10-Q 1 willisgroupholdings10qq120.htm 10-Q Q1 2015 WillisGroupHoldings10Q Q1 2015

 
 
 
 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________
FORM 10-Q
(Mark One)
 
 
þ
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2015
or
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 001-16503
 _______________________________
WILLIS GROUP HOLDINGS PUBLIC
LIMITED COMPANY
(Exact name of registrant as specified in its charter)
 
Ireland
 (Jurisdiction of
incorporation or organization)
 
98-0352587
 (I.R.S. Employer
Identification No.) 

c/o Willis Group Limited
51 Lime Street, London, EC3M 7DQ, England
(Address of principal executive offices)
(011) 44-20-3124-6000
(Registrant’s telephone number, including area code)
   _______________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes  þ      No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).      Yes  þ      No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of ‘large accelerated filer’, ‘accelerated filer’ and ‘smaller reporting company’ in Rule 12b-2 of the Exchange Act.
Large accelerated filer    þ
 
Accelerated filer    ¨
 
Non-accelerated filer      ¨
 
Smaller reporting company    ¨
 
 
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes  ¨      No  þ
As of May 1, 2015 there were outstanding 179,316,364 ordinary shares, nominal value $0.000115 per share, of the Registrant.
 
 
 
 
 




Table Of Contents 

2

Certain Definitions
The following definitions apply throughout this quarterly report unless the context requires otherwise:
‘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.


3
Willis Group Holdings plc


FORWARD-LOOKING STATEMENTS

We have included in this document 'forward-looking statements' within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors created by those laws. These forward-looking statements include information about possible or assumed future results of our operations. All statements, other than statements of historical facts that address activities, events or developments that we expect or anticipate may occur in the future, including such things as our outlook, future capital expenditures, growth in commissions and fees, business strategies and planned acquisitions, competitive strengths, goals, the benefits of new initiatives, growth of our business and operations, plans and references to future successes, are forward-looking statements. Also, when we use the words such as 'anticipate', 'believe', 'estimate', 'expect', 'intend', 'plan', 'probably', or similar expressions, we are making forward-looking statements.

There are important uncertainties, events and factors that could cause our actual results or performance to differ materially from those in the forward-looking statements contained in this document, including the following:

•
the impact of any regional, national or global political, economic, business, competitive, market, environmental or regulatory conditions on our global business operations;
•
the impact of current global economic conditions on our results of operations and financial condition, including as a result of those associated with the Eurozone, any insolvencies of or other difficulties experienced by our clients, insurance companies or financial institutions;
•
our ability to implement and fully realize anticipated benefits of our new growth strategy and revenue generating initiatives;
•
our ability to implement and realize anticipated benefits of any cost-savings or operational improvement initiative, including our ability to achieve expected savings and other benefits from the multi-year Operational Improvement Program as a result of unexpected costs or delays and demand on managerial, operational and administrative resources and/or macroeconomic factors affecting the program as well as the impact of the program on business processes and competitive dynamics;
•
the rejection of our Gras Savoye offer or failure to obtain regulatory approval;
•
our ability to consummate acquisitions, including Miller Insurance Services and Gras Savoye , or achieve the expected benefits;
•
our ability to effectively integrate any acquisition into our business;
•
volatility or declines in insurance markets and premiums on which our commissions are based, but which we do not control;
•
our ability to compete in our industry;
•
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;
•
our ability to retain key employees and clients and attract new business, including at a time when the Company is pursuing various strategic initiatives;
•
our ability to develop new products and services;
•
the practical challenges and costs of complying with a wide variety of foreign laws and regulations and any related changes, given the global scope of our operations and those of any acquired business and the associated risks of non-compliance and regulatory enforcement action;
•
our ability to develop and implement technology solutions and invest in innovative product offerings in an efficient
and effective manner;
•
fluctuations in our earnings as a result of potential changes to our valuation allowance(s) on our deferred tax assets;
•
changes in the tax or accounting treatment of our operations and fluctuations in our tax rate;
•
our ability to achieve anticipated benefit of any acquisition or other transactions in which we may engage, including any revenue growth of operational efficiencies;
•
our inability to exercise full management control over our associates;
•
our ability to continue to manage our significant indebtedness;
•
the timing or ability to carry out share repurchases and redemptions which is based on many factors, including market conditions, the Company's financial position, earnings, share price, capital requirements, and other investment opportunities (including mergers and acquisitions and related financings);
•
the timing or ability to carry out refinancing 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 material fluctuations in exchange and interest rates that could adversely affect expenses and revenue;

4
Notes to the financial statements
 (Unaudited)



•
a significant decline in the value of investments that fund our pension plans or changes in our pension plan liabilities
or funding obligations;
•
rating agency actions, including a downgrade to our credit rating, that could inhibit our ability to borrow funds or the pricing thereof and in certain circumstances cause us to offer to buy back some of our debt;
•
our ability to receive dividends or other distributions in needed amounts from our subsidiaries;
•
our involvement in and the results of any regulatory investigations, legal proceedings and other contingencies;
•
our exposure to potential liabilities arising from errors and omissions and other potential claims against us;
•
underwriting, advisory or reputational risks associated with our business;
•
the interruption or loss of our information processing systems, data security breaches or failure to maintain secure
information systems; and
•
impairment of the goodwill in one of our reporting units, in which case we may be required to record significant charges to earnings.

The foregoing list of factors is not exhaustive and new factors may emerge from time to time that could also affect
actual performance and results. For more information see the section entitled 'Risk Factors' included in Willis' Form 10-K for the year ended December 31, 2014 and our subsequent filings with the Securities and Exchange commission. Copies are available online at http://www.sec.gov or www.willis.com.
Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of these assumptions, and therefore also the forward-looking statements based on these assumptions, could themselves prove to be inaccurate. In light of the significant uncertainties inherent in the forward-looking statements included in this document, our inclusion of this information is not a representation or guarantee by us that our objectives and plans will be achieved.
Our forward-looking statements speak only as of the date made and we will not update these forward-looking statements unless the securities laws require us to do so. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this document may not occur, and we caution you against unduly relying on these forward-looking statements.
 

5
Willis Group Holdings plc


PART I — FINANCIAL INFORMATION
Item 1 — Financial Statements
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
 
 
Three months ended March 31,
 
Note
 
2015
 
2014
 
 
 
(millions, except per share data)
REVENUES
 
 
 
 
 
Commissions and fees
 
 
$
1,081

 
$
1,090

Investment income
 
 
3

 
4

Other income
 
 
3

 
3

Total revenues
 
 
1,087

 
1,097

EXPENSES
 
 
 
 
 
Salaries and benefits
 
 
(567
)
 
(570
)
Other operating expenses
 
 
(160
)
 
(165
)
Depreciation expense
 
 
(22
)
 
(23
)
Amortization of intangible assets
12

 
(14
)
 
(13
)
Restructuring costs
3

 
(31
)
 
—

Total expenses
 
 
(794
)
 
(771
)
OPERATING INCOME
 
 
293

 
326

Other (expense) income, net
4

 
(6
)
 
—

Interest expense
 
 
(33
)
 
(32
)
INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES
 
 
254

 
294

Income taxes
5

 
(56
)
 
(63
)
INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES
 
 
198

 
231

Interest in earnings of associates, net of tax
 
 
16

 
19

NET INCOME
 
 
214

 
250

Less: net income attributable to noncontrolling interests
 
 
(4
)
 
(4
)
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS
 
 
$
210

 
$
246

EARNINGS PER SHARE — BASIC AND DILUTED
 
 
 
 
 
— Basic earnings per share
6

 
$
1.17

 
$
1.37

— Diluted earnings per share
6

 
$
1.15

 
$
1.35

 
 
 
 
 
 
CASH DIVIDENDS DECLARED PER SHARE
 
 
$
0.31

 
$
0.30



The accompanying notes are an integral part of these condensed consolidated financial statements. 


6
Financial statements

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 
 
 
Three months ended March 31,
 
Note
 
2015
 
2014
 
 
 
(millions)
 
 
 
 
 
 
Net income
 
 
$
214

 
$
250

Other comprehensive income, net of tax:
 
 
 
 
 
Foreign currency translation adjustments
 
 
(112
)
 
3

Pension funding adjustment
 
 
230

 
6

Derivative instruments
 
 
(11
)
 
(1
)
Other comprehensive income, net of tax
16

 
107

 
8

Comprehensive income
 
 
321

 
258

Less: Comprehensive loss (income) attributable to noncontrolling interests
 
 
3

 
(4
)
Comprehensive income attributable to Willis Group Holdings
 
 
$
324

 
$
254


The accompanying notes are an integral part of these condensed consolidated financial statements.


7
Willis Group Holdings plc


UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
Note
 
March 31,
2015
 
December 31, 2014
 
 
 
(millions, except share data)
ASSETS
 
 
 
 
 
CURRENT ASSETS
 
 
 
 
 
Cash and cash equivalents
 
 
$
503

 
$
635

Accounts receivable, net
 
 
1,150

 
1,044

Fiduciary assets
 
 
9,444

 
8,948

Deferred tax assets
 
 
13

 
12

Other current assets
13

 
218

 
214

Total current assets
 
 
11,328

 
10,853

NON-CURRENT ASSETS
 
 
 
 
 
Fixed assets, net
 
 
462

 
483

Goodwill
11

 
2,889

 
2,937

Other intangible assets, net
12

 
418

 
450

Investments in associates
 
 
167

 
169

Deferred tax assets
 
 
6

 
9

Pension benefits asset
 
 
606

 
314

Other non-current assets
13

 
229

 
220

Total non-current assets
 
 
4,777

 
4,582

TOTAL ASSETS
 
 
$
16,105

 
$
15,435

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
CURRENT LIABILITIES
 
 
 
 
 
Fiduciary liabilities
 
 
$
9,444

 
$
8,948

Deferred revenue and accrued expenses
 
 
408

 
619

Income taxes payable
 
 
49

 
33

Current portion of long-term debt
15

 
168

 
167

Deferred tax liabilities
 
 
18

 
21

Other current liabilities
14

 
461

 
444

Total current liabilities
 
 
10,548

 
10,232

NON-CURRENT LIABILITIES
 
 
 
 
 
Long-term debt
15

 
2,137

 
2,142

Liability for pension benefits
 
 
277

 
284

Deferred tax liabilities
 
 
185

 
128

Provisions for liabilities
 
 
188

 
194

Other non-current liabilities
14

 
398

 
389

Total non-current liabilities
 
 
3,185

 
3,137

Total liabilities
 
 
13,733

 
13,369


(Continued on next page)


8
Financial statements

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
 
Note
 
March 31,
2015
 
December 31, 2014
 
 
 
(millions, except share data)
COMMITMENTS AND CONTINGENCIES
8

 

 

 
 
 
 
 
 
REDEEMABLE NONCONTROLLING INTEREST
 
 
51

 
59

 
 
 
 
 
 
EQUITY
 
 
 
 
 
Ordinary shares, $0.000115 nominal value; Authorized: 4,000,000,000; Issued 179,586,740 shares in 2015 and 178,701,479 shares in 2014
 
 
—

 
—

Ordinary shares, €1 nominal value; Authorized: 40,000; Issued 40,000 shares in 2015 and 2014
 
 
—

 
—

Preference shares, $0.000115 nominal value; Authorized: 1,000,000,000; Issued nil shares in 2015 and 2014
 
 
—

 
—

Additional paid-in capital
 
 
1,584

 
1,524

Retained earnings
 
 
1,669

 
1,530

Accumulated other comprehensive loss, net of tax
16

 
(952
)
 
(1,066
)
Treasury shares, at cost, 46,408 shares, $0.000115 nominal value, in 2015 and 2014 and 40,000 shares, €1 nominal value, in 2015 and 2014
 
 
(3
)
 
(3
)
Total Willis Group Holdings stockholders’ equity
 
 
2,298

 
1,985

Noncontrolling interests
 
 
23

 
22

Total equity
 
 
2,321

 
2,007

TOTAL LIABILITIES AND EQUITY
 
 
$
16,105

 
$
15,435


The accompanying notes are an integral part of these condensed consolidated financial statements.

 

9
Willis Group Holdings plc


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 
 
 
Three months ended March 31,
 
Note
 
2015
 
2014
 
 
 
(millions)
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
Net income
 
 
$
214

 
$
250

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
 
 
(7
)
 
2

Depreciation expense
 
 
22

 
23

Amortization of intangible assets
12

 
14

 
13

Amortization of cash retention awards
 
 
3

 
2

Net periodic income of defined benefit pension plans
7

 
(13
)
 
(4
)
Provision for doubtful debts
 
 
—

 
1

Provision for deferred income taxes
 
 
12

 
13

Excess tax benefits from share-based payment arrangements
 
 
(3
)
 
(1
)
Share-based compensation
 
 
18

 
14

Loss (gain) on derivative instruments
 
 
1

 
(3
)
Undistributed earnings of associates
 
 
(16
)
 
(19
)
Effect of exchange rate changes on net income
 
 
41

 
1

Change in operating assets and liabilities, net of effects from purchase of subsidiaries:
 
 
 
 
 
Accounts receivable
 
 
(152
)
 
(140
)
Fiduciary assets
 
 
(749
)
 
(871
)
Fiduciary liabilities
 
 
749

 
871

Cash incentives paid
 
 
(306
)
 
(315
)
Funding of defined benefit pension plans
 
 
(44
)
 
(28
)
Other assets
 
 
(4
)
 
—

Other liabilities
 
 
157

 
192

Movement on provisions
 
 
(1
)
 
4

Net cash (used in) provided by operating activities
 
 
(64
)
 
5

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
Proceeds on disposal of fixed and intangible assets
 
 
4

 
1

Additions to fixed assets
 
 
(16
)
 
(22
)
Additions to intangible assets
 
 
(1
)
 
(1
)
Acquisitions of operations, net of cash acquired
 
 
(8
)
 
—

Payments to acquire other investments, net of distributions received
 
 
—

 
(4
)
Proceeds on sale of operations, net of cash disposed
 
 
13

 
5

Net cash used in investing activities
 
 
(8
)
 
(21
)

(Continued on next page)


10
Financial statements

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
 
 
 
Three months ended March 31,
 
Note
 
2015
 
2014
 
 
 
(millions)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
Debt issuance costs
 
 
(1
)
 
(2
)
Repayments of debt
15

 
(4
)
 
(4
)
Repurchase of shares


 
(15
)
 
(35
)
Proceeds from issue of shares
 
 
35

 
43

Excess tax benefits from share-based payment arrangements
 
 
3

 
1

Dividends paid
 
 
(54
)
 
(50
)
Dividends paid to noncontrolling interests
 
 
(3
)
 
(2
)
Net cash used in financing activities
 
 
(39
)
 
(49
)
DECREASE IN CASH AND CASH EQUIVALENTS
 
 
(111
)
 
(65
)
Effect of exchange rate changes on cash and cash equivalents
 
 
(21
)
 
3

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
 
 
635

 
796

CASH AND CASH EQUIVALENTS, END OF PERIOD
 
 
$
503

 
$
734


The accompanying notes are an integral part of these condensed consolidated financial statements.

 

11
Willis Group Holdings plc


UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF EQUITY

 
Shares outstanding
 
Ordinary shares and APIC (i)
 
Retained Earnings
 
Treasury Stock
 
AOCL (ii)
 
Total WGH shareholders' equity
 
Noncontrolling Interests
 
Total Equity
 
Redeemable Noncontrolling interests (iii)
 
Total
 
(thousands)
 
(millions)
Balance at January 1,2015
178,701

 
$
1,524

 
$
1,530

 
$
(3
)
 
$
(1,066
)
 
$
1,985

 
$
22

 
$
2,007

 
$
59

 
 
Shares repurchased
(289
)
 
—

 
(15
)
 
—

 
—

 
(15
)
 
—

 
(15
)
 
—

 
 
Net income
—

 
—

 
210

 
—

 
—

 
210

 
3

 
213

 
1

 
$
214

Dividends
—

 
—

 
(56
)
 
—

 
—

 
(56
)
 
(1
)
 
(57
)
 
(3
)
 
 
Other comprehensive income (loss)
—

 
—

 
—

 
—

 
114

 
114

 
(1
)
 
113

 
(6
)
 
$
107

Issue of shares under employee stock compensation plans and related tax benefits
1,175

 
37

 
—

 
—

 
—

 
37

 
—

 
37

 
—

 
 
Share-based compensation
—

 
18

 
—

 
—

 
—

 
18

 
—

 
18

 
—

 
 
Foreign currency translation
—

 
5

 
—

 
—

 
—

 
5

 
—

 
5

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at March 31, 2015
179,587

 
$
1,584

 
$
1,669

 
$
(3
)
 
$
(952
)
 
$
2,298

 
$
23

 
$
2,321

 
$
51

 
 

(i) 
APIC means Additional Paid-In Capital
(ii) 
AOCL means Accumulated Other Comprehensive Loss, Net of Tax
(iii) 
In accordance with the requirements of Accounting Standards Codification 480-10-S99-3A we have determined that the noncontrolling interest in Max Matthiessen Holding AB should be disclosed as a redeemable noncontrolling interest and presented within mezzanine or temporary equity



12
Notes to the financial statements
 (Unaudited)


1.    NATURE OF OPERATIONS
Willis provides a broad range of insurance and reinsurance broking and risk management consulting services to its clients worldwide, both directly and indirectly through its associates. The Company provides both specialized risk management advisory and consulting services on a global basis to clients engaged in specific industrial and commercial activities, and services to small, medium and large corporations through its retail operations.
In its capacity as an advisor, insurance and reinsurance broker, the Company acts as an intermediary between clients and insurance carriers by advising clients on risk management requirements, helping clients determine the best means of managing risk, and negotiating and placing insurance risk with insurance carriers through the Company’s global distribution network.

2.    BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The accompanying condensed consolidated financial statements (‘Interim Financial Statements’) have been prepared in accordance with accounting principles generally accepted in the United States of America (‘US GAAP’).
The Interim Financial Statements are unaudited but include all adjustments (consisting of normal recurring adjustments) which the Company’s management considers necessary for a fair presentation of the financial position as of such dates and the operating results and cash flows for those periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted. However, the Company believes that the disclosures are adequate to make the information presented not misleading. The results of operations for the three months ended March 31, 2015 may not necessarily be indicative of the operating results for the entire fiscal year.
These Interim Financial Statements should be read in conjunction with the Company’s consolidated balance sheets as of December 31, 2014 and 2013, and the related consolidated statements of operations, comprehensive income, cash flows and equity for each of the three years in the period ended December 31, 2014 included in the Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 24, 2015.

Recent Accounting Pronouncements to be Adopted in Future Periods
In May 2014, the FASB issued ASU No. 2014-09, 'Revenue From Contracts With Customers'. The new standard supersedes most current revenue recognition guidance and eliminates industry-specific guidance. The ASU is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfil a contract. The ASU was originally scheduled to become effective for the Company at the beginning of its 2017 fiscal year; early adoption was not initially permitted. However, in April 2015, the FASB tentatively decided to defer the effective date but permit early adoption at the original effective date. Consequently, the guidance may now become mandatorily effective for the Company at the beginning of its 2018 fiscal year. Entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. The Company is currently assessing the impact that this standard will have on its consolidated financial statements.

In June 2014, the FASB issued guidance on the accounting for stock compensation where share-based payment awards granted to employees required specific performance targets to be achieved in order for employees to become eligible to vest in the awards and such performance targets could be achieved after an employee completes the requisite service period. The amendment in this update requires a performance target that affects vesting and that could be achieved after the requisite service period to be treated as a performance condition. The guidance is applicable to the Company for interim and annual reporting periods beginning after December 15, 2015, although earlier adoption is permitted. The Company is currently assessing the impact that this standard will have on its consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, 'Simplifying the Presentation of Debt Issuance Costs' which requires that debt issuance costs related to a note shall be reported in the balance sheet as a direct deduction from the face amount of that note and that amortization of debt issuance costs shall be reported as interest expense. The ASU becomes effective for the

13
Willis Group Holdings plc

2. BASIS OF PRESENTATION AND ACCOUNTING POLICIES (Continued)

Company at the beginning of its 2016 fiscal year; early adoption is permitted. The Company is required to apply the new guidance retrospectively to all prior periods. The Company is currently assessing the impact that this standard will have on its consolidated financial statements.


3.    RESTRUCTURING COSTS
In April 2014, the Company announced a multi-year operational improvement program designed to strengthen the Company's client service capabilities and to deliver future cost savings (hereinafter referred to as the Operational Improvement Program).
The main elements of the program, which is expected to be completed by the end of 2017, include the following:
•
movement of more than 3,500 support roles from higher cost locations to Willis facilities in lower cost locations, bringing the ratio of employees in higher cost versus lower cost near-shore and off-shore centers from approximately 80:20 to approximately 60:40;
•
net workforce reductions in support positions;
•
lease consolidation in real estate and reductions in ratios of seats per employee and square footage of floor space per employee; and
•
information technology systems simplification and rationalization.
The Company recognized restructuring costs of $31 million in the three months ended March 31, 2015 related to its Operational Improvement Program (three months ended March 31, 2014: $nil).
An analysis of the cost for restructuring recognized in the statement of operations by reportable segment in the three months ended March 31, 2015 is as follows:
 
Willis North America
 
Willis International
 
Willis GB
 
Willis Capital, Wholesale & Reinsurance
 
Corporate & other
 
Total
 
 
 
 
 
(millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Termination benefits
$
2

 
$
2

 
$
—

 
$
6

 
$
—

 
$
10

Professional services and other
5

 
1

 
4

 
—

 
11

 
21

Total
$
7

 
$
3

 
$
4

 
$
6

 
$
11

 
$
31












14
Notes to the financial statements
(Unaudited)
 
3.    RESTRUCTURING COSTS (Continued)


An analysis of the total cumulative restructuring costs recognized for the Operational Improvement Program from commencement to March 31, 2015 is as follows:
 
Willis North America
 
Willis International
 
Willis GB
 
Willis Capital, Wholesale & Reinsurance
 
Corporate & other
 
Total
 
(millions)
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
 
 
 
 
 
 
 
 
 
 
Termination benefits
$
3

 
$
3

 
$
9

 
$
1

 
$
—

 
$
16

Professional services and other
—

 
2

 
1

 
—

 
17

 
20

 
 
 
 
 
 
 
 
 
 
 
 
2015
 
 
 
 
 
 
 
 
 
 
 
Termination benefits
$
2

 
$
2

 
$
—

 
$
6

 
$
—

 
$
10

Professional services and other
5

 
1

 
4

 
—

 
11

 
21

 
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
Termination benefits
$
5

 
$
5

 
$
9

 
$
7

 
$
—

 
$
26

Professional services and other
5

 
3

 
5

 
—

 
28

 
41

Total
$
10

 
$
8

 
$
14

 
$
7

 
$
28

 
$
67

At March 31, 2015 the Company’s liability under the Operational Improvement Program is as follows:
 
Termination benefits
 
Professional services and other
 
Total
 
 
 
(millions)
 
 
Balance at December 31, 2013
$
—

 
$
—

 
$
—

Charges incurred
16

 
20

 
36

Cash payments
(11
)
 
(14
)
 
(25
)
Balance at December 31, 2014
5

 
6

 
11

Charges incurred
10

 
21

 
31

Cash payments
(4
)
 
(15
)
 
(19
)
Foreign exchange
(1
)
 
—

 
(1
)
Balance at March 31, 2015
$
10

 
$
12

 
$
22


4.    OTHER (EXPENSE) INCOME, NET

Other (expense) income, net consists of the following:
 
Three months ended March 31,
 
2015
 
2014
 
(millions)
Gain (loss) on disposal of operations
$
4

 
$
(3
)
Foreign exchange (loss) gain
(10
)
 
3

Other (expense) income, net
$
(6
)
 
$
—


15
Willis Group Holdings plc


5.    INCOME TAXES

The tables below reflect the components of the tax charge for the three months ended March 31, 2015 and 2014 :

 
Income
before tax
 
Tax
 
Effective tax
rate
 
(millions, except percentages)
Three months ended March 31, 2015
 
 
 
 
 
Ordinary income taxed at estimated annual effective tax rate
$
250

 
$
(62
)
 
25
%
Items where tax effect is treated discretely:
 
 
 
 
 
Gain on disposal of operations
4

 
(2
)
 
50
%
Net adjustment in respect of prior periods
—

 
8

 
—
%
As reported
$
254

 
$
(56
)
 
22
%
 
 
 
 
 
 
Three months ended March 31, 2014
 
 
 
 
 
Non-US ordinary income taxed at estimated annual effective tax rate
$
232

 
$
(50
)
 
22
%
US ordinary income and tax charge
65

 
(12
)
 
18
%
Items where tax effect is treated discretely:
 
 
 
 
 
Loss on disposal of operations
(3
)
 
1

 
33
%
Net adjustment in respect of prior periods
—

 
(2
)
 
—
%
As reported
$
294

 
$
(63
)
 
21
%
For interim income tax reporting purposes, the Company determines its best estimate of an annual effective tax rate and applies that rate to its year-to-date ordinary income. The Company's estimated annual effective tax rate excludes significant, unusual, or infrequently occurring items and certain other items excluded pursuant to the US GAAP authoritative guidance where applicable. The income tax expense (or benefit) related to all other items is individually computed and recognized when the items occur.
The reported tax rate for the three months ended March 31, 2015 was 22 percent compared with 21 percent for the same period of 2014. The Company's tax rate differs from the US statutory income tax rate of 35 percent primarily due to income being subject to tax in numerous non-US jurisdictions with varying tax rates, as well as the valuation allowance maintained in the United States due to losses incurred in recent years.
Considering the Company's recent US earnings experience, including profits before tax in the first quarter, and projections of future income, a possibility exists that the Company may release a portion of the valuation allowance against its US deferred tax assets in the current year. Release of the US valuation allowance would result in the recognition of deferred tax assets and a decrease to income tax expense for the period the release is recorded. The Company's US valuation allowance, excluding that related to state separate taxes, is $163 million as at March 31, 2015. The exact timing and amount of future valuation release is subject to change on the basis of the level of profitability the Company is able to achieve.



16
Notes to the financial statements
 (Unaudited)

6.    EARNINGS PER SHARE
Basic and diluted earnings per share are calculated by dividing net income attributable to Willis Group Holdings by the average number of shares outstanding during each period. The computation of diluted earnings per share reflects the potential dilution that could occur if dilutive securities and other contracts to issue shares were exercised or converted into shares or resulted in the issuance of shares that then shared in the net income of the Company.
At March 31, 2015, time-based and performance-based options to purchase 5.0 million and 3.1 million shares (March 31, 2014: 7.0 million and 5.0 million), respectively, and 3.4 million restricted stock units (March 31, 2014: 2.9 million) were outstanding.
Basic and diluted earnings per share are as follows: 
 
Three months ended March 31,
 
2015
 
2014
 
(millions, except per share data)
Net income attributable to Willis Group Holdings
$
210

 
$
246

 
 
 
 
Basic average number of shares outstanding
179

 
179

Dilutive effect of potentially issuable shares
3

 
3

Diluted average number of shares outstanding
182

 
182

 
 
 
 
Basic earnings per share:
 
 
 
Net income attributable to Willis Group Holdings shareholders
$
1.17

 
$
1.37

Dilutive effect of potentially issuable shares
(0.02
)
 
(0.02
)
 
 
 
 
Diluted earnings per share:
 
 
 
Net income attributable to Willis Group Holdings shareholders
$
1.15

 
$
1.35

Options to purchase 1.4 million shares were not included in the computation of the dilutive effect of stock options for the three months ended March 31, 2015 because the effect was antidilutive (three months ended March 31, 2014: 1.8 million shares).


17
Willis Group Holdings plc


7.    PENSION PLANS
The components of the net periodic benefit (income) cost of the UK, US and other defined benefit plans are as follows:
 
 
 
Three months ended March 31,
 
UK Pension
Benefits
 
US Pension
Benefits
 
Other Pension Benefits
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
 
(millions)
Components of net periodic benefit (income) cost:
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
10

 
$
11

 
$
—

 
$
—

 
$
1

 
$
—

Interest cost
26

 
30

 
10

 
10

 
2

 
2

Expected return on plan assets
(57
)
 
(54
)
 
(14
)
 
(13
)
 
(1
)
 
(1
)
Amortization of unrecognized prior service gain
(2
)
 
(1
)
 
—

 
—

 
—

 
—

Amortization of unrecognized actuarial loss
9

 
11

 
3

 
1

 
—

 
—

Net periodic (income) benefit cost
$
(14
)
 
$
(3
)
 
$
(1
)
 
$
(2
)
 
$
2

 
$
1

 
 
 
 
 
 
 
 
 
 
 
 

During the three months ended March 31, 2015, the Company made cash contributions of $40 million (2014: $21 million) into the UK defined benefit pension plan. In addition to this, a further payment of $2 million (2014: $3 million) was made in respect of employees’ salary sacrifice contributions. Cash contributions of $nil and $2 million (2014: $2 million and $2 million) were made to the US plan and other defined benefit pension plans, respectively.
Contributions to the UK defined benefit pension plan in 2015 are expected to total $93 million, of which approximately $18 million relates to ongoing contributions calculated as 15.9 percent of active plan members’ pensionable salaries, approximately $54 million relates to contributions towards funding the deficit and $21 million represents an exceptional return payment related to 10 percent of the $213 million share buyback program completed during 2014, as required under the current agreed schedule of contributions.
In addition, for full year 2015, the Company expects to contribute approximately $9 million to the UK defined benefit pension plan related to employees’ salary sacrifice contributions. The Company also expects to contribute approximately $10 million to the US plan and $10 million to the other defined benefit pension plans for the full year 2015 (inclusive of amounts contributed in the year to date).
Further contributions will be payable into the UK pension plan based on a profit share calculation (equal to 20 percent of EBITDA in excess of $900 million per annum as defined by the revised schedule of contributions) and an exceptional return calculation (equal to 10 percent of any exceptional returns made to shareholders, for example, share buybacks and special dividends). In respect of 2015, any such contributions will be paid in 2016 on finalization of the calculations. Aggregate contributions under the deficit funding contribution and the profit share calculation are capped at £312 million ($463 million) over the six-year period ended December 31, 2017.

The schedule of contributions is required to be renegotiated after three years or at any earlier time jointly agreed by the Company and the trustee. The Company is currently in negotiations with the plan’s Trustee to agree an updated funding strategy.

On March 6, 2015, the Company announced to members of the UK defined benefit pension plan that with effect from June 30, 2015, future salary increases would not be pensionable (the “salary freeze”). The Company has recognized the salary freeze as a plan amendment at the announcement date. The impact of the salary freeze is to reduce the plan’s projected benefit obligation by approximately $215 million and create a prior service gain which is recognized in other comprehensive income and then amortized to the statement of operations over the remaining expected service life of active employees.

18
Notes to the financial statements
 (Unaudited)



8.    COMMITMENTS AND CONTINGENCIES
Contractual Obligations
Pensions
The Company’s pension funding obligations are described in Note 7 — ‘Pension Plans’.
Other Contractual Obligations
In July 2010, the Company made a capital commitment of $25 million to Trident V Parallel Fund, LP. As of March 31, 2015, there had been approximately $22 million of capital contributions towards this commitment.
In May 2011, the Company made a capital commitment of $10 million to Dowling Capital Partners I, LP. As of March 31, 2015, there had been approximately $7 million of capital contributions towards this commitment.
Claims, Lawsuits and Other Proceedings
In the ordinary course of business, the Company is subject to various actual and potential claims, lawsuits, and other proceedings relating principally to alleged errors and omissions in connection with the placement of insurance and reinsurance. Similar to other corporations, the Company is also subject to a variety of other claims, including those relating to the Company’s employment practices. Some of the claims, lawsuits and other proceedings seek damages in amounts which could, if assessed, be significant.
Errors and omissions claims, lawsuits, and other proceedings arising in the ordinary course of business are covered in part by professional indemnity or other appropriate insurance. The terms of this insurance vary by policy year and self-insured risks have increased significantly in recent years. Regarding self-insured risks, the Company has established provisions which are believed to be adequate in the light of current information and legal advice, and the Company adjusts such provisions from time to time according to developments. These provisions have been recognized in other operating expenses to the extent that losses are deemed probable and reasonably estimable. Matters that are not probable or reasonably estimable have not been provided for and the Company does not believe a reasonable possible range of losses, for these matters, can be estimated.
On the basis of current information, the Company does not expect that the actual claims, lawsuits and other proceedings to which the Company is subject, or potential claims, lawsuits, and other proceedings relating to matters of which it is aware, will ultimately have a material adverse effect on the Company’s financial condition, results of operations or liquidity. Nonetheless, given the large or indeterminate amounts sought in certain of these actions, and the inherent unpredictability of litigation and disputes with insurance companies and others, it is possible that an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company’s results of operations or cash flows in particular quarterly or annual periods.
The material actual or potential claims, lawsuits, and other proceedings, of which the Company is currently aware, are as follows:
Stanford Financial Group Litigation
The Company has been named as a defendant in 13 similar lawsuits relating to the collapse of The Stanford Financial Group (‘Stanford’), for which Willis of Colorado, Inc. acted as broker of record on certain lines of insurance. The complaints in these actions generally allege that the defendants actively and materially aided Stanford’s alleged fraud by providing Stanford with certain letters regarding coverage that they knew would be used to help retain or attract actual or prospective Stanford client investors. The complaints further allege that these letters, which contain statements about Stanford and the insurance policies that the defendants placed for Stanford, contained untruths and omitted material facts and were drafted in this manner to help Stanford promote and sell its allegedly fraudulent certificates of deposit.




19
Willis Group Holdings plc

8. COMMITMENTS AND CONTINGENCIES (Continued)

The 13 actions are as follows:

•
Troice, et al. v. Willis of Colorado, Inc., et al., C.A. No. 3:9-CV-1274-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, 2011, plaintiffs filed the operative Third Amended Class Action Complaint individually and 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, arguing, inter alia, that the plaintiffs’ claims are precluded by the Securities Litigation Uniform Standards Act of 1998 (‘SLUSA’).

On May 10, 2011, the court presiding over the Stanford-related actions in the Northern District of Texas entered an order providing that it would consider the applicability of SLUSA to the Stanford-related actions based on the decision in a separate Stanford action not involving a Willis entity, Roland v. Green, Civil Action No. 3:10-CV-0224-N. On August 31, 2011, the court issued its decision in Roland, dismissing that action with prejudice under SLUSA.

On October 27, 2011, the court in Troice entered an order (i) dismissing with prejudice those claims asserted in the Third Amended Class Action Complaint on a class basis on the grounds set forth in the Roland decision discussed above and (ii) dismissing without prejudice those claims asserted in the Third Amended Class Action Complaint on an individual basis. Also on October 27, 2011, the court entered a final judgment in the action.

On October 28, 2011, the plaintiffs in Troice filed a notice of appeal to the U.S. Court of Appeals for the Fifth Circuit. Subsequently, Troice, Roland and a third action captioned Troice, et al. v. Proskauer Rose LLP, Civil Action No. 3:09-CV-01600-N, which also was dismissed on the grounds set forth in the Roland decision discussed above and on appeal to the U.S. Court of Appeals for the Fifth Circuit, were consolidated for purposes of briefing and oral argument. Following the completion of briefing and oral argument, on March 19, 2012, the Fifth Circuit reversed and remanded the actions. On April 2, 2012, the defendants-appellees filed petitions for rehearing en banc. On April 19, 2012, the petitions for rehearing en banc were denied. On July 18, 2012, defendants-appellees filed a petition for writ of certiorari with the United States Supreme Court regarding the Fifth Circuit's reversal in Troice. On January 18, 2013, the Supreme Court granted our petition. Opening briefs were filed on May 3, 2013 and the Supreme Court heard oral argument on October 7, 2013. On February 26, 2014, the Supreme Court affirmed the Fifth Circuit’s decision.

On March 19, 2014, the plaintiffs in Troice filed a Motion to Defer Resolution of Motions to Dismiss, to Compel Rule 26(f) Conference and For Entry of Scheduling Order. That motion has now been fully briefed by the parties and awaits disposition by the court.

On March 25, 2014, the parties in Troice and the Janvey, et al. v. Willis of Colorado, Inc., et al. action discussed below stipulated to the consolidation of the two actions for pre-trial purposes under Rule 42(a) of the Federal Rules of Civil Procedure. On March 28, 2014, the Court “so ordered” that stipulation and, thus, consolidated Troice and Janvey for pre-trial purposes under Rule 42(a).

On September 16, 2014, the court (a) denied the plaintiffs’ request to defer resolution of the defendants’ motions to dismiss, but granted the plaintiffs’ request to enter a scheduling order; (b) requested the submission of supplemental briefing by all parties on the defendants’ motions to dismiss, which the parties submitted on September 30, 2014; and (c) entered an order setting a schedule for briefing and discovery regarding plaintiffs’ motion for class certification, which schedule, among other things, provides for the submission of the plaintiffs’ motion for class certification (following the completion of briefing and discovery) on April 20, 2015.

On December 15, 2014, the court granted in part and denied in part the defendants’ motions to dismiss. On January 30, 2015, the defendants answered the Third Amended Class Action Complaint.

On April 20, 2015, the plaintiffs filed their motion for class certification, the defendants filed their opposition to plaintiffs’ motion, and the plaintiffs filed their reply in further support of the motion. Pursuant to an agreed stipulation also filed with the court on April 20, 2015, the defendants have until June 4, 2015 to file a sur-reply in further opposition to the motion.

20
Notes to the financial statements
 (Unaudited)
8. COMMITMENTS AND CONTINGENCIES (Continued)


•
Ranni v. Willis of Colorado, Inc., et al., C.A. No. 9-22085, 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. On August 26, 2014, the plaintiff filed a notice of voluntary dismissal of the action without prejudice.
    
•
Canabal, et al. v. Willis of Colorado, Inc., et al., C.A. No. 3:9-CV-1474-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 individually and 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. On January 24, 2012, the court remanded Rupert to Texas state court (Bexar County), but stayed the action until further order of the court. On August 13, 2012, the plaintiffs filed a motion to lift the stay, which motion was denied by the court on September 16, 2014. On October 10, 2014, the plaintiffs appealed the court’s denial of their motion to lift the stay to the U.S. Court of Appeals for the Fifth Circuit. On January 5, 2015, the Fifth Circuit consolidated the appeal with the appeal in the Rishmague, et ano. v. Winter, et al. action discussed below, and the consolidated appeal, which was fully briefed as of March 24, 2015, is currently pending. The defendants have not yet responded to the complaint in Rupert.
    
•
Casanova, et al. v. Willis of Colorado, Inc., et al., C.A. No. 3:10-CV-1862-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. On February 13, 2015, the parties filed an Agreed Motion for Partial Dismissal pursuant to which they agreed to the dismissal of certain claims pursuant to the motion to dismiss decisions in the Troice action discussed above and the Janvey action discussed below. Also on February 13, 2015, the defendants answered the complaint in the Casanova action.
    
•
Rishmague, et ano. v. Winter, et al., Case No. 2011CI2585, 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 August 8, 2011, the JPML issued a final transfer order for the transfer of Rishmague to the Northern District of Texas, where it is currently pending. On August 13, 2012, the plaintiffs joined with the plaintiffs

21
Willis Group Holdings plc

8. COMMITMENTS AND CONTINGENCIES (Continued)

in the Rupert action in their motion to lift the court’s stay of the Rupert action. On September 9, 2014, the court remanded Rishmague to Texas state court (Bexar County), but stayed the action until further order of the court and denied the plaintiffs’ motion to lift the stay. On October 10, 2014, the plaintiffs appealed the court’s denial of their motion to lift the stay to the Fifth Circuit. On January 5, 2015, the Fifth Circuit consolidated the appeal with the appeal in the Rupert action, and the consolidated appeal, which was fully briefed as of March 24, 2015, is currently pending. The defendants have not yet responded to the complaint in Rishmague.

•
MacArthur v. Winter, et al., Case No. 2013-07840, was filed on February 8, 2013 on behalf of two Stanford investors against Willis Group Holdings plc, Willis of Colorado, Inc., Willis of Texas, Inc. and the same Willis associate, among others, in Texas state court (Harris County). The complaint alleges claims under Texas and Colorado statutory law and Texas common law and seeks actual, special, consequential and treble damages of approximately $4 million and attorneys' fees and costs. On March 29, 2013, Willis of Colorado, Inc. and Willis of Texas, Inc. (i) removed MacArthur to the U.S. District Court for the Southern District of Texas and (ii) notified the JPML of the pendency of this related action. On April 2, 2013, Willis of Colorado, Inc. and Willis of Texas, Inc. filed a motion in the Southern District of Texas 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. Also on April 2, 2013, the court presiding over MacArthur in the Southern District of Texas transferred the action to the Northern District of Texas for consolidation or coordination with the other Stanford-related actions. On September 29, 2014, the parties stipulated to the remand (to Texas state court (Harris County)) and stay of MacArthur until further order of the court (in accordance with the court’s September 9, 2014 decision in Rishmague (discussed above)), which stipulation was “so ordered” by the court on October 14, 2014. The defendants have not yet responded to the complaint in MacArthur.
    
•
Florida suits: On February 14, 2013, five lawsuits were filed against Willis Group Holdings plc, Willis Limited and Willis of Colorado, Inc. in Florida state court (Miami-Dade County) alleging violations of Florida common law. The five suits are: (1) Barbar, et al. v. Willis Group Holdings Public Limited Company, et al., Case No. 13-05666CA27, filed on behalf of 35 Stanford investors seeking compensatory damages in excess of $30 million; (2) de Gadala-Maria, et al. v. Willis Group Holdings Public Limited Company, et al., Case No. 13-05669CA30, filed on behalf of 64 Stanford investors seeking compensatory damages in excess of $83.5 million; (3) Ranni, et ano. v. Willis Group Holdings Public Limited Company, et al., Case No. 13-05673CA06, filed on behalf of two Stanford investors seeking compensatory damages in excess of $3 million; (4) Tisminesky, et al. v. Willis Group Holdings Public Limited Company, et al., Case No. 13-05676CA09, filed on behalf of 11 Stanford investors seeking compensatory damages in excess of $6.5 million; and (5) Zacarias, et al. v. Willis Group Holdings Public Limited Company, et al., Case No. 13-05678CA11, filed on behalf of 10 Stanford investors seeking compensatory damages in excess of $12.5 million. On June 3, 2013, Willis of Colorado, Inc. removed all five cases to the Southern District of Florida and, on June 4, 2013, notified the JPML of the pendency of these related actions. On June 10, 2013, the court in Tisminesky issued an order sua sponte staying and administratively closing that action pending a determination by the JPML as to whether it should be transferred to the Northern District of Texas for consolidation and coordination with the other Stanford-related actions. On June 11, 2013, Willis of Colorado, Inc. moved to stay the other four actions pending the JPML's transfer decision. On June 20, 2013, the JPML issued a conditional transfer order for the transfer of the five actions to the Northern District of Texas, the transmittal of which was stayed for seven days to allow for any opposition to be filed. On June 28, 2013, with no opposition having been filed, the JPML lifted the stay, enabling the transfer to go forward.

On September 30, 2014, the court denied the plaintiffs’ motion to remand in Zacarias, and, on October 3, 2014, the court denied the plaintiffs’ motions to remand in Tisminesky and de Gadala Maria. On December 3, 2014 and March 3, 2015, the court granted the plaintiffs’ motions to remand in Barbar and Ranni, respectively, remanded both actions to Florida state court (Miami-Dade County) and stayed both actions until further order of the court. On January 2, 2015 and April 1, 2015, the plaintiffs in Barbar and Ranni, respectively, appealed the court’s December 3, 2014 and March 3, 2015 decisions to the Fifth Circuit. On April 22, 2015, the Fifth Circuit dismissed the Barbar appeal sua sponte for lack of jurisdiction. We believe the dismissal was in error and that the appeal is likely to be reinstated. The Ranni appeal is currently pending.

On April 1, 2015, the defendants filed motions to dismiss the complaints in Zacarias, Tisminesky and de Gadala-Maria, which motions are currently pending. The defendants have not yet responded to the complaints in Ranni or Barbar.

22
Notes to the financial statements
 (Unaudited)
8. COMMITMENTS AND CONTINGENCIES (Continued)

    
•
Janvey, et al. v. Willis of Colorado, Inc., et al., Case No. 3:13-CV-03980-D, was filed on October 1, 2013 also in the Northern District of Texas against Willis Group Holdings plc, Willis Limited, Willis North America Inc., Willis of Colorado, Inc. and the same Willis associate. The complaint was filed (i) by Ralph S. Janvey, in his capacity as Court-Appointed Receiver for the Stanford Receivership Estate, and the Official Stanford Investors Committee (the ‘OSIC’) against all defendants and (ii) on behalf of a putative, worldwide class of Stanford investors against Willis North America Inc. Plaintiffs Janvey and the OSIC allege claims under Texas common law and the court’s Amended Order Appointing Receiver, and the putative class plaintiffs allege claims under Texas statutory and common law. Plaintiffs seek actual damages in excess of $1 billion, punitive damages and costs. On November 15, 2013, plaintiffs filed the operative First Amended Complaint, which added certain defendants unaffiliated with Willis. On February 28, 2014, the defendants filed motions to dismiss the First Amended Complaint, which motions were granted in part and denied in part by the court on December 5, 2014. On December 22, 2014, Willis filed a motion to amend the court’s December 5 order to certify an interlocutory appeal to the Fifth Circuit, and, on December 23, 2014, Willis filed a motion to amend and, to the extent necessary, reconsider the court’s December 5 order. On January 16, 2015, the defendants answered the First Amended Complaint. On January 28, 2015, the court denied Willis’s motion to amend the court’s December 5 order to certify an interlocutory appeal to the Fifth Circuit. On February 4, 2015, the court granted Willis’s motion to amend and, to the extent necessary, reconsider the December 5 order.

As discussed above, on March 25, 2014, the parties in Troice and Janvey stipulated to the consolidation of the two actions for pre-trial purposes under Rule 42(a) of the Federal Rules of Civil Procedure. On March 28, 2014, the Court “so ordered” that stipulation and, thus, consolidated Troice and Janvey for pre-trial purposes under Rule 42(a).

On January 26, 2015, the court entered an order setting a schedule for briefing and discovery regarding the plaintiffs’ motion for class certification, which schedule, among other things, provided for the submission of the plaintiffs’ motion for class certification (following the completion of briefing and discovery) on July 20, 2015. By letter dated March 4, 2015, the parties requested that the court consolidate the scheduling orders entered in Troice and Janvey to provide for a class certification submission date of April 20, 2015 in both cases. On March 6, 2015, the court entered an order consolidating the scheduling orders in Troice and Janvey, providing for a class certification submission date of April 20, 2015 in both cases, and vacating the July 20, 2015 class certification submission date in the original Janvey scheduling order.

Additional actions could be brought in the future by other investors in certificates of deposit issued by Stanford and its affiliates. The Company disputes these allegations and intends to defend itself vigorously against these actions. The outcomes of these actions, however, including any losses or other payments that may occur as a result, cannot be predicted at this time.




23
Willis Group Holdings plc


9.    DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
Fair Value of Derivative Financial Instruments
In addition to the note below, see Note 10 — ‘Fair Value Measurement’ for information about the fair value hierarchy of derivatives.
Primary Risks Managed by Derivative Financial Instruments
The main risks managed by derivative financial instruments are interest rate risk and foreign currency risk. The Company’s Board of Directors reviews and approves policies for managing each of these risks as summarized below.
The Company enters into derivative transactions (principally interest rate swaps and forward foreign currency contracts) in order to manage interest rate and foreign currency risks arising from the Company’s operations and its sources of finance. The Company does not hold financial or derivative instruments for trading purposes.
Interest Rate Risk — Investment Income
As a result of the Company’s operating activities, the Company holds Fiduciary funds. The Company earns interest on these
funds, which is included in the Company’s financial statements as investment income. These funds are regulated in terms of
access and the instruments in which they may be invested, most of which are short-term in maturity.

Interest Rate Risk — Interest Expense
The Company's operations are financed principally by $2,054 million fixed rate senior notes maturing through 2043 and $255 million under a 7-year term loan facility. The Company has access to (i) $800 million under a revolving credit facility expiring July 23, 2018, (ii) $400 million under a revolving credit facility expiring April 28, 2017, which will be available for regulatory capital purposes related to securities underwriting only, and (iii) $22 million under two further revolving credit facilities, of which $20 million is also only available for specific regulatory purposes only. As of March 31, 2015 $nil (December 31, 2014: $nil) was drawn on these facilities.
The 7-year term loan facility bears interest at LIBOR plus 1.50% and drawings under the revolving credit facility bear interest at LIBOR plus 1.50%. These margins apply while the Company’s debt rating remains BBB-/Baa3. Should the Company’s debt rating change, then the margin will change in accordance with the credit facilities agreements. The fixed rate senior notes bear interest at various rates as detailed in Note 15 — ‘Debt’.
During the three months ended March 31, 2015 and three months ended March 31, 2014, the Company had no derivative financial instruments that were designated as cash flow hedges of interest rate risk.

Foreign Currency Risk
The Company’s primary foreign exchange risks arise from the following:
•
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
•
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.
The foreign exchange risks in its London market operations are hedged as follows:
•
to the extent that forecast Pounds sterling expenses exceed Pounds 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; and
•
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

24
Notes to the financial statements
 (Unaudited)
9. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Continued)

percentage of forecast cash inflows in specific currencies and periods. In addition, we are also exposed to foreign exchange risk on any net sterling asset or liability position in our London market operations.
The fair value of foreign currency contracts is recorded in other assets and other liabilities. For contracts that qualify as accounting hedges, changes in fair value resulting from movements in the spot exchange rate are recorded as a component of other comprehensive income while changes resulting from a movement in the time value are recorded in interest expense. For contracts that do not qualify for hedge accounting, the total change in fair value is recorded in interest expense. Amounts held in comprehensive income are reclassified into earnings when the hedged exposure affects earnings.
At March 31, 2015 and December 31, 2014, the Company’s foreign currency contracts were all designated as hedging instruments except those relating to short-term cash flows and hedges of certain intercompany loans.
 
The table below summarizes by major currency the contractual amounts of the Company’s forward contracts to exchange foreign currencies for Pounds sterling in the case of US dollars and US dollars for Euro and Japanese yen. Foreign currency notional amounts are reported in US dollars translated at contracted exchange rates.
 
 
Sell
 
Fair value
 
(millions)
US dollar
$
727

 
$
(47
)
Euro
197

 
32

Japanese yen
55

 
7

In addition to forward exchange contracts, we undertake short-term foreign exchange swaps for liquidity purposes. These are not designated as hedges and do not qualify for hedge accounting. The fair values at March 31, 2015 and December 31, 2014 were immaterial.

During the three months ended March 31, 2015, the Company entered into a number of foreign currency transactions in order to hedge certain intercompany loans. These derivatives were not designated as hedging instruments and were for a total notional amount of $606 million (December 31, 2014: $352 million). In respect of these transactions, $2 million has been recognized as an asset within other current assets and an equivalent gain has been recognized in other (expense) income, net, for the period.

Derivative financial instruments
The table below presents the fair value of the Company’s derivative financial instruments and their balance sheet classification at March 31, 2015 and December 31, 2014:
 
 
 
 
 
Fair value
Derivative financial instruments designated as hedging instruments:
 
Balance sheet
classification
 
March 31, 2015
 
December 31, 2014
 
 
 
 
(millions)
Assets:
 
 
 
 
 
 
Forward exchange contracts
 
Other assets
 
$
39

 
$
26

Total derivatives designated as hedging instruments
 
 
 
$
39

 
$
26

Liabilities:
 
 
 
 
 
 
Forward exchange contracts
 
Other liabilities
 
$
47

 
$
21

Total derivatives designated as hedging instruments
 
 
 
$
47

 
$
21



25
Willis Group Holdings plc

9. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Continued)

Cash Flow Hedges

The table below presents the effects of derivative financial instruments in cash flow hedging relationships on the consolidated statements of operations and the consolidated statements of equity for the three months ended March 31, 2015 and 2014:
Derivatives in cash flow
hedging relationships
 
Amount of
gain (loss)
recognized
in OCI(i)on derivative (effective
element)
 
Location of gain (loss)
reclassified from
accumulated OCI(i) into
income (effective element)
 
Amount of
gain (loss)
reclassified
from
accumulated
OCI(i) into
income
(effective
element)
 
Location of gain (loss)
recognized in income on derivative
(ineffective hedges and  ineffective
element of effective hedges)
 
Amount of
gain (loss)
recognized
in income on derivative
(ineffective
hedges
and
ineffective
element of
effective
hedges)
 
 
(millions)
 
 
 
(millions)
 
 
 
(millions)
Three months ended March 31, 2015
 
 
 
 
 
 
 
 
 
 
Interest rate swaps
 
$
—

 
Investment income
 
$
(1
)
 
Other operating expenses
 
$
—

Forward exchange contracts
 
(14
)
 
Other (expense) income, net
 
1

 
Interest expense
 
—

Total
 
$
(14
)
 
 
 
$
—

 
 
 
$
—

Three months ended March 31, 2014
 
 
 
 
 
 
 
 
 
 
Interest rate swaps
 
$
—

 
Investment income
 
$
(2
)
 
Other operating expenses
 
$
—

Forward exchange contracts
 
—

 
Other (expense) income, net
 
1

 
Interest expense
 
—

Total
 
$
—

 
 
 
$
(1
)
 
 
 
$
—

 ____________________
Amounts above shown gross of tax.

(i) Other Comprehensive Loss

For interest rate swaps, all components of each derivative’s gain or loss were included in the assessment of hedge effectiveness. For foreign exchange contracts, only the changes in fair value resulting from movements in the spot exchange rates are included in this assessment. In instances where the timing of expected cash flows can be matched exactly to the maturity of the foreign exchange contract, changes in fair value attributable to movement in the forward points are also included.
At March 31, 2015, the Company estimates there will be $1 million of net derivative gains reclassified from accumulated comprehensive loss into earnings within the next twelve months as the forecasted transactions affect earnings.

Credit Risk and Concentrations of Credit Risk
Credit risk represents the loss that would be recognized at the reporting date if counterparties failed to perform as contracted and may increase or decrease based on movements in interest rates and foreign exchange rates. The Company currently does not anticipate non-performance by its counterparties. The Company generally does not require collateral or other security to support financial instruments with credit risk.
Concentrations of credit risk that arise from financial instruments exist for groups of customers or counterparties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. Financial instruments on the balance sheet that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, fiduciary funds, accounts receivable and derivatives which are recorded at fair value.
The Company maintains a policy providing for the diversification of cash and cash equivalent investments and places such investments in an extensive number of financial institutions to limit the amount of credit risk exposure. These financial institutions are monitored on an ongoing basis for credit quality predominantly using information provided by credit agencies.

26
Notes to the financial statements
 (Unaudited)
9. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Continued)

Concentrations of credit risk with respect to receivables are limited due to the large number of clients and markets in which the Company does business, as well as the dispersion across many geographic areas. Management does not believe significant risk exists in connection with the Company's concentrations of credit as of March 31, 2015.

10.    FAIR VALUE MEASUREMENT
The Company has categorized its assets and liabilities that are measured at fair value on a recurring basis into a three-level fair value hierarchy, based on the reliability of the inputs used to determine fair value as follows:
•
Level 1: refers to fair values determined based on quoted market prices in active markets for identical assets;
•
Level 2: refers to fair values estimated using observable market based inputs or unobservable inputs that are corroborated by market data; and
•
Level 3: includes fair values estimated using unobservable inputs that are not corroborated by market data.

The following methods and assumptions were used by the Company in estimating its fair value disclosure for financial instruments:

Long-term debt (excluding related fair value hedges) - Fair values are based on quoted market values and so classified as Level 1 measurements.

Derivative financial instruments - Market values have been used to determine the fair value of interest rate swaps and forward foreign exchange contracts based on estimated amounts the Company would receive or have to pay to terminate the agreements, taking into account the current interest rate environment or current foreign currency forward rates. Such financial instruments
are classified as Level 2 in the fair value hierarchy.

Financial instruments measured at fair value on a recurring basis

The following table presents, for each of the fair value hierarchy levels, the Company's assets and liabilities that are measured at fair value on a recurring basis.

 
March 31, 2015
 
Quoted
prices in
active
markets
for
identical
assets
 
Significant
other
observable
inputs
 
Significant
other
unobservable
inputs
 
 
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(millions)
Assets at fair value:
 
 
 
 
 
 
 
Derivative financial instruments
—

 
39

 
—

 
39

Total assets
$
—

 
$
39

 
$
—

 
$
39

Liabilities at fair value:
 
 
 
 
 
 
 
Derivative financial instruments
—

 
47

 
—

 
47

Total liabilities
$
—

 
$
47

 
$
—

 
$
47

 

27
Willis Group Holdings plc

10. FAIR VALUE MEASUREMENT (Continued)

 
December 31, 2014
 
Quoted
prices in
active
markets
for
identical
assets
 
Significant
other
observable
inputs
 
Significant
other
unobservable
inputs
 
 
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(millions)
Assets at fair value:
 
 
 
 
 
 
 
Derivative financial instruments
—

 
26

 
—

 
26

Total assets
$
—

 
$
26

 
$
—

 
$
26

Liabilities at fair value:
 
 
 
 
 
 
 
Derivative financial instruments
—

 
21

 
—

 
21

Total liabilities
$
—

 
$
21

 
$
—

 
$
21


Fair value information about financial instruments not measured at fair value on a recurring basis

The following table presents the carrying values and estimated fair values of the Company's financial instruments not measured at fair value on a recurring basis. The fair value amounts shown below are not necessarily indicative of the amounts that the Company would realize upon disposition nor do they indicate the Company’s intent or ability to dispose of the financial instrument.
 
 
March 31, 2015
 
December 31, 2014
 
Carrying
amount
 
Fair
value
 
Carrying
amount
 
Fair
value
 
(millions)
Assets:
 
 
 
 
 
 
 
Cash and cash equivalents
$
503

 
$
503

 
$
635

 
$
635

Fiduciary funds (included within Fiduciary assets)
$
2,015

 
$
2,015

 
$
1,888

 
$
1,888

Liabilities:
 
 
 
 
 
 
 
Current portion of long term debt
$
168

 
$
169

 
$
167

 
$
169

Long-term debt
2,137

 
2,330

 
2,142

 
2,327





28
Notes to the financial statements
 (Unaudited)

11.    GOODWILL
Goodwill represents the excess of the cost of businesses acquired over the fair market value of identifiable net assets at the dates of acquisition. Goodwill is not amortized but is subject to impairment testing annually and whenever facts or circumstances indicate that the carrying amounts may not be recoverable.

The Company is organized into four reporting units which are consistent with its operating segments: North America, International, Willis Capital, Wholesale and Reinsurance and Willis GB - see Note 17 - 'Segment Information' for detailed descriptions of the segments. Goodwill is allocated to these reporting units based on the original purchase price allocation for acquisitions within the reporting units. When a business entity is sold, goodwill is allocated to the disposed entity based on the relative fair value of that entity compared with the fair value of the reporting unit in which it is included.
 
The changes in the carrying amount of goodwill by segment for the three months ended March 31, 2015 and the year ended December 31, 2014 are as follows:
 
Willis GB (formerly Global)
 
Willis Capital, Wholesale & Reinsurance
 
Willis North
America
 
Willis International
 
Total
 
 
Balance at January 1, 2014


 
 
 


 


 


Goodwill, gross
$
1,145

 
$
—

 
$
1,776

 
$
409

 
$
3,330

Accumulated impairment losses
—

 
—

 
(492
)
 
—

 
(492
)
Goodwill, net
$
1,145

 
$
—

 
$
1,284

 
$
409

 
$
2,838

Other movements (i)
88

 
—

 
(45
)
 
(43
)
 
—

Purchase price allocation adjustments
3

 
—

 
3

 
7

 
13

Goodwill acquired during the year
5

 
—

 
—

 
179

 
184

Goodwill disposed of during the year
—

 
—

 
(48
)
 
—

 
(48
)
Foreign exchange
(7
)
 
—

 
—

 
(43
)
 
(50
)
Balance at December 31, 2014
 
 
 
 
 
 
 
 
 
Goodwill, gross
$
1,234

 
$
—

 
$
1,686

 
$
509

 
$
3,429

Accumulated impairment losses
—

 
—

 
(492
)
 
—

 
(492
)
Goodwill, net
$
1,234

 
$
—

 
$
1,194

 
$
509

 
$
2,937

Other movements (ii)
(679
)
 
852

 
(174
)
 
1

 
—

Goodwill disposed of during the period
—

 
—

 
(6
)
 
—

 
(6
)
Foreign exchange
(4
)
 
(1
)
 
(1
)
 
(36
)
 
(42
)
Balance at March 31, 2015
 
 
 
 
 
 
 
 
 
Goodwill, gross
$
551

 
$
851

 
$
1,505

 
$
474

 
$
3,381

Accumulated impairment losses
—

 
—

 
(492
)
 
—

 
(492
)
Goodwill, net
$
551

 
$
851

 
$
1,013

 
$
474

 
$
2,889

________________________________
(i)
Effective January 1, 2014, the Company changed its internal reporting structure: UK retail, previously reported within the International segment, is now reported within the Global segment; Mexico Retail, which was previously reported within the North America segment, is now reported in the International segment; and the US captive consulting and facultative reinsurance businesses, both previously reported within the North America segment, are now reported within the Global segment. Goodwill has been reallocated between segments using the relative fair value allocation approach.
(ii) 
Effective January 1, 2015, the Company changed its internal reporting structure from three reporting units, formerly known as Willis Global, Willis North America and Willis International into four reporting units: Willis GB, Willis Capital Wholesale & Reinsurance, Willis North America and Willis International. As a result: certain specialty and captive businesses, previously reported as part of Willis Global, are now reported within the North America and International segments; Willis Re, Willis Capital Markets & Advisory and Wholesale, previously reported as part of Willis Global, are now reported within the Willis Capital Wholesale & Reinsurance segment; North American P&C business placed in the London Market, previously reported as part of North America, is now reported within the Willis GB segment; and certain portfolio and programs businesses, previously reported as part of North America, are now reported within the Willis Capital Wholesale & Reinsurance segment. Goodwill has been reallocated between segments using the relative fair value allocation approach.

29
Willis Group Holdings plc


12.    OTHER INTANGIBLE ASSETS, NET

Other intangible assets are classified into the following categories:
•
Client Relationships
•
Management Contracts
•
Other, including:
◦
non-compete agreements
◦
trade names
◦
contract based, technology and other
The major classes of amortizable intangible assets are as follows:
 
 
March 31, 2015
 
December 31, 2014
 
Gross
carrying
amount
 
Accumulated
amortization
 
Net
carrying
amount
 
Gross
carrying
amount
 
Accumulated
amortization
 
Net
carrying
amount
 
(millions)
Customer and Marketing Related:
 
 
 
 
 
 
 
 
 
 
 
Client relationships
$
672

 
$
(323
)
 
$
349

 
$
689

 
$
(316
)
 
$
373

Management contracts
65

 
(2
)
 
63

 
71

 
(1
)
 
70

Other
10

 
(4
)
 
6

 
11

 
(4
)
 
7

Total amortizable intangible assets
$
747

 
$
(329
)
 
$
418

 
$
771

 
$
(321
)
 
$
450

 
The aggregate amortization of intangible assets for the three months ended March 31, 2015 was $14 million (three months ended March 31, 2014: $13 million). The estimated aggregate amortization of intangible assets for each of the next five years ended December 31 is as follows:
 
Remainder of 2015
 
2016
 
2017
 
2018
 
2019
 
Thereafter
 
Total
 
(millions)
Amortization of intangible assets
$
41

 
$
49

 
$
44

 
$
40

 
$
36

 
$
208

 
$
418



30
Notes to the financial statements
 (Unaudited)

13.    OTHER ASSETS
An analysis of other assets is as follows:
 
March 31,
2015
 
December 31, 2014
 
(millions)
Other current assets
 
 
 
Prepayments and accrued income
$
89

 
$
81

Income tax receivable
28

 
30

Deferred compensation plan assets
12

 
17

Derivatives
22

 
16

Other receivables
67

 
70

Total other current assets
$
218

 
$
214

Other non-current assets
 
 
 
Deferred compensation plan assets
$
90

 
$
92

Accounts receivable, net
29

 
29

Other investments
29

 
29

Derivatives
17

 
10

Other receivables
64

 
60

Total other non-current assets
$
229

 
$
220

Total other assets
$
447

 
$
434


14.    OTHER LIABILITIES
An analysis of other liabilities is as follows: 
 
March 31,
2015
 
December 31, 2014
 
(millions)
Other current liabilities
 
 
 
Accounts payable
$
130

 
$
131

Accrued dividends payable
58

 
55

Other taxes payable
103

 
44

Derivatives
23

 
12

Deferred compensation plan liability
12

 
17

Other payables
135

 
185

Total other current liabilities
$
461

 
$
444

Other non-current liabilities
 
 
 
Incentives from lessors
$
164

 
$
171

Deferred compensation plan liability
90

 
92

Accounts payable
18

 
14

Derivatives
24

 
9

Other payables
102

 
103

Total other non-current liabilities
$
398

 
$
389

Total other liabilities
$
859

 
$
833



31
Willis Group Holdings plc


15.    DEBT
Short-term debt and current portion of the long-term debt consists of the following: 
 
March 31,
2015
 
December 31, 2014
 
(millions)
Current portion of 7-year term loan facility expiring 2018
$
18

 
$
17

5.625% senior notes due 2015
148

 
148

Fair value adjustment on 5.625% senior notes due 2015
1

 
1

3-year term loan facility expires 2015
1

 
1

 
$
168

 
$
167

Long-term debt consists of the following:
 
March 31,
2015
 
December 31, 2014
 
(millions)
7-year term loan facility expiring 2018
$
237

 
$
242

4.125% senior notes due 2016
299

 
299

6.200% senior notes due 2017
394

 
394

7.000% senior notes due 2019
187

 
187

5.750% senior notes due 2021
497

 
497

4.625% senior notes due 2023
249

 
249

6.125% senior notes due 2043
274

 
274

 
$
2,137

 
$
2,142

Term loan
The 7-year term loan facility expiring 2018 bears interest at LIBOR plus 1.50% and is repayable in quarterly instalments and a final repayment of $186 million is due in the third quarter of 2018.
$800 million revolving credit facility
Drawings under the $800 million revolving credit facility bear interest at LIBOR plus 1.50% and the facility expires on July 23, 2018. These margins apply while the Company’s debt rating remains BBB-/Baa3.
On February 27, 2015 Trinity Acquisition Limited, a wholly-owned subsidiary of Willis Group Holdings plc entered into an amendment to the $800 million revolving credit facility permitting Willis Securities, Inc. (WSI), another wholly-owned subsidiary of Willis Group Holdings plc, to incur up to $400 million of indebtedness under this facility for the purpose of investing in certain underwritten securities in the ordinary course of WSI's business.
As of March 31, 2015 $nil was outstanding under the $800 million revolving credit facility (December 31, 2014: $nil).
WSI revolving credit facility
On March 3, 2014, WSI, entered into a $300 million revolving note and cash subordination agreement available for drawing from March 3, 2014 through March 3, 2015. At that time, the aggregate unpaid principal amount of all advances was repayable on or before March 3, 2016.
On April 28, 2014, WSI entered into an amendment to the $300 million revolving note and cash subordination agreement to increase the amount of financing and to extend both the end date of the credit period and the repayment date. As a result of this amendment, the revolving credit facility was increased from $300 million to $400 million. The end date of the credit period was extended to April 28, 2015 and the repayment date was extended to April 28, 2016.

32
Notes to the financial statements
 (Unaudited)
15. DEBT (Continued)

On February 27, 2015, WSI entered into a second amendment to the revolving note and cash subordination agreement. This amendment included all of the following: (i) the end date of the credit period was extended to April 28, 2016 and the repayment date was extended to April 28, 2017; (ii) WSI was permitted to incur up to $400 million in indebtedness under the $800 million revolving credit facility held by Trinity Acquisition Limited, and (iii) WSI will have the ability to borrow in Euro, Yen and other approved currencies subject to a reserve for foreign currency fluctuation.
Proceeds under the credit facility will be used for regulatory capital purposes related to securities underwriting only, which will allow Willis Securities to meet or exceed capital requirements of regulatory agencies, self-regulatory agencies and their clearing houses, including the Financial Industry Regulatory Authority. Advances under the credit facility shall bear interest at a rate equal to (a) for Eurocurrency Loans, LIBOR plus 1.50% to 2.25%, and (b) for base rates Loans, the highest of (i) the Federal Funds rates plus 0.5%, (ii) the 'prime rate' as announced by SunTrust Bank, and (iii) LIBOR plus 1.00%, plus 0.5% to 1.25%, in each case, based upon the Company’s guaranteed senior-unsecured long-term debt rating.
As of March 31, 2015 $nil was outstanding under the $400 million WSI revolving credit facility (December 31, 2014: $nil).

16.    COMPREHENSIVE INCOME (LOSS)
 
The components of comprehensive income (loss) are as follows:
 
 
Three months ended March 31,
 
2015
 
2014
 
Before tax amount
 
Tax
 
Net of tax amount
 
Before tax amount
 
Tax
 
Net of tax amount
 
(millions)
Other comprehensive income (loss):
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustments
$
(112
)
 
$
—

 
$
(112
)
 
$
3

 
$
—

 
$
3

Pension funding adjustments:
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation on pension funding adjustments
40

 
(10
)
 
30

 
(5
)
 
2

 
(3
)
Net actuarial gain
25

 
(5
)
 
20

 
—

 
—

 
—

Prior service gain
215

 
(43
)
 
172

 
—

 
—

 
—

Amortization of unrecognized actuarial loss
12

 
(2
)
 
10

 
12

 
(2
)
 
10

Amortization of unrecognized prior service gain
(2
)
 
—

 
(2
)
 
(1
)
 
—

 
(1
)
 
290

 
(60
)
 
230

 
6

 
—

 
6

Derivative instruments:
 
 
 
 
 
 
 
 
 
 
 
Interest rate swap reclassification adjustment
(1
)
 
—

 
(1
)
 
(2
)
 
—

 
(2
)
Loss on forward exchange contracts (effective element)
(14
)
 
3

 
(11
)
 
—

 
—

 
—

Forward exchange contracts reclassification adjustment
1

 
—

 
1

 
1

 
—

 
1

 
(14
)
 
3

 
(11
)
 
(1
)
 
—

 
(1
)
Other comprehensive income
164

 
(57
)
 
107

 
8

 
—

 
8

Less: Other comprehensive loss attributable to noncontrolling interests
7

 
—

 
7

 
—

 
—

 
—

Other comprehensive income attributable to Willis Group Holdings
$
171

 
$
(57
)
 
$
114

 
$
8

 
$
—

 
$
8

 
 
 
 
 
 
 
 
 
 
 
 


33
Willis Group Holdings plc

16. COMPREHENSIVE INCOME (LOSS) (Continued)



The components of accumulated other comprehensive loss, net of tax, are as follows:
 
 
 
Net foreign currency translation adjustment
 
Pension funding adjustment
 
Net unrealized gain on derivative instruments
 
Total
 
 
(millions)
Balance at December 31, 2014
 
$
(191
)
 
$
(893
)
 
$
18

 
$
(1,066
)
Other comprehensive (loss) income before reclassifications
 
(105
)
 
222

 
(11
)
 
106

Amounts reclassified from accumulated other comprehensive income
 
—

 
8

 
—

 
8

Net current-period other comprehensive (loss) income, net of tax and noncontrolling interests
 
(105
)
 
230

 
(11
)
 
114

Balance at March 31, 2015
 
$
(296
)
 
$
(663
)
 
$
7

 
$
(952
)

Amounts reclassified out of accumulated other comprehensive loss into the statement of operations are as follows:
Details about accumulated other comprehensive loss components
 
Amount reclassified from accumulated other comprehensive loss
 
Affected line item in the statement of operations
 
 
Three months ended March 31,
 
 
 
 
2015
 
2014
 
 
 
 
(millions)
 
 
Gains and losses on cash flow hedges (Note 9)
 
 
 
 
 
 
Interest rate swaps
 
$
(1
)
 
$
(2
)
 
Investment income
Foreign exchange contracts
 
1

 
1

 
Other (expense) income, net
 
 
—

 
(1
)
 
Total before tax
Tax
 
—

 
—

 
 
 
 
$
—

 
$
(1
)
 
Net of tax
Amortization of defined benefit pension items (Note 7)
 
 
 
 
 
 
Prior service gain
 
$
(2
)
 
$
(1
)
 
Salaries and benefits
Net actuarial loss
 
12

 
12

 
Salaries and benefits
 
 
10

 
11

 
Total before tax
Tax
 
(2
)
 
(2
)
 
 
 
 
$
8

 
$
9

 
Net of tax
 
 
 
 
 
 
 
Total reclassifications for the period
 
$
8

 
$
8

 
 
 
 
 
 
 
 
 


34
Notes to the financial statements
 (Unaudited)

17.    SEGMENT INFORMATION

Effective from January 1, 2015, the Company changed the way it manages and reports operating results, resulting in a change in the Company’s operating and reportable segments from three segments, formerly known as Willis Global, Willis North America and Willis International, into four: Willis Capital, Wholesale and Reinsurance ('Willis CWR'); Willis North America Inc. ('Willis North America'); Willis International; and Willis GB.
The changes to the operating and reportable segments are as follows:
•
Willis International and Willis North America remain largely unchanged except for certain specialty teams formerly included in Global which are now included in the geographic regions in which they are located;
•
Willis CWR includes Willis Re, Willis Capital Markets & Advisory and the Company's wholesale business. In addition, it also includes a new unit called Willis Portfolio and Underwriting Services which includes all of the Company's activities that provide these services; and
•
Willis GB includes the Company's UK retail business, facultative business and London Specialty business.
The prior period comparatives have been retrospectively reclassified to take into account these changes.
For internal reporting and segmental reporting, the following items for which segmental management are not held accountable are excluded from segmental expenses:
(i)
costs of the holding company;
(ii)
costs of Group functions, leadership and projects;
(iii)
significant legal and regulatory settlements which are managed centrally;
(iv)
non-servicing elements of the defined benefit pension schemes cost (income); and
(v)
restructuring costs associated with the Operational Improvement Program.
The accounting policies of the segments are consistent with those described in Note 2 — ‘Basis of Presentation and Significant Accounting Policies’ to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.
There are no inter-segment revenues, with segments operating on a revenue-sharing basis equivalent to that used when sharing business with other third-party brokers.
Selected information regarding the Company’s segments is as follows:
 

35
Willis Group Holdings plc

17. SEGMENT INFORMATION (Continued)


 
Three months ended March 31, 2015
 
Commissions
and fees
 
Investment
income
 
Other
income
 
Total
revenues
 
Depreciation
and
amortization
 
Segment operating
income
 
(millions)
Willis GB
$
142

 
$
1

 
$
—

 
$
143

 
$
6

 
$
21

Willis Capital, Wholesale and Reinsurance
296

 
1

 
—

 
297

 
2

 
153

Willis North America
356

 
—

 
3

 
359

 
16

 
78

Willis International
287

 
1

 
—

 
288

 
9

 
70

Total Segments
1,081

 
3

 
3

 
1,087

 
33

 
322

Corporate and Other (i)
—

 
—

 
—

 
—

 
3

 
(29
)
Total Consolidated
$
1,081

 
$
3

 
$
3

 
$
1,087

 
$
36

 
$
293

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended March 31, 2014
 
Commissions
and fees
 
Investment
income
 
Other
income
 
Total
revenues
 
Depreciation
and
amortization
 
Segment operating
income
 
(millions)
Willis GB
$
150

 
$
1

 
$
2

 
$
153

 
$
7

 
$
22

Willis Capital, Wholesale and Reinsurance
303

 
1

 
—

 
304

 
2

 
168

Willis North America
354

 
—

 
1

 
355

 
18

 
83

Willis International
283

 
2

 
—

 
285

 
6

 
84

Total Segments
1,090

 
4

 
3

 
1,097

 
33

 
357

Corporate and Other (i)
—

 
—

 
—

 
—

 
3

 
(31
)
Total Consolidated
$
1,090

 
$
4

 
$
3

 
$
1,097

 
$
36

 
$
326

________________________________ 
(i) 
See the following table for an analysis of the ‘Corporate and Other’ line.
 
Three months ended March 31,
 
2015
 
2014
 
(millions)
Costs of the holding company
$
(2
)
 
$
(2
)
Costs related to Group functions, leadership and projects
(37
)
 
(41
)
Non-servicing elements of defined benefit pensions
22

 
13

Operational Improvement Program (a)
(11
)
 
—

Other
(1
)
 
(1
)
Total Corporate and Other
$
(29
)
 
$
(31
)
___________________________ 
(a) 
Restructuring charge relating to the Operational Improvement Program. See Note 3 — 'Restructuring Costs', above.

The following table reconciles total consolidated operating income, as disclosed in the segment tables above, to consolidated income before income taxes and interest in earnings of associates:

36
Notes to the financial statements
 (Unaudited)
17. SEGMENT INFORMATION (Continued)

 
Three months ended March 31,
 
2015
 
2014
 
(millions)
Total consolidated operating income
$
293

 
$
326

Other (expense) income, net
(6
)
 
—

Interest expense
(33
)
 
(32
)
Income before income taxes and interest in earnings of associates
$
254

 
$
294

 

18.    SUBSEQUENT EVENTS
On April 22, 2015, the Company announced that it had made a firm offer to acquire the remaining 70 percent of Gras Savoye that it currently does not own for approximately €550 million (approximately $592 million), which includes the repayment of outstanding third-party debt, estimated to be approximately €40 million (approximately $43 million). The transaction, which is subject to regulatory approval and Gras Savoye's workers councils' consultation, is expected to close on or around December 31, 2015.
In addition to this firm offer, the Company has issued notice preserving its right under an existing shareholder agreement to acquire the remaining shares in Gras Savoye in June 2016, should the firm offer not be accepted. In that case, the purchase price would be determined by a formula under that agreement and the expected closing of the transaction would be mid-2016.



37
Willis Group Holdings plc


19.
FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES
Willis North America has $148 million senior notes outstanding that were issued on July 1, 2005, $394 million of senior notes issued on March 28, 2007 and $187 million of senior notes issued on September 29, 2009.
All direct obligations under the senior notes were jointly and severally, irrevocably and fully and unconditionally guaranteed by Willis Netherlands Holdings B.V., Willis Investment UK Holdings Limited, TA I Limited, Trinity Acquisition Limited and Willis Group Limited (collectively, the ‘Other Guarantors’, and with Willis Group Holdings, the ‘Guarantor Companies’).
The debt securities that were issued by Willis North America and guaranteed by the entities described above, and for which the disclosures set forth below relate and are required under applicable SEC rules, were issued under an effective registration statement.
The guarantee of the guarantors will be deemed to be automatically discharged and released in accordance with the terms of the indenture upon release or discharge of the indebtedness or upon sale of the subsidiary or its assets.
Presented below is condensed consolidating financial information for:
(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.
The equity method has been used for investments in subsidiaries in the unaudited condensed consolidating balance sheets as of March 31, 2015 of Willis Group Holdings, the Other Guarantors and the Issuer.
The entities included in the Other Guarantors column as of March 31, 2015 are Willis Netherlands Holdings B.V., Willis Investment UK Holdings Limited, TA I Limited, Trinity Acquisition Limited, and Willis Group Limited.



38
Notes to the financial statements
 (Unaudited)
19. FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Unaudited Condensed Consolidating Statement of Operations
 
 
Three months ended March 31, 2015
 
Willis
Group
Holdings
 
The Other
Guarantors
 
The Issuer
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
REVENUES
 
 
 
 
 
 
 
 
 
 
 
Commissions and fees
$
—

 
$
—

 
$
4

 
$
1,077

 
$
—

 
$
1,081

Investment income
—

 
—

 
—

 
3

 
—

 
3

Other income
—

 
—

 
—

 
3

 
—

 
3

Total revenues
—

 
—

 
4

 
1,083

 
—

 
1,087

EXPENSES
 
 
 
 
 
 
 
 
 
 
 
Salaries and benefits
—

 
—

 
(20
)
 
(547
)
 
—

 
(567
)
Other operating expenses
(9
)
 
(14
)
 
(2
)
 
(135
)
 
—

 
(160
)
Depreciation expense
—

 
(1
)
 
(4
)
 
(17
)
 
—

 
(22
)
Amortization of intangible assets
—

 
—

 
—

 
(14
)
 
—

 
(14
)
Restructuring costs
—

 
(14
)
 
(5
)
 
(12
)
 


 
(31
)
Total expenses
(9
)
 
(29
)
 
(31
)
 
(725
)
 
—

 
(794
)
OPERATING (LOSS) INCOME
(9
)
 
(29
)
 
(27
)
 
358

 
—

 
293

Other (expense) income, net
(12
)
 
6

 
—

 
(1
)
 
1

 
(6
)
Income from group undertakings
—

 
54

 
56

 
25

 
(135
)
 
—

Expenses due to group undertakings
—

 
(8
)
 
(44
)
 
(83
)
 
135

 
—

Interest expense
(11
)
 
(9
)
 
(11
)
 
(2
)
 
—

 
(33
)
(LOSS) INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES
(32
)
 
14

 
(26
)
 
297

 
1

 
254

Income taxes
—

 
6

 
8

 
(70
)
 
—

 
(56
)
(LOSS) INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES
(32
)
 
20

 
(18
)
 
227

 
1

 
198

Interest in earnings of associates, net of tax
—

 
2

 
—

 
14

 
—

 
16

Equity account for subsidiaries
242

 
215

 
66

 
—

 
(523
)
 
—

NET INCOME
210

 
237

 
48

 
241

 
(522
)
 
214

Less: Net income attributable to noncontrolling interests
—

 
—

 
—

 
(4
)
 
—

 
(4
)
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS
$
210

 
$
237

 
$
48

 
$
237

 
$
(522
)
 
$
210


 

39

Willis Group Holdings plc

19. FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Unaudited Condensed Consolidating Statement of Comprehensive Income
 
Three months ended March 31, 2015
 
Willis
Group
Holdings
 
The Other
Guarantors
 
The Issuer
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income
$
324

 
$
354

 
$
51

 
$
370

 
$
(778
)
 
$
321

Less: comprehensive loss attributable to noncontrolling interests
—

 
—

 
—

 
3

 
—

 
3

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS
$
324

 
$
354

 
$
51

 
$
373

 
$
(778
)
 
$
324



40
Notes to the financial statements
 (Unaudited)
19. FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Unaudited Condensed Consolidating Statement of Operations
 
 
Three months ended March 31, 2014
 
Willis
Group
Holdings
 
The Other
Guarantors
 
The Issuer
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
REVENUES
 
 
 
 
 
 
 
 
 
 
 
Commissions and fees
$
—

 
$
—

 
$
2

 
$
1,088

 
$
—

 
$
1,090

Investment income
—

 
—

 
—

 
4

 
—

 
4

Other income
—

 
—

 
—

 
3

 
—

 
3

Total revenues
—

 
—

 
2

 
1,095

 
—

 
1,097

EXPENSES
 
 
 
 
 
 
 
 
 
 
 
Salaries and benefits
—

 
—

 
(19
)
 
(551
)
 
—

 
(570
)
Other operating expenses
(4
)
 
(24
)
 
(17
)
 
(120
)
 
—

 
(165
)
Depreciation expense
—

 
(1
)
 
(4
)
 
(18
)
 
—

 
(23
)
Amortization of intangible assets
—

 
—

 
—

 
(13
)
 
—

 
(13
)
Total expenses
(4
)
 
(25
)
 
(40
)
 
(702
)
 
—

 
(771
)
OPERATING (LOSS) INCOME
(4
)
 
(25
)
 
(38
)
 
393

 
—

 
326

Other income (expense), net
—

 
1

 
—

 
(1
)
 
—

 
—

Income from group undertakings
—

 
59

 
43

 
27

 
(129
)
 
—

Expenses due to group undertakings
—

 
(8
)
 
(46
)
 
(75
)
 
129

 
—

Interest expense
(11
)
 
(9
)
 
(11
)
 
(1
)
 
—

 
(32
)
(LOSS) INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES
(15
)
 
18

 
(52
)
 
343

 
—

 
294

Income taxes
—

 
5

 
19

 
(87
)
 
—

 
(63
)
(LOSS) INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES
(15
)
 
23

 
(33
)
 
256

 
—

 
231

Interest in earnings of associates, net of tax
—

 
3

 
—

 
16

 
—

 
19

Equity account for subsidiaries
261

 
230

 
83

 
—

 
(574
)
 
—

NET INCOME
246

 
256

 
50

 
272

 
(574
)
 
250

Less: Net income attributable to noncontrolling interests
—

 
—

 
—

 
(4
)
 
—

 
(4
)
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS
$
246

 
$
256

 
$
50

 
$
268

 
$
(574
)
 
$
246



41

Willis Group Holdings plc

19. FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

 Unaudited Condensed Consolidating Statement of Comprehensive Income
 
Three months ended March 31, 2014
 
Willis
Group
Holdings
 
The Other
Guarantors
 
The Issuer
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income
$
254

 
$
264

 
$
51

 
$
281

 
$
(592
)
 
$
258

Less: comprehensive income attributable to noncontrolling interests
—

 
—

 
—

 
(4
)
 
—

 
(4
)
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS
$
254

 
$
264

 
$
51

 
$
277

 
$
(592
)
 
$
254

 









































42
Notes to the financial statements
 (Unaudited)
19. FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)



Unaudited Condensed Consolidating Balance Sheet 
 
As of March 31, 2015
 
Willis
Group
Holdings
 
The Other
Guarantors
 
The Issuer
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
ASSETS
 
 
 
 
 
 
 
 
 
 
 
CURRENT ASSETS
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
6

 
$
—

 
$
—

 
$
497

 
$
—

 
$
503

Accounts receivable, net
—

 
—

 
6

 
1,144

 
—

 
1,150

Fiduciary assets
—

 
—

 
—

 
9,444

 
—

 
9,444

Deferred tax assets
—

 
—

 
—

 
13

 
—

 
13

Other current assets
1

 
37

 
21

 
192

 
(33
)
 
218

Amounts due from group undertakings
3,611

 
936

 
971

 
1,137

 
(6,655
)
 
—

Total current assets
3,618

 
973

 
998

 
12,427

 
(6,688
)
 
11,328

NON-CURRENT ASSETS
 
 
 
 
 
 
 
 
 
 

Investments in subsidiaries
—

 
2,910

 
787

 
—

 
(3,697
)
 
—

Fixed assets, net
—

 
21

 
40

 
401

 
—

 
462

Goodwill
—

 
—

 
—

 
2,889

 
—

 
2,889

Other intangible assets, net
—

 
—

 
—

 
418

 
—

 
418

Investments in associates
—

 
133

 
—

 
34

 
—

 
167

Deferred tax assets
—

 
—

 
—

 
6

 
—

 
6

Pension benefits asset
—

 
—

 
—

 
606

 
—

 
606

Other non-current assets
2

 
8

 
2

 
217

 
—

 
229

Non-current amounts due from group undertakings
—

 
518

 
752

 
—

 
(1,270
)
 
—

Total non-current assets
2

 
3,590

 
1,581

 
4,571

 
(4,967
)
 
4,777

TOTAL ASSETS
$
3,620

 
$
4,563

 
$
2,579

 
$
16,998

 
$
(11,655
)
 
$
16,105

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
 
CURRENT LIABILITIES
 
 
 
 
 
 
 
 
 
 
 
Fiduciary liabilities
$
—

 
$
—

 
$
—

 
$
9,444

 
$
—

 
$
9,444

Deferred revenue and accrued expenses
1

 
12

 
24

 
371

 
—

 
408

Income taxes payable
—

 
—

 
—

 
82

 
(33
)
 
49

Short-term debt and current portion of long-term debt
—

 
18

 
149

 
1

 
—

 
168

Deferred tax liabilities
—

 
—

 
—

 
18

 
—

 
18

Other current liabilities
60

 
4

 
16

 
381

 
—

 
461

Amounts due to group undertakings
—

 
4,373

 
1,497

 
785

 
(6,655
)
 
—

Total current liabilities
61

 
4,407

 
1,686

 
11,082

 
(6,688
)
 
10,548










43

Willis Group Holdings plc

19. FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Unaudited Condensed Consolidating Balance Sheet (continued)
 
As of March 31, 2015
 
Willis
Group
Holdings
 
The Other
Guarantors
 
The Issuer
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
NON-CURRENT LIABILITIES
 
 
 
 
 
 
 
 
 
 
 
Investments in subsidiaries
465

 
—

 
—

 
—

 
(465
)
 
—

Long-term debt
796

 
760

 
581

 
—

 
—

 
2,137

Liabilities for pension benefits
—

 
—

 
—

 
277

 
—

 
277

Deferred tax liabilities
—

 
—

 
—

 
185

 
—

 
185

Provisions for liabilities
—

 
—

 
—

 
188

 
—

 
188

Other non-current liabilities
—

 
—

 
16

 
382

 
—

 
398

Non-current amounts due to group undertakings
—

 
—

 
518

 
752

 
(1,270
)
 
—

Total non-current liabilities
1,261

 
760

 
1,115

 
1,784

 
(1,735
)
 
3,185

TOTAL LIABILITIES
$
1,322

 
$
5,167

 
$
2,801

 
$
12,866

 
$
(8,423
)
 
$
13,733

 
 
 
 
 
 
 
 
 
 
 
 
REDEEMABLE NONCONTROLLING INTEREST
—

 
—

 
—

 
51

 
—

 
51

 
 
 
 
 
 
 
 
 
 
 
 
EQUITY
 
 
 
 
 
 
 
 
 
 
 
Total Willis Group Holdings stockholders’ equity
2,298

 
(604
)
 
(222
)
 
4,058

 
(3,232
)
 
2,298

Noncontrolling interests
—

 
—

 
—

 
23

 
—

 
23

Total equity
2,298

 
(604
)
 
(222
)
 
4,081

 
(3,232
)
 
2,321

TOTAL LIABILITIES AND EQUITY
$
3,620

 
$
4,563

 
$
2,579

 
$
16,998

 
$
(11,655
)
 
$
16,105




44
Notes to the financial statements
 (Unaudited)
19. FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

 Condensed Consolidating Balance Sheet
 
As of December 31, 2014
 
Willis
Group
Holdings
 
The Other
Guarantors
 
The Issuer
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
ASSETS
 
 
 
 
 
 
 
 
 
 
 
CURRENT ASSETS
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
9

 
$
2

 
$
—

 
$
624

 
$
—

 
$
635

Accounts receivable, net
—

 
—

 
4

 
1,040

 
—

 
1,044

Fiduciary assets
—

 
—

 
—

 
8,948

 
—

 
8,948

Deferred tax assets
—

 
—

 
—

 
12

 
—

 
12

Other current assets
1

 
27

 
10

 
205

 
(29
)
 
214

Amounts due from group undertakings
3,674

 
924

 
1,057

 
1,114

 
(6,769
)
 
—

Total current assets
3,684

 
953

 
1,071

 
11,943

 
(6,798
)
 
10,853

NON-CURRENT ASSETS
 
 
 
 
 
 
 
 
 
 

Investments in subsidiaries
—

 
2,536

 
721

 
—

 
(3,257
)
 
—

Fixed assets, net
—

 
20

 
42

 
421

 
—

 
483

Goodwill
—

 
—

 
—

 
2,937

 
—

 
2,937

Other intangible assets, net
—

 
—

 
—

 
450

 
—

 
450

Investments in associates
—

 
147

 
—

 
22

 
—

 
169

Deferred tax assets
—

 
—

 
—

 
9

 
—

 
9

Pension benefits asset
—

 
—

 
—

 
314

 
—

 
314

Other non-current assets
3

 
8

 
2

 
207

 
—

 
220

Non-current amounts due from group undertakings
—

 
518

 
740

 
—

 
(1,258
)
 
—

Total non-current assets
3

 
3,229

 
1,505

 
4,360

 
(4,515
)
 
4,582

TOTAL ASSETS
$
3,687

 
$
4,182

 
$
2,576

 
$
16,303

 
$
(11,313
)
 
$
15,435

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
 
CURRENT LIABILITIES
 
 
 
 
 
 
 
 
 
 
 
Fiduciary liabilities
$
—

 
$
—

 
$
—

 
$
8,948

 
$
—

 
$
8,948

Deferred revenue and accrued expenses
1

 
4

 
30

 
584

 
—

 
619

Income taxes payable
—

 
—

 
7

 
55

 
(29
)
 
33

Short-term debt and current portion of long-term debt
—

 
17

 
149

 
1

 
—

 
167

Deferred tax liabilities
—

 
—

 
—

 
21

 
—

 
21

Other current liabilities
67

 
11

 
46

 
320

 
—

 
444

Amounts due to Group undertakings
—

 
4,374

 
1,499

 
896

 
(6,769
)
 
—

Total current liabilities
68

 
4,406

 
1,731

 
10,825

 
(6,798
)
 
10,232

NON-CURRENT LIABILITIES
 
 
 
 
 
 
 
 
 
 

Investments in subsidiaries
838

 
—

 
—

 
—

 
(838
)
 
—

Long-term debt
796

 
765

 
581

 
—

 
—

 
2,142

Liabilities for pension benefits
—

 
—

 
—

 
284

 
—

 
284

Deferred tax liabilities
—

 
—

 
—

 
128

 
—

 
128

Provisions for liabilities
—

 
—

 
—

 
194

 
—

 
194

Other non-current liabilities
—

 
—

 
17

 
372

 
—

 
389

Non-current amounts due to group undertakings
—

 
—

 
518

 
740

 
(1,258
)
 
—

Total non-current liabilities
1,634

 
765

 
1,116

 
1,718

 
(2,096
)
 
3,137

TOTAL LIABILITIES
$
1,702

 
$
5,171

 
$
2,847

 
$
12,543

 
$
(8,894
)
 
$
13,369



45

Willis Group Holdings plc

19. FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Condensed Consolidating Balance Sheet (continued)
 
As of December 31, 2014
 
Willis
Group
Holdings
 
The Other
Guarantors
 
The Issuer
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
REDEEMABLE NONCONTROLLING INTEREST
—

 
—

 
—

 
59

 
—

 
59

 
 
 
 
 
 
 
 
 
 
 
 
EQUITY
 
 
 
 
 
 
 
 
 
 
 
Total Willis Group Holdings stockholders’ equity
1,985

 
(989
)
 
(271
)
 
3,679

 
(2,419
)
 
1,985

Noncontrolling interests
—

 
—

 
—

 
22

 
—

 
22

Total equity
1,985

 
(989
)
 
(271
)
 
3,701

 
(2,419
)
 
2,007

TOTAL LIABILITIES AND EQUITY
$
3,687

 
$
4,182

 
$
2,576

 
$
16,303

 
$
(11,313
)
 
$
15,435


46
Notes to the financial statements
 (Unaudited)
19. FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Unaudited Condensed Consolidating Statement of Cash Flows
 
Three months ended March 31, 2015
 
Willis
Group
Holdings
 
The Other
Guarantors
 
The Issuer
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
$
(20
)
 
$
13

 
$
(47
)
 
$
(10
)
 
$
—

 
$
(64
)
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Proceeds on disposal of fixed and intangible assets
—

 
—

 
—

 
4

 
—

 
4

Additions to fixed assets
—

 
(3
)
 
(1
)
 
(12
)
 
—

 
(16
)
Additions to intangible assets
—

 
—

 
—

 
(1
)
 
—

 
(1
)
Acquisitions of operations, net of cash acquired
—

 
—

 
—

 
(8
)
 
—

 
(8
)
Proceeds from disposal of operations, net of cash disposed
—

 
—

 
—

 
13

 
—

 
13

Proceeds from intercompany investing activities
51

 
—

 
48

 
—

 
(99
)
 
—

Repayments of intercompany investing activities
—

 
(11
)
 
—

 
(26
)
 
37

 
—

Net cash provided by (used in) investing activities
51

 
(14
)
 
47

 
(30
)
 
(62
)
 
(8
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
 
 

Debt issuance costs
—

 
—

 
—

 
(1
)
 
—

 
(1
)
Repayments of debt
—

 
(4
)
 
—

 
—

 
—

 
(4
)
Repurchase of shares
(15
)
 
—

 
—

 
—

 
—

 
(15
)
Proceeds from issue of shares
35

 
—

 
—

 
—

 
—

 
35

Excess tax benefits from share-based payment arrangements
—

 
—

 
—

 
3

 
—

 
3

Dividends paid
(54
)
 
—

 
—

 
—

 
—

 
(54
)
Dividends paid to noncontrolling interests
—

 
—

 
—

 
(3
)
 
—

 
(3
)
Proceeds from intercompany financing activities
—

 
26

 
—

 
11

 
(37
)
 
—

Repayments of intercompany financing activities
—

 
(23
)
 
—

 
(76
)
 
99

 
—

Net cash used in financing activities
(34
)
 
(1
)
 
—

 
(66
)
 
62

 
(39
)
DECREASE IN CASH AND CASH EQUIVALENTS
(3
)
 
(2
)
 
—

 
(106
)
 
—

 
(111
)
Effect of exchange rate changes on cash and cash equivalents
—

 
—

 
—

 
(21
)
 
—

 
(21
)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
9

 
2

 
—

 
624

 
—

 
635

CASH AND CASH EQUIVALENTS, END OF PERIOD
$
6

 
$
—

 
$
—

 
$
497

 
$
—

 
$
503

 

47

Willis Group Holdings plc

19. FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Unaudited Condensed Consolidating Statement of Cash Flows
 
Three months ended March 31, 2014
 
Willis
Group
Holdings
 
The Other
Guarantors
 
The Issuer
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
$
(23
)
 
$
25

 
$
(21
)
 
$
25

 
$
(1
)
 
$
5

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Proceeds on disposal of fixed and intangible assets
—

 
—

 
1

 
1

 
(1
)
 
1

Additions to fixed assets
—

 
(2
)
 
(2
)
 
(19
)
 
1

 
(22
)
Additions to intangible assets
—

 
—

 
—

 
(1
)
 
—

 
(1
)
Payments to acquire other investments
—

 
—

 
—

 
(4
)
 
—

 
(4
)
Proceeds from sale of operations, net of cash disposed
—

 
—

 
—

 
5

 
—

 
5

Proceeds from intercompany investing activities
65

 
12

 
120

 
115

 
(312
)
 
—

Repayments of intercompany investing activities
—

 
—

 
—

 
(16
)
 
16

 
—

Net cash provided by (used in) investing activities
65

 
10

 
119

 
81

 
(296
)
 
(21
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Debt issuance costs
—

 
—

 
—

 
(2
)
 
—

 
(2
)
Repayments of debt
—

 
(4
)
 
—

 
—

 
—

 
(4
)
Repurchase of shares
(35
)
 
—

 
—

 
—

 
—

 
(35
)
Proceeds from issue of shares
43

 
—

 
—

 
—

 
—

 
43

Excess tax benefits from share-based payment arrangements
—

 
—

 
—

 
1

 
—

 
1

Dividends paid
(50
)
 
—

 
—

 
(1
)
 
1

 
(50
)
Dividends paid to noncontrolling interests
—

 
—

 
—

 
(2
)
 
—

 
(2
)
Proceeds from intercompany financing activities
—

 
16

 
—

 
—

 
(16
)
 
—

Repayments of intercompany financing activities
—

 
(47
)
 
(98
)
 
(167
)
 
312

 
—

Net cash used in financing activities
(42
)
 
(35
)
 
(98
)
 
(171
)
 
297

 
(49
)
DECREASE IN CASH AND CASH EQUIVALENTS
—

 
—

 
—

 
(65
)
 
—

 
(65
)
Effect of exchange rate changes on cash and cash equivalents
—

 
—

 
—

 
3

 
—

 
3

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
3

 
3

 
—

 
790

 
—

 
796

CASH AND CASH EQUIVALENTS, END OF PERIOD
$
3

 
$
3

 
$
—

 
$
728

 
$
—

 
$
734


48
Notes to the financial statements
 (Unaudited)

20.
FINANCIAL INFORMATION FOR PARENT ISSUER, GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES
On March 17, 2011, the Company issued senior notes totaling $800 million in a registered public offering. These debt securities are issued by Willis Group Holdings (‘Holdings Debt Securities’) and are guaranteed by certain of the Company’s subsidiaries. Therefore, the Company is providing the unaudited condensed consolidating financial information below. The following wholly owned subsidiaries (directly or indirectly) fully and unconditionally guarantee the Holdings Debt Securities on a joint and several basis: Willis Netherlands Holdings B.V., Willis Investment UK Holdings Limited, TA I Limited, Trinity Acquisition Limited, Willis Group Limited, and Willis North America (the ‘Guarantors’).
The guarantor structure described above differs from the guarantor structure associated with the senior notes issued by Willis North America (the ‘Willis North America Debt Securities’) (and for which unaudited condensed consolidating financial information is presented in Note 19) in that Willis Group Holdings is the Parent Issuer and Willis North America is a subsidiary guarantor.
The guarantee of the guarantors will be deemed to be automatically discharged and released in accordance with the terms of the indenture upon release or discharge of the indebtedness or upon sale of the subsidiary or its assets.
The condensed consolidating financial information for the following entities is presented below:
 
(i)
Willis Group Holdings, which is the Parent Issuer;
(ii)
the Guarantors, which are wholly owned subsidiaries (directly or indirectly) of the parent;
(iii)
Other, which are the non-guarantor subsidiaries, on a combined basis;
(iv)
Consolidating adjustments; and
(v)
the Consolidated Company.
The equity method has been used for investments in subsidiaries in the unaudited condensed consolidating balance sheets as of March 31, 2015 of Willis Group Holdings and the Guarantors.
The entities included in the Guarantors column as of March 31, 2015 are Willis Netherlands Holdings B.V., Willis Investment UK Holdings Limited, TA I Limited, Trinity Acquisition Limited, Willis Group Limited, and Willis North America.




49

Willis Group Holdings plc

20. FINANCIAL INFORMATION FOR PARENT ISSUER, GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Unaudited Condensed Consolidating Statement of Operations
 
 
Three months ended March 31, 2015
 
Willis
Group
Holdings - the Parent Issuer
 
The
Guarantors
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
REVENUES
 
 
 
 
 
 
 
 
 
Commissions and fees
$
—

 
$
4

 
$
1,077

 
$
—

 
$
1,081

Investment income
—

 
—

 
3

 
—

 
3

Other income
—

 
—

 
3

 
—

 
3

Total revenues
—

 
4

 
1,083

 
—

 
1,087

EXPENSES
 
 
 
 
 
 
 
 
 
Salaries and benefits
—

 
(20
)
 
(547
)
 
—

 
(567
)
Other operating expenses
(9
)
 
(16
)
 
(135
)
 
—

 
(160
)
Depreciation expense
—

 
(5
)
 
(17
)
 
—

 
(22
)
Amortization of intangible assets
—

 
—

 
(14
)
 
—

 
(14
)
Restructuring costs
—

 
(19
)
 
(12
)
 
—

 
(31
)
Total expenses
(9
)
 
(60
)
 
(725
)
 
—

 
(794
)
OPERATING (LOSS) INCOME
(9
)
 
(56
)
 
358

 
—

 
293

Other (expense) income, net
(12
)
 
6

 
(1
)
 
1

 
(6
)
Income from group undertakings
—

 
83

 
25

 
(108
)
 
—

Expenses due to group undertakings
—

 
(25
)
 
(83
)
 
108

 
—

Interest expense
(11
)
 
(20
)
 
(2
)
 
—

 
(33
)
(LOSS) INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES
(32
)
 
(12
)
 
297

 
1

 
254

Income taxes
—

 
14

 
(70
)
 
—

 
(56
)
(LOSS) INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES
(32
)
 
2

 
227

 
1

 
198

Interest in earnings of associates, net of tax
—

 
2

 
14

 
—

 
16

Equity account for subsidiaries
242

 
233

 
—

 
(475
)
 
—

NET INCOME
210

 
237

 
241

 
(474
)
 
214

Less: Net income attributable to noncontrolling interests
—

 
—

 
(4
)
 
—

 
(4
)
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS
$
210

 
$
237

 
$
237

 
$
(474
)
 
$
210



50
Notes to the financial statements
 (Unaudited)
20. FINANCIAL INFORMATION FOR PARENT ISSUER, GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

 Unaudited Condensed Consolidating Statement of Comprehensive Income
 
Three months ended March 31, 2015
 
Willis
Group
Holdings - the Parent Issuer
 
The
Guarantors
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
 
 
 
 
 
 
 
 
 
 
Comprehensive income
$
324

 
$
354

 
$
370

 
$
(727
)
 
$
321

Less: comprehensive loss attributable to noncontrolling interests
—

 
—

 
3

 
—

 
3

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS
$
324

 
$
354

 
$
373

 
$
(727
)
 
$
324



51

Willis Group Holdings plc

20. FINANCIAL INFORMATION FOR PARENT ISSUER, GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Unaudited Condensed Consolidating Statement of Operations
 
 
Three months ended March 31, 2014
 
Willis
Group
Holdings - the Parent Issuer
 
The
Guarantors
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
REVENUES
 
 
 
 
 
 
 
 
 
Commissions and fees
$
—

 
$
2

 
$
1,088

 
$
—

 
$
1,090

Investment income
—

 
—

 
4

 
—

 
4

Other income
—

 
—

 
3

 
—

 
3

Total revenues
—

 
2

 
1,095

 
—

 
1,097

EXPENSES
 
 
 
 
 
 
 
 
 
Salaries and benefits
—

 
(19
)
 
(551
)
 
—

 
(570
)
Other operating expenses
(4
)
 
(41
)
 
(120
)
 
—

 
(165
)
Depreciation expense
—

 
(5
)
 
(18
)
 
—

 
(23
)
Amortization of intangible assets
—

 
—

 
(13
)
 
—

 
(13
)
Total expenses
(4
)
 
(65
)
 
(702
)
 
—

 
(771
)
OPERATING (LOSS) INCOME
(4
)
 
(63
)
 
393

 
—

 
326

Other income (expense), net
—

 
1

 
(1
)
 
—

 
—

Income from group undertakings
—

 
75

 
27

 
(102
)
 
—

Expenses due to group undertakings
—

 
(27
)
 
(75
)
 
102

 
—

Interest expense
(11
)
 
(20
)
 
(1
)
 
—

 
(32
)
(LOSS) INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES
(15
)
 
(34
)
 
343

 
—

 
294

Income taxes
—

 
24

 
(87
)
 
—

 
(63
)
(LOSS) INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES
(15
)
 
(10
)
 
256

 
—

 
231

Interest in earnings of associates, net of tax
—

 
3

 
16

 
—

 
19

Equity account for subsidiaries
261

 
263

 
—

 
(524
)
 
—

NET INCOME
246

 
256

 
272

 
(524
)
 
250

Less: Net income attributable to noncontrolling interests
—

 
—

 
(4
)
 
—

 
(4
)
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS
$
246

 
$
256

 
$
268

 
$
(524
)
 
$
246


 

52
Notes to the financial statements
 (Unaudited)
20. FINANCIAL INFORMATION FOR PARENT ISSUER, GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Unaudited Condensed Consolidating Statement of Comprehensive Income
 
 
Three months ended March 31, 2014
 
Willis
Group
Holdings - the Parent Issuer
 
The
Guarantors
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
 
 
 
 
 
 
 
 
 
 
Comprehensive income
$
254

 
$
264

 
$
281

 
$
(541
)
 
$
258

Less: comprehensive income attributable to noncontrolling interests
—

 
—

 
(4
)
 
—

 
(4
)
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS
$
254

 
$
264

 
$
277

 
$
(541
)
 
$
254


















































53

Willis Group Holdings plc

20. FINANCIAL INFORMATION FOR PARENT ISSUER, GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)


Unaudited Condensed Consolidating Balance Sheet
 
As of March 31, 2015
 
Willis
Group
Holdings - the Parent Issuer
 
The Guarantors
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
ASSETS
 
 
 
 
 
 
 
 
 
CURRENT ASSETS
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
6

 
$
—

 
$
497

 
$
—

 
$
503

Accounts receivable, net
—

 
6

 
1,144

 
—

 
1,150

Fiduciary assets
—

 
—

 
9,444

 
—

 
9,444

Deferred tax assets
—

 
—

 
13

 
—

 
13

Other current assets
1

 
58

 
192

 
(33
)
 
218

Amounts due from group undertakings
3,611

 
648

 
1,137

 
(5,396
)
 
—

Total current assets
3,618

 
712

 
12,427

 
(5,429
)
 
11,328

NON-CURRENT ASSETS
 
 
 
 
 
 
 
 
 
Investments in subsidiaries
—

 
3,919

 
—

 
(3,919
)
 
—

Fixed assets, net
—

 
61

 
401

 
—

 
462

Goodwill
—

 
—

 
2,889

 
—

 
2,889

Other intangible assets, net
—

 
—

 
418

 
—

 
418

Investments in associates
—

 
133

 
34

 
—

 
167

Deferred tax assets
—

 
—

 
6

 
—

 
6

Pension benefits asset
—

 
—

 
606

 
—

 
606

Other non-current assets
2

 
10

 
217

 
—

 
229

Non-current amounts due from group undertakings
—

 
752

 
—

 
(752
)
 
—

Total non-current assets
2

 
4,875

 
4,571

 
(4,671
)
 
4,777

TOTAL ASSETS
$
3,620

 
$
5,587

 
$
16,998

 
$
(10,100
)
 
$
16,105

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
CURRENT LIABILITIES
 
 
 
 
 
 
 
 
 
Fiduciary liabilities
$
—

 
$
—

 
$
9,444

 
$
—

 
$
9,444

Deferred revenue and accrued expenses
1

 
36

 
371

 
—

 
408

Income taxes payable
—

 
—

 
82

 
(33
)
 
49

Short-term debt and current portion of long-term debt
—

 
167

 
1

 
—

 
168

Deferred tax liabilities
—

 
—

 
18

 
—

 
18

Other current liabilities
60

 
20

 
381

 
—

 
461

Amounts due to group undertakings
—

 
4,611

 
785

 
(5,396
)
 
—

Total current liabilities
61

 
4,834

 
11,082

 
(5,429
)
 
10,548














54
Notes to the financial statements
 (Unaudited)
20. FINANCIAL INFORMATION FOR PARENT ISSUER, GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Unaudited Condensed Consolidating Balance Sheet (continued)
 
As of March 31, 2015
 
Willis
Group
Holdings - the Parent Issuer
 
The Guarantors
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
NON-CURRENT LIABILITIES
 
 
 
 
 
 
 
 
 
Investments in subsidiaries
465

 
—

 
—

 
(465
)
 
—

Long-term debt
796

 
1,341

 
—

 
—

 
2,137

Liabilities for pension benefits
—

 
—

 
277

 
—

 
277

Deferred tax liabilities
—

 
—

 
185

 
—

 
185

Provisions for liabilities
—

 
—

 
188

 
—

 
188

Other non-current liabilities
—

 
16

 
382

 
—

 
398

Non-current amounts due to group undertakings
—

 
—

 
752

 
(752
)
 
—

Total non-current liabilities
1,261

 
1,357

 
1,784

 
(1,217
)
 
3,185

TOTAL LIABILITIES
$
1,322

 
$
6,191

 
$
12,866

 
$
(6,646
)
 
$
13,733

 
 
 
 
 
 
 
 
 
 
REDEEMABLE NONCONTROLLING INTEREST
—

 
—

 
51

 
—

 
51

 
 
 
 
 
 
 
 
 
 
EQUITY
 
 
 
 
 
 
 
 
 
Total Willis Group Holdings stockholders’ equity
2,298

 
(604
)
 
4,058

 
(3,454
)
 
2,298

Noncontrolling interests
—

 
—

 
23

 
—

 
23

Total equity
2,298

 
(604
)
 
4,081

 
(3,454
)
 
2,321

TOTAL LIABILITIES AND EQUITY
$
3,620

 
$
5,587

 
$
16,998

 
$
(10,100
)
 
$
16,105


55

Willis Group Holdings plc

20. FINANCIAL INFORMATION FOR PARENT ISSUER, GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Condensed Consolidating Balance Sheet
 
As of December 31, 2014
 
Willis
Group
Holdings - the Parent Issuer
 
The Guarantors
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
ASSETS
 
 
 
 
 
 
 
 
 
CURRENT ASSETS
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
9

 
$
2

 
$
624

 
$
—

 
$
635

Accounts receivable, net
—

 
4

 
1,040

 
—

 
1,044

Fiduciary assets
—

 
—

 
8,948

 
—

 
8,948

Deferred tax assets
—

 
—

 
12

 
—

 
12

Other current assets
1

 
37

 
205

 
(29
)
 
214

Amounts due to group undertakings
3,674

 
731

 
1,114

 
(5,519
)
 
—

Total current assets
3,684

 
774

 
11,943

 
(5,548
)
 
10,853

NON-CURRENT ASSETS
 
 
 
 
 
 
 
 
 
Investments in subsidiaries
—

 
3,528

 
—

 
(3,528
)
 
—

Fixed assets, net
—

 
62

 
421

 
—

 
483

Goodwill
—

 
—

 
2,937

 
—

 
2,937

Other intangible assets, net
—

 
—

 
450

 
—

 
450

Investments in associates
—

 
147

 
22

 
—

 
169

Deferred tax assets
—

 
—

 
9

 
—

 
9

Pension benefits asset
—

 
—

 
314

 
—

 
314

Other non-current assets
3

 
10

 
207

 
—

 
220

Non-current amounts due to group undertakings
—

 
740

 
—

 
(740
)
 
—

Total non-current assets
3

 
4,487

 
4,360

 
(4,268
)
 
4,582

TOTAL ASSETS
$
3,687

 
$
5,261

 
$
16,303

 
$
(9,816
)
 
$
15,435

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
CURRENT LIABILITIES
 
 
 
 
 
 
 
 
 
Fiduciary liabilities
$
—

 
$
—

 
$
8,948

 
$
—

 
$
8,948

Deferred revenue and accrued expenses
1

 
34

 
584

 
—

 
619

Income taxes payable
—

 
7

 
55

 
(29
)
 
33

Short-term debt and current portion of long-term debt
—

 
166

 
1

 
—

 
167

Deferred tax liabilities
—

 
—

 
21

 
—

 
21

Other current liabilities
67

 
57

 
320

 
—

 
444

Amounts due to group undertakings
—

 
4,623

 
896

 
(5,519
)
 
—

Total current liabilities
68

 
4,887

 
10,825

 
(5,548
)
 
10,232

NON-CURRENT LIABILITIES
 
 
 
 
 
 
 
 

Investments in subsidiaries
838

 
—

 
—

 
(838
)
 
—

Long-term debt
796

 
1,346

 
—

 
—

 
2,142

Liabilities for pension benefits
—

 
—

 
284

 
—

 
284

Deferred tax liabilities
—

 
—

 
128

 
—

 
128

Provisions for liabilities
—

 
—

 
194

 
—

 
194

Other non-current liabilities
—

 
17

 
372

 
—

 
389

Non-current amounts due to group undertakings
—

 
—

 
740

 
(740
)
 
—

Total non-current liabilities
1,634

 
1,363

 
1,718

 
(1,578
)
 
3,137

TOTAL LIABILITIES
$
1,702

 
$
6,250

 
$
12,543

 
$
(7,126
)
 
$
13,369




56
Notes to the financial statements
 (Unaudited)
20. FINANCIAL INFORMATION FOR PARENT ISSUER, GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Condensed Consolidating Balance Sheet (continued)

 
As of December 31, 2014
 
Willis
Group
Holdings - the Parent Issuer
 
The Guarantors
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
REDEEMABLE NONCONTROLLING INTEREST
—

 
—

 
59

 
—

 
59

 
 
 
 
 
 
 
 
 
 
EQUITY
 
 
 
 
 
 
 
 
 
Total Willis Group Holdings stockholders’ equity
1,985

 
(989
)
 
3,679

 
(2,690
)
 
1,985

Noncontrolling interests
—

 
—

 
22

 
—

 
22

Total equity
1,985

 
(989
)
 
3,701

 
(2,690
)
 
2,007

TOTAL LIABILITIES AND EQUITY
$
3,687

 
$
5,261

 
$
16,303

 
$
(9,816
)
 
$
15,435

 

57

Willis Group Holdings plc

20. FINANCIAL INFORMATION FOR PARENT ISSUER, GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Unaudited Condensed Consolidating Statement of Cash Flows
 
 
Three months ended March 31, 2015
 
Willis
Group
Holdings - the Parent Issuer
 
The Guarantors
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
NET CASH USED IN OPERATING ACTIVITIES
$
(20
)
 
$
(34
)
 
$
(10
)
 
$
—

 
$
(64
)
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
 
Proceeds on disposal of fixed and intangible assets
—

 
—

 
4

 
—

 
4

Additions to fixed assets
—

 
(4
)
 
(12
)
 
—

 
(16
)
Additions to intangible assets
—

 
—

 
(1
)
 
—

 
(1
)
Acquisitions of operations, net of cash acquired
—

 
—

 
(8
)
 
—

 
(8
)
Proceeds from disposal of operations, net of cash disposed
—

 
—

 
13

 
—

 
13

Proceeds from intercompany investing activities
51

 
48

 
—

 
(99
)
 
—

Repayments of intercompany investing activities
—

 
(11
)
 
(26
)
 
37

 
—

Net cash provided by (used in) investing activities
51

 
33

 
(30
)
 
(62
)
 
(8
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
 
Debt issuance costs
—

 
—

 
(1
)
 
—

 
(1
)
Repayments of debt
—

 
(4
)
 
—

 
—

 
(4
)
Repurchase of shares
(15
)
 
—

 
—

 
—

 
(15
)
Proceeds from issue of shares
35

 
—

 
—

 
—

 
35

Excess tax benefits from share-based payment arrangement
—

 
—

 
3

 
—

 
3

Dividends paid
(54
)
 
—

 
—

 
—

 
(54
)
Dividends paid to noncontrolling interests
—

 
—

 
(3
)
 
—

 
(3
)
Proceeds from intercompany financing activities
—

 
26

 
11

 
(37
)
 
—

Repayments of intercompany financing activities
—

 
(23
)
 
(76
)
 
99

 
—

Net cash used in financing activities
(34
)
 
(1
)
 
(66
)
 
62

 
(39
)
DECREASE IN CASH AND CASH EQUIVALENTS
(3
)
 
(2
)
 
(106
)
 
—

 
(111
)
Effect of exchange rate changes on cash and cash equivalents
—

 
—

 
(21
)
 
—

 
(21
)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
9

 
2

 
624

 
—

 
635

CASH AND CASH EQUIVALENTS, END OF PERIOD
$
6

 
$
—

 
$
497

 
$
—

 
$
503


 

58
Notes to the financial statements
 (Unaudited)
20. FINANCIAL INFORMATION FOR PARENT ISSUER, GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Unaudited Condensed Consolidating Statement of Cash Flows
 
 
Three months ended March 31, 2014
 
Willis
Group
Holdings - the Parent Issuer
 
The Guarantors
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
$
(23
)
 
$
4

 
$
25

 
$
(1
)
 
$
5

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
 
Proceeds on disposal of fixed and intangible assets
—

 
1

 
1

 
(1
)
 
1

Additions to fixed assets
—

 
(4
)
 
(19
)
 
1

 
(22
)
Additions to intangible assets
—

 
—

 
(1
)
 
—

 
(1
)
Payments to acquire other investments
—

 
—

 
(4
)
 
—

 
(4
)
Proceeds from disposal of operations, net of cash disposed
—

 
—

 
5

 
—

 
5

Proceeds from intercompany investing activities
65

 
120

 
115

 
(300
)
 
—

Repayments of intercompany investing activities
—

 
—

 
(16
)
 
16

 
—

Net cash provided by (used in) investing activities
65

 
117

 
81

 
(284
)
 
(21
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
 
Debt issuance costs
—

 
—

 
(2
)
 
—

 
(2
)
Repayments of debt
—

 
(4
)
 
—

 
—

 
(4
)
Repurchase of shares
(35
)
 
—

 
—

 
—

 
(35
)
Proceeds from issue of shares
43

 
—

 
—

 
—

 
43

Excess tax benefits from share-based payment arrangement
—

 
—

 
1

 
—

 
1

Dividends paid
(50
)
 
—

 
(1
)
 
1

 
(50
)
Dividends paid to noncontrolling interests
—

 
—

 
(2
)
 
—

 
(2
)
Proceeds from intercompany financing activities
—

 
16

 
—

 
(16
)
 
—

Repayments of intercompany financing activities
—

 
(133
)
 
(167
)
 
300

 
—

Net cash used in financing activities
(42
)
 
(121
)
 
(171
)
 
285

 
(49
)
DECREASE IN CASH AND CASH EQUIVALENTS
—

 
—

 
(65
)
 
—

 
(65
)
Effect of exchange rate changes on cash and cash equivalents
—

 
—

 
3

 
—

 
3

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
3

 
3

 
790

 
—

 
796

CASH AND CASH EQUIVALENTS, END OF PERIOD
$
3

 
$
3

 
$
728

 
$
—

 
$
734

 

59
Willis Group Holdings plc


21.
FINANCIAL INFORMATION FOR ISSUER, PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES
Trinity Acquisition Limited has $525 million senior notes outstanding that were issued on August 15, 2013.
All direct obligations under the senior notes were jointly and severally, irrevocably and fully, and unconditionally guaranteed by Willis Netherlands Holdings B.V, Willis Investment UK Holdings Limited, TA I Limited, Willis Group Limited and Willis North America, Inc. (collectively, the 'Other Guarantors', and with Willis Group Holdings, the 'Guarantor Companies').
The guarantor structure described above differs from the guarantor structure associated with the senior notes issued by the Company and Willis North America (the ‘Willis North America Debt Securities’) in that Trinity Acquisition Limited is the issuer and not a subsidiary guarantor, and Willis North America, Inc. is a subsidiary guarantor.
The guarantee of the guarantors will be deemed to be automatically discharged and released in accordance with the terms of the indenture upon release or discharge of the indebtedness or upon sale of the subsidiary or its assets.
The condensed consolidating financial information for the following entities is presented below:

(i)Willis Group Holdings, which is a guarantor, on a parent company only basis;

(ii)
the Other Guarantors, which are wholly owned subsidiaries (directly or indirectly) of the parent. Willis Netherlands B.V, Willis Investment UK Holdings Limited, and TA 1 Limited are all direct or indirect parents of the issuer, and Willis Group Limited and Willis North America, Inc. are direct or indirect wholly owned subsidiaries of the issuer;

(iii)Trinity Acquisition Limited, which is the issuer and is a 100 percent indirectly owned subsidiary of the parent;

(iv)Other, which are the non-guarantor subsidiaries, on a combined basis;

(v)Consolidating adjustments; and

(vi)the Consolidated Company.
The equity method has been used for investments in subsidiaries in the condensed consolidating balance sheets as of March 31, 2015 of Willis Group Holdings, the Other Guarantors, and the Issuer.
The entities included in the Other Guarantors column as of March 31, 2015 are Willis Netherlands Holdings B.V., Willis Investment UK Holdings Limited, Willis North America, TA I Limited, and Willis Group Limited.






60
Notes to the financial statements
 (Unaudited)
21. FINANCIAL INFORMATION FOR ISSUER, PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Unaudited Condensed Consolidating Statement of Operations
 
 
Three months ended March 31, 2015
 
Willis
Group
Holdings
 
The Other
Guarantors
 
The Issuer
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
REVENUES
 
 
 
 
 
 
 
 
 
 
 
Commissions and fees
$
—

 
$
4

 
$
—

 
$
1,077

 
$
—

 
$
1,081

Investment income
—

 
—

 
—

 
3

 
—

 
3

Other income
—

 
—

 
—

 
3

 
—

 
3

Total revenues
—

 
4

 
—

 
1,083

 
—

 
1,087

EXPENSES
 
 
 
 
 
 
 
 
 
 
 
Salaries and benefits
—

 
(20
)
 
—

 
(547
)
 
—

 
(567
)
Other operating expenses
(9
)
 
(16
)
 
—

 
(135
)
 
—

 
(160
)
Depreciation expense
—

 
(5
)
 
—

 
(17
)
 
—

 
(22
)
Amortization of intangible assets
—

 
—

 
—

 
(14
)
 
—

 
(14
)
Restructuring costs
—

 
(19
)
 
—

 
(12
)
 
—

 
(31
)
Total expenses
(9
)
 
(60
)
 
—

 
(725
)
 
—

 
(794
)
OPERATING (LOSS) INCOME
(9
)
 
(56
)
 
—

 
358

 
—

 
293

Other (expense) income, net
(12
)
 
6

 
—

 
(1
)
 
1

 
(6
)
Income from group undertakings
—

 
90

 
22

 
25

 
(137
)
 
—

Expenses due to group undertakings
—

 
(47
)
 
(7
)
 
(83
)
 
137

 
—

Interest expense
(11
)
 
(11
)
 
(9
)
 
(2
)
 
—

 
(33
)
(LOSS) INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES
(32
)
 
(18
)
 
6

 
297

 
1

 
254

Income taxes
—

 
15

 
(1
)
 
(70
)
 
—

 
(56
)
(LOSS) INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES
(32
)
 
(3
)
 
5

 
227

 
1

 
198

Interest in earnings of associates, net of tax
—

 
2

 
—

 
14

 
—

 
16

Equity account for subsidiaries
242

 
238

 
209

 
—

 
(689
)
 
—

NET INCOME
210

 
237

 
214

 
241

 
(688
)
 
214

Less: Net income attributable to noncontrolling interests
—

 
—

 
—

 
(4
)
 
—

 
(4
)
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS
$
210

 
$
237

 
$
214

 
$
237

 
$
(688
)
 
$
210


 

61

Willis Group Holdings plc

21. FINANCIAL INFORMATION FOR ISSUER, PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Unaudited Condensed Consolidating Statement of Comprehensive Income
 
Three months ended March 31, 2015
 
Willis
Group
Holdings
 
The Other
Guarantors
 
The Issuer
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income
$
324

 
$
354

 
$
347

 
$
370

 
$
(1,074
)
 
$
321

Less: comprehensive loss attributable to noncontrolling interests
—

 
—

 
—

 
3

 
—

 
3

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS
$
324

 
$
354

 
$
347

 
$
373

 
$
(1,074
)
 
$
324



62
Notes to the financial statements
 (Unaudited)
21. FINANCIAL INFORMATION FOR ISSUER, PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Unaudited Condensed Consolidating Statement of Operations
 
 
Three months ended March 31, 2014
 
Willis
Group
Holdings
 
The Other
Guarantors
 
The Issuer
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
REVENUES
 
 
 
 
 
 
 
 
 
 
 
Commissions and fees
$
—

 
$
2

 
$
—

 
$
1,088

 
$
—

 
$
1,090

Investment income
—

 
—

 
—

 
4

 
—

 
4

Other income
—

 
—

 
—

 
3

 
—

 
3

Total revenues
—

 
2

 
—

 
1,095

 
—

 
1,097

EXPENSES
 
 
 
 
 
 
 
 
 
 
 
Salaries and benefits
—

 
(19
)
 
—

 
(551
)
 
—

 
(570
)
Other operating expenses
(4
)
 
(41
)
 
—

 
(120
)
 
—

 
(165
)
Depreciation expense
—

 
(5
)
 
—

 
(18
)
 
—

 
(23
)
Amortization of intangible assets
—

 
—

 
—

 
(13
)
 
—

 
(13
)
Total expenses
(4
)
 
(65
)
 
—

 
(702
)
 
—

 
(771
)
OPERATING (LOSS) INCOME
(4
)
 
(63
)
 
—

 
393

 
—

 
326

Other income (expense), net
—

 
1

 
—

 
(1
)
 
—

 
—

Income from group undertakings
—

 
82

 
22

 
27

 
(131
)
 
—

Expenses due to group undertakings
—

 
(49
)
 
(7
)
 
(75
)
 
131

 
—

Interest expense
(11
)
 
(11
)
 
(9
)
 
(1
)
 
—

 
(32
)
(LOSS) INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES
(15
)
 
(40
)
 
6

 
343

 
—

 
294

Income taxes
—

 
25

 
(1
)
 
(87
)
 
—

 
(63
)
(LOSS) INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES
(15
)
 
(15
)
 
5

 
256

 
—

 
231

Interest in earnings of associates, net of tax
—

 
3

 
—

 
16

 
—

 
19

Equity account for subsidiaries
261

 
268

 
215

 
—

 
(744
)
 
—

NET INCOME
246

 
256

 
220

 
272

 
(744
)
 
250

Less: Net income attributable to noncontrolling interests
—

 
—

 
—

 
(4
)
 
—

 
(4
)
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS
$
246

 
$
256

 
$
220

 
$
268

 
$
(744
)
 
$
246


63

Willis Group Holdings plc

21. FINANCIAL INFORMATION FOR ISSUER, PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

 

Unaudited Condensed Consolidating Statement of Comprehensive Income
 
Three months ended March 31, 2014
 
Willis
Group
Holdings
 
The Other
Guarantors
 
The Issuer
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income
$
254

 
$
264

 
$
228

 
$
281

 
$
(769
)
 
$
258

Less: comprehensive income attributable to noncontrolling interests
—

 
—

 
—

 
(4
)
 
—

 
(4
)
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS
$
254

 
$
264

 
$
228

 
$
277

 
$
(769
)
 
$
254

 

64
Notes to the financial statements
 (Unaudited)
21. FINANCIAL INFORMATION FOR ISSUER, PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Unaudited Condensed Consolidating Balance Sheet 
 
As of March 31, 2015
 
Willis
Group
Holdings
 
The Other
Guarantors
 
The Issuer
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
ASSETS
 
 
 
 
 
 
 
 
 
 
 
CURRENT ASSETS
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
6

 
$
—

 
$
—

 
$
497

 
$
—

 
$
503

Accounts receivable, net
—

 
6

 
—

 
1,144

 
—

 
1,150

Fiduciary assets
—

 
—

 
—

 
9,444

 
—

 
9,444

Deferred tax assets
—

 
—

 
—

 
13

 
—

 
13

Other current assets
1

 
63

 
2

 
192

 
(40
)
 
218

Amounts due from group undertakings
3,611

 
1,076

 
803

 
1,137

 
(6,627
)
 
—

Total current assets
3,618

 
1,145

 
805

 
12,427

 
(6,667
)
 
11,328

NON-CURRENT ASSETS
 
 
 
 
 
 
 
 
 
 
 
Investments in subsidiaries
—

 
3,875

 
2,949

 
—

 
(6,824
)
 
—

Fixed assets, net
—

 
61

 
—

 
401

 
—

 
462

Goodwill
—

 
—

 
—

 
2,889

 
—

 
2,889

Other intangible assets, net
—

 
—

 
—

 
418

 
—

 
418

Investments in associates
—

 
133

 
—

 
34

 
—

 
167

Deferred tax assets
—

 
—

 
—

 
6

 
—

 
6

Pension benefits asset
—

 
—

 
—

 
606

 
—

 
606

Other non-current assets
2

 
2

 
8

 
217

 
—

 
229

Non-current amounts due from group undertakings
—

 
752

 
518

 
—

 
(1,270
)
 
—

Total non-current assets
2

 
4,823

 
3,475

 
4,571

 
(8,094
)
 
4,777

TOTAL ASSETS
$
3,620

 
$
5,968

 
$
4,280

 
$
16,998

 
$
(14,761
)
 
$
16,105

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
 
CURRENT LIABILITIES
 
 
 
 
 
 
 
 
 
 
 
Fiduciary liabilities
$
—

 
$
—

 
$
—

 
$
9,444

 
$
—

 
$
9,444

Deferred revenue and accrued expenses
1

 
36

 
—

 
371

 
—

 
408

Income taxes payable
—

 
—

 
7

 
82

 
(40
)
 
49

Short-term debt and current portion of long-term debt
—

 
149

 
18

 
1

 
—

 
168

Deferred tax liabilities
—

 
—

 
—

 
18

 
—

 
18

Other current liabilities
60

 
16

 
4

 
381

 
—

 
461

Amounts due to group undertakings
—

 
5,256

 
586

 
785

 
(6,627
)
 
—

Total current liabilities
61

 
5,457

 
615

 
11,082

 
(6,667
)
 
10,548



65

Willis Group Holdings plc

21. FINANCIAL INFORMATION FOR ISSUER, PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)


Unaudited Condensed Consolidating Balance Sheet (continued)
 
As of March 31, 2015
 
Willis
Group
Holdings
 
The Other
Guarantors
 
The Issuer
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
NON-CURRENT LIABILITIES
 
 
 
 
 
 
 
 
 
 
 
Investments in subsidiaries
465

 
—

 
—

 
—

 
(465
)
 
—

Long-term debt
796

 
581

 
760

 
—

 
—

 
2,137

Liabilities for pension benefits
—

 
—

 
—

 
277

 
—

 
277

Deferred tax liabilities
—

 
—

 
—

 
185

 
—

 
185

Provisions for liabilities
—

 
—

 
—

 
188

 
—

 
188

Other non-current liabilities
—

 
16

 
—

 
382

 
—

 
398

Non-current amounts due to group undertakings
—

 
518

 
—

 
752

 
(1,270
)
 
—

Total non-current liabilities
1,261

 
1,115

 
760

 
1,784

 
(1,735
)
 
3,185

TOTAL LIABILITIES
$
1,322

 
$
6,572

 
$
1,375

 
$
12,866

 
$
(8,402
)
 
$
13,733

 
 
 
 
 
 
 
 
 
 
 
 
REDEEMABLE NONCONTROLLING INTEREST
—

 
—

 
—

 
51

 
—

 
51

 
 
 
 
 
 
 
 
 
 
 
 
EQUITY
 
 
 
 
 
 
 
 
 
 
 
Total Willis Group Holdings stockholders’ equity
2,298

 
(604
)
 
2,905

 
4,058

 
(6,359
)
 
2,298

Noncontrolling interests
—

 
—

 
—

 
23

 
—

 
23

Total equity
2,298

 
(604
)
 
2,905

 
4,081

 
(6,359
)
 
2,321

TOTAL LIABILITIES AND EQUITY
$
3,620

 
$
5,968

 
$
4,280

 
$
16,998

 
$
(14,761
)
 
$
16,105

 

66
Notes to the financial statements
 (Unaudited)
21. FINANCIAL INFORMATION FOR ISSUER, PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Condensed Consolidating Balance Sheet
 
As of December 31, 2014
 
Willis
Group
Holdings
 
The Other
Guarantors
 
The Issuer
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
ASSETS
 
 
 
 
 
 
 
 
 
 
 
CURRENT ASSETS
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
9

 
$
2

 
$
—

 
$
624

 
$
—

 
$
635

Accounts receivable, net
—

 
4

 
—

 
1,040

 
—

 
1,044

Fiduciary assets
—

 
—

 
—

 
8,948

 
—

 
8,948

Deferred tax assets
—

 
—

 
—

 
12

 
—

 
12

Other current assets
1

 
41

 
1

 
205

 
(34
)
 
214

Amounts due from group undertakings
3,674

 
1,154

 
797

 
1,114

 
(6,739
)
 
—

Total current assets
3,684

 
1,201

 
798

 
11,943

 
(6,773
)
 
10,853

NON-CURRENT ASSETS
 
 
 
 
 
 
 
 
 
 
 
Investments in subsidiaries
—

 
3,478

 
2,578

 
—

 
(6,056
)
 
—

Fixed assets, net
—

 
62

 
—

 
421

 
—

 
483

Goodwill
—

 
—

 
—

 
2,937

 
—

 
2,937

Other intangible assets, net
—

 
—

 
—

 
450

 
—

 
450

Investments in associates
—

 
147

 
—

 
22

 
—

 
169

Deferred tax assets
—

 
—

 
—

 
9

 
—

 
9

Pension benefits asset
—

 
—

 
—

 
314

 
—

 
314

Other non-current assets
3

 
2

 
8

 
207

 
—

 
220

Non-current amounts due from group undertakings
—

 
740

 
518

 
—

 
(1,258
)
 
—

Total non-current assets
3

 
4,429

 
3,104

 
4,360

 
(7,314
)
 
4,582

TOTAL ASSETS
$
3,687

 
$
5,630

 
$
3,902

 
$
16,303

 
$
(14,087
)
 
$
15,435

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
 
CURRENT LIABILITIES
 
 
 
 
 
 
 
 
 
 
 
Fiduciary liabilities
$
—

 
$
—

 
$
—

 
$
8,948

 
$
—

 
$
8,948

Deferred revenue and accrued expenses
1

 
34

 
—

 
584

 
—

 
619

Income taxes payable
—

 
7

 
5

 
55

 
(34
)
 
33

Short-term debt and current portion of long-term debt
—

 
149

 
17

 
1

 
—

 
167

Deferred tax liabilities
—

 
—

 
—

 
21

 
—

 
21

Other current liabilities
67

 
46

 
11

 
320

 
—

 
444

Amounts due to group undertakings
—

 
5,267

 
576

 
896

 
(6,739
)
 
—

Total current liabilities
68

 
5,503

 
609

 
10,825

 
(6,773
)
 
10,232

NON-CURRENT LIABILITIES
 
 
 
 
 
 
 
 
 
 
 
Investments in subsidiaries
838

 
—

 
—

 
—

 
(838
)
 
—

Long-term debt
796

 
581

 
765

 
—

 
—

 
2,142

Liabilities for pension benefits
—

 
—

 
—

 
284

 
—

 
284

Deferred tax liabilities
—

 
—

 
—

 
128

 
—

 
128

Provisions for liabilities
—

 
—

 
—

 
194

 
—

 
194

Other non-current liabilities
—

 
17

 
—

 
372

 
—

 
389

Non-current amounts due to group undertakings
—

 
518

 
—

 
740

 
(1,258
)
 
—

Total non-current liabilities
1,634

 
1,116

 
765

 
1,718

 
(2,096
)
 
3,137

TOTAL LIABILITIES
$
1,702

 
$
6,619

 
$
1,374

 
$
12,543

 
$
(8,869
)
 
$
13,369



67

Willis Group Holdings plc

21. FINANCIAL INFORMATION FOR ISSUER, PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Condensed Consolidating Balance Sheet (continued)
 
As of December 31, 2014
 
Willis
Group
Holdings
 
The Other
Guarantors
 
The Issuer
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
REDEEMABLE NONCONTROLLING INTEREST
—

 
—

 
—

 
59

 
—

 
59

 
 
 
 
 
 
 
 
 
 
 
 
EQUITY
 
 
 
 
 
 
 
 
 
 
 
Total Willis Group Holdings stockholders’ equity
1,985

 
(989
)
 
2,528

 
3,679

 
(5,218
)
 
1,985

Noncontrolling interests
—

 
—

 
—

 
22

 
—

 
22

Total equity
1,985

 
(989
)
 
2,528

 
3,701

 
(5,218
)
 
2,007

TOTAL LIABILITIES AND EQUITY
$
3,687

 
$
5,630

 
$
3,902

 
$
16,303

 
$
(14,087
)
 
$
15,435



68
Notes to the financial statements
 (Unaudited)
21. FINANCIAL INFORMATION FOR ISSUER, PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Unaudited Condensed Consolidating Statement of Cash Flows
 
Three months ended March 31, 2015
 
Willis
Group
Holdings
 
The Other
Guarantors
 
The Issuer
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
$
(20
)
 
$
(35
)
 
$
1

 
$
(10
)
 
$
—

 
$
(64
)
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Proceeds on disposal of fixed and intangible assets
—

 
—

 
—

 
4

 
—

 
4

Additions to fixed assets
—

 
(4
)
 
—

 
(12
)
 
—

 
(16
)
Additions to intangible assets
—

 
—

 
—

 
(1
)
 
—

 
(1
)
Acquisitions of operations, net of cash acquired
—

 
—

 
—

 
(8
)
 
—

 
(8
)
Proceeds from disposal of operations, net of cash disposed
—

 
—

 
—

 
13

 
—

 
13

Proceeds from intercompany investing activities
51

 
48

 
—

 
—

 
(99
)
 
—

Repayments of intercompany investing activities
—

 
(11
)
 
—

 
(26
)
 
37

 
—

Net cash provided by (used in) investing activities
51

 
33

 
—

 
(30
)
 
(62
)
 
(8
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Debt issuance costs
—

 
—

 
—

 
(1
)
 
—

 
(1
)
Repayments of debt
—

 
—

 
(4
)
 
—

 
—

 
(4
)
Repurchase of shares
(15
)
 
—

 
—

 
—

 
—

 
(15
)
Proceeds from issue of shares
35

 
—

 
—

 
—

 
—

 
35

Excess tax benefits from share-based payment arrangements
—

 
—

 
—

 
3

 
—

 
3

Dividends paid
(54
)
 
—

 
—

 
—

 
—

 
(54
)
Dividends paid to noncontrolling interests
—

 
—

 
—

 
(3
)
 
—

 
(3
)
Proceeds from intercompany financing activities
—

 
23

 
3

 
11

 
(37
)
 
—

Repayments of intercompany financing activities
—

 
(23
)
 
—

 
(76
)
 
99

 
—

Net cash used in financing activities
(34
)
 
—

 
(1
)
 
(66
)
 
62

 
(39
)
DECREASE IN CASH AND CASH EQUIVALENTS
(3
)
 
(2
)
 
—

 
(106
)
 
—

 
(111
)
Effect of exchange rate changes on cash and cash equivalents
—

 
—

 
—

 
(21
)
 
—

 
(21
)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
9

 
2

 
—

 
624

 
—

 
635

CASH AND CASH EQUIVALENTS, END OF PERIOD
$
6

 
$
—

 
$
—

 
$
497

 
$
—

 
$
503

 

69

Willis Group Holdings plc

21. FINANCIAL INFORMATION FOR ISSUER, PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES (Continued)

Unaudited Condensed Consolidating Statement of Cash Flows
 
Three months ended March 31, 2014
 
Willis
Group
Holdings
 
The Other
Guarantors
 
The Issuer
 
Other
 
Consolidating
adjustments
 
Consolidated
 
(millions)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
$
(23
)
 
$
28

 
$
(24
)
 
$
25

 
$
(1
)
 
$
5

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Proceeds on disposal of fixed and intangible assets
—

 
1

 
—

 
1

 
(1
)
 
1

Additions to fixed assets
—

 
(4
)
 
—

 
(19
)
 
1

 
(22
)
Additions to intangible assets
—

 
—

 
—

 
(1
)
 
—

 
(1
)
Payments to acquire other investments
—

 
—

 
—

 
(4
)
 
—

 
(4
)
Proceeds from disposal of operations, net of cash disposed
—

 
—

 
—

 
5

 
—

 
5

Proceeds from intercompany investing activities
65

 
120

 
12

 
115

 
(312
)
 
—

Repayments of intercompany investing activities
—

 
—

 
—

 
(16
)
 
16

 
—

Net cash provided by (used in) investing activities
65

 
117

 
12

 
81

 
(296
)
 
(21
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Debt issuance costs
—

 
—

 
—

 
(2
)
 
—

 
(2
)
Repayments of debt
—

 
—

 
(4
)
 
—

 
—

 
(4
)
Repurchase of shares
(35
)
 
—

 
—

 
—

 
—

 
(35
)
Proceeds from issue of shares
43

 
—

 
—

 
—

 
—

 
43

Excess tax benefits from share-based payment arrangements
—

 
—

 
—

 
1

 
—

 
1

Dividends paid
(50
)
 
—

 
—

 
(1
)
 
1

 
(50
)
Dividends paid to noncontrolling interests
—

 
—

 
—

 
(2
)
 
—

 
(2
)
Proceeds from intercompany financing activities
—

 
—

 
16

 
—

 
(16
)
 
—

Repayments of intercompany financing activities
—

 
(145
)
 
—

 
(167
)
 
312

 
—

Net cash (used in) provided by financing activities
(42
)
 
(145
)
 
12

 
(171
)
 
297

 
(49
)
DECREASE IN CASH AND CASH EQUIVALENTS
—

 
—

 
—

 
(65
)
 
—

 
(65
)
Effect of exchange rate changes on cash and cash equivalents
—

 
—

 
—

 
3

 
—

 
3

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
3

 
3

 
—

 
790

 
—

 
796

CASH AND CASH EQUIVALENTS, END OF PERIOD
$
3

 
$
3

 
$
—

 
$
728

 
$
—

 
$
734



70
Business discussion

Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations
This discussion includes references to non-GAAP financial measures as defined in Regulation G of the rules of the Securities and Exchange Commission (‘SEC’). We present such non-GAAP financial measures, specifically underlying and organic non-GAAP financial measures, 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, and these provide a measure against which our businesses may be assessed in the future.
Please see 'Non-GAAP financial measures' below for further discussion of our underlying and organic non-GAAP financial measures.
This discussion includes forward-looking statements included under the headings 'Executive Summary', 'Review of Consolidated Results' and 'Liquidity and Capital Resources'. Please see ‘Forward-Looking Statements’ for certain cautionary information regarding forward-looking statements and a list of factors that could cause actual results to differ materially from those predicted in those statements.

EXECUTIVE SUMMARY
Business Overview
We provide a broad range of insurance broking, risk management, and consulting services to our clients worldwide and organize our business into four segments: Willis GB, Willis Capital, Wholesale & Reinsurance ('Willis CWR'), Willis North America, and Willis International.
Our Willis GB business provides specialist brokerage and consulting services to both clients based in Great Britain and those worldwide requiring access to the London insurance market arising from specific industries, activities, and risks. This segment includes the following business units: Property & Casualty; Financial Lines; Transport; and Retail Networks.
Willis CWR includes Willis Re; Willis Capital Markets & Advisory; Willis' wholesale business; and Willis Portfolio and Underwriting Services.
Willis North America and Willis International comprise our retail and specialty operations, outside of Great Britain, and provide services to small, medium, and large corporations. Included in our retail operations is the Human Capital and Benefits practice, our largest product-based practice group, which provides health, welfare and human resources consulting, and brokerage services.
In our capacity as advisor and insurance broker, we act as an intermediary between our clients and insurance carriers by advising our clients on their risk management requirements, helping clients determine the best means of managing risk, and negotiating and placing insurance with insurance carriers through our global distribution network.
Market Conditions
Due to the cyclical nature of the insurance market and the impact of other market conditions on insurance premiums, commission revenues may vary widely between accounting periods. A period of low or declining premium rates, generally known as a ‘soft’ or ‘softening’ market, generally leads to downward pressure on commission revenues and can have a material adverse impact on our commission revenues and operating margin. A ‘hard’ or ‘firming’ market, during which premium rates rise, generally has a favorable impact on our commission revenues and operating margin. Rates, however, vary by geography, industry and client segment. As a result and due to the global and diverse nature of our business, we view rates in the aggregate.
Market conditions in our industry are generally defined by factors such as the strength of the economies in the various geographic regions in which we serve around the world, insurance rate movements, and insurance and reinsurance buying patterns of our clients.
Early in 2013, the reinsurance market was generally flat; however, as the year progressed we saw changing market sentiment driven by changes in the sources of capital and increases in capital supply in the reinsurance market, most notably within the

71
Willis Group Holdings plc


North American catastrophe-exposed property market. The influx of third-party capital coupled with changes to reinsurance buying patterns and regulatory complexity is leading to growing complexity in the reinsurance market and a softening of prices.
In 2014 we noted a continuation of this trend, and signs of acceleration, towards softening reinsurance rates across almost all classes of business and geographies as positive 2013 results for traditional reinsurers exacerbated the growing supply of capital from third-party investors. In addition, for primary insurance companies, the ability to recognize primary rate increases may be coming to an end and consequently, rate flattening and even rate reductions are seen in many territories on primary insurance classes.
In 2015 we continue to see an easing of both reinsurance and primary insurance rates across most lines of business, although the rate of decline varies significantly by market and geography, and the marketplace continues to both favor and offer opportunities for the buyers of (re)insurance. These challenging and uneven market conditions may result in quarterly volatility in actual financial performance in comparison to our 2015 strategic and financial goals.
In the face of this challenging economic environment, we have adopted a strategy to (1) invest selectively in growth areas, defined by geography, industry sector, and client segment and (2) better coordinate our four segments so as to bring our clients greater access to the Company's specialty areas and analytical capabilities, among other things. Our growth strategy also involves increasing our investment in, and deployment of, our analytical capabilities.
Financial Performance

The following is a summary of our first quarter 2015 GAAP financial results:
•
Total revenues of $1,087 million decreased by $10 million, or 0.9 percent, versus the prior year quarter. The results included $69 million adverse movements in foreign exchange, driven most significantly by the weakening of the Euro and the Pound sterling versus the dollar; $25 million positive impact from acquisitions and disposals; and organic growth of $34 million.
•
Total expenses of $794 million increased by $23 million, or 3.0 percent, versus the prior year quarter. This increase included $31 million of restructuring costs related to the Operational Improvement Program and $48 million favorable movements in foreign exchange.
•
Operating margin decreased 280 basis points to 26.9 percent from 29.7 percent in the prior year quarter.
•
Net income attributable to Willis Group Holdings was $210 million, or $1.15 per diluted share, a decrease of $36 million, or $0.20 per diluted share, from the $246 million, or $1.35 per diluted share, in the year ago quarter.
•
Cash used in operating activities was $64 million, a decrease of $69 million from $5 million of cash provided by operating activities in first quarter 2014.

Our non-GAAP financial measures were as follows:
•
Underlying total revenues of $1,087 million increased $59 million, or 5.7 percent, versus the year ago quarter. Excluding the net $25 million increase from acquisitions and disposals, organic total revenues increased $34 million, or 3.3 percent.
•
Organic commissions and fees increased 3.4 percent versus the year ago quarter, led by solid growth in Willis North America and Willis International.
•
Underlying total expenses of $763 million increased $40 million, or 5.6 percent, versus first quarter 2014. Excluding the net $29 million increase from acquisition and disposals, organic total expenses increased $11 million, or 1.7 percent.
•
Organic operating margin increased 120 basis points to 30.7 percent from 29.5 percent in the year ago quarter.
•
Organic spread, that is the difference between organic commission and fee growth of 3.4 percent and organic total expense growth of 1.7 percent, was 170 bps in first quarter 2015.

72
Business discussion

Acquisitions and Disposals
Our measured acquisition strategy which is focused on high quality, specialized firms with leading market positions, is contributing to the Company's overall growth rate. Revenues from acquisitions over the past twelve months, which include Charles Monat, Max Matthiessen, Surepoint Re, and IFG's pension and financial advisory business, have increased total revenues by $39 million in the first quarter versus the year-ago quarter. Additionally those businesses improved EBITDA by approximately $9 million in the first quarter versus the year-ago quarter.
In January, 2015 the Company reached an agreement to acquire a majority interest in Miller Insurance Services LLP, a leading London-based wholesale specialist. The transaction is subject to customary closing conditions and regulatory approvals and is expected to close by the middle of 2015.
On April 22, 2015 the Company announced that it has made a firm offer to acquire the remaining 70 percent of Gras Savoye that it currently does not own for approximately €550 million (approximately $592 million), which includes the repayment of outstanding third party debt. The transaction which is subject to regulatory approval and Gras Savoye's workers councils' consultation, is expected to close on or around December 31, 2015.
In addition to this firm offer, the Company has issued notice preserving its right under an existing shareholder agreement to acquire the remaining shares in Gras Savoye in June 2016, should the firm offer not be accepted. In that case, the purchase price would be determined by a formula under that agreement and the expected closing of the transaction would be mid-2016.

Operational Improvement Program
Overview
In April 2014, the Company announced an operational improvement program that would allow the Company to continue to strengthen its client service, realize operational efficiencies, and invest in new capabilities for growth.
The main elements of the program include the following:
•
movement of more than 3,500 support roles from higher cost locations to Willis facilities in lower cost locations, bringing the ratio of employees in higher cost versus lower cost near-shore and off-shore centers from approximately 80:20 to approximately 60:40;
•
net workforce reductions in support positions;
•
lease consolidation in real estate and reductions in ratios of seats per employee and square footage of floor space per employee; and
•
information technology systems simplification and rationalization.
The program began in the second quarter of 2014 and is expected to be complete by the end of 2017. The program is expecting to deliver cumulative cost savings of at least $420 million through 2017 and annual cost savings of approximately $300 million starting in 2018.
Actual cost savings of approximately $11 million were achieved in 2014, the estimated phasing of future cost savings is as follows: at least $60 million in 2015, approximately $135 million in 2016, and approximately $235 million in 2017. The estimated cost savings are before any potential reinvestment for future growth.
To achieve these savings, the Company expects to incur cumulative spend, including capital expenditure, amounting to approximately $410 million through the end of 2017. Program spend in 2014 was $36 million, with approximately $130 million expected for 2015 and the balance of approximately $240 million expected to be incurred in 2016 and 2017.
Total spend, actual savings, and timing may vary positively or negatively from these estimates due to changes in the scope, underlying assumptions, or execution risk of the restructuring plan throughout its duration.
The Company expects that about 70 percent of the annualized 2018 savings would come from role relocation and reduction, and about 30 percent of the savings from real estate, information technology and other areas.

73
Willis Group Holdings plc


First quarter 2015 update
In first quarter 2015 the Company recognized restructuring costs of $31 million related to the Operational Improvement Program bringing the total program to date restructuring costs to $67 million since commencement in April 2014.
The $31 million restructuring costs incurred included:
•
$7 million in the North America segment including $2 million related to 23 roles that have either been eliminated or relocated to low costs locations and $5 million of professional services and other costs supporting the execution of the program;
•
approximately $3 million in the International segment including $2 million related to termination benefits;
•
$6 million in Willis CWR related to the elimination and relocation of approximately 53 positions;
•
approximately $4 million in Willis GB related to professional services and other costs supporting the execution of the program; and
•
$11 million in Corporate and other, including approximately $8 million of professional fees, primarily related to advisory services, and approximately $3 million related to system implementation and other core resources supporting the program.
We generated savings of approximately $10 million in the first quarter of 2015, largely from actions taken in the prior year, bringing the cumulative program to date savings to $21 million.
UK defined benefit pension scheme
On March 6, 2015, the Company announced to members of the UK defined benefit pension plan that with effect from June 30, 2015, future salary increases would not be pensionable (the “salary freeze”). The Company has recognized the salary freeze as a plan amendment at the announcement date. The impact of the salary freeze is to reduce the plan’s projected benefit obligation by approximately $215 million and create a prior service gain which is recognized in Other Comprehensive Income and then amortized to the Income Statement over the remaining expected service life of active employees.
Changes to Segmental Presentation

Effective from January 1, 2015 the Company has changed the way it manages and reports operating results, resulting in a change in the Company’s reportable segments from three reportable segments, formerly known as Willis Global, Willis North America and Willis International, into four reportable segments: Willis CWR; Willis North America; Willis International; and Willis GB.
The changes to the reportable segments are as follows:
•
Willis International and Willis North America will remain largely unchanged except for certain specialty teams formerly included in Global which will be included in the geographic regions in which they are located.
•
Willis CWR will include Willis Re, Willis Capital Markets & Advisory and the Company's Wholesale business. In addition, it also includes a new unit called Willis Portfolio and Underwriting Services which includes all of the Company's activities that provide these services.
•
Willis GB includes the Company's UK retail business, facultative business and London Specialty business.
The impact of the changes has been retrospectively applied to the prior period results disclosed herein.


74
Business discussion

Business Strategy
Today we operate in attractive growth markets with a diversified platform across geographies, industries, segments and lines of business. We aim to become the risk advisor, insurance and reinsurance broker of choice globally.
We believe we can achieve this by focusing on:
•
Growing our existing business organically. We help clients of all sizes and in every segment when we form teams of the right people from across our business that can provide every risk and human capital and benefits service the client needs. We call this team-based way of working ‘Connecting Willis’.
In the Connecting Willis model, client advocates ensure that our teams deliver a seamless service of tailored capabilities to every client including:
•
Regional and local market expertise
•
Industry and product specialist capabilities
•
Global placement knowledge and data
•
Cutting-edge analytics to address evolving risks
•
Strategic mergers and acquisitions that add geographic reach, industry expertise, new product offerings, and analytic capabilities.
•
Operational improvement that underpins our growth. We are modernizing the way we run our business in order to serve our clients better, enable the skills of our staff, and to lower our costs of doing business. Our Operational Improvement Program is making changes to our processes, our IT, our real estate and the location of our workforce.
•
Finally, we care as much about how we work as we do about the impact that we make. This means commitment to our values and behaviors, a framework that guides how we run our business and serve clients.
Through these strategies we aim to grow revenue with positive operating leverage, grow cash flows and generate compelling returns for investors.


75
Willis Group Holdings plc


NON-GAAP FINANCIAL MEASURES
We believe that the understanding of the Company's performance and comparative analysis of our results is enhanced by our disclosure of the following non-GAAP financial measures. We use these and other measures to establish Group performance targets and evaluate the performance of our operations.
Our methods of calculating these measures may differ from those used by other companies and therefore comparability may be limited. These financial measures should be viewed in addition to, not in lieu of, these condensed consolidated financial statements for the three months ended March 31, 2015.

Underlying measures
Our underlying non-GAAP measures are calculated by excluding restructuring costs relating to the Operational Improvement Program, and and gains (losses) on disposal of operations, as relevant, from total revenues, total expenses, salaries and benefits, other operating expenses, operating income, net income, and earnings per diluted share, the most directly comparable GAAP measures.
Additionally, prior year total revenues, total expenses and net income and diluted earnings per share have been rebased to current period exchange rates to eliminate the impact of year over year foreign exchange movements.

Organic measures
Our organic non-GAAP measures are calculated by further excluding the twelve month impact from acquisitions and disposals, from our underlying measures.
As set out in the tables below, underlying operating income increased $19 million, or 5.9 percent, to $324 million in first quarter 2015 compared to $305 million in first quarter 2014. Underlying operating margin at 29.8 percent in first quarter 2015 was up 10 basis points compared with first quarter 2014, while first quarter 2015 underlying net income was $230 million, $10 million higher than in first quarter 2014. Underlying earnings per diluted share were $1.26 in first quarter 2015, compared with $1.21 in first quarter 2014.
As set out in the tables below, organic operating income increased $23 million, or 7.4 percent, at $322 million in first quarter 2015 compared to $299 million in first quarter 2014. Organic operating margin at 30.7 percent in first quarter 2015 was up 120 basis points compared with first quarter 2014.
A reconciliation of reported total expenses, salaries and benefits and other operating expenses, the most directly comparable GAAP measures, to underlying and organic total expenses, underlying and organic salaries and benefits and underlying and organic other operating expenses, for the three months ended March 31, 2015 and 2014 and is as follows (in millions, except percentages): 
 
Salaries and benefits
 
Other operating expenses
 
Total expenses
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
Expenses, GAAP basis
$
567

 
$
570

 
$
160

 
$
165

 
$
794

 
$
771

Excluding:
 
 
 
 
 
 
 
 
 
 
 
Restructuring costs
—

 
—

 
—

 
—

 
31

 
—

Foreign currency movements (a)
—

 
37

 
—

 
10

 
—

 
48

Underlying expenses
$
567

 
$
533

 
$
160

 
$
155

 
$
763

 
$
723

Less: net expenses from acquisitions and disposals
23

 
6

 
9

 
1

 
37

 
8

Organic expenses
$
544

 
$
527

 
$
151

 
$
154

 
$
726

 
$
715

 _________________________________
(a) 
For prior periods, underlying measures have been rebased to current period exchange rates to remove the impact of foreign currency movements when comparing periods.

76
Business discussion

A reconciliation of reported operating income, the most directly comparable GAAP measure, to underlying and organic operating income for the three months ended March 31, is as follows (in millions, except percentages): 
 
Three months ended March 31,
 
% Change(b)
 
2015
 
2014
 
 
Total revenues
$
1,087

 
$
1,097

 
(0.9
)
Excluding:
 
 
 
 
 
Foreign currency movements(a)
—

 
(69
)
 
 
Underlying total revenues
$
1,087

 
$
1,028

 
5.7

Less: net revenue from acquisitions and disposals
(39
)
 
(14
)
 
 
Organic total revenues
$
1,048

 
$
1,014

 
3.3

 
 
 
 
 
 
Operating income, GAAP basis
$
293

 
$
326

 
(10.3
)
Excluding:
 
 
 
 
 
Restructuring costs
31

 
—

 
 
Foreign currency movements (a)
—

 
(21
)
 
 
Underlying operating income
$
324

 
$
305

 
5.9

Less: net operating income from acquisitions and disposals
(2
)
 
(6
)
 
 
Organic operating income
$
322

 
$
299

 
7.4

 
 
 
 
 
 
Operating margin, GAAP basis, or operating income as a percentage of total revenues
26.9
%
 
29.7
%
 
 
Underlying operating margin, or underlying operating income as a percentage of underlying total revenues
29.8
%
 
29.7
%
 
 
Organic operating margin, or organic operating income as a percentage of organic total revenues
30.7
%
 
29.5
%
 
 
 _________________________________
(a) 
For prior periods, underlying measures have been rebased to current period exchange rates to remove the impact of foreign currency movements when comparing periods.
(b) 
Percentages may differ due to rounding.


77
Willis Group Holdings plc


A reconciliation of reported net income, attributable to Willis Group Holdings plc, the most directly comparable GAAP measures, to organic and underlying EBITDA, is as follows (in millions, except per share data):
 
Three months ended March 31,
 
% Change(b)
 
2015
 
2014
 
 
Net income attributable to Willis Group Holdings plc
$
210

 
$
246

 
(14.7
)
Add back:
 
 
 
 
 
Net income attributable to noncontrolling interest
4

 
4

 
 
Interest in earnings of associates, net of tax
(16
)
 
(19
)
 
 
Income taxes
56

 
63

 
 
Interest expense
33

 
32

 
 
Other expense (income), net
6

 
—

 
 
Depreciation
22

 
23

 
 
Amortization
14

 
13

 
 
Restructuring costs
31

 
—

 
 
Foreign currency movements (a)
—

 
(22
)
 
 
Underlying EBITDA
$
360

 
$
340

 
5.8

Less: net EBITDA from acquisitions and disposals
(7
)
 
(7
)
 
 
Organic EBITDA
$
353

 
$
333

 
6.0

 _________________________________
(a) 
For prior periods, underlying measures have been rebased to current period exchange rates to remove the impact of foreign currency movements when comparing periods.
(b) 
Percentages may differ due to rounding.


A reconciliation of reported net income, attributable to Willis Group Holdings plc, and reported earnings per diluted share, the most directly comparable GAAP measures, to underlying net income and underlying earnings per diluted share, is as follows (in millions, except per share data):
 
 
 
 
 
 
 
Per diluted share
 
Three months ended March 31,
 
Three months ended March 31,
 
2015
 
2014
 
% Change(b)
 
2015
 
2014
 
% Change(b)
Net income attributable to Willis Group Holdings plc, GAAP basis
$
210

 
$
246

 
(14.7
)
 
$
1.15

 
$
1.35

 
(14.8
)
Excluding:
 
 
 
 
 
 
 
 
 
 
 
Restructuring costs, net of tax ($9, $nil)
22

 
—

 
 
 
0.12

 
—

 
 
Net (gain) loss on disposal of operations ($2, $1)
(2
)
 
2

 
 
 
(0.01
)
 
0.01

 
 
Foreign currency movements (a)
—

 
(28
)
 
 
 
—

 
(0.15
)
 
 
Underlying net income
$
230

 
$
220

 
4.5

 
$
1.26

 
$
1.21

 
4.1

 
 
 
 
 
 
 
 
 
 
 
 
Average diluted shares outstanding, GAAP basis
182

 
182

 
 
 
 
 
 
 
 
_____________________________
(a)
For prior periods, underlying measures have been rebased to current period exchange rates to remove the impact of foreign currency movements when comparing periods.
(b) 
Percentages may differ due to rounding.


78
Business discussion

REVIEW OF CONSOLIDATED RESULTS
The following table is a summary of our revenues, operating income, operating margin, net income and diluted earnings per share (in millions, except per share data and percentages):
 
Three months ended March 31,
 
2015
 
2014
REVENUES
 
 
 
Commissions and fees
$
1,081

 
$
1,090

Investment income
3

 
4

Other income
3

 
3

Total revenues
1,087

 
1,097

EXPENSES
 
 
 
Salaries and benefits
(567
)
 
(570
)
Other operating expenses
(160
)
 
(165
)
Depreciation expense
(22
)
 
(23
)
Amortization of intangible assets
(14
)
 
(13
)
Restructuring costs
(31
)
 
—

Total expenses
(794
)
 
(771
)
OPERATING INCOME
293

 
326

Other (expense) income, net
(6
)
 
—

Interest expense
(33
)
 
(32
)
INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES
254

 
294

Income taxes
(56
)
 
(63
)
INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES
198

 
231

Interest in earnings of associates, net of tax
16

 
19

NET INCOME
214

 
250

Less: net loss attributable to noncontrolling interests
(4
)
 
(4
)
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS
$
210

 
$
246

 
 
 
 
Salaries and benefits as a percentage of total revenues
52.2
%
 
52.0
%
Other operating expenses as a percentage of total revenues
14.7
%
 
15.0
%
Operating margin (operating income as a percentage of total revenues)
26.9
%
 
29.7
%
Diluted earnings per share
$
1.15

 
$
1.35

Average diluted number of shares outstanding
182

 
182

 

79
Willis Group Holdings plc


Revenues
Total revenues for the Group and commissions and fees by segment for the three months ended March 31, 2015 and 2014 are shown below (millions, except percentages):
Three months ended March 31,
2015
 
2014
 
% Change(b)
 
Foreign
currency
translation
 
Underlying growth
 
Acquisitions and disposals
 
Organic
commissions
and fees
growth (a)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Willis GB
$
142

 
$
150

 
(4.6
)%
 
(5.7
)%
 
1.1
%
 
—
 %
 
1.1
%
Willis Capital, Wholesale, and Reinsurance
296

 
303

 
(2.5
)%
 
(4.3
)%
 
1.7
%
 
0.4
 %
 
1.3
%
Willis North America
356

 
354

 
0.5
 %
 
(0.2
)%
 
0.7
%
 
(4.1
)%
 
4.7
%
Willis International
287

 
283

 
1.1
 %
 
(20.1
)%
 
21.1
%
 
15.8
 %
 
5.3
%
Commissions and fees
$
1,081

 
$
1,090

 
(0.9
)%
 
(6.7
)%
 
5.8
%
 
2.4
 %
 
3.4
%
Investment income
3

 
4

 
(25.0
)%
 
 
 
 
 
 
 
 
Other income
3

 
3

 
—
 %
 
 
 
 
 
 
 
 
Total revenues
$
1,087

 
$
1,097

 
(0.9
)%
 
 
 
 
 
 
 
 
 _________________________________ 
(a) 
Organic commissions and fees growth excludes: (i) the impact of foreign currency translation; (ii) the first twelve months of net commission and fee revenues generated from acquisitions; and (iii) the net commission and fee revenues related to operations disposed of in each period presented.
Our methods of calculating these measures may differ from those used by other companies and therefore comparability may be limited.
(b) Percentages may differ due to rounding.
First quarter 2015
Revenues of $1,087 million for first quarter 2015 were $10 million, or 0.9 percent, lower than in same period of 2014. This was primarily due to the adverse impact of foreign exchange partially offset by the net impact from acquisitions and disposals and organic growth.
Total commissions and fees for first quarter 2015 were $1,081 million, down $9 million or 0.9 percent, from $1,090 million in the prior year quarter. Excluding the $69 million adverse impact of foreign exchange, underlying growth in commissions and fees was $60 million, or 5.8 percent. Organic commissions and fees growth, which further excludes a positive 2.4 percent impact from acquisitions and disposals, was 3.4 percent.
The $69 million adverse impact from foreign exchange was due primarily to the significant period-over-period weakening of a number of currencies, most significantly the Euro, Pound Sterling, and Venezuelan Bolivar, versus the dollar.
Willis GB reported a 4.6 percent decline in commissions and fees primarily due to the adverse impact of foreign exchange. Excluding the negative impact of foreign exchange, underlying and organic growth in commissions and fees was 1.1 percent. Acquisition and disposals had no impact on commissions and fees in first quarter 2015.
The 1.1 percent organic growth in Willis GB was driven by strong growth in Financial Lines and mid-single digit growth in Property and Casualty. However, that growth was offset by declines in Transport, driven by softening rates, and in Retail Networks due to weak Insolvency and Commercial business.
Willis CWR reported a 2.5 percent decline in commission and fees. Excluding the negative 4.3 percent impact from foreign exchange and the favorable 0.4 percent impact from acquisition and disposals, organic growth in commissions and fees was 1.3 percent.
The 1.3 percent organic growth was driven by mid-single digit growth in Willis Re partially offset by a decline in the Wholesale business resulting from timing and lost business.
Willis North America reported 0.5 percent growth in commissions and fees. The disposal of low growth and non-strategic offices during 2014 and 2015 adversely impacted commission and fee growth by 4.1 percent. Foreign exchange had a modest negative impact on growth in first quarter 2015.

80
Business discussion

Organic growth was 4.7 percent versus the year ago period driven by strong growth from the M&A, FINEX and Real Estate practices and mid-single digit growth in Human Capital.
Willis International reported 1.1 percent growth in commissions and fees. The 15.8 percent positive impact from acquisitions completed during 2014, primarily due to Max Matthiessen and Charles Monat, was partially offset by the 20.1 percent adverse impact from foreign exchange, as a number of currencies significantly weakened versus the dollar.
Organic growth in commissions and fees was 5.3 percent driven by strong growth in Latin America, Asia and Eastern Europe.
Investment income was $3 million in first quarter 2015 versus $4 million in first quarter 2014.

Salaries and Benefits
First quarter 2015
Salaries and benefits of $567 million for first quarter 2015 were $3 million, or 0.5 percent lower than the year ago period. Underlying salaries and benefits, which exclude $37 million, or 6.9 percent, favorable impact from foreign currency movements, increased $34 million, or 6.4 percent.
The $34 million increase in underlying salaries and benefits includes $17 million net increase from acquisition and disposals. The remaining $17 million organic increase in salaries and benefits was primarily driven by higher costs of incentives, following strong performance in several businesses; mandatory pay increases in Latin America; and investment hires partially offset by higher defined benefit pension scheme income.
Other Expenses
First quarter 2015
Other operating expenses decreased by $5 million, or 3.2 percent, versus the year-ago period. Underlying Other operating expenses, which exclude $10 million favorable foreign currency movements increased $5 million, or 2.9 percent primarily due to an $8 million net increase from acquisitions and disposals. Organic other operating expenses decreased by $3 million due to the impact of cost management initiatives partially offset by costs associated with the proposed acquisition of Gras Savoye.
Depreciation expense was $22 million in first quarter 2015 and $23 million in first quarter 2014.
Amortization of intangible assets was $14 million in first quarter 2015 and $13 million in first quarter 2014.
Restructuring costs were $31 million in first quarter 2015 compared with $nil in first quarter 2014. See the 'Operational Improvement Program' section above for further details.
Other (expense) income, net
Other (expense) income, net in first quarter 2015 was a net expense of $6 million compared with $nil in first quarter 2014. The $6 million adverse movement versus the year-ago period is due to the impact of the revaluation of our non-functional currency assets and liabilities partially offset by derivative gains and the gain recognized following the disposal of our Omaha retail operations from Willis North America. The primary drivers of the foreign currency change were movements in the Euro and the Pound sterling against the US dollar.
Interest Expense
Interest expense in first quarter 2015 was $33 million compared with $32 million for the same period of 2014. The $1 million increase is primarily due to the unwind of discounts applied to deferred consideration related to acquisitions.
Income Taxes

The reported tax rate in first quarter 2015 was 22 percent compared with 21 percent for the same period of 2014. The income tax expense for first quarter 2015 was $56 million compared with $63 million in the year-ago period.


81
Willis Group Holdings plc


The first quarter 2015 charge includes an $8 million credit relating to an adjustment in respect of prior periods, while the first quarter of 2014 included a $2m charge relating to prior periods. Excluding these prior period adjustments the tax rates were approximately 25% for 2015 and 21% for 2014. The reason for the increase in tax rate was due to changes in the full year estimate of geographic mix of income. Also, both the current and prior year periods are impacted by the requirement to maintain a valuation allowance against US deferred tax assets
Interest in Earnings of Associates
Interest in earnings of associates, net of tax, was $16 million in first quarter 2015 compared to $19 million in the same period 2014. This $3 million decrease was mainly due to adverse foreign exchange resulting from the weakening of the Euro versus the dollar.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity
We believe that our balance sheet and cash flow provide us with the platform and flexibility to remain committed to our previously stated goals of:

•
investing in the business for growth;
•
value-creating merger and acquisition activity;
•
returning a steadily rising dividend to shareholders; and
•
the repurchase of shares.

Our principal sources of liquidity are cash from operations, available cash and cash equivalents and amounts available under our four revolving credit facilities, excluding the UK facility, which is solely for use by our main regulated UK entity in certain exceptional circumstances, and the Willis Securities facility, which is available for regulatory purposes related to securities underwriting only.
Our principal short-term uses of liquidity and capital resources are operating expenses, capital expenditures, dividends to shareholders, funding our acquisition strategy, principal amount of outstanding notes, borrowing under our seven-year team loan and revolving credit facilities, funding defined benefit pension plans and the repurchase of shares.
Our long-term liquidity requirements consist of the principal amount of outstanding notes; borrowings under our seven-year term loan and revolving credit facilities; funding our acquisition strategy; and our pension contributions.
As at March 31, 2015, cash and cash equivalents were $503 million, a decrease of $132 million compared to December 31, 2014. The $132 million decrease is primarily due to $64 million of cash used in operating activities, $54 million payment of dividends declared in the fourth quarter of 2014, and adverse foreign exchange movements. Included within cash and cash equivalents is a proportion held for regulatory capital adequacy requirements, including $89 million held within our regulated UK entities.
Net cash used in operating activities was $64 million in first quarter 2015, a reduction of $69 million from the $5 million of net cash provided by operating activities in the year-ago period. Additional funds were provided in first three months 2015 of $13 million from the sales of our Omaha retail operations from Willis North America and $35 million proceeds from the issue of shares.
As at March 31, 2015, there was $nil drawn down on all four of the revolving credit facilities (December 31, 2014: $nil). There were also no drawings, and subsequent repayments, of these facilities during the three months ended March 31, 2015.
The primary uses of funds during the first three months 2015 include $306 million of payments made for 2014 cash incentive awards; $54 million of dividend payments; $44 million cash contributions, including employees' salary sacrifice contributions, to our defined benefit schemes; capital expenditure of $16 million related to leasehold improvements, and information technology projects; $15 million for the repurchase of shares; and $8 million payment of deferred consideration related to acquisitions made in prior years.
The Company is authorized to buy back its ordinary shares by way of redemption, and will consider whether to do so from time to time based on many factors including market conditions. In February 2015, Willis announced that it intended to buy back

82
Business discussion

$175 million in shares in 2015 to offset the increase in shares outstanding resulting from the exercise of employee stock options. Based on the settlement date, the Company bought back approximately 300,000 shares for a total cost of $15 million in first three months 2015.
Based on current market conditions and information available to us at this time, we believe that we have sufficient liquidity, which includes our undrawn revolving credit facilities, to meet our cash needs for the next twelve months including the funding required to complete the acquisitions of Miller Insurance Services and Gras Savoye and the 2015 share buy-backs. Nevertheless, we expect to access the debt capital markets in order to finance the Gras Savoye transaction.
The impact of movements in debt and EBITDA in the quarter had no impact on the interest coverage ratio and the leverage ratio. Both ratios remain well within the requirements of the revolving credit facility covenants.

Debt
Total debt, total equity, and the capitalization ratio at March 31, 2015 and December 31, 2014 were as follows (millions, except percentages): 
 
March 31,
2015
 
December 31, 2014
Long-term debt
$
2,137

 
$
2,142

Short-term debt and current portion of long-term debt
168

 
167

Total debt
$
2,305

 
$
2,309

Total Willis Group Holdings stockholder’s equity
$
2,298

 
$
1,985

 
 
 
 
Capitalization ratio
50.1
%
 
53.8
%
At March 31, 2015 the only mandatory debt repayments falling due over the next 12 months are $148 million outstanding on our 5.625% senior notes, scheduled repayments on our 7-year term loan totaling $18 million, and $1 million outstanding on our 3-year term loan.
 
Summary consolidated cash flow information (millions):
 
Three months ended March 31,
 
2015
 
2014
Cash flows from operating activities
 
 
 
Net cash (used in) provided by operating activities
$
(64
)
 
$
5

Cash flows from investing activities
 
 
 
Net cash used in investing activities
(8
)
 
(21
)
Cash flows from financing activities
 
 
 
Net cash used in financing activities
(39
)
 
(49
)
Decrease in cash and cash equivalents
(111
)
 
(65
)
Effect of exchange rate changes on cash and cash equivalents
(21
)
 
3

Cash and cash equivalents, beginning of period
635

 
796

Cash and cash equivalents, end of period
$
503

 
$
734

This summary consolidated cash flow should be viewed in addition to, not in lieu of, the Company’s condensed consolidated financial statements.

83
Willis Group Holdings plc


Consolidated Cash Flow for first quarter 2015 compared with first quarter 2014
Operating Activities
Net cash used in operating activities in first three months 2015 was $64 million and represents a $69 million decrease from the $5 million net cash provided by operating activities in the year-ago quarter. The first quarter is typically the most significant quarter for operating cash uses due to the payment of the prior year's incentives in the quarter.
The $64 million cash from operating activities included net income of $214 million, $72 million of non-cash adjustments to reconcile net income to cash used in operating activities, and $350 million of negative working capital movements. The $350 million negative movement in working capital includes $306 million cash payments of 2014 incentives and $44 million of defined benefit pension funding.
The $69 million decrease in cash from operating activities was largely due to adverse foreign exchange movements; higher cash contributions into defined benefit pension schemes; a decrease in working capital resulting from the timing of collection of accounts receivable; and restructuring costs related to the Operational Improvement Program.
Investing Activities

Net cash used in investing activities in first three months 2015 was $8 million. This included capital expenditure of $16 million, and cash payments of $8 million for deferred consideration related to acquisitions made in prior years. This was partially offset by proceeds from the disposal of operations of $13 million.
Net cash used in investing activities in first three months 2014 was $21 million. This was primarily due to capital expenditure of $22 million and cash used to purchase subsidiaries and other investments of $4 million. This was partially offset by $6 million cash received from the sale operations and fixed and intangible assets.
Financing Activities

Net cash used in financing activities in first three months 2015 was $39 million primarily due to total dividends paid, including dividends paid to noncontrolling interests, of $57 million, repurchase of shares of $15 million, and $4 million of mandatory repayments against the term loan. This was partially offset by cash receipts of $35 million from the issue of shares, and $3 million excess tax benefits from share-based payment arrangements.
Net cash used in financing activities in first quarter 2014 was $49 million primarily due to total dividends paid, including dividends paid to noncontrolling interests, of $52 million, repurchase of shares of $35 million and $4 million of mandatory repayments against the term loan. This was partially offset by cash receipts of $43 million from the issue of shares.
Fiduciary Funds
As an intermediary, we hold funds generally in a fiduciary capacity for the account of third parties, typically as the result of premiums received from clients that are in transit to insurers and claims due to clients that are in transit from insurers. We report premiums, which are held on account of, or due from, clients as assets with a corresponding liability due to the insurers. Claims held by, or due to, us which are due to clients are also shown as both assets and liabilities.
Fiduciary funds are generally required to be kept in regulated bank accounts subject to guidelines which emphasize capital preservation and liquidity; such funds are not available to service the Company’s debt or for other corporate purposes. Notwithstanding the legal relationships with clients and insurers, the Company is entitled to retain investment income earned on fiduciary funds in accordance with industry custom and practice and, in some cases, as supported by agreements with insureds.
As of March 31, 2015, we had fiduciary funds of $2.0 billion, compared with $1.9 billion at December 31, 2014.
Share Buybacks
The Company is authorized to buy back its ordinary shares, by way of redemption, and will consider whether to do so from time to time based on many factors including market conditions. In February 2015, the Company announced that, during the year, it intends to buyback up to $175 million of shares under this authorization, from time to time, depending on many factors,

84
Business discussion

including market conditions, the Company's financial position, earnings, share price, capital requirements, and other investment opportunities (including mergers and acquisitions and related financings).
During the three months ended March 31, 2015, we bought back approximately 300,000 shares for a total cost of approximately $15 million at an average price of $48.32 per share on a settlement date basis.
Since the quarter-end and as of May 1, 2015, we have bought back a further 491,000 shares for a total cost of approximately $24 million and an average price of $48.86 per share on a settlement-date basis.
Dividends
In April 2015, we declared a quarterly cash dividend of $0.31 per share. This represents an increase of 3.3 percent on the first quarter 2014 per share dividend of $0.30 per share.
Cash dividends paid in first three months 2015 were $54 million compared with $50 million in first quarter 2014. The $4 million increase is driven by the period-over-period increase in dividend per share and the number of shares outstanding.

REVIEW OF SEGMENTAL RESULTS
We organize our business into four segments: Willis GB, Willis CWR, Willis North America, and Willis International.
As discussed in the 'Executive Summary' above, effective from January 1, 2015 the Company changed the way it manages and reports operating results, resulting in a change in the Company’s reportable segments from three reportable segments, formerly known as Willis Global, Willis North America and Willis International, into four reportable segments: Willis CWR, Willis North America, Willis International, and Willis GB.
The changes to the reportable segments units are as follows:
•
Willis International and Willis North America will remain largely unchanged except for certain specialty teams formerly included in Global which will be included in the geographic regions in which they are located;
•
Willis CWR includes Willis Re, Willis Capital Markets & Advisory and the Company's wholesale business. In addition, it will also include a new unit called Willis Portfolio and Underwriting Services which includes all of the Company's activities that provide these services; and
•
Willis GB includes the Company's UK retail business, facultative business and London Specialty business.
The 2014 comparatives have been retrospectively reclassified to take into account these changes.
The following table is a summary of our operating results by segment for the three months ended March 31, 2015 and 2014 (millions, except percentages): 
 
Three months ended March 31,
 
2015
 
2014
 
Revenues
 
Segment operating
income (loss)
 
Operating
margin
 
Revenues
 
Segment operating
income (loss)
 
Operating
margin
Willis GB
$
143

 
$
21

 
14.9
%
 
$
153

 
$
22

 
14.4
%
Willis Capital, Wholesale and Reinsurance
297

 
153

 
51.7
%
 
304

 
168

 
55.3
%
Willis North America
359

 
78

 
21.6
%
 
355

 
83

 
23.4
%
Willis International
288

 
70

 
24.4
%
 
285

 
84

 
29.5
%
Total Segments
1,087

 
322

 
29.6
%
 
1,097

 
357

 
32.5
%
Corporate & Other
—

 
(29
)
 
n/a

 
—

 
(31
)
 
n/a

Total Consolidated
$
1,087

 
$
293

 
26.9
%
 
$
1,097

 
$
326

 
29.7
%

85
Willis Group Holdings plc


Willis GB
Willis GB, our Great Britain-based specialty and retail business, comprises the following business units: Property & Casualty; Financial Lines; Transport; and Retail Networks.
The following table sets out the components of Willis GB's revenues, and its organic commissions and fees growth, operating income, and margin for the three months ended March 31, 2015 and 2014 (millions, except percentages):
 
 
Three months ended March 31,
 
2015
 
2014
Commissions and fees
$
142

 
$
150

Investment income
1

 
1

Other income (a)
—

 
2

Total revenues
$
143

 
$
153

Operating income
$
21

 
$
22

Organic commissions and fees growth (b)
1.1
%
 
(6.3
)%
Operating margin (c)
14.9
%
 
14.4
 %
_________________
(a) 
Other income comprises gains on disposal of intangible assets, which primarily arise from settlements through enforcing non-compete agreements in the event of losing accounts through producer defection or the disposal of books of business.
(b) 
Organic commissions and fees growth excludes (i) the impact of foreign currency translation; (ii) the first twelve months of net commission and fee revenues generated from acquisitions; and (iii) the net commission and fee revenues related to operations disposed of in each period presented.
(c) 
Percentages may differ due to rounding.
Revenues
First quarter 2015
Commissions and fees of $142 million were $8 million, or 4.6 percent, lower in first quarter 2015 compared with the same period 2014. Organic commissions and fees, which exclude a 5.7 percent adverse impact from foreign currency movements, increased by 1.1 percent. Acquisitions and disposals had no impact on commissions and fees versus the year-ago period.
The foreign currency movement was primarily due to the weakening of the Euro and Pound sterling against the US Dollar.
The 1.1 percent organic growth in commissions and fees reflects double digit growth in Financial Lines driven by strong new business across all units; and mid-single digit growth in Property and Casualty which was largely due to double digit growth in our UK large accounts.
However, that growth was offset by a decline in Transport, as new business growth and positive timing in Aviation was more than offset by reductions in our Marine book. In addition, Retail Networks was down versus the year-ago period, due to the renegotiated revenue terms with our commercial network partners and declining performance in our Insolvency business which is sensitive to the improving economy.
Expenses
First quarter 2015
Total expenses of $122 million were $9 million, or 6.9 percent, lower in the first quarter 2015 compared with the same period 2014. Underlying total expenses, which exclude $9 million of favorable foreign currency movements and $4 million restructuring costs related to the Operational Improvement Program charges, declined $4 million or 3.3 percent.
The favorable foreign currency movements arose primarily as a result of the strengthening of the US Dollar to the Pound sterling.
The $4 million decline in total expenses was primarily due to the non-recurrence of certain legal settlement costs that were incurred in first quarter 2014 and lower system charges.

86
Business discussion

The restructuring costs of $4 million related to professional services and other costs. See the 'Operational Improvement Program' section above for further details.
Operating margin
Operating margin was 14.9 percent in the first quarter 2015, up 50 basis points from 14.4 percent in the same period of 2014.
Willis Capital, Wholesale and Reinsurance
Willis CWR includes: Willis Re; Willis Capital Markets & Advisory; our Wholesale business and Portfolio and Underwrting services.
The following table sets out the components of Willis CWR's revenues, and its organic commissions and fees growth, operating income, and margin for the three months ended March 31, 2015 and 2014 (millions, except percentages):
 
 
Three months ended March 31,
 
2015
 
2014
Commissions and fees
$
296

 
$
303

Investment income
1

 
1

Total revenues
$
297

 
$
304

Operating income
$
153

 
$
168

Organic commissions and fees growth (a)
1.3
%
 
6.3
%
Operating margin (b)
51.7
%
 
55.3
%
_________________
(a) 
Organic commissions and fees growth excludes (i) the impact of foreign currency translation; (ii) the first twelve months of net commission and fee revenues generated from acquisitions; and (iii) the net commission and fee revenues related to operations disposed of in each period presented.
(b) 
Percentages may differ due to rounding.
Revenues
First quarter 2015
Commissions and fees of $296 million in first quarter 2015, were $7 million, or 2.5 percent, lower than the year-ago period. Organic commissions and fees, which exclude a 4.3 percent adverse impact from foreign currency movements, and 0.4 percent favorable impact from acquisitions and disposals increased by 1.3 percent.
The 1.3 percent organic growth in commissions and fees reflects solid growth in Willis Re in what is its most significant quarter for revenue. Organic growth in Willis Re was due to continued new business success in the North America business and the benefit of favorable timing from revenue moving into the first quarter from the second quarter. This growth was partially offset by declines in our International and Specialty businesses, where we continue to be affected by declining rates and consolidation. Organic growth was also partially offset by a decline in the Wholesale business that was due to negative timing and lost business.
Willis Capital Markets & Advisory and Willis Portfolio and Underwriting Services delivered commissions and fees in line with the prior year.
Expenses
First quarter 2015
Total expenses of $144 million were $8 million, or 5.9 percent, higher in the first quarter 2015 compared with the same period 2014. Underlying total expenses, which exclude $5 million of favorable foreign currency movements and $6 million restructuring costs related to the Operational Improvement Program charges, increased $7 million or 5.3 percent.

87
Willis Group Holdings plc


The $7 million increase in total expenses included $4 million year-over-year net increase from acquisitions. The remaining $3 million increase in total expenses was due to acquisition related charges.
The restructuring costs of $6 million related entirely to termination benefits. See the 'Operational Improvement Program' section above for further details.

Operating margin
Operating margin was 51.7 percent in the first quarter 2015 down 360 basis points from 55.3 percent in the same period of 2014.
Willis North America
Our North America business provides risk management, insurance brokerage, related risk services and employee benefits brokerage and consulting to a wide array of industry and client segments in the United States and Canada.
The following table sets out the components of Willis North America's revenues, and its organic commissions and fees growth,operating income, and margin for the three months ended March 31, 2015 and 2014 (millions, except percentages):
 
Three months ended March 31,
 
2015
 
2014
Commissions and fees
$
356

 
$
354

Other income (a)
3

 
1

Total revenues
$
359

 
$
355

Operating income
$
78

 
$
83

Organic commissions and fees growth (b)
4.7
%
 
5.4
%
Operating margin (c)
21.6
%
 
23.4
%
_________________
(a) 
Other income comprises gains on disposal of intangible assets, which primarily arise from settlements through enforcing non-compete agreements in the event of losing accounts through producer defection or the disposal of books of business.
(b) 
Organic commissions and fees growth excludes (i) the impact of foreign currency translation; (ii) the first twelve months of net commission and fee revenues generated from acquisitions; and (iii) the net commission and fee revenues related to operations disposed of in each period presented.
(c) 
Percentages may differ due to rounding.
Revenues
First quarter 2015
Commissions and fees of $356 million were $2 million, or 0.5 percent, higher in first quarter 2015 compared with the same period in 2014. Organic commissions and fees growth, which excludes a 4.1 percent negative impact from acquisitions and disposals and a 0.2 percent negative impact from foreign exchange, was 4.7 percent.
The acquisitions and disposals impact relates to the disposal of non-strategic low-growth offices during the past twelve months.
Organic growth in commissions and fees of 4.7 percent was driven by solid growth across a number of the major industry and product practices including Mergers & Acquisitions, FINEX, and Real Estate and Hospitality. The Human Capital practice was up mid-single digits in the quarter while Construction was up low-single digits, held back by declining surety revenues.


88
Business discussion

Expenses
First quarter 2015
Total expenses of $281 million were $9 million, or 3.3 percent, higher in first quarter 2015 compared to the same period in 2014. Underlying total expenses, which exclude $7 million restructuring costs related to the Operational Improvement Program, were $3 million, or 1.1 percent, higher than the year-ago period.
This increase was primarily due to higher salaries and benefits due to pay reviews and higher producer salaries.
The restructuring costs of $7 million related to $2 million of termination benefits and $5 million of professional service fees and other charges. See the 'Operational Improvement Program' section above for further details.
Operating margin
Operating margin in North America was 21.6 percent in first quarter 2015 down 180 basis points from 23.4 percent in first quarter 2014.

Willis International
Our International business comprises our retail and specialty operations in Western Europe, Central and Eastern Europe, Asia, Australasia, the Middle East, South Africa, and Latin America. The services provided are focused according to the characteristics of each market and vary across offices, but generally include direct risk management and insurance brokerage and employee benefits brokerage and consulting.
The following table sets out the components of Willis International's revenues, and its organic commissions and fees growth, operating income, and margin for the three months ended March 31, 2015 and 2014 (millions, except percentages):
 
 
Three months ended March 31,
 
2015
 
2014
Commissions and fees
$
287

 
$
283

Investment income
1

 
2

Total revenues
$
288

 
$
285

Operating income
$
70

 
$
84

Organic commissions and fees growth (a)
5.3
%
 
7.2
%
Operating margin (b)
24.4
%
 
29.5
%
_________________
(a) 
Organic commissions and fees growth excludes: (i) the impact of foreign currency translation; (ii) the first twelve months of net commission and fee revenues generated from acquisitions; and (iii) the net commission and fee revenues related to operations disposed of in each period presented.
(b) 
Percentages may differ due to roundings.
Revenues
First quarter 2015
Commissions and fees of $287 million were $4 million, or 1.1 percent, higher in first quarter 2015 compared with the same period in 2014. Organic commissions and fees, which exclude a 15.8 percent benefit from acquisitions, most significantly Max Matthiessen and Charles Monat, and 20.1 percent negative impact from foreign currency movements, was 5.3 percent.
The adverse foreign currency movement was primarily due to the weakening of a number of currencies such as the Australian Dollar and certain Latin American currencies against the US Dollar.
Commissions and fees in Asia grew high-single-digits in the quarter, despite a decline in China due to non-recurrence of construction projects, driven by strong performance from our Marine and Global Wealth Solutions businesses. Strong growth in

89
Willis Group Holdings plc


Latin America was led by Brazil and Colombia and Western Europe grew low-single digits led by growth in Iberia, Norway and Ireland.
Expenses
First quarter 2015
Total expenses of $218 million were $17 million, or 8.5 percent, higher in the first quarter 2015 compared with the same period in 2014. Underlying total expenses, which exclude $30 million favorable foreign currency movements and $3 million restructuring costs related to the Operational Improvement Program, increased $44 million or 25.7 percent.
The $44 million increase in total expenses included $33 million year-over-year net increase from acquisitions.
The remaining increase in underlying total expenses of $11 million was mainly due to acquisition related expenditure and increased salary and benefits resulting from annual pay reviews, including mandatory pay rises in certain Latin American countries, and investments in growth businesses.
The restructuring costs of $3 million relate to $2 million of termination benefits and $1 million of professional service fees. See the 'Operational Improvement Program' section above for further details.
Operating margin
Operating margin in International was 24.4 percent in first quarter 2015, down 510 basis points from 29.5 percent in the same period of 2014.

Corporate & Other
The Company evaluates the performance of its segments based on organic commissions and fees growth and operating income. For internal reporting and segmental reporting, items for which segmental management are not held responsible are included within ‘Corporate & Other’.
Corporate & Other comprises the following (millions): 
 
Three months ended March 31,
 
2015
 
2014
Costs of the holding company
$
(2
)
 
$
(2
)
Costs related to group functions, leadership and projects
(37
)
 
(41
)
Non-servicing elements of defined benefit pensions
22

 
13

Restructuring costs (a)
(11
)
 
—

Other
(1
)
 
(1
)
Total Corporate & Other
$
(29
)
 
$
(31
)
_________________________________
(a) 
See 'Operational Improvement Program' section above.

First quarter 2015
Corporate & Other expenses of $29 million were $2 million lower in the first quarter 2015 compared with the same period in 2014.
The $2 million reduction in expenses was primarily due to higher defined benefit pension income and a reduction to the costs of group functions, leadership and projects partially offset by restructuring costs incurred related to the 'Operational Improvement program' which is discussed further in the section above.


90
Business discussion

CRITICAL ACCOUNTING ESTIMATES
The accounting estimates or assumptions that management considers to be the most important to the presentation of our financial condition or operating performance are discussed in our Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission on February 27, 2015.
There were no significant additions or changes to these assumptions in the three months ended March 31, 2015.


CONTRACTUAL OBLIGATIONS
There have been no material changes to our contractual obligations since December 31, 2014, except contractual, planned payments during first quarter 2015 and except as discussed in Note 15 — 'Debt' to the condensed consolidated financial statements.

NEW ACCOUNTING STANDARDS
Information regarding new accounting standards and their impact on the financial statements is set forth in Note 2 - ‘Basis of Presentation and Significant Accounting Policies’ to the Consolidated Financial Statements appearing under Part I, Item 1 of this report and incorporated herein by reference.

OFF BALANCE SHEET TRANSACTIONS
Apart from commitments, guarantees and contingencies, as disclosed in Note 8 — ‘Commitments and Contingencies’ to the condensed consolidated financial statements, the Company has no off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on the Company's financial condition, results of operations or liquidity.


Item 3 — Quantitative and Qualitative Disclosures about Market Risk
There has been no material change with respect to market risk from that described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

Item 4 — Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of March 31, 2015, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Group Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e). Based upon that evaluation, the Chief Executive Officer and the Group Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in ensuring that the information required to be included in the Company’s periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to them as appropriate to allow for timely decisions regarding required disclosure.
There have been no changes in the Company's internal controls over financial reporting during the quarter ended March 31, 2015 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

91
Willis Group Holdings plc


PART II — OTHER INFORMATION
Item 1 — Legal Proceedings
Information regarding legal proceedings is set forth in Note 8 — ‘Commitments and Contingencies’ to the Condensed Consolidated Financial Statements appearing in Part I, Item 1 of this report and incorporated herein by reference.

Item 1A — Risk Factors
For a discussion of potential risks or uncertainties, please see 'Part I - Item 1A - Risk Factors' in the Company's 2014 Form 10-K filed with the Securities and Exchange Commission. In addition please see 'Forward-Looking Statements' herein. There have been no material changes to the risk factors disclosed in Part I - Item 1A of the Company's 2014 Annual Report.


Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds
During the quarter ended March 31, 2015, no shares were issued by the Company without registration under the Securities Act of 1933, as amended.
Share buybacks
The Company is authorized to buy back shares, by way of redemption, and will consider whether to do so from time to time, based on many factors, including market conditions. In February 2015, the Company announced that during the year it intends to buy back approximately $175 million of shares under this authorization, from time to time, depending on many factors, including market conditions, the Company's financial position, earnings, share price, capital requirements, and other investment opportunities (including mergers and acquisitions and related financings). As of March 31, 2015, there remained approximately $593 million under the current authorization.
The following amounts of the Company’s ordinary shares were bought back by the Company during the three months ended March 31, 2015 and are reflected below based on the date of trade:
 
Total number of shares purchased
 
Average price paid per share (a)
 
Total number of shares purchased as part of publicly announced plans or programs
 
Approximate dollar value of shares that may yet be purchased under the plans or programs
 
 
 
 
 
 
 
 
Period:
 
 
 
 
 
 
 
January 1, 2015 to January 31, 2015
—

 
$
—

 
—

 
$
611,289,766

February 1, 2015 to February 28, 2015
—

 
$
—

 
—

 
$
611,289,766

March 1, 2015 to March 31, 2015
375,500

 
$
48.30

 
375,500

 
$
593,153,137

 
 
 
 
 
 
 
 
Total
375,500

 

 
375,500

 
 
____________

(i) Does not include commissions and fees.
As of May 5, 2015 the Company has acquired 838,500 shares at a total price of approximately $41 million. There remains approximately $571 million under the current authorization.

92
Other information

Item 3 — Defaults Upon Senior Securities
None.
Item 4 — Mine Safety Disclosures
Not applicable.
Item 5 — Other Information
None.

93
Willis Group Holdings plc


Item 6 — Exhibits
2.1
 
Firm Offer and Form of Securities Transfer Agreement, dated as of April 22, 2015, by and between Willis Europe BV and the Sellers thereto *
10.1
 
Addendum No. 1 to the Shareholders Agreement with respect to GS & Cie Groupe, dated as of April 22, 2015, by and among Willis Group Holdings Public Limited Company, Willis Europe BV, Willis Netherlands Holdings BV, Astorg IV FCPR, key managers of GS & Cie Groupe, and the other parties listed on the signature pages thereto *†
10.2
 
Amended Willis Group Holdings Public Limited Company Compensation Policy for Non-Employee Directors *
21.1
 
List of Subsidiaries*
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
 _________________________________
* Filed herewith.
† The Company intends to seek confidential treatment with respect to certain portions of this exhibit.



94
Willis Group Holdings plc


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 thereunto duly authorized.
 
WILLIS GROUP HOLDINGS PLC
(REGISTRANT)
 
 
By:
 
/s/ JOHN GREENE
 
 
John Greene
 
 
Group Chief Financial Officer
 
 
(Principal Financial and Accounting Officer)
Dated: May 6, 2015

95