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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16
RESTRUCTURING CHARGES
During 2012, the Company recorded $403 million of
restructuring charges, net of revisions to prior estimates. The
2012 activity primarily relates to $400 million of restructuring
charges recorded in the fourth quarter as the Company
committed to undertake a Company-wide restructuring plan
designed to contain future operating expenses, adapt parts of the
business as more customers transact online or through mobile
channels, and provide the resources for additional growth
initiatives worldwide. This restructuring initiative is expected to
result in the elimination of approximately 5,400 positions. The
remaining 2012 activity includes $19 million for several smaller
initiatives which were offset by revisions to prior estimates of
$(16) million for higher employee redeployments to other
positions within the Company and to a lesser extent
modifications to existing initiatives.
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. 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.
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 and
other, net expenses.
The following table summarizes the Company’s restructuring reserves activity for the years ended December 31, 2012, 2011 and 2010:
(Millions) Severance(a) Other(b) Total
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(c) 96 23 119
Payments (121) (8) (129)
Other non-cash(d) (4) (1) (5)
Liability balance as of December 31, 2011 170 30 200
Restructuring charges, net of $16 in revisions(c)(e) 366 37 403
Payments (124) (9) (133)
Other non-cash(d) ———
Liability balance as of December 31, 2012(f) $ 412 $ 58 $ 470
(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 and contract termination costs.
(c) Revisions primarily relate to higher than anticipated redeployments of displaced employees to other positions within the Company, business changes and
modifications to existing initiatives.
(d) Consists primarily of foreign exchange impacts.
(e) Net revisions of $16 million were recorded in the Company’s reportable operating segments and Corporate & Other as follows: $13 million in USCS, $7 million in
ICS, $(5) million in GCS, $4 million in GNMS and $(3) million in Corporate & Other.
(f) The majority of cash payments related to the remaining restructuring liabilities are expected to be completed in 2014, and to a lesser extent certain contractual long-
term severance arrangements and lease obligations are expected to be completed in 2015 and 2019, respectively.
94