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): February 10, 2005

 

BROWN & BROWN, INC.

(Exact name of registrant as specified in its charter)

 

Florida

0-7201

59-0864469

(State or other jurisdiction

(Commission File Number)

(IRS Employer

of incorporation)

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)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Item 2.02

Results of Operations and Financial Condition.

 

On February 10, 2005, Brown & Brown, Inc. issued a press release announcing its results of operations for the fourth quarter and 2004 year-end results.  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 2.02 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, 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: February 10, 2005

   

                                                                                                                          

 

  

News Release

 

    

Cory T. Walker

February 10, 2005

 

Chief Financial Officer

  

 

(386) 239-7250

BROWN & BROWN, INC.

2004 RESULTS SET RECORD LEVELS

FOR REVENUES AND INCOME

 

(Daytona Beach and Tampa, Florida) . . . Brown & Brown, Inc. (NYSE: BRO) today announced record earnings for 2004, the twelfth consecutive year the Company has hit record highs in both revenues and net income.  Net income for 2004 rose to $128,843,000, or $1.86 per share, an increase of 16.3% in per share earnings over the $110,322,000, or $1.60 per share earned in 2003. Total revenues for the year rose to $646,934,000, up 17.4% compared with the $551,040,000 attained in 2003.

 

During the fourth quarter of 2004, net income increased to $30,256,000, or $0.43 per share, compared with 2003 fourth quarter net income of $25,800,000, or $0.37 per share, a 16.2% increase. Total revenue for the fourth quarter of 2004 was $163,046,000, a 20.9% increase over 2003 fourth quarter revenues of $134,901,000.

 

J. Hyatt Brown, Chairman and Chief Executive Officer, said of the results, "Our outstanding record of earnings per share growth of 15% or more continues for the twelfth straight year, thanks primarily to the remarkable men and women who have adopted the Brown & Brown culture as their own.  Just as we achieved our last interim goal, "Project 28," we continue to aggressively pursue our current intermediate goal of achieving over the coming years "B-40," that is, $1 billion in revenue and a 40% operating margin (pre-tax income with interest and amortization expense added back).  We feel quite comfortable in our ability to continue growing and rewarding those who elect to grow with us."

 

Jim W. Henderson, President and Chief Operating Officer, noted, "During 2004 and carrying right into the new year, we have been favored by the exceptional caliber of organizations seeking to join the Brown & Brown team. The results that we continue to produce are proof of the win-win culture we achieve with acquisitions. Looking forward, we continue to see a large number of extremely fine potential new opportunities. 2004 also signaled a higher level of success in the recruitment and hiring of new future leaders. Many of them are expected to be successful graduates of our own Brown & Brown Insurance University."

 

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, 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’ eighth 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, including those relating to continuing our revenue, earnings and operating growth, and to 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 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 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 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; those factors relevant to Brown & Brown's identification,  consummation and integration of 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 pending litigation and regulatory inquiries regarding industry and Company practices with respect to compensation received from insurance carriers, certain of which practices are currently under review by a committee of independent members of the Company’s Board of Directors. 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. 

# # # # #

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Brown & Brown, Inc.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(unaudited)

For the

For the

Three Months Ended

Twelve Months Ended

December 31

December 31

2004  

2003  

2004   

2003   

REVENUES

Commissions and fees

$158,352

$131,632

$638,267

$545,287

Investment income

1,108

344

2,715

1,428

Other income, net

     3,586

     2,925

     5,952

      4,325

    Total revenues

  163,046

  134,901

  646,934

  551,040

EXPENSES

Employee compensation and benefits

82,220

67,157

314,221

268,372

Non-cash stock grant compensation

741

448

2,625

2,272

Other operating expenses

21,506

18,503

84,927

74,617

Amortization

6,069

4,508

22,146

17,470

Depreciation

2,249

2,141

8,910

8,203

Interest

     3,457

        813

     7,156

      3,624

     Total expenses

  116,242

   93,570

  439,985

  374,558

Income before income taxes

46,804

41,331

206,949

176,482

Income taxes

   16,548

   15,531

    78,106

    66,160

Net income

$ 30,256

$ 25,800

$128,843

$110,322

======

======

=======

=======

Net income per share:

  Basic

$0.44

$0.38

$1.87

$1.61

====

====

====

====

  Diluted

$0.43

$0.37

$1.86

$1.60

====

====

====

====

Weighted average number of shares

   Outstanding:

  Basic

69,152

68,532

68,909

68,327

=====

=====

=====

=====

  Diluted

69,687

68,964

69,444

68,897

=====

=====

=====

=====

Dividends declared per share:

$0.08

$0.07

$0.29

$0.2425

====

====

====

======

 

-3-

Brown & Brown, Inc.

INTERNAL GROWTH SCHEDULE

Core Commissions and Fees(1)

Three Months Ended December 31, 2004

  (in thousands)

(unaudited)

 

Quarter

Quarter

Total

Total

Less

Internal

Ended

Ended

Net

Net

Acquisition

Net

12/31/04

12/31/03

Change

Growth %

Revenues

Growth %

Florida Retail

$  35,242

$  31,973

$  3,269

10.2%

$    574

8.4%

National Retail

45,765

30,244

15,521

51.3%

  14,382

3.8%

Western Retail

    24,960

   23,926

    1,034

  4.3%

   1,940

(3.8)%

     Total Retail

  105,967

   86,143

  19,824

23.0%

  16,896

3.4%

  

Professional Programs

11,095

9,571

1,524

15.9%

       650

9.1%

Special Programs

    22,466

   16,927

    5,539

32.7%

    4,640

5.3%

     Total Programs

    33,561

   26,498

    7,063

26.7%

    5,290

6.7%

  

Brokerage

12,108

7,307

4,801

65.7%

    3,304

20.5%

 

TPA Services

      6,348

     5,608

       740

13.2%

           -

13.2%

 

Total Core Commissions

    and Fees (1)

$157,984

$125,556

$32,428

25.8%

$25,490

5.5%

=======

=======

======

=====

======

====

Reconciliation of Internal Growth Schedule

to Total Commissions and Fees

Included in the Consolidated Statements of Income

for the Three Months Ended December 31, 2004 and 2003

(in thousands)

(unaudited)

 

 

Quarter

Quarter

 

 

Ended

Ended

 

 

12/31/04

12/31/03

 

 

Total core commissions and fees(1)

 

$157,984      

$125,556      

Contingent commissions

 

368      

2,957      

Divested business

 

             -      

     3,119      

 

Total Commission & Fees

 

$158,352      

$131,632      

 

=======     

=======     

(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).

-4-

           

Brown & Brown, Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

December 31,

  

December 31,

2004        

2003         

ASSETS

Current assets:

  Cash and cash equivalents

$   188,106   

$  56,926   

  Restricted cash

147,483   

116,543   

  Short-term investments

3,163   

382   

  Premiums, commissions and fees receivable

173,416   

146,672   

  Other current assets

       28,819   

   22,943   

    Total current assets

540,987   

343,466   

Fixed assets, net

33,438   

32,396   

Goodwill

360,843   

237,753   

Amortizable intangible assets, net

293,009   

232,934   

Investments

9,328   

10,845   

Other assets

       12,933   

      8,460   

    Total assets

$1,250,538   

$865,854   

========   

=======   

LIABILITIES

Current liabilities:

    Premiums payable to insurance companies

$   240,867   

$199,628   

  Premium deposits and credits due customers

34,841   

22,223   

  Accounts payable

16,257   

11,282   

  Accrued expenses

58,031   

49,691   

  Current portion of long-term debt

       16,135   

    18,692   

    Total current liabilities

366,131   

301,516   

Long-term debt

227,063   

41,107   

Deferred income taxes, net

24,859   

15,018   

Other liabilities

8,160   

10,178   

SHAREHOLDERS’ EQUITY

Common stock, par value $0.10 per share;

  authorized 280,000 shares;  issued and

  outstanding, 69,159 at 2004 and 68,561 at 2003

6,916   

6,856   

Additional paid-in capital

187,280   

170,130   

Retained earnings

425,662   

316,822   

Accumulated other comprehensive income

         4,467   

        4,227   

    Total shareholders’ equity

     624,325   

  498,035   

Total liabilities and shareholders’ equity

$1,250,538   

$865,854   

========   

=======   

-5-