11. Restructuring

In May 2010, Legg Mason announced a plan to streamline its business model to drive increased profitability and growth that primarily involves transitioning certain shared services to its investment affiliates which are closer to actual client relationships. This plan involves headcount reductions in operations, technology, and other administrative areas, which may be partially offset by headcount increases at the affiliates, and will enable Legg Mason to eliminate a portion of its corporate office space that was primarily dedicated to operations and technology employees. Legg Mason expects the initiative to be substantially complete by December 31, 2011.

This initiative involves transition-related costs primarily comprised of charges for employee termination benefits and retention incentives during the transition period, recorded in Transition-related compensation in the Consolidated Statements of Income. The transition-related costs also involve other costs, including charges for consolidating leased office space, early contract terminations, asset disposals, and professional fees, recorded in the appropriate operating expense classifications. Total transition-related costs are expected to be in the range of $125,000 to $135,000. Charges for transition-related costs were $15,138 and $11,587 for the three months ended September 30, 2011 and 2010, respectively, and $28,858 and $14,742 for the six months ended September 30, 2011 and 2010, respectively, which primarily represent costs for severance and retention incentives.

The table below presents a summary of changes in the transition-related liability from the initiation of the restructuring plan through September 30, 2011, non-cash charges, such as asset write-offs and stock-based compensation expense, recognized through September 30, 2011, and cumulative charges incurred to date:



	Severance and retention incentives			Other			Total
Balance as of March 31, 2010	$	—		$	—		$	—
Accrued charges	35,487			6,160			41,647
Payments	(12,276		)	(325		)	(12,601		)
Balance as of March 31, 2011	23,211			5,835			29,046
Accrued charges	20,431			3,798			24,229
Payments	(24,177		)	(9,265		)	(33,442		)
Balance as of September 30, 2011	$	19,465		$	368		$	19,833

Non-cash charges ⁽¹⁾
Year ended March 31, 2011	$	9,561		$	3,226		$	12,787
Six months ended September 30, 2011	3,310			1,319			4,629
Total	$	12,871		$	4,545		$	17,416

Cumulative charges incurred as of September 30, 2011	$	68,789		$	14,503		$	83,292


(1)	Includes stock-based compensation expense and write-offs of capitalized costs, primarily for internally-developed software that will no longer be utilized as a result of the initiative.

The estimates for remaining transition-related costs are as follows:



	Minimum		Maximum
Severance and retention incentives	$	15,000	$	22,000
Other costs	26,000		29,000
Total	$	41,000	$	51,000

While management expects the total estimated costs to be within the range disclosed, the nature of the costs may differ from those presented above.