FedEx Corp., Memphis, Tenn., has adopted mark-to-market pension accounting, effective with the operating results for its fiscal year ended May 31, the company said in an 8-K filing with the Securities and Exchange Commission on Friday.
The company announced it will record an estimated $2.2 billion non-cash, pre-tax charge for its fiscal 2015 fourth quarter in connection with the change.
“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 Alan B. Graf Jr., executive vice president and chief financial officer, in a news release.
FedEx spokesman Jess Bunn said in an e-mail that the timing of the change is “linked to low interest rates and shifting demographic trends among retirees resulting in greater life expectancy.”
As of May 31, 2014, FedEx’s defined benefit plan assets totaled $21.907 billion and projected benefit obligations totaled $24.578 billion, for a funding ratio of 89.1%.