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FedEx Says Financial Impact Of Cyber-attack On TNT Express Likely To Be Material

FedEx Corp. (FDX) said it has filed its annual report on Form 10-K for fiscal year 2017 with the Securities and Exchange Commission. The company noted that the impact of the cyber attack in June on the worldwide information systems of its subsidiary TNT Express B.V. is likely to be material.

The Form 10-K filing includes additional information regarding the June 2017 cyber-attack on TNT Express, the international express transportation, small-package ground delivery and freight transportation company acquired by FedEx in May 2016.

FedEx said on June 28, 2017 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.

FedEx implemented contingency plans immediately following the attack to recover TNT operations and communications systems.

While all TNT depots, hubs and facilities are now operational and most TNT services are available, customers are still experiencing widespread service and invoicing delays.

Manual processes are being used to facilitate a significant portion of TNT operations and customer service functions. FedEx said it cannot estimate when TNT services will be fully restored.

According to FedEx, it is still evaluating the financial impact of the attack, but noted that it is likely to be material. The company also said it does 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," FedEx said.

FedEx reaffirmed 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.

by RTT Staff Writer

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