BOSTON--(BUSINESS WIRE)--
State Street Corporation, (NYSE:STT), announced today a plan to reduce
its operating costs and support the company's long-term growth while
aligning the organization to meet the challenges and opportunities
presented by the current market environment.
To reduce its operating cost base, the company is initiating a reduction
in force of approximately 6 percent of its global workforce. The
reductions of approximately 1,600 to 1,800 positions will occur
principally between now and the end of the first quarter of 2009. In
order to maintain customer service, the reductions will largely be
achieved by consolidating middle and senior management ranks. In line
with State Street's global growth, approximately two-thirds of the
reductions will occur within North America with the remainder in Europe
and the Asia-Pacific region.
"It is important for State Street to continue to deliver consistent
earnings growth, particularly during this difficult environment," said
Ronald E. Logue, chairman and CEO of State Street. "Taking this action
increases our ability to do so."
In connection with severance, benefits and other costs, the company
expects to record total pre-tax charges of approximately $325 million to
$350 million or $0.51 to $0.55 per share. The action is expected to
generate approximately $375 million to $400 million in annualized
savings. For 2008, the company continues to expect growth in operating
earnings per share to be approaching the high end of its established
range of 10 to 15 percent; growth in operating revenue to be above the
high end of its 14 to 17 percent range, and operating return on equity
to approach the high end of its 14 to 17 percent range. Operating basis
results for 2008 exclude the effects of the above referenced charge and
other non-operating costs referenced in the company's SEC filings. State
Street continues to expect growth in operating earnings per share for
2009 to be approaching the low end of its 10 to 15 percent range.
State Street Corporation (NYSE: STT) is the world's leading provider of
financial services to institutional investors, including investment
servicing, investment management, and investment research and trading.
With $14 trillion in assets under custody and $1.7 trillion in assets
under management at September 30, 2008, State Street operates in 26
countries and more than 100 geographic markets worldwide. For more
information, visit State Street's website at www.statestreet.com.
USE OF NON-GAAP FINANCIAL MEASURES
State Street reports its financial performance in accordance with
accounting principles generally accepted in the United States, referred
to as "GAAP". State Street also separately measures and compares its
financial performance on an operating basis, which reflects revenue from
non-taxable sources on a fully taxable-equivalent basis and excludes the
impact of revenue and expenses outside of the normal course of its
business. State Street reviews its results on an operating basis, as
these results, in addition to results presented in accordance with GAAP,
support meaningful comparisons from period to period and the analysis of
comparable financial trends with respect to State Street's normal
ongoing business operations. Operating-basis results for 2008 will
exclude the effect of expected charges related to the reduction in force
discussed above and other effects, including, for the first nine months
of 2008 and 2007, those more fully described in our press release
announcing our third quarter 2008 earnings issued on October 15, 2008.
We refer you to that press release for additional information about our
operating-basis results. The press release is available on our website
at www.statestreet.com/stockholder
and in our Current Report on Form 8-K filed with the SEC on October 15,
2008 and available at www.sec.gov.
FORWARD-LOOKING STATEMENTS
This news announcement contains forward-looking statements as defined by
United States securities laws, including statements about State Street's
goals and expectations regarding its business, financial condition,
results of operations and strategies, the financial and market outlook,
governmental and regulatory initiatives and developments and the
business environment. These statements are not guarantees of future
performance, are inherently uncertain, are based on current assumptions
that are difficult to predict and involve a number of risks and
uncertainties. Therefore, actual outcomes and results may differ
materially from what is expressed in those statements, and those
statements should not be relied upon as representing State Street's
expectations or beliefs as of any date subsequent to the date of this
release.
Important factors that may affect future results and outcomes include:
-- the finalization and execution of State Street's plans designed to
reduce its operating costs and support the company's long-term growth
while aligning the organization to meet the challenges and opportunities
presented by the current market environment
-- the financial strength of the counterparties with which State Street or
its clients does business and with whom State Street has investment or
financial exposure;
-- the liquidity of the U.S. and International securities markets,
particularly the markets for fixed-income securities, and the liquidity
requirements of State Street's customers;
-- potential changes to the competitive environment due to the effects of
consolidation, regulation and perceptions of State Street as a suitable
service provider or counterparty;
-- the level and volatility of interest rates, particularly in the U.S.,
Europe and the Asia/Pacific region; the performance and volatility of
securities, credit, currency and other markets in the U.S. and
internationally;
-- economic conditions and monetary and other governmental actions designed
to address the level and volatility of interest rates and the volatility
of securities, currency and other markets in the U.S. and
internationally;
-- State Street's ability to measure the fair value of securities in its
investment securities portfolio and in the asset-backed commercial paper
conduits it sponsors, particularly given current market conditions for
many of those securities;
-- the credit quality and credit agency ratings of the securities in State
Street's investment securities portfolio, a deterioration or downgrade
of which could lead to other-than-temporary impairment of the respective
securities and the recognition of an impairment loss, the maintenance of
the credit agency ratings for State Street's own debt obligations as
well as the level of credibility of credit agency ratings;
-- State Street's ability to attract non-interest bearing deposits and
other low-cost funds;
-- the possibility that changes to accounting rules or in market conditions
or asset performance may require any off-balance sheet activities,
including State Street's asset-backed commercial paper conduits, to be
consolidated into State Street's financial statements, requiring
recognition of associated losses, if any;
-- the results of litigation and similar disputes and, in particular, the
effect that current or potential litigation may have on its reputation
and that of State Street Global Advisors ("SSgA") and State Street's
ability to attract and retain customers; the possibility that the
ultimate costs of the legal exposure associated with certain of SSgA's
actively managed fixed-income strategies may exceed or be below the
level of the related reserve, in view of the uncertainties of the timing
and outcome of litigation, and the amounts involved;
-- the possibility of further developments of the nature that previously
gave rise to the legal exposure associated with certain of SSgA's
actively managed fixed-income and other investment strategies;
-- State Street's ability to integrate acquisitions into its business,
including the acquisition of Investors Financial;
-- the performance and demand for the products and services State Street
offers, including the level and timing of withdrawals from our
collective investment products;
-- the enactment of legislation and changes in regulation and enforcement
that impact State Street and its customers, as well as the effects of
legal and regulatory proceedings, including litigation;
-- State Street's ability to continue to grow revenue, control expenses and
attract the capital necessary to achieve its business goals and comply
with regulatory requirements;
-- State Street's ability to navigate systemic risks and control operating
risks;
-- State Street's ability to obtain quality and timely services from third
parties with which it contracts;
-- trends in the globalization of investment activity and the growth on a
worldwide basis in financial assets and the resulting sovereign and
monetary policy risks;
-- trends in governmental and corporate pension plans and savings rates;
-- changes in accounting standards and practices, including changes in the
interpretation of existing standards, that impact State Street's
consolidated financial statements; and
-- changes in tax legislation and in the interpretation of existing tax
laws by U.S. and non-U.S. tax authorities that impact the amount of
taxes due.
Other important factors that could cause actual results to differ
materially from those indicated by any forward-looking statements are
set forth in State Street's 2007 Annual Report on Form 10-K and its
subsequent SEC filings, including, in particular, its Current Report on
Form 8-K dated October 15, 2008. State Street encourages investors to
read these filings, particularly the sections on Risk Factors, and its
subsequent SEC filings for additional information with respect to any
forward-looking statements and prior to making any investment decision.
The forward-looking statements contained in this press release speak
only as of the date hereof, December 3, 2008, and State Street does not
undertake efforts to revise those forward-looking statements to reflect
events after this date.
Source: State Street Corporation
Contact: State Street Corporation
Media Contacts:
Hannah Grove, 617-664-3377
or
Investors and Analysts:
Kelley MacDonald, 617-664-2888
or
Carolyn Cichon, 617-664-8672