Form 10-Q Crawford & Company
Quarter Ended June 30, 1995 Page 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Financial Statements:
Year-to-Date Unaudited Consolidated Statements of Income for the Six-Month
Periods ended June 30, 1995 and June 30, 1994:
(In Thousand of Dollars
Except Share and Per Share Data)
<TABLE>
1995 1994
<S> <C> <C>
Revenues $299,512 $296,616
Costs and Expenses:
Cost of services provided, less reimbursed expenses
of $17,073 in 1995 and $15,700 in 1994 205,200 203,106
Selling, general and administrative expense 67,402 59,140
Total costs and expenses 272,602 262,246
Income Before Income Taxes 26,910 34,370
Provision for Income Taxes 10,852 13,850
Net Income $16,058 $20,520
Earnings Per Share $0.46 $0.57
Weighted Average Shares Outstanding 34,889,009 36,043,364
Declared Dividends Per Share - Class A Common $0.29 $0.28
Declared Dividends Per Share - Class B Common $0.27 $0.25
</TABLE>
(See accompanying notes to condensed financial statements)
Form 10-Q Crawford & Company
Quarter Ended June 30, 1995 Page 3
Quarterly Unaudited Consolidated Statements of Income for the Three-Month
Periods ended June 30, 1995 and June 30, 1994:
(In Thousand of Dollars
Except Share and Per Share Data)
<TABLE>
<S> <C> <C>
1995 1994
Revenues $150,863 $147,824
Costs and Expenses:
Cost of services provided, less reimbursed expenses
of $8,695 in 1995 and $7,328 in 1994 104,235 100,917
Selling, general and administrative expense 35,602 29,429
Total costs and expenses 139,837 130,346
Income Before Income Taxes 11,026 17,478
Provision for Income Taxes 4,446 7,045
Net Income $6,580 $10,433
Earnings Per Share $0.19 $0.29
Weighted Average Shares Outstanding 34,851,171 36,032,567
Declared Dividends Per Share - Class A Common $0.145 $0.140
Declared Dividends Per Share - Class B Common $0.135 $0.125
</TABLE>
(See accompanying notes to condensed financial statements)
Form 10-Q Crawford & Company
Quarter Ended June 30, 1995 Page 4
Consolidated Balance Sheets as of June 30, 1995 and December 31, 1994:
(In Thousands of Dollars)
<TABLE>
<S> <C> <C>
(Unaudited)
June 30 December 31
1995 1994
ASSETS
Current Assets:
Cash and cash equivalents $22,649 $38,968
Short-term investments, at fair value 9,976 18,766
Accounts receivable, less allowance for doubtful
accounts of $10,688 in 1995 and $10,220 in 1994 110,416 104,942
Unbilled revenues, at estimated billable amounts 60,905 59,601
Prepaid income taxes 13,110 12,147
Prepaid expenses and other current assets 12,172 9,215
Total current assets 229,228 243,639
Property and Equipment:
Property and equipment, at cost: 121,186 112,513
Less accumulated depreciation and amortization (82,318) (75,065)
Net property and equipment 38,868 37,448
Other Assets:
Intangible assets arising from acquisitions, less
accumulated amortization of $6,598 in 1995
and $5,833 in 1994 53,873 51,684
Prepaid pension obligation 35,054 23,500
Other 5,374 6,623
Total other assets 94,301 81,807
TOTAL ASSETS $362,397 $362,894
</TABLE>
(See accompanying notes to condensed financial statements)
Form 10-Q Crawford & Company
Quarter Ended June 30, 1995 Page 5
Consolidated Balance Sheets - (Continued)
(In Thousands of Dollars)
<TABLE>
<S> <C> <C>
(Unaudited)
June 30 December 31
1995 1994
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Short-term borrowings $8,786 $9,123
Accounts payable 11,611 10,999
Accrued compensation and related costs 26,289 39,219
Other accrued liabilities 31,374 31,167
Deferred revenues 28,130 25,813
Current installments of long-term debt 1,474 1,298
Total current liabilities 107,664 117,619
Noncurrent Liabilities:
Long-term debt, less current installments 10,237 9,962
Deferred income taxes 19,020 14,720
Postretirement medical benefit obligation 8,314 7,440
Total noncurrent liabilities 37,571 32,122
Shareholders' Investment:
Class A Common Stock, $1.00 par value; 50,000,000
shares authorized; 17,406,248 and 17,449,130
shares issued in 1995 and 1994, respectively 17,406 17,449
Class B Common Stock, $1.00 par value; 50,000,000
shares authorized; 17,466,548 and 17,580,213
shares issued in 1995 and 1994, respectively 17,467 17,580
Retained earnings 184,424 180,772
Cumulative translation adjustment (2,135) (2,648)
Total shareholders' investment 217,162 213,153
TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT $362,397 $362,894
</TABLE>
(See accompanying notes to condensed financial statements)
Form 10-Q Crawford & Company
Quarter Ended June 30, 1995 Page 6
Unaudited Consolidated Statements of Cash Flows for the Six-Month Periods Ended
June 30, 1995 and June 30, 1994:
(In Thousands of Dollars)
<TABLE>
<S> <C> <C>
1995 1994
Cash Flows From Operating Activities:
Net income $16,058 $20,520
Reconciliation of net income to net cash
provided by operating activities:
Depreciation and amortization 8,450 7,489
Deferred income taxes 4,159 (433)
Loss on sales of property and equipment 246 44
Changes in operating assets and liabilities:
Short-term investments 8,790 2,409
Accounts receivable, net (4,913) (9,579)
Unbilled revenues (817) (2,791)
Prepaid or accrued income taxes (1,672) 4,581
Accounts payable and accrued liabilities (9,411) 223
Deferred revenues 2,317 3,285
Prepaid expenses and other assets (18,782) (6,653)
Net cash provided by operating activities 4,425 19,095
Cash Flows From Investing Activities:
Acquisitions of property and equipment (8,004) (5,201)
Net assets of companies acquired 0 (2,350)
Sales of property and equipment 92 128
Net cash used in investing activities (7,912) (7,423)
Cash Flows From Financing Activities:
Dividends paid (9,774) (9,559)
Repurchase of common stock (3,512) (3,147)
Issuance of common stock 724 417
Increase (Decrease) in short-term borrowings (775) 642
Increase (Decrease) in long-term debt 336 (40)
Net cash used in financing activities (13,001) (11,687)
Effect of exchange rate changes on cash and cash
equivalents 169 (205)
Decrease in cash and cash equivalents (16,319) (220)
Cash and cash equivalents at beginning of period 38,968 40,111
Cash and cash equivalents at end of period $22,649 $39,891
Cash payments for income taxes $8,209 $9,565
</TABLE>
(See accompanying notes to condensed financial statements)
Form 10-Q Crawford & Company
Quarter Ended June 30, 1995 Page 7
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. The condensed financial statements included herein have been prepared
by the Registrant, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. These condensed financial statements
should be read in conjunction with the financial statements and related notes
contained in the Registrant's annual report on Form 10-K for the fiscal year
ended December 31, 1994.
In the opinion of management, the condensed financial statements
included herein contain all adjustments (consisting of normal recurring
accruals) necessary to present fairly the financial position of the
Registrant as of June 30, 1995, and the results of its operations and cash
flows for the three and six-month periods then ended.
2. The results of operations for the six-month period ended June 30, 1995,
are not necessarily indicative of the results to be expected during the
balance of the year ending December 31, 1995.
3. Net income per share is computed by dividing net income by the weighted
average number of shares outstanding during the respective periods. The
effect of common stock equivalents was less than 3% dilutive in both 1995 and
1994 and, therefore, the effect on primary earnings per share has not been
shown.
4. The Company considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents for purposes of the
Statements of Cash Flows.
Form 10-Q Crawford & Company
Quarter Ended June 30, 1995 Page 8
PART 1 - FINANCIAL INFORMATION - (Continued)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Financial Condition
The Company's current assets at June 30, 1995, exceeded current liabilities
by $121.6 million, a decrease of $4.5 million from the working capital
balance at December 31, 1994. Cash and cash equivalents at June 30, 1995,
totaled $22.6 million, a decrease of $16.3 million from the balance at the
end of 1994. Short-term investments totaled $10.0 million at June 30, 1995,
decreasing from $18.8 million at December 31, 1994. Cash was generated
primarily from operating activities, while the principal uses of cash were
for dividends paid to shareholders, acquisitions of property and equipment
and repurchases of common stock. At June 30, 1995 and December 31, 1994,
the ratio of current assets to current liabilities was 2.1 to 1.
During 1994, the Company announced that it may, from time to time, purchase
up to an aggregate of 2,000,000 shares of its Class A and Class B Common
Stock through open market purchases. Through June 30, 1995, the Company has
reacquired 691,900 shares of its Class A Common Stock and 625,100 shares of
its Class B Common Stock at an average cost of $15.43 and $15.62 per share,
respectively.
The Company maintains credit lines with banks in order to meet seasonal
working capital requirements of its foreign subsidiaries or other financing
needs that may arise. Short-term borrowings outstanding as of June 30, 1995,
totaled $8.8 million, as compared to $9.1 million at the end of 1994.
Results of Operations
Revenues for the first half of 1995 were $299.5 million, compared with $296.6
million for the same period in 1994. For the second quarter of 1995,
revenues were $150.9 million, an increase of 2.1% compared with $147.8
million for the same period in 1994. Unit volume, measured principally by
chargeable hours and excluding acquisitions, decreased 5.8% and 6.2%, during
the first six months and second quarter of 1995, respectively, as compared
to related 1994 periods. But these decreases were partially offset by
changes in the mix of services and in the rates charged for those services,
the combined effects of which increased revenues by approximately 1.2% in the
first half of 1995 and .9% in the second quarter. The Company's fourth
quarter 1994 acquisitions of the Brocklehurst Group and Arnold & Green Ltd.,
two loss adjusting firms based in the United Kingdom, and the acquisition of
Finnamore & Partners, Ltd., a Canadian loss adjusting firm, in the second
quarter of 1994, increased revenues by 5.6% and 7.4%, during the first six
months and second quarter of 1995, respectively.
Form 10-Q Crawford & Company
Quarter Ended June 30, 1995 Page 9
PART 1 - FINANCIAL INFORMATION - (Continued)
Domestic revenues from Claims Services to insurance companies and Risk
Management Services to self-insured clients totaled $200.2 million for the
first half of 1995, down 1.1% from related 1994 revenues of $202.4 million.
Second quarter 1995 revenues totaled $98.4 million, a decrease of 1.6% from
the same period in 1994. These declines reflect lower claims frequency
throughout the property and casualty insurance industry and increased
competition in the self-insured corporate market. Revenues produced in the
first six months of 1995 by the Company's catastrophe adjusters were $15.3
million. This was approximately $5.6 million less than catastrophe revenues
reported in the first half of 1994, when the Company was involved in
completing major projects, including the Los Angeles earthquake and the
handling of winter storm losses in the Northeast. In the second quarter of
1995, revenues produced by the Company's catastrophe adjusters totaled $9.1
million, as compared to $11.6 million in the 1994 second quarter.
Domestic revenues from HealthCare Management Services, which serves both the
insurance company and self-insured markets, totaled $48.2 million for the
first half of 1995, a decrease of 6.9% from the first half of 1994. For the
second quarter these revenues were $23.5 million, decreasing from the $25.3
million reported in 1994. The demand for these services continues to be
affected by regulatory changes and other medical cost containment
alternatives such as health maintenance organizations.
Revenues from the Company's international operations increased to $35.8
million in the first half of 1995, from $21.6 million for the same period in
1994. Second quarter 1995 revenues totaled $19.9 million, an increase of
82.6% over related 1994 revenues of $10.9 million. These increases result
primarily from the Company's late 1994 acquisitions in the United Kingdom
and strong Canadian growth.
The percentage of revenue derived from each of the Company's
principal service categories is shown in the following schedule:
<TABLE>
<S> <C> <C> <C> <C>
Six-Month Period Three-Month Period
Ended June 30 Ended June 30
1995 1994 1995 1994
Domestic Claims Services (including
Risk Management Services) 71.9% 75.3% 71.4% 75.5%
Domestic HealthCare Management
Services 16.1 17.4 15.4 17.1
International Operations 12.0 7.3 13.2 7.4
100.0% 100.0% 100.0% 100.0%
</TABLE>
Form 10-Q Crawford & Company
Quarter Ended June 30, 1995 Page 10
PART 1 - FINANCIAL INFORMATION - (Continued)
Results of Operations (continued)
Effective January 1, 1995, the Company changed its method of reporting its
principal service categories to correspond with internal management
reporting. Accordingly, risk control and information consulting services,
previously disclosed as other risk management services, are now reported as
a component of domestic claims services, along with certain healthcare
management services which are closely aligned with the Company's risk
management services. International claims and healthcare management
services, previously reported as components of claims services and healthcare
management services, are now reported as international operations.
The Company's most significant expense is the compensation of its employees,
including related payroll taxes and fringe benefits. Such expense
approximated 63.8% of revenues in the first half of 1995, compared to 64.7%
for the first six months of 1994, and 64.4% of revenues in the current
quarter, unchanged as compared to the percentage of second quarter 1994
revenues. The decrease for the first half of 1995 is due primarily to
reduced incentive compensation and group medical expenses.
Expenses other than compensation and related payroll taxes and fringe
benefits approximated 27.2% of revenues for the first six months of 1995,
compared to 23.7% of revenues for the same period in 1994, and 28.3% of
second quarter 1995 revenues, as compared to 23.8% of related 1994 revenues.
These increases resulted principally from an increase in systems development
costs associated with the development of systems designed to enhance the
Company's service delivery to its clients and increases in other operating
costs related to the Company's late 1994 acquisitions in the United Kingdom.
Form 10-Q Crawford & Company
Quarter Ended June 30, 1995 Page 11
Review by Independent Public Accountants.
Arthur Andersen LLP, independent public accountants, has performed a review
of the interim financial information contained herein in accordance with
established professional standards and procedures for such a review and has
issued its report with respect thereto (see page 12).
Form 10-Q Crawford & Company
Quarter Ended June 30, 1995 Page 12
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and
Board of Directors of
Crawford & Company:
We have reviewed the accompanying condensed consolidated balance sheet of
CRAWFORD & COMPANY (a Georgia corporation) AND SUBSIDIARIES as of June 30,
1995 and the related condensed consolidated statements of income for the
three and six-month periods ended June 30, 1995 and the related condensed
consolidated statements of cash flows for the six-month periods ended
June 30, 1995 and 1994. These financial statements are the responsibility
of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the financial statements referred to above for them to be
in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Crawford & Company and
subsidiaries as of December 31, 1994 (not presented herein), and in our
report dated January 31, 1995, we expressed an unqualified opinion on that
statement. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 31, 1994 is fairly stated
in all material respects in relation to the consolidated balance sheet from
which it has been derived.
Arthur Andersen LLP
Atlanta, Georgia
August 11, 1995
Form 10-Q Crawford & Company
Quarter Ended June 30, 1995 Page 13
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On April 25, 1995, the Registrant held its Annual Meeting of
Shareholders. At the Annual Meeting, the Class B Shareholders,
the only class entitled to vote at the meeting, voted on the
election of ten (10) directors for a one year term. The results
of that voting are as follows:
Election of Directors
Name Votes For Votes Withheld
Virginia C. Crawford 16,904,428 12,594
Forrest L. Minix 16,904,717 12,305
J. Hicks Lanier 16,905,329 11,693
Charles Flather 16,905,329 11,693
Jesse S. Hall 16,905,229 11,793
Linda K. Crawford 16,903,805 13,217
Jesse C. Crawford 16,904,005 13,017
Larry L. Prince 16,902,064 14,958
William R. Goodell 16,901,314 15,708
Dennis A. Smith 16,904,447 12,575
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
23.1 Consent of Arthur Andersen LLP
27.1 Financial Data Schedule
(b) Reports on Form 8-K
Registrant filed no reports on Form 8-K during the period
covered by this report.
Form 10-Q Crawford & Company
Quarter Ended June 30, 1995 Page 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Crawford & Company
(Registrant)
Date: August 11, 1995 F. L. Minix
Chairman of the Board and
Chief Executive Officer
Date: August 11, 1995 D. R. Chapman
Executive Vice President - Finance
(Principal Financial Officer)
Date: August 11, 1995 J. F. Giblin
Vice President and Controller
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000025475
<NAME> CRAWFORD & COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 22,649
<SECURITIES> 9,976
<RECEIVABLES> 171,321
<ALLOWANCES> 10,688
<INVENTORY> 0
<CURRENT-ASSETS> 229,228
<PP&E> 121,186
<DEPRECIATION> 82,318
<TOTAL-ASSETS> 362,397
<CURRENT-LIABILITIES> 107,664
<BONDS> 10,237
<COMMON> 34,873
0
0
<OTHER-SE> 182,289
<TOTAL-LIABILITY-AND-EQUITY> 362,397
<SALES> 0
<TOTAL-REVENUES> 299,512
<CGS> 0
<TOTAL-COSTS> 205,200
<OTHER-EXPENSES> 67,402
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 26,910
<INCOME-TAX> 10,852
<INCOME-CONTINUING> 16,058
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,058
<EPS-PRIMARY> .46
<EPS-DILUTED> 0
</TABLE>
Form 10-Q Crawford & Company
Quarter Ended June 30, 1995 Page 15
To the Stockholders and
Board of Directors of
Crawford & Company:
We are aware that Crawford & Company has incorporated by reference in its
previously filed Registration Statement File No. 2-78989, Registration
Statement File No. 33-22595, Registration Statement File No. 33-47536, and
Registration Statement File No. 33-36116 its Form 10-Q for the quarter ended
June 30, 1995, which includes our report dated August 11, 1995 covering the
unaudited interim financial information contained therein. Pursuant to
Regulation C of the Securities Act of 1933 (the "Act"), that report is not
considered a part of the Registration Statement prepared or certified by our
firm or a report prepared or certified by our firm within the meaning of
Sections 7 and 11 of the Act.
Arthur Andersen LLP
Atlanta, Georgia
August 11, 1995
Exhibit 23.1
