SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE MONTH OF JULY 2002
WILLIS GROUP HOLDINGS LIMITED
(Exact name of Registrant as specified in its charter)
Ten Trinity Square
London EC3P 3AX, England
(Address of principal executive offices)
(Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F of Form 40-F.)
Form 20-F x Form 40-F
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(Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.)
Yes No x
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(If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82- .)
Willis Group Holdings Reports 136% Rise in Record
Second Quarter 2002 Operating Results
LONDON--(BUSINESS WIRE)--July 30, 2002--Willis Group Holdings Limited (NYSE:
WSH), the global insurance broker, today reports strong revenue and operating
earnings growth for the quarter and six months ended June 30, 2002.
Operating cash earnings for the second quarter, or net income excluding
goodwill amortization, a non-cash charge for performance-based stock options and
loss on disposal of operations, rose 136% to $59 million, or $0.35 per diluted
share, compared to $25 million, or $0.18 per diluted share, a year ago.
Reported revenues increased 22% in the second quarter to $411 million
compared to a year ago. Organic revenue growth, excluding the effects of foreign
exchange, acquisitions and disposals, was 18% for the quarter ended June 30,
2002, up from 17% in the first quarter, and 12% in the second quarter 2001.
EBITDA margin, or revenues less general and administrative expenses (excluding
non-cash compensation) to total revenues, was 28% for the second quarter 2002,
up from 23% last year.
Joe Plumeri, Chairman and Chief Executive Officer said, "I am proud to
report another strong operating performance this quarter. Our record revenue
growth was achieved with contributions beyond expectations from our Global,
North America and International business units, as we leverage the strengths of
our global resources and build a true sales and service culture.
We continue to execute our business model of a pure, global broker. The
profile of our clients' insurance and risk management needs has never been
higher and those risks that were once marginalized now must be fully considered.
Given these unique market conditions and escalating needs of clients, our role
as broker and advocate to help them identify, transfer and mitigate risk has
been greatly enhanced."
Joe Plumeri continued, "We grow revenues, maintain disciplined expenses,
expand margins, and bring those revenues to the bottom line. Our significant
earnings and cash flow have allowed us to substantially reduce our long-term
debt over the past year. Willis continues to enhance its financial flexibility
through consistently strong performance."
At June 30, 2002, total long-term debt was $677 million, down $232 million,
or 26%, from a year ago. Willis has made significant long-term debt repayments
from its operating cash flow, and the next mandatory debt payment is not due
until November 2005.
For the six months ended June 30, 2002, reported revenues were $862 million,
up 21% from a year ago. Organic revenue growth was 17% for the first six months.
Operating cash earnings for the first six months of 2002, or net income
excluding goodwill amortization, a non-cash charge for performance-based stock
options and loss on disposal of operations, rose 95% to $142 million, or $0.85
per diluted share, compared to $73 million, or $0.54 per diluted share, a year
ago. EBITDA margin, or revenues less general and administrative expenses
(excluding non-cash compensation) to total revenues, was 31% for the first half
of 2002, up from 26% for the same period last year.
Joe Plumeri concluded, "The foundation we have laid provides sound footing
for continued growth and our mission to be the world's best broker. The efforts
of our colleagues are greatly appreciated as we work toward building a great
company. The momentum we've gained, along with our continuing investments in
systems, recruitment and training, will serve us well in the future as we build
for success in all market environments."
In the second quarter 2002, a non-cash charge for performance stock options
was recorded in the amount of $78 million ($65 million, or $0.44 per diluted
share, after tax). This charge, which the company began to take in the third
quarter 2001, recognizes performance-based options granted to management by the
Board of Directors as part of the 1998 buyout arrangement with KKR, for meeting
or exceeding 2001 and 2002 targets. The cumulative charge represents
approximately 76% of the total estimated charge based on the current quarter-end
stock price. Approximately $70 million of the pre-tax charge in the second
quarter represented the cumulative catch-up adjustment based on the increase in
the stock price during the quarter. The remaining performance stock option
charge will be calculated according to the vesting schedule and any change in
the stock price during 2002, and will be recognized quarterly through 2004.
As a result of the non-cash performance option charge, the company reported
a net loss for the quarter ended June 30, 2002 of $(7) million, or $(0.05) per
diluted share, compared with net income of $17 million, or $0.12 per diluted
share, for the same quarter last year. The company adopted Statement of
Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets"
(SFAS 142), effective January 1, 2002. On implementing SFAS 142, amortization of
goodwill ceased, leading to an increase in diluted earnings per share of
approximately $0.05 compared to the second quarter of 2001, while no impairment
charges resulted from its implementation. Reported net income for the six months
ended June 30, 2002 was $61 million, or $0.38 per diluted share, compared to $56
million, or $0.42 per diluted share, last year.
Willis Group Holdings is a leading global insurance broker, developing and
delivering professional insurance, reinsurance, risk management, financial and
human resource consulting and actuarial services to corporations, public
entities and institutions around the world. With over 300 offices in about 80
countries, its global team of 13,000 associates serves clients in 180 countries.
Willis has particular expertise in serving the needs of clients in such major
industries as construction, aerospace, marine and energy. In June 2001 the Group
returned to public ownership and is listed on the New York Stock Exchange (NYSE:
WSH). Additional information on Willis may be found on its web site
www.willis.com.
This press release may contain certain statements relating to future
results, which are forward-looking statements as that term is defined in the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from historical results or those
anticipated, depending on a variety of factors such as general economic
conditions in different countries around the world, fluctuations in global
equity and fixed income markets, changes in premium rates, the competitive
environment and the actual cost of resolution of contingent liabilities. Further
information concerning the Company and its business, including factors that
potentially could materially affect the Company's financial results are
contained in the Company's filings with the Securities and Exchange Commission.
WILLIS GROUP HOLDINGS LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
(unaudited)
Three months Six months
ended June 30, ended June 30,
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2002 2001 2002 2001
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Revenues:
Commissions and fees $ 393 $ 319 $ 829 $ 678
Interest income 18 18 33 34
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Total Revenues 411 337 862 712
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Expenses:
General and administrative
expenses (excluding
non-cash compensation) 294 259 591 527
Non-cash compensation
- performance options 78 - 96 -
Depreciation expense 8 8 16 17
Amortization of goodwill - 8 - 17
Loss on disposal of operations 1 - 1 -
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Total Expenses 381 275 704 561
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Operating Income 30 62 158 151
Interest Expense 17 21 34 42
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Income before Income
Taxes, Equity in Net
Income (Loss) of
Associates and Minority Interest 13 41 124 109
Income Tax Expense 20 16 63 47
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(Loss) Income before
Equity in Net Income
(Loss) of Associates
and Minority Interest (7) 25 61 62
Equity in Net Income
(Loss) of Associates 1 (1) 7 8
Minority Interest
(including preferred
dividends $nil, $6, $nil, $12) (1) (7) (7) (14)
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Net (Loss) Income $ (7) $ 17 $ 61 $ 56
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Net (Loss) Income per Share
- Basic $ (0.05) $ 0.13 $ 0.41 $ 0.44
- Diluted $ (0.05) $ 0.12 $ 0.38 $ 0.42
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Average Number of
Shares Outstanding
- Basic 147 128 147 126
- Diluted 147 138 159 134
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Operating Cash Earnings(1) $ 59 $ 25 $ 142 $ 73
Operating Cash
Earnings(1) per Diluted Share $ 0.35 $ 0.18 $ 0.85 $ 0.54
Average Number of Diluted
Shares, Operating Basis(2) 167 138 167 134
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WILLIS GROUP HOLDINGS LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
(unaudited)
(1) Operating Cash Earnings
Management believes that Operating Cash Earnings is a measure helpful to
investors because it shows the results of the company's trading and finance
costs without the impact of non-cash and non-recurring items. The derivation of
Operating Cash Earnings from Net Income under US GAAP is shown below:
Three months Six months
ended June 30, ended June 30,
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2002 2001 2002 2001
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Net (loss) income, as reported $ (7) 17 $ 61 $ 56
Non-cash compensation
- performance options (net of
tax $13, $nil, $16, $nil) 65 - 80 -
Amortization of goodwill - 8 - 17
Loss on disposal of operations 1 - 1 -
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Operating Cash Earnings $ 59 $ 25 $ 142 $ 73
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(2) Average Number of Diluted Shares, Operating Basis
Management believes it is likely that the performance options will
ultimately be earned in full. However, the actual results for the six months
ended June 30, 2002 had not reached the minimum performance criteria (based on
twelve months' results) necessary to trigger the vesting of the performance
options. In accordance with SFAS 128, "Earnings per Share", such potentially
issuable shares are not included in the Average Number of Diluted Share
Outstanding until the actual results meet the minimum performance criteria.
Management believes it is helpful to investors to present operating cash
earnings per diluted share on the assumption that the performance options had
been earned in full at June 30, 2002. Accordingly, the performance options have
been included in the calculation of the Average Number of Diluted Shares,
Operating Basis.
CONTACT: Willis Group Holdings Limited
Investors:
Kerry K. Calaiaro, 212/837-0880
calaiaro_ke@willis.com
or
Media:
Nicholas Jones, +44 20 7488-8190
jonesnr@willis.com
Dan Prince, 212/837-0806
prince_da@willis.com
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
WILLIS GROUP HOLDINGS LIMITED
By: /s/ Mary E. Caiazzo
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Mary E. Caiazzo
Assistant General Counsel
Date: July 30, 2002