UNITED STATESSECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 10-Q
Commission file number: 001-16503
WILLIS GROUP HOLDINGS LIMITED (Exact name of registrant as specified in its charter)
c/o Willis Group LimitedTen Trinity Square, London EC3P 3AX, England(Address of principal executive offices)
(011) 44-20-7488-8111(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ý No o
As of July 31, 2003, there were outstanding 153,547,535 shares of common stock, par value $0.000115 per share of the registrant.
WILLIS GROUP HOLDINGS LIMITED QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2003
Table of Contents
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
We have included in this document forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that state our intentions, beliefs, expectations or predictions for the future. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated, depending on a variety of factors such as general economic conditions in different countries around the world, fluctuations in global equity and fixed income markets, changes in premium rates, the competitive environment and the actual cost of resolution of contingent liabilities. Although we believe that the expectations reflected in forward-looking statements are reasonable we can give no assurance that those expectations will prove to have been correct. All forward-looking statements contained in this document are qualified by reference to this cautionary statement.
PART I—FINANCIAL INFORMATION
Item 1—Financial Statements
WILLIS GROUP HOLDINGS LIMITED CONSOLIDATED STATEMENTS OF OPERATIONS (millions, except per share data) (unaudited)
The accompanying notes are an integral part of these consolidated financial statements.
2
WILLIS GROUP HOLDINGS LIMITED CONSOLIDATED BALANCE SHEETS (millions, except share data) (unaudited)
3
WILLIS GROUP HOLDINGS LIMITED CONSOLIDATED STATEMENTS OF CASH FLOWS (millions) (unaudited)
4
WILLIS GROUP HOLDINGS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
1. THE COMPANY AND ITS OPERATIONS
Willis Group Holdings Limited ("Willis Group Holdings") and subsidiaries (collectively, the "Company") provide a broad range of value-added risk management consulting and insurance brokerage services, both directly and indirectly through its associates, to a diverse base of clients internationally. The Company provides specialized risk management advisory and other services on a global basis to clients in various industries, including the construction, aerospace, marine and energy industries. In its capacity as an advisor and insurance broker, the Company acts as an intermediary between clients and insurance carriers by advising clients on risk management requirements, helping clients determine the best means of managing risk, and negotiating and placing insurance risk with insurance carriers through the Company's global distribution network. The Company also provides other value-added services.
2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements (hereinafter referred to as the "Interim Financial Statements") have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP").
The Interim Financial Statements are unaudited but include all adjustments (consisting of normal recurring adjustments) which the Company's management considers necessary for a fair presentation of the financial position as of such dates and the operating results and cash flows for those periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted. The results of operations for the six-month period ended June 30, 2003 may not necessarily be indicative of the operating results that may be incurred for the entire fiscal year.
The December 31, 2002 balance sheet was derived from audited financial statements but does not include all disclosures required by US GAAP. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These Interim Financial Statements should be read in conjunction with the Company's consolidated balance sheets as of December 31, 2002 and 2001, and the related consolidated statements of operations, cash flows and changes in stockholders' equity for each of the three years in the period ended December 31, 2002 included in the Annual Report on Form 10-K filed with the Securities and Exchange Commission.
Willis Group Holdings applies the intrinsic value method allowed by Accounting Practices Board Opinion No. 25, Accounting for Stock Issued to Employees ("APB 25") in accounting for its stock option plans. Under APB 25, compensation expense resulting from awards under variable plans is measured as the difference between the quoted market price at the date when the number of shares is known (the date the performance conditions are satisfied) and the exercise price; the cost is recognized over the period the employee performs related services.
5
The following table illustrates the effect on net income (loss) and net income (loss) per share if the Company had applied the fair value recognition provisions of Statement of Financial Accounting Standard ("SFAS") No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation.
3. DERIVATIVE FINANCIAL INSTRUMENTS
The financial risks the Company manages through the use of financial instruments are interest rate risk and foreign currency risk. The Company's Board of Directors reviews and agrees on policies for managing each of these risks. The Company has applied SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS 133") in accounting for these financial instruments.
Interest rate contracts—The fair values of interest rate contracts are recorded in other assets and liabilities on the balance sheet. Changes in fair value of contracts that are effective cash flow hedges as defined by SFAS 133 are recorded as a component of other comprehensive income with losses of $2 million and $1 million recorded for the three and six-month periods ended June 30, 2003, respectively (2002: gains of $8 million and $7 million, respectively). Amounts are reclassified from other comprehensive income into earnings when the hedged exposure affects earnings.
For interest rate contracts which were not effective for hedge accounting as defined in SFAS 133, the Company has recorded $nil and a loss of $1 million, respectively, in general and administrative expenses, representing the change in fair value for the three and six-month periods ended June 30, 2003 (2002: a gain of $1 million and $nil, respectively).
Foreign currency contracts—The fair values of foreign currency contracts are recorded in other assets and liabilities, with changes in fair value of effective cash flow hedges recorded in other comprehensive income and changes in fair value of ineffective hedges recorded in general and administrative expenses. Amounts are reclassified from other comprehensive income into earnings when the hedged exposure affects earnings.
6
For the three and six-month periods ended June 30, 2003, the Company has recorded gains of $8 million and $2 million, respectively, in other comprehensive income relating to changes in fair value on contracts which are effective cash flow hedges as defined in SFAS 133 (2002: gains of $5 million and $5 million, respectively). For contracts which were not effective for hedge accounting as defined in SFAS 133, the Company has recorded losses of $2 million and $2 million, respectively, in general and administrative expenses, representing the change in fair value for the three and six-month periods ended June 30, 2003 (2002: gains of $1 million and $1 million, respectively).
4. NET INCOME (LOSS) PER SHARE
Basic and diluted net income per share is calculated by dividing net income by the average number of shares outstanding during each period. The computation of diluted net income per share reflects the potential dilution that could occur if dilutive securities and other contracts to issue shares were exercised or converted into shares or resulted in the issue of shares that then shared in the net income of the Company.
At June 30, 2003, time-based and performance-based options to purchase 18.1 million and 8.5 million (2002: 19.6 million and 11.2 million) shares, respectively, and 0.4 million restricted shares (2002: 0.2 million), respectively, were outstanding. Basic and diluted net income (loss) per share are as follows:
The average number of shares issuable upon exercise of stock options for the three-month period ended June 30, 2002, which were not included in the calculation because they were antidilutive, was 12 million.
5. COMMITMENTS AND CONTINGENCIES
In common with many companies involved in selling personal pension plans in the United Kingdom ("UK"), the Company's financial advisory business, Willis Corroon Financial Planning Limited ("WCFP"), is required by the Financial Services Authority ("the Regulator"), which regulates these matters, to review certain categories of personal pension plans sold to individuals between 1988 and 1994. WCFP is required to compensate those individuals who transferred from, opted out or did not join their employer-sponsored pension plan if the expected benefits from their personal pension plan did not equal the benefits that would have been available from their employer-sponsored pension plan. Whether compensation is due to a particular individual, and the amount thereof, is dependent upon the subsequent performance of the personal pension plan sold and the net present value of the benefits that would have been available from the employer-sponsored pension plan calculated using financial and demographic assumptions prescribed by the Regulator.
7
At June 30, 2003, the Company had provisions of $13 million relating to this issue. Although the Company considers these provisions to be prudent, there remains some uncertainty as to the ultimate exposure relating to the review.
At June 30, 2003, the Company had provisions of $15 million for discontinued operations that includes estimates for future costs of administering the run-off of the Company's former UK underwriting operations. Willis Faber (Underwriting Management) Limited ("WFUM"), a wholly-owned subsidiary of the Company provided underwriting agency and other services to certain insurance companies including Sovereign Marine & General Insurance Company Limited (in Scheme of Arrangement) ("Sovereign") (collectively, the "stamp companies") and in 1991 ceased arranging new business on behalf of the stamp companies. Willis Faber Limited has agreed with certain of the stamp companies to fund certain costs of the run-off, subject to agreed guidelines as to timing and amount. Although the Company expects the run-off to be conducted in an orderly manner, it may ultimately prove to be a lengthy and expensive process. The amounts to be funded under the run-off arrangements are currently within the aggregate of the provisions made.
The Company is subject to various actual and potential claims, lawsuits and proceedings relating principally to alleged errors and omissions in connection with the placement of insurance and reinsurance in the ordinary course of business. Similar to other corporations, the Company is also subject to a variety of other claims, including those relating to the Company's employment practices. Some of those claims, lawsuits and proceedings seek damages in amounts which could, if assessed, be significant.
Most of the claims, lawsuits and proceedings arising in the ordinary course of business are covered by professional indemnity or other appropriate insurance. In respect of self-insured deductibles, the Company has established provisions against these items which are believed to be adequate in the light of current information and legal advice, and the Company adjusts such provisions from time to time according to developments. On the basis of current information, the Company does not expect that the outcome of the actual claims, lawsuits and proceedings to which the Company is subject or potential claims, lawsuits and proceedings, either individually or in the aggregate, will have a material adverse effect on the Company's financial condition, results of operations or liquidity.
8
6. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Supplemental disclosures regarding cash flow information and non-cash flow investing and financing activities are as follows:
7. ACCUMULATED OTHER COMPREHENSIVE LOSS
The components of other comprehensive income are as follows:
The components of accumulated other comprehensive loss are as follows:
9
8. SEGMENT INFORMATION
The Company conducts its worldwide insurance brokerage activities through three operating segments: Global, North America and International. Each operating segment exhibits similar economic characteristics, provides similar products and services and distributes same through common distribution channels to a common type or class of customer. In addition, the regulatory environment in each region is similar. Consequently, for financial reporting purposes the Company has aggregated these three operating segments into one reportable segment.
9. CONDENSED CONSOLIDATING FINANCIAL INFORMATION
The Willis North America Inc. ("Willis North America") debt securities registered in April 2003 will be, if issued, jointly and severally, irrevocably and fully and unconditionally guaranteed by Willis Group Holdings, Willis Group Limited, Willis Partners, Trinity Acquisition Limited, TA I Limited, TA II Limited, TA III Limited and TA IV Limited.
Presented below is condensed consolidating financial information for: i) Willis Group Holdings, which will be a guarantor, on a parent company only basis; ii) the other Guarantors which are all wholly owned subsidiaries of the parent; iii) the Issuer, Willis North America; iv) Other, which are the non-guarantor subsidiaries, on a combined basis; v) Eliminations; and vi) Consolidated Company and subsidiaries. The equity method has been used for all investments in subsidiaries.
The entities included in the other Guarantors column are Willis Group Limited, Willis Partners, Trinity Acquisition Limited, TA I Limited, TA II Limited, TA III Limited and TA IV Limited.
10
Condensed Consolidating Statement of Operations
11
12
13
14
Condensed Consolidating Balance Sheets
15
16
Condensed Consolidating Statement of Cash Flows
17
18
10. CONDENSED CONSOLIDATING FINANCIAL INFORMATION
The Trinity Acquisition Limited debt securities registered in April 2003 will be, if issued, jointly and severally, irrevocably and fully and unconditionally guaranteed by Willis Group Holdings, TA I Limited, TA II Limited and TA III Limited.
Presented below is condensed consolidating financial information for: i) Willis Group Holdings, which will be a guarantor, on a parent company only basis; ii) the other Guarantors, which are all wholly owned subsidiaries of the parent; iii) the Issuer, Trinity Acquisition Limited; iv) Other, which are the non-guarantor subsidiaries, on a combined basis; v) Eliminations; and vi) Consolidated Company and subsidiaries. The equity method has been used for all investments in subsidiaries.
The entities included in the other Guarantors column are TA I Limited, TA II Limited and TA III Limited.
19
20
21
22
23
24
25
11. Subsequent Event
Following enactment of the UK Finance Act 2003 on July 10, 2003, stock options exercised by UK employees on or after January 1, 2003 will give rise to a corporate tax deduction based on the difference between the Willis share price on the date of exercise and the option exercise price.
Consequently, in the third quarter of 2003, an income tax benefit will be recognized based on the number of performance-based stock options exercised in the nine-month period to September 30, 2003 and the number of outstanding stock options exercisable at that date.
Had the legislation been in force at June 30, 2003, and based on the Willis share price at that date, an income tax benefit of approximately $38 million would have been recognized.
26
Item 2—Management's Discussion and Analysis of Financial Condition and Results of Operations
Summary
Total revenues increased by $81 million (20%) to $492 million in the second quarter of 2003 from $411 million in the second quarter of 2002. Approximately 4% of this increase was attributable to the effect of foreign currency exchange rate movements and approximately (2)% was attributable to the effect of acquisitions and disposals. Adjusting for these items, total revenues on an underlying basis were 18% higher in the second quarter of 2003 than in the corresponding quarter of 2002. For the six months to June 30, 2003, total revenues were $1,047 million, 21% higher than a year ago. Approximately 5% of this increase was attributable to the effect of foreign currency exchange rate movements and approximately (2)% was attributable to the effect of acquisitions and disposals. Adjusting for these items, total revenues on an underlying basis were 18% higher than in the corresponding period of 2002. Of the 18% increase in our underlying revenues for the six months, 13% was attributable to net new business, up from 10% in the corresponding period a year ago, and 5% from higher premium rates.
Operating income increased by $106 million to $136 million in the second quarter and by $164 million to $322 million in the first six months of 2003 compared with the corresponding periods of 2002. Operating income included a non-cash compensation charge for performance-based stock options of $5 million in the second quarter and $13 million in the first six months of 2003 compared with $78 million and $96 million in the same periods of 2002. Excluding the charges for non-cash compensation and gains from the disposal of operations, operating income in the second quarter of 2003 increased by 26% and by 30% in the first six months.
Operating margin, or operating income as a percentage of total revenues, increased to 28% in the second quarter and 31% in the first six months of 2003 compared with 7% and 18% in the same periods a year ago.
Net income increased by $87 million to $80 million in the second quarter and by $136 million to $197 million in the first six months of 2003 compared with the corresponding periods of 2002. Net income per diluted share increased by $0.52 to $0.47 in the second quarter and by $0.79 to $1.17 in the first six months of 2003 compared with the corresponding periods of 2002. Net income included a non-cash compensation charge for performance-based stock options, net of tax, of $5 million, or $0.03 per diluted share, in the second quarter of 2003 compared with $65 million, or $0.44 per diluted share, in the second quarter of 2002 and $11 million, or $0.07 per diluted share, in the first half of 2003 compared with $80 million, or $0.50 per diluted share, in the first half of 2002.
Revenues
Commissions and fees increased by 20% to $472 million in the second quarter of 2003 from $393 million in the second quarter of 2002 and interest income earned of $20 million on fiduciary funds was $2 million (11%) higher than in the second quarter of 2002.
Global: Revenues generated by our Global business increased by 24% to $245 million in the second quarter of 2003 from $197 million in the second quarter of 2002. Approximately 4% of this increase in revenues arose from the effects of foreign currency exchange rate movements. The effect of acquisitions and disposals was immaterial. Adjusting for these items, Global's revenues on an underlying basis increased by 20%. Global's property and casualty, reinsurance and specialties, including marine and aerospace, continued to grow through new business wins across our global marketplace and higher premium rates.
27
North America: Revenues generated by our North America business increased by 9% to $172 million in the second quarter of 2003 from $158 million in the second quarter of 2002. The disposal of the third-party administration units in 2002 impacted the increase in revenues by approximately (5)%. Adjusting for this item, North America's revenues on an underlying basis increased by 14% attributable to new business development and higher premium rates.
International: Revenues generated by our International business increased by 34% to $75 million in the second quarter of 2003 from $56 million in the second quarter of 2002. Foreign currency exchange rate movements accounted for approximately 13% of the reported increase in revenues, largely due to the strengthening of the euro, and the effect of acquisitions and disposals accounted for a further 3% of the reported increase in revenues. Adjusting for these items, International's revenues on an underlying basis increased by 18%, led by good performance in Continental Europe and Eastern Hemisphere, principally Australia.
Expenses
Total expenses decreased by $25 million (7%) to $356 million in the second quarter of 2003 from $381 million in the second quarter of 2002. General and administrative expenses (excluding non-cash compensation) increased by $52 million (18%) to $346 million from $294 million in the second quarter of 2002. Approximately 4% of the reported increase in general and administrative expenses was attributable to foreign currency exchange rate movements and approximately (2)% was attributable to the effect of acquisitions and disposals. Adjusting for these items, general and administrative expenses grew by 16% in the second quarter of 2003 compared to the second quarter of 2002. Much of the increase related to increased incentive compensation due to positive results and the impact of hiring production and sales executives. For the six months, general and administrative expenses were 18% higher than a year ago but 16% higher on a constant currency basis adjusting for acquisitions and disposals. Approximately 5% of the reported increase in general and administrative expenses was attributable to foreign currency exchange rate movements and approximately (3)% was attributable to the effect of acquisitions and disposals.
The non-cash charge for performance-based stock options in the second quarter of 2003 amounted to $5 million compared with $78 million in the second quarter of 2002. As previously disclosed, this charge recognizes performance-based stock options granted to management by the Board of Directors as part of the 1998 acquisition of our predecessor for meeting or exceeding 2001 and 2002 performance targets. The cumulative charge to June 30, 2003 of $251 million represents approximately 89% of the total estimated charge. The remaining performance-based stock option charge of approximately $30 million will be calculated according to the vesting schedule and recognized quarterly through 2004.
Interest Expense
Interest expense of $13 million in the second quarter of 2003 was $4 million lower than in the second quarter of 2002, reflecting lower principal amounts of debt outstanding totaling $490 million at June 30, 2003 compared with $677 million a year ago. Interest expense principally represents interest payable on long-term debt consisting of the senior credit facilities and the 9% senior subordinated notes due 2009.
28
Income Taxes
Income tax expense for the second quarter of 2003 amounted to $44 million, an effective tax rate of 36%, compared with 154% in the corresponding period of 2002. Adjusting for the non-cash performance option charge, of which only approximately 40% is tax deductible, the underlying tax rate for the second quarter of 2003 was 35%, compared with 36% in the corresponding period of 2002. For the six months, income tax expense amounted to $105 million and the underlying tax rate was 35% compared with 36% a year ago.
On July 10, 2003, the UK Finance Act 2003 became law, provisions of which granted a statutory corporate tax deduction for the compensation cost attributable to exercises of stock options by UK employees. With effect from January 1, 2003, we will be able obtain a UK corporate tax deduction for the difference between the Willis share price on the date of exercise of a stock option and the option exercise price. Consequently, we will recognize an income tax benefit in the third quarter of 2003 based on the number of performance-based stock options exercised in the nine-month period to September 30, 2003 and the number of outstanding stock options exercisable at that date. Had the legislation been in force at June 30, 2003, and based on the Willis share price at that date, we would have recognized an income tax benefit of approximately $38 million.
Associates
Equity in net income of our associates was $1 million in the second quarter of 2003, compared with $1 million in the corresponding period of 2002. For the six months, equity in net income of our associates was $11 million, an increase of $4 million compared with $7 million a year ago. The increase was due to improved performance of our associates, led by Gras Savoye.
Minority Interest
Minority interest for the second quarter of 2003 was $nil compared with $1 million for the second quarter of 2002. For the six months, minority interest was $3 million, a decrease of $4 million compared with $7 million a year ago. The decrease in minority interest was largely due to the acquisition of the remaining 22% minority interest in Willis GmbH and the purchase of an additional 23% ownership in Willis Iberia, both with effect from January 1, 2003.
Liquidity and Capital Resources
Net cash provided by operations increased by $73 million to $239 million in the six months ended June 30, 2003 from $166 million in the corresponding period of 2002 as a result of higher revenues and improved operating margins.
Cash used in investing activities was $90 million in the first half of 2003 compared with $25 million in the first half of 2002. On January 1, 2003, we acquired the remaining 22% interest, in addition to the 78% already owned, in Willis GmbH, Germany's third largest insurance broker. On January 1, 2003, we also acquired an additional 23% holding in Willis Iberia to add to the 54% already owned. The remaining 23% of Willis Iberia is owned by our Associate, Gras Savoye. On May 29, 2003, we acquired a further 20% holding in Willis Italia to add to the 67% we already owned.
Cash used in financing activities amounted to $79 million in the first half of 2003 compared with $112 million in the first half of 2002. Total long-term debt outstanding as of June 30, 2003 was $490 million, down from $567 million at the end of 2002, following repayment of term loans totaling $39 million and the repurchase of $38 million of 9% senior subordinated notes in the open market.
29
In the second quarter of 2003, the Board of Directors declared a quarterly cash dividend of $0.125 per common share, totaling $19 million, which was paid on July 14, 2003. A cash dividend of $19 million was paid on April 15, 2003. On July 23, 2003, the Board of Directors approved an increase in the regular quarterly cash dividend of 30% to $0.1625 per common share, to be paid on October 14, 2003.
At June 30, 2003, our cash and cash equivalents aggregated $286 million, an increase of $75 million from December 31, 2002. We expect that internally generated funds will be sufficient to meet our foreseeable operating cash requirements, capital expenditures and scheduled debt repayments, the next of which is not due until 2005. In addition, we have an undrawn $150 million revolving credit facility.
Contractual Obligations
There have been no material changes in our contractual obligations since December 31, 2002 apart from the repayment of term loans and the repurchase of 9% senior subordinated notes, totaling $77 million, as referred to above and a reduction of $47 million in commitments under put and call option arrangements relating to the future acquisition of subsidiaries and associates, following the acquisition of additional interests in Willis Iberia and Willis Italia.
Off-Balance Sheet Transactions
Apart from commitments and contingencies, as described in Note 5 of the Notes to the Consolidated Financial Statements, the Company has no off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on the Company's financial condition, results of operations or liquidity.
30
Item 3—Quantitative and Qualitative Disclosures about Market Risk
There has been no material change with respect to market risk from that described in our Annual Report on Form 10-K for the year ended December 31, 2002.
Item 4—Controls and Procedures
Based on an evaluation of the effectiveness of the Company's disclosure controls, as of a date within 90 days of the filing of this Quarterly Report, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective in ensuring that all material information required to be included in the Company's filings or submissions under the Securities Exchange Act of 1934 is made known to them in a timely fashion.
There have been no significant changes in the Company's internal controls or in other factors that could significantly affect these internal controls subsequent to the date of our most recent evaluation.
31
PART II—OTHER INFORMATION
Item 4—Submission of Matters to a Vote of Security Holders
The Company held its Annual General Meeting on May 9, 2003 at which shareholders elected Mr William Bradley and Mr Douglas B. Roberts as directors and Messrs. James R. Fisher, Todd A. Fisher, Perry Golkin, Paul M. Hazen, Henry R. Kravis, Scott C. Nuttall, Joseph J. Plumeri and George R. Roberts were re-appointed as directors.
The table below sets out the number of votes cast for, against or withheld for each director:
The shareholders adopted at the meeting the financial statements of the Company for the year ended December 31, 2002 together with the Auditors' report thereon. Of the votes cast, 132,110,934 were voted in favor, 124,473 were voted against and 16,664 were withheld.
The shareholders also approved the appointment of Deloitte & Touche as independent auditors for the fiscal year ending December 31, 2003. Of the shares voted, 131,718,838 were voted in favor, 526,031 were voted against and 16,933 were withheld.
The final item of business at the meeting was the amendment to the Company's 2001 Share Purchase and Option Plan increasing the number of shares available for issuance by 5,000,000 shares to 15,000,000 shares. The shareholders approved the amendment with 102,500,992 voting in favor, 28,905,266 voting against and 511,166 withholding.
Item 6—Exhibits and Reports on Form 8-K
32
The following current reports on Form 8-K were filed during the quarter ended June 30, 2003:
33
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.
Dated: London, August 14, 2003
34
QuickLinks