Acquisition and Restructuring Costs

The following table presents acquisition and restructuring costs incurred in the periods indicated:



	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2012		2011		2012		2011
Acquisition costs	$	13	$	19	$	41	$	46
Restructuring charges, net	15		66		45		75
Total acquisition and restructuring costs	$	28	$	85	$	86	$	121

Acquisition Costs

The acquisition costs incurred in the three and nine months ended September 30, 2012 were primarily composed of integration costs incurred in connection with our acquisition of the Intesa securities services business. The acquisition costs incurred in the three and nine months ended September 30, 2011 were composed of integration costs primarily associated with the Intesa securities services business, Mourant International Finance Administration and Bank of Ireland Asset Management acquisitions.

Restructuring Charges

The net restructuring charges incurred in the three and nine months ended September 30, 2012, more fully described below, included $15 million and $48 million, respectively, related to the continuing implementation of our Business Operations and Information Technology Transformation program. The remaining restructuring charge of $(3) million, composed of a net credit adjustment in the nine months ended September 30, 2012, was related to actions initiated by us in 2011 associated with expense control measures, specifically our withdrawal from our fixed-income trading initiative. The restructuring charges incurred in the three and nine months ended September 30, 2011 related solely to the Business Operations and Information Technology Transformation program.

Information with respect to both initiatives (the Business Operations and Information Technology Transformation program and the expense control measures), including charges, staff reductions and aggregate activity in the related accruals, is provided in the two sections that follow.

Business Operations and Information Technology Transformation Program

In November 2010, we announced a global multi-year Business Operations and Information Technology Transformation program. The program includes operational, information technology and targeted cost initiatives, including plans related to reductions in both staff and occupancy costs. To date, we have recorded aggregate pre-tax restructuring charges of $337 million in our consolidated statement of income, composed of $156 million in 2010, $133 million in 2011 and $48 million in the nine months ended September 30, 2012.

The charges related to the program included costs related to severance, benefits and outplacement services, as well as costs which resulted from actions taken to reduce our occupancy costs through consolidation of real estate. The charges also included costs related to information technology, including transition fees associated with the expansion of our use of service providers associated with components of our information technology infrastructure and application maintenance and support.

In 2010, in connection with the program, we initiated the involuntary termination of 1,400 employees, or approximately 5% of our global workforce, which was substantially complete at the end of 2011. In addition, in 2011, in connection with the expansion of our use of service providers associated with our information technology infrastructure and application maintenance and support, we identified approximately 530 employees to be involuntarily terminated as their roles were eliminated. As of September 30, 2012, in connection with the planned aggregate staff reduction of 1,930 employees described above, 1,804 employees had been involuntarily terminated and left State Street, including 472 employees in the nine months ended September 30, 2012.

Expense Control Measures

During the three months ended December 31, 2011, in connection with expense control measures designed to calibrate our expenses to our outlook for our capital markets-facing businesses in 2012, we took two actions. First, we withdrew from our fixed-income trading initiative, under which we traded in fixed-income securities and derivatives as principal with our custody clients and other third-parties that trade in these securities and derivatives. Second, we undertook other targeted staff reductions. As a result of these actions, we recorded aggregate pre-tax restructuring charges of $120 million in 2011, and a net credit adjustment of $(3) million, in the nine months ended September 30, 2012, in our consolidated statement of income.

The charges included costs related to severance, benefits and outplacement services with respect to both the withdrawal from the fixed-income initiative and the other targeted staff reductions. In connection with the employee-related actions, we identified 442 employees to be involuntarily terminated as their roles were eliminated. As of September 30, 2012, 372 employees had been involuntarily terminated and left State Street, including 357 employees in the nine months ended September 30, 2012. The charges also included costs associated with fair-value adjustments to the initiative's trading portfolio resulting from our decision to withdraw from the initiative, as well as costs related to other asset write-downs and contract terminations.

Aggregate Restructuring-Related Accrual Activity

The following table presents aggregate activity associated with accruals that resulted from the charges associated with the Business Operations and Information Technology Transformation program and expense control measures, in the nine months ended September 30, 2012:



(In millions)	Employee- Related Costs			Real Estate Consolidation			Information Technology Costs			Fixed-Income Trading Portfolio			Asset and Other Write-Offs			Total
Balance at December 31, 2011	$	162		$	39		$	33		$	38		$	15		$	287
Accruals for Business Operations and Information Technology Transformation program	21			7			20			—			—			48
Net accruals for expense control measures	1			—			—			(9		)	5			(3		)
Payments and adjustments	(101		)	(6		)	(36		)	(29		)	(6		)	(178		)
Balance at September 30, 2012	$	83		$	40		$	17		$	—		$	14		$	154