FedEx To Record $2.2 Billion Charge For Changing Pension Accounting

FedEx Corp. said it would record a non-cash charge of an estimated $2.2 billion for the fiscal fourth-quarter ended in May, as a result of its decision to adopt mark-to-market accounting for its pension and post-retirement plans. The package delivery giant said the accounting change will not affect benefits for plan participants or the company's cash flow, but should make the company's operating performance easier to understand. "Adopting the mark-to-market approach will align our accounting to provide greater transparency by removing certain legacy pension costs from segment operating results and recognizing them in a year-end adjustment," said Chief Financial Officer Alan Graf, Jr. FedEx also said it will lower its expected return on plan assets to 6.5%. Separately, the company said it will also record a fourth-quarter charge of $197 million as it settled an independent contractor litigation. The stock, which wasn't active in premarket trade, has gained 6.5% year to date through Thursday, while the S&P 500 has gained 2.4%.