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Towers Watson Reports Second Quarter Earnings

  Towers Watson Reports Second Quarter Earnings

  *Adjusted Diluted EPS from continuing operations of $1.40
  *Diluted EPS from continuing operations of $1.21
  *Adjusted EBITDA Margin of 19.4%
  *EBITDA Margin of 19.3%

Business Wire

NEW YORK -- February 6, 2014

Towers Watson (NYSE, NASDAQ: TW),  a leading global professional services
company, today announced financial results for the second quarter of fiscal
year 2014, which ended December 31, 2013.

Total revenues were $888 million for the quarter, a decrease of 2.5% (2%
decrease constant currency) from $911 million for the second quarter of fiscal
2013. On an organic basis, which excludes the impact of changes in foreign
currency exchange rates, acquisitions and divestitures, revenues decreased 2%
from the prior-year second quarter. The prior year quarter experienced
particularly strong results due to short-term strength across several lines of
business. The Brokerage business was sold in the second quarter and is being
reported as discontinued operations. The expansion of the Exchange Solutions
Segment to include all OneExchange and health and welfare administration,
which was announced on January 23, 2014, does not impact the second quarter
results.

Adjusted EBITDA for the second quarter of fiscal 2014 was $172 million, or
19.4% of revenues, versus Adjusted EBITDA of $176 million, or 19.3% of
revenues, for the prior-year second quarter. A number of cost savings
initiatives were implemented in the second quarter which helped drive EBITDA
margins, while absorbing $9 million of severance costs.

Income from continuing operations (attributable to common stockholders) for
the second quarter of fiscal 2014 was $87 million, an increase from $80
million for the prior-year second quarter. For the quarter, diluted earnings
per share from continuing operations were $1.21 and adjusted diluted earnings
per share from continuing operations were $1.40. The tax rate for the quarter
for continuing operations was 32%.

“As expected, this was a challenging quarter due to the tough comparables from
last year,” said John Haley, chief executive officer. “During the second
quarter of fiscal 2013, we recaptured receivable reserves and completed a
significant number of bulk-lump sum de-risking projects which we forecasted
would not be repeated in the second quarter of fiscal 2014. Also, our business
development resources continued to be very focused on building the OneExchange
business, which also dampened the results of the consulting operations this
quarter. Finally, although our revenues were a little softer than expected, we
continued to make significant progress this quarter against our strategic
positioning efforts. We acquired Liazon, adding the leading technology
exchange platform for mid-size and small companies and a fully-insured option
to our OneExchange platform. OneExchange experienced a very successful
enrollment period, with a record number of new enrollments, and we confirmed
the quality and scalability of the platform.”

Second Quarter Company Highlights

Benefits

For the quarter, the Benefits segment had revenues of $487 million, a decrease
of 6% (6% decrease constant currency) from $519 million in the prior year
second quarter. Retirement had a high single digit constant currency revenue
decline primarily due to fewer special projects and less strategy work than
anticipated. Health and Group Benefits had a mid-single digit constant
currency revenue decline. Consulting resources continue to be redirected to
sales efforts and product development for OneExchange Active. Technology and
Administration Solutions constant currency revenue grew by low single digits
due to new client work in Germany and the UK. The Benefits segment had a Net
Operating Income (“NOI”) margin of 30% in the second quarter of fiscal 2014.

Risk and Financial Services

For the quarter, the Risk and Financial Services segment had revenues of $161
million, a decrease of 6.5% (6% decrease constant currency) from $172 million
in the prior-year second quarter. Investment had low single digit constant
currency growth this quarter across all regions. As forecasted, Risk
Consulting and Software (RCS) constant currency revenues declined primarily
due to a decline of M&A activity and tighter discretionary spending,
especially in EMEA. During the quarter, RCS initiated a restructuring to
better align resources with demand. The Risk and Financial Services segment
had an NOI margin of 21% in the second quarter of fiscal 2014.

Talent and Rewards

For the quarter, the Talent and Rewards segment had revenues of $170 million,
a decrease of 3% (3% decrease constant currency) from $176 million in the
prior-year second quarter. Executive Compensation and Rewards, Talent and
Communication had a constant currency revenue decline off of strong
comparables and declines in EMEA. Data, Surveys and Technology had mid-single
digit constant currency revenue growth led by Asia Pacific. The Talent and
Rewards segment had an NOI margin of 31% in the second quarter of fiscal 2014.
The first half of the year typically has stronger margins due to the
seasonality of the business.

Exchange Solutions

For the quarter, the Exchange Solutions segment had revenues of $36 million,
an increase of 127% (127% increase constant currency) from $16 million in the
prior-year second quarter. OneExchange Retiree increased by low triple digits.
Liazon contributed approximately $800,000 in revenues this quarter. The
Exchange Solutions segment had a net operating loss of $7 million and an NOI
margin of (20%) for the second quarter of fiscal 2014. The second half of the
fiscal year is seasonally stronger due to the timing of enrollments.

Outlook for Fiscal 2014

We expect to return to constant currency revenue growth in the second half of
this fiscal year. We also continue to be focused on cost saving initiatives
and streamlining our workflow, which could bring the anticipated total of
severance costs to $15 million this fiscal year.

For fiscal 2014, the company expects to report revenues in the range of $3.5
billion and adjusted diluted earnings per share in the range of $5.55 to
$5.65. This guidance assumes an average exchange rate of 1.61 U.S. dollars to
the British Pound and 1.36 U.S. dollars to the Euro for fiscal 2014.

For the third quarter of fiscal 2014, the company expects to report revenues
in the range of $915 million to $925 million, reflecting constant currency
revenue growth in the low single digits, and adjusted diluted earnings per
share in the range of $1.45 to $1.50.

Conference Call

The company will host a live webcast and conference call to discuss the
financial results for the second quarter of fiscal 2014. It will be held on
Thursday, February 6, 2014, beginning at 9:00 a.m. Eastern Time, and can be
accessed via the Internet at www.towerswatson.com. The replay of the call will
be available shortly after the live call for a period of three months. A
telephonic replay will also be available for one week after the call by
dialing 617-801-6888 and using confirmation number 98259601.

About Towers Watson

Towers Watson (NYSE, NASDAQ: TW) is a leading global professional services
company that helps organizations improve performance through effective people,
risk and financial management. The company offers consulting, technology and
solutions in the areas of benefits, talent management, rewards, and risk and
capital management. Towers Watson has more than 14,000 associates around the
world and is located on the web at www.towerswatson.com.

Use of Non-GAAP Measures

In order to assist readers of our financial statements in understanding the
core operating results that the Company’s management uses to evaluate the
business and for financial planning, we present (1) Adjusted EBITDA, (2)
Adjusted income from continuing operations (attributable to common
stockholders), and (3) Adjusted Diluted Earnings Per Share from continuing
operations (which are all non-U.S. GAAP measures), to eliminate the effect of
acquisition-related expenses from the financial results of our operations. We
use Adjusted income from continuing operations (attributable to common
stockholders), the numerator, for the purpose of calculating Adjusted Diluted
Earnings Per Share from continuing operations. The Company believes that
Adjusted EBITDA and Adjusted Diluted Earnings Per Share from continuing
operations are relevant and useful information widely used by analysts,
investors and other interested parties in our industry to provide a baseline
for evaluating and comparing our operating results.

Since the Merger in January 2010, we have incurred significant
acquisition-related expenses related to our merger and integration activities
necessary to combine Watson Wyatt and Towers Perrin. These acquisition-related
expenses include transaction and integration costs, severance costs, non-cash
charges for amortization of intangible assets and merger-related stock-based
compensation costs from the issuance of merger-related restricted shares.
Included in our acquisition-related transaction and integration costs are
integration consultant fees and legal, accounting, marketing and information
technology integration expenses. We expect that during the first three years
following the merger, these activities and the related expenses will be
incurred and be significant, although amortization will continue over the
estimated useful lives of the related intangibles. We consider Adjusted EBITDA
and Adjusted Diluted Earnings Per Share from continuing operations to be
important financial measures, which we use to internally evaluate and assess
our core operations, and benchmark our operating results against our
competitors. We use Adjusted EBITDA to evaluate and measure our
performance-based compensation plans. Adjusted EBITDA and Adjusted Diluted
Earnings Per Share are important in illustrating what our operating results
would have been had we not incurred these acquisition-related expenses.

We define Adjusted EBITDA as net income (attributable to common stockholders)
adjusted for discontinued operations, net of tax, provision for income taxes,
interest, net, depreciation and amortization, transaction and integration
expenses, stock-based compensation, and other non-operating income excluding
income from variable interest entity. We define Adjusted Diluted Earnings Per
Share from continuing operations as diluted earnings per share from continuing
operations adjusted for discontinued operations, net of tax, transaction and
integration expenses, acquisition non-cash stock-based compensation, and
amortization of merger and acquisition accounting intangible assets. These
non-U.S. GAAP measures are not defined in the same manner by all companies and
may not be comparable to other similarly titled measure of other companies.
Non-U.S. GAAP measures should be considered in addition to, and not as a
substitute for, the information contained within our financial statements.

Reconciliation of Adjusted EBITDA to net income (attributable to common
stockholders), Adjusted income from continuing operations to net income
(attributable to common stockholders) and Adjusted Diluted Earnings Per Share
from continuing operations to diluted earnings per share from continuing
operations are included in the accompanying tables to today’s press release.

Forward-Looking Statements

This document contains “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995. You can identify these
statements and other forward-looking statements in this document by words such
as “may”, “will”, “would”, “expect”, “anticipate”, “believe”, “estimate”,
“plan”, “intend”, “continue”, or similar words, expressions or the negative of
such terms or other comparable terminology. Such statements are based upon the
current beliefs and expectations of Towers Watson's management and are subject
to significant risks and uncertainties. Actual results may differ from those
set forth in the forward-looking statements.

The following factors, among others, could cause actual results to differ from
those set forth in the forward-looking statements: a decline in client demand
(for example, resulting from the reduced use of defined benefit plans); the
risk of a disclosure breach of company or client data; the ability to
successfully make suitable acquisitions and divestitures; the risk that the
acquisitions of Extend Health and Liazon are not profitable or are not
otherwise successfully integrated; our ability to protect client data and our
information systems; the risk that potential changes in federal and state
health care regulations, or future interpretation of existing regulations, may
have a material adverse impact on our business; the risk that our Exchange
Solutions or OneExchange businesses fail to maintain good relationships with
insurance carriers, become dependent upon a limited number of insurance
carriers or fail to develop new insurance carrier relationships; the risk that
changes and developments in the health insurance system in the United States
could harm our business; our ability to respond to rapid technological
changes; the ability to recruit and retain qualified employees and to retain
client relationships; and the risk that a significant or prolonged economic
downturn could have a material adverse effect on Towers Watson's business,
financial condition and results of operations. Additional risks and factors
are identified under “Risk Factors” in Towers Watson’s most recent Annual
Report on Form 10-K filed with the SEC.

You should not rely upon forward-looking statements as predictions of future
events because these statements are based on assumptions that may not come
true and are speculative by their nature. Towers Watson does not undertake an
obligation to update any of the forward-looking information included in this
document, whether as a result of new information, future events, changed
expectations or otherwise.

                                                                             
TOWERS WATSON & CO.
Supplemental Segment Information
(In Thousands of U.S. Dollars)
(Unaudited)
                                                                                    
Segment
Revenue
                                                                                    
             Revenue for the Three
             Months Ended December 31,     % Change      Currency   Acquisitions    % Change
             2013         2012            GAAP          Impact     Divestitures    Organic
                                                                                    
Benefits     $ 487,337     $ 519,418       (6)%          0%         0%              (6)%
Risk &
Financial      161,178       172,405       (6.5)%        (0.5)%     0%              (6)%
Services*
Talent &       170,323       176,185       (3)%          0%         0%              (3)%
Rewards
Exchange      35,736      15,720       127%          0%         5%              122%
Solutions
Reportable   $ 854,574     $ 883,728
Segments
                                                                                    
*Risk and Financial Services excludes Brokerage line of business which has been reported as
discontinued operations
                                                                                    
             Revenue for the Six
             Months Ended December 31,     % Change      Currency   Acquisitions    % Change
             2013         2012            GAAP          Impact     Divestitures    Organic
                                                                                    
Benefits     $ 944,366     $ 976,546       (3)%          0%         0%              (3)%
Risk &
Financial      302,961       321,905       (6)%          (1)%       0%              (5)%
Services*
Talent &       323,892       316,420       2%            (1)%       0%              3%
Rewards
Exchange      71,126      29,638       140%          0%         3%              137%
Solutions
Reportable   $ 1,642,345   $ 1,644,509
Segments
                                                                                    
*Risk and Financial Services excludes Brokerage line of business which has been reported as
discontinued operations
                                                                                    
Reconciliation of Reportable Segment Revenues to Consolidated Revenues
                                                                                    
                           Three Months Ended December              Six Months Ended December 31,
                           31,
                           2013            2012                     2013            2012
                                                                                    
Reportable                 $ 854,574       $ 883,728                $ 1,642,345     $ 1,644,509
Segments
Reimbursable Expenses       33,581        27,293                 55,749        59,747    
and Other
Consolidated Revenues      $ 888,155       $ 911,021                $ 1,698,094     $ 1,704,256
                                                                                    
Segment Net Operating
Income
                                                                                    
                           Three Months Ended December              Six Months Ended December 31,
                           31,
                           2013            2012                     2013            2012
                                                                                    
Benefits                   $ 148,349       $ 185,817                $ 285,887       $ 321,671
Risk & Financial             34,442          41,268                   56,929          64,524
Services*
Talent &                     53,096          60,078                   97,160          85,869
Rewards
Exchange                    (7,223    )    (10,128 )               (767      )    (15,893   )
Solutions
Reportable Segments        $ 228,664       $ 277,035                $ 439,209       $ 456,171
                                                                                    
*Risk and Financial Services excludes Brokerage line of business which has been reported as
discontinued operations
                                                                                    
Reconciliation of Reportable Segment Net Operating Income to Income from Operations
                                                                                    
                           Three Months Ended December              Six Months Ended December 31,
                           31,
                           2013            2012                     2013            2012
                                                                                    
Reportable                 $ 228,664       $ 277,035                $ 439,209       $ 456,171
Segments
Differences in               6,869           (8,881  )                16,855          5,994
Allocation Methods
Amortization of              (18,691   )     (19,727 )                (37,583   )     (38,822   )
Intangible Assets
Transaction and              (808      )     (9,152  )                (808      )     (18,425   )
Integration Expenses
Stock-Based Compensation     (1,782    )     (10,204 )                (5,345    )     (17,828   )
Discretionary                (74,085   )     (98,202 )                (150,207  )     (170,782  )
Compensation
Payroll Tax on
Discretionary                (4,075    )     (5,378  )                (8,643    )     (9,684    )
Compensation
Other, net                  (7,666    )    (11,072 )               (22,631   )    (12,931   )
Income from Operations     $ 128,426       $ 114,419                $ 230,847       $ 193,693
                                                                                                

                                                                                          
TOWERS WATSON & CO.
Reconciliation of Non-GAAP Measures
(In Thousands of U.S. Dollars, Except Per Share Data)
(Unaudited)
                                                                                                   
                Three Months Ended                            Six Months Ended
                December               December               December               December
                31,                    31,                    31,                    31,
                2013                   2012                   2013                   2012
                                                                                                   
Net Income
(attributable   $ 86,188               $ 82,290               $ 174,402              $ 141,017
to common
stockholders)
Less: (Loss)
income from
Discontinued     (403    )             2,412                2,041                9,158   
Operations,
net of tax
Income from
Continuing
Operations      $ 86,591               $ 79,878               $ 172,361              $ 131,859
(attributable
to common
stockholders)
Adjusted for
certain
acquisition
related
items:
Amortization
of intangible     12,731                 13,493                 28,841                 25,782
assets
Transaction
and
integration       550                    6,260                  550                    12,228
expenses
including
severance
Stock-based      -                    3,795                -                    7,896   
compensation
Adjusted
Income from     $ 99,872               $ 103,426              $ 201,752              $ 177,765
continuing
operations
                                                                                                   
Weighted
average
shares of         71,213                 71,847                 71,130                 71,920
common stock,
diluted (000)
                                                                                                   
Diluted EPS
from            $ 1.21                 $ 1.11                 $ 2.42                 $ 1.83
continuing
operations
Adjusted for
certain
acquisition
related
items:
Amortization
of intangible     0.18                   0.19                   0.40                   0.36
assets
Transaction
and
integration       0.01                   0.09                   0.01                   0.17
expenses
including
severance
Stock-based      -                    0.05                 -                    0.11    
compensation
Adjusted
Diluted EPS
from            $ 1.40                 $ 1.44                 $ 2.83                 $ 2.47
continuing
operations
                                                                                                   
                                                                                                   
                Three Months Ended                            Six Months Ended
                December               December               December               December
                31,                    31,                    31,                    31,
                2013                   2012                   2013                   2012
                                                                                                   
Net Income
(attributable   $ 86,188               $ 82,290               $ 174,402              $ 141,017
to common
stockholders)
Less: (Loss)
income from
Discontinued     (403    )             2,412                2,041                9,158   
Operations,
net of tax
Income from
Continuing
Operations        86,591                 79,878                 172,361                131,859
(attributable
to common
stockholders)
Provision for     42,283                 36,126                 57,091                 64,395
Income Taxes
Interest, net     1,467                  2,794                  3,374                  5,055
Depreciation
and               43,296                 44,930                 86,681                 87,804
Amortization
Other
Non-Operating     (2,304  )              (2,696  )              (2,342  )              (4,992  )
Income (a)
Transaction
and               808                    9,152                  808                    18,425
Integration
Expenses
Stock-Based      -                    5,548                -                    11,920  
Compensation
                                                                                                   
Adjusted
EBITDA and      $ 172,141     19.4 %   $ 175,732     19.3 %   $ 317,973     18.7 %   $ 314,466     18.5 %
Adjusted
EBITDA Margin
                                                                                                   
(a) Other non-operating income includes income from affiliates and other non-operating income excluding
income from variable interest entity
                                                                                                   

                                                            
TOWERS WATSON & CO.
Condensed Consolidated Statements of Operations
(In Thousands of U.S. Dollars, Except Per Share Data)
(Unaudited)
                                                                 
                   Three Months Ended December   Six Months Ended December 31,
                   31,
                   2013            2012          2013            2012
                                                                 
Revenue            $  888,155     $ 911,021    $ 1,698,094    $ 1,704,256 
                                                                 
Costs of
providing
services:
Salaries and
employee              526,731        556,179       1,027,150       1,048,259
benefits
Professional and
subcontracted         69,074         71,168        130,474         126,843
services
Occupancy             34,782         34,669        68,327          72,450
General and
administrative        85,038         80,504        153,807         156,782
expenses
Depreciation and      43,296         44,930        86,681          87,804
amortization
Transaction and
integration          808          9,152       808           18,425    
expenses
                     759,729      796,602     1,467,247     1,510,563 
                                                                 
Income from           128,426        114,419       230,847         193,693
operations
                                                                 
Loss from             -              -             -               (56       )
affiliates
Interest income       560            811           1,089           1,505
Interest expense      (2,027   )     (3,605  )     (4,463    )     (6,560    )
Other
non-operating        5,652        2,696       5,690         5,048     
income
                                                                 
INCOME FROM
CONTINUING
OPERATIONS            132,611        114,321       233,163         193,630
BEFORE INCOME
TAXES
                                                                 
Provision for        42,283       36,126      57,091        64,395    
income taxes
                                                                 
INCOME FROM
CONTINUING            90,328         78,195        176,072         129,235
OPERATIONS
                                                                 
(Loss) income
from
discontinued
operations, net      (403     )    2,412       2,041         9,158     
of tax of
$38,286, $730,
$40,837, and
$4,537
                                                                 
NET INCOME
BEFORE                89,925         80,607        178,113         138,393
NON-CONTROLLING
INTERESTS
                                                                 
Less: Income
(loss)
attributable to      3,737        (1,683  )    3,711         (2,624    )
non-controlling
interests
                                                                 
NET INCOME
(attributable to   $  86,188      $ 82,290     $ 174,402      $ 141,017   
common
stockholders)
                                                                 
                                                                 
Basic earnings
per share
(attributable to
common
stockholders):
Income from
continuing         $  1.22         $ 1.12        $ 2.43          $ 1.85
operations
Income from
discontinued         -            0.03        0.03          0.13      
operations
Net income         $  1.22        $ 1.15       $ 2.46         $ 1.98      
                                                                 
Diluted earnings
per share
(attributable to
common
stockholders):
Income from
continuing         $  1.21           1.11          2.42          $ 1.83
operations
Income from
discontinued       $  -            0.04       $ 0.03         $ 0.13      
operations
Net income         $  1.21         1.15       $ 2.45         $ 1.96      
                                                                 
                                                                 
Weighted average
shares of common     70,809       71,257      70,805        71,376    
stock, basic
(000)
Weighted average
shares of common     71,213       71,847      71,130        71,920    
stock, diluted
(000)
                                                                             

                                                              
TOWERS WATSON & CO.
Condensed Consolidated Balance Sheets
(In Thousands of U.S. Dollars, Except Share Data)
(Unaudited)

                                                 December 31,    June 30,
                                                 2013            2013
                                                                 
Assets
Cash and cash equivalents                        $ 511,943       $ 532,805
Fiduciary Assets                                   12,925          148,414
Short-term investments                             16,879          56,645
Receivables from clients:
                                                                 
Billed, net of allowances of $9,833 and            511,871         519,580
$12,768
Unbilled, at estimated net realizable value       276,797       306,258   
                                                   788,668         825,838
                                                                 
Other current assets                              152,492       148,519   
Total current assets                               1,482,907       1,712,221
                                                                 
Fixed assets, net                                  363,258         346,915
Deferred income taxes                              80,761          86,313
Goodwill                                           2,312,335       2,218,935
Intangible assets, net                             655,425         687,758
Investments of consolidated variable interest      277,070         -
entity
Other assets                                       318,015         279,935
                                                                 
Total Assets                                     $ 5,489,771    $ 5,332,077 
                                                                 
Liabilities
Accounts payable, accrued liabilities and        $ 340,337       $ 351,648
deferred income
Employee-related liabilities                       352,943         560,831
Fiduciary liabilities                              12,925          148,414
Term loan - current                                25,000          25,000
Other current liabilities                         58,487        26,980    
Total current liabilities                          789,692         1,112,873
                                                                 
Revolving credit facility                          35,000          -
Term loan                                          212,500         225,000
Accrued retirement benefits and other              679,857         771,429
employee-related liabilities
Professional liability claims reserve              256,042         251,191
Other noncurrent liabilities                      268,011       226,750   
                                                                 
Total Liabilities                                 2,241,102     2,587,243 
                                                                 
Commitments and contingencies
                                                                 
Stockholders' Equity
Class A Common Stock - $0.01 par value:
300,000,000 shares authorized; 69,178,097 and      692             692
69,178,097 issued, and 65,248,816 and
65,341,759 outstanding
Class B Common Stock - $0.01 par value:
93,500,000 shares authorized; 5,374,070 and        54              54
5,374,070 issued and 5,374,070 and 5,374,070
outstanding
Additional paid-in capital                         1,851,940       1,850,448
Treasury stock, at cost - 3,929,281 and            (248,797  )     (221,643  )
3,836,338 shares
Retained earnings                                  1,558,310       1,394,407
Accumulated other comprehensive loss              (204,392  )    (299,464  )
Total Stockholders' Equity                        2,957,807     2,724,494 
Non-controlling interest                          290,862       20,340    
Total Equity                                      3,248,669     2,744,834 
                                                                 
Total Liabilities and Total Equity               $ 5,489,771    $ 5,332,077 
                                                                 

                                                               
TOWERS WATSON & CO.
Condensed Consolidated Statements of Cash Flows
(In Thousands of U.S. Dollars)
(Unaudited)

                                                 Six Months Ended December 31,
                                                 2013             2012
                                                                  
Cash flows (used in) from operating
activities:
Net income before non-controlling interests      $  178,113       $ 138,393
Adjustments to reconcile net income to net
cash (used in) from operating activities:
Provision for doubtful receivables from             566             7,824
clients
Depreciation                                        49,097          49,380
Amortization of intangible assets                   38,022          39,892
Gain on sale of discontinued operations,            (18,480   )     -
pretax
Provision for deferred income taxes                 51,276          27,936
Stock-based compensation                            11,509          23,260
Other, net                                          (1,619    )     (2,651   )
Changes in operating assets and liabilities
Receivables from clients                            47,340          (19,819  )
Fiduciary assets                                    110,743         53,063
Other current assets                                (858      )     (18,865  )
Other noncurrent assets                             (5,139    )     589
Accounts payable, accrued liabilities and           (44,160   )     22,717
deferred income
Employee-related liabilities                        (224,683  )     (144,650 )
Fiduciary liabilities                               (110,743  )     (53,063  )
Accrued retirement benefits and other               (104,386  )     (111,077 )
employee-related liabilities
Professional liability claims reserves              2,887           (8,996   )
Other current liabilities                           (762      )     1,559
Other noncurrent liabilities                        (256      )     9,099
Income tax related accounts                        1,599         6,780    
Cash flows (used in) from operating activities   $  (19,934   )   $ 21,371   
                                                                  
Cash flows used in investing activities:
Cash paid for business acquisitions                 (210,814  )     (185     )
Cash transferred with discontinued operations       (25,066   )     -
Proceeds from discontinued operations               256,953         3,682
Cash acquired from business acquisitions            3,949           -
Fixed assets and software for internal use          (38,566   )     (54,493  )
Purchases of investments of consolidated            (50,510   )     -
variable interest entity
Capitalized software costs                          (23,327   )     (29,007  )
Purchases of investments                            (31,779   )     (18,083  )
Sales and redemptions of investments               56,580        27,670   
Cash flows used in investing activities          $  (62,580   )   $ (70,416  )
                                                                  
Cash flows from (used in) financing
activities:
Borrowings under credit facility                    144,100         376,600
Repayments under credit facility                    (109,100  )     (309,600 )
Repayments of notes payable                         (12,500   )     -
Cash received from consolidated variable            50,510          -
interest entity
Contingent retention liabilities                    21,746          -
Cash paid on retention liabilities                  (1,939    )     -
Dividends paid                                      (613      )     (48,715  )
Repurchases of common stock                         (40,533   )     (36,531  )
Payroll tax payments on vested shares               (7,457    )     (1,750   )
Excess tax benefits                                9,800         -        
Cash flows from (used in) financing activities   $  54,014       $ (19,996  )
                                                                  
Effect of exchange rates on cash                 $  7,638        $ 11,648   
                                                                  
Decrease in cash and cash equivalents               (20,862   )     (57,393  )
                                                                  
Cash and cash equivalents at beginning of          532,805       478,179  
period
                                                                  
Cash and cash equivalents at end of period       $  511,943      $ 420,786  
                                                                  
Supplemental disclosures:
Cash paid for interest                           $  1,931         $ 4,460
Cash paid for income taxes, net of refunds       $  40,814        $ 32,904
Common stock withheld for taxes associated       $  -             $ 1,750
with vesting of Restricted A Shares
Transfers into consolidated investment fund      $  223,212       $ -
                                                                  

Contact:

Towers Watson
Investor Contact
Aida Sukys, 703-258-8033
Aida.Sukys@towerswatson.com
 
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