United Parcel Service Inc., Atlanta, on Friday announced it has adopted a mark-to-market accounting policy for its defined benefit pension plan expenses.
The firm expects to record a pretax $827 million charge for the 2011 mark-to-market adjustment, which will record actuarial gains and losses on the firm's income statement in the year incurred rather than amortizing them over time, according to a company news release.
The firm will now recognize actuarial gains and losses that exceed 10% of pension liabilities or the fair value of plan assets in the fourth quarter of every year.
UPS financial statements for 2009, 2010 and 2011 have been restated to reflect this change and the firm has provided selected financial data tables updated for 2007 and 2008.
“This change will provide better transparency to ongoing operating results by eliminating the noise of past plan performance,” said Kurt Kuehn, CFO, in a conference call Friday.
“Our rationale to elect this method stems from the fact that it is simpler and aligns with fair-value accounting methods.”
