NOTE 11· Subsequent Event

On July 1, 2013, Brown & Brown acquired Beecher Carlson Holdings, Inc. (“Beecher”), an insurance and risk management broker with operations that include retail brokerage, program management and captive management, pursuant to a merger agreement, dated May 21, 2013, among the Company, Brown & Brown Merger Co., a wholly-owned subsidiary of the Company, Beecher, and BC Sellers’ Representative LLC, solely in its capacity as the representative of Beecher’s shareholders. The aggregate purchase price for Beecher was $454,475,000, including $364,644,000 of cash payments and the assumption of $89,831,000 of liabilities. Beecher was acquired primarily to expand Brown & Brown’s Retail and National Programs businesses, and to attract and hire high-quality individuals.

The Beecher acquisition will be accounted for as business combination as follows:


*(in thousands)*
Name	2013 Date of Acquisition		Cash Paid		Recorded Earn-out Payable		Net Assets Acquired		*Maximum* *Potential* *Earn-out* *Payable*
Beecher		July 1	$	364,644	$	—	$	364,644	$	—

The following table summarizes the preliminary estimated fair values of Beecher’s aggregate assets and liabilities acquired:


(in thousands)	Beecher
Cash	$	40,361
Other current assets		44,433
Fixed assets		1,786
Goodwill		264,972
Purchased customer accounts		99,017
Non-compete agreements		2,913
Other assets		933

Total assets acquired		454,475

Other current liabilities		(72,949	)
Deferred income taxes, net		(14,288	)
Other liabilities		(2,594	)

Total liabilities assumed		(89,831	)

Net assets acquired	$	364,644

The weighted average useful lives for the above acquired amortizable intangible assets are as follows: purchased customer accounts are 15.0 years, and non-compete agreements are 5.0 years.

If the Beecher acquisition had occurred as of January 1, 2013, the Company’s estimated results of operations would be as shown in the following table. These unaudited pro forma results are not necessarily indicative of the actual results of operations that would have occurred had the Beecher acquisition actually been made as of January 1, 2013.


(UNAUDITED)	For the three months ended June 30, 2013		For the six months ended June 30, 2013
*(in thousands, except per share data)*
Total revenues	$	354,873	$	718,966
Income before income taxes	$	90,152	$	193,575
Net income	$	54,382	$	116,887
Net income per share:
Basic	$	0.38	$	0.81
Diluted	$	0.37	$	0.80
Weighted average number of shares outstanding:
Basic		140,836		140,816
Diluted		143,021		142,938

On July 1, 2013, in conjunction with the Beecher acquisition, the Company entered into: (1) a revolving loan agreement (the “Wells Fargo Agreement”) with Wells Fargo Bank, N.A. (“Wells Fargo”) that provides for a $50.0 million revolving line of credit (the “Wells Fargo Revolver”) and (2) a term loan agreement (the “Bank of America Agreement”) with Bank of America, N.A. (“Bank of America”) that provides for a $30.0 million term loan (the “Bank of America Term Loan”). The Wells Fargo Revolver was drawn down in the amount of $30.0 million and the Bank of America Term Loan was funded in the amount of $30.0 million, each on July 1, 2013, and these facilities provided the financing for the acquisition.

The maturity date for the Wells Fargo Revolver is December 31, 2016, at which time all outstanding principal and unpaid interest will be due. The Wells Fargo Revolver may be increased by up to $50.0 million (bringing the total available to $100.0 million). The calculation of interest and fees for the Wells Fargo Agreement is generally based on the Company’s funded debt-to-EBITDA ratio. Interest is charged at a rate equal to 1.00% to 1.40% above LIBOR or 1.00% below the Base Rate, each as more fully described in the Wells Fargo Agreement. Fees include an up-front fee, an availability fee of 0.175% to 0.25%, and a letter of credit margin fee of 1.00% to 1.40%. The obligations under the Wells Fargo Revolver are unsecured and the Wells Fargo Agreement includes various covenants, limitations and events of default that are customary for similar facilities for similar borrowers.

The maturity date for the Bank of America Term Loan is December 31, 2016, at which time all outstanding principal and unpaid interest will be due. The calculation of interest for the Bank of America Agreement is generally based on the Company’s fixed charge coverage ratio. Interest is charged at a rate equal to the Alternative Base Rate or 1.00% to 1.40% above the Adjusted LIBOR Rate, each as more fully described in the Bank of America Agreement. Fees include an up-front fee. Initially, until the Lender receives the Company’s September 30, 2013 quarter end financial statements, the applicable margin for Adjusted LIBOR Rate advances is 1.50%. The obligations under the Bank of America Term Loan are unsecured and the Bank of America Agreement includes various covenants, limitations and events of default that are customary for similar facilities for similar borrowers.