Net income for the fourth quarter of 2008 was $33,373,000, or $0.24 per share, compared with $33,004,000, or $0.23 per share for the same quarter of 2007, an increase of 4.3% in net income per share. Total revenues for the fourth quarter ended December 31, 2008 were $232,090,000, compared with the 2007 fourth-quarter revenues of $217,226,000.
Total revenues for the year ended December 31, 2008 were $977,554,000, compared with the total revenues for the year ended December 31, 2007 of $959,667,000. Excluding the non-recurring gain of $18,664,000 on the sale of shares of Rock-Tenn Company in 2007, total revenues in 2008 increased 3.9% over the adjusted total revenues in 2007 of $941,003,000. Net income for the year ended December 31, 2008 was $166,124,000, or $1.17 per share, compared with $190,959,000, or $1.35 per share for 2007. Excluding the non-recurring gain of $18,664,000 on the sale of shares of Rock-Tenn Company in 2007, the adjusted net income for 2007 was $179,291,000 compared to net income in 2008 of $166,124,000.
J. Hyatt Brown, Chairman and Chief Executive Officer, noted, "We continue to traverse rough seas and deliver industry-leading margins, in addition to tolerable (at this time) top-line growth. As we cross the current economic valley, we have increased our budget to bring in new quality people in order to continue our relentless pursuit of top-line and bottom-line growth."
Jim W. Henderson, Vice Chairman and Chief Operating Officer, added, "In the fourth quarter of 2008 we acquired 15 agencies, representing $24.1 million in estimated annualized revenues. For the 2008 calendar year, we acquired 45 agencies with estimated annualized revenues of $115.4 million -- our best year ever in terms of number of transactions. Looking into 2009, the acquisition landscape appears to be robust. In this period of economic stress, it is very important to be selective about your acquisition partners in order to ensure the sustainability of an acquisition's revenues and earnings."
Brown & Brown, Inc. and its subsidiaries offer a broad range of insurance and reinsurance products and services, as well as risk management, third party administration, managed health care, and Medicare set-aside services and programs. Providing service to business, public entity, quasi-public entity, individual, trade and professional association clients nationwide, the Company is ranked by Business Insurance magazine as the United States' seventh largest independent insurance intermediary. The Company's Web address is www.bbinsurance.com.
This press release may contain certain statements relating to future results which are forward-looking statements, including those relating to future financial results and to acquisition opportunities. These statements are not historical facts, but instead represent only the Company's current belief regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company's control. It is possible that the Company's actual results, financial condition and achievements may differ, possibly materially, from the anticipated results, financial condition and achievements contemplated by these forward-looking statements. Further information concerning the Company and its business, including factors that potentially could materially affect the Company's financial results and condition, as well as its other achievements, are contained in the Company's filings with the Securities and Exchange Commission. Some factors include: general economic conditions around the country; downward commercial property and casualty premium pressures; the effects of recent legislative and regulatory changes in Florida pertaining to the insurance industry, including those relating to coastal property coverages; the competitive environment; the integration of the Company's operations with those of businesses or assets the Company has acquired or may acquire in the future and the failure to realize the expected benefits of such integration; the potential occurrence of a disaster that affects certain areas of the States of California, Florida, Michigan, New Jersey, New York, Pennsylvania, Texas and/or Washington, where significant portions of the Company's business are concentrated; and the cost and impact on the Company of previously disclosed regulatory inquiries regarding industry and Company practices with respect to compensation received from insurance carriers. All forward-looking statements made herein are made only as of the date of this release, and the Company does not undertake any obligation to publicly update or correct any forward-looking statements to reflect events or circumstances that subsequently occur or of which the Company hereafter becomes aware.
Brown & Brown, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
For the For the
Three Months Twelve Months
Ended Ended
December 31 December 31
------------------- -------------------
2008 2007 2008 2007
--------- --------- --------- ---------
REVENUES
Commissions and fees $ 229,854 $ 213,194 $ 965,983 $ 914,650
Investment income 943 2,639 6,079 30,494
Other income, net 1,293 1,393 5,492 14,523
--------- --------- --------- ---------
Total revenues 232,090 217,226 977,554 959,667
--------- --------- --------- ---------
EXPENSES
Employee compensation and benefits 121,910 110,164 485,783 444,101
Non-cash stock-based compensation 1,751 1,340 7,314 5,667
Other operating expenses 35,359 34,962 137,352 131,371
Amortization 11,842 10,638 46,631 40,436
Depreciation 3,357 3,271 13,286 12,763
Interest 3,645 3,357 14,690 13,802
--------- --------- --------- ---------
Total expenses 177,864 163,732 705,056 648,140
--------- --------- --------- ---------
Income before income taxes 54,226 53,494 272,498 311,527
Income taxes 20,853 20,490 106,374 120,568
--------- --------- --------- ---------
Net income $ 33,373 $ 33,004 $ 166,124 $ 190,959
========= ========= ========= =========
Net income per share:
Basic $ 0.24 $ 0.23 $ 1.18 $ 1.36
========= ========= ========= =========
Diluted $ 0.24 $ 0.23 $ 1.17 $ 1.35
========= ========= ========= =========
Weighted average number of shares
outstanding:
Basic 141,463 140,701 140,992 140,476
========= ========= ========= =========
Diluted 141,939 141,355 141,558 141,257
========= ========= ========= =========
Dividends declared per share $ 0.075 $ 0.07 $ 0.285 $ 0.25
========= ========= ========= =========
Brown & Brown, Inc.
INTERNAL GROWTH SCHEDULE
Core Commissions and Fees(1)
Three Months Ended December 31, 2008
(in thousands)
(unaudited)
Less
Quarter Quarter Total Total Acquisi- Internal Internal
Ended Ended Net Net tion Net Net
12/31/08 12/31/07 Change Growth Revenues Growth $ Growth %
-------- -------- ------- ----- -------- ------- ------
Florida
Retail $ 41,048 $ 40,907 $ 141 0.3 % $ 4,122 $(3,981) (9.7)%
National
Retail 72,786 61,511 11,275 18.3 % 13,300 (2,025) (3.3)%
Western
Retail 24,722 21,158 3,564 16.8 % 5,999 (2,435) (11.5)%
-------- -------- ------- -------- -------
Total
Retail 138,556 123,576 14,980 12.1 % 23,421 (8,441) (6.8)%
-------- -------- ------- -------- -------
Wholesale
Brokerage 32,156 34,826 (2,670) (7.7)% 2,088 (4,758) (13.7)%
Professional
Programs 12,020 11,467 553 4.8 % - 553 4.8 %
Special
Programs 33,887 31,253 2,634 8.4 % 186 2,448 7.8 %
-------- -------- ------- -------- -------
Total
National
Programs 45,907 42,720 3,187 7.5 % 186 3,001 7.0 %
-------- -------- ------- -------- -------
Services 8,305 7,977 328 4.1 % - 328 4.1 %
-------- -------- ------- -------- -------
Total Core
Commissions
and Fees (1) $224,924 $209,099 $15,825 7.6 % $ 25,695 $(9,870) (4.7)%
======== ======== ======= ======== =======
Reconciliation of Internal Growth Schedule
to Total Commissions and Fees
Included in the Consolidated Statements of Income
for the Three Months Ended December 31, 2008 and 2007
(in thousands)
(unaudited)
Quarter Quarter
Ended Ended
12/31/08 12/31/07
---------- ----------
Total core commissions and fees(1) $ 224,924 $ 209,099
Contingent commissions 4,930 1,945
Divested business - 2,150
---------- ----------
Total commission & fees $ 229,854 $ 213,194
========== ==========
(1) Total core commissions and fees are our total commissions and fees
less (i) profit-sharing contingent commissions (revenue derived from
special revenue-sharing commissions from insurance companies based
upon the volume and the growth and/or profitability of the business
placed with such companies during the prior year), and (ii) divested
business (commissions and fees generated from offices, books of
business or niches sold by the Company or terminated).
Brown & Brown, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
December 31, December 31,
2008 2007
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 78,557 $ 38,234
Restricted cash and investments 144,750 254,404
Short-term investments 7,511 2,892
Premiums, commissions and fees receivable 244,515 240,680
Deferred income taxes 14,171 17,208
Other current assets 33,528 33,964
------------ ------------
Total current assets 523,032 587,382
Fixed assets, net 63,520 62,327
Goodwill 1,023,372 846,433
Amortizable intangible assets, net 495,627 443,224
Other assets 14,029 21,293
------------ ------------
Total assets $ 2,119,580 $ 1,960,659
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Premiums payable to insurance companies $ 357,707 $ 394,034
Premium deposits and credits due customers 43,577 41,211
Accounts payable 18,872 18,760
Accrued expenses 96,325 90,599
Current portion of long-term debt 6,162 11,519
------------ ------------
Total current liabilities 522,643 556,123
Long-term debt 253,616 227,707
Deferred income taxes, net 90,143 65,736
Other liabilities 11,437 13,635
Shareholders' equity:
Common stock, par value $0.10 per share;
authorized 280,000 shares; issued and
outstanding 141,544 at 2008 and 140,673
at 2007 14,154 14,067
Additional paid-in capital 250,167 231,888
Retained earnings 977,407 851,490
Accumulated other comprehensive income 13 13
------------ ------------
Total shareholders' equity 1,241,741 1,097,458
------------ ------------
Total liabilities and shareholders' equity $ 2,119,580 $ 1,960,659
============ ============
Contact:
Cory T. Walker
Chief Financial Officer
(386) 239-7250
SOURCE: Brown & Brown, Inc.