Capital One 2008 Annual Report Download - page 150
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132
Note 14
Restructuring
During the second quarter of 2007, the Company announced a broad-based initiative to reduce expenses and improve the competitive
cost position of the Company. Restructuring initiatives leverage the capabilities of recently completed infrastructure projects in several
of the Companys businesses. The scope and timing of the expected cost reductions are the result of an ongoing, comprehensive
review of operations within and across the Companys businesses, which began early in 2007.
The Company anticipates recording charges of approximately $30.0 million in excess of the original $300.0 million pre-tax over the
course of the cost reduction initiative as the Company has extended the initiative due to the continued economic deterioration.
Approximately half of these charges are related to severance benefits, while the remaining charges are associated with items such as
contract and lease terminations and consolidation of facilities and infrastructure.
Restructuring expenses associated with continuing operations were comprised of the following:
Year
ended
December 31,
2008
Year
ended
December 31,
2007
Restructuring expenses:
Employee termination benefits........................................................................................................ $ 85,949 $ 86,714
Occupancy....................................................................................................................................... 2,171 6,628
Supplies and equipment................................................................................................................... 2,473 20,246
Marketing ........................................................................................................................................ 9,052 1,057
Other................................................................................................................................................ 34,819 23,592
Total restructuring expenses............................................................................................................ $ 134,464 $ 138,237
Employee termination benefits include charges for executives and charges for associates of the Company of $18.7 million and $67.2
million, respectively, for the year ended December 31, 2008.
The Company made $100.8 million and $37.2 million in cash payments for restructuring charges during the year ended December 31,
2008 and 2007, respectively, that related to employee termination benefits. Restructuring accrual activity associated with the
Companys cost initiative for the year ended December 31, 2008 and 2007 was as follows:
Year
ended
December 31,
2008
Year
ended
December 31,
2007
Restructuring accrual activity:
Balance, beginning of period.......................................................................................................... $ 67,961
$
Restructuring charges..................................................................................................................... 134,464
138,237
Cash payments................................................................................................................................ (100,823) (37,165)
Noncash write-downs and other adjustments ................................................................................. (8,853) (33,111)
Balance, end of period.................................................................................................................... $ 92,749
$ 67,961
Note 15
Other Non-Interest Expense
The following table represents the components that comprise other non-interest expense:
Year Ended December 31
2008
2007
2006
Professional services........................................................................................................
.
$ 805,902
$ 772,022 $ 681,535
Collections .......................................................................................................................
.
568,552
560,075 525,680
Fraud losses .....................................................................................................................
.
105,627
123,028 103,010
Bankcard association assessments ...................................................................................
.
195,469
181,076 166,512
Core deposit intangible amortization ...............................................................................
.
191,573
212,107 84,078
Other ................................................................................................................................
.
290,751
538,527 325,820
Total.................................................................................................................................
.
$ 2,157,874
$ 2,386,835 $ 1,886,635