Document and Company Informatio
Document and Company Information (USD $) | ||||
12 Months Ended
Dec. 31, 2009 | Jun. 30, 2009
| Mar. 01, 2010
Class A common stock | Mar. 01, 2010
Class B common stock | |
Entity Registrant Name | CRAWFORD & CO | |||
Entity Central Index Key | 0000025475 | |||
Document Type | 10-K | |||
Document Period End Date | 2009-12-31 | |||
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 | $109,660,997 | |||
Entity Common Stock, Shares Outstanding | 27,654,905 | 24,697,172 |
Consolidated Statements of Oper
Consolidated Statements of Operations (USD $) | |||
In Thousands, except Per Share data | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Revenues from Services: | |||
Revenues before reimbursements | $969,868 | $1,048,582 | $975,143 |
Reimbursements | 78,334 | 87,334 | 76,135 |
Total Revenues | 1,048,202 | 1,135,916 | 1,051,278 |
Costs and Expenses: | |||
Costs of services provided, before reimbursements | 713,991 | 767,093 | 733,240 |
Reimbursements | 78,334 | 87,334 | 76,135 |
Total costs of services | 792,325 | 854,427 | 809,375 |
Selling, general, and administrative expenses | 209,458 | 218,632 | 211,654 |
Corporate interest expense, net of interest income of $1,063, $1,994, and $1,876, respectively | 14,166 | 17,622 | 17,326 |
Goodwill and intangible asset impairment charges | 140,945 | 0 | 0 |
Restructuring and other costs | 4,059 | 3,300 | 0 |
Total Costs and Expenses | 1,160,953 | 1,093,981 | 1,038,355 |
Gain on disposals of businesses | 0 | 2,512 | 3,980 |
Gain on sale of assets | 0 | 0 | 4,844 |
(Loss) Income Before Income Taxes | (112,751) | 44,447 | 21,747 |
Provision for Income Taxes | 2,618 | 11,564 | 5,396 |
Net (Loss) Income | (115,369) | 32,883 | 16,351 |
Less: Net Income Attributable to Noncontrolling Interests | (314) | (624) | (235) |
Net (Loss) Income Attributable to Crawford & Company | ($115,683) | $32,259 | $16,116 |
(Loss) Earnings Per Share: | |||
Basic | -2.23 | 0.63 | 0.32 |
Diluted | -2.23 | 0.62 | 0.32 |
Weighted-Average Shares Used For: | |||
Basic (Loss) Earnings Per Share | 51,830 | 50,958 | 50,532 |
Diluted (Loss) Earnings Per Share | 51,830 | 52,342 | 50,659 |
Cash Dividends Per Share: | |||
Class A and Class B Common Stock | $0 | $0 | $0 |
1_Consolidated Statements of Op
Consolidated Statements of Operations (Parenthetical) (USD $) | |||
In Thousands | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Costs and Expenses: | |||
Interest income | $1,063 | $1,994 | $1,876 |
Consolidated Balance Sheets
Consolidated Balance Sheets (USD $) | ||
In Thousands | Dec. 31, 2009
| Dec. 31, 2008
|
Current Assets: | ||
Cash and cash equivalents | $70,354 | $73,124 |
Accounts receivable, less allowance for doubtful accounts of $11,983 and $12,341, respectively | 139,215 | 157,430 |
Unbilled revenues, at estimated billable amounts | 93,796 | 99,115 |
Prepaid expenses and other current assets | 22,350 | 18,688 |
Total Current Assets | 325,715 | 348,357 |
Property and Equipment: | ||
Property and equipment | 144,254 | 140,399 |
Less accumulated depreciation | (102,108) | (95,785) |
Net Property and Equipment | 42,146 | 44,614 |
Other Assets: | ||
Goodwill | 123,169 | 251,897 |
Intangible assets arising from business acquisitions, net | 104,409 | 111,389 |
Capitalized software costs, net | 50,463 | 46,296 |
Deferred income taxes | 69,504 | 67,695 |
Other noncurrent assets | 27,499 | 25,000 |
Total Other Assets | 375,044 | 502,277 |
TOTAL ASSETS | 742,905 | 895,248 |
Current Liabilities: | ||
Short-term borrowings | 32 | 13,366 |
Accounts payable | 35,449 | 40,711 |
Accrued compensation and related costs | 70,871 | 77,802 |
Self-insured risks | 18,475 | 17,939 |
Income taxes payable | 0 | 5,675 |
Deferred income taxes | 0 | 4,262 |
Deferred rent | 15,777 | 15,645 |
Other accrued liabilities | 31,541 | 41,333 |
Deferred revenues | 53,664 | 59,679 |
Mandatory company contributions due to pension plan | 25,000 | 10,300 |
Current installments of long-term debt and capital leases | 8,189 | 2,284 |
Total Current Liabilities | 258,998 | 288,996 |
Noncurrent Liabilities: | ||
Long-term debt and capital leases, less current installments | 173,061 | 181,206 |
Deferred revenues | 33,524 | 42,795 |
Self-insured risks | 14,824 | 18,531 |
Accrued pension liabilities, less current mandatory contributions | 187,507 | 169,242 |
Other noncurrent liabilities | 13,705 | 14,119 |
Total Noncurrent Liabilities | 422,621 | 425,893 |
Shareholders' Investment: | ||
Additional paid-in capital | 29,570 | 26,342 |
Retained earnings | 140,463 | 256,146 |
Accumulated other comprehensive loss | (165,403) | (158,157) |
Shareholders Investment attributable to shareholders of Crawford & Company | 56,682 | 175,551 |
Noncontrolling interests | 4,604 | 4,808 |
Total Shareholders' Investment | 61,286 | 180,359 |
TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT | 742,905 | 895,248 |
Class A common stock | ||
Shareholders' Investment: | ||
Common Stock, value | 27,355 | 26,523 |
Total Shareholders' Investment | 27,355 | 26,523 |
Class B common stock | ||
Shareholders' Investment: | ||
Common Stock, value | 24,697 | 24,697 |
Total Shareholders' Investment | $24,697 | $24,697 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | ||
In Thousands | Dec. 31, 2009
| Dec. 31, 2008
|
Current Assets: | ||
Allowance for doubtful accounts | $11,983 | $12,341 |
Class A common stock | ||
Shareholders' Investment: | ||
Common stock, par value | 1 | 1 |
Common stock, shares authorized | 50,000 | 50,000 |
Common stock, shares issued | 27,355 | 26,523 |
Common stock, shares outstanding | 27,355 | 26,523 |
Class B common stock | ||
Shareholders' Investment: | ||
Common stock, par value | 1 | 1 |
Common stock, shares authorized | 50,000 | 50,000 |
Common stock, shares issued | 24,697 | 24,697 |
Common stock, shares outstanding | 24,697 | 24,697 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (USD $) | |||
In Thousands | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Cash Flows from Operating Activities: | |||
Net (Loss) Income | ($115,369) | $32,883 | $16,351 |
Reconciliation of net income to net cash provided by operating activities: | |||
Goodwill and intangible asset impairment charges | 140,945 | 0 | 0 |
Depreciation and amortization | 31,010 | 30,331 | 29,646 |
Deferred income taxes | 463 | 247 | (1,437) |
Stock-based compensation costs | 5,510 | 5,858 | 2,929 |
Loss on disposals of property and equipment | 117 | 195 | 554 |
Gains on sales of businesses | 0 | (2,512) | (3,980) |
Gain on 2006 sale of former corporate headquarters | 0 | 0 | (4,844) |
Changes in operating assets and liabilities, net of effects of acquisition and disposition: | |||
Accounts receivable, net | 27,193 | 6,785 | 12,450 |
Unbilled revenues, net | 12,481 | 22,093 | (11,298) |
Prepaid or accrued income taxes | (7,782) | 3,077 | 4,322 |
Accounts payable and accrued liabilities | (16,749) | 20,493 | (2,184) |
Deferred revenues | (15,827) | (19,024) | (22,571) |
Accrued retirement costs | (7,844) | (25,416) | 2,188 |
Prepaid expenses and other operating activities | (2,484) | (3,425) | 1,302 |
Net cash provided by operating activities | 51,664 | 71,585 | 23,428 |
Cash Flows from Investing Activities: | |||
Acquisitions of property and equipment | (9,886) | (15,214) | (16,129) |
Capitalization of software costs | (14,823) | (16,797) | (11,980) |
Proceeds from sales of businesses | 0 | 4,269 | 5,000 |
Proceeds from sale of investment security | 0 | 0 | 5,000 |
Payments for business acquisitions, net of cash acquired | (6,260) | (888) | (1,323) |
Proceeds from disposals of property and equipment | 135 | 662 | 395 |
Other investing activities | (335) | (68) | (50) |
Net cash used in investing activities | (31,169) | (28,036) | (19,087) |
Cash Flows from Financing Activities: | |||
Proceeds from employee stock-based compensation plans | 453 | 2,036 | 736 |
Increase in short-term borrowings | 39,336 | 36,544 | 16,568 |
Payments on short-term borrowings | (57,622) | (48,296) | (18,051) |
Dividends paid to noncontrolling interests | (274) | (610) | (144) |
Payments on long-term debt and capital leases | (2,400) | (2,484) | (15,515) |
Capitalized loan costs | (4,145) | 0 | (908) |
Shares used to settle withholding taxes under stock-based compensation plans | (1,903) | (20) | (19) |
Net cash used in financing activities | (26,555) | (12,830) | (17,333) |
Effects of exchange rate changes on cash and cash equivalents | 3,290 | (8,450) | 2,173 |
(Decrease) Increase in Cash and Cash Equivalents | (2,770) | 22,269 | (10,819) |
Cash and Cash Equivalents at Beginning of Year | 73,124 | 50,855 | 61,674 |
Cash and Cash Equivalents at End of Year | $70,354 | $73,124 | $50,855 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders Equity, Noncontrolling Interests, and Comprehensive Income (Loss) (USD $) | |||||||
In Thousands | Class A common stock
| Class B common stock
| Additional Paid-In Capital
| Retained Earnings
| Accumulated Other Comprehensive Loss
| Noncontrolling Interests
| Total
|
Beginning Balance at Dec. 31, 2006 | $25,741 | $24,697 | $15,468 | $207,891 | ($62,646) | $4,544 | $215,695 |
Comprehensive income (loss): | |||||||
Net (loss) Income | 16,116 | 235 | 16,351 | ||||
Currency translation adjustments, net | 16,382 | 411 | 16,793 | ||||
Accrued retirement liabilities adjustment, net of $5,556, $(46,253) and $(8,682) tax in year 2007, 2008 and 2009 respectively | 9,460 | 9,460 | |||||
Interest-rate swaps, net of $(1,410), $376 and $1,147 tax in year 2007, 2008 and 2009 respectively | (2,463) | (2,463) | |||||
Total comprehensive loss | 40,141 | ||||||
Impact of adoption of new income tax accounting guidance | (214) | (214) | |||||
Stock-based compensation costs | 2,929 | 2,929 | |||||
Shares issued in connection with stock-based compensation plans, net | 197 | 539 | 736 | ||||
Dividends paid to noncontrolling interests | (144) | (144) | |||||
Other equity transactions | (3) | 121 | 118 | ||||
Ending Balance at Dec. 31, 2007 | 25,935 | 24,697 | 19,057 | 223,793 | (39,267) | 5,046 | 259,261 |
Comprehensive income (loss): | |||||||
Net (loss) Income | 32,259 | 624 | 32,883 | ||||
Currency translation adjustments, net | (37,577) | (252) | (37,829) | ||||
Currency translations reclassed for disposal of business | (344) | (344) | |||||
Accrued retirement liabilities adjustment, net of $5,556, $(46,253) and $(8,682) tax in year 2007, 2008 and 2009 respectively | (80,639) | (80,639) | |||||
Interest-rate swaps, net of $(1,410), $376 and $1,147 tax in year 2007, 2008 and 2009 respectively | (822) | (822) | |||||
Total comprehensive loss | (86,751) | ||||||
Impact of adoption of new pension accounting guidance, net of $48 and $277 tax | 94 | 492 | 586 | ||||
Stock-based compensation costs | 5,858 | 5,858 | |||||
Shares issued in connection with stock-based compensation plans, net | 593 | 1,443 | 2,036 | ||||
Dividends paid to noncontrolling interests | (610) | (610) | |||||
Other equity transactions | (5) | (16) | (21) | ||||
Ending Balance at Dec. 31, 2008 | 26,523 | 24,697 | 26,342 | 256,146 | (158,157) | 4,808 | 180,359 |
Comprehensive income (loss): | |||||||
Net (loss) Income | (115,683) | 314 | (115,369) | ||||
Currency translation adjustments, net | 17,344 | (244) | 17,100 | ||||
Accrued retirement liabilities adjustment, net of $5,556, $(46,253) and $(8,682) tax in year 2007, 2008 and 2009 respectively | (26,521) | (26,521) | |||||
Interest-rate swaps, net of $(1,410), $376 and $1,147 tax in year 2007, 2008 and 2009 respectively | 1,931 | 1,931 | |||||
Total comprehensive loss | (122,859) | ||||||
Stock-based compensation costs | 5,510 | 5,510 | |||||
Shares issued in connection with stock-based compensation plans, net | 832 | (2,282) | (1,450) | ||||
Dividends paid to noncontrolling interests | (274) | (274) | |||||
Ending Balance at Dec. 31, 2009 | $27,355 | $24,697 | $29,570 | $140,463 | ($165,403) | $4,604 | $61,286 |
2_Consolidated Statements of Sh
Consolidated Statements of Shareholders Equity, Noncontrolling Interests, and Comprehensive Income (Loss) (Parenthetical) (USD $) | |||
In Thousands | 12 Months Ended
Dec. 31, 2009 Accumulated Other Comprehensive Loss | 12 Months Ended
Dec. 31, 2008 Accumulated Other Comprehensive Loss | 12 Months Ended
Dec. 31, 2007 Accumulated Other Comprehensive Loss |
Retained Earnings | |||
Comprehensive income (loss): | |||
Tax effect on impact of adoption of new pension accounting guidance | $48 | ||
Accumulated Other Comprehensive Loss | |||
Comprehensive income (loss): | |||
Tax effect on accrued retirement liabilities adjustment | (8,682) | (46,253) | 5,556 |
Tax effect on Interest-rate swap | 1,147 | 376 | (1,410) |
Tax effect on impact of adoption of new pension accounting guidance | $277 |
Major Accounting and Reporting
Major Accounting and Reporting Policies | |
12 Months Ended
Dec. 31, 2009 | |
Major Accounting and Reporting Policies [Abstract] | |
MAJOR ACCOUNTING AND REPORTING POLICIES | 1.Major Accounting and Reporting Policies Nature of Operations and Industry Concentration Based in Atlanta, Georgia, Crawford Company (www.crawfordandcompany.com) is the worlds largest independent provider of claims management solutions to the risk management and insurance industry as well as self-insured entities, with a global network of more than 700 locations in 63 countries. The Crawford System of Claims Solutionssm offers comprehensive, integrated claims services, business process outsourcing and consulting services for major product lines including property and casualty claims management, workers compensation claims and medical management, and legal settlement administration. Shares of the Companys two classes of common stock are traded on the New York Stock Exchange under the symbols CRDA and CRDB, respectively. Principles of Consolidation The accompanying consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States (GAAP) and include the accounts of the Company, its majority-owned subsidiaries, and variable interest entities in which the Company is deemed to be the primary beneficiary. Significant intercompany transactions are eliminated in consolidation. 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 (fiscal year-end of October 31)as permitted by GAAP in order to provide sufficient time for accumulation of their results. The Company uses the purchase method of accounting for all acquisitions where the Company is required to consolidate the acquired entity into the Companys financial statements. Results of operations of acquired businesses are included in the Companys consolidated results from the acquisition date. For variable interest entities (VIE), the Company determines when it should include the assets, liabilities, 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 December31, 2009 and 2008, the liabilities of this deferred compensation plan were $8,570,000 and $7,621,000, respectively, and the values of the assets held in the related rabbi trust were $13,551,000 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. 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 noncontrolling interests. The noncontrolling interests represent the equity interests (formerly referred to as minority interests) in these entities that are not attributable, either directly or indirectly, to the Company. Noncontrolling interests are |
Dispositions and Acquisitions o
Dispositions and Acquisitions of Businesses | |
12 Months Ended
Dec. 31, 2009 | |
Dispositions and Acquisitions of Businesses [Abstract] | |
DISPOSITIONS AND ACQUISITIONS OF BUSINESSES | 2. Dispositions And Acquisitions of Businesses Disposition of Netherlands Subsidiary In 2008, the Companys Netherlands subsidiary sold the capital stock of one of its subsidiaries. The net cash received from the buyer was $4,269,000, which consisted of the cash sale price of $5,256,000, less cash of $987,000 retained in the sold subsidiary. The nontaxable gain recognized on this disposition was $2,512,000, including a cumulative translation adjustment of $344,000 related to this sold entity. In connection with this disposition, the Company derecognized goodwill of $1,437,000 from the Companys International Operations segment and reporting unit. The revenues and expenses of this sold subsidiary were not material to the consolidated financial statements of the Company or to the operating results of the Companys International Operations segment. Accordingly, the Company has not reported the disposed business as discontinued operations in its consolidated financial statements. Acquisition of Specialty Liability Services Ltd. In 2006, the Companys U.K. subsidiary acquired all of the outstanding stock of Specialty Liability Services Ltd. (SLS). The purchase price paid at acquisition was $7,965,000, less $1,099,000 cash acquired. The results of SLSs operations have been included in the Companys consolidated financial statements since that date. SLS is a specialist liability adjusting and claims handling company with operations in the U.K. The net assets acquired included amortizable intangible assets of $1,409,000, indefinite-live intangible assets of $2,487,000, and goodwill of $2,929,000. The purchase price was increased by $1,545,000, $888,000 and $338,000 in 2009, 2008 and 2007, respectively, due to additional acquisition costs incurred in 2007 and earnout payments in all three years. At December31, 2009, all contingent amounts related to the SLS acquisition have been determined and all have been paid with the exception of $791,000 expected to be paid in 2010. At December31, 2009, this $791,000 is included in Goodwill and in current Accrued Liabilities on the Companys Consolidated Balance Sheet. Other acquisitions made by the Company in 2009, 2008, and 2007 were not material. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | |
12 Months Ended
Dec. 31, 2009 | |
Goodwill and Intangible Assets [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | 3. Goodwill And Intangible Assets The goodwill recognized, fair values of assets acquired, liabilities assumed, and the net cash paid in 2009 and 2008 related to acquired businesses, including adjustments for prior acquisitions, were as follows: 2009 2008 (In thousands) Goodwill acquired For current year acquisitions: U.S. Property Casualty segment $ 1,000 $ Adjustments for prior years acquisitions: International Operations segment 1,545 4,949 Total goodwill $ 2,545 $ 4,949 Intangible assets acquired Adjustments for prior years acquisitions: Corporate $ 6 Total intangible assets $ $ 6 Fair values of tangible assets acquired $ $ (6 ) Earnout payment in accrued liabilities $ 1,391 $ 4,061 Earnout payment paid from accrued liabilities $ 5,106 $ Cash paid, net of cash acquired $ 6,260 $ 888 Adjustments for prior years acquisitions were for payments made under earnout agreements. Included in the 2008 goodwill adjustments of $4,949,000 for the International Operations segment is a $4,061,000 additional earnout payment due to the seller of Robertson Company Group (Robertson). Robertson was acquired by the Companys Australian subsidiary in 2002. Based on the earnout agreement, the Company recorded a determinable earnout payment in translated U.S.dollars of $4,061,000 in goodwill at December31, 2008. However, the Company was not required to make this earnout payment until 2009, thus it was not reflected as a use of cash in the investing section of the Companys Consolidated Statement of Cash Flows for the year ended December31, 2008. This accrued earnout payment was paid to Robertson in 2009 when the translated amount in U.S.dollars had changed to $5,106,000 at time of payment. Goodwill Impairment Charge in 2009 Due to declines in current and forecasted operating results for the Companys Broadspire segment and reporting unit, 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 noncash impairment charge of $140.3million during 2009. This impairment charge is not deductible for income tax purposes and is not reflected in Broadspires segment operating loss. This impairment charge did not affect the Companys liquidity or cash flows and had no effect on the Companys compliance with the financial covenants under its credit agreement. The first step of the goodwill impairment testing and measurement process involved estimating the fair value of Broadspire using an internally prepared discounted cash flow analysis. The discount rate utilized in estimating the fair value of Broadspire was 14%, reflecting the Companys assessment of a market participants view of the risks associated with Broadspires projected cash flows. |
Short-Term and Long-Term Debt,
Short-Term and Long-Term Debt, Including Capital Leases | |
12 Months Ended
Dec. 31, 2009 | |
Short-Term and Long-Term Debt, Including Capital Leases [Abstract] | |
SHORT-TERM AND LONG-TERM DEBT, INCLUDING CAPITAL LEASES | 4. Short-Term and Long-Term Debt, including Capital Leases On October31, 2006, the Company entered into a secured credit agreement (the Credit Agreement) with a syndication of lenders. The Credit Agreement provides for a maximum borrowing capacity of $310,000,000, comprised of (i)a term loan facility (the term loan) with an original principal amount of $210,000,000 and (ii)a revolving credit facility in the principal amount of $100,000,000 with a swingline subfacility, a letter of credit subfacility, and a foreign currency sublimit. The Credit Agreement has been amended five times since October31, 2006. All amendments to the Companys Credit Agreement have been accounted for as a modification of existing debt. Amended provisions of the original agreement and amendments that were subsequently superseded by other amendments are not included in this note. At December31, 2009 and 2008, a total of $180,675,000 and $194,618,000, respectively, was outstanding under the Credit Agreement. In addition, undrawn commitments under letters of credit totaling $19,569,000 and $19,870,000 were outstanding at December31, 2009 and 2008, respectively, under the letters of credit subfacility of the Credit Agreement. These letter of credit commitments were for the Companys own obligations. Including the amounts committed under the letters of credit subfacility, the unused balance of the revolving credit portion of the credit facility totaled $80,431,000 and $68,286,000 at December31, 2009 and 2008, respectively. Short-term borrowings, including bank overdraft facilities, totaled $32,000 and $13,366,000 at December31, 2009 and 2008, respectively. Long-term debt consisted of the following at December31, 2009 and 2008: 2009 2008 (In thousands) Term loan facility, principal of $525 and interest payable quarterly with balloon payment due October 2013 $ 180,675 $ 182,775 Other term loan payable to bank 161 231 Capital lease obligations 414 484 Total long-term debt and capital leases 181,250 183,490 Less: current installments (8,189 ) (2,284 ) Total long-term debt and capital leases, less current installments $ 173,061 $ 181,206 The Companys capital leases are primarily comprised of leased automobiles with terms ranging from 24 to 60months. Interest expense, including any impact from the Companys interest rate hedge and amortization of capitalized loan origination costs, on the Companys short-term and long-term borrowings was $15,229,000, $19,616,000, and $19,202,000 for the years ended December31, 2009, 2008, and 2007, respectively. Interest paid on the Companys short-term and long-term borrowings was $14,339,000, $19,037,000, and $21,166,000 for the years ended December31, 2009, 2008, and 2007, respectively. At December31, 2008, the weighted-average interest rate on borrowings outstanding under the revolving credit facility was 9.97% and all outstanding borrowings were |
Interest Rate Swap Agreements
Interest Rate Swap Agreements | |
12 Months Ended
Dec. 31, 2009 | |
Interest Rate Swap Agreements [Abstract] | |
INTEREST RATE SWAP AGREEMENTS | 5. Interest Rate Swap Agreements The Company manages its exposure to the impact of interest rate changes by entering interest rate swap agreements. The Company designates pay-fixed interest rate swaps as cash flow hedges of interest payments on floating-rate debt. Pay-fixed swaps effectively convert floating rate debt to fixed-rate debt. 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 income statement 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. 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. In May 2007, 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 December31, 2009. In connection with the Fifth Amendment to the Companys Credit Agreement, this interest rate swap was discontinued as a cash flow hedge of exposure to changes in cash flows due to changes in interest rates. Accordingly, any future changes in the fair value of this swap agreement will be recorded by the Company as a noninterest expense adjustment rather than a component of the Companys accumulated other comprehensive loss. Such amount was not material for the year ended December31, 2009. The pretax amount in accumulated comprehensive loss at the time the hedge was discontinued was $2,652,000 and was $1,593,000 at December31, 2009. 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. The Company believes there have been no material changes in the creditworthiness of the counterparty to this interest-rate swap agreement In November 2009, the Company entered into a two-year forward-starting interest rate swap agreement th |
Fair Value
Fair Value | |
12 Months Ended
Dec. 31, 2009 | |
Fair Value [Abstract] | |
FAIR VALUE | 6. Fair Value The fair value hierarchy has three levels which are based on the reliability of the inputs used to determine fair value. Level1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level2 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. Level3 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 following table presents the Companys assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. Fair Value Measurements at December31, 2009 Significant Other Significant Quoted Prices in Observable Unobservable Active Markets Inputs Inputs Total (Level 1) (Level 2) (Level 3) (In thousands) Assets: Money market funds(1) $ 2,888 $ 2,888 $ $ Liabilities: Derivative designated as hedging instrument: Interest rate swap(2) (400 ) (400 ) Derivative discontinued as hedging instrument: Interest rate swap(2) (1,667 ) (1,667 ) (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 swaps was derived from a discounted cash flow analysis based on the terms of the contracts and the forward interest rate curve adjusted for the Companys credit risk. The fair values of the hedge instruments are either current or non-current Other Liabilities and/or Other Assets on the Companys Consolidated Balance Sheet based upon the term of the hedged item. Fair Value Disclosures The fair value of accounts payable and short-term borrowings approximates their carrying value due to the short-term maturity of the instruments. 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. The fair value of the Companys variable-rate long-term debt approximates carrying value at December31, 2009. |
Commitments Under Operating Lea
Commitments Under Operating Leases | |
12 Months Ended
Dec. 31, 2009 | |
Commitments Under Operating Leases [Abstract] | |
COMMITMENTS UNDER OPERATING LEASES | 7. Commitments Under Operating Leases The Company and its subsidiaries lease certain office space, computer equipment, and automobiles under operating leases. For office leases that contain scheduled rent increases or rent concessions, the Company recognizes monthly rent expense based on a calculated average monthly rent amount that considers the rent increases and rent concessions over the life of the lease term. Leasehold improvements of a capital nature that are made to leased office space under operating leases are amortized over the shorter of the term of the lease or the estimated useful life of the improvement. License and maintenance costs related to the leased vehicles are paid by the Company. Rental expenses, net of amortization of any incentives provided by lessors, for operating leases consisted of the following: 2009 2008 2007 (In thousands) Office space $ 44,069 $ 46,501 $ 48,026 Automobiles 7,978 9,651 8,654 Computers and equipment 728 646 634 Total operating leases $ 52,775 $ 56,798 $ 57,314 At December31, 2009, future minimum payments under non-cancelable operating leases with terms of more than 12months were as follows: 2010 $51,723,000; 2011 $41,668,000; 2012 $34,429,000; 2013 $28,342,000; 2014 $21,386,000; and thereafter $61,756,000. Where applicable, the amounts above include sales taxes. Significant Operating Leases and Subleases Effective August1, 2006, the Company entered into an 11-year operating lease agreement for the lease of approximately 160,000square feet of office space in Atlanta, Georgia for use as the Companys corporate headquarters. Included in the future minimum lease payments noted above are total lease payments of $31,227,000 related to this lease. Additionally, the Company is responsible for certain property operating expenses. Leasehold improvements totaling $4,921,000 were funded directly by the lessor. On October31, 2006, the Company acquired Broadspire Management Services, Inc. (BMSI). Included in the acquired commitments of BMSI was a long-term operating lease for a two-building office complex in Plantation, Florida. The term of this lease ends in December 2021. Included in the future minimum office lease payments for operating leases noted above are total lease payments $51,020,000 related to this Plantation, Florida lease. A majority of this office space is subleased at December31, 2009. Under executed sublease arrangements at December31, 2009 between the Company and sublessors, as described below, the sublessors are obligated to pay the Company minimum sublease payments as follows: Year Ending December 31, (In thousands) 2010 $ 2,098 2011 2,211 2012 2,461 2013 2,503 2014 1,082 2015-2021 4,612 Total minimum sublease payments to be received $ 14,967 One of the |
Income Taxes
Income Taxes | |
12 Months Ended
Dec. 31, 2009 | |
Income Taxes [Abstract] | |
INCOME TAXES | 8. Income Taxes Income (loss) before provision for income taxes consisted of the following: 2009 2008 2007 (In thousands) U.S. $ (146,898 ) $ 6,190 $ (1,744 ) Foreign 34,147 38,257 23,491 (Loss) Income before taxes $ (112,751 ) $ 44,447 $ 21,747 The provision (benefit) for income taxes consisted of the following: 2009 2008 2007 (In thousands) Current: U.S. federal and state $ (4,769 ) $ (166 ) $ (1,172 ) Foreign 6,924 11,483 8,005 Deferred: U.S. federal and state (823 ) 766 (2,110 ) Foreign 1,286 (519 ) 673 Provision for income taxes $ 2,618 $ 11,564 $ 5,396 Net cash payments for income taxes were $10,301,000, $7,975,000, and $2,339,000 in 2009, 2008, and 2007, respectively. The provision for income taxes is reconciled to the federal statutory rate of 35% as follows: 2009 2008 2007 (In thousands) Federal income taxes at statutory rate $ (39,642 ) $ 15,338 $ 7,529 State income taxes, net of federal benefit 562 (223 ) 149 Foreign taxes (4,400 ) (2,110 ) (658 ) Change in valuation allowance 358 597 1,105 Credits (4,074 ) (3,468 ) (1,062 ) Tax exempt interest income (11 ) (267 ) (1,155 ) Nondeductible meals and entertainment 954 1,189 847 Changes in tax accruals and reserves (200 ) (170 ) (2,012 ) Goodwill intangible asset impairments 49,191 Other (120 ) 678 653 Provision for income taxes $ 2,618 $ 11,564 $ 5,396 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 indefinitely reinvested. The Companys intent is for such earnings to be reinvested by the subsidiaries or to be repatriated only when it would be tax effective through the utilization of foreign tax credits. At December31, 2009, such undistributed earnings totaled $89,001,000. Determination of the deferred income tax liability on these unremitted earnings is not practicable since such liability, if any, is dependent on circumstances existing when remittance occurs. Deferred income taxes consisted of the following at December31, 2009 and 2008: |
Retirement Plans
Retirement Plans | |
12 Months Ended
Dec. 31, 2009 | |
Retirement Plans [Abstract] | |
RETIREMENT PLANS | 9. Retirement Plans The Company and its subsidiaries sponsor various retirement plans. Substantially all employees in the U.S.and certain employees outside the U.S.are covered under the Companys defined contribution plans. Certain employees, retirees, and eligible dependents are also covered under the Companys defined benefit pension plans. A fixed number of U.S.employees, retirees, and eligible dependents are covered under a frozen post-retirement medical benefits plan in the U.S.In addition, the Company sponsors nonqualified, unfunded defined benefit pension plans for certain employees and retirees. Employer contributions under the Companys defined contribution plans are determined annually based on employee contributions, a percentage of each covered employees compensation, and years of service. The Companys cost for defined contribution plans totaled $18,944,000, $25,350,000, and $21,256,000 in 2009, 2008, and 2007, respectively. During 2009, the Company temporarily suspended Company contributions for certain defined contribution plans in the U.S. The Company sponsors defined benefit pension plans in the U.S.and U.K. Effective December31, 2002, the Company elected to freeze its U.S.defined benefit pension plan. The Companys U.K. defined benefit pension plans have also been closed for new employees, but existing participants may still accrue additional limited benefits based on salary amounts in effect at the time the plan was closed. Benefits payable under the Companys U.S defined benefit pension plan are generally based on career compensation; however, no additional benefits accrue on the frozen U.S.plan after December31, 2002. Benefits payable under the U.K. plans are generally based on an employees final salary at the time the plan was closed. Benefits paid from the U.K. plans are also subject to adjustments for the effects of inflation. In 2010, the Company expects to make contributions of approximately $33,500,000 to its U.S.defined benefit pension plan and approximately $8,000,000 to its U.K. defined benefit pension plans. Certain other employees located in the Netherlands, Norway, and Germany (referred to herein as the other international plans) have retirement benefits that are accounted for as defined pension benefits under U.S.GAAP. The reconciliation of the beginning and ending balances of the projected benefit obligations and the fair value of plans assets for the Companys defined benefit pension plans as of the plans most recent measurement dates is as follows: Funded Status December31, 2009 2008 (In thousands) Projected Benefit Obligations: Beginning of measurement period $ 537,712 $ 629,640 Service cost 2,073 2,506 Interest cost 36,221 40,694 Employee contributions 768 716 Actuarial loss (gain) 91,798 (48,123 ) Divestiture (1,706 ) Benefits paid (32,277 ) (33,808 ) Foreign currency effects 5,013 (52,207 ) |
Common Stock
Common Stock | |
12 Months Ended
Dec. 31, 2009 | |
Common Stock [Abstract] | |
COMMON STOCK | 10. Common Stock The Company has two classes of common stock outstanding, ClassA Common Stock (CRDA) and ClassB Common Stock (CRDB). These two classes of stock have essentially identical rights, except that shares of CRDA generally do not have any voting rights. Under the Companys Articles of Incorporation, the Board of Directors may pay higher (but not lower) cash dividends on the non-voting CRDA than on the voting CRDB. As described in Note11, certain shares of CRDA are issued with restrictions under executive compensation plans. As disclosed in Note4, the Companys Credit Agreement contains restrictions on dividends and distributions. In April 1999, the Companys Board of Directors authorized a discretionary share repurchase program of an aggregate of 3,000,000shares of CRDA and CRDB through open market purchases. Through December31, 2009, the Company has reacquired 2,150,876shares of CRDA and 143,261shares of CRDB at an average cost of $10.99 and $12.21 per share, respectively. No shares have been repurchased since 2004 under this plan. In 2008, a maximum of 550,000shares of CRDA were authorized for issuance in 2009 under the Companys Frozen Accrued Vacation Stock Purchase Plan (the Plan). Under this Plan, certain officers and employees of the Company could voluntarily make a one-time irrevocable election to convert accrued vacation into shares of CRDA. Accrued vacation in the amount of $372,000 was used to purchase 54,768 (net of 28,090shares used to fund payroll and withholding taxes) shares of CRDA under the Plan. |
Stock-Based Compensation
Stock-Based Compensation | |
12 Months Ended
Dec. 31, 2009 | |
Stock-Based Compensation [Abstract] | |
STOCK-BASED COMPENSATION | 11. Stock-Based Compensation The Company has various stock-based compensation plans for its employees and members of its board of directors. Only shares of the Companys ClassA Common Stock (CRDA) are involved in these plans. The fair value of an equity award is estimated on the grant date without regard to service or performance conditions. The fair value is recognized as compensation expense over the requisite service period for all awards that vest. When recognizing compensation costs, estimates are made for the number of awards that will vest, and subsequent adjustments are made to reflect both changes in the number of shares expected to vest and actual vesting. Compensation cost is not recognized for awards that do not vest because service or performance conditions are not satisfied. Compensation cost recognized at any date equals at least the portion of the grant-date value of an award that is vested at that date. For awards granted prior to January1, 2006 that were not previously subject to the expense recognition provisions of previous accounting guidance, compensation expense under the revised accounting guidance is recognized only for the portions of those awards that were unvested at the adoption of the revised accounting guidance on January1, 2006. Expense for these awards is recognized ratably beginning January1, 2006 over the remaining vesting period of each award. The pretax compensation expense recognized for all stock-based compensation plans was $5,510,000, $5,858,000 and $2,929,000 for the years ended December31, 2009, 2008, and 2007, respectively. The total income tax benefit recognized in the Consolidated Statements of Operations for stock-based compensation arrangements was approximately $1,709,000, $1,801,000, and $816,000 for the years ended December31, 2009, 2008, and 2007, respectively. Some of the Companys stock-based compensation awards are granted under plans which are designed not to be taxable as compensation to the recipient based on tax laws of the United States or the applicable country. Accordingly, the Company does not recognize tax benefits on all of its stock-based compensation expense. During 2009, 2008 and 2007, the Company recognized no adjustments to additional paid-in capital for differences between deductions taken on its income tax returns related to stock-based compensation plans and the related income tax benefits previously recognized for financial reporting purposes. Stock Options The Company has granted nonqualified and incentive stock options to key employees and directors. All stock options were for shares of CRDA. Option awards were granted with an exercise price equal to the market price of the Companys stock at the date of grant. The Companys stock option plans have been approved by shareholders, although the Companys Board of Directors is authorized to make specific grants of stock options under active plans. Employee stock options typically are subject to graded vesting over five years (20% each year) and have a typical life of ten years. Compensation cost for stock options is recognized on a straight-line basis over the requisite service per |
Segment and Geographic Informat
Segment and Geographic Information | |
12 Months Ended
Dec. 31, 2009 | |
Segment and Geographic Information [Abstract] | |
SEGMENT AND GEOGRAPHIC INFORMATION | 12. Segment and Geographic Information The Companys four reportable operating segments are organized based upon the nature of services and/or geographic areas served and include: U.S.Property Casualty which serves the U.S.property and casualty insurance company market, International Operations which serves the property and casualty insurance company markets outside of the U.S., Broadspire which serves the U.S.self-insurance marketplace, and Legal Settlement Administration which serves the securities, bankruptcy, and other legal settlement markets. The Companys four 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. Intersegment sales are recorded at cost and are not material. 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 to investors in that it allows investors 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 income tax expense, net corporate interest expense, amortization of customer-relationship intangible assets, stock option expense, certain other gains and expenses, and certain unallocated corporate and shared costs. Net income or loss attributable to noncontrolling interests has been removed from segment operating earnings. Segment operating earnings include allocations of certain corporate overhead and shared costs. If the Company changes its allocation methods or changes the types of costs that are allocated to its four operating segments, prior periods are adjusted to reflect the current allocation process. In the normal course of its business, the Company sometimes pays for certain out-of-pocket expenses that are reimbursed by its clients. Under GAAP, these out-of-pocket expenses and associated reimbursements are reported as revenues and expenses in the Companys Consolidated Statement of Operations. However, in evaluating segment revenues, Company management excludes these reimbursements from segment revenues. On January1, 2008, the Companys Strategic Warranty Services unit was transferred from the Legal Settlement Administration segment to the U.S.Property Casualty segment. Prior period amounts for both segments have been restated to reflect this transfer. Financial information as of and for the years ended December31, 2009, 2008, and 2007 covering the Companys reportable segments was as follows: U.S. Property International Legal Settlement Casualty Operations Broadspire Administration Total (In thousands) 2009 Revenues before reimbursements $ |
Client Funds
Client Funds | |
12 Months Ended
Dec. 31, 2009 | |
Client Funds [Abstract] | |
CLIENT FUNDS | 13. Client Funds The Company maintains funds in custodial accounts at financial institutions to administer claims for certain clients. These funds are not available for the Companys general operating activities and, as such, have not been recorded in the accompanying Consolidated Balance Sheets. The amount of these funds totaled $242,334,000 and $246,280,000 at December31, 2009 and 2008, respectively. In addition, the Companys Legal Settlement Administration segment administers funds in noncustodial accounts at financial institutions that totaled $578,821,000 and $1,010,593,000 at December31, 2009 and 2008, respectively. |
Contingencies
Contingencies | |
12 Months Ended
Dec. 31, 2009 | |
Contingencies [Abstract] | |
CONTINGENCIES | 14. Contingencies As part of the Companys Credit Agreement, the Company maintains a letter of credit facility to satisfy certain of its own contractual requirements. At December31, 2009, the aggregate amount committed 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 brought actions for indemnification on the basis of alleged negligence 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 responsible for the deductibles and self-insured retentions under various insurance coverages. In the opinion of Company management, adequate provisions have been made for such risks. The Company is 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. In addition, the Company has become aware that certain employers are becoming subject to an increasing number of claims involving alleged violations of wage and hour laws. The outcome of any of these allegations is expected to be highly fact specific, and there has been a substantial amount of recent legislative and judicial activity pertaining to employment-related issues. Such claims or litigation involving the Company or any of the Companys current or former employees could divert managements time and attention from the Companys business operations and could potentially result in substantial costs of defense, settlement or other disposition, which could have a material adverse effect on the Companys results of operations, financial position, and cash flows. As previously disclosed, on October31, 2006, the Company completed its acquisition of 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 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 acquisition of BMSI. In the event of an unfavorable outcome in which Platinum does not indemnify the Company under the terms of the Stock Purchase Agreement, the Company may be responsible for funding any such unfavorable outcomes. At this time, the Companys management does not believe |
Sale of the Former Corporate He
Sale of the Former Corporate Headquarters and Recognition of Deferred Gain | |
12 Months Ended
Dec. 31, 2009 | |
Sale of the Former Corporate Headquarters and Recognition of Deferred Gain [Abstract] | |
SALE OF THE FORMER CORPORATE HEADQUARTERS AND RECOGNITION OF DEFERRED GAIN | 15.Sale of the Former Corporate Headquarters and Recognition of Deferred Gain On June30, 2006, the Company sold the land and building utilized as its former corporate headquarters in Atlanta, Georgia. These assets had a net carrying amount of $2,842,000. The base sale price of $8,000,000 was received in cash at closing. Also on June30, 2006, the Company entered into a 12-month leaseback agreement for these same facilities. During the second quarter of 2007, the company relocated its corporate headquarters to nearby leased facilities. The Company deferred recognition of the gain related to this sale due to its leaseback of the facility. Net of transaction costs, a pretax gain of $4,844,000 was recognized by the Company upon the expiration of the leaseback agreement during the second quarter of 2007. Under the sale agreement, the $8,000,000 base sale price is subject to upward revision depending upon the buyers ability to subsequently redevelop the property. The gain of $4,844,000 was based on the base sale price and did not include any amount for the potential upward revision of the sale price. Should such revision subsequently occur, the Company could ultimately realize a larger gain. |
Restructuring Activities and Ot
Restructuring Activities and Other Charges | |
12 Months Ended
Dec. 31, 2009 | |
Restructuring Activities and Other Charges [Abstract] | |
RESTRUCTURING ACTIVITIES AND OTHER CHARGES | 16.Restructuring Activities and Other Charges In 2009, the Company recorded pretax restructuring and other costs that totaled $4,059,000. Included in the 2009 restructuring costs were $1,815,000 in professional fees related to the internal realignment of certain of our legal entities in the U.S.and internationally that commenced in 2008, and $434,000 in severance expense in our International Operations segment. These restructuring efforts were substantially completed at December31, 2009. The internal realignment did not impact the composition of our segments for financial reporting purposes. Other costs of $1,810,000 in 2009 related to the partial sublease of our Broadspire facility in Plantation, Florida (see Note7, Commitments Under Operating Leases). In 2008, the Company recorded a pretax restructuring charge of $3,300,000. The charge consisted of $1,825,000 for severance and other costs in our International Operations segment, $300,000 for severance costs in our U.S.Property and Casualty segment, and $1,175,000 for professional fees incurred in connection with an internal restructuring of certain of the Companys legal entities in the U.S.and internationally. |