Summary
This Form 8-K filing from American Express Company (AXP), filed on May 19, 2009, details a significant company-wide reengineering initiative aimed at reducing operating costs in response to an uncertain economic outlook. Management has committed to restructuring activities expected to result in a pre-tax charge of approximately $180 million to $250 million in the second quarter of 2009. This charge is primarily driven by employee severance obligations and other employee-related costs. These reengineering efforts involve the elimination of approximately 4,000 jobs, representing about 6% of the company's global workforce, and are expected to be substantially completed by the end of 2009. The initiative also includes reductions in investment spending for marketing and business development, as well as other operating costs. The company anticipates these actions will yield substantial cost benefits, amounting to approximately $800 million in aggregate during the remainder of 2009, which are in addition to previously announced cost-saving measures.
Key Highlights
- 1American Express announced a company-wide reengineering initiative to reduce operating costs.
- 2A pre-tax restructuring charge of approximately $180 million to $250 million is expected in Q2 2009.
- 3Approximately 4,000 jobs, or 6% of the workforce, are being eliminated.
- 4The restructuring charge includes an estimated $175 million to $210 million for employee severance and related costs.
- 5Additional costs of $5 million to $40 million are expected for lease terminations and other contracts.
- 6The company anticipates aggregate cost benefits of approximately $800 million in 2009 from various reengineering efforts.
- 7These cost benefits include reduced marketing, business development spending, and other operating expenses.