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It simply results in anticipated earnings or savings failing to materialize. The writedown was the result of the extinguishing of the goodwill that FedEx acquired in the Kinko's purchase. The Kinko's brand was eliminated, and this essentially dictated the timing of the writedown. All of the goodwill in the marketplace that came with the Kinko's name no longer exists, therefore FedEx needed to write that amount down.
The result was that in 2009, FedEx took a charge of $891 million, or $2.23 per diluted share, on writing down the Kinko's goodwill. FedEx attributes the writedown primarily to the discontinuing of the Kinko's name, but also to a "decline in the fair value of the FedEx Office reporting unit in light of economic conditions." The writedown had...
Already faced with an environment marked by stagnating revenues, the writedown resulted in a net income of $98 million, down from $1.125 billion the year before.
It is important to understand the Kinko's writedown in the context of the income statement. The company's profit declined substantially in fiscal 2009. In order to compare operating results for the year, the writedown must be added back to the $98 million net profit. FedEx did have a worse year, but it was not catastrophic. The writedown actually represents six years of failure since the Kinko's purchase. The financial impact of the failure may have been limited to the 2009 income statement, but it was the result of a steady six-year…
In terms of earnings, FedEx's failure to generate significant synergies from the Kinko's deal does not result in a writedown. It simply results in anticipated earnings or savings failing to materialize. The writedown was the result of the extinguishing of the goodwill that FedEx acquired in the Kinko's purchase. The Kinko's brand was eliminated, and this essentially dictated the timing of the writedown. All of the goodwill in the marketplace that came with the Kinko's name no longer exists, therefore FedEx needed to write that amount down.
The result was that in 2009, FedEx took a charge of $891 million, or $2.23 per diluted share, on writing down the Kinko's goodwill. FedEx attributes the writedown primarily to the discontinuing of the Kinko's name, but also to a "decline in the fair value of the FedEx Office reporting unit in light of economic conditions." The writedown had a significant impact on the company's net income. Already faced with an environment marked by stagnating revenues, the writedown resulted in a net income of $98 million, down from $1.125 billion the year before.
It is important to understand the Kinko's writedown in the context of the income statement. The company's profit declined substantially in fiscal 2009. In order to compare operating results for the year, the writedown must be added back to the $98 million net profit. FedEx did have a worse year, but it was not catastrophic. The writedown actually represents six years of failure since the Kinko's purchase. The financial impact of the failure may have been limited to the 2009 income statement, but it was the result of a steady six-year deterioration of the goodwill generated from the Kinko's purchase.
If it is felt that this is not the case, then another question needs to be answered -- to what extent are the policies and strategies of FedEx management related to the company's performance. Although it has long been held that the company is an economic bellwether on account of their customer base, there are certain aspects of the firm's business model that contribute to their performance, in particular
FedEx was founded by Fred Smith after his tour in Vietnam, and he continues to run the company today, as the only CEO that FedEx has ever known. The company began by offering overnight courier services, an industry that to that point had not existed. Today, that unit is known as FedEx Express and it is still the largest in the company. There are competitors, however, mostly notably UPS, DHL
FedEx Canada Source of Finance (millions) Balance sheet value as of: 28 Feb 2011 Market value as of:____6/5/2011 Proportion in total financing Cost of capital (WACC) Product of (4)x (5) Short-term debt 1,685,000 D/E Ratio: 11.07 Long-term debt 1 1,667,000 Long-term debt 2 Long-term debt 3 Preferred shares Common equity Total 1,716,000 Revenue 39.30B 34.73B 35.49B 37.95B 35.21 B -Purchase of Office Supplies -Direct and indirect labor -Marketing expense - Depreciation 1.91 B 1.90 B 1.89 B 1.70 B 1.52 B EBIT 2.34 B 1.97 B 2.11 B 3.35 B -Taxes Net income 1.45 B 1.18 B 98.00 M 1.12 B 2.02 B + Depreciation Operating cash flow 4.04 B 3.14 B 2.75 B 3.48 B 3.56 B Are there any important
In many countries, FedEx Express charges a fuel surcharge. In foreign countries, an increase in the value of the U.S. dollar is inherently built into the price of jet fuel, or even into the price of gasoline. As such, a fuel surcharge helps to offset the currency impact on the local price of jet fuel. The result is that it serves as something of a hedge, pushing this particular
FedEx Express Financial Performance The financial performance of any organization can be determined through the analysis of its financial statements. Comprehensive income statement, statement of financial position and cash flow statement are the main financial statements. Every end of fiscal year, a company is expected to report its business operations and financial performance throughout the year for the users of its financial statements. These financial statements are utilized to examine and
FedEx Express Airlines (Case Study) In this case study, we will be looking at FedEx Express's hub airports. The airports will include Memphis International Airport (MEM) and Indianapolis International Airport. The focus will be mainly on capacity, traffic, and what is planned for the future of these airports. FedEx Corporation is one of the largest companies in the courier industry. The company is renowned not just nationally in the United States, but