<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
for the quarter ended June 30, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from ____ to _____
COMMISSION FILE NUMBER 1-10356
CRAWFORD & COMPANY
(Exact name of Registrant as specified in its charter)
GEORGIA 58-0506554
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5620 GLENRIDGE DRIVE, N.E.
ATLANTA, GEORGIA 30342
(Address of principal executive offices) (Zip Code)
(404) 256-0830
(Registrant's telephone number, including area code)
-------------
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 [ ]
The number of shares outstanding of each of the issuer's classes of common
stock, as of July 30, 1999 was as follows:
CLASS A COMMON STOCK, $1.00 PAR VALUE: 25,028,306
CLASS B COMMON STOCK, $1.00 PAR VALUE: 24,820,871
================================================================================
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
-----------------------------------
JUNE 30, JUNE 30,
1999 1998
-----------------------------------
<S> <C> <C>
REVENUES $342,448 $336,161
COSTS AND EXPENSES:
Cost of services provided, less reimbursed expenses
of $17,993 in 1999 and $18,590 in 1998 250,132 246,361
Selling, general, and administrative expenses 56,203 49,581
Year 2000 expenses 2,846 2,970
- ----------------------------------------------------------------------------------------------------------------
TOTAL COSTS AND EXPENSES 309,181 298,912
- ----------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 33,267 37,249
PROVISION FOR INCOME TAXES 12,765 14,302
- ----------------------------------------------------------------------------------------------------------------
INCOME BEFORE MINORITY INTEREST 20,502 22,947
MINORITY INTEREST IN LOSS OF JOINT VENTURE - 487
- ----------------------------------------------------------------------------------------------------------------
NET INCOME $ 20,502 $ 23,434
================================================================================================================
NET INCOME PER SHARE:
BASIC $ 0.41 $ 0.47
DILUTED $ 0.41 $ 0.47
================================================================================================================
WEIGHTED-AVERAGE SHARES OUTSTANDING:
BASIC 50,205 49,617
DILUTED 50,297 50,319
================================================================================================================
CASH DIVIDENDS PER SHARE:
CLASS A COMMON STOCK $ 0.26 $ 0.25
CLASS B COMMON STOCK $ 0.26 $ 0.25
================================================================================================================
</TABLE>
(See accompanying notes to condensed consolidated financial statements)
2
<PAGE> 3
CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------
JUNE 30, JUNE 30,
1999 1998
-----------------------------------
<S> <C> <C>
REVENUES $169,827 $170,028
COSTS AND EXPENSES:
Cost of services provided, less reimbursed expenses
of $10,125 in 1999 and $9,239 in 1998 122,543 122,579
Selling, general, and administrative expenses 29,256 26,778
Year 2000 expenses 1,057 1,942
- ----------------------------------------------------------------------------------------------------------------
TOTAL COSTS AND EXPENSES 152,856 151,299
- ----------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 16,971 18,729
PROVISION FOR INCOME TAXES 6,507 7,189
- ----------------------------------------------------------------------------------------------------------------
INCOME BEFORE MINORITY INTEREST 10,464 11,540
MINORITY INTEREST IN LOSS OF JOINT VENTURE - 474
- ----------------------------------------------------------------------------------------------------------------
NET INCOME $ 10,464 $ 12,014
================================================================================================================
NET INCOME PER SHARE:
BASIC $ 0.21 $ 0.24
DILUTED $ 0.21 $ 0.24
================================================================================================================
WEIGHTED-AVERAGE SHARES OUTSTANDING:
BASIC 49,814 49,912
DILUTED 49,876 50,614
================================================================================================================
CASH DIVIDENDS PER SHARE:
CLASS A COMMON STOCK $ 0.13 $ 0.125
CLASS B COMMON STOCK $ 0.13 $ 0.125
================================================================================================================
</TABLE>
(See accompanying notes to condensed consolidated financial statements)
3
<PAGE> 4
CRAWFORD & COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
JUNE 30, DECEMBER 31,
1999 1998
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
ASSETS
- -------------------------------------------------------------------------------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents $ 8,529 $ 8,423
Accounts receivable, less allowance for doubtful
accounts of $19,232 in 1999 and $19,346 in 1998 135,862 134,094
Unbilled revenues, at estimated billable amounts 90,821 88,871
Prepaid expenses and other current assets 16,994 19,758
- -------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 252,206 251,146
- -------------------------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT:
Property and equipment, at cost 156,703 154,073
Less accumulated depreciation and amortization (113,502) (111,130)
- -------------------------------------------------------------------------------------------------------------------------
NET PROPERTY AND EQUIPMENT 43,201 42,943
- -------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS:
Intangible assets arising from acquisitions, net 72,086 64,092
Prepaid pension cost 52,890 55,377
Capitalized software costs 14,598 11,885
Other 9,348 7,826
- -------------------------------------------------------------------------------------------------------------------------
TOTAL OTHER ASSETS 148,922 139,180
- -------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 444,329 $ 433,269
=========================================================================================================================
</TABLE>
(See accompanying notes to condensed consolidated financial statements)
4
<PAGE> 5
CRAWFORD & COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS - CONTINUED
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
(UNAUDITED)
JUNE 30, DECEMBER 31,
1999 1998
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' INVESTMENT
- -------------------------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES:
Short-term borrowings $ 51,121 $ 37,196
Accounts payable 25,092 21,971
Accrued compensation and related costs 21,700 24,219
Accrued restructuring costs 2,581 7,362
Other accrued liabilities 35,433 31,688
Deferred revenues 21,474 17,575
Current installments of long-term debt 710 563
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 158,111 140,574
- -------------------------------------------------------------------------------------------------------------------------------
NONCURRENT LIABILITIES:
Long-term debt, less current installments 1,170 1,854
Deferred income taxes 8,720 8,720
Deferred revenues 13,860 13,594
Postretirement medical benefit obligation 8,014 7,983
Self-insured risks 10,294 9,002
Other 10,977 11,491
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL NONCURRENT LIABILITIES 53,035 52,644
- -------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' INVESTMENT:
Class A Common Stock, $1.00 par value; 50,000
shares authorized; 24,970 and 25,735
shares issued in 1999 and 1998, respectively 24,970 25,735
Class B Common Stock, $1.00 par value; 50,000
shares authorized; 24,821 and 25,168
shares issued in 1999 and 1998, respectively 24,821 25,168
Additional paid-in-capital 12,936 24,560
Retained earnings 180,410 172,958
Cumulative translation adjustment (9,954) (8,370)
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' INVESTMENT 233,183 240,051
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT $444,329 $433,269
===============================================================================================================================
</TABLE>
(See accompanying notes to condensed consolidated financial statements)
5
<PAGE> 6
CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------------------------
JUNE 30, JUNE 30,
1999 1998
----------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 20,502 $ 23,434
Reconciliation of net income to net cash
provided by operating activities:
Minority interest in loss of joint venture - (487)
Depreciation and amortization 8,267 7,566
Loss (gain) on sales of property and equipment 133 (614)
Changes in operating assets and liabilities, net of effects of
acquisitions:
Accounts receivable, net (1,010) (5,899)
Unbilled revenues (1,765) (950)
Prepaid or accrued income taxes 6,455 3,116
Accounts payable and accrued liabilities (1,383) 4,511
Accrued restructuring costs (5,772) (1,815)
Deferred revenues 3,346 1,486
Prepaid expenses and other assets 4,290 (13,584)
- ------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 33,063 16,764
- ------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment, net (8,090) (8,111)
Acquisition of business, net of cash acquired (10,048) -
Capitalization of software costs (3,202) (6,183)
- ------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (21,340) (14,294)
- ------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (13,049) (12,357)
Repurchase of common stock (12,845) (12,292)
Proceeds from exercise of stock options 112 6,938
Increase in short-term borrowings 15,156 2,787
Decrease in long-term debt (727) (188)
- ------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (11,353) (15,112)
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash equivalents (264) (887)
- ------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 106 (13,529)
Cash and cash equivalents at beginning of period 8,423 55,380
- ------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 8,529 $ 41,851
==================================================================================================================
</TABLE>
(See accompanying notes to condensed consolidated financial statements)
6
<PAGE> 7
CRAWFORD & COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. The unaudited condensed financial statements included herein have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Certain previously reported amounts have been reclassified to conform to the
current presentation. These condensed financial statements should be read in
conjunction with the financial statements and related notes contained in the
Company's annual report on Form 10-K for the fiscal year ended December 31,
1998.
2. The results of operations for the quarter and six months ended June 30,
1999, are not necessarily indicative of the results to be expected during the
balance of the year ending December 31, 1999.
3. On January 6, 1999, the Company acquired The Garden City Group ("GCG")
for an initial purchase price of $7.6 million. The Company acquired assets with
a fair value of $11.1 million and assumed liabilities of approximately $3.5
million. This transaction was accounted for by the purchase method of
accounting. Goodwill related to the initial purchase was $5.4 million. In April
1999, the Company made additional payments to the former owners of GCG pursuant
to the purchase agreement. Such additional purchase price was approximately $3.2
million, which was recorded as additional goodwill in the second quarter. The
purchase price may be further increased based on future earnings of GCG.
4. During the quarter and six months ended June 30, 1999, the Company
utilized $2.1 million and $5.8 million, respectively, of its restructuring
reserves for payments due to employee separations and lease terminations. As of
June 30, 1999, remaining restructuring reserves were $7.7 million, $5.1 million
of which is included in other noncurrent liabilities. Management periodically
reviews the restructuring reserves and believes the remaining reserves are
adequate to complete its plan.
5. Basic earnings per share is computed based on the weighted-average
number of total common shares outstanding during the respective periods. Diluted
earnings per share is computed based on the weighted-average number of total
common shares outstanding plus the dilutive effect of outstanding stock options
using the "treasury stock" method.
7
<PAGE> 8
CRAWFORD & COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Below is the calculation of basic and diluted net income per share for the
quarter and six months ended June 30, 1999 and 1998:
<TABLE>
<CAPTION>
Quarter ended Six Months ended
------------- ----------------
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
=========================================================================================================
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Net income available to common shareholders $10,464 $12,014 $20,502 $23,434
======= ======= ======= =======
Weighted-average shares outstanding - Basic 49,814 49,912 50,205 49,617
Dilutive effect of stock options 62 702 92 702
------- ------- ------- -------
Weighted-average shares outstanding - Diluted 49,876 50,614 50,297 50,319
======= ======= ======= =======
Basic net income per share $ 0.21 $ 0.24 $ 0.41 $ 0.47
======= ======= ======= =======
Diluted net income per share $ 0.21 $ 0.24 $ 0.41 $ 0.47
======= ======= ======= =======
=========================================================================================================
</TABLE>
Additional options to purchase 3,701,862 shares of Class A Common Stock at
$12.50 to $19.50 per share were outstanding at June 30, 1999 but were not
included in the computation of diluted net income per share because the options'
exercise price was greater than the average market price of the common shares;
to include them would have been antidilutive.
6. Comprehensive income for the Company consists of net income and foreign
currency translation adjustments. Comprehensive income (in thousands) totaled
$9,689 and $15,316 for the quarter ended June 30, 1999 and 1998, respectively,
and $18,918 and $25,267 for the six months ended June 30, 1999 and 1998,
respectively.
7. The Company has two reportable segments, one which provides claims
services through branch offices located in the United States ("Domestic
Operations") and the other which provides similar services through branch
offices located in 51 other countries ("International Operations"). Intersegment
sales are recorded at cost and are not material. The Company measures segment
profit based on income before taxes, nonrecurring charges, and minority
interest.
8
<PAGE> 9
CRAWFORD & COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Financial information for the quarter and six months ended June 30, 1999 and
1998 covering the Company's reportable segments is presented below (in
thousands):
<TABLE>
<CAPTION>
Quarter ended Six months ended
------------- ----------------
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
===============================================================================================================
<S> <C> <C> <C> <C>
REVENUES
Domestic $126,148 $129,304 $254,443 $256,561
International 43,679 40,724 88,005 79,600
-------- --------- -------- ---------
TOTAL REVENUES $169,827 $170,028 $342,448 $336,161
PRETAX INCOME BEFORE YEAR 2000 EXPENSES
AND MINORITY INTEREST
Domestic $16,197 $ 22,488 $ 31,264 $ 41,996
International 1,831 (1,817) 4,849 (1,777)
-------- --------- -------- ---------
TOTAL PRETAX INCOME BEFORE YEAR 2000
EXPENSES AND MINORITY INTEREST $ 18,028 $ 20,671 $ 36,113 $ 40,219
===============================================================================================================
</TABLE>
8. In 1998, the Financial Accounting Standards Board issued SFAS 133,
"Accounting for Derivatives Instruments and Hedging Activities." SFAS 133
establishes accounting and reporting standards for derivative instruments. SFAS
133, which will be effective for the Company in 2001, requires that entities
recognize all derivatives as either assets or liabilities in the balance sheet
and measure those instruments at fair value. Except for borrowing in foreign
currencies, the Company does not presently engage in any hedging activities to
compensate for the effect of exchange rate fluctuations on the net assets or
operating results of its foreign subsidiaries. As a result, the new standard is
not expected to have a significant effect on the Company's consolidated results
of operations, financial position, or cash flows.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Operating results for the Company's domestic and international operations for
the quarter and six months ended June 30, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
Quarter ended Six months ended
------------- ----------------
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
==========================================================================================================
(in thousands)
<S> <C> <C> <C> <C>
REVENUES:
Domestic $126,148 $129,304 $254,443 $256,561
International 43,679 40,724 88,005 79,600
-------- -------- -------- --------
TOTAL $169,827 $170,028 $342,448 $336,161
COMPENSATION & BENEFITS:
Domestic $ 75,896 $ 78,385 $156,720 $158,579
% of Revenues 60.2% 60.6% 61.6% 61.8%
International 28,006 25,654 55,111 50,921
% of Revenues 64.1% 63.0% 62.6% 64.0%
-------- -------- -------- --------
TOTAL $103,902 $104,039 $211,831 $209,500
% of Revenues 61.2% 61.2% 61.9% 62.3%
EXPENSES OTHER THAN COMPENSATION & BENEFITS:
Domestic $ 34,055 $ 28,431 $ 66,459 $ 55,986
% of Revenues 27.0% 22.0% 26.1% 21.8%
International 13,842 16,887 28,045 30,456
% of Revenues 31.7% 41.5% 31.9% 38.3%
-------- -------- -------- --------
TOTAL $ 47,897 $ 45,318 94,504 $ 86,442
% of Revenues 28.2% 26.7% 27.6% 25.7%
--------------------------------------------------------
PRETAX INCOME BEFORE YEAR 2000 EXPENSES AND
MINORITY INTEREST:
Domestic $ 16,197 $ 22,488 $ 31,264 $ 41,996
% of Revenues 12.8% 17.4% 12.3% 16.4%
International 1,831 (1,817) 4,849 (1,777)
% of Revenues 4.2% (4.5)% 5.5% (2.2)%
-------- -------- -------- --------
TOTAL $ 18,028 $ 20,671 $ 36,113 $ 40,219
% of Revenues 10.6% 12.2% 10.6% 12.0%
==========================================================================================================
</TABLE>
The following discussion analyzes the Company's results reported by its two
reportable segments: domestic operations and international operations. Expense
amounts discussed are excluding Year 2000 expenses and minority interest.
10
<PAGE> 11
DOMESTIC OPERATIONS
REVENUES
Domestic revenues from insurance companies and self-insured entities totaled
$126.1 million for the quarter ended June 30, 1999, a decrease of 2.4% from the
$129.3 million reported for the same period in 1998. Revenues for the first six
months of 1999 totaled $254.4 million, a 0.9% decrease from 1998 revenues of
$256.6 million. Domestic revenues from insurance companies decreased 10.2% to
$69.4 million for the quarter ended June 30, 1999 and decreased 4.7% to $142.5
million for the six months ended June 30, 1999. The Garden City Group ("GCG")
acquisition contributed $6.3 million and $11.1 million of revenue in the quarter
and six months ended June 30, 1999, respectively. Revenues related to the
winding down of a major class action project declined from $2.5 million in the
second quarter of 1998 to $2.1 million in the second quarter of 1999 and
declined from $7.9 million in the first six months of 1998 to $3.9 million in
the first six months of 1999. Revenues from self-insured entities, excluding the
class action project, decreased 2.7% to $48.3 million in the second quarter of
1999 and decreased 2.2% to $96.9 million in the six months ended June 30, 1999.
Excluding the impact of the GCG acquisition, domestic unit volume, measured
principally by cases received, decreased 9.6% and 5.2% in the second quarter and
first six months of 1999, respectively, compared to the same periods in 1998.
Additionally, changes in the mix of services provided and in the rates charged
for those services had the combined effect of increasing revenues by
approximately 2.2% in the second quarter of 1999 and had no effect for the six
months ended June 30, 1999, compared to the same periods in 1998. The Company's
acquisition of GCG increased domestic revenues by 5.0% and 4.4% in the second
quarter and first six months of 1999, respectively.
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 as a percent of revenues decreased to 60.2% in the second quarter of
1999 as compared to 60.6% in the 1998 period and from 61.8% in the six months
ended June 30, 1998 to 61.6% for the 1999 period.
Domestic salaries and wages decreased to $64.8 million and $132.9 million for
the quarter and six months ended June 30, 1999, respectively, from $68.4 million
and $135.3 in the comparable 1998 periods. This decline was due primarily to
reductions in staff levels. Payroll taxes and fringe benefits for domestic
operations totaled $11.1 million and $23.8 million in the second quarter and
first six months of 1999, respectively, increasing 10.8% and 2.2% from 1998
costs of $10.0 million and $23.3 million for the comparable periods. These
increases are due to increased pension expenses. Pension expense in 1998 was
lower due to favorable investment returns.
11
<PAGE> 12
EXPENSES OTHER THAN COMPENSATION AND FRINGE BENEFITS
Domestic expenses other than compensation and related payroll taxes and fringe
benefits approximated 27.0% and 26.1% of revenues for the quarter and six months
ended June 30, 1999, respectively, up from 22.0% and 21.8% of revenues for the
same periods in 1998. These increases are due primarily to higher professional
fees, higher self-insurance costs, and higher interest costs as a result of
increased borrowings in 1999.
INTERNATIONAL OPERATIONS
REVENUES
Revenues from the Company's international operations totaled $88.0 million for
the first six months of 1999, a 10.6% increase from $79.6 million in the first
six months of 1998. This increase is due to the July 1998 acquisition of
Adjusters Canada Incorporated ("ACI"). Second quarter revenues increased from
$40.7 million in 1998 to $43.7 million in 1999, as weak claims volume was more
than offset by the impact of the ACI acquisition. Revenues in 1999 are net of
2.8% and 2.5% declines for the quarter and six months ended June 30, 1999,
respectively, due to the negative effect of a strong U.S. dollar.
COMPENSATION AND FRINGE BENEFITS
As a percent of revenues, compensation expense, including related payroll taxes
and fringe benefits, increased to 64.1% for the three months ended June 30, 1999
from 63.0% in the same period in 1998. For the six-month period, compensation
and fringe benefits decreased as a percentage of revenues from 64.0% in 1998 to
62.6% in 1999.
Salaries and wages of international personnel increased in the quarter ended
June 30, 1999 to 55.3% of revenue from 53.4% for the comparable period in 1998
due to lower revenue per employee. Salaries and wages decreased from 54.6% of
revenues in the first half of 1998 to 53.8% for the first half of 1999. Payroll
taxes and fringe benefits decreased as a percent of revenues, to 8.8% in both
the quarter and six months ended June 30, 1999, from 9.6% and 9.4% for the same
periods in 1998.
EXPENSES OTHER THAN COMPENSATION AND FRINGE BENEFITS
Expenses other than compensation and related payroll taxes and fringe benefits
were 31.7% and 41.5% of international revenues for the second quarter of 1999
and 1998, respectively. Expenses other than compensation and related payroll
taxes and fringe benefits were 31.9% of international revenues for the first six
months of 1999, compared to 38.3% of revenues for the same period in 1998. 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. The decline in these expenses is
primarily due to lower professional fees in 1999, as significant fees were
incurred in 1998 related to the restructuring of the Company's U.K. operations.
12
<PAGE> 13
FINANCIAL CONDITION
At June 30, 1999, current assets exceeded current liabilities by approximately
$94.1 million, a decrease of $16.5 million from the working capital balance at
December 31, 1998. Cash and cash equivalents at June 30, 1999 totaled $8.5
million, remaining level with the balance at the end of 1998. Cash was generated
primarily from operating activities and short-term borrowings, while the
principal uses of cash were for repurchases of common stock, the acquisition of
GCG and dividends paid to shareholders.
During 1997, the Company announced a share repurchase program to acquire up to
an aggregate of 3,000,000 shares of its Class A or Class B Common Stock through
open market purchases. During the first six months of 1999, the Company
repurchased 775,000 shares of its Class A Common Stock and 354,000 shares of its
Class B Common Stock at an average per share cost of $11.42 and $11.28,
respectively. In April 1999, the Board of Directors authorized a share
repurchase program to acquire an additional 3,000,000 shares of Class A or Class
B Common Stock through open market purchases. As of June 30, 1999, 3,191,500
shares remain to be repurchased under the share repurchase programs.
The Company maintains credit lines with banks in order to meet seasonal working
capital requirements and other financing needs that may arise. Short-term
borrowings outstanding as of June 30, 1999 totaled $51.1 million, as compared to
$37.2 million at the end of 1998. 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 the Company's net investment in foreign operations.
Shareholders' investment at June 30, 1999 was $233.2 million, compared with $240
million at December 31, 1998. The decline was due to share repurchases.
FACTORS THAT MAY AFFECT FUTURE RESULTS
YEAR 2000
Overview
The Year 2000 problem concerns the inability of some computer hardware, software
and embedded microprocessors to properly distinguish the year 2000 from the year
1900. Because of the Company's reliance on such computer technologies, this
could result in a system failure or a temporary inability to process claims, to
make claims payments, or to transact similar normal business activities. In
1997, the Company conducted an initial assessment of its information technology
to determine which Year 2000 problems might cause processing errors or computer
system failures. Based on the results of the initial analysis, the Company's
senior management identified the Year 2000 problem as a top corporate priority
and established a centralized team to provide companywide management of its Year
2000 project (the "Project"). During the initial stages of the Project, the
13
<PAGE> 14
Company engaged an independent consultant to evaluate its assessment and plans
and to report on its findings to the Company's Board of Directors.
The following discussion of the implications of the Year 2000 problem for the
Company contains numerous forward-looking statements based on inherently
uncertain information. The cost of the Project and the planned completion dates
are based on the Company's best estimates, which are derived from assumptions of
future events, including the continued availability of internal and external
resources, vendor software modifications and other factors. However, there can
be no guarantee that these estimates will be achieved. Further, although the
Company believes it will be able to make the necessary modifications in advance,
any failure to modify the systems could have a material adverse effect on the
Company.
Readiness
The Project contains five primary remediation phases: identification,
assessment, repair, testing, and contingency planning. The Company prioritized
each information technology ("IT") and non-IT system according to its
criticality to the Company's operations. As of July 31, 1999, the Company has
completed the remediation of and placed into production all of its U.S.
mainframe and mid-range computer systems, which represent approximately 90% of
the Company's lines of computer code. The remainder of the Company's U.S.
systems consists of personal computers, PC-based software systems, and non-IT
systems (primarily telephones). Except for one PC-based system representing
approximately 1% of the Company's lines of computer code (which the Company
expects to remediate by October 31, 1999), the Company has remediated and placed
into production all of its internally developed PC-based software systems.
Additionally, the Company is in the process of upgrading and replacing certain
personal computers and telephone systems and installing 3 purchased PC-based
software systems; these activities are expected to be completed by November 30,
1999.
The Project also includes the assessment of the Year 2000 readiness of vendors,
customers and other business partners ("Trading Partners"). This assessment is
substantially complete. Based on certifications and statements received from
Trading Partners, the Company believes that all Trading Partners identified as
critical (e.g. telecommunications providers) are Year 2000 ready. For Trading
Partners considered to be less critical, the Company has established a listing
of preferred vendors, which have certified their Year 2000 readiness.
The Company has determined that the Year 2000 efforts required in its
international operations are significantly less than those required in the U.S.,
primarily due to the use of newer systems and less automation internationally.
Remediation efforts in the international operations are progressing, and the
established deadlines for completion are similar to those discussed above for
domestic operations.
14
<PAGE> 15
Risks
Because of the range of possible issues and the large number of variables
involved (including the Year 2000 readiness of Trading Partners), it is
impossible to quantify the potential cost of problems should the Company's
remediation efforts or the efforts of its Trading Partners not be successful.
Such costs and any failure of such remediation efforts could result in loss of
business, damage to the Company's reputation, and legal liability. Accordingly,
any such costs or failures could have a material adverse effect on the Company.
The Company believes the most significant internal risk related to the Project
is its ability to effectively remediate its U.S. claims management systems. The
worst-case scenario, a complete failure of these systems, would require the
Company to shift temporarily to a manual-processing mode. Such a scenario could
significantly delay the processing, payment, and reporting of claims and, thus,
the Company's revenue from such services. If the Company were forced to operate
in such a mode for an extended length of time, the adverse impact on the
Company's financial position and results of operations would likely be material.
However, the Company believes that its remediation and contingency planning
efforts will reduce the risk of such an occurrence to a very low level.
The Company believes that the most likely risks of serious Year 2000 business
disruptions are external in nature, such as disruptions in telecommunications,
electric or transportation services and noncompliance of smaller Trading
Partners. The Company believes the most reasonably likely worst case scenario
would be a business disruption resulted from an extended and/or extensive
communications failure. The Company is dependent on voice and data
communications to receive, process, pay and report on claims. Based on the
Company's information regarding the readiness of its major communications
carriers and developing contingency plans, the Company expects that any such
disruption would likely be localized and of short duration, and would therefore
not be likely to have a material adverse effect on the Company.
Contingency Plans
The contingency planning portion of the Project attempts to identify,
investigate, and document potential failure points, internal and external, in
the Company's systems. Failure points are prioritized based on likelihood and
criticality. Contingency plans are then developed for each of the potential
failure points deemed likely and/or critical. Examples of the Company's Year
2000 contingency plans include alternative manual means for receiving and
processing claims in its branch network, and alternative power supplies and
communication lines. Contingency planning for possible Year 2000 disruptions is
ongoing and will continue through the end of the year. The Company expects to
have substantially completed contingency plans with respect to critical systems
by September 30, 1999.
Costs
The total cost associated with the Year 2000 project is not expected to be
material to the Company's financial position. The Company estimates the total
cost of its Year 2000 compliance efforts to be approximately $13.5 million, with
approximately $11 million having been incurred through June 30, 1999. The
Company expects to incur approximately $2 million for the remainder of 1999 and
$0.5 million in 2000 in such costs.
15
<PAGE> 16
EURO
On January 1, 1999, the euro was introduced as the official currency in eleven
European countries in which the Company operates. Companies and individuals in
those countries may now enter into transactions either in euros or in the local
currency. Management does not believe the introduction of the euro will
materially affect the Company's financial position or results of operations.
FOREIGN CURRENCY EXCHANGE
The Company's international operations expose the Company to foreign currency
exchange rate changes and could impact translations of foreign-denominated
assets and liabilities into U.S. dollars and future earnings and cash flows from
transactions denominated in different currencies. The Company's revenue from its
international operations was 26% of total revenue for the six months ended June
30, 1999. Except for borrowing in foreign currencies, the Company does not
presently engage in any hedging activities to compensate for the effect of
exchange rate fluctuations on the net assets or operating results of its foreign
subsidiaries.
NEW CLAIMS MANAGEMENT SYSTEM
During 1998, the Company began the development of a new claims management
system. As of June 30, 1999, approximately $11.9 million of internal and
external costs have been capitalized in connection with this development
project. The server-based system, which is scheduled to be completed by the end
of 1999, is designed to streamline and automate the claims intake, assignment,
management and reporting functions. The Company believes the system will
increase its competitive advantages, particularly in the self-insured corporate
market. However, if the system fails to function as planned, it could adversely
affect the Company's competitive position and revenues.
FORWARD LOOKING STATEMENTS
Certain information presented in Management's Discussion and Analysis of
Financial Condition and Results of Operations may include forward-looking
statements, the accuracy of which is subject to a number of risks and
assumptions. The Company's Form 10-K for the year ended December 31, 1998,
discusses such risks and assumptions and other key factors that could cause
actual results to differ materially from those expressed in such forward-looking
statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK
The information called for by this item is provided under Item 2 - Management's
Discussion and Analysis of Financial Condition and Results of Operations.
16
<PAGE> 17
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors of
Crawford & Company:
We have reviewed the accompanying condensed consolidated balance sheets of
CRAWFORD & COMPANY (a Georgia corporation) AND SUBSIDIARIES as of June 30, 1999
and the related condensed consolidated statements of income for the three- and
six-month periods then ended. These financial statements are the responsibility
of the company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Crawford & Company and subsidiaries
as of December 31, 1998 (not presented herein), and, in our report dated January
29, 1999, we expressed an unqualified opinion on that statement. In our opinion,
the information set forth in the accompanying condensed consolidated balance
sheet as of December 31, 1998, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
/s/ Arthur Andersen LLP
Atlanta, Georgia
August 6, 1999
17
<PAGE> 18
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On April 27, 1999, the Registrant held its Annual Meeting of
Shareholders. At the Annual Meeting, the Class B Shareholders,
the only class entitled to vote at the meeting, voted on (i) the
election of nine (9) directors for a one-year term; and (ii)
ratification of the selection of Arthur Andersen LLP as the
Registrant's auditor for the year ending December 31, 1999. The
results of that voting are as follows:
ELECTION OF DIRECTORS
<TABLE>
<CAPTION>
For Withheld
--- --------
<S> <C> <C>
Forrest L. Minix 24,498,798 62,381
J. Hicks Lanier 24,503,111 58,068
Charles Flather 24,502,874 58,305
Linda K. Crawford 24,498,311 62,868
Jesse C. Crawford 24,503,311 57,868
Larry L. Prince 24,501,473 59,706
John A. Williams 24,501,473 59,706
E. Jenner Wood, III 24,501,761 59,418
Archie L. Meyers, Jr. 24,502,220 58,959
</TABLE>
RATIFICATION OF APPOINTMENT OF AUDITORS
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C>
24,542,446 13,818 4,915
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
<TABLE>
<S> <C>
3.1 Restated By-laws of the Registrant, as amended
*10.1 Amended and Restated Supplemental Executive
Retirement Plan
*10.2 Crawford & Company UK Sharesave Scheme
15.1 Letter from Arthur Andersen LLP
27.1 Financial Data (For SEC use only)
</TABLE>
* Management contract or compensatory plan required to
be filed as an Exhibit pursuant to Item 601 of
Regulation S-K.
(b) Reports on Form 8-K:
The Company did not file any reports on Form 8-K during the
period covered by this report.
18
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CRAWFORD & COMPANY
(Registrant)
Date: August 13, 1999 /s/ Archie Meyers, Jr.
------------------------------------
Archie Meyers, Jr.
Chairman of the Board and
Chief Executive Officer
Date: August 13, 1999 /s/ John F. Giblin
------------------------------------
John F. Giblin
Executive Vice President - Finance
(Principal Financial Officer)
Date: August 13, 1999 /s/ William L. Hudson
------------------------------------
William L. Hudson
Senior Vice President and Controller
(Principal Accounting Officer)
19
<PAGE> 20
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description Sequential Page No.
<S> <C> <C>
3.1 Restated By-laws of the Registrant, as amended 21
*10.1 Amended and Restated Supplemental Executive 30
Retirement Plan
*10.2 Crawford & Company UK Sharesave Scheme 35
15.1 Letter from Arthur Andersen LLP 46
27.1 Financial Data Schedule (For SEC use only) 47
</TABLE>
* Management contract or compensatory plan required to be filed
as an Exhibit pursuant to Item 601 of Regulation S-K.
20
<PAGE> 1
EXHIBIT 3.1
RESTATED BY-LAWS
OF
CRAWFORD & COMPANY
(reflecting amendments made through July 27, 1999)
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
21
<PAGE> 2
an amendment to the Articles of Incorporation, a plan of merger or share
exchange, sale of assets, or any other action that would entitle the shareholder
to dissenter's rights, is submitted to a vote of shareholders, the same material
that the Georgia Business Corporation Code would have required to be sent to the
shareholder in a notice of the meeting must be delivered to the shareholder
prior to such shareholder's execution of the waiver of notice, or the waiver
itself must expressly waive the right to such material.
Notice of any meeting may be given by or at the direction of
the Secretary or by the person or persons calling such meeting, if the Secretary
fails to give such notice within twenty (20) days after the call of a meeting.
No notice need be given of the new date, time or place of reconvening any
adjourned meeting, if the new date, time and place to which the meeting is
adjourned are announced at the adjourned meeting before adjournment, except
that, if a new record date for the adjourned meeting is or must be fixed under
the applicable provisions of the Georgia Business Corporation Code, notice of
the adjourned meeting must be given to persons who are shareholders as of the
new record date.
Notwithstanding the foregoing, notice of any meeting of the
shareholders may be given by electronic or any other means to the extent that
delivery of such notice by those means is not precluded by the Georgia Business
Corporation Code or the rules and regulations of The New York Stock Exchange or
the United States Securities and Exchange Commission.
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. Unless otherwise provided in
the proxy, it shall confer discretionary authority to vote on any proposal by a
shareholder not included with the proxy materials accompanying the notice and
proxy if the Company did not have notice of that matter at least 120 days before
the date on which the Company first mailed its proxy materials for the prior
year's annual meeting of shareholders.
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
22
<PAGE> 3
of the shareholders entitled to notice of, and to vote at, any such meeting, or
entitled to receive payment of any such dividend, or to any such allotment of
rights, or to exercise the rights in respect of any such change, conversion or
exchange of capital stock, and in such case only such shareholders as shall be
shareholders of record on the date so fixed shall be entitled to such notices
of, and to vote at, such meeting, or to receive payment of such dividend, or to
receive such allotment of rights, or to exercise such rights, as the case may
be, notwithstanding any transfer of any stock on the books of the Company after
any such record date fixed as aforesaid.
ARTICLE II
DIRECTORS
Section 1. Powers of Directors. The Board of Directors shall
have the management of the business of the Company, and, subject to any
restrictions imposed by law, by the charter, or by these By-Laws, may exercise
all the power of the corporation.
Section 2. Number and Term of Directors. The number of
Directors which shall constitute the full Board shall be 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
23
<PAGE> 4
present at the meeting. If the Secretary fails to give such notice in the manner
specified in the call, within five (5) days after receiving notice of the call,
the person or persons calling such meetings, or any person designated by him or
them may give such notice. Neither the business to be transacted at or the
purpose of any regular or special meeting of the Board need be specified in the
notice or waiver of notice of such meeting.
Section 7. Committees. The Board may by resolution provide for
an Executive Committee and one or more other committees, each consisting of such
Directors as are designated by the Board. Any vacancy in such Committee may be
filled by the Board. Except as otherwise provided by law, by these By-Laws, or
by resolution of the full Board, such Executive Committee shall have and may
exercise the full powers of the Board of Directors during the interval between
the meetings of the Board and wherever by these By-Laws, or by resolution of the
shareholders, the Board of Directors is authorized to take action or to make a
determination, such action or determination may be taken or made by such
Executive Committee, unless these By-Laws or such resolution expressly require
that such action or determination be taken or made by the full Board of
Directors. The Executive Committee, or other Committee, shall by resolution fix
its own rules of procedure, and the time and place of its meetings, and the
person or persons who may call, and the method of call, of its meetings.
Section 8. Compensation. A fee for serving as a Director and
reimbursement for expenses for attendance at meetings of the Board of Directors
or any Committee thereof may be fixed by resolution of the full Board.
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 subsection (a) and (b) above
shall not apply to (i) 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; or (ii) Forrest L. Minix.
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
24
<PAGE> 5
honorary member as an "Emeritus" officer of the Company. It shall not be a
requirement that any such honorary member be qualified to be a member of the
Board of Directors. An honorary member shall be entitled to notice of and
attendance at all meetings of the Board of Directors and to participate in such
meetings, except that such honorary member shall have no voting rights nor shall
such honorary member be included in determining a quorum under Section 4.
ARTICLE III
OFFICERS
Section 1. Officers. The officers of the Company shall consist
of a Chairman of the Board, a corporate President, one or more business unit
Presidents, one or more Vice Presidents, a Secretary, a Comptroller, a
Treasurer, and such other officers or assistant officers as may be elected by
the Board of Directors. Any two (2) or more offices may be held by the same
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.
25
<PAGE> 6
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.
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.
26
<PAGE> 7
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.
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.
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<PAGE> 8
ARTICLE VI
INDEMNIFICATION
Section 1. The Company shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Company) by reason
of the fact that he is or was a director, officer, employee or agent of the
Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including court costs and
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 2. The Company shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Company to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the Company, or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including court costs and attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company and except that no such
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Company unless and only to the
extent that the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such court shall deem proper.
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.
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<PAGE> 9
Section 5. Expenses incurred in defending a civil or criminal
action, suit or proceeding may be paid by the Company in advance of the final
disposition or such action, suit or proceeding as authorized by the Board of
Directors in the manner provided in Section 4 of this Article upon receipt of an
undertaking by or on behalf of the director, officer, employee or agent to repay
such amount unless it shall ultimately be determined that he is entitled to be
indemnified by the Company as authorized in this Article, and, if such person is
a director, upon receipt of a written affirmation of such director's good faith
belief that he or she has met the standards of conduct required by the Georgia
Business Corporation Code.
Section 6. The indemnification provided by this Article shall
not be deemed exclusive of any other rights to which those indemnified may be
entitled under any agreement, vote of shareholders or disinterested directors,
or otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
Section 7. The Board of Directors may authorize, by a vote of
a majority of the full Board, the Company to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the Company would have the power to indemnify him against such
liability under the provisions of this Article.
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.
29
<PAGE> 1
EXHIBIT 10.1
CRAWFORD & COMPANY
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
AS AMENDED AND RESTATED AS OF APRIL 27, 1999
ss. 1
PURPOSE
Crawford & Company hereby amends and restates the Crawford &
Company Supplemental Executive Retirement Plan as originally effective as of
January 1, 1986 and as thereafter amended. The primary purpose of this SERP is
to provide a supplemental retirement benefit to the Participants described in
Exhibit A to supplement the benefits payable to each of them under the
Retirement Plan to the extent such Retirement Plan benefits are limited by the
application of Code ss.ss. 401(a)(17) and 415.
ss. 2
DEFINITIONS
The capitalized terms used in this SERP shall have the same
meanings assigned to those terms in the Retirement Plan except that the
following terms shall have the following meanings:
2.1 SERP - means this Crawford & Company Supplemental
Executive Retirement Plan, as amended from time to time.
2.2 Retirement Plan - means the Crawford & Company
Retirement Plan and Trust Agreement, as amended from time to time.
2.3 Deferred Compensation Plan - means the Crawford &
Company Deferred Compensation Plan, and any successor plan, as amended from time
to time.
ss. 3
PARTICIPATION
The Senior Compensation and Stock Option Committee of the
Board of Directors shall have the power to designate an executive as a
Participant in this SERP and such designations shall be reflected on Exhibit A
to this SERP.
30
<PAGE> 2
ss. 4
BENEFIT
4.1 SERP Benefit. A benefit shall be payable under this SERP
to, or on behalf of, each Participant, which benefit shall equal the excess, if
any, of (a) over (b) where
(a) equals the aggregate of the benefits which would have been
payable to him, or on his behalf, under (A) the Retirement Plan, plus (B)
Restoration Benefits under the Deferred Compensation Plan in the form elected by
him, or his Beneficiary, under the terms of the Retirement Plan and Deferred
Compensation Plan absent the limitations of Code ss.ss.401(a)(17) and 415,
without regard to when such executive became a participant; and
(b) equals the aggregate benefits actually payable to him, or
on his behalf, in such form under (A) the Retirement Plan, and (B) the
Restoration Benefits provisions of the Deferred Compensation Plan.
4.2 Payment. The benefit payable to, or on behalf of, a
Participant under this ss.4 shall be paid as of the same date, in the same
benefit payment form and to the same person as his benefit under the Retirement
Plan or Deferred Compensation Plan and no payment shall be made to, or on behalf
of, a Participant under this ss.4 unless and until a benefit is paid to him, or
on his behalf, under the Retirement Plan.
4.3 Previously Retired Participants. Notwithstanding the
foregoing, if an executive, at the time of his designation as a Participant, is
currently receiving benefits under the Retirement Plan, he shall not receive any
benefits under this SERP until such time as such Participant's employment
terminates following his or her designation as a Participant ("Subsequent
Retirement"). Such Participant's SERP benefits under ss.4.1 shall, at the time
of the Subsequent Retirement, be determined by including all periods of
employment up to the Subsequent Retirement, without regard to any previous
retirement, as if the Participant first started receiving benefits under the
Retirement Plan as of the time of his or her Subsequent Retirement. Any
Participant who retires and then returns to employment shall receive additional
SERP benefits in accordance with ss.4.1 with respect to such period of
subsequent employment if designated a continuing Participant by the Committee.
ss. 5
SOURCE OF BENEFIT PAYMENTS
All benefits payable under the terms of this SERP shall be
paid by Crawford & Company from its general assets. No person shall have any
right or interest or claims whatsoever to the payment of a benefit under this
SERP from any person whomsoever other than Crawford & Company, and no
Participant or beneficiary shall have any right or interest whatsoever to the
payment of a benefit under this SERP which is superior in any manner to the
right of any other general and unsecured creditor of Crawford & Company.
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<PAGE> 3
ss. 6
NOT A CONTRACT OF EMPLOYMENT
Participation in this SERP shall not grant to any Participant
the right to remain an employee for any specific term of employment or in any
specific capacity or at any specific rate of compensation.
ss. 7
NO ALIENATION OR ASSIGNMENT
A Participant or a beneficiary under this SERP shall have no
right or power to alienate, commute, anticipate or otherwise assign at law or
equity all or any portion of any benefit otherwise payable under this SERP, and
the Senior Compensation and Stock Option Committee of the Board of Directors
shall have the right in light of any such action to suspend temporarily or
terminate permanently the payment of benefits to, or on behalf of, any
Participant or beneficiary who attempts to do so.
ss. 8
ERISA
Crawford & Company intends that this SERP come within the
various exceptions and exemptions of ERISA and for an unfunded deferred
compensation plan maintained primarily for a select group of management or
highly compensated employees within the meaning of ERISA ss. 201(2), ss.
302(a)(3) and ss. 401(a)(1) and any ambiguities in this SERP shall be construed
to effect that intent.
ss. 9
ADMINISTRATION, AMENDMENT AND TERMINATION
Crawford & Company shall have all powers necessary to
administer this SERP in its absolute discretion and shall have the right, by
action of the Senior Compensation and Stock Option Committee of the Board of
Directors, to amend this SERP from time to time in any respect whatsoever and to
terminate this SERP at any time; provided, however, that any such amendment or
termination shall not be applied retroactively to deprive a Participant of
benefits accrued under this Plan to the date of such amendment or termination.
This SERP shall be binding on any successor in interest to crawford & Company.
ss. 10
CONSTRUCTION
This SERP shall be construed in accordance with the laws of
the State of Georgia, and the masculine shall include the feminine and the
singular the plural whenever appropriate.
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<PAGE> 4
ss. 11
EXECUTION
Crawford & Company, as the SERP sponsor, has executed this
SERP to evidence the adoption of this amendment and restatement by the Senior
Compensation and Stock Option Committee of its Board of Directors this 2nd day
of February, 1999.
CRAWFORD & COMPANY
By: /s/ F. L. Minix
--------------------------
Title: Chairman & CEO
-----------------------
33
<PAGE> 5
EXHIBIT A
CRAWFORD & COMPANY SUPPLEMENTAL RETIREMENT PLAN
AS AMENDED AND RESTATED EFFECTIVE
AS OF APRIL 27, 1999
Name of Participant
- ------------------
T. G. Germany
F. L. Minix
R. P. Albright
P. A. Bollinger
D. R. Chapman
J. F. Osten
D. A. Smith
J. F. Giblin
A. L. Meyers, Jr.
34
<PAGE> 1
EXHIBIT 10.2
THE CRAWFORD & COMPANY UK SHARESAVE SCHEME
1. DEFINITIONS AND INTERPRETATION
1.1 In this Scheme, unless the context otherwise requires:-
"3-YEAR OPTION", "5-YEAR OPTION" and "7-YEAR OPTION" have the meanings
given in sub-rule 3.2 below;
"ASSOCIATED COMPANY" means an associated company within the meaning
given to that expression by section 187(2) of the Taxes Act 1988 for the
purposes of paragraph 23 of Schedule 9;
"THE BOARD" means the board of directors of the Company or a committee
appointed by them;
"BONUS DATE", in relation to an option, means:-
1.1.1 in the case of a 3-Year Option, the earliest date on which the
bonus is payable,
1.1.2 in the case of a 5-Year Option, the earliest date on which a
bonus is payable, and
1.1.3 in the case of a 7-Year Option, the earliest date on which the
maximum bonus is payable;
and for this purpose "payable" means payable under the Savings
Contract made in connection with the option;
"THE COMPANY" means Crawford & Company, a corporation incorporated
under the laws of the state of Georgia in the USA;
"THE EXERCISE DATE" shall be the date on which a validly completed
notice of exercise is received by the Company;
"THE GRANT DAY" shall be construed in accordance with sub-rule 2.1
below;
"THE INVITATION DATE" shall be the date on which an invitation is given
pursuant to sub-rule 3.6 below;
"PARTICIPANT" means a person who holds an option granted under this
Scheme;
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<PAGE> 2
"PARTICIPATING COMPANY" means the Company or any Subsidiary to which the
Board has resolved that this Scheme shall for the time being extend;
"SAVINGS BODY" means any building society, institution authorised under
the Banking Act 1987 or relevant European institution (within the
meaning of Schedule 15A to the Taxes Act 1988) with which a Savings
Contract can be made;
"SAVINGS CONTRACT" means an agreement to pay monthly contributions under
the terms of a certified contractual savings scheme, within the meaning
of section 326 of the Taxes Act 1988, which has been approved by the
Inland Revenue for the purposes of Schedule 9;
"SCHEDULE 9" means Schedule 9 to the Taxes Act 1988;
"SUBSIDIARY" means a body corporate which is a subsidiary of the Company
(within the meaning of section 736 of the Companies Act 1985) and of
which the Company has control (within the meaning of section 840 of the
Taxes Act 1988);
"THE TAXES ACT 1988" means the Income and Corporation Taxes Act 1988;
and expressions not otherwise defined in this Scheme have the same
meanings as they have in Schedule 9.
1.2 Any reference in this Scheme to any enactment includes a reference to
that enactment as from time to time modified, extended or re-enacted.
1.3 Expressions in italics are for guidance only and do not form part of
this Scheme.
2. ELIGIBILITY
2.1 Subject to sub-rule 2.5 below, an individual is eligible to be granted
an option on any day ("THE GRANT DAY") if (and only if):-
2.1.1 he is on the Grant Day an employee or director of a company
which is a Participating Company; and
2.1.2 he either satisfies the conditions specified in sub-rule 2.2
below or is nominated by the Board for this purpose.
2.2 The conditions referred to in sub-rule 2.1.2 above are that the
individual:-
2.2.1 shall at all times during the qualifying period have been an
employee (but not a director) or a full-time director of the
Company or a company which was for the time being a
Subsidiary; and
2.2.2 was at the relevant time chargeable to tax in respect of his
employment or office under Case I of Schedule E.
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<PAGE> 3
2.3 For the purposes of sub-rule 2.2 above:-
2.3.1 THE RELEVANT TIME is the date on which any invitation is given
under Rule 3.6 below or such other time during the period of 5
years ending with the Grant Day as the Board may determine
(provided that no such determination may be made if it would
have the effect that the qualifying period would not fall
within that 5-year period);
2.3.2 THE QUALIFYING PERIOD is such period ending at the relevant
time but falling within the 5-year period mentioned in
paragraph 2.3.1 above as the Board may determine;
2.3.3 an individual shall be treated as a FULL-TIME DIRECTOR of a
company if he is obliged to devote to the performance of the
duties of his office or employment with the company not less
than 25 hours a week;
2.3.4 Chapter I of Part XIV of the Employment Rights Act 1996 shall
have effect, with any necessary changes, for ascertaining the
length of the period during which an individual shall have
been an employee or a full-time director and whether he shall
have been an employee or a full-time director at all times
during that period.
2.4 Any determination of the Board under paragraph 2.3.1 or 2.3.2 above
shall have effect in relation to every individual for the purpose of
ascertaining whether he is eligible to be granted an option on the Grant
Day.
2.5 An individual is not eligible to be granted an option at any time if he
is at that time ineligible to participate in this Scheme by virtue of
paragraph 8 of Schedule 9 (material interest in close company).
3. GRANT OF OPTIONS
3.1 Subject to Rule 4 below, the Board may grant an option to acquire shares
in the Company which satisfy the requirements of paragraphs 10 to 14 of
Schedule 9 (fully paid up, unrestricted, ordinary share capital), upon
the terms set out in this Scheme, to any individual who:-
3.1.1 is eligible to be granted an option in accordance with Rule 2
above, and
3.1.2 has applied for an option and proposed to make a Savings
Contract in connection with it (with a Savings Body approved
by the Board) in the form and manner prescribed by the Board,
and for this purpose an option to acquire includes an option to
purchase and an option to subscribe.
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<PAGE> 4
3.2 The type of option to be granted to an individual, that is to say a
3-Year Option, a 5-Year Option or a 7-Year Option, shall be determined
by the Board or, if the Board so permits, by the individual; and for
this purpose:-
3.2.1 a 3-YEAR OPTION is an option in connection with which a three
year Savings Contract is to be made and in respect of which,
subject to sub-rule 4.3 below, the repayment is to be taken as
including the bonus;
3.2.2 a 5-YEAR OPTION is an option in connection with which a five
year Savings Contract is to be made and in respect of which,
subject to sub-rule 4.3 below, the repayment is to be taken as
including a bonus other than the maximum bonus; and
3.2.3 a 7-YEAR OPTION is an option in connection with which a five
year Savings Contract is to be made and in respect of which
the repayment is to be taken as including the maximum bonus.
3.3 The amount of the monthly contribution under the Savings Contract to be
made in connection with an option granted to an individual shall,
subject to sub-rule 4.5 below, be the amount which the individual shall
have specified in his application for the option that he is willing to
pay or, if lower, the maximum permitted amount, that is to say, the
maximum amount which:-
3.3.1 when aggregated with the amount of his monthly contributions
under any other Savings Contract linked to this Scheme or to
any other savings-related share option scheme approved under
Schedule 9, does not exceed (pound)250 or such other maximum
amount as may for the time being be permitted by paragraph
24(2)(a) of Schedule 9;
3.3.2 does not exceed the maximum amount for the time being
permitted under the terms of the Savings Contract; and
3.3.3 when aggregated with the amount of his monthly contributions
under any other Savings Contract linked to this Scheme, does
not exceed any maximum amount determined by the Board.
3.4 The number of shares in respect of which an option may be granted to any
individual shall be the maximum number which can be paid for, at the
price determined under sub-rule 3.5 below, with monies equal to the
amount of the repayment due on the Bonus Date under the Savings Contract
to be made in connection with the option and for these purposes, the
exchange rate to be used shall be the closing mid-point sterling/US
dollar exchange rate published in the Financial Times (or such other
newspaper as the Board may select from time to time) on the Exercise
Date (or if not published on that day, the last preceding day of
publication).
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<PAGE> 5
3.5 The price at which shares may be acquired by the exercise of options of
a particular type granted on any day shall be a price denominated in US
dollars which is determined by the Board and stated on that day,
provided that:-
3.5.1 if shares of the same class as those shares are quoted on the
New York Stock Exchange, the price shall not be less than 85%
of-
(a) the average of the closing prices of shares of that
class on the five dealing days last preceding the
Invitation Date, or
(b) if the first of those dealing days does not fall
within the period of 30 days ending with the day on
which the options are granted or falls prior to the
date on which the Company last announced its results
for any period, the closing price of shares of that
class on the dealing day last preceding the day on
which the options are granted or such other dealing
day as may be agreed with the Inland Revenue;
3.5.2 if paragraph (a) above does not apply, the price shall not be
less than the Specified Percentage of the market value (within
the meaning of Part VIII of the Taxation of Chargeable Gains
Act 1992) of shares of that class, as agreed in advance for
the purposes of this Scheme with the Shares Valuation Division
of the Inland Revenue, on -
(a) the Invitation Date, or
(b) if that date does not fall within the period of 30
days ending with the day on which the options are
granted, on the day on which the options are granted
or such other day as may be agreed with the Inland
Revenue; and
3.5.3 in the case of an option to acquire shares only by
subscription, the price shall not be less than the nominal
value of those shares;
3.6 The Board shall ensure that, in relation to the grant of options on any
day:-
3.6.1 every individual who is eligible to be granted an option on
that day has been given an invitation;
3.6.2 the invitation specifies a period of not less than 14 days in
which an application for an option may be
made; and
3.6.3 every eligible individual who has applied for an option as
mentioned in sub-rule 3.1 above is in fact granted an option
on that day.
3.7 An invitation to apply for an option may only be given within the
period of 10 years beginning with the date on which this Scheme is
adopted by the Company.
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<PAGE> 6
3.8 An option granted to any person:-
3.8.1 shall not, except as provided in sub-rule 5.3 below, be
capable of being transferred by him; and
3.8.2 shall lapse forthwith if he is adjudged bankrupt.
4. EXERCISE OF OPTIONS
4.1 The exercise of any option shall be effected in the form and manner
prescribed by the Board, provided that the monies paid for shares on
such exercise shall not exceed the amount of the repayment made and any
interest paid under the Savings Contract made in connection with the
option.
4.2 Subject to sub-rules 4.3, 4.4 and 4.6 below and to Rule 6 below, an
option shall not be capable of being exercised before the Bonus Date.
4.3 Subject to sub-rule 4.8 below:-
4.3.1 if any Participant dies before the Bonus Date, any option
granted to him may (and must, if at all) be exercised by his
personal representatives within 12 months after the date of
his death, and
4.3.2 if he dies on or within 6 months after the Bonus Date, any
option granted to him may (and must, if at all) be exercised
by his personal representatives within 12 months after the
Bonus Date,
provided in either case that his death occurs at a time when he either
holds the office or employment by virtue of which he is eligible to
participate in this Scheme or is entitled to exercise the option by
virtue of sub-rule 4.4 below.
4.4 Subject to sub-rule 4.8 below, if any Participant ceases to hold the
office or employment by virtue of which he is eligible to participate in
this Scheme (otherwise than by reason of his death), the following
provisions apply in relation to any option granted to him:-
4.4.1 if he so ceases by reason of injury, disability, redundancy
within the meaning of the Employment Rights Act 1996, or
retirement on reaching the age of 60 or any other age at which
he is bound to retire in accordance with the terms of his
contract of employment, the option may (and subject to
sub-rule 4.3 above must, if at all) be exercised within 6
months of his so ceasing;
4.4.2 if he so ceases by reason only that the office or employment
is in a company of which the Company ceases to have control,
or relates to a business or part of a business which is
transferred to a person who is neither an Associated Company
of the Company nor a company of which
40
<PAGE> 7
the Company has control, the option may (and subject to
sub-rule 4.3 above must, if at all) be exercised within 6
months of his so ceasing;
4.4.3 if he so ceases for any other reason within 3 years of the
grant of the option, the option may not be exercised at all;
4.4.4 if he so ceases for any other reason (except for dismissal for
misconduct) more than 3 years after the grant of the option,
the option may (and subject to sub-rule 4.3 above must, if at
all) be exercised within 6 months of his so ceasing.
4.5 Subject to sub-rule 4.8 below, if, at the Bonus Date, a Participant
holds an office or employment with a company which is not a
Participating Company but which is an Associated Company or a company of
which the Company has control, any option granted to him may (and
subject to sub-rule 4.3 above must, if at all) be exercised within 6
months of the Bonus Date.
4.6 Subject to sub-rule 4.8 below, where any Participant continues to hold
the office or employment by virtue of which he is eligible to
participate in this Scheme after the date on which he reaches the age of
60, he may exercise any option within 6 months of that date.
4.7 Subject to sub-rule 4.3 above, an option shall not be capable of being
exercised later than 6 months after the Bonus Date.
4.8 Where, before an option has become capable of being exercised, the
Participant gives notice that he intends to stop paying monthly
contributions under the Savings Contract made in connection with the
option, or is deemed under its terms to have given such notice, or makes
an application for repayment of the monthly contributions paid under it,
the option may not be exercised at all.
4.9 A Participant shall not be treated for the purposes of sub-rules 4.3 and
4.4 above as ceasing to hold the office or employment by virtue of which
he is eligible to participate in this Scheme until he ceases to hold an
office or employment in the Company or any Associated Company or company
of which the Company has control, and a female Participant who ceases to
hold the office or employment by virtue of which she is eligible to
participate in this Scheme by reason of pregnancy or confinement and who
exercises her right to return to work under the Employment Rights Act
1996 before exercising her option shall be treated for the purposes of
sub-rule 4.4 above as not having ceased to hold that office or
employment.
4.10 A Participant shall not be eligible to exercise an option at any time:-
4.10.1 unless, subject to sub-rules 4.4 and 4.5 above, he is at that
time a director or employee of a Participating Company;
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<PAGE> 8
4.10.2 if he is not at that time eligible to participate in this
Scheme by virtue of paragraph 8 of Schedule 9 (material
interest in close company).
4.11 An option shall not be capable of being exercised more than once.
4.12 Within 30 days after an option has been exercised by any person, the
Board shall allot to him (or a nominee for him) or, as appropriate,
procure the transfer to him (or a nominee for him) of the number of
shares in respect of which the option has been exercised, provided
that:-
4.12.1 the Board considers that the issue or transfer thereof would
be lawful in all relevant jurisdictions; and
4.12.2 in a case where a Participating Company is obliged to (or
would suffer a disadvantage if it were not to) account for any
tax (in any jurisdiction) for which the person in question is
liable by virtue of the exercise of the option and/or for any
social security contributions recoverable from the person in
question (together, the "Tax Liability"), that person has
either:
(a) made a payment to the Participating Company of an
amount equal to the Tax Liability; or
(b) entered into arrangements acceptable to that or
another Participating Company to secure that such a
payment is made (whether by authorising the sale of
some or all of the shares on his behalf and the
payment to the Participating Company of the relevant
amount out of the proceeds of sale or otherwise).
4.13 All shares allotted under this Scheme shall rank equally in all respects
with shares of the same class then in issue except for any rights
attaching to such shares by reference to a record date before the date
of the allotment.
4.14 If shares of the same class as those allotted under this Scheme are
listed on any stock exchange, the Company shall apply to that stock
exchange for any shares so allotted to be admitted thereto.
5. TAKEOVER, RECONSTRUCTION AND WINDING UP
5.1 If any person obtains control of the Company (within the meaning of
section 840 of the Taxes Act 1988) as a result of making a general offer
to acquire shares in the Company, or having obtained control makes such
an offer, the Board shall within 7 days of becoming aware thereof notify
every Participant thereof and, subject to sub-rules 4.3, 4.4, 4.7 and
4.8 above, any option may be exercised within one month (or such longer
period as the Board may permit) of the notification, but not later than
6 months after that person has obtained control.
42
<PAGE> 9
5.2 For the purposes of sub-rule 5.1 above, a person shall be deemed to have
obtained control of the Company if he and others acting in concert with
him have together obtained control of it.
5.3 If a compromise or arrangement is effected for the purposes of or in
connection with a scheme for the reconstruction of the Company or its
amalgamation with any other company or companies, or if the Company
passes a resolution for voluntary winding up, the Board shall forthwith
notify every Participant thereof and, subject to sub-rules 4.3, 4.4, 4.7
and 4.8 above, any option may be exercised within one month of the
notification, but to the extent that it is not exercised within that
period shall (notwithstanding any other provision of this Scheme) lapse
on the expiration of that period.
5.4 If any company ("the acquiring company"):-
5.4.1 obtains control of the Company as a result of making-
(a) a general offer to acquire the whole of the issued
ordinary share capital of the Company which is made
on a condition such that if it is satisfied the
acquiring company will have control of the Company,
or
(b) a general offer to acquire all the shares in the
Company which are of the same class as the shares
which may be acquired by the exercise of options
granted under this Scheme,
any Participant may at any time within the appropriate period (which
expression shall be construed in accordance with paragraph 15(2) of
Schedule 9), by agreement with the acquiring company, release any option
which has not lapsed ("the old option") in consideration of the grant to
him of an option ("the new option") which (for the purposes of that
paragraph) is equivalent to the old option but relates to shares in a
different company (whether the acquiring company itself or some other
company falling within paragraph 10(b) or (c) of Schedule 9).
5.5 The new option shall not be regarded for the purposes of sub-rule 5.4
above as equivalent to the old option unless the conditions set out in
paragraph 15(3) of Schedule 9 are satisfied, but so that the provisions
of this Scheme shall for this purpose be construed as if:-
5.5.1 the new option were an option granted under this Scheme at the
same time as the old option;
5.5.2 except for the purposes of the definitions of "Participating
Company" and "Subsidiary" in sub-rule 1.1 and sub-rules 4.4.2,
4.5 and 4.9 above, the expression "the Company" were defined
as "a company whose shares may be acquired by the exercise of
options granted under this Scheme";
43
<PAGE> 10
5.5.3 the Savings Contract made in connection with the old option
had been made in connection with the new option; and
5.5.4 the Bonus Date in relation to the new option were the same as
that in relation to the old option.
6. VARIATION OF CAPITAL
6.1 Subject to sub-rule 6.3 below, in the event of any variation of the
share capital of the Company, the Board may make such adjustments as it
considers appropriate under sub-rule 6.2 below.
6.2 An adjustment made under this sub-rule shall be to one or more of the
following:-
6.2.1 the price at which shares may be acquired by the exercise of
any option;
6.2.2 where any option has been exercised but no shares have been
allotted or transferred pursuant to the exercise, the price at
which they may be acquired.
6.3 At a time when this Scheme is approved by the Inland Revenue under
Schedule 9, no adjustment under sub-rule 6.2 above shall be made without
the prior approval of the Inland Revenue.
6.4 An adjustment under sub-rule 6.2 above may have the effect of reducing
the price at which shares may be acquired by the exercise of an option
to less than their nominal value, but only if and to the extent that the
Board shall be authorised to capitalise from the reserves of the Company
a sum equal to the amount by which the nominal value of the shares in
respect of which the option is exercised exceeds the price at which the
shares may be subscribed for and to apply that sum in paying up that
amount on the shares; and so that on the exercise of any option in
respect of which such a reduction shall have been made the Board shall
capitalise that sum (if any) and apply it in paying up that amount.
7. ALTERATIONS
The Board may at any time alter this Scheme, provided that no alteration
shall be made at a time when this Scheme is approved by the Inland
Revenue under Schedule 9 without the prior approval of the Inland
Revenue.
8. MISCELLANEOUS
8.1 The rights and obligations of any individual under the terms of his
office or employment with the Company or a Subsidiary shall not be
affected by his participation in this Scheme or any right which he may
have to participate in it, and an individual who participates in it
shall waive all and any rights to compensation or damages in consequence
of the termination of his office or
44
<PAGE> 11
employment for any reason whatsoever insofar as those rights arise or
may arise from his ceasing to have rights under or be entitled to
exercise any option as a result of such termination.
8.2 In the event of any dispute or disagreement as to the interpretation of
this Scheme, or as to any question or right arising from or related to
this Scheme, the decision of the Board shall be final and binding upon
all persons.
8.3 The Company and any Subsidiary may provide money to the trustees of any
trust or any other person to enable them or him to acquire shares to be
held for the purposes of the Scheme, or enter into any guarantee or
indemnity for those purposes, to the extent permitted by any applicable
laws.
8.4 Any notice or other communication under or in connection with this
Scheme may be given by personal delivery or by sending it by post, in
the case of a company to its registered office, and in the case of an
individual to his last known address, or, where he is a director or
employee of the Company or a Subsidiary, either to his last known
address or to the address of the place of business at which he performs
the whole or substantially the whole of the duties of his office or
employment.
CLIFFORD CHANCE
200 Aldersgate Street
London EC1A 4JJ
45
<PAGE> 1
EXHIBIT 15.1
LETTER OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors of
Crawford & Company:
We are aware that Crawford & Company has incorporated by reference in its
previously filed Registration Statement File Nos. 2-78989, 33-22595, 33-47536,
33-36116, 333-02051, 333-24425 and 333-24427, its Form 10-Q for the quarter
ended June 30, 1999, which includes our report dated August 6, 1999 covering the
unaudited interim financial information contained therein. Pursuant to
Regulation C of the Securities Act of 1933 (the "Act"), that report is not
considered a part of the Registration Statement prepared or certified by our
firm or a report prepared or certified by our firm within the meaning of
Sections 7 and 11 of the Act.
/s/ Arthur Andersen LLP
Atlanta, Georgia
August 6, 1999
46
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CRAWFORD &
COMPANY CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED
JUNE 30, 1999 AND CRAWFORD & COMPANY CONSOLIDATED BALANCE SHEET AT JUNE 30, 1999
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 8,529
<SECURITIES> 0
<RECEIVABLES> 226,683
<ALLOWANCES> 19,232
<INVENTORY> 0
<CURRENT-ASSETS> 252,206
<PP&E> 156,703
<DEPRECIATION> 113,502
<TOTAL-ASSETS> 444,329
<CURRENT-LIABILITIES> 158,111
<BONDS> 1,170
0
0
<COMMON> 49,791
<OTHER-SE> 183,392
<TOTAL-LIABILITY-AND-EQUITY> 444,329
<SALES> 0
<TOTAL-REVENUES> 342,448
<CGS> 0
<TOTAL-COSTS> 250,132
<OTHER-EXPENSES> 59,049
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 33,267
<INCOME-TAX> 12,765
<INCOME-CONTINUING> 20,502
<DISCONTINUED> 0
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<NET-INCOME> 20,502
<EPS-BASIC> 0.41
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