NEW YORK, April 26, 2012 /PRNewswire/ --
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Financial Highlights(1)
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Q1
2012
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Q1
2011
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%
Change
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(Dollars
in millions, except per share amounts)
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Revenue
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$
254.1
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$
233.3
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8.9%
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Net
income
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5.6
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6.9
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-18.3%
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Net
income per diluted share
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0.13
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0.15
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-13.3%
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Cash
earnings
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24.4
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18.5
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31.5%
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Cash
earnings per diluted share
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$
0.57
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$
0.41
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39.0%
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Adjusted EBITDA
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$
32.1
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$
24.0
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33.7%
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Adjusted EBITDA margin
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12.6%
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10.3%
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Net
cash used in operating activities
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$
(14.6)
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$
(5.9)
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NM
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(1)
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This
summary includes financial measures not calculated based on
generally accepted accounting principles.
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NM
indicates metric not meaningful.
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National Financial Partners Corp. (NYSE: NFP), a leading
provider of benefits, insurance and wealth management services,
today reported financial results for the first quarter ended
March 31, 2012.
(Logo:
http://photos.prnewswire.com/prnh/20100920/NY67494LOGO)
Commenting on today's announcements, Jessica M. Bibliowicz, chairman and chief
executive officer, said, "The first quarter 2012 included solid
results and positive contributions from all of our business
segments. For the quarter, we reported revenue growth of
8.9%, organic revenue growth of 5.9%, growth in Adjusted EBITDA and
margin expansion."
Ms. Bibliowicz continued, "We plan to continue executing on our
balanced capital allocation strategy in 2012 which includes
acquisitions, a share repurchase program beginning in May and
investments in our Company. We believe these actions will
continue to enhance shareholder value and NFP's client value
proposition, as well as our leadership position in our core markets
of benefits, insurance and wealth management."
First Quarter 2012 Results - Consolidated
NFP reported first quarter 2012 net income of $5.6 million, or $0.13 per diluted share, compared with net income
of $6.9 million, or $0.15 per diluted share, in the prior year
period.
First quarter 2012 cash earnings was $24.4 million, or $0.57 per diluted share, compared with
$18.5 million, or $0.41 per diluted share, in the first quarter
2011. Net income and cash earnings include the impact of an
interim effective tax rate of 24.0% due to a reduction in
unrecognized tax benefits. Cash earnings is a non-GAAP
financial measure and a reconciliation of net income to this
non-GAAP financial measure is provided in the attached
tables.
NFP had 42.6 million weighted average fully diluted shares
outstanding for the first quarter of 2012 compared to 42.4 million
shares for the fourth quarter 2011. The increase in the first
quarter of 2012 includes 1.5 million shares that may be issued upon
conversion of NFP's senior convertible notes. NFP's share
delivery obligation of the 1.5 million shares may be offset by the
obligation of the counterparties to the convertible note hedge
agreements to deliver a similar number of shares. This increase was
partially offset by a reduction in weighted average shares of 1.0
million from shares repurchased by NFP during the fourth quarter
2011 and the first quarter 2012.
Adjusted EBITDA in the first quarter 2012 was $32.1 million, an increase of 33.7% compared with
$24.0 million in the first quarter
2011. Adjusted EBITDA margin of 12.6% in the first quarter
2012 grew compared with an Adjusted EBITDA margin of 10.3% in the
prior year period. Adjusted EBITDA is a non-GAAP financial
measure and a reconciliation of net income to this non-GAAP
financial measure is provided in the attached tables.
Revenue was $254.1 million in the
first quarter 2012, an increase of $20.9
million, or 8.9%, compared with $233.3 million in the first quarter 2011. Organic
revenue grew 5.9% in the first quarter 2012, compared with the
prior year period. The increases were driven by all three of the
Company's business segments.
Total operating expenses were $244.1
million, compared with $220.3
million in the prior year period, which were driven by the
addition of operating expenses of acquired companies, expenses and
impairments related to previously announced management contract
buyouts and the adjustment in expected contingent consideration
payments from prior acquisitions.
Cash used in operations for the first quarter 2012 was
$14.6 million compared with cash used
in operations of $5.9 million in the
first quarter 2011. The first quarter 2012 included payments of
$7.3 for the Principal Incentive Plan
(PIP). There were no comparable PIP payments in the first
quarter 2011. As of March 31,
2012, there was $15.0 million
outstanding on the Company's revolving credit facility.
First Quarter 2012 Results – Segments
NFP reports results in three segments that provide unique
products and services to corporate and high net worth individual
clients: the Corporate Client Group, the Individual Client Group
and the Advisor Services Group.
Corporate Client Group (CCG)
CCG is one of the leading corporate benefits advisors in the middle
market, offering independent solutions for health and welfare,
retirement planning, executive benefits, and property and casualty
insurance.
The CCG accounted for 44.1% of NFP's revenue in the first
quarter 2012 and 41.0% in the first quarter 2011. CCG revenue
was $112.1 million in the first
quarter 2012 compared with $95.6
million in the prior year period, an increase of
$16.5 million or 17.3%. CCG
organic revenue growth was 8.4%.
CCG Adjusted EBITDA was $24.5
million in the first quarter 2012 compared with $18.0 million in the prior year period.
Adjusted EBITDA margin was 21.9% in the first quarter 2012 compared
with 18.8% in the prior year period.
Individual Client Group (ICG)
ICG is a leader in the delivery of independent life insurance and
wealth transfer solutions for high net worth individuals.
ICG's advisors provide wealth accumulation, preservation and
transfer solutions, including estate and business planning and
financial advisory services.
The ICG accounted for 31.7% of NFP's revenue in the first
quarter 2012 and 33.3% in the first quarter 2011. ICG revenue
was $80.6 million in the first
quarter 2012 compared with $77.8
million in the prior year period, an increase of
$2.8 million or 3.7%. ICG
organic revenue growth was 5.3%.
ICG Adjusted EBITDA was $4.7
million in the first quarter 2012 compared with $3.3 million in the prior year period. Adjusted
EBITDA margin was 5.8% in the first quarter 2012 compared with 4.2%
in the prior year period.
Advisor Services Group (ASG)
ASG serves independent financial advisors whose clients are high
net worth individuals and companies by offering an open choice of
broker-dealer and asset management products and services.
The ASG accounted for 24.2% of NFP's revenue in the first
quarter 2012 and 25.7% for the first quarter 2011. ASG
revenue was $61.4 million in the
first quarter 2012 compared with $60.0
million in the prior year period, an increase of
$1.5 million. Growth in revenue
and organic revenue was 2.5%.
ASG Adjusted EBITDA was $2.9
million in the first quarter 2012 compared with $2.8 million in the prior year period. Adjusted
EBITDA margin was 4.7% in the first quarter 2012 compared with 4.6%
in the prior year period.
As of March 31, 2012, assets under
management at NFP's corporate registered investment advisor were
$10.1 billion, compared with
$9.7 billion as of December 31, 2011.
Earnings Conference Call & Presentation
On April 27, 2012 at
8:30 a.m. (ET), members of senior
management will discuss first quarter results during a live
conference call. The call can be accessed via telephone by dialing
866-783-2146 (domestic) or 857-350-1605 (international)
approximately 10 minutes prior to the start of the call (when
prompted, callers should provide the access code NFP). The
conference call will also be broadcast live over the Internet at
www.nfp.com/investor-relations. To listen to the live audio
webcast, please go to the Web site at least 10-15 minutes prior to
the start of the call to register. The conference call and
webcast will be accompanied by a presentation. The presentation
will be available for electronic download on NFP's Web site before
the conference call and webcast is scheduled to begin. The
presentation may also be viewed automatically upon connecting to
the webcast. Listeners can access an audio replay of the conference
call over the Internet at www.nfp.com/investor-relations, or via
telephone by dialing 888-286-8010 (domestic) or 617-801-6888
(international). The access code for the replay is 16513234. The
replay will be available for approximately 90 days.
About NFP
National Financial Partners Corp. (NYSE: NFP), and its
benefits, insurance and wealth management businesses provide
diversified advisory and brokerage services to companies and high
net worth individuals, partnering with them to preserve their
assets and prosper over the long term. NFP advisors provide
innovative and comprehensive solutions, backed by NFP's national
scale and resources. NFP operates in three business segments.
The Corporate Client Group provides corporate and executive
benefits, retirement plans and property and casualty
insurance. The Individual Client Group includes retail and
wholesale life insurance brokerage and wealth management advisory
services. The Advisor Services Group serves independent
financial advisors by offering broker-dealer and asset management
products and services. Most recently NFP was ranked as the
eighth Top Global Insurance Broker by Best's Review; operated the
fourth largest Executive Benefits Provider of nonqualified deferred
compensation plans administered for recordkeeping clients as ranked
by PlanSponsor; operated a top ten Independent Broker Dealer as
ranked by Financial Planning and Financial Advisor; had three
advisors ranked in Barron's Top 100 Independent Financial Advisors
and is a leading independent life insurance distributor according
to many top-tier carriers. For more information, visit
www.nfp.com.
Reconciliation of Non-GAAP Financial Measures
The Company analyzes its performance using historical and
forward-looking non-GAAP financial measures called cash earnings,
cash earnings per diluted share, Adjusted EBITDA and percentages or
calculations using these measures. The Company believes these
non-GAAP financial measures provide additional meaningful methods
of evaluating certain aspects of the Company's operating
performance from period to period on a basis that may not be
otherwise apparent under GAAP. Cash earnings is defined as
net income excluding amortization of intangibles, depreciation, the
after-tax impact of the impairment of goodwill and intangible
assets, the after-tax impact of non-cash interest, the after-tax
impact of change in estimated acquisition earn-out payables
recorded in accordance with purchase accounting that have been
subsequently adjusted and recorded in the consolidated statements
of operations, the after-tax impact of management contract buyouts
and the after-tax impact of certain non-recurring items. Cash
earnings per diluted share is calculated by dividing cash earnings
by the number of weighted average diluted shares outstanding for
the period indicated. Cash earnings and cash earnings per
diluted share should not be viewed as substitutes for net income
and net income per diluted share, respectively. Adjusted
EBITDA is defined as net income excluding income tax expense,
interest income, interest expense, gain on early extinguishment of
debt, other, net, amortization of intangibles, depreciation,
impairment of goodwill and intangible assets, (gain) loss on sale
of businesses, net, the accelerated vesting of certain RSUs, any
change in estimated acquisition earn-out payables recorded in
accordance with purchase accounting that have been subsequently
adjusted and recorded in the consolidated statements of operations
and the expense related to management contract buyouts.
Adjusted EBITDA should not be viewed as a substitute for net
income. A reconciliation of these non-GAAP financial measures
to their GAAP counterparts is provided in the attached tables and
the Company's quarterly financial supplement for the period ended
March 31, 2012, which is available on
the Investor Relations section of the Company's Web site at
www.nfp.com.
Organic Revenue Growth
The Company uses organic revenue growth as a comparable
revenue measurement for future periods. The Company excludes
revenue from new acquisitions, sub-acquisitions, and the revenue
derived from businesses fully disposed of for the first twelve
months after the respective transaction. With respect to
situations where a significant portion of a business' assets have
been disposed, the Company reduces the prior year's comparable
revenue proportionally to the percentage of assets that have been
disposed to facilitate an equitable organic growth comparison.
Forward-Looking Statements
This release contains statements which are forward-looking
statements as that term is defined in the Private Securities
Litigation Reform Act of 1995. Forward-looking statements include,
without limitation, any statement that may project, indicate or
imply future results, events, performance or achievements, and may
contain the words "anticipate," "expect," "intend," "plan,"
"believe," "estimate," "may," "project," "will," "continue" and
similar expressions of a future or forward-looking nature.
Forward-looking statements may include discussions concerning
revenue, expenses, earnings, cash flow, impairments, losses,
dividends, capital structure, market and industry conditions,
premium and commission rates, interest rates, contingencies, the
direction or outcome of regulatory investigations and litigation,
income taxes and the Company's operations or strategy. These
forward-looking statements are based on management's current views
with respect to future results. Forward-looking statements are
based on beliefs and assumptions made by management using
currently-available information, such as market and industry
materials, experts' reports and opinions, and current financial
trends. These statements are only predictions and are not
guarantees of future performance. Forward-looking statements are
subject to risks and uncertainties that could cause actual results
to differ materially from those contemplated by a forward-looking
statement. These risks and uncertainties include, without
limitation: (1) the ability of the Company to execute on its
strategy of increasing recurring revenue and other business
initiatives; (2) NFP's ability, through its operating structure, to
respond quickly to operational, financial or regulatory situations
impacting its businesses; (3) the ability of the Company's
businesses to perform successfully following acquisition, including
through the diversification of product and service offerings, and
NFP's ability to manage its business effectively and profitably
through its principals and employees and through the Company's
reportable segments; (4) any losses that NFP may take with
respect to dispositions, restructures or otherwise;
(5) seasonality or an economic environment that results in
fewer sales of financial products or services; (6) NFP's
success in acquiring and retaining high-quality independent
financial services businesses and their managers and key producers;
(7) changes in premiums and commission rates or the rates of
other fees paid to the Company's businesses, due to requirements
related to medical loss ratios stemming from the Patient Protection
and Affordable Care Act or otherwise; (8) NFP's ability to
operate effectively within the restrictive covenants of its credit
facility; (9) changes that adversely affect NFP's ability to
manage its indebtedness or capital structure, including changes in
interest rates or credit market conditions; (10) the impact of
capital markets behavior, such as fluctuations in the price of
NFP's common stock, or the dilutive impact of capital raising
efforts; (11) adverse results or other consequences from
matters including litigation, arbitration, settlements, regulatory
investigations or compliance initiatives, such as those related to
business practices, compensation agreements with insurance
companies, policy rescissions or chargebacks, or activities within
the life settlements industry; (12) the impact of legislation
or regulations on NFP's businesses, such as the possible adoption
of exclusive federal regulation over interstate insurers, the
uncertain impact of legislation regulating the financial services
industry, such as the recent Dodd-Frank Wall Street Reform and
Consumer Protection Act, the impact of the adoption of the Patient
Protection and Affordable Care Act and resulting changes in
business practices, potential changes in estate tax laws, or
changes in regulations affecting the value or use of benefits
programs, any of which may adversely affect the demand for or
profitability of the Company's services; (13) adverse
developments in the Company's markets, such as those related to
compensation agreements with insurance companies or activities
within the life settlements industry, which could result in
decreased sales of financial products or services; (14) the
effectiveness or financial impact of NFP's incentive plans;
(15) the impact of the adoption or change in interpretation of
certain accounting treatments or policies and changes in underlying
assumptions relating to such treatments or policies, which may lead
to adverse financial statement results; (16) the loss of
services of key members of senior management; (17) failure by the
Company's broker-dealers to comply with net capital requirements;
(18) the Company's ability to compete against competitors with
greater resources, such as those with greater name recognition;
(19) developments in the availability, pricing, design, tax
treatment or underwriting of insurance products, including
insurance carriers' potential change in accounting for deferred
acquisition costs, revisions in mortality tables by life expectancy
underwriters or changes in the Company's relationships with
insurance companies; (20) the reduction of the Company's
revenue and earnings due to the elimination or modification of
compensation arrangements, including contingent compensation
arrangements and the adoption of internal initiatives to enhance
compensation transparency, including the transparency of fees paid
for life settlements transactions; (21) the occurrence of
adverse economic conditions or an adverse legal or regulatory
climate in New York, Florida or California; and (22) the Company's
ability to effect smooth succession planning.
Additional factors are set forth in NFP's filings with the
Securities and Exchange Commission (the "SEC"), including its
Annual Report on Form 10-K for the year ended December 31, 2011, filed with the SEC on
February 13, 2012.
Forward-looking statements speak only as of the date on which
they are made. NFP expressly disclaims any obligation to update or
revise any forward-looking statement, whether as a result of new
information, future events or otherwise.
CONSOLIDATED STATEMENTS OF INCOME
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(Unaudited-in thousands, except per share
amounts)
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Three Months Ended
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March
31,
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2012
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2011
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Revenue:
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Commissions and fees
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$
254,131
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$
233,264
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Operating
expenses:
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Commissions and fees
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82,150
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79,098
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Compensation expense - employees
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70,948
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66,889
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Fees to
principals
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29,207
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24,619
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Non-compensation expense
|
39,702
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|
38,625
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Amortization of intangibles
|
8,275
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|
7,962
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Depreciation
|
3,146
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|
3,077
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Impairment
of goodwill and intangible assets
|
3,228
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-
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Gain on
sale of businesses, net
|
(351)
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-
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Change in
estimated acquisition earn-out payables
|
4,466
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|
-
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Management
contract buyout
|
3,355
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|
-
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Total
operating expenses
|
244,126
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|
220,270
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|
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Income
from operations
|
10,005
|
|
12,994
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Non-operating income and expenses
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Interest
income
|
629
|
|
974
|
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Interest
expense
|
(4,121)
|
|
(3,771)
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Other,
net
|
880
|
|
3,187
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Non-operating income and expenses, net
|
(2,612)
|
|
390
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Income
before income taxes
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7,393
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|
13,384
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Income tax
expense
|
1,775
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|
6,508
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Net
income
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$
5,618
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$
6,876
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Earnings
per share:
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Basic
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$
0.14
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$
0.16
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Diluted
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$
0.13
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$
0.15
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Weighted
average shares outstanding:
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Basic
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40,518
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43,785
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Diluted
|
42,599
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|
45,310
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RECONCILIATION OF NET INCOME TO ADJUSTED
EBITDA
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(Unaudited-in thousands)
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Three Months Ended
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March
31,
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2012
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2011
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GAAP net
income
|
$
5,618
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|
$
6,876
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Income tax
expense
|
1,775
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|
6,508
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Interest
income
|
(629)
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|
(974)
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Interest
expense
|
4,121
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|
3,771
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|
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Other,
net
|
(880)
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|
(3,187)
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Income
from operations
|
$
10,005
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|
$
12,994
|
|
|
|
|
|
Amortization of intangibles
|
8,275
|
|
7,962
|
|
|
|
|
|
Depreciation
|
3,146
|
|
3,077
|
|
|
|
|
|
Impairment
of goodwill and intangible assets
|
3,228
|
|
-
|
|
|
|
|
|
Gain on
sale of businesses, net
|
(351)
|
|
-
|
|
|
|
|
|
Change in
estimated acquisition earn-out payables
|
4,466
|
|
-
|
|
|
|
|
|
Management
contract buyout
|
3,355
|
|
-
|
|
|
|
|
Adjusted
EBITDA (1)
|
$
32,124
|
|
$
24,033
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NET INCOME TO CASH
EARNINGS
|
|
|
(Unaudited-in thousands, except per share
amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
March
31,
|
|
|
|
|
|
|
2012
|
|
2011
|
|
|
|
|
GAAP net
income
|
$
5,618
|
|
$
6,876
|
|
|
|
|
|
Amortization of intangibles
|
8,275
|
|
7,962
|
|
|
|
|
|
Depreciation
|
3,146
|
|
3,077
|
|
|
|
|
|
Impairment
of goodwill and intangible assets
|
3,228
|
|
-
|
|
|
|
|
|
Tax
benefit of impairment of goodwill and
|
|
|
|
|
|
|
|
|
intangible
assets
|
(1,227)
|
|
-
|
|
|
|
|
|
Non-cash
interest, net of tax
|
717
|
|
631
|
|
|
|
|
|
Change in
estimated acquisition earn-out payables, net of tax
|
2,544
|
|
-
|
|
|
|
|
|
Management
contract buyout, net of tax
|
2,080
|
|
-
|
|
|
|
|
Cash
earnings (2)
|
$
24,381
|
|
$
18,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net
income per share - diluted
|
$
0.13
|
|
$
0.15
|
|
|
|
|
|
Amortization of intangibles
|
0.19
|
|
0.18
|
|
|
|
|
|
Depreciation
|
0.07
|
|
0.07
|
|
|
|
|
|
Impairment
of goodwill and intangible assets
|
0.08
|
|
-
|
|
|
|
|
|
Tax
benefit of impairment of goodwill and
|
|
|
|
|
|
|
|
|
intangible
assets
|
(0.03)
|
|
-
|
|
|
|
|
|
Non-cash
interest, net of tax
|
0.02
|
|
0.01
|
|
|
|
|
|
Change in
estimated acquisition earn-out payables, net of tax
|
0.06
|
|
-
|
|
|
|
|
|
Management
contract buyout, net of tax
|
0.05
|
|
-
|
|
|
|
|
Cash
earnings per share - diluted (3)
|
$
0.57
|
|
$
0.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Adjusted
EBITDA is a non-GAAP financial measure, which the Company defines
as net income excluding income tax expense, interest
|
|
income,
interest expense, gain on early extinguishment of debt, other, net,
amortization of intangibles, depreciation, impairment
|
|
of
goodwill and intangible assets, (gain) loss on sale of businesses,
net, the accelerated vesting of certain RSUs, any change
in
|
|
estimated
acquisition earn-out payables recorded in accordance with purchase
accounting that have been subsequently
|
|
|
adjusted
and recorded in the consolidated statements of operations and the
expense related to management contract buyouts.
|
|
|
|
|
|
|
|
|
|
(2)
|
Cash
earnings is a non-GAAP financial measure, which the Company defines
as net income excluding amortization of intangibles,
|
|
depreciation, the after-tax impact of the impairment
of goodwill and intangible assets, the after-tax impact of non-cash
interest,
|
|
the
after-tax impact of change in estimated acquisition earn-out
payables recorded in accordance with purchase
accounting
|
|
that have
been subsequently adjusted and recorded in the consolidated
statements of operations, the after-tax impact of
management
|
|
contract
buyouts and the after-tax impact of certain non-recurring
items.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
The sum of
the per-share components of cash earnings per share - diluted may
not agree to cash earnings per share -
|
|
|
diluted,
due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CORPORATE CLIENT GROUP
|
|
|
|
CONDENSED STATEMENTS OF INCOME
|
|
|
|
(Unaudited-in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
March
31,
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
Commissions and fees
|
$
112,089
|
|
$
95,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Commissions and fees
|
13,334
|
|
10,995
|
|
|
|
|
|
|
Compensation expense - employees
|
38,733
|
|
33,915
|
|
|
|
|
|
|
Fees to
principals
|
16,026
|
|
14,513
|
|
|
|
|
|
|
Non-compensation expense
|
19,465
|
|
18,136
|
|
|
|
|
|
|
Amortization of intangibles
|
5,909
|
|
5,151
|
|
|
|
|
|
|
Depreciation
|
1,427
|
|
1,624
|
|
|
|
|
|
|
Impairment
of goodwill and intangible assets
|
2,680
|
|
-
|
|
|
|
|
|
|
Loss on
sale of businesses, net
|
46
|
|
-
|
|
|
|
|
|
|
Change in
estimated acquisition earn-out payables
|
4,466
|
|
-
|
|
|
|
|
|
|
Management
contract buyout
|
3,355
|
|
-
|
|
|
|
|
|
Total
operating expenses
|
105,441
|
|
84,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from operations
|
$
6,648
|
|
$
11,216
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CORPORATE CLIENT GROUP
|
|
|
|
RECONCILIATION OF INCOME FROM OPERATIONS TO
ADJUSTED EBITDA (1)
|
|
|
|
(Unaudited-in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
March
31,
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from operations
|
$
6,648
|
|
$
11,216
|
|
|
|
|
|
|
Amortization of intangibles
|
5,909
|
|
5,151
|
|
|
|
|
|
|
Depreciation
|
1,427
|
|
1,624
|
|
|
|
|
|
|
Impairment
of goodwill and intangible assets
|
2,680
|
|
-
|
|
|
|
|
|
|
Loss on
sale of businesses, net
|
46
|
|
-
|
|
|
|
|
|
|
Change in
estimated acquisition earn-out payables
|
4,466
|
|
-
|
|
|
|
|
|
|
Management
contract buyout
|
3,355
|
|
-
|
|
|
|
|
|
Adjusted
EBITDA
|
$
24,531
|
|
$
17,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The
reconciliation of Adjusted EBITDA per reportable segment does not
include the following items, which are not allocated to any of
the
|
|
|
Company's
reportable segments: income tax expense, interest income, interest
expense, gain on early extinguishment of debt and other,
net.
|
|
These
items are included in the reconciliation of Adjusted EBITDA to net
income on a consolidated basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INDIVIDUAL CLIENT GROUP
|
|
|
|
CONDENSED STATEMENTS OF INCOME
|
|
|
|
(Unaudited-in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
March
31,
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
Commissions and fees
|
$
80,593
|
|
$
77,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Commissions and fees
|
18,577
|
|
18,390
|
|
|
|
|
|
|
Compensation expense - employees
|
28,113
|
|
28,960
|
|
|
|
|
|
|
Fees to
principals
|
13,181
|
|
10,106
|
|
|
|
|
|
|
Non-compensation expense
|
16,011
|
|
17,016
|
|
|
|
|
|
|
Amortization of intangibles
|
2,366
|
|
2,811
|
|
|
|
|
|
|
Depreciation
|
1,012
|
|
1,155
|
|
|
|
|
|
|
Impairment
of goodwill and intangible assets
|
548
|
|
-
|
|
|
|
|
|
|
Gain on
sale of businesses, net
|
(397)
|
|
-
|
|
|
|
|
|
Total
operating expenses
|
79,411
|
|
78,438
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from operations
|
$
1,182
|
|
$
(685)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INDIVIDUAL CLIENT GROUP
|
|
|
|
RECONCILIATION OF INCOME (LOSS) FROM OPERATIONS TO
ADJUSTED EBITDA (1)
|
|
|
|
(Unaudited-in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
March
31,
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from operations
|
$
1,182
|
|
$
(685)
|
|
|
|
|
|
|
Amortization of intangibles
|
2,366
|
|
2,811
|
|
|
|
|
|
|
Depreciation
|
1,012
|
|
1,155
|
|
|
|
|
|
|
Impairment
of goodwill and intangible assets
|
548
|
|
-
|
|
|
|
|
|
|
Gain on
sale of businesses, net
|
(397)
|
|
-
|
|
|
|
|
|
Adjusted
EBITDA
|
$
4,711
|
|
$
3,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The
reconciliation of Adjusted EBITDA per reportable segment does not
include the following items, which are not allocated to any of
the
|
|
|
Company's
reportable segments: income tax expense, interest income, interest
expense, gain on early extinguishment of debt and other,
net.
|
|
These
items are included in the reconciliation of Adjusted EBITDA to net
income on a consolidated basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADVISOR
SERVICES GROUP
|
|
|
|
CONDENSED STATEMENTS OF INCOME
|
|
|
|
(Unaudited-in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
March
31,
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
Commissions and fees
|
$
61,449
|
|
$
59,961
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Commissions and fees
|
50,239
|
|
49,713
|
|
|
|
|
|
|
Compensation expense - employees
|
4,102
|
|
4,014
|
|
|
|
|
|
|
Non-compensation expense
|
4,226
|
|
3,473
|
|
|
|
|
|
|
Depreciation
|
707
|
|
298
|
|
|
|
|
|
Total
operating expenses
|
59,274
|
|
57,498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from operations
|
$
2,175
|
|
$
2,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADVISOR
SERVICES GROUP
|
|
|
|
RECONCILIATION OF INCOME FROM OPERATIONS TO
ADJUSTED EBITDA (1)
|
|
|
|
(Unaudited-in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
March
31,
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from operations
|
$
2,175
|
|
$
2,463
|
|
|
|
|
|
|
Depreciation
|
707
|
|
298
|
|
|
|
|
|
Adjusted
EBITDA
|
$
2,882
|
|
$
2,761
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The
reconciliation of Adjusted EBITDA per reportable segment does not
include the following items, which are not allocated to any of
the
|
|
|
Company's
reportable segments: income tax expense, interest income, interest
expense, gain on early extinguishment of debt and other,
net.
|
|
These
items are included in the reconciliation of Adjusted EBITDA to net
income on a consolidated basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF FINANCIAL
CONDITION
|
(Unaudited-in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
|
December
31,
|
|
|
2012
|
|
|
2011
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and
cash equivalents
|
$
85,598
|
|
|
$
135,239
|
|
Fiduciary
funds - restricted related to premium trust accounts
|
73,969
|
|
|
75,503
|
|
Commissions, fees and premiums receivable,
net
|
102,482
|
|
|
119,945
|
|
Due from
principals and/or certain entities they own
|
6,407
|
|
|
4,308
|
|
Notes
receivable, net
|
4,729
|
|
|
4,224
|
|
Deferred
tax assets
|
10,209
|
|
|
10,209
|
|
Other
current assets
|
23,025
|
|
|
18,706
|
|
Total current assets
|
306,419
|
|
|
368,134
|
Property
and equipment, net
|
32,142
|
|
|
33,937
|
Deferred
tax assets
|
4,691
|
|
|
5,023
|
Intangibles, net
|
325,747
|
|
|
320,066
|
Goodwill,
net
|
119,452
|
|
|
102,039
|
Notes
receivable, net
|
24,262
|
|
|
23,661
|
Other
non-current assets
|
42,965
|
|
|
41,307
|
|
Total assets
|
$
855,678
|
|
|
$
894,167
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Premiums
payable to insurance carriers
|
$
72,952
|
|
|
$
74,145
|
|
Current
portion of long term debt
|
12,500
|
|
|
12,500
|
|
Income
taxes payable
|
-
|
|
|
3,045
|
|
Due to
principals and/or certain entities they own
|
12,843
|
|
|
37,886
|
|
Accounts
payable
|
24,325
|
|
|
30,584
|
|
Accrued
liabilities
|
55,056
|
|
|
70,855
|
|
Total current
liabilities
|
177,676
|
|
|
229,015
|
Long term
debt
|
105,625
|
|
|
93,750
|
Deferred
tax liabilities
|
1,631
|
|
|
1,605
|
Convertible senior notes
|
93,044
|
|
|
91,887
|
Other
non-current liabilities
|
77,064
|
|
|
71,960
|
|
Total liabilities
|
455,040
|
|
|
488,217
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY
|
|
|
|
|
Preferred
stock at par value
|
-
|
|
|
-
|
Common
stock at par value
|
4,702
|
|
|
4,665
|
Additional
paid-in capital
|
902,659
|
|
|
905,774
|
Accumulated deficit
|
(386,393)
|
|
|
(391,202)
|
Treasury
stock
|
(119,448)
|
|
|
(112,278)
|
Accumulated other comprehensive loss
|
(882)
|
|
|
(1,009)
|
|
Total stockholders'
equity
|
400,638
|
|
|
405,950
|
|
Total liabilities and
stockholders' equity
|
$
855,678
|
|
|
$
894,167
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
(Unaudited-in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March
31,
|
|
|
2012
|
|
2011
|
Cash flow
from operating activities
|
|
|
|
|
Net
income
|
$
5,618
|
|
$
6,876
|
|
|
|
|
|
Adjustments to reconcile net income to net cash used
in
|
|
|
|
operating
activities:
|
|
|
|
|
Stock-based compensation
|
1,364
|
|
1,413
|
|
Impairment
of goodwill and intangible assets
|
3,228
|
|
-
|
|
Amortization of intangibles
|
8,275
|
|
7,962
|
|
Depreciation
|
3,146
|
|
3,077
|
|
Accretion
of senior convertible notes discount
|
1,157
|
|
1,044
|
|
Gain on
sale of businesses, net
|
(351)
|
|
-
|
|
Change in
estimated acquisition earn-out payables
|
4,466
|
|
-
|
|
Bad debt
expense
|
-
|
|
567
|
|
Other,
net
|
-
|
|
(478)
|
|
|
|
|
|
(Increase)
decrease in operating assets:
|
|
|
|
|
Fiduciary
funds - restricted related to premium
|
|
|
|
|
trust
accounts
|
1,827
|
|
6,336
|
|
Commissions, fees and premiums receivable,
net
|
18,847
|
|
28,608
|
|
Due from
principals and/or certain entities they own
|
(2,126)
|
|
1,844
|
|
Notes
receivable, net - current
|
(707)
|
|
618
|
|
Other
current assets
|
(4,293)
|
|
(9,182)
|
|
Notes
receivable, net - non-current
|
(366)
|
|
(544)
|
|
Other
non-current assets
|
(1,392)
|
|
628
|
|
|
|
|
|
Increase
(decrease) in operating liabilities:
|
|
|
|
|
Premiums
payable to insurance carriers
|
(1,454)
|
|
(8,093)
|
|
Income
taxes payable
|
(3,045)
|
|
15
|
|
Due to
principals and/or certain entities they own
|
(25,206)
|
|
(26,293)
|
|
Accounts
payable
|
(7,851)
|
|
(18,054)
|
|
Accrued
liabilities
|
(13,170)
|
|
(5,505)
|
|
Other
non-current liabilities
|
(2,552)
|
|
3,222
|
Total
adjustments
|
(20,203)
|
|
(12,815)
|
Net cash
used in operating activities
|
(14,585)
|
|
(5,939)
|
|
|
|
|
|
Cash flow
from investing activities:
|
|
|
|
|
Proceeds
from disposal of businesses
|
352
|
|
-
|
|
Purchases
of property and equipment, net
|
(1,279)
|
|
(2,082)
|
|
Payments
for acquired firms, net of cash
|
(27,079)
|
|
(3,997)
|
|
Payments
for contingent consideration
|
(6,520)
|
|
-
|
Net cash
used in investing activities
|
(34,526)
|
|
(6,079)
|
|
|
|
|
|
Cash flow
from financing activities:
|
|
|
|
|
Proceeds
from draw down of revolving credit facility
|
15,000
|
|
-
|
|
Repayment
of long term debt
|
(3,125)
|
|
(3,125)
|
|
Proceeds
from stock-based awards, including
|
|
|
|
|
tax
benefit
|
(804)
|
|
1,933
|
|
Shares
cancelled to pay withholding taxes
|
(3,638)
|
|
(2,909)
|
|
Repurchase
of Common Stock
|
(7,963)
|
|
-
|
Net cash
used in financing activities
|
(530)
|
|
(4,101)
|
Net
decrease in cash and cash equivalents
|
(49,641)
|
|
(16,119)
|
Cash and
cash equivalents, beginning of the period
|
135,239
|
|
128,830
|
Cash and
cash equivalents, end of the period
|
$
85,598
|
|
$
112,711
|
|
|
|
|
|
Supplemental disclosures of cash flow
information
|
|
|
|
|
Cash paid
for income taxes
|
$
8,819
|
|
$
7,353
|
|
Cash paid
for interest
|
$
1,034
|
|
$
976
|
SOURCE NFP