8-KFinancial Events

STATE STREET CORP 8-K Report, Exit or Disposal Costs (Dec 1, 2010)

Filed December 1, 2010For Securities:STTSTT-PG

Summary

State Street Corporation (STT) filed an 8-K on December 1, 2010, to announce a significant multi-year program aimed at enhancing service, driving efficiency, and positioning the company for accelerated growth. This initiative involves substantial cost-reduction measures, including a reduction in force impacting approximately 1,400 employees (5% of the workforce) and efforts to lower occupancy costs. In the fourth quarter of 2010, State Street expected to record pre-tax restructuring charges between $160 million and $165 million. These charges are primarily associated with severance and benefit costs for the workforce reduction, as well as real estate consolidation and lease termination initiatives. The company highlighted that these forward-looking statements are subject to various risks and uncertainties, and actual results may differ materially.

Key Highlights

  • 1State Street announced a multi-year program focused on service excellence, innovation, and operational efficiency.
  • 2The program includes targeted cost initiatives, a reduction in force, and efforts to lower occupancy costs.
  • 3Approximately 1,400 employees, representing 5% of the workforce, will be impacted by the reduction in force, to be substantially completed by the end of 2011.
  • 4State Street projected pre-tax restructuring charges of $160-$165 million for the fourth quarter of 2010.
  • 5Severance and benefit costs related to the workforce reduction account for $105-$110 million of the projected charges.
  • 6The remaining $55 million in charges are related to office consolidation and real estate initiatives.
  • 7The company included a comprehensive list of forward-looking statements and risk factors that could impact future results.

Frequently Asked Questions

The primary purpose of the program is to enhance service excellence and innovation, deliver increased efficiencies in its operating model, and position State Street for accelerated growth.

State Street expects to record pre-tax restructuring charges of approximately $160 million to $165 million in the fourth quarter of 2010. This translates to an after-tax impact of approximately $0.23 to $0.24 per diluted share.

Approximately 1,400 employees, which represents 5% of State Street's workforce, will be affected. The first reduction in force is planned for December 2010, and the initiative is expected to be substantially completed by the end of 2011.

The restructuring charges are primarily divided into two components: severance and benefit costs associated with the targeted reduction in force ($105 million to $110 million) and costs related to office consolidation, lease termination, and other real estate initiatives ($55 million).