Acquisition and Restructuring Costs

The following table presents acquisition and restructuring costs recorded in the years ended December 31:



(In millions)	2012		2011		2010
Acquisition costs, net	$	26	$	16	$	96
Restructuring charges, net	199		253		156
Total acquisition and restructuring costs	$	225	$	269	$	252

Acquisition Costs

Acquisition costs incurred in 2012 totaled $66 million, and were mainly related to integration costs incurred in connection with the 2012 GSAS and 2010 Intesa acquisitions. These acquisition costs were partly offset by an indemnification benefit of $40 million for the assumption of an income tax liability related to the 2010 Intesa acquisition. Acquisition costs of $71 million incurred in 2011 were composed of integration costs primarily associated with the 2011 Bank of Ireland Asset Management, Intesa and 2010 Mourant International Finance Administration and acquisitions. These acquisition costs were partially offset by an indemnification benefit of $55 million for the assumption of an income tax liability related to the Intesa acquisition. The indemnification benefits of $40 million in 2012 and $55 million in 2011 were offset by corresponding income tax expense of $40 million and $55 million, respectively (refer to note 22).

The acquisition costs incurred in 2010 were mainly related to integration costs incurred in connection with the Intesa and Mourant International Finance Administration acquisitions.

Restructuring Charges

The net restructuring charges recorded in 2012, more fully described below, included $67 million related to the continuing implementation of our Business Operations and Information Technology Transformation program. The remaining restructuring charges of $132 million were composed of charges of $133 million related to expense control measures initiated by us in 2012, more fully described below, and a net credit adjustment of $(1) million related to expense control measures initiated in 2011. The restructuring charges of $253 million recorded in 2011 consisted of $133 million related to the Business Operations and Information Technology Transformation program and $120 million associated with expense control measures, including our withdrawal from our fixed-income trading initiative.

Information with respect to these initiatives (the Business Operations and Information Technology Transformation program and the 2011 and 2012 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 $356 million in our consolidated statement of income, composed of $156 million in 2010, $133 million in 2011 and $67 million in 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 completed 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. In 2012, an additional 164 positions were identified for elimination. As of December 31, 2012, in connection with the planned aggregate staff reduction of 2,094 employees described above, 2,029 of such identified employees had been involuntarily terminated, composed of 550 employees in 2010, 782 employees in 2011 and 697 employees in 2012.

Expense Control Measures

In December 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, in 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 $(1) million in 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 December 31, 2012, 378 employees had been involuntarily terminated under this initiative, including 363 employees in 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 asset write-downs and contract terminations.

In December 2012, specifically in connection with expense control measures designed to better align our expenses to our business strategy and related outlook for 2013, we identified additional targeted staff reductions, and recorded aggregate pre-tax restructuring charges of $133 million in 2012 in our consolidated statement of income. The charges, composed of employee-related costs, included costs related to severance, benefits and outplacement services. In connection with this measure, we identified 630 employees to be involuntarily terminated as their roles were eliminated. As of December 31, 2012, 40 employees had been involuntarily terminated under this initiative.

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 the 2011 and 2012 expense control measures:



(In millions)	Employee- Related Costs			Real Estate Consolidation			Information Technology Costs			Fixed-Income Trading Portfolio			Asset and Other Write-Offs			Total
Balance as of December 31, 2011	$	162		$	39		$	33		$	38		$	15		$	287
Accruals for Business Operations and Information Technology Transformation program	27			20			20			—			—			67
Net accruals for 2011 expense control measures	3			—			—			(9		)	5			(1		)
Accruals for 2012 expense control measures	129			—			—			—			4			133
Payments and adjustments	(126		)	(10		)	(48		)	(29		)	(11		)	(224		)
Balance as of December 31, 2012	$	195		$	49		$	5		$	—		$	13		$	262