Real Estate Charges

9 Months Ended

Sep. 30, 2012

3. Real Estate Charges

During 2010, we performed a comprehensive review of our real estate requirements in New York in connection with our workforce reductions commencing in 2008. As a result, during 2010 we decided to sub-lease over 380,000 square feet in New York (over 75% of this space has been sublet) and largely consolidate our New York-based employees into two office locations from three. We recorded pre-tax real estate charges of $101.7 million in 2010 that reflected the net present value of the difference between the amount of our ongoing contractual operating lease obligations for this space and our estimate of current market rental rates ($76.2 million), as well as the write-off of leasehold improvements, furniture and equipment related to this space ($25.5 million). We periodically review our assumptions and estimates used in recording these charges. During 2011, we reduced our real estate liability by $3.5 million as a result of changes in our estimates. During the first six months of 2012, we recorded pre-tax real estate charges totaling $16.1 million, reflecting $8.8 million resulting from the abandonment of our leased New York City Data Center office space and $7.3 million resulting from a change in estimates relating to previously recorded real estate charges. The New York City Data Center charge consisted of the net present value of the difference between the amount of ongoing contractual operating lease obligations for this space and our estimate of current market rental rates ($7.1 million) and the write-off of leasehold improvements, furniture and equipment related to this space ($1.7 million).

During the third quarter of 2012, in an effort to further reduce our global real estate footprint, we completed a comprehensive review of our worldwide office locations and began implementing a space consolidation plan. As a result, our intention is to sub-lease approximately 510,000 square feet of office space, over 70% of which is additional New York office space, with the remainder being office space in London, Australia and various U.S. locations. We expect that the actions we intend to take going forward to vacate and market space for sublease will result over time in projected real estate charges of $225 million to $250 million, with the bulk of the charges occurring in the third and fourth quarters of 2012. These charges are in addition to the 2010 real estate charge for New York City office space discussed previously, and they will not affect our future quarterly distributions.

During the third quarter of 2012, we recorded pre-tax real estate charges of $168.1 million, reflecting the net present value of the difference between the amount of our ongoing contractual operating lease obligations for this space and our estimate of current market rental rates ($131.8 million), as well as the write-off of leasehold improvements, furniture and equipment related to this space ($31.3 million), and changes in estimates relating to previously recorded real estate charges ($5.0 million). The following table summarizes the activity in the liability account relating to our 2010 and 2012 office space consolidation initiatives for the following periods:

	Nine Months Ended September 30, 2012			Twelve Months Ended December 31, 2011
	(in thousands)

Balance as of beginning of period	$	71,164		$	89,793
Expense incurred (credit)		151,125			(3,506	)
Deferred rent		22,617			2,288
Payments made		(23,188	)		(18,696	)
Interest accretion		826			1,285
Balance as of end of period	$	222,544		$	71,164

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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