BXXX Brooke Corp (MM)

OVERLAND PARK, Kan., Oct. 31 /PRNewswire-FirstCall/ -- Brooke Corporation (NASDAQ:BXXX) today reported its financial results for the third quarter and first nine months of 2006. Net income for the nine months ended Sept. 30, 2006, totaled $9,053,000, or 64 cents per diluted share, on revenues of $135,446,000, compared to net earnings of $7,426,000, or 69 cents per diluted share, on revenues of $106,132,000 for the same period in the prior year. For this nine-month period, total net income increased 22 percent and total revenues increased 28 percent. Per share results for the nine-month period decreased in comparison to the same period in the prior year primarily due to dilution associated with the anticipated issuance of 1.176 million shares of common stock as a result of the company's offering of perpetual convertible preferred stock in the third quarter of 2006 and dilution associated with the company's secondary offering of 2.875 million shares of common stock in the third quarter of 2005. Net income for the three months ended Sept. 30, 2006, totaled $2,610,000, or 18 cents per diluted share, on revenues of $48,695,000, compared to net earnings of $1,980,000, or 18 cents per diluted share, on revenues of $37,085,000 for the same period in the prior year. For this three-month period, total net income increased 32 percent and total revenues increased 31 percent. "Our revenues continue to grow at a healthy pace because we continue to make significant investments of personnel, advertising and other expenses in our businesses," said Brooke Corporation chairman and chief executive officer Robert D. Orr. "As noted in my annual letter to stockholders, 2007 represents an important year for our organization and we remain absolutely focused on implementing our long-term plans." Separate discussions of segment revenues and selected data follow. Brooke Credit Segment Brooke Credit Corporation had third quarter revenues of $9,680,000, compared to third quarter revenues in 2005 of $2,678,000. For the nine months ended Sept. 30, Brooke Credit had revenues of $19,416,000, compared to revenues of $10,074,000 in the corresponding period a year ago. Primarily as a result of completing a securitization of insurance agency loans during the third quarter of 2006, Brooke Credit recorded revenues from gain on sale of notes in the net amount of $2,541,000 after deduction of securitization related expenses totaling $1,652,000. In the third quarter of 2005, a loss of $359,000 was recorded on the sale of notes receivables. "With a loan portfolio exceeding $400,000,000 and a significant share of the market for insurance agency loans, Brooke Credit is an important and growing business within our organization," Orr noted. Brooke Franchise Segment Brooke Franchise Corporation had third quarter revenues of $34,876,000, compared to 2005 third quarter revenues of $31,847,000. For the nine months ended Sept. 30, the revenues of Brooke Franchise rose to $108,489,000 in 2006, from revenues of $89,531,000 in 2005. Brooke Franchise granted 54 startup franchises during the third quarter of 2006, compared to 31 startup franchises during the third quarter of 2005. Brooke Franchise granted four conversion franchises during the third quarter of 2006, compared to 34 conversion franchises during the third quarter of 2005. "The significant quarter-to-quarter increase in the number of startup franchises demonstrates that the industry is buying into our franchising model," Orr stated. "The significant quarter-to-quarter decrease in the number of conversion franchises results primarily from the unpredictability of finding and closing on suitable acquisitions." Brooke Brokerage Segment Brooke Brokerage Corporation had third quarter revenues of $2,972,000, compared to 2005 third quarter revenues of $2,820,000. For the nine months ended Sept. 30, the revenues of Brooke Brokerage were $7,643,000 in 2006, as compared to revenues of $7,525,000 in 2005. During the third quarter of 2006, Brooke Brokerage recorded consulting fee revenues, primarily from loan brokerage activities, of $1,640,000. No consulting fees were recorded by Broke Brokerage during the third quarter of 2005, because loan brokerage activities for non franchise, primarily general agency, borrowers were transferred in November 2005 from the franchise segment to the brokerage segment. Orr noted, "Revenues from loan brokerage for general agency borrowers have steadily increased since setting up a separate Brooke Brokerage unit to focus on this type of activity." Corporate Corporate revenues primarily result from administrative, or shared services, fees paid by subsidiaries for legal, accounting, human resources, information technology and facilities management services provided by the Brooke Corporation holding company. Brooke Corporation received shared services fees of $2,100,000 in the third quarter of 2006, compared to 2005 third quarter shared services fees of $1,755,000. "Analysis of segment results is impacted by the amount of shared services fees paid by each subsidiary to the holding company," Orr said. "To help investors get a better and more consistent snapshot of segment performance, we try to allocate shared services fees in amounts that approximately reflect usage." Additional information is provided in the quarterly report on Form 10-Q filed today with the Securities and Exchange Commission. Earnings Conference Call Brooke Corporation will host a conference call for analysts and investors at 4 p.m. CST (5 p.m. EST) today. Company representatives participating in the conference call include Chairman and Chief Executive Officer, Robert Orr, President and Chief Operating Officer, Anita Larson, Chief Financial Officer, Leland Orr, President of Brooke Franchise Corporation, Shawn Lowry, and President of Brooke Credit Corporation, Mick Lowry. The public and media are invited to listen to the call, which will be broadcast live via the Internet. The call is being webcast by Thomson/CCBN and can be accessed at Brooke Corporation's Web site, http://www.brookecorp.com/ . A replay of the call will be available on the Web site for the next 12 months. About our company ... Brooke Corporation is listed on the Nasdaq Global Market under the symbol "BXXX." Brooke Corporation is a holding company with three operating subsidiaries. Brooke Franchise Corporation is a subsidiary that distributes insurance and financial services through a network of more than 650 franchise locations. Brooke Credit Corporation is a subsidiary that originates loans to insurance agencies and other businesses that sell insurance or financial services, including Brooke franchisees. Brooke Brokerage Corporation is a subsidiary that brokers hard-to-place insurance and brokers loans for general insurance agencies specializing in hard-to-place insurance sales. For more information, visit http://www.brookecorp.com/ . E-mail Distribution ... To receive electronic press alerts, visit the Brooke Corporation Media Room at http://brookecorp.mediaroom.com/ and subscribe to our e-mail alerts online through the Get the News link. This press release contains forward-looking statements. All forward- looking statements involve risks and uncertainties, and several factors could cause actual results to differ materially from those in the forward-looking statements. The following factors, among others, could cause actual results to differ from those indicated in the forward-looking statements: the uncertainty that the Company will achieve its short-term and long-term profitability and growth goals, uncertainties associated with market acceptance of and demand for the Company's products and services, the impact of competitive products and pricing, the dependence on third-party suppliers and their pricing, its ability to meet product demand, the availability of funding sources, the exposure to market risks, uncertainties associated with the development of technology, changes in the law and in economic, political and regulatory environments, changes in management, the dependence on intellectual property rights, the effectiveness of internal controls, and risks and factors described from time to time in reports and registration statements filed by Brooke Corporation with the Securities and Exchange Commission. A more complete description of Brooke's business is provided in Brooke Corporation's most recent annual, quarterly and current reports, which are available from Brooke Corporation without charge or at http://www.sec.gov/ . DATASOURCE: Brooke Corporation CONTACT: Anita Larson, Brooke Corporation, +1-913-661-0123, Web site: http://www.brookecorp.com/

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