American Express 2004 Annual Report Download - page 123

Note 21 QUARTERLY FINANCIAL DATA (Unaudited)
(Millions, except per share amounts) 2004 2003
Quarters Ended 12/31
(a)
9/30
(b)
6/30 3/31
(c)
12/31
(d)
9/30 6/30 3/31
Revenues $ 7,771 $ 7,202 $ 7,232 $ 6,910 $ 7,038 $ 6,419 $ 6,356 $ 6,023
Pretax income before accounting
change 1,183 1,254 1,266 1,248 1,090 1,064 1,097 996
Net income 896 879 876 794 763 770 762 692
Earnings per common share:
Income before accounting change:
Basic 0.72 0.70 0.69 0.68 0.61 0.60 0.59 0.53
Diluted 0.71 0.69 0.68 0.66 0.60 0.59 0.59 0.53
Net income:
Basic 0.72 0.70 0.69 0.62 0.60 0.60 0.59 0.53
Diluted 0.71 0.69 0.68 0.61 0.59 0.59 0.59 0.53
Cash dividends declared per
common share 0.12 0.12 0.10 0.10 0.10 0.10 0.10 0.08
Common share price:
High 57.05 51.77 52.82 54.50 49.11 47.45 44.84 38.95
Low 50.86 47.70 47.32 47.43 43.53 41.04 32.86 30.90
(a) Fourth quarter 2004 results reflect aggregate restructuring charges of $102 million ($66 million after-tax) for initiatives executed during 2004. In addition,
the Company recognized a $117 million ($76 million after-tax) net gain on the sale of the leasing product line of the Company’s small business financing unit,
American Express Business Finance Corporation.
(b) Third quarter 2004 results reflect a reconciliation of securitization-related cardmember loans, which resulted in a charge of $115 million (net of $32 million
of reserves previously provided) for balances accumulated over the prior five year period as a result of a computational error. The amount of the error was imma-
terial to any of the periods in which it occurred. In addition, third quarter 2004 results reflect a reduction in merchant-related reserves of approximately $60
million that reflect changes made to mitigate loss exposure and ongoing favorable credit experience with merchants.
(c) First quarter 2004 results reflect a $109 million non-cash pretax charge ($71 million after-tax) related to the January 1, 2004 adoption of SOP 03-1.
(d) Fourth quarter 2003 results reflect a $20 million non-cash pretax charge ($13 million after-tax) related to the December 31, 2003 adoption of FIN 46, as revised.
Note 22 RESTRUCTURING CHARGES
During the fourth quarter of 2004, the Company
recorded aggregate restructuring charges of $102 mil-
lion ($66 million after-tax) for initiatives executed during
2004. The aggregate restructuring charges consisted of
$79 million of employee severance obligations and $23
million of other exit costs principally relating to the early
termination of certain real property leases. The charges
reflect expenses in connection with several initiatives
relating principally to the restructuring of the Company’s
business travel operations within TRS, the decision to
sell certain of the operations of AEB in Bangladesh,
Egypt, Luxembourg and Pakistan and the relocation of
certain functions in the Company’s finance operations.
The charges related to severance obligations are
included in human resources and the other exit costs are
included in occupancy and equipment, professional ser-
vices and other expenses in the Company’s Consoli-
dated Statement of Income for the year ended
December 31, 2004. As of December 31, 2004, other
liabilities include $81 million related to the aggregate
restructuring charges recorded for future cash outlays
expected to be paid out prior to the end of 2005. The
following table summarizes by category the Company’s
fourth quarter 2004 restructuring charges, cash pay-
ments and the resulting liability balance as of
December 31, 2004 for each of the Company’s operat-
ing segments:
Restructuring Charges
Cash paid through
December 31, 2004
Liability balance at
December 31, 2004
(Millions) Severance Other Total Severance Other Total Severance Other Total
Travel Related Services $ 46 $ 18 $ 64 $ 10 $ 10 $ 20 $ 36 $ 8 $ 44
American Express
Financial Advisors 3— 3 1— 1 2— 2
American Express Bank 30 5 35 — — — 30 5 35
Total $ 79 $ 23 $ 102 $ 11 $ 10 $ 21 $ 68 $ 13 $ 81
AXP
AR.04
121
Notes to Consolidated Financial Statements