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 June 30, 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.

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 reclassifications of $2.3 million and $5.9 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 and six months ended June 30, 2016, respectively.

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



	Three Months Ended						Six Months Ended
	June 30, 2016						June 30, 2016
($ In Millions except per share data)	As Reported			As Adjusted			As Reported			As Adjusted
Provision for Income Taxes	$	134.0		$	131.7		$	251.4		$	245.5
Net Income	260.7			263.0			502.5			508.4
Earnings Allocated to Participating Securities	4.7			4.8			8.8			8.9
Net Income Applicable to Common Stock	254.9			257.2			490.8			496.7

Effective Tax Rate	33.9		%	33.4		%	33.3		%	32.6		%

Basic Earnings per Share	$	1.10		$	1.11		$	2.11		$	2.14
Diluted Earnings per Share	1.09			1.10			2.10			2.13
Diluted Weighted Average Shares Outstanding (000s)	229,197			229,280			229,588			229,539

							As of June 30, 2016
							As Reported			As Adjusted
Additional Paid-In Capital							$	1,040.2		$	1,034.3
Retained Earnings							8,566.3			8,572.2

Definitive Agreement. On February 19, 2017, the Corporation entered into a definitive agreement with UBS AG to acquire UBS Asset Management’s fund administration servicing businesses in Luxembourg and Switzerland for an initial purchase price of approximately $175 million in cash, subject to adjustment. The transaction is expected to close in the second half of 2017, subject to applicable regulatory and fund board approvals and other customary closing conditions.