We operate in attractive markets - both growing and mature - with a diversified platform across geographies, industries, segments and lines of business. We aim to create and become the premier advisory, broking and solutions company of choice globally. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. We also help organizations improve performance through effective people, risk and financial management, by focusing on providing human capital and financial consulting services.
The following table sets out the total revenues for the year ended December 31, 2016 and 2015 and the components of the change in total revenues for the year ended December 31, 2016:
The following table sets out the total revenues for the year ended December 31, 2015 and 2014 and the components of the change in total revenues for the year ended December 31, 2015:
Affinity - Affinity arranges the insurance products and services for our client partners to offer to their customers, employees or members alongside, or in addition to, their principal business activities.
Willis ordinary shares issuance. Approximately 184 million Willis ordinary shares (prior to the reverse stock split) were issued to Towers Watson stockholders as the Merger Consideration in connection with the Merger, based on Towers Watson shares of common stock outstanding as of January 4, 2016, at a per share price of $47.18, which was the closing share price on that date, for a total value of approximately $8.7 billion.
Shares issued for Towers Watson based on approximately 69 million Towers Watson shares outstanding at January 4, 2016.
Restructuring costs related to the BRP for the year ended December 31, 2016 by segment are as follows:
Cash flows used in investing activities of $276 million for the year ended December 31, 2014 were primarily driven by $245 million used in the acquisitions of operations and $113 million for capital expenditures, partially offset by $86 million of proceeds from the disposal of operations.
Total debt, total equity, and the capitalization ratio at December 31, 2016 and December 31, 2015 were as follows:
Claims, Lawsuits and Other Proceedings, including Stanford Financial Group Litigation - Information regarding claims, lawsuits and other proceedings, including the Stanford Financial Group litigation, and their impact on the consolidated financial statements is set forth in Item 8, Note 13 - Commitments and Contingencies to the Consolidated Financial Statements in this Annual Report on Form 10-K and is incorporated herein by reference.
These consolidated financial statements conform to U.S. GAAP, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Our estimates, judgments and assumptions are continually evaluated based on available information and experience. Because of the use of estimates inherent in the financial reporting process, actual results could differ from those estimates. The areas that we believe are critical accounting policies include valuation of billed and unbilled receivables from clients, discretionary compensation, income taxes, commitments, contingencies and accrued liabilities, pension assumptions, and goodwill and intangible assets. The critical accounting policies discussed below involve making difficult, subjective or complex accounting estimates that could have a material effect on our financial condition and results of operations. These critical accounting policies require us to make assumptions about matters that are highly uncertain at the time of the estimate or assumption. Different estimates that we could have used, or changes in estimates that are reasonably likely to occur, may have a material effect on our financial condition and results of operations.
Willis Towers Watson is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. Willis Towers Watson has more than 41,000 employees and services clients in more than 140 countries and territories. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas - the dynamic formula that drives business performance.
Commitments, Contingencies and Provisions for Liabilities - The Company establishes provisions against various actual and potential claims, lawsuits and other proceedings relating principally to alleged errors and omissions in the ordinary course of business. Such provisions cover claims that have been reported but not paid and also unasserted claims and related legal fees. These provisions are established based on actuarial estimates together with individual case reviews and are believed to be adequate in the light of current information and legal advice. In certain cases, where a range of loss exists, we accrue the minimum amount in the range if no amount within the range is a better estimate than any other amount. To the extent such losses can be recovered under the Company’s insurance programs, estimated recoveries are recorded when losses for insured events are recognized and the recoveries are likely to be realized. Significant management judgment is required to estimate the amounts of such unasserted claims and the related insurance recoveries. The Company analyzes its litigation exposure based on available information, including consultation with outside counsel handling the defense of these matters, to assess its potential liability. These contingent liabilities are not discounted. See Note 13 - Commitments and Contingencies and Note 14 - Supplementary Information for Certain Balance Sheet Accounts for additional information about our commitments, contingencies and provisions for liabilities.
The assessment outlined above was updated to reflect changes in the initial estimates of the fair values of assets and liabilities acquired as presented in the subsequent event disclosure of the fiscal year 2015 Form 10-K, including the following material changes: intangible assets decreased by $119 million; deferred tax liabilities increased by $135 million; and goodwill increased by $237 million for the residual amount of the changes. Goodwill is calculated as the difference between the aggregate merger consideration and the acquisition date fair value of the net assets acquired, and represents the value of the Legacy Towers Watson assembled workforce and the future economic benefits that we expect to achieve as a result of the Merger. None of the goodwill recognized on the transaction is tax deductible.
Deferred consideration is payable on the first and second anniversary of the acquisition. The discounted fair value of the deferred consideration at December 31, 2016 and 2015 was $4 million and $10 million, respectively. None of the goodwill recognized on the transaction is tax deductible.
The Company believes that the outcomes which are reasonably possible within the next 12 months may result in a reduction in the liability for uncertain tax positions in the range of $3 million to $6 million, excluding interest and penalties.
Amortization associated with favorable agreements is recorded in other Operating expenses in the consolidated statements of operations.
The weighted average remaining life of amortizable intangible assets and liabilities at December 31, 2016 was 14.8 years.
The carrying values of our revolving lines of credit and term loans approximate their fair values. The fair values above are not necessarily indicative of the amounts that the Company would realize upon disposition nor do they indicate the Company’s intent or ability to dispose of the financial instrument. The fair value of our senior notes are considered level 2 financial instruments as they are corroborated by observable market data.
Amounts recognized in accumulated other comprehensive loss as of December 31, 2016 and 2015 consist of:
Under the terms of the Settlement Term Sheet, the parties agreed in principle to settle and dismiss the Janvey and Troice actions (collectively, the ‘Actions’) and all current or future claims arising from or related to Stanford. If the settlement, including the bar orders described below, is approved by the Court and is not subject to further appeal, Willis North America Inc. will make a
Based on all of the information to date, and given the stage of the matter, the Company is currently unable to provide an estimate of the reasonably possible loss or range of loss. The Company disputes the allegations and intends to continue to defend the lawsuit vigorously.
The Company adopted the Willis Group Holdings 2010 North America Employee Stock Purchase Plan, which expires on May 31, 2020. These plans provide certain eligible employees in the United States and Canada with the ability to contribute payroll deductions to the purchase of Willis Towers Watson ordinary shares at the end of each offering period.