================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 2002
SEC NO. 1-5998
A. Full title of the Plan:
MARSH & McLENNAN COMPANIES STOCK INVESTMENT PLAN
B. Name of issuer of the securities held pursuant to the Plan and the
address of its principal executive office:
MARSH & McLENNAN COMPANIES, INC.
1166 Avenue of the Americas
New York, NY 10036-2774
================================================================================
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the MARSH & McLENNAN COMPANIES STOCK INVESTMENT PLAN COMMITTEE has duly caused
this annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
MARSH & McLENNAN COMPANIES STOCK
INVESTMENT PLAN
(Name of Plan)
Date: December 13, 2002 By: /s/ Sandra S. Wijnberg
____________________________________________
Sandra S. Wijnberg
Chairperson, Stock Investment Plan Committee
MARSH & McLENNAN COMPANIES STOCK INVESTMENT PLAN
TABLE OF CONTENTS
Page
Independent Auditors' Report 1
Statements of Net Assets Available for Benefits 2
Statement of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4-7
Supplemental Schedules:
Schedule of Assets Held at End of Year Schedule I
Schedule of Reportable Transactions Schedule II
INDEPENDENT AUDITORS' REPORT
To Marsh & McLennan Companies Stock Investment Plan Committee:
We have audited the accompanying statements of net assets available for benefits
of the Marsh & McLennan Companies Stock Investment Plan (the "Plan") as of June
30, 2002 and 2001, and the related statement of changes in net assets available
for benefits for the year then ended June 30, 2002. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, information regarding the Plan's net assets available for benefits as
of June 30, 2002 and 2001 and the changes in net assets available for benefits
for the year ended June 30, 2002 in conformity with accounting principles
generally accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in the
table of contents are presented for purposes of additional analysis and are not
a required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. These schedules are the responsibility of the Plan's management. Such
schedules have been subjected to the auditing procedures applied in the audit of
the basic 2002 financial statements and, in our opinion, are fairly stated in
all material respects when considered in relation to the basic financial
statements taken as a whole.
/s/ Deloitte & Touche LLP
-------------------------
Deloitte & Touche LLP
New York, New York
December 13, 2002
MARSH & MCLENNAN COMPANIES STOCK INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
JUNE 30, 2002 AND 2001
Assets: 2002 2001
------ --------------- ---------------
CASH AND CASH EQUIVALENTS $ 81,330,812 $ 27,213,871
--------------- ---------------
INVESTMENTS (NOTE 2) 2,026,316,414 2,193,997,303
RECEIVABLES:
LOANS RECEIVABLE - PARTICIPANTS 29,741,672 30,284,198
DIVIDENDS AND INTEREST RECEIVABLE 9,123,029 8,797,968
RECEIVABLE FROM COMPANY:
Contributions 5,297,961 5,061,718
Loan Repayments 612,371 641,271
--------------- ---------------
5,910,332 5,702,989
RECEIVABLE FOR INVESTMENTS SOLD 247,293 16,225,626
--------------- ---------------
TOTAL ASSETS 2,152,669,552 2,282,221,955
--------------- ---------------
Liabilities:
-----------
PAYABLE FOR INVESTMENTS PURCHASED 3,086,988 2,431,279
--------------- ---------------
NET ASSETS AVAILABLE FOR BENEFITS $2,149,582,564 $2,279,790,676
=============== ===============
See notes to financial statements.
MARSH & MCLENNAN COMPANIES STOCK INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED JUNE 30, 2002
2002
-----------------
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR $ 2,279,790,676
INVESTMENT INCOME:
Dividends 35,693,211
Interest 23,199,638
-----------------
58,892,849
NET REALIZED AND UNREALIZED
DEPRECIATION IN FAIR VALUE
OF INVESTMENTS (171,386,036)
CONTRIBUTIONS:
Employer 47,671,612
Employee 94,109,159
-----------------
141,780,771
DISTRIBUTIONS TO AND WITHDRAWALS BY EMPLOYEES (191,293,610)
NET TRANSFERS FROM OTHER PLANS (NOTE 1) 31,797,914
-----------------
NET DECREASE (130,208,112)
-----------------
-----------------
NET ASSETS AVAILABLE FOR BENEFITS, END OF YEAR $ 2,149,582,564
=================
See notes to financial statements.
MARSH & McLENNAN COMPANIES STOCK INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002 and 2001
(1) Description of the Plan:
-----------------------
The Marsh & McLennan Companies Stock Investment Plan (the "Plan") is a
defined contribution Employee Stock Ownership Plan which allows
participants to contribute through payroll deductions from 1% to 15% of
their salary, on a before and/or after-tax basis. Marsh & McLennan
Companies, Inc. ("MMC" or the "Company") matches up to the first six
percent of participants' before and/or after tax contributions in the
following percentages:
o 71-2/3% for each participant who elects to receive dividends on
their MMC shares as cash payments each quarter (100% for those
participants age 55 or whose age plus years of plan participation
equals at least sixty-five).
o 66-2/3% for each plan participant who elects not to receive the
cash dividends (95% for those participants age 55 or whose age
plus years of plan participation equals at least sixty-five).
The increase over the basic match must be invested in the Company stock
fund. Participants who are age 55 or whose age plus years of plan
participation equals at least sixty-five may diversify their contribution
and accumulated balance among the MMC Stock Fund, a Fixed Income Fund and
various Putnam mutual funds. In addition, Company basic matching
contributions are invested the same as participants' contributions. The
Company's matching contributions to a participant are suspended for 12
months if the participant makes certain in-service withdrawals from their
Account. Employee and Company contributions are subject to certain
limitations in accordance with Federal Income Tax Regulations. For
employees hired on and after January 1, 1998, the Plan includes a vesting
schedule for Company matching contributions. These employees shall vest
33% in such contributions after three years of service, 67% after four
years of service and 100% after five years of service.
In April 2002 and May 2002, $25,286,480 and $5,398,001 were transferred
into the Plan from the KVI Profit Sharing and 401(k) Plan and the J&H/KVI
Profit Sharing Plan, respectively. In August 2001, $1,113,433 was
transferred into the Plan from CODA, Inc. 401(k) Retirement & Savings
Plan.
In the fourth quarter of 1998, the Company consummated a business
combination with Sedgwick Group plc ("Sedgwick"). Former employees of
Sedgwick became eligible to participate in the Plan effective January 1,
2000. Participants' balances in the Sedgwick Savings & Investment Plan
were transferred into the Plan on December 2, 2002.
The trustee, Bankers Trust Company, is responsible for maintaining the
assets of the Plan, making distribution payments as directed by the
Company and generally performing all other acts deemed necessary or
proper to fulfill its responsibility as set forth in the Trust Agreement.
Certain administrative functions are performed by employees of the
Company or its subsidiaries. All such costs as well as administrative
expenses for the Trustee's fees are paid directly by the Company. The
employee benefits handbook, containing Plan information and documents
constituting part of a Prospectus, is provided to each participant in the
Plan.
(2) Summary of Significant Accounting Policies:
------------------------------------------
Basis of accounting
-------------------
The accompanying financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of
America.
Use of estimates
----------------
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of net assets available for benefits and changes therein.
Actual results could differ from those estimates. The Plan utilizes
various investment instruments. Investment securities, in general, are
exposed to various risks, such as interest rate, credit, and overall
market volatility. Due to the level of risk associated with certain
investment securities, it is reasonably possible that changes in the
values of investment securities will occur in the near term and that
such changes could materially affect the amounts reported in the
statement of net assets available for plan benefits.
Cash and cash equivalents
-------------------------
Cash and cash equivalents primarily consist of interest bearing money
market investments, which are available on demand.
Investments
-----------
The common stock of Marsh & McLennan Companies, Inc. and shares of
Putnam Mutual Funds are reflected in the accompanying statements of
net assets available for benefits at quoted market prices.
The Plan's Fixed Income Fund, which consists of guaranteed insurance
contracts and group annuity contracts, has been presented in the
financial statements at contract value, which approximates fair market
value. The investments in this fund are valued at contract value,
which is cost plus accrued interest, and are guaranteed by the issuing
institution as to principal and interest. The average yield for these
investment contracts was approximately 6.2% for the year ended June
30, 2002.
The following table presents the market values of investments that
represent 5% or more of the Plan's net assets at the beginning of the
plan-year:
June 30,
---------------------------------
2002 2001
--------------- ---------------
Marsh & McLennan Companies common stock $1,315,391,574 $1,335,120,212
=============== ===============
The Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) depreciated in value
as follows:
Year Ended June 30,
-------------------
2002
-------------------
Common Stock $(57,506,768)
Mutual Funds (113,879,268)
-------------------
$(171,386,036)
===================
The plan offers a program that is both participant and non-participant
directed. All non-participant directed contributions are invested in
the Marsh & McLennan Companies Stock Fund. The net assets as of June
30, 2002 and 2001 and changes in net assets relating to the Company
stock fund for the year ended June 30, 2002 are as follows:
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
-----------------------------------------------
June 30, 2002 June 30, 2001
------------- -------------
ASSETS
------
CASH AND CASH EQUIVALENTS $ 20,062,259 $ 16,662,081
COMMON STOCK 1,315,391,574 1,335,120,212
DIVIDENDS AND INTEREST RECEIVABLE 7,675,965 7,071,311
RECEIVABLE FROM COMPANY:
Contributions 4,893,804 4,671,398
Loan repayments 574,918 589,965
------------- -------------
5,468,722 5,261,363
INTERFUND RECEIVABLE 28,580 113,269
------------- -------------
TOTAL ASSETS 1,348,627,100 1,364,228,236
------------- -------------
LIABILITIES
-----------
PAYABLE FOR INVESTMENTS PURCHASED 1,292,674 248,538
-------------- -------------
TOTAL LIABILITIES 1,292,674 248,538
-------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS $1,347,334,426 $1,363,979,698
============== ==============
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
---------------------------------------------------------
June 30, 2002
--------------
NET ASSETS AVAILABLE FOR BENEFITS,
Beginning of year $1,363,979,698
INVESTMENT INCOME:
Dividends 29,068,366
Interest 520,176
--------------
29,588,542
NET REALIZED AND UNREALIZED
DEPRECIATION IN FAIR
VALUE OF INVESTMENTS (57,506,768)
CONTRIBUTIONS:
Employer 44,146,665
Employee 81,325,918
--------------
125,472,583
DISTRIBUTIONS TO AND WITHDRAWALS
BY EMPLOYEES (99,776,847)
NET TRANSFERS BETWEEN FUNDS (15,913,039)
NET TRANSFERS FROM OTHER PLANS 1,490,257
--------------
NET DECREASE (16,645,272)
--------------
NET ASSETS AVAILABLE FOR BENEFITS,
End of year $1,347,334,426
==============
(3) Related party transactions:
--------------------------
The Putnam Investors Fund, Inc., the Putnam Fund for Growth & Income, the
Putnam Voyager Fund, the Putnam Global Growth Fund, the Putnam New
Opportunities Fund, the George Putnam Fund of Boston, the Putnam S&P 500
Index Fund and the Putnam Bond Index Fund are managed by Putnam
Investments, LLC, a subsidiary of the Company.
(4) Loans receivable-participants:
-----------------------------
Plan participants may borrow funds from their account subject to certain
limits and conditions. Outstanding loans, which are secured by the
participants' interest in the Plan, are generally repaid through payroll
deductions or, at the option of the participant, the total outstanding
balance may be prepaid anytime after the completion of 12 months of loan
repayments. Participants' loan repayments and any interest due are paid
into the participants' account.
New loans to participants amounted to $13,437,974 and $13,935,507 for the
years ended June 30, 2002 and 2001, respectively, and repayments from
participants, including interest, amounted to $15,007,677 and $14,767,980
respectively.
(5) Income Tax Status:
-----------------
The Internal Revenue Service has determined and informed the Company by a
letter dated January 28, 2002, that the Plan is designed in accordance
with applicable sections of the Internal Revenue Code ("IRC"). The Plan
has been amended since receiving the determination letter. However, the
Plan Administrator and the Plan's tax counsel believe that the Plan is
currently being operated in compliance with the applicable requirements
of the IRC.
(6) Payment of Benefits:
-------------------
Benefit payments to participants are recorded upon distribution. Amounts
allocated to accounts of persons who have elected to withdraw from the
Plan but have not yet been paid were $243,799 at June 30, 2002. These
amounts have not been recorded as liabilities in the accompanying
financial statements.
(7) Supporting Schedules:
--------------------
The detail of assets held for investment as of June 30, 2002 is provided
on Schedule I.
The summary of transactions occurring during the year ended June 30, 2002
representing more than 5% of the Plan's net assets as of July 1, 2001 is
reportable under the Department of Labor Regulation 2520.103-6 and is
presented on Schedule II.
(8) Subsequent Event:
----------------
Effective July 1, 2002, the vesting schedule for all participants was
changed to 20% after two years of service, 40% after three years of
service, 67% after four years of service and 100% after five years of
service.
SCHEDULE I
Page 1 of 1
MARSH & MCLENNAN COMPANIES STOCK INVESTMENT PLAN
SCHEDULE H, line 4i - SCHEDULE OF ASSETS HELD AT END OF YEAR
AS OF JUNE 30, 2002
PRINCIPAL AMOUNT OR
NUMBER OF SHARES 2002
-------------------- ---------------- ----------------
2002 COST FAIR VALUE
-------------------- ---------------- ----------------
COMMON STOCK:
27,233,780 MARSH & McLENNAN COMPANIES, INC. $ 532,583,838 $ 1,315,391,574
MUTUAL FUNDS:
7,174,538 PUTNAM INVESTORS FUND 103,241,181 69,951,748
3,995,145 THE PUTNAM FUND FOR GROWTH AND INCOME 76,568,224 63,882,373
4,792,913 PUTNAM VOYAGER FUND 93,328,252 63,830,668
4,426,537 PUTNAM GLOBAL GROWTH FUND 61,194,966 31,729,082
941,470 PUTNAM NEW OPPORTUNITIES FUND 64,568,069 30,390,658
1,803,768 GEORGE PUTNAM FUND OF BOSTON 32,155,132 28,625,791
3,877,114 PUTNAM S&P 500 INDEX FUND 120,178,940 93,632,293
2,850,432 PUTNAM BOND INDEX FUND 31,379,270 35,031,807
---------------- ----------------
582,614,034 417,074,420
---------------- ----------------
FIXED INCOME FUND:
SUNAMERICA LIFE INSURANCE CO
1,922,033 6.30% DUE JANUARY 2, 2004 1,922,033 1,922,033
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
12,278,387 6.95% DUE SEPTEMBER 30, 2002 12,278,387 12,278,387
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
12,055,662 7.04% DUE DECEMBER 31, 2002 12,055,662 12,055,662
ALLSTATE LIFE INSURANCE
12,003,121 6.87% DUE SEPTEMBER 30, 2002 12,003,121 12,003,121
NEW YORK LIFE
17,341,666 7.52% DUE MARCH 31, 2003 17,341,666 17,341,666
JOHN HANCOCK INSURANCE COMPANY
12,055,677 6.20% DUE NOVEMBER 30, 2002 12,055,677 12,055,677
JOHN HANCOCK LIFE INSURANCE
12,023,449 7.30% DUE NOVEMBER 30, 2003 12,023,449 12,023,449
METROPOLITIAN LIFE INSURANCE
13,302,745 6.81% DUE SEPTEMBER 30, 2003 13,302,745 13,302,745
HARTLAND LIFE INSURANCE
13,321,740 6.92% DUE MARCH 31, 2004 13,321,740 13,321,740
METROPOLITIAN LIFE
15,026,996 5.83% DUE JUNE 30, 2004 15,026,996 15,026,996
TRAVELERS INSURANCE CO
15,035,283 5.89% DUE SEPTEMBER 30, 2004 15,035,283 15,035,283
TRAVELERS INSURANCE CO
17,344,850 7.63% DUE JUNE 30, 2003 17,344,850 17,344,850
JOHN HANCOCK INSURANCE COMPANY
12,047,020 6.58% DUE NOVEMBER 30, 2004 12,047,020 12,047,020
NEW YORK LIFE
20,756,625 5.09% DUE SEPTEMBER 30, 2005 20,756,625 20,756,625
MONUMENTAL LIFE INSURANCE COMPANY
15,556,387 4.99% DUE JUNE 30, 2005 15,556,387 15,556,387
MONUMENTAL LIFE INSURANCE COMPANY
10,362,797 4.88% DUE MARCH 31, 2005 10,362,797 10,362,797
PRINCIPAL LIFE
12,326,822 5.60% DUE MARCH 31, 2006 12,326,822 12,326,822
NEW YORK LIFE
10,524,522 5.26% DUE MARCH 31, 2004 10,524,522 10,524,522
HARTFORD LIFE
10,575,738 5.79% DUE MARCH 31, 2005 10,575,738 10,575,738
METROPOLITIAN LIFE
11,666,911 5.95% DUE JUNE 30, 2006 11,666,911 11,666,911
ALLSTATE LIFE
11,664,439 5.86% DUE SEPTEMBER 29, 2006 11,664,439 11,664,439
HARTFORD LIFE
12,326,699 5.63% DUE MARCH 31, 2006 12,326,699 12,326,699
MONUMENTAL LIFE INSURANCE COMPANY
12,330,851 5.67% DUE MARCH 31, 2006 12,330,851 12,330,851
---------------- ----------------
293,850,420 293,850,420
---------------- ----------------
TOTAL INVESTMENTS $ 1,409,048,292 $ 2,026,316,414
================ ================
SCHEDULE II
MARSH & MCLENNAN COMPANIES STOCK INVESTMENT PLAN
SCHEDULE H, line 4j - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED JUNE 30, 2002
CURRENT NET
DESCRIPTION OF ASSET COST OF ASSETS VALUE OF ASSETS GAIN (LOSS)
-------------------- ---------------- ----------------- ------------------
TRANSACTION BY ISSUE:
BANKERS TRUST COMPANY OF NEW YORK
PYRAMID CASH TEMPORARY FUND
INVESTMENTS
297 PURCHASES $ 589,005,372 $ 589,005,372 $ -
402 SALES 533,249,030 533,249,030 -