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 October 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 ___
(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___
(If "Yes" is marked, indicate below the file number assigned to
the registrant in connection with Rule 12g3-2(b): 82- .)
1
Willis Group Reports Record Third Quarter and Nine Months 2002 Operating
Results; Revenue Growth Fuels Performance
LONDON--Oct. 29, 2002--Willis Group Holdings Limited (NYSE: WSH), the
global insurance broker, today reports record revenue and operating cash
earnings growth for the quarter and nine months ended September 30, 2002.
Operating cash earnings for the third quarter of 2002 rose 84% to
$46 million, or $0.28 per diluted share, compared to $25 million, or
$0.16 per diluted share, a year ago. Operating cash earnings
represents net income excluding non-cash charges for performance-based
stock options, goodwill amortization, and gain or loss on disposal of
operations.
Total reported revenues increased 20% to $390 million in the third
quarter of 2002 compared to a year ago. Organic revenue growth,
excluding the effects of foreign exchange, acquisitions and disposals,
was 17% for the quarter ended September 30, 2002. EBITDA margin, or
revenues less general and administrative expenses (excluding non-cash
compensation) to total revenues, rose to 23% for the third quarter
2002, from 21% last year.
For the nine months ended September 30, 2002, operating cash
earnings rose 92% to $188 million, or $1.13 per diluted share,
compared to $98 million, or $0.69 per diluted share, a year ago. Total
reported revenues were $1,252 million, up 21% from last year. Organic
revenue growth was 17% for the first nine months of 2002. EBITDA
margin rose to 29% for the first nine months of 2002, from 24% a year
ago.
Joe Plumeri, Chairman and Chief Executive Officer said, "Our
results for the third quarter and first nine months of 2002 continue
to affirm our business model. Willis is a pure, global broker,
building a strong sales culture for success in all market
environments. Our Associates around the world continue to distinguish
themselves as we provide exceptional risk management services in a
hard insurance market that is complex and enduring. That model,
combined with disciplined expense and capital management, has enabled
us to deliver eleven consecutive quarters of record operating results.
"Quarter by quarter, we are making steady progress toward building
a great company as we remain true to our mission of being the world's
best insurance broker. We continue to bolster the organization by
investing in people through recruitment and training, and enhancing
our operating platform, so that each office, no matter the location
around the world, brings the full strengths and capabilities of Willis
to every client relationship."
Willis recently completed several acquisition transactions
consistent with its strategy. As of quarter end, Willis increased its
majority interest in subsidiary Willis GmbH & Co. KG, Germany's third
largest broker, to 78%, completed two acquisitions in Sweden,
strengthening its leading share in that marketplace, and increased its
ownership to 100% of certain business units in Australia and
Indonesia.
At September 30, 2002, total long-term debt was $658 million, down
$178 million, or 21%, from a year ago. Total long-term debt to
capitalization declined to 41% at quarter end. 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.
As a result of non-cash performance option charges recorded in
2002 and 2001, the company reported net income for the quarter ended
September 30, 2002 of $31 million, or $0.19 per diluted share,
compared with a net loss of $(81) million, or $(0.55) per diluted
share, for the same quarter last year. Reported net income for the
nine months ended September 30, 2002 was $92 million, or $0.57 per
diluted share, compared to a net loss of $(25) million, or $(0.19) per
diluted share, last year.
Non-cash charges for performance stock options were recorded in
the amount of $18 million in the third quarter of 2002 and $145
million in the same quarter a year ago; and, for the nine months ended
2002 and 2001, totaled $114 million and $145 million, respectively.
These charges, which the company began to take in the third quarter
2001, recognize 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. On a cumulative basis,
the company has now recognized $272 million, or approximately 81% of
the total estimated charge based on the current quarter-end stock
price. 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.
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 $0.06 compared to the third quarter of 2001, and $0.20
per diluted share compared to the nine months ended September 30,
2001, while no impairment charges resulted from its implementation.
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. 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 Nine months
ended ended
September 30, September 30,
-------------- --------------
2002 2001 2002 2001
------ ------ ------ ------
Revenues:
Commissions and fees $ 371 $ 309 $1,200 $ 987
Interest income 19 16 52 50
------ ------ ------ ------
Total Revenues 390 325 1,252 1,037
------ ------ ------ ------
Expenses:
General and administrative expenses
(excluding non-cash compensation) 299 257 890 784
Non-cash compensation - performance
options 18 145 114 145
Depreciation expense 9 8 25 25
Amortization of goodwill - 9 - 26
(Gain) loss on disposal of operations - (22) 1 (22)
------ ------ ------ ------
Total Expenses 326 397 1,030 958
------ ------ ------ ------
Operating Income (Loss) 64 (72) 222 79
Interest Expense 16 21 50 63
------ ------ ------ ------
Income (Loss) before Income Taxes,
Equity in Net Income of Associates and
Minority Interest 48 (93) 172 16
Income Tax Expense (Benefit) 20 (11) 83 36
------ ------ ------ ------
Income (Loss) before Equity in Net
Income of Associates and Minority
Interest 28 (82) 89 (20)
Equity in Net Income of Associates 3 1 10 9
Minority Interest (including preferred
dividends $nil, $nil, $nil, $12) - - (7) (14)
------ ------ ------ ------
Net Income (Loss) $ 31 $ (81)$ 92 $ (25)
====== ====== ====== ======
Net Income (Loss) per Share
- Basic $ 0.21 $(0.55)$ 0.63 $(0.19)
- Diluted $ 0.19 $(0.55)$ 0.57 $(0.19)
====== ====== ====== ======
Average Number of Shares Outstanding
- Basic 147 146 147 133
- Diluted 167 146 162 133
====== ====== ====== ======
SUPPLEMENTAL FINANCIAL INFORMATION
(in millions, except per share data)
(unaudited)
Three months Nine months
ended ended
September 30, September 30,
-------------- --------------
2002 2001 2002 2001
------ ------ ------ ------
Operating Cash Earnings (Note 1) $ 46 $ 25 $ 188 $ 98
Operating Cash Earnings per Diluted
Share (Notes 1 and 2) $ 0.28 $ 0.16 $ 1.13 $ 0.69
Average Number of Diluted Shares,
Operating Basis (Note 2) 167 158 167 142
====== ====== ====== ======
Operating Income and EBITDA:
Total revenues $ 390 $ 325 $1,252 $1,037
General and administrative expenses
(excluding non-cash compensation) 299 257 890 784
------ ------ ------ ------
EBITDA 91 68 362 253
Depreciation expense 9 8 25 25
Amortization of goodwill - 9 - 26
------ ------ ------ ------
Operating Income, excluding non-cash
compensation - performance options and
gain or loss on disposal of operations $ 82 $ 51 $ 337 $ 202
====== ====== ====== ======
EBITDA Margin 23% 21% 29% 24%
Operating Margin 21% 16% 27% 19%
Organic Revenue Growth, excluding the
effects of foreign exchange,
acquisitions and disposals 17% 13% 17% 12%
Note 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 Nine months
ended ended
September 30, September 30,
-------------- --------------
2002 2001 2002 2001
------ ------ ------ ------
Net income (loss), as reported $ 31 $ (81)$ 92 $ (25)
Non-cash compensation - performance
options (net of tax $3, $24, $19, $24) 15 121 95 121
Amortization of goodwill - 9 - 26
(Gain) loss on disposal of operations
(net of tax $nil, $6, $nil, $6) - (16) 1 (16)
Non-recurring tax credit - (8) - (8)
------ ------ ------ ------
Operating Cash Earnings $ 46 $ 25 $ 188 $ 98
====== ====== ====== ======
Note 2: Average Number of Diluted Shares, Operating Basis
The results for the nine months ended September 30, 2002 exceeded
the criteria necessary for the performance options to be earned in
full at the end of the performance period on December 31, 2002. In
accordance with SFAS 128, "Earnings per Share", potentially issuable
shares are not included in the Average Number of Diluted Shares
Outstanding until the period in which the actual results meet or
exceed the performance criteria. Accordingly, for the three and nine
months ended September 2002, all outstanding performance options have
been included from the beginning of the third quarter 2002 in the
calculation of the Average Number of Diluted Shares Outstanding.
Management believes it is helpful to investors to present for each
period the average number of diluted shares on the assumption that the
performance options would ultimately be earned in full. Accordingly,
all outstanding performance options have been included in the
calculation of the Average Number of Diluted Shares, Operating Basis
for each period presented.
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
2
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
________________________________
Mary E. Caiazzo
Assistant General Counsel
Date: October 29, 2002