England and Wales | 1-7933 | 98-1030901 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
122 Leadenhall Street, London, England (Address of Principal Executive Offices) | EC3V 4AN (Zip Code) |
Exhibit Number | Description of Exhibit | ||
99.1 | Press Release issued by Aon plc on July 27, 2018. | ||
99.2 | Impact of Adopting ASC 606 on U.S. GAAP Financial Statements to the Second Quarter 2018 |
Aon plc | |||
By: | /s/ Christa Davies | ||
Christa Davies | |||
Executive Vice President and Chief Financial Officer | |||
Date: | July 27, 2018 |
Exhibit Number | Description of Exhibit | |
99.1 | ||
99.2 |
Investor Relations | ![]() |
• | Total revenue increased 8% to $2.6 billion, including a decrease of $36 million, or 2%, related to the FASB’s new revenue recognition standard |
• | Operating margin increased 480 basis points to (0.6)%, including a decrease of 180 basis points related to the FASB’s new revenue recognition standard |
• | EPS increased 195% to $0.19, including a decrease of $0.14 related to the FASB’s new revenue recognition standard |
• | Total revenue increased 10% to $2.6 billion, including 5% organic revenue growth |
• | Operating margin increased to (0.6)%, and operating margin, adjusted for certain items, increased 130 basis points to 22.0% |
• | EPS increased to $0.19, and EPS, adjusted for certain items, increased 31% to $1.71 |
• | For the first six months of 2018, cash flow from operations decreased 5% to $413 million, and adjusted free cash flow increased 17% to $580 million, when excluding certain near-term impacts related to the divestiture of the outsourcing business |
• | Repurchased 2.8 million Class A Ordinary Shares for approximately $400 million |
• | Announced an 11% increase to the quarterly cash dividend |
• | Took further steps to unite the firm including the appointment of Eric Andersen and Michael O’Connor as Co-Presidents to further align the leadership team, as well as the move to a single brand to increase consistency and reinforce focus on long-term growth |
• | Launched our Intellectual Property Solutions Group with the acquisition of 601West providing increased industry knowledge for clients working to protect and maximize their most valuable asset in today’s business world – intellectual property |
Three Months Ended | ||||||||||||||||||||||||||
(millions) | Jun 30, 2018 | Jun 30, 2017 | % Change | Revenue Recognition | Less: Currency Impact | Less: Fiduciary Investment Income | Less: Acquisitions, Divestitures & Other | Organic Revenue Growth | ||||||||||||||||||
Revenue | ||||||||||||||||||||||||||
Commercial Risk Solutions | $ | 1,166 | $ | 1,042 | 12 | % | — | % | 2 | % | — | % | 4 | % | 6 | % | ||||||||||
Reinsurance Solutions | 380 | 344 | 10 | — | 2 | 1 | (1 | ) | 8 | |||||||||||||||||
Retirement Solutions | 431 | 389 | 11 | — | 3 | — | 5 | 3 | ||||||||||||||||||
Health Solutions | 309 | 312 | (1 | ) | (11 | ) | 1 | — | 2 | 7 | ||||||||||||||||
Data & Analytic Services | 277 | 285 | (3 | ) | (2 | ) | 1 | — | 2 | (4 | ) | |||||||||||||||
Elimination | (2 | ) | (4 | ) | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||
Total revenue | $ | 2,561 | $ | 2,368 | 8 | % | (2 | )% | 2 | % | — | % | 3 | % | 5 | % |
Three Months Ended | |||||||||||||||
(millions) | Jun 30, 2018 | Jun 30, 2017 | $ Change | % Change | |||||||||||
Expenses | |||||||||||||||
Compensation and benefits | $ | 1,494 | $ | 1,466 | $ | 28 | 2 | % | |||||||
Information technology | 123 | 98 | 25 | 26 | |||||||||||
Premises | 96 | 86 | 10 | 12 | |||||||||||
Depreciation of fixed assets | 47 | 54 | (7 | ) | (13 | ) | |||||||||
Amortization and impairment of intangible assets | 282 | 460 | (178 | ) | (39 | ) | |||||||||
Other general expenses | 535 | 331 | 204 | 62 | |||||||||||
Total operating expenses | $ | 2,577 | $ | 2,495 | $ | 82 | 3 | % |
Three Months Ended | |||||||||||
(millions) | Jun 30, 2018 | Jun 30, 2017 | % Change | ||||||||
Revenue | $ | 2,561 | $ | 2,368 | 8 | % | |||||
Expenses | 2,577 | 2,495 | 3 | ||||||||
Operating income - as reported | $ | (16 | ) | $ | (127 | ) | (87 | )% | |||
Operating margin - as reported | (0.6 | )% | (5.4 | )% |
Three Months Ended | |||||||||||
(Pro Forma) | |||||||||||
(millions) | Jun 30, 2018 | Jun 30, 2017 | % Change | ||||||||
Revenue | $ | 2,561 | $ | 2,332 | 10 | % | |||||
Expenses | 2,577 | 2,499 | 3 | ||||||||
Operating income - as reported | $ | (16 | ) | $ | (167 | ) | (90 | )% | |||
Operating margin - as reported | (0.6 | )% | (7.2 | )% | |||||||
Operating income - as adjusted | $ | 564 | $ | 482 | 17 | % | |||||
Operating margin - as adjusted | 22.0 | % | 20.7 | % |
Investor Contact: | Media Contact: | |
Investor Relations | Donna Mirandola | |
312-381-3310 | Vice President, Global External Communications | |
investor.relations@aon.com | 312-381-1532 |
Three Months Ended | Six Months Ended | |||||||||||||||||||||
(millions, except per share data) | Jun 30, 2018 | Jun 30, 2017 | % Change | Jun 30, 2018 | Jun 30, 2017 | % Change | ||||||||||||||||
Revenue | ||||||||||||||||||||||
Total revenue | $ | 2,561 | $ | 2,368 | 8 | % | $ | 5,651 | $ | 4,749 | 19 | % | ||||||||||
Expenses | ||||||||||||||||||||||
Compensation and benefits | 1,494 | 1,466 | 2 | % | 3,110 | 2,935 | 6 | % | ||||||||||||||
Information technology | 123 | 98 | 26 | % | 238 | 186 | 28 | % | ||||||||||||||
Premises | 96 | 86 | 12 | % | 189 | 170 | 11 | % | ||||||||||||||
Depreciation of fixed assets | 47 | 54 | (13 | )% | 86 | 108 | (20 | )% | ||||||||||||||
Amortization and impairment of intangible assets | 282 | 460 | (39 | )% | 392 | 503 | (22 | )% | ||||||||||||||
Other general expenses | 535 | 331 | 62 | % | 853 | 639 | 33 | % | ||||||||||||||
Total operating expenses | 2,577 | 2,495 | 3 | % | 4,868 | 4,541 | 7 | % | ||||||||||||||
Operating income (loss) | (16 | ) | (127 | ) | (87 | )% | 783 | 208 | 276 | % | ||||||||||||
Interest income | 1 | 8 | (88 | )% | 5 | 10 | (50 | )% | ||||||||||||||
Interest expense | (69 | ) | (71 | ) | (3 | )% | (139 | ) | (141 | ) | (1 | )% | ||||||||||
Other income (expense) | (3 | ) | 4 | (175 | )% | (18 | ) | 2 | nm* | |||||||||||||
Income (loss) from continuing operations before income taxes | (87 | ) | (186 | ) | (53 | )% | 631 | 79 | 699 | % | ||||||||||||
Income taxes (1) | (144 | ) | (143 | ) | 1 | % | (30 | ) | (143 | ) | (79 | )% | ||||||||||
Net income (loss) from continuing operations | 57 | (43 | ) | (233 | )% | 661 | 222 | 198 | % | |||||||||||||
Net income from discontinued operations | 1 | 821 | (100 | )% | 7 | 861 | (99 | )% | ||||||||||||||
Net income | 58 | 778 | (93 | )% | 668 | 1,083 | (38 | )% | ||||||||||||||
Less: Net income attributable to noncontrolling interests | 10 | 9 | 11 | % | 26 | 23 | 13 | % | ||||||||||||||
Net income attributable to Aon shareholders | $ | 48 | $ | 769 | (94 | )% | $ | 642 | $ | 1,060 | (39 | )% | ||||||||||
Basic net income (loss) per share attributable to Aon shareholders | ||||||||||||||||||||||
Continuing operations | $ | 0.19 | $ | (0.20 | ) | (195 | )% | $ | 2.57 | $ | 0.75 | 243 | % | |||||||||
Discontinued operations | 0.01 | 3.13 | (100 | )% | 0.03 | 3.27 | (99 | )% | ||||||||||||||
Net income | $ | 0.20 | $ | 2.93 | (93 | )% | $ | 2.60 | $ | 4.02 | (35 | )% | ||||||||||
Diluted net income (loss) per share attributable to Aon shareholders | ||||||||||||||||||||||
Continuing operations | $ | 0.19 | $ | (0.20 | ) | (195 | )% | $ | 2.55 | $ | 0.75 | 240 | % | |||||||||
Discontinued operations (2) | — | 3.13 | (100 | )% | 0.03 | 3.24 | (99 | )% | ||||||||||||||
Net income | $ | 0.19 | $ | 2.93 | (94 | )% | $ | 2.58 | $ | 3.99 | (35 | )% | ||||||||||
Weighted average ordinary shares outstanding - basic | 246.0 | 262.4 | (6 | )% | 247.2 | 263.6 | (6 | )% | ||||||||||||||
Weighted average ordinary shares outstanding - diluted | 247.4 | 262.4 | (6 | )% | 248.8 | 265.7 | (6 | )% |
(1) | The effective tax rate was 165.5% and 76.9% for the three months ended June 30, 2018 and 2017, respectively, and (4.8)% and (181.0)% for the six months ended June 30, 2018 and 2017, respectively. |
(2) | Upon triggering held for sale criteria in February 2017, Aon ceased depreciating and amortizing all long-lived assets included in discontinued operations. Total operating expenses for 2017 include $8 million of depreciation of fixed assets and $11 million of intangible asset amortization. |
Three Months Ended | ||||||||||||||||||||||||||
(millions) | Jun 30, 2018 | Jun 30, 2017 | % Change | Revenue Recognition (1) | Less: Currency Impact (2) | Less: Fiduciary Investment Income (3) | Less: Acquisitions, Divestitures & Other | Organic Revenue Growth (4) | ||||||||||||||||||
Revenue | ||||||||||||||||||||||||||
Commercial Risk Solutions | $ | 1,166 | $ | 1,042 | 12 | % | — | % | 2 | % | — | % | 4 | % | 6 | % | ||||||||||
Reinsurance Solutions | 380 | 344 | 10 | — | 2 | 1 | (1 | ) | 8 | |||||||||||||||||
Retirement Solutions | 431 | 389 | 11 | — | 3 | — | 5 | 3 | ||||||||||||||||||
Health Solutions | 309 | 312 | (1 | ) | (11 | ) | 1 | — | 2 | 7 | ||||||||||||||||
Data & Analytic Services | 277 | 285 | (3 | ) | (2 | ) | 1 | — | 2 | (4 | ) | |||||||||||||||
Elimination | (2 | ) | (4 | ) | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||
Total revenue | $ | 2,561 | $ | 2,368 | 8 | % | (2 | )% | 2 | % | — | % | 3 | % | 5 | % |
Six Months Ended | ||||||||||||||||||||||||||
(millions) | Jun 30, 2018 | Jun 30, 2017 | % Change | Revenue Recognition (1) | Less: Currency Impact (2) | Less: Fiduciary Investment Income (3) | Less: Acquisitions, Divestitures & Other | Organic Revenue Growth (4) | ||||||||||||||||||
Revenue | ||||||||||||||||||||||||||
Commercial Risk Solutions | $ | 2,350 | $ | 2,026 | 16 | % | — | % | 4 | % | — | % | 7 | % | 5 | % | ||||||||||
Reinsurance Solutions | 1,122 | 715 | 57 | 47 | 3 | — | 1 | 6 | ||||||||||||||||||
Retirement Solutions | 855 | 775 | 10 | (1 | ) | 4 | — | 6 | 1 | |||||||||||||||||
Health Solutions | 760 | 684 | 11 | 4 | 3 | — | 2 | 2 | ||||||||||||||||||
Data & Analytic Services | 571 | 553 | 3 | — | 2 | — | 2 | (1 | ) | |||||||||||||||||
Elimination | (7 | ) | (4 | ) | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||
Total revenue | $ | 5,651 | $ | 4,749 | 19 | % | 8 | % | 4 | % | — | % | 3 | % | 4 | % |
(1) | Revenue Recognition represents the impact of Aon’s adoption of new revenue recognition standard that became effective for Aon on the January 1, 2018. |
(2) | Currency impact is determined by translating last year’s revenue at this year’s foreign exchange rates. |
(3) | Fiduciary Investment Income for the three months ended June 30, 2018 and 2017 was $12 million and $7 million, respectively. Fiduciary Investment Income for the six months ended June 30, 2018 and 2017 was $22 million and $13 million, respectively. |
(4) | Organic revenue growth includes the impact of intercompany activity and excludes the impact of the adoption of the new revenue recognition standard, changes in foreign exchange rates, acquisitions, divestitures, transfers between revenue lines, and fiduciary investment income. |
Six Months Ended | |||||||||||
(millions) | Jun 30, 2018 | Jun 30, 2017 | Percent Change | ||||||||
Cash Provided by Continuing Operating Activities | $ | 413 | $ | 436 | (5 | )% | |||||
Capital Expenditures Used for Continuing Operations | (111 | ) | (82 | ) | 35 | ||||||
Free Cash Flow Provided by Continuing Operations (1) | $ | 302 | $ | 354 | (15 | )% | |||||
Adjustments: | |||||||||||
Transaction Costs Associated with the Divested Business | — | 44 | (100 | )% | |||||||
Restructuring Plan Initiatives (2) | 278 | 99 | 181 | % | |||||||
Free Cash Flow Provided by Continuing Operations - as adjusted (3) | $ | 580 | $ | 497 | 17 | % |
(1) | Free cash flow is defined as cash flow from operations less capital expenditures. This non-GAAP measure does not imply or represent a precise calculation of residual cash flow available for discretionary expenditures. |
(2) | Restructuring plan cash payments include cash used to settle restructuring liabilities as well as payments made on capital expenditures under the program. |
(3) | Certain noteworthy items impacting free cash flow from operating activities in 2018 and 2017 are described in this schedule. This non-GAAP measure does not imply or represent a precise calculation of residual cash flow available for discretionary expenditures. |
Three Months Ended | Six Months Ended | |||||||||||||||||||||
(millions, except percentages) | Jun 30, 2018 | Jun 30, 2017 (2) | Percent Change | Jun 30, 2018 | Jun 30, 2017 (2) | Percent Change | ||||||||||||||||
Revenue from continuing operations | $ | 2,561 | $ | 2,332 | 10 | % | $ | 5,651 | $ | 5,078 | 11 | % | ||||||||||
Operating income from continuing operations | $ | (16 | ) | $ | (167 | ) | (90 | )% | $ | 783 | $ | 455 | 72 | % | ||||||||
Amortization and impairment of intangible assets (3) | 282 | 460 | 392 | 503 | ||||||||||||||||||
Restructuring | 195 | 155 | 269 | 299 | ||||||||||||||||||
Legacy Litigation | 103 | — | 103 | — | ||||||||||||||||||
Regulatory and Compliance Matters | — | 34 | — | 34 | ||||||||||||||||||
Operating income from continuing operations - as adjusted | $ | 564 | $ | 482 | 17 | % | $ | 1,547 | $ | 1,291 | 20 | % | ||||||||||
Operating margin from continuing operations | (0.6 | )% | (7.2 | )% | 13.9 | % | 9.0 | % | ||||||||||||||
Operating margin from continuing operations - as adjusted | 22.0 | % | 20.7 | % | 27.4 | % | 25.4 | % |
Three Months Ended | Six Months Ended | |||||||||||||||||||||
(millions, except percentages) | Jun 30, 2018 | Jun 30, 2017 (2) | Percent Change | Jun 30, 2018 | Jun 30, 2017 (2) | Percent Change | ||||||||||||||||
Operating income from continuing operations - as adjusted | $ | 564 | $ | 482 | 17 | % | $ | 1,547 | $ | 1,291 | 20 | % | ||||||||||
Interest income | 1 | 8 | (88 | )% | 5 | 10 | (50 | )% | ||||||||||||||
Interest expense | (69 | ) | (71 | ) | (3 | )% | (139 | ) | (141 | ) | (1 | )% | ||||||||||
Other income (expense): | ||||||||||||||||||||||
Other income (expense) - pensions - as adjusted (4) | 9 | 9 | — | % | 18 | 17 | 6 | % | ||||||||||||||
Other income (expense) - other | 4 | (5 | ) | (180 | )% | (13 | ) | (15 | ) | (13 | )% | |||||||||||
Total Other income (expense) - as adjusted (4) | 13 | 4 | 225 | % | 5 | 2 | 150 | % | ||||||||||||||
Income before income taxes from continuing operations - as adjusted | 509 | 423 | 20 | % | 1,418 | 1,162 | 22 | % | ||||||||||||||
Income taxes expense (5) | 75 | 68 | 10 | % | 225 | 166 | 36 | % | ||||||||||||||
Net income from continuing operations - as adjusted | 434 | 355 | 22 | % | 1,193 | 996 | 20 | % | ||||||||||||||
Less: Net income attributable to noncontrolling interests | 10 | 9 | 11 | % | 26 | 23 | 13 | % | ||||||||||||||
Net income attributable to Aon shareholders from continuing operations - as adjusted | 424 | 346 | 23 | % | 1,167 | 973 | 20 | % | ||||||||||||||
Net income (loss) from discontinued operation - as adjusted (6) | — | 22 | (100 | )% | (2 | ) | 70 | (103 | )% | |||||||||||||
Income from discontinued operations, net of tax | $ | 424 | $ | 368 | 15 | % | $ | 1,165 | $ | 1,043 | 12 | % | ||||||||||
Diluted net income (loss) per share attributable to Aon shareholders | ||||||||||||||||||||||
Continuing operations - as adjusted | $ | 1.71 | $ | 1.31 | 31 | % | $ | 4.69 | $ | 3.66 | 28 | % | ||||||||||
Discontinued operations - as adjusted | — | 0.08 | (100 | )% | (0.01 | ) | 0.26 | (104 | )% | |||||||||||||
Net income - as adjusted | $ | 1.71 | $ | 1.39 | 23 | % | $ | 4.68 | $ | 3.93 | 19 | % | ||||||||||
Weighted average ordinary shares outstanding - diluted | 247.4 | 264.3 | (6 | )% | 248.8 | 265.7 | (6 | )% | ||||||||||||||
Effective Tax Rates (4) | ||||||||||||||||||||||
Continuing Operations - U.S. GAAP | 165.5 | % | 76.9 | % | (4.8 | )% | (181.0 | )% | ||||||||||||||
Continuing Operations - Non-GAAP | 14.7 | % | 16.1 | % | 15.9 | % | 14.3 | % | ||||||||||||||
Discontinued Operations - U.S. GAAP | 1.7 | % | 59.0 | % | 14.7 | % | 58.1 | % | ||||||||||||||
Discontinued Operations - Non-GAAP (6) | 63.7 | % | 16.2 | % | 49.3 | % | 25.9 | % |
(1) | Certain noteworthy items impacting operating income in 2018 and 2017 are described in this schedule. The items shown with the caption “as adjusted” are non-GAAP measures. In the first quarter of 2018, Aon adopted new accounting guidance related to the treatment of revenue from contracts with customers that was applied prospectively on its U.S. GAAP financial statements in accordance with FASB standards, and therefore comparable prior periods were not restated. On pages 11 through 15 of this press release, the Company has included unaudited pro forma consolidated results that present the retrospective impact of the new standard as if it were in effect for the comparable periods ended June 30, 2017. We use this supplemental information to help us and our investors evaluate business growth from core operations. Please see the U.S. GAAP financial statements included as Exhibit 99.2 to the Company’s Form 8-K filed on July 27, 2018 for a reconciliation in accordance with FASB standards. |
(2) | The historical period presented above has been adjusted retrospectively to reflect changes in accounting guidance related to revenue recognition, effective for Aon in the first quarter of 2018. |
(3) | Included in the three and six months ended June 30, 2018 was a $176 million non-cash impairment charges taken on certain assets and liabilities held for sale. Included in the three and six months ended June 30, 2017 was a $380 million non-cash impairment charge taken on indefinite-lived tradenames. |
(4) | Adjusted Other income (expense) excludes Pension settlement charges of $16 million and $23 million for three and six months ended June 30, 2018, respectively. |
(5) | Adjusted items are generally taxed at the estimated annual effective tax rate, except for the applicable tax impact associated with estimated restructuring plan expenses, legacy litigation, accelerated tradename amortization, impairment charges, and non-cash pension settlement charges, which are adjusted at the related jurisdictional rate. In addition, tax expense excludes the tax impacts of the anticipated sale of the disposal group as well as adjustments to the provisional estimates of the impact of US Tax Reform recorded pursuant to SAB 118. |
(6) | Adjusted income from discontinued operations, net of tax, excludes the gain on sale of discontinued operations of $1 million and $9 million for the three and six months ended June 30, 2018 , respectively. Adjusted income from discontinued operations, net of tax, excludes the gain on sale of discontinued operations of $798 million and $798 million and $0 million and $11 million of intangible asset amortization for the three and six months ended June 30, 2017, respectively. The effective tax rate was further adjusted for the applicable tax impact associated with the gain on sale and intangible asset amortization, as applicable. |
Three months ended June 30, 2017 | Six months ended June 30, 2017 | |||||||||||||||||||
(millions, except per share data) | As Reported(3) | Revenue Recognition | Pro Forma | As Reported(3) | Revenue Recognition | Pro Forma | ||||||||||||||
Revenue | ||||||||||||||||||||
Commercial Risk Solutions | $ | 1,042 | $ | (1 | ) | $ | 1,041 | $ | 2,026 | $ | 4 | $ | 2,030 | |||||||
Reinsurance Solutions | 344 | 1 | 345 | 715 | 301 | 1,016 | ||||||||||||||
Retirement Solutions | 389 | (1 | ) | 388 | 775 | (2 | ) | 773 | ||||||||||||
Health Solutions | 312 | (31 | ) | 281 | 684 | 25 | 709 | |||||||||||||
Data & Analytic Services | 285 | (4 | ) | 281 | 553 | 1 | 554 | |||||||||||||
Elimination | (4 | ) | — | (4 | ) | (4 | ) | — | (4 | ) | ||||||||||
Total revenue | $ | 2,368 | $ | (36 | ) | $ | 2,332 | $ | 4,749 | $ | 329 | $ | 5,078 | |||||||
Expenses | ||||||||||||||||||||
Compensation and benefits | 1,466 | 5 | 1,471 | 2,935 | 84 | 3,019 | ||||||||||||||
Information technology | 98 | — | 98 | 186 | — | 186 | ||||||||||||||
Premises | 86 | — | 86 | 170 | — | 170 | ||||||||||||||
Depreciation of fixed assets | 54 | — | 54 | 108 | — | 108 | ||||||||||||||
Amortization and impairment of intangible assets | 460 | — | 460 | 503 | — | 503 | ||||||||||||||
Other general expenses | 331 | (1 | ) | 330 | 639 | (2 | ) | 637 | ||||||||||||
Total operating expenses | 2,495 | 4 | 2,499 | 4,541 | 82 | 4,623 | ||||||||||||||
Operating income | (127 | ) | (40 | ) | (167 | ) | 208 | 247 | 455 | |||||||||||
Amortization and impairment of intangible assets | 460 | — | 460 | 503 | — | 503 | ||||||||||||||
Restructuring | 155 | — | 155 | 299 | — | 299 | ||||||||||||||
Regulatory and compliance matters | 34 | — | 34 | 34 | — | 34 | ||||||||||||||
Operating income - as adjusted | 522 | (40 | ) | 482 | 1,044 | 247 | 1,291 | |||||||||||||
Operating margin from continuing operations - as adjusted | 22.0 | % | 20.7 | % | 22.0 | % | 25.4 | % | ||||||||||||
Interest income | 8 | — | 8 | 10 | — | 10 | ||||||||||||||
Interest expense | (71 | ) | — | (71 | ) | (141 | ) | — | (141 | ) | ||||||||||
Other income (expense): | ||||||||||||||||||||
Other income (expense) - pensions | 9 | — | 9 | 17 | — | 17 | ||||||||||||||
Other income (expense) - other (4) | (5 | ) | — | (5 | ) | (15 | ) | — | (15 | ) | ||||||||||
Total Other income (expense) | 4 | — | 4 | 2 | — | 2 | ||||||||||||||
Income before income taxes from continuing operations - as adjusted | 463 | (40 | ) | 423 | 915 | 247 | 1,162 | |||||||||||||
Income taxes - as adjusted (5) | 72 | (4 | ) | 68 | 122 | 44 | 166 | |||||||||||||
Income from continuing operations - as adjusted | 391 | (36 | ) | 355 | 793 | 203 | 996 | |||||||||||||
Less: Net income attributable to noncontrolling interests | 9 | — | 9 | 23 | — | 23 | ||||||||||||||
Net income from continuing operations attributable to Aon shareholders - as adjusted | $ | 382 | $ | (36 | ) | $ | 346 | $ | 770 | $ | 203 | $ | 973 | |||||||
Diluted earnings per share from continuing operations - as adjusted | $ | 1.45 | $ | (0.14 | ) | $ | 1.31 | $ | 2.90 | $ | 0.76 | $ | 3.66 | |||||||
Weighted average ordinary shares outstanding - diluted | 264.3 | 264.3 | 264.3 | 265.7 | 265.7 | 265.7 |
(1) | Certain noteworthy items impacting operating income in 2017 are described in this schedule. The items shown with the caption “as adjusted” are non-GAAP measures. |
(2) | The historical period presented above have been adjusted retrospectively to reflect Aon’s adoption of new revenue recognition standard in the first quarter of 2018. |
(3) | Reported results above reflect the retrospective adoption of the new pension accounting guidance effective for Aon in the first quarter of 2018. |
(4) | For illustrative purposes, the impact of the total foreign currency related to the new revenue accounting guidance is excluded from the Pro Forma financial statements. Had the Company included it, Other income (expense) in the Revenue Recognition column would have been $(4) million and $(6) million, respectively, for the three and six months ended June 30, 2017. |
(5) | The non-GAAP effective tax rate reported was 15.6% and 13.3%, respectively, for the three and six months ended June 30, 2017. Adjusted items are generally taxed at the estimated annual effective tax rate, except for the applicable tax impact associated with estimated restructuring charges, accelerated tradename amortization, impairment charges, regulatory and compliance provisions, and non-cash pension settlement charges, which are adjusted at the related jurisdictional rate. In addition, tax expense excludes the provisional estimates of the impact of US Tax Reform recorded pursuant to SAB 118. The non-GAAP effective tax rate for continuing operations, adjusted for the change in accounting guidance was 16.1% and 14.3%, respectively, for the three and six months ended June 30, 2017. |
Three Months Ended | ||||||||||||||||||
(millions) | Jun 30, 2017 | Jun 30, 2016 | % Change | Less: Currency Impact (1) | Less: Fiduciary Investment Income(2) | Less: Acquisitions, Divestitures & Other | Organic Revenue Growth (3) | |||||||||||
Commercial Risk Solutions | $ | 1,041 | $ | 990 | 5% | (1)% | —% | 4% | 2% | |||||||||
Reinsurance Solutions | 345 | 335 | 3% | (2)% | —% | (1)% | 6% | |||||||||||
Retirement Solutions | 388 | 405 | (4)% | (3)% | —% | (2)% | 1% | |||||||||||
Health Solutions | 281 | 253 | 11% | (2)% | —% | 9% | 4% | |||||||||||
Data & Analytic Services | 281 | 271 | 4% | (1)% | —% | 1% | 4% | |||||||||||
Elimination | (4 | ) | (1 | ) | N/A | N/A | N/A | N/A | N/A | |||||||||
Total revenue | $ | 2,332 | $ | 2,253 | 4% | (2)% | —% | 4% | 2% |
Six Months Ended | ||||||||||||||||||
(millions) | Jun 30, 2017 | Jun 30, 2016 | % Change | Less: Currency Impact (1) | Less: Fiduciary Investment Income(2) | Less: Acquisitions, Divestitures & Other | Organic Revenue Growth (3) | |||||||||||
Commercial Risk Solutions | $ | 2,030 | $ | 1,959 | 4% | (1)% | —% | 4% | 1% | |||||||||
Reinsurance Solutions | 1,016 | 1,002 | 1% | (2)% | —% | (1)% | 4% | |||||||||||
Retirement Solutions | 773 | 801 | (3)% | (4)% | —% | (1)% | 2% | |||||||||||
Health Solutions | 709 | 591 | 20% | (2)% | —% | 12% | 10% | |||||||||||
Data & Analytic Services | 554 | 534 | 4% | (1)% | —% | 1% | 4% | |||||||||||
Elimination | (4 | ) | (3 | ) | N/A | N/A | N/A | N/A | N/A | |||||||||
Total revenue | $ | 5,078 | $ | 4,884 | 4% | (2)% | —% | 3% | 3% |
(1) | Currency impact is determined by translating last year’s revenue at the subsequent year’s foreign exchange rates. |
(2) | Fiduciary Investment Income for the three months ended June 30, 2017 and 2016, respectively, was $7 million and $5 million. Fiduciary Investment Income for the six months ended June 30, 2017 and 2016, respectively, was $13 million and $10 million. |
(3) | Organic revenue growth includes the impact of intercompany activity and excludes the impact of foreign exchange rate changes, acquisitions, divestitures, transfers between revenue lines, and fiduciary investment income. |
Pro Forma Periods | Reported Period | ||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended (5) | Full Year 2016 (5) | Three Months Ended (6) | Full Year 2017 (6) | Three Months Ended (7) | |||||||||||||||||||||||||||||||||||||||||||
(millions, except per share data) | Mar 31, 2016 | Jun 30, 2016 | Sep 30, 2016 | Dec 31, 2016 | Mar 31, 2017 | Jun 30, 2017 | Sep 30, 2017 | Dec 31, 2017 | Mar 31, 2018 | Jun 30, 2018 | |||||||||||||||||||||||||||||||||||||
Revenue | |||||||||||||||||||||||||||||||||||||||||||||||
Commercial Risk Solutions | $ | 969 | $ | 990 | $ | 884 | $ | 1,088 | $ | 3,931 | $ | 989 | $ | 1,041 | $ | 915 | $ | 1,218 | $ | 4,163 | $ | 1,184 | $ | 1,166 | |||||||||||||||||||||||
Reinsurance Solutions | 667 | 335 | 234 | 131 | 1,367 | 671 | 345 | 257 | 153 | 1,426 | 742 | 380 | |||||||||||||||||||||||||||||||||||
Retirement Solutions | 396 | 405 | 465 | 441 | 1,707 | 385 | 388 | 492 | 489 | 1,754 | 424 | 431 | |||||||||||||||||||||||||||||||||||
Health Solutions | 338 | 253 | 245 | 522 | 1,358 | 428 | 281 | 277 | 526 | 1,512 | 451 | 309 | |||||||||||||||||||||||||||||||||||
Data & Analytic Services | 263 | 271 | 260 | 256 | 1,050 | 273 | 281 | 287 | 299 | 1,140 | 294 | 277 | |||||||||||||||||||||||||||||||||||
Elimination | (2 | ) | (1 | ) | (3 | ) | (2 | ) | (8 | ) | — | (4 | ) | (5 | ) | (1 | ) | (10 | ) | (5 | ) | (2 | ) | ||||||||||||||||||||||||
Total revenue | $ | 2,631 | $ | 2,253 | $ | 2,085 | $ | 2,436 | $ | 9,405 | $ | 2,746 | $ | 2,332 | $ | 2,223 | $ | 2,684 | $ | 9,985 | $ | 3,090 | $ | 2,561 | |||||||||||||||||||||||
Expenses | |||||||||||||||||||||||||||||||||||||||||||||||
Compensation and benefits | 1,444 | 1,372 | 1,293 | 1,417 | 5,526 | 1,548 | 1,471 | 1,420 | 1,568 | 6,007 | 1,616 | 1,494 | |||||||||||||||||||||||||||||||||||
Information technology | 83 | 99 | 99 | 105 | 386 | 88 | 98 | 109 | 124 | 419 | 115 | 123 | |||||||||||||||||||||||||||||||||||
Premises | 82 | 89 | 86 | 86 | 343 | 84 | 86 | 89 | 89 | 348 | 93 | 96 | |||||||||||||||||||||||||||||||||||
Depreciation of fixed assets | 38 | 41 | 39 | 44 | 162 | 54 | 54 | 40 | 39 | 187 | 39 | 47 | |||||||||||||||||||||||||||||||||||
Amortization of intangible assets | 37 | 38 | 42 | 40 | 157 | 43 | 460 | 101 | 100 | 704 | 110 | 282 | |||||||||||||||||||||||||||||||||||
Other general expenses | 270 | 230 | 257 | 279 | 1,036 | 307 | 330 | 307 | 328 | 1,272 | 318 | 535 | |||||||||||||||||||||||||||||||||||
Total operating expenses | 1,954 | 1,869 | 1,816 | 1,971 | 7,610 | 2,124 | 2,499 | 2,066 | 2,248 | 8,937 | 2,291 | 2,577 | |||||||||||||||||||||||||||||||||||
Operating income | 677 | 384 | 269 | 465 | 1,795 | 622 | (167 | ) | 157 | 436 | 1,048 | 799 | (16 | ) | |||||||||||||||||||||||||||||||||
Amortization of intangible assets | 37 | 38 | 42 | 40 | 157 | 43 | 460 | 101 | 100 | 704 | 110 | 282 | |||||||||||||||||||||||||||||||||||
Restructuring | — | — | — | — | — | 144 | 155 | 102 | 96 | 497 | 74 | 195 | |||||||||||||||||||||||||||||||||||
Legacy Litigation | — | — | — | — | — | — | — | — | — | — | — | 103 | |||||||||||||||||||||||||||||||||||
Regulatory and compliance matters | — | — | — | — | — | — | 34 | 8 | (14 | ) | 28 | — | — | ||||||||||||||||||||||||||||||||||
Transaction costs | — | — | — | 15 | 15 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Operating income - as adjusted | 714 | 422 | 311 | 520 | 1,967 | 809 | 482 | 368 | 618 | 2,277 | 983 | 564 | |||||||||||||||||||||||||||||||||||
Operating margin from continuing operations - as adjusted | 27.1 | % | 18.7 | % | 14.9 | % | 21.3 | % | 20.9 | % | 29.5 | % | 20.7 | % | 16.6 | % | 23.0 | % | 22.8 | % | 31.8 | % | 22.0 | % | |||||||||||||||||||||||
Interest income | 2 | 3 | 1 | 3 | 9 | 2 | 8 | 10 | 7 | 27 | 4 | 1 | |||||||||||||||||||||||||||||||||||
Interest expense | (69 | ) | (73 | ) | (70 | ) | (70 | ) | (282 | ) | (70 | ) | (71 | ) | (70 | ) | (71 | ) | (282 | ) | (70 | ) | (69 | ) | |||||||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||||||||||||||||||||||||||
Other income (expense) - pensions - as adjusted (3) | 11 | 11 | 12 | 13 | 47 | 8 | 9 | 9 | 16 | 42 | 9 | 9 | |||||||||||||||||||||||||||||||||||
Other income (expense) - other - as adjusted (4) | 18 | (1 | ) | 10 | 9 | 36 | (10 | ) | (5 | ) | (5 | ) | (19 | ) | (39 | ) | (17 | ) | 4 | ||||||||||||||||||||||||||||
Total Other income (expense) - as adjusted (3)(4) | 29 | 10 | 22 | 22 | 83 | (2 | ) | 4 | 4 | (3 | ) | 3 | (8 | ) | 13 | ||||||||||||||||||||||||||||||||
Income before income taxes from continuing operations - as adjusted | 676 | 362 | 264 | 475 | 1,777 | 739 | 423 | 312 | 551 | 2,025 | 909 | 509 | |||||||||||||||||||||||||||||||||||
Income taxes | 107 | 53 | 35 | 49 | 244 | 98 | 68 | 54 | 81 | 301 | 150 | 75 | |||||||||||||||||||||||||||||||||||
Income from continuing operations - as adjusted | 569 | 309 | 229 | 426 | 1,533 | 641 | 355 | 258 | 470 | 1,724 | 759 | 434 | |||||||||||||||||||||||||||||||||||
Less: Net income attributable to noncontrolling interests | 12 | 8 | 7 | 7 | 34 | 14 | 9 | 7 | 7 | 37 | 16 | 10 | |||||||||||||||||||||||||||||||||||
Net income attributable to Aon shareholders from continuing operations - as adjusted | $ | 557 | $ | 301 | $ | 222 | $ | 419 | $ | 1,499 | $ | 627 | $ | 346 | $ | 251 | $ | 463 | $ | 1,687 | $ | 743 | $ | 424 | |||||||||||||||||||||||
Diluted earnings per share from continuing operations - as adjusted | $ | 2.04 | $ | 1.12 | $ | 0.82 | $ | 1.56 | $ | 5.55 | $ | 2.35 | $ | 1.31 | $ | 0.98 | $ | 1.82 | $ | 6.47 | $ | 2.97 | $ | 1.71 | |||||||||||||||||||||||
Weighted average ordinary shares outstanding - diluted | 273.7 | 269.8 | 269.6 | 268.3 | 270.3 | 267.0 | 264.3 | 257.3 | 254.5 | 260.7 | 250.2 | 247.4 |
(1) | Certain noteworthy items impacting operating income in 2016 and 2017 are described in this schedule. The items shown with the caption “as adjusted” are non-GAAP measures. |
(2) | The historical period presented above have been adjusted retrospectively to reflect Aon’s adoption of new revenue recognition standard in the first quarter of 2018. For a complete reconciliation of prior period reported balances to the pro forma adjusted balances above, please refer to our press release issued on February 2, 2018. |
(3) | Adjusted Other income (expense) excludes pension settlement charges taken within each respective period. Pension settlement charges were $62 million for the three months ended June 30, 2016, and $158 million and $220 million for the three and twelve months ended December 31, 2016, respectively. Pension settlement charges were $128 million for the three and twelve months ended December 31, 2017. Pension settlement chargers were $7 million and $16 million, respectively, for the three months ended March 31, 2018 and June 30, 2018 and $23 million for the six months ended June 30, 2018. |
(4) | For illustrative purposes, the impact of the total foreign currency related to the new revenue accounting guidance is excluded from the Pro Forma financial statements. The impact on Other income (expense) of foreign currency due to this new guidance was $(3) million, $5 million, $1 million, and $4 million, respectively, for the three months ended March 31, 2016, June 30, 2016, September 30, 2016, and December 31, 2016 and $7 million for the twelve months ended December 31, 2016. The impact on Other income (expense) of foreign currency due to this new guidance was $(2) million, $(4) million, $(6) million, and $1 million, respectively, for the three months ended March 31, 2017, June 30, 2017, September 30, 2017, and December 31, 2017, and $(11) million for the twelve months ended December 31, 2017. |
(5) | The non-GAAP effective tax rates reported were 15.7%, 14.9%, 14.2%, and 12.0%, respectively, for the three months ended March 31, 2016, June 30, 2016, September 30, 2016, and December 31, 2016 and 13.9% for the twelve months ended December 31, 2016. Adjusted items are generally taxed at the estimated annual effective tax rate, except for the applicable tax impact associated with non-cash pension settlements and transaction costs which are adjusted at the related jurisdictional rate. The non-GAAP effective tax rates for continuing operations, adjusted for the change in accounting guidance were 15.8%, 14.6%, 13.3%, and 10.3% for the three months ended March 31, 2016, June 30, 2016, September 30, 2016, and December 31, 2016, and 13.7% for the twelve months ended December 31, 2016. |
(6) | The non-GAAP effective tax rates reported were 11.1%, 15.6%, 17.5%, and 15.5%, respectively, for the three months ended March 31, 2017, June 30, 2017, September 30, 2017, and December 31, 2017, and 14.9% for the twelve months ended December 31, 2017. Adjusted items are generally taxed at the estimated annual effective tax rate, except for the applicable tax impact associated with estimated restructuring expenses, accelerated tradename amortization, impairment charges, regulatory and compliance provisions, and non-cash pension settlements, which are adjusted at the related jurisdictional rate. In addition, tax expense excludes the provisional estimates of the impact of U.S. Tax Reform recorded pursuant to SAB 118. The non-GAAP effective tax rates for continuing operations, adjusted for the change in accounting guidance were 13.3%, 16.1%, 17.3%, and 14.7% for the three months ended March 31, 2017, June 30, 2017, September 30, 2017, and December 31, 2017, and 14.9% for the twelve months ended December 31, 2017. |
(7) | The non-GAAP effective tax rates reported were 16.5% and 14.7%, respectively, for the three months ended March 31, 2018 and June 30, 2018, and 15.9% for the six months ended June 30, 2018. Adjusted items are generally taxed at the estimated annual effective tax rate, except for the applicable tax impact associated with estimated restructuring expenses, legacy litigation, accelerated tradename amortization, impairment charges, and non-cash pension settlement charges, which are adjusted at the related jurisdictional rate. In addition, tax expense excludes the tax impacts of the anticipated sale of the disposal group as well as adjustments to the provisional estimates of the impact of US Tax Reform recorded pursuant to SAB 118. |
As of | ||||||||
(millions) | June 30, 2018 | December 31, 2017 | ||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 487 | $ | 756 | ||||
Short-term investments | 173 | 529 | ||||||
Receivables, net | 2,992 | 2,478 | ||||||
Fiduciary assets (1) | 10,476 | 9,625 | ||||||
Other current assets | 732 | 289 | ||||||
Total current assets | 14,860 | 13,677 | ||||||
Goodwill | 8,291 | 8,358 | ||||||
Intangible assets, net | 1,363 | 1,733 | ||||||
Fixed assets, net | 575 | 564 | ||||||
Deferred tax assets | 452 | 389 | ||||||
Prepaid pension | 1,272 | 1,060 | ||||||
Other non-current assets | 404 | 307 | ||||||
Total assets | $ | 27,217 | $ | 26,088 | ||||
Liabilities and equity | ||||||||
Liabilities | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | $ | 1,447 | $ | 1,961 | ||||
Short-term debt and current portion of long-term debt | 799 | 299 | ||||||
Fiduciary liabilities | 10,476 | 9,625 | ||||||
Other current liabilities | 1,121 | 870 | ||||||
Total current liabilities | 13,843 | 12,755 | ||||||
Long-term debt | 5,659 | 5,667 | ||||||
Deferred tax liabilities | 294 | 127 | ||||||
Pension, other postretirement, and postemployment liabilities | 1,715 | 1,789 | ||||||
Other non-current liabilities | 1,088 | 1,102 | ||||||
Total liabilities | 22,599 | 21,440 | ||||||
Equity | ||||||||
Ordinary shares - $0.01 nominal value | 2 | 2 | ||||||
Additional paid-in capital | 5,772 | 5,775 | ||||||
Retained earnings | 2,295 | 2,302 | ||||||
Accumulated other comprehensive loss | (3,524 | ) | (3,496 | ) | ||||
Total Aon shareholders' equity | 4,545 | 4,583 | ||||||
Noncontrolling interests | 73 | 65 | ||||||
Total equity | 4,618 | 4,648 | ||||||
Total liabilities and equity | $ | 27,217 | $ | 26,088 |
(1) | Includes cash and short-term investments of $3,839 million and $3,743 million for the periods ended June 30, 2018 and December 31, 2017, respectively. |
Six Months Ended | ||||||||
(millions) | June 30, 2018 | June 30, 2017 | ||||||
Cash flows from operating activities | ||||||||
Net income | $ | 668 | $ | 1,083 | ||||
Less: Income from discontinued operations, net of income taxes | 7 | 861 | ||||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
Loss from sales of businesses, net | 1 | 3 | ||||||
Depreciation of fixed assets | 86 | 108 | ||||||
Amortization and impairment of intangible assets | 392 | 503 | ||||||
Share-based compensation expense | 147 | 148 | ||||||
Deferred income taxes | (93 | ) | (227 | ) | ||||
Change in assets and liabilities: | ||||||||
Fiduciary receivables | (883 | ) | 10 | |||||
Short-term investments — funds held on behalf of clients | (154 | ) | (286 | ) | ||||
Fiduciary liabilities | 1,037 | 275 | ||||||
Receivables, net | (371 | ) | (25 | ) | ||||
Accounts payable and accrued liabilities | (495 | ) | (377 | ) | ||||
Restructuring reserves | 12 | 178 | ||||||
Current income taxes | (144 | ) | (25 | ) | ||||
Pension, other postretirement and other postemployment liabilities | (84 | ) | (101 | ) | ||||
Other assets and liabilities | 301 | 30 | ||||||
Net cash provided by operating activities - continuing operations | 413 | 436 | ||||||
Net cash provided by operating activities - discontinued operations | — | 64 | ||||||
Cash provided by operating activities | 413 | 500 | ||||||
Cash flows from investing activities | ||||||||
Proceeds from investments | 23 | 29 | ||||||
Payments for investments | (36 | ) | (32 | ) | ||||
Net sale of short-term investments — non-fiduciary | 352 | (2,451 | ) | |||||
Acquisition of businesses, net of cash acquired | (50 | ) | (149 | ) | ||||
Sale of businesses, net of cash sold | 1 | 4,193 | ||||||
Capital expenditures | (111 | ) | (82 | ) | ||||
Net cash provided by investing activities - continuing operations | 179 | 1,508 | ||||||
Net cash used for investing activities - discontinued operations | — | (19 | ) | |||||
Cash provided by investing activities | 179 | 1,489 | ||||||
Cash flows from financing activities | ||||||||
Share repurchase | (971 | ) | (1,100 | ) | ||||
Issuance of shares for employee benefit plans | (150 | ) | (139 | ) | ||||
Issuance of debt | 2,552 | 1,651 | ||||||
Repayment of debt | (2,027 | ) | (1,990 | ) | ||||
Cash dividends to shareholders | (187 | ) | (182 | ) | ||||
Noncontrolling interests and other financing activities | (15 | ) | (10 | ) | ||||
Net cash provided by financing activities - continuing operations | (798 | ) | (1,770 | ) | ||||
Net cash provided by financing activities - discontinued operations | — | — | ||||||
Cash used for financing activities | (798 | ) | (1,770 | ) | ||||
Effect of exchange rates on cash and cash equivalents | (63 | ) | 34 | |||||
Net increase (decrease) in cash and cash equivalents | (269 | ) | 253 | |||||
Cash and cash equivalents at beginning of period | 756 | 431 | ||||||
Cash and cash equivalents at end of period | $ | 487 | $ | 684 |
Three months ended June 30, 2018 | Six months ended June 30, 2018 | Inception to Date | Estimated Remaining Costs | Estimated Total Cost (2) | ||||||||||||||||
Workforce reduction | $ | 33 | $ | 66 | $ | 365 | $ | 55 | $ | 420 | ||||||||||
Technology rationalization | 8 | 18 | 51 | 79 | 130 | |||||||||||||||
Lease consolidation | 10 | 13 | 21 | 39 | 60 | |||||||||||||||
Asset impairments | 8 | 9 | 35 | 5 | 40 | |||||||||||||||
Other costs associated with restructuring and separation (3) | 136 | 163 | 294 | 81 | 375 | |||||||||||||||
Total restructuring and related expenses | $ | 195 | $ | 269 | 766 | $ | 259 | $ | 1,025 |
(1) | In the Condensed Consolidated Statements of Income, workforce reductions are included in “Compensation and benefits,” IT rationalization is included in “Information technology,” lease consolidations are included in “Premises,” asset impairments are included in “Depreciation of fixed assets,” and other costs associated with restructuring are included in “Other general expenses” depending on the nature of the expense. |
(2) | Actual costs, when incurred, may vary due to changes in the assumptions built into this plan. Significant assumptions that may change when plans are finalized and implemented include, but are not limited to, changes in severance calculations, changes in the assumptions underlying sublease loss calculations due to changing market conditions, and changes in the overall analysis that might cause the Company to add or cancel component initiatives. Estimated allocations between expense categories may be revised in future periods as these assumptions are updated. |
(3) | Other costs associated with the Restructuring Plan include those to separate the Divested Business, as well as moving costs and consulting and legal fees. These costs are generally recognized when incurred. |
Three months ended June 30, 2018 | Six months ended June 30, 2018 | |||||||||||||||||||||||
(millions) | As Reported | Adjustments | Balances Without Adoption of ASC 606 | As Reported | Adjustments | Balances Without Adoption of ASC 606 | ||||||||||||||||||
Revenue | ||||||||||||||||||||||||
Total revenue | $ | 2,561 | $ | 3 | $ | 2,564 | $ | 5,651 | $ | (410 | ) | $ | 5,241 | |||||||||||
Expenses | ||||||||||||||||||||||||
Compensation and benefits | $ | 1,494 | $ | (13 | ) | $ | 1,481 | $ | 3,110 | $ | (78 | ) | $ | 3,032 | ||||||||||
Other general expenses | $ | 535 | $ | 2 | 537 | $ | 853 | $ | 2 | 855 | ||||||||||||||
Other income (expense) | $ | (3 | ) | $ | (1 | ) | $ | (4 | ) | $ | (18 | ) | $ | — | $ | (18 | ) | |||||||
Income taxes | $ | (144 | ) | $ | 7 | $ | (137 | ) | $ | (30 | ) | $ | (75 | ) | $ | (105 | ) |
As of June 30, 2018 | ||||||||||||
(millions) | As Reported | Adjustments | Balances Without Adoption of ASC 606 | |||||||||
Assets | ||||||||||||
Receivables, net | $ | 2,992 | $ | (657 | ) | $ | 2,335 | |||||
Other current assets | $ | 732 | $ | (216 | ) | $ | 516 | |||||
Deferred tax assets | $ | 452 | $ | 128 | $ | 580 | ||||||
Other non-current assets | $ | 404 | $ | (144 | ) | $ | 260 | |||||
Liabilities | ||||||||||||
Other current liabilities | $ | 1,121 | $ | (61 | ) | $ | 1,060 | |||||
Deferred tax liabilities | $ | 294 | $ | (71 | ) | $ | 223 | |||||
Other non-current liabilities | $ | 1,088 | $ | 1 | $ | 1,089 | ||||||
Equity | ||||||||||||
Total equity | $ | 4,618 | $ | (758 | ) | $ | 3,860 |
Six months ended June 30, 2018 | ||||||||||||
(millions) | As Reported | Adjustments | Balances Without Adoption of ASC 606 | |||||||||
Cash flows from operating activities | ||||||||||||
Net income | $ | 668 | $ | (259 | ) | $ | 409 | |||||
Deferred income taxes | $ | (93 | ) | $ | (29 | ) | $ | (122 | ) | |||
Receivables, net | $ | (371 | ) | $ | 405 | $ | 34 | |||||
Accounts payable and accrued liabilities | $ | (495 | ) | $ | 8 | $ | (487 | ) | ||||
Current income taxes | $ | (144 | ) | $ | (46 | ) | $ | (190 | ) | |||
Other assets and liabilities | $ | 301 | $ | (79 | ) | $ | 222 |