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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): August 2, 2006
Willis Group Holdings Limited
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Bermuda
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation)
001-16503 98-0352587
- --------------------------------------------------------------------------------
(Commission File Number) (IRS Employer Identification No.)
c/o Willis Group Limited
Ten Trinity Square
- --------------------------------------------------------------------------------
London EC3P 3AX, England
(Address of Principal Executive Offices)
(44) (20) 7488-8111
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Not Applicable
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On August 2, 2006, Willis Group Holdings Limited ("WGHL") issued a
press release (the "Press Release") reporting results for the quarter and six
months ended June 30, 2006. A copy of the Press Release is attached as Exhibit
99.1 to this Report on Form 8-K and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits.
99.1 Press Release of WGHL dated August 2, 2006
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WILLIS GROUP HOLDINGS LIMITED
Date: August 4, 2006 By: /s/ Eric R. Dinallo
-------------------
Name: Eric R. Dinallo
Title: General Counsel
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
99.1 Press Release of WGHL dated August 2, 2006
Exhibit 99.1
Willis Group Reports Strong Second Quarter 2006 Results;
Eight Percent Reported Revenue Growth and Ten Percent
Organic Revenue Growth are Company's Highest in Two Years
NEW YORK--(BUSINESS WIRE)--Aug. 2, 2006--
Board Authorizes New $1 Billion Stock Buy Back Plan and Declares
Regular Quarterly Dividend
Willis Group Holdings Limited (NYSE: WSH), the global insurance
broker, today reported results for the quarter and six months ended
June 30, 2006.
Commenting on today's results, Joe Plumeri, Chairman and Chief
Executive Officer, said, "We have already begun successfully
implementing the Shaping Our Future initiatives throughout Willis. Our
10 percent organic revenue growth in the second quarter is a clear
demonstration of the effectiveness of our sales culture. In addition,
we see traction and accretion from the new hires that we made over the
last few years. Importantly, the expansion of our underlying margins
and profitability are direct results of solid growth and contributions
from each and every area of our business through the first half of
2006."
"We are confident that achieving leadership in our core businesses
and delivering the best value to our clients through our distribution
network will make a significant impact on our Company and drive our
financial performance. We are focused on businesses where our unique
expertise allows us to deliver superior advice, products and services.
In addition, we believe that our extensive retail distribution
network, client advocacy and efficient delivery platform makes Willis
the broker most valued by our clients." Mr. Plumeri continued, "The
Board's authorization of a new $1 billion stock buy back plan is a
clear indicator of their confidence in the future of Willis and a
recognition that our best use of capital is to invest in ourselves."
Second Quarter 2006 Financial Results
Total reported revenues for the quarter ended June 30, 2006 were
$593 million, compared with $549 million for the same period last
year, an increase of 8 percent. The effect of foreign currency
translation decreased reported revenues by 1 percent and net
acquisitions of operations increased reported revenues by 1 percent.
Organic growth in commissions and fees excluding total market
remuneration was 10 percent in the second quarter 2006. Each business
unit had a strong contribution to overall organic growth in
commissions and fees including Global with 13 percent organic growth
in the quarter (including double digit organic growth in Reinsurance),
North America with 8 percent and International with 6 percent.
The reduction of total market remuneration as well as changes to
the quarterly phasing of incentive compensation in 2006 impacted the
year-over-year comparison of adjusted operating margin by over 4
percentage points in the second quarter of 2006 compared to the second
quarter of 2005. The reported (and adjusted) operating margin was 20.1
percent in the second quarter of 2006, and excluding these items, this
represented an over 2 percentage point improvement in adjusted
operating margin over the second quarter of 2005.
Other expenses for the second quarter of 2006 were $108 million,
or 18.2 percent of total revenues, compared to $98 million, or 17.9
percent in the comparable period last year, relatively flat despite
incremental spending for strategic initiatives.
Excluding the effects on taxation of amortization of intangibles,
disposals of operations and share-based compensation, the underlying
tax rate in the second quarter of 2006 was 31.5 percent, the same as
the underlying rate for the full year 2005.
Reported and adjusted net income for the quarter ended June 30,
2006 was $72 million, or $0.45 per diluted share, compared with a
reported net income of $114 million, or $0.70 per diluted share, a
year ago and adjusted net income of $73 million, or $0.45 per diluted
share, for the same period last year. Foreign currency translation had
no impact on second quarter 2006 net income compared with second
quarter 2005.
Six Months 2006 Financial Results
Total reported revenues increased by 4 percent to $1,264 million
in the first six months of 2006, up from $1,218 million for the
corresponding period in 2005. The effect of foreign currency
translation decreased reported revenues by 2 percent and net disposals
of operations decreased reported revenues by 1 percent.
The reduction of total market remuneration as well as changes to
the quarterly phasing of incentive compensation in 2006 impacted the
year-over-year comparison of adjusted operating margin by over 1
percentage point in the first half of 2006 compared to the first half
of 2005. The reported (and adjusted) operating margin was 25.6 percent
in the first half of 2006, and excluding these items, this represented
an over 1 percentage point improvement in adjusted operating margin
over the first half of 2005.
Other expenses for the first half of 2006 were $213 million, or
16.9 percent of total revenues, compared to $194 million, or 15.9
percent in the comparable period last year (excluding the first
quarter 2005 non-operating items), principally as a result of
incremental spending for strategic initiatives.
Reported and adjusted net income for the six months ended June 30,
2006 was $212 million or $1.33 per diluted share, compared to a
reported net income of $181 million, or $1.10 per diluted share and
adjusted net income of $209 million, or $1.27 per diluted share, for
the same period last year. Foreign currency translation had a negative
$0.03 impact on results for the first six months of 2006, compared
with same period last year.
Outlook
For the full year 2006, the Company anticipates continued growth
in organic commissions and fees. The Company still expects salaries
and benefits expense as a percentage of total revenues to be less than
59 percent and continues to expect modest adjusted operating margin
expansion.
In the third quarter 2006, Willis expects to incur certain
one-time expenses related to the Company's strategic initiatives.
Willis also expects to close on the sale of Ten Trinity Square, its
current London headquarters during the third quarter of 2006. The
Company is on schedule to move into a new London headquarters in late
2007/early 2008.
The Company expects to deliver breakout financial performance in
the next five years. Specifically, by 2010, the Company has set
financial targets of salaries and benefits expense as a percentage of
total revenues to be below 54 percent, adjusted operating margin of 28
percent or better and industry leading organic revenue growth.
In conclusion, Mr. Plumeri added, "We remain focused and committed
to the Shaping Our Future initiatives which are designed to drive
revenue and profitable growth in our Company. We have seen early signs
that the execution of our strategy is working well and expect an even
more significantly positive impact on our results in 2007 and beyond."
Capital Management
The Board of Directors approved a new $1 billion stock buy back
plan. This authorization replaces the Company's previously announced
$500 million buy back plan and its remaining $140 million
authorization. The buy back is an open-ended plan to purchase, from
time to time in the open market or through negotiated trades with
persons who are not affiliates of the Company, shares of the Company's
common stock.
Separately, the Board of Directors declared a regular quarterly
cash dividend on the Company's common stock of $0.235 per share, an
annual rate of $0.94 per share. The dividend is payable on October 13,
2006 to shareholders of record on September 30, 2006.
During the six months ended June 30, 2006 the Company completed 4
acquisitions with annual revenues of approximately $13 million. Cash
and cash equivalents totaled $210 million, including approximately
$104 million of immediately available cash at June 30, 2006. No shares
were repurchased during the first half of 2006.
At June 30, 2006, total long-term debt was $600 million and total
stockholders' equity was approximately $1.4 billion. The
capitalization ratio (total long-term debt to total long-term debt and
stockholders' equity) was 29 percent at June 30, 2006.
Conference Call and Webcast
A conference call to discuss second quarter 2006 results will be
held August 3, 2006 at 8:00 a.m. Eastern Time. To participate in the
live teleconference, please dial (888) 316-9406 (Domestic) or +1 (210)
234-0000 (International) with a passcode of "Willis." The live audio
web cast (which will be listen-only) may be accessed at
www.willis.com. This call will be available by replay starting at
approximately 10:00 a.m., Eastern Time, and ending August 17, 2006. To
access the audio replay, please dial (866) 445-8187 (Domestic) or +1
(203) 369-1139 (International), or by accessing the web site.
Willis Group Holdings Limited is a leading global insurance
broker, developing and delivering professional insurance, reinsurance,
risk management, financial and human resource consulting and actuarial
services to corporations, public entities and institutions around the
world. With over 300 offices in some 80 countries, its global team of
approximately 15,400 associates serves clients in some 190 countries.
Additional information on Willis may be found on its Web site
www.willis.com.
This press release may contain certain statements relating to
future results, which are forward-looking statements as that term is
defined in the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially
from historical results or those anticipated, depending on a variety
of factors such as general economic conditions in different countries
around the world, fluctuations in global equity and fixed income
markets, changes in premium rates, the competitive environment and the
actual cost of resolution of contingent liabilities. Further
information concerning the Company and its business, including factors
that potentially could materially affect the Company's financial
results are contained in the Company's filings with the Securities and
Exchange Commission.
This press release includes supplemental financial information
which may contain references to non-GAAP financial measures as defined
in Regulation G of SEC rules. Consistent with Regulation G, a
reconciliation of this supplemental financial information to our
generally accepted accounting principles (GAAP) information follows.
We present such non-GAAP supplemental financial information as we
believe such information is of interest to the investment community
because it provides additional meaningful methods of evaluating
certain aspects of the Company's operating performance from period to
period on a basis that may not be otherwise apparent on a GAAP basis.
This supplemental financial information should be viewed in addition
to, not in lieu of, the Company's condensed consolidated statements of
operations for the three and six months ended June 30, 2006.
WILLIS GROUP HOLDINGS LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
(unaudited)
Three months ended Six months ended
June 30, June 30,
------------------- ------------------
2005 2005
As As
adjusted adjusted
2006 (Note 2) 2006 (Note 2)
-------- --------- ------- ---------
Revenues
Commissions and fees $ 572 $ 530 $ 1,224 $ 1,181
Investment income 21 19 40 37
-------- -------- ------- --------
Total Revenues 593 549 1,264 1,218
-------- -------- ------- --------
Expenses
Salaries and benefits (after
charging share-based
compensation $5, $5, $8 and
$9) 351 316 699 709
Other operating expenses 108 98 213 223
Regulatory settlements - - - 51
Depreciation expense and
amortization of intangible
assets 15 14 29 27
Net gain on disposal of
operations - (78) - (78)
-------- -------- ------- --------
Total Expenses 474 350 941 932
-------- -------- ------- --------
Operating Income 119 199 323 286
Interest expense, net 9 6 18 12
-------- -------- ------- --------
Income before Income Taxes,
Equity in Net Income of
Associates and Minority
Interest 110 193 305 274
Income taxes 36 75 98 99
-------- -------- ------- --------
Income before Equity in Net
Income of Associates and
Minority Interest 74 118 207 175
Equity in net income of
associates, net of tax - (2) 14 12
Minority interest, net of tax (2) (2) (9) (6)
-------- -------- ------- --------
Net Income $ 72 $ 114 $ 212 $ 181
======== ======== ======= ========
Earnings per Share
- Basic $ 0.46 $ 0.70 $ 1.35 $ 1.11
- Diluted $ 0.45 $ 0.70 $ 1.33 $ 1.10
======== ======== ======= ========
Average Number of Shares
Outstanding
- Basic 157 163 157 163
- Diluted 159 164 159 164
======== ======== ======= ========
WILLIS GROUP HOLDINGS LIMITED
SUPPLEMENTAL FINANCIAL INFORMATION
(in millions) (unaudited)
1. Definitions of Non-GAAP Financial Measures
We believe that investors' understanding of the Company's
performance is enhanced by our disclosure of the following non-GAAP
financial measures. Our method of calculating these measures may
differ from those used by other companies and therefore comparability
may be limited.
Organic revenue growth
Organic revenue growth excludes the impact of foreign currency
translation, acquisitions and disposals and total market remuneration
from reported revenues. We use organic revenue growth as a measure of
business growth generated by operations that were part of the Company
at the end of the period.
Adjusted operating income and adjusted net income
Our results for the six months June 30, 2005 were significantly
impacted by gains on disposal of operations, charges for regulatory
settlements and related expenses, our first quarter 2005 headcount
reduction program and other provisions. We believe that excluding
these items from operating income and net income as applicable, along
with the GAAP measures, provides a more complete and consistent
comparative analysis of our results of operations. These items did not
have a material effect on the results for the six months ended June
30, 2006.
2. Accounting and reporting changes
We made a number of changes to our accounting and reporting in
first quarter 2006. In particular:
Revenue analysis
Following a change to our internal reporting structure, North
America Global Markets and International Global Markets revenues,
which were previously reported within our Global division, are now
reported in the North America and International divisions,
respectively. In addition, we refined our method of allocating
revenues between the Global and North America divisions. We have
adjusted our 2005 revenue analysis to be consistent with the new
internal reporting structure.
FAS 123R, Share-Based Payment
Effective January 1, 2006, we adopted FAS 123R using the
modified-retrospective transition method. Our 2005 comparative data
has therefore been adjusted to recognize the compensation cost
previously reported in the footnote disclosure to our financial
statements.
The retrospective application of FAS 123R has also impacted the
diluted share count in prior periods as proceeds under the treasury
stock method have been adjusted with a consequent impact on diluted
share count. Proceeds were adjusted to include the future potential
tax consequences that will arise when the options are exercised and
the average unrecognized compensation cost outstanding during the
period.
Pensions: market-related value
FAS 87, Employers' Accounting for Pensions, requires the expected
return on plan assets to be determined based on the expected long-term
rate of return on plan assets and the market-related value of plan
assets. The market-related value of plan assets may either be a fair
value or a calculated value that recognizes changes in a systematic
and rational manner over not more than five years.
Up to December 31, 2005, the market-related value of our UK
pension plan assets was determined using a calculated value that
recognized asset gains or losses over five years. With effect from
January 1, 2006, the market-related value of UK pension plan assets
has been determined on a fair value basis. We believe that fair value
is a preferable measure of determining the market-related value of
plan assets as it more fairly reflects the actual value of pension
plan assets as of the balance sheet date. In addition, it brings the
methodology used for calculating the market-related value of our UK
plan assets into line with the fair value methodology already used to
value our US plan assets.
We have adjusted our 2005 comparative data to reflect the change
in method of determining the market-related value of plan assets.
Pensions: return on assets
After reviewing the long-term rate of return on our UK plan
assets, effective January 1, 2006, we have increased the expected
long-term rate to 7.75% from 7.25%.
3. Revenue analysis
Organic revenue growth
Organic revenue growth is defined as revenue growth excluding the
impact of foreign currency translation, acquisitions and disposals and
total market remuneration. The percentage change in reported revenues
is the most directly comparable GAAP measure, and the following table
reconciles this change to organic revenue growth by business unit for
the three months ended June 30, 2006:
Three months ended
June 30,
---------------------------------------
%
2006 2005(1) Change
------------ ------------ -----------
Global $ 255 $ 238 7%
North America 195 180 8%
International 122 112 9%
------------ ------------ -----------
Commissions and fees $ 572 $ 530 8%
Investment Income 21 19 11%
------------ ------------ -----------
Total revenues $ 593 $ 549 8%
============ ============ ===========
Change attributable to
-----------------------------------------------
Foreign Acquisitions Total market Organic
currency and remuneration revenue
translation disposals growth
------------ ------------ ------------- --------
Global (1)% (1)% (4)% 13%
North America 0% 0% 0% 8%
International 0% 3% 0% 6%
------------ ------------ ------------- --------
Commissions and fees 0% 0% (2)% 10%
Investment Income (10)% 1% 0% 20%
------------ ------------ ------------- --------
Total revenues (1)% 1% (2)% 10%
============ ============ ============= ========
(1) As described in Note 2, our prior period revenue analysis has been
adjusted to reflect our new internal reporting structure.
The following table reconciles the percentage change in reported
revenues to organic revenue growth by business unit for the six months
ended June 30, 2006:
Six months ended
June 30,
------------------------------------------
2006 2005(1) % Change
------------- ------------- -------------
Global $563 $564 0%
North America 376 342 10%
International 285 275 4%
------------- ------------- -------------
Commissions and
fees $1,224 $1,181 4%
Investment Income 40 37 8%
------------- ------------- -------------
Total revenues $1,264 $1,218 4%
============= ============= =============
Change attributable to
------------------------------------------------
Foreign Acquisitions Total market Organic
currency and remuneration revenue
translation disposals growth
------------ ------------ ------------- --------
Global (2)% (3)% (2)% 7%
North America 0% 1% 0% 9%
International (5)% 3% (1)% 7%
------------ ------------ ------------- --------
Commissions and fees (2)% 0% (2)% 8%
Investment Income (7)% (1)% 0% 16%
------------ ------------ ------------- --------
Total revenues (2)% (1)% (1)% 8%
============ ============ ============= ========
(1) As described in Note 2, our prior period revenue analysis has been
adjusted to reflect our new internal reporting structure.
WILLIS GROUP HOLDINGS LIMITED
SUPPLEMENTAL FINANCIAL INFORMATION
(in millions, except per share data)
(unaudited)
4. Non-GAAP Supplemental Financial Information
Adjusted operating income
Adjusted operating income is defined as operating income excluding
net gain on disposal of operations and, for 2005, charges for
regulatory settlements and related expenses, severance costs relating
to our first quarter 2005 headcount reduction program and other
provisions. Operating income is the most directly comparable GAAP
measure, and the following tables reconcile adjusted operating income
to operating income for the three months and six months ended June 30,
2006 and 2005:
Three months ended June 30,
----------------------------------
2005 As
adjusted %
2006 (Note 2) Change
--------- ------------ -----------
Operating Income, GAAP basis $ 119 $ 199 (40)%
Excluding:
Net gain on disposal of
operations (a) - (78)
--------- ------------
Adjusted Operating Income $ 119 $ 121 (2)%
========= ============
Operating Margin, GAAP basis, or
Operating Income as a percentage
of Total Revenues 20.1% 36.2%
========= ============
Adjusted Operating Margin, GAAP
basis, or Adjusted Operating
Income as a percentage of Total
Revenues 20.1% 22.0%
========= ============
Six months ended June 30,
----------------------------------
2005 As
adjusted %
2006 (Note 2) Change
--------- ------------ -----------
Operating Income, GAAP basis $ 323 $ 286 13%
Excluding:
Regulatory settlements (b) - 51
Costs related to regulatory
settlements (b) - 9
Severance costs (c) - 28
Other provision (d) - 20
Net gain on disposal of operations
(a) - (78)
--------- ------------
Adjusted Operating Income $ 323 $ 316 2%
========= ============
Operating Margin, GAAP basis, or
Operating Income as a percentage of
Total Revenues 25.6% 23.5%
========= ============
Adjusted Operating Margin, GAAP
basis, or Adjusted Operating Income
as a percentage of Total Revenues 25.6% 25.9%
========= ============
a) Primarily attributable to the $79 million gain arising on the sale
of the Company's US wholesale unit Stewart Smith on April 14,
2005.
b) Comprises $51 million to establish the reimbursement funds agreed
with the New York and Minnesota Attorneys General and New York
Department of Insurance in April 2005 and $9 million of related
legal and administrative expenses.
c) Severance costs relate to the headcount reduction program announced
in the first quarter 2005 which eliminated approximately 500
positions at a cost of $28 million.
d) Based on the quarterly review of legal proceedings at March 31,
2005, the Company increased its provision for claims by an
additional $20 million.
Adjusted net income
Adjusted net income is defined as net income excluding net gain on
disposal of operations and, for 2005, charges for regulatory
settlements and related expenses, severance costs relating to our
first quarter 2005 headcount reduction program and other provisions.
Net income is the most directly comparable GAAP measure, and the
following tables reconcile adjusted net income to net income for the
three months and six months ended June 30, 2006 and 2005:
Three months ended Per diluted share
June 30, Three months ended
June 30,
----------------------- ------------------------
2005 2005 %
As As Change
Adjusted % adjusted
2006 (Note 2) Change 2006 (Note 2)
----- -------- -------- ------ -------- --------
Net income, GAAP basis $72 $114 (37)% $0.45 $0.70 (36)%
Excluding:
Net gain on disposal
of operations, net
of tax ($nil,
$(37)) - (41) - (0.25)
----- -------- ------ --------
Adjusted net income $72 $73 (1)% $0.45 $0.45 0%
===== ======== ====== ========
Diluted shares
outstanding, GAAP
basis 159 164
===== ========
Per diluted share
Six months ended Six months ended
June 30, June 30,
------------------------ ------------------------
2005 2005
As As
adjusted % adjusted %
2006 (Note 2) Change 2006 (Note 2) Change
----- -------- -------- ----- -------- --------
Net income, GAAP
basis $ 212 $ 181 17% $1.33 $ 1.10 21%
Excluding:
Regulatory
settlements, net
of tax
($20) - 31 - 0.19
Costs related to
regulatory
settlements, net
of tax ($4) - 5 - 0.03
Severance costs,
net of tax ($9) - 19 - 0.12
Other provision,
net of tax ($6) - 14 - 0.08
Net gain on
disposal of
operations, net of
tax ($nil, $(37)) - (41) - (0.25)
----- ------- ----- ------
Adjusted net income $ 212 $ 209 1% $1.33 $ 1.27 5%
===== ======= ===== ======
Diluted shares
outstanding, GAAP
basis 159 164
===== =======
WILLIS GROUP HOLDINGS LIMITED, NON-GAAP FINANCIAL SUPPLEMENT
(in millions, except per share data)
(unaudited)
2005
----------------------------------
Q1 Q2 Q3 Q4 FY
------ ------ ------ ------ -------
Revenues (1)
Global $326 $ 238 $ 200 $ 197 $ 961
North America 162 180 173 207 722
International 163 112 96 140 511
----- ----- ----- ----- ------
Commissions and fees 651 530 469 544 2,194
Investment income 18 19 18 18 73
----- ----- ----- ----- ------
Total Revenues 669 549 487 562 2,267
----- ----- ----- ----- ------
Expenses
Salaries and benefits as
previously reported/computed 386 309 313 348 1,356
Adoption of FAS 123R (2) 4 5 4 5 18
Pensions: market-related value
methodology (2) 3 2 2 3 10
----- ----- ----- ----- ------
Salaries and benefits as
adjusted/reported 393 316 319 356 1,384
Other operating expenses 125 98 89 93 405
Regulatory settlements 51 - - - 51
Depreciation expense and
amortization of intangible assets 13 14 13 14 54
Net gain on disposal of operations - (78) - - (78)
----- ----- ----- ----- ------
Total Expenses 582 350 421 463 1,816
----- ----- ----- ----- ------
Operating Income 87 199 66 99 451
Operating Income margin 13.0% 36.2% 13.6% 17.6% 19.9%
Interest expense, net 6 6 9 9 30
----- ----- ----- ----- ------
Income before Income Taxes, Equity
in Net Income of Associates and
Minority Interest 81 193 57 90 421
Income taxes as previously
reported/computed 26 77 18 31 152
Adoption of FAS 123R (1) (2) (1) (2) (6)
Pensions: market-related value
methodology (1) - (1) (1) (3)
----- ----- ----- ----- ------
Income taxes as adjusted/reported 24 75 16 28 143
----- ----- ----- ----- ------
Income before Equity in Net Income
of Associates and Minority
Interest 57 118 41 62 278
Equity in net income of
associates, net of tax 14 (2) 5 (3) 14
Minority interest, net of tax (4) (2) (1) (4) (11)
----- ----- ----- ----- ------
Net Income $ 67 $ 114 $ 45 $ 55 $ 281
===== ===== ===== ===== ======
Earnings per Share
- - Diluted (3) $0.41 $0.70 $0.28 $0.35 $ 1.72
===== ===== ===== ===== ======
Average Number of Shares
Outstanding
- Basic 163 163 160 157 161
Diluted as previously reported 168 166 163 160 164
Adoption of FAS 123R (3) (3) (2) (1) (1) (1)
----- ----- ----- ----- ------
- - Diluted as adjusted/ reported 165 164 162 159 163
===== ===== ===== ===== ======
2006
--------------------
Q1 Q2 Q2 YTD
------ ------ -------
Revenues (1)
Global $ 308 255 563
North America 181 195 376
International 163 122 285
----- ----- ------
Commissions and fees 652 572 1,224
Investment income 19 21 40
----- ----- ------
Total Revenues 671 593 1,264
----- ----- ------
Expenses
Salaries and benefits as previously
reported/computed 351 352 703
Adoption of FAS 123R (2) 3 5 8
Pensions: market-related value methodology (2) (6) (6) (12)
----- ----- ------
Salaries and benefits as adjusted/reported 348 351 699
Other operating expenses 105 108 213
Regulatory settlements - - -
Depreciation expense and amortization of
intangible assets 14 15 29
Net gain on disposal of operations - - -
----- ----- ------
Total Expenses 467 474 941
----- ----- ------
Operating Income 204 119 323
Operating Income margin 30.4% 20.1% 25.6%
Interest expense, net 9 9 18
----- ----- ------
Income before Income Taxes, Equity in Net Income
of Associates and Minority Interest 195 110 305
Income taxes as previously reported/computed 61 36 97
Adoption of FAS 123R (1) (2) (3)
Pensions: market-related value methodology 2 2 4
----- ----- ------
Income taxes as adjusted/reported 62 36 98
----- ----- ------
Income before Equity in Net Income of Associates
and Minority Interest 133 74 207
Equity in net income of associates, net of tax 14 - 14
Minority interest, net of tax (7) (2) (9)
----- ----- ------
Net Income $ 140 $ 72 $ 212
===== ===== ======
Earnings per Share
- - Diluted (3) $0.88 $0.45 $ 1.33
===== ===== ======
Average Number of Shares Outstanding
- Basic 157 157 157
Diluted as previously reported 159 159 159
Adoption of FAS 123R (3) - - -
----- ----- ------
- - Diluted as adjusted/ reported 159 159 159
===== ===== ======
(1) As described in Note 2, our prior period revenue analysis has been
adjusted to reflect our new internal reporting structure.
(2) Details of the accounting and reporting changes are described in
Note 2.
(3) The impact on diluted share count from the retrospective
application of FAS 123R is described in Note 2.
CONTACT: Willis Group Holdings Limited
Investors:
Kerry K. Calaiaro, 212-837-0880
kerry.calaiaro@willis.com
or
Media:
Dan Prince, 212-837-0806
daniel.prince@willis.com