Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Sep. 30, 2015 | Oct. 30, 2015 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,016 | |
Current Fiscal Year End Date | --06-30 | |
Entity Central Index Key | 1,470,215 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Registrant Name | Towers Watson & Co. | |
Entity Common Stock, Shares Outstanding | 69,443,969 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Income Statement [Abstract] | ||
Revenue | $ 895,621 | $ 878,107 |
Costs of providing services: | ||
Salaries and employee benefits | 544,472 | 533,528 |
Professional and subcontracted services | 65,112 | 62,205 |
Occupancy | 31,745 | 36,073 |
General and administrative expenses | 71,370 | 75,434 |
Depreciation and amortization | 44,192 | 44,869 |
Transaction and integration expenses | 9,330 | 0 |
Cost of Services | 766,221 | 752,109 |
Income from operations | 129,400 | 125,998 |
Income from affiliates | 51 | 0 |
Interest income | 1,192 | 1,063 |
Interest expense | (2,072) | (2,328) |
Other non-operating income | 55,370 | 831 |
INCOME BEFORE INCOME TAXES | 183,941 | 125,564 |
Provision for income taxes | 60,558 | 44,062 |
NET INCOME BEFORE NON-CONTROLLING INTERESTS | 123,383 | 81,502 |
Less: Income/(loss) attributable to non-controlling interests | 1 | (56) |
NET INCOME (attributable to common stockholders) | $ 123,382 | $ 81,558 |
Earnings per share: | ||
Basic earnings per share (attributable to common stockholders) | $ 1.78 | $ 1.16 |
Diluted earnings per share (attributable to common stockholders) | 1.78 | 1.16 |
Dividends declared per share | $ 0.15 | $ 0.15 |
Weighted average shares of common stock, basic (000) | 69,381 | 70,182 |
Weighted average shares of common stock, diluted (000) | 69,475 | 70,596 |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Statement of Comprehensive Income [Abstract] | ||
Net income before non-controlling interests | $ 123,383 | $ 81,502 |
Other comprehensive income/(loss), net of tax: | ||
Foreign currency translation | (71,558) | (105,331) |
Defined pension and post-retirement benefit costs | 4,768 | 2,875 |
Hedge effectiveness | (802) | 806 |
Available-for-sale securities | (82) | (128) |
Other comprehensive income/(loss) before non-controlling interests | (67,674) | (101,778) |
Comprehensive income/(loss) before non-controlling interests | 55,709 | (20,276) |
Comprehensive income/(loss) attributable to non-controlling interest | (5) | (111) |
Comprehensive income/(loss) (attributable to common stockholders) | $ 55,714 | $ (20,165) |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2015 | Jun. 30, 2015 |
Assets | ||
Cash and cash equivalents | $ 699,966 | $ 715,151 |
Fiduciary assets | 33,054 | 38,075 |
Short-term investments | 59,444 | 127,156 |
Receivables from clients: | ||
Billed, net of allowances of $11,623 and $7,665 | 481,271 | 479,536 |
Unbilled, at estimated net realizable value | 332,551 | 320,827 |
Current receivables, net | 813,822 | 800,363 |
Other current assets | 122,962 | 155,487 |
Total current assets | 1,729,248 | 1,836,232 |
Fixed assets, net | 396,967 | 390,681 |
Deferred income taxes | 61,515 | 62,772 |
Goodwill | 2,229,560 | 2,278,351 |
Intangible assets, net | 642,900 | 654,087 |
Other assets | 204,164 | 172,051 |
Total Assets | 5,264,354 | 5,394,174 |
Liabilities | ||
Accounts payable, accrued liabilities and deferred income | 398,088 | 424,403 |
Employee-related liabilities | 339,094 | 581,115 |
Fiduciary liabilities | 33,054 | 38,075 |
Term loan - current | 25,000 | 25,000 |
Other current liabilities | 42,922 | 62,281 |
Total current liabilities | 838,158 | 1,130,874 |
Revolving credit facility | 160,000 | 40,000 |
Term loan | 168,750 | 175,000 |
Accrued retirement benefits and other employee-related liabilities | 628,139 | 648,655 |
Professional liability claims reserve | 237,074 | 235,856 |
Other noncurrent liabilities | 234,652 | 216,277 |
Total Liabilities | $ 2,266,773 | $ 2,446,662 |
Commitments and contingencies | ||
Stockholders’ Equity | ||
Additional paid-in capital | $ 1,862,634 | $ 1,870,745 |
Treasury stock, at cost — 5,111,449 and 5,270,907 shares | (416,309) | (429,286) |
Retained earnings | 2,178,980 | 2,066,104 |
Accumulated other comprehensive loss | (643,966) | (576,298) |
Total Stockholders’ Equity | 2,982,085 | 2,932,011 |
Non-controlling interest | 15,496 | 15,501 |
Total Equity | 2,997,581 | 2,947,512 |
Total Liabilities and Total Equity | 5,264,354 | 5,394,174 |
Class A Common Stock | ||
Stockholders’ Equity | ||
Class A Common Stock — $0.01 par value: 300,000,000 shares authorized; 74,552,661 issued and 69,441,212 and 69,281,754 outstanding | $ 746 | $ 746 |
Condensed Consolidated Balance5
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Sep. 30, 2015 | Jun. 30, 2015 |
Allowance for doubtful accounts receivable, current | $ 11,623 | $ 7,665 |
Treasury stock, shares | 5,111,449 | 5,270,907 |
Class A Common Stock | ||
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 | 69,441,212 | 69,281,754 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flows used in operating activities: | ||
Net income before non-controlling interests | $ 123,383 | $ 81,502 |
Adjustments to reconcile net income to net cash from operating activities: | ||
Provision for doubtful receivables from clients | 8,232 | 7,994 |
Depreciation | 27,323 | 27,332 |
Amortization of intangible assets | 16,869 | 17,537 |
Gain on sale of business, pretax | (55,390) | 0 |
Provision for deferred income taxes | 45,395 | 25,893 |
Stock-based compensation | 3,734 | 11,174 |
Other, net | 245 | 975 |
Changes in operating assets and liabilities (net of business acquisitions) | ||
Receivables from clients | (40,693) | (960) |
Fiduciary assets | 5,015 | (3,655) |
Other current assets | (15,501) | (24,418) |
Other noncurrent assets | (984) | (4,240) |
Accounts payable, accrued liabilities and deferred income | (37,107) | (59,649) |
Employee-related liabilities | (237,044) | (173,084) |
Fiduciary liabilities | (5,015) | 3,655 |
Accrued retirement benefits and other employee-related liabilities | (38,788) | (65,744) |
Professional liability claims reserves | 3,955 | 4,995 |
Other current liabilities | 4,224 | 5,255 |
Other noncurrent liabilities | 1,147 | (9,299) |
Income tax related accounts | 30,428 | (50,445) |
Cash flows used in operating activities | (160,572) | (205,182) |
Cash flows from/(used in) investing activities: | ||
Cash paid for business acquisitions | (15,964) | (1,255) |
Net proceeds from sale of business | 65,264 | 0 |
Fixed assets and software for internal use | (15,002) | (15,714) |
Capitalized software costs | (21,189) | (17,900) |
Purchases of held-to-maturity investments | (12,632) | (127,431) |
Redemptions of held-to-maturity investments | 74,153 | 107,330 |
Purchases of available-for-sale securities | (207) | (11) |
Sales and redemptions of available-for-sale securities | 0 | 11,721 |
Cash flows from/(used in) investing activities | 74,423 | (43,260) |
Cash flows from financing activities: | ||
Borrowings under credit facility | 384,500 | 145,000 |
Repayments under credit facility | (294,500) | (10,000) |
Repayments of notes payable | (6,250) | (6,250) |
Cash paid on retention liability | 0 | (284) |
Dividends paid | (10,506) | (9,723) |
Repurchases of common stock | 0 | (37,350) |
Payroll tax payments on vested shares | (12,039) | (10,363) |
Issuances of common stock and excess tax benefit | 12,065 | 4,229 |
Other financing activities | 15,000 | 0 |
Cash flows from financing activities | 88,270 | 75,259 |
Effect of exchange rates on cash | (17,306) | (11,316) |
Decrease in cash and cash equivalents | (15,185) | (184,499) |
Cash and cash equivalents at beginning of period | 715,151 | 727,849 |
Cash and cash equivalents at end of period | 699,966 | 543,350 |
Supplemental disclosures: | ||
Cash paid for interest | 906 | 809 |
Cash (refunded)/paid for income taxes, net of refunds | (26,412) | 63,796 |
Common stock issued upon the vesting of our restricted stock units | $ 20,261 | $ 8,246 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Additional Paid-in Capital | Treasury Stock, at cost | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Noncontrolling Interest | Class A Common StockCommon Stock |
Balance as of at Jun. 30, 2014 | $ 3,110,949 | $ 1,849,119 | $ (286,182) | $ 1,722,927 | $ (189,702) | $ 14,041 | $ 746 |
Shares outstanding as of at Jun. 30, 2014 | 74,552 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 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 | (6,672) | (6,672) | |||||
Exercises of stock options | 0 | (854) | 854 | ||||
Vesting of restricted stock units | (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 |
Shares outstanding as of at Sep. 30, 2014 | 74,552 | ||||||
Balance as of at Jun. 30, 2015 | 2,947,512 | 1,870,745 | (429,286) | 2,066,104 | (576,298) | 15,501 | $ 746 |
Shares outstanding as of at Jun. 30, 2015 | 74,552 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 123,383 | 123,382 | 1 | ||||
Other comprehensive income/(loss) | (67,674) | (67,668) | (6) | ||||
Repurchases of common stock | 0 | ||||||
Shares received for employee taxes upon vesting of restricted stock units | (8,213) | (8,213) | |||||
Exercises of stock options | (9) | (938) | 929 | ||||
Vesting of restricted stock units | (2,031) | (22,292) | 20,261 | ||||
Class A Common Stock: | |||||||
Cash dividends declared | (10,506) | (10,506) | |||||
Excess tax benefits | 11,450 | 11,450 | |||||
Stock-based compensation | 3,669 | 3,669 | |||||
Balance as of at Sep. 30, 2015 | $ 2,997,581 | $ 1,862,634 | $ (416,309) | $ 2,178,980 | $ (643,966) | $ 15,496 | $ 746 |
Shares outstanding as of at Sep. 30, 2015 | 74,552 |
Organization, Basis of Presenta
Organization, Basis of Presentation and Proposed Merger | 3 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | Organization, Basis of Presentation and Proposed Merger 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 consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2015 , which was filed with the SEC on August 14, 2015 , and may be accessed via EDGAR on the SEC’s web site at www.sec.gov. Our fiscal year 2016 began July 1, 2015 and ends June 30, 2016 . The results of operations for the three months ended September 30, 2015 are not necessarily indicative of the results that can be expected for the entire fiscal year ending June 30, 2016 . 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. Proposed Merger On June 30, 2015, Willis Group Holdings PLC (“Willis”) and Towers Watson announced the signing of a definitive merger agreement under which the companies will combine in an all-stock merger of equals transaction (“Towers Watson | Willis Merger”). Based on the closing price of Willis and Towers Watson common stock on June 29, 2015, the implied equity value of the transaction is approximately $18 billion . At the effective time of the Towers Watson | Willis Merger, each share of Class A common stock, par value $0.01 per share, of Towers Watson (the “TW Common Stock”) issued and outstanding immediately prior to the Towers Watson | Willis Merger (other than shares held by Towers Watson, Willis, or Merger Sub and dissenting shares) will be converted into the right to receive 2.6490 validly issued, fully paid and nonassessable ordinary shares of Willis. In addition, Towers Watson intends to declare and pay a pre-Towers Watson | Willis Merger special dividend of $4.87 per share of TW Common Stock, payable to holders of record of TW Common Stock prior to the closing date. We are in the process of evaluating our options to fund the special dividend. The transaction is expected to close by December 31, 2015, subject to customary closing conditions, including regulatory approvals, and approval by both Willis shareholders and Towers Watson stockholders. 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 was originally effective for interim and annual reporting periods that begin after December 15, 2016, and early adoption is prohibited. However, the FASB issued ASU 2015-14 on August 12, 2015, which defers the adoption date for one year and allows for early adoption. ASU 2014-09 is now effective for interim and annual reporting periods that begin after December 15, 2017. 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 ASU 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. On September 25, 2015, the FASB issued ASU 2015-16, Business Combinations, Simplifying the Accounting for Measurement Period Adjustments. The ASU eliminates the requirement that an acquirer in a business combination account for measurement-period adjustments retrospectively. Instead, an acquirer will recognize a measurement-period adjustment during the period in which it determines the amount of the adjustment, including the effect on earnings of any amounts it would have recorded in previous periods if the accounting had been completed at the acquisition date. The ASU is effective for interim and annual periods that begin after December 15, 2015. The Company is currently evaluating the impact of adopting this provision. |
Acquisitions and Divestitures
Acquisitions and Divestitures | 3 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Acquisitions and Divestitures | Acquisitions and Divestitures Acquisitions Acclaris Acquisition On May 11, 2015, Towers Watson acquired Acclaris Holdings, Inc. (“Acclaris”) for $140.0 million in cash. Headquartered in Tampa, FL, and with locations in Kansas and India, Acclaris offers flexible products that include integrated technology and services to support consumer-directed benefits on a single platform in a scalable way. Its core business focuses on health care and reimbursement accounts which include health reimbursement arrangements (HRAs), health savings accounts (HSAs), flexible spending accounts, commuter accounts and custom reimbursement accounts. Acclaris was integrated into our Exchange Solutions segment and joined the Other line of business as the Consumer-Directed Accounts practice. Together, Towers Watson and Acclaris enable clients of any size to offer benefits in new and cost-effective ways. During the fourth quarter of fiscal year 2015, we recorded the tangible assets received, liabilities assumed, and the fair value of intangibles. The intangibles included developed technology, valued at $14.5 million , and a customer related intangible, valued at $12.3 million . Our estimate of fair value for the developed technology intangible and the customer related intangible was based on the relief from royalty method and the multi-period excess earnings method, respectively. Significant assumptions used in the valuation were estimated revenues and expenses, contributory asset charges, required rates of return, and discount rates. During the first quarter of fiscal year 2016, working capital and acquisition accounting adjustments were made resulting in a refund of $1.7 million of cash consideration and a $3.1 million decrease to goodwill. It was determined that total consideration was $139.5 million , and we recorded $109.2 million of goodwill related to the acquisition of Acclaris. Saville Consulting Acquisition On April 23, 2015, Towers Watson acquired Saville Consulting Group Limited (“Saville”) for £42.0 million ( $64.5 million ) in cash. Saville is a U.K. and Jersey-based global psychometric assessment business. Its principal activities include helping employers to improve the match between people, work and organizations through the development and sale of objective psychometric assessment tools and related user training and consultancy services. Saville is included within our Data, Surveys and Technology line of business within our Talent and Rewards segment. During the fourth quarter of fiscal 2015, we recorded the tangible assets received, liabilities assumed, and the fair value of intangibles. The intangibles included a product intangible, valued at £25.8 million , and other intangibles that were collectively immaterial. Our estimate of fair value for the product intangible was based on the relief from royalty method. Significant assumptions used in the valuation were estimated revenues and expenses, contributory asset charges, required rates of return, and discount rates. It was determined that total consideration was £43.4 million , and we recorded £5.8 million of goodwill related to the acquisition of Saville, inclusive of £0.6 million of deferred consideration recorded in the first quarter of fiscal year 2016. Divestitures Sale of Human Resources Service Delivery Practice On July 9, 2015, we entered into a definitive agreement with KPMG to sell our Human Resources Service Delivery (“HRSD”) practice. The sale closed on August 14, 2015 for proceeds of $65.8 million , which reflects working capital adjustments and excludes transaction costs. The HRSD practice was a component of our Talent and Rewards segment. We divested this business to enhance our focus on other targeted areas like software offerings, integrating the Saville Consulting acquisition, and continuing to drive market leadership of our core businesses. ASU 2014-08, Presentation of Financial Statements and Property, Plant, and Equipment - Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, amended the requirements for the presentation of discontinued operations in the financial statements. Discontinued operations that do not represent a strategic shift or will not have a major effect on an entity’s operations and financial results are no longer reported in discontinued operations and are only disclosed in the notes to the financial statements. The divestiture of HRSD does not qualify for discontinued operations presentation in the financial statements. Included in other non-operating income on the condensed consolidated statements of operations for the three months ended September 30, 2015 is $55.4 million related to the gain on the sale of HRSD. The following amounts are directly attributable to the results of operations of our HRSD practice and are included in the condensed consolidated statements of operations for the three months ended September 30, 2015 and 2014, respectively: Three Months Ended September 30, 2015 2014 Revenue $ 5,807 $ 7,610 Costs of providing services 4,634 6,212 Income from operations $ 1,173 $ 1,398 |
Investments
Investments | 3 Months Ended |
Sep. 30, 2015 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments Held-to-maturity - Our held-to-maturity investments are comprised of term deposits, certificates of deposit, and certain bonds with original maturities greater than 90 days. As of September 30, 2015 and June 30, 2015 , all held-to-maturity investments were included in short-term investments in the accompanying condensed consolidated balance sheet. During the three months ended September 30, 2015 and September 30, 2014 , proceeds from maturities of held-to-maturity investments were $74.2 million and $107.3 million , respectively resulting in immaterial realized gains. Available-for-sale - Our available-for-sale securities are comprised of equity securities and mutual funds / exchange-traded funds. There were no proceeds from the sales and maturities of available-for-sale investments for the three months ended September 30, 2015 . Proceeds from sales and maturities of available-for-sale investments during the three months ended September 30, 2014 were $11.7 million , resulting in immaterial gains. Additional information on the Company’s investments is provided in the following table as of September 30, 2015 and June 30, 2015 : As of September 30, 2015 As of June 30, 2015 Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value Short Term Investments: Held-to-maturity: Term deposits & Certificates of deposit $ 12,771 $ — $ — $ 12,771 $ 70,346 $ — $ — $ 70,346 Fixed income securities 41,572 — — 41,572 51,685 — — 51,685 Available-for-sale: Equity securities 102 — (27 ) 75 102 11 (10 ) 103 Mutual funds and exchange-traded funds 5,050 2 (26 ) 5,026 5,033 5 (16 ) 5,022 Total Short-Term Investments: 59,495 2 (53 ) 59,444 127,166 16 (26 ) 127,156 Other Assets: Available-for-sale: Mutual funds and exchange-traded funds 43,922 — (882 ) 43,040 43,711 6 (147 ) 43,570 Total Investments in Other Assets $ 43,922 $ — $ (882 ) $ 43,040 $ 43,711 $ 6 $ (147 ) $ 43,570 For all investments other than fixed income securities, amortized cost represents the cost basis of the investment as of the purchase date. For fixed income securities, amortized cost represents the face value of the bond plus the unamortized portion of the bond premium as of the date presented. 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 as of September 30, 2015 was $46.4 million . The aggregate fair value of investments with unrealized losses as of June 30, 2015 was $24.4 million . |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Sep. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The components of goodwill are outlined below for the three months ended September 30, 2015 : Benefits Exchange Solutions Risk and Financial Services Talent and Rewards All Other Total Balance as of June 30, 2015 $ 1,088,504 $ 682,033 $ 370,274 $ 136,326 $ 1,214 $ 2,278,351 Goodwill related to acquisitions — — 1,486 — — 1,486 Goodwill related to disposals — — — (1,412 ) — (1,412 ) Purchase accounting adjustments — (3,079 ) — 958 — (2,121 ) Translation adjustment (30,752 ) — (11,721 ) (4,271 ) — (46,744 ) Balance as of September 30, 2015 $ 1,057,752 $ 678,954 $ 360,039 $ 131,601 $ 1,214 $ 2,229,560 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, 2015 : Customer related intangible Core/ developed technology Product Favorable agreements Total Balance as of June 30, 2015 $ 168,319 $ 68,015 $ 40,184 $ 6,091 $ 282,609 Intangible assets acquired — 13,520 — — 13,520 Amortization (10,433 ) (5,742 ) (526 ) (391 ) (17,092 ) Translation adjustment (2,259 ) (126 ) (1,481 ) (171 ) (4,037 ) Balance as of September 30, 2015 $ 155,627 $ 75,667 $ 38,177 $ 5,529 $ 275,000 We record amortization related to our finite-lived intangible assets. Exclusive of the amortization of our favorable lease agreements, for the three months ended September 30, 2015 and September 30, 2014 , we recorded amortization of $16.9 million and $17.5 million , respectively. Our indefinite-lived non-amortizable intangible assets consist of acquired trade names. The carrying value of these assets was $367.9 million and $371.5 million as of September 30, 2015 and June 30, 2015 , respectively. The change during the period was due to foreign currency translation. Our acquired unfavorable lease liabilities were $6.7 million and $7.3 million as of September 30, 2015 and June 30, 2015 , respectively, and are recorded in the other noncurrent liabilities in the condensed consolidated balance sheet. The change for the three months ended September 30, 2015 was comprised of a reduction to rent expense of $0.6 million . The following table reflects the carrying value of finite-lived intangible assets and liabilities as of September 30, 2015 and June 30, 2015 : As of September 30, 2015 As of June 30, 2015 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Finite-lived intangible assets and liabilities: Trademark and trade name $ 150 $ 150 $ 150 $ 150 Customer related intangibles 381,933 226,306 388,113 219,794 Core/developed technology 187,469 111,802 174,480 106,465 Product 39,030 853 40,537 353 Favorable agreements 10,526 4,997 10,866 4,775 Total finite-lived intangible assets $ 619,108 $ 344,108 $ 614,146 $ 331,537 Unfavorable lease agreements $ 20,811 $ 14,158 $ 21,793 $ 14,512 Total finite-lived intangible liabilities $ 20,811 $ 14,158 $ 21,793 $ 14,512 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, 2015 was 6.9 years. The table below reflects the following for the remainder of fiscal year 2016 and for subsequent fiscal years: • Future estimated amortization expense for amortizable intangible assets consisting of customer related intangibles, core/developed technology, and product; • and the rent offset resulting from the amortization of the net lease intangible assets and liabilities: Fiscal year ending June 30, Amortization Rent (Offset) Expense 2016 $ 48,143 $ (1,206 ) 2017 57,181 (1,873 ) 2018 49,260 (1,981 ) 2019 42,258 (315 ) 2020 25,973 101 Thereafter 50,770 36 Total $ 273,585 $ (5,238 ) |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Sep. 30, 2015 | |
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 at September 30, 2015 and June 30, 2015 : Fair Value Measurements on a Recurring Basis at September 30, 2015 Level 1 Level 2 Level 3 Total Assets: Available-for-sale securities: Equity securities $ 75 $ — $ — $ 75 Mutual funds / exchange traded funds $ 48,066 $ — $ — $ 48,066 Derivatives: Foreign exchange forwards (a) $ — $ 301 $ — $ 301 Liabilities: Derivatives: Foreign exchange forwards (a) $ — $ 403 $ — $ 403 Contingent Liabilities: Retention bonus liability (b) $ — $ — $ 9,948 $ 9,948 Fair Value Measurements on a Recurring Basis at June 30, 2015 Level 1 Level 2 Level 3 Total Assets: Available-for-sale securities: Equity securities $ 102 $ — $ — $ 102 Mutual funds / exchange traded funds $ 48,592 $ — $ — $ 48,592 Derivatives: Foreign exchange forwards (a) $ — $ 2,177 $ — $ 2,177 Liabilities: Derivatives: Foreign exchange forwards (a) $ — $ 272 $ — $ 272 Contingent Liabilities: Retention bonus liability (b) $ — $ — $ 9,934 $ 9,934 _________________________ (a) These derivative investments are included in other current assets or accounts payable, accrued liabilities and deferred income on the accompanying 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 at June 30, 2015 , and other current liabilities at September 30, 2015 , on the accompanying 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, 2015 , we recorded losses of $0.4 million for instruments still held at September 30, 2015 . For the three months ended September 30, 2014 , we recorded losses of $1.2 million for instruments still held at September 30, 2014 . 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, 2015 or 2014 . 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 2015 Annual Report on Form 10-K on August 14, 2015 . There were no transfers of securities between any levels for the three months ended September 30, 2015 or the fiscal year ended June 30, 2015 . 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 1.5% 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 $10.0 million and $9.2 million , respectively. • Forfeiture rates - Changing the assumed forfeiture rate to either 5.0% or 10.0% would have resulted in values of $10.2 million and $9.6 million , respectively. Fair Value Measurements using significant unobservable inputs (Level 3): Beginning balance - June 30, 2015 $ 9,934 Payments — Unrealized (gains)/losses 14 Ending balance - September 30, 2015 $ 9,948 |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
Sep. 30, 2015 | |
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 forecast collections. We have designated these derivatives as cash flow hedges of the forecast 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, 2015 , the longest outstanding maturity was 12 months. As of September 30, 2015 , a net $0.3 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, 2015 and June 30, 2015 , we had cash flow and economic hedges with a notional value of $30.5 million and $43.2 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, 2015 and June 30, 2015 was a liability of $0.1 million and an asset of $1.9 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, 2015 and June 30, 2015 and their location in the condensed consolidated balance sheet are as follows: Derivative assets Derivative liabilities Balance sheet location Fair value Balance sheet location Fair value September 30, 2015 June 30, 2015 September 30, 2015 June 30, 2015 Derivatives designated as hedging instruments: Foreign exchange forwards Other current assets $ 301 $ 1,792 Accounts payable, $ — $ (157 ) Derivatives not designated as hedging instruments: Foreign exchange forwards Other current assets — 385 Accounts payable, (403 ) (115 ) Total derivative assets (liabilities) $ 301 $ 2,177 $ (403 ) $ (272 ) 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, 2015 and 2014 are as follows: Three Months Ended (Loss)/gain recognized in OCI Location Gain/(loss) reclassified Location of loss recognized in income Loss recognized 2015 2014 2015 2014 2015 2014 Foreign exchange forwards $ (406 ) $ 1,185 General and $ 914 $ (156 ) General and $ — $ (28 ) Total $ (406 ) $ 1,185 $ 914 $ (156 ) $ — $ (28 ) Included in the notional values above are $20.5 million and $20.4 million as of September 30, 2015 and June 30, 2015 , 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, 2015 and 2014 are as follows: Gain/(loss) recognized in income Three Months Ended Derivatives not designated as hedging instruments: Location of gain/(loss) 2015 2014 Foreign exchange forwards General and administrative expenses $ 133 $ (1,895 ) Total $ 133 $ (1,895 ) |
Retirement Benefits
Retirement Benefits | 3 Months Ended |
Sep. 30, 2015 | |
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, 2015 , 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. 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, 2015 and 2014 : Three Months Ended September 30, 2015 2014 North America Europe North America Europe Service cost $ 18,042 $ 1,077 $ 18,211 $ 3,373 Interest cost 36,185 9,573 34,630 10,435 Expected return on plan assets (52,137 ) (12,866 ) (53,291 ) (13,226 ) Amortization of net loss 9,969 2,691 4,378 3,302 Amortization of prior service (credit)/cost (1,994 ) 10 (2,095 ) 11 Net periodic benefit cost $ 10,065 $ 485 $ 1,833 $ 3,895 The increase in our North American pension expense was primarily driven by lower than expected return on assets and a change in assumptions based on the new mortality tables. 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, 2015 and 2014 : Three Months Ended 2015 2014 Service cost $ 168 $ 321 Interest cost 1,432 2,052 Expected return on plan assets (20 ) (24 ) Amortization of net gain (1,506 ) (440 ) Amortization of prior service credit (1,726 ) (1,726 ) Net periodic benefit (credit)/cost $ (1,652 ) $ 183 Employer Contributions to Defined Benefit Pension Plans The Company made $31.4 million in contributions to the North American plans during the first three months of fiscal year 2016 , and anticipates making $2.9 million in contributions over the remainder of the fiscal year. The Company made $3.1 million in contributions to European plans during the first three months of fiscal year 2016 , and anticipates making $37.4 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 was $5.1 million and $4.7 million for the three months ended September 30, 2015 and 2014 , respectively. The cost of the Company’s contributions to the various U.K. defined contribution plans was $5.6 million and $5.0 million for the three months ended September 30, 2015 and 2014 , respectively. |
Debt, Commitments and Contingen
Debt, Commitments and Contingent Liabilities | 3 Months Ended |
Sep. 30, 2015 | |
Debt Commitments And Contingent Liabilities [Abstract] | |
Debt, Commitments And Contingent Liabilities | Debt, Commitments, Contingent and Other 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, 2015 and 2014 , the weighted-average interest rate on borrowings under the Senior Credit Facility was 1.56% and 1.39% , 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, 2015, we were in compliance with our covenants. As of September 30, 2015 , we had $160.0 million outstanding borrowings under the Senior Credit Facility. Letters of Credit under the Senior Credit Facility As of September 30, 2015 , 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 $1.0 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, 2015 and 2014 was 1.45% and 1.40% , respectively. The Term Loan amortizes at a rate of $6.25 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, 2015 , the balance on the Term Loan was $193.75 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. Employee-Related and Other Current Liabilities Employee related liabilities decreased due to the payment of our discretionary year-end bonuses. The decrease in other current liabilities was primarily due to the repayment of an uncommitted line of credit. 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 are parties to various lawsuits, arbitrations or mediations that arise in the ordinary course of business. Towers Watson was formed on January 1, 2010, upon the merger (the “Towers Perrin | Watson Wyatt Merger”) of Watson Wyatt Worldwide, Inc. (“Watson Wyatt”) and Towers, Perrin, Forster & Crosby, Inc. (“Towers Perrin”), and its subsidiaries include both Watson Wyatt and Towers Perrin. The matters reported on below relate to certain pending claims or demands against Towers Watson and its subsidiaries. We do not expect the impact of claims or demands 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. Our professional liability insurance for each annualized policy period commencing July 1, 2011, up to and including the policy period commencing July 1, 2016, 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 Towers Perrin | Watson Wyatt 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, 2015 , we had a $182.5 million IBNR liability balance, net of estimated IBNR recoverable receivables of our captive insurance companies. This net liability was $ 181.5 million as of June 30, 2015 . 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. 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. 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. 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. On November 21, 2014, the City filed its response in opposition to the Company’s motion to dismiss. On September 23, 2015, the Company’s motion to dismiss was denied by the United States District Court for the Southern District of Texas, Houston Division. 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. 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, compensatory damages for which losses are quantified at £47,500,000 , for the period August 2008 to October 2012. TWL sent a Letter of Response on 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. Meriter Health Services On January 12, 2015, Towers Watson Delaware Inc. (“TWDE”), a wholly-owned subsidiary of the Company, was served with a Summons and Complaint (the “Complaint”) on behalf of Meriter Health Services, Inc. (“Meriter”), plan sponsor of the Meriter Health Services Employee Retirement Plan (the “Plan”). The Complaint was filed in Wisconsin State Court in Dane County; on February 12, 2015, the Complaint was removed to the United States District Court for the Western District of Wisconsin. On March 10, 2015, Meriter filed a Motion to Remand, seeking to transfer the Complaint back to Wisconsin State Court in Dane County, which remains pending. Meriter subsequently filed an amended complaint (“Amended Complaint”) on July 24, 2015, to which the defendants filed answers. In the Amended Complaint, Meriter alleges that TWDE, and other entities and individuals, acted negligently concerning the benefits consulting advice provided to it by Towers, Perrin, Forster & Crosby, Inc. (“TPFC”) and Davis, Conder, Enderle & Sloan, Inc. (“DCES”), including TPFC’s involvement in the Plan design and drafting of the Plan document in 1987, DCES’ Plan review in 2001, Plan redesign, Plan amendment, and drafting of ERISA section 204(h) notices. Additionally, Meriter asserts that TPFC and DCES breached alleged fiduciary duties to advise Meriter regarding the competency of Meriter’s then ERISA counsel. Meriter’s current claims arise out of a 2010 putative class action lawsuit related to the Plan that was filed by Plan participants against Meriter alleging a number of claims involving ERISA violations. The lawsuit was settled in 2015 for $82 million . While the Amended Complaint does not include a specific, quantified demand, it does refer to the $82 million paid out by Meriter in settlement of the class action, and other damages (including punitive damages) which are not further particularized in the Amended Complaint. On August 10, 2015, TWDE and other defendants filed with the court their respective answers to the Amended Complaint. On June 1, 2015, TWDE and other defendants filed a Motion to Bifurcate Statute of Limitations Issues and Stay Further Discovery Pending Decision on Those Issues. This motion is still pending before the Court. The parties are currently engaged in discovery. Based on all of the information to date, and given the stage of the matter, TWDE is currently unable to provide an estimate of the reasonably possible loss or range of loss. TWDE disputes the allegations, and intends to defend the matter vigorously. In re Towers Watson & Co. Stockholders Litigation Multiple complaints challenging the Towers Watson | Willis Merger have been filed in the Court of Chancery for the State of Delaware. See New Jersey Building Laborers’ Statewide Annuity Fund v. Towers Watson & Co., et al., C.A. No. 11270-CB (filed on July 9, 2015), City of Atlanta Firefighters’ Pension Fund v. Ganzi, et al., C.A. No. 11275-CB (filed on July 10, 2015), Cordell v. Haley, et al., C.A. No. 11358-CB (filed on July 31, 2015) and Mills v. Towers Watson & Co., et al., C.A. No. 11423 (filed on August 24, 2015). These complaints were filed by purported stockholders of Towers Watson on behalf of a putative class comprised of all Towers Watson stockholders. The complaints generally allege that Towers Watson’s directors breached their fiduciary duties to Towers Watson stockholders by agreeing to merge Towers Watson with Willis through an inadequate and unfair process, which led to inadequate and unfair consideration, and by agreeing to unfair deal protection devices, and that Willis and the Merger Sub formed for purposes of consummating the proposed merger aided and abetted those alleged breaches. On August 17, 2015, the court consolidated the first three filed actions (the fourth, Mills, had not at that time been filed) and any other actions then pending or thereafter filed arising out of the same issues of fact under the caption In re Towers Watson & Co. Stockholders Litigation, Consolidated C.A. No. 11270-CB. On September 9, 2015, the plaintiffs in the consolidated action and in Mills filed a consolidated amended complaint, which, among other things, added claims for alleged misstatements and omissions from a preliminary proxy statement and prospectus for the merger dated August 27, 2015. The consolidated amended complaint seeks, among other things, to enjoin the merger and an award of damages in an unspecified amount against the Towers Watson directors. On September 17, 2015, the plaintiffs filed a motion for expedited proceedings and a motion for a preliminary injunction. On October 14, 2015, the defendants filed opposition papers to the motion for expedited proceedings. On October 20, 2015, the plaintiffs withdrew their motion for expedited proceedings and motion for a preliminary injunction. Based on all of the information to date, and given the stage of the matter, we are currently unable to provide an estimate of the reasonably possible loss or range of loss. The Towers Watson directors intend to defend themselves vigorously against the claims asserted in the consolidated amended complaint. |
Variable Interest Entities
Variable Interest Entities | 3 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Variable Interest Entities | Variable Interest Entities We offer integrated solutions that include different combinations of investment management or consulting, pension administration, and actuarial services, through entities holding approximately $73.5 million of assets that are considered and for which our management fee is considered a variable interest. We determine whether we consolidate based on whether we have both the power to direct the activities that most significantly impact the VIE’s performance and have the obligation to absorb losses of, or the right to receive benefits from the VIE that could potentially be significant to the VIE. We are not the primary beneficiary and therefore do not consolidate any of the funds as of September 30, 2015 or June 30, 2015 . Our maximum exposure to loss of these unconsolidated VIEs is limited to collection of any unpaid management fees or invested capital (which are not material). 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 Comprehensive
Accumulated Other Comprehensive Income/(Loss) | 3 Months Ended |
Sep. 30, 2015 | |
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 translation (1) Hedge effectiveness (1) Available-for-sale securities (2) Defined pension and post-retirement benefit costs (3) Before Tax Tax After Tax Before Tax Tax After Tax Before Tax Tax After Tax As of June 30, 2015 $ (226,041 ) $ 1,616 $ (657 ) $ 959 $ 141 $ (60 ) $ 81 $ (512,767 ) $ 161,470 $ (351,297 ) Other comprehensive income/(loss) before reclassifications (71,555 ) (406 ) 159 (247 ) (117 ) 38 (79 ) — — — Amounts reclassified from accumulated other comprehensive income — (914 ) 359 (555 ) — — — 7,091 (2,323 ) 4,768 Net current-period other comprehensive income/(loss) (71,555 ) (1,320 ) 518 (802 ) (117 ) 38 (79 ) 7,091 (2,323 ) 4,768 As of September 30, 2015 $ (297,596 ) $ 296 $ (139 ) $ 157 $ 24 $ (22 ) $ 2 $ (505,676 ) $ 159,147 $ (346,529 ) ________________________ (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 general and administrative expenses (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) |
Share-Based Compensation
Share-Based Compensation | 3 Months Ended |
Sep. 30, 2015 | |
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 certain 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. These awards are typically approved by the Compensation Committee of the Board of Directors in the first quarter of the fiscal year. The LTIP awards are generally 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. Except for the Exchange Solutions (“ES”) LTIP awards, 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 applicable performance period, subject to the employee or executive officers’ continued employment with us through the end of the performance period, except in the case of a qualified retirement. For participants that meet the requirement for qualified retirement, we record the expense of their awards over the one-year service period as performed. For the 2014 ES LTIP awards, 240% of the target number of RSUs vested, and for the 2016 ES LTIP awards, between 0% and 196% of the target number of RSUs will vest, based on the extent to which specified performance metrics are achieved over the applicable performance period, subject to the employee or executive officers’ continued employment with us through the end of the performance period. Except for the ES LTIP awards, 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. The performance metrics for the 2014 ES LTIP awards are based on EBITDA margin and revenue growth, and the performance metrics for the 2016 ES LTIP awards are based on ES net operating income margin and revenue. We record stock-based compensation expense over the performance period beginning with the date of grant and will adjust the expense for their awards based upon the level of performance achieved. The Compensation Committee of the Board of Directors also approves RSUs to certain employees under our Select Equity Plan (“SEP”) during the first quarter of the fiscal year. The RSUs vest annually over a three -year period and include an assumed forfeiture rate. The following table presents key information with regard to each of the awards that had been granted as of September 30, 2015 : Plan Performance Period RSUs Awarded Grant Date Stock Price Assumed Forfeiture Rate 2015 LTIP July 1, 2014 to June 30, 2017 82,350 $100.02 and $131.35 None 2014 LTIP July 1, 2013 to June 30, 2016 65,355 $105.90 and $110.70 None 2013 LTIP July 1, 2012 to June 30, 2015 121,075 $54.59 None 2016 ES LTIP July 1, 2015 to June 30, 2017 38,864 $125.50 None 2014 ES LTIP July 1, 2013 to June 30, 2015 30,192 $91.43 None 2015 SEP July 1, 2015 to June 30, 2018 101,923 $119.30 5% 2014 SEP July 1, 2014 to June 30, 2017 112,464 $106.89 5% 2013 SEP July 1, 2013 to June 30, 2016 131,286 $91.43 5% 2012 SEP July 1, 2012 to June 30, 2015 147,503 $53.93 5% Total expense related to our LTIP and SEP awards, and other miscellaneous RSU awards for the three months ended September 30, 2015 and 2014 was $2.8 million and $9.6 million , respectively. 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, 2015, 7,234 RSUs were granted for the annual award for outside directors, which vest in equal quarterly installments over fiscal year 2016. 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. We recorded stock-based compensation expense related to these grants in the amount of $0.5 million and $0.4 million for the three months ended September 30, 2015 and 2014 , respectively. Stock Options In light of the pending Towers Watson | Willis Merger, the Compensation Committee of our Board of Directors determined that it would be very difficult to establish performance metrics for our key executives under a performance-vested based restricted stock unit awards type of plan for fiscal year 2016. As a result, the Compensation Committee approved the issuance of stock options under the existing 2009 Long Term Incentive Plan. This is similar to the approach taken by Watson Wyatt Worldwide, Inc., in connection with the merger between Towers, Perrin, Foster & Crosby, Inc. and Watson Wyatt Worldwide, Inc. The number of options granted under the new plan is 536,890 and the options have an exercise price equal to the grant date market price of Towers Watson’s common stock of $120.58 . The options vest on July 1, 2018 contingent upon the optionee’s continued service with Towers Watson or the merged entity, except in the case of a qualified retirement. The vesting of 202,365 of these options is also contingent upon the occurrence of the Towers Watson | Willis Merger on or before December 31, 2016, and therefore, a performance factor is applied to these options when determining the expense. We will adjust the expense based upon the performance achieved. Compensation expense is recorded on a straight-line basis over the vesting term. For participants who meet the requirement for qualified retirement, we record the expense of their awards over the one-year service period as performed. We recorded stock-based compensation expense related to these stock options in the amount of $0.4 million for the three months ended September 30, 2015 . There were no stock options granted in 2014. The fair value of the stock option grants was calculated using the Black-Scholes formula and is included in the valuation assumptions table below: Three Months Ended September 30, 2015 Stock option grants: Risk-free interest rate 1.32% Expected lives in years 5.2 Expected volatility 17.75% - 23.89% Dividend yield 0.50% -1.65% Weighted-average grant date fair value of options granted $16.96 - $27.22 Number of shares granted 536,890 Acquired Plans 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. 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. 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 were 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 at the time of the acquisition, less 10% estimated forfeitures, was $7.9 million , and will be recorded over the future vesting periods. We are now estimating a 5% forfeiture rate for the remaining unvested options. Total expense related to our acquired option plans for the three months ended September 30, 2015 was not material. Total expense related to our acquired plans for the three months ended September 30, 2014 was $0.7 million . Impact of Proposed Merger to Certain Vesting Provisions Certain awards contain provisions affected by a change in control. The Non-Employee Director awards will vest immediately upon a change in control. The number of RSUs payable under the 2014 and 2015 LTIP awards is determined at the greater of 100% of the target level or the amount calculated based on the Company’s actual financial performance prior to the change in control. These LTIP awards will be paid on the original payment date, provided the participant remains in service, with the exception for involuntary termination within twelve months of the change in control. |
Income Taxes
Income Taxes | 3 Months Ended |
Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Provision for income taxes for the three months ended September 30, 2015 was $60.6 million , compared to $44.1 million for the three months ended September 30, 2014 . The effective tax rate was 32.9% for the three months ended September 30, 2015 and 35.1% for the three months ended September 30, 2014 . The prior year effective tax rate was higher due to increases in uncertain tax positions of 2.4% . We have liabilities for uncertain tax positions under ASC 740, Income Taxes of $32.8 million , excluding interest and penalties. 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 $0.7 million to $3.3 million , excluding interest and penalties. |
Segment Information
Segment Information | 3 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information Towers Watson has four reportable operating segments or business areas: • Benefits • Exchange Solutions • Risk and Financial Services • Talent and Rewards 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). The table below presents revenue (net of reimbursable expenses) of the reported segments for the three months ended September 30, 2015 and 2014 : Three Months Ended 2015 2014 Benefits $ 448,024 $ 465,587 Exchange Solutions 118,491 86,282 Risk and Financial Services 137,723 148,026 Talent and Rewards 160,291 153,294 Total revenue (net of reimbursable expenses) $ 864,529 $ 853,189 The table below presents net operating income of the reported segments for the three months ended September 30, 2015 and 2014 : Three Months Ended 2015 2014 Benefits $ 151,460 $ 155,759 Exchange Solutions 21,516 14,012 Risk and Financial Services 33,502 35,561 Talent and Rewards 47,465 36,843 Total net operating income $ 253,943 $ 242,175 The table below presents a reconciliation of the information reported by segment to the consolidated amounts reported for the three months ended September 30, 2015 and 2014 : Three Months Ended 2015 2014 Revenue: Total segment revenue $ 864,529 $ 853,189 Reimbursable expenses and other 31,092 24,918 Revenue $ 895,621 $ 878,107 Net Operating Income: Total segment net operating income $ 253,943 $ 242,175 Differences in allocation methods (1) 9,791 15,712 Amortization of intangibles (16,869 ) (17,537 ) Transaction and integration expenses (9,330 ) — Stock-based compensation (2) (2,465 ) (5,552 ) Discretionary compensation (101,369 ) (92,364 ) Payroll tax on discretionary compensation (5,618 ) (5,519 ) Other, net 1,317 (10,917 ) Income from operations $ 129,400 $ 125,998 ________________________ (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 the 2014 ES LTIP awards granted to certain executives of our Exchange Solutions segment, which are included within the calculation of Exchange Solutions’ net operating income. The 2016 ES LTIP awards are included in corporate stock-based compensation. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Sep. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On October 13, 2015 , the Company and one of our alliance partners agreed to discontinue our alliance. The Company will pay the alliance partner up to an estimated total of $37.5 million as part of the agreement. |
Accounting Policies (Policies)
Accounting Policies (Policies) | 3 Months Ended |
Sep. 30, 2015 | |
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 was originally effective for interim and annual reporting periods that begin after December 15, 2016, and early adoption is prohibited. However, the FASB issued ASU 2015-14 on August 12, 2015, which defers the adoption date for one year and allows for early adoption. ASU 2014-09 is now effective for interim and annual reporting periods that begin after December 15, 2017. 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 ASU 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. On September 25, 2015, the FASB issued ASU 2015-16, Business Combinations, Simplifying the Accounting for Measurement Period Adjustments. The ASU eliminates the requirement that an acquirer in a business combination account for measurement-period adjustments retrospectively. Instead, an acquirer will recognize a measurement-period adjustment during the period in which it determines the amount of the adjustment, including the effect on earnings of any amounts it would have recorded in previous periods if the accounting had been completed at the acquisition date. The ASU is effective for interim and annual periods that begin after December 15, 2015. The Company is currently evaluating the impact of adopting this provision. |
Fair Value Transfer Policy | The Company’s policy is to recognize transfers in and transfers out as of the beginning of the reporting period. |
Acquisitions and Divestitures (
Acquisitions and Divestitures (Tables) | 3 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Selected financial information relating to HRSD business's operations | The following amounts are directly attributable to the results of operations of our HRSD practice and are included in the condensed consolidated statements of operations for the three months ended September 30, 2015 and 2014, respectively: Three Months Ended September 30, 2015 2014 Revenue $ 5,807 $ 7,610 Costs of providing services 4,634 6,212 Income from operations $ 1,173 $ 1,398 |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Sep. 30, 2015 | |
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, 2015 and June 30, 2015 : As of September 30, 2015 As of June 30, 2015 Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value Short Term Investments: Held-to-maturity: Term deposits & Certificates of deposit $ 12,771 $ — $ — $ 12,771 $ 70,346 $ — $ — $ 70,346 Fixed income securities 41,572 — — 41,572 51,685 — — 51,685 Available-for-sale: Equity securities 102 — (27 ) 75 102 11 (10 ) 103 Mutual funds and exchange-traded funds 5,050 2 (26 ) 5,026 5,033 5 (16 ) 5,022 Total Short-Term Investments: 59,495 2 (53 ) 59,444 127,166 16 (26 ) 127,156 Other Assets: Available-for-sale: Mutual funds and exchange-traded funds 43,922 — (882 ) 43,040 43,711 6 (147 ) 43,570 Total Investments in Other Assets $ 43,922 $ — $ (882 ) $ 43,040 $ 43,711 $ 6 $ (147 ) $ 43,570 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Sep. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill | The components of goodwill are outlined below for the three months ended September 30, 2015 : Benefits Exchange Solutions Risk and Financial Services Talent and Rewards All Other Total Balance as of June 30, 2015 $ 1,088,504 $ 682,033 $ 370,274 $ 136,326 $ 1,214 $ 2,278,351 Goodwill related to acquisitions — — 1,486 — — 1,486 Goodwill related to disposals — — — (1,412 ) — (1,412 ) Purchase accounting adjustments — (3,079 ) — 958 — (2,121 ) Translation adjustment (30,752 ) — (11,721 ) (4,271 ) — (46,744 ) Balance as of September 30, 2015 $ 1,057,752 $ 678,954 $ 360,039 $ 131,601 $ 1,214 $ 2,229,560 |
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, 2015 : Customer related intangible Core/ developed technology Product Favorable agreements Total Balance as of June 30, 2015 $ 168,319 $ 68,015 $ 40,184 $ 6,091 $ 282,609 Intangible assets acquired — 13,520 — — 13,520 Amortization (10,433 ) (5,742 ) (526 ) (391 ) (17,092 ) Translation adjustment (2,259 ) (126 ) (1,481 ) (171 ) (4,037 ) Balance as of September 30, 2015 $ 155,627 $ 75,667 $ 38,177 $ 5,529 $ 275,000 |
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, 2015 and June 30, 2015 : As of September 30, 2015 As of June 30, 2015 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Finite-lived intangible assets and liabilities: Trademark and trade name $ 150 $ 150 $ 150 $ 150 Customer related intangibles 381,933 226,306 388,113 219,794 Core/developed technology 187,469 111,802 174,480 106,465 Product 39,030 853 40,537 353 Favorable agreements 10,526 4,997 10,866 4,775 Total finite-lived intangible assets $ 619,108 $ 344,108 $ 614,146 $ 331,537 Unfavorable lease agreements $ 20,811 $ 14,158 $ 21,793 $ 14,512 Total finite-lived intangible liabilities $ 20,811 $ 14,158 $ 21,793 $ 14,512 |
Schedule of rent offset, future amortization | The table below reflects the following for the remainder of fiscal year 2016 and for subsequent fiscal years: • Future estimated amortization expense for amortizable intangible assets consisting of customer related intangibles, core/developed technology, and product; • and the rent offset resulting from the amortization of the net lease intangible assets and liabilities: Fiscal year ending June 30, Amortization Rent (Offset) Expense 2016 $ 48,143 $ (1,206 ) 2017 57,181 (1,873 ) 2018 49,260 (1,981 ) 2019 42,258 (315 ) 2020 25,973 101 Thereafter 50,770 36 Total $ 273,585 $ (5,238 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Sep. 30, 2015 | |
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 at September 30, 2015 and June 30, 2015 : Fair Value Measurements on a Recurring Basis at September 30, 2015 Level 1 Level 2 Level 3 Total Assets: Available-for-sale securities: Equity securities $ 75 $ — $ — $ 75 Mutual funds / exchange traded funds $ 48,066 $ — $ — $ 48,066 Derivatives: Foreign exchange forwards (a) $ — $ 301 $ — $ 301 Liabilities: Derivatives: Foreign exchange forwards (a) $ — $ 403 $ — $ 403 Contingent Liabilities: Retention bonus liability (b) $ — $ — $ 9,948 $ 9,948 Fair Value Measurements on a Recurring Basis at June 30, 2015 Level 1 Level 2 Level 3 Total Assets: Available-for-sale securities: Equity securities $ 102 $ — $ — $ 102 Mutual funds / exchange traded funds $ 48,592 $ — $ — $ 48,592 Derivatives: Foreign exchange forwards (a) $ — $ 2,177 $ — $ 2,177 Liabilities: Derivatives: Foreign exchange forwards (a) $ — $ 272 $ — $ 272 Contingent Liabilities: Retention bonus liability (b) $ — $ — $ 9,934 $ 9,934 _________________________ (a) These derivative investments are included in other current assets or accounts payable, accrued liabilities and deferred income on the accompanying 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 at June 30, 2015 , and other current liabilities at September 30, 2015 , on the accompanying 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, 2015 $ 9,934 Payments — Unrealized (gains)/losses 14 Ending balance - September 30, 2015 $ 9,948 |
Derivative Financial Instrume27
Derivative Financial Instruments (Tables) | 3 Months Ended |
Sep. 30, 2015 | |
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, 2015 and June 30, 2015 and their location in the condensed consolidated balance sheet are as follows: Derivative assets Derivative liabilities Balance sheet location Fair value Balance sheet location Fair value September 30, 2015 June 30, 2015 September 30, 2015 June 30, 2015 Derivatives designated as hedging instruments: Foreign exchange forwards Other current assets $ 301 $ 1,792 Accounts payable, $ — $ (157 ) Derivatives not designated as hedging instruments: Foreign exchange forwards Other current assets — 385 Accounts payable, (403 ) (115 ) Total derivative assets (liabilities) $ 301 $ 2,177 $ (403 ) $ (272 ) |
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, 2015 and 2014 are as follows: Three Months Ended (Loss)/gain recognized in OCI Location Gain/(loss) reclassified Location of loss recognized in income Loss recognized 2015 2014 2015 2014 2015 2014 Foreign exchange forwards $ (406 ) $ 1,185 General and $ 914 $ (156 ) General and $ — $ (28 ) Total $ (406 ) $ 1,185 $ 914 $ (156 ) $ — $ (28 ) |
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, 2015 and 2014 are as follows: Gain/(loss) recognized in income Three Months Ended Derivatives not designated as hedging instruments: Location of gain/(loss) 2015 2014 Foreign exchange forwards General and administrative expenses $ 133 $ (1,895 ) Total $ 133 $ (1,895 ) |
Retirement Benefits (Tables)
Retirement Benefits (Tables) | 3 Months Ended |
Sep. 30, 2015 | |
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, 2015 and 2014 : Three Months Ended September 30, 2015 2014 North America Europe North America Europe Service cost $ 18,042 $ 1,077 $ 18,211 $ 3,373 Interest cost 36,185 9,573 34,630 10,435 Expected return on plan assets (52,137 ) (12,866 ) (53,291 ) (13,226 ) Amortization of net loss 9,969 2,691 4,378 3,302 Amortization of prior service (credit)/cost (1,994 ) 10 (2,095 ) 11 Net periodic benefit cost $ 10,065 $ 485 $ 1,833 $ 3,895 |
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, 2015 and 2014 : Three Months Ended 2015 2014 Service cost $ 168 $ 321 Interest cost 1,432 2,052 Expected return on plan assets (20 ) (24 ) Amortization of net gain (1,506 ) (440 ) Amortization of prior service credit (1,726 ) (1,726 ) Net periodic benefit (credit)/cost $ (1,652 ) $ 183 |
Accumulated Other Comprehensi29
Accumulated Other Comprehensive Income/(Loss) (Tables) | 3 Months Ended |
Sep. 30, 2015 | |
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 translation (1) Hedge effectiveness (1) Available-for-sale securities (2) Defined pension and post-retirement benefit costs (3) Before Tax Tax After Tax Before Tax Tax After Tax Before Tax Tax After Tax As of June 30, 2015 $ (226,041 ) $ 1,616 $ (657 ) $ 959 $ 141 $ (60 ) $ 81 $ (512,767 ) $ 161,470 $ (351,297 ) Other comprehensive income/(loss) before reclassifications (71,555 ) (406 ) 159 (247 ) (117 ) 38 (79 ) — — — Amounts reclassified from accumulated other comprehensive income — (914 ) 359 (555 ) — — — 7,091 (2,323 ) 4,768 Net current-period other comprehensive income/(loss) (71,555 ) (1,320 ) 518 (802 ) (117 ) 38 (79 ) 7,091 (2,323 ) 4,768 As of September 30, 2015 $ (297,596 ) $ 296 $ (139 ) $ 157 $ 24 $ (22 ) $ 2 $ (505,676 ) $ 159,147 $ (346,529 ) ________________________ (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 general and administrative expenses (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) |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 3 Months Ended |
Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Restricted Stock Units | The following table presents key information with regard to each of the awards that had been granted as of September 30, 2015 : Plan Performance Period RSUs Awarded Grant Date Stock Price Assumed Forfeiture Rate 2015 LTIP July 1, 2014 to June 30, 2017 82,350 $100.02 and $131.35 None 2014 LTIP July 1, 2013 to June 30, 2016 65,355 $105.90 and $110.70 None 2013 LTIP July 1, 2012 to June 30, 2015 121,075 $54.59 None 2016 ES LTIP July 1, 2015 to June 30, 2017 38,864 $125.50 None 2014 ES LTIP July 1, 2013 to June 30, 2015 30,192 $91.43 None 2015 SEP July 1, 2015 to June 30, 2018 101,923 $119.30 5% 2014 SEP July 1, 2014 to June 30, 2017 112,464 $106.89 5% 2013 SEP July 1, 2013 to June 30, 2016 131,286 $91.43 5% 2012 SEP July 1, 2012 to June 30, 2015 147,503 $53.93 5% |
Schedule of Stock Options, Valuation Assumptions | The fair value of the stock option grants was calculated using the Black-Scholes formula and is included in the valuation assumptions table below: Three Months Ended September 30, 2015 Stock option grants: Risk-free interest rate 1.32% Expected lives in years 5.2 Expected volatility 17.75% - 23.89% Dividend yield 0.50% -1.65% Weighted-average grant date fair value of options granted $16.96 - $27.22 Number of shares granted 536,890 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Schedule of segment information, by segment | The table below presents revenue (net of reimbursable expenses) of the reported segments for the three months ended September 30, 2015 and 2014 : Three Months Ended 2015 2014 Benefits $ 448,024 $ 465,587 Exchange Solutions 118,491 86,282 Risk and Financial Services 137,723 148,026 Talent and Rewards 160,291 153,294 Total revenue (net of reimbursable expenses) $ 864,529 $ 853,189 The table below presents net operating income of the reported segments for the three months ended September 30, 2015 and 2014 : Three Months Ended 2015 2014 Benefits $ 151,460 $ 155,759 Exchange Solutions 21,516 14,012 Risk and Financial Services 33,502 35,561 Talent and Rewards 47,465 36,843 Total net operating income $ 253,943 $ 242,175 |
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 for the three months ended September 30, 2015 and 2014 : Three Months Ended 2015 2014 Revenue: Total segment revenue $ 864,529 $ 853,189 Reimbursable expenses and other 31,092 24,918 Revenue $ 895,621 $ 878,107 Net Operating Income: Total segment net operating income $ 253,943 $ 242,175 Differences in allocation methods (1) 9,791 15,712 Amortization of intangibles (16,869 ) (17,537 ) Transaction and integration expenses (9,330 ) — Stock-based compensation (2) (2,465 ) (5,552 ) Discretionary compensation (101,369 ) (92,364 ) Payroll tax on discretionary compensation (5,618 ) (5,519 ) Other, net 1,317 (10,917 ) Income from operations $ 129,400 $ 125,998 ________________________ (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 the 2014 ES LTIP awards granted to certain executives of our Exchange Solutions segment, which are included within the calculation of Exchange Solutions’ net operating income. The 2016 ES LTIP awards are included in corporate stock-based compensation. |
Organization, Basis of Presen32
Organization, Basis of Presentation and Proposed Merger (Details) - USD ($) $ / shares in Units, $ in Billions | 3 Months Ended | ||||
Dec. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Jun. 30, 2015 | Jun. 29, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Current Fiscal Year End Date | --06-30 | ||||
Business Acquisition [Line Items] | |||||
Dividends declared per share | $ 0.15 | $ 0.15 | |||
Willis Group Holdings Merger | |||||
Business Acquisition [Line Items] | |||||
Implied equity value | $ 18 | ||||
Class A Common Stock | |||||
Business Acquisition [Line Items] | |||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |||
Scenario, Forecast | Willis Group Holdings Merger | |||||
Business Acquisition [Line Items] | |||||
Number of ordinary shares of Willis receivable per right | 2.6490 | ||||
Special Dividend | Scenario, Forecast | |||||
Business Acquisition [Line Items] | |||||
Dividends declared per share | $ 4.87 |
Acquisitions and Divestitures33
Acquisitions and Divestitures (Acquisitions) (Details) $ in Thousands, £ in Millions | May. 11, 2015USD ($) | Apr. 23, 2015USD ($) | Apr. 23, 2015GBP (£) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Jun. 30, 2015USD ($) | Sep. 30, 2015GBP (£) | Jun. 30, 2015GBP (£) |
Business Acquisition [Line Items] | |||||||||
Cash paid | $ 15,964 | $ 1,255 | |||||||
Purchase accounting adjustments | (2,121) | ||||||||
Goodwill acquired | 1,486 | ||||||||
Acclaris | |||||||||
Business Acquisition [Line Items] | |||||||||
Name of acquired entity | Acclaris Holdings, Inc. | ||||||||
Cash paid | $ 140,000 | ||||||||
Return of Consideration Transferred | (1,700) | ||||||||
Purchase accounting adjustments | $ (3,100) | ||||||||
Consideration transferred | $ 139,500 | ||||||||
Goodwill acquired | 109,200 | ||||||||
Saville | |||||||||
Business Acquisition [Line Items] | |||||||||
Name of acquired entity | Saville Consulting Group Limited | ||||||||
Cash paid | $ 64,500 | £ 42 | |||||||
Consideration transferred | £ | 43.4 | ||||||||
Goodwill acquired | £ | £ 5.8 | ||||||||
Deferred Consideration, Liability | £ | £ 0.6 | ||||||||
Customer Relationships | Acclaris | |||||||||
Business Acquisition [Line Items] | |||||||||
Intangibles | 12,300 | $ 12,300 | |||||||
Technology-Based Intangible Assets | Acclaris | |||||||||
Business Acquisition [Line Items] | |||||||||
Intangibles | $ 14,500 | $ 14,500 | |||||||
Product | Saville | |||||||||
Business Acquisition [Line Items] | |||||||||
Intangibles | £ | £ 25.8 |
Acquisitions and Divestitures34
Acquisitions and Divestitures (Divestitures) (Details) - USD ($) $ in Thousands | Aug. 14, 2015 | Sep. 30, 2015 | Sep. 30, 2014 |
Discontinued Operations Disclosures | |||
Net proceeds from sale of business | $ 65,264 | $ 0 | |
Selected Income Statement Information | |||
Revenue | 5,807 | 7,610 | |
Costs of providing services | 4,634 | 6,212 | |
Income from operations | $ 1,173 | $ 1,398 | |
HRSD | |||
Discontinued Operations Disclosures | |||
Net proceeds from sale of business | $ 65,800 | ||
Segment disposal group belonged to | Talent and Rewards | ||
Final pre-tax gain on sale of business | $ 55,400 |
Investments (Details)
Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Jun. 30, 2015 | |
Held-to-maturity: | |||
Proceeds from maturities of held-to-maturity securities | $ 74,153 | $ 107,330 | |
Available-for-sale: | |||
Proceeds from sale and maturity of available-for-sale securities | 0 | $ 11,721 | |
Available-for-sale and Held-to-maturity | |||
Fair value of investments in an unrealized loss position | 46,400 | $ 24,400 | |
Short-term investments | |||
Available-for-sale and Held-to-maturity | |||
Amortized cost | 59,495 | 127,166 | |
Unrealized gains | 2 | 16 | |
Unrealized losses | (53) | (26) | |
Estimated fair value | 59,444 | 127,156 | |
Short-term investments | Term deposits & Certificates of deposits | |||
Held-to-maturity: | |||
Amortized cost | 12,771 | 70,346 | |
Unrealized gains | 0 | 0 | |
Unrealized losses | 0 | 0 | |
Estimated fair value | 12,771 | 70,346 | |
Short-term investments | Fixed income securities | |||
Held-to-maturity: | |||
Amortized cost | 41,572 | 51,685 | |
Unrealized gains | 0 | 0 | |
Unrealized losses | 0 | 0 | |
Estimated fair value | 41,572 | 51,685 | |
Short-term investments | Equity securities | |||
Available-for-sale: | |||
Amortized cost | 102 | 102 | |
Unrealized gains | 0 | 11 | |
Unrealized losses | (27) | (10) | |
Estimated Fair Value | 75 | 103 | |
Short-term investments | Mutual funds and exchange-traded funds | |||
Available-for-sale: | |||
Amortized cost | 5,050 | 5,033 | |
Unrealized gains | 2 | 5 | |
Unrealized losses | (26) | (16) | |
Estimated Fair Value | 5,026 | 5,022 | |
Other assets | |||
Available-for-sale: | |||
Amortized cost | 43,922 | 43,711 | |
Unrealized gains | 0 | 6 | |
Unrealized losses | (882) | (147) | |
Estimated Fair Value | 43,040 | 43,570 | |
Other assets | Mutual funds and exchange-traded funds | |||
Available-for-sale: | |||
Amortized cost | 43,922 | 43,711 | |
Unrealized gains | 0 | 6 | |
Unrealized losses | (882) | (147) | |
Estimated Fair Value | $ 43,040 | $ 43,570 |
Goodwill and Intangible Asset36
Goodwill and Intangible Assets (Details) $ in Thousands | 3 Months Ended |
Sep. 30, 2015USD ($) | |
Goodwill [Roll Forward] | |
Balance as of June 30, 2015 | $ 2,278,351 |
Goodwill related to acquisitions | 1,486 |
Goodwill related to disposals | (1,412) |
Purchase accounting adjustments | (2,121) |
Translation adjustment | (46,744) |
Balance as of September 30, 2015 | 2,229,560 |
Benefits | |
Goodwill [Roll Forward] | |
Balance as of June 30, 2015 | 1,088,504 |
Goodwill related to acquisitions | 0 |
Purchase accounting adjustments | 0 |
Translation adjustment | (30,752) |
Balance as of September 30, 2015 | 1,057,752 |
Exchange Solutions | |
Goodwill [Roll Forward] | |
Balance as of June 30, 2015 | 682,033 |
Goodwill related to acquisitions | 0 |
Purchase accounting adjustments | (3,079) |
Translation adjustment | 0 |
Balance as of September 30, 2015 | 678,954 |
Risk and Financial Services | |
Goodwill [Roll Forward] | |
Balance as of June 30, 2015 | 370,274 |
Goodwill related to acquisitions | 1,486 |
Purchase accounting adjustments | 0 |
Translation adjustment | (11,721) |
Balance as of September 30, 2015 | 360,039 |
Talent and Rewards | |
Goodwill [Roll Forward] | |
Balance as of June 30, 2015 | 136,326 |
Goodwill related to acquisitions | 0 |
Goodwill related to disposals | (1,412) |
Purchase accounting adjustments | 958 |
Translation adjustment | (4,271) |
Balance as of September 30, 2015 | 131,601 |
All Other | |
Goodwill [Roll Forward] | |
Balance as of June 30, 2015 | 1,214 |
Goodwill related to acquisitions | 0 |
Purchase accounting adjustments | 0 |
Translation adjustment | 0 |
Balance as of September 30, 2015 | $ 1,214 |
Goodwill and Intangible Asset37
Goodwill and Intangible Assets (Details1) - USD ($) $ in Thousands | 3 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Jun. 30, 2015 | |
Finite-Lived Intangible Assets [Roll Forward] | ||||
Balance as of June 30, 2015 | $ 282,609 | |||
Intangible assets acquired | 13,520 | |||
Amortization | (16,869) | $ (17,537) | ||
Total intangible amortization and rent expense | (17,092) | |||
Translation adjustment | (4,037) | |||
Balance as of September 30, 2015 | 273,585 | |||
Balance as of September 30, 2015 | 275,000 | |||
Intangible Assets Other Disclosures [Abstract] | ||||
Indefinite-lived intangible assets (excluding goodwill) | $ 367,900 | $ 371,500 | ||
Unfavorable lease liability | 6,700 | 7,300 | ||
Reduction to rent expense | $ 600 | |||
Finite-Lived Intangible Assets By Category [Abstract] | ||||
Gross carrying amount | 619,108 | 614,146 | ||
Accumulated amortization | 344,108 | 331,537 | ||
Gross carrying amount - intangible liabilities | 20,811 | 21,793 | ||
Accumulated amortization - intangible liabilities | 14,158 | 14,512 | ||
Weighted average remaining life of intangible assets and liabilities | 6 years 11 months | |||
Amortization | ||||
2,016 | 48,143 | |||
2,017 | 57,181 | |||
2,018 | 49,260 | |||
2,019 | 42,258 | |||
2,020 | 25,973 | |||
Thereafter | 50,770 | |||
Total | $ 273,585 | 273,585 | ||
Rent (Offset) Expense | ||||
2,016 | (1,206) | |||
2,017 | (1,873) | |||
2,018 | (1,981) | |||
2,019 | (315) | |||
2,020 | 101 | |||
Thereafter | 36 | |||
Total | (5,238) | |||
Customer related intangible | ||||
Finite-Lived Intangible Assets [Roll Forward] | ||||
Balance as of June 30, 2015 | 168,319 | |||
Intangible assets acquired | 0 | |||
Amortization | (10,433) | |||
Translation adjustment | (2,259) | |||
Balance as of September 30, 2015 | 155,627 | |||
Finite-Lived Intangible Assets By Category [Abstract] | ||||
Gross carrying amount | 381,933 | 388,113 | ||
Accumulated amortization | 226,306 | 219,794 | ||
Amortization | ||||
Total | 168,319 | 155,627 | 168,319 | |
Core/developed technology | ||||
Finite-Lived Intangible Assets [Roll Forward] | ||||
Balance as of June 30, 2015 | 68,015 | |||
Intangible assets acquired | 13,520 | |||
Amortization | (5,742) | |||
Translation adjustment | (126) | |||
Balance as of September 30, 2015 | 75,667 | |||
Finite-Lived Intangible Assets By Category [Abstract] | ||||
Gross carrying amount | 187,469 | 174,480 | ||
Accumulated amortization | 111,802 | 106,465 | ||
Amortization | ||||
Total | 68,015 | 75,667 | 68,015 | |
Product | ||||
Finite-Lived Intangible Assets [Roll Forward] | ||||
Balance as of June 30, 2015 | 40,184 | |||
Amortization | (526) | |||
Translation adjustment | (1,481) | |||
Balance as of September 30, 2015 | 38,177 | |||
Finite-Lived Intangible Assets By Category [Abstract] | ||||
Gross carrying amount | 39,030 | 40,537 | ||
Accumulated amortization | 853 | 353 | ||
Favorable agreements | ||||
Finite-Lived Intangible Assets [Roll Forward] | ||||
Balance as of June 30, 2015 | 6,091 | |||
Intangible assets acquired | 0 | |||
Rent expense for lease intangible | (391) | |||
Translation adjustment | (171) | |||
Balance as of September 30, 2015 | 5,529 | |||
Finite-Lived Intangible Assets By Category [Abstract] | ||||
Gross carrying amount | 10,526 | 10,866 | ||
Accumulated amortization | 4,997 | 4,775 | ||
Amortization | ||||
Total | $ 6,091 | 5,529 | 6,091 | |
Trademark and trade name | ||||
Finite-Lived Intangible Assets By Category [Abstract] | ||||
Gross carrying amount | 150 | 150 | ||
Accumulated amortization | 150 | 150 | ||
Unfavorable lease agreements | ||||
Finite-Lived Intangible Assets By Category [Abstract] | ||||
Gross carrying amount - intangible liabilities | 20,811 | 21,793 | ||
Accumulated amortization - intangible liabilities | $ 14,158 | $ 14,512 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Jun. 30, 2015 | |
Unrealized Gain (Loss) on Derivatives recognized in earnings [Abstract] | |||
Unrealized gain (loss) on derivatives recognized in earnings | $ (400) | $ (1,200) | |
Recurring | |||
Liabilities: | |||
Retention bonus liability | 9,948 | $ 9,934 | |
Recurring | Equity securities | |||
Assets: | |||
Available-for-sale securities | 75 | 102 | |
Recurring | Mutual funds and exchange-traded funds | |||
Assets: | |||
Available-for-sale securities | 48,066 | 48,592 | |
Recurring | Level 1 | |||
Liabilities: | |||
Retention bonus liability | 0 | 0 | |
Recurring | Level 1 | Equity securities | |||
Assets: | |||
Available-for-sale securities | 75 | 102 | |
Recurring | Level 1 | Mutual funds and exchange-traded funds | |||
Assets: | |||
Available-for-sale securities | 48,066 | 48,592 | |
Recurring | Level 2 | |||
Liabilities: | |||
Retention bonus liability | 0 | 0 | |
Recurring | Level 2 | Equity securities | |||
Assets: | |||
Available-for-sale securities | 0 | 0 | |
Recurring | Level 2 | Mutual funds and exchange-traded funds | |||
Assets: | |||
Available-for-sale securities | 0 | 0 | |
Recurring | Level 3 | |||
Liabilities: | |||
Retention bonus liability | 9,948 | 9,934 | |
Recurring | Level 3 | Equity securities | |||
Assets: | |||
Available-for-sale securities | 0 | 0 | |
Recurring | Level 3 | Mutual funds and exchange-traded funds | |||
Assets: | |||
Available-for-sale securities | 0 | 0 | |
Foreign exchange forwards | Recurring | |||
Assets: | |||
Derivatives | 301 | 2,177 | |
Liabilities: | |||
Derivatives | 403 | 272 | |
Foreign exchange forwards | Recurring | Level 1 | |||
Assets: | |||
Derivatives | 0 | 0 | |
Liabilities: | |||
Derivatives | 0 | 0 | |
Foreign exchange forwards | Recurring | Level 2 | |||
Assets: | |||
Derivatives | 301 | 2,177 | |
Liabilities: | |||
Derivatives | 403 | 272 | |
Foreign exchange forwards | Recurring | Level 3 | |||
Assets: | |||
Derivatives | 0 | 0 | |
Liabilities: | |||
Derivatives | $ 0 | $ 0 |
Fair Value Measurements - Level
Fair Value Measurements - Level 3 Financial Instruments (Details) - Deferred bonus $ in Thousands | 3 Months Ended |
Sep. 30, 2015USD ($) | |
Fair Value Measurements using significant unobservable inputs (Level 3): | |
Beginning balance | $ 9,934 |
Payments | 0 |
Unrealized (gains)/losses | 14 |
Ending balance | $ 9,948 |
Level 3 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Credit adjusted interest rate (percentage) | 1.50% |
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 | $ 10,000 |
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 | $ 9,200 |
Recurring | Minimum | Level 3 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Resulting values from changes in valuation inputs | 10,200 |
Recurring | Maximum | Level 3 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Resulting values from changes in valuation inputs | $ 9,600 |
Derivative Financial Instrume40
Derivative Financial Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2015 | Jun. 30, 2015 | |
Derivatives, Fair Value [Line Items] | ||
Longest outstanding maturity for derivative contracts at the most recent balance sheet date | 12 months | |
Pretax gain deferred in accumulated other comprehensive income | $ 300 | |
Derivative, notional amount | 30,500 | $ 43,200 |
Derivative, fair value, net | (100) | 1,900 |
Asset derivatives | ||
Derivative assets | 301 | 2,177 |
Liability derivatives | ||
Derivative liabilities | (403) | (272) |
Not designated as hedging | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, notional amount | 20,500 | 20,400 |
Foreign exchange forwards | Designated as hedging | Other current assets | ||
Asset derivatives | ||
Derivative assets | 301 | 1,792 |
Foreign exchange forwards | Designated as hedging | Accounts payable, accrued liabilities and deferred income | ||
Liability derivatives | ||
Derivative liabilities | 0 | (157) |
Foreign exchange forwards | Not designated as hedging | Other current assets | ||
Asset derivatives | ||
Derivative assets | 0 | 385 |
Foreign exchange forwards | Not designated as hedging | Accounts payable, accrued liabilities and deferred income | ||
Liability derivatives | ||
Derivative liabilities | $ (403) | $ (115) |
Derivative Financial Instrume41
Derivative Financial Instruments (Details 2) - Foreign exchange forwards - Cash flow hedges - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Summary Of Hedged Derivative Instruments Impact On Results Of Operations [Abstract] | ||
(Loss)/gain recognized in OCI (effective portion) | $ (406) | $ 1,185 |
General and administrative expenses | ||
Summary Of Hedged Derivative Instruments Impact On Results Of Operations [Abstract] | ||
Gain/(loss) reclassified from OCI into income (effective portion) | 914 | (156) |
Loss recognized in income (ineffective portion and amount excluded from effectiveness testing) | 0 | (28) |
Not designated as hedging | General and administrative expenses | ||
Summary Of Non Hedged Derivative Instruments Impact On Results Of Operations [Abstract] | ||
Gain/(loss) recognized in income | $ 133 | $ (1,895) |
Retirement Benefits (Details)
Retirement Benefits (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Jun. 30, 2015 | |
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% | ||
U.S. defined contribution plans | |||
Defined Contributions Plans | |||
Company contribution costs recognized | $ 5,100 | $ 4,700 | |
U.K. defined contribution plans | |||
Defined Contributions Plans | |||
Company contribution costs recognized | 5,600 | 5,000 | |
North America pension plans | |||
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | |||
Service cost | 18,042 | 18,211 | |
Interest cost | 36,185 | 34,630 | |
Expected return on plan assets | (52,137) | (53,291) | |
Amortization of net loss | 9,969 | 4,378 | |
Amortization of prior service (credit)/cost | (1,994) | (2,095) | |
Net periodic benefit cost | 10,065 | 1,833 | |
Employer Contributions | |||
Company contributions | 31,400 | ||
Estimated future company contributions | 2,900 | ||
European pension plan | |||
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | |||
Service cost | 1,077 | 3,373 | |
Interest cost | 9,573 | 10,435 | |
Expected return on plan assets | (12,866) | (13,226) | |
Amortization of net loss | 2,691 | 3,302 | |
Amortization of prior service (credit)/cost | 10 | 11 | |
Net periodic benefit cost | 485 | 3,895 | |
Employer Contributions | |||
Company contributions | 3,100 | ||
Estimated future company contributions | 37,400 | ||
Other postretirement plans | |||
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | |||
Service cost | 168 | 321 | |
Interest cost | 1,432 | 2,052 | |
Expected return on plan assets | (20) | (24) | |
Amortization of net loss | (1,506) | (440) | |
Amortization of prior service (credit)/cost | (1,726) | (1,726) | |
Net periodic benefit cost | $ (1,652) | $ 183 |
Debt, Commitments and Conting43
Debt, Commitments and Contingent Liabilities (Summary of Long-Term Debt) (Details) - USD ($) | Jun. 01, 2012 | Nov. 07, 2011 | Sep. 30, 2015 | Sep. 30, 2014 |
Senior credit facility | ||||
Debt Instrument [Line Items] | ||||
Line of credit facility, expiration period | 5 years | |||
Line of credit maximum borrowing capacity | $ 500,000,000 | |||
Line 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) | 1.56% | 1.39% | ||
Line of credit commitment fee (percent) | 0.175% | |||
Line of credit collateral description | 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). | |||
Line of credit covenant compliance | As of September 30, 2015, we were in compliance with our covenants. | |||
Line of credit amount outstanding | $ 160,000,000 | |||
Term loan | ||||
Debt Instrument [Line Items] | ||||
Weighted average interest rate (percent) | 1.45% | 1.40% | ||
Term of debt instrument | 5 years | |||
Original amount borrowed | $ 250,000,000 | |||
Debt periodic principal payment | $ 6,250,000 | |||
Term loan | 193,750,000 | |||
Captive insurance companies | Standby letters of credit | ||||
Debt Instrument [Line Items] | ||||
Line of credit amount outstanding | 21,400,000 | |||
Other existing or potential business obligations | Standby letters of credit | ||||
Debt Instrument [Line Items] | ||||
Line of credit amount outstanding | $ 1,000,000 | |||
LIBOR | Minimum | Term loan | ||||
Debt Instrument [Line Items] | ||||
Percentage spread to base index rate | 1.25% | |||
LIBOR | Maximum | Term loan | ||||
Debt Instrument [Line Items] | ||||
Percentage spread to base index rate | 1.75% | |||
Bank base rate | Minimum | Term loan | ||||
Debt Instrument [Line Items] | ||||
Percentage spread to base index rate | 0.25% | |||
Bank base rate | Maximum | Term loan | ||||
Debt Instrument [Line Items] | ||||
Percentage spread to base index rate | 0.75% |
Debt, Commitments and Conting44
Debt, Commitments and Contingent Liabilities (Summary of Malpractice Insurance) (Details) - USD ($) | 3 Months Ended | |
Sep. 30, 2015 | Jun. 30, 2015 | |
Malpractice Insurance [Line Items] | ||
Professional liability claims reserve incurred by not reported | $ 182,500,000 | $ 181,500,000 |
Aggregate claims | ||
Malpractice Insurance [Line Items] | ||
Malpractice insurance deductible | 10,000,000 | |
Per claim | ||
Malpractice Insurance [Line Items] | ||
Malpractice insurance deductible | 1,000,000 | |
SMIC | ||
Malpractice Insurance [Line Items] | ||
Malpractice insurance, maximum coverage per incident | 40,000,000 | |
Captive insurance reinsurance coverage | 25,000,000 | |
Captive insurance coverage amount | 15,000,000 | |
Malpractice insurance, coverage floor | 25,000,000 | |
PCIC | ||
Malpractice Insurance [Line Items] | ||
Malpractice insurance deductible | 1,000,000 | |
Malpractice insurance, maximum coverage per incident | 50,000,000 | |
Captive insurance reinsurance coverage | 25,000,000 | |
Captive insurance coverage amount | $ 25,000,000 | |
Malpractice insurance percentage of ownership in captive insurer | 72.86% |
Debt, Commitments and Conting45
Debt, Commitments and Contingent Liabilities (Summary of Litigation) (Details) £ in Thousands, $ in Millions | 1 Months Ended | 3 Months Ended | 51 Months Ended | |||
Feb. 05, 2015USD ($) | Apr. 30, 2000report | Feb. 29, 2000report | Apr. 30, 2000report | Oct. 31, 2012GBP (£) | Aug. 31, 2008GBP (£) | |
Pending litigation | City of Houston | ||||||
Loss Contingencies [Line Items] | ||||||
Number of reports issued | report | 1 | 1 | 2 | |||
Letter of Claim | Currency hedge | Trustee of the British Coal Staff Superannuation Scheme | ||||||
Loss Contingencies [Line Items] | ||||||
Derivative, amount of hedged item | £ 250,000 | |||||
Quantified loss on derivative | £ 47,500 | |||||
Violation of ERISA | Meriter Health Services | ||||||
Loss Contingencies [Line Items] | ||||||
Litigation settlement amount | $ | $ 82 |
Variable Interest Entities (Det
Variable Interest Entities (Details) $ in Millions | Sep. 30, 2015USD ($) |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Assets under management | $ 73.5 |
Accumulated Other Comprehensi47
Accumulated Other Comprehensive Income/(Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
After tax - AOCI | ||
After tax - Accumulated OCI as of | $ (576,298) | |
Other comprehensive income/(loss) before non-controlling interests | (67,674) | $ (101,778) |
After tax - Accumulated OCI as of | (643,966) | |
Foreign currency translation | ||
After tax - AOCI | ||
After tax - Accumulated OCI as of | (226,041) | |
After tax - Other comprehensive income/(loss) before reclassifications | (71,555) | |
After tax - Amounts reclassified from accumulated other comprehensive income | 0 | |
Other comprehensive income/(loss) before non-controlling interests | (71,555) | |
After tax - Accumulated OCI as of | (297,596) | |
Hedge effectiveness | ||
Before tax - AOCI | ||
Before tax - Accumulated OCI as of | 1,616 | |
Before tax - Other comprehensive income/(loss) before reclassifications | (406) | |
Before tax - Amounts reclassified from accumulated other comprehensive income | (914) | |
Before tax - Net current-period other comprehensive income | (1,320) | |
Before tax - Accumulated OCI as of | 296 | |
Tax - AOCI | ||
Tax - Accumulated OCI as of | (657) | |
Tax - Other comprehensive income/(loss) before reclassifications | 159 | |
Tax - Amounts reclassified from accumulated other comprehensive income | 359 | |
Tax - Net current-period other comprehensive income | 518 | |
Tax - Accumulated OCI as of | (139) | |
After tax - AOCI | ||
After tax - Accumulated OCI as of | 959 | |
After tax - Other comprehensive income/(loss) before reclassifications | (247) | |
After tax - Amounts reclassified from accumulated other comprehensive income | (555) | |
Other comprehensive income/(loss) before non-controlling interests | (802) | |
After tax - Accumulated OCI as of | 157 | |
Available-for-sale securities | ||
Before tax - AOCI | ||
Before tax - Accumulated OCI as of | 141 | |
Before tax - Other comprehensive income/(loss) before reclassifications | (117) | |
Before tax - Amounts reclassified from accumulated other comprehensive income | 0 | |
Before tax - Net current-period other comprehensive income | (117) | |
Before tax - Accumulated OCI as of | 24 | |
Tax - AOCI | ||
Tax - Accumulated OCI as of | (60) | |
Tax - Other comprehensive income/(loss) before reclassifications | 38 | |
Tax - Amounts reclassified from accumulated other comprehensive income | 0 | |
Tax - Net current-period other comprehensive income | 38 | |
Tax - Accumulated OCI as of | (22) | |
After tax - AOCI | ||
After tax - Accumulated OCI as of | 81 | |
After tax - Other comprehensive income/(loss) before reclassifications | (79) | |
After tax - Amounts reclassified from accumulated other comprehensive income | 0 | |
Other comprehensive income/(loss) before non-controlling interests | (79) | |
After tax - Accumulated OCI as of | 2 | |
Defined pension and post-retirement benefit costs | ||
Before tax - AOCI | ||
Before tax - Accumulated OCI as of | (512,767) | |
Before tax - Other comprehensive income/(loss) before reclassifications | 0 | |
Before tax - Amounts reclassified from accumulated other comprehensive income | 7,091 | |
Before tax - Net current-period other comprehensive income | 7,091 | |
Before tax - Accumulated OCI as of | (505,676) | |
Tax - AOCI | ||
Tax - Accumulated OCI as of | 161,470 | |
Tax - Other comprehensive income/(loss) before reclassifications | 0 | |
Tax - Amounts reclassified from accumulated other comprehensive income | (2,323) | |
Tax - Net current-period other comprehensive income | (2,323) | |
Tax - Accumulated OCI as of | 159,147 | |
After tax - AOCI | ||
After tax - Accumulated OCI as of | (351,297) | |
After tax - Other comprehensive income/(loss) before reclassifications | 0 | |
After tax - Amounts reclassified from accumulated other comprehensive income | 4,768 | |
Other comprehensive income/(loss) before non-controlling interests | 4,768 | |
After tax - Accumulated OCI as of | $ (346,529) |
Share-Based Compensation (Restr
Share-Based Compensation (Restricted Stock Units) (Details) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | |
Nov. 30, 2013USD ($)shares | Sep. 30, 2015USD ($)yr$ / sharesshares | Sep. 30, 2014USD ($)shares | |
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. | ||
Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Retirement age (in years) | yr | 55 | ||
Years of experience (in years) | 15 years | ||
Minimum years of service during performance period (in years) | 1 year | ||
Vesting period | 3 years | ||
Restricted Stock Units | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of target number of units vesting based on performance metrics | 0.00% | ||
Restricted Stock Units | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of target number of units vesting based on performance metrics | 204.00% | ||
LTIP, SEP, and Other Plans [Member] | Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation expense (reversal) | $ | $ 2.8 | $ 9.6 | |
2015 LTIP | Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
RSU's awarded (in shares) | shares | 82,350 | ||
2015 LTIP | Restricted Stock Units | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Grant Date Stock Price (in dollars per share) | $ 100.02 | ||
2015 LTIP | Restricted Stock Units | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Grant Date Stock Price (in dollars per share) | $ 131.35 | ||
2014 LTIP | Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
RSU's awarded (in shares) | shares | 65,355 | ||
2014 LTIP | Restricted Stock Units | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Grant Date Stock Price (in dollars per share) | $ 105.90 | ||
2014 LTIP | Restricted Stock Units | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Grant Date Stock Price (in dollars per share) | $ 110.70 | ||
2013 LTIP | Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
RSU's awarded (in shares) | shares | 121,075 | ||
Grant Date Stock Price (in dollars per share) | $ 54.59 | ||
2016 ES LTIP | Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
RSU's awarded (in shares) | shares | 38,864 | ||
Grant Date Stock Price (in dollars per share) | $ 125.50 | ||
2016 ES LTIP | Restricted Stock Units | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of target number of units vesting based on performance metrics | 0.00% | ||
2016 ES LTIP | Restricted Stock Units | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of target number of units vesting based on performance metrics | 196.00% | ||
2014 ES LTIP | Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of target number of units vesting based on performance metrics | 240.00% | ||
RSU's awarded (in shares) | shares | 30,192 | ||
Grant Date Stock Price (in dollars per share) | $ 91.43 | ||
2015 SEP | Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
RSU's awarded (in shares) | shares | 101,923 | ||
Grant Date Stock Price (in dollars per share) | $ 119.30 | ||
Forfeiture rate | 5.00% | ||
2014 SEP | Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
RSU's awarded (in shares) | shares | 112,464 | ||
Grant Date Stock Price (in dollars per share) | $ 106.89 | ||
Forfeiture rate | 5.00% | ||
2013 SEP | Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
RSU's awarded (in shares) | shares | 131,286 | ||
Grant Date Stock Price (in dollars per share) | $ 91.43 | ||
Forfeiture rate | 5.00% | ||
2012 SEP | Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
RSU's awarded (in shares) | shares | 147,503 | ||
Grant Date Stock Price (in dollars per share) | $ 53.93 | ||
Forfeiture rate | 5.00% | ||
Liazon RSUs | Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
RSU's awarded (in shares) | shares | 70,533 | ||
Stock based compensation awards assumed, fair value | $ | $ 5.7 | ||
Unvested awards acquired, fair value | $ | $ 2.1 | ||
Outside Directors | Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
RSU's awarded (in shares) | shares | 7,234 | 8,059 | |
Compensation expense (reversal) | $ | $ 0.5 | $ 0.4 |
Share-Based Compensation (Stock
Share-Based Compensation (Stock Options) (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | ||
Nov. 30, 2013 | May. 31, 2012 | Sep. 30, 2015 | Sep. 30, 2014 | |
Stock Options Granted [Abstract] | ||||
Expected Term | 5 years 2 months | |||
2015 Options | ||||
Stock Options Granted [Abstract] | ||||
Stock Option Grants in Period, Gross | 536,890 | |||
Share Price | $ 120.58 | |||
Risk Free Interest Rate | 1.32% | |||
Expected Volatility Rate, Minimum | 17.75% | |||
Expected Volatility Rate, Maximum | 23.89% | |||
Acquired Plans | ||||
Options Acquired [Abstract] | ||||
Compensation expense | $ 0.7 | |||
Liazon Unvested Options | ||||
Options Acquired [Abstract] | ||||
Options granted previously and assumed by a business acquirer | 37,162 | |||
Fair value of vested stock options acquired | $ 1.7 | |||
Liazon Vested Options | ||||
Options Acquired [Abstract] | ||||
Fair value of vested stock options acquired | $ 2.2 | |||
Extend Health Unvested Options | ||||
Options Acquired [Abstract] | ||||
Options granted previously and assumed by a business acquirer | 377,614 | |||
Fair value of vested stock options acquired | $ 7.9 | |||
Forfeiture rate | 10.00% | |||
Extend Health Unvested Options | Acquired Plans | ||||
Options Acquired [Abstract] | ||||
Forfeiture rate | 5.00% | |||
Extend Health Vested Options | ||||
Options Acquired [Abstract] | ||||
Fair value of vested stock options acquired | $ 11.2 | |||
Towers Watson Willis Merger | 2015 Options | ||||
Stock Options Granted [Abstract] | ||||
Stock Option Grants in Period, Gross | 202,365 | |||
Minimum | 2015 Options | ||||
Stock Options Granted [Abstract] | ||||
Expected Dividend Rate | 0.50% | |||
Weighted-average grant date fair value of options granted | $ 16.96 | |||
Maximum | 2015 Options | ||||
Stock Options Granted [Abstract] | ||||
Expected Dividend Rate | 1.65% | |||
Weighted-average grant date fair value of options granted | $ 27.22 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | ||
Income tax expense (benefit) | $ 60,558 | $ 44,062 |
Effective tax rate | 32.90% | 35.10% |
Uncertain tax positions, tax rate impact | 2.40% | |
Liabilities for uncertain tax positions | $ 32,800 | |
Maximum | ||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | ||
Significant change in unrecognized tax benefits is reasonably possible, estimated range of change, lower bound | 3,300 | |
Minimum | ||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | ||
Significant change in unrecognized tax benefits is reasonably possible, estimated range of change, lower bound | $ 700 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | |
Sep. 30, 2015USD ($)segment | Sep. 30, 2014USD ($) | |
Segment Reporting Information [Line Items] | ||
Number of reportable operating segments | segment | 4 | |
Revenue (net of reimbursable expenses) | $ 864,529 | $ 853,189 |
Net operating income | 253,943 | 242,175 |
Benefits | ||
Segment Reporting Information [Line Items] | ||
Revenue (net of reimbursable expenses) | 448,024 | 465,587 |
Net operating income | 151,460 | 155,759 |
Exchange Solutions | ||
Segment Reporting Information [Line Items] | ||
Revenue (net of reimbursable expenses) | 118,491 | 86,282 |
Net operating income | 21,516 | 14,012 |
Risk and Financial Services | ||
Segment Reporting Information [Line Items] | ||
Revenue (net of reimbursable expenses) | 137,723 | 148,026 |
Net operating income | 33,502 | 35,561 |
Talent and Rewards | ||
Segment Reporting Information [Line Items] | ||
Revenue (net of reimbursable expenses) | 160,291 | 153,294 |
Net operating income | $ 47,465 | $ 36,843 |
Segment Information (Details 1)
Segment Information (Details 1) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Revenue: | ||
Total segment revenue | $ 864,529 | $ 853,189 |
Reimbursable expenses and other | 31,092 | 24,918 |
Revenue | 895,621 | 878,107 |
Net Operating Income: | ||
Total segment net operating income | 253,943 | 242,175 |
Differences in allocation methods | 9,791 | 15,712 |
Amortization of intangibles | (16,869) | (17,537) |
Transaction and integration expenses | (9,330) | 0 |
Stock-based compensation | (2,465) | (5,552) |
Discretionary compensation | (101,369) | (92,364) |
Payroll tax on discretionary compensation | (5,618) | (5,519) |
Other, net | 1,317 | (10,917) |
Income from operations | $ 129,400 | $ 125,998 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Thousands | Oct. 13, 2015 | Dec. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2014 |
Subsequent Event [Line Items] | ||||
Additional expenses | $ 71,370 | $ 75,434 | ||
Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Subsequent Event, Date | Oct. 13, 2015 | |||
Additional expenses | $ 37,500 |