x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT
OF 1934
|
For
the quarterly period ended March 31, 2008
|
|
or
|
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT
OF 1934
|
For
the transition period from _____________ to
________________
|
Florida
(State
or other jurisdiction of
incorporation
or organization)
220
South Ridgewood Avenue,
Daytona
Beach, FL
(Address
of principal executive offices)
|
®
|
59-0864469
(I.R.S.
Employer Identification Number)
32114
(Zip
Code)
|
Large
accelerated filer x
|
Accelerated
filer o
|
Non-accelerated
filer o
|
Smaller
reporting company o
|
PAGE
NO.
|
|||
3
|
|||
4
|
|||
5
|
|||
6
|
|||
17
|
|||
30
|
|||
31
|
|||
31
|
|||
31
|
|||
32
|
|||
32
|
(in
thousands, except per share data)
|
For
the three months
ended
March 31,
|
|||||||
2008
|
2007
|
|||||||
REVENUES
|
||||||||
Commissions
and fees
|
$
|
253,528
|
$
|
245,559
|
||||
Investment
income
|
1,999
|
11,579
|
||||||
Other
income, net
|
1,188
|
1,375
|
||||||
Total
revenues
|
256,715
|
258,513
|
||||||
EXPENSES
|
||||||||
Employee
compensation and benefits
|
121,187
|
110,810
|
||||||
Non-cash
stock-based compensation
|
1,944
|
1,502
|
||||||
Other
operating expenses
|
31,204
|
31,923
|
||||||
Amortization
|
11,116
|
9,502
|
||||||
Depreciation
|
3,246
|
3,040
|
||||||
Interest
|
3,434
|
3,634
|
||||||
Total
expenses
|
172,131
|
160,411
|
||||||
Income
before income taxes
|
84,584
|
98,102
|
||||||
Income
taxes
|
32,824
|
38,375
|
||||||
Net
income
|
$
|
51,760
|
$
|
59,727
|
||||
Net
income per share:
|
||||||||
Basic
|
$
|
0.37
|
$
|
0.43
|
||||
Diluted
|
$
|
0.37
|
$
|
0.42
|
||||
Weighted
average number of shares outstanding:
|
||||||||
Basic
|
140,704
|
140,221
|
||||||
Diluted
|
141,327
|
141,194
|
||||||
Dividends
declared per share
|
$
|
0.07
|
$
|
0.06
|
(in
thousands, except per share data)
|
March
31,
2008
|
December
31,
2007
|
||||||
ASSETS
|
||||||||
Current
Assets:
|
||||||||
Cash
and cash equivalents
|
$
|
16,990
|
$
|
38,234
|
||||
Restricted
cash and investments
|
239,350
|
254,404
|
||||||
Short-term
investments
|
4,673
|
2,892
|
||||||
Premiums,
commissions and fees receivable
|
231,471
|
240,680
|
||||||
Deferred
income taxes
|
-
|
17,208
|
||||||
Other
current assets
|
55,022
|
33,964
|
||||||
Total
current assets
|
547,506
|
587,382
|
||||||
Fixed
assets, net
|
62,199
|
62,327
|
||||||
Goodwill
|
896,544
|
846,433
|
||||||
Amortizable
intangible assets, net
|
459,098
|
443,224
|
||||||
Other
assets
|
20,802
|
21,293
|
||||||
Total
assets
|
$
|
1,986,149
|
$
|
1,960,659
|
||||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||
Current
Liabilities:
|
||||||||
Premiums
payable to insurance companies
|
$
|
376,829
|
$
|
394,034
|
||||
Premium
deposits and credits due customers
|
35,956
|
41,211
|
||||||
Accounts
payable
|
35,665
|
18,760
|
||||||
Accrued
expenses
|
52,472
|
90,599
|
||||||
Current
portion of long-term debt
|
7,421
|
11,519
|
||||||
Total
current liabilities
|
508,343
|
556,123
|
||||||
Long-term
debt
|
252,627
|
227,707
|
||||||
Deferred
income taxes, net
|
69,048
|
65,736
|
||||||
Other
liabilities
|
14,300
|
13,635
|
||||||
Shareholders'
Equity:
|
||||||||
Common
stock, par value $0.10 per share;
|
||||||||
authorized
280,000 shares; issued and
|
||||||||
outstanding
140,724 at 2008 and 140,673 at 2007
|
14,072
|
14,067
|
||||||
Additional
paid-in capital
|
234,342
|
231,888
|
||||||
Retained
earnings
|
893,403
|
851,490
|
||||||
Accumulated
other comprehensive income, net of related income tax
|
||||||||
effect
of $9 at 2008 and $8 at 2007
|
14
|
13
|
||||||
Total
shareholders' equity
|
1,141,831
|
1,097,458
|
||||||
|
||||||||
Total
liabilities and shareholders' equity
|
$
|
1,986,149
|
$
|
1,960,659
|
For
the three months
ended
March 31,
|
||||||||
(in
thousands)
|
2008
|
2007
|
||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$
|
51,760
|
$
|
59,727
|
||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Amortization
|
11,116
|
9,502
|
||||||
Depreciation
|
3,246
|
3,040
|
||||||
Non-cash
stock-based compensation
|
1,944
|
1,502
|
||||||
Deferred
income taxes
|
20,519
|
1,920
|
||||||
Net
loss (gain) on sales of investments, fixed
|
||||||||
assets
and customer accounts
|
60
|
(9,518
|
)
|
|||||
Changes
in operating assets and liabilities, net of effect
|
||||||||
from
acquisitions and divestitures:
|
||||||||
Restricted
cash and investments decrease
|
15,054
|
1,402
|
||||||
Premiums,
commissions and fees receivable decrease
|
11,181
|
39,882
|
||||||
Other
assets (increase) decrease
|
(20,518
|
)
|
6,257
|
|||||
Premiums
payable to insurance companies (decrease)
|
(17,383
|
)
|
(36,724
|
)
|
||||
Premium
deposits and credits due customers (decrease)
|
(5,256
|
)
|
(699
|
)
|
||||
Accounts
payable increase
|
11,709
|
30,998
|
||||||
Accrued
expenses (decrease)
|
(38,638
|
)
|
(39,792
|
)
|
||||
Other
liabilities increase
|
665
|
1,894
|
||||||
Net
cash provided by operating activities
|
45,459
|
69,391
|
||||||
Cash
flows from investing activities:
|
||||||||
Additions
to fixed assets
|
(4,061
|
)
|
(16,280
|
)
|
||||
Payments
for businesses acquired, net of cash acquired
|
(72,551
|
)
|
(41,672
|
)
|
||||
Proceeds
from sales of fixed assets and customer accounts
|
2,135
|
1,351
|
||||||
Purchases
of investments
|
(1,788
|
)
|
(29
|
)
|
||||
Proceeds
from sales of investments
|
50
|
9,090
|
||||||
Net
cash used in investing activities
|
(76,215
|
)
|
(47,540
|
)
|
||||
Cash
flows from financing activities:
|
||||||||
Proceeds
from long-term debt
|
25,000
|
-
|
||||||
Payments
on long-term debt
|
(6,156
|
)
|
(5,487
|
)
|
||||
Borrowings
on revolving credit facility
|
-
|
12,240
|
||||||
Payments
on revolving credit facility
|
-
|
(12,240
|
)
|
|||||
Income
tax benefit from issuance of common stock
|
-
|
4,273
|
||||||
Issuances
of common stock for employee stock benefit plans
|
515
|
609
|
||||||
Cash
dividends paid
|
(9,847
|
)
|
(8,403
|
)
|
||||
Net
cash provided by (used in) financing activities
|
9,512
|
(9,008
|
)
|
|||||
Net
(decrease) increase in cash and cash equivalents
|
(21,244
|
)
|
12,843
|
|||||
Cash
and cash equivalents at beginning of period
|
38,234
|
88,490
|
||||||
Cash
and cash equivalents at end of period
|
$
|
16,990
|
$
|
101,333
|
For
the three months
ended
March 31,
|
||||||||
(in thousands, except per
share data)
|
2008
|
2007
|
||||||
Net
income
|
$
|
51,760
|
$
|
59,727
|
||||
Weighted
average number of common shares outstanding
|
140,704
|
140,221
|
||||||
Dilutive
effect of stock options using the
|
||||||||
treasury
stock method
|
623
|
973
|
||||||
Weighted
average number of shares outstanding
|
141,327
|
141,194
|
||||||
Net
income per share:
|
||||||||
Basic
|
$
|
0.37
|
$
|
0.43
|
||||
Diluted
|
$
|
0.37
|
$
|
0.42
|
(in
thousands)
Name
|
Business
Segment
|
2008
Date
of
Acquisition
|
Net
Cash
Paid
|
Notes
Payable
|
Recorded
Purchase
Price
|
|||||||||||
Smith
Peabody & Stiles Insurance Agency
|
Retail
|
January
1
|
$
|
13,285
|
$
|
-
|
$
|
13,285
|
||||||||
LDP
Consulting Group, Inc.
|
Retail
|
January
24
|
39,226
|
-
|
39,226
|
|||||||||||
Other
|
Various
|
Various
|
18,964
|
1,987
|
20,951
|
|||||||||||
Total
|
$
|
71,475
|
$
|
1,987
|
$
|
73,462
|
(in
thousands)
|
Smith
Peabody
&
Stiles
|
LDP
|
Other
|
Total
|
||||||||||||
Fiduciary
cash
|
$
|
-
|
$
|
166
|
$
|
-
|
$
|
166
|
||||||||
Other
current assets
|
-
|
1,121
|
853
|
1,974
|
||||||||||||
Fixed
assets
|
75
|
19
|
99
|
193
|
||||||||||||
Goodwill
|
8,980
|
29,115
|
10,771
|
48,866
|
||||||||||||
Purchased
customer accounts
|
4,218
|
13,958
|
9,788
|
27,964
|
||||||||||||
Noncompete
agreements
|
12
|
55
|
126
|
193
|
||||||||||||
Other
assets
|
-
|
11
|
-
|
11
|
||||||||||||
Total
assets acquired
|
13,285
|
44,445
|
21,637
|
79,367
|
||||||||||||
Other
current liabilities
|
-
|
(5,219
|
)
|
|
(686
|
)
|
(5,905
|
)
|
||||||||
Total
liabilities assumed
|
-
|
(5,219
|
)
|
|
(686
|
)
|
(5,905
|
)
|
||||||||
Net
assets acquired
|
$
|
13,285
|
$
|
39,226
|
$
|
20,951
|
$
|
73,462
|
For
the three months
|
||||||||
(UNAUDITED)
|
ended
March 31,
|
|||||||
(in
thousands, except per share data)
|
2008
|
2007
|
||||||
Total
revenues
|
$
|
258,531
|
$
|
266,392
|
||||
Income
before income taxes
|
85,285
|
101,023
|
||||||
Net
income
|
52,189
|
61,505
|
||||||
Net
income per share:
|
||||||||
Basic
|
$
|
0.37
|
$
|
0.44
|
||||
Diluted
|
$
|
0.37
|
$
|
0.44
|
||||
Weighted
average number of shares outstanding:
|
||||||||
Basic
|
140,704
|
140,221
|
||||||
Diluted
|
141,327
|
141,194
|
(in
thousands)
|
2007
|
Net
|
Recorded
|
|||||||||||||
Business
|
Date
of
|
Cash
|
Notes
|
Purchase
|
||||||||||||
Name
|
Segment
|
Acquisition
|
Paid
|
Payable
|
Price
|
|||||||||||
ALCOS,
Inc.
|
Retail
|
March
1
|
$
|
30,850
|
$
|
3,500
|
$
|
34,350
|
||||||||
Other
|
Various
|
Various
|
11,802
|
515
|
12,317
|
|||||||||||
Total
|
$
|
42,652
|
$
|
4,015
|
$
|
46,667
|
(in
thousands)
|
ALCOS
|
Other
|
Total
|
|||||||||
Fiduciary
cash
|
$
|
627
|
$
|
716
|
$
|
1,343
|
||||||
Other
current assets
|
1,224
|
515
|
1,739
|
|||||||||
Fixed
assets
|
720
|
102
|
822
|
|||||||||
Goodwill
|
28,970
|
8,192
|
37,162
|
|||||||||
Purchased
customer accounts
|
7,820
|
4,180
|
12,000
|
|||||||||
Noncompete
agreements
|
130
|
112
|
242
|
|||||||||
Other
assets
|
115
|
10
|
125
|
|||||||||
Total
assets acquired
|
39,606
|
13,827
|
53,433
|
|||||||||
Other
current liabilities
|
(2,098
|
)
|
(761
|
)
|
(2,859
|
)
|
||||||
Deferred
income taxes
|
(3,083
|
)
|
(749
|
)
|
(3,832
|
)
|
||||||
Non-current
other liabilities
|
(75
|
)
|
-
|
(75
|
)
|
|||||||
Total
liabilities assumed
|
(5,256
|
)
|
(1,510
|
)
|
(6,766
|
)
|
||||||
Net
assets acquired
|
$
|
34,350
|
$
|
12,317
|
$
|
46,667
|
For
the three months
|
||||||||
(UNAUDITED)
|
ended
March 31,
|
|||||||
(in
thousands, except per share data)
|
2007
|
2006
|
||||||
Total
revenues
|
$
|
262,255
|
$
|
237,820
|
||||
Income
before income taxes
|
99,088
|
83,311
|
||||||
Net
income
|
60,327
|
51,178
|
||||||
Net
income per share:
|
||||||||
Basic
|
$
|
0.43
|
$
|
0.37
|
||||
Diluted
|
$
|
0.43
|
$
|
0.36
|
||||
Weighted
average number of shares outstanding:
|
||||||||
Basic
|
140,221
|
139,383
|
||||||
Diluted
|
141,194
|
140,823
|
Wholesale
|
National
|
|||||||||||||||||||
(in
thousands)
|
Retail
|
Brokerage
|
Programs
|
Services
|
Total
|
|||||||||||||||
Balance
as of January 1, 2008
|
$
|
453,485
|
$
|
242,730
|
$
|
146,948
|
$
|
3,270
|
$
|
846,433
|
||||||||||
Goodwill
of acquired businesses
|
48,770
|
1,074
|
320
|
-
|
50,164
|
|||||||||||||||
Goodwill
disposed of relating to sales of businesses
|
-
|
(53
|
)
|
-
|
-
|
(53
|
)
|
|||||||||||||
Balance
as of March 31, 2008
|
$
|
502,255
|
$
|
243,751
|
$
|
147,268
|
$
|
3,270
|
$
|
896,544
|
March
31, 2008
|
December
31, 2007
|
|||||||||||||||||||||||||||||||
Weighted
|
Weighted
|
|||||||||||||||||||||||||||||||
Gross
|
Net
|
Average
|
Gross
|
Net
|
Average
|
|||||||||||||||||||||||||||
Carrying
|
Accumulated
|
Carrying
|
Life
|
Carrying
|
Accumulated
|
Carrying
|
Life
|
|||||||||||||||||||||||||
(in
thousands)
|
Value
|
Amortization
|
Value
|
(years)
|
Value
|
Amortization
|
Value
|
(years)
|
||||||||||||||||||||||||
Purchased
customer accounts
|
$
|
654,724
|
$
|
(198,082
|
)
|
$
|
456,642
|
14.9
|
$
|
628,123
|
$
|
(187,543
|
)
|
$
|
440,580
|
14.9
|
||||||||||||||||
Noncompete
agreements
|
26,040
|
(23,584
|
)
|
2,456
|
7.7
|
25,858
|
(23,214
|
)
|
2,644
|
7.7
|
||||||||||||||||||||||
Total
|
$
|
680,764
|
$
|
(221,666
|
)
|
$
|
459,098
|
$
|
653,981
|
$
|
(210,757
|
)
|
$
|
443,224
|
March
31, 2008
|
December
31, 2007
|
|||||||||||||||
Carrying
Value
|
Carrying
Value
|
|||||||||||||||
(in
thousands)
|
Current
|
Non-
Current
|
Current
|
Non-
Current
|
||||||||||||
Available-for-sale
marketable equity securities
|
$
|
48
|
$
|
-
|
$
|
46
|
$
|
-
|
||||||||
Non-marketable
equity securities and certificates of deposit
|
4,625
|
391
|
2,846
|
355
|
||||||||||||
Total
investments
|
$
|
4,673
|
$
|
391
|
$
|
2,892
|
$
|
355
|
(in
thousands)
|
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Estimated
Fair
Value
|
||||||||||||
Marketable
equity securities:
|
||||||||||||||||
March
31, 2008
|
$
|
25
|
$
|
23
|
$
|
-
|
$
|
48
|
||||||||
December
31, 2007
|
$
|
25
|
$
|
21
|
$
|
-
|
$
|
46
|
(in
thousands)
|
Proceeds
|
Gross
Realized
Gains
|
Gross
Realized
Losses
|
||||||||||
For
the three months ended:
|
|||||||||||||
March
31, 2008
|
$
|
50
|
$
|
78
|
$
|
-
|
|||||||
March
31, 2007
|
$
|
9,090
|
$
|
8,841
|
$
|
500
|
(in
thousands)
|
2008
|
2007
|
||||||
Unsecured
senior notes
|
$
|
250,000
|
$
|
225,000
|
||||
Acquisition
notes payable
|
9,875
|
14,025
|
||||||
Revolving
credit facility
|
-
|
-
|
||||||
Term
loan agreements
|
-
|
-
|
||||||
Other
notes payable
|
173
|
201
|
||||||
Total
debt
|
260,048
|
239,226
|
||||||
Less
current portion
|
(7,421
|
)
|
(11,519
|
)
|
||||
Long-term
debt
|
$
|
252,627
|
$
|
227,707
|
(in
thousands)
|
For
the three months
ended
March 31,
|
|||||||
2008
|
2007
|
|||||||
Cash
paid during the period for:
|
||||||||
Interest
|
$
|
5,778
|
$
|
6,118
|
||||
Income
taxes
|
$
|
124
|
$
|
1,192
|
For
the three months
ended
March 31,
|
||||||||
(in
thousands)
|
2008
|
2007
|
||||||
Unrealized
holding gain (loss) on available-for-sale securities, net of tax effect of
$1 for 2008; net of tax benefit of $1,826 for 2007
|
$
|
1
|
$
|
(3,199
|
)
|
|||
Net
(loss) gain on cash-flow hedging derivative, net of tax benefit of $0 for
2008, net of tax benefit of $9 for 2007
|
$
|
-
|
$
|
(16
|
)
|
|||
Notes
payable issued or assumed for purchased customer accounts
|
$
|
2,042
|
$
|
7,900
|
For
the three months
|
||||||||
ended
March 31,
|
||||||||
(in
thousands)
|
2008
|
2007
|
||||||
Net
income
|
$
|
51,760
|
$
|
59,727
|
||||
Net
unrealized holding gain (loss) on available-for-sale
securities
|
1
|
(3,199
|
)
|
|||||
Net
(loss) gain on cash-flow hedging derivative
|
-
|
(16
|
)
|
|||||
Comprehensive
income
|
$
|
51,761
|
$
|
56,512
|
For
the three months ended March 31, 2008
|
||||||||||||||||||||||||
Wholesale
|
National
|
|||||||||||||||||||||||
(in
thousands)
|
Retail
|
Brokerage
|
Programs
|
Services
|
Other
|
Total
|
||||||||||||||||||
Total
revenues
|
$
|
157,213
|
$
|
46,334
|
$
|
44,070
|
$
|
7,938
|
$
|
1,160
|
$
|
256,715
|
||||||||||||
Investment
income
|
191
|
459
|
109
|
5
|
1,235
|
1,999
|
||||||||||||||||||
Amortization
|
6,218
|
2,498
|
2,275
|
115
|
10
|
11,116
|
||||||||||||||||||
Depreciation
|
1,460
|
738
|
641
|
112
|
295
|
3,246
|
||||||||||||||||||
Interest
|
6,331
|
4,797
|
2,117
|
194
|
(10,005
|
)
|
3,434
|
|||||||||||||||||
Income
before income taxes
|
47,332
|
7,236
|
16,036
|
1,776
|
12,204
|
84,584
|
||||||||||||||||||
Total
assets
|
1,466,811
|
643,717
|
553,612
|
40,193
|
(718,184
|
)
|
1,986,149
|
|||||||||||||||||
Capital
expenditures
|
1,168
|
1,246
|
396
|
55
|
1,196
|
4,061
|
For
the three months ended March 31, 2007
|
||||||||||||||||||||||||
Wholesale
|
National
|
|||||||||||||||||||||||
(in
thousands)
|
Retail
|
Brokerage
|
Programs
|
Services
|
Other
|
Total
|
||||||||||||||||||
Total
revenues
|
$
|
150,819
|
$
|
48,586
|
$
|
38,725
|
$
|
8,961
|
$
|
11,422
|
$
|
258,513
|
||||||||||||
Investment
income
|
46
|
705
|
123
|
6
|
10,699
|
11,579
|
||||||||||||||||||
Amortization
|
4,884
|
2,234
|
2,259
|
115
|
10
|
9,502
|
||||||||||||||||||
Depreciation
|
1,389
|
601
|
697
|
151
|
202
|
3,040
|
||||||||||||||||||
Interest
|
4,295
|
4,855
|
2,694
|
165
|
(8,375
|
)
|
3,634
|
|||||||||||||||||
Income
before income taxes
|
53,547
|
10,845
|
11,232
|
2,094
|
20,384
|
98,102
|
||||||||||||||||||
Total
assets
|
1,178,751
|
610,859
|
527,186
|
33,715
|
(523,104
|
)
|
1,827,407
|
|||||||||||||||||
Capital
expenditures
|
1,407
|
569
|
459
|
123
|
13,722
|
16,280
|
For
the three months
|
|||||||||||
ended
March 31,
|
|||||||||||
%
|
|||||||||||
2008
|
2007
|
Change
|
|||||||||
REVENUES
|
|||||||||||
Commissions
and fees
|
$
|
217,181
|
$
|
201,502
|
7.8
|
%
|
|||||
Profit-sharing
contingent commissions
|
36,347
|
44,057
|
(17.5
|
)%
|
|||||||
Investment
income
|
1,999
|
11,579
|
(82.7
|
)%
|
|||||||
Other
income, net
|
1,188
|
1,375
|
(13.6
|
)%
|
|||||||
Total
revenues
|
256,715
|
258,513
|
(0.7
|
)%
|
|||||||
EXPENSES
|
|||||||||||
Employee
compensation and benefits
|
121,187
|
110,810
|
9.4
|
%
|
|||||||
Non-cash
stock-based compensation
|
1,944
|
1,502
|
29.4
|
%
|
|||||||
Other
operating expenses
|
31,204
|
31,923
|
(2.3
|
)%
|
|||||||
Amortization
|
11,116
|
9,502
|
17.0
|
%
|
|||||||
Depreciation
|
3,246
|
3,040
|
6.8
|
%
|
|||||||
Interest
|
3,434
|
3,634
|
(5.5
|
)%
|
|||||||
Total
expenses
|
172,131
|
160,411
|
7.3
|
%
|
|||||||
Income
before income taxes
|
84,584
|
98,102
|
(13.8
|
)%
|
|||||||
Income
taxes
|
32,824
|
38,375
|
(14.5
|
)%
|
|||||||
NET
INCOME
|
$
|
51,760
|
$
|
59,727
|
(13.3
|
)%
|
|||||
Net
internal growth rate – core commissions and fees
|
(4.1
|
)%
|
(1.8
|
)%
|
|||||||
Employee
compensation and benefits ratio
|
47.2
|
%
|
42.9
|
%
|
|||||||
Other
operating expenses ratio
|
12.2
|
%
|
12.3
|
%
|
|||||||
Capital
expenditures
|
$
|
4,061
|
$
|
16,280
|
|||||||
Total
assets at March 31, 2008 and 2007
|
$
|
1,986,149
|
$
|
1,827,407
|
2008
|
For
the three months
ended
March 31,
|
|||||||||||||||||||||||||||
2008
|
2007
|
Total
Net
Change
|
Total
Net
Growth
%
|
Less
Acquisition
Revenues
|
Internal
Net
Growth
$
|
Internal
Net
Growth
%
|
||||||||||||||||||||||
Florida
Retail
|
$ | 41,635 | $ | 43,891 | $ | (2,256 | ) | (5.1 | )% | $ | 921 | $ | (3,177 | ) | (7.2 | )% | ||||||||||||
National
Retail
|
70,685 | 51,701 | 18,984 | 36.7 | % | 19,842 | (858 | ) | (1.7 | )% | ||||||||||||||||||
Western
Retail
|
21,704 | 22,426 | (722 | ) | (3.2 | )% | 262 | (984 | ) | (4.4 | )% | |||||||||||||||||
Total Retail(1)
|
134,024 | 118,018 | 16,006 | 13.6 | % | 21,025 | (5,019 | ) | (4.3 | )% | ||||||||||||||||||
Wholesale
Brokerage
|
37,039 | 37,267 | (228 | ) | (0.6 | )% | 4,979 | (5,207 | ) | (14.0 | )% | |||||||||||||||||
Professional
Programs
|
10,385 | 10,438 | (53 | ) | (0.5 | )% | - | (53 | ) | (0.5 | )% | |||||||||||||||||
Special
Programs
|
27,800 | 24,484 | 3,316 | 13.5 | % | 131 | 3,185 | 13.0 | % | |||||||||||||||||||
Total
National Programs
|
38,185 | 34,922 | 3,263 | 9.3 | % | 131 | 3,132 | 9.0 | % | |||||||||||||||||||
Services
|
7,933 | 8,954 | (1,021 | ) | (11.4 | )% | - | (1,021 | ) | (11.4 | )% | |||||||||||||||||
Total
Core Commissions and Fees
|
$ | 217,181 | $ | 199,161 | $ | 18,020 | 9.0 | % | $ | 26,135 | $ | (8,115 | ) | (4.1 | )% |
For
the three months
ended
March 31,
|
||||||
2008
|
2007
|
|||||
Total
core commissions and fees
|
$
|
217,181
|
|
$
|
199,161
|
|
Profit-sharing
contingent commissions
|
|
36,347
|
|
|
44,057
|
|
Divested
business
|
|
—
|
|
|
2,341
|
|
Total
commission and fees
|
$
|
253,528
|
|
$
|
245,559
|
|
(1)
|
The
Retail segment includes commissions and fees reported in the “Other”
column of the Segment Information in Note 13 which includes corporate and
consolidation items.
|
2007
|
For
the three months
ended
March 31,
|
|||||||||||||||||||||||||||
2007
|
2006
|
Total
Net
Change
|
Total
Net
Growth
%
|
Less
Acquisition
Revenues
|
Internal
Net
Growth
$
|
Internal
Net
Growth
%
|
||||||||||||||||||||||
Florida
Retail
|
$ | 43,918 | $ | 39,175 | $ | 4,743 | 12.1 | % | $ | 567 | $ | 4,176 | 10.7 | % | ||||||||||||||
National
Retail
|
53,134 | 50,527 | 2,607 | 5.2 | % | 2,962 | (355 | ) | (0.7 | )% | ||||||||||||||||||
Western
Retail
|
23,307 | 25,028 | (1,721 | ) | (6.9 | )% | 159 | (1,880 | ) | (7.5 | )% | |||||||||||||||||
Total Retail(1)
|
120,359 | 114,730 | 5,629 | 4.9 | % | 3,688 | 1,941 | 1.7 | % | |||||||||||||||||||
Wholesale
Brokerage
|
37,267 | 35,143 | 2,124 | 6.0 | % | 3,977 | (1,853 | ) | (5.3 | )% | ||||||||||||||||||
Professional
Programs
|
10,438 | 10,157 | 281 | 2.8 | % | 126 | 155 | 1.5 | % | |||||||||||||||||||
Special
Programs
|
24,484 | 26,959 | (2,475 | ) | (9.2 | )% | 1,864 | (4,339 | ) | (16.1 | )% | |||||||||||||||||
Total
National Programs
|
34,922 | 37,116 | (2,194 | ) | (5.9 | )% | 1,990 | 4,184 | (11.3 | )% | ||||||||||||||||||
Services
|
8,954 | 6,644 | 2,310 | 34.8 | % | 1,674 | 636 | 9.6 | % | |||||||||||||||||||
Total
Core Commissions
and
Fees
|
$ | 201,502 | $ | 193,633 | $ | 7,869 | 4.1 | % | $ | 11,329 | $ | (3,460 | ) | (1.8 | )% |
For
the three months
ended
March 31,
|
|||||||
2007
|
|
2006
|
|||||
Total
core commissions and fees
|
$
|
201,502
|
|
|
$
|
193,633
|
|
Profit-sharing
contingent commissions
|
|
44,057
|
|
|
|
33,467
|
|
Divested
business
|
|
—
|
|
|
|
815
|
|
Total
commission and fees
|
$
|
245,559
|
|
|
$
|
227,915
|
|
(1)
|
The
Retail segment includes commissions and fees reported in the “Other”
column of the Segment Information in Note 13 which includes corporate and
consolidation items.
|
For
the three months
|
||||||||||||
ended
March 31,
|
||||||||||||
%
|
||||||||||||
2008
|
2007
|
Change
|
||||||||||
REVENUES
|
||||||||||||
Commissions
and fees
|
$
|
133,810
|
$
|
119,657
|
11.8
|
%
|
||||||
Profit-sharing
contingent commissions
|
21,928
|
29,769
|
(26.3
|
)%
|
||||||||
Investment
income
|
191
|
46
|
315.2
|
%
|
||||||||
Other
income, net
|
1,284
|
1,347
|
(4.7
|
) %
|
||||||||
Total
revenues
|
157,213
|
150,819
|
4.2
|
%
|
||||||||
EXPENSES
|
||||||||||||
Employee
compensation and benefits
|
72,157
|
64,672
|
11.6
|
%
|
||||||||
Non-cash
stock-based compensation
|
915
|
784
|
16.7
|
%
|
||||||||
Other
operating expenses
|
22,800
|
21,248
|
7.3
|
%
|
||||||||
Amortization
|
6,218
|
4,884
|
27.3
|
%
|
||||||||
Depreciation
|
1,460
|
1,389
|
5.1
|
%
|
||||||||
Interest
|
6,331
|
4,295
|
47.4
|
%
|
||||||||
Total
expenses
|
109,881
|
97,272
|
13.0
|
%
|
||||||||
Income
before income taxes
|
$
|
47,332
|
$
|
53,547
|
(11.6
|
)%
|
||||||
Net
internal growth rate – core commissions and fees
|
(4.3
|
)%
|
1.7
|
%
|
||||||||
Employee
compensation and benefits ratio
|
45.9
|
%
|
42.9
|
%
|
||||||||
Other
operating expenses ratio
|
14.5
|
%
|
14.1
|
%
|
||||||||
Capital
expenditures
|
$
|
1,168
|
$
|
1,407
|
||||||||
Total
assets at March 31, 2008 and 2007
|
$
|
1,466,811
|
$
|
1,178,751
|
For
the three months
|
||||||||||||
ended
March 31,
|
||||||||||||
%
|
||||||||||||
2008
|
2007
|
Change
|
||||||||||
REVENUES
|
||||||||||||
Commissions
and fees
|
$
|
37,039
|
$
|
37,267
|
(0.6
|
)%
|
||||||
Profit-sharing
contingent commissions
|
8,669
|
10,597
|
(18.2
|
)%
|
||||||||
Investment
income
|
459
|
705
|
(34.9
|
)%
|
||||||||
Other
income, net
|
167
|
17
|
NMF
|
|||||||||
Total
revenues
|
46,334
|
48,586
|
(4.6
|
)%
|
||||||||
EXPENSES
|
||||||||||||
Employee
compensation and benefits
|
22,891
|
22,294
|
2.7
|
%
|
||||||||
Non-cash
stock-based compensation
|
197
|
117
|
68.4
|
%
|
||||||||
Other
operating expenses
|
7,977
|
7,640
|
4.4
|
%
|
||||||||
Amortization
|
2,498
|
2,234
|
11.8
|
%
|
||||||||
Depreciation
|
738
|
601
|
22.8
|
%
|
||||||||
Interest
|
4,797
|
4,855
|
(1.2
|
)%
|
||||||||
Total
expenses
|
39,098
|
37,741
|
3.6
|
%
|
||||||||
Income
before income taxes
|
$
|
7,236
|
$
|
10,845
|
(33.3
|
)%
|
||||||
Net
internal growth rate – core commissions and fees
|
(14.0
|
)%
|
(5.3
|
)%
|
||||||||
Employee
compensation and benefits ratio
|
49.4
|
%
|
45.9
|
%
|
||||||||
Other
operating expenses ratio
|
17.2
|
%
|
15.7
|
%
|
||||||||
Capital
expenditures
|
$
|
1,246
|
$
|
569
|
||||||||
Total
assets at March 31, 2008 and 2007
|
$
|
643,717
|
$
|
610,859
|
For
the three months
|
||||||||||||
ended
March 31,
|
||||||||||||
%
|
||||||||||||
2008
|
2007
|
Change
|
||||||||||
REVENUES
|
||||||||||||
Commissions
and fees
|
$
|
38,185
|
$
|
34,922
|
9.3
|
%
|
||||||
Profit-sharing
contingent commissions
|
5,750
|
3,691
|
55.8
|
%
|
||||||||
Investment
income
|
109
|
123
|
(11.4
|
)%
|
||||||||
Other
income (loss), net
|
26
|
(11
|
)
|
(336.4
|
)%
|
|||||||
Total
revenues
|
44,070
|
38,725
|
13.8
|
%
|
||||||||
EXPENSES
|
||||||||||||
Employee
compensation and benefits
|
16,589
|
15,608
|
6.3
|
%
|
||||||||
Non-cash
stock-based compensation
|
200
|
190
|
5.3
|
%
|
||||||||
Other
operating expenses
|
6,212
|
6,045
|
2.8
|
%
|
||||||||
Amortization
|
2,275
|
2,259
|
0.7
|
%
|
||||||||
Depreciation
|
641
|
697
|
(8.0
|
)%
|
||||||||
Interest
|
2,117
|
2,694
|
(21.4
|
)%
|
||||||||
Total
expenses
|
28,034
|
27,493
|
2.0
|
%
|
||||||||
Income
before income taxes
|
$
|
16,036
|
$
|
11,232
|
42.8
|
%
|
||||||
Net
internal growth rate – core commissions and fees
|
9.0
|
%
|
(11.3
|
)%
|
||||||||
Employee
compensation and benefits ratio
|
37.6
|
%
|
40.3
|
%
|
||||||||
Other
operating expenses ratio
|
14.1
|
%
|
15.6
|
%
|
||||||||
Capital
expenditures
|
$
|
396
|
$
|
459
|
||||||||
Total
assets at March 31, 2008 and 2007
|
$
|
553,612
|
$
|
527,186
|
For
the three months
|
||||||||||||
ended
March 31,
|
||||||||||||
%
|
||||||||||||
2008
|
2007
|
Change
|
||||||||||
REVENUES
|
||||||||||||
Commissions
and fees
|
$
|
7,933
|
$
|
8,954
|
(11.4
|
)%
|
||||||
Profit-sharing
contingent commissions
|
-
|
-
|
-
|
|||||||||
Investment
income
|
5
|
6
|
(16.7
|
)%
|
||||||||
Other
income, net
|
-
|
1
|
-
|
|||||||||
Total
revenues
|
7,938
|
8,961
|
(11.4
|
)%
|
||||||||
EXPENSES
|
||||||||||||
Employee
compensation and benefits
|
4,555
|
5,052
|
(9.8
|
)%
|
||||||||
Non-cash
stock-based compensation
|
35
|
35
|
-
|
|||||||||
Other
operating expenses
|
1,151
|
1,349
|
(14.7
|
)%
|
||||||||
Amortization
|
115
|
115
|
-
|
|||||||||
Depreciation
|
112
|
151
|
(25.8
|
)%
|
||||||||
Interest
|
194
|
165
|
17.6
|
%
|
||||||||
Total
expenses
|
6,162
|
6,867
|
(10.3
|
)%
|
||||||||
Income
before income taxes
|
$
|
1,776
|
$
|
2,094
|
(15.2
|
)%
|
||||||
Net
internal growth rate – core commissions and fees
|
(11.4
|
)%
|
9.6
|
%
|
||||||||
Employee
compensation and benefits ratio
|
57.4
|
%
|
56.4
|
%
|
||||||||
Other
operating expenses ratio
|
14.5
|
%
|
15.1
|
%
|
||||||||
Capital
expenditures
|
$
|
55
|
$
|
123
|
||||||||
Total
assets at March 31, 2008 and 2007
|
$
|
40,193
|
$
|
33,715
|
Payments Due by
Period
|
||||||||||||||||||||
Less
Than
|
After
5
|
|||||||||||||||||||
(in
thousands)
|
Total
|
1
Year
|
1-3
Years
|
4-5
Years
|
Years
|
|||||||||||||||
Long-term
debt
|
$
|
259,988
|
$
|
7,361
|
$
|
2,597
|
$
|
100,030
|
$
|
150,000
|
||||||||||
Capital
lease obligations
|
60
|
60
|
-
|
-
|
-
|
|||||||||||||||
Other
long-term liabilities
|
14,300
|
11,933
|
331
|
439
|
1,597
|
|||||||||||||||
Operating
leases
|
95,468
|
25,154
|
38,614
|
19,126
|
12,574
|
|||||||||||||||
Interest
obligations
|
79,047
|
14,452
|
28,836
|
20,228
|
15,531
|
|||||||||||||||
Unrecognized
tax benefits
|
507
|
-
|
507
|
-
|
-
|
|||||||||||||||
Maximum
future acquisition contingency payments
|
181,580
|
73,450
|
105,647
|
2,483
|
-
|
|||||||||||||||
Total
contractual cash obligations
|
$
|
630,950
|
$
|
132,410
|
$
|
176,532
|
$
|
142,306
|
$
|
179,702
|
●
|
material
adverse changes in economic conditions in the markets we
serve;
|
|
●
|
future
regulatory actions and conditions in the states in which we conduct our
business;
|
|
●
|
competition
from others in the insurance agency and brokerage
business;
|
|
●
|
a
significant portion of business written by Brown & Brown is for
customers located in Arizona, California, Florida, Georgia, Michigan, New
Jersey, New York, Pennsylvania, Texas and Washington. Accordingly, the
occurrence of adverse economic conditions, an adverse regulatory climate,
or a disaster in any of these states could have a material adverse effect
on our business, although no such conditions have been encountered in the
past;
|
|
●
|
the
integration of our operations with those of businesses or assets we have
acquired or may acquire in the future and the failure to realize the
expected benefits of such integration; and
|
|
●
|
other
risks and uncertainties as may be detailed from time to time in our
public announcements and SEC
filings.
|
3.1
|
Articles
of Amendment to Articles of Incorporation (adopted April 24, 2003)
(incorporated by reference to Exhibit 3a to Form 10-Q for the quarter
ended March 31, 2003), and Amended and Restated Articles of Incorporation
(incorporated by reference to Exhibit 3a to Form 10-Q for the quarter
ended March 31, 1999).
|
3.2
|
Bylaws
(incorporated by reference to Exhibit 3b to Form 10-K for the year ended
December 31, 2002).
|
31.1
|
Rule
13a-14(a)/15d-14(a) Certification by the Chief Executive Officer of the
Registrant.
|
31.2
|
Rule
13a-14(a)/15d-14(a) Certification by the Chief Financial Officer of the
Registrant.
|
32.1
|
Section
1350 Certification by the Chief Executive Officer of the
Registrant.
|
32.2
|
Section
1350 Certification by the Chief Financial Officer of the
Registrant.
|
BROWN
& BROWN, INC.
|
||
/s/
CORY T. WALKER
|
||
Date:
May 9, 2008
|
Cory
T. Walker
Sr.
Vice President, Chief Financial Officer and Treasurer
(duly
authorized officer, principal financial officer and principal
accounting
officer)
|