Summary
Arthur J. Gallagher & Co. (AJG) filed an 8-K on December 8, 2006, reporting on two key events that occurred on December 7, 2006. The company amended its lease for its Itasca, Illinois headquarters, extending the term from 2011 to 2018 and adjusting rent. Concurrently, AJG's indirect subsidiary participated in the sale of the office building where its headquarters are located. The sale involved the building and parking structure at Two Pierce Place, Itasca, Illinois, for a total purchase price of $83.8 million, plus reimbursement of a $4.8 million prepayment fee on the seller's mortgage. Gallagher is entitled to approximately $8.0 million in cash proceeds from the sale due to its ownership stake, but expects to record a pre-tax loss of approximately $4.5 million in the fourth quarter of 2006 within its Financial Services Segment. Despite this loss and other factors impacting the Financial Services Segment, Gallagher reiterated its previously issued earnings per share guidance for the fourth quarter of 2006, citing the anticipated average oil price and the phase-out of IRC Section 29 tax credits.
Key Highlights
- 1AJG amended its lease for its Itasca, Illinois headquarters, extending the term to February 28, 2018.
- 2The company participated in the sale of its headquarters building and associated parking structure.
- 3The sale price for the building and parking structure was $83.8 million, with an additional $4.8 million reimbursement for mortgage prepayment.
- 4Gallagher expects to receive approximately $8.0 million in cash proceeds from the sale.
- 5A pre-tax loss of approximately $4.5 million is anticipated in the Financial Services Segment for Q4 2006 related to the sale.
- 6Despite the sale impact and other factors (oil prices, Section 29 tax credit phase-out), AJG reaffirmed its Q4 2006 EPS guidance for the Financial Services Segment.