FedEx to take $2.2 billion charge on pension accounting change
LOS ANGELES – Parcel delivery service FedEx Corp (FDX.N) said it would record a $2.2 billion non-cash pretax charge related to a change in the way it accounts for pensions.
The move to mark-to-market accounting will have no effect on employees’ pension benefits or the funding requirements for any pension plans or cash flows, FedEx said on Friday.
“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,” Chief Financial Officer Alan Graf said in a statement.
FedEx also said its Ground unit had reached a $228 million settlement in an independent contractor litigation pending in the US District Court for the Northern District of California.
“This settlement resolves claims dating back to 2000 that concern a model FedEx Ground no longer operates,” General Counsel Christine Richards said.
FedEx said it recorded charges of 47 cents per share, net of tax, in its fourth quarter ended May 31 related to the settlement.
The ground package delivery business is the company’s second largest after FedEx Express and accounts for more than a quarter of its total revenue.
Shares of FedEx, which is scheduled to report quarterly results on June 17, were little changed at $184.14 on Friday. Up to Thursday’s close, they had risen nearly 7 percent this year. –Reuters