American Express 2010 Annual Report Download - page 101

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NOTE 16
RESTRUCTURING CHARGES
During 2010, the Company recorded $96 million of restructuring
charges, net of adjustments of previously accrued amounts due to
revisions of prior estimates. The 2010 activity primarily relates to
a $98 million charge reflecting employee severance obligations to
consolidate certain facilities within the Company’s global
servicing network. In addition, the Company expects to record
further charges in one or more quarterly periods during 2011
relating to these facility consolidations totaling between
$60 million and $80 million. The total expected additional
charges include lease exit (approximately 60 percent) and
employee compensation (approximately 40 percent) costs. It is
estimated that these costs will be recorded to the business units
as follows: USCS (73 percent), International Card Services (ICS)
(5 percent), GCS (12 percent), and Global Network Merchant
Services (GNMS) (10 percent). As a result of this initiative,
approximately 3,200 positions will be eliminated; however,
overall staffing levels are expected to decrease by
approximately 400 positions on a net basis as new employees
are hired at the locations to which work is being transferred. The
remaining 2010 activity includes $25 million of additional
charges comprised of several smaller initiatives which were
more than offset by adjustments of $(27) million that relate to
revisions of prior estimates for higher employee redeployments
to other positions within the Company and modifications to
existing initiatives.
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 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.
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.
99
AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS