(Mark One) | ||
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended June 30, 2015 | ||
or | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Ireland (Jurisdiction of incorporation or organization) | 98-0352587 (I.R.S. Employer Identification No.) |
Large accelerated filer þ | Accelerated filer ¨ | Non-accelerated filer ¨ | Smaller reporting company ¨ | |||
(Do not check if a smaller reporting company) |
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‘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’ or 'Willis ordinary shares' | The ordinary shares of Willis Group Holdings Public Limited Company, nominal value $0.000115 per share. | |
'Merger' | Pending merger between the Company and Towers Watson & Co. | |
'Merger Agreement' | Agreement and Plan of Merger, dated as of June 29, 2015 (as it may be amended from time to time), by and among Willis Group Holdings plc, Citadel Merger Sub Inc. and Towers Watson & Co. | |
'Merger Sub' | Citadel Merger Sub Inc., a Delaware corporation | |
'Towers Watson' | Towers Watson & Co., a Delaware corporation |
• | 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; |
• | our ability to consummate transactions, including the proposed Towers Watson merger and the Gras Savoye acquisition; |
• | our ability to obtain requisite approvals and satisfy other conditions to the consummation of proposed transactions, including obtaining regulatory and shareholder approvals for the proposed Towers Watson transactions and regulatory approval for the Gras Savoye acquisition; |
• | our ability to successfully integrate our operations and employees with those of Towers Watson and any acquired business, including Gras Savoye and Miller Insurance Services LLP; |
• | our ability to realize any anticipated benefit of any acquisition or other transaction in whicy we may engage, including any revenue growth, operational efficiencies, synergies or cost savings; |
• | the potential impact of the consummation of the proposed Towers Watson transaction on relationships, including with employees, suppliers, customers and competitors; |
• | the diversion of management's time and attention while the Towers Watson transaction or Gras Savoye acquisition is pending; |
• | the income tax consequences of the Towers Watson transaction and the enactment of additional state, federal, and/or foreign regulatory and tax laws and regulations; |
• | 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 |
• | 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; |
• | 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 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; |
• | a significant decline in the value of investments that fund our pension plans or changes in our pension plan liabilities |
• | 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 |
• | impairment of the goodwill in one of our reporting units, in which case we may be required to record significant charges to earnings. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||
Note | 2015 | 2014 | 2015 | 2014 | ||||||||||||||
(millions, except per share data) | ||||||||||||||||||
REVENUES | ||||||||||||||||||
Commissions and fees | $ | 917 | $ | 930 | $ | 1,998 | $ | 2,020 | ||||||||||
Investment income | 3 | 4 | 6 | 8 | ||||||||||||||
Other income | 2 | 1 | 5 | 4 | ||||||||||||||
Total revenues | 922 | 935 | 2,009 | 2,032 | ||||||||||||||
EXPENSES | ||||||||||||||||||
Salaries and benefits | (561 | ) | (575 | ) | (1,128 | ) | (1,145 | ) | ||||||||||
Other operating expenses | (179 | ) | (173 | ) | (339 | ) | (338 | ) | ||||||||||
Depreciation expense | (23 | ) | (24 | ) | (45 | ) | (47 | ) | ||||||||||
Amortization of intangible assets | 13 | (16 | ) | (12 | ) | (30 | ) | (25 | ) | |||||||||
Restructuring costs | 3 | (38 | ) | (3 | ) | (69 | ) | (3 | ) | |||||||||
Total expenses | (817 | ) | (787 | ) | (1,611 | ) | (1,558 | ) | ||||||||||
OPERATING INCOME | 105 | 148 | 398 | 474 | ||||||||||||||
Other income (expense), net | 4 | 23 | (3 | ) | 17 | (3 | ) | |||||||||||
Interest expense | (35 | ) | (35 | ) | (68 | ) | (67 | ) | ||||||||||
INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | 93 | 110 | 347 | 404 | ||||||||||||||
Income taxes | 5 | (19 | ) | (59 | ) | (75 | ) | (122 | ) | |||||||||
INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES | 74 | 51 | 272 | 282 | ||||||||||||||
Interest in (loss) earnings of associates, net of tax | (2 | ) | (3 | ) | 14 | 16 | ||||||||||||
NET INCOME | 72 | 48 | 286 | 298 | ||||||||||||||
Less: net income attributable to noncontrolling interests | (2 | ) | (1 | ) | (6 | ) | (5 | ) | ||||||||||
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS | $ | 70 | $ | 47 | $ | 280 | $ | 293 |
EARNINGS PER SHARE — BASIC AND DILUTED | ||||||||||||||||||
— Basic earnings per share | 6 | $ | 0.39 | $ | 0.26 | $ | 1.56 | $ | 1.64 | |||||||||
— Diluted earnings per share | 6 | $ | 0.38 | $ | 0.26 | $ | 1.54 | $ | 1.61 | |||||||||
CASH DIVIDENDS DECLARED PER SHARE | $ | 0.31 | $ | 0.30 | $ | 0.62 | $ | 0.60 |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||
Note | 2015 | 2014 | 2015 | 2014 | ||||||||||||||
(millions) | ||||||||||||||||||
Net income | $ | 72 | $ | 48 | $ | 286 | $ | 298 | ||||||||||
Other comprehensive income, net of tax: | ||||||||||||||||||
Foreign currency translation adjustments | 70 | 27 | (42 | ) | 30 | |||||||||||||
Pension funding adjustment | (17 | ) | (5 | ) | 213 | 1 | ||||||||||||
Derivative instruments | 31 | 3 | 20 | 2 | ||||||||||||||
Other comprehensive income, net of tax | 17 | 84 | 25 | 191 | 33 | |||||||||||||
Comprehensive income | 156 | 73 | 477 | 331 | ||||||||||||||
Less: Comprehensive income attributable to noncontrolling interests | (6 | ) | (1 | ) | (3 | ) | (5 | ) | ||||||||||
Comprehensive income attributable to Willis Group Holdings | $ | 150 | $ | 72 | $ | 474 | $ | 326 |
Note | June 30, 2015 | December 31, 2014 | ||||||||
(millions, except share data) | ||||||||||
ASSETS | ||||||||||
CURRENT ASSETS | ||||||||||
Cash and cash equivalents | $ | 483 | $ | 635 | ||||||
Accounts receivable, net | 1,226 | 1,044 | ||||||||
Fiduciary assets | 11,006 | 8,948 | ||||||||
Deferred tax assets | 9 | 12 | ||||||||
Other current assets | 14 | 222 | 214 | |||||||
Total current assets | 12,946 | 10,853 | ||||||||
NON-CURRENT ASSETS | ||||||||||
Fixed assets, net | 516 | 483 | ||||||||
Goodwill | 12 | 3,097 | 2,937 | |||||||
Other intangible assets, net | 13 | 675 | 450 | |||||||
Investments in associates | 168 | 169 | ||||||||
Deferred tax assets | 6 | 9 | ||||||||
Pension benefits asset | 677 | 314 | ||||||||
Other non-current assets | 14 | 234 | 220 | |||||||
Total non-current assets | 5,373 | 4,582 | ||||||||
TOTAL ASSETS | $ | 18,319 | $ | 15,435 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
CURRENT LIABILITIES | ||||||||||
Fiduciary liabilities | $ | 11,006 | $ | 8,948 | ||||||
Deferred revenue and accrued expenses | 443 | 619 | ||||||||
Income taxes payable | 35 | 33 | ||||||||
Current portion of long-term debt | 16 | 468 | 167 | |||||||
Deferred tax liabilities | 21 | 21 | ||||||||
Other current liabilities | 15 | 522 | 444 | |||||||
Total current liabilities | 12,495 | 10,232 | ||||||||
NON-CURRENT LIABILITIES | ||||||||||
Long-term debt | 16 | 2,052 | 2,142 | |||||||
Liability for pension benefits | 294 | 284 | ||||||||
Deferred tax liabilities | 211 | 128 | ||||||||
Provisions for liabilities | 220 | 194 | ||||||||
Other non-current liabilities | 15 | 506 | 389 | |||||||
Total non-current liabilities | 3,283 | 3,137 | ||||||||
Total liabilities | 15,778 | 13,369 |
Note | June 30, 2015 | December 31, 2014 | ||||||||
(millions, except share data) | ||||||||||
COMMITMENTS AND CONTINGENCIES | 8 | |||||||||
REDEEMABLE NONCONTROLLING INTEREST | 52 | 59 | ||||||||
EQUITY | ||||||||||
Ordinary shares, $0.000115 nominal value; Authorized: 4,000,000,000; Issued 179,656,059 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 | 1,650 | 1,524 | ||||||||
Retained earnings | 1,618 | 1,530 | ||||||||
Accumulated other comprehensive loss, net of tax | 17 | (872 | ) | (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 | 2,393 | 1,985 | ||||||||
Noncontrolling interests | 96 | 22 | ||||||||
Total equity | 2,489 | 2,007 | ||||||||
TOTAL LIABILITIES AND EQUITY | $ | 18,319 | $ | 15,435 |
Six months ended June 30, | ||||||||||
Note | 2015 | 2014 | ||||||||
(millions) | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||
Net income | $ | 286 | $ | 298 | ||||||
Adjustments to reconcile net income to total net cash provided by operating activities: | ||||||||||
Net gain on disposal of operations and fixed and intangible assets | (15 | ) | — | |||||||
Depreciation expense | 45 | 47 | ||||||||
Amortization of intangible assets | 13 | 30 | 25 | |||||||
Amortization of cash retention awards | 5 | 5 | ||||||||
Net periodic income of defined benefit pension plans | 7 | (33 | ) | (8 | ) | |||||
Provision for doubtful debts | 1 | 2 | ||||||||
Provision for deferred income taxes | 33 | 45 | ||||||||
Excess tax benefits from share-based payment arrangements | (5 | ) | (2 | ) | ||||||
Share-based compensation | 34 | 28 | ||||||||
Gain on derivative instruments | (6 | ) | (5 | ) | ||||||
Undistributed earnings of associates | (8 | ) | (14 | ) | ||||||
Effect of exchange rate changes on net income | 20 | 15 | ||||||||
Change in operating assets and liabilities, net of effects from purchase of subsidiaries: | ||||||||||
Accounts receivable | (160 | ) | (137 | ) | ||||||
Fiduciary assets | (1,470 | ) | (1,534 | ) | ||||||
Fiduciary liabilities | 1,470 | 1,534 | ||||||||
Cash incentives paid | (385 | ) | (358 | ) | ||||||
Funding of defined benefit pension plans | (69 | ) | (54 | ) | ||||||
Other assets | 10 | 37 | ||||||||
Other liabilities | 216 | 225 | ||||||||
Movement on provisions | 8 | 3 | ||||||||
Net cash provided by operating activities | 7 | 152 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||
Proceeds on disposal of fixed and intangible assets | 9 | 2 | ||||||||
Additions to fixed assets | (47 | ) | (54 | ) | ||||||
Additions to intangible assets | (10 | ) | (1 | ) | ||||||
Acquisitions of operations, net of cash acquired | (228 | ) | (41 | ) | ||||||
Payments to acquire other investments, net of distributions received | — | (6 | ) | |||||||
Proceeds on sale of operations, net of cash disposed | 28 | 18 | ||||||||
Net cash used in investing activities | (248 | ) | (82 | ) |
Six months ended June 30, | ||||||||||
Note | 2015 | 2014 | ||||||||
(millions) | ||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||
Proceeds from draw down of revolving credit facilities | 16 | 220 | — | |||||||
Debt issuance costs | (1 | ) | (3 | ) | ||||||
Repayments of debt | 16 | (8 | ) | (8 | ) | |||||
Repurchase of shares | (79 | ) | (117 | ) | ||||||
Proceeds from issue of shares | 84 | 93 | ||||||||
Excess tax benefits from share-based payment arrangements | 5 | 2 | ||||||||
Dividends paid | (109 | ) | (103 | ) | ||||||
Acquisition of noncontrolling interests | — | (4 | ) | |||||||
Dividends paid to noncontrolling interests | (8 | ) | (15 | ) | ||||||
Net cash provided by (used in) financing activities | 104 | (155 | ) | |||||||
DECREASE IN CASH AND CASH EQUIVALENTS | (137 | ) | (85 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents | (15 | ) | (3 | ) | ||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 635 | 796 | ||||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 483 | $ | 708 |
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, 2014 | 178,861 | 1,316 | 1,595 | (3 | ) | (693 | ) | 2,215 | 28 | 2,243 | — | |||||||||||||||||||||||||||
Shares repurchased | (2,755 | ) | — | (117 | ) | — | — | (117 | ) | — | (117 | ) | — | |||||||||||||||||||||||||
Net income | — | — | 293 | — | — | 293 | 5 | 298 | — | $ | 298 | |||||||||||||||||||||||||||
Dividends | — | — | (107 | ) | — | — | (107 | ) | (15 | ) | (122 | ) | — | |||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | 33 | 33 | — | 33 | — | $ | 33 | |||||||||||||||||||||||||||
Issue of shares under employee stock compensation plans and related tax benefits | 2,787 | 98 | — | — | — | 98 | — | 98 | — | |||||||||||||||||||||||||||||
Share-based compensation | — | 28 | — | — | — | 28 | — | 28 | — | |||||||||||||||||||||||||||||
Foreign currency translation | — | 1 | — | — | — | 1 | — | 1 | — | |||||||||||||||||||||||||||||
Balance at June 30, 2014 | 178,893 | 1,443 | 1,664 | (3 | ) | (660 | ) | 2,444 | 18 | 2,462 | — | |||||||||||||||||||||||||||
Balance at January 1, 2015 | 178,701 | $ | 1,524 | $ | 1,530 | $ | (3 | ) | $ | (1,066 | ) | $ | 1,985 | $ | 22 | $ | 2,007 | $ | 59 | |||||||||||||||||||
Shares repurchased | (1,642 | ) | — | (79 | ) | — | — | (79 | ) | — | (79 | ) | — | |||||||||||||||||||||||||
Net income | — | — | 280 | — | — | 280 | 5 | 285 | 1 | $ | 286 | |||||||||||||||||||||||||||
Dividends | — | — | (113 | ) | — | — | (113 | ) | (9 | ) | (122 | ) | (5 | ) | ||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | 194 | 194 | — | 194 | (3 | ) | $ | 191 | ||||||||||||||||||||||||||
Issue of shares under employee stock compensation plans and related tax benefits | 2,597 | 88 | — | — | — | 88 | — | 88 | — | |||||||||||||||||||||||||||||
Share-based compensation | — | 34 | — | — | — | 34 | — | 34 | — | |||||||||||||||||||||||||||||
Additional noncontrolling interests | — | — | — | — | — | — | 78 | 78 | — | |||||||||||||||||||||||||||||
Foreign currency translation | — | 4 | — | — | — | 4 | — | 4 | — | |||||||||||||||||||||||||||||
Balance at June 30, 2015 | 179,656 | $ | 1,650 | $ | 1,618 | $ | (3 | ) | $ | (872 | ) | $ | 2,393 | $ | 96 | $ | 2,489 | $ | 52 |
(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 |
• | Elimination or 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; |
• | information technology systems simplification and rationalization. |
Willis North America | Willis International | Willis GB | Willis Capital, Wholesale & Reinsurance | Corporate & other | Total | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
Three months ended June 30, 2015 | |||||||||||||||||||||||
Termination benefits | $ | 3 | $ | 1 | $ | 13 | $ | — | $ | 3 | $ | 20 | |||||||||||
Professional services and other | 5 | 6 | 4 | 1 | 2 | 18 | |||||||||||||||||
Total | $ | 8 | $ | 7 | $ | 17 | $ | 1 | $ | 5 | $ | 38 | |||||||||||
Three months ended June 30, 2014 | |||||||||||||||||||||||
Termination benefits | $ | 1 | $ | — | $ | — | $ | — | $ | — | $ | 1 | |||||||||||
Professional services and other | — | — | — | — | 2 | $ | 2 | ||||||||||||||||
Total | $ | 1 | $ | — | $ | — | $ | — | $ | 2 | $ | 3 |
Willis North America | Willis International | Willis GB | Willis Capital, Wholesale & Reinsurance | Corporate & other | Total | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
Six months ended June 30, 2015 | |||||||||||||||||||||||
Termination benefits | $ | 5 | $ | 3 | $ | 13 | $ | 6 | $ | 3 | $ | 30 | |||||||||||
Professional services and other | 10 | 7 | 8 | 1 | 13 | 39 | |||||||||||||||||
Total | $ | 15 | $ | 10 | $ | 21 | $ | 7 | $ | 16 | $ | 69 | |||||||||||
Six months ended June 30, 2014 | |||||||||||||||||||||||
Termination benefits | $ | 1 | $ | — | $ | — | $ | — | $ | — | $ | 1 | |||||||||||
Professional services and other | — | — | — | — | 2 | $ | 2 | ||||||||||||||||
Total | $ | 1 | $ | — | $ | — | $ | — | $ | 2 | $ | 3 |
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 | $ | 5 | $ | 3 | $ | 13 | $ | 6 | $ | 3 | $ | 30 | |||||||||||
Professional services and other | 10 | 7 | 8 | 1 | 13 | 39 | |||||||||||||||||
Total | |||||||||||||||||||||||
Termination benefits | $ | 8 | $ | 6 | $ | 22 | $ | 7 | $ | 3 | $ | 46 | |||||||||||
Professional services and other | 10 | 9 | 9 | 1 | 30 | 59 | |||||||||||||||||
Total | $ | 18 | $ | 15 | $ | 31 | $ | 8 | $ | 33 | $ | 105 |
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 | 30 | 39 | 69 | ||||||||
Cash payments | (11 | ) | (39 | ) | (50 | ) | |||||
Balance at June 30, 2015 | $ | 24 | $ | 6 | $ | 30 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(millions) | |||||||||||||||
Gain (loss) on disposal of operations | $ | 7 | $ | 2 | $ | 11 | $ | (1 | ) | ||||||
Foreign exchange gains (losses), net | 16 | (5 | ) | 6 | (2 | ) | |||||||||
Other income (expense), net | $ | 23 | $ | (3 | ) | $ | 17 | $ | (3 | ) |
Income before tax | Tax | Effective tax rate | ||||||||
(millions, except percentages) | ||||||||||
Three months ended June 30, 2015 | ||||||||||
Ordinary income taxed at estimated annual effective tax rate | $ | 86 | $ | (21 | ) | 24 | % | |||
Items where tax effect is treated discretely: | ||||||||||
Gain on disposal of operations | 7 | (2 | ) | 29 | % | |||||
Net adjustment in respect of prior periods | — | 4 | — | % | ||||||
As reported | $ | 93 | $ | (19 | ) | 20 | % | |||
Three months ended June 30, 2014 | ||||||||||
Ordinary income taxed at estimated annual effective tax rate | $ | 108 | $ | (27 | ) | 25 | % | |||
Items where tax effect is treated discretely: | ||||||||||
Gain on disposal of operations | 2 | (2 | ) | 100 | % | |||||
Incremental increase to US valuation allowance | — | (21 | ) | — | % | |||||
Net adjustment in respect of prior periods | — | 4 | — | % | ||||||
Additional tax charge as a result of current quarter refinements to the phasing of the US tax charge | — | (13 | ) | — | % | |||||
As reported | $ | 110 | $ | (59 | ) | 54 | % |
Income before tax | Tax | Effective tax rate | ||||||||
(millions, except percentages) | ||||||||||
Six months ended June 30, 2015 | ||||||||||
Ordinary income taxed at estimated annual effective tax rate | $ | 336 | $ | (83 | ) | 25 | % | |||
Items where tax effect is treated discretely: | ||||||||||
Gain on disposal of operations | 11 | (4 | ) | 36 | % | |||||
Net adjustment in respect of prior periods | — | 12 | — | % | ||||||
As reported | $ | 347 | $ | (75 | ) | 22 | % | |||
Six months ended June 30, 2014 | ||||||||||
Ordinary income taxed at estimated annual effective tax rate | $ | 405 | $ | (102 | ) | 25 | % | |||
Items where tax effect is treated discretely: | ||||||||||
Loss on disposal of operations | (1 | ) | (1 | ) | (100 | )% | ||||
Incremental increase to US valuation allowance | — | (21 | ) | — | % | |||||
Net adjustment in respect of prior periods | — | 2 | — | % | ||||||
As reported | $ | 404 | $ | (122 | ) | 30 | % |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(millions, except per share data) | |||||||||||||||
Net income attributable to Willis Group Holdings | $ | 70 | $ | 47 | $ | 280 | $ | 293 | |||||||
Basic average number of shares outstanding | 180 | 179 | 179 | 179 | |||||||||||
Dilutive effect of potentially issuable shares | 2 | 3 | 3 | 3 | |||||||||||
Diluted average number of shares outstanding | 182 | 182 | 182 | 182 | |||||||||||
Basic earnings per share: | |||||||||||||||
Net income attributable to Willis Group Holdings shareholders | $ | 0.39 | $ | 0.26 | $ | 1.56 | $ | 1.64 | |||||||
Dilutive effect of potentially issuable shares | (0.01 | ) | — | (0.02 | ) | (0.03 | ) | ||||||||
Diluted earnings per share: | |||||||||||||||
Net income attributable to Willis Group Holdings shareholders | $ | 0.38 | $ | 0.26 | $ | 1.54 | $ | 1.61 |
Three months ended June 30, | |||||||||||||||||||||||
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 | $ | 8 | $ | 10 | $ | — | $ | — | $ | — | $ | 1 | |||||||||||
Interest cost | 26 | 31 | 10 | 10 | 1 | 2 | |||||||||||||||||
Expected return on plan assets | (55 | ) | (54 | ) | (15 | ) | (14 | ) | (1 | ) | (2 | ) | |||||||||||
Amortization of unrecognized prior service gain | (6 | ) | — | — | — | — | — | ||||||||||||||||
Amortization of unrecognized actuarial loss | 9 | 10 | 3 | 2 | — | — | |||||||||||||||||
Net periodic (income) benefit cost | $ | (18 | ) | $ | (3 | ) | $ | (2 | ) | $ | (2 | ) | $ | — | $ | 1 | |||||||
Six months ended June 30, | |||||||||||||||||||||||
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 | $ | 18 | $ | 21 | $ | — | $ | — | $ | 1 | $ | 1 | |||||||||||
Interest cost | 52 | 61 | 20 | 20 | 3 | 4 | |||||||||||||||||
Expected return on plan assets | (112 | ) | (108 | ) | (29 | ) | (27 | ) | (2 | ) | (3 | ) | |||||||||||
Amortization of unrecognized prior service gain | (8 | ) | (1 | ) | — | — | — | — | |||||||||||||||
Amortization of unrecognized actuarial loss | 18 | 21 | 6 | 3 | — | — | |||||||||||||||||
Net periodic benefit (income) cost | $ | (32 | ) | $ | (6 | ) | $ | (3 | ) | $ | (4 | ) | $ | 2 | $ | 2 |
• | 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’). |
• | 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 |
• | 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 except Willis Group Holdings plc answered the complaint in the Casanova action. On June 19, 2015, Willis Group Holdings plc filed a motion to dismiss the complaint for lack of personal jurisdiction. The motion is scheduled to be fully briefed as of September 17, 2015. |
• | 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 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. Oral argument on the consolidated appeal is scheduled for September 2, 2015. 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 |
• | 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. |
• | 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 |
• | changes in the exchange rate between US dollars and Pounds sterling as the Company's London market operations earn the majority of their revenues in US dollars and incurs 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. |
• | 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; |
• | to the extent the UK operations, excluding Miller Insurance Services LLP, earn significant revenues in euros and Japanese yen, the Company limits its exposure to changes in the exchange rate between the US dollar and these currencies by the use of forward contracts matched to a percentage of forecast cash inflows in specific currencies and periods. In addition, the Company is also exposed to foreign exchange risk on any net sterling asset or liability position in the London market operations; and |
• | to the extent Miller Insurance Services LLP earns significant non-functional currency revenues, the Company limits its exposure to exchange rate changes by the use of forward contracts matched to a percentage of forecast cash inflows in specific currencies and periods. |
Sell | Fair value | ||||||
(millions) | |||||||
US dollar | $ | 1,004 | $ | (1 | ) | ||
Euro | 202 | 25 | |||||
Japanese yen | 47 | 6 |
Fair value | ||||||||||
Derivative financial instruments designated as hedging instruments: | Balance sheet classification | June 30, 2015 | December 31, 2014 | |||||||
(millions) | ||||||||||
Assets: | ||||||||||
Forward exchange contracts | Other assets | $ | 44 | $ | 26 | |||||
Interest rate swaps | Other assets | 2 | — | |||||||
Total derivatives designated as hedging instruments | $ | 46 | $ | 26 | ||||||
Liabilities: | ||||||||||
Forward exchange contracts | Other liabilities | $ | 13 | $ | 21 | |||||
Interest rate swaps | Other liabilities | 2 | — | |||||||
Total derivatives designated as hedging instruments | $ | 15 | $ | 21 |
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 June 30, 2015 | ||||||||||||||||
Forward exchange contracts | 39 | Other income (expense), net | (1 | ) | Interest expense | 1 | ||||||||||
Total | $ | 39 | $ | (1 | ) | $ | 1 | |||||||||
Three months ended June 30, 2014 | ||||||||||||||||
Interest rate swaps | $ | — | Investment income | $ | (1 | ) | Other operating expenses | $ | — | |||||||
Treasury locks | — | Interest expense | (1 | ) | Interest expense | — | ||||||||||
Forward exchange contracts | (1 | ) | Other income (expense), net | 6 | Interest expense | (1 | ) | |||||||||
Total | $ | (1 | ) | $ | 4 | $ | (1 | ) | ||||||||
Six months ended June 30, 2015 | ||||||||||||||||
Interest rate swaps | $ | — | Investment income | $ | (1 | ) | Other operating expenses | $ | — | |||||||
Forward exchange contracts | 25 | Other income (expense), net | — | Interest expense | 1 | |||||||||||
Total | $ | 25 | $ | (1 | ) | $ | 1 | |||||||||
Six months ended June 30, 2014 | ||||||||||||||||
Interest rate swaps | $ | — | Investment income | $ | (3 | ) | Other operating expenses | $ | — | |||||||
Treasury locks | — | Interest expense | (1 | ) | Interest expense | — | ||||||||||
Forward exchange contracts | (1 | ) | Other income (expense), net | 7 | Interest expense | (1 | ) | |||||||||
Total | $ | (1 | ) | $ | 3 | $ | (1 | ) |
• | 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. |
June 30, 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 | — | 47 | — | 47 | |||||||||||
Total assets | $ | — | $ | 47 | $ | — | $ | 47 | |||||||
Liabilities at fair value: | |||||||||||||||
Derivative financial instruments | — | 17 | — | 17 | |||||||||||
Total liabilities | $ | — | $ | 17 | $ | — | $ | 17 |
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 |
June 30, 2015 | December 31, 2014 | ||||||||||||||
Carrying amount | Fair value | Carrying amount | Fair value | ||||||||||||
(millions) | |||||||||||||||
Assets: | |||||||||||||||
Cash and cash equivalents | $ | 483 | $ | 483 | $ | 635 | $ | 635 | |||||||
Fiduciary funds (included within Fiduciary assets) | $ | 2,473 | $ | 2,473 | $ | 1,888 | $ | 1,888 | |||||||
Liabilities: | |||||||||||||||
Current portion of long term debt | $ | 169 | $ | 169 | $ | 167 | $ | 169 | |||||||
Long-term debt | 2,351 | 2,491 | 2,142 | 2,327 |
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 | — | ||||||||||||
Purchase price allocation adjustments | — | — | — | 1 | 1 | ||||||||||||||
Goodwill acquired during the period | — | 172 | 11 | 9 | 192 | ||||||||||||||
Goodwill disposed of during the period | (2 | ) | — | (10 | ) | — | (12 | ) | |||||||||||
Foreign exchange | 1 | 4 | (2 | ) | (24 | ) | (21 | ) | |||||||||||
Balance at June 30, 2015 | |||||||||||||||||||
Goodwill, gross | $ | 554 | $ | 1,028 | $ | 1,511 | $ | 496 | $ | 3,589 | |||||||||
Accumulated impairment losses | — | — | (492 | ) | — | (492 | ) | ||||||||||||
Goodwill, net | $ | 554 | $ | 1,028 | $ | 1,019 | $ | 496 | $ | 3,097 |
(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. |
• | Client relationships |
• | Management contracts |
• | Other, including: |
◦ | non-compete agreements |
◦ | trade names |
◦ | contract-based, technology and other |
June 30, 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 | $ | 924 | $ | (336 | ) | $ | 588 | $ | 689 | $ | (316 | ) | $ | 373 | |||||||||
Management contracts | 67 | (3 | ) | 64 | 71 | (1 | ) | 70 | |||||||||||||||
Other | 28 | (5 | ) | 23 | 11 | (4 | ) | 7 | |||||||||||||||
Total amortizable intangible assets | $ | 1,019 | $ | (344 | ) | $ | 675 | $ | 771 | $ | (321 | ) | $ | 450 |
Remainder of 2015 | 2016 | 2017 | 2018 | 2019 | Thereafter | Total | |||||||||||||||||||||
(millions) | |||||||||||||||||||||||||||
Amortization of intangible assets | $ | 37 | $ | 69 | $ | 64 | $ | 60 | $ | 56 | $ | 389 | $ | 675 |
June 30, 2015 | December 31, 2014 | ||||||
(millions) | |||||||
Other current assets | |||||||
Prepayments and accrued income | $ | 78 | $ | 81 | |||
Income tax receivable | 36 | 30 | |||||
Deferred compensation plan assets | 13 | 17 | |||||
Derivatives | 29 | 16 | |||||
Other receivables | 66 | 70 | |||||
Total other current assets | $ | 222 | $ | 214 | |||
Other non-current assets | |||||||
Deferred compensation plan assets | $ | 113 | $ | 92 | |||
Accounts receivable, net | 29 | 29 | |||||
Other investments | 29 | 29 | |||||
Derivatives | 17 | 10 | |||||
Other receivables | 46 | 60 | |||||
Total other non-current assets | $ | 234 | $ | 220 | |||
Total other assets | $ | 456 | $ | 434 |
June 30, 2015 | December 31, 2014 | ||||||
(millions) | |||||||
Other current liabilities | |||||||
Accounts payable | $ | 148 | $ | 131 | |||
Accrued dividends payable | 65 | 55 | |||||
Other taxes payable | 58 | 44 | |||||
Deferred compensation plan liability | 13 | 17 | |||||
Contingent or deferred consideration on acquisition | 61 | 8 | |||||
Other payables | 177 | 189 | |||||
Total other current liabilities | $ | 522 | $ | 444 | |||
Other non-current liabilities | |||||||
Incentives from lessors | $ | 167 | $ | 171 | |||
Deferred compensation plan liability | 113 | 92 | |||||
Contingent and deferred consideration on acquisition | 146 | 26 | |||||
Other payables | 80 | 100 | |||||
Total other non-current liabilities | $ | 506 | $ | 389 | |||
Total other liabilities | $ | 1,028 | $ | 833 |
June 30, 2015 | December 31, 2014 | ||||||
(millions) | |||||||
Current portion of 7-year term loan facility expiring 2018 | $ | 20 | $ | 17 | |||
5.625% senior notes due 2015 | 148 | 148 | |||||
Fair value adjustment on 5.625% senior notes due 2015 | 1 | 1 | |||||
4.125% senior notes due 2016 | 299 | — | |||||
3-year term loan facility expires 2015 | — | 1 | |||||
$ | 468 | $ | 167 |
June 30, 2015 | December 31, 2014 | ||||||
(millions) | |||||||
7-year term loan facility expiring 2018 | $ | 231 | $ | 242 | |||
Revolving $800 million credit facility | 220 | — | |||||
4.125% senior notes due 2016 | — | 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 | |||||
$ | 2,052 | $ | 2,142 |
Three months ended June 30, | |||||||||||||||||||||||
2015 | 2014 | ||||||||||||||||||||||
Before tax amount | Tax | Net of tax amount | Before tax amount | Tax | Net of tax amount | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
Other comprehensive income: | |||||||||||||||||||||||
Foreign currency translation adjustments | $ | 70 | $ | — | $ | 70 | $ | 27 | $ | — | $ | 27 | |||||||||||
Pension funding adjustments: | |||||||||||||||||||||||
Foreign currency translation on pension funding adjustments | (31 | ) | 9 | (22 | ) | (20 | ) | 5 | (15 | ) | |||||||||||||
Amortization of unrecognized actuarial loss | 12 | (2 | ) | 10 | 12 | (2 | ) | 10 | |||||||||||||||
Amortization of unrecognized prior service gain | (6 | ) | 1 | (5 | ) | — | — | — | |||||||||||||||
(25 | ) | 8 | (17 | ) | (8 | ) | 3 | (5 | ) | ||||||||||||||
Derivative instruments: | |||||||||||||||||||||||
Interest rate swap reclassification adjustment | — | — | — | (1 | ) | 1 | — | ||||||||||||||||
Gain (loss) on forward exchange contracts (effective element) | 39 | (7 | ) | 32 | (1 | ) | — | (1 | ) | ||||||||||||||
Forward exchange contracts reclassification adjustment | (1 | ) | — | (1 | ) | 6 | (1 | ) | 5 | ||||||||||||||
Treasury lock reclassification adjustment | — | — | — | (1 | ) | — | (1 | ) | |||||||||||||||
38 | (7 | ) | 31 | 3 | — | 3 | |||||||||||||||||
Other comprehensive income | 83 | 1 | 84 | 22 | 3 | 25 | |||||||||||||||||
Less: Other comprehensive income attributable to noncontrolling interests | (4 | ) | — | (4 | ) | — | — | — | |||||||||||||||
Other comprehensive income attributable to Willis Group Holdings | $ | 79 | $ | 1 | $ | 80 | $ | 22 | $ | 3 | $ | 25 | |||||||||||
Six months ended June 30, | |||||||||||||||||||||||
2015 | 2014 | ||||||||||||||||||||||
Before tax amount | Tax | Net of tax amount | Before tax amount | Tax | Net of tax amount | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
Other comprehensive income: | |||||||||||||||||||||||
Foreign currency translation adjustments | $ | (42 | ) | $ | — | $ | (42 | ) | $ | 30 | $ | — | $ | 30 | |||||||||
Pension funding adjustments: | |||||||||||||||||||||||
Foreign currency translation on pension funding adjustments | 9 | (1 | ) | 8 | (25 | ) | 7 | (18 | ) | ||||||||||||||
Net actuarial gain | 25 | (5 | ) | 20 | — | — | — | ||||||||||||||||
Prior service gain | 215 | (43 | ) | 172 | — | — | — | ||||||||||||||||
Amortization of unrecognized actuarial loss | 24 | (4 | ) | 20 | 24 | (4 | ) | 20 | |||||||||||||||
Amortization of unrecognized prior service gain | (8 | ) | 1 | (7 | ) | (1 | ) | — | (1 | ) | |||||||||||||
265 | (52 | ) | 213 | (2 | ) | 3 | 1 | ||||||||||||||||
Derivative instruments: | |||||||||||||||||||||||
Interest rate swap reclassification adjustment | (1 | ) | — | (1 | ) | (3 | ) | 1 | (2 | ) | |||||||||||||
Gain (loss) on forward exchange contracts (effective element) | 25 | (4 | ) | 21 | (1 | ) | — | (1 | ) | ||||||||||||||
Forward exchange contracts reclassification adjustment | — | — | — | 7 | (1 | ) | 6 | ||||||||||||||||
Treasury lock reclassification adjustment | — | — | — | (1 | ) | — | (1 | ) | |||||||||||||||
24 | (4 | ) | 20 | 2 | — | 2 | |||||||||||||||||
Other comprehensive income | 247 | (56 | ) | 191 | 30 | 3 | 33 | ||||||||||||||||
Less: Other comprehensive loss attributable to noncontrolling interests | 3 | — | 3 | — | — | — | |||||||||||||||||
Other comprehensive income attributable to Willis Group Holdings | $ | 250 | $ | (56 | ) | $ | 194 | $ | 30 | $ | 3 | $ | 33 |
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 | (39 | ) | 200 | 21 | 182 | |||||||||||
Amounts reclassified from accumulated other comprehensive loss | — | 13 | (1 | ) | 12 | |||||||||||
Net current-period other comprehensive (loss) income, net of tax and noncontrolling interests | (39 | ) | 213 | 20 | 194 | |||||||||||
Balance at June 30, 2015 | $ | (230 | ) | $ | (680 | ) | $ | 38 | $ | (872 | ) |
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 June 30, | ||||||||||
2015 | 2014 | |||||||||
(millions) | ||||||||||
Gains and losses on cash flow hedges (Note 9) | ||||||||||
Interest rate swaps | $ | — | $ | (1 | ) | Investment income | ||||
Foreign exchange contracts | (1 | ) | 6 | Other income (expense), net | ||||||
Treasury lock | — | (1 | ) | Interest expense | ||||||
(1 | ) | 4 | Total before tax | |||||||
Tax | — | — | ||||||||
$ | (1 | ) | $ | 4 | Net of tax | |||||
Amortization of defined benefit pension items (Note 7) | ||||||||||
Prior service gain | $ | (6 | ) | $ | — | Salaries and benefits | ||||
Net actuarial loss | 12 | 12 | Salaries and benefits | |||||||
6 | 12 | Total before tax | ||||||||
Tax | (1 | ) | (2 | ) | ||||||
$ | 5 | $ | 10 | Net of tax | ||||||
Total reclassifications for the period | $ | 4 | $ | 14 | ||||||
Details about accumulated other comprehensive (loss) income components | Amount reclassified from accumulated other comprehensive (loss) income | Affected line item in the statement of operations | ||||||||
Six months ended June 30, | ||||||||||
2015 | 2014 | |||||||||
(millions) | ||||||||||
Gains and losses on cash flow hedges (Note 9) | ||||||||||
Interest rate swaps | $ | (1 | ) | $ | (3 | ) | Investment income | |||
Foreign exchange contracts | — | 7 | Other income (expense), net | |||||||
Treasury lock | — | (1 | ) | Interest expense | ||||||
(1 | ) | 3 | Total before tax | |||||||
Tax | — | — | ||||||||
$ | (1 | ) | $ | 3 | Net of tax | |||||
Amortization of defined benefit pension items (Note 7) | ||||||||||
Prior service gain | $ | (8 | ) | $ | (1 | ) | Salaries and benefits | |||
Net actuarial loss | 24 | 24 | Salaries and benefits | |||||||
16 | 23 | Total before tax | ||||||||
Tax | (3 | ) | (4 | ) | ||||||
$ | 13 | $ | 19 | Net of tax | ||||||
Total reclassifications for the period | $ | 12 | $ | 22 |
• | 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; and |
• | the remaining component businesses previously included as part of the Global segment which include the Company's UK retail business, facultative business and London Specialty business, now form Willis GB. |
(i) | costs of the holding company; |
(ii) | costs of Group functions, leadership and projects; |
(iii) | non-servicing elements of the defined benefit pension schemes cost (income); and |
(iv) | Corporate restructuring costs associated with the Operational Improvement Program. |
Three months ended June 30, 2015 | |||||||||||||||||||||||
Commissions and fees | Investment income | Other income | Total revenues | Depreciation and amortization | Segment operating income | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
Willis GB | $ | 170 | $ | 1 | $ | — | $ | 171 | $ | 6 | $ | 39 | |||||||||||
Willis Capital, Wholesale and Reinsurance | 190 | 1 | — | 191 | 5 | 36 | |||||||||||||||||
Willis North America | 314 | — | 2 | 316 | 16 | 32 | |||||||||||||||||
Willis International | 243 | 1 | — | 244 | 10 | 19 | |||||||||||||||||
Total Segments | 917 | 3 | 2 | 922 | 37 | 126 | |||||||||||||||||
Corporate and Other (i) | — | — | — | 2 | (21 | ) | |||||||||||||||||
Total Consolidated | $ | 917 | $ | 3 | $ | 2 | $ | 922 | $ | 39 | $ | 105 | |||||||||||
Three months ended June 30, 2014 | |||||||||||||||||||||||
Commissions and fees | Investment income | Other income | Total revenues | Depreciation and amortization | Segment operating income | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
Willis GB | $ | 187 | $ | 2 | $ | 1 | $ | 190 | $ | 8 | $ | 57 | |||||||||||
Willis Capital, Wholesale and Reinsurance | 192 | 1 | — | 193 | 2 | 63 | |||||||||||||||||
Willis North America | 323 | — | — | 323 | 18 | 47 | |||||||||||||||||
Willis International | 228 | 1 | — | 229 | 6 | 23 | |||||||||||||||||
Total Segments | 930 | 4 | 1 | 935 | 34 | 190 | |||||||||||||||||
Corporate and Other (i) | — | — | — | — | 2 | (42 | ) | ||||||||||||||||
Total Consolidated | $ | 930 | $ | 4 | $ | 1 | $ | 935 | $ | 36 | $ | 148 |
(i) | See the following table for an analysis of ‘Corporate and Other’. |
Three months ended June 30, | |||||||
2015 | 2014 | ||||||
(millions) | |||||||
Costs of the holding company | $ | (7 | ) | $ | (5 | ) | |
Costs related to Group functions, leadership and projects | (36 | ) | (47 | ) | |||
Non-servicing elements of defined benefit pensions | 27 | 14 | |||||
Operational Improvement Program (a) | (5 | ) | (2 | ) | |||
Other | — | (2 | ) | ||||
Total Corporate and Other | $ | (21 | ) | $ | (42 | ) |
(a) | Restructuring charge relating to the Operational Improvement Program. See Note 3 — 'Restructuring Costs', above. |
Six months ended June 30, 2015 | |||||||||||||||||||||||
Commissions and fees | Investment income | Other income | Total revenues | Depreciation and amortization | Segment operating income | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
Willis GB | $ | 312 | $ | 2 | $ | — | $ | 314 | $ | 12 | $ | 60 | |||||||||||
Willis Capital, Wholesale and Reinsurance | 486 | 2 | — | 488 | 8 | 189 | |||||||||||||||||
Willis North America | 670 | — | 5 | 675 | 32 | 110 | |||||||||||||||||
Willis International | 530 | 2 | — | 532 | 19 | 89 | |||||||||||||||||
Total Segments | 1,998 | 6 | 5 | 2,009 | 71 | 448 | |||||||||||||||||
Corporate and Other (i) | — | — | — | — | 4 | (50 | ) | ||||||||||||||||
Total Consolidated | $ | 1,998 | $ | 6 | $ | 5 | $ | 2,009 | $ | 75 | $ | 398 | |||||||||||
Six months ended June 30, 2014 | |||||||||||||||||||||||
Commissions and fees | Investment income | Other income | Total revenues | Depreciation and amortization | Segment operating income | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
Willis GB | $ | 337 | $ | 3 | $ | 3 | $ | 343 | $ | 15 | $ | 79 | |||||||||||
Willis Capital, Wholesale and Reinsurance | 495 | 2 | — | 497 | 5 | 231 | |||||||||||||||||
Willis North America | 677 | — | 1 | 678 | 36 | 130 | |||||||||||||||||
Willis International | 511 | 3 | — | 514 | 12 | 107 | |||||||||||||||||
Total Segments | 2,020 | 8 | 4 | 2,032 | 68 | 547 | |||||||||||||||||
Corporate and Other (i) | — | — | — | — | 4 | (73 | ) | ||||||||||||||||
Total Consolidated | $ | 2,020 | $ | 8 | $ | 4 | $ | 2,032 | $ | 72 | $ | 474 |
(i) | See the following table for an analysis of ‘Corporate and Other’. |
Six months ended June 30, | |||||||
2015 | 2014 | ||||||
(millions) | |||||||
Costs of the holding company | $ | (10 | ) | $ | (7 | ) | |
Costs related to Group functions, leadership and projects | (75 | ) | (89 | ) | |||
Non-servicing elements of defined benefit pensions | 51 | 27 | |||||
Operational Improvement Program (a) | (16 | ) | (2 | ) | |||
Other | — | (2 | ) | ||||
Total Corporate and Other | $ | (50 | ) | $ | (73 | ) |
(a) | Restructuring charge relating to the Operational Improvement Program. See Note 3 — 'Restructuring Costs', above. |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(millions) | |||||||||||||||
Total consolidated operating income | $ | 105 | $ | 148 | $ | 398 | $ | 474 | |||||||
Other income (expense), net | 23 | (3 | ) | 17 | (3 | ) | |||||||||
Interest expense | (35 | ) | (35 | ) | (68 | ) | (67 | ) | |||||||
Income before income taxes and interest in earnings of associates | $ | 93 | $ | 110 | $ | 347 | $ | 404 |
20. | FINANCIAL INFORMATION FOR PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES |
(i) | Willis Group Holdings, which is a guarantor, on a parent company only basis; |
(ii) | the Other Guarantors, which are all 100 percent directly or indirectly owned subsidiaries of the parent and are all direct or indirect parents of the issuer; |
(iii) | the Issuer, Willis North America; |
(iv) | Other, which are the non-guarantor subsidiaries, on a combined basis; |
(v) | Consolidating adjustments; and |
(vi) | the Consolidated Company. |
Three months ended June 30, 2015 | |||||||||||||||||||||||
Willis Group Holdings | The Other Guarantors | The Issuer | Other | Consolidating adjustments | Consolidated | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
REVENUES | |||||||||||||||||||||||
Commissions and fees | $ | — | $ | — | $ | — | $ | 917 | $ | — | $ | 917 | |||||||||||
Investment income | — | — | — | 3 | — | 3 | |||||||||||||||||
Other income | — | — | — | 2 | — | 2 | |||||||||||||||||
Total revenues | — | — | — | 922 | — | 922 | |||||||||||||||||
EXPENSES | |||||||||||||||||||||||
Salaries and benefits | (1 | ) | — | (22 | ) | (538 | ) | — | (561 | ) | |||||||||||||
Other operating expenses | — | (41 | ) | (9 | ) | (129 | ) | — | (179 | ) | |||||||||||||
Depreciation expense | — | (2 | ) | (4 | ) | (17 | ) | — | (23 | ) | |||||||||||||
Amortization of intangible assets | — | — | — | (16 | ) | — | (16 | ) | |||||||||||||||
Restructuring costs | — | — | (8 | ) | (30 | ) | (38 | ) | |||||||||||||||
Total expenses | (1 | ) | (43 | ) | (43 | ) | (730 | ) | — | (817 | ) | ||||||||||||
OPERATING (LOSS) INCOME | (1 | ) | (43 | ) | (43 | ) | 192 | — | 105 | ||||||||||||||
Other income (expense), net | 4 | (6 | ) | — | 25 | — | 23 | ||||||||||||||||
Income from group undertakings | — | 56 | 56 | 24 | (136 | ) | — | ||||||||||||||||
Expenses due to group undertakings | — | (7 | ) | (45 | ) | (84 | ) | 136 | — | ||||||||||||||
Interest expense | (10 | ) | (9 | ) | (11 | ) | (5 | ) | — | (35 | ) | ||||||||||||
(LOSS) INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | (7 | ) | (9 | ) | (43 | ) | 152 | — | 93 | ||||||||||||||
Income taxes | — | 11 | 14 | (44 | ) | — | (19 | ) | |||||||||||||||
(LOSS) INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES | (7 | ) | 2 | (29 | ) | 108 | — | 74 | |||||||||||||||
Interest in earnings of associates, net of tax | — | 2 | — | (4 | ) | — | (2 | ) | |||||||||||||||
Equity account for subsidiaries | 77 | 71 | 30 | — | (178 | ) | — | ||||||||||||||||
NET INCOME | 70 | 75 | 1 | 104 | (178 | ) | 72 | ||||||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | — | (2 | ) | — | (2 | ) | |||||||||||||||
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS | $ | 70 | $ | 75 | $ | 1 | $ | 102 | $ | (178 | ) | $ | 70 |
Three months ended June 30, 2015 | |||||||||||||||||||||||
Willis Group Holdings | The Other Guarantors | The Issuer | Other | Consolidating adjustments | Consolidated | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
Comprehensive income | $ | 150 | $ | 154 | $ | 4 | $ | 176 | $ | (328 | ) | $ | 156 | ||||||||||
Less: comprehensive income attributable to noncontrolling interests | — | — | — | (6 | ) | — | (6 | ) | |||||||||||||||
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS | $ | 150 | $ | 154 | $ | 4 | $ | 170 | $ | (328 | ) | $ | 150 |
Three months ended June 30, 2014 | |||||||||||||||||||||||
Willis Group Holdings | The Other Guarantors | The Issuer | Other | Consolidating adjustments | Consolidated | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
REVENUES | |||||||||||||||||||||||
Commissions and fees | $ | — | $ | — | $ | 2 | $ | 928 | $ | — | $ | 930 | |||||||||||
Investment income | — | — | — | 4 | — | 4 | |||||||||||||||||
Other income | — | — | — | 1 | — | 1 | |||||||||||||||||
Total revenues | — | — | 2 | 933 | — | 935 | |||||||||||||||||
EXPENSES | |||||||||||||||||||||||
Salaries and benefits | (1 | ) | — | (17 | ) | (557 | ) | — | (575 | ) | |||||||||||||
Other operating expenses | (5 | ) | (20 | ) | (19 | ) | (129 | ) | — | (173 | ) | ||||||||||||
Depreciation expense | — | (1 | ) | (5 | ) | (18 | ) | — | (24 | ) | |||||||||||||
Amortization of intangible assets | — | — | — | (12 | ) | — | (12 | ) | |||||||||||||||
Restructuring costs | — | (2 | ) | — | (1 | ) | — | (3 | ) | ||||||||||||||
Total expenses | (6 | ) | (23 | ) | (41 | ) | (717 | ) | — | (787 | ) | ||||||||||||
OPERATING (LOSS) INCOME | (6 | ) | (23 | ) | (39 | ) | 216 | — | 148 | ||||||||||||||
Other (expense) income, net | (1 | ) | (229 | ) | — | (3 | ) | 230 | (3 | ) | |||||||||||||
Income from group undertakings | — | 57 | 85 | 27 | (169 | ) | — | ||||||||||||||||
Expenses due to group undertakings | — | (8 | ) | (46 | ) | (115 | ) | 169 | — | ||||||||||||||
Interest expense | (10 | ) | (9 | ) | (12 | ) | (4 | ) | — | (35 | ) | ||||||||||||
(LOSS) INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | (17 | ) | (212 | ) | (12 | ) | 121 | 230 | 110 | ||||||||||||||
Income taxes | — | 6 | (1 | ) | (64 | ) | — | (59 | ) | ||||||||||||||
(LOSS) INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES | (17 | ) | (206 | ) | (13 | ) | 57 | 230 | 51 | ||||||||||||||
Interest in earnings of associates, net of tax | — | 2 | — | (5 | ) | — | (3 | ) | |||||||||||||||
Equity account for subsidiaries | 64 | 267 | 35 | — | (366 | ) | — | ||||||||||||||||
NET INCOME | 47 | 63 | 22 | 52 | (136 | ) | 48 | ||||||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | — | (1 | ) | — | (1 | ) | |||||||||||||||
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS | $ | 47 | $ | 63 | $ | 22 | $ | 51 | $ | (136 | ) | $ | 47 |
Three months ended June 30, 2014 | |||||||||||||||||||||||
Willis Group Holdings | The Other Guarantors | The Issuer | Other | Consolidating adjustments | Consolidated | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
Comprehensive income | $ | 72 | $ | 88 | $ | 24 | $ | 76 | $ | (187 | ) | $ | 73 | ||||||||||
Less: comprehensive income attributable to noncontrolling interests | — | — | — | (1 | ) | — | (1 | ) | |||||||||||||||
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS | $ | 72 | $ | 88 | $ | 24 | $ | 75 | $ | (187 | ) | $ | 72 |
Six months ended June 30, 2015 | |||||||||||||||||||||||
Willis Group Holdings | The Other Guarantors | The Issuer | Other | Consolidating adjustments | Consolidated | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
REVENUES | |||||||||||||||||||||||
Commissions and fees | $ | — | $ | — | $ | 4 | $ | 1,994 | $ | — | $ | 1,998 | |||||||||||
Investment income | — | — | — | 6 | — | 6 | |||||||||||||||||
Other income | — | — | — | 5 | — | 5 | |||||||||||||||||
Total revenues | — | — | 4 | 2,005 | — | 2,009 | |||||||||||||||||
EXPENSES | |||||||||||||||||||||||
Salaries and benefits | (1 | ) | — | (42 | ) | (1,085 | ) | — | (1,128 | ) | |||||||||||||
Other operating expenses | (9 | ) | (55 | ) | (11 | ) | (264 | ) | — | (339 | ) | ||||||||||||
Depreciation expense | — | (3 | ) | (8 | ) | (34 | ) | — | (45 | ) | |||||||||||||
Amortization of intangible assets | — | — | — | (30 | ) | — | (30 | ) | |||||||||||||||
Restructuring costs | — | (14 | ) | (13 | ) | (42 | ) | — | (69 | ) | |||||||||||||
Total expenses | (10 | ) | (72 | ) | (74 | ) | (1,455 | ) | — | (1,611 | ) | ||||||||||||
OPERATING (LOSS) INCOME | (10 | ) | (72 | ) | (70 | ) | 550 | — | 398 | ||||||||||||||
Other (expense) income, net | (8 | ) | — | — | 24 | 1 | 17 | ||||||||||||||||
Income from group undertakings | — | 110 | 112 | 49 | (271 | ) | — | ||||||||||||||||
Expenses due to group undertakings | — | (15 | ) | (89 | ) | (167 | ) | 271 | — | ||||||||||||||
Interest expense | (21 | ) | (18 | ) | (22 | ) | (7 | ) | — | (68 | ) | ||||||||||||
(LOSS) INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | (39 | ) | 5 | (69 | ) | 449 | 1 | 347 | |||||||||||||||
Income taxes | — | 17 | 22 | (114 | ) | — | (75 | ) | |||||||||||||||
(LOSS) INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES | (39 | ) | 22 | (47 | ) | 335 | 1 | 272 | |||||||||||||||
Interest in earnings of associates, net of tax | — | 4 | — | 10 | — | 14 | |||||||||||||||||
Equity account for subsidiaries | 319 | 286 | 96 | — | (701 | ) | — | ||||||||||||||||
NET INCOME | 280 | 312 | 49 | 345 | (700 | ) | 286 | ||||||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | — | (6 | ) | — | (6 | ) | |||||||||||||||
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS | $ | 280 | $ | 312 | $ | 49 | $ | 339 | $ | (700 | ) | $ | 280 |
Six months ended June 30, 2015 | |||||||||||||||||||||||
Willis Group Holdings | The Other Guarantors | The Issuer | Other | Consolidating adjustments | Consolidated | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
Comprehensive income | $ | 474 | $ | 508 | $ | 55 | $ | 546 | $ | (1,106 | ) | $ | 477 | ||||||||||
Less: comprehensive income attributable to noncontrolling interests | — | — | — | (3 | ) | — | (3 | ) | |||||||||||||||
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS | $ | 474 | $ | 508 | $ | 55 | $ | 543 | $ | (1,106 | ) | $ | 474 |
Six months ended June 30, 2014 | |||||||||||||||||||||||
Willis Group Holdings | The Other Guarantors | The Issuer | Other | Consolidating adjustments | Consolidated | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
REVENUES | |||||||||||||||||||||||
Commissions and fees | $ | — | $ | — | $ | 4 | $ | 2,016 | $ | — | $ | 2,020 | |||||||||||
Investment income | — | — | — | 8 | — | 8 | |||||||||||||||||
Other income | — | — | — | 4 | — | 4 | |||||||||||||||||
Total revenues | — | — | 4 | 2,028 | — | 2,032 | |||||||||||||||||
EXPENSES | |||||||||||||||||||||||
Salaries and benefits | (1 | ) | — | (36 | ) | (1,108 | ) | — | (1,145 | ) | |||||||||||||
Other operating expenses | (9 | ) | (44 | ) | (36 | ) | (249 | ) | — | (338 | ) | ||||||||||||
Depreciation expense | — | (2 | ) | (9 | ) | (36 | ) | — | (47 | ) | |||||||||||||
Amortization of intangible assets | — | — | — | (25 | ) | — | (25 | ) | |||||||||||||||
Restructuring costs | — | (2 | ) | — | (1 | ) | — | (3 | ) | ||||||||||||||
Total expenses | (10 | ) | (48 | ) | (81 | ) | (1,419 | ) | — | (1,558 | ) | ||||||||||||
OPERATING (LOSS) INCOME | (10 | ) | (48 | ) | (77 | ) | 609 | — | 474 | ||||||||||||||
Other (expense) income, net | (1 | ) | (228 | ) | — | (4 | ) | 230 | (3 | ) | |||||||||||||
Income from group undertakings | — | 116 | 128 | 54 | (298 | ) | — | ||||||||||||||||
Expenses due to group undertakings | — | (16 | ) | (92 | ) | (190 | ) | 298 | — | ||||||||||||||
Interest expense | (21 | ) | (18 | ) | (23 | ) | (5 | ) | — | (67 | ) | ||||||||||||
(LOSS) INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | (32 | ) | (194 | ) | (64 | ) | 464 | 230 | 404 | ||||||||||||||
Income taxes | — | 11 | 18 | (151 | ) | — | (122 | ) | |||||||||||||||
(LOSS) INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES | (32 | ) | (183 | ) | (46 | ) | 313 | 230 | 282 | ||||||||||||||
Interest in earnings of associates, net of tax | — | 5 | — | 11 | — | 16 | |||||||||||||||||
Equity account for subsidiaries | 325 | 497 | 118 | — | (940 | ) | — | ||||||||||||||||
NET INCOME | 293 | 319 | 72 | 324 | (710 | ) | 298 | ||||||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | — | (5 | ) | — | (5 | ) | |||||||||||||||
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS | $ | 293 | $ | 319 | $ | 72 | $ | 319 | $ | (710 | ) | $ | 293 |
Six months ended June 30, 2014 | |||||||||||||||||||||||
Willis Group Holdings | The Other Guarantors | The Issuer | Other | Consolidating adjustments | Consolidated | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
Comprehensive income | $ | 326 | $ | 352 | $ | 75 | $ | 357 | $ | (779 | ) | $ | 331 | ||||||||||
Less: comprehensive income attributable to noncontrolling interests | — | — | — | (5 | ) | — | (5 | ) | |||||||||||||||
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS | $ | 326 | $ | 352 | $ | 75 | $ | 352 | $ | (779 | ) | $ | 326 |
As of June 30, 2015 | |||||||||||||||||||||||
Willis Group Holdings | The Other Guarantors | The Issuer | Other | Consolidating adjustments | Consolidated | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
ASSETS | |||||||||||||||||||||||
CURRENT ASSETS | |||||||||||||||||||||||
Cash and cash equivalents | $ | 6 | $ | 2 | $ | — | $ | 475 | $ | — | $ | 483 | |||||||||||
Accounts receivable, net | — | — | 2 | 1,224 | — | 1,226 | |||||||||||||||||
Fiduciary assets | — | — | — | 11,006 | — | 11,006 | |||||||||||||||||
Deferred tax assets | — | — | — | 9 | — | 9 | |||||||||||||||||
Other current assets | 1 | 48 | 25 | 195 | (47 | ) | 222 | ||||||||||||||||
Amounts due from group undertakings | 3,560 | 983 | 953 | 1,289 | (6,785 | ) | — | ||||||||||||||||
Total current assets | 3,567 | 1,033 | 980 | 14,198 | (6,832 | ) | 12,946 | ||||||||||||||||
NON-CURRENT ASSETS | |||||||||||||||||||||||
Investments in subsidiaries | — | 3,333 | 824 | — | (4,157 | ) | — | ||||||||||||||||
Fixed assets, net | — | 20 | 39 | 457 | — | 516 | |||||||||||||||||
Goodwill | — | — | — | 3,097 | — | 3,097 | |||||||||||||||||
Other intangible assets, net | — | — | — | 675 | — | 675 | |||||||||||||||||
Investments in associates | — | 139 | — | 29 | — | 168 | |||||||||||||||||
Deferred tax assets | — | 1 | — | 6 | (1 | ) | 6 | ||||||||||||||||
Pension benefits asset | — | — | — | 677 | — | 677 | |||||||||||||||||
Other non-current assets | 2 | 7 | 2 | 223 | — | 234 | |||||||||||||||||
Non-current amounts due from group undertakings | — | 518 | 765 | — | (1,283 | ) | — | ||||||||||||||||
Total non-current assets | 2 | 4,018 | 1,630 | 5,164 | (5,441 | ) | 5,373 | ||||||||||||||||
TOTAL ASSETS | $ | 3,569 | $ | 5,051 | $ | 2,610 | $ | 19,362 | $ | (12,273 | ) | $ | 18,319 | ||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||||||||||
CURRENT LIABILITIES | |||||||||||||||||||||||
Fiduciary liabilities | $ | — | $ | — | $ | — | $ | 11,006 | $ | — | $ | 11,006 | |||||||||||
Deferred revenue and accrued expenses | 5 | 6 | 18 | 414 | — | 443 | |||||||||||||||||
Income taxes payable | — | — | — | 82 | (47 | ) | 35 | ||||||||||||||||
Current portion of long-term debt | 299 | 20 | 148 | 1 | — | 468 | |||||||||||||||||
Deferred tax liabilities | — | — | — | 21 | — | 21 | |||||||||||||||||
Other current liabilities | 71 | 16 | 29 | 406 | — | 522 | |||||||||||||||||
Amounts due to group undertakings | — | 4,484 | 1,519 | 782 | (6,785 | ) | — | ||||||||||||||||
Total current liabilities | 375 | 4,526 | 1,714 | 12,712 | (6,832 | ) | 12,495 |
As of June 30, 2015 | |||||||||||||||||||||||
Willis Group Holdings | The Other Guarantors | The Issuer | Other | Consolidating adjustments | Consolidated | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
NON-CURRENT LIABILITIES | |||||||||||||||||||||||
Investments in subsidiaries | 304 | — | — | — | (304 | ) | — | ||||||||||||||||
Long-term debt | 497 | 974 | 581 | — | — | 2,052 | |||||||||||||||||
Liabilities for pension benefits | — | — | — | 294 | — | 294 | |||||||||||||||||
Deferred tax liabilities | — | — | — | 212 | (1 | ) | 211 | ||||||||||||||||
Provisions for liabilities | — | — | — | 220 | — | 220 | |||||||||||||||||
Other non-current liabilities | — | 2 | 16 | 488 | — | 506 | |||||||||||||||||
Non-current amounts due to group undertakings | — | — | 518 | 765 | (1,283 | ) | — | ||||||||||||||||
Total non-current liabilities | 801 | 976 | 1,115 | 1,979 | (1,588 | ) | 3,283 | ||||||||||||||||
TOTAL LIABILITIES | $ | 1,176 | $ | 5,502 | $ | 2,829 | $ | 14,691 | $ | (8,420 | ) | $ | 15,778 | ||||||||||
REDEEMABLE NONCONTROLLING INTEREST | — | — | — | 52 | — | 52 | |||||||||||||||||
EQUITY | |||||||||||||||||||||||
Total Willis Group Holdings stockholders’ equity | 2,393 | (451 | ) | (219 | ) | 4,523 | (3,853 | ) | 2,393 | ||||||||||||||
Noncontrolling interests | — | — | — | 96 | — | 96 | |||||||||||||||||
Total equity | 2,393 | (451 | ) | (219 | ) | 4,619 | (3,853 | ) | 2,489 | ||||||||||||||
TOTAL LIABILITIES AND EQUITY | $ | 3,569 | $ | 5,051 | $ | 2,610 | $ | 19,362 | $ | (12,273 | ) | $ | 18,319 |
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 | ||||||||||||||||
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 |
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 |
Six months ended June 30, 2015 | |||||||||||||||||||||||
Willis Group Holdings | The Other Guarantors | The Issuer | Other | Consolidating adjustments | Consolidated | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES | $ | (4 | ) | $ | 62 | $ | 17 | $ | (68 | ) | $ | — | $ | 7 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||||||||||
Proceeds on disposal of fixed and intangible assets | — | — | — | 9 | — | 9 | |||||||||||||||||
Additions to fixed assets | — | (4 | ) | (5 | ) | (38 | ) | — | (47 | ) | |||||||||||||
Additions to intangible assets | — | — | — | (10 | ) | — | (10 | ) | |||||||||||||||
Acquisitions of operations, net of cash acquired | — | — | — | (228 | ) | — | (228 | ) | |||||||||||||||
Proceeds from disposal of operations, net of cash disposed | — | — | — | 28 | — | 28 | |||||||||||||||||
Proceeds from intercompany investing activities | 105 | 49 | — | 153 | (307 | ) | — | ||||||||||||||||
Repayments of intercompany investing activities | — | (72 | ) | (14 | ) | (218 | ) | 304 | — | ||||||||||||||
Intercompany investing in subsidiaries | — | (274 | ) | — | — | 274 | — | ||||||||||||||||
Net cash provided by (used in) investing activities | 105 | (301 | ) | (19 | ) | (304 | ) | 271 | (248 | ) | |||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||||||||||||
Proceeds from draw down of revolving credit facility | — | 220 | — | — | — | 220 | |||||||||||||||||
Debt issuance costs | — | — | — | (1 | ) | — | (1 | ) | |||||||||||||||
Repayments of debt | — | (8 | ) | — | — | — | (8 | ) | |||||||||||||||
Repurchase of shares | (79 | ) | — | — | — | — | (79 | ) | |||||||||||||||
Proceeds from issue of shares | 84 | — | — | 274 | (274 | ) | 84 | ||||||||||||||||
Excess tax benefits from share-based payment arrangements | — | — | — | 5 | — | 5 | |||||||||||||||||
Dividends paid | (109 | ) | — | — | — | — | (109 | ) | |||||||||||||||
Dividends paid to noncontrolling interests | — | — | — | (8 | ) | — | (8 | ) | |||||||||||||||
Proceeds from intercompany financing activities | — | 216 | 2 | 86 | (304 | ) | — | ||||||||||||||||
Repayments of intercompany financing activities | — | (189 | ) | — | (118 | ) | 307 | — | |||||||||||||||
Net cash (used in) provided by financing activities | (104 | ) | 239 | 2 | 238 | (271 | ) | 104 | |||||||||||||||
DECREASE IN CASH AND CASH EQUIVALENTS | (3 | ) | — | — | (134 | ) | — | (137 | ) | ||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | — | (15 | ) | — | (15 | ) | |||||||||||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 9 | 2 | — | 624 | — | 635 | |||||||||||||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 6 | $ | 2 | $ | — | $ | 475 | $ | — | $ | 483 |
Six months ended June 30, 2014 | |||||||||||||||||||||||
Willis Group Holdings | The Other Guarantors | The Issuer | Other | Consolidating adjustments | Consolidated | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES | $ | (18 | ) | $ | 124 | $ | 44 | $ | 238 | $ | (236 | ) | $ | 152 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||||||||||
Proceeds on disposal of fixed and intangible assets | — | — | 1 | 2 | (1 | ) | 2 | ||||||||||||||||
Additions to fixed assets | — | (4 | ) | (7 | ) | (44 | ) | 1 | (54 | ) | |||||||||||||
Additions to intangible assets | — | — | — | (1 | ) | — | (1 | ) | |||||||||||||||
Acquisitions of subsidiaries, net of cash acquired | — | — | — | (41 | ) | — | (41 | ) | |||||||||||||||
Payments to acquire other investments | — | — | — | (6 | ) | — | (6 | ) | |||||||||||||||
Proceeds from sale of operations, net of cash disposed | — | — | — | 18 | — | 18 | |||||||||||||||||
Proceeds from intercompany investing activities | 145 | 12 | 120 | 283 | (560 | ) | — | ||||||||||||||||
Repayments of intercompany investing activities | — | — | — | (37 | ) | 37 | — | ||||||||||||||||
Net cash provided by (used in) investing activities | 145 | 8 | 114 | 174 | (523 | ) | (82 | ) | |||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||||||||||||
Debt issuance costs | — | — | — | (3 | ) | — | (3 | ) | |||||||||||||||
Repayments of debt | — | (8 | ) | — | — | — | (8 | ) | |||||||||||||||
Repurchase of shares | (117 | ) | — | — | — | — | (117 | ) | |||||||||||||||
Proceeds from issue of shares | 93 | — | — | — | — | 93 | |||||||||||||||||
Excess tax benefits from share-based payment arrangements | — | — | — | 2 | — | 2 | |||||||||||||||||
Dividends paid | (103 | ) | — | — | (236 | ) | 236 | (103 | ) | ||||||||||||||
Acquisition of noncontrolling interests | — | (4 | ) | — | — | — | (4 | ) | |||||||||||||||
Dividends paid to noncontrolling interests | — | — | — | (15 | ) | — | (15 | ) | |||||||||||||||
Proceeds from intercompany financing activities | — | 37 | — | — | (37 | ) | — | ||||||||||||||||
Repayments of intercompany financing activities | — | (156 | ) | (158 | ) | (246 | ) | 560 | — | ||||||||||||||
Net cash used in financing activities | (127 | ) | (131 | ) | (158 | ) | (498 | ) | 759 | (155 | ) | ||||||||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | — | 1 | — | (86 | ) | — | (85 | ) | |||||||||||||||
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 | $ | 4 | $ | — | $ | 701 | $ | — | $ | 708 |
21. | FINANCIAL INFORMATION FOR PARENT ISSUER, GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES |
(i) | Willis Group Holdings, which is the Parent Issuer; |
(ii) | the Guarantors, which are 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. |
Three months ended June 30, 2015 | |||||||||||||||||||
Willis Group Holdings - the Parent Issuer | The Guarantors | Other | Consolidating adjustments | Consolidated | |||||||||||||||
(millions) | |||||||||||||||||||
REVENUES | |||||||||||||||||||
Commissions and fees | $ | — | $ | — | $ | 917 | $ | — | $ | 917 | |||||||||
Investment income | — | — | 3 | — | 3 | ||||||||||||||
Other income | — | — | 2 | — | 2 | ||||||||||||||
Total revenues | — | — | 922 | — | 922 | ||||||||||||||
EXPENSES | |||||||||||||||||||
Salaries and benefits | (1 | ) | (22 | ) | (538 | ) | — | (561 | ) | ||||||||||
Other operating expenses | — | (50 | ) | (129 | ) | — | (179 | ) | |||||||||||
Depreciation expense | — | (6 | ) | (17 | ) | — | (23 | ) | |||||||||||
Amortization of intangible assets | — | — | (16 | ) | — | (16 | ) | ||||||||||||
Restructuring costs | — | (8 | ) | (30 | ) | — | (38 | ) | |||||||||||
Total expenses | (1 | ) | (86 | ) | (730 | ) | — | (817 | ) | ||||||||||
OPERATING (LOSS) INCOME | (1 | ) | (86 | ) | 192 | — | 105 | ||||||||||||
Other income (expense), net | 4 | (6 | ) | 25 | — | 23 | |||||||||||||
Income from group undertakings | — | 84 | 24 | (108 | ) | — | |||||||||||||
Expenses due to group undertakings | — | (24 | ) | (84 | ) | 108 | — | ||||||||||||
Interest expense | (10 | ) | (20 | ) | (5 | ) | — | (35 | ) | ||||||||||
(LOSS) INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | (7 | ) | (52 | ) | 152 | — | 93 | ||||||||||||
Income taxes | — | 25 | (44 | ) | — | (19 | ) | ||||||||||||
(LOSS) INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES | (7 | ) | (27 | ) | 108 | — | 74 | ||||||||||||
Interest in earnings of associates, net of tax | — | 2 | (4 | ) | — | (2 | ) | ||||||||||||
Equity account for subsidiaries | 77 | 100 | — | (177 | ) | — | |||||||||||||
NET INCOME | 70 | 75 | 104 | (177 | ) | 72 | |||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | (2 | ) | — | (2 | ) | ||||||||||||
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS | $ | 70 | $ | 75 | $ | 102 | $ | (177 | ) | $ | 70 |
Three months ended June 30, 2015 | |||||||||||||||||||
Willis Group Holdings - the Parent Issuer | The Guarantors | Other | Consolidating adjustments | Consolidated | |||||||||||||||
(millions) | |||||||||||||||||||
Comprehensive income | $ | 150 | $ | 154 | $ | 176 | $ | (324 | ) | $ | 156 | ||||||||
Less: comprehensive income attributable to noncontrolling interests | — | — | (6 | ) | — | (6 | ) | ||||||||||||
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS | $ | 150 | $ | 154 | $ | 170 | $ | (324 | ) | $ | 150 |
Three months ended June 30, 2014 | |||||||||||||||||||
Willis Group Holdings - the Parent Issuer | The Guarantors | Other | Consolidating adjustments | Consolidated | |||||||||||||||
(millions) | |||||||||||||||||||
REVENUES | |||||||||||||||||||
Commissions and fees | $ | — | $ | 2 | $ | 928 | $ | — | $ | 930 | |||||||||
Investment income | — | — | 4 | — | 4 | ||||||||||||||
Other income | — | — | 1 | — | 1 | ||||||||||||||
Total revenues | — | 2 | 933 | — | 935 | ||||||||||||||
EXPENSES | |||||||||||||||||||
Salaries and benefits | (1 | ) | (17 | ) | (557 | ) | — | (575 | ) | ||||||||||
Other operating expenses | (5 | ) | (39 | ) | (129 | ) | — | (173 | ) | ||||||||||
Depreciation expense | — | (6 | ) | (18 | ) | — | (24 | ) | |||||||||||
Amortization of intangible assets | — | — | (12 | ) | — | (12 | ) | ||||||||||||
Restructuring costs | — | (2 | ) | (1 | ) | — | (3 | ) | |||||||||||
Total expenses | (6 | ) | (64 | ) | (717 | ) | — | (787 | ) | ||||||||||
OPERATING (LOSS) INCOME | (6 | ) | (62 | ) | 216 | — | 148 | ||||||||||||
Other (expense) income, net | (1 | ) | (229 | ) | (3 | ) | 230 | (3 | ) | ||||||||||
Income from group undertakings | — | 114 | 27 | (141 | ) | — | |||||||||||||
Expenses due to group undertakings | — | (26 | ) | (115 | ) | 141 | — | ||||||||||||
Interest expense | (10 | ) | (21 | ) | (4 | ) | — | (35 | ) | ||||||||||
(LOSS) INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | (17 | ) | (224 | ) | 121 | 230 | 110 | ||||||||||||
Income taxes | — | 5 | (64 | ) | — | (59 | ) | ||||||||||||
(LOSS) INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES | (17 | ) | (219 | ) | 57 | 230 | 51 | ||||||||||||
Interest in earnings of associates, net of tax | — | 2 | (5 | ) | — | (3 | ) | ||||||||||||
Equity account for subsidiaries | 64 | 280 | — | (344 | ) | — | |||||||||||||
NET INCOME | 47 | 63 | 52 | (114 | ) | 48 | |||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | (1 | ) | — | (1 | ) | ||||||||||||
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS | $ | 47 | $ | 63 | $ | 51 | $ | (114 | ) | $ | 47 |
Three months ended June 30, 2014 | |||||||||||||||||||
Willis Group Holdings - the Parent Issuer | The Guarantors | Other | Consolidating adjustments | Consolidated | |||||||||||||||
(millions) | |||||||||||||||||||
Comprehensive income | $ | 72 | $ | 88 | $ | 76 | $ | (163 | ) | $ | 73 | ||||||||
Less: comprehensive income attributable to noncontrolling interests | — | — | (1 | ) | — | (1 | ) | ||||||||||||
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS | $ | 72 | $ | 88 | $ | 75 | $ | (163 | ) | $ | 72 |
Six months ended June 30, 2015 | |||||||||||||||||||
Willis Group Holdings - the Parent Issuer | The Guarantors | Other | Consolidating adjustments | Consolidated | |||||||||||||||
(millions) | |||||||||||||||||||
REVENUES | |||||||||||||||||||
Commissions and fees | $ | — | $ | 4 | $ | 1,994 | $ | — | $ | 1,998 | |||||||||
Investment income | — | — | 6 | — | 6 | ||||||||||||||
Other income | — | — | 5 | — | 5 | ||||||||||||||
Total revenues | — | 4 | 2,005 | — | 2,009 | ||||||||||||||
EXPENSES | |||||||||||||||||||
Salaries and benefits | (1 | ) | (42 | ) | (1,085 | ) | — | (1,128 | ) | ||||||||||
Other operating expenses | (9 | ) | (66 | ) | (264 | ) | — | (339 | ) | ||||||||||
Depreciation expense | — | (11 | ) | (34 | ) | — | (45 | ) | |||||||||||
Amortization of intangible assets | — | — | (30 | ) | — | (30 | ) | ||||||||||||
Restructuring costs | — | (27 | ) | (42 | ) | — | (69 | ) | |||||||||||
Total expenses | (10 | ) | (146 | ) | (1,455 | ) | — | (1,611 | ) | ||||||||||
OPERATING (LOSS) INCOME | (10 | ) | (142 | ) | 550 | — | 398 | ||||||||||||
Other (expense) income, net | (8 | ) | — | 24 | 1 | 17 | |||||||||||||
Income from group undertakings | — | 167 | 49 | (216 | ) | — | |||||||||||||
Expenses due to group undertakings | — | (49 | ) | (167 | ) | 216 | — | ||||||||||||
Interest expense | (21 | ) | (40 | ) | (7 | ) | — | (68 | ) | ||||||||||
(LOSS) INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | (39 | ) | (64 | ) | 449 | 1 | 347 | ||||||||||||
Income taxes | — | 39 | (114 | ) | — | (75 | ) | ||||||||||||
(LOSS) INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES | (39 | ) | (25 | ) | 335 | 1 | 272 | ||||||||||||
Interest in earnings of associates, net of tax | — | 4 | 10 | — | 14 | ||||||||||||||
Equity account for subsidiaries | 319 | 333 | — | (652 | ) | — | |||||||||||||
NET INCOME | 280 | 312 | 345 | (651 | ) | 286 | |||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | (6 | ) | — | (6 | ) | ||||||||||||
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS | $ | 280 | $ | 312 | $ | 339 | $ | (651 | ) | $ | 280 |
Six months ended June 30, 2015 | |||||||||||||||||||
Willis Group Holdings - the Parent Issuer | The Guarantors | Other | Consolidating adjustments | Consolidated | |||||||||||||||
(millions) | |||||||||||||||||||
Comprehensive income | $ | 474 | $ | 508 | $ | 546 | $ | (1,051 | ) | $ | 477 | ||||||||
Less: comprehensive income attributable to noncontrolling interests | — | — | (3 | ) | — | (3 | ) | ||||||||||||
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS | $ | 474 | $ | 508 | $ | 543 | $ | (1,051 | ) | $ | 474 |
Six months ended June 30, 2014 | |||||||||||||||||||
Willis Group Holdings - the Parent Issuer | The Guarantors | Other | Consolidating adjustments | Consolidated | |||||||||||||||
(millions) | |||||||||||||||||||
REVENUES | |||||||||||||||||||
Commissions and fees | $ | — | $ | 4 | $ | 2,016 | $ | — | $ | 2,020 | |||||||||
Investment income | — | — | 8 | — | 8 | ||||||||||||||
Other income | — | — | 4 | — | 4 | ||||||||||||||
Total revenues | — | 4 | 2,028 | — | 2,032 | ||||||||||||||
EXPENSES | |||||||||||||||||||
Salaries and benefits | (1 | ) | (36 | ) | (1,108 | ) | — | (1,145 | ) | ||||||||||
Other operating expenses | (9 | ) | (80 | ) | (249 | ) | — | (338 | ) | ||||||||||
Depreciation expense | — | (11 | ) | (36 | ) | — | (47 | ) | |||||||||||
Amortization of intangible assets | — | — | (25 | ) | — | (25 | ) | ||||||||||||
Restructuring costs | — | (2 | ) | (1 | ) | — | (3 | ) | |||||||||||
Total expenses | (10 | ) | (129 | ) | (1,419 | ) | — | (1,558 | ) | ||||||||||
OPERATING (LOSS) INCOME | (10 | ) | (125 | ) | 609 | — | 474 | ||||||||||||
Other (expense) income, net | (1 | ) | (228 | ) | (4 | ) | 230 | (3 | ) | ||||||||||
Income from group undertakings | — | 189 | 54 | (243 | ) | — | |||||||||||||
Expenses due to group undertakings | — | (53 | ) | (190 | ) | 243 | — | ||||||||||||
Interest expense | (21 | ) | (41 | ) | (5 | ) | — | (67 | ) | ||||||||||
(LOSS) INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | (32 | ) | (258 | ) | 464 | 230 | 404 | ||||||||||||
Income taxes | — | 29 | (151 | ) | — | (122 | ) | ||||||||||||
(LOSS) INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES | (32 | ) | (229 | ) | 313 | 230 | 282 | ||||||||||||
Interest in earnings of associates, net of tax | — | 5 | 11 | — | 16 | ||||||||||||||
Equity account for subsidiaries | 325 | 543 | — | (868 | ) | — | |||||||||||||
NET INCOME | 293 | 319 | 324 | (638 | ) | 298 | |||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | (5 | ) | — | (5 | ) | ||||||||||||
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS | $ | 293 | $ | 319 | $ | 319 | $ | (638 | ) | $ | 293 |
Six months ended June 30, 2014 | |||||||||||||||||||
Willis Group Holdings - the Parent Issuer | The Guarantors | Other | Consolidating adjustments | Consolidated | |||||||||||||||
(millions) | |||||||||||||||||||
Comprehensive income | $ | 326 | $ | 352 | $ | 357 | $ | (704 | ) | $ | 331 | ||||||||
Less: comprehensive income attributable to noncontrolling interests | — | — | (5 | ) | — | (5 | ) | ||||||||||||
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS | $ | 326 | $ | 352 | $ | 352 | $ | (704 | ) | $ | 326 |
As of June 30, 2015 | |||||||||||||||||||
Willis Group Holdings - the Parent Issuer | The Guarantors | Other | Consolidating adjustments | Consolidated | |||||||||||||||
(millions) | |||||||||||||||||||
ASSETS | |||||||||||||||||||
CURRENT ASSETS | |||||||||||||||||||
Cash and cash equivalents | $ | 6 | $ | 2 | $ | 475 | $ | — | $ | 483 | |||||||||
Accounts receivable, net | — | 2 | 1,224 | — | 1,226 | ||||||||||||||
Fiduciary assets | — | — | 11,006 | — | 11,006 | ||||||||||||||
Deferred tax assets | — | — | 9 | — | 9 | ||||||||||||||
Other current assets | 1 | 73 | 195 | (47 | ) | 222 | |||||||||||||
Amounts due from group undertakings | 3,560 | 687 | 1,289 | (5,536 | ) | — | |||||||||||||
Total current assets | 3,567 | 764 | 14,198 | (5,583 | ) | 12,946 | |||||||||||||
NON-CURRENT ASSETS | |||||||||||||||||||
Investments in subsidiaries | — | 4,376 | — | (4,376 | ) | — | |||||||||||||
Fixed assets, net | — | 59 | 457 | — | 516 | ||||||||||||||
Goodwill | — | — | 3,097 | — | 3,097 | ||||||||||||||
Other intangible assets, net | — | — | 675 | — | 675 | ||||||||||||||
Investments in associates | — | 139 | 29 | — | 168 | ||||||||||||||
Deferred tax assets | — | 1 | 6 | (1 | ) | 6 | |||||||||||||
Pension benefits asset | — | — | 677 | — | 677 | ||||||||||||||
Other non-current assets | 2 | 9 | 223 | — | 234 | ||||||||||||||
Non-current amounts due from group undertakings | — | 765 | — | (765 | ) | — | |||||||||||||
Total non-current assets | 2 | 5,349 | 5,164 | (5,142 | ) | 5,373 | |||||||||||||
TOTAL ASSETS | $ | 3,569 | $ | 6,113 | $ | 19,362 | $ | (10,725 | ) | $ | 18,319 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||||||
CURRENT LIABILITIES | |||||||||||||||||||
Fiduciary liabilities | $ | — | $ | — | $ | 11,006 | $ | — | $ | 11,006 | |||||||||
Deferred revenue and accrued expenses | 5 | 24 | 414 | — | 443 | ||||||||||||||
Income taxes payable | — | — | 82 | (47 | ) | 35 | |||||||||||||
Current portion of long-term debt | 299 | 168 | 1 | — | 468 | ||||||||||||||
Deferred tax liabilities | — | — | 21 | — | 21 | ||||||||||||||
Other current liabilities | 71 | 45 | 406 | — | 522 | ||||||||||||||
Amounts due to group undertakings | — | 4,754 | 782 | (5,536 | ) | — | |||||||||||||
Total current liabilities | 375 | 4,991 | 12,712 | (5,583 | ) | 12,495 |
As of June 30, 2015 | |||||||||||||||||||
Willis Group Holdings - the Parent Issuer | The Guarantors | Other | Consolidating adjustments | Consolidated | |||||||||||||||
(millions) | |||||||||||||||||||
NON-CURRENT LIABILITIES | |||||||||||||||||||
Investments in subsidiaries | 304 | — | — | (304 | ) | — | |||||||||||||
Long-term debt | 497 | 1,555 | — | — | 2,052 | ||||||||||||||
Liabilities for pension benefits | — | — | 294 | — | 294 | ||||||||||||||
Deferred tax liabilities | — | — | 212 | (1 | ) | 211 | |||||||||||||
Provisions for liabilities | — | — | 220 | — | 220 | ||||||||||||||
Other non-current liabilities | — | 18 | 488 | — | 506 | ||||||||||||||
Non-current amounts due to group undertakings | — | — | 765 | (765 | ) | — | |||||||||||||
Total non-current liabilities | 801 | 1,573 | 1,979 | (1,070 | ) | 3,283 | |||||||||||||
TOTAL LIABILITIES | $ | 1,176 | $ | 6,564 | $ | 14,691 | $ | (6,653 | ) | $ | 15,778 | ||||||||
REDEEMABLE NONCONTROLLING INTEREST | — | — | 52 | — | 52 | ||||||||||||||
EQUITY | |||||||||||||||||||
Total Willis Group Holdings stockholders’ equity | 2,393 | (451 | ) | 4,523 | (4,072 | ) | 2,393 | ||||||||||||
Noncontrolling interests | — | — | 96 | — | 96 | ||||||||||||||
Total equity | 2,393 | (451 | ) | 4,619 | (4,072 | ) | 2,489 | ||||||||||||
TOTAL LIABILITIES AND EQUITY | $ | 3,569 | $ | 6,113 | $ | 19,362 | $ | (10,725 | ) | $ | 18,319 |
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 from 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 from 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 | |||||||||||||
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 |
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 |
Six months ended June 30, 2015 | |||||||||||||||||||
Willis Group Holdings - the Parent Issuer | The Guarantors | Other | Consolidating adjustments | Consolidated | |||||||||||||||
(millions) | |||||||||||||||||||
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES | $ | (4 | ) | $ | 79 | $ | (68 | ) | $ | — | $ | 7 | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||||||
Proceeds on disposal of fixed and intangible assets | — | — | 9 | — | 9 | ||||||||||||||
Additions to fixed assets | — | (9 | ) | (38 | ) | — | (47 | ) | |||||||||||
Additions to intangible assets | — | — | (10 | ) | — | (10 | ) | ||||||||||||
Acquisitions of operations, net of cash acquired | — | — | (228 | ) | — | (228 | ) | ||||||||||||
Proceeds from disposal of operations, net of cash disposed | — | — | 28 | — | 28 | ||||||||||||||
Proceeds from intercompany investing activities | 105 | 49 | 153 | (307 | ) | — | |||||||||||||
Repayments of intercompany investing activities | — | (86 | ) | (218 | ) | 304 | — | ||||||||||||
Intercompany investing in subsidiaries | — | (274 | ) | — | 274 | — | |||||||||||||
Net cash provided by (used in) investing activities | 105 | (320 | ) | (304 | ) | 271 | (248 | ) | |||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||||||||
Proceeds from draw down of revolving credit facility | — | 220 | — | — | 220 | ||||||||||||||
Debt issuance costs | — | — | (1 | ) | — | (1 | ) | ||||||||||||
Repayments of debt | — | (8 | ) | — | — | (8 | ) | ||||||||||||
Repurchase of shares | (79 | ) | — | — | — | (79 | ) | ||||||||||||
Proceeds from issue of shares | 84 | — | 274 | (274 | ) | 84 | |||||||||||||
Excess tax benefits from share-based payment arrangement | — | — | 5 | — | 5 | ||||||||||||||
Dividends paid | (109 | ) | — | — | — | (109 | ) | ||||||||||||
Dividends paid to noncontrolling interests | — | — | (8 | ) | — | (8 | ) | ||||||||||||
Proceeds from intercompany financing activities | — | 218 | 86 | (304 | ) | — | |||||||||||||
Repayments of intercompany financing activities | — | (189 | ) | (118 | ) | 307 | — | ||||||||||||
Net cash (used in) provided by financing activities | (104 | ) | 241 | 238 | (271 | ) | 104 | ||||||||||||
DECREASE IN CASH AND CASH EQUIVALENTS | (3 | ) | — | (134 | ) | — | (137 | ) | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | (15 | ) | — | (15 | ) | ||||||||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 9 | 2 | 624 | — | 635 | ||||||||||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 6 | $ | 2 | $ | 475 | $ | — | $ | 483 |
Six months ended June 30, 2014 | |||||||||||||||||||
Willis Group Holdings - the Parent Issuer | The Guarantors | Other | Consolidating adjustments | Consolidated | |||||||||||||||
(millions) | |||||||||||||||||||
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES | $ | (18 | ) | $ | 168 | $ | 238 | $ | (236 | ) | $ | 152 | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||||||
Proceeds on disposal of fixed and intangible assets | — | 1 | 2 | (1 | ) | 2 | |||||||||||||
Additions to fixed assets | — | (11 | ) | (44 | ) | 1 | (54 | ) | |||||||||||
Additions to intangible assets | — | — | (1 | ) | — | (1 | ) | ||||||||||||
Acquisitions of subsidiaries, net of cash acquired | — | — | (41 | ) | — | (41 | ) | ||||||||||||
Payments to acquire other investments | — | — | (6 | ) | — | (6 | ) | ||||||||||||
Proceeds from disposal of operations, net of cash disposed | — | — | 18 | — | 18 | ||||||||||||||
Proceeds from intercompany investing activities | 145 | 120 | 283 | (548 | ) | — | |||||||||||||
Repayments of intercompany investing activities | — | — | (37 | ) | 37 | — | |||||||||||||
Net cash provided by (used in) investing activities | 145 | 110 | 174 | (511 | ) | (82 | ) | ||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||||||||
Debt issuance costs | — | — | (3 | ) | — | (3 | ) | ||||||||||||
Repayments of debt | — | (8 | ) | — | — | (8 | ) | ||||||||||||
Repurchase of shares | (117 | ) | — | — | — | (117 | ) | ||||||||||||
Proceeds from issue of shares | 93 | — | — | — | 93 | ||||||||||||||
Excess tax benefits from share-based payment arrangement | — | — | 2 | — | 2 | ||||||||||||||
Dividends paid | (103 | ) | — | (236 | ) | 236 | (103 | ) | |||||||||||
Acquisition of noncontrolling interests | — | (4 | ) | — | — | (4 | ) | ||||||||||||
Dividends paid to noncontrolling interests | — | — | (15 | ) | — | (15 | ) | ||||||||||||
Proceeds from intercompany financing activities | — | 37 | — | (37 | ) | — | |||||||||||||
Repayments of intercompany financing activities | — | (302 | ) | (246 | ) | 548 | — | ||||||||||||
Net cash used in financing activities | (127 | ) | (277 | ) | (498 | ) | 747 | (155 | ) | ||||||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | — | 1 | (86 | ) | — | (85 | ) | ||||||||||||
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 | $ | 4 | $ | 701 | $ | — | $ | 708 |
22. | FINANCIAL INFORMATION FOR ISSUER, PARENT GUARANTOR, OTHER GUARANTOR SUBSIDIARIES AND NON-GUARANTOR SUBSIDIARIES |
(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; |
Three months ended June 30, 2015 | |||||||||||||||||||||||
Willis Group Holdings | The Other Guarantors | The Issuer | Other | Consolidating adjustments | Consolidated | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
REVENUES | |||||||||||||||||||||||
Commissions and fees | $ | — | $ | — | $ | — | $ | 917 | $ | — | $ | 917 | |||||||||||
Investment income | — | — | — | 3 | — | 3 | |||||||||||||||||
Other income | — | — | — | 2 | — | 2 | |||||||||||||||||
Total revenues | — | — | — | 922 | — | 922 | |||||||||||||||||
EXPENSES | |||||||||||||||||||||||
Salaries and benefits | (1 | ) | (22 | ) | — | (538 | ) | — | (561 | ) | |||||||||||||
Other operating expenses | — | (50 | ) | — | (129 | ) | — | (179 | ) | ||||||||||||||
Depreciation expense | — | (6 | ) | — | (17 | ) | — | (23 | ) | ||||||||||||||
Amortization of intangible assets | — | — | — | (16 | ) | — | (16 | ) | |||||||||||||||
Restructuring costs | — | (8 | ) | — | (30 | ) | — | (38 | ) | ||||||||||||||
Total expenses | (1 | ) | (86 | ) | — | (730 | ) | — | (817 | ) | |||||||||||||
OPERATING (LOSS) INCOME | (1 | ) | (86 | ) | — | 192 | — | 105 | |||||||||||||||
Other income (expense), net | 4 | (6 | ) | — | 25 | — | 23 | ||||||||||||||||
Income from group undertakings | — | 90 | 23 | 24 | (137 | ) | — | ||||||||||||||||
Expenses due to group undertakings | — | (46 | ) | (7 | ) | (84 | ) | 137 | — | ||||||||||||||
Interest expense | (10 | ) | (10 | ) | (10 | ) | (5 | ) | — | (35 | ) | ||||||||||||
(LOSS) INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | (7 | ) | (58 | ) | 6 | 152 | — | 93 | |||||||||||||||
Income taxes | — | 27 | (2 | ) | (44 | ) | — | (19 | ) | ||||||||||||||
(LOSS) INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES | (7 | ) | (31 | ) | 4 | 108 | — | 74 | |||||||||||||||
Interest in earnings of associates, net of tax | — | 2 | — | (4 | ) | — | (2 | ) | |||||||||||||||
Equity account for subsidiaries | 77 | 104 | 52 | — | (233 | ) | — | ||||||||||||||||
NET INCOME | 70 | 75 | 56 | 104 | (233 | ) | 72 | ||||||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | — | (2 | ) | — | (2 | ) | |||||||||||||||
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS | $ | 70 | $ | 75 | $ | 56 | $ | 102 | $ | (233 | ) | $ | 70 |
Three months ended June 30, 2015 | |||||||||||||||||||||||
Willis Group Holdings | The Other Guarantors | The Issuer | Other | Consolidating adjustments | Consolidated | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
Comprehensive income | $ | 150 | $ | 154 | $ | 127 | $ | 176 | $ | (451 | ) | $ | 156 | ||||||||||
Less: comprehensive income attributable to noncontrolling interests | — | — | — | (6 | ) | — | (6 | ) | |||||||||||||||
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS | $ | 150 | $ | 154 | $ | 127 | $ | 170 | $ | (451 | ) | $ | 150 |
Three months ended June 30, 2014 | |||||||||||||||||||||||
Willis Group Holdings | The Other Guarantors | The Issuer | Other | Consolidating adjustments | Consolidated | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
REVENUES | |||||||||||||||||||||||
Commissions and fees | $ | — | $ | 2 | $ | — | $ | 928 | $ | — | $ | 930 | |||||||||||
Investment income | — | — | — | 4 | — | 4 | |||||||||||||||||
Other income | — | — | — | 1 | — | 1 | |||||||||||||||||
Total revenues | — | 2 | — | 933 | — | 935 | |||||||||||||||||
EXPENSES | |||||||||||||||||||||||
Salaries and benefits | (1 | ) | (17 | ) | — | (557 | ) | — | (575 | ) | |||||||||||||
Other operating expenses | (5 | ) | (39 | ) | — | (129 | ) | — | (173 | ) | |||||||||||||
Depreciation expense | — | (6 | ) | — | (18 | ) | — | (24 | ) | ||||||||||||||
Amortization of intangible assets | — | — | — | (12 | ) | — | (12 | ) | |||||||||||||||
Restructuring costs | — | (2 | ) | — | (1 | ) | — | (3 | ) | ||||||||||||||
Total expenses | (6 | ) | (64 | ) | — | (717 | ) | — | (787 | ) | |||||||||||||
OPERATING (LOSS) INCOME | (6 | ) | (62 | ) | — | 216 | — | 148 | |||||||||||||||
Other (expense) income, net | (1 | ) | (229 | ) | — | (3 | ) | 230 | (3 | ) | |||||||||||||
Income from group undertakings | — | 121 | 23 | 27 | (171 | ) | — | ||||||||||||||||
Expenses due to group undertakings | — | (49 | ) | (7 | ) | (115 | ) | 171 | — | ||||||||||||||
Interest expense | (10 | ) | (12 | ) | (9 | ) | (4 | ) | — | (35 | ) | ||||||||||||
(LOSS) INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | (17 | ) | (231 | ) | 7 | 121 | 230 | 110 | |||||||||||||||
Income taxes | — | 7 | (2 | ) | (64 | ) | — | (59 | ) | ||||||||||||||
(LOSS) INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES | (17 | ) | (224 | ) | 5 | 57 | 230 | 51 | |||||||||||||||
Interest in earnings of associates, net of tax | — | 2 | — | (5 | ) | — | (3 | ) | |||||||||||||||
Equity account for subsidiaries | 64 | 285 | 42 | — | (391 | ) | — | ||||||||||||||||
NET INCOME | 47 | 63 | 47 | 52 | (161 | ) | 48 | ||||||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | — | (1 | ) | — | (1 | ) | |||||||||||||||
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS | $ | 47 | $ | 63 | $ | 47 | $ | 51 | $ | (161 | ) | $ | 47 |
Three months ended June 30, 2014 | |||||||||||||||||||||||
Willis Group Holdings | The Other Guarantors | The Issuer | Other | Consolidating adjustments | Consolidated | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
Comprehensive income | $ | 72 | $ | 88 | $ | 71 | $ | 76 | $ | (234 | ) | $ | 73 | ||||||||||
Less: comprehensive income attributable to noncontrolling interests | — | — | — | (1 | ) | — | (1 | ) | |||||||||||||||
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS | $ | 72 | $ | 88 | $ | 71 | $ | 75 | $ | (234 | ) | $ | 72 |
Six months ended June 30, 2015 | |||||||||||||||||||||||
Willis Group Holdings | The Other Guarantors | The Issuer | Other | Consolidating adjustments | Consolidated | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
REVENUES | |||||||||||||||||||||||
Commissions and fees | $ | — | $ | 4 | $ | — | $ | 1,994 | $ | — | $ | 1,998 | |||||||||||
Investment income | — | — | — | 6 | — | 6 | |||||||||||||||||
Other income | — | — | — | 5 | — | 5 | |||||||||||||||||
Total revenues | — | 4 | — | 2,005 | — | 2,009 | |||||||||||||||||
EXPENSES | |||||||||||||||||||||||
Salaries and benefits | (1 | ) | (42 | ) | — | (1,085 | ) | — | (1,128 | ) | |||||||||||||
Other operating expenses | (9 | ) | (66 | ) | — | (264 | ) | — | (339 | ) | |||||||||||||
Depreciation expense | — | (11 | ) | — | (34 | ) | — | (45 | ) | ||||||||||||||
Amortization of intangible assets | — | — | — | (30 | ) | — | (30 | ) | |||||||||||||||
Restructuring costs | — | (27 | ) | — | (42 | ) | — | (69 | ) | ||||||||||||||
Total expenses | (10 | ) | (146 | ) | — | (1,455 | ) | — | (1,611 | ) | |||||||||||||
OPERATING (LOSS) INCOME | (10 | ) | (142 | ) | — | 550 | — | 398 | |||||||||||||||
Other (expense) income, net | (8 | ) | — | — | 24 | 1 | 17 | ||||||||||||||||
Income from group undertakings | — | 180 | 45 | 49 | (274 | ) | — | ||||||||||||||||
Expenses due to group undertakings | — | (93 | ) | (14 | ) | (167 | ) | 274 | — | ||||||||||||||
Interest expense | (21 | ) | (21 | ) | (19 | ) | (7 | ) | — | (68 | ) | ||||||||||||
(LOSS) INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | (39 | ) | (76 | ) | 12 | 449 | 1 | 347 | |||||||||||||||
Income taxes | — | 42 | (3 | ) | (114 | ) | — | (75 | ) | ||||||||||||||
(LOSS) INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES | (39 | ) | (34 | ) | 9 | 335 | 1 | 272 | |||||||||||||||
Interest in earnings of associates, net of tax | — | 4 | — | 10 | — | 14 | |||||||||||||||||
Equity account for subsidiaries | 319 | 342 | 261 | — | (922 | ) | — | ||||||||||||||||
NET INCOME | 280 | 312 | 270 | 345 | (921 | ) | 286 | ||||||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | — | (6 | ) | — | (6 | ) | |||||||||||||||
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS | $ | 280 | $ | 312 | $ | 270 | $ | 339 | $ | (921 | ) | $ | 280 |
Six months ended June 30, 2015 | |||||||||||||||||||||||
Willis Group Holdings | The Other Guarantors | The Issuer | Other | Consolidating adjustments | Consolidated | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
Comprehensive income | $ | 474 | $ | 508 | $ | 474 | $ | 546 | $ | (1,525 | ) | $ | 477 | ||||||||||
Less: comprehensive income attributable to noncontrolling interests | — | — | — | (3 | ) | — | (3 | ) | |||||||||||||||
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS | $ | 474 | $ | 508 | $ | 474 | $ | 543 | $ | (1,525 | ) | $ | 474 |
Six months ended June 30, 2014 | |||||||||||||||||||||||
Willis Group Holdings | The Other Guarantors | The Issuer | Other | Consolidating adjustments | Consolidated | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
REVENUES | |||||||||||||||||||||||
Commissions and fees | $ | — | $ | 4 | $ | — | $ | 2,016 | $ | — | $ | 2,020 | |||||||||||
Investment income | — | — | — | 8 | — | 8 | |||||||||||||||||
Other income | — | — | — | 4 | — | 4 | |||||||||||||||||
Total revenues | — | 4 | — | 2,028 | — | 2,032 | |||||||||||||||||
EXPENSES | |||||||||||||||||||||||
Salaries and benefits | (1 | ) | (36 | ) | — | (1,108 | ) | — | (1,145 | ) | |||||||||||||
Other operating expenses | (9 | ) | (80 | ) | — | (249 | ) | — | (338 | ) | |||||||||||||
Depreciation expense | — | (11 | ) | — | (36 | ) | — | (47 | ) | ||||||||||||||
Amortization of intangible assets | — | — | — | (25 | ) | — | (25 | ) | |||||||||||||||
Restructuring costs | — | (2 | ) | — | (1 | ) | (3 | ) | |||||||||||||||
Total expenses | (10 | ) | (129 | ) | — | (1,419 | ) | — | (1,558 | ) | |||||||||||||
OPERATING (LOSS) INCOME | (10 | ) | (125 | ) | — | 609 | — | 474 | |||||||||||||||
Other (expense) income, net | (1 | ) | (228 | ) | — | (4 | ) | 230 | (3 | ) | |||||||||||||
Income from group undertakings | — | 203 | 45 | 54 | (302 | ) | — | ||||||||||||||||
Expenses due to group undertakings | — | (98 | ) | (14 | ) | (190 | ) | 302 | — | ||||||||||||||
Interest expense | (21 | ) | (23 | ) | (18 | ) | (5 | ) | — | (67 | ) | ||||||||||||
(LOSS) INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | (32 | ) | (271 | ) | 13 | 464 | 230 | 404 | |||||||||||||||
Income taxes | — | 32 | (3 | ) | (151 | ) | — | (122 | ) | ||||||||||||||
(LOSS) INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES | (32 | ) | (239 | ) | 10 | 313 | 230 | 282 | |||||||||||||||
Interest in earnings of associates, net of tax | — | 5 | — | 11 | — | 16 | |||||||||||||||||
Equity account for subsidiaries | 325 | 553 | 257 | — | (1,135 | ) | — | ||||||||||||||||
NET INCOME | 293 | 319 | 267 | 324 | (905 | ) | 298 | ||||||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | — | (5 | ) | — | (5 | ) | |||||||||||||||
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS | $ | 293 | $ | 319 | $ | 267 | $ | 319 | $ | (905 | ) | $ | 293 |
Six months ended June 30, 2014 | |||||||||||||||||||||||
Willis Group Holdings | The Other Guarantors | The Issuer | Other | Consolidating adjustments | Consolidated | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
Comprehensive income | $ | 326 | $ | 352 | $ | 299 | $ | 357 | $ | (1,003 | ) | $ | 331 | ||||||||||
Less: comprehensive income attributable to noncontrolling interests | — | — | — | (5 | ) | — | (5 | ) | |||||||||||||||
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS | $ | 326 | $ | 352 | $ | 299 | $ | 352 | $ | (1,003 | ) | $ | 326 |
As of June 30, 2015 | |||||||||||||||||||||||
Willis Group Holdings | The Other Guarantors | The Issuer | Other | Consolidating adjustments | Consolidated | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
ASSETS | |||||||||||||||||||||||
CURRENT ASSETS | |||||||||||||||||||||||
Cash and cash equivalents | $ | 6 | $ | 2 | $ | — | $ | 475 | $ | — | $ | 483 | |||||||||||
Accounts receivable, net | — | 2 | — | 1,224 | — | 1,226 | |||||||||||||||||
Fiduciary assets | — | — | — | 11,006 | — | 11,006 | |||||||||||||||||
Deferred tax assets | — | — | — | 9 | — | 9 | |||||||||||||||||
Other current assets | 1 | 80 | 1 | 195 | (55 | ) | 222 | ||||||||||||||||
Amounts due from group undertakings | 3,560 | 1,036 | 870 | 1,289 | (6,755 | ) | — | ||||||||||||||||
Total current assets | 3,567 | 1,120 | 871 | 14,198 | (6,810 | ) | 12,946 | ||||||||||||||||
NON-CURRENT ASSETS | |||||||||||||||||||||||
Investments in subsidiaries | — | 4,337 | 3,071 | — | (7,408 | ) | — | ||||||||||||||||
Fixed assets, net | — | 59 | — | 457 | — | 516 | |||||||||||||||||
Goodwill | — | — | — | 3,097 | — | 3,097 | |||||||||||||||||
Other intangible assets, net | — | — | — | 675 | — | 675 | |||||||||||||||||
Investments in associates | — | 139 | — | 29 | — | 168 | |||||||||||||||||
Deferred tax assets | — | 1 | — | 6 | (1 | ) | 6 | ||||||||||||||||
Pension benefits asset | — | — | — | 677 | — | 677 | |||||||||||||||||
Other non-current assets | 2 | 2 | 7 | 223 | — | 234 | |||||||||||||||||
Non-current amounts due from group undertakings | — | 765 | 518 | — | (1,283 | ) | — | ||||||||||||||||
Total non-current assets | 2 | 5,303 | 3,596 | 5,164 | (8,692 | ) | 5,373 | ||||||||||||||||
TOTAL ASSETS | $ | 3,569 | $ | 6,423 | $ | 4,467 | $ | 19,362 | $ | (15,502 | ) | $ | 18,319 | ||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||||||||||
CURRENT LIABILITIES | |||||||||||||||||||||||
Fiduciary liabilities | $ | — | $ | — | $ | — | $ | 11,006 | $ | — | $ | 11,006 | |||||||||||
Deferred revenue and accrued expenses | 5 | 24 | — | 414 | — | 443 | |||||||||||||||||
Income taxes payable | — | — | 8 | 82 | (55 | ) | 35 | ||||||||||||||||
Current portion of long-term debt | 299 | 148 | 20 | 1 | — | 468 | |||||||||||||||||
Deferred tax liabilities | — | — | — | 21 | — | 21 | |||||||||||||||||
Other current liabilities | 71 | 34 | 11 | 406 | — | 522 | |||||||||||||||||
Amounts due to group undertakings | — | 5,551 | 422 | 782 | (6,755 | ) | — | ||||||||||||||||
Total current liabilities | 375 | 5,757 | 461 | 12,712 | (6,810 | ) | 12,495 |
As of June 30, 2015 | |||||||||||||||||||||||
Willis Group Holdings | The Other Guarantors | The Issuer | Other | Consolidating adjustments | Consolidated | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
NON-CURRENT LIABILITIES | |||||||||||||||||||||||
Investments in subsidiaries | 304 | — | — | — | (304 | ) | — | ||||||||||||||||
Long-term debt | 497 | 581 | 974 | — | — | 2,052 | |||||||||||||||||
Liabilities for pension benefits | — | — | — | 294 | — | 294 | |||||||||||||||||
Deferred tax liabilities | — | — | — | 212 | (1 | ) | 211 | ||||||||||||||||
Provisions for liabilities | — | — | — | 220 | — | 220 | |||||||||||||||||
Other non-current liabilities | — | 18 | — | 488 | — | 506 | |||||||||||||||||
Non-current amounts due to group undertakings | — | 518 | — | 765 | (1,283 | ) | — | ||||||||||||||||
Total non-current liabilities | 801 | 1,117 | 974 | 1,979 | (1,588 | ) | 3,283 | ||||||||||||||||
TOTAL LIABILITIES | $ | 1,176 | $ | 6,874 | $ | 1,435 | $ | 14,691 | $ | (8,398 | ) | $ | 15,778 | ||||||||||
REDEEMABLE NONCONTROLLING INTEREST | — | — | — | 52 | — | 52 | |||||||||||||||||
EQUITY | |||||||||||||||||||||||
Total Willis Group Holdings stockholders’ equity | 2,393 | (451 | ) | 3,032 | 4,523 | (7,104 | ) | 2,393 | |||||||||||||||
Noncontrolling interests | — | — | — | 96 | — | 96 | |||||||||||||||||
Total equity | 2,393 | (451 | ) | 3,032 | 4,619 | (7,104 | ) | 2,489 | |||||||||||||||
TOTAL LIABILITIES AND EQUITY | $ | 3,569 | $ | 6,423 | $ | 4,467 | $ | 19,362 | $ | (15,502 | ) | $ | 18,319 |
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 | ||||||||||||||||
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 |
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 |
Six months ended June 30, 2015 | |||||||||||||||||||||||
Willis Group Holdings | The Other Guarantors | The Issuer | Other | Consolidating adjustments | Consolidated | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES | $ | (4 | ) | $ | 70 | $ | 9 | $ | (68 | ) | $ | — | $ | 7 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||||||||||
Proceeds on disposal of fixed and intangible assets | — | — | — | 9 | — | 9 | |||||||||||||||||
Additions to fixed assets | — | (9 | ) | — | (38 | ) | — | (47 | ) | ||||||||||||||
Additions to intangible assets | — | — | — | (10 | ) | — | (10 | ) | |||||||||||||||
Acquisitions of operations, net of cash acquired | — | — | — | (228 | ) | — | (228 | ) | |||||||||||||||
Proceeds from disposal of operations, net of cash disposed | — | — | — | 28 | — | 28 | |||||||||||||||||
Proceeds from intercompany investing activities | 105 | 49 | — | 153 | (307 | ) | — | ||||||||||||||||
Repayments of intercompany investing activities | — | (14 | ) | (72 | ) | (218 | ) | 304 | — | ||||||||||||||
Intercompany investing in subsidiaries | — | (274 | ) | — | — | 274 | — | ||||||||||||||||
Net cash provided by (used in) investing activities | 105 | (248 | ) | (72 | ) | (304 | ) | 271 | (248 | ) | |||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||||||||||||
Proceeds from draw down of revolving credit facility | — | — | 220 | — | — | 220 | |||||||||||||||||
Debt issuance costs | — | — | — | (1 | ) | — | (1 | ) | |||||||||||||||
Repayments of debt | — | — | (8 | ) | — | — | (8 | ) | |||||||||||||||
Repurchase of shares | (79 | ) | — | — | — | — | (79 | ) | |||||||||||||||
Proceeds from issue of shares | 84 | — | — | 274 | (274 | ) | 84 | ||||||||||||||||
Excess tax benefits from share-based payment arrangements | — | — | — | 5 | — | 5 | |||||||||||||||||
Dividends paid | (109 | ) | — | — | — | — | (109 | ) | |||||||||||||||
Dividends paid to noncontrolling interests | — | — | — | (8 | ) | — | (8 | ) | |||||||||||||||
Proceeds from intercompany financing activities | — | 218 | — | 86 | (304 | ) | — | ||||||||||||||||
Repayments of intercompany financing activities | — | (40 | ) | (149 | ) | (118 | ) | 307 | — | ||||||||||||||
Net cash (used in) provided by financing activities | (104 | ) | 178 | 63 | 238 | (271 | ) | 104 | |||||||||||||||
DECREASE IN CASH AND CASH EQUIVALENTS | (3 | ) | — | — | (134 | ) | — | (137 | ) | ||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | — | (15 | ) | — | (15 | ) | |||||||||||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 9 | 2 | — | 624 | — | 635 | |||||||||||||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 6 | $ | 2 | $ | — | $ | 475 | $ | — | $ | 483 |
Six months ended June 30, 2014 | |||||||||||||||||||||||
Willis Group Holdings | The Other Guarantors | The Issuer | Other | Consolidating adjustments | Consolidated | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES | $ | (18 | ) | $ | 186 | $ | (18 | ) | $ | 238 | $ | (236 | ) | $ | 152 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||||||||||
Proceeds on disposal of fixed and intangible assets | — | 1 | — | 2 | (1 | ) | 2 | ||||||||||||||||
Additions to fixed assets | — | (11 | ) | — | (44 | ) | 1 | (54 | ) | ||||||||||||||
Additions to intangible assets | — | — | — | (1 | ) | — | (1 | ) | |||||||||||||||
Acquisitions of subsidiaries, net of cash acquired | — | — | — | (41 | ) | — | (41 | ) | |||||||||||||||
Payments to acquire other investments | — | — | — | (6 | ) | — | (6 | ) | |||||||||||||||
Proceeds from disposal of operations, net of cash disposed | — | — | — | 18 | — | 18 | |||||||||||||||||
Proceeds from intercompany investing activities | 145 | 120 | 13 | 283 | (561 | ) | — | ||||||||||||||||
Repayments of intercompany investing activities | — | — | — | (37 | ) | 37 | — | ||||||||||||||||
Net cash provided by (used in) investing activities | 145 | 110 | 13 | 174 | (524 | ) | (82 | ) | |||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||||||||||||
Debt issuance costs | — | — | — | (3 | ) | — | (3 | ) | |||||||||||||||
Repayments of debt | — | — | (8 | ) | — | — | (8 | ) | |||||||||||||||
Repurchase of shares | (117 | ) | — | — | — | — | (117 | ) | |||||||||||||||
Proceeds from issue of shares | 93 | — | — | — | — | 93 | |||||||||||||||||
Excess tax benefits from share-based payment arrangements | — | — | — | 2 | — | 2 | |||||||||||||||||
Dividends paid | (103 | ) | — | — | (236 | ) | 236 | (103 | ) | ||||||||||||||
Acquisition of noncontrolling interests | — | (4 | ) | — | — | — | (4 | ) | |||||||||||||||
Dividends paid to noncontrolling interests | — | — | — | (15 | ) | — | (15 | ) | |||||||||||||||
Proceeds from intercompany financing activities | — | 24 | 13 | — | (37 | ) | — | ||||||||||||||||
Repayments of intercompany financing activities | — | (315 | ) | — | (246 | ) | 561 | — | |||||||||||||||
Net cash (used in) provided by financing activities | (127 | ) | (295 | ) | 5 | (498 | ) | 760 | (155 | ) | |||||||||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | — | 1 | — | (86 | ) | — | (85 | ) | |||||||||||||||
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 | $ | 4 | $ | — | $ | 701 | $ | — | $ | 708 |
• | Total revenues of $922 million decreased by $13 million, or 1.4 percent, versus second quarter 2014. The results included $59 million adverse foreign currency movements; $33 million positive impact from acquisitions and disposals; and organic growth of $13 million. |
• | Total expenses of $817 million increased by $30 million, or 3.8 percent, versus second quarter 2014. |
• | Operating margin decreased 440 basis points to 11.4 percent from 15.8 percent in second quarter 214. |
• | Net income attributable to Willis Group Holdings was $70 million, or $0.38 per diluted share, an increase of $23 million, or $0.12 per diluted share, from the $47 million, or $0.26 per diluted share, in second quarter 2014. |
• | Cash provided by operating activities was $71 million, a decrease of $76 million from $147 million of cash provided by operating activities in second quarter 2014. |
• | Underlying total revenues of $922 million increased $46 million, or 5.3 percent, versus second quarter 2014. Organic total revenues increased $13 million, or 1.5 percent. |
• | Underlying commissions and fees increased 5.3 percent and organic commissions and fees increased 1.6 percent, versus second quarter 2014, led by solid growth in Willis North America and Willis International. |
• | Underlying total expenses of $765 million increased $37 million, or 5.1 percent, versus second quarter 2014. Organic total expenses decreased $3 million, or 0.4 percent. |
• | Organic operating margin increased 160 basis points to 17.8 percent from 16.2 percent in second quarter 2014. |
• | Organic spread, that is the difference between organic commissions and fees growth of 1.6 percent and organic total expense reduction of 0.4 percent, was 200 basis points in second quarter 2015. |
• | Total revenues of $2,009 million decreased by $23 million, or 1.2 percent, versus first half 2014. The results included $128 million adverse movements in foreign exchange; $58 million positive impact from acquisitions and disposals; and organic growth of $47 million. |
• | Total expenses of $1,611 million increased by $53 million, or 3.4 percent, versus first half 2014. |
• | Operating margin decreased 350 basis points to 19.8 percent from 23.3 percent in first half 2014. |
• | Net income attributable to Willis Group Holdings was $280 million, or $1.54 per diluted share, a decrease of $13 million, or $0.07 per diluted share, from the $293 million, or $1.61 per diluted share, in the first half 2014. |
• | Cash provided in operating activities was $7 million, a decrease of $145 million from $152 million of cash provided by operating activities in first half 2014. |
• | Underlying total revenues of $2,009 million increased $105 million, or 5.6 percent, versus first half 2014. Organic total revenues increased $47 million, or 2.5 percent. |
• | Underlying commissions and fees increased 5.6 percent and organic commissions and fees increased 2.6 percent, versus first half 2014, led by solid growth in Willis North America and Willis International. |
• | Underlying total expenses of $1,528 million increased $77 million, or 5.3 percent, versus first half 2014. Excluding the net $69 million increase from acquisition and disposals, organic total expenses increased $8 million, or 0.6 percent. |
• | Organic operating margin increased 150 basis points to 24.9 percent from 23.4 percent in the first half 2014. |
• | Organic spread, that is the difference between organic commission and fee growth of 2.6 percent and organic total expense growth of 0.6 percent, was 200 basis points in first half 2015. |
• | movement or elimination of approximately 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; |
• | 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. |
• | $8 million in the North America segment including $3 million related to roles that have either been eliminated or relocated to low cost locations and $5 million of professional services and other costs supporting the execution of the program; |
• | approximately $7 million in the International segment including $1 million related to termination benefits and $6 million of professional services and other program related costs; |
• | $1 million in Willis CWR related to professional services and other program related costs; |
• | approximately $17 million in Willis GB including $13 million related to termination benefits and $4 million of professional services and other costs supporting the execution of the program; and |
• | $5 million in Corporate and other, including approximately $3 million of termination benefits and $2 million related to other core resources supporting the program. |
• | $15 million in the North America segment including $5 million related to roles that have either been eliminated or relocated to low cost locations and $10 million of professional services and other costs supporting the execution of the program; |
• | approximately $10 million in the International segment including $3 million related to termination benefits and $7 million of professional services and other program related costs; |
• | $7 million in Willis CWR related to termination benefits, professional services and other program related costs; |
• | approximately $21 million in Willis GB including $13 million related to termination benefits and $8 million of professional services and other costs supporting the execution of the program; and |
• | $16 million in Corporate and other, including approximately $3 million of termination benefits and $13 million related to other professional services and core resources supporting the program. |
• | 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 risk and human capital and benefits service that the client needs. We call this team-based way of working ‘Connecting Willis’. |
• | Regional and local market expertise; |
• | Industry and product specialist capabilities; |
• | Global placement knowledge and data; and |
• | 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. |
Salaries and benefits | Other operating expenses | Total expenses | |||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | ||||||||||||||||||
Expenses, GAAP basis | $ | 561 | $ | 575 | $ | 179 | $ | 173 | $ | 817 | $ | 787 | |||||||||||
Excluding: | |||||||||||||||||||||||
Restructuring costs | — | — | — | — | 38 | 3 | |||||||||||||||||
M&A transaction-related costs (b) | 1 | — | 13 | — | 14 | — | |||||||||||||||||
Foreign currency movements (a) | — | 42 | — | 13 | — | 56 | |||||||||||||||||
Underlying expenses | $ | 560 | $ | 533 | $ | 166 | $ | 160 | $ | 765 | $ | 728 | |||||||||||
Less: net expenses from acquisitions and disposals | 32 | 7 | 9 | 1 | 49 | 9 | |||||||||||||||||
Organic expenses | $ | 528 | $ | 526 | $ | 157 | $ | 159 | $ | 716 | $ | 719 |
(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) | From second quarter 2015, the definition of underlying measures was modified to exclude the impact from M&A transaction-related costs. Prior period underlying measures, which include $7 million of such expenses in the first quarter 2015 and approximately $1 million in the second quarter 2014 have not been recast. |
Salaries and benefits | Other operating expenses | Total expenses | |||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | ||||||||||||||||||
Expenses, GAAP basis | $ | 1,128 | $ | 1,145 | $ | 339 | $ | 338 | $ | 1,611 | $ | 1,558 | |||||||||||
Excluding: | |||||||||||||||||||||||
Restructuring costs | — | — | — | — | 69 | 3 | |||||||||||||||||
M&A transaction-related costs (b) | 1 | — | 13 | — | 14 | — | |||||||||||||||||
Foreign currency movements (a) | — | 79 | — | 23 | — | 104 | |||||||||||||||||
Underlying expenses | $ | 1,127 | $ | 1,066 | $ | 326 | $ | 315 | $ | 1,528 | $ | 1,451 | |||||||||||
Less: net expenses from acquisitions and disposals | 55 | 13 | 18 | 2 | 86 | 17 | |||||||||||||||||
Organic expenses | $ | 1,072 | $ | 1,053 | $ | 308 | $ | 313 | $ | 1,442 | $ | 1,434 |
(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) | From second quarter 2015, the definition of underlying measures was modified to exclude the impact from M&A transaction-related costs. Prior period underlying measures, which include $7 million of such expenses in the first quarter 2015 and approximately $1 million in the second quarter 2014 have not been recast. |
Three months ended June 30, | % Change(b) | Six months ended June 30, | % Change(b) | ||||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||||||
Total revenues | $ | 922 | $ | 935 | (1.4 | ) | $ | 2,009 | $ | 2,032 | (1.2 | ) | |||||||||
Excluding: | |||||||||||||||||||||
Foreign currency movements(a) | — | (59 | ) | — | (128 | ) | |||||||||||||||
Underlying total revenues | $ | 922 | $ | 876 | 5.3 | $ | 2,009 | $ | 1,904 | 5.6 | |||||||||||
Less: net revenue from acquisitions and disposals | 51 | 18 | 90 | 32 | |||||||||||||||||
Organic total revenues | $ | 871 | $ | 858 | 1.5 | $ | 1,919 | $ | 1,872 | 2.5 | |||||||||||
Operating income, GAAP basis | $ | 105 | $ | 148 | (29.0 | ) | $ | 398 | $ | 474 | (16.1 | ) | |||||||||
Excluding: | |||||||||||||||||||||
M&A transaction related costs (c) | 14 | — | — | 14 | — | ||||||||||||||||
Restructuring costs | 38 | 3 | 69 | 3 | |||||||||||||||||
Foreign currency movements (a) | — | (3 | ) | — | (24 | ) | |||||||||||||||
Underlying operating income | $ | 157 | $ | 148 | 6.2 | $ | 481 | $ | 453 | 6.1 | |||||||||||
Less: net operating income from acquisitions and disposals | 2 | 9 | 4 | 15 | |||||||||||||||||
Organic operating income | $ | 155 | $ | 139 | 11.5 | $ | 477 | $ | 438 | 8.9 | |||||||||||
Operating margin, GAAP basis, or operating income as a percentage of total revenues | 11.4 | % | 15.8 | % | 19.8 | % | 23.3 | % | |||||||||||||
Underlying operating margin, or underlying operating income as a percentage of underlying total revenues | 17.0 | % | 16.9 | % | 23.9 | % | 23.8 | % | |||||||||||||
Organic operating margin, or organic operating income as a percentage of organic total revenues | 17.8 | % | 16.2 | % | 24.9 | % | 23.4 | % |
(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. |
(c) | From second quarter 2015, the definition of underlying measures was modified to exclude the impact from M&A transaction-related costs. Prior period underlying measures, which include $7 million of such expenses in the first quarter 2015 and approximately $1 million in the second quarter 2014 have not been recast. |
Three months ended June 30, | % Change(b) | Six months ended June 30, | % Change(b) | |||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||||
Net income attributable to Willis Group Holdings plc | $ | 70 | $ | 47 | 48.9 | $ | 280 | $ | 293 | (4.4 | ) | |||||||||
Add back: | ||||||||||||||||||||
Net income attributable to noncontrolling interest | 2 | 1 | 6 | 5 | ||||||||||||||||
Interest in losses(earnings) of associates, net of tax | 2 | 3 | (14 | ) | (16 | ) | ||||||||||||||
Income taxes | 19 | 59 | 75 | 122 | ||||||||||||||||
Interest expense | 35 | 35 | 68 | 67 | ||||||||||||||||
Other (income) expense, net | (23 | ) | 3 | (17 | ) | 3 | ||||||||||||||
Depreciation | 23 | 24 | 45 | 47 | ||||||||||||||||
Amortization | 16 | 12 | 30 | 25 | ||||||||||||||||
M&A transaction related costs (c) | 14 | — | 14 | — | ||||||||||||||||
Restructuring costs | 38 | 3 | 69 | 3 | ||||||||||||||||
Foreign currency movements (a) | — | (4 | ) | — | (26 | ) | ||||||||||||||
Underlying EBITDA | $ | 196 | $ | 183 | 7.1 | $ | 556 | $ | 523 | 6.3 | ||||||||||
Less: net EBITDA from acquisitions and disposals | 10 | 10 | 17 | 17 | ||||||||||||||||
Organic EBITDA | $ | 186 | $ | 173 | 8.0 | $ | 539 | $ | 506 | 6.5 |
(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. |
(c) | From second quarter 2015, the definition of underlying measures was modified to exclude the impact from M&A transaction-related costs. Prior period underlying measures, which include $7 million of such expenses in the first quarter 2015 and approximately $1 million in the second quarter 2014, have not been recast. |
Per diluted share | |||||||||||||||||||
Three months ended June 30, | Three months ended June 30, | ||||||||||||||||||
2015 | 2014 | % Change(b) | 2015 | 2014 | % Change(b) | ||||||||||||||
Net income attributable to Willis Group Holdings plc, GAAP basis | $ | 70 | $ | 47 | 48.9 | $ | 0.38 | $ | 0.26 | 46.2 | |||||||||
Excluding: | |||||||||||||||||||
M&A transaction-related costs (c) | 11 | — | 0.06 | — | |||||||||||||||
Restructuring costs | 27 | 2 | 0.15 | 0.01 | |||||||||||||||
Net gain on disposal of operations | (4 | ) | — | (0.02 | ) | — | |||||||||||||
Venezuela devaluation currency, net of tax | 1 | 13 | 0.01 | 0.07 | |||||||||||||||
Deferred tax valuation allowance | — | 21 | — | 0.12 | |||||||||||||||
Foreign currency movements(a) | — | 4 | — | 0.02 | |||||||||||||||
Underlying net income | $ | 105 | $ | 87 | 20.7 | $ | 0.58 | $ | 0.48 | 20.8 | |||||||||
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. |
(c) | From second quarter 2015, the definition of underlying measures was modified to exclude the impact from M&A transaction-related costs. Prior period underlying measures, which include $7 million of such expenses in the first quarter 2015 and approximately $1 million in the second quarter 2014, have not been recast. |
Per diluted share | |||||||||||||||||||||
Six months ended June 30, | Six months ended June 30, | ||||||||||||||||||||
2015 | 2014 | % Change(b) | 2015 | 2014 | % Change(b) | ||||||||||||||||
Net income attributable to Willis Group Holdings plc, GAAP basis | $ | 280 | $ | 293 | (4.4 | ) | $ | 1.54 | $ | 1.61 | (4.3 | ) | |||||||||
Excluding: | |||||||||||||||||||||
M&A transaction related costs (c) | 11 | — | 0.06 | — | |||||||||||||||||
Restructuring costs, | 50 | 2 | 0.27 | 0.01 | |||||||||||||||||
Net (gain) loss on disposal of operations | (7 | ) | 2 | (0.04 | ) | 0.01 | |||||||||||||||
Venezuela devaluation currency, net of tax | 1 | 13 | 0.01 | 0.07 | |||||||||||||||||
Deferred tax valuation allowance | — | 21 | — | 0.12 | |||||||||||||||||
Foreign currency movements(a) | — | (24 | ) | — | (0.13 | ) | |||||||||||||||
Underlying net income | $ | 335 | $ | 307 | 9.1 | $ | 1.84 | $ | 1.69 | 8.9 | |||||||||||
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. |
(c) | From second quarter 2015, the definition of underlying measures was modified to exclude the impact from M&A transaction-related costs. Prior period underlying measures, which include $7 million of such expenses in the first quarter 2015 and approximately $1 million in the second quarter 2014, have not been recast. |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
REVENUES | |||||||||||||||
Commissions and fees | $ | 917 | $ | 930 | $ | 1,998 | $ | 2,020 | |||||||
Investment income | 3 | 4 | 6 | 8 | |||||||||||
Other income | 2 | 1 | 5 | 4 | |||||||||||
Total revenues | 922 | 935 | 2,009 | 2,032 | |||||||||||
EXPENSES | |||||||||||||||
Salaries and benefits | (561 | ) | (575 | ) | (1,128 | ) | (1,145 | ) | |||||||
Other operating expenses | (179 | ) | (173 | ) | (339 | ) | (338 | ) | |||||||
Depreciation expense | (23 | ) | (24 | ) | (45 | ) | (47 | ) | |||||||
Amortization of intangible assets | (16 | ) | (12 | ) | (30 | ) | (25 | ) | |||||||
Restructuring costs | (38 | ) | (3 | ) | (69 | ) | (3 | ) | |||||||
Total expenses | (817 | ) | (787 | ) | (1,611 | ) | (1,558 | ) | |||||||
OPERATING INCOME | 105 | 148 | 398 | 474 | |||||||||||
Other income(expense), net | 23 | (3 | ) | 17 | (3 | ) | |||||||||
Interest expense | (35 | ) | (35 | ) | (68 | ) | (67 | ) | |||||||
INCOME BEFORE INCOME TAXES AND INTEREST IN EARNINGS OF ASSOCIATES | 93 | 110 | 347 | 404 | |||||||||||
Income taxes | (19 | ) | (59 | ) | (75 | ) | (122 | ) | |||||||
INCOME BEFORE INTEREST IN EARNINGS OF ASSOCIATES | 74 | 51 | 272 | 282 | |||||||||||
Interest in (losses) earnings of associates, net of tax | (2 | ) | (3 | ) | 14 | 16 | |||||||||
NET INCOME | 72 | 48 | 286 | 298 | |||||||||||
Less: net loss attributable to noncontrolling interests | (2 | ) | (1 | ) | (6 | ) | (5 | ) | |||||||
NET INCOME ATTRIBUTABLE TO WILLIS GROUP HOLDINGS | $ | 70 | $ | 47 | $ | 280 | $ | 293 | |||||||
Salaries and benefits as a percentage of total revenues | 60.8 | % | 61.5 | % | 56.1 | % | 56.3 | % | |||||||
Other operating expenses as a percentage of total revenues | 19.4 | % | 18.5 | % | 16.9 | % | 16.6 | % | |||||||
Operating margin (operating income as a percentage of total revenues) | 11.4 | % | 15.8 | % | 19.8 | % | 23.3 | % | |||||||
Diluted earnings per share | $ | 0.38 | $ | 0.26 | $ | 1.54 | $ | 1.61 | |||||||
Average diluted number of shares outstanding | 182 | 182 | 182 | 182 |
Attributable to: | ||||||||||||||||||||||
Three months ended June 30, | 2015 | 2014 | % Change(b) | Foreign currency translation | Underlying growth | Acquisitions and disposals | Organic commissions and fees growth (a) | |||||||||||||||
Willis GB | $ | 170 | $ | 187 | (9.1 | )% | (5.8 | )% | (3.3 | )% | (1.0 | )% | (2.3 | )% | ||||||||
Willis Capital, Wholesale, and Reinsurance | 190 | 192 | (1.0 | )% | (4.6 | )% | 3.6 | % | 5.9 | % | (2.3 | )% | ||||||||||
Willis North America | 314 | 323 | (2.8 | )% | (0.5 | )% | (2.3 | )% | (4.8 | )% | 2.5 | % | ||||||||||
Willis International | 243 | 228 | 6.6 | % | (21.3 | )% | 27.9 | % | 20.8 | % | 7.1 | % | ||||||||||
Commissions and fees | $ | 917 | $ | 930 | (1.3 | )% | (6.6 | )% | 5.3 | % | 3.7 | % | 1.6 | % | ||||||||
Investment income | 3 | 4 | (25.0 | )% | ||||||||||||||||||
Other income | 2 | 1 | 100 | % | ||||||||||||||||||
Total revenues | $ | 922 | $ | 935 | (1.4 | )% | ||||||||||||||||
Attributable to: | ||||||||||||||||||||||
Six months ended June 30, | 2015 | 2014 | % Change(b) | Foreign currency translation | Underlying growth | Acquisitions and disposals | Organic commissions and fees growth (a) | |||||||||||||||
Willis GB | $ | 312 | $ | 337 | (7.4 | )% | (6.1 | )% | (1.3 | )% | (0.6 | )% | (0.7 | )% | ||||||||
Willis Capital, Wholesale, and Reinsurance | 486 | 495 | (1.8 | )% | (4.3 | )% | 2.5 | % | 2.6 | % | (0.1 | )% | ||||||||||
North America | 670 | 677 | (1.0 | )% | (0.3 | )% | (0.7 | )% | (4.4 | )% | 3.7 | % | ||||||||||
International | 530 | 511 | 3.7 | % | (20.5 | )% | 24.2 | % | 18.0 | % | 6.2 | % | ||||||||||
Commissions and fees | 1,998 | 2,020 | (1.1 | )% | (6.7 | )% | 5.6 | % | 3.0 | % | 2.6 | % | ||||||||||
Investment income | 6 | 8 | (25.0 | )% | ||||||||||||||||||
Other income | 5 | 4 | 25.0 | % | ||||||||||||||||||
Total revenues | $ | 2,009 | $ | 2,032 | 1.2 | % |
(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. |
• | investing in the business for growth; |
• | value-creating merger and acquisition activity; |
• | returning a steadily rising dividend to shareholders; and |
• | the repurchase of shares. |
June 30, 2015 | December 31, 2014 | ||||||
Long-term debt | $ | 2,052 | $ | 2,142 | |||
Current portion of long-term debt | 468 | 167 | |||||
Total debt | $ | 2,520 | $ | 2,309 | |||
Total Willis Group Holdings stockholder’s equity | $ | 2,393 | $ | 1,985 | |||
Capitalization ratio | 51.3 | % | 53.8 | % |
Six months ended June 30, | |||||||
2015 | 2014 | ||||||
Cash flows from operating activities | |||||||
Net cash provided by operating activities | $ | 7 | $ | 152 | |||
Cash flows from investing activities | |||||||
Net cash used in investing activities | (248 | ) | (82 | ) | |||
Cash flows from financing activities | |||||||
Net cash provided by (used in) financing activities | 104 | (155 | ) | ||||
Decrease in cash and cash equivalents | (137 | ) | (85 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (15 | ) | (3 | ) | |||
Cash and cash equivalents, beginning of period | 635 | 796 | |||||
Cash and cash equivalents, end of period | $ | 483 | $ | 708 |
• | 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. |
Three months ended June 30, | |||||||||||||||||||||
2015 | 2014 | ||||||||||||||||||||
Revenues | Operating income (loss) | Operating margin | Revenues | Operating income (loss) | Operating margin | ||||||||||||||||
Willis GB | $ | 171 | $ | 39 | 23.1 | % | $ | 190 | $ | 57 | 30.0 | % | |||||||||
Willis Capital, Wholesale and Reinsurance | 191 | 36 | 19.3 | % | 193 | 63 | 32.6 | % | |||||||||||||
Willis North America | 316 | 32 | 10.2 | % | 323 | 47 | 14.6 | % | |||||||||||||
Willis International | 244 | 19 | 7.6 | % | 229 | 23 | 10.0 | % | |||||||||||||
Total Segments | 922 | 126 | 13.7 | % | 935 | 190 | 20.3 | % | |||||||||||||
Corporate & Other | — | (21 | ) | n/a | — | (42 | ) | n/a | |||||||||||||
Total Consolidated | $ | 922 | $ | 105 | 11.4 | % | $ | 935 | $ | 148 | 15.8 | % | |||||||||
Six months ended June 30, | |||||||||||||||||||||
2015 | 2014 | ||||||||||||||||||||
Revenues | Operating income (loss) | Operating margin | Revenues | Operating income (loss) | Operating margin | ||||||||||||||||
Willis GB | $ | 314 | $ | 60 | 19.1 | % | $ | 343 | $ | 79 | 23.0 | % | |||||||||
Willis Capital, Wholesale and Reinsurance | 488 | 189 | 38.7 | % | 497 | 231 | 46.5 | % | |||||||||||||
Willis North America | 675 | 110 | 16.3 | % | 678 | 130 | 19.2 | % | |||||||||||||
Willis International | 532 | 89 | 16.7 | % | 514 | 107 | 20.8 | % | |||||||||||||
Total Segments | 2,009 | 448 | 22.3 | % | 2,032 | 547 | 26.9 | % | |||||||||||||
Corporate & Other | — | (50 | ) | n/a | — | (73 | ) | n/a | |||||||||||||
Total Consolidated | $ | 2,009 | $ | 398 | 19.8 | % | $ | 2,032 | $ | 474 | 23.3 | % |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Commissions and fees | $ | 170 | $ | 187 | $ | 312 | $ | 337 | |||||||
Investment income | 1 | 2 | 2 | 3 | |||||||||||
Other income (a) | — | 1 | — | 3 | |||||||||||
Total revenues | $ | 171 | $ | 190 | $ | 314 | $ | 343 | |||||||
Operating income | $ | 39 | $ | 57 | $ | 60 | $ | 79 | |||||||
Organic commissions and fees growth (b) | (2.3 | )% | 6.9 | % | (0.7 | )% | 0.6 | % | |||||||
Operating margin (c) | 23.1 | % | 30.0 | % | 19.1 | % | 23.0 | % |
(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. |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Commissions and fees | $ | 190 | $ | 192 | 486 | $ | 495 | ||||||||
Investment income | 1 | 1 | 2 | 2 | |||||||||||
Total revenues | $ | 191 | $ | 193 | $ | 488 | $ | 497 | |||||||
Operating income | $ | 36 | $ | 63 | 189 | 231 | |||||||||
Organic commissions and fees growth (a) | (2.3 | )% | 2.7 | % | (0.1 | )% | 4.9 | % | |||||||
Operating margin (b) | 19.3 | % | 32.6 | % | 38.7 | % | 46.5 | % |
(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 rounding. |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Commissions and fees | $ | 314 | $ | 323 | $ | 670 | $ | 677 | |||||||
Other income (a) | 2 | — | 5 | 1 | |||||||||||
Total revenues | $ | 316 | $ | 323 | $ | 675 | $ | 678 | |||||||
Operating income | $ | 32 | $ | 47 | $ | 110 | $ | 130 | |||||||
Organic commissions and fees growth (b) | 2.5 | % | 3.2 | % | 3.7 | % | 4.3 | % | |||||||
Operating margin (c) | 10.2 | % | 14.6 | % | 16.3 | % | 19.2 | % |
(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. |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Commissions and fees | $ | 243 | $ | 228 | $ | 530 | $ | 511 | |||||||
Investment income | 1 | 1 | 2 | 3 | |||||||||||
Total revenues | $ | 244 | $ | 229 | $ | 532 | $ | 514 | |||||||
Operating income | $ | 19 | $ | 23 | $ | 89 | $ | 107 | |||||||
Organic commissions and fees growth (a) | 7.1 | % | 6.1 | % | 6.2 | % | 6.7 | % | |||||||
Operating margin (b) | 7.6 | % | 10.0 | % | 16.7 | % | 20.8 | % |
(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. |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Costs of the holding company | $ | (7 | ) | $ | (5 | ) | $ | (10 | ) | $ | (7 | ) | |||
Costs related to group functions, leadership and projects | (36 | ) | (47 | ) | (75 | ) | (89 | ) | |||||||
Non-servicing elements of defined benefit pensions | 27 | 14 | 51 | 27 | |||||||||||
Restructuring costs (a) | (5 | ) | (2 | ) | (16 | ) | (2 | ) | |||||||
Other | — | (2 | ) | — | (2 | ) | |||||||||
Total Corporate & Other | $ | (21 | ) | $ | (42 | ) | $ | (50 | ) | $ | (73 | ) |
(a) | See 'Operational Improvement Program' section above. |
• | the diversion of management’s attention to integration matters; |
• | difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from the combination; |
• | difficulties in the integration of operations and systems; |
• | conforming standards, controls, procedures and accounting and other policies, business cultures and compensation structures between the two companies; |
• | difficulties in the assimilation of employees; |
• | difficulties in managing the expanded operations of a significantly larger and more complex company; |
• | difficulties in establishing effective uniform controls, systems, procedures and policies for the combined company; |
• | challenges in keeping existing customers and obtaining new customers; |
• | challenges in attracting and retaining key personnel; and |
• | coordinating a geographically dispersed organization. |
US Dollars | Pounds Sterling | Euros | Other currencies | ||||
Revenues | 58% | 8% | 13% | 21% | |||
Expenses | 46% | 25% | 9% | 20% |
Total number of shares purchased | Average price paid per share (i) | 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: | |||||||||||||
April 1, 2015 to April 30, 2015 | 393,500 | $ | 48.99 | 393,500 | $ | 573,873,937 | |||||||
May 1, 2015 to May 31, 2015 | 453,100 | $ | 47.86 | 453,100 | $ | 552,189,324 | |||||||
June 1, 2015 to June 30, 2015 | 490,300 | $ | 47.32 | 490,300 | $ | 528,990,325 | |||||||
Total | 1,336,900 | 1,336,900 |
2.1 | Merger Agreement and Plan of Merger, dated as of June 29, 2015, by and among Willis Group Holdings plc, Citadel Merger Sub, Inc. and Towers Watson & Co. (incorporated by reference to Exhibit 2.1 to the Company's Form 8-K filed on June 30, 2015 (SEC File No. 001-16503)) | |
10.1 | Separation Letter Agreement, dated as of June 24, 2015, by and between Stephen Hearn and Willis Limited* | |
10.2 | Willis Group Holdings Public Limited Company Compensation Policy for Non-Employee Directors (as amended)* | |
10.3 | Amended and Restated Employment Agreement, dated as of June 29, 2015, by and between Willis Group Holdings Public Limited Company and Dominic Casserley (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on June 30, 2015 (SEC File No. 001-16503)) | |
10.4 | Amendment to Employment Agreement, dated as of June 29, 2015, by and between Willis Group Holdings Public Limited Company and John Greene (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed on June 30, 2015 (SEC File No. 001-16503)) | |
10.5 | Amendment to Employment Agreement, dated as of June 29, 2015, by and between Willis Limited and Timothy Wright (incorporated by reference to Exhibit 10.3 to the Company's Form 8-K filed on June 30, 2015 (SEC File No. 001-16503)) | |
10.6 | Amendment to Employment Agreement, dated as of June 29, 2015, by and between Willis North America Inc. and Todd Jones (incorporated by reference to Exhibit 10.4 to the Company's Form 8-K filed on June 30, 2015 (SEC File No. 001-16503)) | |
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 |
WILLIS GROUP HOLDINGS PLC (REGISTRANT) | ||
By: | /s/ JOHN GREENE | |
John Greene | ||
Group Chief Financial Officer | ||
(Principal Financial and Accounting Officer) |
1. | Definitions. |
a. | “Non-Employee Director.” For purposes of this Policy, “Non-Employee Director” means a member of the Board who is not an employee of the Company or any of its subsidiaries or affiliates. |
b. | “Term of Service” or “Term” with Respect to Non-Employee Directors. For purposes of this Policy, “term of service” or “term” with respect to a Non-Employee Director means the period of time from his or her annual election at the Annual General Meeting of Shareholders (AGM) until the next AGM. |
c. | “Term of Service” or “Term” with Respect to Chairman of the Board and Committee Chairs. For purposes of this Policy, “term of service” or “term” with respect to the Chairman of the Board and/or a Committee Chair shall commence on his or her appointment by the Board to such position and end on the date of reappointment if the Non-Employee Director is reappointed. |
d. | “Term of Service” or “Term” with Respect to the Presiding Independent Director. For purposes of this Policy, the “term of service” or “term” with respect to the Presiding Independent Director shall commence on his or her election by the Non-Employee Directors and end on the date that is one year after such election. |
2. | Term Cash Fees |
a. | Non-Employee Director Fees. For each term of service as a Non-Employee Director, a cash fee of $100,000 shall be paid to each Non-Employee Director. |
b. | Chairman/Presiding Independent Director/Committee Fees. The additional fees set forth below shall be paid to a Non-Employee Director for each term of service that he or she serves in the following capacity: |
i. | Chairman of the Board: $100,000*, provided, however, that the Chairman may elect to receive such fee 100% in equity on the same terms and conditions as the equity granted under Section 3 below. |
ii. | Presiding Independent Director (if any): $35,000. |
iii. | Chairman of the Board Audit Committee: $30,000. |
iv. | Chairman of the Board Compensation Committee: $20,000. |
v. | Chairman of the Board Governance Committee: $20,000. |
vi. | Chairman of the Board Risk Committee: $20,000. |
vii. | Member of the Board Audit Committee: $10,000. |
c. | If the Chairman elects to receive his/her fee for the upcoming term set forth under Section 2(b)(i) 100% in equity, such election shall be made in writing and sent to the Group Company Secretary, substantially in the form attached as Exhibit A. The election must be made during an “open window” (as defined by the Group Insider Trading Policy), when the Chairman does not possess any material non-public information, and by December 31st of the calendar year immediately preceding the calendar year during which any portion of the cash fees were scheduled to be paid. If no election is made by the Chairman, he or she will receive the $100,000 fee in cash. |
d. | Vesting; Accelerated Vesting. Cash fees shall vest and be payable in four equal quarterly installments at the end of each calendar quarter; provided, however, if any Non-Employee Director is appointed, in accordance with applicable law and the Company’s memorandum and articles of association and other corporate governance documents, to fill a vacancy after an AGM or if the Chairman of the Board, Presiding Independent Director, Chairman of a Committee or Member of the Board Audit Committee is appointed in the middle of a term, then, in the discretion of the Compensation Committee, such director may be entitled to a prorated portion of the cash fees based on the portion of a calendar quarter during which the Non-Employee Director served in the relevant position. Notwithstanding the foregoing, if a Non-Employee Director ceases to serve through one or more quarterly vesting dates due to death, disability, removal, resignation or retirement, the Compensation Committee shall have the discretion |
e. | Multiple Roles. If a Non-Employee Director serves in more than one of the roles noted in Section 2(b), he or she shall be entitled to receive compensation for each role. |
3. | Annual Equity Grant. |
a. | Non-Employee Directors. Each Non-Employee Director who is elected at the Company’s AGM shall, in addition to the cash fees referred to in Section 2, be granted a time-based equity award covering a number of ordinary shares having an approximate aggregate value of $100,000, provided, however, that if any Non-Employee Director is appointed, in accordance with applicable law and the Company’s memorandum and articles of association and other corporate governance documents, to fill a vacancy after an AGM, then in the discretion of the Compensation Committee, such director shall be entitled to receive a prorated equity award on such terms and conditions, including a grant date, approved by the Compensation Committee. The equity award shall be calculated based on the closing price of the Company’s ordinary shares on the date of the grant as reported on the New York Stock Exchange and rounded down to the nearest whole ordinary share. The terms of the equity grant shall be as set forth in this Section 3. |
b. | Chairman of the Board. In addition to the equity award set forth in Section 3(a), in consideration for the services performed in his capacity as the Chairman of the Board, the Chairman shall be granted, at the same time and on the same terms and conditions as the equity granted under Section 3(a) above, an equity award covering a number of ordinary shares having an approximate aggregate value of $100,000, provided, however, that if any Chairman is appointed in the middle of the term, then, in the discretion of the Compensation Committee, such director may be entitled to receive a prorated equity award on such terms and conditions, including a grant date, approved by the Compensation Committee. |
c. | Form of Equity Award. The equity award shall be made in the form of restricted share units (RSUs), provided, however, that it may be made in the form of time-based options upon notification by management to the Compensation Committee of the lack of RSU availability under the 2012 Plan (defined below). |
d. | Grant Date. The equity granted pursuant to Sections 3(a) and 3(b) shall be granted on March 5th, May 10th, August 10th, November 10th, or December 5th (or if the applicable grant date is not a trading day, the next trading day) on the date most closely following the AGM. |
e. | Vesting; Accelerated Vesting. The equity granted under this Section 3 shall vest 100% in full on the one-year anniversary date of the grant date, provided, however, that equity granted by the Compensation Committee to a Non-Employee Director appointed to the Company after an AGM or to a Chairman appointed in the middle of the term, may vest at such time as determined by the Compensation Committee as long as that Non-Employee Director or Chairman of the Board continues to serve in such capacity through the vesting date. Notwithstanding the foregoing, if a Non-Employee Director ceases to serve through the vesting date due to death, disability, removal, resignation or retirement, the Compensation Committee shall have the discretion to accelerate the vesting of the equity as of the date of such Non-Employee Director’s cessation of service. Otherwise, such equity shall be forfeited. |
f. | Change in Control. The Compensation Committee shall have the discretion to accelerate the vesting of the equity granted under this Section 3 or take other steps specified in the 2012 Plan in the event of a change of control (as defined in the 2012 Plan). |
g. | Dividend Equivalents. There will be no dividend equivalents on the RSUs granted under Section 3. |
h. | The Plan. The equity granted under this Policy shall be made in accordance with the Willis Group Holdings Public Limited Company 2012 Equity Incentive Plan or any successor plan thereto (the 2012 Plan). All applicable terms of the 2012 Plan apply to this Policy as if fully set forth herein except to the extent such other provisions are inconsistent with this Policy, and all grants of equity hereby are subject in all respect to the terms of the 2012 Plan. |
i. | Nominal Value. The ordinary shares to be issued upon vesting of the equity granted under this Section 3 must be fully paid up in accordance with the requirements of applicable law and the Company’s memorandum and articles of association and other corporate governance documents by payment of the nominal value per ordinary share. The Compensation Committee shall ensure that payment of the nominal value for any such ordinary shares is received by the |
j. | Written Grant Agreement. The award of equity under this Policy shall be made solely by and subject to the terms set forth in a written agreement in a form duly executed by an executive officer of the Company, provided, however that to the extent that the terms of this Policy are inconsistent with any such written agreement, the terms of this Policy shall prevail. |
4. | Policy Subject to Amendment, Modification and Termination. This Policy may be amended, modified or terminated by the Compensation Committee in the future at its sole discretion subject to compliance with applicable law and the Company’s memorandum and articles of association and other corporate governance documents, provided, however, that any amendment or modification to Sections 2(a), 2(b), 3(a) and 3(b) shall require full Board approval. No Non-Employee Director shall have any rights under any equity granted under this Policy unless and until the equity is actually granted. Without limiting the generality of the foregoing, the Compensation Committee and the Board hereby expressly reserves the authority to terminate this Policy during any year. |
5. | Effectiveness. This Policy shall become effective upon adoption by the Board. |
6. |
1. | I have reviewed this quarterly report on Form 10-Q for the quarter ended June 30, 2015 of Willis Group Holdings plc (the "Company"); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; |
4. | The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and |
5. | The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting. |
By: | /s/ DOMINIC CASSERLEY | |||
Dominic Casserley | ||||
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q for the quarter ended June 30, 2015 of Willis Group Holdings plc (the "Company"); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; |
4. | The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and |
5. | The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting. |
By: | /s/ JOHN GREENE | |||
John Greene | ||||
Group Chief Financial Officer | ||||
(Principal Financial and Accounting Officer) |
(1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | /s/ DOMINIC CASSERLEY | |||
Dominic Casserley | ||||
Chief Executive Officer |
(1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | /s/ JOHN GREENE | |||
John Greene | ||||
Group Chief Financial Officer | ||||
(Principal Financial and Accounting Officer) |
OTHER ASSETS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Analysis of Other Assets | An analysis of other assets is as follows:
|
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