Business Segment Information

12 Months Ended

May 31, 2013

Business Segment Information [Abstract]

Business Segment Information

NOTE 14: BUSINESS SEGMENT INFORMATION

FedEx Express, FedEx Ground and FedEx Freight represent our major service lines and, along with FedEx Services, form the core of our reportable segments. Our reportable segments include the following businesses:

FedEx Express Segment	FedEx Express (express transportation)
	FedEx Trade Networks (air and ocean freight forwarding and customs
		brokerage)
	FedEx SupplyChain Systems (logistics services)
FedEx Ground Segment	FedEx Ground (small-package ground delivery)
	FedEx SmartPost (small-parcel consolidator)
FedEx Freight Segment	FedEx Freight (LTL freight transportation)
	FedEx Custom Critical (time-critical transportation)
FedEx Services Segment	FedEx Services (sales, marketing, information technology,
		communications and back-office functions)
	FedEx TechConnect (customer service, technical support, billings
		and collections)
	FedEx Office (document and business services and package
		acceptance)

FedEx Services Segment

The FedEx Services segment operates combined sales, marketing, administrative and information technology functions in shared services operations that support our transportation businesses and allow us to obtain synergies from the combination of these functions. For the international regions of FedEx Express, some of these functions are performed on a regional basis by FedEx Express and reported in the FedEx Express segment in their natural expense line items. The FedEx Services segment includes: FedEx Services, which provides sales, marketing, information technology, communications and back-office support to our other companies; FedEx TechConnect, which is responsible for customer service, technical support, billings and collections for U.S. customers of our major business units; and FedEx Office, which provides an array of document and business services and retail access to our customers for our package transportation businesses.

The FedEx Services segment provides direct and indirect support to our transportation businesses, and we allocate all of the net operating costs of the FedEx Services segment (including the net operating results of FedEx Office) to reflect the full cost of operating our transportation businesses in the results of those segments. Within the FedEx Services segment allocation, the net operating results of FedEx Office, which are an immaterial component of our allocations, are allocated to FedEx Express and FedEx Ground. The allocations of net operating costs are based on metrics such as relative revenues or estimated services provided. We believe these allocations approximate the net cost of providing these functions. We review and evaluate the performance of our transportation segments based on operating income (inclusive of FedEx Services segment allocations). For the FedEx Services segment, performance is evaluated based on the impact of its total allocated net operating costs on our transportation segments.

The operating expenses line item “Intercompany charges” on the accompanying unaudited financial summaries of our transportation segments in MD&Areflects the allocations from the FedEx Services segment to the respective transportation segments. The “Intercompany charges” caption also includes charges and credits for administrative services provided between operating companies and certain other costs such as corporate management fees related to services received for general corporate oversight, including executive officers and certain legal and finance functions. We believe these allocations approximate the net cost of providing these functions.

Other Intersegment Transactions

Certain FedEx operating companies provide transportation and related services for other FedEx companies outside their reportable segment. Billings for such services are based on negotiated rates, which we believe approximate fair value, and are reflected as revenues of the billing segment. These rates are adjusted from time to time based on market conditions. Such intersegment revenues and expenses are eliminated in our consolidated results and are not separately identified in the following segment information, because the amounts are not material.

The following table provides a reconciliation of reportable segment revenues, depreciation and amortization, operating income (loss) and segment assets to consolidated financial statement totals for the years ended or as of May 31 (in millions):

		FedEx Express Segment(1)		FedEx Ground Segment(2)		FedEx Freight Segment(3)		FedEx Services Segment		Other and Eliminations		Consolidated Total
Revenues
2013		$	27,171	$	10,578	$	5,401	$	1,580	$	(443)	$	44,287
2012			26,515		9,573		5,282		1,671		(361)		42,680
2011			24,581		8,485		4,911		1,684		(357)		39,304
Depreciation and amortization
2013		$	1,350	$	434	$	217	$	384	$	1	$	2,386
2012			1,169		389		185		369		1		2,113
2011			1,059		337		205		371		1		1,973
Operating income (loss)
2013		$	555	$	1,788	$	208	$	-	$	-	$	2,551
2012			1,260		1,764		162		-		-		3,186
2011			1,228		1,325		(175)		-		-		2,378
Segment assets(4)
2013		$	18,935	$	7,353	$	2,953	$	4,879	$	(553)	$	33,567
2012			17,981		6,154		2,807		4,546		(1,585)		29,903
2011			16,463		5,048		2,664		4,278		(1,068)		27,385
(1)	FedEx Express segment 2013 operating expenses include $405 million of direct and allocated business realignment costs and an impairment charge of $100 million resulting from the decision to retire 10 aircraft and related engines. FedEx Express segment 2012 operating expenses include an impairment charge of $134 million resulting from the decision to retire 24 aircraft and related engines and a reversal of a $66 million legal reserve which was initially recorded in 2011.
(2)	FedEx Ground segment 2013 operating expenses include $105 million of allocated business realignment costs.
(3)	FedEx Freight segment 2013 operating expenses include $50 million in direct and allocated business realignment costs. FedEx Freight segment 2011 operating expenses include $133 million in costs associated with the combination of our FedEx Freight and FedEx National LTL operations, effective January 30, 2011.
(4)	Segment assets include intercompany receivables.

The following table provides a reconciliation of reportable segment capital expenditures to consolidated totals for the years ended May 31 (in millions):
	FedEx Express Segment		FedEx Ground Segment		FedEx Freight Segment		FedEx Services Segment		Other		Consolidated Total
2013	$	2,067	$	555	$	326	$	424	$	3	$	3,375
2012		2,689		536		340		437		5		4,007
2011		2,467		426		153		387		1		3,434

The following table presents revenue by service type and geographic information for the years ended or as of May 31 (in millions):
REVENUE BY SERVICE TYPE
				2013		2012		2011
FedEx Express segment:
	Package:
		U.S. overnight box		$	6,513	$	6,546	$	6,128
		U.S. overnight envelope			1,705		1,747		1,736
		U.S. deferred			3,020		3,001		2,805
			Total U.S. domestic package revenue		11,238		11,294		10,669
		International priority			6,586		6,849		6,760
		International economy			2,046		1,859		1,468
			Total international export package revenue		8,632		8,708		8,228
		International domestic(1)			1,398		853		653
			Total package revenue		21,268		20,855		19,550
	Freight:
		U.S.			2,562		2,498		2,188
		International priority			1,678		1,827		1,722
		International airfreight			276		307		283
			Total freight revenue		4,516		4,632		4,193
	Other				1,387		1,028		838
			Total FedEx Express segment		27,171		26,515		24,581
FedEx Ground segment:
	FedEx Ground				9,652		8,791		7,855
	FedEx SmartPost				926		782		630
		Total FedEx Ground segment			10,578		9,573		8,485
FedEx Freight segment					5,401		5,282		4,911
FedEx Services segment					1,580		1,671		1,684
Other and eliminations(2)					(443)		(361)		(357)
				$	44,287	$	42,680	$	39,304
GEOGRAPHICAL INFORMATION(3)
Revenues:
	U.S.			$	31,550	$	29,837	$	27,461
	International:
		FedEx Express segment			12,357		12,370		11,437
		FedEx Ground segment			234		216		177
		FedEx Freight segment			112		101		84
		FedEx Services segment			34		156		145
			Total international revenue		12,737		12,843		11,843
				$	44,287	$	42,680	$	39,304
Noncurrent assets:
	U.S.			$	19,637	$	18,874	$	17,235
	International				2,656		1,973		1,865
				$	22,293	$	20,847	$	19,100
(1)		International domestic revenues include our international intra-country domestic express operations, including acquisitions in India (February 2011), Mexico (July 2011), Poland (June 2012), France (July 2012) and Brazil (July 2012).
(2)		Includes FedEx Trade Networks and FedEx SupplyChain Systems.
(3)		International revenue includes shipments that either originate in or are destined to locations outside the United States. Noncurrent assets include property and equipment, goodwill and other long-term assets. Our flight equipment registered in the U.S. is included as U.S. assets; however, many of our aircraft operate internationally.