SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Fiscal Year Ended December 31, 2001
COMMISSION FILE NO. 0-15981
HILB, ROGAL AND HAMILTON COMPANY
(Exact name of registrant as specified in its charter)
VIRGINIA 54-1194795
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4951 LAKE BROOK DRIVE, SUITE 500 23060
GLEN ALLEN, VIRGINIA (Zip Code)
(Address of principal executive offices)
(804) 747-6500
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Class Name of Exchange on Which Registered
--------------------------- ------------------------------------
COMMON STOCK, NO PAR VALUE NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act:
NONE
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (ss. 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of 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 [ X ].
State the aggregate market value of the voting stock held by
non-affiliates of the registrant.
$914,639,915 AS OF MARCH 1, 2002
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Class Outstanding at March 1, 2002
----- ----------------------------
COMMON STOCK, NO PAR VALUE 28,491,053
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's 2001 Annual Report to Shareholders are incorporated
by reference into Parts I and II of this report.
Portions of the registrant's Proxy Statement for the 2002 Annual Meeting of
Shareholders are incorporated by reference into Part III hereof.
PART I
ITEM 1. BUSINESS
THE COMPANY
Hilb, Rogal and Hamilton Company (the "Company"), through its network
of wholly-owned subsidiary insurance agencies (the "Agencies"), places various
types of insurance, including property, casualty and employee benefits and other
areas of specialized exosure, with insurance underwriters on behalf of its
clients. The Agencies operate over 80 offices in 23 states. The Company's client
base ranges from personal to large national accounts and is primarily comprised
of middle-market commercial and industrial accounts. Insurance commissions
accounted for approximately 91% of the Company's total revenues in 2001. The
Company also advises clients on risk management and employee benefits and
provides claims administration and loss control consulting services to clients,
which contributed approximately 7% of revenues in 2001.
The Company has historically grown principally through acquisitions of
independent agencies with significant local market shares in small to
medium-size metropolitan areas. Since 1984, the Company has acquired 199
independent agencies. The Company's prior growth strategy emphasized
acquisitions of established independent agencies staffed by local professionals
and centralization of certain administrative functions to allow agents to focus
on business production. The Company believes that a key to its success has been
a strong emphasis on local client service by experienced personnel with
established community relationships.
On May 3, 1999, the Company acquired American Phoenix Corporation, the
property and casualty brokerage subsidiary of Phoenix Home Life Mutual Insurance
Company, its largest acquisition to date. American Phoenix Corporation, based in
Hartford, Connecticut, was the 14th largest property and casualty insurance
brokerage firm in the United States.
The Company's current acquisition program is largely focused on
acquisitions which fit into the strategic and regional plans and targets
entities which provide a specialty or product expertise which can be exported
throughout the Company.
The Agencies act as independent agents representing a large number of
insurance companies, which gives the Company access to specialized products and
capacity needed by its clients. Agencies and regions are staffed to handle the
broad variety of insurance needs of their clients. Additionally, certain
Agencies and regions have developed special expertise in areas such as
professional liability, equipment maintenance and construction and this
expertise is made available to clients throughout the regions and Company.
The Company has established direct access to certain foreign insurance
markets without the need to share commissions with excess and surplus lines
brokers. This direct access allows the Company to enhance its revenues from
insurance products written by foreign insurers and allows it to provide a
broader array of insurance products to its clients.
While the Agencies have historically been largely decentralized with
respect to client solicitation, account maintenance, underwriting decisions,
selection of insurance carriers and areas of insurance specialization, the
Company maintains centralized administrative functions, including cash
management and investment, human resources and legal functions, through its
corporate headquarters. Accounting records and systems are maintained at each
Agency, but the Company requires each Agency to comply with
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standardized financial reporting and control requirements. Through its internal
auditing department, Company personnel periodically visit each Agency and
monitor compliance with internal accounting controls and procedures.
The Company has created regional operating units to coordinate the
efforts of several local offices in a geographic area to focus on markets,
account retention, client service and new business production. The five U.S.
regions are the Mid-Atlantic (Ohio, Pennsylvania, Maryland and Virginia);
Northeast (Connecticut, Massachusetts, Maine, New Hampshire, New York and New
Jersey); Southeast (Alabama, Georgia and Florida); Central (Oklahoma, Texas,
Kansas, Michigan and Illinois) and West (Arizona, California, Colorado, Oregon
and North Carolina). Regional management of a sizable mass of coordinated and
complementary resources has enabled each Agency to address a broader spectrum of
client needs and respond more quickly and expertly than each could do on a
stand-alone basis. Additionally, operations were streamlined by merging multiple
locations in the same city into a single profit center and converting smaller
locations into sales offices of a larger profit center in the same region.
The Company derives income primarily from commissions on the sale of
insurance products to clients paid by the insurance underwriters with whom the
Agencies place their clients' insurance. The Company acts as an agent in
soliciting, negotiating and effecting contracts of insurance through insurance
companies and occasionally as a broker in procuring contracts of insurance on
behalf of insureds. In the past three years, the Company has derived in excess
of 92% of its commission and fee revenue from the sale of insurance products,
principally property and casualty insurance. Accordingly, no breakdown by
industry segments has been made. The balance is primarily derived from service
fee income related to claims management and loss control services, program
administration and workers compensation consultative service. Within its range
of services, the Company also places surplus lines coverages (coverages not
available from insurance companies licensed by the states in which the risks are
located) with surplus lines insurers for various specialized risks.
Insurance agents' commissions are generally a percentage of the premium
paid by the client. Commission rates vary substantially within the insurance
industry. Commissions depend upon a number of factors, including the type of
insurance, the amount of the premium, the particular insurer, the capacity in
which the Company acts and the scope of the services it renders to the client.
In some cases, the Company or an Agency is compensated by a fee paid directly by
the client. The Company may also receive contingent commissions which are based
on the profit an insurance company makes on the overall volume of business
placed with it by the Company. Contingent commissions are generally received in
the first quarter of each year and, accordingly, may cause first quarter
revenues and earnings to vary from other quarterly results.
The Company provides a variety of professional services to assist
clients in analyzing risks and in determining whether protection against risks
is best obtained through the purchase of insurance or through retention of all,
or a portion of those risks, and the adoption of risk management policies and
cost-effective loss control and prevention programs.
No material part of the Company's business is dependent on a single
client or on a few clients, and the Company does not depend on a single industry
or type of client for a substantial amount of its business. In 2001, the largest
single client accounted for approximately 0.5% of the Company's total revenues.
OPERATING HISTORY AND ACQUISITION PROGRAM
The Company was formed in 1982 to acquire and continue an existing
insurance agency network. At that time, the Company undertook a program of
consolidating agencies, closing or selling unprofitable
3
locations and acquiring new agencies. From 1984 to March 1, 2002, a total of 199
agencies have been acquired. One hundred forty-nine of those agencies acquired
were accounted for using the purchase method of accounting at a total purchase
price of approximately $362.1 million. In a purchase acquisition, the purchase
price of an agency is typically paid in cash and deferred cash payments. In some
cases, a portion of the purchase price may also be paid in Common Stock and, in
the case of the American Phoenix acquisition, the issuance of Convertible
Subordinated Debentures. From November 1, 1988 to May 1, 1995, 50 acquired
agencies were accounted for using the pooling-of-interests method of accounting
in exchange for a total of approximately 16.2 million shares of Common Stock of
the Company.
The Company has substantial experience in acquiring insurance agencies.
Generally, each acquisition candidate is subjected to a due diligence process in
which the Company evaluates the quality and reputation of the business and its
management, revenues and earnings, specialized products and expertise,
administrative and accounting records, growth potential and location. For
candidates that pass this screening process, the Company uses a pricing method
that emphasizes pro forma revenues, profits and tangible net worth. As a
condition to completing an acquisition, the Company requires that the principals
be subject to restrictive covenants in a Company prepared form. Once the
acquisition is consummated, the Company takes steps to introduce its procedures
and protocols and to integrate the agency's systems and employees into the
Company.
COMPETITION
The Company participates in a very competitive industry. Competition is
primarily based on price, service, relationships and expertise. The Company is a
leading independent insurance agency system serving a wide variety of clients
through its network of wholly-owned subsidiaries which operate over 80 offices
located in 23 states. Many of the Company's competitors are larger and have
greater resources than the Company and operate on an international scale.
In some of the Agencies' cities, because no major national insurance
broker has established a presence, the Company competes with local agents and
private, regional firms, some of who may be larger than the Company's local
Agency.
The Company is also in competition with certain insurance companies
which write insurance directly for their customers, and the banking industry, as
well as self-insurance and other employer sponsored programs.
EMPLOYEES
As of December 31, 2001, the Company had approximately 2,600 employees.
No employees are currently represented by a union. The Company believes its
relations with its employees are good.
REGULATION
In every state in which the Company does business, the applicable
Agency or an employee is required to be licensed or to have received regulatory
approval by the state insurance department in order for the Company to conduct
business. In addition to licensing requirements applicable to the Company, most
jurisdictions require individuals who engage in brokerage and certain insurance
service activities to be licensed personally.
The Company's operations depend on the validity of and its continued
good standing under the licenses and approvals pursuant to which it operates.
Licensing laws and regulations vary from jurisdiction
4
to jurisdiction. In all jurisdictions, the applicable licensing laws and
regulations are subject to amendment or interpretation by regulatory
authorities, and generally such authorities are vested with general discretion
as to the grant, renewal and revocation of licenses and approvals.
ITEM 2. PROPERTIES
Except as mentioned below, the Company leases its Headquarters' office
in Richmond, Virginia and its Agencies' offices in various states. Information
on the Company's lease commitments is incorporated herein by reference to "Note
H-Leases" of the Notes to Consolidated Financial Statements in the Company's
2001 Annual Report to Shareholders.
At December 31, 2001, the Company owned buildings in Oklahoma City,
Oklahoma and Auburn, Maine. Subsequent to year end, the Oklahoma City, Oklahoma
building was sold.
ITEM 3. LEGAL PROCEEDINGS
The Company and its Agencies have no material pending legal proceedings
other than ordinary, routine litigation incidental to the business, to which it
or a subsidiary is a party. With respect to the routine litigation, upon the
advice of counsel, management believes that none of these proceedings, either
individually or in the aggregate, if determined adversely to the Company, would
have a material effect on the financial position or results of operations of the
Company or its ability to carry on its business as currently conducted.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this report.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the registrant are as follows:
Andrew L. Rogal, 53, has been Chairman of the Company since January
2000 and Chief Executive Officer since May 1997. He was President of the Company
from 1995 until December 1999 and has been a director of the Company since 1989.
He was Chief Operating Officer of the Company from 1995 to 1997.
Martin L. Vaughan, III, 55, has been President of the Company since
January 2000. He has been Chief Operating Officer and a director of the Company
since June 1999. Prior thereto, he was President and Chief Executive Officer of
American Phoenix Corporation from 1990 to 1999.
Timothy J. Korman, 49, has been Executive Vice President, Finance and
Administration since 1997 and has been a director of the Company since June
1999. He was Executive Vice President, Chief Financial Officer and Treasurer of
the Company from 1995 to 1997. He is a first cousin of Robert S. Ukrop, a
director of the Company.
5
Carolyn Jones, 46, has been Senior Vice President, Chief Financial
Officer and Treasurer since 1997 and was Vice President and Controller of the
Company from 1991 to 1997.
Walter L. Smith, 44, has been Senior Vice President of the Company
since August 2001. He has been General Counsel of the Company since 1991 and
Secretary of the Company since 1998. He was Vice President from 1991 to August
2001 and he was Assistant Secretary of the Company from 1989 to 1998.
Vincent P. Howley, 53, has been Vice President, Agency Financial
Operations since 1997. He was Vice President-Audit of the Company from 1993 to
1997.
John P. McGrath, 44, has been Senior Vice President - Business and
Product Development since June 1999 and was Vice President of the Company from
1998 to June 1999. He has been Vice President of Hilb, Rogal and Hamilton
Company of Pittsburgh, Inc., a subsidiary of the Company since 1998. He was
Director of the Mid-Atlantic Region from 1995 to March 2000 and President and
Chief Executive Officer of Hilb, Rogal and Hamilton Company of Pittsburgh, Inc.
from 1993 to 1998.
William L. Chaufty, 49, has been Vice President of the Company since
1998. He has been Director of the Central Region since 1997 and was President of
Hilb, Rogal and Hamilton Company of Oklahoma, a subsidiary of the Company, from
1989 to 2000.
Michael A. Janes, 42, has been Vice President of the Company since
1998. He has been Director of the West Region since 1997 and Chairman of Hilb,
Rogal and Hamilton Company of Arizona, a subsidiary of the Company, since June
1998. He was President of this subsidiary from 1993 to 1998.
Robert B. Lockhart, 51, has been Vice President of the Company since
May 1999. He has been Director of the Northeast Region since May 1999. He was
President of American Phoenix Corporation of Connecticut from 1996 to 1999.
Prior thereto, he held various positions at Marsh & McLennan, Inc. from 1975 to
1996.
Benjamin A. Tyler, 53, has been Vice President of the Company since May
1999. He has been Director of the Southeast Region since January 2001. He was
Director of the Florida Region from May 1999 to January 2001. He was President
of American Phoenix Corporation of Maryland from 1997 until May 1999. From 1994
until 1997, he was Senior Vice President of Marsh & McLennan,
Baltimore/Washington. Prior thereto, he was President and Senior Consultant of
Inteco, Incorporated from 1981 to 1994.
Steven C. Deal, 48, has been Vice President of the Company since 1998.
He has been Director of the Mid-Atlantic Region since March 2000. He was
National Director of Select Commercial Operations from 1997 until March 2000 and
National Director of Personal Lines from 1998 until March 2000. He has also been
Chairman of Hilb, Rogal and Hamilton Company of Virginia, a subsidiary of the
Company, since October 1997. He was President of this subsidiary from 1990 to
1997.
Karl E. Manke, 55, has been Vice President of the Company since May
1999. Prior thereto, he was Vice President, Sales and Marketing for American
Phoenix Corporation from 1993 to 1999.
Henry C. Kramer, 57, has been Vice President, Human Resources since
1997. Prior thereto, he held various human resource positions with Alexander &
Alexander, Inc. in Baltimore, Maryland from 1973 to 1997.
6
Robert W. Blanton, Jr., 37, has been Vice President and Controller of
the Company since May 1998. He was Assistant Vice President and Controller from
1997 to 1998 and was Assistant Vice President of the Company from 1993 to 1997.
William C. Widhelm, 33, has been Vice President, Internal Audit since
August 2001. He was Assistant Vice President, Internal Audit from 1999 to 2001.
He joined the Company in 1994 and has held various positions in the auditing
department.
A. Brent King, 33, has been Vice President and Associate General
Counsel of the Company since November 2001. Prior thereto, he was an attorney at
Williams Mullen from 1994 to October 2001.
All officers serve at the discretion of the Board of Directors. Each
holds office until the next annual election of officers by the Board of
Directors, which will occur after the Annual Meeting of Shareholders, scheduled
to be held on May 7, 2002, or until their successors are elected. There are no
family relationships nor any arrangements or understandings between any officer
and any other person pursuant to which any such officer was selected, except as
noted above.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's Common Stock has been publicly traded since July 15,
1987. It is traded on the New York Stock Exchange under the symbol "HRH". As of
December 31, 2001, there were 594 holders of record of the Company's Common
Stock.
The following table sets forth the reported high and low sales prices
per share of the Common Stock on the NYSE Composite Tape, based on published
financial sources, and the dividends per share declared on Common Stock for the
quarter indicated.
7
CASH
DIVIDENDS
QUARTER ENDED SALES PRICE DECLARED
----------------------------------------------------------------------------------------------------------------
HIGH LOW
---- ---
2001
March 31 $20.44 $16.88 $.0850
June 30 22.08 17.20 .0875
September 30 24.08 20.55 .0875
December 31 31.38 22.45 .0875
2000
March 31 $14.25 $12.91 $.0825
June 30 17.44 13.60 .0850
September 30 20.97 17.19 .0850
December 31 20.63 18.41 .0850
The Company's current dividend policy anticipates the payment of
quarterly dividends in the future. The declaration and payment of dividends to
holders of Common Stock will be at the discretion of the Board of Directors and
will be dependent upon the future earnings and financial condition of the
Company.
The Company's current credit facility with seven banks limits the
payment of cash dividends and other distributions on the Common Stock of the
Company. The Company may not make dividend payments or other distributions
exceeding $11,000,000 for the year ending December 31, 2001 and $11,500,000 each
year thereafter through the due date of the loan agreement (June 30, 2004.)
ITEM 6. SELECTED FINANCIAL DATA
Information as to selected financial data is incorporated herein by
reference to the material under the heading "Selected Financial Data" in the
Company's 2001 Annual Report to Shareholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Information as to management's analysis of financial condition and
results of operations is incorporated herein by reference to the materials under
the heading "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Company's 2001 Annual Report to Shareholders.
ITEM 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
The Company believes that its exposure to market risk associated with
transactions using derivative financial instruments is not material.
8
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item is submitted in a separate section of this
report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Except as to certain information regarding executive officers included
in Part I, the information required by this item is incorporated by reference to
the Company's definitive Proxy Statement for the 2002 Annual Meeting of
Shareholders to be filed within 120 days after the end of the fiscal year.
ITEM 11. EXECUTIVE COMPENSATION
Information required by this item is incorporated by reference to the
material included on pages 7 and pages 10 through 14 of the Company's definitive
Proxy Statement for the 2002 Annual Meeting of Shareholders to be filed within
120 days after the end of the fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by this item is incorporated herein by reference
to the material under the headings "Security Ownership of Management" and
"Security Ownership of Certain Beneficial Owners" contained in the definitive
Proxy Statement for the 2002 Annual Meeting of Shareholders to be filed within
120 days after the end of the fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by this item is incorporated herein by reference
to the material under the heading "Certain Relationships and Related
Transactions" contained in the Proxy Statement for the 2002 Annual Meeting of
Shareholders to be filed within 120 days after the end of the fiscal year.
9
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) and (2). The response to this portion of Item 14 is
submitted as a separate section of this report.
2001 Exhibits - Index
EXHIBIT NO. DOCUMENT
----------- --------
3.1 Articles of Incorporation
(incorporated by reference to Exhibit
4.1 to the Company's Registration
Statement on Form S-3, File No.
33-56488, effective March 1, 1993,
hereinafter, the Form S-3)
3.2 Amended and Restated Bylaws
(incorporated by reference to Exhibit
3.2 to the Company's Form 10-K for the
year ended December 31, 1998, File No.
0-15981)
10.1 Indenture dated as of May 3, 1999 made
by and among the registrant and
Crestar Bank as Trustee (incorporated
by reference to Exhibit 10.2 to the
Company's Form 10-Q dated May 14,
1999, File No. 0-15981)
10.2 Risk Management Agreement dated as of
May 3, 1999 by and between Phoenix
Home Life Mutual Insurance Company and
the registrant (incorporated by
reference to Exhibit 10.3 to the
Company's Form 10-Q dated May 14,
1999, File No. 0-15981)
10.3 Incentive Stock Option Plan, as
amended (incorporated by reference to
Exhibit 28.27 of the Form S-3)
10.4 Hilb, Rogal and Hamilton Company 2000
Stock Incentive Plan, incorporated by
reference to Exhibit A of the
Registrant's definitive Proxy
Statement for the Annual Meeting of
Shareholders held on May 2, 2000
10.5 Consulting Agreement with Robert H.
Hilb (incorporated by reference to
Exhibit 10.1 to the Company's Form
10-Q for the quarter ended June 30,
1997, File No. 0-15981)
10
EXHIBIT NO. DOCUMENT
----------- --------
10.6 First Amendment to Consulting
Agreement with Robert H. Hilb
(incorporated by reference to Exhibit
10.6 to the Company's Form 10-K for
the year ended December 31, 1999, File
No. 0-15981)
10.7 Hilb, Rogal and Hamilton Company 1989
Stock Plan, as amended and restated
(incorporated by reference to Exhibit
10.7 to the Company's Form 10-K for
the year ended December 31, 1998)
10.8 Hilb, Rogal and Hamilton Company
Non-employee Directors Stock Incentive
Plan, as amended and restated
(incorporated by reference to Exhibit
10.10 to the Company's Form 10-K for
the year ended December 31, 1998)
10.9 Voting and Standstill Agreement dated
as of May 3, 1999 made by and among
the registrant, PM Holdings, Inc. and
Phoenix Home Life Mutual Insurance
Company (incorporated by reference to
Exhibit 10.5 to the Company's Form
10-Q dated May 14, 1999, File No.
0-15981)
10.10 Registration Rights Agreement dated as
of May 3, 1999 made between the
registrant, PM Holdings, Inc. and
Phoenix Home Life Mutual Insurance
Company (incorporated by reference to
Exhibit 10.6 to the Company's Form
10-Q dated May 14, 1999, File No.
0-15981)
10.11 Form of Change of Control Employment
Agreement for the following executive
officers: Andrew L. Rogal, Timothy J.
Korman, Martin L. Vaughan, III,
Carolyn Jones, Walter L. Smith,
Vincent P. Howley, Henry C. Kramer,
Robert W. Blanton, Jr., A. Brent King
and William C. Widhelm (incorporated
by reference to Exhibit 10.12 to the
Company's Form 10-K for the year ended
December 31, 1998, File No. 0-15981)
10.12 Form of Change of Control Employment
Agreement for the following executive
officers: John P. McGrath, William C.
Chaufty, Steven C. Deal, Michael A.
Janes, Robert B. Lockhart, Benjamin A.
Tyler, Karl E. Manke and Richard F.
Galardini (incorporated by reference
to Exhibit 10.13 to the Company's Form
10-K for the year ended December 31,
1998, File No. 0-15981)
11
EXHIBIT NO. DOCUMENT
----------- --------
10.13 Employment Agreement of Michael A.
Janes (incorporated by reference to
Exhibit 10.16 to the Company's Form
10-K for the year ended December 31,
1998, File No. 0-15981)
10.14 Form of Hilb, Rogal and Hamilton
Employee Non-qualified Stock Option
Agreement with schedule of optionees
and amounts of options granted
(incorporated by reference to Exhibit
10.28 to the Company's Form 10-K for
the year ended December 31, 2000, File
No. 0-15981)
10.15 Form of Hilb, Rogal and Hamilton
Restricted Stock Agreement with
schedule of grantees and amounts of
restricted stock granted (incorporated
by reference to Exhibit 10.29 to the
Company's Form 10-K for the year ended
December 31, 2000, File No. 0-15981)
10.16 Form of Split-Dollar Agreement for the
following executive officers: Andrew
L. Rogal, Timothy J. Korman and John
P. McGrath (incorporated by reference
to Exhibit 10.30 to the Company's Form
10-K for the year ended December 31,
2000, File No. 0-15981)
10.17 Form of Split-Dollar Agreement for the
following named executive officers:
Martin L. Vaughan, III, Robert B.
Lockhart and Michael A. Janes
(incorporated by reference to Exhibit
10.31 to the Company's Form 10-K for
the year ended December 31, 2000, File
No. 0-15981)
10.18 Amended and Restated Credit Agreement
dated April 6, 2001 among the
Registrant and First Union National
Bank, PNC Bank, National Association,
Bank of America Securities, LLC, Fleet
National Bank, SunTrust Bank, Branch
Banking and Trust Company and Comerica
Bank (incorporated by reference to
Exhibit 10.1 to the Company's Form
10-Q dated May 11, 2001, File No.
0-15981)
10.19 Senior Executive Employment Agreement
of Andrew L. Rogal dated December 1,
2001 by and between Hilb, Rogal and
Hamilton Company and Andrew L. Rogal*
12
EXHIBIT NO. DOCUMENT
----------- --------
10.20 Senior Executive Employment Agreement
of Martin L. Vaughan, III dated
December 1, 2001 by and between Hilb,
Rogal and Hamilton Company and Martin
L. Vaughan, III*
10.21 Senior Executive Employment Agreement
of John P. McGrath dated December 1,
2001 by and between Hilb, Rogal and
Hamilton Company and John P. McGrath*
10.22 Senior Executive Employment Agreement
of Timothy J. Korman dated December 1,
2001 by and between Hilb, Rogal and
Hamilton Company and Timothy J.
Korman*
10.23 Hilb, Rogal and Hamilton Company
Executive Voluntary Deferral Plan, as
amended and restated effective January
1, 2002 (incorporated by reference to
Exhibit 4.3 to the Company's Amendment
No. 1 to Form S-3 dated February 11,
2002, File No. 333-74564)
10.24 Hilb, Rogal and Hamilton Company
Outside Directors Deferral Plan, as
amended and restated effective January
1, 2002 (incorporated by reference to
Exhibit 4.5 to the Company's Amendment
No. 1 to Form S-3 dated February 11,
2002, File No. 333-74564)
10.25 Form of Hilb, Rogal and Hamilton
Company Employee Non-Qualified Stock
Option Agreement with schedule of
optionees and amounts of options
granted*
10.26 Form of Hilb, Rogal and Hamilton
Company Restricted Stock Agreement
with schedule of grantees and amounts
of restricted stock granted*
10.27 Hilb, Rogal and Hamilton Company
Supplemental Executive Retirement
Plan, as amended and restated
effective January 1, 2002*
13 2001 Annual Report to Shareholders*
21 Subsidiaries of Hilb, Rogal and
Hamilton Company*
13
EXHIBIT NO. DOCUMENT
----------- --------
23 Consent of Ernst & Young LLP*
* Filed Herewith
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter of
2001.
(c) Exhibits
The response to this portion of Item 14 as listed in Item 14(a)(3)
above is submitted as a separate section of this report.
(d) Financial Statement Schedules
The response to this portion of Item 14 is submitted as a separate
section of this report.
14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant, Hilb, Rogal and Hamilton Company, has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
HILB, ROGAL AND HAMILTON COMPANY
By: /s/ ANDREW L. ROGAL
--------------------------------
Andrew L. Rogal, Chairman
of the Board and Chief
Executive Officer
Date: March 29, 2002
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ ANDREW L. ROGAL Chairman of the Board and Chief Executive March 29, 2002
-------------------------------------------------- Officer and Director
Andrew L. Rogal (Principal Executive Officer)
/s/ CAROLYN JONES Senior Vice President, Chief Financial March 29, 2002
--------------------------------------------------- Officer and Treasurer
Carolyn Jones (Principal Financial Officer)
/s/ ROBERT W. BLANTON, JR. Vice President and Controller March 29, 2002
--------------------------------------------------- (Principal Accounting Officer)
Robert W. Blanton, Jr.
/s/ ROBERT H. HILB Chairman Emeritus and Director March 29, 2002
---------------------------------------------------
Robert H. Hilb
/s/ MARTIN L. VAUGHAN, III President, Chief Operating Officer and March 29, 2002
--------------------------------------------------- Director
Martin L. Vaughan, III
/s/ TIMOTHY J.KORMAN Executive Vice President, Administration March 29, 2002
--------------------------------------------------- and Finance and Director
Timothy J. Korman
/s/ ROBERT S. UKROP Director March 29, 2002
---------------------------------------------------
Robert S. Ukrop
15
SIGNATURE TITLE DATE
--------- ----- ----
/s/ THOMAS H. O'BRIEN Director March 29, 2002
---------------------------------------------------
Thomas H. O'Brien
/s/ J. S. M. FRENCH Director March 29, 2002
---------------------------------------------------
J. S. M. French
/s/ NORWOOD H. DAVIS, JR. Director March 29, 2002
---------------------------------------------------
Norwood H. Davis, Jr.
/s/ THEODORE L. CHANDLER, JR. Director March 29, 2002
---------------------------------------------------
Theodore L. Chandler, Jr.
/s/ ANTHONY F. MARKEL Director March 29, 2002
---------------------------------------------------
Anthony F. Markel
/s/ ROBERT W. FIONDELLA Director March 29, 2002
---------------------------------------------------
Robert W. Fiondella
/s/ DAVID W. SEARFOSS Director March 29, 2002
---------------------------------------------------
David W. Searfoss
/s/ JULIOUS P. SMITH, JR. Director March 29, 2002
---------------------------------------------------
Julious P. Smith, Jr.
16
ITEM 8, ITEMS 14 (a)(1) AND (2) AND (d)
INDEX OF FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
FINANCIAL STATEMENT SCHEDULES
CERTAIN EXHIBITS
YEAR ENDED DECEMBER 31, 2001
HILB, ROGAL AND HAMILTON COMPANY
GLEN ALLEN, VIRGINIA
17
HILB, ROGAL AND HAMILTON COMPANY AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The report of independent auditors is included on page 19 of this Form
10-K and the following consolidated financial statements of Hilb, Rogal and
Hamilton Company and subsidiaries, included in the Company's 2001 Annual Report
to Shareholders are incorporated by reference in Item 8 of this report:
Consolidated Balance Sheets, December 31, 2001 and 2000
Statement of Consolidated Income,
Years Ended December 31, 2001, 2000 and 1999
Statement of Consolidated Shareholders' Equity,
Years Ended December 31, 2001, 2000 and 1999
Statement of Consolidated Cash Flows,
Years Ended December 31, 2001, 2000 and 1999
Notes to Consolidated Financial Statements
The following consolidated financial statement schedule of Hilb, Rogal and
Hamilton Company and subsidiaries is included in item 14(d):
Page Number
Schedule II Valuation and Qualifying Accounts................................................ 20
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable and therefore have been
omitted.
18
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
-------------------------------------------------
Shareholders and Board of Directors
Hilb, Rogal and Hamilton Company
We have audited the accompanying consolidated balance sheets of Hilb, Rogal and
Hamilton Company and subsidiaries as of December 31, 2001 and 2000, and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 2001. Our audits
also included the financial statement schedule listed in the Index at Item 14
(a). These financial statements and schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Hilb, Rogal and
Hamilton Company and subsidiaries at December 31, 2001 and 2000, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States. Also, in our opinion, the
related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.
As explained in Note B to the consolidated financial statements, in 2001 the
Company changed its method of accounting for derivative instruments and hedging
activities and, in 2000 changed its method of accounting for policy
cancellations.
/s/ Ernst & Young LLP
Richmond, Virginia
February 13, 2002
19
HILB, ROGAL AND HAMILTON COMPANY
AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
COL. A COL. B COL. C COL. D COL. E
ADDITIONS
---------
CHARGED
BALANCE AT CHARGED TO OTHER BALANCE
BEGINNING TO COSTS ACCOUNTS DEDUCTIONS AT END
DESCRIPTION OF PERIOD AND EXPENSES (DESCRIBE)* (DESCRIBE)** OF PERIOD
Year ended
December 31, 2001:
Allowance for
doubtful accounts $1,878,000 $2,119,000 $844,000 $1,467,000 $3,374,000
Year ended
December 31, 2000:
Allowance for
doubtful accounts 1,456,000 1,307,000 89,000 974,000 1,878,000
Year ended
December 31, 1999:
Allowance for
doubtful accounts 1,505,000 402,000 377,000 828,000 1,456,000
-----------------------------------------------
* Recoveries ($70,000) and other adjustments ($774,000)
** Bad debts written off
20