American Express 2002 Annual Report Download - page 84

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I82 AXP INOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Income tax provision (benefit) is calculated on a separate return basis; however, benefits from operating losses, loss carrybacks
and tax credits (principally foreign tax credits) recognizable for the company’s consolidated reporting purposes are allocated
based upon the tax sharing agreement among members of the American Express Company consolidated U.S. tax group.
Assets are those that are used or generated exclusively by each industry segment. The adjustments and eliminations required to
determine the consolidated amounts shown above consist principally of the elimination of inter-segment amounts.
Geographic Operations
The following table presents the company’s revenues and pretax income in different geographic regions:
Adjustments
United and
(Millions) States Europe Asia/Pacific All Other Eliminations Consolidated
20 02
Revenues $ 19,286 $ 1,943 $ 1,685 $ 1,586 $ (693) $ 23,807
Pretax income $ 2,983 $ 310 $ 181 $ 253 — $ 3,727
20 01
Revenues $ 17,522 $ 2,556 $ 1,523 $ 1,667 $ (686) $ 22,582
Pretax income $ 1,177 $ 101 $ 159 $ 159 — $ 1,596
2000
Revenues $ 18,529 $ 2,731 $ 1,582 $ 1,629 $ (796) $ 23,675
Pretax income $ 3,049 $ 411 $ 199 $ 249 — $ 3,908
Foreign currency transaction (losses) gains amounted to ($77 million), $16 million and $102 million in 2002, 2001 and 2000,
respectively.
Most services of the company are provided on an integrated worldwide basis. Therefore, it is not practicable to separate pre-
cisely the U.S. and international services. Accordingly, the data in the above table are, in part, based upon internal allocations,
which necessarily involve management’s judgment.
Note 19 RESTRUCTURING CHARGES
In the third and fourth quarters of 2001, the company recorded aggregate restructuring charges of $631 million ($411 million
after-tax). The aggregate restructuring charges consisted of $369 million for severance related to the original plans to eliminate
approximately 12,900 jobs and $262 million of exit costs primarily consisting of $138 million of charges related to the consoli-
dation of real estate facilities, $35 million of asset impairment charges, $26 million recorded in loss provisions, $25 million in
contract termination costs and $24 million of currency translation losses.
During the year ended December 31, 2002, the company adjusted the prior year’s aggregate restructuring charge liability by
taking back into income a net pretax amount of $31 million ($20 million after-tax). This is comprised of the reversal of
severance and related benefits of $62 million, primarily caused by voluntary attrition or redeployment into open jobs of
approximately 4,100 employees whose jobs were eliminated, partially offset by additional net exit costs of $31 million. These
net exit costs include $46 million of additional costs relating to certain domestic and international office facilities, a $20 million
reduction primarily due to revisions to plans relating to certain travel office locations and a $5 million additional charge for
write-offs of building and related costs in facilities affected by the restructuring plan. As of December 31, 2002, the company
had executed all restructuring plans related to the 2001 charges. The severance component of the remaining restructuring
related reserve includes $44 million in severance for employees terminated as part of the 2001 plan and will be substantially
paid out by the end of 2003. In addition, the remaining other component of the restructuring reserve includes $62 million
primarily related to lease commitments on facilities and $22 million of costs associated with travel office closures as a result
of the 2001 plans. The payments on these obligations are spread over the next several years due to lease terminations for which
the company is still obligated to make payments.
Of the $31 million net pretax aggregate adjustment activity recognized in 2002, related to the reserves established in 2001,
$23 million was recorded at TRS and $8 million was recorded at AEB.