x |
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
|
|
|
For
the quarterly period ended March 31, 2006
|
|
|
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)
|
|
PAGE
NO.
|
|||
|
|
|||
|
||||
|
|
|
|
|
|
|
|||
|
|
3
|
||
|
|
4
|
||
|
|
5
|
||
|
|
6
|
||
|
16
|
|||
|
25
|
|||
|
25
|
|||
|
|
|
||
26
|
||||
27
|
||||
27
|
||||
29
|
||||
|
|
For
the three months
ended
March 31,
|
|||||||
(in
thousands, except per share data)
|
2006
|
2005
|
|||||
REVENUES
|
|||||||
Commissions
and fees
|
$
|
227,915
|
$
|
200,315
|
|||
Investment
income
|
2,209
|
965
|
|||||
Other
income, net
|
458
|
1,094
|
|||||
Total
revenues
|
230,582
|
202,374
|
|||||
|
|
|
|||||
EXPENSES
|
|
|
|||||
Employee
compensation and benefits
|
100,730
|
90,384
|
|||||
Non-cash
stock-based compensation
|
2,330
|
891
|
|||||
Other
operating expenses
|
30,969
|
27,142
|
|||||
Amortization
|
9,000
|
7,535
|
|||||
Depreciation
|
2,595
|
2,367
|
|||||
Interest
|
3,522
|
3,542
|
|||||
Total
expenses
|
149,146
|
131,861
|
|||||
|
|
|
|||||
Income
before income taxes
|
81,436
|
70,513
|
|||||
|
|
|
|||||
Income
taxes
|
31,410
|
27,495
|
|||||
|
|
|
|||||
Net
income
|
$
|
50,026
|
$
|
43,018
|
|||
|
|
|
|||||
Net
income per share:
|
|
|
|||||
Basic
|
$
|
0.36
|
$
|
0.31
|
|||
Diluted
|
$
|
0.36
|
$
|
0.31
|
|||
|
|
|
|||||
Weighted
average number of common shares outstanding:
|
|
|
|||||
Basic
|
139,383
|
138,324
|
|||||
Diluted
|
140,823
|
139,422
|
|||||
|
|
|
|||||
Dividends
declared per share
|
$
|
0.05
|
$
|
0.04
|
(in
thousands, except per share data)
|
March
31,
2006
|
December
31,
2005
|
|||||
ASSETS
|
|||||||
Current
Assets:
|
|||||||
Cash
and cash equivalents
|
$
|
73,683
|
$
|
100,580
|
|||
Restricted
cash and investments
|
256,085
|
229,872
|
|||||
Short-term
investments
|
2,767
|
2,748
|
|||||
Premiums,
commissions and fees receivable
|
245,357
|
257,930
|
|||||
Other
current assets
|
29,141
|
28,637
|
|||||
Total
current assets
|
607,033
|
619,767
|
|||||
|
|
|
|||||
Fixed
assets, net
|
41,726
|
39,398
|
|||||
Goodwill
|
623,124
|
549,040
|
|||||
Amortizable
intangible assets, net
|
387,151
|
377,907
|
|||||
Investments
|
9,119
|
8,421
|
|||||
Other
assets
|
14,249
|
14,127
|
|||||
Total
assets
|
$
|
1,682,402
|
$
|
1,608,660
|
|||
|
|||||||
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
|
|
|||||
Current
Liabilities:
|
|
|
|||||
Premiums
payable to insurance companies
|
$
|
419,097
|
$
|
397,466
|
|||
Premium
deposits and credits due customers
|
27,048
|
34,027
|
|||||
Accounts
payable
|
50,318
|
21,161
|
|||||
Accrued
expenses
|
42,870
|
74,534
|
|||||
Current
portion of long-term debt
|
73,370
|
55,630
|
|||||
Total
current liabilities
|
612,703
|
582,818
|
|||||
|
|
|
|||||
Long-term
debt
|
210,832
|
214,179
|
|||||
|
|
|
|||||
Deferred
income taxes, net
|
34,961
|
35,489
|
|||||
|
|
|
|||||
Other
liabilities
|
13,304
|
11,830
|
|||||
|
|
|
|||||
Shareholders’
Equity:
|
|
|
|||||
Common
stock, par value $0.10 per share; authorized
280,000 shares; issued and outstanding
139,516 at 2006 and 139,383 at 2005
|
13,952
|
13,938
|
|||||
Additional
paid-in capital
|
196,013
|
193,313
|
|||||
Retained
earnings
|
595,703
|
552,647
|
|||||
Accumulate
other comprehensive income, net of related income tax effect
of $2,892 at 2006 and $2,606 at 2005
|
4,934
|
4,446
|
|||||
|
|
|
|||||
Total
shareholders’ equity
|
810,602
|
764,344
|
|||||
|
|
|
|||||
Total
liabilities and shareholders’ equity
|
$
|
1,682,402
|
$
|
1,608,660
|
For
the three months
ended
March 31,
|
|||||||
(in
thousands)
|
2006
|
2005
|
|||||
Cash
flows from operating activities:
|
|||||||
Net
income
|
$
|
50,026
|
$
|
43,018
|
|||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|
|
|||||
Amortization
|
9,000
|
7,535
|
|||||
Depreciation
|
2,595
|
2,367
|
|||||
Non-cash
stock-based compensation
|
2,330
|
891
|
|||||
Deferred
income taxes
|
(814
|
)
|
(207
|
)
|
|||
Net
gain on sales of investments, fixed assets
and customer accounts
|
(14
|
)
|
(985
|
)
|
|||
Changes
in operating assets and liabilities, net of effect from
acquisitions and divestitures:
|
|
|
|||||
Restricted
cash and investments (increase)
|
(26,213
|
)
|
(50,649
|
)
|
|||
Premiums,
commissions and fees receivable decrease (increase)
|
13,045
|
(42,307
|
)
|
||||
Other
assets (increase) decrease
|
(489
|
)
|
10,019
|
||||
Premiums
payable to insurance companies increase
|
12,008
|
90,759
|
|||||
Premium
deposits and credits due customers (decrease)
|
(6,979
|
)
|
(7,558
|
)
|
|||
Accounts
payable increase
|
29,015
|
27,362
|
|||||
Accrued
expenses (decrease)
|
(32,952
|
)
|
(19,973
|
)
|
|||
Other
liabilities increase
|
1,474
|
236
|
|||||
Net
cash provided by operating activities
|
52,032
|
60,508
|
|||||
|
|
|
|||||
Cash
flows from investing activities:
|
|
|
|||||
Additions
to fixed assets
|
(4,477
|
)
|
(3,469
|
)
|
|||
Payments
for businesses acquired, net of cash acquired
|
(59,356
|
)
|
(201,427
|
)
|
|||
Proceeds
from sales of fixed assets and customer accounts
|
158
|
784
|
|||||
Purchases
of investments
|
(23
|
)
|
(186
|
)
|
|||
Proceeds
from sales of investments
|
12
|
3
|
|||||
Net
cash used in investing activities
|
(63,686
|
)
|
(204,295
|
)
|
|||
Cash
flows from financing activities:
|
|
|
|||||
Payments
on long-term debt
|
(8,657
|
)
|
(4,085
|
)
|
|||
Borrowings
on revolving credit facility
|
-
|
50,000
|
|||||
Issuances
of common stock for employee stock benefit plans
|
384
|
281
|
|||||
Cash
dividends paid
|
(6,970
|
)
|
(5,533
|
)
|
|||
Net
cash (used in) provided by financing activities
|
(15,243
|
)
|
40,663
|
||||
Net
decrease in cash and cash equivalents
|
(26,897
|
)
|
(103,124
|
)
|
|||
Cash
and cash equivalents at beginning of period
|
100,580
|
188,106
|
|||||
Cash
and cash equivalents at end of period
|
$
|
73,683
|
$
|
84,982
|
For
the three months ended March 31,
|
|||||||
(in
thousands, except per share data)
|
2006
|
2005
|
|||||
Net
income
|
$
|
50,026
|
$
|
43,018
|
|||
|
|
|
|||||
Weighted
average number of common shares outstanding
|
139,383
|
138,324
|
|||||
Dilutive
effect of stock options using the treasury stock method
|
1,440
|
1,098
|
|||||
|
|
|
|||||
Weighted
average number of common shares outstanding
|
140,823
|
139,422
|
|||||
|
|
|
|||||
Net
income per share:
|
|
|
|||||
Basic
|
$
|
0.36
|
$
|
0.31
|
|||
Diluted
|
$
|
0.36
|
$
|
0.31
|
(in
thousands, except per share data)
|
For
the three months ended
March
31, 2005
|
||||||
Net
income
|
As
reported
|
$
|
43,018
|
||||
Add:
Total stock-based compensation included in net
income, net of tax effect
|
As
reported
|
544
|
|||||
Less:
Total stock-based employee compensation expense
determined under fair value method for all
awards, net of tax effect
|
Pro
forma
|
(1,141
|
)
|
||||
|
|||||||
Net
income
|
Pro
forma
|
$
|
42,421
|
||||
|
|||||||
Basic
earnings per share:
|
As
reported
|
$
|
0.31
|
||||
|
Pro
forma
|
$
|
0.31
|
||||
Diluted
earnings per share:
|
As
reported
|
$
|
0.31
|
||||
Pro
forma
|
$
|
0.31
|
· |
compensation
cost for all share-based awards (expected to vest) granted prior
to, but
not yet vested as of January 1, 2006, based upon grant-date fair
value
estimated in accordance with the original provisions of SFAS 123;
and
|
· |
compensation
cost for all share-based awards (expected to vest) granted during
the
three-month period ended March 31, 2006 based upon grant-date fair
value
estimated in accordance with the provisions of SFAS
123R.
|
· |
Non-cash
stock-based compensation is
$2,330,000
|
· |
Provision
for income taxes is reduced by
$899,000
|
· |
Net
income is reduced by $1,431,000
|
· |
Basic
earnings per share is reduced by
$0.01
|
· |
Diluted
earnings per share is reduced by
$0.01
|
· |
Deferred
tax assets increased by
$899,000
|
Risk-free
interest rate
|
4.50%
|
||
Expected
life (in years)
|
6%
|
||
Expected
volatility
|
35%
|
||
Dividend
yield
|
0.86%
|
Stock
Options
|
Shares
|
Weighted-
Average
Exercise
Price
|
Weighted-
Average
Remaining
Contractual
Term
|
Aggregate
Intrinsic
Value
(in
thousands)
|
|||||||||
Outstanding
at January 1, 2006
|
2,016,988
|
$
|
10.83
|
||||||||||
Granted
|
-
|
$
|
-
|
||||||||||
Exercised
|
12,337
|
$
|
10.46
|
||||||||||
Forfeited
|
-
|
$
|
-
|
||||||||||
Expired
|
-
|
$
|
-
|
||||||||||
Outstanding
at March 31, 2006
|
2,004,651
|
$
|
10.83
|
5.6
|
$
|
44,848
|
|||||||
Exercisable
at March 31, 2006
|
1,295,943
|
$
|
8.06
|
4.9
|
$
|
32,577
|
Performance
Stock
|
Shares
|
Weighted
Average Grant-Date
Fair Value
|
|||||
Outstanding
at January 1, 2006
|
5,842,376
|
$
|
8.59
|
||||
Granted
|
16,345
|
$
|
30.54
|
||||
Vested
|
-
|
$
|
— | ||||
Forfeited
|
141,062
|
$
|
6.73
|
||||
Outstanding
at March 31, 2006
|
5,717,659
|
$
|
8.71
|
(in
thousands)
Name
|
|
Business
Segment
|
|
2006
Date
of
Acquisition
|
|
Net
Cash
Paid
|
|
Notes
Payable
|
|
Recorded
Purchase
Price
|
||||||||
Axiom
Intermediaries, LLC
|
|
Brokerage
|
|
January
1
|
|
$
|
60,292
|
|
$
|
-
|
|
$
|
60,292
|
|||||
Other
|
|
Various
|
|
Various
|
|
|
1,702
|
|
|
82
|
|
|
1,784
|
|||||
Total
|
|
|
|
|
|
|
|
$
|
61,994
|
|
$
|
82
|
|
$
|
62,076
|
(in
thousands)
|
Axiom
|
Other
|
Total
|
|||||||
Fiduciary
cash
|
$
|
9,598
|
$
|
-
|
$
|
9,598
|
||||
Other
current assets
|
372
|
100
|
472
|
|||||||
Fixed
assets
|
435
|
25
|
460
|
|||||||
Purchased
customer accounts
|
17,363
|
858
|
18,221
|
|||||||
Noncompete
agreements
|
31
|
43
|
74
|
|||||||
Goodwill
|
42,478
|
768
|
43,246
|
|||||||
Other
assets
|
73
|
-
|
73
|
|||||||
Total
assets acquired
|
70,350
|
1,794
|
72,144
|
|||||||
Other
current liabilities
|
(10,058
|
)
|
(10
|
)
|
(10,068
|
|||||
Total
liabilities assumed
|
(10,058
|
)
|
(10
|
)
|
(10,068
|
|||||
Net
assets acquired
|
$
|
60,292
|
$
|
1,784
|
$
|
62,076
|
(UNAUDITED)
|
For
the three months ended March 31,
|
||||||
(in
thousands, except per share data)
|
2006
|
2005
|
|||||
Total
revenues
|
$
|
230,687
|
$
|
208,194
|
|||
Income
before income taxes
|
$
|
81,461
|
$
|
72,028
|
|||
Net
income
|
$
|
50,041
|
$
|
43,943
|
|||
Net
income per share:
|
|||||||
Basic
|
$
|
0.36
|
$
|
0.32
|
|||
Diluted
|
$
|
0.36
|
$
|
0.32
|
|||
|
|||||||
Weighted
average number of common shares outstanding:
|
|||||||
Basic
|
139,383
|
138,324
|
|||||
Diluted
|
140,823
|
139,422
|
(in
thousands)
|
|
Retail
|
|
National
Programs
|
|
Brokerage
|
|
Service
|
|
Total
|
|||||
Balance
as of January 1, 2006
|
|
$
|
292,212
|
|
$
|
119,022
|
|
$
|
137,750
|
|
$
|
56
|
|
$
|
549,040
|
Goodwill
of acquired businesses
|
|
|
25,205
|
|
|
2,227
|
|
|
46,652
|
|
|
-
|
|
|
74,084
|
Goodwill
disposed of relating to sales of businesses
|
|
|
-
|
|
-
|
|
-
|
|
|
-
|
|
|
-
|
||
Balance
as of March 31, 2006
|
|
$
|
317,417
|
|
$
|
121,249
|
|
$
|
184,402
|
|
$
|
56
|
|
$
|
623,124
|
March
31, 2006
|
December
31, 2005
|
||||||||||||||||||||||||
(in thousands) |
Gross
Carrying
Value
|
Accumulated
Amortization
|
Net
Carrying
Value
|
Weighted
Average Life (years)
|
Gross
Carrying
Value
|
Accumulated
Amortization
|
Net
Carrying
Value
|
Weighted
Average
Life
(years)
|
|||||||||||||||||
Purchased
customer accounts
|
|
$
|
516,645
|
|
$
|
(134,465)
|
$
|
382,180
|
|
|
14.9
|
|
$
|
498,580
|
|
$
|
(126,161)
|
$
|
372,419
|
|
|
14.9
|
|||
Noncompete
agreements
|
|
|
34,319
|
|
|
(29,348)
|
|
4,971
|
|
|
7.0
|
|
|
34,154
|
|
|
(28,666)
|
|
5,488
|
|
|
7.0
|
|||
Total
|
|
$
|
550,964
|
|
$
|
(163,813)
|
$
|
387,151
|
|
|
|
|
$
|
532,734
|
|
$
|
(154,827)
|
$
|
377,907
|
|
|
(in
thousands)
|
2006
|
2005
|
|||||
Unsecured
Senior Notes
|
$
|
200,000
|
$
|
200,000
|
|||
Acquisition
notes payable
|
61,506
|
43,889
|
|||||
Term
loan agreements
|
22,500
|
25,714
|
|||||
Revolving
credit facility
|
-
|
-
|
|||||
Other
notes payable
|
196
|
206
|
|||||
Total
debt
|
284,202
|
269,809
|
|||||
Less
current portion
|
(73,370
|
)
|
(55,630
|
)
|
|||
Long-term
debt
|
$
|
210,832
|
$
|
214,179
|
For
the three months
ended
March 31,
|
|||||||
(in
thousands)
|
2006
|
2005
|
|||||
Cash
paid during the period for:
|
|||||||
Interest
|
$
|
6,187
|
$
|
6,365
|
|||
|
|
|
|||||
Income
taxes
|
$
|
4,430
|
$
|
415
|
For
the three months
ended
March 31,
|
|||||||
(in
thousands)
|
2006
|
2005
|
|||||
Unrealized
holding gain (loss) on available-for-sale securities, net of tax
effect of
$256 for 2006; net of tax benefit of $243 for 2005
|
$
|
438
|
$
|
(783
|
)
|
||
Net
gain on cash-flow hedging derivative, net of tax effect of $30 for
2006,
net of tax effect of $167 for 2005
|
$
|
50
|
$
|
300
|
|||
Notes
payable issued or assumed for purchased customer accounts
|
$
|
23,050
|
$
|
35,468
|
|||
Notes
received on the sale of fixed assets and customer accounts
|
$
|
-
|
$
|
582
|
For
the three months
ended
March 31,
|
|||||||
(in
thousands)
|
2006
|
2005
|
|||||
Net
income
|
$
|
50,026
|
$
|
43,018
|
|||
|
|
|
|||||
Net
unrealized holding gain (loss) on available-for-sale
securities
|
438
|
(783
|
)
|
||||
|
|
|
|||||
Net
gain on cash-flow hedging derivative
|
50
|
300
|
|||||
Comprehensive
income
|
$
|
50,514
|
$
|
42,535
|
For
the three months ended March 31, 2006
|
|||||||||||||||||||
Retail
|
National
Programs
|
Brokerage
|
Services
|
Other
|
Total
|
||||||||||||||
(in
thousands)
|
|||||||||||||||||||
Total
revenues
|
$
|
142,551
|
$ |
39,001
|
$ |
40,982
|
$ |
6,658
|
$ |
1,390
|
$ |
230,582
|
|||||||
Investment
income
|
22
|
97
|
906
|
13
|
1,171
|
2,209
|
|||||||||||||
Amortization
|
4,828
|
2,188
|
1,962
|
11
|
11
|
9,000
|
|||||||||||||
Depreciation
|
1,374
|
536
|
419
|
105
|
161
|
2,595
|
|||||||||||||
Interest
expense
|
4,784
|
2,617
|
4,441
|
1
|
(8,321
|
)
|
3,522
|
||||||||||||
Income
before income taxes
|
47,170
|
12,034
|
7,986
|
1,531
|
12,715
|
81,436
|
|||||||||||||
Total
assets
|
1,037,773
|
466,322
|
566,478
|
18,862
|
(407,033
|
)
|
1,682,402
|
||||||||||||
Capital
expenditures
|
1,506
|
1,406
|
377
|
120
|
1,068
|
4,477
|
For
the three months ended March 31, 2005
|
|||||||||||||||||||
Retail
|
National
Programs
|
Brokerage
|
Services
|
Other
|
Total
|
||||||||||||||
(in
thousands)
|
|||||||||||||||||||
Total
revenues
|
$
|
137,321
|
$
|
33,048 |
$
|
23,649
|
$
|
6,384
|
$
|
1,972
|
$
|
202,374
|
|||||||
Investment
income
|
23
|
75
|
15
|
-
|
852
|
965
|
|||||||||||||
Amortization
|
4,723
|
2,031
|
755
|
11
|
15
|
7,535
|
|||||||||||||
Depreciation
|
1,416
|
471
|
202
|
106
|
172
|
2,367
|
|||||||||||||
Interest
expense
|
5,374
|
2,673
|
1,789
|
1
|
(6,295
|
)
|
3,542
|
||||||||||||
Income
before income taxes
|
43,445
|
8,495
|
7,060
|
1,405
|
10,108
|
70,513
|
|||||||||||||
Total
assets
|
899,441
|
396,397
|
402,876
|
14,454
|
(251,643
|
)
|
1,461,525
|
||||||||||||
Capital
expenditures
|
2,175
|
763
|
220
|
84
|
227
|
3,469
|
ITEM
2
-
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF
OPERATIONS.
|
2006
|
2005
|
Percent
Change
|
|||||||
REVENUES
|
|||||||||
Commissions
and fees
|
|
$
|
194,448
|
|
$
|
172,471
|
|
12.7%
|
|
Contingent
commissions
|
|
|
33,467
|
|
|
27,844
|
|
20.2%
|
|
Investment
income
|
|
|
2,209
|
|
|
965
|
|
128.9%
|
|
Other
income, net
|
|
|
458
|
|
|
1,094
|
|
(58.1)%
|
|
Total
revenues
|
|
|
230,582
|
|
|
202,374
|
|
13.9%
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
Employee
compensation and benefits
|
|
|
100,730
|
|
|
90,384
|
|
11.4%
|
|
Non-cash
stock-based compensation
|
|
|
2,330
|
|
|
891
|
|
161.5%
|
|
Other
operating expenses
|
|
|
30,969
|
|
|
27,142
|
|
14.1%
|
|
Amortization
|
|
|
9,000
|
|
|
7,535
|
|
19.4%
|
|
Depreciation
|
|
|
2,595
|
|
2,367
|
|
9.6%
|
||
Interest
|
|
|
3,522
|
|
|
3,542
|
|
(0.6)%
|
|
Total
expenses
|
|
|
149,146
|
|
131,861
|
|
13.1%
|
||
|
|
|
|
|
|
|
|
|
|
Income
before income taxes
|
|
$
|
81,436
|
|
$
|
70,513
|
|
15.5%
|
|
|
|
|
|
|
|
|
|
|
|
Net
internal growth rate - core commissions and fees
|
1.2%
|
|
3.5%
|
|
|
|
|||
Employee
compensation and benefits ratio
|
43.7%
|
|
44.7%
|
|
|||||
Other
operating expenses ratio
|
13.4%
|
|
13.4%
|
|
|||||
|
|
|
|
|
|
|
|
||
Capital
expenditures
|
|
$
|
4,477
|
|
$
|
3,469
|
|
||
Total
assets at March 31
|
|
$
|
1,682,402
|
|
$
|
1,461,525
|
|
2006
|
2005
|
Percent
Change
|
||||||||
REVENUES | ||||||||||
Commissions
and fees
|
$
|
115,444
|
$
|
112,215
|
2.9
|
%
|
||||
Contingent
commissions
|
26,763
|
24,362
|
9.9
|
%
|
||||||
Investment
income
|
22
|
23
|
(4.3
|
)%
|
||||||
Other
income, net
|
322
|
721
|
(55.3
|
)%
|
||||||
Total
revenues
|
142,551
|
137,321
|
3.8
|
%
|
||||||
|
|
|
|
|||||||
EXPENSES
|
|
|
|
|||||||
Employee
compensation and benefits
|
62,631
|
60,751
|
3.1
|
%
|
||||||
Non-cash
stock-based compensation
|
739
|
547
|
35.1
|
%
|
||||||
Other
operating expenses
|
21,025
|
21,065
|
(0.2
|
)%
|
||||||
Amortization
|
4,828
|
4,723
|
2.2
|
%
|
||||||
Depreciation
|
1,374
|
1,416
|
(3.0
|
)%
|
||||||
Interest
|
4,784
|
5,374 |
(11.0
|
)%
|
||||||
Total
expenses
|
95,381
|
93,876 |
1.6
|
%
|
||||||
|
|
|
|
|||||||
Income
before income taxes
|
$
|
47,170
|
43,445 |
8.6
|
%
|
|||||
|
|
|
|
|||||||
Net
internal growth rate - core commissions and fees
|
(0.9
|
)%
|
1.2
|
%
|
|
|||||
Employee
compensation and benefits ratio
|
43.9
|
%
|
44.2
|
%
|
|
|||||
Other
operating expenses ratio
|
14.7
|
%
|
15.3
|
%
|
|
|||||
|
|
|
|
|||||||
Capital
expenditures
|
$
|
1,506
|
$
|
2,175
|
|
|||||
Total
assets at March 31
|
$
|
1,037,773
|
$
|
899,441
|
|
2006
|
2005
|
Percent
Change
|
||||||||
REVENUES
|
||||||||||
Commissions
and fees
|
$
|
37,116
|
$
|
31,689
|
17.1
|
%
|
||||
Contingent
commissions
|
1,777
|
1,147
|
54.9
|
%
|
||||||
Investment
income
|
97
|
75
|
29.3
|
%
|
||||||
Other
income, net
|
11
|
137
|
(92.0
|
)%
|
||||||
Total
revenues
|
39,001
|
33,048
|
18.0
|
%
|
||||||
|
|
|
|
|||||||
EXPENSES
|
|
|
|
|||||||
Employee
compensation and benefits
|
15,672 | 13,975 |
12.1
|
%
|
||||||
Non-cash
stock-based compensation
|
131 | 91 |
44.0
|
%
|
||||||
Other
operating expenses
|
5,823 | 5,312 |
9.6
|
%
|
||||||
Amortization
|
2,188 | 2,031 |
7.7
|
%
|
||||||
Depreciation
|
536 | 471 |
13.8
|
%
|
||||||
Interest
|
2,617 | 2,673 |
(2.1
|
)%
|
||||||
Total
expenses
|
26,967 | 24,553 |
9.8
|
%
|
||||||
Income
before income taxes
|
$
|
12,034
|
$
|
8,495
|
41.7
|
%
|
||||
|
||||||||||
Net
internal growth rate - core commissions and fees
|
6.8
|
%
|
7.0 | % | ||||||
Employee
compensation and benefits ratio
|
40.2
|
%
|
42.3 | % | ||||||
Other
operating expenses ratio
|
14.9
|
%
|
16.1 | % | ||||||
|
|
|||||||||
Capital
expenditures
|
$
|
1,406
|
$
|
763
|
||||||
Total
assets at March 31
|
$
|
466,322
|
$
|
396,397
|
2006
|
2005
|
Percent
Change
|
||||||||
REVENUES
|
||||||||||
Commissions
and fees
|
$
|
35,143
|
$
|
21,366
|
64.5
|
%
|
||||
Contingent
commissions
|
4,927
|
2,260
|
118.0
|
%
|
||||||
Investment
income
|
906
|
15
|
NMF
|
%
|
||||||
Other
income, net
|
6
|
8
|
(25.0
|
)%
|
||||||
Total
revenues
|
40,982
|
23,649 |
73.3
|
%
|
||||||
|
|
|
|
|||||||
EXPENSES
|
|
|
|
|||||||
Employee
compensation and benefits
|
18,610
|
10,462
|
77.9
|
%
|
||||||
Non-cash
stock-based compensation
|
130
|
41
|
217.1
|
%
|
||||||
Other
operating expenses
|
7,434
|
3,340
|
122.6
|
%
|
||||||
Amortization
|
1,962
|
755
|
159.9
|
%
|
||||||
Depreciation
|
419
|
202 |
107.4
|
%
|
||||||
Interest
|
4,441
|
1,789
|
148.2
|
%
|
||||||
Total
expenses
|
32,996
|
16,589
|
98.9
|
%
|
||||||
|
|
|
|
|||||||
Income
before income taxes
|
$
|
7,986
|
$
|
7,060
|
13.1
|
%
|
||||
|
|
|
|
|||||||
Net
internal growth rate - core commissions and fees
|
3.3
|
%
|
15.5
|
%
|
|
|||||
Employee
compensation and benefits ratio
|
45.4
|
%
|
44.2
|
%
|
|
|||||
Other
operating expenses ratio
|
18.1
|
%
|
14.1 | % |
|
|||||
|
|
|
|
|||||||
Capital
expenditures
|
$
|
377
|
$
|
220
|
|
|||||
Total
assets at March 31
|
$
|
566,478
|
$
|
402,876
|
|
2006
|
2005
|
Percent
Change
|
||||||||
REVENUES
|
||||||||||
Commissions
and fees
|
$
|
6,644
|
$
|
6,384
|
4.1
|
%
|
||||
Contingent
commissions
|
-
|
-
|
-
|
|||||||
Investment
income
|
13
|
-
|
NMF
|
|||||||
Other
income, net
|
1
|
-
|
NMF
|
|||||||
Total
revenues
|
6,658
|
6,384
|
4.3
|
%
|
||||||
|
|
|
|
|||||||
EXPENSES
|
|
|
|
|||||||
Employee
compensation and benefits
|
3,900
|
3,805
|
2.5
|
%
|
||||||
Non-cash
stock-based compensation
|
30
|
31
|
(3.2
|
)%
|
||||||
Other
operating expenses
|
1,080
|
1,025
|
5.4
|
%
|
||||||
Amortization
|
11
|
11
|
-
|
%
|
||||||
Depreciation
|
105
|
106
|
(0.9
|
)%
|
||||||
Interest
|
1
|
1
|
-
|
%
|
||||||
Total
expenses
|
5,127
|
4,979
|
3.0
|
%
|
||||||
|
|
|
|
|||||||
Income
before income taxes
|
$
|
1,531
|
$
|
1,405
|
9.0
|
%
|
||||
|
|
|
|
|||||||
Net
internal growth rate - core commissions and fees
|
4.1
|
%
|
11.3
|
%
|
|
|||||
Employee
compensation and benefits ratio
|
58.6
|
%
|
59.6
|
%
|
|
|||||
Other
operating expenses ratio
|
16.2
|
%
|
16.1 | % |
|
|||||
|
|
|
|
|||||||
Capital
expenditures
|
$
|
120
|
$
|
84
|
|
|||||
Total
assets at March 31
|
$
|
18,862
|
$
|
14,454
|
|
(in
thousands)
|
Total
|
Less
Than
1
Year
|
1-3
Years
|
4-5
Years
|
After
5 Years
|
|||||||||||
Long-term
debt
|
$
|
284,187
|
$
|
73,363
|
$
|
10,497
|
$
|
297
|
$
|
200,030
|
||||||
Capital
lease obligations
|
15
|
7
|
8
|
-
|
-
|
|||||||||||
Other
long-term liabilities
|
13,304
|
10,600
|
930
|
654
|
1,120
|
|||||||||||
Operating
leases
|
80,639
|
19,852
|
31,108
|
20,947
|
8,732
|
|||||||||||
Interest
obligations
|
82,191
|
12,697
|
23,607
|
23,320
|
22,567
|
|||||||||||
Maximum
future acquisition
|
145,539
|
85,326
|
60,204
|
9
|
-
|
|||||||||||
contingency
payments
|
||||||||||||||||
Total
contractual cash obligations
|
$
|
605,875
|
$
|
201,845
|
$
|
126,354
|
$
|
45,227
|
$
|
232,449
|
·
|
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, New Jersey,
New York, Pennsylvania 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 Securities and Exchange Commission (“SEC”)
filings.
|
|
|
|
|
|
(in
thousands, except percentages)
|
Contractual/
Notional
Amount
|
Fair
Value
|
Weighted
Average
Pay
Rates
|
Weighted
Average
Received
Rates
|
|
|
|
|
|
Interest
rate swap agreement
|
$22,500
|
$138
|
4.53%
|
4.25%
|
|
(a)
|
EXHIBITS
|
|
|
|
|
|