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SECURITIES AND EXCHANGE COMMISSION

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

 






Date of Report (Date of earliest event reported):  January 3, 2001




 





BROWN & BROWN, INC.

(Exact name of registrant as specified in its charter)




 





FLORIDA

(State or other jurisdiction 

of incorporation)



0-7201

(Commission 

File Number)



59-0864469

(IRS Employer 

Identification No.)















220 S. Ridgewood Avenue, Daytona Beach, Florida

(Address of principal executive offices)



32114

(Zip Code)














Registrant's telephone number, including area code: (386) 252-9601




 





N/A


(Former name or former address, if changed since last report)














	On January 18, 2001, the Registrant filed a report on Form 8-K with respect to the acquisition of certain assets of Riedman Corporation (the "Original Form 8-K Filing").  At that time it was impracticable to provide the financial
statements and pro forma information required to be filed therewith relative to the acquired assets, and the Registrant stated in such Form 8-K that it intended to file the required financial statements and pro-forma financial information as soon as
practicable, but no later than 60 days from the date of that filing. By this amendment to such Form 8-K, the Registrant is amending and restating Item 7 thereof to include the required financial statements and pro forma financial information. 













ITEM 7.



FINANCIAL STATEMENTS AND EXHIBITS.




 
 
 



 


(a)



Financial Statements of Business Acquired.




 
 
 



 
 


The audited financial statements of Riedman Insurance (a division of Riedman Corporation) for the year ended December 31, 2000 are filed as Exhibit 99.1 to the Original Form 8-K Filing and are being filed herewith.




 
 
 



 


(b)



Pro Forma Financial Information.




 
 
 



 
 


The Registrant hereby files the pro forma financial data required to be filed herewith as Exhibit 99.2 hereto.




 
 
 



 


(c)



Exhibits.












EXHIBIT



DESCRIPTION




 
 





10(a)



Asset Purchase Agreement, dated September 11, 2000, among the Company, Riedman Corporation and Riedman Corporation's shareholders, incorporated by reference to the Company's Quarterly Report on Form 10-Q dated November 13, 2000 (File
No. 0-7201).




 
 





10(b)



First Amendment to Asset Purchase Agreement, dated January 3, 2001, among the Company, Riedman Corporation and Riedman's Corporation's shareholders.* 




 
 





10(c)



General Assignment and Bill of Sale, dated January 1, 2001, from Riedman Insurance of Wyoming, Inc. to Brown & Brown of Wyoming, Inc.*




 
 





23



Consent of KPMG LLP.




 
 





99(a)



Audited Financial Statements of Riedman Insurance: 




 


-



Independent Auditors' Report




 


-



Statement of Income of the year ended December 31, 2000




 


-



Balance sheet as of December 31, 2000




 


-



Statement of Stockholders' Equity for the year ended December 31, 2000




 


-



Statement of Cash Flows for the year ended December 31, 2000




 


-



Notes to Financial Statements




 
 





99(b)



Unaudited Pro Forma Condensed Combined Financial Statements.




 





*previously filed.




 





The Registrant has determined since filing the Original 8-K Filing that the foregoing constitute all of the required exhibits in connection with the acquisition.









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.






 


BROWN & BROWN, INC.




 


(Registrant)




 
 



 
 





Date:  March 19, 2001



By: /S/  CORY T. WALKER			




 


Cory T. Walker, Vice President,




 


Chief Financial Officer and 


Treasurer




 


(Signature)








 


 






EXHIBIT INDEX




 





BROWN & BROWN, INC.




 





Current Report on Amended Form 8-K






Dated March 19, 2001




 
 





EXHIBIT



DESCRIPTION




 
 





10(a)



Asset Purchase Agreement, dated September 11, 2000, among the Company, Riedman Corporation and Riedman Corporation's shareholders, incorporated by reference to the Company's Quarterly Report on Form 10-Q dated November 13, 2000 (File
No. 0-7201).




 
 





10(b)



First Amendment to Asset Purchase Agreement, dated January 3, 2001, among the Company, Riedman Corporation and Riedman's Corporation's shareholders.* 




 
 





10(c)



General Assignment and Bill of Sale, dated January 1, 2001, from Riedman Insurance of Wyoming, Inc. to Brown & Brown of Wyoming, Inc.*




 
 





23



Consent of KPMG LLP.




 
 





99(a)



Audited Financial Statements of Riedman Insurance: 




 


-



Independent Auditors' Report




 


-



Statement of Income of the year ended December 31, 2000




 


-



Balance sheet as of December 31, 2000




 


-



Statement of Stockholders' Equity for the year ended December 31, 2000




 


-



Statement of Cash Flows for the year ended December 31, 2000




 


-



Notes to Financial Statements




 
 





99(b)



Unaudited Pro Forma Condensed Combined Financial Statements.




 





*previously filed.




 












EXHIBIT 23









/S/ KPMG LLP






March 16, 2001






Rochester, New York















RIEDMAN INSURANCE




EXHIBIT 99(a)






The Stockholders and Board of Directors






Riedman Corporation:




 





We have audited the accompanying balance sheet of Riedman Insurance (a division of Riedman Corporation) as of December 31, 2000 and the related statements of income, stockholders' equity and cash flows for the year then
ended.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audit.




 





We conducted our audit 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 audit provides a reasonable basis for our opinion.




 





In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Riedman Insurance as of December 31, 2000 and the results of its operations and its cash flows
for the year then ended in conformity with accounting principles generally accepted in the United States of America.











/S/ KPMG LLP











February 23, 2001








 


 






RIEDMAN INSURANCE






(A division of Riedman Corporation)




























Balance Sheet
























December 31, 2000
























Assets




























Current assets:













Securities available for sale, at fair value (cost of $8,666,022)



$



43,053,795    







Accounts receivable, less allowance for doubtful accounts of $250,000





11,770,957    







Prepaid expenses and other 





2,986,845    









 





















Total current assets





57,811,597    
























Property, equipment and leasehold improvements:











Land











37,204    







Buildings and improvements





478,652    







Leasehold improvements





388,866    







Furniture, fixtures and equipment





11,607,235    





































12,511,957    







Less accumulated depreciation and amortization





9,339,419    





























Net property, equipment and leasehold improvements





3,172,538    
























Other assets:















Investment in net assets of commercial real estate division





18,451,150    







Notes receivable from non-consolidated subsidiary





4,060,000    







Investment in Daniel Green Company





1,356,900    







Insurance expirations, at cost, less accumulated amortization of $6,960,079 





10,071,740    







Goodwill, at cost, less accumulated amortization of $487,504 





845,074    





























Total other assets





34,784,864    



































$



95,768,999    













Liabilities and Stockholders' Equity




























Current liabilities:











Short-term notes payable to banks



$



28,400,000    







Current installments of long-term debt





43,723    







Current installments of records and expirations debt





837,576    







Trade accounts payable





13,034,680    







Accrued expenses





3,778,380    





























Total current liabilities





46,094,359    
























Long-term debt, excluding current installments





163,051    






Long-term records and expirations debt, excluding current installments





2,645,684    





























Total liabilities





48,903,094    
























Commitments and contingencies (notes 5, 9 and 12)




























Stockholders' equity:











Voting common stock, $2 par value per share.  Authorized: 10,000  













shares; 9,310 shares issued and 9,065 shares outstanding





18,620    







Class A non-voting common stock, $2 par value per share.  Authorized:   













50,000 shares; 46,650 shares issued and 45,825 













shares outstanding





93,300    







Additional paid-in capital





1,154,052    







Retained earnings





11,359,048    







Accumulated other comprehensive income - net unrealized













 gain on securities available for sale





34,387,773    





































47,012,793    







Less treasury stock of 245 voting common shares and 825













Class A non-voting common shares, at cost





(146,888)   





























Total stockholders' equity





46,865,905    



































$



95,768,999    








 


 






RIEDMAN INSURANCE






(A division of Riedman Corporation)


























Statement of Income






















Year ended December 31, 2000


























































Commissions and fees



$



54,070,340    






Employee compensation and benefits





(35,664,036)   






Other operating expenses





(12,465,012)   






Depreciation expense





(1,451,226)   






Amortization expense





(1,649,649)   

























Operating income





2,840,417    






















Other income (expense):











Investment income





1,129,622    







Gain on sale of securities 





1,286,632    







Interest expense





(1,987,783)   







Gain on lawsuit settlement





637,500    







Miscellaneous, net





30,580    

































1,096,551    

























Income before income taxes





3,936,968    






















Income tax expense





130,358    

























Net income



$



3,806,610    






















Pro forma data:















Income before income taxes





3,936,968    







Pro forma provision for income tax expense (unaudited)





1,532,588    

























Pro forma net income (unaudited)



$



2,404,380    






































See accompanying notes to financial statements.




























 


 






RIEDMAN INSURANCE






(A division of Riedman Corporation)






































































Statement of Stockholders' Equity










































Year ended December 31, 2000 

































































Accumulated





































other





































comprehensive





































income -net

























Class A













unrealized gain





















Voting





non-voting





Additional









on securities





Treasury





Total













Common





common





paid-in





Retained





available





stock, at





stockholders'













Stock





stock





capital





earnings





for sale





cost





equity














































































Balances at December 31, 1999



$



18,620    





93,300    





1,154,052    





12,163,198    





28,946,854    





(146,888)   





42,229,136    










































Comprehensive income:



































Net income





-    





-    





-    





3,806,610    





-    





-    





3,806,610    







Change in net unrealized gain on





































securities available for sale





-    





-    





-    





-    





6,727,551    





-    





6,727,551    







Less:  reclassification adjustment





































for gains included in net income





-    





-    





-    





-    





(1,286,632)   





-    





(1,286,632)   













































Total comprehensive income





























9,247,529    










































Distributions to stockholders,



































$84 per share





-    





-    





-    





(4,610,760)   





-    





-    





(4,610,760)   










































Balances at December 31, 2000



$



18,620    





93,300    





1,154,052    





11,359,048    





34,387,773    





(146,888)   





46,865,905    














































































See accompanying notes to financial statements.



































 






RIEDMAN INSURANCE






(A division of Riedman Corporation)
































Statement of Cash Flows




























Year ended December 31, 2000 








































































Cash flows from operating activities:











Net income









$



3,806,610    







Adjustments to reconcile net income to net













cash provided by operating activities:















Depreciation and amortization





3,100,875    











Net realized gain on sale of securities





(1,286,632)   











Changes in assets and liabilities:

















Accounts receivable





(5,802,248)   













Prepaid expenses and other current assets





(997,727)   













Trade accounts payable





4,383,540    













Accrued expenses





1,450,727    





































Net cash provided by operating activities





4,655,145    




























Cash flows from investing activities:











Purchases of securities available for sale





(793)   







Proceeds from sale of securities available for sale





19,102,660    







Decrease in investment in net assets of commercial real estate division





974,038    







Collection on notes receivable





550,184    







Issuance of notes receivable





(710,000)   







Capital expenditures





(199,387)   







Purchase of insurance agencies





(1,072,346)   





































Net cash provided by investing activities





18,644,356    




























Cash flows from financing activities:











Net decrease in short-term notes payable to banks





(18,600,000)   







Repayment of long-term debt 





(1,230,580)   







Distributions to stockholders





(4,610,760)   





































Net cash used in financing activities





(24,441,340)   




























Net decrease in cash and cash equivalents





(1,141,839)   




























Cash and cash equivalents at beginning of year





1,141,839    




























Cash and cash equivalents at end of year



$



-    




























Supplemental disclosures of cash flow information:











Cash paid during the year for:













Interest









$



1,900,438    









Income taxes









124,205    




























Supplemental disclosure of noncash investing and financing activities:











The Company purchased insurance agencies in 2000 for $940,000.  The Company partially funded  









these acquisitions through future long-term debt obligations in the amount of $238,654.


















































See accompanying notes to financial statements.













RIEDMAN INSURANCE


(A division of Riedman Corporation)




Notes to Financial Statements




December 31, 2000




 


 




(1)	Description of the Company and Summary of Significant Accounting Policies




(a)	Description of the Company and Basis of Presentation




Riedman Corporation (the Company) is an insurance agency that markets and sells primarily property and casualty and life and health insurance with insurers on behalf of individual and commercial clients in a variety of industries.  The
Company operates a network of insurance agencies with offices in 13 states.  The Company has its principal executive offices in Rochester, New York and is engaged in the insurance agency business in New York and throughout the United States.  In addition
to its insurance division, the Company operates a commercial real estate division and acts as a third party administrator through a majority-owned subsidiary.  




The shareholders of the Company signed an Asset Purchase Agreement with Brown & Brown Inc. (Purchaser) dated September 11, 2000 to sell to the Purchaser substantially all of the Company's insurance agency business-related assets,
as identified in the Agreement.  The transaction was consummated on January 3, 2001.  The sale price will generally be determined as a multiple of insurance revenue for a period before and after the closing date.




These financial statements reflect the accounts of the Company's insurance division (the Division) as reflected in its books and records.  The Division's financial statements do not include the Company's commercial real estate business
or its investment in a third-party administrator subsidiary.  Neither of these excluded businesses has been sold to the Purchaser.  The Division's balance sheet at December 31, 2000 does include, however, certain assets which are not being acquired by the
Purchaser.  Such assets include securities available for sale, accounts receivable, investments and notes receivable from non-consolidated subsidiary.




These financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America.  In preparing these financial statements, management is required to make a number of estimates
and assumptions relating to the reporting of assets, liabilities, revenues and expenditures and the disclosure of contingent assets and liabilities.  Actual results could differ from those estimates.




(b)	Revenue Recognition




Commissions earned on agency-billed accounts are recorded at the later of the effective date of insurance coverage or the billing date.  Adjustments to commissions earned, including policy cancellations, are recorded when effective.
Commissions earned on accounts billed directly by insurance companies, as well as adjustments thereon, are recorded when received.  Contingent commissions are recorded when received.







RIEDMAN INSURANCE


(A division of Riedman Corporation)




Notes to Financial Statements




December 31, 2000




 


 





(c)	Cash and Cash Equivalents




The Division considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.




(d)	Securities




All of the Division's securities are classified as available for sale and are recorded at fair value, with unrealized holding gains and losses excluded from earnings and reported as a separate component of stockholders' equity until
realized. Realized gains and losses from the sale of securities are recognized on the trade date and determined using the average cost method.




A decline in the fair value of any available for sale security below cost that is deemed other than temporary results in a charge to earnings and a new cost basis for the security.  Dividend and interest income are recognized when earned
 .




(e)	Property, Equipment and Leasehold Improvements




Property, equipment and leasehold improvements are stated at cost and are depreciated or amortized over the shorter of their estimated useful lives or the lease term.  Useful lives range between 3 and 7 years.




(f)	Investments



The Company's 28% investment in the common stock of the Daniel Green Company, a publicly-traded footwear company, is accounted for under the equity method of accounting and is considered a Division asset.  The Division's
investment balance approximates its share of the investee's equity.  The market value of this investment at December 31, 2000 is $1,953,000.




The Division, from time to time, has advanced monies and other assets to the Company's commercial real estate division.  The net impact of these intracompany transactions are reflected at cost and reported as an investment in the net
assets of the real estate division.




(g)	Insurance Expirations, Covenants Not to Compete and Goodwill




The cost of purchased insurance expirations is being amortized over the estimated ten-year period of benefit on a straight-line basis.







Covenants not to compete are expensed over the terms of the underlying agreements on a straight-line basis, which range from five to ten years.  




RIEDMAN INSURANCE


(A division of Riedman Corporation)




Notes to Financial Statements




December 31, 2000




 


 





Goodwill represents the excess of the purchase price of acquired insurance agencies over the fair value of the acquired tangible and intangible assets less liabilities assumed.  Goodwill is amortized on a straight-line basis over 15
years.  




The Division evaluates any possible impairment of these intangible assets using estimates of undiscounted future cash flows.




(h)	Income Taxes




The Company has elected, under Internal Revenue Code Section 1362(a) and New York State Law Chapter 606, Laws of 1984 (Subchapter S), exemptions from Federal and state income taxes at the corporate level.  New York State and other
states in which the Company operates impose franchise taxes at the corporate level in addition to the taxes imposed at the shareholder level.  Such taxes have been reflected in the Division's financial statements as applicable.




(i)	Pro Forma Data




The unaudited pro forma data presented in the statement of income reflects the effects of income taxes as if the Division had been a fully taxable entity for the period presented.




(j)	Advertising




Advertising costs are expensed as incurred and included within selling, general and administrative expenses.  Total advertising expenses were $423,410 for the year ended December 31, 2000.




 



(2)	Securities




The Division's available for sale securities portfolio is comprised of readily marketable common stocks.  The net unrealized gain of $34,387,773 at December 31, 2000 includes gross unrealized gains and losses of $36,149,064 and
($1,761,291), respectively.




On October 12, 1999, the Riedman Corporation entered into an agreement with the Penobscot Shoe Company to acquire all of the issued and outstanding stock of Penobscot for a total purchase price $16.3 million.  The purchase of Penobscot
by Riedman was of a temporary nature as the original intent was to sell Penobscot to the Daniel Green Company, an entity owned 28% by the Company.  




 




RIEDMAN INSURANCE


(A division of Riedman Corporation)




Notes to Financial Statements




December 31, 2000




 


 




On February 10, 2000, the Riedman Corporation entered into an agreement with the Daniel Green Company to sell its entire interest in the Penobscot Shoe Company for a total sales price of $17.8 million.  The sale was
closed on March 31, 2000 with a realized gain on the sale of the stock of $644,091 reported in gain on sale of securities for 2000.  As a result of the Company's 28% interest in Daniel Green, a proportionate amount of the gain has been excluded from
income in preparation of the Division's financial statements.




 


(3)	Short-Term Notes Payable to Banks



The following is a summary of short-term notes payable to banks as of December 31, 2000:







Demand note payable bearing interest at the lower


	of the bank's prime rate less 2% or LIBOR 


	plus 1% (7.5% at December 31, 2000).  	$ 	13,400,000	




Revolving line of credit bearing interest at the lower


	of prime rate less 2% or LIBOR plus 1% (7.5%


	at December 31, 2000) and maturing July 29, 2001.		15,000,000	




					$ 	28,400,000	 







The collateral for the above secured revolving lines of credit consists of marketable investment securities with a fair value of $26,709,318 at December 31, 2000.



 


(4)	Long-Term Debt




The following is a summary of long-term debt as of December 31, 2000:







Unsecured noninterest-bearing note payable 


	with monthly principal payments of 


	$2,960 due August 2005.	$ 	165,763	




Unsecured note payable with annual principal


	payments of $8,202 plus interest at 8.5%,


	due September 2005.		41,011	




						206,774


		Less current installments		(43,723)	




			Long-term debt, excluding


				current installments	$ 	163,051	









RIEDMAN INSURANCE


(A division of Riedman Corporation)




Notes to Financial Statements




December 31, 2000




 


 




Maturities of long-term debt for each of the five years subsequent to December 31, 2000 are as follows:  2001 through 2004, $43,723 and 2005, $31,882.




 


(5)	Covenants Not To Compete




At December 31, 2000, the Division is committed for payments under covenants not to compete in connection with the acquisition of certain assets of other insurance agencies as follows:







2001				$ 	2,681,968


2002					2,166,522


2003					1,670,524


2004					1,249,022


2005					934,737


Thereafter				893,750	




					$ 	9,596,523	 






Because future payments for covenants not to compete are contingent upon the sellers fulfilling certain terms and conditions, these intangible assets and corresponding obligations are not recorded by the Division at the
time of the acquisitions.  Such payments amounted to $2,180,881 in 2000.




At December 31, 2000, covenant payments in excess of the straight-line recognition of covenant expenses of $2,843,100 were included in prepaid expenses and other current assets.  Covenant expenses in excess of cash payments of $551,001
was included in accrued interest, commissions and other expenses on the balance sheet.




 


(6)	Long-Term Records and Expirations Debt




Periodically, the Division acquires certain insurance agencies for their records and insurance expirations.  The purchases are typically funded through cash and debt payable to the sellers.  The long-term records and expirations debt
at December 31, 2000 is $3,483,260 which includes current installments of $837,576.




The payment terms are based upon the various agreements entered into by the Division at the time of acquisition.  The agreements have a stated interest rate of 8.0%.  Generally, the payments extend out 10 years, which is the average
useful life of the expiration lists.




 




RIEDMAN INSURANCE


(A division of Riedman Corporation)




Notes to Financial Statements




December 31, 2000




 


 




At December 31, 2000, the Division is committed for principal payments under these agreements as follows:







2001				$ 	837,576


2002					796,736


2003					735,027


2004					799,614


2005					169,383	


Thereafter				144,924	




					$ 	3,483,260	 




 





(7)	Profit Sharing and Incentive Savings Plan




The Company has a defined contribution plan covering all full-time employees who have met length of service requirements.  Annual contributions to the plan are at the discretion of the Board of Directors.  Division
contributions were $1,347,020 in 2000.  



The Company also sponsors a 401(k) plan covering all full-time employees who have met length of service requirements.  Participants are permitted to make voluntary contributions to the plan up to 10% of their
compensation.  The Division matches a portion of participant contributions based upon a formula defined in the plan.  Division contributions to the plan amounted to $355,878 in 2000.  




 


(8)	Income Taxes




The Company is subject to state franchise tax as a Subchapter S corporation.  Tax expense amounted to $130,358 for 2000 has been reflected in the Division's financial statements. 




 


(9)	Operating Leases




The Division leases various office sites under lease agreements having an original life of greater than one year.  The future minimum lease payments are as follows:







2001				$ 	1,650,737


2002					941,864


2003					552,466


2004					180,009


2005 and thereafter		31,591	




					$ 	3,356,667	 







Rental expense under these agreements amounted to $2,807,050 in 2000.






RIEDMAN INSURANCE


(A division of Riedman Corporation)




Notes to Financial Statements




December 31, 2000




 


 




(10)	Acquisitions



The Division periodically acquires insurance agencies which includes substantially all of the business assets of the entities acquired.  The acquisitions are accounted for under the purchase method of accounting, and
accordingly, the operating results have been included in the Division's financial statements from the date of acquisition.




During 2000, the Division acquired the assets of five insurance agencies for $940,000.  The Division recorded fixed assets of $98,500, insurance expirations of $799,000 and goodwill of $42,500 in connection with these acquisitions.
The Division is committed to make payments under covenants not to compete associated with these acquisitions of approximately $2,520,000.




In one of these insurance agency acquisitions, the asset purchase agreement provides for contingent consideration based on a percentage of the agency and direct bill commission generated by the business acquired through April 30, 2001.
 Payments under this agreement of $371,000 were made in 2000.




 


(11)	Related Party Transactions



During 2000 Riedman Insurance leased office space from the Company at a cost of $253,200.  The remaining lease term was assumed by the Purchaser.




Notes receivable of $4,060,000 at December 31, 2000 are due from the Company's non-consolidated subsidiary.




 


(12)	Risks and Uncertainties



The Company is currently a defendant in two related claims regarding the validity and timing of excess insurance coverage for a customer that experienced loss due to a fire.  In the first claim, the plaintiff alleges that
Riedman and the underwriter of an insurance policy owe additional amounts from loss of business income and punitive damages.  In the second claim the underwriter is the plaintiff and claims that a Riedman employee inappropriately documented the excess
coverage.  Riedman vigorously denies the claim and the St. Paul Insurance Company is providing the defense for Riedman.  No determination has been made in any of the claims.  Management believes the outcome will not have a material adverse effect on the
financial statements.



 


 


 









EXHIBIT 99




EXHIBIT 99.2



UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS	



The following unaudited pro forma condensed combined statements of income for the year ended December 31, 2000 and the unaudited pro forma condensed combined balance sheet as of December 31, 2000 give effect to the acquisition of
agency-related assets of Riedman Insurance.  The purchase method of accounting has been applied to the transaction.  The pro forma statements of income assume the acquisition occurred on January 1, 2000 and the pro forma balance sheet assumes the
transaction occurred on December 31, 2000.




The unaudited pro forma statement of income does not include potential cost savings that may be realized as a result of the acquisition.




The unaudited pro forma condensed combined financial statements have been prepared by the Registrant based upon the assumptions disclosed in the notes to the pro forma condensed combined financial statements.  The unaudited pro forma
financial statements presented herein are shown for illustrative purposes only and do not purport to be indicative of the results which would have been reported if the transaction had occurred on the dates indicated or which may occur in the future.  The
unaudited pro forma condensed combined financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Registrant's Annual Report on Form 10-K for the year ended December 31, 2000 and the
Riedman Insurance financial statements included in Exhibits 99.1 of this Form 8-K.



 


 






BROWN & BROWN, INC.






PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME






FOR THE YEAR ENDED DECEMBER 31, 2000 (UNAUDITED)






(In thousands, except per share figures)









	 






 


Brown &


Brown, Inc.



Riedman


Insurance



Pro forma


Adjustments



Pro forma


Combined






REVENUES



 

 
 
 





  Commissions and fees



204,862



54,070



            0



258,932






  Investment income



    3,890



  2,416



A-(2,416)


B-



    3,890







  Other income



       954



     668



A-   (668)



       954






    Total revenues



209,706



57,155



    (3,084)



263,776




 
 
 
 
 





EXPENSES

 
 
 
 





  Employee compensation and benefits



108,258



35,664



            0



143,922






  Other operating expenses



  33,724



12,465



            0



  46,189






  Depreciation



    4,637



  1,451



A-(1,451)


C-



    4,637






  Amortization



    8,519



  1,650



A-(1,650)


C-



    8,519






  Interest



      


       590



  


  1,988



A-(1,988)


D-           



      


       590






     Total expenses



155,728



53,218



    (5,089)



203,857




 
 
 
 
 





  Income before income taxes



  53,978



  3,937



      2,004



  59,919






  Income taxes



  20,792



     130



             0



  20,922




 
 
 
 
 





  Net income



  33,186



  3,807



      2,004



  38,997




 
 
 
 
 





Basic and diluted earnings per share



     1.16



    0.13



       0.07



      1.36




 
 
 
 
 





Weighted average number of common and common equivalent shares outstanding




 28,663




28,663




   28,663




  28,663














See accompanying notes to pro forma condensed combined financial statements.




 





A - Elimination of non-insurance related income, investment income, depreciation,






       Amortization and interest expense.






B - Interest income earned on commissions and fees.






C - Amortization and depreciation of acquired Riedman assets.








 


 


 


 






BROWN & BROWN, INC.






PRO FORMA CONDENSED COMBINED BALANCE SHEET






AS OF ENDED DECEMBER 31, 2000 (UNAUDITED)






(In thousands of dollars)







 




 


Brown & Brown, Inc.



Riedman


Insurance



Pro forma


Adjustments



Pro forma


Combined






ASSETS



 

 
 
 





Cash and cash equivalent



 $ 57,610



$        0



B-$ 90,000


C-


D-



 $147,610






Short-term investments



        373



  43,054



A-(43,054)



          373






Premiums, commissions and fees receivable 



   83,199



  11,771



A-(11,771)



     83,199






Other current assets



     7,576



    2,987



A-  (2,987)



       7,576






    Total current assets



 148,758



  57,812



      32,188



   238,758






Fixed assets, net



   14,210



    3,173



A-  (3,173)


C-



     14,210






Due from commercial real estate division



           0



  18,451



A-(18,451)



              0






Notes receivable from non-consolidated subsidiary



           0



   4,060



A-  (4,060)



              0






Intangibles, net



101,901



 10,917



A-(10,917)


C-



   101,901






Investments



    5,572



   1,357



A-  (1,357)



       5,752






Deferred income taxes



       649

 


              0



          649






Other assets



    5,449



          0



              0



       5,449






  Total assets



$276,719



$95,769



$    (5,769)



$ 366,719






LIABILITIES

 
 
 
 





Premiums payable to insurance companies



109,417



 13,035



A-(13,035)



   109,417






Premium deposits and credits due customers



    8,347



          0



0



       8,347






Accounts payable and accrued expenses



  24,101



   3,778



A-  (3,778)



     24,101






Short-term notes payable to banks



           0



 28,400



A-(28,400)



             0






Current installments of records and expirations debt



           0



      838



A-     (838)


D-



             0






Current portion of long-term debt



     


     2,611



     


       44



A-  12,813


B-                        



    


   15,468






  Total current liabilities



 144,476



46,094



    (33,237)



 157,333






Long-term records and expirations debt 



     2,736



  2,646



A-  (2,646)


C-



     2,736






Long-term debt



           0



     163



A-(76,980)


B-



   77,143






Other liabilities



    7,596

 


               0



     7,596






  Total liabilities



154,808



48,903



      41,097



 244,808






SHAREHOLDERS' EQUITY

 
 
 
 





Common stock, par value $.10 per share; authorized


  70,000 shares; issued 28,699 shares at 2000 and


  28,412 shares at 1999



   



   2,870




 


      19




 


A-       (19)




 


     2,870






Class A non-voting common stock $2 par value per share.   




         0




      93




A-       (93)




 






Additional paid-in capital



           -



  1,154



A-  (1,154)



           0






Retained earnings



116,546



11,359



A-(11,359)



116,546






Less treasury stock of 245 shares at cost



           0



   (147)



A-      147

 





Accumulated other comprehensive income



    2,495



34,388



A-(34,388)



    2,495






  Total shareholders' equity



121,911



46,866



    (46,866)



121,911






  Total liabilities and shareholders' equity



276,719



95,769



      (5,769)



366,719






See accompanying notes to pro forma condensed combined financial statements.










 






A - Elimination of assets not acquired from Riedman.






B - Borrowing of Term Loan






C - Purchase of Riedman's Insurance agency-related assets.






D - Assumption of certain Riedman's debt obligations.










 




 





NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS




 





A description of the adjustments reflected in the pro forma condensed combined financial statements follows:






(a)



Certain amounts included in the Riedman Insurance ("Riedman") statements of income and balance sheet have been reclassified to conform with the Registrant's financial statement presentation.




 
 





(b)



To reflect the incremental estimated annual goodwill amortization charge associated with the acquisition of Riedman (the "acquisition").  Goodwill is estimated at $_______ million and is being amortized over a twenty-year period.





 
 





(c)



To record the additional annual interest expense associated with the estimated $_______million of incremental debt that is expected to be incurred by the Registrant as a result of the acquisition.  The assumed interest rate of _____
represents the weighted average interest rate of the expected incremental debt based on prevailing rates.  The actual interest rate may vary from the assumed rate.  The annual effect on pretax income of a one-eighth percent variance in this rate is $_____
million.




 
 





(d)



To record the tax effect of the pro forma adjustments related to the additional annual interest expense.  The assumed tax rate of 38.5% represents the federal and state tax benefit on the estimated incremental interest expense.




 
 





(e)



Certain amounts included in the Riedman balance sheet have been reclassified to conform with the Registrant's financial statement presentation.




 
 





(f)



The Registrant's management is in the preliminary stages of identifying the impact of purchase related matters, principally related to severance, duplicative real estate, and adjustments of asset and liability balances to fair values.
The preliminary estimate of these purchase related matters of $_____ million and the related income tax benefit of $______ million, which may differ from the final resolution of such items, are not included in the pro forma financial statements.




 
 





(g)



Represents the excess of the $______ million acquisition consideration over the $_____ million acquired net assets of Riedman.  The Registrant's management is in the process of, but has not completed, identifying intangibles or fair
values of assets acquired and liabilities assumed.  Since there are no known adjustments at this time, the fair values of assets and liabilities are assumed to be the carrying values on the Riedman balance sheet and the excess of the acquisition
consideration over the acquired net assets has been allocated to goodwill.  The preliminary purchase price allocation to the underlying assets and liabilities of Riedman, including goodwill, is subject to further refinement as the Registrant's management
continues to review the estimated fair values of the assets acquired and the liabilities assumed.  The final purchase price allocation could be materially different from this preliminary allocation.




 
 





(h)



To record the elimination of $_____ million of Riedman stockholders' equity.











 




 




 








F:\ADMIN\SEC\8K\8K_A\EX99_2.doc