UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF
1934
For the period ended March 31, 1998
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition period from _______________ to _______________
COMMISSION FILE NUMBER 000-23427
STIRLING COOKE BROWN HOLDINGS LIMITED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
BERMUDA NOT APPLICABLE
(STATE OF OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
VICTORIA HALL, 3RD FLOOR, 11 VICTORIA STREET, HAMILTON HM 11, BERMUDA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
TELEPHONE NUMBER: (441) 295-7556
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES |X| NO |_|
The number of outstanding shares of the registrant's Ordinary Stock, $0.25
par value, as of March 31, 1998 was 9,863,372.
INDEX
PART 1 - FINANCIAL INFORMATION
PAGE
----
ITEM 1 UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets at December 31, 1997 and
March 31, 1998 (Unaudited)............................... 1
Unaudited Consolidated Statements of Income and
Comprehensive Income for the three month periods ended
March 31, 1997 and 1998.................................. 2
Unaudited Consolidated Statements of Changes in
Shareholders' Equity for the three month periods ended
March 31, 1997 and 1998.................................. 3
Unaudited Consolidated Statements of Cash Flows for the
three month periods ended March 31, 1997 and 1998........ 4
Notes to Unaudited Consolidated Financial Statements at
March 31, 1997 and 1998.................................. 5
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS...................... 6
PART II - OTHER INFORMATION:
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K......................... 11
SIGNATURES.............................................. 11
EXHIBITS
Exhibit 11 - Computation of Net Income per Share and Net Income
per Share assuming dilution 12
<TABLE>
<CAPTION>
STIRLING COOKE BROWN HOLDINGS LIMITED
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND MARCH 31, 1998 (UNAUDITED)
(EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE AND PER SHARE DATA)
1997 1998
---- ----
ASSETS
<S> <C> <C>
Marketable securities, at fair value
Debt securities (amortized cost, 1997 - $14,882, 1998 - $9,422)........ $ 14,971 $ 9,526
Equity securities (cost, 1997 - $454, 1998 - $454)..................... 486 493
Short term investments (amortized cost,1997 - $5,579, 1998 - $11,006).. 5,579 11,006
----- ------
Total marketable securities............................................... 21,036 21,025
Cash and cash equivalents................................................. 50,631 59,642
Fiduciary funds-restricted................................................ 60,224 76,999
Insurance and reinsurance balances receivable (affiliates, 1997 - $8,118,
1998 - $8,578)..................................................... 213,332 213,909
Outstanding losses recoverable from reinsurers............................ 24,621 30,295
Deferred acquisition costs................................................ 579 1,739
Deferred reinsurance premiums ceded....................................... 12,503 17,737
Deferred tax asset........................................................ 1,109 1,415
Goodwill.................................................................. 8,613 8,437
Other assets.............................................................. 10,926 12,419
Assets related to deposit liabilities..................................... 2,756 3,056
----- ------
Total assets........................................................... $406,330 $446,673
======== ========
LIABILITIES
Outstanding losses and loss expenses...................................... $ 36,276 $ 44,272
Unearned premiums......................................................... 19,187 25,628
Deferred income........................................................... 2,853 3,137
Insurance and reinsurance balances payable (affiliates, 1997 - $16,187,
1998 - $17,705) ............................................... 251,713 271,730
Funds withheld............................................................ 1,314 1,492
Accounts payable and accrued liabilities.................................. 6,170 6,564
Income taxes payable...................................................... 2,958 3,968
Deposit liabilities....................................................... 2,756 3,056
-------- --------
Total liabilities...................................................... 323,227 359,847
-------- --------
SHAREHOLDERS' EQUITY
--------------------
Share capital
Authorized 20,000,000 ordinary shares of par value $0.25 each
Issued and fully paid 9,863,372 ordinary shares........................ 2,466 2,466
Additional paid in capital................................................ 54,167 54,167
Accumulated other comprehensive income.................................... 63 95
Retained earnings......................................................... 27,074 30,765
-------- --------
83,770 87,493
Less: 40,000 Ordinary shares in treasury at cost.......................... (667) (667)
-------- --------
Total shareholders' equity............................................. 83,103 86,826
-------- -------
Total liabilities and shareholders' equity............................. $ 406,330 $ 446,673
========= =========
See accompanying notes to unaudited consolidated financial statements
</TABLE>
STIRLING COOKE BROWN HOLDINGS LIMITED
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
THREE MONTHS ENDED MARCH 31, 1997 AND 1998
(EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT PER SHARE DATA)
1997 1998
REVENUES
Risk management fees......................... $10,266 $12,775
Net premiums earned.......................... 2,694 4,486
Net investment income........................ 1,212 1,966
Other income................................. 173 716
------- -------
Total revenues......................... 14,345 19,943
------- -------
EXPENSES
Net losses and loss expenses incurred........ 2,376 4,767
Acquisition costs............................ 360 566
Depreciation and amortization of capital
assets..................................... 283 351
Amortization of goodwill..................... 176 177
Salaries and benefits........................ 4,058 4,665
Other operating expenses..................... 3,532 4,537
------- -------
Total expenses......................... 10,785 15,063
------- -------
Income before taxation....................... 3,560 4,880
Taxation..................................... 740 893
------- -------
Net income................................... $ 2,820 $ 3,987
======= =======
Other comprehensive (loss) income, net of tax:
Unrealized (losses) gains on securities.... (302) 32
Less: reclassification adjustments
for gains included in net income........... 112 0
------ -------
Other comprehensive (loss) income......... (190) 32
------ -------
Comprehensive income...................... 2,630 4,019
====== =======
Net income per share......................... $ 0.35 $ 0.41
====== =======
Net income per share
assuming dilution............................ $ 0.34 $ 0.40
======= =======
Dividends per share.......................... $ 0.00 $ 0.03
======= =======
See accompanying notes to unaudited consolidated financial statements
STIRLING COOKE BROWN HOLDINGS LIMITED
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1997 AND 1998
(EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT PER SHARE DATA)
1997 1998
ORDINARY SHARES OF PAR VALUE $0.25 EACH
Balance at beginning of period............... 1,500 $ 2,466
-------- --------
Balance at end of period..................... 1,500 $ 2,466
-------- --------
ADDITIONAL PAID IN CAPITAL
Balance at beginning of period............... $ 12,319 $ 54,167
-------- ---------
Balance at end of period..................... $ 12,319 $ 54,167
-------- ---------
ACCUMULATED OTHER COMPREHENSIVE INCOME
Balance at beginning of period............... $ 147 $ 63
Change in unrealized (loss) gain on
marketable securities (302) 32
Balance at end of period..................... $ (155) $ 95
-------- --------
RETAINED EARNINGS
Balance at beginning of period............... $ 15,973 $ 27,074
Net income................................... 2,820 3,987
Dividends (296)
-------- --------
Balance at end of period .................... $ 18,793 $ 30,765
-------- --------
TREASURY STOCK
Balance at beginning of period .............. $ (938) $ (667)
-------- --------
Balance at end of period .................... $ (938) $ (667)
-------- --------
TOTAL SHAREHOLDERS' EQUITY ....................... $ 31,519 $ 86,826
======== ========
Dividends per share were $0 and $0.03 for the three months ended March 31,
1997 and 1998, respectively.
See accompanying notes to unaudited consolidated financial statements
<TABLE>
<CAPTION>
STIRLING COOKE BROWN HOLDINGS LIMITED
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1998
(EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS)
1997 1998
OPERATING ACTIVITIES
<S> <C> <C>
Net income................................................ $ 2,820 $ 3,987
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of capital assets........ 283 351
Amortization of goodwill............................... 176 177
Amortization of marketable securities.................. 22 32
Net realized gains on sale of marketable securities.... (181) 0
Equity in income of affiliates......................... (161) (663)
Changes in non cash operating assets and liabilities:
Fiduciary funds........................................ 1,000 (16,774)
Insurance and reinsurance balances receivable.......... (125,922) (576)
Outstanding losses recoverable from reinsurers......... (2,376) (5,674)
Deferred acquisition costs............................. (76) (1,160)
Deferred reinsurance premiums ceded.................... 207 (5,234)
Other assets........................................... (910) (697)
Deferred tax asset..................................... (647) (296)
Assets related to deposit liabilities.................. 256 (300)
Outstanding losses and loss expenses................... 3,997 7,995
Unearned premiums...................................... (500) 6,441
Insurance and reinsurance balances payable............. 120,071 20,016
Funds withheld......................................... 26 180
Accounts payable and accrued liabilities............... 1,496 392
Income taxes payable................................... 673 1,010
Deferred income........................................ 421 284
Deposit liabilities.................................... (256) 300
-------- -------
Net cash provided by operating activities............. 307 9,791
-------- -------
INVESTING ACTIVITIES
Purchase of capital assets............................. (310) (532)
Sale of capital assets................................. 13 47
Purchase of equity securities.......................... (3,331) 0
Purchase of short-term investments, net................ (1,765) (5,427)
Proceeds on maturity of debt securities................ 2,086 5,428
Proceeds on sale of debt securities.................... 41 0
Proceeds on sale of equity securities.................. 3,545 0
Purchase of subsidiaries, net of cash acquired......... (1,197) 0
-------- -------
Cash used by investing activities..................... (918) (484)
-------- -------
FINANCING ACTIVITIES
Dividends.............................................. 0 (296)
-------- -------
Cash used by financing activities..................... 0 (296)
-------- -------
(Decrease) increase in cash and cash equivalents.......... (499) 9,011
Cash and cash equivalents at beginning of period.......... 15,602 50,631
-------- -------
Cash and cash equivalents at end of period................ $ 15,103 $59,642
======== ======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for income taxes.......... $ 215 $ 530
======== ======
See accompanying notes to unaudited consolidated financial statements
</TABLE>
STIRLING COOKE BROWN HOLDINGS LIMITED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997 AND 1998
(EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE DATA)
1. INTERIM ACCOUNTING POLICY
In the opinion of management of the Company, the accompanying
unaudited consolidated financial statements include all adjustments,
consisting only of normal recurring adjustments, necessary to present
fairly the financial position of the Company at December 31, 1997 and March
31, 1998 and the results of operations and cash flows for the three months
ended March 31, 1997 and 1998. Although the Company believes that the
disclosure in these financial statements is adequate to make the
information presented not misleading certain information and footnote
information normally included in financial statements prepared in
accordance with generally accepted accounting principles has been condensed
or omitted pursuant to the rules and regulations of the Securities and
Exchange Commission. Interim statements are subject to possible adjustments
in connection with the annual audit of the Company's financial statements
for the full year. The interim financial statements should be read in
conjunction with the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997. Results of operations for the three months
ended March 31, 1998 are not necessarily indicative of what operating
results may be for the full year.
2. COMPREHENSIVE INCOME
During the quarter ended March 31, 1998, the Company adopted
the reporting and disclosure requirements of SFAS No. 130
"Reporting Comprehensive Income".
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following is Management's discussion and analysis of Stirling Cooke
Brown Holdings Limited's (the "Company") results of operations for the
three months ended March 31, 1997 and 1998 and financial condition as of
March 31, 1998. This discussion and analysis should be read in conjunction
with the attached unaudited consolidated financial statements and notes
thereto of the Company and the audited consolidated financial statements
and notes thereto of the Company contained in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1997.
GENERAL
The Company was incorporated in Bermuda on December 12, 1995. The Company
is a holding company engaged, through its subsidiaries, in providing
insurance services primarily in the United States, Bermuda and Europe. The
Company's activities include insurance and reinsurance brokering,
underwriting management, risk management, claims control, loss and safety
prevention, third party administration and managed care services. The
Company also owns a United States domiciled insurance company Realm
National Insurance Company "Realm National" which, together with the
Company's Bermuda based reinsurance company Comp Indemnity Reinsurance
Company Limited "CIRCL", writes insurance and reinsurance business. Realm
National also earns policy issuance fees. The Company specializes in the
North American occupational accident and workers' compensation alternative
risk transfer markets.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998.
The results of operations for the three months ended March 31, 1998 reflect
a continuation of growth in revenues and net income resulting from the
increased business activity of the Company.
REVENUES
Total revenues increased $5.6 million, or 39.0%, to $19.9 million for
the first three months of 1998, from $14.3 million in 1997.
The components of the Company's revenues are illustrated below:
FOR THE THREE MONTHS ENDED MARCH 31
1997 1998
---- ----
(dollars in thousands)
Total % of Total Total % of Total
Risk management fees 10,266 71.6% $12,775 64.0%
Net premiums earned 2,694 18.8 4,486 22.5
Net investment 1,212 8.4 1,966 9.9
income
Other income 173 1.2 716 3.6
--- --- --- ---
Total revenues $14,345 100.0% $19,943 100.0%
======= ====== ======= ======
The increase in revenues for the first three months of 1998 compared
to the corresponding period in 1997 consisted primarily of a $2.5 million
increase in risk management fees. This was due to strong growth in managing
general agency fees as a result of a greater penetration of existing
markets by the Company's managing general agency network, increased
business volume by the Company's brokering subsidiaries, increased program
administrative fees, and additional risk management fees generated from the
provision of loss control and audit services. Net premiums earned increased
$1.8 million over 1997 primarily as a result of increased business
generated by Realm National for the Company. Net investment income in 1998
increased $0.8 million over 1997, reflecting an increase in the Company's
average balances of cash, including cash held in fiduciary accounts. These
increased cash balances reflect the growth in the Company's business
activities together with the cash held following completion of the
Company's initial public offering in December, 1997. Other income for the
first quarter of 1998 of $0.7 million, comprised primarily of the Company's
equity share in the net income of affiliates, increased from $0.2 million
in 1997.
The components of the Company's risk management fees are
illustrated below:
FOR THE THREE MONTHS ENDED MARCH 31
1997 1998
---- ----
(dollars in thousands)
% %
Total of Total Total of Total
Brokerage fees and
commissions $5,324 51.9% $6,066 47.5%
Managing general agency
fees 2,508 24.4 3,715 29.1
Underwriting management
fees 960 9.3 919 7.2
Program and captive
management fees 597 5.8 875 6.8
Loss control and audit fees 663 6.5 814 6.4
Policy issuance fees 214 2.1 386 3.0
--- --- --- ---
Total risk management
fees $10,266 100.0% $12,775 100.0%
======= ====== ======= ======
Risk management fees increased $2.5 million, or 24.4%, to $12.8
million, for the first three months of 1998 from $10.3 million in 1997.
Managing general agency fees had the most significant impact on the growth
of total risk management fees for the first three months of 1998,
increasing $1.2 million, primarily as a result of the Company's continued
expansion of its managing general agency operations in Florida and Texas.
Brokerage fees and commissions increased $0.8 million for the first three
months of 1998, primarily the result of increased insurance and reinsurance
brokerage activities from the Company's U.K.-based brokerage operations.
Program and captive management fees increased $0.3 million in the first
three months of 1998 to $0.9 million, from $0.6 million in 1997, due to an
increase in business resulting from increased program volumes generated by
the Company's managing general agency network. Fees for loss control and
audit services provided by North American Risk, Inc. increased $0.1 million
for the first three months of 1998, to $0.8 million, from $0.7 million in
1997. The Company's policy issuance fees earned by Realm National increased
$0.2 million for the first three months of 1998, to $0.4 million, from $0.2
million for the first three months of 1997.
Expenses
The components of the Company's expenses are illustrated below:
FOR THE THREE MONTHS ENDED MARCH 31
1997 1998
---- ----
(thousands of dollars)
Net losses and loss $2,376 $4,767
expenses incurred
Insurance premium acquisition costs 360 566
--- ---
Total insurance costs 2,736 5,333
----- -----
Salaries and benefits 4,058 4,665
General and administration expenses 3,991 5,065
----- -----
Total operating expenses 8,049 9,730
----- -----
Total expenses $10,785 $15,063
======= =======
Total expenses increased $4.3 million, or 39.7% to $15.1 million, for
the first three months of 1998 from $10.8 million in 1997. Total insurance
costs, which includes net losses and loss expenses incurred and insurance
premium acquisition costs, increased $2.6 million, to $5.3 million, for the
first three months of 1998 from $2.7 million in 1997. This increase in
total insurance costs was primarily a result of the corresponding increase
in net premiums earned during the period together with loss development on
one particular program that covers bodily injury and property risks in the
construction industry. Total operating expenses increased $1.7 million, or
20.9%, to $9.7 million for the first three months of 1998 from $8.0 million
in 1997. Salaries and benefits, the largest component of total operating
expenses, increased $0.6 million, to $4.7 million, for the first three
months of 1998 from $4.1 million in 1997. General and administration
expenses increased $1.1 million, to $5.1 million, for the first three
months of 1998 from $4.0 million in 1997, primarily as a result of the
general expansion of the Company's business as reflected in the Company's
growth in revenues.
INCOME
- ------
The components of the Company's income are illustrated below:
FOR THE THREE MONTHS ENDED MARCH 31
1997 1998
---- ----
(thousands of dollars)
Risk management
companies $ 3,332 $ 5,532
Underwriting companies 228 (652)
------- -------
Income before taxation 3,560 4,880
------- -------
Taxation 740 893
------- -------
Net income $ 2,820 $ 3,987
======= =======
Effective tax rate 20.8% 18.3%
Risk management companies comprise those companies that do not retain
any underwriting risk and underwriting companies comprise those companies
that do retain various degrees of risk. Underwriting companies include
income from risk management fees earned by them in the form of policy
issuance fees. Interest income is included in revenue if the asset on which
the interest is earned is included among the segment's identifiable assets.
The performance of the underwriting companies during the first quarter of
1998 was affected by adverse loss development on one particular program
that the Company writes covering bodily injury and property risks in the
construction industry.
Income before taxation increased $1.3 million, or 37.1%, to $4.9
million for the first three months of 1998 from $3.6 million in the
corresponding period in 1997. Net income increased $1.2 million, or 41.4%,
to $4.0 million for the first three months of 1998 from $2.8 million in
1997.
Provision for income taxes increased $0.2 million, to $0.9 million,
for the first three months of 1998 compared to $0.7 million in 1997,
representing effective tax rates of 18.3% and 20.8%, respectively. This
decrease in the effective tax rate between 1998 and 1997 was primarily due
to the relative increase in profits from the Company's Bermuda
subsidiaries.
Basic earnings per share increased to $0.41 in 1998 from $0.35 in
1997. Diluted earnings per share for the three month period increased to
$0.40, in 1998 from $0.34 in 1997.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1998, the Company held cash and marketable securities of
$80.7 million compared to $71.1 million at December 31, 1997. In addition,
the Company held cash in fiduciary accounts relating to insurance client
premiums amounting to $77.0 million at March 31, 1998 compared to $60.2
million at December 31, 1997. Of the $80.7 million of cash and marketable
securities held by the Company at March 31, 1998 (December 31, 1997 - $71.7
million), $46.7 million (December 31, 1997 - $40.9 million) were held by
subsidiaries whose payment of dividends to the Company was subject to
regulatory restrictions or possible tax liabilities. At March 31, 1998,
Realm National's investment portfolio (at fair market value) totalled $21.0
million. The portfolio consisted primarily of U.S. Treasury, short-term
cash and A-rated corporate debt securities.
During the three month period ending March 31, 1998, the Company's
operating activities generated $9.8 million of net cash, compared to
generating $0.3 million of net cash during the corresponding three months
of 1997. The cash generated from operating activities varies according to
the timing of collections and payments of insurance and reinsurance
balances.
Total assets increased to $446.7 million at March 31, 1998 from $406.3
million at December 31, 1997, principally as a result of increased business
activity. The Company had no outstanding debt as of March 31, 1998.
On March 30, 1998, the Company paid a dividend of 0.03 per share to
shareholders of record on March 23, 1998. The actual amount and timing of
any future ordinary share dividends is at the discretion of the Board of
Directors of the Company. The declaration and payment of any dividends is
dependent upon the profits and financial requirements of the Company and
other factors, including certain legal, regulatory and other restrictions.
There can be no assurance that the Company's dividend policy will not
change or that the Company will declare or pay any dividends in future
periods.
ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued SFAS No.
131 "Disclosures about Segments of an Enterprise and Related Information."
This statement was effective for financial statements issued for fiscal
years beginning after December 15, 1997. SFAS No. 131 requires the Company
to report financial and descriptive information about its reportable
operating segments. The Company is currently reviewing the impact of this
standard on its financial reporting.
In December 1997, AICPA Accounting Standards Executive Committee
issued Statement of Position (SOP) 97-3. Accounting by Insurance and Other
Enterprises for Insurance-Related Assessments. The accounting guidance of
this SOP focuses on the timing of recognition and measurement of
liabilities for insurance-related assessments. Guidance is also provided on
recording assets representing future recoveries of assessments through
premium tax offsets or policy surcharges. The SOP was issued to reduce
diversity in practice and to improve comparability and disclosure. The SOP
is effective for fiscal years beginning after December 15, 1998. The
Company is currently reviewing the impact of the adoption of this new SOP
on its consolidated financial statements.
YEAR 2000
The Company has conducted a review of its computer systems to identify
the systems that could be affected by the Year 2000 Issue and is developing
an implementation plan to resolve the issue. The Year 2000 Issue is the
result of computer programs being written using two digits rather than four
to define the applicable year. Any of the Company's programs that have
time-sensitive software may recognize a date using "00" as the year 1900
rather than the year 2000. This could result in a major system failure or
miscalculations. The Company presently believes that, with modifications to
existing software and conversions to new software, the Year 2000 Issue will
not pose significant operational problems for the Company's computer
systems as so modified and converted. However, if such modifications and
conversions are not completed timely, the Year 2000 Issue may have a
significant impact on the operations of the Company.
The Company plans to have formal communications with all of its
significant vendors and large customers to determine the extent to which
the Company is vulnerable to those third parties' failure to remediate
their own Year 2000 Issues. However, there can be no guarantee that the
systems of other companies on which the Company's systems rely will be
timely converted, or that a failure to convert by another company, or a
conversion that is incompatible with the Company's systems, would not have
a material adverse effect on the Company's operating results.
The total cost to the Company of the Year 2000 issue has not yet been
calculated but is not anticipated to be material to its financial position
or results of operations in any given period.
NOTE ON FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. This Form 10-Q may include
forward-looking statements which reflect the Company's current views with
respect to future events and financial performance. These forward-looking
statements are identified by their use of such terms and phrases as
"intends," "intend," "intended," "goal," "estimate," "estimates,"
"expects," "expect," "expected," "project," "projected," "projections,"
"plans," "anticipates," "anticipated," "should," "designed to,"
"foreseeable future," "believe," "believes" and "scheduled" and similar
expressions. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date the statement
was made. The Company undertakes no obligation to publicly update or revise
any forward-looking statements, whether as a result of new information,
future events or otherwise.
Reference is made to the cautionary statements contained in Exhibit 99 to
the Company's Form 10-K for the year ended December 31, 1997 for a
discussion of the factors that may cause actual results to differ from the
results discussed in these forward-looking statements.
PART II - OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Description
----------- -----------
11. Net income per share Data
(b) Reports on Form 8-K
The Company filed a report on Form 8-K dated March 16, 1998
reporting the Company's financial results for the year ended
December 31, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Dated May 14, 1998
STIRLING COOKE BROWN HOLDINGS LIMITED
BY /s/ George W. Jones
George W. Jones
CHIEF FINANCIAL OFFICER AND DIRECTOR
EXHIBIT 11
STIRLING COOKE BROWN HOLDINGS LIMITED
STATEMENT OF COMPUTATION OF NET INCOME PER ORDINARY SHARE
(Expressed in thousands of United States Dollars, except per share data)
As of or for the three
months ended March 31,
----------------------
1997 1998
---- ----
Net Income ......................................... $ 2,820 $ 3,987
=========== ===========
BASIC
Number of Shares:
Weighted average number of ordinary shares
outstanding ................................... 8,000,000 9,863,372
Weighted average treasury shares held .............. (202,784) (40,000)
Shares issued in June, 1997 (1) .................... 288,888 0
----------- -----------
8,086,104 9,823,372
=========== ===========
Net income per share ............................... $ 0.35 $ 0.41
----------- -----------
DILUTED
Number of shares:
Weighted average number of ordinary shares
outstanding .................................. $ 8,000,000 $ 9,863,372
Weighted average treasury shares held .............. (202,784) (40,000)
Shares issued in June, 1997 (1) .................... 288,888 0
Incremental shares of outstanding stock options .... 253,348 43,689
----------- -----------
8,339,452 9,867,061
=========== ===========
Net income per share assuming dilution ............. $ 0.34 $ 0.40
=========== ===========
(1) In accordance with SEC Staff Accounting Bulletin 98, ordinary shares
which were issued in connection with the conversion of 25 class
"A" non-voting shares are considered outstanding for all periods
presented for purposes of both basic and diluted presentations.
