Citibank 2008 Annual Report Download - page 156

10. RESTRUCTURING
In the fourth quarter of 2008, Citigroup recorded a pretax restructuring
expense of $1.797 billion pre-tax related to the implementation of a
Company-wide re-engineering plan. This initiative will generate headcount
reductions of approximately 20,600. The charges related to the 2008
Re-engineering Projects Restructuring Initiative are reported in the
Restructuring line on the Company’s Consolidated Statement of Income and
are recorded in each segment.
In 2007, the Company completed a review of its structural expense base in
a Company-wide effort to create a more streamlined organization, reduce
expense growth, and provide investment funds for future growth initiatives.
As a result of this review, a pretax restructuring charge of $1.4 billion was
recorded in Corporate/Other during the first quarter of 2007. Additional net
charges of $151 million were recognized in subsequent quarters throughout
2007 and a net release of $31 million in 2008 due to a change in estimates.
The charges related to the 2007 Structural Expense Review Restructuring
Initiative are reported in the Restructuring line on the Company’s
Consolidated Statement of Income.
The primary goals of the 2007 Structural Expense Review and
Restructuring, and the 2008 Re-engineering Projects and Restructuring
Initiatives were:
• eliminate layers of management/improve workforce management;
• consolidate certain back-office, middle-office and corporate functions;
• increase the use of shared services;
• expand centralized procurement; and
• continue to rationalize operational spending on technology.
The implementation of these restructuring initiatives also caused certain
related premises and equipment assets to become redundant. The remaining
depreciable lives of these assets were shortened, and accelerated depreciation
charges began in the second quarter of 2007 and fourth quarter of 2008 for
the 2007 and 2008 initiatives, respectively, in addition to normal scheduled
depreciation.
The following tables detail the Company’s restructuring reserves.
2008 Re-engineering Projects Restructuring Charges
Severance
In millions of dollars SFAS 112 (1) SFAS 146 (2)
Contract
termination
costs
Asset
write-
downs (3)
Employee
termination
cost
Total
Citigroup (4)
Total Citigroup (pretax)
Original restructuring charge $1,254 $295 $55 $ 123 $19 $1,746
Utilization (114) (3) (2) (100) — (219)
Balance at December 31, 2008 $1,140 $292 $53 $ 23 $19 $1,527
2007 Structural Expense Review Restructuring Charges
Severance
In millions of dollars SFAS 112 (1) SFAS 146 (2)
Contract
termination
costs
Asset
write-
downs (3)
Employee
termination
cost
Total
Citigroup
Total Citigroup (pretax)
Original restructuring charge $ 950 $ 11 $ 25 $ 352 $ 39 $1,377
Additional charge $ 42 $ 96 $ 29 $ 27 $ 11 $ 205
Foreign exchange 19 — 2 — — 21
Utilization (547) (75) (28) (363) (33) (1,046)
Changes in estimates (39) — (6) (1) (8) (54)
Balance at December 31, 2007 $ 425 $ 32 $ 22 $ 15 $ 9 $ 503
Additional charge $ 10 $ 14 $ 43 $ 6 $ — $ 73
Foreign exchange (11) — (4) — — (15)
Utilization (288) (34) (22) (7) (6) (357)
Changes in estimates (93) (2) (2) (4) (3) (104)
Balance at December 31, 2008 $ 43 $ 10 $ 37 $ 10 $ — $ 100
(1) Accounted for in accordance with SFAS No. 112, Employer’s Accounting for Post Employment Benefits (SFAS 112).
(2) Accounted for in accordance with SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities (SFAS 146).
(3) Accounted for in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144).
(4) Total Citigroup charge in the table above does not include a $51 million one-time pension curtailment charge related to this restructuring initiative, which is recorded as part of the Company’s Restructuring charge in
the Consolidated Statement of Income.
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