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Aon: Quarter Key Metrics And Highlights

The following excerpt is from the company's SEC filing.

Total revenue was

$2.7 billion

with organic revenue growth of

Operating margin was

, and operating margin, adjusted for certain items,

increased

basis points to

EPS was

, and EPS, adjusted for certain items,

decreased

Repurchased 6.3 million Class A Ordinary Shares for approximately $600 million

Nine Months Key Metrics and Highlights

$8.4 billion

, and operating margin, adjusted for certain items, increased 20 basis points to

Cash flow from operations

$1.1 billion

, and free cash flow

$ 850 million

Repurchased 11.7 million Class A Ordinary Shares for approximately $1.15 billion

LONDON -

- Aon plc (NYSE: AON) today reported results for the three months ended

September 30, 2015

Net income

attributable to Aon shareholders was

$295 million

per share, compared to

$309 million

per share, for the prior year quarter. Net income per share attributable to Aon shareholders, adjusted for certain items,

in the prior year quarter, including a $0.09 per share unfavorable impact on adjusted net income from continuing operations if the Company were to translate prior year quarter results at current quarter foreign exchange rates ("foreign currency translation"). The prior year quarter included a $25 million pre-tax, or $0.07 per share after tax, gain related to the sale of a business. Certain items that impacted

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 12 of this press release.

“In our seasonally weakest quarter, our results reflect organic revenue growth and operating margin expansion across both segments, effective capital management and significant free cash flow generation, despite the impact of unfavorable foreign currency translation and macroeconomic challenges,” said Greg Case, president and chief executive officer. “Driven by our industry-leading portfolio and investments across data and analytics, we expect a strong fourth quarter and finish to the year across each of our key metrics, further positioning the firm for free cash flow generation and shareholder value creation.”

QUARTER FINANCIAL SUMMARY

compared to the prior year quarter driven primarily by a

unfavorable impact from foreign currency translation, partially offset by

organic revenue growth.

Total operating expenses

$2.3 billion

compared to the prior year quarter due primarily to a $162 million favorable impact from foreign currency translation and a $12 million decrease in intangible asset amortization, partially offset by an increase in expense to support

Depreciation expense

$5 million

$56 million

compared to the prior year period.

Intangible asset amortization

$78 million

compared to the prior year quarter, consisting of a

$10 million

in HR Solutions and a

$2 million

in Risk Solutions.

Foreign currency

exchange rates in the

quarter had a $0.09 per share, or $30 million pretax, unfavorable impact (-$25 million in Risk Solutions and -$5 million in HR Solutions) on adjusted net income from continuing operations, if the Company were to translate prior year quarter results at current quarter foreign exchange rates.

Effective tax rate

used in the U.S. GAAP financial statements in the

quarter was

, compared to the prior year quarter of

. After adjusting to exclude the applicable tax impact associated with expenses for legacy litigation incurred in the second quarter, the adjusted effective tax rate for the

declined to 16.0% compared to

in the prior year quarter, due primarily to certain favorable discrete items. This adjustment is discussed in the “Reconciliation of Non-GAAP Measures - Operating Income and Diluted Earnings per Share” on page 12 of this press release.

Average diluted shares outstanding

283.8 million

quarter compared to

296.1 million

in the prior year quarter. The Company repurchased 6.3 million Class A Ordinary Shares for approximately $600 million in the

quarter. As of September 30, 2015, the Company had $4.5 billion of remaining authorization under its share repurchase program.

for the first

months of

$192 million

driven by working capital improvements and a decline in cash paid for pension contributions, taxes, and restructuring.

Free cash flow

, defined as cash flow from operations less capital expenditures, for the first

$146 million

in cash flow from operations, partially offset by a

$46 million

in capital expenditures primarily due to real estate related projects. A reconciliation of free cash flow to cash flow from operations can be found on the “Reconciliation of Non-GAAP Measures - Organic Revenue and Free Cash Flow” on page 11 of this press release.

QUARTER SEGMENT REVIEW

Certain noteworthy items impacted operating income and operating margins in the

quarters of

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 and Free Cash Flow” on page 11 and “Reconciliation of Non-GAAP Measures - Operating Income and Diluted Earnings per Share” on page 12 of this press release.

RISK SOLUTIONS

(millions)

Three Months Ended

Acquisitions,

Commissions,

Fees and Other

Sep 30,

Change

Currency

Impact

Divestitures,

Retail

Reinsurance

Subtotal

Investment Income

Total Revenue

Risk Solutions total revenue

$1.7 billion

compared to the prior year quarter due to an

unfavorable impact from foreign currency translation and a

decrease in commissions and fees related to acquisitions, net of divestitures, partially offset by

organic growth in commissions and fees.

Retail organic revenue increased

reflecting revenue growth in both the Americas and International businesses. Americas organic revenue increased

driven by growth across all region and product lines, including strong new business generation in US Retail and Canada and effective management of the renewal book portfolio in Latin America. International organic revenue increased

driven by growth in New Zealand and across Asia.

Reinsurance organic revenue decreased

compared to the prior year quarter due primarily to an unfavorable market impact globally, a modest decline in facultative placements, and unfavorable timing, partially offset by record new business growth in treaty placements.

Expenses

Compensation and benefits

Other general expenses

Operating income

Operating income - adjusted

Operating margin - adjusted

Compensation and benefits for the

$76 million

, compared to the prior year quarter due primarily to an $84 million favorable impact from foreign currency translation and a $9 million decrease in expenses related to acquisitions, net of divestitures, partially offset by an increase in expense to support

organic growth.

Other general expenses for the

$52 million

, compared to the prior year quarter due primarily to a $46 million favorable impact from foreign currency translation.

quarter operating income

$324 million

compared to the prior year quarter. Adjusting for certain items detailed on page 12 of this press release, operating...


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