American Express 2001 Annual Report Download - page 56

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axp_54
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Bank’s (AEB) corporate lending activities in parts of Asia,Latin America and Europe as well as $142 million of other charges,includ-
ing asset impairment charges and other exit costs relating to the exit of certain locations and $24 million of currency translation
losses previously recorded in shareholders’ equity. As of December 31, 2001, other liabilities include $460 million for the expected
future cash outlays related to these charges. The pretax charge and employee reductions by operating segment are as follows:
Restructuring Charges Employee
(Dollars in millions) Pretax After-tax Reductions(a)
Travel Related Services $ 414 $ 267 10,900
American Express Financial Advisors 107 70 1,300
American Express Bank 96 65 500
Corporate and Other 14 9 200
Total $ 631 $ 411 12,900
(a)3,300 employees were terminated as of December 31, 2001.
The following table summarizes by category the company’s 2001 restructuring charges, cash payments, balance sheet charge-offs
and the resulting liability balance as of December 31, 2001:
(Millions) Severance Other Total
Restructuring charges $ 369 $ 262 $ 631
Cash paid 37 14 51
Balance sheet charge-offs
—
120 120
Liability balance at December 31, 2001 $ 332 $ 128 $ 460
Note 3 ❚DISASTER RECOVERY CHARGE
As a result of the terrorist attacks on September 11, 2001, the company incurred a $90 million ($59 million after-tax) disaster recov-
ery charge. This charge mainly includes provisions for credit exposures to travel industry service establishments and insurance
claims. $79 million of the pretax charge was incurred by Travel Related Services (TRS), while $11 million was incurred by AEFA.
In addition to the pretax charge, the company waived approximately $8 million of finance charges and late fees.
The company also incurred costs of approximately $58 million since September 11th, which are expected to be covered by insur-
ance and, consequently,did not impact results. These include the cost of duplicate facilities and equipment associated with the relo-
cation of the company’s offices in lower Manhattan and certain other business recovery expenses. Costs associated with the damage
to the company’s offices, extra operating expenses and business interruption losses are still being evaluated. As of January 2002,
approximately $30 million of such costs relating to the company’s portion of the repair of its headquarters building have been iden-
tified. The company expects that a substantial portion of these losses will be covered by insurance.
Note 4 ❚INVESTMENTS
The following is a summary of investments at December 31. Pursuant to the adoption of SFAS No. 133, the company elected to
reclassify its Held-to-Maturity investments to Available-for-Sale as of January 1, 2001.
(Millions) 2001 2000
Available-for-Sale, at fair value $ 42,225 $ 31,052
Held-to-Maturity, at amortized cost
—
8,404
Investment mortgage loans (fair value: 2001, $4,195; 2000, $4,178) 4,024 4,097
Trading 239 194
Total $ 46,488 $ 43,747