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| 8-K - 8-K - WILLIS TOWERS WATSON PLC | form8-kapril2014.htm |
Exhibit 99.1
The following is the impact of the unaudited changes to the Consolidated Statements of Operations presentation described above retrospectively applied to 2011, 2012 and 2013.
For the year ended December 31, 2011 | For the year ended December 31, 2012 | For the year ended December 31, 2013 | ||||||||||||||||||||||||||||||
As Reported | Reclassification | As Reclassified | As Reported | Reclassification | As Reclassified | As Reported | Reclassification | As Reclassified | ||||||||||||||||||||||||
Revenues | (millions) | |||||||||||||||||||||||||||||||
Total revenues | $ | 3,447 | — | $ | 3,447 | $ | 3,480 | — | $ | 3,480 | $ | 3,655 | — | $ | 3,655 | |||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||
Salaries and benefits | (2,087 | ) | — | (2,087 | ) | (2,475 | ) | — | (2,475 | ) | (2,207 | ) | — | (2,207 | ) | |||||||||||||||||
Other operating expenses | (656 | ) | 9 | (647 | ) | (581 | ) | (19 | ) | (600 | ) | (616 | ) | (20 | ) | (636 | ) | |||||||||||||||
Depreciation expense | (74 | ) | — | (74 | ) | (79 | ) | — | (79 | ) | (94 | ) | — | (94 | ) | |||||||||||||||||
Amortization of intangible assets | (68 | ) | — | (68 | ) | (59 | ) | — | (59 | ) | (55 | ) | — | (55 | ) | |||||||||||||||||
Goodwill impairment charge | — | — | — | (492 | ) | — | (492 | ) | — | — | — | |||||||||||||||||||||
Net gain (loss) on disposal of operations | 4 | (4 | ) | — | (3 | ) | 3 | — | 2 | (2 | ) | — | ||||||||||||||||||||
Total expenses | (2,881 | ) | 5 | (2,876 | ) | (3,689 | ) | (16 | ) | (3,705 | ) | (2,970 | ) | (22 | ) | (2,992 | ) | |||||||||||||||
Operating income (loss) | 566 | 5 | 571 | (209 | ) | (16 | ) | (225 | ) | 685 | (22 | ) | 663 | |||||||||||||||||||
Other (expense) income | — | (5 | ) | (5 | ) | — | 16 | 16 | — | 22 | 22 | |||||||||||||||||||||
Make-whole on repurchase and redemption of senior notes and write-off of unamortized debt issuance costs | (171 | ) | — | (171 | ) | — | — | — | — | — | — | |||||||||||||||||||||
Loss on extinguishment of debt | — | — | — | — | — | — | (60 | ) | — | (60 | ) | |||||||||||||||||||||
Interest expense | (156 | ) | — | (156 | ) | (128 | ) | — | (128 | ) | (126 | ) | — | (126 | ) | |||||||||||||||||
Income (loss) from continuing operations before income taxes and interest in earnings of associates | 239 | — | 239 | (337 | ) | — | (337 | ) | 499 | — | 499 | |||||||||||||||||||||
Income taxes | (32 | ) | — | (32 | ) | (101 | ) | — | (101 | ) | (122 | ) | — | (122 | ) | |||||||||||||||||
Income (loss) from continuing operations before interest in earnings of associates | 207 | — | 207 | (438 | ) | — | (438 | ) | 377 | — | 377 | |||||||||||||||||||||
Interest in earnings of associates, net of tax | 12 | — | 12 | 5 | — | 5 | — | — | — | |||||||||||||||||||||||
Income (loss) from continuing operations | 219 | — | 219 | (433 | ) | — | (433 | ) | 377 | — | 377 | |||||||||||||||||||||
Discontinued operations, net of tax | 1 | — | 1 | — | — | — | — | — | — | |||||||||||||||||||||||
Net income (loss) | 220 | — | 220 | (433 | ) | — | (433 | ) | 377 | — | 377 | |||||||||||||||||||||
Less: net income attributable to noncontrolling interests | (16 | ) | — | (16 | ) | (13 | ) | — | (13 | ) | (12 | ) | — | (12 | ) | |||||||||||||||||
Net income (loss) attributable to Willis Group Holdings | $ | 204 | — | $ | 204 | $ | (446 | ) | — | $ | (446 | ) | $ | 365 | — | $ | 365 | |||||||||||||||
1
The following is the impact of the above unaudited changes retrospectively applied to the 2011, 2012 and 2013 segmental and total commissions and fees, total revenue, operating income (loss), organic commission and fee growth and operating margin disclosures:
As reported | For the year ended December 31, | 2013 | ||||||||||||||||||||||||||
2011 | 2012 | Q1 | Q2 | Q3 | Q4 | FY | ||||||||||||||||||||||
(millions, except percentages) | ||||||||||||||||||||||||||||
Commissions and fees | ||||||||||||||||||||||||||||
Global | $ | 1,073 | $ | 1,124 | $ | 383 | $ | 305 | $ | 250 | $ | 250 | $ | 1,188 | ||||||||||||||
North America | 1,314 | 1,306 | 363 | 333 | 328 | 353 | 1,377 | |||||||||||||||||||||
International | 1,027 | 1,028 | 300 | 247 | 213 | 308 | 1,068 | |||||||||||||||||||||
Total commissions and fees | $ | 3,414 | $ | 3,458 | $ | 1,046 | $ | 885 | $ | 791 | $ | 911 | $ | 3,633 | ||||||||||||||
Total revenues | ||||||||||||||||||||||||||||
Global | $ | 1,082 | $ | 1,129 | $ | 384 | $ | 306 | $ | 251 | $ | 250 | $ | 1,191 | ||||||||||||||
North America | 1,323 | 1,313 | 365 | 335 | 329 | 357 | 1,386 | |||||||||||||||||||||
International | 1,042 | 1,038 | 302 | 249 | 215 | 312 | 1,078 | |||||||||||||||||||||
Total revenues | $ | 3,447 | $ | 3,480 | $ | 1,051 | $ | 890 | $ | 795 | $ | 919 | $ | 3,655 | ||||||||||||||
Operating income (loss) | ||||||||||||||||||||||||||||
Global | $ | 352 | $ | 372 | $ | 171 | $ | 106 | $ | 36 | $ | 21 | $ | 334 | ||||||||||||||
North America | 271 | 240 | 89 | 57 | 57 | 66 | 269 | |||||||||||||||||||||
International | 221 | 183 | 86 | 27 | (9 | ) | 77 | 181 | ||||||||||||||||||||
Corporate & other | (278 | ) | (1,004 | ) | (59 | ) | (19 | ) | (9 | ) | (12 | ) | (99 | ) | ||||||||||||||
Total operating income | $ | 566 | $ | (209 | ) | $ | 287 | $ | 171 | $ | 75 | $ | 152 | $ | 685 | |||||||||||||
Organic commission and fee growth | ||||||||||||||||||||||||||||
Global | 6.6 | % | 6.1 | % | 4.1 | % | 10.3 | % | 6.4 | % | 1.4 | % | 5.6 | % | ||||||||||||||
North America | (3.5 | )% | (0.6 | )% | 4.3 | % | 5.5 | % | 3.9 | % | 5.8 | % | 4.9 | % | ||||||||||||||
International | 4.8 | % | 4.9 | % | 3.8 | % | 2.6 | % | 7.8 | % | 3.0 | % | 4.1 | % | ||||||||||||||
Total organic commission and fee growth | 1.8 | % | 3.1 | % | 4.1 | % | 6.3 | % | 5.7 | % | 3.7 | % | 4.9 | % | ||||||||||||||
Operating margin | ||||||||||||||||||||||||||||
Global | 32.5 | % | 32.9 | % | 44.5 | % | 34.6 | % | 14.3 | % | 8.4 | % | 28.0 | % | ||||||||||||||
North America | 20.5 | % | 18.3 | % | 24.4 | % | 17.0 | % | 17.3 | % | 18.5 | % | 19.4 | % | ||||||||||||||
International | 21.2 | % | 17.6 | % | 28.5 | % | 10.8 | % | (4.2 | )% | 24.7 | % | 16.8 | % | ||||||||||||||
Total operating margin | 16.4 | % | (6.0 | )% | 27.3 | % | 19.2 | % | 9.4 | % | 16.5 | % | 18.7 | % | ||||||||||||||
2
Reclassifications | For the year ended December 31, | 2013 | ||||||||||||||||||||||||||
2011 | 2012 | Q1 | Q2 | Q3 | Q4 | FY | ||||||||||||||||||||||
(millions, except percentages) | ||||||||||||||||||||||||||||
Commissions and fees | ||||||||||||||||||||||||||||
Global | $ | 192 | $ | 185 | $ | 46 | $ | 47 | $ | 40 | $ | 44 | $ | 177 | ||||||||||||||
North America | (29 | ) | (25 | ) | (8 | ) | (6 | ) | (6 | ) | (8 | ) | (28 | ) | ||||||||||||||
International | (163 | ) | (160 | ) | (38 | ) | (41 | ) | (34 | ) | (36 | ) | (149 | ) | ||||||||||||||
Total commissions and fees | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
Total revenues | ||||||||||||||||||||||||||||
Global | $ | 196 | $ | 187 | $ | 46 | $ | 48 | $ | 41 | $ | 45 | $ | 180 | ||||||||||||||
North America | (29 | ) | (25 | ) | (8 | ) | (6 | ) | (7 | ) | (7 | ) | (28 | ) | ||||||||||||||
International | (167 | ) | (162 | ) | (38 | ) | (42 | ) | (34 | ) | (38 | ) | (152 | ) | ||||||||||||||
Total revenues | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
Operating income (loss) | ||||||||||||||||||||||||||||
Global | $ | 50 | $ | 26 | $ | 16 | $ | 2 | $ | 11 | $ | 13 | $ | 42 | ||||||||||||||
North America | (13 | ) | 12 | (7 | ) | (2 | ) | (11 | ) | — | (20 | ) | ||||||||||||||||
International | (23 | ) | (14 | ) | (8 | ) | (1 | ) | 2 | 4 | (3 | ) | ||||||||||||||||
Corporate & other | (9 | ) | (40 | ) | (7 | ) | (3 | ) | (7 | ) | (24 | ) | (41 | ) | ||||||||||||||
Total operating income | $ | 5 | $ | (16 | ) | $ | (6 | ) | $ | (4 | ) | $ | (5 | ) | $ | (7 | ) | $ | (22 | ) | ||||||||
Organic commission and fee growth | ||||||||||||||||||||||||||||
Global | 0.4 | % | (1.4 | )% | (0.7 | )% | (1.8 | )% | (1.9 | )% | (1.0 | )% | (1.2 | )% | ||||||||||||||
North America | (2.1 | )% | 0.2 | % | 0.1 | % | — | % | (0.1 | )% | (0.2 | )% | (0.1 | )% | ||||||||||||||
International | 2.7 | % | 1.4 | % | 0.7 | % | 1.6 | % | 3.5 | % | 1.7 | % | 1.6 | % | ||||||||||||||
Total organic commission and fee growth | — | % | — | % | — | % | — | % | — | % | — | % | — | % | ||||||||||||||
Operating margin | ||||||||||||||||||||||||||||
Global | (1.0 | )% | (2.7 | )% | (1.0 | )% | (4.1 | )% | 1.8 | % | 3.1 | % | (0.6 | )% | ||||||||||||||
North America | (0.6 | )% | 1.3 | % | (1.4 | )% | (0.3 | )% | (3.0 | )% | 0.4 | % | (1.1 | )% | ||||||||||||||
International | 1.4 | % | (1.7 | )% | 1.0 | % | 1.8 | % | 0.3 | % | 4.9 | % | 2.4 | % | ||||||||||||||
Total operating margin | 0.2 | % | (0.5 | )% | (0.6 | )% | (0.4 | )% | (0.6 | )% | (0.7 | )% | (0.6 | )% | ||||||||||||||
3
As reclassified | For the year ended December 31, | 2013 | ||||||||||||||||||||||||||
2011 | 2012 | Q1 | Q2 | Q3 | Q4 | FY | ||||||||||||||||||||||
(millions, except percentages) | ||||||||||||||||||||||||||||
Commissions and fees | ||||||||||||||||||||||||||||
Global | $ | 1,265 | $ | 1,309 | $ | 429 | $ | 352 | $ | 290 | $ | 294 | $ | 1,365 | ||||||||||||||
North America | 1,285 | 1,281 | 355 | 327 | 322 | 345 | 1,349 | |||||||||||||||||||||
International | 864 | 868 | 262 | 206 | 179 | 272 | 919 | |||||||||||||||||||||
Total commissions and fees | $ | 3,414 | $ | 3,458 | $ | 1,046 | $ | 885 | $ | 791 | $ | 911 | $ | 3,633 | ||||||||||||||
Total revenues | ||||||||||||||||||||||||||||
Global | $ | 1,278 | $ | 1,316 | $ | 430 | $ | 354 | $ | 292 | $ | 295 | $ | 1,371 | ||||||||||||||
North America | 1,294 | 1,288 | 357 | 329 | 322 | 350 | 1,358 | |||||||||||||||||||||
International | 875 | 876 | 264 | 207 | 181 | 274 | 926 | |||||||||||||||||||||
Total revenues | $ | 3,447 | $ | 3,480 | $ | 1,051 | $ | 890 | $ | 795 | $ | 919 | $ | 3,655 | ||||||||||||||
Operating income (loss) | ||||||||||||||||||||||||||||
Global | $ | 402 | $ | 398 | $ | 187 | $ | 108 | $ | 47 | $ | 34 | $ | 376 | ||||||||||||||
North America | 258 | 252 | 82 | 55 | 46 | 66 | 249 | |||||||||||||||||||||
International | 198 | 169 | 78 | 26 | (7 | ) | 81 | 178 | ||||||||||||||||||||
Corporate & other | (287 | ) | (1,044 | ) | (66 | ) | (22 | ) | (16 | ) | (36 | ) | (140 | ) | ||||||||||||||
Total operating income | $ | 571 | $ | (225 | ) | $ | 281 | $ | 167 | $ | 70 | $ | 145 | $ | 663 | |||||||||||||
Organic commission and fee growth | ||||||||||||||||||||||||||||
Global | 7.0 | % | 4.7 | % | 3.4 | % | 8.5 | % | 4.5 | % | 0.4 | % | 4.4 | % | ||||||||||||||
North America | (5.6 | )% | (0.4 | )% | 4.4 | % | 5.5 | % | 3.8 | % | 5.6 | % | 4.8 | % | ||||||||||||||
International | 7.5 | % | 6.3 | % | 4.5 | % | 4.2 | % | 11.3 | % | 4.7 | % | 5.7 | % | ||||||||||||||
Total organic commission and fee growth | 1.8 | % | 3.1 | % | 4.1 | % | 6.3 | % | 5.7 | % | 3.7 | % | 4.9 | % | ||||||||||||||
Operating margin | ||||||||||||||||||||||||||||
Global | 31.5 | % | 30.2 | % | 43.5 | % | 30.5 | % | 16.1 | % | 11.5 | % | 27.4 | % | ||||||||||||||
North America | 19.9 | % | 19.6 | % | 23.0 | % | 16.7 | % | 14.3 | % | 18.9 | % | 18.3 | % | ||||||||||||||
International | 22.6 | % | 19.3 | % | 29.5 | % | 12.6 | % | (3.9 | )% | 29.6 | % | 19.2 | % | ||||||||||||||
Total operating margin | 16.6 | % | (6.5 | )% | 26.7 | % | 18.8 | % | 8.8 | % | 15.8 | % | 18.1 | % | ||||||||||||||
4
The following is the impact of the reclassification of foreign exchange gains and losses and gains and losses from the disposal of operations to the reconciliation of operating income (loss), the most directly comparable GAAP measures, to adjusted operating income and adjusted operating margin disclosures, which are non-GAAP financial measures as defined under Regulation G of SEC rules, for the years ended December 31, 2011, 2012 and 2013.
2011 | 2012 | 2013 | |||||||||||
(millions, except percentages) | |||||||||||||
As reported: | Operating income (loss), GAAP basis | $ | 566 | $ | (209 | ) | $ | 685 | |||||
Reclassification: | Foreign exchange gains and losses and gains and losses from the disposal of operations | 5 | (16 | ) | (22 | ) | |||||||
As reclassified: | Operating income (loss), GAAP basis | 571 | (225 | ) | 663 | ||||||||
Excluding: | |||||||||||||
Expense reduction initiative | — | — | 46 | ||||||||||
Fees related to the extinguishment of debt | — | — | 1 | ||||||||||
Additional incentive accrual for change in remuneration policy | — | 252 | — | ||||||||||
Write-off of unamortized cash retention awards debtor | — | 200 | — | ||||||||||
Goodwill impairment charge | — | 492 | — | ||||||||||
India JV settlement | — | 11 | — | ||||||||||
Insurance recovery | — | (10 | ) | — | |||||||||
Write-off of uncollectible accounts receivable balance | 22 | 13 | — | ||||||||||
2011 Operational Review | 180 | — | — | ||||||||||
FSA regulatory settlement | 11 | — | — | ||||||||||
Adjusted operating income | $ | 784 | $ | 733 | $ | 710 | |||||||
Operating margin | 16.6 | % | (6.5 | )% | 18.1 | % | |||||||
Adjusted operating margin | 22.7 | % | 21.1 | % | 19.4 | % | |||||||
5