3rd Quarter & 9 Mths Results
Marsh & McLennan Co Inc
19 October 2000
MMC REPORTS STRONG THIRD QUARTER AND NINE MONTHS RESULTS
Earnings Per Share Rises 20 Percent for Quarter
========================================================
NEW YORK, NEW YORK, October 19, 2000-Marsh & McLennan Companies, Inc. (MMC)
today reported strong revenues and earnings for both the quarter and nine
months ended September 30, 2000.
For the quarter, MMC's revenues rose 14 percent to $2.5 billion from $2.2
billion in 1999. Net income grew 26 percent to $282 million from $223 million,
and earnings per share rose 20 percent to $0.97 from $0.81 in 1999.
For the nine months, MMC's revenues reached $7.7 billion, a 13 percent
increase from $6.8 billion in 1999. Net income increased 22 percent to $895
million and earnings per share grew 17 percent to $3.12, compared with $731
million and $2.66, respectively, in 1999, excluding the special charge in the
second quarter of 1999 related to MMC's acquisition of Sedgwick.
J.W. Greenberg, chairman, said, 'We are pleased with MMC's results. All of our
businesses continued to grow profitably as leaders in large and growing
markets.'
Marsh's revenues rose 7 percent in the third quarter to $1.1 billion, driven
by net new business. Operating income increased 21 percent to $200 million,
reflecting continued savings from consolidation associated with the
integration of Sedgwick.
Putnam performed well despite continuing volatility in equity markets.
Revenues in the third quarter rose 28 percent to $863 million, and operating
income grew 31 percent to $275 million, compared with the third quarter of
1999. Average assets under management in the third quarter were $412 billion,
compared with $323 billion in the same period of 1999 and $394 billion in the
second quarter of 2000. Assets under management at September 30, 2000 were
$406 billion.
Mercer reported growth across its human resource and management consulting
practices. Revenues in the third quarter rose 8 percent to $540 million,
compared with 1999. Margin expansion continued, with operating income growing
to $84 million, an increase of 17 percent from 1999.
During the third quarter, MMC used positive cash flows to pay down debt. This
resulted in a decrease in interest expense to $63 million from $68 million in
the second quarter of 2000. The strong U.S. dollar had a minimal impact on
earnings in both the third quarter and nine months.
MMC is a global professional services firm with annual revenues exceeding $9
billion. It is the parent company of Marsh, the world's leading risk and
insurance services firm; Putnam Investments, one of the largest investment
management companies in the United States; and Mercer Consulting Group, a
major global provider of consulting services. More than 55,000 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 Web site 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 revenue and expense growth, cost
savings and efficiencies expected from the integration of Sedgwick Group plc
and market and industry conditions. Actual results may differ from those
contemplated as a result of certain risks and uncertainties, including but not
limited to changes in general worldwide and national economic conditions,
competitive conditions and pricing pressures, the integration of the risk and
insurance services and consulting businesses of Sedgwick Group plc (including
the achievement of synergies and cost reductions) or other adverse
consequences from that transaction, level of worldwide and national equity and
fixed income markets, premium rate levels in the global property and casualty
insurance markets, prospective and retrospective changes in the tax or
accounting treatment of the Company's operations and the impact of tax or
other legislation and regulation in the jurisdictions in which the Company
operates, the uncertainties of litigation, as well as other risks and
uncertainties detailed from time to time in the Company's Securities and
Exchange Commission filings. Please refer to Marsh & McLennan Companies' 1999
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.
Marsh & McLennan Companies, Inc.
Consolidated Statements of Income
(In millions, except per share figures)
(Unaudited)
=======================================
Three Months Ended Nine Months Ended
September 30, September 30,
__________________ _________________
2000 1999 2000 1999
________ _____ ______ _______
Revenue:
Risk and Insurance Services $1,132 $1,055 $3,581 $3,403
Investment Management 863 673 2,502 1,963
Consulting 540 499 1,598 1,457
_________ ______ ______ _______
Total Revenue 2,535 2,227 7,681 6,823
_________ ______ ______ _______
Expense:
Compensation and Benefits 1,267 1,118 3,782 3,413
Amortization of Intangibles 46 43 134 112
Other Operating Expenses 706 641 2,131 1,923
Special Charge - - - 84
_________ ______ ______ _______
Total Expense 2,019 1,802 6,047 5,532
_________ ______ ______ _______
Operating Income 516 425 1,634 1,291
Interest Income 7 6 18 17
Interest Expense (63) (59) (191) (174)
_________ ______ ______ _______
Income Before Income Taxes 460 372 1,461 1,134
Income Taxes 178 149 566 455
_________ ______ ______ _______
Net Income $ 282 $ 223 $ 895 $ 679
========= ====== ====== =======
Basic Net Income Per Share $1.04 $0.84 $3.32 $2.60
========= ====== ====== =======
Diluted Net Income Per Share $0.97 $0.81 $3.12 $2.47
========= ====== ====== =======
Diluted Net Income Per Share
Excluding Special Charge $0.97 $0.81 $3.12 $2.66
========= ====== ====== =======
Average Number of
Shares Outstanding - Basic 272 264 270 262
========= ====== ====== =======
Average Number of
Shares Outstanding - Diluted 286 273 283 270
========= ====== ====== =======
Marsh & McLennan Companies, Inc.
Supplemental Information
(In millions, except assets under management)
(Unaudited)
============================================
Three Months Nine Months Ended
Ended September 30,
September 30,
________________ _________________
2000 1999 2000 1999(a)
_______ ______ ______ _______
Revenue:
Risk and Insurance Services $1,132 $1,055 $3,581 $3,403
Investment Management 863 673 2,502 1,963
Consulting 540 499 1,598 1,457
_______ ______ ______ _______
2,535 2,227 7,681 6,823
_______ ______ ______ _______
Expense:
Risk and Insurance Services 932 890 2,853 2,773
Investment Management 588 463 1,709 1,333
Consulting 456 427 1,365 1,265
Corporate 34 20 98 73
Minority Interest 9 2 22 4
_______ ______ ______ _______
2,019 1,802 6,047 5,448
_______ ______ ______ _______
Operating Income:
Risk and Insurance Services 200 165 728 630
Investment Management 275 210 793 630
Consulting 84 72 233 192
Corporate (34) (20) (98) (73)
Minority Interest (9) (2) (22) (4)
_______ ______ ______ _______
$ 516 $ 425 $1,634 $1,375
_______ ______ ______ _______
Segment Operating Margins:
Risk and Insurance Services 17.7% 15.6% 20.3% 18.5%
Investment Management 31.9% 31.2% 31.7% 32.1%
Consulting 15.6% 14.5% 14.6% 13.2%
Consolidated Operating
Margin 20.4% 19.1% 21.3% 20.2%
Pretax Margin 18.1% 16.7% 19.0% 17.9%
Tax Rate 38.75% 40.00% 38.75% 40.00%
Underlying Revenue Growth
(b):
Risk and Insurance Services
9% 4% 7% 5%
Investment Management 28% 18% 27% 15%
Consulting 10% 9% 11% 10%
Shares Outstanding at End of
Period 275 266
Potential Minority Interest
Associated
with the Putnam Equity
Partnership Plan $ 5 $ 4 $ 14 $ 12
Putnam Assets Under
Management (billions):
Ending Assets (September
30):
Retail Mutual Funds $ 246 $ 197
Defined Benefit 67 57
Defined Contribution 63 44
International 30 20
_______ ______
$ 406 $ 318
======= ======
Composition of Ending Assets
(September 30):
Equity $ 344 $ 245
Fixed Income
62 73
_______ ______
$ 406 $ 318
======= ======
Average Assets $ 412 $ 323 $ 403 $ 313
Net New Sales including $ 5 $ 2 $ 24 $ 11
Dividends Reinvested
(a) Excludes 1999 Pretax Special Charge of $84 million for the nine
months.
(b) Excluding the effect of foreign exchange, acquisitions and
dispositions.
Contact: Barbara Perlmutter James N. Fingeroth
Marsh & McLennan Cos Kekst and Company
(212) 345-5585 (212) 521-4819
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