Goodwill and Other Intangible Assets

12 Months Ended

May 31, 2019

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, 2017	$	4,953		$	827		$	764		$	1,525		$	395		$	8,464
Accumulated impairment charges		—			—			(133	)		(1,177	)		—			(1,310	)
Balance as of May 31, 2017		4,953			827			631			348			395			7,154
Goodwill acquired⁽¹⁾		76			14			3			—			32			125
Purchase adjustments and other⁽²⁾		71			(1	)		—			—			(2	)		68
Impairment charges⁽³⁾		—			—			—			—			(374	)		(374	)
Balance as of May 31, 2018		5,100			840			634			348			51			6,973
Goodwill acquired⁽⁴⁾		126			—			—			—			—			126
Purchase adjustments and other⁽²⁾		(210	)		—			—			—			(5	)		(215	)
Balance as of May 31, 2019	$	5,016		$	840		$	634		$	348		$	46		$	6,884
Accumulated goodwill impairment charges as of May 31, 2019	$	—		$	—		$	(133	)	$	(1,177	)	$	(374	)	$	(1,684	)

(1)

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

(2)

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

(3)

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

(4)

Goodwill acquired relates to the acquisitions of Flying Cargo and the controlling interest in an existing joint venture with Swiss Post. See Note 3 for more information.

Our reporting units with significant recorded goodwill include FedEx Express, FedEx Ground, FedEx Freight and FedEx Office (reported in the FedEx Services segment). We evaluated these reporting units during the fourth quarter of 2019. The estimated fair value of each of these reporting units exceeded their carrying values in 2019, and we do not believe that any of these reporting units were impaired as of May 31, 2019.

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 2019, 2018 or 2017.

OTHER INTANGIBLE ASSETS. The summary of our intangible assets and related accumulated amortization at May 31, 2019 and 2018 is as follows (in millions):

	2019							2018
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Gross Carrying Amount		Accumulated Amortization			Net Book Value
Customer relationships	$	685	$	(293	)	$	392	$	676	$	(250	)	$	426
Technology		66		(51	)		15		68		(39	)		29
Trademarks and other		137		(128	)		9		141		(116	)		25
Total	$	888	$	(472	)	$	416	$	885	$	(405	)	$	480

Amortization expense for intangible assets was $82 million in 2019, $87 million in 2018 and $91 million in 2017.

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

2020	$	64
2021		52
2022		45
2023		43
2024		42