American Express 2011 Annual Report Download - page 89

AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16
RESTRUCTURING CHARGES
During 2011, the Company recorded $119 million of
restructuring charges, net of revisions to prior estimates. The
2011 activity primarily relates to $105 million of restructuring
charges the Company recorded throughout the year to further
reduce its operating costs by reorganizing certain operations that
occurred across all business units, markets and staff groups. The
remaining 2011 activity includes $41 million of employee
compensation and lease exit costs related to the facilities
consolidation within the Company’s global servicing network
which were announced in the fourth quarter of 2010. In
addition, the Company expects to record further charges in one
or more quarterly periods during 2012 relating to lease exit costs
for these facility consolidations totaling between $5 million and
$15 million in Corporate & Other. The Company also recorded
revisions to prior estimates of $(27) million for higher employee
redeployments to other positions within the Company and to a
lesser extent modifications to existing initiatives.
During 2010, the Company recorded $96 million of
restructuring charges, net of revisions to 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. As a result of
this initiative, approximately 3,200 positions were to be
eliminated; however, overall staffing levels were expected to
decrease by approximately 400 positions on a net basis as new
employees were 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 revisions to prior estimates of $(27)
million for higher employee redeployments to other positions
within the Company and to a lesser extent modifications to
existing initiatives.
During 2009, the Company recorded $185 million of
restructuring charges, net of revisions to 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 revisions to prior estimates of $(52) million during
2009 for higher employee redeployments to other positions
within the Company, and to a lesser extent 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.
Restructuring charges related to severance obligations are
included in salaries and employee benefits in the Company’s
Consolidated Statements of Income, while charges pertaining to
other exit costs are included in occupancy and equipment,
professional services and other, net expenses.
The following table summarizes the Company’s restructuring reserves activity for the years ended December 31, 2011, 2010 and 2009:
(Millions) Severance(a) Other(b) Total
Liability balance as of December 31, 2008 $ 365 $ 62 $ 427
Restructuring charges, net of $52 in revisions(c) 161 24 185
Payments (287) (45) (332)
Other non-cash(d) 14 (9) 5
Liability balance as of December 31, 2009 253 32 285
Restructuring charges, net of $27 in revisions(c) 98 (2) 96
Payments (141) (14) (155)
Other non-cash(d) (11) – (11)
Liability balance as of December 31, 2010 199 16 215
Restructuring charges, net of $27 in revisions(e) 96 23 119
Payments (121) (8) (129)
Other non-cash(d) (4) (1) (5)
Liability balance as of December 31, 2011(f) $ 170 $ 30 $ 200
(a) Accounted for in accordance with 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) Revisions primarily relate to higher than anticipated redeployments of displaced employees to other positions within the Company.
(d) Consists primarily of foreign exchange impacts. During 2009, the amounts in other also include asset impairments directly related to restructuring activity.
(e) Net revisions of $27 million were recorded in the Company’s reportable operating segments and Corporate & Other as follows: $21 million in USCS, $(2) million in
ICS, $(5) million in GCS, $8 million in GNMS and $5 million in Corporate & Other. These revisions primarily relate to higher employee redeployments to other
positions within the Company, business changes and modifications to existing initiatives.
(f) The majority of cash payments related to the remaining restructuring liabilities are expected to be completed in 2012, and to a lesser extent certain contractual long-
term severance arrangements and lease obligations are expected to be completed in 2013 and 2019, respectively.
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