During the fourth quarter of 2006 net income increased 5.3%, to $37,623,000, or $0.27 per share, compared with 2005 fourth quarter net income of $35,717,000, or $0.25 per share. Total revenue for the fourth quarter of 2006 was $214,650,000, a 9.0% increase over the fourth quarter 2005 revenues of $196,857,000.
Commenting on the results, J. Hyatt Brown, Chairman and Chief Executive Officer, said, "2006 was another good year for Brown & Brown. In a year with many challenges, including a lighter than normal year of completed acquisitions, our solid internal revenue growth was instrumental in raising our total revenue by nearly 12%. As a result, part of our intermediate goal, 'B-40,' of achieving one billion dollars of revenues now appears within reach and has our entire Company focused on delivering even stronger results in 2007."
Jim W. Henderson, Vice-Chairman and Chief Operating Officer, commented, "During 2006, completed acquisitions accounted for approximately $56 million in annualized revenues, with Axiom Re and Delaware Valley Underwriting Authority accounting for the majority of that amount. By the same token, just in this past week we closed three transactions: ALCOS, Inc., in Michigan, Shapiro Insurance, Inc. in Tallahassee and the Marcello Agency, Inc. in Louisiana, totaling some $23 million in annualized revenues. The acquisition opportunities continue to be robust."
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, individual, trade and professional association clients nationwide, the Company is ranked by Business Insurance magazine as the United States' sixth 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 continuing our revenue, earnings and operating growth, as well as identifying and consummating attractive 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 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, Georgia, New Jersey, New York, Pennsylvania and/or Washington, where significant portions of the Company's business are concentrated; the actual costs of resolution of contingent liabilities; those factors relevant to Brown & Brown's consummation and integration of announced acquisitions, including any matters analyzed in the due diligence process, material adverse changes in the customers of the companies whose operations are acquired, and material adverse changes in the business and financial condition of either or both companies and their respective customers; and the cost and impact on the Company of previously disclosed litigation initiated against the Company and 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 Three For the Twelve
Months Ended Months Ended
December 31 December 31
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
REVENUES
Commissions and fees $ 210,763 $ 194,046 $ 864,663 $ 775,543
Investment income 3,096 2,303 11,479 6,578
Other income, net 791 508 1,862 3,686
--------- --------- --------- ---------
Total revenues 214,650 196,857 878,004 785,807
--------- --------- --------- ---------
EXPENSES
Employee compensation and benefits 100,160 96,450 404,891 374,943
Non-cash stock-based compensation 815 977 5,416 3,337
Other operating expenses 35,887 26,862 126,492 105,622
Amortization 9,431 8,901 36,498 33,245
Depreciation 3,007 2,629 11,309 10,061
Interest 3,277 3,578 13,357 14,469
--------- --------- --------- ---------
Total expenses 152,577 139,397 597,963 541,677
--------- --------- --------- ---------
Income before income taxes 62,073 57,460 280,041 244,130
Income taxes 24,450 21,743 107,691 93,579
--------- --------- --------- ---------
Net income $ 37,623 $ 35,717 $ 172,350 $ 150,551
========= ========= ========= =========
Net income per share:
Basic $ 0.27 $ 0.26 $ 1.23 $ 1.09
========= ========= ========= =========
Diluted $ 0.27 $ 0.25 $ 1.22 $ 1.08
========= ========= ========= =========
Weighted average number of shares
outstanding:
Basic 139,969 139,126 139,634 138,563
========= ========= ========= =========
Diluted 141,227 140,443 141,020 139,776
========= ========= ========= =========
Dividends declared per share $ 0.06 $ 0.05 $ 0.21 $ 0.17
========= ========= ========= =========
Brown & Brown, Inc.
INTERNAL GROWTH SCHEDULE
Core Commissions and Fees(1)
Three Months Ended December 31, 2006
(in thousands)
(unaudited)
Total Internal
Quarter Quarter Net Less Net
Ended Ended Total Net Growth Acquisition Growth
12/31/06 12/31/05 Change % Revenues %
---------- ---------- --------- ------ ---------- ------
Florida
Retail $ 45,513 $ 39,546 $ 5,967 15.1 % $ 3 15.1 %
National
Retail 49,505 48,918 587 1.2 % 1,422 (1.7)%
Western
Retail 24,875 26,473 (1,598) (6.0)% 626 (8.4)%
---------- ---------- --------- ----------
Total
Retail 119,893 114,937 4,956 4.3 % 2,051 2.5 %
---------- ---------- --------- ----------
Professional
Programs 10,599 10,497 102 1.0 % 43 0.6 %
Special
Programs 33,302 26,735 6,567 24.6 % 2,650 14.7 %
---------- ---------- --------- ----------
Total
Programs 43,901 37,232 6,669 17.9 % 2,693 10.7 %
---------- ---------- --------- ----------
Wholesale
Brokerage 37,382 33,456 3,926 11.7 % 6,210 (6.8)%
Services 8,702 6,911 1,791 25.9 % 1,540 3.6 %
---------- ---------- --------- ----------
Total Core
Commissions
and Fees (1) $ 209,878 $ 192,536 $ 17,342 9.0 % $ 12,494 2.5 %
========== ========== ========= ====== ========== ======
Reconciliation of Internal Growth Schedule
to Total Commissions and Fees
Included in the Consolidated Statements of Income
for the Three Months Ended December 31, 2006 and 2005
(in thousands)
(unaudited)
Quarter Quarter
Ended Ended
12/31/06 12/31/05
--------- ---------
Total core commissions and fees(1) $ 209,878 $ 192,536
Contingent commissions 885 567
Divested business - 943
--------- ---------
Total commission & fees $ 210,763 $ 194,046
========= =========
(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,
2006 2005
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 88,490 $ 100,580
Restricted cash and investments 242,187 229,872
Short-term investments 2,909 2,748
Premiums, commissions and fees receivable 282,440 257,930
Other current assets 32,180 28,637
----------- -----------
Total current assets 648,206 619,767
Fixed assets, net 44,170 39,398
Goodwill 684,521 549,040
Amortizable intangible assets, net 396,069 377,907
Investments 15,826 8,421
Other assets 19,160 14,127
----------- -----------
Total assets $ 1,807,952 $ 1,608,660
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Premiums payable to insurance companies $ 435,449 $ 397,466
Premium deposits and credits due customers 33,273 34,027
Accounts payable 17,854 21,161
Accrued expenses 86,009 74,534
Current portion of long-term debt 18,082 55,630
----------- -----------
Total current liabilities 590,667 582,818
Long-term debt 226,252 214,179
Deferred income taxes, net 49,721 35,489
Other liabilities 11,967 11,830
Shareholders' equity:
Common stock, par value $0.10 per
share; authorized 280,000 shares; issued
and outstanding 140,016 at 2006 and 139,383 at
2005 14,002 13,938
Additional paid-in capital 210,543 193,313
Retained earnings 695,656 552,647
Accumulated other comprehensive income 9,144 4,446
----------- -----------
Total shareholders' equity 929,345 764,344
----------- -----------
Total liabilities and shareholders' equity $ 1,807,952 $ 1,608,660
=========== ===========
Cory T. Walker Chief Financial Officer (386) 239-7250
SOURCE: Brown & Brown, Inc.