Attached files
file | filename |
---|---|
EX-10.2 - EX-10.2 - WILLIS TOWERS WATSON PLC | u10790exv10w2.htm |
EX-10.8 - EX-10.8 - WILLIS TOWERS WATSON PLC | u10790exv10w8.htm |
EX-10.7 - EX-10.7 - WILLIS TOWERS WATSON PLC | u10790exv10w7.htm |
EX-32.1 - EX-32.1 - WILLIS TOWERS WATSON PLC | u10790exv32w1.htm |
EX-10.5 - EX-10.5 - WILLIS TOWERS WATSON PLC | u10790exv10w5.htm |
EX-10.6 - EX-10.6 - WILLIS TOWERS WATSON PLC | u10790exv10w6.htm |
EX-10.1 - EX-10.1 - WILLIS TOWERS WATSON PLC | u10790exv10w1.htm |
EX-10.3 - EX-10.3 - WILLIS TOWERS WATSON PLC | u10790exv10w3.htm |
EX-31.1 - EX-31.1 - WILLIS TOWERS WATSON PLC | u10790exv31w1.htm |
EX-31.2 - EX-31.2 - WILLIS TOWERS WATSON PLC | u10790exv31w2.htm |
EX-10.4 - EX-10.4 - WILLIS TOWERS WATSON PLC | u10790exv10w4.htm |
EX-32.2 - EX-32.2 - WILLIS TOWERS WATSON PLC | u10790exv32w2.htm |
Table of Contents
(Mark One) | ||
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended
June 30,
2011
|
||
or
|
||
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Ireland | 98-0352587 | |
(Jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
51 Lime Street, London, EC3M 7DQ, England
(Address of principal executive offices)
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
Page | ||||||||
Forward-Looking Statements | 4 | |||||||
PART IFinancial Information | ||||||||
6 | ||||||||
57 | ||||||||
82 | ||||||||
82 | ||||||||
PART IIOther Information | ||||||||
83 | ||||||||
83 | ||||||||
83 | ||||||||
84 | ||||||||
84 | ||||||||
84 | ||||||||
84 | ||||||||
Signatures | 85 | |||||||
EX-10.1 | ||||||||
EX-10.2 | ||||||||
EX-10.3 | ||||||||
EX-10.4 | ||||||||
EX-10.5 | ||||||||
EX-10.6 | ||||||||
EX-10.7 | ||||||||
EX-10.8 | ||||||||
EX-31.1 | ||||||||
EX-31.2 | ||||||||
EX-32.1 | ||||||||
EX-32.2 |
2
Table of Contents
We, Us, Company,
Group, Willis, or Our
|
Willis Group Holdings and its subsidiaries. | |
Willis Group Holdings or Willis Group
Holdings plc
|
Willis Group Holdings Public Limited Company, a company organized under the laws of Ireland. | |
shares
|
The ordinary shares of Willis Group Holdings Public Limited Company, nominal value $0.000115 per share. | |
HRH
|
Hilb Rogal & Hobbs Company. |
3
Table of Contents
| the impact of any regional, national or global political, economic, business, competitive, market, environmental and regulatory conditions on our global business operations; |
| the impact of current financial market conditions on our results of operations and financial condition, including as a result of any insolvencies of or other difficulties experienced by our clients, insurance companies or financial institutions; |
| our ability to continue to manage our significant indebtedness; |
| our ability to compete effectively in our industry; |
| our ability to implement and realize anticipated benefits of the 2011 Operational Review, the Willis Cause, or any other initiative we pursue; |
| 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, or otherwise; |
| the volatility or declines in other insurance markets and premiums on which our commissions are based, but which we do not control; |
| our ability to retain key employees and clients and attract new business; |
| the timing or ability to carry out share repurchases, refinancings 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; |
| any fluctuations in exchange and interest rates that could affect expenses and revenue; |
| rating agency actions that could inhibit our ability to borrow funds or the pricing thereof; |
| a significant decline in the value of investments that fund our pension plans or changes in our pension plan funding obligations; |
| our ability to achieve the expected strategic benefits of transactions; |
| our ability to receive dividends or other distributions in needed amounts from our subsidiaries; |
| changes in the tax or accounting treatment of our operations; |
| any potential impact from the US healthcare reform legislation; |
| 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; |
| our involvements in and the results of any regulatory investigations, legal proceedings and other contingencies; |
| risks associated with non-core operations including underwriting, advisory or reputational; |
| 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 or failure to maintain secure information systems. |
4
Table of Contents
5
Table of Contents
Three months ended |
Six months ended |
|||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||
Note | 2011 | 2010 | 2011 | 2010 | ||||||||||||||||
(millions, except per share data) | ||||||||||||||||||||
REVENUES
|
||||||||||||||||||||
Commissions and fees
|
$ | 854 | $ | 789 | $ | 1,854 | $ | 1,752 | ||||||||||||
Investment income
|
8 | 10 | 16 | 19 | ||||||||||||||||
Other income
|
1 | | 1 | | ||||||||||||||||
Total revenues
|
863 | 799 | 1,871 | 1,771 | ||||||||||||||||
EXPENSES
|
||||||||||||||||||||
Salaries and benefits
|
3 | (506 | ) | (456 | ) | (1,090 | ) | (942 | ) | |||||||||||
Other operating expenses
|
(164 | ) | (135 | ) | (317 | ) | (284 | ) | ||||||||||||
Depreciation expense
|
(19 | ) | (16 | ) | (39 | ) | (31 | ) | ||||||||||||
Amortization of intangible assets
|
(17 | ) | (21 | ) | (34 | ) | (42 | ) | ||||||||||||
Net (loss) gain on disposal of operations
|
| (2 | ) | 4 | (2 | ) | ||||||||||||||
Total expenses
|
(706 | ) | (630 | ) | (1,476 | ) | (1,301 | ) | ||||||||||||
OPERATING INCOME
|
157 | 169 | 395 | 470 | ||||||||||||||||
Make-whole on repurchase and redemption of senior notes and
write-off of unamortized debt issuance costs
|
14 | | | (171 | ) | | ||||||||||||||
Interest expense
|
(34 | ) | (41 | ) | (74 | ) | (84 | ) | ||||||||||||
INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES
|
123 | 128 | 150 | 386 | ||||||||||||||||
Income taxes
|
4 | (31 | ) | (35 | ) | (32 | ) | (102 | ) | |||||||||||
INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES
|
92 | 93 | 118 | 284 | ||||||||||||||||
Interest in earnings of associates, net of tax
|
(3 | ) | (2 | ) | 13 | 18 | ||||||||||||||
NET INCOME
|
89 | 91 | 131 | 302 | ||||||||||||||||
Less: net income attributable to noncontrolling interests
|
(4 | ) | (2 | ) | (12 | ) | (9 | ) | ||||||||||||
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS
|
$ | 85 | $ | 89 | $ | 119 | $ | 293 | ||||||||||||
EARNINGS PER SHARE BASIC AND DILUTED
|
||||||||||||||||||||
Basic earnings per share
|
5 | $ | 0.49 | $ | 0.52 | $ | 0.69 | $ | 1.73 | |||||||||||
Diluted earnings per share
|
5 | $ | 0.48 | $ | 0.52 | $ | 0.68 | $ | 1.71 | |||||||||||
CASH DIVIDENDS DECLARED PER SHARE
|
$ | 0.26 | $ | 0.26 | $ | 0.52 | $ | 0.52 | ||||||||||||
6
Table of Contents
June 30, |
December 31, |
|||||||||||
Note | 2011 | 2010 | ||||||||||
(millions, except share data) | ||||||||||||
ASSETS
|
||||||||||||
CURRENT ASSETS
|
||||||||||||
Cash and cash equivalents
|
$ | 317 | $ | 316 | ||||||||
Accounts receivable, net
|
1,049 | 839 | ||||||||||
Fiduciary assets
|
11,256 | 9,569 | ||||||||||
Deferred tax assets
|
32 | 36 | ||||||||||
Other current assets
|
12 | 327 | 340 | |||||||||
Total current assets
|
12,981 | 11,100 | ||||||||||
NON-CURRENT ASSETS
|
||||||||||||
Fixed assets, net
|
391 | 381 | ||||||||||
Goodwill
|
10 | 3,317 | 3,294 | |||||||||
Other intangible assets, net
|
11 | 461 | 492 | |||||||||
Investments in associates
|
186 | 161 | ||||||||||
Deferred tax assets
|
9 | 7 | ||||||||||
Pension benefits asset
|
231 | 179 | ||||||||||
Other non-current assets
|
12 | 365 | 233 | |||||||||
Total non-current assets
|
4,960 | 4,747 | ||||||||||
TOTAL ASSETS
|
$ | 17,941 | $ | 15,847 | ||||||||
LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||||||
CURRENT LIABILITIES
|
||||||||||||
Fiduciary liabilities
|
$ | 11,256 | $ | 9,569 | ||||||||
Deferred revenue and accrued expenses
|
323 | 298 | ||||||||||
Income taxes payable
|
50 | 57 | ||||||||||
Short-term debt and current portion of long-term debt
|
14 | 114 | 110 | |||||||||
Deferred tax liabilities
|
22 | 9 | ||||||||||
Other current liabilities
|
13 | 318 | 266 | |||||||||
Total current liabilities
|
12,083 | 10,309 | ||||||||||
NON-CURRENT LIABILITIES
|
||||||||||||
Long-term debt
|
14 | 2,307 | 2,157 | |||||||||
Liability for pension benefits
|
150 | 164 | ||||||||||
Deferred tax liabilities
|
111 | 83 | ||||||||||
Provisions for liabilities
|
184 | 179 | ||||||||||
Other non-current liabilities
|
13 | 367 | 347 | |||||||||
Total non-current liabilities
|
3,119 | 2,930 | ||||||||||
Total liabilities
|
15,202 | 13,239 | ||||||||||
7
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June 30, |
December 31, |
|||||||||||
Note | 2011 | 2010 | ||||||||||
(millions, except share data) | ||||||||||||
COMMITMENTS AND CONTINGENCIES
|
7 | |||||||||||
EQUITY
|
||||||||||||
Ordinary shares, $0.000115 nominal value; Authorized:
4,000,000,000; Issued 172,949,656 shares in 2011 and
170,883,865 shares in 2010
|
| | ||||||||||
Ordinary shares, 1 nominal value; Authorized: 40,000;
Issued 40,000 shares in 2011 and 2010
|
| | ||||||||||
Preference shares, $0.000115 nominal value; Authorized:
1,000,000,000; Issued nil shares in 2011 and 2010
|
| | ||||||||||
Additional paid-in capital
|
1,033 | 985 | ||||||||||
Retained earnings
|
2,165 | 2,136 | ||||||||||
Accumulated other comprehensive loss, net of tax
|
16 | (488 | ) | (541 | ) | |||||||
Treasury shares, at cost, 46,408 shares, $0.000115 nominal
value, in 2011 and 2010 and 40,000 shares, 1 nominal
value, in 2011 and 2010
|
(3 | ) | (3 | ) | ||||||||
Total Willis Group Holdings stockholders equity
|
17 | 2,707 | 2,577 | |||||||||
Noncontrolling interests
|
17 | 32 | 31 | |||||||||
Total equity
|
2,739 | 2,608 | ||||||||||
TOTAL LIABILITIES AND EQUITY
|
$ | 17,941 | $ | 15,847 | ||||||||
8
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Six months ended |
||||||||||||
June 30, | ||||||||||||
Note | 2011 | 2010(i) | ||||||||||
(millions) | ||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||
Net income
|
$ | 131 | $ | 302 | ||||||||
Adjustments to reconcile net income to total net cash provided
by operating activities:
|
||||||||||||
Net (gain) loss on disposal of operations and fixed and
intangible assets
|
(5 | ) | 3 | |||||||||
Depreciation expense
|
39 | 31 | ||||||||||
Amortization of intangible assets
|
34 | 42 | ||||||||||
Provision for doubtful debts
|
1 | | ||||||||||
Provision (benefit) for deferred income taxes
|
49 | (17 | ) | |||||||||
Excess tax benefits from share-based payment arrangements
|
(4 | ) | (1 | ) | ||||||||
Share-based compensation
|
24 | 25 | ||||||||||
Make-whole on repurchase and redemption of senior notes and
write-off of unamortized debt issuance costs
|
171 | | ||||||||||
Undistributed earnings of associates
|
(6 | ) | (14 | ) | ||||||||
Non-cash Venezuela currency devaluation
|
2 | | 12 | |||||||||
Effect of exchange rate changes on net income
|
3 | (2 | ) | |||||||||
Change in operating assets and liabilities, net of effects from
purchase of subsidiaries:
|
||||||||||||
Accounts receivable, net
|
(188 | ) | (119 | ) | ||||||||
Fiduciary funds
|
(1,510 | ) | (1,525 | ) | ||||||||
Fiduciary liabilities
|
1,510 | 1,525 | ||||||||||
Other assets
|
(145 | ) | (110 | ) | ||||||||
Other liabilities
|
21 | 22 | ||||||||||
Movement on provisions
|
1 | (20 | ) | |||||||||
Net cash provided by operating activities
|
126 | 154 | ||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||
Proceeds on disposal of fixed and intangible assets
|
5 | 4 | ||||||||||
Additions to fixed assets
|
(47 | ) | (45 | ) | ||||||||
Acquisitions of subsidiaries, net of cash acquired
|
(4 | ) | (15 | ) | ||||||||
Acquisition of investments in associates
|
(2 | ) | (1 | ) | ||||||||
Investment in Trident V Parallel Fund, LP
|
(4 | ) | | |||||||||
Net cash used in investing activities
|
(52 | ) | (57 | ) | ||||||||
(i) | The 2010 Unaudited Condensed Consolidated Statement of Cash Flows has been recast to conform to the new balance sheet presentation. See Note 2 Basis of Presentation and Significant Accounting Policies for details. |
9
Table of Contents
Six months ended |
||||||||||||
June 30, | ||||||||||||
Note | 2011 | 2010(i) | ||||||||||
(millions) | ||||||||||||
INCREASE IN CASH AND CASH EQUIVALENTS FROM OPERATING AND
INVESTING ACTIVITIES
|
$ | 74 | $ | 97 | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||
(Repayment of) proceeds from draw down of revolving credit
facility
|
14 | (90 | ) | 30 | ||||||||
Senior notes issued
|
14 | 794 | | |||||||||
Debt issuance costs
|
(7 | ) | | |||||||||
Repayments of debt
|
14 | (555 | ) | (70 | ) | |||||||
Make-whole on repurchase and redemption of senior notes
|
14 | (158 | ) | | ||||||||
Proceeds from issue of shares
|
42 | 17 | ||||||||||
Excess tax benefits from share-based payment arrangements
|
4 | 1 | ||||||||||
Dividends paid
|
(90 | ) | (89 | ) | ||||||||
Acquisition of noncontrolling interests
|
(9 | ) | (4 | ) | ||||||||
Dividends paid to noncontrolling interests
|
(12 | ) | (22 | ) | ||||||||
Net cash used in financing activities
|
(81 | ) | (137 | ) | ||||||||
DECREASE IN CASH AND CASH EQUIVALENTS
|
(7 | ) | (40 | ) | ||||||||
Effect of exchange rate changes on cash and cash equivalents
|
8 | (14 | ) | |||||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
316 | 221 | ||||||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
$ | 317 | $ | 167 | ||||||||
(i) | The 2010 Unaudited Condensed Consolidated Statement of Cash Flows has been recast to conform to the new balance sheet presentation. See Note 2 Basis of Presentation and Significant Accounting Policies for details. |
10
Table of Contents
(Unaudited)
1. | NATURE OF OPERATIONS |
| the Groups non-fiduciary balances; and |
| the further distinction between those assets and liabilities that are expected to be realized within or later than twelve months of the balance sheet date. |
11
Table of Contents
2. | BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued) |
3. | SALARIES AND BENEFITS EXPENSE |
12
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(Unaudited)
3. | SALARIES AND BENEFITS EXPENSE (Continued) |
June 30, |
||||
2011 | ||||
(millions) | ||||
Balance at January 1, 2011
|
$ | | ||
Severance costs accrued
|
55 | |||
Cash payments
|
(29 | ) | ||
Foreign exchange
|
| |||
Balance at end of period
|
$ | 26 | ||
Three months ended |
Six months ended |
|||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(millions) | ||||||||||||||||
Cash retention awards made
|
$ | 11 | $ | 16 | $ | 206 | $ | 185 | ||||||||
Amortization of cash retention awards included in salaries and
benefits
|
44 | 32 | 88 | 60 |
13
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3. | SALARIES AND BENEFITS EXPENSE (Continued) |
4. | INCOME TAXES |
Three months ended June 30, 2011 | ||||||||||||
Income |
Effective |
|||||||||||
before tax | Tax | tax rate | ||||||||||
(millions, except percentages) | ||||||||||||
Ordinary income taxed at estimated annual effective tax rate
|
$ | 123 | $ | (31 | ) | 25 | % | |||||
As reported
|
$ | 123 | $ | (31 | ) | 25 | % | |||||
Six months ended June 30, 2011 | ||||||||||||
Income |
Effective |
|||||||||||
before tax | Tax | tax rate | ||||||||||
(millions, except percentages) | ||||||||||||
Ordinary income taxed at estimated annual effective tax rate
|
$ | 317 | $ | (79 | ) | 25 | % | |||||
Items where tax effect is treated discretely:
|
||||||||||||
Make-whole on repurchase and redemption of senior notes and
write-off of unamortized debt issuance costs
|
(171 | ) | 47 | 27 | % | |||||||
Non-taxable gain on disposal of operations
|
4 | | | % | ||||||||
As reported
|
$ | 150 | $ | (32 | ) | 21 | % | |||||
5. | EARNINGS PER SHARE |
14
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(Unaudited)
5. | EARNINGS PER SHARE (Continued) |
Three months ended |
Six months ended |
|||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(millions, except per share data) | ||||||||||||||||
Net income attributable to Willis Group Holdings
|
$ | 85 | $ | 89 | $ | 119 | $ | 293 | ||||||||
Basic weighted average number of shares outstanding
|
172 | 170 | 172 | 169 | ||||||||||||
Dilutive effect of potentially issuable shares
|
4 | 1 | 3 | 2 | ||||||||||||
Diluted weighted average number of shares outstanding
|
176 | 171 | 175 | 171 | ||||||||||||
Basic earnings per share:
|
||||||||||||||||
Net income attributable to Willis Group Holdings shareholders
|
$ | 0.49 | $ | 0.52 | $ | 0.69 | $ | 1.73 | ||||||||
Dilutive effect of potentially issuable shares
|
(0.01 | ) | | (0.01 | ) | (0.02 | ) | |||||||||
Diluted earnings per share:
|
||||||||||||||||
Net income attributable to Willis Group Holdings shareholders
|
$ | 0.48 | $ | 0.52 | $ | 0.68 | $ | 1.71 | ||||||||
6. | PENSION PLANS |
Three months ended June 30, | ||||||||||||||||||||||||
UK Pension |
US Pension |
Intl Pension |
||||||||||||||||||||||
Benefits | Benefits | Benefits | ||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||
(millions) | ||||||||||||||||||||||||
Components of net periodic benefit cost:
|
||||||||||||||||||||||||
Service cost
|
$ | 10 | $ | 9 | $ | | $ | | $ | 1 | $ | 2 | ||||||||||||
Interest cost
|
27 | 24 | 11 | 10 | 2 | 2 | ||||||||||||||||||
Expected return on plan assets
|
(41 | ) | (33 | ) | (12 | ) | (10 | ) | (2 | ) | (2 | ) | ||||||||||||
Amortization of unrecognized prior service gain
|
(1 | ) | (1 | ) | | | | | ||||||||||||||||
Amortization of unrecognized actuarial loss
|
7 | 9 | 1 | | | 1 | ||||||||||||||||||
Net periodic benefit cost
|
$ | 2 | $ | 8 | $ | | $ | | $ | 1 | $ | 3 | ||||||||||||
15
Table of Contents
6. | PENSION PLANS (Continued) |
Six months ended June 30, | ||||||||||||||||||||||||
UK Pension |
US Pension |
Intl Pension |
||||||||||||||||||||||
Benefits | Benefits | Benefits | ||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||
(millions) | ||||||||||||||||||||||||
Components of net periodic benefit cost:
|
||||||||||||||||||||||||
Service cost
|
$ | 19 | $ | 18 | $ | | $ | | $ | 2 | $ | 3 | ||||||||||||
Interest cost
|
53 | 49 | 21 | 20 | 4 | 4 | ||||||||||||||||||
Expected return on plan assets
|
(81 | ) | (69 | ) | (23 | ) | (21 | ) | (4 | ) | (4 | ) | ||||||||||||
Amortization of unrecognized prior service gain
|
(2 | ) | (2 | ) | | | | | ||||||||||||||||
Amortization of unrecognized actuarial loss
|
15 | 18 | 2 | 1 | | 1 | ||||||||||||||||||
Net periodic benefit cost
|
$ | 4 | $ | 14 | $ | | $ | | $ | 2 | $ | 4 | ||||||||||||
7. | COMMITMENTS AND CONTINGENCIES |
16
Table of Contents
(Unaudited)
7. | COMMITMENTS AND CONTINGENCIES (Continued) |
17
Table of Contents
7. | COMMITMENTS AND CONTINGENCIES (Continued) |
18
Table of Contents
(Unaudited)
7. | COMMITMENTS AND CONTINGENCIES (Continued) |
19
Table of Contents
7. | COMMITMENTS AND CONTINGENCIES (Continued) |
| Troice, et al. v. Willis of Colorado, Inc., et al., C.A. No. 3:09-CV-01274-N, was filed on July 2, 2009 in the U.S. District Court for the Northern District of Texas against Willis Group Holdings plc, Willis of Colorado, Inc. and a Willis associate, among others. On April 1, 2010, plaintiffs filed the operative Third Amended Class Action Complaint on behalf of a putative, worldwide class of Stanford investors, adding Willis Limited as a defendant and alleging claims under Texas statutory and common law and seeking damages in excess of $1 billion, punitive damages and costs. On May 2, 2011, the defendants filed motions to dismiss the Third Amended Class Action Complaint, which motions are currently pending. It may be several months or longer before rulings are issued on these motions. |
| Ranni v. Willis of Colorado, Inc., et al., C.A. No. 09-22085, was filed on July 17, 2009 against Willis Group Holdings plc and Willis of Colorado, Inc. in the U.S. District Court for the Southern District of Florida. The complaint was filed on behalf of a putative class of Venezuelan and other South American Stanford investors and alleges claims under Section 10(b) of the Securities Exchange Act of 1934 (and Rule 10b-5 thereunder) and Florida statutory and common law and seeks damages in an amount to be determined at trial. On October 6, 2009, Ranni was transferred, for consolidation or coordination with other Stanford-related actions (including Troice), to the Northern District of Texas by the U.S. Judicial Panel on Multidistrict Litigation (the JPML). The defendants have not yet responded to the complaint in Ranni. |
| Canabal, et al. v. Willis of Colorado, Inc., et al., C.A. No. 3:09-CV-01474-D, was filed on August 6, 2009 against Willis Group Holdings plc, Willis of Colorado, Inc. and the same Willis associate named as a defendant in Troice, among others, also in the Northern District of Texas. The complaint was filed on behalf of a putative class of Venezuelan Stanford investors, alleged claims under Texas statutory and common law and sought damages in excess of $1 billion, punitive damages, attorneys fees and costs. On December 18, 2009, the parties in Troice and Canabal stipulated to the consolidation of those actions (under the Troice civil action number), and, on December 31, 2009, the plaintiffs in Canabal filed a notice of dismissal, dismissing the action without prejudice. |
| Rupert, et al. v. Winter, et al., Case No. 2009C115137, was filed on September 14, 2009 on behalf of 97 Stanford investors against Willis Group Holdings plc, Willis of Colorado, Inc. and the same Willis associate, among others, in Texas state court (Bexar County). The complaint alleges claims under the Securities Act of 1933, Texas and Colorado statutory law and Texas common law and seeks special, consequential and treble damages of more than $300 million, attorneys fees and costs. On October 20, 2009, certain defendants, including Willis of Colorado, Inc., (i) removed Rupert to the U.S. District Court for the Western District of Texas, (ii) notified the JPML of the pendency of this related action and (iii) moved to stay the action pending a determination by the JPML as to whether it should be transferred to the Northern District of Texas for consolidation or coordination with the other Stanford-related actions. On April 1, 2010, the JPML issued a final transfer order for the transfer of Rupert to the Northern District of Texas, where it is currently pending. The defendants have not yet responded to the complaint in Rupert. |
20
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(Unaudited)
7. | COMMITMENTS AND CONTINGENCIES (Continued) |
| Casanova, et al. v. Willis of Colorado, Inc., et al., C.A. No. 3:10-CV-01862-O, was filed on September 16, 2010 on behalf of seven Stanford investors against Willis Group Holdings plc, Willis Limited, Willis of Colorado, Inc. and the same Willis associate, among others, also in the Northern District of Texas. The complaint alleges claims under Texas statutory and common law and seeks actual damages in excess of $5 million, punitive damages, attorneys fees and costs. The defendants have not yet responded to the complaint in Casanova. |
| Rishmague, et ano. v. Winter, et al., Case No. 2011CI02585, was filed on March 11, 2011 on behalf of two Stanford investors, individually and as representatives of certain trusts, against Willis Group Holdings plc, Willis of Colorado, Inc., Willis of Texas, Inc. and the same Willis associate, among others, in Texas state court (Bexar County). The complaint alleges claims under Texas and Colorado statutory law and Texas common law and seeks special, consequential and treble damages of more than $37 million and attorneys fees and costs. On April 11, 2011, certain defendants, including Willis of Colorado, Inc., (i) removed Rishmague to the Western District of Texas, (ii) notified the JPML of the pendency of this related action and (iii) moved to stay the action pending a determination by the JPML as to whether it should be transferred to the Northern District of Texas for consolidation or coordination with the other Stanford-related actions. On April 13, 2011, the JPML issued a conditional transfer order for the transfer of Rishmague to the Northern District of Texas, which the plaintiffs moved to vacate on May 13, 2011. That motion is currently pending. The defendants have not yet responded to the complaint in Rishmague. |
8. | DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES |
21
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8. | DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Continued) |
Notional |
Fair |
|||||||||
amount(i) | value | |||||||||
(millions) | ||||||||||
US dollar
|
Receive fixed-pay variable | $ | 840 | $ | 10 | |||||
Pounds sterling
|
Receive fixed-pay variable | 250 | 3 | |||||||
Euro
|
Receive fixed-pay variable | 146 | |
(i) | Notional amounts represent US dollar equivalents translated at the spot rate as of June 30, 2011. |
22
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(Unaudited)
8. | DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Continued) |
| from changes in the exchange rate between US dollars and pounds sterling as its London market operations earn the majority of their revenues in US dollars and incur expenses predominantly in pounds sterling, and may also hold a significant net sterling asset or liability position on the balance sheet. In addition, the London market operations earn significant revenues in Euros and Japanese yen; and |
| from the translation into US dollars of the net income and net assets of its foreign subsidiaries, excluding the London market operations which are US dollar denominated. |
| to the extent that forecast pound sterling expenses exceed pound sterling revenues, the Company limits its exposure to this exchange rate risk by the use of forward contracts matched to specific, clearly identified cash outflows arising in the ordinary course of business; |
| to the extent the UK operations earn significant revenues in Euros and Japanese yen, the Company limits its exposure to changes in the exchange rate between the US dollar and these currencies by the use of forward contracts matched to a percentage of forecast cash inflows in specific currencies and periods; and |
| to the extent that the net sterling asset or liability position in its London market operations relate to short-term cash flows, the Company limits its exposure by the use of forward purchases and sales. These forward purchases and sales are not effective hedges for accounting purposes. |
23
Table of Contents
8. | DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Continued) |
Fair |
||||||||
Sell(i) | value | |||||||
(millions) | ||||||||
US dollar
|
$ | 325 | $ | 10 | ||||
Euro
|
161 | (5 | ) | |||||
Japanese yen
|
64 | (4 | ) |
(i) | Foreign currency notional amounts are reported in US dollars translated at contracted exchange rates. |
24
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(Unaudited)
8. | DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Continued) |
Fair value | ||||||||||
Balance sheet |
June 30, |
|||||||||
Derivative financial instruments designated as hedging instruments: | classification | 2011 | December 31, 2010 | |||||||
(millions) | ||||||||||
Assets:
|
||||||||||
Interest rate swaps (cash flow hedges)
|
Other assets | $ | 15 | $ | 17 | |||||
Interest rate swaps (fair value hedges)
|
Other assets | 22 | 14 | |||||||
Forward exchange contracts
|
Other assets | 13 | 16 | |||||||
Total derivatives designated as hedging instruments
|
$ | 50 | $ | 47 | ||||||
Liabilities:
|
||||||||||
Interest rate swaps (cash flow hedges)
|
Other liabilities | (2 | ) | (2 | ) | |||||
Forward exchange contracts
|
Other liabilities | (12 | ) | (10 | ) | |||||
Total derivatives designated as hedging instruments
|
$ | (14 | ) | $ | (12 | ) | ||||
25
Table of Contents
8. | DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Continued) |
Amount of |
||||||||||||||||
gain (loss) |
||||||||||||||||
Amount of |
recognized |
|||||||||||||||
gain (loss) |
in income |
|||||||||||||||
Amount of |
reclassified |
on derivative |
||||||||||||||
gain (loss) |
from |
(ineffective |
||||||||||||||
recognized |
accumulated |
Location of gain (loss) |
hedges and |
|||||||||||||
in OCI(i) |
Location of gain (loss) |
OCI(i)
into |
recognized in income |
ineffective |
||||||||||||
on derivative |
reclassified from |
income |
on derivative (ineffective |
element of |
||||||||||||
Derivatives in cash flow |
(effective |
accumulated
OCI(i)
into |
(effective |
hedges and ineffective |
effective |
|||||||||||
hedging relationships | element) | income (effective element) | element) | element of effective hedges) | hedges) | |||||||||||
(millions) | (millions) | (millions) | ||||||||||||||
Three months ended June 30, 2011
|
||||||||||||||||
Interest rate swaps
|
$ | 6 | Investment income | $ | (4 | ) | Other operating expenses | $ | | |||||||
Forward exchange contracts
|
(7 | ) | Other operating expenses | | Interest expense | | ||||||||||
Total
|
$ | (1 | ) | $ | (4 | ) | $ | | ||||||||
Three months ended June 30, 2010
|
||||||||||||||||
Interest rate swaps
|
$ | 6 | Investment income | $ | (6 | ) | Other operating expenses | $ | | |||||||
Forward exchange contracts
|
7 | Other operating expenses | 2 | Interest expense | | |||||||||||
Total
|
$ | 13 | $ | (4 | ) | $ | | |||||||||
Six months ended June 30, 2011
|
||||||||||||||||
Interest rate swaps
|
$ | 4 | Investment income | $ | (8 | ) | Other operating expenses | $ | | |||||||
Forward exchange contracts
|
(5 | ) | Other operating expenses | (1 | ) | Interest expense | 1 | |||||||||
Total
|
$ | (1 | ) | $ | (9 | ) | $ | 1 | ||||||||
Six months ended June 30, 2010
|
||||||||||||||||
Interest rate swaps
|
$ | 11 | Investment income | $ | (13 | ) | Other operating expenses | $ | | |||||||
Forward exchange contracts
|
4 | Other operating expenses | 7 | Interest expense | | |||||||||||
Total
|
$ | 15 | $ | (6 | ) | $ | | |||||||||
(i) | OCI means other comprehensive income. |
26
Table of Contents
(Unaudited)
8. | DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Continued) |
Gain (loss) |
Ineffectiveness |
|||||||||||||
Gain (loss) |
recognized |
recognized in |
||||||||||||
Hedged item in fair value |
recognized |
for hedged |
interest |
|||||||||||
Derivatives in fair value hedging relationships | hedging relationship | for derivative | item | expense | ||||||||||
(millions) | ||||||||||||||
Three months ended June 30, 2011
|
||||||||||||||
Interest rate swaps
|
5.625% senior notes due 2015 | $ | (6 | ) | $ | 6 | $ | | ||||||
Three months ended June 30, 2010
|
||||||||||||||
Interest rate swaps
|
5.625% senior notes due 2015 | $ | 12 | $ | (12 | ) | $ | | ||||||
Six months ended June 30, 2011
|
||||||||||||||
Interest rate swaps
|
5.625% senior notes due 2015 | $ | 5 | $ | (4 | ) | $ | (1 | ) | |||||
Six months ended June 30, 2010
|
||||||||||||||
Interest rate swaps
|
5.625% senior notes due 2015 | $ | 14 | $ | (14 | ) | $ | | ||||||
9. | FAIR VALUE MEASUREMENT |
June 30, 2011 | ||||||||||||||||
Quoted |
||||||||||||||||
prices in |
||||||||||||||||
active markets |
||||||||||||||||
for |
Significant other |
Significant other |
||||||||||||||
identical assets | observable inputs | unobservable inputs | ||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(millions) | ||||||||||||||||
Assets at fair value:
|
||||||||||||||||
Cash and cash equivalents
|
$ | 317 | $ | | $ | | $ | 317 | ||||||||
Fiduciary fundsrestricted (included within Fiduciary
assets)
|
1,957 | | | 1,957 | ||||||||||||
Derivative financial instruments
|
| 50 | | 50 | ||||||||||||
Total assets
|
$ | 2,274 | $ | 50 | $ | | $ | 2,324 | ||||||||
Liabilities at fair value:
|
||||||||||||||||
Derivative financial instruments
|
$ | | $ | 14 | $ | | $ | 14 | ||||||||
Changes in fair value of hedged
debt(i)
|
| 16 | | 16 | ||||||||||||
Total liabilities
|
$ | | $ | 30 | $ | | $ | 30 | ||||||||
(i) | Changes in the fair value of the underlying hedged debt instrument since inception of the hedging relationship are included in long-term debt. |
27
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9. | FAIR VALUE MEASUREMENT (Continued) |
December 31, 2010 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(millions) | ||||||||||||||||
Assets at fair value:
|
||||||||||||||||
Cash and cash equivalents
|
$ | 316 | $ | | $ | | $ | 316 | ||||||||
Fiduciary fundsrestricted (included within Fiduciary
assets)
|
1,764 | | | 1,764 | ||||||||||||
Derivative financial instruments
|
| 47 | | 47 | ||||||||||||
Total assets
|
$ | 2,080 | $ | 47 | $ | | $ | 2,127 | ||||||||
Liabilities at fair value:
|
||||||||||||||||
Derivative financial instruments
|
$ | | $ | 12 | $ | | $ | 12 | ||||||||
Changes in fair value of hedged
debt(i)
|
| 12 | | 12 | ||||||||||||
Total liabilities
|
$ | | $ | 24 | $ | | $ | 24 | ||||||||
(i) | Changes in the fair value of the underlying hedged debt instrument since inception of the hedging relationship are included in long-term debt. |
June 30, 2011 | December 31, 2010 | |||||||||||||||
Carrying |
Fair |
Carrying |
Fair |
|||||||||||||
amount | value | amount | value | |||||||||||||
(millions) | ||||||||||||||||
Assets:
|
||||||||||||||||
Cash and cash equivalents
|
$ | 317 | $ | 317 | $ | 316 | $ | 316 | ||||||||
Fiduciary fundsrestricted (included within Fiduciary
assets)
|
1,957 | 1,957 | 1,764 | 1,764 | ||||||||||||
Derivative financial instruments
|
50 | 50 | 47 | 47 | ||||||||||||
Liabilities:
|
||||||||||||||||
Short-term debt
|
$ | 114 | $ | 114 | $ | 110 | $ | 110 | ||||||||
Long-term debt
|
2,307 | 2,436 | 2,157 | 2,450 | ||||||||||||
Derivative financial instruments
|
14 | 14 | 12 | 12 |
28
Table of Contents
(Unaudited)
10. | GOODWILL |
North |
||||||||||||||||
Global | America | International | Total | |||||||||||||
(millions) | ||||||||||||||||
Balance at January 1, 2010
|
$ | 1,065 | $ | 1,780 | $ | 432 | $ | 3,277 | ||||||||
Purchase price allocation adjustments
|
| 6 | | 6 | ||||||||||||
Other
movements(i)
|
| (3 | ) | | (3 | ) | ||||||||||
Foreign exchange
|
(2 | ) | | 16 | 14 | |||||||||||
Balance at December 31, 2010
|
$ | 1,063 | $ | 1,783 | $ | 448 | $ | 3,294 | ||||||||
Purchase price allocation adjustments
|
| | 2 | 2 | ||||||||||||
Other
movements(i)(ii)
|
60 | | (61 | ) | (1 | ) | ||||||||||
Foreign exchange
|
3 | | 19 | 22 | ||||||||||||
Balance at June 30, 2011
|
$ | 1,126 | $ | 1,783 | $ | 408 | $ | 3,317 | ||||||||
(i) | North America$1 million (2010 : $3 million) tax benefit arising on the exercise of fully vested HRH stock options which were issued as part of the acquisition of HRH in 2008. | |
(ii) | Effective January 1, 2011, the Company changed its internal reporting structure: Global Markets International, previously reported within the International segment, is now reported in the Global segment; and Mexico Retail, which was previously reported within the International segment, is now reported in the North America segment. As a result of these changes, goodwill of $60 million has been reallocated from the International segment into the Global segment for Global Markets International, and $1 million has been reallocated from the International segment into the North America segment for Mexico Retail. Goodwill has been reallocated between segments using the relative fair value allocation approach. |
11. | OTHER INTANGIBLE ASSETS, NET |
| Customer and Marketing Related, including: |
| client relationships; | |
| client lists; | |
| non-compete agreements; | |
| trade names; and |
| Contract based, Technology and Other includes all other purchased intangible assets. |
29
Table of Contents
11. | OTHER INTANGIBLE ASSETS, NET (Continued) |
June 30, 2011 | December 31, 2010 | |||||||||||||||||||||||
Gross |
Net |
Gross |
Net |
|||||||||||||||||||||
carrying |
Accumulated |
carrying |
carrying |
Accumulated |
carrying |
|||||||||||||||||||
amount | amortization | amount | amount | amortization | amount | |||||||||||||||||||
(millions) | ||||||||||||||||||||||||
Customer and Marketing Related:
|
||||||||||||||||||||||||
Client Relationships
|
$ | 705 | $ | (247 | ) | $ | 458 | $ | 695 | $ | (207 | ) | $ | 488 | ||||||||||
Client Lists
|
8 | (7 | ) | 1 | 9 | (7 | ) | 2 | ||||||||||||||||
Non-compete Agreements
|
36 | (36 | ) | | 36 | (36 | ) | | ||||||||||||||||
Trade Names
|
11 | (10 | ) | 1 | 11 | (10 | ) | 1 | ||||||||||||||||
Total Customer and Marketing Related
|
760 | (300 | ) | 460 | 751 | (260 | ) | 491 | ||||||||||||||||
Contract based, Technology and Other
|
4 | (3 | ) | 1 | 4 | (3 | ) | 1 | ||||||||||||||||
Total amortizable intangible assets
|
$ | 764 | $ | (303 | ) | $ | 461 | $ | 755 | $ | (263 | ) | $ | 492 | ||||||||||
Remainder of |
||||||||||||||||||||||||||||
2011 | 2012 | 2013 | 2014 | 2015 | Thereafter | Total | ||||||||||||||||||||||
(millions) | ||||||||||||||||||||||||||||
Amortization of intangible assets
|
$ | 34 | $ | 61 | $ | 53 | $ | 45 | $ | 38 | $ | 230 | $ | 461 | ||||||||||||||
30
Table of Contents
(Unaudited)
12. | OTHER ASSETS |
June 30, |
December 31, |
|||||||
2011 | 2010 | |||||||
(millions) | ||||||||
Other current assets
|
||||||||
Unamortized cash retention awards
|
$ | 148 | $ | 125 | ||||
Prepayments and accrued income
|
58 | 73 | ||||||
Derivatives
|
17 | 17 | ||||||
Debt issuance costs
|
8 | 8 | ||||||
Income tax receivable
|
42 | 69 | ||||||
Other receivables
|
54 | 48 | ||||||
Total other current assets
|
$ | 327 | $ | 340 | ||||
Other non-current assets
|
||||||||
Unamortized cash retention awards
|
$ | 145 | $ | 48 | ||||
Deferred compensation plan assets
|
115 | 114 | ||||||
Prepayments and accrued income
|
17 | | ||||||
Debt issuance costs
|
19 | 27 | ||||||
Derivatives
|
33 | 30 | ||||||
Income taxes receivable
|
11 | | ||||||
Other receivables
|
25 | 14 | ||||||
Total other non-current assets
|
$ | 365 | $ | 233 | ||||
Total other assets
|
$ | 692 | $ | 573 | ||||
31
Table of Contents
13. | OTHER LIABILITIES |
June 30, |
December 31, |
|||||||
2011 | 2010 | |||||||
(millions) | ||||||||
Other current liabilities
|
||||||||
Other taxes payable
|
$ | 46 | $ | 41 | ||||
Accounts payable
|
72 | 39 | ||||||
Accrued dividends payable
|
46 | 46 | ||||||
Accrued interest payable
|
37 | 21 | ||||||
Derivatives
|
7 | 6 | ||||||
Other payables
|
110 | 113 | ||||||
Total other current liabilities
|
$ | 318 | $ | 266 | ||||
Other non-current liabilities
|
||||||||
Incentives from lessors
|
$ | 156 | $ | 150 | ||||
Deferred compensation plan liability
|
122 | 120 | ||||||
Capital lease obligation
|
25 | 23 | ||||||
Derivatives
|
7 | 6 | ||||||
Other payables
|
57 | 48 | ||||||
Total other non-current liabilities
|
$ | 367 | $ | 347 | ||||
Total other liabilities
|
$ | 685 | $ | 613 | ||||
14. | DEBT |
June 30, |
December 31, |
|||||||
2011 | 2010 | |||||||
(millions) | ||||||||
Current portion of
5-year term
loan facility
|
$ | 110 | $ | 110 | ||||
6.000% loan notes due 2012
|
4 | | ||||||
$ | 114 | $ | 110 | |||||
32
Table of Contents
(Unaudited)
14. | DEBT (Continued) |
June 30, |
December 31, |
|||||||
2011 | 2010 | |||||||
(millions) | ||||||||
5-year term
loan facility
|
$ | 246 | $ | 301 | ||||
Revolving $300 million credit facility
|
| 90 | ||||||
6.000% loan notes due 2012
|
| 4 | ||||||
5.625% senior notes due 2015
|
350 | 350 | ||||||
Fair value adjustment on 5.625% senior notes due 2015
|
16 | 12 | ||||||
12.875% senior notes due 2016
|
| 500 | ||||||
4.125% senior notes due 2016
|
299 | | ||||||
6.200% senior notes due 2017
|
600 | 600 | ||||||
7.000% senior notes due 2019
|
300 | 300 | ||||||
5.750% senior notes due 2021
|
496 | | ||||||
$ | 2,307 | $ | 2,157 | |||||
33
Table of Contents
15. | SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION |
Six months ended |
||||||||
June 30, | ||||||||
2011 | 2010 | |||||||
(millions) | ||||||||
Supplemental disclosures of cash flow information:
|
||||||||
Cash (receipts) payments for income taxes, net of cash received
|
$ | (24 | ) | $ | 56 | |||
Cash payments for interest
|
62 | 82 | ||||||
Supplemental disclosures of non-cash flow investing and
financing activities:
|
||||||||
Write-off of unamortized debt issuance costs
|
$ | (13 | ) | $ | | |||
Acquisitions:
|
||||||||
Fair value of assets acquired
|
$ | 2 | $ | 1 | ||||
Less: Liabilities assumed
|
| | ||||||
Net assets acquired, net of cash acquired
|
$ | 2 | $ | 1 | ||||
16. | COMPREHENSIVE INCOME |
Three months ended |
Six months ended |
|||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(millions) | (millions) | |||||||||||||||
Net income
|
$ | 89 | $ | 91 | $ | 131 | $ | 302 | ||||||||
Other comprehensive income, net of tax:
|
||||||||||||||||
Foreign currency translation adjustment (net of tax of $nil,
$nil, $nil and $nil)
|
25 | (29 | ) | 65 | (35 | ) | ||||||||||
Pension funding adjustment (net of tax of $nil,
$(2) million, $(1) million and $(5) million)
|
| 6 | (5 | ) | 12 | |||||||||||
Net loss on derivative instruments (net of tax of
$1 million, $(2) million, $3 million and
$(2) million)
|
(4 | ) | 7 | (7 | ) | 7 | ||||||||||
Other comprehensive income (net of tax of $1 million,
$(4) million, $2 million and $(7) million)
|
21 | (16 | ) | 53 | (16 | ) | ||||||||||
Comprehensive income
|
110 | 75 | 184 | 286 | ||||||||||||
Noncontrolling interest
|
(4 | ) | (2 | ) | (12 | ) | (9 | ) | ||||||||
Comprehensive income attributable to Willis Group Holdings
|
$ | 106 | $ | 73 | $ | 172 | $ | 277 | ||||||||
34
Table of Contents
(Unaudited)
16. | COMPREHENSIVE INCOME (Continued) |
June 30, |
December 31, |
|||||||
2011 | 2010 | |||||||
(millions) | ||||||||
Net foreign currency translation adjustment
|
$ | 13 | $ | (52 | ) | |||
Pension funding adjustment
|
(508 | ) | (503 | ) | ||||
Net unrealized gain on derivative instruments
|
7 | 14 | ||||||
Accumulated other comprehensive loss, attributable to Willis
Group Holdings, net of tax
|
$ | (488 | ) | $ | (541 | ) | ||
17. | EQUITY AND NONCONTROLLING INTERESTS |
June 30, 2011 | June 30, 2010 | |||||||||||||||||||||||
Willis |
Willis |
|||||||||||||||||||||||
Group |
Group |
|||||||||||||||||||||||
Holdings |
Noncontrolling |
Total |
Holdings |
Noncontrolling |
Total |
|||||||||||||||||||
stockholders | interests | equity | stockholders | interests | equity | |||||||||||||||||||
(millions) | ||||||||||||||||||||||||
Balance at beginning of period
|
$ | 2,577 | $ | 31 | $ | 2,608 | $ | 2,180 | $ | 49 | $ | 2,229 | ||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||
Net income
|
119 | 12 | 131 | 293 | 9 | 302 | ||||||||||||||||||
Other comprehensive income (loss), net of tax
|
53 | | 53 | (16 | ) | | (16 | ) | ||||||||||||||||
Comprehensive income
|
172 | 12 | 184 | 277 | 9 | 286 | ||||||||||||||||||
Dividends
|
(90 | ) | (12 | ) | (102 | ) | (89 | ) | (22 | ) | (111 | ) | ||||||||||||
Additional paid-in capital
|
48 | | 48 | 33 | | 33 | ||||||||||||||||||
Purchase of subsidiary shares from noncontrolling interests
|
| | | | (4 | ) | (4 | ) | ||||||||||||||||
Foreign currency translation
|
| 1 | 1 | | (4 | ) | (4 | ) | ||||||||||||||||
Balance at end of period
|
$ | 2,707 | $ | 32 | $ | 2,739 | $ | 2,401 | $ | 28 | $ | 2,429 | ||||||||||||
June 30, |
June 30, |
|||||||
2011 | 2010 | |||||||
(millions) | ||||||||
Net income attributable to Willis Group Holdings
|
$ | 119 | $ | 293 | ||||
Transfers from noncontrolling interest:
|
||||||||
Decrease in Willis Group Holdings paid-in capital for purchase
of noncontrolling interests
|
| (14 | ) | |||||
Net transfers to noncontrolling interests
|
| (14 | ) | |||||
Change from net income attributable to Willis Group Holdings and
transfers from noncontrolling interests
|
$ | 119 | $ | 279 | ||||
35
Table of Contents
18. | SEGMENT INFORMATION |
(i) | costs of the holding company; | |
(ii) | foreign exchange loss from the devaluation of the Venezuelan currency; | |
(iii) | foreign exchange hedging activities, foreign exchange movements on the UK pension plan asset and foreign exchange gains and losses from currency purchases and sales; | |
(iv) | amortization of intangible assets; | |
(v) | gains and losses on the disposal of operations; | |
(vi) | significant legal and regulatory settlements which are managed centrally; and | |
(vii) | costs associated with the 2011 Operational Review. |
Three months ended June 30, 2011 | ||||||||||||||||||||||||||||
Interest in |
||||||||||||||||||||||||||||
Depreciation |
Earnings of |
|||||||||||||||||||||||||||
Commissions |
Investment |
Other |
Total |
and |
Operating |
Associates, |
||||||||||||||||||||||
and Fees | Income | Income | Revenues | Amortization | Income | net of tax | ||||||||||||||||||||||
(millions) | ||||||||||||||||||||||||||||
Global
|
$ | 271 | $ | 3 | $ | | $ | 274 | $ | 5 | $ | 89 | $ | | ||||||||||||||
North America
|
326 | 1 | 1 | 328 | 3 | 61 | | |||||||||||||||||||||
International
|
257 | 4 | | 261 | 10 | 56 | (3 | ) | ||||||||||||||||||||
Total Retail
|
583 | 5 | 1 | 589 | 13 | 117 | (3 | ) | ||||||||||||||||||||
Total Operating Segments
|
854 | 8 | 1 | 863 | 18 | 206 | (3 | ) | ||||||||||||||||||||
Corporate and
Other(ii)
|
| | | | 18 | (49 | ) | | ||||||||||||||||||||
Total Consolidated
|
$ | 854 | $ | 8 | $ | 1 | $ | 863 | $ | 36 | $ | 157 | $ | (3 | ) | |||||||||||||
36
Table of Contents
(Unaudited)
18. | SEGMENT INFORMATION (Continued) |
Three months ended June 30, 2010(i) | ||||||||||||||||||||||||||||
Interest in |
||||||||||||||||||||||||||||
Depreciation |
Earnings of |
|||||||||||||||||||||||||||
Commissions |
Investment |
Other |
Total |
and |
Operating |
Associates, |
||||||||||||||||||||||
and Fees | Income | Income | Revenues | Amortization | Income | net of tax | ||||||||||||||||||||||
(millions) | ||||||||||||||||||||||||||||
Global
|
$ | 249 | $ | 2 | $ | | $ | 251 | $ | 5 | $ | 87 | $ | | ||||||||||||||
North America
|
328 | 5 | | 333 | 6 | 68 | | |||||||||||||||||||||
International
|
212 | 3 | | 215 | 5 | 41 | (2 | ) | ||||||||||||||||||||
Total Retail
|
540 | 8 | | 548 | 11 | 109 | (2 | ) | ||||||||||||||||||||
Total Operating Segments
|
789 | 10 | | 799 | 16 | 196 | (2 | ) | ||||||||||||||||||||
Corporate and
Other(ii)
|
| | | | 21 | (27 | ) | | ||||||||||||||||||||
Total Consolidated
|
$ | 789 | $ | 10 | $ | | $ | 799 | $ | 37 | $ | 169 | $ | (2 | ) | |||||||||||||
(i) | Effective January 1, 2011, the Company changed its internal reporting structure: Global Markets International, previously reported within the International segment, is now reported in the Global segment. In addition, Mexico Retail, which was previously reported within the International segment, is now reported in the North America segment. As a result of these changes, second quarter 2010 revenues of $36 million, previously allocated to our International segment, have been included in Global: $34 million; and North America: $2 million. Operating income of $18 million previously allocated to our International segment has been included in Global: $18 million; and North America: $nil. | |
(ii) | Corporate and Other includes the following: |
Three months ended |
||||||||
June 30, | ||||||||
2011 | 2010 | |||||||
(millions) | ||||||||
Amortization of intangible assets
|
$ | (17 | ) | $ | (21 | ) | ||
Foreign exchange hedging
|
1 | (2 | ) | |||||
Foreign exchange on the UK pension plan asset
|
| 2 | ||||||
Net gain on disposal of operations
|
| (2 | ) | |||||
2011 Operational Review
|
(18 | ) | | |||||
FSA regulatory settlement
|
(11 | ) | | |||||
Other(a)
|
(4 | ) | (4 | ) | ||||
Total Corporate and Other
|
$ | (49 | ) | $ | (27 | ) | ||
(a) | Other includes $6 million of the $9 million total benefit in second quarter 2011 from the release of funds and reserves related to potential legal liabilities. |
Six months ended June 30, 2011 | ||||||||||||||||||||||||||||
Interest in |
||||||||||||||||||||||||||||
Depreciation |
Earnings of |
|||||||||||||||||||||||||||
Commissions |
Investment |
Other |
Total |
and |
Operating |
Associates, |
||||||||||||||||||||||
and Fees | Income | Income | Revenues | Amortization | Income | net of tax | ||||||||||||||||||||||
(millions) | ||||||||||||||||||||||||||||
Global
|
$ | 629 | $ | 6 | $ | | $ | 635 | $ | 9 | $ | 264 | $ | | ||||||||||||||
North America
|
682 | 3 | 1 | 686 | 10 | 146 | | |||||||||||||||||||||
International
|
543 | 7 | | 550 | 15 | 142 | 13 | |||||||||||||||||||||
Total Retail
|
1,225 | 10 | 1 | 1,236 | 25 | 288 | 13 | |||||||||||||||||||||
Total Operating Segments
|
1,854 | 16 | 1 | 1,871 | 34 | 552 | 13 | |||||||||||||||||||||
Corporate and
Other(ii)
|
| | | | 39 | (157 | ) | | ||||||||||||||||||||
Total Consolidated
|
$ | 1,854 | $ | 16 | $ | 1 | $ | 1,871 | $ | 73 | $ | 395 | $ | 13 | ||||||||||||||
37
Table of Contents
18. | SEGMENT INFORMATION (Continued) |
Six months ended June 30, 2010(i) | ||||||||||||||||||||||||||||
Interest in |
||||||||||||||||||||||||||||
Depreciation |
Earnings of |
|||||||||||||||||||||||||||
Commissions |
Investment |
Other |
Total |
and |
Operating |
Associates, |
||||||||||||||||||||||
and Fees | Income | Income | Revenues | Amortization | Income | net of tax | ||||||||||||||||||||||
(millions) | ||||||||||||||||||||||||||||
Global
|
$ | 580 | $ | 5 | $ | | $ | 585 | $ | 9 | $ | 241 | $ | | ||||||||||||||
North America
|
693 | 8 | | 701 | 12 | 161 | | |||||||||||||||||||||
International
|
479 | 6 | | 485 | 10 | 128 | 18 | |||||||||||||||||||||
Total Retail
|
1,172 | 14 | | 1,186 | 22 | 289 | 18 | |||||||||||||||||||||
Total Operating Segments
|
1,752 | 19 | | 1,771 | 31 | 530 | 18 | |||||||||||||||||||||
Corporate and
Other(ii)
|
| | | | 42 | (60 | ) | | ||||||||||||||||||||
Total Consolidated
|
$ | 1,752 | $ | 19 | $ | | $ | 1,771 | $ | 73 | $ | 470 | $ | 18 | ||||||||||||||
(i) | Effective January 1, 2011, the Company changed its internal reporting structure: Global Markets International, previously reported within the International segment, is now reported in the Global segment. In addition, Mexico Retail, which was previously reported within the International segment, is now reported in the North America segment. As a result of these changes, first half year 2010 total revenues of $70 million, previously allocated to our International segment, have been included in Global: $65 million; and North America: $5 million. Operating income of $34 million previously allocated to our International segment has been included in Global: $34 million; and North America: $nil. | |
(ii) | Corporate and Other includes the following: |
Six months ended |
||||||||
June 30, | ||||||||
2011 | 2010 | |||||||
(millions) | ||||||||
Amortization of intangible assets
|
$ | (34 | ) | $ | (42 | ) | ||
Foreign exchange hedging
|
2 | (6 | ) | |||||
Foreign exchange on the UK pension plan asset
|
1 | 6 | ||||||
Net gain (loss) on disposal of operations
|
4 | (2 | ) | |||||
2011 Operational Review
|
(115 | ) | | |||||
FSA regulatory settlement
|
(11 | ) | | |||||
Venezuela currency devaluation
|
| (12 | ) | |||||
Other(a)
|
(4 | ) | (4 | ) | ||||
Total Corporate and Other
|
$ | (157 | ) | $ | (60 | ) | ||
(a) | Other includes $6 million of the $9 million total benefit in second quarter 2011 from the release of funds and reserves related to potential legal liabilities. |
Three months ended |
Six months ended |
|||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(millions) | ||||||||||||||||
Total consolidated operating income
|
$ | 157 | $ | 169 | $ | 395 | $ | 470 | ||||||||
Make-whole on repurchase and redemption of senior notes and
write-off of unamortized debt issuance costs
|
| | (171 | ) | | |||||||||||
Interest expense
|
(34 | ) | (41 | ) | (74 | ) | (84 | ) | ||||||||
Income before income taxes and interest in earnings of associates
|
$ | 123 | $ | 128 | $ | 150 | $ | 386 | ||||||||
38
Table of Contents
(Unaudited)
19. | FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES |
(i) | Willis Group Holdings, which is a guarantor, on a parent company only basis; | |
(ii) | the Other Guarantors, which are all 100 percent directly or indirectly owned subsidiaries of the parent and are all direct or indirect parents of the issuer; | |
(iii) | the Issuer, Willis North America; | |
(iv) | Other, which are the non-guarantor subsidiaries, on a combined basis; | |
(v) | Consolidating adjustments; and | |
(vi) | the Consolidated Company. |
39
Table of Contents
19. | FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued) |
Three months ended June 30, 2011 | ||||||||||||||||||||||||
Willis |
||||||||||||||||||||||||
Group |
The Other |
Consolidating |
||||||||||||||||||||||
Holdings | Guarantors | The Issuer | Other | adjustments | Consolidated | |||||||||||||||||||
(millions) | ||||||||||||||||||||||||
REVENUES
|
||||||||||||||||||||||||
Commissions and fees
|
$ | | $ | | $ | | $ | 854 | $ | | $ | 854 | ||||||||||||
Investment income
|
| 3 | 1 | 7 | (3 | ) | 8 | |||||||||||||||||
Other income
|
| | | 24 | (23 | ) | 1 | |||||||||||||||||
Total revenues
|
| 3 | 1 | 885 | (26 | ) | 863 | |||||||||||||||||
EXPENSES
|
||||||||||||||||||||||||
Salaries and benefits
|
| | | (523 | ) | 17 | (506 | ) | ||||||||||||||||
Other operating expenses
|
| 1 | (48 | ) | (119 | ) | 2 | (164 | ) | |||||||||||||||
Depreciation expense
|
| | (3 | ) | (16 | ) | | (19 | ) | |||||||||||||||
Amortization of intangible assets
|
| | | (22 | ) | 5 | (17 | ) | ||||||||||||||||
Total expenses
|
| 1 | (51 | ) | (680 | ) | 24 | (706 | ) | |||||||||||||||
OPERATING INCOME (LOSS)
|
| 4 | (50 | ) | 205 | (2 | ) | 157 | ||||||||||||||||
Investment income from Group undertakings
|
1 | 137 | 110 | 40 | (288 | ) | | |||||||||||||||||
Interest expense
|
(10 | ) | (60 | ) | (37 | ) | (102 | ) | 175 | (34 | ) | |||||||||||||
(LOSS) INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF
ASSOCIATES
|
(9 | ) | 81 | 23 | 143 | (115 | ) | 123 | ||||||||||||||||
Income taxes
|
2 | 2 | 1 | (39 | ) | 3 | (31 | ) | ||||||||||||||||
(LOSS) INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES
|
(7 | ) | 83 | 24 | 104 | (112 | ) | 92 | ||||||||||||||||
Interest in earnings of associates, net of tax
|
| | | (5 | ) | 2 | (3 | ) | ||||||||||||||||
(LOSS) NET INCOME
|
(7 | ) | 83 | 24 | 99 | (110 | ) | 89 | ||||||||||||||||
Less: Net income attributable to noncontrolling interests
|
| | | (4 | ) | | (4 | ) | ||||||||||||||||
EQUITY ACCOUNT FOR SUBSIDIARIES
|
92 | 9 | (42 | ) | | (59 | ) | | ||||||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO WILLIS GROUP HOLDINGS
|
$ | 85 | $ | 92 | $ | (18 | ) | $ | 95 | $ | (169 | ) | $ | 85 | ||||||||||
40
Table of Contents
(Unaudited)
19. | FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued) |
Three months ended June 30, 2010 | ||||||||||||||||||||||||
Willis |
||||||||||||||||||||||||
Group |
The Other |
Consolidating |
||||||||||||||||||||||
Holdings | Guarantors | The Issuer | Other | adjustments | Consolidated | |||||||||||||||||||
(millions) | ||||||||||||||||||||||||
REVENUES
|
||||||||||||||||||||||||
Commissions and fees
|
$ | | $ | | $ | | $ | 789 | $ | | $ | 789 | ||||||||||||
Investment income
|
| 2 | | 13 | (5 | ) | 10 | |||||||||||||||||
Total revenues
|
| 2 | | 802 | (5 | ) | 799 | |||||||||||||||||
EXPENSES
|
||||||||||||||||||||||||
Salaries and benefits
|
| | | (466 | ) | 10 | (456 | ) | ||||||||||||||||
Other operating expenses
|
369 | 8 | (61 | ) | (436 | ) | (15 | ) | (135 | ) | ||||||||||||||
Depreciation expense
|
| | (2 | ) | (14 | ) | | (16 | ) | |||||||||||||||
Amortization of intangible assets
|
| | | (21 | ) | | (21 | ) | ||||||||||||||||
Net gain on disposal of operations
|
| | | 2,433 | (2,435 | ) | (2 | ) | ||||||||||||||||
Total expenses
|
369 | 8 | (63 | ) | 1,496 | (2,440 | ) | (630 | ) | |||||||||||||||
OPERATING INCOME (LOSS)
|
369 | 10 | (63 | ) | 2,298 | (2,445 | ) | 169 | ||||||||||||||||
Investment income from Group undertakings
|
| 218 | 117 | 65 | (400 | ) | | |||||||||||||||||
Interest expense
|
| (79 | ) | (38 | ) | (154 | ) | 230 | (41 | ) | ||||||||||||||
INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES
|
369 | 149 | 16 | 2,209 | (2,615 | ) | 128 | |||||||||||||||||
Income taxes
|
| (7 | ) | 16 | (45 | ) | 1 | (35 | ) | |||||||||||||||
INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES
|
369 | 142 | 32 | 2,164 | (2,614 | ) | 93 | |||||||||||||||||
Interest in earnings of associates, net of tax
|
| | | (6 | ) | 4 | (2 | ) | ||||||||||||||||
NET INCOME
|
369 | 142 | 32 | 2,158 | (2,610 | ) | 91 | |||||||||||||||||
Less: Net income attributable to noncontrolling interests
|
| | | | (2 | ) | (2 | ) | ||||||||||||||||
EQUITY ACCOUNT FOR SUBSIDIARIES
|
(280 | ) | 97 | (35 | ) | | 218 | | ||||||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO WILLIS GROUP HOLDINGS
|
$ | 89 | $ | 239 | $ | (3 | ) | $ | 2,158 | $ | (2,394 | ) | $ | 89 | ||||||||||
41
Table of Contents
19. | FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued) |
Six months ended June 30, 2011 | ||||||||||||||||||||||||
Willis |
||||||||||||||||||||||||
Group |
The Other |
Consolidating |
||||||||||||||||||||||
Holdings | Guarantors | The Issuer | Other | adjustments | Consolidated | |||||||||||||||||||
(millions) | ||||||||||||||||||||||||
REVENUES
|
||||||||||||||||||||||||
Commissions and fees
|
$ | | $ | | $ | | $ | 1,854 | $ | | $ | 1,854 | ||||||||||||
Investment income
|
| 6 | 1 | 15 | (6 | ) | 16 | |||||||||||||||||
Other income
|
| | | 24 | (23 | ) | 1 | |||||||||||||||||
Total revenues
|
| 6 | 1 | 1,893 | (29 | ) | 1,871 | |||||||||||||||||
EXPENSES
|
||||||||||||||||||||||||
Salaries and benefits
|
| | | (1,116 | ) | 26 | (1,090 | ) | ||||||||||||||||
Other operating expenses
|
1 | 25 | (93 | ) | (253 | ) | 3 | (317 | ) | |||||||||||||||
Depreciation expense
|
| | (7 | ) | (32 | ) | | (39 | ) | |||||||||||||||
Amortization of intangible assets
|
| | | (39 | ) | 5 | (34 | ) | ||||||||||||||||
Net gain on disposal of operations
|
| | | 6 | (2 | ) | 4 | |||||||||||||||||
Total expenses
|
1 | 25 | (100 | ) | (1,434 | ) | 32 | (1,476 | ) | |||||||||||||||
OPERATING INCOME (LOSS)
|
1 | 31 | (99 | ) | 459 | 3 | 395 | |||||||||||||||||
Investment income from Group undertakings
|
35 | 218 | 173 | 33 | (459 | ) | | |||||||||||||||||
Make-whole on repurchase and redemption of senior notes and
write-off of unamortized debt issuance costs
|
| (171 | ) | | | | (171 | ) | ||||||||||||||||
Interest expense
|
(12 | ) | (125 | ) | (73 | ) | (208 | ) | 344 | (74 | ) | |||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF
ASSOCIATES
|
24 | (47 | ) | 1 | 284 | (112 | ) | 150 | ||||||||||||||||
Income taxes
|
2 | 45 | 14 | (89 | ) | (4 | ) | (32 | ) | |||||||||||||||
INCOME (LOSS) BEFORE INTEREST IN EARNINGS OF ASSOCIATES
|
26 | (2 | ) | 15 | 195 | (116 | ) | 118 | ||||||||||||||||
Interest in earnings of associates, net of tax
|
| | | 9 | 4 | 13 | ||||||||||||||||||
NET INCOME (LOSS)
|
26 | (2 | ) | 15 | 204 | (112 | ) | 131 | ||||||||||||||||
Less: Net income attributable to noncontrolling interests
|
| | | (12 | ) | | (12 | ) | ||||||||||||||||
EQUITY ACCOUNT FOR SUBSIDIARIES
|
93 | 133 | (37 | ) | | (189 | ) | | ||||||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO WILLIS GROUP HOLDINGS
|
$ | 119 | $ | 131 | $ | (22 | ) | $ | 192 | $ | (301 | ) | $ | 119 | ||||||||||
42
Table of Contents
(Unaudited)
19. | FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued) |
Six months ended June 30, 2010 | ||||||||||||||||||||||||
Willis |
||||||||||||||||||||||||
Group |
The Other |
Consolidating |
||||||||||||||||||||||
Holdings | Guarantors | The Issuer | Other | adjustments | Consolidated | |||||||||||||||||||
(millions) | ||||||||||||||||||||||||
REVENUES
|
||||||||||||||||||||||||
Commissions and fees
|
$ | | $ | | $ | | $ | 1,752 | $ | | $ | 1,752 | ||||||||||||
Investment income
|
| 5 | 1 | 18 | (5 | ) | 19 | |||||||||||||||||
Total revenues
|
| 5 | 1 | 1,770 | (5 | ) | 1,771 | |||||||||||||||||
EXPENSES
|
||||||||||||||||||||||||
Salaries and benefits
|
| | | (957 | ) | 15 | (942 | ) | ||||||||||||||||
Other operating expenses
|
565 | (26 | ) | (59 | ) | (730 | ) | (34 | ) | (284 | ) | |||||||||||||
Depreciation expense
|
| | (4 | ) | (27 | ) | | (31 | ) | |||||||||||||||
Amortization of intangible assets
|
| | | (42 | ) | | (42 | ) | ||||||||||||||||
Net gain (loss) on disposal of operations
|
| | | 2,435 | (2,437 | ) | (2 | ) | ||||||||||||||||
Total expenses
|
565 | (26 | ) | (63 | ) | 679 | (2,456 | ) | (1,301 | ) | ||||||||||||||
OPERATING INCOME (LOSS)
|
565 | (21 | ) | (62 | ) | 2,449 | (2,461 | ) | 470 | |||||||||||||||
Investment income from Group undertakings
|
| 551 | 173 | 488 | (1,212 | ) | | |||||||||||||||||
Interest expense
|
| (211 | ) | (80 | ) | (211 | ) | 418 | (84 | ) | ||||||||||||||
INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES
|
565 | 319 | 31 | 2,726 | (3,255 | ) | 386 | |||||||||||||||||
Income taxes
|
| (4 | ) | 9 | (119 | ) | 12 | (102 | ) | |||||||||||||||
INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES
|
565 | 315 | 40 | 2,607 | (3,243 | ) | 284 | |||||||||||||||||
Interest in earnings of associates, net of tax
|
| | | 14 | 4 | 18 | ||||||||||||||||||
NET INCOME
|
565 | 315 | 40 | 2,621 | (3,239 | ) | 302 | |||||||||||||||||
Less: Net income attributable to noncontrolling interests
|
| | | (3 | ) | (6 | ) | (9 | ) | |||||||||||||||
EQUITY ACCOUNT FOR SUBSIDIARIES
|
(272 | ) | 132 | (30 | ) | | 170 | | ||||||||||||||||
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS
|
$ | 293 | $ | 447 | $ | 10 | $ | 2,618 | $ | (3,075 | ) | $ | 293 | |||||||||||
43
Table of Contents
19. | FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued) |
As at June 30, 2011 | ||||||||||||||||||||||||
Willis |
||||||||||||||||||||||||
Group |
The Other |
The |
Consolidating |
|||||||||||||||||||||
Holdings | Guarantors | Issuer | Other | adjustments | Consolidated | |||||||||||||||||||
(millions) | ||||||||||||||||||||||||
ASSETS
|
||||||||||||||||||||||||
CURRENT ASSETS
|
||||||||||||||||||||||||
Cash and cash equivalents
|
$ | | $ | | $ | 87 | $ | 230 | $ | | $ | 317 | ||||||||||||
Accounts receivable
|
| | | 1,021 | 28 | 1,049 | ||||||||||||||||||
Fiduciary assets
|
| | | 11,919 | (663 | ) | 11,256 | |||||||||||||||||
Deferred tax assets
|
| | | 32 | | 32 | ||||||||||||||||||
Other current assets
|
3 | 138 | 37 | 434 | (285 | ) | 327 | |||||||||||||||||
Total current assets
|
3 | 138 | 124 | 13,636 | (920 | ) | 12,981 | |||||||||||||||||
Investments in subsidiaries
|
(911 | ) | 4,031 | 1,423 | 3,875 | (8,418 | ) | | ||||||||||||||||
Amounts owed by (to) Group undertakings
|
4,462 | (5,193 | ) | 882 | (151 | ) | | | ||||||||||||||||
NON-CURRENT ASSETS
|
||||||||||||||||||||||||
Fixed assets
|
| | 58 | 335 | (2 | ) | 391 | |||||||||||||||||
Goodwill
|
| | | 1,699 | 1,618 | 3,317 | ||||||||||||||||||
Other intangible assets
|
| | | 477 | (16 | ) | 461 | |||||||||||||||||
Investments in associates
|
| | | (45 | ) | 231 | 186 | |||||||||||||||||
Deferred tax assets
|
| | | 7 | 2 | 9 | ||||||||||||||||||
Pension benefits asset
|
| | | 231 | | 231 | ||||||||||||||||||
Other non-current assets
|
6 | 139 | 48 | 172 | | 365 | ||||||||||||||||||
Total non-current assets
|
6 | 139 | 106 | 2,876 | 1,833 | 4,960 | ||||||||||||||||||
TOTAL ASSETS
|
$ | 3,560 | $ | (885 | ) | $ | 2,535 | $ | 20,236 | $ | (7,505 | ) | $ | 17,941 | ||||||||||
LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||||||||||||||||||
CURRENT LIABILITIES
|
||||||||||||||||||||||||
Fiduciary liabilities
|
$ | | $ | | $ | | $ | 11,919 | $ | (663 | ) | $ | 11,256 | |||||||||||
Deferred revenue and accrued expenses
|
1 | | | 322 | | 323 | ||||||||||||||||||
Income taxes payable
|
| 51 | | 107 | (108 | ) | 50 | |||||||||||||||||
Short-term debt
|
| | 110 | 4 | | 114 | ||||||||||||||||||
Deferred tax liabilities
|
| 1 | | 21 | | 22 | ||||||||||||||||||
Other current liabilities
|
58 | 14 | 57 | 222 | (33 | ) | 318 | |||||||||||||||||
Total current liabilities
|
59 | 66 | 167 | 12,595 | (804 | ) | 12,083 | |||||||||||||||||
NON-CURRENT LIABILITIES
|
||||||||||||||||||||||||
Long-term debt
|
794 | | 1,513 | | | 2,307 | ||||||||||||||||||
Liabilities for pension benefits
|
| | | 150 | | 150 | ||||||||||||||||||
Deferred tax liabilities
|
| 2 | 28 | 81 | | 111 | ||||||||||||||||||
Provisions for liabilities
|
| | | 188 | (4 | ) | 184 | |||||||||||||||||
Other non-current liabilities
|
| 5 | 12 | 350 | | 367 | ||||||||||||||||||
Total non-current liabilities
|
794 | 7 | 1,553 | 769 | (4 | ) | 3,119 | |||||||||||||||||
TOTAL LIABILITIES
|
$ | 853 | $ | 73 | $ | 1,720 | $ | 13,364 | $ | (808 | ) | $ | 15,202 | |||||||||||
EQUITY
|
||||||||||||||||||||||||
Total Willis Group Holdings stockholders equity
|
2,707 | (958 | ) | 815 | 6,840 | (6,697 | ) | 2,707 | ||||||||||||||||
Noncontrolling interests
|
| | | 32 | | 32 | ||||||||||||||||||
Total equity
|
2,707 | (958 | ) | 815 | 6,872 | (6,697 | ) | 2,739 | ||||||||||||||||
TOTAL LIABILITIES AND EQUITY
|
$ | 3,560 | $ | (885 | ) | $ | 2,535 | $ | 20,236 | $ | (7,505 | ) | $ | 17,941 | ||||||||||
44
Table of Contents
(Unaudited)
19. | FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued) |
As at December 31, 2010 | ||||||||||||||||||||||||
Willis |
||||||||||||||||||||||||
Group |
The Other |
The |
Consolidating |
|||||||||||||||||||||
Holdings | Guarantors | Issuer | Other | adjustments | Consolidated | |||||||||||||||||||
(millions) | ||||||||||||||||||||||||
ASSETS
|
||||||||||||||||||||||||
CURRENT ASSETS
|
||||||||||||||||||||||||
Cash and cash equivalents
|
$ | | $ | | $ | 76 | $ | 240 | $ | | $ | 316 | ||||||||||||
Accounts receivable
|
2 | | | 809 | 28 | 839 | ||||||||||||||||||
Fiduciary assets
|
| | | 10,167 | (598 | ) | 9,569 | |||||||||||||||||
Deferred tax assets
|
| | 1 | 35 | | 36 | ||||||||||||||||||
Other current assets
|
| 23 | 57 | 293 | (33 | ) | 340 | |||||||||||||||||
Total current assets
|
2 | 23 | 134 | 11,544 | (603 | ) | 11,100 | |||||||||||||||||
Investments in subsidiaries
|
(1,039 | ) | 3,814 | 1,455 | 3,855 | (8,085 | ) | | ||||||||||||||||
Amounts owed by (to) Group undertakings
|
3,659 | (4,590 | ) | 1,002 | (71 | ) | | | ||||||||||||||||
NON-CURRENT ASSETS
|
||||||||||||||||||||||||
Fixed assets
|
| | 52 | 330 | (1 | ) | 381 | |||||||||||||||||
Goodwill
|
| | | 1,696 | 1,598 | 3,294 | ||||||||||||||||||
Other intangible assets
|
| | | 492 | | 492 | ||||||||||||||||||
Investments in associates
|
| | | (51 | ) | 212 | 161 | |||||||||||||||||
Deferred tax assets
|
| | | 7 | | 7 | ||||||||||||||||||
Pension benefits asset
|
| | | 179 | | 179 | ||||||||||||||||||
Other non-current assets
|
| 166 | 41 | 149 | (123 | ) | 233 | |||||||||||||||||
Total non-current assets
|
| 166 | 93 | 2,802 | 1,686 | 4,747 | ||||||||||||||||||
TOTAL ASSETS
|
$ | 2,622 | $ | (587 | ) | $ | 2,684 | $ | 18,130 | $ | (7,002 | ) | $ | 15,847 | ||||||||||
LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||||||||||||||||||
CURRENT LIABILITIES
|
||||||||||||||||||||||||
Fiduciary liabilities
|
$ | | $ | | $ | | $ | 10,167 | $ | (598 | ) | $ | 9,569 | |||||||||||
Deferred revenue and accrued expenses
|
1 | | | 297 | | 298 | ||||||||||||||||||
Income taxes payable
|
| | | 69 | (12 | ) | 57 | |||||||||||||||||
Short-term debt
|
| | 110 | | | 110 | ||||||||||||||||||
Deferred tax liabilities
|
| 3 | 1 | 5 | | 9 | ||||||||||||||||||
Other current liabilities
|
44 | 15 | 38 | 189 | (20 | ) | 266 | |||||||||||||||||
Total current liabilities
|
45 | 18 | 149 | 10,727 | (630 | ) | 10,309 | |||||||||||||||||
NON-CURRENT LIABILITIES
|
||||||||||||||||||||||||
Long-term debt
|
| 500 | 1,653 | 4 | | 2,157 | ||||||||||||||||||
Liabilities for pension benefits
|
| | | 164 | | 164 | ||||||||||||||||||
Deferred tax liabilities
|
| 3 | 26 | 54 | | 83 | ||||||||||||||||||
Provisions for liabilities
|
| | | 183 | (4 | ) | 179 | |||||||||||||||||
Other non-current liabilities
|
| 10 | 16 | 321 | | 347 | ||||||||||||||||||
Total non-current liabilities
|
| 513 | 1,695 | 726 | (4 | ) | 2,930 | |||||||||||||||||
TOTAL LIABILITIES
|
$ | 45 | $ | 531 | $ | 1,844 | $ | 11,453 | $ | (634 | ) | $ | 13,239 | |||||||||||
EQUITY
|
||||||||||||||||||||||||
Total Willis Group Holdings stockholders equity
|
2,577 | (1,118 | ) | 840 | 6,646 | (6,368 | ) | 2,577 | ||||||||||||||||
Noncontrolling interests
|
| | | 31 | | 31 | ||||||||||||||||||
Total equity
|
2,577 | (1,118 | ) | 840 | 6,677 | (6,368 | ) | 2,608 | ||||||||||||||||
TOTAL LIABILITIES AND EQUITY
|
$ | 2,622 | $ | (587 | ) | $ | 2,684 | $ | 18,130 | $ | (7,002 | ) | $ | 15,847 | ||||||||||
45
Table of Contents
19. | FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued) |
Six months ended June 30, 2011 | ||||||||||||||||||||||||
Willis |
||||||||||||||||||||||||
Group |
The Other |
Consolidating |
||||||||||||||||||||||
Holdings | Guarantors | The Issuer | Other | adjustments | Consolidated | |||||||||||||||||||
(millions) | ||||||||||||||||||||||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
$ | 3 | $ | 76 | $ | 54 | $ | 140 | $ | (147 | ) | $ | 126 | |||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||||||||||||||
Proceeds on disposal of fixed and intangible assets
|
| | | 5 | | 5 | ||||||||||||||||||
Additions to fixed assets
|
| | (13 | ) | (34 | ) | | (47 | ) | |||||||||||||||
Acquisitions of subsidiaries, net of cash acquired
|
| | | (4 | ) | | (4 | ) | ||||||||||||||||
Acquisitions of investments in associates
|
| | | (2 | ) | | (2 | ) | ||||||||||||||||
Investment in Trident V Parallel Fund, LP
|
| | | (4 | ) | | (4 | ) | ||||||||||||||||
Net cash used in investing activities
|
| | (13 | ) | (39 | ) | | (52 | ) | |||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||||||||||||||
Proceeds from draw down of revolving credit facility
|
| | (90 | ) | | | (90 | ) | ||||||||||||||||
Senior notes issued
|
794 | | | | | 794 | ||||||||||||||||||
Debt issuance costs
|
(7 | ) | | | | | (7 | ) | ||||||||||||||||
Repayments of debt
|
| (500 | ) | (55 | ) | | | (555 | ) | |||||||||||||||
Make-whole on repurchase and redemption of senior notes
|
| (158 | ) | | | | (158 | ) | ||||||||||||||||
Proceeds from issue of shares
|
42 | | | | | 42 | ||||||||||||||||||
Amounts owed by and to Group undertakings
|
(742 | ) | 590 | 115 | 37 | | | |||||||||||||||||
Excess tax benefits from share-based payment arrangements
|
| | | 4 | | 4 | ||||||||||||||||||
Dividends paid
|
(90 | ) | | | (147 | ) | 147 | (90 | ) | |||||||||||||||
Acquisition of noncontrolling interests
|
| (8 | ) | | (1 | ) | | (9 | ) | |||||||||||||||
Dividends paid to noncontrolling interests
|
| | | (12 | ) | | (12 | ) | ||||||||||||||||
Net cash used in financing activities
|
(3 | ) | (76 | ) | (30 | ) | (119 | ) | 147 | (81 | ) | |||||||||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
| | 11 | (18 | ) | | (7 | ) | ||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents
|
| | | 8 | | 8 | ||||||||||||||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
| | 76 | 240 | | 316 | ||||||||||||||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
$ | | $ | | $ | 87 | $ | 230 | $ | | $ | 317 | ||||||||||||
46
Table of Contents
(Unaudited)
19. | FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued) |
Six months ended June 30, 2010(i) | ||||||||||||||||||||||||
Willis |
||||||||||||||||||||||||
Group |
The Other |
Consolidating |
||||||||||||||||||||||
Holdings | Guarantors | The Issuer | Other | adjustments | Consolidated | |||||||||||||||||||
(millions) | ||||||||||||||||||||||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
$ | 569 | $ | 321 | $ | 42 | $ | (22 | ) | $ | (756 | ) | $ | 154 | ||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||||||||||||||
Proceeds on disposal of fixed and intangible assets
|
| | | 4 | | 4 | ||||||||||||||||||
Additions to fixed assets
|
| | (13 | ) | (32 | ) | | (45 | ) | |||||||||||||||
Acquisitions of subsidiaries, net of cash acquired
|
| | | (15 | ) | | (15 | ) | ||||||||||||||||
Acquisitions of investments in associates
|
| | | (1 | ) | | (1 | ) | ||||||||||||||||
Net cash used in investing activities
|
| | (13 | ) | (44 | ) | | (57 | ) | |||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||||||||||||||
Proceeds from draw down of revolving credit facility
|
| | 30 | | | 30 | ||||||||||||||||||
Repayments of debt
|
| | (61 | ) | (9 | ) | | (70 | ) | |||||||||||||||
Proceeds from issue of shares
|
17 | | | | | 17 | ||||||||||||||||||
Amounts owed by and to Group undertakings
|
(542 | ) | (189 | ) | (21 | ) | 752 | | | |||||||||||||||
Excess tax benefits from share-based payment arrangements
|
| | | 1 | | 1 | ||||||||||||||||||
Dividends paid
|
(44 | ) | (132 | ) | | (669 | ) | 756 | (89 | ) | ||||||||||||||
Acquisition of noncontrolling interests
|
| | | (4 | ) | | (4 | ) | ||||||||||||||||
Dividends paid to noncontrolling interests
|
| | | (22 | ) | | (22 | ) | ||||||||||||||||
Net cash (used in) provided by financing activities
|
(569 | ) | (321 | ) | (52 | ) | 49 | 756 | (137 | ) | ||||||||||||||
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
|
| | (23 | ) | (17 | ) | | (40 | ) | |||||||||||||||
Effect of exchange rate changes on cash and cash equivalents
|
| | | (14 | ) | | (14 | ) | ||||||||||||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
| | 104 | 117 | | 221 | ||||||||||||||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
$ | | $ | | $ | 81 | $ | 86 | $ | | $ | 167 | ||||||||||||
(i) | The 2010 Condensed Consolidating Statement of Cash Flows has been recast to conform to the new balance sheet presentation. See Note 2 Basis of Presentation and Significant Accounting Policies for details |
47
Table of Contents
20. | FINANCIAL INFORMATION FOR PARENT ISSUER, GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES |
(i) | Willis Group Holdings, which is the Parent Issuer; | |
(ii) | the Guarantors, which are all 100 percent directly or indirectly owned subsidiaries of the parent; | |
(iii) | Other, which are the non-guarantor subsidiaries, on a combined basis; | |
(iv) | Consolidating adjustments; and | |
(v) | the Consolidated Company. |
48
Table of Contents
(Unaudited)
20. | FINANCIAL INFORMATION FOR PARENT ISSUER, GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued) |
Three months ended June 30, 2011 | ||||||||||||||||||||
Willis |
||||||||||||||||||||
Group |
||||||||||||||||||||
Holdings |
||||||||||||||||||||
the Parent |
The |
Consolidating |
||||||||||||||||||
Issuer | Guarantors | Other | adjustments | Consolidated | ||||||||||||||||
(millions) | ||||||||||||||||||||
REVENUES
|
||||||||||||||||||||
Commissions and fees
|
$ | | $ | | $ | 854 | $ | | $ | 854 | ||||||||||
Investment income
|
| 3 | 8 | (3 | ) | 8 | ||||||||||||||
Other income
|
| | 24 | (23 | ) | 1 | ||||||||||||||
Total revenues
|
| 3 | 886 | (26 | ) | 863 | ||||||||||||||
EXPENSES
|
||||||||||||||||||||
Salaries and benefits
|
| | (523 | ) | 17 | (506 | ) | |||||||||||||
Other operating expenses
|
| (47 | ) | (119 | ) | 2 | (164 | ) | ||||||||||||
Depreciation expense
|
| (3 | ) | (16 | ) | | (19 | ) | ||||||||||||
Amortization of intangible assets
|
| | (22 | ) | 5 | (17 | ) | |||||||||||||
Total expenses
|
| (50 | ) | (680 | ) | 24 | (706 | ) | ||||||||||||
OPERATING (LOSS) INCOME
|
| (47 | ) | 206 | (2 | ) | 157 | |||||||||||||
Investment income from Group undertakings
|
1 | 247 | 40 | (288 | ) | | ||||||||||||||
Interest expense
|
(10 | ) | (97 | ) | (102 | ) | 175 | (34 | ) | |||||||||||
(LOSS) INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF
ASSOCIATES
|
(9 | ) | 103 | 144 | (115 | ) | 123 | |||||||||||||
Income taxes
|
2 | 3 | (39 | ) | 3 | (31 | ) | |||||||||||||
(LOSS) INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES
|
(7 | ) | 106 | 105 | (112 | ) | 92 | |||||||||||||
Interest in earnings of associates, net of tax
|
| | (5 | ) | 2 | (3 | ) | |||||||||||||
NET (LOSS) INCOME
|
(7 | ) | 106 | 100 | (110 | ) | 89 | |||||||||||||
Less: Net income attributable to noncontrolling interests
|
| | (4 | ) | | (4 | ) | |||||||||||||
EQUITY ACCOUNT FOR SUBSIDIARIES
|
92 | (14 | ) | | (78 | ) | | |||||||||||||
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS
|
$ | 85 | $ | 92 | $ | 96 | $ | (188 | ) | $ | 85 | |||||||||
49
Table of Contents
20. | FINANCIAL INFORMATION FOR PARENT ISSUER, GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued) |
Three months ended June 30, 2010 | ||||||||||||||||||||
Willis |
||||||||||||||||||||
Group |
||||||||||||||||||||
Holdings |
||||||||||||||||||||
the Parent |
The |
Consolidating |
||||||||||||||||||
Issuer | Guarantors | Other | adjustments | Consolidated | ||||||||||||||||
(millions) | ||||||||||||||||||||
REVENUES
|
||||||||||||||||||||
Commissions and fees
|
$ | | $ | | $ | 789 | $ | | $ | 789 | ||||||||||
Investment income
|
| 2 | 13 | (5 | ) | 10 | ||||||||||||||
Total revenues
|
| 2 | 802 | (5 | ) | 799 | ||||||||||||||
EXPENSES
|
||||||||||||||||||||
Salaries and benefits
|
| | (466 | ) | 10 | (456 | ) | |||||||||||||
Other operating expenses
|
369 | (53 | ) | (436 | ) | (15 | ) | (135 | ) | |||||||||||
Depreciation expense
|
| (2 | ) | (14 | ) | | (16 | ) | ||||||||||||
Amortization of intangible assets
|
| | (21 | ) | | (21 | ) | |||||||||||||
Net gain (loss) on disposal of operations
|
| | 2,433 | (2,435 | ) | (2 | ) | |||||||||||||
Total expenses
|
369 | (55 | ) | 1,496 | (2,440 | ) | (630 | ) | ||||||||||||
OPERATING INCOME (LOSS)
|
369 | (53 | ) | 2,298 | (2,445 | ) | 169 | |||||||||||||
Investment income from Group undertakings
|
| 335 | 65 | (400 | ) | | ||||||||||||||
Interest expense
|
| (117 | ) | (154 | ) | 230 | (41 | ) | ||||||||||||
INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES
|
369 | 165 | 2,209 | (2,615 | ) | 128 | ||||||||||||||
Income taxes
|
| 9 | (45 | ) | 1 | (35 | ) | |||||||||||||
INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES
|
369 | 174 | 2,164 | (2,614 | ) | 93 | ||||||||||||||
Interest in earnings of associates, net of tax
|
| | (6 | ) | 4 | (2 | ) | |||||||||||||
NET INCOME
|
369 | 174 | 2,158 | (2,610 | ) | 91 | ||||||||||||||
Less: Net income attributable to noncontrolling interests
|
| | | (2 | ) | (2 | ) | |||||||||||||
EQUITY ACCOUNT FOR SUBSIDIARIES
|
(280 | ) | 65 | | 215 | | ||||||||||||||
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS
|
$ | 89 | $ | 239 | $ | 2,158 | $ | (2,397 | ) | $ | 89 | |||||||||
50
Table of Contents
(Unaudited)
20. | FINANCIAL INFORMATION FOR PARENT ISSUER, GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued) |
Six months ended June 30, 2011 | ||||||||||||||||||||
Willis |
||||||||||||||||||||
Group |
||||||||||||||||||||
Holdings |
||||||||||||||||||||
the Parent |
The |
Consolidating |
||||||||||||||||||
Issuer | Guarantors | Other | adjustments | Consolidated | ||||||||||||||||
(millions) | ||||||||||||||||||||
REVENUES
|
||||||||||||||||||||
Commissions and fees
|
$ | | $ | | $ | 1,854 | $ | | $ | 1,854 | ||||||||||
Investment income
|
| 6 | 16 | (6 | ) | 16 | ||||||||||||||
Other income
|
| | 24 | (23 | ) | 1 | ||||||||||||||
Total revenues
|
| 6 | 1,894 | (29 | ) | 1,871 | ||||||||||||||
EXPENSES
|
||||||||||||||||||||
Salaries and benefits
|
| | (1,116 | ) | 26 | (1,090 | ) | |||||||||||||
Other operating expenses
|
1 | (68 | ) | (253 | ) | 3 | (317 | ) | ||||||||||||
Depreciation expense
|
| (7 | ) | (32 | ) | | (39 | ) | ||||||||||||
Amortization of intangible assets
|
| | (39 | ) | 5 | (34 | ) | |||||||||||||
Net gain on disposal of operations
|
| | 6 | (2 | ) | 4 | ||||||||||||||
Total expenses
|
1 | (75 | ) | (1,434 | ) | 32 | (1,476 | ) | ||||||||||||
OPERATING INCOME (LOSS)
|
1 | (69 | ) | 460 | 3 | 395 | ||||||||||||||
Investment income from Group undertakings
|
35 | 391 | 33 | (459 | ) | | ||||||||||||||
Make-whole on repurchase and redemption of senior notes and
write-off of unamortized debt issuance costs
|
| (171 | ) | | | (171 | ) | |||||||||||||
Interest expense
|
(12 | ) | (198 | ) | (208 | ) | 344 | (74 | ) | |||||||||||
INCOME (LOSS) BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF
ASSOCIATES
|
24 | (47 | ) | 285 | (112 | ) | 150 | |||||||||||||
Income taxes
|
2 | 59 | (89 | ) | (4 | ) | (32 | ) | ||||||||||||
INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES
|
26 | 12 | 196 | (116 | ) | 118 | ||||||||||||||
Interest in earnings of associates, net of tax
|
| | 9 | 4 | 13 | |||||||||||||||
NET INCOME
|
26 | 12 | 205 | (112 | ) | 131 | ||||||||||||||
Less: Net income attributable to noncontrolling interests
|
| | (12 | ) | | (12 | ) | |||||||||||||
EQUITY ACCOUNT FOR SUBSIDIARIES
|
93 | 119 | | (212 | ) | | ||||||||||||||
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS
|
$ | 119 | $ | 131 | $ | 193 | $ | (324 | ) | $ | 119 | |||||||||
51
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20. | FINANCIAL INFORMATION FOR PARENT ISSUER, GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued) |
Six months ended June 30, 2010 | ||||||||||||||||||||
Willis |
||||||||||||||||||||
Group |
||||||||||||||||||||
Holdings |
||||||||||||||||||||
the Parent |
The |
Consolidating |
||||||||||||||||||
Issuer | Guarantors | Other | adjustments | Consolidated | ||||||||||||||||
(millions) | ||||||||||||||||||||
REVENUES
|
||||||||||||||||||||
Commissions and fees
|
$ | | $ | | $ | 1,752 | $ | | $ | 1,752 | ||||||||||
Investment income
|
| 6 | 18 | (5 | ) | 19 | ||||||||||||||
Total revenues
|
| 6 | 1,770 | (5 | ) | 1,771 | ||||||||||||||
EXPENSES
|
||||||||||||||||||||
Salaries and benefits
|
| | (957 | ) | 15 | (942 | ) | |||||||||||||
Other operating expenses
|
565 | (85 | ) | (730 | ) | (34 | ) | (284 | ) | |||||||||||
Depreciation expense
|
| (4 | ) | (27 | ) | | (31 | ) | ||||||||||||
Amortization of intangible assets
|
| | (42 | ) | | (42 | ) | |||||||||||||
Net gain on disposal of operations
|
| | 2,435 | (2,437 | ) | (2 | ) | |||||||||||||
Total expenses
|
565 | (89 | ) | 679 | (2,456 | ) | (1,301 | ) | ||||||||||||
OPERATING INCOME (LOSS)
|
565 | (83 | ) | 2,449 | (2,461 | ) | 470 | |||||||||||||
Investment income from Group undertakings
|
| 724 | 488 | (1,212 | ) | | ||||||||||||||
Interest expense
|
| (291 | ) | (211 | ) | 418 | (84 | ) | ||||||||||||
INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES
|
565 | 350 | 2,726 | (3,255 | ) | 386 | ||||||||||||||
Income taxes
|
| 5 | (119 | ) | 12 | (102 | ) | |||||||||||||
INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES
|
565 | 355 | 2,607 | (3,243 | ) | 284 | ||||||||||||||
Interest in earnings of associates, net of tax
|
| | 14 | 4 | 18 | |||||||||||||||
NET INCOME
|
565 | 355 | 2,621 | (3,239 | ) | 302 | ||||||||||||||
Less: Net income attributable to noncontrolling interests
|
| | (3 | ) | (6 | ) | (9 | ) | ||||||||||||
EQUITY ACCOUNT FOR SUBSIDIARIES
|
(272 | ) | 92 | | 180 | | ||||||||||||||
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS
|
$ | 293 | $ | 447 | $ | 2,618 | $ | (3,065 | ) | $ | 293 | |||||||||
52
Table of Contents
(Unaudited)
20. | FINANCIAL INFORMATION FOR PARENT ISSUER, GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued) |
As at June 30, 2011 | ||||||||||||||||||||
Willis |
||||||||||||||||||||
Group |
||||||||||||||||||||
Holdings |
||||||||||||||||||||
the Parent |
The |
Consolidating |
||||||||||||||||||
Issuer | Guarantors | Other | adjustments | Consolidated | ||||||||||||||||
(millions) | ||||||||||||||||||||
ASSETS
|
||||||||||||||||||||
CURRENT ASSETS
|
||||||||||||||||||||
Cash and cash equivalents
|
$ | | $ | 87 | $ | 230 | $ | | $ | 317 | ||||||||||
Accounts receivable
|
| | 1,021 | 28 | 1,049 | |||||||||||||||
Fiduciary assets
|
| | 11,919 | (663 | ) | 11,256 | ||||||||||||||
Deferred tax assets
|
| | 32 | | 32 | |||||||||||||||
Other current assets
|
3 | 175 | 434 | (285 | ) | 327 | ||||||||||||||
Total current assets
|
3 | 262 | 13,636 | (920 | ) | 12,981 | ||||||||||||||
Investments in subsidiaries
|
(911 | ) | 4,639 | 3,875 | (7,603 | ) | | |||||||||||||
Amounts owed by (to) Group undertakings
|
4,462 | (4,311 | ) | (151 | ) | | | |||||||||||||
NON-CURRENT ASSETS
|
||||||||||||||||||||
Fixed assets
|
| 58 | 335 | (2 | ) | 391 | ||||||||||||||
Goodwill
|
| | 1,699 | 1,618 | 3,317 | |||||||||||||||
Other intangible assets
|
| | 477 | (16 | ) | 461 | ||||||||||||||
Investments in associates
|
| | (45 | ) | 231 | 186 | ||||||||||||||
Deferred tax assets
|
| | 7 | 2 | 9 | |||||||||||||||
Pension benefits asset
|
| | 231 | | 231 | |||||||||||||||
Other non-current assets
|
6 | 187 | 172 | | 365 | |||||||||||||||
Total non-current assets
|
6 | 245 | 2,876 | 1,833 | 4,960 | |||||||||||||||
TOTAL ASSETS
|
$ | 3,560 | $ | 835 | $ | 20,236 | $ | (6,690 | ) | $ | 17,941 | |||||||||
LIABILITIES AND STOCKHOLDERS EQUITY
|
||||||||||||||||||||
CURRENT LIABILITIES
|
||||||||||||||||||||
Fiduciary liabilities
|
$ | | $ | | $ | 11,919 | $ | (663 | ) | $ | 11,256 | |||||||||
Deferred revenue and accrued expenses
|
1 | | 322 | | 323 | |||||||||||||||
Income taxes payable
|
| 51 | 107 | (108 | ) | 50 | ||||||||||||||
Short-term debt
|
| 110 | 4 | | 114 | |||||||||||||||
Deferred tax liabilities
|
| 1 | 21 | | 22 | |||||||||||||||
Other current liabilities
|
58 | 71 | 222 | (33 | ) | 318 | ||||||||||||||
Total current liabilities
|
59 | 233 | 12,595 | (804 | ) | 12,083 | ||||||||||||||
NON-CURRENT LIABILITIES
|
||||||||||||||||||||
Long-term debt
|
794 | 1,513 | | | 2,307 | |||||||||||||||
Liabilities for pension benefits
|
| | 150 | | 150 | |||||||||||||||
Deferred tax liabilities
|
| 30 | 81 | | 111 | |||||||||||||||
Provisions for liabilities
|
| | 188 | (4 | ) | 184 | ||||||||||||||
Other non-current liabilities
|
| 17 | 350 | | 367 | |||||||||||||||
Total non-current liabilities
|
794 | 1,560 | 769 | (4 | ) | 3,119 | ||||||||||||||
TOTAL LIABILITIES
|
$ | 853 | $ | 1,793 | $ | 13,364 | $ | (808 | ) | $ | 15,202 | |||||||||
EQUITY
|
||||||||||||||||||||
Total Willis Group Holdings stockholders equity
|
2,707 | (958 | ) | 6,840 | (5,882 | ) | 2,707 | |||||||||||||
Noncontrolling interests
|
| | 32 | | 32 | |||||||||||||||
Total equity
|
2,707 | (958 | ) | 6,872 | (5,882 | ) | 2,739 | |||||||||||||
TOTAL LIABILITIES AND EQUITY
|
$ | 3,560 | $ | 835 | $ | 20,236 | $ | (6,690 | ) | $ | 17,941 | |||||||||
53
Table of Contents
20. | FINANCIAL INFORMATION FOR PARENT ISSUER, GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued) |
As at December 31, 2010 | ||||||||||||||||||||
Willis |
||||||||||||||||||||
Group |
||||||||||||||||||||
Holdings |
||||||||||||||||||||
the Parent |
The |
Consolidating |
||||||||||||||||||
Issuer | Guarantors | Other | adjustments | Consolidated | ||||||||||||||||
(millions) | ||||||||||||||||||||
ASSETS
|
||||||||||||||||||||
CURRENT ASSETS
|
||||||||||||||||||||
Cash and cash equivalents
|
$ | | $ | 76 | $ | 240 | $ | | $ | 316 | ||||||||||
Accounts receivable
|
2 | | 809 | 28 | 839 | |||||||||||||||
Fiduciary assets
|
| | 10,167 | (598 | ) | 9,569 | ||||||||||||||
Deferred tax assets
|
| 1 | 35 | | 36 | |||||||||||||||
Other current assets
|
| 80 | 293 | (33 | ) | 340 | ||||||||||||||
Total current assets
|
2 | 157 | 11,544 | (603 | ) | 11,100 | ||||||||||||||
Investments in subsidiaries
|
(1,039 | ) | 4,429 | 3,855 | (7,245 | ) | | |||||||||||||
Amounts owed by (to) Group undertakings
|
3,659 | (3,588 | ) | (71 | ) | | | |||||||||||||
NON-CURRENT ASSETS
|
||||||||||||||||||||
Fixed assets
|
| 52 | 330 | (1 | ) | 381 | ||||||||||||||
Goodwill
|
| | 1,696 | 1,598 | 3,294 | |||||||||||||||
Other intangible assets
|
| | 492 | | 492 | |||||||||||||||
Investments in associates
|
| | (51 | ) | 212 | 161 | ||||||||||||||
Deferred tax assets
|
| | 7 | | 7 | |||||||||||||||
Pension benefits asset
|
| | 179 | | 179 | |||||||||||||||
Other non-current assets
|
| 207 | 149 | (123 | ) | 233 | ||||||||||||||
Total non-current assets
|
| 259 | 2,802 | 1,686 | 4,747 | |||||||||||||||
TOTAL ASSETS
|
$ | 2,622 | $ | 1,257 | $ | 18,130 | $ | (6,162 | ) | $ | 15,847 | |||||||||
LIABILITIES AND STOCKHOLDERS EQUITY
|
||||||||||||||||||||
CURRENT LIABILITIES
|
||||||||||||||||||||
Fiduciary liabilities
|
$ | | $ | | $ | 10,167 | $ | (598 | ) | $ | 9,569 | |||||||||
Deferred revenue and accrued expenses
|
1 | | 297 | | 298 | |||||||||||||||
Income taxes payable
|
| | 69 | (12 | ) | 57 | ||||||||||||||
Short-term debt
|
| 110 | | | 110 | |||||||||||||||
Deferred tax liabilities
|
| 4 | 5 | | 9 | |||||||||||||||
Other current liabilities
|
44 | 53 | 189 | (20 | ) | 266 | ||||||||||||||
Total current liabilities
|
45 | 167 | 10,727 | (630 | ) | 10,309 | ||||||||||||||
NON-CURRENT LIABILITIES
|
||||||||||||||||||||
Long-term debt
|
| 2,153 | 4 | | 2,157 | |||||||||||||||
Liabilities for pension benefits
|
| | 164 | | 164 | |||||||||||||||
Deferred tax liabilities
|
| 29 | 54 | | 83 | |||||||||||||||
Provisions for liabilities
|
| | 183 | (4 | ) | 179 | ||||||||||||||
Other non-current liabilities
|
| 26 | 321 | | 347 | |||||||||||||||
Total non-current liabilities
|
| 2,208 | 726 | (4 | ) | 2,930 | ||||||||||||||
TOTAL LIABILITIES
|
$ | 45 | $ | 2,375 | $ | 11,453 | $ | (634 | ) | $ | 13,239 | |||||||||
EQUITY
|
||||||||||||||||||||
Total Willis Group Holdings stockholders equity
|
2,577 | (1,118 | ) | 6,646 | (5,528 | ) | 2,577 | |||||||||||||
Noncontrolling interests
|
| | 31 | | 31 | |||||||||||||||
Total equity
|
2,577 | (1,118 | ) | 6,677 | (5,528 | ) | 2,608 | |||||||||||||
TOTAL LIABILITIES AND EQUITY
|
$ | 2,622 | $ | 1,257 | $ | 18,130 | $ | (6,162 | ) | $ | 15,847 | |||||||||
54
Table of Contents
(Unaudited)
20. | FINANCIAL INFORMATION FOR PARENT ISSUER, GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued) |
Six months ended June 30, 2011 | ||||||||||||||||||||
Willis |
||||||||||||||||||||
Group |
||||||||||||||||||||
Holdings |
||||||||||||||||||||
the Parent |
The |
Consolidating |
||||||||||||||||||
Issuer | Guarantors | Other | adjustments | Consolidated | ||||||||||||||||
(millions) | ||||||||||||||||||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
$ | 3 | $ | 130 | $ | 140 | $ | (147 | ) | $ | 126 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||||||||||
Proceeds on disposal of fixed and intangible assets
|
| | 5 | | 5 | |||||||||||||||
Additions to fixed assets
|
| (13 | ) | (34 | ) | | (47 | ) | ||||||||||||
Acquisitions of subsidiaries, net of cash acquired
|
| | (4 | ) | | (4 | ) | |||||||||||||
Acquisitions of investments in associates
|
| | (2 | ) | | (2 | ) | |||||||||||||
Investment in Trident V Parallel Fund, LP
|
| | (4 | ) | | (4 | ) | |||||||||||||
Net cash used in investing activities
|
| (13 | ) | (39 | ) | | (52 | ) | ||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||||||||||
Draw down of revolving credit facility
|
| (90 | ) | | | (90 | ) | |||||||||||||
Senior notes issued
|
794 | | | | 794 | |||||||||||||||
Debt issuance costs
|
(7 | ) | | | | (7 | ) | |||||||||||||
Repayments of debt
|
| (555 | ) | | | (555 | ) | |||||||||||||
Make-whole on repurchase and redemption of senior notes
|
| (158 | ) | | | (158 | ) | |||||||||||||
Proceeds from issue of shares
|
42 | | | | 42 | |||||||||||||||
Amounts owed by and to Group undertakings
|
(742 | ) | 705 | 37 | | | ||||||||||||||
Excess tax benefits from share-based payment arrangement
|
| | 4 | | 4 | |||||||||||||||
Dividends paid
|
(90 | ) | | (147 | ) | 147 | (90 | ) | ||||||||||||
Acquisition of noncontrolling interests
|
| (8 | ) | (1 | ) | | (9 | ) | ||||||||||||
Dividends paid to noncontrolling interests
|
| | (12 | ) | | (12 | ) | |||||||||||||
Net cash used in financing activities
|
(3 | ) | (106 | ) | (119 | ) | 147 | (81 | ) | |||||||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
| 11 | (18 | ) | | (7 | ) | |||||||||||||
Effect of exchange rate changes on cash and cash equivalents
|
| | 8 | | 8 | |||||||||||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
| 76 | 240 | | 316 | |||||||||||||||
CASH AND CASH EQUIVALENTS, END OF YEAR
|
| 87 | 230 | | 317 | |||||||||||||||
55
Table of Contents
20. | FINANCIAL INFORMATION FOR PARENT ISSUER, GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued) |
Six months ended June 30, 2010 | ||||||||||||||||||||
Willis |
||||||||||||||||||||
Group |
||||||||||||||||||||
Holdings |
||||||||||||||||||||
the Parent |
The |
Consolidating |
||||||||||||||||||
Issuer | Guarantors | Other | adjustments | Consolidated | ||||||||||||||||
(millions) | ||||||||||||||||||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
$ | 569 | $ | 363 | $ | (22 | ) | $ | (756 | ) | $ | 154 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||||||||||
Proceeds on disposal of fixed and intangible assets
|
| | 4 | | 4 | |||||||||||||||
Additions to fixed assets
|
| (13 | ) | (32 | ) | | (45 | ) | ||||||||||||
Acquisitions of subsidiaries, net of cash acquired
|
| | (15 | ) | | (15 | ) | |||||||||||||
Acquisitions of investments in associates
|
| | (1 | ) | | (1 | ) | |||||||||||||
Net cash used in investing activities
|
| (13 | ) | (44 | ) | | (57 | ) | ||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||||||||||
Proceeds from draw down of revolving credit facility
|
| 30 | | | 30 | |||||||||||||||
Repayments of debt
|
| (61 | ) | (9 | ) | | (70 | ) | ||||||||||||
Proceeds from issue of shares
|
17 | | | | 17 | |||||||||||||||
Amounts owed by and to Group undertakings
|
(542 | ) | (210 | ) | 752 | | | |||||||||||||
Excess tax benefits from share-based payment arrangement
|
| | 1 | | 1 | |||||||||||||||
Dividends paid
|
(44 | ) | (132 | ) | (669 | ) | 756 | (89 | ) | |||||||||||
Acquisition of noncontrolling interests
|
| | (4 | ) | | (4 | ) | |||||||||||||
Dividends paid to noncontrolling interests
|
| | (22 | ) | | (22 | ) | |||||||||||||
Net cash (used in) provided by financing activities
|
(569 | ) | (373 | ) | 49 | 756 | (137 | ) | ||||||||||||
DECREASE IN CASH AND CASH EQUIVALENTS
|
| (23 | ) | (17 | ) | | (40 | ) | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents
|
| | (14 | ) | | (14 | ) | |||||||||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
| 104 | 117 | | 221 | |||||||||||||||
CASH AND CASH EQUIVALENTS, END OF YEAR
|
$ | | $ | 81 | $ | 86 | $ | | $ | 167 | ||||||||||
56
Table of Contents
57
Table of Contents
| $12 million post-tax, or $0.07 per diluted share, relating to the 2011 Operational Review. See 2011 Operational Review, below; |
| an $11 million, or $0.06 per diluted share, non tax-deductible expense relating to a previously announced UK Financial Services Authority (FSA) regulatory settlement; and |
| a $9 million post-tax, or $0.05 per diluted share, increase in the amortization charge relating to our |
cash retention awards. See Salaries and benefitsCash retention awards, below. |
| $115 million relating to the 2011 Operational Review, equivalent to $81 million post-tax or $0.46 per diluted share. See, 2011 Operational Review, below; |
| $171 million relating to the make-whole amounts on the repurchase and redemption of $500 million of our senior debt and the write-off of related unamortized debt issuance costs, equivalent to $124 million post-tax or $0.71 per diluted share. See, Make-whole on repurchase and redemption of senior notes and write-off of unamortized debt issuance costs, below; |
| a $21 million post-tax, or $0.12 per diluted share, increase in the amortization charge relating to our cash retention awards; and |
| the $11 million, or $0.06 per diluted share, second quarter 2011 non tax-deductible expense relating to the UK FSA regulatory settlement. |
| execution of the Willis Causeaiming to become the broker and risk adviser of choice globally by aligning our business model to the needs of each client segment and maintaining a focus on growth; |
| continued investment in technology, advanced analytics, product innovation and industry talent and expertise to support our growth strategy; and |
58
Table of Contents
| completion of our 2011 Operational Review which aims to better align resources with our growth |
strategies and enable related long-term expense savings. |
| the $18 million expense for the 2011 Operational Review, discussed below, equivalent to approximately 2 percentage points; |
| a $14 million net increase in incentive expenses, equivalent to approximately 2 percentage points, including a $12 million increase in the amortization of cash retention awards; and |
| the $11 million expense for a UK FSA regulatory settlement, equivalent to approximately 1 percentage point; |
| the $64 million increase in revenues including organic growth in commissions and fees; |
| a $9 million benefit from the release of funds and reserves related to potential legal liabilities; and |
| rigorous expense management. |
| the $115 million expense for the 2011 Operational Review, discussed below, equivalent to approximately 6 percentage points; |
| a $24 million net increase in incentive expenses, equivalent to approximately 1 percentage point, primarily reflecting a $28 million increase in the amortization of cash retention awards; and |
| the $11 million second quarter 2011 expense for a UK FSA regulatory settlement; |
59
Table of Contents
| the $100 million increase in revenues driven by organic growth in commissions and fees; |
| the period-over-period benefit from a $12 million charge relating to the first quarter 2010 devaluation of the Venezuelan currency; |
| a $9 million benefit from the release of funds and reserves related to potential legal liabilities; and |
| rigorous expense management. |
| an approximately $60 million increase due to higher amortization of cash retention payments, of which $12 million and $28 million was recognized in second quarter and first half of 2011, respectively; |
| the reinstatement of annual salary reviews for all employees from April 2011; and |
| the reinstatement of a 401(k) match plan for North America employees. |
| $57 million of severance costs relating to approximately 600 positions which have been, or are in the process of being, eliminated; |
| $35 million of other salaries and benefits expense to buy out previously existing incentive schemes and other contractual arrangements that no longer align with the Groups overall remuneration strategy; and |
| $23 million of other operating expenses, including: property and systems rationalization costs; related accelerated systems depreciation of $5 million; and re-negotiation of sourcing contracts. |
60
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61
Table of Contents
June 30, |
December 31, |
|||||||
2011 | 2010 | |||||||
(millions, except percentages) | ||||||||
Long-term debt
|
$ | 2,307 | $ | 2,157 | ||||
Short-term debt and current portion of long-term debt
|
114 | 110 | ||||||
Total debt
|
$ | 2,421 | $ | 2,267 | ||||
Total equity
|
$ | 2,739 | $ | 2,608 | ||||
Capitalization ratio
|
47 | % | 47 | % | ||||
62
Table of Contents
63
Table of Contents
Change attributable to: | ||||||||||||||||||||||||||||
Foreign |
Acquisitions |
Organic |
||||||||||||||||||||||||||
% |
currency |
and |
Contingent |
revenue |
||||||||||||||||||||||||
Three months ended June 30,(a) | 2011 | 2010 | Change | translation | disposals | Commissions(c) | growth(b) | |||||||||||||||||||||
(millions) | ||||||||||||||||||||||||||||
Global
|
$ | 271 | $ | 249 | 9 | % | 6 | % | | % | | % | 3 | % | ||||||||||||||
North America
|
326 | 328 | (1 | )% | | % | | % | (1 | )% | | % | ||||||||||||||||
International
|
257 | 212 | 21 | % | 15 | % | | % | | % | 6 | % | ||||||||||||||||
Commissions and fees
|
$ | 854 | $ | 789 | 8 | % | 5 | % | | % | | % | 3 | % | ||||||||||||||
Investment income
|
8 | 10 | (20 | )% | ||||||||||||||||||||||||
Other income
|
1 | | 100 | % | ||||||||||||||||||||||||
Total revenues
|
$ | 863 | $ | 799 | 8 | % | ||||||||||||||||||||||
Change attributable to: | ||||||||||||||||||||||||||||
Foreign |
Acquisitions |
|||||||||||||||||||||||||||
% |
currency |
and |
Contingent |
Organic revenue |
||||||||||||||||||||||||
Six months ended June 30,(a) | 2011 | 2010 | Change | translation | disposals | Commissions(c) | growth(b) | |||||||||||||||||||||
(millions) | ||||||||||||||||||||||||||||
Global(d)
|
$ | 629 | $ | 580 | 8 | % | 2 | % | | % | | % | 6 | % | ||||||||||||||
North America
|
682 | 693 | (2 | )% | | % | | % | (1 | )% | (1 | )% | ||||||||||||||||
International
|
543 | 479 | 13 | % | 7 | % | | % | | % | 6 | % | ||||||||||||||||
Commissions and fees
|
$ | 1,854 | $ | 1,752 | 6 | % | 3 | % | | % | | % | 3 | % | ||||||||||||||
Investment income
|
16 | 19 | 16 | % | ||||||||||||||||||||||||
Other income
|
1 | | 100 | % | ||||||||||||||||||||||||
Total revenues
|
$ | 1,871 | $ | 1,771 | 6 | % | ||||||||||||||||||||||
(a) | Effective January 1, 2011, we changed our internal reporting structure: Global Markets International, previously reported within the International segment, is now reported in the Global segment. In addition, Mexico Retail, which was previously reported within the International segment, is now reported in the North America segment. As a result of these changes, commissions and fees of $35 million in second quarter 2010 and $69 million in first half 2010, previously allocated to our International segment, have been included in Global: $33 million and $63 million; and North America: $2 million and $6 million. | |
(b) | Organic revenue growth excludes: (i) the impact of foreign currency translation; (ii) the first twelve months of net commission and fee revenues generated from acquisitions; (iii) the net commission and fee revenues related to operations disposed of in each period presented; (iv) in North America, legacy contingent commissions assumed as part of the HRH acquisition that had not been converted into higher standard commission; and (v) investment income and other income from reported revenues. | |
(c) | Included in North America reported commissions and fees were legacy HRH contingent commissions of $nil in second quarter 2011 and $4 million in first half 2011, compared with $2 million and $10 million in the second quarter and first half of 2010, respectively. | |
(d) | Reported commissions and fees and organic revenue growth for Global for the six months ended June 30, 2011 included a first quarter 2011 favorable impact from a change in accounting methodology in a Global Specialty business of $6 million. |
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| International achieved 6 percent organic growth including double digit growth in Latin America and Eastern Europe regions, together with good organic growth in Asia and Continental Europe; |
| Global achieved 3 percent growth, reflecting good positive growth in both our Reinsurance and Global Specialties businesses, partly offset by negative growth in our transaction oriented WCMA business due primarily to the non-recurrence of a significant transaction fee earned in second quarter 2010; and |
| North America reported flat organic revenue growth, as the benefits of growth in our Employee Benefits practice and some of our specialty business practices were more than offset by the continued impact of the soft market and ongoing weakened economic conditions. |
| International achieved 6 percent organic growth driven by our Latin America, Eastern Europe and Asia regions; |
| Global also achieved 6 percent growth for the six months ended June 30, 2011, including positive growth in Reinsurance, Global Specialties, London Market Wholesale and WCMA businesses, together with a $6 million first quarter 2011 benefit from a change in accounting within a Global Specialty business to conform to current Group accounting policy; and |
| North America organic revenue growth was negative 1 percent, as the benefits of higher retention rates and growth in some specialties businesses were more than offset by the continued impact of the soft market and ongoing weakened economic conditions. |
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Three months |
Six months |
|||||||||||||||
ended June 30, | ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(millions, except percentages) | ||||||||||||||||
Salaries and benefits
|
$ | 506 | $ | 456 | $ | 1,090 | $ | 942 | ||||||||
Other
|
164 | 135 | 317 | 284 | ||||||||||||
General and administrative expenses
|
$ | 670 | $ | 591 | $ | 1,407 | $ | 1,226 | ||||||||
Salaries and benefits as a percentage of revenues
|
59 | % | 57 | % | 58 | % | 53 | % | ||||||||
Other as a percentage of revenues
|
19 | % | 17 | % | 17 | % | 16 | % |
| additional salaries and benefits expense in second quarter 2011 of $10 million associated with our 2011 Operational Review, as discussed above, equivalent to 1 percentage point; |
| a $14 million net increase in incentive expenses, equivalent to 2 percentage points, including a $12 million increase in the amortization of cash retention awards; |
| a period-over-period net adverse impact on salaries and benefits expense from foreign currency translation, driven primarily by the weakening of the US dollar against the Pound sterling (in which our London Market based operations incur the majority of their expenses); |
| a $3 million expense relating to the reinstatement of our 401(k) match plan for our North America employees from January 2011 and the incremental expense of the reinstatement of annual salary reviews for all employees from April 2011; and |
| the period-over-period impact of investment in new client-facing hires; |
| an $8 million decrease in pension expense. |
| additional salaries and benefits expense in first half 2011 of $92 million associated with our 2011 Operational Review, as discussed above, equivalent to 5 percentage points; |
| a $24 million net increase in incentive expenses, equivalent to approximately 1 percentage point, primarily reflecting a $28 million increase in the amortization of cash retention awards; |
| a period-over-period net adverse impact on salaries and benefits expense from foreign currency translation, driven primarily by the weakening of the US dollar against the Pound sterling (in which our London Market based operations incur the majority of their expenses); |
| a $6 million expense relating to reinstatement of our 401(k) match plan for North America employees from January 2011 and the incremental expense of the reinstatement of annual salary reviews for all employees from April 2011; and |
| the period-over-period impact of investment in new client-facing hires; |
| a $12 million decrease in pension expense. |
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| an $11 million expense relating to a previously announced UK FSA regulatory settlement; |
| costs associated with the 2011 Operational Review of $7 million in second quarter 2011, as discussed above; and |
| increased systems expense in corporate functions, including amortization of capitalized project costs, in support of our growth initiatives; |
| a $9 million benefit from the release of funds and reserves related to potential legal liabilities, $6 million |
of which is included within Corporate and Other discussed below; and | |
| continued disciplined management of discretionary expenses. |
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Three months |
Six months |
|||||||||||||||
ended June 30, | ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(millions, except percentages) | ||||||||||||||||
Revenues
|
$ | 863 | $ | 799 | $ | 1,871 | $ | 1,771 | ||||||||
Operating income
|
157 | 169 | 395 | 470 | ||||||||||||
Operating margin or operating income as a percentage of revenues
|
18 | % | 21 | % | 21 | % | 27 | % |
| the $18 million expense for the 2011 Operational Review, discussed below, equivalent to approximately 2 percentage points; |
| a $14 million net increase in incentive expenses, equivalent to approximately 2 percentage points, including a $12 million increase in the amortization of cash retention awards; and |
| the $11 million expense for a UK FSA regulatory settlement, equivalent to approximately 1 percentage point; |
| the $64 million increase in revenues including organic growth in commissions and fees; |
| a $9 million benefit from the release of funds and reserves related to potential legal liabilities; and |
| rigorous expense management. |
| the $115 million expense for the 2011 Operational Review, discussed below, equivalent to approximately 6 percentage points; |
| a $24 million net increase in incentive expenses, equivalent to approximately 1 percentage point, primarily reflecting a $28 million increase in the amortization of cash retention awards; and |
| the $11 million second quarter 2011 expense for a UK FSA regulatory settlement; |
| the $100 million increase in revenues including positive organic growth in commissions and fees; |
| the period-over-period benefit from a $12 million charge relating to the first quarter 2010 devaluation of the Venezuelan currency; |
| a $9 million benefit from the release of funds and reserves related to potential legal liabilities; and |
| rigorous expense management. |
Three months |
Six months |
|||||||||||||||
ended June 30, | ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(millions) | ||||||||||||||||
Make-whole amounts on repurchase and redemption of senior notes
and write-off of unamortized debt issuance costs
|
$ | | $ | | $ | 171 | $ | |
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| a charge of $146 million relating to the make-whole payment (at a small discount to the contractual agreement) on the early repurchase of $465 million of our 12.875% senior notes due 2016 in March 2011; |
| a charge of $12 million relating to the redemption of the remaining $35 million of 12.875% senior notes due 2016, that were called in March 2011 and redeemed on April 18, 2011; and |
| the write-off of $13 million of unamortized debt issuance costs relating to these notes. |
Three months |
Six months |
|||||||||||||||
ended June 30, | ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(millions, except percentages) | ||||||||||||||||
Income before taxes
|
$ | 123 | $ | 128 | $ | 150 | $ | 386 | ||||||||
Income tax charge
|
31 | 35 | 32 | 102 | ||||||||||||
Effective tax rate
|
25 | % | 27 | % | 21 | % | 26 | % |
| the benefit from the higher tax rate at which costs associated with the 2011 Operational Review will be relieved; and |
| the impact of the UK FSA regulatory settlement expense for which no tax relief is available. |
| the make-whole expense on early repurchase and redemption of the 2016 senior notes attracting tax relief at the UK corporation tax rate which is higher than our Group underlying tax rate; and |
| the net non-taxable gain on disposal of operations. |
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Three months |
Six months |
|||||||||||||||
ended June 30, | ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(millions, except per share data) | ||||||||||||||||
Net income
|
$ | 85 | $ | 89 | $ | 119 | $ | 293 | ||||||||
Diluted earnings per share
|
$ | 0.48 | $ | 0.52 | $ | 0.68 | $ | 1.71 | ||||||||
Weighted average diluted number of shares outstanding
|
176 | 171 | 175 | 171 |
| the $12 million post-tax cost of the 2011 Operational Review, as discussed above, equivalent to $0.07 per diluted share; |
| an $11 million non tax-deductible expense relating to a previously announced UK FSA regulatory settlement, equivalent to $0.06 per diluted share; |
| a $9 million post-tax increase in the amortization charge relating to our cash retention awards, equivalent to $0.05 per diluted share; and |
| the salaries and benefits expense impact of the reinstated annual salary review and North American 401(k) match plan in 2011, as discussed above; |
| the $64 million increase in revenues, equivalent to $48 million post-tax, or $0.27 per diluted share; and |
| the decrease in interest expense. |
| the $81 million post-tax cost of the 2011 Operational Review, as discussed above, equivalent to $0.46 per diluted share; |
| the $124 million post-tax impact of the make-whole amounts associated with the early repurchase and redemption of the $500 million 12.875% senior notes due 2016, equivalent to $0.71 per diluted share; |
| a $21 million post-tax, or $0.12 per diluted share, increase in the amortization charge relating to our cash retention awards; and |
| the $11 million non tax-deductible expense relating to a previously announced UK FSA regulatory settlement, equivalent to $0.06 per diluted share; |
| the $100 million increase in revenues, equivalent to $75 million post-tax, or $0.43 per diluted share; and |
| the $8 million post-tax decrease in interest expense, equivalent to $0.05 per diluted share. |
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Three months ended June 30,(a) | ||||||||||||||||||||||||
2011 | 2010 | |||||||||||||||||||||||
Operating |
Operating |
Operating |
Operating |
|||||||||||||||||||||
Revenues | Income | Margin | Revenues | Income | Margin | |||||||||||||||||||
(millions) | (millions) | |||||||||||||||||||||||
Global
|
$ | 274 | $ | 89 | 32 | % | $ | 251 | $ | 87 | 35 | % | ||||||||||||
North America
|
328 | 61 | 19 | % | 333 | 68 | 20 | % | ||||||||||||||||
International
|
261 | 56 | 21 | % | 215 | 41 | 19 | % | ||||||||||||||||
Total Retail
|
589 | 117 | 20 | % | 548 | 109 | 20 | % | ||||||||||||||||
Corporate & Other
|
| (49 | ) | n/a | | (27 | ) | n/a | ||||||||||||||||
Total Consolidated
|
$ | 863 | $ | 157 | 18 | % | $ | 799 | $ | 169 | 21 | % | ||||||||||||
Six months ended June 30,(a) | ||||||||||||||||||||||||
2011 | 2010 | |||||||||||||||||||||||
Operating |
Operating |
Operating |
Operating |
|||||||||||||||||||||
Revenues | Income | Margin | Revenues | Income | Margin | |||||||||||||||||||
(millions) | (millions) | |||||||||||||||||||||||
Global
|
$ | 635 | $ | 264 | 42 | % | $ | 585 | $ | 241 | 41 | % | ||||||||||||
North America
|
686 | 146 | 21 | % | 701 | 161 | 23 | % | ||||||||||||||||
International
|
550 | 142 | 26 | % | 485 | 128 | 26 | % | ||||||||||||||||
Total Retail
|
1,236 | 288 | 23 | % | 1,186 | 289 | 24 | % | ||||||||||||||||
Corporate & Other
|
| (157 | ) | n/a | | (60 | ) | n/a | ||||||||||||||||
Total Consolidated
|
$ | 1,871 | $ | 395 | 21 | % | $ | 1,771 | $ | 470 | 27 | % | ||||||||||||
(a) | Effective January 1, 2011, we changed our internal reporting structure: Global Markets International, previously reported within the International segment, is now reported in the Global segment. In addition, Mexico Retail, which was previously reported within the International segment, is now reported in the North America segment. As a result of these changes, commissions and fees of $35 million in second quarter 2010 and $69 million in first half 2010, previously allocated to our International segment, have been included in Global: $33 million and $63 million; and North America: $2 million and $6 million. Operating income of $18 million in second quarter 2010 and $34 million in first half 2010 has been allocated to our Global segment, with a corresponding reduction in International in the same periods of 2010. |
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Three months |
Six months |
|||||||||||||||
ended June 30,(a) | ended June 30,(a) | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(millions, except percentages) | ||||||||||||||||
Commissions and
fees(b)
|
$ | 271 | $ | 249 | $ | 629 | $ | 580 | ||||||||
Investment income
|
3 | 2 | 6 | 5 | ||||||||||||
Total revenues
|
$ | 274 | $ | 251 | $ | 635 | $ | 585 | ||||||||
Operating income
|
$ | 89 | $ | 87 | $ | 264 | $ | 241 | ||||||||
Organic revenue
growth(c)
|
3 | % | 9 | % | 6 | % | 8 | % | ||||||||
Operating margin
|
32 | % | 35 | % | 42 | % | 41 | % |
(a) | Effective January 1, 2011, we changed our internal reporting structure: Global Markets International, previously reported within the International segment, is now reported in the Global segment. As a result of this change, commissions and fees of $33 million in second quarter 2010 and $63 million in first half 2010, previously allocated to our International segment, have been included in Global. Operating income of $18 million in second quarter 2010 and $34 million in first half 2010 has been allocated to our Global segment, with a corresponding reduction in International in the same periods of 2010. | |
(b) | Reported commissions and fees and organic revenue growth for the six months ended June 30, 2011 included a first quarter 2011 favorable impact from a change in accounting methodology in a Global Specialty business of $6 million. | |
(c) | Organic revenue growth excludes: (i) the impact of foreign currency translation; (ii) the first twelve months of net commission and fee revenues generated from acquisitions; (iii) the net commission and fee revenues related to operations disposed of in each period presented; and (iv) investment income and other income from reported revenues. |
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| a net negative impact from foreign currency movements; |
| a $3 million increase in incentive expense, including amortization of cash retention award payments; and |
| the impact of costs associated with continued support of current and future growth; |
| the positive 3 percent organic growth discussed above; and |
| a $4 million decrease in pension expense. |
| the strong 6 percent organic growth discussed above; and |
| an $8 million decrease in pension expense; |
| a net negative impact from foreign currency movements; |
| an $8 million increase in incentive expense, including amortization of cash retention award payments; and |
| the impact of costs associated with continued support of current and future growth. |
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Three months |
Six months |
|||||||||||||||
ended June 30,(a) | ended June 30,(a) | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(millions, except percentages) | ||||||||||||||||
Commissions and
fees(b)
|
$ | 326 | $ | 328 | $ | 682 | $ | 693 | ||||||||
Investment income
|
1 | 5 | 3 | 8 | ||||||||||||
Other income
|
1 | | 1 | | ||||||||||||
Total revenues
|
$ | 328 | $ | 333 | $ | 686 | $ | 701 | ||||||||
Operating income
|
$ | 61 | $ | 68 | $ | 146 | $ | 161 | ||||||||
Organic revenue
growth(c)
|
| % | (1 | )% | (1 | )% | | % | ||||||||
Operating margin
|
19 | % | 20 | % | 21 | % | 23 | % |
(a) | Effective January 1, 2011, we changed our internal reporting structure: Mexico Retail, which was previously reported within the International segment, is now reported in the North America segment. As a result of this change, commissions and fees of $2 million in second quarter 2010 and $6 million in first half 2010, previously allocated to our International segment, have been included in North America. | |
(b) | Included in North America reported commissions and fees were legacy HRH contingent commissions of $nil in second quarter 2011 and $4 million in first half 2011, compared with $2 million and $10 million in the second quarter and first half of 2010, respectively. | |
(c) | Organic revenue growth excludes: (i) the impact of foreign currency translation; (ii) the first twelve months of net commission and fee revenues generated from acquisitions; (iii) the net commission and fee revenues related to operations disposed of in each period presented; (iv) in North America, legacy contingent commissions assumed as part of the HRH acquisition and that had not been converted into higher standard commission; and (v) investment income and other income from reported revenues. |
| good net new business growth; and |
| positive growth in Employee Benefits, our largest North America practice; |
| a negative impact from rate declines and other market factors; |
| a decline in our Construction business reflecting the ongoing impact of the weakened economy on this sector; |
| negative growth in our Loan Protector specialty business, acquired as part of the HRH acquisition, driven by the period-over-period adverse impact of a $3 million second quarter 2010 benefit from a one- |
time accounting adjustment together with the impact of lower foreclosure levels and certain changes to compensation agreements; and | |
| smaller declines elsewhere reflecting the impact of the continued soft market conditions and weak US economy. |
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| flat organic growth for second quarter 2011; |
| a $4 million decrease in investment income in second quarter 2011; |
| a period-over-period increase in 401(k) match plan expense of $3 million following its reinstatement in 2011; and |
| a reduction in legacy HRH contingent commissions of $2 million in second quarter 2011 and $6 million in first half 2011; |
| a $2 million decrease in stock-based compensation charge in second quarter 2011; and |
| the benefit of cost reductions driven by our continued focus on expense management. |
| negative organic growth in commissions and fees, discussed above; |
| a reduction in legacy HRH contingent commissions of $6 million in first half 2011; |
| the period-over-period increase in 401(k) match plan expense of $6 million in first half 2011: we expect the full year 2011 401(k) expense to be approximately $10 million; |
| a $6 million first half 2011 increase in incentive expense, including amortization of cash retention award payments; and |
| a reduction in investment income driven by continued low US interest rates; |
| the benefit of cost reductions driven by our continued focus on expense management. |
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Three months |
Six months |
|||||||||||||||
ended June 30,(a) | ended June 30,(a) | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(millions, except percentages) | ||||||||||||||||
Commissions and fees
|
$ | 257 | $ | 212 | $ | 543 | $ | 479 | ||||||||
Investment income
|
4 | 3 | 7 | 6 | ||||||||||||
Total revenues
|
$ | 261 | $ | 215 | $ | 550 | $ | 485 | ||||||||
Operating income
|
$ | 56 | $ | 41 | $ | 142 | $ | 128 | ||||||||
Organic revenue
growth(b)
|
6 | % | 6 | % | 6 | % | 5 | % | ||||||||
Operating margin
|
21 | % | 19 | % | 26 | % | 26 | % |
(a) | Effective January 1, 2011, we changed our internal reporting structure: Global Markets International, previously reported within the International segment, is now reported in the Global segment. In addition, Mexico Retail, which was previously reported within the International segment, is now reported in the North America segment. As a result of these changes, commissions and fees of $35 million in second quarter 2010 and $69 million in first half 2010, previously allocated to our International segment, have been included in our Global and North America segments. Operating income of $18 million in second quarter 2010 and $34 million in first half 2010, previously allocated to International, has been included in our Global segment. | |
(b) | Organic revenue growth excludes: (i) the impact of foreign currency translation; (ii) the first twelve months of net commission and fee revenues generated from acquisitions; (iii) the net commission and fee revenues related to operations disposed of in each period presented; and (iv) investment income and other income from reported revenues. |
| Brazil, Colombia, Venezuela and Argentina in Latin America; |
| Russia in Eastern Europe; and |
| China and Hong Kong in Asia. |
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| 6 percent positive organic revenue growth; |
| a net benefit from foreign currency movements, reflecting the benefit of the period-over-period weakening of the US dollar against a number of currencies in which we earn a significant portion of our operating income, notably the Euro, Australian dollar and Pound sterling; and |
| lower pension expense; |
| a $4 million increase in incentive expenses in second quarter 2011, including amortization of cash retention award payments; |
| the impact of the reinstated annual salary review for all employees from April 2011; and |
| increased spending on initiatives to drive future growth, including investment hires. |
| 6 percent positive organic revenue growth; |
| a net benefit from foreign currency movements, reflecting the benefit of the period-over-period |
weakening of the US dollar against a number of currencies in which we earn a significant portion of our operating income, notably the Euro, Australian dollar and Pound sterling; and | |
| lower pension expense; |
| a $10 million increase in incentive expenses in first half 2011, including amortization of cash retention award payments; |
| the impact of the reinstated annual salary review for all employees from April 2011; and |
| increased spending on initiatives to drive future growth, including investment hires. |
Three months |
Six months |
|||||||||||||||
ended June 30, | ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(millions) | ||||||||||||||||
Amortization of intangible assets
|
$ | (17 | ) | $ | (21 | ) | $ | (34 | ) | $ | (42 | ) | ||||
Foreign exchange hedging
|
1 | (2 | ) | 2 | (6 | ) | ||||||||||
Foreign exchange gain on the UK pension plan asset
|
| 2 | 1 | 6 | ||||||||||||
Net (loss) gain on disposal of operations
|
| (2 | ) | 4 | (2 | ) | ||||||||||
2011 Operational Review
|
(18 | ) | | (115 | ) | | ||||||||||
UK FSA regulatory settlement
|
(11 | ) | | (11 | ) | | ||||||||||
Venezuela currency devaluation
|
| | | (12 | ) | |||||||||||
Other(a)
|
(4 | ) | (4 | ) | (4 | ) | (4 | ) | ||||||||
Total
|
$ | (49 | ) | $ | (27 | ) | $ | (157 | ) | $ | (60 | ) | ||||
(a) | Other includes $6 million of the $9 million total benefit in second quarter 2011 from the release of funds and reserves related to potential legal liabilities. |
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| payment of interest on debt, $110 million of mandatory repayments under our 5-year term loan and |
the $4 million mandatory repayment of our 6.000% loan notes; | |
| capital expenditure; and |
| working capital requirements. |
| the principal amount of outstanding notes; and |
| borrowings under our 5-year term loan facility. |
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| a $21 million increase in cash payments for incentive awards in first half 2011; and |
| costs associated with the 2011 Operational Review, of which approximately $65 million were paid in cash in first half 2011; |
| a $16 million increase in net income before: $171 million for the make-whole amounts on repurchase and redemption of senior notes and related costs; and the non-cash charges for: depreciation expense; amortization of intangible assets; amortization of cash retention award payments; and the Venezuela currency devaluation charge in first quarter 2010; and |
| the timing of cash collections and other working capital movements. |
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| an $11 million decrease in cash payments for acquisitions of subsidiaries, mainly reflecting a |
reduction in deferred payments in respect of prior year acquisitions; |
| a $4 million cash payment in first half 2011 for investment in Trident V Parallel Fund, LP. |
| the net cash proceeds from the issuance of senior notes due 2016 and 2021 totaling $787 million, as discussed above; and |
| a $25 million increase in cash proceeds from the issuance of shares relating to share option exercises; |
| a $485 million increase in debt repayment, primarily reflecting the first half 2011 early repayment of the $500 million 12.875% senior notes due 2016; |
| the $158 million cash paid relating to the make-whole payments on repurchase and redemption of the 12.875% senior notes; and |
| a $120 million first half 2011 period-over-period decrease in draw down against our revolving credit facilities, comprising a $90 million repayment in first half 2011 compared with a $30 million draw down in first half 2010. |
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| In March 2011, we issued additional senior notes totaling $800 million, comprising $300 million of |
4.125% senior notes due 2016 and $500 million of 5.750% senior notes due 2021; and | |
| we subsequently repurchased the previously outstanding $500 million of 12.875% senior notes due 2016. |
Item 3 | Quantitative and Qualitative Disclosures about Market Risk |
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10 | .1 | First Amendment to the Amended and Restated Willis U.S. 2005 Deferred Compensation Plan, effective June 1, 2011 | ||
10 | .2 | Form of Time-Based Restricted Share Unit Award Agreement granted under the Willis Group Holdings 2001 Share Purchase and Option Plan (for executive officers) | ||
10 | .3 | Form of Performance-Based Share Option Award Agreement granted under the Willis Group Holdings 2008 Share Purchase and Option Plan (for executive officers) | ||
10 | .4 | Form of Performance-Based Restricted Share Unit Award Agreement granted under the Willis Group Holdings 2008 Share Purchase and Option Plan (for executive officers) | ||
10 | .5 | Form of Performance-Based Share Options Award Agreement granted under the Hilb Rogal & Hobbs Company 2007 Share Incentive Plan (for executive officers) | ||
10 | .6 | Form of Performance-Based Restricted Share Unit Award Agreement granted under the Hilb Rogal & Hobbs Company 2007 Share Incentive Plan (for executive officers) | ||
10 | .7 | Form of Performance-Based Restricted Share Unit Award Agreement granted under the Willis Group Holdings 2008 Share Purchase and Option Plan, dated May 2, 2011, between Joseph J. Plumeri and Willis Group Holdings Public Limited Company | ||
10 | .8 | Form of Performance-Based Restricted Share Unit Award Agreement granted under the Hilb Rogal & Hobbs Company 2007 Share Incentive Plan, dated May 2, 2011, between Martin Sullivan and Willis Group Holdings Public Limited Company | ||
31 | .1 | Certification Pursuant to Rule 13a-14(a) | ||
31 | .2 | Certification Pursuant to Rule 13a-14(a) | ||
32 | .1 | Certification Pursuant to 18 U.S.C. Section 1350 | ||
32 | .2 | Certification Pursuant to 18 U.S.C. Section 1350 | ||
101 | .INS* | XBRL Instance Document | ||
101 | .SCH* | XBRL Taxonomy Extension Schema Document | ||
101 | .CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | ||
101 | .DEF* | XBRL Taxonomy Extension Definition Linkbase Document | ||
101 | .LAB* | XBRL Taxonomy Extension Label Linkbase Document | ||
101 | .PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. | |
| To be furnished within 30 days in accordance with Rule 405(a)(2) of Regulation S-T. |
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(Registrant)
By: |
/s/ Michael
K. Neborak
|
85