MMC Reports 3rd Quarter
Marsh & McLennan Co Inc
09 November 2004
News Release
Media Contacts: Jim Fingeroth Investor Contact:
Barbara Perlmutter Kekst and Company Mike Bischoff
MMC (212) 521-4819 MMC
(212) 345-5585 (212) 345-5470
MMC REPORTS THIRD QUARTER RESULTS
NEW YORK, NEW YORK, November 9, 2004-Marsh & McLennan Companies, Inc. (MMC)
today reported financial results for the third quarter and nine months ended
September 30, 2004.
Financial Highlights
• Initiatives lead to annual cost savings of approximately $400 million
• MMC established a $232 million reserve to be used in connection with
any settlement agreement that may be reached with the New York Attorney General
• Near-term impact of eliminating market services agreements outlined
• $40 million settlement agreement in principle reached with the SEC
concerning Putnam's disclosure of brokerage allocation practices prior to 2004
• Third quarter 2004 consolidated revenues increased 5 percent to $3
billion; net income was $21 million or $.04 per share
• Operating cash flow was strong in the third quarter
Since the New York Attorney General filed a civil lawsuit on October 14, MMC has
acted quickly and decisively to address legal and regulatory issues and restore
confidence in the company. New leadership was installed. Michael G. Cherkasky
was named president and chief executive officer of MMC upon the resignation of
Jeffrey W. Greenberg, former chairman and chief executive officer. Mr. Cherkasky
was also named chairman and chief executive officer of Marsh Inc., MMC's risk
and insurance services subsidiary. Previously, Mr. Cherkasky was chief executive
officer of the company's Kroll business unit.
Robert F. Erburu, former chairman of The Times Mirror Company, was named lead
director of the MMC Board of Directors and chairs a special committee of outside
MMC directors working to resolve the company's legal and regulatory matters.
Mr. Cherkasky said: 'This has been a difficult time for the company. We are
determined to address the issues at hand and committed to regaining the trust
and confidence of our clients, employees, and shareholders. We recognize the
seriousness of the problems we are facing and are moving quickly to correct
them. This will require the effort and dedication of our people throughout the
organization. We are fortunate to have the talent, strength, and capabilities to
move forward.
'We recently announced industry-leading reforms to Marsh's business model
including the elimination of market services agreements with insurers and
complete transparency in all dealings with and on behalf of clients. We will
continue to consider any modifications that are in the best interest of our
clients.
'Across MMC's businesses, it is critical to preserve the capabilities to serve
clients and the capacity to support staff development. Employees are the
lifeblood of our organization, and we know they have been hurt by the situation
at Marsh. As a result, we are in the process of developing compensation programs
to retain, motivate, and reward employees.
'We are examining all parts of the company's cost structure to identify areas
where expenses can be reduced appropriately. Discretionary expenses are under
review as are ways to increase efficiencies through technology and other methods
such as consolidating facilities. Unfortunately, we must also adjust staff
levels based on the realities of the marketplace and our current situation. On a
global basis, we are reducing staff by 5 percent, or approximately 3,000
positions, with three quarters coming from risk and insurance services. This is
a difficult but necessary step, and we are committed to carrying out these
reductions fairly. This includes staff reductions associated with the previously
announced combination of the defined contribution administration business of
Putnam with Mercer's human resources outsourcing operations as well as the
integration of Kroll.
'We expect the decisions we are announcing today to result in pretax
restructuring charges of approximately $325 million over the next six months.
The elimination of certain discretionary expenses and the effect of the
restructuring should result in annual cost savings of approximately $400 million
when fully implemented. These initiatives will allow us to continue to provide
excellent service to clients, make the best use of our global capabilities, and
establish a level of profitability that will contribute to maximizing long-term
value for shareholders.'
Third Quarter Results
MMC's consolidated revenues for the quarter ended September 30, 2004 increased 5
percent to $3 billion. Net income declined to $21 million from $357 million in
the third quarter of 2003. Earnings per share declined to $.04 from $.65 last
year. In the quarter, earnings per share was reduced by $.27 as a result of the
reserve for Marsh's possible regulatory settlements, $.16 due to the decline in
market services revenues, $.07 because of the Putnam SEC settlement in
principle, and $.05 by the increase in MMC's tax rate. For the nine months of
2004, consolidated revenues rose 8 percent to $9.2 billion. Net income declined
to $856 million from $1.2 billion, and earnings per share declined to $1.60 from
$2.12.
Risk and Insurance Services
Risk and insurance services revenues in the third quarter rose 8 percent to $1.8
billion. Insurance marketplace conditions were competitive during the quarter,
with rate decreases across most lines of commercial property and casualty
insurance. Underlying revenues for risk and insurance services, including the
impact of market services agreements, declined 7 percent, reflecting a 13
percent decline in risk management and insurance broking and a 3 percent decline
in reinsurance broking and services. Excluding the effect of market services
agreements, underlying growth in risk and insurance services revenues would have
been 1 percent compared with last year's third quarter. New business in
insurance and reinsurance broking largely offset the effect of the declines in
insurance premium rates. Kroll, acquired in July 2004, is contributing to
Marsh's risk services offerings, producing strong revenue and earnings growth in
the quarter. Excluding the effect of Kroll, underlying revenue growth in risk
consulting and technology was 6 percent. Related insurance services revenues
increased 13 percent resulting from strong growth in claims management
operations as well as MMC Capital.
Market services revenues declined to $46 million in the third quarter of 2004
from $177 million in the prior year. Due to the filing of the New York Attorney
General's civil complaint, MMC was unable to complete the normal process to
verify amounts earned or determine that the collection of these amounts was
reasonably assured for certain contracts. As a result, MMC did not accrue a
significant portion of market services revenues expected from placement activity
in the third quarter. Almost all the decline in market services revenues in the
third quarter is due to the above factors and not to a decline in the amount of
business placed. Although some insurance companies have indicated they may delay
payments until the issues concerning market services agreements are clarified,
MMC intends to collect all market services revenues earned prior to October 1,
2004. Any such amounts not accrued at September 30, 2004 will be recognized in
revenues when collected. No market services revenues will be earned for
placements made after September 30, 2004. A reserve of $232 million was
established as the minimum potential liability in connection with any settlement
agreement that may be reached with the New York Attorney General.
Mercer
Mercer performed well in the quarter. Revenues increased 11 percent to $766
million from $690 million, and operating income rose 11 percent to $106 million
from $96 million. Underlying revenue growth was 3 percent, reflecting growth of
17 percent in management and organizational change consulting, 6 percent in
human capital consulting, and 7 percent in economic consulting. Retirement
services revenues were essentially flat.
Putnam
Putnam's revenues in the third quarter declined 16 percent to $429 million.
Average assets under management during the third quarter were $209 billion, a
decline of 23 percent from the third quarter of 2003. Total assets under
management on September 30, 2004 were also $209 billion, comprising $140 billion
of mutual fund assets and $69 billion of institutional assets. Putnam reached a
$40 million settlement agreement in principle with the Securities and Exchange
Commission concerning its disclosure of brokerage allocation practices prior to
2004. This entire amount will be distributed to Putnam's mutual funds. The
settlement remains subject to final documentation and approval by the
Commissioners of the SEC. Including the effect of the settlement, operating
income declined 60 percent to $55 million.
Other
Cash flow continued to be strong in the quarter. Cash flow from operations was
approximately $660 million in the third quarter of 2004 and $1.4 billion for the
nine months. During the third quarter, MMC did not repurchase any of its common
shares.
MMC's effective tax rate of 65.8 percent in the third quarter reflects the
impact of Putnam's nondeductible settlement of $40 million, changes in the
geographic mix of MMC's income, and the establishment of the $232 million
reserve for any possible settlement agreement for Marsh. The effective tax rate
for ongoing operations is 34.5 percent. The effective tax rate of 37.8 percent
for the nine months of 2004 also includes the first quarter impact of Putnam's
regulatory settlements of $100 million and the World Trade Center settlement
gain of $105 million.
Conference Call
A conference call to discuss third quarter results will be held at 11:00 a.m. ET
today. To participate in the live teleconference, please dial (888) 578-6632
(U.S.) or (719) 955-1565 (international). The live audio webcast (which will be
listen-only) may be accessed at www.mmc.com. A replay of the webcast will be
available beginning approximately two hours after the event. A continuous
telephone replay will be available beginning at 2:00 p.m. ET on Tuesday,
November 9 and continuing through 11:00 p.m. ET on Tuesday, November 16, 2004.
To listen to the replay, please dial (888) 203-1112 (U.S.) or (719) 457-0820
(international). The access code for both numbers is 876772.
MMC is a global professional services firm with annual revenues exceeding $11
billion. It is the parent company of Marsh Inc., the world's leading risk and
insurance services firm; Putnam Investments, one of the largest investment
management companies in the United States; and Mercer Inc., a major global
provider of consulting services. More than 63,000 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, elimination of
market services agreements ('MSA'), capital structure, existing credit
facilities, access to commercial paper markets, pension funding, the adverse
consequences arising from market-timing issues at Putnam, including fines and
restitution, the matters raised in the complaint filed by the New York Attorney
General's Office stating a claim for, among other things, fraud and violations
of New York State antitrust and securities laws, 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 business, changes in competitive
conditions, the impact of litigation and other matters concerning the claims
brought by the New York Attorney General's Office and state insurance
regulators, loss of clients, inability to collect previously accrued MSA
revenue, movements in premium rate levels, the conditions for the transfer of
commercial risk and other changes in the global property and casualty insurance
markets, natural catastrophes, mergers between client organizations, and
insurance or reinsurance company insolvencies. 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 historic levels; and with
respect to all of MMC's activities, the ability to amend or replace MMC's
existing credit facilities to provide long-term support for commercial paper
borrowings following the claims brought by the New York Attorney General, the
continued strength of MMC's relationships with its employees and clients, the
ability to successfully integrate acquired businesses and realize expected
synergies, changes in general worldwide and national economic conditions, the
impact of terrorist attacks, 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'
2003 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 total assets under management at Putnam
will be posted to the MMC website the first business day following the end of
each month. Putnam posts mutual fund and performance data to its website
regularly. Assets for most Putnam retail mutual funds are posted approximately
two weeks after each month-end. Mutual fund net asset value (NAV) is posted
daily. Historical performance and Lipper rankings are also provided. Investors
can link to MMC and its operating company websites through www.mmc.com.
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,
------- ------- ------- -------
2004 2003 2004 2003
------- ------- ------- -------
Revenue:
Service Revenue $2,931 $2,809 $9,072 $8,490
Investment Income (Loss) 38 28 143 64
------- ------- ------- -------
Total Revenue 2,969 2,837 9,215 8,554
------- ------- ------- -------
Expense:
Compensation and Benefits 1,716 1,486 4,947 4,339
Other Operating Expenses 1,125 758 2,735 2,306
------- ------- ------- -------
Total Expense 2,841 2,244 7,682 6,645
------- ------- ------- -------
Operating Income 128 593 1,533 1,909
Interest Income 6 6 15 19
Interest Expense (55) (48) (153) (137)
------- ------- ------- -------
Income Before Income Taxes and
Minority Interest Expense 79 551 1,395 1,791
Income Taxes 52 188 527 609
Minority Interest Expense, Net
of Tax 6 6 12 17
------- ------- ------- -------
Net Income $ 21 $ 357 $ 856 $1,165
======= ======= ======= =======
Basic Net Income Per Share $0.04 $0.67 $1.64 $2.18
======= ======= ======= =======
Diluted Net Income Per Share $0.04 $0.65 $1.60 $2.12
======= ======= ======= =======
Average Number of
Shares Outstanding - Basic 521 531 522 534
======= ======= ======= =======
Average Number of
Shares Outstanding - Diluted 533 550 536 550
======= ======= ======= =======
Marsh & McLennan Companies, Inc.
Supplemental Information - Revenue Analysis
Third Quarter
(Millions) (Unaudited)
Three Months Ended Components of Revenue Change
----------------------
% Change Acquisitions/
September 30, GAAP Underlying Dispositions Currency
-------------
2004 2003 Revenue Revenue Impact Impact
------- ------ -------- -------- -------- -------
Risk and
Insurance
Services
Risk
Management and
Insurance
Broking $1,030 $1,134 (9)% (13)% 1% 3%
Reinsurance
Broking and
Services 206 209 (1)% (3)% - 2%
Risk
Consulting &
Technology 272 73 268% 6% 262% -
Related
Insurance
Services 266 224 18% 13% 4% 1%
------- ------
Total Risk and
Insurance
Services 1,774 1,640 8% (7)% 13% 2%
------- ------
Investment
Management 429 507 (16)% (16)% - -
------- ------
Consulting
Retirement
Services 333 300 11% (1)% 5% 7%
Management and
Organizational
Change 145 117 24% 17% 2% 5%
Health Care &
Group Benefits 99 99 1% (2)% - 3%
Human 108 100 9% 6% - 3%
Capital
Economic 42 38 9% 7% - 2%
------- ------
727 654 11% 3% 3% 5%
Reimbursed
Expenses 39 36
------- ------
Total
Consulting 766 690 11% 3% 3% 5%
------- ------
Total $2,969 $2,837 5% (6)% 8% 3%
Revenue ======= ======
Notes to Consolidated Statements of Income and Supplemental Information:
The table below provides an analysis of revenue by quarter, which reflects
reclassification of previously reported results:
Three Months Ended Three Months Ended Three Months Ended Three Months Ended
March 31, June 30, September 30, December 31,
--------------------- -------------------- -------------------- --------------------
2004 2003 2004 2003 2004 2003 2004 2003
--------- --------- --------- --------- --------- --------- --------- ---------
Risk and
Insurance
Services
Risk
Management
and
Insurance $1,411 $1,250 $1,284 $1,199 $1,030 $1,134 - $1,298
Broking
Reinsurance
Broking and
Services 275 243 207 194 206 209 - 151
Risk
Consulting
& 75 70 80 70 272 73 - 87
Technology
Related
Insurance
Services 233 210 246 217 266 224 - 239
-------- -------- -------- -------- -------- -------- --------- --------
Total Risk
and
Insurance 1,994 1,773 1,817 1,680 1,774 1,640 - 1,775
Services ======= ======= ======= ======= ======= ======= ========= =======
The table below provides quarterly market services revenue for 2004 and 2003:
2004 2003
------- -------
First Quarter $ 211 $ 173
Second Quarter 211 202
Third Quarter 46 177
------- -------
Nine Months Ended September 30, 468 552
------- -------
Fourth Quarter 293
=== -------
Year Ended December 31, 845
=== =======
Underlying revenue measures the change in revenue, before the impact of
acquisitions and dispositions, using consistent currency exchange rates.
Underlying revenue for risk management and insurance broking decreased 13%,
comprising an 11% decline related to market services agreements and a 2% decline
related to other revenues.
Underlying revenue for the risk and insurance services segment decreased 7%,
comprising an 8% decline related to market services agreements, partly offset by
a 1% increase in other revenues. Interest income on fiduciary funds amounted to
$35 million and $30 million for the three months ended September 30, 2004 and
2003, respectively.
Certain reclassifications have been made to prior year amounts to conform with
current presentation.
Marsh & McLennan Companies, Inc.
Supplemental Information - Revenue Analysis
(Millions) (Unaudited)
Nine Months Ended Components of Revenue Change
----------------------
% Change Acquisitions/
September 30, GAAP Underlying Dispositions Currency
-------------
2004 2003 Revenue Revenue Impact Impact
------- ------ -------- -------- -------- -------
Risk and
Insurance
Services
Risk
Management and
Insurance
Broking $3,725 $3,583 4% (1)% 1% 4%
Reinsurance
Broking and
Services 688 646 6% 4% - 2%
Risk
Consulting &
Technology 427 213 100% 9% 91% -
Related
Insurance
Services 745 651 14% 12% 1% 1%
------- ------
Total Risk and
Insurance
Services 5,585 5,093 10% 2% 5% 3%
------- ------
Investment
Management 1,336 1,447 (8)% (8)% - -
------- ------
Consulting
Retirement
Services 1,022 906 13% - 5% 8%
Management and
Organizational
Change 420 315 33% 12% 16% 5%
Health Care &
Group Benefits 310 300 3% 1% - 2%
Human 305 281 9% 3% - 6%
Capital
Economic 123 109 12% 10% - 2%
------- ------
2,180 1,911 14% 3% 5% 6%
Reimbursed
Expenses 114 103
------- ------
Total
Consulting 2,294 2,014 14% 3% 5% 6%
------- ------
Total $9,215 $8,554 8% 1% 4% 3%
Revenue ======= ======
Notes to Consolidated Statements of Income and Supplemental Information:
Underlying revenue measures the change in revenue, before the impact of acquisitions and
dispositions, using consistent currency exchange rates.
Risk Consulting and Technology includes the operations of Kroll and Marsh Risk Consulting.
Related Insurance Services includes U.S. affinity, wholesale broking, underwriting management,
claims management and MMC Capital businesses.
Interest income on fiduciary funds amounted to $94 million and $91 million for the nine months
ended September 30, 2004 and 2003, respectively.
Investment income (loss) includes realized and unrealized gains and losses from investments
recognized in the income statement, as well as other than temporary declines in the value of
'available for sale' securities. MMC's investments may include seed shares for mutual funds,
direct investments, and investments in private equity funds. Costs related to the management of
MMC's investments, including incentive compensation partially derived from investment income and
loss, are recorded in operating expenses.
MMC's direct investment in AXIS is classified as an available for sale security. As restrictions
on the sale of AXIS shares expire, changes in fair value are reflected on the Balance Sheet until
realized. Trident II's investments are carried at fair value, in accordance with investment
company accounting. MMC's proportionate share of the change in value of its investment in Trident
II is recorded as part of investment income (loss) in the Consolidated Statements of Income.
Certain reclassifications have been made to prior year amounts to conform with current
presentation.
Marsh & McLennan Companies, Inc.
Supplemental Information
(Millions) (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------- ------- ------- -------
2004 2003 2004 2003
------- ------- ------- -------
Operating Income Including Minority
Interest Expense:
Risk and Insurance Services (a) $ (6) $ 388 $1,086 $1,351
Investment Management (b) 55 136 124 364
Consulting 106 96 308 278
Corporate (c) (33) (33) 3 (101)
------- ------- ------- -------
122 587 1,521 1,892
------- ------- ------- -------
Minority Interest Expense, Net of
Tax, Included Above:
Risk and Insurance Services 5 3 12 9
Investment Management 1 3 - 8
------- ------- ------- -------
6 6 12 17
------- ------- ------- -------
Operating Income $ 128 $ 593 $1,533 $1,909
======= ======= ======= =======
Segment Operating Margins:
Risk and Insurance Services (0.3)% 23.7% 19.4% 26.5%
Investment Management (d) 12.8% 26.8% 9.3% 25.2%
Consulting 13.8% 13.9% 13.4% 13.8%
Consolidated Operating Margin 4.3% 20.9% 16.6% 22.3%
Pretax Margin 2.7% 19.4% 15.1% 20.9%
Effective Tax Rate 65.8% 34.0% 37.8% 34.0%
Shares Outstanding at End of
Period 526 533
Potential Minority Interest
Associated with the Putnam
Equity Partnership Plan Net of
Dividend Equivalent
Expense Related to MMC Common
Stock Equivalents $- $- $(2) $-
There were a number of notable items affecting results for the nine months
ended September 30, 2004:
(a) During the third quarter of 2004, Risk and Insurance Services recorded a
$232 million charge established to be used in connection with any settlement
agreement MMC may reach with the New York Attorney General. This charge reduced
net income by $144 million.
(b) Putnam's nine months results include: gains of $38 million related to the
disposal of Putnam's interest in its Italian joint venture partner and related
securities, which is recorded in investment income; a credit of $25 million
related to the settlement with Putnam's former chief executive officer;
non-deductible regulatory fines of $140 million related to settlement
agreements with the Securities and Exchange Commission and the Office of the
Secretary of the Commonwealth of Massachusetts; severance of $57 million; and
costs related to regulatory matters and repositioning Putnam, including legal
and audit costs of $36 million, communications costs of $16 million and other
costs of $5 million. These items reduced Putnam's net operating income for the
nine months ended September 30, 2004 by $186 million, after the impact of
minority interest of $5 million, and reduced net income by $169 million.
(c) During the first quarter of 2004, MMC reached final settlement for insured
losses totaling $278 million related to the World Trade Center ('WTC'). The
replacement value of assets exceeded the book value by $105 million, which was
recorded in Corporate as a reduction of other operating expenses and increased
net income for the nine months ended September 30, 2004 by $63 million.
(d) In the third quarter of 2004, Putnam's contract for transfer agency
services was converted from cost of service to a fixed rate per mutual fund
shareholder account. As part of the change in the service fee contract, Putnam
will incur certain expenses previously borne by the Putnam Mutual Funds. The
change in the service fee calculation resulted in an increase in service fee
revenue and expense incurred under the contract of approximately $20 million
for the third quarter of 2004. The change in the service fee contract had an
immaterial impact on operating income, but reduced the ongoing operating margin
by approximately 100 basis points.
Marsh & McLennan Companies, Inc.
Supplemental Information - Putnam Assets Under Management
(Billions) (Unaudited)
Sept. June 30, March 31, Dec. 31, Sept. 30,
30,
2004 2004 2004 2003 2003
-------- -------- -------- -------- --------
Mutual Funds:
Growth Equity $ 37 $ 41 $ 45 $ 46 $ 48
Value Equity 39 41 42 43 42
Blend Equity 27 28 30 32 36
Fixed Income 37 38 40 42 45
-------- -------- -------- -------- --------
Total Mutual
Fund Assets 140 148 157 163 171
-------- -------- -------- -------- --------
Institutional:
Equity 40 39 44 51 76
Fixed Income 29 26 26 26 25
-------- -------- -------- -------- --------
Total
Institutional
Assets 69 65 70 77 101
-------- -------- -------- -------- --------
Total Ending
Assets $209 $213 $227 $240 $272
======== ======== ======== ======== ========
Assets from
Non-US
Investors $ 36 $ 36 $ 38 $ 39 $ 39
======== ======== ======== ======== ========
Average Assets Under
Management:
Quarter-to-Date $209 $216 $234 $259 $270
======== ======== ======== ======== ========
Year-to-Date $220 $225 $234 $258 $258
======== ======== ======== ======== ========
Net New Sales/
(Redemptions)
including
Dividends Reinvested:
(a)
Quarter-to-Date $ (10.5) $ (12.2) $ (17.6) $ (53.7) $ (2.7)
======== ======== ======== ======== ========
Year-to-Date $ (40.3) $ (29.8) $ (17.6) $ (60.7) $ (7.0)
======== ======== ======== ======== ========
Impact of Market/
Performance on Ending
Assets Under
Management $ (2.1) $ (1.4) $ 4.5 $ 21.9 $ 7.4
======== ======== ======== ======== ========
Categories of mutual fund assets reflect style designations aligned with Putnam's
various prospectuses.
All quarter-end assets conform with the current investment mandate for each product.
(a) Excludes the impact of the acquisition of PanAgora in July 2004, which increased
assets under management by $8.2 billion.
Marsh & McLennan Companies, Inc.
Consolidated Balance Sheets
(Unaudited)
September 30, December 31,
(In millions of dollars) 2004 2003
------------ -----------
ASSETS
Current assets:
Cash and cash equivalents $ 577 $ 665
Net receivables 2,979 2,703
Prepaid dealer commissions - current portion 98 150
Other current assets 360 330
------------ -----------
Total current assets 4,014 3,848
Goodwill and intangible assets 7,816 5,797
Fixed assets, net 1,385 1,389
Long-term investments 566 648
Prepaid dealer commissions 30 114
Prepaid pension 1,294 1,199
Other assets 1,970 2,058
------------ -----------
TOTAL ASSETS $17,075 $15,053
------------ -----------
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Short-term debt $ 1,396 $447
Accounts payable and accrued liabilities 1,867 1,511
Accrued compensation and employee benefits 1,135 1,263
Accrued income taxes 391 272
Dividends payable 180 166
------------ -----------
Total current liabilities 4,969 3,659
Fiduciary liabilities 4,068 4,228
Less - cash and investments held in a
fiduciary capacity (4,068) (4,228)
------------ -----------
- -
Long-term debt 3,458 2,910
Other liabilities 2,990 3,033
Total stockholders' equity 5,658 5,451
------------ -----------
$17,075 $15,053
------------ -----------
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