-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TenpSb4Y+4E3K6dNMn3XTCZFfmuHnaPsWFo6f6TVcF6BOyz62wf3FEZMLkh15pQ/ gypCOSESB0sQ9bwSj1wgOQ== 0000062709-95-000012.txt : 19951119 0000062709-95-000012.hdr.sgml : 19951119 ACCESSION NUMBER: 0000062709-95-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARSH & MCLENNAN COMPANIES INC CENTRAL INDEX KEY: 0000062709 STANDARD INDUSTRIAL CLASSIFICATION: INSURANCE AGENTS BROKERS & SERVICES [6411] IRS NUMBER: 362668272 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05998 FILM NUMBER: 95591490 BUSINESS ADDRESS: STREET 1: 1166 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 2123455000 MAIL ADDRESS: STREET 1: 1166 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10036 FORMER COMPANY: FORMER CONFORMED NAME: MARLENNAN CORP DATE OF NAME CHANGE: 19760505 10-Q 1 THIRD QUARTER 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For quarter ended September 30, 1995 Marsh & McLennan Companies, Inc. 1166 Avenue of the Americas New York, New York 10036 (212) 345-5000 Commission file number 1-5998 State of Incorporation: Delaware I.R.S. Employer Identification No. 36-2668272 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X . NO . As of October 31, 1995, there were outstanding 73,158,866 shares of common stock, par value $1.00 per share, of the registrant. PART I, FINANCIAL INFORMATION MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share figures) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994* Revenue $921.6 $826.9 $2,812.0 $2,577.6 Expense 763.2 678.3 2,265.1 2,036.8 Operating Income 158.4 148.6 546.9 540.8 Interest Income 4.7 2.4 13.2 8.3 Interest Expense (15.8) (13.1) (47.3) (37.0) Income Before Income Taxes and Cumulative Effect of Accounting Change 147.3 137.9 512.8 512.1 Income Taxes 56.0 54.5 194.9 202.3 Income Before Cumulative Effect of Accounting Change 91.3 83.4 317.9 309.8 Cumulative Effect of Accounting Change, Net of Income Tax Benefit - - - (10.5) Net Income $ 91.3 $ 83.4 $ 317.9 $ 299.3 Per Share Data: Income Before Cumulative Effect of Accounting Change $1.26 $1.14 $4.37 $4.21 Cumulative Effect of Accounting Change - - - (.14) Net Income $1.26 $1.14 $4.37 $4.07 Average Number of Shares Outstanding 72.5 73.3 72.8 73.6 Dividends Declared $0.80 $.725 $2.25 $2.125 * Reflects the adoption, effective January 1, 1994, of SFAS No. 112, "Employers' Accounting for Postemployment Benefits." MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In millions of dollars) (Unaudited) September 30, December 31, 1995 1994 ASSETS Current assets: Cash and cash equivalents (including interest-bearing amounts of $349.4 at September 30, 1995 and $265.6 at December 31, 1994) $ 383.2 $ 294.9 Receivables- Commissions and fees 799.3 692.3 Advanced premiums and claims 80.6 78.0 Consumer finance and other 215.1 229.6 1,095.0 999.9 Less-allowance for doubtful accounts (48.9) (44.9) Net receivables 1,046.1 955.0 Other current assets 181.4 196.1 Total current assets 1,610.7 1,446.0 Consumer finance receivables, net 157.4 150.4 Long-term securities 397.9 282.8 Fixed assets, net 754.4 740.3 (net of accumulated depreciation and amortization of $644.1 at September 30, 1995 and $574.5 at December 31, 1994) Intangible assets 733.6 701.0 Other assets 567.1 510.1 $4,221.1 $3,830.6 MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In millions of dollars) (Unaudited) September 30, December 31, 1995 1994 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt $ 539.9 $ 403.0 Accrued compensation and employee benefits 204.4 220.8 Accounts payable and accrued liabilities 437.8 496.7 Accrued income taxes 237.2 218.7 Dividends payable 58.5 53.1 Total current liabilities 1,477.8 1,392.3 Fiduciary liabilities 1,699.8 1,652.1 Less - cash and investments held in a fiduciary capacity (1,699.8) (1,652.1) - - Long-term debt 411.2 409.4 Other liabilities 652.1 568.3 Commitments and contingencies - - Stockholders' equity: Preferred stock, $1 par value, authorized 6,000,000 shares, none issued - - Common stock, $1 par value, authorized 200,000,000 shares, issued 76,794,531 shares at September 30, 1995 and December 31, 1994 76.8 76.8 Additional paid-in capital 156.2 166.1 Retained earnings 1,661.6 1,507.7 Unrealized securities holding gains, net of income taxes 142.8 91.6 Cumulative translation adjustments (70.2) (105.4) 1,967.2 1,736.8 Less - treasury shares, at cost, 3,688,228 shares at September 30, 1995 and 3,594,342 shares at December 31, 1994 (287.2) (276.2) Total stockholders' equity 1,680.0 1,460.6 $4,221.1 $3,830.6 MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions of dollars) (Unaudited) Nine Months Ended September 30, 1995 1994 Operating cash flows: Net income $317.9 $299.3 Depreciation and amortization 99.9 90.8 Deferred income taxes 39.8 36.1 Other liabilities (3.5) (5.0) Cumulative effect of accounting change - 10.5 Prepaid dealer commissions (64.2) (109.7) Other, net (12.4) (13.6) Net changes in operating working capital other than cash and cash equivalents - Receivables (85.0) (40.4) Other current assets 41.0 (24.1) Accrued compensation and employee benefits (17.4) (.4) Accounts payable and accrued liabilities (35.4) (3.5) Accrued income taxes 0.3 3.5 Effect of exchange rate changes (9.0) 14.8 Net cash generated from operations 272.0 258.3 Financing cash flows: Net change in debt 140.9 96.0 Purchase of treasury shares (90.5) (94.6) Issuance of common stock 67.8 65.1 Dividends paid (158.6) (152.9) Other, net 2.4 (22.4) Net cash used for financing activities (38.0) (108.8) Investing cash flows: Additions to fixed assets (100.0) (87.9) Acquisitions (6.8) (10.3) Other, net (46.1) (53.2) Net cash used for investing activities (152.9) (151.4) Effect of exchange rate changes on cash and cash equivalents 7.2 8.8 Increase in cash & cash equivalents 88.3 6.9 Cash & cash equivalents at beginning of period 294.9 332.0 Cash & cash equivalents at end of period $383.2 $338.9 MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. The consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the Company's latest annual report on Form 10-K. The financial information contained herein reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the three and nine month periods ended September 30, 1995 and 1994. 2. Fiduciary Cash and Liabilities In its capacity as an insurance broker or agent, the Company collects premiums from insureds and, after deducting its commissions, remits the premiums to the respective insurance underwriters; the Company also collects claims or refunds from underwriters on behalf of insureds. Unremitted insurance premiums and claims are held in a fiduciary capacity. Interest income on these fiduciary funds, included in revenue, amounted to $77.4 million and $56.8 million for the nine months ended September 30, 1995 and 1994, respectively. Net uncollected premiums and claims and the related payables amounting to $3.1 billion at September 30, 1995 and $2.8 billion at December 31, 1994, are not included in the accompanying Consolidated Balance Sheets. 3. Net Income Per Share Net income per share is computed by dividing net income by the average number of shares of common stock outstanding. Common stock equivalents (relating principally to stock options), which have been excluded from the calculation because their dilutive effect is immaterial, are shown below for the three and nine month periods ended September 30, 1995 and 1994. (In millions of shares) Three Months Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994 Primary .9 .8 .8 .8 Fully Diluted 1.2 .8 1.1 .8 4. Supplemental Disclosure to the Consolidated Statements of Cash Flows The following schedule provides additional information concerning acquisitions: Nine Months Ended September 30, (In millions of dollars) 1995 1994 Purchase acquisitions: Assets acquired, excluding cash $21.5 $10.3 Liabilities assumed (8.2) - Issuance of debt and other obligations (6.5) - Net cash outflow for acquisitions $ 6.8 $10.3 The following schedule provides details of changes in the Company's short-term and long-term debt. Although a portion of the Company's commercial paper borrowings is classified as long-term debt in the Consolidated Balance Sheets, borrowings and repayments of commercial paper are shown below based on original maturities. Nine Months Ended September 30, (In millions of dollars) 1995 1994 Net change in debt with maturities of three months or less $ (84.7) $331.9 Borrowings with maturities over three months 528.9 47.9 Repayments of debt with maturities over three months (303.3) (283.8) Net increase in debt $ 140.9 $ 96.0 Interest paid during the nine months ended September 30, 1995 and 1994 was $52.1 million and $36.7 million, respectively. Income taxes paid during the nine months ended September 30, 1995 and 1994 were $163.5 million and $164.5 million, respectively. 5. Income Taxes Taxing authorities periodically challenge positions taken by the Company on its tax returns. On the basis of present information and advice received from counsel, it is the opinion of the Company's management that any assessments resulting from current tax audits will not have a material adverse effect on the Company's consolidated results of operations or its consolidated financial position. 6. Claims, Lawsuits and Other Contingencies The Company and its subsidiaries are subject to claims and lawsuits that arise in the ordinary course of business, consisting principally of alleged errors and omissions in connection with the placement of insurance or reinsurance and in rendering consulting and investment services. Some of these claims and lawsuits seek damages, including punitive damages, in amounts which could, if assessed, be significant. Among these is a group of claims relating to reinsurance contracts placed by reinsurance broking subsidiaries of the Company that were called into question by certain reinsurers. In general, these contracts concern so-called run-off exposures under which reinsurers assumed some or all remaining liability for claims against Lloyd's syndicates or other London insurers on policies, typically written in the past over a period of many years and sometimes without aggregate limits. The initial disputes, primarily between reinsurers and cedants, concerned these contracts, and have largely been resolved by negotiation, arbitration or litigation. More recently, related disputes, including litigation, have arisen or been deferred by agreement between the members of syndicates, their underwriting and members' names agencies and, in some cases, subsidiaries of the Company. The syndicate members have experienced significant and continuing losses on policies, some of which were the subject of run-off reinsurance contracts that have been voided or compromised. The Company believes that its subsidiaries performed their reinsurance broking services in conformity with accepted and customary practices in the London market. Subsidiaries of the Company in the course of their consulting and insurance activities advised certain clients in connection with their purchase of guaranteed investment contracts and annuities issued by Executive Life Insurance Company, which is currently being rehabilitated under the supervision of the California Insurance Department. Some of those clients as well as the Company's subsidiaries have been or may be subject to claims or lawsuits relating to losses in connection with those investments. In some instances, the subsidiaries have entered into agreements extending the time in which possible claims may be asserted against them, or have engaged in negotiating the deferral or resolution of claims and litigation. The Company believes that its subsidiaries acted in a proper and professional manner in connection with these matters. On the basis of present information, available insurance coverage and advice received from counsel, it is the opinion of the Company's management that the disposition or ultimate determination of these claims and lawsuits will not have a material adverse effect on the Company's consolidated results of operations or its consolidated financial position. 7. Cumulative Effect of Accounting Changes Effective January 1, 1994, the Company adopted SFAS No. 112 "Employers' Accounting for Postemployment Benefits," which requires the Company to accrue for the cost of certain benefits provided to former or inactive employees after employment but before retirement. The cumulative effect of adopting this standard resulted in a noncash charge, net of income taxes, of $10.5 million or $.14 per share. PART II, OTHER INFORMATION MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES INFORMATION REQUIRED FOR FORM 10-Q QUARTERLY REPORT SEPTEMBER 30, 1995 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. 27. Financial Data Schedule (b) Reports on Form 8-K. None. MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed this 14th day of November, 1995 on its behalf by the undersigned, thereunto duly authorized and in the capacity indicated. MARSH & McLENNAN COMPANIES, INC. By:/s/FRANK J. BORELLI Senior Vice President and Chief Financial Officer EX-27 2 ARTICLE 5
5 This schedule contains summary financial information extracted from the consolidated Marsh & McLennan Companies, Inc. and subsidiaries September 30, 1995 financial statements and is qualified in its entirety by reference to such financial statements. 9-MOS DEC-31-1995 SEP-30-1995 383,200,000 0 1,095,000,000 48,900,000 0 1,610,700,000 1,398,500,000 644,100,000 4,221,100,000 1,477,800,000 411,200,000 76,800,000 0 0 1,603,200,000 4,221,100,000 0 2,812,000,000 0 2,265,100,000 0 0 47,300,000 512,800,000 194,900,000 317,900,000 0 0 0 317,900,000 4.37 4.37
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