Aon Reports Fourth Quarter and Full Year 2011 Results CHICAGO, Feb. 3, 2012 /PRNewswire/ -- Aon Corporation (NYSE: AON) today reported results for the fourth quarter and full year ended December 31, 2011. Net income attributable to Aon stockholders from continuing operations increased 19% to $277 million or $0.82 per share, compared to $232 million or $0.67 per share for the prior year quarter. Net income per share attributable to Aon stockholders from continuing operations, adjusted for certain items, increased 15% to $0.97, compared to $0.84 in the prior year quarter. Certain items that impacted fourth quarter results and comparisons with the prior year quarter are detailed in the "Reconciliation of Non-GAAP Measures - Operating Income and Diluted Earnings per Share" on page 14 of this press release. "Our fourth quarter results reflect 15 percent growth in earnings as highlighted by organic growth across all major businesses and the continued delivery of synergy savings related to Aon Hewitt," said Greg Case, president and chief executive officer. While macro economic conditions remain challenging globally, we are firmly on track to deliver improved growth in 2012, our restructuring programs will deliver cost savings and we have solid financial flexibility that will drive increased shareholder value, as highlighted by the repurchase of $828 million of common stock in 2011. Total revenue increased 3% to $3.0 billion from the prior year quarter driven primarily by a 3% increase in organic revenue. Total operating expenses increased 3%, or $72 million, to $2.6 billion due primarily to a 3% increase in organic revenue, a $21 million increase in intangible asset amortization expense and $18 million of non-cash charges related to the write-off of accounts receivable primarily from the years 2001 to 2004, partially offset by benefits related to the restructuring programs, a $15 million favorable impact from foreign currency exchange rates and a $14 million decline in restructuring costs. Depreciation expense decreased 3%, or $2 million, to $56 million compared to the prior year quarter. Intangible asset amortization expense increased 31%, or $21 million, to $89 million compared to the prior year quarter due primarily to a $22 million increase relating to assets recognized from the merger with Hewitt. Restructuring expenses were $43 million compared to $57 million in the prior year quarter. In the fourth quarter, the Company incurred $25 million of costs under the Aon Hewitt restructuring program and $21 million of costs under the Aon Benfield restructuring program primarily related to workforce reduction. The Company has completed all restructuring activities and incurred 100% of the total costs for the 2007 restructuring program and has incurred approximately 96% of the total costs necessary to deliver the remaining $22 million of restructuring savings for the Aon Benfield restructuring program. An analysis of restructuring-related costs is detailed on page 16 of this release. Restructuring savings in the fourth quarter related to the 2007 restructuring program are estimated at $134 million compared to $128 million in the prior year quarter. Of the restructuring savings in the fourth quarter, $113 million were related to the Risk Solutions segment. Before any potential reinvestment of savings, the 2007 restructuring delivered cumulative expense savings of $536 million in 2011. Restructuring savings in the fourth quarter related to the Aon Benfield restructuring program are estimated at $33 million compared to $27 million in the prior year quarter. Before any potential reinvestment of savings, the Benfield restructuring program is expected to deliver cumulative expense savings of $144 million in 2012 related to the Risk Solutions segment. Restructuring savings in the fourth quarter related to the Aon Hewitt restructuring program are estimated at $43 million compared to $4 million in the prior year quarter. The Company expects to deliver cumulative expense savings of $355 million in 2013 related to the merger with Hewitt, including $280 million related to the restructuring program and $75 million in additional synergy savings from areas such as information technology, procurement and public company costs. Associated with the transfer of the Health and Benefits business effective January 1, 2012, approximately $20 million of the estimated savings under the Aon Hewitt restructuring program will be achieved in the Risk Solutions segment. Currency fluctuations in the fourth quarter had a $0.01 favorable impact on adjusted net income from continuing operations per diluted share when the Company translates prior year quarter results at current quarter foreign exchange rates. Effective tax rate on net income from continuing operations declined to 27.0% in the fourth quarter compared to 32.8% in the prior year quarter. The prior year quarter was unfavorably impacted by certain deferred tax adjustments. The Company anticipates an effective tax rate on net income from continuing operations of approximately 29.0% in 2012. Average diluted shares outstanding decreased to 337.9 million in the fourth quarter compared to 346.7 million in the prior year quarter due primarily to the Company's share repurchase program in 2011. The Company did not repurchase shares during the fourth quarter due to the subsequent announcement of the relocation of the corporate headquarters. The Company has approximately $1.2 billion of common stock remaining under the share repurchase program. Certain noteworthy items impacted operating income and operating margins in the fourth quarter of 2011 and 2010. The fourth quarter segment reviews provided below include supplemental information related to organic revenue, adjusted operating income and operating margin, which is described in detail on the "Reconciliation of Non-GAAP Measures - Organic Revenue" on page 13 and "Reconciliation of Non-GAAP Measures - Operating Income and Diluted Earnings per Share" on page 14 of this press release. millions Fourth Quarter Ended Acquisitions, Commissions, Dec 31, Divestitures, Organic Fees and Other Retail Reinsurance Subtotal Investment Income Risk Solutions total revenue increased 3% to $1.8 billion compared to the prior year quarter due primarily to 3% organic growth in commissions and fees. Retail Brokerage organic revenue increased 2% reflecting revenue growth in both the Americas and International businesses. Americas organic revenue increased 3% primarily as a result of strong management of the renewal book portfolio in Latin America and the U.S. and solid new business growth in both Canada and Latin America. International organic revenue increased 1% driven by strong growth in Asia and emerging markets, partially offset by challenging macro-economic conditions in continental Europe. Reinsurance organic revenue increased 4% due primarily to strong growth in capital market transactions and advisory business and modest growth in global facultative placements. Expenses Compensation and benefits Operating income - adjusted Operating margin - adjusted Compensation and benefits for the fourth quarter increased 5%, or $48 million, compared to the prior year quarter due primarily to 3% organic revenue growth and a $30 million increase in restructuring costs, partially offset by benefits related to the restructuring programs. Other expenses for the fourth quarter increased 9%, or $39 million, primarily due to $18 million of non-cash charges related to the write-off of accounts receivable primarily from the years 2001 to 2004, 3% organic revenue growth and $4 million of integration costs related to the recent acquisition of Glenrand M-I-B. Fourth quarter operating income decreased 8% to $345 million. Adjusting for certain items detailed on page 14 of this press release, operating income increased 3%, or $10 million compared to the prior year quarter, and operating margin decreased 10 basis points to 21.8% due primarily to a 20 basis point unfavorable impact for integration costs related to recent acquisitions. Consulting Services Outsourcing Intersegment HR Solutions total revenue increased 3% to $1.2 billion compared to the prior year quarter due primarily to 3% organic growth in commissions and fees. Organic revenue in Consulting Services increased 2% driven primarily by growth in health and benefits and investment consulting, partially offset by a decline in retirement consulting. Organic revenue in Outsourcing increased 4% due primarily to new client wins in HR business process outsourcing and health care exchanges, partially offset by price compression and client losses in benefits administration. Compensation and benefits for the fourth quarter decreased 6%, or $42 million, from the prior year quarter due primarily to benefits related to the Aon Hewitt restructuring program and a $39 million decline in restructuring costs, partially offset by 3% organic revenue growth and investment in the business. Other expenses increased 8%, or $26 million, from the prior year quarter due primarily to a $22 million increase in intangible asset amortization expense and 3% organic revenue growth, partially offset by benefits related to the Aon Hewitt restructuring program. Fourth quarter operating income increased 55% to $133 million. Adjusting for certain items detailed on page 14 of this press release, operating income decreased 6%, or $10 million, to $147 million and operating margin decreased 120 basis points to 12.4% versus the prior year quarter due primarily to a 190 basis point impact from intangible asset amortization expense, investment in the business and an unfavorable revenue mix shift, partially offset by benefits related to the restructuring program. Risk Solutions HR Solutions Unallocated expenses Operating income from continuing operations before tax Income from continuing operations before tax Unallocated expenses increased $5 million to $43 million including costs for project-related work. Interest income decreased $2 million to $4 million due to lower average interest rates. Interest expense decreased $6 million to $59 million due primarily to a decline in the average rate on total debt outstanding. Other income of $4 million in the fourth quarter includes gains on certain Company owned life insurance plans, partially offset by losses on the Company's ownership in certain private equity securities and other long-term investments. The prior year quarter included a loss of $8 million on extinguishment of debt and losses related to certain long-term investments, partially offset by gains related to the Company's ownership in certain insurance investment funds. Total revenue for 2011 increased 33% to $11.3 billion due to a 29% increase in commissions and fees resulting from acquisitions, primarily Hewitt, net of dispositions, a 2% increase in organic revenue driven by Risk Solutions, and a 2% favorable impact from foreign currency exchange rates. Risk Solutions total revenue increased 6% to $6.8 billion and HR Solutions total revenue increased 113% to $4.5 billion as a result of the merger with Hewitt. Net income attributable to Aon stockholders for 2011 increased 39% to $979 million compared to $706 million for the prior year. Net income attributable to Aon stockholders from continuing operations increased 33% to $975 million compared to $733 million for the prior year. Net income attributable to Aon stockholders, adjusted for certain items, increased 21% to $1.1 billion compared to $929 million for the prior year. Certain items that impacted full year results and comparisons against the prior year are detailed in the "Reconciliation of Non-GAAP Measures - Operating Income and Diluted Earnings per Share" on page 14 of this press release. Net income attributable to Aon stockholders for 2011 increased 21% to $2.87 per share compared to $2.37 per share for the prior year. Net income attributable to Aon stockholders from continuing operations increased 16% to $2.86 per share compared to $2.46 per share for the prior year. Net income attributable to Aon stockholders, adjusted for certain items, increased 5% to $3.29 per share compared to $3.12 per share for the prior year. During 2011, the Company repurchased approximately 16.4 million shares of common stock for $828 million at an average price of $50.39 per share. On January 13, 2012, the Company announced, as an important part of its global growth strategy, it intends to change its jurisdiction of incorporation from Delaware to the U.K. and move its corporate headquarters to London. The proposed transaction requires shareholder approval and is expected to close in the second quarter of 2012 subject to the satisfaction of other conditions. Effective January 1, 2012, the Company moved the global Aon Hewitt Health and Benefits businesses from the HR Solutions segment into the Risk Solutions segment. This move will allow the businesses to benefit from a broader global distribution channel and to promote the Company's deep health and benefits capabilities in data and analytics with clients and insurance carriers. Effective January 1, 2012, the Company will begin reporting adjusted results that exclude the impact of non-cash intangible asset amortization and certain one-time items. Historical selected financial information for the years 2009, 2010 and 2011, that fully reflect the disclosure changes for both the Health and Benefits transfer and for intangible amortization, are provided on pages 19-22 of this press release. Conference Call, Presentation Slides and Webcast Details The Company will host a conference call on Friday, February 3, 2012 at 7:30 a.m. central time. Interested parties can listen to the conference call via a live audio webcast and view the presentation slides at www.aon.com. About Aon Aon Corporation (NYSE: AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 61,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world's best broker, best insurance intermediary, reinsurance intermediary, captives manager and best employee benefits consulting firm by multiple industry sources. Visit http://www.aon.com for more information on Aon. This communication contains certain statements related to future results, or states our intentions, beliefs and expectations or predictions for the future which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from either historical or anticipated results depending on a variety of factors. Potential factors that could impact results include: the planned change in global headquarters and jurisdiction of incorporation (the "Reorganization") may not be approved by Aon's stockholders; changes in circumstances beyond Aon's control, including changes in foreign or domestic laws, regulatory actions, orders or rulings by foreign or domestic governmental entities, Aon's possible removal from the S&P 500 stock index and the possibility that the Class A Ordinary Shares of Aon's U.K. successor will not be eligible for acceptance by DTC may effectively preclude Aon from completing the Reorganization or reduce or eliminate the benefits Aon expects to achieve from the Reorganization; the possibility that the expected efficiencies and cost savings from the merger with Hewitt Associates Inc. ("Hewitt") will not be realized, or will not be realized within the expected time period; the risk that the Aon and Hewitt businesses will not be integrated successfully; general economic conditions in different countries in which Aon does business around the world; changes in global equity and fixed income markets that could affect the return on invested assets; fluctuations in exchange and interest rates that could influence revenue and expense; rating agency actions that could affect Aon's ability to borrow funds; funding of Aon's various pension plans; our ability to implement restructuring initiatives and other initiatives intended to yield cost savings, and the ability to achieve those cost savings; changes in the competitive environment; changes in commercial property and casualty markets and commercial premium rates that could impact revenues; continued compliance with settlement agreements related to compliance with the U.S. Foreign Corrupt Practices Act and non-U.S. anti-corruption laws; the impact of investigations brought by U.S. state attorneys general, U.S. state insurance regulators, U.S. federal prosecutors, U.S. federal regulators, and regulatory authorities in the U.K. and other countries; the impact of class actions and individual lawsuits including client class actions, securities class actions, derivative actions and ERISA class actions; the cost of resolution of other contingent liabilities and loss contingencies, including potential liabilities arising from error and omissions claims against Aon; the extent to which Aon retains existing clients and attracts new businesses; the extent to which Aon manages certain risks created in connection with the various services, including fiduciary and advisory services, among others, that Aon currently provides, or will provide in the future, to clients; the extent to which Aon retains existing employees and attracts new personnel, including potential difficulties in executive succession planning related to our need to attract talent to London if the reorganization is completed; Aon's ability to maintain the security and privacy of confidential information belonging to its clients or their personnel; Aon's ability to innovate and keep pace with rapid and continuing changes in technology, industry standards and client preferences; the impact of, and potential challenges in complying with, legislation and regulation in the jurisdictions in which Aon operates, particularly given the global scope of Aon's businesses and the possibility of conflicting regulatory requirements across jurisdictions in which Aon does business; changes in costs or assumptions associated with our outsourcing and consulting engagements that affect the profitability of these engagements; and the implementation of changes to the methods in which Aon internally process and monitors transactions. Further information concerning Aon and its business, including factors that potentially could materially affect Aon's financial results, is contained in Aon's and, historically, Hewitt's filings with the SEC. See Aon's Annual Report on Form 10-K and Annual Report to Stockholders for the fiscal year ended December 31, 2010 and Quarterly Reports on Form 10-Q for the subsequent fiscal quarters and other public filings with the SEC for a further discussion of these and other risks and uncertainties applicable to our businesses. Aon does not undertake, and expressly disclaims, any duty to update any forward-looking statement whether as a result of new information, future events or changes in their respective expectations, except as required by law. Additional Information This communication is being made in respect of a proposed corporate reorganization involving Aon Corporation ("Aon"), which will result in Aon's stockholders holding Class A Ordinary Shares in a newly-formed public limited company organized under English law. In connection with the proposed reorganization, Aon Global Limited, a subsidiary of Aon (which will become a public limited company) ("Aon UK") has filed with the SEC a registration statement on Form S-4 that included a preliminary proxy statement/prospectus, and each of Aon and Aon UK may be filing with the SEC other documents regarding the proposed reorganization. At the appropriate time, the definitive proxy statement/prospectus regarding the proposed reorganization will be mailed to Aon stockholders. Before making any voting or investment decision, investors and stockholders are urged to read carefully in their entirety the definitive proxy statement/prospectus regarding the proposed reorganization and any other relevant documents filed by either Aon or Aon UK with the SEC when they become available because they will contain important information about the proposed transaction. You may obtain copies of all documents filed with the SEC regarding this transaction, free of charge, at the SEC's website (www.sec.gov) or from Aon by accessing Aon's website at www.aon.com under the heading "Investor Relations" and then under the link "SEC Filings" or by directing a request to 200 E. Randolph Street, Chicago, Illinois 60601, Attention: Investor Relations. Aon and Aon UK and their respective directors and executive officers and certain other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. You can find information about Aon's directors and executive officers in its definitive proxy statement filed with the SEC on April 8, 2011. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available. You can obtain free copies of these documents using the contact information above. Explanation of Non-GAAP Measures This communication includes supplemental information related to organic revenue and several additional measures including expenses, margins and income per share, that exclude the effects of restructuring charges, transaction and integration costs and certain other noteworthy items that affected results for the comparable periods. Organic revenue excludes from reported revenues the impact of foreign exchange, acquisitions, divestitures, transfers between business units, reimbursable expenses and unusual items. The impact of foreign exchange is determined by translating last year's revenue, expense or net income at this year's foreign exchange rates. Reconciliations are provided in the attached schedules. Supplemental organic revenue information and additional measures that exclude the effects of the restructuring charges and certain other items do not affect net income or any other GAAP reported amounts. Management believes that these measures are important to make meaningful period-to-period comparisons and that this supplemental information is helpful to investors. They should be viewed in addition to, not in lieu of, the Company's Consolidated Financial Statements. Industry peers provide similar supplemental information regarding their performance, although they may not make identical adjustments. Media Contact: Scott Malchow David Prosperi Vice President, Investor Relations Vice President, Global Public Relations Aon Corporation Consolidated Statements of Income (Unaudited) millions except per share data Commissions, fees and other Fiduciary investment income Other general expenses Income taxes (1) Income (loss) from discontinued operations before income taxes Income taxes (2) Income (loss) from discontinued operations Less: Net income attributable to the noncontrolling interests Net income attributable to Aon stockholders Net income (loss) attributable to Aon stockholders: Basic net income (loss) per share attributable to Aon stockholders: Diluted net income (loss) per share attributable to Aon stockholders: Weighted average common shares outstanding - diluted (1) Tax rate for continuing operations is 27.0% and 32.8% for the fourth quarters ended December 31, 2011 and 2010, respectively, and 27.3% and 28.4% for the twelve months ended December 31, 2011 and 2010, respectively. (2) Tax rate for discontinued operations is not meaningful for the fourth quarter ended December 31, 2011 and 34.0% for the fourth quarter ended December 2010, and 25.7% and 31.8% for the twelve months ended December 31, 2011 and 2010, respectively. Revenue from Continuing Operations (Unaudited) Organic Revenue (1) Commissions, Fees and Other Total Operating Segments Fiduciary Investment Income (1) Organic revenue excludes the impact of foreign exchange, acquisitions, divestitures, transfers, reimbursable expenses and unusual items. Change in organic revenue, a non-GAAP measure, is reconciled to the corresponding U.S. GAAP percent change in revenue on page 13 of this release. Segments (Unaudited) Total Operating Income (Loss) Unallocated Total operating income Total operating margin Reconciliation of Non-GAAP Measures - Organic Revenue (Unaudited) Less: Currency Impact (1) Less: Acquisitions, Divestitures & Other Organic Revenue (2) Risk Solutions Segment: Retail brokerage Total Retail brokerage Reinsurance brokerage Total Risk Solutions HR Solutions Segment: Consulting services Intrasegment Total HR Solutions Currency impact is determined by translating last year's revenue at this year's foreign exchange rates. Organic revenue excludes the impact of foreign exchange, acquisitions, divestitures, transfers, reimbursable expenses and unusual items. Reconciliation of Non-GAAP Measures - Operating Income and Diluted Earnings Per Share (Unaudited) (1) Fourth Quarter Ended December 31, 2011 Unallocated Income & Expense Operating income (loss) - as reported Legacy receivables write-off Transaction related costs - proxy Hewitt related costs Operating income (loss) - as adjusted Operating margins - as adjusted Fourth Quarter Ended December 31, 2010 Pension adjustment Anti-bribery and compliance initiatives Operating income - as adjusted Interest expense - as adjusted Other (expense) income - as reported Loss on Debt Extinguishment Other (expense) income - as adjusted Income from continuing operations before income taxes - as adjusted Income from continuing operations - as adjusted Less: Net income attributable to noncontrolling interests Income from continuing operations attributable to Aon stockholders - as adjusted Diluted earnings per share from continuing operations - (1) Certain noteworthy items impacting operating income in 2011 and 2010 are described in this schedule. The items shown with the caption "as adjusted" are non-GAAP measures. (2) The effective tax rate for continuing operations is 27.0% and 32.8% for the fourth quarters ended December 31, 2011 and 2010, respectively, and 27.3% and 28.4% for the twelve months ended December 31, 2011 and 2010, respectively. All adjusting items are generally taxed at the effective tax rate. However, the twelve months ended December 31, 2010 U.S. GAAP effective tax rate was adjusted to 28.9% to exclude the impact of the 40% tax rate applied to the a $49 million U.S. pension expense adjustment for prior years recorded in the second quarter 2010. Reconciliation of Non-GAAP Measures - Operating Income and Diluted Earnings Per Share Adjusted for Intangible Asset Amortization (Unaudited) (1) Restructuring Plans (Unaudited) (1) Aon Hewitt Restructuring Plan By Type: Full Year 2010 Total to Date Estimated Total Workforce reduction Lease consolidation Other costs associated with restructuring Total restructuring and related expenses By Segment: (2) Aon Benfield Restructuring Plan Purchase Price Allocation (3) Full Total Operations to Date Lease consolidation (4) 2007 Restructuring Plan Inception to 2010 (1) In the Consolidated Statements of Income, workforce reductions are included in "Compensation and benefits"; lease consolidations, asset impairments, and other costs associated with restructuring are included in "Other general expenses." (2) Costs included in the Risk Solutions segment are associated with the transfer of the Health and Benefits Consulting business from HR Solutions to Risk Solutions effective January 1, 2012 (3) Represents costs associated with the execution of restructuring activity identified at the acquisition date (November 30, 2008). (4) Includes impact of reoccupying previously vacated leased properties. Total restructuring reversal was $28 million, of which $19 million was related to the Aon Benfield Restructuring Plan and $9 million was related to the 2007 Restructuring Plan. Consolidated Statements of Financial Position (Unaudited) Current Assets Fiduciary assets (1) Other current assets Intangible assets, net Fixed assets, net Deferred tax assets Current Liabilities Fiduciary liabilities Short-term debt and current portion of long-term debt Deferred tax liabilities Pension and other post employment liabilities Total Liabilities Common stock-$1 par value Treasury stock at cost Total Aon Stockholders' Equity (1) Includes short-term investments: 2011 - $4,190, 2010 - $3,489. Consolidated Statements of Cash Flows (Unaudited) Adjustments to reconcile net income to cash provided by operating activities: (Gain) loss from sales of businesses, net Depreciation of fixed assets Fiduciary receivables Short term investments - funds held on behalf of clients Restructuring reserves Current income taxes Other assets and liabilities Sales of long-term investments Purchases of long-term investments Net (purchases) sales of short-term investments - non-fiduciary Acquisition of businesses, net of cash acquired Issuance of stock for employee benefit plans Issuance of debt Repayment of debt Cash dividends to stockholders Purchase of shares from non controlling interests Dividends paid to non controlling interests Effect of Exchange Rate Changes on Cash and Cash Equivalents Net (Decrease) Increase in Cash and Cash Equivalents Cash and Cash Equivalents at Beginning of Period Cash and Cash Equivalents at End of Period Reconciliation of Non-GAAP Measures - Historical Organic Revenue (Unaudited) Risk Solutions: Retail Brokerage - Americas - as reported Retail Brokerage - Americas - after H&B transfer Retail Brokerage - International - as reported Retail Brokerage - International - after H&B transfer Retail Brokerage - Worldwide - as reported Retail Brokerage - Worldwide - after H&B transfer Reinsurance Brokerage and Related Services Total Risk Solutions - as reported Total Risk Solutions - after H&B transfer HR Solutions: Consulting Services - as reported Consulting Services - after H&B Transfer Outsourcing - as reported Outsourcing - after H&B transfer Total HR Solutions - as reported Total HR Solutions - after H&B transfer Total Operating Segments Organic Growth in Revenue Segments and Non-GAAP Measures Adjusted (Unaudited) 1st Quarter ended March 31, 2009 2nd Quarter ended June 30, 2009 3rd Quarter ended September 30, 2009 4th Quarter ended December 31, 2009 Full Year ended December 31, 2009 Continuing Segments Reported Commissions, fee and other Health & Benefits Transfer Restated As Disclosed Pension curtailment/adjustment Benfield integration costs Income before income taxes - as adjusted Net income attributable to non-controlling interests Income attributable to Aon stockholders - as adjusted Diluted earnings per share - as adjusted Revenue, as reported Revenue, Heath & Benefits transfer Revenue - as restated Operating income (loss) - Health & Benefits Restructuring charges (credits) - Health & Benefits Amortization of intangible assets - reported Amortization of intangible assets - H&B (1) The effective tax rate was 31.5% for the first quarter ended March 31, 2009, 27.1% for the second quarter ended June 30, 2009, 26.7% for the third quarter ended September 30, 2009, 25.4% for the fourth quarter ended December 31, 2009, and 28.2% for the year ended December 31, 2009. Reconciling items are generally taxed at the effective tax rate. However, the first quarter and full year 2009 U.S. GAAP effective tax rates were adjusted to 29.3% and 27.0%, respectively, to exclude the impact of the 40% tax rate applied to the $83 million U.S. pension expense adjustment for prior years. 1st Quarter ended March 31, 2010 2nd Quarter ended June 30, 2010 3rd Quarter ended September 30, 2010 4th Quarter ended December 31, 2010 Full Year ended December 31, 2010 (1) The effective tax rate was 24.9% for the first quarter ended March 31, 2010, 24.5% for the second quarter ended June 30, 2010, 29.4% for the third quarter ended September 30, 2010, 32.8% for the fourth quarter ended December 31, 2010, and 28.4% for the year ended December 31, 2010. Reconciling items are generally taxed at the effective tax rate. However, the second quarter and full year 2010 U.S. GAAP effective tax rates were adjusted to 26.8% and 28.9%, respectively, to exclude the impact of the 40% tax rate applied to the $49 million U.S. pension expense adjustment for prior years. 1st Quarter ended March 31, 2011 2nd Quarter ended June 30, 2011 3rd Quarter ended September 30, 2011 4th Quarter ended December 31, 2011 Full Year ended December 31, 2011 Other income (expense) - as adjusted (1) The effective tax rate was 29.0% for the first quarter ended March 31, 2011, 24.7% for the second quarter ended June 30, 2011, 28.9% for the third quarter ended September 30, 2011, 27.0% for the fourth quarter ended December 31, 2011, and 27.3% for the year ended December 31, 2011. SOURCE Aon Corporation