Citibank 2009 Annual Report Download - page 174

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10. RESTRUCTURING
In the fourth quarter of 2008, Citigroup recorded a pretax restructuring
expense of $1.581 billion related to the implementation of a Company-wide
re-engineering plan. For the year ended December 31, 2009, Citigroup recorded
a pretax net restructuring release of $110 million composed of a gross charge
of $86 million and a credit of $196 million due to changes in estimates. The
charges related to the 2008 Re-engineering Projects Restructuring Initiative
are reported in Restructuring 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 net releases of $31 million and $3 million in 2008
and 2009, respectively, due to changes in estimates. The charges related to
the 2007 Structural Expense Review Restructuring Initiative are reported in
Restructuring on the Company’s Consolidated Statement of Income.
The primary goals of the 2008 Re-engineering Projects Restructuring
Initiative and the 2007 Structural Expense Review Restructuring Initiative 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 (2)
Contract
termination
costs
Asset
write-
downs (3)
Employee
termination
cost
Total
Citigroup (4)
ASC 712 (1) ASC 420
Total Citigroup (pretax)
Original restructuring charge $ 1,254 $ 79 $ 55 $ 123 $19 $ 1,530
Utilization $ (114) $ (3) $ (2) $(100) $— $ (219)
Balance at December 31, 2008 $ 1,140 $ 76 $ 53 $ 23 $19 $ 1,311
Additional charge 24 29 23 10 — 86
Foreign exchange 14 — 3 (11) (1) 5
Utilization (882) (102) (33) (14) (6) (1,037)
Changes in estimates (175) (3) (5) (5) (8) (196)
Balance at December 31, 2009 $ 121 $ — $ 41 $ 3 $ 4 $ 169
(1) Accounted for in accordance with ASC 712, Compensation – Nonretirement Postemployment Benefits (formerly SFAS No. 112, Employer’s Accounting for Post Employment Benefits (SFAS 112)).
(2) Accounted for in accordance with ASC 420, Exit or Disposal Cost Obligations (formerly SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities (SFAS 146)).
(3) Accounted for in accordance with ASC 360, Property, Plant and Equipment (formerly 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 at December 31, 2008.