DAYTONA BEACH, Fla., and TAMPA, Fla., Oct 8, 2003 /PRNewswire-FirstCall via COMTEX/ -- Brown & Brown, Inc. (NYSE: BRO) announced record quarterly earnings for the third quarter of 2003 of $26,051,000 compared with $20,178,000 recorded in the third quarter of 2002, an increase of 29.1%. Net income per share rose 31.0% to $0.38 per share, compared with $0.29 per share in the third quarter of last year. Total revenue for the quarter ended September 30, 2003 was up 20.7% to $133,545,000, compared with the revenue of $110,657,000 for the same quarter in 2002.
Total revenue for the nine months ended September 30, 2003 was $416,139,000, compared with revenue for the same period in 2002 of $336,595,000, up 23.6%. Net income for the nine months ended September 30, 2003 was $84,521,000, or $1.23 per share, compared with the $61,741,000, or $0.91 per share, posted during the same period last year. This represents an increase of 35.2% in per share earnings.
J. Hyatt Brown, Chairman and CEO, commented, "Forty-three consecutive quarters of record earnings is a signal accomplishment. Our results are a credit to our established strategy, and affirm the depth of expertise and dogged discipline of the men and women who comprise our winning team."
Jim W. Henderson, President and Chief Operating Officer noted, "Part of our corporate history is the successful acquisition of agencies in various stages of the insurance pricing cycle. In the third quarter, we acquired three operations: Canfield and Associates, Inc.; Washington Insurance Services, Inc.; and The Hoffman Company. More recently, we have experienced an increase in the number of agencies that have expressed an interest in joining Brown & Brown. We believe that this activity is in part due to the current moderation of insurance pricing and the shrinkage of market access due to downgrades and dislocations of risk bearers. We will continue to identify the best opportunities and invest in those evidencing sustainable earnings growth and high quality people."
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 and trade 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; and the potential occurrence of a disaster that affects certain areas of the States of Arizona, California, Florida and/or New York, where significant portions of the Company's business are concentrated. 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 For the
Three Months Ended Nine Months Ended
September 30 September 30
2003 2002 2003 2002
REVENUES
Commissions and fees $132,146 $109,799 $413,656 $334,887
Investment income 309 924 1,084 2,222
Other income
(loss), net 1,090 (66) 1,399 (514)
Total revenues 133,545 110,657 416,139 336,595
EXPENSES
Employee compensation
and benefits 66,882 53,527 201,215 164,531
Non-cash stock grants
compensation 375 1,463 1,824 3,025
Other operating
expenses 17,479 15,815 56,114 47,173
Amortization 4,209 3,435 12,963 10,194
Depreciation 2,116 1,859 6,062 5,319
Interest 858 1,162 2,811 3,556
Total expenses 91,919 77,261 280,989 233,798
Income before income
taxes and minority
interest 41,626 33,396 135,150 102,797
Income taxes 15,575 12,830 50,629 39,550
Minority interest,
net of income tax -- 388 -- 1,506
Net income $ 26,051 $ 20,178 $ 84,521 $ 61,741
Net income per share:
Basic $0.38 $0.30 $1.24 $0.92
Diluted $0.38 $0.29 $1.23 $0.91
Weighted average number
of shares outstanding:
Basic 68,532 68,266 68,327 66,979
Diluted 68,995 68,994 68,944 67,745
Brown & Brown, Inc.
INTERNAL GROWTH SCHEDULE
Core Commissions and Fees(1)
Three Months Ended September 30, 2003
(in thousands)
(unaudited)
Quarter Quarter Total Total Less Internal
Ended Ended Net Net Acquisition Net
9/30/03 9/30/02 Change Growth % Revenues Growth %
Florida Retail $34,732 $31,417 $3,315 10.6% $428 9.2%
National Retail 36,130 31,765 4,365 13.7% 4,975 (1.9)%
Western Retail 25,238 19,479 5,759 29.6% 5,370 2.0%
Total Retail 96,100 82,661 13,439 16.3% 10,773 3.2%
Professional
Programs 9,870 4,222 5,648 133.8% 5,766 (2.8)%
Special Programs 10,698 6,834 3,864 56.5% 3,928 (0.9)%
Total Programs 20,568 11,056 9,512 86.0% 9,694 (1.6)%
Brokerage 6,691 5,821 870 14.9% 54 14.0%
TPA Services 7,585 7,279 306 4.2% -- 4.2%
Total Core
Commissions
and Fees (1) $130,944 $106,817 $24,127 22.6% $20,521 3.4%
Reconciliation of Internal Growth Schedule
to Total Commissions and Fees
Included in the Consolidated Statements of Income
for the Three Months Ended September 30, 2003 and 2002
(in thousands)
(unaudited)
Quarter Quarter
Ended Ended
9/30/03 9/30/02
Total core commissions and fees (1) $130,944 $106,817
Contingent commissions 1,202 1,633
Adjustment for upfront annual
commissions (2) -- (492)
Divested business -- 1,841
Total Commission & Fees $132,146 $109,799
(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), (ii) adjustment for upfront annual commissions (explained below), and (iii) divested business (commissions and fees generated from offices, books of business or niches sold by the Company or terminated).
(2) Commissions from a Florida-based workers' compensation carrier that changed its agency commission payment policy from paying on a monthly basis to paying on an up-front annual basis only for year 2002. Beginning January 1, 2003, this carrier reverted back to paying commissions on a monthly basis.
Brown & Brown, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
September 30, December 31,
2003 2002
ASSETS
Current assets:
Cash and cash equivalents $68,743 $91,247
Restricted cash 126,354 79,796
Short-term investments 471 446
Premiums, commissions and fees receivable 145,540 144,244
Other current assets 14,619 16,527
Total current assets 355,727 332,260
Fixed assets, net 25,209 24,730
Goodwill, net 225,663 176,269
Other intangible assets, net 231,383 203,984
Investments 9,264 8,585
Deferred income taxes, net -- 1,788
Other assets 6,780 6,733
Total assets $854,026 $754,349
LIABILITIES
Current liabilities:
Premiums payable to insurance companies $214,802 $191,682
Premium deposits and credits due customers 17,292 16,723
Accounts payable 8,055 12,054
Accrued expenses 56,010 46,586
Current portion of long-term debt 25,663 27,334
Total current liabilities 321,822 294,379
Long-term debt 45,298 57,585
Deferred income taxes, net 2,262 --
Other liabilities 9,634 8,943
Minority Interest -- 1,852
SHAREHOLDERS' EQUITY
Common stock, par value $0.10 per share;
authorized 280,000 shares; issued and
outstanding, 68,646 at 2003 and 68,178 at 2002 6,865 6,818
Additional paid-in capital 169,473 159,564
Retained earnings 295,825 223,102
Accumulated other comprehensive income 2,847 2,106
Total shareholders' equity 475,010 391,590
Total liabilities and shareholders' equity $854,026 $754,349
SOURCE Brown & Brown, Inc.
Cory T. Walker, Chief Financial Officer, Brown & Brown, +1-386-239-7250
http://www.bbinsurance.com