Business Segment Information

12 Months Ended

May 31, 2014

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 certain 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. 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.

Operating expenses for each of our transportation segments include the allocations from the FedEx Services segment to the respective transportation segments. These allocations also include 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. 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 and our allocation methodologies are refined as necessary to reflect changes in our businesses.

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 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
2014		$	27,121	$	11,617	$	5,757	$	1,536	$	(464)	$	45,567
2013			27,171		10,578		5,401		1,580		(443)		44,287
2012			26,515		9,573		5,282		1,671		(361)		42,680
Depreciation and amortization
2014		$	1,488	$	468	$	231	$	399	$	1	$	2,587
2013			1,350		434		217		384		1		2,386
2012			1,169		389		185		369		1		2,113
Operating income
2014		$	1,172	$	1,955	$	319	$	-	$	-	$	3,446
2013			555		1,788		208		-		-		2,551
2012			1,260		1,764		162		-		-		3,186
Segment assets(4)
2014		$	19,901	$	8,466	$	3,216	$	5,186	$	(3,699)	$	33,070
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
(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 that 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.
(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
2014	$	1,994	$	850	$	325	$	363	$	1	$	3,533
2013		2,067		555		326		424		3		3,375
2012		2,689		536		340		437		5		4,007

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
				2014		2013		2012
FedEx Express segment:
	Package:
		U.S. overnight box		$	6,555	$	6,513	$	6,546
		U.S. overnight envelope			1,636		1,705		1,747
		U.S. deferred			3,188		3,020		3,001
			Total U.S. domestic package revenue		11,379		11,238		11,294
		International priority			6,451		6,586		6,849
		International economy			2,229		2,046		1,859
			Total international export package revenue		8,680		8,632		8,708
		International domestic(1)			1,446		1,398		853
			Total package revenue		21,505		21,268		20,855
	Freight:
		U.S.			2,355		2,562		2,498
		International priority			1,594		1,678		1,827
		International airfreight			205		276		307
			Total freight revenue		4,154		4,516		4,632
	Other(2)				1,462		1,387		1,028
			Total FedEx Express segment		27,121		27,171		26,515
FedEx Ground segment:
	FedEx Ground				10,634		9,652		8,791
	FedEx SmartPost				983		926		782
		Total FedEx Ground segment			11,617		10,578		9,573
FedEx Freight segment					5,757		5,401		5,282
FedEx Services segment					1,536		1,580		1,671
Other and eliminations					(464)		(443)		(361)
				$	45,567	$	44,287	$	42,680
GEOGRAPHICAL INFORMATION(3)
Revenues:
	U.S.			$	32,901	$	31,550	$	29,837
	International:
		FedEx Express segment			12,274		12,357		12,370
		FedEx Ground segment			248		234		216
		FedEx Freight segment			130		112		101
		FedEx Services segment			14		34		156
			Total international revenue		12,666		12,737		12,843
				$	45,567	$	44,287	$	42,680
Noncurrent assets:
	U.S.			$	20,658	$	19,637	$	18,874
	International				2,729		2,656		1,973
				$	23,387	$	22,293	$	20,847
(1)		International domestic revenues represent our international intra-country express operations, including countries such as Mexico and Brazil.
(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 is registered in the U.S. and is included as U.S. assets; however, many of our aircraft operate internationally.