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 Fiscal Year Ended December 31, 2002
A. Full title of the plan:
PUTNAM INVESTMENTS
PROFIT SHARING RETIREMENT PLAN
B. Name the 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
PUTNAM INVESTMENTS
PROFIT SHARING RETIREMENT PLAN
The Trustees of the plan are Francis N. Bonsignore, William L. Rosoff,
and Sandra S. Wijnberg. Mr. Bonsignore is Senior Vice President -
Executive Resources & Development of MMC. Mr. Rosoff is Senior Vice
President and General Counsel of MMC. Ms. Wijnberg is Senior Vice
President and Chief Financial Officer of MMC. Mr. William L. Rosoff has
been appointed as Plan Administrator. The business address of all the
Trustees is c/o MMC, 1166 Avenue of the Americas, New York, NY 10036.
The financial statements of the Plan are included in this Form 11-K and
consist of the statements of net assets available for plan benefits as
of December 31, 2002 and 2001, and the statements of changes in net
assets available for plan benefits for the years ended December 31, 2002
and 2001 and the report and consent of Deloitte & Touche, independent
public accountants, with respect thereto. Exhibit 99 contains the
certification pursuant to section 906 of the Sarbenes-Oxley Act of 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Trustees of Putnam Investments Profit Sharing Retirement Plan have duly
caused this annual report to be signed this 24th day of June 2003 by the
undersigned thereunto duly authorized.
PUTNAM INVESTMENTS
PROFIT SHARING RETIREMENT PLAN
By /s/ William L. Rosoff
------------------------------
William L. Rosoff
Plan Administrator
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement
Nos. 2-65096 and 333-69774 of Marsh & McLennan Companies, Inc. on Form
S-8 of our report dated May 15, 2003, appearing in this Annual Report on
Form 11-K of Putnam Investments, Inc. Profit Sharing Retirement Plan for
the year ended December 31, 2002.
/s/ DELOITTE & TOUCHE LLP
Boston, Massachusetts
June 24, 2003
Putnam Investments Profit Sharing Retirement Plan
Independent Auditors' Report
Financial Statements
Years Ended December 31, 2002 and 2001
Supplemental Schedule
As of December 31, 2002
PUTNAM INVESTMENTS
PROFIT SHARING RETIREMENT PLAN
TABLE OF CONTENTS
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Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2002
AND 2001:
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4-8
SUPPLEMENTAL SCHEDULE AS OF DECEMBER 31, 2002:
Form 5500, Schedule H, Part IV, Line 4i - Schedule of Assets
(Held at End of Year) 9-10
Schedules required under the Employee Retirement Income Security Act of
1974, other than the schedule listed above, are omitted because of the
absence of the conditions under which the schedules are required.
INDEPENDENT AUDITORS' REPORT
To the Trustees and Participants of the Putnam Investments
Profit Sharing Retirement Plan:
We have audited the accompanying statements of net assets available for
benefits of the Putnam Investments Profit Sharing Retirement Plan (the
"Plan") as of December 31, 2002 and 2001, and the related statements of
changes in net assets available for benefits for the years then ended.
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, the net assets available for benefits of the Plan as
of December 31, 2002 and 2001 and the changes in net assets available
for benefits for the years then ended 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 schedule
listed in the Table of Contents is presented for the purpose of
additional analysis and is not a required part of the basic 2002
financial statements but is 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. This
schedule is the responsibility of the Plan's management. Such schedule
has been subjected to the auditing procedures applied in our audit of
the basic 2002 financial statements and, in our opinion, is fairly
stated in all material respects when considered in relation to the basic
2002 financial statements taken as a whole.
May 15, 2003
PUTNAM INVESTMENTS
PROFIT SHARING RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2002 AND 2001
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2002 2001
ASSETS:
Investments, at fair value $328,262,466 $366,524,461
Participant loans 8,517,015 7,638,873
------------ ------------
Total investments 336,779,481 374,163,334
Employer contributions receivable 35,378,223 31,396,568
Participant contributions receivable 1,412,410 1,452,163
------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $373,570,114 $407,012,065
============ ============
See notes to financial statements.
PUTNAM INVESTMENTS
PROFIT SHARING RETIREMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2002 AND 2001
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2002 2001
ADDITIONS - Contributions:
Employer $35,378,223 $31,396,568
Participants 21,043,559 21,176,634
------------ ------------
Total additions 56,421,782 52,573,202
------------ ------------
DEDUCTIONS:
Investment activity:
Net depreciation in fair value of investments (69,687,720) (83,021,151)
Dividend income 4,848,731 7,846,905
Interest income 1,576,064 1,650,557
------------ ------------
Investment activity, net (63,262,925) (73,523,689)
Benefits paid to participants (26,600,808) (19,699,786)
------------ ------------
Total deductions (89,863,733) (93,223,475)
------------ ------------
NET DECREASE (33,441,951) (40,650,273)
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 407,012,065 447,662,338
------------ ------------
End of year $373,570,114 $407,012,065
============ ============
See notes to financial statements.
PUTNAM INVESTMENTS
PROFIT SHARING RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
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1. DESCRIPTION OF THE PLAN
The following description of the Putnam Investments Profit Sharing
Retirement Plan (the "Plan") is provided for general information
purposes only. Participants should refer to the Plan document for a
more complete description of the Plan's provisions.
General -- The Plan is a defined contribution plan sponsored by Putnam
Investments LLC ("Putnam") and its subsidiaries (the "Company"). Putnam
is a wholly owned subsidiary of Putnam Investments Trust, which is
ultimately a majority-owned subsidiary of Marsh & McLennan Companies,
Inc. ("MMC"). The Plan is for the benefit of the Company's employees
and is intended to qualify as a profit-sharing plan under Section 401(a)
of the Internal Revenue Code (the "Code") and to constitute a qualified
cash or deferred arrangement under Section 401(k) of the Code. The Plan
document was amended and restated January 1, 2001 to comply with the
applicable provisions of tax acts referred to as GUST. The Plan is
subject to the provisions of the Employee Retirement Income Security Act
of 1974 ("ERISA").
Investment Programs -- The Plan allows each participant to elect to have
employer contributions and reallocated forfeitures invested in one or
more of the following authorized investment vehicles:
(1) Any one or a combination of the open-end management investment
companies, excluding tax-exempt income funds, for which a subsidiary of
Putnam acts as an investment adviser ("Putnam-sponsored mutual funds").
(2) Prior to January 1997, any one or a combination of contracts with
insurance companies which guarantee principal and interest at a fixed
rate. Subsequent to January 1997, guaranteed investment contract
products are offered through the investment in the Putnam Fiduciary
Trust Company Stable Value Fund.
(3) MMC common stock (MMC is the parent company of Putnam).
(4) Other investment options approved by the Board of Directors of
Putnam, the trustees of the Plan (the "Trustees"), and the chief
executive officer of MMC. There were no investments in this option at
December 31, 2002 or 2001.
Employer contributions and forfeitures must generally be allocated with
apportionments to be no less than 1% per investment.
Participants may also elect to have their voluntary contributions
invested in any one or more of the authorized investments noted above in
(1), (2), (3), and (4), with apportionments to be at least 1% to any one
investment.
With proper notification, participants may elect to change their
investment in either their participation or voluntary accounts up to
once a day.
1. DESCRIPTION OF THE PLAN (CONTINUED)
Contributions -- Employer contributions are determined at the discretion
of the Company's Board of Directors. Contributions may not exceed the
amount permitted as a deduction under the applicable provisions of the
Code. During the years ended December 31, 2002 and 2001, the Company
contributed 15% of eligible compensation.
It is the intention of the Trustees that the salary deferral portion of
the Plan be qualified under Section 401(k) of the Code. The terms of
the salary savings agreement provide that the participants' earnings
contribution to the Plan will be deducted from their payroll and that
the employer shall contribute this amount to the Plan on behalf of the
participants. Unless otherwise directed by the employee, all new
employees contribute 3% of their total earnings to the salary-deferred
portion of the Plan. Investments into the various investment vehicles
are at the discretion of the individual participant. The market value
of assets relating to the salary savings program at December 31, 2002
and 2001 was $83,898,552 and $87,723,830, respectively.
Voluntary employee contributions are accepted within certain limits as
defined in the Plan. Participants making contributions are not allowed
to withdraw any appreciation on such contributions before termination of
employment but may withdraw their contributions subject to certain
restrictions.
Forfeitures -- Forfeitures of invested employer contributions are used to
reduce future employer contributions one year after the fiscal year in
which the forfeitures occur. Reduction of employer contributions
amounted to $1,644,468 and $2,063,646 in 2002 and 2001, respectively,
for forfeitures that occurred in 2001 and 2000, respectively.
Participant Accounts -- Individual accounts are maintained for each
participant. The Plan provides that the market value of investments in
participant accounts shall be determined each business day. The change
in unrealized appreciation or depreciation, investment income received,
and realized gains or losses on investments sold or distributed are
allocated to participants' accounts based on each participant's
proportionate interest in the investment.
Employer contributions are allocated annually based on a uniform
percentage of eligible earnings per participant.
An employee is eligible to become a participant under the profit-sharing
portion of the Plan upon the completion of 12 months of service. An
employee is eligible to become a participant in the salary-deferral
portion of the Plan upon commencement of employment. A participant must
be employed on the last day of the Plan's fiscal year (December 31) to
be eligible for his or her portion of the employer's contribution for
that year.
Vesting -- The vesting of participants, other than voluntary and rollover
contributions, is as follows:
Vested Interest
Years of continuous service:
Less than two None
Two but less than three 25%
Three but less than four 50%
Four but less than five 75%
Five or more 100%
If a participant reaches age 59?, dies, or becomes disabled 100%
Participants are automatically fully vested in their voluntary and
rollover contributions.
1. DESCRIPTION OF THE PLAN (CONTINUED)
Payment of Benefits -- Distributions are based on the vested portion of
the participant's account valuation as of the liquidation date
coinciding with or following the next valuation date after the
individual ceases to be a participant. Upon participant request, such
distributions are made within a reasonable period after the individual
ceases to be a participant, but not later than 60 days after the close
of the fiscal year. The Plan generally allows terminated participants
to maintain their accounts in the Plan, but such accounts do not share
in contributions and forfeiture reallocations. The value of these
accounts will continue to be determined each business day.
Participant Loans -- Upon the approval of the Retirement Savings Plan
Committee, appointed by the Plan administrator, participants of the Plan
may borrow from their accounts, to alleviate financial need as defined
by the Plan, an amount which, when added to all other loans to the
participant, would not exceed the lesser of (1) a maximum borrowing
limit of $50,000 or (2) 50% of the vested balance of the participant's
account. All loans shall be secured by the participant's account and
will be repaid through payroll deductions according to a fixed repayment
schedule which includes interest at a rate equal to the prime rate at
the time the loan originated. Loans outstanding at December 31, 2002
and 2001 were $8,517,015 and $7,638,873, respectively.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Method of Accounting -- The accompanying financial statements of the Plan
have been prepared on the accrual basis of accounting in accordance with
accounting principles generally accepted in the United States of
America. Certain prior-year amounts have been reclassified to conform
to the current-year presentation.
Investment Valuation and Income Recognition -- The Plan's investments are
stated at fair value except for its benefit-responsive investment
contracts, which are valued at contract value. Quoted market prices are
used to value investments. Shares of mutual funds are valued at the net
asset value of shares held by the Plan at year end. Investment
transactions are recorded on the trade-date basis. Dividend income is
recorded on the ex-dividend date. Interest income is recorded as
earned.
Administrative Expenses - Expenses of the Plan have been paid by the
Company, but such payment is at the Company's discretion.
Benefits -- Benefits to participants are recorded when paid.
Estimates -- The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires the Plan's 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
financial statements.
3. INVESTMENTS
Investments that represent 5% or more of the Plan's net assets available
for benefits at December 31 are as follows:
2002 2001
Putnam Money Market Fund $39,943,548 $34,440,344
Putnam Voyager Fund 23,553,525 31,339,685
Putnam New Opportunities Fund 20,576,944 30,586,516
The Putnam Fund for Growth and Income 20,326,365 24,783,555
Putnam Stable Value Fund 23,355,227 --
Putnam International Growth Fund 18,711,029 --
During the years ended December 31, 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:
2002 2001
Investments at fair value, based on quoted
market prices:
Putnam-sponsored mutual funds $(67,748,445) $(81,886,859)
MMC common stock, 323,311 and 123,997
shares, respectively (1,939,275) (1,134,292)
------------- ------------
Total $(69,687,720) $(83,021,151)
============= ============
4. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of
Plan termination, participants will become 100% vested in their
accounts.
5. SUBSEQUENT DISTRIBUTIONS
At December 31, 2002 and 2001, amounts allocated to accounts of persons
who have elected to withdraw from the Plan but have not yet been paid
were $1,017,871 and $1,094,182, respectively. These amounts by
investment type are as follows:
Source 2002 2001
Mutual funds $900,652 $1,018,951
Stable Value Fund -- guaranteed investment products 85,159 40,829
MMC common stock* 32,060 34,402
------------- ------------
Total $1,017,871 $1,094,182
============= ============
*Putnam and MMC are parties-in-interest to the Plan.
6. TAX STATUS OF THE PLAN
The Plan obtained its latest determination letter on December 6, 2002 in
which the Internal Revenue Service stated that the Plan, as then
designed, was in compliance with the applicable requirements of the
Code. The Plan administrator believes that the Plan is currently
designed and being operated in compliance with the applicable
requirements of the Code. Accordingly, no provision for income taxes
has been included in the Plan's financial statements.
7. RELATED-PARTY TRANSACTIONS
Certain Plan investments are shares of Putnam-sponsored mutual funds.
Putnam is the Plan sponsor as defined by the Plan, and therefore, these
transactions qualify as party-in-interest transactions. Fees paid by
the Plan for investment management services were included as a reduction
of the return earned on each fund.
At December 31, 2002 and 2001, the Plan held 323,311 and 123,997 shares,
respectively, of common stock of MMC, the parent company of the
sponsoring employer, with a cost basis of $13,243,193 and $9,179,810,
respectively, and with the fair value of $14,940,179 and $13,323,470,
respectively. During the years ended December 31, 2002 and 2001, the
Plan recorded dividend income of $310,734 and $254,568, respectively.
* * * * * *
PUTNAM INVESTMENTS
PROFIT SHARING RETIREMENT PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4i -- SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2002
---------------------------------------------------------------------------------------------------------------------------
(c) Description of (e) Current
(a) Shares (b) Identity of Issue Investment (d) Cost ** Value
MUTUAL FUNDS AND COLLECTIVE TRUSTS:
* 39,943,544 Putnam Money Market Fund Registered Investment Company $39,943,548
* 1,804,868 Putnam Voyager Fund Registered Investment Company 23,553,525
* 23,355,227 Putnam Stable Value Fund Collective Trust 23,355,227
* 705,173 Putnam New Opportunities Fund Registered Investment Company 20,576,944
* 1,435,478 The Putnam Fund for Growth and Income Registered Investment Company 20,326,365
* 1,132,629 Putnam International Growth Fund Registered Investment Company 18,711,029
* 929,988 The George Putnam Fund of Boston Registered Investment Company 13,791,720
* 1,616,402 Putnam Vista Fund Registered Investment Company 10,005,526
* 834,869 Putnam Small Cap Value Fund Registered Investment Company 9,375,579
* 1,677,425 Putnam OTC Emerging Growth Fund Registered Investment Company 8,672,289
* 170,604 Putnam Health Sciences Trust Registered Investment Company 8,596,725
* 909,301 Putnam Investors Fund Registered Investment Company 8,101,875
* 953,384 Putnam International New Opportunities Fund Registered Investment Company 7,455,464
* 1,225,788 Putnam Global Equity Fund Registered Investment Company 7,428,275
* 528,497 Putnam International Voyager Trust Registered Investment Company 7,340,824
* 588,355 Putnam Voyager Fund II Registered Investment Company 7,172,047
* 481,617 Putnam New Value Fund Registered Investment Company 5,750,512
* 522,124 Putnam Growth Opportunities Registered Investment Company 5,482,308
* 783,176 Putnam High Yield Trust Registered Investment Company 5,388,253
* 415,485 Putnam Equity Income Trust Registered Investment Company 5,243,419
* 456,886 Putnam Research Fund Registered Investment Company 4,737,904
* 701,866 Putnam Income Fund Registered Investment Company 4,716,542
* 589,149 Putnam Capital Opportunities Fund Registered Investment Company 4,524,667
* 448,781 Putnam Mid Cap Value Fund Registered Investment Company 4,254,448
* 426,012 Putnam American Gov't Income Trust Registered Investment Company 3,868,193
* 277,310 Putnam Capital Appreciation Fund Registered Investment Company 3,560,662
* 343,024 Putnam Classic Equity Fund Registered Investment Company 3,275,878
* 254,973 Putnam Global Income Trust Registered Investment Company 3,031,634
* 216,142 Putnam Convertible Income-Growth Trust Registered Investment Company 2,792,554
* 528,871 Putnam High Yield Advantage Trust Registered Investment Company 2,755,416
(Continued)
PUTNAM INVESTMENTS
PROFIT SHARING RETIREMENT PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2002
---------------------------------------------------------------------------------------------------------------------------
(c) Description of (e) Current
(a) Shares (b) Identity of Issue Investment (d) Cost ** Value
* 191,993 Putnam Europe Growth Fund Registered Investment Company $2,657,180
* 304,450 Putnam Asset Allocation Fund: Balanced Registered Investment Company 2,548,250
* 190,832 Putnam U.S. Government Income Trust Registered Investment Company 2,524,708
* 283,150 Putnam Asset Allocation Fund: Growth Registered Investment Company 2,256,708
* 209,261 Putnam Diversified Income Trust Registered Investment Company 1,912,642
* 237,105 Putnam International Growth & Income Fund Registered Investment Company 1,728,492
* 99,447 Putnam Global Natural Resources Fund Registered Investment Company 1,614,022
* 310,039 Putnam Intermediate U.S. Governement Income Fund Registered Investment Company 1,612,202
* 134,802 Putnam Asset Allocation Fund: Conservative Registered Investment Company 1,070,328
* 70,197 Putnam Small Cap Growth Fund Registered Investment Company 880,270
* 102,989 Putnam Utilities Growth and Income Fund Registered Investment Company 728,133
------------
Total Mutual Funds and Collective Trust 313,322,287
* 323,311 Marsh & McLennan Companies, Inc. Common Stock 14,940,179
* Participants Participant loans -
Various maturities from
2003 and 2013 at interest
rates ranging from
4.75% to 12.375% 8,517,015
------------
TOTAL INVESTMENTS $336,779,481
============
* Permitted party-in-interest. (Concluded)
(Note -- The Putnam mutual funds are sponsored by Putnam Investments Trust, a party-in-interest
to the Plan.)
** Cost information is not required for participant-directed investments and is therefore not included.