Total revenue for the twelve months ended December 31, 2007 was $959,667,000, compared with revenue of $878,004,000 for the corresponding period in 2006, up 9.3%. Net income for the twelve months of 2007 was $190,959,000, versus $172,350,000 during the comparable 2006 period, an increase of 10.8%. Net income per share for the twelve months ended December 31, 2007 was $1.35, versus the $1.22 per share posted during the same period in 2006, an increase of 10.7%.
J. Hyatt Brown, Chairman and Chief Executive Officer, noted, "The fourth quarter of 2007 was a very challenging quarter. Property and Casualty lines of insurance continued to renew at 15% to 30% less than expiring premiums. New business production was in line with expectations but not sufficient to make up the price reductions across the states in which we operate. These price reductions are of course good news for our insureds. For the year of 2007, our net income per share was up a respectable 10.7%."
Jim W. Henderson, Vice Chairman and Chief Operating Officer, added, "We are very pleased to report an increase in merger and acquisitions activity with 20 transactions and $61.2 million in estimated annualized revenues acquired during the period extending from the fourth quarter of 2007 through the first 40 days of 2008. During the 2007 calendar year, we acquired approximately $107.0 of annualized revenues, a 90% increase over 2006. There is a general improvement in the merger and acquisitions environment, and as such, acquisitions will continue to be a bright spot in our long-term growth plans."
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, quasi-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 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 effects of recent legislative and regulatory changes in Florida pertaining to the insurance industry, including those relating to coastal property coverages; 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, Michigan, New Jersey, New York, Pennsylvania, Texas and/or Washington, where significant portions of the Company's business are concentrated; 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 For the
Three Months Twelve Months
Ended Ended
December 31 December 31
2007 2006 2007 2006
---------- ---------- ---------- ----------
REVENUES
Commissions and fees $ 213,194 $ 210,763 $ 914,650 $ 864,663
Investment income 2,639 3,096 30,494 11,479
Other income, net 1,393 791 14,523 1,862
---------- ---------- ---------- ----------
Total revenues 217,226 214,650 959,667 878,004
---------- ---------- ---------- ----------
EXPENSES
Employee compensation and
benefits 110,164 100,160 444,101 404,891
Non-cash stock-based
compensation 1,340 815 5,667 5,416
Other operating expenses 34,962 35,887 131,371 126,492
Amortization 10,638 9,431 40,436 36,498
Depreciation 3,271 3,007 12,763 11,309
Interest 3,357 3,277 13,802 13,357
---------- ---------- ---------- ----------
Total expenses 163,732 152,577 648,140 597,963
---------- ---------- ---------- ----------
Income before income taxes 53,494 62,073 311,527 280,041
Income taxes 20,490 24,450 120,568 107,691
---------- ---------- ---------- ----------
Net income $ 33,004 $ 37,623 $ 190,959 $ 172,350
========== ========== ========== ==========
Net income per share:
Basic $ 0.23 $ 0.27 $ 1.36 $ 1.23
========== ========== ========== ==========
Diluted $ 0.23 $ 0.27 $ 1.35 $ 1.22
========== ========== ========== ==========
Weighted average number of
shares outstanding:
Basic 140,701 139,969 140,476 139,634
========== ========== ========== ==========
Diluted 141,355 141,227 141,257 141,020
========== ========== ========== ==========
Dividends declared per share $ 0.07 $ 0.06 $ 0.25 $ 0.21
========== ========== ========== ==========
Brown & Brown, Inc.
INTERNAL GROWTH SCHEDULE
Core Commissions and Fees(1)
Three Months Ended December 31, 2007
(in thousands)
(unaudited)
Quarter Quarter Total Total Less Internal
Ended Ended Net Net Acquisition Net
12/31/07 12/31/06 Change Growth % Revenues Growth %
--------- --------- --------- --------- --------- ---------
Florida Retail $ 41,250 $ 45,347 $ (4,097) (9.0)% $ 982 (11.2)%
National Retail 62,241 48,236 14,005 29.0 % 15,450 (3.0)%
Western Retail 21,910 23,793 (1,883) (7.9)% 80 (8.3)%
--------- --------- -------- ---------
Total Retail 125,401 117,376 8,025 6.8 % 16,512 (7.2)%
--------- --------- -------- ---------
Professional
Programs 11,630 10,980 650 5.9 % 47 5.5 %
Special
Programs 31,253 32,921 (1,668) (5.1)% 10 (5.1)%
--------- --------- -------- ---------
Total National
Programs 42,883 43,901 (1,018) (2.3)% 57 (2.4)%
--------- --------- -------- ---------
Wholesale
Brokerage 34,988 37,382 (2,394) (6.4)% 3,454 (15.6)%
Services 7,977 8,702 (725) (8.3)% - (8.3)%
--------- --------- -------- ---------
Total Core
Commissions
and Fees (1) $ 211,249 $ 207,361 $ 3,888 1.9 % $ 20,023 (7.8)%
========= ========= ======== ======= ========= =======
Reconciliation of Internal Growth Schedule
to Total Commissions and Fees
Included in the Consolidated Statements of Income
for the Three Months Ended December 31, 2007 and 2006
(in thousands)
(unaudited)
Quarter Quarter
Ended Ended
12/31/07 12/31/06
--------- ---------
Total core commissions and fees(1) $ 211,249 $ 207,361
Contingent commissions 1,945 885
Divested business - 2,517
--------- ---------
Total commission & fees $ 213,194 $ 210,763
========= =========
(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 December
31, 31,
2007 2006
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 38,234 $ 88,490
Restricted cash and investments 254,404 242,187
Short-term investments 2,892 2,909
Premiums, commissions and fees receivable 240,680 282,440
Deferred income taxes 17,208 -
Other current assets 33,964 32,180
----------- -----------
Total current assets 587,382 648,206
Fixed assets, net 62,327 44,170
Goodwill 846,433 684,521
Amortizable intangible assets, net 443,224 396,069
Investments 355 15,826
Other assets 20,938 19,160
----------- -----------
Total assets $ 1,960,659 $ 1,807,952
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Premiums payable to insurance companies $ 394,034 $ 435,449
Premium deposits and credits due customers 41,211 33,273
Accounts payable 18,760 17,854
Accrued expenses 90,599 86,009
Current portion of long-term debt 11,519 18,082
----------- -----------
Total current liabilities 556,123 590,667
Long-term debt 227,707 226,252
Deferred income taxes, net 65,736 49,721
Other liabilities 13,635 11,967
Shareholders' equity:
Common stock, par value $0.10 per share;
authorized 280,000 shares; issued and
outstanding 140,673 at 2007 and
140,016 at 2006 14,067 14,002
Additional paid-in capital 231,888 210,543
Retained earnings 851,490 695,656
Accumulated other comprehensive income 13 9,144
----------- -----------
Total shareholders' equity 1,097,458 929,345
----------- -----------
Total liabilities and shareholders' equity $ 1,960,659 $ 1,807,952
=========== ===========
Contact: Cory T. Walker Chief Financial Officer (386) 239-7250
SOURCE: Brown & Brown, Inc.