US Bank 2001 Annual Report Download - page 61

as incurred for groups of employees not speciÑcally of the Company. It may also include charges to realign risk
identiÑed at the time of closing or acquired in business management practices related to certain credit portfolios. In
combinations accounted for as ""poolings''. connection with the merger of Firstar and USBM, balance
Systems conversion and integration costs are recorded sheet restructuring charges of $457.6 million were comprised
as incurred and are associated with the preparation and of a $201.3 million provision associated with the Company's
mailing of numerous customer communications for the integration of certain small business products and
acquisitions and conversion of customer accounts, printing management's decision to discontinue an unsecured small
and distribution of training materials and policy and business product of USBM; $90.0 million of charge-offs to
procedure manuals, outside consulting fees, and other align risk management practices, align charge-off policies and
expenses related to systems conversions and the integration to expedite the Company's transition out of a specific segment
of acquired branches and operations. of the healthcare industry; and $76.6 million of losses related
Asset writedowns and lease terminations represent lease to the sales of two higher credit risk retail loan portfolios of
termination costs and impairment of assets for redundant USBM. Also, the amount included $89.7 million related to the
oÇce space, branches that will be vacated and equipment Company's decision to discontinue a high-yield investment
disposed of as part of the integration plan. These costs are banking business, to restructure a co-branding credit card
recognized in the accounting period that contract relationship of USBM, and for the planned disposition of
terminations occur or the asset becomes impaired and is certain equity investments that no longer align with the long-
abandoned. term strategy of the Company. The alignment of risk
In connection with certain mergers, the Company has management practices included a write-down of several large
made charitable contributions to reaÇrm a commitment to commercial loans originally held separately by both Firstar and
its market or as part of speciÑc conditions necessary to USBM, primarily to allow the Company to exit or reduce
achieve regulatory approval. These contributions were these credits to conform with the credit exposure policy of
funded up front and represent costs that would not have the combined entity.
been incurred had the merger not occurred. Charitable Other merger-related expenses of $108.1 million
contributions are charged to merger and restructuring primarily included $69.1 million and $24.2 million of
expenses or considered in determining the acquisition cost investment banking fees, legal fees and stock registration
at the applicable closing date. fees associated with the merger of Firstar and USBM and
Balance sheet restructurings primarily represent gains or the acquisition of NOVA Corporation, respectively. Also, it
losses incurred by the Company related to the disposal of included $10.0 million of goodwill impairment related to
certain businesses, products, or customer and business the Piper Restructuring and $4.8 million of other costs.
relationships that no longer align with the long-term strategy
The following table presents a summary of activity with respect to the merger and restructuring-related accruals:
Piper
(Dollars in Millions) USBM NOVA Restructuring Mercantile Firstar Other(a) Total
Balance at December 31, 1998 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ Ì $ Ì $ Ì $ Ì $ 125.2 $ 227.3 $ 352.5
Provision charged to operating expenseÏÏÏÏ Ì Ì Ì 417.0 95.9 27.4 540.3
Additions related to purchase acquisitionsÏÏ ÌÌÌÌÌ70.2 70.2
Cash outlaysÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì (182.8) (176.5) (148.5) (507.8)
Noncash write-downs and other ÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì (35.3) (44.6) (60.6) (140.5)
Securities losses to restructure portfolio ÏÏÏ Ì Ì Ì (177.7) Ì Ì (177.7)
Transfer of tax liability(b)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ ÌÌÌÌÌ(33.8) (33.8)
Balance at December 31, 1999 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì 21.2 Ì 82.0 103.2
Provision charged to operating expenseÏÏÏÏ Ì Ì Ì 227.0 52.6 69.1 348.7
Additions related to purchase acquisition ÏÏÏ ÌÌÌÌÌ46.0 46.0
Cash outlaysÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì (197.9) (52.6) (117.1) (367.6)
Noncash write-downs and other ÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì (50.3) Ì (30.2) (80.5)
Balance at December 31, 2000 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ ÌÌÌÌÌ49.8 49.8
Provision charged to operating expenseÏÏÏÏ 1,167.2 1.6 50.7 22.7 3.2 21.0 1,266.4
Additions related to purchase acquisitionsÏÏ Ì 82.2ÌÌÌ7.489.6
Cash outlaysÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (532.5) (32.4) (22.3) (23.8) (3.2) (50.6) (664.8)
Noncash write-downs and other ÏÏÏÏÏÏÏÏÏÏÏ (510.4) (3.0) (10.3) 1.1 Ì (13.0) (535.6)
Balance at December 31, 2001 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 124.3 $ 48.4 $ 18.1 $ Ì $ Ì $ 14.6 $ 205.4
(a) ""Other'' includes the 1997 acquisition of the former U.S. Bancorp of Portland, Oregon by First Bank System, Inc. (""FBS''). FBS was renamed U.S. Bancorp. ""Other'' also includes the 1998
acquisition of Piper Jaffray, Inc., the 1999 acquisitions of Libra Investments, Inc., Bank of Commerce, and Western Bancorp, and the 2000 acquisitions of Peninsula Bank, Oliver-Allen
Corporation, Lyon Financial Services, Inc., Scripps Financial Corporation and 41 branches acquired from First Union. Refer to Note 3 for further information.
(b) The liability relates to certain severance-related items.
U.S. Bancorp 59