Exhibit 99.2

Arthur J. Gallagher & Co.

Supplemental Quarterly Financial Information

1st Quarter Ended March 31, 2011

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Arthur J. Gallagher & Co.

Supplemental Quarterly Financial Information

1st Quarter Ended March 31, 2011

 

Index				Page
Information on Non-GAAP Measures				1
Brokerage Segment				2 - 5
Risk Management Segment				6 - 9
Combined Brokerage & Risk Management				10 -13
Corporate Segment				14
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Index

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Arthur J. Gallagher & Co.

Information Regarding Non-GAAP Measures

1st Quarter Ended March 31, 2011

In addition to reporting financial results in accordance with GAAP, these spreadsheets provide information regarding EBITDAC, EBITDAC margin, Adjusted EBITDAC, Adjusted EBITDAC margin, Diluted Net Earnings Per Share (As Adjusted) for the Brokerage and Risk Management segments, organic change in commission, fee and supplemental commission revenues, adjusted revenues, expenses and earnings from continuing operations, adjusted compensation expense ratio and adjusted operating expense ratio. These measures are not in accordance with, or an alternative to, the GAAP information provided herein. Gallagher’s management believes that these presentations provide useful information to management, analysts and investors regarding financial and business trends relating to Gallagher’s results of operations and financial condition. Gallagher’s industry peers provide similar supplemental non-GAAP information, although they may not use the same or comparable terminology and may not make identical adjustments. The non-GAAP information provided by Gallagher should be used in addition to, but not as a substitute for, the GAAP information provided.

Adjusted presentation - Gallagher believes that the adjusted presentation of 2008, 2009, 2010 and 2011 statements of earnings, presented on the following pages, provides stockholders and other interested persons with useful information regarding certain financial metrics of Gallagher’s Brokerage and Risk Management segments that will assist such persons in analyzing Gallagher’s operating results as they develop a future earnings outlook for Gallagher. The after tax amounts related to the adjustments were computed using the effective tax rate for each respective period.

 

•

Adjusted revenues, expenses and earnings from continuing operations - Gallagher defines these measures as revenues, expenses and earnings from continuing operations, respectively, each adjusted to exclude gains realized from sales of books of business and supplemental commission timing amounts, workforce related charges, lease termination related charges and litigation settlement amounts, as applicable.

 

•

Adjusted ratios - Compensation expense ratio, and operating expense ratio are defined as adjusted compensation expense and adjusted operating expense, respectively, each divided by adjusted revenues from continuing operations.

Earnings Measures - Gallagher believes that each of EBITDAC, EBITDAC margin, Adjusted EBITDAC, Adjusted EBITDAC margin, and Diluted Net Earnings Per Share (As Adjusted) for the Brokerage and Risk Management segments, as defined below, provide a meaningful representation of its operating performance. Gallagher considers EBITDAC and EBITDAC margin as a way to measure financial performance on an ongoing basis. Adjusted EBITDAC, Adjusted EBITDAC margin and Diluted Net Earnings Per Share (As Adjusted) for the Brokerage and Risk Management segments are meant to reflect the true operating performance of Gallagher’s brokerage business; consequently, they exclude items that could be considered “non-operating” or “non-core” in nature.

 

•

EBITDAC - Gallagher defines this measure as earnings from continuing operations before interest, income taxes, depreciation, amortization and the change in estimated acquisition earnout payables.

 

•

EBITDAC margin - Gallagher defines this measure as EBITDAC divided by total revenues.

 

•

Adjusted EBITDAC - Gallagher defines this measure as EBITDAC adjusted to exclude gains realized from sales of books of business, supplemental commission timing amounts, workforce related charges, lease termination related charges and litigation settlement amounts.

 

•

Adjusted EBITDAC margin - Gallagher defines this measure as Adjusted EBITDAC divided by adjusted revenues.

 

•

Diluted Net Earnings Per Share (As Adjusted) for the Brokerage and Risk Management segments - Gallagher defines this measure as earnings from continuing operations adjusted to exclude the after-tax impact of gains realized from sales of books of business, workforce related charges, lease termination related charges, litigation settlement amounts and the change in estimated acquisition earnout payables, divided by diluted weighted average shares outstanding.

Organic Revenues - Organic change in commission, fee and supplemental commission revenues (change in organic revenues) in excludes the first twelve months of net commission, fee and supplemental commission revenues generated from acquisitions accounted for as purchases and the net commission and fee revenues related to operations disposed of in each year presented. These commissions and fees are excluded from organic revenues in order to determine the change in organic revenues that is associated with the operations that were a part of Gallagher in both the current and prior year. In addition, change in organic revenues exclude the impact of contingent commission revenues and the period-over-period impact of foreign currency translation. The amounts excluded with respect to foreign currency translation are calculated by applying current period foreign exchange rates to the same periods in prior years.

These revenue items are excluded from organic revenues in order to determine a comparable measurement of revenue growth that is associated with the revenue sources that will be continuing in future periods. Gallagher has historically viewed change in organic revenues as an important indicator when assessing and evaluating the performance of its Brokerage and Risk Management segments. Gallagher also believes that using this measure allows financial statement users to measure, analyze and compare the growth from its Brokerage and Risk Management segments in a meaningful and consistent manner.

Reconciliation of Non-GAAP Information Presented to GAAP Measure - These spreadsheets include tabular reconciliations to the most comparable GAAP measures for adjusted revenues, expenses and earnings from continuing operations, EBITDAC, Adjusted EBITDAC, Adjusted EBITDAC margin and Diluted Net Earnings Per Share (As Adjusted) for the Brokerage and Risk Management segments. For organic change in commission, fee and supplemental commission revenues for the Brokerage and Risk Management segments, please see reconciliations in Gallagher’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010 and in its 2011 and 2010 quarterly reports on Form 10-Q.

Information on Non-GAAP Measures

 

Page 1

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Arthur J. Gallagher & Co.

Brokerage Segment Statement of Earnings - As Reported

Quarterly Trend - 2008 to 2011

(Unaudited - in millions except share and per share data)

 

BROKERAGE SEGMENT		2008 Reported																				2009 Reported																				2010 Reported																				2011 Reported
Statement of Earnings		Q1				Q2				Q3				Q4				FY				Q1				Q2				Q3				Q4				FY				Q1				Q2				Q3				Q4				FY				Q1
Commissions		$	183.4			$	232.6			$	226.8			$	211.4			$	854.2			$	198.0			$	249.7			$	237.0			$	228.2			$	912.9			$	204.2			$	257.0			$	251.9			$	244.2			$	957.3			$	225.7
Fees			50.4				63.5				66.0				70.3				250.2				54.8				73.9				75.8				77.6				282.1				54.9				68.5				74.8				76.7				274.9				59.1
Supplemental commissions			6.4				3.3				5.1				5.6				20.4				15.7				5.8				4.5				11.4				37.4				27.9				10.6				10.2				12.1				60.8				13.5
Contingent commissions			11.5				5.0				7.2				1.6				25.3				13.8				6.0				5.8				2.0				27.6				15.5				8.7				9.5				3.1				36.8				16.8
Investment income and realized book gains			6.3				7.8				9.3				14.3				37.7				7.2				4.7				2.7				1.6				16.2				1.9				2.2				4.9				1.8				10.8				2.3
Revenues			258.0				312.2				314.4				303.2				1,187.8				289.5				340.1				325.8				320.8				1,276.2				304.4				347.0				351.3				337.9				1,340.6				317.4
Compensation			167.1				175.8				179.6				184.9				707.4				182.3				199.5				190.3				206.6				778.7				191.5				206.7				205.0				213.9				817.1				210.0
Operating			58.7				56.0				60.5				72.2				247.4				51.1				51.1				54.5				61.3				218.0				53.3				57.0				57.1				56.2				223.6				57.0
Depreciation			3.9				4.7				4.7				4.9				18.2				4.7				4.7				4.7				4.7				18.8				4.6				4.9				5.1				4.9				19.5				4.7
Amortization			8.8				10.1				10.1				14.2				43.2				12.2				13.9				13.7				14.5				54.3				13.7				16.5				14.4				15.2				59.8				15.8
Change in estimated acquisition earnout payables			—				—				—				—				—				—				1.4				1.2				1.5				4.1				1.9				(0.9	)			(3.9	)			0.3				(2.6	)			0.8
Expenses			238.5				246.6				254.9				276.2				1,016.2				250.3				270.6				264.4				288.6				1,073.9				265.0				284.2				277.7				290.5				1,117.4				288.3
Earnings from continuing operations before income taxes			19.5				65.6				59.5				27.0				171.6				39.2				69.5				61.4				32.2				202.3				39.4				62.8				73.6				47.4				223.2				29.1
Provision for income taxes			7.6				26.4				23.4				10.0				67.4				15.1				28.0				24.5				11.0				78.6				15.9				25.4				29.4				17.0				87.7				11.4
Earnings from continuing operations		$	11.9			$	39.2			$	36.1			$	17.0			$	104.2			$	24.1			$	41.5			$	36.9			$	21.2			$	123.7			$	23.5			$	37.4			$	44.2			$	30.4			$	135.5			$	17.7
Diluted earnings from continuing operations per share		$	0.13			$	0.42			$	0.38			$	0.18			$	1.11			$	0.25			$	0.41			$	0.36			$	0.21			$	1.23			$	0.23			$	0.36			$	0.42			$	0.28			$	1.29			$	0.16
Change in diluted earnings from continuing ops per share			30	%			11	%			9	%			-44	%			-3	%			92	%			-2	%			-5	%			17	%			11	%			-8	%			-12	%			17	%			33	%			5	%			-30	%
Change in revenues			11	%			6	%			8	%			2	%			7	%			12	%			9	%			4	%			6	%			7	%			5	%			2	%			8	%			5	%			5	%			4	%
Organic change in commissions and fees			0	%			-1	%			0	%			-5	%			-2	%			-4	%			-2	%			-5	%			-1	%			-3	%			-5	%			-3	%			0	%			0	%			-2	%			2	%
Compensation expense ratio			65	%			56	%			57	%			61	%			60	%			63	%			59	%			58	%			64	%			61	%			63	%			60	%			58	%			63	%			61	%			66	%
Operating expense ratio			23	%			18	%			19	%			24	%			21	%			18	%			15	%			17	%			19	%			17	%			18	%			16	%			16	%			17	%			17	%			18	%
Effective tax rate			39	%			40	%			39	%			37	%			39	%			39	%			40	%			40	%			34	%			39	%			40	%			40	%			40	%			36	%			39	%			39	%
Other Information
Diluted weighted average shares outstanding (000s)			92,898				93,545				94,556				95,900				94,179				98,084				100,717				101,550				102,213				100,625				102,936				104,648				105,736				107,327				105,099				110,315
Common shares issued for acquisitions and earnouts (000s)			280				203				1,061				1,279				2,823				3,650				833				463				632				5,578				521				1,011				679				1,937				4,148				902
Number of acquisitions closed			11				9				8				9				37				3				6				2				4				15				3				5				4				6				18				4
Annualized revenues acquired (in millions)		$	31.0			$	26.5			$	41.5			$	66.6			$	165.6			$	69.7			$	11.1			$	2.9			$	14.8			$	98.5			$	5.6			$	38.6			$	12.5			$	38.4			$	95.1			$	27.2
Headcount (000’s)			5,277				5,282				5,461				5,748								5,914				6,076				5,965				5,890								5,857				6,186				6,068				6,275								6,324
EBITDAC
Earnings from continuing operations		$	11.9			$	39.2			$	36.1			$	17.0			$	104.2			$	24.1			$	41.5			$	36.9			$	21.2			$	123.7			$	23.5			$	37.4			$	44.2			$	30.4			$	135.5			$	17.7
Provision for income taxes			7.6				26.4				23.4				10.0				67.4				15.1				28.0				24.5				11.0				78.6				15.9				25.4				29.4				17.0				87.7				11.4
Depreciation			3.9				4.7				4.7				4.9				18.2				4.7				4.7				4.7				4.7				18.8				4.6				4.9				5.1				4.9				19.5				4.7
Amortization			8.8				10.1				10.1				14.2				43.2				12.2				13.9				13.7				14.5				54.3				13.7				16.5				14.4				15.2				59.8				15.8
Change in estimated acquisition earnout payables			—				—				—				—				—				—				1.4				1.2				1.5				4.1				1.9				(0.9	)			(3.9	)			0.3				(2.6	)			0.8
EBITDAC		$	32.2			$	80.4			$	74.3			$	46.1			$	233.0			$	56.1			$	89.5			$	81.0			$	52.9			$	279.5			$	59.6			$	83.3			$	89.2			$	67.8			$	299.9			$	50.4
EBITDAC margin (3)			12	%			26	%			24	%			15	%			20	%			19	%			26	%			25	%			16	%			22	%			20	%			24	%			25	%			20	%			22	%			16	%
EBITDAC growth (decline)			13	%			11	%			11	%			-24	%			2	%			74	%			11	%			9	%			15	%			20	%			6	%			-7	%			10	%			28	%			7	%			-15	%

Brokerage - As Reported

 

Page 2

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Arthur J. Gallagher & Co.

Non-GAAP Adjustments to Brokerage Segment Statement of Earnings

Quarterly Trend - 2008 to 2011

(Unaudited - in millions except share and per share data)

 

BROKERAGE SEGMENT		2008 Adjustments																				2009 Adjustments																				2010 Adjustments																				2011 Adjust- ments
Statement of Earnings		Q1				Q2				Q3				Q4				FY				Q1				Q2				Q3				Q4				FY				Q1				Q2				Q3				Q4				FY				Q1
Commissions		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—
Fees			—				—				—				—				—				—				—				—				—				—				—				—				—				—				—				—
Supplemental commissions (1)			(1.6	)			3.0				2.4				2.3				6.1				(8.2	)			4.4				5.3				(0.1	)			1.4				(14.7	)			—				—				—				(14.7	)			—
Contingent commissions			—				—				—				—				—				—				—				—				—				—				—				—				—				—				—				—
Investment income and realized book gains (2)			(1.7	)			(3.5	)			(5.7	)			(12.9	)			(23.8	)			(6.1	)			(3.3	)			(1.7	)			(0.5	)			(11.6	)			(0.9	)			(0.6	)			(3.8	)			(0.6	)			(5.9	)			(1.1	)
Revenues			(3.3	)			(0.5	)			(3.3	)			(10.6	)			(17.7	)			(14.3	)			1.1				3.6				(0.6	)			(10.2	)			(15.6	)			(0.6	)			(3.8	)			(0.6	)			(20.6	)			(1.1	)
Compensation (3)			(0.1	)			(0.9	)			—				(2.9	)			(3.9	)			(0.1	)			(0.6	)			(0.8	)			(4.0	)			(5.5	)			(0.4	)			(3.2	)			(1.2	)			(1.5	)			(6.3	)			(1.5	)
Operating (4)			—				—				(1.3	)			(2.3	)			(3.6	)			—				(0.3	)			(0.8	)			(2.5	)			(3.6	)			(0.1	)			(4.0	)			—				—				(4.1	)			—
Depreciation			—				—				—				—				—				—				—				—				—				—				—				—				—				—				—				—
Amortization			—				—				—				(2.7	)			(2.7	)			—				—				—				—				—				—				(2.3	)			—				—				(2.3	)			—
Change in estimated acquisition earnout payables (5)			—				—				—				—				—				—				—				—				—				—				(0.5	)			2.5				5.6				1.2				8.8				1.2
Expenses			(0.1	)			(0.9	)			(1.3	)			(7.9	)			(10.2	)			(0.1	)			(0.9	)			(1.6	)			(6.5	)			(9.1	)			(1.0	)			(7.0	)			4.4				(0.3	)			(3.9	)			(0.3	)
Earnings from continuing operations before income taxes			(3.2	)			0.4				(2.0	)			(2.7	)			(7.5	)			(14.2	)			2.0				5.2				5.9				(1.1	)			(14.6	)			6.4				(8.2	)			(0.3	)			(16.7	)			(0.8	)
Provision for income taxes			(1.2	)			0.2				(0.8	)			(1.0	)			(2.8	)			(5.5	)			0.8				2.1				2.0				(0.6	)			(5.9	)			2.6				(3.3	)			(0.1	)			(6.7	)			(0.3	)
Earnings from continuing operations		$	(2.0	)		$	0.2			$	(1.2	)		$	(1.7	)		$	(4.7	)		$	(8.7	)		$	1.2			$	3.1			$	3.9			$	(0.5	)		$	(8.7	)		$	3.8			$	(4.9	)		$	(0.2	)		$	(10.0	)		$	(0.5	)
Diluted earnings from continuing operations per share		$	(0.02	)		$	—			$	(0.01	)		$	(0.02	)		$	(0.05	)		$	(0.09	)		$	0.01			$	0.03			$	0.04			$	(0.01	)		$	(0.09	)		$	0.04			$	(0.05	)		$	—			$	(0.10	)		$	—
EBITDAC
Earnings from continuing operations		$	(2.0	)		$	0.2			$	(1.2	)		$	(1.7	)		$	(4.7	)		$	(8.7	)		$	1.2			$	3.1			$	3.9			$	(0.5	)		$	(8.7	)		$	3.8			$	(4.9	)		$	(0.2	)		$	(10.0	)		$	(0.5	)
Provision for income taxes			(1.2	)			0.2				(0.8	)			(1.0	)			(2.8	)			(5.5	)			0.8				2.1				2.0				(0.6	)			(5.9	)			2.6				(3.3	)			(0.1	)			(6.7	)			(0.3	)
Depreciation			—				—				—				—				—				—				—				—				—				—				—				—				—				—				—				—
Amortization			—				—				—				(2.7	)			(2.7	)			—				—				—				—				—				—				(2.3	)			—				—				(2.3	)			—
Change in estimated acquisition earnout payables			—				—				—				—				—				—				—				—				—				—				(0.5	)			2.5				5.6				1.2				8.8				1.2
EBITDAC		$	(3.2	)		$	0.4			$	(2.0	)		$	(5.4	)		$	(10.2	)		$	(14.2	)		$	2.0			$	5.2			$	5.9			$	(1.1	)		$	(15.1	)		$	6.6			$	(2.6	)		$	0.9			$	(10.2	)		$	0.4

 

(1)

As previously disclosed, many insurance carriers now provide sufficient information for Gallagher to recognize supplemental commission revenues on a quarterly basis for a majority of its 2011 and 2010 supplemental commission arrangements. However, in 2009 and prior years, most carriers only provided this information on an annual basis after the end of the contract period. Accordingly, the 2010 amounts reported in the table include both a full year of 2009 supplemental commission revenues and 2010 supplemental commission revenues that were recognized by Gallagher on a quarterly basis. This situation should not occur again in 2011 and later years as Gallagher anticipates that most of the carriers will continue to provide information on a quarterly basis sufficient to allow recognition of revenues in a similar manner in future quarters.

(2)	To remove realized gains from sales of books of business.

(3)	To eliminate severance charges.

(4)	To eliminate lease termination and abandonment charges.

(5)	To remove adjustments to the estimated acquisition earnout payables.

See information regarding Non-GAAP Financial Measures on Page 1 of these exhibits.

Brokerage - Adjustments

 

Page 3

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Arthur J. Gallagher & Co.

Non-GAAP Brokerage Segment Statement of Earnings - As Adjusted

Quarterly Trend - 2008 to 2011

(Unaudited - in millions except share and per share data)

 

BROKERAGE SEGMENT		2008 Adjusted																				2009 Adjusted																				2010 Adjusted																				2011 Adjusted
Statement of Earnings		Q1				Q2				Q3				Q4				FY				Q1				Q2				Q3				Q4				FY				Q1				Q2				Q3				Q4				FY				Q1
Commissions		$	183.4			$	232.6			$	226.8			$	211.4			$	854.2			$	198.0			$	249.7			$	237.0			$	228.2			$	912.9			$	204.2			$	257.0			$	251.9			$	244.2			$	957.3			$	225.7
Fees			50.4				63.5				66.0				70.3				250.2				54.8				73.9				75.8				77.6				282.1				54.9				68.5				74.8				76.7				274.9				59.1
Supplemental commissions			4.8				6.3				7.5				7.9				26.5				7.5				10.2				9.8				11.3				38.8				13.2				10.6				10.2				12.1				46.1				13.5
Contingent commissions			11.5				5.0				7.2				1.6				25.3				13.8				6.0				5.8				2.0				27.6				15.5				8.7				9.5				3.1				36.8				16.8
Investment income and realized book gains			4.6				4.3				3.6				1.4				13.9				1.1				1.4				1.0				1.1				4.6				1.0				1.6				1.1				1.2				4.9				1.2
Revenues			254.7				311.7				311.1				292.6				1,170.1				275.2				341.2				329.4				320.2				1,266.0				288.8				346.4				347.5				337.3				1,320.0				316.3
Compensation			167.0				174.9				179.6				182.0				703.5				182.2				198.9				189.5				202.6				773.2				191.1				203.5				203.8				212.4				810.8				208.5
Operating			58.7				56.0				59.2				69.9				243.8				51.1				50.8				53.7				58.8				214.4				53.2				53.0				57.1				56.2				219.5				57.0
Depreciation			3.9				4.7				4.7				4.9				18.2				4.7				4.7				4.7				4.7				18.8				4.6				4.9				5.1				4.9				19.5				4.7
Amortization			8.8				10.1				10.1				11.5				40.5				12.2				13.9				13.7				14.5				54.3				13.7				14.2				14.4				15.2				57.5				15.8
Change in estimated acquisition earnout payables			—				—				—				—				—				—				1.4				1.2				1.5				4.1				1.4				1.6				1.7				1.5				6.2				2.0
Expenses			238.4				245.7				253.6				268.3				1,006.0				250.2				269.7				262.8				282.1				1,064.8				264.0				277.2				282.1				290.2				1,113.5				288.0
Earnings from continuing operations before income taxes			16.3				66.0				57.5				24.3				164.1				25.0				71.5				66.6				38.1				201.2				24.8				69.2				65.4				47.1				206.5				28.3
Provision for income taxes			6.4				26.6				22.6				9.0				64.6				9.6				28.8				26.6				13.0				78.0				10.0				28.0				26.1				16.9				81.0				11.1
Earnings from continuing operations		$	9.9			$	39.4			$	34.9			$	15.3			$	99.5			$	15.4			$	42.7			$	40.0			$	25.1			$	123.2			$	14.8			$	41.2			$	39.3			$	30.2			$	125.5			$	17.2
Diluted earnings from continuing operations per share		$	0.11			$	0.42			$	0.37			$	0.16			$	1.06			$	0.16			$	0.42			$	0.39			$	0.25			$	1.22			$	0.14			$	0.39			$	0.37			$	0.28			$	1.19			$	0.16
Change in diluted earnings from continuing ops per share			10	%			14	%			3	%			-47	%			-6	%			45	%			0	%			5	%			56	%			15	%			-13	%			-7	%			-5	%			12	%			-2	%			14	%
Change in revenues			9	%			6	%			7	%			-1	%			5	%			8	%			9	%			6	%			9	%			8	%			5	%			2	%			5	%			5	%			4	%			10	%
Organic change in commissions and fees			0	%			-1	%			0	%			-5	%			-2	%			-4	%			-2	%			-5	%			-1	%			-3	%			-5	%			-3	%			0	%			0	%			-2	%			2	%
Compensation expense ratio			66	%			56	%			58	%			62	%			60	%			66	%			58	%			58	%			63	%			61	%			66	%			59	%			59	%			63	%			61	%			66	%
Operating expense ratio			23	%			18	%			19	%			24	%			21	%			19	%			15	%			16	%			18	%			17	%			18	%			15	%			16	%			17	%			17	%			18	%
Effective tax rate			39	%			40	%			39	%			37	%			39	%			38	%			40	%			40	%			34	%			39	%			40	%			40	%			40	%			36	%			39	%			39	%
Other Information
Diluted weighted average shares outstanding (000s)			92,898				93,545				94,556				95,900				94,179				98,084				100,717				101,550				102,213				100,625				102,936				104,648				105,736				107,327				105,099				110,315
Common shares issued for acquisitions and earnouts (000s)			280				203				1,061				1,279				2,823				3,650				833				463				632				5,578				521				1,011				679				1,937				4,148				902
Number of acquisitions closed			11				9				8				9				37				3				6				2				4				15				3				5				4				6				18				4
Annualized revenues acquired (in millions)		$	31.0			$	26.5			$	41.5			$	66.6			$	165.6			$	69.7			$	11.1			$	2.9			$	14.8			$	98.5			$	5.6			$	38.6			$	12.5			$	38.4			$	95.1			$	27.2
Headcount (000’s)			5,277				5,282				5,461				5,748								5,914				6,076				5,965				5,890								5,857				6,186				6,068				6,275								6,324
EBITDAC
Earnings from continuing operations		$	9.9			$	39.4			$	34.9			$	15.3			$	99.5			$	15.4			$	42.7			$	40.0			$	25.1			$	123.2			$	14.8			$	41.2			$	39.3			$	30.2			$	125.5			$	17.2
Provision for income taxes			6.4				26.6				22.6				9.0				64.6				9.6				28.8				26.6				13.0				78.0				10.0				28.0				26.1				16.9				81.0				11.1
Depreciation			3.9				4.7				4.7				4.9				18.2				4.7				4.7				4.7				4.7				18.8				4.6				4.9				5.1				4.9				19.5				4.7
Amortization			8.8				10.1				10.1				11.5				40.5				12.2				13.9				13.7				14.5				54.3				13.7				14.2				14.4				15.2				57.5				15.8
Change in estimated acquisition earnout payables			—				—				—				—				—				—				1.4				1.2				1.5				4.1				1.4				1.6				1.7				1.5				6.2				2.0
EBITDAC		$	29.0			$	80.8			$	72.3			$	40.7			$	222.8			$	41.9			$	91.5			$	86.2			$	58.8			$	278.4			$	44.5			$	89.9			$	86.6			$	68.7			$	289.7			$	50.8
EBITDAC margin (3)			11	%			26	%			23	%			14	%			19	%			15	%			27	%			26	%			18	%			22	%			15	%			26	%			25	%			20	%			22	%			16	%
EBITDAC growth (decline)			6	%			13	%			5	%			-28	%			0	%			44	%			13	%			19	%			44	%			25	%			6	%			-2	%			0	%			17	%			4	%			14	%

Note: This page is the result of subtracting the Adjustments Page 3 from As Reported on Page 2.

See information regarding Non-GAAP Financial Measures on Page 1 of these exhibits.

 

Brokerage - Adjusted

 

Page 4

---

Arthur J. Gallagher & Co.

Non-GAAP Brokerage Segment Statement of Earnings - As Adjusted

Quarter over Quarter - 2008 to 2011

(Unaudited - in millions except share and per share data)

 

BROKERAGE SEGMENT		Q1 Adjusted																Q2 Adjusted												Q3 Adjusted												Q4 Adjusted												Full Year Adjusted
Statement of Earnings		2008				2009				2010				2011				2008				2009				2010				2008				2009				2010				2008				2009				2010				2008				2009				2010
Commissions		$	183.4			$	198.0			$	204.2			$	225.7			$	232.6			$	249.7			$	257.0			$	226.8			$	237.0			$	251.9			$	211.4			$	228.2			$	244.2			$	854.2			$	912.9			$	957.3
Fees			50.4				54.8				54.9				59.1				63.5				73.9				68.5				66.0				75.8				74.8				70.3				77.6				76.7				250.2				282.1				274.9
Supplemental commissions			4.8				7.5				13.2				13.5				6.3				10.2				10.6				7.5				9.8				10.2				7.9				11.3				12.1				26.5				38.8				46.1
Contingent commissions			11.5				13.8				15.5				16.8				5.0				6.0				8.7				7.2				5.8				9.5				1.6				2.0				3.1				25.3				27.6				36.8
Investment income			4.6				1.1				1.0				1.2				4.3				1.4				1.6				3.6				1.0				1.1				1.4				1.1				1.2				13.9				4.6				4.9
Revenues			254.7				275.2				288.8				316.3				311.7				341.2				346.4				311.1				329.4				347.5				292.6				320.2				337.3				1,170.1				1,266.0				1,320.0
Compensation			167.0				182.2				191.1				208.5				174.9				198.9				203.5				179.6				189.5				203.8				182.0				202.6				212.4				703.5				773.2				810.8
Operating			58.7				51.1				53.2				57.0				56.0				50.8				53.0				59.2				53.7				57.1				69.9				58.8				56.2				243.8				214.4				219.5
Depreciation			3.9				4.7				4.6				4.7				4.7				4.7				4.9				4.7				4.7				5.1				4.9				4.7				4.9				18.2				18.8				19.5
Amortization			8.8				12.2				13.7				15.8				10.1				13.9				14.2				10.1				13.7				14.4				11.5				14.5				15.2				40.5				54.3				57.5
Change in estimated acquisition earnout payables			—				—				1.4				2.0				—				1.4				1.6				—				1.2				1.7				—				1.5				1.5				—				4.1				6.2
Expenses			238.4				250.2				264.0				288.0				245.7				269.7				277.2				253.6				262.8				282.1				268.3				282.1				290.2				1,006.0				1,064.8				1,113.5
Earnings from continuing operations before income taxes			16.3				25.0				24.8				28.3				66.0				71.5				69.2				57.5				66.6				65.4				24.3				38.1				47.1				164.1				201.2				206.5
Provision for income taxes			6.4				9.6				10.0				11.1				26.6				28.8				28.0				22.6				26.6				26.1				9.0				13.0				16.9				64.6				78.0				81.0
Earnings from continuing operations		$	9.9			$	15.4			$	14.8			$	17.2			$	39.4			$	42.7			$	41.2			$	34.9			$	40.0			$	39.3			$	15.3			$	25.1			$	30.2			$	99.5			$	123.2			$	125.5
Diluted earnings from continuing operations per share		$	0.11			$	0.16			$	0.14			$	0.16			$	0.42			$	0.42			$	0.39			$	0.37			$	0.39			$	0.37			$	0.16			$	0.25			$	0.28			$	1.06			$	1.22			$	1.19
Change in diluted earnings from continuing ops per share			10	%			45	%			-13	%			14	%			14	%			0	%			-7	%			3	%			5	%			-5	%			-47	%			56	%			12	%			-6	%			15	%			-2	%
Change in revenues			9	%			8	%			5	%			10	%			6	%			9	%			2	%			7	%			6	%			5	%			-1	%			9	%			5	%			5	%			8	%			4	%
Organic change in commissions and fees			0	%			-4	%			-5	%			2	%			-1	%			-2	%			-3	%			0	%			-5	%			0	%			-5	%			-1	%			0	%			-2	%			-3	%			-2	%
Compensation expense ratio			66	%			66	%			66	%			66	%			56	%			58	%			59	%			58	%			58	%			59	%			62	%			63	%			63	%			60	%			61	%			61	%
Operating expense ratio			23	%			19	%			18	%			18	%			18	%			15	%			15	%			19	%			16	%			16	%			24	%			18	%			17	%			21	%			17	%			17	%
Effective tax rate			39	%			38	%			40	%			39	%			40	%			40	%			40	%			39	%			40	%			40	%			37	%			34	%			36	%			39	%			39	%			39	%
Other Information
Diluted weighted average shares outstanding (000s)			92,898				98,084				102,936				110,315				93,545				100,717				104,648				94,556				101,550				105,736				95,900				102,213				107,327				94,179				100,625				105,099
Headcount (000’s)			5,277				5,914				5,857				6,324				5,282				6,076				6,186				5,461				5,965				6,068				5,748				5,890				6,275				—				—				—
EBITDAC
Earnings from continuing operations		$	9.9			$	15.4			$	14.8			$	17.2			$	39.4			$	42.7			$	41.2			$	34.9			$	40.0			$	39.3			$	15.3			$	25.1			$	30.2			$	99.5			$	123.2			$	125.5
Provision for income taxes			6.4				9.6				10.0				11.1				26.6				28.8				28.0				22.6				26.6				26.1				9.0				13.0				16.9				64.6				78.0				81.0
Depreciation			3.9				4.7				4.6				4.7				4.7				4.7				4.9				4.7				4.7				5.1				4.9				4.7				4.9				18.2				18.8				19.5
Amortization			8.8				12.2				13.7				15.8				10.1				13.9				14.2				10.1				13.7				14.4				11.5				14.5				15.2				40.5				54.3				57.5
Change in estimated acquisition earnout payables			—				—				1.4				2.0				—				1.4				1.6				—				1.2				1.7				—				1.5				1.5				—				4.1				6.2
EBITDAC		$	29.0			$	41.9			$	44.5			$	50.8			$	80.8			$	91.5			$	89.9			$	72.3			$	86.2			$	86.6			$	40.7			$	58.8			$	68.7			$	222.8			$	278.4			$	289.7
EBITDAC margin			11	%			15	%			15	%			16	%			26	%			27	%			26	%			23	%			26	%			25	%			14	%			18	%			20	%			19	%			22	%			22	%
EBITDAC growth (decline)			6	%			44	%			6	%			14	%			13	%			13	%			-2	%			5	%			19	%			0	%			-28	%			44	%			17	%			0	%			25	%			4	%

See information regarding Non-GAAP Financial Measures on Page 1 of these exhibits.

 

Brokerage Adjusted - Quarter over Quarter

 

Page 5

---

Arthur J. Gallagher & Co.

Risk Management Segment Statement of Earnings - As Reported

Quarterly Trend - 2008 to 2011

(Unaudited - in millions except share and per share data)

 

RISK MANAGEMENT SEGMENT		2008 Reported																				2009 Reported																				2010 Reported																				2011 Reported
Statement of Earnings		Q1				Q2				Q3				Q4				FY				Q1				Q2				Q3				Q4				FY				Q1				Q2				Q3				Q4				FY				Q1
Fees		$	115.1			$	114.1			$	117.6			$	114.3			$	461.1			$	111.8			$	113.0			$	113.1			$	113.8			$	451.7			$	110.1			$	110.9			$	110.9			$	128.2			$	460.1			$	129.9
Investment income			1.1				1.1				1.0				0.6				3.8				0.4				0.3				0.4				0.4				1.5				0.4				0.5				0.5				0.6				2.0				0.7
Revenues			116.2				115.2				118.6				114.9				464.9				112.2				113.3				113.5				114.2				453.2				110.5				111.4				111.4				128.8				462.1				130.6
Compensation			70.1				70.4				70.4				69.7				280.6				68.1				69.9				69.9				74.4				282.3				67.7				66.7				72.5				81.1				288.0				82.7
Operating			29.2				29.2				33.8				34.1				126.3				26.6				27.0				26.2				30.1				109.9				24.2				28.2				24.9				31.8				109.1				32.7
Depreciation			3.0				3.2				3.2				2.2				11.6				3.0				2.8				3.0				2.9				11.7				3.0				3.0				3.1				3.3				12.4				3.3
Amortization			0.1				0.2				0.1				0.1				0.5				0.2				0.2				0.1				0.2				0.7				0.2				0.1				0.1				0.6				1.0				0.6
Expenses			102.4				103.0				107.5				106.1				419.0				97.9				99.9				99.2				107.6				404.6				95.1				98.0				100.6				116.8				410.5				119.3
Earnings from continuing operations before income taxes			13.8				12.2				11.1				8.8				45.9				14.3				13.4				14.3				6.6				48.6				15.4				13.4				10.8				12.0				51.6				11.3
Provision for income taxes			5.3				4.8				4.1				3.5				17.7				5.6				5.5				5.6				1.2				17.9				6.2				5.3				4.4				4.4				20.3				4.4
Earnings from continuing operations		$	8.5			$	7.4			$	7.0			$	5.3			$	28.2			$	8.7			$	7.9			$	8.7			$	5.4			$	30.7			$	9.2			$	8.1			$	6.4			$	7.6			$	31.3			$	6.9
Diluted earnings from continuing operations per share		$	0.09			$	0.08			$	0.08			$	0.05			$	0.30			$	0.09			$	0.08			$	0.09			$	0.05			$	0.31			$	0.09			$	0.08			$	0.06			$	0.07			$	0.30			$	0.06
Change in diluted earnings from continuing ops per share			-10	%			0	%			-20	%			-62	%			-27	%			0	%			0	%			13	%			0	%			3	%			0	%			0	%			-33	%			40	%			-3	%			-33	%
Change in revenues			9	%			7	%			8	%			-3	%			5	%			-3	%			-2	%			-4	%			-1	%			-3	%			-2	%			-2	%			-2	%			13	%			2	%			18	%
Organic change in commissions and fees			7	%			5	%			8	%			2	%			5	%			1	%			2	%			-3	%			-4	%			-1	%			-5	%			-3	%			-3	%			0	%			-3	%			6	%
Compensation expense ratio			60	%			61	%			59	%			61	%			60	%			61	%			62	%			62	%			65	%			62	%			61	%			60	%			65	%			63	%			62	%			63	%
Operating expense ratio			25	%			25	%			29	%			30	%			27	%			24	%			24	%			23	%			26	%			24	%			22	%			25	%			22	%			25	%			24	%			25	%
Effective tax rate			38	%			39	%			37	%			40	%			39	%			39	%			41	%			39	%			18	%			37	%			40	%			40	%			41	%			37	%			39	%			39	%
Other Information
Diluted weighted average shares outstanding (000s)			92,898				93,545				94,556				95,900				94,179				98,084				100,717				101,550				102,213				100,625				102,936				104,648				105,736				107,327				105,099				110,315
Headcount (000’s)			3,848				3,892				3,903				3,901								3,865				3,862				3,835				3,741								3,637				3,605				3,660				4,227								4,281
EBITDAC
Earnings from continuing operations		$	8.5			$	7.4			$	7.0			$	5.3			$	28.2			$	8.7			$	7.9			$	8.7			$	5.4			$	30.7			$	9.2			$	8.1			$	6.4			$	7.6			$	31.3			$	6.9
Provision for income taxes			5.3				4.8				4.1				3.5				17.7				5.6				5.5				5.6				1.2				17.9				6.2				5.3				4.4				4.4				20.3				4.4
Depreciation			3.0				3.2				3.2				2.2				11.6				3.0				2.8				3.0				2.9				11.7				3.0				3.0				3.1				3.3				12.4				3.3
Amortization			0.1				0.2				0.1				0.1				0.5				0.2				0.2				0.1				0.2				0.7				0.2				0.1				0.1				0.6				1.0				0.6
EBITDAC		$	16.9			$	15.6			$	14.4			$	11.1			$	58.0			$	17.5			$	16.4			$	17.4			$	9.7			$	61.0			$	18.6			$	16.5			$	14.0			$	15.9			$	65.0			$	15.2
EBITDAC margin (3)			15	%			14	%			12	%			10	%			12	%			16	%			14	%			15	%			8	%			13	%			17	%			15	%			13	%			12	%			14	%			12	%
EBITDAC growth (decline)			-14	%			-7	%			-22	%			-47	%			-23	%			4	%			5	%			21	%			-13	%			5	%			6	%			1	%			-20	%			64	%			7	%			-18	%

Risk Management - As Reported

 

Page 6

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Arthur J. Gallagher & Co.

Non-GAAP Adjustments to Risk Management Segment Statement of Earnings

Quarterly Trend - 2008 to 2011

(Unaudited - in millions except share and per share data)

 

RISK MANAGEMENT SEGMENT		2008 Adjustments																				2009 Adjustments																				2010 Adjustments																				2011 Adjust- ments
Statement of Earnings		Q1				Q2				Q3				Q4				FY				Q1				Q2				Q3				Q4				FY				Q1				Q2				Q3				Q4				FY				Q1
Fees		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—
Investment income			—				—				—				—				—				—				—				—				—				—				—				—				—				—				—				—
Revenues			—				—				—				—				—				—				—				—				—				—				—				—				—				—				—				—
Compensation (1)			—				—				—				—				—				(0.3	)			—				—				(6.2	)			(6.5	)			—				(0.2	)			(3.6	)			(2.9	)			(6.7	)			(4.0	)
Operating (2)			—				—				—				(0.6	)			(0.6	)			(0.6	)			—				—				(0.7	)			(1.3	)			—				(0.2	)			0.7				(0.8	)			(0.3	)			(1.3	)
Depreciation			—				—				—				—				—				—				—				—				—				—				—				—				—				—				—				—
Amortization			—				—				—				—				—				—				—				—				—				—				—				—				—				—				—				—
Expenses			—				—				—				(0.6	)			(0.6	)			(0.9	)			—				—				(6.9	)			(7.8	)			—				(0.4	)			(2.9	)			(3.7	)			(7.0	)			(5.3	)
Earnings from continuing operations before income taxes			—				—				—				0.6				0.6				0.9				—				—				6.9				7.8				—				0.4				2.9				3.7				7.0				5.3
Provision for income taxes			—				—				—				0.2				0.2				0.4				—				—				2.8				3.2				—				0.2				1.2				1.4				2.8				2.1
Earnings from continuing operations		$	—			$	—			$	—			$	0.4			$	0.4			$	0.5			$	—			$	—			$	4.1			$	4.6			$	—			$	0.2			$	1.7			$	2.3			$	4.2			$	3.2
Diluted earnings from continuing operations per share		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	0.04			$	0.05			$	—			$	—			$	0.02			$	0.02			$	0.04			$	0.03
Diluted weighted average shares outstanding (000s)			92,898				93,545				94,556				95,900				94,179				98,084				100,717				101,550				102,213				100,625				102,936				104,648				105,736				107,327				105,099				110,315
EBITDAC
Earnings from continuing operations		$	—			$	—			$	—			$	0.4			$	0.4			$	0.5			$	—			$	—			$	4.1			$	4.6			$	—			$	0.2			$	1.7			$	2.3			$	4.2			$	3.2
Provision for income taxes			—				—				—				0.2				0.2				0.4				—				—				2.8				3.2				—				0.2				1.2				1.4				2.8				2.1
Depreciation			—				—				—				—				—				—				—				—				—				—				—				—				—				—				—				—
Amortization			—				—				—				—				—				—				—				—				—				—				—				—				—				—				—				—
EBITDAC		$	—			$	—			$	—			$	0.6			$	0.6			$	0.9			$	—			$	—			$	6.9			$	7.8			$	—			$	0.4			$	2.9			$	3.7			$	7.0			$	5.3

 

(1)	To eliminate severance, GAB integration costs and other workforce charges.

(2)	To eliminate lease termination and abandonment charges and GAB integration costs.

See information regarding Non-GAAP Financial Measures on Page 1 of these exhibits.

Risk Management - Adjustments

 

 

Page 7

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Arthur J. Gallagher & Co.

Non-GAAP Risk Management Statement of Earnings - As Adjusted

Quarterly Trend - 2008 to 2011

(Unaudited - in millions except share and per share data)

 

RISK MANAGEMENT SEGMENT		2008 Adjusted																				2009 Adjusted																				2010 Adjusted																				2011 Adjusted
Statement of Earnings		Q1				Q2				Q3				Q4				FY				Q1				Q2				Q3				Q4				FY				Q1				Q2				Q3				Q4				FY				Q1
Fees		$	115.1			$	114.1			$	117.6			$	114.3			$	461.1			$	111.8			$	113.0			$	113.1			$	113.8			$	451.7			$	110.1			$	110.9			$	110.9			$	128.2			$	460.1			$	129.9
Investment income			1.1				1.1				1.0				0.6				3.8				0.4				0.3				0.4				0.4				1.5				0.4				0.5				0.5				0.6				2.0				0.7
Revenues			116.2				115.2				118.6				114.9				464.9				112.2				113.3				113.5				114.2				453.2				110.5				111.4				111.4				128.8				462.1				130.6
Compensation			70.1				70.4				70.4				69.7				280.6				67.8				69.9				69.9				68.2				275.8				67.7				66.5				68.9				78.2				281.3				78.7
Operating			29.2				29.2				33.8				33.5				125.7				26.0				27.0				26.2				29.4				108.6				24.2				28.0				25.6				31.0				108.8				31.4
Depreciation			3.0				3.2				3.2				2.2				11.6				3.0				2.8				3.0				2.9				11.7				3.0				3.0				3.1				3.3				12.4				3.3
Amortization			0.1				0.2				0.1				0.1				0.5				0.2				0.2				0.1				0.2				0.7				0.2				0.1				0.1				0.6				1.0				0.6
Expenses			102.4				103.0				107.5				105.5				418.4				97.0				99.9				99.2				100.7				396.8				95.1				97.6				97.7				113.1				403.5				114.0
Earnings from continuing operations before income taxes			13.8				12.2				11.1				9.4				46.5				15.2				13.4				14.3				13.5				56.4				15.4				13.8				13.7				15.7				58.6				16.6
Provision for income taxes			5.3				4.8				4.1				3.7				17.9				6.0				5.5				5.6				4.0				21.1				6.2				5.5				5.6				5.8				23.1				6.5
Earnings from continuing operations		$	8.5			$	7.4			$	7.0			$	5.7			$	28.6			$	9.2			$	7.9			$	8.7			$	9.5			$	35.3			$	9.2			$	8.3			$	8.1			$	9.9			$	35.5			$	10.1
Diluted earnings from continuing operations per share		$	0.09			$	0.08			$	0.07			$	0.06			$	0.30			$	0.09			$	0.08			$	0.09			$	0.09			$	0.35			$	0.09			$	0.08			$	0.08			$	0.09			$	0.34			$	0.09
Change in diluted earnings from continuing ops per share			-10	%			0	%			-30	%			-54	%			-27	%			0	%			0	%			29	%			50	%			17	%			0	%			0	%			-11	%			0	%			-3	%			0	%
Change in revenues			9	%			7	%			8	%			-3	%			5	%			-3	%			-2	%			-4	%			-1	%			-3	%			-2	%			-2	%			-2	%			13	%			2	%			18	%
Organic change in commissions and fees			7	%			5	%			8	%			2	%			5	%			1	%			2	%			-3	%			-4	%			-1	%			-5	%			-3	%			-3	%			0	%			-3	%			6	%
Compensation expense ratio			60	%			61	%			59	%			61	%			60	%			60	%			62	%			62	%			60	%			61	%			61	%			60	%			62	%			61	%			61	%			60	%
Operating expense ratio			25	%			25	%			29	%			29	%			27	%			23	%			24	%			23	%			26	%			24	%			22	%			25	%			23	%			24	%			24	%			24	%
Effective tax rate			38	%			39	%			37	%			39	%			38	%			39	%			41	%			39	%			30	%			37	%			40	%			40	%			41	%			37	%			39	%			39	%
Other Information
Diluted weighted average shares outstanding (000s)			92,898				93,545				94,556				95,900				94,179				98,084				100,717				101,550				102,213				100,625				102,936				104,648				105,736				107,327				105,099				110,315
Headcount (000’s)			3,848				3,892				3,903				3,901								3,865				3,862				3,835				3,741								3,637				3,605				3,660				4,227								4,281
EBITDAC
Earnings from continuing operations		$	8.5			$	7.4			$	7.0			$	5.7			$	28.6			$	9.2			$	7.9			$	8.7			$	9.5			$	35.3			$	9.2			$	8.3			$	8.1			$	9.9			$	35.5			$	10.1
Provision for income taxes			5.3				4.8				4.1				3.7				17.9				6.0				5.5				5.6				4.0				21.1				6.2				5.5				5.6				5.8				23.1				6.5
Depreciation			3.0				3.2				3.2				2.2				11.6				3.0				2.8				3.0				2.9				11.7				3.0				3.0				3.1				3.3				12.4				3.3
Amortization			0.1				0.2				0.1				0.1				0.5				0.2				0.2				0.1				0.2				0.7				0.2				0.1				0.1				0.6				1.0				0.6
EBITDAC		$	16.9			$	15.6			$	14.4			$	11.7			$	58.6			$	18.4			$	16.4			$	17.4			$	16.6			$	68.8			$	18.6			$	16.9			$	16.9			$	19.6			$	72.0			$	20.5
EBITDAC margin (3)			15	%			14	%			12	%			10	%			13	%			16	%			14	%			15	%			15	%			15	%			17	%			15	%			15	%			15	%			16	%			16	%
EBITDAC growth (decline)			-14	%			-7	%			-22	%			-47	%			-23	%			9	%			5	%			21	%			42	%			17	%			1	%			3	%			-3	%			18	%			5	%			10	%

Note: This page is the result of subtracting the Adjustments on Page 7 from As Reported on Page 6.

See information regarding Non-GAAP Financial Measures on Page 1 of these exhibits.

 

Risk Management - Adjusted

 

Page 8

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Arthur J. Gallagher & Co.

Non-GAAP Risk Management Segment Statement of Earnings - As Adjusted

Quarter over Quarter - 2008 to 2011

(Unaudited - in millions except share and per share data)

 

RISK MANAGEMENT SEGMENT		Q1 Adjusted																Q2 Adjusted												Q3 Adjusted												Q4 Adjusted												Full Year Adjusted
Statement of Earnings		2008				2009				2010				2011				2008				2009				2010				2008				2009				2010				2008				2009				2010				2008				2009				2010
Fees		$	115.1			$	111.8			$	110.1			$	129.9			$	114.1			$	113.0			$	110.9			$	117.6			$	113.1			$	110.9			$	114.3			$	113.8			$	128.2			$	461.1			$	451.7			$	460.1
Investment income			1.1				0.4				0.4				0.7				1.1				0.3				0.5				1.0				0.4				0.5				0.6				0.4				0.6				3.8				1.5				2.0
Revenues			116.2				112.2				110.5				130.6				115.2				113.3				111.4				118.6				113.5				111.4				114.9				114.2				128.8				464.9				453.2				462.1
Compensation			70.1				67.8				67.7				78.7				70.4				69.9				66.5				70.4				69.9				68.9				69.7				68.2				78.2				280.6				275.8				281.3
Operating			29.2				26.0				24.2				31.4				29.2				27.0				28.0				33.8				26.2				25.6				33.5				29.4				31.0				125.7				108.6				108.8
Depreciation			3.0				3.0				3.0				3.3				3.2				2.8				3.0				3.2				3.0				3.1				2.2				2.9				3.3				11.6				11.7				12.4
Amortization			0.1				0.2				0.2				0.6				0.2				0.2				0.1				0.1				0.1				0.1				0.1				0.2				0.6				0.5				0.7				1.0
Expenses			102.4				97.0				95.1				114.0				103.0				99.9				97.6				107.5				99.2				97.7				105.5				100.7				113.1				418.4				396.8				403.5
Earnings from continuing operations before income taxes			13.8				15.2				15.4				16.6				12.2				13.4				13.8				11.1				14.3				13.7				9.4				13.5				15.7				46.5				56.4				58.6
Provision for income taxes			5.3				6.0				6.2				6.5				4.8				5.5				5.5				4.1				5.6				5.6				3.7				4.0				5.8				17.9				21.1				23.1
Earnings from continuing operations		$	8.5			$	9.2			$	9.2			$	10.1			$	7.4			$	7.9			$	8.3			$	7.0			$	8.7			$	8.1			$	5.7			$	9.5			$	9.9			$	28.6			$	35.3			$	35.5
Diluted earnings from continuing operations per share		$	0.09			$	0.09			$	0.09			$	0.09			$	0.08			$	0.08			$	0.08			$	0.07			$	0.09			$	0.08			$	0.06			$	0.09			$	0.09			$	0.30			$	0.35			$	0.34
Change in diluted earnings from continuing ops per share			-10	%			0	%			0	%			0	%			0	%			0	%			0	%			-30	%			29	%			-11	%			-54	%			50	%			0	%			-27	%			17	%			-3	%
Change in revenues			9	%			-3	%			-2	%			18	%			7	%			-2	%			-2	%			8	%			-4	%			-2	%			-3	%			-1	%			13	%			5	%			-3	%			2	%
Organic change in commissions and fees			7	%			1	%			-5	%			6	%			5	%			2	%			-3	%			8	%			-3	%			-3	%			2	%			-4	%			0	%			5	%			-1	%			-3	%
Compensation expense ratio			60	%			60	%			61	%			60	%			61	%			62	%			60	%			59	%			62	%			62	%			61	%			60	%			61	%			60	%			61	%			61	%
Operating expense ratio			25	%			23	%			22	%			24	%			25	%			24	%			25	%			29	%			23	%			23	%			29	%			26	%			24	%			27	%			24	%			24	%
Effective tax rate			38	%			39	%			40	%			39	%			39	%			41	%			40	%			37	%			39	%			41	%			39	%			30	%			37	%			38	%			37	%			39	%
Other Information
Diluted weighted average shares outstanding (000s)			92,898				98,084				102,936				110,315				93,545				100,717				104,648				94,556				101,550				105,736				95,900				102,213				107,327				94,179				100,625				105,099
Headcount (000’s)			3,848				3,865				3,637				4,281				3,892				3,862				3,605				3,903				3,835				3,660				3,901				3,741				4,227				—				—				—
EBITDAC
Earnings from continuing operations		$	8.5			$	9.2			$	9.2			$	10.1			$	7.4			$	7.9			$	8.3			$	7.0			$	8.7			$	8.1			$	5.7			$	9.5			$	9.9			$	28.6			$	35.3			$	35.5
Provision for income taxes			5.3				6.0				6.2				6.5				4.8				5.5				5.5				4.1				5.6				5.6				3.7				4.0				5.8				17.9				21.1				23.1
Depreciation			3.0				3.0				3.0				3.3				3.2				2.8				3.0				3.2				3.0				3.1				2.2				2.9				3.3				11.6				11.7				12.4
Amortization			0.1				0.2				0.2				0.6				0.2				0.2				0.1				0.1				0.1				0.1				0.1				0.2				0.6				0.5				0.7				1.0
EBITDAC		$	16.9			$	18.4			$	18.6			$	20.5			$	15.6			$	16.4			$	16.9			$	14.4			$	17.4			$	16.9			$	11.7			$	16.6			$	19.6			$	58.6			$	68.8			$	72.0
EBITDAC margin (3)			15	%			16	%			17	%			16	%			14	%			14	%			15	%			12	%			15	%			15	%			10	%			15	%			15	%			13	%			15	%			16	%
EBITDAC growth (decline)			-14	%			9	%			1	%			10	%			7	%			5	%			3	%			-22	%			21	%			-3	%			-44	%			42	%			18	%			-23	%			17	%			5	%

See information regarding Non-GAAP Financial Measures on Page 1 of these exhibits.

Risk Management - Adjusted - Quarter over Quarter

 

 

Page 9

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Arthur J. Gallagher & Co.

Combined Brokerage and Risk Management Segments Statement of Earnings - As Reported

Quarterly Trend - 2008 to 2011

(Unaudited - in millions except share and per share data)

 

BROKERAGE AND RISK MANAGEMENT SEGMENTS COMBINED		2008 Reported																				2009 Reported																				2010 Reported																				2011 Reported
Statement of Earnings		Q1				Q2				Q3				Q4				FY				Q1				Q2				Q3				Q4				FY				Q1				Q2				Q3				Q4				FY				Q1
Commissions		$	183.4			$	232.6			$	226.8			$	211.4			$	854.2			$	198.0			$	249.7			$	237.0			$	228.2			$	912.9			$	204.2			$	257.0			$	251.9			$	244.2			$	957.3			$	225.7
Fees			165.5				177.6				183.6				184.6				711.3				166.6				186.9				188.9				191.4				733.8				165.0				179.4				185.7				204.9				735.0				189.0
Supplemental commissions			6.4				3.3				5.1				5.6				20.4				15.7				5.8				4.5				11.4				37.4				27.9				10.6				10.2				12.1				60.8				13.5
Contingent commissions			11.5				5.0				7.2				1.6				25.3				13.8				6.0				5.8				2.0				27.6				15.5				8.7				9.5				3.1				36.8				16.8
Investment income and realized book gains			7.4				8.9				10.3				14.9				41.5				7.6				5.0				3.1				2.0				17.7				2.3				2.7				5.4				2.4				12.8				3.0
Revenues			374.2				427.4				433.0				418.1				1,652.7				401.7				453.4				439.3				435.0				1,729.4				414.9				458.4				462.7				466.7				1,802.7				448.0
Compensation			237.2				246.2				250.0				254.6				988.0				250.4				269.4				260.2				281.0				1,061.0				259.2				273.4				277.5				295.0				1,105.1				292.7
Operating			87.9				85.2				94.3				106.3				373.7				77.7				78.1				80.7				91.4				327.9				77.5				85.2				82.0				88.0				332.7				89.7
Depreciation			6.9				7.9				7.9				7.1				29.8				7.7				7.5				7.7				7.6				30.5				7.6				7.9				8.2				8.2				31.9				8.0
Amortization			8.9				10.3				10.2				14.3				43.7				12.4				14.1				13.8				14.7				55.0				13.9				16.6				14.5				15.8				60.8				16.4
Change in estimated acquisition earnout payables			—				—				—				—				—				—				1.4				1.2				1.5				4.1				1.9				(0.9	)			(3.9	)			0.3				(2.6	)			0.8
Expenses			340.9				349.6				362.4				382.3				1,435.2				348.2				370.5				363.6				396.2				1,478.5				360.1				382.2				378.3				407.3				1,527.9				407.6
Earnings from continuing operations before income taxes			33.3				77.8				70.6				35.8				217.5				53.5				82.9				75.7				38.8				250.9				54.8				76.2				84.4				59.4				274.8				40.4
Provision for income taxes			12.9				31.2				27.5				13.5				85.1				20.7				33.5				30.1				12.2				96.5				22.1				30.7				33.8				21.4				108.0				15.8
Earnings from continuing operations		$	20.4			$	46.6			$	43.1			$	22.3			$	132.4			$	32.8			$	49.4			$	45.6			$	26.6			$	154.4			$	32.7			$	45.5			$	50.6			$	38.0			$	166.8			$	24.6
Diluted earnings from continuing operations per share		$	0.22			$	0.50			$	0.46			$	0.23			$	1.41			$	0.34			$	0.49			$	0.45			$	0.26			$	1.53			$	0.32			$	0.43			$	0.48			$	0.35			$	1.59			$	0.22
Change in diluted earnings from continuing ops per share			10	%			9	%			2	%			-49	%			-10	%			55	%			-2	%			-2	%			13	%			9	%			-6	%			-12	%			7	%			35	%			4	%			-31	%
Change in revenues			10	%			6	%			8	%			1	%			6	%			7	%			6	%			1	%			4	%			5	%			3	%			1	%			5	%			7	%			4	%			8	%
Organic change in commissions and fees			3	%			1	%			2	%			-3	%			0	%			-2	%			-1	%			5	%			-2	%			-2	%			-5	%			-3	%			-1	%			0	%			-2	%			2	%
Compensation expense ratio			63	%			58	%			58	%			61	%			60	%			62	%			59	%			59	%			65	%			61	%			62	%			60	%			60	%			63	%			61	%			65	%
Operating expense ratio			23	%			20	%			22	%			25	%			23	%			19	%			17	%			18	%			21	%			19	%			19	%			19	%			18	%			19	%			18	%			20	%
Effective tax rate			39	%			40	%			39	%			38	%			39	%			39	%			40	%			40	%			31	%			38	%			40	%			40	%			40	%			36	%			39	%			39	%
Other Information
Diluted weighted average shares outstanding (000s)			92,898				93,545				94,556				95,900				94,179				98,084				100,717				101,550				102,213				100,625				102,936				104,648				105,736				107,327				105,099				110,315
Common shares issued for acquisitions and earnouts (000s)			280				203				1,061				1,279				2,823				3,650				833				463				632				5,578				521				1,011				679				1,937				4,148				902
Number of acquisitions closed			11				9				8				9				37				3				6				2				4				15				3				5				4				7				19				4
Annualized revenues acquired (in millions)		$	31.0			$	26.5			$	41.5			$	66.6			$	165.6			$	69.7			$	11.1			$	2.9			$	14.8			$	98.5			$	5.6			$	38.6			$	12.5			$	88.4			$	145.1			$	27.2
Headcount (000’s)			9,125				9,174				9,364				9,649								9,778				9,938				9,800				9,630								9,494				9,790				9,727				10,501								10,605
EBITDAC
Earnings from continuing operations		$	20.4			$	46.6			$	43.1			$	22.3			$	132.4			$	32.8			$	49.4			$	45.6			$	26.6			$	154.4			$	32.7			$	45.5			$	50.6			$	38.0			$	166.8			$	24.6
Provision for income taxes			12.9				31.2				27.5				13.5				85.1				20.7				33.5				30.1				12.2				96.5				22.1				30.7				33.8				21.4				108.0				15.8
Depreciation			6.9				7.9				7.9				7.1				29.8				7.7				7.5				7.7				7.6				30.5				7.6				7.9				8.2				8.2				31.9				8.0
Amortization			8.9				10.3				10.2				14.3				43.7				12.4				14.1				13.8				14.7				55.0				13.9				16.6				14.5				15.8				60.8				16.4
Change in estimated acquisition earnout payables			—				—				—				—				—				—				1.4				1.2				1.5				4.1				1.9				(0.9	)			(3.9	)			0.3				(2.6	)			0.8
EBITDAC		$	49.1			$	96.0			$	88.7			$	57.2			$	291.0			$	73.6			$	105.9			$	98.4			$	62.6			$	340.5			$	78.2			$	99.8			$	103.2			$	83.7			$	364.9			$	65.6
EBITDAC margin (3)			13	%			22	%			20	%			14	%			18	%			18	%			23	%			22	%			14	%			20	%			19	%			22	%			22	%			18	%			20	%			15	%
EBITDAC growth (decline)			2	%			8	%			4	%			-29	%			-4	%			50	%			10	%			11	%			9	%			17	%			6	%			-6	%			5	%			34	%			7	%			-16	%

Combined - As Reported

 

 

Page 10

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Arthur J. Gallagher & Co.

Non-GAAP Adjustments to Combined Brokerage and Risk Management Segments Segment Statement of Earnings

Quarterly Trend - 2008 to 2011

(Unaudited - in millions except share and per share data)

 

BROKERAGE AND RISK MANAGEMENT SEGMENTS COMBINED		2008 Adjustments																				2009 Adjustments																				2010 Adjustments																				2011 Adjust- ments
Statement of Earnings		Q1				Q2				Q3				Q4				FY				Q1				Q2				Q3				Q4				FY				Q1				Q2				Q3				Q4				FY				Q1
Commissions		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—
Fees			—				—				—				—				—				—				—				—				—				—				—				—				—				—				—				—
Supplemental commissions (1)			(1.6	)			3.0				2.4				2.3				6.1				(8.2	)			4.4				5.3				(0.1	)			1.4				(14.7	)			—				—				—				(14.7	)			—
Contingent commissions			—				—				—				—				—				—				—				—				—				—				—				—				—				—				—				—
Investment income and realized book gains (2)			(1.7	)			(3.5	)			(5.7	)			(12.9	)			(23.8	)			(6.1	)			(3.3	)			(1.7	)			(0.5	)			(11.6	)			(0.9	)			(0.6	)			(3.8	)			(0.6	)			(5.9	)			(1.1	)
Revenues			(3.3	)			(0.5	)			(3.3	)			(10.6	)			(17.7	)			(14.3	)			1.1				3.6				(0.6	)			(10.2	)			(15.6	)			(0.6	)			(3.8	)			(0.6	)			(20.6	)			(1.1	)
Compensation (3)			(0.1	)			(0.9	)			—				(2.9	)			(3.9	)			(0.4	)			(0.6	)			(0.8	)			(10.2	)			(12.0	)			(0.4	)			(3.4	)			(4.8	)			(4.4	)			(13.0	)			(5.5	)
Operating (4)			—				—				(1.3	)			(2.9	)			(4.2	)			(0.6	)			(0.3	)			(0.8	)			(3.2	)			(4.9	)			(0.1	)			(4.2	)			0.7				(0.8	)			(4.4	)			(1.3	)
Depreciation			—				—				—				—				—				—				—				—				—				—				—				—				—				—				—				—
Amortization			—				—				—				(2.7	)			(2.7	)			—				—				—				—				—				—				(2.3	)			—				—				(2.3	)			—
Change in estimated acquisition earnout payables (5)			—				—				—				—				—				—				—				—				—				—				(0.5	)			2.5				5.6				1.2				8.8				1.2
Expenses			(0.1	)			(0.9	)			(1.3	)			(8.5	)			(10.8	)			(1.0	)			(0.9	)			(1.6	)			(13.4	)			(16.9	)			(1.0	)			(7.4	)			1.5				(4.0	)			(10.9	)			(5.6	)
Earnings from continuing operations before income taxes			(3.2	)			0.4				(2.0	)			(2.1	)			(6.9	)			(13.3	)			2.0				5.2				12.8				6.7				(14.6	)			6.8				(5.3	)			3.4				(9.7	)			4.5
Provision for income taxes			(1.2	)			0.2				(0.8	)			(0.8	)			(2.6	)			(5.1	)			0.8				2.1				4.8				2.6				(5.9	)			2.8				(2.1	)			1.3				(3.9	)			1.8
Earnings from continuing operations		$	(2.0	)		$	0.2			$	(1.2	)		$	(1.3	)		$	(4.3	)		$	(8.2	)		$	1.2			$	3.1			$	8.0			$	4.1			$	(8.7	)		$	4.0			$	(3.2	)		$	2.1			$	(5.8	)		$	2.7
Diluted earnings from continuing operations per share		$	(0.02	)		$	—			$	(0.01	)		$	(0.01	)		$	(0.04	)		$	(0.08	)		$	0.01			$	0.03			$	0.08			$	0.04			$	(0.08	)		$	0.04			$	(0.03	)		$	0.02			$	(0.06	)		$	0.01
EBITDAC
Earnings from continuing operations		$	(2.0	)		$	0.2			$	(1.2	)		$	(1.3	)		$	(4.3	)		$	(8.2	)		$	1.2			$	3.1			$	8.0			$	4.1			$	(8.7	)		$	4.0			$	(3.2	)		$	2.1			$	(5.8	)		$	2.7
Provision for income taxes			(1.2	)			0.2				(0.8	)			(0.8	)			(2.6	)			(5.1	)			0.8				2.1				4.8				2.6				(5.9	)			2.8				(2.1	)			1.3				(3.9	)			1.8
Depreciation			—				—				—				—				—				—				—				—				—				—				—				—				—				—				—				—
Amortization			—				—				—				(2.7	)			(2.7	)			—				—				—				—				—				—				(2.3	)			—				—				(2.3	)			—
Change in estimated acquisition earnout payables			—				—				—				—				—				—				—				—				—				—				(0.5	)			2.5				5.6				1.2				8.8				1.2
EBITDAC		$	(3.2	)		$	0.4			$	(2.0	)		$	(4.8	)		$	(9.6	)		$	(13.3	)		$	2.0			$	5.2			$	12.8			$	6.7			$	(15.1	)		$	7.0			$	0.3			$	4.6			$	(3.2	)		$	5.7

 

(1)

As previously disclosed, many insurance carriers now provide sufficient information for Gallagher to recognize supplemental commission revenues on a quarterly basis for a majority of its 2011 and 2010 supplemental commission arrangements. However, in 2009 and prior years, most carriers only provided this information on an annual basis after the end of the contract period. Accordingly, the 2010 amounts reported in the table include both a full year of 2009 supplemental commission revenues and 2010 supplemental commission revenues that were recognized by Gallagher on a quarterly basis. This situation should not occur again in 2011 and later years as Gallagher anticipates that most of the carriers will continue to provide information on a quarterly basis sufficient to allow recognition of revenues in a similar manner in future quarters.

(2)	To remove realized gains from sales of books of business.

(3)	To eliminate severance charges, GAB integration costs and other workforce charges.

(4)	To eliminate lease termination, abandonment charges and GAB integration costs.

(5)	To remove adjustments to the estimated acquisition earnout payables.

See information regarding Non-GAAP Financial Measures on Page 1 of these exhibits.

Combined Adjustments

 

Page 11

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Arthur J. Gallagher & Co.

Non-GAAP Combined Brokerage and Risk Management Segments Statement of Earnings - As Adjusted

Quarterly Trend - 2008 to 2011

(Unaudited - in millions except share and per share data)

 

BROKERAGE AND RISK MANAGEMENT SEGMENTS COMBINED		2008 Adjusted																				2009 Adjusted																				2010 Adjusted																				2011 Adjusted
Statement of Earnings		Q1				Q2				Q3				Q4				FY				Q1				Q2				Q3				Q4				FY				Q1				Q2				Q3				Q4				FY				Q1
Commissions		$	183.4			$	232.6			$	226.8			$	211.4			$	854.2			$	198.0			$	249.7			$	237.0			$	228.2			$	912.9			$	204.2			$	257.0			$	251.9			$	244.2			$	957.3			$	225.7
Fees			165.5				177.6				183.6				184.6				711.3				166.6				186.9				188.9				191.4				733.8				165.0				179.4				185.7				204.9				735.0				189.0
Supplemental commissions			4.8				6.3				7.5				7.9				26.5				7.5				10.2				9.8				11.3				38.8				13.2				10.6				10.2				12.1				46.1				13.5
Contingent commissions			11.5				5.0				7.2				1.6				25.3				13.8				6.0				5.8				2.0				27.6				15.5				8.7				9.5				3.1				36.8				16.8
Investment income and realized book gains			5.7				5.4				4.6				2.0				17.7				1.5				1.7				1.4				1.5				6.1				1.4				2.1				1.6				1.8				6.9				1.9
Revenues			370.9				426.9				429.7				407.5				1,635.0				387.4				454.5				442.9				434.4				1,719.2				399.3				457.8				458.9				466.1				1,782.1				446.9
Compensation			237.1				245.3				250.0				251.7				984.1				250.0				268.8				259.4				270.8				1,049.0				258.8				270.0				272.7				290.6				1,092.1				287.2
Operating			87.9				85.2				93.0				103.4				369.5				77.1				77.8				79.9				88.2				323.0				77.4				81.0				82.7				87.2				328.3				88.4
Depreciation			6.9				7.9				7.9				7.1				29.8				7.7				7.5				7.7				7.6				30.5				7.6				7.9				8.2				8.2				31.9				8.0
Amortization			8.9				10.3				10.2				11.6				41.0				12.4				14.1				13.8				14.7				55.0				13.9				14.3				14.5				15.8				58.5				16.4
Change in estimated acquisition earnout payables			—				—				—				—				—				—				1.4				1.2				1.5				4.1				1.4				1.6				1.7				1.5				6.2				2.0
Expenses			340.8				348.7				361.1				373.8				1,424.4				347.2				369.6				362.0				382.8				1,461.6				359.1				374.8				379.8				403.3				1,517.0				402.0
Earnings from continuing operations before income taxes			30.1				78.2				68.6				33.7				210.6				40.2				84.9				80.9				51.6				257.6				40.2				83.0				79.1				62.8				265.1				44.9
Provision for income taxes			11.7				31.4				26.7				12.7				82.5				15.6				34.3				32.2				17.0				99.1				16.2				33.5				31.7				22.7				104.1				17.6
Earnings from continuing operations		$	18.4			$	46.8			$	41.9			$	21.0			$	128.1			$	24.6			$	50.6			$	48.7			$	34.6			$	158.5			$	24.0			$	49.5			$	47.4			$	40.1			$	161.0			$	27.3
Diluted earnings from continuing operations per share		$	0.20			$	0.50			$	0.44			$	0.22			$	1.36			$	0.25			$	0.50			$	0.48			$	0.34			$	1.58			$	0.23			$	0.47			$	0.45			$	0.37			$	1.53			$	0.25
Change in diluted earnings from continuing ops per share			0	%			9	%			-4	%			-46	%			-12	%			25	%			0	%			9	%			55	%			16	%			-8	%			-6	%			-6	%			9	%			-3	%			9	%
Change in revenues			9	%			8	%			10	%			-2	%			5	%			4	%			6	%			3	%			7	%			5	%			3	%			1	%			4	%			7	%			4	%			12	%
Organic change in commissions and fees			3	%			1	%			2	%			-3	%			0	%			-2	%			-1	%			-5	%			-2	%			-2	%			-5	%			-3	%			-1	%			0	%			-2	%			2	%
Compensation expense ratio			64	%			57	%			58	%			62	%			60	%			65	%			59	%			59	%			62	%			61	%			65	%			59	%			59	%			62	%			61	%			64	%
Operating expense ratio			24	%			20	%			22	%			25	%			23	%			20	%			17	%			18	%			20	%			19	%			19	%			18	%			18	%			19	%			18	%			20	%
Effective tax rate			39	%			40	%			39	%			38	%			39	%			39	%			40	%			40	%			33	%			38	%			40	%			40	%			40	%			36	%			39	%			39	%
Other Information
Diluted weighted average shares outstanding (000s)			92,898				93,545				94,556				95,900				94,179				98,084				100,717				101,550				102,213				100,625				102,936				104,648				105,736				107,327				105,099				110,315
Common shares issued for acquisitions and earnouts (000s)			280				203				1,061				1,279				2,823				3,650				833				463				632				5,578				521				1,011				679				1,937				4,148				902
Number of acquisitions closed			11				9				8				9				37				3				6				2				4				15				3				5				4				7				19				4
Annualized revenues acquired (in millions)		$	31.0			$	26.5			$	41.5			$	66.6			$	165.6			$	69.7			$	11.1			$	2.9			$	14.8			$	98.5			$	5.6			$	38.6			$	12.5			$	88.4			$	145.1			$	27.2
Headcount (000’s)			9,125				9,174				9,364				9,649								9,778				9,938				9,800				9,630								9,494				9,790				9,727				10,501								10,605
EBITDAC
Earnings from continuing operations		$	18.4			$	46.8			$	41.9			$	21.0			$	128.1			$	24.6			$	50.6			$	48.7			$	34.6			$	158.5			$	24.0			$	49.5			$	47.4			$	40.1			$	161.0			$	27.3
Provision for income taxes			11.7				31.4				26.7				12.7				82.5				15.6				34.3				32.2				17.0				99.1				16.2				33.5				31.7				22.7				104.1				17.6
Depreciation			6.9				7.9				7.9				7.1				29.8				7.7				7.5				7.7				7.6				30.5				7.6				7.9				8.2				8.2				31.9				8.0
Amortization			8.9				10.3				10.2				11.6				41.0				12.4				14.1				13.8				14.7				55.0				13.9				14.3				14.5				15.8				58.5				16.4
Change in estimated acquisition earnout payables			—				—				—				—				—				—				1.4				1.2				1.5				4.1				1.4				1.6				1.7				1.5				6.2				2.0
EBITDAC		$	45.9			$	96.4			$	86.7			$	52.4			$	281.4			$	60.3			$	107.9			$	103.6			$	75.4			$	347.2			$	63.1			$	106.8			$	103.5			$	88.3			$	361.7			$	71.3
EBITDAC margin (3)			12	%			23	%			20	%			13	%			17	%			16	%			24	%			23	%			17	%			20	%			16	%			23	%			23	%			19	%			20	%			16	%
EBITDAC growth (decline)			-2	%			9	%			-1	%			-32	%			-6	%			31	%			12	%			19	%			44	%			23	%			5	%			-1	%			0	%			17	%			4	%			13	%

Note: This page is the result of subtracting the Adjustments Page 11 from As Reported on Page 10.

See information regarding Non-GAAP Financial Measures on Page 1 of these exhibits.

Combined Adjusted

 

 

Page 12

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Arthur J. Gallagher & Co.

Non-GAAP Combined Brokerage and Risk Management Segments Segment Statement of Earnings - As Adjusted

Quarter over Quarter - 2008 to 2011

(Unaudited - in millions except share and per share data)

 

BROKERAGE AND RISK MANAGEMENT SEGMENTS COMBINED		Q1 Adjusted																Q2 Adjusted												Q3 Adjusted												Q4 Adjusted												Full Year Adjusted
Statement of Earnings		2008				2009				2010				2011				2008				2009				2010				2008				2009				2010				2008				2009				2010				2008				2009				2010
Commissions		$	183.4			$	198.0			$	204.2			$	225.7			$	232.6			$	249.7			$	257.0			$	226.8			$	237.0			$	251.9			$	211.4			$	228.2			$	244.2			$	854.2			$	912.9			$	957.3
Fees			165.5				166.6				165.0				189.0				177.6				186.9				179.4				183.6				188.9				185.7				184.6				191.4				204.9				711.3				733.8				735.0
Supplemental commissions			4.8				7.5				13.2				13.5				6.3				10.2				10.6				7.5				9.8				10.2				7.9				11.3				12.1				26.5				38.8				46.1
Contingent commissions			11.5				13.8				15.5				16.8				5.0				6.0				8.7				7.2				5.8				9.5				1.6				2.0				3.1				25.3				27.6				36.8
Investment income			5.7				1.5				1.4				1.9				5.4				1.7				2.1				4.6				1.4				1.6				2.0				1.5				1.8				17.7				6.1				6.9
Revenues			370.9				387.4				399.3				446.9				426.9				454.5				457.8				429.7				442.9				458.9				407.5				434.4				466.1				1,635.0				1,719.2				1,782.1
Compensation			237.1				250.0				258.8				287.2				245.3				268.8				270.0				250.0				259.4				272.7				251.7				270.8				290.6				984.1				1,049.0				1,092.1
Operating			87.9				77.1				77.4				88.4				85.2				77.8				81.0				93.0				79.9				82.7				103.4				88.2				87.2				369.5				323.0				328.3
Depreciation			6.9				7.7				7.6				8.0				7.9				7.5				7.9				7.9				7.7				8.2				7.1				7.6				8.2				29.8				30.5				31.9
Amortization			8.9				12.4				13.9				16.4				10.3				14.1				14.3				10.2				13.8				14.5				11.6				14.7				15.8				41.0				55.0				58.5
Change in estimated acquisition earnout payables			—				—				1.4				2.0				—				1.4				1.6				—				1.2				1.7				—				1.5				1.5				—				4.1				6.2
Expenses			340.8				347.2				359.1				402.0				348.7				369.6				374.8				361.1				362.0				379.8				373.8				382.8				403.3				1,424.4				1,461.6				1,517.0
Earnings from continuing operations before income taxes			30.1				40.2				40.2				44.9				78.2				84.9				83.0				68.6				80.9				79.1				33.7				51.6				62.8				210.6				257.6				265.1
Provision for income taxes			11.7				15.6				16.2				17.6				31.4				34.3				33.5				26.7				32.2				31.7				12.7				17.0				22.7				82.5				99.1				104.1
Earnings from continuing operations		$	18.4			$	24.6			$	24.0			$	27.3			$	46.8			$	50.6			$	49.5			$	41.9			$	48.7			$	47.4			$	21.0			$	34.6			$	40.1			$	128.1			$	158.5			$	161.0
Diluted earnings from continuing operations per share		$	0.20			$	0.25			$	0.23			$	0.25			$	0.50			$	0.50			$	0.47			$	0.44			$	0.48			$	0.45			$	0.22			$	0.34			$	0.37			$	1.36			$	1.58			$	1.53
Change in diluted earnings from continuing ops per share			0	%			25	%			-8	%			9	%			9	%			0	%			-6	%			-4	%			9	%			-6	%			-46	%			55	%			9	%			-12	%			16	%			-3	%
Change in revenues			9	%			4	%			3	%			12	%			8	%			6	%			1	%			10	%			3	%			4	%			-2	%			7	%			7	%			5	%			5	%			4	%
Organic change in commissions and fees			3	%			-2	%			-5	%			2	%			1	%			-1	%			-3	%			2	%			-5	%			-1	%			-3	%			-2	%			0	%			0	%			-2	%			-2	%
Compensation expense ratio			64	%			65	%			65	%			64	%			57	%			59	%			59	%			58	%			59	%			59	%			62	%			62	%			62	%			60	%			61	%			61	%
Operating expense ratio			24	%			20	%			19	%			20	%			20	%			17	%			18	%			22	%			18	%			18	%			25	%			20	%			19	%			23	%			19	%			18	%
Effective tax rate			39	%			39	%			40	%			39	%			40	%			40	%			40	%			39	%			40	%			40	%			38	%			33	%			36	%			39	%			38	%			39	%
Other Information
Diluted weighted average shares outstanding (000s)			92,898				98,084				102,936				110,315				93,545				100,717				104,648				94,556				101,550				105,736				95,900				102,213				107,327				94,179				100,625				105,099
Headcount (000’s)			9,125				9,778				9,494				10,605				9,174				9,938				9,790				9,364				9,800				9,727				9,649				9,630				10,501				—				—				—
EBITDAC
Earnings from continuing operations		$	18.4			$	24.6			$	24.0			$	27.3			$	46.8			$	50.6			$	49.5			$	41.9			$	48.7			$	47.4			$	21.0			$	34.6			$	40.1			$	128.1			$	158.5			$	161.0
Provision for income taxes			11.7				15.6				16.2				17.6				31.4				34.3				33.5				26.7				32.2				31.7				12.7				17.0				22.7				82.5				99.1				104.1
Depreciation			6.9				7.7				7.6				8.0				7.9				7.5				7.9				7.9				7.7				8.2				7.1				7.6				8.2				29.8				30.5				31.9
Amortization			8.9				12.4				13.9				16.4				10.3				14.1				14.3				10.2				13.8				14.5				11.6				14.7				15.8				41.0				55.0				58.5
Change in estimated acquisition earnout payables			—				—				1.4				2.0				—				1.4				1.6				—				1.2				1.7				—				1.5				1.5				—				4.1				6.2
EBITDAC		$	45.9			$	60.3			$	63.1			$	71.3			$	96.4			$	107.9			$	106.8			$	86.7			$	103.6			$	103.5			$	52.4			$	75.4			$	88.3			$	281.4			$	347.2			$	361.7
EBITDAC margin			12	%			16	%			16	%			16	%			23	%			24	%			23	%			20	%			23	%			23	%			13	%			17	%			19	%			17	%			20	%			20	%
EBITDAC growth (decline)			-2	%			31	%			5	%			13	%			9	%			12	%			-1	%			-1	%			19	%			0	%			-32	%			44	%			17	%			-6	%			23	%			4	%

See information regarding Non-GAAP Financial Measures on Page 1 of these exhibits.

Combined Adjusted - Quarter over Quarter

 

Page 13

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Arthur J. Gallagher & Co.

Corporate Segment - Summary of Operating Results

Quarterly Trend - 2009 to 2011

(Unaudited - in millions except per share data)

 

		2009 Reported												2010 Reported												2011 Reported
		Pretax Earnings (Loss)				Taxes Benefit (Expense)				Net Earnings (Loss)				Pretax Earnings (Loss)				Taxes Benefit (Expense)				Net Earnings (Loss)				Pretax Earnings (Loss)				Taxes Benefit (Expense)				Net Earnings (Loss)
1st Quarter
Interest and banking costs		$	(7.3	)		$	2.9			$	(4.4	)		$	(8.8	)		$	3.5			$	(5.3	)		$	(10.3	)		$	4.1			$	(6.2	)
Clean-energy related			(0.5	)			0.2				(0.3	)			(0.4	)			4.0				3.6				(2.6	)			2.2				(0.4	)
Acquisition costs			(0.5	)			0.2				(0.3	)			(1.5	)			0.6				(0.9	)			(1.7	)			0.5				(1.2	)
Corporate			(1.3	)			2.0				0.7				(1.2	)			0.3				(0.9	)			(2.3	)			0.7				(1.6	)
Legacy investments			(0.4	)			0.2				(0.2	)			—				—				—				—				—				—
Total		$	(10.0	)		$	5.5			$	(4.5	)		$	(11.9	)		$	8.4			$	(3.5	)		$	(16.9	)		$	7.5			$	(9.4	)
Diluted earnings (loss) per share										$	(0.05	)										$	(0.04	)										$	(0.08	)
2nd Quarter
Interest and banking costs		$	(7.0	)		$	2.8			$	(4.2	)		$	(8.9	)		$	3.6			$	(5.3	)
Clean-energy related			(0.9	)			0.4				(0.5	)			(1.8	)			4.7				2.9
Acquisition costs			—				—				—				(0.6	)			0.2				(0.4	)
Corporate			(1.4	)			(0.2	)			(1.6	)			(1.3	)			0.3				(1.0	)
Legacy investments			0.5				0.2				0.7				0.3				(0.1	)			0.2
Total		$	(8.8	)		$	3.2			$	(5.6	)		$	(12.3	)		$	8.7			$	(3.6	)
Diluted earnings (loss) per share										$	(0.05	)										$	(0.04	)
3rd Quarter
Interest and banking costs		$	(7.4	)		$	3.0			$	(4.4	)		$	(9.3	)		$	3.7			$	(5.6	)
Clean-energy related			(3.6	)			1.4				(2.2	)			(2.4	)			5.1				2.7
Acquisition costs			—				—				—				(0.6	)			0.2				(0.4	)
Corporate			(2.1	)			1.3				(0.8	)			(1.2	)			0.4				(0.8	)
Legacy investments			0.5				2.9				3.4				(0.5	)			0.2				(0.3	)
Total		$	(12.6	)		$	8.6			$	(4.0	)		$	(14.0	)		$	9.6			$	(4.4	)
Diluted earnings (loss) per share										$	(0.04	)										$	(0.04	)
4th Quarter
Interest and banking costs		$	(7.8	)		$	3.1			$	(4.7	)		$	(9.4	)		$	3.8			$	(5.6	)
Clean-energy related			(3.3	)			1.5				(1.8	)			(2.3	)			0.6				(1.7	)
Acquisition costs			—				—				—				(0.2	)			—				(0.2	)
State sales tax matter			3.6				(1.4	)			2.2				—				—				—
Corporate			(0.9	)			(2.0	)			(2.9	)			(5.5	)			1.7				(3.8	)
Legacy investments			—				—				—				(16.2	)			35.5				19.3
Total		$	(8.4	)		$	1.2			$	(7.2	)		$	(33.6	)		$	41.6			$	8.0
Diluted earnings (loss) per share										$	(0.07	)										$	0.08
YTD
Interest and banking costs		$	(29.5	)		$	11.8			$	(17.7	)		$	(36.4	)		$	14.6			$	(21.8	)		$	(10.3	)		$	4.1			$	(6.2	)
Clean-energy related			(8.3	)			3.5				(4.8	)			(6.9	)			14.4				7.5				(2.6	)			2.2				(0.4	)
Acquisition costs			(0.5	)			0.2				(0.3	)			(2.9	)			1.0				(1.9	)			(1.7	)			0.5				(1.2	)
State sales tax matter			3.6				(1.4	)			2.2				—				—				—				—				—				—
Corporate			(5.7	)			1.1				(4.6	)			(9.2	)			2.7				(6.5	)			(2.3	)			0.7				(1.6	)
Legacy investments			0.6				3.3				3.9				(16.4	)			35.6				19.2				—				—				—
Total		$	(39.8	)		$	18.5			$	(21.3	)		$	(71.8	)		$	68.3			$	(3.5	)		$	(16.9	)		$	7.5			$	(9.4	)
Diluted earnings (loss) per share										$	(0.21	)										$	(0.03	)										$	(0.08	)

Corporate - As Reported

 

Page 14