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Kinko's Move South of the Border Signals International Expansion Strategy

Press release from the issuing company

DALLAS, Nov. 18 -- Kinko's, Inc. welcomed a tenth country into its global network today with the grand opening of its first location in Mexico. The Mexico City branch is the first of several locations planned for Mexico's largest city in the next 18 months. During this time, the company also plans to evaluate opportunities in other major Mexican cities. "Because of its importance to the U.S. as a trading partner and the significant presence there of many U.S.-based corporations, Mexico has long been of interest to Kinko's. Our new Mexico City location enables us to serve both multinational and local customers," said Mark Seals, Kinko's executive vice president of operations. "Kinko's Mexico will introduce 24-hour access, online ordering, document finishing, signs and banners, videoconferencing and other services not widely available there. Most importantly our operations in Mexico will be digitally connected to the more than 1,200 Kinko's locations around the world, making it convenient and cost-effective for businesses to manage, send and print documents globally." As Kinko's first new international market entry in five years, the move into Mexico is an important step in Kinko's international expansion strategy. "During the prior two years, we have strengthened our country management teams, enhanced our digital connectivity between U.S. and international branches, and tightened our focus for new unit expansion. As a result our financial performance has improved significantly and we are beginning to accelerate the pace of growth," added Seals. "We expect the international division to contribute significantly to the company's overall revenue growth and profitability in the coming years." Kinko's does not release detailed financial information, however, the company says 2003 has been a banner year for its international operations. New unit growth has resumed after more than a year of strengthening operations and fine-tuning strategy. Financial performance has improved to the point where some markets are profitable and the division as a whole is expected to reach breakeven or better next year. Going into 2003, Kinko's had more than 100 locations in Canada, the United Kingdom (U.K.), The Netherlands, Japan, Korea, Australia, China, and the United Arab Emirates (U.A.E.). By the end of the year, 10-15 new locations will be opened or under construction in Mexico, Canada, the U.K., Korea, Japan and the U.A.E. In 2004, Kinko's expects to approximately double this rate of expansion. Some of Kinko's U.S.-based customers have been the beneficiaries of the increased focus on international operations as there has been a marked increase in business across borders thanks to the valuable time and money savings enabled by its global network. For example, a major East Coast financial organization regularly printed large quantities of employee training materials and then express shipped them to Japan. Using its global network, Kinko's provided an alternative to costly and time consuming shipping. The customer now submits new manuals online through a customized online ordering system. A Kinko's location in Tokyo produces the manuals, which are delivered to the customer's Tokyo office at no charge. Kinko's eliminated shipping costs, customs worries, and time in transit for the customer. As part of its strategic plan for growth outside the U.S., the company has decided to focus on growth in North American Free Trade Agreement (NAFTA) countries, Asia-Pacific, and the European Union through 2007. Regions outside these major trade lanes will be addressed more opportunistically. Kinko's North America Kinko's entry into Mexico is part of the company's plan to develop a strong presence across NAFTA countries. The U.S.-based company has approximately 1,100 domestic locations and 18 in Canada, including branches in Halifax, Toronto, Calgary and Vancouver. Both Canada and Mexico are viewed as prime expansion markets by the company and expectations are that several dozen new units will be opened in those markets over the next five years. Kinko's in Asia-Pacific Since the first Kinko's opened in Japan in 1992, the country has become Kinko's largest and most profitable international market. This summer, Kinko's acquired the 49 percent stake in its Japanese operations previously held by Sumitomo Metal Mining. Kinko's now operates 59 locations throughout Japan, including branches in Tokyo, Osaka, Fukuoka, Hiroshima, Kobe, Kokura, Kyoto, Nagasaki, Nagoya, and Yokohama. In China, Kinko's has operated its branch in Beijing since 1997 and has accelerated its plans for expansion in this important and rapidly growing Asian market. The company is now looking to other major commercial centers along the eastern coast of China including Shanghai and Guangdong province. Korea, which saw the first Kinko's open in 1995, has also been a fast- growing and profitable market. Three new locations have opened this year bringing the total to 14. The company maintains a leading presence in the document services industry in the main commercial districts of Seoul. Rounding out the Asia-Pacific presence is Australia, with a total of 10 Kinko's branches in Sydney and Melbourne. Kinko's in Europe Kinko's operates 3 branches in London and will add two more there by early 2004. The company's two locations in The Netherlands (Amsterdam and Rotterdam) are strategically situated as entry points for customers doing business in the European Union. While details were not disclosed, Kinko's plans significant expansion within the E.U. in the next few years.