American Express 2013 Annual Report Download - page 95

Download and view the complete annual report

Please find page 95 of the 2013 American Express annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 114

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114

AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16
RESTRUCTURING
From time to time, the Company initiates restructuring programs to
become more efficient and effective, and to support new business
strategies. In connection with these programs, the Company typically
will incur severance and other exit costs.
During 2013, the Company recorded $(4) million of restructuring
charges, consisting of revisions to prior estimates.
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.
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.
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 expenses.
The following table summarizes the Company’s restructuring reserves activity for the years ended December 31, 2013, 2012 and 2011:
(Millions) Severance(a) Other(b) Total
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) 366 37 403
Payments (124) (9) (133)
Liability balance as of December 31, 2012 412 58 470
Restructuring charges, $4 in revisions(c) (7) 3 (4)
Payments (206) (23) (229)
Other non-cash(d) (3) (1) (4)
Liability balance as of December 31, 2013(e) $ 196 $ 37 $ 233
(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) 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.
The following table summarizes the Company’s restructuring charges, net of revisions, by reportable operating segment and Corporate & Other
for the year ended December 31, 2013, and the cumulative amounts relating to the restructuring programs that were in progress during 2013 and
initiated at various dates between 2009 and 2013.
2013
Cumulative Restructuring Expense Incurred To Date On
In-Progress Restructuring Programs
(Millions)
Total Restructuring
Charges, net
revisions Severance Other Total
USCS $ (7) $ 71 $ 6 $ 77
ICS (8) 110 1 111
GCS (4) 204 18 222
GNMS 755 — 55
Corporate & Other 889 68 157(a)
Total $ (4) $ 529 $ 93 $ 622(b)
(a) Corporate & Other includes certain severance and other charges of $147 million related to Company-wide support functions which were not allocated to the
Company’s reportable operating segments, as these were corporate initiatives, which is consistent with how such charges were reported internally.
(b) As of December 31, 2013, the total expenses to be incurred for previously approved restructuring activities that were in progress are not expected to be materially
different than the cumulative expenses incurred to date for these programs.
93