FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999.
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 0-7201.
BROWN & BROWN, INC.
(Exact Name of Registrant as Specified in its Charter)
Florida 59-0864469
_______________________ __________________________
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
220 S. Ridgewood Ave., Daytona Beach, FL 32114
__________________________________________ ___________
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (904) 252-9601
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, and (2) has been subject to
such filing requirements for the past 90 days. Yes X No __
____
The number of shares of the registrant's common stock, $.10 par value,
outstanding as of July 26, 1999, was 13,591,475.
<PAGE 2>
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BROWN & BROWN, INC.
Index to Form 10-Q
For The Quarter Ended June 30, 1999
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Page
PART I. FINANCIAL INFORMATION ____
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Statements of Income for the three
and six months ended June 30, 1999 and 1998 3
Condensed Consolidated Balance Sheets as of June 30,
1999 and December 31, 1998 4
Condensed Consolidated Statements of Cash Flows for
the six months ended June 30, 1999 and 1998 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures about Market
Risk 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 14
</TABLE>
<PAGE 3>
ITEM 1: FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
BROWN & BROWN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share data)
<S> <C> <C> <C> <C>
For the three months For the six months
ended June 30, ended June 30,
_____________________ __________________
1999 1998 1999 1998
____ ____ ____ ____
REVENUES
Commissions and fees $41,482 $38,038 $84,752 $74,060
Investment income 558 812 1,130 1,587
Other income 63 124 97 (44)
_______ _______ _______ _______
Total revenues 42,103 38,974 85,979 75,603
_______ _______ _______ _______
EXPENSES
Employee compensation and
benefits 22,242 20,712 44,553 38,755
Other operating expenses 8,563 8,703 16,225 15,771
Amortization 1,838 1,468 3,620 2,698
Interest 125 154 285 265
_______ _______ _______ _______
Total expenses 32,768 31,037 64,683 57,489
_______ _______ _______ _______
Income before income taxes 9,335 7,937 21,296 18,114
Income taxes 3,685 3,135 8,411 7,155
_______ _______ _______ _______
NET INCOME $ 5,650 $ 4,802 $12,885 $10,959
_______ _______ _______ _______
Other comprehensive income,
net of tax:
Unrealized gain (loss) on
securities:
Unrealized holding gain (loss),
net of tax effect of ($305)
and tax benefit of $438 for
the three-month periods ended
June 30, 1999 and 1998,
respectively, and net of
tax benefit of $28 and $1,431
for the six-month periods
ended June 30, 1999 and 1998,
respectively 478 (779) (44) (2,332)
_______ _______ _______ _______
Comprehensive Income $ 6,128 $ 4,023 $12,841 $ 8,627
======= ======= ======= =======
Basic and diluted earnings
per share $ 0.42 $ .36 $ 0.96 $ .82
======= ======= ======= =======
Dividend declared per share $ .11 $ .10 $ .22 $ .20
======= ======= ======= ======
Diluted shares outstanding 13,479 13,370 13,486 13,391
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE 4>
<TABLE>
<CAPTION>
BROWN & BROWN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<S> <C> <C>
(Unaudited) (Audited)
June 30, December 31,
1999 1998
______ ______
ASSETS
Cash and cash equivalents $ 39,048 $ 42,174
Short-term investments 818 746
Premiums, commissions and fees receivable 60,144 69,186
Other current assets 7,591 9,840
________ ________
Total current assets 107,601 121,946
Fixed assets, net 13,988 13,698
Intangible assets, net 87,586 79,483
Investments 10,378 10,483
Other assets 4,726 4,903
________ ________
Total assets $224,279 $230,513
======== ========
LIABILITIES
Premiums payable to insurance companies $ 85,900 $ 89,405
Premium deposits and credits due
customers 7,226 8,379
Accounts payable and accrued expenses 19,887 16,122
Current portion of long-term det 5,096 4,960
________ _________
Total current liabilities 118,109 118,866
Long-term debt 4,301 17,207
Deferred income taxes 2,375 2,403
Other liabilities 6,662 7,829
________ ________
Total liabilities 131,447 146,305
________ ________
SHAREHOLDERS' EQUITY
Common stock, par value $.10 per share:
authorized 70,000 shares; issued
13,431 shares at 1999 and 13,498
shares at 1998 1,343 1,350
Retained earnings 85,993 77,318
Accumulated other comprehensive income 5,496 5,540
________ ________
Total shareholders' equity 92,832 84,208
________ ________
Total liabilities and shareholders'
equity $224,279 $230,513
======== ========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE4 5>
<TABLE>
<CAPTION>
BROWN & BROWN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
<S> <C> <C>
For the six months ended June 30,
_________________________________
1999 1998
____ ____
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 12,885 $ 10,959
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 2,036 1,704
Amortization 3,620 2,698
Compensation expense under performance stock plan 631 339
Net (gains) losses on sales of investments, fixed
assets and customer accounts (12) 187
Premiums, commissions and fees receivable, decrease 9,042 182
Other assets, decrease (increase) 1,316 (1,327)
Premiums payable to insurance companies,
(decrease) increase (3,505) 6,881
Premium deposits and credits due customers,
(decrease) (1,153) (824)
Accounts payable and accrued expenses, increase 3,765 1,036
Other liabilities, (decrease) (1,297) (829)
________ ________
NET CASH PROVIDED BY OPERATING ACTIVITIES 27,328 21,006
________ ________
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to fixed assets (2,363) (1,634)
Payments for businesses acquired, net of cash
acquired (11,086) (23,509)
Proceeds from sales of fixed assets and customer
accounts 49 213
Purchases of investments (71) (1,035)
Proceeds from sales of investments 32 174
________ ________
NET CASH USED IN INVESTING ACTIVITIES (13,439) (25,791)
________ ________
CASH FLOWS FROM FINANCING ACTIVITIES
Payment on long-term debt (14,047) (6,691)
Exercise of stock options and issuances of stock _ 175
Purchases of stock for stock option plan,
employee stock purchase plan
and performance stock plan - (6,892)
Cash dividends paid (2,968) (2,653)
________ ________
NET CASH USED IN FINANCING ACTIVITIES (17,015) (16,061)
________ ________
Net decrease in cash and cash equivalents (3,126) (20,846)
Cash and cash equivalents at beginning of period 42,174 48,568
________ ________
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 39,048 $ 27,722
======== ========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE 6>
BROWN & BROWN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1 - Basis of Financial Reporting
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. For
further information, refer to the consolidated financial statements and
the notes thereto included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1998.
Certain amounts at December 31, 1998 have been reclassified to be
consistent with the current period presentation.
Results of operations for the three- and six-month periods ended June
30, 1999 are not necessarily indicative of the results that may be expected
for the year ending December 31, 1999.
Note 2 - Basic and Diluted Earnings Per Share
Basic earnings per share is based upon the weighted average number of
shares outstanding. Diluted earnings per share is adjusted for the dilutive
effect of stock options. Earnings per share for the Company is the same on
both a basic and a diluted basis.
Note 3 - Acquisitions
1999 Purchases
______________
During the second quarter of 1999, the Company acquired substantially all
of the assets of one general insurance agency in addition to acquiring several
books of business.
During the first quarter of 1999, the Company acquired substantially all
of the assets of the Daytona Beach, Florida office of Hilb, Rogal & Hamilton
Company; The Insurance Center of Roswell, Inc. in Roswell, New Mexico; and
Chancy-Stoutamire, Inc., with offices in Monticello and Perry, Florida.
The Company also acquired all of the outstanding shares of the Bill
Williams Agency, Inc. of St. Petersburg, Florida in the first quarter of
1999.
These acquisitions have been accounted for using the purchase method of
accounting. Pro forma results of operations for the three- and six-month
periods ended June 30, 1999 and June 30, 1998 resulting from these
acquisitions are not materially different from the results of operations
as reported. The results of operations for the acquired companies
have been combined with those of the Company since their respective
acquisition dates.
<PAGE 7>
1998 Purchases
______________
During the second quarter of 1998, the Company acquired substantially
all of the assets of the John F. Phillips Insurance Agency, of Prescott,
Arizona; Harris Insurance Services, of Las Vegas, Nevada; the Fordham
Agency, of St. Petersburg, Florida; Alderman, Click & Co., of Princeton,
New Jersey; Zel Schwanz & Associates, of Phoenix, Arizona; and the Fort
Lauderdale office of Hilb, Rogal and Hamilton Company.
During the first quarter of 1998, the Company acquired substantially all
of the assets of Arizona General Insurance of Tucson, Arizona; Boynton
Brothers Insurance of Perth Amboy, New Jersey; Great Northern Insurance of
Phoenix, Arizona; and the Heine-Miles Insurance Agency of Phoenix, Arizona.
These acquisitions have also been accounted for using the purchase method
of accounting. The results of operations for the acquired companies have
been combined with those of the Company since their respective acquisition
dates. If the acquisitions had occurred at the beginning of the 1998
reporting period, the Company's results of operations would be shown in
the following table. These unaudited pro forma results are not necessarily
indicative of the actual results of operations that would have occurred
had the acquisitions actually been made at the beginning of the 1998
reporting period.
<TABLE>
<CAPTION>
SIX-MONTH PERIOD ENDED JUNE 30 (Unaudited),
(In thousands, except per share data)
<S> <C>
1998
_____
Operating revenue 78,881
Income before income taxes 18,490
Net income 11,188
Earnings per share 0.84
</TABLE>
1999 Poolings
_____________
The Company did not make any acquisitions using the pooling-of-interests
method of accounting during either the first or second quarters of 1999.
1998 Poolings
______________
During the second quarter of 1998, the Company issued 278,765 shares of
its common stock for all of the outstanding stock of Daniel-James Insurance
Agency, Inc., an Ohio corporation with offices in Perrysburg, Ohio and
Indianapolis, Indiana, and for all of the outstanding membership interests
of Becky-Lou Realty Limited, an Ohio limited liability company with offices
in Perrysburg, Ohio. During the first quarter of 1998, the Company issued
22,500 shares of its common stock for all of the outstanding stock of Thim
Insurance Agency, Inc., an Arizona corporation.
These acquisitions have been recorded using the pooling-of-interests
method of accounting The Daniel-James Insurance Agency, Inc. acquisition
was determined to be a material pooling and the Company's consolidated
financial statements have been restated for this transaction for all prior
periods. The acquisition of the Thim Insurance Agency, Inc. was determined
to be immaterial and the Company's consolidated financial statements have
not been restated for this transaction.
<PAGE 8>
Note 4 - Long-Term Debt
The Company continues to maintain its credit agreement with a major
insurance company under which $4 million (the maximum amount available for
borrowings) was outstanding at June 30, 1999, at an interest rate equal to
the prime lending rate plus one percent (9.00% at June 30, 1999). In
accordance with the amendment to the loan agreement dated August 1, 1998,
the available amount will decrease by $1 million each August beginning in 2000.
The Company also has a revolving credit facility with a national banking
institution that provides for available borrowings of up to $50 million, with
a maturity date of October, 2000. As of June 30, 1999, there were no
borrowings against this line of credit.
Note 5 - Contingencies
The Company is not a party to any legal proceedings other than various
claims and lawsuits arising in the normal course of business. Management of
the Company does not believe that any such claims or lawsuits will have a
material effect on the Company's financial condition or results of operations.
Note 6 - Supplemental Disclosures of Cash Flow Information
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<CAPTION>
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For the six-month period ended June 30,
_______________________________________
(in thousands) 1999 1998
______ ______
Cash paid during the period for:
Interest 279 605
Income taxes 7,284 7,097
</TABLE>
<TABLE>
<CAPTION>
The Company's significant non-cash investing and financing activities
are as follows:
<S> <C> <C>
For the six-month period ended June 30,
_______________________________________
(in thousands) 1999 1998
____ ____
Unrealized depreciation of available-
for-sale securities net of tax
benefit of $28 for 1999 and $1,431
in 1998 $ (44) $ (2,332)
Long-term debt incurred for
acquisition of customer accounts 1,277 1,192
Notes received on the sale of fixed
assets and customer accounts 640 566
Common stock (cancelled)/issued in
acquisitions (130) 9,426
</TABLE>
<PAGE 8>
Note 7 - Segment Information
The Company's business is divided into four divisions: the Retail
Division, which markets and sells a broad range of insurance products to
commercial, professional and individual clients; the National Programs
Division, which develops and administers property and casualty insurance
and employee benefits coverage solutions for professional and commercial
groups and trade associations nationwide; the Service Division, which
provides insurance-related services such as third-party administration
and consultation for workers' compensation and employee benefit self-insurance
markets; and the Brokerage Division, which markets and sells excess and surplus
commercial insurance primarily through non-affiliated independent agents and
brokers. The Company conducts all of its operations in the United States.
Summarized financial information concerning the Company's reportable
segments is shown in the following table. The "Other" column includes
corporate-related items and, as it relates to segment profit, income and
expense not allocated to reportable segments.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
(in thousands)
Six Months Ended
June 30, 1999: Retail Programs Service Brokerage Other Total
_____________________________________________________________________________
Total Revenues $ 61,015 $10,832 $7,366 $ 7,403 $ (637) $ 85,979
Interest and other
investment income 913 596 109 171 (659) 1,130
Interest expense 498 - - - (213) 285
Depreciation and
amortization 4,137 718 194 475 132 5,656
Income (loss) before
income taxes 14,816 2,418 1,190 2,632 240 21,296
Total assets 147,946 54,133 5,840 28,547 (12,187) 224,279
Capital expenditures 1,633 174 288 134 134 2,363
_____________________________________________________________________________
Six Months Ended
June 30, 1998: Retail Programs Service Brokerage Other Total
_____________________________________________________________________________
Total Revenues $ 49,797 $ 12,892 $ 6,701 $ 6,959 $ (746) $75,603
Interest and other
investment income 750 932 100 204 (399) 1,587
Interest expense 20 - - 8 237 265
Depreciation and
amortization 3,013 672 156 457 104 4,402
Income (loss) before
income taxes 11,854 4,013 1,182 2,631 (1,566) 18,114
Total assets 116,121 53,428 4,759 28,185 66 202,559
Capital expenditures 1,151 241 139 81 22 1,634
_____________________________________________________________________________
</TABLE>
<PAGE 10>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
_____________________
Net Income. Net income for the second quarter of 1999 was $5,650,000, or
$.42 per share, compared with net income in the second quarter of 1998 of
$4,802,000, or $.36 per share, an 18% increase. Net income for the six months
ended June 30, 1999 was $12,885,000, or $.96 per share, compared with 1998
same-period net income of $10,959,000, or $.82 per share, an 18% increase.
Commissions and Fees. Commissions and fees for the second quarter of
1999 increased $3,444,000, or 9% from the same period in 1998.
Approximately $3,230,000 of this increase represents revenues from acquired
agencies, with the remainder due to new business production. Commissions and
fees for the six months ended June 30, 1999 were $84,752,000 compared to
$74,060,000 for the same period in 1998, a 14% increase. The 1999 increase is
due to approximately $10,045,000 of revenue from acquired agencies, with the
remainder due to new business production.
Investment Income. Investment income for the second quarter and six-month
period ended June 30, 1999 decreased $254,000 and $457,000, respectively,
from the same periods in 1998 primarily due to a decrease in available cash to
invest.
Other Income. Other income primarily includes gains and losses from the
sale of customer accounts and other assets. Other income for the second
quarter ended June 30, 1999 decreased $61,000 over the same period in 1998.
Other income for the six-month period ended June 30, 1999 increased $141,000
over the same period in 1998, due primarily to the disposition of the assets
of the Company's Charlotte, North Carolina office in the first quarter of
1998, which resulted in a loss of $518,000.
Employee Compensation and Benefits. Employee compensation and benefits
increased 7% and 15%, respectively, during the three-month and six-month
periods ended June 30, 1999 over the same periods in 1998. These increases
primarily relate to the addition of new employees as a result of acquisitions.
Employee compensation and benefits as a percentage of total revenue for the
second quarter of 1999 remained constant at 53% compared to the same period
last year, and increased to 52% for the six months ended June 30, 1999,
compared to 51% in the same period last year.
Other Operating Expenses. Other operating expenses for the second quarter
of 1999 decreased $140,000, or 2%, over the same period in 1998, primarily due
to certain one-time expenses associated with acquisitions during the second
quarter of 1998. Other operating expenses increased $454,000, or 3%, for the
six months ended June 30, 1999, compared to the same period in 1998, primarily
due to acquisitions. Other operating expenses as a percentage of total revenue
decreased to 20% in the second quarter of 1999, compared to 22% in the same
period in 1998, and decreased to 19% for the six months ended June 30, 1999,
compared to 21% in the same period in 1998.
Amortization. Amortization increased $370,000, or 25%, and $922,000, or
34%, for the three-month and six-month periods ended June 30, 1999,
respectively, over the same periods in 1998, primarily due to increased
amortization from acquisitions.
Interest. Interest decreased $29,000, or 19%, for the second quarter of
1999 over the same period in 1998. Interest increased $20,000, or 8%, for
the six months ended June 30, 1999 compared to
<PAGE 11>
the same period in 1998, primarily due to fluctuations in the amount outstanding
under the Company's line of credit.
Liquidity and Capital Resources
________________________________
The Company's cash and cash equivalents of $39,048,000 at June 30, 1999
decreased by $3,126,000 from $42,174,000 at December 31, 1998. For the six-
month period ended June 30, 1999, operating activities provided $27,328,000 of
cash. From both this amount and existing cash balances, $14,047,000 was used
for payments on long-term debt, $11,086,000 was used to acquire businesses,
$2,968,000 was used for payments of dividends, and $2,363,000 was used for
additions to fixed assets. The current ratio at June 30, 1999 was 0.91
compared to 1.03 as of December 31, 1998.
The Company has a revolving credit agreement with a major insurance
company under which up to $4 million presently may be borrowed at an interest
rate equal to the prime lending rate plus one percent (9.00% at June 30,
1999). The amount of available credit will decrease by $1 million each
year beginning in August 2000 until the facility expires in August 2004.
As of June 30, 1999, the maximum amount of borrowings was outstanding.
The Company also has a revolving credit facility with a national banking
institution that provides for available borrowings of up to $50 million,
with a maturity date of October, 2000. As of June 30, 1999, there were no
borrowings against this line of credit. The Company believes that its
existing cash, cash equivalents, short-term investments portfolio, funds
generated from operations and available credit facility borrowings are
sufficient to satisfy its normal financial needs.
Year 2000 Date Conversion
_________________________
Year 2000 issues relate to system failures or errors resulting from
computer programs and embedded computer chips which utilize dates with
only two digits instead of four digits to represent a year. A data field
with two digits representing a year may result in an error or failure due
to the system's inability to recognize "00" as the Year 2000. The Company
is reviewing its computer systems for Year 2000 readiness and is
implementing a plan to resolve existing issues.
The Company has evaluated and identified the risks of failure of its
information and financial systems that may be adversely affected by Year 2000
issues. The Company is in the process of making required upgrades and other
remedial measures. The Company expects to complete such implementation by
September, 1999. To date, approximately $525,000 has been expended in
systems upgrades directly relating to Year 2000 issues. Present estimates for
further expenditures to address Year 2000 issues are between $50,000 and
$250,000.
Based on its assessments to date, the Company believes it will not
experience any material disruption as a result of Year 2000 issues in
processing information, interfacing with key vendors, or with processing
orders and billing. However, the Year 2000 issue creates risk for the
Company from unforeseen problems in its own computer systems and from
third parties on which the Company relies. Accordingly, the Company is
requesting assurances from software vendors from which it has purchased
or from which it may purchase software that the software sold to the
Company will continue to correctly process date information through
2000 and beyond. In addition, the Company is querying its independent
brokers and insurance carriers as to their progress in identifying and
addressing problems that their computer systems may experience in
correctly processing date information as the year 2000 approaches and
thereafter. However, there are no assurances that the Company will
identify all date-handling problems in its business systems or that the
Company will be able to successfully remedy Year 2000 compliance issues
that are discovered.
<PAGE 12>
To the extent that the Company is unable to resolve its Year 2000 issues
prior to January 1, 2000, operating results could be adversely affected. In
addition, the Company could be adversely affected if other entities (e.g.,
insurance carriers and independent agents through which the Company brokers
business) not affiliated with the Company do not appropriately address their
own Year 2000 compliance issues in advance of their occurrence. There is
also risk that insureds may attempt to recover damages from the Company if
their insurance policies procured with the assistance of the Company are
believed by such insureds to cover Year 2000-related claims, but do not do
so. The impact of these potential legal disputes cannot be reasonably
estimated. The Company has developed a contingency plan for dealing with
Year 2000 issues that could surface in a particular office or offices.
That plan involves shifting the information systems functions from the
affected office to another Company office that will be specially equipped
and staffed to absorb the additional responsibilities. However, there can
be no assurance that Year 2000 issues will not have a material adverse
effect on the Company's business, results of operation or financial
condition.
Forward-Looking Statements
__________________________
From time to time, the Company may publish "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended, or make
oral statements that constitute forward-looking statements. These forward-
looking statements may relate to such matters as anticipated financial
performance of future revenues or earnings, business prospects, projected
acquisitions or ventures, new products or services, anticipated market
performance, compliance costs, and similar matters. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements. In order to comply with the terms of the safe harbor, the Company
cautions readers that a variety of factors could cause the Company's actual
results to differ materially from the anticipated results or other expectations
expressed in the Company's forward-looking statements. These risks and
uncertainties, many of which are beyond the Company's control, include, but are
not limited to: (i) competition from existing insurance agencies and new
participants and their effect on pricing of premiums; (ii) changes in
regulatory requirements that could affect the cost of doing business;
(iii) legal developments affecting the litigation experience of the
insurance industry; (iv) the volatility of the securities markets; (v) the
potential occurrence of a major natural disaster in certain areas of the
State of Florida, where the Company's business is concentrated, and
(vi) general economic conditions. The Company does not undertake any
obligation to publicly update or revise any forward-looking statements.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the potential loss arising from adverse changes in
market rates and prices, such as interest, foreign currency exchange rates, and
equity prices. The Company is exposed to market risk through its revolving
credit line and some of its investments; however, such risk is not
considered to be material as of June 30, 1999.
<PAGE 13>
BROWN & BROWN, INC.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
The Company is involved in various pending or threatened proceedings by or
against the Company or one or more of its subsidiaries which involve routine
litigation relating to insurance risks placed by the Company, and other
contractual matters. The Company's management does not believe that any such
pending or threatened proceedings will have a material adverse effect on the
Company's financial position or results or operations.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Shareholders was held on April 28, 1999.
At the Annual Meeting, two matters were submitted to a vote of security
holders. The matters were:
1. The election of eight directors
The number of votes cast for, withheld or abstaining with respect to the
election of each of the directors is set forth below:
<TABLE>
<CAPTION>
<S> <C> <C>
Abstain/
For Withheld
J. Hyatt Brown 11,772,840 53,878
Samuel P. Bell, III 11,773,035 53,683
Bradley Currey, Jr. 11,773,035 53,683
Jim W. Henderson 11,773,035 53,683
Theodore J. Hoepner 11,773,035 53,683
David H. Hughes 11,773,035 53,683
Toni Jennings 11,772,977 53,741
Jan E. Smith 11,773,185 53,533
</TABLE>
There were no broker non-votes with respect to the election of directors.
2. The proposal to amend the Company's Articles of Incorporation to
change the Company's corporate name from "Poe & Brown, Inc."
to "Brown & Brown, Inc."
The number of votes cast for, against or abstaining with respect to the
proposal to change the name of the Company is set forth below:
<TABLE>
<CAPTION>
<S> <C>
For 11,618,497
Against 105,113
Abstain 103,108
</TABLE>
<PAGE 14>
There were no broker non-votes with respect to this proposal.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit 3a - Amended and Restated Articles of Incorporation
(incorporated by reference to Exhibit 3a to
Form 10-Q for the quarter ended March 31, 1999)
Exhibit 3b - Amended and Restated Bylaws (incorporated by
reference to Exhibit 3b to Form 10-K for the
year ended December 31, 1996)
Exhibit 11 - Statement re: Computation of Basic and Diluted
Earnings Per Share
Exhibit 27 - Financial Data Schedule (for SEC use only)
(b) There were no reports filed on Form 8-K during the quarter ended
June 30, 1999. A report on Form 8-K was filed by the Company on
August 2, 1999 to reflect the Company's adoption of a Shareholder
Rights Plan on July 29, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BROWN & BROWN, INC.
/S/ JEFFREY R. PARO
Date: August 5, 1999 __________________________________
Jeffrey R. Paro, Vice President,
Chief Financial Officer and Treasurer
(duly authorized officer, principal
financial officer and principal
accounting officer)
<TABLE>
<CAPTION>
Exhibit 11 - Statement Re: Computation of Basic and Diluted
Earnings Per Share (Unaudited)
<S> <C> <C> <C> <C>
Three Months Ended June 30, Six Months Ended June 30,
___________________________ _________________________
1999 1998 1999 1998
____ ____ ____ ____
BASIC EARNINGS PER
SHARE
Net Income $ 5,650 $ 4,802 $12,885 $10,959
======== ======= ======= =======
Weighted average
shares outstanding 13,477 13,351 13,485 13,373
======== ======= ======== =======
Basic earnings per
share $ .42 $ .36 $ .96 $ .82
======== ======= ======= ========
DILUTED EARNINGS
PER SHARE
Weighted average
number of shares
outstanding 13,477 13,351 13,485 13,373
Net effect of
dilutive stock
options, based on
the treasury stock
method 2 19 1 18
_______ _________ _________ ________
Total diluted shares
used in computation 13,479 13,370 13,486 13,391
========= ========= ========== =========
Diluted earnings
per share $ .42 $ .36 $ .96 $ .82
======== ========= ========== =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
financial statements of Brown & Brown, Inc. for the six months ended June 30,
1999, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 39,048
<SECURITIES> 11,196
<RECEIVABLES> 60,144
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 107,601
<PP&E> 35,465
<DEPRECIATION> 21,477
<TOTAL-ASSETS> 224,279
<CURRENT-LIABILITIES> 118,109
<BONDS> 0
0
0
<COMMON> 1,343
<OTHER-SE> 91,489
<TOTAL-LIABILITY-AND-EQUITY> 224,279
<SALES> 0
<TOTAL-REVENUES> 85,979
<CGS> 0
<TOTAL-COSTS> 64,683
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,905
<INCOME-PRETAX> 21,296
<INCOME-TAX> 8,411
<INCOME-CONTINUING> 12,885
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,885
<EPS-BASIC> .96
<EPS-DILUTED> .96
</TABLE>
