Basis of Presentation

The consolidated financial statements include the accounts of Northern Trust Corporation (the Corporation) and its wholly-owned subsidiary, The Northern Trust Company (the Bank), and various other wholly-owned subsidiaries of the Corporation and the Bank. Throughout the notes, the term “Northern Trust” refers to the Corporation and its subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. The consolidated financial statements, as of and for the periods ended March 31, 2017 and 2016, have not been audited by the Corporation’s independent registered public accounting firm. In the opinion of management, all accounting entries and adjustments, including normal recurring accruals, necessary for a fair presentation of the financial position and the results of operations for the interim periods have been made. The accounting and financial reporting policies of Northern Trust conform to U.S. generally accepted accounting principles (GAAP) and reporting practices prescribed by the banking industry. The consolidated statements of income include results of acquired subsidiaries from the dates of acquisition. Certain amounts in prior periods have been reclassified to conform with the current year’s presentation. For a description of Northern Trust’s significant accounting policies, refer to Note 1 of the Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2016.

Change in Presentation. Based on the increase in trade clearing activity taking place outside of the United States, during the year ended December 31, 2016, Northern Trust became a participant in the Clearing House Automated Payment System (CHAPS) in the United Kingdom. In addition, Northern Trust anticipates becoming a participant in the European solution for securities settlements, the Target 2 Securities (T2S) platform, in 2017. As a part of the implementation of these programs, management assessed the nature of Northern Trust’s deposits with non-U.S. central banks and determined that they were similar to the deposits Northern Trust has with the U.S. Federal Reserve System (Federal Reserve). As such, during the year ended December 31, 2016, the presentation of non-U.S. central bank deposits was combined with the presentation of Federal Reserve deposits on a single financial statement line, Federal Reserve and Other Central Bank Deposits, on the face of the consolidated balance sheets. Northern Trust determined that this change in presentation was material to the financial statements and has revised the prior-period presentation of the consolidated balance sheets, statements of cash flows and applicable notes to the financial statements. This change in presentation has no impact on the consolidated statements of income, comprehensive income or changes in stockholders’ equity.

The table below shows the effect of the change in presentation on the Corporation’s consolidated statements of cash flows and related footnotes for the three months ended March 31, 2016.

Table 30: Change in Presentation



Consolidated Statements of Cash Flows	Three Months Ended March 31, 2016
(In Millions)	Previously Reported		Adjustment			Revised
Change in Interest-Bearing Deposits with Banks	$	716.7	$	5.2		$	721.9
Net Change in Federal Reserve Deposits	1,983.2		(1,983.2		)	—
Net Change in Federal Reserve and Other Central Bank Deposits	—		1,987.3			1,987.3
Net Cash Provided by Investing Activities	653.2		9.3			662.5
Effect of Foreign Currency Exchange Rates on Cash	202.9		0.2			203.1
Increase in Cash and Due from Banks	560.4		9.5			569.9
Cash and Due from Banks at Beginning of Year	6,444.6		(26.1		)	6,418.5
Cash and Due from Banks at End of Period	7,005.0		(16.6		)	6,988.4



Footnote 14 Net Interest Income	Three Months Ended March 31, 2016
(In Millions)	Previously Reported		Adjustment			Revised
Interest-Bearing Due from and Deposits with Banks	$	23.7	$	(6.2	)	$	17.5
Federal Reserve Deposits and Other	23.0		(23.0		)	—
Federal Reserve and Other Central Bank Deposits	$	—	$	29.2		$	29.2

Adoption of ASU No. 2016-09. The Corporation adopted ASU No. 2016-09 on July 1, 2016 with an effective date of January 1, 2016, which resulted in a reclassification $3.6 million from additional paid-in capital to provision for income taxes, representing excess tax benefits previously recognized in additional paid-in-capital during the three months ended March 31, 2016.

Adoption of the standard impacted the Corporation’s previously reported quarterly results as follows:



	Three Months Ended
	March 31, 2016
($ In Millions except per share data)	As Reported			As Adjusted
Provision for Income Taxes	$	117.4		$	113.8
Net Income	241.8			245.4
Earnings Allocated to Participating Securities	4.1			4.1
Net Income Applicable to Common Stock	235.9			239.5

Effective Tax Rate	32.7		%	31.7		%

Basic Earnings per Share	1.01			1.03
Diluted Earnings per Share	1.01			1.03
Diluted Weighted Average Shares Outstanding (000s)	229,980			229,798

Additional Paid-In Capital	1,022.1			1,018.5
Retained Earnings	8,394.8			8,398.4