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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM _________ TO ________
COMMISSION FILE NUMBER 0-7201.
POE & BROWN, INC.
(Exact name of Registrant as specified in its charter)
FLORIDA 59-0864469
(State or other jurisdiction (I.R.S. Employer
of Identification Number)
incorporation or organization)
220 SOUTH RIDGEWOOD AVENUE, DAYTONA BEACH, FL 32114
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (904) 252-9601
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK $.10 PAR VALUE
(Title of class)
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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
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INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN AND WILL NOT BE CONTAINED, TO THE
BEST OF THE REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY
AMENDMENT TO THIS FORM 10-K [ ].
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF
THE REGISTRANT, COMPUTED BY REFERENCE TO THE LAST REPORTED PRICE AT WHICH THE
STOCK WAS SOLD ON MARCH 4, 1996, WAS $161,684,057.
THE NUMBER OF SHARES OF THE REGISTRANT'S COMMON STOCK, $.10 PAR VALUE,
OUTSTANDING AS OF MARCH 4, 1996, WAS 8,682,359.
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF THE REGISTRANT'S 1995 ANNUAL REPORT TO SHAREHOLDERS ARE
INCORPORATED BY REFERENCE INTO PARTS I AND II OF THIS REPORT. WITH THE EXCEPTION
OF THOSE PORTIONS WHICH ARE INCORPORATED BY REFERENCE, THE REGISTRANT'S ANNUAL
REPORT TO SHAREHOLDERS IS NOT DEEMED FILED AS PART OF THIS REPORT.
PORTIONS OF THE REGISTRANT'S PROXY STATEMENT FOR THE 1996 ANNUAL MEETING OF
SHAREHOLDERS ARE INCORPORATED BY REFERENCE INTO PART III OF THIS REPORT.
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POE & BROWN, INC.
FORM 10-K ANNUAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 1995
PART I
ITEM 1. BUSINESS
GENERAL
Poe & Brown, Inc. (the "Company") is a general insurance agency
headquartered in Daytona Beach and Tampa, Florida that resulted from an April
28, 1993 business combination involving Poe & Associates, Inc. ("Poe") and Brown
& Brown, Inc. ("Brown"). Poe was incorporated in 1958 and Brown commenced
business in 1939. Industry segment information is not presented because the
Company realizes substantially all of its revenues from the general insurance
agency business.
The Company is a diversified insurance brokerage and agency that markets
and sells primarily property and casualty insurance products and services to its
clients. Because the Company does not engage in underwriting activities, it does
not assume underwriting risks. Instead, it acts in an agency capacity to provide
its customers with targeted, customized risk management products.
The Company is compensated for its services by commissions paid by
insurance companies and fees for administration and benefit consulting services.
The commission is usually a percentage of the premium paid by an insured.
Commission rates generally depend upon the type of insurance, the particular
insurance company, and the nature of the services provided by the Company. In
some cases, a commission is shared with other agents or brokers who have acted
jointly with the Company in a transaction. The Company may also receive from an
insurance company a contingent commission that is generally based on the
profitability and volume of business placed with it by the Company over a given
period of time. Fees are principally generated by the Service Division, which
offers administration and benefit consulting services primarily in the workers'
compensation and employee benefit markets. The amount of the Company's income
from commissions and fees is a function of, among other factors, continued new
business production, retention of existing customers, acquisitions, and
fluctuations in insurance premium rates and insurable exposure units.
Premium pricing within the property and casualty insurance underwriting
industry has been cyclical and has displayed a high degree of volatility based
on prevailing economic and competitive conditions. Since the mid-1980s, the
property and casualty insurance industry has been in a "soft market" during
which the underwriting capacity of insurance companies expanded, stimulating an
increase in competition and a decrease in premium rates and related commissions
and fees. Significant reductions in premium rates occurred during the years 1987
through 1989 and continue, although to a lesser degree, through the present. The
effect of this softness in rates on the Company's revenues has been somewhat
offset by the Company's acquisitions and new business production. The Company
cannot predict the timing or extent of premium pricing changes as a result of
market fluctuations or their effect on the Company's operations in the future.
The Company's activities are conducted in 17 locations throughout Florida,
and in 10 additional locations in Arizona, California, Colorado, Connecticut,
Georgia, New Jersey, North Carolina, Pennsylvania, and Texas. Because the
Company's business is concentrated in Florida, the occurrence of adverse
economic conditions or an adverse regulatory climate in Florida could have a
materially adverse effect on its business, although the Company has not
encountered such conditions in the past.
The Company's business is divided into four divisions: (i) the Retail
Division; (ii) the National Programs Division; (iii) the Service Division; and
(iv) the Brokerage Division. The Retail Division is composed of Company
employees in 23 offices that market and sell a broad range of insurance products
to insureds. The National Programs Division works with underwriters to develop
proprietary insurance programs for specific niche markets. These programs are
marketed and sold primarily through approximately 270 independent agencies and
more than 2,000 independent agents across the United States. The Company
receives an override on the commissions generated by these independent agencies.
The Service Division provides insurance-related
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services such as third-party administration and consultation for workers'
compensation and employee benefit markets. The Brokerage Division markets and
sells excess and surplus commercial insurance primarily through independent
agents.
The following table sets forth a summary of (i) the commission and fee
revenues realized from each of the Company's operating divisions for each of the
three years in the period ended December 31, 1995 (in thousands of dollars), and
(ii) the percentage of the Company's total commission and fee revenues
represented by each division for each of such periods:
1993 % 1994 % 1995 %
------- ----- ------- ----- -------- -----
Retail Division(1)................ $58,959 62.4% $56,018 58.4% $ 59,552 58.4%
Nat'l Programs Division........... 23,633 25.0% 26,519 27.7% 27,542 27.0%
Service Division.................. 10,166 10.8% 10,643 11.1% 10,751 10.5%
Brokerage Division................ 1,662 1.8% 2,672 2.8% 4,153 4.1%
------- ----- ------- ----- -------- -----
Total................... $94,420 100% $95,852 100% $101,998 100%
======= ===== ======= ===== ======== =====
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(1) In 1993 and 1994, the Company sold retail offices in Tallahassee, Florida
and Westlake Village, California and various other customer accounts. More
than half the decline in Retail Division revenues from 1993 to 1994 is
attributable to those dispositions.
RETAIL DIVISION
The Company's Retail Division operates through 23 locations in eight
states. These locations employ approximately 550 persons. The Company's retail
insurance agency business consists primarily of selling and marketing property
and casualty insurance coverages to commercial, professional, and to a limited
extent, individual customers. The categories of insurance principally sold by
the Company are: Casualty -- insurance relating to legal liabilities, workers'
compensation, commercial and private passenger automobile coverages, and
fidelity and surety insurance; and Property -- insurance against physical damage
to property and resultant interruption of business or extra expense caused by
fire, windstorm or other perils. The Company also sells and services all forms
of group and individual life, accident, health, hospitalization, medical and
dental insurance programs. Each category of insurance is serviced by insurance
specialists employed by the Company.
No material part of the Company's retail business depends upon a single
customer or a few customers. During 1995, the Company's Retail Division received
approximately $418,000 of fees and commissions from Rock-Tenn Company, the
Company's largest single Retail Division customer. Such amount represented less
than 1% of the Retail Division's total commission and fee revenues for 1995.
In connection with the selling and marketing of insurance coverages, the
Company provides a broad range of related services to its customers, such as
risk management surveys and analysis, consultation in connection with placing
insurance coverages, and claims processing. The Company believes these services
are important factors in securing and retaining customers.
NATIONAL PROGRAMS DIVISION
The National Programs Division tailors insurance products to the needs of a
particular professional or trade group, negotiates policy forms, coverages, and
commission rates with an insurance company, and, in certain cases, secures the
formal or informal endorsement of the product by an association. The National
Programs Division's programs are marketed and sold primarily through a national
network of approximately 270 independent agencies and more than 2,000
independent agents, who solicit customers though advertisements in association
publications, direct mailings and personal contact. The Company also markets
these products directly in Florida through the National Programs Division's
Professional Services Program. Under agency agreements with the insurance
companies that underwrite these programs, the Company usually has authority to
bind coverages, subject to established guidelines, to bill and collect premiums
and, in some cases, to process claims.
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The Company is committed to ongoing market research and development of new
proprietary programs. The Company employs a variety of methods, including
interviews with members of prospective professional and trade groups, to assess
the coverage needs of various professional groups and trade associations to
which the Company does not presently offer insurance products. If the initial
market research is positive, the Company studies the existing and potential
competition and locates potential carriers for the program. A proposal is then
submitted to and negotiated with a selected carrier and, in most instances, a
professional or trade association concerning endorsement of the program. New
programs are introduced through written communications, personal visits with
agents, placements of advertising in trade publications and, where appropriate,
participation in trade shows and conventions. Several new programs are currently
being reviewed by the Company. There can be no assurance, however, as to whether
the Company will be successful in developing any such new programs or what the
market reception will be.
Professional Groups. The professional groups targeted by the National
Programs Division include dentists, lawyers, physicians, and optometrists and
opticians. Set forth below is a brief description of the programs offered to
these four major professional groups.
- Dentists: The largest program marketed by the National Programs
Division is a package insurance policy known as the Professional Protector
Plan(R), which provides comprehensive coverage for dentists, including practice
protection and professional liability. This program, initiated in 1969, is
endorsed by 31 state or component dental societies, and is offered in 49 states,
the District of Columbia, the Virgin Islands and Puerto Rico. This program
presently insures approximately 37,100 dentists, which the Company believes
represents approximately 27% of the eligible practicing dentists within the
Company's marketing territories.
- Lawyers: The Company began marketing lawyers' professional liability
insurance in 1973, and the national Lawyer's Protector Plan(R) was introduced in
1983. The program presently insures approximately 36,000 attorneys and is
offered in 46 states and the Virgin Islands.
- Physicians: The Company markets professional liability insurance for
physicians, surgeons, and other health care providers through a program known as
the Physicians Protector Plan(R). The program, initiated in 1980, is currently
offered in thirteen states and insures approximately 5,000 physicians.
- Optometrists and Opticians: The Optometric Protector Plan(R) was created
in 1973 to provide optometrists and opticians with a package of practice and
professional liability coverage. This program insures approximately 7,000
optometrists and opticians in all states and Puerto Rico.
The professional programs described above are underwritten predominantly
through CNA Insurance Companies ("CNA"). The Company and CNA are parties to
Program Agency Agreements with respect to each of the programs described above.
Among other things, these agreements grant the Company the exclusive right to
solicit and receive applications for program policies directly and from other
licensed agents and to bind and issue such policies and endorsements thereto. In
fulfilling its obligations under the agreements, the Company must comply with
the administrative and underwriting guidelines established by CNA. The Company
must use its best efforts to promote the programs and solicit and sell program
policies. The Company is compensated through commissions on premiums, which vary
according to insurance product (e.g., workers' compensation, commercial
umbrella, package coverage, monoline professional and general liability) and the
Company's role in the transaction. The commission to which the Company is
entitled may change upon 90 days' written notice from CNA. The Program Agency
Agreements are generally cancellable by either party on six months' or one
year's advance written notice for any reason. An agreement may also be
terminated upon breach, by the non-breaching party, subject to certain
opportunities to cure the breach.
Commercial. The National Programs Division's Towing Operators Protector
Plan(R) was introduced in 1993 and currently provides specialized insurance
products to tow-truck operators in 29 states. The Automobile Dealers Protector
Plan(R) insures used car dealers not affiliated with manufacturers. In Florida,
the program is endorsed by the Florida Independent Auto Dealers Association.
Since 1994, this Plan has been expanded into eight additional states, and
currently insures approximately 3,000 dealers in nine states.
Health Care Insurers, Inc. ("HCI"), a wholly owned subsidiary of the
Company located in Colorado Springs, Colorado, was created in 1989 to market and
sell professional health care liability insurance and
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property coverages through independent agents to hospitals, laboratories,
nursing homes, medical groups, and clinics. HCI currently represents 165 clients
in 22 states.
The Insurance Administration Center ("IAC") became a wholly owned
subsidiary of the Company in 1989. IAC was founded in 1962 to serve as insurance
consultant to the National Association of Wholesaler-Distributors ("NAW") and
NAW's industry associations, which have a total of approximately 40,000 members.
IAC currently serves NAW members as a third-party administration facility for
life and health coverages, and markets and sells various employee benefits,
property, and casualty insurance products to NAW members.
IAC's third-party administration services include billing, premium
accounting, eligibility, enrollment, claims payments, and financial reporting,
and IAC currently processes claims for approximately 350 employers associated
with NAW in a program for which New York Life Insurance Company is the lead
underwriter. Since April 1995, IAC's property and casualty offerings have been
principally underwritten by General Accident Insurance Company. Prior to that
time, they were principally underwritten by CIGNA.
SERVICE DIVISION
The Service Division consists of two separate components: (i) insurance and
related services as a third-party administrator ("TPA") and consultant for
employee health and welfare benefit plans, and (ii) insurance and related
services providing comprehensive risk management and third-party administration
to self-funded workers' compensation plans.
In connection with its employee benefit plan administrative services, the
Service Division provides TPA services and consulting related to benefit plan
design and costing, arrangement for the placement of stop-loss insurance and
other employee benefit coverages, and settlement of claims. The Service Division
provides utilization management services such as pre-admission review,
concurrent/retrospective review, pre-treatment review of certain non-hospital
treatment plans, and medical and psychiatric case management. In addition to the
administration of self-funded health care plans, the Service Division offers
administration of flexible benefit plans, including plan design, employee
communication, enrollment and reporting. The Service Division's workers'
compensation TPA services include risk management services such as loss control,
claim administration, access to major reinsurance markets, cost containment
consulting, and services for secondary disability and subrogation recoveries.
The Service Division provides workers' compensation TPA services for
approximately 2,000 employers representing more than $2 billion of employee
payroll. The Company's largest workers' compensation contract represents
approximately 72% of the Company's workers' compensation TPA revenues, or 5% of
the Company's total commission and fee revenues.
BROKERAGE DIVISION
The Brokerage Division markets excess and surplus lines and specialty
insurance products to the Company's Retail Division, as well as other retail
agencies throughout Florida and the Southeast. The Brokerage Division represents
various U.S. and U.K. surplus lines companies and is also a Lloyd's of London
correspondent. In addition to surplus lines carriers, the Brokerage Division
represents admitted carriers for smaller agencies that do not have access to
large insurance carrier representation. Excess and surplus products include
commercial automobile, garage, restaurant, builder's risk and inland marine
lines. Difficult-to-insure general liability and products liability coverages
are a specialty, as is excess workers' compensation. Retail agency business is
solicited through mailings and direct contact with retail agency
representatives. Effective July 1, 1995, the Company acquired Roehrig Flood &
Associates, Inc., an excess and surplus lines broker located in St. Petersburg,
Florida. Effective January 1, 1996, the Company acquired a 75% ownership in
Florida Intracoastal Underwriters, Ltd. ("FIU") of Miami Lakes, Florida. FIU is
a managing general agency that specializes in providing insurance coverages for
coastal and inland high-value condominiums and apartments. FIU has developed a
unique reinsurance facility to support the underwriting activities associated
with these risks.
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EMPLOYEES
As of December 31, 1995, the Company had 1,035 full-time equivalent
employees. The Company has contracts with its sales employees that include
provisions restricting their right to solicit the Company's customers after
termination of employment with the Company. The enforceability of such contracts
varies from state to state depending upon state statutes, judicial decisions,
and factual circumstances. The majority of these contracts are terminable by
either party; however, the agreements not to solicit the Company's customers
continue generally for a period of at least three years after employment
termination.
None of the Company's employees is represented by a labor union, and the
Company considers its relations with its employees to be satisfactory.
COMPETITION
The insurance agency business is highly competitive, and numerous firms
actively compete with the Company for customers and insurance carriers. Although
the Company is the largest insurance agency headquartered in Florida, a number
of firms with much greater resources and market presence compete with the
Company in Florida and elsewhere. This situation is particularly pronounced
outside Florida. Competition in the insurance business is largely based on
innovation, quality of service, and price.
A number of insurance companies are engaged in the direct sale of
insurance, primarily to individuals, and do not pay commissions to agents and
brokers. To date, such direct writing has had relatively little effect on the
Company's operations, primarily because the Company's Retail Division is
commercially oriented.
REGULATION, LICENSING AND AGENCY CONTRACTS
The Company or its designated employees must be licensed to act as agents
by state regulatory authorities in the states in which the Company conducts
business. Regulations and licensing laws vary in individual states and are often
complex.
The applicable licensing laws and regulations in all states are subject to
amendment or reinterpretation by state regulatory authorities, and such
authorities are vested in most cases with relatively broad discretion as to the
granting, revocation, suspension and renewal of licenses. The possibility exists
that the Company could be excluded or temporarily suspended from carrying on
some or all of its activities in, or otherwise subjected to penalties by, a
particular state.
ITEM 2. PROPERTIES
The Company's executive offices are located at 220 South Ridgewood Avenue,
Daytona Beach, Florida 32115 and 401 East Jackson Street, Suite 1700, Tampa,
Florida 33602. The Company also maintains offices in the following cities:
Phoenix, Arizona; San Francisco, California; Colorado Springs, Colorado;
Glastonbury, Connecticut; Brooksville, Florida; Ft. Lauderdale, Florida; Ft.
Myers, Florida; Jacksonville, Florida; Kissimmee, Florida; Leesburg, Florida;
Melbourne, Florida; Miami Lakes, Florida; Naples, Florida; Orlando, Florida; St.
Petersburg, Florida; Sarasota, Florida; West Palm Beach, Florida; Winter Haven,
Florida; Atlanta, Georgia; Charlotte, North Carolina; Clark, New Jersey;
Somerset, New Jersey; Philadelphia, Pennsylvania; and Houston, Texas.
The Company occupies office premises under noncancellable operating leases
expiring at various dates. These leases generally contain renewal options and
escalation clauses based on increases in the lessors' operating expenses and
other charges. The Company expects that most leases will be renewed or replaced
upon expiration. See Note 8 of the "Notes to Consolidated Financial Statements"
in the 1995 Annual Report to Shareholders for additional information on the
Company's lease commitments.
At December 31, 1995 the Company owned one building located in downtown
Daytona Beach, Florida having an aggregate book value of approximately $128,000,
including improvements. There are no outstanding mortgages on this building.
This building generated lease revenue during 1995 of approximately $16,600.
During 1995, two other buildings having an aggregate book value approximating
$186,000 were sold for a
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minimal gain. The Company also owns an office condominium in Venice, Florida
which has a net book value of $195,000, with no outstanding mortgage.
ITEM 3. LEGAL PROCEEDINGS
On February 21, 1995, an Amended Complaint was filed in an action pending
in the Superior Court of Puerto Rico, Bayamon division, and captioned Cadillac
Uniform & Linen Supply Company, et al. v. General Accident Insurance Company,
Puerto Rico, Limited, et al. The case was originally filed on November 23, 1994,
and named General Accident Insurance Company, Puerto Rico Limited, and Benj.
Acosta, Inc. as defendants. The Amended Complaint added several defendants,
including the Company and Poe & Brown of California, Inc. ("P&B/Cal."), a
subsidiary of the Company, as parties to the case. The Plaintiffs allege that
P&B/Cal. failed to procure sufficient coverage for a commercial laundry facility
that was rendered inoperable for a period of time as the result of a fire, and
further allege that the Company is vicariously liable for the actions of
P&B/Cal. The Amended Complaint seeks damages of $11.2 million against P&B/Cal.,
the Company, the P&B/Cal. employee who handled the account and LBI Corp., a/k/a
Levinson Bros., Inc. The Company and P&B/Cal. believe that P&B/Cal. has
meritorious defenses to each of the claims asserted against it, and that the
Company likewise has meritorious defenses to allegations premised upon theories
of vicarious liability. Both the Company and P&B/Cal. intend to contest this
action vigorously. In the event that damages are awarded against P&B/Cal. or the
Company, P&B/Cal. and the Company believe that available insurance would be
sufficient to cover such loss.
On September 9, 1994, the Company was named as a third-party defendant in a
case pending in the United States District Court, Eastern District of New York,
captioned Alec Sharp, an Underwriter at Lloyds on behalf of himself and other
Lloyd's Underwriters and Colin Trevor Dingley, on behalf of himself and other
Lloyd's Underwriters v. Best Security Corp., d/b/a Independent Armored, et al.
The third-party complaint was filed against the Company by some of the
defendants in the action. The case arose from the theft of jewelry claimed to be
worth approximately $7 million from an armored car owned and operated by Best
Security Corp. Plaintiffs, the insurers, sought a declaratory judgment against
the insured and purported additional insureds that the policy was void from
inception because the insured made misrepresentations on the application. In the
third-party complaint, the third-party plaintiffs alleged that the Company
issued certificates of insurance naming additional insureds without
authorization, and claimed the Company failed to communicate information given
to the Company by the named insured to the Underwriters at Lloyds of London. As
of March 15, 1996, the claims of all but three of the third-party plaintiffs had
been resolved through settlement. The Company does not believe the three
remaining claims will have a materially adverse effect on the consolidated
financial position or future operations of the Company.
In 1992, the Internal Revenue Service (the "Service") completed
examinations of the Company's federal income tax returns for the years 1988,
1989, and 1990. As a result of these examinations, the Service issued Reports of
Proposed Adjustments asserting income tax deficiencies which, by including
interest and state income taxes for the periods examined and the Company's
estimates of similar adjustments for subsequent periods through December 31,
1993, would have totalled $6,100,000. The disputed issues related primarily to
the deductibility of amortization of purchased customer accounts of
approximately $5,107,000 and of non-compete agreements of approximately
$993,000. In addition, the Service's report included a dispute regarding the
timing at which the Company's payments made pursuant to certain indemnity
agreements would be deductible for tax reporting purposes. During 1994, the
Company reached a settlement with the Service with respect to certain of the
disputed amortization items and the indemnity agreement payment issue. This
settlement reduced the total remaining asserted income tax deficiencies to
approximately $2,800,000. In March 1995, the Company reached an agreement with
the Service on the remaining unsettled items. The agreement resulted in payments
by the Company of approximately $349,000. With all disputed items settled, the
Company recorded a $451,000 reduction in its general tax reserve.
The Company is involved in various other pending or threatened proceedings
by or against the Company or one or more of its subsidiaries that involve
routine litigation relating to insurance risks placed by the Company and other
contractual matters. Management of the Company does not believe that any of such
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pending or threatened proceedings (including the proceedings described above)
will have a materially adverse effect on the consolidated financial position or
future operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
Company's fourth quarter ended December 31, 1995.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is traded on the National Market System of The
Nasdaq Stock Market under the symbol "POBR." The approximate number of
shareholders of record as of March 4, 1996 was 842, and the closing price per
share on that date was $25.25.
The table below sets forth information for each quarter in the last two
fiscal years concerning (i) the high and low sales prices for the Company's
common stock, and (ii) cash dividends declared per share.
STOCK PRICE RANGE CASH
------------------- DIVIDENDS
HIGH LOW PER SHARE
------ ------ ---------
1995
First quarter....................................... $22.50 $20.25 $0.12
Second quarter...................................... 24.25 22.00 0.12
Third quarter....................................... 25.25 23.25 0.12
Fourth quarter...................................... 25.25 24.25 0.12
1994
First quarter....................................... $19.50 $17.63 $0.10
Second quarter...................................... 20.50 18.25 0.10
Third quarter....................................... 22.75 19.75 0.10
Fourth quarter...................................... 21.75 19.50 0.12
ITEM 6. SELECTED FINANCIAL DATA
Information under the caption "Financial Highlights" on page 2 of the
Company's 1995 Annual Report to Shareholders is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Information under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on pages 18-22 of the Company's
1995 Annual Report to Shareholders is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements of Poe & Brown, Inc. and its
subsidiaries, together with the reports thereon of Arthur Andersen LLP and Ernst
& Young LLP, appearing on pages 23-41 of the Company's 1995 Annual Report to
Shareholders, are incorporated herein by reference.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information contained under the caption "Management" on pages 4-6 of the
Company's Proxy Statement for its 1996 Annual Meeting of Shareholders is
incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information contained under the caption "Executive Compensation" on pages
7-10 of the Company's Proxy Statement for its 1996 Annual Meeting of
Shareholders is incorporated herein by reference; provided, however, that the
report of the Compensation Committee on executive compensation, which begins on
page 10 thereof, and the stock performance graph on page 12 thereof shall not be
deemed to be incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information contained under the caption "Security Ownership of Management
and Certain Beneficial Owners" on pages 2-3 of the Company's Proxy Statement for
its 1996 Annual Meeting of Shareholders is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information contained under the captions "Executive
Compensation -- Transactions with Directors" and "Executive
Compensation -- Compensation Committee Interlocks and Insider Participation" on
pages 9-10 of the Company's Proxy Statement for its 1996 Annual Meeting of
Shareholders is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1. Consolidated Financial Statements of Poe & Brown, Inc.
(incorporated herein by reference from pages 23-41 of the Company's 1995
Annual Report to Shareholders) consisting of:
(a) Consolidated Statements of Income for each of the three years in
the period ended December 31, 1995.
(b) Consolidated Balance Sheets as of December 31, 1995 and 1994.
(c) Consolidated Statements of Shareholders' Equity for each of the
three years in the period ended December 31, 1995.
(d) Consolidated Statements of Cash Flows for each of the three years
in the period ended December 31, 1995.
(e) Notes to Consolidated Financial Statements.
(f) Reports of Independent Certified Public Accountants.
2. Consolidated Financial Statement Schedule included on page 14 of
this report, consisting of:
(a) Schedule II -- Valuation and Qualifying Accounts.
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The independent auditors' report with respect to the above-listed financial
statement schedule appears on page 12 of this report on Form 10-K. All other
schedules are omitted because they are not applicable, or not required, or
because the required information is included in the Consolidated Financial
Statements or the Notes thereto.
3. EXHIBITS
3a -- Articles of Incorporation of the Registrant, as last amended on April 28, 1993
(incorporated by reference to Exhibit 3a to Form 10-K for the year ended December
31, 1994).
3b -- Amended and Restated By-Laws of the Registrant effective March 22, 1994
(incorporated by reference to Exhibit 3b to Registration Statement No. 33-58090
on Form S-4).
4 -- Revolving Loan Agreement dated November 9, 1994, by and among the Registrant and
SunTrust Bank, Central Florida, N.A., f/k/a SunBank, National Association
(incorporated by reference to Exhibit 4 to Form 10-K for the year ended December
31, 1994).
10a(1) -- Lease of Registrant for office space at 220 South Ridgewood Avenue, Daytona
Beach, Florida dated August 15, 1987 (incorporated by reference to Exhibit 10a(3)
to Form 10-K for the year ended December 31, 1993).
10a(2) -- Lease agreement for office space at SunTrust Financial Centre, Tampa, Florida,
dated February 1995, between Southeast Financial Center Associates, as landlord,
and Registrant, as tenant (incorporated by reference to Exhibit 10a(4) to Form
10-K for the year ended December 31, 1994).
10b -- Registrant's 1985 Stock Option Plan (incorporated by reference to Exhibit 10b(1)
to Form 10-K for the year ended December 31, 1984).
10c -- Registrant's 1989 Stock Option Plan (incorporated by reference to Exhibit 10f to
Form 10-K for the year ended December 31, 1989).
10d -- Loan Agreement between Continental Casualty Company and Registrant dated August
23, 1991 (incorporated by reference to Exhibit 10d to Form 10-K for the year
ended December 31, 1991).
10e -- Indemnity Agreement dated January 1, 1979, among the Registrant, Whiting National
Management, Inc., and Pennsylvania Manufacturers' Association Insurance Company
(incorporated by reference to Exhibit 10g to Registration Statement No. 33-58090
on Form S-4).
10f -- Agency Agreement dated January 1, 1979 among the Registrant, Whiting National
Management, Inc., and Pennsylvania Manufacturers' Association Insurance Company
(incorporated by reference to Exhibit 10h to Registration Statement No. 33-58090
on Form S-4).
10g -- Indemnification Agreement, dated February 22, 1993, between the Registrant and
William F. Poe, Sr. (incorporated by reference to Exhibit 10k to Registration
Statement No. 33-58090 on Form S4).*
10h -- Deferred Compensation Agreement, dated May 1, 1983, as amended April 27, 1993,
between the Registrant and Kenneth E. Hill (incorporated by reference to Exhibit
10i to Form 10-K for the year ended December 31, 1993).
10i -- Employment Agreement, dated April 28, 1993 between the Registrant and William F.
Poe, Sr. (incorporated by reference to Exhibit 10j to Form 10-K for the year
ended December 31, 1993).
10j -- Employment Agreement, dated April 28, 1993 between the Registrant and J. Hyatt
Brown (incorporated by reference to Exhibit 10k to Form 10-K for the year ended
December 31, 1993).
10k -- Portions of Employment Agreement, dated April 28, 1993 between the Registrant and
Kenneth E. Hill (incorporated by reference to Exhibit 10l to Form 10-K for the
year ended December 31, 1993).
9
11
10l -- Portions of Employment Agreement, dated April 28, 1993 between the Registrant and
Jim W. Henderson (incorporated by reference to Exhibit 10m to Form 10-K for the
year ended December 31, 1993).
10m -- Portions of Promissory Note and Security Agreement, dated January 20, 1995,
between William F. Poe Sr., and the Registrant (incorporated by reference to
Exhibit 10n to Form 10-K for the year ended December 31, 1994).
10n -- Form of Underwriting Agreement among the Registrant, The Robinson-Humphrey
Company, Inc., Smith Barney, Inc. and certain selling shareholders of the
Registrant (incorporated by reference to Exhibit 1 to Registration Statement No.
33-61591 on Form S-3).
11 -- Statement Re: Computation of Per Share Earnings
13 -- Portions of Registrant's 1995 Annual Report to Shareholders (not deemed "filed"
under the Securities Exchange Act of 1934, except for those portions specifically
incorporated by reference herein).
22 -- Subsidiaries of the Registrant
23a -- Consent of Ernst & Young LLP.
23b -- Consent of Arthur Andersen LLP.
24a -- Powers of Attorney pursuant to which this Form 10-K has been signed on behalf of
certain directors and officers of the Registrant.
24b -- Resolutions of the Board of Directors, certified by the Secretary.
27 -- Financial Data Schedule.
- ---------------
* The registrant has Indemnification Agreements with certain of its other
directors and former directors (Joseph E. Brown, Bruce G. Geer, V.C. Jordan,
Jr., Byrne Litschgi, Charles W. Poe, William F. Poe, Jr., and Bernard H.
Mizel) that are identical in all material respects to Exhibit 10g except for
the parties involved and the dates executed.
(b) REPORTS ON FORM 8-K
The Registrant filed a report on Form 8-K with the Securities and Exchange
Commission on October 16, 1995, reporting (i) the Registrant's decision not to
renew the engagement of Ernst & Young LLP as the Registrant's independent
accountants, and (ii) the engagement of Arthur Andersen LLP as the Registrant's
new independent accountants.
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12
SCHEDULE II
POE & BROWN, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ---------------------------- -------- ------------------------------ ------------- --------
ADDITIONS
------------------------------
BALANCE (1) (2)
AT ---------- ----------------- BALANCE
BEGINNING CHARGED TO CHARGED TO AT
OF COST AND OTHER ACCOUNTS -- DEDUCTIONS -- END OF
DESCRIPTION PERIOD EXPENSES EXPENSES DESCRIBE PERIOD
- ---------------------------- -------- ---------- ----------------- ------------- --------
Year ended December 31, 1995
Deducted from asset
account:
Allowance for doubtful
accounts............. $69,000 $ 72,000 $ -- $ 41,000(A) $100,000
-------- ---------- ----------------- ------------- --------
Year ended December 31, 1994
Deducted from asset
account:
Allowance for doubtful
accounts............. $435,000 $ 19,000 $ -- $ 385,000(A) $69,000
-------- ---------- ----------------- ------------- --------
Year ended December 31, 1993
Deducted from asset
account:
Allowance for doubtful
accounts............. $590,000 $562,000 $ -- $ 717,000(A) $435,000
-------- ---------- ----------------- ------------- --------
- ---------------
(A) Uncollectible accounts written off, net of recoveries.
11
13
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To Poe & Brown, Inc.:
We have audited in accordance with generally accepted auditing standards,
the 1995 consolidated financial statements included in Poe & Brown, Inc.'s
Annual Report to Stockholders incorporated by reference in this Form 10-K, and
have issued our report thereon dated January 29, 1996. Our audit was made for
the purpose of forming an opinion on those statements taken as a whole. The
schedule listed in Item 14(a)2 is the responsibility of the Company's management
and is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic consolidated financial
statements. The 1995 amounts in this schedule have been subjected to the
auditing procedures applied in the audit of the 1995 basic consolidated
financial statements and, in our opinion, fairly state in all material respects
the financial data required to be set forth therein in relation to the 1995
basic consolidated financial statements taken as a whole.
Arthur Andersen LLP
Orlando, Florida
January 29, 1996
12
14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
POE & BROWN, INC.
Registrant
By: *
------------------------------------
J. Hyatt Brown
Chief Executive Officer
Date: March 19, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the date indicated.
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------- ---------------
* Chairman of the Board, March 19, 1996
- --------------------------------------------- President and Chief Executive
J. Hyatt Brown Officer (Principal Executive
Officer)
* Director March 19, 1996
- ---------------------------------------------
Samuel P. Bell, III
* Director March 19, 1996
- ---------------------------------------------
Bradley Currey, Jr.
* Director March 19, 1996
- ---------------------------------------------
Bruce G. Geer
* Director March 19, 1996
- ---------------------------------------------
Jim W. Henderson
* Director March 19, 1996
- ---------------------------------------------
Kenneth E. Hill
* Director March 19, 1996
- ---------------------------------------------
Theodore J. Hoepner
* Director March 19, 1996
- ---------------------------------------------
Charles W. Poe
13
15
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------- ---------------
* Director March 19, 1996
- ---------------------------------------------
William F. Poe
* Director March 19, 1996
- ---------------------------------------------
William F. Poe, Jr.
* Vice President, Treasurer and March 19, 1996
- --------------------------------------------- Chief Financial Officer
James A. Orchard (Principal Financial and
Accounting Officer)
*By: /s/ LAUREL J. LENFESTEY
- ---------------------------------------------
Laurel J. Lenfestey
Attorney-in-Fact
14
16
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------------------------------------------------------------------------------
11 -- Statement Re: Computation of Per Share Earnings
13 -- Portions of 1995 Annual Report to Shareholders
22 -- Subsidiaries
23a -- Consent of Ernst & Young LLP
23b -- Consent of Arthur Andersen LLP
24a -- Powers of Attorney
24b -- Certified Resolutions of the Board of Directors
27 -- Financial Data Schedule
15