FedEx to drop Kinko's name, take $891M charge

June 2, 2008 6:23:01 PM PDT
FedEx Corp. said Monday it plans to stop using the Kinko's name on its copy and office service stores and book an $891 million charge for the quarter that ended Saturday.

The charge relates to the value of the Kinko's name and a write-down of the value of its acquisition of the brand. The charge, which works out to $2.22 a share, was not part of FedEx's earnings forecast.

The company early last month cut its outlook to $1.45 to $1.50 per share, down from $1.60 to $1.80, because of increasing fuel costs. FedEx reports its financial results for the fiscal fourth quarter June 18.

The company said it will change the name of its FedEx Kinko's stores to FedEx Office over the next several years.

"The FedEx Office name better describes the wide range of services available at its retail centers and takes full advantage of the FedEx brand long recognized for excellent customer service, quality and reliability," spokesman Jess Bunn told The Associated Press.

The name change is among a series of recent moves the company has made since it acquired the Kinko's copy chain in 2004 for $2.4 billion.

Bunn didn't elaborate on them, but the company said in a news release that the FedEx Office changes are "designed to more sharply focus the division on profitable core revenue growth and incremental shipping volume, which contributes about $1 billion of revenues annually to FedEx Express and FedEx Ground."

In May, Brian D. Phillips was named president and CEO of what is now FedEx Office. In addition, the unit's senior management team was reduced and restructured to control costs, the release said.

Earlier this year, the company reduced future capital commitments by slowing the rate of expansion from about 300 locations in fiscal year 2008 to about 70 in fiscal 2009.

Also Monday, FedEx's board declared a quarterly cash dividend of 11 cents per share, an increase of 1 cent over the 10 cent quarterly dividend that has been paid since July 2007. The new dividend is payable July 1 to stockholders of record at the close of business June 13.

Before the announcement, FedEx shares fell $1.06, or 1.2 percent, to close at $90.65 Monday. They were unchanged in after-hours trading.


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