FedEx Files 10-K with Additional Disclosure on Cyber-Attack Affecting TNT Express Systems
July 17 2017 - 7:54AM
Business Wire
Reaffirms Commitment to Improve FedEx
Express Operating Income by $1.2-$1.5 billion by FY2020
FedEx Corp. (NYSE: FDX) (“FedEx”) today filed its annual report
on Form 10-K for fiscal year 2017 with the Securities and Exchange
Commission. The filing includes additional information regarding
the June 2017 cyber-attack on the worldwide information systems of
TNT Express B.V. (“TNT”), the international express transportation,
small-package ground delivery and freight transportation company
FedEx acquired in May 2016.
TNT Express Cyber-Attack
On June 28, 2017, FedEx announced that the worldwide operations
of TNT were significantly affected by the cyber-attack known as
Petya, which involved the spread of an information technology virus
through a Ukrainian tax software product. The systems and data of
all other FedEx companies are currently unaffected by the attack.
TNT operates in Ukraine and uses the software that was compromised,
which allowed the virus to infiltrate TNT systems and encrypt its
data. While TNT operations and communications were significantly
affected, no data breach or data loss to third parties is known to
have occurred as of the date of this press release.
FedEx implemented contingency plans immediately following the
attack to recover TNT operations and communications systems. As of
the date of this press release, all TNT depots, hubs and facilities
are operational and most TNT services are available, but customers
are still experiencing widespread service and invoicing delays, and
manual processes are being used to facilitate a significant portion
of TNT operations and customer service functions. We cannot
estimate when TNT services will be fully restored. Contingency
plans that make use of both FedEx Express and TNT networks remain
in place to minimize the impacts to customers.
Our information technology teams have been focused on the
recovery of critical systems and continue to make progress in
resuming full services and restoring critical systems. We are
currently focused on restoring remaining operational systems, along
with finance, back-office and secondary business systems. We cannot
yet estimate how long it will take to restore the systems that were
impacted, and it is reasonably possible that TNT will be unable to
fully restore all of the affected systems and recover all of the
critical business data that was encrypted by the virus.
Given the recent timing and magnitude of the attack, in addition
to our initial focus on restoring TNT operations and customer
service functions, we are still evaluating the financial impact of
the attack, but it is likely that it will be material. We do not
have cyber or other insurance in place that covers this attack.
Although we cannot currently quantify the amounts, we have
experienced loss of revenue due to decreased volumes at TNT and
incremental costs associated with the implementation of contingency
plans and the remediation of affected systems.
Additional consequences and risks associated with the
cyber-attack that could negatively impact our results of operations
and financial condition are described in the corresponding risk
factor included in the Management’s Discussion and Analysis section
of our annual report on Form 10-K for fiscal year 2017, filed
earlier today. In addition to financial consequences, the
cyber-attack may materially impact our disclosure controls and
procedures and internal control over financial reporting in future
periods.
Reaffirmation of FedEx Express FY2020
Operating Income Guidance
FedEx reaffirms its commitment to improve the operating income
at the FedEx Express Group by $1.2 billion to $1.5 billion in
fiscal 2020 versus fiscal 2017, assuming moderate economic growth
and current accounting and tax rules.
Corporate Overview
FedEx Corp. (NYSE: FDX) provides customers and businesses
worldwide with a broad portfolio of transportation, e-commerce and
business services. With annual revenues of $60 billion, the company
offers integrated business applications through operating companies
competing collectively and managed collaboratively, under the
respected FedEx brand. Consistently ranked among the world's most
admired and trusted employers, FedEx inspires its more than 400,000
team members to remain "absolutely, positively" focused on safety,
the highest ethical and professional standards and the needs of
their customers and communities. To learn more about how FedEx
connects people and possibilities around the world, please visit
about.fedex.com.
Additional information and operating data are contained in the
company’s annual report, Form 10-K, Form 10-Qs and Form 8-Ks.
The Investor Relations page of our website, investors.fedex.com,
contains a significant amount of information about FedEx, including
our Securities and Exchange Commission (“SEC”) filings and
financial and other information for investors. The information that
we post on our Investor Relations website could be deemed to be
material information. We encourage investors, the media and others
interested in the company to visit this website from time to time,
as information is updated and new information is posted.
Certain statements in this press release may be considered
forward-looking statements, such as statements relating to
management’s views with respect to future events and financial
performance. Such forward-looking statements are subject to risks,
uncertainties and other factors which could cause actual results to
differ materially from historical experience or from future results
expressed or implied by such forward-looking statements. Potential
risks and uncertainties include, but are not limited to, economic
conditions in the global markets in which we operate, our ability
to successfully integrate the businesses and operations of FedEx
Express and TNT in the expected time frame, our ability to match
capacity to shifting volume levels, changes in fuel prices or
currency exchange rates, a significant data breach or other
disruption to our technology infrastructure, legal challenges or
changes related to FedEx Ground’s owner-operators and the drivers
providing services on their behalf, new U.S. domestic or
international government regulation, our ability to effectively
operate, integrate and leverage acquired businesses, disruptions or
modifications in service by, or changes in the business of, the
U.S. Postal Service, the impact from any terrorist activities or
international conflicts, the impact of the TNT cyber-attack
described in this press release and other factors which can be
found in FedEx Corp.’s and its subsidiaries’ press releases and
FedEx Corp.’s filings with the SEC. Any forward-looking statement
speaks only as of the date on which it is made. We do not undertake
or assume any obligation to update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise.
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version on businesswire.com: http://www.businesswire.com/news/home/20170717005594/en/
FedEx Corp.Media Relations:Patrick Fitzgerald,
901-818-7300orInvestor Relations:Mickey Foster, 901-818-7468
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