|
10. Stockholders’ Equity
Common Stock
In 2007, Aon’s Board of Directors increased the Company’s authorized share repurchase program to $4.6 billion. In January 2010, the Company’s Board of Directors authorized a new share repurchase program under which up to $2 billion of common stock may be repurchased (“2010 Share Repurchase Program”). Repurchases under the 2010 Share Repurchase Program commenced in the first quarter 2011, upon conclusion of the prior program. Shares may be repurchased through the open market or in privately negotiated transactions, including structured repurchase programs, from time to time, based on prevailing market conditions, and will be funded from available capital. Any repurchased shares will be available for employee stock plans and for other corporate purposes.
In the third quarter 2011, Aon repurchased 3.8 million shares at an average price per share of $45.61 for a total cost of $175 million. In the first nine months of 2011, Aon repurchased 16.4 million shares at an average price per share of $50.39, for a total cost of $828 million. In the third quarter 2010, Aon did not repurchase any shares. In the first nine months of 2010, Aon repurchased 2.4 million shares for a total cost of $100 million. Since the inception of its share repurchase program in 2005, Aon has repurchased a total of 128.3 million shares for an aggregate cost of $5.4 billion. As of September 30, 2011, Aon was authorized to purchase up to $1.2 billion of additional shares under the 2010 Share Repurchase Program.
In the nine months ended September 30, 2011, Aon issued 0.5 million shares of common stock in relation to the exercise of options issued to former holders of Hewitt options as part of the Hewitt acquisition. In addition, in the nine months ended September 30, 2011 Aon reissued 6.7 million shares of treasury stock for employee benefit programs and 0.2 million shares in connection with employee stock purchase plans. In the nine months ended September 30, 2010, Aon reissued 6.8 million shares of treasury stock for employee benefit programs and 0.3 million shares in connection with employee stock purchase plans.
Participating Securities
Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities, as defined, and therefore, are included in computing basic and diluted earnings per share using the two class method. Certain of Aon’s restricted stock awards allow the holder to receive a non-forfeitable dividend equivalent.
Income from continuing operations, income (loss) from discontinued operations and net income, attributable to participating securities, were as follows (in millions):
|
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
|
|
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
|
|
Income from continuing operations |
|
$ |
3 |
|
$ |
3 |
|
$ |
11 |
|
$ |
11 |
|
|
Income (loss) from discontinued operations |
|
— |
|
— |
|
— |
|
(1 |
) |
|
Net income |
|
$ |
3 |
|
$ |
3 |
|
$ |
11 |
|
$ |
10 |
|
Weighted average shares outstanding are as follows (in millions):
|
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
|
|
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
|
|
Shares for basic earnings per share (1) |
|
332.6 |
|
278.7 |
|
336.7 |
|
277.6 |
|
|
Common stock equivalents |
|
4.3 |
|
3.5 |
|
5.1 |
|
4.3 |
|
|
Shares for diluted earnings per share |
|
336.9 |
|
282.2 |
|
341.8 |
|
281.9 |
|
(1) Includes 5.2 million and 5.8 million of participating securities for the three months ended September 30, 2011 and 2010, respectively, and 5.5 million and 6.1 million of participating securities for the nine months ended September 30, 2011 and 2010, respectively.
Certain common stock equivalents, primarily related to stock options, were not included in the computation of diluted net income per share because their inclusion would have been antidilutive. The number of shares excluded from the calculation was 1.0 million and 5.1 million for the three month periods ended September 30, 2011 and 2010, respectively. The number of shares excluded from the calculation was 0.1 million and 5.0 million for the nine month periods ended September 30, 2011 and 2010, respectively.
Other Comprehensive Income (Loss)
The components of other comprehensive income (loss), net of related tax, are as follows (in millions):
|
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
|
|
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
|
|
Net change in derivative (losses) gains |
|
(9 |
) |
2 |
|
(14 |
) |
(24 |
) |
|
Net foreign currency translation adjustments |
|
(209 |
) |
207 |
|
(12 |
) |
(66 |
) |
|
Net post-retirement benefit obligations |
|
15 |
|
13 |
|
42 |
|
68 |
|
|
Total other comprehensive (loss) income |
|
(203 |
) |
222 |
|
16 |
|
(22 |
) |
|
Less: other comprehensive (loss) income attributable to noncontrolling interests |
|
(1 |
) |
5 |
|
(1 |
) |
16 |
|
|
Other comprehensive (loss) income attributable to Aon stockholders |
|
$ |
(202 |
) |
$ |
217 |
|
$ |
17 |
|
$ |
(38 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The components of Accumulated other comprehensive loss, net of related tax, are as follows (in millions):
|
|
|
September 30,
2011 |
|
December 31,
2010 |
|
|
Net derivative losses |
|
$ |
(38 |
) |
$ |
(24 |
) |
|
Net foreign currency translation adjustments |
|
157 |
|
168 |
|
|
Net post-retirement benefit obligations |
|
(2,019 |
) |
(2,061 |
) |
|
Accumulated other comprehensive loss, net of tax |
|
$ |
(1,900 |
) |
$ |
(1,917 |
) | |