Goodwill and Other Intangible Assets

12 Months Ended

May 31, 2016

Goodwill and Other Intangible Assets [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		TNT Express Segment		FedEx Ground Segment		FedEx Freight Segment		FedEx Services Segment		Total

Goodwill at May 31, 2014			$	1,750	$	-	$	90	$	735	$	1,525	$	4,100
Accumulated impairment charges				-		-		-		(133)		(1,177)		(1,310)

Balance as of May 31, 2014				1,750		-		90		602		348		2,790

Goodwill acquired⁽¹⁾				40		-		1,055		38		-		1,133
Purchase adjustments and other⁽²⁾				(113)		-		-		-		-		(113)

Balance as of May 31, 2015				1,677		-		1,145		640		348		3,810

Goodwill acquired⁽¹⁾				-		2,964		-		-		-		2,964
Purchase adjustments and other⁽²⁾				(88)		-		66		(5)		-		(27)

Balance as of May 31, 2016			$	1,589	$	2,964	$	1,211	$	635	$	348	$	6,747

Accumulated goodwill impairment
	charges as of May 31, 2016		$	-	$	-	$	-	$	(133)	$	(1,177)	$	(1,310)

⁽¹⁾		Goodwill acquired relates to the acquisition of transportation companies in Southern Africa in 2014, the acquisition of e-commerce and supply chain solutions companies in 2015, and the acquisition of TNT Express in 2016. See Note 3 for related disclosures.
⁽²⁾		Primarily currency translation adjustments, acquired goodwill related to immaterial acquisitions, and purchase related adjustments.

Our reporting units with significant recorded goodwill include FedEx Express, TNT Express, FedEx Ground, FedEx Freight, FedEx Office (reported in the FedEx Services segment) and GENCO (reported in the FedEx Ground segment). We evaluated reporting units for impairment during the fourth quarter of 2016 and 2015. The estimated fair value of each of these reporting units exceeded their carrying values in 2016 and 2015, and we do not believe that any of these reporting units were impaired as of the balance sheet dates. The goodwill for our TNT Express reporting unit will be tested beginning in 2017.

Given the timing and complexity of the TNT Express acquisition, the full amount of acquired goodwill has been presented in the TNT Express segment for 2016 as we continue to evaluate benefits from synergies with our FedEx Express segment. Therefore, attribution of this goodwill could change in future periods.

OTHER INTANGIBLE ASSETS. The summary of our intangible assets and related accumulated amortization at May 31, 2016 and 2015 is as follows (in millions):

		2016						2015
		Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value

Customer relationships		$	912	$	(156)	$	756	$	338	$	(151)	$	187
Technology			123		(16)		107		34		(14)		20
Trademarks and other			202		(57)		145		60		(60)		-
	Total	$	1,237	$	(229)	$	1,008	$	432	$	(225)	$	207

Amortization expense for intangible assets was $14 million in 2016, $21 million in 2015 and $23 million in 2014.

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

2017	$	130
2018		116
2019		115
2020		112
2021		54

Given the timing and complexity of the TNT Express acquisition, the amount and timing of expected amortization expense may change once the purchase price allocation is complete.

- 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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