Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Sep. 30, 2014 | Oct. 30, 2014 | |
Document And Entity Information [Abstract] | ' | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Amendment Flag | 'false | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Document Fiscal Year Focus | '2015 | ' |
Current Fiscal Year End Date | '--06-30 | ' |
Entity Central Index Key | '0001470215 | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Registrant Name | 'Towers Watson & Co. | ' |
Entity Common Stock, Shares Outstanding | ' | 69,936,264 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Income Statement [Abstract] | ' | ' |
Revenue | $878,107 | $809,939 |
Costs of providing services: | ' | ' |
Salaries and employee benefits | 533,528 | 500,419 |
Professional and subcontracted services | 62,205 | 61,400 |
Occupancy | 36,073 | 33,545 |
General and administrative expenses | 75,434 | 68,769 |
Depreciation and amortization | 44,869 | 43,385 |
Cost of Services | 752,109 | 707,518 |
Income from operations | 125,998 | 102,421 |
Interest income | 1,063 | 529 |
Interest expense | -2,328 | -2,436 |
Other non-operating income | 831 | 38 |
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 125,564 | 100,552 |
Provision for income taxes | 44,062 | 14,808 |
INCOME FROM CONTINUING OPERATIONS | 81,502 | 85,744 |
Income from discontinued operations, net of tax of $- and $2,551, respectively | 0 | 2,444 |
NET INCOME BEFORE NON-CONTROLLING INTERESTS | 81,502 | 88,188 |
Less: Loss attributable to non-controlling interests | -56 | -26 |
NET INCOME (attributable to common stockholders) | $81,558 | $88,214 |
Basic earnings per share (attributable to common stockholders): | ' | ' |
Income from continuing operations (in dollars per share) | $1.16 | $1.21 |
Income from discontinued operations (in dollars per share) | $0 | $0.04 |
Net income (in dollars per share) | $1.16 | $1.25 |
Diluted earnings per share (attributable to common stockholders): | ' | ' |
Income from continuing operations (in dollars per share) | $1.16 | $1.21 |
Income from discontinued operations (in dollars per share) | $0 | $0.03 |
Net income (in dollars per share) | $1.16 | $1.24 |
Dividends declared per share (in dollars per share) | $0.15 | $0 |
Weighted average shares of common stock, basic (in shares) | 70,182 | 70,801 |
Weighted average shares of common stock, diluted (in shares) | 70,596 | 71,046 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Operations (Parenthetical) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Income Statement [Abstract] | ' | ' |
Discontinued operations, tax provision | $0 | $2,551 |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Comprehensive Income (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Statement of Comprehensive Income [Abstract] | ' | ' |
Net income before non-controlling interests | $81,502 | $88,188 |
Other comprehensive (loss)/income, net of tax: | ' | ' |
Foreign currency translation | -105,331 | 70,910 |
Defined pension and post-retirement benefit costs | 2,875 | 3,112 |
Hedge effectiveness | 806 | -1,018 |
Available-for-sale securities | -128 | 186 |
Other comprehensive (loss)/income before non-controlling interests | -101,778 | 73,190 |
Comprehensive (loss)/income before non-controlling interests | -20,276 | 161,378 |
Comprehensive loss attributable to non-controlling interest | -111 | -224 |
Comprehensive (loss)/income (attributable to common stockholders) | ($20,165) | $161,602 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Sep. 30, 2014 | Jun. 30, 2014 |
In Thousands, unless otherwise specified | ||
Assets | ' | ' |
Cash and cash equivalents | $543,350 | $727,849 |
Fiduciary assets | 15,665 | 12,010 |
Short-term investments | 130,340 | 122,761 |
Receivables from clients: | ' | ' |
Billed, net of allowances of $11,082 and $8,075 | 464,158 | 507,213 |
Unbilled, at estimated net realizable value | 326,168 | 314,020 |
Current receivables, net | 790,326 | 821,233 |
Other current assets | 136,268 | 124,645 |
Total current assets | 1,615,949 | 1,808,498 |
Fixed assets, net | 373,699 | 374,444 |
Deferred income taxes | 73,702 | 79,103 |
Goodwill | 2,240,672 | 2,313,058 |
Intangible assets, net | 629,026 | 657,293 |
Other assets | 435,826 | 395,390 |
Total Assets | 5,368,874 | 5,627,786 |
Liabilities | ' | ' |
Accounts payable, accrued liabilities and deferred income | 356,071 | 404,760 |
Employee-related liabilities | 330,234 | 518,532 |
Fiduciary liabilities | 15,665 | 12,010 |
Term loan - current | 25,000 | 25,000 |
Other current liabilities | 29,940 | 74,297 |
Total current liabilities | 756,910 | 1,034,599 |
Revolving credit facility | 135,000 | 0 |
Term loan | 193,750 | 200,000 |
Accrued retirement benefits and other employee-related liabilities | 717,497 | 768,024 |
Professional liability claims reserve | 227,591 | 225,959 |
Other noncurrent liabilities | 286,637 | 288,255 |
Total Liabilities | 2,317,385 | 2,516,837 |
Commitments and contingencies | ' | ' |
Stockholders’ Equity | ' | ' |
Additional paid-in capital | 1,855,365 | 1,849,119 |
Treasury stock, at cost — 4,480,910 and 4,213,770 shares | -321,104 | -286,182 |
Retained earnings | 1,793,977 | 1,722,927 |
Accumulated other comprehensive loss | -291,425 | -189,702 |
Total Stockholders’ Equity | 3,037,559 | 3,096,908 |
Non-controlling interest | 13,930 | 14,041 |
Total Equity | 3,051,489 | 3,110,949 |
Total Liabilities and Total Equity | 5,368,874 | 5,627,786 |
Class A Common Stock [Member] | ' | ' |
Stockholders’ Equity | ' | ' |
Class A Common Stock — $0.01 par value: 300,000,000 shares authorized; 74,552,661 issued and 70,071,751 and 70,338,891 outstanding | $746 | $746 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parentheticals) (USD $) | Sep. 30, 2014 | Jun. 30, 2014 |
In Thousands, except Share data, unless otherwise specified | ||
Allowance for doubtful accounts receivable, current | $11,082 | $8,075 |
Treasury stock, shares | 4,480,910 | 4,213,770 |
Common Class A [Member] | ' | ' |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 74,552,661 | 74,552,661 |
Common stock, shares outstanding | 70,071,751 | 70,338,891 |
Condensed_Consolidated_Stateme3
Condensed Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Cash flows used in operating activities: | ' | ' |
Net income before non-controlling interests | $81,502 | $88,188 |
Adjustments to reconcile net income to net cash used in operating activities: | ' | ' |
Provision for doubtful receivables from clients | 7,994 | 1,469 |
Depreciation | 27,332 | 24,492 |
Amortization of intangible assets | 17,537 | 19,330 |
Provision for deferred income taxes | 25,893 | 48,796 |
Stock-based compensation | 11,174 | 6,641 |
Other, net | 975 | 797 |
Changes in operating assets and liabilities | ' | ' |
Receivables from clients | -960 | 40,636 |
Fiduciary assets | -3,655 | -1,913 |
Other current assets | -24,418 | -4,264 |
Other noncurrent assets | -4,240 | -567 |
Accounts payable, accrued liabilities and deferred income | -59,649 | -17,790 |
Employee-related liabilities | -173,084 | -233,084 |
Fiduciary liabilities | 3,655 | 1,913 |
Accrued retirement benefits and other employee-related liabilities | -65,744 | -75,548 |
Professional liability claims reserves | 4,995 | -4,681 |
Other current liabilities | 5,255 | 1,787 |
Other noncurrent liabilities | -9,299 | -638 |
Income tax related accounts | -50,445 | -47,428 |
Cash flows used in operating activities | -205,182 | -151,864 |
Cash flows (used in)/from investing activities: | ' | ' |
Cash paid for business acquisitions | -1,255 | 0 |
Fixed assets and software for internal use | -15,714 | -25,760 |
Capitalized software costs | -17,900 | -10,408 |
Purchases of held-to-maturity investments | -127,431 | 0 |
Redemptions of held-to-maturity investments | 107,330 | 0 |
Purchases of available-for-sale securities | -11 | -326 |
Sales and redemptions of available-for-sale securities | 11,721 | 54,580 |
Cash flows (used in)/from investing activities | -43,260 | 18,086 |
Cash flows from financing activities: | ' | ' |
Borrowings under credit facility | 145,000 | 30,000 |
Repayments under credit facility | -10,000 | 0 |
Repayments of notes payable | -6,250 | -6,250 |
Cash paid on retention liabilities | -284 | 0 |
Dividends paid | -9,723 | -613 |
Repurchases of common stock | -37,350 | -80 |
Payroll tax payments on vested shares | -10,363 | -6,965 |
Excess tax benefits | 4,229 | 9,065 |
Cash flows from financing activities | 75,259 | 25,157 |
Effect of exchange rates on cash | -11,316 | 638 |
Decrease in cash and cash equivalents | -184,499 | -107,983 |
Cash and cash equivalents at beginning of period | 727,849 | 532,805 |
Cash and cash equivalents at end of period | 543,350 | 424,822 |
Supplemental disclosures: | ' | ' |
Cash paid for interest | 809 | 955 |
Cash paid for income taxes, net of refunds | $63,796 | $12,172 |
Condensed_Consolidated_Stateme4
Condensed Consolidated Statements of Changes in Stockholders' Equity (USD $) | Total | Additional Paid-in Capital [Member] | Treasury Stock, at cost [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive (Loss) Income [Member] | Noncontrolling Interest [Member] | Common Class A [Member] | Common Class B [Member] |
In Thousands, unless otherwise specified | Common Stock [Member] | Common Stock [Member] | ||||||
Balance as of at Jun. 30, 2013 | $2,744,834 | $1,850,448 | ($221,643) | $1,394,407 | ($299,464) | $20,340 | $692 | $54 |
Shares outstanding as of at Jun. 30, 2013 | ' | ' | ' | ' | ' | ' | 69,178 | 5,374 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' | ' | ' | ' |
Net income/(loss) | 88,188 | ' | ' | 88,214 | ' | -26 | ' | ' |
Other comprehensive income/(loss) | 73,190 | ' | ' | ' | 73,388 | -198 | ' | ' |
Repurchases of common stock | -80 | ' | -80 | ' | ' | ' | ' | ' |
Shares received for employee taxes upon vesting of restricted stock units, value | -6,965 | ' | -6,965 | ' | ' | ' | ' | ' |
Exercises of stock options | 360 | -2,553 | 2,913 | ' | ' | ' | ' | ' |
Vesting of restricted stock units, value | -5,879 | -21,214 | 15,335 | ' | ' | ' | ' | ' |
Class A Common Stock: | ' | ' | ' | ' | ' | ' | ' | ' |
Cash dividends declared | -613 | ' | ' | -613 | ' | ' | ' | ' |
Excess tax benefits | 9,065 | 9,065 | ' | ' | ' | ' | ' | ' |
Stock-based compensation | 6,641 | 6,641 | ' | ' | ' | ' | ' | ' |
Balance as of at Sep. 30, 2013 | 2,908,741 | 1,842,387 | -210,440 | 1,482,008 | -226,076 | 20,116 | 692 | 54 |
Shares outstanding as of at Sep. 30, 2013 | ' | ' | ' | ' | ' | ' | 69,178 | 5,374 |
Balance as of at Jun. 30, 2014 | 3,110,949 | 1,849,119 | -286,182 | 1,722,927 | -189,702 | 14,041 | 746 | 0 |
Shares outstanding as of at Jun. 30, 2014 | ' | ' | ' | ' | ' | ' | 74,552 | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' | ' | ' | ' |
Net income/(loss) | 81,502 | ' | ' | 81,558 | ' | -56 | ' | ' |
Other comprehensive income/(loss) | -101,778 | ' | ' | ' | -101,723 | -55 | ' | ' |
Repurchases of common stock | -37,350 | ' | -37,350 | ' | ' | ' | ' | ' |
Shares received for employee taxes upon vesting of restricted stock units, value | -6,672 | ' | -6,672 | ' | ' | ' | ' | ' |
Exercises of stock options | 0 | -854 | 854 | ' | ' | ' | ' | ' |
Vesting of restricted stock units, value | -57 | -8,303 | 8,246 | ' | ' | ' | ' | ' |
Class A Common Stock: | ' | ' | ' | ' | ' | ' | ' | ' |
Cash dividends declared | -10,508 | ' | ' | -10,508 | ' | ' | ' | ' |
Excess tax benefits | 4,229 | 4,229 | ' | ' | ' | ' | ' | ' |
Stock-based compensation | 11,174 | 11,174 | ' | ' | ' | ' | ' | ' |
Balance as of at Sep. 30, 2014 | $3,051,489 | $1,855,365 | ($321,104) | $1,793,977 | ($291,425) | $13,930 | $746 | $0 |
Shares outstanding as of at Sep. 30, 2014 | ' | ' | ' | ' | ' | ' | 74,552 | 0 |
Organization_and_Basis_of_Pres
Organization and Basis of Presentation | 3 Months Ended |
Sep. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Organization and Basis of Presentation | ' |
Organization and Basis of Presentation. | |
The accompanying unaudited quarterly condensed consolidated financial statements of Towers Watson & Co. (“Towers Watson”, the “Company” or “we”) 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”). In the opinion of management, these condensed consolidated financial statements reflect all adjustments, consisting only 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 Towers Watson audited condensed consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2014, which was filed with the SEC on August 15, 2014, and may be accessed via EDGAR on the SEC’s web site at www.sec.gov. Balance sheet data as of June 30, 2014 was derived from Towers Watson’s audited financial statements. | |
Towers Watson was formed on January 1, 2010, upon the merger (the “Merger”) of Watson Wyatt Worldwide, Inc. (“Watson Wyatt”) and Towers, Perrin, Forster & Crosby, Inc. (“Towers Perrin”). | |
Our fiscal year 2015 began July 1, 2014 and ends June 30, 2015. | |
The results of operations for the three months ended September 30, 2014 are not necessarily indicative of the results that can be expected for the entire fiscal year ending June 30, 2015. 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. | |
As discussed further in Note 2 – Acquisitions and Divestitures, we have classified the operating results of our reinsurance and property and casualty insurance brokerage business as discontinued operations for all periods presented in our condensed consolidated statements of operations. This business was sold in November 2013. | |
Recent Accounting Pronouncements. | |
Not yet adopted | |
On May 28, 2014, the Financial Accounting Standards Board ("FASB") and International Accounting Standards Board ("IASB") issued their final standard on revenue from contracts with customers. The standard, issued as Accounting Standards Update ("ASU") 2014-09 by the FASB, outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers, and supersedes most current revenue recognition guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised 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 applies to all contracts with customers, except those that are within the scope of other topics in the FASB Accounting Standards Codification. Compared with current U.S. GAAP, the ASU also requires significantly expanded disclosures about revenue recognition. The ASU is effective for interim and annual reporting periods that begin after December 15, 2016, and early adoption is prohibited. The Company is currently evaluating the impact of adopting this provision. | |
On June 19, 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide a Performance Target Could Be Achieved After the Requisite Service Period. The update is intended to resolve the diverse accounting treatment of these types of awards in practice. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in "Compensation - Stock Compensation (Topic 718)" as it relates to awards with performance conditions that affect vesting to account for such awards. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved, and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The ASU is effective for interim and annual reporting periods that begin after December 15, 2015. The Company does not expect the adoption of this pronouncement to have an impact on our financial statements as this guidance mirrors our existing policy for such share-based awards. | |
Adopted | |
On June 7, 2013, the FASB issued ASU 2013-08, “Financial Services – Investment Companies (Topic 946): Amendments to the Scope, Measurement, and Disclosure Requirements,” which amends the criteria an entity would need to meet to qualify as an investment company under ASC 946. The ASU (1) introduces new disclosure requirements that apply to all investment companies and, (2) amends the measurement criteria for certain interests in other investment companies. The ASU also amends the requirements in ASC 810 related to qualifying for the “investment-company deferral” in ASU 2010-10, as well as the requirements in ASC 820 related to qualifying for the “net asset value practical expedient” in ASU 2009-12. We manage certain funds that are considered variable interest entities and for which our management fee is considered a variable interest. These funds qualify for the “investment-company deferral” in ASU 2010-10, and therefore are subject to the consolidation guidance prior to the issuance of ASU 2009-17. The ASU is effective for annual periods that begin after December 15, 2013 and interim periods within those annual periods. Early adoption is prohibited. The Company has evaluated whether these funds continued to qualify for the “investment-company deferral” based on the amended investment company criteria proscribed by ASU 2013-08 and concluded that there were no changes to the Company's original assessments. Therefore, there is no impact to the Company's financial statements or disclosures. |
Acquisitions_and_Divestitures
Acquisitions and Divestitures | 3 Months Ended | |||
Sep. 30, 2014 | ||||
Business Combinations [Abstract] | ' | |||
Acquisitions and Divestitures | ' | |||
Acquisitions and Divestitures. | ||||
Acquisitions | ||||
Liazon Corporation Acquisition | ||||
On November 22, 2013, Towers Watson purchased Liazon Corporation (“Liazon”), a business focused on developing and delivering private benefit exchanges for active employees, for $204.3 million in cash and assumed equity awards valued at $8.0 million. See Note 11 for further information on the assumed stock options. The Liazon business became a new line of business, which complements our existing OneExchange offerings under the Exchange Solutions segment. Together these solutions help organizations, both large and small, deliver self- and fully-insured benefits to both employees as well as pre- and post-65 retirees. We included the results of Liazon's operations since the acquisition date in both the Exchange Solutions segment and in our condensed consolidated financial statements. | ||||
We have recorded the tangible assets received, liabilities assumed, and the fair value of intangibles for Liazon. The intangibles included developed technology, valued at $34.3 million, and other intangibles that were collectively immaterial. Our estimate of fair value for the technology intangible was developed using the multi-period excess earnings method valuation model. Significant assumptions used in the valuation were estimated revenues and expenses, contributory asset charges, required rates of return, and discount rates. We also recorded a net deferred tax asset of $9.2 million. It was determined that total consideration was $212.3 million, and we recorded $172.9 million of goodwill related to the acquisition of Liazon. | ||||
Divestitures | ||||
Sale of our Brokerage business | ||||
On September 19, 2013, we entered into a definitive agreement to sell our Reinsurance and Property and Casualty Insurance Brokerage (“Brokerage”) business to Jardine Lloyd Thompson Group plc (“JLT”) for cash consideration of $250 million. The Brokerage business was a component of our Risk and Financial Services segment. The sale closed during our second quarter of fiscal year 2014. We divested this business as part of our strategy to focus on other areas of the business. We continue to focus on risk consulting, software and other services for the insurance industry. The business will be branded for a transitional period of 15 months from the closing date as JLT Towers Re. | ||||
As part of the transaction, we entered into an Alliance Agreement with JLT that will ensure clients have continued access to our risk consulting and software services. This agreement will also provide JLT Towers Re with continued use of Towers Watson’s proprietary actuarial models and software. | ||||
The Company assessed the guidance under ASC 205 to determine if the Alliance Agreement or any other terms of the sale agreement constituted significant continuing direct cash flows or significant continuing involvement with the Brokerage business after the sale. The Company compared the cash flows expected to be recognized from the Brokerage business as a result of the continuation or migration of activities after the disposal transaction to the projected generation of cash flows by the Brokerage business that we could have expected absent the disposal transaction. Based on this analysis, the expected annual cash inflows or outflows related to the portion of revenues shared or commissions received or paid and software sales under the Alliance Agreement were each expected to represent approximately 1% or less of the annual revenues generated by our Brokerage business operations prior to the disposal. This was deemed not significant. Actual results have been within the original expectations and continue to be not significant. | ||||
The Company also calculated the expected cash flows associated with the placement of its insurance and reinsurance arrangements. The Company agreed to use JLT as its broker-of-record for all insurance and reinsurance transactions to which the Company’s wholly-owned captive insurance company, Stone Mountain Insurance Company, is a party through November 2018. These amounts were previously eliminated as intercompany transactions, and were $2.8 million for fiscal year 2014. Additionally, the Company agreed to a Transitional Services Agreement with JLT for a two-year period ending November 5, 2015. The Company expects to incur approximately $6.3 million each year in occupancy or other infrastructure costs, which were prepaid as part of deal consideration or will be repaid by JLT over the next two years. The cash flows associated with these arrangements represented approximately 7.4% of the annual expenses generated by our Brokerage operations prior to the disposal, which was deemed not significant. | ||||
The Company noted that none of the aforementioned agreements or arrangements constituted significant continuing involvement because they do not afford the Company the ability to influence the financial or operating decisions of JLT. Accordingly, we concluded that the continuing cash flows expected after the sale of our Brokerage business did not preclude discontinued operations presentation, and the Company therefore classified the results of our Brokerage business’s operations as discontinued operations for all periods presented in our condensed consolidated statements of operations. There was no revenue or income from discontinued operations in the current fiscal year. The following selected financial information relates to the Brokerage business’s operations for the three months ended September 30, 2013: | ||||
Three Months Ended September 30, 2013 | ||||
Revenue from discontinued operations | $ | 41,198 | ||
Income from discontinued operations before taxes | 4,995 | |||
Tax expense on discontinued operations | 2,551 | |||
Net income from discontinued operations | $ | 2,444 | ||
Only the fiduciary assets and liabilities associated with the European businesses were sold. North American fiduciary assets and liabilities have not been disposed of due to certain legal restrictions which do not permit the transfer of these assets and liabilities. The subsequent settlement of the North American fiduciary assets and liabilities was presented within the operating section of our statement of cash flows for the year ended June 30, 2014. | ||||
In addition to the stated $250 million cash consideration stipulated in the sale agreement, a purchase price adjustment of $31.4 million was paid to the Company by JLT representing the value of net assets transferred in the sale. | ||||
As part of the sale, the Company agreed to repay JLT for retention payments made to certain employees of Brokerage if they remain with the business on the 30-day anniversary of the sale and the first and second anniversary of the sale. The value ascribed to this portion of the obligation is $21.7 million at the time of the sale. The remaining liability at September 30, 2014 is carried at fair value on the accompanying consolidated balance sheets (see Note 5 – Fair Value Measurements). The total amount has been classified as current or non-current liabilities based on the expected payment dates. | ||||
The obligation for retention payments and certain other negotiated terms reduced total consideration received at close to $215.1 million. Total transaction and integration costs were approximately $6.4 million. We finalized the completion accounts and the purchase price adjustments during the third quarter of fiscal 2014. Our final pre-tax gain on the sale was $24.0 million. The sale of our Brokerage business resulted in a significant taxable gain since the disposal of the goodwill and intangible assets associated with the business is not tax-deductible. |
Investments
Investments | 3 Months Ended | |||||||||||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | ' | |||||||||||||||||||||||||||||||
Investments | ' | |||||||||||||||||||||||||||||||
Investments. | ||||||||||||||||||||||||||||||||
Held-to-maturity - We hold held-to-maturity investments comprised of term deposits and certificates of deposits with original maturities greater than 90 days. As of September 30, 2014 and June 30, 2014, all held-to-maturity investments were included in short-term investments in the condensed consolidated balance sheet. Proceeds from maturities of held-to-maturity investments were $107.3 million during the three months ended September 30, 2014, resulting in immaterial realized gains. There were no proceeds from maturities of held-to-maturity investments during the three months ended September 30, 2013. | ||||||||||||||||||||||||||||||||
Available-for-sale - We hold available-for-sale securities that may be comprised of fixed income securities, equity securities and mutual funds / exchange-traded funds. Proceeds from sales and maturities of investments of available-for-sale securities during the three months ended September 30, 2014 were $11.7 million, resulting in immaterial gains. Proceeds from sales and maturities of investments of available-for-sale securities during the three months ended September 30, 2013 were $54.6 million, resulting in immaterial gains. | ||||||||||||||||||||||||||||||||
Additional information on the Company's investments is provided in the following table as of September 30, 2014 and June 30, 2014: | ||||||||||||||||||||||||||||||||
As of September 30, 2014 | As of June 30, 2014 | |||||||||||||||||||||||||||||||
Amortized | Unrealized | Unrealized | Estimated | Amortized | Unrealized | Unrealized | Estimated | |||||||||||||||||||||||||
Cost | Gains | Losses | Fair Value | Cost | Gains | Losses | Fair Value | |||||||||||||||||||||||||
Short Term Investments: | ||||||||||||||||||||||||||||||||
Held-to-maturity: | ||||||||||||||||||||||||||||||||
Term deposits & Certificates of deposits | $ | 126,846 | $ | — | $ | — | $ | 126,846 | $ | 107,556 | $ | — | $ | — | $ | 107,556 | ||||||||||||||||
Available-for-sale: | ||||||||||||||||||||||||||||||||
Equity securities | 138 | 11 | (8 | ) | 141 | 126 | 7 | (3 | ) | 130 | ||||||||||||||||||||||
Mutual funds and exchange-traded funds | 3,359 | — | (6 | ) | 3,353 | 15,033 | 42 | — | 15,075 | |||||||||||||||||||||||
Total Short-Term Investments: | 130,343 | 11 | (14 | ) | 130,340 | 122,715 | 49 | (3 | ) | 122,761 | ||||||||||||||||||||||
Other Assets: | ||||||||||||||||||||||||||||||||
Available-for-sale: | ||||||||||||||||||||||||||||||||
Mutual funds and exchange-traded funds | 42,232 | 13 | (323 | ) | 41,922 | 42,147 | 451 | — | 42,598 | |||||||||||||||||||||||
Total Investments in Other Assets | $ | 42,232 | $ | 13 | $ | (323 | ) | $ | 41,922 | $ | 42,147 | $ | 451 | $ | — | $ | 42,598 | |||||||||||||||
For all investments other than fixed income securities, amortized cost represents the cost basis of the investment as of the purchase or Merger date. There were no material investments that have been in a continuous loss position for more than twelve months, and there have been no other-than-temporary impairments recognized. The aggregate fair value of investments with unrealized losses for the three months ended September 30, 2014 was $20.3 million. The aggregate fair value of investments with unrealized losses for the fiscal year ended June 30, 2014 was immaterial. |
Goodwill_and_Intangible_Assets
Goodwill and Intangible Assets | 3 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||||||||||||||||||||||
Goodwill and Intangible Assets | ' | |||||||||||||||||||||||
Goodwill and Intangible Assets. | ||||||||||||||||||||||||
The components of goodwill and intangible assets are outlined below for the three months ended September 30, 2014: | ||||||||||||||||||||||||
Benefits | Risk and | Talent and | Exchange | All Other | Total | |||||||||||||||||||
Financial | Rewards | Solutions | ||||||||||||||||||||||
Services | ||||||||||||||||||||||||
Balance as of June 30, 2014 | $ | 1,290,789 | $ | 391,549 | $ | 113,862 | $ | 515,644 | $ | 1,214 | $ | 2,313,058 | ||||||||||||
Goodwill related to acquisitions | — | — | — | (1,255 | ) | — | (1,255 | ) | ||||||||||||||||
Goodwill reallocated in segment restructuring | (54,052 | ) | — | — | 54,052 | — | — | |||||||||||||||||
Translation adjustment | (49,871 | ) | (16,957 | ) | (4,303 | ) | — | — | (71,131 | ) | ||||||||||||||
Balance as of September 30, 2014 | $ | 1,186,866 | $ | 374,592 | $ | 109,559 | $ | 568,441 | $ | 1,214 | $ | 2,240,672 | ||||||||||||
Included in the Benefits and Exchange Solutions information is a $54.1 million preliminary reclassification of goodwill related to the segment reorganization, which was effective on July 1, 2014. See Note 13 for additional information regarding the segment reorganization. | ||||||||||||||||||||||||
The following table reflects changes in the net carrying amount of the components of finite-lived intangible assets for the three months ended September 30, 2014: | ||||||||||||||||||||||||
Customer | Core/ | Favorable | Total | |||||||||||||||||||||
related | developed | lease | ||||||||||||||||||||||
intangible | technology | agreements | ||||||||||||||||||||||
Balance as of June 30, 2014 | $ | 198,855 | $ | 75,827 | $ | 2,617 | $ | 277,299 | ||||||||||||||||
Amortization | (11,451 | ) | (6,086 | ) | (237 | ) | (17,774 | ) | ||||||||||||||||
Translation adjustment | (4,715 | ) | (275 | ) | (15 | ) | (5,005 | ) | ||||||||||||||||
Balance as of September 30, 2014 | $ | 182,689 | $ | 69,466 | $ | 2,365 | $ | 254,520 | ||||||||||||||||
For the three months ended September 30, 2014 and 2013, we recorded $17.5 million and $19.3 million, respectively, of amortization related to our intangible assets, exclusive of favorable lease agreements. These amounts include amortization that has been classified within income from discontinued operations on the accompanying condensed consolidated statements of operations. | ||||||||||||||||||||||||
Our indefinite-lived non-amortizable intangible assets consist of acquired trade names. The carrying value of these assets was $374.5 million and $380.0 million as of September 30, 2014 and June 30, 2014, respectively. The change during the period was due to foreign currency translation. | ||||||||||||||||||||||||
Our acquired unfavorable lease liabilities were $9.4 million and $10.2 million as of September 30, 2014 and June 30, 2014, respectively, and are recorded in the other noncurrent liabilities in the condensed consolidated balance sheet. The change for the three months ended September 30, 2014 was comprised primarily of a reduction to rent expense of $0.8 million. | ||||||||||||||||||||||||
The following table reflects the carrying value of finite-lived intangible assets and liabilities as of September 30, 2014 and June 30, 2014: | ||||||||||||||||||||||||
As of September 30, 2014 | As of June 30, 2014 | |||||||||||||||||||||||
Gross | Accumulated | Gross | Accumulated | |||||||||||||||||||||
Carrying | Amortization | Carrying | Amortization | |||||||||||||||||||||
Amount | Amount | |||||||||||||||||||||||
Finite-lived intangible assets and liabilities: | ||||||||||||||||||||||||
Trade name | $ | 520 | $ | 520 | $ | 520 | $ | 520 | ||||||||||||||||
Customer related intangibles | 379,403 | 196,748 | 391,201 | 192,346 | ||||||||||||||||||||
Core/developed technology | 175,180 | 105,714 | 175,948 | 100,121 | ||||||||||||||||||||
Favorable lease agreements | 6,428 | 4,063 | 6,488 | 3,871 | ||||||||||||||||||||
Total finite-lived intangible assets | $ | 561,531 | $ | 307,045 | $ | 574,157 | $ | 296,858 | ||||||||||||||||
Unfavorable lease agreements | 24,638 | 15,219 | 24,818 | 14,588 | ||||||||||||||||||||
Total finite-lived intangible liabilities | $ | 24,638 | $ | 15,219 | $ | 24,818 | $ | 14,588 | ||||||||||||||||
Certain trademark and trade-name intangible assets have indefinite useful lives and are not amortized. The weighted average remaining life of amortizable intangible assets and liabilities at September 30, 2014 was 4.9 years. | ||||||||||||||||||||||||
The table below reflects the following for the remainder of fiscal 2015 and for subsequent fiscal years: | ||||||||||||||||||||||||
1) future estimated amortization expense for amortizable intangible assets consisting of customer related intangibles and core/developed technology, and | ||||||||||||||||||||||||
2) the rent offset resulting from the amortization of the net lease intangible assets and liabilities: | ||||||||||||||||||||||||
Fiscal year ending June 30, | Amortization | Rent (Offset) | ||||||||||||||||||||||
Expense | ||||||||||||||||||||||||
2015 | $ | 51,347 | $ | (1,459 | ) | |||||||||||||||||||
2016 | 56,376 | (1,568 | ) | |||||||||||||||||||||
2017 | 52,168 | (1,864 | ) | |||||||||||||||||||||
2018 | 41,925 | (1,981 | ) | |||||||||||||||||||||
2019 | 27,138 | (315 | ) | |||||||||||||||||||||
Thereafter | 23,167 | 133 | ||||||||||||||||||||||
Total | $ | 252,121 | $ | (7,054 | ) | |||||||||||||||||||
Fair_Value_Measurements
Fair Value Measurements | 3 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||||||
Fair Value Measurements | ' | |||||||||||||||
Fair Value Measurements. | ||||||||||||||||
We have categorized our financial instruments into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and lowest priority to unobservable inputs (Level 3). In some cases, the inputs used to measure fair value might fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. | ||||||||||||||||
Financial assets and liabilities recorded in the accompanying condensed consolidated balance sheets are categorized based on the inputs in the valuation techniques as follows: | ||||||||||||||||
Level 1 — Financial assets and liabilities whose values are based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. | ||||||||||||||||
Level 2 — Financial assets and liabilities whose values are based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. | ||||||||||||||||
Level 3 — Financial assets and liabilities whose values are based on unobservable inputs for the asset or liability. | ||||||||||||||||
The following presents our assets and liabilities measured at fair value on a recurring basis as of September 30, 2014 and June 30, 2014: | ||||||||||||||||
Fair Value Measurements on a Recurring Basis at | ||||||||||||||||
30-Sep-14 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Available-for-sale securities: | ||||||||||||||||
Equity securities | $ | 141 | $ | — | $ | — | $ | 141 | ||||||||
Mutual funds / exchange traded funds | 45,275 | — | — | 45,275 | ||||||||||||
Derivatives: | ||||||||||||||||
Foreign exchange forwards (a) | — | 2,394 | — | 2,394 | ||||||||||||
Liabilities: | ||||||||||||||||
Derivatives: | ||||||||||||||||
Foreign exchange forwards (a) | — | 2,102 | — | 2,102 | ||||||||||||
Contingent Liabilities: | ||||||||||||||||
Retention bonus liability (b) | — | — | 19,730 | 19,730 | ||||||||||||
Fair Value Measurements on a Recurring Basis at | ||||||||||||||||
30-Jun-14 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Available-for-sale securities: | ||||||||||||||||
Equity securities | $ | 130 | $ | — | $ | — | $ | 130 | ||||||||
Mutual funds / exchange traded funds | 57,673 | — | — | 57,673 | ||||||||||||
Derivatives: | ||||||||||||||||
Foreign exchange forwards (a) | — | 639 | — | 639 | ||||||||||||
Liabilities: | ||||||||||||||||
Derivatives: | ||||||||||||||||
Foreign exchange forwards (a) | — | 550 | — | 550 | ||||||||||||
Contingent Liabilities: | ||||||||||||||||
Retention bonus liability (b) | — | — | 19,998 | 19,998 | ||||||||||||
_________________________ | ||||||||||||||||
(a) | These derivative investments are included in other current assets or accounts payable, accrued liabilities and deferred income on the condensed consolidated balance sheet. See Note 6 for further information on our derivative investments. | |||||||||||||||
(b) | These liabilities are included in other current liabilities and other noncurrent liabilities on the condensed consolidated balance sheet. The fair value was determined using a discounted cash flow model. | |||||||||||||||
We record gains or losses related to the changes in the fair value of our financial instruments for foreign exchange forward contracts accounted for as foreign currency hedges in general and administrative expenses in the condensed consolidated statements of operations. For the three months ended September 30, 2014, we recorded a loss of $1.2 million for instruments still held at September 30, 2014. For the three months ended September 30, 2013, we recorded a gain of $0.6 million for instruments still held at September 30, 2013. There were no material gains or losses recorded in the condensed consolidated statements of operations for available-for-sale securities still held at September 30, 2014 or 2013. | ||||||||||||||||
We generally use third-party pricing services in determining the fair value of our investments. The pricing services use observable inputs when available. These values take into account recent market activity as well as other market observable data such as interest rate, spread and prepayment information. We perform various procedures to evaluate the accuracy of the fair values provided by the third-party service provider. These procedures include obtaining a detailed understanding of the models, inputs, and assumptions used in developing prices provided by the pricing services. This understanding includes a review of the vendors’ Service Organization Controls report and, as necessary, discussions with valuation resources at the pricing services. We obtain the information necessary to assess the model, inputs and assumptions used to comply with U.S. GAAP, including disclosure requirements. Additional information related to the Company’s fair valuation process is included in our financial statements and the notes thereto as filed in our 2014 Annual Report on Form 10-K on August 15, 2014. | ||||||||||||||||
Transfers in and out of Level 1 and 2 | ||||||||||||||||
There were no securities transferred between Level 1 and Level 2 for the three months ended September 30, 2014 or the year ended June 30, 2014. The Company’s policy is to recognize transfers in and transfers out as of the beginning of the reporting period. | ||||||||||||||||
Level 3 Financial Instruments | ||||||||||||||||
The fair value of the retention bonus liability is determined using a discounted cash flows model. The significant unobservable inputs used in the discounted cash flows model are a credit-adjusted interest rate of 1.6% and an assumed forfeiture rate of 7.0%. Changes in each of these unobservable inputs would have adjusted the fair value as follows: | ||||||||||||||||
• | Interest rate - The lowest and highest interest rates that we could have used to value the bonus retention liability are 0.5% to 10.0%, which would have resulted in values of $19.9 million and $18.2 million, respectively. | |||||||||||||||
• | Forfeiture rates - Changing the assumed forfeiture rate to either 5.0% or 10.0% would have resulted in values of $20.2 million and $19.1 million, respectively. | |||||||||||||||
Fair Value Measurements using significant unobservable inputs (Level 3): | ||||||||||||||||
Beginning balance - June 30, 2014 | $ | (19,998 | ) | |||||||||||||
Payments | 285 | |||||||||||||||
Unrealized gains/(losses) | (17 | ) | ||||||||||||||
Ending balance - September 30, 2014 | $ | (19,730 | ) |
Derivative_Financial_Instrumen
Derivative Financial Instruments | 3 Months Ended | ||||||||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ||||||||||||||||||||||||||||
Derivative Financial Instruments | ' | ||||||||||||||||||||||||||||
Derivative Financial Instruments. | |||||||||||||||||||||||||||||
We are exposed to market risk from changes in foreign currency exchange rates. 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 foreign currency rates. We do not enter into derivative transactions for trading purposes. | |||||||||||||||||||||||||||||
A number of our foreign subsidiaries receive revenues (through either internal or external billing) in currencies other than their functional currency. As a result, the foreign subsidiary’s functional currency revenue will fluctuate as the currency exchange rates change. To reduce this variability, we use foreign exchange forward contracts to hedge the foreign exchange risk of the forecasted collections. We have designated these derivatives as cash flow hedges of the forecasted foreign currency denominated collections. We also use derivative financial contracts, principally foreign exchange forward contracts, to hedge other non-functional currency obligations. These exposures primarily arise from intercompany lending and other liabilities denominated in foreign currencies. At September 30, 2014, the longest outstanding maturity was 15 months. As of September 30, 2014, a net $1.5 million pretax gain was deferred in accumulated other comprehensive income and is expected to be recognized in general and administrative expenses during the next 12 months when the hedged revenue is recognized. | |||||||||||||||||||||||||||||
As of September 30, 2014 and June 30, 2014, we had cash flow and economic hedges with a notional value of $72.8 million and $49.5 million, respectively, to hedge cash flow and balance sheet exposures. We determine the fair value of our foreign currency derivatives based on quoted prices received from the counterparty for each contract, which we evaluate using pricing models whose inputs are observable. The net fair value of all derivatives held as of September 30, 2014 and June 30, 2014 was an asset of $0.3 million and an asset of $0.1 million, respectively. See Note 5, Fair Value Measurements, for further information regarding the determination of fair value. | |||||||||||||||||||||||||||||
The fair value of our derivative instruments held as of September 30, 2014 and June 30, 2014 and their location in the condensed consolidated balance sheet are as follows: | |||||||||||||||||||||||||||||
Derivative assets | Derivative liabilities | ||||||||||||||||||||||||||||
Balance sheet | Fair value | Balance sheet | Fair value | ||||||||||||||||||||||||||
location | location | ||||||||||||||||||||||||||||
30-Sep-14 | 30-Jun-14 | 30-Sep-14 | 30-Jun-14 | ||||||||||||||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||||||||||||||||
Foreign exchange forwards | Other current assets | $ | 1,960 | $ | 618 | Accounts payable, | $ | (453 | ) | $ | (513 | ) | |||||||||||||||||
accrued liabilities | |||||||||||||||||||||||||||||
and deferred income | |||||||||||||||||||||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||||||||||||||
Foreign exchange forwards | Other current assets | 434 | 21 | Accounts payable, | (1,649 | ) | (37 | ) | |||||||||||||||||||||
accrued liabilities | |||||||||||||||||||||||||||||
and deferred income | |||||||||||||||||||||||||||||
Total derivative assets (liabilities) | $ | 2,394 | $ | 639 | $ | (2,102 | ) | $ | (550 | ) | |||||||||||||||||||
The effects of derivative instruments that are designated as hedging instruments on the condensed consolidated statements of operations and the condensed consolidated statements of changes in stockholders’ equity for the three months ended September 30, 2014 and 2013 are as follows: | |||||||||||||||||||||||||||||
Gain/(loss) recognized in OCI | Location | (Loss)/gain reclassified | Location of (loss)/gain recognized in income | (Loss)/gain recognized | |||||||||||||||||||||||||
(effective portion) | of (loss)/gain reclassified | from OCI into income | (ineffective portion and | in income (ineffective | |||||||||||||||||||||||||
from OCI into income | (effective portion) | amount excluded from | portion and | ||||||||||||||||||||||||||
(effective portion) | effectiveness testing) | amount excluded from | |||||||||||||||||||||||||||
effectiveness testing) | |||||||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||||
Foreign exchange forwards | $ | 1,185 | $ | (1,632 | ) | General and | $ | (156 | ) | $ | 62 | General and | $ | (28 | ) | $ | 1 | ||||||||||||
administrative | administrative | ||||||||||||||||||||||||||||
expenses | expenses | ||||||||||||||||||||||||||||
Total | $ | 1,185 | $ | (1,632 | ) | $ | (156 | ) | $ | 62 | $ | (28 | ) | $ | 1 | ||||||||||||||
Included in the notional values above are $25.1 million and $24.2 million as of September 30, 2014 and June 30, 2014, respectively, of derivatives held as economic hedges primarily to hedge intercompany loans denominated in currencies other than the functional currency. The effects of derivatives that have not been designated as hedging instruments on the condensed consolidated statements of operations for the three months ended September 30, 2014 and 2013 are as follows: | |||||||||||||||||||||||||||||
(Loss)/gain recognized in income | |||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||
September 30, | |||||||||||||||||||||||||||||
Derivatives not designated as hedging instruments: | Location of (loss)/gain | 2014 | 2013 | ||||||||||||||||||||||||||
recognized in income | |||||||||||||||||||||||||||||
Foreign exchange forwards | General and administrative expenses | $ | (1,895 | ) | $ | 1,147 | |||||||||||||||||||||||
Total | $ | (1,895 | ) | $ | 1,147 | ||||||||||||||||||||||||
Retirement_Benefits
Retirement Benefits | 3 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | ' | |||||||||||||||
Retirement Benefits | ' | |||||||||||||||
Retirement Benefits. | ||||||||||||||||
Defined Benefit Plans | ||||||||||||||||
Towers Watson sponsors both qualified and non-qualified defined benefit pension plans and other post-retirement benefit plans in North America and Europe. As of June 30, 2014, these funded and unfunded plans represented 98 percent of Towers Watson’s pension and other post-retirement benefit obligations and are disclosed herein. Towers Watson also sponsors funded and unfunded defined benefit pension plans in certain other countries as well, representing the remaining two percent of the liability. All expenses and contributions presented in this note are inclusive of amounts classified as discontinued operations in the accompanying condensed consolidated statements of operations. | ||||||||||||||||
Components of Net Periodic Benefit Cost for Defined Benefit Pension Plans | ||||||||||||||||
The following table sets forth the components of net periodic benefit cost for the Company’s defined benefit pension plan for North America and Europe for the three months ended September 30, 2014 and 2013: | ||||||||||||||||
Three Months Ended September 30, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
North | Europe | North | Europe | |||||||||||||
America | America | |||||||||||||||
Service cost | $ | 18,211 | $ | 3,373 | $ | 17,788 | $ | 2,965 | ||||||||
Interest cost | 34,630 | 10,435 | 35,354 | 9,847 | ||||||||||||
Expected return on plan assets | (53,291 | ) | (13,226 | ) | (47,226 | ) | (11,056 | ) | ||||||||
Amortization of net loss | 4,378 | 3,302 | 5,649 | 2,169 | ||||||||||||
Amortization of prior service (credit)/cost | (2,095 | ) | 11 | (2,095 | ) | 10 | ||||||||||
Net periodic benefit cost | $ | 1,833 | $ | 3,895 | $ | 9,470 | $ | 3,935 | ||||||||
The decrease in our North American pension expense was primarily driven by an increase in the expected return on assets. This higher expected return in fiscal year 2015 relates to larger pension asset values at the beginning of the fiscal year caused by favorable investment returns in fiscal year 2014. | ||||||||||||||||
Components of Net Periodic Benefit Cost for Other Postretirement Plans | ||||||||||||||||
The following table sets forth the components of net periodic benefit cost for the Company’s post-retirement plans for the three months ended September 30, 2014 and 2013: | ||||||||||||||||
Three Months Ended | ||||||||||||||||
September 30, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Service cost | $ | 321 | $ | 367 | ||||||||||||
Interest cost | 2,052 | 2,223 | ||||||||||||||
Expected return on plan assets | (24 | ) | (28 | ) | ||||||||||||
Amortization of net gain | (440 | ) | (430 | ) | ||||||||||||
Amortization of prior service credit | (1,726 | ) | (1,752 | ) | ||||||||||||
Net periodic benefit cost | $ | 183 | $ | 380 | ||||||||||||
Employer Contributions to Defined Benefit Pension Plans | ||||||||||||||||
The Company made $31.1 million in contributions to the North American plans during the first three months of fiscal year 2015, and anticipates making $5.2 million in contributions over the remainder of the fiscal year. The Company made $24.6 million in contributions to European plans during the first three months of fiscal year 2015, and anticipates making $24.0 million in contributions over the remainder of the fiscal year. | ||||||||||||||||
Defined Contribution Plans | ||||||||||||||||
The cost of the Company's contributions to the various U.S. defined contribution plans for the three months ended September 30, 2014 and 2013 amounted to $4.7 million and $6.0 million, respectively. | ||||||||||||||||
The cost of the Company's contributions to the various U.K defined contribution plans for the three months ended September 30, 2014 and 2013 amounted to $5.0 million and $5.8 million, respectively. |
Debt_Commitments_and_Contingen
Debt, Commitments and Contingent Liabilities | 3 Months Ended |
Sep. 30, 2014 | |
Debt Commitments And Contingent Liabilities [Abstract] | ' |
Debt, Commitments And Contingent Liabilities | ' |
Debt, Commitments and Contingent Liabilities. | |
The debt, commitments and contingencies described below are currently in effect and would require Towers Watson, or domestic subsidiaries, to make payments to third parties under certain circumstances. In addition to commitments and contingencies specifically described below, Towers Watson has historically provided guarantees on an infrequent basis to third parties in the ordinary course of business. | |
Towers Watson Senior Credit Facility | |
On November 7, 2011, Towers Watson and certain subsidiaries entered into a five-year, $500 million revolving credit facility, which amount may be increased by an aggregate amount of $250 million, subject to the satisfaction of customary terms and conditions, with a syndicate of banks (the “Senior Credit Facility”). Borrowings under the Senior Credit Facility bear interest at a spread to either LIBOR or the Prime Rate. During the three months ended September 30, 2014 and 2013, the weighted-average interest rate on borrowings under the Senior Credit Facility was 1.39% and 1.43%, respectively. We are charged a quarterly commitment fee, currently 0.175% of the Senior Credit Facility, which varies with our financial leverage and is paid on the unused portion of the Senior Credit Facility. Obligations under the Senior Credit Facility are guaranteed by Towers Watson and all of its domestic subsidiaries (other than Professional Consultants Insurance Company (“PCIC”), a majority-owned captive insurance company, and Stone Mountain Insurance Company (“SMIC”), a wholly-owned captive insurance company). | |
The Senior Credit Facility contains customary representations and warranties and affirmative and negative covenants. The Senior Credit Facility requires Towers Watson to maintain certain financial covenants that include a minimum Consolidated Interest Coverage Ratio and a maximum Consolidated Leverage Ratio (which terms in each case are defined in the Senior Credit Facility). In addition, the Senior Credit Facility contains restrictions on the ability of Towers Watson to, among other things, incur additional indebtedness; pay dividends; make distributions; create liens on assets; make acquisitions; dispose of property; engage in sale-leaseback transactions; engage in mergers or consolidations, liquidations and dissolutions; engage in certain transactions with affiliates; and make changes in lines of businesses. As of September 30, 2014, we were in compliance with our covenants. | |
As of September 30, 2014, Towers Watson had borrowings of $135.0 million outstanding under the Senior Credit Facility. | |
Letters of Credit under the Senior Credit Facility | |
As of September 30, 2014, Towers Watson had standby letters of credit totaling $21.4 million associated with our captive insurance companies in the event that we fail to meet our financial obligations. Additionally, Towers Watson had $0.9 million of standby letters of credit covering various other existing or potential business obligations. The aforementioned letters of credit are issued under the Senior Credit Facility, and therefore reduce the amount that can be borrowed under the Senior Credit Facility by the outstanding amount of these standby letters of credit. | |
Term Loan Agreement Due June 2017 | |
On June 1, 2012, the Company entered into a five-year $250 million amortizing term loan facility (“the Term Loan”) with a consortium of banks. The interest rate on the term loan is based on the Company’s choice of one, three or six month LIBOR plus a spread of 1.25% to 1.75%, or alternatively the bank base rate plus 0.25% to 0.75%. The spread to each index is dependent on the Company’s consolidated leverage ratio. The weighted-average interest rate on the Term Loan during the three months ended September 30, 2014 and 2013 was 1.40% and 1.44%, respectively. The Term Loan amortizes at a rate of $6.3 million per quarter, beginning in September 2013, with a final maturity date of June 1, 2017. The Company has the right to prepay a portion or all of the outstanding Term Loan balance on any interest payment date without penalty. At September 30, 2014, the balance on the Term Loan was $218.8 million. | |
This agreement contains substantially the same terms and conditions as our Senior Credit Facility, including guarantees from all of the domestic subsidiaries of Towers Watson (other than PCIC and SMIC). The Company entered into the Term Loan as part of the financing of our acquisition of Extend Health on May 29, 2012. | |
Indemnification Agreements | |
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 Towers Watson’s obligations and the unique facts of each particular agreement, Towers Watson does not believe 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 | |
From time to time, Towers Watson and its subsidiaries, including Watson Wyatt and Towers Perrin, are parties to various lawsuits, arbitrations or mediations that arise in the ordinary course of business. The matters reported on below are the material pending claims against Towers Watson and its subsidiaries. We do not expect the impact of claims not described below to be material to Towers Watson’s financial statements. We also receive subpoenas in the ordinary course of business and, from time-to-time, receive requests for information in connection with governmental investigations. | |
Towers Watson carries substantial professional liability insurance which, effective July 1, 2010, has been provided by SMIC. For the policy period beginning July 1, 2011 certain changes were made to our professional liability insurance program. These changes remained in-force for the policy periods beginning July 1, 2011 and ending July 1, 2015. Our professional liability insurance includes a $10 million aggregate self-insured retention above the $1 million self-insured retention per claim, including the cost of defending such claims. SMIC provides us with $40 million of coverage per claim and in the aggregate, above the retentions, including the cost of defending such claims. SMIC secured $25 million of reinsurance from unaffiliated reinsurance companies in excess of the $15 million SMIC retained layer. Excess insurance attaching above the SMIC coverage is provided by various unaffiliated commercial insurance companies. | |
This structure effectively results in Towers Watson and SMIC bearing the first $25 million of loss per occurrence or in the aggregate above the $1 million per claim self-insured retention. As a wholly-owned captive insurance company, SMIC is consolidated into our financial statements. | |
Before the Merger, Watson Wyatt and Towers Perrin each obtained substantial professional liability insurance from PCIC. A limit of $50 million per claim and in the aggregate was provided by PCIC subject to a $1 million per claim self-insured retention. PCIC secured reinsurance of $25 million attaching above the $25 million PCIC retained layer from unaffiliated reinsurance companies. Our ownership interest in PCIC is 72.86%. As a consequence, PCIC’s results are consolidated in Towers Watson’s operating results. PCIC ceased issuing insurance policies effective July 1, 2010 and at that time entered into a run-off mode of operation. Our shareholder agreements with PCIC could require additional payments to PCIC if development of claims significantly exceeds prior expectations. | |
We provide for the self-insured retention where specific estimated losses and loss expenses for known claims are considered probable and reasonably estimable. Although we maintain professional liability insurance coverage, this insurance does not cover claims made after expiration of our current policies of insurance. Generally accepted accounting principles require that we record a liability for incurred but not reported (“IBNR”) professional liability claims if they are probable and reasonably estimable. We use actuarial assumptions to estimate and record our IBNR liability. As of September 30, 2014, we had a $179.8 million IBNR liability balance, net of estimated IBNR recoverable receivables of our captive insurance companies. This net liability was $173.8 million as of June 30, 2014. To the extent our captive insurance companies, PCIC and SMIC, expect losses to be covered by a third party, they record a receivable for the amount expected to be recovered. This receivable is classified in other current or other noncurrent assets in our condensed consolidated balance sheet. | |
We reserve 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. | |
Current and Former Employees of Teck Metals, Ltd. | |
A class action is currently pending against the Company in the Supreme Court of British Columbia. On July 14, 2009, James Weldon, an employee of Teck Metals, Ltd. (“Teck”) commenced an action against Teck and Towers Perrin Inc. (now known as Towers Watson Canada Inc.). On October 17, 2011, Leonard Bleier, a former employee of Teck, sued Teck and Towers Perrin. Aside from their employment status, the allegations in the action commenced by Bleier (retired from Teck in 2006) are substantively similar in all material respects to those in the action commenced by Weldon (employed by Teck at the time the action commenced). Both actions were brought in the Supreme Court of British Columbia, and that court consolidated the actions on June 21, 2012. | |
On October 1, 2012, the Company filed a response to the plaintiffs' consolidated and amended claim denying the legal and factual basis for the plaintiffs' claim. On December 21, 2012, the court certified the consolidated case as a class action. | |
At all times relevant to the plaintiffs’ claim, Towers Perrin acted as the actuarial advisor for Teck’s defined benefit pension plan. According to the plaintiffs' allegations, in 1992 and on Towers Perrin's advice, Teck offered its non-union, salaried employees a one-time option to continue participation in Teck’s defined benefit pension plan or to transfer to a newly established defined contribution plan. The plaintiffs also allege that Towers Perrin assisted Teck in preparing—and that Towers Perrin approved—informational materials and a computer-based modeling tool that Teck distributed to eligible employees prior to the employees electing whether to transfer. Several hundred employees elected to transfer from the defined benefit pension plan to the defined contribution plan on January 1, 1993. | |
The plaintiff class comprises current and former Teck employees who elected to transfer from the defined benefit pension plan to the defined contribution plan. As of October 23, 2014, the Company understands there to be 436 individuals in the class. | |
The plaintiffs, on behalf of the class, allege that Towers Perrin was professionally negligent and that Teck and Towers Perrin breached statutory and fiduciary duties and acted deceitfully by providing incomplete, inaccurate, and misleading information to participants in Teck’s defined benefit plan regarding the option to transfer to the defined contribution plan. Principally, the plaintiffs allege that the risks of the defined contribution plan—including investment risk and annuity risk—were downplayed, either negligently or with the specific intent of causing eligible employees to transfer to the defined contribution plan. | |
The plaintiffs seek assorted declaratory relief; an injunction reinstating them and all class members into the defined benefit plan with full rights and benefits as if they had not transferred; disgorgement against Teck; damages in the amount necessary to provide the plaintiffs and all class members with the pension and other benefits they would have accrued if they had not transferred; interest as allowed by law; and such further and other relief as to the court may seem just. | |
In a settlement agreement dated October 31, 2014, the Company, plaintiffs, and Teck agreed to resolve all claims in this litigation. The settlement agreement is subject to court approval. Based on all of the information to date, the Company believes that any loss beyond accrued amounts is unlikely. | |
City of Houston | |
On August 1, 2014, the City of Houston ("plaintiff") filed suit against the Company in the United States District Court for the Southern District of Texas, Houston Division. | |
In the complaint, plaintiff alleges various deficiencies in pension actuarial work-product and advice stated to have been provided by the Company's predecessor firm, Towers Perrin, in its capacity as principal actuary to the Houston Firefighters' Relief and Retirement Fund (the "Fund"). Towers Perrin is stated to have acted in this capacity between "the early 1980s until 2002". | |
In particular, the complaint is critical of two reports allegedly issued by Towers Perrin — one in February 2000 and the other in April 2000 — containing actuarial valuations upon which plaintiff claims to have relied. Plaintiff claims that the reports indicated that the City’s minimum contribution percentages to the Fund would remain in place through at least 2018; and that existing benefits under the Fund could be increased, and new benefits could be added, without increasing plaintiff's financial burden, and without increasing plaintiff's rate of annual contributions to the Fund. The complaint alleges that plaintiff relied on these reports when supporting a new benefit package for the Fund. These reports, and other advice, are alleged, among other things, to have been negligent, to have misrepresented the present and future financial condition of the Fund and the contributions required to be made by plaintiff to support those benefits, and to have constituted professional malpractice. Plaintiff asserts that, but for Towers Perrin's alleged negligence and misrepresentations, plaintiff would not have supported the benefit increase, and that such increased benefits would not and could not have been approved or enacted. It is further asserted that Towers Perrin's alleged "negligence and misrepresentations damaged the City to the tune of tens of millions of dollars in annual contributions." | |
Plaintiff seeks the award of actual damages, exemplary damages, special damages, attorney's fees and expenses, costs of suit, pre- and post- judgment interest at the maximum legal rate, and other unspecified legal and equitable relief. Plaintiff has not yet quantified fully its asserted damages. Given the stage of the proceedings, the Company is currently unable to provide an estimate of the reasonably possible loss or range of loss. The Company disputes the allegations, and intends to defend the lawsuit vigorously. | |
On October 10, 2014, the Company filed a motion to dismiss plaintiff's entire complaint on the basis that the complaint fails to state a claim upon which relief can be granted. To date, no hearing on that motion has been scheduled. | |
British Coal Staff Superannuation Scheme | |
On September 4, 2014, Towers Watson Limited ("TWL"), a wholly-owned subsidiary of the Company, received a Letter of Claim (the "Demand Letter") on behalf of Coal Staff Superannuation Scheme Trustees Limited (the "Trustee"), trustee of the British Coal Staff Superannuation Scheme (the "Scheme"). The Demand Letter was sent under the Professional Negligence Pre-Action Protocol, a pre-action dispute resolution procedure which applies in England and Wales. | |
In the Demand Letter, it is asserted that the Trustee has a claim against TWL in respect of allegedly negligent investment consulting advice provided to it by Watson Wyatt Limited, in the United Kingdom, in particular with regard to a currency hedge that was implemented in connection with the Scheme’s investment of £250,000,000 in a Bluebay local currency emerging market debt fund in August 2008. It is alleged that the currency hedge has caused a substantial loss to the Scheme, quantified at £47,500,000, for the period August 2008 to October 2012. | |
TWL is due to send a Letter of Response on or before December 23, 2014. | |
Based on all of the information to date, and given the stage of the matter, TWL is currently unable to provide an estimate of the reasonably possible loss or range of loss. TWL disputes the allegations, and intends to defend the matter vigorously. |
Variable_Interest_Entities
Variable Interest Entities | 3 Months Ended |
Sep. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Variable Interest Entities | ' |
Variable Interest Entities. | |
Through our wholly owned subsidiaries we manage approximately $2.7 billion of assets in investment funds that are considered variable interest entities ("VIEs") and for which our management fee is considered a variable interest. In addition, some of the investments in these funds are held by the Company's retirement plans, which are considered related parties. We have determined that these funds qualify for the deferral to certain provisions of ASC Subtopic 810-10, Consolidation – Overall, afforded by ASU 2010-10, Consolidation – Amendments for Certain Investment Funds. In accordance with this deferral, we determine whether we consolidate the fund based on whether we absorb a majority of the fund’s expected losses or receive a majority of the fund’s expected returns. | |
We are not the primary beneficiary and therefore do not consolidate any of the funds as of September 30, 2014 or June 30, 2014. Our maximum exposure to loss of these unconsolidated VIEs is limited to collection of any unpaid management fees (which are not material) and any potential increase to pension funding obligation due to losses incurred by the funds in which the Company's retirement plans are invested. The Company has no obligation to provide financial or other support to these VIEs, other than guarantees to provide the minimum statutorily-mandated capital. The Company reassesses its initial evaluation of whether an entity is a VIE when certain reconsideration events occur. The Company reassesses its determination of whether it is the primary beneficiary on an ongoing basis based on current facts and circumstances. |
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Income/(Loss) | 3 Months Ended | |||||||||||||||||||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ' | |||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income/(Loss) | ' | |||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income/(Loss). | ||||||||||||||||||||||||||||||||||||||||
Changes in accumulated other comprehensive income/(loss), net of non-controlling interests, are provided in the following table. The difference between the amounts presented in this table and the amounts presented in the condensed consolidated statements of comprehensive income are the corresponding components attributable to non-controlling interests, which are not material for further disclosure. | ||||||||||||||||||||||||||||||||||||||||
Foreign | Hedge effectiveness (1) | Available-for-sale | Defined pension and | |||||||||||||||||||||||||||||||||||||
currency | securities (2) | post-retirement benefit costs (3) | ||||||||||||||||||||||||||||||||||||||
translation | ||||||||||||||||||||||||||||||||||||||||
-1 | Before | Tax | After | Before | Tax | After | Before | Tax | After | |||||||||||||||||||||||||||||||
Tax | Tax | Tax | Tax | Tax | Tax | |||||||||||||||||||||||||||||||||||
As of June 30, 2014 | $ | 2,271 | $ | 144 | $ | (79 | ) | $ | 65 | $ | 344 | $ | (114 | ) | $ | 230 | $ | (262,902 | ) | $ | 70,634 | $ | (192,268 | ) | ||||||||||||||||
Other comprehensive income/(loss) before reclassifications | (105,289 | ) | 1,185 | (473 | ) | 712 | (127 | ) | 42 | (85 | ) | — | — | — | ||||||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income | — | 156 | (62 | ) | 94 | (30 | ) | — | (30 | ) | 3,580 | (705 | ) | 2,875 | ||||||||||||||||||||||||||
Net current-period other comprehensive income/(loss) | (105,289 | ) | 1,341 | (535 | ) | 806 | (157 | ) | 42 | (115 | ) | 3,580 | (705 | ) | 2,875 | |||||||||||||||||||||||||
As of September 30, 2014 | $ | (103,018 | ) | $ | 1,485 | $ | (614 | ) | $ | 871 | $ | 187 | $ | (72 | ) | $ | 115 | $ | (259,322 | ) | $ | 69,929 | $ | (189,393 | ) | |||||||||||||||
________________________ | ||||||||||||||||||||||||||||||||||||||||
-1 | Reclassification adjustments from accumulated other comprehensive income are included in general and administrative expenses (see Note 6 – Derivative Financial Instruments for additional details regarding the reclassification adjustments for the hedge settlements) | |||||||||||||||||||||||||||||||||||||||
-2 | Reclassification adjustments from accumulated other comprehensive income are included in income from discontinued operations | |||||||||||||||||||||||||||||||||||||||
-3 | Reclassification adjustments from accumulated other comprehensive income are included in the computation of net periodic pension cost (see Note 7 – Retirement Benefits for additional details) |
ShareBased_Compensation
Share-Based Compensation | 3 Months Ended |
Sep. 30, 2014 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' |
Share-Based Compensation | ' |
Share-Based Compensation. | |
Restricted Stock Units | |
Executives and Employees | |
The Compensation Committee of our Board of Directors approves performance-vested restricted stock unit awards pursuant to the Towers Watson & Co. 2009 Long Term Incentive Plan. RSUs are designed to provide us an opportunity to offer our long-term incentive program (LTIP) and to provide key executives with a long-term stake in our success. RSUs are notional, non-voting units of measurement based on our common stock. Under the RSU agreement, participants become vested in a number of RSUs based on the achievement of specified levels of financial performance during the performance period set forth in the agreement, provided that the participant remains in continuous service with us through the end of the performance period. Any RSUs that become vested are payable in shares of our Class A Common Stock. Dividend equivalents will accrue on RSUs and vest to the same extent as the underlying shares. The form of performance-vested restricted stock unit award agreement includes a provision whereby the Committee could provide for continuation of vesting of restricted stock units upon an employee’s termination under certain circumstances such as a qualified retirement. This definition of qualified retirement is age 55 and with 15 years of experience at the company and a minimum of one year of service in the performance period. | |
2015 LTIP. During the first quarter of fiscal year 2015, the Compensation Committee of the Board of Directors approved a grant of 76,202 RSUs to certain of our executive officers. Awards were based on the value of the executive officer’s annual base salary and a multiplier, which is then converted into a target number of RSUs based on our closing stock price as of the date of grant of $100.02. Between 0% and 204% of the target number of RSUs will vest based on the extent to which specified performance metrics are achieved over the three-year performance period from July 1, 2014 to June 30, 2017, subject to the executive officers’ continued employment with us through the end of the performance period, except in the case of a qualified retirement. The Compensation Committee approved the grants and established adjusted three-year average EPS and revenue growth during the performance period as the performance metrics for the awards. For participants that meet the requirement for qualified retirement, we record the expense of their awards over the one year service period as performed. We will adjust the stock-based compensation for their awards during the performance period based upon the level of performance achieved. For the three months ended September 30, 2014, we recorded $1.5 million of stock-based compensation related to these grants. | |
2014 LTIP. During the first quarter of fiscal year 2014, the Compensation Committee of the Board of Directors approved a grant of 62,651 RSUs to certain of our executive officers. During the third quarter of fiscal year 2014, the Compensation Committee of the Board of Directors approved an additional grant of 2,704 RSUs as a result of new executives being added to the plan. Awards were based on the value of the executive officer’s annual base salary and a multiplier, which is then converted into a target number of RSUs based on our closing stock price as of the date of grant, which was between $105.90 and $110.70. Between 0% and 204% of the target number of RSUs will vest based on the extent to which specified performance metrics are achieved over the three-year performance period from July 1, 2013 to June 30, 2016, subject to the executive officers’ continued employment with us through the end of the performance period, except in the case of a qualified retirement. The Compensation Committee approved the grants and established adjusted three-year average EPS and revenue growth during the performance period as the performance metrics for the awards. For participants that met the requirement for qualified retirement, we record the expense of their awards over the one year service period as performed. We will adjust the stock-based compensation for their awards during the performance period based upon the level of performance achieved. For the three months ended September 30, 2014 and 2013, we recorded $1.1 million and $1.2 million, respectively, of stock-based compensation related to these grants. | |
2013 LTIP. During the first quarter of fiscal year 2013, the Compensation Committee of the Board of Directors approved a grant of 121,075 RSUs to certain of our executive officers. Awards were based on the value of the executive officer’s annual base salary and a multiplier, which is then converted into a target number of RSUs based on our closing stock price as of the date of grant of $54.59. Between 0% and 204% of the target number of RSUs will vest based on the extent to which specified performance metrics are achieved over the three-year performance period from July 1, 2012 to June 30, 2015, subject to the executive officers’ continued employment with us through the end of the performance period, except in the case of a qualified retirement. The Compensation Committee approved the grants and established adjusted three-year average EPS and revenue growth during the performance period as the performance metrics for the awards. For participants that met the requirement for qualified retirement, we record the expense of their awards over the one year service period as performed. We will adjust the stock-based compensation for their awards during the performance period based upon the level of performance achieved. For the three months ended September 30, 2014 and 2013, we recorded $2.1 million and $0.8 million of stock based compensation expense related these grants, respectively. | |
2012 LTIP. During the fiscal year ended June 30, 2012, 86,188 RSUs were granted to certain of our executive officers. Awards were based on the value of the executive officer’s annual base salary and a multiplier, which was then converted into a target number of RSUs based on our closing stock price as of the date of grant which was between $63.73 and $63.94. Between 0% and 204% of the target number of RSUs vested based on the extent to which specified performance metrics were achieved over the three-year performance period from July 1, 2011 to June 30, 2014, subject to the executive officers’ continued employment with us through the end of the performance period, except in the case of a qualified retirement. The Compensation Committee approved the grants and established adjusted EBITDA margin and revenue growth during the performance period as the performance metrics for the awards. For participants that met the requirement for qualified retirement, we recorded the expense of their awards over the one year service period as performed. We adjusted the stock-based compensation for their awards during the performance period based upon the level of performance achieved. For the three months ended September 30, 2014 and 2013, we recorded a reduction to expense of $1.1 million and expense of $0.5 million, respectively. | |
2014 ES LTIP. In August 2013, the Compensation Committee of the Board of Directors awarded 30,192 RSUs under the 2009 Plan to select executives of our Exchange Solutions segment with a grant date fair value of $91.43, based on our closing stock price. Between 0% and 240% of the target number of RSUs will vest based on the extent to which specified performance metrics are achieved over the two-year performance period from July 1, 2013 to June 30, 2015, subject to continued employment with us through the end of the performance period. The Compensation Committee approved the grants and established EBITDA margin and revenue growth during the performance period as the performance metrics for the awards. For the three months ended September 30, 2014 and 2013, we recorded $2.7 million and $0.4 million, respectively, of non-cash stock based compensation in the Exchange Solutions business segment. | |
Liazon RSUs. In November 2013, in connection with the acquisition, we assumed the Liazon Corporation 2011 Equity Incentive Plan and converted the outstanding unvested restricted stock units into 70,533 Towers Watson restricted stock units using a conversion ratio stated in the agreement for the exercise price and number of options. The fair value of these restricted stock units was calculated using the fair value share price of Towers Watson’s closing share price on the date of acquisition. We determined the fair value of the portion of the 70,533 outstanding RSUs related to pre-acquisition employee service using Towers Watson graded vesting methodology from the date of grant to the acquisition date to be $5.7 million which was added to the transaction consideration. The fair value of the remaining portion of RSUs related to the post-acquisition employee services was $2.1 million, and will be recorded over the future vesting periods. For the three months ended September 30, 2014, we recorded $0.3 million of non-cash stock based compensation. | |
Other RSUs. During the fiscal year ended June 30, 2014, 28,947 RSUs were granted to certain employees which vest in equal installments over a three-year period based on continued employment through the vesting period. Of those RSUs granted, 11,150 RSUs vested immediately. For the three months ended September 30, 2014, we recorded $0.7 million of stock-based compensation related to these grants. | |
2014 SEP. During the quarter ended September 30, 2014, 112,464 RSUs were granted to certain employees under our Select Equity Plan with a grant date fair value of $106.89, based on our closing stock price. The RSUs vest annually over a three-year period. We assumed a 5% forfeiture rate with these awards. For the three months ended September 30, 2014, we recorded $1.9 million of non-cash stock based compensation related to these grants. | |
2013 SEP. During the quarter ended September 30, 2013, 131,286 RSUs were granted to certain employees under our Select Equity Plan with a grant date fair value of $91.43, based on our closing stock price. The RSUs vest annually over a three-year period. We assumed a 5% forfeiture rate with these awards. For the three months ended September 30, 2014 and 2013, we recorded $0.7 million and $1.7 million, respectively, of non-cash stock based compensation related to these grants. | |
2012 SEP. During the quarter ended September 30, 2012, 147,503 RSUs were granted to certain employees under our Select Equity Plan with a grant date fair value of $53.93, based on our closing stock price. The RSUs vest annually over a three-year period. We assumed a 5% forfeiture rate with these awards. For the three months ended September 30, 2014 and 2013, we recorded $0.2 million and $0.5 million, respectively, of non-cash stock based compensation. | |
2011 SEP. During the quarter ended September 30, 2011, 577,191 RSUs were granted to certain employees under our Select Equity Plan, of which 288,595 were vested immediately in conjunction with our annual fiscal year 2011 performance bonus payments. The remaining 288,595 RSUs vested annually over a three-year period. We assumed a 5% forfeiture rate with these awards. For the three months ended September 30, 2013, we recorded $0.4 million of non-cash stock based compensation related to these grants. Upon final vesting during the three months ended September 30, 2014, a final adjustment was made to record actual forfeitures, which resulted in a reversal of expense of $0.2 million. | |
Outside Directors. The Towers Watson & Co. Compensation Plan for Non-Employee Directors provides for cash and stock compensation for outside directors for service on the board of directors. During the three months ended September 30, 2014, 8,059 RSUs were granted for the annual award for outside directors, which vest in equal quarterly installments over fiscal year 2015. During the three months ended September 30, 2013, 10,251 RSUs were granted for the annual award for outside directors, which vest in equal quarterly installments over fiscal year 2014. We recorded non-cash stock based compensation related to these awards of $0.4 million and $0.4 million, respectively, for the three months ended September 30, 2014 and 2013. | |
Stock Options | |
Liazon Options. In November 2013, in connection with the Liazon acquisition, we assumed the Liazon Corporation 2011 Equity Incentive Plan and converted the outstanding unvested employee stock options into 37,162 Towers Watson stock options using a conversion ratio stated in the agreement for the exercise price and number of options. The fair value of the vested stock options was calculated using the Black-Scholes model with a volatility and risk-free interest rate over the expected term of each group of options using the fair value share price of Towers Watson’s closing share price on the date of acquisition. The fair value of the new awards was less than the acquisition date fair value of the replaced Liazon options; accordingly, no compensation expense was recorded. We determined the fair value of the portion of the 37,162 outstanding options relating to the pre-acquisition employee service using Towers Watson graded vesting methodology from the date of grant to the acquisition date to be $2.2 million, which was added to the transaction consideration. The fair value of the remaining portion of unvested options related to the post-acquisition employee service was $1.7 million, which will be recorded over the future vesting periods. We recorded non-cash stock based compensation related to these awards of $0.3 million for the three months ended September 30, 2014. | |
Extend Health Options. In May 2012, we assumed the Extend Health, Inc. 2007 Equity Incentive Plan and converted the outstanding unvested employee stock options into 377,614 Towers Watson stock options using a conversion ratio stated in the agreement for the exercise price and number of options. The fair value of the vested stock options was calculated using the Black-Scholes model with a volatility and risk-free interest rate over the expected term of each group of options using the fair value share price of Towers Watson’s closing share price on the date of acquisition. The fair value of the new awards was less than the acquisition date fair value of the replaced Extend Health options; accordingly, no compensation expense was recorded. We determined the fair value of the portion of the 377,614 outstanding options related to pre-acquisition employee service using Towers Watson graded vesting methodology from the date of grant to the acquisition date was $11.2 million, which was added to the transaction consideration. The fair value of the remaining portion of the unvested options, less 10% estimated forfeitures, was $7.9 million, and will be recorded over the future vesting periods. We recorded non-cash stock based compensation related to these awards of $0.1 million and $0.5 million, respectively, for the three months ended September 30, 2014 and 2013. |
Income_Taxes
Income Taxes | 3 Months Ended |
Sep. 30, 2014 | |
Income Tax Disclosure [Abstract] | ' |
Income Taxes | ' |
Income Taxes. | |
Provision for income taxes on continuing operations for the three months ended September 30, 2014 was $44.1 million, compared to $14.8 million for the three months ended September 30, 2013. The effective tax rate was 35.1% for the three months ended September 30, 2014 and 14.7% for the three months ended September 30, 2013. The prior year effective tax rate was lower due to income tax benefits on the release of uncertain tax positions of 16.7% related to the lapses in statute of limitations in various taxing jurisdictions, primarily the U.S., and an income tax benefit of 3.6% in connection with the enacted statutory tax rate reduction in the U.K. Towers Watson records a tax benefit on net operating loss carryovers and net deferred tax assets only if it is more likely than not that a benefit will be realized. | |
We have liabilities for uncertain tax positions under ASC 740, Income Taxes. The expected settlement period for the $35.3 million liability, which excludes interest and penalties, cannot be reasonably estimated because it depends on the timing and possible outcomes of tax examinations with various tax authorities. | |
It is reasonably possible that during the next 12 months the Company’s liability for uncertain tax positions may change by a significant amount. The Company may settle certain U.S. tax examinations or have lapses in statute of limitations for different amounts than the Company has accrued as uncertain tax positions. The Company may need to accrue and ultimately pay additional amounts for tax positions that previously met a more likely than not standard if such positions are not upheld. Conversely, the Company could settle positions with the tax authorities for amounts lower than have been accrued or extinguish a position through payment. The Company believes the outcomes which are reasonably possible within the next 12 months may result in a reduction in the liability for uncertain tax positions in the range of approximately $4.8 million to $17.2 million, excluding interest and penalties. |
Segment_Information
Segment Information | 3 Months Ended | |||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||||||
Segment Information | ' | |||||||||||||||||||
Segment Information. | ||||||||||||||||||||
Towers Watson has four reportable operating segments or business areas: | ||||||||||||||||||||
• | Benefits | |||||||||||||||||||
• | Risk and Financial Services | |||||||||||||||||||
• | Talent and Rewards | |||||||||||||||||||
• | Exchange Solutions | |||||||||||||||||||
Towers Watson’s chief operating decision maker is its chief executive officer. It was determined that Towers Watson operational data used by the chief operating decision maker is that of the segments. 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. Revenue includes amounts that were directly incurred on behalf of our clients and reimbursed by them (reimbursable expenses). | ||||||||||||||||||||
On January 23, 2014, Towers Watson announced plans to expand the Exchange Solutions segment by combining operations and associates from the Health & Welfare practice of the Technology and Administration Solutions North America line of business, and certain associates from the Health and Group Benefits line of business with the Retiree & Access Exchanges line of business and the Liazon acquisition to better align their respective strategic goals. The restructuring took effect on July 1, 2014. We have reclassified certain portions of the revenue (net of reimbursable expenses) and net operating income previously reflected in the Benefits segment in the quarterly filing for the three months ended September 30, 2013 to conform to the current segment alignment within Exchange Solutions. The reorganization had no impact on the Risk and Financial Services and Talent and Rewards segments. | ||||||||||||||||||||
The table below presents specified information about the continuing operations of the reported segments for the three months ended September 30, 2014: | ||||||||||||||||||||
Benefits | Risk and | Talent and | Exchange | Total | ||||||||||||||||
Financial Services | Rewards | Solutions | ||||||||||||||||||
Revenue (net of reimbursable expenses) | $ | 465,587 | $ | 148,026 | $ | 153,294 | $ | 86,282 | $ | 853,189 | ||||||||||
Net operating income | 155,759 | 35,561 | 36,843 | 14,012 | 242,175 | |||||||||||||||
The table below presents specified information about the continuing operations of the reported segments for the three months ended September 30, 2013: | ||||||||||||||||||||
Benefits | Risk and | Talent and | Exchange | Total | ||||||||||||||||
Financial Services | Rewards | Solutions | ||||||||||||||||||
Revenue (net of reimbursable expenses) | $ | 431,255 | $ | 141,783 | $ | 153,569 | $ | 61,164 | $ | 787,771 | ||||||||||
Net operating income | 129,538 | 22,487 | 44,064 | 14,456 | 210,545 | |||||||||||||||
The table below presents a reconciliation of the information reported by segment to the consolidated amounts reported from continuing operations for the three months ended September 30, 2014 and 2013: | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
September 30, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Revenue: | ||||||||||||||||||||
Total segment revenue | $ | 853,189 | $ | 787,771 | ||||||||||||||||
Reimbursable expenses and other | 24,918 | 22,168 | ||||||||||||||||||
Revenue | $ | 878,107 | $ | 809,939 | ||||||||||||||||
Net Operating Income: | ||||||||||||||||||||
Total segment net operating income | $ | 242,175 | $ | 210,545 | ||||||||||||||||
Differences in allocation methods (1) | 15,712 | 9,986 | ||||||||||||||||||
Amortization of intangibles | (17,537 | ) | (18,892 | ) | ||||||||||||||||
Stock-based compensation (2) | (5,552 | ) | (3,563 | ) | ||||||||||||||||
Discretionary compensation | (92,364 | ) | (76,122 | ) | ||||||||||||||||
Payroll tax on discretionary compensation | (5,519 | ) | (4,568 | ) | ||||||||||||||||
Other, net | (10,917 | ) | (14,965 | ) | ||||||||||||||||
Income from operations | $ | 125,998 | $ | 102,421 | ||||||||||||||||
________________________ | ||||||||||||||||||||
-1 | Depreciation, general and administrative, pension, and medical costs are allocated to our segments based on budgeted expenses determined at the beginning of the fiscal year, as management believes that these costs are largely uncontrollable to the segment. To the extent that the actual expense base upon which allocations are made differs from the forecast/budget amount, a reconciling item will be created between internally allocated expenses and the actual expense that we report for GAAP purposes. | |||||||||||||||||||
-2 | Stock-based compensation excludes RSUs granted in conjunction with our performance bonus, which are included in discretionary compensation, as well as LTIP awards granted to certain executives of our Exchange Solutions segment, which are included within the calculation of Exchange Solutions' net operating income. |
Accounting_Policies_Policies
Accounting Policies (Policies) | 3 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | ' |
Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements. | |
Not yet adopted | |
On May 28, 2014, the Financial Accounting Standards Board ("FASB") and International Accounting Standards Board ("IASB") issued their final standard on revenue from contracts with customers. The standard, issued as Accounting Standards Update ("ASU") 2014-09 by the FASB, outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers, and supersedes most current revenue recognition guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised 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 applies to all contracts with customers, except those that are within the scope of other topics in the FASB Accounting Standards Codification. Compared with current U.S. GAAP, the ASU also requires significantly expanded disclosures about revenue recognition. The ASU is effective for interim and annual reporting periods that begin after December 15, 2016, and early adoption is prohibited. The Company is currently evaluating the impact of adopting this provision. | |
On June 19, 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide a Performance Target Could Be Achieved After the Requisite Service Period. The update is intended to resolve the diverse accounting treatment of these types of awards in practice. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in "Compensation - Stock Compensation (Topic 718)" as it relates to awards with performance conditions that affect vesting to account for such awards. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved, and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The ASU is effective for interim and annual reporting periods that begin after December 15, 2015. The Company does not expect the adoption of this pronouncement to have an impact on our financial statements as this guidance mirrors our existing policy for such share-based awards. | |
Adopted | |
On June 7, 2013, the FASB issued ASU 2013-08, “Financial Services – Investment Companies (Topic 946): Amendments to the Scope, Measurement, and Disclosure Requirements,” which amends the criteria an entity would need to meet to qualify as an investment company under ASC 946. The ASU (1) introduces new disclosure requirements that apply to all investment companies and, (2) amends the measurement criteria for certain interests in other investment companies. The ASU also amends the requirements in ASC 810 related to qualifying for the “investment-company deferral” in ASU 2010-10, as well as the requirements in ASC 820 related to qualifying for the “net asset value practical expedient” in ASU 2009-12. We manage certain funds that are considered variable interest entities and for which our management fee is considered a variable interest. These funds qualify for the “investment-company deferral” in ASU 2010-10, and therefore are subject to the consolidation guidance prior to the issuance of ASU 2009-17. The ASU is effective for annual periods that begin after December 15, 2013 and interim periods within those annual periods. Early adoption is prohibited. The Company has evaluated whether these funds continued to qualify for the “investment-company deferral” based on the amended investment company criteria proscribed by ASU 2013-08 and concluded that there were no changes to the Company's original assessments. Therefore, there is no impact to the Company's financial statements or disclosures. |
Acquisitions_and_Divestitures_
Acquisitions and Divestitures (Tables) | 3 Months Ended | |||
Sep. 30, 2014 | ||||
Business Combinations [Abstract] | ' | |||
Selected financial information relating to Brokerage business's operations | ' | |||
The following selected financial information relates to the Brokerage business’s operations for the three months ended September 30, 2013: | ||||
Three Months Ended September 30, 2013 | ||||
Revenue from discontinued operations | $ | 41,198 | ||
Income from discontinued operations before taxes | 4,995 | |||
Tax expense on discontinued operations | 2,551 | |||
Net income from discontinued operations | $ | 2,444 | ||
Investments_Tables
Investments (Tables) | 3 Months Ended | |||||||||||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | ' | |||||||||||||||||||||||||||||||
Schedule of investments | ' | |||||||||||||||||||||||||||||||
Additional information on the Company's investments is provided in the following table as of September 30, 2014 and June 30, 2014: | ||||||||||||||||||||||||||||||||
As of September 30, 2014 | As of June 30, 2014 | |||||||||||||||||||||||||||||||
Amortized | Unrealized | Unrealized | Estimated | Amortized | Unrealized | Unrealized | Estimated | |||||||||||||||||||||||||
Cost | Gains | Losses | Fair Value | Cost | Gains | Losses | Fair Value | |||||||||||||||||||||||||
Short Term Investments: | ||||||||||||||||||||||||||||||||
Held-to-maturity: | ||||||||||||||||||||||||||||||||
Term deposits & Certificates of deposits | $ | 126,846 | $ | — | $ | — | $ | 126,846 | $ | 107,556 | $ | — | $ | — | $ | 107,556 | ||||||||||||||||
Available-for-sale: | ||||||||||||||||||||||||||||||||
Equity securities | 138 | 11 | (8 | ) | 141 | 126 | 7 | (3 | ) | 130 | ||||||||||||||||||||||
Mutual funds and exchange-traded funds | 3,359 | — | (6 | ) | 3,353 | 15,033 | 42 | — | 15,075 | |||||||||||||||||||||||
Total Short-Term Investments: | 130,343 | 11 | (14 | ) | 130,340 | 122,715 | 49 | (3 | ) | 122,761 | ||||||||||||||||||||||
Other Assets: | ||||||||||||||||||||||||||||||||
Available-for-sale: | ||||||||||||||||||||||||||||||||
Mutual funds and exchange-traded funds | 42,232 | 13 | (323 | ) | 41,922 | 42,147 | 451 | — | 42,598 | |||||||||||||||||||||||
Total Investments in Other Assets | $ | 42,232 | $ | 13 | $ | (323 | ) | $ | 41,922 | $ | 42,147 | $ | 451 | $ | — | $ | 42,598 | |||||||||||||||
Goodwill_and_Intangible_Assets1
Goodwill and Intangible Assets (Tables) | 3 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||||||||||||||||||||||
Schedule of goodwill | ' | |||||||||||||||||||||||
The components of goodwill and intangible assets are outlined below for the three months ended September 30, 2014: | ||||||||||||||||||||||||
Benefits | Risk and | Talent and | Exchange | All Other | Total | |||||||||||||||||||
Financial | Rewards | Solutions | ||||||||||||||||||||||
Services | ||||||||||||||||||||||||
Balance as of June 30, 2014 | $ | 1,290,789 | $ | 391,549 | $ | 113,862 | $ | 515,644 | $ | 1,214 | $ | 2,313,058 | ||||||||||||
Goodwill related to acquisitions | — | — | — | (1,255 | ) | — | (1,255 | ) | ||||||||||||||||
Goodwill reallocated in segment restructuring | (54,052 | ) | — | — | 54,052 | — | — | |||||||||||||||||
Translation adjustment | (49,871 | ) | (16,957 | ) | (4,303 | ) | — | — | (71,131 | ) | ||||||||||||||
Balance as of September 30, 2014 | $ | 1,186,866 | $ | 374,592 | $ | 109,559 | $ | 568,441 | $ | 1,214 | $ | 2,240,672 | ||||||||||||
Schedule of changes in finite-lived intangible assets by major class | ' | |||||||||||||||||||||||
The following table reflects changes in the net carrying amount of the components of finite-lived intangible assets for the three months ended September 30, 2014: | ||||||||||||||||||||||||
Customer | Core/ | Favorable | Total | |||||||||||||||||||||
related | developed | lease | ||||||||||||||||||||||
intangible | technology | agreements | ||||||||||||||||||||||
Balance as of June 30, 2014 | $ | 198,855 | $ | 75,827 | $ | 2,617 | $ | 277,299 | ||||||||||||||||
Amortization | (11,451 | ) | (6,086 | ) | (237 | ) | (17,774 | ) | ||||||||||||||||
Translation adjustment | (4,715 | ) | (275 | ) | (15 | ) | (5,005 | ) | ||||||||||||||||
Balance as of September 30, 2014 | $ | 182,689 | $ | 69,466 | $ | 2,365 | $ | 254,520 | ||||||||||||||||
Schedule of finite-lived intangible assets by major class | ' | |||||||||||||||||||||||
The following table reflects the carrying value of finite-lived intangible assets and liabilities as of September 30, 2014 and June 30, 2014: | ||||||||||||||||||||||||
As of September 30, 2014 | As of June 30, 2014 | |||||||||||||||||||||||
Gross | Accumulated | Gross | Accumulated | |||||||||||||||||||||
Carrying | Amortization | Carrying | Amortization | |||||||||||||||||||||
Amount | Amount | |||||||||||||||||||||||
Finite-lived intangible assets and liabilities: | ||||||||||||||||||||||||
Trade name | $ | 520 | $ | 520 | $ | 520 | $ | 520 | ||||||||||||||||
Customer related intangibles | 379,403 | 196,748 | 391,201 | 192,346 | ||||||||||||||||||||
Core/developed technology | 175,180 | 105,714 | 175,948 | 100,121 | ||||||||||||||||||||
Favorable lease agreements | 6,428 | 4,063 | 6,488 | 3,871 | ||||||||||||||||||||
Total finite-lived intangible assets | $ | 561,531 | $ | 307,045 | $ | 574,157 | $ | 296,858 | ||||||||||||||||
Unfavorable lease agreements | 24,638 | 15,219 | 24,818 | 14,588 | ||||||||||||||||||||
Total finite-lived intangible liabilities | $ | 24,638 | $ | 15,219 | $ | 24,818 | $ | 14,588 | ||||||||||||||||
Schedule of rent offset, future amortization | ' | |||||||||||||||||||||||
The table below reflects the following for the remainder of fiscal 2015 and for subsequent fiscal years: | ||||||||||||||||||||||||
1) future estimated amortization expense for amortizable intangible assets consisting of customer related intangibles and core/developed technology, and | ||||||||||||||||||||||||
2) the rent offset resulting from the amortization of the net lease intangible assets and liabilities: | ||||||||||||||||||||||||
Fiscal year ending June 30, | Amortization | Rent (Offset) | ||||||||||||||||||||||
Expense | ||||||||||||||||||||||||
2015 | $ | 51,347 | $ | (1,459 | ) | |||||||||||||||||||
2016 | 56,376 | (1,568 | ) | |||||||||||||||||||||
2017 | 52,168 | (1,864 | ) | |||||||||||||||||||||
2018 | 41,925 | (1,981 | ) | |||||||||||||||||||||
2019 | 27,138 | (315 | ) | |||||||||||||||||||||
Thereafter | 23,167 | 133 | ||||||||||||||||||||||
Total | $ | 252,121 | $ | (7,054 | ) | |||||||||||||||||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 3 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||||||
Schedule of fair value, assets and liabilities measured on recurring basis | ' | |||||||||||||||
The following presents our assets and liabilities measured at fair value on a recurring basis as of September 30, 2014 and June 30, 2014: | ||||||||||||||||
Fair Value Measurements on a Recurring Basis at | ||||||||||||||||
30-Sep-14 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Available-for-sale securities: | ||||||||||||||||
Equity securities | $ | 141 | $ | — | $ | — | $ | 141 | ||||||||
Mutual funds / exchange traded funds | 45,275 | — | — | 45,275 | ||||||||||||
Derivatives: | ||||||||||||||||
Foreign exchange forwards (a) | — | 2,394 | — | 2,394 | ||||||||||||
Liabilities: | ||||||||||||||||
Derivatives: | ||||||||||||||||
Foreign exchange forwards (a) | — | 2,102 | — | 2,102 | ||||||||||||
Contingent Liabilities: | ||||||||||||||||
Retention bonus liability (b) | — | — | 19,730 | 19,730 | ||||||||||||
Fair Value Measurements on a Recurring Basis at | ||||||||||||||||
30-Jun-14 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Available-for-sale securities: | ||||||||||||||||
Equity securities | $ | 130 | $ | — | $ | — | $ | 130 | ||||||||
Mutual funds / exchange traded funds | 57,673 | — | — | 57,673 | ||||||||||||
Derivatives: | ||||||||||||||||
Foreign exchange forwards (a) | — | 639 | — | 639 | ||||||||||||
Liabilities: | ||||||||||||||||
Derivatives: | ||||||||||||||||
Foreign exchange forwards (a) | — | 550 | — | 550 | ||||||||||||
Contingent Liabilities: | ||||||||||||||||
Retention bonus liability (b) | — | — | 19,998 | 19,998 | ||||||||||||
_________________________ | ||||||||||||||||
(a) | These derivative investments are included in other current assets or accounts payable, accrued liabilities and deferred income on the condensed consolidated balance sheet. See Note 6 for further information on our derivative investments. | |||||||||||||||
(b) | These liabilities are included in other current liabilities and other noncurrent liabilities on the condensed consolidated balance sheet. The fair value was determined using a discounted cash flow model. | |||||||||||||||
Fair value measurements using significant unobservable inputs (level 3) | ' | |||||||||||||||
Fair Value Measurements using significant unobservable inputs (Level 3): | ||||||||||||||||
Beginning balance - June 30, 2014 | $ | (19,998 | ) | |||||||||||||
Payments | 285 | |||||||||||||||
Unrealized gains/(losses) | (17 | ) | ||||||||||||||
Ending balance - September 30, 2014 | $ | (19,730 | ) |
Derivative_Financial_Instrumen1
Derivative Financial Instruments (Tables) | 3 Months Ended | ||||||||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ||||||||||||||||||||||||||||
Schedule of derivative assets and liabilities at fair value | ' | ||||||||||||||||||||||||||||
The fair value of our derivative instruments held as of September 30, 2014 and June 30, 2014 and their location in the condensed consolidated balance sheet are as follows: | |||||||||||||||||||||||||||||
Derivative assets | Derivative liabilities | ||||||||||||||||||||||||||||
Balance sheet | Fair value | Balance sheet | Fair value | ||||||||||||||||||||||||||
location | location | ||||||||||||||||||||||||||||
30-Sep-14 | 30-Jun-14 | 30-Sep-14 | 30-Jun-14 | ||||||||||||||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||||||||||||||||
Foreign exchange forwards | Other current assets | $ | 1,960 | $ | 618 | Accounts payable, | $ | (453 | ) | $ | (513 | ) | |||||||||||||||||
accrued liabilities | |||||||||||||||||||||||||||||
and deferred income | |||||||||||||||||||||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||||||||||||||
Foreign exchange forwards | Other current assets | 434 | 21 | Accounts payable, | (1,649 | ) | (37 | ) | |||||||||||||||||||||
accrued liabilities | |||||||||||||||||||||||||||||
and deferred income | |||||||||||||||||||||||||||||
Total derivative assets (liabilities) | $ | 2,394 | $ | 639 | $ | (2,102 | ) | $ | (550 | ) | |||||||||||||||||||
Schedule of the effect of derivative instruments on statement of financial performance | ' | ||||||||||||||||||||||||||||
The effects of derivative instruments that are designated as hedging instruments on the condensed consolidated statements of operations and the condensed consolidated statements of changes in stockholders’ equity for the three months ended September 30, 2014 and 2013 are as follows: | |||||||||||||||||||||||||||||
Gain/(loss) recognized in OCI | Location | (Loss)/gain reclassified | Location of (loss)/gain recognized in income | (Loss)/gain recognized | |||||||||||||||||||||||||
(effective portion) | of (loss)/gain reclassified | from OCI into income | (ineffective portion and | in income (ineffective | |||||||||||||||||||||||||
from OCI into income | (effective portion) | amount excluded from | portion and | ||||||||||||||||||||||||||
(effective portion) | effectiveness testing) | amount excluded from | |||||||||||||||||||||||||||
effectiveness testing) | |||||||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||||
Foreign exchange forwards | $ | 1,185 | $ | (1,632 | ) | General and | $ | (156 | ) | $ | 62 | General and | $ | (28 | ) | $ | 1 | ||||||||||||
administrative | administrative | ||||||||||||||||||||||||||||
expenses | expenses | ||||||||||||||||||||||||||||
Total | $ | 1,185 | $ | (1,632 | ) | $ | (156 | ) | $ | 62 | $ | (28 | ) | $ | 1 | ||||||||||||||
Schedule of other derivatives not designated as hedging instruments, Statements of financial performance and financial position | ' | ||||||||||||||||||||||||||||
The effects of derivatives that have not been designated as hedging instruments on the condensed consolidated statements of operations for the three months ended September 30, 2014 and 2013 are as follows: | |||||||||||||||||||||||||||||
(Loss)/gain recognized in income | |||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||
September 30, | |||||||||||||||||||||||||||||
Derivatives not designated as hedging instruments: | Location of (loss)/gain | 2014 | 2013 | ||||||||||||||||||||||||||
recognized in income | |||||||||||||||||||||||||||||
Foreign exchange forwards | General and administrative expenses | $ | (1,895 | ) | $ | 1,147 | |||||||||||||||||||||||
Total | $ | (1,895 | ) | $ | 1,147 | ||||||||||||||||||||||||
Retirement_Benefits_Tables
Retirement Benefits (Tables) | 3 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | ' | |||||||||||||||
Components of net periodic benefit cost for defined benefit pension plans | ' | |||||||||||||||
The following table sets forth the components of net periodic benefit cost for the Company’s defined benefit pension plan for North America and Europe for the three months ended September 30, 2014 and 2013: | ||||||||||||||||
Three Months Ended September 30, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
North | Europe | North | Europe | |||||||||||||
America | America | |||||||||||||||
Service cost | $ | 18,211 | $ | 3,373 | $ | 17,788 | $ | 2,965 | ||||||||
Interest cost | 34,630 | 10,435 | 35,354 | 9,847 | ||||||||||||
Expected return on plan assets | (53,291 | ) | (13,226 | ) | (47,226 | ) | (11,056 | ) | ||||||||
Amortization of net loss | 4,378 | 3,302 | 5,649 | 2,169 | ||||||||||||
Amortization of prior service (credit)/cost | (2,095 | ) | 11 | (2,095 | ) | 10 | ||||||||||
Net periodic benefit cost | $ | 1,833 | $ | 3,895 | $ | 9,470 | $ | 3,935 | ||||||||
Components of net periodic benefit cost for other postretirement plans | ' | |||||||||||||||
The following table sets forth the components of net periodic benefit cost for the Company’s post-retirement plans for the three months ended September 30, 2014 and 2013: | ||||||||||||||||
Three Months Ended | ||||||||||||||||
September 30, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Service cost | $ | 321 | $ | 367 | ||||||||||||
Interest cost | 2,052 | 2,223 | ||||||||||||||
Expected return on plan assets | (24 | ) | (28 | ) | ||||||||||||
Amortization of net gain | (440 | ) | (430 | ) | ||||||||||||
Amortization of prior service credit | (1,726 | ) | (1,752 | ) | ||||||||||||
Net periodic benefit cost | $ | 183 | $ | 380 | ||||||||||||
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Income/(Loss) (Tables) | 3 Months Ended | |||||||||||||||||||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ' | |||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income/(Loss) | ' | |||||||||||||||||||||||||||||||||||||||
Changes in accumulated other comprehensive income/(loss), net of non-controlling interests, are provided in the following table. The difference between the amounts presented in this table and the amounts presented in the condensed consolidated statements of comprehensive income are the corresponding components attributable to non-controlling interests, which are not material for further disclosure. | ||||||||||||||||||||||||||||||||||||||||
Foreign | Hedge effectiveness (1) | Available-for-sale | Defined pension and | |||||||||||||||||||||||||||||||||||||
currency | securities (2) | post-retirement benefit costs (3) | ||||||||||||||||||||||||||||||||||||||
translation | ||||||||||||||||||||||||||||||||||||||||
-1 | Before | Tax | After | Before | Tax | After | Before | Tax | After | |||||||||||||||||||||||||||||||
Tax | Tax | Tax | Tax | Tax | Tax | |||||||||||||||||||||||||||||||||||
As of June 30, 2014 | $ | 2,271 | $ | 144 | $ | (79 | ) | $ | 65 | $ | 344 | $ | (114 | ) | $ | 230 | $ | (262,902 | ) | $ | 70,634 | $ | (192,268 | ) | ||||||||||||||||
Other comprehensive income/(loss) before reclassifications | (105,289 | ) | 1,185 | (473 | ) | 712 | (127 | ) | 42 | (85 | ) | — | — | — | ||||||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income | — | 156 | (62 | ) | 94 | (30 | ) | — | (30 | ) | 3,580 | (705 | ) | 2,875 | ||||||||||||||||||||||||||
Net current-period other comprehensive income/(loss) | (105,289 | ) | 1,341 | (535 | ) | 806 | (157 | ) | 42 | (115 | ) | 3,580 | (705 | ) | 2,875 | |||||||||||||||||||||||||
As of September 30, 2014 | $ | (103,018 | ) | $ | 1,485 | $ | (614 | ) | $ | 871 | $ | 187 | $ | (72 | ) | $ | 115 | $ | (259,322 | ) | $ | 69,929 | $ | (189,393 | ) | |||||||||||||||
________________________ | ||||||||||||||||||||||||||||||||||||||||
-1 | Reclassification adjustments from accumulated other comprehensive income are included in general and administrative expenses (see Note 6 – Derivative Financial Instruments for additional details regarding the reclassification adjustments for the hedge settlements) | |||||||||||||||||||||||||||||||||||||||
-2 | Reclassification adjustments from accumulated other comprehensive income are included in income from discontinued operations | |||||||||||||||||||||||||||||||||||||||
-3 | Reclassification adjustments from accumulated other comprehensive income are included in the computation of net periodic pension cost (see Note 7 – Retirement Benefits for additional details) |
Segment_Information_Tables
Segment Information (Tables) | 3 Months Ended | |||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||||||
Schedule of segment information, by segment | ' | |||||||||||||||||||
The table below presents specified information about the continuing operations of the reported segments for the three months ended September 30, 2014: | ||||||||||||||||||||
Benefits | Risk and | Talent and | Exchange | Total | ||||||||||||||||
Financial Services | Rewards | Solutions | ||||||||||||||||||
Revenue (net of reimbursable expenses) | $ | 465,587 | $ | 148,026 | $ | 153,294 | $ | 86,282 | $ | 853,189 | ||||||||||
Net operating income | 155,759 | 35,561 | 36,843 | 14,012 | 242,175 | |||||||||||||||
The table below presents specified information about the continuing operations of the reported segments for the three months ended September 30, 2013: | ||||||||||||||||||||
Benefits | Risk and | Talent and | Exchange | Total | ||||||||||||||||
Financial Services | Rewards | Solutions | ||||||||||||||||||
Revenue (net of reimbursable expenses) | $ | 431,255 | $ | 141,783 | $ | 153,569 | $ | 61,164 | $ | 787,771 | ||||||||||
Net operating income | 129,538 | 22,487 | 44,064 | 14,456 | 210,545 | |||||||||||||||
Schedule of reconciliation of segment information to the consolidated amounts | ' | |||||||||||||||||||
The table below presents a reconciliation of the information reported by segment to the consolidated amounts reported from continuing operations for the three months ended September 30, 2014 and 2013: | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
September 30, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Revenue: | ||||||||||||||||||||
Total segment revenue | $ | 853,189 | $ | 787,771 | ||||||||||||||||
Reimbursable expenses and other | 24,918 | 22,168 | ||||||||||||||||||
Revenue | $ | 878,107 | $ | 809,939 | ||||||||||||||||
Net Operating Income: | ||||||||||||||||||||
Total segment net operating income | $ | 242,175 | $ | 210,545 | ||||||||||||||||
Differences in allocation methods (1) | 15,712 | 9,986 | ||||||||||||||||||
Amortization of intangibles | (17,537 | ) | (18,892 | ) | ||||||||||||||||
Stock-based compensation (2) | (5,552 | ) | (3,563 | ) | ||||||||||||||||
Discretionary compensation | (92,364 | ) | (76,122 | ) | ||||||||||||||||
Payroll tax on discretionary compensation | (5,519 | ) | (4,568 | ) | ||||||||||||||||
Other, net | (10,917 | ) | (14,965 | ) | ||||||||||||||||
Income from operations | $ | 125,998 | $ | 102,421 | ||||||||||||||||
________________________ | ||||||||||||||||||||
-1 | Depreciation, general and administrative, pension, and medical costs are allocated to our segments based on budgeted expenses determined at the beginning of the fiscal year, as management believes that these costs are largely uncontrollable to the segment. To the extent that the actual expense base upon which allocations are made differs from the forecast/budget amount, a reconciling item will be created between internally allocated expenses and the actual expense that we report for GAAP purposes. | |||||||||||||||||||
-2 | Stock-based compensation excludes RSUs granted in conjunction with our performance bonus, which are included in discretionary compensation, as well as LTIP awards granted to certain executives of our Exchange Solutions segment, which are included within the calculation of Exchange Solutions' net operating income. |
Organization_and_Basis_of_Pres1
Organization and Basis of Presentation (Details) | 3 Months Ended |
Sep. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Current Fiscal Year End Date | '--06-30 |
Acquisitions_and_Divestitures_1
Acquisitions and Divestitures (Acquisitions) (Details) (USD $) | 3 Months Ended | 0 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | Nov. 22, 2013 | |
Liazon | |||
Business Acquisition [Line Items] | ' | ' | ' |
Acquisition date | ' | ' | 22-Nov-13 |
Name of acquired entity | ' | ' | 'Liazon |
Cash paid | $1,255,000 | $0 | $204,300,000 |
Stock based compensation awards assumed, fair value | ' | ' | 8,000,000 |
Acquired Finite-Lived Intangibles | ' | ' | 34,300,000 |
Net deferred tax asset | ' | ' | 9,200,000 |
Consideration transferred | ' | ' | 212,300,000 |
Goodwill acquired | ' | ' | $172,900,000 |
Acquisitions_and_Divestitures_2
Acquisitions and Divestitures (Divestitures) (Details) (USD $) | 3 Months Ended | 12 Months Ended | 3 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | |
Brokerage | Brokerage | Alliance Agreement [Member] | Transitional Services Agreement [Member] | |||
Brokerage | Brokerage | |||||
Discontinued Operations Disclosures | ' | ' | ' | ' | ' | ' |
Description of disposal transaction | ' | ' | 'On September 19, 2013, we entered into a definitive agreement to sell our Reinsurance and Property and Casualty Insurance Brokerage (“Brokerageâ€) business to Jardine Lloyd Thompson Group plc (“JLTâ€) for cash consideration of $250 million. The Brokerage business was a component of our Risk and Financial Services segment. The sale closed during our second quarter of fiscal year 2014. We divested this business as part of our strategy to focus on other areas of the business. We continue to focus on risk consulting, software and other services for the insurance industry. The business will be branded for a transitional period of 15 months from the closing date as JLT Towers Re. | ' | ' | ' |
Proceeds from discontinued operations | ' | ' | $250,000,000 | ' | ' | ' |
Segment disposal group belonged to | ' | ' | 'Risk and Financial Services segment | ' | ' | ' |
Branding transitional period (in months) | ' | ' | '15 months | ' | ' | ' |
Percentage of continuing cash flows after disposal | ' | ' | ' | ' | 1.00% | 7.40% |
Elimination of intercompany transactions | ' | ' | ' | 2,800,000 | ' | ' |
Transitional services agreement term (in years) | ' | ' | '2 years | ' | ' | ' |
Continuing cash flow after disposal | ' | ' | 6,300,000 | ' | ' | ' |
Repayment period of prepaid occupancy and infrastructure costs (in years) | ' | ' | '2 years | ' | ' | ' |
Selected Income Statement Information | ' | ' | ' | ' | ' | ' |
Revenue from discontinued operations | 0 | 41,198,000 | ' | ' | ' | ' |
Income from discontinued operations before taxes | ' | 4,995,000 | ' | ' | ' | ' |
Tax expense on discontinued operations | 0 | 2,551,000 | ' | ' | ' | ' |
Net income from discontinued operations | 0 | 2,444,000 | ' | ' | ' | ' |
Adjustment to consideration for net assets transferred | ' | ' | 31,400,000 | ' | ' | ' |
Description of retention liability | ' | ' | 'As part of the sale, the Company agreed to repay JLT for retention payments made to certain employees of Brokerage if they remain with the business on the 30-day anniversary of the sale and the first and second anniversary of the sale. The value ascribed to this portion of the obligation is $21.7 million at the time of the sale. The remaining liability at September 30, 2014 is carried at fair value on the accompanying consolidated balance sheets (see Note 5 – Fair Value Measurements). The total amount has been classified as current or non-current liabilities based on the expected payment dates. | ' | ' | ' |
Retention liability amount | ' | ' | 21,700,000 | ' | ' | ' |
Total consideration | ' | ' | 215,100,000 | ' | ' | ' |
Transaction costs | ' | ' | 6,400,000 | ' | ' | ' |
Final pre-tax gain on sale of business | ' | ' | ' | $24,000,000 | ' | ' |
Investments_Additional_Disclos
Investments - Additional Disclosures (Details) (USD $) | 3 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Investments, Debt and Equity Securities [Abstract] | ' | ' |
Proceeds from maturities of held-to-maturity securities | $107,330,000 | $0 |
Proceeds from sale and maturity of available-for-sale securities | 11,721,000 | 54,580,000 |
Fair value of investments in an unrealized loss position | $20,300,000 | ' |
Investments_Details
Investments (Details) (USD $) | Sep. 30, 2014 | Jun. 30, 2014 |
In Thousands, unless otherwise specified | ||
Short-term investments | ' | ' |
Available-for-sale and Held-to-maturity | ' | ' |
Amortized cost | $130,343 | $122,715 |
Unrealized gains | 11 | 49 |
Unrealized losses | -14 | -3 |
Estimated fair value | 130,340 | 122,761 |
Short-term investments | Term deposits & Certificates of deposits | ' | ' |
Held-to-maturity: | ' | ' |
Amortized cost | 126,846 | 107,556 |
Unrealized gains | 0 | 0 |
Unrealized losses | 0 | 0 |
Estimated fair value | 126,846 | 107,556 |
Short-term investments | Equity securities | ' | ' |
Available-for-sale: | ' | ' |
Amortized cost | 138 | 126 |
Unrealized gains | 11 | 7 |
Unrealized losses | -8 | -3 |
Estimated Fair Value | 141 | 130 |
Short-term investments | Mutual funds and exchange-traded funds | ' | ' |
Available-for-sale: | ' | ' |
Amortized cost | 3,359 | 15,033 |
Unrealized gains | 0 | 42 |
Unrealized losses | -6 | 0 |
Estimated Fair Value | 3,353 | 15,075 |
Other assets | ' | ' |
Available-for-sale: | ' | ' |
Amortized cost | 42,232 | 42,147 |
Unrealized gains | 13 | 451 |
Unrealized losses | -323 | 0 |
Estimated Fair Value | 41,922 | 42,598 |
Other assets | Mutual funds and exchange-traded funds | ' | ' |
Available-for-sale: | ' | ' |
Amortized cost | 42,232 | 42,147 |
Unrealized gains | 13 | 451 |
Unrealized losses | -323 | 0 |
Estimated Fair Value | $41,922 | $42,598 |
Goodwill_and_Intangible_Assets2
Goodwill and Intangible Assets (Details) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 |
Goodwill [Roll Forward] | ' |
Balance as of June 30, 2014 | $2,313,058 |
Goodwill related to acquisitions | -1,255 |
Goodwill reallocated in segment restructuring | 0 |
Translation adjustment | -71,131 |
Balance as of September 30, 2014 | 2,240,672 |
Benefits | ' |
Goodwill [Roll Forward] | ' |
Balance as of June 30, 2014 | 1,290,789 |
Goodwill related to acquisitions | 0 |
Goodwill reallocated in segment restructuring | -54,052 |
Translation adjustment | -49,871 |
Balance as of September 30, 2014 | 1,186,866 |
Risk and Financial Services | ' |
Goodwill [Roll Forward] | ' |
Balance as of June 30, 2014 | 391,549 |
Goodwill related to acquisitions | 0 |
Goodwill reallocated in segment restructuring | 0 |
Translation adjustment | -16,957 |
Balance as of September 30, 2014 | 374,592 |
Talent and Rewards | ' |
Goodwill [Roll Forward] | ' |
Balance as of June 30, 2014 | 113,862 |
Goodwill related to acquisitions | 0 |
Goodwill reallocated in segment restructuring | 0 |
Translation adjustment | -4,303 |
Balance as of September 30, 2014 | 109,559 |
Exchange Solutions | ' |
Goodwill [Roll Forward] | ' |
Balance as of June 30, 2014 | 515,644 |
Goodwill related to acquisitions | -1,255 |
Goodwill reallocated in segment restructuring | 54,052 |
Translation adjustment | 0 |
Balance as of September 30, 2014 | 568,441 |
All Other | ' |
Goodwill [Roll Forward] | ' |
Balance as of June 30, 2014 | 1,214 |
Goodwill related to acquisitions | 0 |
Goodwill reallocated in segment restructuring | 0 |
Translation adjustment | 0 |
Balance as of September 30, 2014 | $1,214 |
Goodwill_and_Intangible_Assets3
Goodwill and Intangible Assets (Details1) (USD $) | 3 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Jun. 30, 2014 | |
Finite-Lived Intangible Assets [Roll Forward] | ' | ' | ' |
Balance as of June 30, 2014 | $277,299,000 | ' | ' |
Amortization | -17,537,000 | -19,330,000 | ' |
Total intangible amortization and rent expense | -17,774,000 | ' | ' |
Translation adjustment | -5,005,000 | ' | ' |
Balance as of September 30, 2014 | 252,121,000 | ' | ' |
Balance as of September 30, 2014 | 254,520,000 | ' | ' |
Intangible Assets Other Disclosures [Abstract] | ' | ' | ' |
Indefinite-lived intangible assets (excluding goodwill) | 374,500,000 | ' | 380,000,000 |
Intangible Lease Liability | 9,400,000 | ' | 10,200,000 |
Reduction to rent expense | 800,000 | ' | ' |
Finite-Lived Intangible Assets By Category [Abstract] | ' | ' | ' |
Gross carrying amount | 561,531,000 | ' | 574,157,000 |
Accumulated amortization | 307,045,000 | ' | 296,858,000 |
Gross carrying amount - intangible liabilities | 24,638,000 | ' | 24,818,000 |
Accumulated amortization - intangible liabilities | 15,219,000 | ' | 14,588,000 |
Weighted average remaining life of intangible assets and liabilities | '4 years 11 months | ' | ' |
Amortization | ' | ' | ' |
2015 | 51,347,000 | ' | ' |
2016 | 56,376,000 | ' | ' |
2017 | 52,168,000 | ' | ' |
2018 | 41,925,000 | ' | ' |
2019 | 27,138,000 | ' | ' |
Thereafter | 23,167,000 | ' | ' |
Total | 252,121,000 | ' | ' |
Rent (Offset) Expense | ' | ' | ' |
2015 | -1,459,000 | ' | ' |
2016 | -1,568,000 | ' | ' |
2017 | -1,864,000 | ' | ' |
2018 | -1,981,000 | ' | ' |
2019 | -315,000 | ' | ' |
Thereafter | 133,000 | ' | ' |
Total | -7,054,000 | ' | ' |
Customer related intangible | ' | ' | ' |
Finite-Lived Intangible Assets [Roll Forward] | ' | ' | ' |
Balance as of June 30, 2014 | 198,855,000 | ' | ' |
Amortization | -11,451,000 | ' | ' |
Translation adjustment | -4,715,000 | ' | ' |
Balance as of September 30, 2014 | 182,689,000 | ' | ' |
Finite-Lived Intangible Assets By Category [Abstract] | ' | ' | ' |
Gross carrying amount | 379,403,000 | ' | 391,201,000 |
Accumulated amortization | 196,748,000 | ' | 192,346,000 |
Amortization | ' | ' | ' |
Total | 182,689,000 | ' | ' |
Core/developed technology | ' | ' | ' |
Finite-Lived Intangible Assets [Roll Forward] | ' | ' | ' |
Balance as of June 30, 2014 | 75,827,000 | ' | ' |
Amortization | -6,086,000 | ' | ' |
Translation adjustment | -275,000 | ' | ' |
Balance as of September 30, 2014 | 69,466,000 | ' | ' |
Finite-Lived Intangible Assets By Category [Abstract] | ' | ' | ' |
Gross carrying amount | 175,180,000 | ' | 175,948,000 |
Accumulated amortization | 105,714,000 | ' | 100,121,000 |
Amortization | ' | ' | ' |
Total | 69,466,000 | ' | ' |
Favorable lease agreements | ' | ' | ' |
Finite-Lived Intangible Assets [Roll Forward] | ' | ' | ' |
Balance as of June 30, 2014 | 2,617,000 | ' | ' |
Rent expense for lease intangible | -237,000 | ' | ' |
Translation adjustment | -15,000 | ' | ' |
Balance as of September 30, 2014 | 2,365,000 | ' | ' |
Finite-Lived Intangible Assets By Category [Abstract] | ' | ' | ' |
Gross carrying amount | 6,428,000 | ' | 6,488,000 |
Accumulated amortization | 4,063,000 | ' | 3,871,000 |
Amortization | ' | ' | ' |
Total | 2,365,000 | ' | ' |
Trademarks & trade names | ' | ' | ' |
Finite-Lived Intangible Assets By Category [Abstract] | ' | ' | ' |
Gross carrying amount | 520,000 | ' | 520,000 |
Accumulated amortization | 520,000 | ' | 520,000 |
Unfavorable lease agreements | ' | ' | ' |
Finite-Lived Intangible Assets By Category [Abstract] | ' | ' | ' |
Gross carrying amount - intangible liabilities | 24,638,000 | ' | 24,818,000 |
Accumulated amortization - intangible liabilities | $15,219,000 | ' | $14,588,000 |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (USD $) | 3 Months Ended | |||||||||||||||||||||||||||||||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | |
Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | |||
Equity securities | Equity securities | Mutual funds and exchange-traded funds | Mutual funds and exchange-traded funds | Foreign exchange forwards | Foreign exchange forwards | Level 1 | Level 1 | Level 1 | Level 1 | Level 1 | Level 1 | Level 1 | Level 1 | Level 2 | Level 2 | Level 2 | Level 2 | Level 2 | Level 2 | Level 2 | Level 2 | Level 3 | Level 3 | Level 3 | Level 3 | Level 3 | Level 3 | Level 3 | Level 3 | |||||
Equity securities | Equity securities | Mutual funds and exchange-traded funds | Mutual funds and exchange-traded funds | Foreign exchange forwards | Foreign exchange forwards | Equity securities | Equity securities | Mutual funds and exchange-traded funds | Mutual funds and exchange-traded funds | Foreign exchange forwards | Foreign exchange forwards | Equity securities | Equity securities | Mutual funds and exchange-traded funds | Mutual funds and exchange-traded funds | Foreign exchange forwards | Foreign exchange forwards | |||||||||||||||||
Assets: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Available-for-sale securities | ' | ' | ' | ' | $141,000 | $130,000 | $45,275,000 | $57,673,000 | ' | ' | ' | ' | $141,000 | $130,000 | $45,275,000 | $57,673,000 | ' | ' | ' | ' | $0 | $0 | $0 | $0 | ' | ' | ' | ' | $0 | $0 | $0 | $0 | ' | ' |
Derivatives | ' | ' | ' | ' | ' | ' | ' | ' | 2,394,000 | 639,000 | ' | ' | ' | ' | ' | ' | 0 | 0 | ' | ' | ' | ' | ' | ' | 2,394,000 | 639,000 | ' | ' | ' | ' | ' | ' | 0 | 0 |
Liabilities: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Derivatives | ' | ' | ' | ' | ' | ' | ' | ' | 2,102,000 | 550,000 | ' | ' | ' | ' | ' | ' | 0 | 0 | ' | ' | ' | ' | ' | ' | 2,102,000 | 550,000 | ' | ' | ' | ' | ' | ' | 0 | 0 |
Retention bonus liability | ' | ' | 19,730,000 | 19,998,000 | ' | ' | ' | ' | ' | ' | 0 | 0 | ' | ' | ' | ' | ' | ' | 0 | 0 | ' | ' | ' | ' | ' | ' | 19,730,000 | 19,998,000 | ' | ' | ' | ' | ' | ' |
Unrealized Gain (Loss) on Derivatives recognized in earnings [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unrealized Gain (Loss) on derivatives recognized in earnings | ($1,200,000) | $600,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair_Value_Measurements_Level_
Fair Value Measurements - Level 3 Financial Instruments (Details) (Deferred bonus, USD $) | 3 Months Ended |
Sep. 30, 2014 | |
Fair Value Measurements using significant unobservable inputs (Level 3): | ' |
Beginning balance | ($19,998,000) |
Payments | 285,000 |
Unrealized gains/(losses) | -17,000 |
Ending balance | -19,730,000 |
Level 3 | ' |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ' |
Credit adjusted interest rate (percentage) | 1.60% |
Forfeiture rate (percentage) | 7.00% |
Minimum | Level 3 | ' |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ' |
Credit adjusted interest rate (percentage) | 0.50% |
Forfeiture rate (percentage) | 5.00% |
Resulting values from changes in valuation inputs | 19,900,000 |
Maximum | Level 3 | ' |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ' |
Credit adjusted interest rate (percentage) | 10.00% |
Forfeiture rate (percentage) | 10.00% |
Resulting values from changes in valuation inputs | 18,200,000 |
Recurring | Minimum | Level 3 | ' |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ' |
Resulting values from changes in valuation inputs | 20,200,000 |
Recurring | Maximum | Level 3 | ' |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ' |
Resulting values from changes in valuation inputs | $19,100,000 |
Derivative_Financial_Instrumen2
Derivative Financial Instruments (Details) (USD $) | 3 Months Ended | |
Sep. 30, 2014 | Jun. 30, 2014 | |
Derivatives, Fair Value [Line Items] | ' | ' |
Longest outstanding maturity for derivative contracts at the most recent balance sheet date | '15 months | ' |
Pretax gain deferred in accumulated other comprehensive income | $1,500,000 | ' |
Derivative, fair value, net | 300,000 | 100,000 |
Asset derivatives | ' | ' |
Derivative assets | 2,394,000 | 639,000 |
Liability derivatives | ' | ' |
Derivative liabilities | -2,102,000 | -550,000 |
Designated as hedging | ' | ' |
Derivatives, Fair Value [Line Items] | ' | ' |
Derivative, notional amount | 72,800,000 | 49,500,000 |
Not designated as hedging | ' | ' |
Derivatives, Fair Value [Line Items] | ' | ' |
Derivative, notional amount | 25,100,000 | 24,200,000 |
Foreign exchange forwards | Designated as hedging | Other current assets | ' | ' |
Asset derivatives | ' | ' |
Derivative assets | 1,960,000 | 618,000 |
Foreign exchange forwards | Designated as hedging | Accounts payable, accrued liabilities and deferred income | ' | ' |
Liability derivatives | ' | ' |
Derivative liabilities | -453,000 | -513,000 |
Foreign exchange forwards | Not designated as hedging | Other current assets | ' | ' |
Asset derivatives | ' | ' |
Derivative assets | 434,000 | 21,000 |
Foreign exchange forwards | Not designated as hedging | Accounts payable, accrued liabilities and deferred income | ' | ' |
Liability derivatives | ' | ' |
Derivative liabilities | ($1,649,000) | ($37,000) |
Derivative_Financial_Instrumen3
Derivative Financial Instruments (Details 2) (Foreign exchange forwards, Cash flow hedges, USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Summary Of Hedged Derivative Instruments Impact On Results Of Operations [Abstract] | ' | ' |
Gain/(loss) recognized in OCI (effective portion) | $1,185 | ($1,632) |
General and administrative expenses | ' | ' |
Summary Of Hedged Derivative Instruments Impact On Results Of Operations [Abstract] | ' | ' |
(Loss)/gain reclassified from OCI into income (effective portion) | -156 | 62 |
(Loss)/gain recognized in income (ineffective portion and amount excluded from effectiveness testing) | -28 | 1 |
Summary Of Non Hedged Derivative Instruments Impact On Results Of Operations [Abstract] | ' | ' |
(Loss)/gain recognized in income | ($1,895) | $1,147 |
Retirement_Benefits_Details
Retirement Benefits (Details) (USD $) | Jun. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
U.S. defined contribution plans | U.S. defined contribution plans | U.K. defined contribution plans | U.K. defined contribution plans | North America pension plans | North America pension plans | Europe pension plans | Europe pension plans | Other postretirement plans | Other postretirement plans | ||
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percent of pension and other post-retirement benefit obligations disclosed | 98.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percent of unfunded defined benefit pension plans in other countries | 2.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Service cost | ' | ' | ' | ' | ' | $18,211,000 | $17,788,000 | $3,373,000 | $2,965,000 | $321,000 | $367,000 |
Interest cost | ' | ' | ' | ' | ' | 34,630,000 | 35,354,000 | 10,435,000 | 9,847,000 | 2,052,000 | 2,223,000 |
Expected return on plan assets | ' | ' | ' | ' | ' | -53,291,000 | -47,226,000 | -13,226,000 | -11,056,000 | -24,000 | -28,000 |
Amortization of net loss | ' | ' | ' | ' | ' | 4,378,000 | 5,649,000 | 3,302,000 | 2,169,000 | -440,000 | -430,000 |
Amortization of prior service (credit)/cost | ' | ' | ' | ' | ' | -2,095,000 | -2,095,000 | 11,000 | 10,000 | -1,726,000 | -1,752,000 |
Net periodic benefit cost | ' | ' | ' | ' | ' | 1,833,000 | 9,470,000 | 3,895,000 | 3,935,000 | 183,000 | 380,000 |
Employer Contributions | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Company contributions | ' | ' | ' | ' | ' | 31,100,000 | ' | 24,600,000 | ' | ' | ' |
Estimated future company contributions | ' | ' | ' | ' | ' | 5,200,000 | ' | 24,000,000 | ' | ' | ' |
Defined Contributions Plans | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Company contribution costs recognized | ' | $4,700,000 | $6,000,000 | $5,000,000 | $5,800,000 | ' | ' | ' | ' | ' | ' |
Debt_Commitments_and_Contingen1
Debt, Commitments and Contingent Liabilities (Summary of Long-Term Debt) (Details) (USD $) | 0 Months Ended | 3 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | |||||||
Nov. 07, 2011 | Sep. 30, 2014 | Sep. 30, 2013 | Jun. 01, 2012 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Jun. 01, 2012 | Jun. 01, 2012 | Jun. 01, 2012 | Jun. 01, 2012 | |
Senior credit facility | Senior credit facility | Senior credit facility | Term loan | Term loan | Term loan | Captive insurance companies | Other existing or potential business obligations | LIBOR | LIBOR | Bank base rate | Bank base rate | |
Standby letters of credit | Standby letters of credit | Minimum | Maximum | Minimum | Maximum | |||||||
Term loan | Term loan | Term loan | Term loan | |||||||||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line of credit facility, expiration period | '5 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line of credit maximum borrowing capacity | $500,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Lined of credit additional borrowing capacity | 250,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line of credit, interest rate description | 'a spread to either LIBOR or the Prime Rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted average interest rate (percent) | ' | 1.39% | 1.43% | ' | 1.40% | 1.44% | ' | ' | ' | ' | ' | ' |
Line of credit commitment fee (percent) | ' | 0.18% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line of credit collateral description | ' | 'Towers Watson and all of its domestic subsidiaries (other than Professional Consultants Insurance Company (“PCICâ€), a majority-owned captive insurance company, and Stone Mountain Insurance Company (“SMICâ€), a wholly-owned captive insurance company). | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line of credit covenant terms | ' | 'The Senior Credit Facility contains customary representations and warranties and affirmative and negative covenants. The Senior Credit Facility requires Towers Watson to maintain certain financial covenants that include a minimum Consolidated Interest Coverage Ratio and a maximum Consolidated Leverage Ratio (which terms in each case are defined in the Senior Credit Facility). In addition, the Senior Credit Facility contains restrictions on the ability of Towers Watson to, among other things, incur additional indebtedness; pay dividends; make distributions; create liens on assets; make acquisitions; dispose of property; engage in sale-leaseback transactions; engage in mergers or consolidations, liquidations and dissolutions; engage in certain transactions with affiliates; and make changes in lines of businesses. | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line of credit covenant compliance | ' | 'As of September 30, 2014, we were in compliance with our covenants. | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line of credit amount outstanding | ' | 135,000,000 | ' | ' | ' | ' | 21,400,000 | 900,000 | ' | ' | ' | ' |
Term of debt instrument | ' | ' | ' | '5 years | ' | ' | ' | ' | ' | ' | ' | ' |
Original amount borrowed | ' | ' | ' | 250,000,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage spread to base index rate | ' | ' | ' | ' | ' | ' | ' | ' | 1.25% | 1.75% | 0.25% | 0.75% |
Debt periodic principal payment | ' | ' | ' | ' | 6,300,000 | ' | ' | ' | ' | ' | ' | ' |
Term loan | ' | ' | ' | ' | $218,800,000 | ' | ' | ' | ' | ' | ' | ' |
Debt_Commitments_and_Contingen2
Debt, Commitments and Contingent Liabilities (Summary of Malpractice Insurance) (Details) (USD $) | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 |
Aggregate claims | Per claim | SMIC | PCIC | |||
Malpractice Insurance [Line Items] | ' | ' | ' | ' | ' | ' |
Malpractice insurance continuing coverage policy description | ' | ' | ' | ' | 'Towers Watson carries substantial professional liability insurance which, effective July 1, 2010, has been provided by SMIC. For the policy period beginning July 1, 2011 certain changes were made to our professional liability insurance program. These changes remained in-force for the policy periods beginning July 1, 2011 and ending July 1, 2015. Our professional liability insurance includes a $10 million aggregate self-insured retention above the $1 million self-insured retention per claim, including the cost of defending such claims. SMIC provides us with $40 million of coverage per claim and in the aggregate, above the retentions, including the cost of defending such claims. | ' |
Reinsurance coverage description | ' | ' | ' | ' | 'SMIC secured $25 million of reinsurance from unaffiliated reinsurance companies in excess of the $15 million SMIC retained layer. Excess insurance attaching above the SMIC coverage is provided by various unaffiliated commercial insurance companies. | 'PCIC secured reinsurance of $25 million attaching above the $25 million PCIC retained layer from unaffiliated reinsurance companies. |
Malpractice insurance description | ' | ' | ' | ' | ' | 'Before the Merger, Watson Wyatt and Towers Perrin each obtained substantial professional liability insurance from PCIC. A limit of $50 million per claim and in the aggregate was provided by PCIC subject to a $1 million per claim self-insured retention. |
Malpractice insurance deductible | ' | ' | $10,000,000 | $1,000,000 | ' | $1,000,000 |
Malpractice insurance, maximum coverage per incident | ' | ' | ' | ' | 40,000,000 | 50,000,000 |
Captive insurance reinsurance coverage | ' | ' | ' | ' | 25,000,000 | 25,000,000 |
Captive insurance coverage amount | ' | ' | ' | ' | 15,000,000 | 25,000,000 |
Malpractice insurance, coverage floor | ' | ' | ' | ' | 25,000,000 | ' |
Malpractice insurance percentage of ownership in captive insurer | ' | ' | ' | ' | ' | 72.86% |
Professional liability claims reserve incurred by not reported | $179,800,000 | $173,800,000 | ' | ' | ' | ' |
Debt_Commitments_and_Contingen3
Debt, Commitments and Contingent Liabilities (Summary of Litigation) (Details) (GBP £) | 0 Months Ended | 1 Months Ended | 3 Months Ended | 51 Months Ended | ||
In Thousands, unless otherwise specified | Oct. 23, 2014 | Apr. 30, 2000 | Feb. 29, 2000 | Apr. 30, 2000 | Oct. 31, 2012 | Aug. 31, 2008 |
Pending litigation | Pending litigation | Pending litigation | Pending litigation | Letter of Claim [Member] | Letter of Claim [Member] | |
Teck Metals, Ltd. | City of Houston | City of Houston | City of Houston | Currency hedge | Currency hedge | |
Subsequent Event | report | report | report | Trustee of the British Coal Staff Superannuation Scheme | Trustee of the British Coal Staff Superannuation Scheme | |
plaintiff | ||||||
Loss Contingencies [Line Items] | ' | ' | ' | ' | ' | ' |
Number of plaintiffs | 436 | ' | ' | ' | ' | ' |
Number of reports issued | ' | 1 | 1 | 2 | ' | ' |
Derivative, amount of hedged item | ' | ' | ' | ' | ' | £ 250,000 |
Quantified loss on derivative | ' | ' | ' | ' | £ 47,500 | ' |
Variable_Interest_Entities_Det
Variable Interest Entities (Details) (USD $) | Sep. 30, 2014 |
In Billions, unless otherwise specified | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Assets under management | $2.70 |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive Income/(Loss) (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
After tax - AOCI | ' | ' |
After tax - Accumulated OCI as of | ($189,702) | ' |
Other comprehensive (loss)/income before non-controlling interests | -101,778 | 73,190 |
After tax - Accumulated OCI as of | -291,425 | ' |
Foreign currency translation | ' | ' |
After tax - AOCI | ' | ' |
After tax - Accumulated OCI as of | 2,271 | ' |
After tax - Other comprehensive income/(loss) before reclassifications | -105,289 | ' |
After tax - Amounts reclassified from accumulated other comprehensive income | 0 | ' |
Other comprehensive (loss)/income before non-controlling interests | -105,289 | ' |
After tax - Accumulated OCI as of | -103,018 | ' |
Hedge effectiveness | ' | ' |
Before tax - AOCI | ' | ' |
Before tax - Accumulated OCI as of | 144 | ' |
Before tax - Other comprehensive income/(loss) before reclassifications | 1,185 | ' |
Before tax - Amounts reclassified from accumulated other comprehensive income | 156 | ' |
Before tax - Net current-period other comprehensive income | 1,341 | ' |
Before tax - Accumulated OCI as of | 1,485 | ' |
Tax - AOCI | ' | ' |
Tax - Accumulated OCI as of | -79 | ' |
Tax - Other comprehensive income/(loss) before reclassifications | -473 | ' |
Tax - Amounts reclassified from accumulated other comprehensive income | -62 | ' |
Tax - Net current-period other comprehensive income | -535 | ' |
Tax - Accumulated OCI as of | -614 | ' |
After tax - AOCI | ' | ' |
After tax - Accumulated OCI as of | 65 | ' |
After tax - Other comprehensive income/(loss) before reclassifications | 712 | ' |
After tax - Amounts reclassified from accumulated other comprehensive income | 94 | ' |
Other comprehensive (loss)/income before non-controlling interests | 806 | ' |
After tax - Accumulated OCI as of | 871 | ' |
Available-for-sale securities | ' | ' |
Before tax - AOCI | ' | ' |
Before tax - Accumulated OCI as of | 344 | ' |
Before tax - Other comprehensive income/(loss) before reclassifications | -127 | ' |
Before tax - Amounts reclassified from accumulated other comprehensive income | -30 | ' |
Before tax - Net current-period other comprehensive income | -157 | ' |
Before tax - Accumulated OCI as of | 187 | ' |
Tax - AOCI | ' | ' |
Tax - Accumulated OCI as of | -114 | ' |
Tax - Other comprehensive income/(loss) before reclassifications | 42 | ' |
Tax - Amounts reclassified from accumulated other comprehensive income | 0 | ' |
Tax - Net current-period other comprehensive income | 42 | ' |
Tax - Accumulated OCI as of | -72 | ' |
After tax - AOCI | ' | ' |
After tax - Accumulated OCI as of | 230 | ' |
After tax - Other comprehensive income/(loss) before reclassifications | -85 | ' |
After tax - Amounts reclassified from accumulated other comprehensive income | -30 | ' |
Other comprehensive (loss)/income before non-controlling interests | -115 | ' |
After tax - Accumulated OCI as of | 115 | ' |
Defined pension and post-retirement benefit costs | ' | ' |
Before tax - AOCI | ' | ' |
Before tax - Accumulated OCI as of | -262,902 | ' |
Before tax - Other comprehensive income/(loss) before reclassifications | 0 | ' |
Before tax - Amounts reclassified from accumulated other comprehensive income | 3,580 | ' |
Before tax - Net current-period other comprehensive income | 3,580 | ' |
Before tax - Accumulated OCI as of | -259,322 | ' |
Tax - AOCI | ' | ' |
Tax - Accumulated OCI as of | 70,634 | ' |
Tax - Other comprehensive income/(loss) before reclassifications | 0 | ' |
Tax - Amounts reclassified from accumulated other comprehensive income | -705 | ' |
Tax - Net current-period other comprehensive income | -705 | ' |
Tax - Accumulated OCI as of | 69,929 | ' |
After tax - AOCI | ' | ' |
After tax - Accumulated OCI as of | -192,268 | ' |
After tax - Other comprehensive income/(loss) before reclassifications | 0 | ' |
After tax - Amounts reclassified from accumulated other comprehensive income | 2,875 | ' |
Other comprehensive (loss)/income before non-controlling interests | 2,875 | ' |
After tax - Accumulated OCI as of | ($189,393) | ' |
ShareBased_Compensation_Restri
Share-Based Compensation (Restricted Stock Units) (Details) (USD $) | 3 Months Ended | 3 Months Ended | 3 Months Ended | 12 Months Ended | 1 Months Ended | 3 Months Ended | 1 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | ||||||||||||||||||||||||||||||||||||
In Millions, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Jun. 30, 2012 | Jun. 30, 2012 | Jun. 30, 2012 | Aug. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Nov. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2011 | Sep. 30, 2011 | Sep. 30, 2011 | Sep. 30, 2014 | Sep. 30, 2013 |
Restricted Stock Units | 2015 LTIP | 2015 LTIP | 2015 LTIP | 2014 LTIP | 2014 LTIP | 2014 LTIP | 2014 LTIP | 2014 LTIP | 2014 LTIP | 2014 LTIP | 2013 LTIP | 2013 LTIP | 2013 LTIP | 2013 LTIP | 2013 LTIP | 2012 LTIP | 2012 LTIP | 2012 LTIP | 2012 LTIP | 2012 LTIP | 2012 LTIP | 2012 LTIP | 2014 ES LTIP | 2014 ES LTIP | 2014 ES LTIP | 2014 ES LTIP | 2014 ES LTIP | Liazon RSUs | Liazon RSUs | Other RSUs | Other RSUs | 2014 SEP | 2013 SEP | 2013 SEP | 2012 SEP | 2012 SEP | 2012 SEP | 2011 SEP | 2011 SEP | 2011 SEP | Vesting group 1 | Vesting group 2 | Outside Directors | Outside Directors | ||
Y | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Minimum | Maximum | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | Restricted Stock Units | 2011 SEP | 2011 SEP | Restricted Stock Units | Restricted Stock Units | ||
Minimum | Maximum | Minimum | Minimum | Maximum | Maximum | Minimum | Maximum | Minimum | Maximum | Minimum | Maximum | Restricted Stock Units | Restricted Stock Units | |||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Description of Restricted Stock Units | 'RSUs are designed to provide us an opportunity to offer our long-term incentive program (LTIP) and to provide key executives with a long-term stake in our success. RSUs are notional, non-voting units of measurement based on our common stock. | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Retirement age (in years) | ' | 55 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Years of experience (in years) | ' | '15 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Minimum years of service during performance period (in years) | ' | '1 year | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Restricted Stock Units granted during the period (in shares) | ' | ' | 76,202 | ' | ' | ' | 2,704 | 62,651 | ' | ' | ' | ' | ' | ' | 121,075 | ' | ' | ' | ' | ' | ' | 86,188 | ' | ' | 30,192 | ' | ' | ' | ' | 70,533 | ' | ' | 28,947 | 112,464 | ' | 131,286 | ' | ' | 147,503 | ' | ' | 577,191 | ' | ' | 8,059 | 10,251 |
Vested Stock Based Compensation Awards Acquired | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $5.70 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted average grant date fair value (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $91.43 | ' | ' | ' | ' | ' | ' | ' | ' | $106.89 | ' | $91.43 | ' | ' | $53.93 | ' | ' | ' | ' | ' | ' | ' |
Restricted Stock Units vested in the period (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 11,150 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 288,595 | ' | ' | ' |
Restricted Stock Units, balance not yet vested (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 288,595 | ' | ' |
Closing stock price on date of grant (in dollars per share) | ' | ' | $100 | ' | ' | ' | ' | ' | ' | $106 | ' | $111 | ' | ' | $54.59 | ' | ' | ' | ' | ' | ' | ' | $63.73 | $63.94 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of target number of units vesting based on performance metrics | ' | ' | ' | 0.00% | 204.00% | ' | ' | ' | 0.00% | ' | 204.00% | ' | ' | ' | ' | 0.00% | 204.00% | 0.00% | 204.00% | ' | ' | ' | ' | ' | ' | ' | ' | 0.00% | 240.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Vesting period | ' | ' | '3 years | ' | ' | '3 years | ' | ' | ' | ' | ' | ' | '3 years | ' | ' | ' | ' | ' | ' | '3 years | ' | ' | ' | ' | ' | '2 years | ' | ' | ' | ' | ' | '3 years | ' | '3 years | '3 years | ' | '3 years | ' | ' | ' | ' | ' | ' | '3 years | ' | ' |
Period used for calculation of average EPS and revenue growth | ' | ' | '3 years | ' | ' | '3 years | ' | ' | ' | ' | ' | ' | '3 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Service period | ' | ' | '1 year | ' | ' | ' | ' | ' | ' | ' | ' | ' | '1 year | ' | ' | ' | ' | ' | ' | '1 year | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unvested awards acquired | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.1 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Forfeiture rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5.00% | ' | 5.00% | ' | ' | 5.00% | ' | ' | ' | ' | 5.00% | ' | ' |
Compensation expense (reversal) | ' | ' | $1.50 | ' | ' | $1.10 | ' | $1.20 | ' | ' | ' | ' | $2.10 | $0.80 | ' | ' | ' | ' | ' | $1.10 | $0.50 | ' | ' | ' | ' | $2.70 | $0.40 | ' | ' | ' | $0.30 | $0.70 | ' | $1.90 | $0.70 | $1.70 | $0.20 | $0.50 | ' | ($0.20) | $0.40 | ' | ' | ' | $0.40 | $0.40 |
ShareBased_Compensation_Stock_
Share-Based Compensation (Stock Options) (Details) (USD $) | 1 Months Ended | 3 Months Ended | 1 Months Ended | 3 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Nov. 30, 2013 | Sep. 30, 2014 | 31-May-12 | 31-May-12 | Sep. 30, 2014 | Sep. 30, 2013 |
Liazon Vested Options | Liazon Unvested Options | Extend Health Vested Options | Extend Health Unvested Options | Extend Health Unvested Options | Extend Health Unvested Options | |
Stock Options Explanatory Disclosures [Line Items] | ' | ' | ' | ' | ' | ' |
Options granted previously and assumed by a business acquirer | 37,162 | ' | 377,614 | ' | ' | ' |
Fair value of vested stock options acquired | $2.20 | $1.70 | $11.20 | $7.90 | ' | ' |
Forfeiture rate | ' | ' | ' | 10.00% | ' | ' |
Compensation expense | ' | $0.30 | ' | ' | $0.10 | $0.50 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 3 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Income Tax Disclosure [Abstract] | ' | ' |
Income tax expense (benefit) | $44,062,000 | $14,808,000 |
Effective tax rate | 35.10% | 14.70% |
Uncertain tax positions, tax rate impact, benefit | ' | 16.70% |
Change in tax rate, tax rate impact, benefit | ' | 3.60% |
Unrecognized Tax Benefits | 35,300,000 | ' |
Significant change in unrecognized tax benefits is reasonably possible, estimated range of change, lower bound | 4,800,000 | ' |
Significant change in unrecognized tax benefits is reasonably possible, estimated range of change, upper bound | $17,200,000 | ' |
Segment_Information_Details
Segment Information (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
segment | ||
Segment Reporting Information [Line Items] | ' | ' |
Number of reportable operating segments | 4 | ' |
Revenue (net of reimbursable expenses) | $853,189 | $787,771 |
Net operating income | 242,175 | 210,545 |
Benefits | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Revenue (net of reimbursable expenses) | 465,587 | 431,255 |
Net operating income | 155,759 | 129,538 |
Risk and Financial Services | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Revenue (net of reimbursable expenses) | 148,026 | 141,783 |
Net operating income | 35,561 | 22,487 |
Talent and Rewards | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Revenue (net of reimbursable expenses) | 153,294 | 153,569 |
Net operating income | 36,843 | 44,064 |
Exchange Solutions | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Revenue (net of reimbursable expenses) | 86,282 | 61,164 |
Net operating income | $14,012 | $14,456 |
Segment_Information_Details_1
Segment Information (Details 1) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Revenue: | ' | ' |
Total segment revenue | $853,189 | $787,771 |
Reimbursable expenses and other | 24,918 | 22,168 |
Revenue | 878,107 | 809,939 |
Net Operating Income: | ' | ' |
Total segment net operating income | 242,175 | 210,545 |
Differences in allocation methods | 15,712 | 9,986 |
Amortization of intangibles | -17,537 | -18,892 |
Stock-based compensation | -5,552 | -3,563 |
Discretionary compensation | -92,364 | -76,122 |
Payroll tax on discretionary compensation | -5,519 | -4,568 |
Other, net | -10,917 | -14,965 |
Income from operations | $125,998 | $102,421 |