View:
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): April 28, 2004
WILLIS GROUP HOLDINGS LIMITED
(Exact name of Registrant as specified in its charter)
BERMUDA 001-16503 98-0352587
(Jurisdiction of incorporation (Commission File (IRS Employer
or organization) Number) Identification No.)
Ten Trinity Square
London EC3P 3AX, England
(Address of principal executive offices)
Registrant's telephone number, including area code: +44 20 7488 8111
Not Applicable
(Former name or former address, if changed since last report.)
Item 7. Financial Statements Financial Information and Exhibits.
(c) Exhibits.
Exhibit No. Exhibit Description
----------- -------------------
99 Press release dated April 28, 2004 announcing
earnings for the first quarter of 2004.
Item 12. Results of Operations and Financial Condition
On April 28, 2004 Willis Group Holdings Limited issued a press release
announcing its unaudited financial results for the first quarter of 2004. A copy
of this press release is attached hereto as Exhibit 99 and is incorporated
herein by reference.
SIGNATURES
Pursuant to the requirements 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.
WILLIS GROUP HOLDINGS LIMITED
By: /s/ Mary E. Caiazzo
--------------------------
Mary E. Caiazzo
Assistant General Counsel
Date: April 28, 2004
EXHIBIT INDEX
Exhibit
Number Title
- ------- -----
99 Press release dated April 28, 2004 announcing earnings for the first
quarter of 2004.
Exhibit 99
Willis Group Reports Record First Quarter 2004 Results
NEW YORK--(BUSINESS WIRE)--April 28, 2004--Willis Group Holdings Limited
(NYSE: WSH)
First Quarter 2004 Highlights:
-- Track record continued with seventeenth consecutive quarter of record
results
-- Reported revenues grew 20% (with 9% organic growth); margin expansion
continued
-- Capital deployed - 4 million shares repurchased, subordinated debt
redeemed
-- Global presence strengthened in Denmark, Italy and China
Willis Group Holdings Limited (NYSE: WSH), the global insurance broker,
today reports record results for the quarter ended March 31, 2004.
Net income for the quarter ended March 31, 2004 was $148 million, or $0.87
per diluted share, compared with $117 million, or $0.69 per diluted share, a
year ago. Excluding non-cash compensation for performance-based stock options
and a subordinated debt redemption premium, adjusted net income increased 30
percent to $160 million for the quarter ended March 31, 2004 from $123 million
in the same period last year, while adjusted net income per diluted share rose
29 percent to $0.94 for the first quarter of 2004 from $0.73 a year ago. Foreign
currency translation increased first quarter 2004 reported earnings by
approximately $0.03 per share.
Total reported revenues for the quarter ended March 31, 2004 increased 20
percent to $665 million, from $555 million for the same period last year.
Organic revenue growth was 9 percent, which excluded the effects of foreign
currency translation (8 percent) and net acquisitions (3 percent). Rates
continued to moderate during the quarter, with declines in some property lines
and modest increases in casualty and professional liability lines. The adjusted
operating margin was 35.5 percent for the first quarter of 2004 compared with
35.0 percent for the same period last year.
Joe Plumeri, Chairman and Chief Executive Officer said, "We continue the
steadfast execution of our model - build a sales culture, grow revenues,
maintain expense discipline, expand margins and enhance earnings. With 17
consecutive quarters of record results, we are accumulating a strong track
record and continue to build the Company for success in all market
environments."
At March 31, 2004, total long-term debt was $300 million, down 40 percent
from $499 million a year ago. During the quarter, the Company redeemed the
outstanding $370 million 9 percent senior subordinated debt (with a related
premium of $17 million pre tax, or $0.06 per share after tax), and drew down
$300 million against the new $450 million bank credit facility and $150 million
line of credit.
Total stockholders' equity at the quarter end was approximately $1.3
billion, up 39 percent from a year ago. The capitalization ratio (total
long-term debt to total long-term debt and stockholders' equity) declined to 18
percent at quarter-end March 31, 2004 compared to 34 percent a year ago. During
the quarter, the Company repurchased 4 million shares ($148 million) and repaid
$70 million of debt at the time of the redemption. There was approximately $93
million of immediately available cash at March 31, 2004, providing significant
financial flexibility to support the cash needs of the Company.
Effective January 1, 2004, Willis acquired the remaining 70 percent
interest in Willis A/S, Denmark's largest insurance broker, with annualized
revenues of approximately $50 million. Also during the quarter, the Company
acquired reinsurance brokers in Denmark and Italy and received approval from the
China Insurance Regulatory Commission to complete the purchase of a 50 percent
equity stake in Shanghai Pudong Insurance Brokers Ltd.
Plumeri concluded, "Willis is in great shape and we remain confident in our
outlook for future growth. We reaffirm our long-term goal to grow adjusted net
income per diluted share by 15 percent or better each year."
Willis Group Holdings Limited 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 some
80 countries, its global team of 14,500 associates serves clients in some 180
countries. 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.
This press release includes supplemental financial information which may
contain references to non-GAAP financial measures as defined in Regulation G of
SEC rules. Consistent with Regulation G, a reconciliation of this supplemental
financial information to our generally accepted accounting principles (GAAP)
information follows. We present such non-GAAP supplemental financial information
as we believe such information is of interest to the investment community
because it provides 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 GAAP basis. This supplemental financial
information should be viewed in addition to, not in lieu of, the Company's
consolidated statements of operations for the quarter ended March 31, 2004.
WILLIS GROUP HOLDINGS LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
(unaudited)
Three months ended March 31,
--------------------------------
2004 2003
--------------------------------
Revenues:
Commissions and fees $ 648 $ 540
Interest income 17 15
--------------------------------
Total Revenues 665 555
--------------------------------
Expenses:
General and administrative
expenses (excluding non-cash
compensation) 417 351
Non-cash compensation -
performance options (Note 1) 2 8
Depreciation expense 11 9
Amortization of intangible
assets 1 1
--------------------------------
Total Expenses 431 369
--------------------------------
Operating Income 234 186
Interest expense 5 15
Premium on redemption of
subordinated debt 17 -
--------------------------------
Income before Income Taxes,
Equity in Net Income of
Associates and Minority
Interest 212 171
Income taxes 72 61
--------------------------------
Income before Equity in Net
Income of Associates and
Minority Interest 140 110
Equity in net income of
associates 12 10
Minority interest (4) (3)
--------------------------------
Net Income $ 148 $ 117
================================
Net Income per Share
- Basic $0.94 $0.79
- Diluted $0.87 $0.69
================================
Average Number of Shares
Outstanding
- Basic 158 149
- Diluted 170 169
================================
Note 1: Non-Cash Compensation - Performance Options
The non-cash compensation charge recognizes performance-based stock options
granted to management as part of the 1998 leveraged buyout arrangement for
meeting or exceeding 2001 and 2002 targets. In accordance with GAAP, a quarterly
charge is recognized, on a cumulative basis, calculated in accordance with the
vesting schedule and the stock price at the end of the performance period, which
ended on December 31, 2002 when the stock price was $28.67. On a cumulative
basis at March 31, 2004, the Company has recognized $260 million, or
approximately 96 percent of the total estimated charge. The remaining estimated
charge of $12 million will be recognized quarterly through 2004 in accordance
with the vesting schedule.
WILLIS GROUP HOLDINGS LIMITED
SUPPLEMENTAL FINANCIAL INFORMATION
(in millions, except per share data)
(unaudited)
Definitions of Non-GAAP Financial Measures:
We believe that investors' understanding of the Company's performance is
enhanced by our disclosure of the following non-GAAP financial measures. Our
method of calculating these measures may differ from those used by other
companies and therefore comparability may be limited.
Because the non-cash compensation charge for performance-based stock
options was based on our stock price at the end of each quarter until December
31, 2002, changes in our stock price increased the volatility of our reported
operating income and reported net income. We believe that excluding the non-cash
compensation charge and the non-recurring subordinated debt redemption premium
from these measures, along with the GAAP measures, provides a more complete,
comparative analysis of our results of operations.
Adjusted Operating Income:
Adjusted operating income is defined as operating income excluding non-cash
compensation for performance-based stock options and net gains or losses on
disposals of operations. However, there were no gains or losses on disposals of
operations in the first quarter of 2004 and 2003. Operating income is the most
directly comparable GAAP measure, and the following table reconciles adjusted
operating income to operating income for the quarters ended March 31, 2004 and
2003:
Three months ended March 31,
------------------------------------------
2004 2003 % Change
--------- ------------ --------
Operating Income, GAAP basis $ 234 $ 186 26%
Excluding:
Non-cash compensation -
performance options 2 8
---------- ------------ --------
Adjusted Operating Income $ 236 $ 194 22%
========== ============
Operating Margin, GAAP
basis, or Operating Income
as a percentage of Total
Revenues 35.2% 33.5%
======== =========
Adjusted Operating Margin,
or Adjusted Operating
Income as a percentage of
Total Revenues 35.5% 35.0%
======== =========
Adjusted Net Income:
Adjusted net income is defined as net income excluding non-cash
compensation for performance-based stock options, net gains or losses on
disposals of operations and the non-recurring subordinated debt redemption
premium. However, there were no gains or losses on disposals of operations in
the first quarter of 2004 and 2003. Net income is the most directly comparable
GAAP measure, and the following table reconciles adjusted net income to net
income for the quarters ended March 31, 2004 and 2003:
Per Diluted Share
Three months ended March Three months ended
31, March 31,
-------------------------- ---------------------
% %
2004 2003 Change 2004 2003 Change
-------- ------ -------- ------ ------ -------
Net Income, GAAP basis $ 148 $ 117 26% $ 0.87 $ 0.69 26%
Excluding:
Non-cash compensation-
performance options,
net of tax
($nil, $2) 2 6 0.01 0.04
Non-recurring premium
on redemption of
subordinated debt,
net of tax ($7) 10 - 0.06 -
------- ------- ------ ------
Adjusted Net Income $ 160 $ 123 30% $ 0.94 $ 0.73 29%
======= ======= ====== ======
Diluted shares
outstanding, GAAP
basis 170 169
======= =======
Forward-Looking Information: Our stated goal is to grow adjusted net income
per diluted share by 15 percent or better each year. The most directly
comparable GAAP measure is net income per diluted share. We are not in a
position to reconcile adjusted net income per diluted share to net income per
diluted share for this forward-looking information. Historically, reconciling
items have consisted of non-cash compensation for performance-based stock
options, estimated at $12 million for the remainder of 2004; net gain or loss on
disposal of operations; and the tax effects thereon. We are unable to provide
estimates for future gains or losses on disposals.
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
or
Dan Prince, 212-837-0806
prince_da@willis.com