UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 12, 2004
BROWN & BROWN, INC.
(Exact name of registrant as specified in its charter)
| Florida | 0-7201 | 59-0864469 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
220 South Ridgewood Avenue, Florida 32114
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (386) 252-9601
N/A
(Former name or former address, if changed since last report)
Item 12. Results of Operations and Financial Condition.
On July 12, 2004, Brown & Brown, Inc. issued a press release announcing its results of operations for the second quarter ended June 30, 2004. A copy of the press release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.
The information furnished herewith pursuant to Item 12 of this Current Report shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BROWN & BROWN, INC. (Registrant) | ||
| By: | /s/ CORY T. WALKER | |
| Cory T. Walker, Chief Financial Officer | ||
Date: July 12, 2004
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Exhibit 99.1
[LOGO OF BROWN & BROWN]
| News Release | ||
| Cory T. Walker | ||
| July 12, 2004 |
Chief Financial Officer | |
| (386) 239-7250 |
BROWN & BROWN, INC.
SECOND QUARTER RESULTS AGAIN SET RECORD LEVELS
FOR REVENUES AND INCOME
(Daytona Beach and Tampa, Florida) . . . Brown & Brown, Inc. (NYSE:BRO) announced net income for the second quarter of 2004 of $32,153,000, or $0.46 per share, an increase of 15.1% over the $27,935,000, or $0.41 per share, reported for the quarter ended June 30, 2003. Total revenue for the quarter ended June 30, 2004 was $157,942,000 compared with 2003 second-quarter revenue of $137,858,000 an increase of 14.6%.
Total revenue for the six months ended June 30, 2004 was $323,507,000, compared with first-half 2003 revenue of $282,594,000, up 14.5%. Net income for the first six months of 2004 was $68,501,000 versus $58,471,000 during the same period in 2003, an increase of 17.2%. Net income per share for the six months ended June 30, 2004 was $0.99, versus the $0.85 per share posted during the comparable 2003 period, an increase of 16.5%.
J. Hyatt Brown, Chairman and CEO, commenting on the results said, “We are very pleased with our second quarter results. The internal growth rate of 5.1% exceeded our expectations, particularly in view of continued rate erosion; which was possibly offset by increases in exposure units. Brown & Brown’s high quality sustained growth continues to be recognized by investors as our market capitalization recently crossed the $3 billion level.”
President and Chief Operating Officer, Jim W. Henderson added, “We continue our steady march to our intermediate goal of B-40. We have been assisted in this march by the addition of many fine, high quality, insurance agencies that have joined our team during the second quarter of 2004. Since April 1, 2004, we have completed ten acquisitions with estimated annual revenues of $38 million, bringing the total for the year to 21 with $86 million of estimated annual revenues. Among those most recently joining us is The McDuffee Insurance Agency, which represented our initial entry into New Hampshire and Massachusetts. We continue to be quite pleased with the active pipeline of high-quality agencies.”
Brown & Brown, Inc. and its subsidiaries offer a broad range of insurance and reinsurance products and services, as well as risk management, employee benefit
administration, and managed health care 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. Our Web address is www.bbinsurance.com.
This press release may contain certain statements relating to future results which are forward-looking statements. These statements are not historical facts, but instead represent only the Company’s 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 and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Further information concerning the Company and its business, including factors that potentially could materially affect the Company’s financial results, 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 Arizona, California, Florida, New Jersey, New York and/or Washington, where significant portions of the Company’s business are concentrated; the actual costs of resolution of contingent liabilities; and 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. All forward-looking statements included in this press release are made only as of the date of this press release, and we do not undertake any obligation to publicly update or correct any forward-looking statements to reflect events or circumstances that subsequently occur or of which we hereafter become aware.
Brown & Brown, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
| For the Three Months Ended |
For the Six Months Ended | |||||||||||
| June 30 |
June 30 | |||||||||||
| 2004 |
2003 |
2004 |
2003 | |||||||||
| REVENUES |
||||||||||||
| Commissions and fees |
$ | 156,749 | $ | 137,257 | $ | 321,063 | $ | 281,509 | ||||
| Investment income |
333 | 442 | 1,021 | 775 | ||||||||
| Other income, net |
860 | 159 | 1,423 | 310 | ||||||||
| Total revenues |
157,942 | 137,858 | 323,507 | 282,594 | ||||||||
| EXPENSES |
||||||||||||
| Employee compensation and benefits |
76,270 | 66,092 | 152,552 | 134,333 | ||||||||
| Non-cash stock grant compensation |
665 | 632 | 1,510 | 1,449 | ||||||||
| Other operating expenses |
19,983 | 19,229 | 41,379 | 38,635 | ||||||||
| Amortization |
5,483 | 4,416 | 10,300 | 8,753 | ||||||||
| Depreciation |
2,269 | 2,019 | 4,423 | 3,946 | ||||||||
| Interest |
743 | 946 | 1,454 | 1,953 | ||||||||
| Total expenses |
105,413 | 93,334 | 211,618 | 189,069 | ||||||||
| Income before income taxes |
52,529 | 44,524 | 111,889 | 93,525 | ||||||||
| Income taxes |
20,376 | 16,589 | 43,388 | 35,054 | ||||||||
| Net income |
$ | 32,153 | $ | 27,935 | $ | 68,501 | $ | 58,471 | ||||
| Net income per share: |
||||||||||||
| Basic |
$ | 0.47 | $ | 0.41 | $ | 1.00 | $ | 0.86 | ||||
| Diluted |
$ | 0.46 | $ | 0.41 | $ | 0.99 | $ | 0.85 | ||||
| Weighted average number of shares outstanding: |
||||||||||||
| Basic |
68,790 | 68,270 | 68,736 | 68,222 | ||||||||
| Diluted |
69,370 | 68,943 | 69,283 | 68,927 | ||||||||
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Brown & Brown, Inc.
INTERNAL GROWTH SCHEDULE
Core Commissions and Fees(1)
Three Months Ended June 30, 2004
(in thousands)
(unaudited)
| Quarter Ended 6/30/04 |
Quarter Ended 6/30/03 |
Total Net Change |
Total Net Growth % |
Less Acquisition Revenues |
Internal Net Growth % |
|||||||||||||
| Florida Retail |
$ | 36,032 | $ | 34,762 | $ | 1,270 | 3.7 | % | $ | — | 3.7 | % | ||||||
| National Retail |
47,508 | 33,673 | 13,835 | 41.1 | % | 13,815 | 0.1 | % | ||||||||||
| Western Retail |
29,146 | 24,212 | 4,934 | 20.4 | % | 2,581 | 9.7 | % | ||||||||||
| Total Retail |
112,686 | 92,647 | 20,039 | 21.6 | % | 16,396 | 3.9 | % | ||||||||||
| Professional Programs |
10,087 | 8,885 | 1,202 | 13.5 | % | 849 | 4.0 | % | ||||||||||
| Special Programs |
14,659 | 9,540 | 5,119 | 53.7 | % | 4,997 | 1.3 | % | ||||||||||
| Total Programs |
24,746 | 18,425 | 6,321 | 34.3 | % | 5,846 | 2.6 | % | ||||||||||
| Brokerage |
8,270 | 6,351 | 1,919 | 30.2 | % | 895 | 16.1 | % | ||||||||||
| TPA Services |
6,086 | 4,952 | 1,134 | 22.9 | % | — | 22.9 | % | ||||||||||
| Total Core Commissions and Fees (1) |
$ | 151,788 | $ | 122,375 | $ | 29,413 | 24.0 | % | $ | 23,137 | 5.1 | % | ||||||
Reconciliation of Internal Growth Schedule
to Total Commissions and Fees
Included in the Consolidated Statements of Income
for the Three Months Ended June 30, 2004 and 2003
(in thousands)
(unaudited)
| Quarter Ended 6/30/04 |
Quarter Ended 6/30/03 | |||||
| Total core commissions and fees(1) |
$ | 151,788 | $ | 122,375 | ||
| Contingent commissions |
3,522 | 10,202 | ||||
| Divested business |
1,439 | 4,680 | ||||
| Total Commission & Fees |
$ | 156,749 | $ | 137,257 | ||
| (1) | Total core commissions and fees are our total commissions and fees less (i) 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). |
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Brown & Brown, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
| June 30, 2004 |
December 31, 2003 | |||||
| ASSETS |
||||||
| Current assets: |
||||||
| Cash and cash equivalents |
$ | 36,384 | $ | 56,926 | ||
| Restricted cash |
133,194 | 116,543 | ||||
| Short-term investments |
386 | 382 | ||||
| Premiums, commissions and fees receivable |
146,669 | 146,672 | ||||
| Other current assets |
17,833 | 22,943 | ||||
| Total current assets |
334,466 | 343,466 | ||||
| Fixed assets, net |
32,990 | 32,396 | ||||
| Goodwill, net |
300,732 | 237,753 | ||||
| Amortizable intangible assets, net |
308,361 | 232,934 | ||||
| Investments |
10,353 | 10,845 | ||||
| Other assets |
7,197 | 8,460 | ||||
| Total assets |
$ | 994,099 | $ | 865,854 | ||
| LIABILITIES |
||||||
| Current liabilities: |
||||||
| Premiums payable to insurance companies |
$ | 216,788 | $ | 199,628 | ||
| Premium deposits and credits due customers |
23,769 | 22,223 | ||||
| Accounts payable |
20,163 | 11,282 | ||||
| Accrued expenses |
38,474 | 49,691 | ||||
| Current portion of long-term debt |
68,455 | 18,692 | ||||
| Total current liabilities |
367,649 | 301,516 | ||||
| Long-term debt |
34,313 | 41,107 | ||||
| Deferred income taxes, net |
17,176 | 15,018 | ||||
| Other liabilities |
9,063 | 10,178 | ||||
| SHAREHOLDERS’ EQUITY |
||||||
| Common stock, par value $0.10 per share; authorized 280,000 shares; |
6,881 | 6,856 | ||||
| Additional paid-in capital |
178,577 | 170,130 | ||||
| Retained earnings |
375,695 | 316,822 | ||||
| Accumulated other comprehensive income |
4,745 | 4,227 | ||||
| Total shareholders’ equity |
565,898 | 498,035 | ||||
| Total liabilities and shareholders’ equity |
$ | 994,099 | $ | 865,854 | ||
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