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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 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
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(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
Georgia 58-0506554
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(State or other jurisdiction of incorporation or (I.R.S. Employer Identification Number)
organization)
<CAPTION>
5620 Glenridge Dr., N.E., Atlanta, Georgia 30342
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(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code (404) 256-0830
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Securities registered pursuant to Section 12(b) of the Act:
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<CAPTION>
Title of each class Name of each exchange on which registered
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<S> <C>
Class A Common Stock - $1.00 Par Value New York Stock Exchange
Class B Common Stock - $1.00 Par Value New York Stock Exchange
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</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
The aggregate market value of the voting stock held by nonaffiliates* of the
Registrant was $141,284,900 as of March 2, 2000, based upon the closing price as
reported on NYSE on such date.
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*All shareholders, other than Directors, Executive Officers, and 10% beneficial
owners.
The number of shares outstanding of each of the Registrant's classes of common
stock, as of March 2, 2000, was:
Class A Common Stock - $1.00 Par Value - 25,687,731 Shares
Class B Common Stock - $1.00 Par Value - 24,712,172 Shares
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Documents incorporated by reference:
(1) Annual Report to Shareholders for the Year Ended December 31, 1999, Part I
- - Item 2; Part II - Items 5, 6, 7, 7A and 8; Part IV - Item 14, and
(2) Proxy Statement for the Annual Meeting of Shareholders to be held April 25,
2000, Part III -Items 10, 11, 12, and 13.
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PART I
ITEM 1. BUSINESS
Crawford & Company (the "Registrant") is the world's largest independent
provider of diversified services to insurance companies, self-insured
corporations and governmental entities. A few of the many services provided are
claims management, loss adjustment, healthcare management, risk management
services, class action administration and risk information services.
The Registrant is not owned by or affiliated with any insurance company.
DESCRIPTION OF SERVICES
The percentages of consolidated revenues derived from the Registrant's domestic
and international operations are shown in the following schedule:
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<CAPTION>
Years Ended December 31,
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1999 1998 1997
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<S> <C> <C> <C>
Domestic Operations 74.6% 74.8% 78.9%
International Operations 25.4% 25.2% 21.1%
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100.0% 100.0% 100.0%
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</TABLE>
DOMESTIC OPERATIONS. Domestic claims services are provided by the Registrant to
two different markets. Insurance companies, which represent the major source of
revenues, customarily manage their own claims administration function, but
require limited services which the Registrant provides. The Registrant also
services clients which are self-insured or commercially insured through
alternative loss funding methods, and provides them with a more complete range
of services they typically require, including the supervision of field
locations, information services and medical cost-containment.
The major elements of domestic claims administration services (which include
the limited services required by most property and casualty insurance company
clients as well as the expanded services required by self-insured clients) are
as follows:
- Initial Reporting - the Registrant's XPressLink(SM) service
provides 24-hour receipt, acknowledgement, and distribution
of claims information through Electronic Data Interchange,
customized reporting and referral programs, call center
reporting, and facsimile receipt and distribution.
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- Investigation - the development of information necessary to
determine the cause and origin of loss.
- Evaluation - the determination of the extent and value of
damage incurred and the coverage, liability, and
compensability relating to the parties involved.
- Disposition - the resolution of the claim, whether by
negotiation and settlement, by denial, or by other means.
Expanded services provided primarily, but not exclusively, to Registrant's
self-insured clients include the following:
- Information Services - through the Registrant's information
system, SISDAT(SM), it provides reports of detailed claims
information of both a statistical and financial nature to
self-insured corporations, governmental entities and
insurance companies.
- Management - the coordination and supervision of all parties
involved in the claims settlement process, including the
adjusting personnel directly involved in handling the claim.
Typically, this management function is performed by an
independent administrative unit within the Registrant which
is not involved in the initial investigation of a claim.
- Auditing Services - the Registrant's provider and hospital
bill audit programs assist clients in controlling medical
costs associated with workers compensation and liability
claims by comparing fees charged by health care providers and
hospitals with maximum fee schedules prescribed by statutory
regulations as well as usual and customary charges in
non-fee-schedule states. The Registrant also provides a PPO
network through First Health Group.
- Managed Care Services - provides a broad range of cost
containment and utilization review services to insurance
companies, service organizations and self-insured
corporations. These services, which are designed to both
control the cost and enhance the efficient delivery of
medical benefits, include pre-admission review of
hospitalizations, second surgical opinions, concurrent
hospital utilization review, and discharge planning. Early
intervention services seek to actively control workers
compensation medical and indemnity costs at the onset of a
claim through nurse screening for severity as claims are
received from XPressLink(SM) or directly from the client.
- Vocational Services - provides vocational evaluation in order
to assess an injured employee's potential to return to work.
These services involve diagnostic testing and occupational,
personal and motivational counseling of the employee.
Vocational, medical and employment consultants assist in the
re-employment and preparation of injured
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individuals to return to work.
- Medical Case Management Services - are typically provided by
rehabilitation nurses who work closely with attending
physicians and other medical personnel in order to expedite
the injured person's physical recovery and rehabilitation and
maximize the opportunity for the person to return to work.
These services also involve coordinating and monitoring
treatment plans and related costs to insure that such
treatment is appropriate and necessary in the circumstances.
- Long-Term Care - offers a full menu of long-term care
services including comprehensive on-site assessments,
complete care coordination, and on-going care monitoring.
These services are provided through experienced health care
professionals with an insight to local quality care needs and
are offered primarily to senior citizens and their children,
attorneys, and trust officers.
The claims administration services described above are provided to clients for
a variety of different referral assignments which generally are classified as
to the underlying insured risk categories used by insurance companies. The
major categories are described below:
- Automobile - relates to all types of losses involving use of
the automobile. Such losses include bodily injury, physical
damage, medical payments, collision, fire, theft, and
comprehensive liability.
- Property - relates to losses caused by physical damage to
commercial or residential real property and certain types of
personal property. Such losses include those arising from
fire, windstorm, or hail damage to commercial and residential
property, burglary, robbery or theft of personal property,
and damage to property under inland marine coverage.
- Workers Compensation - relates to claims arising under state
and federal workers compensation laws.
- Public Liability - relates to a wide range of non-automobile
liability claims such as product liability; owners',
landlords' and tenants' liabilities; and comprehensive
general liability.
- Catastrophe - covers all types of natural disasters, such as
hurricanes, earthquakes and floods, and man-made disasters
such as oil spills, chemical releases, and explosions, where
the Registrant provides specially trained catastrophe teams
to handle claims, as well as to manage the recovery efforts.
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- Class Action Support - relates to the administration and
field inspection requirements with respect to product
liability class action settlements.
ADDITIONAL RISK MANAGEMENT AND OTHER SERVICES. The Registrant provides the
following additional risk management and other related services, which support
and supplement the claims and risk management services offered:
- RISK SCIENCES GROUP, INC. - is a software applications and
consulting firm which is a wholly-owned subsidiary of the
Registrant. Risk Sciences Group ("RSG") provides customized
computer-based information systems and analytical forecasting
services to the risk management and insurance industry. It
manages the Registrant's basic information systems,
SISDAT(SM), and has developed the SIGMA(SM) system, an on-line
risk management information system which supports multiple
sources of claims, locations, risk control, medical,
litigation, exposure, and insurance policy information. RSG
serves a variety of clients with specialized computer programs
for long-term risk management planning; data and systems
integration; development of historical claims/loss databases;
claims administration and management; regulatory reporting;
insurance and risk management cost control; and actuarial and
financial analysis required for loss forecasting, reserve
estimation and financial reporting.
- THE GARDEN CITY GROUP, INC. - is a class action settlement
administration company which was acquired by the Registrant
in January of 1999. The Garden City Group ("GCG") handles the
administrative functions related to class action settlements,
including qualifying class members, dispensing payments, and
administering the settlement funds. With the field operations
of the Registrant, GCG and the Registrant offer comprehensive
programs to integrate the field inspection and administrative
functions in a single source for product liability class
action settlements.
- THE PRISM NETWORK, INC. - is a subsidiary of the Registrant,
acquired in August of 1999, which contracts with a network of
contractors ("repairNet(SM)") to provide property damage
repair services at agreed contract rates for property damage
losses. The Registrant and The PRISM Network, Inc. market
repairNet to property insurance companies to facilitate
faster, more economical resolution of smaller property damage
claims under home-owner policies.
- EDUCATION SERVICES - are provided by the Registrant's
Crawford University. The primary purpose of the University is
to provide education and certification for professionals
engaged in service delivery for all lines of business to
assure consistent quality in our
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work products. In addition, the University provides
continuing education in support of career paths, management
and supervisory training, and the opportunity to obtain
professional certification through IIA/CPCU. Clients have the
opportunity to attend Crawford University education programs
and access the Crawford University continuing education
curriculum in a variety of risk management subjects.
INTERNATIONAL OPERATIONS. In December 1996, an English subsidiary of the
Registrant (renamed Crawford-THG Limited) acquired all of the non-United States
operations of the Thomas Howell Group, a London, England based international
loss adjusting enterprise owned by a subsidiary of Swiss Reinsurance Company of
Zurich, Switzerland, which received stock in Crawford-THG Limited as
consideration for the transfer. Concurrently, all of the Registrant's non- U.S.
subsidiaries were transferred to Crawford-THG Limited, in which the Registrant
retained a sixty percent (60%) interest and Swiss Reinsurance Company's
subsidiary received a forty percent (40%) interest. In June 1998, Swiss Re's
subsidiary exchanged its forty percent (40%) interest in Crawford- THG for
1,900,000 shares of the Registrant's Class A Common Stock. All of the
Registrant's principal international operations are now wholly-owned by the
Registrant. On July 13, 1998, the Registrant, through a wholly-owned
subsidiary, acquired all of the outstanding shares in Adjusters Canada
Incorporated, a Canadian loss adjusting company. On December 31, 1998,
Adjusters Canada Incorporated and Crawford-THG (Canada) Limited were
amalgamated into Crawford Adjusters Canada Incorporated.
Revenues and expenses outside of North America and the Caribbean are reported
on a two-month delayed basis and, accordingly, the Registrant's December 31,
1999, 1998 and 1997 consolidated financial statements reflect the non-North
American financial position as of October 31, 1999, 1998 and 1997 and the
results of non-North American operations and cash flows for the 12-month
periods ended October 31, 1999, 1998 and 1997.
The major services offered by the Registrant through its international
operations doing business outside of the U.S. are listed below:
- Property and Casualty - provides loss adjusting services for
property, general liability, professional indemnity for
directors and officers, product liability and medical
malpractice.
- Oil, Energy & Engineering - provides loss adjusting for oil,
gas, petrochemicals, other energy risks, utilities and mining
industries, as well as marine and off-shore risks.
- Environmental Pollution - provides cost-containment and
claims management services with respect to environmental
related losses.
- Construction - provides loss adjusting services under
contractors' all risk, engineering all risk, and contractors'
liability coverages. Additionally evaluates machinery
breakdown claims and provides
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peripheral services including plant valuation and loss
prevention surveys.
- Catastrophe - organizes major loss teams to provide claims
management and cost containment services through proprietary
information systems.
- Marine - provides loss adjusting services for freight
carriers liability, loss investigations, recoveries, salvage
disposal, yacht and small craft, cargo, container, discharge,
draft, general average, load, trailer and on/off live
surveys, ship repairer liability and port stevedore
liability.
- Specie and Fine Art - provides loss adjusting services under
fine art dealers' block and jewelry and furriers' block
policies.
- Entertainment Industry - provides a broad range of loss
adjusting services for television, commercial and educational
film production, and theater and live events.
- Aviation - manages salvage removal and sale and provides loss
adjusting services for hull related risks, as well as cargo
and legal liability, hangar and airport owners'/operators'
liability policies.
- Banking, Financial and Political Risks - performs loss
adjusting functions under bankers blanket bond, political
risk, and financial contingency policies.
- Livestock - performs loss adjusting on bloodstock, and
liability/equestrian activity.
- Security Consultancy - performs loss prevention and bank
surveys and adjusts cash-in-transit losses.
- Reinsurance - provides external audits, portfolio analyses,
and management and marketing research. Additionally provides
underwriting review, cash control and management of
discontinued operations.
- Medical and Vocational Case Management Services - provides
specialized return to work and expert testimony services in
the employer liability and auto liability markets.
SERVICE DELIVERY - The Registrant's claims management services are offered
primarily through its more than 400 branch offices throughout the United States
and 300 offices in 64 countries throughout the rest of the world.
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The Registrant has a branch profit-sharing compensation policy covering most of
its branch managers in the United States, under which those managers
participate in the profits of their respective branches. This policy provides a
formula for the determination of branch office profits and pays the manager a
percentage, generally forty percent (40%), of those profits.
COMPETITION, EMPLOYMENT AND OTHER FACTORS
The claims services markets, both domestically and internationally, are highly
competitive and are composed of a large number of companies of varying size and
scope of services. These include large insurance companies and insurance
brokerage firms which, in addition to their primary services of insurance
underwriting or insurance brokerage, also provide services such as claims
administration, health and disability management, and risk management
information systems, which compete with services offered by the Registrant.
Many of these companies are larger than the Registrant in terms of annual
revenues and total assets; however, based on experience in the market, the
Registrant believes that few, if any, such organizations derive revenues from
independent claims administration activities which equal those of the
Registrant.
The majority of property and casualty insurance companies maintain their own
staffs of salaried adjusters, with field adjusters located in those areas in
which the volume of claims justifies maintaining a salaried staff. These
companies utilize independent adjusters to service claims when the volume of
claims exceeds the capacity of their staffs and when claims arise in areas not
serviced by staff adjusters. The volume of property claim assignments referred
to the Registrant fluctuates primarily depending on the occurrence of severe
weather.
The United States insurance industry generally uses internal adjusting
personnel to make automobile claims adjustments by telephone and assigns the
limited function of appraising physical damage to outside service
organizations, such as the Registrant. The Registrant believes that such
limited assignments from automobile insurers may continue, reflecting a
perception by insurance companies that they can reduce adjusting expenses in
amounts greater than the higher losses associated with telephone adjusting. In
certain instances, however, insurers have attempted to reduce the fixed cost of
their claims departments by increasing outside assignments to independent firms
such as the Registrant.
When insurance premiums have increased and corporate risk management personnel
have become more aware of alternative methods of financing losses, there has
been a trend toward higher retention levels of risk insurance or implementation
of self-insurance programs by large corporations and governmental entities.
These programs generally utilize an insurance company which writes specialized
policies that permit each client to select its own level of risk retention, and
may permit certain risk management services to be provided to the client by
service companies independent of the insurance company or broker. In addition
to providing full claims administration services for such clients, the
Registrant generally provides statistical data such as loss experience
analysis. The services are usually the subject of a contractual agreement with
the specialty insurance company or the self-insured client that specifies the
claims to be administered by the Registrant and the fee to be paid for its
services (generally a fixed rate per assignment within the various risk
classifications). These programs are sensitive to changes in premiums charged
for full coverage insurance. In softer
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insurance markets, as have been experienced in recent years, these alternative
risk programs tend to be less attractive to potential clients and are replaced
by full traditional insurance and, accordingly, reduce the number of
alternative risk programs in which the Registrant can participate.
In addition to the large insurance companies and insurance brokerage firms, the
Registrant competes with a great number of smaller local and regional risk
management services firms located throughout the United States and
internationally. Many of these smaller firms have rate structures that are
lower than the Registrant's, but do not offer the broad spectrum of risk
management services which the Registrant provides and, although such firms may
secure business which has a local or regional source, the Registrant believes
its broader scope of services and its large number of geographically dispersed
offices provide it with a competitive advantage in securing business from
national and international clients.
Much of the Registrant's operations are dependent on information technology in
the receipt, processing, disposition, and archiving of claims and claim related
information. The Registrant reviewed its systems and computer software
programs, and believes it has modified or replaced those of its systems which
might be impacted by the "Year 2000 issue" associated with the capability to
properly recognize and process date-sensitive data beyond year 1999. Much of
the Registrant's data is received from or distributed to its clients and other
third parties, and its ability to do so could be impacted by system problems of
those third parties over which the Registrant has no control. The inability of
the Registrant's major trading partners to modify or replace their non-Year
2000 compliant systems could have a material impact on future financial
results, although the Registrant has seen no material impact to date.
At December 31, 1999, the total number of full-time employees was 7,684
compared with 7,658 at December 31, 1998. The Registrant, through its Crawford
University, provides many of its employees with formal classroom training in
basic and advanced skills relating to claims administration and disability
management services. Such training is generally provided at the Registrant's
education facility in Atlanta, Georgia, although much of the material is also
available through correspondence courses. In many cases, employees are required
to complete these or other professional courses in order to qualify for
promotion from their existing positions.
In addition to this technical training, the Registrant also provides ongoing
professional education for certain of its management personnel on general
management, marketing, and sales topics. These programs involve both in-house
and external resources.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND ANALYSTS' REPORTS
Certain written and oral statements made or incorporated by reference from time
to time by the Registrant in this report, other reports, filings with the
Securities and Exchange Commission, press releases, conferences, or otherwise,
are "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements include, without
limitation, any statement that may predict, forecast, indicate or imply future
results, performance or achievements. Forward-looking statements may be
identified, without limitation, by the use of such words as "anticipates",
"estimates", "expects", "intends", "plans", "predicts", "projects", "believes",
or words or phrases of similar meaning.
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Forward-looking statements include risks and uncertainties which could cause
actual results or outcomes to differ materially from those expressed in the
forward-looking statements. In addition to other factors and matters discussed
elsewhere herein, some of the important factors that could cause actual results
to differ materially from those discussed in the forward-looking statements
include the following:
- Changes in general economic conditions in the Registrant's
major markets, which include the United States, the United
Kingdom, and Canada, as well as, to a lesser extent, the
other areas throughout the world in which the Registrant does
business;
- Occurrences of weather related, natural and man-made
disasters;
- Changes in the degree to which property and casualty
insurance carriers outsource their claims handling functions;
- Decisions by major insurance carriers and underwriters and
brokers to expand their activities as third party
administrators and adjusters, which would directly compete
with the Registrant's business;
- Continued growth in product liability class actions and the
possibility that legislation may curtail or limit that
growth;
- The growth of the alternative risk market and the use of
independent third party administrators such as the
Registrant, as opposed to administrators affiliated with
brokers or insurance carriers;
- Ability to develop or acquire information technology
resources to support and grow the Registrant's businesses;
- The ability to recruit, train, and retain qualified
personnel;
- The cyclical nature of the Registrant's business and the
affect of general economic and weather conditions;
- The renewal of existing major contracts with clients and the
Registrant's ability to obtain such renewals and new
contracts on satisfactory financial terms;
- Changes in accounting principles or application of such
principles to the Registrant's business;
- General risks associated with doing business outside the
United States, including without limitation, restrictions on
foreign-owned or controlled entities conducting loss
adjusting activities in those jurisdictions and currency
restrictions; and
- Any other factors referenced or incorporated by reference in
this report and any other report.
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The risks included above are not exhaustive. Other sections of this report may
include additional factors which could adversely impact the Registrant's
business and financial performance. Moreover, the Registrant operates in a very
competitive and rapidly changing environment. New risk factors emerge from time
to time, and it is not possible for management to predict all such risk
factors, nor can it assess the impact of known risk factors on the Registrant's
business or the extent to which any factor or combination of factors may cause
actual results to differ materially from those contained in any forward-looking
statement. The Registrant undertakes no obligation to revise or publicly
release the results of any revisions to forward-looking statements or to
identify any new risk factors which may arise. Given these risks and
uncertainties, investors should not place undue reliance on forward-looking
statements as a prediction of actual future results.
Investors should also be aware that while the Registrant does, from time to
time, communicate with securities analysts, it is against the Registrant's
policy to disclose to them any material, non-public information or other
confidential commercial information. Accordingly, investors should not assume
that the Registrant agrees with any statement or report issued by any analyst
irrespective of the content of the statement or report. Furthermore, the
Registrant has a policy against issuing or confirming financial forecasts or
projections issued by others. Thus, to the extent that the reports issued by
securities analysts contain any projections, forecasts, or opinions, such
reports are not the responsibility of the Registrant.
ITEM 2. PROPERTIES
The Registrant's home office and educational facilities are owned by the
Registrant and located in Atlanta, Georgia. As of December 31, 1999, the
Registrant leased approximately 600 office locations under leases with
remaining terms ranging from a few months to ten years. The remainder of its
office locations are occupied under various short-term rental arrangements. The
Registrant also leases certain computer equipment. See Note 4 of Notes to
Consolidated Financial Statements included in the Registrant's 1999 Annual
Report to Shareholders filed herewith as Exhibit 13.1, which notes are
incorporated herein by reference.
As of December 31, 1999, the Registrant owned or leased approximately 1,585
automobiles which are used by the Registrant's field adjusters and certain of
its management personnel in the United States. Additional vehicles are owned or
leased by the Registrant's foreign subsidiaries for use by field and management
personnel.
ITEM 3. LEGAL PROCEEDINGS
In the normal course of the claims administration services business, the
Registrant is named as a defendant in suits by insureds or claimants contesting
decisions by the Registrant or its clients with respect to the settlement of
claims. Additionally, clients of the Registrant have brought actions for
indemnification on the basis of alleged negligence on the part of the
Registrant, its agents or employees in rendering service to clients. The
majority of these claims are of the type covered by insurance maintained by the
Registrant; however, the Registrant is self-insured for the deductibles under
its various insurance coverages. In the opinion of the Registrant, adequate
reserves have been provided for such self-insured risks.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to security holders for a vote during the fourth
quarter of 1999.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following are the names, positions held, and ages of each of the executive
officers of the Registrant:
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<CAPTION>
Name Office Age
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<S> <C> <C>
A. L. Meyers, Jr. Chairman and Chief Executive Officer 62
G. L. Davis President and Chief Operating Officer 48
S. V. Festa Executive Vice President - Risk Management Services 40
J. F. Giblin Executive Vice President - Finance 43
Victoria Holland Executive Vice President - Healthcare Management Services 55
J. A. McGee Executive Vice President - Claims Management Services 49
J. F. Osten Executive Vice President-General Counsel & Corporate Secretary 58
H. L. Rogers Executive Vice President - Technical Services 43
W. L. Beach Senior Vice President - Human Resources 55
J. T. Bowman Senior Vice President - Crawford & Company International, Inc. 46
Regional Managing Director - Americas
M. F. Reeves Senior Vice President - Crawford & Company International, Inc. 47
Regional Managing Director - UK, Europe & Africa
R.G.L. Solomon Senior Vice President - Crawford & Company International, Inc. 52
Regional Managing Director - Asia-Pacific
</TABLE>
Mr. Meyers was appointed to his present position effective July 27, 1999. From
September 28, 1998 to July 27, 1999 he served as President and Chief Operating
Officer. He served as President Claims Management Services from August 1995
until March 1998. He had previously retired from the Company in April 1994,
after having served as Manager of the Registrant's Washington, D. C. branch
office since 1977. During the period between his retirement in 1994 and
appointment as President - Claims Management Services in 1995, he served as a
consultant and operations supervisor for the Registrant.
Mr. Davis was appointed to his present position effective July 27, 1999. From
November 1, 1998 to July 27, 1999 he was Senior Vice President of the Claims
Services business unit, a position he also held from August 1, 1997 to April 1,
1998. From April, 1998 to October 31, 1998 Mr. Davis was Manager of the
Registrant's Dallas Service Center. From May of 1996 to August of 1997 he was
Vice President - National Sales Manager for Claims Services and from July 1994
to May of 1996 he was a Regional Manager in Claims Services operations, first as
an Assistant Vice President
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and then Vice President.
Mr. Festa was appointed to his present position with the Registrant on July 27,
1999. Prior to July 1999 and from November 1998 he was Senior Vice President -
Risk Management Services. From April 1998 to November 1998, he was a Vice
President and Director of the Registrant's Service Centers. Prior to April 1998
and for more than five years Mr. Festa was involved in the operations of the
Registrant's Risk Management Services business unit first as an Operations
Supervisor, then in June of 1996 as an Assistant Vice President and in August
of 1997 as a Vice President.
Mr. Giblin has been with the Registrant for more than five years, serving as
Controller until his appointment to his present position in June 1998.
Ms. Holland was appointed to her present position with the Registrant on July
27, 1999. From August 1, 1997 to July 27, 1999, she was a Senior Vice President
in the Healthcare Management business unit. Prior to August 1997 and for more
than five years, Ms. Holland was a Vice President in the Healthcare Management
business unit.
Mr. McGee was appointed to his present position with the Registrant July 27,
1999. From November, 1994 to April, 1999 Mr. McGee was Executive Vice President
with GAB Robins responsible for the Claims Services Business Unit. GAB Robins
is a competitor of the Registrant's.
Mr. Osten has served in his present position with the Registrant for more then
five years.
Mr. Rogers was appointed to his present position with the Registrant on July
27, 1999. Prior to July 1999 and from November 1998 he was Senior Vice
President - Property & Catastrophe Services. From February 1, 1997 to November
1, 1998, he was a Vice President in Catastrophe Services operations and from
April 1, 1996 to February, 1997 he was an Assistant Vice President in
Catastrophe Services operations. From March 1995 to April 1996 he served as
Manager of the Registrant's Nashville, Tennessee branch office and from March
1994 to February 1995 he was Manager of the Registrant's Florence, Alabama
branch office.
Mr. Beach was hired by the Registrant as its Chief Learning & Resources Officer
in September 1996 and was appointed Senior Vice President - Human Resources in
October of 1997. For more than five years prior to that, he was a partner of
Southern Consulting Group in Atlanta, Georgia.
Mr. Bowman was appointed to his present position August 1997, first as a Vice
President and then in August 1999 as a Senior Vice President. From January 1,
1996 to August, 1997 he was Vice President in charge of International Strategic
Planning and from January 1, 1995 to December 31, 1995 he was the Registrant's
International Director of Finance.
Mr. Reeves was appointed to his present position January 1999, first as a Vice
President and then in August, 1999 as a Senior Vice President. From January 1,
1997 to December 1998 he held the positions of Managing Director - U.K.
Property and Managing Director - Global Business Development in Crawford-THG
Limited, the Registrant's subsidiary. Prior to January 1997 he was employed by
Thomas Howell Group, which the Registrant acquired in December of 1996, as
Managing Director - U.K. from January 1, 1996 to December 31, 1996 and Managing
Director - Europe from January 1, 1995 to December 31, 1995.
13
<PAGE> 14
Mr. Solomon was appointed to his present position January 1999, first as a Vice
President and then in August 1999 as a Senior Vice President. From January 1,
1997 to December, 1998 he was a Regional Director of Africa, Europe, Asia and
Australia in Crawford-THG Limited, the Registrant's subsidiary. Prior to
January 1997 he was employed by Thomas Howell Group, which the Registrant
acquired in December of 1996, as a Group Director from June 1993.
Officers of the Registrant are appointed annually by the Board of Directors of
Registrant, except for Messrs. Solomon, Reeves and Bowman, who are appointed by
the Board of Directors of Crawford & Company International, Inc.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
The information required by this Item is included on page 40 of the
Registrant's Annual Report to Shareholders for the year ended December 31, 1999
under the caption "Quarterly Financial Data (Unaudited), Dividend Information
and Common Stock Quotations" and is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is included on page 39 of the
Registrant's Annual Report to Shareholders for the year ended December 31,
1999, under the caption "Selected Financial Data" and is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this Item is included on pages 18-22 of the
Registrant's Annual Report to Shareholders for the year ended December 31, 1999
under the caption "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Registrant is exposed to minimal market risk for changes in foreign
currency exchange rates and interest rates. The Registrant does not hold or
issue financial instruments for trading purposes, nor has it entered into any
transactions using derivative financial instruments or derivative commodity
instruments.
FOREIGN CURRENCY
The operating results of the Registrant's foreign subsidiaries are affected by
fluctuations in foreign currency exchange rates. Fluctuations in foreign
currency exchange rates affect the stockholders' investment of the Registrant.
Accounts invested in the Registrant's foreign subsidiaries are considered to be
permanently invested and are translated into U.S. dollars at the exchange rates
in
14
<PAGE> 15
effect at year-end. The resulting translation adjustments are recorded in
stockholders' investment as cumulative translation adjustments. The cumulative
translation adjustment component of stockholders' investment decreased $26,000
during the year.
INTEREST RATES
The Registrant is exposed to interest rate fluctuations on its borrowings.
Depending on general economic conditions, the Registrant has typically used
variable rate debt for short-term borrowings and fixed rate debt for
longer-term borrowings.
At December 31, 1999, the Registrant had $38.9 million in short-term loans
outstanding with an average variable interest rate of 5.20%.
Long-term loans consisted of the following (in thousands):
<TABLE>
<CAPTION>
Description Interest Rate Amount Maturity
----------- ------------- ------- --------
<S> <C> <C> <C>
Term Loan 6.8% $15,000 September 2004,
interest payable quarterly
Mortgages secured
by buildings 7.3% - 7.8% $ 832 Various dates through 2003
</TABLE>
The above loans carry a fixed rate of interest.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is included on pages 23-40 of the
Registrant's Annual Report to Shareholders for the year ended December 31, 1999
under the captions "Consolidated Statements of Income", "Consolidated Balance
Sheets", "Consolidated Statements of Shareholders' Investment", "Consolidated
Statements of Cash Flows", "Notes to Consolidated Financial Statements", and
"Quarterly Financial Data (Unaudited), Dividend Information and Common Stock
Quotations", and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item is included on page 2 under the caption
"Nominee Information" of the Registrant's Proxy Statement for the Annual
Meeting of Shareholders to be held April 25, 2000, and is incorporated herein
by reference. For other information required by this Item, see "Executive
Officers of the Registrant" on pages 12-14 herein.
15
<PAGE> 16
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is included on pages 4-9 under the
captions "Executive Compensation and Other Information" and "Report of the
Senior Compensation and Stock Option Committee of the Board of Directors on
Executive Compensation" and on page 13 under the caption "Five Year Comparative
Stock Performance Graph" of the Registrant's Proxy Statement for the Annual
Meeting of Shareholders to be held April 25, 2000, and is incorporated herein
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is included on pages 10-12 under the
caption "Stock Ownership Information" of the Registrant's Proxy Statement for
the Annual Meeting of Shareholders to be held April 25, 2000, and is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is included on page 12 under the caption
"Information with Respect to Certain Business Relationships" of the
Registrant's Proxy Statement for the Annual Meeting of Shareholders to be held
April 25, 2000, and is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements
The Registrant's 1999 Annual Report to Shareholders contains
the consolidated balance sheets as of December 31, 1999 and
1998, the related consolidated statements of income,
shareholders' investment and cash flows for each of the three
years in the period ended December 31, 1999, and the related
report of Arthur Andersen LLP on the financial statements.
These financial statements and the report of Arthur Andersen
LLP are incorporated herein by reference and included as
Exhibit 13.1 to this Form 10-K. The financial statements,
incorporated by reference, include the following:
- Consolidated Balance Sheets -- December 31, 1999 and
1998
- Consolidated Statements of Income for the Years
Ended December 31, 1999, 1998, and 1997
- Consolidated Statements of Shareholders' Investment
for the Years Ended December 31, 1999, 1998 and 1997
16
<PAGE> 17
- Consolidated Statements of Cash Flows for the Years
Ended December 31, 1999, 1998, and 1997
- Notes to Consolidated Financial Statements -
December 31, 1999, 1998, and 1997
2. Financial Statement Schedule
- Report of Independent Public Accountants as to
Schedule
<TABLE>
<CAPTION>
Schedule
Number
--------
<S> <C>
II Valuation and Qualifying Accounts for the Years
Ended December 31, 1999, 1998, and 1997
Schedules I and III through V not listed above have
been omitted because they are not applicable.
</TABLE>
3. Exhibits filed with this report.
<TABLE>
<CAPTION>
Exhibit No. Document
----------- --------
<S> <C>
3.1 Restated Articles of Incorporation of the Registrant, as amended (incorporated
by reference to Exhibit 19.1 to the Registrant's quarterly report on Form 10-Q
for the quarter ended June 30, 1991).
3.2 Restated By-laws of the Registrant, as amended (incorporated by reference to
Exhibit 3.1 to the Registrants quarterly report on Form 10-Q for the quarter
ended June 30, 1999).
10.1 * Crawford & Company 1987 Stock Option Plan (incorporated by reference to
Exhibit 28(a) to the Registration Statement on Form S-8, Registration
No. 33-22595).
10.2 * Amendment to Crawford & Company 1987 Stock Option Plan (incorporated
by reference to Appendix C on page C-1 of the Registrant's Proxy Statement
for the Special Meeting of Shareholders held on July 24, 1990).
10.3 * Crawford & Company 1990 Stock Option Plan, as amended (incorporated by
reference to Exhibit 10.5 to the Registrant's annual report on Form 10-K for
the year ended December 31, 1992).
10.4 * Crawford & Company 1997 Key Employee Stock Option Plan (incorporated by
reference to Appendix A on page A-1 of the Registrant's Proxy Statement
for the Annual Meeting of Shareholders held on April 22, 1997).
</TABLE>
17
<PAGE> 18
<TABLE>
<S> <C>
10.5 * Crawford & Company 1997 Non-Employee Director Stock Option Plan
(incorporated by reference to Appendix B on page B-1 of the Registrant's
Proxy Statement for the Annual meeting of Shareholders held on April 22,
1997).
10.6 * Amended and Restated Supplemental Executive Retirement Plan.
10.7 * Crawford & Company 1996 Employee Stock Purchase Plan (incorporated by
reference to Appendix A on page A-1 of Registrant's Proxy Statement for the
Annual Meeting of Shareholders held on April 18, 1996).
10.8 * Amended and Restated Crawford & Company Medical Reimbursement Plan
(incorporated by reference to Exhibit 10.9 to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1994).
10.9 * Discretionary Allowance Plan (incorporated by reference to Exhibit 10.10 to
the Registrant's Annual Report on Form 10-K for the year ended December
31, 1994).
10.10 * Deferred Compensation Plan (incorporated by reference to Exhibit 10.11 to
the Registrant's Annual Report on Form 10-K for the year ended December
31, 1994).
10.11* Crawford & Company 1996 Incentive Compensation Plan, as amended.
13.1 The Registrant's Annual Report to Shareholders for the year ended December
31, 1999 (only those portions incorporated herein by reference).
21.1 Subsidiaries of Crawford & Company.
23.1 Consent of Arthur Andersen LLP.
24.1-8 Powers of Attorney.
27.1 Financial Data Schedule. (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) No reports on Form 8-K have been filed during the last quarter of the
year ended December 31, 1999.
(c) The Registrant has filed the Exhibits listed in Item 14(a)(3).
(d) Separate financial statements of Crawford & Company have been omitted
since it is primarily an operating company. All subsidiaries included
in the consolidated financial statements are wholly-owned.
18
<PAGE> 19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CRAWFORD & COMPANY
Date March 27, 2000 By /s/ Archie Meyers, Jr.
--------------- ----------------------------------
ARCHIE MEYERS, JR., Chairman
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C>
NAME AND TITLE
---------------
Date March 27, 2000 /s/ Archie Meyers, Jr.
---------------- --------------------------------------
ARCHIE MEYERS, JR., Chairman and Chief
Executive Officer (Principal Executive Officer)
and Director
Date March 27, 2000 /s/ J. F. Giblin
---------------- --------------------------------------
J. F. GIBLIN, Executive Vice President-Finance
(Principal Financial Officer)
Date March 27, 2000 /s/ W. B. Swain
---------------- --------------------------------------
W. B. SWAIN, Senior Vice President and
Controller (Principal Accounting Officer)
Date March 27, 2000 /s/ Grover L. Davis
---------------- --------------------------------------
GROVER L. DAVIS, Director
</TABLE>
19
<PAGE> 20
<TABLE>
<S> <C>
NAME AND TITLE
Date March 28, 2000 *
---------------- ------------------------------------
F. L. MINIX, Director
Date March 28, 2000 *
---------------- ------------------------------------
J. HICKS LANIER, Director
Date March 28, 2000 *
---------------- ------------------------------------
CHARLES FLATHER, Director
Date March 28, 2000 *
---------------- ------------------------------------
LINDA K. CRAWFORD, Director
Date March 28, 2000 *
---------------- ------------------------------------
JESSE C. CRAWFORD, Director
Date March 28, 2000 *
---------------- ------------------------------------
LARRY L. PRINCE, Director
Date March 28, 2000 *
---------------- ------------------------------------
JOHN A. WILLIAMS, Director
Date March 28, 2000 *
---------------- ------------------------------------
E. JENNER WOOD, III, Director
Date March 28, 2000 By /s/ Judd F. Osten
---------------- ------------------------------------
JUDD F. OSTEN - As attorney-in-fact for the
Directors above whose name an asterisk
appears.
</TABLE>
20
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequential
Page Number
Exhibit No. Description of Exhibit of Exhibit
----------- ---------------------- ----------
<S> <C> <C>
3.1 Restated Articles of Incorporation of the Registrant, as
amended (incorporated by reference to Exhibit 19.1 to the
Registrant's quarterly report on Form 10-Q for the quarter
ended June 30, 1991).
3.2 Restated By-laws of the Registrant, as amended (incorporated
by reference to Exhibit 3.1 to the Registrants quarterly report
on Form 10-Q for the quarter ended June 30, 1999).
10.1 Crawford & Company 1987 Stock Option Plan (incorporated
by reference to Exhibit 28(a) to the Registration Statement on
Form S-8, Registration No. 33-22595).
10.2 Amendment to Crawford & Company 1987 Stock Option Plan
(incorporated by reference to Appendix C on page C-1 of the
Registrant's Proxy Statement for the Special Meeting of
Shareholders held on July 24, 1990).
10.3 Crawford & Company 1990 Stock Option Plan, as amended
(incorporated by reference to Exhibit 10.5 to the Registrant's
annual report on Form 10-K for the year ended December 31,
1992).
10.4 Crawford & Company 1997 Key Employee Stock Option Plan
(incorporated by reference to Appendix A on page A-1 of the
Registrant's Proxy Statement for the Annual Meeting of
Shareholders held on April 22, 1997).
10.5 Crawford & Company 1997 Non-Employee Director Stock
Option Plan (incorporated by reference to Appendix B on page
B-1 of the Registrant's Proxy Statement for the Annual
meeting of Shareholders held on April 22, 1997).
10.6 Amended and Restated Supplemental Executive Retirement
Plan. 25-28
10.7 Crawford & Company 1996 Employee Stock Purchase Plan
(incorporated by reference to Appendix A on page A-1 of
Registrant's Proxy Statement for the Annual Meeting of
Shareholders held on April 18, 1996).
</TABLE>
21
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequential
Page Number
Exhibit No. Description of Exhibit of Exhibit
----------- ---------------------- ----------
<S> <C> <C>
10.8 Amended and Restated Crawford & Company Medical
Reimbursement Plan (incorporated by reference to Exhibit 10.9
to the Registrant's annual report on Form 10-K for the year
ended December 31, 1994).
10.9 Discretionary Allowance Plan (incorporated by reference to
Exhibit 10.10 to the Registrant's annual report on Form 10-K
for the year ended December 31, 1994).
10.10 Deferred Compensation Plan (incorporated by reference to
Exhibit 10.11 to the Registrant's annual report on Form 10-K
for the year ended December 31, 1994).
10.11 Crawford & Company 1996 Incentive Compensation
Plan, as amended. 29-31
13.1 The Registrant's Annual Report to Shareholders for the year
ended December 31, 1999 (only those portions incorporated
hereby by reference). 32-55
21.1 Subsidiaries of Crawford & Company. 56
23.1 Consent of Arthur Andersen LLP. 57
24.1-8 Powers of Attorney. 58-65
27.1 Financial Data Schedule. (For SEC use only)
</TABLE>
22
<PAGE> 23
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Crawford & Company:
We have audited, in accordance with generally accepted auditing standards, the
consolidated financial statements included in Crawford & Company's annual
report to shareholders incorporated by reference in this Form 10-K and have
issued our report thereon dated January 28, 2000. Our audit was made for the
purpose of forming an opinion of those statements taken as a whole. The
schedule listed in Item 14(a)2 is the responsibility of the Company's
management, is presented for purposes of complying with the Securities and
Exchange Commission's rules, and is not part of the basic consolidated
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
/s/ ARTHUR ANDERSEN LLP
Atlanta, Georgia
January 28, 2000
<PAGE> 24
SCHEDULE II
CRAWFORD & COMPANY AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
----------------------------------------------------
(In Thousands of Dollars)
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D Col. E
- ------ ------ ------ ------ ------
Balance at Additions Additions Balance
Period Beginning (Deductions) at End
of Period from of
Allowances(2) Period
Charged Charged
to Costs to Other
and Accounts
Expenses (1)
<S> <C> <C> <C> <C> <C>
1999
Deducted in
consolidated balance
sheets from accounts $19,346 $2,789 $ 228 $(2,181) $20,182
receivable ======= ====== ====== ======= =======
1998
Deducted in
consolidated balance
sheets from accounts $16,802 $2,780 $ 746 $ (982) $19,346
receivable ======= ====== ====== ======= =======
1997
Deducted in
consolidated balance
sheets from accounts $11,692 $2,008 $4,596 $(1,494) $16,802
receivable ======= ====== ====== ======= =======
</TABLE>
(1) Represents adjustments to allowance for doubtful accounts receivable
arising from acquisitions.
(2) Represents uncollectible accounts written off, net of recoveries.
<PAGE> 1
EXHIBIT 10.6
RESTATED AND
AS AMENDED THROUGH
FEBRUARY 1, 2000
CRAWFORD & COMPANY
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
AS AMENDED AND RESTATED AS OF FEBRUARY 1, 2000
Section 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.
Section 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.
Section 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.
Section 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.
<PAGE> 2
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.
Section 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.
Section 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.
Section 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.
Section 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.
<PAGE> 3
Section 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.
Section 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.
Section 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 1st day
of February, 2000.
CRAWFORD & COMPANY
By /s/ Archie Meyers, Jr.
Title: Chairman & CEO
<PAGE> 4
EXHIBIT A
CRAWFORD & COMPANY SUPPLEMENTAL RETIREMENT PLAN
AS AMENDED AND RESTATED EFFECTIVE
AS OF FEBRUARY 1, 2000
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.
G. L. Davis
J. A. McGee
H. L. Rogers
S. V. Festa
Victoria Holland
<PAGE> 1
EXHIBIT 10.11
CRAWFORD & COMPANY
1996 INCENTIVE COMPENSATION PLAN
(as Amended through February 2, 1999)
Crawford & Company hereby establishes the Crawford & Company 1996 Incentive
Compensation Plan, effective as of January 1, 1996, to provide to the officers
and key employees of Crawford & Company additional cash incentive compensation
which is tied to the attainment of targeted increases in adjusted revenues and
adjusted pre-tax income of Crawford & Company on a consolidated basis.
I. DEFINITIONS
The capitalized terms used in the Plan shall have the following meanings:
1.1 Actual Earnings shall mean the reported Earnings of the Company for
the period with respect to which the Incentive Compensation Pool is
determined.
1.2 Actual Earnings Percentage shall mean the percentage computed by
multiplying (i) the Target Earnings Percentage by (ii) a fraction
(which may not be larger than one) the numerator of which is Covered
Earnings and the denominator of which is the difference between (A)
the Target Earnings and (B) the Threshold Earnings.
1.3 Actual Revenues shall mean the reported Revenues of the Company for
the period with respect to which the Incentive Compensation Pool is
determined.
1.4 Chief Executive Officer shall mean the Chief Executive Officer of the
Company.
1.5 Committee shall mean the Senior Compensation and Stock Option
Committee of the Board of Directors of the Company.
1.6 Company shall mean Crawford & Company.
1.7 Covered Earnings shall mean the difference between (i) the Actual
Earnings and (ii) the Threshold Earnings (but not less than zero).
1.8 Covered Salaries shall mean the base salaries of the Participants.
1.9 Earnings shall mean the reported pre-tax income of the Company, on a
consolidated basis, adjusted to eliminate the effect, if any, of the
cumulative effects of changes in accounting principles and any
significant gains or losses resulting from the disposition of any
major assets of the Company, such as the sale of land, the sale and
leaseback of buildings, or the sale or other disposition of a
subsidiary or portion of the Company's operations.
1.10 Incentive Compensation Pool shall mean the sum of (1) the Incentive
Compensation Pool--Sales and Account Management; plus (2) the
Incentive Compensation Pool--Other Officers and Key Employees.
1.11 Incentive Compensation Pool--Other Officers and Key Employees shall
mean the sum of (1) the amount computed by multiplying the lesser of
Actual Earnings or Threshold Earnings by 1.5%; plus (2) the amount
computed by multiplying (i) Actual Earnings by (ii) the Actual Earnings
Percentage. In no event shall the Incentive Compensation Pool--Other
Officers and Key Employees exceed 100% of the Covered Salaries of its
Participants.
1.12 Incentive Compensation Pool--Sales and Account Management shall mean
the greater of (1) the amount computed by multiplying the lesser of
Actual Earnings or Threshold Earnings by .5%; or (2) the amount
computed by multiplying the growth in Actual Revenues over Threshold
Revenues by 1.5%, reduced by 10% for every 1% decline in the
consolidated Pre-Tax Profit Margin of the Company on a pro rata basis.
In no event shall the Incentive Compensation Pool--Sales and Account
Management exceed 100% of the Covered Salaries of its Participants.
<PAGE> 2
1.13 Participant shall mean any officer (other than the Chief Executive
Officer) or home office or regional employee of the Company or its
domestic or foreign subsidiaries designated by the Chief Executive
Officer to participate in the Incentive Compensation Pool--Sales and
Account Management or the Incentive Compensation Pool--Other Officers
and Key Employees.
1.14 Pre-Tax Profit Margin shall mean the percentage derived by dividing
Earnings by Revenues, both adjusted to eliminate the effect, if any,
of significant acquisitions made by the Company in the relevant
period.
1.15 Revenues shall mean the reported revenues of the Company, on a
consolidated basis, adjusted to eliminate the effect, if any, of
significant acquisitions made by the Company in the period with
respect to which the Incentive Compensation Pool is determined.
1.16 Target Earnings shall mean the Committee's determination of achievable
earnings for the Company for the fiscal year.
1.17 Target Earnings Percentage shall mean 5.22%.
1.18 Threshold Earnings shall mean the Committee's determination of
Earnings below which no amount will be added to the Incentive
Compensation Pool for earnings growth.
1.19 Threshold Revenues shall mean the Committee's determination of
achievable Revenues for the Company in the period with respect to
which the Incentive Compensation Pool is determined.
1.20 Plan shall mean this Crawford & Company 1996 Incentive Compensation
Plan.
II. ESTABLISHMENT OF THRESHOLD REVENUES AND EARNINGS
As soon as possible following the availability of audited financial statements
of the Company for the immediately preceding fiscal year and the preparation of
operational budgets for the current fiscal year, the Committee shall meet to
establish the (i) Threshold Revenues, (ii) Threshold Earnings and (iii) Target
Earnings for the current fiscal year. Any adjustments to the audited revenues
and pre-tax income of the Company in the calculations of Revenues and Earnings
shall be approved by the Committee.
III. ALLOCATION AND PAYMENT TO PARTICIPANTS
The Chief Executive Officer shall have total authority and discretion with
respect to the determination of amounts to be paid to the Participants in each
of the Incentive Compensation Pools under the provisions of this Plan. He may
delegate that responsibility and allocate amounts available for distribution to
the heads of the business units and support divisions of the Company. In the
event that an individual is no longer a Participant at the end of any period
with respect to which the Incentive Compensation Pool is determined by virtue
of his no longer being an employee of the Company or any of its domestic or
foreign subsidiaries on that date, such individual shall not be eligible for
any payments under this Plan, unless such individual's employment has been
terminated by reason of death, disability, or retirement. Nothing herein
contained shall be construed to require the Committee or the Chief Executive
Officer to authorize the allocation and payment of all or any amounts available
for distribution under the terms of this Plan. Amounts not distributed with
respect to any year shall not be carried over to subsequent fiscal years.
Payment to individual Participants shall be as soon as practical after the
close of the fiscal period, the availability of reported Revenues and Earnings
for that period, the calculation of the Incentive Compensation Pool for that
period by the Chief Financial Officer of the Company, and the approval of that
calculation by the Committee.
IV. NO CONTRACT OF EMPLOYMENT
The establishment of this Plan shall not grant to any Participant the right to
remain an employee for any specific term of employment or in any specific
capacity or as a Participant or at any specific rate of compensation.
<PAGE> 3
V. NO ALIENATION OR ASSIGNMENT
A Participant shall have no right or power to alienate, commute, anticipate or
otherwise assign at law or equity all or any portion of amounts which may be
payable to him hereunder and the Committee and the Chief Executive Officer
shall have the right, in light of any such action, to suspend temporarily or
terminate permanently the status of such an individual as a Participant under
this Plan.
VI. ADMINISTRATION, AMENDMENT AND TERMINATION
The Committee shall have all powers necessary to administer this Plan in its
absolute discretion and its determination shall be binding on the Company and
the Participants. The Board of Directors of the Company and the Committee have
the right to amend or terminate this Plan at any time.
VII. CONSTRUCTION
This Plan 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, where appropriate.
VII. TERMINATION OF FORMER PLAN
The Annual Incentive Compensation Plan adopted effective January 1, 1993, is
hereby terminated.
IN WITNESS WHEREOF, Crawford & Company has caused its duly authorized officer
to execute the Plan this 30th day of January, 1996, to evidence the adoption of
this Plan.
CRAWFORD & COMPANY
/s/ F. L. MINIX
F. L. Minix, Chairman of the Board,
and Chief Executive Officer
<PAGE> 1
EXHIBIT 13.1
1999
FINANCIAL REVIEW
CRAWFORD & COMPANY
<TABLE>
<S> <C>
Management's Discussion and Analysis 18
Consolidated Statements of Income 23
Consolidated Balance Sheets 24
Consolidated Statements of Shareholders' Investment 26
Consolidated Statements of Cash Flows 27
Notes to Consolidated Financial Statements 28
Report of Management 38
Report of Independent Public Accountants 38
Selected Financial Data 39
Quarterly Financial Data (Unaudited) 40
Directors, Officers, and Shareholder Information IBC
</TABLE>
ONE COMPANY
17
<PAGE> 2
CRAWFORD & COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion and analysis of the consolidated financial
condition and results of operations of Crawford & Company by its two reportable
segments: domestic operations and international operations. Expense amounts
discussed are excluding Year 2000 expenses, restructuring charges, and minority
interest. This discussion should be read in conjunction with the Company's
consolidated financial statements and the accompanying footnotes.
RESULTS OF OPERATIONS
Operating results for the Company's domestic and international operations were
as follows:
<TABLE>
<CAPTION>
% Change From Prior Year
YEARS ENDED DECEMBER 31 1999 1998 1997 1999 1998
- ------------------------ -------- -------- -------- ------ -------
(in thousands)
<S> <C> <C> <C> <C> <C>
REVENUES:
Domestic $523,342 $499,260 $546,246 4.8% (8.6)%
International 178,584 168,011 146,076 6.3% 15.0%
-------- -------- --------
Total 701,926 667,271 692,322 5.2% (3.6)%
COMPENSATION & FRINGE BENEFITS:
Domestic 318,450 313,918 341,684 1.4% (8.1)%
% of Revenues 60.9% 62.9% 62.6%
International 112,892 104,239 92,528 8.3% 12.7%
% of Revenues 63.2% 62.0% 63.4%
-------- -------- --------
Total 431,342 418,157 434,212 3.2% (3.7)%
% of Revenues 61.5% 62.7% 62.7%
EXPENSES OTHER THAN COMPENSATION & FRINGE BENEFITS:
Domestic 141,931 121,169 122,294 17.1% (0.9)%
% of Revenues 27.1% 24.3% 22.4%
International 59,728 63,188 49,695 (5.5)% 27.2%
% of Revenues 33.5% 37.6% 34.0%
-------- -------- --------
Total 201,659 184,357 171,989 9.4% 7.2%
% of Revenues 28.7% 27.6% 24.8%
OPERATING INCOME(1):
Domestic 62,961 64,173 82,268 (1.9)% (22.0)%
% of Revenues 12.0% 12.8% 15.0%
International 5,964 584 3,853 nm (84.8)%
% of Revenues 3.3% 0.4% 2.6%
-------- -------- --------
Total 68,925 64,757 86,121 6.4% (24.8)%
% of Revenues 9.8% 9.7% 12.5%
</TABLE>
(1) Income before taxes, nonrecurring charges, and minority interest. nm = Not
meaningful
18
<PAGE> 3
DOMESTIC OPERATIONS
YEARS ENDED DECEMBER 31, 1999 and 1998
REVENUES
Domestic revenues from insurance companies and self-insured entities totaled
$523.3 million for the year ended December 31, 1999, an increase of 4.8% from
the $499.3 million reported in 1998. The increase in domestic revenues is due
to The Garden City Group ("GCG") and PRISM Network Inc. ("PRISM") acquisitions,
which contributed $35.4 million of revenue in 1999.
Domestic revenues from insurance companies decreased by 6.4% during 1999, to
$281.1 million, due to continued sluggish claim referrals. This decline was
partially offset by an increase in revenues from self-insured entities of 5.3%,
to $198.2 million, as the insurance market began to harden.
Excluding the impact of the GCG and PRISM acquisitions, domestic unit volume,
measured principally by cases received, decreased 6.9% from 1998 to 1999. This
decrease was partially offset by changes in the mix of services provided and in
the rates charged for those services which had the combined effect of
increasing revenues by approximately 4.6% in 1999 compared to 1998. The
Company's acquisitions of GCG and PRISM increased domestic revenues by 7.1% in
1999.
COMPENSATION AND FRINGE BENEFITS
The Company's most significant expense is the compensation of its employees,
including related payroll taxes and fringe benefits. As a percent of rev-
enues, domestic compensation expense decreased, from 62.9% of revenues in 1998
to 60.9% of revenues in 1999. This decrease is due to the Company's efforts to
grow revenues without increasing the employee base.
Domestic salaries and wages increased slightly, from $270.8 million in 1998 to
$271.9 million in 1999. Payroll taxes and fringe benefits for domestic
operations increased from $43.1 million in 1998 to $46.6 million in 1999, as a
result of an increase in pension expense. Pension expense in 1998 was lower due
to favorable investment returns in recent years.
EXPENSES OTHER THAN COMPENSATION AND FRINGE BENEFITS
Domestic expenses other than compensation and related payroll taxes and fringe
benefits increased as a percent of revenues to 27.1% in 1999 from 24.3% in
1998. These increases are primarily due to higher professional fees (related to
outsourced functions in the Company's class action administration and medical
bill auditing units), and higher interest costs as a result of increased
borrowings and lower cash balances in 1999.
YEARS ENDED DECEMBER 31, 1998 and 1997
REVENUES
Domestic revenues declined 8.6% to $499.3 million for the year ended December
31, 1998. Domestic revenues from insurance companies increased by 3% during
1998 to $300.3 million. This gain was more than off- set, however, by a decline
in revenues related to the winding down of a major class action project and
continued weakness in the self-insured market.
Revenues from the class action project declined from $48.9 million in 1997 to
$10.9 million in 1998. The soft insurance market has contributed to the
weakness in the self-insurance market, as self-insured entities have elected to
move to fully insured programs from alternative risk funding arrangements.
Revenues from self-insured entities, excluding the class action project,
declined 8% to $188.1 million in 1998.
Domestic unit volume, measured principally by cases received, decreased 3.0%
from 1997 to 1998. Additionally, changes in the mix of services provided and
in the rates charged for those services had the combined effect of decreasing
revenues by approximately 5.6% in 1998 compared to 1997.
COMPENSATION AND FRINGE BENEFITS
The Company's most significant expense is the compensation of its employ-
ees, including related payroll taxes and fringe benefits. Domestic compen-
sation expense increased slightly, from 62.6% of revenues in 1997 to
62.9% of revenues in 1998.
19
<PAGE> 4
CRAWFORD & COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Domestic salaries and wages decreased by 6.2% from $288.7 million in 1997 to
$270.8 million in 1998. This decline was due to fewer employees during the year
as compared to the prior year, as the Company reduced its U.S. workforce in
response to the decline in revenues.
Payroll taxes and fringe benefits for domestic operations decreased from $53.0
million in 1997 to $43.1 million in 1998, as a result of fewer employees and
a reduction in pension expense due to favorable investment returns achieved by
the Company's pension plan in recent years.
EXPENSES OTHER THAN COMPENSATION AND FRINGE BENEFITS
Domestic expenses other than compensation and related payroll taxes and fringe
benefits increased as a percent of revenues to 24.3% in 1998 from 22.4% in
1997. This increase was due to higher personnel relocation costs, higher costs
related to the Company's self-insurance program, and one-time costs associated
with converting to a new medical bill auditing system.
INTERNATIONAL OPERATIONS
YEARS ENDED DECEMBER 31, 1999 AND 1998
REVENUES
Revenues from the Company's international operations totaled $178.6 million in
1999, a 6.3% increase from $168.0 million in 1998. This increase is due to the
July 1998 acquisition of Adjusters Canada Incorporated ("ACI"), which more than
offset the reduced claims frequency experienced in 1999. Revenues are net of a
1.0% decline 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 from 62.0% in 1998 to 63.2% in 1999, primarily
due to an increase in pension expense.
Salaries and wages of international personnel increased as a percent of rev-
enues, from 53.3% in 1998 to 54.0% in 1999. Payroll taxes and fringe benefits
also increased as a percent of revenues, from 8.7% in 1998 to 9.2% in 1999.
EXPENSES OTHER THAN COMPENSATION AND FRINGE BENEFITS
Expenses other than compensation and related payroll taxes and fringe benefits
decreased as a percent of revenues from 37.6% in 1998 to 33.5% in 1999. 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 due
primarily to lower professional fees in 1999, as significant fees were incurred
in 1998 related to the restructuring of the Company's United Kingdom ("U.K.")
operations, and expense reduction measures put in place in 1999.
YEARS ENDED DECEMBER 31, 1998 AND 1997
REVENUES
Revenues from the Company's international operations totaled $168.0 million
and $146.1 million in 1998 and 1997, respectively. The 15% increase in 1998 was
primarily due to the acquisitions of ACI and the Thomas Howell Group ("THG").
The stronger U.S. dollar negatively impacted revenues in 1998, reducing
international revenues by approximately 6% from the level that would have been
reported without foreign currency fluctuations.
COMPENSATION AND FRINGE BENEFITS
As a percent of revenues, compensation expense, including related payroll taxes
and fringe benefits, decreased from 63.4% in 1997 to 62.0% in 1998, primarily
due to continued efforts to eliminate redundancies in the Company's U.K.
operations (see "Restructuring Charges" below).
Salaries and wages of international personnel decreased as a percent of
revenues, from 54.5% in 1997 to 53.3% in 1998. Payroll taxes and fringe
benefits also decreased as a percent of revenues, from 8.9% in 1997 to 8.7% in
1998. These decreases were due to a decline in the number of employees as a
result of the U.K. restructuring program.
EXPENSES OTHER THAN COMPENSATION AND FRINGE BENEFITS
Expenses other than compensation and related payroll taxes and fringe bene-
fits increased as a percent of revenues from 34.0% in 1997 to 37.6% in 1998.
This increase was due to higher professional fees associated with the restruc-
turing of the Company's U.K. operations and increased bad debt expense.
20
<PAGE> 5
MINORITY INTEREST
Minority interest benefit of $1.2 million was recorded in 1998, compared to a
benefit of $2.5 million in 1997. The minority interest benefit reflects Swiss
Reinsurance Company's ("Swiss Re") 40% share in the losses of Crawford-THG
Limited through May 1998. In June 1998, the Company acquired Swiss Re's 40%
interest, and Crawford-THG Limited is now a wholly-owned subsidiary.
RESTRUCTURING CHARGES
During the third quarter of 1998, the Company recorded charges totaling $14.9
million related to the restructuring of its U.K. and Canadian operations and
the realignment of senior management after the resignation of its former
chairman and chief executive officer. These restructuring programs resulted in
the elimination of approximately 350 staff positions and the closing of 67
offices. After reflecting income tax benefits of $5.2 million, this charge
reduced the Company's 1998 net income by $9.7 million, or $0.19 per share.
In connection with the THG acquisition, the Company recorded a pretax charge of
$13 million in the first quarter of 1997 for personnel, facilities, and other
costs associated with the integration of the Company's international
businesses. After reflecting income tax benefits of $4.3 million and minority
interest share of $3.5 million, this charge reduced 1997 net income by $5.2
million, or $0.10 per share.
During 1999, the Company utilized $4.4 million and $4.0 million of lease and
employee separation reserves, respectively. As of December 31, 1999, remaining
lease and employee separation reserves were $4.4 million and $0.7 million,
respectively.
FINANCIAL CONDITION
At December 31, 1999, current assets exceeded current liabilities by
approximately $109.8 million, a decrease of $0.7 million from the working
capital balance at December 31, 1998. Cash and cash equivalents at the end of
1999 totaled $17.7 million, increasing from the $8.4 million at the end of
1998. Cash was generated primarily from operating activities and long-term
borrowings, while the principal uses of cash were for dividends paid to
shareholders, acquisitions of property and equipment, repurchases of common
stock, and the acquisition of GCG.
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 December 31, 1999 totaled $38.9 million,
increasing from $37.2 million at the end of 1998. In September 1999, the
Company obtained a five-year, $15 million term loan with a fixed interest rate
of 6.8%. This new loan increased the Company's long-term debt to $16.1 million
as of December 31, 1999, compared to $1.9 million at December 31, 1998. The
Company believes that its current financial resources, together with funds
generated from operations and existing and potential borrowing capabilities,
will be sufficient to maintain its current operations.
The Company does not engage in any hedging activities to compensate for the
effect of exchange rate fluctuations on the operating results of its foreign
subsidiaries. Foreign currency denominated debt is maintained primarily to
hedge the currency exposure of its net investment in foreign operations.
Shareholders' investment at the end of 1999 was $250.3 million, compared with
$239.7 million at the end of 1998.
FACTORS THAT MAY AFFECT FUTURE RESULTS
Certain of the statements contained in this and other sections of this Annual
Report are forward-looking. While management believes that these statements are
accurate, the Company's business is dependent upon general economic conditions
and various conditions specific to its industry. Future trends and these
factors could cause actual results to differ materially from the
forward-looking statements that have been made. In particular, the following
issues and uncertainties should be considered in evaluating the Company's
prospects:
YEAR 2000
The Company has completed its project to remediate its computer systems to
address the Year 2000 issue. The Year 2000 issue, which is common to most
organizations, concerns the inability of information systems to properly
distinguish the year 2000 from the year 1900.
21
<PAGE> 6
CRAWFORD & COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINAL CONDITION AND RESULTS OF OPERATIONS
The Company has completed the remediation of, and placed into production,
substantially all of its information technology ("IT") and non-IT systems
(primarily telephones). These IT and non-IT systems are operational with no
known processing errors, computer system failures, or business disruptions
associated with the transition from 1999 to 2000. The Company has not
experienced any business disruptions external in nature, such as disruptions in
telecommunications, electric or transportation services or noncompliance of
vendors, customers and other business partners ("Trading Partners") associated
with the transition from 1999 to 2000. We will continue to monitor system
performance and Trading Partners throughout the year 2000 to ensure continued
compliance.
The total costs associated with the Year 2000 project were not material to the
Company's financial position. The Company incurred approximately $13.3 million
through December 31, 1999. The Company does not expect to incur any material
costs in 2000.
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 that 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 revenues
from its international operations were 25% of total revenues at December 31,
1999 and 1998. Except for borrowings 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 December 31, 1999, approximately $14.2 million of internal and
external costs have been capitalized in connection with this development
project. The server-based system, which is scheduled to be deployed in
mid-2000, is designed to streamline and automate the claims intake, assignment,
management, and reporting functions. The Company believes the system will
increase its competitive advantages. However, if the system fails to function
as planned, it could adversely affect the Company's competitive position and
revenues.
22
<PAGE> 7
CRAWFORD & COMPANY
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31 1999 1998 1997
- ------------------------------- -------- -------- --------
(in thousands, except per share data)
<S> <C> <C> <C>
REVENUES $701,926 $667,271 $692,322
COSTS AND EXPENSES:
Costs of services provided, less reimbursed expenses of $38,109
in 1999, $35,327 in 1998, and $40,218 in 1997 514,827 494,590 496,613
Selling, general, and administrative expenses 118,174 107,924 109,588
Year 2000 expenses 5,181 7,201 937
Restructuring charges -- 14,873 13,000
-------- -------- --------
638,182 624,588 620,138
-------- -------- --------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 63,744 42,683 72,184
PROVISION FOR INCOME TAXES 24,480 16,395 27,697
-------- -------- --------
INCOME BEFORE MINORITY INTEREST 39,264 26,288 44,487
MINORITY INTEREST IN LOSS OF JOINT VENTURE -- 1,177 2,502
-------- -------- --------
NET INCOME $ 39,264 $ 27,465 $ 46,989
-------- -------- --------
NET INCOME PER SHARE:
Basic $ 0.78 $ 0.55 $ 0.95
-------- -------- --------
Diluted $ 0.78 $ 0.54 $ 0.93
-------- -------- --------
WEIGHTED-AVERAGE SHARES OUTSTANDING:
Basic 50,380 50,341 49,566
-------- -------- --------
Diluted 50,498 50,938 50,687
-------- -------- --------
CASH DIVIDENDS PER SHARE:
Class A Common Stock $ 0.52 $ 0.50 $ 0.44
-------- -------- --------
Class B Common Stock $ 0.52 $ 0.50 $ 0.44
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
23
<PAGE> 8
CRAWFORD & COMPANY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31 1999 1998
- ----------------- --------- ---------
(in thousands)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 17,716 $ 8,423
Accounts receivable, less allowance for doubtful accounts
of $20,182 in 1999 and $19,346 in 1998 141,841 134,094
Unbilled revenues, at estimated billable amounts 91,039 88,871
Deferred income tax assets -- 2,342
Prepaid expenses and other current assets 17,240 17,416
--------- ---------
TOTAL CURRENT ASSETS 267,836 251,146
--------- ---------
PROPERTY AND EQUIPMENT, AT COST:
Land 2,425 2,409
Buildings and improvements 20,280 20,009
Furniture and fixtures 65,000 59,693
Data processing equipment 73,117 63,733
Automobiles 5,730 8,229
--------- ---------
166,552 154,073
Less accumulated depreciation and amortization (117,661) (111,130)
--------- ---------
NET PROPERTY AND EQUIPMENT 48,891 42,943
--------- ---------
OTHER ASSETS:
Intangible assets arising from acquisitions, less accumulated
amortization of $15,068 in 1999 and $12,434 in 1998 80,566 64,092
Prepaid pension cost 49,995 55,377
Capitalized software costs, net 18,449 11,885
Other 8,291 7,447
--------- ---------
TOTAL OTHER ASSETS 157,301 138,801
--------- ---------
$ 474,028 $ 432,890
========= =========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
24
<PAGE> 9
CRAWFORD & COMPANY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31 1999 1998
- ----------------- --------- ----------
(in thousands)
LIABILITIES AND SHAREHOLDERS' INVESTMENT
<S> <C> <C>
CURRENT LIABILITIES:
Short-term borrowings $ 38,914 $ 37,196
Accounts payable 29,575 21,971
Accrued compensation and related costs 23,825 20,307
Accrued restructuring charges 973 7,362
Self-insured risks 11,360 12,166
Other accrued liabilities 30,044 23,434
Deferred revenues 22,836 17,575
Current installments of long-term debt 463 563
--------- ---------
TOTAL CURRENT LIABILITIES 157,990 140,574
--------- ---------
NONCURRENT LIABILITIES:
Long-term debt, less current installments 16,053 1,854
Deferred income taxes 6,571 8,720
Deferred revenues 13,644 13,594
Postretirement medical benefit obligation 7,756 7,983
Self-insured risks 10,241 9,002
Other 11,494 11,491
--------- ---------
TOTAL NONCURRENT LIABILITIES 65,759 52,644
--------- ---------
SHAREHOLDERS' INVESTMENT:
Class A Common Stock, $1.00 par value, 50,000 shares authorized;
25,892 and 25,735 shares issued in 1999 and 1998, respectively 25,892 25,735
Class B Common Stock, $1.00 par value, 50,000 shares authorized;
24,826 and 25,168 shares issued in 1999 and 1998, respectively 24,826 25,168
Additional paid-in capital 22,309 24,560
Retained earnings 185,975 172,958
Cumulative translation adjustment (8,723) (8,749)
--------- ---------
TOTAL SHAREHOLDERS' INVESTMENT 250,279 239,672
--------- ---------
$ 474,028 $ 432,890
========= =========
</TABLE>
25
<PAGE> 10
CRAWFORD & COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
For the years ended December 31
<TABLE>
<CAPTION>
Common Stock
----------------------- Additional Cumulative Total
Class A Class B Paid-In Retained Translation Shareholders'
Non-Voting Voting Capital Earnings Adjustment Investment
---------- -------- ---------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
(in thousands)
BALANCE AT 12/31/96 $ 24,392 $ 25,719 $ -- $ 173,708 $(2,283) $ 221,536
Net income -- -- -- 46,989 -- 46,989
Translation adjustment -- -- -- -- (7,078) (7,078)
---------
Comprehensive income 39,911
Dividends paid -- -- -- (21,820) -- (21,820)
Shares repurchased (1,775) (295) (11,300) (23,904) -- (37,274)
Conversion of convertible debt 821 -- 6,564 -- -- 7,385
Stock options exercised 478 53 4,736 -- -- 5,267
-------- -------- -------- --------- ------- ---------
BALANCE AT 12/31/97 23,916 25,477 -- 174,973 (9,361) 215,005
Net income -- -- -- 27,465 -- 27,465
Translation adjustment -- -- -- -- 612 612
---------
Comprehensive income 28,077
Dividends paid -- -- -- (25,126) -- (25,126)
Shares repurchased (780) (333) (14,327) (4,354) -- (19,794)
Stock options exercised 699 24 7,656 -- -- 8,379
Shares issued for acquisition (Note 7) 1,900 -- 31,231 -- -- 33,131
-------- -------- -------- --------- ------- ---------
BALANCE AT 12/31/98 25,735 25,168 24,560 172,958 (8,749) 239,672
Net income -- -- -- 39,264 -- 39,264
Translation adjustment -- -- -- -- 26 26
---------
Comprehensive income 39,290
Dividends paid -- -- -- (26,247) -- (26,247)
Shares repurchased (861) (354) (12,589) -- -- (13,804)
Stock options exercised 98 12 1,385 -- -- 1,495
Shares issued for acquisition (Note 7) 920 -- 8,953 -- -- 9,873
-------- -------- -------- --------- ------- ---------
BALANCE AT 12/31/99 $ 25,892 $ 24,826 $ 22,309 $ 185,975 $(8,723) $ 250,279
-------- -------- -------- --------- ------- ---------
</TABLE>
The accompanying notes are an integral part of these statements.
26
<PAGE> 11
CRAWFORD & COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For The Years Ended December 31 1999 1998 1997
<S> <C> <C> <C>
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 39,264 $ 27,465 $ 46,989
Reconciliation of net income to net cash provided by operating activities:
Minority interest in loss of joint venture -- (1,177) (2,502)
Depreciation and amortization 17,028 14,798 15,423
Deferred income taxes 779 (9,662) 2,807
Loss on sales of property and equipment 479 300 277
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable, net (6,209) (13,513) 12,643
Unbilled revenues (1,870) 6,138 10,907
Prepaid or accrued income taxes 4,073 3,713 (1,628)
Accounts payable and accrued liabilities 13,226 (7,453) (14,633)
Accrued restructuring charges (8,374) 4,490 6,220
Deferred revenues 4,475 943 389
Prepaid expenses and other assets 5,777 (5,106) (10,016)
-------- -------- --------
Net cash provided by operating activities 68,648 20,936 66,876
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment (20,835) (13,814) (12,331)
Acquisitions of businesses, net of cash acquired (9,555) (16,259) --
Capitalization of software costs (7,736) (11,852) (741)
Proceeds from sales of property and equipment 1,348 1,516 1,053
-------- -------- --------
Net cash used in investing activities (36,778) (40,409) (12,019)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (26,247) (25,126) (21,820)
Repurchase of common stock (13,804) (19,794) (37,274)
Proceeds from exercise of stock options 1,495 8,379 5,267
Increase in short-term borrowings 2,676 10,887 1,878
Proceeds from long-term borrowings 15,000 -- --
Payments on long-term debt (910) (1,079) (1,676)
-------- -------- --------
Net cash used in financing activities (21,790) (26,733) (53,625)
-------- -------- --------
Effects of exchange rate changes on cash and cash equivalents (787) (751) (1,337)
-------- -------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 9,293 (46,957) (105)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 8,423 55,380 55,485
-------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 17,716 $ 8,423 $ 55,380
-------- -------- --------
</TABLE>
The accompanying notes are an integral part of these statements.
27
<PAGE> 12
CRAWFORD & COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1 MAJOR ACCOUNTING AND REPORTING POLICIES
NATURE OF OPERATIONS AND INDUSTRY CONCENTRATION
The Company is the world's largest independent provider of claims and risk
management, loss adjustment, healthcare management, class action
administration, and risk information services to insurance companies,
self-insured corporations, and governmental entities. Substantial portions of
the Company's revenues and accounts receivable are derived from domestic claims
services provided to the property and casualty insurance industry.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of the
Company and its subsidiaries after elimination of all significant intercompany
transactions. The financial statements of the Company's international
subsidiaries outside North America and the Caribbean are included in the
Company's consolidated financial statements on a two-month delayed basis in
order to provide sufficient time for accumulation of their results.
PRIOR YEAR RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the current
year presentation.
MANAGEMENT'S USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of financial instruments classified as current assets or
liabilities, including cash and cash equivalents, receivables, and accounts
payable, approximates carrying value due to the short-term maturity of the
instruments. The fair value of short-term borrowings and long-term debt
approximates carrying value based on their effective interest rates compared to
current market rates.
PROPERTY AND DEPRECIATION
The Company depreciates the cost of property and equipment over the estimated
useful lives of the related assets, primarily using the straight-line method.
The estimated useful lives for the principal property and equipment
classifications are as follows:
<TABLE>
<CAPTION>
Classification Estimated Useful Lives
<S> <C>
Furniture and fixtures 3-10 years
Data processing equipment 3-5 years
Automobiles 3-4 years
Buildings and improvements 7-40 years
</TABLE>
CAPITALIZED SOFTWARE
Capitalized software included in other assets reflects costs related to
internally developed or purchased software that are capitalized and amortized
on a straight-line basis over periods ranging from three to ten years.
INTANGIBLE ASSETS
Intangible assets arise from acquisitions and are amortized over 15 to 40 years
using the straight-line method. Management periodically evaluates the
recoverability of intangible assets. Intangible assets in excess of associated
expected operating cash flows are considered to be impaired and are written
down to fair value.
SELF-INSURED RISKS
The Company self-insures certain insurable risks consisting primarily of
professional liability, employee medical and disability, workers' compensation,
and auto liability.
Insurance coverage is obtained for catastrophic property and casualty exposures
(including professional liability on a claims-made basis), as well as those
risks required to be insured by law or contract. Provision for claims under the
self-insured program is made based on the Company's estimate of the aggregate
liability for claims incurred. At December 31, 1999 and 1998, accrued
self-insured risks totaled $21,601,000 and $21,168,000, respectively, including
current liabilities of $11,360,000 and $12,166,000, respectively.
28
<PAGE> 13
REVENUE RECOGNITION
Revenue is recognized in unbilled revenues as services are provided. Deferred
revenues represent the unearned portion of fees derived from certain fixed-rate
claim service agreements.
INCOME TAXES
The Company accounts for certain income and expense items differently for
financial reporting and income tax purposes. Provisions for deferred taxes are
made in recognition of these temporary differences. The most significant
differences relate to prepaid pension cost, unbilled and deferred revenues,
self-insurance, and employee compensation.
NET INCOME PER SHARE
Basic net income per share is computed based on the weighted-average number of
total common shares outstanding during the respective periods. Diluted net
income 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.
Below is the calculation of basic and diluted net income per share:
<TABLE>
<CAPTION>
(in thousands, except per share data) 1999 1998 1997
<S> <C> <C> <C>
Net income available to
common shareholders $39,264 $27,465 $46,989
------- ------- -------
Weighted-average common
shares outstanding -Basic 50,380 50,341 49,566
Dilutive effect of stock options 118 597 1,121
------- ------- -------
Weighted-average common
shares outstanding -Diluted 50,498 50,938 50,687
------- ------- -------
Basic net income per share $ 0.78 $ 0.55 $ 0.95
------- ------- -------
Diluted net income per share $ 0.78 $ 0.54 $ 0.93
------- ------- -------
</TABLE>
Additional options to purchase 2,989,550, 1,098,500, and 913,500 shares of
Class A Common Stock at $11.83 to $19.50 per share were outstanding at December
31, 1999, 1998, and 1997, respectively, but were not included in the
computation of diluted net income per share because the options' exercise
prices were greater than the average market price of the common shares; to
include them would have been antidilutive.
COMPREHENSIVE INCOME AND FOREIGN CURRENCY TRANSLATION
Comprehensive income for the Company consists of the total of net income and
foreign currency translation adjustments. The Company reports comprehensive
income in the Consolidated Statements of Shareholders' Investment.
For operations outside the United States that prepare financial statements in
currencies other than the U.S. dollar, results from operations and cash flows
are translated at average exchange rates during the period, and assets and
liabilities are translated at end-of-period exchange rates. Resulting
translation adjustments are accumulated as a component of comprehensive income
and reported in the Consolidated Statements of Shareholders' Investment.
NEW ACCOUNTING PRONOUNCEMENTS
In 1998, the Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards ("SFAS") 133, "Accounting for Derivative
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.
29
<PAGE> 14
CRAWFORD & COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." SOP 98-1 establishes
guidelines for capitalizing such software costs. The Company adopted SOP 98-1
effective January 1, 1999, with no material impact on the Company's
consolidated results of operations, financial position, or cash flows expected.
CONTINGENCIES
The Company is subject to legal proceedings and claims arising in the ordinary
course of business. Although there can be no assurance as to the ultimate
disposition of these matters, it is the opinion of the Company's management
that the final disposition of such matters will not have a material adverse
effect on the financial position or results of operations of the Company.
2 RETIREMENT PLANS
The Company and its subsidiaries sponsor various defined contribution and
defined benefit retirement plans covering substantially all employees. Employer
contributions under the Company's defined contribution plans are determined
annually, based on employee contributions, a percentage of each covered
employee's compensation, and the profitability of the Company. The cost of
these plans totaled $5,129,000, $6,007,000, and $7,475,000 in 1999, 1998, and
1997, respectively.
Benefits payable under the Company's defined benefit plans are generally based
on career compensation. The Company's funding policy is to make cash
contributions in amounts sufficient to maintain the plans on an actuarially
sound basis, but not in excess of deductible amounts permitted under applicable
income tax regulations. Plan assets are invested primarily in equity and fixed
income securities.
The following schedule reconciles the funded status of the plans with amounts
reported in the Company's balance sheets at December 31, 1999 and 1998.
<TABLE>
<CAPTION>
(in thousands) 1999 1998
<S> <C> <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year $ 393,439 $ 324,474
Service cost 13,474 13,243
Interest cost 25,281 25,912
Actuarial (gain) loss (43,944) 46,238
Benefits paid (16,686) (16,428)
--------- ---------
Benefit obligation at end of year 371,564 393,439
--------- ---------
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year 394,087 382,477
Actual return on plan assets 44,611 19,658
Company contributions 3,060 8,267
Benefits paid (16,571) (16,315)
--------- ---------
Fair value of plan assets at end of year 425,187 394,087
--------- ---------
Funded status of plan 53,623 648
Unrecognized actuarial (gain) loss (1,440) 59,155
Unrecognized prior service cost (credit) 101 (243)
Unrecognized net transition asset (4,594) (6,100)
--------- ---------
Net prepaid benefit cost 47,690 53,460
Less pension obligation included in
other accrued liabilities 2,305 1,917
--------- ---------
Prepaid pension cost included in
other assets $ 49,995 $ 55,377
--------- ---------
</TABLE>
30
<PAGE> 15
Assumptions used in accounting for the plans were:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C> <C>
Discount rate 7.5% 6% to 6.8%
Expected return on plan assets 9.3% 8% to 9.3%
Rate of compensation increase 4.5% 4% to 5.5%
</TABLE>
Net periodic benefit cost related to the defined benefit plans in 1999, 1998,
and 1997 included the following components:
<TABLE>
<CAPTION>
(in thousands) 1999 1998 1997
<S> <C> <C> <C>
Service cost $ 13,474 $ 13,243 $ 9,931
Interest cost 25,281 25,912 17,871
Expected return on assets (29,982) (34,990) (21,104)
Amortization (391) (563) 628
Recognized net actuarial loss 2,196 156 2,003
-------- -------- --------
Net periodic benefit cost $ 10,578 $ 3,758 $ 9,329
-------- -------- --------
</TABLE>
3 INCOME TAXES
Income (loss) before provisions for income taxes and minority interest,
consists of the following:
<TABLE>
<CAPTION>
(in thousands) 1999 1998 1997
<S> <C> <C> <C>
U.S. $57,780 $ 53,660 $ 81,331
Foreign 5,964 (10,977) (9,147)
------- -------- --------
$63,744 $ 42,683 $ 72,184
------- -------- --------
</TABLE>
The provisions (credits) for income taxes consist of the following:
<TABLE>
<CAPTION>
(in thousands) 1999 1998 1997
<S> <C> <C> <C>
Current:
U.S. federal and state $23,663 $ 24,328 $ 26,314
Foreign 38 1,729 (1,424)
Deferred 779 (9,662) 2,807
------- -------- --------
$24,480 $ 16,395 $ 27,697
------- -------- --------
</TABLE>
Cash payments for income taxes were $20,763,000 in 1999, $21,493,000 in 1998,
and $26,145,000 in 1997.
The provisions for income taxes are reconciled to the federal statutory rate of
35% as follows:
<TABLE>
<CAPTION>
(in thousands) 1999 1998 1997
<S> <C> <C> <C>
Federal income taxes at
statutory rate $ 22,310 $14,939 $ 25,264
State income taxes, net of
federal benefit 2,279 1,387 2,815
Other (109) 69 (382)
-------- ------- --------
$ 24,480 $16,395 $ 27,697
-------- ------- --------
</TABLE>
The Company does not provide for additional U.S. and foreign income taxes on
undistributed earnings of foreign subsidiaries because they are considered to
be permanently reinvested. At December 31, 1999, such undistributed earnings
totaled $40,047,000. If the earnings were not considered permanently
reinvested, deferred income taxes would have been provided. Such taxes, if
ultimately paid, may be recoverable as foreign tax credits in the United
States.
Deferred income taxes consist of the following at December 31, 1999 and 1998:
<TABLE>
<CAPTION>
(in thousands) 1999 1998
<S> <C> <C>
Accrued compensation $ 6,642 $ 2,997
Accrued restructuring costs 1,538 3,683
Self-insured risks 7,443 6,591
Deferred revenues 11,709 10,903
Postretirement benefits 2,978 3,065
Other 2,162 2,544
-------- --------
Gross deferred tax assets 32,472 29,783
-------- --------
Unbilled revenues 13,644 11,892
Depreciation and amortization 4,935 3,746
Prepaid pension cost 19,198 19,170
Other 1,852 1,353
-------- --------
Gross deferred tax liabilities 39,629 36,161
-------- --------
Net deferred tax liabilities (7,157) (6,378)
Less noncurrent net deferred tax liabilities (6,571) (8,720)
-------- --------
Current net deferred tax (liability) asset $ (586) $ 2,342
-------- --------
</TABLE>
31
<PAGE> 16
CRAWFORD & COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4 LEASE COMMITMENTS
The Company and its subsidiaries lease office space, certain computer
equipment, and its automobile fleet under operating leases. License and
maintenance costs related to the leased vehicles are paid by the Company.
Rental expense for all operating leases consists of the following:
<TABLE>
<CAPTION>
(in thousands) 1999 1998 1997
<S> <C> <C> <C>
Office space $28,412 $29,603 $29,644
Automobile 11,218 12,306 13,090
Computer equipment 527 604 3,344
------- ------- -------
$40,157 $42,513 $46,078
------- ------- -------
</TABLE>
At December 31, 1999, future minimum payments under non-cancelable operating
leases with terms of more than 12 months were as follows: 2000 - $32,804,000;
2001 - $23,518,000; 2002 - $16,002,000; 2003 - $11,141,000; 2004 - $8,528,000
and thereafter - $27,657,000.
5 LONG-TERM DEBT AND SHORT-TERM BORROWINGS
Long-term debt consists of the following at December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
(in thousands)
<S> <C> <C>
Term loan payable to bank due
September 2004, interest payable
quarterly at 6.8% $ 15,000 $ --
Mortgages payable, secured by buildings,
due on various dates through 2003 at
interest rates ranging from 7.3% to 7.8% 832 1,503
Capital lease obligations 684 914
-------- -------
Total debt 16,516 2,417
Less: current installments (463) (563)
-------- -------
Total long-term debt $ 16,053 $ 1,854
-------- -------
</TABLE>
The Company leases certain computer and office equipment under capital leases
with terms ranging from 24 to 60 months.
The term loan payable contains various provisions which, among other things,
require the Company to maintain defined fixed charge coverage and leverage
ratios and limit the incurrence of certain liens, encumbrances, and disposition
of assets in excess of defined amounts, none of which are expected to restrict
future operations.
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 totaled $38.9 million and $37.2 million at December 31, 1999 and
1998, respectively. The weighted-average interest rate on short-term borrowings
was 5.2% during 1999 and 6.7% during 1998.
6 SEGMENT AND GEOGRAPHIC INFORMATION
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 or representative
offices located in 64 other countries ("International Operations").
Intersegment sales are recorded at cost and are not material. The Company
measures segment profit based on operating income, defined as income before
taxes, nonrecurring charges, and minority interest.
32
<PAGE> 17
Financial information as of December 31, 1999, 1998, and 1997 covering the
Company's reportable segments is presented below:
<TABLE>
<CAPTION>
Domestic International Consolidated
(in thousands) Operations Operations Totals
1999
<S> <C> <C> <C>
Revenues $523,342 $178,584 $701,926
Operating income 62,961 5,964 68,925
Depreciation and amortization 11,320 5,708 17,028
Capital expenditures 23,419 5,152 28,571
Assets 263,677 210,351 474,028
Long-lived assets 138,508 67,684 206,192
1998
Revenues $499,260 $168,011 $667,271
Operating income 64,173 584 64,757
Depreciation and amortization 9,719 5,079 14,798
Capital expenditures 21,569 4,097 25,666
Assets 243,426 189,464 432,890
Long-lived assets 122,178 59,566 181,744
1997
Revenues $546,246 $146,076 $692,322
Operating income 82,268 3,853 86,121
Depreciation and amortization 10,699 4,724 15,423
Capital expenditures 9,698 3,374 13,072
Assets 252,079 176,787 428,866
Long-lived assets 87,060 62,992 150,052
</TABLE>
The Company's most significant international operations are in the United
Kingdom. Revenues in the United Kingdom were $73,925,000, $79,874,000, and
$77,218,000 in 1999, 1998, and 1997, respectively. Long-lived assets were
$16,817,000, $14,238,000, and $13,957,000 as of December 31, 1999, 1998, and
1997, respectively.
7 ACQUISITIONS
On August 9, 1999, the Company acquired all of the outstanding shares of PRISM
Network Inc. ("PRISM") by issuing 919,945 shares of Crawford Class A Common
Stock for a total purchase price of approximately $9.9 million. The Company
acquired assets with a fair value of $12.2 million, including goodwill related
to the purchase of $9.7 million, and assumed liabilities of approximately $2.3
million. The transaction was accounted for by the purchase method of
accounting. PRISM's operating results are included in the consolidated
statements of income from the acquisition date.
On January 6, 1999, the Company acquired all of the outstanding shares of 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, including goodwill
related to the initial purchase of $5.4 million, and assumed liabilities of
approximately $3.5 million. This transaction was accounted for by the purchase
method of accounting. GCG's operating results are included in the consolidated
statements of income from the acquisition date. 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. The purchase price may be further
increased based on future earnings of GCG through December 31, 2001.
On July 31, 1998, the Company acquired all of the outstanding shares of
Adjusters Canada Incorporated ("ACI") for $16.3 million in cash. The Company
acquired assets with a fair value of $30.1 million, including goodwill related
to the purchase of $13.8 million, and assumed liabilities of approximately
$13.8 million. This transaction was accounted for by the purchase method of
accounting. ACI's operating results are included in the consolidated statements
of income from the acquisition date. The initial purchase price may be
increased based on future earnings of ACI through October 31, 2001.
33
<PAGE> 18
CRAWFORD & COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In December 1996, the Company entered into an agreement with Swiss Reinsurance
Company ("Swiss Re") to merge both companies' claims services firms outside the
United States into Crawford-THG Limited ("Crawford-THG"), in which the Company
had a 60% controlling interest after this initial transaction. The merger was
accounted for as a partial sale of the Company's 100%-owned subsidiary,
Crawford & Company International, Ltd. to Swiss Re and a partial acquisition of
Swiss Re's 100%-owned subsidiary, Thomas Howell Group ("THG"), by the Company.
No gain or loss was recognized on the partial sale. Swiss Re's 40% interest in
the equity and net loss of the joint venture is reflected as minority interest
through May 31, 1998.
On June 1, 1998, the Company acquired Swiss Re's 40% interest in Crawford-THG
in exchange for 1.9 million shares of the Company's Class A Common Stock.
Crawford-THG is now a wholly-owned subsidiary of the Company. This transaction
was accounted for by the purchase method of accounting. The shares issued were
valued at $33.1 million, which approximated the minority interest book value.
Accordingly, no goodwill was recorded related to this transaction.
The accompanying consolidated statements of income include 10 months' operating
results of the Company's interest in THG for the year ended December 31, 1997,
due to an acquisition effective date of January 1, 1997 and a two-month lag in
reporting international results. The following table presents unaudited pro
forma operating results as if a full 12 months' operating results of the
Company's interest in THG had been recorded for the year ending December 31,
1997. The pro forma information is based on historical information and does not
necessarily reflect the actual results that would have occurred, nor is it
necessarily indicative of future results of operations of the combined
enterprises.
<TABLE>
<CAPTION>
(unaudited - in thousands, except per share data) 1997
<S> <C>
Revenues $ 710,062
---------
Income before minority interest 54,420
Minority interest in joint venture (2,821)
---------
Net income $ 51,599
---------
Net income per share:
Basic $ 1.04
---------
Diluted $ 1.02
---------
</TABLE>
8 RESTRUCTURING CHARGES
During the third quarter of 1998, the Company recorded a pretax charge of
$14,873,000 related to the restructuring of its United Kingdom and Canadian
operations and the realignment of senior management following the resignation
of its former chairman and chief executive officer. These restructuring
programs resulted in the elimination of approximately 350 staff positions and
the closing of 67 offices. After reflecting income tax benefits of $5,181,000,
this charge reduced the Company's 1998 net income by $9,692,000 ($0.19 per
share).
In connection with the THG acquisition, the Company recorded a pretax charge of
$13,000,000 in the first quarter of 1997 for personnel, facilities, and other
costs associated with the integration of the Company's international
businesses. After reflecting income tax benefits of $4,290,000 and minority
interest share of $3,484,000, this charge reduced the Company's 1997 net income
by $5,226,000 ($0.10 per share).
34
<PAGE> 19
The following is a rollforward of the Company's accrued restructuring costs:
<TABLE>
<CAPTION>
Employee
(in thousands) Leases Separations Other Total
------- ----------- ------- ---------
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1996 $ -- $ -- $ -- $ --
Accrued 4,937 5,096 2,967 13,000
Acquired 1,137 671 -- 1,808
Utilized (1,709) (2,850) (2,221) (6,780)
-------- -------- -------- ---------
BALANCE AT DECEMBER 31, 1997 4,365 2,917 746 8,028
Accrued 6,356 8,196 321 14,873
Acquired 371 763 -- 1,134
Utilized (2,292) (7,163) (1,067) (10,522)
-------- -------- -------- ---------
BALANCE AT DECEMBER 31, 1998 8,800 4,713 -- 13,513
Utilized (4,379) (3,995) -- (8,374)
-------- -------- -------- ---------
BALANCE AT DECEMBER 31, 1999 4,421 718 -- 5,139
Less noncurrent portion 3,762 404 -- 4,166
-------- -------- -------- ---------
Current portion of accrued restructuring costs $ 659 $ 314 $ -- $ 973
-------- -------- -------- ---------
</TABLE>
The noncurrent portion of accrued restructuring costs consists primarily of
long-term lease obligations related to various U.K. offices, which the Company
has vacated and is currently attempting to sublease, and extended payments
being made under employee separation agreements. Management believes the
remaining reserves are adequate to complete its plan.
35
<PAGE> 20
CRAWFORD & COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9 COMMON STOCK
The Company has two classes of Common Stock outstanding, Class A Common Stock
and Class B Common Stock. These two classes of stock have essentially identical
rights, except that shares of Class A Common Stock generally do not have any
voting rights. Under the Company's Articles of Incorporation, the Board of
Directors may pay higher (but not lower) cash dividends on the non-voting Class
A Common Stock than on the voting Class B Common Stock.
STOCK SPLIT
In February 1997, the Board of Directors declared a three-for-two stock split
on both the Class A Common Stock and Class B Common Stock. The split was
effected in the form of a 50% stock dividend and resulted in the issuance of
8,104,354 shares of Class A Common Stock and 8,575,344 shares of Class B Common
Stock. All share and per share amounts in the accompanying financial statements
and related notes have been restated to give retroactive effect to this stock
split.
SHARE REPURCHASES
In 1997, the Company completed the 1996 share repurchase program by reacquiring
1,176,800 shares of its Class A Common Stock and 240,500 shares of its Class B
Common Stock at an average cost of $18.06 and $18.39 per share, respectively.
In October 1997, the Company's Board of Directors authorized an additional
share repurchase program of an aggregate of 3,000,000 shares of Class A and
Class B Common Stock through open market purchases. Through December 31, 1999,
the Company has reacquired 2,170,800 shares of its Class A Common Stock and
723,700 shares of its Class B Common Stock at an average cost of $15.84 and
$14.91 per share, respectively, under the 1997 program. In April 1999, the
Company's Board of Directors authorized an additional share repurchase program
of an aggregate of 3,000,000 shares of Class A and Class B Common Stock through
open market purchases.
EMPLOYEE STOCK PURCHASE PLAN
Under the 1996 Employee Stock Purchase Plan, the Company is authorized to issue
up to 1,500,000 shares of Class A Common Stock to U.S. and Canadian employees,
nearly all of whom are eligible to participate. Under the terms of the Plan,
employees can choose each year to have up to $21,000 of their annual earnings
withheld to purchase the Company's Class A Common Stock. The purchase price of
the stock is 85% of the lesser of the closing price for a share of stock on the
first day of the purchase period or the last day of the purchase period. During
1999, 1998, and 1997, the Company issued 56,068, 69,000, and 60,000 shares,
respectively, to employees under this plan.
Under the 1999 U.K. Sharesave Scheme, the Company is authorized to issue up to
500,000 shares of Class A Common Stock to eligible employees in the U.K. The
Scheme has terms comparable to the 1996 Employee Stock Purchase Plan. As of
December 31, 1999, no shares have been issued under this scheme.
STOCK OPTION PLANS
The Company has various stock option plans for employees and directors, which
provide for nonqualified and incentive stock option (ISO) grants. The option
exercise price cannot be less than the fair market value of the Company's stock
at the date of grant, and an option's maximum term is 10 years. Options
generally vest ratably over five years or, with respect to certain nonqualified
options granted to key executives, upon the attainment of specified prices of
the Company's stock. At December 31, 1999, there were 952,300 shares available
for future option grants under the plans.
The fair value of options is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Expected dividend yield 3.8% 3.8% 2.6%
Expected volatility 20% 20% 20%
Risk-free interest rates 6.8% 4.5%-5.7% 5.4%
Expected life of options 7 years 5 years 6-8 years
</TABLE>
36
<PAGE> 21
A summary of the status of the Company's stock option plans is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
Weighted-Average Weighted-Average Weighted-Average
(in thousands of shares) Shares Exercise Price Shares Exercise Price Shares Exercise Price
- ------------------------------ ------- ---------------- ------ ---------------- ------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning of year 4,001 $ 15 3,348 $14 2,722 $12
Options granted 1,281 11 1,845 16 1,433 18
Options acquired 141 2 -- -- -- --
Options exercised (58) 6 (735) 12 (533) 11
Options forfeited (1,367) 16 (457) 18 (274) 12
------- ----- -----
Outstanding, end of year 3,998 13 4,001 15 3,348 14
------- ----- -----
Exercisable, end of year 981 1,075 1,536
------- ----- -----
Weighted-average fair value of
options granted during the year:
Incentive stock options $2.79 $ 2.74 $3.91
Nonqualified stock options 2.88 2.44 4.41
</TABLE>
The following table summarizes information about stock options outstanding at
December 31, 1999:
<TABLE>
<CAPTION>
(in thousands of shares) Options Outstanding Options Exercisable
- ------------------------------------------------------------------------------------------------------
Range Of Number Weighted-Average Weighted-Average Number Weighted-Average
Exercise Outstanding Remaining Exercise Exercisable Exercise
Prices At 12/31/99 Contractual Life Price At 12/31/99 Price
- --------- ----------- ---------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
$ 2 to 8 117 7.3 $ 2 112 $ 2
9 to 12 593 5.2 11 420 11
13 to 17 2,870 8.6 14 392 14
18 to 20 418 8.1 19 57 19
----- ---
$ 2 to 20 3,998 8.0 13 981 12
----- ---
</TABLE>
As part of the PRISM acquisition, the Company acquired and converted
outstanding PRISM stock options to 141,415 options for Crawford Class A Common
Stock at an option price of $2.41 per share. At December 31, 1999, 116,713 and
110,911 of those options were outstanding and exercisable, respectively.
Except for 20,453 options for Class B Common Stock, all of the outstanding and
exercisable options as of December 31, 1999 are for Class A Common Stock.
PRO FORMA INFORMATION
The Company applies APB Opinion 25 and related Interpretations in accounting
for its stock option and employee stock purchase plans. Accordingly, no
compensation cost has been recognized for these plans. Had compensation cost
for these plans been determined based on the fair value at the grant dates for
awards under those plans consistent with SFAS 123, "Accounting for Stock-Based
Compensation," the Company's net income and net income per share would have
been reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
(in thousands, except per share data) 1999 1998 1997
<S> <C> <C> <C> <C>
Net income As reported $39,264 $27,465 $46,989
Pro forma 36,395 25,621 44,293
Net income per share - basic As reported 0.78 0.55 0.95
Pro forma 0.72 0.51 0.89
Net income per share - diluted As reported 0.78 0.54 0.93
Pro forma 0.72 0.50 0.87
</TABLE>
37
<PAGE> 22
CRAWFORD & COMPANY
REPORT OF MANAGEMENT
The management of Crawford & Company is responsible for the integrity and
objectivity of the financial information in this annual report. These financial
statements are prepared in conformity with generally accepted accounting
principles, using informed judgements and estimates where appropriate.
The Company maintains a system of internal accounting policies, procedures, and
controls designed to provide reasonable assurance that assets are safeguarded
and transactions are executed and recorded in accordance with management's
authorization. The internal accounting control system is augmented by a program
of internal audits and reviews by management, written policies and guidelines,
and the careful selection and training of qualified personnel. Management
believes it maintains an effective system of internal accounting controls.
The Audit Committee of the Board of Directors, composed solely of outside
directors, is responsible for monitoring the Company's accounting and reporting
practices. The Audit Committee meets regularly with management, the internal
auditors, and the independent public accountants to review the work of each and
to assure that each performs its responsibilities. The independent public
accountants, Arthur Andersen LLP, are recommended by the Audit Committee of the
Board of Directors, selected by the Board of Directors, and ratified by the
Company's shareholders. Both the internal auditors and Arthur Andersen LLP have
unrestricted access to the audit committee allowing open discussion, without
management present, on the quality of financial reporting and the adequacy of
internal accounting controls.
<TABLE>
<CAPTION>
/s/ Archie Meyers, Jr. /s/ John F. Giblin /s/ W. Bruce Swain
<S> <C> <C>
Archie Meyers, Jr. John F. Giblin W. Bruce Swain
Chairman of the Board Executive Vice President Senior Vice President, Controller,
and Chief Executive Officer and Chief Financial Officer and Chief Accounting Officer
</TABLE>
Atlanta, Georgia
January 28, 2000
CRAWFORD & COMPANY
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and the Board of Directors for Crawford & Company:
We have audited the accompanying consolidated balance sheets of CRAWFORD &
COMPANY (a Georgia corporation) AND SUBSIDIARIES as of December 31, 1999 and
1998, and the related statements of income and cash flows for each of the three
years in the period ended December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Crawford & Company and
subsidiaries as of December 31, 1999 and 1998 and the results of their
operations and their cash flows for each of the three years ended December 31,
1999, in conformity with accounting principles generally accepted in the United
States.
/s/ Arthur Anderson LLP
Arthur Andersen LLP
Atlanta, Georgia
January 28, 2000
38
<PAGE> 23
CRAWFORD & COMPANY
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
For The Years Ended December 31 1999 1998 1997 1996 1995
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
REVENUES $701,926 $667,271 $692,322 $633,625 $607,577
NET INCOME 39,264 27,465 46,989 42,810 36,020
NET INCOME PER SHARE:
Basic 0.78 0.55 0.95 0.84 0.69
Diluted 0.78 0.54 0.93 0.82 0.68
TOTAL ASSETS 474,028 432,890 428,866 378,085 366,983
LONG-TERM DEBT 16,053 1,854 731 376 9,412
CASH DIVIDENDS PER SHARE:
Class A Common Stock 0.52 0.50 0.44 0.40 0.39
Class B Common Stock 0.52 0.50 0.44 0.39 0.36
WEIGHTED-AVERAGE SHARES OUTSTANDING:
Basic 50,380 50,341 49,566 51,032 52,277
Diluted 50,498 50,938 50,687 52,097 53,236
</TABLE>
All share and per share amounts have been restated to reflect the three-for-two
stock split in 1997 (see Note 9) and the adoption of SFAS 128 effective
December 31, 1997.
39
<PAGE> 24
CRAWFORD & COMPANY
QUARTERLY FINANCIAL DATA (UNAUDITED),
DIVIDEND INFORMATION AND COMMON STOCK QUOTATIONS
<TABLE>
<CAPTION>
1999 First Second Third Fourth Fiscal Year
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
REVENUES $ 172,621 $ 169,827 $ 168,251 $ 191,227 $ 701,926
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 16,296 16,971 13,153 17,324 63,744
NET INCOME 10,038 10,464 8,093 10,669 39,264
NET INCOME PER SHARE-BASIC 0.20 0.21 0.16 0.21 0.78
NET INCOME PER SHARE-DILUTED 0.20 0.21 0.16 0.21 0.78
CASH DIVIDENDS PER SHARE:
Class A Common Stock 0.13 0.13 0.13 0.13 0.52
Class B Common Stock 0.13 0.13 0.13 0.13 0.52
COMMON STOCK QUOTATIONS:
Class A-High (A) 14.06 13.50 13.88 12.38 14.06
Class A-Low (A) 10.19 10.00 10.56 10.50 10.00
Class B-High (A) 16.00 16.25 16.13 14.81 16.25
Class B-Low (A) 10.44 10.31 11.56 11.94 10.31
</TABLE>
<TABLE>
<CAPTION>
1998 First Second Third Fourth Fiscal Year
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
REVENUES $ 166,133 $ 170,028 $ 165,116 $ 165,994 $ 667,271
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 18,520 18,729 (4,548) 9,982 42,683
MINORITY INTEREST IN LOSS OF JOINT VENTURE 13 474 690 -- 1,177
NET INCOME (LOSS) 11,420 12,014 (2,117) 6,148 27,465
NET INCOME (LOSS) PER SHARE-BASIC 0.23 0.24 (0.04) 0.12 0.55
NET INCOME (LOSS) PER SHARE-DILUTED 0.23 0.24 (0.04) 0.12 0.54 (B)
CASH DIVIDENDS PER SHARE:
Class A Common Stock 0.125 0.125 0.125 0.125 0.50
Class B Common Stock 0.125 0.125 0.125 0.125 0.50
COMMON STOCK QUOTATIONS:
Class A-High (A) 19.75 19.50 19.00 16.13 19.75
Class A-Low (A) 17.75 18.38 16.25 12.06 12.06
Class B-High (A) 20.63 19.69 19.44 16.75 20.63
Class B-Low (A) 18.63 17.38 16.81 12.13 12.13
</TABLE>
(A) The quotations listed in this table set forth the high and low closing
prices per share of Crawford & Company Class A Common Stock and Class
B Common Stock, respectively, as reported on the NYSE Composite Tape.
(B) Due to the method used in calculating per share data as prescribed by
SFAS 128, the quarterly per share data does not total to the full-year
per share data.
The approximate number of record holders of the Company's stock as of December
31, 1999: Class A-1,763 and Class B-914.
40
<PAGE> 1
EXHIBIT 21.1
CRAWFORD & COMPANY
LISTING OF SUBSIDIARY CORPORATIONS*
<TABLE>
<CAPTION>
Jurisdiction in
Subsidiary Which Organized
---------- ---------------
<S> <C>
Crawford & Company of California Delaware
Crawford & Company of Florida Delaware
Crawford & Company of Illinois Delaware
Crawford & Company of New York, Inc. New York
Crawford & Company Employment Services, Inc. Delaware
Risk Sciences Group, Inc. Delaware
Crawford & Company (Bermuda) Limited Bermuda
Crawford & Company HealthCare Management, Inc. Delaware
Crawford & Company International, Inc. Georgia
Crawford-THG Limited England
Crawford Adjusters Canada Incorporated Canadian Federal
The Garden City Group, Inc. Delaware
The PRISM Network, Inc. Georgia
</TABLE>
* Excludes subsidiaries which, if considered in the aggregate as a single
subsidiary, would not constitute a significant subsidiary as of the year
ended December 31, 1999.
<PAGE> 1
ARTHUR ANDERSEN LLP
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our reports included or incorporated by reference in this Form 10-K into
Crawford & Company's previously filed Registration Statement File Nos. 2-78989,
33-22595, 33-47536, 33-36116, 333-02051, 333-24425, 333-24427, 333-87465 and
333-87467.
/s/ ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 28, 2000
<PAGE> 1
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of
CRAWFORD & COMPANY, a Georgia corporation (the "Corporation"), hereby
constitutes and appoints JUDD F. OSTEN and JOHN F. GIBLIN, and each of them,
his or her true and lawful attorney-in-fact and agent to sign (1) the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1999;
(2) the Registration Statement on Form S-8 covering 2,500,000 shares of the
Class A Common Stock of the Corporation related to the 1997 Key Employee Stock
Option Plan, and any and all amendments to, and supplements to any prospectus
contained in such Registration Statement and any and all instruments and
documents filed as a part of or in connection with such amendments or
supplements; (3) Forms 4 or 5 under the Securities Exchange Act of 1934; and
(4) any other reports or registration statements to be filed by the Corporation
with the Securities and Exchange Commission and/or any national securities
exchange under the Securities Exchange Act of 1934, as amended, and any and all
amendments thereto, and any and all instruments and documents filed as part of
or in connection with any such reports or registration statements or reports or
amendments thereto; and in connection with the foregoing, to do any and all
acts and things and execute any and all instrument which such attorneys-in-fact
and agents may deem necessary or advisable to enable this Corporation to comply
with the securities laws of the United States and of any State or other
political subdivision thereof; hereby ratifying and confirming all that such
attorneys-in-fact and agents, or any one of them, shall do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
1st day of February, 2000.
/s/ Jesse C. Crawford
<PAGE> 1
EXHIBIT 24.2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of
CRAWFORD & COMPANY, a Georgia corporation (the "Corporation"), hereby
constitutes and appoints JUDD F. OSTEN and JOHN F. GIBLIN, and each of them,
his or her true and lawful attorney-in-fact and agent to sign (1) the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1999;
(2) the Registration Statement on Form S-8 covering 2,500,000 shares of the
Class A Common Stock of the Corporation related to the 1997 Key Employee Stock
Option Plan, and any and all amendments to, and supplements to any prospectus
contained in such Registration Statement and any and all instruments and
documents filed as a part of or in connection with such amendments or
supplements; (3) Forms 4 or 5 under the Securities Exchange Act of 1934; and
(4) any other reports or registration statements to be filed by the Corporation
with the Securities and Exchange Commission and/or any national securities
exchange under the Securities Exchange Act of 1934, as amended, and any and all
amendments thereto, and any and all instruments and documents filed as part of
or in connection with any such reports or registration statements or reports or
amendments thereto; and in connection with the foregoing, to do any and all
acts and things and execute any and all instrument which such attorneys-in-fact
and agents may deem necessary or advisable to enable this Corporation to comply
with the securities laws of the United States and of any State or other
political subdivision thereof; hereby ratifying and confirming all that such
attorneys-in-fact and agents, or any one of them, shall do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
1st day of February, 2000.
/s/ Linda K. Crawford
<PAGE> 1
EXHIBIT 24.3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of
CRAWFORD & COMPANY, a Georgia corporation (the "Corporation"), hereby
constitutes and appoints JUDD F. OSTEN and JOHN F. GIBLIN, and each of them,
his or her true and lawful attorney-in-fact and agent to sign (1) the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1999;
(2) the Registration Statement on Form S-8 covering 2,500,000 shares of the
Class A Common Stock of the Corporation related to the 1997 Key Employee Stock
Option Plan, and any and all amendments to, and supplements to any prospectus
contained in such Registration Statement and any and all instruments and
documents filed as a part of or in connection with such amendments or
supplements; (3) Forms 4 or 5 under the Securities Exchange Act of 1934; and
(4) any other reports or registration statements to be filed by the Corporation
with the Securities and Exchange Commission and/or any national securities
exchange under the Securities Exchange Act of 1934, as amended, and any and all
amendments thereto, and any and all instruments and documents filed as part of
or in connection with any such reports or registration statements or reports or
amendments thereto; and in connection with the foregoing, to do any and all
acts and things and execute any and all instrument which such attorneys-in-fact
and agents may deem necessary or advisable to enable this Corporation to comply
with the securities laws of the United States and of any State or other
political subdivision thereof; hereby ratifying and confirming all that such
attorneys-in-fact and agents, or any one of them, shall do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
1st day of February, 2000.
/s/ E. Jenner Wood, III
<PAGE> 1
EXHIBIT 24.4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of
CRAWFORD & COMPANY, a Georgia corporation (the "Corporation"), hereby
constitutes and appoints JUDD F. OSTEN and JOHN F. GIBLIN, and each of them,
his or her true and lawful attorney-in-fact and agent to sign (1) the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1999;
(2) the Registration Statement on Form S-8 covering 2,500,000 shares of the
Class A Common Stock of the Corporation related to the 1997 Key Employee Stock
Option Plan, and any and all amendments to, and supplements to any prospectus
contained in such Registration Statement and any and all instruments and
documents filed as a part of or in connection with such amendments or
supplements; (3) Forms 4 or 5 under the Securities Exchange Act of 1934; and
(4) any other reports or registration statements to be filed by the Corporation
with the Securities and Exchange Commission and/or any national securities
exchange under the Securities Exchange Act of 1934, as amended, and any and all
amendments thereto, and any and all instruments and documents filed as part of
or in connection with any such reports or registration statements or reports or
amendments thereto; and in connection with the foregoing, to do any and all
acts and things and execute any and all instrument which such attorneys-in-fact
and agents may deem necessary or advisable to enable this Corporation to comply
with the securities laws of the United States and of any State or other
political subdivision thereof; hereby ratifying and confirming all that such
attorneys-in-fact and agents, or any one of them, shall do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
1st day of February, 2000.
/s/ J. Hicks Lanier
<PAGE> 1
EXHIBIT 24.5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of
CRAWFORD & COMPANY, a Georgia corporation (the "Corporation"), hereby
constitutes and appoints JUDD F. OSTEN and JOHN F. GIBLIN, and each of them,
his or her true and lawful attorney-in-fact and agent to sign (1) the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1999;
(2) the Registration Statement on Form S-8 covering 2,500,000 shares of the
Class A Common Stock of the Corporation related to the 1997 Key Employee Stock
Option Plan, and any and all amendments to, and supplements to any prospectus
contained in such Registration Statement and any and all instruments and
documents filed as a part of or in connection with such amendments or
supplements; (3) Forms 4 or 5 under the Securities Exchange Act of 1934; and
(4) any other reports or registration statements to be filed by the Corporation
with the Securities and Exchange Commission and/or any national securities
exchange under the Securities Exchange Act of 1934, as amended, and any and all
amendments thereto, and any and all instruments and documents filed as part of
or in connection with any such reports or registration statements or reports or
amendments thereto; and in connection with the foregoing, to do any and all
acts and things and execute any and all instrument which such attorneys-in-fact
and agents may deem necessary or advisable to enable this Corporation to comply
with the securities laws of the United States and of any State or other
political subdivision thereof; hereby ratifying and confirming all that such
attorneys-in-fact and agents, or any one of them, shall do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
1st day of February, 2000.
/s/ Larry L. Prince
<PAGE> 1
EXHIBIT 24.6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of
CRAWFORD & COMPANY, a Georgia corporation (the "Corporation"), hereby
constitutes and appoints JUDD F. OSTEN and JOHN F. GIBLIN, and each of them,
his or her true and lawful attorney-in-fact and agent to sign (1) the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1999;
(2) the Registration Statement on Form S-8 covering 2,500,000 shares of the
Class A Common Stock of the Corporation related to the 1997 Key Employee Stock
Option Plan, and any and all amendments to, and supplements to any prospectus
contained in such Registration Statement and any and all instruments and
documents filed as a part of or in connection with such amendments or
supplements; (3) Forms 4 or 5 under the Securities Exchange Act of 1934; and
(4) any other reports or registration statements to be filed by the Corporation
with the Securities and Exchange Commission and/or any national securities
exchange under the Securities Exchange Act of 1934, as amended, and any and all
amendments thereto, and any and all instruments and documents filed as part of
or in connection with any such reports or registration statements or reports or
amendments thereto; and in connection with the foregoing, to do any and all
acts and things and execute any and all instrument which such attorneys-in-fact
and agents may deem necessary or advisable to enable this Corporation to comply
with the securities laws of the United States and of any State or other
political subdivision thereof; hereby ratifying and confirming all that such
attorneys-in-fact and agents, or any one of them, shall do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
1st day of February, 2000.
/s/ Charles Flather
<PAGE> 1
EXHIBIT 24.7
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of
CRAWFORD & COMPANY, a Georgia corporation (the "Corporation"), hereby
constitutes and appoints JUDD F. OSTEN and JOHN F. GIBLIN, and each of them,
his or her true and lawful attorney-in-fact and agent to sign (1) the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1999;
(2) the Registration Statement on Form S-8 covering 2,500,000 shares of the
Class A Common Stock of the Corporation related to the 1997 Key Employee Stock
Option Plan, and any and all amendments to, and supplements to any prospectus
contained in such Registration Statement and any and all instruments and
documents filed as a part of or in connection with such amendments or
supplements; (3) Forms 4 or 5 under the Securities Exchange Act of 1934; and
(4) any other reports or registration statements to be filed by the Corporation
with the Securities and Exchange Commission and/or any national securities
exchange under the Securities Exchange Act of 1934, as amended, and any and all
amendments thereto, and any and all instruments and documents filed as part of
or in connection with any such reports or registration statements or reports or
amendments thereto; and in connection with the foregoing, to do any and all
acts and things and execute any and all instrument which such attorneys-in-fact
and agents may deem necessary or advisable to enable this Corporation to comply
with the securities laws of the United States and of any State or other
political subdivision thereof; hereby ratifying and confirming all that such
attorneys-in-fact and agents, or any one of them, shall do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
1st day of February, 2000.
/s/ John A. Williams
<PAGE> 1
EXHIBIT 24.8
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned director of
CRAWFORD & COMPANY, a Georgia corporation (the "Corporation"), hereby
constitutes and appoints JUDD F. OSTEN and JOHN F. GIBLIN, and each of them,
his or her true and lawful attorney-in-fact and agent to sign (1) the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1999;
(2) the Registration Statement on Form S-8 covering 2,500,000 shares of the
Class A Common Stock of the Corporation related to the 1997 Key Employee Stock
Option Plan, and any and all amendments to, and supplements to any prospectus
contained in such Registration Statement and any and all instruments and
documents filed as a part of or in connection with such amendments or
supplements; (3) Forms 4 or 5 under the Securities Exchange Act of 1934; and
(4) any other reports or registration statements to be filed by the Corporation
with the Securities and Exchange Commission and/or any national securities
exchange under the Securities Exchange Act of 1934, as amended, and any and all
amendments thereto, and any and all instruments and documents filed as part of
or in connection with any such reports or registration statements or reports or
amendments thereto; and in connection with the foregoing, to do any and all
acts and things and execute any and all instrument which such attorneys-in-fact
and agents may deem necessary or advisable to enable this Corporation to comply
with the securities laws of the United States and of any State or other
political subdivision thereof; hereby ratifying and confirming all that such
attorneys-in-fact and agents, or any one of them, shall do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
1st day of February, 2000.
/s/ F. L. Minix
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CRAWFORD & COMPANY FOR THE YEAR ENDED DECEMBER 31, 1999
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 17,716
<SECURITIES> 0
<RECEIVABLES> 141,841
<ALLOWANCES> 20,182
<INVENTORY> 0
<CURRENT-ASSETS> 267,836
<PP&E> 166,552
<DEPRECIATION> 117,661
<TOTAL-ASSETS> 474,028
<CURRENT-LIABILITIES> 157,990
<BONDS> 16,053
0
0
<COMMON> 50,718
<OTHER-SE> 199,561
<TOTAL-LIABILITY-AND-EQUITY> 474,028
<SALES> 0
<TOTAL-REVENUES> 701,926
<CGS> 0
<TOTAL-COSTS> 514,827
<OTHER-EXPENSES> 123,355
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 63,744
<INCOME-TAX> 24,480
<INCOME-CONTINUING> 39,264
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 39,264
<EPS-BASIC> 0.78
<EPS-DILUTED> 0.78
</TABLE>
