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