-----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, A8h5jLAJNuq3TBp8+4V66cqaMzFwyVfCaDXYYS6xMNTnbxz5GDD5N4Sxhc9XXPKT U+qKHl7de38N2fXhEMZkXA== 0000950103-03-000563.txt : 20030211 0000950103-03-000563.hdr.sgml : 20030211 20030211102343 ACCESSION NUMBER: 0000950103-03-000563 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030129 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030211 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05998 FILM NUMBER: 03548884 BUSINESS ADDRESS: STREET 1: 1166 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 2123455000 MAIL ADDRESS: STREET 1: 1166 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10036 FORMER COMPANY: FORMER CONFORMED NAME: MARLENNAN CORP DATE OF NAME CHANGE: 19760505 8-K 1 feb1003_8k.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) January 29, 2003 ---------------- MARSH & MCLENNAN COMPANIES, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 1-5998 36-2668272 - -------------------------------------------------------------------------------- (State or other jurisdiction of (Commission (I.R.S. Employer incorporation or organization) File Number) Identification Number) 1166 Avenue of the Americas, New York, New York 10036 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 212-345-5000 ------------ Item 5. Other Events. ------------- On January 29, 2003, Marsh & McLennan Companies, Inc. ("MMC") issued a press release announcing its unaudited fourth quarter and year-end financial results for the year ended December 31, 2002. A copy of the press release is attached to this Report as an exhibit and is incorporated herein by reference. Item 7. Financial Statements and Exhibits. ---------------------------------- (a) Financial Statements of Businesses Acquired None. (b) Pro Forma Financial Information None. (c) Exhibits 99.1. Press Release dated January 29, 2003. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MARSH & MCLENNAN COMPANIES, INC. Dated: February 11, 2003 By: /s/ Gregory F. Van Gundy --------------------------------- Name: Gregory F. Van Gundy Title: Secretary EX-99.1 3 feb1003_ex9901.txt EXHIBIT 99.1 News Release Media Contacts: Investor Contact: Barbara Perlmutter Jim Fingeroth Mike Bischoff MMC Kekst and Company MMC (212) 345-5585 (212) 521-4819 (212) 345-5470 MMC REPORTS FOURTH QUARTER AND YEAR-END RESULTS Risk and Insurance Services Performance Drives Strong Earnings Growth NEW YORK, NEW YORK, January 29, 2003--Marsh & McLennan Companies, Inc. (MMC) today reported financial results for the quarter and year ended December 31, 2002. Consolidated revenues in the fourth quarter increased 15 percent to $2.6 billion from the fourth quarter of 2001. Net income grew 117 percent to $312 million, and earnings per share grew 119 percent to $.57. Excluding 2001 special items discussed below, net income grew 9 percent, and earnings per share rose 14 percent. For the year, consolidated revenues rose 6 percent to $10.4 billion. Net income grew 40 percent to $1.4 billion, and earnings per share increased 44 percent to $2.45. Excluding the 2001 special items, net income grew 12 percent, and earnings per share increased 16 percent. Jeffrey W. Greenberg, chairman, commented: "We are pleased with our results for 2002. The year presented challenging conditions for each of MMC's businesses. Marsh's professionals served the needs of clients in an environment where risks increased, capacity decreased, insurance rates rose, and terms and conditions were restricted. Putnam managed through a protracted downturn in equity markets, making adjustments to strengthen its operations. Mercer performed well, increasing its revenues and operating income in a difficult environment for the consulting business. Looking to 2003 and beyond, MMC is positioned for future growth." 1 Mr. Greenberg added: "Throughout the year, we continued to provide support for the families of our 295 colleagues lost on September 11, as well as for employees affected by the terrorist attacks. MMC hosted a commemoration for families this past September and previewed plans for a permanent memorial to be completed this summer. Our lost colleagues remain in our thoughts." In the fourth quarter, risk and insurance services revenues rose 18 percent to a quarterly record of $1.6 billion, and operating income increased 38 percent to $365 million. Included in fourth quarter revenues is $18 million resulting from an increase in the valuation of an investment in AXIS Capital Holdings held by Trident II, a private equity investment fund. Marsh's underlying revenue growth in the quarter was 16 percent. For the year, revenues of $5.9 billion represented an increase of 15 percent both on a reported and underlying basis. Risk and insurance services operating income increased 31 percent to $1.5 billion in 2002. While some moderation in insurance rate increases is occurring in property lines, the difficult market is expected to continue in 2003, particularly for many liability coverages. U.S. equity markets in 2002 declined for the third consecutive year--the first such occurrence in 60 years. Moreover, for the first time in 14 years, the mutual fund industry had net redemptions in equity funds. Putnam's average assets under management in the fourth quarter decreased 18 percent to $249 billion from $304 billion last year. Net new sales in the fourth quarter were $400 million and net redemptions during the year were $10.3 billion. Total assets under management on December 31, 2002 were $251 billion, compared with $238 billion on September 30, 2002, and $315 billion at year-end 2001. Fixed income assets grew from $60 billion at the end of 2001 to $67 billion at year-end 2002, and now represent 27 percent of Putnam's assets under management. Although Putnam's fourth quarter revenues increased 15 percent to $469 million from $407 million, underlying revenues declined 22 percent. Excluded from underlying revenues is an impairment charge related to the shares of Bipop Carire of $222 million recorded in the fourth quarter of 2001, and $20 million in the fourth quarter of 2002 related to Fineco, a successor company formed from the reorganization of Bipop Carire. For the year, Putnam's 2 revenues declined 10 percent to $2.2 billion from $2.4 billion, and underlying revenues declined 18 percent. Operating income was $100 million in the fourth quarter of 2002 and $560 million for the year. Trends in Mercer's revenues improved throughout the year. In the fourth quarter, revenues increased 9 percent to $604 million, and operating income increased 7 percent to $76 million. Underlying revenues rose 5 percent. Annual revenues increased 2 percent to $2.4 billion, with underlying revenues growing 1 percent. Operating income rose 4 percent in 2002 to $326 million. The retirement consulting and administration practices, which represent almost half of Mercer's business, showed consistent growth throughout the year. This growth reflects the increased provision of advice on retirement issues and greater interest by clients in managing retirement programs on a global basis. The health and group benefits, economic, and investment consulting practices each produced double-digit revenue growth in the fourth quarter. Management consulting revenues declined 19 percent for the year, but improved progressively, declining 2 percent in the fourth quarter. Cash flow from MMC's operations continued to be strong throughout 2002. The company repurchased 24 million shares of common stock for approximately $1.2 billion. MMC paid $590 million in dividends to shareholders. This is the 40th consecutive year that annual dividends paid to shareholders have increased. MMC adopted Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" in 2002 resulting in an increase in earnings per share of approximately $.05 in the fourth quarter of 2002 and $.23 for the year. Through a combination of the change in goodwill accounting and the geographic mix of MMC's businesses, MMC's effective tax rate decreased from 37.5 percent for 2001 to 35 percent. MMC is a global professional services firm with annual revenues exceeding $10 billion. It is the parent company of Marsh Inc., the world's leading risk and insurance services firm; Putnam 3 Investments, one of the largest investment management companies in the United States; and Mercer Inc., a major global provider of consulting services. Approximately 59,000 employees provide analysis, advice and transactional capabilities to clients in over 100 countries. Its stock (ticker symbol: MMC) is listed on the New York, Chicago, Pacific, and London stock exchanges. MMC's website address is www.mmc.com. This press release contains certain statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, discussions concerning revenues, expenses, earnings, cash flow, capital structure, pension funding, financial losses and expected insurance recoveries resulting from the September 11, 2001 attack on the World Trade Center in New York City, as well as market and industry conditions, premium rates, financial markets, interest rates, foreign exchange rates, contingencies and matters relating to MMC's operations and income taxes. Such forward-looking statements are based on available current market and industry materials, experts' reports and opinions and long-term trends, as well as management's expectations concerning future events impacting MMC. Forward-looking statements by their very nature involve risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by any forward-looking statements contained herein include, in the case of MMC's risk and insurance services and consulting businesses, the amount of actual insurance recoveries and financial losses from the September 11 attack on the World Trade Center, or other adverse consequences from that incident. Other factors that should be considered in the case of MMC's risk and insurance services business are changes in competitive conditions, movements in premium rate levels, the continuation of difficult conditions for the transfer of commercial risk and other changes in the global property and casualty insurance markets, the impact of terrorist attacks, natural catastrophes, and mergers between client organizations, including insurance and reinsurance companies. Factors to be considered in the case of MMC's investment management business include changes in worldwide and national equity and fixed income markets, actual and relative investment performance, the level of sales and redemptions, and the ability to maintain investment management and administrative fees at appropriate levels; and with respect to all of MMC's activities, changes in general worldwide and national economic conditions, changes in the value of investments made in individual companies and investment funds, fluctuations in foreign currencies, actions of competitors or regulators, changes in interest rates or in the ability to access financial markets, developments relating to claims, lawsuits and contingencies, prospective and retrospective changes in the tax or accounting treatment of MMC's operations, and the impact of tax and other legislation and regulation in the jurisdictions in which MMC operates. Forward-looking statements speak only as of the date on which they are made, and MMC undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of unanticipated events. Please refer to Marsh & McLennan Companies' 2001 Annual Report on Form 10-K for "Information Concerning Forward-Looking Statements," its reports on Form 8-K, and quarterly reports on Form 10-Q. MMC is committed to providing timely and materially accurate information to the investing public, consistent with our legal and regulatory obligations. To that end, MMC and its operating companies use their websites to convey meaningful information about their businesses, including the anticipated release of quarterly financial results, and the posting of updates of assets under management at Putnam. Monthly updates of assets under management at Putnam will be posted on the first business day following the end of each month, except at the end of March, June, September, and December, when such information will be released with MMC's quarterly earnings announcement. Investors can link to MMC and its operating company websites through www.mmc.com. 4 Marsh & McLennan Companies, Inc. Consolidated Statements of Income (In millions, except per share figures) (Unaudited) Three Months Ended Twelve Months Ended December 31, December 31, ---------------------- -------------------- 2002 2001 (a) 2002 2001 (a) --------- --------- -------- -------- Revenue: Risk and Insurance Services $ 1,567 $ 1,328 $ 5,910 $ 5,152 Investment Management 469 407 2,166 2,409 Consulting 604 555 2,364 2,308 -------- -------- -------- -------- Total Revenue 2,640 2,290 10,440 9,869 -------- -------- -------- -------- Expense: Compensation and Benefits 1,370 1,255 5,199 4,877 Other Operating Expenses 760 754 2,967 3,055 Charges Related to September 11 and Special Credits -- 1 -- 174 -------- -------- -------- -------- Total Expense 2,130 2,010 8,166 8,106 -------- -------- -------- -------- Operating Income 510 280 2,274 1,763 Interest Income 5 5 19 23 Interest Expense (42) (42) (160) (196) -------- -------- -------- -------- Income Before Income Taxes and Minority Interest 473 243 2,133 1,590 Income Taxes 158 96 747 599 Minority Interest Expense, Net of Tax 3 3 21 17 -------- -------- -------- -------- Net Income $ 312 $ 144 $ 1,365 $ 974 ======== ======== ======== ======== Basic Net Income Per Share $ 0.58 $ 0.26 $ 2.52 $ 1.77 ======== ======== ======== ======== Diluted Net Income Per Share $ 0.57 $ 0.26 $ 2.45 $ 1.70 ======== ======== ======== ======== Diluted Net Income Per Share Excluding Special Items (b) $ 0.57 $ 0.50 $ 2.45 $ 2.12 ======== ======== ======== ======== Average Number of Shares Outstanding - Basic 537 549 541 550 ======== ======== ======== ======== Average Number of Shares Outstanding - Diluted 550 571 557 572 ======== ======== ======== ========
(a) Prior year amounts have been reclassified to conform with current presentation. (b) 2001 results exclude an investment valuation charge, charges related to September 11 and special credits. Page 1 of 3 5 Marsh & McLennan Companies, Inc. Supplemental Information - Excluding Special Items (In millions) (Unaudited) Three Months Ended Twelve Months Ended December 31, December 31, -------------------- ------------------- 2002 2001 2002 2001 -------- -------- ------- ------- Operating Income Including Minority Interest Expense: Risk and Insurance Services $ 365 $ 265 $ 1,490 $ 1,139 Investment Management 100 190 560 803 Consulting 76 71 326 313 Corporate (34) (29) (123) (116) ------- ------- ------- ------- $ 507 $ 497 $ 2,253 $ 2,139 ======= ======= ======= ======= Minority Interest Expense, Net of Tax, Included Above: Risk and Insurance Services $ 3 $ 3 $ 10 $ 6 Investment Management -- 3 11 14 ------- ------- ------- ------- $ 3 $ 6 $ 21 $ 20 ======= ======= ======= ======= Operating Income $ 510 $ 503 $ 2,274 $ 2,159 Income Before Income Taxes and Minority Interest $ 473 $ 466 $ 2,133 $ 1,986 Income Taxes $ 158 $ 174 $ 747 $ 744 Net Income $ 312 $ 286 $ 1,365 $ 1,222 Segment Operating Margins: Risk and Insurance Services 23.3% 20.0% 25.2% 22.1% Investment Management 21.3% 30.2% 25.9% 30.5% Consulting 12.6% 12.8% 13.8% 13.6% Consolidated Operating Margin 19.3% 20.0% 21.8% 21.4% Pretax Margin 17.9% 18.6% 20.4% 19.7% Effective Tax Rate 33.4% 37.5% 35.0% 37.5% Underlying Change in Revenue: (Excludes such items as foreign exchange, acquisitions, dispositions and gains/losses on investments) Risk and Insurance Services (Includes interest income on fiduciary funds) 16% 11% 15% 10% Investment Management (22%) (15%) (18%) (19%) Consulting 5% (3%) 1% 3% Consolidated 4% - % 3% (1%) Interest Income on Fiduciary Funds $ 28 $ 30 $ 118 $ 165 Basic Shares Outstanding at End of Period 538 549 Potential Minority Interest Associated with the Putnam Equity Partnership Plan Net of Dividend Equivalent Expense Related to MMC Common Stock Equivalents $ -- $ 2 $ -- $ 10
Page 2 of 3 6 Marsh & McLennan Companies, Inc. Supplemental Information (Unaudited) Putnam Assets Under Management (billions) Dec. 31, Sept. 30, June 30, March 31, Dec. 31, - ---------------------------------------- 2002 2002 2002 2002 2001 ----------- ------------ ---------- ------------ ---------- Mutual Funds: Growth Equity $ 45 $ 45 $ 58 $ 73 $ 77 Value Equity 40 38 49 55 54 Blend Equity 33 32 40 46 45 Fixed Income 46 46 44 43 43 ----------- ------------ ---------- ------------ ---------- Total Mutual Fund Assets 164 161 191 217 219 ----------- ------------ ---------- ------------ ---------- Institutional: Equity 66 59 74 79 79 Fixed Income 21 18 19 18 17 ----------- ------------ ---------- ------------ ---------- Total Institutional Assets 87 77 93 97 96 ----------- ------------ ---------- ------------ ---------- Total Ending Assets $251 $238 $284 $314 $315 =========== ============ ========== ============ ========== Assets from Non-US Investors $33 $27 $30 $30 $30 =========== ============ ========== ============ ========== Average Assets Under Management: Quarter-To-Date $249 $257 $301 $310 $304 =========== ============ ========== ============ ========== Year-To-Date $279 $289 $305 $310 $328 =========== ============ ========== ============ ========== Net New Sales/(Redemptions) including Dividends Reinvested: Quarter-To-Date $ 0.4 $ (7.1) $(3.2) $(0.4) $3.9 =========== ============ ========== ============ ========== Year-To-Date $(10.3) $(10.7) $(3.6) $(0.4) $11.5 =========== ============ ========== ============ ==========
Categories of mutual fund assets reflect style designations aligned with Putnam's various fund prospectuses. All quarter-end assets conform with the current investment mandate for each product. MMC Pension Plans - ----------------- In December 2002, MMC contributed $350 million to the funding of its worldwide pension plans. The company is currently conducting its annual pension valuations. The net non-cash impact of the "minimum pension liability" is estimated to be $250 million, which will be reflected in year-end stockholders' equity. 2001 Special Items (in millions) Three Months Ended Twelve Months Ended - ------------------------------- December 31, 2001 December 31, 2001 ------------------ ------------------- Valuation charge (Bipop) recorded against revenue $ 222 $ 222 ====== ====== Charges Related to September 11 14 187 Special Credits (13) (13) ------ ------ $ 1 $ 174 ====== ======
Putnam's strategic investment in the financial services industry in Italy included the publicly traded shares of Bipop Carire. MMC determined the decline in value of this investment was other than temporary and accordingly, wrote down the cost basis of the investment to its market value at December 31, 2001, resulting in a pretax charge of $222 million. This amount was reclassified as a charge against revenues in 2002 to conform with the current year presentation. In 2001, special credits were recorded to reflect lower than anticipated costs of integrating Johnson & Higgins and Sedgwick, which led to a reduction in Other Liabilities. There were no special items in 2002. Included in the operating results in the third quarter of 2002 was a write-down of Putnam's investment related to Thomas H. Lee Equity Fund IV, L.P., partially offset by a contractual payment received from Putnam's Italian joint venture partner. The net impact of these items reduced operating income by approximately $20 million. Also included in the fourth quarter of 2002 is an impairment charge of $20 million related to the shares of Fineco. Page 3 of 3 7 -----END PRIVACY-ENHANCED MESSAGE-----