Document
1P3Yfalse--12-31Q22019GB0000315293X00000.360.400.400.440.010.017500000007500000002401000002357000000P3Y5000000000.0
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE QUARTERLY PERIOD ENDED June 30, 2019
 
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Commission file number 1-7933

Aon plc
(Exact Name of Registrant as Specified in Its Charter)
 
ENGLAND AND WALES
 
98-1030901
(State or Other Jurisdiction of
 
(I.R.S. Employer
Incorporation or Organization)
 
Identification No.)
 
122 LEADENHALL STREET
,
LONDON
,
ENGLAND

EC3V 4AN
(Address of Principal Executive Offices)
 
(Zip Code)
+44 20 7623 5500
(Registrant’s Telephone Number,
Including Area Code)
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes    No 
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes    No 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
Accelerated filer
 
Non-accelerated filer
 
Smaller reporting company
 
 
 
 
Emerging growth company
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes No
 
Number of Class A Ordinary Shares of Aon plc, $0.01 nominal value, outstanding as of July 25, 2019235,841,886
 



Table of Contents
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




Part I Financial Information
Item 1. Financial Statements
 
Aon plc
Condensed Consolidated Statements of Income
(Unaudited) 
 
 
Three Months Ended
 
Six Months Ended
(millions, except per share data)
 
June 30, 2019
 
June 30, 2018
 
June 30, 2019
 
June 30, 2018
Revenue
 
 

 
 

 
 
 
 
Total revenue
 
$
2,606

 
$
2,561

 
$
5,749

 
$
5,651

Expenses
 
 

 
 

 
 

 
 

Compensation and benefits
 
1,501

 
1,494

 
3,085

 
3,110

Information technology
 
126

 
123

 
243

 
238

Premises
 
85

 
96

 
172

 
189

Depreciation of fixed assets
 
40

 
47

 
80

 
86

Amortization and impairment of intangible assets
 
97

 
282

 
194

 
392

Other general expenses
 
344

 
535

 
690

 
853

Total operating expenses
 
2,193

 
2,577

 
4,464

 
4,868

Operating income (loss)
 
413

 
(16
)
 
1,285

 
783

Interest income
 
1

 
1

 
3

 
5

Interest expense
 
(77
)
 
(69
)
 
(149
)
 
(139
)
Other income (expense)
 
6

 
(3
)
 
6

 
(18
)
Income (loss) from continuing operations before income taxes
 
343

 
(87
)
 
1,145

 
631

Income tax expense (benefit)
 
56

 
(144
)
 
182

 
(30
)
Net income from continuing operations
 
287

 
57

 
963

 
661

Net income from discontinued operations
 

 
1

 

 
7

Net income
 
287

 
58

 
963

 
668

Less: Net income attributable to noncontrolling interests
 
10

 
10

 
27

 
26

Net income attributable to Aon shareholders
 
$
277

 
$
48

 
$
936

 
$
642

 
 
 
 
 
 
 
 
 
Basic net income per share attributable to Aon shareholders
 
 
 
 
 
 
 
 
Continuing operations
 
$
1.15

 
$
0.19

 
$
3.88

 
$
2.57

Discontinued operations
 

 
0.01

 

 
0.03

Net income
 
$
1.15

 
$
0.20

 
$
3.88

 
$
2.60

Diluted net income per share attributable to Aon shareholders
 
 
 
 
 
 
 
 
Continuing operations
 
$
1.14

 
$
0.19

 
$
3.85

 
$
2.55

Discontinued operations
 

 

 

 
0.03

Net income
 
$
1.14

 
$
0.19

 
$
3.85

 
$
2.58

Weighted average ordinary shares outstanding - basic
 
240.6

 
246.0

 
241.4

 
247.2

Weighted average ordinary shares outstanding - diluted
 
242.8

 
247.4

 
243.2

 
248.8


See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

2



Aon plc
Condensed Consolidated Statements of Comprehensive Income
(Unaudited) 
 
 
Three Months Ended
 
Six Months Ended
(millions)
 
June 30, 2019
 
June 30, 2018
 
June 30, 2019
 
June 30, 2018
Net income
 
$
287

 
$
58

 
$
963

 
$
668

Less: Net income attributable to noncontrolling interests
 
10

 
10

 
27

 
26

Net income attributable to Aon shareholders
 
277

 
48

 
936

 
642

Other comprehensive income (loss), net of tax:
 
 

 
 

 
 

 
 

Change in fair value of financial instruments
 
(8
)
 
(1
)
 
(1
)
 
13

Foreign currency translation adjustments
 
(103
)
 
(460
)
 
30

 
(213
)
Postretirement benefit obligation
 
14

 
122

 
45

 
170

Total other comprehensive income (loss)
 
(97
)
 
(339
)
 
74

 
(30
)
Less: Other comprehensive income (loss) attributable to noncontrolling interests
 

 
(6
)
 
2

 
(3
)
Total other comprehensive income (loss) attributable to Aon shareholders
 
(97
)
 
(333
)
 
72

 
(27
)
Comprehensive income (loss) attributable to Aon shareholders
 
$
180

 
$
(285
)
 
$
1,008

 
$
615

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

3



Aon plc
Condensed Consolidated Statements of Financial Position
 
 
(Unaudited)
 
 
(millions, except nominal value)
 
June 30,
2019
 
December 31,
2018
Assets
 
 

 
 

Current assets
 
 

 
 

Cash and cash equivalents
 
$
581

 
$
656

Short-term investments
 
235

 
172

Receivables, net
 
3,227

 
2,760

Fiduciary assets 
 
12,071

 
10,166

Other current assets
 
631

 
618

Total current assets
 
16,745

 
14,372

Goodwill
 
8,198

 
8,171

Intangible assets, net
 
973

 
1,149

Fixed assets, net
 
599

 
588

Operating lease right-of-use assets
 
959

 

Deferred tax assets
 
599

 
561

Prepaid pension
 
1,213

 
1,133

Other non-current assets
 
521

 
448

Total assets
 
$
29,807

 
$
26,422

 
 
 
 
 
Liabilities and equity
 
 

 
 

Liabilities
 
 

 
 

Current liabilities
 
 

 
 

Accounts payable and accrued liabilities
 
$
1,369

 
$
1,943

Short-term debt and current portion of long-term debt
 
844

 
251

Fiduciary liabilities
 
12,071

 
10,166

Other current liabilities
 
1,197

 
936

Total current liabilities
 
15,481

 
13,296

Long-term debt
 
6,740

 
5,993

Non-current operating lease liabilities
 
962

 

Deferred tax liabilities
 
211

 
181

Pension, other postretirement, and postemployment liabilities
 
1,576

 
1,636

Other non-current liabilities
 
924

 
1,097

Total liabilities
 
25,894

 
22,203

 
 
 
 
 
Equity
 
 

 
 

Ordinary shares - $0.01 nominal value
Authorized: 750 shares (issued: 2019 - 235.7; 2018 - 240.1)
 
2

 
2

Additional paid-in capital
 
6,002

 
5,965

Retained earnings
 
1,669

 
2,093

Accumulated other comprehensive loss
 
(3,837
)
 
(3,909
)
Total Aon shareholders' equity
 
3,836

 
4,151

Noncontrolling interests
 
77

 
68

Total equity
 
3,913

 
4,219

Total liabilities and equity
 
$
29,807

 
$
26,422

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

4



Aon plc
Condensed Consolidated Statements of Shareholders’ Equity
(Unaudited) 
(millions)
 
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, 2019
 
240.1

 
$
5,967

 
$
2,093

 
$
(3,909
)
 
$
68

 
$
4,219

Net income
 

 

 
659

 

 
17

 
676

Shares issued - employee stock compensation plans
 
1.4

 
(96
)
 

 

 

 
(96
)
Shares purchased
 
(0.6
)
 

 
(101
)
 

 

 
(101
)
Share-based compensation expense
 

 
89

 

 

 

 
89

Dividends to shareholders ($0.40 per share)
 

 

 
(96
)
 

 

 
(96
)
Net change in fair value of financial instruments
 

 

 

 
7

 

 
7

Net foreign currency translation adjustments
 

 

 

 
131

 
2

 
133

Net postretirement benefit obligation
 

 

 

 
31

 

 
31

Balance at March 31, 2019
 
240.9

 
5,960

 
2,555

 
(3,740
)
 
87

 
4,862

Net income
 

 

 
277

 

 
10

 
287

Shares issued - employee stock compensation plans
 
0.6

 
(47
)
 

 

 

 
(47
)
Shares purchased
 
(5.8
)
 

 
(1,056
)
 

 

 
(1,056
)
Share-based compensation expense
 

 
91

 

 

 

 
91

Dividends to shareholders ($0.44 per share)
 

 

 
(107
)
 

 

 
(107
)
Net change in fair value of financial instruments
 

 

 

 
(8
)
 

 
(8
)
Net foreign currency translation adjustments
 

 

 

 
(103
)
 

 
(103
)
Net postretirement benefit obligation
 

 

 

 
14

 

 
14

Dividends paid to noncontrolling interests on subsidiary common stock
 

 

 

 

 
(20
)
 
(20
)
Balance at June 30, 2019
 
235.7

 
$
6,004

 
$
1,669

 
$
(3,837
)
 
$
77

 
$
3,913



5



Aon plc
Condensed Consolidated Statements of Shareholders’ Equity
(Unaudited)
 
(millions)
 
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, 2018
 
247.6

 
$
5,777

 
$
2,795

 
$
(3,497
)
 
$
65

 
$
5,140

Net income
 

 

 
594

 

 
16

 
610

Shares issued - employee stock compensation plans
 
1.5

 
(109
)
 

 

 

 
(109
)
Shares purchased
 
(3.9
)
 

 
(553
)
 

 

 
(553
)
Share-based compensation expense
 

 
77

 

 

 

 
77

Dividends to shareholders ($0.36 per share)
 

 

 
(89
)
 

 

 
(89
)
Net change in fair value of financial instruments
 

 

 

 
14

 

 
14

Net foreign currency translation adjustments
 

 

 

 
244

 
3

 
247

Net postretirement benefit obligation
 

 

 

 
48

 

 
48

Balance at March 31, 2018
 
245.2

 
5,745

 
2,747

 
(3,191
)
 
84

 
5,385

Net income
 

 

 
48

 

 
10

 
58

Shares issued - employee stock compensation plans
 
0.6

 
(41
)
 

 

 

 
(41
)
Shares purchased
 
(2.8
)
 

 
(402
)
 

 

 
(402
)
Share-based compensation expense
 

 
70

 

 

 

 
70

Dividends to shareholders ($0.40 per share)
 

 

 
(98
)
 

 

 
(98
)
Net change in fair value of financial instruments
 

 

 

 
(1
)
 

 
(1
)
Net foreign currency translation adjustments
 

 

 

 
(454
)
 
(6
)
 
(460
)
Net postretirement benefit obligation
 

 

 

 
122

 

 
122

Purchases of shares from noncontrolling interests
 

 

 

 

 
(1
)
 
(1
)
Dividends paid to noncontrolling interests on subsidiary common stock
 

 

 

 

 
(14
)
 
(14
)
Balance at June 30, 2018
 
243.0

 
$
5,774

 
$
2,295

 
$
(3,524
)
 
$
73

 
$
4,618

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

6



Aon plc
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
 
Six Months Ended
(millions)
 
June 30, 2019
 
June 30, 2018
Cash flows from operating activities
 
 

 
 

Net income
 
$
963

 
$
668

Less: Net income from discontinued operations
 

 
7

Adjustments to reconcile net income to cash provided by operating activities:
 
 

 
 

(Gain) loss from sales of businesses, net
 
(7
)
 
1

Depreciation of fixed assets
 
80

 
86

Amortization and impairment of intangible assets
 
194

 
392

Share-based compensation expense
 
180

 
147

Deferred income taxes
 
(25
)
 
(93
)
Change in assets and liabilities:
 
 

 
 

Fiduciary receivables
 
(926
)
 
(883
)
Short-term investments — funds held on behalf of clients
 
(961
)
 
(154
)
Fiduciary liabilities
 
1,887

 
1,037

Receivables, net
 
(477
)
 
(371
)
Accounts payable and accrued liabilities
 
(579
)
 
(495
)
Restructuring reserves
 
(18
)
 
12

Current income taxes
 
10

 
(144
)
Pension, other postretirement and postemployment liabilities
 
(92
)
 
(84
)
Other assets and liabilities
 
132

 
301

Cash provided by operating activities
 
361

 
413

Cash flows from investing activities
 
 

 
 

Proceeds from investments
 
14

 
23

Payments for investments
 
(60
)
 
(36
)
Net sales (purchases) of short-term investments — non-fiduciary
 
(62
)
 
352

Acquisition of businesses, net of cash acquired
 
(15
)
 
(50
)
Sale of businesses, net of cash sold
 
7

 
1

Capital expenditures
 
(106
)
 
(111
)
Cash provided by (used for) investing activities
 
(222
)
 
179

Cash flows from financing activities
 
 

 
 

Share repurchase
 
(1,155
)
 
(971
)
Issuance of shares for employee benefit plans
 
(144
)
 
(150
)
Issuance of debt
 
3,559

 
2,552

Repayment of debt
 
(2,228
)
 
(2,027
)
Cash dividends to shareholders
 
(203
)
 
(187
)
Noncontrolling interests and other financing activities
 
(61
)
 
(15
)
Cash used for financing activities
 
(232
)
 
(798
)
Effect of exchange rates on cash and cash equivalents
 
18

 
(63
)
Net decrease in cash and cash equivalents
 
(75
)
 
(269
)
Cash and cash equivalents at beginning of period
 
656

 
756

Cash and cash equivalents at end of period
 
$
581

 
$
487

Supplemental disclosures:
 
 

 
 

Interest paid
 
$
147

 
$
145

Income taxes paid, net of refunds
 
$
197

 
$
207


See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

7



Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements and Notes thereto (the “Financial Statements”) have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The Financial Statements include the accounts of Aon plc and all of its controlled subsidiaries (“Aon” or the “Company”). Intercompany accounts and transactions have been eliminated. The Financial Statements include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to present fairly the Company’s consolidated financial position, results of operations and cash flows for all periods presented.
Certain information and disclosures normally included in the Financial Statements prepared in accordance with U.S. GAAP have been condensed or omitted. These Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. The results for the three and six months ended June 30, 2019 are not necessarily indicative of operating results that may be expected for the full year ending December 31, 2019.
Use of Estimates
The preparation of the accompanying Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the Financial Statements, and the reported amounts of reserves and expenses. These estimates and assumptions are based on management’s best estimates and judgments. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment. Management believes its estimates to be reasonable given the current facts available. Aon adjusts such estimates and assumptions when facts and circumstances dictate.  Illiquid credit markets, volatile equity markets, and foreign currency exchange rate movements increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in estimates resulting from continuing changes in the economic environment would, if applicable, be reflected in the Financial Statements in future periods.
2. Accounting Principles and Practices
Adoption of New Accounting Standards
Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income
In February 2018, the FASB issued new accounting guidance related to reclassification of certain tax effects from accumulated other comprehensive income. The guidance allowed a reclassification from accumulated comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. The guidance was effective for the Company in the first quarter of 2019. For the three and six months ended June 30, 2019, there was no impact on the net income of the Company as Aon did not elect to reclassify stranded tax effects on the Condensed Consolidated Statement of Financial Position. It is the Company’s policy to release income tax effects from accumulated other comprehensive loss using the portfolio approach.
Targeted Improvements to Accounting for Hedging Activities
In August 2017, the FASB issued new accounting guidance on targeted improvements to accounting for hedging activities. The new guidance amended its hedge accounting model to enable entities to better portray their risk management activities in the financial statements. The guidance eliminated the requirement to separately measure and report hedge ineffectiveness and required the effect of a hedging instrument to be presented in the same income statement line as the hedged item. The new guidance was effective for Aon in the first quarter of 2019 and the Company adopted it on a modified retrospective basis with no cumulative effect adjustment to accumulated other comprehensive income or corresponding adjustment to Retained earnings. Changes to the Condensed Consolidated Statement of Income and financial statement disclosures were applied prospectively. Under the new guidance, gains or losses on certain derivative hedging instruments are recognized in revenue, as opposed to other income (expense) under the previous guidance. For the three and six months ended June 30, 2019, the adoption of this guidance had no impact on the net income and an insignificant impact on the operating income of the Company.
Leases
In February 2016, the FASB issued a new accounting standard on leases, which requires lessees to recognize assets and liabilities for most leases. Under the new standard, a lessee is required to recognize in the Consolidated Statements of Financial Position, liabilities to make future lease payments and right-of-use (“ROU”) assets representing its right to use the underlying assets for the lease term. The recognition, measurement, timing, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous U.S. GAAP.

8



The Company adopted the new standard as of January 1, 2019, using the modified retrospective approach for all leases existing at, or entered into after, the period of adoption. Under this approach, prior periods were not restated. Rather, lease balances and other disclosures for prior periods were provided in the notes to the financial statements as previously reported, and the cumulative effect of initially applying the guidance was recognized in the Condensed Consolidated Statement of Financial Position.
The modified retrospective approach includes several optional practical expedients available that entities may elect to apply upon transition. These practical expedients relate to the identification and classification of leases that commenced before the effective date, initial direct costs for leases that commenced before the effective date, and the ability to use hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allows a lessee to carryforward their population of existing leases, the classification of each lease, as well as the treatment of initial direct costs as of the period of adoption. In addition, the Company elected the practical expedient related to lease and non-lease components, as an accounting policy election for all asset classes, which allows a lessee to not separate non-lease from lease components and instead account for consideration paid in a contract as a single lease component. Lastly, the Company did not elect the practical expedient related to hindsight analysis which allows a lessee to use hindsight in determining the lease term and in assessing impairment of the entity’s ROU assets.
The Company has made a policy election to not recognize ROU assets and lease liabilities that arise from leases with an initial term of twelve months or less on the Condensed Consolidated Statements of Financial Position. However, the Company will recognize these lease payments in the Condensed Consolidated Statements of Income on a straight-line basis over the lease term and variable lease payments in the period in which the obligation is incurred. The Company has chosen to apply this accounting policy across all classes of underlying assets. Additionally, upon adoption, the Company utilized a discount rate to determine the present value of the lease payments based on information available as of January 1, 2019.
Beginning January 1, 2019, operating ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at the commencement date. Operating leases in effect prior to January 1, 2019 were recognized at the present value of the remaining payments on the remaining lease term as of January 1, 2019. Upon adoption, the Company recognized ROU assets and lease liabilities of $1.1 billion and $1.3 billion, respectively. The standard had an insignificant impact on the Condensed Consolidated Statements of Income and no impact on the Condensed Consolidated Statements of Cash Flows. Refer to Note 20 “Lease Commitments” for further information including significant assumptions and judgments made.

As a result of applying the modified retrospective approach to adopt the new leasing standard, the following adjustments were made to the Condensed Consolidated Statements of Financial Position as of January 1, 2019 (in millions):
 
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


Accounting Standards Issued But Not Yet Adopted
Changes to the Disclosure Requirements for Defined Benefit Plans
In August 2018, the FASB issued new accounting guidance related to the disclosure requirements for employers that sponsor defined benefit pension and other postretirement benefit plans. The guidance requires sponsors of these plans to provide additional disclosures, including weighted average interest rates used in the entity’s cash balance pension plans and a narrative description of reasons for any significant gains or losses impacting the benefit obligation for the period, and eliminates certain previous disclosure requirements. The new guidance is effective for Aon in the first quarter of 2021 with early adoption permitted and will be applied retrospectively. The Company is currently evaluating the impact that the guidance will have on the Financial Statements and the period of adoption.

9



Simplifying the Test for Goodwill Impairment
In January 2017, the FASB issued new accounting guidance on simplifying the test for goodwill impairment. Currently the standard requires an entity to perform a two-step test to determine the amount, if any, of goodwill impairment. In Step 1, an entity compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, the entity performs Step 2 and compares the implied fair value of goodwill with the carrying amount of that goodwill for that reporting unit. An impairment charge equal to the amount by which the carrying amount of goodwill for the reporting unit exceeds the implied fair value of that goodwill is recorded, limited to the amount of goodwill allocated to that reporting unit. The new guidance removes Step 2. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. An entity will apply the new guidance on a prospective basis. The new guidance is effective for Aon in the first quarter of 2020 and early adoption is permitted. The Company is currently evaluating the period of adoption, but does not expect a significant impact on the Financial Statements.
Credit Losses
In June 2016, the FASB issued a new accounting standard on the measurement of credit losses on financial instruments. The new standard replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. An entity will apply the new standard through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the standard is effective. The new standard is effective for Aon in the first quarter of 2020 with early adoption permitted. The Company is currently evaluating the impact that the standard will have on the Financial Statements and will adopt the new accounting standard in the first quarter of 2020.
3. Revenue from Contracts with Customers
Disaggregation of Revenue
The following table summarizes revenue from contracts with customers by principal service line (in millions):
 
 
Three Months Ended June 30
 
Six Months Ended June 30
 
 
2019
 
2018
 
2019
 
2018
Commercial Risk Solutions
 
$
1,167

 
$
1,166

 
$
2,285

 
$
2,350

Reinsurance Solutions
 
420

 
380

 
1,208

 
1,122

Retirement Solutions
 
419

 
431

 
839

 
855

Health Solutions
 
317

 
309

 
803

 
760

Data & Analytic Services
 
286

 
277

 
622

 
571

Elimination
 
(3
)
 
(2
)
 
(8
)
 
(7
)
Total revenue
 
$
2,606

 
$
2,561

 
$
5,749

 
$
5,651


Consolidated revenue from contracts with customers by geographic area, which is attributed on the basis of where the services are performed, is as follows (in millions):
 
 
Three Months Ended June 30
 
Six Months Ended June 30
 
 
2019
 
2018
 
2019
 
2018
United States
 
$
1,146

 
$
1,125

 
$
2,307

 
$
2,241

Americas other than United States
 
241

 
243

 
467

 
480

United Kingdom
 
400

 
413

 
852

 
897

Europe, Middle East, & Africa other than United Kingdom
 
501

 
493

 
1,510

 
1,472

Asia Pacific
 
318

 
287

 
613

 
561

Total revenue
 
$
2,606

 
$
2,561

 
$
5,749

 
$
5,651



10




Contract Costs

An analysis of the changes in the net carrying amount of costs to fulfill contracts with customers are as follows (in millions):
 
 
Three Months Ended June 30
 
Six Months Ended June 30
 
 
2019
 
2018
 
2019
 
2018
Balance at beginning of period
 
$
236

 
$
240

 
$
329

 
$
298

Additions
 
336

 
341

 
682

 
711

Amortization
 
(357
)
 
(353
)
 
(796
)
 
(785
)
Impairment
 

 

 

 

Foreign currency translation and other
 
1

 
(12
)
 
1

 
(8
)
Balance at end of period
 
$
216

 
$
216

 
$
216

 
$
216



An analysis of the changes in the net carrying amount of costs to obtain contracts with customers are as follows (in millions):
 
 
Three Months Ended June 30
 
Six Months Ended June 30
 
 
2019
 
2018
 
2019
 
2018
Balance at beginning of period
 
$
155

 
$
144

 
$
156

 
$
145

Additions
 
17

 
13

 
26

 
21

Amortization
 
(11
)
 
(11
)
 
(22
)
 
(21
)
Impairment
 

 

 

 

Foreign currency translation and other
 

 
(2
)
 
1

 
(1
)
Balance at end of period
 
$
161

 
$
144

 
$
161

 
$
144


4. Cash and Cash Equivalents and Short-term Investments
Cash and cash equivalents include cash balances and all highly liquid instruments with initial maturities of three months or less.  Short-term investments consist of money market funds. The estimated fair value of cash and cash equivalents and short-term investments approximates their carrying values.
At June 30, 2019, Cash and cash equivalents and Short-term investments were $816 million compared to $828 million at December 31, 2018, a decrease of $12 million. Of the total balances, $99 million and $91 million were restricted as to their use at June 30, 2019 and December 31, 2018, respectively. Included within Short-term investments as of June 30, 2019 and December 31, 2018 were £42.8 million ($54.3 million at June 30, 2019 exchange rates) and £42.7 million ($53.9 million at December 31, 2018 exchange rates), respectively, of operating funds required to be held by the Company in the United Kingdom (the “U.K.”) by the Financial Conduct Authority (the “FCA”), a U.K.-based regulator.
5. Other Financial Data
Condensed Consolidated Statements of Income Information
Other Income (Expense)
Other income (expense) consists of the following (in millions):
 
Three Months Ended June 30
 
Six Months Ended June 30
 
2019
 
2018
 
2019
 
2018
Foreign currency remeasurement
$
11

 
$
29

 
$

 
$
13

Disposal of businesses
2

 

 
7

 
(1
)
Pension and other postretirement
5

 
(7
)
 
9

 
(5
)
Equity earnings
1

 
1

 
2

 
2

Financial instruments
(13
)
 
(27
)
 
(12
)
 
(27
)
Other

 
1

 

 

Total
$
6

 
$
(3
)
 
$
6

 
$
(18
)


11



Condensed Consolidated Statements of Financial Position Information
Allowance for Doubtful Accounts
An analysis of the allowance for doubtful accounts are as follows (in millions):
 
Three Months Ended June 30
 
Six Months Ended June 30
 
2019
 
2018
 
2019
 
2018
Balance at beginning of period
$
64

 
$
65

 
$
64

 
$
59

Provision charged to Other general expenses
4

 
3

 
12

 
11

Accounts written off, net of recoveries
(3
)
 
(6
)
 
(11
)
 
(8
)
Balance at end of period
$
65

 
$
62

 
$
65

 
$
62


Other Current Assets
The components of Other current assets are as follows (in millions):
As of
June 30,
2019
 
December 31,
2018
Costs to fulfill contracts with customers (1)
$
216

 
$
329

Prepaid expenses
128

 
97

Taxes receivable
145

 
113

Other (2)
142

 
79

Total
$
631

 
$
618


(1)
Refer to Note 3 “Revenue from Contracts with Customers” for further information.
(2)
December 31, 2018 includes $12 million previously classified as “Receivables from the Divested Business”.
Other Non-Current Assets
The components of Other non-current assets are as follows (in millions):
As of
June 30,
2019
 
December 31,
2018
Costs to obtain contracts with customers (1)
$
161

 
$
156

Taxes receivable
100

 
100

Leases (2)
65

 

Investments
54

 
54

Other
141

 
138

Total
$
521

 
$
448


(1)
Refer to Note 3 “Revenue from Contracts with Customers” for further information.
(2)
Refer to Note 20 “Lease Commitments” for further information.
Other Current Liabilities
The components of Other current liabilities are as follows (in millions):
As of
June 30,
2019
 
December 31,
2018
Deferred revenue (1)
$
337

 
$
251

Leases (2)
223

 

Taxes payable
133

 
83

Other
504

 
602

Total
$
1,197

 
$
936


(1)
During the three and six months ended June 30, 2019, $95 million and $241 million, respectively, was recognized in the Condensed Consolidated Statements of Income. During the three and six months ended June 30, 2018, $115 million and $215 million, respectively, was recognized in the Condensed Consolidated Statements of Income.
(2)
Refer to Note 20 “Lease Commitments” for further information.

12



Other Non-Current Liabilities
The components of Other non-current liabilities are as follows (in millions):
As of
June 30,
2019
 
December 31,
2018
Taxes payable (1)
$
576

 
$
585

Leases
37

 
169

Deferred revenue
59

 
65

Compensation and benefits
49

 
56

Other
203

 
222

Total
$
924

 
$
1,097


(1) Includes $221 million and $240 million for the non-current portion of the one-time mandatory transition tax on accumulated foreign earnings as of June 30, 2019 and December 31, 2018, respectively.
6. Discontinued Operations
On February 9, 2017, the Company entered into a Purchase Agreement with Tempo Acquisition, LLC (the “Purchase Agreement”) to sell its benefits administration and business process outsourcing business (the “Divested Business”) to an entity formed and controlled by affiliates of The Blackstone Group L.P. (the “Buyer”) and certain designated purchasers that are direct or indirect subsidiaries of the Buyer.
On May 1, 2017, the Buyer purchased all of the outstanding equity interests of the Divested Business, plus certain related assets and liabilities, for a purchase price of $4.3 billion in cash paid at closing, subject to customary adjustments set forth in the Purchase Agreement, and deferred consideration of up to $500 million (the “Transaction”). Cash proceeds after customary adjustments and before taxes due were $4.2 billion.
Aon and the Buyer entered into certain transaction related agreements at the closing, including two commercial agreements, a transition services agreement, certain intellectual property license agreements, subleases, and other customary agreements. Aon expects to continue to be a significant client of the Divested Business and the Divested Business has agreed to use Aon for its broking and other services for a specified period of time.
The financial results of the Divested Business for the three and six months ended June 30, 2019 and 2018 are presented as Income from discontinued operations on the Company’s Condensed Consolidated Statements of Income. The following table presents the financial results of the Divested Business (in millions):
 
 
Three Months Ended June 30
 
Six Months Ended June 30

 
2019
 
2018
 
2019
 
2018
Expenses
 
 
 
 
 
 
 
 
Total operating expenses
 
$
1

 
$

 
$
1

 
$
3

Loss from discontinued operations before income taxes
 
(1
)
 

 
(1
)
 
(3
)
Income tax benefit
 
(1
)
 

 
(1
)
 
(1
)
Net loss from discontinued operations excluding gain
 

 

 

 
(2
)
Gain on sale of discontinued operations, net of tax
 

 
1

 

 
9

Net income from discontinued operations
 
$

 
$
1

 
$

 
$
7


There were no Cash and cash equivalents of discontinued operations at June 30, 2019. Total proceeds received for the sale of the Divested Business and taxes paid as a result of the sale are recognized on the Condensed Consolidated Statements of Cash Flows in Cash provided by investing activities - continuing operations and Cash provided by operating activities - continuing operations, respectively.

13



7. Restructuring
In 2017, Aon initiated a global restructuring plan (the “Restructuring Plan”) in connection with the sale of the Divested Business. The Restructuring Plan is intended to streamline operations across the organization and deliver greater efficiency, insight, and connectivity. The Company expects these restructuring activities and related expenses to affect continuing operations through the fourth quarter of 2019, including an estimated 5,000 to 5,600 total role eliminations. In the second quarter of 2019, Aon updated the Restructuring Plan for additional opportunities that were identified in the quarter, which are expected to result in additional estimated charges of $125 million in 2019.
The Restructuring Plan is expected to result in cumulative charges of approximately $1,350 million through the end of the plan, consisting of approximately $530 million in employee termination costs, $130 million in technology rationalization costs, $80 million in lease consolidation costs, $45 million in non-cash asset impairments, and $565 million in other costs, including certain separation costs associated with the sale of the Divested Business.
From the inception of the Restructuring Plan through June 30, 2019, the Company has eliminated 5,091 positions and incurred total charges of $1,200 million for restructuring and related separation costs. These charges are included in Compensation and benefits, Information technology, Premises, Depreciation of fixed assets, and Other general expenses in the accompanying Condensed Consolidated Statements of Income.
The following table summarizes restructuring and separation costs by type that have been incurred through June 30, 2019 and are estimated to be incurred through the end of the Restructuring Plan (in millions). Estimated costs by type may be revised in future periods as these assumptions are updated:
 
 
Three Months Ended June 30, 2019
 
Six Months Ended June 30, 2019
 
Inception to Date
 
Estimated Remaining Costs
 
Estimated Total Cost (1)
Workforce reduction
 
$
78

 
$
102

 
$
516

 
$
14

 
$
530

Technology rationalization (2)
 
4

 
15

 
95

 
35

 
130

Lease consolidation (2)
 
5

 
14

 
50

 
30

 
80

Asset impairments
 
2

 
2

 
41

 
4

 
45

Other costs associated with restructuring and separation (2) (3)
 
38<