Marsh & mclennan companies reports second quarter 2011 results
New york--(business wire)--marsh & mclennan companies, inc. (nyse: mmc) today reported financial results for the second quarter ended june 30, 2011. brian duperreault, president and ceo, said: “we are very pleased with our performance in the first half of 2011. our excellent second quarter performance successfully built on our strong first quarter results. “each of our four operating companies produced strong growth in revenue and profitability in the second quarter. in risk and insurance services, marsh’s underlying revenue grew across all geographies, reflecting increases in new business development and client revenue retention rates. guy carpenter continued to produce impressive results, reporting its tenth consecutive quarter of underlying revenue growth. “consulting produced strong underlying revenue growth as it has over the last year. mercer continued to generate positive results, led by good underlying revenue growth in its consulting and investments businesses. oliver wyman achieved strong underlying revenue growth for the sixth consecutive quarter. “we continue to progress toward our goal to establish marsh & mclennan companies as an elite, global growth enterprise. our operating results in the first half of the year demonstrate the type of performance the senior leadership team is striving for. sustaining this performance over the long term should translate into outstanding results for our shareholders,” concluded mr. duperreault. consolidated results consolidated revenue in the second quarter of 2011 was $2.9 billion, an increase of 12 percent from the second quarter of 2010, or 5 percent on an underlying basis. underlying revenue measures the change in revenue before the impact of acquisitions and dispositions, using consistent currency exchange rates. operating income rose to $465 million, compared with a loss in the prior year period. adjusted operating income in the second quarter rose 17 percent to $462 million. in the second quarter of 2011, net income rose 19 percent to $282 million, compared with $236 million last year. this includes income from discontinued operations, net of tax, of $3 million in the second quarter of 2011, compared with $271 million in the prior year period. earnings per share increased 16 percent to $.50 from $.43. income from continuing operations increased to $286 million, or $.50 per share, from a loss in the prior year period. earnings per share on an adjusted basis, which excludes noteworthy items as presented in the attached supplemental schedules, increased 9 percent to $.50, compared with $.46. for the six months ended june 30, 2011, income from continuing operations was $605 million, or $1.06 per share, compared with $245 million, or $.43 per share in 2010. discontinued operations, net of tax, was $15 million, or $.03 per share, compared with $249 million, or $.45 per share. net income was $607 million, or $1.09 per share, compared with $484 million, or $.88 per share in the prior year period. adjusted earnings per share for the six months increased 9 percent to $1.06, compared with $.97 last year. risk and insurance services risk and insurance services revenue increased 11 percent to $1.6 billion in the second quarter of 2011, or 5 percent on an underlying basis. operating income increased 38 percent to $356 million, compared with $258 million. adjusted operating income in the second quarter of 2011 increased 16 percent to $352 million from $302 million. for the first six months of 2011, segment revenue was $3.3 billion, an increase of 10 percent from the prior year period, and 5 percent growth on an underlying basis. marsh’s revenue in the second quarter of 2011 was $1.4 billion, an increase of 12 percent, or 5 percent on an underlying basis. international operations grew underlying revenue 6 percent in the second quarter, reflecting growth of 18 percent in latin america, 6 percent in asia pacific, and 4 percent in emea. in the united states/canada region, underlying revenue grew 3 percent. guy carpenter’s second quarter revenue increased 6 percent to $257 million, or 5 percent on an underlying basis. consulting consulting segment revenue increased 13 percent to $1.3 billion in the second quarter of 2011, or 5 percent on an underlying basis. operating income was $152 million in the second quarter, compared with a loss of $275 million due to a litigation settlement last year. adjusted operating income rose 21 percent to $154 million in the second quarter of 2011, compared with $127 million. for the first six months of 2011, segment revenue increased 11 percent to $2.6 billion, or 6 percent on an underlying basis. adjusted operating income rose 17 percent to $285 million, compared with $243 million in 2010. mercer’s revenue increased 13 percent to $945 million in the second quarter of 2011, an increase of 4 percent on an underlying basis. mercer’s consulting operations produced revenue of $639 million, an increase of 3 percent on an underlying basis; outsourcing, with revenue of $188 million, was up 2 percent; and investment consulting and management, with revenue of $118 million, grew 13 percent. oliver wyman’s revenue increased 14 percent to $374 million in the second quarter of 2011, or 8 percent on an underlying basis. other items at the end of the second quarter of 2011, cash and cash equivalents was $1.7 billion, compared with $1.5 billion at the end of the second quarter of 2010. net debt, which is total debt less cash and cash equivalents, was $1.4 billion, compared with $2.1 billion at the end of the second quarter of 2010. in the second quarter of 2011, the company repurchased 7.8 million shares of its common stock for $235 million as part of the company’s share repurchase authorization. in july, the company successfully completed a tender offer that resulted in the retirement of an aggregate of $600 million of the senior notes scheduled to mature in 2014 and 2015. costs of $73 million relating to the early extinguishment of this debt will be recognized in the third quarter. also in july, the company successfully issued $500 million of 4.80 percent senior notes due 2021. conference call a conference call to discuss second quarter 2011 results will be held today at 8:30 a.m. eastern time. to participate in the teleconference, please dial 888 504 7953. callers from outside the united states should dial 719 325 2223. the access code for both numbers is 4261044. the live audio webcast may be accessed at www.mmc.com. a replay of the webcast will be available approximately two hours after the event at the same web address. marsh & mclennan companies is a global professional services firm providing advice and solutions in the areas of risk, strategy and human capital. it is the parent company of a number of the world’s leading risk experts and specialty consultants, including marsh, the insurance broker and risk advisor; guy carpenter, the risk and reinsurance specialist; mercer, the provider of hr and related financial advice and services; and oliver wyman, the management consultancy. with 52,000 employees worldwide and annual revenue exceeding $11 billion, marsh & mclennan companies provides analysis, advice and transactional capabilities to clients in more than 100 countries. its stock (ticker symbol: mmc) is listed on the new york, chicago and london stock exchanges. marsh & mclennan companies’ website address is www.mmc.com. this press release contains “forward-looking statements,” as defined in the private securities litigation reform act of 1995. these statements, which express management’s current views concerning future events or results, use words like “anticipate,” “assume,” “believe,” “continue,” “estimate,” “expect,” “future,” “intend,” “plan,” “project” and similar terms, and future or conditional tense verbs like “could,” “may,” “might,” “should,” “will” and “would.” for example, we may use forward-looking statements when addressing topics such as: the outcome of contingencies; market and industry conditions; changes in our business strategies and methods of generating revenue; the development and performance of our services and products; changes in the composition or level of our revenues; our cost structure and the outcome of cost-saving or restructuring initiatives; dividend policy; the expected impact of acquisitions and dispositions; pension obligations; cash flow and liquidity; future actions by regulators; and the impact of changes in accounting rules. forward-looking statements are subject to inherent risks and uncertainties. factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements include, among other things: our exposure to potential liabilities arising from errors and omissions claims against us, particularly in our marsh and mercer businesses; our ability to make strategic acquisitions and dispositions and to integrate, and realize expected synergies, savings or strategic benefits from the businesses we acquire; changes in the funded status of our global defined benefit pension plans and the impact of any increased pension funding resulting from those changes; the impact on our net income caused by fluctuations in foreign currency exchange rates; the impact on our net income or cash flows and our effective tax rate in a particular period caused by settled tax audits and expired statutes of limitation; the extent to which we retain existing clients and attract new business, and our ability to incentivize and retain key employees; the impact of any regional, national or global political, economic, regulatory or market conditions on our results of operations and financial condition; our exposure to potential criminal sanctions or civil remedies if we fail to comply with foreign and u.s. laws and regulations that are applicable to our international operations, including import and export requirements, anti-corruption laws such as the u.s. foreign corrupt practices act and the uk bribery act 2010, local laws prohibiting corrupt payments to government officials, as well as various trade sanctions laws; the impact of competition, including with respect to pricing; the potential impact of rating agency actions on our cost of financing and ability to borrow, as well as on our operating costs and competitive position; our ability to successfully recover should we experience a disaster or other business continuity problem; changes in applicable tax or accounting requirements; and potential income statement effects from the application of fasb’s asc topic no. 740 (“income taxes”) regarding accounting treatment of uncertain tax benefits and valuation allowances and asc topic no. 350 (“intangibles – goodwill and other”), including the effect of any subsequent adjustments to the estimates we use in applying these accounting standards. the factors identified above are not exhaustive. marsh & mclennan companies and its subsidiaries operate in a dynamic business environment in which new risks may emerge frequently. accordingly, we caution readers not to place undue reliance on the above forward-looking statements, which speak only as of the dates on which they are made. the company undertakes no obligation to update or revise any forward-looking statement to reflect events or circumstances arising after the date on which it is made. further information concerning marsh & mclennan companies and its businesses, including information about factors that could materially affect our results of operations and financial condition, is contained in the company’s filings with the securities and exchange commission, including the “risk factors” section of our most recently filed annual report on form 10-k. marsh & mclennan companies, inc. consolidated statements of income (in millions, except per share figures) (unaudited) three months ended june 30, june 30, – continuing operations – net income attributable to the company average number of shares outstanding – basic – diluted marsh & mclennan companies, inc. supplemental information – revenue analysis three months ended (millions) (unaudited) june 30, gaap dispositions revenue details june 30, gaap dispositions marsh & mclennan companies, inc. supplemental information – revenue analysis six months ended (millions) (unaudited) june 30, gaap dispositions revenue details june 30, gaap dispositions marsh & mclennan companies, inc. non-gaap measures three months ended june 30 risk &insuranceservices eliminations three months ended june 30, 2011 three months ended june 30, 2010 400 (d) marsh & mclennan companies, inc. non-gaap measures six months ended june 30 risk &insuranceservices corporate/eliminations six months ended june 30, 2011 six months ended june 30, 2010 400 (d) marsh & mclennan companies, inc. non-gaap measures three and six months ended june 30 consolidatedresults portionattributable tocommonshareholders adjusteddilutedeps marsh & mclennan companies, inc. supplemental expense information (millions) (unaudited) june 30, june 30, marsh & mclennan companies, inc. supplemental information – discontinued operations on august 3, 2010, the company completed its sale of kroll to altegrity. kroll’s results of operations are reported as discontinued operations in the company’s consolidated statements of income. the three and six months ended june 30, 2010 also includes the loss on the sale of kroll labs specialists (“kls”). the provision/(credit) for income taxes related to the disposal of discontinued operations for the three and six months ended june 30, 2010 is the tax provision of $36 million on the sale of kls. the tax credit for the three and six months ended june 30, 2011 is primarily due to a tax recovery included in the indemnity agreement related to the putnam sale. summarized statements of income data for discontinued operations is as follows: marsh & mclennan companies, inc. consolidated balance sheets (millions) (unaudited) 2011 2010 5,186 5,276 – – –
