You should read the selected consolidated financial data set forth below in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the Consolidated Financial Statements and the related notes contained in this report. The Company derived the following selected financial information (excluding Other Data) as of December 31, 2012 and 2011 and for each of the three years in the period ended December 31, 2012 from the Company’s audited Consolidated Financial Statements and the related notes contained in this report. The Company derived the selected financial information (excluding Other Data) as of December 31, 2010, 2009, and 2008 from the Company’s audited Consolidated Financial Statements and the related notes not contained in this report.
b) Because the Company’s revenues include amounts that are passed through to producers as commissions and fees, the Company’s internal net revenue growth represented the Company’s internal growth rate, as defined in footnote (a) above, less the amount of commissions and fees included in operating expenses.
As of December 31, 2012 the Company has accrued $5.8 million to the extent a business’s earnings exceed certain performance targets. The accrual, which was included within fees to principals expense, relates to the incentive plan for the 12-month performance period ending December 31, 2012, the terms of which were materially consistent with previous PIPs. Cash incentive payments will be made in the first quarter of 2013.
Compensation expense-employees. Compensation expense-employees increased $24.2 million for the year ended December 31, 2012 compared with 2011. Approximately $17.7 million of the increase was due to compensation expense-employees from the net impact of acquisitions and dispositions affecting the current period. Excluding this impact and the reversal of previously-recognized expenses related to certain RSUs of $2.5 million, compensation expense-employees in the CCG increased by $9.0 million, due to increased headcount at existing businesses, increases in salaries and wages and certain management contract buyouts, in which fees to principals expense was converted into compensation expense-employees.
Loss on sale of businesses. During the year ended December 31, 2012, the CCG recognized a loss of less than $0.1 million on the disposal of one business, whereas during the year ended December 31, 2011, the CCG recognized a gain of $0.1 million on the disposal of one business.
The ASG accounted for 23.0%, 24.6% and 22.0% of NFP’s revenue for the years ended December 31, 2012, 2011 and 2010, respectively. The financial information below relates to the ASG for the periods presented (in thousands, except for percentages):
Liquidity refers to the ability of an enterprise to generate adequate cash to meet its needs for cash. NFP derives liquidity primarily from cash generated by the Company’s businesses and from financing activities.
See “Note 4-Commitments and Contingencies” to the Company’s Consolidated Financial Statements contained in this report for further discussion regarding the Company’s legal matters.
The actual termination of the management contract is reflected as a change “in the extent or manner in which the long lived asset is being used,” and the contract is therefore impaired in accordance with ASC 360. This is reflected in NFP’s consolidated statements of income as an impairment of goodwill and intangible assets.
For a discussion of recently adopted accounting standards, please see “Note 1-Summary of Significant Accounting Policies” to the Company’s Consolidated Financial Statements contained in this report.