14
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 quarterly period ended September 30, 2000.
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 No.)
incorporation or organization)
(I.R.S. Employer Identification No.)
220 S. RIDGEWOOD AVE., DAYTONA BEACH, FL 32114
_________________________________________ ________________________________
(Address of principal executive offices) (Zip Code)
(904) 252-9601
____________________________________________________
(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 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 shares of the Registrant's common stock, $.10 par
value per share, outstanding as of November 7, 2000 was
28,439,631.
<PAGE 2>
BROWN & BROWN, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
PART I. FINANCIAL INFORMATION ____
<S> <C>
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Statements of Income for the
three and nine months ended September 30, 2000 and
1999 3
Condensed Consolidated Balance Sheets as of
September 30, 2000 and December 31, 1999 4
Condensed Consolidated Statements of Cash Flows for
the nine months ended September 30, 2000 and 1999 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 6. Exhibits and Reports on Form 8-K 13
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 NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
2000 1999 2000 1999
REVENUES
Commissions and fees $48,985 $43,719 $147,002 $134,193
Investment income 910 796 2,554 2,001
Other income 160 665 736 805
_______ _______ ________ ________
Total revenues 50,055 45,180 150,292 136,999
_______ _______ ________ ________
EXPENSES
Employee compensation and
benefits 25,539 23,290 77,082 71,062
Other operating expenses 7,387 7,566 23,712 23,890
Depreciation 1,178 1,091 3,452 3,235
Amortization 2,124 1,918 6,347 5,664
Interest 110 170 423 576
_______ _______ _______ _______
Total expenses 36,338 34,035 111,016 104,427
_______ _______ _______ _______
Income before income taxes 13,717 11,145 39,276 32,572
Income taxes 5,281 4,313 15,377 12,816
_______ _______ _______ _______
NET INCOME 8,436 6,832 23,899 19,756
_______ _______ _______ _______
Other comprehensive income,
net of tax:
Unrealized holding gain
(loss), net of tax effect
of $297 and tax benefit of
$446 for the three-month
periods ended September 30,
2000 and 1999, respectively,
and net of tax benefits of
$1,009 and $474 for the
nine-month periods ended
September 30, 2000 and
1999, respectively 465 (697) (1,578) (741)
________ _______ ________ ________
Comprehensive Income $ 8,901 $ 6,135 $ 22,321 $ 19,015
======== ======= ======== ========
Basic and diluted earnings
per share $ 0.30 $ 0.24 $ 0.85 $ 0.70
======== ======= ======== ========
Dividend declared per share $ 0.065 $ 0.055 $ 0.195 $ 0.165
======== ======= ======== ========
Weighted average diluted
shares outstanding 28,212 27,966 28,024 28,028
======== ======= ======== ========
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE 4>
BROWN & BROWN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
<S> <C> <C>
SEPTEMBER 30, DECEMBER 31,
2000 1999
ASSETS
Cash and cash equivalents $ 48,370 $ 39,006
Short-term investments 363 680
Premiums, commissions and fees
receivable, less allowance for
doubtful accounts of $0 at 2000
and $0 at 1999 72,060 67,996
Other current assets 9,033 7,730
________ ________
Total current assets 129,826 115,412
Fixed assets, net 14,254 15,047
Intangible assets, net 101,185 91,851
Investments 7,035 9,489
Other assets 6,154 6,957
________ ________
Total assets $258,454 $238,756
======== ========
LIABILITIES
Premiums payable to insurance
companies $ 96,165 $ 90,442
Premium deposits and credits due
customers 7,390 7,771
Accounts payable and accrued
expenses 21,637 20,843
Current portion of long-term debt 2,336 3,714
________ ________
Total current liabilities 127,528 122,770
Long-term debt 2,759 4,690
Deferred income taxes 823 1,660
Other liabilities 6,445 7,136
________ ________
Total liabilities 137,555 136,256
________ ________
SHAREHOLDERS' EQUITY
Common stock, par value $.10 per
share; authorized 70,000 shares;
issued 28,329 shares at 2000 and
27,984 shares at 1999 2,833 2,798
Retained earnings 114,721 94,780
Accumulated other comprehensive
income 3,345 4,922
________ ________
Total shareholders' equity 120,899 102,500
________ ________
Total liabilities and
shareholders' equity $258,454 $238,756
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE 5>
BROWN & BROWN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C> <C>
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 23,899 $ 19,756
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 3,452 3,235
Amortization 6,347 5,664
Compensation expense under
performance stock plan 361 948
Net gains on sales of investments,
fixed assets and customer accounts (588) (215)
Premiums, commissions and fees
receivable, (increase) decrease (4,064) 9,546
Other assets, increase (500) (8)
Premiums payable to insurance
companies, increase (decrease) 5,723 (6,322)
Premium deposits and credits due
customers, (decrease) (381) (855)
Accounts payable and accrued expenses, increase 794 951
Other liabilities, (decrease) (519) (1,284)
________ ________
NET CASH PROVIDED BY OPERATING ACTIVITIES 34,524 31,416
________ ________
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to fixed assets (3,159) (4,039)
Payments for businesses acquired,
net of cash acquired (15,314) (15,666)
Proceeds from sales of fixed assets
and customer accounts 959 224
Purchases of investments (64) (120)
Proceeds from sales of investments 377 636
________ ________
NET CASH USED IN INVESTING ACTIVITIES (17,201) (18,965)
________ ________
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt (3,920) (17,075)
Proceeds from long-term debt - 2,389
Exercise of stock options and issuances of stock 1,734 1,664
Purchases of stock (381) (1,152)
Shareholder distributions from pooled entities - (623)
Cash dividends paid (5,392) (4,469)
_______ ________
NET CASH USED IN FINANCING ACTIVITIES (7,959) (19,266)
_______ ________
Net increase (decrease) in cash and cash
equivalents 9,364 (6,815)
Cash and cash equivalents at beginning of period 39,006 43,940
________ ________
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 48,370 $ 37,125
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE 6>
BROWN & BROWN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
SEPTEMBER 30, 2000
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
financial information and footnotes required by generally
accepted accounting principles for complete financial statements.
However, in the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. These unaudited,
condensed, and consolidated financial statements should be read
in conjunction with the audited consolidated financial statements
and the notes thereto set forth in the Company's Annual Report on
Form 10-K for the year ended December 31, 1999.
The accompanying financial statements for all periods
presented have been restated to give effect to the acquisition of
Ampher Insurance, Inc. and Ross Insurance of Florida, Inc.,
effective July 20, 1999; the acquisition of Signature Insurance
Group, Inc., and all of the outstanding general partnership
interests in C, S & D, effective November 10, 1999; and the
acquisition of Bowers, Schumann and Welch, effective June 2,
2000.
The acquisitions described above have been accounted for
under the pooling-of-interests method of accounting, and
accordingly, the Company's condensed consolidated financial
statements have been restated for all periods prior to the
acquisitions to include the results of operations, financial
positions and cash flows of those acquisitions.
Results of operations for the three- and nine-month periods
ended September 30, 2000 are not necessarily indicative of the
results that may be expected for the year ending December 31,
2000.
NOTE 2 - BASIC AND DILUTED EARNINGS PER SHARE
All share and per-share information in the financial
statements has been adjusted to give effect to the 2-for-1 common
stock split which became effective on August 23, 2000.
Basic earnings per share is based upon the weighted average
number of shares outstanding. Diluted earnings per share
includes the dilutive effect of stock options. Earnings per
share for the Company for all periods presented is the same on
both a basic and a diluted basis.
NOTE 3 - ACQUISITIONS
2000 PURCHASES
During the third quarter of 2000, the Company acquired
substantially all of the assets of Corporate Risk Management
Services, Inc. of Tallahassee, Florida, and Cunningham Insurance
Agency, of Naples, Florida. During such period, the Company also
acquired all of the outstanding capital stock of Robertson Insurance
Services, Inc. of Macungie, Pennsylvania. In addition, the
Company acquired several books of business.
During the second quarter of 2000, the Company acquired
substantially all of the assets of Amerisys, Inc., of Oviedo,
Florida. In addition, the Company acquired several books of
business.
During the first quarter of 2000, the Company acquired
substantially all of the assets of Risk Management Associates,
Inc., of Fort Lauderdale, Florida, and Program Management
Services, Inc., of Altamonte Springs, Florida. In addition, the
Company acquired several books of business.
<PAGE 7>
These acquisitions have been accounted for using the
purchase method of accounting. Pro forma results of operations
for the three- and nine-month periods ended September 30, 2000
and September 30, 1999 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.
1999 PURCHASES
During the third quarter of 1999, the Company acquired
substantially all of the assets of Burns, Harrelson & Burns
Insurance Agency, and Tomborello Insurance Services, both of
Phoenix, Arizona, in addition to acquiring one book of business.
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 nine-month periods ended September 30, 2000
and September 30, 1999 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.
2000 POOLINGS
During the second quarter of 2000, the Company issued
271,794 shares of its common stock for all of the outstanding
stock of Bowers, Schumann & Welch, a New Jersey corporation with
offices in Washington, New Jersey and Bethlehem, Pennsylvania.
The Company did not make any acquisitions using the pooling-of-
interests method of accounting during either the first or third
quarters of 2000.
The above acquisition has been recorded using the pooling-of-
interests method of accounting. The acquisition was treated as a
material transaction and the Company's consolidated financial
statements have been restated for this transaction for all prior
periods presented.
1999 POOLINGS
During the third quarter of 1999, the Company issued 167,328
shares of its common stock in exchange for all of the outstanding
stock of Ampher Insurance, Inc. and Ross Insurance of Florida,
Inc., related entities located in Sunrise, Florida. The Company
did not make any acquisitions using the pooling-of-interests
method of accounting during either the first or second quarters
of 1999.
The above acquisition has been recorded using the pooling-of-
interests method of accounting. The acquisition was treated as a
material transaction and the Company's consolidated financial
statements have been restated for this transaction for all prior
periods presented.
NOTE 4 - LONG-TERM DEBT
The Company continues to maintain its credit agreement with
a major insurance company under which $3 million (the maximum
amount available for borrowings) was outstanding at September 30,
2000, at an interest rate equal to the prime lending rate plus
one percent (10.50% at September 30, 2000). In accordance with
the amendment to the loan agreement dated August 1, 1998, the
available amount will decrease by $1 million each August through
2003.
<PAGE 8>
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,
2002. As of September 30, 2000, 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 the
outcome of 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
<TABLE>
<CAPTION>
<S> <C> <C>
FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30,
(IN THOUSANDS) 2000 1999
Cash paid during the period for:
Interest $ 439 $ 632
Income taxes 13,885 12,030
</TABLE>
THE COMPANY'S SIGNIFICANT NON-CASH INVESTING AND FINANCING ACTIVITIES ARE
AS FOLLOWS:
<TABLE>
<CAPTION>
<S> <C> <C>
FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30,
(IN THOUSANDS) 2000 1999
Unrealized holding loss on
available-for-sale
securities, net of tax
benefit of $1,009 for
2000 and $474 in 1999 $ (1,578) $ (741)
Long-term debt incurred for
acquisition of customer accounts 611 1,277
Notes received on the sale of
fixed assets and customer accounts - 714
Common stock issued in acquisitions 11,144 6,228
</TABLE>
<PAGE 9>
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 benefits 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 income and expenses
not allocated to reportable segments.
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
NINE MONTHS ENDED Retail Programs Service Brokerage Other Total
SEPTEMBER 30, 2000:
_____________________________________________________________________________
Total Revenues $104,830 $ 16,649 $13,860 $15,394 $(441) $150,292
Interest and other
investment income 1,607 1,045 204 539 (841) 2,554
Interest expense 1,368 16 - - (961) 423
Depreciation 1,960 780 331 175 206 3,452
Amortization 5,212 155 2 955 23 6,347
Income before income
taxes 24,208 5,973 2,056 4,966 2,073 39,276
Total assets 170,729 57,334 5,548 49,538 (24,695) 258,454
Capital expenditures 1,403 397 834 345 180 3,159
_____________________________________________________________________________
NINE MONTHS ENDED Retail Programs Service Brokerage Other Total
SEPBEMBER 30, 1999:
______________________________________________________________________________
Total Revenues $98,054 $ 17,857 $11,174 $10,690 $ (776) $136,999
Interest and other
investment income 1,474 899 165 265 (802) 2,001
Interest expense 931 - - - (355) 576
Depreciation 1,800 845 292 129 169 3,235
Amortization 4,804 242 - 589 29 5,664
Income before income
taxes 20,531 5,418 1,839 3,714 1,070 32,572
Total assets 153,912 58,652 6,092 25,344 (15,247) 228,753
Capital expenditures 3,051 312 323 181 172 4,039
____________________________________________________________________________
</TABLE>
<PAGE 10>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION UPDATES THE MD&A CONTAINED IN THE
COMPANY'S 1999 ANNUAL REPORT ON FORM 10-K, AND THE TWO
DISCUSSIONS SHOULD BE READ TOGETHER.
RESULTS OF OPERATIONS
NET INCOME. Net income for the third quarter of 2000 was
$8,436,000, or $.30 per share, compared with net income in the
third quarter of 1999 of $6,832,000, or $.24 per share, a 23%
increase. Net income for the nine months ended September 30,
2000 was $23,899,000, or $.85 per share, compared with 1999 same-
period net income of $19,756,000, or $.70 per share, a 21%
increase.
COMMISSIONS AND FEES. Commissions and fees for the third
quarter of 2000 increased $5,266,000, or 12%, over the same
period in 1999. Approximately $1,476,000 of this increase
represents revenues from agencies acquired under the purchase
method of accounting, with the remainder due to new and renewal
business production. Commissions and fees for the nine months
ended September 30, 2000 were $147,002,000 compared with
$134,193,000 for the same period in 1999, a 10% increase. The
2000 increase of $12,809,000 is due to approximately $4,828,000,
or 37%, of revenue from acquired agencies, with the remainder due
to new and renewal business production.
INVESTMENT INCOME. Investment income for the three- and
nine-month periods ended September 30, 2000 increased $114,000
and $553,000, respectively, over the same periods in 1999
primarily due to an increase in available cash to invest and the
sale of common stock investments.
OTHER INCOME. Other income primarily includes gains and
losses from the sale of customer accounts and other assets.
Other income for the third quarter ended September 30, 2000
decreased $505,000 from the same period in 1999 due to the sale
of certain customer accounts in 1999. Other income for the nine-
month period ended September 30, 2000 decreased $69,000 from the
same period in 1999.
EMPLOYEE COMPENSATION AND BENEFITS. Employee compensation
and benefits increased 10% and 8%, respectively, during the three-
and nine-month periods ended September 30, 2000 over the same
periods in 1999. 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
decreased to 51% in both the three- and nine-month periods ended
September 30, 2000, compared with 52% for each of the same
periods in 1999.
OTHER OPERATING EXPENSES. Other operating expenses for the
third quarter of 2000 decreased $179,000, or 2%, from the same
period in 1999, primarily due to certain one-time expenses
associated with acquisitions during the third quarter of 1999.
Other operating expenses decreased $178,000, or less than 1%, for
the nine months ended September 30, 2000, compared with the same
period in 1999, primarily due to the previously mentioned one-
time expenses. Other operating expenses as a percentage of total
revenue decreased to 15% in the third quarter of 2000, compared
with 17% in the same period in 1999, and decreased to 16% for the
nine months ended September 30, 3000, compared with 17% in the
same period in 1999.
DEPRECIATION. Depreciation increased $87,000, or 8%, and
$217,000, or 7%, for the three- and nine-month periods ended
September 30, 2000, respectively, over the same periods in 1999,
primarily due to higher fixed asset balances from acquisitions.
AMORTIZATION. Amortization increased $206,000, or 11%, and
$683,000, or 12%, for the three- and nine-month periods ended
September 30, 2000, respectively, over the same periods in 1999,
primarily due to increased amortization from acquisitions.
INTEREST. Interest decreased $60,000, or 35%, for the third
quarter of 2000 from the same period in 1999. Interest decreased
$153,000, or 27%, for the nine months ended September 30, 2000
compared with the same
<PAGE 11>
period in 1999, primarily due to fluctuations in the amount outstanding
under the Company's line of credit and payoffs of acquisition-related debt.
PROPOSED ACQUISITION
On September 11, 2000 the Company signed a definitive
agreement to acquire the insurance-related operations and assets
of Riedman Corporation ("Riedman"), subject to the completion of
due diligence and certain other customary conditions. Riedman
operates more than 60 offices in 13 states, principally where the
Company does not currently have an office location. During 1999,
Riedman reported insurance-related revenues of $51.1 million.
This amount equals approximately 29% of the Company's 1999
revenues. The cash purchase price will be approximately 1.55
times Riedman's revenues for year 2000, less the assumption by
the Company of certain Riedman debt related to its prior
acquisitions. This acquisition is expected to be effective
January 1, 2001 and will be accounted for using the purchase
method of accounting. However, the Company cannot assure that it
will consummate or, if consummated, it can successfully integrate
Riedman's operations and management. Further, as with all
acquisitions, the proposed Riedman acquisition involves certain
risks which could have a material adverse effect on the Company,
such as: potential liabilities of Riedman; the incurrence of
additional debt, as discussed below; the financial impact of
amortizing goodwill and other intangible assets; the diversion of
management's attention to the assimilation of Riedman's business;
the risk that the acquired business will fail to maintain the
quality of services the Company has historically provided; the
need to implement financial and other systems, incur other
capital expenditures, and add management resources; the risk that
key Riedman employees may leave after the acquisition and attempt
to divert business away from the Company; and unforeseen
difficulties in the acquired operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents of $48,370,000 at
September 30, 2000 increased by $9,364,000 from $39,006,000 at
December 31, 1999, a 24% increase. From both this amount and
existing cash balances, $15,314,000 was used to acquire
businesses, $5,392,000 was used for payments of dividends,
$3,920,000 was used for payments on long-term debt, and
$3,159,000 was used for additions to fixed assets. The current
ratio at September 30, 2000 was 1.02, compared with 0.94 as of
December 31, 1999.
The Company has a revolving credit agreement with a major
insurance company under which up to $3 million presently may be
borrowed at an interest rate equal to the prime lending rate plus
1% (10.50% at September 30, 2000). The amount of available
credit will decrease by $1 million each year in August until the
facility expires in August 2003. As of September 30, 2000, 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, 2002. As of September
30, 2000, there were no borrowings against this line of credit.
Related to the proposed Riedman acquisition, the Company has
a signed commitment letter with a national banking institution to
provide up to $90 million under a seven year term loan, bearing
an interest rate between the London Inter-Bank Offering Rate
(LIBOR) plus 0.50% and LIBOR plus 1.0%, depending upon the
Company's quarterly ratio of Funded Debt to Earnings Before
Interest, Taxes, Depreciation and Amortization (EBITDA).
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.
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.
<PAGE 12>
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,; (vi) the actual costs of
resolution of contingent liabilities; (vii) those factors
relevant to Brown & Brown's integration of acquisitions,
including any material adverse changes in the customers of the
company whose operations are being acquired and/or any material
adverse changes in the business and financial condition of either
or both companies and their respective customers; and (viii)
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 September 30, 2000.
<PAGE 13>
BROWN & BROWN, INC.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
As more fully discussed in the Company's report on Form 10-Q
for the quarter ended March 31, 2000, on January 19, 2000, a
complaint was filed in the Superior Court of Henry County,
Georgia, captioned GRESHAM & ASSOCIATES, INC. V. ANTHONY T.
STRIANESE ET AL. No material developments have occurred in this
action since the filing of that Form 10-Q by the Company.
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 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 4b - Rights Agreement, dated as of July 30, 1999, between the
Company and First Union National Bank, as Rights Agent
(incorporated by reference to Exhibit 4.1 to Form 8-K
filed on August 2, 1999)
Exhibit 10a - Asset Purchase Agreement dated September 11, 1999, among
the Company, Riedman Corporation, and Riedman Corporation's
shareholders
Exhibit 10b - Commitment Letter Agreement dated September 12, 2000,
between the Company and SunTrust Bank, regarding commitment
of $90 million term loan and extension of existing $50
million revolving credit facility to the Company
Exhibit 11 - Statement re: Computation of Basic and Diluted Earnings
Per Share
(b) There were no open reports filed on Form 8-K during the three-month
period ended September 30, 2000.
<PAGE 14>
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: November 13, 2000 /S/ CORY T. WALKER
___________________________________________
CORY T. WALKER, VICE PRESIDENT,
CHIEF FINANCIAL OFFICER AND TREASURER
(duly authorized officer, principal financial
officer and principal accounting officer)
