Date of report (Date of earliest event reported) | May 10, 2013 |
Marsh & McLennan Companies, Inc. |
(Exact Name of Registrant as Specified in Charter) |
Delaware | 1-5998 | 36-2668272 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
1166 Avenue of the Americas, New York, NY | 10036 |
(Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code | (212) 345-5000 |
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 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations; and |
• | Item 8. Financial Statements and Supplementary Data (including segment data and related disclosures contained in the Company’s audited consolidated financial statements for each of the three years in the period ended December 31, 2012). |
Exhibit No. | Exhibit Name | |
23.1 | Consent of Deloitte & Touche LLP | |
99.1 | Amended Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 | |
99.2 | Amended Item 8. Financial Statements and Supplementary Data of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase | |
101.LAB | XBRL Taxonomy Extension Label Linkbase | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase |
MARSH & McLENNAN COMPANIES, INC. | ||
By: | /s/ Luciana Fato | |
Name: | Luciana Fato | |
Title: | Deputy General Counsel & | |
Corporate Secretary |
Exhibit No. | Exhibit Name | |
23.1 | Consent of Deloitte & Touche LLP | |
99.1 | Amended Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 | |
99.2 | Amended Item 8. Financial Statements and Supplementary Data of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase | |
101.LAB | XBRL Taxonomy Extension Label Linkbase | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase |
• | our exposure to potential liabilities arising from errors and omissions claims against us, particularly in our Marsh and Mercer businesses; |
• | our ability to make strategic acquisitions and dispositions and to integrate, and realize expected synergies, savings or strategic benefits from the businesses we acquire; |
• | the impact of any regional, national or global political, economic, regulatory or market conditions on our results of operations and financial condition; |
• | changes in the funded status of our global defined benefit pension plans and the impact of any increased pension funding resulting from those changes; |
• | the impact of competition, including with respect to our geographic reach, the sophistication and quality of our services, our pricing relative to competitors, our customers' option to self-insure or utilize internal resources instead of consultants, and our corporate tax rates relative to a number of our competitors; |
• | the extent to which we retain existing clients and attract new business, and our ability to incentivize and retain key employees; |
• | our exposure to potential criminal sanctions or civil remedies if we fail to comply with foreign and U.S. laws and regulations that are applicable to our international operations, including trade sanctions laws such as the Iran Threat Reduction and Syria Human Rights Act of 2012, anti-corruption laws such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act 2010, local laws prohibiting corrupt payments to government officials, as well as import and export restrictions; |
• | our ability to maintain adequate physical, technical and administrative safeguards to protect the security of data; |
• | the impact of changes in interest rates and deterioration of counterparty credit quality on our results related to our cash balances and investment portfolios, including corporate and fiduciary funds; |
• | the impact on our net income or cash flows and our effective tax rate in a particular period caused by settled tax audits and expired statutes of limitation; |
• | the impact on our net income caused by fluctuations in foreign currency exchange rates; |
• | the potential impact of rating agency actions on our cost of financing and ability to borrow, as well as on our operating costs and competitive position; |
• | our ability to successfully recover should we experience a disaster or other business continuity problem; |
• | changes in applicable tax or accounting requirements; and |
• | potential income statement effects from the application of FASB's ASC Topic No. 740 (“Income Taxes”) regarding accounting treatment of uncertain tax benefits and valuation allowances, including the effect of any subsequent adjustments to the estimates we use in applying this accounting standard. |
• | Risk and Insurance Services includes risk management activities (risk advice, risk transfer and risk control and mitigation solutions) as well as insurance and reinsurance broking and services. We conduct business in this segment through Marsh and Guy Carpenter. |
• | Consulting includes Health, Retirement, Talent and Investments consulting and services, and specialized management and economic consulting services. We conduct business in this segment through Mercer and Oliver Wyman Group. |
For the Years Ended December 31, (In millions, except per share figures) | 2012 | 2011 | 2010 | ||||||||
Revenue | $ | 11,924 | $ | 11,526 | $ | 10,550 | |||||
Expense | |||||||||||
Compensation and Benefits | 7,134 | 6,969 | 6,465 | ||||||||
Other Operating Expenses | 2,961 | 2,919 | 3,146 | ||||||||
Operating Expenses | 10,095 | 9,888 | 9,611 | ||||||||
Operating Income | $ | 1,829 | $ | 1,638 | $ | 939 | |||||
Income from Continuing Operations | $ | 1,204 | $ | 982 | $ | 565 | |||||
Discontinued Operations, Net of Tax | (3 | ) | 33 | 306 | |||||||
Net Income Before Non-Controlling Interests | $ | 1,201 | $ | 1,015 | $ | 871 | |||||
Net Income Attributable to the Company | $ | 1,176 | $ | 993 | $ | 855 | |||||
Net Income from Continuing Operations Per Share: | |||||||||||
Basic | $ | 2.16 | $ | 1.76 | $ | 1.01 | |||||
Diluted | $ | 2.13 | $ | 1.73 | $ | 1.00 | |||||
Net Income Per Share Attributable to the Company: | |||||||||||
Basic | $ | 2.16 | $ | 1.82 | $ | 1.56 | |||||
Diluted | $ | 2.13 | $ | 1.79 | $ | 1.55 | |||||
Average number of shares outstanding: | |||||||||||
Basic | 544 | 542 | 540 | ||||||||
Diluted | 552 | 551 | 544 | ||||||||
Shares outstanding at December 31, | 545 | 539 | 541 |
Year Ended December 31, | Components of Revenue Change* | |||||||||||||||||||||
(In millions, except percentage figures) | 2012 | 2011 | % Change GAAP Revenue | Currency Impact | Acquisitions/ Dispositions Impact | Underlying Revenue | ||||||||||||||||
Risk and Insurance Services | ||||||||||||||||||||||
Marsh | $ | 5,232 | $ | 4,991 | 5 | % | (2 | )% | 2 | % | 5 | % | ||||||||||
Guy Carpenter | 1,079 | 1,041 | 4 | % | — | (1 | )% | — | (1 | )% | — | 6 | % | |||||||||
Subtotal | 6,311 | 6,032 | 5 | % | — | (2 | )% | — | 2 | % | — | 5 | % | |||||||||
Fiduciary Interest Income | 39 | 47 | ||||||||||||||||||||
Total Risk and Insurance Services | 6,350 | 6,079 | 4 | % | — | (2 | )% | — | 2 | % | — | 5 | % | |||||||||
Consulting | ||||||||||||||||||||||
Mercer | 4,147 | 4,004 | 4 | % | — | (1 | )% | — | 1 | % | — | 4 | % | |||||||||
Oliver Wyman Group | 1,466 | 1,483 | (1 | )% | — | (2 | )% | — | (2 | )% | — | 3 | % | |||||||||
Total Consulting | 5,613 | 5,487 | 2 | % | — | (2 | )% | — | — | % | — | 4 | % | |||||||||
Corporate/Eliminations | (39 | ) | (40 | ) | ||||||||||||||||||
Total Revenue | $ | 11,924 | $ | 11,526 | 3 | % | — | (2 | )% | — | 1 | % | — | 4 | % |
* | Components of revenue change may not add due to rounding. |
Year Ended December 31, | Components of Revenue Change* | ||||||||||||||||||||
(In millions, except percentage figures) | 2012 | 2011 | % Change GAAP Revenue | Currency Impact | Acquisitions/ Dispositions Impact | Underlying Revenue | |||||||||||||||
Marsh: | |||||||||||||||||||||
EMEA | $ | 1,860 | $ | 1,796 | 4 | % | (5 | )% | — | 3 | % | — | 5 | % | |||||||
Asia Pacific | 656 | 612 | 7 | % | (1 | )% | — | — | % | — | 7 | % | |||||||||
Latin America | 353 | 334 | 6 | % | (7 | )% | — | — | % | — | 13 | % | |||||||||
Total International | 2,869 | 2,742 | 5 | % | (4 | )% | — | 2 | % | — | 6 | % | |||||||||
U.S. / Canada | 2,363 | 2,249 | 5 | % | — | % | — | 2 | % | — | 3 | % | |||||||||
Total Marsh | $ | 5,232 | $ | 4,991 | 5 | % | (2 | )% | — | 2 | % | — | 5 | % | |||||||
Mercer: | |||||||||||||||||||||
Health | $ | 1,412 | $ | 1,320 | 7 | % | (1 | )% | — | 2 | % | — | 7 | % | |||||||
Retirement | 1,396 | 1,423 | (2 | )% | (2 | )% | — | (1 | )% | — | 1 | % | |||||||||
Talent | 604 | 576 | 5 | % | (2 | )% | — | 4 | % | — | 2 | % | |||||||||
Investments | 735 | 685 | 7 | % | (1 | )% | — | 2 | % | — | 7 | % | |||||||||
Total Mercer | $ | 4,147 | $ | 4,004 | 4 | % | (1 | )% | — | 1 | % | — | 4 | % |
Underlying revenue measures the change in revenue using consistent currency exchange rates, excluding the impact of certain items such as: acquisitions, dispositions and transfers among businesses. | |
* | Components of revenue change may not add due to rounding. |
Year Ended December 31, | Components of Revenue Change* | ||||||||||||||||||||
(In millions, except percentage figures) | 2011 | 2010 | % Change GAAP Revenue | Currency Impact | Acquisitions/ Dispositions Impact | Underlying Revenue | |||||||||||||||
Risk and Insurance Services | |||||||||||||||||||||
Marsh | $ | 4,991 | $ | 4,537 | 10 | % | 2 | % | — | 4 | % | — | 4 | % | |||||||
Guy Carpenter | 1,041 | 975 | 7 | % | 1 | % | — | 1 | % | — | 5 | % | |||||||||
Subtotal | 6,032 | 5,512 | 9 | % | 2 | % | — | 3 | % | — | 4 | % | |||||||||
Fiduciary Interest Income | 47 | 45 | |||||||||||||||||||
Total Risk and Insurance Services | 6,079 | 5,557 | 9 | % | 2 | % | — | 3 | % | — | 4 | % | |||||||||
Consulting | |||||||||||||||||||||
Mercer | 4,004 | 3,685 | 9 | % | 3 | % | — | 2 | % | — | 4 | % | |||||||||
Oliver Wyman Group | 1,483 | 1,357 | 9 | % | 2 | % | — | — | % | — | 7 | % | |||||||||
Total Consulting | 5,487 | 5,042 | 9 | % | 3 | % | — | 1 | % | — | 5 | % | |||||||||
Corporate /Eliminations | (40 | ) | (49 | ) | |||||||||||||||||
Total Revenue | $ | 11,526 | $ | 10,550 | 9 | % | 2 | % | — | 2 | % | — | 5 | % |
Year Ended December 31, | Components of Revenue Change* | |||||||||||||||||||||
(In millions, except percentage figures) | 2011 | 2010 | % Change GAAP Revenue | Currency Impact | Acquisitions/ Dispositions Impact | Underlying Revenue | ||||||||||||||||
Marsh: | ||||||||||||||||||||||
EMEA | $ | 1,796 | $ | 1,674 | 7 | % | 2 | % | — | 2 | % | — | 4 | % | ||||||||
Asia Pacific | 612 | 503 | 22 | % | 8 | % | — | 4 | % | — | 9 | % | ||||||||||
Latin America | 334 | 298 | 12 | % | (1 | )% | — | — | — | 14 | % | |||||||||||
Total International | 2,742 | 2,475 | 11 | % | 3 | % | — | 2 | % | — | 6 | % | ||||||||||
U.S. / Canada | 2,249 | 2,062 | 9 | % | — | — | 6 | % | — | 2 | % | |||||||||||
Total Marsh | $ | 4,991 | $ | 4,537 | 10 | % | 2 | % | — | 4 | % | — | 4 | % | ||||||||
Mercer: | ||||||||||||||||||||||
Health | $ | 1,320 | $ | 1,243 | 6 | % | 1 | % | — | — | — | 5 | % | |||||||||
Retirement | 1,423 | 1,408 | 1 | % | 3 | % | — | — | % | — | (1 | )% | ||||||||||
Talent | 576 | 488 | 18 | % | 3 | % | — | 5 | % | — | 11 | % | ||||||||||
Investments | 685 | 546 | 26 | % | 8 | % | — | 6 | % | — | 11 | % | ||||||||||
Total Mercer | $ | 4,004 | $ | 3,685 | 9 | % | 3 | % | — | 2 | % | — | 4 | % |
Underlying revenue measures the change in revenue using consistent currency exchange rates, excluding the impact of certain items such as: acquisitions, dispositions and transfers among businesses. | |
* | Components of revenue change may not add due to rounding. |
(In millions of dollars) | 2012 | 2011 | 2010 | ||||||||
Revenue | $ | 6,350 | $ | 6,079 | $ | 5,557 | |||||
Compensation and Benefits | 3,502 | 3,400 | 3,172 | ||||||||
Other Operating Expenses | 1,514 | 1,479 | 1,428 | ||||||||
Operating Expenses | 5,016 | 4,879 | 4,600 | ||||||||
Operating Income | $ | 1,334 | $ | 1,200 | $ | 957 | |||||
Operating Income Margin | 21.0 | % | 19.7 | % | 17.2 | % |
• | January - Marsh acquired Alexander Forbes' South African brokerage operations, including Alexander Forbes Risk Services and related ancillary operations and insurance broking operations in Botswana and Namibia to expand Marsh's presence in Africa. Marsh subsequently closed the acquisitions of the Alexander Forbes operations in Uganda, Malawi and Zambia. |
• | March - Marsh & McLennan Agency ("MMA") acquired KSPH, LLC, a middle-market employee benefits agency based in Virginia, and Marsh acquired Cosmos Services (America) Inc., the U.S. insurance brokerage subsidiary of ITOCHU Corp., which specializes in commercial property/casualty, personal lines, |
• | June - MMA acquired Progressive Benefits Solutions, an employee benefits agency based in North Carolina, and Security Insurance Services, Inc., a Wisconsin-based insurance agency which offers property/casualty and employee benefits products and services to individuals and businesses. |
• | August - MMA acquired Rosenfeld-Einstein, a South Carolina-based employee benefits service provider, and Eidson Insurance, a property/casualty and employee benefits services firm located in Florida. |
• | October - MMA acquired Howalt+McDowell, a South Dakota-based agency which offers property casualty, surety, personal protection and employee benefits insurance to individuals and businesses, and The Protector Group Insurance Agency, a Massachusetts-based agency which provides property casualty, employee benefits services, personal insurance and individual financial services. |
• | November - MMA acquired Brower Insurance, an Ohio-based company providing employee benefits, property casualty and consulting services. |
• | December - MMA acquired McGraw Wentworth, a Michigan-based company providing consulting services to mid-sized organizations, and Liscomb Hood Mason, a Minnesota-based company providing property casualty and employee benefits products and services. |
(In millions of dollars) | 2012 | 2011 | 2010 | ||||||||
Revenue | $ | 5,613 | $ | 5,487 | $ | 5,042 | |||||
Compensation and Benefits | 3,298 | 3,315 | 3,063 | ||||||||
Other Operating Expenses | 1,623 | 1,555 | 1,835 | ||||||||
Operating Expenses | 4,921 | 4,870 | 4,898 | ||||||||
Operating Income | $ | 692 | $ | 617 | $ | 144 | |||||
Operating Income Margin | 12.3 | % | 11.2 | % | 2.9 | % |
• | February - Mercer acquired the remaining 49% of Yokogawa-ORC, a global mobility firm based in Japan, which was previously accounted for under the equity method, and Pensjon & Finans, a leading Norway-based financial investment and pension consulting firm. |
• | March - Mercer acquired REPCA, a France-based broking and advisory firm for employer health and benefits plans. |
(In millions of dollars) | 2012 | 2011 | 2010 | ||||||||
Corporate Advisory and Restructuring Operating Income | $ | 6 | $ | 9 | $ | 10 | |||||
Corporate Expense | (203 | ) | (188 | ) | (172 | ) | |||||
Total Corporate and Other | $ | (197 | ) | $ | (179 | ) | $ | (162 | ) |
For the Years Ended December 31, (In millions of dollars, except per share figures) | 2012 | 2011 | 2010 | ||||||||
Kroll Operations | |||||||||||
Revenue | $ | — | $ | — | $ | 381 | |||||
Operating expenses | — | — | 345 | ||||||||
Operating income | — | — | 36 | ||||||||
Income tax expense | — | — | 16 | ||||||||
Income from Kroll operations, net of tax | — | — | 20 | ||||||||
Other discontinued operations, net of tax | — | (17 | ) | (7 | ) | ||||||
Income (loss) from discontinued operations, net of tax | — | (17 | ) | 13 | |||||||
Disposals of discontinued operations (a) | (2 | ) | 25 | 58 | |||||||
Income tax expense (credit) (b) | 1 | (25 | ) | (235 | ) | ||||||
Disposals of discontinued operations, net of tax | (3 | ) | 50 | 293 | |||||||
Discontinued operations, net of tax | $ | (3 | ) | $ | 33 | $ | 306 | ||||
Discontinued operations, net of tax per share | |||||||||||
—Basic | $ | — | $ | 0.06 | $ | 0.55 | |||||
—Diluted | $ | — | $ | 0.06 | $ | 0.55 |
(a) | Includes gain on sale of Kroll and the gain on the sale of KLS in 2010. |
(b) | The income tax credit related to the disposal of discontinued operations for 2010 primarily represents the recognition of tax benefits related to the sale of Kroll, partly offset by a tax provision of $36 million related to the sale of KLS. |
Payment due by Period | |||||||||||||||||||
Contractual Obligations (In millions of dollars) | Total | Within 1 Year | 1-3 Years | 4-5 Years | After 5 Years | ||||||||||||||
Current portion of long-term debt | $ | 260 | $ | 260 | $ | — | $ | — | $ | — | |||||||||
Long-term debt | 2,664 | — | 821 | 273 | 1,570 | ||||||||||||||
Interest on long-term debt | 1,309 | 159 | 287 | 209 | 654 | ||||||||||||||
Net operating leases | 2,489 | 355 | 583 | 433 | 1,118 | ||||||||||||||
Service agreements | 374 | 136 | 120 | 78 | 40 | ||||||||||||||
Other long-term obligations | 144 | 32 | 103 | 7 | 2 | ||||||||||||||
Purchase commitments | 47 | 32 | 15 | — | — | ||||||||||||||
Total | $ | 7,287 | $ | 974 | $ | 1,929 | $ | 1,000 | $ | 3,384 |
0.5 Percentage Point Increase | 0.5 Percentage Point Decrease | ||||||||||||||
(In millions of dollars) | U.S. | U.K. | U.S. | U.K. | |||||||||||
Assumed Rate of Return on Plan Assets | $ | (18 | ) | $ | (35 | ) | $ | 18 | $ | 35 | |||||
Discount Rate | $ | (20 | ) | $ | (25 | ) | $ | 20 | $ | 25 |
For the Years Ended December 31, | ||||||||||||
(In millions, except per share figures) | 2012 | 2011 | 2010 | |||||||||
Revenue | $ | 11,924 | $ | 11,526 | $ | 10,550 | ||||||
Expense: | ||||||||||||
Compensation and benefits | 7,134 | 6,969 | 6,465 | |||||||||
Other operating expenses | 2,961 | 2,919 | 3,146 | |||||||||
Operating expenses | 10,095 | 9,888 | 9,611 | |||||||||
Operating income | 1,829 | 1,638 | 939 | |||||||||
Interest income | 24 | 28 | 20 | |||||||||
Interest expense | (181 | ) | (199 | ) | (233 | ) | ||||||
Cost of extinguishment of debt | — | (72 | ) | — | ||||||||
Investment income | 24 | 9 | 43 | |||||||||
Income before income taxes | 1,696 | 1,404 | 769 | |||||||||
Income tax expense | 492 | 422 | 204 | |||||||||
Income from continuing operations | 1,204 | 982 | 565 | |||||||||
Discontinued operations, net of tax | (3 | ) | 33 | 306 | ||||||||
Net income before non-controlling interests | 1,201 | 1,015 | 871 | |||||||||
Less: Net income attributable to non-controlling interests | 25 | 22 | 16 | |||||||||
Net income attributable to the Company | $ | 1,176 | $ | 993 | $ | 855 | ||||||
Basic net income per share – Continuing operations | $ | 2.16 | $ | 1.76 | $ | 1.01 | ||||||
– Net income attributable to the Company | $ | 2.16 | $ | 1.82 | $ | 1.56 | ||||||
Diluted net income per share – Continuing operations | $ | 2.13 | $ | 1.73 | $ | 1.00 | ||||||
–Net income attributable to the Company | $ | 2.13 | $ | 1.79 | $ | 1.55 | ||||||
Average number of shares outstanding – Basic | 544 | 542 | 540 | |||||||||
– Diluted | 552 | 551 | 544 | |||||||||
Shares outstanding at December 31, | 545 | 539 | 541 |
For the Years Ended December 31, (In millions) | 2012 | 2011 | 2010 | ||||||||
Net income before non-controlling interests | $ | 1,201 | $ | 1,015 | $ | 871 | |||||
Other comprehensive income (loss), before tax: | |||||||||||
Foreign currency translation adjustments | 177 | (100 | ) | (34 | ) | ||||||
Unrealized investment loss | (1 | ) | (9 | ) | (17 | ) | |||||
Loss related to pension/post-retirement plans | (447 | ) | (1,114 | ) | (146 | ) | |||||
Other comprehensive loss, before tax | (271 | ) | (1,223 | ) | (197 | ) | |||||
Income tax credit on other comprehensive loss | (152 | ) | (335 | ) | (68 | ) | |||||
Other comprehensive loss, net of tax | (119 | ) | (888 | ) | (129 | ) | |||||
Comprehensive income | 1,082 | 127 | 742 | ||||||||
Less: Comprehensive income attributable to non-controlling interests | 25 | 22 | 16 | ||||||||
Comprehensive income attributable to the Company | $ | 1,057 | $ | 105 | $ | 726 |
December 31, | |||||||
(In millions, except share figures) | 2012 | 2011 | |||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 2,301 | $ | 2,113 | |||
Receivables | |||||||
Commissions and fees | 2,858 | 2,676 | |||||
Advanced premiums and claims | 62 | 86 | |||||
Other | 244 | 249 | |||||
3,164 | 3,011 | ||||||
Less-allowance for doubtful accounts and cancellations | (106 | ) | (105 | ) | |||
Net receivables | 3,058 | 2,906 | |||||
Current deferred tax assets | 410 | 376 | |||||
Other current assets | 194 | 253 | |||||
Total current assets | 5,963 | 5,648 | |||||
Goodwill and intangible assets | 7,261 | 6,963 | |||||
Fixed assets, net | 809 | 804 | |||||
Pension related assets | 260 | 39 | |||||
Deferred tax assets | 1,223 | 1,205 | |||||
Other assets | 772 | 795 | |||||
$ | 16,288 | $ | 15,454 | ||||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Short-term debt | $ | 260 | $ | 260 | |||
Accounts payable and accrued liabilities | 1,721 | 2,016 | |||||
Accrued compensation and employee benefits | 1,473 | 1,400 | |||||
Accrued income taxes | 110 | 63 | |||||
Total current liabilities | 3,564 | 3,739 | |||||
Fiduciary liabilities | 3,992 | 4,082 | |||||
Less – cash and investments held in a fiduciary capacity | (3,992 | ) | (4,082 | ) | |||
— | — | ||||||
Long-term debt | 2,658 | 2,668 | |||||
Pension, postretirement and postemployment benefits | 2,094 | 1,655 | |||||
Liabilities for errors and omissions | 460 | 468 | |||||
Other liabilities | 906 | 984 | |||||
Commitments and contingencies | — | — | |||||
Equity: | |||||||
Preferred stock, $1 par value, authorized 6,000,000 shares, none issued | — | — | |||||
Common stock, $1 par value, authorized | |||||||
1,600,000,000 shares, issued 560,641,640 shares at December 31, 2012 and December 31, 2011 | 561 | 561 | |||||
Additional paid-in capital | 1,107 | 1,156 | |||||
Retained earnings | 8,628 | 7,949 | |||||
Accumulated other comprehensive loss | (3,307 | ) | (3,188 | ) | |||
Non-controlling interests | 64 | 57 | |||||
7,053 | 6,535 | ||||||
Less – treasury shares, at cost, 15,133,774 shares at December 31, 2012 and 21,463,226 shares at December 31, 2011 | (447 | ) | (595 | ) | |||
Total equity | 6,606 | 5,940 | |||||
$ | 16,288 | $ | 15,454 |
For the Years Ended December 31, | |||||||||||
(In millions) | 2012 | 2011 | 2010 | ||||||||
Operating cash flows: | |||||||||||
Net income before non-controlling interests | $ | 1,201 | $ | 1,015 | $ | 871 | |||||
Adjustments to reconcile net income to cash provided by operations: | |||||||||||
Depreciation and amortization of fixed assets and capitalized software | 277 | 267 | 291 | ||||||||
Amortization of intangible assets | 72 | 65 | 66 | ||||||||
Intangible asset impairment | 8 | — | — | ||||||||
Adjustments to acquisition related contingent consideration liability | (44 | ) | — | — | |||||||
Charge for early extinguishment of debt | — | 72 | — | ||||||||
Provision for deferred income taxes | 96 | 178 | 16 | ||||||||
Gain on investments | (24 | ) | (8 | ) | (40 | ) | |||||
Loss (gain) on disposition of assets | 23 | 35 | (17 | ) | |||||||
Stock option expense | 26 | 21 | 18 | ||||||||
Changes in assets and liabilities: | |||||||||||
Net receivables | (144 | ) | 143 | (216 | ) | ||||||
Other current assets | (37 | ) | (225 | ) | 51 | ||||||
Other assets | (177 | ) | (94 | ) | (216 | ) | |||||
Accounts payable and accrued liabilities | (210 | ) | 108 | (55 | ) | ||||||
Accrued compensation and employee benefits | 72 | 107 | (13 | ) | |||||||
Accrued income taxes | 44 | 1 | 32 | ||||||||
Other liabilities | 174 | 32 | (145 | ) | |||||||
Effect of exchange rate changes | (35 | ) | (12 | ) | 79 | ||||||
Net cash provided by operations | 1,322 | 1,705 | 722 | ||||||||
Financing cash flows: | |||||||||||
Purchase of treasury shares | (230 | ) | (361 | ) | (86 | ) | |||||
Proceeds from issuance of debt | 248 | 496 | — | ||||||||
Repayments of debt | (259 | ) | (11 | ) | (559 | ) | |||||
Payments for early extinguishment of debt | — | (672 | ) | — | |||||||
Purchase of non-controlling interests | — | (21 | ) | (15 | ) | ||||||
Shares withheld for taxes on vested units – treasury shares | (97 | ) | (93 | ) | (59 | ) | |||||
Issuance of common stock | 248 | 162 | 41 | ||||||||
Payments of contingent consideration for acquisitions | (30 | ) | (16 | ) | — | ||||||
Distributions to non-controlling interests | (16 | ) | (11 | ) | — | ||||||
Dividends paid | (497 | ) | (480 | ) | (452 | ) | |||||
Net cash used for financing activities | (633 | ) | (1,007 | ) | (1,130 | ) | |||||
Investing cash flows: | |||||||||||
Capital expenditures | (320 | ) | (280 | ) | (271 | ) | |||||
Net sales of long-term investments | 20 | 62 | 91 | ||||||||
Proceeds from sales of fixed assets | 6 | 3 | 6 | ||||||||
Dispositions | — | — | 1,202 | ||||||||
Acquisitions | (292 | ) | (237 | ) | (492 | ) | |||||
Other, net | 3 | (5 | ) | (1 | ) | ||||||
Net cash (used for) provided by investing activities | (583 | ) | (457 | ) | 535 | ||||||
Effect of exchange rate changes on cash and cash equivalents | 82 | (22 | ) | (10 | ) | ||||||
Increase in cash and cash equivalents | 188 | 219 | 117 | ||||||||
Cash and cash equivalents at beginning of period | 2,113 | 1,894 | 1,777 | ||||||||
Cash and cash equivalents at end of period | $ | 2,301 | $ | 2,113 | $ | 1,894 |
For the Years Ended December 31, | |||||||||||
(In millions, except per share figures) | 2012 | 2011 | 2010 | ||||||||
COMMON STOCK | |||||||||||
Balance, beginning and end of year | $ | 561 | $ | 561 | $ | 561 | |||||
ADDITIONAL PAID-IN CAPITAL | |||||||||||
Balance, beginning of year | $ | 1,156 | $ | 1,185 | $ | 1,211 | |||||
Change in accrued stock compensation costs | (16 | ) | (13 | ) | 6 | ||||||
Issuance of shares under stock compensation plans and employee stock purchase plans and related tax impact | (34 | ) | (14 | ) | (17 | ) | |||||
Purchase of subsidiary shares from non-controlling interests | 1 | (2 | ) | — | |||||||
Issuance of shares for acquisitions | — | — | (15 | ) | |||||||
Balance, end of period | $ | 1,107 | $ | 1,156 | $ | 1,185 | |||||
RETAINED EARNINGS | |||||||||||
Balance, beginning of year | $ | 7,949 | $ | 7,436 | $ | 7,033 | |||||
Net income attributable to the Company | 1,176 | 993 | 855 | ||||||||
Dividend equivalents declared - (per share amounts: $0.90 in 2012, $0.86 in 2011, and $0.81 in 2010) | (8 | ) | (14 | ) | (15 | ) | |||||
Dividends declared – (per share amounts: $0.90 in 2012, $0.86 in 2011, and $0.81 in 2010) | (489 | ) | (466 | ) | (437 | ) | |||||
Balance, end of period | $ | 8,628 | $ | 7,949 | $ | 7,436 | |||||
ACCUMULATED OTHER COMPREHENSIVE LOSS | |||||||||||
Balance, beginning of year | $ | (3,188 | ) | $ | (2,300 | ) | $ | (2,171 | ) | ||
Comprehensive loss, net of tax | (119 | ) | (888 | ) | (129 | ) | |||||
Balance, end of period | $ | (3,307 | ) | $ | (3,188 | ) | $ | (2,300 | ) | ||
TREASURY SHARES | |||||||||||
Balance, beginning of year | $ | (595 | ) | $ | (514 | ) | $ | (806 | ) | ||
Issuance of shares under stock compensation plans and employee stock purchase plans | 378 | 280 | 180 | ||||||||
Issuance of shares for acquisitions | — | — | 198 | ||||||||
Purchase of treasury shares | (230 | ) | (361 | ) | (86 | ) | |||||
Balance, end of period | $ | (447 | ) | $ | (595 | ) | $ | (514 | ) | ||
NON-CONTROLLING INTERESTS | |||||||||||
Balance, beginning of year | $ | 57 | $ | 47 | $ | 35 | |||||
Net income attributable to non-controlling interests | 25 | 22 | 16 | ||||||||
Distributions | (16 | ) | (5 | ) | — | ||||||
Other changes | (2 | ) | (7 | ) | (4 | ) | |||||
Balance, end of period | $ | 64 | $ | 57 | $ | 47 | |||||
TOTAL EQUITY | $ | 6,606 | $ | 5,940 | $ | 6,415 |
December 31, | ||||||||
(In millions of dollars) | 2012 | 2011 | ||||||
Furniture and equipment | $ | 1,168 | $ | 1,101 | ||||
Land and buildings | 412 | 405 | ||||||
Leasehold and building improvements | 811 | 767 | ||||||
2,391 | 2,273 | |||||||
Less-accumulated depreciation and amortization | (1,582 | ) | (1,469 | ) | ||||
$ | 809 | $ | 804 |
Basic EPS Calculation - Continuing Operations | |||||||||||
(In millions, except per share figures) | 2012 | 2011 | 2010 | ||||||||
Net income from continuing operations | $ | 1,204 | $ | 982 | $ | 565 | |||||
Less: Net income attributable to non-controlling interests | 25 | 22 | 16 | ||||||||
Net income from continuing operations attributable to the Company | 1,179 | 960 | 549 | ||||||||
Less: Portion attributable to participating securities | 2 | 6 | 6 | ||||||||
Net income attributable to common shares for basic earnings per share | $ | 1,177 | $ | 954 | $ | 543 | |||||
Basic weighted average common shares outstanding | 544 | 542 | 540 |
Basic EPS Calculation - Net Income | |||||||||||
(In millions, except per share figures) | 2012 | 2011 | 2010 | ||||||||
Net income attributable to the Company | $ | 1,176 | $ | 993 | $ | 855 | |||||
Less: Portion attributable to participating securities | 2 | 6 | 11 | ||||||||
Net income attributable to common shares for basic earnings per share | $ | 1,174 | $ | 987 | $ | 844 | |||||
Basic weighted average common shares outstanding | 544 | 542 | 540 |
Diluted EPS Calculation - Continuing Operations | |||||||||||
(In millions, except per share figures) | 2012 | 2011 | 2010 | ||||||||
Net income from continuing operations | $ | 1,204 | $ | 982 | $ | 565 | |||||
Less: Net income attributable to non-controlling interests | 25 | 22 | 16 | ||||||||
Net income from continuing operations attributable to the Company | 1,179 | 960 | 549 | ||||||||
Less: Portion attributable to participating securities | 2 | 6 | 6 | ||||||||
Net income attributable to common shares for diluted earnings per share | $ | 1,177 | $ | 954 | $ | 543 | |||||
Basic weighted average common shares outstanding | 544 | 542 | 540 | ||||||||
Dilutive effect of potentially issuable common shares | 8 | 9 | 4 | ||||||||
Diluted weighted average common shares outstanding | 552 | 551 | 544 | ||||||||
Average stock price used to calculate common stock equivalents | $ | 33.10 | $ | 29.40 | $ | 23.76 |
Diluted EPS Calculation - Net Income | |||||||||||
(In millions, except per share figures) | 2012 | 2011 | 2010 | ||||||||
Net income attributable to the Company | $ | 1,176 | $ | 993 | $ | 855 | |||||
Less: Portion attributable to participating securities | 2 | 6 | 11 | ||||||||
Net income attributable to common shares for diluted earnings per share | $ | 1,174 | $ | 987 | $ | 844 | |||||
Basic weighted average common shares outstanding | 544 | 542 | 540 | ||||||||
Dilutive effect of potentially issuable common shares | 8 | 9 | 4 | ||||||||
Diluted weighted average common shares outstanding | 552 | 551 | 544 | ||||||||
Average stock price used to calculate common stock equivalents | $ | 33.10 | $ | 29.40 | $ | 23.76 |
(In millions of dollars) | 2012 | 2011 | 2010 | ||||||||
Assets acquired, excluding cash | $ | 380 | $ | 214 | $ | 867 | |||||
Released from escrow in 2012 | (62 | ) | — | — | |||||||
Liabilities assumed | (42 | ) | (21 | ) | (176 | ) | |||||
Shares issued (7.6 million shares in 2010) | — | — | (183 | ) | |||||||
Contingent/deferred purchase consideration | (46 | ) | (33 | ) | (81 | ) | |||||
Net cash outflow for current year acquisitions | 230 | 160 | 427 | ||||||||
Purchase of other intangibles | 3 | 4 | 3 | ||||||||
Deferred purchase consideration from prior years' acquisitions | 59 | 11 | 62 | ||||||||
Subtotal | $ | 292 | $ | 175 | $ | 492 | |||||
Cash paid into escrow for future acquisition | — | 62 | — | ||||||||
Net cash outflow for acquisitions | $ | 292 | $ | 237 | $ | 492 |
(In millions of dollars) | 2012 | 2011 | 2010 | ||||||||
Interest paid | $ | 183 | $ | 188 | $ | 232 | |||||
Income taxes paid, net of refunds | $ | 350 | $ | 37 | $ | 39 |
For the Year Ended December 31, | |||||||||||
(In millions of dollars) | 2012 | 2011 | 2010 | ||||||||
Net cash provided by (used for) operations | $ | — | $ | 11 | $ | (6 | ) | ||||
Net cash used for investing activities | $ | — | $ | — | $ | (14 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | $ | — | $ | — | $ | (2 | ) |
For the Year Ended December 31, | |||||||||||
(In millions of dollars) | 2012 | 2011 | 2010 | ||||||||
Balance at beginning of year | $ | 105 | $ | 114 | $ | 107 | |||||
Provision charged to operations | 11 | 11 | 20 | ||||||||
Accounts written-off, net of recoveries | (12 | ) | (21 | ) | (26 | ) | |||||
Effect of exchange rate changes and other | 2 | 1 | 13 | ||||||||
Balance at end of year | $ | 106 | $ | 105 | $ | 114 |
For the year ended December 31, | 2012 | ||||||||
(In millions of dollars) | Pre-Tax | Tax (Credit) | Net of Tax | ||||||
Foreign currency translation adjustments | $ | 177 | $ | (5 | ) | $ | 182 | ||
Unrealized investment gains (losses) | (1 | ) | 1 | (2 | ) | ||||
Pension/post-retirement plans: | |||||||||
Amortization of losses (gains) included in net periodic pension cost: | |||||||||
Prior service gains | (31 | ) | (12 | ) | (19 | ) | |||
Net actuarial losses | 270 | 90 | 180 | ||||||
Subtotal | 239 | 78 | 161 | ||||||
Net loss arising during period | (648 | ) | (217 | ) | (431 | ) | |||
Foreign currency translation adjustments | (113 | ) | (26 | ) | (87 | ) | |||
Other adjustments | 75 | 17 | 58 | ||||||
Pension/post-retirement plans losses | (447 | ) | (148 | ) | (299 | ) | |||
Other comprehensive loss | $ | (271 | ) | $ | (152 | ) | $ | (119 | ) |
For the year ended December 31, | 2011 | ||||||||
(In millions of dollars) | Pre-Tax | Tax (Credit) | Net of Tax | ||||||
Foreign currency translation adjustments | $ | (100 | ) | $ | 4 | $ | (104 | ) | |
Unrealized investment losses | (9 | ) | (4 | ) | (5 | ) | |||
Pension/post-retirement plans: | |||||||||
Amortization of losses (gains) included in net periodic pension cost: | |||||||||
Prior service gains | (32 | ) | (13 | ) | (19 | ) | |||
Net actuarial losses | 213 | 68 | 145 | ||||||
Subtotal | 181 | 55 | 126 | ||||||
Net loss arising during period | (1,289 | ) | (388 | ) | (901 | ) | |||
Foreign currency translation adjustments | (14 | ) | (3 | ) | (11 | ) | |||
Other adjustments | 8 | 1 | 7 | ||||||
Pension/post-retirement plans losses | (1,114 | ) | (335 | ) | (779 | ) | |||
Other comprehensive loss | $ | (1,223 | ) | $ | (335 | ) | $ | (888 | ) |
For the year ended December 31, | 2010 | ||||||||
(In millions of dollars) | Pre-Tax | Tax (Credit) | Net of Tax | ||||||
Foreign currency translation adjustments | $ | (34 | ) | $ | (7 | ) | $ | (27 | ) |
Unrealized investment losses | (17 | ) | (5 | ) | (12 | ) | |||
Pension/post-retirement plans: | |||||||||
Amortization of losses (gains) included in net periodic pension cost: | |||||||||
Prior service gains | (34 | ) | (13 | ) | (21 | ) | |||
Net actuarial losses | 144 | 48 | 96 | ||||||
Subtotal | 110 | 35 | 75 | ||||||
Net loss arising during period | (346 | ) | (111 | ) | (235 | ) | |||
Foreign currency translation adjustments | 89 | 18 | 71 | ||||||
Other adjustments | 1 | 2 | (1 | ) | |||||
Pension/post-retirement plans losses | (146 | ) | (56 | ) | (90 | ) | |||
Other comprehensive loss | $ | (197 | ) | $ | (68 | ) | $ | (129 | ) |
(In millions of dollars) | December 31, 2012 | December 31, 2011 | |||||
Foreign currency translation adjustments (net of deferred tax liability of $9 and $14 in 2012 and 2011, respectively) | $ | 140 | $ | (42 | ) | ||
Net unrealized investment gains (net of deferred tax liability of $2 and $1 in 2012 and 2011, respectively) | 4 | 6 | |||||
Net charges related to pension / post-retirement plans (net of deferred tax asset of $1,657 and $1,508 in 2012 and 2011, respectively) | (3,451 | ) | (3,152 | ) | |||
$ | (3,307 | ) | $ | (3,188 | ) |
• | January - Marsh acquired Alexander Forbes' South African brokerage operations, including Alexander Forbes Risk Services and related ancillary operations and insurance broking operations in Botswana and Namibia to expand Marsh's presence in Africa. Marsh subsequently closed the acquisitions of the Alexander Forbes operations in Uganda, Malawi and Zambia. |
• | March - Marsh & McLennan Agency business ("MMA") acquired KSPH, LLC, a middle-market employee benefits agency based in Virginia, and Marsh acquired Cosmos Services (America) Inc., the U.S. insurance brokerage subsidiary of ITOCHU Corp., which specializes in commercial property/casualty, personal lines, and employee benefits brokerage services to U.S. subsidiaries of Japanese companies. |
• | June - MMA acquired Progressive Benefits Solutions, an employee benefits agency based in North Carolina, and Security Insurance Services, Inc., a Wisconsin-based insurance agency which offers property/casualty and employee benefits products and services to individuals and businesses. |
• | August - MMA acquired Rosenfeld-Einstein, a South Carolina-based employee benefits service provider, and Eidson Insurance, a property/casualty and employee benefits services firm located in Florida. |
• | October - MMA acquired Howalt+McDowell, a South Dakota-based agency which offers property casualty, surety, personal protection and employee benefits insurance to individuals and businesses, and The Protector Group Insurance Agency, a Massachusetts-based agency which provides property casualty, employee benefits services, personal insurance and individual financial services. |
• | November - MMA acquired Brower Insurance, an Ohio-based company providing employee benefits, property/casualty and consulting services. |
• | December - MMA acquired McGraw Wentworth, a Michigan-based company providing consulting services to mid-sized organizations, and Liscomb Hood Mason, a Minnesota-based company providing property/casualty and employee benefits products and services. |
• | February - Mercer acquired the remaining 49% of Yokogawa-ORC, a global mobility firm based in Japan, which was previously accounted for under the equity method, and Pensjon & Finans, a leading Norway-based financial investment and pension consulting firm. |
• | March - Mercer acquired REPCA, a France-based broking and advisory firm for employer health and benefits plans. |
(In millions) | 2012 | ||
Cash (includes $62 million held in escrow at December 31, 2011) | $ | 314 | |
Estimated fair value of deferred/contingent consideration | 46 | ||
Total Consideration | $ | 360 | |
Allocation of purchase price: | |||
Cash and cash equivalents | $ | 22 | |
Accounts receivable, net | 8 | ||
Other current assets | — | ||
Property, plant, and equipment | 5 | ||
Intangible assets (primarily customer lists amortized over 10 years) | 147 | ||
Goodwill | 226 | ||
Other assets | 5 | ||
Total assets acquired | 413 | ||
Current liabilities | 13 | ||
Other liabilities | 40 | ||
Total liabilities assumed | 53 | ||
Net assets acquired | $ | 360 |
Years Ended December 31, | |||||||||||
(In millions, except per share data) | 2012 | 2011 | 2010 | ||||||||
Revenue | $ | 12,013 | $ | 11,778 | $ | 10,839 | |||||
Income from continuing operations | $ | 1,214 | $ | 990 | $ | 580 | |||||
Net income attributable to the Company | $ | 1,187 | $ | 1,001 | $ | 870 | |||||
Basic net income per share: | |||||||||||
– Continuing operations | $ | 2.18 | $ | 1.78 | $ | 1.03 | |||||
– Net income attributable to the Company | $ | 2.18 | $ | 1.84 | $ | 1.59 | |||||
Diluted net income per share: | |||||||||||
– Continuing operations | $ | 2.15 | $ | 1.75 | $ | 1.02 | |||||
– Net income attributable to the Company | $ | 2.14 | $ | 1.81 | $ | 1.57 |
For the Year Ended December 31, | |||||||||||
(In millions of dollars) | 2012 | 2011 | 2010 | ||||||||
Kroll Operations | |||||||||||
Revenue | $ | — | $ | — | $ | 381 | |||||
Operating expenses | — | — | 345 | ||||||||
Operating income | — | — | 36 | ||||||||
Income tax expense | — | — | 16 | ||||||||
Income from Kroll operations, net of tax | — | — | 20 | ||||||||
Other discontinued operations, net of tax | — | (17 | ) | (7 | ) | ||||||
Income (loss) from discontinued operations, net of tax | — | (17 | ) | 13 | |||||||
Disposals of discontinued operations (a) | (2 | ) | 25 | 58 | |||||||
Income tax (credit) expense (b) | 1 | (25 | ) | (235 | ) | ||||||
Disposals of discontinued operations, net of tax | (3 | ) | 50 | 293 | |||||||
Discontinued operations, net of tax | $ | (3 | ) | $ | 33 | $ | 306 | ||||
Discontinued operations, net of tax per share | |||||||||||
– Basic | $ | — | $ | 0.06 | $ | 0.55 | |||||
– Diluted | $ | — | $ | 0.06 | $ | 0.55 |
(a) | Includes gain on sale of Kroll and the gain on the sale of KLS in 2010. |
(b) | Includes the provision/(credit) for income taxes relating to the recognition of tax benefits recorded in connection with the sale of Kroll as well as a tax provision of $36 million on the sale of KLS in 2010. |
(In millions of dollars) | 2012 | 2011 | |||||
Balance as of January 1, as reported | $ | 6,562 | $ | 6,420 | |||
Goodwill acquired | 226 | 124 | |||||
Other adjustments(a) | 4 | 18 | |||||
Balance at December 31, | $ | 6,792 | $ | 6,562 |
(a) | Reflects increases due to the impact of foreign exchange in both years. 2012 also reflects a reduction due to purchase accounting adjustments. |
(In millions of dollars) | 2012 | 2011 | |||||||||||||||||||||
Gross Cost | Accumulated Amortization | Net Carrying Amount | Gross Cost | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||
Amortized intangibles | $ | 814 | $ | 345 | $ | 469 | $ | 666 | $ | 265 | $ | 401 |
For the Years Ending December 31, | |||
(In millions of dollars) | |||
2013 | $ | 67 | |
2014 | 64 | ||
2015 | 61 | ||
2016 | 50 | ||
2017 | 45 | ||
Subsequent years | 182 | ||
$ | 469 |
For the Years Ended December 31, | |||||||||||
(In millions of dollars) | 2012 | 2011 | 2010 | ||||||||
Income before income taxes: | |||||||||||
U.S. | $ | 398 | $ | 121 | $ | (296 | ) | ||||
Other | 1,298 | 1,283 | 1,065 | ||||||||
$ | 1,696 | $ | 1,404 | $ | 769 | ||||||
The expense (benefit) for income taxes is comprised of: | |||||||||||
Income taxes: | |||||||||||
Current– | |||||||||||
U.S. Federal | $ | 42 | $ | 7 | $ | (90 | ) | ||||
Other national governments | 336 | 289 | 249 | ||||||||
U.S. state and local | 24 | 24 | 21 | ||||||||
402 | 320 | 180 | |||||||||
Deferred– | |||||||||||
U.S. Federal | (18 | ) | 5 | (28 | ) | ||||||
Other national governments | 89 | 90 | 50 | ||||||||
U.S. state and local | 19 | 7 | 2 | ||||||||
90 | 102 | 24 | |||||||||
Total income taxes | $ | 492 | $ | 422 | $ | 204 |
December 31, | |||||||
(In millions of dollars) | 2012 | 2011 | |||||
Deferred tax assets: | |||||||
Accrued expenses not currently deductible | $ | 589 | $ | 559 | |||
Differences related to non-U.S. operations (a) | 159 | 188 | |||||
Accrued retirement & postretirement benefits—non-U.S. operations | 107 | 164 | |||||
Accrued retirement benefits U.S. | 604 | 507 | |||||
Net operating losses (b) | 104 | 129 | |||||
Income currently recognized for tax | 75 | 62 | |||||
Foreign tax credit carryforwards | 224 | 169 | |||||
Other | 77 | 114 | |||||
$ | 1,939 | $ | 1,892 |
Deferred tax liabilities: | |||||||
Unrealized investment holding gains | $ | 2 | $ | 3 | |||
Differences related to non-U.S. operations | 107 | 99 | |||||
Depreciation and amortization | 245 | 233 | |||||
Other | 4 | 9 | |||||
$ | 358 | $ | 344 |
(a) | Net of valuation allowances of $7 million in 2012 and $3 million in 2011. |
(b) | Net of valuation allowances of $65 million in 2012 and $46 million in 2011. |
December 31, | |||||||
(In millions of dollars) | 2012 | 2011 | |||||
Balance sheet classifications: | |||||||
Current assets | $ | 410 | $ | 376 | |||
Other assets | $ | 1,223 | $ | 1,205 | |||
Current liabilities | $ | (18 | ) | $ | (12 | ) | |
Other liabilities | $ | (34 | ) | $ | (21 | ) |
For the Years Ended December 31, | 2012 | 2011 | 2010 | |||||
U.S. Federal statutory rate | 35.0 | % | 35.0 | % | 35.0 | % | ||
U.S. state and local income taxes—net of U.S. Federal income tax benefit | 1.9 | 1.6 | 1.9 | |||||
Differences related to non-U.S. operations | (6.1 | ) | (6.5 | ) | (9.5 | ) | ||
Other | (1.8 | ) | — | (0.9 | ) | |||
Effective tax rate | 29.0 | % | 30.1 | % | 26.5 | % |
(In millions of dollars) | 2012 | 2011 | 2010 | ||||||||
Balance at January 1, | $ | 143 | $ | 199 | $ | 206 | |||||
Additions, based on tax positions related to current year | 26 | 7 | 7 | ||||||||
Additions for tax positions of prior years | 35 | 39 | 10 | ||||||||
Reductions for tax positions of prior years | (41 | ) | (91 | ) | (6 | ) | |||||
Reductions due to reclassification of tax indemnifications on sale of Kroll | — | — | (3 | ) | |||||||
Settlements | (6 | ) | (6 | ) | (4 | ) | |||||
Lapses in statutes of limitation | (40 | ) | (5 | ) | (11 | ) | |||||
Balance at December 31, | $ | 117 | $ | 143 | $ | 199 |
Pension Benefits | Postretirement Benefits | ||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||
Weighted average assumptions: | |||||||||||
Discount rate (for expense) | 4.91 | % | 5.59 | % | 5.05 | % | 5.81 | % | |||
Expected return on plan assets | 8.03 | % | 8.19 | % | — | — | |||||
Rate of compensation increase (for expense) | 3.09 | % | 4.08 | % | — | — | |||||
Discount rate (for benefit obligation) | 4.38 | % | 4.91 | % | 4.32 | % | 5.05 | % | |||
Rate of compensation increase (for benefit obligation) | 2.43 | % | 3.09 | % | — | — |
Combined U.S. and significant non-U.S. Plans | Pension | Postretirement | |||||||||||||||||||||
For the Years Ended December 31, | Benefits | Benefits | |||||||||||||||||||||
(In millions of dollars) | 2012 | 2011 | 2010 | 2012 | 2011 | 2010 | |||||||||||||||||
Service cost | $ | 240 | $ | 226 | $ | 197 | $ | 5 | $ | 5 | $ | 4 | |||||||||||
Interest cost | 596 | 609 | 578 | 13 | 13 | 14 | |||||||||||||||||
Expected return on plan assets | (905 | ) | (887 | ) | (815 | ) | — | — | — | ||||||||||||||
Amortization of prior service credit | (19 | ) | (19 | ) | (21 | ) | (14 | ) | (13 | ) | (13 | ) | |||||||||||
Recognized actuarial loss (credit) | 270 | 215 | 144 | — | (4 | ) | — | ||||||||||||||||
Net periodic benefit cost | $ | 182 | $ | 144 | $ | 83 | $ | 4 | $ | 1 | $ | 5 |
U.S. Pension Benefits | U.S. Postretirement Benefits | ||||||||||||||
(In millions of dollars) | 2012 | 2011 | 2012 | 2011 | |||||||||||
Change in benefit obligation: | |||||||||||||||
Benefit obligation at beginning of year | $ | 4,533 | $ | 4,041 | $ | 162 | $ | 180 | |||||||
Service cost | 93 | 83 | 3 | 3 | |||||||||||
Interest cost | 230 | 231 | 8 | 8 | |||||||||||
Actuarial (gain) loss | 522 | 352 | 13 | (20 | ) | ||||||||||
Medicare Part D subsidy | — | — | 3 | 4 | |||||||||||
Benefits paid | (181 | ) | (174 | ) | (13 | ) | (13 | ) | |||||||
Benefit obligation, December 31 | $ | 5,197 | $ | 4,533 | $ | 176 | $ | 162 | |||||||
Change in plan assets: | |||||||||||||||
Fair value of plan assets at beginning of year | $ | 3,493 | $ | 3,444 | $ | — | $ | — | |||||||
Actual return on plan assets | 500 | 199 | — | — | |||||||||||
Employer contributions | 124 | 24 | 10 | 9 | |||||||||||
Medicare Part D subsidy | — | — | 3 | 4 | |||||||||||
Benefits paid | (181 | ) | (174 | ) | (13 | ) | (13 | ) | |||||||
Fair value of plan assets, December 31 | $ | 3,936 | $ | 3,493 | $ | — | $ | — | |||||||
Net funded status, December 31 | $ | (1,261 | ) | $ | (1,040 | ) | $ | (176 | ) | $ | (162 | ) | |||
Amounts recognized in the consolidated balance sheets: | |||||||||||||||
Current liabilities | $ | (25 | ) | $ | (124 | ) | $ | (9 | ) | $ | (9 | ) | |||
Noncurrent liabilities | (1,236 | ) | (916 | ) | (167 | ) | (153 | ) | |||||||
Net liability recognized, December 31 | $ | (1,261 | ) | $ | (1,040 | ) | $ | (176 | ) | $ | (162 | ) | |||
Amounts recognized in other comprehensive income (loss): | |||||||||||||||
Prior service credit | $ | 23 | $ | 39 | $ | — | $ | 13 | |||||||
Net actuarial (loss) gain | (1,887 | ) | (1,695 | ) | (2 | ) | 12 | ||||||||
Total recognized accumulated other comprehensive (loss) income, December 31 | $ | (1,864 | ) | $ | (1,656 | ) | $ | (2 | ) | $ | 25 | ||||
Cumulative employer contributions in excess (deficient) of net periodic cost | 603 | 616 | (174 | ) | (187 | ) | |||||||||
Net amount recognized in consolidated balance sheet | $ | (1,261 | ) | $ | (1,040 | ) | $ | (176 | ) | $ | (162 | ) | |||
Accumulated benefit obligation at December 31 | $ | 5,114 | $ | 4,467 | $ | — | $ | — |
U.S. Pension Benefits | U.S. Postretirement Benefits | ||||||||||||||
(In millions of dollars) | 2012 | 2011 | 2012 | 2011 | |||||||||||
Reconciliation of prior service credit (charge) recognized in accumulated other comprehensive income (loss): | |||||||||||||||
Beginning balance | $ | 39 | $ | 55 | $ | 13 | $ | 26 | |||||||
Recognized as component of net periodic benefit credit | (16 | ) | (16 | ) | (13 | ) | (13 | ) | |||||||
Prior service credit, December 31 | $ | 23 | $ | 39 | $ | — | $ | 13 |
U.S. Pension Benefits | U.S. Postretirement Benefits | ||||||||||||||
(In millions of dollars) | 2012 | 2011 | 2012 | 2011 | |||||||||||
Reconciliation of net actuarial gain (loss) recognized in accumulated other comprehensive income (loss): | |||||||||||||||
Beginning balance | $ | (1,695 | ) | $ | (1,327 | ) | $ | 12 | $ | (4 | ) | ||||
Recognized as component of net periodic benefit cost | 152 | 100 | (1 | ) | (4 | ) | |||||||||
Changes in plan assets and benefit obligations recognized in other comprehensive income (loss): | |||||||||||||||
Liability experience | (522 | ) | (352 | ) | (13 | ) | 20 | ||||||||
Asset experience | 178 | (116 | ) | — | — | ||||||||||
Total gain (loss) recognized as change in plan assets and benefit obligations | (344 | ) | (468 | ) | (13 | ) | 20 | ||||||||
Net actuarial gain (loss), December 31 | $ | (1,887 | ) | $ | (1,695 | ) | $ | (2 | ) | $ | 12 |
For the Years Ended December 31, | U.S. Pension Benefits | U.S. Postretirement Benefits | |||||||||||||||||||||
(In millions of dollars) | 2012 | 2011 | 2010 | 2012 | 2011 | 2010 | |||||||||||||||||
Total recognized in net periodic benefit cost and other comprehensive loss (income) | $ | 346 | $ | 467 | $ | 148 | $ | 24 | $ | (9 | ) | $ | 26 |
U.S. Pension Benefits | U.S. Postretirement Benefits | ||||||
(In millions of dollars) | 2013 | 2013 | |||||
Prior service cost | $ | (16 | ) | $ | — | ||
Net actuarial loss | 202 | — | |||||
Projected cost | $ | 186 | $ | — |
U.S. Pension Benefits | U.S. Postretirement Benefits | ||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||
Weighted average assumptions: | |||||||||||
Discount rate (for expense) | 5.15 | % | 5.90 | % | 5.10 | % | 5.95 | % | |||
Expected return on plan assets | 8.75 | % | 8.75 | % | — | — | |||||
Rate of compensation increase (for expense) | 2.00 | % | 3.90 | % | — | — | |||||
Discount rate (for benefit obligation) | 4.45 | % | 5.15 | % | 4.25 | % | 5.10 | % | |||
Rate of compensation increase (for benefit obligation) | 2.00 | % | 2.00 | % | — | — |
U.S. Plans only | Pension Benefits | Postretirement Benefits | |||||||||||||||||||||
For the Years Ended December 31, | |||||||||||||||||||||||
(In millions of dollars) | 2012 | 2011 | 2010 | 2012 | 2011 | 2010 | |||||||||||||||||
Service cost | $ | 93 | $ | 83 | $ | 76 | $ | 3 | $ | 3 | $ | 3 | |||||||||||
Interest cost | 230 | 231 | 227 | 8 | 8 | 10 | |||||||||||||||||
Expected return on plan assets | (322 | ) | (315 | ) | (295 | ) | — | — | — | ||||||||||||||
Amortization of prior service credit | (16 | ) | (16 | ) | (18 | ) | (13 | ) | (13 | ) | (13 | ) | |||||||||||
Recognized actuarial loss (credit) | 152 | 100 | 71 | (1 | ) | (4 | ) | — | |||||||||||||||
Net periodic benefit cost (credit) | $ | 137 | $ | 83 | $ | 61 | $ | (3 | ) | $ | (6 | ) | $ | — |
(In millions of dollars) | 1 Percentage Point Increase | 1 Percentage Point Decrease | |||||
Effect on total of service and interest cost components | $ | — | $ | — | |||
Effect on postretirement benefit obligation | $ | 1 | $ | (5 | ) |
Non-U.S. Pension Benefits | Non-U.S. Postretirement Benefits | ||||||||||||||
(In millions of dollars) | 2012 | 2011 | 2012 | 2011 | |||||||||||
Change in benefit obligation: | |||||||||||||||
Benefit obligation at beginning of year | $ | 7,717 | $ | 6,802 | $ | 91 | $ | 83 | |||||||
Service cost | 147 | 143 | 2 | 2 | |||||||||||
Interest cost | 366 | 378 | 5 | 5 | |||||||||||
Employee contributions | 11 | 14 | — | — | |||||||||||
Actuarial loss | 419 | 575 | 10 | 5 | |||||||||||
Plan amendments | (71 | ) | (3 | ) | — | — | |||||||||
Effect of settlement | (11 | ) | (7 | ) | — | — | |||||||||
Effect of curtailment | (3 | ) | (1 | ) | (1 | ) | — | ||||||||
Benefits paid | (278 | ) | (266 | ) | (4 | ) | (4 | ) | |||||||
Foreign currency changes | 280 | 66 | 4 | — | |||||||||||
Other | 2 | 16 | — | — | |||||||||||
Benefit obligation at, December 31 | $ | 8,579 | $ | 7,717 | $ | 107 | $ | 91 | |||||||
Change in plan assets: | |||||||||||||||
Fair value of plan assets at beginning of year | $ | 7,206 | $ | 6,741 | $ | — | $ | — | |||||||
Actual return on plan assets | 721 | 311 | — | — | |||||||||||
Effect of settlement | (11 | ) | (6 | ) | — | — | |||||||||
Company contributions | 389 | 320 | 4 | 4 | |||||||||||
Employee contributions | 11 | 14 | — | — | |||||||||||
Benefits paid | (278 | ) | (266 | ) | (4 | ) | (4 | ) | |||||||
Foreign currency changes | 273 | 82 | — | — | |||||||||||
Other | 1 | 10 | — | — | |||||||||||
Fair value of plan assets, December 31 | $ | 8,312 | $ | 7,206 | $ | — | $ | — | |||||||
Net funded status, December 31 | $ | (267 | ) | $ | (511 | ) | $ | (107 | ) | $ | (91 | ) | |||
Amounts recognized in the consolidated balance sheets: | |||||||||||||||
Non-current assets | $ | 258 | $ | 39 | $ | — | $ | — | |||||||
Current liabilities | (6 | ) | (106 | ) | (4 | ) | (4 | ) | |||||||
Non-current liabilities | (519 | ) | (444 | ) | (103 | ) | (87 | ) | |||||||
Net liability recognized, December 31 | $ | (267 | ) | $ | (511 | ) | $ | (107 | ) | $ | (91 | ) | |||
Amounts recognized in other comprehensive income (loss): | |||||||||||||||
Prior service credit | $ | 93 | $ | 23 | $ | — | $ | 1 | |||||||
Net actuarial (loss) gain | (3,309 | ) | (3,038 | ) | (27 | ) | (19 | ) | |||||||
Total recognized accumulated other comprehensive (loss) income, December 31 | $ | (3,216 | ) | $ | (3,015 | ) | $ | (27 | ) | $ | (18 | ) | |||
Cumulative employer contributions in excess (deficient) of net periodic cost | 2,949 | 2,504 | (80 | ) | (73 | ) | |||||||||
Net amount recognized in consolidated balance sheet, December 31 | $ | (267 | ) | $ | (511 | ) | $ | (107 | ) | $ | (91 | ) | |||
Accumulated benefit obligation, December 31 | $ | 8,229 | $ | 7,246 | $ | — | $ | — |
Non-U.S. Pension Benefits | Non-U.S. Postretirement Benefits | ||||||||||||||
(In millions of dollars) | 2012 | 2011 | 2012 | 2011 | |||||||||||
Reconciliation of prior service credit (cost): | |||||||||||||||
Beginning balance | $ | 23 | $ | 23 | $ | 1 | $ | 1 | |||||||
Recognized as component of net periodic benefit credit | (3 | ) | 3 | (1 | ) | — | |||||||||
Effect of curtailment | (1 | ) | — | — | — | ||||||||||
Changes in plan assets and benefit obligations recognized in other comprehensive income: | |||||||||||||||
Plan amendments | 71 | (3 | ) | — | — | ||||||||||
Exchange rate adjustments | 3 | — | — | — | |||||||||||
Prior service credit, December 31 | $ | 93 | $ | 23 | $ | — | $ | 1 |
Non-U.S. Pension Benefits | Non-U.S. Postretirement Benefits | ||||||||||||||
(In millions of dollars) | 2012 | 2011 | 2012 | 2011 | |||||||||||
Reconciliation of net actuarial gain (loss): | |||||||||||||||
Beginning balance | $ | (3,038 | ) | $ | (2,305 | ) | $ | (19 | ) | $ | (14 | ) | |||
Recognized as component of net periodic benefit cost | 118 | 115 | 1 | — | |||||||||||
Effect of settlement | 1 | — | — | — | |||||||||||
Changes in plan assets and benefit obligations recognized in other comprehensive income (loss): | |||||||||||||||
Liability experience | (419 | ) | (575 | ) | (10 | ) | (5 | ) | |||||||
Asset experience | 138 | (261 | ) | — | — | ||||||||||
Effect of curtailment | 3 | (1 | ) | 1 | — | ||||||||||
Total amount recognized as change in plan assets and benefit obligations | (278 | ) | (837 | ) | (9 | ) | (5 | ) | |||||||
Exchange rate adjustments | (112 | ) | (11 | ) | — | — | |||||||||
Net actuarial gain (loss), December 31 | $ | (3,309 | ) | $ | (3,038 | ) | $ | (27 | ) | $ | (19 | ) |
For the Years Ended December 31, | Non-U.S. Pension Benefits | Non-U.S. Postretirement Benefits | |||||||||||||||||||||
(In millions of dollars) | 2012 | 2011 | 2010 | 2012 | 2011 | 2010 | |||||||||||||||||
Total recognized in net periodic benefit cost and other comprehensive loss | $ | 246 | $ | 792 | $ | 66 | $ | 16 | $ | 12 | $ | 15 |
Non-U.S. Pension Benefits | Non-U.S. Postretirement Benefits | ||||||
(In millions of dollars) | 2013 | 2013 | |||||
Prior service cost | $ | (6 | ) | $ | — | ||
Net actuarial loss | 112 | 2 | |||||
Projected cost | $ | 106 | $ | 2 |
Non-U.S. Pension Benefits | Non-U.S. Postretirement Benefits | ||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||
Weighted average assumptions: | |||||||||||
Discount rate (for expense) | 4.77 | % | 5.41 | % | 4.95 | % | 5.51 | % | |||
Expected return on plan assets | 7.68 | % | 7.91 | % | — | — | |||||
Rate of compensation increase (for expense) | 3.73 | % | 4.19 | % | — | — | |||||
Discount rate (for benefit obligation) | 4.33 | % | 4.77 | % | 4.45 | % | 4.95 | % | |||
Rate of compensation increase (for benefit obligation) | 2.69 | % | 3.73 | % | — | — |
For the Years Ended December 31, | Non-U.S. Pension Benefits | Non-U.S. Postretirement Benefits | |||||||||||||||||||||
(In millions of dollars) | 2012 | 2011 | 2010 | 2012 | 2011 | 2010 | |||||||||||||||||
Service cost | $ | 147 | $ | 143 | $ | 121 | $ | 2 | $ | 2 | $ | 1 | |||||||||||
Interest cost | 366 | 378 | 351 | 5 | 5 | 4 | |||||||||||||||||
Expected return on plan assets | (583 | ) | (572 | ) | (520 | ) | — | — | — | ||||||||||||||
Amortization of prior service cost | (3 | ) | (3 | ) | (3 | ) | (1 | ) | — | — | |||||||||||||
Recognized actuarial loss | 118 | 115 | 73 | 1 | — | — | |||||||||||||||||
Net periodic benefit cost | 45 | 61 | 22 | 7 | 7 | 5 | |||||||||||||||||
Settlement loss | 1 | — | 5 | — | — | — | |||||||||||||||||
Curtailment credit | (1 | ) | — | — | — | — | — | ||||||||||||||||
Special termination benefits | — | — | 1 | — | — | — | |||||||||||||||||
Total cost | $ | 45 | $ | 61 | $ | 28 | $ | 7 | $ | 7 | $ | 5 |
(In millions of dollars) | 1 Percentage Point Increase | 1 Percentage Point Decrease | |||||
Effect on total of service and interest cost components | $ | 1 | $ | (1 | ) | ||
Effect on postretirement benefit obligation | $ | 12 | $ | (10 | ) |
December 31, | Pension Benefits | Postretirement Benefits | |||||||||||||
(In millions of dollars) | U.S. | Non-U.S. | U.S. | Non-U.S. | |||||||||||
2013 | $ | 210 | $ | 275 | $ | 11 | $ | 4 | |||||||
2014 | $ | 221 | $ | 276 | $ | 11 | $ | 4 | |||||||
2015 | $ | 231 | $ | 287 | $ | 11 | $ | 4 | |||||||
2016 | $ | 242 | $ | 310 | $ | 11 | $ | 4 | |||||||
2017 | $ | 251 | $ | 321 | $ | 11 | $ | 5 | |||||||
2018-2022 | $ | 1,394 | $ | 1,910 | $ | 59 | $ | 27 |
Fair Value Measurements at December 31, 2012 | |||||||||||||||
Assets (In millions of dollars) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||
Common/Collective trusts | $ | 16 | $ | 5,376 | $ | — | $ | 5,392 | |||||||
Corporate obligations | — | 2,236 | 1 | 2,237 | |||||||||||
Corporate stocks | 2,005 | 4 | 9 | 2,018 | |||||||||||
Private equity/Partnerships | 2 | 2 | 824 | 828 | |||||||||||
Government securities | 9 | 309 | — | 318 | |||||||||||
Real estate | 11 | 8 | 357 | 376 | |||||||||||
Short-term investment funds | 410 | 4 | — | 414 | |||||||||||
Company common stock | 276 | — | — | 276 | |||||||||||
Other investments | 11 | 112 | 216 | 339 | |||||||||||
Insurance group annuity contracts | — | — | 23 | 23 | |||||||||||
Swaps | — | 4 | — | 4 | |||||||||||
Total investments | $ | 2,740 | $ | 8,055 | $ | 1,430 | $ | 12,225 |
Fair Value Measurements at December 31, 2011 | |||||||||||||||
Assets (In millions of dollars) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||
Common/Collective trusts | $ | 10 | $ | 4,837 | $ | — | $ | 4,847 | |||||||
Corporate obligations | — | 1,792 | 1 | 1,793 | |||||||||||
Corporate stocks | 1,716 | 15 | 8 | 1,739 | |||||||||||
Private equity/Partnerships | — | 1 | 779 | 780 | |||||||||||
Government securities | 10 | 368 | — | 378 | |||||||||||
Real estate | 14 | 4 | 319 | 337 | |||||||||||
Short-term investment funds | 288 | 42 | — | 330 | |||||||||||
Company common stock | 253 | — | — | 253 | |||||||||||
Other investments | 1 | 34 | 202 | 237 | |||||||||||
Insurance group annuity contracts | — | — | 20 | 20 | |||||||||||
Swaps | — | 5 | — | 5 | |||||||||||
Total investments | $ | 2,292 | $ | 7,098 | $ | 1,329 | $ | 10,719 |
Assets (In millions) | Fair Value, January 1, 2012 | Purchases | Sales | Unrealized Gain/ (Loss) | Realized Gain/ (Loss) | Exchange Rate Impact | Transfers in/(out) and Other | Fair Value, December 31, 2012 | |||||||||||||||||||||||
Private equity/Partnerships | $ | 779 | $ | 86 | $ | (79 | ) | $ | 138 | $ | (113 | ) | $ | 13 | $ | — | $ | 824 | |||||||||||||
Real estate | 319 | 11 | (3 | ) | 104 | (86 | ) | 12 | — | 357 | |||||||||||||||||||||
Other investments | 202 | 17 | (24 | ) | 11 | 6 | 4 | — | 216 | ||||||||||||||||||||||
Insurance group annuity contracts | 20 | 160 | (157 | ) | 1 | (1 | ) | — | — | 23 | |||||||||||||||||||||
Corporate stocks | 8 | 1 | — | — | — | — | — | 9 | |||||||||||||||||||||||
Corporate obligations | 1 | — | — | — | — | — | — | 1 | |||||||||||||||||||||||
Total assets | $ | 1,329 | $ | 275 | $ | (263 | ) | $ | 254 | $ | (194 | ) | $ | 29 | $ | — | $ | 1,430 |
Assets (In millions) | Fair Value, January 1, 2011 | Purchases | Sales | Unrealized Gain/ (Loss) | Realized Gain/ (Loss) | Exchange Rate Impact | Transfers in/(out) and Other | Fair Value, December 31, 2011 | |||||||||||||||||||||||
Private equity/Partnerships | $ | 746 | $ | 119 | $ | (80 | ) | $ | (83 | ) | $ | 70 | $ | 7 | $ | — | $ | 779 | |||||||||||||
Real estate | 293 | — | — | 22 | (1 | ) | 5 | — | 319 | ||||||||||||||||||||||
Other investments | 177 | 32 | (13 | ) | 6 | 2 | (2 | ) | — | 202 | |||||||||||||||||||||
Insurance group annuity contracts | 20 | 151 | (150 | ) | 8 | (9 | ) | — | — | 20 | |||||||||||||||||||||
Corporate stocks | 1 | 8 | — | (1 | ) | — | — | — | 8 | ||||||||||||||||||||||
Corporate obligations | 8 | 1 | (8 | ) | 2 | (1 | ) | — | (1 | ) | 1 | ||||||||||||||||||||
Total assets | $ | 1,245 | $ | 311 | $ | (251 | ) | $ | (46 | ) | $ | 61 | $ | 10 | $ | (1 | ) | $ | 1,329 |
2012 | 2011 | 2010 | |||
Risk-free interest rate | 1.26%-1.27% | 2.28%-2.90% | 3.15%-3.20% | ||
Expected life (in years) | 6.50 | 6.75 | 6.75 | ||
Expected volatility | 26.2%-26.4% | 25.4%-25.8% | 26.3%-27.6% | ||
Expected dividend yield | 2.76%-2.80% | 2.75%-2.86% | 3.26%-3.52% |
Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value ($000) | ||||||||
Balance at January 1, 2012 | 38,895,109 | $ | 29.21 | ||||||||
Granted | 3,547,733 | $ | 31.88 | ||||||||
Exercised | (6,892,731 | ) | $ | 26.01 | |||||||
Canceled or exchanged | — | — | |||||||||
Forfeited | (860,022 | ) | $ | 27.69 | |||||||
Expired | (2,644,296 | ) | $ | 42.85 | |||||||
Balance at December 31, 2012 | 32,045,793 | $ | 29.10 | 4.5 years | 186,467 | ||||||
Options vested or expected to vest at December 31, 2012 | 32,004,297 | $ | 29.12 | 4.4 years | 185,871 | ||||||
Options exercisable at December 31, 2012 | 16,115,605 | $ | 28.85 | 3.8 years | 106,606 |
Restricted Stock Units | Performance Stock Units | ||||||||||
Shares | Weighted Average Grant Date Fair Value | Shares | Weighted Average Grant Date Fair Value | ||||||||
Non-vested balance at January 1, 2012 | 15,058,428 | $ | 25.43 | 368,346 | $ | 30.60 | |||||
Granted | 2,797,287 | $ | 31.96 | 461,756 | $ | 31.89 | |||||
Vested | (8,209,388 | ) | $ | 23.97 | (25,129 | ) | $ | 30.83 | |||
Forfeited | (682,089 | ) | $ | 28.49 | (81,075 | ) | $ | 31.31 | |||
Adjustment due to performance | — | $ | — | 6,940 | $ | 30.60 | |||||
Non-vested balance at December 31, 2012 | 8,964,238 | $ | 28.58 | 730,838 | $ | 31.32 |
Shares | Weighted Average Grant Date Fair Value | |||||
Non-vested balance at January 1, 2012 | 51,700 | $ | 46.86 | |||
Granted | — | $ | — | |||
Vested | (20,000 | ) | $ | 46.14 | ||
Forfeited | — | $ | — | |||
Non-vested balance at December 31, 2012 | 31,700 | $ | 47.31 |
(In millions of dollars) | Identical Assets (Level 1) | Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | Total | |||||||||||||||||||||||||||
12/31/12 | 12/31/11 | 12/31/12 | 12/31/11 | 12/31/12 | 12/31/11 | 12/31/12 | 12/31/11 | ||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||
Financial instruments owned: | |||||||||||||||||||||||||||||||
Mutual funds(a) | $ | 139 | $ | 134 | $ | — | $ | — | $ | — | $ | — | $ | 139 | $ | 134 | |||||||||||||||
Money market funds(b) | 483 | 226 | — | — | — | — | 483 | 226 | |||||||||||||||||||||||
Interest rate swap derivatives(c) | — | — | 6 | 7 | — | — | 6 | 7 | |||||||||||||||||||||||
Total assets measured at fair value | $ | 622 | $ | 360 | $ | 6 | $ | 7 | $ | — | $ | — | $ | 628 | $ | 367 | |||||||||||||||
Fiduciary Assets: | |||||||||||||||||||||||||||||||
State and local obligations (including non-U.S. locales) | $ | — | $ | — | $ | 3 | $ | 13 | $ | — | $ | — | $ | 3 | $ | 13 | |||||||||||||||
Other sovereign government obligations and supranational agencies | — | — | — | 47 | — | — | — | 47 | |||||||||||||||||||||||
Corporate and other debt | — | — | — | 2 | — | — | — | 2 | |||||||||||||||||||||||
Money market funds | 149 | 186 | — | — | — | — | 149 | 186 | |||||||||||||||||||||||
Total fiduciary assets measured at fair value | $ | 149 | $ | 186 | $ | 3 | $ | 62 | $ | — | $ | — | $ | 152 | $ | 248 | |||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||
Contingent purchase consideration liability(d) | $ | — | $ | — | $ | — | $ | — | $ | 63 | $ | 110 | $ | 63 | $ | 110 | |||||||||||||||
Senior Notes due 2014(e) | $ | — | $ | — | $ | 256 | $ | 257 | $ | — | $ | — | $ | 256 | $ | 257 | |||||||||||||||
Total liabilities measured at fair value | $ | — | $ | — | $ | 256 | $ | 257 | $ | 63 | $ | 110 | $ | 319 | $ | 367 |
(In millions of dollars) | 2012 | 2011 | ||||||
Balance at January 1, | $ | 110 | $ | 106 | ||||
Additions | 27 | 14 | ||||||
Payments | (30 | ) | (13 | ) | ||||
Revaluation Impact | (44 | ) | 3 | |||||
Balance at December 31, | $ | 63 | $ | 110 |
For the Years Ended December 31, | Gross Rental Commitments | Rentals from Subleases | Net Rental Commitments | ||||||||
(In millions of dollars) | |||||||||||
2013 | $ | 404 | $ | 49 | $ | 355 | |||||
2014 | $ | 359 | $ | 48 | $ | 311 | |||||
2015 | $ | 315 | $ | 43 | $ | 272 | |||||
2016 | $ | 279 | $ | 42 | $ | 237 | |||||
2017 | $ | 236 | $ | 40 | $ | 196 | |||||
Subsequent years | $ | 1,227 | $ | 109 | $ | 1,118 |
For the Years Ended December 31, | Future Minimum Commitments | ||
(In millions of dollars) | |||
2013 | $ | 168 | |
2014 | 87 | ||
2015 | 48 | ||
Subsequent years | 118 | ||
$ | 421 |
December 31, | |||||||
(In millions of dollars) | 2012 | 2011 | |||||
Short-term: | |||||||
Current portion of long-term debt | $ | 260 | $ | 260 | |||
Long-term: | |||||||
Senior notes – 6.25% due 2012 (5.1% effective interest rate) | $ | — | $ | 250 | |||
Senior notes – 4.850% due 2013 | 250 | 251 | |||||
Senior notes – 5.875% due 2033 | 296 | 296 | |||||
Senior notes – 5.375% due 2014 | 326 | 326 | |||||
Senior notes – 5.75% due 2015 | 479 | 479 | |||||
Senior notes – 2.30% due 2017 | 249 | — | |||||
Senior notes – 9.25% due 2019 | 398 | 398 | |||||
Senior notes – 4.80% due 2021 | 497 | 496 | |||||
Mortgage – 5.70% due 2035 | 422 | 431 | |||||
Other | 1 | 1 | |||||
2,918 | 2,928 | ||||||
Less current portion | 260 | 260 | |||||
$ | 2,658 | $ | 2,668 |
2012 | 2011 | ||||||||||||||||||||||
Income statement classification (In millions of dollars) | Loss on Swaps | Gain on Notes | Net Income Effect | Gain on Swaps | Loss on Notes | Net Income Effect | |||||||||||||||||
Other Operating Expenses | $ | (1 | ) | $ | 1 | $ | — | $ | 7 | $ | (7 | ) | $ | — |
December 31, 2012 | December 31, 2011 | ||||||||||||||
(In millions of dollars) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||
Short-term debt | $ | 260 | $ | 261 | $ | 260 | $ | 261 | |||||||
Long-term debt | $ | 2,658 | $ | 2,986 | $ | 2,668 | $ | 2,958 |
(In millions of dollars) | Balance at 1/1/11 | Expense Incurred | Cash Paid | Other | Balance at 12/31/11 | Expense Incurred | Cash Paid | Other | Balance at 12/31/12 | ||||||||||||||||||||||||||
Severance | $ | 40 | $ | 29 | $ | (40 | ) | $ | (2 | ) | $ | 27 | $ | 46 | $ | (38 | ) | $ | 1 | $ | 36 | ||||||||||||||
Future rent under non-cancelable leases and other costs | 171 | 22 | (42 | ) | 3 | 154 | 32 | (50 | ) | (2 | ) | 134 | |||||||||||||||||||||||
Total | $ | 211 | $ | 51 | $ | (82 | ) | $ | 1 | $ | 181 | $ | 78 | $ | (88 | ) | $ | (1 | ) | $ | 170 |
▪ | Risk and Insurance Services, comprising insurance services (Marsh) and reinsurance services (Guy Carpenter); and |
▪ | Consulting, comprising Mercer and Oliver Wyman Group |
For the Year Ended December 31, (In millions) | Revenue | Operating Income (Loss) | Total Assets | Depreciation and Amortization | Capital Expenditures | ||||||||||||||
2012 – | |||||||||||||||||||
Risk and Insurance Services | $ | 6,350 | (a) | $ | 1,334 | $ | 9,832 | $ | 196 | $ | 131 | ||||||||
Consulting | 5,613 | (b) | 692 | 5,203 | 113 | 117 | |||||||||||||
Total Operating Segments | 11,963 | 2,026 | 15,035 | 309 | 248 | ||||||||||||||
Corporate / Eliminations | (39 | ) | (c) | (197 | ) | (c) | 1,253 | (d) | 40 | 72 | |||||||||
Total Consolidated | $ | 11,924 | $ | 1,829 | $ | 16,288 | $ | 349 | $ | 320 | |||||||||
2011 – | |||||||||||||||||||
Risk and Insurance Services | $ | 6,079 | (a) | $ | 1,200 | $ | 9,102 | $ | 189 | $ | 146 | ||||||||
Consulting | 5,487 | (b) | 617 | 4,820 | 112 | 91 | |||||||||||||
Total Operating Segments | 11,566 | 1,817 | 13,922 | 301 | 237 | ||||||||||||||
Corporate / Eliminations | (40 | ) | (c) | (179 | ) | (c) | 1,532 | (d) | 31 | 43 | |||||||||
Total Consolidated | $ | 11,526 | $ | 1,638 | $ | 15,454 | $ | 332 | $ | 280 | |||||||||
2010 – | |||||||||||||||||||
Risk and Insurance Services | $ | 5,557 | (a) | $ | 957 | $ | 9,318 | $ | 175 | $ | 144 | ||||||||
Consulting | 5,042 | (b) | 144 | 4,537 | 115 | 80 | |||||||||||||
Total Operating Segments | 10,599 | 1,101 | 13,855 | 290 | 224 | ||||||||||||||
Corporate / Eliminations | (49 | ) | (c) | (162 | ) | (c) | 1,455 | (d) | 29 | 34 | |||||||||
Total Consolidated | $ | 10,550 | $ | 939 | $ | 15,310 | $ | 319 | $ | 258 |
(a) | Includes inter-segment revenue of $5 million, $4 million and $7 million in 2012, 2011 and 2010, respectively, interest income on fiduciary funds of $39 million, $47 million and $45 million in 2012, 2011 and 2010, respectively, and equity method income of $11 million, $14 million and $12 million in 2012, 2011 and 2010, respectively. |
(b) | Includes inter-segment revenue of $34 million, $36 million and $43 million in 2012, 2011 and 2010, respectively, and interest income on fiduciary funds of $4 million in 2012, 2011 and 2010. |
(c) | Includes results of corporate advisory and restructuring business. |
(d) | Corporate assets primarily include insurance recoverables, pension related assets, the owned portion of the Company headquarters building and intercompany eliminations. |
For the Years Ended December 31, | |||||||||||
(In millions of dollars) | 2012 | 2011 | 2010 | ||||||||
Risk and Insurance Services | |||||||||||
Marsh | $ | 5,265 | $ | 5,031 | $ | 4,574 | |||||
Guy Carpenter | 1,085 | 1,048 | 983 | ||||||||
Total Risk and Insurance Services | 6,350 | 6,079 | 5,557 | ||||||||
Consulting | |||||||||||
Mercer | 4,147 | 4,004 | 3,685 | ||||||||
Oliver Wyman Group | 1,466 | 1,483 | 1,357 | ||||||||
Total Consulting | 5,613 | 5,487 | 5,042 | ||||||||
Total Operating Segments | 11,963 | 11,566 | 10,599 | ||||||||
Corporate/ Eliminations | (39 | ) | (40 | ) | (49 | ) | |||||
Total | $ | 11,924 | $ | 11,526 | $ | 10,550 |
For the Years Ended December 31, | |||||||||||
(In millions of dollars) | 2012 | 2011 | 2010 | ||||||||
Revenue | |||||||||||
United States | $ | 5,300 | $ | 5,131 | $ | 4,708 | |||||
United Kingdom | 1,960 | 1,922 | 1,720 | ||||||||
Continental Europe | 1,879 | 1,906 | 1,809 | ||||||||
Asia Pacific | 1,346 | 1,287 | 1,067 | ||||||||
Other | 1,478 | 1,320 | 1,295 | ||||||||
11,963 | 11,566 | 10,599 | |||||||||
Corporate/Eliminations | (39 | ) | (40 | ) | (49 | ) | |||||
$ | 11,924 | $ | 11,526 | $ | 10,550 |
For the Years Ended December 31, | |||||||||||
(In millions of dollars) | 2012 | 2011 | 2010 | ||||||||
Fixed Assets, Net | |||||||||||
United States | $ | 494 | $ | 505 | $ | 511 | |||||
United Kingdom | 121 | 133 | 132 | ||||||||
Continental Europe | 63 | 65 | 69 | ||||||||
Asia Pacific | 62 | 37 | 43 | ||||||||
Other | 69 | 64 | 67 | ||||||||
$ | 809 | $ | 804 | $ | 822 |
Revenue | Operating Income | ||||||||||||||||||||||
As Reported | Reclassification | Current Presentation | As Reported | Reclassification | Current Presentation | ||||||||||||||||||
2012 - | |||||||||||||||||||||||
Risk and Insurance Services | $ | 6,581 | $ | (231 | ) | $ | 6,350 | $ | 1,374 | $ | (40 | ) | $ | 1,334 | |||||||||
Consulting | 5,382 | 231 | 5,613 | 652 | 40 | 692 | |||||||||||||||||
Total Operating Segments | 11,963 | — | 11,963 | 2,026 | — | 2,026 | |||||||||||||||||
Corporate/Eliminations | (39 | ) | — | (39 | ) | (197 | ) | — | (197 | ) | |||||||||||||
Total Consolidated | $ | 11,924 | $ | — | $ | 11,924 | $ | 1,829 | $ | — | $ | 1,829 | |||||||||||
2011 - | |||||||||||||||||||||||
Risk and Insurance Services | $ | 6,301 | $ | (222 | ) | $ | 6,079 | $ | 1,229 | $ | (29 | ) | $ | 1,200 | |||||||||
Consulting | 5,265 | 222 | 5,487 | 588 | 29 | 617 | |||||||||||||||||
Total Operating Segments | 11,566 | — | 11,566 | 1,817 | — | 1,817 | |||||||||||||||||
Corporate/Eliminations | (40 | ) | — | (40 | ) | (179 | ) | — | (179 | ) | |||||||||||||
Total Consolidated | $ | 11,526 | $ | — | $ | 11,526 | $ | 1,638 | $ | — | $ | 1,638 | |||||||||||
2010 - | |||||||||||||||||||||||
Risk and Insurance Services | $ | 5,764 | $ | (207 | ) | $ | 5,557 | $ | 972 | $ | (15 | ) | $ | 957 | |||||||||
Consulting | 4,835 | 207 | 5,042 | 129 | 15 | 144 | |||||||||||||||||
Total Operating Segments | 10,599 | — | 10,599 | 1,101 | — | 1,101 | |||||||||||||||||
Corporate/Eliminations | (49 | ) | — | (49 | ) | (162 | ) | — | (162 | ) | |||||||||||||
Total Consolidated | $ | 10,550 | $ | — | $ | 10,550 | $ | 939 | $ | — | $ | 939 |
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||
(In millions, except per share figures) | |||||||||||||||
2012: | |||||||||||||||
Revenue | $ | 3,051 | $ | 3,026 | $ | 2,845 | $ | 3,002 | |||||||
Operating income | $ | 527 | $ | 518 | $ | 378 | $ | 406 | |||||||
Income from continuing operations | $ | 354 | $ | 339 | $ | 246 | $ | 265 | |||||||
Income (loss) from discontinued operations | $ | — | $ | (2 | ) | $ | 1 | $ | (2 | ) | |||||
Net income attributable to the Company | $ | 347 | $ | 329 | $ | 241 | $ | 259 | |||||||
Basic Per Share Data: | |||||||||||||||
Income from continuing operations | $ | 0.64 | $ | 0.61 | $ | 0.44 | $ | 0.48 | |||||||
Income (loss) from discontinued operations | $ | — | $ | (0.01 | ) | $ | — | $ | — | ||||||
Net income attributable to the Company | $ | 0.64 | $ | 0.60 | $ | 0.44 | $ | 0.48 | |||||||
Diluted Per Share Data: | |||||||||||||||
Income from continuing operations | $ | 0.63 | $ | 0.60 | $ | 0.43 | $ | 0.47 | |||||||
Income (loss) from discontinued operations | $ | — | $ | (0.01 | ) | $ | 0.01 | $ | — | ||||||
Net income attributable to the Company | $ | 0.63 | $ | 0.59 | $ | 0.44 | $ | 0.47 | |||||||
Dividends Paid Per Share | $ | 0.22 | $ | 0.22 | $ | 0.23 | $ | 0.23 | |||||||
2011: | |||||||||||||||
Revenue | $ | 2,884 | $ | 2,928 | $ | 2,806 | $ | 2,908 | |||||||
Operating income | $ | 472 | $ | 465 | $ | 310 | $ | 391 | |||||||
Income from continuing operations | $ | 319 | $ | 286 | $ | 133 | $ | 244 | |||||||
Income from discontinued operations | $ | 12 | $ | 3 | $ | 2 | $ | 16 | |||||||
Net income attributable to the Company | $ | 325 | $ | 282 | $ | 130 | $ | 256 | |||||||
Basic Per Share Data: | |||||||||||||||
Income from continuing operations | $ | 0.57 | $ | 0.51 | $ | 0.24 | $ | 0.44 | |||||||
Income from discontinued operations | $ | 0.02 | $ | — | $ | — | $ | 0.03 | |||||||
Net income attributable to the Company | $ | 0.59 | $ | 0.51 | $ | 0.24 | $ | 0.47 | |||||||
Diluted Per Share Data: | |||||||||||||||
Income from continuing operations | $ | 0.56 | $ | 0.50 | $ | 0.23 | $ | 0.44 | |||||||
Income from discontinued operations | $ | 0.02 | $ | — | $ | 0.01 | $ | 0.02 | |||||||
Net income attributable to the Company | $ | 0.58 | $ | 0.50 | $ | 0.24 | $ | 0.46 | |||||||
Dividends Paid Per Share | $ | 0.21 | $ | 0.21 | $ | 0.22 | $ | 0.22 |
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Segment Information (Tables)
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Dec. 31, 2012
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Segment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected information and details for MMC's operating segments | Selected information about the Company’s segments and geographic areas of operation are as follows:
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Details of operating segment revenue | Details of operating segment revenue are as follows:
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Information by geographic area | Information by geographic area is as follows:
The impact of the transfer discussed above is as follows:
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Marsh & McLennan Companies, Inc. New York, New York We have audited the accompanying consolidated balance sheets of Marsh & McLennan Companies, Inc. and subsidiaries (the “Company”) as of December 31, 2012 and 2011, and the related consolidated statements of income, comprehensive income, cash flows and equity for each of the three years in the period ended December 31, 2012. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Marsh & McLennan Companies, Inc. and subsidiaries as of December 31, 2012 and 2011, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2012, in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 1 to the financial statements, the Company retrospectively adjusted segment disclosures for a transfer of business between segments effective January 1, 2013. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2012, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2013 expressed an unqualified opinion on the Company's internal control over financial reporting. /s/ Deloitte & Touche LLP New York, New York February 27, 2013 (May 10, 2013 as to Notes 1, 6 and 16) Marsh & McLennan Companies, Inc. and Subsidiaries SELECTED QUARTERLY FINANCIAL DATA AND SUPPLEMENTAL INFORMATION (UNAUDITED)
As of February 22, 2013 there were 6,840 stockholders of record. |
Acquisitions (Pro-Forma Information) (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
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Acquisitions [Abstract] | |||
Revenue | $ 12,013 | $ 11,778 | $ 10,839 |
Income from continuing operations | 1,214 | 990 | 580 |
Net income attributable to the Company | $ 1,187 | $ 1,001 | $ 870 |
Basic net income per share - Continuing operations | $ 2.18 | $ 1.78 | $ 1.03 |
Basic net income per share - Net income attributable to the Company | $ 2.18 | $ 1.84 | $ 1.59 |
Diluted net income per share - Continuing operations | $ 2.15 | $ 1.75 | $ 1.02 |
Diluted net income per share - Net income attributable to the Company | $ 2.14 | $ 1.81 | $ 1.57 |
Supplemental Disclosures (Schedule of Supplemental Cash Flow Income Statement Disclosures) (Details) (USD $)
In Millions, unless otherwise specified |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
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Supplemental Cash Flow Information [Abstract] | |||
Net cash provided by (used for) operations | $ 0 | $ 11 | $ (6) |
Net cash used for investing activities | 0 | 0 | (14) |
Effect of exchange rate changes on cash and cash equivalents | $ 0 | $ 0 | $ (2) |
Discontinued Operations (Narrative) (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2010
|
Dec. 31, 2011
|
Dec. 31, 2011
Business Process Outsourcing [Member]
|
Dec. 31, 2010
Kroll Divestiture [Member]
|
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Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Discontinued operation, settlement of tax audits | $ 50 | |||
Capitalized Computer Software, Impairments | 17 | |||
Provision/ (credit) for income taxes | 36 | |||
deferred tax benefit | $ 265 |
Stock Benefit Plans (Narrative) (Details) (USD $)
In Millions, except Share data, unless otherwise specified |
12 Months Ended | 12 Months Ended | 1 Months Ended | 3 Months Ended | 12 Months Ended | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
Dec. 31, 2012
Restricted Stock [Member]
|
Dec. 31, 2011
Restricted Stock [Member]
|
Dec. 31, 2012
Restricted Stock [Member]
Shares granted prior to 2004 [Member]
|
Dec. 31, 2012
Restricted Stock [Member]
Shares granted during 2004 [Member]
|
Dec. 31, 2012
Restricted Stock [Member]
Shares granted during 2005 [Member]
|
Dec. 31, 2012
Restricted Stock [Member]
Certain grants in 2005 [Member]
|
Dec. 31, 2012
Restricted Stock Units And Performance Stock Units [Member]
|
Dec. 31, 2012
Restricted Stock Units And Performance Stock Units [Member]
Shares granted prior to 2004 [Member]
|
Dec. 31, 2011
Restricted Stock Units (RSUs) [Member]
|
Dec. 31, 2010
Restricted Stock Units (RSUs) [Member]
|
Dec. 31, 2012
Performance Units [Member]
|
Dec. 31, 2011
Performance Units [Member]
|
Dec. 31, 2006
Performance Units [Member]
|
Dec. 31, 2012
Deferred Stock Units [Member]
|
Dec. 31, 2011
Deferred Stock Units [Member]
|
Dec. 31, 2010
Deferred Stock Units [Member]
|
Dec. 31, 2012
Stock Options [Member]
|
Mar. 16, 2005
Stock Options [Member]
|
Dec. 31, 2012
Executive Plan 2000 [Member]
|
Mar. 31, 2007
Employee Stock Purchase Plan 1999 [Member]
|
Dec. 31, 2012
Employee Stock Purchase Plan 1999 [Member]
|
Dec. 31, 2012
Employee Stock Purchase Plan 1999 [Member]
|
May 31, 2007
International Plan [Member]
|
Dec. 31, 2012
International Plan [Member]
|
Dec. 31, 2012
International Plan [Member]
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Awards made over the life of the plan | 23,200,000 | |||||||||||||||||||||||||||
Stock options vesting percentage | 25.00% | 25.00% | ||||||||||||||||||||||||||
Contractual term of stock option awards | 10 years | |||||||||||||||||||||||||||
Stock appreciation percentage above exercise price | 15.00% | |||||||||||||||||||||||||||
Weighted-average grant-date fair value | $ 6.04 | $ 6.67 | $ 4.85 | $ 30.46 | $ 22.81 | $ 30.60 | ||||||||||||||||||||||
Total intrinsic value of options exercised | $ 57.7 | $ 23.6 | $ 0.5 | |||||||||||||||||||||||||
Unrecognized compensation cost related to option awards | 135 | 18 | ||||||||||||||||||||||||||
Weighted-average period over which that cost is expected to be recognized, years | 1 year | 1 year 3 months 18 days | ||||||||||||||||||||||||||
Cash received from the exercise of stock options | 179.3 | 111.7 | 1.5 | |||||||||||||||||||||||||
Performance-based restricted stock unit payable range minimum | 0.00% | |||||||||||||||||||||||||||
Performance-based restricted stock unit payable range maximum | 200.00% | |||||||||||||||||||||||||||
Total fair value of deferred stock units | 262.6 | 249.0 | 170.7 | |||||||||||||||||||||||||
Performance Based Restricted Stock Unit Payout, Above Target Percentage | 160.00% | |||||||||||||||||||||||||||
Performance Based Restricted Stock Unit Payout, Target Percentage | 100.00% | |||||||||||||||||||||||||||
Vesting period, years | 10 years | 7 years | 5 years | 3 years | 3 years | |||||||||||||||||||||||
Total fair value of restricted stock | $ 0.6 | |||||||||||||||||||||||||||
Stock option price percent | 95.00% | |||||||||||||||||||||||||||
Reduction in the shares available | 10,000,000 | |||||||||||||||||||||||||||
Issuance of common stock common stock approved by the Board of Directors | 35,600,000 | 12,000,000 | ||||||||||||||||||||||||||
Shares due to shareholder action | 4,000,000 | |||||||||||||||||||||||||||
Increase in number of shares available for issuance approved by Board of Directors | 5,000,000 | |||||||||||||||||||||||||||
Shares purchased by employees | 899,424 | 111,073 | ||||||||||||||||||||||||||
Shares available for issuance under the plan | 4,136,312 | 4,136,312 | 3,085,961 | 3,085,961 |
Supplemental Disclosures (Narrative) (Details) (USD $)
In Millions, unless otherwise specified |
12 Months Ended | 0 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
Aug. 03, 2010
Kroll Divestiture [Member]
|
Dec. 31, 2011
Kroll Divestiture [Member]
|
Dec. 31, 2011
KLS [Member]
|
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Supplemental Disclosures [Line Items] | ||||||
Non-cash issuance of common stock | $ 193 | $ 197 | $ 182 | |||
Stock-based compensation expense, equity awards | 152 | 165 | 174 | |||
Cash from disposal, disposition, and/or sale transaction | $ 1,130 | $ 1,130 | $ 110 |
Retirement Benefits (Tables)
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2012
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Defined Benefit Plan Disclosure [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of estimated future benefit payaments for its pension and postretirement benefits | The Plan’s estimated future benefit payments for its pension and postretirement benefits (without reduction for Medicare subsidy receipts) at December 31, 2012 are as follows:
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Summary of the U.S. and non-U.S. plans investments measured at fair value on a recurring basis |
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Summary of changes in the fair value of the plans' Level 3 assets | The tables below set forth a summary of changes in the fair value of the plans’ Level 3 assets for the years ended December 31, 2012 and December 31, 2011:
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Combined US & Significant Non-US Plans [Member]
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Defined Benefit Plan Disclosure [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of weighted average actuarial assumptions utilized defined benefit plans | The weighted average actuarial assumptions utilized for the U.S. and significant non-U.S. defined benefit plans and postretirement benefit plans are as follows:
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Schedule of components of net periodic benefit cost for U.S. defined benefit and other postretirement benefit plans | The components of the net periodic benefit cost for defined benefit and other postretirement plans are as follows:
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U.S. Plans [Member]
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of weighted average actuarial assumptions utilized defined benefit plans | The weighted average actuarial assumptions utilized in determining the above amounts for the U.S. defined benefit and other U.S. postretirement plans as of the end of the year are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of net periodic benefit cost for U.S. defined benefit and other postretirement benefit plans | The components of the net periodic benefit cost for the U.S. defined benefit and other postretirement benefit plans are as follows:
|
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Schedule of MMC's defined benefit plans and postretirement plans | The following schedules provide information concerning the Company’s U.S. defined benefit pension plans and postretirement benefit plans:
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Schedule of unrecognized net actuarial gain (loss) |
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Schedule of total recognized in net periodic benefit cost and other comprehensive income (loss) |
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Schedule of change in assumed health care cost trend rates | A one percentage point change in assumed health care cost trend rates would have the following effects:
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Schedule of estimated amounts that will be amortized from accumulated other comprehensive in the next fiscal year | Estimated amounts that will be amortized from accumulated other comprehensive income in the next fiscal year:
|
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Non-U.S. Plans [Member]
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Defined Benefit Plan Disclosure [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of weighted average actuarial assumptions utilized defined benefit plans |
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Schedule of components of net periodic benefit cost for U.S. defined benefit and other postretirement benefit plans | The components of the net periodic benefit cost for the non-U.S. defined benefit and other postretirement benefit plans and the curtailment, settlement and termination expenses are as follows:
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Schedule of unrecognized net actuarial gain (loss) |
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Schedule of defined benefit plans disclosures and unrecognized net actuarial gain (loss) [Table Text Block] | The following schedules provide information concerning the Company’s non-U.S. defined benefit pension plans and non-U.S. postretirement benefit plans:
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Schedule of total recognized in net periodic benefit cost and other comprehensive income (loss) |
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Schedule of change in assumed health care cost trend rates | A one percentage point change in assumed health care cost trend rates would have the following effects:
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Schedule of estimated amounts that will be amortized from accumulated other comprehensive in the next fiscal year | Estimated amounts that will be amortized from accumulated other comprehensive income in the next fiscal year:
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Stock Benefit Plans (Black-Scholes Option Pricing Valuation Model For Options) (Details) (Black-Scholes Option Pricing [Member])
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12 Months Ended | ||
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Dec. 31, 2012
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Dec. 31, 2011
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Dec. 31, 2010
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Black-Scholes Option Pricing [Member]
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Risk-free interest rate, Range Minimum | 1.26% | 2.28% | 3.15% |
Risk-free interest rate, Range Maximum | 1.27% | 2.90% | 3.20% |
Expected life (in years) | 6 years 6 months | 6 years 9 months | 6 years 9 months |
Expected volatility, Range Minimum | 26.20% | 25.40% | 26.30% |
Expected volatility, Range Maximum | 26.40% | 25.80% | 27.60% |
Expected dividend yield, Range Minimum | 2.76% | 2.75% | 3.26% |
Expected dividend yield, Range Maximum | 2.80% | 2.86% | 3.52% |
Retirement Benefits (Schedule of Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income (Loss) (Details) (USD $)
In Millions, unless otherwise specified |
12 Months Ended | ||
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Dec. 31, 2012
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Dec. 31, 2011
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Dec. 31, 2010
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U.S. Pension Benefits [Member]
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Total recognized in net periodic benefit cost and other comprehensive loss (income) | $ 346 | $ 467 | $ 148 |
Non- U.S Pension Benefits [Member]
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Total recognized in net periodic benefit cost and other comprehensive loss (income) | 246 | 792 | 66 |
U.S. Postretirement Benefits [Member]
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Total recognized in net periodic benefit cost and other comprehensive loss (income) | 24 | (9) | 26 |
Non- U.S Postretirement Benefits [Member]
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Total recognized in net periodic benefit cost and other comprehensive loss (income) | $ 16 | $ 12 | $ 15 |
Debt (Narrative) (Details) (USD $)
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1 Months Ended | 12 Months Ended | 3 Months Ended | 3 Months Ended | 0 Months Ended | 3 Months Ended | 12 Months Ended | 12 Months Ended | |||||||||||||||
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Feb. 28, 2011
Years
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Dec. 31, 2012
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Dec. 31, 2011
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Dec. 31, 2010
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Feb. 28, 2012
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Mar. 31, 2012
Senior Debt Obligations Due 2012 [Member]
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Dec. 31, 2012
Senior Debt Obligations Due 2017 [Member]
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Mar. 31, 2012
Senior Debt Obligations Due 2017 [Member]
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Dec. 31, 2011
Senior Debt Obligations Due 2017 [Member]
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Dec. 31, 2012
Senior Debt Obligations Due 2014 [Member]
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Jun. 27, 2011
Senior Debt Obligations Due 2014 [Member]
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Jun. 27, 2011
Senior Debt Obligations Due 2015 [Member]
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Sep. 30, 2011
Senior Debt Obligations Due In Ten Years [Member]
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Mar. 31, 2013
Senior Debt Obligations Due 2013 [Member]
Subsequent Event [Member]
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Sep. 30, 2011
Senior Debt Obligations Due In Ten Years [Member]
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Jul. 15, 2011
Senior Debt Obligations Due 2015 [Member]
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Jul. 15, 2011
Senior Debt Obligations Due 2014 [Member]
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Mar. 31, 2012
Senior Debt Obligations Due 2017 [Member]
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Mar. 31, 2012
Senior Debt Obligations Due 2012 [Member]
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Dec. 31, 2011
September 2011 Debt Obligation [Member]
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Dec. 31, 2012
September 2011 Debt Obligation [Member]
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Oct. 13, 2011
September 2011 Debt Obligation [Member]
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Dec. 31, 2012
Three-Year Delayed Draw Term Loan Facility [Member]
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Debt instrument, interest rate, stated percentage | 6.25% | 2.30% | 5.375% | 5.75% | 4.80% | ||||||||||||||||||
Debt Instrument, Term | 5 years | 10 years | 5 years | 3 years | |||||||||||||||||||
Line of Credit Facility, Potential Increase to Maximum Borrowing Capacity | $ 100,000,000 | ||||||||||||||||||||||
Senior notes | 2,658,000,000 | 2,668,000,000 | 249,000,000 | 0 | 600,000,000 | ||||||||||||||||||
Revised Purchase Price Allocation For Principal Amount Outstanding of Notes | 250,000,000 | 270,000,000 | 330,000,000 | 250,000,000 | |||||||||||||||||||
Number of interest rate swaps | 2 | ||||||||||||||||||||||
Floating rate three-month LIBOR plus fixed spread interest percentage | 3.726% | ||||||||||||||||||||||
Interest rate swaps, fair value adjustment | 0 | ||||||||||||||||||||||
Swap agreements, effectiveness recognized during the period | 0 | ||||||||||||||||||||||
Interest rate swap for hedging | 125,000,000 | ||||||||||||||||||||||
Interest rate swap maturity, in years | 3.5 | ||||||||||||||||||||||
5.375% senior notes due in 2014, hedged value | 250,000,000 | ||||||||||||||||||||||
Line of credit facility, current borrowing capacity | 1,000,000,000 | ||||||||||||||||||||||
Revolving credit facility, borrowing capacity | 50,000,000 | ||||||||||||||||||||||
Revolving credit facility, amount outstanding | 0 | 0 | 0 | 0 | |||||||||||||||||||
Proceeds from issuance of debt | 248,000,000 | 496,000,000 | 500,000,000 | 250,000,000 | |||||||||||||||||||
Debtor-in-Possession Financing, Letters of Credit Outstanding | $ 247,000,000 | $ 248,000,000 |
Goodwill And Other Intangibles (Narrative) (Details) (USD $)
In Millions, unless otherwise specified |
12 Months Ended | 3 Months Ended | 12 Months Ended | |||
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Dec. 31, 2012
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Dec. 31, 2011
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Dec. 31, 2010
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Sep. 30, 2012
Risk and Insurance Services [Member]
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Dec. 31, 2012
Risk and Insurance Services [Member]
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Dec. 31, 2012
Consulting [Member]
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Segment Reporting Information [Line Items] | ||||||
Intangible asset impairment charge | $ 8 | |||||
Goodwill acquired | 226 | 124 | 196 | 30 | ||
Business Acquisition, Purchase Price Allocation, Goodwill, Expected Tax Deductible Amount | 110 | |||||
Finite lived assets amortization expense | 72 | 65 | 66 | |||
Finite lived assets amortization expense, excluding discontinued operations | 50 | |||||
Goodwill | $ 6,792 | $ 6,562 | $ 6,420 | $ 4,600 | $ 2,200 |
Long-Term Commitments (Narrative) (Details) (USD $)
In Millions, unless otherwise specified |
12 Months Ended | ||
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Dec. 31, 2012
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Dec. 31, 2011
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Dec. 31, 2010
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Long-Term Commitments [Abstract] | |||
Lease obligations for office space | 98.00% | ||
Net rental costs | $ 416 | $ 430 | $ 421 |
Rentals from subleases | $ 10 | $ 9 | $ 8 |
Long-term Commitments (Operating Lease Agreements) (Details) (USD $)
In Millions, unless otherwise specified |
Dec. 31, 2012
|
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Long-Term Commitments [Abstract] | |
2013, Gross Rental Commitments | $ 404 |
2014, Gross Rental Commitments | 359 |
2015, Gross Rental Commitments | 315 |
2016, Gross Rental Commitments | 279 |
2017, Gross Rental Commitments | 236 |
Subsequent years, Gross Rental Commitments | 1,227 |
2013, Rentals from Subleases | 49 |
2014, Rentals from Subleases | 48 |
2015, Rentals from Subleases | 43 |
2016, Rentals from Subleases | 42 |
2017, Rentals from Subleases | 40 |
Subsequent years, Rentals from Subleases | 109 |
2013, Net Rental Commitments | 355 |
2014, Net Rental Commitments | 311 |
2015, Net Rental Commitments | 272 |
2016, Net Rental Commitments | 237 |
2017, Net Rental Commitments | 196 |
Subsequesnt years, Net Rental Commitments | $ 1,118 |
Summary of Significant Accounting Policies (Policies)
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12 Months Ended |
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Dec. 31, 2012
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Accounting Policies [Abstract] | |
Nature of Operations | Nature of Operations: Marsh & McLennan Companies, Inc. the ("Company”), a global professional services firm, is organized based on the different services that it offers. Under this organizational structure, the Company’s two business segments are Risk and Insurance Services and Consulting. Effective January 1, 2013, the Corporate Benefits and Association businesses, previously part of Marsh's U.S. Consumer operations in the Risk and Insurance Services segment, were transferred to Mercer. Accordingly, these businesses are now part of the Consulting segment. The segment data in Note 6 and Note 16 has been updated to reflect this transfer. See Note 16 for additional details about the impact of these reclassifications. The Risk and Insurance Services segment provides risk management and insurance broking, reinsurance broking and insurance program management services for businesses, public entities, insurance companies, associations, professional services organizations, and private clients. The Company conducts business in this segment through Marsh and Guy Carpenter. The Company conducts business in its Consulting segment through two main business groups. Mercer provides consulting expertise, advice, services and solutions in the areas of talent, health, retirement and investments. Oliver Wyman Group provides specialized management and economic and brand consulting services. Acquisitions impacting the Risk and Insurance Services and Consulting segments are discussed in Note 4 to the consolidated financial statements. On August 3, 2010, the Company completed the sale of Kroll, the Company’s former Risk Consulting & Technology segment, to Altegrity, Inc. (“Altegrity”) for cash consideration of $1.13 billion. In the first quarter of 2010, Kroll completed the sale of Kroll Laboratory Specialists (“KLS”). The gain on the sale of Kroll and related tax benefits and the after-tax loss on the sale of KLS, along with Kroll’s, and KLS’s 2010 results of operations are included in discontinued operations in 2010. With the sale of Kroll in August 2010, along with other dispositions between 2008 and 2010, the Company has divested its entire Risk Consulting and Technology Segment. The Company has “continuing involvement” in certain Corporate Advisory and Restructuring businesses (“CARG”) that were disposed of in 2008. The runoff of the CARG businesses is being managed by the Company's corporate departments and financial results of these entities are included in “Corporate” for segment reporting purposes. |
Principles of Consolidation | Principles of Consolidation: The accompanying consolidated financial statements include all wholly-owned and majority-owned subsidiaries. All significant inter-company transactions and balances have been eliminated. |
Fiduciary Assets And Liabilities | Fiduciary Assets and Liabilities: In its capacity as an insurance broker or agent, the Company generally collects premiums from insureds and, after deducting its commissions, remits the premiums to the respective insurance underwriters. The Company also collects claims or refunds from underwriters on behalf of insureds. Unremitted insurance premiums and claims proceeds are held by the Company in a fiduciary capacity. Risk and Insurance Services revenue includes interest on fiduciary funds of $39 million, $47 million and $45 million in 2012, 2011 and 2010, respectively. The Consulting segment recorded fiduciary interest income of $4 million in each of 2012 , 2011 and 2010. Since fiduciary assets are not available for corporate use, they are shown in the consolidated balance sheets as an offset to fiduciary liabilities. Net uncollected premiums and claims and the related payables amounted to $9.1 billion and $9 billion at December 31, 2012 and 2011, respectively. The Company is not a principal to the contracts under which the right to receive premiums or the right to receive reimbursement of insured losses arises. Net uncollected premiums and claims and the related payables are, therefore, not assets and liabilities of the Company and are not included in the accompanying consolidated balance sheets. In certain instances, the Company advances premiums, refunds or claims to insurance underwriters or insureds prior to collection. These advances are made from corporate funds and are reflected in the accompanying consolidated balance sheets as receivables. Mercer manages approximately $16 billion of assets in trusts or funds for which Mercer’s management or trustee fee is considered a variable interest. Mercer is not the primary beneficiary of these trusts or funds. Mercer’s only variable interest in any of these trusts or funds is its unpaid fees, if any. Mercer’s maximum exposure to loss of its interests is, therefore, limited to collection of its fees. |
Revenue | Revenue: Risk and Insurance Services revenue includes insurance commissions, fees for services rendered and interest income on certain fiduciary funds. Insurance commissions and fees for risk transfer services generally are recorded as of the effective date of the applicable policies or, in certain cases (primarily in the Company's reinsurance broking operations), as of the effective date or billing date, whichever is later. A reserve for policy cancellation is provided based on historic and current data on cancellations. Fees for non-risk transfer services provided to clients are recognized over the period in which the services are provided, using a proportional performance model. Fees resulting from achievement of certain performance thresholds are recorded when such levels are attained and such fees are not subject to forfeiture. As part of the sale of MMC Capital in 2005, the Company retained the right to receive certain performance fees related to the Trident II and Trident III private equity partnerships. The Company recognizes performance fee income when such fees are no longer subject to forfeiture, which may take a number of years to resolve. The Company has deferred the recognition of income related to such performance fees of $78 million and $74 million at December 31, 2012 and 2011, respectively. This income is based on the investment performance over the life of each private equity fund, and future declines in fund performance from current levels may result in the forfeiture of such revenue. In the first quarter of 2013, Trident II sold substantially all of the remaining assets of the fund and the fund will wind down. As a result, approximately $15 million of the deferred performance fees will be recognized as part of investment income. Consulting revenue includes fees paid by clients for advice and services and commissions from insurance companies for the placement of individual and group contracts. Fee revenue for engagements where remuneration is based on time plus out-of-pocket expenses is recognized based on the amount of time consulting professionals expend on the engagement. For fixed fee engagements, revenue is recognized using a proportional performance model. Revenue from insurance commissions not subject to a fee arrangement is recorded over the effective period of the applicable policies. Revenues for asset based fees are recognized on an accrual basis by applying the daily/monthly rate as contractually agreed with the client to the applicable net asset value. On a limited number of engagements, performance fees may also be earned for achieving certain pre-determined performance criteria. Such fees are recognized when the performance criteria have been achieved and agreed to by the client. Expenses incurred by professional staff in the generation of revenue are billed to the client and included in revenue. |
Cash and Cash Equivalents | Cash and Cash Equivalents: Cash and cash equivalents primarily consist of certificates of deposit and time deposits, with original maturities of three months or less, and money market funds. The estimated fair value of the Company's cash and cash equivalents approximates their carrying value. |
Fixed Assets | Fixed Assets: Fixed assets are stated at cost less accumulated depreciation and amortization. Expenditures for improvements are capitalized. Upon sale or retirement, the cost and related accumulated depreciation and amortization are removed from the accounts and any gain or loss is reflected in income. Expenditures for maintenance and repairs are charged to operations as incurred. Depreciation of buildings, building improvements, furniture, and equipment is provided on a straight-line basis over the estimated useful lives of these assets. Furniture and equipment is depreciated over periods ranging from three to ten years. Leasehold improvements are amortized on a straight-line basis over the periods covered by the applicable leases or the estimated useful life of the improvement, whichever is less. Buildings are depreciated over periods ranging from thirty to forty years. The Company periodically reviews long-lived assets for impairment whenever events or changes indicate that the carrying value of assets may not be recoverable. |
Investment Securities | Investment Securities: The Company holds investments primarily in private companies and certain private equity funds. Certain investments, primarily investments in private equity funds, are accounted for under the equity method using a consistently applied three-month lag period adjusted for any known significant changes from the lag period to the reporting date of the Company. The underlying private equity funds follow investment company accounting, where securities within the fund are carried at fair value. The Company records its proportionate share of the change in fair value of the funds in earnings which amounted to gains of $33 million, $10 million and $32 million in 2012, 2011 and 2010, respectively. Securities recorded using the equity method are included in other assets in the consolidated balance sheets. The Company has an investment in Trident II limited partnership, a private equity investment fund. At December 31, 2012, the Company’s investment in Trident II was approximately $78 million, reflected in other assets in the consolidated balance sheet. In the first quarter of 2013, Trident II sold substantially all remaining assets and the fund will wind down. The Company expects to receive approximately $100 million in cash proceeds related to this sale in 2013. Gains or losses recognized in earnings from the investment securities, including the performance fees discussed above, are included in investment income in the consolidated statements of income. Costs related to management of the Company’s investments, including incentive compensation partially derived from investment income and (loss), are recorded in operating expenses. |
Goodwill and Intangible Assets | Goodwill and Other Intangible Assets: Goodwill represents acquisition costs in excess of the fair value of net assets acquired. Goodwill is reviewed at least annually for impairment. The Company performs an annual impairment test for each of its reporting units during the third quarter of each year. When a step 1 test is performed, fair values of the reporting units are estimated using either a market approach or a discounted cash flow model. Carrying values for the reporting units are based on balances at the prior quarter end and include directly identified assets and liabilities as well as an allocation of those assets and liabilities not recorded at the reporting unit level. As discussed in Note 6, the Company assesses qualitative factors to determine if a step 1 assessment is necessary. Other intangible assets, which primarily consist of customer lists, that are not deemed to have an indefinite life are amortized over their estimated lives and reviewed for impairment upon the occurrence of certain triggering events in accordance with applicable accounting literature. The Company had no indefinite lived identified intangible assets at December 31, 2012 or 2011. |
Capitalized Software Costs | Capitalized Software Costs: The Company capitalizes certain costs to develop, purchase or modify software for the internal use of the Company. These costs are amortized on a straight-line basis over periods ranging from three to ten years. Costs incurred during the preliminary project stage and post implementation stage, are expensed as incurred. Costs incurred during the application development stage are capitalized. Costs related to updates and enhancements are only capitalized if they will result in additional functionality. Capitalized computer software costs of $278 million and $244 million, net of accumulated amortization of $691 million and $619 million at December 31, 2012 and 2011, respectively, are included in other assets in the consolidated balance sheets. |
Legal and Other Loss Contingencies | Legal and Other Loss Contingencies: The Company and its subsidiaries are subject to numerous claims, lawsuits and proceedings including claims for errors and omissions ("E&O"). GAAP requires that a liability be recorded when a loss is both probable and reasonably estimable. Significant management judgement is required to apply this guidance. The Company utilizes case level reviews by inside and outside counsel, an internal actuarial analysis and other analyses to estimate potential losses. The liability is reviewed quarterly and adjusted as developments warrant. In many cases, the Company has not recorded a liability, other than for legal fees to defend the claim, because we are unable, at the present time, to make a determination that a loss is both probable and reasonably estimable. Given the unpredictability of E&O claims and of litigation that could flow from them, it is possible that an adverse outcome in a particular matter could have a material adverse effect on the Company’s businesses, results of operations, financial condition or cash flow in a given quarterly or annual period. In addition, to the extent that insurance coverage is available, significant management judgment is required to determine the amount of recoveries that are probable of collection under the Company’s various insurance programs. The legal and other contingent liabilities described above are not discounted. |
Income Taxes | Income Taxes: The Company's effective tax rate reflects its income, statutory tax rates and tax planning in the various jurisdictions in which it operates. Significant judgment is required in determining the annual effective tax rate and in evaluating uncertain tax positions and the ability to realize deferred tax assets. The Company reports a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. The evaluation of a tax position is a two-step process. The first step involves recognition. The Company determines whether it is more likely than not that a tax position will be sustained upon tax examination, including resolution of any related appeals or litigation, based on only the technical merits of the position. The technical merits of a tax position derive from both statutory and judicial authority (legislation and statutes, legislative intent, regulations, rulings, and case law) and their applicability to the facts and circumstances of the tax position. If a tax position does not meet the more likely than not recognition threshold, the benefit of that position is not recognized in the financial statements. The second step is measurement. A tax position that meets the more likely than not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate resolution with a taxing authority. Uncertain tax positions are evaluated based upon the facts and circumstances that exist at each reporting period. Subsequent changes in judgment based upon new information may lead to changes in recognition, derecognition, and measurement. Adjustments may result, for example, upon resolution of an issue with the taxing authorities, or expiration of a statute of limitations barring an assessment for an issue. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense. Tax law requires items be included in the Company's tax returns at different times than the items are reflected in the financial statements. As a result, the annual tax expense reflected in the consolidated statements of income is different than that reported in the income tax returns. Some of these differences are permanent, such as expenses that are not deductible in the returns, and some differences are temporary and reverse over time, such as depreciation expense. Temporary differences create deferred tax assets and liabilities. Deferred tax assets generally represent items that can be used as a tax deduction or credit in tax returns in future years for which benefit has already been recorded in the financial statements. Valuation allowances are established for deferred tax assets when it is estimated that future taxable income will be insufficient to use a deduction or credit in that jurisdiction. Deferred tax liabilities generally represent tax expense recognized in the financial statements for which payment has been deferred, or expense for which a deduction has been taken already in the tax return but the expense has not yet been recognized in the financial statements. |
Derivative Instruments | Derivative Instruments: All derivatives, whether designated in hedging relationships or not, are recorded on the balance sheet at fair value. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in earnings. If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative are recorded in other comprehensive income and are recognized in the income statement when the hedged item affects earnings. Changes in the fair value attributable to the ineffective portion of cash flow hedges are recognized in earnings. |
Concentrations Of Credit Risk | Concentrations of Credit Risk: Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, commissions and fees receivable and insurance recoverables. The Company maintains a policy providing for the diversification of cash and cash equivalent investments and places its investments in a large number of high quality financial institutions to limit the amount of credit risk exposure. Concentrations of credit risk with respect to receivables are generally limited due to the large number of clients and markets in which the Company does business, as well as the dispersion across many geographic areas. |
Per Share Data | Per Share Data: Under the accounting guidance which applies to the calculation of earnings per share (“EPS”) for share-based payment awards with rights to dividends or dividend equivalents, unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and should be included in the computation of basic and dilutive EPS using the two-class method. Basic net income per share attributable to the Company and income from continuing operations per share are calculated by dividing the respective after-tax income attributable to common shares by the weighted average number of outstanding shares of the Company’s common stock. Diluted net income per share attributable to the Company and income from continuing operations per share are calculated by dividing the respective after-tax income attributable to common shares by the weighted average number of outstanding shares of the Company’s common stock, which have been adjusted for the dilutive effect of potentially issuable common shares (excluding those that are considered participating securities). The diluted earnings per share calculation reflects the more dilutive effect of either (a) the two-class method that assumes that the participating securities have not been exercised or (b) the treasury stock method. Reconciliation of the applicable income components used for diluted earnings per share and basic weighted average common shares outstanding to diluted weighted average common shares outstanding is presented below. |
Estimates | Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results may vary from those estimates. |
New Accounting Pronouncements | New Accounting Pronouncements: In the first quarter of 2012, the Company adopted new accounting guidance related to the presentation of Comprehensive Income. The new guidance gives an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. The guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. The guidance did not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. On February 5, 2013, the FASB issued new accounting guidance that adds new disclosure requirements for items reclassified out of accumulated other comprehensive income. The Company is required to implement this new guidance for the reporting period ended March 31, 2013. Other than enhanced disclosure, the adoption of this new guidance is not expected to have a material effect on the Company's financial statements. In January 2012, the Company adopted guidance issued by the FASB on accounting and disclosure requirements related to fair value measurements. The guidance expands the disclosures on Level 3 inputs by requiring quantitative disclosure of the unobservable inputs and assumptions, as well as description of the valuation processes, the sensitivity of the fair value to changes in unobservable inputs and the hierarchy classification, valuation techniques, and inputs for assets and liabilities whose fair value is only disclosed in the footnotes. In January 2011, the Company adopted guidance issued by the FASB on revenue recognition regarding multiple-deliverable revenue arrangements. Other than enhanced disclosure, the adoption of this new guidance did not have a material effect on the Company's financial statements. In January 2011, the Company adopted guidance issued by the FASB which establishes a revenue recognition model for contingent consideration that is payable upon the achievement of an uncertain future event, referred to as a milestone. The scope of this guidance is limited to research or development arrangements and requires an entity to record the milestone payment in its entirety in the period received if the milestone meets all the necessary criteria to be considered substantive. However, entities would not be precluded from making an accounting policy election to apply another appropriate accounting policy that results in the deferral of some portion of the arrangement consideration. The adoption of this new guidance did not have a material impact on the Company’s financial statements. |
Reclassification | Reclassifications: Certain reclassifications have been made to prior period amounts to conform with current year presentation, in particular with regard to combining income taxes receivable with other receivables on the consolidated balance sheets. |
Summary of Significant Accounting Policies (Basic EPS Calculation for Continuing Operations) (Details) (USD $)
In Millions, unless otherwise specified |
12 Months Ended | ||
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Dec. 31, 2012
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Dec. 31, 2011
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Dec. 31, 2010
|
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Net income from continuing operations | $ 1,204 | $ 982 | $ 565 |
Less: Net income attributable to non-controlling interests | 25 | 22 | 16 |
Net income attributable to the Company | 1,176 | 993 | 855 |
Basic weighted average common shares outstanding | 544 | 542 | 540 |
Segment, Continuing Operations [Member]
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Net income from continuing operations | 1,204 | 982 | 565 |
Less: Net income attributable to non-controlling interests | 25 | 22 | 16 |
Net income attributable to the Company | 1,179 | 960 | 549 |
Less: Portion attributable to participating securities | 2 | 6 | 6 |
Net income attributable to common shares for basic earnings per shares | $ 1,177 | $ 954 | $ 543 |
Basic weighted average common shares outstanding | 544 | 542 | 540 |
Retirement Benefits (Schedule of Estimated Future Benefit Payments for Pension and Postretirement Benefits) (Details) (USD $)
In Millions, unless otherwise specified |
Dec. 31, 2012
|
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U.S. Pension Benefits [Member]
|
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2013 | $ 210 |
2014 | 221 |
2015 | 231 |
2016 | 242 |
2017 | 251 |
2018-2022 | 1,394 |
Non- U.S Pension Benefits [Member]
|
|
2013 | 275 |
2014 | 276 |
2015 | 287 |
2016 | 310 |
2017 | 321 |
2018-2022 | 1,910 |
U.S. Postretirement Benefits [Member]
|
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2013 | 11 |
2014 | 11 |
2015 | 11 |
2016 | 11 |
2017 | 11 |
2018-2022 | 59 |
Non- U.S Postretirement Benefits [Member]
|
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2013 | 4 |
2014 | 4 |
2015 | 4 |
2016 | 4 |
2017 | 5 |
2018-2022 | $ 27 |
Claims, Lawsuits And Other Contingencies Claims, Lawsuits And Other Contingencies (Details) (USD $)
In Millions, unless otherwise specified |
Dec. 31, 2012
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Commitments and Contingencies Disclosure [Abstract] | |
Reinsured Policies Covered By Related Party Guarantee | $ 40 |
Debt (Tables)
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2012
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Debt [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Outstanding Debt | The Company’s outstanding debt is as follows:
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Gain Or Loss On The Hedged Item And Offsetting Gain Or Loss On Interest Rate Swaps | The gain or loss on the hedged item (fixed rate debt) and the offsetting gain or (loss) on the interest rate swaps for the periods ended December 31, 2012 and December 31, 2011 is as follows:
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Estimated Fair Value Of Significant Financial Instruments | The fair value amounts shown below are not necessarily indicative of the amounts that the Company would realize upon disposition, nor do they indicate the Company’s intent or need to dispose of the financial instrument.
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Acquisitions (Narrative) (Details) (USD $)
In Millions, unless otherwise specified |
12 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2012
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Dec. 31, 2011
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Dec. 31, 2010
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Mar. 31, 2011
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Feb. 29, 2012
Acquisition Yokogawa-ORC [Member]
|
Dec. 31, 2012
Current Year Acquisitions [Member]
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Dec. 31, 2012
Released Cash Held in Escrow [Member]
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Dec. 31, 2011
Released Cash Held in Escrow [Member]
|
Dec. 31, 2010
Released Cash Held in Escrow [Member]
|
Dec. 31, 2011
Minority Interest Acquired [Member]
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Jun. 30, 2011
Minority Interest Acquired [Member]
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Dec. 31, 2012
Purchase Consideration for Acquisitions During the Period [Member]
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Dec. 31, 2011
Prior Years Acquisitions [Member]
|
Dec. 31, 2011
Remaining Prior Years Acquisitions [Member]
|
Dec. 31, 2012
Risk and Insurance Services [Member]
|
Dec. 31, 2011
Risk and Insurance Services [Member]
|
Dec. 31, 2012
Consulting [Member]
|
Dec. 31, 2011
Consulting [Member]
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Dec. 31, 2012
Maximum [Member]
Current Year Acquisitions [Member]
|
Dec. 31, 2011
Maximum [Member]
Prior Years Acquisitions [Member]
|
Dec. 31, 2012
Minimum [Member]
Current Year Acquisitions [Member]
|
Dec. 31, 2011
Minimum [Member]
Prior Years Acquisitions [Member]
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Finite-Lived Intangible Asset, Useful Life | 10 years | |||||||||||||||||||||
Cash | $ 252 | $ 62 | $ 0 | $ 0 | $ 164 | |||||||||||||||||
Estimated fair value of deferred/contingent consideration | 46 | 33 | 81 | 46 | 33 | |||||||||||||||||
Total Consideration | 360 | 360 | 8 | 197 | ||||||||||||||||||
Adjustments to Additional Paid in Capital, Other | 2 | |||||||||||||||||||||
Deferred purchase consideration | 13 | 59 | 27 | |||||||||||||||||||
Purchase of other intangible assets | 3 | 4 | 3 | 3 | ||||||||||||||||||
Number of acquisitions made | 12 | 7 | 3 | 5 | ||||||||||||||||||
Business Combination, Step Acquisition, Equity Interest in Acquiree, Percentage | 49.00% | |||||||||||||||||||||
Revenue target period, in years | 4 years | 4 years | 2 years | 2 years | ||||||||||||||||||
Revenue related to acquisitions | 12,013 | 11,778 | 10,839 | 113 | ||||||||||||||||||
Net operating income related to acquisitions | 1,214 | 990 | 580 | 21 | ||||||||||||||||||
Contingent payments for acquisitions | $ 30 | $ 16 | $ 30 |
Supplemental Disclosures (Schedule of Supplemental Cash Flow Disclosures) (Details) (USD $)
In Millions, unless otherwise specified |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2012
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Dec. 31, 2011
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Dec. 31, 2010
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Supplemental Disclosures [Line Items] | |||
Assets acquired, excluding cash | $ 380 | $ 214 | $ 867 |
Liabilities assumed | (42) | (21) | (176) |
Shares issued (7.6 million shares in 2010) | 0 | 0 | (183) |
Contingent/deferred purchase consideration | (46) | (33) | (81) |
Net cash outflow for current year acquisitions | 230 | 160 | 427 |
Purchase of other intangible assets | 3 | 4 | 3 |
Deferred purchase consideration from prior years' acquisitions | 59 | 11 | 62 |
Subtotal | 292 | 175 | 492 |
Cash paid into escrow for future acquisition | 0 | 62 | 0 |
Net cash outflow for acquisitions | 292 | 237 | 492 |
Interest paid | 183 | 188 | 232 |
Income taxes paid, net of refunds | 350 | 37 | 39 |
Shares issued | 7.6 | ||
Released Cash Held in Escrow [Member]
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Supplemental Disclosures [Line Items] | |||
Released from escrow in 2012 | $ (62) | $ 0 | $ 0 |
Summary of Significant Accounting Policies
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2012
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Nature of Operations: Marsh & McLennan Companies, Inc. the ("Company”), a global professional services firm, is organized based on the different services that it offers. Under this organizational structure, the Company’s two business segments are Risk and Insurance Services and Consulting. Effective January 1, 2013, the Corporate Benefits and Association businesses, previously part of Marsh's U.S. Consumer operations in the Risk and Insurance Services segment, were transferred to Mercer. Accordingly, these businesses are now part of the Consulting segment. The segment data in Note 6 and Note 16 has been updated to reflect this transfer. See Note 16 for additional details about the impact of these reclassifications. The Risk and Insurance Services segment provides risk management and insurance broking, reinsurance broking and insurance program management services for businesses, public entities, insurance companies, associations, professional services organizations, and private clients. The Company conducts business in this segment through Marsh and Guy Carpenter. The Company conducts business in its Consulting segment through two main business groups. Mercer provides consulting expertise, advice, services and solutions in the areas of talent, health, retirement and investments. Oliver Wyman Group provides specialized management and economic and brand consulting services. Acquisitions impacting the Risk and Insurance Services and Consulting segments are discussed in Note 4 to the consolidated financial statements. On August 3, 2010, the Company completed the sale of Kroll, the Company’s former Risk Consulting & Technology segment, to Altegrity, Inc. (“Altegrity”) for cash consideration of $1.13 billion. In the first quarter of 2010, Kroll completed the sale of Kroll Laboratory Specialists (“KLS”). The gain on the sale of Kroll and related tax benefits and the after-tax loss on the sale of KLS, along with Kroll’s, and KLS’s 2010 results of operations are included in discontinued operations in 2010. With the sale of Kroll in August 2010, along with other dispositions between 2008 and 2010, the Company has divested its entire Risk Consulting and Technology Segment. The Company has “continuing involvement” in certain Corporate Advisory and Restructuring businesses (“CARG”) that were disposed of in 2008. The runoff of the CARG businesses is being managed by the Company's corporate departments and financial results of these entities are included in “Corporate” for segment reporting purposes. Principles of Consolidation: The accompanying consolidated financial statements include all wholly-owned and majority-owned subsidiaries. All significant inter-company transactions and balances have been eliminated. Fiduciary Assets and Liabilities: In its capacity as an insurance broker or agent, the Company generally collects premiums from insureds and, after deducting its commissions, remits the premiums to the respective insurance underwriters. The Company also collects claims or refunds from underwriters on behalf of insureds. Unremitted insurance premiums and claims proceeds are held by the Company in a fiduciary capacity. Risk and Insurance Services revenue includes interest on fiduciary funds of $39 million, $47 million and $45 million in 2012, 2011 and 2010, respectively. The Consulting segment recorded fiduciary interest income of $4 million in each of 2012 , 2011 and 2010. Since fiduciary assets are not available for corporate use, they are shown in the consolidated balance sheets as an offset to fiduciary liabilities. Net uncollected premiums and claims and the related payables amounted to $9.1 billion and $9 billion at December 31, 2012 and 2011, respectively. The Company is not a principal to the contracts under which the right to receive premiums or the right to receive reimbursement of insured losses arises. Net uncollected premiums and claims and the related payables are, therefore, not assets and liabilities of the Company and are not included in the accompanying consolidated balance sheets. In certain instances, the Company advances premiums, refunds or claims to insurance underwriters or insureds prior to collection. These advances are made from corporate funds and are reflected in the accompanying consolidated balance sheets as receivables. Mercer manages approximately $16 billion of assets in trusts or funds for which Mercer’s management or trustee fee is considered a variable interest. Mercer is not the primary beneficiary of these trusts or funds. Mercer’s only variable interest in any of these trusts or funds is its unpaid fees, if any. Mercer’s maximum exposure to loss of its interests is, therefore, limited to collection of its fees. Revenue: Risk and Insurance Services revenue includes insurance commissions, fees for services rendered and interest income on certain fiduciary funds. Insurance commissions and fees for risk transfer services generally are recorded as of the effective date of the applicable policies or, in certain cases (primarily in the Company's reinsurance broking operations), as of the effective date or billing date, whichever is later. A reserve for policy cancellation is provided based on historic and current data on cancellations. Fees for non-risk transfer services provided to clients are recognized over the period in which the services are provided, using a proportional performance model. Fees resulting from achievement of certain performance thresholds are recorded when such levels are attained and such fees are not subject to forfeiture. As part of the sale of MMC Capital in 2005, the Company retained the right to receive certain performance fees related to the Trident II and Trident III private equity partnerships. The Company recognizes performance fee income when such fees are no longer subject to forfeiture, which may take a number of years to resolve. The Company has deferred the recognition of income related to such performance fees of $78 million and $74 million at December 31, 2012 and 2011, respectively. This income is based on the investment performance over the life of each private equity fund, and future declines in fund performance from current levels may result in the forfeiture of such revenue. In the first quarter of 2013, Trident II sold substantially all of the remaining assets of the fund and the fund will wind down. As a result, approximately $15 million of the deferred performance fees will be recognized as part of investment income. Consulting revenue includes fees paid by clients for advice and services and commissions from insurance companies for the placement of individual and group contracts. Fee revenue for engagements where remuneration is based on time plus out-of-pocket expenses is recognized based on the amount of time consulting professionals expend on the engagement. For fixed fee engagements, revenue is recognized using a proportional performance model. Revenue from insurance commissions not subject to a fee arrangement is recorded over the effective period of the applicable policies. Revenues for asset based fees are recognized on an accrual basis by applying the daily/monthly rate as contractually agreed with the client to the applicable net asset value. On a limited number of engagements, performance fees may also be earned for achieving certain pre-determined performance criteria. Such fees are recognized when the performance criteria have been achieved and agreed to by the client. Expenses incurred by professional staff in the generation of revenue are billed to the client and included in revenue. Cash and Cash Equivalents: Cash and cash equivalents primarily consist of certificates of deposit and time deposits, with original maturities of three months or less, and money market funds. The estimated fair value of the Company's cash and cash equivalents approximates their carrying value. The Company is required to maintain operating funds of approximately $250 million related to regulatory requirements outside the U.S. or as collateral under captive insurance arrangements. Fixed Assets: Fixed assets are stated at cost less accumulated depreciation and amortization. Expenditures for improvements are capitalized. Upon sale or retirement, the cost and related accumulated depreciation and amortization are removed from the accounts and any gain or loss is reflected in income. Expenditures for maintenance and repairs are charged to operations as incurred. Depreciation of buildings, building improvements, furniture, and equipment is provided on a straight-line basis over the estimated useful lives of these assets. Furniture and equipment is depreciated over periods ranging from three to ten years. Leasehold improvements are amortized on a straight-line basis over the periods covered by the applicable leases or the estimated useful life of the improvement, whichever is less. Buildings are depreciated over periods ranging from thirty to forty years. The Company periodically reviews long-lived assets for impairment whenever events or changes indicate that the carrying value of assets may not be recoverable. The components of fixed assets are as follows:
Investment Securities: The Company holds investments primarily in private companies and certain private equity funds. Certain investments, primarily investments in private equity funds, are accounted for under the equity method using a consistently applied three-month lag period adjusted for any known significant changes from the lag period to the reporting date of the Company. The underlying private equity funds follow investment company accounting, where securities within the fund are carried at fair value. The Company records its proportionate share of the change in fair value of the funds in earnings which amounted to gains of $33 million, $10 million and $32 million in 2012, 2011 and 2010, respectively. Securities recorded using the equity method are included in other assets in the consolidated balance sheets. The Company has an investment in Trident II limited partnership, a private equity investment fund. At December 31, 2012, the Company’s investment in Trident II was approximately $78 million, reflected in other assets in the consolidated balance sheet. In the first quarter of 2013, Trident II sold substantially all remaining assets and the fund will wind down. The Company expects to receive approximately $100 million in cash proceeds related to this sale in 2013. Gains or losses recognized in earnings from the investment securities, including the performance fees discussed above, are included in investment income in the consolidated statements of income. Costs related to management of the Company’s investments, including incentive compensation partially derived from investment income and (loss), are recorded in operating expenses. Goodwill and Other Intangible Assets: Goodwill represents acquisition costs in excess of the fair value of net assets acquired. Goodwill is reviewed at least annually for impairment. The Company performs an annual impairment test for each of its reporting units during the third quarter of each year. When a step 1 test is performed, fair values of the reporting units are estimated using either a market approach or a discounted cash flow model. Carrying values for the reporting units are based on balances at the prior quarter end and include directly identified assets and liabilities as well as an allocation of those assets and liabilities not recorded at the reporting unit level. As discussed in Note 6, the Company assesses qualitative factors to determine if a step 1 assessment is necessary. Other intangible assets, which primarily consist of customer lists, that are not deemed to have an indefinite life are amortized over their estimated lives and reviewed for impairment upon the occurrence of certain triggering events in accordance with applicable accounting literature. The Company had no indefinite lived identified intangible assets at December 31, 2012 or 2011. Capitalized Software Costs: The Company capitalizes certain costs to develop, purchase or modify software for the internal use of the Company. These costs are amortized on a straight-line basis over periods ranging from three to ten years. Costs incurred during the preliminary project stage and post implementation stage, are expensed as incurred. Costs incurred during the application development stage are capitalized. Costs related to updates and enhancements are only capitalized if they will result in additional functionality. Capitalized computer software costs of $278 million and $244 million, net of accumulated amortization of $691 million and $619 million at December 31, 2012 and 2011, respectively, are included in other assets in the consolidated balance sheets. Legal and Other Loss Contingencies: The Company and its subsidiaries are subject to numerous claims, lawsuits and proceedings including claims for errors and omissions ("E&O"). GAAP requires that a liability be recorded when a loss is both probable and reasonably estimable. Significant management judgement is required to apply this guidance. The Company utilizes case level reviews by inside and outside counsel, an internal actuarial analysis and other analyses to estimate potential losses. The liability is reviewed quarterly and adjusted as developments warrant. In many cases, the Company has not recorded a liability, other than for legal fees to defend the claim, because we are unable, at the present time, to make a determination that a loss is both probable and reasonably estimable. Given the unpredictability of E&O claims and of litigation that could flow from them, it is possible that an adverse outcome in a particular matter could have a material adverse effect on the Company’s businesses, results of operations, financial condition or cash flow in a given quarterly or annual period. In addition, to the extent that insurance coverage is available, significant management judgment is required to determine the amount of recoveries that are probable of collection under the Company’s various insurance programs. The legal and other contingent liabilities described above are not discounted. Income Taxes: The Company's effective tax rate reflects its income, statutory tax rates and tax planning in the various jurisdictions in which it operates. Significant judgment is required in determining the annual effective tax rate and in evaluating uncertain tax positions and the ability to realize deferred tax assets. The Company reports a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. The evaluation of a tax position is a two-step process. The first step involves recognition. The Company determines whether it is more likely than not that a tax position will be sustained upon tax examination, including resolution of any related appeals or litigation, based on only the technical merits of the position. The technical merits of a tax position derive from both statutory and judicial authority (legislation and statutes, legislative intent, regulations, rulings, and case law) and their applicability to the facts and circumstances of the tax position. If a tax position does not meet the more likely than not recognition threshold, the benefit of that position is not recognized in the financial statements. The second step is measurement. A tax position that meets the more likely than not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate resolution with a taxing authority. Uncertain tax positions are evaluated based upon the facts and circumstances that exist at each reporting period. Subsequent changes in judgment based upon new information may lead to changes in recognition, derecognition, and measurement. Adjustments may result, for example, upon resolution of an issue with the taxing authorities, or expiration of a statute of limitations barring an assessment for an issue. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense. Tax law requires items be included in the Company's tax returns at different times than the items are reflected in the financial statements. As a result, the annual tax expense reflected in the consolidated statements of income is different than that reported in the income tax returns. Some of these differences are permanent, such as expenses that are not deductible in the returns, and some differences are temporary and reverse over time, such as depreciation expense. Temporary differences create deferred tax assets and liabilities. Deferred tax assets generally represent items that can be used as a tax deduction or credit in tax returns in future years for which benefit has already been recorded in the financial statements. Valuation allowances are established for deferred tax assets when it is estimated that future taxable income will be insufficient to use a deduction or credit in that jurisdiction. Deferred tax liabilities generally represent tax expense recognized in the financial statements for which payment has been deferred, or expense for which a deduction has been taken already in the tax return but the expense has not yet been recognized in the financial statements. Derivative Instruments: All derivatives, whether designated in hedging relationships or not, are recorded on the balance sheet at fair value. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in earnings. If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative are recorded in other comprehensive income and are recognized in the income statement when the hedged item affects earnings. Changes in the fair value attributable to the ineffective portion of cash flow hedges are recognized in earnings. Concentrations of Credit Risk: Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, commissions and fees receivable and insurance recoverables. The Company maintains a policy providing for the diversification of cash and cash equivalent investments and places its investments in a large number of high quality financial institutions to limit the amount of credit risk exposure. Concentrations of credit risk with respect to receivables are generally limited due to the large number of clients and markets in which the Company does business, as well as the dispersion across many geographic areas. Per Share Data: Under the accounting guidance which applies to the calculation of earnings per share (“EPS”) for share-based payment awards with rights to dividends or dividend equivalents, unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and should be included in the computation of basic and dilutive EPS using the two-class method. Basic net income per share attributable to the Company and income from continuing operations per share are calculated by dividing the respective after-tax income attributable to common shares by the weighted average number of outstanding shares of the Company’s common stock. Diluted net income per share attributable to the Company and income from continuing operations per share are calculated by dividing the respective after-tax income attributable to common shares by the weighted average number of outstanding shares of the Company’s common stock, which have been adjusted for the dilutive effect of potentially issuable common shares (excluding those that are considered participating securities). The diluted earnings per share calculation reflects the more dilutive effect of either (a) the two-class method that assumes that the participating securities have not been exercised or (b) the treasury stock method. Reconciliation of the applicable income components used for diluted earnings per share and basic weighted average common shares outstanding to diluted weighted average common shares outstanding is presented below.
There were 32.0 million, 38.9 million and 43.4 million stock options outstanding as of December 31, 2012, 2011 and 2010, respectively. Other Significant Matters Impacting Results in Prior Periods: In June 2010, the Company settled a lawsuit brought by the Alaska Retirement Management Board (“ARMB”) against Mercer. Under the terms of the settlement agreement, Mercer paid $500 million, of which $100 million was covered by insurance, and recognized a charge of $400 million in the second quarter of 2010. Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results may vary from those estimates. New Accounting Pronouncements: In the first quarter of 2012, the Company adopted new accounting guidance related to the presentation of Comprehensive Income. The new guidance gives an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. The guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. The guidance did not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. On February 5, 2013, the FASB issued new accounting guidance that adds new disclosure requirements for items reclassified out of accumulated other comprehensive income. The Company is required to implement this new guidance for the reporting period ended March 31, 2013. Other than enhanced disclosure, the adoption of this new guidance is not expected to have a material effect on the Company's financial statements. In January 2012, the Company adopted guidance issued by the FASB on accounting and disclosure requirements related to fair value measurements. The guidance expands the disclosures on Level 3 inputs by requiring quantitative disclosure of the unobservable inputs and assumptions, as well as description of the valuation processes, the sensitivity of the fair value to changes in unobservable inputs and the hierarchy classification, valuation techniques, and inputs for assets and liabilities whose fair value is only disclosed in the footnotes. In January 2011, the Company adopted guidance issued by the FASB on revenue recognition regarding multiple-deliverable revenue arrangements. Other than enhanced disclosure, the adoption of this new guidance did not have a material effect on the Company's financial statements. In January 2011, the Company adopted guidance issued by the FASB which establishes a revenue recognition model for contingent consideration that is payable upon the achievement of an uncertain future event, referred to as a milestone. The scope of this guidance is limited to research or development arrangements and requires an entity to record the milestone payment in its entirety in the period received if the milestone meets all the necessary criteria to be considered substantive. However, entities would not be precluded from making an accounting policy election to apply another appropriate accounting policy that results in the deferral of some portion of the arrangement consideration. The adoption of this new guidance did not have a material impact on the Company’s financial statements. Reclassifications: Certain reclassifications have been made to prior period amounts to conform with current year presentation, in particular with regard to combining income taxes receivable with other receivables on the consolidated balance sheets. |
Income Taxes (Taxes on Income) (Details) (USD $)
In Millions, unless otherwise specified |
12 Months Ended | ||
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Dec. 31, 2012
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Dec. 31, 2011
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Dec. 31, 2010
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Income Tax Disclosure [Abstract] | |||
U.S., income before income taxes | $ 398 | $ 121 | $ (296) |
Other, income before income taxes | 1,298 | 1,283 | 1,065 |
Total income before imcome taxes | 1,696 | 1,404 | 769 |
U.S. Federal, current | 42 | 7 | (90) |
Other national governments, current | 336 | 289 | 249 |
U.S. state and local, current | 24 | 24 | 21 |
Total current income taxes | 402 | 320 | 180 |
U.S. Federal, deferred | (18) | 5 | (28) |
Other national governments, deferred | 89 | 90 | 50 |
U.S. state and local, deferred | 19 | 7 | 2 |
Total deferred income taxes | 90 | 102 | 24 |
Total income taxes | $ 492 | $ 422 | $ 204 |