FedEx taking $1.2bn in charges
FedEx will take some $1.2bn in charges against its fiscal fourth quarter earnings, including charges against its purchased Kinko’s and Watkins Motor Lines businesses.
FedEx will take some $1.2bn in charges against its fiscal fourth quarter earnings, including charges against its purchased Kinko’s and Watkins Motor Lines businesses.
FedEx said in a securities filing that it expects to take an $810m charge against Kinko’s, which it bought in 2004 and has renamed FedEx office, for reduced goodwill at the underperforming operation.
The company expects to take an $80m charge for reduced goodwill for Watkins, the operator of less-than-truckload operations in the United States and Canada that FedEx bought in 2006 to bulk up its growing trucking operations.
The charges, along with some $300m in other already-disclosed charges, will come in the FedEx financial results for the company’s fiscal fourth quarter ending May 31.
“The key factor contributing to the goodwill impairment was a decline in FedEx Office’s and FedEx National LTL’s recent and forecasted financial performance as a result of weak economic conditions,” the company said.
In writing down the goodwill of its underperforming units, FedEx is joining several other transportation companies that have seen the value of acquisitions made in recent years deteriorate under a downturn that has eaten away at shipping business.
The Kinko’s operation was a drain on FedEx earnings before the downturn, however. FedEx had said in buying the ubiquitous storefront office services operation that it would add a vital presence to help bring in small business, including home office workers that rely on Kinko’s.
But the operation now called FedEx Office has never performed like FedEx’s core shipping businesses and the parent company has sought to overhaul the unit several times.
