Form 10-Q Crawford & Company
Quarter Ended March 31, 1997 Page 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Financial Statements:
Year-to-Date Unaudited Consolidated Statements of Income for the Three-Month
Periods ended March 31, 1997 and March 31, 1996:
(In Thousands of Dollars
Except Share and Per Share Data)
<TABLE>
<S> <C> <C>
1997 1996
Revenues $165,951 $161,563
Costs and Expenses:
Cost of services provided, less reimbursed expenses
of $8,575 in 1997 and $7,784 in 1996 119,594 116,804
Selling, general and administrative expenses 27,075 27,281
Restructuring charge 13,000 0
Total costs and expenses 159,669 144,085
Income Before Income Taxes and Minority Interest 6,282 17,478
Provision for Income Taxes 3,166 7,047
Income Before Minority Interest 3,116 10,431
Minority Interest in Loss of Joint Venture 3,199 0
Net Income $6,315 $10,431
Earnings Per Share $0.13 $0.20
Weighted Average Shares Outstanding 50,030,061 51,465,714
Declared Dividends Per Share - Class A Common Stock $0.110 $0.100
Declared Dividends Per Share - Class B Common Stock $0.110 $0.097
</TABLE>
(See accompanying notes to condensed financial statements)
Form 10-Q Crawford & Company
Quarter Ended March 31, 1997 Page 3
Consolidated Balance Sheets as of March 31, 1997 and December 31, 1996:
(In Thousands of Dollars)
<TABLE>
<S> <C> <C>
(Unaudited)
March 31 December 31
1997 1996
ASSETS
Current Assets:
Cash and cash equivalents $64,640 $55,485
Accounts receivable, less allowance for doubtful
accounts of $15,005 in 1997 and $11,692 in 1996 128,085 112,975
Unbilled revenues, at estimated billable amounts 93,646 68,593
Prepaid income taxes 2,677 2,677
Prepaid expenses and other current assets 13,150 7,166
Total current assets 302,198 246,896
Property and Equipment:
Property and equipment, at cost: 154,416 123,901
Less accumulated depreciation and amortization (112,402) (92,264)
Net property and equipment 42,014 31,637
Other Assets:
Intangible assets arising from acquisitions,
less accumulated amortization of $9,193
in 1997 and $8,768 in 1996 51,934 52,266
Prepaid pension obligation 42,759 41,405
Other 6,249 5,881
Total other assets 100,942 99,552
TOTAL ASSETS $445,154 $378,085
</TABLE>
(See accompanying notes to condensed financial statements)
Form 10-Q Crawford & Company
Quarter Ended March 31, 1997 Page 4
Consolidated Balance Sheets - (Continued)
(In Thousands of Dollars)
<TABLE>
<S> <C> <C>
(Unaudited)
March 31 December 31
1997 1996
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Short-term borrowings $19,028 $8,437
Accounts payable 16,052 13,329
Accrued compensation and related costs 27,386 30,811
Other accrued liabilities 59,409 32,645
Deferred revenues 15,992 16,300
Current installments of long-term debt 9,717 9,130
Total current liabilities 147,584 110,652
Noncurrent Liabilities:
Long-term debt, less current installments 4,330 376
Deferred income taxes 13,810 13,810
Deferred revenues 12,921 12,902
Postretirement medical benefit obligation 8,155 8,037
Self-insured risks 9,075 8,172
Minority interest 27,719 0
Other 5,851 2,600
Total noncurrent liabilities 81,861 45,897
Shareholders' Investment:
Class A Common Stock, $1.00 par value; 50,000,000
shares authorized; 24,285,960 and 24,392,393
shares issued in 1997 and 1996, respectively 24,286 24,392
Class B Common Stock, $1.00 par value; 50,000,000
shares authorized; 25,677,343 and 25,718,919
shares issued in 1997 and 1996, respectively 25,677 25,719
Retained earnings 171,370 173,708
Cumulative translation adjustment (5,624) (2,283)
Total shareholders' investment 215,709 221,536
TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT $445,154 $378,085
(See accompanying notes to condensed financial statements)
Form 10-Q Crawford & Company
Quarter Ended March 31, 1997 Page 5
Unaudited Consolidated Statements of Cash Flows for the Three-Month Periods
Ended March 31, 1997 and March 31, 1996:
(In Thousands of Dollars)
</TABLE>
<TABLE>
<S> <C> <C>
1997 1996
Cash Flows From Operating Activities:
Net income $6,315 $10,431
Reconciliation of net income to net cash
provided by operating activities:
Minority interest in loss of joint venture (3,199) 0
Depreciation and amortization 3,800 4,163
Deferred income taxes (6,007) 2,547
Loss on sales of property and equipment 75 42
Changes in operating assets and liabilities,
net of effects of acquisitions:
Short-term investments 0 2,212
Accounts receivable, net 1,759 (727)
Unbilled revenues 4,910 (4,522)
Prepaid or accrued income taxes 4,416 3,477
Accounts payable and accrued liabilities 11,108 12,232
Deferred revenues (264) 328
Prepaid expenses and other assets (4,819) (7,099)
Net cash provided by operating activities 18,094 23,084
Cash Flows From Investing Activities:
Acquisitions of property and equipment (4,602) (2,148)
Proceeds from sales of property and equipment 142 23
Net cash used in investing activities (4,460) (2,125)
Cash Flows From Financing Activities:
Dividends paid (5,504) (5,085)
Repurchase of common stock (4,399) (6,644)
Issuance of common stock 1,103 306
Increase in short-term borrowings 1,410 483
(Decrease) increase in long-term debt (576) 102
Net cash used in financing activities (7,966) (10,838)
Effect of exchange rate changes on cash and
cash equivalents 3,487 (82)
Increase in cash and cash equivalents 9,155 10,039
Cash and cash equivalents at beginning of period 55,485 40,802
Cash and cash equivalents at end of period $64,640 $50,841
Cash payments for income taxes $1,494 $1,569
</TABLE>
(See accompanying notes to condensed financial statements)
Form 10-Q Crawford & Company
Quarter Ended March 31, 1997 Page 6
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, 1996.
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
March 31, 1997, and the results of its operations and cash flows for the
three-month period then ended.
2. The results of operations for the three-month period ended March 31, 1997,
are not necessarily indicative of the results to be expected during the
balance of the year ending December 31, 1997.
3. The Company completed the agreement signed December 19, 1996, with Swiss
Reinsurance Company (Swiss Re) to merge both companies' claims services firms
outside the United States into a new entity, Crawford-THG Limited, in which
the Company has a 60% controlling interest. The merger was accounted for as a
partial sale of the Company's 100% owned subsidiary, Crawford & Company
International (CCI), to Swiss Re and a partial acquisition of Swiss Re's 100%
owned subsidiary, Thomas Howell Group (THG), by the Company. Swiss Re's 40%
interest in the equity and net income/loss of the joint venture is reflected
in the accompanying financial statements as minority interest.
4. 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 1997
and 1996 and, therefore, the effect on primary earnings per share has not
been shown.
The Company plans to adopt SFAS No. 128 "Earnings per Share" effective
December 15, 1997. This statement will require dual presentation of basic
and diluted EPS on the face of the income statement for all entities with
complex capital structures and will require restatement of all prior-period
EPS data presented. If this statement had been effective January 1, 1997,
the basic EPS would be $0.126 per share and the diluted EPS would be $0.123
per share for the first quarter of 1997, compared to basic EPS of $0.203 per
share and diluted EPS of $0.199 per share for the first quarter of 1996.
Form 10-Q Crawford & Company
Quarter Ended March 31, 1997 Page 7
5. 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.
6. Certain reclassifications of prior year amounts have been made in the
accompanying balance sheets to conform to the current year presentation.
7. On February 4, 1997, the Board of Directors declared a three-for-two
stock split on both the Class A Common Stock and Class B Common Stock. The
split was effected in the form of a 50% stock dividend on the outstanding
shares of each class, paid on March 25, 1997 to stockholders of record on
March 11, 1997. All share and per share amounts in the accompanying financial
statements have been restated to give retroactive effect to the stock split.
Form 10-Q Crawford & Company
Quarter Ended March 31, 1997 Page 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Financial Condition
At March 31, 1997, current assets exceeded current liabilities by
approximately $154.6 million, an increase of $18.4 million from the working
capital balance at December 31, 1996. Cash and cash equivalents at March 31,
1997 totaled $64.6 million, increasing $9.2 million from the balance at the
end of 1996. The Company held no short-term investments at March 31, 1997 or
December 31, 1996. During the quarter, 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 March 31, 1997, the ratio of current assets to current
liabilities was 2.0 to 1 compared with 2.2 to 1 at the end of 1996.
During 1996, the Company announced a share repurchase program to acquire up
to an aggregate of 3,000,000 shares of its Class A or Class B Common Stock
through open market purchases. Through March 31, 1997, the Company has
reacquired 1,423,200 shares of its Class A Common Stock and 369,350 shares of
its Class B Common Stock at an average cost of $13.16 and $13.15 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 March 31, 1997,
totaled $19.0 million, as compared to $8.4 million at the end of 1996, due to
the acquisition of THG. The Company believes that its current financial
resources, together with funds generated from operations and existing and
potential long-term borrowing capabilities, will be sufficient to maintain
its current operations.
The Company does not engage in any hedging activities to compensate for the
effect of exchange rate fluctuations on the operating results of its foreign
subsidiaries. Foreign currency denominated debt is maintained primarily to
hedge the currency exposure of its net investment in foreign operations.
Shareholders' investment at March 31, 1997 was $215.7 million, compared with
$221.5 million at the end of 1996. Long-term debt totaled $4.3 million at
March 31, 1997, or approximately 2.0% of shareholders' investment.
Form 10-Q Crawford & Company
Quarter Ended March 31, 1997 Page 9
Results of Operations
Operating results for the Company's domestic and international operations for
the three-month periods ended March 31, 1997 and 1996 are as follows:
Domestic International Total
1997 1996 1997 1996 1997 1996
(In thousands of dollars, except percentages)
Revenues $139,907 $141,112 $ 26,044 $ 20,451 $165,951 $161,563
Compensation
& Benefits 89,433 92,751 16,424 12,166 105,857 104,917
% of Revenues 63.9% 65.7% 63.1% 59.5% 63.8% 64.9%
Expenses Other
than Compensation
& Benefits 31,653 32,870 9,159 6,298 40,812 39,168
% of Revenues 22.6% 23.3% 35.2% 30.8% 24.6% 24.2%
Pretax Income Before
Restructuring
Charge and
Minority Interest $ 18,821 $ 15,491 $ 461 $ 1,987 $ 19,282 $ 17,478
% of Revenues 13.5% 11.0% 1.8% 9.7% 11.6% 10.8%
For the first three months of 1997, revenues were $166.0 million, increasing
2.7% from the $161.6 million for the same period in 1996. Consolidated pretax
income before restructuring charge and minority interest increased 10.3%, or
$1.8 million, in first quarter 1997 compared to the same period in 1996. While
revenues increased 2.7%, costs increased only 1.8% due to efficiencies achieved
in operating and support activities throughout the Company.
DOMESTIC OPERATIONS
Revenues
Domestic revenues from insurance companies and self-insured clients benefited
from increased assignments arising from product liability claims, an area
which the Company has targeted for revenue growth. The generally mild 1997
winter, however, resulted in fewer weather-related property assignments than in
the 1996 period and that factor, together with lower workers compensation
claims, resulted in first quarter 1997 revenues of $139.9 million, off just
under 1% from the comparable quarter of 1996.
Form 10-Q Crawford & Company
Quarter Ended March 31, 1997 Page 10
Domestic unit volume, measured principally by chargeable hours and excluding
acquisitions, decreased approximately 4% in the first quarter of 1997 compared
to the first quarter of 1996. This decrease was partially offset by changes
in the mix of services provided and in the rates charged for those services,
the combined effects of which increased revenues by approximately 1.6% in the
first three months of 1997 compared to the comparable period in 1996. The
Company's acquisition of the Thomas Howell Group - Americas unit based in the
United States increased domestic revenues by 1.5% in the first quarter 1997
compared to first quarter 1996.
Revenues from domestic operations include $6.7 million in revenue from services
provided by the Company's catastrophe adjusters during the first quarter of
1997, principally to clients affected by natural or man-made disasters,
including hurricanes, floods, hail storms and oil spills. During the first
quarter of 1996, such revenue approximated $8.4 million. This decrease was
due to a decrease in weather-related claims in first quarter 1997 compared to
first quarter 1996.
Compensation and Fringe Benefits
The Company's most significant expense is the compensation of its employees,
including related payroll taxes and fringe benefits. Domestic compensation
expense decreased as a percent of revenues from 65.7% in the three months ended
March 31, 1996 to 63.9% in the same period in 1997. This decrease is due
primarily to a decline in administrative compensation expense.
Domestic salaries and wages of personnel other than contract managers decreased
by 3.6%, from $66.0 million in first quarter 1996 to $63.6 million in first
quarter 1997. Contract managers' compensation is based on the operating income
of the offices which they manage. Compensation of these managers totaled $10.4
million in the three-month period ended March 31, 1997, increasing 4.4% from
related 1996 costs of $10.0 million.
Payroll taxes and fringe benefits for domestic operations totaled $15.4 million
in first quarter 1997, decreasing 8.2% from first quarter 1996 costs of $16.8
million, due primarily to lower employee group medical costs.
Expenses Other than Compensation and Fringe Benefits
Domestic expenses other than compensation and related payroll taxes and fringe
benefits approximated 22.6% of revenues for the three months ended March 31,
1997, down from 23.3% of revenues for the same period in 1996. This decline is
largely due to lower rent and occupancy and automobile fleet costs.
Form 10-Q Crawford & Company
Quarter Ended March 31, 1997 Page 11
INTERNATIONAL OPERATIONS
Revenues
Revenues from the Company's international operations totaled $26.0 million for
the first quarter of 1997, a 27.3% increase from $20.5 million for the same
period in 1996. This increase is due to the THG acquisition, which contributed
international revenues of approximately $9 million in the quarter. Only one
month's results for THG's international operations were included in the first
quarter 1997, due to a two-month delay in reporting international results.
International revenues excluding acquired revenues declined by approximately
$3.5 million, due primarily to a decline in weather-related claims in the
United Kingdom and Canada and fewer disability management claim referrals
resulting from regulatory changes in the Canadian automobile liability market.
Compensation and Fringe Benefits
Compensation expense, including related payroll taxes and fringe benefits,
was also affected by the acquisition of THG, with the acquisition adding $5.2
million of compensation costs. Compensation expense exclusive of the
acquisition declined by $.9 million. As a percent of revenues, such expense
increased from 59.5% in the three months ended March 31, 1996 to 63.1% in the
comparable period in 1997. Salaries and wages of international personnel
increased from 48.9% of revenues in 1996 to 52.2% in 1997. Payroll taxes and
fringe benefits also increased as a percent of revenues, from 7.5% in 1996 to
9.3% in 1997, due primarily to more generous retirement programs maintained by
the acquired THG entities.
Expenses Other than Compensation and Fringe Benefits
Expenses other than compensation and related payroll taxes and fringe benefits
approximated 35.2% of international revenues for the first three months of
1997, compared to 30.8% of revenues for the same period in 1996. These
expenses comprise a higher percentage of revenues than the Company's domestic
operations due primarily to amortization of intangible assets and higher
automobile, occupancy and interest costs.
Form 10-Q Crawford & Company
Quarter Ended March 31, 1997 Page 12
Restructuring Charge
In connection with the THG acquisition, the Company recorded a pretax charge
of $13 million for personnel, facilities and other costs associated with
integration of the Company's international businesses. This one-time charge
will be recovered through lower operating costs within a year after the
restructuring is completed. After reflecting income tax benefits of $4.3
million and minority interest share of $3.5 million, this charge reduced
Crawford's first quarter 1997 net income by $5.2 million, or $0.10 per share.
Minority Interest
A minority interest benefit of $3.2 million was recorded in the first three
months of 1997, reflecting Swiss Re's 40% minority interest in the net loss
of Crawford-THG Limited.
Form 10-Q Crawford & Company
Quarter Ended March 31, 1997 Page 13
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 14).
Form 10-Q Crawford & Company
Quarter Ended March 31, 1997 Page 14
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and
Board of Directors of
Crawford & Company:
We have made a review of the accompanying condensed consolidated balance sheet
of CRAWFORD & COMPANY (a Georgia corporation) AND SUBSIDIARIES as of March 31,
1997 and the related condensed consolidated statements of income for the
three-month periods ended March 31, 1997 and 1996 and the related condensed
consolidated statements of cash flows for the three-month periods ended
March 31, 1997 and 1996. 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 obtaining an understanding of
the system for the preparation of interim financial information, 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 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, 1996 (not presented separately herein), and
in our report dated January 28, 1997, we expressed an unqualified opinion on
that balance sheet. In our opinion, the information set forth in the
accompanying condensed consolidated balance sheet as of December 31, 1996 is
fairly stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
/s/ Arthur Andersen LLP
Atlanta, Georgia
May 7, 1997
Form 10-Q Crawford & Company
Quarter Ended March 31, 1997 Page 15
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
3.1 Restated By-laws of the Registrant, as amended
15.1 Letter from 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 March 31, 1997 Page 16
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: May 9, 1997 /s/D. A. Smith
D. A. Smith
Chairman of the Board and
Chief Executive Officer
Date: May 9, 1997 /s/D. R. Chapman
D. R. Chapman
Executive Vice President - Finance
(Principal Financial Officer)
Date: May 9, 1997 /s/J. F. Giblin
J. F. Giblin
Vice President and Controller
(Principal Accounting Officer)
Form 10-Q Crawford & Company
Quarter Ended March 31, 1997 Page 17
INDEX TO EXHIBITS
Exhibit No. Description Sequential Page No.
3.1 Restated By-laws of the Registrant,
as amended 18
15.1 Letter from Arthur Andersen LLP 29
27.1 Financial Data Schedule (for SEC use only)
Form 10-Q Crawford & Company
Quarter Ended March 31, 1997 Page 18
RESTATED BY-LAWS
OF
CRAWFORD & COMPANY
(reflecting amendments made through April 22, 1997)
ARTICLE I
SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders
for the election of directors and for the transaction of such other business as
may properly come before the meeting shall be held at such place, either within
or without the State of Georgia, on such date, and at such time, as the Board
of Directors or its Executive Committee may by resolution provide, or if the
Board of Directors or Executive Committee fails to provide for such meeting by
action by April 1 of any year, then such meeting shall be held at the principal
office of the Company in Atlanta, Georgia at 11:00 a.m. on the third Tuesday
in April of each year, if not a legal holiday under the laws of the State of
Georgia, and if a legal holiday, on the next succeeding business day. The
Board of Directors may specify by resolution prior to any special meeting of
shareholders held within the year that such meeting shall be in lieu of the
annual meeting.
Section 2. Special Meetings. Except as otherwise provided by law,
special meetings of the shareholders may be called by the Board of Directors,
or its Executive Committee, or by the Chairman of the Board, or by the
President, or by the holders of record of at least one-fourth (1/4) of the
outstanding stock entitled to vote at such meeting. Such meeting may be held
in such place, either within or without the State of Georgia, as is stated in
the call and notice thereof.
Section 3. Notice of Meeting. Written notice of each meeting of
shareholders, stating the date, time and place of the meeting, and describing
the purpose or purposes of the meeting if it is a special meeting, shall be
mailed to each shareholder entitled to vote at such meeting at such
shareholder's address shown on the Company's current record of shareholders
not less than ten (10) nor more than sixty (60) days prior to such meeting.
If an amendment to the Articles of Incorporation, a plan of merger or share
exchange, or a sale of assets of the Company is to be considered at any annual
or special meeting, the written notice shall state that consideration of such
action is one of the purposes of such meeting. A shareholder may waive notice
of a meeting before or after the meeting. The waiver must be in writing, must
Form 10-Q Crawford & Company
Quarter Ended March 31, 1997 Page 19
be signed by the shareholder entitled to the notice, and must be delivered to
the Company for inclusion in the minutes or filing with the corporate records.
A shareholder's attendance at a meeting (1) waives objection to lack of notice
or defective notice of the meeting, unless the shareholder at the beginning of
the meeting objects to holding a meeting or transacting business at the
meeting, and (2) waives objection to consideration of a particular matter at
the meeting, that is not within the purpose or purposes described in the
meeting notice, unless the shareholder objects to considering the matter when
it is presented. Neither the business transacted at, nor the purpose of, any
meeting need be stated in a waiver of notice of a meeting, except that, with
respect to a waiver of notice of a meeting at which an amendment to the
Articles of Incorporation, a plan of merger or share exchange, sale of assets,
or any other action that would entitle the shareholder to dissenter's rights,
is submitted to a vote of shareholders, the same material that the Georgia
Business Corporation Code would have required to be sent to the shareholder
in a notice of the meeting must be delivered to the shareholder prior to such
shareholder's execution of the waiver of notice, or the waiver itself must
expressly waive the right to such material.
Notice of any meeting may be given by or at the direction of the
Secretary or by the person or persons calling such meeting, if the Secretary
fails to give such notice within twenty (20) days after the call of a meeting.
No notice need be given of the new date, time or place of reconvening any
adjourned meeting, if the new date, time and place to which the meeting is
adjourned are announced at the adjourned meeting before adjournment, except
that, if a new record date for the adjourned meeting is or must be fixed
under the applicable provisions of the Georgia Business Corporation Code,
notice of the adjourned meeting must be given to persons who are shareholders
as of the new record date.
Section 4. Quorum. A majority in interest of the issued and
outstanding capital stock of the Company entitled to vote at any annual or
special meeting of shareholders and represented either in person or by proxy
shall constitute a quorum for the transaction of business at such annual or
special meeting. Once a share is represented for any purpose at a meeting
other than solely to object to holding the meeting or transacting business
at the meeting, it is deemed present for quorum purposes for the remainder of
the meeting and for any adjournment of that meeting unless a new record date
is or must be (under the provisions of the Georgia Business Corporation Code)
set for that adjourned meeting. If a quorum shall not be present, the holders
of a majority of the stock represented may adjourn the meeting to some later
time. When a quorum is present, a vote of a majority of the stock represented
in person or by proxy shall determine any question, except as otherwise
provided by the Articles of Incorporation, these By-laws, or by law.
Section 5. Proxies. A shareholder may vote, execute consents,
waivers and releases and exercise any of his other rights, either in person
or by proxy duly executed in writing by the shareholder. A proxy for any
meeting shall be valid for any adjournment of such meeting.
Form 10-Q Crawford & Company
Quarter Ended March 31, 1997 Page 20
Section 6. Record Date. The Board shall have power to close the
stock transfer books of the Company for a period not to exceed fifty (50)
days preceding the date of any meeting of shareholders, or the date for
payment of any dividend, or the date for the allotment of rights, or the date
when any change or conversion or exchange of capital stock shall go into
effect; provided, however, that in lieu of closing the stock transfer books
as aforesaid, the Board may fix in advance a date, not exceeding seventy (70)
days preceding the date of any meeting of shareholders, or the date of the
payment of any dividend, or the date for the allotment of rights, or the date
when any change or conversion or exchange of capital stock shall go into
effect, as a record date for the determination of the shareholders entitled
to notice of, and to vote at, any such meeting, or entitled to receive payment
of any such dividend, or to any such allotment of rights, or to exercise the
rights in respect of any such change, conversion or exchange of capital stock,
and in such case only such shareholders as shall be shareholders of record on
the date so fixed shall be entitled to such notices of, and to vote at, such
meeting, or to receive payment of such dividend, or to receive such allotment
of rights, or to exercise such rights, as the case may be, notwithstanding any
transfer of any stock on the books of the Company after any such record date
fixed as aforesaid.
ARTICLE II
DIRECTORS
Section 1. Powers of Directors. The Board of Directors shall have
the management of the business of the Company, and, subject to any restrictions
imposed by law, by the charter, or by these By-Laws, may exercise all the power
of the corporation.
Section 2. Number and Term of Directors. The number of Directors
which shall constitute the full Board shall be nine (9), but the number may
be increased or decreased by amendment of these By-Laws either by the Board
of Directors or by the affirmative vote of a majority of the voting power of
the outstanding stock of the Company entitled to vote generally in the
election of Directors, voting as a class. At each annual meeting the
shareholders entitled to vote thereon shall elect the Directors, who shall
serve until their successors are elected and qualified; provided that the
shareholders entitled to vote thereon at any special meeting may remove any
Director, with or without cause, and may fill any vacancy created thereby.
Any vacancy in the Board of Directors occurring between meetings of the
shareholders may be filled by the vote of a majority of the remaining
Directors, though less than a quorum.
Section 3. Meetings of the Directors. The Board may by resolution
provide for the time and place of regular meetings, and no notice need be
given of such regular meetings. Special meetings of the Directors may be
called by the full Board of Directors, by the Executive Committee of the
Board of Directors, by the Chairman of the Board, by the President, or by at
Form 10-Q Crawford & Company
Quarter Ended March 31, 1997 Page 21
least any two (2) of the Directors. There shall be an annual meeting of the
Board of Directors at the place of and immediately following the annual
meeting of shareholders.
Section 4. Quorum. A majority of the number of Directors fixed as
herein provided or fixed as otherwise provided by law shall constitute a
quorum for the transaction of business at any meeting thereof. If a quorum
shall not be present, a majority of the Directors present at any such meeting
may adjourn the meeting to some later time.
Section 5. Action. When a quorum is present, the vote of a
majority of the Directors present shall be the act of the Board of Directors,
unless a greater vote is required by law, by the Articles of Incorporation or
by these By-Laws.
Section 6. Notice of Meetings. Notice of each meeting of the Board
shall be given by the Secretary by mailing the same at least five (5) days
before the meeting or by telephone or telegraph or in person at least two (2)
days before the meeting, to each Director, except that no notice need be given
of regular meetings fixed by the resolution of the Board. Any Director may
waive notice, either before or after any meeting, and shall be deemed to have
waived notice if he is present at the meeting. If the Secretary fails to give
such notice in the manner specified in the call, within five (5) days after
receiving notice of the call, the person or persons calling such meetings, or
any person designated by him or them may give such notice. Neither the
business to be transacted at or the purpose of any regular or special meeting
of the Board need be specified in the notice or waiver of notice of such
meeting.
Section 7. Committees. The Board may by resolution provide for an
Executive Committee and one or more other committees, each consisting of such
Directors as are designated by the Board. Any vacancy in such Committee may
be filled by the Board. Except as otherwise provided by law, by these By-Laws,
or by resolution of the full Board, such Executive Committee shall have and
may exercise the full powers of the Board of Directors during the interval
between the meetings of the Board and wherever by these By-Laws, or by
resolution of the shareholders, the Board of Directors is authorized to take
action or to make a determination, such action or determination may be taken
or made by such Executive Committee, unless these By-Laws or such resolution
expressly require that such action or determination be taken or made by the
full Board of Directors. The Executive Committee, or other Committee, shall
by resolution fix its own rules of procedure, and the time and place of its
meetings, and the person or persons who may call, and the method of call, of
its meetings.
Section 8. Compensation. A fee for serving as a Director and
reimbursement for expenses for attendance at meetings of the Board of
Directors or any Committee thereof may be fixed by resolution of the full
Board.
Form 10-Q Crawford & Company
Quarter Ended March 31, 1997 Page 22
Section 9. Qualifications of Directors
(a) Corporate Officers. Except as provided in subsection (c) below,
no person who is or has been an officer of the Company shall be eligible for
nomination or renomination as a member of the Board of Directors of the Company
at any time after the earlier of the following occurrences: (i) such person
has attained the age of seventy (70), or (ii) the second anniversary of the
date of such person's retirement, resignation or removal as an officer of the
Company.
(b) Other Directors. Except as provided in subsection (c) below,
no person shall be eligible for nomination or renomination as a member of the
Board of Directors of the Company at any time after the earlier of the
following occurrences: (i) such person has attained the age of seventy (70),
or (ii) the second anniversary of the termination by retirement of the
"Principal Employment" (as hereinafter defined) of such person. As used
herein, the term "Principal Employment" means the principal employment,
professional affiliation or business activity as set forth in the Company's
Proxy Statement dated March 24, 1986 (in the case of directors holding office
on April 22, 1986) or the first Proxy Statement of the Company that contains
such information (in the case of directors first elected after April 22, 1986).
(c) Exceptions. The provisions of subsections (a) and (b) above
shall not apply with respect to any person who, at the time of such person's
nomination or re-nomination as a member of the Board of Directors of the
Company, is the beneficial owner of ten percent (10%) or more of the voting
power of the outstanding stock of the Company entitled to vote generally in
the election of Directors.
Section 10. Honorary Directors. The Board of Directors shall have
the authority to appoint honorary members of the Board of Directors and to
further designate any such honorary member as an "Emeritus" officer of the
Company. It shall not be a requirement that any such honorary member be
qualified to be a member of the Board of Directors. An honorary member shall
be entitled to notice of and attendance at all meetings of the Board of
Directors and to participate in such meetings, except that such honorary member
shall have no voting rights nor shall such honorary member be included in
determining a quorum under Section 4.
ARTICLE III
OFFICERS
Section 1. Officers. The officers of the Company shall consist
of a Chairman of the Board, a corporate President, one or more business unit
Presidents, one or more Vice Presidents, a Secretary, a Comptroller, a
Treasurer, and such other officers or assistant officers as may be elected by
the Board of Directors. Any two (2) or more offices may be held by the same
Form 10-Q Crawford & Company
Quarter Ended March 31, 1997 Page 23
person. The Board may designate one or more Vice Presidents as Executive Vice
Presidents or Senior Vice Presidents, and may designate the order in which the
Vice Presidents may act.
Section 2. Chairman of the Board. Subject to the control of the
Board of Directors, the Chairman of the Board shall give supervision and
direction to the affairs of the Company, and shall be the chief executive
officer of the Company. He shall preside at all meetings of the shareholders
and of the Board of Directors.
Section 3. Corporate President. The corporate President shall be
the chief operating officer of the Company and shall give general supervision
and administrative direction to the affairs of the Company, subject to the
direction of the Board of Directors and Chairman of the Board.
Section 4. Business Unit President. A business unit President
shall be the chief operating officer of the designated major business unit of
the Corporation, reporting to the Chairman of the Board or the corporate
President, as the Board of Directors shall designate. Business units need
not have a President, and in the absence of such an officer, will be managed
by one or more Vice Presidents.
Section 5. Vice President. A Vice President shall have such
powers and perform such duties as the Board of Directors, corporate President,
or, in the case of the business unit Vice President, as that business unit
President may prescribe. A Vice President shall act in case of the absence or
disability of the corporate President or business unit President. If there is
more than one Vice President, such Vice Presidents shall act in the order of
precedence as set out by the Board of Directors, or in the absence of such
designation, as designated by the corporate President or business unit
President.
Section 6. Treasurer. The Treasurer shall receive and have the
custody of all moneys and securities of the Company, shall pay such dividends
as may be declared from time to time by the Board of Directors, and do and
perform all such duties as may be required of him by its Board of Directors,
and such other duties as usually devolve upon such officers.
Section 7. Comptroller. The Comptroller shall be responsible
for the maintenance of proper financial books and records of the Company.
Section 8. Secretary. The Secretary shall keep the minutes of the
of the meetings of the shareholders, the Directors, the Executive Committee,
and the other committees of the Board and shall have custody of the seal of
the Company.
Section 9. Assistant Secretaries. The Assistant Secretaries, in
the order of their seniority, shall, in the absence or disability of the
Secretary, perform the duties and exercise the powers of the Secretary, and
Form 10-Q Crawford & Company
Quarter Ended March 31, 1997 Page 24
shall perform such other duties as the Board of Directors shall prescribe.
Section 10. Assistant Treasurers. The Assistant Treasurers, in
the order of their seniority, shall, in the absence or disability of the
Treasurer, perform the duties and exercise the powers of the Treasurer, and
shall perform such other duties as the Board of Directors shall prescribe.
Section 11. Other Duties and Authorities. Each officer, employee
and agent shall have such other duties and authorities as may be conferred on
them by the Board of Directors and, subject to any directions of the Board, by
the Chairman of the Board, the corporate President, and any business unit
President.
Section 12. Removal. Any officer may be removed at any time by
the Board of Directors and such vacancy may be filled by the Board of
Directors. A contract of employment for a definite term shall not prevent
the removal of any officer; but this provision shall not prevent the making
of a contract of employment with any officer and any officer removed in breach
of his contract of employment shall have a cause of action therefor.
Section 13. Salary. The salaries of all officers of the Company
shall be fixed by the Board of Directors or by a duly authorized Committee of
the Board.
ARTICLE IV
DEPOSITORIES, SIGNATURES AND SEAL
Section 1. Depositories. All funds of the Company shall be
deposited in the name of the Company in such depository or depositories as
the Board may designate and shall be drawn out on checks, drafts or other
orders signed by such officer, officers, agent or agents as the Board may
from time to time authorize.
Section 2. Contracts. All contracts and other instruments shall
be signed on behalf of the Company by such officer, officers, agent or agents,
as the Board may from time to time by resolution provide.
Section 3. Seal. The corporate seal of the Company shall be as
follows, or in such other form as the Board may from time to time by
resolution provide:
Form 10-Q Crawford & Company
Quarter Ended March 31, 1997 Page 25
(Imprint of Seal)
If the seal is affixed to a document, the signature of the
Secretary or an Assistant Secretary shall attest the seal. The seal and its
attestation may be lithographed or otherwise printed on any document and shall
have, to the extent permitted by law, the same force and effect as if it had
been affixed and attested manually.
ARTICLE V
STOCK TRANSFERS
Section 1. Form and Execution of Certificates. The certificates
of shares of capital stock of the Company shall be in such form as may be
approved by the Board of Directors and shall be signed by the Chairman of the
Board or the President and by the Secretary or any Assistant Secretary or
Treasurer or any Assistant Treasurer, provided that any such certificate may
be signed by the facsimile of the signature of either or both of such officers
imprinted thereon if the same is countersigned by a transfer agent of the
Company, and provided further that certificates bearing the facsimile of the
signature of such officers imprinted thereon shall be valid in all respects as
if such person or persons were still in office, even though such officer or
officers have died or otherwise ceased to be officers.
Section 2. Transfer of Shares. Shares of stock in the Company
shall be transferable only on the books of the Company by proper transfer
signed by the holder of record thereof or by a person duly authorized to sign
for such holder of record. The Company or its transfer agent shall be
authorized to refuse any transfer unless and until it is furnished such
evidence as it may reasonably require showing that the requested transfer is
proper. Upon the surrender of a certificate for transfer of shares of stock,
such certificate shall at once be conspicuously marked on its face "Cancelled"
and filed with the permanent stock records of the Company.
Section 3. Lost, Destroyed or Mutilated Certificates. The Board
may by resolution provide for the issuance of certificates in lieu of lost,
destroyed or mutilated certificates and may authorize such officer or agent as
it may designate to determine the sufficiency of the evidence of such loss,
destruction or mutilation and the sufficiency of any security furnished to the
Company and to determine whether such duplicate certificate should be issued.
Form 10-Q Crawford & Company
Quarter Ended March 31, 1997 Page 26
Section 4. Transfer Agent and Registrar. The Board may appoint a
transfer agent or agents and a registrar or registrars of transfers, and may
require that all stock certificates bear the signature of such transfer agent
or such transfer agent and registrar.
ARTICLE VI
INDEMNIFICATION
Section 1. The Company shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the Company) by
reason of the fact that he is or was a director, officer, employee or agent of
the Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including court costs and
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
action or proceeding, had reasonable cause to believe that his conduct was
unlawful.
Section 2. The Company shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Company to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the Company, or is or was serving at the request
of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including court costs and attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action
or suit if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Company and except that no such
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Company unless and only to the
extent that the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such court shall deem proper.
Form 10-Q Crawford & Company
Quarter Ended March 31, 1997 Page 27
Section 3. To the extent that a director, officer, employee or
agent of the Company shall be successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in Sections 1 and 2 of this
Article, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including court costs and attorneys' fees)
actually and reasonably incurred by him in connection therewith.
Section 4. Any indemnification under Sections 1 and 2 of this
Article (unless ordered by a court) shall be made by the Company only as
authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances because
he has met the applicable standard of conduct set forth in said Sections 1 and
2. Such determination shall be made (1) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable, or,
even if obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (3) by the shareholders.
Section 5. Expenses incurred in defending a civil or criminal
action, suit or proceeding may be paid by the Company in advance of the final
disposition or such action, suit or proceeding as authorized by the Board of
Directors in the manner provided in Section 4 of this Article upon receipt of
an undertaking by or on behalf of the director, officer, employee or agent to
repay such amount unless it shall ultimately be determined that he is entitled
to be indemnified by the Company as authorized in this Article, and, if such
person is a director, upon receipt of a written affirmation of such director's
good faith belief that he or she has met the standards of conduct required by
the Georgia Business Corporation Code.
Section 6. The indemnification provided by this Article shall not
be deemed exclusive of any other rights to which those indemnified may be
entitled under any agreement, vote of shareholders or disinterested directors,
or otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
Section 7. The Board of Directors may authorize, by a vote of a
majority of the full Board, the Company to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
the Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the Company would have the power to indemnify him against such
liability under the provisions of this Article.
Form 10-Q Crawford & Company
Quarter Ended March 31, 1997 Page 28
ARTICLE VII
AMENDMENT
Section 1. The Board of Directors or the shareholders entitled to
vote thereon shall have the power to alter, amend or repeal the By-laws or
adopt new by-laws. The shareholders may prescribe that any by-law or by-laws
adopted by them shall not be altered, amended or repealed by the Board of
Directors. Action by the Board of Directors with respect to by-laws shall be
taken by an affirmative vote of a majority of all directors then holding
office. An action by the shareholders with respect to by-laws shall be taken
by the affirmative vote of a majority of the shares then issued and
outstanding and entitled to vote.
Form 10-Q Crawford & Company
Quarter Ended May 31, 1997 Page 29
Exhibit 15.1
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,
Registration Statement File No. 33-36116, Registration Statement File No.
333-2051, Registration Statement File No. 333-24425, and Registration Statement
File No. 333-24427, its Form 10-Q for the quarter ended March 31, 1997, which
includes our report dated May 7, 1997 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.
/s/Arthur Andersen LLP
Atlanta, Georgia
May 7, 1997
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