8-K/AFinancial Events

STATE STREET CORP 8-K/A Report, Exit or Disposal Costs (Mar 15, 2016)

Filed March 15, 2016For Securities:STTSTT-PG

Summary

State Street Corporation (STT) filed an 8-K on March 15, 2016, detailing restructuring charges related to its multi-year transformation program, "State Street Beacon." This program aims to achieve operational efficiencies and enhance digital client interfaces. The company anticipates incurring pre-tax restructuring charges of approximately $300 million to $400 million between 2016 and the end of 2020. These charges are primarily comprised of an estimated $250 million to $300 million for severance and benefits related to staff reductions, with a significant portion expected to be a cash expenditure. An additional $50 million to $100 million is allocated for IT application rationalization and real estate adjustments. Notably, State Street expects to record a charge of approximately $100 million in the first quarter of 2016, with roughly $90 million of that allocated to severance and benefits costs.

Key Highlights

  • 1State Street is undertaking a multi-year transformation program called "State Street Beacon" to improve efficiency and digitize client interfaces.
  • 2The program is expected to result in aggregate pre-tax restructuring charges of $300 million to $400 million.
  • 3These charges will be incurred from 2016 through the end of 2020.
  • 4Severance and benefits costs for targeted staff reductions are estimated to be between $250 million and $300 million.
  • 5A substantial portion of the severance costs are expected to involve future cash expenditures.
  • 6An additional $50 million to $100 million is budgeted for IT application rationalization and real estate actions.
  • 7A charge of approximately $100 million is anticipated for the first quarter of 2016, with $90 million of that for severance and benefits.

Frequently Asked Questions

State Street Beacon is a multi-year transformation program initiated by State Street Corporation. Its primary objectives are to achieve greater operational efficiencies and to further digitize the company's interfaces with its clients.

State Street anticipates incurring aggregate pre-tax restructuring charges ranging from approximately $300 million to $400 million. These costs are expected to be recognized over the period from 2016 through December 31, 2020.

The estimated charges include approximately $250 million to $300 million for severance and benefits costs related to targeted staff reductions, a significant portion of which will result in future cash expenditures. An additional estimated $50 million to $100 million is allocated for information technology application rationalization and real estate actions.

State Street expects to record a charge of approximately $100 million in the first quarter of 2016. Of this amount, approximately $90 million is expected to be for severance and benefits costs.