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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
/ X / SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
/ / SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-10356.
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CRAWFORD & COMPANY
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(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
Georgia 58-0506554
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(State or other jurisdiction of incorporation or (I.R.S. Employer Identification Number)
organization)
5620 Glenridge Dr., N.E., Atlanta, Georgia 30342
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(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code (404) 256-0830
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class Name of each exchange on which registered
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Class A Common Stock - $1.00 Par Value New York Stock Exchange
Class B Common Stock - $1.00 Par Value New York Stock Exchange
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
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The aggregate market value of the voting stock held by nonaffiliates* of the
Registrant was $155,460,000 as of February 28, 1997, based upon the closing
price as reported on NYSE on such date.
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*All shareholders, other than Directors, Executive Officers, and 10% beneficial
owners.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
The number of shares outstanding of each of the Registrant's classes of common
stock, as of February 28, 1997 was:
Class A Common Stock - $1.00 Par Value - 16,203,576 Shares
Class B Common Stock - $1.00 Par Value - 17,150,624 Shares
Documents incorporated by reference:
(1) Annual Report to Shareholders for the Year Ended December 31, 1996, Part I
- - Item 2; Part II - Items 5, 6, 7 and 8; Part IV - Item 14, and
(2) Proxy Statement for the Annual Meeting of Shareholders to be held April 22,
1997, Part III -Items 10, 11, 12, and 13.
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PART I
ITEM 1. BUSINESS
Crawford & Company (the "Registrant") is a worldwide diversified service firm
which provides claims adjusting and risk management information services to
insurance companies, self-insured corporations and governmental entities.
The Registrant is not owned by or affiliated with any insurance company.
DESCRIPTION OF SERVICES
The percentages of consolidated revenues derived from each of the Registrant's
principal service categories are shown in the following schedule:
<TABLE>
<CAPTION>
Years Ended December 31,
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1996 1995 1994
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<S> <C> <C> <C>
Domestic Operations 87.6% 86.1% 92.1%
International Operations 12.4% 13.9% 7.9%
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100.0% 100.0% 100.0%
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</TABLE>
DOMESTIC OPERATIONS. Domestic claims services are provided by the Registrant
to two different markets. Insurance companies, which represent the major
source of revenues, customarily manage their own claims administration
function, but require various partial services which the Registrant provides.
The Registrant also services clients which are self-insured or commercially
insured through alternative loss funding methods, and provides them the more
complete range of services they typically require, including the supervision of
field locations, information services and medical cost- containment.
The major elements of domestic claims administration services (which include
the partial services required by most property and casualty insurance company
clients as well as the expanded services required by self-insured clients) are
as follows:
- Initial Reporting - the Registrant's XPressLinkSM service
provides 24-hour receipt, acknowledgement, and distribution of
claims information through Electronic Data Interchange,
customized reporting and referral programs, call center
reporting, and facsimile receipt and distribution.
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- Investigation - the development of information necessary to
determine the cause and origin of loss.
- Evaluation - the determination of the extent and value of
damage incurred and the coverage, liability and compensability
relating to the parties involved.
- Disposition - the resolution of the claim, whether by
negotiation and settlement, by denial or by other resolution.
Expanded services provided primarily, but not exclusively, to Registrant's
self-insured clients include the following:
- Information Services - provides reports of detailed claims
information of both a statistical and financial nature to
self-insured corporations, governmental entities and insurance
companies. The Registrant's basic information system is
SISDATSM, but the registrant also offers SISDAT+SM, a risk
management information system which integrates the basic
information provided by the SISDATSM system with the on-line
inquiry and flexible reporting capabilities of Risk Sciences
Group's SIGMASM system (discussed below).
- Management - the coordination and supervision of all parties
involved in the claims settlement process, including the
adjusting personnel directly involved in handling the claim.
Typically, this management function is performed by an
independent administrative unit within the Registrant which is
not involved in the initial investigation of a claim.
- Auditing Services - the Registrant's Sentinel Medical Review
System(R), a bill audit program, utilizes proprietary software
developed by the Registrant, to assist clients in controlling
medical costs associated with workers compensation claims by
comparing fees charged by health care providers with maximum
fee schedules prescribed by state workers compensation
regulations as well as usual and customary charges in non-fee
schedule states. The Registrant also performs hospital bill
audits related to workers compensation claims.
- Medical Review Services - provides a broad range of cost
containment and utilization review services to insurance
companies, service organizations and self-insured corporations
involved in employee group health insurance plans. These
services, which are designed to both control the cost and
enhance the efficient delivery of medical benefits, include
pre-admission review of hospitalizations, second surgical
opinions, concurrent hospital utilization review, discharge
planning, and the Early Medical Management InterventionSM
(EMMISM) program which provides services to actively control
workers compensation medical and indemnity costs at the onset
of a claim
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- through nurse screening for severity as claims are received
from XPressLink SM or directly from the client. The
Registrant also provides a workers compensation PPO network to
its self-insured clients.
- Vocational Services - provides vocational evaluation in order
to assess an injured employee's potential to return to work.
These services involve diagnostic testing and occupational,
personal and motivational counseling of the employee. The
Crawford Occupational Re-EmploymentSM (CORESM) program enlists
the services of our vocational, medical and employment
consultants to assist in the re-employment and preparation of
injured individuals to return to work.
- Medical Case Management Services - are typically provided by
rehabilitation nurses who work closely with attending
physicians and other medical personnel in order to expedite
the injured person's physical recovery and rehabilitation and
maximize the opportunity for the person to return to work.
These services also involve coordinating and monitoring
treatment plans and related costs to insure that such
treatment is appropriate and necessary in the circumstances.
- Elder Care - offers a full menu of elder care service
including comprehensive on-site assessments, complete care
coordination and on-going care monitoring. These services are
provided through experienced health care professionals with an
insight to local quality care needs and offers these services
in Florida and New York to senior citizens and their children,
attorneys and trust officers.
The claims administration services described above are provided to clients for
a variety of different referral assignments which generally are classified as
to the underlying insured risk categories used by insurance companies. The
major categories are described below:
- Automobile - relates to all types of losses involving use of
the automobile. Such losses include bodily injury, physical
damage, medical payments, collision, fire, theft and
comprehensive liability.
- Property - relates to losses caused by physical damage to
commercial or residential real property and certain types of
personal property. Such losses include those arising from
fire, windstorm, or hail damage to commercial and residential
property, burglary, robbery or theft of personal property and
damage to property under inland marine coverage.
- Workers Compensation - relates to claims arising under state
and federal workers compensation laws.
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- Public Liability - relates to a wide range of non-automobile
liability claims such as product liability, owners, landlords
and tenants' liabilities and comprehensive general liability.
The Registrant provides quick response catastrophe teams for support to clients
by servicing insurance claims following hurricanes, tornados, earthquakes,
floods and other natural disasters. In addition, the Registrant provides
catastrophic liability management services, including class action litigation
support, cost containment, claims management systems development, and
contingency planning, for clients faced with product liability, explosion, oil
spill, chemical release and other man-made disasters.
ADDITIONAL RISK MANAGEMENT AND OTHER SERVICES. The Registrant provides the
following additional risk management and other related services, which support
and supplement the claims and casualty risk management services offered:
- RISK CONTROL SERVICES - involves the identification of factors
which cause loss and the development of procedures and
techniques designed to prevent, minimize or control these
losses. These services are provided by risk control
consultants, who develop complete programs for the client
which emphasize preventative measures to reduce the costs of
losses. Risk control consultants also perform risk
assessments of larger, more complicated risks for the
insurance industry. Additionally, through Crawford/FPE the
Registrant provides fire protection consulting and system
design, industrial hygiene, and boiler and machinery
consulting. The Registrant sold its risk control services
business in January, 1997 and will no longer offer these
services.
- RISK SCIENCES GROUP, INC. - is a software applications and
consulting firm which is a wholly-owned subsidiary of the
Registrant. Risk Sciences Group (RSG) provides customized
computer-based information systems and analytical forecasting
services to the risk management and insurance industry. It
manages the Registrant's basic information systems SISDATSM
and SISDAT+SM, and has developed the SIGMASM system, an
on-line risk management information system which supports
multiple sources of claims, locations, risk control, medical,
litigation, exposure and insurance policy information. With
its staff of approximately 114 employees, RSG serves a variety
of clients with specialized computer programs for long-term
risk management planning; data and systems integration;
development of historical claims/loss databases; claims
administration and management; regulatory reporting; insurance
and risk management cost control; and actuarial and financial
analysis required for loss forecasting, reserve estimation and
financial reporting.
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- EDUCATION SERVICES - are provided by the Registrant's Learning
& Resource Center, whose principal objective is to provide
technical and management training to the Registrant's
employees in order to assure consistent quality in the
delivery of services to clients. In addition, the Learning &
Resource Center markets its classrooms and correspondence
courses in many risk management subjects to outside clients.
INTERNATIONAL OPERATIONS. International operations provided 12.4% of the
Registrant's 1996 revenues. Through its Canadian subsidiary, Crawford &
Company Insurance Adjusters Ltd., the Registrant provides in Canada generally
the same array of claims, risk management and disability management services as
the Registrant provides to the United States insurance and self-insured
marketplace. In December 1990, the Registrant acquired Graham Miller Group
Limited ("Graham Miller"), a London-based international loss adjusting firm.
Graham Miller provides loss adjusting services to international insurance
underwriters, including Lloyds of London, through owned or affiliated offices
in approximately 40 countries. In April of 1994, Crawford & Company Insurance
Adjusters Ltd. acquired all the outstanding capital stock of Finnamore &
Partners Limited ("Finnamore"), a Canadian specialty loss adjusting firm
headquartered in Halifax, Nova Scotia. Effective January 1, 1996, Finnamore
was amalgamated with Crawford & Company Insurance Adjusters Ltd. In September
of 1994, a subsidiary of the Registrant acquired all of the outstanding stock
of Arnold & Green Ltd. ("A & G"), a United Kingdom based liability adjusting
firm headquartered in Stockport, Cheshire, which handles claims in the fields
of employers' liability, public liability, products and product guaranties, as
well as professional indemnity errors and omissions and contractors' all risk
loss exposures. In November of 1994, subsidiaries of the Registrant acquired
the Brocklehurst Group ("Brocklehurst"), consisting primarily of a United
Kingdom based chartered loss adjusting firm specializing in property, aviation,
marine, agriculture and oil and energy exposures. In 1995 the Registrant
consolidated Graham Miller's existing United Kingdom branches with those of
Brocklehurst under the names "Crawford Brocklehurst" and "Brocklehurst Miller".
A & G continued to operate separately in the United Kingdom under the name
"Crawford Arnold & Green". Outside of the United Kingdom and North America,
the Registrant did business as "Crawford Graham Miller".
In December, 1996, an English subsidiary of the Registrant acquired all of the
non-United States operations of the Thomas Howell Group, a London, England
based international loss adjusting enterprise owned by a subsidiary of Swiss
Reinsurance Company of Zurich, Switzerland, which received stock in
Registrant's subsidiary as consideration for the transfer. Concurrently, all
of the Registrant's non-U.S. subsidiaries were transferred to that same English
subsidiary, in which Registrant now has a sixty percent (60%) interest and
Swiss Reinsurance Company's subsidiary has a forty percent (40%) interest.
Non-North American revenues and expenses were reported on a three-month delayed
basis until 1995. Such revenues and expenses are now reported on a two-month
delayed basis and, accordingly, the Registrant's December 31, 1996 and 1995
consolidated financial statements reflect the non-North American financial
position as of October 31, 1996 and 1995 and the results of non-North American
operations and cash flows for the 12-month period ended October 31, 1996, the
13-month period ended October 31, 1995, and the 12-month period ended September
30, 1994. This
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change had no material effect on the Registrant's financial position, results
of operations, or cash flows. Because of the deferred reporting of non-North
American operations, the merger of the international operations of the
Registrant with those of Thomas Howell Group is not reflected in the
Registrant's December 31, 1996 consolidated financial statements.
The major services offered by the Registrant through its U.K. headquartered
international operations are listed below:
- Property and Casualty - provides loss adjusting services for
property, general liability, professional indemnity for
directors and officers, product liability and medical
malpractice.
- Oil, Energy & Engineering - provides loss adjusting for oil,
gas, petrochemicals, other energy risks, utilities and mining
industries, as well as marine and off-shore risks.
- Environmental Pollution - provides cost-containment and claims
management services with respect to environmental related
losses.
- Construction - provides loss adjusting services under
contractors' all risk, engineering all risk, and contractors'
liability coverages. Additionally evaluates machinery
breakdown claims and provides peripheral services including
plant valuation and loss prevention surveys.
- Catastrophe - organizes major loss teams to provide claims
management and cost containment services through proprietary
information systems.
- Marine - provides loss adjusting services for freight carriers
liability, loss investigations, recoveries, salvage disposal,
yacht and small craft, cargo, container, discharge, draft,
general average, load, trailer and on/off live surveys, ship
repairer liability and port stevedore liability.
- Specie and Fine Art - provides loss adjusting services under
fine art dealers' block and jewelry and furriers' block
policies.
- Entertainment Industry - provides a broad range of loss
adjusting services for television, commercial and educational
film production, and theater and live events.
- Aviation - manages salvage removal and sale and provides loss
adjusting services for hull related risks, as well as cargo
and legal liability, hangar and airport owners'/operators'
liability policies.
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- Banking, Financial and Political Risks - performs loss
adjusting functions under bankers blanket bond, political
risk, and financial contingency policies.
- Livestock - performs loss adjusting on bloodstock,
liability/equestrian activity.
- Security Consultancy - performs loss prevention and bank
surveys and adjusts cash-in- transit losses.
- Reinsurance - provides external audits, portfolio analyses,
and management and marketing research. Additionally provides
underwriting review, cash control and management of
discontinued operations.
During 1994, the Registrant opened a health care management services office in
London to provide medical and vocational case management services to the
employer liability market and to provide specialized return to work and expert
testimony services in the auto liability market. It is hoped these services
will expand in the coming years, both within and outside of the United Kingdom.
COMPETITION, EMPLOYMENT AND OTHER FACTORS
The claims services markets, both domestically and internationally, are highly
competitive and are composed of a large number of companies of varying size and
scope of services. These include large insurance companies and insurance
brokerage firms which, in addition to their primary services of insurance
underwriting or insurance brokerage, also provide services such as claims
administration, health and disability management, and risk management
information systems, which compete with services offered by the Registrant.
Many of these companies are larger than the Registrant in terms of annual
revenues and total assets; however, based on experience in the market, the
Registrant believes that few, if any, such organizations derive revenues from
independent claims administration activities which equal those of the
Registrant.
The majority of property and casualty insurance companies maintain their own
staffs of salaried adjusters, with field adjusters located in those areas in
which the volume of claims justifies maintaining a salaried staff. These
companies utilize independent adjusters to service claims when the volume of
claims exceeds the capacity of their staffs and when claims arise in areas not
serviced by staff adjusters. The volume of property claim assignments referred
to the Registrant fluctuates primarily depending on the occurrence of severe
weather.
The United States insurance industry generally uses internal adjusting
personnel to make automobile claims adjustments by telephone and assigns the
limited function of appraising physical damage to outside service
organizations, such as the Registrant. The Registrant believes that such
limited assignments from automobile insurers may continue, reflecting a
perception by insurance companies
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that they can reduce adjusting expenses in amounts greater than the higher
losses associated with telephone adjusting. In certain instances, however,
insurers have attempted to reduce the fixed cost of their claims departments by
increasing outside assignments to independent firms such as the Registrant.
As insurance premiums have increased and corporate risk management personnel
have become more aware of alternative methods of financing losses, there has
been a trend toward higher retention levels of risk insurance or implementation
of self-insurance programs by large corporations and governmental
instrumentalities. These programs generally utilize an insurance company which
writes specialized policies that permit each client to select its own level of
risk retention, as well as permit certain risk management services to be
provided to the client by service companies independent of the insurance
company. In addition to providing full claims administration services for such
clients, the Registrant generally provides statistical data such as loss
experience analysis. The services are usually the subject of a contractual
agreement with the specialty insurance company or the self-insured client that
specifies the claims to be administered by the Registrant and the fee to be
paid for its services (generally a fixed rate per assignment within the various
risk classifications).
In addition to the large insurance companies and insurance brokerage firms, the
Registrant competes with a great number of smaller local and regional risk
management services firms located throughout the United States and
internationally. Many of these smaller firms have rate structures that are
lower than the Registrant's, but do not offer the broad spectrum of risk
management services which the Registrant provides and, although such firms may
secure business which has a local or regional source, the Registrant believes
its broader scope of services and its large number of geographically dispersed
offices provide it with a competitive advantage in securing business from
national and international clients.
The Registrant has approximately 530 offices which provide some or all of
Registrant's services in the fifty states of the United States, and through
subsidiaries in nine provinces of Canada and Puerto Rico. Internationally, the
Registrant and its affiliates have 180 offices serving approximately 49
non-North American countries.
The Registrant has branch profit-sharing agreements with most of its branch
managers in the United States under which those managers participate in the
profits of their respective branches. These agreements provide a formula for
the determination of branch office profits and specify the managers'
participation percentage, which is generally 40%.
During 1996, revenues derived from services provided to American International
Group and its subsidiaries (AIG) approximated 9.5% of total revenues. During
1995 and 1994, revenues derived from services provided by the Registrant to AIG
were 12% and 14% of total revenue in each of such years. Revenues derived from
AIG, an insurance holding company, principally relate to claims administration
services provided under the high-risk retention programs described above. In
addition, the Registrant also provides disability management services and other
risk management services to AIG. The Registrant believes that its
relationships with all its customers, including AIG, are good.
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At December 31, 1996, the total number of full-time employees was 6,844
compared with 7,189 at December 31, 1995. The Registrant, through its Learning
& Resource Center, provides many of its employees with formal classroom
training in basic and advanced skills relating to claims administration and
disability management services. Such training is generally provided at the
Registrant's education facility in Atlanta, Georgia, although much of the
material is also available through correspondence courses. In many cases,
employees are required to complete these or other professional courses in order
to qualify for promotion from their existing positions.
In addition to this technical training, the Registrant also provides ongoing
professional education for certain of its management personnel on general
management, marketing and sales topics. These programs involve both in-house
and external resources.
ITEM 2. PROPERTIES
The Registrant's home office and educational facilities are owned by the
Registrant and located in Atlanta, Georgia. As of December 31, 1996, the
Registrant leased approximately 594 office locations under leases with
remaining terms ranging from a few months to ten years. The remainder of its
office locations are occupied under various short-term rental arrangements.
The Registrant also leases certain computer equipment. See Note 6 of Notes to
Consolidated Financial Statements included in the Registrant's 1996 Annual
Report to Shareholders filed herewith as Exhibit 13.1, which notes are
incorporated herein by reference.
The Registrant owns or leases approximately 2,553 automobiles which are used by
the Registrant's field adjusters and certain of its management personnel in the
United States and Canada. Additional vehicles are owned or leased by the
Registrant's foreign subsidiaries for use by field and management personnel.
ITEM 3. LEGAL PROCEEDINGS
In the normal course of the claims administration services business, the
Registrant is named as a defendant in suits by insureds or claimants contesting
decisions by the Registrant or its clients with respect to the settlement of
claims. Additionally, clients of the Registrant have brought actions for
indemnification on the basis of alleged negligence on the part of the
Registrant, its agents or employees in rendering service to clients. The
majority of these claims are of the type covered by insurance maintained by the
Registrant; however, the Registrant is self-insured for the deductibles under
its various insurance coverages. In the opinion of the Registrant, adequate
reserves have been provided for such self-insured risks.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to security holders for a vote during the fourth
quarter of 1996.
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EXECUTIVE OFFICERS OF THE REGISTRANT
The following are the names, positions held, and ages of each of the executive
officers of the Registrant:
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Name Office Age
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D. A. Smith Chairman, President and Chief Executive Officer 47
A. L. Meyers, Jr. President - Claims Services 59
J. R. Bryant President - Risk Management Services 46
D. R. Chapman Executive Vice President - Finance 57
J. F. Osten Senior Vice President - General Counsel & Corporate Secretary 55
</TABLE>
All of the above officers, except as indicated below, have been associated with
the Registrant in management capacities for more than five years and have held
the positions indicated in the above table for more than five years.
Mr. Smith was appointed to his present position effective January 1, 1996.
Prior to January 1, 1996 and since November 1, 1994, he was President and Chief
Operating Officer. From August 1, 1992 to November 1, 1994, Mr. Smith was
President - Claims Services. From January 1, 1991 to August 1, 1992, Mr. Smith
was President of Crawford & Company International, Inc., and he was Vice
President, and later, Senior Vice President with responsibility for the
Registrant's Midwest Region from January 1, 1986 to January, 1991.
Mr. Meyers was appointed to his present position effective September 1, 1995.
He had previously retired from the Company in April 1994, after having served
as General Manager of the Registrant's Fairfax, Virginia branch office since
1988. During the period between his retirement and appointment to his present
position he served as a consultant and operations supervisor for the
Registrant.
Mr. Bryant was appointed to his present position effective August 1, 1995.
Prior to August 1, 1995 and since November 1, 1994, he was President - Claims
Services. From January 1, 1993 to November 1, 1994, he was Vice President -
National Sales Manager and from March, 1989 to December, 1992 he was Regional
Director - RMS for the Registrant's Midwest Region becoming an Assistant Vice
President on July 1, 1990.
Officers of the Registrant are appointed annually by the Board of Directors.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
The information required by this Item is included on pages 40-41 of the
Registrant's Annual Report to Shareholders for the year ended December 31, 1996
under the caption "Quarterly Financial Data" and is incorporated herein by
reference.
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ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is included on page 39 of the
Registrant's Annual Report to Shareholders for the year ended December 31,
1996, under the caption "Selected Financial Data" and is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information required by this Item is included on pages 18-22 of the
Registrant's Annual Report to Shareholders for the year ended December 31, 1996
under the caption "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is included on pages 23-41 of the
Registrant's Annual Report to Shareholders for the year ended December 31, 1996
under the captions "Consolidated Statements of Income", "Consolidated Balance
Sheets", "Consolidated Statements of Shareholders' Investment", "Consolidated
Statements of Cash Flows", "Notes to Consolidated Financial Statements", and
"Quarterly Financial Data", and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item is included on page 2 under the caption
"Nominee Information" of the Registrant's Proxy Statement for the Annual
Meeting of Shareholders to be held April 22, 1997, and is incorporated herein
by reference. For other information required by this Item, see "Executive
Officers of the Registrant" on page 11 herein.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is included on pages 4-9 under the
captions "Executive Compensation and Other Information", "Report of the Senior
Compensation and Stock Option Committee of the Board of Directors on Executive
Compensation", and "Compensation Committee Interlocks and Insider
Participation" and on page 15 under the caption "Five Year Comparative Stock
Performance Graph" of the Registrant's Proxy Statement for the Annual Meeting
of Shareholders to be held April 22, 1997, and is incorporated herein by
reference.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information required by this Item is included on pages 10-14 under the
caption "Stock Ownership Information" of the Registrant's Proxy Statement for
the Annual Meeting of Shareholders to be held April 22, 1997, and is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is included on page 14 under the caption
"Information with Respect to Certain Business Relationships" of the
Registrant's Proxy Statement for the Annual Meeting of Shareholders to be held
April 22, 1997, and is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements
The Registrant's 1996 Annual Report to Shareholders contains
the consolidated balance sheets as of December 31, 1996 and
1995, the related consolidated statements of income,
shareholders' investment and cash flows for each of the three
years in the period ended December 31, 1996, and the related
report of Arthur Andersen LLP on the financial statements.
These financial statements and the report of Arthur Andersen
LLP are incorporated herein by reference and included as
Exhibit 13.1 to this Form 10-K. The financial statements,
incorporated by reference, include the following:
- Consolidated Balance Sheets -- December 31, 1996 and 1995
- Consolidated Statements of Income for the Years Ended
December 31, 1996, 1995 and 1994
- Consolidated Statements of Shareholders' Investment
for the Years Ended December 31, 1996, 1995 and 1994
- Consolidated Statements of Cash Flows for the Years
Ended December 31, 1996, 1995 and 1994
- Notes to Consolidated Financial Statements - December
31, 1996, 1995 and 1994
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The report of Touche Ross & Co. as of and for the year ended September
30, 1994 is incorporated by reference to pages 19-21 of Registrant's
Report on Form 10-K for the year ended December 31, 1994.
2. Financial Statement Schedule
- Report of Independent Public Accountants as to Schedule
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Schedule
Number
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II Valuation and Qualifying Accounts for the Years Ended December 31, 1996, 1995 and 1994
Schedules I and III through V not listed above have been omitted because they are not
applicable.
</TABLE>
3. Exhibits filed with this report.
<TABLE>
<CAPTION>
Exhibit No. Document
----------- --------
<S> <C>
3.1 Restated Articles of Incorporation of the Registrant, as amended (incorporated by reference to
Exhibit 19.1 to the Registrant's quarterly report on Form 10-Q for the quarter ended June 30,
1991).
3.2 Restated By-laws of the Registrant, as amended.
10.1 * Crawford & Company Incentive Stock Option Plan (incorporated by reference to Exhibit 10(a) to
the Registrant's annual report on Form 10-K for the year ended December 31, 1981).
10.2 * Amendment to Crawford & Company Incentive Stock Option Plan (incorporated by reference to
Appendix D on page D-1 of Registrant's Proxy Statement for the Special Meeting of Shareholders
held on July 24, 1990).
10.3 * Crawford & Company 1987 Stock Option Plan (incorporated by reference to Exhibit 28(a) to the
Registration Statement on Form S-8, Registration No. 33-22595).
10.4 * Amendment to Crawford & Company 1987 Stock Option Plan (incorporated by reference to Appendix C
on page C-1 of the Registrant's Proxy Statement for the Special Meeting of Shareholders held on
July 24, 1990).
</TABLE>
14
<PAGE> 15
<TABLE>
<S> <C>
10.5 * Crawford & Company 1990 Stock Option Plan, as amended (incorporated by reference to Exhibit
10.5 to the Registrant's annual report on Form 10-K for the year ended December 31, 1992).
10.6 * Crawford & Company 1997 Key Employee Stock Option Plan (incorporated by reference to Appendix A
on page A-1 of the Registrant's Proxy Statement for the Annual Meeting of Shareholders to be
held on April 22, 1997).
10.7 * Crawford & Company 1997 Non-Employee Director Stock Option Plan (incorporated by reference to
Appendix B on page B-1 of the Registrant's Proxy Statement for the Annual meeting of
Shareholders to be held on April 22, 1997).
10.8 * Crawford & Company Annual Incentive Compensation Plan (incorporated by reference to Exhibit
10.7 to the Registrant's annual report on Form 10-K for the year ended December 31, 1992).
10.9 * Crawford & Company 1996 Annual Incentive Compensation Plan (incorporated by reference to
Exhibit 10.7 to the Registrant's annual report on Form 10-K for the year ended December 31,
1995).
10.10 * Crawford & Company 1994-1996 Long-Term Executive Bonus Plan (incorporated by reference to
Exhibit 10.7 to the Registrant's annual report on Form 10-K for the year ended December 31,
1993).
10.11* Amended and Restated Supplemental Executive Retirement Plan (incorporated by reference to
Exhibit 10.9 to the Registrant's annual report on Form 10-K for the year ended December 31,
1993).
10.12 * Crawford & Company 1996 Employee Stock Purchase Plan (incorporated by reference to Appendix A
on page A-1 of Registrant's Proxy Statement for the Annual Meeting of Shareholders held on
April 18, 1996).
10.13 * Amended and Restated Crawford & Company Medical Reimbursement Plan (incorporated by reference
to Exhibit 10.9 to the Registrant's Annual Report on Form 10-K for the year ended December 31,
1994).
10.14 * Discretionary Allowance Plan (incorporated by reference to Exhibit 10.10 to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1994).
10.15 * Deferred Compensation Plan (incorporated by reference to Exhibit 10.11 to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1994).
11.1 Computation of Fully Diluted Earnings Per Share for the year ended December 31, 1996.
</TABLE>
15
<PAGE> 16
<TABLE>
<S> <C>
13.1 The Registrant's Annual Report to Shareholders for the year ended December 31, 1996 (only
those portions incorporated herein by reference).
21.1 Subsidiaries of Crawford & Company.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Deloitte & Touche.
24.1-9 Powers of Attorney.
27.1 Financial Data Schedule.
99.1 Touche Ross & Co. report as of and for the year ended September 30, 1994 (incorporated by
reference to pages 19-21 of Registrant's Report on Form 10-K for the year ended December 31,
1994).
</TABLE>
* Management contract or compensatory plan required to be filed as an
exhibit pursuant to Item 601 of Regulation S-K.
(b) No reports on Form 8-K have been filed during the last quarter of the
year ended December 31, 1996.
(c) The Registrant has filed the Exhibits listed in Item 14(a)(3).
(d) Separate financial statements of Crawford & Company have been omitted
since it is primarily an operating company. All subsidiaries included
in the consolidated financial statements are wholly-owned.
16
<PAGE> 17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
Date March 20, 1997 By /s/ D. A. Smith
--------------- ---------------------------------
D. A. SMITH, Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
NAME AND TITLE
--------------
Date March 20, 1997 /s/ D. A. Smith
--------------- ---------------------------------
D. A. SMITH, Chairman, President and Chief
Executive Officer (Principal Executive
Officer) and Director
Date March 20, 1997 /s/ D. R. Chapman
--------------- ---------------------------------
D. R. CHAPMAN, Executive Vice President-
Finance (Principal Financial Officer)
Date March 20, 1997 /s/ J. F. Giblin
--------------- ---------------------------------
J. F. GIBLIN, Vice President and Controller
(Principal Accounting Officer)
Date March 24, 1997 *
--------------- ---------------------------------
VIRGINIA C. CRAWFORD, Director
17
<PAGE> 18
NAME AND TITLE
Date March 24, 1997 *
--------------- ---------------------------------
FORREST L. MINIX, Director
Date March 24, 1997 *
--------------- ---------------------------------
J. HICKS LANIER, Director
Date March 24, 1997 *
--------------- ---------------------------------
CHARLES FLATHER, Director
Date March 24, 1997 *
--------------- ---------------------------------
JESSE S. HALL, Director
Date March 24 , 1997 *
--------------- ---------------------------------
LINDA K. CRAWFORD, Director
Date March 24, 1997 *
--------------- ---------------------------------
JESSE C. CRAWFORD, Director
Date March 24, 1997 *
--------------- ---------------------------------
LARRY L. PRINCE, Director
Date March 24, 1997 *
--------------- ---------------------------------
JOHN A. WILLIAMS, Director
Date March 24 , 1997 By /s/ Judd F. Osten
--------------- ---------------------------------
JUDD F. OSTEN - As attorney-in-fact for the
Directors above whose name an asterisk
appears
18
<PAGE> 19
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULES
To Crawford & Company:
We have audited, in accordance with generally accepted auditing standards, the
consolidated financial statements included in Crawford & Company's annual
report to shareholders incorporated by reference in this Form 10-K and have
issued our report thereon dated January 28, 1997. Our audit was made for the
purposes of forming an opinion on those statements taken as a whole. We did
not audit the 1994 financial statements of certain foreign operations, which
statements reflect approximately 4% of consolidated revenues in 1994. The
schedule listed in Item 14(a)2 is the responsibility of the Company's
management, is presented for purposes of complying with the Securities and
Exchange Commission's rules, and is not part of the basic consolidated
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
/s/ ARTHUR ANDERSEN LLP
Atlanta, Georgia
January 28, 1997
19
<PAGE> 20
SCHEDULE II
CRAWFORD & COMPANY AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
----------------------------------------------------
(In Thousands of Dollars)
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D Col. E
------ ------ ------ ------ ------
Balance at Additions Additions Balance
Beginning of Charged to (Deductions) End of
Period Period Costs and from Period
Expenses Allowances(1)
<S> <C> <C> <C> <C>
1996
Deducted in
Consolidated balance
sheets from accounts
receivable $10,303 $1,025 $364 $11,692
------- ------- ------ -------
1995
Deducted in
Consolidated balance
sheets from accounts
receivable $10,220 $193 $(110) $10,303
------- ------- ------ -------
1994
Deducted in
Consolidated balance
sheets from accounts
receivable $10,128 $(1,373) $1,465 $10,220
------- ------- ------ -------
</TABLE>
(1) Represents uncollectible accounts written off, net of recoveries.
20
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequential
Page Number
Exhibit No. Description of Exhibit of Exhibit
----------- ---------------------- ----------
<S> <C>
3.1 Restated Articles of Incorporation of the Registrant, as
amended (incorporated by reference to Exhibit 19.1 to the
Registrant's quarterly report on Form 10-Q for the quarter
ended June 30, 1991).
3.2 Restated By-laws of the Registrant, as amended.
10.1 Crawford & Company Incentive Stock Option Plan (incorporated
by reference to Exhibit 10(a) to the Registrant's annual
report on Form 10-K for the year ended December 31, 1981).
10.2 Amendment to Crawford & Company Incentive Stock Option Plan
(incorporated by reference to Appendix D on page D-1 of
Registrant's Proxy Statement for the Special Meeting of
Shareholders held on July 24, 1990).
10.3 Crawford & Company 1987 Stock Option Plan (incorporated by
reference to Exhibit 28(a) to the Registration Statement on
Form S-8, Registration No. 33-22595).
10.4 Amendment to Crawford & Company 1987 Stock Option Plan
(incorporated by reference to Appendix C on page C-1 of the
Registrant's Proxy Statement for the Special Meeting of
Shareholders held on July 24, 1990).
10.5 Crawford & Company 1990 Stock Option Plan, as amended
(incorporated by reference to Exhibit 10.5 to the
Registrant's annual report on Form 10-K for the year ended
December 31, 1992).
10.6 Crawford & Company 1997 Key Employee Stock Option Plan
(incorporated by reference to Appendix A on page A-1 of the
Registrant's Proxy Statement for the Annual Meeting of
Shareholders to be held on April 22, 1997).
10.7 Crawford & Company 1997 Non-Employee Director Stock Option
Plan (incorporated by reference to Appendix B on page B-1 of
the Registrant's Proxy Statement for the Annual meeting of
Shareholders to be held on April 22, 1997).
</TABLE>
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequential
Page Number
Exhibit No. Description of Exhibit of Exhibit
----------- ---------------------- ----------
<S> <C>
10.8 Crawford & Company Annual Incentive Compensation Plan
(incorporated by reference to Exhibit 10.7 to the
Registrant's annual report on Form 10-K for the year ended
December 31, 1992).
10.9 Crawford & Company 1996 Annual Incentive Compensation Plan.
(incorporated by reference to Exhibit 10.7 to the
Registrant's annual report on Form 10-K for the year ended
December 31, 1995).
10.10 Crawford & Company 1994-1996 Long-Term Executive Bonus Plan
(incorporated by reference to Exhibit 10.7 to the
Registrant's annual report on Form 10-K for the year ended
December 31, 1993).
10.11 Amended and Restated Supplemental Executive Retirement Plan
(incorporated by reference to Exhibit 10.9 to the
Registrant's annual report on Form 10-K for the year ended
December 31, 1993).
10.12 Crawford & Company 1996 Employee Stock Purchase Plan
(incorporated by reference to Appendix A on page A-1 of
Registrant's Proxy Statement for the Annual Meeting of
Shareholders held on April 18, 1996).
10.13 Amended and Restated Crawford & Company Medical Reimbursement
Plan (incorporated by reference to Exhibit 10.9 to the
Registrant's annual report on Form 10-K for the year ended
December 31, 1994).
10.14 Discretionary Allowance Plan (incorporated by reference to
Exhibit 10.10 to the Registrant's annual report on Form 10-K
for the year ended December 31, 1994).
10.15 Deferred Compensation Plan (incorporated by reference to
Exhibit 10.11 to the Registrant's annual report on Form 10-K
for the year ended December 31, 1994).
11.1 Computation of Fully Diluted Earnings Per Share for the year
ended December 31, 1996.
</TABLE>
<PAGE> 23
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequential
Page Number
Exhibit No. Description of Exhibit of Exhibit
----------- ---------------------- ----------
<S> <C>
13.1 The Registrant's Annual Report to Shareholders for the year
ended December 31, 1996 (only those portions incorporated
hereby by reference).
21.1 Subsidiaries of Crawford & Company.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Deloitte & Touche.
24.1-9 Powers of Attorney.
27.1 Financial Data Schedule.
99.1 Touche Ross & Co. report as of and for the year ended
September 30, 1994 (incorporated by reference to pages 19-21
of Registrant's Report on Form 10-K for the year ended
December 31, 1994).
</TABLE>
<PAGE> 1
EXHIBIT 3.2
RESTATED BY-LAWS
OF
CRAWFORD & COMPANY
(reflecting amendments made through February 4, 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 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
<PAGE> 2
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.
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.
<PAGE> 3
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 ten (10), 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 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.
<PAGE> 4
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.
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.
<PAGE> 5
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
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
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.
<PAGE> 6
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 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:
(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.
<PAGE> 7
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.
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,
<PAGE> 8
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.
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
<PAGE> 9
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.
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.
<PAGE> 1
EXHIBIT 11.1
CRAWFORD & COMPANY AND SUBSIDIARIES
COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C> <C>
GENERAL INFORMATION:
Net income $42,810,215
Weighted average common shares outstanding 51,032,111
Dilutive option shares outstanding at year-end 2,688,867
Option shares outstanding prior to exercise during year 163,520
Average exercise price per outstanding dilutive option share $11.50
Average market price per share $14.43
Year-end market price per share $14.83
Average market price of shares issued upon exercise during year $13.07
COMPUTATIONS:
Dilutive option shares outstanding at year-end 2,688,687
Shares repurchased at $14.43
(proceeds of $30,913,329 divided by $14.43) (2,142,135)
-----------
Net additional shares issuable 546,732
Dilutive Option shares outstanding from the
1996 Employee Stock Purchase Plan 35,457
Shares repurchased at $14.12
(proceeds of $339,070 divided by $14.42) (23,519)
--------
Net additional shares issuable 11,938
Option shares outstanding prior to exercise during year 163,520
Shares repurchased at $13.07
(proceeds of $1,474,477 divided by $13.07) (112,843)
---------
Net additional shares issued 50,677
Contingently issuable shares related to convertible notes payable
issued November 30, 1994 809,730
Weighted average common shares outstanding 51,032,111
----------
Adjusted shares outstanding 52,451,188
==========
FULLY DILUTED EARNINGS PER SHARE:
Net income ($42,810,215 divided by 52,451,188) $0.82
PERCENTAGE DILUTION:
Net income ($.02 divided by $0.84) 2.38%
=====
</TABLE>
<PAGE> 1
EXHIBIT 13.1
MANAGEMENT'S DISCUSSION AND ANALYSIS
of Financial Condition and Results of Operations
FINANCIAL CONDITION
At December 31, 1996, current assets exceeded current liabilities by
approximately $136.2 million, a decrease of $3.1 million from the working
capital balance at December 31, 1995. Cash and cash equivalents at the end of
1996 totaled $55.5 million, increasing $14.7 million from the balance at the end
of 1995. The Company held no short-term investments at December 31, 1996, as
compared to $5.6 million at December 31, 1995. During 1996, cash was generated
primarily from operating activities, while the principal uses of cash were for
repurchases of common stock, dividends paid to shareholders and acquisitions of
property and equipment. At December 31, 1996, the ratio of current assets to
current liabilities was 2.2 to 1 compared with 2.5 to 1 at the end of 1995.
During the first quarter of 1996, the Company completed its 1994 share
repurchase program and, under that program, reacquired 1,748,850 shares of its
Class A Common Stock and 1,254,750 shares of its Class B Common Stock at an
average cost of $10.51 and $10.43 per share, respectively. Additionally, during
March of 1996, the Company announced a second 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 December 31, 1996, the Company has
reacquired 1,200,300 shares of its Class A Common Stock and 293,100 shares of
its Class B Common Stock at an average cost of $12.88 and $12.76 per share,
respectively.
On December 19, 1996, the Company and Swiss Reinsurance Company of Zurich,
Switzerland agreed to merge their existing claims service firms outside the
United States. The new entity will be a 60% owned subsidiary of the Company. The
Company also acquired 100% of Swiss Reinsurance Company's Thomas Howell Group -
Americas unit based in the United States for approximately $3.3 million.
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 December 31, 1996, totaled
$8.4 million, as compared to $10.2 million at the end of 1995. 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 the end of 1996 was $221.5 million, compared with
$220.9 million at the end of 1995. Long-term debt totaled $376,000 at December
31, 1996, compared to $9.4 million at December 31, 1995.
- -
18
- -
<PAGE> 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
of Financial Condition and Results of Operations
RESULTS OF OPERATIONS
1996 COMPARED WITH 1995
Effective January 1, 1997 the Company changed its method of reporting its
principal service categories to correspond with internal management reporting.
Accordingly, disability management services is now reported as a component of
domestic operations. Operating results for the Company's domestic and
international operations for the years ended December 31, 1996 and 1995 are as
follows:
<TABLE>
<CAPTION>
Domestic International Total
1996 1995 1996 1995 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------
In Thousands of Dollars, Except Percentages
<S> <C> <C> <C> <C> <C> <C>
Revenues $555,257 $523,367 $ 78,368 $ 84,210 $633,625 $607,577
Compensation & Benefits 355,110 338,221 48,251 50,752 403,361 388,973
% of Revenues 63.9% 64.6% 61.5% 60.3% 63.6% 64.0%
Expenses Other than Compensation & Benefits 130,973 127,778 27,321 30,446 158,294 158,224
% of Revenues 23.6% 24.4% 34.9% 36.1% 25.0% 26.1%
-------- -------- -------- -------- -------- --------
Pretax Income $ 69,174 $ 57,368 $ 2,796 $ 3,012 $ 71,970 $ 60,380
% of Revenues 12.5% 11.0% 3.6% 3.6% 11.4% 9.9%
======== ======== ======== ======== ======== ========
</TABLE>
Total revenues from services provided increased by 4.3%, or $26.0 million,
during 1996. Unit volume, measured principally by chargeable hours, increased
approximately 3.3% during 1996. This increase was complemented 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 2%. In addition,
the Company began reporting its international results on a two-month rather than
a three-month delayed basis in 1995. Accordingly, 1995 international results
reflect thirteen months of activity as compared to twelve months in 1996. This
change in reporting reduced total revenues by approximately 1%. The effect of
this change on pretax income was not material.
Consolidated pretax income increased 19.2%, or $11.6 million, during 1996. While
revenues increased 4.3%, costs increased only 2.6% due to efficiencies achieved
in operating and support activities throughout the Company.
DOMESTIC OPERATIONS
Revenues
Domestic revenues from insurance companies and self-insured clients totaled
$555.3 million for 1996, up 6.1% from related 1995 revenues of $523.4 million.
This increase is largely due to greater claims volume from insurers who have
outsourced their claims handling functions to the Company and an increase in
weather-related claims resulting from the severe weather in the United States
during 1996. This growth offsets continued weakness in the self-insured
corporate market. Revenues from services provided to an insurance holding
company and its subsidiaries continued to decline, from 12% of total revenues in
1995 to less than 10% in 1996.
Revenues from domestic operations include $41.0 million in revenue from services
provided by the Company's "catastrophe" adjusters during 1996, principally to
clients affected by natural or man-made disasters, including hurricanes, floods,
hail storms and oil spills. During 1995, such revenue approximated $29.1
million.
Compensation and Fringe Benefits
The Company's most significant expense is the compensation of its employees,
including related payroll taxes and fringe benefits. Although increasing in the
aggregate due to increased claims volume, domestic compensation expense
decreased as a percent of revenues from 64.6% in 1995 to 63.9% in 1996. This
decrease is due primarily to a decline in administrative compensation expense,
partially offset by an increase in incentive compensation expense which is based
on growth in earnings.
-
19
-
<PAGE> 3
MANAGEMENT'S DISCUSSION AND ANALYSIS
of Financial Condition and Results of Operations
Domestic salaries and wages of personnel other than contract managers increased
by 3.6%, from $254.3 million in 1995 to $263.4 million in 1996. Contract
managers' compensation is based on the operating income of the offices which
they manage. Compensation of these managers totaled $36.5 million during 1996,
increasing 28.1% from related 1995 costs of $28.5 million.
Payroll taxes and fringe benefits for domestic operations totaled $55.2 million
in 1996, decreasing slightly from 1995 costs of $55.4 million, due primarily to
lower employee group medical costs, substantially offset by higher profit
sharing contributions.
Expenses Other than Compensation and Fringe Benefits
Domestic expenses other than compensation and related payroll taxes and fringe
benefits approximated 23.6% of revenues for 1996, down from 24.4% of revenues
for 1995. This decline is due largely to lower automobile fleet and data
processing costs.
INTERNATIONAL OPERATIONS
Revenues
Revenues from the Company's international operations declined to $78.4 million
in 1996, from $84.2 million in 1995. This decline results primarily from the
Company's 1995 reporting change when the delay in reporting international
results was reduced from three to two months. Accordingly, 1995 international
results reflect thirteen months of activity as compared to twelve months in
1996.
Compensation and Fringe Benefits
Compensation expense, including related payroll taxes and fringe benefits, was
also affected by the 1995 change in reporting, since 1995 results include
thirteen months of expense as compared to twelve months in 1996. However, as a
percent of revenues, such expense increased from 60.3% in 1995 to 61.5% in 1996.
Salaries and wages of international personnel increased from 52.5% of revenues
in 1995 to 53.6% in 1996. Payroll taxes and fringe benefits also increased
slightly as a percent of revenues, from 7.8% in 1995 to 7.9% in 1996.
Expenses Other than Compensation and Fringe Benefits
Expenses other than compensation and related payroll taxes and fringe benefits
approximated 34.9% of international revenues for 1996, compared to 36.1% of 1995
revenues. This decline reflects efficiencies gained through integration of the
Company's late 1994 acquisitions in the United Kingdom. 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.
RESULTS OF OPERATIONS
1995 COMPARED WITH 1994
Operating results for the Company's domestic and international operations for
the years ended December 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
Domestic International Total
1995 1994 1995 1994 1995 1994
- -------------------------------------------------------------------------------------------------------------------------------
In Thousands of Dollars, Except Percentages
<S> <C> <C> <C> <C> <C> <C>
Revenues $523,367 $541,969 $ 84,210 $ 45,812 $607,577 $587,781
Compensation & Benefits 338,221 352,376 50,752 28,506 388,973 380,882
% of Revenues 64.6% 65.0% 60.3% 62.2% 64.0% 64.8%
Expenses Other than Compensation & Benefits 127,778 122,844 30,446 16,004 158,224 138,848
% of Revenues 24.4% 22.7% 36.1% 35.0% 26.1% 23.6%
-------- -------- -------- -------- -------- --------
Pretax Income $ 57,368 $ 66,749 $ 3,012 $ 1,302 $ 60,380 $ 68,051
% of Revenues 11.0% 12.3% 3.6% 2.8% 9.9% 11.6%
======== ======== ======== ======== ======== ========
</TABLE>
- -
20
- -
<PAGE> 4
MANAGEMENT'S DISCUSSION AND ANALYSIS
of Financial Condition and Results of Operations
Total revenues from services provided increased by 3.4%, or $19.8 million,
during 1995. Unit volume, measured principally by chargeable hours and excluding
acquisitions, decreased approximately 5.8% during 1995. 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 2.4% during 1995. Revenues from services provided to an insurance
holding company and its subsidiaries continued to decline, from 14% of total
revenues in 1994 to 12% in 1995. 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 6.8% during 1995.
Consolidated pretax income declined 11.3%, or $7.7 million, during 1995. While
revenues increased 3.4%, costs increased 5.3% due to increased systems
development costs and higher costs related to the Company's late 1994
acquisitions in the United Kingdom.
DOMESTIC OPERATIONS
Revenues
Domestic revenues from insurance companies and self-insured clients totaled
$523.4 million for 1995, down 3.4% from related 1994 revenues of $542.0 million.
This decline reflects lower claims frequency throughout the property and
casualty insurance industry and increased competition in the self-insured
corporate market.
Domestic revenues include $29.1 million in revenues from services provided by
the Company's "catastrophe" adjusters during 1995, principally to clients
affected by natural or man-made disasters, including hurricanes, floods, hail
storms, oil spills and chemical-related incidents. During 1994, such revenues
approximated $35.0 million.
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 from 65.0% of revenues in 1994 to 64.6% in 1995. This decrease
is primarily due to lower employee group medical and workers compensation costs
and reduced incentive compensation expense, which is based on growth in
earnings.
Domestic salaries and wages of personnel other than contract managers decreased
slightly, from $255.5 million in 1994 to $254.3 million in 1995. Contract
managers' compensation is based on the operating income of the offices which
they manage. Compensation of these managers totaled $28.5 million during 1995,
declining 25.4% from related 1994 costs of $38.2 million.
Domestic payroll taxes and fringe benefits totaled $55.4 million in 1995,
decreasing 5.6% from 1994 costs of $58.7 million, due primarily to lower
employee group medical, workers compensation and profit sharing costs.
Expenses Other than Compensation and Fringe Benefits
Domestic expenses other than compensation and related payroll taxes and fringe
benefits approximated 24.4% of revenues for 1995, compared to 22.7% of revenues
for 1994. These increases resulted principally from an increase in systems
development costs and higher automobile fleet costs.
-
21
-
<PAGE> 5
MANAGEMENTS DISCUSSION AND ANALYSIS
of Financial Condition and Results of Operations
INTERNATIONAL OPERATIONS
Revenues
Revenues from the Company's international operations increased to $84.2 million
in 1995, from $45.8 million in 1994. This increase resulted primarily from the
Company's late 1994 acquisitions in the United Kingdom and strong Canadian
growth.
Compensation and Fringe Benefits
Compensation expense, including related payroll taxes and fringe benefits, also
increased significantly, from $28.5 million in 1994 to $50.8 million in 1995.
However, as a percent of revenues, such expense declined from 62.2% of revenues
in 1994 to 60.3% in 1995. Salaries and wages of international personnel declined
from 54.7% of revenues in 1994 to 52.5% in 1995, reflecting the integration of
the United Kingdom acquisitions with Crawford's operations in that country.
Payroll taxes and fringe benefits increased as a percentage of revenues, from
7.5% in 1994 to 7.8% in 1995, due to more generous retirement programs
maintained by the acquired entities.
Expenses Other than Compensation and Fringe Benefits
Expenses other than compensation and related payroll taxes and fringe benefits
approximated 36.1% of revenues for 1995 compared to 35.0% of revenues for 1994,
primarily due to higher amortization of intangible assets arising from the
Company's United Kingdom acquisitions. 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.
- -
22
- -
<PAGE> 6
CONSOLIDATED STATEMENTS OF INCOME
Crawford & Company
<TABLE>
<CAPTION>
IN THOUSANDS
OF $ EXCEPT
For the years ended December 31, 1996, 1995 and 1994 1996 1995 1994 SHARE AND PER
- ---------------------------------------------------------------------------------------------------------- SHARE DATA
<S> <C> <C> <C>
Revenues $ 633,625 $ 607,577 $ 587,781
-------------------------------------------
Costs and Expenses:
Costs of services provided, less
reimbursed expenses of $33,218
in 1996, $34,025 in 1995 and
$31,751 in 1994 451,512 439,029 421,047
Selling, general and
administrative expenses 110,143 108,168 98,683
-------------------------------------------
561,655 547,197 519,730
-------------------------------------------
Income Before Income Taxes 71,970 60,380 68,051
Income Taxes 29,160 24,360 27,450
-------------------------------------------
Net Income $ 42,810 $ 36,020 $ 40,601
-------------------------------------------
Per Share Amounts:
Net income $ 0.84 $ 0.69 $ 0.76
-------------------------------------------
Cash Dividends Per Share:
Class A Common Stock $ 0.40 $ 0.39 $ 0.37
-------------------------------------------
Class B Common Stock $ 0.39 $ 0.36 $ 0.33
-------------------------------------------
Weighted Average
Shares Outstanding 51,032,111 52,277,138 53,585,244
-------------------------------------------
</TABLE>
-
23
-
The accompanying notes are an integral part of these statements.
<PAGE> 7
CONSOLIDATED BALANCE SHEETS
Crawford & Company
<TABLE>
<CAPTION>
December 31, 1996 and 1995 1996 1995
- ----------------------------------------------------------------------------------------------- IN THOUSANDS
ASSETS OF $
Current Assets:
<S> <C> <C>
Cash and cash equivalents $ 55,485 $ 40,802
Short-term investments, at fair value - 5,596
Accounts receivable, less allowance for doubtful
accounts of $11,692 in 1996 and $10,303 in 1995 112,975 111,636
Unbilled revenues, at estimated billable amounts 68,593 60,486
Prepaid income taxes 2,677 6,115
Prepaid expenses and other current assets 7,166 9,745
----------------------------------
Total current assets 246,896 234,380
----------------------------------
Property and Equipment, at cost:
Furniture and fixtures 52,123 52,504
Data processing equipment 51,368 48,607
Automobiles 2,332 2,169
Buildings and improvements 15,979 15,928
Land 2,099 2,099
----------------------------------
123,901 121,307
Less accumulated depreciation and amortization (92,264) (84,859)
----------------------------------
Net property and equipment 31,637 36,448
----------------------------------
Other Assets:
Intangible assets arising from acquisitions,
less accumulated amortization of $8,768 in
1996 and $7,596 in 1995 52,266 55,731
Prepaid pension obligation 41,405 34,243
Other 5,881 6,181
----------------------------------
Total other assets 99,552 96,155
----------------------------------
$378,085 $366,983
==================================
</TABLE>
- -
24
- -
The accompanying notes are an integral part of these balance sheets.
<PAGE> 8
CONSOLIDATED BALANCE SHEETS
Crawford & Company
<TABLE>
<CAPTION>
December 31, 1996 and 1995 1996 1995
- ------------------------------------------------------------------------------------------------ IN THOUSANDS
OF $
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
<S> <C> <C>
Short-term borrowings $ 8,437 $ 10,154
Accounts payable 13,329 12,366
Accrued compensation and related costs 30,811 26,764
Other accrued liabilities 32,645 29,394
Deferred revenues 16,300 15,504
Current installments of long-term debt 9,130 872
----------------------------------------
Total current liabilities 110,652 95,054
----------------------------------------
Noncurrent Liabilities:
Long-term debt, less current installments 376 9,412
Deferred income taxes 13,810 14,854
Deferred revenues 12,902 10,498
Postretirement medical benefit obligation 8,037 7,938
Self-insured risks 8,172 7,347
Other 2,600 1,020
----------------------------------------
Total noncurrent liabilities 45,897 51,069
----------------------------------------
Shareholders' Investment:
Class A Common Stock, $1.00 par value;
50,000,000 shares authorized; 24,392,393 and
25,844,979 shares issued in 1996 and 1995,
respectively 24,392 25,845
Class B Common Stock, $1.00 par value;
50,000,000 shares authorized; 25,718,919 and
25,946,595 shares issued in 1996 and 1995,
respectively 25,719 25,947
Retained earnings 173,708 172,030
Cumulative translation adjustment (2,283) (2,962)
----------------------------------------
Total shareholders' investment 221,536 220,860
----------------------------------------
$ 378,085 $ 366,983
----------------------------------------
</TABLE>
-
25
-
<PAGE> 9
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
Crawford & Company
<TABLE>
<CAPTION>
IN THOUSANDS
For the years ended December 31, 1996, 1995 and 1994 OF $
- -----------------------------------------------------------------------------------------------------
Common Stock Additional Cumulative
Class A Class B Paid-In Retained Translation
Non-voting Voting Capital Earnings Adjustment
<S> <C> <C> <C> <C> <C>
Balance at 12/31/93
as originally reported $18,015 $18,015 $5,445 $168,944 $(2,606)
Restatement for stock
split in 1997 9,008 9,008 (18,016)
-------------------------------------------------------------------
Balance at 12/31/93
as restated 27,023 27,023 5,445 150,928 (2,606)
Net income 40,601
Translation adjustment (42)
Cash dividends paid (18,941)
Shares repurchased (911) (713) (5,969) (9,331)
Stock options
exercised, net 62 60 524
-------------------------------------------------------------------
Balance at 12/31/94 26,174 26,370 -- 163,257 (2,648)
Net income 36,020
Translation adjustment (314)
Cash dividends paid (19,541)
Shares repurchased (416) (501) (793) (7,706)
Stock options
exercised, net 87 78 793
-------------------------------------------------------------------
Balance at 12/31/95 25,845 25,947 -- 172,030 (2,962)
Net income 42,810
Translation adjustment 679
Cash dividends paid (20,095)
Shares repurchased (1,623) (335) (1,323) (21,037)
Stock options
exercised, net 170 107 1,323
-------------------------------------------------------------------
Balance at 12/31/96 $24,392 $25,719 -- $173,708 $(2,283)
===================================================================
</TABLE>
- -
26
- -
The accompanying notes are an integral part of these statements.
<PAGE> 10
CONSOLIDATED STATEMENTS OF CASH FLOWS
Crawford & Company
<TABLE>
<CAPTION>
For the years ended December 31, 1996, 1995 and 1994 1996 1995 1994 IN THOUSANDS
- ------------------------------------------------------------------------------------------------------------------ OF $
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income $ 42,810 $ 36,020 $ 40,601
Reconciliation of net income to net cash
provided by operating activities:
Depreciation and amortization 15,716 16,865 14,912
Deferred income taxes 2,394 5,205 210
Loss on disposal of risk control unit 1,560 -- --
Loss on sales of property and equipment 434 928 179
Changes in operating assets and liabilities,
net of effects of acquisitions:
Short-term investments 5,596 13,170 10,414
Accounts receivable, net 5,231 (6,392) (8,028)
Unbilled revenues (4,586) (1,172) 1,967
Prepaid or accrued income taxes (1,124) (462) 4,038
Accounts payable and accrued liabilities 10,383 (2,368) 7,006
Deferred revenues 1,897 188 2,767
Prepaid expenses and other (9,328) (14,681) (1,929)
-------------------------------------------------
Net cash provided by operating activities 70,983 47,301 72,137
-------------------------------------------------
Cash Flows From Investing Activities:
Acquisitions of property and equipment (7,473) (12,575) (11,769)
Net assets of companies acquired, excluding cash (3,329) (4,998) (24,918)
Proceeds from sales of property and equipment 350 137 241
-------------------------------------------------
Net cash used in investing activities (10,452) (17,436) (36,446)
-------------------------------------------------
Cash Flows From Financing Activities:
Dividends paid (20,095) (19,541) (18,941)
Repurchase of common stock (24,318) (9,416) (16,924)
Issuance of common stock 1,600 958 646
Increase (decrease) in short-term borrowings (2,340) 684 704
Decrease in long-term debt (677) (827) (2,170)
-------------------------------------------------
Net cash used in financing activities (45,830) (28,142) (36,685)
-------------------------------------------------
Effect of exchange rate changes on cash and cash
equivalents (18) 111 (149)
-------------------------------------------------
Increase (Decrease) in Cash and Cash Equivalents 14,683 1,834 (1,143)
Cash and Cash Equivalents at Beginning of Year 40,802 38,968 40,111
-------------------------------------------------
Cash and Cash Equivalents at End of Year $ 55,485 $ 40,802 $ 38,968
=================================================
</TABLE>
-
27
-
The accompanying notes are an integral part of these statements.
<PAGE> 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,1996, 1995 and 1994
1. SUMMARY OF MAJOR ACCOUNTING AND REPORTING POLICIES
Nature of Operations
The Company is a worldwide diversified service firm which provides claims
services and risk management information services to insurance companies,
self-insured corporations and governmental entities. The majority of the
Company's revenues are derived from domestic claims services.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the
Company and its subsidiaries after elimination of all significant intercompany
transactions.
The financial statements of the Company's international claims adjusting firm,
Crawford & Company International, Inc. (CCI), are included in the Company's
consolidated financial statements on a delayed basis in order to provide
sufficient time for accumulation of CCI's worldwide results. This reporting
delay, previously three months, was changed to two months during 1995.
Accordingly, the Company's December 31, 1996 and 1995 consolidated financial
statements reflect the financial position of CCI as of October 31, 1996 and
1995, respectively, and the results of CCI's operations and cash flows for the
twelve-month period ended October 31, 1996, the thirteen-month period ended
October 31, 1995, and the twelve-month period ended September 30, 1994. This
change had no material effect on the Company's financial position, results of
operations or cash flows.
Foreign Currency Translation
The financial statements of the Company's foreign subsidiaries are translated
into U.S. dollars at current exchange rates. Resulting translation adjustments
are accumulated as a component of shareholders' investment and excluded from net
income.
Cash Flows
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.
Income Taxes
The Company accounts for certain income and expense items differently for
financial reporting and income tax purposes. Provisions for deferred taxes are
made in recognition of these temporary differences. The most significant
differences result from prepayment of pension costs, the use of accelerated
depreciation methods, and deferred recognition of unbilled revenues for income
tax purposes; and deferred revenue, self-insurance, employee compensation, and
receivables valuation reserves provided for financial reporting purposes.
Net Income Per Share
Net income per share is computed based on the weighted average number of total
common shares outstanding of Class A and Class B during the respective years.
The effect of common stock equivalents is less than 3% dilutive and, therefore,
is not included in the computation.
Fair Value of Financial Instruments
The fair value of financial instruments classified as current assets or
liabilities including cash and cash equivalents, receivables and accounts
payable approximate carrying value due to the short-term maturity of the
instruments. The fair value of short-term and long-term debt approximates
carrying value based on their effective interest rates compared to current
market rates.
Short-Term Investments
The Company generally invests its excess cash in short-term debt securities.
These securities are reported at their estimated fair value in the accompanying
financial statements, with unrealized holding gains and losses included in
earnings. Investments with maturities greater than three months are classified
as short-term investments. Net unrealized holding gains of $11,000 and $277,000
and net unrealized holding losses of $288,000 were recognized during 1996, 1995
and 1994, respectively.
- -
28
- -
<PAGE> 12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,1996, 1995 and 1994
Property and Depreciation
The Company depreciates the cost of property and equipment over the estimated
useful lives of the related assets. The estimated useful lives and depreciation
methods for the principal property and equipment classifications are as follows:
<TABLE>
<CAPTION>
Estimated
Classification Useful Lives Method
- -----------------------------------------------------------------------------
<S> <C> <C>
Straight-line
Furniture and and double-
fixtures 3-10 years declining balance
Data processing
equipment 3-5 years Straight-line
Automobiles 3-4 years Straight-line
Buildings and
improvements 7-40 years Straight-line
</TABLE>
Maintenance and repairs are charged to expense as incurred. Renewals and
betterments are capitalized. The cost of property retired or sold and the
related accumulated depreciation are removed from the applicable accounts, and
the resulting gains and losses are reflected in the consolidated statements of
income.
Revenue Recognition
Revenue is recognized in unbilled revenues as services are provided. Deferred
revenues represent the unearned portion of fees derived from certain annual
fixed-rate claim service agreements.
Management's Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Self-Insured Risks
The Company self-insures certain insurable risks consisting primarily of
professional liability, employee medical and disability, workers compensation
and auto liability.
Insurance coverage is obtained for catastrophic property and casualty exposures
(including professional liability on a claims-made basis), as well as those
risks required to be insured by law or contract. Provision for claims under the
self-insured program is recorded based on the Company's estimate of the
aggregate liability for claims incurred. At December 31, 1996 and 1995, accrued
self-insured risks totaled $16,305,000 and $15,185,000, respectively, including
current liabilities of $8,133,000 and $7,838,000, respectively.
Industry Concentration and Major Customer
Substantial portions of the Company's revenues and accounts receivable are
derived from the property and casualty insurance industry. Revenues from
services provided to an insurance holding company and its subsidiaries
approximated 12% of consolidated revenues in 1995 and 14% in 1994. Such revenues
were less than 10% in 1996.
Reclassification
Costs associated with the Company's distributed branch computer network totaling
$19,843,000 were reclassified from selling, general and administrative expenses
to costs of services provided in the 1994 consolidated statement of income.
-
29
-
<PAGE> 13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,1996, 1995 and 1994
2. RETIREMENT PLANS
The Company and its subsidiaries sponsor various defined contribution and
defined benefit retirement plans covering substantially all employees. Employer
contributions under the Company's defined contribution plans are determined
annually, based on employee contributions, a percentage of each covered
employee's compensation, and the profitability of the Company. The cost of these
plans totaled $5,900,000, $3,493,000 and $4,216,000 in 1996, 1995 and 1994,
respectively.
Benefits payable under the Company's defined benefit plans are generally based
on career compensation. The Company's funding policy is to make cash
contributions in amounts sufficient to maintain the plans on an actuarially
sound basis, but not in excess of deductible amounts permitted under federal
income tax regulations. Plan assets are invested primarily in equity and fixed
income securities.
Pension expense related to the defined benefit plans in 1996, 1995 and 1994
included the following components:
<TABLE>
<CAPTION>
1996 1995 1994
- -----------------------------------------------------------------------------------------------------
in thousands of dollars
<S> <C> <C> <C>
Service costs of benefits $ 10,118 $ 9,160 $ 8,832
Interest costs on projected benefit obligations 16,111 14,673 12,711
Actual return on plan assets (17,914) (24,183) 4,211
Net amortization and deferrals 1,351 10,572 (16,749)
-------------------------------------------
Pension expense $ 9,666 $ 10,222 $ 9,005
===========================================
</TABLE>
The following schedule reconciles the funded status of the plans with amounts
reported in the Company's balance sheets at December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
- -----------------------------------------------------------------------------------------
in thousands of dollars
<S> <C> <C>
Accumulated benefit obligation at September 30:
Vested portion $183,423 $167,527
Nonvested portion 12,174 12,607
-------------------------
195,597 180,134
Effect of projected future compensation levels 26,443 27,360
-------------------------
Projected benefit obligation at September 30 222,040 207,494
Less fair market value of plan assets at September 30 (222,533) (199,680)
-------------------------
Unfunded projected benefit obligation (493) 7,814
Contributions made in fourth quarter (2,000) (2,300)
Unrecognized net transition asset 397 477
Unrecognized net loss (36,393) (37,420)
-------------------------
Net prepaid pension cost (38,489) (31,429)
Less pension obligation included in other accrued liabilities (2,916) (2,814)
Prepaid pension included in other assets $(41,405) $(34,243)
=========================
</TABLE>
The discount rate and rate of increase in future compensation levels used in
determining the projected benefit obligations ranged from 7.5% to 8% and 5% to
5.5%, respectively, at September 30, 1996 and 1995. The expected long-term rate
of return on plan assets used in determining net periodic pension costs ranged
from 8% to 9.25% in both years.
- -
30
- -
<PAGE> 14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,1996, 1995 and 1994
3. POSTRETIREMENT MEDICAL BENEFITS
Certain retirees and a fixed number of long-term employees are entitled to
receive postretirement medical benefits under the Company's various medical
benefit plans. Net postretirement medical benefit expense for 1996 and 1995
includes the following components:
<TABLE>
<CAPTION>
1996 1995
- ------------------------------------------------------------------------------------------------
in thousands of dollars
<S> <C> <C>
Service cost of benefits $ 40 $ 40
Interest cost on Accumulated Postretirement Benefit Obligation (APBO) 594 594
-----------------
$ 634 $634
=================
The APBO at December 31, 1996 and 1995 was comprised of the following:
</TABLE>
<TABLE>
<CAPTION>
1996 1995
- ------------------------------------------------------------------------------------------------
in thousands of dollars
<S> <C> <C>
Retirees $4,925 $5,099
Eligible active participants 1,197 1,466
Other active participants 579 1,491
------------------
6,701 8,056
Unrecognized net gain (loss) 1,336 (118)
------------------
Postretirement Medical Benefit Obligation recognized in balance sheets $8,037 $7,938
==================
</TABLE>
The discount rate used in determining the APBO was 7.5% for 1996 and 1995. The
assumed rate of increase in the per capita costs of covered healthcare benefits
(the healthcare cost trend rate) was 8.5% in 1996, decreasing gradually to 5.0%
by the year 2003; and 12% in 1995, decreasing gradually to 6% by the year 2004.
The effect of increasing the healthcare cost trend rate by one percentage point
in each year would increase the APBO, which is unfunded, by approximately
$781,000 and the total service and interest cost components of the 1996 and 1995
net postretirement benefit cost by approximately $60,000 and $76,000,
respectively.
4. INTANGIBLE ASSETS
Other assets include the following intangible assets (net of amortization)
arising from acquisitions:
<TABLE>
<CAPTION>
1996 1995
- -------------------------------------------------------------------------------------------
in thousands of dollars
<S> <C> <C>
Amortized over fifteen years $ 969 $ 1,050
Amortized over twenty years 2,484 4,460
Amortized over forty years 48,813 50,221
--------------------
$ 52,266 $ 55,731
====================
</TABLE>
Goodwill in excess of associated expected operating cash flows is considered to
be impaired and is written down to fair value.
-
31
-
<PAGE> 15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,1996, 1995 and 1994
5. INCOME TAXES
The provisions for income taxes consist of the following:
<TABLE>
<CAPTION>
1996 1995 1994
- ------------------------------------------------------------------------------------------
in thousands of dollars
<S> <C> <C> <C>
Currently payable $26,766 $19,155 $27,240
Current deferred 3,471 (1,442) 703
Noncurrent deferred (1,077) 6,647 (493)
----------------------------------------
$29,160 $24,360 $27,450
========================================
</TABLE>
Cash payments for income taxes were $28,195,000 in 1996, $18,571,000 in 1995 and
$22,796,000 in 1994.
The provisions for income taxes are reconciled to the federal statutory rate of
35% in 1996, 1995 and 1994, as follows:
<TABLE>
<CAPTION>
1996 1995 1994
- ------------------------------------------------------------------------------------------
in thousands of dollars
<S> <C> <C> <C>
Federal income taxes at statutory rate $25,190 $21,133 $23,818
State income taxes, net of federal benefit 2,807 2,512 3,079
Other 1,163 715 553
-----------------------------------------
$29,160 $24,360 $27,450
=========================================
</TABLE>
The provisions for income taxes include foreign income taxes of $1,641,000 in
1996, $2,541,000 in 1995 and $1,831,000 in 1994. The Company does not provide
for additional U.S. and foreign income taxes on undistributed earnings
considered to be permanently reinvested in its foreign subsidiaries. At December
31, 1996, such undistributed earnings totaled $14,424,000.
Deferred income taxes consist of the following at December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
- -----------------------------------------------------------------------------------------
in thousands of dollars
<S> <C> <C>
Accounts receivable reserves $ 1,019 $ 884
Accrued compensation 4,844 4,040
Self-insured risks 5,648 6,901
Deferred revenues 11,159 10,401
Postretirement benefits 3,215 3,175
Other 3,965 2,427
-------------------------
Gross deferred tax assets 29,850 27,828
-------------------------
Unbilled revenues 13,967 10,862
Depreciation and amortization 6,908 7,820
Prepaid pension obligation 19,714 17,706
Other 394 179
-------------------------
Gross deferred tax liabilities 40,983 36,567
-------------------------
Net deferred tax liability (11,133) (8,739)
Less noncurrent net deferred tax liability (13,810) (14,854)
-------------------------
Current net deferred tax asset $ 2,677 $ 6,115
=========================
</TABLE>
- -
32
- -
<PAGE> 16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,1996, 1995 and 1994
6. LEASE COMMITMENTS AND OBLIGATIONS
The Company and its subsidiaries lease office space and certain computer
equipment under operating leases. In addition, the Company leases a major
portion of its automobile fleet under twelve-month operating leases that require
the Company to guarantee specified residual values and monthly rental payments
for up to two months after the end of the lease term. License and maintenance
costs related to the leased vehicles are paid by the Company. Rental expense for
all operating leases was $47,119,000 in 1996, $49,122,000 in 1995 and
$46,512,000 in 1994, including rental expense for automobile leases of
$11,551,000 in 1996, $13,531,000 in 1995 and $12,474,000 in 1994.
The Company also leases certain computer and office equipment under capital
leases with terms ranging from 24 to 60 months. The Company incurred $162,000 of
such capital lease obligations in 1996, none in 1995 and $60,000 in 1994. These
transactions represent noncash investing and financing activities and
consequently have been excluded from the accompanying consolidated statements of
cash flows. At December 31, 1996, future minimum payments under capital leases
and non-cancellable operating leases with remaining terms of more than 12 months
were as follows:
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
- ----------------------------------------------------------------------------------
in thousands of dollars
<S> <C> <C>
1997 $ 93 $25,219
1998 69 15,862
1999 51 10,529
2000 24 4,767
2001 -- 3,084
Subsequent to 2001 -- 8,027
------------------
Total minimum lease payments 237 $67,488
=======
Less amounts representing interest (33)
----
Present value of future minimum lease payments (See Note 9) $204
====
</TABLE>
7. FOREIGN OPERATIONS
The Company provides claims services through branch offices located in
approximately 51 countries outside the United States. Selected financial
information as of December 31, 1996, 1995 and 1994 covering the Company's
foreign operations is presented below:
<TABLE>
<CAPTION>
U.S. Foreign Consolidated
Operations Operations Totals
- ------------------------------------------------------------------------------
in thousands of dollars
1996
<S> <C> <C> <C>
Revenues $555,257 $78,368 $633,625
Pretax Income 69,174 2,796 71,970
Total Assets 263,349 114,736 378,085
1995
Revenues $523,367 $84,210 $607,577
Pretax Income 57,368 3,012 60,380
Total Assets 256,417 110,566 366,983
1994
Revenues $541,969 $45,812 $587,781
Pretax Income 66,749 1,302 68,051
Total Assets 250,923 105,458 356,381
</TABLE>
-
33
-
<PAGE> 17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,1996, 1995 and 1994
8. ACQUISITIONS AND DISPOSITIONS
On December 19, 1996, the Company entered into an agreement with Swiss
Reinsurance Company (Swiss Re) to merge both companies' claims services firms
outside the United States. Following the merger, the new entity was named
Crawford-THG Limited. The Company contributed its 100% owned subsidiary,
Crawford & Company International (CCI), with a net tangible book value of
approximately $38 million, and a fair market value of approximately $77.5
million, in exchange for a 60% controlling interest in Crawford-THG Limited.
Swiss Re contributed the non-U.S. operations of its 100% owned subsidiary,
Thomas Howell Group (THG), with a net tangible book value of approximately $25
million, and a fair market value of approximately $51.7 million, in exchange for
a 40% minority interest.
The merger was accounted for under the purchase method of accounting as a
partial sale of CCI to Swiss Re, and a partial acquisition of THG by the
Company. No gain or loss was recognized on the partial sale. The accompanying
consolidated financial statements exclude the financial position and operating
results of the Company's interest in THG at December 31,1996 due to the
two-month lag in reporting international results.
The Company also acquired 100% of Swiss Re's THG-Americas unit based in the
United States for approximately $3.3 million. The Company acquired assets with a
fair market value of approximately $13.7 million and assumed liabilities of
$10.4 million. This transaction was accounted for by the purchase method of
accounting. The December 31, 1996 consolidated financial statements reflect the
financial position of THG-Americas as of that date, but do not include any
revenues or expenses related to THG-Americas' operations.
The following table presents unaudited pro forma operating results as if these
acquisitions had occurred on January 1, 1995. The pro forma information is based
on historical information and does not necessarily reflect the actual results
that would have occurred nor is it necessarily indicative of future results of
operations of the combined enterprises.
<TABLE>
<CAPTION>
1996 1995
- ----------------------------------------------------------------------------
Unaudited
(in thousands of dollars,
except per share data)
<S> <C> <C>
Revenues $757,335 $727,526
=====================
Net income before minority interest $ 44,764 $ 33,103
Minority interest in net (income) loss (2,717) 1,279
---------------------
Net income $ 42,047 $ 34,382
=====================
Net income per share $ 0.82 $ 0.66
=====================
</TABLE>
The operating results of the acquired entities include certain non-recurring
expenses and restructuring charges. Had these charges not been incurred, pro
forma net income per share would have been $0.87 and $0.68 for 1996 and 1995,
respectively.
On January 31, 1997, the Company entered into an agreement to dispose of its
risk control unit. The 1996 consolidated statement of income includes a pre-tax
charge of $1,560,000 ($928,200 after tax or $.02 per share) related to this
transaction.
- -
34
- -
<PAGE> 18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,1996, 1995 and 1994
9. LONG-TERM DEBT AND SHORT-TERM BORROWINGS
Long-term debt at December 31, 1996 and 1995 consists of the following:
<TABLE>
<CAPTION>
1996 1995
- -----------------------------------------------------------------------------------------------------
in thousands of dollars
<S> <C> <C>
Unsecured convertible loan notes issued in connection with
acquisition of foreign subsidiary; non interest bearing; due November 1997 $8,188 $ 7,900
6% loan notes issued in connection with acquisition of foreign subsidiary;
due October 1997 780 1,464
Loan note issued in connection with acquisition of foreign subsidiary;
non-interest bearing; due January 1997 57 526
Mortgage payable, secured by building 277 277
Capital leases (See Note 6) 204 117
--------------------
9,506 10,284
Less current installments (9,130) (872)
--------------------
$ 376 $ 9,412
====================
</TABLE>
The convertible loan notes are convertible into Crawford Class A Common Stock
based on certain factors, including the market price of the stock and currency
exchange (approximately 810,000 and 775,000 shares based on the market price and
currency exchange at December 31, 1996 and 1995, respectively).
The Company maintains credit lines with banks in order to meet seasonal working
capital requirements or other financing needs that may arise. Short-term
borrowings totaled $8.4 million and $10.2 million at December 31, 1996 and 1995,
respectively. The weighted average interest rate on short-term borrowings during
1996 and 1995 was 5.6% and 6.9%, respectively.
10. COMMON STOCK
The Company has two classes of Common Stock outstanding, Class A Common Stock
and Class B Common Stock. These two classes of stock have essentially identical
rights, except that shares of Class A Common Stock generally do not have any
voting rights. Under the Company's Articles of Incorporation, amended as of July
24, 1990, the Board of Directors may pay higher (but not lower) cash dividends
on the non-voting Class A Common Stock than on the voting Class B Common Stock.
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 is to be
effected in the form of a 50% stock dividend on the outstanding shares of each
Class, payable on March 25, 1997 to stockholders of record on March 11, 1997.
Had this action occurred on December 31, 1996, it would have resulted in the
issuance of 8,130,798 shares of Class A Common Stock and 8,572,973 shares of
Class B CommonStock, and the transfer of the par value of the additional shares
($8,130,798 for Class A shares and $8,572,973 for Class B shares) from retained
earnings to common stock. All share and per share amounts in the accompanying
financial statements and related notes have been restated to give retroactive
effect to this stock split.
-
35
-
<PAGE> 19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,1996, 1995 and 1994
Stock Compensation Plans
At December 31, 1996, the Company had four stock-based compensation plans which
are described below. The Company applies APB Opinion 25 and related
Interpretations in accounting for its plans. Accordingly, no compensation cost
has been recognized for its fixed stock option plans and its employee stock
purchase plan. Had compensation cost for these stock-based compensation plans
been determined based on the fair value at the grant dates for awards under
those plans consistent with Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation," the Company's net income and earnings per share
would have been reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
1996 1995
- ---------------------------------------------------------------------
(in thousands of dollars,
except per share data)
<S> <C> <C> <C>
Net Income As Reported $42,810 $36,020
Pro Forma 42,209 35,869
Earnings Per Share As Reported $0.84 $0.69
Pro Forma 0.83 0.69
</TABLE>
Employee Stock Purchase Plan
Under the 1996 Employee Stock Purchase Plan, the Company is authorized to issue
up to 1,500,000 shares of its Class A Common Stock to its full time employees,
nearly all of whom are eligible to participate. Under the terms of the Plan,
employees can choose each year to have up to $21,000 of their annual earnings
withheld to purchase the Company's Class A Common Stock. The purchase price of
the stock is 85% of the lesser of the closing price for a share of stock on the
first day of the purchase period or the last day of the purchase period.
The fair value of each employee purchase right was estimated using the
Black-Scholes option pricing model with the following assumptions: dividend
yield of 2.6%; expected life of one year; expected volatility of 20%; and
risk-free interest rate of 5.0%. The weighted-average fair value of the purchase
rights granted in 1996 was $5.
Fixed Stock Option Plans
The Company has three fixed Employee Stock Option Plans. Under these plans which
were established in 1990, 1987, and 1981, the Company may grant options for up
to 2,857,500 shares, 675,000 shares, and 450,000 shares, respectively, of common
stock to key employees. The exercise price of each option equals the market
price of the Company's stock on the date of grant and an option's maximum term
is 10 years. Options are granted throughout the year under the 1990 Plan and
become exercisable according to provisions outlined in the Plan's terms and
conditions. The 1990 Plan includes options granted as incentive stock options
(ISO) and non-incentive stock options (Non-ISO). During 1996, 1,095,000 Non-ISOs
were granted to certain key executives. These options vest in full if the
Company's stock price closes above $17.73 for ten consecutive trading days and
expire in seven years. As of December 31, 1996, all options under the 1987 and
1981 Plans have been granted.
Options granted prior to the July 24, 1990 amendment to the Articles of
Incorporation are exercisable for one share of Class A Common Stock and one
share of Class B Common Stock. Options granted after July 24, 1990 are
exercisable for one share of Class A Common Stock.
The fair value of each option granted in 1996 and 1995 under the 1990 Plan is
estimated on the date of grant using the Black-Scholes option pricing model with
the following weighted-average assumptions: dividend yield of 2.6% for both
years; expected volatility of 20% for both years; risk-free interest rates of
5.6% (ISO) and 5.4% (Non-ISO) in 1996, and 7.6% (ISO) in 1995; and expected
option lives of 8.3 years (ISO) and 6.5 years (Non-ISO) in 1996, and 8.3 years
(ISO) in 1995.
A summary of the status of the Company's fixed stock option plans as of December
31, 1996, 1995, and 1994, and changes during the years ending on those dates is
as follows (in thousands of shares):
- -
36
- -
<PAGE> 20
Notes to Consolidated Financial Statements
December 31,1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------------
Weighted- Weighted- Weighted-
Shares Average Shares Average Shares Average
Exercise Price Exercise Price Exercise Price
------------------------- -------------------------- ---------------------------
Class A Common Stock (Non-voting) Options
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning of year 1,592 $11 1,536 $11 1,393 $12
Options granted 1,489 12 346 10 366 11
Options exercised (275) 9 (91) 6 (69) 6
Options forfeited (216) 11 (199) 12 (154) 14
----- ----- -----
Outstanding, end of year 2,590 12 1,592 11 1,536 12
===== ===== =====
Exercisable, end of year 560 647 709
===== ===== =====
Weighted-average fair value of options granted during the year
Incentive stock options $ 3 $ 3 --
Nonincentive stock options 3 -- --
Class B Common Stock (Voting) Options
Outstanding, beginning of year 344 $ 9 451 $ 8 538 $ 8
Options granted - - - - - -
Options exercised (206) 9 (80) 6 (65) 6
Options forfeited (6) 10 (27) 9 (22) 10
----- ----- -----
Outstanding, end of year 132 9 344 9 451 8
===== ===== =====
Exercisable, end of year 132 344 416
===== ===== =====
</TABLE>
The following table summarizes information about fixed stock options outstanding
at December 31, 1996:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
- -------------------------------------------------------------------------------------------------------
Range of Number Weighted- Weighted- Number Weighted-
Exercise Outstanding Average Average Exercisable Average
Prices at 12/31/96 Remaining Exercise at 12/31/96 Exercise
Contractual Life Price Price
- ------------ -------------------------------------------------- ------------------------------
Class A Common Stock (Non-voting) Options
<S> <C> <C> <C> <C> <C>
$ 4 to 8 49 2.1 years $ 6 48 $ 6
9 to 12 1,230 7.4 11 392 11
13 to 17 1,311 6.6 13 120 14
------ ----
$ 4 to 17 2,590 6.9 12 560 11
====== ====
Class B Common Stock (Voting) Options
$ 4 to 8 43 1.8 years $ 5 43 $ 5
9 to 11 89 3.1 10 89 10
---- ----
$ 4 to 11 132 2.7 9 132 9
==== ====
</TABLE>
-
37
-
<PAGE> 21
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of Crawford & Company: [ARTHUR ANDERSON LOGO]
We have audited the consolidated balance sheets of CRAWFORD & COMPANY (a Georgia
corporation) and subsidiaries as of December 31, 1996 and 1995 and the related
consolidated statements of income, shareholders' investment, and cash flows for
each of the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the 1994 financial statements of certain foreign
operations, which statements reflect approximately 4% of consolidated revenues
in 1994. Those statements were audited by other auditors whose report has been
furnished to us, and our opinion, in so far as it relates to the amounts
included for those entities, is based solely on the report of other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Crawford & Company and
subsidiaries as of December 31, 1996 and 1995 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996 in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Atlanta, Georgia /S/ ARTHUR ANDERSON LLP
January 28, 1997
- -
38
- -
<PAGE> 22
SELECTED FINANCIAL DATA
Crawford & Company
For the years ended December 31, 1996, 1995, 1994, 1993 and 1992
<TABLE>
<CAPTION>
IN THOUSANDS
OF $ EXCEPT
1996 1995 1994 1993 1992 SHARE AND PER
- -------------------------------------------------------------------------------------------------------------- SHARE DATA
<S> <C> <C> <C> <C> <C>
Revenues $ 633,625 $ 607,577 $ 587,781 $ 576,298 $ 597,745
Income Before
Accounting Changes 42,810 36,020 40,601 38,050 40,417
Income Per Share Before
Accounting Changes 0.84 0.69 0.76 0.71 0.75
Total Assets 378,085 366,983 356,381 326,263 316,889
Long-Term Debt 376 9,412 9,962 734 1,806
Cash Dividends Per Share:
Class A Common Stock 0.40 0.39 0.37 0.35 0.31
Class B Common Stock 0.39 0.36 0.33 0.29 0.27
Weighted Average
Shares Outstanding 51,032,111 52,277,138 53,585,244 53,976,672 53,753,102
</TABLE>
-
39
-
Note: All shares and per share amounts have been restated to reflect the
three-for-two stock split in 1997 (See Note 10).
Effective January 1, 1993, the Company adopted new accounting standards for
postretirement benefits other than pensions, other postemployment benefits,
and income taxes, by reflecting the cumulative effects of the changes in
income upon adoption.
<PAGE> 23
QUARTERLY FINANCIAL DATA
Crawford & Company
Quarterly Financial Data (Unaudited), Dividend Information and Common Stock
Quotations
<TABLE>
<CAPTION>
IN THOUSANDS
1996 1995 1994 OF $ EXCEPT
- ----------------------------------------------------------------------------------------- PER SHARE DATA
First Quarter:
<S> <C> <C> <C>
Revenues $ 161,563 $ 148,649 $ 148,792
Income before income taxes 17,478 15,884 16,892
Net income 10,431 9,478 10,087
Net income per share 0.20 0.18 0.19
Cash dividends per share:
Class A Common Stock 0.1000 0.0967 0.0933
Class B Common Stock 0.0967 0.0900 0.0833
Common stock quotations:
Class A - High 11.09 10.50 11.83
Class A - Low 9.67 9.67 10.50
Class B - High 11.42 10.67 11.17
Class B - Low 10.00 9.75 10.09
Second Quarter:
Revenues $ 157,629 $ 150,863 $ 147,824
Income before income taxes 17,144 11,026 17,478
Net income 10,228 6,580 10,433
Net income per share 0.20 0.13 0.19
Cash dividends per share:
Class A Common Stock 0.1000 0.0967 0.0933
Class B Common Stock 0.0967 0.0900 0.0833
Common stock quotations:
Class A - High 11.42 11.67 11.42
Class A - Low 10.17 10.33 10.42
Class B - High 11.59 11.83 11.17
Class B - Low 10.33 10.50 9.92
</TABLE>
- -
40
- -
The quotations listed in this table set forth the high and low closing prices
per share of Crawford & Company Class A Common Stock and Class B Common Stock,
respectively, as reported on the NYSE Composite Tape. All per share amounts and
common stock quotations have been restated to reflect the three-for-two stock
split in 1997 (See Note 10).
<PAGE> 24
QUARTERLY FINANCIAL DATA
Crawford & Company
<TABLE>
<CAPTION>
IN THOUSANDS
1996 1995 1994 OF $ EXCEPT
- ------------------------------------------------------------------------------------------ PER SHARE DATA
Third Quarter:
<S> <C> <C> <C>
Revenues $154,897 $150,954 $149,051
Income before income taxes 18,189 15,806 18,806
Net income 10,855 9,431 10,776
Net income per share 0.22 0.18 0.20
Cash dividends per share:
Class A Common Stock 0.1000 0.0967 0.0933
Class B Common Stock 0.0967 0.0900 0.0833
Common stock quotations:
Class A - High 14.09 11.50 11.17
Class A - Low 11.00 9.83 10.33
Class B - High 14.09 11.75 10.92
Class B - Low 11.00 9.92 10.33
Fourth Quarter:
Revenues $159,536 $157,111 $142,114
Income before income taxes 19,159 17,664 14,875
Net income 11,296 10,531 9,305
Net income per share 0.22 0.20 0.18
Cash dividends per share:
Class A Common Stock 0.1000 0.0967 0.0933
Class B Common Stock 0.0967 0.0900 0.0833
Common stock quotations:
Class A - High 14.50 10.75 10.50
Class A - Low 13.09 10.17 9.67
Class B - High 15.83 11.09 10.67
Class B - Low 13.17 10.17 9.67
</TABLE>
-
41
-
The approximate number of record holders of the Company's stock as of February
3, 1997: Class A -- 1,453 and Class B -- 1,121.
<PAGE> 1
EXHIBIT 21.1
CRAWFORD & COMPANY
LISTING OF SUBSIDIARY CORPORATIONS*
<TABLE>
<CAPTION>
Jurisdiction in
Subsidiary Which Organized
---------- ---------------
<S> <C>
Crawford & Company of New York, Inc. New York
Risk Sciences Group, Inc. Delaware
Crawford & Company Insurance Adjusters, Ltd. Province of Ontario
Crawford and Company, Inc. (P.R.) Commonwealth of Puerto
Rico
Crawford & Company (Bermuda) Limited Bermuda
Crawford & Company HealthCare Management, Inc. Delaware
Crawford & Company International, Inc. Georgia
Graham Miller International, Inc. Georgia
Crawford & Company International Limited England
Crawford/Brocklehurst, Ltd. England
Crawford Arnold & Green Limited England
</TABLE>
* Excludes subsidiaries which, if considered in the aggregate as a
single subsidiary, would not constitute a significant subsidiary as of
the year ended December 31, 1996.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our reports included or incorporated by reference in this Form 10-K into
Crawford & Company's previously filed Registration Statement File Nos. 2-78989,
33-22595, 33-47536, 33-36116, and 333-02051.
/s/ ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 24, 1997
<PAGE> 1
EXHIBIT 23.2
Deloitte & Touche
[Logo]
Deloitte & Touche Telephone : National 01719363000
Stonecutter Court International + 44 171 936 3000
1 Stonecutter Street Telex: BB4739 TRLNDN G
London EC4A 4TR FAX (Gp. 3): 0171 538 1198
LDE: DX 599
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements
2-78989, 33-22595, 33-36116, 33-47536 and 333- 02051 of Crawford and Company on
Form S-8 of our report dated December 1, 1994, appearing in this Annual Report
on Form 10-K of Crawford and Company for the year ended December 31, 1996.
/s/ Deloitte & Touche
DELOITTE & TOUCHE
March 24, 1997
- --------------------
Deloitte Touche
Tohmatsu
International
- --------------------
<PAGE> 1
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned director or
officer, or both, of CRAWFORD & COMPANY, a Georgia corporation (the
"Corporation"), hereby constitutes and appoints JUDD F. OSTEN and DONALD R.
CHAPMAN, and each of them, his or her true and lawful attorney-in-fact and
agent to sign (1) the Corporation's Annual Report on Form 10-K for the year
ended December 31, 1996; (2) the Registration Statement on Form S-8 covering
2,500,000 shares of the Class A Common Stock of the Corporation related to the
1997 Key Employee Stock Option Plan, and any and all amendments to, and
supplements to any prospectus contained in, such Registration Statement and any
and all instruments and documents filed as a part of or in connection with such
amendments or supplements; (3) the Registration Statement on Form S-8 covering
300,000 shares of the Class A Common Stock of the Corporation related to the
1997 Non-Employee Director Stock Option Plan, and any and all amendments to,
and supplements to any prospectus contained in, such Registration Statement and
any and all instruments and documents filed as a part of or in connection with
such amendments or supplements; and (4) any other reports or registration
statements to be filed by the Corporation with the Securities and Exchange
Commission and/or any national securities exchange under the Securities
Exchange Act of 1934, as amended, and any and all amendments thereto, and any
and all instruments and documents filed as part of or in connection with any
such reports or registration statements or reports or amendments thereto; and
in connection with the foregoing, to do any and all acts and things and execute
any and all instrument which such attorneys-in-fact and agents may deem
necessary or advisable to enable this Corporation to comply with the securities
laws of the United States and of any State or other political subdivision
thereof; hereby ratifying and confirming all that such attorneys-in-fact and
agents, or any one of them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
4th day of February, 1997.
/s/ Virginia C. Crawford
<PAGE> 1
EXHIBIT 24.2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned director or
officer, or both, of CRAWFORD & COMPANY, a Georgia corporation (the
"Corporation"), hereby constitutes and appoints JUDD F. OSTEN and DONALD R.
CHAPMAN, and each of them, his or her true and lawful attorney-in-fact and
agent to sign (1) the Corporation's Annual Report on Form 10-K for the year
ended December 31, 1996; (2) the Registration Statement on Form S-8 covering
2,500,000 shares of the Class A Common Stock of the Corporation related to the
1997 Key Employee Stock Option Plan, and any and all amendments to, and
supplements to any prospectus contained in, such Registration Statement and any
and all instruments and documents filed as a part of or in connection with such
amendments or supplements; (3) the Registration Statement on Form S-8 covering
300,000 shares of the Class A Common Stock of the Corporation related to the
1997 Non-Employee Director Stock Option Plan, and any and all amendments to,
and supplements to any prospectus contained in, such Registration Statement and
any and all instruments and documents filed as a part of or in connection with
such amendments or supplements; and (4) any other reports or registration
statements to be filed by the Corporation with the Securities and Exchange
Commission and/or any national securities exchange under the Securities
Exchange Act of 1934, as amended, and any and all amendments thereto, and any
and all instruments and documents filed as part of or in connection with any
such reports or registration statements or reports or amendments thereto; and
in connection with the foregoing, to do any and all acts and things and execute
any and all instrument which such attorneys-in-fact and agents may deem
necessary or advisable to enable this Corporation to comply with the securities
laws of the United States and of any State or other political subdivision
thereof; hereby ratifying and confirming all that such attorneys-in-fact and
agents, or any one of them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
4th day of February, 1997.
/s/ Jesse C. Crawford
<PAGE> 1
EXHIBIT 24.3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned director or
officer, or both, of CRAWFORD & COMPANY, a Georgia corporation (the
"Corporation"), hereby constitutes and appoints JUDD F. OSTEN and DONALD R.
CHAPMAN, and each of them, his or her true and lawful attorney-in-fact and
agent to sign (1) the Corporation's Annual Report on Form 10-K for the year
ended December 31, 1996; (2) the Registration Statement on Form S-8 covering
2,500,000 shares of the Class A Common Stock of the Corporation related to the
1997 Key Employee Stock Option Plan, and any and all amendments to, and
supplements to any prospectus contained in, such Registration Statement and any
and all instruments and documents filed as a part of or in connection with such
amendments or supplements; (3) the Registration Statement on Form S-8 covering
300,000 shares of the Class A Common Stock of the Corporation related to the
1997 Non-Employee Director Stock Option Plan, and any and all amendments to,
and supplements to any prospectus contained in, such Registration Statement and
any and all instruments and documents filed as a part of or in connection with
such amendments or supplements; and (4) any other reports or registration
statements to be filed by the Corporation with the Securities and Exchange
Commission and/or any national securities exchange under the Securities
Exchange Act of 1934, as amended, and any and all amendments thereto, and any
and all instruments and documents filed as part of or in connection with any
such reports or registration statements or reports or amendments thereto; and
in connection with the foregoing, to do any and all acts and things and execute
any and all instrument which such attorneys-in-fact and agents may deem
necessary or advisable to enable this Corporation to comply with the securities
laws of the United States and of any State or other political subdivision
thereof; hereby ratifying and confirming all that such attorneys-in-fact and
agents, or any one of them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
4th day of February, 1997.
/s/ Linda K. Crawford
<PAGE> 1
EXHIBIT 24.4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned director or
officer, or both, of CRAWFORD & COMPANY, a Georgia corporation (the
"Corporation"), hereby constitutes and appoints JUDD F. OSTEN and DONALD R.
CHAPMAN, and each of them, his or her true and lawful attorney-in-fact and
agent to sign (1) the Corporation's Annual Report on Form 10-K for the year
ended December 31, 1996; (2) the Registration Statement on Form S-8 covering
2,500,000 shares of the Class A Common Stock of the Corporation related to the
1997 Key Employee Stock Option Plan, and any and all amendments to, and
supplements to any prospectus contained in, such Registration Statement and any
and all instruments and documents filed as a part of or in connection with such
amendments or supplements; (3) the Registration Statement on Form S-8 covering
300,000 shares of the Class A Common Stock of the Corporation related to the
1997 Non-Employee Director Stock Option Plan, and any and all amendments to,
and supplements to any prospectus contained in, such Registration Statement and
any and all instruments and documents filed as a part of or in connection with
such amendments or supplements; and (4) any other reports or registration
statements to be filed by the Corporation with the Securities and Exchange
Commission and/or any national securities exchange under the Securities
Exchange Act of 1934, as amended, and any and all amendments thereto, and any
and all instruments and documents filed as part of or in connection with any
such reports or registration statements or reports or amendments thereto; and
in connection with the foregoing, to do any and all acts and things and execute
any and all instrument which such attorneys-in-fact and agents may deem
necessary or advisable to enable this Corporation to comply with the securities
laws of the United States and of any State or other political subdivision
thereof; hereby ratifying and confirming all that such attorneys-in-fact and
agents, or any one of them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
4th day of February, 1997.
/s/ Jesse S. Hall
<PAGE> 1
EXHIBIT 24.5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned director or
officer, or both, of CRAWFORD & COMPANY, a Georgia corporation (the
"Corporation"), hereby constitutes and appoints JUDD F. OSTEN and DONALD R.
CHAPMAN, and each of them, his or her true and lawful attorney-in-fact and
agent to sign (1) the Corporation's Annual Report on Form 10-K for the year
ended December 31, 1996; (2) the Registration Statement on Form S-8 covering
2,500,000 shares of the Class A Common Stock of the Corporation related to the
1997 Key Employee Stock Option Plan, and any and all amendments to, and
supplements to any prospectus contained in, such Registration Statement and any
and all instruments and documents filed as a part of or in connection with such
amendments or supplements; (3) the Registration Statement on Form S-8 covering
300,000 shares of the Class A Common Stock of the Corporation related to the
1997 Non-Employee Director Stock Option Plan, and any and all amendments to,
and supplements to any prospectus contained in, such Registration Statement and
any and all instruments and documents filed as a part of or in connection with
such amendments or supplements; and (4) any other reports or registration
statements to be filed by the Corporation with the Securities and Exchange
Commission and/or any national securities exchange under the Securities
Exchange Act of 1934, as amended, and any and all amendments thereto, and any
and all instruments and documents filed as part of or in connection with any
such reports or registration statements or reports or amendments thereto; and
in connection with the foregoing, to do any and all acts and things and execute
any and all instrument which such attorneys-in-fact and agents may deem
necessary or advisable to enable this Corporation to comply with the securities
laws of the United States and of any State or other political subdivision
thereof; hereby ratifying and confirming all that such attorneys-in-fact and
agents, or any one of them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
4th day of February, 1997.
/s/ J. Hicks Lanier
<PAGE> 1
EXHIBIT 24.6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned director or
officer, or both, of CRAWFORD & COMPANY, a Georgia corporation (the
"Corporation"), hereby constitutes and appoints JUDD F. OSTEN and DONALD R.
CHAPMAN, and each of them, his or her true and lawful attorney-in-fact and
agent to sign (1) the Corporation's Annual Report on Form 10-K for the year
ended December 31, 1996; (2) the Registration Statement on Form S-8 covering
2,500,000 shares of the Class A Common Stock of the Corporation related to the
1997 Key Employee Stock Option Plan, and any and all amendments to, and
supplements to any prospectus contained in, such Registration Statement and any
and all instruments and documents filed as a part of or in connection with such
amendments or supplements; (3) the Registration Statement on Form S-8 covering
300,000 shares of the Class A Common Stock of the Corporation related to the
1997 Non-Employee Director Stock Option Plan, and any and all amendments to,
and supplements to any prospectus contained in, such Registration Statement and
any and all instruments and documents filed as a part of or in connection with
such amendments or supplements; and (4) any other reports or registration
statements to be filed by the Corporation with the Securities and Exchange
Commission and/or any national securities exchange under the Securities
Exchange Act of 1934, as amended, and any and all amendments thereto, and any
and all instruments and documents filed as part of or in connection with any
such reports or registration statements or reports or amendments thereto; and
in connection with the foregoing, to do any and all acts and things and execute
any and all instrument which such attorneys-in-fact and agents may deem
necessary or advisable to enable this Corporation to comply with the securities
laws of the United States and of any State or other political subdivision
thereof; hereby ratifying and confirming all that such attorneys-in-fact and
agents, or any one of them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
4th day of February, 1997.
/s/ Larry L. Prince
<PAGE> 1
EXHIBIT 24.7
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned director or
officer, or both, of CRAWFORD & COMPANY, a Georgia corporation (the
"Corporation"), hereby constitutes and appoints JUDD F. OSTEN and DONALD R.
CHAPMAN, and each of them, his or her true and lawful attorney-in-fact and
agent to sign (1) the Corporation's Annual Report on Form 10-K for the year
ended December 31, 1996; (2) the Registration Statement on Form S-8 covering
2,500,000 shares of the Class A Common Stock of the Corporation related to the
1997 Key Employee Stock Option Plan, and any and all amendments to, and
supplements to any prospectus contained in, such Registration Statement and any
and all instruments and documents filed as a part of or in connection with such
amendments or supplements; (3) the Registration Statement on Form S-8 covering
300,000 shares of the Class A Common Stock of the Corporation related to the
1997 Non-Employee Director Stock Option Plan, and any and all amendments to,
and supplements to any prospectus contained in, such Registration Statement and
any and all instruments and documents filed as a part of or in connection with
such amendments or supplements; and (4) any other reports or registration
statements to be filed by the Corporation with the Securities and Exchange
Commission and/or any national securities exchange under the Securities
Exchange Act of 1934, as amended, and any and all amendments thereto, and any
and all instruments and documents filed as part of or in connection with any
such reports or registration statements or reports or amendments thereto; and
in connection with the foregoing, to do any and all acts and things and execute
any and all instrument which such attorneys-in-fact and agents may deem
necessary or advisable to enable this Corporation to comply with the securities
laws of the United States and of any State or other political subdivision
thereof; hereby ratifying and confirming all that such attorneys-in-fact and
agents, or any one of them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
4th day of February, 1997.
/s/ Charles Flather
<PAGE> 1
EXHIBIT 24.8
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned director or
officer, or both, of CRAWFORD & COMPANY, a Georgia corporation (the
"Corporation"), hereby constitutes and appoints JUDD F. OSTEN and DONALD R.
CHAPMAN, and each of them, his or her true and lawful attorney-in-fact and
agent to sign (1) the Corporation's Annual Report on Form 10-K for the year
ended December 31, 1996; (2) the Registration Statement on Form S-8 covering
2,500,000 shares of the Class A Common Stock of the Corporation related to the
1997 Key Employee Stock Option Plan, and any and all amendments to, and
supplements to any prospectus contained in, such Registration Statement and any
and all instruments and documents filed as a part of or in connection with such
amendments or supplements; (3) the Registration Statement on Form S-8 covering
300,000 shares of the Class A Common Stock of the Corporation related to the
1997 Non-Employee Director Stock Option Plan, and any and all amendments to,
and supplements to any prospectus contained in, such Registration Statement and
any and all instruments and documents filed as a part of or in connection with
such amendments or supplements; and (4) any other reports or registration
statements to be filed by the Corporation with the Securities and Exchange
Commission and/or any national securities exchange under the Securities
Exchange Act of 1934, as amended, and any and all amendments thereto, and any
and all instruments and documents filed as part of or in connection with any
such reports or registration statements or reports or amendments thereto; and
in connection with the foregoing, to do any and all acts and things and execute
any and all instrument which such attorneys-in-fact and agents may deem
necessary or advisable to enable this Corporation to comply with the securities
laws of the United States and of any State or other political subdivision
thereof; hereby ratifying and confirming all that such attorneys-in-fact and
agents, or any one of them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
4th day of February, 1997.
/s/ Forrest L. Minix
<PAGE> 1
EXHIBIT 24.9
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned director or
officer, or both, of CRAWFORD & COMPANY, a Georgia corporation (the
"Corporation"), hereby constitutes and appoints JUDD F. OSTEN and DONALD R.
CHAPMAN, and each of them, his or her true and lawful attorney-in-fact and
agent to sign (1) the Corporation's Annual Report on Form 10-K for the year
ended December 31, 1996; (2) the Registration Statement on Form S-8 covering
2,500,000 shares of the Class A Common Stock of the Corporation related to the
1997 Key Employee Stock Option Plan, and any and all amendments to, and
supplements to any prospectus contained in, such Registration Statement and any
and all instruments and documents filed as a part of or in connection with such
amendments or supplements; (3) the Registration Statement on Form S-8 covering
300,000 shares of the Class A Common Stock of the Corporation related to the
1997 Non-Employee Director Stock Option Plan, and any and all amendments to,
and supplements to any prospectus contained in, such Registration Statement and
any and all instruments and documents filed as a part of or in connection with
such amendments or supplements; and (4) any other reports or registration
statements to be filed by the Corporation with the Securities and Exchange
Commission and/or any national securities exchange under the Securities
Exchange Act of 1934, as amended, and any and all amendments thereto, and any
and all instruments and documents filed as part of or in connection with any
such reports or registration statements or reports or amendments thereto; and
in connection with the foregoing, to do any and all acts and things and execute
any and all instrument which such attorneys-in-fact and agents may deem
necessary or advisable to enable this Corporation to comply with the securities
laws of the United States and of any State or other political subdivision
thereof; hereby ratifying and confirming all that such attorneys-in-fact and
agents, or any one of them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
4th day of February, 1997.
/s/ John A. Williams
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-END> DEC-31-1996 DEC-31-1995
<CASH> 55,485 40,802
<SECURITIES> 0 5,596
<RECEIVABLES> 181,568 172,122
<ALLOWANCES> 11,692 10,303
<INVENTORY> 0 0
<CURRENT-ASSETS> 246,896 234,380
<PP&E> 123,901 121,307
<DEPRECIATION> 92,264 84,859
<TOTAL-ASSETS> 378,085 366,983
<CURRENT-LIABILITIES> 110,652 95,054
<BONDS> 376 9,412
0 0
0 0
<COMMON> 50,111 34,528<F1>
<OTHER-SE> 171,425 186,332<F2>
<TOTAL-LIABILITY-AND-EQUITY> 378,085 366,983
<SALES> 0 0
<TOTAL-REVENUES> 633,625 607,577
<CGS> 0 0
<TOTAL-COSTS> 451,512 439,029
<OTHER-EXPENSES> 110,143 108,168
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 71,970 60,380
<INCOME-TAX> 29,160 24,360
<INCOME-CONTINUING> 42,810 36,020
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 42,810 36,020
<EPS-PRIMARY> .84 1.03<F3>
<EPS-DILUTED> 0 0
<FN>
<F1>NOTE: 12/31/95 ADJUSTED FOR STOCK SPLIT: 51,792
<F2>NOTE: 12/31/95 ADJUSTED FOR STOCK SPLIT: 169,068
<F3>NOTE: 12/31/95 ADJUSTED FOR STOCK SPLIT: 0.69
</FN>
</TABLE>
