| 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 3, 2014 | ||
| BROWN & BROWN, INC. | ||
| (Exact name of registrant as specified in its charter) | ||
| Florida | 001-13619 | 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 3, 2014, Brown & Brown, Inc. issued a press release announcing its results of operations for the fourth quarter and 2013 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, including Exhibit 99.1, 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. | |
| Item 9.01. Financial Statements and Exhibits. | |
| (d) Exhibits | |
| The following exhibit is furnished herewith: | |
| Exhibit No. Description | |
| 99.1 Press Release dated February 3, 2014. | |
| 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. |
|
By:__________________________________ |
| Cory Walker |
| Sr. Vice President, Treasurer and |
| Chief Financial Officer |
| Date: February 3, 2014 |
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News Release
February 3, 2014
Cory T. Walker
Chief Financial Officer
(386) 239-7250
BROWN & BROWN, INC. ANNOUNCES
COMPANY RECORD FOURTH-QUARTER EARNINGS OF $47.2 MILLION AND 2013 NET INCOME GROWTH OF 18.0%
(Daytona Beach and Tampa, Florida) . . . Brown & Brown, Inc. (NYSE:BRO) today announced its preliminary, unaudited financial results for the fourth quarter of 2013.
Net income for the fourth quarter of 2013 was $47,225,000, or $0.32 per share, compared with $42,637,000, or $0.29 per share for the same quarter of 2012, an increase of 10.8%. Total revenue for the fourth quarter was $343,165,000, compared with 2012 fourth-quarter revenue of $302,830,000, an increase of 13.3%.
Total revenue for the twelve months ended December 31, 2013 was $1,363,279,000, compared with total revenue for the same period of 2012 of $1,200,032,000, an increase of 13.6%. Net income for the twelve-month period ended December 31, 2013 was $217,112,000, or $1.48 per share, compared with $184,045,000, or $1.26 per share for the same period of 2012, an increase of 18.0%.
J. Powell Brown, President and Chief Executive Officer of the Company, noted, “We are very pleased that we grew our net income 18.0% in 2013. Our Colonial Claims subsidiary, which adjusts flood claims, had core commissions and fees of $1.3 million in the fourth quarter of 2013, but had $7.4 million of core commissions and fees in the fourth quarter of 2012 as a result of the significant flood claims attributable to SuperStorm Sandy. Excluding the impact of Colonial Claims, our core organic commissions and fees in the fourth quarter of 2013 grew by 4.5%. In addition, we continued to improve certain operating profit margins in the fourth quarter.”
Brown & Brown, Inc., through its subsidiaries, offers a broad range of insurance and reinsurance products and services. Additionally, certain Brown & Brown subsidiaries offer a variety of risk management, third-party administration, and other services. Serving business, 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 the Company's anticipated financial results for the fourth quarter and full year of 2013. 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. These risks and uncertainties include, but are not limited to, the Company's determination as it finalizes its financial results for the fourth quarter and full year of 2013 that its financial results differ from the current preliminary unaudited numbers set forth herein, other factors that the Company may not have currently identified or quantified, and other risks, relevant factors and uncertainties identified in the Company's Annual Report on Form 10-K for the year ended December 31, 2012, and the Company’s other filings with the Securities and Exchange Commission. 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 Months Ended December 31, | For the Twelve Months Ended December 31, | ||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| REVENUES | ||||||||||||||||
| Commissions and fees | $ | 339,364 | $ | 300,296 | $ | 1,355,503 | $ | 1,189,081 | ||||||||
| Investment income | 128 | 236 | 638 | 797 | ||||||||||||
| Other income, net | 3,673 | 2,298 | 7,138 | 10,154 | ||||||||||||
| Total revenues | 343,165 | 302,830 | 1,363,279 | 1,200,032 | ||||||||||||
| EXPENSES | ||||||||||||||||
| Employee compensation and benefits | 179,460 | 158,467 | 683,000 | 608,506 | ||||||||||||
| Non-cash stock-based compensation | 7,699 | 4,472 | 22,603 | 15,865 | ||||||||||||
| Other operating expenses | 51,839 | 44,995 | 195,677 | 174,389 | ||||||||||||
| Amortization | 17,792 | 16,123 | 67,932 | 63,573 | ||||||||||||
| Depreciation | 4,589 | 3,990 | 17,485 | 15,373 | ||||||||||||
| Interest | 4,324 | 4,004 | 16,440 | 16,097 | ||||||||||||
| Change in estimated acquisition earn-out payables | 1,020 | 1,552 | 2,533 | 1,418 | ||||||||||||
| Total expenses | 266,723 | 233,603 | 1,005,670 | 895,221 | ||||||||||||
| Income before income taxes | 76,442 | 69,227 | 357,609 | 304,811 | ||||||||||||
| Income taxes | 29,217 | 26,590 | 140,497 | 120,766 | ||||||||||||
| Net income | $ | 47,225 | $ | 42,637 | $ | 217,112 | $ | 184,045 | ||||||||
| Net income per share: | ||||||||||||||||
| Basic | $ | 0.32 | $ | 0.30 | $ | 1.50 | $ | 1.28 | ||||||||
| Diluted | $ | 0.32 | $ | 0.29 | $ | 1.48 | $ | 1.26 | ||||||||
| Weighted average number of shares outstanding: | ||||||||||||||||
| Basic | 141,355 | 139,681 | 141,033 | 139,364 | ||||||||||||
| Diluted | 143,036 | 142,314 | 142,624 | 142,010 | ||||||||||||
| Dividends declared per share | $ | 0.100 | $ | 0.090 | $ | 0.3700 | $ | 0.3450 | ||||||||
Brown & Brown, Inc.
INTERNAL GROWTH SCHEDULE
Core Organic Commissions and Fees(1)
Three Months Ended December 31, 2013
(in thousands)
(unaudited)
Quarter Ended 12/31/13 | Quarter Ended 12/31/12 | Total Net Change | Total Net Growth % | Less Acquisition Revenues | Internal Net Growth $ | Internal Net Growth % | ||||||||||||||||||||||
| Retail(2) | $ | 184,996 | $ | 151,041 | $ | 33,955 | 22.5 | % | $ | 33,625 | $ | 330 | 0.2 | % | ||||||||||||||
| National Programs | 73,528 | 64,090 | 9,438 | 14.7 | % | 3,094 | 6,344 | 9.9 | % | |||||||||||||||||||
| Wholesale Brokerage | 46,238 | 40,299 | 5,939 | 14.7 | % | — | 5,939 | 14.7 | % | |||||||||||||||||||
| Services | 28,273 | 34,398 | (6,125 | ) | -17.8 | % | — | (6,125 | ) | -17.8 | % | |||||||||||||||||
| Total Core Commissions and Fees (1) | $ | 333,035 | $ | 289,828 | $ | 43,207 | 14.9 | % | $ | 36,719 | $ | 6,488 | 2.2 | % |
Reconciliation of Internal Growth Schedule
to Total Commissions and Fees
Included in the Consolidated Statements of Income
For the Three Months Ended December 31, 2013 and 2012
(in thousands)
(unaudited)
| Quarter Ended 12/31/13 | Quarter Ended 12/31/12 | ||||||
| Total core commissions and fees(1) | $ | 333,035 | $ | 289,828 | ||||
| Profit-sharing contingent commissions | 4,382 | 6,342 | ||||||
| Guaranteed supplemental commissions | 1,947 | 1,937 | ||||||
| Divested business | — | 2,189 | ||||||
| Total commissions & fees | $ | 339,364 | $ | 300,296 |
(1) Total core commissions and fees are our total commissions and fees less (i) profit-sharing contingent
commissions (revenues 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), (ii) guaranteed supplemental commissions (GSC) (revenues derived from special revenue-sharing commissions from insurance companies based solely upon the volume of the business placed with such companies during the current year),and (iii) divested business (commissions and fees generated from offices, books of business or niches sold by the Company or terminated).
(2) The Retail segment includes commissions and fees reported in the “Other” column of the Segment Information, which includes corporate and consolidation items.
Brown & Brown, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
| December 31, | December 31, | |||||||
| ASSETS | 2013 | 2012 | ||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 202,952 | $ | 219,821 | ||||
| Restricted cash and investments | 250,009 | 164,564 | ||||||
| Short-term investments | 10,624 | 8,183 | ||||||
| Premiums, commissions and fees receivable | 395,915 | 302,725 | ||||||
| Deferred income taxes | 29,276 | 24,408 | ||||||
| Other current assets | 39,260 | 39,811 | ||||||
| Total current assets | 928,036 | 759,512 | ||||||
| Fixed assets, net | 74,733 | 74,337 | ||||||
| Goodwill | 2,006,173 | 1,711,514 | ||||||
| Amortizable intangible assets, net | 618,888 | 566,538 | ||||||
| Other assets | 21,678 | 16,157 | ||||||
| Total assets | $ | 3,649,508 | $ | 3,128,058 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Premiums payable to insurance companies | $ | 534,360 | $ | 406,704 | ||||
| Premium deposits and credits due customers | 80,959 | 32,867 | ||||||
| Accounts payable | 34,158 | 48,524 | ||||||
| Accrued expenses and other liabilities | 157,400 | 79,593 | ||||||
| Current portion of long-term debt | 100,000 | 93 | ||||||
| Total current liabilities | 906,877 | 567,781 | ||||||
| Long-term debt | 380,000 | 450,000 | ||||||
| Deferred income taxes, net | 291,704 | 237,630 | ||||||
| Other liabilities | 63,786 | 65,314 | ||||||
| Shareholders’ equity: | ||||||||
Common stock, par value $0.10 per share; authorized 280,000 shares; issued and outstanding 145,419 at 2013 and 143,878 at 2012 | 14,542 | 14,388 | ||||||
| Additional paid-in capital | 371,960 | 335,872 | ||||||
| Retained earnings | 1,620,639 | 1,457,073 | ||||||
| Total shareholders’ equity | 2,007,141 | 1,807,333 | ||||||
| Total liabilities and shareholders’ equity | $ | 3,649,508 | $ | 3,128,058 | ||||