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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AMERICAN EXPRESS COMPANY
NOTE 16
RESTRUCTURING CHARGES
During 2009, the Company recorded $185 million of
restructuring charges, net of adjustments of previously accrued
amounts due to revisions of prior estimates. The 2009 activity
primarily relates to the $199 million of restructuring charges
the Company recorded in the second quarter to further reduce
its operating costs by downsizing and reorganizing certain
operations. These restructuring activities were for the
elimination of approximately 4,000 positions or about 6
percent of the Company’s total worldwide workforce and
occurred across all business units, markets and staff groups.
Additional restructuring charges of $38 million taken in the
third and fourth quarters of 2009 relate principally to the
reorganization of certain senior leadership positions, as well as
the exit of a business in the Global Network & Merchant
Services (GNMS) segment. The Company also recorded
adjustments of $(52) million during 2009 that primarily relate
to revisions of prior estimates for higher employee
redeployments to other positions within the Company,
business changes and modifications to existing initiatives.
These modifications do not constitute a significant change in
the original restructuring plan from an overall Company
perspective.
During 2008, the Company recorded restructuring charges
of $434 million, net of adjustments of previously accrued
amounts due to revisions of prior estimates. While the
Company’s restructuring activity in the first and third
quarters of 2008 primarily related to exiting certain
international banking businesses, the Company recorded
$410 million of restructuring charges in the fourth quarter of
2008 in order to further reduce the Company’s cost structure.
This restructuring was for the elimination of approximately
7,000 positions or approximately 10 percent of its total
worldwide workforce. These reductions primarily occurred
across business units, markets and staff groups focusing on
management and other positions that do not interact directly
with customers, and related to reorganizing or automating
certain internal processes; outsourcing certain operations to
third parties; and discontinuing or relocating business
activities to other locations. During 2007, the Company
recorded restructuring charges of $49 million, net of
adjustments of previously accrued amounts due to revisions
of prior estimates, primarily related to the reorganizations
within the Company’s business travel, operations, finance,
and technology areas.
Restructuring charges related to severance obligations are
included in salaries and employee benefits and discontinued
operations in the Company’s Consolidated Statements of
Income, while charges pertaining to other exit costs are
included in occupancy and equipment, professional services,
other, net expenses and discontinued operations.
The following table summarizes the Company’s restructuring reserves activity for the years ended December 31, 2009, 2008 and
2007:
(Millions) Severance(a) Other(b) Total
Liability balance as of December 31, 2006 $ 89 $ 4 $ 93
Restructuring charges, net of $17 in adjustments(c) 34 15 49
Payments (61) (6) (67)
Other non-cash (2) (4) (6)
Liability balance as of December 31, 2007 60 9 69
Restructuring charges, net of $10 in adjustments(c)(d) 366 68 434
Payments (63) (13) (76)
Other non-cash 2 (2) —
Liability balance as of December 31, 2008 365 62 427
Restructuring charges, net of $52 in adjustments(e) 161 24 185
Payments (287) (45) (332)
Other non-cash(f) 14 (9) 5
Liability balance as of December 31, 2009(g) $ 253 $ 32 $ 285
(a) Accounted for in accordance with the GAAP governing the accounting for nonretirement postemployment benefits and for costs associated
with exit or disposal activities.
(b) Other primarily includes facility exit, asset impairment and contract termination costs.
(c) Adjustments primarily relate to higher than anticipated redeployments of displaced employees to other positions within the Company.
(d) Includes $17 million related to discontinued operations.
(e) Adjustments of $52 million were recorded in the Company’s reportable operating segments as follows: $6 million in USCS, $28 million in
ICS, $(15) million in GCS, $3 million in GNMS, and $30 million in Corporate & Other. These adjustments primarily relate to higher
employee redeployments to other positions within the Company, business changes and modifications to existing initiatives.
(f) Consists primarily of foreign exchange impacts offset by asset impairments directly related to restructuring activity.
106