BBInsurance-2017-Annual-Report

Management’s Discussion and Analysis
of Financial Condition and Results of Operations
Our cash and cash equivalents of $515.6 million at December 31, 2016 reflected an increase of $72.2 million from the
$443.4 million balance at December 31, 2015. During 2016, $411.0 million of cash was generated from operating activities.
During this period, $122.6 million of cash was used for acquisitions, $28.2 million was used for acquisition earn-out payments,
$17.8 million was used for additions to fixed assets, $70.3 million was used for payment of dividends, $7.7 million was used
for share repurchases, and $73.1 million was used to pay outstanding principal balances owed on long-term debt.
Our cash and cash equivalents of $443.4 million at December 31, 2015 reflected a decrease of $26.6 million from the
$470.0 million balance at December 31, 2014. During 2015, $381.8 million of cash was generated from operating activities.
During this period, $136.0 million of cash was used for acquisitions, $36.8 million was used for acquisition earn-out payments,
$18.4 million was used for additions to fixed assets, $64.1 million was used for payment of dividends, $175.0 million was used
as part of accelerated share repurchase programs, and $45.6 million was used to pay outstanding principal balances owed on
long-term debt.
Our ratio of current assets to current liabilities (the “current ratio”) was 1.13 and 1.20 at December 31, 2017 and 2016,
respectively.
Contractual Cash Obligations
As of December 31, 2017, our contractual cash obligations were as follows:
Payments Due by Period
Less Than
(in thousands) Total 1 Year 1-3 Years 4-5 Years After 5 Years
42
Brown & Brown, Inc.
Long-term debt $ 985,000 $ 120,000 $ 70,000 $ 295,000 $ 500,000
Other liabilities (1) 51,266 3,973 8,305 2,430 36,558
Operating leases 210,559 43,080 73,272 49,711 44,496
Interest obligations 188,285 35,450 62,455 54,505 35,875
Unrecognized tax benefits 1,694 — 1,694 — —
Maximum future acquisition contingency
payments (2) 88,382 42,233 46,149 — —
Total contractual cash obligations $ 1,525,186 $ 244,736 $ 261,875 $ 401,646 $ 616,929
(1) Includes the current portion of other long-term liabilities.
(2) Includes $36.2 million of current and non-current estimated earn-out payables resulting from acquisitions consummated after
January 1, 2009.
Debt
Total debt at December 31, 2017 was $976.1 million net of unamortized discount and debt issuance costs, which was a
decrease of $97.7 million compared to December 31, 2016. The decrease reflects the repayment of $96.8 million in principal,
related to our credit agreements, repayment of the $0.5 million in a short-term note payable related to the 2016 acquisition of
Social Security Advocates for the Disabled, LLC (“SSAD”), net of the amortization of discounted debt related to our Senior Notes
due 2024, with a fixed interest rate of 4.200% per year and debt issuance cost amortization of $1.9 million. The Company also
added $2.8 million in debt issuance costs related to the Amended and Restated Credit Agreement (as defined below) that was
executed in June 2017.
During 2017, the $100.0 million of Series E Senior Notes were issued and are due September 15, 2018, with a fixed
interest rate of 4.500% per year were reclassified as current portion of long-term debt in the Consolidated Balance Sheet,
as the date of maturity is less than one year.
On June 28, 2017, the Company entered into an amended and restated credit agreement (the “Amended and Restated
Credit Agreement”) with the lenders named therein, JPMorgan Chase Bank, N.A. as administrative agent and certain other banks
as co-syndication agents and co-documentation agents. The Amended and Restated Credit Agreement amended and restated
the credit agreement dated April 17, 2014, among such parties (the “Original Credit Agreement”). The Amended and Restated