US Bank 2004 Annual Report Download - page 77
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Please find page 77 of the 2004 US Bank annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.The components of the merger and restructuring-related items are shown below:
(Dollars in Millions) USBM NOVA Other (a) Total
2003
Severance and employee-related ************************************ $— $.8 $— $ .8
Systems conversions and integration ********************************* — 25.9 6.9 32.8
Asset write-downs and lease terminations **************************** — 6.8 3.0 9.8
Other merger-related items ***************************************** — — 1.4 1.4
Total 2003******************************************************** $ — $33.5 $11.3 $ 44.8
Noninterest expense *********************************************** $ — $33.5 $12.7 $ 46.2
Balance sheet recognition ****************************************** — — (1.4) (1.4)
Merger-related items — 2003 ************************************ $ — $33.5 $11.3 $ 44.8
2002
Severance and employee-related ************************************ $ 4.1 $ (3.8) $ 9.1 $ 9.4
Systems conversions and integration ********************************* 194.9 29.4 17.3 241.6
Asset write-downs and lease terminations **************************** 104.0 14.2 6.0 124.2
Other merger-related items ***************************************** (34.0) (1.1) 3.5 (31.6)
Total 2002******************************************************** $269.0 $38.7 $35.9 $343.6
Noninterest expense *********************************************** $269.0 $34.9 $17.3 $321.2
Balance sheet recognition ****************************************** — 3.8 18.6 22.4
Merger-related items — 2002 ************************************ $269.0 $38.7 $35.9 $343.6
(a) In 2003 and 2002, ‘‘Other’’ primarily included merger and restructuring-related items pertaining to the Bay View acquisition, State Street Corporate Trust and the Lyon Financial acquisition.
The Company determines merger and restructuring- procedure manuals, outside consulting fees, and other
related items and related accruals based on its integration expenses related to systems conversions and the integration
strategy and formulated plans. These plans are established of acquired branches and operations.
as of the acquisition date and are regularly evaluated during Asset write-downs and lease terminations represent
the integration process. lease termination costs and impairment of assets for
Severance and employee-related charges include the cost redundant office space, branches that will be vacated and
of severance, other benefits and outplacement costs equipment disposed of as part of the integration plan. These
associated with the termination of employees primarily in costs are recognized in the accounting period that contract
branch offices and centralized corporate support and data terminations occur or the asset becomes impaired and is
processing functions. The severance amounts are determined abandoned. In 2002, this category included $38.2 million of
based on the Company’s existing severance pay programs signage write-offs, $26.9 million of software and equipment
and are paid out over a benefit period of up to two years write-offs, $32.0 million of lease and contract cancellations
from the time of termination. In 2002, the Company and $6.9 million of leasehold and other related items
recognized additional severance costs of $13.1 million in associated with the Firstar/USBM merger.
connection with the USBM merger offset by net curtailment Other merger-related items in 2002 of $(31.6) million
and settlement gains of $9.0 million related to changes in primarily represented asset gains and changes to conform
certain non-qualified pension plans. Changes in severance accounting policies implemented at the time of systems
costs for NOVA primarily reflected a change in estimate in conversions related to the Firstar/USBM merger and other
the liability given the mix of employees terminated. acquired entities. During 2002, the Company recognized
Severance and employee-related costs for identified groups asset gains related to the sale of a non-strategic investment
of acquired employees are included in the determination of in a sub-prime lending business of $28.7 million and a
goodwill at closing. Severance and employee-related costs mark-to-market recovery of $10.1 million associated with
are recorded as incurred for groups of employees not the liquidation of U.S. Bancorp Libra’s investment portfolio.
specifically identified at the time of closing or acquired in The adequacy of the accrued liabilities is reviewed
business combinations accounted for as ‘‘poolings.’’ regularly taking into consideration actual and projected
Systems conversions and integration costs are recorded payments. Adjustments are made to increase or decrease
as incurred and are associated with the preparation and these accruals as needed. Reversals of expenses can reflect a
mailing of numerous customer communications for the lower utilization of benefits by affected staff, changes in
acquisitions and conversion of customer accounts, printing initial assumptions as a result of subsequent mergers and
and distribution of training materials and policy and alterations of business plans.
U.S. BANCORP 75