UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 16, 2011
Towers Watson & Co.
(Exact name of registrant as specified in its charter)
Delaware |
|
001-34594 |
|
27-0676603 |
(State or other jurisdiction |
|
(Commission |
|
(IRS Employer |
of incorporation) |
|
File Number) |
|
Identification No.) |
875 Third Avenue New York, NY |
|
10022 |
(Address of principal executive offices) |
|
(Zip Code) |
Registrants telephone number, including area code (212) 725-7550
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On August 16, 2011, Towers Watson & Co. (Towers Watson) issued a press release announcing its financial results for the three months ended June 30, 2011.
A copy of Towers Watsons press release is attached hereto as Exhibit 99.1 to this current report on Form 8-K and is incorporated by reference herein. A reconciliation between certain non-GAAP financial measures and reported financial results is provided as an attachment to this press release.
The information contained in this Form 8-K, including the attached exhibit, is being furnished under Item 2.02 and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 (the Exchange Act), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 7.01. Regulation FD Disclosure
In the section of the press release titled Dividend Increase and Quarterly Dividend, Towers Watson also announced that its Board of Directors approved a 33% increase in its regularly quarterly cash dividend, from $0.075 per common share to $0.10 per common share, beginning in fiscal 2012.
The information contained under the heading Dividend Increase and Quarterly Dividend is incorporated herein by reference. No other information contained in the press release shall be deemed to be incorporated by reference in this Item 8.01.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit |
|
|
No. |
|
Description |
|
|
|
99.1 |
|
Press Release, dated August 16, 2011, announcing Towers Watsons financial results for the three months ended June 30, 2011. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
TOWERS WATSON & CO. |
| |
|
(Registrant) |
| |
|
|
|
|
Date: August 16, 2011 |
|
|
|
|
By: |
/s/ Neil D. Falis |
|
|
Name: |
Neil D. Falis |
|
|
Title: |
Assistant Secretary |
|
Exhibit 99.1
Global Headquarters 875 Third Avenue |
|
T +1 212 725 7550 towerswatson.com |
News
Investor Contact
Name: |
|
Roger Millay |
Phone Number: |
|
703-258-7920 |
Email: |
|
Roger.Millay@towerswatson.com |
Towers Watson Reports Fourth Quarter Adjusted Diluted EPS of $1.06
Increases Quarterly Dividend by 33%
New York August 16, 2011 Towers Watson (NYSE, NASDAQ: TW), a leading global professional services company, today announced financial results for the fourth quarter of fiscal year 2011, which ended June 30, 2011.
Revenues were $851 million for the quarter, an increase of 14% (8% constant currency) from $750 million for the fourth quarter of fiscal 2010. On an organic basis which excludes the impact of changes in foreign currency exchange rates, acquisitions and divestitures, revenues increased 6% from the prior-year fourth quarter. For the fiscal year, revenues were $3.26 billion, an increase of 37% from $2.39 billion in fiscal 2010. Reported results for the first two quarters of fiscal 2010 include only the financial results of Watson Wyatt. On a pro forma basis, that includes Towers Perrin actual results during the first two quarters of fiscal 2010, revenues for fiscal year 2011 increased 2% from the prior fiscal year (2% constant currency).
EBITDA for the fourth quarter of fiscal 2011 was $125 million, or 15% of revenues, an increase from $64 million, or 9% of revenues, for the prior-year fourth quarter. Adjusted EBITDA for the fourth quarter of fiscal 2011 was $159 million, or 19% of revenues, an increase from $118 million, or 16% of revenues, for the prior-year fourth quarter. Adjusted EBITDA excludes transaction and integration costs as well as non-cash stock-based compensation arising from the merger. The increase in revenues drove the increases in EBITDA and Adjusted EBITDA. Decreases in integration costs and stock based compensation costs also contributed to the increase in EBITDA. For the fiscal year, EBITDA was $464 million and Adjusted EBITDA was $616 million.
Net income attributable to controlling interests for the fourth quarter of fiscal 2011 was $44 million, a decrease from $58 million for the prior-year fourth quarter. Net income attributable to controlling interests from the prior-year fourth quarter included a significant income tax benefit. For the fiscal year, net income attributable to controlling interests was $194 million. For the quarter, diluted earnings per share were $0.59 and adjusted diluted earnings per share were $1.06. Adjusted diluted earnings per share increased 18% from the prior-year fourth quarter. For the fiscal year, diluted earnings per share were $2.62 and adjusted diluted earnings per share were $4.46. Adjusted diluted earnings per share include a normalized income tax rate and exclude transaction and integration costs, non-cash stock-based compensation arising from the merger, amortization of merger accounting intangible assets and non-recurring other income. The normalized tax rate for the quarter was 43%. The fourth quarter tax rate included an adjustment for the shift in actual worldwide earnings compared to forecast by jurisdiction for the full fiscal year.
I am very pleased with our fourth quarter and full fiscal year results. During our first, full fiscal year as Towers Watson, all of our segments grew revenue and produced strong margins in a challenging economic environment, said John Haley, chief executive officer. And we executed well on our integration plans. As a result, we have built a solid platform to pursue profitable revenue growth. I remain confident about our future and our ability to grow along with our clients needs.
Fourth Quarter Company Highlights
Benefits
For the quarter, the Benefits segment had revenues of $483 million, an increase of 11% (4% organic) from $437 million in the prior-year fourth quarter. Revenues increased in all lines of business: Retirement; Technology and Administration Solutions; and Health and Group Benefits. Retirement had strong growth in emerging markets. Health and Group Benefits continued to see increased client demand. Technology and Administration Solutions had increased client activity in North America. The Benefits segment had a Net Operating Income (NOI) margin of 33% in the fourth quarter of fiscal 2011.
Risk and Financial Services
For the quarter, the Risk and Financial Services segment had revenues of $194 million, an increase of 17% (1% organic) from $165 million in the prior-year fourth quarter. Overall segment growth was largely due to increases in Risk Consulting and Software including the acquisition of EMB. Organic growth within the segment was led by Brokerage which saw new business activity in Europe and improving pricing conditions. Investment Services continued to experience softness. The Risk and Financial Services segment had an NOI margin of 20% in the fourth quarter of fiscal 2011.
Talent and Rewards
For the quarter, the Talent and Rewards segment had revenues of $136 million, an increase of 12% (14% organic) from $122 million in the prior-year fourth quarter. Organic revenues grew in all lines of business: Rewards, Talent and Communication; Data, Surveys and Technology; and Executive Compensation. Increased client demand and increased activity in Asia Pacific drove the segments growth. The Talent and Rewards segment had an NOI margin of 13% in the fourth quarter of fiscal 2011 as compared to -1% NOI margin in the fourth quarter of fiscal 2010.
Outlook for First Quarter of Fiscal 2012
For the first quarter of fiscal 2012, the company expects to report revenues in the range of $800 million to $825 million and adjusted diluted earnings per share in the range of $1.02 to $1.07. Adjusted diluted earnings per share include a normalized income tax rate and exclude transaction and integration costs, non-cash stock-based compensation arising from the merger and amortization of merger accounting intangible assets. This guidance assumes an average exchange rate of 1.60 U.S. dollars to the British Pound and 1.40 U.S. dollars to the Euro for the first quarter of fiscal 2012.
Full fiscal year 2012 guidance will be provided at Towers Watson Analyst Day on September 19, 2011.
Dividend Increase and Quarterly Dividend
The Board of Directors of Towers Watson approved a 33% increase in its regular quarterly cash dividend from $0.075 per common share to $0.10 per common share. The companys next dividend is payable on or about October 17, 2011 to shareholders of record at the close of business on September 30, 2011.
Conference Call
The company will host a live webcast and conference call to discuss the financial results for the fourth quarter of fiscal 2011. It will be held on Tuesday, August 16, 2011, beginning at 9:00 a.m. Eastern Time, and can be accessed via the Internet at www.towerswatson.com. The replay of the call will be available shortly after the live call for a period of three months. A telephonic replay will also be available for one week after the call by dialing 617-801-6888 and using confirmation number 22481994.
About Towers Watson
Towers Watson is a leading global professional services company that helps organizations improve performance through effective people, risk and financial management. With approximately 14,000 full-time and contract associates around the world, we offer solutions in the areas of employee benefits, talent management, rewards, and risk and capital management. Towers Watson was formed on January 1, 2010, from the merger of Towers Perrin and Watson Wyatt, two leading multi-service firms that provide a broad array of consulting services to organizations around the world.
Use of Non-GAAP Measures
The company defines EBITDA as net income before non-controlling interests adjusted for provision for income taxes, interest, depreciation and amortization. We use EBITDA in evaluating our financial performance. Although EBITDA is not a measure of financial condition or performance determined in accordance with U.S. generally accepted accounting principles (GAAP), we believe that it is a useful measure for evaluating our results of operations as compared from period to period and in providing a baseline for the evaluation of future operating performance. A reconciliation of net income before non-controlling interests to EBITDA is included in the accompanying tables to todays press release. EBITDA is not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies unless the definition is the same.
The company also uses adjusted measures of income to evaluate its performance internally and separately evaluates its performance of transaction and integration activities as well as changes in tax law. Adjusted EBITDA and Adjusted diluted earnings per share are not determined in accordance with GAAP. However, we believe these measures are useful in evaluating our results of operations and in providing a baseline for the evaluation of future operating results. Reconciliations of EBITDA to Adjusted EBITDA (and from net income before non-controlling interests, the most comparable GAAP financial measure, to EBITDA), and diluted earnings per share to Adjusted diluted earnings per share are included in the accompanying tables to todays press release. Adjusted measures of income may not be defined in the same manner by all companies, and our adjusted measures of income may not be comparable to similarly titled measures of other companies.
Non-GAAP measures should be considered in addition to the information contained within our financial statements.
Forward-Looking Statements
This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify these statements and other forward-looking statements in this document by words such as may, will, would, expect, anticipate, believe, estimate, plan, intend, continue, or similar words, expressions or the negative of such terms or other comparable terminology. Such statements are based upon the current beliefs and expectations of Towers Watsons management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements.
The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: the risk that the Towers Perrin and Watson Wyatt businesses will not be integrated successfully; the risk that anticipated cost savings and any other synergies from the merger of Towers Perrin and Watson Wyatt may not be fully realized or may take longer to realize than expected; the ability to successfully make and integrate profitable acquisitions; the risk that the acquisitions of EMB or Aliquant Corporation are not profitable or are not otherwise successfully integrated; the ability to successfully address issues surrounding the number of company shares that will become freely tradable on January 1, 2012; our ability to respond to rapid technological changes; the ability to recruit and retain qualified employees, particularly given the companys recent changes in employee compensation plans; and to retain client relationships, particularly in the executive compensation business, given recent Securities and Exchange Commission (SEC) and other regulatory actions; and the risk that a significant or prolonged economic downturn could have a material adverse effect on Towers Watsons business, financial condition and results of operations. Additional risks and factors are identified under Risk Factors in Towers Watsons Annual Report on Form 10-K filed on September 7, 2010 with the SEC, as supplemented in Towers Watsons Quarterly Report on Form 10-Q filed on November 9, 2010 and May 16, 2011.
You should not rely upon forward-looking statements as predictions of future events because these statements are based on assumptions that may not come true and are speculative by their nature. Towers Watson does not undertake an obligation to update any of the forward-looking information included in this document, whether as a result of new information, future events, changed expectations or otherwise.
TOWERS WATSON & CO.
Segment Information
(Thousands of U.S. Dollars)
Segment Revenue
|
|
Revenue for the Three |
|
|
|
|
|
|
|
|
| ||||
|
|
Months Ended June 30 |
|
% Change |
|
Currency |
|
Acquisitions/ |
|
% Change |
| ||||
|
|
2011 |
|
2010 |
|
GAAP |
|
Impact |
|
Divestitures |
|
Organic |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Benefits |
|
$ |
483,083 |
|
$ |
437,092 |
|
11 |
% |
5 |
% |
2 |
% |
4 |
% |
Risk & Financial Services |
|
193,516 |
|
165,322 |
|
17 |
% |
7 |
% |
9 |
% |
1 |
% | ||
Talent & Rewards |
|
136,220 |
|
121,980 |
|
12 |
% |
5 |
% |
-7 |
% |
14 |
% | ||
Reportable Segments |
|
$ |
812,819 |
|
$ |
724,394 |
|
|
|
|
|
|
|
|
|
|
|
Revenue for the |
|
|
|
|
|
|
|
|
| ||||
|
|
Year Ended June 30 |
|
% Change |
|
Currency |
|
Acquisitions/ |
|
% Change |
| ||||
|
|
2011 |
|
2010 |
|
GAAP |
|
Impact |
|
Divestitures |
|
Organic |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Benefits |
|
$ |
1,857,046 |
|
$ |
1,817,176 |
|
2 |
% |
1 |
% |
0 |
% |
1 |
% |
Risk & Financial Services |
|
740,721 |
|
727,570 |
|
2 |
% |
1 |
% |
3 |
% |
-2 |
% | ||
Talent & Rewards |
|
543,507 |
|
540,028 |
|
1 |
% |
1 |
% |
-7 |
% |
7 |
% | ||
Reportable Segments |
|
$ |
3,141,274 |
|
$ |
3,084,774 |
|
|
|
|
|
|
|
|
|
Note: Revenue for the year ended June 30, 2010 is pro forma and assumes the merger between Towers Perrin and Watson Wyatt occurred on July 1, 2009.
Reconciliation of Reportable Segment Revenues to Consolidated Revenues
|
|
Three Months Ended June 30 |
|
Year Ended |
| |||||
|
|
2011 |
|
2010 |
|
June 30, 2011 |
| |||
|
|
|
|
|
|
|
| |||
Reportable Segments |
|
$ |
812,819 |
|
$ |
724,394 |
|
$ |
3,141,274 |
|
Reimbursable Expenses and Other |
|
38,446 |
|
25,513 |
|
118,177 |
| |||
Consolidated Revenues |
|
$ |
851,265 |
|
$ |
749,907 |
|
$ |
3,259,451 |
|
Segment Net Operating Income
|
|
Three Months Ended June 30 |
|
Year Ended |
| |||||
|
|
2011 |
|
2010 |
|
June 30, 2011 |
| |||
|
|
|
|
|
|
|
| |||
Benefits |
|
$ |
158,480 |
|
$ |
121,576 |
|
$ |
609,133 |
|
Risk & Financial Services |
|
39,495 |
|
27,900 |
|
181,970 |
| |||
Talent & Rewards |
|
17,733 |
|
(1,046 |
) |
96,791 |
| |||
Reportable Segments |
|
$ |
215,708 |
|
$ |
148,430 |
|
$ |
887,894 |
|
Reconciliation of Reportable Segment Net Operating Income to Income before Income Taxes
|
|
Three Months Ended June 30 |
|
Year Ended |
| |||||
|
|
2011 |
|
2010 |
|
June 30, 2011 |
| |||
|
|
|
|
|
|
|
| |||
Reportable Segments |
|
$ |
215,708 |
|
$ |
148,430 |
|
$ |
887,894 |
|
Differences in Allocation Methods |
|
7,581 |
|
2,568 |
|
18,934 |
| |||
Amortization of Intangible Assets |
|
(14,841 |
) |
(11,944 |
) |
(51,989 |
) | |||
Transaction and Integration Expenses |
|
(22,901 |
) |
(37,947 |
) |
(100,535 |
) | |||
Stock-Based Compensation |
|
(11,699 |
) |
(23,988 |
) |
(71,715 |
) | |||
Discretionary Compensation |
|
(72,346 |
) |
(50,770 |
) |
(337,694 |
) | |||
Non-Operating Income |
|
245 |
|
7,639 |
|
20,430 |
| |||
Other, net |
|
(13,489 |
) |
(4,939 |
) |
(38,684 |
) | |||
Income before Income Taxes |
|
$ |
88,258 |
|
$ |
29,049 |
|
326,641 |
| |
TOWERS WATSON & CO.
Reconciliation of Non-GAAP Measures
(Thousands of U.S. Dollars, Except Per Share Data)
The company completed the merger of Towers Perrin and Watson Wyatt on January 1, 2010, and is incurring significant transaction and integration costs. The company is also incurring significant non-cash charges from stock-based compensation arising from the merger and the amortization of merger accounting intangible assets. The companys management uses adjusted measures of income to evaluate its performance internally and separately evaluates its performance of transaction and integration activities. Management determined that this information is useful to investors in evaluating its results of operations and providing a baseline for evaluation of future operating results. Reconciliations of our non-GAAP measures to GAAP measures are as follows.
|
|
Three Months Ended |
|
Year Ended |
| ||
|
|
June 30, 2011 |
|
June 30, 2011 |
| ||
|
|
|
|
|
| ||
Diluted EPS per GAAP |
|
$ |
0.59 |
|
$ |
2.62 |
|
|
|
|
|
|
| ||
Transaction and Integration Costs |
|
0.21 |
|
0.87 |
| ||
Stock-Based Compensation |
|
0.11 |
|
0.63 |
| ||
Amortization of Merger Accounting Intangible Assets |
|
0.14 |
|
0.46 |
| ||
Non-recurring Other Income |
|
0.01 |
|
(0.13 |
) | ||
Other Merger-related tax items |
|
|
|
0.01 |
| ||
|
|
|
|
|
| ||
Adjusted Diluted EPS |
|
$ |
1.06 |
|
$ |
4.46 |
|
|
|
Three Months Ended |
|
|
| ||||||
|
|
June 30, 2011 |
|
|
|
June 30, 2010 |
|
|
| ||
|
|
|
|
|
|
|
|
|
| ||
Net Income Before Non-Controlling Interests |
|
$ |
44,505 |
|
|
|
$ |
55,934 |
|
|
|
Provision for Income Taxes |
|
43,753 |
|
|
|
(26,885 |
) |
|
| ||
Interest, net |
|
1,144 |
|
|
|
2,940 |
|
|
| ||
Depreciation and Amortization |
|
35,180 |
|
|
|
32,065 |
|
|
| ||
EBITDA |
|
$ |
124,582 |
|
|
|
$ |
64,054 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||
EBITDA and EBITDA Margin |
|
$ |
124,582 |
|
14.6 |
% |
64,054 |
|
8.5 |
% | |
|
|
|
|
|
|
|
|
|
| ||
Transaction and Integration Costs |
|
22,901 |
|
2.7 |
% |
37,947 |
|
5.1 |
% | ||
Stock-Based Compensation |
|
11,699 |
|
1.4 |
% |
23,988 |
|
3.2 |
% | ||
Other Non-Operating (Income) Loss (a) |
|
245 |
|
0.0 |
% |
(7,639 |
) |
-1.0 |
% | ||
|
|
|
|
|
|
|
|
|
| ||
Adjusted EBITDA and EBITDA Margin |
|
$ |
159,427 |
|
18.7 |
% |
118,350 |
|
15.8 |
% | |
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
| ||||||
|
|
June 30, 2011 |
|
|
|
June 30, 2010 |
|
|
| ||
|
|
|
|
|
|
|
|
|
| ||
Net Income Before Non-Controlling Interests |
|
$ |
196,725 |
|
|
|
119,010 |
|
|
| |
Provision for Income Taxes |
|
129,916 |
|
|
|
50,907 |
|
|
| ||
Interest, net |
|
6,952 |
|
|
|
4,558 |
|
|
| ||
Depreciation and Amortization |
|
130,575 |
|
|
|
101,084 |
|
|
| ||
EBITDA |
|
$ |
464,168 |
|
|
|
$ |
275,559 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||
EBITDA and EBITDA Margin |
|
$ |
464,168 |
|
14.2 |
% |
$ |
275,559 |
|
11.5 |
% |
|
|
|
|
|
|
|
|
|
| ||
Transaction and Integration Costs |
|
100,535 |
|
3.1 |
% |
87,644 |
|
3.7 |
% | ||
Stock-Based Compensation |
|
71,715 |
|
2.2 |
% |
48,006 |
|
2.0 |
% | ||
Other Non-Operating Income (a) |
|
(20,430 |
) |
-0.6 |
% |
(10,030 |
) |
-0.4 |
% | ||
|
|
|
|
|
|
|
|
|
| ||
Adjusted EBITDA and EBITDA Margin |
|
$ |
615,988 |
|
18.9 |
% |
$ |
401,179 |
|
16.8 |
% |
(a) Other non-operating income includes income from affiliates and other non-operating income
TOWERS WATSON & CO.
Condensed Consolidated Statements of Operations
(Thousands of U.S. Dollars, Except Per Share Data)
|
|
Three months ended June 30, |
|
Year ended June 30, |
| ||||||||
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Revenue |
|
$ |
851,265 |
|
$ |
749,907 |
|
$ |
3,259,451 |
|
$ |
2,387,829 |
|
|
|
|
|
|
|
|
|
|
| ||||
Costs of providing services: |
|
|
|
|
|
|
|
|
| ||||
Salaries and employee benefits |
|
512,468 |
|
478,166 |
|
2,043,063 |
|
1,540,417 |
| ||||
Professional and subcontracted services |
|
68,853 |
|
61,844 |
|
246,348 |
|
163,848 |
| ||||
Occupancy |
|
37,252 |
|
36,052 |
|
144,191 |
|
109,454 |
| ||||
General and administrative expenses |
|
84,964 |
|
79,483 |
|
281,576 |
|
220,937 |
| ||||
Depreciation and amortization |
|
35,180 |
|
32,065 |
|
130,575 |
|
101,084 |
| ||||
Transaction and integration expenses |
|
22,901 |
|
37,947 |
|
100,535 |
|
87,644 |
| ||||
|
|
761,618 |
|
725,557 |
|
2,946,288 |
|
2,223,384 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income from operations |
|
89,647 |
|
24,350 |
|
313,163 |
|
164,445 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income (loss) from affiliates |
|
597 |
|
(61 |
) |
1,081 |
|
(1,274 |
) | ||||
Interest income |
|
1,715 |
|
1,242 |
|
5,523 |
|
2,950 |
| ||||
Interest expense |
|
(2,859 |
) |
(4,182 |
) |
(12,475 |
) |
(7,508 |
) | ||||
Other non-operating income |
|
(842 |
) |
7,700 |
|
19,349 |
|
11,304 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income before income taxes |
|
88,258 |
|
29,049 |
|
326,641 |
|
169,917 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Provision for income taxes |
|
43,753 |
|
(26,885 |
) |
129,916 |
|
50,907 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income before non-controlling interests |
|
44,505 |
|
55,934 |
|
196,725 |
|
119,010 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) attributable to non-controlling interests |
|
649 |
|
(2,195 |
) |
2,288 |
|
(1,587 |
) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Net Income attributable to controlling interests |
|
$ |
43,856 |
|
$ |
58,129 |
|
$ |
194,437 |
|
$ |
120,597 |
|
|
|
|
|
|
|
|
|
|
| ||||
Earnings per share: |
|
|
|
|
|
|
|
|
| ||||
Net income attributable to controlling interests - basic |
|
$ |
0.59 |
|
$ |
0.77 |
|
$ |
2.62 |
|
$ |
2.04 |
|
Net income attributable to controlling interests - diluted |
|
$ |
0.59 |
|
$ |
0.77 |
|
$ |
2.62 |
|
$ |
2.03 |
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted average shares of common stock, basic (000) |
|
73,823 |
|
75,699 |
|
74,075 |
|
59,257 |
| ||||
Weighted average shares of common stock, diluted (000) |
|
73,882 |
|
75,731 |
|
74,139 |
|
59,372 |
|
TOWERS WATSON & CO.
Condensed Consolidated Balance Sheets
(Thousands of U.S. Dollars, Except Share Data)
|
|
June 30, |
| ||||
|
|
2011 |
|
2010 |
| ||
|
|
|
|
|
| ||
Assets |
|
|
|
|
| ||
Cash and cash equivalents |
|
$ |
528,923 |
|
$ |
435,927 |
|
Restricted cash |
|
153,154 |
|
164,539 |
| ||
Short-term investments |
|
43,682 |
|
51,009 |
| ||
Receivables from clients: |
|
|
|
|
| ||
Billed, net of allowances of $12,636 and $7,975 |
|
502,910 |
|
421,602 |
| ||
Unbilled, at estimated net realizable value |
|
276,020 |
|
215,912 |
| ||
|
|
778,930 |
|
637,514 |
| ||
|
|
|
|
|
| ||
Other current assets |
|
156,333 |
|
156,312 |
| ||
Total current assets |
|
1,661,022 |
|
1,445,301 |
| ||
|
|
|
|
|
| ||
Fixed assets, net |
|
252,343 |
|
227,308 |
| ||
Deferred income taxes |
|
188,569 |
|
344,481 |
| ||
Goodwill |
|
1,945,755 |
|
1,717,295 |
| ||
Intangible assets, net |
|
694,922 |
|
683,487 |
| ||
Other assets |
|
315,139 |
|
155,745 |
| ||
|
|
|
|
|
| ||
Total Assets |
|
$ |
5,057,750 |
|
$ |
4,573,617 |
|
|
|
|
|
|
| ||
Liabilities |
|
|
|
|
| ||
Accounts payable, accrued liabilities and deferred income |
|
$ |
685,991 |
|
$ |
409,308 |
|
Reinsurance payables |
|
147,902 |
|
164,539 |
| ||
Notes payable |
|
99,341 |
|
201,967 |
| ||
Other current liabilities |
|
215,237 |
|
189,966 |
| ||
Total current liabilities |
|
1,148,471 |
|
965,780 |
| ||
|
|
|
|
|
| ||
Revolving credit facility |
|
|
|
|
| ||
Accrued retirement benefits |
|
784,559 |
|
1,061,557 |
| ||
Professional liability claims reserve |
|
300,914 |
|
335,034 |
| ||
Other noncurrent liabilities |
|
221,136 |
|
246,574 |
| ||
|
|
|
|
|
| ||
Total Liabilities |
|
2,455,080 |
|
2,608,945 |
| ||
|
|
|
|
|
| ||
Commitments and contingencies |
|
|
|
|
| ||
|
|
|
|
|
| ||
Stockholders Equity |
|
|
|
|
| ||
Class A Common Stock - $.01 par value: 300,000,000 shares authorized; 57,897,889 and 47,160,497 issued and 56,949,548 and 47,160,497 outstanding |
|
579 |
|
472 |
| ||
Class B Common Stock - $.01 par value: 93,500,000 shares authorized; 16,651,890 and 27,043,196 issued and 16,651,890 and 27,043,196 outstanding |
|
167 |
|
270 |
| ||
Additional paid-in capital |
|
1,773,285 |
|
1,679,624 |
| ||
Treasury stock, at cost 948,341 and 0 shares |
|
(52,360 |
) |
|
| ||
Retained earnings |
|
883,161 |
|
711,570 |
| ||
Accumulated other comprehensive loss |
|
(13,305 |
) |
(436,329 |
) | ||
Total Stockholders Equity |
|
2,591,527 |
|
1,955,607 |
| ||
Non-controlling interest |
|
11,143 |
|
9,065 |
| ||
Total Equity |
|
2,602,670 |
|
1,964,672 |
| ||
|
|
|
|
|
| ||
Total Liabilities and Total Equity |
|
$ |
5,057,750 |
|
$ |
4,573,617 |
|
TOWERS WATSON & CO.
Condensed Consolidated Statements of Cash Flows
(Thousands of U.S. Dollars, Except Per Share Data)
|
|
Year Ended June 30, |
| |||||||
|
|
2011 |
|
2010 |
|
2009 |
| |||
|
|
|
|
|
|
|
| |||
Cash flows from/(used in) operating activities: |
|
|
|
|
|
|
| |||
Net income |
|
$ |
196,725 |
|
$ |
119,010 |
|
$ |
146,627 |
|
Adjustments to reconcile net income to net cash from operating activities: |
|
|
|
|
|
|
| |||
Provision for doubtful receivables from clients |
|
13,004 |
|
11,759 |
|
5,355 |
| |||
Depreciation |
|
78,461 |
|
69,684 |
|
59,556 |
| |||
Amortization of intangible assets |
|
52,114 |
|
31,400 |
|
13,892 |
| |||
Provision for deferred income taxes |
|
14,448 |
|
(5,134 |
) |
14,205 |
| |||
Equity from affiliates |
|
(622 |
) |
869 |
|
(8,080 |
) | |||
Stock based compensation |
|
79,922 |
|
52,953 |
|
932 |
| |||
Other, net |
|
(10,209 |
) |
(9,975 |
) |
(2,474 |
) | |||
Changes in operating assets and liabilities (net of business acquisitions) |
|
|
|
|
|
|
| |||
Receivables from clients |
|
(98,468 |
) |
(41,339 |
) |
57,991 |
| |||
Other current assets |
|
8,256 |
|
(2,205 |
) |
3,279 |
| |||
Other noncurrent assets |
|
14,509 |
|
50,854 |
|
(3,497 |
) | |||
Accounts payable, accrued liabilities and deferred income |
|
238,824 |
|
(295,402 |
) |
(28,717 |
) | |||
Restricted Cash |
|
22,167 |
|
(49,756 |
) |
|
| |||
Reinsurance payables |
|
(20,431 |
) |
49,756 |
|
|
| |||
Accrued retirement benefits |
|
(55,859 |
) |
(71,292 |
) |
(42,069 |
) | |||
Professional liability claims reserves |
|
(39,940 |
) |
16,171 |
|
(5,900 |
) | |||
Other current liabilities |
|
(23,329 |
) |
20,874 |
|
4,138 |
| |||
Other noncurrent liabilities |
|
20,944 |
|
(24,050 |
) |
10,631 |
| |||
Income tax related accounts |
|
50,721 |
|
(8,801 |
) |
1,678 |
| |||
Cash flows from/(used in) operating activities: |
|
541,237 |
|
(84,624 |
) |
227,547 |
| |||
|
|
|
|
|
|
|
| |||
Cash flows (used in)/from investing activities: |
|
|
|
|
|
|
| |||
Cash paid for business acquisitions |
|
(141,885 |
) |
(200,025 |
) |
(1,185 |
) | |||
Cash acquired from business acquisitions |
|
10,349 |
|
603,208 |
|
|
| |||
Purchases of fixed assets |
|
(76,859 |
) |
(25,752 |
) |
(39,195 |
) | |||
Capitalized software costs |
|
(22,487 |
) |
(19,632 |
) |
(23,374 |
) | |||
Purchases of held-to-maturity securities |
|
(14,295 |
) |
|
|
|
| |||
Redemption of held-to-maturity securities |
|
14,295 |
|
|
|
|
| |||
Purchases of available-for-sale securities |
|
(54,696 |
) |
(17,789 |
) |
|
| |||
Redemption of available-for-sale securities |
|
72,703 |
|
16,191 |
|
|
| |||
Investment in affiliates |
|
(5,805 |
) |
|
|
(2,302 |
) | |||
Proceeds from sale of investments |
|
|
|
10,749 |
|
|
| |||
Contingent proceeds from divestitures |
|
17,772 |
|
4,486 |
|
4,926 |
| |||
Cash flows (used in)/from investing activities: |
|
(200,908 |
) |
371,436 |
|
(61,130 |
) | |||
|
|
|
|
|
|
|
| |||
Cash flows used in financing activities: |
|
|
|
|
|
|
| |||
Borrowings under credit facility |
|
75,000 |
|
126,333 |
|
267,912 |
| |||
Repayments under credit facility |
|
(75,000 |
) |
(125,650 |
) |
(267,912 |
) | |||
Repayments of notes payable |
|
(200,000 |
) |
|
|
|
| |||
Financing of credit facility |
|
|
|
(5,679 |
) |
|
| |||
Dividends paid |
|
(21,599 |
) |
(15,249 |
) |
(12,785 |
) | |||
Repurchases of common stock |
|
(30,646 |
) |
(34,922 |
) |
(77,443 |
) | |||
Tax payment on vested shares |
|
(26,596 |
) |
|
|
|
| |||
Issuances of common stock and excess tax benefit |
|
6,158 |
|
6,068 |
|
6,509 |
| |||
Cash flows used in financing activities: |
|
(272,683 |
) |
(49,099 |
) |
(83,719 |
) | |||
|
|
|
|
|
|
|
| |||
Effect of exchange rates on cash |
|
25,350 |
|
(11,618 |
) |
2,502 |
| |||
|
|
|
|
|
|
|
| |||
Increase in cash and cash equivalents |
|
92,996 |
|
226,095 |
|
85,200 |
| |||
|
|
|
|
|
|
|
| |||
Cash and cash equivalents at beginning of period |
|
435,927 |
|
209,832 |
|
124,632 |
| |||
|
|
|
|
|
|
|
| |||
Cash and cash equivalents at end of period |
|
$ |
528,923 |
|
$ |
435,927 |
|
$ |
209,832 |
|