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Willis Towers Watson Annual Report, Year Ended Dec 31, 2001

Filing Date
Filed March 26, 2002
Period End
December 31, 2001
Security
WTW
In the record · 2016–202610-K1210-Q338-K148

WTW filed 12 annual reports (10-K), 33 quarterly reports (10-Q) and 148 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · May ’17May ’17
  2. Leadership change8-K · Mar ’20Mar ’20
  3. Leadership change8-K · Feb ’22Feb ’22
  4. Material agreement8-K · Jan ’26Jan ’26

01—Abstract

Summary

Summary of the 20-F filed March 26, 2002. Cited figures are marked; the original filing is the authoritative source.

Willis Group Holdings Limited, a Bermuda company filing its annual report on Form 20-F for fiscal 2001, reported total revenues of $1,424 milliona in 2001, up $119 million (9%) from $1,305 million in 2000.

Operating income rose to $161 millionb from $154 million, but net income fell to $2 million ($0.01 per diluted share) from $9 million, primarily because of a non-cash $158 million charge for performance-based stock options. Excluding that charge, net gains on disposals and restructuring costs, operating cash earnings were $147 million, or $0.99 per diluted share, compared with $54 million ($0.45) in 2000. Net cash provided by operations was $221 million in 2001, versus $79 million in 2000.

The company describes itself as the third largest insurance broker in the world, serving approximately 50,000 clients and placing insurance with over 4,000 carriers. Total long-term debt fell to $787 millionc from $958 million at year-end 2000, and stockholders' equity rose to $696 million from $238 million, reflecting the June 2001 initial public offering (net proceeds of $280 million) and the redemption of $273 million of preference shares.

Kohlberg Kravis Roberts affiliates control about 52.7% of the shares, which trade on the New York Stock Exchange under the symbol WSH. Key risks flagged in the filing include commission revenue tied to insurance premium rates, errors and omissions claims, UK personal pension review liabilities, the Sovereign/WFUM run-off, potential claims tied to the September 11, 2001 World Trade Center placements, and a put arrangement on the 33% stake in Gras Savoye that could require payments of about $135 milliond.

02—Key points

Key Highlights

  1. Total revenues rose 9% to $1,424 million in 2001 from $1,305 million in 2000, with commissions and fees up to $1,357 million.
  2. Net income was $2 million ($0.01 per diluted share), down from $9 million, mainly due to a $158 million non-cash charge for performance-based stock options.
  3. Operating cash earnings were $147 million ($0.99 per diluted share) in 2001, compared with $54 million ($0.45) in 2000.
  4. Net cash provided by operations rose to $221 million from $79 million in 2000.
  5. Long-term debt was reduced to $787 million from $958 million, and stockholders' equity increased to $696 million from $238 million after the June 2001 IPO.
  6. About 52.7% of the shares are controlled by KKR affiliates, who can determine the outcome of matters submitted to shareholders.
  7. Gras Savoye put arrangements could require the company to buy an additional 57% stake, with the incremental portion priced at about $135 million at December 31, 2001 exchange rates.

03—Questions

Frequently Asked Questions

  1. Why did net income fall in 2001 even though operating income increased?

    Operating income rose to $161 million from $154 million, but the company recorded a non-cash compensation charge of $158 million ($132 million net of tax) for performance-based stock options. This charge reduced net income to $2 million, or $0.01 per diluted share, from $9 million, or $0.07 per diluted share, in 2000.

  2. What is the company's operating cash earnings measure and how did it change?

    The company defines operating cash earnings as net income excluding non-cash and non-recurring items such as the performance option charge, goodwill amortization, disposal gains and restructuring costs. It was $147 million ($0.99 per diluted share) in 2001, up from $54 million ($0.45) in 2000.

  3. How did the company's capital structure change in 2001?

    The company completed an initial public offering in June 2001 with net proceeds of $280 million, which was used to redeem all $273 million of preference shares of a subsidiary. Total long-term debt fell to $787 million from $958 million, and total shareholders' equity rose to $696 million from $238 million.

  4. What are the main risks identified in the filing?

    The filing highlights commission revenue dependence on insurance premium rates, errors and omissions claims, the UK personal pension review, the Sovereign/WFUM run-off, potential claims related to the September 11, 2001 World Trade Center placements, and currency exposure because most UK expenses are in pounds sterling. It also notes controlling shareholder influence by KKR affiliates.

  5. What is the Gras Savoye put arrangement?

    Co-shareholders of Gras Savoye, in which the company holds 33%, may put their shares to the company between 2001 and 2011, potentially increasing its ownership to 90%. For the incremental 57% from 2001 to 2005, the price is the greater of about 800 million French francs ($108 million) or a formula price that amounted to about $135 million at December 31, 2001.

04—Continue

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