State Street Increases Fourth-Quarter 2014 Legal Accrual
February 20 2015 - 4:35PM
Business Wire
State Street Corporation (State Street) today announced an
increase from $50 million to $115 million of its fourth-quarter
2014 legal accrual associated with indirect foreign exchange
matters. The increase reflects continued negotiations in connection
with State Street’s intention to seek to resolve some, but not all,
of the outstanding and potential claims arising out of its indirect
foreign exchange client activities, and results in a current total
legal accrual of $185 million regarding these matters.
The table below sets forth State Street’s summary financial
results for the fourth-quarter and full-year ended December 31,
2014, both as announced on January 23, 2015 and as adjusted to
reflect the effects of the $65 million legal accrual increase
described above. These summary results are presented on a
GAAP-basis. The increased legal accrual does not affect State
Street’s previously announced operating-basis fourth-quarter and
full-year 2014 financial results, which are not presented on a
GAAP-basis.
4Q14 4Q14 4Q14
2014 2014 2014
$ in millions, except pershare
data
Aspreviouslyreported
Adjustments
As adjusted
Aspreviouslyreported
Adjustments As adjusted Revenue
$ 2,630 $ —
$
2,630
$ 10,295
$ — $ 10,295
Expenses 1,992
65
2,057 7,762
65 7,827
Earnings per share (EPS)
1.24 (0.12 )
1.12
4.69 (0.12 )
4.57
Return on average commonequity
(ROE)
10.4 %
(1.0
)%
9.4 %
10.1 % (0.3 )%
9.8 % Pre-tax operating
margin 24.1
(2.5 ) 21.6
24.5
(0.6 ) 23.9
State Street’s Annual Report on Form 10-K, to be filed with the
Securities and Exchange Commission on the date hereof, will reflect
the effects of the increased legal accrual and the adjusted
financial results described above. In addition, State Street will
post an updated financial information addendum for the
fourth-quarter and full-year 2014 and an updated slide presentation
providing highlights of its fourth-quarter and full-year 2014
results of operations, in each case reflecting the additional legal
accrual, on the Investor Relations portion of its corporate website
at www.statestreet.com/stockholder.
Our legal accrual with respect to indirect foreign exchange
matters, including the increase described above, reflects our
intention to seek to resolve some, but not all, of the outstanding
and potential claims arising out of our indirect foreign exchange
client activities. We have reported on these matters in our
previous filings with the SEC. With respect to that legal accrual:
(1) we are engaged in discussions with some, but not all, of the
governmental agencies and civil litigants that we have described in
connection with these matters regarding potential settlements of
their outstanding or potential claims; (2) there can be no
assurance that we will reach a settlement in any of these matters,
that the cost of such settlements would not materially exceed such
accrual, or that other claims will not be asserted; and (3) we do
not currently intend to seek to negotiate settlements with respect
to all outstanding and potential claims, and our current efforts,
even if successful, will not address all of our potential material
legal exposure arising out of our indirect foreign exchange client
activities. Accordingly, an adverse outcome with respect to one or
more outstanding or potential claims could have a material adverse
effect on our consolidated results of operations, our consolidated
financial condition or on our reputation for the period in which
the relevant matter or matters are resolved or an accrual or
additional accrual is determined to be required.
Forward-Looking
Statements
This news release contains forward-looking statements as defined
by U.S. securities laws, including statements relating to our
intention to seek to resolve some, but not all, of the outstanding
and potential claims arising out of our indirect foreign exchange
client activities, our legal accruals, our results of operations
and our financial and capital condition. Forward-looking statements
are often, but not always, identified by such forward-looking
terminology as “intend,” “expect,” “objective,” “plan,” “forecast,”
“outlook,” “believe,” “anticipate,” “estimate,” “seek,” “may,”
“will,” “trend,” “target,” “strategy” and “goal,” or similar
statements or variations of such terms. 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 our expectations or beliefs as of any date
subsequent to February 20, 2015.
Other important factors that could cause actual results to
differ materially from those indicated by any forward-looking
statements are set forth in our 2013 Annual Report on Form 10-K and
our subsequent SEC filings, including our 2014 Annual Report on
Form 10-K to be filed with the SEC on the date hereof. We encourage
investors to read these filings, particularly the sections on risk
factors, for additional information with respect to any
forward-looking statements and prior to making any investment
decision. The forward-looking statements contained in this news
release speak only as of the date hereof, February 20, 2015,
and we do not undertake efforts to revise those forward-looking
statements to reflect events after that date.
State Street CorporationInvestor Contact:Anthony Ostler,
617-664-3477orMedia Contact:Carolyn Cichon, 617-664-8672
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