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Brown &;; Brown, Inc. Announces Record Third-Quarter Earnings of $49.5 Million

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October 15, 2012 17:23 ET

Brown & Brown, Inc. Announces Record Third-Quarter Earnings of $49.5 Million

DAYTONA BEACH, FL and TAMPA, FL--(Marketwire - Oct 15, 2012) - Brown & Brown, Inc. (NYSE: [ BRO ]) today announced its preliminary, unaudited financial results for the third quarter of 2012.

Net income for the third quarter of 2012 was $49,504,000, or $0.34 per share, compared with $44,173,000, or $0.30 per share for the same quarter of 2011, an increase of 12.1%. Total revenue for the third quarter was $303,800,000, compared with 2011 third-quarter revenue of $260,401,000, an increase of 16.7%. 

Total revenue for the nine months ended September 30, 2012 was $897,202,000, compared with total revenue for the same period of 2011 of $769,445,000, an increase of 16.6%. Net income for the nine-month period ended September 30, 2012 was $141,408,000, or $0.97 per share, compared with $127,501,000, or $0.88 per share for the same period of 2011, an increase of 10.9%.

J. Powell Brown, President and Chief Executive Officer of the Company, noted, "We are pleased with our record earnings in the third quarter. Our Retail Division continues to show increasing organic growth, which suggests that economic conditions are improving for our clients across the country, who are predominantly in the middle market."

Brown & Brown, Inc., through its subsidiaries, offers a broad range of insurance and reinsurance products and services. Additionally, certain Brown & Brown subsidiaries offer a variety of risk management, third party administration, and other services. Serving business, public entity, individual, trade and professional association clients nationwide, the Company is ranked by Business Insurance magazine as the United States' sixth largest independent insurance intermediary. The Company's Web address is [ www.bbinsurance.com ]. 

This press release may contain certain statements relating to future results which are forward-looking statements, including those relating to the Company's anticipated financial results for the third quarter of 2012. These statements are not historical facts, but instead represent only the Company's current belief regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company's control. It is possible that the Company's actual results, financial condition and achievements may differ, possibly materially, from the anticipated results, financial condition and achievements contemplated by these forward-looking statements. These risks and uncertainties include, but are not limited to, the Company's determination as it finalizes its financial results for the third quarter of 2012 that its financial results differ from the current preliminary unaudited numbers set forth herein, other factors that the Company may not have currently identified or quantified, and other risks, relevant factors and uncertainties identified in the Company's Annual Report on Form 10-K for the year ended December 31, 2011, and the Company's other filings with the Securities and Exchange Commission. All forward-looking statements made herein are made only as of the date of this release, and the Company does not undertake any obligation to publicly update or correct any forward-looking statements to reflect events or circumstances that subsequently occur or of which the Company hereafter becomes aware. 

Brown & Brown, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
 
   For the
Three Months Ended
September 30,
  For the
Nine Months Ended
September 30,
   2012 2011  2012  2011
REVENUES               
Commissions and fees  $302,310 $257,177  $888,785  $764,612
Investment income   239  317   561   934
Other income, net   1,251  2,907   7,856   3,899
  Total revenues   303,800  260,401   897,202   769,445
                
EXPENSES               
Employee compensation and benefits   149,691  126,877   450,039   379,286
Non-cash stock-based compensation   3,908  2,856   11,393   8,338
Other operating expenses   43,774  38,434   129,394   109,489
Amortization   15,956  13,725   47,450   40,790
Depreciation   3,958  3,062   11,383   9,276
Interest   4,006  3,565   12,093   10,780
Change in estimated acquisition earn-out payables   
 858
  
(810
)  (134)  656
  Total expenses   222,151  187,709   661,618   558,615
                
Income before income taxes   81,649  72,692   235,584   210,830
                
Income taxes   32,145  28,519   94,176   83,329
                
Net income  $49,504 $44,173  $141,408  $127,501
                
Net income per share:               
 Basic  $0.34 $0.31  $0.99  $0.89
 Diluted  $0.34 $0.30  $0.97  $0.88
                
Weighted average number of shares outstanding:               
 Basic   139,465  138,690   139,185   138,475
 Diluted   142,097  140,443   141,769   140,120
                
Dividends declared per share  $0.0850 $0.0800  $0.2550  $0.2400
                
                
                
Brown & Brown, Inc. 
INTERNAL GROWTH SCHEDULE 
Core Organic Commissions and Fees(1) 
Three Months Ended September 30, 2012 
(in thousands) 
(unaudited) 
  
  Quarter
Ended
09/30/12
 Quarter
Ended
09/30/11
 Total
Net
Change
 Total
Net
Growth
%
  Less
Acquisition
Revenues
 Internal
Net
Growth
$
  Internal
Net
Growth
%
 
                       
Retail(2) $153,702 $143,681 $10,021 7.0% $8,593 $1,428  1.0%
                       
National Programs  62,406  42,265  20,141 47.7%  21,536  (1,395) (3.3)%
                       
Wholesale Brokerage  43,200  41,192  2,008 4.9%  868  1,140  2.8%
                       
Services  28,566  16,450  12,116 73.7%  10,845  1,271  7.7%
                       
Total Core Commissions and Fees (1) $
287,874
 $
243,588
 $
44,286
 
18.2
% $
41,842
 $
2,444
  
1.0
%
                       
                       
                       
Reconciliation of Internal Growth Schedule
to Total Commissions and Fees
Included in the Consolidated Statements of Income
For the Three Months Ended September 30, 2012 and 2011
(in thousands)
(unaudited)
  Quarter
Ended
09/30/12
 Quarter
Ended
09/30/11
Total core commissions and fees(1) $287,874 $243,588
Profit-sharing contingent commissions  
 12,077
  
 7,233
Guaranteed supplemental commissions  
 2,359
  
 3,460
Divested business  -  2,896
       
Total commissions & fees $302,310 $257,177
(1) Total core commissions and fees are our total commissions and fees less (i) profit-sharing contingent commissions (revenues derived from special revenue-sharing commissions from insurance companies based upon the volume and the growth and/or profitability of the business placed with such companies during the prior year), (ii) guaranteed supplemental commissions (GSC) (revenues derived from special revenue-sharing commissions from insurance companies based solely upon the volume of the business placed with such companies during the current year),and (iii) divested business (commissions and fees generated from offices, books of business or niches sold by the Company or terminated).
(2) The Retail segment includes commissions and fees reported in the "Other" column of the Segment Information, which includes corporate and consolidation items.
   
   
   
Brown & Brown, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
 
 
  September 30, December 31,
  2012 2011
ASSETS      
Current assets:      
 Cash and cash equivalents $244,637 $286,305
 Restricted cash and investments  198,137  130,535
 Short-term investments  8,176  7,627
 Premiums, commissions and fees receivable  282,972  240,257
 Deferred income taxes  18,792  19,863
 Other current assets  32,794  23,540
  Total current assets  785,508  708,127
       
Fixed assets, net  73,191  61,360
Goodwill  1,686,460  1,323,469
Amortizable intangible assets, net  567,489  496,182
Other assets  22,081  17,873
  Total assets $3,134,729 $2,607,011
       
LIABILITIES AND SHAREHOLDERS' EQUITY      
Current liabilities:      
 Premiums payable to insurance companies $397,995 $327,096
 Premium deposits and credits due customers  47,798  30,048
 Accounts payable  57,046  22,384
 Accrued expenses and other liabilities  120,667  100,865
 Current portion of long-term debt  93  1,227
  Total current liabilities  623,599  481,620
       
Long-term debt  450,000  250,033
       
Deferred income taxes, net  229,458  178,052
       
Other liabilities  62,858  53,343
       
Shareholders' equity:      
 Common stock, par value $0.10 per share; authorized 280,000 shares; issued and outstanding 143,817 at 2012 and 143,352 at 2011  

14,382
  

14,335
 Additional paid-in capital  327,053  307,059
 Retained earnings  1,427,379  1,322,562
 Accumulated other comprehensive income  -  7
       
  Total shareholders' equity  1,768,814  1,643,963
         
  Total liabilities and shareholders' equity $3,134,729 $2,607,011