Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 01, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Willis Towers Watson Plc. | |
Entity Central Index Key | 1,140,536 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 130,769,522 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Statement [Abstract] | ||||
Revenues | $ 1,990 | $ 1,953 | $ 4,282 | $ 4,272 |
Costs of providing services | ||||
Salaries and benefits | 1,275 | 1,211 | 2,652 | 2,464 |
Other operating expenses | 406 | 391 | 829 | 792 |
Depreciation | 51 | 51 | 100 | 97 |
Amortization | 140 | 149 | 281 | 300 |
Restructuring costs | 0 | 27 | 0 | 54 |
Transaction and integration expenses | 55 | 63 | 98 | 103 |
Total costs of providing services | 1,927 | 1,892 | 3,960 | 3,810 |
Income from operations | 63 | 61 | 322 | 462 |
Interest expense | (52) | (46) | (103) | (92) |
Other income, net | 63 | 34 | 119 | 77 |
INCOME FROM OPERATIONS BEFORE INCOME TAXES | 74 | 49 | 338 | 447 |
Provision for income taxes | (9) | (8) | (52) | (54) |
NET INCOME | 65 | 41 | 286 | 393 |
Income attributable to non-controlling interests | (7) | (8) | (13) | (16) |
NET INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON | $ 58 | $ 33 | $ 273 | $ 377 |
EARNINGS PER SHARE | ||||
Basic earnings/(loss) per share (usd per share) | $ 0.44 | $ 0.24 | $ 2.06 | $ 2.77 |
Diluted earnings/(loss) per share (usd per share) | 0.44 | 0.24 | 2.05 | 2.75 |
Cash dividends declared per share (usd per share) | $ 0.60 | $ 0.53 | $ 1.20 | $ 1.06 |
Comprehensive (loss)/income before non-controlling interests | $ (111) | $ 181 | $ 194 | $ 512 |
Comprehensive income attributable to non-controlling interests | (6) | (16) | (13) | (27) |
Comprehensive (loss)/income attributable to Willis Towers Watson | $ (117) | $ 165 | $ 181 | $ 485 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 | |
ASSETS | |||
Cash and cash equivalents | $ 911 | $ 1,030 | |
Fiduciary assets | 14,126 | 12,155 | |
Accounts receivable, net | 2,394 | 2,246 | |
Prepaid and other current assets | 458 | 430 | |
Total current assets | 17,889 | 15,861 | |
Fixed assets, net | 924 | 985 | |
Goodwill | 10,468 | 10,519 | |
Other intangible assets, net | 3,562 | 3,882 | |
Pension benefits assets | 902 | 764 | |
Other non-current assets | 468 | 447 | |
Total non-current assets | 16,324 | 16,597 | |
TOTAL ASSETS | 34,213 | 32,458 | |
LIABILITIES AND EQUITY | |||
Fiduciary liabilities | 14,126 | 12,155 | |
Deferred revenue and accrued expenses | 1,357 | 1,711 | |
Short-term debt and current portion of long-term debt | 85 | 85 | |
Other current liabilities | 814 | 804 | |
Total current liabilities | 16,382 | 14,755 | |
Long-term debt | 4,589 | 4,450 | |
Liability for pension benefits | 1,185 | 1,259 | |
Deferred tax liabilities | 691 | 615 | |
Provision for liabilities | 546 | 558 | |
Other non-current liabilities | 446 | 544 | |
Total non-current liabilities | 7,457 | 7,426 | |
TOTAL LIABILITIES | 23,839 | 22,181 | |
COMMITMENTS AND CONTINGENCIES | |||
REDEEMABLE NON-CONTROLLING INTEREST | 27 | 28 | |
EQUITY (i) | |||
Additional paid-in capital | 10,566 | 10,538 | |
Retained earnings | 1,270 | 1,104 | |
Accumulated other comprehensive loss, net of tax | (1,605) | (1,513) | |
Treasury shares, at cost, 17,519 shares in 2018 and 2017, and 40,000 shares, €1 nominal value, in 2018 and 2017 | (3) | (3) | |
Total Willis Towers Watson shareholders’ equity | [1] | 10,228 | 10,126 |
Non-controlling interests | 119 | 123 | |
Total equity | 10,347 | 10,249 | |
TOTAL LIABILITIES AND EQUITY | $ 34,213 | $ 32,458 | |
[1] | Equity includes (a) Ordinary shares $0.000304635 nominal value; Authorized 1,510,003,775; Issued 130,729,558 (2018) and 132,139,581 (2017); Outstanding 130,729,558 (2018) and 132,139,581 (2017); (b) Ordinary shares, €1 nominal value; Authorized and Issued 40,000 shares in 2018 and 2017; and (c) Preference shares, $0.000115 nominal value; Authorized 1,000,000,000 and Issued none in 2018 and 2017. |
Condensed Consolidated Balance4
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) | Jun. 30, 2018$ / sharesshares | Jun. 30, 2018€ / sharesshares | Dec. 31, 2017$ / sharesshares | Dec. 31, 2017€ / sharesshares |
Ordinary shares, $0.000304635 nominal value | ||||
Ordinary shares, nominal value (euro per share) | $ / shares | $ 0.000304635 | $ 0.000304635 | ||
Ordinary shares, shares authorized | 1,510,003,775 | 1,510,003,775 | 1,510,003,775 | 1,510,003,775 |
Ordinary shares, shares issued | 130,729,558 | 130,729,558 | 132,139,581 | 132,139,581 |
Ordinary shares, shares outstanding | 130,729,558 | 130,729,558 | 132,139,581 | 132,139,581 |
Treasury shares | 17,519 | 17,519 | 17,519 | 17,519 |
Ordinary shares, €1 nominal value | ||||
Ordinary shares, nominal value (euro per share) | € / shares | € 1 | € 1 | ||
Ordinary shares, shares authorized | 40,000 | 40,000 | 40,000 | 40,000 |
Ordinary shares, shares issued | 40,000 | 40,000 | 40,000 | 40,000 |
Treasury shares | 40,000 | 40,000 | 40,000 | 40,000 |
Preference shares, $0.000115 nominal value | ||||
Preference shares, nominal value (usd per share) | $ / shares | $ 0.000115 | $ 0.000115 | ||
Preference shares, shares authorized | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 |
Preference shares, shares issued | 0 | 0 | 0 | 0 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
NET INCOME | $ 286 | $ 393 |
Adjustments to reconcile net income to total net cash from operating activities: | ||
Depreciation | 104 | 112 |
Amortization | 281 | 300 |
Net periodic benefit of defined benefit pension plans | (78) | (65) |
Provision for doubtful receivables from clients | 10 | 11 |
Benefit from deferred income taxes | (48) | (74) |
Share-based compensation | 4 | 33 |
Net loss on disposal of operations | 9 | 0 |
Non-cash foreign exchange loss/(gain) | 15 | (13) |
Other, net | 3 | 33 |
Changes in operating assets and liabilities, net of effects from purchase of subsidiaries: | ||
Accounts receivable | 81 | (174) |
Fiduciary assets | (2,193) | (1,934) |
Fiduciary liabilities | 2,193 | 1,934 |
Other assets | 70 | (216) |
Other liabilities | (325) | (73) |
Provisions | (17) | 52 |
Net cash from operating activities | 395 | 319 |
CASH FLOWS USED IN INVESTING ACTIVITIES | ||
Additions to fixed assets and software for internal use | (141) | (119) |
Capitalized software costs | (25) | (32) |
Acquisitions of operations, net of cash acquired | (8) | (13) |
Net proceeds from sale of operations | 4 | 0 |
Other, net | 17 | 9 |
Net cash used in investing activities | (153) | (155) |
CASH FLOWS USED IN FINANCING ACTIVITIES | ||
Net borrowings on revolving credit facility | 197 | 283 |
Senior notes issued | 0 | 650 |
Proceeds from issuance of other debt | 0 | 32 |
Debt issuance costs | 0 | (9) |
Repayments of debt | (43) | (695) |
Repurchase of shares | (269) | (296) |
Proceeds from issuance of shares | 18 | 37 |
Payments for deferred and contingent consideration related to acquisitions | (41) | (44) |
Cash paid for employee taxes on withholding shares | (30) | (3) |
Dividends paid | (149) | (137) |
Acquisitions of and dividends paid to non-controlling interests | (18) | (14) |
Net cash used in financing activities | (335) | (196) |
DECREASE IN CASH AND CASH EQUIVALENTS | (93) | (32) |
Effect of exchange rate changes on cash and cash equivalents | (26) | 14 |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 1,030 | 870 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ 911 | $ 852 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Changes in Equity (Unaudited) - USD ($) shares in Thousands, $ in Millions | Total | Shares outstanding | Ordinary shares and APIC | Retained earnings | Treasury shares | AOCL | Total WTW shareholders’ equity | Non-controlling interests | Redeemable Noncontrolling interests | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Adoption of New Pronouncement | Accounting Standards Update 2016-16 | $ (3) | $ (3) | $ (3) | |||||||||
Equity, beginning balance (in shares) at Dec. 31, 2016 | 136,297 | |||||||||||
Equity, beginning balance at Dec. 31, 2016 | 10,183 | $ 10,596 | [1] | 1,452 | $ (99) | $ (1,884) | [1] | 10,065 | $ 118 | |||
Temporary equity, beginning balance at Dec. 31, 2016 | [2] | $ 51 | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Shares repurchased (in shares) | (2,238) | |||||||||||
Shares repurchased | $ (296) | (278) | (18) | (296) | ||||||||
Shares canceled, shares | 0 | |||||||||||
Shares canceled | $ 96 | 0 | 96 | 96 | ||||||||
Net income | 388 | 377 | 377 | 11 | ||||||||
Net income, redeemable | 5 | |||||||||||
Net income, total | 393 | |||||||||||
Dividends | (158) | (146) | (146) | (12) | (3) | |||||||
Other comprehensive (loss)/income | 115 | 108 | [1] | 108 | 7 | |||||||
Other comprehensive income, redeemable | [2] | 4 | ||||||||||
Other comprehensive income, total | 119 | |||||||||||
Issue of shares under employee stock compensation plans and related tax benefits (in shares) | 554 | |||||||||||
Issuance of shares under employee stock compensation plans | 38 | 38 | 38 | |||||||||
Share-based compensation | 33 | 33 | 33 | |||||||||
Additional non-controlling interests | (1) | (1) | (1) | 0 | ||||||||
Foreign currency translation | (8) | (8) | (8) | |||||||||
Equity, ending balance (in shares) at Jun. 30, 2017 | 134,613 | |||||||||||
Equity, ending balance at Jun. 30, 2017 | 10,387 | 10,658 | 1,402 | (21) | (1,776) | [1] | 10,263 | 124 | ||||
Temporary equity, ending balance at Jun. 30, 2017 | 57 | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Net income, total | 41 | |||||||||||
Equity, ending balance (in shares) at Jun. 30, 2017 | 134,613 | |||||||||||
Equity, ending balance at Jun. 30, 2017 | 10,387 | 10,658 | 1,402 | (21) | (1,776) | [1] | 10,263 | 124 | ||||
Temporary equity, ending balance at Jun. 30, 2017 | 57 | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Adoption of New Pronouncement | Accounting Standards Update 2014-09 [Member] | 317 | 317 | 317 | |||||||||
Equity, beginning balance (in shares) at Dec. 31, 2017 | 132,140 | |||||||||||
Equity, beginning balance at Dec. 31, 2017 | 10,249 | 10,538 | 1,104 | (3) | (1,513) | [1] | 10,126 | 123 | ||||
Temporary equity, beginning balance at Dec. 31, 2017 | [2] | 28 | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Shares repurchased (in shares) | (1,768) | |||||||||||
Shares repurchased | (269) | (269) | (269) | |||||||||
Net income | 284 | 273 | 273 | 11 | ||||||||
Net income, redeemable | 2 | |||||||||||
Net income, total | 286 | |||||||||||
Dividends | (171) | (155) | (155) | (16) | (2) | |||||||
Other comprehensive (loss)/income | (91) | (92) | [1] | (92) | 1 | |||||||
Other comprehensive income, redeemable | (1) | |||||||||||
Other comprehensive income, total | (92) | |||||||||||
Issue of shares under employee stock compensation plans and related tax benefits (in shares) | 358 | |||||||||||
Issuance of shares under employee stock compensation plans | 18 | 18 | 18 | |||||||||
Share-based compensation | 4 | 4 | 4 | |||||||||
Foreign currency translation | 6 | 6 | 6 | |||||||||
Equity, ending balance (in shares) at Jun. 30, 2018 | 130,730 | |||||||||||
Equity, ending balance at Jun. 30, 2018 | 10,347 | 10,566 | 1,270 | (3) | (1,605) | 10,228 | 119 | |||||
Temporary equity, ending balance at Jun. 30, 2018 | [2] | 27 | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Net income, total | 65 | |||||||||||
Equity, ending balance (in shares) at Jun. 30, 2018 | 130,730 | |||||||||||
Equity, ending balance at Jun. 30, 2018 | $ 10,347 | $ 10,566 | $ 1,270 | $ (3) | $ (1,605) | $ 10,228 | $ 119 | |||||
Temporary equity, ending balance at Jun. 30, 2018 | [2] | $ 27 | ||||||||||
[1] | Accumulated other comprehensive loss, net of tax (‘AOCL’). | |||||||||||
[2] | The non-controlling interest is related to Max Matthiessen Holding AB. |
Nature of Operations
Nature of Operations | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | Nature of Operations Willis Towers Watson plc is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. The Company has over 43,000 employees servicing more than 140 countries. We offer our clients a broad range of services to help them identify and control their risks, and to enhance business performance by improving their ability to attract, retain and engage a talented workforce. Our risk control services range from strategic risk consulting (including providing actuarial analysis), to a variety of due diligence services, to the provision of practical on-site risk control services (such as health and safety or property loss control consulting), as well as analytical and advisory services (such as hazard modeling and reinsurance optimization studies). We assist clients in planning how to manage incidents or crises when they occur. These services include contingency planning, security audits and product tampering plans. We help our clients enhance their business performance by delivering consulting services, technology and solutions that help them anticipate, identify and capitalize on emerging opportunities in human capital management, including areas such as employee benefits, total rewards, talent and benefits outsourcing. In addition, we provide investment advice to help clients develop disciplined and efficient strategies to meet their investment goals. As an insurance broker, we act as an intermediary between our clients and insurance carriers by advising our clients on their risk management requirements, helping them determine the best means of managing risk and negotiating and placing insurance with insurance carriers through our global distribution network. We operate the largest private Medicare exchange in the U.S. Through this exchange and those for active employees, we help our clients move to a more sustainable economic model by capping and controlling the costs associated with healthcare benefits. We are not an insurance company, and therefore we do not underwrite insurable risks for our own account. We believe our broad perspective allows us to see the critical intersections between talent, assets and ideas - the dynamic formula that drives business performance. |
Basis of Presentation and Recen
Basis of Presentation and Recent Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Recent Accounting Policies | Basis of Presentation and Recent Accounting Pronouncements Basis of Presentation The accompanying unaudited quarterly condensed consolidated financial statements of Willis Towers Watson and our subsidiaries are presented in accordance with the rules and regulations of the Securities and Exchange Commission (‘SEC’) for quarterly reports on Form 10-Q and therefore do not include all of the information and footnotes required by U.S. generally accepted accounting principles (‘GAAP’). We have reclassified certain prior period amounts to conform to current period presentation due to the adoption of certain updated accounting standards (see below for further discussion). In the opinion of management, these condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, which are necessary for a fair presentation of the condensed consolidated financial statements and results for the interim periods. All intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements should be read together with the Company’s Annual Report on Form 10-K, filed with the SEC on February 28, 2018, and may be accessed via EDGAR on the SEC’s web site at www.sec.gov. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results that can be expected for the entire year. The Company experiences seasonal fluctuations of its revenue. Revenue is typically higher during the Company’s first and fourth quarters due to the timing of broking-related activities. The results reflect certain estimates and assumptions made by management, including those estimates used in calculating acquisition consideration and fair value of tangible and intangible assets and liabilities, professional liability claims, estimated bonuses, valuation of billed and unbilled receivables, and anticipated tax liabilities that affect the amounts reported in the condensed consolidated financial statements and related notes. Recent Accounting Pronouncements Not Yet Adopted In February 2016, the Financial Accounting Standards Board (‘FASB’) issued Accounting Standard Update (‘ASU’) No. 2016-02, Leases , which requires a lessee to recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. Additional ASUs have since been issued which provide amended and additional guidance for the implementation of ASU No. 2016-02. All related guidance has been codified into, and is now known as, Accounting Standards Codification (‘ASC’) 842 (‘ASC 842’). ASC 842 becomes effective for the Company at the beginning of its 2019 calendar year, at which time the Company will adopt it, although early adoption is permitted. The Company is still in the process of finalizing its complete inventory of lease agreements to determine the full impact the standard will have, however the majority of its leases are currently considered operating leases and will be capitalized as a lease asset on its balance sheet with a related lease liability for the obligated lease payments. While the Company is still evaluating which practical expedients afforded by ASC 842 it will select, the Company has provisionally determined the following: • The Company will adopt the standard using the modified retrospective approach whereby it will recognize a transition adjustment at the effective date of ASC 842, January 1, 2019, rather than at the beginning of the earliest comparative period presented. • Additionally, to prepare for the additional required disclosures and new accounting treatment, the Company is currently implementing additional tools to its lease accounting and data collection processes, which will be in place and effective on January 1, 2019. In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment , which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, current U.S. GAAP requires the performance of procedures to determine the fair value at the impairment testing date of assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, the amendments under this ASU require the goodwill impairment test to be performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The ASU becomes effective for the Company on January 1, 2020. The amendments in this ASU should be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017, and the Company is still evaluating when to adopt this ASU. The Company does not expect an immediate impact to its condensed consolidated financial statements upon adopting this ASU since the most recent Step 1 goodwill impairment test resulted in fair values in excess of carrying values for all reporting units at October 1, 2017. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities , which provides amendments under six specific objectives to better align risk management activities and financial reporting, and to simplify disclosure, presentation, hedging and the testing and measurement of ineffectiveness. The ASU becomes effective for the Company on January 1, 2019. Early adoption is permitted, and any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company is currently assessing when it will adopt this standard, and the impact that this standard will have on its condensed consolidated financial statements. In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows for a reclassification from accumulated other comprehensive income to retained earnings for ‘stranded’ tax effects (those tax effects of items within accumulated other comprehensive income resulting from the historical corporate income tax rate reduction) resulting from the Tax Cuts and Jobs Act. The amendments within this ASU also require certain disclosures about stranded tax effects. The ASU becomes effective for the Company on January 1, 2019. Early adoption is permitted, and any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company will adopt this standard on January 1, 2019, and is evaluating the impact that this standard will have on its condensed consolidated financial statements. Adopted In May 2014, the FASB issued ASU No. 2014-09, Revenue From Contracts With Customers . The new standard supersedes most current revenue recognition guidance and eliminates most industry-specific guidance. The ASU is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. Entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. Additional ASUs have since been issued which provide further guidance, examples and technical corrections for the implementation of ASU No. 2014-09. All related guidance has been codified into, and is now known as, Accounting Standards Codification 606, Revenue From Contracts With Customers (‘ASC 606’). The guidance was effective for, and was adopted by, the Company as of January 1, 2018 using the modified retrospective method, and has a material impact on the condensed consolidated financial statements and their accompanying notes containing our 2018 information. A full description of each impact, as well as the new disclosures required by ASC 606, is discussed below and in Note 3 — Revenue . In March 2017, the FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost , which requires entities to (1) disaggregate the current service-cost component from the other components of net benefit cost (the ‘other components’) and present it in the income statement with other current compensation costs for related employees and (2) present the other components elsewhere in the income statement and outside of income from operations if that subtotal is presented. In addition, the ASU requires entities to disclose the income statement lines that contain the other components if they are not presented or included in appropriately described separate lines. The ASU became effective for the Company on January 1, 2018 and it has applied the standard retrospectively in this Quarterly Report on Form 10-Q. As a result of adopting this ASU, the Company classified or reclassified net periodic pension and postretirement benefit credits totaling $61 million and $140 million for the three and six months ended June 30, 2018, respectively, and $63 million and $125 million for the three and six months ended June 30, 2017, respectively, from salaries and benefits expense to other income, net, in the condensed consolidated statements of comprehensive income. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments , which amends guidance on presentation and classification of eight specific cash flow issues with the objective of reducing diversity in practice. The ASU became effective for the Company on January 1, 2018 on a prospective basis. While there was no impact to the condensed consolidated statement of cash flows for the six months ended June 30, 2018, the Company will reflect the new guidance prospectively as applicable transactions occur. In May 2017, the FASB issued ASU No. 2017-09, Stock Compensation - Scope of Modification Accounting , which provides guidance on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The ASU requires that an entity should account for the effects of a modification unless the fair value (or calculated value or intrinsic value, if used), vesting conditions and classification (as equity or liability) of the modified award are all the same as for the original award immediately before the modification. The ASU became effective for the Company on January 1, 2018 and will be applied prospectively to any award modified on or after this date. There is no immediate impact to the accompanying condensed consolidated financial statements, until such time as an award may be modified in 2018 or forward. Changes to Accounting Policies As a result of the adoption of ASC 606 on January 1, 2018, we have updated our accounting policies for each revenue stream. These policies relate to the accounting for revenue and certain related costs for our 2018 results, consistent with the modified retrospective adoption guidance we have elected to apply. Our revenue recognition policies for 2017 and prior reporting periods are reflected in the notes to our annual consolidated financial statements as filed on February 28, 2018, and amended on June 6, 2018, in our Annual Report on Form 10-K. We have also included an accounting policy resulting from U.S. Tax Reform. Accounting for income taxes on Global Intangible Low-Taxed Income (‘GILTI’) We recognize the tax on GILTI as a period expense in the period the tax is incurred. Under this policy, we have not provided deferred taxes related to temporary differences, that upon their reversal, will affect the amount of income subject to GILTI in the period. Revenue Recognition We recognize revenue from a variety of services, with broking, consulting and outsourced administration representing our most significant offerings. All other revenue streams, which can be recognized at either point in time or over time, are individually less significant and are grouped in Other in our revenue disaggregation disclosures in Note 3 — Revenue . These Other revenue streams represent approximately 5% of customer contract revenue for the three and six months ended June 30, 2018. Broking — Representing approximately 46% and 48% of customer contract revenue for the three and six months ended June 30, 2018, respectively, in our broking arrangements, we earn revenue by acting as an intermediary in the placement of effective insurance policies. Generally, we act as an agent and view our clients to be the party looking to obtain insurance coverage for various risks, or employers or sponsoring organizations looking to obtain insurance coverage for their employees or members. Also, we act as an agent in reinsurance broking arrangements where our client is the party looking to cede risks to the reinsurance markets. Our primary performance obligation under the majority of these arrangements is to place an effective insurance or reinsurance policy, but there can also be significant post-placement obligations in certain contracts to which we need to allocate revenue. The most common of these is for claims handling or call center support. The revenue recognition method for these, after the relative fair value allocation, is described further as part of the ‘Outsourced Administration’ description below. Due to the nature of the majority of our broking arrangements, no single document constitutes the contract for ASC 606 purposes. Our services may be governed by a mixture of different types of contractual arrangements depending on the jurisdiction or type of coverage, including terms of business agreements, broker-of-record letters, statements of work or local custom and practice. This is then confirmed by the client’s acceptance of the underlying insurance contract. Prior to the policy inception date, the client has not accepted nor formally committed to perform under the arrangement (i.e. pay for the insurance coverage in place). Therefore in the majority of broking arrangements, the contract date is the date the insurance policy incepts. However, in certain instances such as Medicare broking or Affinity arrangements, where the employer or sponsoring organization is our customer, client acceptance of underlying individual policy placements is not required, and therefore the date at which we have a contract with a customer is not dependent upon placement. As noted, our primary performance obligations typically consist of only the placement of an effective insurance policy which precedes the inception date of the policy. Therefore, most of our fulfillment costs are incurred before we can recognize revenue, and are thus deferred during the pre-placement process. Where we have material post-placement services obligations, we estimate the relative fair value of the post-placement services using either the expected cost-plus-margin or the market assessment approach. Fees for our broking services consist of commissions or fees negotiated in lieu of commissions. At times, we may receive additional income for performing these services from the insurance and reinsurance carriers market, which is collectively referred to as ‘market derived income’. In situations in which our fees are not fixed but are variable, we must estimate the likely commission per policy, taking into account the likelihood of cancellation before the end of the policy. For Medicare broking, Affinity arrangements and proportional treaty reinsurance broking, the commissions to which we will be entitled can vary based on the underlying individual insurance policies that are placed. For proportional treaty reinsurance broking in particular, we base the estimate of transaction prices on supportable evidence from an analysis of past transactions, and only include amounts that are probable of being received or not refunded (referred to as applying ‘constraint’ under ASC 606). This results in us estimating a transaction price that may be significantly lower than the ultimate amount of commissions we may collect. The transaction price is then adjusted over time as we receive confirmation of our remuneration through receipt of treaty statements. We recognize revenue for most broking arrangements as of a point in time at the later of the policy inception date or when the policy placement is complete, because this is viewed as the date when control is transferred to the client. For Medicare broking, we recognize revenue over time, as we stand ready under our agreements to place retiree Medicare coverage. For this type of broking arrangement, we recognize the majority of our placement revenue in the fourth quarter of the calendar year when the majority of the placement or renewal activity occurs. Consulting — We earn revenue for advisory and consulting work that may be structured as different types of service offerings, including annual recurring projects, projects of a short duration or stand-ready obligations. Collectively, our consulting arrangements represent approximately 39% and 37% of customer contract revenue for the three and six months ended June 30, 2018, respectively. We have engagement letters with our clients that specify the terms and conditions upon which the engagements are based. These terms and conditions can only be changed upon agreement by both parties. In assessing our performance obligations, our consulting work is typically highly integrated, with the various promised services representing inputs of the combined overall output. We view these arrangements to represent a single performance obligation. To the extent we do not integrate our services, as is the case with unrelated services that may be sourced from different areas of our business, we consider these separate performance obligations. Fee terms can be in the form of fixed-fees (including fixed-fees offset by commissions), time-and-expense fees, commissions, per-participant fees, or fees based on assets under management. Payment is typically due on a monthly basis as we perform under the contract, and we are entitled to be reimbursed for work performed to date in the event of termination. The majority of our revenue from these consulting engagements is recognized over time, either because our clients are simultaneously receiving and consuming the benefits of our services, or because we have an enforceable right to payment for performance rendered to date. Additionally, from time to time, we may be entitled to an additional fee based on achieving certain performance criteria. To the extent that we cannot estimate with reasonable assurance the likelihood that we will achieve the performance target, we will ‘constrain’ this portion of the transaction price and recognize it when or as the uncertainty is resolved. We use different performance measures to determine our revenue depending on the nature of the engagement: • Annual recurring projects and projects of short duration. These projects are typically straightforward and highly predictable in nature with either time and expense or fixed fee terms. Time-and-expense fees are recognized as hours or expenses are incurred using the ‘right to invoice’ practical expedient allowed under ASC 606. For fixed-fee arrangements, to the extent estimates can be made of the remaining work required under the arrangement, revenues are based upon the proportional performance method, using the value of labor hours compared to the estimated total value of labor hours. We believe that cost represents a faithful depiction of transfer of value because the completion of these performance obligations is based upon the professional services of employees of differing experience levels and thereby costs. It is appropriate that satisfaction of these performance obligations considers both the number of hours incurred by each employee and the value of each labor hour worked (as opposed to simply the hours worked). • Stand-ready obligations. These projects consist of repetitive monthly or quarterly services performed consistently each period. As none of the activities provided under these services are performed at specified times and quantities, but at the discretion of each customer, our obligation is to stand-ready to perform these services on an as-needed basis. These arrangements represent a ‘series’ performance obligation in accordance with ASC 606. Each time increment (i.e. each month or quarter) of standing ready to provide the overall services is distinct and the customer obtains value from each period of service independent of the other periods of service. Where we recognize revenue on a proportional performance basis, the amount we recognize is affected by a number of factors that can change the estimated amount of work required to complete the project such as the staffing on the engagement and/or the level of client participation. Our periodic engagement evaluations require us to make judgments and estimates regarding the overall profitability and stage of project completion that, in turn, affect how we recognize revenue. We recognize a loss on an engagement when estimated revenues to be received for that engagement are less than the total estimated costs associated with the engagement. Losses are recognized in the period in which the loss becomes probable and the amount of the loss is reasonably estimable. Outsourced Administration — We provide customized benefits outsourcing and co-sourcing solutions services in relation to the administration of defined benefit, defined contribution, and health and welfare plans. These plans are sponsored by our clients to provide benefits to their active or retired employees. Additionally, these services include operating call centers, and may include providing access to, and managing a variety of consumer-directed savings accounts. The operation of call centers and consumer-directed accounts can be provisioned as part of an ongoing administration or solutions service, or separately as part of a broking arrangement. The products and services available to all clients are the same, but the selections by the client can vary and portray customized products and services based on the customer’s specific needs. Our services often include the use of proprietary systems that are configured for each of our clients’ needs. In total, our outsourced administration services represent approximately 10% of customer contract revenue for the three and six months ended June 30, 2018. These contracts typically consist of an implementation phase and an ongoing administration phase: • Implementation phase. Work performed during the implementation phase is considered a set-up activity because it does not transfer a service to the customer, and therefore costs are deferred during this phase of the arrangement. Since these arrangements are longer term in nature and subject to more changes in scope as the project progresses, our contracts generally provide that if the client terminates a contract, we are entitled to an additional payment for services performed through the termination date designed to recover our up-front costs of implementation. • Ongoing administration phase. The ongoing administration phase includes a variety of plan administration services, system hosting and support services. More specifically, these services include data management, calculations, reporting, fulfillment/communications, compliance services, call center support, and in our health and welfare arrangements, annual onboarding and enrollment support. While there are a variety of activities performed, the overall nature of the obligation is to provide an integrated outsourcing solution to the customer. The arrangement represents a stand-ready obligation to perform these activities on an as-needed basis. The customer obtains value from each period of service, and each time increment (i.e., each month, or each benefits cycle in our health and welfare arrangements) is distinct and substantially the same. Accordingly, the ongoing administration services represent a ‘series’ in accordance with ASC 606 and are deemed one performance obligation. We have engagement letters with our clients that specify the terms and conditions upon which the engagements are based. These terms and conditions can only be changed upon agreement by both parties. Fees for these arrangements can be fixed, per- participant-per-month, or in the case of call center services provided in conjunction with our broking services, an allocation based on commissions. Our fees are not typically payable until the commencement of the ongoing administration phase. However, in our health and welfare arrangements, we begin transferring services to our customers approximately four months prior to payments being due as part of our annual onboarding and enrollment work. Although our per-participant-per-month and commission-based fees are considered variable, they are typically predictable in nature, and therefore we generally do not ‘constrain’ any portion of our transaction price estimates. Once fees become payable, payment is typically due on a monthly basis as we perform under the contract, and are entitled to be reimbursed for work performed to date in the event of termination. Revenue is recognized over time as the services are performed because our clients are simultaneously receiving and consuming the benefits of our services. For our health and welfare arrangements where each benefits cycle represents a time increment under the series guidance, revenue is recognized based on proportional performance. We use an input measure (value of labor hours worked) as the measure of progress. Given that the service is stand-ready in nature, it can be difficult to predict the remaining obligation under the benefits cycle. Therefore, the input measure is based on the historical effort expended each month, which is measured as labor cost. This results in slightly more revenue being recognized during periods of annual onboarding since we are performing both our normal monthly services and our annual services during this portion of the benefits cycle. For all other outsourced administration arrangements where a month represents our time increment under the series guidance, we allocate transaction price to the month we are performing our services. Therefore, the amount recognized each month is the variable consideration related to that month plus the fixed monthly or annual fee. The fixed annual or monthly fee is recognized on a straight-line basis. Revenue recognition for these types of arrangements is therefore more consistent throughout the year. Reimbursed expenses — Client reimbursable expenses, including those relating to travel, other out-of-pocket expenses and any third-party costs, are included in revenue, and an equivalent amount of reimbursable expenses is included in other operating expenses as a cost of revenue as incurred. Reimbursed expenses represented approximately 1% of customer contract revenue for the three and six months ended June 30, 2018. Taxes collected from customers and remitted to government authorities are recorded net and are excluded from revenue. Cost to obtain or fulfill contracts Costs to obtain customers include commissions for brokers under specific agreements that would not be incurred without a contract being signed and executed. The Company has elected to apply the ASC 606 ‘practical expedient’ which allows us to expense these costs as incurred if the amortization period related to the resulting asset would be one year or less. The Company has no significant instances of contracts that would be amortized for a period greater than a year, and therefore has no contract costs capitalized for these arrangements. Costs to fulfill include costs incurred by the Company that are expected to be recovered within the expected contract period. The costs associated with our system implementation activities and consulting contracts are recorded through time entry. For our broking business, the Company must estimate the fulfillment costs incurred during the pre-placement of the broking contracts. These judgments include: • which activities in the pre-placement process should be eligible for capitalization; • the amount of time and effort expended on those pre-placement activities; • the amount of payroll and related costs eligible for capitalization; and, • the monthly or quarterly timing of underlying insurance and reinsurance policy inception dates. We amortize costs to fulfill over the period we receive the related benefits. For broking pre-placement costs, this is typically less than a year. In our system implementation and consulting arrangements, we include the likelihood of contract renewals in our estimate of the amortization period, resulting in most costs being amortized for a greater length of time than the initial contract term. |
Revenue Revenue
Revenue Revenue | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contract with Customer [Text Block] | Revenue As of January 1, 2018, the Company adopted ASC 606 . The adoption of this new guidance had a material impact to the amounts and classification of certain balances within our condensed consolidated financial statements and disclosures in the accompanying notes. We adopted ASC 606 using the modified retrospective approach, and elected to apply the following ‘practical expedients’ during adoption: • We elected to apply the new standard only to contracts that are not completed as of the transition date. This had the net effect of reducing revenue recognized under ASC 606 due to the change in method in our Health and Benefits broking business. See a further discussion and quantification for the quarterly results below. • We elected to reflect the aggregate effect of all modifications made to contracts prior to the transition date, January 1, 2018, rather than retrospectively restating the contracts for each of these modifications. We recognized the cumulative effect of initially applying ASC 606 as an adjustment to the opening balance of retained earnings. The comparative periods included within this Quarterly Report on Form 10-Q have not been restated and continue to be reported under the accounting standards in effect for those periods. The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of ASC 606 were as follows: Balance Sheet Balance at December 31, 2017 Adjustments due to ASC 606 Balance at January 1, 2018 ASSETS Accounts receivable, net $ 2,246 $ 309 a $ 2,555 Prepaid and other current assets 430 89 b 519 Fixed assets, net 985 (83 ) c 902 Other non-current assets 447 39 c 486 LIABILITIES Deferred revenue and accrued expenses 1,711 (74 ) d 1,637 Deferred tax liabilities 615 99 e 714 Provision for liabilities 558 12 f 570 EQUITY Retained earnings 1,104 317 g 1,421 In accordance with the modified retrospective adoption requirements of ASC 606, the following disclosures represent the impact of adoption on our condensed consolidated statement of comprehensive income, balance sheet and statement of cash flows: Three Months Ended June 30, 2018 Statement of Comprehensive Income As Reported Balances Without Adoption of ASC 606 Effect of Change Revenue $ 1,990 $ 2,022 $ (32 ) h Costs of providing services Salaries and benefits 1,275 1,272 3 i Depreciation 51 56 (5 ) i Income from operations 63 93 (30 ) INCOME FROM OPERATIONS BEFORE INCOME TAXES 74 104 (30 ) Provision for income taxes (9 ) (15 ) 6 j NET INCOME 65 89 (24 ) NET INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON 58 82 (24 ) EARNINGS PER SHARE Basic earnings per share $ 0.44 $ 0.62 $ (0.18 ) Diluted earnings per share $ 0.44 $ 0.62 $ (0.18 ) Six Months Ended June 30, 2018 Statement of Comprehensive Income As Reported Balances Without Adoption of ASC 606 Effect of Change Revenue $ 4,282 $ 4,573 $ (291 ) h Costs of providing services Salaries and benefits 2,652 2,624 28 i Depreciation 100 110 (10 ) i Income from operations 322 631 (309 ) INCOME FROM OPERATIONS BEFORE INCOME TAXES 338 647 (309 ) Provision for income taxes (52 ) (111 ) 59 j NET INCOME 286 536 (250 ) NET INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON 273 523 (250 ) EARNINGS PER SHARE Basic earnings per share $ 2.06 $ 3.95 $ (1.89 ) Diluted earnings per share $ 2.05 $ 3.94 $ (1.89 ) As of June 30, 2018 Balance Sheet As Reported Balances Without Adoption of ASC 606 Effect of Change ASSETS Accounts receivable, net $ 2,394 $ 2,406 $ (12 ) a Prepaid and other current assets 458 389 69 b Fixed assets, net 924 1,022 (98 ) c Other non-current assets 468 415 53 c LIABILITIES Deferred revenue and accrued expenses 1,357 1,464 (107 ) d Other current liabilities 814 873 (59 ) e Deferred tax liabilities 691 592 99 e Provision for liabilities 546 534 12 f EQUITY Retained earnings 1,270 1,203 67 g Six Months Ended June 30, 2018 Statement of Cash Flows As Reported Balances Without Adoption of ASC 606 Effect of Change Net cash from operating activities $ 395 $ 419 $ (24 ) k Capitalized software costs (25 ) (49 ) 24 k Explanation of Changes The adoption of ASC 606 had the following impacts to our balance sheets at January 1, 2018 and June 30, 2018: a. Accounts receivable, net, now includes receivables that have been billed, not yet billed and short-term contract assets. This adjustment is the result of the cumulative adjustments to revenue that have not yet been collected from our customers, but are expected to be collected within the next twelve months. The most significant increases to this balance result from revenue acceleration under ASC 606 for Medicare and proportional treaty broking commissions. b. Prepaid and other current assets include the impact of costs deferred in connection with our broking pre-placement activities. These costs are being deferred while the related pre-placement work is performed, and amortized as the related revenue is recognized, typically upon policy inception. Since the amortization period associated with these fulfillment costs is less than one year, these deferred costs have been classified as a current asset. c. Prior to the adoption of ASC 606, costs that we deferred related to certain system implementation activities had been included in fixed assets, net. These costs, adjusted based on the guidance in ASC 606, have now been included in other non-current assets. Additionally we have included less significant impacts of adjustments to deferred tax assets and have classified non-current contract assets within non-current assets. d. Deferred revenue has been adjusted primarily to reflect revenue acceleration in our Medicare broking business. Additional adjustments were included to accelerate the license component of certain software arrangements and to net deferred revenue with contract assets. e. Other current liabilities, which includes current taxes payable, and deferred tax liabilities, have been adjusted for the tax effects of the individual changes resulting from the adoption of ASC 606. The income tax expense was calculated based on the U.S. and foreign statutory rates applicable to adjustments made. Where applicable, a U.S. statutory rate of 21% was used. f. Provision for liabilities has been adjusted for additional reserves for long-term post-placement obligations in our broking business. g. Retained earnings has been adjusted for the net impact of the adoption of ASC 606. See the discussion of the significant pre-tax changes by revenue stream in the following section. The following changes are now reflected in our condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2018. Each description also includes a discussion of the impact to retained earnings as of the adoption date. Retained Earnings Increase/(Decrease) at January 1, 2018 Increase/(Decrease) for the Three Months Ended June 30, 2018 Increase/(Decrease) for the Six Months Ended June 30, 2018 Revenue adjustments Medicare broking $ 311 $ (78 ) $ (151 ) Proportional treaty reinsurance broking 50 5 29 Health and benefits broking — 35 (155 ) Other adjustments 28 6 (14 ) Total adjustments related to revenue 389 (32 ) (291 ) Cost adjustments System implementation activities (46 ) 2 4 Other cost adjustments 75 (4 ) 14 Total adjustments related to costs 29 (2 ) 18 Tax effect (101 ) (6 ) (59 ) Total net adjustments $ 317 $ (24 ) $ (250 ) h. Revenue was adjusted for the following significant changes: • Medicare broking — The majority of revenue recognition for this offering, within our Individual Marketplace business, has moved from monthly ratable recognition over the policy period, to recognition upon placement of the policy. Consequently, the Company will now recognize approximately two-thirds of one calendar year of expected commissions during its fourth quarter of the preceding calendar year. The remainder of the revenue is recognized consistently with methods used prior to the adoption of ASC 606. Therefore, at the adoption date, we have reflected a $271 million pre-tax increase to retained earnings for the portion of the revenue that would otherwise have been recognized during our 2018 calendar year since our earnings process was largely completed during the fourth quarter of 2017. Additionally, we have reflected a $40 million pretax adjustment to increase retained earnings related to previously deferred contingent revenue from placements made prior to 2018 because the earnings process was complete under ASC 606. During the three and six months ended June 30, 2018, the accounting for this revenue stream under ASC 606 represented a reduction of revenue from ASC 605, Revenue Recognition (‘ASC 605’) accounting methods of $78 million and $151 million , respectively. • Proportional treaty reinsurance broking — The revenue recognition for proportional treaty reinsurance broking commissions, within our Investment, Risk and Reinsurance segment, has moved from recognition upon the receipt of the monthly or quarterly treaty statements from the ceding insurance carriers, to the recognition of an estimate of expected commissions upon the policy effective date. Since the majority of revenue recognized historically based on these monthly or quarterly statements was received over a two-year period, we reflected a $50 million pretax increase to retained earnings at the adoption date for the portion of revenue that would otherwise have been recognized during our 2018 calendar year related to policies effective in 2017 or prior years. For the three and six months ended June 30, 2018, ASC 606 revenue was higher than ASC 605 revenue by approximately $5 million and $29 million , respectively, related to this adjustment. • Health and benefits broking — Revenue for certain Health and Benefits broking arrangements, in our Human Capital and Benefits segment, will now be recognized evenly over the year to reflect the nature of the ongoing obligations to our customers as well as receipt of the monthly commissions. These contracts are monthly or annual in nature, and are considered complete as of the transition date. Therefore, no retained earnings adjustment is required. The total changes to revenue as a result of this accounting change for the three and six months ended June 30, 2018 was an increase of $35 million and a decrease of $155 million , respectively. • Other adjustments — Certain other revenue changes with individually less significant adjustments were made to retained earnings as of the adoption date totaling a net $28 million . The cumulative changes to revenue for the three and six months ended June 30, 2018 for other revenue streams not discussed above resulting from the ASC 606 adoption was an increase of $6 million and a decrease of $14 million , respectively. i. Salaries and benefits and depreciation expense have been impacted by the guidance for deferred costs. Our accounting for these deferred costs has changed for certain revenue streams with system implementation activities, and other types of arrangements with associated costs, that now meet the criteria for cost deferral under ASC 606: • System implementation activities — For those portions of the business that previously deferred costs, the length of time over which we amortize those costs will extend to a longer estimated contract term. For 2017 and prior years, these costs were amortized over a typical period of 3 - 5 years in accordance with the initial stated terms of the customer agreements. Additionally, the composition of deferred costs has been adjusted to reflect the guidance in ASC 606. A reduction adjustment to retained earnings of $46 million was recorded on the adoption date to reflect these changes. Further, the amortization of the costs are no longer classified as depreciation expense, but rather included in salaries and benefits. These adjustments resulted in an increase in expenses of $2 million and $4 million for the three and six months ended June 30, 2018, respectively. • Other cost adjustments — This guidance now applies to our broking arrangements and certain consulting engagements. While the costs deferred for our broking arrangements will typically be amortized within one year, costs now deferred related to certain consulting arrangements will be amortized over a longer term. We have increased pre-tax retained earnings by $75 million primarily to reflect the total changes to contract costs as of the adoption date. For the three and six months ended June 30, 2018, these changes resulted in expenses decreasing by $4 million and increasing by $14 million , respectively. j. The provision for income taxes for the three and six months ended June 30, 2018 was $6 million and $59 million , respectively, lower than our provision on an ASC 605 basis. The income tax expense was calculated based on the U.S. and foreign statutory rates applicable to adjustments made. Where applicable, a U.S. statutory rate of 21% was used. There was a $101 million net tax reduction to retained earnings upon adoption of ASC 606. The following changes are now reflected in our condensed consolidated statement of cash flows for the six months ended June 30, 2018. k. As part of the changes in accounting for deferred costs, amounts capitalized relating to system implementation activities are now classified as operating cash outflows. Prior to 2018, those costs capitalized under previous guidance were included in the Capitalized software costs as an investing cash outflow. Disaggregation of Revenue The Company reports revenue by segment in Note 4 — Segment Information . The following tables present revenue by service offering and segment, as well as a reconciliation to total revenue for the three and six months ended June 30, 2018. Along with reimbursable expenses and other, total revenue by service offering represents our revenue from customer contracts. See Note 4 — Segment Information for further information. Three months ended June 30, 2018 HCB CRB IRR BDA Corporate (i) Total Broking $ 61 $ 610 $ 224 $ 4 $ — $ 899 Consulting 602 39 107 — 3 751 Outsourced administration 68 16 — 115 — 199 Other 44 2 45 — 2 93 Total revenues by service offering 775 667 376 119 5 1,942 Reimbursable expenses and other (i) 17 — 1 2 4 24 Total revenue from customer contracts $ 792 $ 667 $ 377 $ 121 $ 9 $ 1,966 Interest and other income (ii) 5 7 9 — 3 24 Total revenue $ 797 $ 674 $ 386 $ 121 $ 12 $ 1,990 Six months ended June 30, 2018 HCB CRB IRR BDA Corporate (i) Total Broking $ 137 $ 1,274 $ 615 $ 8 $ — $ 2,034 Consulting 1,233 83 224 — 6 1,546 Outsourced administration 142 39 — 233 — 414 Other 91 5 104 — 3 203 Total revenues by service offering 1,603 1,401 943 241 9 4,197 Reimbursable expenses and other (i) 31 — 3 4 5 43 Total revenue from customer contracts $ 1,634 $ 1,401 $ 946 $ 245 $ 14 $ 4,240 Interest and other income (ii) 9 13 16 — 4 42 Total revenue $ 1,643 $ 1,414 $ 962 $ 245 $ 18 $ 4,282 ____________________ (i) Reimbursable expenses and other, as well as Corporate revenue, are excluded from segment revenue, but included in total revenue on the condensed consolidated statements of comprehensive income. (ii) Interest and other income is included in segment revenue and total revenue, however it has been presented separately in the above tables because it does not arise directly from contracts with customers. Individual revenue streams aggregating to less than 5% of total revenue have been included within the Other line in the tables above. The following tables present revenue by the geography where our work is performed for the three and six months ended June 30, 2018. The reconciliation to total revenue on our condensed consolidated statements of comprehensive income and to segment revenue is shown in the tables above. Three months ended June 30, 2018 HCB CRB IRR BDA Corporate Total North America $ 467 $ 259 $ 105 $ 119 $ 5 $ 955 Great Britain 120 170 182 — — 472 Western Europe 124 121 51 — — 296 International 64 117 38 — — 219 Total revenue by geography $ 775 $ 667 $ 376 $ 119 $ 5 $ 1,942 Six months ended June 30, 2018 HCB CRB IRR BDA Corporate Total North America $ 929 $ 474 $ 258 $ 241 $ 9 $ 1,911 Great Britain 249 318 477 — — 1,044 Western Europe 278 360 122 — — 760 International 147 249 86 — — 482 Total revenue by geography $ 1,603 $ 1,401 $ 943 $ 241 $ 9 $ 4,197 Contract Balances The Company reports accounts receivable, net on the condensed consolidated balance sheet, which includes billed and unbilled receivables and current contract assets. In addition to accounts receivable, net, the Company had the following non-current contract assets and deferred revenue balances at June 30, 2018 and January 1, 2018: June 30, 2018 January 1, 2018 Billed receivables, net of allowance for doubtful debts of $49 million and $45 million $ 1,827 $ 1,933 Unbilled receivables 371 276 Current contract assets 196 346 Accounts receivable, net $ 2,394 $ 2,555 Non-current contract assets $ 5 $ 5 Deferred revenue $ 484 $ 463 The Company receives payments from customers based on billing schedules or terms as written in our contracts. Those balances denoted as contract assets relate to situations where we have completed some or all performance under the contract, however our right to consideration is conditional. Contract assets result most materially in our Medicare broking and proportional treaty broking businesses. Billed and unbilled receivables are recorded when the right to consideration becomes unconditional. Deferred revenue relates to payments received in advance of performance under the contract, and is recognized as revenue as (or when) we perform under the contract. During the three and six months ended June 30, 2018, revenue of approximately $52 million and $136 million , respectively, was recognized that was reflected as deferred revenue at January 1, 2018. During the three months ended June 30, 2018, revenue of approximately $66 million was recognized that was reflected as deferred revenue at March 31, 2018. The primary driver for the changes in contract assets and liabilities from January 1, 2018 to June 30, 2018 was the collection of cash, which either reduced the contract assets, or added additional deferred revenue. During the three and six months ended June 30, 2018, the Company recognized no material revenue related to performance obligations satisfied in a prior period. Performance Obligations The Company has contracts for which performance obligations have not been satisfied as of June 30, 2018 or have been partially satisfied as of June 30, 2018. The following table shows the expected timing for the satisfaction of the remaining performance obligations. This table does not include contract renewals nor variable consideration, which was excluded from the transaction prices in accordance with the guidance on constraining estimates of variable consideration. In addition, the Company has elected not to disclose the remaining performance obligations when one or both of the following circumstances apply: • Performance obligations which are part of a contract that has an original expected duration of less than one year, and • Performance obligations satisfied in accordance with ASC 606-10-55-18 (‘right to invoice’). Remainder of 2018 2019 2020 onward Total Revenue expected to be recognized on contracts as of June 30, 2018 $ 220 $ 390 $ 638 $ 1,248 Since most of the Company’s contracts are cancellable with less than one year’s notice, and have no substantive penalty for cancellation, the majority of the Company’s remaining performance obligations as of June 30, 2018 has been excluded from the table above. Costs to obtain or fulfill a contract The Company incurs costs to obtain or fulfill contracts which it would not incur if a contract with a customer was not executed. The following table shows the categories of costs that are capitalized and deferred over the expected life of a contract. Costs to fulfill Balance at January 1, 2018 $ 126 New capitalized costs 222 Amortization (228 ) Impairments — Foreign currency translation (2 ) Balance at June 30, 2018 $ 118 |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information Willis Towers Watson has four reportable operating segments or business areas: • Human Capital and Benefits (‘HCB’) • Corporate Risk and Broking (‘CRB’) • Investment, Risk and Reinsurance (‘IRR’) • Benefits Delivery and Administration (‘BDA’) Willis Towers Watson’s chief operating decision maker is its chief executive officer. We determined that the operational data used by the chief operating decision maker is at the segment level. Management bases strategic goals and decisions on these segments and the data presented below is used to assess the adequacy of strategic decisions, the method of achieving these strategies and related financial results. Management evaluates the performance of its segments and allocates resources to them based on net operating income on a pre-bonus, pre-tax basis. The Company experiences seasonal fluctuations of its revenue. Revenue is typically higher during the Company’s first and fourth quarters due to timing of broking-related activities, and although the mix of quarterly income will change as a result of the adoption of ASC 606, our first and fourth quarters will continue to be the highest. Beginning in 2018, we made certain changes that affect our segment results that are not material. These changes include the following: • To better align our business within our segments, we (1) moved portions of our Insurance, Consulting and Technology business from IRR to CRB; (2) moved certain resources that support our outsourced administration offerings from HCB to BDA; and (3) moved our CEEMEA-based strategy study business from our Health and Benefits business in HCB to CRB. • As part of the continued integration of our businesses, we have applied our 2018 corporate expense allocation methodology to our 2017 segment results in order to standardize our methodologies and allocate those expenses for period over period comparatives. Such methodology updates include (1) an increased allocation for Gras Savoye as it no longer benefits as a new acquisition; (2) adjustments relating to changes in segment and total headcount; and (3) the addition of certain allocable direct expenses, which lowers the corporate expense allocation. In connection with our segment realignment, we reassigned a proportional amount of the carrying value of goodwill between the CRB and IRR segments. See Note 7 — Goodwill and Other Intangible Assets for further information. The prior period comparatives reflected in the tables below have been retrospectively adjusted to reflect our current segment presentation. The following table presents segment revenue and segment operating income for our reportable segments for the three months ended June 30, 2018 and 2017. Three Months Ended June 30, HCB CRB IRR BDA Total 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 Segment revenue $ 780 $ 726 $ 674 $ 644 $ 385 $ 374 $ 119 $ 178 $ 1,958 $ 1,922 Segment operating income/(loss) $ 149 $ 122 $ 97 $ 104 $ 89 $ 89 $ (31 ) $ 35 $ 304 $ 350 The following table presents segment revenue and segment operating income for our reportable segments for the six months ended June 30, 2018 and 2017. Six Months Ended June 30, HCB CRB IRR BDA Total 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 Segment revenue $ 1,612 $ 1,675 $ 1,414 $ 1,316 $ 959 $ 865 $ 241 $ 359 $ 4,226 $ 4,215 Segment operating income/(loss) $ 342 $ 467 $ 222 $ 221 $ 350 $ 303 $ (63 ) $ 73 $ 851 $ 1,064 The following table presents reconciliations of the information reported by segment to the Company’s consolidated amounts reported for the three and six months ended June 30, 2018 and 2017 . Three Months Ended Six Months Ended 2018 2017 2018 2017 Revenue: Total segment revenue $ 1,958 $ 1,922 $ 4,226 $ 4,215 Reimbursable expenses and other 32 31 56 57 Revenue $ 1,990 $ 1,953 $ 4,282 $ 4,272 Total segment operating income $ 304 $ 350 $ 851 $ 1,064 Amortization (140 ) (149 ) (281 ) (300 ) Restructuring costs — (27 ) — (54 ) Transaction and integration expenses (55 ) (63 ) (98 ) (103 ) Unallocated, net (i) (46 ) (50 ) (150 ) (145 ) Income from operations 63 61 322 462 Interest expense (52 ) (46 ) (103 ) (92 ) Other income, net 63 34 119 77 Income from operations before income taxes $ 74 $ 49 $ 338 $ 447 ________________________ (i) Includes certain costs, primarily related to corporate functions which are not directly related to the segments, and certain differences between budgeted expenses determined at the beginning of the year and actual expenses that we report for U.S. GAAP purposes. The Company does not currently provide asset information by reportable segment as it does not routinely evaluate the total asset position by segment. |
Restructuring Costs
Restructuring Costs | 6 Months Ended |
Jun. 30, 2018 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Costs | Restructuring Costs The Company had two major elements of the restructuring costs included in its condensed consolidated financial statements, which were the Operational Improvement Program and the Business Restructure Program. Costs for each program were fully accrued and completed by the end of 2017 and 2016, respectively. No additional costs for either program have been incurred during 2018. Operational Improvement Program - In April 2014, Legacy Willis announced a multi-year operational improvement program designed to strengthen its client service capabilities and to deliver future cost savings. The main elements of the program included: moving more than 3,500 support roles from higher cost locations to facilities in lower cost locations; net workforce reductions in support positions; lease consolidation in real estate; and information technology systems simplification and rationalization. The Company recognized restructuring costs of $27 million and $54 million for the three and six months ended June 30, 2017 , respectively, related to the Operational Improvement Program. The Company spent a cumulative amount of $441 million on restructuring charges for this program. Business Restructure Program - In the second quarter of 2016, we began planning targeted staffing reductions in certain portions of the business due to a reduction in business demand or change in business focus (hereinafter referred to as the Business Restructure Program). The main element of the program included workforce reductions and was completed in 2016, however, cash payments pertaining to the program were made primarily in 2017. An analysis of total restructuring costs recognized in the condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2017 by segment is as follows: Three Months Ended June 30, 2017 HCB CRB IRR BDA Corporate Total Termination benefits $ — $ 5 $ 1 $ — $ 1 $ 7 Professional services and other — 15 1 — 4 20 Total $ — $ 20 $ 2 $ — $ 5 $ 27 Six Months Ended June 30, 2017 HCB CRB IRR BDA Corporate Total Termination benefits $ — $ 9 $ 3 $ — $ 1 $ 13 Professional services and other 1 30 2 — 8 41 Total $ 1 $ 39 $ 5 $ — $ 9 $ 54 The changes in the Company’s liability under the Operational Improvement Program from its commencement to June 30, 2018 are as follows: Termination Benefits Professional Services and Other Total Balance at January 1, 2014 $ — $ — $ — Charges incurred 16 20 36 Cash payments (11 ) (14 ) (25 ) Balance at December 31, 2014 5 6 11 Charges incurred 36 90 126 Cash payments (26 ) (85 ) (111 ) Balance at December 31, 2015 15 11 26 Charges incurred 23 122 145 Cash payments (31 ) (115 ) (146 ) Balance at December 31, 2016 7 18 25 Charges incurred 48 86 134 Cash payments (41 ) (97 ) (138 ) Balance at December 31, 2017 14 7 21 Cash payments (9 ) (6 ) (15 ) Balance at June 30, 2018 $ 5 $ 1 $ 6 The changes in the Company’s liability under the Business Restructure Program from its commencement to June 30, 2018 are as follows: Termination Benefits Professional Services and Other Total Balance at January 1, 2016 $ — $ — $ — Charges incurred 45 3 48 Cash payments (19 ) (3 ) (22 ) Balance at December 31, 2016 26 — 26 Adjustment to prior charges incurred (2 ) — (2 ) Cash payments (23 ) — (23 ) Balance at December 31, 2017 1 — 1 Cash payments (1 ) — (1 ) Balance at June 30, 2018 $ — $ — $ — |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Impact of U.S. Tax Reform On December 22, 2017, the U.S. government enacted comprehensive tax legislation, commonly referred to as ‘U.S. Tax Reform’. U.S. Tax Reform makes broad and complex changes to the U.S. tax code, including, but not limited to: (1) requiring a one-time transition tax on certain unremitted earnings of foreign subsidiaries that may be payable over eight years; (2) bonus depreciation that will allow for a full expensing of qualified property; (3) reduction of the federal corporate tax rate from 35% to 21% ; (4) a new provision designed to tax global intangible low-taxed income (‘GILTI’), which allows for the possibility of using foreign tax credits (‘FTCs’) and a deduction of up to 50% to offset the income tax liability (subject to some limitations); (5) a new limitation on deductible interest expense; (6) limitations on the deductibility of certain executive compensation; (7) limitations on the use of FTCs to reduce the U.S. income tax liability; (8) the creation of the base erosion anti-abuse tax (‘BEAT’), a new minimum tax; and (9) a general elimination of U.S. federal income taxes on dividends from foreign subsidiaries. Also on December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (‘SAB 118’), which provides guidance on accounting for the tax effects of the U.S. Tax Reform. SAB 118 provides for a measurement period that should not extend beyond one year from the U.S. Tax Reform enactment date for companies to complete the accounting under Accounting Standards Codification (‘ASC’) 740, Income Taxes (‘ASC 740’). In accordance with SAB 118, a company must reflect the income tax effects of those aspects of U.S. Tax Reform for which the accounting under ASC 740 is complete. Adjustments to incomplete and unknown amounts will be recorded and disclosed prospectively during the measurement period. To the extent that a company’s accounting for certain income tax effects of U.S. Tax Reform is incomplete, but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of U.S. Tax Reform. As of June 30, 2018, our accounting for U.S. Tax Reform is incomplete. However, as noted in our 2017 Annual Report on Form 10-K, the Company was able to make reasonable estimates of certain effects and recorded provisional adjustments. We expect to complete our accounting within the measurement period for all provisional amounts. For the following provisional items, we did not record any additional measurement period adjustments during the three and six months ended June 30, 2018, for the following reasons: Reduction of the federal corporate tax rate – The provisional amount of $208 million income tax benefit recorded at December 31, 2017 may be affected due to the continued refinement of our transition tax calculation, additional analysis of tax amounts in other comprehensive income, future guidance issued or other items relating to U.S. Tax Reform. We will continue to analyze and refine our calculations related to the measurement of the deferred tax balances. Indefinite reinvestment assertion – The provisional amount of $1 million for foreign withholding and state income taxes in relation to the future repatriation of earnings previously deemed indefinitely reinvested may be affected by our global working capital and cash requirements. Bonus Depreciation – The provisional tax deduction of $40 million may be affected by the Company’s ongoing analysis of capital expenditures that qualify for immediate expensing. Executive compensation – The provisional income tax expense of $8 million relating to our compensation plans not qualifying for the binding contract exception may be affected by the completion of our analysis of the binding contract requirement on our various compensation plans. For the following provisional items, incremental measurement adjustments were recognized during the six months ended June 30, 2018 (there were no adjustments made during the three months ended June 30, 2018), but the item is still determined to be provisional for the following reasons: One-time transition tax – The one-time transition tax is based on the Company’s total post-1986 earnings and profits (‘E&P’) that it previously deferred from U.S. income taxes. The Company originally recorded a provisional amount for the one time transition tax liability for its foreign subsidiaries owned by U.S. corporate shareholders, resulting in a U.S. federal income tax expense of $70 million and state income tax expense of $2 million . However, the Internal Revenue Service (‘IRS’) clarified the application of the ‘with’ and ‘without’ approach for calculating the transition tax liability in determining the amount payable over eight years, and as it will appear on the U.S. federal corporate income tax return. Based on this guidance the Company has revised its provisional estimate for the U.S. federal transition tax liability. The provisional amount of U.S. federal transition tax liability has been reduced by $64 million due to the utilization of interest loss carryforwards resulting from the transition tax income inclusion. The Company has not made any further measurement period adjustments related to the transition tax. The Company expects to revise its estimates of E&P, non-U.S. income taxes and cash balances throughout 2018 which could affect the measurement of this liability. Furthermore, additional guidance may be released which could also impact these estimates. GILTI – U.S. Tax Reform creates a new requirement that certain income (i.e., GILTI) earned by controlled foreign corporations (‘CFCs’) must be included currently in the gross income of the CFCs’ U.S. shareholder. The FASB Staff Q&A, Topic 740 No. 5, Accounting for GILTI, states that an entity can make a policy election to either recognize deferred taxes for temporary differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI resulting from those items in the period the tax is incurred. The Company is treating the taxes due on U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the ‘period cost method’) and has included a reasonable estimate of the GILTI in its full year estimated annual effective tax rate; it is not expected to be material. We will continue to refine our calculations based on future guidance and actual results, which may result in changes to this amount. The Company's accounting for changes in its valuation allowance as a result of U.S. Tax Reform is incomplete, and it is not yet able to make reasonable estimates of the realizability of certain deferred tax assets. The Company must assess whether valuation allowance assessments are affected by various aspects of U.S. Tax Reform (e.g., limitation on net interest expense in excess of 30% of adjusted taxable income). As of June 30, 2018, no provisional adjustments have been recorded. Provision for income taxes for the three and six months ended June 30, 2018 was $9 million and $52 million , respectively, compared to $8 million and $54 million for the three and six months ended June 30, 2017, respectively. The effective tax rate was 12.7% and 15.5% for the three and six months ended June 30, 2018 , respectively, and 16.8% and 12.1% for the three and six months ended June 30, 2017 . These effective tax rates are calculated using extended values from our condensed consolidated statements of comprehensive income, and are therefore more precise tax rates than can be calculated from rounded values. Historically, our effective tax rate was low as compared to the U.S statutory tax rate of 35% due to our global mix of income and deductions in jurisdictions with high statutory tax rates, primarily the U.S. While the U.S. federal corporate income tax rate has decreased, effective January 1, 2018, from 35% to 21% as a result of U.S. Tax Reform, certain deferred tax benefits realized as a result of the Merger have now been reduced as well. This offsets, in part, the benefit of U.S. Tax Reform, thus increasing our effective income tax rate between the periods. However, the effective income tax rate for the three months ended June 30, 2018 was lower than the three months ended June 30, 2017 due to the change in the geographic mix of income. Historically, we provided taxes on the cumulative earnings of certain legacy Towers Watson subsidiaries. The historical cumulative earnings of other legacy Towers Watson subsidiaries have been reinvested indefinitely. However, as a result of U.S. Tax Reform, we have analyzed our global working capital and cash requirements and the potential tax liabilities attributable to a repatriation, and have changed our assertion with respect to certain legacy Towers Watson subsidiaries. For those subsidiaries from which we were able to make a reasonable estimate of the tax effects of such repatriation, we have recorded an estimate for foreign withholding and state income taxes. For all other subsidiaries, we continue to assert that the historical cumulative earnings have been reinvested indefinitely. The Company records valuation allowances against net deferred tax assets based on whether it is more likely than not that the deferred tax assets will be realized. We have liabilities for uncertain tax positions under ASC 740 of $53 million , excluding interest and penalties. The Company believes the outcomes that are reasonably possible within the next 12 months may result in a reduction in the liability for uncertain tax positions of approximately $1 million to $4 million , excluding interest and penalties. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets The components of goodwill are outlined below for the six months ended June 30, 2018 : HCB CRB IRR BDA Total Balance at December 31, 2017: Goodwill, gross $ 4,342 $ 2,261 $ 1,851 $ 2,557 $ 11,011 Accumulated impairment losses (130 ) (362 ) — — (492 ) Goodwill, net - December 31, 2017 4,212 1,899 1,851 2,557 10,519 Goodwill reassigned in segment realignment (i) — 72 (72 ) — — Goodwill acquired during the period — — 5 — 5 Goodwill disposed of during the period — — (5 ) — (5 ) Foreign exchange (25 ) (21 ) (5 ) — (51 ) Balance at June 30, 2018: Goodwill, gross 4,317 2,312 1,774 2,557 10,960 Accumulated impairment losses (130 ) (362 ) — — (492 ) Goodwill, net - June 30, 2018 $ 4,187 $ 1,950 $ 1,774 $ 2,557 $ 10,468 ____________________ (i) Represents the preliminary reallocation of goodwill related to certain businesses which were realigned among the segments as of January 1, 2018. See Note 4 — Segment Information for further information. Other Intangible Assets The following table reflects changes in the net carrying amounts of the components of finite-lived intangible assets for the six months ended June 30, 2018 : Balance at December 31, 2017 Intangible assets acquired Intangible assets disposed Amortization (i) Foreign exchange Balance at June 30, 2018 Client relationships $ 2,342 $ 3 $ (6 ) $ (182 ) $ (26 ) $ 2,131 Management contracts 56 — — (2 ) (4 ) 50 Software 473 — — (73 ) (3 ) 397 Trademark and trade name 966 — — (22 ) (1 ) 943 Product 33 — — (2 ) (1 ) 30 Favorable agreements 10 — — — — 10 Other 2 — — — (1 ) 1 Total amortizable intangible assets $ 3,882 $ 3 $ (6 ) $ (281 ) $ (36 ) $ 3,562 (i) Amortization associated with favorable lease agreements is recorded in Other operating expenses in the condensed consolidated statements of comprehensive income. We recorded amortization related to our finite-lived intangible assets, exclusive of the amortization of our favorable lease agreements, of $140 million and $281 million for three and six months ended June 30, 2018, respectively, and $149 million and $300 million for the three and six months ended June 30, 2017, respectively. Our acquired unfavorable lease liabilities were $25 million and $26 million at June 30, 2018 and December 31, 2017 , respectively, and are recorded in other non-current liabilities in the condensed consolidated balance sheet. The following table reflects the carrying value of finite-lived intangible assets and liabilities at June 30, 2018 and December 31, 2017 : June 30, 2018 December 31, 2017 Gross carrying amount Accumulated amortization Gross carrying amount Accumulated amortization Client relationships $ 3,403 $ (1,272 ) $ 3,462 $ (1,120 ) Management contracts 63 (13 ) 68 (12 ) Software 756 (359 ) 764 (291 ) Trademark and trade name 1,054 (111 ) 1,055 (89 ) Product 38 (8 ) 39 (6 ) Favorable agreements 15 (5 ) 14 (4 ) Other 5 (4 ) 6 (4 ) Total finite-lived assets $ 5,334 $ (1,772 ) $ 5,408 $ (1,526 ) Unfavorable agreements $ 34 $ (9 ) $ 34 $ (8 ) Total finite-lived intangible liabilities $ 34 $ (9 ) $ 34 $ (8 ) The weighted average remaining life of amortizable intangible assets and liabilities at June 30, 2018 was 14.1 years. The table below reflects the future estimated amortization expense for amortizable intangible assets and the rent offset resulting from amortization of the net lease intangible assets and liabilities for the remainder of 2018 and for subsequent years: Amortization Rent offset Remainder of 2018 $ 253 $ (2 ) 2019 473 (2 ) 2020 420 (3 ) 2021 343 (2 ) 2022 285 (3 ) Thereafter 1,778 (3 ) Total $ 3,552 $ (15 ) |
Derivative Financial Instrument
Derivative Financial Instruments | 6 Months Ended |
Jun. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments We are exposed to certain interest rate and foreign currency risks. Where possible, we identify exposures in our business that can be offset internally. Where no natural offset is identified, we may choose to enter into various derivative transactions. These instruments have the effect of reducing our exposure to unfavorable changes in interest and foreign currency rates. The Company’s board of directors reviews and approves policies for managing each of these risks as summarized below. Additional information regarding our derivative financial instruments can be found in Note 10 — Fair Value Measurements and Note 14 — Accumulated Other Comprehensive Loss. Interest Rate Risk - Investment Income As a result of the Company’s operating activities, the Company holds fiduciary funds. The Company earns interest on these funds, which is included in the Company’s condensed consolidated financial statements in interest and other income. These funds are regulated in terms of access as are the instruments in which they may be invested, most of which are short-term in nature. During 2015, in order to manage interest rate risk arising from these financial assets, the Company entered into interest rate swaps to receive a fixed rate of interest and pay a variable rate of interest. These derivatives, with total notional amounts of $300 million , were designated as hedging instruments at June 30, 2018 and December 31, 2017 , and had net fair value liabilities of nil and $1 million , respectively. Foreign Currency Risk Certain non-U.S. subsidiaries receive revenue and incur expenses in currencies other than their functional currency, and as a result, the foreign subsidiary’s functional currency revenue will fluctuate as the currency rates change. Additionally, the forecast Pounds sterling expenses of our London brokerage market operations may exceed their Pounds sterling revenue, and they may also hold a significant net Pounds sterling asset or liability position in the consolidated balance sheet. To reduce such variability, we use foreign exchange contracts to hedge against this currency risk. These derivatives were designated as hedging instruments and at June 30, 2018 and December 31, 2017 had total notional amounts of $650 million and $937 million , respectively, and had net fair value liabilities of $12 million and $21 million , respectively. At June 30, 2018 , the Company estimates, based on current interest and exchange rates, there will be $13 million of net derivative losses on forward exchange rates, interest rate swaps, and treasury locks reclassified from accumulated other comprehensive income/(loss) into earnings within the next twelve months as the forecast transactions affect earnings. At June 30, 2018 , our longest outstanding maturity was 2.5 years. The effects of the material derivative instruments that are designated as hedging instruments on the condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2018 and 2017 are as follows: Three Months Ended June 30, (Loss)/gain recognized in OCI (effective portion) Location of loss reclassified from Accumulated OCI into income (effective element) Loss reclassified from Accumulated OCI into income (effective element) Location of gain recognized in income (ineffective portion and amount excluded from effectiveness testing) Gain recognized in income (ineffective portion and amount excluded from effectiveness testing) 2018 2017 2018 2017 2018 2017 Forward exchange contracts $ (24 ) $ 9 Other income, net $ (7 ) $ (20 ) Interest expense $ — $ — Six Months Ended June 30, (Loss)/gain recognized in OCI (effective portion) Location of loss reclassified from Accumulated OCI into income (effective element) Loss reclassified from Accumulated OCI into income (effective element) Location of gain recognized in income (ineffective portion and amount excluded from effectiveness testing) Gain recognized in income (ineffective portion and amount excluded from effectiveness testing) 2018 2017 2018 2017 2018 2017 Forward exchange contracts $ (9 ) $ 12 Other income, net $ (18 ) $ (43 ) Interest expense $ — $ 1 We also enter into foreign currency transactions, primarily to hedge certain intercompany loans. These derivatives are not generally designated as hedging instruments, and at June 30, 2018 and December 31, 2017 , we had notional amounts of $891 million and $971 million , respectively, and had net fair value assets of nil and $3 million , respectively. The effects of derivatives that have not been designated as hedging instruments on the condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2018 and 2017 are as follows: Gain/(loss) recognized in income Three Months Ended Six Months Ended Derivatives not designated as hedging instruments: Location of gain/(loss) 2018 2017 2018 2017 Forward exchange contracts Other income, net $ 2 $ 1 $ (3 ) $ 9 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt | Debt Short-term debt and current portion of long-term debt consists of the following: June 30, 2018 December 31, 2017 Current portion of term loan due 2019 $ 85 $ 85 Long-term debt consists of the following: June 30, 2018 December 31, 2017 Revolving $1.25 billion credit facility $ 1,081 $ 884 Term loan due 2019 42 84 7.000% senior notes due 2019 186 186 5.750% senior notes due 2021 497 497 3.500% senior notes due 2021 448 447 2.125% senior notes due 2022 (i) 627 644 4.625% senior notes due 2023 248 248 3.600% senior notes due 2024 645 645 4.400% senior notes due 2026 544 544 6.125% senior notes due 2043 271 271 $ 4,589 $ 4,450 ________________________ (i) Notes issued in Euro ( €540 million ) At June 30, 2018 and December 31, 2017, we were in compliance with all financial covenants. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company has categorized its assets and liabilities that are measured at fair value on a recurring and non-recurring basis into a three-level fair value hierarchy, based on the reliability of the inputs used to determine fair value as follows: • Level 1: refers to fair values determined based on quoted market prices in active markets for identical assets; • Level 2: refers to fair values estimated using observable market based inputs or unobservable inputs that are corroborated by market data; and • Level 3: includes fair values estimated using unobservable inputs that are not corroborated by market data. The following methods and assumptions were used by the Company in estimating its fair value disclosure for financial instruments: • Available-for-sale securities are classified as Level 1 because we use quoted market prices in determining the fair value of these securities. • Market values for our derivative instruments have been used to determine the fair value of interest rate swaps and forward foreign exchange contracts based on estimated amounts the Company would receive or have to pay to terminate the agreements, taking into account observable information about the current interest rate environment or current foreign currency forward rates. Such financial instruments are classified as Level 2 in the fair value hierarchy. • Contingent consideration payable is classified as Level 3, and we estimate fair value based on the likelihood and timing of achieving the relevant milestones of each arrangement, applying a probability assessment to each of the potential outcomes, and discounting the probability-weighted payout. Typically, milestones are based on revenue or Earnings Before Interest, Tax, Depreciation and Amortization (‘EBITDA’) growth for the acquired business. The following table presents our assets and liabilities measured at fair value on a recurring basis at June 30, 2018 and December 31, 2017 : Fair Value Measurements on a Recurring Basis at June 30, 2018 Balance Sheet Location Level 1 Level 2 Level 3 Total Assets: Available-for-sale securities: Mutual funds / exchange traded funds Prepaid and other current assets and other non-current assets $ 19 $ — $ — $ 19 Derivatives: Derivative financial instruments (i) Prepaid and other current assets and other non-current assets $ — $ 5 $ — $ 5 Liabilities: Contingent consideration: Contingent consideration (ii) Other current liabilities and other non-current liabilities $ — $ — $ 50 $ 50 Derivatives: Derivative financial instruments (i) Other current liabilities and other non-current liabilities $ — $ 17 $ — $ 17 Fair Value Measurements on a Recurring Basis at December 31, 2017 Balance Sheet Location Level 1 Level 2 Level 3 Total Assets: Available-for-sale securities: Mutual funds / exchange traded funds Prepaid and other current assets and other non-current assets $ 40 $ — $ — $ 40 Derivatives: Derivative financial instruments (i) Prepaid and other current assets and other non-current assets $ — $ 18 $ — $ 18 Liabilities: Contingent consideration: Contingent consideration (ii) Other current liabilities and other non-current liabilities $ — $ — $ 51 $ 51 Derivatives: Derivative financial instruments (i) Other current liabilities and other non-current liabilities $ — $ 37 $ — $ 37 _________________________ (i) See Note 8 — Derivative Financial Instruments for further information on our derivative investments. (ii) Probability weightings are based on our knowledge of the past and planned performance of the acquired entity to which the contingent consideration applies. The weighted average discount rate used on our material contingent consideration calculations was 9.50% and 9.64% at June 30, 2018 and December 31, 2017, respectively. Using different probability weightings and discount rates could result in an increase or decrease of the contingent consideration payable. The following table summarizes the change in fair value of the Level 3 liabilities: Fair Value Measurements Using Significant Unobservable Inputs (Level 3) June 30, 2018 Balance at December 31, 2017 $ 51 Obligations assumed 1 Payments (2 ) Realized and unrealized gains 1 Foreign exchange (1 ) Balance at June 30, 2018 $ 50 There were no significant transfers between Levels 1, 2 or 3 in the six months ended June 30, 2018 and 2017, respectively. The following tables present our liabilities not measured at fair value on a recurring basis at June 30, 2018 and December 31, 2017 : June 30, 2018 December 31, 2017 Carrying Value Fair Value Carrying Value Fair Value Liabilities: Short-term debt and current portion of long-term debt $ 85 $ 85 $ 85 $ 85 Long-term debt $ 4,589 $ 4,700 $ 4,450 $ 4,706 The carrying values of our revolving lines of credit and term loans approximate their fair values. The fair values above are not necessarily indicative of the amounts that the Company would realize upon disposition nor do they indicate the Company’s intent or ability to dispose of the financial instrument. The fair value of our respective senior notes are considered level 2 financial instruments as they are corroborated by observable market data. |
Retirement Benefits
Retirement Benefits | 6 Months Ended |
Jun. 30, 2018 | |
Retirement Benefits [Abstract] | |
Retirement Benefits | Retirement Benefits Defined Benefit Plans and Post-retirement Welfare Plan Willis Towers Watson sponsors both qualified and non-qualified defined benefit pension plans and other post-retirement welfare (‘PRW’) plans throughout the world. The majority of our plan assets and obligations are in the U.S. and the U.K. We have also included disclosures related to defined benefit plans in certain other countries, including Canada, France, Germany, Ireland and the Netherlands. Together, these disclosed funded and unfunded plans represent 99% of Willis Towers Watson’s pension and PRW obligations and are disclosed herein. Components of Net Periodic Benefit (Income)/Cost for Defined Benefit Pension and Post-retirement Welfare Plans The following tables set forth the components of net periodic benefit (income)/cost for the Company’s defined benefit pension and PRW plans for the three and six months ended June 30, 2018 and 2017 : Three Months Ended June 30, 2018 2017 U.S. U.K. Other PRW U.S. U.K. Other PRW Service cost $ 17 $ 5 $ 5 $ — $ 17 $ 7 $ 4 $ — Interest cost 35 24 4 1 35 24 5 1 Expected return on plan assets (69 ) (77 ) (7 ) — (62 ) (71 ) (8 ) — Settlement — 20 — — — — — — Amortization of net loss 3 12 1 — 3 13 1 — Amortization of prior service credit — (5 ) — — — (4 ) — — Net periodic benefit (income)/cost $ (14 ) $ (21 ) $ 3 $ 1 $ (7 ) $ (31 ) $ 2 $ 1 Six Months Ended June 30, 2018 2017 U.S. U.K. Other PRW U.S. U.K. Other PRW Service cost $ 33 $ 10 $ 10 $ — $ 33 $ 15 $ 9 $ — Interest cost 70 48 9 2 70 46 9 2 Expected return on plan assets (137 ) (155 ) (15 ) — (123 ) (139 ) (15 ) — Settlement — 20 — — — — — — Amortization of net loss 6 24 1 — 6 26 1 — Amortization of prior service credit — (10 ) — — — (9 ) — — Net periodic benefit (income)/cost $ (28 ) $ (63 ) $ 5 $ 2 $ (14 ) $ (61 ) $ 4 $ 2 As a result of adopting ASU 2017-07, within the condensed consolidated statements of comprehensive income, service cost is included within salaries and benefits expense. The remainder of the components of net periodic benefit income of $61 million and $140 million for the three and six months ended June 30, 2018, respectively, and $63 million and $125 million for the three and six months ended June 30, 2017, respectively, are included within other income, net. These reclassifications include amounts for those plans which are immaterial for disclosure. During the second quarter of 2018, as a result of past changes in U.K. legislation and the low interest rate environment, the Company determined that the amount of transfer payments from the Legacy Willis U.K. pension plan would exceed the plan’s service and interest cost for the full year 2018. This triggers settlement accounting, which requires immediate recognition of a portion of the obligations associated with the plan transfers. Consequently, the Company recognized a non-cash expense of $20 million for the three and six months ended June 30, 2018. Employer Contributions to Defined Benefit Pension Plans The Company made no contributions to its U.S. plans for the six months ended June 30, 2018 but anticipates making $50 million in contributions over the remainder of the fiscal year. The Company made contributions of $44 million to its U.K. plans for the six months ended June 30, 2018 and anticipates making additional contributions of $42 million for the remainder of the fiscal year. The Company made contributions of $7 million to its other plans for the six months ended June 30, 2018 and anticipates making additional contributions of $6 million for the remainder of the fiscal year. Defined Contribution Plans The Company made contributions to its defined contribution plans of $41 million and $89 million during the three and six months ended June 30, 2018 , respectively, and $37 million and $79 million during the three and six months ended June 30, 2017, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Indemnification Agreements Willis Towers Watson has various agreements which provide that it may be obligated to indemnify the other party to the agreement with respect to certain matters. Generally, these indemnification provisions are included in contracts arising in the normal course of business and in connection with the purchase and sale of certain businesses. Although it is not possible to predict the maximum potential amount of future payments that may become due under these indemnification agreements because of the conditional nature of Willis Towers Watson’s obligations and the unique facts of each particular agreement, the Company does not believe that any potential liability that might arise from such indemnity provisions is probable or material. There are no provisions for recourse to third parties, nor are any assets held by any third parties that any guarantor can liquidate to recover amounts paid under such indemnities. Legal Proceedings In the ordinary course of business, the Company is subject to various actual and potential claims, lawsuits and other proceedings. Some of the claims, lawsuits and other proceedings seek damages in amounts which could, if assessed, be significant. We do not expect the impact of claims or demands not described below to be material to the Company’s condensed consolidated financial statements. The Company also receives subpoenas in the ordinary course of business and, from time to time, receives requests for information in connection with governmental investigations. Errors and omissions claims, lawsuits, and other proceedings arising in the ordinary course of business are covered in part by professional indemnity or other appropriate insurance. See Note 13 for the amounts accrued at June 30, 2018 and December 31, 2017 in the condensed consolidated balance sheets. The terms of this insurance vary by policy year. Regarding self-insured risks, the Company has established provisions which are believed to be adequate in light of current information and legal advice, or, in certain cases, where a range of loss exists, the Company accrues the minimum amount in the range if no amount within the range is a better estimate than any other amount. The Company adjusts such provisions from time to time according to developments. On the basis of current information, the Company does not expect that the actual claims, lawsuits and other proceedings to which the Company is subject, or potential claims, lawsuits, and other proceedings relating to matters of which it is aware, will ultimately have a material adverse effect on the Company’s financial condition, results of operations or liquidity. Nonetheless, given the large or indeterminate amounts sought in certain of these actions, and the inherent unpredictability of litigation and disputes with insurance companies, it is possible that an adverse outcome or settlement in certain matters could, from time to time, have a material adverse effect on the Company’s results of operations or cash flows in particular quarterly or annual periods. In addition, given the early stages of some litigation or regulatory proceedings described below, it is not possible to predict their outcome or resolution, and it is possible that these events may have a material adverse effect on the Company. The Company provides for contingent liabilities based on ASC 450, Contingencies, when it is determined that a liability, inclusive of defense costs, is probable and reasonably estimable. The contingent liabilities recorded are primarily developed actuarially. Litigation is subject to many factors which are difficult to predict so there can be no assurance that in the event of a material unfavorable result in one or more claims, we will not incur material costs. Merger-Related Securities Litigation On November 21, 2017, a purported former stockholder of Legacy Towers Watson filed a putative class action complaint on behalf of a putative class consisting of all Legacy Towers Watson stockholders as of October 2, 2015 against the Company, Legacy Towers Watson, Legacy Willis, ValueAct Capital Management (‘ValueAct’), and certain current and former directors and officers of Legacy Towers Watson and Legacy Willis (John Haley, Dominic Casserley, and Jeffrey Ubben), in the United States District Court for the Eastern District of Virginia. The complaint asserted claims against certain defendants under Section 14(a) of the Securities Exchange Act of 1934 (the ‘Exchange Act’) for allegedly false and misleading statements in the proxy statement for the Merger; and against other defendants under Section 20(a) of the Exchange Act for alleged “control person” liability with respect to such allegedly false and misleading statements. The complaint further contended that the allegedly false and misleading statements caused stockholders of Legacy Towers Watson to accept inadequate Merger consideration. The complaint sought damages in an unspecified amount. On February 20, 2018, the court appointed the Regents of the University of California (‘Regents’) as Lead Plaintiff and Bernstein Litowitz Berger & Grossman LLP (‘Bernstein’) as Lead Counsel for the putative class, consolidated all subsequently filed, removed, or transferred actions, and captioned the consolidated action “In re Willis Towers Watson plc Proxy Litigation,” Master File No. 1:17-cv-1338-AJT-JFA. On March 9, 2018, Lead Plaintiff filed an Amended Complaint. On April 13, 2018, the defendants filed motions to dismiss the Amended Complaint, and, on July 11, 2018, following briefing and argument, the court granted the motions and dismissed the Amended Complaint in its entirety. On July 30, 2018, Lead Plaintiff filed a notice of appeal from the court’s July 11, 2018 dismissal order to the United States Court of Appeals for the Fourth Circuit. On February 27, 2018 and March 8, 2018, two additional purported former stockholders of Legacy Towers Watson, City of Fort Myers General Employees’ Pension Fund (‘Fort Myers’) and Alaska Laborers-Employers Retirement Trust (‘Alaska’), filed putative class action complaints on behalf of a putative class of Legacy Towers Watson stockholders against the former members of the Legacy Towers Watson board of directors, Legacy Towers Watson, Legacy Willis and ValueAct, in the Delaware Court of Chancery, captioned City of Fort Myers General Employees’ Pension Fund v. Towers Watson & Co., et al., C.A. No. 2018-0132, and Alaska Laborers-Employers Retirement Trust v. Victor F. Ganzi, et al., C.A. No. 2018-0155, respectively. Based on similar allegations as the Eastern District of Virginia action described above, the complaints assert claims against the former directors of Legacy Towers Watson for breach of fiduciary duty and against Legacy Willis and ValueAct for aiding and abetting breach of fiduciary duty. On March 9, 2018, Regents filed a putative class action complaint on behalf of a putative class of Legacy Towers Watson stockholders against the Company, Legacy Willis, ValueAct, and Messrs. Haley, Casserley, and Ubben, in the Delaware Court of Chancery, captioned The Regents of the University of California v. John J. Haley, et al., C.A. No. 2018-0166. Based on similar allegations as the Eastern District of Virginia action described above, the complaint asserts claims against Mr. Haley for breach of fiduciary duty and against all other defendants for aiding and abetting breach of fiduciary duty. Also on March 9, 2018, Regents filed a motion for consolidation of all pending and subsequently filed Delaware Court of Chancery actions, and for appointment as Lead Plaintiff and for the appointment of Bernstein as Lead Counsel for the putative class. On March 29, 2018, Fort Myers and Alaska responded to Regents’ motion and cross-moved for appointment as Co-Lead Plaintiffs and for the appointment of their counsel, Grant & Eisenhofer P.A. and Kessler Topaz Meltzer & Check, LLP as Co-Lead Counsel. On April 2, 2018, the court consolidated the Delaware Court of Chancery actions and all related actions subsequently filed in or transferred to the Delaware Court of Chancery. On June 5, 2018, the court denied Regents’ motion for appointment of Lead Plaintiff and Lead Counsel and granted Fort Myers’ and Alaska’s cross-motion. On June 20, 2018, Fort Myers and Alaska designated the complaint previously filed by Alaska (the ‘Alaska Complaint’) as the operative complaint in the consolidated action. The defendants have not yet responded to the Alaska Complaint. The defendants dispute the allegations in these actions and intend to defend the lawsuits vigorously. Given the stage of the proceedings, the Company is unable to provide an estimate of the reasonably possible loss or range of loss in respect of the complaints. Stanford Financial Group The Company has been named as a defendant in 15 similar lawsuits relating to the collapse of The Stanford Financial Group (‘Stanford’), for which Willis of Colorado, Inc. acted as broker of record on certain lines of insurance. The complaints in these actions generally allege that the defendants actively and materially aided Stanford’s alleged fraud by providing Stanford with certain letters regarding coverage that they knew would be used to help retain or attract actual or prospective Stanford client investors. The complaints further allege that these letters, which contain statements about Stanford and the insurance policies that the defendants placed for Stanford, contained untruths and omitted material facts and were drafted in this manner to help Stanford promote and sell its allegedly fraudulent certificates of deposit. The 15 actions are as follows: • Troice, et al. v. Willis of Colorado, Inc., et al. , C.A. No. 3:9-CV-1274-N, was filed on July 2, 2009 in the U.S. District Court for the Northern District of Texas against Willis Group Holdings plc, Willis of Colorado, Inc. and a Willis associate, among others. On April 1, 2011, plaintiffs filed the operative Third Amended Class Action Complaint individually and on behalf of a putative, worldwide class of Stanford investors, adding Willis Limited as a defendant and alleging claims under Texas statutory and common law and seeking damages in excess of $1 billion , punitive damages and costs. On May 2, 2011, the defendants filed motions to dismiss the Third Amended Class Action Complaint, arguing, inter alia , that the plaintiffs’ claims are precluded by the Securities Litigation Uniform Standards Act of 1998 (‘SLUSA’). On May 10, 2011, the court presiding over the Stanford-related actions in the Northern District of Texas entered an order providing that it would consider the applicability of SLUSA to the Stanford-related actions based on the decision in a separate Stanford action not involving a Willis entity, Roland v. Green , Civil Action No. 3:10-CV-0224-N (‘Roland’). On August 31, 2011, the court issued its decision in Roland , dismissing that action with prejudice under SLUSA. On October 27, 2011, the court in Troice entered an order (i) dismissing with prejudice those claims asserted in the Third Amended Class Action Complaint on a class basis on the grounds set forth in the Roland decision discussed above and (ii) dismissing without prejudice those claims asserted in the Third Amended Class Action Complaint on an individual basis. Also on October 27, 2011, the court entered a final judgment in the action. On October 28, 2011, the plaintiffs in Troice filed a notice of appeal to the U.S. Court of Appeals for the Fifth Circuit. Subsequently, Troice , Roland and a third action captioned Troice, et al. v. Proskauer Rose LLP, Civil Action No. 3:09-CV-01600-N, which also was dismissed on the grounds set forth in the Roland decision discussed above and on appeal to the U.S. Court of Appeals for the Fifth Circuit, were consolidated for purposes of briefing and oral argument. Following the completion of briefing and oral argument, on March 19, 2012, the Fifth Circuit reversed and remanded the actions. On April 2, 2012, the defendants-appellees filed petitions for rehearing en banc . On April 19, 2012, the petitions for rehearing en banc were denied. On July 18, 2012, defendants-appellees filed a petition for writ of certiorari with the United States Supreme Court regarding the Fifth Circuit’s reversal in Troice . On January 18, 2013, the Supreme Court granted our petition. Opening briefs were filed on May 3, 2013 and the Supreme Court heard oral argument on October 7, 2013. On February 26, 2014, the Supreme Court affirmed the Fifth Circuit’s decision. On March 19, 2014, the plaintiffs in Troice filed a Motion to Defer Resolution of Motions to Dismiss, to Compel Rule 26(f) Conference and For Entry of Scheduling Order. On March 25, 2014, the parties in Troice and the Janvey, et al. v. Willis of Colorado, Inc., et al. action discussed below stipulated to the consolidation of the two actions for pre-trial purposes under Rule 42(a) of the Federal Rules of Civil Procedure. On March 28, 2014, the Court ‘so ordered’ that stipulation and, thus, consolidated Troice and Janvey for pre-trial purposes under Rule 42(a). On September 16, 2014, the court (a) denied the plaintiffs’ request to defer resolution of the defendants’ motions to dismiss, but granted the plaintiffs’ request to enter a scheduling order; (b) requested the submission of supplemental briefing by all parties on the defendants’ motions to dismiss, which the parties submitted on September 30, 2014; and (c) entered an order setting a schedule for briefing and discovery regarding plaintiffs’ motion for class certification, which schedule, among other things, provided for the submission of the plaintiffs’ motion for class certification (following the completion of briefing and discovery) on April 20, 2015. On December 15, 2014, the court granted in part and denied in part the defendants’ motions to dismiss. On January 30, 2015, the defendants except Willis Group Holdings plc answered the Third Amended Class Action Complaint. On April 20, 2015, the plaintiffs filed their motion for class certification, the defendants filed their opposition to plaintiffs’ motion, and the plaintiffs filed their reply in further support of the motion. Pursuant to an agreed stipulation also filed with the court on April 20, 2015, the defendants on June 4, 2015 filed sur-replies in further opposition to the motion. The Court has not yet scheduled a hearing on the motion. On June 19, 2015, Willis Group Holdings plc filed a motion to dismiss the complaint for lack of personal jurisdiction. On November 17, 2015, Willis Group Holdings plc withdrew the motion. On March 31, 2016, the parties in the Troice and Janvey actions entered into a settlement in principle that is described in more detail below. • Ranni v. Willis of Colorado, Inc., et al., C.A. No. 9-22085, was filed on July 17, 2009 against Willis Group Holdings plc and Willis of Colorado, Inc. in the U.S. District Court for the Southern District of Florida. The complaint was filed on behalf of a putative class of Venezuelan and other South American Stanford investors and alleges claims under Section 10(b) of the Securities Exchange Act of 1934 (and Rule 10b-5 thereunder) and Florida statutory and common law and seeks damages in an amount to be determined at trial. On October 6, 2009, Ranni was transferred, for consolidation or coordination with other Stanford-related actions (including Troice ), to the Northern District of Texas by the U.S. Judicial Panel on Multidistrict Litigation (the ‘JPML’). The defendants have not yet responded to the complaint in Ranni . On August 26, 2014, the plaintiff filed a notice of voluntary dismissal of the action without prejudice. • Canabal, et al. v. Willis of Colorado, Inc., et al., C.A. No. 3:9-CV-1474-D, was filed on August 6, 2009 against Willis Group Holdings plc, Willis of Colorado, Inc. and the same Willis associate named as a defendant in Troice , among others, also in the Northern District of Texas. The complaint was filed individually and on behalf of a putative class of Venezuelan Stanford investors, alleged claims under Texas statutory and common law and sought damages in excess of $1 billion , punitive damages, attorneys’ fees and costs. On December 18, 2009, the parties in Troice and Canabal stipulated to the consolidation of those actions (under the Troice civil action number), and, on December 31, 2009, the plaintiffs in Canabal filed a notice of dismissal, dismissing the action without prejudice. • Rupert, et al. v. Winter, et al., Case No. 2009C115137, was filed on September 14, 2009 on behalf of 97 Stanford investors against Willis Group Holdings plc, Willis of Colorado, Inc. and the same Willis associate, among others, in Texas state court (Bexar County). The complaint alleges claims under the Securities Act of 1933, Texas and Colorado statutory law and Texas common law and seeks special, consequential and treble damages of more than $300 million , attorneys’ fees and costs. On October 20, 2009, certain defendants, including Willis of Colorado, Inc., (i) removed Rupert to the U.S. District Court for the Western District of Texas, (ii) notified the JPML of the pendency of this related action and (iii) moved to stay the action pending a determination by the JPML as to whether it should be transferred to the Northern District of Texas for consolidation or coordination with the other Stanford-related actions. On April 1, 2010, the JPML issued a final transfer order for the transfer of Rupert to the Northern District of Texas. On January 24, 2012, the court remanded Rupert to Texas state court (Bexar County), but stayed the action until further order of the court. On August 13, 2012, the plaintiffs filed a motion to lift the stay, which motion was denied by the court on September 16, 2014. On October 10, 2014, the plaintiffs appealed the court’s denial of their motion to lift the stay to the U.S. Court of Appeals for the Fifth Circuit. On January 5, 2015, the Fifth Circuit consolidated the appeal with the appeal in the Rishmague, et ano. v. Winter, et al. action discussed below, and the consolidated appeal, was fully briefed as of March 24, 2015. Oral argument on the consolidated appeal was held on September 2, 2015. On September 16, 2015, the Fifth Circuit affirmed. The defendants have not yet responded to the complaint in Rupert . • Casanova, et al. v. Willis of Colorado, Inc., et al., C.A. No. 3:10-CV-1862-O, was filed on September 16, 2010 on behalf of seven Stanford investors against Willis Group Holdings plc, Willis Limited, Willis of Colorado, Inc. and the same Willis associate, among others, also in the Northern District of Texas. The complaint alleges claims under Texas statutory and common law and seeks actual damages in excess of $5 million , punitive damages, attorneys’ fees and costs. On February 13, 2015, the parties filed an Agreed Motion for Partial Dismissal pursuant to which they agreed to the dismissal of certain claims pursuant to the motion to dismiss decisions in the Troice action discussed above and the Janvey action discussed below. Also on February 13, 2015, the defendants except Willis Group Holdings plc answered the complaint in the Casanova action. On June 19, 2015, Willis Group Holdings plc filed a motion to dismiss the complaint for lack of personal jurisdiction. Plaintiffs have not opposed the motion. • Rishmague, et ano. v. Winter, et al., Case No. 2011CI2585, was filed on March 11, 2011 on behalf of two Stanford investors, individually and as representatives of certain trusts, against Willis Group Holdings plc, Willis of Colorado, Inc., Willis of Texas, Inc. and the same Willis associate, among others, in Texas state court (Bexar County). The complaint alleges claims under Texas and Colorado statutory law and Texas common law and seeks special, consequential and treble damages of more than $37 million and attorneys’ fees and costs. On April 11, 2011, certain defendants, including Willis of Colorado, Inc., (i) removed Rishmague to the Western District of Texas, (ii) notified the JPML of the pendency of this related action and (iii) moved to stay the action pending a determination by the JPML as to whether it should be transferred to the Northern District of Texas for consolidation or coordination with the other Stanford-related actions. On August 8, 2011, the JPML issued a final transfer order for the transfer of Rishmague to the Northern District of Texas, where it is currently pending. On August 13, 2012, the plaintiffs joined with the plaintiffs in the Rupert action in their motion to lift the court’s stay of the Rupert action. On September 9, 2014, the court remanded Rishmague to Texas state court (Bexar County), but stayed the action until further order of the court and denied the plaintiffs’ motion to lift the stay. On October 10, 2014, the plaintiffs appealed the court’s denial of their motion to lift the stay to the Fifth Circuit. On January 5, 2015, the Fifth Circuit consolidated the appeal with the appeal in the Rupert action, and the consolidated appeal was fully briefed as of March 24, 2015. Oral argument on the consolidated appeal was held on September 2, 2015. On September 16, 2015, the Fifth Circuit affirmed. The defendants have not yet responded to the complaint in Rishmague . • MacArthur v. Winter, et al., Case No. 2013-07840, was filed on February 8, 2013 on behalf of two Stanford investors against Willis Group Holdings plc, Willis of Colorado, Inc., Willis of Texas, Inc. and the same Willis associate, among others, in Texas state court (Harris County). The complaint alleges claims under Texas and Colorado statutory law and Texas common law and seeks actual, special, consequential and treble damages of approximately $4 million and attorneys’ fees and costs. On March 29, 2013, Willis of Colorado, Inc. and Willis of Texas, Inc. (i) removed MacArthur to the U.S. District Court for the Southern District of Texas and (ii) notified the JPML of the pendency of this related action. On April 2, 2013, Willis of Colorado, Inc. and Willis of Texas, Inc. filed a motion in the Southern District of Texas to stay the action pending a determination by the JPML as to whether it should be transferred to the Northern District of Texas for consolidation or coordination with the other Stanford-related actions. Also on April 2, 2013, the court presiding over MacArthur in the Southern District of Texas transferred the action to the Northern District of Texas for consolidation or coordination with the other Stanford-related actions. On September 29, 2014, the parties stipulated to the remand (to Texas state court (Harris County)) and stay of MacArthur until further order of the court (in accordance with the court’s September 9, 2014 decision in Rishmague (discussed above)), which stipulation was ‘so ordered’ by the court on October 14, 2014. The defendants have not yet responded to the complaint in MacArthur . • Florida suits : On February 14, 2013, five lawsuits were filed against Willis Group Holdings plc, Willis Limited and Willis of Colorado, Inc. in Florida state court (Miami-Dade County) alleging violations of Florida common law. The five suits are: (1) Barbar, et al. v. Willis Group Holdings Public Limited Company, et al. , Case No. 13-05666CA27, filed on behalf of 35 Stanford investors seeking compensatory damages in excess of $30 million ; (2) de Gadala-Maria, et al. v. Willis Group Holdings Public Limited Company, et al. , Case No. 13-05669CA30, filed on behalf of 64 Stanford investors seeking compensatory damages in excess of $83.5 million ; (3) Ranni, et ano. v. Willis Group Holdings Public Limited Company, et al. , Case No. 13-05673CA06, filed on behalf of two Stanford investors seeking compensatory damages in excess of $3 million ; (4) Tisminesky, et al. v. Willis Group Holdings Public Limited Company, et al. , Case No. 13-05676CA09, filed on behalf of 11 Stanford investors seeking compensatory damages in excess of $6.5 million ; and (5) Zacarias, et al. v. Willis Group Holdings Public Limited Company, et al. , Case No. 13-05678CA11, filed on behalf of 10 Stanford investors seeking compensatory damages in excess of $12.5 million . On June 3, 2013, Willis of Colorado, Inc. removed all five cases to the Southern District of Florida and, on June 4, 2013, notified the JPML of the pendency of these related actions. On June 10, 2013, the court in Tisminesky issued an order sua sponte staying and administratively closing that action pending a determination by the JPML as to whether it should be transferred to the Northern District of Texas for consolidation and coordination with the other Stanford-related actions. On June 11, 2013, Willis of Colorado, Inc. moved to stay the other four actions pending the JPML’s transfer decision. On June 20, 2013, the JPML issued a conditional transfer order for the transfer of the five actions to the Northern District of Texas, the transmittal of which was stayed for seven days to allow for any opposition to be filed. On June 28, 2013, with no opposition having been filed, the JPML lifted the stay, enabling the transfer to go forward. On September 30, 2014, the court denied the plaintiffs’ motion to remand in Zacarias , and, on October 3, 2014, the court denied the plaintiffs’ motions to remand in Tisminesky and de Gadala Maria . On December 3, 2014 and March 3, 2015, the court granted the plaintiffs’ motions to remand in Barbar and Ranni , respectively, remanded both actions to Florida state court (Miami-Dade County) and stayed both actions until further order of the court. On January 2, 2015 and April 1, 2015, the plaintiffs in Barbar and Ranni , respectively, appealed the court’s December 3, 2014 and March 3, 2015 decisions to the Fifth Circuit. On April 22, 2015 and July 22, 2015, respectively, the Fifth Circuit dismissed the Barbar and Ranni appeals sua sponte for lack of jurisdiction. The defendants have not yet responded to the complaints in Ranni or Barbar . On April 1, 2015, the defendants except Willis Group Holdings plc filed motions to dismiss the complaints in Zacarias , Tisminesky and de Gadala-Maria . On June 19, 2015, Willis Group Holdings plc filed motions to dismiss the complaints in Zacarias , Tisminesky and de Gadala-Maria for lack of personal jurisdiction. On July 15, 2015, the court dismissed the complaint in Zacarias in its entirety with leave to replead within 21 days . On July 21, 2015, the court dismissed the complaints in Tisminesky and de Gadala-Maria in their entirety with leave to replead within 21 days . On August 6, 2015, the plaintiffs in Zacarias , Tisminesky and de Gadala-Maria filed amended complaints (in which, among other things, Willis Group Holdings plc was no longer named as a defendant). On September 11, 2015, the defendants filed motions to dismiss the amended complaints. The motions await disposition by the court. • Janvey, et al. v. Willis of Colorado, Inc., et al. , Case No. 3:13-CV-03980-D, was filed on October 1, 2013 also in the Northern District of Texas against Willis Group Holdings plc, Willis Limited, Willis North America Inc., Willis of Colorado, Inc. and the same Willis associate. The complaint was filed (i) by Ralph S. Janvey, in his capacity as Court-Appointed Receiver for the Stanford Receivership Estate, and the Official Stanford Investors Committee (the ‘OSIC’) against all defendants and (ii) on behalf of a putative, worldwide class of Stanford investors against Willis North America Inc. Plaintiffs Janvey and the OSIC allege claims under Texas common law and the court’s Amended Order Appointing Receiver, and the putative class plaintiffs allege claims under Texas statutory and common law. Plaintiffs seek actual damages in excess of $1 billion , punitive damages and costs. As alleged by the Stanford Receiver, the total amount of collective losses allegedly sustained by all investors in Stanford certificates of deposit is approximately $4.6 billion . On November 15, 2013, plaintiffs in Janvey filed the operative First Amended Complaint, which added certain defendants unaffiliated with Willis. On February 28, 2014, the defendants filed motions to dismiss the First Amended Complaint, which motions, other than with respect to Willis Group Holding plc’s motion to dismiss for lack of personal jurisdiction, were granted in part and denied in part by the court on December 5, 2014. On December 22, 2014, Willis filed a motion to amend the court’s December 5 order to certify an interlocutory appeal to the Fifth Circuit, and, on December 23, 2014, Willis filed a motion to amend and, to the extent necessary, reconsider the court’s December 5 order. On January 16, 2015, the defendants answered the First Amended Complaint. On January 28, 2015, the court denied Willis’s motion to amend the court’s December 5 order to certify an interlocutory appeal to the Fifth Circuit. On February 4, 2015, the court granted Willis’s motion to amend and, to the extent necessary, reconsider the December 5 order. As discussed above, on March 25, 2014, the parties in Troice and Janvey stipulated to the consolidation of the two actions for pre-trial purposes under Rule 42(a) of the Federal Rules of Civil Procedure. On March 28, 2014, the Court ‘so ordered’ that stipulation and, thus, consolidated Troice and Janvey for pre-trial purposes under Rule 42(a). On January 26, 2015, the court entered an order setting a schedule for briefing and discovery regarding the plaintiffs’ motion for class certification, which schedule, among other things, provided for the submission of the plaintiffs’ motion for class certification (following the completion of briefing and discovery) on July 20, 2015. By letter dated March 4, 2015, the parties requested that the court consolidate the scheduling orders entered in Troice and Janvey to provide for a class certification submission date of April 20, 2015 in both cases. On March 6, 2015, the court entered an order consolidating the scheduling orders in Troice and Janvey , providing for a class certification submission date of April 20, 2015 in both cases, and vacating the July 20, 2015 class certification submission date in the original Janvey scheduling order. On November 17, 2015, Willis Group Holdings plc withdrew its motion to dismiss for lack of personal jurisdiction. On March 31, 2016, the parties in the Troice and Janvey actions entered into a settlement in principle that is described in more detail below. • Martin v. Willis of Colorado, Inc., et al. , Case No. 201652115, was filed on August 5, 2016, on behalf of one Stanford investor against Willis Group Holdings plc, Willis Limited, Willis of Colorado, Inc. and the same Willis associate in Texas state court (Harris County). The complaint alleges claims under Texas statutory and common law and seeks actual damages of less than $100,000 , exemplary damages, attorneys’ fees and costs. On September 12, 2016, the plaintiff filed an amended complaint, which added five more Stanford investors as plaintiffs and seeks damages in excess of $1 million . The defendants have not yet responded to the amended complaint in Martin . • Abel, et al. v. Willis of Colorado, Inc., et al ., C.A. No. 3:16-cv-2601, was filed on September 12, 2016, on behalf of more than 300 Stanford investors against Willis Group Holdings plc, Willis Limited, Willis of Colorado, Inc. and the same Willis associate, also in the Northern District of Texas. The complaint alleges claims under Texas statutory and common law and seeks actual damages in excess of $135 million , exemplary damages, attorneys’ fees and costs. On November 10, 2016, the plaintiffs filed an amended complaint, which, among other things, added several more Stanford investors as plaintiffs. The defendants have not yet responded to the complaint in Abel . The plaintiffs in Janvey and Troice and the other actions above seek overlapping damages, representing either the entirety or a portion of the total alleged collective losses incurred by investors in Stanford certificates of deposit, notwithstanding the fact that Legacy Willis acted as broker of record for only a portion of time that Stanford issued certificates of deposit. In the fourth quarter of 2015, the Company recognized a $70 million litigation provision for loss contingencies relating to the Stanford matters based on its ongoing review of a variety of factors as required by accounting standards. On March 31, 2016, the Company entered into a settlement in principle for $120 million relating to this litigation, and increased its provisions by $50 million during that quarter. Further details on this settlement in principle are gi |
Supplementary Information for C
Supplementary Information for Certain Balance Sheet Accounts Supplementary Information for Certain Balance Sheet Accounts (Notes) | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Supplemental Balance Sheet Disclosures [Text Block] | Supplementary Information for Certain Balance Sheet Accounts Additional details of specific balance sheet accounts are detailed below. Deferred revenue and accrued expenses consists of the following: June 30, December 31, Accounts payable, accrued liabilities and deferred income $ 715 $ 772 Discretionary compensation 166 313 Accrued compensation 248 439 Accrued vacation 143 93 Other employee-related liabilities 85 94 Total deferred revenue and accrued expenses $ 1,357 $ 1,711 Provision for liabilities consists of the following: June 30, December 31, Claims, lawsuits and other proceedings $ 453 $ 474 Other provisions 93 84 Total provision for liabilities $ 546 $ 558 Other non-current liabilities consists of the following: June 30, December 31, Incentives from lessors $ 131 $ 138 Deferred compensation plan liability 137 135 Contingent and deferred consideration on acquisition 1 41 Liabilities for uncertain tax positions 53 60 Lease-related liabilities 31 28 Other non-current liabilities 93 142 Total other non-current liabilities $ 446 $ 544 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income/(Loss) | Accumulated Other Comprehensive Loss Changes in accumulated other comprehensive loss, net of non-controlling interests, and net of tax are provided in the following table for the three and six months ended June 30, 2018 and 2017. This table excludes amounts attributable to non-controlling interests, which are not material for further disclosure. Foreign currency translation (i) Cash flow hedges (i) Defined pension and post-retirement benefit costs (ii) Total 2018 2017 2018 2017 2018 2017 2018 2017 Quarter-to-date activity: Balance at March 31, 2018 and 2017, respectively $ (307 ) $ (724 ) $ 9 $ (62 ) $ (1,132 ) $ (1,122 ) $ (1,430 ) $ (1,908 ) Other comprehensive (loss)/income before reclassifications (199 ) 77 (20 ) 8 35 24 (184 ) 109 Loss reclassified from accumulated other comprehensive loss (net of income tax expense of $11 and $7, respectively) — — 6 15 3 8 9 23 Net current-period other comprehensive (loss)/income (199 ) 77 (14 ) 23 38 32 (175 ) 132 Balance at June 30, 2018 and 2017, respectively $ (506 ) $ (647 ) $ (5 ) $ (39 ) $ (1,094 ) $ (1,090 ) $ (1,605 ) $ (1,776 ) Year-to-date activity: Balance at December 31, 2017 and 2016, respectively $ (365 ) $ (650 ) $ (10 ) $ (82 ) $ (1,138 ) $ (1,152 ) $ (1,513 ) $ (1,884 ) Other comprehensive (loss)/income before reclassifications (141 ) 3 (11 ) 9 34 44 (118 ) 56 Loss reclassified from accumulated other comprehensive loss (net of income tax expense of $12 and $13, respectively) — — 16 34 10 18 26 52 Net current-period other comprehensive (loss)/income (141 ) 3 5 43 44 62 (92 ) 108 Balance at June 30, 2018 and 2017, respectively $ (506 ) $ (647 ) $ (5 ) $ (39 ) $ (1,094 ) $ (1,090 ) $ (1,605 ) $ (1,776 ) ________________________ (i) Reclassification adjustments from accumulated other comprehensive loss related to foreign currency translation and cash flow hedges are included in Other income, net in the accompanying condensed consolidated statements of comprehensive income. See Note 8 — Derivative Financial Instruments for additional details regarding the reclassification adjustments for the hedge settlements. (ii) Reclassification adjustments from accumulated other comprehensive loss are included in the computation of net periodic pension cost (see Note 11 — Retirement Benefits ). These components are included in Other income, net in the accompanying condensed consolidated statements of comprehensive income. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic and diluted earnings per share are calculated by dividing net income attributable to Willis Towers Watson by the average number of ordinary shares outstanding during each period. The computation of diluted earnings per share reflects the potential dilution that could occur if dilutive securities and other contracts to issue shares were exercised or converted into shares or resulted in the issuance of shares that then shared in the net income of the Company. At June 30, 2018 and 2017 , there were 0.6 million and 0.9 million time-based share options; 0.6 million and 1.0 million performance-based options; 0.1 million and 0.5 million restricted time-based stock units; 0.7 million and 0.6 million restricted performance-based stock units, respectively. In addition, the Company had 0.3 million performance-based phantom units outstanding at June 30, 2018; there were no phantom units outstanding at June 30, 2017. Basic and diluted earnings per share are as follows: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Net income attributable to Willis Towers Watson $ 58 $ 33 $ 273 $ 377 Basic average number of shares outstanding 132 136 132 136 Dilutive effect of potentially issuable shares 1 1 1 1 Diluted average number of shares outstanding 133 137 133 137 Basic earnings per share $ 0.44 $ 0.24 $ 2.06 $ 2.77 Dilutive effect of potentially issuable shares — — (0.01 ) (0.02 ) Diluted earnings per share $ 0.44 $ 0.24 $ 2.05 $ 2.75 For the three and six months ended June 30, 2018, 0.3 million and 0.1 million restricted stock units were not included in the computation of the dilutive effect of potentially issuable shares because their effect was anti-dilutive. |
Financial Information for Issue
Financial Information for Issuers and Other Guarantor Subsidiaries | 6 Months Ended |
Jun. 30, 2018 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Financial Information for Issuers and Other Guarantor Subsidiaries | Financial Information for Issuers and Other Guarantor Subsidiaries As of June 30, 2018 Willis Towers Watson has issued the following debt securities (‘WTW Debt Securities’): a) Willis Towers Watson plc (the parent company) has $500 million senior notes outstanding, which were issued on March 15, 2016; b) Willis North America, Inc. (‘Willis North America’) has $837 million senior notes outstanding, of which $187 million were issued on September 29, 2009, and $650 million were issued on May 16, 2017; and c) Trinity Acquisition plc has $2.1 billion senior notes outstanding, of which $525 million were issued on August 15, 2013, $1.0 billion were issued on March 22, 2016 and €540 million ( $609 million ) were issued on May 26, 2016, and $1.1 billion currently outstanding on a consolidated basis under the $1.25 billion revolving credit facility issued on March 7, 2017. The notes issued by the Company are guaranteed by the following additional wholly owned subsidiaries on a joint and several basis: Willis Netherlands B.V., Willis Investment U.K. Holdings Limited, TA I Limited, Trinity Acquisition plc, Willis Group Limited, Willis North America, Willis Towers Watson Sub Holdings Unlimited Company and Willis Towers Watson U.K. Holdings Limited. The notes issued by Willis North America are guaranteed on a joint and several basis by the Company and each of the subsidiaries that guarantee the Company notes, except for Willis North America itself. The notes issued by Trinity Acquisition plc are guaranteed on a joint and several basis by the Company and each of the subsidiaries that guarantee the Company notes, except for Trinity Acquisition plc itself. For the purposes of this footnote, the companies that guarantee the Company notes, the Willis North America notes and the Trinity Acquisition plc notes, other than Willis North America and Trinity Acquisition plc, are referred to as the ‘other guarantors.’ The presentation of the financial information for issuers and other guarantor subsidiaries has been changed from prior filings in that the three previously disclosed separate notes that presented the three different issuer and related guarantor scenarios have been combined into one note. This new presentation still includes all of the financial information of the appropriate issuing and guarantor entities, with some minor reclassifications from what had been previously disclosed for each entity. We believe that the new presentation will help to reduce the complexity of the information and offer a more meaningful analysis for the reader. All intercompany receivables/payables have been presented in the condensed consolidating financial statements as non-current on a net presentation basis, rather than a gross basis, as this better reflects the nature of the intercompany positions and presents the funding or funded position that is due or owed. The equity method has been used for investments in subsidiaries in the condensed consolidating balance sheet of Willis Towers Watson plc, Willis North America, Trinity Acquisition plc and the other guarantors. Presented below is condensed financial information for: (i) Willis Towers Watson plc, which is both an issuer and guarantor, on a parent company only basis; (ii) Willis North America, which is both an issuer and guarantor, on a company only basis; (iii) Trinity Acquisition plc, which is both an issuer and guarantor, on a company only basis; (iv) Other guarantors, which are all wholly owned direct or indirect subsidiaries of the parent, on a combined basis; (v) Non-guarantors, which are all wholly owned direct or indirect subsidiaries of the parent, on a combined basis; (vi) Eliminations, which are consolidating adjustments on a combined basis; and (vii) The consolidated company. Unaudited Condensed Consolidating Statement of Comprehensive Income Three months ended June 30, 2018 Willis Towers Watson plc Willis North America Trinity Acquisition plc Other guarantors Non-guarantors Eliminations Consolidated Revenue $ — $ 1 $ — $ — $ 1,989 $ — $ 1,990 Costs of providing services Salaries and benefits — 21 — — 1,254 — 1,275 Other operating expenses 2 20 — 52 332 — 406 Depreciation — — — 1 50 — 51 Amortization — — — — 140 — 140 Restructuring costs — — — — — — — Transaction and integration expenses — — — — 55 — 55 Total costs of providing services 2 41 — 53 1,831 — 1,927 (Loss)/income from operations (2 ) (40 ) — (53 ) 158 — 63 Intercompany (expense)/income — (9 ) 30 97 (118 ) — — Interest expense (8 ) (11 ) (27 ) — (6 ) — (52 ) Other income, net — — — 1 62 — 63 (LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES (10 ) (60 ) 3 45 96 — 74 Benefit from/(provision for) income taxes — 8 — (8 ) (9 ) — (9 ) Equity account for subsidiaries 68 (35 ) (8 ) 26 — (51 ) — NET INCOME/(LOSS) 58 (87 ) (5 ) 63 87 (51 ) 65 Income attributable to non-controlling interests — — — — (7 ) — (7 ) NET INCOME/(LOSS) ATTRIBUTABLE TO WILLIS TOWERS WATSON $ 58 $ (87 ) $ (5 ) $ 63 $ 80 $ (51 ) $ 58 Comprehensive loss before non-controlling interests $ (117 ) $ (153 ) $ (178 ) $ (111 ) $ (40 ) $ 488 $ (111 ) Comprehensive income attributable to non-controlling interest — — — — (6 ) — (6 ) Comprehensive loss attributable to Willis Towers Watson $ (117 ) $ (153 ) $ (178 ) $ (111 ) $ (46 ) $ 488 $ (117 ) Unaudited Condensed Consolidating Statement of Comprehensive Income Three months ended June 30, 2017 Willis Towers Watson plc Willis North America Trinity Acquisition plc Other guarantors Non-guarantors Eliminations Consolidated Revenue $ — $ 5 $ — $ — $ 1,948 $ — $ 1,953 Costs of providing services Salaries and benefits 1 10 — — 1,200 — 1,211 Other operating expenses 1 — — 37 353 — 391 Depreciation — — — 2 49 — 51 Amortization — — — 2 147 — 149 Restructuring costs — (3 ) — — 30 — 27 Transaction and integration expenses — (1 ) — 29 35 — 63 Total costs of providing services 2 6 — 70 1,814 — 1,892 (Loss)/income from operations (2 ) (1 ) — (70 ) 134 — 61 Intercompany (expense)/income — (9 ) 31 107 (129 ) — — Interest expense (8 ) (6 ) (26 ) — (6 ) — (46 ) Other income, net — — — — 34 — 34 (LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES (10 ) (16 ) 5 37 33 — 49 Benefit from/(provision for) income taxes 1 1 (1 ) (4 ) (5 ) — (8 ) Equity account for subsidiaries 42 50 (115 ) (11 ) — 34 — NET INCOME/(LOSS) 33 35 (111 ) 22 28 34 41 Income attributable to non-controlling interests — — — — (8 ) — (8 ) NET INCOME/(LOSS) ATTRIBUTABLE TO WILLIS TOWERS WATSON $ 33 $ 35 $ (111 ) $ 22 $ 20 $ 34 $ 33 Comprehensive income before non-controlling interests $ 165 $ 136 $ 15 $ 156 $ 152 $ (443 ) $ 181 Comprehensive income attributable to non-controlling interest — — — — (16 ) — (16 ) Comprehensive income attributable to Willis Towers Watson $ 165 $ 136 $ 15 $ 156 $ 136 $ (443 ) $ 165 Unaudited Condensed Consolidating Statement of Comprehensive Income Six months ended June 30, 2018 Willis Towers Watson plc Willis North America Trinity Acquisition plc Other guarantors Non-guarantors Eliminations Consolidated Revenue $ — $ 7 $ — $ — $ 4,275 $ — $ 4,282 Costs of providing services Salaries and benefits 1 36 — — 2,615 — 2,652 Other operating expenses 2 25 — 94 708 — 829 Depreciation — — — 2 98 — 100 Amortization — — — 1 280 — 281 Restructuring costs — — — — — — — Transaction and integration expenses — 5 — 1 92 — 98 Total costs of providing services 3 66 — 98 3,793 — 3,960 (Loss)/income from operations (3 ) (59 ) — (98 ) 482 — 322 Intercompany (expense)/income — (14 ) 60 189 (235 ) — — Interest expense (15 ) (22 ) (54 ) — (12 ) — (103 ) Other income, net — — — 2 117 — 119 (LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES (18 ) (95 ) 6 93 352 — 338 Benefit from/(provision for) income taxes — 13 (1 ) (16 ) (48 ) — (52 ) Equity account for subsidiaries 291 (42 ) 134 207 — (590 ) — NET INCOME/(LOSS) 273 (124 ) 139 284 304 (590 ) 286 Income attributable to non-controlling interests — — — — (13 ) — (13 ) NET INCOME/(LOSS) ATTRIBUTABLE TO WILLIS TOWERS WATSON $ 273 $ (124 ) $ 139 $ 284 $ 291 $ (590 ) $ 273 Comprehensive income/(loss) before non-controlling interests $ 181 $ (175 ) $ 48 $ 192 $ 202 $ (254 ) $ 194 Comprehensive income attributable to non-controlling interest — — — — (13 ) — (13 ) Comprehensive income/(loss) attributable to Willis Towers Watson $ 181 $ (175 ) $ 48 $ 192 $ 189 $ (254 ) $ 181 Unaudited Condensed Consolidating Statement of Comprehensive Income Six months ended June 30, 2017 Willis Towers Watson plc Willis North America Trinity Acquisition plc Other guarantors Non-guarantors Eliminations Consolidated Revenue $ — $ 11 $ — $ — $ 4,261 $ — $ 4,272 Costs of providing services Salaries and benefits 2 20 — — 2,442 — 2,464 Other operating expenses 2 10 — 44 736 — 792 Depreciation — — — 3 94 — 97 Amortization — — — 2 298 — 300 Restructuring costs — — — 4 50 — 54 Transaction and integration expenses — 2 — 30 71 — 103 Total costs of providing services 4 32 — 83 3,691 — 3,810 (Loss)/income from operations (4 ) (21 ) — (83 ) 570 — 462 Intercompany income/(expense) — 18 59 168 (245 ) — — Interest expense (15 ) (16 ) (51 ) — (10 ) — (92 ) Other income, net — — — — 77 — 77 (LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES (19 ) (19 ) 8 85 392 — 447 Benefit from/(provision for) income taxes 1 3 (1 ) (8 ) (49 ) — (54 ) Equity account for subsidiaries 395 225 225 300 — (1,145 ) — NET INCOME 377 209 232 377 343 (1,145 ) 393 Income attributable to non-controlling interests — — — — (16 ) — (16 ) NET INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON $ 377 $ 209 $ 232 $ 377 $ 327 $ (1,145 ) $ 377 Comprehensive income before non-controlling interests $ 485 $ 283 $ 334 $ 490 $ 438 $ (1,518 ) $ 512 Comprehensive income attributable to non-controlling interest — — — — (27 ) — (27 ) Comprehensive income attributable to Willis Towers Watson $ 485 $ 283 $ 334 $ 490 $ 411 $ (1,518 ) $ 485 Unaudited Condensed Consolidating Balance Sheet As of June 30, 2018 Willis Towers Watson plc Willis North America Trinity Acquisition plc Other guarantors Non-guarantors Eliminations Consolidated ASSETS Cash and cash equivalents $ 1 $ — $ — $ 1 $ 909 $ — $ 911 Fiduciary assets — — — — 14,126 — 14,126 Accounts receivable, net — — — — 2,394 — 2,394 Prepaid and other current assets — 299 1 31 320 (193 ) 458 Total current assets 1 299 1 32 17,749 (193 ) 17,889 Intercompany receivables, net 5,966 — 2,200 — — (8,166 ) — Fixed assets, net — — — 25 899 — 924 Goodwill — — — — 10,468 — 10,468 Other intangible assets, net — — — 59 3,562 (59 ) 3,562 Pension benefits assets — — — — 902 — 902 Other non-current assets 4 70 2 27 444 (79 ) 468 Total non-current assets 5,970 70 2,202 111 16,275 (8,304 ) 16,324 Investments in subsidiaries 4,852 6,031 2,320 7,960 — (21,163 ) — TOTAL ASSETS $ 10,823 $ 6,400 $ 4,523 $ 8,103 $ 34,024 $ (29,660 ) $ 34,213 LIABILITIES AND EQUITY Fiduciary liabilities $ — $ — $ — $ — $ 14,126 $ — $ 14,126 Deferred revenue and accrued expenses — — — 4 1,353 — 1,357 Short-term debt and current portion of long-term debt 1 — — — 84 — 85 Other current liabilities 97 12 27 16 803 (141 ) 814 Total current liabilities 98 12 27 20 16,366 (141 ) 16,382 Intercompany payables, net — 634 — 3,658 3,874 (8,166 ) — Long-term debt 497 1,136 2,914 — 42 — 4,589 Liability for pension benefits — — — — 1,185 — 1,185 Deferred tax liabilities — — — — 768 (77 ) 691 Provision for liabilities — 120 — — 426 — 546 Other non-current liabilities — — — — 446 — 446 Total non-current liabilities 497 1,890 2,914 3,658 6,741 (8,243 ) 7,457 TOTAL LIABILITIES 595 1,902 2,941 3,678 23,107 (8,384 ) 23,839 REDEEMABLE NON-CONTROLLING INTEREST — — — — 27 — 27 EQUITY Total Willis Towers Watson shareholders’ equity 10,228 4,498 1,582 4,425 10,771 (21,276 ) 10,228 Non-controlling interests — — — — 119 — 119 Total equity 10,228 4,498 1,582 4,425 10,890 (21,276 ) 10,347 TOTAL LIABILITIES AND EQUITY $ 10,823 $ 6,400 $ 4,523 $ 8,103 $ 34,024 $ (29,660 ) $ 34,213 Unaudited Condensed Consolidating Balance Sheet As of December 31, 2017 Willis Towers Watson plc Willis North America Trinity Acquisition plc Other guarantors Non-guarantors Eliminations Consolidated ASSETS Cash and cash equivalents $ 2 $ — $ — $ 1 $ 1,027 $ — $ 1,030 Fiduciary assets — — — — 12,155 — 12,155 Accounts receivable, net — 4 — — 2,242 — 2,246 Prepaid and other current assets — 267 1 44 264 (146 ) 430 Total current assets 2 271 1 45 15,688 (146 ) 15,861 Intercompany receivables, net 6,202 — 2,501 — — (8,703 ) — Fixed assets, net — — — 25 960 — 985 Goodwill — — — — 10,519 — 10,519 Other intangible assets, net — — — 60 3,882 (60 ) 3,882 Pension benefits assets — — — — 764 — 764 Other non-current assets — 115 3 31 388 (90 ) 447 Total non-current assets 6,202 115 2,504 116 16,513 (8,853 ) 16,597 Investments in subsidiaries 4,506 6,125 1,918 8,425 — (20,974 ) — TOTAL ASSETS $ 10,710 $ 6,511 $ 4,423 $ 8,586 $ 32,201 $ (29,973 ) $ 32,458 LIABILITIES AND EQUITY Fiduciary liabilities $ — $ — $ — $ — $ 12,155 $ — $ 12,155 Deferred revenue and accrued expenses — 19 — 7 1,685 — 1,711 Short-term debt and current portion of long-term debt — — — — 85 — 85 Other current liabilities 87 83 33 27 724 (150 ) 804 Total current liabilities 87 102 33 34 14,649 (150 ) 14,755 Intercompany payables, net — 787 — 3,895 4,021 (8,703 ) — Long-term debt 497 986 2,883 — 84 — 4,450 Liability for pension benefits — — — — 1,259 — 1,259 Deferred tax liabilities — — — — 704 (89 ) 615 Provision for liabilities — 120 — — 438 — 558 Other non-current liabilities — 19 — 5 520 — 544 Total non-current liabilities 497 1,912 2,883 3,900 7,026 (8,792 ) 7,426 TOTAL LIABILITIES 584 2,014 2,916 3,934 21,675 (8,942 ) 22,181 REDEEMABLE NON-CONTROLLING INTEREST — — — — 28 — 28 EQUITY Total Willis Towers Watson shareholders’ equity 10,126 4,497 1,507 4,652 10,375 (21,031 ) 10,126 Non-controlling interests — — — — 123 — 123 Total equity 10,126 4,497 1,507 4,652 10,498 (21,031 ) 10,249 TOTAL LIABILITIES AND EQUITY $ 10,710 $ 6,511 $ 4,423 $ 8,586 $ 32,201 $ (29,973 ) $ 32,458 Unaudited Condensed Consolidating Statement of Cash Flows Six months ended June 30, 2018 Willis Towers Watson plc Willis North America Trinity Acquisition plc Other guarantors Non-guarantors Eliminations Consolidated NET CASH FROM/(USED IN) OPERATING ACTIVITIES $ 154 $ — $ (240 ) $ 170 $ 644 $ (333 ) $ 395 CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES Additions to fixed assets and software for internal use — — — (2 ) (139 ) — (141 ) Capitalized software costs — — — — (25 ) — (25 ) Acquisitions of operations, net of cash acquired — — — — (8 ) — (8 ) Net proceeds from sale of operations — — — — 4 — 4 Other, net — — — — 17 — 17 Proceeds from/(repayments of) intercompany investing activities, net 245 (97 ) 137 139 (351 ) (73 ) — Net cash from/(used in) investing activities $ 245 $ (97 ) $ 137 $ 137 $ (502 ) $ (73 ) $ (153 ) CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES Net borrowings on revolving credit facility — 150 47 — — — 197 Repayments of debt — — — — (43 ) — (43 ) Repurchase of shares (269 ) — — — — — (269 ) Proceeds from issuance of shares 18 — — — — — 18 Payments of deferred and contingent consideration related to acquisitions — — — — (41 ) — (41 ) Cash paid for employee taxes on withholding shares — — — — (30 ) — (30 ) Dividends paid (149 ) — (332 ) (1 ) — 333 (149 ) Acquisitions of and dividends paid to non-controlling interests — — — — (18 ) — (18 ) (Repayments of)/proceeds from intercompany financing activities, net — (53 ) 388 (306 ) (102 ) 73 — Net cash (used in)/from financing activities $ (400 ) $ 97 $ 103 $ (307 ) $ (234 ) $ 406 $ (335 ) DECREASE IN CASH AND CASH EQUIVALENTS (1 ) — — — (92 ) — (93 ) Effect of exchange rate changes on cash and cash equivalents — — — — (26 ) — (26 ) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2 — — 1 1,027 — 1,030 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1 $ — $ — $ 1 $ 909 $ — $ 911 Unaudited Condensed Consolidating Statement of Cash Flows Six months ended June 30, 2017 Willis Towers Watson plc Willis North America Trinity Acquisition plc Other guarantors Non-guarantors Eliminations Consolidated NET CASH FROM/(USED IN) OPERATING ACTIVITIES $ 448 $ 39 $ 434 $ (311 ) $ (116 ) $ (175 ) $ 319 CASH FLOWS (USED IN)/FROM INVESTING ACTIVITIES Additions to fixed assets and software for internal use — — — (5 ) (114 ) — (119 ) Capitalized software costs — — — — (32 ) — (32 ) Acquisitions of operations, net of cash acquired — — — — (13 ) — (13 ) Other, net — — — — 9 — 9 Proceeds from/(repayments of) intercompany investing activities, net 948 7 (473 ) 78 184 (744 ) — (Increase)/decrease in investment in subsidiaries (1,000 ) — — 941 59 — — Net cash (used in)/from investing activities $ (52 ) $ 7 $ (473 ) $ 1,014 $ 93 $ (744 ) $ (155 ) CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES Net borrowings on revolving credit facility — — 283 — — — 283 Senior notes issued — 650 — — — — 650 Proceeds from issuance of other debt — — — — 32 — 32 Debt issuance costs — (5 ) (4 ) — — — (9 ) Repayments of debt — (399 ) (215 ) — (81 ) — (695 ) Repurchase of shares (296 ) — — — — — (296 ) Proceeds from issuance of shares 37 — — — — — 37 Payments of deferred and contingent consideration related to acquisitions — — — — (44 ) — (44 ) Cash paid for employee taxes on withholding shares — — — — (3 ) — (3 ) Dividends paid (137 ) (59 ) — — (116 ) 175 (137 ) Acquisitions of and dividends paid to non-controlling interests — — — — (14 ) — (14 ) (Repayments of)/proceeds from intercompany financing activities, net — (233 ) (25 ) (696 ) 210 744 — Net cash (used in)/from financing activities $ (396 ) $ (46 ) $ 39 $ (696 ) $ (16 ) $ 919 $ (196 ) INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS — — — 7 (39 ) — (32 ) Effect of exchange rate changes on cash and cash equivalents — — — — 14 — 14 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD — — — — 870 — 870 CASH AND CASH EQUIVALENTS, END OF PERIOD $ — $ — $ — $ 7 $ 845 $ — $ 852 |
Basis of Presentation and Rec23
Basis of Presentation and Recent Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying unaudited quarterly condensed consolidated financial statements of Willis Towers Watson and our subsidiaries are presented in accordance with the rules and regulations of the Securities and Exchange Commission (‘SEC’) for quarterly reports on Form 10-Q and therefore do not include all of the information and footnotes required by U.S. generally accepted accounting principles (‘GAAP’). We have reclassified certain prior period amounts to conform to current period presentation due to the adoption of certain updated accounting standards (see below for further discussion). In the opinion of management, these condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, which are necessary for a fair presentation of the condensed consolidated financial statements and results for the interim periods. All intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements should be read together with the Company’s Annual Report on Form 10-K, filed with the SEC on February 28, 2018, and may be accessed via EDGAR on the SEC’s web site at www.sec.gov. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results that can be expected for the entire year. The Company experiences seasonal fluctuations of its revenue. Revenue is typically higher during the Company’s first and fourth quarters due to the timing of broking-related activities. The results reflect certain estimates and assumptions made by management, including those estimates used in calculating acquisition consideration and fair value of tangible and intangible assets and liabilities, professional liability claims, estimated bonuses, valuation of billed and unbilled receivables, and anticipated tax liabilities that affect the amounts reported in the condensed consolidated financial statements and related notes. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Not Yet Adopted In February 2016, the Financial Accounting Standards Board (‘FASB’) issued Accounting Standard Update (‘ASU’) No. 2016-02, Leases , which requires a lessee to recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. Additional ASUs have since been issued which provide amended and additional guidance for the implementation of ASU No. 2016-02. All related guidance has been codified into, and is now known as, Accounting Standards Codification (‘ASC’) 842 (‘ASC 842’). ASC 842 becomes effective for the Company at the beginning of its 2019 calendar year, at which time the Company will adopt it, although early adoption is permitted. The Company is still in the process of finalizing its complete inventory of lease agreements to determine the full impact the standard will have, however the majority of its leases are currently considered operating leases and will be capitalized as a lease asset on its balance sheet with a related lease liability for the obligated lease payments. While the Company is still evaluating which practical expedients afforded by ASC 842 it will select, the Company has provisionally determined the following: • The Company will adopt the standard using the modified retrospective approach whereby it will recognize a transition adjustment at the effective date of ASC 842, January 1, 2019, rather than at the beginning of the earliest comparative period presented. • Additionally, to prepare for the additional required disclosures and new accounting treatment, the Company is currently implementing additional tools to its lease accounting and data collection processes, which will be in place and effective on January 1, 2019. In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment , which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, current U.S. GAAP requires the performance of procedures to determine the fair value at the impairment testing date of assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, the amendments under this ASU require the goodwill impairment test to be performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The ASU becomes effective for the Company on January 1, 2020. The amendments in this ASU should be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017, and the Company is still evaluating when to adopt this ASU. The Company does not expect an immediate impact to its condensed consolidated financial statements upon adopting this ASU since the most recent Step 1 goodwill impairment test resulted in fair values in excess of carrying values for all reporting units at October 1, 2017. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities , which provides amendments under six specific objectives to better align risk management activities and financial reporting, and to simplify disclosure, presentation, hedging and the testing and measurement of ineffectiveness. The ASU becomes effective for the Company on January 1, 2019. Early adoption is permitted, and any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company is currently assessing when it will adopt this standard, and the impact that this standard will have on its condensed consolidated financial statements. In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows for a reclassification from accumulated other comprehensive income to retained earnings for ‘stranded’ tax effects (those tax effects of items within accumulated other comprehensive income resulting from the historical corporate income tax rate reduction) resulting from the Tax Cuts and Jobs Act. The amendments within this ASU also require certain disclosures about stranded tax effects. The ASU becomes effective for the Company on January 1, 2019. Early adoption is permitted, and any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company will adopt this standard on January 1, 2019, and is evaluating the impact that this standard will have on its condensed consolidated financial statements. Adopted In May 2014, the FASB issued ASU No. 2014-09, Revenue From Contracts With Customers . The new standard supersedes most current revenue recognition guidance and eliminates most industry-specific guidance. The ASU is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. Entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. Additional ASUs have since been issued which provide further guidance, examples and technical corrections for the implementation of ASU No. 2014-09. All related guidance has been codified into, and is now known as, Accounting Standards Codification 606, Revenue From Contracts With Customers (‘ASC 606’). The guidance was effective for, and was adopted by, the Company as of January 1, 2018 using the modified retrospective method, and has a material impact on the condensed consolidated financial statements and their accompanying notes containing our 2018 information. A full description of each impact, as well as the new disclosures required by ASC 606, is discussed below and in Note 3 — Revenue . In March 2017, the FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost , which requires entities to (1) disaggregate the current service-cost component from the other components of net benefit cost (the ‘other components’) and present it in the income statement with other current compensation costs for related employees and (2) present the other components elsewhere in the income statement and outside of income from operations if that subtotal is presented. In addition, the ASU requires entities to disclose the income statement lines that contain the other components if they are not presented or included in appropriately described separate lines. The ASU became effective for the Company on January 1, 2018 and it has applied the standard retrospectively in this Quarterly Report on Form 10-Q. As a result of adopting this ASU, the Company classified or reclassified net periodic pension and postretirement benefit credits totaling $61 million and $140 million for the three and six months ended June 30, 2018, respectively, and $63 million and $125 million for the three and six months ended June 30, 2017, respectively, from salaries and benefits expense to other income, net, in the condensed consolidated statements of comprehensive income. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments , which amends guidance on presentation and classification of eight specific cash flow issues with the objective of reducing diversity in practice. The ASU became effective for the Company on January 1, 2018 on a prospective basis. While there was no impact to the condensed consolidated statement of cash flows for the six months ended June 30, 2018, the Company will reflect the new guidance prospectively as applicable transactions occur. In May 2017, the FASB issued ASU No. 2017-09, Stock Compensation - Scope of Modification Accounting , which provides guidance on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The ASU requires that an entity should account for the effects of a modification unless the fair value (or calculated value or intrinsic value, if used), vesting conditions and classification (as equity or liability) of the modified award are all the same as for the original award immediately before the modification. The ASU became effective for the Company on January 1, 2018 and will be applied prospectively to any award modified on or after this date. There is no immediate impact to the accompanying condensed consolidated financial statements, until such time as an award may be modified in 2018 or forward. |
Revenue Recognition, Policy [Policy Text Block] | Revenue Recognition We recognize revenue from a variety of services, with broking, consulting and outsourced administration representing our most significant offerings. All other revenue streams, which can be recognized at either point in time or over time, are individually less significant and are grouped in Other in our revenue disaggregation disclosures in Note 3 — Revenue . These Other revenue streams represent approximately 5% of customer contract revenue for the three and six months ended June 30, 2018. Broking — Representing approximately 46% and 48% of customer contract revenue for the three and six months ended June 30, 2018, respectively, in our broking arrangements, we earn revenue by acting as an intermediary in the placement of effective insurance policies. Generally, we act as an agent and view our clients to be the party looking to obtain insurance coverage for various risks, or employers or sponsoring organizations looking to obtain insurance coverage for their employees or members. Also, we act as an agent in reinsurance broking arrangements where our client is the party looking to cede risks to the reinsurance markets. Our primary performance obligation under the majority of these arrangements is to place an effective insurance or reinsurance policy, but there can also be significant post-placement obligations in certain contracts to which we need to allocate revenue. The most common of these is for claims handling or call center support. The revenue recognition method for these, after the relative fair value allocation, is described further as part of the ‘Outsourced Administration’ description below. Due to the nature of the majority of our broking arrangements, no single document constitutes the contract for ASC 606 purposes. Our services may be governed by a mixture of different types of contractual arrangements depending on the jurisdiction or type of coverage, including terms of business agreements, broker-of-record letters, statements of work or local custom and practice. This is then confirmed by the client’s acceptance of the underlying insurance contract. Prior to the policy inception date, the client has not accepted nor formally committed to perform under the arrangement (i.e. pay for the insurance coverage in place). Therefore in the majority of broking arrangements, the contract date is the date the insurance policy incepts. However, in certain instances such as Medicare broking or Affinity arrangements, where the employer or sponsoring organization is our customer, client acceptance of underlying individual policy placements is not required, and therefore the date at which we have a contract with a customer is not dependent upon placement. As noted, our primary performance obligations typically consist of only the placement of an effective insurance policy which precedes the inception date of the policy. Therefore, most of our fulfillment costs are incurred before we can recognize revenue, and are thus deferred during the pre-placement process. Where we have material post-placement services obligations, we estimate the relative fair value of the post-placement services using either the expected cost-plus-margin or the market assessment approach. Fees for our broking services consist of commissions or fees negotiated in lieu of commissions. At times, we may receive additional income for performing these services from the insurance and reinsurance carriers market, which is collectively referred to as ‘market derived income’. In situations in which our fees are not fixed but are variable, we must estimate the likely commission per policy, taking into account the likelihood of cancellation before the end of the policy. For Medicare broking, Affinity arrangements and proportional treaty reinsurance broking, the commissions to which we will be entitled can vary based on the underlying individual insurance policies that are placed. For proportional treaty reinsurance broking in particular, we base the estimate of transaction prices on supportable evidence from an analysis of past transactions, and only include amounts that are probable of being received or not refunded (referred to as applying ‘constraint’ under ASC 606). This results in us estimating a transaction price that may be significantly lower than the ultimate amount of commissions we may collect. The transaction price is then adjusted over time as we receive confirmation of our remuneration through receipt of treaty statements. We recognize revenue for most broking arrangements as of a point in time at the later of the policy inception date or when the policy placement is complete, because this is viewed as the date when control is transferred to the client. For Medicare broking, we recognize revenue over time, as we stand ready under our agreements to place retiree Medicare coverage. For this type of broking arrangement, we recognize the majority of our placement revenue in the fourth quarter of the calendar year when the majority of the placement or renewal activity occurs. Consulting — We earn revenue for advisory and consulting work that may be structured as different types of service offerings, including annual recurring projects, projects of a short duration or stand-ready obligations. Collectively, our consulting arrangements represent approximately 39% and 37% of customer contract revenue for the three and six months ended June 30, 2018, respectively. We have engagement letters with our clients that specify the terms and conditions upon which the engagements are based. These terms and conditions can only be changed upon agreement by both parties. In assessing our performance obligations, our consulting work is typically highly integrated, with the various promised services representing inputs of the combined overall output. We view these arrangements to represent a single performance obligation. To the extent we do not integrate our services, as is the case with unrelated services that may be sourced from different areas of our business, we consider these separate performance obligations. Fee terms can be in the form of fixed-fees (including fixed-fees offset by commissions), time-and-expense fees, commissions, per-participant fees, or fees based on assets under management. Payment is typically due on a monthly basis as we perform under the contract, and we are entitled to be reimbursed for work performed to date in the event of termination. The majority of our revenue from these consulting engagements is recognized over time, either because our clients are simultaneously receiving and consuming the benefits of our services, or because we have an enforceable right to payment for performance rendered to date. Additionally, from time to time, we may be entitled to an additional fee based on achieving certain performance criteria. To the extent that we cannot estimate with reasonable assurance the likelihood that we will achieve the performance target, we will ‘constrain’ this portion of the transaction price and recognize it when or as the uncertainty is resolved. We use different performance measures to determine our revenue depending on the nature of the engagement: • Annual recurring projects and projects of short duration. These projects are typically straightforward and highly predictable in nature with either time and expense or fixed fee terms. Time-and-expense fees are recognized as hours or expenses are incurred using the ‘right to invoice’ practical expedient allowed under ASC 606. For fixed-fee arrangements, to the extent estimates can be made of the remaining work required under the arrangement, revenues are based upon the proportional performance method, using the value of labor hours compared to the estimated total value of labor hours. We believe that cost represents a faithful depiction of transfer of value because the completion of these performance obligations is based upon the professional services of employees of differing experience levels and thereby costs. It is appropriate that satisfaction of these performance obligations considers both the number of hours incurred by each employee and the value of each labor hour worked (as opposed to simply the hours worked). • Stand-ready obligations. These projects consist of repetitive monthly or quarterly services performed consistently each period. As none of the activities provided under these services are performed at specified times and quantities, but at the discretion of each customer, our obligation is to stand-ready to perform these services on an as-needed basis. These arrangements represent a ‘series’ performance obligation in accordance with ASC 606. Each time increment (i.e. each month or quarter) of standing ready to provide the overall services is distinct and the customer obtains value from each period of service independent of the other periods of service. Where we recognize revenue on a proportional performance basis, the amount we recognize is affected by a number of factors that can change the estimated amount of work required to complete the project such as the staffing on the engagement and/or the level of client participation. Our periodic engagement evaluations require us to make judgments and estimates regarding the overall profitability and stage of project completion that, in turn, affect how we recognize revenue. We recognize a loss on an engagement when estimated revenues to be received for that engagement are less than the total estimated costs associated with the engagement. Losses are recognized in the period in which the loss becomes probable and the amount of the loss is reasonably estimable. Outsourced Administration — We provide customized benefits outsourcing and co-sourcing solutions services in relation to the administration of defined benefit, defined contribution, and health and welfare plans. These plans are sponsored by our clients to provide benefits to their active or retired employees. Additionally, these services include operating call centers, and may include providing access to, and managing a variety of consumer-directed savings accounts. The operation of call centers and consumer-directed accounts can be provisioned as part of an ongoing administration or solutions service, or separately as part of a broking arrangement. The products and services available to all clients are the same, but the selections by the client can vary and portray customized products and services based on the customer’s specific needs. Our services often include the use of proprietary systems that are configured for each of our clients’ needs. In total, our outsourced administration services represent approximately 10% of customer contract revenue for the three and six months ended June 30, 2018. These contracts typically consist of an implementation phase and an ongoing administration phase: • Implementation phase. Work performed during the implementation phase is considered a set-up activity because it does not transfer a service to the customer, and therefore costs are deferred during this phase of the arrangement. Since these arrangements are longer term in nature and subject to more changes in scope as the project progresses, our contracts generally provide that if the client terminates a contract, we are entitled to an additional payment for services performed through the termination date designed to recover our up-front costs of implementation. • Ongoing administration phase. The ongoing administration phase includes a variety of plan administration services, system hosting and support services. More specifically, these services include data management, calculations, reporting, fulfillment/communications, compliance services, call center support, and in our health and welfare arrangements, annual onboarding and enrollment support. While there are a variety of activities performed, the overall nature of the obligation is to provide an integrated outsourcing solution to the customer. The arrangement represents a stand-ready obligation to perform these activities on an as-needed basis. The customer obtains value from each period of service, and each time increment (i.e., each month, or each benefits cycle in our health and welfare arrangements) is distinct and substantially the same. Accordingly, the ongoing administration services represent a ‘series’ in accordance with ASC 606 and are deemed one performance obligation. We have engagement letters with our clients that specify the terms and conditions upon which the engagements are based. These terms and conditions can only be changed upon agreement by both parties. Fees for these arrangements can be fixed, per- participant-per-month, or in the case of call center services provided in conjunction with our broking services, an allocation based on commissions. Our fees are not typically payable until the commencement of the ongoing administration phase. However, in our health and welfare arrangements, we begin transferring services to our customers approximately four months prior to payments being due as part of our annual onboarding and enrollment work. Although our per-participant-per-month and commission-based fees are considered variable, they are typically predictable in nature, and therefore we generally do not ‘constrain’ any portion of our transaction price estimates. Once fees become payable, payment is typically due on a monthly basis as we perform under the contract, and are entitled to be reimbursed for work performed to date in the event of termination. Revenue is recognized over time as the services are performed because our clients are simultaneously receiving and consuming the benefits of our services. For our health and welfare arrangements where each benefits cycle represents a time increment under the series guidance, revenue is recognized based on proportional performance. We use an input measure (value of labor hours worked) as the measure of progress. Given that the service is stand-ready in nature, it can be difficult to predict the remaining obligation under the benefits cycle. Therefore, the input measure is based on the historical effort expended each month, which is measured as labor cost. This results in slightly more revenue being recognized during periods of annual onboarding since we are performing both our normal monthly services and our annual services during this portion of the benefits cycle. For all other outsourced administration arrangements where a month represents our time increment under the series guidance, we allocate transaction price to the month we are performing our services. Therefore, the amount recognized each month is the variable consideration related to that month plus the fixed monthly or annual fee. The fixed annual or monthly fee is recognized on a straight-line basis. Revenue recognition for these types of arrangements is therefore more consistent throughout the year. Reimbursed expenses — Client reimbursable expenses, including those relating to travel, other out-of-pocket expenses and any third-party costs, are included in revenue, and an equivalent amount of reimbursable expenses is included in other operating expenses as a cost of revenue as incurred. Reimbursed expenses represented approximately 1% of customer contract revenue for the three and six months ended June 30, 2018. Taxes collected from customers and remitted to government authorities are recorded net and are excluded from revenue. Cost to obtain or fulfill contracts Costs to obtain customers include commissions for brokers under specific agreements that would not be incurred without a contract being signed and executed. The Company has elected to apply the ASC 606 ‘practical expedient’ which allows us to expense these costs as incurred if the amortization period related to the resulting asset would be one year or less. The Company has no significant instances of contracts that would be amortized for a period greater than a year, and therefore has no contract costs capitalized for these arrangements. Costs to fulfill include costs incurred by the Company that are expected to be recovered within the expected contract period. The costs associated with our system implementation activities and consulting contracts are recorded through time entry. For our broking business, the Company must estimate the fulfillment costs incurred during the pre-placement of the broking contracts. These judgments include: • which activities in the pre-placement process should be eligible for capitalization; • the amount of time and effort expended on those pre-placement activities; • the amount of payroll and related costs eligible for capitalization; and, • the monthly or quarterly timing of underlying insurance and reinsurance policy inception dates. We amortize costs to fulfill over the period we receive the related benefits. For broking pre-placement costs, this is typically less than a year. In our system implementation and consulting arrangements, we include the likelihood of contract renewals in our estimate of the amortization period, resulting in most costs being amortized for a greater length of time than the initial contract term. |
Income Tax, Policy - GILTI [Policy Text Block] | Accounting for income taxes on Global Intangible Low-Taxed Income (‘GILTI’) We recognize the tax on GILTI as a period expense in the period the tax is incurred. Under this policy, we have not provided deferred taxes related to temporary differences, that upon their reversal, will affect the amount of income subject to GILTI in the period. |
Revenue Revenue (Tables)
Revenue Revenue (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Disaggregation of Revenue [Line Items] | |
Schedule of Effect of ASC 606 on Financial Statements [Table Text Block] | The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of ASC 606 were as follows: Balance Sheet Balance at December 31, 2017 Adjustments due to ASC 606 Balance at January 1, 2018 ASSETS Accounts receivable, net $ 2,246 $ 309 a $ 2,555 Prepaid and other current assets 430 89 b 519 Fixed assets, net 985 (83 ) c 902 Other non-current assets 447 39 c 486 LIABILITIES Deferred revenue and accrued expenses 1,711 (74 ) d 1,637 Deferred tax liabilities 615 99 e 714 Provision for liabilities 558 12 f 570 EQUITY Retained earnings 1,104 317 g 1,421 In accordance with the modified retrospective adoption requirements of ASC 606, the following disclosures represent the impact of adoption on our condensed consolidated statement of comprehensive income, balance sheet and statement of cash flows: Three Months Ended June 30, 2018 Statement of Comprehensive Income As Reported Balances Without Adoption of ASC 606 Effect of Change Revenue $ 1,990 $ 2,022 $ (32 ) h Costs of providing services Salaries and benefits 1,275 1,272 3 i Depreciation 51 56 (5 ) i Income from operations 63 93 (30 ) INCOME FROM OPERATIONS BEFORE INCOME TAXES 74 104 (30 ) Provision for income taxes (9 ) (15 ) 6 j NET INCOME 65 89 (24 ) NET INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON 58 82 (24 ) EARNINGS PER SHARE Basic earnings per share $ 0.44 $ 0.62 $ (0.18 ) Diluted earnings per share $ 0.44 $ 0.62 $ (0.18 ) Six Months Ended June 30, 2018 Statement of Comprehensive Income As Reported Balances Without Adoption of ASC 606 Effect of Change Revenue $ 4,282 $ 4,573 $ (291 ) h Costs of providing services Salaries and benefits 2,652 2,624 28 i Depreciation 100 110 (10 ) i Income from operations 322 631 (309 ) INCOME FROM OPERATIONS BEFORE INCOME TAXES 338 647 (309 ) Provision for income taxes (52 ) (111 ) 59 j NET INCOME 286 536 (250 ) NET INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON 273 523 (250 ) EARNINGS PER SHARE Basic earnings per share $ 2.06 $ 3.95 $ (1.89 ) Diluted earnings per share $ 2.05 $ 3.94 $ (1.89 ) As of June 30, 2018 Balance Sheet As Reported Balances Without Adoption of ASC 606 Effect of Change ASSETS Accounts receivable, net $ 2,394 $ 2,406 $ (12 ) a Prepaid and other current assets 458 389 69 b Fixed assets, net 924 1,022 (98 ) c Other non-current assets 468 415 53 c LIABILITIES Deferred revenue and accrued expenses 1,357 1,464 (107 ) d Other current liabilities 814 873 (59 ) e Deferred tax liabilities 691 592 99 e Provision for liabilities 546 534 12 f EQUITY Retained earnings 1,270 1,203 67 g Six Months Ended June 30, 2018 Statement of Cash Flows As Reported Balances Without Adoption of ASC 606 Effect of Change Net cash from operating activities $ 395 $ 419 $ (24 ) k Capitalized software costs (25 ) (49 ) 24 k Explanation of Changes The adoption of ASC 606 had the following impacts to our balance sheets at January 1, 2018 and June 30, 2018: a. Accounts receivable, net, now includes receivables that have been billed, not yet billed and short-term contract assets. This adjustment is the result of the cumulative adjustments to revenue that have not yet been collected from our customers, but are expected to be collected within the next twelve months. The most significant increases to this balance result from revenue acceleration under ASC 606 for Medicare and proportional treaty broking commissions. b. Prepaid and other current assets include the impact of costs deferred in connection with our broking pre-placement activities. These costs are being deferred while the related pre-placement work is performed, and amortized as the related revenue is recognized, typically upon policy inception. Since the amortization period associated with these fulfillment costs is less than one year, these deferred costs have been classified as a current asset. c. Prior to the adoption of ASC 606, costs that we deferred related to certain system implementation activities had been included in fixed assets, net. These costs, adjusted based on the guidance in ASC 606, have now been included in other non-current assets. Additionally we have included less significant impacts of adjustments to deferred tax assets and have classified non-current contract assets within non-current assets. d. Deferred revenue has been adjusted primarily to reflect revenue acceleration in our Medicare broking business. Additional adjustments were included to accelerate the license component of certain software arrangements and to net deferred revenue with contract assets. e. Other current liabilities, which includes current taxes payable, and deferred tax liabilities, have been adjusted for the tax effects of the individual changes resulting from the adoption of ASC 606. The income tax expense was calculated based on the U.S. and foreign statutory rates applicable to adjustments made. Where applicable, a U.S. statutory rate of 21% was used. f. Provision for liabilities has been adjusted for additional reserves for long-term post-placement obligations in our broking business. g. Retained earnings has been adjusted for the net impact of the adoption of ASC 606. See the discussion of the significant pre-tax changes by revenue stream in the following section. The following changes are now reflected in our condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2018. Each description also includes a discussion of the impact to retained earnings as of the adoption date. Retained Earnings Increase/(Decrease) at January 1, 2018 Increase/(Decrease) for the Three Months Ended June 30, 2018 Increase/(Decrease) for the Six Months Ended June 30, 2018 Revenue adjustments Medicare broking $ 311 $ (78 ) $ (151 ) Proportional treaty reinsurance broking 50 5 29 Health and benefits broking — 35 (155 ) Other adjustments 28 6 (14 ) Total adjustments related to revenue 389 (32 ) (291 ) Cost adjustments System implementation activities (46 ) 2 4 Other cost adjustments 75 (4 ) 14 Total adjustments related to costs 29 (2 ) 18 Tax effect (101 ) (6 ) (59 ) Total net adjustments $ 317 $ (24 ) $ (250 ) h. Revenue was adjusted for the following significant changes: • Medicare broking — The majority of revenue recognition for this offering, within our Individual Marketplace business, has moved from monthly ratable recognition over the policy period, to recognition upon placement of the policy. Consequently, the Company will now recognize approximately two-thirds of one calendar year of expected commissions during its fourth quarter of the preceding calendar year. The remainder of the revenue is recognized consistently with methods used prior to the adoption of ASC 606. Therefore, at the adoption date, we have reflected a $271 million pre-tax increase to retained earnings for the portion of the revenue that would otherwise have been recognized during our 2018 calendar year since our earnings process was largely completed during the fourth quarter of 2017. Additionally, we have reflected a $40 million pretax adjustment to increase retained earnings related to previously deferred contingent revenue from placements made prior to 2018 because the earnings process was complete under ASC 606. During the three and six months ended June 30, 2018, the accounting for this revenue stream under ASC 606 represented a reduction of revenue from ASC 605, Revenue Recognition (‘ASC 605’) accounting methods of $78 million and $151 million , respectively. • Proportional treaty reinsurance broking — The revenue recognition for proportional treaty reinsurance broking commissions, within our Investment, Risk and Reinsurance segment, has moved from recognition upon the receipt of the monthly or quarterly treaty statements from the ceding insurance carriers, to the recognition of an estimate of expected commissions upon the policy effective date. Since the majority of revenue recognized historically based on these monthly or quarterly statements was received over a two-year period, we reflected a $50 million pretax increase to retained earnings at the adoption date for the portion of revenue that would otherwise have been recognized during our 2018 calendar year related to policies effective in 2017 or prior years. For the three and six months ended June 30, 2018, ASC 606 revenue was higher than ASC 605 revenue by approximately $5 million and $29 million , respectively, related to this adjustment. • Health and benefits broking — Revenue for certain Health and Benefits broking arrangements, in our Human Capital and Benefits segment, will now be recognized evenly over the year to reflect the nature of the ongoing obligations to our customers as well as receipt of the monthly commissions. These contracts are monthly or annual in nature, and are considered complete as of the transition date. Therefore, no retained earnings adjustment is required. The total changes to revenue as a result of this accounting change for the three and six months ended June 30, 2018 was an increase of $35 million and a decrease of $155 million , respectively. • Other adjustments — Certain other revenue changes with individually less significant adjustments were made to retained earnings as of the adoption date totaling a net $28 million . The cumulative changes to revenue for the three and six months ended June 30, 2018 for other revenue streams not discussed above resulting from the ASC 606 adoption was an increase of $6 million and a decrease of $14 million , respectively. i. Salaries and benefits and depreciation expense have been impacted by the guidance for deferred costs. Our accounting for these deferred costs has changed for certain revenue streams with system implementation activities, and other types of arrangements with associated costs, that now meet the criteria for cost deferral under ASC 606: • System implementation activities — For those portions of the business that previously deferred costs, the length of time over which we amortize those costs will extend to a longer estimated contract term. For 2017 and prior years, these costs were amortized over a typical period of 3 - 5 years in accordance with the initial stated terms of the customer agreements. Additionally, the composition of deferred costs has been adjusted to reflect the guidance in ASC 606. A reduction adjustment to retained earnings of $46 million was recorded on the adoption date to reflect these changes. Further, the amortization of the costs are no longer classified as depreciation expense, but rather included in salaries and benefits. These adjustments resulted in an increase in expenses of $2 million and $4 million for the three and six months ended June 30, 2018, respectively. • Other cost adjustments — This guidance now applies to our broking arrangements and certain consulting engagements. While the costs deferred for our broking arrangements will typically be amortized within one year, costs now deferred related to certain consulting arrangements will be amortized over a longer term. We have increased pre-tax retained earnings by $75 million primarily to reflect the total changes to contract costs as of the adoption date. For the three and six months ended June 30, 2018, these changes resulted in expenses decreasing by $4 million and increasing by $14 million , respectively. j. The provision for income taxes for the three and six months ended June 30, 2018 was $6 million and $59 million , respectively, lower than our provision on an ASC 605 basis. The income tax expense was calculated based on the U.S. and foreign statutory rates applicable to adjustments made. Where applicable, a U.S. statutory rate of 21% was used. There was a $101 million net tax reduction to retained earnings upon adoption of ASC 606. The following changes are now reflected in our condensed consolidated statement of cash flows for the six months ended June 30, 2018. k. As part of the changes in accounting for deferred costs, amounts capitalized relating to system implementation activities are now classified as operating cash outflows. Prior to 2018, those costs capitalized under previous guidance were included in the Capitalized software costs as an investing cash outflow. |
Disaggregation of Revenue [Table Text Block] | The following tables present revenue by service offering and segment, as well as a reconciliation to total revenue for the three and six months ended June 30, 2018. Along with reimbursable expenses and other, total revenue by service offering represents our revenue from customer contracts. See Note 4 — Segment Information for further information. Three months ended June 30, 2018 HCB CRB IRR BDA Corporate (i) Total Broking $ 61 $ 610 $ 224 $ 4 $ — $ 899 Consulting 602 39 107 — 3 751 Outsourced administration 68 16 — 115 — 199 Other 44 2 45 — 2 93 Total revenues by service offering 775 667 376 119 5 1,942 Reimbursable expenses and other (i) 17 — 1 2 4 24 Total revenue from customer contracts $ 792 $ 667 $ 377 $ 121 $ 9 $ 1,966 Interest and other income (ii) 5 7 9 — 3 24 Total revenue $ 797 $ 674 $ 386 $ 121 $ 12 $ 1,990 Six months ended June 30, 2018 HCB CRB IRR BDA Corporate (i) Total Broking $ 137 $ 1,274 $ 615 $ 8 $ — $ 2,034 Consulting 1,233 83 224 — 6 1,546 Outsourced administration 142 39 — 233 — 414 Other 91 5 104 — 3 203 Total revenues by service offering 1,603 1,401 943 241 9 4,197 Reimbursable expenses and other (i) 31 — 3 4 5 43 Total revenue from customer contracts $ 1,634 $ 1,401 $ 946 $ 245 $ 14 $ 4,240 Interest and other income (ii) 9 13 16 — 4 42 Total revenue $ 1,643 $ 1,414 $ 962 $ 245 $ 18 $ 4,282 ____________________ (i) Reimbursable expenses and other, as well as Corporate revenue, are excluded from segment revenue, but included in total revenue on the condensed consolidated statements of comprehensive income. (ii) Interest and other income is included in segment revenue and total revenue, however it has been presented separately in the above tables because it does not arise directly from contracts with customers. Individual revenue streams aggregating to less than 5% of total revenue have been included within the Other line in the tables above. The following tables present revenue by the geography where our work is performed for the three and six months ended June 30, 2018. The reconciliation to total revenue on our condensed consolidated statements of comprehensive income and to segment revenue is shown in the tables above. Three months ended June 30, 2018 HCB CRB IRR BDA Corporate Total North America $ 467 $ 259 $ 105 $ 119 $ 5 $ 955 Great Britain 120 170 182 — — 472 Western Europe 124 121 51 — — 296 International 64 117 38 — — 219 Total revenue by geography $ 775 $ 667 $ 376 $ 119 $ 5 $ 1,942 Six months ended June 30, 2018 HCB CRB IRR BDA Corporate Total North America $ 929 $ 474 $ 258 $ 241 $ 9 $ 1,911 Great Britain 249 318 477 — — 1,044 Western Europe 278 360 122 — — 760 International 147 249 86 — — 482 Total revenue by geography $ 1,603 $ 1,401 $ 943 $ 241 $ 9 $ 4,197 |
Contract with Customer, Asset and Liability [Table Text Block] | The Company reports accounts receivable, net on the condensed consolidated balance sheet, which includes billed and unbilled receivables and current contract assets. In addition to accounts receivable, net, the Company had the following non-current contract assets and deferred revenue balances at June 30, 2018 and January 1, 2018: June 30, 2018 January 1, 2018 Billed receivables, net of allowance for doubtful debts of $49 million and $45 million $ 1,827 $ 1,933 Unbilled receivables 371 276 Current contract assets 196 346 Accounts receivable, net $ 2,394 $ 2,555 Non-current contract assets $ 5 $ 5 Deferred revenue $ 484 $ 463 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Table Text Block] | In addition, the Company has elected not to disclose the remaining performance obligations when one or both of the following circumstances apply: • Performance obligations which are part of a contract that has an original expected duration of less than one year, and • Performance obligations satisfied in accordance with ASC 606-10-55-18 (‘right to invoice’). Remainder of 2018 2019 2020 onward Total Revenue expected to be recognized on contracts as of June 30, 2018 $ 220 $ 390 $ 638 $ 1,248 |
Capitalized Contract Cost [Table Text Block] | The following table shows the categories of costs that are capitalized and deferred over the expected life of a contract. Costs to fulfill Balance at January 1, 2018 $ 126 New capitalized costs 222 Amortization (228 ) Impairments — Foreign currency translation (2 ) Balance at June 30, 2018 $ 118 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment [Table Text Block] | The following table presents segment revenue and segment operating income for our reportable segments for the three months ended June 30, 2018 and 2017. Three Months Ended June 30, HCB CRB IRR BDA Total 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 Segment revenue $ 780 $ 726 $ 674 $ 644 $ 385 $ 374 $ 119 $ 178 $ 1,958 $ 1,922 Segment operating income/(loss) $ 149 $ 122 $ 97 $ 104 $ 89 $ 89 $ (31 ) $ 35 $ 304 $ 350 The following table presents segment revenue and segment operating income for our reportable segments for the six months ended June 30, 2018 and 2017. Six Months Ended June 30, HCB CRB IRR BDA Total 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 Segment revenue $ 1,612 $ 1,675 $ 1,414 $ 1,316 $ 959 $ 865 $ 241 $ 359 $ 4,226 $ 4,215 Segment operating income/(loss) $ 342 $ 467 $ 222 $ 221 $ 350 $ 303 $ (63 ) $ 73 $ 851 $ 1,064 |
Net Operating Income of the Reported Segments | The following table presents reconciliations of the information reported by segment to the Company’s consolidated amounts reported for the three and six months ended June 30, 2018 and 2017 . Three Months Ended Six Months Ended 2018 2017 2018 2017 Revenue: Total segment revenue $ 1,958 $ 1,922 $ 4,226 $ 4,215 Reimbursable expenses and other 32 31 56 57 Revenue $ 1,990 $ 1,953 $ 4,282 $ 4,272 Total segment operating income $ 304 $ 350 $ 851 $ 1,064 Amortization (140 ) (149 ) (281 ) (300 ) Restructuring costs — (27 ) — (54 ) Transaction and integration expenses (55 ) (63 ) (98 ) (103 ) Unallocated, net (i) (46 ) (50 ) (150 ) (145 ) Income from operations 63 61 322 462 Interest expense (52 ) (46 ) (103 ) (92 ) Other income, net 63 34 119 77 Income from operations before income taxes $ 74 $ 49 $ 338 $ 447 ________________________ (i) Includes certain costs, primarily related to corporate functions which are not directly related to the segments, and certain differences between budgeted expenses determined at the beginning of the year and actual expenses that we report for U.S. GAAP purposes. |
Restructuring Costs (Tables)
Restructuring Costs (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Restructuring and Related Activities [Abstract] | |
Analysis of the Cost for Restructuring | An analysis of total restructuring costs recognized in the condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2017 by segment is as follows: Three Months Ended June 30, 2017 HCB CRB IRR BDA Corporate Total Termination benefits $ — $ 5 $ 1 $ — $ 1 $ 7 Professional services and other — 15 1 — 4 20 Total $ — $ 20 $ 2 $ — $ 5 $ 27 Six Months Ended June 30, 2017 HCB CRB IRR BDA Corporate Total Termination benefits $ — $ 9 $ 3 $ — $ 1 $ 13 Professional services and other 1 30 2 — 8 41 Total $ 1 $ 39 $ 5 $ — $ 9 $ 54 |
Schedule of Restructuring Liability | The changes in the Company’s liability under the Operational Improvement Program from its commencement to June 30, 2018 are as follows: Termination Benefits Professional Services and Other Total Balance at January 1, 2014 $ — $ — $ — Charges incurred 16 20 36 Cash payments (11 ) (14 ) (25 ) Balance at December 31, 2014 5 6 11 Charges incurred 36 90 126 Cash payments (26 ) (85 ) (111 ) Balance at December 31, 2015 15 11 26 Charges incurred 23 122 145 Cash payments (31 ) (115 ) (146 ) Balance at December 31, 2016 7 18 25 Charges incurred 48 86 134 Cash payments (41 ) (97 ) (138 ) Balance at December 31, 2017 14 7 21 Cash payments (9 ) (6 ) (15 ) Balance at June 30, 2018 $ 5 $ 1 $ 6 The changes in the Company’s liability under the Business Restructure Program from its commencement to June 30, 2018 are as follows: Termination Benefits Professional Services and Other Total Balance at January 1, 2016 $ — $ — $ — Charges incurred 45 3 48 Cash payments (19 ) (3 ) (22 ) Balance at December 31, 2016 26 — 26 Adjustment to prior charges incurred (2 ) — (2 ) Cash payments (23 ) — (23 ) Balance at December 31, 2017 1 — 1 Cash payments (1 ) — (1 ) Balance at June 30, 2018 $ — $ — $ — |
Goodwill and Other Intangible27
Goodwill and Other Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Components of Goodwill | The components of goodwill are outlined below for the six months ended June 30, 2018 : HCB CRB IRR BDA Total Balance at December 31, 2017: Goodwill, gross $ 4,342 $ 2,261 $ 1,851 $ 2,557 $ 11,011 Accumulated impairment losses (130 ) (362 ) — — (492 ) Goodwill, net - December 31, 2017 4,212 1,899 1,851 2,557 10,519 Goodwill reassigned in segment realignment (i) — 72 (72 ) — — Goodwill acquired during the period — — 5 — 5 Goodwill disposed of during the period — — (5 ) — (5 ) Foreign exchange (25 ) (21 ) (5 ) — (51 ) Balance at June 30, 2018: Goodwill, gross 4,317 2,312 1,774 2,557 10,960 Accumulated impairment losses (130 ) (362 ) — — (492 ) Goodwill, net - June 30, 2018 $ 4,187 $ 1,950 $ 1,774 $ 2,557 $ 10,468 ____________________ (i) Represents the preliminary reallocation of goodwill related to certain businesses which were realigned among the segments as of January 1, 2018. See Note 4 — Segment Information for further information. |
Changes in the Net Carrying Amount of the Components of Finite-Lived Intangible Assets | The following table reflects changes in the net carrying amounts of the components of finite-lived intangible assets for the six months ended June 30, 2018 : Balance at December 31, 2017 Intangible assets acquired Intangible assets disposed Amortization (i) Foreign exchange Balance at June 30, 2018 Client relationships $ 2,342 $ 3 $ (6 ) $ (182 ) $ (26 ) $ 2,131 Management contracts 56 — — (2 ) (4 ) 50 Software 473 — — (73 ) (3 ) 397 Trademark and trade name 966 — — (22 ) (1 ) 943 Product 33 — — (2 ) (1 ) 30 Favorable agreements 10 — — — — 10 Other 2 — — — (1 ) 1 Total amortizable intangible assets $ 3,882 $ 3 $ (6 ) $ (281 ) $ (36 ) $ 3,562 (i) Amortization associated with favorable lease agreements is recorded in Other operating expenses in the condensed consolidated statements of comprehensive income. |
Schedule of Carrying Values of Finite-Lived Intangible Assets and Liabilities | The following table reflects the carrying value of finite-lived intangible assets and liabilities at June 30, 2018 and December 31, 2017 : June 30, 2018 December 31, 2017 Gross carrying amount Accumulated amortization Gross carrying amount Accumulated amortization Client relationships $ 3,403 $ (1,272 ) $ 3,462 $ (1,120 ) Management contracts 63 (13 ) 68 (12 ) Software 756 (359 ) 764 (291 ) Trademark and trade name 1,054 (111 ) 1,055 (89 ) Product 38 (8 ) 39 (6 ) Favorable agreements 15 (5 ) 14 (4 ) Other 5 (4 ) 6 (4 ) Total finite-lived assets $ 5,334 $ (1,772 ) $ 5,408 $ (1,526 ) Unfavorable agreements $ 34 $ (9 ) $ 34 $ (8 ) Total finite-lived intangible liabilities $ 34 $ (9 ) $ 34 $ (8 ) |
Schedule of Future Amortization Expense and Rent Offset | The table below reflects the future estimated amortization expense for amortizable intangible assets and the rent offset resulting from amortization of the net lease intangible assets and liabilities for the remainder of 2018 and for subsequent years: Amortization Rent offset Remainder of 2018 $ 253 $ (2 ) 2019 473 (2 ) 2020 420 (3 ) 2021 343 (2 ) 2022 285 (3 ) Thereafter 1,778 (3 ) Total $ 3,552 $ (15 ) |
Derivative Financial Instrume28
Derivative Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments, Designated As Hedging Instrument, Effect on Other Comprehensive Income (Loss) | The effects of the material derivative instruments that are designated as hedging instruments on the condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2018 and 2017 are as follows: Three Months Ended June 30, (Loss)/gain recognized in OCI (effective portion) Location of loss reclassified from Accumulated OCI into income (effective element) Loss reclassified from Accumulated OCI into income (effective element) Location of gain recognized in income (ineffective portion and amount excluded from effectiveness testing) Gain recognized in income (ineffective portion and amount excluded from effectiveness testing) 2018 2017 2018 2017 2018 2017 Forward exchange contracts $ (24 ) $ 9 Other income, net $ (7 ) $ (20 ) Interest expense $ — $ — Six Months Ended June 30, (Loss)/gain recognized in OCI (effective portion) Location of loss reclassified from Accumulated OCI into income (effective element) Loss reclassified from Accumulated OCI into income (effective element) Location of gain recognized in income (ineffective portion and amount excluded from effectiveness testing) Gain recognized in income (ineffective portion and amount excluded from effectiveness testing) 2018 2017 2018 2017 2018 2017 Forward exchange contracts $ (9 ) $ 12 Other income, net $ (18 ) $ (43 ) Interest expense $ — $ 1 |
Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss) | The effects of derivatives that have not been designated as hedging instruments on the condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2018 and 2017 are as follows: Gain/(loss) recognized in income Three Months Ended Six Months Ended Derivatives not designated as hedging instruments: Location of gain/(loss) 2018 2017 2018 2017 Forward exchange contracts Other income, net $ 2 $ 1 $ (3 ) $ 9 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Short-term debt and current portion of long-term debt consists of the following: June 30, 2018 December 31, 2017 Current portion of term loan due 2019 $ 85 $ 85 Long-term debt consists of the following: June 30, 2018 December 31, 2017 Revolving $1.25 billion credit facility $ 1,081 $ 884 Term loan due 2019 42 84 7.000% senior notes due 2019 186 186 5.750% senior notes due 2021 497 497 3.500% senior notes due 2021 448 447 2.125% senior notes due 2022 (i) 627 644 4.625% senior notes due 2023 248 248 3.600% senior notes due 2024 645 645 4.400% senior notes due 2026 544 544 6.125% senior notes due 2043 271 271 $ 4,589 $ 4,450 ________________________ (i) Notes issued in Euro ( €540 million ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis | The following table presents our assets and liabilities measured at fair value on a recurring basis at June 30, 2018 and December 31, 2017 : Fair Value Measurements on a Recurring Basis at June 30, 2018 Balance Sheet Location Level 1 Level 2 Level 3 Total Assets: Available-for-sale securities: Mutual funds / exchange traded funds Prepaid and other current assets and other non-current assets $ 19 $ — $ — $ 19 Derivatives: Derivative financial instruments (i) Prepaid and other current assets and other non-current assets $ — $ 5 $ — $ 5 Liabilities: Contingent consideration: Contingent consideration (ii) Other current liabilities and other non-current liabilities $ — $ — $ 50 $ 50 Derivatives: Derivative financial instruments (i) Other current liabilities and other non-current liabilities $ — $ 17 $ — $ 17 Fair Value Measurements on a Recurring Basis at December 31, 2017 Balance Sheet Location Level 1 Level 2 Level 3 Total Assets: Available-for-sale securities: Mutual funds / exchange traded funds Prepaid and other current assets and other non-current assets $ 40 $ — $ — $ 40 Derivatives: Derivative financial instruments (i) Prepaid and other current assets and other non-current assets $ — $ 18 $ — $ 18 Liabilities: Contingent consideration: Contingent consideration (ii) Other current liabilities and other non-current liabilities $ — $ — $ 51 $ 51 Derivatives: Derivative financial instruments (i) Other current liabilities and other non-current liabilities $ — $ 37 $ — $ 37 _________________________ (i) See Note 8 — Derivative Financial Instruments for further information on our derivative investments. (ii) Probability weightings are based on our knowledge of the past and planned performance of the acquired entity to which the contingent consideration applies. The weighted average discount rate used on our material contingent consideration calculations was 9.50% and 9.64% at June 30, 2018 and December 31, 2017, respectively. Using different probability weightings and discount rates could result in an increase or decrease of the contingent consideration payable. |
Schedule of Change in Fair Value of Level 3 Liabilities | The following table summarizes the change in fair value of the Level 3 liabilities: Fair Value Measurements Using Significant Unobservable Inputs (Level 3) June 30, 2018 Balance at December 31, 2017 $ 51 Obligations assumed 1 Payments (2 ) Realized and unrealized gains 1 Foreign exchange (1 ) Balance at June 30, 2018 $ 50 |
Schedule of Liabilities Whose Carrying Values Differ From the Fair Value and are Not Measured on a Recurring Basis | The following tables present our liabilities not measured at fair value on a recurring basis at June 30, 2018 and December 31, 2017 : June 30, 2018 December 31, 2017 Carrying Value Fair Value Carrying Value Fair Value Liabilities: Short-term debt and current portion of long-term debt $ 85 $ 85 $ 85 $ 85 Long-term debt $ 4,589 $ 4,700 $ 4,450 $ 4,706 |
Retirement Benefits (Tables)
Retirement Benefits (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Retirement Benefits [Abstract] | |
Schedule of Net Periodic Benefit Cost | The following tables set forth the components of net periodic benefit (income)/cost for the Company’s defined benefit pension and PRW plans for the three and six months ended June 30, 2018 and 2017 : Three Months Ended June 30, 2018 2017 U.S. U.K. Other PRW U.S. U.K. Other PRW Service cost $ 17 $ 5 $ 5 $ — $ 17 $ 7 $ 4 $ — Interest cost 35 24 4 1 35 24 5 1 Expected return on plan assets (69 ) (77 ) (7 ) — (62 ) (71 ) (8 ) — Settlement — 20 — — — — — — Amortization of net loss 3 12 1 — 3 13 1 — Amortization of prior service credit — (5 ) — — — (4 ) — — Net periodic benefit (income)/cost $ (14 ) $ (21 ) $ 3 $ 1 $ (7 ) $ (31 ) $ 2 $ 1 Six Months Ended June 30, 2018 2017 U.S. U.K. Other PRW U.S. U.K. Other PRW Service cost $ 33 $ 10 $ 10 $ — $ 33 $ 15 $ 9 $ — Interest cost 70 48 9 2 70 46 9 2 Expected return on plan assets (137 ) (155 ) (15 ) — (123 ) (139 ) (15 ) — Settlement — 20 — — — — — — Amortization of net loss 6 24 1 — 6 26 1 — Amortization of prior service credit — (10 ) — — — (9 ) — — Net periodic benefit (income)/cost $ (28 ) $ (63 ) $ 5 $ 2 $ (14 ) $ (61 ) $ 4 $ 2 |
Supplementary Information for32
Supplementary Information for Certain Balance Sheet Accounts Supplementary Information for Certain Balance Sheet Accounts (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Accounts Payable and Accrued Liabilities [Table Text Block] | Deferred revenue and accrued expenses consists of the following: June 30, December 31, Accounts payable, accrued liabilities and deferred income $ 715 $ 772 Discretionary compensation 166 313 Accrued compensation 248 439 Accrued vacation 143 93 Other employee-related liabilities 85 94 Total deferred revenue and accrued expenses $ 1,357 $ 1,711 |
Provisions for Liabilities [Table Text Block] | Provision for liabilities consists of the following: June 30, December 31, Claims, lawsuits and other proceedings $ 453 $ 474 Other provisions 93 84 Total provision for liabilities $ 546 $ 558 |
Other Noncurrent Liabilities [Table Text Block] | Other non-current liabilities consists of the following: June 30, December 31, Incentives from lessors $ 131 $ 138 Deferred compensation plan liability 137 135 Contingent and deferred consideration on acquisition 1 41 Liabilities for uncertain tax positions 53 60 Lease-related liabilities 31 28 Other non-current liabilities 93 142 Total other non-current liabilities $ 446 $ 544 |
Accumulated Other Comprehensi33
Accumulated Other Comprehensive Income/(Loss) (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | Foreign currency translation (i) Cash flow hedges (i) Defined pension and post-retirement benefit costs (ii) Total 2018 2017 2018 2017 2018 2017 2018 2017 Quarter-to-date activity: Balance at March 31, 2018 and 2017, respectively $ (307 ) $ (724 ) $ 9 $ (62 ) $ (1,132 ) $ (1,122 ) $ (1,430 ) $ (1,908 ) Other comprehensive (loss)/income before reclassifications (199 ) 77 (20 ) 8 35 24 (184 ) 109 Loss reclassified from accumulated other comprehensive loss (net of income tax expense of $11 and $7, respectively) — — 6 15 3 8 9 23 Net current-period other comprehensive (loss)/income (199 ) 77 (14 ) 23 38 32 (175 ) 132 Balance at June 30, 2018 and 2017, respectively $ (506 ) $ (647 ) $ (5 ) $ (39 ) $ (1,094 ) $ (1,090 ) $ (1,605 ) $ (1,776 ) Year-to-date activity: Balance at December 31, 2017 and 2016, respectively $ (365 ) $ (650 ) $ (10 ) $ (82 ) $ (1,138 ) $ (1,152 ) $ (1,513 ) $ (1,884 ) Other comprehensive (loss)/income before reclassifications (141 ) 3 (11 ) 9 34 44 (118 ) 56 Loss reclassified from accumulated other comprehensive loss (net of income tax expense of $12 and $13, respectively) — — 16 34 10 18 26 52 Net current-period other comprehensive (loss)/income (141 ) 3 5 43 44 62 (92 ) 108 Balance at June 30, 2018 and 2017, respectively $ (506 ) $ (647 ) $ (5 ) $ (39 ) $ (1,094 ) $ (1,090 ) $ (1,605 ) $ (1,776 ) ________________________ (i) Reclassification adjustments from accumulated other comprehensive loss related to foreign currency translation and cash flow hedges are included in Other income, net in the accompanying condensed consolidated statements of comprehensive income. See Note 8 — Derivative Financial Instruments for additional details regarding the reclassification adjustments for the hedge settlements. (ii) Reclassification adjustments from accumulated other comprehensive loss are included in the computation of net periodic pension cost (see Note 11 — Retirement Benefits ). These components are included in Other income, net in the accompanying condensed consolidated statements of comprehensive income. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Earnings Per Share | Basic and diluted earnings per share are as follows: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Net income attributable to Willis Towers Watson $ 58 $ 33 $ 273 $ 377 Basic average number of shares outstanding 132 136 132 136 Dilutive effect of potentially issuable shares 1 1 1 1 Diluted average number of shares outstanding 133 137 133 137 Basic earnings per share $ 0.44 $ 0.24 $ 2.06 $ 2.77 Dilutive effect of potentially issuable shares — — (0.01 ) (0.02 ) Diluted earnings per share $ 0.44 $ 0.24 $ 2.05 $ 2.75 |
Financial Information for Iss35
Financial Information for Issuers and Other Guarantor Subsidiaries (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Unaudited Condensed Consolidated Statement of Comprehensive Income | Unaudited Condensed Consolidating Statement of Comprehensive Income Three months ended June 30, 2018 Willis Towers Watson plc Willis North America Trinity Acquisition plc Other guarantors Non-guarantors Eliminations Consolidated Revenue $ — $ 1 $ — $ — $ 1,989 $ — $ 1,990 Costs of providing services Salaries and benefits — 21 — — 1,254 — 1,275 Other operating expenses 2 20 — 52 332 — 406 Depreciation — — — 1 50 — 51 Amortization — — — — 140 — 140 Restructuring costs — — — — — — — Transaction and integration expenses — — — — 55 — 55 Total costs of providing services 2 41 — 53 1,831 — 1,927 (Loss)/income from operations (2 ) (40 ) — (53 ) 158 — 63 Intercompany (expense)/income — (9 ) 30 97 (118 ) — — Interest expense (8 ) (11 ) (27 ) — (6 ) — (52 ) Other income, net — — — 1 62 — 63 (LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES (10 ) (60 ) 3 45 96 — 74 Benefit from/(provision for) income taxes — 8 — (8 ) (9 ) — (9 ) Equity account for subsidiaries 68 (35 ) (8 ) 26 — (51 ) — NET INCOME/(LOSS) 58 (87 ) (5 ) 63 87 (51 ) 65 Income attributable to non-controlling interests — — — — (7 ) — (7 ) NET INCOME/(LOSS) ATTRIBUTABLE TO WILLIS TOWERS WATSON $ 58 $ (87 ) $ (5 ) $ 63 $ 80 $ (51 ) $ 58 Comprehensive loss before non-controlling interests $ (117 ) $ (153 ) $ (178 ) $ (111 ) $ (40 ) $ 488 $ (111 ) Comprehensive income attributable to non-controlling interest — — — — (6 ) — (6 ) Comprehensive loss attributable to Willis Towers Watson $ (117 ) $ (153 ) $ (178 ) $ (111 ) $ (46 ) $ 488 $ (117 ) Unaudited Condensed Consolidating Statement of Comprehensive Income Three months ended June 30, 2017 Willis Towers Watson plc Willis North America Trinity Acquisition plc Other guarantors Non-guarantors Eliminations Consolidated Revenue $ — $ 5 $ — $ — $ 1,948 $ — $ 1,953 Costs of providing services Salaries and benefits 1 10 — — 1,200 — 1,211 Other operating expenses 1 — — 37 353 — 391 Depreciation — — — 2 49 — 51 Amortization — — — 2 147 — 149 Restructuring costs — (3 ) — — 30 — 27 Transaction and integration expenses — (1 ) — 29 35 — 63 Total costs of providing services 2 6 — 70 1,814 — 1,892 (Loss)/income from operations (2 ) (1 ) — (70 ) 134 — 61 Intercompany (expense)/income — (9 ) 31 107 (129 ) — — Interest expense (8 ) (6 ) (26 ) — (6 ) — (46 ) Other income, net — — — — 34 — 34 (LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES (10 ) (16 ) 5 37 33 — 49 Benefit from/(provision for) income taxes 1 1 (1 ) (4 ) (5 ) — (8 ) Equity account for subsidiaries 42 50 (115 ) (11 ) — 34 — NET INCOME/(LOSS) 33 35 (111 ) 22 28 34 41 Income attributable to non-controlling interests — — — — (8 ) — (8 ) NET INCOME/(LOSS) ATTRIBUTABLE TO WILLIS TOWERS WATSON $ 33 $ 35 $ (111 ) $ 22 $ 20 $ 34 $ 33 Comprehensive income before non-controlling interests $ 165 $ 136 $ 15 $ 156 $ 152 $ (443 ) $ 181 Comprehensive income attributable to non-controlling interest — — — — (16 ) — (16 ) Comprehensive income attributable to Willis Towers Watson $ 165 $ 136 $ 15 $ 156 $ 136 $ (443 ) $ 165 Unaudited Condensed Consolidating Statement of Comprehensive Income Six months ended June 30, 2018 Willis Towers Watson plc Willis North America Trinity Acquisition plc Other guarantors Non-guarantors Eliminations Consolidated Revenue $ — $ 7 $ — $ — $ 4,275 $ — $ 4,282 Costs of providing services Salaries and benefits 1 36 — — 2,615 — 2,652 Other operating expenses 2 25 — 94 708 — 829 Depreciation — — — 2 98 — 100 Amortization — — — 1 280 — 281 Restructuring costs — — — — — — — Transaction and integration expenses — 5 — 1 92 — 98 Total costs of providing services 3 66 — 98 3,793 — 3,960 (Loss)/income from operations (3 ) (59 ) — (98 ) 482 — 322 Intercompany (expense)/income — (14 ) 60 189 (235 ) — — Interest expense (15 ) (22 ) (54 ) — (12 ) — (103 ) Other income, net — — — 2 117 — 119 (LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES (18 ) (95 ) 6 93 352 — 338 Benefit from/(provision for) income taxes — 13 (1 ) (16 ) (48 ) — (52 ) Equity account for subsidiaries 291 (42 ) 134 207 — (590 ) — NET INCOME/(LOSS) 273 (124 ) 139 284 304 (590 ) 286 Income attributable to non-controlling interests — — — — (13 ) — (13 ) NET INCOME/(LOSS) ATTRIBUTABLE TO WILLIS TOWERS WATSON $ 273 $ (124 ) $ 139 $ 284 $ 291 $ (590 ) $ 273 Comprehensive income/(loss) before non-controlling interests $ 181 $ (175 ) $ 48 $ 192 $ 202 $ (254 ) $ 194 Comprehensive income attributable to non-controlling interest — — — — (13 ) — (13 ) Comprehensive income/(loss) attributable to Willis Towers Watson $ 181 $ (175 ) $ 48 $ 192 $ 189 $ (254 ) $ 181 Unaudited Condensed Consolidating Statement of Comprehensive Income Six months ended June 30, 2017 Willis Towers Watson plc Willis North America Trinity Acquisition plc Other guarantors Non-guarantors Eliminations Consolidated Revenue $ — $ 11 $ — $ — $ 4,261 $ — $ 4,272 Costs of providing services Salaries and benefits 2 20 — — 2,442 — 2,464 Other operating expenses 2 10 — 44 736 — 792 Depreciation — — — 3 94 — 97 Amortization — — — 2 298 — 300 Restructuring costs — — — 4 50 — 54 Transaction and integration expenses — 2 — 30 71 — 103 Total costs of providing services 4 32 — 83 3,691 — 3,810 (Loss)/income from operations (4 ) (21 ) — (83 ) 570 — 462 Intercompany income/(expense) — 18 59 168 (245 ) — — Interest expense (15 ) (16 ) (51 ) — (10 ) — (92 ) Other income, net — — — — 77 — 77 (LOSS)/INCOME FROM OPERATIONS BEFORE INCOME TAXES (19 ) (19 ) 8 85 392 — 447 Benefit from/(provision for) income taxes 1 3 (1 ) (8 ) (49 ) — (54 ) Equity account for subsidiaries 395 225 225 300 — (1,145 ) — NET INCOME 377 209 232 377 343 (1,145 ) 393 Income attributable to non-controlling interests — — — — (16 ) — (16 ) NET INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON $ 377 $ 209 $ 232 $ 377 $ 327 $ (1,145 ) $ 377 Comprehensive income before non-controlling interests $ 485 $ 283 $ 334 $ 490 $ 438 $ (1,518 ) $ 512 Comprehensive income attributable to non-controlling interest — — — — (27 ) — (27 ) Comprehensive income attributable to Willis Towers Watson $ 485 $ 283 $ 334 $ 490 $ 411 $ (1,518 ) $ 485 |
Unaudited Condensed Consolidated Balance Sheet | Unaudited Condensed Consolidating Balance Sheet As of June 30, 2018 Willis Towers Watson plc Willis North America Trinity Acquisition plc Other guarantors Non-guarantors Eliminations Consolidated ASSETS Cash and cash equivalents $ 1 $ — $ — $ 1 $ 909 $ — $ 911 Fiduciary assets — — — — 14,126 — 14,126 Accounts receivable, net — — — — 2,394 — 2,394 Prepaid and other current assets — 299 1 31 320 (193 ) 458 Total current assets 1 299 1 32 17,749 (193 ) 17,889 Intercompany receivables, net 5,966 — 2,200 — — (8,166 ) — Fixed assets, net — — — 25 899 — 924 Goodwill — — — — 10,468 — 10,468 Other intangible assets, net — — — 59 3,562 (59 ) 3,562 Pension benefits assets — — — — 902 — 902 Other non-current assets 4 70 2 27 444 (79 ) 468 Total non-current assets 5,970 70 2,202 111 16,275 (8,304 ) 16,324 Investments in subsidiaries 4,852 6,031 2,320 7,960 — (21,163 ) — TOTAL ASSETS $ 10,823 $ 6,400 $ 4,523 $ 8,103 $ 34,024 $ (29,660 ) $ 34,213 LIABILITIES AND EQUITY Fiduciary liabilities $ — $ — $ — $ — $ 14,126 $ — $ 14,126 Deferred revenue and accrued expenses — — — 4 1,353 — 1,357 Short-term debt and current portion of long-term debt 1 — — — 84 — 85 Other current liabilities 97 12 27 16 803 (141 ) 814 Total current liabilities 98 12 27 20 16,366 (141 ) 16,382 Intercompany payables, net — 634 — 3,658 3,874 (8,166 ) — Long-term debt 497 1,136 2,914 — 42 — 4,589 Liability for pension benefits — — — — 1,185 — 1,185 Deferred tax liabilities — — — — 768 (77 ) 691 Provision for liabilities — 120 — — 426 — 546 Other non-current liabilities — — — — 446 — 446 Total non-current liabilities 497 1,890 2,914 3,658 6,741 (8,243 ) 7,457 TOTAL LIABILITIES 595 1,902 2,941 3,678 23,107 (8,384 ) 23,839 REDEEMABLE NON-CONTROLLING INTEREST — — — — 27 — 27 EQUITY Total Willis Towers Watson shareholders’ equity 10,228 4,498 1,582 4,425 10,771 (21,276 ) 10,228 Non-controlling interests — — — — 119 — 119 Total equity 10,228 4,498 1,582 4,425 10,890 (21,276 ) 10,347 TOTAL LIABILITIES AND EQUITY $ 10,823 $ 6,400 $ 4,523 $ 8,103 $ 34,024 $ (29,660 ) $ 34,213 Unaudited Condensed Consolidating Balance Sheet As of December 31, 2017 Willis Towers Watson plc Willis North America Trinity Acquisition plc Other guarantors Non-guarantors Eliminations Consolidated ASSETS Cash and cash equivalents $ 2 $ — $ — $ 1 $ 1,027 $ — $ 1,030 Fiduciary assets — — — — 12,155 — 12,155 Accounts receivable, net — 4 — — 2,242 — 2,246 Prepaid and other current assets — 267 1 44 264 (146 ) 430 Total current assets 2 271 1 45 15,688 (146 ) 15,861 Intercompany receivables, net 6,202 — 2,501 — — (8,703 ) — Fixed assets, net — — — 25 960 — 985 Goodwill — — — — 10,519 — 10,519 Other intangible assets, net — — — 60 3,882 (60 ) 3,882 Pension benefits assets — — — — 764 — 764 Other non-current assets — 115 3 31 388 (90 ) 447 Total non-current assets 6,202 115 2,504 116 16,513 (8,853 ) 16,597 Investments in subsidiaries 4,506 6,125 1,918 8,425 — (20,974 ) — TOTAL ASSETS $ 10,710 $ 6,511 $ 4,423 $ 8,586 $ 32,201 $ (29,973 ) $ 32,458 LIABILITIES AND EQUITY Fiduciary liabilities $ — $ — $ — $ — $ 12,155 $ — $ 12,155 Deferred revenue and accrued expenses — 19 — 7 1,685 — 1,711 Short-term debt and current portion of long-term debt — — — — 85 — 85 Other current liabilities 87 83 33 27 724 (150 ) 804 Total current liabilities 87 102 33 34 14,649 (150 ) 14,755 Intercompany payables, net — 787 — 3,895 4,021 (8,703 ) — Long-term debt 497 986 2,883 — 84 — 4,450 Liability for pension benefits — — — — 1,259 — 1,259 Deferred tax liabilities — — — — 704 (89 ) 615 Provision for liabilities — 120 — — 438 — 558 Other non-current liabilities — 19 — 5 520 — 544 Total non-current liabilities 497 1,912 2,883 3,900 7,026 (8,792 ) 7,426 TOTAL LIABILITIES 584 2,014 2,916 3,934 21,675 (8,942 ) 22,181 REDEEMABLE NON-CONTROLLING INTEREST — — — — 28 — 28 EQUITY Total Willis Towers Watson shareholders’ equity 10,126 4,497 1,507 4,652 10,375 (21,031 ) 10,126 Non-controlling interests — — — — 123 — 123 Total equity 10,126 4,497 1,507 4,652 10,498 (21,031 ) 10,249 TOTAL LIABILITIES AND EQUITY $ 10,710 $ 6,511 $ 4,423 $ 8,586 $ 32,201 $ (29,973 ) $ 32,458 |
Unaudited Condensed Consolidated Statement of Cash Flows | Unaudited Condensed Consolidating Statement of Cash Flows Six months ended June 30, 2018 Willis Towers Watson plc Willis North America Trinity Acquisition plc Other guarantors Non-guarantors Eliminations Consolidated NET CASH FROM/(USED IN) OPERATING ACTIVITIES $ 154 $ — $ (240 ) $ 170 $ 644 $ (333 ) $ 395 CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES Additions to fixed assets and software for internal use — — — (2 ) (139 ) — (141 ) Capitalized software costs — — — — (25 ) — (25 ) Acquisitions of operations, net of cash acquired — — — — (8 ) — (8 ) Net proceeds from sale of operations — — — — 4 — 4 Other, net — — — — 17 — 17 Proceeds from/(repayments of) intercompany investing activities, net 245 (97 ) 137 139 (351 ) (73 ) — Net cash from/(used in) investing activities $ 245 $ (97 ) $ 137 $ 137 $ (502 ) $ (73 ) $ (153 ) CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES Net borrowings on revolving credit facility — 150 47 — — — 197 Repayments of debt — — — — (43 ) — (43 ) Repurchase of shares (269 ) — — — — — (269 ) Proceeds from issuance of shares 18 — — — — — 18 Payments of deferred and contingent consideration related to acquisitions — — — — (41 ) — (41 ) Cash paid for employee taxes on withholding shares — — — — (30 ) — (30 ) Dividends paid (149 ) — (332 ) (1 ) — 333 (149 ) Acquisitions of and dividends paid to non-controlling interests — — — — (18 ) — (18 ) (Repayments of)/proceeds from intercompany financing activities, net — (53 ) 388 (306 ) (102 ) 73 — Net cash (used in)/from financing activities $ (400 ) $ 97 $ 103 $ (307 ) $ (234 ) $ 406 $ (335 ) DECREASE IN CASH AND CASH EQUIVALENTS (1 ) — — — (92 ) — (93 ) Effect of exchange rate changes on cash and cash equivalents — — — — (26 ) — (26 ) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2 — — 1 1,027 — 1,030 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1 $ — $ — $ 1 $ 909 $ — $ 911 Unaudited Condensed Consolidating Statement of Cash Flows Six months ended June 30, 2017 Willis Towers Watson plc Willis North America Trinity Acquisition plc Other guarantors Non-guarantors Eliminations Consolidated NET CASH FROM/(USED IN) OPERATING ACTIVITIES $ 448 $ 39 $ 434 $ (311 ) $ (116 ) $ (175 ) $ 319 CASH FLOWS (USED IN)/FROM INVESTING ACTIVITIES Additions to fixed assets and software for internal use — — — (5 ) (114 ) — (119 ) Capitalized software costs — — — — (32 ) — (32 ) Acquisitions of operations, net of cash acquired — — — — (13 ) — (13 ) Other, net — — — — 9 — 9 Proceeds from/(repayments of) intercompany investing activities, net 948 7 (473 ) 78 184 (744 ) — (Increase)/decrease in investment in subsidiaries (1,000 ) — — 941 59 — — Net cash (used in)/from investing activities $ (52 ) $ 7 $ (473 ) $ 1,014 $ 93 $ (744 ) $ (155 ) CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES Net borrowings on revolving credit facility — — 283 — — — 283 Senior notes issued — 650 — — — — 650 Proceeds from issuance of other debt — — — — 32 — 32 Debt issuance costs — (5 ) (4 ) — — — (9 ) Repayments of debt — (399 ) (215 ) — (81 ) — (695 ) Repurchase of shares (296 ) — — — — — (296 ) Proceeds from issuance of shares 37 — — — — — 37 Payments of deferred and contingent consideration related to acquisitions — — — — (44 ) — (44 ) Cash paid for employee taxes on withholding shares — — — — (3 ) — (3 ) Dividends paid (137 ) (59 ) — — (116 ) 175 (137 ) Acquisitions of and dividends paid to non-controlling interests — — — — (14 ) — (14 ) (Repayments of)/proceeds from intercompany financing activities, net — (233 ) (25 ) (696 ) 210 744 — Net cash (used in)/from financing activities $ (396 ) $ (46 ) $ 39 $ (696 ) $ (16 ) $ 919 $ (196 ) INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS — — — 7 (39 ) — (32 ) Effect of exchange rate changes on cash and cash equivalents — — — — 14 — 14 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD — — — — 870 — 870 CASH AND CASH EQUIVALENTS, END OF PERIOD $ — $ — $ — $ 7 $ 845 $ — $ 852 |
Nature of Operations (Details)
Nature of Operations (Details) | Jun. 30, 2018employeeCountry |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of employees employed (more than 43,000) | employee | 43,000 |
Number of countries in which entity operates (more than 140) | Country | 140 |
Basis of Presentation and Rec37
Basis of Presentation and Recent Accounting Policies (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
AccountingStandardsUpdate201707 [Member] | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Reclassification For Presentation | $ 61 | $ 63 | $ 140 | $ 125 |
Accounting Standards Update 2014-09 [Member] | Broking [Member] | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Portion Of Revenue | 46.00% | 48.00% | ||
Accounting Standards Update 2014-09 [Member] | Consulting [Member] | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Portion Of Revenue | 39.00% | 37.00% | ||
Accounting Standards Update 2014-09 [Member] | Outsourced administration [Member] | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Portion Of Revenue | 10.00% | 10.00% | ||
Accounting Standards Update 2014-09 [Member] | Other | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Portion Of Revenue | 5.00% | 5.00% | ||
Accounting Standards Update 2014-09 [Member] | Reimbursed Expenses [Member] | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Portion Of Revenue | 1.00% | 1.00% |
Revenue - Narrative (Details)
Revenue - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Jan. 01, 2018 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Revenues | $ 1,990,000 | $ 1,953,000 | $ 4,282,000 | $ 4,272,000 | |||
Operating Expenses | 1,927,000 | 1,892,000 | 3,960,000 | 3,810,000 | |||
Provision for income taxes | $ 9,000 | $ 8,000 | $ 52,000 | $ 54,000 | |||
U.S. statutory tax rate | 21.00% | 21.00% | 35.00% | 35.00% | |||
Retained earnings | $ 1,270,000 | $ 1,270,000 | $ 1,104,000 | ||||
January 1 2018 [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Contract with Customer, Liability, Revenue Recognized | 52,000 | 136,000 | |||||
March 31 2018 [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Contract with Customer, Liability, Revenue Recognized | 66,000 | ||||||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Revenues | [1],[2],[3],[4] | (32,000) | (291,000) | ||||
Provision for income taxes | [5] | (6,000) | (59,000) | ||||
Retained earnings | [6] | 67,000 | 67,000 | $ 317,000 | |||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Medicare broking [Member] | Accounting Standards Update 2014-09 [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Revenues | [2] | (78,000) | (151,000) | ||||
Retained earnings | [2] | 311,000 | |||||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Other Cost Adjustments [Member] | Accounting Standards Update 2014-09 [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Operating Expenses | [7] | (4,000) | 14,000 | ||||
Retained earnings | [7] | 75,000 | |||||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Income Tax Effect [Member] | Accounting Standards Update 2014-09 [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Provision for income taxes | [5] | (6,000) | (59,000) | ||||
Retained earnings | [5] | (101,000) | |||||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | System implementation activities [Member] | Accounting Standards Update 2014-09 [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Operating Expenses | [8] | 2,000 | 4,000 | ||||
Retained earnings | [8] | (46,000) | |||||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Other | Accounting Standards Update 2014-09 [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Revenues | [3] | 6,000 | (14,000) | ||||
Retained earnings | [3] | 28,000 | |||||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Proportional treaty reinsurance broking [Member] | Accounting Standards Update 2014-09 [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Revenues | [4] | 5,000 | 29,000 | ||||
Retained earnings | [4] | 50,000 | |||||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Health and benefits broking [Member] | Accounting Standards Update 2014-09 [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Revenues | [1] | 35,000 | (155,000) | ||||
Retained earnings | [1] | 0 | |||||
Calculated under Revenue Guidance in Effect before Topic 606 [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Retained earnings | $ 1,104,000 | ||||||
Calculated under Revenue Guidance in Effect before Topic 606 [Member] | Accounting Standards Update 2014-09 [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Revenues | 2,022,000 | 4,573,000 | |||||
Provision for income taxes | 15,000 | 111,000 | |||||
Retained earnings | $ 1,203,000 | $ 1,203,000 | |||||
Minimum | Calculated under Revenue Guidance in Effect before Topic 606 [Member] | System implementation activities [Member] | Accounting Standards Update 2014-09 [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Deferred Costs, Amortization Time | 3 years | ||||||
Maximum | Other | Accounting Standards Update 2014-09 [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Revenue, Percentage of Total Revenue | 5.00% | 5.00% | |||||
Maximum | Calculated under Revenue Guidance in Effect before Topic 606 [Member] | System implementation activities [Member] | Accounting Standards Update 2014-09 [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Deferred Costs, Amortization Time | 5 years | ||||||
Current Year Policies | Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Medicare broking [Member] | Accounting Standards Update 2014-09 [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Retained earnings | 271,000 | ||||||
Prior Policy Years | Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Medicare broking [Member] | Accounting Standards Update 2014-09 [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Retained earnings | $ 40,000 | ||||||
[1] | Health and benefits broking — Revenue for certain Health and Benefits broking arrangements, in our Human Capital and Benefits segment, will now be recognized evenly over the year to reflect the nature of the ongoing obligations to our customers as well as receipt of the monthly commissions. These contracts are monthly or annual in nature, and are considered complete as of the transition date. Therefore, no retained earnings adjustment is required. The total changes to revenue as a result of this accounting change for the three and six months ended June 30, 2018 was an increase of $35 million and a decrease of $155 million, respectively. | ||||||
[2] | Medicare broking — The majority of revenue recognition for this offering, within our Individual Marketplace business, has moved from monthly ratable recognition over the policy period, to recognition upon placement of the policy. Consequently, the Company will now recognize approximately two-thirds of one calendar year of expected commissions during its fourth quarter of the preceding calendar year. The remainder of the revenue is recognized consistently with methods used prior to the adoption of ASC 606. Therefore, at the adoption date, we have reflected a $271 million pre-tax increase to retained earnings for the portion of the revenue that would otherwise have been recognized during our 2018 calendar year since our earnings process was largely completed during the fourth quarter of 2017. Additionally, we have reflected a $40 million pretax adjustment to increase retained earnings related to previously deferred contingent revenue from placements made prior to 2018 because the earnings process was complete under ASC 606. During the three and six months ended June 30, 2018, the accounting for this revenue stream under ASC 606 represented a reduction of revenue from ASC 605, Revenue Recognition (‘ASC 605’) accounting methods of $78 million and $151 million, respectively. | ||||||
[3] | Other adjustments — Certain other revenue changes with individually less significant adjustments were made to retained earnings as of the adoption date totaling a net $28 million. The cumulative changes to revenue for the three and six months ended June 30, 2018 for other revenue streams not discussed above resulting from the ASC 606 adoption was an increase of $6 million and a decrease of $14 million, respectively. | ||||||
[4] | Proportional treaty reinsurance broking — The revenue recognition for proportional treaty reinsurance broking commissions, within our Investment, Risk and Reinsurance segment, has moved from recognition upon the receipt of the monthly or quarterly treaty statements from the ceding insurance carriers, to the recognition of an estimate of expected commissions upon the policy effective date. Since the majority of revenue recognized historically based on these monthly or quarterly statements was received over a two-year period, we reflected a $50 million pretax increase to retained earnings at the adoption date for the portion of revenue that would otherwise have been recognized during our 2018 calendar year related to policies effective in 2017 or prior years. For the three and six months ended June 30, 2018, ASC 606 revenue was higher than ASC 605 revenue by approximately $5 million and $29 million, respectively, related to this adjustment. | ||||||
[5] | The provision for income taxes for the three and six months ended June 30, 2018 was $6 million and $59 million, respectively, lower than our provision on an ASC 605 basis. The income tax expense was calculated based on the U.S. and foreign statutory rates applicable to adjustments made. Where applicable, a U.S. statutory rate of 21% was used. There was a $101 million net tax reduction to retained earnings upon adoption of ASC 606. | ||||||
[6] | Retained earnings has been adjusted for the net impact of the adoption of ASC 606. See the discussion of the significant pre-tax changes by revenue stream in the following section. | ||||||
[7] | Other cost adjustments — This guidance now applies to our broking arrangements and certain consulting engagements. While the costs deferred for our broking arrangements will typically be amortized within one year, costs now deferred related to certain consulting arrangements will be amortized over a longer term. We have increased pre-tax retained earnings by $75 million primarily to reflect the total changes to contract costs as of the adoption date. For the three and six months ended June 30, 2018, these changes resulted in expenses decreasing by $4 million and increasing by $14 million, respectively. | ||||||
[8] | System implementation activities — For those portions of the business that previously deferred costs, the length of time over which we amortize those costs will extend to a longer estimated contract term. For 2017 and prior years, these costs were amortized over a typical period of 3-5 years in accordance with the initial stated terms of the customer agreements. Additionally, the composition of deferred costs has been adjusted to reflect the guidance in ASC 606. A reduction adjustment to retained earnings of $46 million was recorded on the adoption date to reflect these changes. Further, the amortization of the costs are no longer classified as depreciation expense, but rather included in salaries and benefits. These adjustments resulted in an increase in expenses of $2 million and $4 million for the three and six months ended June 30, 2018, respectively. |
Revenue - Schedule of Effect of
Revenue - Schedule of Effect of ASC 606 on Financial Statements (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Accounts receivable, net | $ 2,394 | $ 2,394 | $ 2,555 | $ 2,246 | |||
Prepaid and other current assets | 458 | 458 | 430 | ||||
Fixed assets, net | 924 | 924 | 985 | ||||
Other non-current assets | 468 | 468 | 447 | ||||
Deferred revenue and accrued expenses | 1,357 | 1,357 | 1,711 | ||||
Other current liabilities | 814 | 814 | 804 | ||||
Deferred tax liabilities | 691 | 691 | 615 | ||||
Provision for liabilities | 546 | 546 | 558 | ||||
Retained earnings | 1,270 | 1,270 | 1,104 | ||||
Revenues | 1,990 | $ 1,953 | 4,282 | $ 4,272 | |||
Salaries and benefits | 1,275 | 1,211 | 2,652 | 2,464 | |||
Depreciation | 51 | 51 | 100 | 97 | |||
Income from operations | 63 | 61 | 322 | 462 | |||
INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | 74 | 49 | 338 | 447 | |||
Provision for income taxes | (9) | (8) | (52) | (54) | |||
NET INCOME | 65 | 41 | 286 | 393 | |||
Net income attributable to Willis Towers Watson | $ 58 | $ 33 | $ 273 | $ 377 | |||
Basic earnings/(loss) per share (usd per share) | $ 0.44 | $ 0.24 | $ 2.06 | $ 2.77 | |||
Diluted earnings/(loss) per share (usd per share) | $ 0.44 | $ 0.24 | $ 2.05 | $ 2.75 | |||
NET CASH FROM/(USED IN) OPERATING ACTIVITIES | $ 395 | $ 319 | |||||
Capitalized software costs | (25) | $ (32) | |||||
Calculated under revenue guidance in Topic 606 [Member] | Accounting Standards Update 2014-09 [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Accounts receivable, net | 2,555 | ||||||
Prepaid and other current assets | 519 | ||||||
Fixed assets, net | 902 | ||||||
Other non-current assets | 486 | ||||||
Deferred revenue and accrued expenses | 1,637 | ||||||
Deferred tax liabilities | 714 | ||||||
Provision for liabilities | 570 | ||||||
Retained earnings | 1,421 | ||||||
Calculated under Revenue Guidance in Effect before Topic 606 [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Accounts receivable, net | 2,246 | ||||||
Prepaid and other current assets | 430 | ||||||
Fixed assets, net | 985 | ||||||
Other non-current assets | 447 | ||||||
Deferred revenue and accrued expenses | 1,711 | ||||||
Deferred tax liabilities | 615 | ||||||
Provision for liabilities | 558 | ||||||
Retained earnings | $ 1,104 | ||||||
Calculated under Revenue Guidance in Effect before Topic 606 [Member] | Accounting Standards Update 2014-09 [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Accounts receivable, net | $ 2,406 | 2,406 | |||||
Prepaid and other current assets | 389 | 389 | |||||
Fixed assets, net | 1,022 | 1,022 | |||||
Other non-current assets | 415 | 415 | |||||
Deferred revenue and accrued expenses | 1,464 | 1,464 | |||||
Other current liabilities | 873 | 873 | |||||
Deferred tax liabilities | 592 | 592 | |||||
Provision for liabilities | 534 | 534 | |||||
Retained earnings | 1,203 | 1,203 | |||||
Revenues | 2,022 | 4,573 | |||||
Salaries and benefits | 1,272 | 2,624 | |||||
Depreciation | 56 | 110 | |||||
Income from operations | 93 | 631 | |||||
INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | 104 | 647 | |||||
Provision for income taxes | (15) | (111) | |||||
NET INCOME | 89 | 536 | |||||
Net income attributable to Willis Towers Watson | $ 82 | $ 523 | |||||
Basic earnings/(loss) per share (usd per share) | $ 0.62 | $ 3.95 | |||||
Diluted earnings/(loss) per share (usd per share) | $ 0.62 | $ 3.94 | |||||
NET CASH FROM/(USED IN) OPERATING ACTIVITIES | $ 419 | ||||||
Capitalized software costs | (49) | ||||||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Accounts receivable, net | [1] | $ (12) | (12) | 309 | |||
Prepaid and other current assets | [2] | 69 | 69 | 89 | |||
Fixed assets, net | [3] | (98) | (98) | (83) | |||
Other non-current assets | [3] | 53 | 53 | 39 | |||
Deferred revenue and accrued expenses | [4] | (107) | (107) | (74) | |||
Other current liabilities | [5] | (59) | (59) | ||||
Deferred tax liabilities | [5] | 99 | 99 | 99 | |||
Provision for liabilities | [6] | 12 | 12 | 12 | |||
Retained earnings | [7] | 67 | 67 | $ 317 | |||
Revenues | [8],[9],[10],[11] | (32) | (291) | ||||
Salaries and benefits | [12],[13] | 3 | 28 | ||||
Depreciation | [13] | (5) | (10) | ||||
Income from operations | (30) | (309) | |||||
INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | (30) | (309) | |||||
Provision for income taxes | [14] | 6 | 59 | ||||
NET INCOME | (24) | (250) | |||||
Net income attributable to Willis Towers Watson | $ (24) | $ (250) | |||||
Basic earnings/(loss) per share (usd per share) | $ (0.18) | $ (1.89) | |||||
Diluted earnings/(loss) per share (usd per share) | $ (0.18) | $ (1.89) | |||||
NET CASH FROM/(USED IN) OPERATING ACTIVITIES | [15] | $ (24) | |||||
Capitalized software costs | [15] | $ 24 | |||||
[1] | Accounts receivable, net, now includes receivables that have been billed, not yet billed and short-term contract assets. This adjustment is the result of the cumulative adjustments to revenue that have not yet been collected from our customers, but are expected to be collected within the next twelve months. The most significant increases to this balance result from revenue acceleration under ASC 606 for Medicare and proportional treaty broking commissions. | ||||||
[2] | Prepaid and other current assets include the impact of costs deferred in connection with our broking pre-placement activities. These costs are being deferred while the related pre-placement work is performed, and amortized as the related revenue is recognized, typically upon policy inception. Since the amortization period associated with these fulfillment costs is less than one year, these deferred costs have been classified as a current asset. | ||||||
[3] | Prior to the adoption of ASC 606, costs that we deferred related to certain system implementation activities had been included in fixed assets, net. These costs, adjusted based on the guidance in ASC 606, have now been included in other non-current assets. Additionally we have included less significant impacts of adjustments to deferred tax assets and have classified non-current contract assets within non-current assets. | ||||||
[4] | Deferred revenue has been adjusted primarily to reflect revenue acceleration in our Medicare broking business. Additional adjustments were included to accelerate the license component of certain software arrangements and to net deferred revenue with contract assets. | ||||||
[5] | Other current liabilities, which includes current taxes payable, and deferred tax liabilities, have been adjusted for the tax effects of the individual changes resulting from the adoption of ASC 606. The income tax expense was calculated based on the U.S. and foreign statutory rates applicable to adjustments made. Where applicable, a U.S. statutory rate of 21% was used. | ||||||
[6] | Provision for liabilities has been adjusted for additional reserves for long-term post-placement obligations in our broking business. | ||||||
[7] | Retained earnings has been adjusted for the net impact of the adoption of ASC 606. See the discussion of the significant pre-tax changes by revenue stream in the following section. | ||||||
[8] | Health and benefits broking — Revenue for certain Health and Benefits broking arrangements, in our Human Capital and Benefits segment, will now be recognized evenly over the year to reflect the nature of the ongoing obligations to our customers as well as receipt of the monthly commissions. These contracts are monthly or annual in nature, and are considered complete as of the transition date. Therefore, no retained earnings adjustment is required. The total changes to revenue as a result of this accounting change for the three and six months ended June 30, 2018 was an increase of $35 million and a decrease of $155 million, respectively. | ||||||
[9] | Medicare broking — The majority of revenue recognition for this offering, within our Individual Marketplace business, has moved from monthly ratable recognition over the policy period, to recognition upon placement of the policy. Consequently, the Company will now recognize approximately two-thirds of one calendar year of expected commissions during its fourth quarter of the preceding calendar year. The remainder of the revenue is recognized consistently with methods used prior to the adoption of ASC 606. Therefore, at the adoption date, we have reflected a $271 million pre-tax increase to retained earnings for the portion of the revenue that would otherwise have been recognized during our 2018 calendar year since our earnings process was largely completed during the fourth quarter of 2017. Additionally, we have reflected a $40 million pretax adjustment to increase retained earnings related to previously deferred contingent revenue from placements made prior to 2018 because the earnings process was complete under ASC 606. During the three and six months ended June 30, 2018, the accounting for this revenue stream under ASC 606 represented a reduction of revenue from ASC 605, Revenue Recognition (‘ASC 605’) accounting methods of $78 million and $151 million, respectively. | ||||||
[10] | Other adjustments — Certain other revenue changes with individually less significant adjustments were made to retained earnings as of the adoption date totaling a net $28 million. The cumulative changes to revenue for the three and six months ended June 30, 2018 for other revenue streams not discussed above resulting from the ASC 606 adoption was an increase of $6 million and a decrease of $14 million, respectively. | ||||||
[11] | Proportional treaty reinsurance broking — The revenue recognition for proportional treaty reinsurance broking commissions, within our Investment, Risk and Reinsurance segment, has moved from recognition upon the receipt of the monthly or quarterly treaty statements from the ceding insurance carriers, to the recognition of an estimate of expected commissions upon the policy effective date. Since the majority of revenue recognized historically based on these monthly or quarterly statements was received over a two-year period, we reflected a $50 million pretax increase to retained earnings at the adoption date for the portion of revenue that would otherwise have been recognized during our 2018 calendar year related to policies effective in 2017 or prior years. For the three and six months ended June 30, 2018, ASC 606 revenue was higher than ASC 605 revenue by approximately $5 million and $29 million, respectively, related to this adjustment. | ||||||
[12] | Other cost adjustments — This guidance now applies to our broking arrangements and certain consulting engagements. While the costs deferred for our broking arrangements will typically be amortized within one year, costs now deferred related to certain consulting arrangements will be amortized over a longer term. We have increased pre-tax retained earnings by $75 million primarily to reflect the total changes to contract costs as of the adoption date. For the three and six months ended June 30, 2018, these changes resulted in expenses decreasing by $4 million and increasing by $14 million, respectively. | ||||||
[13] | System implementation activities — For those portions of the business that previously deferred costs, the length of time over which we amortize those costs will extend to a longer estimated contract term. For 2017 and prior years, these costs were amortized over a typical period of 3-5 years in accordance with the initial stated terms of the customer agreements. Additionally, the composition of deferred costs has been adjusted to reflect the guidance in ASC 606. A reduction adjustment to retained earnings of $46 million was recorded on the adoption date to reflect these changes. Further, the amortization of the costs are no longer classified as depreciation expense, but rather included in salaries and benefits. These adjustments resulted in an increase in expenses of $2 million and $4 million for the three and six months ended June 30, 2018, respectively. | ||||||
[14] | The provision for income taxes for the three and six months ended June 30, 2018 was $6 million and $59 million, respectively, lower than our provision on an ASC 605 basis. The income tax expense was calculated based on the U.S. and foreign statutory rates applicable to adjustments made. Where applicable, a U.S. statutory rate of 21% was used. There was a $101 million net tax reduction to retained earnings upon adoption of ASC 606. | ||||||
[15] | As part of the changes in accounting for deferred costs, amounts capitalized relating to system implementation activities are now classified as operating cash outflows. Prior to 2018, those costs capitalized under previous guidance were included in the Capitalized software costs as an investing cash outflow. |
Revenue - Schedule of Effect 40
Revenue - Schedule of Effect of ASC 606 on Items in Retained Earnings and Earnings (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Retained earnings | $ 1,270,000 | $ 1,270,000 | $ 1,104,000 | ||||
Provision for income taxes | 9,000 | $ 8,000 | 52,000 | $ 54,000 | |||
Revenues | 1,990,000 | 1,953,000 | 4,282,000 | 4,272,000 | |||
Total costs of providing services | 1,927,000 | 1,892,000 | 3,960,000 | 3,810,000 | |||
Net income attributable to Willis Towers Watson | 58,000 | $ 33,000 | 273,000 | $ 377,000 | |||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Retained earnings | [1] | 67,000 | 67,000 | $ 317,000 | |||
Provision for income taxes | [2] | (6,000) | (59,000) | ||||
Revenues | [3],[4],[5],[6] | (32,000) | (291,000) | ||||
Net income attributable to Willis Towers Watson | (24,000) | (250,000) | |||||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member] | Medicare broking [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Retained earnings | [4] | 311,000 | |||||
Revenues | [4] | (78,000) | (151,000) | ||||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member] | Proportional treaty reinsurance broking [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Retained earnings | [6] | 50,000 | |||||
Revenues | [6] | 5,000 | 29,000 | ||||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member] | Health and benefits broking [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Retained earnings | [3] | 0 | |||||
Revenues | [3] | 35,000 | (155,000) | ||||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member] | Other | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Retained earnings | [5] | 28,000 | |||||
Revenues | [5] | 6,000 | (14,000) | ||||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member] | Total Revenue Adjustments [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Retained earnings | 389,000 | ||||||
Revenues | (32,000) | (291,000) | |||||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member] | System implementation activities [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Retained earnings | [7] | (46,000) | |||||
Total costs of providing services | [7] | 2,000 | 4,000 | ||||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member] | Other Cost Adjustments [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Retained earnings | [8] | 75,000 | |||||
Total costs of providing services | [8] | (4,000) | 14,000 | ||||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member] | Total Cost Adjustments [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Retained earnings | 29,000 | ||||||
Total costs of providing services | (2,000) | 18,000 | |||||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member] | Income Tax Effect [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Retained earnings | [2] | $ (101,000) | |||||
Provision for income taxes | [2] | $ (6,000) | $ (59,000) | ||||
[1] | Retained earnings has been adjusted for the net impact of the adoption of ASC 606. See the discussion of the significant pre-tax changes by revenue stream in the following section. | ||||||
[2] | The provision for income taxes for the three and six months ended June 30, 2018 was $6 million and $59 million, respectively, lower than our provision on an ASC 605 basis. The income tax expense was calculated based on the U.S. and foreign statutory rates applicable to adjustments made. Where applicable, a U.S. statutory rate of 21% was used. There was a $101 million net tax reduction to retained earnings upon adoption of ASC 606. | ||||||
[3] | Health and benefits broking — Revenue for certain Health and Benefits broking arrangements, in our Human Capital and Benefits segment, will now be recognized evenly over the year to reflect the nature of the ongoing obligations to our customers as well as receipt of the monthly commissions. These contracts are monthly or annual in nature, and are considered complete as of the transition date. Therefore, no retained earnings adjustment is required. The total changes to revenue as a result of this accounting change for the three and six months ended June 30, 2018 was an increase of $35 million and a decrease of $155 million, respectively. | ||||||
[4] | Medicare broking — The majority of revenue recognition for this offering, within our Individual Marketplace business, has moved from monthly ratable recognition over the policy period, to recognition upon placement of the policy. Consequently, the Company will now recognize approximately two-thirds of one calendar year of expected commissions during its fourth quarter of the preceding calendar year. The remainder of the revenue is recognized consistently with methods used prior to the adoption of ASC 606. Therefore, at the adoption date, we have reflected a $271 million pre-tax increase to retained earnings for the portion of the revenue that would otherwise have been recognized during our 2018 calendar year since our earnings process was largely completed during the fourth quarter of 2017. Additionally, we have reflected a $40 million pretax adjustment to increase retained earnings related to previously deferred contingent revenue from placements made prior to 2018 because the earnings process was complete under ASC 606. During the three and six months ended June 30, 2018, the accounting for this revenue stream under ASC 606 represented a reduction of revenue from ASC 605, Revenue Recognition (‘ASC 605’) accounting methods of $78 million and $151 million, respectively. | ||||||
[5] | Other adjustments — Certain other revenue changes with individually less significant adjustments were made to retained earnings as of the adoption date totaling a net $28 million. The cumulative changes to revenue for the three and six months ended June 30, 2018 for other revenue streams not discussed above resulting from the ASC 606 adoption was an increase of $6 million and a decrease of $14 million, respectively. | ||||||
[6] | Proportional treaty reinsurance broking — The revenue recognition for proportional treaty reinsurance broking commissions, within our Investment, Risk and Reinsurance segment, has moved from recognition upon the receipt of the monthly or quarterly treaty statements from the ceding insurance carriers, to the recognition of an estimate of expected commissions upon the policy effective date. Since the majority of revenue recognized historically based on these monthly or quarterly statements was received over a two-year period, we reflected a $50 million pretax increase to retained earnings at the adoption date for the portion of revenue that would otherwise have been recognized during our 2018 calendar year related to policies effective in 2017 or prior years. For the three and six months ended June 30, 2018, ASC 606 revenue was higher than ASC 605 revenue by approximately $5 million and $29 million, respectively, related to this adjustment. | ||||||
[7] | System implementation activities — For those portions of the business that previously deferred costs, the length of time over which we amortize those costs will extend to a longer estimated contract term. For 2017 and prior years, these costs were amortized over a typical period of 3-5 years in accordance with the initial stated terms of the customer agreements. Additionally, the composition of deferred costs has been adjusted to reflect the guidance in ASC 606. A reduction adjustment to retained earnings of $46 million was recorded on the adoption date to reflect these changes. Further, the amortization of the costs are no longer classified as depreciation expense, but rather included in salaries and benefits. These adjustments resulted in an increase in expenses of $2 million and $4 million for the three and six months ended June 30, 2018, respectively. | ||||||
[8] | Other cost adjustments — This guidance now applies to our broking arrangements and certain consulting engagements. While the costs deferred for our broking arrangements will typically be amortized within one year, costs now deferred related to certain consulting arrangements will be amortized over a longer term. We have increased pre-tax retained earnings by $75 million primarily to reflect the total changes to contract costs as of the adoption date. For the three and six months ended June 30, 2018, these changes resulted in expenses decreasing by $4 million and increasing by $14 million, respectively. |
Revenue - Schedule of Disaggreg
Revenue - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 1,966 | $ 4,240 | |||
Other Revenue, Net | [1] | 24 | 42 | ||
Revenues | 1,990 | $ 1,953 | 4,282 | $ 4,272 | |
Broking [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 899 | 2,034 | |||
Consulting [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 751 | 1,546 | |||
Outsourced administration [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 199 | 414 | |||
Other | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 93 | 203 | |||
HCB | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 792 | 1,634 | |||
Other Revenue, Net | [1] | 5 | 9 | ||
Revenues | 797 | 1,643 | |||
HCB | Broking [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 61 | 137 | |||
HCB | Consulting [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 602 | 1,233 | |||
HCB | Outsourced administration [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 68 | 142 | |||
HCB | Other | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 44 | 91 | |||
CRB | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 667 | 1,401 | |||
Other Revenue, Net | [1] | 7 | 13 | ||
Revenues | 674 | 1,414 | |||
CRB | Broking [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 610 | 1,274 | |||
CRB | Consulting [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 39 | 83 | |||
CRB | Outsourced administration [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 16 | 39 | |||
CRB | Other | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 2 | 5 | |||
IRR | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 377 | 946 | |||
Other Revenue, Net | [1] | 9 | 16 | ||
Revenues | 386 | 962 | |||
IRR | Broking [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 224 | 615 | |||
IRR | Consulting [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 107 | 224 | |||
IRR | Outsourced administration [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 0 | 0 | |||
IRR | Other | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 45 | 104 | |||
BDA | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 121 | 245 | |||
Other Revenue, Net | [1] | 0 | 0 | ||
Revenues | 121 | 245 | |||
BDA | Broking [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 4 | 8 | |||
BDA | Consulting [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 0 | 0 | |||
BDA | Outsourced administration [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 115 | 233 | |||
BDA | Other | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 0 | 0 | |||
Corporate, Non-Segment [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 9 | 14 | ||
Other Revenue, Net | [1],[2] | 3 | 4 | ||
Revenues | [2] | 12 | 18 | ||
Corporate, Non-Segment [Member] | Broking [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 0 | 0 | ||
Corporate, Non-Segment [Member] | Consulting [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 3 | 6 | ||
Corporate, Non-Segment [Member] | Outsourced administration [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 0 | 0 | ||
Corporate, Non-Segment [Member] | Other | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 2 | 3 | ||
Segment Reconciling Items [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 24 | 43 | ||
Revenues | 32 | 31 | 56 | 57 | |
Segment Reconciling Items [Member] | HCB | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 17 | 31 | ||
Segment Reconciling Items [Member] | CRB | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 0 | 0 | ||
Segment Reconciling Items [Member] | IRR | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 1 | 3 | ||
Segment Reconciling Items [Member] | BDA | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 2 | 4 | ||
Segment Reconciling Items [Member] | Corporate, Non-Segment [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 4 | 5 | ||
Operating Segments | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 1,942 | 4,197 | |||
Revenues | 1,958 | 1,922 | 4,226 | 4,215 | |
Operating Segments | HCB | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 775 | 1,603 | |||
Revenues | 780 | 726 | 1,612 | 1,675 | |
Operating Segments | CRB | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 667 | 1,401 | |||
Revenues | 674 | 644 | 1,414 | 1,316 | |
Operating Segments | IRR | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 376 | 943 | |||
Revenues | 385 | 374 | 959 | 865 | |
Operating Segments | BDA | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | 119 | 241 | |||
Revenues | 119 | $ 178 | 241 | $ 359 | |
Operating Segments | Corporate, Non-Segment [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | $ 5 | $ 9 | ||
[1] | Interest and other income is included in segment revenue and total revenue, however it has been presented separately in the above tables because it does not arise directly from contracts with customers. | ||||
[2] | Reimbursable expenses and other, as well as Corporate revenue, are excluded from segment revenue, but included in total revenue on the condensed consolidated statements of comprehensive income. |
Revenue - Schedule of Revenue b
Revenue - Schedule of Revenue by Geography (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2018 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 1,966 | $ 4,240 | |
HCB | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 792 | 1,634 | |
CRB | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 667 | 1,401 | |
IRR | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 377 | 946 | |
BDA | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 121 | 245 | |
Corporate, Non-Segment [Member] | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | [1] | 9 | 14 |
North America [Member] | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 955 | 1,911 | |
North America [Member] | HCB | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 467 | 929 | |
North America [Member] | CRB | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 259 | 474 | |
North America [Member] | IRR | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 105 | 258 | |
North America [Member] | BDA | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 119 | 241 | |
North America [Member] | Corporate, Non-Segment [Member] | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 5 | 9 | |
Great Britain [Member] | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 472 | 1,044 | |
Great Britain [Member] | HCB | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 120 | 249 | |
Great Britain [Member] | CRB | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 170 | 318 | |
Great Britain [Member] | IRR | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 182 | 477 | |
Great Britain [Member] | BDA | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 0 | 0 | |
Great Britain [Member] | Corporate, Non-Segment [Member] | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 0 | 0 | |
Western Europe [Member] | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 296 | 760 | |
Western Europe [Member] | HCB | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 124 | 278 | |
Western Europe [Member] | CRB | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 121 | 360 | |
Western Europe [Member] | IRR | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 51 | 122 | |
Western Europe [Member] | BDA | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 0 | 0 | |
Western Europe [Member] | Corporate, Non-Segment [Member] | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 0 | 0 | |
International [Member] | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 219 | 482 | |
International [Member] | HCB | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 64 | 147 | |
International [Member] | CRB | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 117 | 249 | |
International [Member] | IRR | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 38 | 86 | |
International [Member] | BDA | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 0 | 0 | |
International [Member] | Corporate, Non-Segment [Member] | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 0 | 0 | |
Operating Segments | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 1,942 | 4,197 | |
Operating Segments | HCB | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 775 | 1,603 | |
Operating Segments | CRB | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 667 | 1,401 | |
Operating Segments | IRR | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 376 | 943 | |
Operating Segments | BDA | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 119 | 241 | |
Operating Segments | Corporate, Non-Segment [Member] | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | [1] | $ 5 | $ 9 |
[1] | Reimbursable expenses and other, as well as Corporate revenue, are excluded from segment revenue, but included in total revenue on the condensed consolidated statements of comprehensive income. |
Revenue - Schedule of Contract
Revenue - Schedule of Contract Balances (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |||
Billed Receivable, Current | $ 1,827 | $ 1,933 | |
Unbilled Receivable, Current | 371 | 276 | |
Contract asset, Current | 196 | 346 | |
Accounts receivable, net | 2,394 | 2,555 | $ 2,246 |
Contract asset, Noncurrent | 5 | 5 | |
Deferred Revenue | 484 | 463 | |
Allowance for doubtful debts | $ 49 | $ 45 |
Revenue - Schedule of Remaining
Revenue - Schedule of Remaining Performance Obligations (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-07-01 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Revenue, Remaining Performance Obligation | $ 220 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 6 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Revenue, Remaining Performance Obligation | $ 390 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Revenue, Remaining Performance Obligation | $ 1,248 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period |
Revenue - Schedule of Capitaliz
Revenue - Schedule of Capitalized and Deferred Costs (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jan. 01, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | ||
Capitalized Contract Cost, Net | $ 118 | $ 126 |
Capitalized Contract Cost, Additions | 222 | |
Capitalized Contract Cost, Amortization | (228) | |
Capitalized Contract Cost, Impairment Loss | 0 | |
Capitalized Contract Cost, Foreign Exchange Translation Gain (Loss) | $ (2) |
Segment Information - Narrative
Segment Information - Narrative (Details) | 6 Months Ended |
Jun. 30, 2018segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 4 |
Number of reportable segments | 4 |
Segment Information - Revenue (
Segment Information - Revenue (Net of Reimbursable Expenses) of the Reported Segments (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Segment Reporting Information [Line Items] | ||||
Revenues | $ 1,990 | $ 1,953 | $ 4,282 | $ 4,272 |
Income from operations | 63 | 61 | 322 | 462 |
HCB | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 797 | 1,643 | ||
CRB | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 674 | 1,414 | ||
IRR | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 386 | 962 | ||
BDA | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 121 | 245 | ||
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 1,958 | 1,922 | 4,226 | 4,215 |
Income from operations | 304 | 350 | 851 | 1,064 |
Operating Segments | HCB | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 780 | 726 | 1,612 | 1,675 |
Income from operations | 149 | 122 | 342 | 467 |
Operating Segments | CRB | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 674 | 644 | 1,414 | 1,316 |
Income from operations | 97 | 104 | 222 | 221 |
Operating Segments | IRR | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 385 | 374 | 959 | 865 |
Income from operations | 89 | 89 | 350 | 303 |
Operating Segments | BDA | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 119 | 178 | 241 | 359 |
Income from operations | $ (31) | $ 35 | $ (63) | $ 73 |
Segment Information - Reconcili
Segment Information - Reconciliation of Information Reported by Segment to Consolidated Amounts (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenue: | ||||
Revenues | $ 1,990 | $ 1,953 | $ 4,282 | $ 4,272 |
Income from operations | 63 | 61 | 322 | 462 |
Amortization | (140) | (149) | (281) | (300) |
Restructuring costs | 0 | (27) | 0 | (54) |
Interest expense | 52 | 46 | 103 | 92 |
Other income, net | (63) | (34) | (119) | (77) |
INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | 74 | 49 | 338 | 447 |
Operating Segments | ||||
Revenue: | ||||
Revenues | 1,958 | 1,922 | 4,226 | 4,215 |
Income from operations | 304 | 350 | 851 | 1,064 |
Segment Reconciling Items [Member] | ||||
Revenue: | ||||
Revenues | 32 | 31 | 56 | 57 |
Amortization | (140) | (149) | (281) | (300) |
Restructuring costs | 0 | (27) | 0 | (54) |
Transaction and integration expenses | (55) | (63) | (98) | (103) |
Unallocated, net (i) | (46) | (50) | (150) | (145) |
Interest expense | (52) | (46) | (103) | (92) |
Other income, net | $ 63 | $ 34 | $ 119 | $ 77 |
Restructuring Costs - Narrative
Restructuring Costs - Narrative (Details) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | 45 Months Ended | |||||
Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2017USD ($)Position | |
Restructuring Cost and Reserve [Line Items] | |||||||||
Restructuring costs | $ 0 | $ 27 | $ 0 | $ 54 | |||||
Operational Improvement Program | |||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||
Number of support roles moved from higher cost locations to lower cost locations (more than) | Position | 3,500 | ||||||||
Restructuring costs | $ 27 | $ 54 | $ 134 | $ 145 | $ 126 | $ 36 | |||
Cumulative restructuring cost | $ 441 |
Restructuring Costs - Analysis
Restructuring Costs - Analysis of the Cost for Restructuring (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Restructuring Cost and Reserve [Line Items] | ||||||||
Restructuring costs | $ 0 | $ 27 | $ 0 | $ 54 | ||||
Termination benefits | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Restructuring costs | 7 | 13 | ||||||
Professional services and other | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Restructuring costs | 20 | 41 | ||||||
Operating Segments | HCB | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Restructuring costs | 0 | 1 | ||||||
Operating Segments | HCB | Termination benefits | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Restructuring costs | 0 | 0 | ||||||
Operating Segments | HCB | Professional services and other | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Restructuring costs | 0 | 1 | ||||||
Operating Segments | CRB | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Restructuring costs | 20 | 39 | ||||||
Operating Segments | CRB | Termination benefits | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Restructuring costs | 5 | 9 | ||||||
Operating Segments | CRB | Professional services and other | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Restructuring costs | 15 | 30 | ||||||
Operating Segments | IRR | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Restructuring costs | 2 | 5 | ||||||
Operating Segments | IRR | Termination benefits | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Restructuring costs | 1 | 3 | ||||||
Operating Segments | IRR | Professional services and other | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Restructuring costs | 1 | 2 | ||||||
Operating Segments | BDA | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Restructuring costs | 0 | 0 | ||||||
Operating Segments | BDA | Termination benefits | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Restructuring costs | 0 | 0 | ||||||
Operating Segments | BDA | Professional services and other | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Restructuring costs | 0 | 0 | ||||||
Corporate, Non-Segment [Member] | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Restructuring costs | 5 | 9 | ||||||
Corporate, Non-Segment [Member] | Termination benefits | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Restructuring costs | 1 | 1 | ||||||
Corporate, Non-Segment [Member] | Professional services and other | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Restructuring costs | 4 | 8 | ||||||
Operational Improvement Program | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Restructuring costs | $ 27 | $ 54 | $ 134 | $ 145 | $ 126 | $ 36 | ||
Operational Improvement Program | Termination benefits | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Restructuring costs | 48 | 23 | 36 | 16 | ||||
Operational Improvement Program | Professional services and other | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Restructuring costs | $ 86 | $ 122 | $ 90 | $ 20 |
Restructuring Costs - Restructu
Restructuring Costs - Restructuring Liability (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Restructuring Reserve [Roll Forward] | ||||||||
Charges incurred | $ 0 | $ 27 | $ 0 | $ 54 | ||||
Operational Improvement Program | ||||||||
Restructuring Reserve [Roll Forward] | ||||||||
Restructuring liability, beginning balance | 21 | 25 | $ 25 | $ 26 | $ 11 | $ 0 | ||
Charges incurred | 27 | 54 | 134 | 145 | 126 | 36 | ||
Cash payments | (15) | (138) | (146) | (111) | (25) | |||
Restructuring liability, ending balance | 6 | 6 | 21 | 25 | 26 | 11 | ||
Business Restructure Program | ||||||||
Restructuring Reserve [Roll Forward] | ||||||||
Restructuring liability, beginning balance | 1 | 26 | 26 | 0 | ||||
Charges incurred | (2) | 48 | ||||||
Cash payments | (1) | (23) | (22) | |||||
Restructuring liability, ending balance | 0 | 0 | 1 | 26 | 0 | |||
Termination benefits | ||||||||
Restructuring Reserve [Roll Forward] | ||||||||
Charges incurred | 7 | 13 | ||||||
Termination benefits | Operational Improvement Program | ||||||||
Restructuring Reserve [Roll Forward] | ||||||||
Restructuring liability, beginning balance | 14 | 7 | 7 | 15 | 5 | 0 | ||
Charges incurred | 48 | 23 | 36 | 16 | ||||
Cash payments | (9) | (41) | (31) | (26) | (11) | |||
Restructuring liability, ending balance | 5 | 5 | 14 | 7 | 15 | 5 | ||
Termination benefits | Business Restructure Program | ||||||||
Restructuring Reserve [Roll Forward] | ||||||||
Restructuring liability, beginning balance | 1 | 26 | 26 | 0 | ||||
Charges incurred | (2) | 45 | ||||||
Cash payments | (1) | (23) | (19) | |||||
Restructuring liability, ending balance | 0 | 0 | 1 | 26 | 0 | |||
Professional services and other | ||||||||
Restructuring Reserve [Roll Forward] | ||||||||
Charges incurred | $ 20 | 41 | ||||||
Professional services and other | Operational Improvement Program | ||||||||
Restructuring Reserve [Roll Forward] | ||||||||
Restructuring liability, beginning balance | 7 | 18 | 18 | 11 | 6 | 0 | ||
Charges incurred | 86 | 122 | 90 | 20 | ||||
Cash payments | (6) | (97) | (115) | (85) | (14) | |||
Restructuring liability, ending balance | 1 | 1 | 7 | 18 | 11 | $ 6 | ||
Professional services and other | Business Restructure Program | ||||||||
Restructuring Reserve [Roll Forward] | ||||||||
Restructuring liability, beginning balance | 0 | $ 0 | 0 | 0 | ||||
Charges incurred | 0 | 3 | ||||||
Cash payments | 0 | 0 | (3) | |||||
Restructuring liability, ending balance | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Income Taxes - Impact of U.S. T
Income Taxes - Impact of U.S. Tax Reform (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Impact of U.S. Tax Reform [Line Items] | |||||
Provision for income taxes | $ 9 | $ 8 | $ 52 | $ 54 | |
Effective tax rate | 12.70% | 16.80% | 15.50% | 12.10% | |
U.S. statutory tax rate | 21.00% | 21.00% | 35.00% | 35.00% | |
Liabilities for uncertain tax positions | $ 53 | $ 53 | $ 60 | ||
Deferred tax liabilities | 691 | 691 | 615 | ||
Reduction Of The Federal Corporate Tax Rate [Member] | |||||
Impact of U.S. Tax Reform [Line Items] | |||||
Deferred Tax Assets, Net | 208 | ||||
Indefinite Reinvestment Assertion [Member] | |||||
Impact of U.S. Tax Reform [Line Items] | |||||
Deferred tax liabilities | 1 | ||||
Bonus Depreciation [Member] | |||||
Impact of U.S. Tax Reform [Line Items] | |||||
Income Taxes Receivable, Current | 40 | ||||
Executive Compensation [Member] | |||||
Impact of U.S. Tax Reform [Line Items] | |||||
Deferred tax liabilities | 8 | ||||
One-Time Transition Tax [Member] | Internal Revenue Service (IRS) [Member] | |||||
Impact of U.S. Tax Reform [Line Items] | |||||
Accrued Income Taxes, Noncurrent | 70 | ||||
Accrued Income Taxes Reduction | (64) | ||||
One-Time Transition Tax [Member] | State and Local Jurisdiction [Member] | |||||
Impact of U.S. Tax Reform [Line Items] | |||||
Accrued Income Taxes, Noncurrent | $ 2 | ||||
Minimum | |||||
Impact of U.S. Tax Reform [Line Items] | |||||
Expected decrease in liability for uncertain tax position | 1 | $ 1 | |||
Maximum | |||||
Impact of U.S. Tax Reform [Line Items] | |||||
GILTI deduction rate | 50.00% | ||||
Expected decrease in liability for uncertain tax position | $ 4 | $ 4 |
Goodwill and Other Intangible53
Goodwill and Other Intangible Assets - Components of Goodwill (Details) $ in Millions | 6 Months Ended | |
Jun. 30, 2018USD ($) | ||
Goodwill [Roll Forward] | ||
Goodwill, gross, beginning balance | $ 11,011 | |
Accumulated impairment losses, beginning balance | (492) | |
Goodwill, net, beginning balance | 10,519 | |
Goodwill reassigned in segment realignment | 0 | |
Goodwill acquired during the period | 5 | |
Goodwill disposed of during the period | 5 | |
Foreign exchange | (51) | |
Goodwill, gross, ending balance | 10,960 | |
Accumulated impairment losses, ending balance | (492) | |
Goodwill, net, ending balance | 10,468 | |
HCB | ||
Goodwill [Roll Forward] | ||
Goodwill, gross, beginning balance | 4,342 | |
Accumulated impairment losses, beginning balance | (130) | |
Goodwill, net, beginning balance | 4,212 | |
Goodwill reassigned in segment realignment | 0 | |
Goodwill acquired during the period | 0 | |
Goodwill disposed of during the period | 0 | |
Foreign exchange | (25) | |
Goodwill, gross, ending balance | 4,317 | |
Accumulated impairment losses, ending balance | (130) | |
Goodwill, net, ending balance | 4,187 | |
CRB | ||
Goodwill [Roll Forward] | ||
Goodwill, gross, beginning balance | 2,261 | |
Accumulated impairment losses, beginning balance | (362) | |
Goodwill, net, beginning balance | 1,899 | |
Goodwill reassigned in segment realignment | 72 | [1] |
Goodwill acquired during the period | 0 | |
Goodwill disposed of during the period | 0 | |
Foreign exchange | (21) | |
Goodwill, gross, ending balance | 2,312 | |
Accumulated impairment losses, ending balance | (362) | |
Goodwill, net, ending balance | 1,950 | |
IRR | ||
Goodwill [Roll Forward] | ||
Goodwill, gross, beginning balance | 1,851 | |
Accumulated impairment losses, beginning balance | 0 | |
Goodwill, net, beginning balance | 1,851 | |
Goodwill reassigned in segment realignment | (72) | [1] |
Goodwill acquired during the period | 5 | |
Goodwill disposed of during the period | 5 | |
Foreign exchange | (5) | |
Goodwill, gross, ending balance | 1,774 | |
Accumulated impairment losses, ending balance | 0 | |
Goodwill, net, ending balance | 1,774 | |
BDA | ||
Goodwill [Roll Forward] | ||
Goodwill, gross, beginning balance | 2,557 | |
Accumulated impairment losses, beginning balance | 0 | |
Goodwill, net, beginning balance | 2,557 | |
Goodwill reassigned in segment realignment | 0 | |
Goodwill acquired during the period | 0 | |
Goodwill disposed of during the period | 0 | |
Foreign exchange | 0 | |
Goodwill, gross, ending balance | 2,557 | |
Accumulated impairment losses, ending balance | 0 | |
Goodwill, net, ending balance | $ 2,557 | |
[1] | Represents the preliminary reallocation of goodwill related to certain businesses which were realigned among the segments as of January 1, 2018. See Note 4 — Segment Information for further information. |
Goodwill and Other Intangible54
Goodwill and Other Intangible Assets - Finite-Lived Intangible Assets and Liabilities (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | ||
Finite-lived Intangible Assets [Roll Forward] | ||||||
Balance at December 31, 2017 | $ 3,882 | |||||
Intangible assets acquired | 3 | |||||
Intangible assets disposed | (6) | |||||
Amortization (i) | $ (140) | $ (149) | (281) | $ (300) | ||
Foreign exchange | (36) | |||||
Balance at June 30, 2018 | 3,562 | 3,562 | ||||
Finite-lived intangible assets, gross carrying amount | 5,334 | 5,334 | $ 5,408 | |||
Finite-lived intangible assets, accumulated amortization | (1,772) | (1,772) | (1,526) | |||
Amortization of intangible assets, excluding above market leases | [1] | 281 | ||||
Finite-lived intangible liabilities, gross carrying amount | 34 | 34 | 34 | |||
Finite-lived intangible liabilities, accumulated amortization | (9) | (9) | (8) | |||
Acquired unfavorable lease liabilities, net | 25 | $ 25 | 26 | |||
Weighted average remaining life of amortizable intangible assets | 14 years 1 month | |||||
Client relationships | ||||||
Finite-lived Intangible Assets [Roll Forward] | ||||||
Balance at December 31, 2017 | $ 2,342 | |||||
Intangible assets acquired | 3 | |||||
Intangible assets disposed | (6) | |||||
Amortization (i) | (182) | |||||
Foreign exchange | (26) | |||||
Balance at June 30, 2018 | 2,131 | 2,131 | ||||
Finite-lived intangible assets, gross carrying amount | 3,403 | 3,403 | 3,462 | |||
Finite-lived intangible assets, accumulated amortization | (1,272) | (1,272) | (1,120) | |||
Management contracts | ||||||
Finite-lived Intangible Assets [Roll Forward] | ||||||
Balance at December 31, 2017 | 56 | |||||
Intangible assets acquired | 0 | |||||
Intangible assets disposed | 0 | |||||
Amortization (i) | (2) | |||||
Foreign exchange | (4) | |||||
Balance at June 30, 2018 | 50 | 50 | ||||
Finite-lived intangible assets, gross carrying amount | 63 | 63 | 68 | |||
Finite-lived intangible assets, accumulated amortization | (13) | (13) | (12) | |||
Software | ||||||
Finite-lived Intangible Assets [Roll Forward] | ||||||
Balance at December 31, 2017 | 473 | |||||
Intangible assets acquired | 0 | |||||
Intangible assets disposed | 0 | |||||
Amortization (i) | (73) | |||||
Foreign exchange | (3) | |||||
Balance at June 30, 2018 | 397 | 397 | ||||
Finite-lived intangible assets, gross carrying amount | 756 | 756 | 764 | |||
Finite-lived intangible assets, accumulated amortization | (359) | (359) | (291) | |||
Trademark and trade name | ||||||
Finite-lived Intangible Assets [Roll Forward] | ||||||
Balance at December 31, 2017 | 966 | |||||
Intangible assets acquired | 0 | |||||
Intangible assets disposed | 0 | |||||
Amortization (i) | (22) | |||||
Foreign exchange | (1) | |||||
Balance at June 30, 2018 | 943 | 943 | ||||
Finite-lived intangible assets, gross carrying amount | 1,054 | 1,054 | 1,055 | |||
Finite-lived intangible assets, accumulated amortization | (111) | (111) | (89) | |||
Product | ||||||
Finite-lived Intangible Assets [Roll Forward] | ||||||
Balance at December 31, 2017 | 33 | |||||
Intangible assets acquired | 0 | |||||
Intangible assets disposed | 0 | |||||
Amortization (i) | (2) | |||||
Foreign exchange | (1) | |||||
Balance at June 30, 2018 | 30 | 30 | ||||
Finite-lived intangible assets, gross carrying amount | 38 | 38 | 39 | |||
Finite-lived intangible assets, accumulated amortization | (8) | (8) | (6) | |||
Favorable agreements | ||||||
Finite-lived Intangible Assets [Roll Forward] | ||||||
Balance at December 31, 2017 | 10 | |||||
Intangible assets acquired | 0 | |||||
Intangible assets disposed | 0 | |||||
Amortization (i) | [1] | 0 | ||||
Foreign exchange | 0 | |||||
Balance at June 30, 2018 | 10 | 10 | ||||
Finite-lived intangible assets, gross carrying amount | 15 | 15 | 14 | |||
Finite-lived intangible assets, accumulated amortization | (5) | (5) | (4) | |||
Other | ||||||
Finite-lived Intangible Assets [Roll Forward] | ||||||
Balance at December 31, 2017 | 2 | |||||
Intangible assets acquired | 0 | |||||
Intangible assets disposed | 0 | |||||
Amortization (i) | 0 | |||||
Foreign exchange | (1) | |||||
Balance at June 30, 2018 | 1 | 1 | ||||
Finite-lived intangible assets, gross carrying amount | 5 | 5 | 6 | |||
Finite-lived intangible assets, accumulated amortization | $ (4) | $ (4) | $ (4) | |||
[1] | Amortization associated with favorable lease agreements is recorded in Other operating expenses in the condensed consolidated statements of comprehensive income. |
Goodwill and Other Intangible55
Goodwill and Other Intangible Assets - Schedule of Future Amortization Expense and Rent Offset (Details) $ in Millions | Jun. 30, 2018USD ($) |
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] | |
Remainder of 2018 | $ 253 |
2,019 | 473 |
2,020 | 420 |
2,021 | 343 |
2,022 | 285 |
Thereafter | 1,778 |
Total | 3,552 |
Rent offset | |
Remainder of 2018 | (2) |
2,019 | (2) |
2,020 | (3) |
2,021 | (2) |
2,022 | (3) |
Thereafter | (3) |
Total | $ (15) |
Derivative Financial Instrume56
Derivative Financial Instruments (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Derivative [Line Items] | |||||
Loss on derivatives to be reclassified within the next twelve months | $ (13) | ||||
Maximum | |||||
Derivative [Line Items] | |||||
Longest outstanding maturity | 2 years 6 months | ||||
Not Designated as Hedging Instrument | Forward exchange contracts | |||||
Derivative [Line Items] | |||||
Derivative, notional amount | $ 891 | $ 891 | $ 971 | ||
Derivative asset, fair value | 0 | 0 | 3 | ||
Cash Flow Hedges | Designated as Hedging Instrument | Interest rate swaps | |||||
Derivative [Line Items] | |||||
Derivative, notional amount | 300 | 300 | 300 | ||
Derivative liability, fair value | 0 | 0 | 1 | ||
Cash Flow Hedges | Designated as Hedging Instrument | Forward exchange contracts | |||||
Derivative [Line Items] | |||||
Derivative, notional amount | 650 | 650 | 937 | ||
Derivative liability, fair value | 12 | 12 | $ 21 | ||
(Loss)/gain recognized in OCI (effective portion) | (24) | $ 9 | (9) | $ 12 | |
Loss reclassified from Accumulated OCI into income (effective element) | (7) | (20) | (18) | (43) | |
Gain recognized in income (ineffective portion and amount excluded from effectiveness testing) | 0 | 0 | 0 | 1 | |
Other income, net | Not Designated as Hedging Instrument | Forward exchange contracts | |||||
Derivative [Line Items] | |||||
Gain/(loss) recognized in income | $ 2 | $ 1 | $ (3) | $ 9 |
Debt - Schedule of Long-term De
Debt - Schedule of Long-term Debt (Details) € in Millions | Jun. 30, 2018USD ($) | Jun. 30, 2018EUR (€) | Dec. 31, 2017USD ($) | ||
Debt Instrument [Line Items] | |||||
Short-term debt and current portion of long-term debt | $ 85,000,000 | $ 85,000,000 | |||
Long-term debt, excluding current maturities | 4,589,000,000 | 4,450,000,000 | |||
Term loan due 2019 | |||||
Debt Instrument [Line Items] | |||||
Short-term debt and current portion of long-term debt | 85,000,000 | 85,000,000 | |||
Line of Credit | Revolving Credit Facility | Revolving $1.25 billion credit facility | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, excluding current maturities | 1,081,000,000 | 884,000,000 | |||
Maximum borrowing capacity | 1,250,000,000 | ||||
Term Loan | Term loan due 2019 | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, excluding current maturities | 42,000,000 | 84,000,000 | |||
Senior Notes | 7.000% senior notes due 2019 | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, excluding current maturities | $ 186,000,000 | 186,000,000 | |||
Stated interest rate | 7.00% | 7.00% | |||
Senior Notes | 5.750% senior notes due 2021 | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, excluding current maturities | $ 497,000,000 | 497,000,000 | |||
Stated interest rate | 5.75% | 5.75% | |||
Senior Notes | 3.500% senior notes due 2021 | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, excluding current maturities | $ 448,000,000 | 447,000,000 | |||
Stated interest rate | 3.50% | 3.50% | |||
Senior Notes | 2.125% senior notes due 2022 (i) | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, excluding current maturities | $ 627,000,000 | [1] | € 540 | 644,000,000 | [1] |
Stated interest rate | 2.125% | 2.125% | |||
Senior Notes | 4.625% senior notes due 2023 | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, excluding current maturities | $ 248,000,000 | 248,000,000 | |||
Stated interest rate | 4.625% | 4.625% | |||
Senior Notes | 3.600% senior notes due 2024 | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, excluding current maturities | $ 645,000,000 | 645,000,000 | |||
Stated interest rate | 3.60% | 3.60% | |||
Senior Notes | 4.400% senior notes due 2026 | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, excluding current maturities | $ 544,000,000 | 544,000,000 | |||
Stated interest rate | 4.40% | 4.40% | |||
Senior Notes | 6.125% senior notes due 2043 [Member] | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, excluding current maturities | $ 271,000,000 | $ 271,000,000 | |||
Stated interest rate | 6.125% | 6.125% | |||
[1] | Notes issued in Euro (€540 million) |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Jun. 30, 2018 |
Contingent consideration | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value Inputs, Discount Rate | 9.64% | 9.50% |
Recurring | ||
Assets: | ||
Mutual funds / exchange traded funds | $ 40 | $ 19 |
Derivative financial instruments | 18 | 5 |
Liabilities: | ||
Contingent consideration | 51 | 50 |
Derivative financial instruments | 37 | 17 |
Recurring | Level 1 | ||
Assets: | ||
Mutual funds / exchange traded funds | 40 | 19 |
Derivative financial instruments | 0 | 0 |
Liabilities: | ||
Contingent consideration | 0 | 0 |
Derivative financial instruments | 0 | 0 |
Recurring | Level 2 | ||
Assets: | ||
Mutual funds / exchange traded funds | 0 | 0 |
Derivative financial instruments | 18 | 5 |
Liabilities: | ||
Contingent consideration | 0 | 0 |
Derivative financial instruments | 37 | 17 |
Recurring | Level 3 | ||
Assets: | ||
Mutual funds / exchange traded funds | 0 | 0 |
Derivative financial instruments | 0 | 0 |
Liabilities: | ||
Contingent consideration | 51 | 50 |
Derivative financial instruments | $ 0 | $ 0 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value Liabilities Measured Using Significant Unobservable Inputs Level 3 (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Balance as of beginning of period | $ 51 |
Obligations assumed | 1 |
Payments | (2) |
Realized and unrealized gains | 1 |
Foreign exchange | (1) |
Balance as of end of period | $ 50 |
Fair Value Measurements - Sch60
Fair Value Measurements - Schedule of Liabilities Whose Carrying Values Differ From the Fair Value and are Not Measured on a Recurring Basis (Details) - Nonrecurring - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Carrying Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term debt and current portion of long-term debt | $ 85 | $ 85 |
Long-term debt | 4,589 | 4,450 |
Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term debt and current portion of long-term debt | 85 | 85 |
Long-term debt | $ 4,700 | $ 4,706 |
Retirement Benefits - Narrative
Retirement Benefits - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Defined Benefit Plan Disclosure [Line Items] | ||||
Portion of pension and OPEB obligation attributed to disclosed plans (as a percent) | 99.00% | |||
Defined contribution plan, employer contribution | $ 41,000,000 | $ 37,000,000 | $ 89,000,000 | $ 79,000,000 |
Pension Plan [Member] | UNITED STATES | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Settlement | 0 | 0 | 0 | 0 |
Defined benefit pension plans contributions | 0 | |||
Defined benefit plan, estimated future employer contributions, remainder of fiscal year | 50,000,000 | 50,000,000 | ||
Pension Plan [Member] | UNITED KINGDOM | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Settlement | 20,000,000 | 0 | 20,000,000 | 0 |
Defined benefit pension plans contributions | 44,000,000 | |||
Defined benefit plan, estimated future employer contributions, remainder of fiscal year | 42,000,000 | 42,000,000 | ||
Pension Plan [Member] | Other Foreign Plans [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Settlement | 0 | 0 | 0 | 0 |
Defined benefit pension plans contributions | 7,000,000 | |||
Defined benefit plan, estimated future employer contributions, remainder of fiscal year | 6,000,000 | 6,000,000 | ||
AccountingStandardsUpdate201707 [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Reclassification For Presentation | 61,000,000 | $ 63,000,000 | 140,000,000 | $ 125,000,000 |
Pension Costs [Member] | Pension Plan [Member] | UNITED KINGDOM | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Settlement | $ 20,000,000 | $ 20,000,000 |
Retirement Benefits - Net Perio
Retirement Benefits - Net Periodic Benefit Cost (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Pension Plan [Member] | UNITED STATES | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 17 | $ 17 | $ 33 | $ 33 |
Interest cost | 35 | 35 | 70 | 70 |
Expected return on plan assets | (69) | (62) | (137) | (123) |
Settlement | 0 | 0 | 0 | 0 |
Amortization of net loss | 3 | 3 | 6 | 6 |
Amortization of prior service credit | 0 | 0 | 0 | 0 |
Net periodic benefit (income)/cost | (14) | (7) | (28) | (14) |
Pension Plan [Member] | UNITED KINGDOM | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 5 | 7 | 10 | 15 |
Interest cost | 24 | 24 | 48 | 46 |
Expected return on plan assets | (77) | (71) | (155) | (139) |
Settlement | 20 | 0 | 20 | 0 |
Amortization of net loss | 12 | 13 | 24 | 26 |
Amortization of prior service credit | (5) | (4) | (10) | (9) |
Net periodic benefit (income)/cost | (21) | (31) | (63) | (61) |
Pension Plan [Member] | Other Foreign Plans [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 5 | 4 | 10 | 9 |
Interest cost | 4 | 5 | 9 | 9 |
Expected return on plan assets | (7) | (8) | (15) | (15) |
Settlement | 0 | 0 | 0 | 0 |
Amortization of net loss | 1 | 1 | 1 | 1 |
Amortization of prior service credit | 0 | 0 | 0 | 0 |
Net periodic benefit (income)/cost | 3 | 2 | 5 | 4 |
PRW | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 0 | 0 | 0 | 0 |
Interest cost | 1 | 1 | 2 | 2 |
Expected return on plan assets | 0 | 0 | 0 | 0 |
Settlement | 0 | 0 | 0 | 0 |
Amortization of net loss | 0 | 0 | 0 | 0 |
Amortization of prior service credit | 0 | 0 | 0 | 0 |
Net periodic benefit (income)/cost | $ 1 | $ 1 | $ 2 | $ 2 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | Jun. 05, 2018USD ($) | Mar. 01, 2017USD ($) | Sep. 12, 2016USD ($)plaintiff | Aug. 05, 2016USD ($)plaintiff | Mar. 31, 2016USD ($) | Jul. 21, 2015 | Jul. 15, 2015 | Aug. 01, 2014USD ($) | Jan. 10, 2014plaintiff | Oct. 01, 2013USD ($) | Aug. 06, 2013plaintiff | Jun. 20, 2013lawsuit | Jun. 11, 2013lawsuit | Jun. 03, 2013lawsuit | Feb. 14, 2013USD ($)lawsuitplaintiff | Feb. 08, 2013USD ($)plaintiff | Mar. 11, 2011USD ($)plaintiff | Sep. 16, 2010USD ($)plaintiff | Sep. 14, 2009USD ($)plaintiff | Aug. 06, 2009USD ($) | Jul. 02, 2009USD ($) | Apr. 30, 2018USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Jun. 30, 2018lawsuit | Jul. 01, 2017USD ($) | Mar. 25, 2014action |
de Gadala-Maria, et al. v. Willis Group Holdings Public Limited Company, et al. | |||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||
Period to replead dismissed claim | 21 days | ||||||||||||||||||||||||||
Settled Litigation | Stanford Financial Group | |||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||
Number of complaints filed | lawsuit | 15 | ||||||||||||||||||||||||||
Provision for litigation losses | $ 50,000,000 | $ 70,000,000 | |||||||||||||||||||||||||
Litigation Settlement amount | $ 120,000,000 | $ 120,000,000 | |||||||||||||||||||||||||
Settled Litigation | Janvey, et al. v. Willis of Colorado, Inc., et al. | |||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||
Damages sought (in excess of) | $ 1,000,000,000 | ||||||||||||||||||||||||||
Total losses incurred by plaintiff | $ 4,600,000,000 | ||||||||||||||||||||||||||
Settled Litigation | Troice, et al. v. Willis of Colorado, Inc., et al. | |||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||
Number of actions consolidated | action | 2 | ||||||||||||||||||||||||||
Damages sought (in excess of) | $ 1,000,000,000 | ||||||||||||||||||||||||||
Settled Litigation | Canabal, et al. v. Willis of Colorado, Inc., et al. | |||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||
Damages sought (in excess of) | $ 1,000,000,000 | ||||||||||||||||||||||||||
Settled Litigation | Rupert, et al. v. Winter, et al. | |||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||
Number of plaintiffs | plaintiff | 97 | ||||||||||||||||||||||||||
Damages sought (in excess of) | $ 300,000,000 | ||||||||||||||||||||||||||
Settled Litigation | Casanova, et al. v. Willis of Colorado, Inc., et al. | |||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||
Number of plaintiffs | plaintiff | 7 | ||||||||||||||||||||||||||
Damages sought (in excess of) | $ 5,000,000 | ||||||||||||||||||||||||||
Settled Litigation | Rishmague, et ano. v. Winter, et al. | |||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||
Number of plaintiffs | plaintiff | 2 | ||||||||||||||||||||||||||
Damages sought (in excess of) | $ 37,000,000 | ||||||||||||||||||||||||||
Settled Litigation | MacArthur v. Winter, et al. | |||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||
Number of plaintiffs | plaintiff | 2 | ||||||||||||||||||||||||||
Damages sought (in excess of) | $ 4,000,000 | ||||||||||||||||||||||||||
Settled Litigation | Stanford Financial Group, Florida Suits | |||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||
Number of complaints filed | lawsuit | 5 | ||||||||||||||||||||||||||
Number of cases removed | lawsuit | 5 | ||||||||||||||||||||||||||
Number of cases moved to stay | lawsuit | 4 | ||||||||||||||||||||||||||
Number of cases transferred | lawsuit | 5 | ||||||||||||||||||||||||||
Settled Litigation | Barbar, et al. v. Willis Group Holdings Public Limited Company, et al. | |||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||
Number of plaintiffs | plaintiff | 35 | ||||||||||||||||||||||||||
Damages sought (in excess of) | $ 30,000,000 | ||||||||||||||||||||||||||
Settled Litigation | de Gadala-Maria, et al. v. Willis Group Holdings Public Limited Company, et al. | |||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||
Number of plaintiffs | plaintiff | 64 | ||||||||||||||||||||||||||
Damages sought (in excess of) | $ 83,500,000 | ||||||||||||||||||||||||||
Settled Litigation | Ranni, et ano. v. Willis Group Holdings Public Limited Company, et al. | |||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||
Number of plaintiffs | plaintiff | 2 | ||||||||||||||||||||||||||
Damages sought (in excess of) | $ 3,000,000 | ||||||||||||||||||||||||||
Settled Litigation | Tisminesky, et al. v. Willis Group Holdings Public Limited Company, et al. | |||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||
Number of plaintiffs | plaintiff | 11 | ||||||||||||||||||||||||||
Damages sought (in excess of) | $ 6,500,000 | ||||||||||||||||||||||||||
Period to replead dismissed claim | 21 days | ||||||||||||||||||||||||||
Settled Litigation | Zacarias, et al. v. Willis Group Holdings Public Limited Company, et al. | |||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||
Number of plaintiffs | plaintiff | 10 | ||||||||||||||||||||||||||
Damages sought (in excess of) | $ 12,500,000 | ||||||||||||||||||||||||||
Period to replead dismissed claim | 21 days | ||||||||||||||||||||||||||
Settled Litigation | Abel, et al. v. Willis of Colorado, Inc., et al [Member] | |||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||
Number of plaintiffs | plaintiff | 300 | ||||||||||||||||||||||||||
Damages sought (in excess of) | $ 135,000,000 | ||||||||||||||||||||||||||
Settled Litigation | Martin v. Willis of Colorado, Inc., et. al. [Member] | |||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||
Number of plaintiffs | plaintiff | 5 | 1 | |||||||||||||||||||||||||
Damages sought (in excess of) | $ 1,000,000 | $ 100,000 | |||||||||||||||||||||||||
Settled Litigation | City of Houston | |||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||
Litigation Settlement amount | $ 40,000,000 | ||||||||||||||||||||||||||
Increase to actuarial accrued liability alleged by plaintiff | $ 163,000,000 | ||||||||||||||||||||||||||
Estimated damages incurred (through July 1, 2017) | $ 430,000,000 | ||||||||||||||||||||||||||
Estimated future damages incurred (as of July 1, 2017) | $ 400,000,000 | ||||||||||||||||||||||||||
Settled Litigation | Elma Sanchez, et al. | |||||||||||||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||||||||||||
Number of plaintiffs | plaintiff | 3 | 3 | |||||||||||||||||||||||||
Litigation Settlement amount | $ 9,750,000 | $ 9,750,000 | |||||||||||||||||||||||||
Premium rate increase | 85.00% |
Supplementary Information for64
Supplementary Information for Certain Balance Sheet Accounts Supplementary Information for Certain Balance Sheet Accounts (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accounts payable, accrued liabilities and deferred income | $ 715 | $ 772 |
Discretionary compensation | 166 | 313 |
Accrued compensation | 248 | 439 |
Accrued vacation | 143 | 93 |
Other employee-related liabilities | 85 | 94 |
Deferred revenue and accrued expenses | 1,357 | 1,711 |
Claims, lawsuits and other proceedings | 453 | 474 |
Other provisions | 93 | 84 |
Total provision for liabilities | 546 | 558 |
Incentives from lessors | 131 | 138 |
Deferred compensation plan liability | 137 | 135 |
Contingent and deferred consideration on acquisition | 1 | 41 |
Liabilities for uncertain tax positions | 53 | 60 |
Lease-related liabilities | 31 | 28 |
Other non-current liabilities | 93 | 142 |
Total other non-current liabilities | $ 446 | $ 544 |
Accumulated Other Comprehensi65
Accumulated Other Comprehensive Loss - Schedule of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Equity, beginning balance | $ 10,249 | $ 10,183 | ||
Equity, ending balance | $ 10,347 | $ 10,387 | 10,347 | 10,387 |
Reclassification from AOCI, Current Period, Tax | 11 | 7 | 12 | 13 |
Foreign currency translation | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Equity, beginning balance | (307) | (724) | (365) | (650) |
Other comprehensive income/(loss) before reclassifications | (199) | 77 | (141) | 3 |
Amounts reclassified from accumulated other comprehensive income/(loss) (net of income tax) | 0 | 0 | 0 | 0 |
Net current-period other comprehensive income/(loss) | (199) | 77 | (141) | 3 |
Equity, ending balance | (506) | (647) | (506) | (647) |
Gains and losses on cash flow hedges | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Equity, beginning balance | 9 | (62) | (10) | (82) |
Other comprehensive income/(loss) before reclassifications | (20) | 8 | (11) | 9 |
Amounts reclassified from accumulated other comprehensive income/(loss) (net of income tax) | 6 | 15 | 16 | 34 |
Net current-period other comprehensive income/(loss) | (14) | 23 | 5 | 43 |
Equity, ending balance | (5) | (39) | (5) | (39) |
Defined pension and post-retirement benefit costs | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Equity, beginning balance | (1,132) | (1,122) | (1,138) | (1,152) |
Other comprehensive income/(loss) before reclassifications | 35 | 24 | 34 | 44 |
Amounts reclassified from accumulated other comprehensive income/(loss) (net of income tax) | 3 | 8 | 10 | 18 |
Net current-period other comprehensive income/(loss) | 38 | 32 | 44 | 62 |
Equity, ending balance | (1,094) | (1,090) | (1,094) | (1,090) |
Total | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Equity, beginning balance | (1,430) | (1,908) | (1,513) | (1,884) |
Other comprehensive income/(loss) before reclassifications | (184) | 109 | (118) | 56 |
Amounts reclassified from accumulated other comprehensive income/(loss) (net of income tax) | 9 | 23 | 26 | 52 |
Net current-period other comprehensive income/(loss) | (175) | 132 | (92) | 108 |
Equity, ending balance | $ (1,605) | $ (1,776) | $ (1,605) | $ (1,776) |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - shares shares in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | |
Time-based award | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock options outstanding | 0.6 | 0.6 | 0.9 |
Restricted share units outstanding | 0.1 | 0.1 | 0.5 |
Performance-based | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock options outstanding | 0.6 | 0.6 | 1 |
Restricted share units outstanding | 0.7 | 0.7 | 0.6 |
Phantom Share Units (PSUs) [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Restricted share units outstanding | 0.3 | 0.3 | 0 |
Restricted share units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share | 0.3 | 0.1 |
Earnings Per Share - Basic and
Earnings Per Share - Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Earnings Per Share [Abstract] | ||||
Net income attributable to Willis Towers Watson | $ 58 | $ 33 | $ 273 | $ 377 |
Basic average number of shares outstanding (shares) | 132 | 136 | 132 | 136 |
Dilutive effect of potentially issuable shares (shares) | 1 | 1 | 1 | 1 |
Diluted average number of shares outstanding (shares) | 133 | 137 | 133 | 137 |
Basic earnings per share (usd per share) | $ 0.44 | $ 0.24 | $ 2.06 | $ 2.77 |
Dilutive effect of potentially issuable shares (usd per share) | 0 | 0 | (0.01) | (0.02) |
Diluted earnings per share (usd per share) | $ 0.44 | $ 0.24 | $ 2.05 | $ 2.75 |
Financial Information for Iss68
Financial Information for Issuers and Other Guarantor Subsidiaries - Narrative (Details) € in Millions, $ in Millions | Jun. 30, 2018USD ($) | May 16, 2017USD ($) | Mar. 07, 2017USD ($) | May 26, 2016USD ($) | May 26, 2016EUR (€) | Mar. 22, 2016USD ($) | Mar. 15, 2016USD ($) | Aug. 15, 2013USD ($) | Sep. 29, 2009USD ($) |
Willis Towers Watson plc | Senior Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Long-term debt | $ 500 | ||||||||
Willis North America | Senior Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Long-term debt | $ 837 | $ 650 | $ 187 | ||||||
Trinity Acquisition plc | Revolving Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 1,250 | ||||||||
Trinity Acquisition plc | Revolving Credit Facility | Revolving $1.25 billion credit facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Long-term debt | 1,100 | ||||||||
Trinity Acquisition plc | Senior Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Long-term debt | $ 2,100 | $ 609 | € 540 | $ 1,000 | $ 525 |
Financial Information for Iss69
Financial Information for Issuers and Other Guarantor Subsidiaries - Unaudited Condensed Consolidated Statement of Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Condensed Financial Statements, Captions [Line Items] | ||||
Revenues | $ 1,990 | $ 1,953 | $ 4,282 | $ 4,272 |
Costs of providing services | ||||
Salaries and benefits | 1,275 | 1,211 | 2,652 | 2,464 |
Other operating expenses | 406 | 391 | 829 | 792 |
Depreciation | 51 | 51 | 100 | 97 |
Amortization | 140 | 149 | 281 | 300 |
Restructuring costs | 0 | 27 | 0 | 54 |
Transaction and integration expenses | 55 | 63 | 98 | 103 |
Total costs of providing services | 1,927 | 1,892 | 3,960 | 3,810 |
Income from operations | 63 | 61 | 322 | 462 |
Intercompany income/(expense) | 0 | 0 | 0 | 0 |
Interest expense | (52) | (46) | (103) | (92) |
Other income, net | 63 | 34 | 119 | 77 |
INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | 74 | 49 | 338 | 447 |
Provision for income taxes | (9) | (8) | (52) | (54) |
Equity account for subsidiaries | 0 | 0 | 0 | 0 |
NET INCOME | 65 | 41 | 286 | 393 |
Income attributable to non-controlling interests | (7) | (8) | (13) | (16) |
NET INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON | 58 | 33 | 273 | 377 |
Comprehensive (loss)/income before non-controlling interests | (111) | 181 | 194 | 512 |
Comprehensive income attributable to non-controlling interest | (6) | (16) | (13) | (27) |
Comprehensive income/(loss) attributable to Willis Towers Watson | (117) | 165 | 181 | 485 |
Other guarantors | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Costs of providing services | ||||
Salaries and benefits | 0 | 0 | 0 | 0 |
Other operating expenses | 52 | 37 | 94 | 44 |
Depreciation | 1 | 2 | 2 | 3 |
Amortization | 0 | 2 | 1 | 2 |
Restructuring costs | 0 | 0 | 0 | 4 |
Transaction and integration expenses | 0 | 29 | 1 | 30 |
Total costs of providing services | 53 | 70 | 98 | 83 |
Income from operations | (53) | (70) | (98) | (83) |
Intercompany income/(expense) | 97 | 107 | 189 | 168 |
Interest expense | 0 | 0 | 0 | 0 |
Other income, net | 1 | 0 | 2 | 0 |
INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | 45 | 37 | 93 | 85 |
Provision for income taxes | (8) | (4) | (16) | (8) |
Equity account for subsidiaries | 26 | (11) | 207 | 300 |
NET INCOME | 63 | 22 | 284 | 377 |
Income attributable to non-controlling interests | 0 | 0 | 0 | 0 |
NET INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON | 63 | 22 | 284 | 377 |
Comprehensive (loss)/income before non-controlling interests | (111) | 156 | 192 | 490 |
Comprehensive income attributable to non-controlling interest | 0 | 0 | 0 | 0 |
Comprehensive income/(loss) attributable to Willis Towers Watson | (111) | 156 | 192 | 490 |
Non-guarantors | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Revenues | 1,989 | 1,948 | 4,275 | 4,261 |
Costs of providing services | ||||
Salaries and benefits | 1,254 | 1,200 | 2,615 | 2,442 |
Other operating expenses | 332 | 353 | 708 | 736 |
Depreciation | 50 | 49 | 98 | 94 |
Amortization | 140 | 147 | 280 | 298 |
Restructuring costs | 0 | 30 | 0 | 50 |
Transaction and integration expenses | 55 | 35 | 92 | 71 |
Total costs of providing services | 1,831 | 1,814 | 3,793 | 3,691 |
Income from operations | 158 | 134 | 482 | 570 |
Intercompany income/(expense) | (118) | (129) | (235) | (245) |
Interest expense | (6) | (6) | (12) | (10) |
Other income, net | 62 | 34 | 117 | 77 |
INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | 96 | 33 | 352 | 392 |
Provision for income taxes | (9) | (5) | (48) | (49) |
Equity account for subsidiaries | 0 | 0 | 0 | 0 |
NET INCOME | 87 | 28 | 304 | 343 |
Income attributable to non-controlling interests | (7) | (8) | (13) | (16) |
NET INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON | 80 | 20 | 291 | 327 |
Comprehensive (loss)/income before non-controlling interests | (40) | 152 | 202 | 438 |
Comprehensive income attributable to non-controlling interest | (6) | (16) | (13) | (27) |
Comprehensive income/(loss) attributable to Willis Towers Watson | (46) | 136 | 189 | 411 |
Consolidating adjustments | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Costs of providing services | ||||
Salaries and benefits | 0 | 0 | 0 | 0 |
Other operating expenses | 0 | 0 | 0 | 0 |
Depreciation | 0 | 0 | 0 | 0 |
Amortization | 0 | 0 | 0 | 0 |
Restructuring costs | 0 | 0 | 0 | 0 |
Transaction and integration expenses | 0 | 0 | 0 | 0 |
Total costs of providing services | 0 | 0 | 0 | 0 |
Income from operations | 0 | 0 | 0 | 0 |
Intercompany income/(expense) | 0 | 0 | 0 | 0 |
Interest expense | 0 | 0 | 0 | 0 |
Other income, net | 0 | 0 | 0 | 0 |
INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | 0 | 0 | 0 | 0 |
Provision for income taxes | 0 | 0 | 0 | 0 |
Equity account for subsidiaries | (51) | 34 | (590) | (1,145) |
NET INCOME | (51) | 34 | (590) | (1,145) |
Income attributable to non-controlling interests | 0 | 0 | 0 | 0 |
NET INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON | (51) | 34 | (590) | (1,145) |
Comprehensive (loss)/income before non-controlling interests | 488 | (443) | (254) | (1,518) |
Comprehensive income attributable to non-controlling interest | 0 | 0 | 0 | 0 |
Comprehensive income/(loss) attributable to Willis Towers Watson | 488 | (443) | (254) | (1,518) |
Willis Towers Watson plc | Reportable Legal Entities | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Costs of providing services | ||||
Salaries and benefits | 0 | 1 | 1 | 2 |
Other operating expenses | 2 | 1 | 2 | 2 |
Depreciation | 0 | 0 | 0 | 0 |
Amortization | 0 | 0 | 0 | 0 |
Restructuring costs | 0 | 0 | 0 | 0 |
Transaction and integration expenses | 0 | 0 | 0 | 0 |
Total costs of providing services | 2 | 2 | 3 | 4 |
Income from operations | (2) | (2) | (3) | (4) |
Intercompany income/(expense) | 0 | 0 | 0 | 0 |
Interest expense | (8) | (8) | (15) | (15) |
Other income, net | 0 | 0 | 0 | 0 |
INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | (10) | (10) | (18) | (19) |
Provision for income taxes | 0 | 1 | 0 | 1 |
Equity account for subsidiaries | 68 | 42 | 291 | 395 |
NET INCOME | 58 | 33 | 273 | 377 |
Income attributable to non-controlling interests | 0 | 0 | 0 | 0 |
NET INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON | 58 | 33 | 273 | 377 |
Comprehensive (loss)/income before non-controlling interests | (117) | 165 | 181 | 485 |
Comprehensive income attributable to non-controlling interest | 0 | 0 | 0 | 0 |
Comprehensive income/(loss) attributable to Willis Towers Watson | (117) | 165 | 181 | 485 |
Willis North America | Reportable Legal Entities | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Revenues | 1 | 5 | 7 | 11 |
Costs of providing services | ||||
Salaries and benefits | 21 | 10 | 36 | 20 |
Other operating expenses | 20 | 0 | 25 | 10 |
Depreciation | 0 | 0 | 0 | 0 |
Amortization | 0 | 0 | 0 | 0 |
Restructuring costs | 0 | (3) | 0 | 0 |
Transaction and integration expenses | 0 | (1) | 5 | 2 |
Total costs of providing services | 41 | 6 | 66 | 32 |
Income from operations | (40) | (1) | (59) | (21) |
Intercompany income/(expense) | (9) | (9) | (14) | 18 |
Interest expense | (11) | (6) | (22) | (16) |
Other income, net | 0 | 0 | 0 | 0 |
INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | (60) | (16) | (95) | (19) |
Provision for income taxes | 8 | 1 | 13 | 3 |
Equity account for subsidiaries | (35) | 50 | (42) | 225 |
NET INCOME | (87) | 35 | (124) | 209 |
Income attributable to non-controlling interests | 0 | 0 | 0 | 0 |
NET INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON | (87) | 35 | (124) | 209 |
Comprehensive (loss)/income before non-controlling interests | (153) | 136 | (175) | 283 |
Comprehensive income attributable to non-controlling interest | 0 | 0 | 0 | 0 |
Comprehensive income/(loss) attributable to Willis Towers Watson | (153) | 136 | (175) | 283 |
Trinity Acquisition plc | Reportable Legal Entities | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Costs of providing services | ||||
Salaries and benefits | 0 | 0 | 0 | 0 |
Other operating expenses | 0 | 0 | 0 | 0 |
Depreciation | 0 | 0 | 0 | 0 |
Amortization | 0 | 0 | 0 | 0 |
Restructuring costs | 0 | 0 | 0 | 0 |
Transaction and integration expenses | 0 | 0 | 0 | 0 |
Total costs of providing services | 0 | 0 | 0 | 0 |
Income from operations | 0 | 0 | 0 | 0 |
Intercompany income/(expense) | 30 | 31 | 60 | 59 |
Interest expense | (27) | (26) | (54) | (51) |
Other income, net | 0 | 0 | 0 | 0 |
INCOME FROM OPERATIONS BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | 3 | 5 | 6 | 8 |
Provision for income taxes | 0 | (1) | (1) | (1) |
Equity account for subsidiaries | (8) | (115) | 134 | 225 |
NET INCOME | (5) | (111) | 139 | 232 |
Income attributable to non-controlling interests | 0 | 0 | 0 | 0 |
NET INCOME ATTRIBUTABLE TO WILLIS TOWERS WATSON | (5) | (111) | 139 | 232 |
Comprehensive (loss)/income before non-controlling interests | (178) | 15 | 48 | 334 |
Comprehensive income attributable to non-controlling interest | 0 | 0 | 0 | 0 |
Comprehensive income/(loss) attributable to Willis Towers Watson | $ (178) | $ 15 | $ 48 | $ 334 |
Financial Information for Iss70
Financial Information for Issuers and Other Guarantor Subsidiaries - Unaudited Condensed Consolidated Balance Sheet (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | |
ASSETS | ||||||
Cash and cash equivalents | $ 911 | $ 1,030 | $ 852 | $ 870 | ||
Fiduciary assets | 14,126 | 12,155 | ||||
Accounts receivable, net | 2,394 | $ 2,555 | 2,246 | |||
Prepaid and other current assets | 458 | 430 | ||||
Total current assets | 17,889 | 15,861 | ||||
Intercompany receivables, net | 0 | 0 | ||||
Fixed assets, net | 924 | 985 | ||||
Goodwill | 10,468 | 10,519 | ||||
Other intangible assets, net | 3,562 | 3,882 | ||||
Pension benefits assets | 902 | 764 | ||||
Other non-current assets | 468 | 447 | ||||
Total non-current assets | 16,324 | 16,597 | ||||
Investments in subsidiaries | 0 | 0 | ||||
TOTAL ASSETS | 34,213 | 32,458 | ||||
LIABILITIES AND EQUITY | ||||||
Fiduciary liabilities | 14,126 | 12,155 | ||||
Deferred revenue and accrued expenses | 1,357 | 1,711 | ||||
Short-term debt and current portion of long-term debt | 85 | 85 | ||||
Other current liabilities | 814 | 804 | ||||
Total current liabilities | 16,382 | 14,755 | ||||
Intercompany payables, net | 0 | 0 | ||||
Long-term debt | 4,589 | 4,450 | ||||
Liability for pension benefits | 1,185 | 1,259 | ||||
Deferred tax liabilities | 691 | 615 | ||||
Provision for liabilities | 546 | 558 | ||||
Other non-current liabilities | 446 | 544 | ||||
Total non-current liabilities | 7,457 | 7,426 | ||||
TOTAL LIABILITIES | 23,839 | 22,181 | ||||
REDEEMABLE NON-CONTROLLING INTEREST | 27 | 28 | ||||
EQUITY (i) | ||||||
Total Willis Towers Watson shareholders’ equity | [1] | 10,228 | 10,126 | |||
Non-controlling interests | 119 | 123 | ||||
Total equity | 10,347 | 10,249 | 10,387 | 10,183 | ||
TOTAL LIABILITIES AND EQUITY | 34,213 | 32,458 | ||||
Other guarantors | ||||||
ASSETS | ||||||
Cash and cash equivalents | 1 | 1 | 7 | 0 | ||
Fiduciary assets | 0 | 0 | ||||
Accounts receivable, net | 0 | 0 | ||||
Prepaid and other current assets | 31 | 44 | ||||
Total current assets | 32 | 45 | ||||
Intercompany receivables, net | 0 | 0 | ||||
Fixed assets, net | 25 | 25 | ||||
Goodwill | 0 | 0 | ||||
Other intangible assets, net | 59 | 60 | ||||
Pension benefits assets | 0 | 0 | ||||
Other non-current assets | 27 | 31 | ||||
Total non-current assets | 111 | 116 | ||||
Investments in subsidiaries | 7,960 | 8,425 | ||||
TOTAL ASSETS | 8,103 | 8,586 | ||||
LIABILITIES AND EQUITY | ||||||
Fiduciary liabilities | 0 | 0 | ||||
Deferred revenue and accrued expenses | 4 | 7 | ||||
Short-term debt and current portion of long-term debt | 0 | 0 | ||||
Other current liabilities | 16 | 27 | ||||
Total current liabilities | 20 | 34 | ||||
Intercompany payables, net | 3,658 | 3,895 | ||||
Long-term debt | 0 | 0 | ||||
Liability for pension benefits | 0 | 0 | ||||
Deferred tax liabilities | 0 | 0 | ||||
Provision for liabilities | 0 | 0 | ||||
Other non-current liabilities | 0 | 5 | ||||
Total non-current liabilities | 3,658 | 3,900 | ||||
TOTAL LIABILITIES | 3,678 | 3,934 | ||||
REDEEMABLE NON-CONTROLLING INTEREST | 0 | 0 | ||||
EQUITY (i) | ||||||
Total Willis Towers Watson shareholders’ equity | 4,425 | 4,652 | ||||
Non-controlling interests | 0 | 0 | ||||
Total equity | 4,425 | 4,652 | ||||
TOTAL LIABILITIES AND EQUITY | 8,103 | 8,586 | ||||
Non-guarantors | ||||||
ASSETS | ||||||
Cash and cash equivalents | 909 | 1,027 | 845 | 870 | ||
Fiduciary assets | 14,126 | 12,155 | ||||
Accounts receivable, net | 2,394 | 2,242 | ||||
Prepaid and other current assets | 320 | 264 | ||||
Total current assets | 17,749 | 15,688 | ||||
Intercompany receivables, net | 0 | 0 | ||||
Fixed assets, net | 899 | 960 | ||||
Goodwill | 10,468 | 10,519 | ||||
Other intangible assets, net | 3,562 | 3,882 | ||||
Pension benefits assets | 902 | 764 | ||||
Other non-current assets | 444 | 388 | ||||
Total non-current assets | 16,275 | 16,513 | ||||
Investments in subsidiaries | 0 | 0 | ||||
TOTAL ASSETS | 34,024 | 32,201 | ||||
LIABILITIES AND EQUITY | ||||||
Fiduciary liabilities | 14,126 | 12,155 | ||||
Deferred revenue and accrued expenses | 1,353 | 1,685 | ||||
Short-term debt and current portion of long-term debt | 84 | 85 | ||||
Other current liabilities | 803 | 724 | ||||
Total current liabilities | 16,366 | 14,649 | ||||
Intercompany payables, net | 3,874 | 4,021 | ||||
Long-term debt | 42 | 84 | ||||
Liability for pension benefits | 1,185 | 1,259 | ||||
Deferred tax liabilities | 768 | 704 | ||||
Provision for liabilities | 426 | 438 | ||||
Other non-current liabilities | 446 | 520 | ||||
Total non-current liabilities | 6,741 | 7,026 | ||||
TOTAL LIABILITIES | 23,107 | 21,675 | ||||
REDEEMABLE NON-CONTROLLING INTEREST | 27 | 28 | ||||
EQUITY (i) | ||||||
Total Willis Towers Watson shareholders’ equity | 10,771 | 10,375 | ||||
Non-controlling interests | 119 | 123 | ||||
Total equity | 10,890 | 10,498 | ||||
TOTAL LIABILITIES AND EQUITY | 34,024 | 32,201 | ||||
Consolidating adjustments | ||||||
ASSETS | ||||||
Cash and cash equivalents | 0 | 0 | 0 | 0 | ||
Fiduciary assets | 0 | 0 | ||||
Accounts receivable, net | 0 | 0 | ||||
Prepaid and other current assets | (193) | (146) | ||||
Total current assets | (193) | (146) | ||||
Intercompany receivables, net | (8,166) | (8,703) | ||||
Fixed assets, net | 0 | 0 | ||||
Goodwill | 0 | 0 | ||||
Other intangible assets, net | (59) | (60) | ||||
Pension benefits assets | 0 | 0 | ||||
Other non-current assets | (79) | (90) | ||||
Total non-current assets | (8,304) | (8,853) | ||||
Investments in subsidiaries | (21,163) | (20,974) | ||||
TOTAL ASSETS | (29,660) | (29,973) | ||||
LIABILITIES AND EQUITY | ||||||
Fiduciary liabilities | 0 | 0 | ||||
Deferred revenue and accrued expenses | 0 | 0 | ||||
Short-term debt and current portion of long-term debt | 0 | 0 | ||||
Other current liabilities | (141) | (150) | ||||
Total current liabilities | (141) | (150) | ||||
Intercompany payables, net | (8,166) | (8,703) | ||||
Long-term debt | 0 | 0 | ||||
Liability for pension benefits | 0 | 0 | ||||
Deferred tax liabilities | (77) | (89) | ||||
Provision for liabilities | 0 | 0 | ||||
Other non-current liabilities | 0 | 0 | ||||
Total non-current liabilities | (8,243) | (8,792) | ||||
TOTAL LIABILITIES | (8,384) | (8,942) | ||||
REDEEMABLE NON-CONTROLLING INTEREST | 0 | 0 | ||||
EQUITY (i) | ||||||
Total Willis Towers Watson shareholders’ equity | (21,276) | (21,031) | ||||
Non-controlling interests | 0 | 0 | ||||
Total equity | (21,276) | (21,031) | ||||
TOTAL LIABILITIES AND EQUITY | (29,660) | (29,973) | ||||
Willis Towers Watson plc | Reportable Legal Entities | ||||||
ASSETS | ||||||
Cash and cash equivalents | 1 | 2 | 0 | 0 | ||
Fiduciary assets | 0 | 0 | ||||
Accounts receivable, net | 0 | 0 | ||||
Prepaid and other current assets | 0 | 0 | ||||
Total current assets | 1 | 2 | ||||
Intercompany receivables, net | 5,966 | 6,202 | ||||
Fixed assets, net | 0 | 0 | ||||
Goodwill | 0 | 0 | ||||
Other intangible assets, net | 0 | 0 | ||||
Pension benefits assets | 0 | 0 | ||||
Other non-current assets | 4 | 0 | ||||
Total non-current assets | 5,970 | 6,202 | ||||
Investments in subsidiaries | 4,852 | 4,506 | ||||
TOTAL ASSETS | 10,823 | 10,710 | ||||
LIABILITIES AND EQUITY | ||||||
Fiduciary liabilities | 0 | 0 | ||||
Deferred revenue and accrued expenses | 0 | 0 | ||||
Short-term debt and current portion of long-term debt | 1 | 0 | ||||
Other current liabilities | 97 | 87 | ||||
Total current liabilities | 98 | 87 | ||||
Intercompany payables, net | 0 | 0 | ||||
Long-term debt | 497 | 497 | ||||
Liability for pension benefits | 0 | 0 | ||||
Deferred tax liabilities | 0 | 0 | ||||
Provision for liabilities | 0 | 0 | ||||
Other non-current liabilities | 0 | 0 | ||||
Total non-current liabilities | 497 | 497 | ||||
TOTAL LIABILITIES | 595 | 584 | ||||
REDEEMABLE NON-CONTROLLING INTEREST | 0 | 0 | ||||
EQUITY (i) | ||||||
Total Willis Towers Watson shareholders’ equity | 10,228 | 10,126 | ||||
Non-controlling interests | 0 | 0 | ||||
Total equity | 10,228 | 10,126 | ||||
TOTAL LIABILITIES AND EQUITY | 10,823 | 10,710 | ||||
Willis North America | Reportable Legal Entities | ||||||
ASSETS | ||||||
Cash and cash equivalents | 0 | 0 | 0 | 0 | ||
Fiduciary assets | 0 | 0 | ||||
Accounts receivable, net | 0 | 4 | ||||
Prepaid and other current assets | 299 | 267 | ||||
Total current assets | 299 | 271 | ||||
Intercompany receivables, net | 0 | 0 | ||||
Fixed assets, net | 0 | 0 | ||||
Goodwill | 0 | 0 | ||||
Other intangible assets, net | 0 | 0 | ||||
Pension benefits assets | 0 | 0 | ||||
Other non-current assets | 70 | 115 | ||||
Total non-current assets | 70 | 115 | ||||
Investments in subsidiaries | 6,031 | 6,125 | ||||
TOTAL ASSETS | 6,400 | 6,511 | ||||
LIABILITIES AND EQUITY | ||||||
Fiduciary liabilities | 0 | 0 | ||||
Deferred revenue and accrued expenses | 0 | 19 | ||||
Short-term debt and current portion of long-term debt | 0 | 0 | ||||
Other current liabilities | 12 | 83 | ||||
Total current liabilities | 12 | 102 | ||||
Intercompany payables, net | 634 | 787 | ||||
Long-term debt | 1,136 | 986 | ||||
Liability for pension benefits | 0 | 0 | ||||
Deferred tax liabilities | 0 | 0 | ||||
Provision for liabilities | 120 | 120 | ||||
Other non-current liabilities | 0 | 19 | ||||
Total non-current liabilities | 1,890 | 1,912 | ||||
TOTAL LIABILITIES | 1,902 | 2,014 | ||||
REDEEMABLE NON-CONTROLLING INTEREST | 0 | 0 | ||||
EQUITY (i) | ||||||
Total Willis Towers Watson shareholders’ equity | 4,498 | 4,497 | ||||
Non-controlling interests | 0 | 0 | ||||
Total equity | 4,498 | 4,497 | ||||
TOTAL LIABILITIES AND EQUITY | 6,400 | 6,511 | ||||
Trinity Acquisition plc | Reportable Legal Entities | ||||||
ASSETS | ||||||
Cash and cash equivalents | 0 | 0 | $ 0 | $ 0 | ||
Fiduciary assets | 0 | 0 | ||||
Accounts receivable, net | 0 | 0 | ||||
Prepaid and other current assets | 1 | 1 | ||||
Total current assets | 1 | 1 | ||||
Intercompany receivables, net | 2,200 | 2,501 | ||||
Fixed assets, net | 0 | 0 | ||||
Goodwill | 0 | 0 | ||||
Other intangible assets, net | 0 | 0 | ||||
Pension benefits assets | 0 | 0 | ||||
Other non-current assets | 2 | 3 | ||||
Total non-current assets | 2,202 | 2,504 | ||||
Investments in subsidiaries | 2,320 | 1,918 | ||||
TOTAL ASSETS | 4,523 | 4,423 | ||||
LIABILITIES AND EQUITY | ||||||
Fiduciary liabilities | 0 | 0 | ||||
Deferred revenue and accrued expenses | 0 | 0 | ||||
Short-term debt and current portion of long-term debt | 0 | 0 | ||||
Other current liabilities | 27 | 33 | ||||
Total current liabilities | 27 | 33 | ||||
Intercompany payables, net | 0 | 0 | ||||
Long-term debt | 2,914 | 2,883 | ||||
Liability for pension benefits | 0 | 0 | ||||
Deferred tax liabilities | 0 | 0 | ||||
Provision for liabilities | 0 | 0 | ||||
Other non-current liabilities | 0 | 0 | ||||
Total non-current liabilities | 2,914 | 2,883 | ||||
TOTAL LIABILITIES | 2,941 | 2,916 | ||||
REDEEMABLE NON-CONTROLLING INTEREST | 0 | 0 | ||||
EQUITY (i) | ||||||
Total Willis Towers Watson shareholders’ equity | 1,582 | 1,507 | ||||
Non-controlling interests | 0 | 0 | ||||
Total equity | 1,582 | 1,507 | ||||
TOTAL LIABILITIES AND EQUITY | $ 4,523 | $ 4,423 | ||||
[1] | Equity includes (a) Ordinary shares $0.000304635 nominal value; Authorized 1,510,003,775; Issued 130,729,558 (2018) and 132,139,581 (2017); Outstanding 130,729,558 (2018) and 132,139,581 (2017); (b) Ordinary shares, €1 nominal value; Authorized and Issued 40,000 shares in 2018 and 2017; and (c) Preference shares, $0.000115 nominal value; Authorized 1,000,000,000 and Issued none in 2018 and 2017. |
Financial Information for Iss71
Financial Information for Issuers and Other Guarantor Subsidiaries - Unaudited Condensed Consolidated Statement of Cash Flows (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Condensed Financial Statements, Captions [Line Items] | ||
NET CASH FROM/(USED IN) OPERATING ACTIVITIES | $ 395 | $ 319 |
CASH FLOWS USED IN INVESTING ACTIVITIES | ||
Additions to fixed assets and software for internal use | (141) | (119) |
Capitalized software costs | (25) | (32) |
Acquisitions of operations, net of cash acquired | (8) | (13) |
Net proceeds from sale of operations | 4 | 0 |
Other, net | 17 | 9 |
Proceeds from/(repayments of) intercompany investing activities, net | 0 | 0 |
(Increase)/decrease in investment in subsidiaries | 0 | |
Net cash (used in)/from investing activities | (153) | (155) |
CASH FLOWS USED IN FINANCING ACTIVITIES | ||
Net borrowings on revolving credit facility | 197 | 283 |
Senior notes issued | 0 | 650 |
Proceeds from issuance of other debt | 0 | 32 |
Debt issuance costs | 0 | (9) |
Repayments of debt | (43) | (695) |
Repurchase of shares | (269) | (296) |
Proceeds from issuance of shares | 18 | 37 |
Payments for deferred and contingent consideration related to acquisitions | (41) | (44) |
Cash paid for employee taxes on withholding shares | (30) | (3) |
Dividends paid | (149) | (137) |
Acquisitions of and dividends paid to non-controlling interests | (18) | (14) |
(Repayments of)/proceeds from intercompany financing activities, net | 0 | 0 |
Net cash provided by (used in) financing activities | (335) | (196) |
DECREASE IN CASH AND CASH EQUIVALENTS | (93) | (32) |
Effect of exchange rate changes on cash and cash equivalents | (26) | 14 |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 1,030 | 870 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 911 | 852 |
Other guarantors | ||
Condensed Financial Statements, Captions [Line Items] | ||
NET CASH FROM/(USED IN) OPERATING ACTIVITIES | 170 | (311) |
CASH FLOWS USED IN INVESTING ACTIVITIES | ||
Additions to fixed assets and software for internal use | (2) | (5) |
Capitalized software costs | 0 | 0 |
Acquisitions of operations, net of cash acquired | 0 | 0 |
Net proceeds from sale of operations | 0 | |
Other, net | 0 | 0 |
Proceeds from/(repayments of) intercompany investing activities, net | 139 | 78 |
(Increase)/decrease in investment in subsidiaries | 941 | |
Net cash (used in)/from investing activities | 137 | 1,014 |
CASH FLOWS USED IN FINANCING ACTIVITIES | ||
Net borrowings on revolving credit facility | 0 | 0 |
Senior notes issued | 0 | |
Proceeds from issuance of other debt | 0 | |
Debt issuance costs | 0 | |
Repayments of debt | 0 | 0 |
Repurchase of shares | 0 | 0 |
Proceeds from issuance of shares | 0 | 0 |
Payments for deferred and contingent consideration related to acquisitions | 0 | 0 |
Cash paid for employee taxes on withholding shares | 0 | 0 |
Dividends paid | (1) | 0 |
Acquisitions of and dividends paid to non-controlling interests | 0 | 0 |
(Repayments of)/proceeds from intercompany financing activities, net | (306) | (696) |
Net cash provided by (used in) financing activities | (307) | (696) |
DECREASE IN CASH AND CASH EQUIVALENTS | 0 | 7 |
Effect of exchange rate changes on cash and cash equivalents | 0 | 0 |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 1 | 0 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 1 | 7 |
Non-guarantors | ||
Condensed Financial Statements, Captions [Line Items] | ||
NET CASH FROM/(USED IN) OPERATING ACTIVITIES | 644 | (116) |
CASH FLOWS USED IN INVESTING ACTIVITIES | ||
Additions to fixed assets and software for internal use | (139) | (114) |
Capitalized software costs | (25) | (32) |
Acquisitions of operations, net of cash acquired | (8) | (13) |
Net proceeds from sale of operations | 4 | |
Other, net | 17 | 9 |
Proceeds from/(repayments of) intercompany investing activities, net | (351) | 184 |
(Increase)/decrease in investment in subsidiaries | 59 | |
Net cash (used in)/from investing activities | (502) | 93 |
CASH FLOWS USED IN FINANCING ACTIVITIES | ||
Net borrowings on revolving credit facility | 0 | 0 |
Senior notes issued | 0 | |
Proceeds from issuance of other debt | 32 | |
Debt issuance costs | 0 | |
Repayments of debt | (43) | (81) |
Repurchase of shares | 0 | 0 |
Proceeds from issuance of shares | 0 | 0 |
Payments for deferred and contingent consideration related to acquisitions | (41) | (44) |
Cash paid for employee taxes on withholding shares | (30) | (3) |
Dividends paid | 0 | (116) |
Acquisitions of and dividends paid to non-controlling interests | (18) | (14) |
(Repayments of)/proceeds from intercompany financing activities, net | (102) | 210 |
Net cash provided by (used in) financing activities | (234) | (16) |
DECREASE IN CASH AND CASH EQUIVALENTS | (92) | (39) |
Effect of exchange rate changes on cash and cash equivalents | (26) | 14 |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 1,027 | 870 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 909 | 845 |
Consolidating adjustments | ||
Condensed Financial Statements, Captions [Line Items] | ||
NET CASH FROM/(USED IN) OPERATING ACTIVITIES | (333) | (175) |
CASH FLOWS USED IN INVESTING ACTIVITIES | ||
Additions to fixed assets and software for internal use | 0 | 0 |
Capitalized software costs | 0 | 0 |
Acquisitions of operations, net of cash acquired | 0 | 0 |
Net proceeds from sale of operations | 0 | |
Other, net | 0 | 0 |
Proceeds from/(repayments of) intercompany investing activities, net | (73) | (744) |
(Increase)/decrease in investment in subsidiaries | 0 | |
Net cash (used in)/from investing activities | (73) | (744) |
CASH FLOWS USED IN FINANCING ACTIVITIES | ||
Net borrowings on revolving credit facility | 0 | 0 |
Senior notes issued | 0 | |
Proceeds from issuance of other debt | 0 | |
Debt issuance costs | 0 | |
Repayments of debt | 0 | 0 |
Repurchase of shares | 0 | 0 |
Proceeds from issuance of shares | 0 | 0 |
Payments for deferred and contingent consideration related to acquisitions | 0 | 0 |
Cash paid for employee taxes on withholding shares | 0 | 0 |
Dividends paid | 333 | 175 |
Acquisitions of and dividends paid to non-controlling interests | 0 | 0 |
(Repayments of)/proceeds from intercompany financing activities, net | 73 | 744 |
Net cash provided by (used in) financing activities | 406 | 919 |
DECREASE IN CASH AND CASH EQUIVALENTS | 0 | 0 |
Effect of exchange rate changes on cash and cash equivalents | 0 | 0 |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 0 | 0 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 0 | 0 |
Willis Towers Watson plc | Reportable Legal Entities | ||
Condensed Financial Statements, Captions [Line Items] | ||
NET CASH FROM/(USED IN) OPERATING ACTIVITIES | 154 | 448 |
CASH FLOWS USED IN INVESTING ACTIVITIES | ||
Additions to fixed assets and software for internal use | 0 | 0 |
Capitalized software costs | 0 | 0 |
Acquisitions of operations, net of cash acquired | 0 | 0 |
Net proceeds from sale of operations | 0 | |
Other, net | 0 | 0 |
Proceeds from/(repayments of) intercompany investing activities, net | 245 | 948 |
(Increase)/decrease in investment in subsidiaries | (1,000) | |
Net cash (used in)/from investing activities | 245 | (52) |
CASH FLOWS USED IN FINANCING ACTIVITIES | ||
Net borrowings on revolving credit facility | 0 | 0 |
Senior notes issued | 0 | |
Proceeds from issuance of other debt | 0 | |
Debt issuance costs | 0 | |
Repayments of debt | 0 | 0 |
Repurchase of shares | (269) | (296) |
Proceeds from issuance of shares | 18 | 37 |
Payments for deferred and contingent consideration related to acquisitions | 0 | 0 |
Cash paid for employee taxes on withholding shares | 0 | 0 |
Dividends paid | (149) | (137) |
Acquisitions of and dividends paid to non-controlling interests | 0 | 0 |
(Repayments of)/proceeds from intercompany financing activities, net | 0 | 0 |
Net cash provided by (used in) financing activities | (400) | (396) |
DECREASE IN CASH AND CASH EQUIVALENTS | (1) | 0 |
Effect of exchange rate changes on cash and cash equivalents | 0 | 0 |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 2 | 0 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 1 | 0 |
Willis North America | Reportable Legal Entities | ||
Condensed Financial Statements, Captions [Line Items] | ||
NET CASH FROM/(USED IN) OPERATING ACTIVITIES | 0 | 39 |
CASH FLOWS USED IN INVESTING ACTIVITIES | ||
Additions to fixed assets and software for internal use | 0 | 0 |
Capitalized software costs | 0 | 0 |
Acquisitions of operations, net of cash acquired | 0 | 0 |
Net proceeds from sale of operations | 0 | |
Other, net | 0 | 0 |
Proceeds from/(repayments of) intercompany investing activities, net | (97) | 7 |
(Increase)/decrease in investment in subsidiaries | 0 | |
Net cash (used in)/from investing activities | (97) | 7 |
CASH FLOWS USED IN FINANCING ACTIVITIES | ||
Net borrowings on revolving credit facility | 150 | 0 |
Senior notes issued | 650 | |
Proceeds from issuance of other debt | 0 | |
Debt issuance costs | (5) | |
Repayments of debt | 0 | (399) |
Repurchase of shares | 0 | 0 |
Proceeds from issuance of shares | 0 | 0 |
Payments for deferred and contingent consideration related to acquisitions | 0 | 0 |
Cash paid for employee taxes on withholding shares | 0 | 0 |
Dividends paid | 0 | (59) |
Acquisitions of and dividends paid to non-controlling interests | 0 | 0 |
(Repayments of)/proceeds from intercompany financing activities, net | (53) | (233) |
Net cash provided by (used in) financing activities | 97 | (46) |
DECREASE IN CASH AND CASH EQUIVALENTS | 0 | 0 |
Effect of exchange rate changes on cash and cash equivalents | 0 | 0 |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 0 | 0 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 0 | 0 |
Trinity Acquisition plc | Reportable Legal Entities | ||
Condensed Financial Statements, Captions [Line Items] | ||
NET CASH FROM/(USED IN) OPERATING ACTIVITIES | (240) | 434 |
CASH FLOWS USED IN INVESTING ACTIVITIES | ||
Additions to fixed assets and software for internal use | 0 | 0 |
Capitalized software costs | 0 | 0 |
Acquisitions of operations, net of cash acquired | 0 | 0 |
Net proceeds from sale of operations | 0 | |
Other, net | 0 | 0 |
Proceeds from/(repayments of) intercompany investing activities, net | 137 | (473) |
(Increase)/decrease in investment in subsidiaries | 0 | |
Net cash (used in)/from investing activities | 137 | (473) |
CASH FLOWS USED IN FINANCING ACTIVITIES | ||
Net borrowings on revolving credit facility | 47 | 283 |
Senior notes issued | 0 | |
Proceeds from issuance of other debt | 0 | |
Debt issuance costs | (4) | |
Repayments of debt | 0 | (215) |
Repurchase of shares | 0 | 0 |
Proceeds from issuance of shares | 0 | 0 |
Payments for deferred and contingent consideration related to acquisitions | 0 | 0 |
Cash paid for employee taxes on withholding shares | 0 | 0 |
Dividends paid | (332) | 0 |
Acquisitions of and dividends paid to non-controlling interests | 0 | 0 |
(Repayments of)/proceeds from intercompany financing activities, net | 388 | (25) |
Net cash provided by (used in) financing activities | 103 | 39 |
DECREASE IN CASH AND CASH EQUIVALENTS | 0 | 0 |
Effect of exchange rate changes on cash and cash equivalents | 0 | 0 |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 0 | 0 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ 0 | $ 0 |