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NEWS RELEASE
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Northern Trust Corporation
50 South LaSalle Street
Chicago, Illinois 60675
Contact: Bev Fleming, Investor Relations
(312) 444-7811 or
Sue Rageas, Public Relations
(312) 444-4279
http://www.northerntrust.com
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FOR IMMEDIATE RELEASE
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NORTHERN TRUST CORPORATION ANNOUNCES EXPENSE REDUCTIONS.
(CHICAGO, June 23, 2003) Today Northern Trust Corporation announced that as part
of an ongoing review of its business and operations it has taken a number of
strategic steps to reduce expenses and better position the Corporation for
improved profitability.
Northern Trust implemented actions that, together with transactions
announced earlier in the quarter, will result in a second quarter net pre-tax
charge to earnings of approximately $51.5 million. This will impact reported
earnings per share by $.14 for the second quarter 2003.
Of this charge, approximately $23.5 million represents severance costs
relating to the elimination of approximately 700 positions, the majority of
which occurred in June. When this staff reduction is fully implemented, and
giving effect to the approximately 690 person reduction associated with the sale
of the assets of Northern Trust Retirement Consulting, L.L.C. (NTRC) and other
previously announced second quarter transactions, total staff is expected to be
less than 8,000 positions, down from 9,336 at March 31, 2003, a 15% reduction.
The remainder of the charge reflects:
. Reduction in the amount of office space leased and owned as a result
of lower staff levels ($16.1 million);
. Standardization of software applications across business units and
replacement of existing software with more cost-effective solutions
($9.5 million); and
. Two other strategic transactions that were previously announced in
April and closed in June; the sale of NTRC assets ($20.2 million loss)
and the sale of the Higgins Road Chicago retail branch ($17.8 million
gain). NTRC had gross revenues of $74.4 million in the year ended
December 31, 2002.
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The strategic planning process that led to these actions also identified
additional reductions in operating expenses, which Northern Trust expects to
achieve over the next 12 months. The expected effect of all of these actions is
to reduce annual operating expenses by $145-$150 million.
William A. Osborn, Chairman and CEO, stated, "We are taking these steps to
allow us to improve profitability and focus our resources where we have clear
competitive advantages and can serve our clients best. We are committed to
delivering value to our shareholders and clients and to operating in a
productive and efficient manner.
Northern Trust remains strategically focused on the asset administration
and asset management business, delivered to our target personal and
institutional clients. We will continue to invest in this core business, through
acquisitions that fit with our key strategies, expansion into new markets and
investment in leading edge technology."
FORWARD-LOOKING STATEMENTS
This news release may be deemed to include forward-looking statements, such
as statements that relate to Northern Trust's financial goals, dividend policy,
expansion and business development plans, business prospects and positioning
with respect to market and pricing trends, strategic initiatives, re-engineering
and outsourcing activities, new business results and outlook, changes in
securities market prices, credit quality including reserve levels, planned
capital expenditures and technology spending, and the effect of extraordinary
events and various other matters (including changes in accounting standards and
interpretations) on Northern Trust's business and results. Forward-looking
statements are typically identified by words or phrases, such as "believe,"
"expect," "anticipate," "intent," "estimate," "may increase," "may fluctuate,"
and similar expressions or future or conditional verbs such as "will," "should,"
"would," and "could." Forward-looking statements are Northern Trust's current
estimates or expectations of future events or future results. Actual results
could differ materially from those indicated by these statements because the
realization of those results is subject to many risks and uncertainties.
Northern Trust Corporation's 2002 Annual Report to Shareholders, including the
section of Management's Discussion and
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FORWARD-LOOKING STATEMENTS (continued)
Analysis captioned "Factors Affecting Future Results," and periodic reports to
the Securities and Exchange Commission contain additional information about
factors that could affect actual results, including certain economic, interest
rate, market and credit risks, competitive conditions, changes in U.S. and
worldwide securities markets, Northern Trust's success in executing various
parts of its business plans, operating and technology risks, including material
systems interruptions or errors, risks associated with regulatory changes, and
uncertainties inherent in the litigation process. All forward-looking statements
included in this news release are based on information available at the time of
the release, and Northern Trust Corporation assumes no obligation to update any
forward-looking statement.
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