Document and Company Informatio
Document and Company Information (USD $) | ||||
9 Months Ended
Sep. 30, 2009 | Jun. 30, 2008
| Oct. 31, 2009
Class A common stock | Oct. 31, 2009
Class B common stock | |
Entity Registrant Name | CRAWFORD & CO | |||
Entity Central Index Key | 0000025475 | |||
Document Type | 10-Q | |||
Document Period End Date | 2009-09-30 | |||
Amendment Flag | false | |||
Current Fiscal Year End Date | --12-31 | |||
Entity Well-known Seasoned Issuer | No | |||
Entity Voluntary Filers | No | |||
Entity Current Reporting Status | Yes | |||
Entity Filer Category | Accelerated Filer | |||
Entity Public Float | $180,922,217 | |||
Entity Common Stock, Shares Outstanding | 27,355,390 | 24,697,172 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) (USD $) | ||||
In Thousands, except Per Share data | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
Revenues: | ||||
Revenues before reimbursements | $245,752 | $266,916 | $731,499 | $785,693 |
Reimbursements | 23,105 | 24,416 | 59,284 | 69,578 |
Total Revenues | 268,857 | 291,332 | 790,783 | 855,271 |
Costs and Expenses: | ||||
Costs of services provided, before reimbursements | 179,405 | 196,329 | 538,451 | 572,743 |
Reimbursements | 23,105 | 24,416 | 59,284 | 69,578 |
Total cost of services | 202,510 | 220,745 | 597,735 | 642,321 |
Selling, general, and administrative expenses | 53,835 | 56,606 | 159,737 | 163,313 |
Corporate interest expense, net of interest income of $142 and $551 and $1,208 and $1,436, for three months and nine months 2009 and 2008 respectively | 3,126 | 4,334 | 10,251 | 13,406 |
Restructuring costs | 0 | 0 | 1,815 | 0 |
Goodwill and intangible asset impairment charges | 46,945 | 0 | 140,945 | 0 |
Total Costs and Expenses | 306,416 | 281,685 | 910,483 | 819,040 |
(Loss) Income before Income Taxes | (37,559) | 9,647 | (119,700) | 36,231 |
Provision for Income Taxes | 1,841 | 2,564 | 4,576 | 11,994 |
Net (Loss) Income | (39,400) | 7,083 | (124,276) | 24,237 |
Less: Net Income Attributable to Noncontrolling Interests | 110 | 161 | 276 | 315 |
Net (Loss) Income Attributable to Crawford & Company | ($39,510) | $6,922 | ($124,552) | $23,922 |
(Loss) Earnings Per Share, Based on Net (Loss) Income Attributable to Crawford & Company: | ||||
Basic | -0.76 | 0.14 | -2.41 | 0.47 |
Diluted | -0.76 | 0.13 | -2.41 | 0.47 |
Average Number of Shares Used to Compute: | ||||
Basic (Loss) Earnings Per Share | 52,011 | 50,994 | 51,755 | 50,870 |
Diluted (Loss) Earnings Per Share | 52,011 | 52,022 | 51,755 | 51,275 |
1_Condensed Consolidated Statem
Condensed Consolidated Statements of Operations (Parenthetical) (Unaudited) (USD $) | ||||
In Thousands | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
Costs and Expenses: | ||||
Corporate interest expense, interest income | $142 | $551 | $1,208 | $1,436 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) (USD $) | |||||||||||||||||||
In Thousands | Sep. 30, 2009
| Dec. 31, 2008
| |||||||||||||||||
Current Assets: | |||||||||||||||||||
Cash and cash equivalents | $55,089 | $73,124 | [1] | ||||||||||||||||
Accounts receivable, less allowance for doubtful accounts of $12,394 and $12,341, respectively | 161,507 | 157,430 | [1] | ||||||||||||||||
Unbilled revenues, at estimated billable amounts | 102,521 | 99,115 | [1] | ||||||||||||||||
Prepaid expenses and other current assets | 22,725 | 18,688 | [1] | ||||||||||||||||
Total current assets | 341,842 | 348,357 | [1] | ||||||||||||||||
Property and Equipment: | |||||||||||||||||||
Property and equipment | 146,601 | 140,399 | [1] | ||||||||||||||||
Less accumulated depreciation | (104,189) | (95,785) | [1] | ||||||||||||||||
Net property and equipment | 42,412 | 44,614 | [1] | ||||||||||||||||
Other Assets: | |||||||||||||||||||
Goodwill | 119,760 | 251,897 | [1] | ||||||||||||||||
Intangible assets arising from business acquisitions, net | 106,007 | 111,389 | [1] | ||||||||||||||||
Capitalized software costs, net | 48,803 | 46,296 | [1] | ||||||||||||||||
Deferred income tax asset, net | 65,952 | 67,695 | [1] | ||||||||||||||||
Other noncurrent assets | 24,693 | 25,000 | [1] | ||||||||||||||||
Total other assets | 365,215 | 502,277 | [1] | ||||||||||||||||
TOTAL ASSETS | 749,469 | 895,248 | [1] | ||||||||||||||||
Current Liabilities: | |||||||||||||||||||
Short-term borrowings | 11,327 | 13,366 | [1] | ||||||||||||||||
Accounts payable | 34,457 | 40,711 | [1] | ||||||||||||||||
Accrued compensation and related costs | 69,227 | 77,802 | [1] | ||||||||||||||||
Deferred revenues | 59,312 | 59,679 | [1] | ||||||||||||||||
Self-insured risks | 18,807 | 17,939 | [1] | ||||||||||||||||
Accrued income taxes | 7,513 | 9,937 | [1] | ||||||||||||||||
Other accrued liabilities | 52,990 | 56,978 | [1] | ||||||||||||||||
Current installments of long-term debt and capital leases | 2,296 | 2,284 | [1] | ||||||||||||||||
Total current liabilities | 255,929 | 278,696 | [1] | ||||||||||||||||
Noncurrent Liabilities: | |||||||||||||||||||
Long-term debt and capital leases, less current installments | 179,494 | 181,206 | [1] | ||||||||||||||||
Deferred revenues | 35,824 | 42,795 | [1] | ||||||||||||||||
Self-insured risks | 16,492 | 18,531 | [1] | ||||||||||||||||
Accrued pension liabilities | 173,077 | 179,542 | [1] | ||||||||||||||||
Other noncurrent liabilities | 13,504 | 14,119 | [1] | ||||||||||||||||
Total noncurrent liabilities | 418,391 | 436,193 | [1] | ||||||||||||||||
Shareholders' Investment: | |||||||||||||||||||
Additional paid-in capital | 27,178 | 26,342 | [1] | ||||||||||||||||
Retained earnings | 131,594 | 256,146 | [1] | ||||||||||||||||
Accumulated other comprehensive loss | (140,272) | (158,157) | [1] | ||||||||||||||||
Total Crawford & Company Shareholders' Investment | 70,552 | 175,551 | [1] | ||||||||||||||||
Noncontrolling interests | 4,597 | 4,808 | [1] | ||||||||||||||||
Total shareholders' investment | 75,149 | 180,359 | [1] | ||||||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT | 749,469 | 895,248 | [1] | ||||||||||||||||
Class A common stock | |||||||||||||||||||
Shareholders' Investment: | |||||||||||||||||||
Common Stock, value | 27,355 | 26,523 | [1] | ||||||||||||||||
Class B common stock | |||||||||||||||||||
Shareholders' Investment: | |||||||||||||||||||
Common Stock, value | $24,697 | $24,697 | [1] | ||||||||||||||||
[1]derived from the audited Consolidated Balance Sheet. |
2_Condensed Consolidated Balanc
Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) (USD $) | |||||||||||||||||||
In Thousands | Sep. 30, 2009
| Dec. 31, 2008
| |||||||||||||||||
Current Assets: | |||||||||||||||||||
Accounts receivable, allowance for doubtful accounts | $12,394 | $12,341 | [1] | ||||||||||||||||
Class A common stock | |||||||||||||||||||
Shareholders' Investment: | |||||||||||||||||||
Common stock, par value | 1 | 1 | [1] | ||||||||||||||||
Common stock, shares authorized | 50,000 | 50,000 | [1] | ||||||||||||||||
Common stock, shares issued | 27,355 | 26,523 | [1] | ||||||||||||||||
Common stock, shares outstanding | 27,355 | 26,523 | [1] | ||||||||||||||||
Class B common stock | |||||||||||||||||||
Shareholders' Investment: | |||||||||||||||||||
Common stock, par value | 1 | 1 | [1] | ||||||||||||||||
Common stock, shares authorized | 50,000 | 50,000 | [1] | ||||||||||||||||
Common stock, shares issued | 24,697 | 24,697 | [1] | ||||||||||||||||
Common stock, shares outstanding | 24,697 | 24,697 | [1] | ||||||||||||||||
[1]derived from the audited Consolidated Balance Sheet. |
3_Condensed Consolidated Statem
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) | |||||||||||||||||||
In Thousands | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 | |||||||||||||||||
Cash Flows From Operating Activities: | |||||||||||||||||||
Net (loss) income | ($124,276) | $24,237 | |||||||||||||||||
Reconciliation of net (loss) income to net cash provided by operating activities: | |||||||||||||||||||
Depreciation and amortization | 23,102 | 22,737 | |||||||||||||||||
Goodwill and intangible asset impairment charges | 140,945 | 0 | |||||||||||||||||
Loss on sales of property and equipment, net | 54 | 67 | |||||||||||||||||
Stock-based compensation | 3,118 | 4,345 | |||||||||||||||||
Changes in operating assets and liabilities, net of effects of disposition: | |||||||||||||||||||
Accounts receivable, net | 2,626 | 2,003 | |||||||||||||||||
Unbilled revenues, net | 2,105 | 3,903 | |||||||||||||||||
Accrued or prepaid income taxes | (4,139) | 6,609 | |||||||||||||||||
Accounts payable and accrued liabilities | (15,686) | 11,062 | |||||||||||||||||
Deferred revenues | (7,791) | (13,845) | |||||||||||||||||
Accrued retirement costs | (5,728) | (23,435) | |||||||||||||||||
Prepaid expenses and other operating activities | (4,539) | (4,249) | |||||||||||||||||
Net cash provided by operating activities | 9,791 | 33,434 | |||||||||||||||||
Cash Flows From Investing Activities: | |||||||||||||||||||
Acquisitions of property and equipment | (6,418) | (10,368) | |||||||||||||||||
Proceeds from sales of property and equipment | 72 | 631 | |||||||||||||||||
Capitalization of computer software costs | (10,775) | (11,518) | |||||||||||||||||
Other investing activities | (1,089) | (204) | |||||||||||||||||
Net cash used in investing activities | (18,210) | (21,459) | |||||||||||||||||
Cash Flows From Financing Activities: | |||||||||||||||||||
Shares used to settle withholding taxes under stock-based compensation plans | (1,903) | (20) | |||||||||||||||||
Proceeds from exercises of stock options/ESPP plans | 453 | 2,016 | |||||||||||||||||
Increases in short-term borrowings | 24,022 | 35,425 | |||||||||||||||||
Payments on short-term borrowings | (30,986) | (41,289) | |||||||||||||||||
Payments on long-term debt and capital lease obligations | (1,837) | (1,970) | |||||||||||||||||
Capitalized loan costs | (944) | 0 | |||||||||||||||||
Other financing activities | (274) | (309) | |||||||||||||||||
Net cash used in financing activities | (11,469) | (6,147) | |||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | 1,853 | 136 | |||||||||||||||||
Change in cash and cash equivalents | (18,035) | 5,964 | |||||||||||||||||
Cash and cash equivalents at beginning of year | 73,124 | [1] | 50,855 | ||||||||||||||||
Cash and cash equivalents at end of period | $55,089 | $56,819 | |||||||||||||||||
[1]derived from the audited Consolidated Balance Sheet. |
4_Condensed Consolidated Statem
Condensed Consolidated Statements of Shareholders Equity (Unaudited) (USD $) | |||||||||||||||||||
In Thousands | Common Stock
Class A common stock | Common Stock
Class B common stock | Additional Paid-In Capital
| Retained Earnings
| Accumulated Other Comprehensive Loss
| Noncontrolling Interests
| Total
| ||||||||||||
Beginning Balance at Dec. 31, 2007 | $25,935 | $24,697 | $19,057 | [1] | $223,793 | [1] | ($39,267) | [1] | $5,046 | [1] | $259,261 | [1] | |||||||
Comprehensive (loss) income | 9,068 | (5,686) | (57) | 3,325 | |||||||||||||||
Adoption of ASC 715-20-65-1 | 94 | 94 | |||||||||||||||||
Dividends paid to noncontrolling interest | (90) | (90) | |||||||||||||||||
Stock-based compensation | 962 | 962 | |||||||||||||||||
Common stock activity, net | 256 | (276) | (20) | ||||||||||||||||
Ending Balance at Mar. 31, 2008 | 26,191 | 24,697 | 19,743 | 232,955 | (44,953) | 4,899 | 263,532 | ||||||||||||
Comprehensive (loss) income | 7,932 | 4,134 | 245 | 12,311 | |||||||||||||||
Stock-based compensation | 1,872 | 1,872 | |||||||||||||||||
Common stock activity, net | 1 | 4 | 5 | ||||||||||||||||
Ending Balance at Jun. 30, 2008 | 26,192 | 24,697 | 21,619 | 240,887 | (40,819) | 5,144 | 277,720 | ||||||||||||
Comprehensive (loss) income | 6,922 | (1,197) | 19 | 5,744 | |||||||||||||||
Dividends paid to noncontrolling interest | (219) | (219) | |||||||||||||||||
Stock-based compensation | 1,511 | 1,511 | |||||||||||||||||
Common stock activity, net | 318 | 1,692 | 2,010 | ||||||||||||||||
Ending Balance at Sep. 30, 2008 | 26,510 | 24,697 | 24,822 | 247,809 | (42,016) | 4,944 | 286,766 | ||||||||||||
Beginning Balance at Dec. 31, 2008 | 26,523 | 24,697 | 26,342 | [1] | 256,146 | [1] | (158,157) | [1] | 4,808 | [1] | 180,359 | [1] | |||||||
Comprehensive (loss) income | 3,082 | (13,833) | (653) | (11,404) | |||||||||||||||
Stock-based compensation | 1,595 | 1,595 | |||||||||||||||||
Common stock activity, net | 626 | (2,512) | (1,886) | ||||||||||||||||
Ending Balance at Mar. 31, 2009 | 27,149 | 24,697 | 25,425 | 259,228 | (171,990) | 4,155 | 168,664 | ||||||||||||
Comprehensive (loss) income | (88,124) | 13,368 | 394 | (74,362) | |||||||||||||||
Stock-based compensation | 1,246 | 1,246 | |||||||||||||||||
Common stock activity, net | 70 | (59) | 11 | ||||||||||||||||
Ending Balance at Jun. 30, 2009 | 27,219 | 24,697 | 26,612 | 171,104 | (158,622) | 4,549 | 95,559 | ||||||||||||
Comprehensive (loss) income | (39,510) | 18,350 | 322 | (20,838) | |||||||||||||||
Dividends paid to noncontrolling interest | (274) | (274) | |||||||||||||||||
Stock-based compensation | 277 | 277 | |||||||||||||||||
Common stock activity, net | 136 | 289 | 425 | ||||||||||||||||
Ending Balance at Sep. 30, 2009 | $27,355 | $24,697 | $27,178 | $131,594 | ($140,272) | $4,597 | $75,149 | ||||||||||||
[1]derived from the audited Consolidated Balance Sheet. |
Basis of Presentation
Basis of Presentation | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Basis of Presentation [Abstract] | |
Basis of Presentation | 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of Crawford Company (the Company) have been prepared in accordance with generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article10 of RegulationS-X promulgated by the United States Securities and Exchange Commission (the SEC). Accordingly, these unaudited condensed consolidated financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Significant intercompany transactions have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring accruals and adjustments) considered necessary for a fair presentation have been included. Certain prior period amounts have been reclassified to conform to the current presentation. Operating results for the three months and nine months ended September30, 2009 are not necessarily indicative of the results that may be expected for the year ending December31, 2009 or for other future periods. The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 materially from those estimates. The financial statements of the Companys international subsidiaries, other than those in Canada and the Caribbean, are included in the Companys consolidated financial statements on a two-month delayed basis as permitted by GAAP in order to provide sufficient time for accumulation of their results. For variable interest entities (VIE), the Company determines when it should include the assets, liabilities, noncontrolling interests, and results of operations of a VIE in its consolidated financial statements. The Company consolidates the liabilities of its deferred compensation plan and the related assets, which are held in a rabbi trust and considered a VIE of the Company. At September30, 2009 and December31, 2008, the liabilities of this deferred compensation plan were $8,527,000 and $7,621,000, respectively, and the values of the assets held in the related rabbi trust were $13,439,000 and $12,985,000, respectively. These assets and liabilities are included in Other Noncurrent Assets and Other Noncurrent Liabilities on the Companys Consolidated Balance Sheets. Transactions between this VIE and the Company were not material to the Companys results of operations or cash flows for the three months or nine months ended September30, 2009 or 2008. The Company has controlling ownership interests in several entities that are not wholly-owned by the Company. The financial results and financial positions of these controlled entities are included in the Companys consolidated financial statements, for both the controlling interests and the |
Impairment Testing and Noncash
Impairment Testing and Noncash Charges for Goodwill and Intangible Asset | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Impairment Testing and Noncash Charges for Goodwill and Intangible Asset [Abstract] | |
Impairment Testing and Noncash Charges for Goodwill and Intangible Asset | 2. Impairment Testing and Noncash Charges for Goodwill and Intangible Asset Due to declines in then-current and forecasted operating results for the Companys Broadspire reportable segment and reporting unit (Broadspire), the impact that declining U.S. employment levels have had on Broadspires revenue, and the weakness in the Companys stock prices, the Company recorded a preliminary noncash goodwill impairment charge of $94,000,000 in connection with the preparation of its unaudited condensed consolidated financial statements for the three months and six months ended June30, 2009, as previously disclosed. In connection with the preparation of the Companys unaudited condensed consolidated financial statements for the three months and nine months ended September30, 2009, the Company completed this goodwill impairment analysis for Broadspire and determined, for the reasons described below, that all of Broadspires remaining goodwill was impaired, resulting in an additional noncash goodwill impairment charge of $46,345,000. The additional charge resulted from finalizing the fair values assigned to other assets and liabilities in order to determine the implied fair value of goodwill, and from a further reduction in the future forecasted cash flows of Broadspire from the forecasts used to determine the preliminary impairment charge. These goodwill impairment charges are not deductible by the Company for income tax purposes. Also, it was determined during the quarter ended September30, 2009 that the value of a trade name indefinite-lived intangible asset used in a small portion of the Broadspire reporting unit was totally impaired. Accordingly, the Company recorded a pre-tax impairment charge of $600,000, or approximately $382,500 after tax, to recognize the impairment of this trade name intangible asset. The first step of the goodwill impairment testing and measurement process involved estimating the fair value of the reporting unit using an internally prepared discounted cash flow analysis. The discount rate utilized in estimating the fair value of Broadspire was 14%, reflecting managements assessment of a market participants view of the risks associated with the projected cash flows. The terminal growth rate used in the analysis was 3%. The results of Step 1 of the process indicated potential impairment of the goodwill balance, as the book value of Broadspire exceeded its estimated fair value. As a result, management performed Step 2 of the process to quantify the amount of the goodwill impairment. In this step, the estimated fair value of Broadspire was allocated among its respective assets and liabilities in order to determine an implied value of goodwill, in a manner similar to the calculations performed in the accounting for a business combination. The allocation process was performed only for purposes of measuring goodwill impairment, and not to adjust the carrying values of recognized tangible assets or liabilities. Accordingly, no impairment charge or carrying value adjustment was made to the basis of any tangible asset or liability as a result of this process. Management also updated its impairment review of other intangible asse |
Adoption of New Accounting Stan
Adoption of New Accounting Standards | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Adoption of New Accounting Standards [Abstract] | |
Adoption of New Accounting Standards | 3. Adoption of New Accounting Standards Expanded Disclosure for Derivative Instruments and Hedging Activities On January1, 2009, the Company adopted ASC 815-10-50, Derivatives and Hedging-Overall-Disclosure, which requires expanded disclosures about an entitys derivative instruments and hedging activities, including requirements that interim financial statements include certain disclosures for derivative instruments. ASC 815-10-50 did not change any accounting requirements, but instead relates only to disclosures. Since this new guidance relates only to disclosures, its adoption did not have any impact on the Companys results of operations, financial condition, or cash flows. See Note 7 Interest Rate Swap Agreement and Note 8 Fair Value Measurements. Noncontrolling Interests in Consolidated Financial Statements On January1, 2009, the Company adopted ASC 810-10-65-1, Consolidation-Overall-Transition and Open Effective Date Information, which revised the classification of noncontrolling interests in consolidated statements of financial position and the accounting for and reporting of transactions between the reporting entity and holders of such noncontrolling interests. Under this new guidance, noncontrolling interests are considered equity and the practice of classifying minority interests within a mezzanine section of the balance sheet was eliminated. Net (loss)income encompasses the total (loss)income of all consolidated subsidiaries and there is separate disclosure on the face of the statement of operations of the attribution of that (loss)income between the controlling and noncontrolling interests. Increases and decreases in the noncontrolling ownership interest amounts are accounted for as equity transactions. Any future issuance of noncontrolling interests that causes the controlling interest to lose control and deconsolidate a subsidiary will be accounted for by full gain or loss recognition. Upon adoption, ASC 810-10-65-1 was applied retroactively to all previous financial statements and increased Shareholders Investment on January1, 2009 by $4,808,000. The adoption of ASC 810-10-65-1 was not material to the Companys results of operations or cash flows. Business Combinations On January1, 2009, the Company adopted ASC 805, Business Combinations. ASC 805 changed many well-established business combination accounting practices and significantly affected how acquisition transactions are reflected in the financial statements. ASC 805 changed the accounting treatment for certain acquisition-related activities that occur after its adoption including 1) recording contingent consideration at the acquisition date at fair value, 2) expensing acquisition-related costs as incurred, and 3) expensing restructuring costs associated with the acquired business. ASC 805 also introduced certain new disclosure requirements. Since ASC 805 uses an expanded definition of a business, the Company was required to evaluate its reporting units at adoption. The adoption of ASC 805 did not have an impact on the Companys consolidated financial statements. However, it could have a significant impact on the accounting for any future acquisitions. |
Pending Adoption of Recently Is
Pending Adoption of Recently Issued Accounting Standards | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Pending Adoption of Recently Issued Accounting Standards [Abstract] | |
Pending Adoption of Recently Issued Accounting Standards | 4. Pending Adoption of Recently Issued Accounting Standards Issued Subsequent to the Effective Date of the Codification Measuring Liabilities at Fair Value On August28, 2009, ASU 2009-05 was issued by the FASB. ASU 2009-05 will amend ASC 820-10, Fair Value Measurements and Disclosures-Overall, by providing additional guidance clarifying the measurement of liabilities at fair value. When a quoted price in an active market for the identical liability is not available, the amendments in ASU 2009-05 will require that the fair value of a liability be measured using one or more of the listed valuation techniques that should maximize the use of relevant observable inputs and minimize the use of unobservable inputs. In addition, the amendments in ASU 2009-05 clarify that when estimating the fair value of a liability, an entity is not required to include a separate input or adjustment to other inputs to the existence of a restriction that prevents the transfer of the liability. The Company adopted the provisions of ASU 2009-05 on October1, 2009. Its adoption did not have a material impact on the Companys financial condition, results of operations, or cash flows. Multiple-Deliverable Revenue Arrangements On October7, 2009, the FASB issued ASU 2009-13, which will supersede certain guidance in ASC 605-25, Revenue Recognition-Multiple Element Arrangements, and will require an entity to allocate arrangement consideration to all of its deliverables at the inception of an arrangement based on their relative selling prices (i.e., the relative-selling-price method). The use of the residual method of allocation will no longer be permitted in circumstances in which an entity recognized revenue for an arrangement with multiple deliverables subject to ASC 605-25. ASU 2009-13 will also require additional disclosures. The Company will adopt the provisions of ASU 2009-13 on January1, 2011. Based on the Companys current revenue arrangements, the adoption of ASU 2009-13 is not expected to have a material impact on the Companys financial condition, results of operations, or cash flows. Issued Prior to the Effective Date of the Codification Employers Disclosures About Postretirement Benefit Plan Assets ASC 715-10-50, Compensation-Retirement Benefits, will require additional disclosures about assets held in an employers defined benefit pension or other postretirement plan. ASC 715-10-50 will replace many of the disclosures currently required under GAAP and require disclosure of the fair value of each major asset category. Disclosure will also be required for the level within the fair value hierarchy of each major category of plan assets, using the guidance in ASC Topic 820, Fair Value Measurements and Disclosures. Employers will be required to reconcile the beginning and ending balances of plan assets with fair values measured using significant unobservable inputs (Level 3), separately presenting changes during the period attributable to a) actual return on plan assets, b) purchases, sales, and settlements (net), and c) transfers in and out of Level 3. ASC 715-10-50 will be effective beginning with the Companys December31, 2009 annual disclosu |
Comprehensive
Comprehensive (Loss) Income | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Comprehensive (Loss) Income [Abstract] | |
Comprehensive (Loss) Income | 5. Comprehensive (Loss) Income Comprehensive (loss)income for the nine months ended September30, 2009 and 2008 was as follows: Nine months ended September 30, 2009 Shareholders of Noncontrolling (in thousands) Crawford Company Interests Total Net (Loss) Income $ (124,552 ) $ 276 $ (124,276 ) Other Comprehensive Income (Loss): Net foreign currency translation gain (loss) 12,683 (213 ) 12,470 Interest rate swap agreement, net of taxes: Loss reclassified into income 2,090 2,090 Loss recognized during period (608 ) (608 ) Amortization of retirement plans costs, net of taxes 3,720 3,720 Total Comprehensive (Loss) Income $ (106,667 ) $ 63 $ (106,604 ) Nine months ended September 30, 2008 Shareholders of Noncontrolling (in thousands) Crawford Company Interests Total Net Income $ 23,922 $ 315 $ 24,237 Other Comprehensive Income (Loss): Net foreign currency translation loss (5,212 ) (108 ) (5,320 ) Interest rate swap agreement, net of taxes: Loss reclassified into income 1,204 1,204 Loss recognized during period (736 ) (736 ) Amortization of retirement plans costs, net of taxes 1,995 1,995 Total Comprehensive Income $ 21,173 $ 207 $ 21,380 Comprehensive (loss)income for the three months ended September30, 2009 and 2008 was as follows: Three months ended September 30, 2009 Shareholders of Noncontrolling (in thousands) Crawford Company Interests Total Net (Loss) Income $ (39,510 ) $ 110 $ (39,400 ) Other Comprehensive Income (Loss): Net foreign currency translation gain 16,610 212 16,822 Interest rate swap agreement, net of taxes: Loss reclassified into income 642 642 Loss recognized during period (142 ) (142 ) Amortization of retirement plans costs, net of taxes 1,240 1,240 Total Comprehensive (Loss) Income $ (21,160 ) $ 322 $ (20,838 ) Three months ended September 30, 2008 Shareholders of Noncontrolling (in thousands) Crawford Company Interests Total Net Income $ 6,922 $ 161 $ 7,083 Other Comprehensive Income (Loss): Net foreign currency translation loss (2,412 ) (142 ) (2,554 ) Interest rate swap agreement, net of taxes: Loss reclassified into income 487 487 Gain recognized during period 63 63 Amortization of retirement plans costs, net of taxes 665 665 Total Comprehensive Income $ 5,725 $ 19 $ 5,744 |
Net
Net (Loss) Income Attributable to Crawford & Company per Common Share | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Net (Loss) Income Attributable to Crawford & Company per Common Share [Abstract] | |
Net (Loss) Income Attributable to Crawford & Company per Common Share | 6. Net (Loss) Income Attributable to Crawford Company per Common Share Both classes of the Companys common stock, Common Stock ClassA (CRDA) and Common Stock ClassB (CRDB), share equally in the Companys earnings for purposes of computing EPS. The computations of basic and diluted net (loss)income attributable to Crawford Company per common share, after giving effect to the adoption of ASC 260-10-45-60, Earnings Per Share-Overall-Other Presentation Matters, were as follows: Three months ended Nine months ended Sept. 30, Sept. 30, Sept. 30, Sept. 30, In thousands, except (loss) earnings per share 2009 2008 2009 2008 Net (loss)income attributable to Crawford Company $ (39,510 ) $ 6,922 $ (124,552 ) $ 23,922 Weighted average common shares used to compute basic (loss)earnings per share 52,011 50,994 51,755 50,870 Dilutive effects of stock-based compensation plans (a ) 1,028 (a ) 405 Weighted-average common share equivalents used to compute diluted (loss)earnings per share 52,011 52,022 51,755 51,275 Basic (loss)earnings per share $ (0.76 ) $ 0.14 $ (2.41 ) $ 0.47 Diluted (loss)earnings per share $ (0.76 ) $ 0.13 $ (2.41 ) $ 0.47 (a) For the three months and nine months ended September30, 2009, the Company excluded from its loss per share calculations all common share equivalents because their effect was anti-dilutive. The weighted-average of these common share equivalents totaled approximately 634,000 shares and 861,000 shares for the three months and nine months ended September30, 2009, respectively. These common share equivalents excluded weighted-average stock options of approximately 2,435,000 and 2,507,000 for the three months and nine months ended September30, 2009, respectively, because the stock options were anti-dilutive based on the average price of the Companys ClassA Common Stock during those periods. Performance stock grants of 353,000 shares of the Companys ClassA common stock were excluded from the computation of EPS at September30, 2009 because the expected performance conditions had not been met as of September30, 2009. Compensation cost is recognized for these performance stock grants based on expected achievement rates, however no consideration is given for these performance stock grants when calculating EPS until the performance measurements have actually been achieved. The performance goals for these 353,000 performance stock grants are currently expected to be achieved at the end of 2010. Weighted-average outstanding stock options to purchase approximately 661,000 and 2,030,000 shares of the Companys ClassA Common Stock were excluded from the computations of diluted EPS for the three months and nine months ended September30, 2008, re |
Interest Rate Swap Agreement
Interest Rate Swap Agreement | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Interest Rate Swap Agreement [Abstract] | |
Interest Rate Swap Agreement | 7. Interest Rate Swap Agreement In May2007, the Company entered into a three-year interest rate swap agreement that effectively converts the LIBOR-based portion of the interest rate under the Companys Credit Agreement for a portion of its floating-rate debt to a fixed rate of 5.25%. The Company designated the interest rate swap as a cash flow hedge of exposure to changes in cash flows due to changes in interest rates on an equivalent amount of debt. The notional amount of the swap is reduced over its three-year term and was $80,000,000 at September30, 2009. The Company is exposed to counterparty credit risk for nonperformance and, in the event of nonperformance, to market risk for changes in interest rates. The Company attempts to manage exposure to counterparty credit risk primarily by selecting a counterparty only if it meets certain credit and other financial standards. The Company believes there have been no material changes in the creditworthiness of the counterparty to its interest-rate swap agreement. The Company reports the effective portion of the change in fair value of the derivative instrument as a component of its accumulated other comprehensive loss and reclassifies that portion into earnings in the same period during which the hedged transaction affects earnings. The Company recognizes the ineffective portion of the hedge, if any, in current earnings during the period of change. Amounts that are reclassified into earnings from accumulated other comprehensive loss and the ineffective portion of the hedge, if any, are reported on the same statement of operations line item as the original hedged item. The Company includes the fair value of the hedge in either current or non-current other liabilities and/or other assets on the balance sheet based upon the term of the hedged item. See Note 8, Fair Value Measurements. The effective portion of the pre-tax losses on the Companys interest-rate swap derivative instrument is categorized in the table below: Loss Recognized in Other Loss Reclassified from Comprehensive Loss Accumulated OCL into (OCL) on Derivative - Income - Effective Portion (in thousands) Effective Portion (1) Three months ended September 30, 2009 2008 2009 2008 Cash Flow Hedging Relationship: Interest rate hedge $ 201 $ 243 $ 951 $ 939 Loss Reclassified from Loss Recognized in OCL Accumulated OCL into on Derivative - Effective Income - Effective Portion (in thousands) Portion (1) Nine months ended September 30, 2009 2008 2009 2008 Cash Flow Hedging Relationship: Interest rate hedge $ 990 $ 1,262 $ 3,409 $ 2,066 (1) The losses reclassified from accumulated other comprehensive loss into income (effective portion) are reported in Net Corporate Interest Expense on the Companys Consolidated Statements of Operations. The amounts of gains/losses recognized in income/expense on the Companys interest rate hedge contract (ineffecti |
Fair Value Measurements
Fair Value Measurements | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | 8. Fair Value Measurements The fair value hierarchy has three levels of inputs to determine fair value, each of which is based on the reliability of the inputs used to determine fair value. Level 1 inputs are quoted prices (unadjusted)in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Companys assumptions used to measure assets and liabilities at fair value. A financial asset or liabilitys classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The fair values of the Companys assets and liabilities at September30, 2009 that are carried at fair value on the Companys balance sheet were categorized as follows: Fair Value Measurements at Sept. 30, 2009 (in thousands) Total (Level 1) (Level 2) (Level 3) Assets: Money market funds (1) $ 2,686 $ 2,686 Liabilities: Derivatives designated as hedging instruments under SFAS 133: Interest rate contract-current (2) $ 2,652 $ 2,652 (1) The fair values of the money market funds were based on recently quoted market prices and reported transactions in an active marketplace. Money market funds are reported on the Companys Consolidated Balance Sheet as Cash and Cash Equivalents. (2) The fair value of the interest rate swap was derived from a discounted cash flow analysis based on the terms of the contract and the forward interest rate curve adjusted for the Companys credit risk. On the Companys Condensed Consolidated Balance Sheet at September30, 2009, the swap is a current liability reported as a component of Other Accrued Liabilities. See Note 7, Interest Rate Swap Agreement. Fair Value Disclosures The fair value of accounts payable and short-term borrowings approximates their carrying values due to the short-term maturities of these instruments. The carrying value of the Companys term note payable was $181,200,000 at September30, 2009. The Companys term note payable is held by a small number of lenders, and thus it trades infrequently. The Company estimates the fair value of its term note payable based on a discounted cash flow analysis based on current borrowing rates for new debt issues with similar credit quality. At September30, 2009, the Company estimated the value of its term note payable to be approximately $175.0million. As disclosed in Note 13, Amendment to Credit Agreement, the Company has the ability to repurchase and retire up to $25.0million of its term note payable through December31, 2010. |
Defined Benefit Pension Plans
Defined Benefit Pension Plans | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Defined Benefit Pension Plans [Abstract] | |
Defined Benefit Pension Plans | 9. Defined Benefit Pension Plans Net periodic benefit cost (credit)related to the Companys defined benefit pension plans for the three months and nine months ended September30, 2009 and 2008 included the following pre-tax components: Three months ended Nine months ended Sept. 30, Sept. 30, Sept. 30, Sept. 30, (in thousands) 2009 2008 2009 2008 Service cost $ 433 $ 748 $ 1,228 $ 2,295 Interest cost 8,970 9,323 26,423 27,945 Expected return on assets (7,420 ) (11,384 ) (21,793 ) (34,096 ) Amortization of transition asset 59 73 166 218 Recognized net actuarial loss 1,885 961 5,587 2,886 Net periodic benefit cost (credit) $ 3,927 $ (279 ) $ 11,611 $ (752 ) For the three and nine month periods ended September30, 2009, the Company made contributions to its underfunded U.S. and U.K. defined benefit pension plans of $3,842,000 and $11,237,000, respectively, compared to $13,645,000 and $19,869,000, respectively, for the comparable periods in 2008. |
Income Taxes
Income Taxes | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Income Tax Expense (Benefit) [Abstract] | |
Income Taxes | 10. Income Taxes The Companys consolidated effective income tax rate changes periodically due to changes in enacted tax rates, fluctuations in the mix of taxable income earned from the various jurisdictions in which the Company operates, the Companys ability to utilize net operating loss carryforwards in certain of its subsidiaries, and amounts related to uncertain income tax positions. The Companys effective income tax rate for financial reporting purposes differs from the statutory income tax rate due primarily to the goodwill impairment charge, described in Note 2 above, which is not deductible for income tax purposes. |
Segment Information
Segment Information | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Segment Information [Abstract] | |
Segment Information | 11. Segment Information The Companys four reportable operating segments are: U.S. Property Casualty which serves the property and casualty insurance company market in the U.S., International Operations which serves the property and casualty insurance company markets outside the U.S., Broadspire which serves the U.S. self-insurance marketplace, and Legal Settlement Administration which serves the class action settlement and bankruptcy markets. The Companys reportable segments represent components of the business for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Operating earnings (loss)is the Companys segment measure of profit or loss required to be disclosed by ASC 280, Segment Reporting. Operating earnings is the primary financial performance measure used by the Companys senior management and chief operating decision maker to evaluate the financial performance of the Companys four operating segments. The Company believes this measure is useful in that it allows others to evaluate segment operating performance using the same criteria used by the Companys senior management. Operating earnings will differ from net income computed in accordance with GAAP since operating earnings exclude net corporate interest expense, amortization of customer-relationship intangible assets, stock option expense, unallocated corporate and shared costs, net income attributable to noncontrolling interests, and certain other gains and expenses. Financial information for the three months and nine months ended September30, 2009 and 2008 related to the Companys reportable segments, including a reconciliation from segment operating earnings (loss)to the most directly comparable GAAP financial measure, is presented below: Three months ended Nine months ended September 30, September 30, September 30, September 30, (in thousands) 2009 2008 2009 2008 Revenues: U.S. Property Casualty $ 52,253 $ 56,227 $ 161,852 $ 156,935 International Operations 101,725 115,362 288,724 335,505 Broadspire 70,430 76,911 218,087 236,289 Legal Settlement Administration 21,344 18,416 62,836 56,964 Total Segment Revenues before Reimbursements 245,752 266,916 731,499 785,693 Reimbursements 23,105 24,416 59,284 69,578 Total Revenues $ 268,857 $ 291,332 $ 790,783 $ 855,271 Operating Earnings (Loss): U.S. Property Casualty $ 4,862 $ 6,781 $ 17,250 $ 17,822 International Operations 7,258 8,594 22,943 28,027 Broadspire (1,171 ) 1,079 (3,731 ) 5,366 Legal Settlement Administration 4,097 2,853 9,911 8,492 Total Segment Oper |
Commitments and Contingencies
Commitments and Contingencies | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | 12. Commitments and Contingencies In the past, the Company has structured certain acquisitions to include earnout payments, which are typically contingent upon the acquired entity reaching certain revenue and operating earnings targets. The amount of any contingent payments and length of the earnout period have varied for each acquisition, and the ultimate payments, when and if made, vary since they depend on future events. At September30, 2009, all measurement periods covered by existing earnout agreements have ended and the Company can tentatively calculate amounts due under these agreements. At September 30, 2009, the Company estimates that it will make cash payments of approximately $5,434,000 in the fourth quarter of 2009 and $858,000 in the second quarter of 2010, based on currency exchange rates on September30, 2009. At September30, 2009, these amounts are included as components of Goodwill and Other Accrued Liabilities (current)on the Companys Unaudited Condensed Consolidated Balance sheet. As part of the Companys Credit Agreement, the Company maintains a $50,000,000 letter of credit facility to satisfy certain of its contractual requirements. At September30, 2009, the aggregate amount of issued but undrawn letters of credit under the facility was $19,569,000. In the normal course of the claims administration services business, the Company is sometimes named as a defendant in suits by insureds or claimants contesting decisions made by the Company or its clients with respect to the settlement of claims. Additionally, certain clients of the Company have in the past brought actions for indemnification by the Company, its agents, or its employees in rendering service to clients. The majority of these claims are of the type covered by insurance maintained by the Company. However, the Company is self-insured for the deductibles under various insurance coverages. In the opinion of Company management, adequate provisions have been made for such self-insured risks. The Company is also subject to numerous federal, state, and foreign employment laws, and from time to time the Company faces claims by its employees and former employees under such laws. As previously disclosed, on October31, 2006, the Company completed its acquisition of Broadspire Management Services, Inc. (BMSI) from Platinum Equity, LLC (Platinum). BMSI and Platinum are together engaged in certain legal proceedings against the former owners of certain entities acquired by BMSI prior to the Companys October31, 2006 acquisition of BMSI. Pursuant to the agreement under which the Company acquired BMSI (the Stock Purchase Agreement), Platinum has full responsibility to resolve all of these matters and is obligated to fully indemnify BMSI and the Company for all monetary payments that BMSI may be required to make as a result of any unfavorable outcomes related to these pre-existing legal proceedings. Pursuant thereto, Platinum has also agreed to indemnify the Company for any additional payments required under any purchase price adjustment mechanism, earnout, or similar provision in any of BMSIs purchase and sale agreements entered into prior to the Companys acquisitio |
Amendment to Credit Agreement
Amendment to Credit Agreement | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Amendment to Credit Agreement [Abstract] | |
Amendment to Credit Agreement | 13. Amendment to Credit Agreement In February2009, the Company entered into a Fourth Amendment to Credit Agreement and First Amendment to Pledge Agreement (the Fourth Amendment). The Fourth Amendment amended, among other things, the Companys Credit Agreement dated October31, 2006 (the Credit Agreement). The Fourth Amendment provided the Company with additional flexibility to enhance certain operational and financial aspects of its business, including, among other things, undertaking an internal corporate realignment of certain of the Companys subsidiaries. A substantial portion of the realignment was completed in connection with the execution of the Fourth Amendment. This corporate realignment did not impact the composition of the Companys four operating segments. Among other things, the Fourth Amendment provided the Company with the ability to repurchase and retire, from time to time through December2010, up to $25.0million of its outstanding term debt under its Credit Agreement. The Fourth Amendment did not change the base interest rate, interest rate spreads, financial covenants or other key terms of the Credit Agreement. See Note 15, Subsequent Events. |
Restructuring Charge
Restructuring Charge | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Restructuring Charges [Abstract] | |
Restructuring Charge | 14. Restructuring Charge During the first quarter of 2009, the Company recorded a pretax restructuring charge of $1,815,000. The charge consisted of professional fees incurred in connection with the realignment of certain of the Companys legal entities in the U.S. and internationally. The realignment of these legal entities did not impact segment financial reporting. These realignment activities commenced in the fourth quarter of 2008. |
Subsequent Events
Subsequent Events | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Subsequent Events [Abstract] | |
Subsequent Events | 15. Subsequent Events Fifth Amendment to Credit Agreement On October27, 2009, the Company entered into the Fifth Amendment To Credit Agreement (the Fifth Amendment). The Fifth Amendment affected the following changes to the Companys Credit Agreement, among others: providing the Company the option, subject to its receipt of additional commitments, to increase the revolving commitment amount or incur additional term loans under the Credit Agreement of up to a maximum of $50.0million in aggregate; extending the revolving credit termination date to October30, 2013, which is coterminous with the term loan maturity date thereunder; modifying the restricted payments basket by eliminating the Restricted Payments Coverage Ratio (as defined) test and allowing certain payments, such as the payment of dividends, among other items, in certain amounts in any four-quarter period depending upon the Companys pro forma Leverage Ratio (as defined); increasing the Applicable Margin (as defined); imposing a LIBOR floor of 2.0% on all loans under the Credit Agreement; modifying the applicable margin for revolving loans and term loans and the applicable commitment fee percentage; increasing the unsecured indebtedness basket from $5.0million to $200million, provided that 50% of the proceeds thereof are applied as a mandatory prepayment to the term loans and revolving loans, in that order under the Credit Agreement; and modifying the maximum leverage ratio, defined as the ratio of consolidated debt to earnings before interest expense, income taxes, depreciation, amortization, stock-based compensation expense, and certain other charges (EBITDA), to no more than (i)3.25 to 1.00 through March31, 2011, (ii)3.00 to 1.00 from June30 2011 through March31, 2012, (iii)2.75 to 1.00 from June30, 2012 through September30, 2012, and (iv)2.50 to 1.00 from December31, 2012. In connection with the Fifth Amendment, the Companys interest rate swap agreement (described in Note 7) is no longer designated as a cash flow hedge of exposure to changes in cash flows due to change in interest rates. Accordingly, any future changes in the fair value of the Companys interest rate swap agreement will be recorded by the Company as an expense adjustment rather than a component of the Companys accumulated other comprehensive loss. Also, at September30, 2009, a pretax loss of $2,652,000 on the interest rate swap agreement is a $1,803,000 after-tax component of the Companys accumulated other comprehensive loss. Because it is still probable that the forecasted transactions that were hedged will occur, this loss on the interest rate swap agreement will be reclassified into earnings as an increase to interest expense over the remaining life of the interest rate swap agreement as the forecasted transactions occur. Sublease During October2009, the Company entered into an agreement to sublease a portion of its leased Broadspire office building located in Plantation, Florida. The agreement provides the subtenant with options to sublease additional space in the building at various dates in 2010. The sublease is for |