Goodwill and Other Intangible Assets

12 Months Ended

May 31, 2018

Goodwill And Intangible Assets Disclosure [Abstract]

NOTE 4: GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL. The carrying amount of goodwill attributable to each reportable operating segment and changes therein are as follows (in millions):

	FedEx Express Segment		FedEx Ground Segment			FedEx Freight Segment			FedEx Services Segment			Corporate, Other and Eliminations			Total
Goodwill at May 31, 2016	$	4,546	$	827		$	764		$	1,525		$	395		$	8,057
Accumulated impairment charges		—		—			(133	)		(1,177	)		—			(1,310	)
Balance as of May 31, 2016		4,546		827			631			348			395			6,747
Purchase adjustments and other⁽¹⁾		407		—			—			—			—			407
Balance as of May 31, 2017		4,953		827			631			348			395			7,154
Goodwill acquired⁽²⁾		76		14			3			—			32			125
Purchase adjustments and other⁽¹⁾		71		(1	)		—			—			(2	)		68
Impairment charges⁽³⁾		—		—			—			—			(374	)		(374	)
Balance as of May 31, 2018	$	5,100	$	840		$	634		$	348		$	51		$	6,973
Accumulated goodwill impairment charges as of May 31, 2018	$	—	$	—		$	(133	)	$	(1,177	)	$	(374	)	$	(1,684	)

(1)

Primarily purchase-related adjustments, currency translation adjustments, and acquired goodwill related to immaterial acquisitions.

(2)

Goodwill acquired relates to the acquisitions of Northwest Research, Inc. and P2P Mailing Limited. See Note 3 for more information.

(3)

Impairment charges related to the goodwill impairment of FedEx Supply Chain described below.

Our reporting units with significant recorded goodwill include FedEx Express, FedEx Ground, FedEx Freight, FedEx Office (reported in the FedEx Services segment) and FedEx Supply Chain (reported in the FedEx Trade Networks operating segment, which is included in “Corporate, other and eliminations”) in our segment reporting. In 2018, we incurred a goodwill impairment charge of $374 million related to FedEx Supply Chain, eliminating substantially all of the goodwill attributable to this reporting unit. In our evaluation of the goodwill of this reporting unit, we compared the fair value of the reporting unit to its carrying value (including attributable goodwill). Fair value was estimated using standard valuation methodologies (principally the income and market approach) incorporating market participant considerations and management’s assumptions on revenue growth rates, operating margins, discount rates and expected capital expenditures. The key factors contributing to the goodwill impairment were underperformance of the FedEx Supply Chain business during 2018, including base business erosion, and the failure to attain the level of operating synergies and revenue and profit growth anticipated at the time of the acquisition. Based on these factors, our outlook for the business and industry changed in the fourth quarter of 2018. No other impairments of goodwill were recognized during 2018, 2017 or 2016.

OTHER INTANGIBLE ASSETS. The summary of our intangible assets and related accumulated amortization at May 31, 2018 and 2017 is as follows (in millions):

	2018							2017
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Gross Carrying Amount		Accumulated Amortization			Net Book Value
Customer relationships	$	676	$	(250	)	$	426	$	656	$	(203	)	$	453
Technology		68		(39	)		29		54		(26	)		28
Trademarks and other		141		(116	)		25		136		(88	)		48
Total	$	885	$	(405	)	$	480	$	846	$	(317	)	$	529

Amortization expense for intangible assets was $87 million in 2018, $91 million in 2017 and $14 million in 2016.

Expected amortization expense for the next five years is as follows (in millions):

2019	$	81
2020		63
2021		50
2022		44
2023		42

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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