10-Q 1 0001.txt 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. BROWN & BROWN, INC. INDEX
PAGE PART I. FINANCIAL INFORMATION ____ 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
ITEM 1: FINANCIAL STATEMENTS
BROWN & BROWN, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA) 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 ======== ======= ======== ========
See notes to condensed consolidated financial statements. BROWN & BROWN, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
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 ======== ========
See notes to condensed consolidated financial statements. BROWN & BROWN, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)
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 ======== ========
See notes to condensed consolidated financial statements. 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. 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. 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
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
THE COMPANY'S SIGNIFICANT NON-CASH INVESTING AND FINANCING ACTIVITIES ARE AS FOLLOWS:
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
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.
(IN THOUSANDS) 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 ____________________________________________________________________________
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 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. 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. 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. 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)