8-KFinancial Events

STATE STREET CORP 8-K Report, Exit or Disposal Costs (Dec 3, 2008)

Filed December 3, 2008For Securities:STTSTT-PG

Summary

State Street Corporation (STT) announced on December 3, 2008, a significant cost reduction initiative in response to the challenging market environment. The company plans to reduce its global workforce by approximately 6%, impacting 1,600 to 1,800 positions, primarily between the announcement date and the end of the first quarter of 2009. This reduction is part of a broader strategy to lower operating costs and position the company for long-term growth. In connection with these workforce reductions and other cost-saving measures, State Street anticipates incurring pre-tax charges totaling between $325 million and $350 million. Of this amount, approximately $295 million to $315 million are specifically allocated to severance and benefit costs. The company expects these charges to translate to an after-tax impact of $0.51 to $0.55 per share. The filing also includes forward-looking statements that highlight various risks and uncertainties, including market liquidity, counterparty financial strength, interest rate volatility, and potential regulatory changes.

Key Highlights

  • 1State Street Corporation announced a workforce reduction of approximately 6% (1,600-1,800 employees) by the end of Q1 2009.
  • 2The company expects to incur pre-tax charges of $325 million to $350 million related to these cost reduction efforts.
  • 3Severance and benefit costs are estimated to account for $295 million to $315 million of the total charges.
  • 4The expected after-tax impact per share from these charges is between $0.51 and $0.55.
  • 5The initiative aims to reduce operating costs and support long-term growth amidst current market challenges.
  • 6The filing includes standard forward-looking statements outlining risks such as market liquidity, counterparty risk, and interest rate volatility.

Frequently Asked Questions

State Street is implementing a reduction in force to lower its operating costs and align its organization to better meet the challenges and opportunities presented by the current market environment, aiming to support its long-term growth.

State Street expects to record total pre-tax charges of approximately $325 million to $350 million. This includes an estimated $295 million to $315 million for severance and benefit costs. The after-tax impact is projected to be between $0.51 and $0.55 per share.

The reductions of approximately 1,600 to 1,800 positions are expected to occur principally between December 3, 2008, and the end of the first quarter of 2009.

The filing highlights several risks, including the financial strength of counterparties, liquidity of securities markets, interest rate and market volatility, potential changes in the competitive environment and regulation, the ability to measure fair value of securities, credit quality of investments, litigation risks, and the ability to attract low-cost funding.