Exhibit 99.1
Item | 8. Financial Statements and Supplementary Data |
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
Aon plc
Opinion on the Financial Statements
We have audited the accompanying consolidated statement of financial position of Aon plc (the Company) as of December 31, 2019 and 2018, and the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2019 and 2018, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, and the related notes in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 14, 2020, expressed an unqualified opinion thereon.
Adoption of New Accounting Standards
As discussed in Note 2 “Summary of Significant Accounting Principles and Practices” of the Notes to the Consolidated Financial Statements, the Company changed its method of accounting for leases in 2019.
As discussed in Note 2 “Summary of Significant Accounting Principles and Practices” of the Notes to the Consolidated Financial Statements, the Company changed its method of accounting for revenue in 2018.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.
1
Realizability of Deferred Tax Assets | ||
Description of the Matter | As discussed in Note 11 “Income Taxes” of the Notes to Consolidated Financial Statements, the Company had net deferred tax assets of $446 million at December 31, 2019. Deferred tax assets are reduced by a valuation allowance if, based on the weight of all available evidence, in management’s judgment it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.
Conclusions on the realizability of the net deferred tax assets involve significant management judgment including assumptions and estimates related to the amount and timing of future taxable income. Auditing the deferred tax asset calculation and the related forecast of future taxable income was especially challenging as it involved a high degree of auditor judgment around management’s assumptions and estimates. | |
How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and operating effectiveness of internal controls that address the risks of material misstatement relating to the realizability of deferred tax assets, including controls over management’s projections of future taxable income and the related assumptions.
Among other audit procedures performed, we evaluated the assumptions used by the Company to develop projections of future taxable income by income tax jurisdiction and tested the completeness and accuracy of the underlying data used in the projections. For example, we inspected the growth rate used in the calculation, the estimates of the reversal of cumulative temporary differences by year and the capital and debt requirements by jurisdiction. We compared the projections of future taxable income with the actual results of prior periods, as well as management’s considerations of current industry and economic trends. Further, we involved tax subject matter professionals in the review of the information identified. |
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1986.
Chicago, Illinois
February 14, 2020
Except for Note 19, “Guarantee of Registered Securities”, as to which the date is April 1, 2020
2
Years ended December 31 | ||||||||||||
(millions, except per share data) | 2019 | 2018 | 2017 | |||||||||
Revenue | ||||||||||||
Total revenue | $ | 11,013 | $ | 10,770 | $ | 9,998 | ||||||
Expenses | ||||||||||||
Compensation and benefits | 6,054 | 6,103 | 6,003 | |||||||||
Information technology | 494 | 484 | 419 | |||||||||
Premises | 339 | 370 | 348 | |||||||||
Depreciation of fixed assets | 172 | 176 | 187 | |||||||||
Amortization and impairment of intangible assets | 392 | 593 | 704 | |||||||||
Other general expense | 1,393 | 1,500 | 1,272 | |||||||||
Total operating expenses | 8,844 | 9,226 | 8,933 | |||||||||
Operating income | 2,169 | 1,544 | 1,065 | |||||||||
Interest income | 8 | 5 | 27 | |||||||||
Interest expense | (307 | ) | (278 | ) | (282 | ) | ||||||
Other income (expense) | 1 | (25 | ) | (125 | ) | |||||||
Income from continuing operations before income taxes | 1,871 | 1,246 | 685 | |||||||||
Income tax expense | 297 | 146 | 250 | |||||||||
Net income from continuing operations | 1,574 | 1,100 | 435 | |||||||||
Net income (loss) from discontinued operations | (1 | ) | 74 | 828 | ||||||||
Net income | 1,573 | 1,174 | 1,263 | |||||||||
Less: Net income attributable to noncontrolling interests | 41 | 40 | 37 | |||||||||
Net income attributable to Aon shareholders | $ | 1,532 | $ | 1,134 | $ | 1,226 | ||||||
Basic net income per share attributable to Aon shareholders | ||||||||||||
Continuing operations | $ | 6.42 | $ | 4.32 | $ | 1.54 | ||||||
Discontinued operations | — | 0.30 | 3.20 | |||||||||
Net income | $ | 6.42 | $ | 4.62 | $ | 4.74 | ||||||
Diluted net income per share attributable to Aon shareholders | ||||||||||||
Continuing operations | $ | 6.37 | $ | 4.29 | $ | 1.53 | ||||||
Discontinued operations | — | 0.30 | 3.17 | |||||||||
Net income | $ | 6.37 | $ | 4.59 | $ | 4.70 | ||||||
Weighted average ordinary shares outstanding - basic | 238.6 | 245.2 | 258.5 | |||||||||
Weighted average ordinary shares outstanding - diluted | 240.6 | 247.0 | 260.7 |
Years Ended December 31 | ||||||||||||
(millions) | 2019 | 2018 | 2017 | |||||||||
Net income | $ | 1,573 | $ | 1,174 | $ | 1,263 | ||||||
Less: Net income attributable to noncontrolling interests | 41 | 40 | 37 | |||||||||
Net income attributable to Aon shareholders | 1,532 | 1,134 | 1,226 | |||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||
Change in fair value of financial instruments | 3 | 11 | 12 | |||||||||
Foreign currency translation adjustments | 14 | (444 | ) | 390 | ||||||||
Postretirement benefit obligation | (141 | ) | 17 | 19 | ||||||||
Total other comprehensive income (loss) | (124 | ) | (416 | ) | 421 | |||||||
Less: Other comprehensive income (loss) attributable to noncontrolling interests | — | (4 | ) | 5 | ||||||||
Total other comprehensive income (loss) attributable to Aon shareholders | (124 | ) | (412 | ) | 416 | |||||||
Comprehensive income attributable to Aon shareholders | $ | 1,408 | $ | 722 | $ | 1,642 |
As of December 31 | ||||||||
(millions, except nominal value) | 2019 | 2018 | ||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 790 | $ | 656 | ||||
Short-term investments | 138 | 172 | ||||||
Receivables, net | 3,112 | 2,760 | ||||||
Fiduciary assets | 11,834 | 10,166 | ||||||
Other current assets | 602 | 618 | ||||||
Total current assets | 16,476 | 14,372 | ||||||
Goodwill | 8,165 | 8,171 | ||||||
Intangible assets, net | 783 | 1,149 | ||||||
Fixed assets, net | 621 | 588 | ||||||
Operating lease right-of-use assets | 929 | — | ||||||
Deferred tax assets | 645 | 561 | ||||||
Prepaid pension | 1,216 | 1,133 | ||||||
Other non-current assets | 570 | 448 | ||||||
Total assets | $ | 29,405 | $ | 26,422 | ||||
Liabilities and equity | ||||||||
Liabilities | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | $ | 1,939 | $ | 1,943 | ||||
Short-term debt and current portion of long-term debt | 712 | 251 | ||||||
Fiduciary liabilities | 11,834 | 10,166 | ||||||
Other current liabilities | 1,086 | 936 | ||||||
Total current liabilities | 15,571 | 13,296 | ||||||
Long-term debt | 6,627 | 5,993 | ||||||
Non-current operating lease liabilities | 944 | — | ||||||
Deferred tax liabilities | 199 | 181 | ||||||
Pension, other postretirement, and postemployment liabilities | 1,738 | 1,636 | ||||||
Other non-current liabilities | 877 | 1,097 | ||||||
Total liabilities | 25,956 | 22,203 | ||||||
Equity | ||||||||
Ordinary shares - $0.01 nominal value Authorized: 750 shares (issued: 2019 - 232.1; 2018 - 240.1) | 2 | 2 | ||||||
Additional paid-in capital | 6,152 | 5,965 | ||||||
Retained earnings | 1,254 | 2,093 | ||||||
Accumulated other comprehensive loss | (4,033 | ) | (3,909 | ) | ||||
Total Aon shareholders' equity | 3,375 | 4,151 | ||||||
Noncontrolling interests | 74 | 68 | ||||||
Total equity | 3,449 | 4,219 | ||||||
Total liabilities and equity | $ | 29,405 | $ | 26,422 |
(millions, except per share data) | Shares | Ordinary Shares and Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss, Net of Tax | Non-controlling Interests | Total | |||||||||||||||||
Balance at January 1, 2017 | 262.0 | $ | 5,580 | $ | 3,856 | $ | (3,912 | ) | $ | 57 | $ | 5,581 | |||||||||||
Net income | — | — | 1,226 | — | 37 | 1,263 | |||||||||||||||||
Shares issued — employee stock compensation plans | 3.6 | (120 | ) | (1 | ) | — | — | (121 | ) | ||||||||||||||
Shares purchased | (18.0 | ) | — | (2,415 | ) | — | — | (2,415 | ) | ||||||||||||||
Share-based compensation expense | — | 321 | — | — | — | 321 | |||||||||||||||||
Dividends to shareholders ($1.41 per share) | — | — | (364 | ) | — | — | (364 | ) | |||||||||||||||
Net change in fair value of financial instruments | — | — | — | 12 | — | 12 | |||||||||||||||||
Net foreign currency translation adjustments | — | — | — | 385 | 5 | 390 | |||||||||||||||||
Net postretirement benefit obligation | — | — | — | 19 | — | 19 | |||||||||||||||||
Net purchases of shares from noncontrolling interests | — | (4 | ) | — | — | (7 | ) | (11 | ) | ||||||||||||||
Dividends paid to noncontrolling interests on subsidiary common stock | — | — | — | — | (27 | ) | (27 | ) | |||||||||||||||
Balance at December 31, 2017 | 247.6 | 5,777 | 2,302 | (3,496 | ) | 65 | 4,648 | ||||||||||||||||
Adoption of new accounting guidance | — | — | 493 | (1 | ) | — | 492 | ||||||||||||||||
Balance at January 1, 2018 | 247.6 | 5,777 | 2,795 | (3,497 | ) | 65 | 5,140 | ||||||||||||||||
Net income | — | — | 1,134 | — | 40 | 1,174 | |||||||||||||||||
Shares issued — employee stock compensation plans | 2.5 | (148 | ) | — | — | — | (148 | ) | |||||||||||||||
Shares purchased | (10.0 | ) | — | (1,454 | ) | — | — | (1,454 | ) | ||||||||||||||
Share-based compensation expense | — | 338 | — | — | — | 338 | |||||||||||||||||
Dividends to shareholders ($1.56 per share) | — | — | (382 | ) | — | — | (382 | ) | |||||||||||||||
Net change in fair value of financial instruments | — | — | — | 11 | — | 11 | |||||||||||||||||
Net foreign currency translation adjustments | — | — | — | (440 | ) | (4 | ) | (444 | ) | ||||||||||||||
Net postretirement benefit obligation | — | — | — | 17 | — | 17 | |||||||||||||||||
Net purchases of shares from noncontrolling interests | — | — | — | — | (1 | ) | (1 | ) | |||||||||||||||
Dividends paid to noncontrolling interests on subsidiary common stock | — | — | — | (32 | ) | (32 | ) | ||||||||||||||||
Balance at December 31, 2018 | 240.1 | 5,967 | 2,093 | (3,909 | ) | 68 | 4,219 | ||||||||||||||||
Net income | — | — | 1,532 | — | 41 | 1,573 | |||||||||||||||||
Shares issued — employee stock compensation plans | 2.5 | (130 | ) | (1 | ) | — | — | (131 | ) | ||||||||||||||
Shares purchased | (10.5 | ) | — | (1,960 | ) | — | — | (1,960 | ) | ||||||||||||||
Share-based compensation expense | — | 317 | — | — | — | 317 | |||||||||||||||||
Dividends to shareholders ($1.72 per share) | — | — | (410 | ) | — | — | (410 | ) | |||||||||||||||
Net change in fair value of financial instruments | — | — | — | 3 | — | 3 | |||||||||||||||||
Net foreign currency translation adjustments | — | — | — | 14 | — | 14 | |||||||||||||||||
Net postretirement benefit obligation | — | — | — | (141 | ) | — | (141 | ) | |||||||||||||||
Dividends paid to noncontrolling interests on subsidiary common stock | — | — | — | (35 | ) | (35 | ) | ||||||||||||||||
Balance at December 31, 2019 | 232.1 | $ | 6,154 | $ | 1,254 | $ | (4,033 | ) | $ | 74 | $ | 3,449 |
Years ended December 31 | ||||||||||||
(millions) | 2019 | 2018 | 2017 | |||||||||
Cash flows from operating activities | ||||||||||||
Net income | $ | 1,573 | $ | 1,174 | $ | 1,263 | ||||||
Less: Income from discontinued operations, net of income taxes | (1 | ) | 74 | 828 | ||||||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||||||
Loss (gain) from sales of businesses and investments, net | (13 | ) | 6 | 16 | ||||||||
Depreciation of fixed assets | 172 | 176 | 187 | |||||||||
Amortization and impairment of intangible assets | 392 | 593 | 704 | |||||||||
Share-based compensation expense | 317 | 338 | 319 | |||||||||
Deferred income taxes | (36 | ) | (225 | ) | (18 | ) | ||||||
Change in assets and liabilities: | ||||||||||||
Fiduciary receivables | (409 | ) | (679 | ) | 171 | |||||||
Short-term investments — funds held on behalf of clients | (1,246 | ) | (320 | ) | (135 | ) | ||||||
Fiduciary liabilities | 1,655 | 999 | (36 | ) | ||||||||
Receivables, net | (371 | ) | (127 | ) | (254 | ) | ||||||
Accounts payable and accrued liabilities | (28 | ) | 25 | 96 | ||||||||
Restructuring reserves | 3 | 23 | 172 | |||||||||
Current income taxes | (20 | ) | 34 | (914 | ) | |||||||
Pension, other postretirement and postemployment liabilities | (156 | ) | (259 | ) | (66 | ) | ||||||
Other assets and liabilities | 1 | 2 | (8 | ) | ||||||||
Cash provided by operating activities - continuing operations | 1,835 | 1,686 | 669 | |||||||||
Cash provided by operating activities - discontinued operations | — | — | 65 | |||||||||
Cash provided by operating activities | 1,835 | 1,686 | 734 | |||||||||
Cash flows from investing activities | ||||||||||||
Proceeds from investments | 61 | 71 | 68 | |||||||||
Payments for investments | (113 | ) | (80 | ) | (64 | ) | ||||||
Net sales (purchases) of short-term investments — non-fiduciary | 35 | 348 | (232 | ) | ||||||||
Acquisition of businesses, net of cash acquired | (39 | ) | (58 | ) | (1,029 | ) | ||||||
Sale of businesses, net of cash sold | 52 | (10 | ) | 4,246 | ||||||||
Capital expenditures | (225 | ) | (240 | ) | (183 | ) | ||||||
Cash provided by (used for) investing activities - continuing operations | (229 | ) | 31 | 2,806 | ||||||||
Cash used for investing activities - discontinued operations | — | — | (19 | ) | ||||||||
Cash provided by (used for) investing activities | (229 | ) | 31 | 2,787 | ||||||||
Cash flows from financing activities | ||||||||||||
Share repurchase | (1,960 | ) | (1,470 | ) | (2,399 | ) | ||||||
Issuance of shares for employee benefit plans | (131 | ) | (149 | ) | (121 | ) | ||||||
Issuance of debt | 6,052 | 5,754 | 1,654 | |||||||||
Repayment of debt | (4,941 | ) | (5,417 | ) | (1,999 | ) | ||||||
Cash dividends to shareholders | (410 | ) | (382 | ) | (364 | ) | ||||||
Noncontrolling interests and other financing activities | (103 | ) | (35 | ) | (36 | ) | ||||||
Cash used for financing activities - continuing operations | (1,493 | ) | (1,699 | ) | (3,265 | ) | ||||||
Cash used for financing activities - discontinued operations | — | — | — | |||||||||
Cash used for financing activities | (1,493 | ) | (1,699 | ) | (3,265 | ) | ||||||
Effect of exchange rates on cash and cash equivalents | 21 | (118 | ) | 69 | ||||||||
Net increase (decrease) in cash and cash equivalents | 134 | (100 | ) | 325 | ||||||||
Cash and cash equivalents at beginning of period | 656 | 756 | 431 | |||||||||
Cash and cash equivalents at end of period | $ | 790 | $ | 656 | $ | 756 | ||||||
Supplemental disclosures: | ||||||||||||
Interest paid | $ | 289 | $ | 266 | $ | 272 | ||||||
Income taxes paid, net of refunds | $ | 353 | $ | 337 | $ | 1,182 |
Asset Description | Estimated Useful Life | |
Software | Lesser of the life of an associated license, or 4 to 7 years | |
Leasehold improvements | Lesser of estimated useful life or lease term, not to exceed 10 years | |
Furniture, fixtures and equipment | 4 to 10 years | |
Computer equipment | 4 to 6 years | |
Buildings | 35 years | |
Automobiles | 6 years |
Intangible Asset Description | Amortization Basis | Estimated Useful Life | ||
Tradenames | Straight-line | 1 to 3 years | ||
Customer-related and contract-based | In line with underlying cash flows | 7 to 20 years | ||
Technology and other | Straight-line | 5 to 7 years |
December 31, 2018 | January 1, 2019 | ||||||||||
As Reported | Adjustments | As Adjusted | |||||||||
Assets | |||||||||||
Operating lease right-of-use assets | $ | — | $ | 1,021 | $ | 1,021 | |||||
Other non-current assets | $ | 448 | $ | 78 | $ | 526 | |||||
Liabilities | |||||||||||
Other current liabilities | $ | 936 | $ | 219 | $ | 1,155 | |||||
Non-current operating lease liabilities | $ | — | $ | 1,014 | $ | 1,014 | |||||
Other non-current liabilities | $ | 1,097 | $ | (134 | ) | $ | 963 |
• | The Company previously recognized revenue either at a point in time or over a period of time based on the transfer of value to customers or as the remuneration became determinable. Under ASC 606, the revenue related to certain brokerage services recognized over a period of time is recognized on the effective date of the associated policies when control of the policy transfers to the customer. This change resulted in a significant shift in timing of interim revenue for the Reinsurance Solutions revenue line and, to a lesser extent, certain other brokerage services. |
• | The Standard provides guidance on accounting for certain revenue-related costs including when to capitalize costs associated with obtaining and fulfilling a contract. The majority of these costs were previously expensed as incurred under ASC 605. Assets recognized for the costs to obtain a contract, which includes certain sales commissions, are amortized on a systematic basis that is consistent with the transfer of the services to which the asset relates, considering anticipated renewals when applicable. Assets recognized as costs to fulfill a contract, which includes internal costs related to pre-placement broking activities, as well as other costs, are amortized on a systematic basis that is consistent with the transfer of the services to which the asset relates, which is generally less than one year. |
Years ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Commercial Risk Solutions | $ | 4,673 | $ | 4,652 | $ | 4,169 | ||||||
Reinsurance Solutions | 1,686 | 1,563 | 1,429 | |||||||||
Retirement Solutions | 1,817 | 1,865 | 1,755 | |||||||||
Health Solutions | 1,667 | 1,596 | 1,515 | |||||||||
Data & Analytic Services | 1,184 | 1,105 | 1,140 | |||||||||
Elimination | (14 | ) | (11 | ) | (10 | ) | ||||||
Total revenue | $ | 11,013 | $ | 10,770 | $ | 9,998 |
Years ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
United States | $ | 5,016 | $ | 4,677 | $ | 4,425 | ||||||
Americas other than United States | 919 | 940 | 976 | |||||||||
United Kingdom | 1,502 | 1,555 | 1,436 | |||||||||
Europe, Middle East, & Africa other than United Kingdom | 2,338 | 2,413 | 2,025 | |||||||||
Asia Pacific | 1,238 | 1,185 | 1,136 | |||||||||
Total revenue | $ | 11,013 | $ | 10,770 | $ | 9,998 |
2019 | 2018 | |||||||
Balance at beginning of period | $ | 329 | $ | 298 | ||||
Additions | 1,453 | 1,504 | ||||||
Amortization | (1,447 | ) | (1,465 | ) | ||||
Impairment | — | — | ||||||
Foreign currency translation and other | — | (8 | ) | |||||
Balance at end of period | $ | 335 | $ | 329 |
2019 | 2018 | |||||||
Balance at beginning of period | $ | 156 | $ | 145 | ||||
Additions | 58 | 53 | ||||||
Amortization | (44 | ) | (41 | ) | ||||
Impairment | — | — | ||||||
Foreign currency translation and other | 1 | (1 | ) | |||||
Balance at end of period | $ | 171 | $ | 156 |
Years ended December 31 | |||||||||||
2019 | 2018 | 2017 | |||||||||
Foreign currency remeasurement | $ | 9 | $ | 25 | $ | (37 | ) | ||||
Disposal of businesses | 13 | (6 | ) | (16 | ) | ||||||
Pension and other postretirement | 9 | 1 | (86 | ) | |||||||
Equity earnings | 4 | 4 | 12 | ||||||||
Financial instruments | (34 | ) | (49 | ) | 2 | ||||||
Total | $ | 1 | $ | (25 | ) | $ | (125 | ) |
2019 | 2018 | 2017 | |||||||||
Balance at beginning of period | $ | 62 | $ | 59 | $ | 56 | |||||
Provision | 27 | 24 | 18 | ||||||||
Accounts written off, net of recoveries | (19 | ) | (25 | ) | (18 | ) | |||||
Foreign currency translation and other | — | 4 | 3 | ||||||||
Balance at end of period | $ | 70 | $ | 62 | $ | 59 |
As of December 31 | 2019 | 2018 | |||||
Costs to fulfill contracts with customers | $ | 335 | $ | 329 | |||
Taxes receivable | 88 | 113 | |||||
Prepaid expenses | 97 | 97 | |||||
Receivables from the Divested Business (1) | 4 | 12 | |||||
Other | 78 | 67 | |||||
Total | $ | 602 | $ | 618 |
(1) | Refer to Note 5 “Discontinued Operations” for further information. |
As of December 31 | 2019 | 2018 | |||||
Software | $ | 727 | $ | 693 | |||
Leasehold improvements | 358 | 334 | |||||
Computer equipment | 250 | 279 | |||||
Furniture, fixtures and equipment | 225 | 228 | |||||
Construction in progress | 183 | 154 | |||||
Other | 37 | 45 | |||||
Fixed assets, gross | 1,780 | 1,733 | |||||
Less: Accumulated depreciation | 1,159 | 1,145 | |||||
Fixed assets, net | $ | 621 | $ | 588 |
As of December 31 | 2019 | 2018 | |||||
Costs to obtain contracts with customers | $ | 171 | $ | 156 | |||
Investments | 53 | 54 | |||||
Leases (1) | 100 | — | |||||
Taxes receivable | 102 | 100 | |||||
Other | 144 | 138 | |||||
Total | $ | 570 | $ | 448 |
(1) | In the first quarter of 2019, Aon adopted new accounting guidance related to the treatment of leases which was applied under the modified retrospective approach. The Other non-current asset balances related to leasing under the legacy accounting standard are reflected in Other as reported in December 31, 2018. Refer to Note 2 “Summary of Significant Accounting Principles and Practices” for further information. |
As of December 31 | 2019 | 2018 | |||||
Deferred revenue (1) | $ | 270 | $ | 251 | |||
Taxes payable | 93 | 83 | |||||
Leases (2) | 210 | — | |||||
Other | 513 | 602 | |||||
Total | $ | 1,086 | $ | 936 |
(1) | $532 million and $487 million was recognized in the Consolidated Statements of Income during the twelve months ended December 31, 2019 and December 31, 2018, respectively. |
(2) | In the first quarter of 2019, Aon adopted new accounting guidance related to the treatment of leases which was applied under the modified retrospective approach. The Other current liability balances related to leasing under the legacy accounting standard are reflected in Other as reported in December 31, 2018. Refer to Note 2 “Summary of Significant Accounting Principles and Practices” for further information. |
As of December 31 | 2019 | 2018 | |||||
Taxes payable (1) | $ | 525 | $ | 585 | |||
Leases (2) | 76 | 169 | |||||
Compensation and benefits | 49 | 56 | |||||
Deferred revenue | 62 | 65 | |||||
Other | 165 | 222 | |||||
Total | $ | 877 | $ | 1,097 |
(1) | Includes $145 million and $240 million for the non-current portion of the Transition Tax, as of December 31, 2019 and December 31, 2018, respectively. Refer to Note 11 “Income Taxes” for further information on the Transition Tax. |
(2) | In the first quarter of 2019, Aon adopted new accounting guidance related to the treatment of leases which was applied under the modified retrospective approach. The comparable period presented reflects balances under the legacy accounting standard. Refer to Note 2 “Summary of Significant Accounting Principles and Practices” for further information. |
Years ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Revenue | ||||||||||||
Total revenue | $ | — | $ | — | $ | 698 | ||||||
Expenses | ||||||||||||
Total operating expenses | 2 | 12 | 656 | |||||||||
Operating income from discontinued operations | (2 | ) | (12 | ) | 42 | |||||||
Other income | — | — | 10 | |||||||||
Income (loss) from discontinued operations before income taxes | (2 | ) | (12 | ) | 52 | |||||||
Income tax expense (benefit) | (1 | ) | (4 | ) | 3 | |||||||
Net income (loss) from discontinued operations, excluding gain | (1 | ) | (8 | ) | 49 | |||||||
Gain on sale of discontinued operations, net of tax | — | 82 | 779 | |||||||||
Net income (loss) from discontinued operations | $ | (1 | ) | $ | 74 | $ | 828 |
2019 | 2018 | 2017 | Completed Plan Total | |||||||||||||
Workforce reduction | $ | 205 | $ | 115 | $ | 299 | $ | 619 | ||||||||
Technology rationalization (1) | 39 | 47 | 33 | 119 | ||||||||||||
Lease consolidation (1) | 33 | 28 | 8 | 69 | ||||||||||||
Asset impairments | 14 | 13 | 26 | 53 | ||||||||||||
Other costs associated with restructuring and separation (1) (2) | 160 | 282 | 131 | 573 | ||||||||||||
Total restructuring and related expenses | $ | 451 | $ | 485 | $ | 497 | $ | 1,433 |
(1) | Total contract termination costs incurred under the Restructuring Plan associated with technology rationalizations, lease consolidations, and other costs associated with restructuring and separation for the twelve months ended December 31, 2019 were $0 million, $33 million, and $13 million, respectively; for the twelve months ended December 31, 2018 were $5 million, $25 million, and $85 million, respectively; and for the twelve months ended December 31, 2017 were $1 million, $8 million, and $3 million, respectively. |
(2) | Other costs associated with the Restructuring Plan include those to separate the Divested Business, as well as moving costs, and consulting and legal fees. These costs are typically recognized when incurred. |
Restructuring Plan | ||||
Balance at December 31, 2018 | $ | 201 | ||
Expensed | 418 | |||
Cash payments | (415 | ) | ||
Foreign currency translation and other | — | |||
Balance at December 31, 2019 | $ | 204 |
For the year ended December 31, 2019 | |||
Consideration transferred | |||
Cash | $ | 42 | |
Deferred and contingent consideration | 8 | ||
Aggregate consideration transferred | $ | 50 | |
Assets acquired | |||
Cash and cash equivalents | $ | 4 | |
Receivables, net | — | ||
Goodwill | 34 | ||
Intangible assets, net | 22 | ||
Fixed assets, net | 1 | ||
Other assets | 13 | ||
Total assets acquired | 74 | ||
Liabilities assumed | |||
Current liabilities | 18 | ||
Other non-current liabilities | 6 | ||
Total liabilities assumed | 24 | ||
Net assets acquired | $ | 50 |
Balance as of January 1, 2018 | $ | 8,358 | |
Goodwill related to current year acquisitions | 38 | ||
Goodwill related to disposals | (2 | ) | |
Goodwill related to prior year acquisitions | 4 | ||
Foreign currency translation | (227 | ) | |
Balance as of December 31, 2018 | $ | 8,171 | |
Goodwill related to current year acquisitions | 34 | ||
Goodwill related to disposals | (11 | ) | |
Goodwill related to prior year acquisitions | 2 | ||
Foreign currency translation | (31 | ) | |
Balance as of December 31, 2019 | $ | 8,165 |
As of December 31 | |||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization and Impairment | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization and Impairment | Net Carrying Amount | ||||||||||||||||||
Customer-related and contract-based | $ | 2,264 | $ | 1,600 | $ | 664 | $ | 2,240 | $ | 1,444 | $ | 796 | |||||||||||
Tradenames | 1,029 | 956 | 73 | 1,027 | 740 | 287 | |||||||||||||||||
Technology and other | 380 | 334 | 46 | 391 | 325 | 66 | |||||||||||||||||
Total | $ | 3,673 | $ | 2,890 | $ | 783 | $ | 3,658 | $ | 2,509 | $ | 1,149 |
Estimated Future Amortization | ||||
For the years ended | ||||
2020 | $ | 223 | ||
2021 | 127 | |||
2022 | 86 | |||
2023 | 76 | |||
2024 | 59 | |||
Thereafter | 212 | |||
Total | $ | 783 |
As of December 31 | 2019 | 2018 | |||||
Commercial paper | $ | 112 | $ | 250 | |||
5.00% Senior Notes due September 2020 | 600 | 599 | |||||
2.80% Senior Notes due March 2021 | 399 | 398 | |||||
2.20% Senior Notes due November 2022 | 497 | — | |||||
4.00% Senior Notes due November 2023 | 348 | 348 | |||||
3.50% Senior Notes due June 2024 | 597 | 596 | |||||
3.875% Senior Notes due December 2025 | 746 | 746 | |||||
2.875% Senior Notes due May 2026 (EUR 500M) | 550 | 562 | |||||
8.205% Junior Subordinated Notes due January 2027 | 521 | 521 | |||||
4.50% Senior Notes due December 2028 | 346 | 347 | |||||
3.75% Senior Notes due May 2029 | 744 | — | |||||
6.25% Senior Notes due September 2040 | 296 | 296 | |||||
4.25% Senior Notes due December 2042 | 199 | 198 | |||||
4.45% Senior Notes due May 2043 | 246 | 246 | |||||
4.60% Senior Notes due June 2044 | 544 | 544 | |||||
4.75% Senior Notes due May 2045 | 593 | 592 | |||||
Other | 1 | 1 | |||||
Total debt | 7,339 | 6,244 | |||||
Less: Short-term debt and current portion of long-term debt | 712 | 251 | |||||
Total long-term debt | $ | 6,627 | $ | 5,993 |
2020 | $ | 712 | |
2021 | 400 | ||
2022 | 500 | ||
2023 | 350 | ||
2024 | 600 | ||
Thereafter | 4,882 | ||
Total Repayments | 7,444 | ||
Unamortized discounts, premiums, and debt issuance costs | (105 | ) | |
Total Debt | $ | 7,339 |
As of December 31 | 2019 | 2018 | ||||||
Commercial paper outstanding | $ | 112 | $ | 250 |
Years ended December 31 | 2019 | 2018 | ||||||
Weighted average commercial paper outstanding | $ | 511 | $ | 580 | ||||
Weighted average interest rate of commercial paper outstanding | 0.27 | % | 0.84 | % |
As of | December 31, 2019 | |||
Assets | ||||
Operating lease assets | Operating lease right-of-use assets | $ | 929 | |
Finance lease assets | Other non-current assets | 100 | ||
Total lease assets | $ | 1,029 | ||
Liabilities | ||||
Current lease liabilities | ||||
Operating | Other current liabilities | $ | 186 | |
Finance | Other current liabilities | 24 | ||
Non-current lease liabilities | ||||
Operating | Non-current operating lease liabilities | 944 | ||
Finance | Other non-current liabilities | 76 | ||
Total lease liabilities | $ | 1,230 |
Year Ended December 31, 2019 | |||
Operating lease cost | $ | 234 | |
Finance lease costs | |||
Amortization of leased assets | 26 | ||
Interest on lease liabilities | 2 | ||
Variable lease cost | 60 | ||
Short-term lease cost (1) | 5 | ||
Sublease income | (32 | ) | |
Net lease cost | $ | 295 |
As of | December 31, 2019 | |
Weighted average remaining lease term (years) | ||
Operating leases | 7.9 | |
Finance leases | 4.4 | |
Weighted average discount rate | ||
Operating leases | 3.2 | % |
Finance leases | 2.0 | % |
Year Ended December 31, 2019 | |||
Cash paid for amounts included in the measurement of lease liabilities | |||
Operating cash flows for operating leases | $ | 264 | |
Financing cash flows for finance leases | $ | 17 | |
Non-cash related activities | |||
ROU assets obtained in exchange for new operating lease liabilities | $ | 155 | |
ROU assets obtained in exchange for new finance lease liabilities | $ | 48 | |
Operating lease ROU asset expense (1) | $ | 195 | |
Changes in Non-current operating lease liabilities (1) | $ | (70 | ) |
(1) | The Company has recorded non-cash changes in Operating lease ROU assets and Non-current operating lease liabilities through Other assets and liabilities in Cash flows from operations within the Consolidated Statement of Cash Flows. |
Operating Leases | Finance Leases | Total | |||||||||
2020 | $ | 208 | $ | 26 | $ | 234 | |||||
2021 | 202 | 26 | 228 | ||||||||
2022 | 177 | 20 | 197 | ||||||||
2023 | 141 | 18 | 159 | ||||||||
2024 | 113 | 15 | 128 | ||||||||
Thereafter | 432 | — | 432 | ||||||||
Total undiscounted future minimum lease payments | 1,273 | 105 | 1,378 | ||||||||
Less: Imputed interest | (143 | ) | (5 | ) | (148 | ) | |||||
Present value of lease liabilities | $ | 1,130 | $ | 100 | $ | 1,230 |
Gross rental commitments | Rentals from subleases | Net rental commitments | |||||||||
2019 | $ | 303 | $ | (34 | ) | $ | 269 | ||||
2020 | 253 | (30 | ) | 223 | |||||||
2021 | 221 | (30 | ) | 191 | |||||||
2022 | 182 | (30 | ) | 152 | |||||||
2023 | 148 | (12 | ) | 136 | |||||||
Thereafter | 472 | (5 | ) | 467 | |||||||
Total minimum payments required | $ | 1,579 | $ | (141 | ) | $ | 1,438 |
Years ended December 31 | 2019 | 2018 | 2017 | ||||||||
Income before income taxes: | |||||||||||
U.K. | $ | 228 | $ | (240 | ) | $ | (420 | ) | |||
U.S. | (219 | ) | (601 | ) | (765 | ) | |||||
Other | 1,862 | 2,087 | 1,870 | ||||||||
Total | $ | 1,871 | $ | 1,246 | $ | 685 | |||||
Income tax expense (benefit): | |||||||||||
Current: | |||||||||||
U.K. | $ | 20 | $ | 21 | $ | 1 | |||||
U.S. federal | 22 | 101 | 48 | ||||||||
U.S. state and local | 41 | 35 | 18 | ||||||||
Other | 250 | 214 | 201 | ||||||||
Total current tax expense | $ | 333 | $ | 371 | $ | 268 | |||||
Deferred tax expense (benefit): | |||||||||||
U.K. | $ | 35 | $ | 19 | $ | (5 | ) | ||||
U.S. federal | (20 | ) | (165 | ) | 12 | ||||||
U.S. state and local | (27 | ) | (56 | ) | (35 | ) | |||||
Other | (24 | ) | (23 | ) | 10 | ||||||
Total deferred tax benefit | $ | (36 | ) | $ | (225 | ) | $ | (18 | ) | ||
Total income tax expense | $ | 297 | $ | 146 | $ | 250 |
Years ended December 31 | 2019 | 2018 | 2017 | ||
Statutory tax rate | 19.0% | 19.0% | 19.3% | ||
U.S. state income taxes, net of U.S. federal benefit | 0.5 | (0.4) | (1.5) | ||
Taxes on international operations (1) | (6.0) | (7.3) | (30.3) | ||
Nondeductible expenses | 1.6 | 2.7 | 3.4 | ||
Adjustments to prior year tax requirements | 0.1 | 0.9 | 2.0 | ||
Adjustments to valuation allowances | 1.8 | 3.8 | (1.8) | ||
Change in uncertain tax positions | 2.2 | 0.9 | 1.6 | ||
Excess tax benefits related to shared based compensation (2) | (2.8) | (3.6) | (8.0) | ||
U.S. Tax Reform impact (3) | (0.3) | 7.1 | 51.2 | ||
Loss on disposition | — | (10.2) | — | ||
Other — net | (0.2) | (1.2) | 0.6 | ||
Effective tax rate | 15.9% | 11.7% | 36.5% |
(1) | The Company determines the adjustment for taxes on international operations based on the difference between the statutory tax rate applicable to earnings in each foreign jurisdiction and the enacted rate of 19.0%, 19.0% and 19.3% at December 31, 2019, 2018, and 2017, respectively. The benefit to the Company’s effective income tax rate from taxes on international operations relates to benefits from lower-taxed global operations, primarily due to the use of global funding structures and the tax holiday in Singapore. The impact decreased from 2017 to 2018 primarily as a result of the decrease in the U.S. federal tax rate. |
(2) | With the adoption of ASU 2016-09 in 2017, excess tax benefits and deficiencies from share-based payment transactions are recognized as income tax expense or benefit in the Company’s Consolidated Statements of Income. |
(3) | The impact of the Tax Reform Act including the Transition Tax, the re-measurement of U.S. deferred tax assets and liabilities from 35% to 21%, withholding tax accruals, and the allocation of tax benefit between continuing operations and discontinued operations related to utilization of foreign tax credits. |
As of December 31 | 2019 | 2018 | |||||
Deferred tax assets: | |||||||
Net operating loss, capital loss, interest, and tax credit carryforwards | $ | 440 | $ | 563 | |||
Employee benefit plans | 373 | 351 | |||||
Lease liabilities | 247 | — | |||||
Accrued interest | 116 | — | |||||
Other accrued expenses | 68 | 98 | |||||
Investment basis differences | 28 | 28 | |||||
Deferred revenue | 24 | 29 | |||||
Lease and service guarantees | 3 | 5 | |||||
Other | 57 | 46 | |||||
Total | 1,356 | 1,120 | |||||
Valuation allowance on deferred tax assets | (200 | ) | (171 | ) | |||
Total | $ | 1,156 | $ | 949 | |||
Deferred tax liabilities: | |||||||
Intangibles and property, plant and equipment | $ | (251 | ) | $ | (310 | ) | |
Lease right-of-use asset | (219 | ) | — | ||||
Deferred costs | (128 | ) | (143 | ) | |||
Unremitted earnings | (28 | ) | (30 | ) | |||
Unrealized foreign exchange gains | (26 | ) | (26 | ) | |||
Other accrued expenses | (25 | ) | (36 | ) | |||
Other | (33 | ) | (24 | ) | |||
Total | $ | (710 | ) | $ | (569 | ) | |
Net deferred tax asset | $ | 446 | $ | 380 |
As of December 31 | 2019 | 2018 | |||||
Deferred tax assets — non-current | $ | 645 | $ | 561 | |||
Deferred tax liabilities — non-current | (199 | ) | (181 | ) | |||
Net deferred tax asset | $ | 446 | $ | 380 |
As of December 31 | 2019 | 2018 | |||||
U.K. | |||||||
Operating loss carryforwards | $ | 438 | $ | 541 | |||
Capital loss carryforwards | $ | 411 | $ | 400 | |||
Interest carryforwards | $ | 203 | $ | 53 | |||
U.S. | |||||||
Federal operating loss carryforwards | $ | 1 | $ | 2 | |||
Federal capital loss carryforwards | $ | 112 | $ | 367 | |||
Federal interest carryforwards | $ | 355 | $ | 424 | |||
State operating loss carryforwards | $ | 376 | $ | 315 | |||
State capital loss carryforwards | $ | 123 | $ | 221 | |||
State interest carryforwards | $ | 172 | $ | 227 | |||
Other Non-U.S. | |||||||
Operating loss carryforwards | $ | 308 | $ | 369 | |||
Capital loss carryforwards | $ | 29 | $ | 30 | |||
Interest carryforwards | $ | 159 | $ | 186 |
2019 | 2018 | ||||||
Balance at January 1 | $ | 279 | $ | 280 | |||
Additions based on tax positions related to the current year | 23 | 18 | |||||
Additions for tax positions of prior years | 12 | 10 | |||||
Reductions for tax positions of prior years | (5 | ) | (24 | ) | |||
Settlements | (5 | ) | — | ||||
Business combinations | — | 1 | |||||
Lapse of statute of limitations | (5 | ) | (6 | ) | |||
Foreign currency translation | — | — | |||||
Balance at December 31 | $ | 299 | $ | 279 |
Twelve months ended December 31 | ||||||||
2019 | 2018 | |||||||
Shares repurchased | 10.5 | 10.0 | ||||||
Average price per share | $ | 186.33 | $ | 143.94 | ||||
Costs recorded to retained earnings | ||||||||
Total repurchase cost | $ | 1,950 | $ | 1,447 | ||||
Additional associated costs | 10 | 7 | ||||||
Total costs recorded to retained earnings | $ | 1,960 | $ | 1,454 |
Years ended December 31 | 2019 | 2018 | 2017 | |||||
Basic weighted average ordinary shares outstanding | 238.6 | 245.2 | 258.5 | |||||
Dilutive effect of potentially issuable shares | 2.0 | 1.8 | 2.2 | |||||
Diluted weighted average ordinary shares outstanding | 240.6 | 247.0 | 260.7 |
Change in Fair Value of Financial Instruments (1) | Foreign Currency Translation Adjustments | Postretirement Benefit Obligation (2) | Total | ||||||||||||
Balance at January 1, 2017 | $ | (37 | ) | $ | (1,264 | ) | $ | (2,611 | ) | $ | (3,912 | ) | |||
Other comprehensive income (loss) before reclassifications | |||||||||||||||
Other comprehensive income (loss) before reclassifications | 18 | 397 | (220 | ) | 195 | ||||||||||
Tax benefit (expense) | (3 | ) | (5 | ) | 55 | 47 | |||||||||
Other comprehensive income (loss) before reclassifications, net | 15 | 392 | (165 | ) | 242 | ||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | |||||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | (2 | ) | (7 | ) | 236 | 227 | |||||||||
Tax benefit (expense) | (1 | ) | — | (52 | ) | (53 | ) | ||||||||
Amounts reclassified from accumulated other comprehensive income (loss), net | (3 | ) | (7 | ) | 184 | 174 | |||||||||
Net current period other comprehensive income (loss) | 12 | 385 | 19 | 416 | |||||||||||
Balance at December 31, 2017 | (25 | ) | (879 | ) | (2,592 | ) | (3,496 | ) | |||||||
Adoption of new accounting guidance (3) | (1 | ) | — | — | (1 | ) | |||||||||
Balance at January 1, 2018 | (26 | ) | (879 | ) | (2,592 | ) | (3,497 | ) | |||||||
Other comprehensive income (loss) before reclassifications | |||||||||||||||
Other comprehensive income (loss) before reclassifications | (15 | ) | (437 | ) | (124 | ) | (576 | ) | |||||||
Tax benefit (expense) | 18 | (3 | ) | 28 | 43 | ||||||||||
Other comprehensive income (loss) before reclassifications, net | 3 | (440 | ) | (96 | ) | (533 | ) | ||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | |||||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | 11 | — | 146 | 157 | |||||||||||
Tax benefit (expense) | (3 | ) | — | (33 | ) | (36 | ) | ||||||||
Amounts reclassified from accumulated other comprehensive income (loss), net | 8 | — | 113 | 121 | |||||||||||
Net current period other comprehensive income (loss) | 11 | (440 | ) | 17 | (412 | ) | |||||||||
Balance at December 31, 2018 | (15 | ) | (1,319 | ) | (2,575 | ) | (3,909 | ) | |||||||
Other comprehensive income (loss) before reclassifications | |||||||||||||||
Other comprehensive income (loss) before reclassifications | (10 | ) | 15 | (287 | ) | (282 | ) | ||||||||
Tax benefit (expense) | 1 | (1 | ) | 58 | 58 | ||||||||||
Other comprehensive income (loss) before reclassifications, net | (9 | ) | 14 | (229 | ) | (224 | ) | ||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | |||||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | 14 | — | 109 | 123 | |||||||||||
Tax benefit (expense) | (2 | ) | — | (21 | ) | (23 | ) | ||||||||
Amounts reclassified from accumulated other comprehensive income (loss), net | 12 | — | 88 | 100 | |||||||||||
Net current period other comprehensive income (loss) | 3 | 14 | (141 | ) | (124 | ) | |||||||||
Balance at December 31, 2019 | $ | (12 | ) | $ | (1,305 | ) | $ | (2,716 | ) | $ | (4,033 | ) |
(1) | Reclassifications from this category included in Accumulated other comprehensive loss are recorded in Revenue, Interest expense, and Compensation and benefits in the accompanying Consolidated Statements of Income. See Note 15 “Derivatives and Hedging” for additional information regarding the Company’s derivative and hedging activity. |
(2) | Reclassifications from this category included in Accumulated other comprehensive loss are recorded in Other income (expense). |
(3) | Refer to Note 2 “Summary of Significant Accounting Principles and Practices ” for further information. |
Years ended December 31 | 2019 | 2018 | 2017 | ||||||||
U.S. | $ | 98 | $ | 98 | $ | 105 | |||||
U.K. | 41 | 45 | 43 | ||||||||
Netherlands and Canada | 25 | 25 | 25 | ||||||||
Total | $ | 164 | $ | 168 | $ | 173 |
U.K. | U.S. | Other | |||||||||||||||||||||
(millions) | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||
Change in projected benefit obligation | |||||||||||||||||||||||
At January 1 | $ | 4,129 | $ | 4,893 | $ | 2,877 | $ | 3,155 | $ | 1,271 | $ | 1,401 | |||||||||||
Service cost | — | — | — | — | — | — | |||||||||||||||||
Interest cost | 109 | 109 | 108 | 99 | 27 | 27 | |||||||||||||||||
Plan amendment | 10 | 13 | — | — | — | — | |||||||||||||||||
Settlements | (22 | ) | (176 | ) | — | — | — | — | |||||||||||||||
Actuarial loss (gain) | 594 | (297 | ) | 373 | (221 | ) | 177 | (47 | ) | ||||||||||||||
Benefit payments | (168 | ) | (160 | ) | (166 | ) | (156 | ) | (42 | ) | (43 | ) | |||||||||||
Foreign currency impact | 127 | (253 | ) | — | — | (8 | ) | (67 | ) | ||||||||||||||
As of December 31 | $ | 4,779 | $ | 4,129 | $ | 3,192 | $ | 2,877 | $ | 1,425 | $ | 1,271 | |||||||||||
Accumulated benefit obligation at end of year | $ | 4,779 | $ | 4,129 | $ | 3,192 | $ | 2,877 | $ | 1,391 | $ | 1,247 | |||||||||||
Change in fair value of plan assets | |||||||||||||||||||||||
At January 1 | $ | 5,225 | $ | 5,906 | $ | 1,796 | $ | 1,958 | $ | 1,155 | $ | 1,256 | |||||||||||
Actual return on plan assets | 687 | (125 | ) | 398 | (141 | ) | 182 | (19 | ) | ||||||||||||||
Employer contributions | 78 | 97 | 38 | 135 | 19 | 20 | |||||||||||||||||
Settlements | (22 | ) | (176 | ) | — | — | — | — | |||||||||||||||
Benefit payments | (168 | ) | (160 | ) | (166 | ) | (156 | ) | (42 | ) | (43 | ) | |||||||||||
Foreign currency impact | 159 | (317 | ) | — | — | (11 | ) | (59 | ) | ||||||||||||||
As of December 31 | $ | 5,959 | $ | 5,225 | $ | 2,066 | $ | 1,796 | $ | 1,303 | $ | 1,155 | |||||||||||
Market related value at end of year | $ | 5,959 | $ | 5,225 | $ | 1,969 | $ | 1,981 | $ | 1,303 | $ | 1,155 | |||||||||||
Amount recognized in Statement of Financial Position as of December 31 | |||||||||||||||||||||||
Funded status | $ | 1,180 | $ | 1,096 | $ | (1,126 | ) | $ | (1,081 | ) | $ | (122 | ) | $ | (116 | ) | |||||||
Unrecognized prior-service cost | 40 | 30 | 1 | 3 | (6 | ) | (7 | ) | |||||||||||||||
Unrecognized loss | 1,204 | 1,106 | 1,762 | 1,705 | 460 | 440 | |||||||||||||||||
Net amount recognized | $ | 2,424 | $ | 2,232 | $ | 637 | $ | 627 | $ | 332 | $ | 317 |
U.K. | U.S. | Other | |||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Prepaid benefit cost (1) | $ | 1,200 | $ | 1,113 | $ | — | $ | — | $ | — | $ | — | |||||||||||
Accrued benefit liability - current (2) | (1 | ) | (1 | ) | (50 | ) | (46 | ) | (5 | ) | (5 | ) | |||||||||||
Accrued benefit liability - non-current (3) | (19 | ) | (16 | ) | (1,076 | ) | (1,035 | ) | (117 | ) | (111 | ) | |||||||||||
Accumulated other comprehensive loss | 1,244 | 1,136 | 1,763 | 1,708 | 454 | 433 | |||||||||||||||||
Net amount recognized | $ | 2,424 | $ | 2,232 | $ | 637 | $ | 627 | $ | 332 | $ | 317 |
(1) | Included in Prepaid pension |
(2) | Included in Other current liabilities |
(3) | Included in Pension, other postretirement, and postemployment liabilities |
U.K. | U.S. | Other | |||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Net loss | $ | 1,204 | $ | 1,106 | $ | 1,762 | $ | 1,705 | $ | 460 | $ | 440 | |||||||||||
Prior service cost (income) | 40 | 30 | 1 | 3 | (6 | ) | (7 | ) | |||||||||||||||
Total | $ | 1,244 | $ | 1,136 | $ | 1,763 | $ | 1,708 | $ | 454 | $ | 433 |
U.K. | U.S. | Other | |||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||||
Service cost | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||
Interest cost | 109 | 109 | 123 | 108 | 99 | 96 | 27 | 27 | 26 | ||||||||||||||||||||||||||
Expected return on plan assets, net of administration expenses | (191 | ) | (192 | ) | (199 | ) | (136 | ) | (144 | ) | (140 | ) | (40 | ) | (45 | ) | (47 | ) | |||||||||||||||||
Amortization of prior-service cost | 1 | 1 | 1 | 2 | 2 | 2 | — | — | — | ||||||||||||||||||||||||||
Amortization of net actuarial loss | 29 | 28 | 31 | 53 | 59 | 50 | 12 | 12 | 11 | ||||||||||||||||||||||||||
Net periodic benefit (income) cost | (52 | ) | (54 | ) | (44 | ) | 27 | 16 | 8 | (1 | ) | (6 | ) | (10 | ) | ||||||||||||||||||||
Settlement expense | 5 | 37 | 125 | — | — | — | — | — | — | ||||||||||||||||||||||||||
Total net periodic benefit cost (income) | $ | (47 | ) | $ | (17 | ) | $ | 81 | $ | 27 | $ | 16 | $ | 8 | $ | (1 | ) | $ | (6 | ) | $ | (10 | ) |
U.K. | U.S. (1) | Other | |||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||
Discount rate | 2.09% | 2.95% | 2.72 - 3.17% | 3.92 - 4.26% | 0.91 - 3.10% | 1.89 - 3.88% | |||||
Rate of compensation increase | 3.24 - 3.74% | 3.73 - 4.23% | N/A | N/A | 1.00 - 3.00% | 1.00 - 3.00% | |||||
Underlying price inflation | 1.78% | 1.88% | N/A | N/A | 2.00% | 2.00% |
(1) | U.S. pension plans are frozen and therefore not impacted by compensation increases or price inflation. |
U.K. | U.S. | Other | |||||||||||||||
2019 | 2018 | 2017 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | |||||||||
Discount rate | 2.95% | 2.63% | 2.77% | 3.92 - 4.26% | 3.27 - 3.61% | 3.53 - 4.11% | 1.89 - 3.88% | 1.78 - 3.39% | 1.85 - 3.81% | ||||||||
Expected return on plan assets, net of administration expenses | 3.64% | 3.34% | 3.36% | 7.05% | 7.71% | 7.88% | 2.50 - 4.10% | 1.70 - 4.85% | 2.68 - 5.15% | ||||||||
Rate of compensation increase | 3.73 - 4.23% | 3.70 - 4.20% | 3.70 - 4.20% | N/A | N/A | N/A | 1.00 - 3.00% | 1.00 - 3.00% | 1.00 - 3.50% |
Fair Value Measurements Using | |||||||||||||||
Asset Category | Balance at December 31, 2019 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||
Cash and cash equivalents (1) | $ | 77 | $ | 77 | $ | — | $ | — | |||||||
Equity investments: | |||||||||||||||
Equity securities | 195 | 195 | — | — | |||||||||||
Equity derivatives | 22 | — | 22 | — | |||||||||||
Pooled funds (2) | 583 | — | — | — | |||||||||||
Fixed income investments: | |||||||||||||||
Corporate bonds | 128 | — | 128 | — | |||||||||||
Government and agency bonds | 199 | 162 | 37 | — | |||||||||||
Asset-backed securities | 3 | — | 3 | — | |||||||||||
Pooled funds (2) | 545 | — | — | — | |||||||||||
Other investments: | |||||||||||||||
Real estate (2) (3) | 133 | — | — | — | |||||||||||
Alternative investments (2) (4) | 181 | — | — | — | |||||||||||
Total | $ | 2,066 | $ | 434 | $ | 190 | $ | — |
(1) | Consists of cash and institutional short-term investment funds. |
(2) | Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note. |
(3) | Consists of property funds and trusts holding direct real estate investments. |
(4) | Consists of limited partnerships, private equity, and hedge funds. |
Fair Value Measurements Using | |||||||||||||||
Asset Category | Balance at December 31, 2018 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||
Cash and cash equivalents (1) | $ | 130 | $ | 130 | $ | — | $ | — | |||||||
Equity investments: | |||||||||||||||
Equity securities | 384 | 384 | — | — | |||||||||||
Equity derivatives | (14 | ) | — | (14 | ) | — | |||||||||
Pooled funds (2) | 285 | — | — | — | |||||||||||
Fixed income investments: | |||||||||||||||
Corporate bonds | 111 | — | 111 | — | |||||||||||
Government and agency bonds | 126 | 95 | 31 | — | |||||||||||
Asset-backed securities | 2 | — | 2 | — | |||||||||||
Pooled funds (2) | 417 | — | — | — | |||||||||||
Other investments: | |||||||||||||||
Real estate and REITs (3) | 78 | 78 | — | — | |||||||||||
Alternative investments (2) (4) | 277 | — | — | — | |||||||||||
Total | $ | 1,796 | $ | 687 | $ | 130 | $ | — |
(1) | Consists of cash and institutional short-term investment funds. |
(2) | Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note. |
(3) | Consists of exchange traded real estate investment trusts (“REITs”). |
(4) | Consists of limited partnerships, private equity, and hedge funds. |
Fair Value Measurements Using | |||||||||||||||
Balance at December 31, 2019 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Cash and cash equivalents (1) | $ | 81 | $ | 81 | $ | — | $ | — | |||||||
Equity investments: | |||||||||||||||
Pooled funds (2) | 119 | — | — | — | |||||||||||
Fixed income investments: | |||||||||||||||
Derivatives (3) | (1,205 | ) | — | (1,205 | ) | — | |||||||||
Government and agency bonds | 2,667 | 2,667 | — | — | |||||||||||
Annuities | 1,849 | — | — | 1,849 | |||||||||||
Pooled funds (2) | 1,486 | — | — | — | |||||||||||
Other investments: | |||||||||||||||
Real estate (2) (4) | 180 | — | — | — | |||||||||||
Alternative investments (2) (5) | 782 | — | — | — | |||||||||||
Total | $ | 5,959 | $ | 2,748 | $ | (1,205 | ) | $ | 1,849 |
(1) | Consists of cash and institutional short-term investment funds. |
(2) | Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note. |
(3) | Consists of equity securities and equity derivatives, including repurchase agreements. |
(4) | Consists of property funds and trusts holding direct real estate investments. |
(5) | Consists of limited partnerships, private equity, and hedge funds. |
Fair Value Measurements Using | |||||||||||||||
Balance at December 31, 2018 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Cash and cash equivalents (1) | $ | 96 | $ | 96 | $ | — | $ | — | |||||||
Equity investments: | |||||||||||||||
Pooled funds (2) | 212 | — | — | — | |||||||||||
Fixed income investments: | |||||||||||||||
Derivatives (3) | (949 | ) | — | (949 | ) | — | |||||||||
Corporate bonds | 367 | — | 367 | — | |||||||||||
Government and agency bonds | 2,079 | 2,079 | — | — | |||||||||||
Annuities | 1,688 | — | — | 1,688 | |||||||||||
Pooled funds (2) | 889 | — | — | — | |||||||||||
Other investments: | |||||||||||||||
Real estate (2) (4) | 149 | — | — | — | |||||||||||
Alternative investments (2) (5) | 694 | — | — | — | |||||||||||
Total | $ | 5,225 | $ | 2,175 | $ | (582 | ) | $ | 1,688 |
(1) | Consists of cash and institutional short-term investment funds. |
(2) | Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note. |
(3) | Consists of equity securities and equity derivatives, including repurchase agreements. |
(4) | Consists of property funds and trusts holding direct real estate investments. |
(5) | Consists of limited partnerships, private equity, and hedge funds. |
Fair Value Measurements Using Level 3 Inputs | Annuities | ||
Balance at January 1, 2018 | $ | 1,909 | |
Actual return on plan assets: | |||
Relating to assets still held at December 31, 2018 | (122 | ) | |
Purchases, sales and settlements—net | 7 | ||
Foreign exchange | (106 | ) | |
Balance at December 31, 2018 | 1,688 | ||
Actual return on plan assets: | |||
Relating to assets still held at December 31, 2019 | 113 | ||
Foreign exchange | 48 | ||
Balance at December 31, 2019 | $ | 1,849 |
Fair Value Measurements Using | |||||||||||||||
Balance at December 31, 2019 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Cash and cash equivalents (1) | $ | 5 | $ | 5 | $ | — | $ | — | |||||||
Equity investments: | |||||||||||||||
Pooled funds (2) | 323 | — | — | — | |||||||||||
Fixed income investments: | |||||||||||||||
Pooled funds (2) | 907 | — | — | — | |||||||||||
Other investments: | |||||||||||||||
Alternative investments (2) (3) | 62 | — | — | — | |||||||||||
Real estate (2) (4) | 6 | — | — | — | |||||||||||
Total | $ | 1,303 | $ | 5 | $ | — | $ | — |
(1) | Consists of cash and institutional short-term investment funds. |
(2) | Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note. |
(3) | Consists of limited partnerships, private equity, and hedge funds. |
(4) | Consists of property funds and trusts holding direct real estate investments. |
Fair Value Measurements Using | |||||||||||||||
Balance at December 31, 2018 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Cash and cash equivalents (1) | $ | 10 | $ | 10 | $ | — | $ | — | |||||||
Equity investments: | |||||||||||||||
Pooled funds (2) | 281 | — | — | — | |||||||||||
Fixed income investments: | |||||||||||||||
Derivatives | 9 | — | 9 | — | |||||||||||
Pooled funds (2) | 782 | — | — | — | |||||||||||
Other investments: | |||||||||||||||
Alternative investments (2) (3) | 63 | — | — | — | |||||||||||
Real estate (2) (4) | 10 | — | — | — | |||||||||||
Total | $ | 1,155 | $ | 10 | $ | 9 | $ | — |
(1) | Consists of cash and institutional short-term investment funds. |
(2) | Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note. |
(3) | Consists of limited partnerships, private equity, and hedge funds. |
(4) | Consists of property funds and trusts holding direct real estate investments. |
U.K. | U.S. | Other | ||||||||||
2020 | $ | 164 | $ | 186 | $ | 43 | ||||||
2021 | $ | 154 | $ | 190 | $ | 44 | ||||||
2022 | $ | 160 | $ | 192 | $ | 46 | ||||||
2023 | $ | 167 | $ | 189 | $ | 46 | ||||||
2024 | $ | 172 | $ | 181 | $ | 47 | ||||||
2025 – 2029 | $ | 913 | $ | 887 | $ | 252 |
2019 | 2018 | ||||||
Accumulated projected benefit obligation | $ | 103 | $ | 91 | |||
Fair value of plan assets | 16 | 14 | |||||
Funded status | (87 | ) | (77 | ) | |||
Unrecognized prior-service credit | (1 | ) | (1 | ) | |||
Unrecognized (gain) loss | 3 | (6 | ) | ||||
Net amount recognized | $ | (85 | ) | $ | (84 | ) |
2019 | 2018 | 2017 | |||
Net periodic benefit cost recognized (millions) | $3 | $3 | $1 | ||
Weighted-average discount rate used to determine future benefit obligations | 2.93 - 3.25% | 3.91 - 4.26% | 3.32 - 3.64% | ||
Weighted-average discount rate used to determine net periodic benefit costs | 3.91 - 4.26% | 3.32 - 3.64% | 3.71 - 4.15% |
• | The amount in Accumulated other comprehensive income expected to be recognized as a component of net periodic benefit cost during 2020 is $0.2 million and $0.8 million of prior service credit and net gain, respectively. |
• | To contribute $4 million to fund significant other postretirement benefit plans during 2020. |
• | Estimated future benefit payments will be approximately $5 million each year for 2020 through 2024, and $25 million in aggregate for 2025-2029. |
Years ended December 31 | 2019 | 2018 | 2017 | ||||||||
Restricted share units (“RSUs”) | $ | 198 | $ | 186 | $ | 182 | |||||
Performance share awards (“PSAs”) | 110 | 143 | 127 | ||||||||
Employee share purchase plans | 9 | 9 | 10 | ||||||||
Total share-based compensation expense | 317 | 338 | 319 | ||||||||
Tax benefit | 66 | 74 | 73 | ||||||||
Share-based compensation expense, net of tax | $ | 251 | $ | 264 | $ | 246 |
2019 | 2018 | 2017 | ||||||||||||||||||
Years ended December 31 | Shares | Fair Value at Date of Grant (1) | Shares | Fair Value at Date of Grant (1) | Shares | Fair Value at Date of Grant (1) | ||||||||||||||
Non-vested at beginning of year | 4,208 | $ | 120 | 4,849 | $ | 104 | 6,195 | $ | 89 | |||||||||||
Granted | 1,306 | $ | 175 | 1,500 | $ | 141 | 1,700 | $ | 123 | |||||||||||
Vested | (1,661 | ) | $ | 113 | (1,943 | ) | $ | 97 | (2,407 | ) | $ | 82 | ||||||||
Forfeited | (219 | ) | $ | 131 | (198 | ) | $ | 114 | (639 | ) | $ | 93 | ||||||||
Non-vested at end of year | 3,634 | $ | 143 | 4,208 | $ | 120 | 4,849 | $ | 104 |
(1) | Represents per share weighted average fair value of award at date of grant. |
2019 | 2018 | 2017 | |||||||||
Target PSAs granted during period | 467 | 564 | 548 | ||||||||
Weighted average fair value per share at date of grant | $ | 165 | $ | 134 | $ | 114 | |||||
Number of shares that would be issued based on current performance levels | 453 | 818 | 1,057 | ||||||||
Unamortized expense, based on current performance levels | $ | 50 | $ | 34 | $ | — |
Notional Amount | Net Amount of Derivative Assets Presented in the Statements of Financial Position (1) | Net Amount of Derivative Liabilities Presented in the Statements of Financial Position (2) | |||||||||||||||||||||
As of December 31 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||
Foreign exchange contracts | |||||||||||||||||||||||
Accounted for as hedges | $ | 579 | $ | 646 | $ | 16 | $ | 17 | $ | 1 | $ | 2 | |||||||||||
Not accounted for as hedges (3) | 297 | 269 | 2 | 1 | — | 6 | |||||||||||||||||
Total | $ | 876 | $ | 915 | $ | 18 | $ | 18 | $ | 1 | $ | 8 |
(1) | Included within Other current assets ($7 million in 2019 and $3 million in 2018) or Other non-current assets ($11 million in 2019 and $15 million in 2018). |
(2) | Included within Other current liabilities ($1 million in 2019 and $5 million in 2018) or Other non-current liabilities ($3 million in 2018). |
(3) | These contracts typically are for 30-day durations and executed close to the last day of the most recent reporting month, thereby resulting in nominal fair values at the balance sheet date. |
2019 | 2018 | 2017 | ||||||||||
(Loss) Gain recognized in Accumulated other comprehensive loss | $ | (9 | ) | $ | (18 | ) | $ | 18 |
Years Ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Total revenue (1) | $ | (12 | ) | $ | — | $ | — | |||||
Compensation and benefits | (1 | ) | 1 | 14 | ||||||||
Other general expense | — | (2 | ) | (5 | ) | |||||||
Interest expense | (1 | ) | (2 | ) | (1 | ) | ||||||
Other income (expense) (1) | — | (8 | ) | (9 | ) | |||||||
Total | $ | (14 | ) | $ | (11 | ) | $ | (1 | ) |
(1) | With the adoption of new hedge accounting guidance in the first quarter of 2019, gains (losses) on derivatives accounted for as hedges are recognized in Total revenue in the Company’s Consolidated Statement of Income rather than Other income (expense). Refer to Note 2 “Summary of Significant Accounting Principles and Practices” for additional details. |
• | Level 1 — observable inputs such as quoted prices for identical assets in active markets; |
• | Level 2 — inputs other than quoted prices for identical assets in active markets, that are observable either directly or indirectly; and |
• | Level 3 — unobservable inputs in which there is little or no market data which requires the use of valuation techniques and the development of assumptions. |
Fair Value Measurements Using | |||||||||||||||
Balance at December 31, 2019 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets | |||||||||||||||
Money market funds (1) | $ | 2,007 | $ | 2,007 | $ | — | $ | — | |||||||
Other investments | |||||||||||||||
Government bonds | $ | 1 | $ | — | $ | 1 | $ | — | |||||||
Equity investments | $ | 1 | $ | — | $ | 1 | $ | — | |||||||
Derivatives (2) | |||||||||||||||
Gross foreign exchange contracts | $ | 21 | $ | — | $ | 21 | $ | — | |||||||
Liabilities | |||||||||||||||
Derivatives (2) | |||||||||||||||
Gross foreign exchange contracts | $ | 4 | $ | — | $ | 4 | $ | — |
Fair Value Measurements Using | |||||||||||||||
Balance at December 31, 2018 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets | |||||||||||||||
Money market funds (1) | $ | 1,759 | $ | 1,759 | $ | — | $ | — | |||||||
Other investments | |||||||||||||||
Government bonds | $ | 1 | $ | — | $ | 1 | $ | — | |||||||
Equity investments | $ | 2 | $ | — | $ | 2 | $ | — | |||||||
Derivatives (2) | |||||||||||||||
Gross foreign exchange contracts | $ | 21 | $ | — | $ | 21 | $ | — | |||||||
Liabilities | |||||||||||||||
Derivatives (2) | |||||||||||||||
Gross foreign exchange contracts | $ | 12 | $ | — | $ | 12 | $ | — |
(1) | Included within Fiduciary assets or Short-term investments in the Consolidated Statements of Financial Position, depending on their nature and initial maturity. |
(2) | Refer to Note 15 “Derivatives and Hedging” for additional information regarding the Company’s derivatives and hedging activity. |
2019 | 2018 | ||||||||||||||
As of December 31 | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||
Current portion of long-term debt | $ | 600 | $ | 614 | $ | — | $ | — | |||||||
Long-term debt | $ | 6,627 | $ | 7,442 | $ | 5,993 | $ | 6,159 |
Years ended December 31 | Total | United States | Americas other than U.S. | United Kingdom | Europe, Middle East, & Africa | Asia Pacific | |||||||||||||||||
2019(1) | $ | 1,550 | $ | 686 | $ | 145 | $ | 225 | $ | 319 | $ | 175 | |||||||||||
2018 | $ | 588 | $ | 288 | $ | 44 | $ | 58 | $ | 101 | $ | 97 |
(1) | In the first quarter of 2019, Aon adopted new accounting guidance related to the treatment of leases which was applied under the modified retrospective approach. Refer to Note 2 “Summary of Significant Accounting Principles and Practices” for further information. |
Year Ended December 31, 2019 | ||||||||||||||||||||||||||||
(millions) | Aon Ireland | Aon UK | Aon Global Holdings Limited | Aon Corporation | Other Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||||
Total revenue | $ | — | $ | — | $ | — | $ | — | $ | 11,013 | $ | — | $ | 11,013 | ||||||||||||||
Expenses | ||||||||||||||||||||||||||||
Compensation and benefits | — | 49 | — | 20 | 5,985 | — | 6,054 | |||||||||||||||||||||
Information technology | — | — | — | — | 494 | — | 494 | |||||||||||||||||||||
Premises | — | — | — | 23 | 316 | — | 339 | |||||||||||||||||||||
Depreciation of fixed assets | — | — | — | — | 172 | — | 172 | |||||||||||||||||||||
Amortization and impairment of intangible assets | — | — | — | — | 392 | — | 392 | |||||||||||||||||||||
Other general expense | — | 10 | — | 4 | 1,379 | — | 1,393 | |||||||||||||||||||||
Total operating expenses | — | 59 | — | 47 | 8,738 | — | 8,844 | |||||||||||||||||||||
Operating income (loss) | — | (59 | ) | — | (47 | ) | 2,275 | — | 2,169 | |||||||||||||||||||
Interest income | — | — | — | 39 | 67 | (98 | ) | 8 | ||||||||||||||||||||
Interest expense | — | (188 | ) | (81 | ) | (133 | ) | (3 | ) | 98 | (307 | ) | ||||||||||||||||
Intercompany interest income (expense) | — | 21 | — | (464 | ) | 443 | — | — | ||||||||||||||||||||
Intercompany other income (expense) | — | 185 | — | (362 | ) | 177 | — | — | ||||||||||||||||||||
Other income (expense) | — | 18 | — | (60 | ) | 51 | (8 | ) | 1 | |||||||||||||||||||
Income (loss) from continuing operations before income taxes | — | (23 | ) | (81 | ) | (1,027 | ) | 3,010 | (8 | ) | 1,871 | |||||||||||||||||
Income tax expense (benefit) | — | (12 | ) | (8 | ) | (182 | ) | 499 | — | 297 | ||||||||||||||||||
Net income (loss) from continuing operations | — | (11 | ) | (73 | ) | (845 | ) | 2,511 | (8 | ) | 1,574 | |||||||||||||||||
Net income (loss) from discontinued operations | — | — | — | — | (1 | ) | — | (1 | ) | |||||||||||||||||||
Net income (loss) before equity in earnings of subsidiaries | — | (11 | ) | (73 | ) | (845 | ) | 2,510 | (8 | ) | 1,573 | |||||||||||||||||
Equity in earnings of subsidiaries | 1,540 | 1,551 | 283 | 1,254 | — | (4,628 | ) | — | ||||||||||||||||||||
Net income | 1,540 | 1,540 | 210 | 409 | 2,510 | (4,636 | ) | 1,573 | ||||||||||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | — | — | 41 | — | 41 | |||||||||||||||||||||
Net income attributable to Aon shareholders | $ | 1,540 | $ | 1,540 | $ | 210 | $ | 409 | $ | 2,469 | $ | (4,636 | ) | $ | 1,532 |
Year Ended December 31, 2018 | ||||||||||||||||||||||||||||
(millions) | Aon Ireland | Aon UK | Aon Global Holdings Limited | Aon Corporation | Other Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||||
Total revenue | $ | — | $ | — | $ | — | $ | — | $ | 10,770 | $ | — | $ | 10,770 | ||||||||||||||
Expenses | ||||||||||||||||||||||||||||
Compensation and benefits | — | 74 | — | (1 | ) | 6,030 | — | 6,103 | ||||||||||||||||||||
Information technology | — | — | — | — | 484 | — | 484 | |||||||||||||||||||||
Premises | — | — | — | — | 370 | — | 370 | |||||||||||||||||||||
Depreciation of fixed assets | — | — | — | — | 176 | — | 176 | |||||||||||||||||||||
Amortization and impairment of intangible assets | — | — | — | — | 593 | — | 593 | |||||||||||||||||||||
Other general expense | — | 4 | — | 90 | 1,406 | — | 1,500 | |||||||||||||||||||||
Total operating expenses | — | 78 | — | 89 | 9,059 | — | 9,226 | |||||||||||||||||||||
Operating income (loss) | — | (78 | ) | — | (89 | ) | 1,711 | — | 1,544 | |||||||||||||||||||
Interest income | — | — | — | 58 | 60 | (113 | ) | 5 | ||||||||||||||||||||
Interest expense | — | (203 | ) | (83 | ) | (101 | ) | (4 | ) | 113 | (278 | ) | ||||||||||||||||
Intercompany interest income (expense) | — | 15 | — | (514 | ) | 499 | — | — | ||||||||||||||||||||
Intercompany other income (expense) | — | 65 | — | (373 | ) | 308 | — | — | ||||||||||||||||||||
Other income (expense) | — | 41 | — | (48 | ) | 3 | (21 | ) | (25 | ) | ||||||||||||||||||
Income (loss) from continuing operations before income taxes | — | (160 | ) | (83 | ) | (1,067 | ) | 2,577 | (21 | ) | 1,246 | |||||||||||||||||
Income tax expense (benefit) | — | (60 | ) | (15 | ) | (192 | ) | 413 | — | 146 | ||||||||||||||||||
Net income (loss) from continuing operations | — | (100 | ) | (68 | ) | (875 | ) | 2,164 | (21 | ) | 1,100 | |||||||||||||||||
Net income (loss) from discontinued operations | — | — | — | — | 74 | — | 74 | |||||||||||||||||||||
Net income (loss) before equity in earnings of subsidiaries | — | (100 | ) | (68 | ) | (875 | ) | 2,238 | (21 | ) | 1,174 | |||||||||||||||||
Equity in earnings of subsidiaries | — | 1,255 | 100 | 1,009 | — | (2,364 | ) | — | ||||||||||||||||||||
Net income | — | 1,155 | 32 | 134 | 2,238 | (2,385 | ) | 1,174 | ||||||||||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | — | — | 40 | — | 40 | |||||||||||||||||||||
Net income attributable to Aon shareholders | $ | — | $ | 1,155 | $ | 32 | $ | 134 | $ | 2,198 | $ | (2,385 | ) | $ | 1,134 |
Year Ended December 31, 2017 | ||||||||||||||||||||||||||||
(millions) | Aon Ireland | Aon UK | Aon Global Holdings Limited | Aon Corporation | Other Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||||
Total revenue | $ | — | $ | — | $ | — | $ | — | $ | 9,998 | $ | — | $ | 9,998 | ||||||||||||||
Expenses | ||||||||||||||||||||||||||||
Compensation and benefits | — | 150 | — | 26 | 5,827 | — | 6,003 | |||||||||||||||||||||
Information technology | — | — | — | — | 419 | — | 419 | |||||||||||||||||||||
Premises | — | — | — | — | 348 | — | 348 | |||||||||||||||||||||
Depreciation of fixed assets | — | — | — | — | 187 | — | 187 | |||||||||||||||||||||
Amortization and impairment of intangible assets | — | — | — | — | 704 | — | 704 | |||||||||||||||||||||
Other general expense | — | 12 | — | 20 | 1,240 | — | 1,272 | |||||||||||||||||||||
Total operating expenses | — | 162 | — | 46 | 8,725 | — | 8,933 | |||||||||||||||||||||
Operating income (loss) | — | (162 | ) | — | (46 | ) | 1,273 | — | 1,065 | |||||||||||||||||||
Interest income | — | — | — | 52 | 37 | (62 | ) | 27 | ||||||||||||||||||||
Interest expense | — | (202 | ) | (33 | ) | (94 | ) | (15 | ) | 62 | (282 | ) | ||||||||||||||||
Intercompany interest income (expense) | — | 14 | 1 | (543 | ) | 528 | — | — | ||||||||||||||||||||
Intercompany other income (expense) | — | 282 | — | (385 | ) | 103 | — | — | ||||||||||||||||||||
Other income (expense) | — | (62 | ) | — | 12 | (93 | ) | 18 | (125 | ) | ||||||||||||||||||
Income (loss) from continuing operations before income taxes | — | (130 | ) | (32 | ) | (1,004 | ) | 1,833 | 18 | 685 | ||||||||||||||||||
Income tax expense (benefit) | — | (43 | ) | (6 | ) | (110 | ) | 409 | — | 250 | ||||||||||||||||||
Net income (loss) from continuing operations | — | (87 | ) | (26 | ) | (894 | ) | 1,424 | 18 | 435 | ||||||||||||||||||
Net income (loss) from discontinued operations | — | — | — | — | 828 | — | 828 | |||||||||||||||||||||
Net income (loss) before equity in earnings of subsidiaries | — | (87 | ) | (26 | ) | (894 | ) | 2,252 | 18 | 1,263 | ||||||||||||||||||
Equity in earnings of subsidiaries | — | 1,295 | 457 | 1,141 | — | (2,893 | ) | — | ||||||||||||||||||||
Net income | — | 1,208 | 431 | 247 | 2,252 | (2,875 | ) | 1,263 | ||||||||||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | — | — | 37 | — | 37 | |||||||||||||||||||||
Net income attributable to Aon shareholders | $ | — | $ | 1,208 | $ | 431 | $ | 247 | $ | 2,215 | $ | (2,875 | ) | $ | 1,226 |
Year Ended December 31, 2019 | ||||||||||||||||||||||||||||
(millions) | Aon Ireland | Aon UK | Aon Global Holdings Limited | Aon Corporation | Other Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||||||||
Net income | $ | 1,540 | $ | 1,540 | $ | 210 | $ | 409 | $ | 2,510 | $ | (4,636 | ) | $ | 1,573 | |||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | — | — | 41 | — | 41 | |||||||||||||||||||||
Net income attributable to Aon shareholders | 1,540 | 1,540 | 210 | 409 | 2,469 | (4,636 | ) | 1,532 | ||||||||||||||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||||||||||||||
Change in fair value of financial instruments | — | — | — | 3 | — | — | 3 | |||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | 6 | 8 | 14 | |||||||||||||||||||||
Postretirement benefit obligation | — | — | — | (44 | ) | (97 | ) | — | (141 | ) | ||||||||||||||||||
Total other comprehensive income (loss) | — | — | — | (41 | ) | (91 | ) | 8 | (124 | ) | ||||||||||||||||||
Equity in other comprehensive income (loss) of subsidiaries, net of tax | (132 | ) | (132 | ) | (172 | ) | (131 | ) | — | 567 | — | |||||||||||||||||
Less: Other comprehensive income (loss) attributable to noncontrolling interests | — | — | — | — | — | — | — | |||||||||||||||||||||
Total other comprehensive income (loss) attributable to Aon shareholders | (132 | ) | (132 | ) | (172 | ) | (172 | ) | (91 | ) | 575 | (124 | ) | |||||||||||||||
Comprehensive income (loss) attributable to Aon shareholders | $ | 1,408 | $ | 1,408 | $ | 38 | $ | 237 | $ | 2,378 | $ | (4,061 | ) | $ | 1,408 |
Year Ended December 31, 2018 | ||||||||||||||||||||||||||||
(millions) | Aon Ireland | Aon UK | Aon Global Holdings Limited | Aon Corporation | Other Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||||||||
Net income | $ | — | $ | 1,155 | $ | 32 | $ | 134 | $ | 2,238 | $ | (2,385 | ) | $ | 1,174 | |||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | — | — | 40 | — | 40 | |||||||||||||||||||||
Net income attributable to Aon shareholders | — | 1,155 | 32 | 134 | 2,198 | (2,385 | ) | 1,134 | ||||||||||||||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||||||||||||||
Change in fair value of financial instruments | — | — | — | — | 11 | — | 11 | |||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | (465 | ) | 21 | (444 | ) | |||||||||||||||||||
Postretirement benefit obligation | — | — | — | (2 | ) | 19 | — | 17 | ||||||||||||||||||||
Total other comprehensive income (loss) | — | — | — | (2 | ) | (435 | ) | 21 | (416 | ) | ||||||||||||||||||
Equity in other comprehensive income (loss) of subsidiaries, net of tax | — | (433 | ) | (417 | ) | (415 | ) | — | 1,265 | — | ||||||||||||||||||
Less: Other comprehensive income (loss) attributable to noncontrolling interests | — | — | — | — | (4 | ) | — | (4 | ) | |||||||||||||||||||
Total other comprehensive income (loss) attributable to Aon shareholders | — | (433 | ) | (417 | ) | (417 | ) | (431 | ) | 1,286 | (412 | ) | ||||||||||||||||
Comprehensive income (loss) attributable to Aon shareholders | $ | — | $ | 722 | $ | (385 | ) | $ | (283 | ) | $ | 1,767 | $ | (1,099 | ) | $ | 722 |
Year Ended December 31, 2017 | ||||||||||||||||||||||||||||
(millions) | Aon Ireland | Aon UK | Aon Global Holdings Limited | Aon Corporation | Other Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||||||||
Net income | $ | — | $ | 1,208 | $ | 431 | $ | 247 | $ | 2,252 | $ | (2,875 | ) | $ | 1,263 | |||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | — | — | 37 | — | 37 | |||||||||||||||||||||
Net income attributable to Aon shareholders | — | 1,208 | 431 | 247 | 2,215 | (2,875 | ) | 1,226 | ||||||||||||||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||||||||||||||
Change in fair value of financial instruments | — | — | — | 3 | 9 | — | 12 | |||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | 408 | (18 | ) | 390 | ||||||||||||||||||||
Postretirement benefit obligation | — | — | — | (101 | ) | 120 | — | 19 | ||||||||||||||||||||
Total other comprehensive income (loss) | — | — | — | (98 | ) | 537 | (18 | ) | 421 | |||||||||||||||||||
Equity in other comprehensive income (loss) of subsidiaries, net of tax | — | 434 | 417 | 515 | — | (1,366 | ) | — | ||||||||||||||||||||
Less: Other comprehensive income (loss) attributable to noncontrolling interests | — | — | — | — | 5 | — | 5 | |||||||||||||||||||||
Total other comprehensive income (loss) attributable to Aon shareholders | — | 434 | 417 | 417 | 532 | (1,384 | ) | 416 | ||||||||||||||||||||
Comprehensive income (loss) attributable to Aon shareholders | $ | — | $ | 1,642 | $ | 848 | $ | 664 | $ | 2,747 | $ | (4,259 | ) | $ | 1,642 |
As of December 31, 2019 | ||||||||||||||||||||||||||||
(millions) | Aon Ireland | Aon UK | Aon Global Holdings Limited | Aon Corporation | Other Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||
Current assets | ||||||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | — | $ | — | $ | 2,271 | $ | 2,619 | $ | (4,100 | ) | $ | 790 | |||||||||||||
Short-term investments | — | — | — | 28 | 110 | — | 138 | |||||||||||||||||||||
Receivables, net | — | — | — | — | 3,112 | — | 3,112 | |||||||||||||||||||||
Fiduciary assets | — | — | — | — | 11,834 | — | 11,834 | |||||||||||||||||||||
Intercompany receivables | — | 246 | 89 | 1,214 | 12,710 | (14,259 | ) | — | ||||||||||||||||||||
Other current assets | — | — | — | 7 | 595 | — | 602 | |||||||||||||||||||||
Total current assets | — | 246 | 89 | 3,520 | 30,980 | (18,359 | ) | 16,476 | ||||||||||||||||||||
Goodwill | — | — | — | — | 8,165 | — | 8,165 | |||||||||||||||||||||
Intangible assets, net | — | — | — | — | 783 | — | 783 | |||||||||||||||||||||
Operating lease right-of-use assets | — | — | — | 110 | 819 | — | 929 | |||||||||||||||||||||
Fixed assets, net | — | — | — | — | 621 | — | 621 | |||||||||||||||||||||
Deferred tax assets | — | 89 | 4 | 577 | 165 | (190 | ) | 645 | ||||||||||||||||||||
Intercompany receivables | — | 868 | — | 261 | 7,046 | (8,175 | ) | — | ||||||||||||||||||||
Prepaid pension | — | — | — | 7 | 1,209 | — | 1,216 | |||||||||||||||||||||
Other non-current assets | — | — | — | 32 | 538 | — | 570 | |||||||||||||||||||||
Investment in subsidiary | 3,375 | 8,899 | 12,211 | 19,470 | — | (43,955 | ) | — | ||||||||||||||||||||
Total assets | $ | 3,375 | $ | 10,102 | $ | 12,304 | $ | 23,977 | $ | 50,326 | $ | (70,679 | ) | $ | 29,405 | |||||||||||||
Liabilities and equity | ||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||
Current liabilities | ||||||||||||||||||||||||||||
Accounts payable and accrued liabilities | $ | — | $ | 2,157 | $ | 1,994 | $ | 56 | $ | 1,832 | $ | (4,100 | ) | $ | 1,939 | |||||||||||||
Short-term debt and current portion of long-term debt | — | 112 | — | 600 | — | — | 712 | |||||||||||||||||||||
Fiduciary liabilities | — | — | — | — | 11,834 | — | 11,834 | |||||||||||||||||||||
Intercompany payables | — | 234 | 61 | 12,978 | 986 | (14,259 | ) | — | ||||||||||||||||||||
Other current liabilities | — | — | — | 80 | 1,006 | — | 1,086 | |||||||||||||||||||||
Total current liabilities | — | 2,503 | 2,055 | 13,714 | 15,658 | (18,359 | ) | 15,571 | ||||||||||||||||||||
Long-term debt | — | 4,223 | — | 2,404 | — | — | 6,627 | |||||||||||||||||||||
Non-current operating lease liabilities | — | — | — | 143 | 801 | — | 944 | |||||||||||||||||||||
Deferred tax liabilities | — | — | — | — | 389 | (190 | ) | 199 | ||||||||||||||||||||
Pension, other postretirement, and other post-employment liabilities | — | — | — | 1,348 | 390 | — | 1,738 | |||||||||||||||||||||
Intercompany payables | — | — | — | 7,212 | 963 | (8,175 | ) | — | ||||||||||||||||||||
Other non-current liabilities | — | 1 | — | 113 | 763 | — | 877 | |||||||||||||||||||||
Total liabilities | — | 6,727 | 2,055 | 24,934 | 18,964 | (26,724 | ) | 25,956 | ||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||
Total Aon shareholders' equity | 3,375 | 3,375 | 10,249 | (957 | ) | 31,288 | (43,955 | ) | 3,375 | |||||||||||||||||||
Noncontrolling interests | — | — | — | — | 74 | — | 74 | |||||||||||||||||||||
Total equity | 3,375 | 3,375 | 10,249 | (957 | ) | 31,362 | (43,955 | ) | 3,449 | |||||||||||||||||||
Total liabilities and equity | $ | 3,375 | $ | 10,102 | $ | 12,304 | $ | 23,977 | $ | 50,326 | $ | (70,679 | ) | $ | 29,405 |
As of December 31, 2018 | ||||||||||||||||||||||||||||
(millions) | Aon Ireland | Aon UK | Aon Global Holdings Limited | Aon Corporation | Other Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||
Current assets | ||||||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | — | $ | — | $ | 862 | $ | 3,473 | $ | (3,679 | ) | $ | 656 | |||||||||||||
Short-term investments | — | — | — | 56 | 116 | — | 172 | |||||||||||||||||||||
Receivables, net | — | — | — | — | 2,760 | — | 2,760 | |||||||||||||||||||||
Fiduciary assets | — | — | — | — | 10,166 | — | 10,166 | |||||||||||||||||||||
Intercompany receivables | — | 191 | 20 | 897 | 11,614 | (12,722 | ) | — | ||||||||||||||||||||
Other current assets | — | — | — | 16 | 602 | — | 618 | |||||||||||||||||||||
Total current assets | — | 191 | 20 | 1,831 | 28,731 | (16,401 | ) | 14,372 | ||||||||||||||||||||
Goodwill | — | — | — | — | 8,171 | — | 8,171 | |||||||||||||||||||||
Intangible assets, net | — | — | — | — | 1,149 | — | 1,149 | |||||||||||||||||||||
Fixed assets, net | — | — | — | — | 588 | — | 588 | |||||||||||||||||||||
Deferred tax assets | — | 94 | 4 | 467 | 140 | (144 | ) | 561 | ||||||||||||||||||||
Intercompany receivables | — | 403 | — | 261 | 7,225 | (7,889 | ) | — | ||||||||||||||||||||
Prepaid pension | — | — | — | 5 | 1,128 | — | 1,133 | |||||||||||||||||||||
Other non-current assets | — | 1 | — | 30 | 417 | — | 448 | |||||||||||||||||||||
Investment in subsidiary | — | 8,433 | 4,421 | 19,031 | — | (31,885 | ) | — | ||||||||||||||||||||
Total assets | $ | — | $ | 9,122 | $ | 4,445 | $ | 21,625 | $ | 47,549 | $ | (56,319 | ) | $ | 26,422 | |||||||||||||
Liabilities and equity | ||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||
Current liabilities | ||||||||||||||||||||||||||||
Accounts payable and accrued liabilities | $ | — | $ | 274 | $ | 3,463 | $ | 70 | $ | 1,815 | $ | (3,679 | ) | $ | 1,943 | |||||||||||||
Short-term debt and current portion of long-term debt | — | 250 | — | — | 1 | — | 251 | |||||||||||||||||||||
Fiduciary liabilities | — | — | — | — | 10,166 | — | 10,166 | |||||||||||||||||||||
Intercompany payables | — | 213 | 1 | 11,875 | 633 | (12,722 | ) | — | ||||||||||||||||||||
Other current liabilities | — | — | — | 69 | 867 | — | 936 | |||||||||||||||||||||
Total current liabilities | — | 737 | 3,464 | 12,014 | 13,482 | (16,401 | ) | 13,296 | ||||||||||||||||||||
Long-term debt | — | 4,231 | — | 1,762 | — | — | 5,993 | |||||||||||||||||||||
Deferred tax liabilities | — | — | — | — | 325 | (144 | ) | 181 | ||||||||||||||||||||
Pension, other postretirement, and other post-employment liabilities | — | — | — | 1,275 | 361 | — | 1,636 | |||||||||||||||||||||
Intercompany payables | — | — | — | 7,390 | 499 | (7,889 | ) | — | ||||||||||||||||||||
Other non-current liabilities | — | 3 | — | 167 | 927 | — | 1,097 | |||||||||||||||||||||
Total liabilities | — | 4,971 | 3,464 | 22,608 | 15,594 | (24,434 | ) | 22,203 | ||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||
Total Aon shareholders' equity | — | 4,151 | 981 | (983 | ) | 31,887 | (31,885 | ) | 4,151 | |||||||||||||||||||
Noncontrolling interests | — | — | — | — | 68 | — | 68 | |||||||||||||||||||||
Total equity | — | 4,151 | 981 | (983 | ) | 31,955 | (31,885 | ) | 4,219 | |||||||||||||||||||
Total liabilities and equity | $ | — | $ | 9,122 | $ | 4,445 | $ | 21,625 | $ | 47,549 | $ | (56,319 | ) | $ | 26,422 |
Year Ended December 31, 2019 | ||||||||||||||||||||||||||||
(millions) | Aon Ireland | Aon UK | Aon Global Holdings Limited | Aon Corporation | Other Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||||||||||
Cash provided by (used for) operating activities - continuing operations | $ | — | $ | 280 | $ | 1,346 | $ | (140 | ) | $ | 2,254 | $ | (1,905 | ) | $ | 1,835 | ||||||||||||
Cash provided by operating activities - discontinued operations | — | — | — | — | — | — | — | |||||||||||||||||||||
Cash provided by (used for) operating activities | — | 280 | 1,346 | (140 | ) | 2,254 | (1,905 | ) | 1,835 | |||||||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||||||||||
Proceeds from investments | — | — | 123 | 29 | 189 | (280 | ) | 61 | ||||||||||||||||||||
Payments for investments | — | — | — | (62 | ) | (124 | ) | 73 | (113 | ) | ||||||||||||||||||
Net sales (purchases) of short-term investments — non-fiduciary | — | — | — | 28 | 7 | — | 35 | |||||||||||||||||||||
Acquisition of businesses, net of cash acquired | — | — | — | — | (39 | ) | — | (39 | ) | |||||||||||||||||||
Sale of businesses, net of cash sold | — | — | — | — | 52 | — | 52 | |||||||||||||||||||||
Capital expenditures | — | — | — | — | (225 | ) | — | (225 | ) | |||||||||||||||||||
Cash used for investing activities - continuing operations | — | — | 123 | (5 | ) | (140 | ) | (207 | ) | (229 | ) | |||||||||||||||||
Cash used for investing activities - discontinued operations | — | — | — | — | — | — | — | |||||||||||||||||||||
Cash used for investing activities | — | — | 123 | (5 | ) | (140 | ) | (207 | ) | (229 | ) | |||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||||||
Share repurchase | — | (1,960 | ) | (1,469 | ) | — | — | — | (1,960 | ) | ||||||||||||||||||
Advances from (to) affiliates | — | 2,350 | — | 314 | (2,886 | ) | 1,691 | — | ||||||||||||||||||||
Issuance of shares for employee benefit plans | — | (131 | ) | — | — | — | — | (131 | ) | |||||||||||||||||||
Issuance of debt | — | 2,739 | — | 3,313 | — | — | 6,052 | |||||||||||||||||||||
Repayment of debt | — | (2,868 | ) | — | (2,073 | ) | — | — | (4,941 | ) | ||||||||||||||||||
Cash dividends to shareholders | — | (410 | ) | — | — | — | — | (410 | ) | |||||||||||||||||||
Noncontrolling interests and other financing activities | — | — | — | — | (103 | ) | — | (103 | ) | |||||||||||||||||||
Cash provided by (used for) financing activities - continuing operations | — | (280 | ) | (1,469 | ) | 1,554 | (2,989 | ) | 1,691 | (1,493 | ) | |||||||||||||||||
Cash used for financing activities - discontinued operations | — | — | — | — | — | — | — | |||||||||||||||||||||
Cash provided by (used for) financing activities | — | (280 | ) | (1,469 | ) | 1,554 | (2,989 | ) | 1,691 | (1,493 | ) | |||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | — | — | 21 | — | 21 | |||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | — | — | — | 1,409 | (854 | ) | (421 | ) | 134 | |||||||||||||||||||
Cash and cash equivalents at beginning of year | — | — | — | 862 | 3,473 | (3,679 | ) | 656 | ||||||||||||||||||||
Cash and cash equivalents at end of year | $ | — | $ | — | $ | — | $ | 2,271 | $ | 2,619 | $ | (4,100 | ) | $ | 790 |
Year Ended December 31, 2018 | ||||||||||||||||||||||||||||
(millions) | Aon Ireland | Aon UK | Aon Global Holdings Limited | Aon Corporation | Other Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||||||||||
Cash provided by operating activities - continuing operations | $ | — | $ | 1,575 | $ | 2,676 | $ | 3 | $ | 2,700 | $ | (5,268 | ) | $ | 1,686 | |||||||||||||
Cash provided by operating activities - discontinued operations | — | — | — | — | — | — | — | |||||||||||||||||||||
Cash provided by operating activities | — | 1,575 | 2,676 | 3 | 2,700 | (5,268 | ) | 1,686 | ||||||||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||||||||||
Proceeds from investments | — | — | — | 24 | 955 | (908 | ) | 71 | ||||||||||||||||||||
Payments for investments | — | (13 | ) | — | (47 | ) | (33 | ) | 13 | (80 | ) | |||||||||||||||||
Net sales (purchases) of short-term investments — non-fiduciary | — | — | — | 299 | 49 | — | 348 | |||||||||||||||||||||
Acquisition of businesses, net of cash acquired | — | — | — | — | (58 | ) | — | (58 | ) | |||||||||||||||||||
Sale of businesses, net of cash sold | — | — | — | — | (10 | ) | — | (10 | ) | |||||||||||||||||||
Capital expenditures | — | — | — | — | (240 | ) | — | (240 | ) | |||||||||||||||||||
Cash provided by (used for) investing activities - continuing operations | — | (13 | ) | — | 276 | 663 | (895 | ) | 31 | |||||||||||||||||||
Cash used for investing activities - discontinued operations | — | — | — | — | — | — | — | |||||||||||||||||||||
Cash provided by (used for) investing activities | — | (13 | ) | — | 276 | 663 | (895 | ) | 31 | |||||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||||||
Share repurchase | — | (1,470 | ) | — | — | — | — | (1,470 | ) | |||||||||||||||||||
Advances from (to) affiliates | — | 156 | (2,676 | ) | (2,291 | ) | (2,523 | ) | 7,334 | — | ||||||||||||||||||
Issuance of shares for employee benefit plans | — | (149 | ) | — | — | — | — | (149 | ) | |||||||||||||||||||
Issuance of debt | — | 1,723 | — | 4,028 | 3 | — | 5,754 | |||||||||||||||||||||
Repayment of debt | — | (1,441 | ) | — | (3,678 | ) | (298 | ) | — | (5,417 | ) | |||||||||||||||||
Cash dividends to shareholders | — | (382 | ) | — | — | — | — | (382 | ) | |||||||||||||||||||
Noncontrolling interests and other financing activities | — | — | — | — | (35 | ) | — | (35 | ) | |||||||||||||||||||
Cash used for financing activities - continuing operations | — | (1,563 | ) | (2,676 | ) | (1,941 | ) | (2,853 | ) | 7,334 | (1,699 | ) | ||||||||||||||||
Cash used for financing activities - discontinued operations | — | — | — | — | — | — | — | |||||||||||||||||||||
Cash used for financing activities | — | (1,563 | ) | (2,676 | ) | (1,941 | ) | (2,853 | ) | 7,334 | (1,699 | ) | ||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | — | — | (118 | ) | — | (118 | ) | |||||||||||||||||||
Net decrease in cash and cash equivalents | — | (1 | ) | — | (1,662 | ) | 392 | 1,171 | (100 | ) | ||||||||||||||||||
Cash and cash equivalents at beginning of year | — | 1 | — | 2,524 | 3,081 | (4,850 | ) | 756 | ||||||||||||||||||||
Cash and cash equivalents at end of year | $ | — | $ | — | $ | — | $ | 862 | $ | 3,473 | $ | (3,679 | ) | $ | 656 |
Year Ended December 31, 2017 | ||||||||||||||||||||||||||||
(millions) | Aon Ireland | Aon UK | Aon Global Holdings Limited | Aon Corporation | Other Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||||||||||
Cash provided by operating activities - continuing operations | $ | — | $ | 2,787 | $ | 618 | $ | 503 | $ | 1,804 | $ | (5,043 | ) | $ | 669 | |||||||||||||
Cash provided by operating activities - discontinued operations | — | — | — | — | 65 | — | 65 | |||||||||||||||||||||
Cash provided by operating activities | — | 2,787 | 618 | 503 | 1,869 | (5,043 | ) | 734 | ||||||||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||||||||||
Proceeds from investments | — | 224 | 1,683 | 587 | 582 | (3,008 | ) | 68 | ||||||||||||||||||||
Payments for investments | — | (261 | ) | (1,141 | ) | (29 | ) | (2,259 | ) | 3,626 | (64 | ) | ||||||||||||||||
Net sales (purchases) of short-term investments — non-fiduciary | — | — | — | (215 | ) | (17 | ) | — | (232 | ) | ||||||||||||||||||
Acquisition of businesses, net of cash acquired | — | — | — | — | (1,029 | ) | — | (1,029 | ) | |||||||||||||||||||
Sale of businesses, net of cash sold | — | — | — | — | 4,246 | — | 4,246 | |||||||||||||||||||||
Capital expenditures | — | — | — | — | (183 | ) | — | (183 | ) | |||||||||||||||||||
Cash provided by (used for) investing activities - continuing operations | — | (37 | ) | 542 | 343 | 1,340 | 618 | 2,806 | ||||||||||||||||||||
Cash used for investing activities - discontinued operations | — | — | — | — | (19 | ) | — | (19 | ) | |||||||||||||||||||
Cash provided by (used for) investing activities | — | (37 | ) | 542 | 343 | 1,321 | 618 | 2,787 | ||||||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||||||
Share repurchase | — | (2,399 | ) | — | — | — | — | (2,399 | ) | |||||||||||||||||||
Advances from (to) affiliates | — | 426 | (1,160 | ) | 95 | (1,966 | ) | 2,605 | — | |||||||||||||||||||
Issuance of shares for employee benefit plans | — | (121 | ) | — | — | — | — | (121 | ) | |||||||||||||||||||
Issuance of debt | — | 544 | — | 1,100 | 10 | — | 1,654 | |||||||||||||||||||||
Repayment of debt | — | (835 | ) | — | (1,150 | ) | (14 | ) | — | (1,999 | ) | |||||||||||||||||
Cash dividends to shareholders | — | (364 | ) | — | — | — | — | (364 | ) | |||||||||||||||||||
Noncontrolling interests and other financing activities | — | — | — | — | (36 | ) | — | (36 | ) | |||||||||||||||||||
Cash provided by (used for) financing activities - continuing operations | — | (2,749 | ) | (1,160 | ) | 45 | (2,006 | ) | 2,605 | (3,265 | ) | |||||||||||||||||
Cash used for financing activities - discontinued operations | — | — | — | — | — | — | — | |||||||||||||||||||||
Cash provided by (used for) financing activities | — | (2,749 | ) | (1,160 | ) | 45 | (2,006 | ) | 2,605 | (3,265 | ) | |||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | — | — | 69 | — | 69 | |||||||||||||||||||||
Net increase in cash and cash equivalents | — | 1 | — | 891 | 1,253 | (1,820 | ) | 325 | ||||||||||||||||||||
Cash and cash equivalents at beginning of year (1) | — | — | — | 1,633 | 1,828 | (3,030 | ) | 431 | ||||||||||||||||||||
Cash and cash equivalents at end of year | $ | — | $ | 1 | $ | — | $ | 2,524 | $ | 3,081 | $ | (4,850 | ) | $ | 756 |
(1) | Includes $5 million of discontinued operations at December 31, 2016 . |
1Q | 2Q | 3Q | 4Q | 2019 | |||||||||||||||
Income Statement Data | |||||||||||||||||||
Total revenue | $ | 3,143 | $ | 2,606 | $ | 2,379 | $ | 2,885 | $ | 11,013 | |||||||||
Operating income | 872 | 413 | 360 | 524 | 2,169 | ||||||||||||||
Net income from continuing operations | 676 | 287 | 229 | 382 | 1,574 | ||||||||||||||
Income from discontinued operations, net of tax | — | — | (1 | ) | — | (1 | ) | ||||||||||||
Net income | 676 | 287 | 228 | 382 | 1,573 | ||||||||||||||
Less: Net income attributable to noncontrolling interests | 17 | 10 | 6 | 8 | 41 | ||||||||||||||
Net income attributable to Aon shareholders | $ | 659 | $ | 277 | $ | 222 | $ | 374 | $ | 1,532 | |||||||||
Per Share Data | |||||||||||||||||||
Basic net income per share attributable to Aon shareholders | |||||||||||||||||||
Continuing operations | $ | 2.72 | $ | 1.15 | $ | 0.94 | $ | 1.59 | $ | 6.42 | |||||||||
Discontinued operations | — | — | — | — | — | ||||||||||||||
Net income | $ | 2.72 | $ | 1.15 | $ | 0.94 | $ | 1.59 | $ | 6.42 | |||||||||
Diluted net income per share attributable to Aon shareholders | |||||||||||||||||||
Continuing operations | $ | 2.70 | $ | 1.14 | $ | 0.93 | $ | 1.58 | $ | 6.37 | |||||||||
Discontinued operations | — | — | — | — | — | ||||||||||||||
Net income | $ | 2.70 | $ | 1.14 | $ | 0.93 | $ | 1.58 | $ | 6.37 |
1Q | 2Q | 3Q | 4Q | 2018 | |||||||||||||||
Income Statement Data | |||||||||||||||||||
Total revenue | $ | 3,090 | $ | 2,561 | $ | 2,349 | $ | 2,770 | $ | 10,770 | |||||||||
Operating income | 799 | (16 | ) | 262 | 499 | 1,544 | |||||||||||||
Net income from continuing operations | 604 | 57 | 155 | 284 | 1,100 | ||||||||||||||
Income from discontinued operations, net of tax | 6 | 1 | (2 | ) | 69 | 74 | |||||||||||||
Net income | 610 | 58 | 153 | 353 | 1,174 | ||||||||||||||
Less: Net income attributable to noncontrolling interests | 16 | 10 | 6 | 8 | 40 | ||||||||||||||
Net income attributable to Aon shareholders | $ | 594 | $ | 48 | $ | 147 | $ | 345 | $ | 1,134 | |||||||||
Per Share Data | |||||||||||||||||||
Basic net income per share attributable to Aon shareholders | |||||||||||||||||||
Continuing operations | $ | 2.37 | $ | 0.19 | $ | 0.61 | $ | 1.14 | $ | 4.32 | |||||||||
Discontinued operations | 0.02 | 0.01 | (0.01 | ) | 0.28 | 0.30 | |||||||||||||
Net income | $ | 2.39 | $ | 0.20 | $ | 0.60 | $ | 1.42 | $ | 4.62 | |||||||||
Diluted net income per share attributable to Aon shareholders | |||||||||||||||||||
Continuing operations | $ | 2.35 | $ | 0.19 | $ | 0.61 | $ | 1.13 | $ | 4.29 | |||||||||
Discontinued operations | 0.02 | — | (0.01 | ) | 0.28 | 0.30 | |||||||||||||
Net income | $ | 2.37 | $ | 0.19 | $ | 0.60 | $ | 1.41 | $ | 4.59 |
Business Combination Agreement
On March 9, 2020, the Company and Willis Towers Watson Public Limited Company, an Irish public limited company (“WTW”), entered into a business combination agreement with respect to a combination of the parties. At the effective date of the combination, WTW shareholders will be entitled to receive 1.08 newly issued Class A ordinary shares, nominal value $0.01 per share, of Aon Ireland in exchange for each ordinary share of WTW held by such holders. The combination is expected to be completed in the first half of 2021.