HUB INTERNATIONAL LIMITED
NYSE : HBG
TSX : HBG

HUB INTERNATIONAL LIMITED

July 27, 2005 07:00 ET

Hub International Reports Strong Growth in Q205

CHICAGO--(CCNMatthews - Jul 27, 2005) -

Hub International Limited (NYSE:HBG)(TSX:HBG):

-- Revenue Rises 37%, Including 7% Organic Growth Rate

-- New Accounts and Retention Continue Sequential Increases

-- Company Accelerates Cost Reductions

-- Acquisition Pipeline Remains Substantial

Hub International Limited (NYSE:HBG)(TSX:HBG) reported today that second quarter and first-half revenue rose sharply, reflecting both the benefits of acquisitions and strong organic growth.

Revenue for the quarter ended June 30, 2005 increased 37% to $112.7 million from $82.2 million a year earlier. Net earnings declined, as expected, due to the impact of a non-cash stock based compensation charge resulting from the 2004 acquisition of Talbot. (See detailed discussion below). Second quarter net earnings decreased 63% to $4.3 million ($0.12 per diluted share) from $11.6 million ($0.35 per diluted share) a year earlier. Excluding the Talbot charge and foreign currency effects, net earnings increased 11% to $12.6 million ($0.36 per diluted share).

Despite a declining rate environment, Hub continued to build revenue organically, posting an organic growth rate of 7%--or 4% when foreign exchange benefits are excluded. Organic growth, which includes net revenue increases for businesses owned at least 12 months, was 3% in the United States and 13% in Canada. Excluding the impact of foreign exchange gains, contingent commissions and other income, Hub's core commissions continued a sequential improvement in organic growth rates, rising to 3% in the second quarter of 2005 from 1% in the first quarter and negative 2% in the fourth quarter of 2004.

"We continue to gain momentum in our efforts to build the sales culture at Hub," said Martin P. Hughes, chairman and chief executive officer. "Management of the sales pipeline, producer training programs, improved oversight of the sales process and other systems implemented over the past year are becoming increasingly effective. We are seeing improvements in both new sales and account retention.

Hughes said he anticipates increased rate stability as 2006 unfolds based on a belief that insurers will exhibit more pricing and underwriting discipline during this cycle than they have in previous cycles. Underwriting discipline is being driven by more conservative management and accounting in a post-Sarbanes-Oxley environment, limited investment returns available for premium dollars and the relatively higher likelihood of a large loss of business for insurers that are downgraded by rating agencies. "In turn, this discipline could provide benefits to the brokerage business," Hughes added.

Revenue Increases Strongly in Second Quarter

U.S. revenue rose 55% to $78.6 million in the second quarter from $50.7 million in the prior year, reflecting both acquisitions and organic growth. Organic growth of 3% included a 2% growth rate in core commission income.

Canadian revenue increased 8% to $34.1 million from $31.5 million, including the impact of acquisitions, divestitures and foreign exchange. Organic growth of 13% in both revenue and core commission income included a benefit of nine percentage points from a stronger Canadian dollar.

Cash compensation expense increased 46% to $61.4 million from $42.1 million a year earlier and rose to 55% of revenue from 51% in the second quarter of 2004. The increase in compensation relative to revenue reflected higher compensation expense ratios at Talbot, acquired July 1, 2004. However, the company also experienced excessive compensation ratios in hubs that have failed to meet their budget projections and operating ratios. Hughes said the company has been reducing costs in recent months and has instructed several hubs to accelerate the pace of reductions in the third quarter. Severance costs related to these reductions, to be implemented by August 31st, will limit their impact in the third quarter, with savings more evident in the fourth quarter and beyond.

"We have made it clear to our managers that the cash compensation ratio must decline as we grow, generating a higher return from incremental revenue," Hughes said. "In the hubs where this goal is being achieved, no staff reductions are being implemented. However, hubs that have not brought performance up to standards set earlier this year must make the adjustments necessary to meet profitability goals. We are fully committed to our goal of reducing compensation as a percentage of revenue by an average of 100 basis points per year."

Non-cash stock based compensation rose to $10.7 million from $1.7 million in the second quarter of 2004, largely due to the Talbot charge of $8.7 million or $0.25 per diluted share.

Increasing profitability at Talbot indicates the total earnout for approximately 70 Talbot employees will be in the $52-$55 million range, up from about $45-$50 million indicated earlier. Hughes noted the Talbot charge will begin to decline in the fourth quarter of 2005 in accordance with the non-cash stock based compensation amortization schedule. The first payment under the earnout provisions is scheduled for September 2005. Hub has the option to make the payment in common shares or cash, although the accounting to date has been based on the assumption that the payment will be made in common shares.

Selling, occupancy and administration expense rose 29% to $20.7 million in the second quarter of 2005 from $16.1 million a year earlier, but declined to 18% of revenue from 20%.

Pre-tax earnings declined 29% to $13.2 million from $18.6 million a year earlier. The non-taxable nature of the Talbot charge contributed to a sharp increase in the effective tax rate to 67.8% from 37.6%. Net earnings decreased 63% to $4.3 million ($0.12 per diluted share) in the second quarter from $11.6 million ($0.35 per diluted share) in the same period of 2004. (See attached table for details.)

Performance Strengthens in First Half of 2005

Growth in the second quarter expanded on gains made in first quarter performance at Hub. For the first six months of 2005, revenue increased 45% to $234.4 million from $161.6 million. Organic growth was 8% for total revenue and 5% for core commissions. Foreign exchange effects added three percentage points to revenue growth rates in the first half.

U.S. revenue rose 66% to $165.7 million from $99.5 million, reflecting both acquisitions and organic growth. Organic growth of 4% included a 1% growth rate in core commission income.

Canadian revenue increased 11% to $68.7 million from $62.1 million, including the impact of acquisitions, divestitures and foreign exchange. Organic growth of 15% overall and 12% for core commissions included a benefit of nine percentage points from a stronger Canadian dollar.

Cash compensation expense increased 51% to $125.3 million in the first half of 2005 from $82.8 million a year earlier, rising to 54% of revenue from 51% in 2004. Higher relative cash compensation ratios at Talbot and in some other hubs were partially offset by the benefit of higher contingent income, which has little compensation expense associated with it.

Non-cash stock-based compensation rose to $19.7 million from $3.3 million, including $15.9 million ($0.43 per diluted share) for the Talbot charge. Absent the Talbot charge, non-cash stock based compensation increased 13%.

Selling, occupancy and administration expense rose 29% to $40.7 million in the first half of 2005 from $31.6 million a year earlier, but declined to 17% of revenue from 20%.

Pre-tax earnings increased 27% to $42.6 million from $33.5 million in the first half of 2004. The non-taxable nature of the Talbot charge contributed to a sharp increase in the effective tax rate to 51.3% from 36.6%. Net earnings decreased 2% to $20.7 million ($0.59 per diluted share) from $21.2 million ($0.64 per diluted share) a year earlier. The decrease in net earnings resulted from the Talbot charge, offset by higher contingent income, forgiveness of debt on a loan from an insurer and gains on disposal of assets.

Growth Momentum and Industry Trends Bolster Outlook

Looking ahead into 2006, Hughes indicated that both internal and external factors are leading to increased optimism, including:

-- The company's investment in sales culture development has gained substantial traction, as evidenced by improvements in sales productivity in a falling rate environment.

-- Acquisition opportunities continue to be plentiful and pricing is within the ranges set by the company's valuation discipline. During the second quarter of 2005, Hub announced the acquisitions of THB Intermediaries, and Tash, Lyle & Jones and established Hub International Gulf South, a new office in New Orleans.

-- Cash flow and access to capital are adequate to fund a significant number of acquisitions. At the close of the second quarter, cash and cash equivalents totalled $114.6 million, including $27.8 million of cash generated from operating activities in the first half.

-- Although premium rates continue to be soft--a condition likely to hold for another 12 months or so--insurer pricing reflects a level of discipline that should lead to reduced softness during 2006.

-- Profitability at Talbot is increasing. Continuation of this trend and accelerated expense reduction initiatives at several hubs should lead to improved margins on a consolidated basis.

"Each of the factors listed above would have a varying impact on Hub's performance and the timing or certainty of any factor is not assured," Hughes noted. "However, the combined number of trends--all positive--suggests an enhanced opportunity to build our business for the long term."

Understanding the Talbot Charge

Hub discloses the impact of non-cash stock based compensation related to Talbot in order to give investors increased insight into Hub's results of operations and the effective cost of the Talbot acquisition.

Both the $90 million cash paid to Safeco Corporation and the future issuance of restricted and non-restricted Hub shares to approximately 70 Talbot executives are components of the total consideration paid to acquire Talbot. This total consideration is within Hub's target range of paying 5-7 times EBITDA (earnings before interest, taxes, depreciation and amortization) for acquired brokerages.

The executives of Talbot were not shareholders prior to the sale, and therefore non-cash stock based compensation they receive under terms of the purchase agreement is recorded as compensation expense. This compensation expense, which is not deductible for tax purposes, will be charged to earnings through the first quarter of 2007 and will affect earnings comparisons through 2007, making it difficult for investors to analyze the company's results in comparison to prior years and industry peers.

In the first six months of 2005, Hub recorded $15.9 million of non-cash stock based compensation for Talbot based on a total estimated earnout liability of approximately $53 million. The amount of non-cash stock based compensation may vary from quarter to quarter based on the profitability of Talbot. Based on the current expected earnout of approximately $53 million, the estimated charge to earnings will be:



2004 $14.4 million (actual)
2005 $27.8 million
2006 $9.3 million
2007 $1.7 million



Conference Call and Webcast

Hub International will discuss its financial results and outlook on a conference call scheduled for 9:30 a.m. (CT), 10:30 a.m. (ET) today, July 27, 2005. This call is being webcast by Thompson/CCBN and can be accessed at Hub International's web site at www.hubinternational.com. The webcast is also being distributed through the Thomson StreetEvents Network to both institutional and individual investors. Individual investors can listen to the call at www.fulldisclosure.com, Thomson/CCBN's individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson's password-protected event management site, StreetEvents (www.streetevents.com).

Headquartered in Chicago, IL, Hub International Limited is a leading North American insurance brokerage that has grown rapidly since its formation in 1998 through mergers, acquisitions and organic growth. Hub International provides a broad array of property and casualty, life and health, employee benefits, investment and risk management products and services through offices located in the United States and Canada. Hub International's strategy is to expand its market share in the highly fragmented U.S. insurance brokerage industry by acquiring quality firms that focus on servicing middle-market commercial businesses. In addition, Hub plans to leverage its decentralized approach, differentiate its service, and capitalize on its scale to provide broader product offerings to its clients through multiple distribution channels. Hub International currently has fifteen large "hub" brokerages that have significant market presence in their geographic regions or specialities in the U.S. and Canada. Each hub provides insurance brokerage services and manages the various other Hub International offices in its territory. The hub brokerages are responsible for growth through sales, service and fold-in acquisitions. The hub offices report to the head office which, in addition to monitoring the activity of each hub, retains responsibility for identifying and acquiring additional hub brokerages, along with integration and coordination initiatives that increase enterprise value.

This press release may contain forward-looking statements which reflect our current views with respect to future events and financial performance. These forward-looking statements relate, among other things, to our plans and objectives for future operations and are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. These uncertainties and other factors include, but are not limited to, risks associated with implementing our business strategies, identifying and consummating acquisitions, integrating acquired brokerages, attaining greater market share, developing and implementing effective information technology systems, recruiting and retaining qualified employees, fluctuations in the premiums charged by insurance companies with corresponding fluctuations in our premium-based revenue, any loss of services of key executives, industry consolidation, increased competition in the industry, fluctuations in the demand for insurance products, exchange rates, resolution of regulatory issues, including those related to compensation arrangements with insurance companies, the actual costs of resolution of contingent liabilities and the passage of new legislation subjecting our business to regulation in jurisdictions where we operate. We caution readers not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Additional information regarding these risks and other factors that could cause Hub International's actual results to differ materially from our expectations is contained in the company's filings with the Securities and Exchange Commission and the Canadian securities commissions. Except as otherwise required by federal securities laws, Hub International undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.



HUB INTERNATIONAL LIMITED
Consolidated Organic Growth
For the three months and six months ended June 30, 2005
(in thousands of U.S. dollars, except percentages)


Net
Revenue Adjustments
------------------ Total Total For Organic
Second quarter Change Growth (Acquisitions) Growth
2005 2004 ($) (%) And Disposals (%)
-------------------------------------------------------
Total
----------------
Commission
Income $105,418 $76,922 $28,496 37% $(23,644) 6%
Contingent
Commissions
and Volume
Overrides 4,244 3,038 1,206 40% (829) 13%
Other Income 3,004 2,271 733 32% (208) 23%
------------------------------------------------------
Total $112,666 $82,231 $30,435 37% $(24,681) 7%
------------------------------------------------------

USA
----------------
Commission
Income $72,740 $46,805 $25,935 55% $(25,037) 2%
Contingent
Commissions
and Volume
Overrides 3,461 2,189 1,272 58% (864) 19%
Other Income 2,376 1,728 648 37% (242) 23%
------------------------------------------------------
Total $78,577 $50,722 $27,855 55% $(26,143) 3%
------------------------------------------------------

Canada
----------------
Commission
Income $32,678 $30,117 $2,561 9% $1,393 13%
Contingent
Commissions
and Volume
Overrides 783 849 (66) -8% 35 -3%
Other Income 628 543 85 16% 34 22%
------------------------------------------------------
Total $34,089 $31,509 $2,580 8% $1,462 13%
------------------------------------------------------

Net
Revenue Adjustments
------------------ Total Total For Organic
First six months Change Growth (Acquisitions) Growth
2005 2004 ($) (%) And Disposals (%)
-------------------------------------------------------

Total
----------------
Commission
Income $194,387 $138,507 $55,880 40% $(48,903) 5%
Contingent
Commissions
and Volume
Overrides 33,404 18,075 15,329 85% (9,537) 32%
Other Income 6,572 4,998 1,574 31% (880) 14%
------------------------------------------------------
Total $234,363 $161,580 $72,783 45% $(59,320) 8%
------------------------------------------------------

USA
----------------
Commission
Income $135,893 $83,853 $52,040 62% $(51,424) 1%
Contingent
Commissions
and Volume
Overrides 24,418 11,832 12,586 106% (9,859) 23%
Other Income 5,390 3,840 1,550 40% (951) 16%
------------------------------------------------------
Total $165,701 $99,525 $66,176 66% $(62,234) 4%
------------------------------------------------------

Canada
----------------
Commission
Income $58,494 $54,654 $3,840 7% $2,521 12%
Contingent
Commissions
and Volume
Overrides 8,986 6,243 2,743 44% 322 49%
Other Income 1,182 1,158 24 2% 71 8%
------------------------------------------------------
Total $68,662 $62,055 $6,607 11% $2,914 15%
------------------------------------------------------

Notes: 1. Organic growth is a non-GAAP measure.
2. Total and Canadian organic growth rates above include
the impact of changes in foreign currency.


HUB INTERNATIONAL LIMITED
Consolidated Statements of Earnings
For the three months and six months ended June 30, 2005 and 2004
(in thousands of U.S. dollars, except per share amounts)

Second quarter First six months
---------------------- -----------------------
2005 2004 2005 2004
----------- ---------- ----------- -----------
(Unaudited) (Unaudited)(Unaudited) (Unaudited)
Revenue
Commission income $105,418 $76,922 $194,387 $138,507
Contingent commissions
and volume overrides 4,244 3,038 33,404 18,075
Other 3,004 2,271 6,572 4,998
-------------------- -----------------------
112,666 82,231 234,363 161,580
-------------------- -----------------------

Expenses
Cash compensation 61,447 42,114 125,300 82,751
Selling, occupancy and
administration 20,693 16,086 40,746 31,639
Depreciation 2,134 1,730 4,215 3,317
Interest expense 2,588 1,702 4,991 3,362
Intangible asset
amortization 1,888 936 3,747 1,717
Non-cash stock based
compensation 10,652 1,701 19,650 3,315
Gain on forgiveness of
debt - - (4,500) -
(Gain)/loss on disposal
of subsidiaries,
property, equipment
and other assets 18 (597) (2,394) (559)
Loss on write-off of
trademarks - - - 2,587
-------------------- -----------------------
99,420 63,672 191,755 128,129
-------------------- -----------------------

Net earnings before
income taxes 13,246 18,559 42,608 33,451
-------------------- -----------------------

Provision for income tax
expense (benefit)
Current 8,902 4,992 22,756 11,730
Future 75 1,976 (897) 507
-------------------- -----------------------
8,977 6,968 21,859 12,237
-------------------- -----------------------
Net earnings 4,269 11,591 20,749 21,214
Interest on subordinated
convertible debentures - 475 950 950
Dividends in lieu on
restricted share units 28 65 56 65
-------------------- -----------------------
Diluted net earnings $4,297 $12,131 $21,755 $22,229
-------------------- -----------------------
-------------------- -----------------------

Earnings per share
Basic $0.14 $0.38 $0.68 $0.70
Diluted $0.12 $0.35 $0.59 $0.64

Weighted average shares
outstanding
- Basic (000's) 30,441 30,189 30,405 30,102
Weighted average shares
outstanding
- Diluted (000's) 34,713 34,905 36,994 34,711


HUB INTERNATIONAL LIMITED
Consolidated Balance Sheets
As of June 30, 2005 and December 31, 2004
(in thousands of U.S. dollars)

2005 2004
----------- ----------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $114,577 $98,204
Trust cash 71,175 71,718
Accounts and other receivables 229,353 162,841
Income taxes receivable 5,961 6,208
Future income taxes 6,260 3,901
Prepaid expenses 6,924 5,835
----------- ----------
Total current assets 434,250 348,707

Goodwill 382,073 376,676
Other intangible assets 87,524 88,842
Property and equipment 26,648 27,907
Future income taxes 9,470 4,368
Other assets 10,082 11,035
----------- ----------
Total assets $950,047 $857,535
----------- ----------
----------- ----------

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $341,782 $271,843
Income taxes payable 6,566 2,273
Future income taxes 404 34
Current portion long-term debt and capital
leases 5,074 5,195
----------- ----------
Total current liabilities 353,826 279,345

Long-term debt and capital leases 137,051 146,602
Subordinated convertible debentures 35,000 35,000
Future income taxes 20,557 14,805
----------- ----------
Total liabilities 546,434 475,752
----------- ----------

Commitments and Contingencies

Shareholders' equity
Share capital 262,945 259,617
Contributed surplus 15,979 12,681
Cumulative translation account 25,117 26,983
Retained earnings 99,572 82,502
----------- ----------
Total shareholders' equity 403,613 381,783
----------- ----------
Total liabilities and shareholders' equity $950,047 $857,535
----------- ----------
----------- ----------

HUB INTERNATIONAL LIMITED
Consolidated Statements of Cash Flows
For the three months and six months ended June 30, 2005 and 2004
(in thousands of U.S. dollars)

Second quarter First six months
---------------------- -----------------------
2005 2004 2005 2004
----------- ---------- ----------- -----------
(Unaudited) (Unaudited)(Unaudited) (Unaudited)

Operating activities
Net earnings $4,269 $11,591 $20,749 $21,214
Items not affecting cash:
Amortization and
depreciation 4,022 2,666 7,962 5,034
(Gain)/loss on disposal of
subsidiaries, property,
equipment and other
assets 18 (597) (2,394) (559)
Non-cash stock based
compensation 10,652 1,701 19,650 3,315
Gain on forgiveness of
debt - - (4,500) -
Loss on write-off of
trademarks - - - 2,587
Future income taxes 75 1,976 (897) 507
Non-cash working capital
items
Trust cash (9,302) (10,373) 5,764 30
Accounts and other
receivables (75,553) (59,781) (42,268) (8,368)
Prepaid expenses (1,685) (3,520) (916) (3,366)
Accounts payable and
accrued liabilities 85,667 66,939 19,802 (3,330)
Other assets 129 128 257 256
Income taxes (3,834) (1,566) 4,563 (176)
------------------- ----------------------
Net cash flows from
operating activities 14,458 9,164 27,772 17,144
------------------- ----------------------

Investing activities
Property and equipment
- purchases (1,721) (1,465) (2,657) (2,850)
Property and equipment
- proceeds on sale 13 14 14 81
Purchase of subsidiaries,
net of cash received (7,960) (11,621) (7,977) (11,878)
Sale of subsidiaries (111) 3,929 3,765 3,929
Other assets 126 (302) 4,520 255
------------------- ----------------------
Net cash flows (used
for) investing
activities (9,653) (9,445) (2,335) (10,463)
------------------- ----------------------

Financing activities
Long-term debt and
capital leases -
advances - 65,000 - 65,000
Long-term debt and
capital leases -
repayments (934) (3,680) (5,198) (4,690)
Proceeds from exercise
of stock options 124 412 628 480
Proceeds from sale of
executive purchase
plan shares 35 - 35 -
Dividends paid (1,844) (3,043) (3,679) (3,043)
------------------- ----------------------
Net cash flows from
(used for) financing
activities (2,619) 58,689 (8,214) 57,747
------------------- ----------------------

Effect of exchange rate
changes on cash and cash
equivalents (501) (1,185) (850) (1,953)
------------------- ----------------------
Change in cash and cash
equivalents 1,685 57,223 16,373 62,475
Cash and cash equivalents
- Beginning of period 112,892 87,304 98,204 82,052
------------------- ----------------------
Cash and cash equivalents
- End of period $114,577 $144,527 $114,577 $144,527
------------------- ----------------------
------------------- ----------------------

HUB INTERNATIONAL LIMITED
Non-cash stock based compensation
For the three months and six months ended June 30, 2005 and 2004
(in thousands of U.S. dollars)

Our non-cash stock based compensation includes stock options and
restricted share units for senior employees as well as amortization of
$8.7 million, or $0.25 per diluted share for the second quarter 2005
and $15.9 million or $ 0.43 per diluted share for the first 6 months
2005, of non-cash stock based compensation related to the estimated
earnout due to management of Talbot. In response to investor interest
in the true impact of these costs, we began recognizing the expense of
non-cash stock based compensation during 2003. Options vest evenly
over three years and expire in seven years from issuance. Shares
derived from the options are held in escrow for a period of five years
from the date the options are granted, subject to early releases in
certain circumstances. Restricted share units vest over periods
ranging from 46 months to 95 months. Our policy is to expense the fair
value of non-cash stock based compensation to employees over the
period in which entitlement to the compensation vests. The amount of
expense recognized in each year related to stock options will vary
with respect to exercise and forfeiture of options.

Non-cash stock based compensation for the three months and six months
ended June 30, 2005 and 2004 is comprised of the following:

Second quarter First six months
2005 2004 2005 2004
-------- ------- -------- -------
Non-cash stock based compensation:
Stock options granted June 2002 $389 $510 $851 $1,001
Stock options granted February
2003 90 128 190 230
Stock based compensation granted
for 2003 bonuses 780 634 1,514 1,267
Restricted share units 661 429 1,162 817
Other 11 - 18 -
----------------- ----------------
1,931 1,701 3,735 3,315
Non-cash stock based compensation
related to
Talbot acquisition 8,721 - 15,915 -
----------------- ----------------
$10,652 $1,701 $19,650 $3,315
----------------- ----------------
----------------- ----------------

The Company estimates the non-cash stock based compensation expense
for 2005 through 2010 will be:


Year ended December 31, 2005 2006 2007 2008 2009 2010
----------------------------------------------
Stock options granted
June 2002 $851 $- $- $- $- $-
Stock options granted
February 2003 366 - - - - -
Stock based compensation
granted for 2003
bonuses 2,671 2,227 2,136 2,136 2,136 2,062
Stock based compensation
regarding Talbot
acquisition 27,780 9,293 1,668 - - -
Restricted share
units 2,501 2,670 2,635 2,635 735 115
Other 114 19 5 - - -
------------------------------------------------
$34,283 $14,209 $6,444 $4,771 $2,871 $2,177
------------------------------------------------
------------------------------------------------

In total, as of June 30, 2005, we had issued and outstanding
approximately 1.4 million stock options at a weighted average exercise
price of $15.35. Our closing share price on the New York Stock
Exchange was $19.35 on June 30, 2005.


HUB INTERNATIONAL LIMITED
Consolidated Statements of Normalized Net Earnings
For the three months and six months ended June 30, 2005 and 2004
(in thousands of U.S. dollars, except per share amounts)


Normalized Net Earnings -
Three Months 2005 2004 2005 2004
---------------------- ------------------------
(000's) (000's) Diluted EPS Diluted EPS
---------------------- ------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)

Reported net earnings
(GAAP) for the three
months ended June 30 $4,269 $11,591 $0.12 $0.35
Impact of non-cash
stock based
compensation - Talbot 8,721 - 0.25 -
Impact of foreign
exchange (420) (219) (0.01) (0.01)
---------------------- ------------------------
$12,570 $11,372 $0.36 $0.34
---------------------- ------------------------

Normalized Net
Earnings - Six Months 2005 2004 2005 2004
---------------------- ------------------------
(000's) (000's) Diluted EPS Diluted EPS
---------------------- ------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)

Reported net earnings
(GAAP) for the six
months ended June 30 $20,749 $21,214 $0.59 $0.64
Impact of non-cash
stock based
compensation - Talbot 15,915 - 0.43 -
Impact of gain on
forgiveness of debt (2,925) - (0.08) -
Impact on gain on
disposition of assets
of certain brokerages (1,914) (414) (0.05) (0.01)
Impact of foreign
exchange (1,089) (1,084) (0.03) (0.03)
Impact of write-off of
trademarks - 1,656 - 0.05
---------------------- ------------------------
$30,736 $21,372 $0.86 $0.65
---------------------- ------------------------

Note: Normalized net earnings is a non-GAAP measure.



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