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 March 31, 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 Identification
incorporation or organization) 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
Poe & Brown, Inc.
___________________________________________
(Former Name, If Changed Since Last Report)
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 ninety (90) days. Yes X No
____ _____
The number of shares of the Registrant's common stock, $.10 par value,
outstanding as of May 2, 1999, was 13,489,321.
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BROWN & BROWN, INC.
Index to Form 10-Q
FOR THE QUARTER ENDED MARCH 31, 1999
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PAGE
____
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Statements of Income for the
three months ended March 31, 1999 and 1998 3
Condensed Consolidated Balance Sheets as of March 31,
1999 and December 31, 1998 4
Condensed Consolidated Statements of Cash Flows for
the three months ended March 31, 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 8
Item 3. Quantitative and Qualitative Disclosures About Market
Risk 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 12
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<PAGE 3>
ITEM 1: FINANCIAL STATEMENTS
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BROWN & BROWN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share data)
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For the three months
ended March 31,
_______________
1999 1998
____ _____
REVENUES
Commissions and fees $43,270 $36,022
Investment income 572 775
Other income 34 (168)
_______ ________
Total revenues 43,876 36,629
EXPENSES
Employee compensation and benefits 22,311 18,043
Other operating expenses 7,662 7,067
Amortization 1,782 1,231
Interest 160 110
_______ _______
Total expenses 31,915 26,451
_______ _______
Income before income taxes 11,961 10,178
Income taxes 4,726 4,020
_______ ______
NET INCOME $ 7,235 $ 6,158
Other comprehensive income, net of tax:
Unrealized loss on securities:
Unrealized holding (loss) arising during
period, net of tax benefit of $334 in 1999
and $993 in 1998 $ (522) $(1,553)
_______ ________
Comprehensive Income $ 6,713 $ 4,605
======= ========
Basic and diluted earnings per share $ 0.54 $ 0.47
======= ========
Dividends declared per share $ .11 $ .10
======= ========
Diluted shares outstanding 13,493 13,117
</TABLE>
See notes to condensed consolidated financial statements.
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BROWN & BROWN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
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(Unaudited) (Audited)
March 31, December 31,
1999 1998
____ ____
ASSETS
Cash and cash equivalents $ 40,162 $ 42,174
Short-term investments 794 746
Premiums, commissions and fees receivable 60,486 69,186
Other current assets 9,146 9,840
________ ________
Total current assets 110,588 121,946
Fixed assets, net 14,226 13,698
Intangible assets, net 88,159 79,483
Investments 9,608 10,483
Other assets 5,119 4,903
________ ________
Total assets $227,700 $230,513
======== ========
LIABILITIES
Premiums payable to insurance companies $ 93,394 $ 89,405
Premium deposits and credits due customers 7,560 8,379
Accounts payable and accrued expenses 17,663 16,122
Current portion of long-term debt 5,828 4,960
________ ________
Total current liabilities 124,445 118,866
Long-term debt 4,575 17,207
Deferred income taxes 2,070 2,403
Other liabilities 6,929 7,829
________ ________
Total liabilities 138,019 146,305
________ ________
SHAREHOLDERS' EQUITY
Common stock, par value $.10 per share:
authorized 70,000 shares; issued 13,489
shares at 1999 and 13,498 at 1998 1,349 1,350
Retained earnings 83,314 77,318
Accumulated other comprehensive income 5,018 5,540
________ _______
Total shareholders' equity 89,681 84,208
________ _______
Total liabilities and shareholders'
equity $227,700 $230,513
======== ========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE 5>
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BROWN & BROWN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
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For the three months ended March 31,
____________________________________
1999 1998
____ ____
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 7,235 $ 6,158
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation 994 768
Amortization 1,782 1,231
Compensation expense under stock
performance plan 316 170
Net (gains) losses on sales of
investments, fixed assets and
customer accounts (2) 201
Premiums, commissions and fees
receivable, decrease 8,700 6,890
Other assets, decrease 1,118 3,008
Premiums payable to insurance companies,
increase 3,989 1,297
Premium deposits and credits due
customers, (decrease) increase (819) 394
Accounts payable and accrued expenses,
increase (decrease) 1,541 (1,928)
Other liabilities, decrease (970) (1,266)
________ _________
NET CASH PROVIDED BY OPERATING ACTIVITIES 23,884 16,923
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to fixed assets (1,545) (922)
Payments for businesses acquired, net of
cash acquired (9,821) (7,984)
Proceeds from sales of fixed assets and
customer accounts 25 42
Purchases of investments (60) (12)
Proceeds from sales of investments 32 174
_________ _________
NET CASH USED IN INVESTING ACTIVITIES (11,369) (8,702)
_________ _________
CASH FLOWS FROM FINANCING ACTIVITIES
Payment on long-term debt (13,041) (3,827)
Exercise of stock options and issuances
of stock (1) 12
Purchases of stock for stock option plan,
employee stock purchase plan and performance
stock plan - (6,892)
Cash dividends paid (1,485) (1,316)
_________ __________
NET CASH USED IN FINANCING ACTIVITIES (14,527) (12,023)
_________ __________
Net decrease in cash and cash equivalents (2,012) (3,802)
Cash and cash equivalents at beginning of
period 42,174 48,568
_________ __________
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 40,162 $ 44,766
========= ==========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE 6>
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-month period ended March 31, 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
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.
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 been accounted for using the purchase method of
accounting. Pro forma results of operations for the three months ended
March 31, 1999 and March 31, 1998 resulting from these acquisitions were
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.
Additionally, 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
<PAGE 7>
corporation. This acquisition has been accounted for as a pooling-of-
interests; however, due to the immaterial nature of the transaction, the
Company's consolidated financial statements have not been restated for all
periods prior to the transaction. The separate company operating results
of Thim Insurance Agency, Inc. for periods prior to the acquisition are not
material to the Company's consolidated operating results.
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 March 31, 1999, at an interest rate equal to
the prime lending rate plus one percent (8.75% at March 31, 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 which provides for available borrowings of up to $50 million,
with a maturity date of October, 2000. As of March 31, 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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For the three-month period ended March 31,
__________________________________________
(in thousands) 1999 1998
____ ____
Cash paid during the period for:
Interest 206 117
Income taxes 271 379
</TABLE>
The Company's significant non-cash investing and financing activities
are as follows:
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For the three-month period ended March 31,
__________________________________________
(in thousands) 1999 1998
Unrealized depreciation of
available-for-sale securities
net of tax benefit of $334
in 1999 and $993 in 1998 $ (522) $ (1,553)
Long-term debt issued for acquisition
of customer accounts 1,277 -
Notes received on the sale of fixed
assets and customer accounts 640 839
Common stock (cancelled)/issued in
acquisitions (70) 106
</TABLE>
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
<PAGE 8>
Programs Division, which develops and administers property and casualty
insurance and employee benefits coverage solutions for both 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.
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(in thousands)
Three Months Ended
March 31, 1999: Retail Programs Service Brokerage Other Total
_____________________________________________________________________________
Total Revenues $ 30,317 $ 5,923 $ 3,643 $ 4,306 $ (313) $ 43,876
______________
Interest and other
investment income 456 308 54 87 (333) 572
Interest expense 241 - - - (81) 160
Depreciation and
amortization 2,025 353 97 236 65 2,776
Income (loss) before
income taxes 7,576 1,690 566 1,748 381 11,961
Total assets 138,766 57,963 5,675 32,045 (6,749) 227,700
Capital expenditures 1,071 90 211 76 97 1,545
______________________________________________________________________________
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Three Months Ended
March 31, 1998: Retail Programs Service Brokerage Other Total
______________________________________________________________________________
Total Revenues $ 23,072 $ 6,733 $ 3,299 $ 4,036 $ (511) $ 36,629
Interest and other
investment income 337 463 49 110 (184) 775
Interest expense 5 - - - 105 110
Depreciation and
amortization 1,325 333 78 226 52 2,014
Income (loss) before
income taxes 6,296 2,307 573 1,707 (705) 10,178
Total assets 100,196 60,870 4,474 34,353 (5,784) 194,109
Capital expenditures 649 136 78 46 13 922
______________________________________________________________________________
</TABLE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net Income. Net income for the first quarter of 1999 was $7,235,000,
or $.54 per share, compared with net income in the first quarter of 1998
of $6,158,000, or $.47 per share, an 18% increase.
Commissions and Fees. Commissions and fees for the first quarter
of 1999 increased $7,248,000, or 20%, from the same period in 1998.
Approximately $6,815,000 of this increase represents revenues from
acquired agencies, with the remainder due to new business production.
Investment Income. Investment income for the first quarter of 1999
decreased $203,000 from the same period in 1998, primarily due to a
reduction in available cash to invest.
<PAGE 9>
Other Income. Other income primarily includes gains and losses
from the sale of customer accounts and other assets. Other income for
the three-month period ended March 31, 1999 increased $202,000 over the
same period in 1998, primarily due 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 24% during the first quarter of 1999 over the same
period in 1998. This increase primarily relates to the addition of new
employees as a result of acquisitions. Employee compensation and benefits
as a percentage of total revenue increased to 51% in the first
quarter of 1999, compared with 49% incurred in the same period in 1998.
Other Operating Expenses. Other operating expenses for the first
quarter of 1999 increased $595,000, or 8%, over the same period in 1998,
primarily due to acquisitions. Other operating expenses as a percentage
of total revenue declined to 17% in the first quarter of 1999, compared
with 19% incurred in the same period in 1998.
Amortization. Amortization increased $551,000, or 45%, over the same
period in 1998, primarily due to increased amortization from acquisitions.
Interest. Interest increased $50,000, or 45%, over the same period
in 1998, primarily due to higher levels of incurred debt.
Liquidity and Capital Resources
The Company's cash and cash equivalents of $40,162,000 at March 31,
1999 decreased by $2,012,000 from $42,174,000 at December 31, 1998. During
the first quarter of 1999, $23,884,000 of cash was provided from operating
activities. From both this amount and existing cash balances, $13,041,000
was used for payments on long-term debt, $9,821,000 was used to acquire
businesses, $1,545,000 was used for additions to fixed assets, and
$1,485,000 was used for payment of dividends. The current ratio at
March 31, 1999 was 0.89, 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
(8.75% at March 31, 1999). The amount of available credit will decrease
by $1 million each year beginning in August 2000 in accordance with
the August 1, 1998 amendment to the original loan agreement. As of
March 31, 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 March 31, 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
<PAGE 10>
systems which 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 $450,000 has been expended in systems upgrades
directly relating to Year 2000 issues. Present estimates for further
expenditures to address Year 2000 issues are between $100,000 and $350,000.
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.
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
<PAGE 11>
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 March 31, 1999.
<PAGE 12>
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 of such pending or threatened proceedings will have a material adverse
effect on the Company's financial position or results of operations.
<TABLE>
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ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
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(a) EXHIBITS
Exhibit 3a - Amended and Restated Articles of Incorporation
(filed herewith)
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
March 31, 1999.
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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.
Date: May 12, 1999 /S/ JEFFREY R. PARO
_____________________________________
Jeffrey R. Paro
Vice President, Chief Financial Officer
and Treasurer
(duly authorized officer, principal
financial officer and principal
accounting officer)
EXHIBIT 3a
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
POE & BROWN, INC.
Poe & Brown, Inc. (the "Corporation") hereby files the following Amended
and Restated Articles of Incorporation under the Florida Business Corporation
Act:
ARTICLE I
The name of the Corporation shall be Poe & Brown, Inc.
ARTICLE II
Section 1. The general nature of the business or businesses to be
transacted by the Corporation is the acting as an agent or broker in the
sale of all forms of insurance.
In addition, the Corporation may engage in any activity or business
permitted under the laws of the United States and of the State of Florida.
Section 2. The Corporation shall also have power:
(a) To construct, erect, repair and remodel buildings and
structures of all types for itself and others and to manufacture, purchase,
or otherwise acquire, and to own, mortgage, pledge, sell, assign, transfer
or otherwise dispose of, and to invest in, trade in, deal in and with,
goods, wares, merchandise, personal property and services of every class,
kind and description; except that it is not to conduct a banking, safe
deposit, trust, insurance surety, express, railroad, canal, telephone,
telegraph or cemetery company, a building and loan association, mutual fire
insurance association, cooperative association, fraternal benefit society,
state fair or exposition.
(b) To act as broker, agent or factor for any person, firm
or corporation.
(c) To purchase, lease or otherwise acquire real and personal
property and leaseholds thereof and interest therein, and to own, hold,
manage, develop, improve, equip, maintain and operate, and to sell, convey,
exchange, lease or otherwise alienate and dispose of, and to mortgage,
pledge or otherwise encumber any and all such property and any and all
legal and equitable rights thereunder and interests therein.
(d) To borrow or raise money for any of the purposes of the
Corporation, and from time to time without limit as to amount, to draw, make,
accept, endorse, execute and issue promissory notes, drafts, bills of
exchange, warrants, bonds, debentures and other negotiable and
non-negotiable instruments and evidences of indebtedness, and to secure
payment thereof and any interest therein by mortgage, pledge, conveyance,
or other assignment in trust, in whole or in part, of the assets of the
Corporation, real, personal or mixed, including contract rights, whether
at the time owned or thereafter acquired.
<PAGE 2>
(e) To guarantee, endorse, purchase, hold, sell, transfer,
mortgage, pledge or otherwise acquire or dispose of the shares of the
capital stock of, or any bonds, security, or other evidences of indebtedness
created by any other corporation of the State of Florida or any other state
or government, and while owner of such stock to exercise all the rights,
powers, and privileges of ownership, including the right to vote such stock.
(f) To enter into, make, perform and carry out contracts and
arrangements of every sort and kind which may be necessary or convenient for
the business of the Corporation or business of a similar nature, with any
person, firm, corporation, association or syndicate, or any private, public
or municipal body existing under the government of the United States or any
state, territory, colony or dependency thereof or foreign government so far
as or to the extent that the same may be done or performed pursuant to law.
(g) To enter into, or become a partner in, any agreement for
sharing profits, union of interests, cooperation, joint venture or
otherwise, with any person, firm or corporation now carrying on or about
to carry on any business which this Corporation has the direct or incidental
authority to pursue.
(h) To include in its Bylaws any regulatory or restrictive
provisions relating to the proposed sale, transfer of other disposition of
any of its outstanding stock by any of its stockholders or in the event of
the death of any of its stockholders. The manner and form, as well as all
relevant terms, conditions and details hereof shall be determined by the
stockholders of this Corporation provided, however, that no such regulatory
or restrictive provision shall affect the rights of third parties without
actual knowledge thereof, unless such provision shall be noted upon the
certificate evidencing the ownership of said stock.
(i) In general, to do any and all of the acts and things
herein set forth to the same extent as natural persons could do and in any
part of the world, as principal, factor, agent, contractor, broker or
otherwise, either alone or in company with any entity or individual; to
establish one or more offices, both within the State of Florida and any
part or parts of the world, at which meetings of directors may be held and
all or any part of the Corporation's business may be conducted; and to
exercise all or any of its corporate powers and rights in the State of
Florida and in any and all other states, territories, districts, dependencies,
colonies or possessions in the United States of America and in any foreign
countries.
To do everything necessary, proper, advisable or convenient for the
accomplishment of any of the purposes or the attainment of any of the
objects or the furtherance of any of the powers herein set forth, and to
do every other act and thing incidental thereto or connected therewith,
to the extent permitted by law.
ARTICLE III
The number of shares of capital stock authorized to be issued by this
Corporation is 70,000,000 shares of Common Stock, par value $.10 per share.
<PAGE 3>
ARTICLE IV
The amount of capital with which this Corporation will begin business
will be Five Hundred Dollars ($500).
ARTICLE V
This Corporation shall have perpetual existence.
ARTICLE VI
The principal office of the Corporation shall be located at 608 Jackson
Street, in Tampa, Hillsborough County, Florida, or at such other place as
the Board of Directors may direct; and the Corporation shall have the power
to establish branch offices and other places of business at such other
places, within or without the State of Florida, as may be determined and
deemed expedient by the Board of Directors.
ARTICLE VII
The Board of Directors shall consist of not less than three (3) directors.
The number of directors may be increased or diminished form time to time by
action in accordance with the Bylaws of the Corporation. All of the said
directors shall be at least twenty-one (21) years of age and at least one
of them shall be a citizen of the United States.
ARTICLE VIII
The names and post office addresses of the first officers and Board of
Directors, who, subject to these Articles of Incorporation, the Bylaws of
this Corporation and the laws of the State of Florida, shall hold office
for the first year of the Corporation's existence or until their successors
are elected and have qualified, are:
<TABLE>
<CAPTION>
<S> <C> <C>
President W. F. Poe 7702 Park Drive
Tampa, Florida
Vice President William T. Driscoll, Jr. 2903 Beach Drive
Tampa, Florida
Vice President William C. McElmurray 101 Adalia
Tampa, Florida
Secretary-Treasurer Charles W. Poe 4807 Sunset Blvd.
Tampa, Florida
</TABLE>
The initial Board of Directors shall consist of the foregoing individuals.
<PAGE 4>
ARTICLE IX
The name and post office addresses of each subscriber to these Articles
of Incorporation, and the number of shares of common stock each agrees to
take, are:
<TABLE>
<CAPTION>
<S> <C> <C>
W.F. Poe 7702 Park Drive 20 shares
Tampa, Florida
William T. Driscoll, Jr. 2903 Beach Drive 20 shares
Tampa, Florida
Charles W. Poe 4807 Sunset Blvd. 20 shares
Tampa, Florida
</TABLE>
the proceeds of which will amount to at least $600.00.
ARTICLE X
Section 1. For the regulation of the business and for the conduct of
the affairs of the Corporation, to create, divide, limit and regulate the
powers of the Corporation, the directors and the stockholders, provision is
made as follows:
(a) General authority is hereby conferred upon the Board of
Directors of the Corporation, except as the stockholders may otherwise from
time to time provide or direct, to fix the consideration for which the
shares of stock of the Corporation shall be issued and disposed of, and to
provide when and how such consideration shall be paid.
(b) Meetings of the incorporators, of the stockholders, and of
the directors of the Corporation, for all purposes, may be held at any place,
either inside or outside of the State of Florida.
(c) All corporate powers, including the sale, mortgage,
hypothecation, and pledge of the whole or any part of the corporate property,
shall be exercised by the Board of Directors, except as otherwise expressly
provided by law.
(d) The Board of Directors shall have power from time to time
to fix and determine and vary the amount of the working capital of the
Corporation and direct and determine the use and disposition of any surplus
or net profits over and above the capital stock paid in, and in its
discretion, the Board of Directors may use and apply any such surplus
or accumulated profits in purchasing or acquiring bonds or other
obligations of the Corporation or shares of its own capital stock, to
such extent, in such manner and upon such terms as the Board of Directors
may deem expedient, but any shares of such capital stock so purchased or
acquired may not be resold unless such shares shall have been retired in
the manner provided by law for the purpose of decreasing the Corporation's
capital stock.
(e) The Board of Directors shall have the power of fixing the
compensation, by way of salaries and/or bonuses, and/or pensions, of the
employees, the agents, the officers,
<PAGE 5>
and directors, all or each of them, in such sum and form and amount as may
seem reasonable in and by their discretion.
(f) The Board of Directors may designate from their number
an executive committee, which shall, for the time being, in the intervals
between meetings of the Board and to the extent provided by the Bylaws and
authorized by law, exercise the powers of the Board of Directors in the
management of the affairs and business of the Corporation.
(g) Any one or more or all of the directors may be removed,
either with or without cause, at any time, by the vote of the stockholders
holding a majority of the stock entitled to vote of the Corporation, at any
special meeting, and thereupon the term of each director or directors who
shall have been so removed shall forthwith terminate, and there shall be a
vacancy or vacancies in the Board of Directors, to be filled as provided by
the Bylaws.
(h) Any officers of the Corporation may be removed either
with or without cause, at any time, by vote of a majority of the Board of
Directors.
(i) No contract or other transaction between the Corporation
and any other corporation shall be affected or invalidated by the fact that
any one or more of the directors or officers of this Corporation is or are
interested in or is a director or officer or are directors or officers of
such other corporation, nor shall such contract or other transaction be
affected by the fact that the directors or officers of the Corporation are
personally interested therein. Any director or directors, officer or
officers, individually or jointly, may be a party or parties to or may be
interested in any contract or transaction of or with this Corporation or
in which this Corporation is interested; and no contact, act or transaction
of this Corporation with any person or persons, firm, association, or
corporations shall be affected or invalidated by the fact that any director
or directors or officer or officers of this Corporation is a party or are
parties to, or interested in, such contract, act or transaction or in any
way connected with such person or persons, firm, association or corporation,
and each and every person who may become a director or officer of this
Corporation is hereby relieved, as far as is legally permissible, from any
disability which might otherwise prevent him from contracting with the
Corporation for the benefit of himself or of any firm, association or
corporation in which he may be in anywise interested.
(j) Subject always to Bylaws made by the stockholders, the
Board of Directors may make Bylaws and from time to time alter, amend or
repeal any Bylaws, but any Bylaws made by the Board of Directors may be
altered or repealed by the stockholders.
(k) No holder of shares of the capital stock of any class of
the Corporation shall have any pre-emptive or preferential right of
subscription to any shares of any class of stock of the Corporation,
whether now or hereafter authorized, or to any obligations convertible
into stock of the Corporation, issued or sold, nor any right of subscription
to any thereof other than such, if any, as the Board of Directors, in its
discretion, may from time to time determine and at such price as the Board
of Directors may from time to time fix; and any shares of stock or
convertible obligations which the corporation may determine to offer for
subscription to the holders of stock may, as the Board of Directors shall
determine, be offered to more than one class of stock, in such proportions
as between said classes of stock as the Board of Directors in its
<PAGE 6>
discretion may determine. As used in this paragraph, the expression
"convertible obligations" shall include any notes, bonds or other evidences
of indebtedness to which are attached or with which are issued warrants or
other rights to purchase stock of the Corporation of any class or classes;
and the Board of Directors is hereby expressly authorized, in its discretion,
in connection with the issue of any obligations or stock of the Corporation
(but without intending hereby to limit its general power so to do in any
other cases) to grant rights or options to purchase stock of the Corporation
of any class upon such terms and during such periods as the Board of
Directors shall determine, and to cause such rights or options to be
evidenced by such warrants or other instruments as it may deem advisable.
(l) The Bylaws of the Corporation may provide for the
indemnification of the officers and directors of the Corporation for their
actions and omissions up to the maximum extent permitted by law.
ARTICLE XI
These Articles of Incorporation may be amended in the manner provided
by law. Every amendment shall be approved by the Board of Directors,
proposed by them to the stockholders, and approved at a stockholders'
meeting by a majority of the stock entitled to vote thereon, unless all
the directors and all the stockholders sign a written statement manifesting
their intention that a certain amendment of these Articles of Incorporation
be made.
The undersigned officer of Poe & Brown, Inc. has executed these Amended
and Restated Articles of Incorporation this 18th day of May, 1998.
POE & BROWN, INC.
By: /s/ JAMES L. OLIVIER
______________________________
James L. Olivier
Vice Presiden
<PAGE 7>
CERTIFICATE
The undersigned officer of Poe & Brown, Inc. (the "Corporation") hereby
supplies this Certificate to the Corporation's Amended and Restated Articles
of Incorporation pursuant to Section 607.1007(4), Florida Statutes:
1. The foregoing Amended and Restated Articles of Incorporation
contain an amendment to the Corporation's Articles of Incorporation requiring
shareholder approval. The amendment consists of deleting the old
Article III in its entirety and replacing it with the new Article III.
2. The amendment to the Articles of Incorporation was adopted by
a vote of the shareholders of the Corporation at the Corporation's Annual
Meeting of Shareholders on April 29, 1998. The number of votes cast for
the amendment by the shareholders was sufficient for approval.
IN WITNESS WHEREOF, the undersigned officer of the Corporation has
executed this Certificate this 18th day of May, 1998.
POE & BROWN, INC.
By: /S/ JAMES L. OLIVIER
_________________________________
James L. Olivier
Vice President
<PAGE 8>
ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
POE & BROWN, INC.
Pursuant to the provisions of Section 607.1006, Florida Statutes, Poe &
Brown, Inc., a Florida profit corporation, adopts the following Articles of
Amendment to its Amended and Restated Articles of Incorporation:
FIRST: Article I of the corporation's Articles of Incorporation is hereby
amended in its entirety to read as follows:
The name of the Corporation shall be Brown & Brown, Inc.
SECOND: The date of the amendment's adoption was April 28, 1999.
THIRD: Adoption of the amendment was approved by the shareholders. The
number of votes cast for the amendment was sufficient for approval.
Signed this 28th day of April, 1999.
POE & BROWN, INC.
By: /S/ JAMES L. OLIVIER
_________________________
James L. Olivier
Vice President
<TABLE>
<CAPTION>
EXHIBIT 11 - STATEMENT RE: COMPUTATION OF BASIC AND DILUTED
EARNINGS PER SHARE (UNAUDITED)
<S> <C> <C>
THREE MONTHS ENDED MARCH 31,
____________________________
1999 1998
____ _____
BASIC EARNINGS PER SHARE
Net Income $ 7,235 $ 6,158
======= ========
Weighted average number of
shares outstanding 13,493 13,105
======= ========
Basic earnings per share $ .54 $ .47
======= ========
DILUTED EARNINGS PER SHARE
Weighted average number of
shares outstanding 13,493 13,105
Net effect of dilutive stock
options, based on the treasury
stock method - 12
_______ ________
Total diluted shares used in
computation 13,493 13,117
======= ========
Diluted earnings per share $ .54 $ .47
======= ========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
financial statements of Brown & Brown, Inc. for the three months ended March 31,
1999, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 40,162
<SECURITIES> 10,402
<RECEIVABLES> 60,486
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 110,588
<PP&E> 34,722
<DEPRECIATION> 20,496
<TOTAL-ASSETS> 227,700
<CURRENT-LIABILITIES> 124,445
<BONDS> 0
0
0
<COMMON> 1,349
<OTHER-SE> 88,332
<TOTAL-LIABILITY-AND-EQUITY> 227,700
<SALES> 0
<TOTAL-REVENUES> 43,876
<CGS> 0
<TOTAL-COSTS> 31,915
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,942
<INCOME-PRETAX> 11,961
<INCOME-TAX> 4,726
<INCOME-CONTINUING> 7,235
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,235
<EPS-PRIMARY> .54
<EPS-DILUTED> .54
</TABLE>
