This is a partial transcript from "Your World with Neil Cavuto," April 26, 2004, that was edited for clarity.

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NEIL CAVUTO, HOST: FedEx (FDX) says there’s soon to be a new look at all those Kinko’s stores in your area. FedEx bought the chain back in February for more than $2 billion, so it has every right to add its name to the storefront logo and that’s exactly what the company said today it plans to do.

The renaming will cost about $20 million. Is it worth it? FedEx Chairman and CEO Fred Smith here to say, yes. He joins us from Dallas.

Fred, good to have you.

FRED SMITH, FEDEX CHMN. & CEO: Neil, thank you very much.

CAVUTO: What you do you get out of this?

SMITH: Well, we’ve got the combination of two of the greatest brands in the country, and we think it is going to completely redefine the business services marketplace, offering a very, very unique one-stop shopping capability for small and medium and home businesses and traveling professionals of all types.

CAVUTO: You know, I always have looked at your kind of business, Fred, as sort of a barometer for the economy. If things are picking up again, people are sending packages back and forth again. What have you noticed?

SMITH: Well, the economic expansion is definitely under way. If you will recall, we announced a 41 percent increase in our earnings for our third fiscal quarter which ended in February, and upped our estimates for our fourth fiscal quarter we are now in. And those trends are continuing and we do believe there is a strong recovery under way.

CAVUTO: Now a lot of that momentum was because of cost-cutting you initiated, is that about done, the layoffs, the downsizing, whatever you wanted to call it?

SMITH: Well, we didn’t have any layoffs, what we had in our express unit was a package of voluntary severance, and early retirement incentives. We had a very good acceptance of that. But, by the third fiscal quarter that I just mentioned, the costs of that were essentially behind us and the ongoing benefits will be about $220 million to $240 million for each fiscal year in the future. And it was a part of it, but really the economic recovery was a much bigger part of it.

CAVUTO: You know, I always wonder what your Yale professors might have thought when you were in school and you got a C on a paper with this idea for overnight service, that was then, this is now. But now I’m wondering in the age of e-mail and documents that can be downloaded via the Internet, none of that seemed to affect your business severely. What do you make of that?

SMITH: Well, a couple of reasons. First, our revenues which are very substantial, $25 billion or so, are mostly made up of moving physical items, so there was never any real threat to that, even though a lot of people that are in the white collar professions know us most for our express document transportation services. FedExKinko’s is a big player in the digital document arena, however. It is really a network, Neil, you can sit at your desk and print out at 1200 locations around the world, pricing lists, sales collateral and so forth. So we have a new entry now in the digital document sector as well with FedexKinko’s.

CAVUTO: All right, well, Fred, we wish you well, Fred Smith, the chairman, president and CEO, FedEx Corporation. I love the story, how he started out.

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