UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 10, 2014
Willis Group Holdings Public Limited Company
(Exact name of registrant as specified in its charter)
| Ireland | 001-16503 | 98-0352587 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
c/o Willis Group Limited, 51 Lime Street, London, EC3M 7DQ, England and Wales
(Address, including Zip Code, of Principal Executive Offices)
Registrant’s telephone number, including area code: (44) (20) 3124 6000
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 7.01. | Regulation FD Disclosure. |
On March 10, 2014, Willis Group Holdings Public Limited Company posted its Fact Book for the quarter ended December 31, 2013 to its website, which is attached hereto as Exhibit 99.1 and incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
| Exhibit |
Description | |
| 99.1 | Willis Group Holdings Fact Book for the Quarter Ended December 31, 2013 | |
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: March 10, 2014 | WILLIS GROUP HOLDINGS PUBLIC LIMITED COMPANY | |||||
| By: | /s/ Adam L. Rosman | |||||
| Adam L. Rosman | ||||||
| Group General Counsel | ||||||
INDEX TO EXHIBITS
| Exhibit |
Description | |
| 99.1 | Willis Group Holdings Fact Book for the Quarter Ended December 31, 2013 | |
 WILLIS
GROUP HOLDINGS Fact Book
Fourth Quarter 2013
March 2014
Exhibit 99.1 |
 With roots dating to 1828, Willis operates today on every continent, with more than
18,000 employees in over 400 offices
Across geographies, industries and specialties, Willis provides its local and
multinational clients with resilience for a risky world
Willis is known for its market-leading products and professional services in
risk management and risk transfer
Willis experts rank among the world’s leading authorities on analytics,
modelling and mitigation
strategies
at
the
intersection
of
global
commerce
and
extreme
events
Willis
Global
Franchise
Willis Subsidiaries and Associates
2013 Commissions and Fees by Segment
2013 C&F: $3.63 billion
A leading global risk advisor, insurance and
reinsurance broker
2 |
 Summary
Q4 2013 financial results See important disclosures regarding non-GAAP
measures starting on page 17 Q4 2013
Q4 2012
Reported
commission and
fee growth
5.1%
7.0%
Organic
commission and
fee growth
3.7%
7.5%
Reported
operating margin
16.5%
(89.0)%
Adjusted
operating margin
16.3%
19.1%
Reported EPS
$0.37
$(4.65)
Adjusted EPS
$0.42
$0.45
3
Positive Q4 2013 organic commission
and fee growth across all three
business segments
Q4 2012 adjusted operating margin
would have been 180 bps lower had the
change to compensation policy been in
effect from start of 2012 |
 Organic
Q4 2013 commissions and fees growth Q4 2013
Q4 2012
North America
5.8%
5.0%
International
3.0%
7.4%
Global
1.4%
11.6%
Willis Group
3.7%
7.5%
See important disclosures regarding non-GAAP measures starting on page 17
4
Organic growth excluding $9.4 million (110 bps) net
negative revenue recognition adjustment would have
been 4.8%
North America –
Excluding $5.3 million (160 bps) positive
revenue recognition adjustment, organic would
have been 4.2%
Growth well distributed across geographic
regions and solid growth in construction
International –
Excluding $14.7 million (510 bps) negative
revenue recognition adjustment, organic would
have been 8.1%
Good growth across most regions: Western
Europe, Eastern Europe, Latin America,
Australasia. Good growth in Asia, excluding
impact of revenue recognition adjustment
Global –
Mid-single digit growth in Specialty, Reinsurance
down very low-single digits, challenging 4Q
2012 WCMA comparison |
 Reported operating margin 16.5%; Adjusted operating margin 16.3%
Adjusted operating margin down 280 bps from prior year quarter, primarily driven
by: Higher salaries and benefits and other operating expenses
Partially offset by higher commissions and fees
Q4 2012 adjusted operating margin would have been 180 bps lower had the change in
remuneration policy been in effect from start of 2012
Reported EPS of $0.37; Adjusted EPS of $0.42
Reported and adjusted EPS include approximately $9 million negative impact related
to revenue recognition adjustments in North America and China
Adjusted EPS down $0.03 from Q4 2012
Q4 2012 results would have been $0.07 per diluted share lower had the change to
remuneration policy been in effect from start of 2012
See important disclosures regarding non-GAAP measures starting on page 17
Q4 2013 financial results
5 |
 WSH &
Peers – Organic growth trends
6
Note: Peer averages are based on Willis estimates using public information
regarding insurance brokerage operations of AJG, AON, BRO, MMC Average
2008-2013: WSH: 3%
Peers: 1%
See important disclosures regarding non-GAAP measures starting on page 17
4%
2%
4%
2%
3%
5%
-1%
-2%
-1%
2%
4%
5%
2008
2009
2010
2011
2012
2013
WSH
Peers |
 ($
millions) 2013 corporate/non-operating uses of cash
Dividends $193 million
Capex $112 million
M&A expenditures of ~$34 million
$36 million increase in cash flow from operations in 2013
$796 million of cash and cash equivalents at December 31, 2013
Strong cash flow from operations
7
$253
$419
$489
$439
$525
$561
2008
2010
2009
2011
2013
2012 |
 3.8x
2.7x
2.5x
2.6x
2.6x
2.7x
2008
2009
2010
2011
2012
2013
Debt / Adjusted EBITDA
Adjusted EBITDA $874 million in 2013
Debt outstanding $2.3 billion as at December 31, 2013
(a)
(a)
Includes impact from acquisition of HRH as of 10/1/2008.
Leverage ratios
8
See important disclosures regarding non-GAAP measures starting on page 17
|
 SEGMENT
OVERVIEWS |
 Extensive retail platform
Able to leverage industry and specialty
practice group expertise across Willis
network
Major practice groups include:
Human Capital (approximately 25% of
2013 North America C&F)
Construction (approximately 14% of
2013 North America C&F)
Healthcare
Real Estate/Hospitality
Financial and Executive Risk
Approximately 6,000 associates
Over 100 locations (Other includes
Canada and Mexico)
2013 North America C&F: $1.38 billion
Willis North America overview
10
(1)
CAPPPS: Captives, Actuarial, Programs, Pooling and Personal Lines
Metro /
Northeast
14%
Midwest
17%
Atlantic
21%
West
14%
South
16%
CAPPPS
(1)
12%
Other
6%
Segment overview
2013 commissions and fees – by region |
 Retail operations in
Western and Eastern Europe
United Kingdom
Latin America
Asia Pacific
South Africa
Middle East
Offices designed to grow business
locally around the world, making use of
the skills, industry knowledge and
expertise available within segment and
elsewhere in the Group
Approximately 7,000 associates
170 offices in 43 countries
2013 International C&F: $1.07 billion
Willis International overview
11
Western
Europe
46%
UK
15%
Latin America
16%
Australasia
8%
South Africa
1%
Asia
9%
Eastern Europe
5%
Segment overview
2013 commissions and fees – by region |
 Reinsurance, Specialty Insurance and
Capital Markets businesses
Approximately 3,600 associates; clients
around the globe
Willis Re
One of the world’s largest reinsurance
brokers with three divisions: North
America, International and Specialty
Strong market share in major markets,
particularly marine and aviation
Complete range of transactional
capabilities including, in conjunction with
WCM&A, a wide variety of capital markets
based products
Cutting edge analytical and advisory
services, including Willis Research
Network, the insurance industry’s largest
partnership with global academic research
2013 Global C&F: $1.19 billion
Willis Global overview
12
Reinsurance
46%
Political
People and
Terrorism
Other
4%
Aerospace
8%
Marine & Energy
13%
P&C and
Construction
9%
Placement
2%
Finex / Finmar
7%
Faber Global
4%
Willis Capital
Markets
1%
7%
Segment overview
2013 commissions and fees – by business |
 Global Specialty, with strong global
positions in:
Aerospace
–
includes
Inspace
Marine & Energy
Construction
Financial & Executive Risks
Financial Solutions –
political risks and UK
financial institutions
Faber Global –
wholesale and facultative
solutions through London, European & Bermuda
markets
Fine Art, Jewelry and Specie, Bloodstock and
Kidnap & Ransom
Placement
Specialist placement of risk into worldwide
insurance market
Willis Capital Markets & Advisory
Advises on M&A and capital markets products
Willis Global overview (continued)
2013 Global C&F: $1.19 billion
13
Segment overview
Reinsurance
46%
Political
People and
Terrorism
Other
4%
Aerospace
8%
Marine & Energy
13%
P&C and
Construction
9%
Placement
2%
Finex / Finmar
7%
Faber Global
4%
Willis Capital
Markets
1%
7%
2013 commissions and fees – by business |
 APPENDIX |
 The
Willis Cause 15 |
 Important disclosures regarding forward-looking statements
16
www.willis.com.
This presentation contains certain “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of
1934, which are intended to be covered by the safe harbors created by those laws. These
forward-looking statements include information about possible or assumed future results of
our operations.
All statements, other than statements of historical facts, included in this document that address
activities, events or developments that we expect or anticipate may occur in the future,
including such things as our outlook, potential cost savings and accelerated adjusted operating margin
and adjusted earnings per share growth, future capital expenditures, growth in commissions and
fees, business strategies, competitive strengths, goals, the benefits of new initiatives, growth of our business and operations, plans, and references to future
successes are forward-looking statements. Also, when we use the words such as
‘anticipate’, ‘believe’, ‘estimate’, ‘expect’, ‘intend’, ‘plan’, ‘probably’, or similar expressions, we are
making forward-looking statements.
There are important uncertainties, events and factors that could cause our actual results or
performance to differ materially from those in the forward-looking statements contained in
this document, including the following: the impact of any regional, national or global political,
economic, business, competitive, market, environmental or regulatory conditions on our global
business operations; the impact of current global economic conditions on our results of operations and financial condition, including as a result of those associated with the
ongoing Eurozone crisis, any insolvencies of or other difficulties experienced by our clients,
insurance companies or financial institutions; our ability to implement and realize anticipated
benefits of any expense reduction initiative, charge or any revenue generating initiatives; our ability to implement and fully realize anticipated benefits of our new growth
strategy and revenue generating and cost-saving initiatives; volatility or declines in insurance
markets and premiums on which our commissions are based, but which we do not control; our
ability to develop and implement technology solutions and invest in innovative product offerings in an efficient and competitive manner; our ability to continue to manage
our significant indebtedness; our ability to compete effectively in our industry, including any impact
if we continue to refuse to accept contingent commissions to date from carriers in the
non-Human Capital areas of our retail brokerage business and developing new products and services; material changes in commercial property and casualty markets generally or
the availability of insurance products or changes in premiums resulting from a catastrophic event,
such as a hurricane; our ability to retain key employees and clients and attract new business;
the timing or ability to carry out share repurchases and redemptions; the timing or ability to carry out refinancing or take other steps to manage our capital and the limitations
in our long term debt agreements that may restrict our ability to take these actions; fluctuations in
our earnings as a result of potential changes to our valuation allowance(s) on our deferred tax
assets; any fluctuations in exchange and interest rates that could affect expenses and revenue; the potential costs and difficulties in complying with a wide variety of
foreign laws and regulations and any related changes, given the global scope of our operations; rating
agency actions, including a downgrade to our credit rating, that could inhibit our ability to
borrow funds or the pricing thereof and in certain circumstances cause us to offer to buy back some of our debt; a significant decline in the value of investments that fund our
pension plans or changes in our pension plan liabilities or funding obligations; our ability to
achieve the expected strategic benefits of transactions, including any growth from associates;
further impairment of the goodwill of one of our reporting units, in which case we may be required to record additional significant charges to earnings; our ability to receive
dividends or other distributions in needed amounts from our subsidiaries; changes in the tax or
accounting treatment of our operations and fluctuations in our tax rate; any potential impact
from the US healthcare reform legislation; our involvement in and the results of any regulatory investigations, legal proceedings and other contingencies; underwriting, advisory
or reputational risks associated with non-core operations as well as the potential significant
impact our non-core operations (including the Willis Capital Markets & Advisory operations)
can have on our financial results; our exposure to potential liabilities arising from errors and
omissions and other potential claims against us; and the interruption or loss of our
information processing systems, data security breaches or failure to maintain secure information systems. The foregoing list of factors is not exhaustive and new factors may emerge from time to time that
could also affect actual performance and results. For more information see the section entitled
‘‘Risk Factors’’ included in Willis’ Form 10-K for the year ended December 31, 2013 and our subsequent filings with the Securities and Exchange Commission. Copies are
available online at http://www.sec.gov or
Although we believe that the assumptions underlying our forward-looking statements are reasonable,
any of these assumptions, and therefore also the forward-looking statements based on these
assumptions, could themselves prove to be inaccurate. In light of the significant uncertainties inherent in the forward-looking statements included in this presentation,
our inclusion of this information is not a representation or guarantee by us that our objectives and
plans will be achieved. Our forward-looking statements speak only as of the date made and
we will not update these forward-looking statements unless the securities laws require us to do so. In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in this presentation may not occur, and we caution you against unduly relying on
these forward-looking statements. |
 Important disclosures regarding non-GAAP measures
This
presentation
contains
references
to
"non-GAAP
financial
measures"
as
defined
in
Regulation
G
of
SEC
rules.
We
present these measures because we believe they are of interest to the investment
community and they provide additional meaningful methods of evaluating
certain aspects of the Company’s operating performance from period to period on a basis
that may not be otherwise apparent on a generally accepted accounting principles
(GAAP) basis. These financial measures should be viewed in addition to, not
in lieu of, the Company’s condensed consolidated income statements and balance sheet
as of the relevant date.
Consistent with Regulation G, a description of such information is provided below
and a reconciliation of certain of
such
items
to
GAAP
information
can
be
found
in
our
periodic
filings
with
the
SEC.
Our
method
of
calculating
these non-GAAP financial measures may differ from other companies and therefore
comparability may be limited. Adjusted operating income
is defined as operating income, excluding certain items as set out on pages 18 and
19. Adjusted operating margin
is defined as the percentage of adjusted operating income to total revenues.
Adjusted net income
is defined
as
net
(loss)
income,
excluding
certain
items
as
set
out
on
pages
20
and
21.
Adjusted earnings per share (Adjusted EPS)
is defined as adjusted net income per diluted share.
Adjusted EBITDA
is defined
as
Adjusted
operating
income,
excluding
depreciation
and
amortization
as
set
out
on
pages 22
and 23.
Organic commissions & fees growth
excludes: (i) the impact of foreign currency translation; (ii) the first twelve
months of net commission
and
fee
revenues
generated
from
acquisitions;
and
(iii)
the
net
commission
and
fee
revenues
related
to
operations disposed of in each period presented, as set out on pages 24 and 25 .
Reconciliations to GAAP measures are provided for selected non-GAAP
measures. 17 |
 Important
disclosures regarding non-GAAP measures (continued) Operating income (loss)
to adjusted operating income See related footnotes on page 26
18
2008
2009
2010
2011
2012
2013
(In millions)
FY
FY
FY
FY
FY
FY
Operating Income
$503
$690
$753
$566
($209)
$685
Excluding:
Fees related to the extinguishment of debt
(a)
-
-
-
-
-
1
Expense reduction initiative
(b)
-
-
-
-
-
46
Goodwill impairment charge
(c)
-
-
-
-
492
-
Write-off of unamortized cash retention awards
(d)
-
-
-
-
200
-
2012 cash bonus accrual
(e)
-
-
-
-
252
-
Insurance recovery
(f)
-
-
-
-
(10)
-
Write-off of uncollectible accounts receivable and
legal fees
(g)
-
-
-
22
13
-
India JV settlement
(h)
-
-
-
-
11
-
2011 Operational review
(i)
-
-
-
180
-
-
Financial Services Authority regulatory settlement
-
-
-
11
-
-
Venezuela currency devaluation
(j)
-
-
12
-
-
-
Net (gain)/loss on disposal of operations
-
(13)
2
(4)
3
(2)
Salaries and benefits - severance programs
(k)
24
-
-
-
-
-
Salaries and benefits – other
(l)
42
-
-
-
-
-
HRH integration costs
(m)
5
18
-
-
-
-
Other operating expenses
(n)
26
-
-
-
-
-
Accelerated amortization of intangibles assets
(o)
-
7
-
-
-
-
Redomicile costs
(p)
-
6
-
-
-
-
Adjusted Operating Income
$600
$708
$767
$775
$752
$730
Operating Margin
17.8%
21.2%
22.6%
16.4%
(6.0%)
18.7%
Adjusted Operating Margin
21.2%
21.8%
23.0%
22.5%
21.6%
20.0% |
 Important
disclosures regarding non-GAAP measures (continued) Operating income (loss)
to adjusted operating income See related footnotes on page 26
19
(In millions)
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
Operating Income (loss)
$317
$179
$70
($775)
$287
$171
$75
$152
Excluding:
Fees related to the extinguishment of debt
(a)
-
-
-
-
-
-
1
-
Expense reduction initiative
(b)
-
-
-
-
46
-
-
-
Goodwill impairment charge
(c)
-
-
-
492
-
-
-
-
Write-off of unamortized cash retention awards
(d)
-
-
-
200
-
-
-
-
2012 cash bonus accrual
(e)
-
-
-
252
-
-
-
-
Insurance recovery
(f)
-
(5)
-
(5)
-
-
-
-
Write-off of uncollectible accounts receivable and
legal fees
(g)
13
-
-
-
-
-
-
-
India JV settlement
(h)
11
-
-
-
-
-
Net (gain)/loss on disposal of operations
-
-
1
2
-
-
-
(2)
Adjusted Operating Income
$330
$174
$82
$166
$333
$171
$76
$150
Operating Margin
31.3%
21.3%
9.3%
(89.0%)
27.3%
19.2%
9.4%
16.5%
Adjusted Operating Margin
32.6%
20.7%
10.9%
19.1%
31.7%
19.2%
9.6%
16.3%
2012
2013 |
  Important
disclosures regarding non-GAAP measures (continued) Net income (loss) to
adjusted net income See related footnotes on page 26
20
2008
2009
2010
2011
2012
2013
(In millions, except per share data)
FY
FY
FY
FY
FY
FY
Net Income (loss)
$302
$434
$455
$203
($446)
$365
Excluding the following, net of tax:
Fees related to the extinguishment of debt
(a)
-
-
-
-
-
1
Loss on extinguishment of debt
(a)
-
-
-
-
-
60
Expense reduction initiative
(b)
-
-
-
-
-
38
Goodwill impairment charge
(c)
-
-
-
-
458
-
Write-off of unamortized cash retention awards
(d)
-
-
-
-
138
-
2012 cash bonus accrual
(e)
-
-
-
-
175
-
Insurance recovery
(f)
-
-
-
-
(6)
-
Write-off of uncollectible accounts receivable and legal fees
(g)
-
-
-
13
8
-
India JV settlement
(h)
-
-
-
-
11
-
2011 Operational review
(i)
-
-
-
128
-
-
Financial Services Authority regulatory settlement
-
-
-
11
-
-
Deferred tax valuation allowance
-
-
-
-
113
9
Make-whole amounts on repurchase and redemption of Senior
Notes and write-off of unamortized debt costs
-
-
-
131
-
-
Venezuela currency devaluation
(j)
-
-
12
-
-
-
Net (gain)/loss on disposal of operations
-
(11)
3
(4)
3
(1)
Salaries and benefits - severance programs
(k)
17
Salaries and benefits – other
(l)
30
-
-
-
-
-
HRH integration costs
(m)
10
13
-
-
-
-
Other operating expenses
(n)
19
-
-
-
-
-
Accelerated amortization of intangibles assets
(o)
-
4
-
-
-
-
Redomicile costs
(p)
-
6
-
-
-
-
Premium on early redemption of 2010 bonds
(q)
-
4
-
-
-
-
Adjusted Net Income
$378
$450
$470
$482
$454
$472
Diluted shares outstanding
148
169
171
176
176
179
Net income
per diluted share
Adjusted net income
per diluted share
$2.58
$2.04
$2.55
$2.57
$2.66
$2.66
$2.75
$2.04
$2.64
$1.15
$2.74
($2.58) |
 Important
disclosures regarding non-GAAP measures (continued) Net income (loss) to
adjusted net income See related footnotes on page 26
21
(In millions, except per share data)
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
Net Income (loss)
$225
$107
$26
($804)
$219
$105
($27)
$68
Excluding the following, net of tax:
Loss on extinguishment of debt
(a)
-
-
-
-
-
-
60
-
Fees related to the extinguishment of debt
(a)
-
-
-
-
-
-
1
-
Expense reduction initiative
(b)
-
-
-
-
38
-
-
-
Goodwill impairment charge
(c)
-
-
-
458
-
-
-
-
Write-off of unamortized cash retention awards
(d)
-
-
-
138
-
-
-
-
2012 cash bonus accrual
(e)
-
-
-
175
-
-
-
-
Insurance recovery
(f)
-
(3)
-
(3)
-
-
-
-
Write-off of uncollectible accounts receivable and
legal fees
(g)
8
-
-
-
-
-
-
-
India JV settlement
(h)
-
-
11
-
-
-
-
Deferred tax valuation allowance
-
-
-
113
-
-
-
9
Net (gain)/loss on disposal of operations
-
-
1
2
-
-
-
(1)
Adjusted Net Income
$233
$104
$38
$79
$257
$105
$34
$76
Diluted shares outstanding
176
176
175
175
176
178
180
182
Net income
per diluted share
Adjusted net income
per diluted share
$0.37
$0.42
$0.59
$0.59
$1.46
$0.45
$1.28
($4.65)
$0.61
$0.15
$1.24
2012
$1.32
$0.22
2013
$0.59
($0.15)
$0.19 |
  Important
disclosures regarding non-GAAP measures (continued) Adjusted EBITDA and
Debt/Adjusted EBITDA See related footnotes on page 26
22
2008
2009
2010
2011
2012
2013
(In millions)
FY
FY
FY
FY
FY
FY
Operating Income (loss)
$503
$690
$753
$566
($209)
$685
Excluding:
Fees related to the extinguishment of debt
(a)
-
-
-
-
-
1
Expense reduction initiative
(b)
-
-
-
-
-
46
Goodwill impairment charge
(c)
-
-
-
-
492
-
Write-off of unamortized cash retention awards
(d)
-
-
-
-
200
-
2012 cash bonus accrual
(e)
-
-
-
-
252
-
Insurance recovery
(f)
-
-
-
-
(10)
-
Write-off of uncollectible accounts receivable and
legal fees
(g)
-
-
-
22
13
-
India JV settlement
(h)
-
-
-
-
11
-
2011 Operational review
(i)
-
-
-
180
-
-
Financial Services Authority regulatory settlement
-
-
-
11
-
-
Venezuela currency devaluation
(j)
-
-
12
-
-
-
Net (gain)/loss on disposal of operations
-
(13)
2
(4)
3
(2)
Salaries and benefits - severance programs
(k)
24
-
-
-
-
-
Salaries and benefits – other
(l)
42
-
-
-
-
-
HRH integration costs
(m)
5
18
-
-
-
-
Other operating expenses
(n)
26
-
-
-
-
-
Accelerated amortization of intangibles assets
(o)
-
7
-
-
-
-
Redomicile costs
(p)
-
6
-
-
-
-
Adjusted Operating Income
$600
$708
$767
$775
$752
$730
Add back
Depreciation
54
64
63
69
79
89
Amortization of intangibles
36
93
82
68
59
55
Adjusted EBITDA
$690
$865
$912
$912
$890
$874
Debt
2,650
2,374
2,267
2,369
2,353
2,326
Debt / Adjusted EBITDA
3.8x
2.7x
2.5x
2.6x
2.6x
2.7x |
 Important
disclosures regarding non-GAAP measures (continued) Adjusted EBITDA and
Debt/Adjusted EBITDA See related footnotes on page 26
23
(In millions)
1Q
2Q
3Q
4Q
FY
Operating Income
$287
$171
$75
$152
$685
Excluding:
Fees related to the extinguishment of debt
(a)
-
-
1
-
1
Expense reduction initiative
(b)
46
-
-
-
46
Net (gain) on disposal of operations
-
-
-
(2)
(2)
Adjusted Operating Income
$333
$171
$76
$150
$730
Add back
Depreciation
21
21
21
26
89
Amortization of intangibles
14
14
14
13
55
Adjusted EBITDA
$368
$206
$111
$189
$874
Debt
2,326
Debt / Adjusted EBITDA
2.7x
2013 |
 Important
disclosures regarding non-GAAP measures (continued) Commissions and fees
analysis 24
2013
2012
Change
Foreign
currency
translation
Acquisitions
and
disposals
Organic
commissions
and fees
growth
($ millions)
%
%
%
%
Three months ended
December 31, 2013
North America
$353
$331
6.6
0.0
0.8
5.8
International
308
299
3.0
0.4
(0.4)
3.0
Global
250
237
5.5
(0.4)
4.5
1.4
Commissions and Fees
$911
$867
5.1
0.0
1.4
3.7
2013
2012
Change
Foreign
currency
translation
Acquisitions
and
disposals
Organic
commissions
and fees
growth
($ millions)
%
%
%
%
Twelve months ended
December 31, 2013
North America
$1,377
$1,306
5.4
(0.1)
0.6
4.9
International
1,068
1,028
3.9
(0.2)
0.0
4.1
Global
1,188
1,124
5.7
(0.9)
1.0
5.6
Commissions and Fees
$3,633
$3,458
5.1
(0.3)
0.5
4.9 |
 Important
disclosures regarding non-GAAP measures (continued) Commissions and fees
analysis 25
2012
2011
Change
Foreign
currency
translation
Acquisitions
and
disposals
Organic
commissions
and fees growth
($ millions)
%
%
%
%
2012 Full year
Global
$1,124
$1,073
4.8
(1.3)
-
6.1
North America
1,306
1,314
(0.6)
-
-
(0.6)
International
1,028
1,027
0.1
(4.8)
-
4.9
Commissions and Fees
$3,458
$3,414
1.3
(1.8)
-
3.1
2011
2010
Change
Foreign
currency
translation
Acquisitions
and
disposals
Organic
commissions
and fees growth
($ millions)
%
%
%
%
2011 Full year
Global
$1,073
$987
8.7
2.0
-
6.7
North America
1,314
1,369
(4.0)
-
(0.4)
(3.6)
International
1,027
937
9.6
4.8
-
4.8
Commissions and Fees
$3,414
$3,293
3.7
2.1
(0.2)
1.8 |
 Important
disclosures regarding non-GAAP measures (continued) 26
(a)
In August 2013, Willis bought back $521 million of outstanding 2015, 2017 and 2019 senior notes
through a tender offer. In conjunction with this activity, the Company recorded a loss on debt
extinguishment of $60 million. Willis also recorded a $1 million expense for tender related fees
(recorded within other operating expenses). (b)
$46 million pre-tax charge associated with expense reduction initiative in 1Q13. (c)
Impairment charge to reduce carrying value of North America segment goodwill. (d)
Charge to write-off unamortized balance of past cash retention awards related to change in
remuneration policy.
(e)
Accrual for 2012 bonuses paid in 2013 related to change in remuneration policy. (f)
Insurance recovery related to (g) below. (g)
Write-off of uncollectible accounts receivable balance, together with associated legal costs. (h)
Settlement with former partners related to the termination of a joint venture arrangement in India. (i)
$180 million pre-tax charge in FY2011 relating to the 2011 operational review, including $98
million of severance costs relating to the elimination of approximately 1,200 positions in
FY2011.
(j)
With effect from January 1, 2010, the Venezuelan economy was designated as hyper-inflationary. The
Venezuelan government also devalued the Bolivar Fuerte in January 2010. As a result of these
actions, the Company recorded a one-time charge in other expenses to reflect the re-
measurement of its net assets denominated in Venezuelan Bolivar Fuerte. (k)
Severance costs excluded from adjusted operating income and adjusted net income in 2008 relate to
approximately 350 positions through the year ended December 31, 2008 that were eliminated as
part of the 2008 expense review. Severance costs also arise in the normal course of business and
these charges (pre-tax) amounted to $6 million, $nil, $15 million, $24 million and $2 million for
the years ended December 31, 2012, 2011, 2010, 2009 and 2008, respectively. (l)
Other 2008 expense review salaries and benefits costs relate primarily to contract buyouts. (m)
2009 HRH integration costs include $nil severance costs ($2 million in 2008). (n)
Other operating expenses primarily relate to property and systems rationalization. (o)
The charge for the accelerated amortization for intangibles relates to the HRH brand name. Following
the successful integration of HRH into our North American operations, we announced on October
1, 2009 that our North America retail operations would change their name from Willis HRH to Willis
North America. Consequently, the intangible asset recognized on the acquisition of HRH relating to the
HRH brand has been fully amortized.
(p)
These are legal and professional fees incurred as part of the Company’s redomicile of its parent
Company from Bermuda to Ireland.
(q)
On September 29, 2009 we repurchased $160 million of our 5.125 percent Senior Notes due July 2010 at a
premium of $27.50 per $1,000 face value, resulting in a total premium on redemption, including
fees, of $5 million. |
 WILLIS
GROUP HOLDINGS Fact Book
Fourth Quarter 2013
March 2014 |