By Chelsey Dulaney
FedEx Corp. said Friday that it will book a $2.2 billion pretax
charge in its most recently ended quarter as a result of its
decision to switch to a pension accounting method that it said
makes it easier to gauge plan performance.
FedEx joins dozens of companies, such as AT&T Inc., that
have adopted mark-to-market pension accounting in the last few
years. The method allows pension gains and losses to flow into
earnings sooner than under old rules, which allow companies to
smooth out the impact over several years.
FedEx said it would now recognize actuarial gains and losses in
the fourth quarter of its fiscal year rather than amortizing them
over several years, making its operating performance easier to
understand and more transparent.
Net of tax, the charge is valued at $1.4 billion, or $4.88 a
share. Before the announcement, analysts polled by Thomson Reuters
expected FedEx to post $2.68 a share in adjusted earnings in its
fiscal fourth quarter, which ended in May.
FedEx said the plan won't impact its employees' pension benefits
or the company's cash flows.
FedEx said it also booked a charge of 47 cents a share in the
fourth quarter related to a $228 million settlement in a
long-running independent contractor lawsuit. FedEx has tussled for
years over its practice of classifying its U.S. delivery drivers as
independent contractors.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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