Exhibit 99.1 |
FOR IMMEDIATE RELEASE | Date: August 10, 2009 | |||
From: Jeffrey T. Bowman | ||||
Chief Executive Officer |
Crawford Reports 2009 Second Quarter Results
Revenue Increases on a Constant Dollar Basis
Company Records Non-cash Goodwill Impairment Charge
Crawford & Company (www.crawfordandcompany.com) (NYSE: CRDA and CRDB), the world’s largest independent provider of claims management solutions to insurance companies and self-insured entities, today announced its financial results for the second quarter ended June 30, 2009.
Consolidated Results
Second quarter 2009 consolidated revenues before reimbursements decreased to $249.7 million compared to $263.3 million in the 2008 second quarter due primarily to the negative effect of foreign currency changes. The second quarter 2009 net loss attributable to Crawford & Company was ($88.1) million, including a preliminary non-cash goodwill impairment charge of $94.0 million, compared to net income attributable to Crawford & Company of $7.9 million in the 2008 second quarter. The second quarter 2009 loss per share was ($1.70) compared to earnings per share of $0.16 in the prior-year quarter. Excluding the preliminary non-cash goodwill impairment charge, second quarter 2009 net income attributable to Crawford & Company was $5.9 million and earnings per share were $0.11.
During the 2009 second quarter, the Company recorded a preliminary non-cash goodwill impairment charge of $94.0 million, or $1.81 per share. This charge is not deductible for tax purposes. This charge was primarily related to declines in the Broadspire segment’s current and forecasted operating results, the impact of declining U.S. employment levels on Broadspire’s current and projected claims volume, and declines in the Company’s stock prices. This impairment charge does not affect the Company’s liquidity or cash flows and has no effect on the Company’s credit agreement or its compliance with the financial covenants under the credit agreement.
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Revenues, net income and earnings per share in the 2009 second quarter were negatively impacted by increased defined benefit pension expense, the impact of foreign currency changes, and the non-cash charge associated with the write-off of a portion of the Company’s goodwill as outlined below:
In millions, except per share amounts | Revenues before Reimbursements | Net Income (Loss) Attributable to Crawford & Company | EPS | |||||||||
2nd quarter 2008 results | $ | 263.3 | $ | 7.9 | $ | 0.16 | ||||||
(Less)/Add: | ||||||||||||
Foreign currency impact in 2009 | (24.3 | ) | (1.5 | ) | (0.03 | ) | ||||||
Increase in pension expense in 2009 | — | (3.0 | ) | (0.06 | ) | |||||||
Preliminary goodwill impairment charge in 2009 | — | (94.0 | ) | (1.81 | ) | |||||||
All other operating changes | 10.7 | 2.5 | 0.04 | |||||||||
2nd quarter 2009 results | $ | 249.7 | ($ | 88.1 | ) | ($ | 1.70 | ) | ||||
Crawford generated $3.7 million of cash from operations during the 2009 year-to-date period, compared to the $11.1 million in cash provided by operations during the 2008 period. The $7.4 million decrease was due primarily to lower earnings during 2009 before the goodwill impairment charge. The Company’s consolidated cash and cash equivalent position as of June 30, 2009 totaled $58.1 million compared to $48.3 million at June 30, 2008 and $73.1 million at December 31, 2008.
International Operations
Second quarter 2009 revenues before reimbursements for the International Operations segment declined 15.3% to $96.1 million from $113.4 million for the same period in 2008 due to the strength of the U.S. dollar. Compared to the 2008 second quarter, during the 2009 second quarter the U.S. dollar strengthened against most major foreign currencies, resulting in a negative exchange rate impact. Excluding the negative impact of exchange rate fluctuations, International revenues would have been $120.4 million in the 2009 second quarter, reflecting growth in revenues on a constant dollar basis of 6.1%. International operating expenses for the 2009 second quarter decreased by $15.1 million in U.S. dollars, a 14.6% decrease, but increased by 6.7% on a constant dollar basis, compared to the 2008 period. Operating earnings declined to $8.2 million in the 2009 second quarter, down from last year’s second quarter operating earnings of $10.4 million. The related operating margin was 8.6% in the 2009 second quarter, compared to a 9.2% operating margin in the 2008 second quarter.
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U.S. Property & Casualty
U.S. Property & Casualty revenues before reimbursements were $54.5 million in the second quarter of 2009, increasing 6.5% from $51.2 million in the 2008 second quarter. Revenues generated by the Company’s catastrophe adjuster group were $7.2 million in the 2009 second quarter, compared to $3.5 million in the 2008 period. Operating earnings in the 2009 second quarter in the U.S. Property & Casualty segment improved to $6.2 million, or an operating margin of 11.4% of revenues, compared to operating earnings of $5.1 million, or 9.9% of revenues in the 2008 second quarter. This operating earnings improvement reflected the benefits of increased catastrophe-related claims.
Broadspire
Revenues before reimbursements from the Broadspire segment were $73.1 million in the 2009 second quarter, down 7.6% from $79.1 million in the 2008 quarter. Broadspire had an operating loss of ($606,000) in the 2009 second quarter, or an operating margin of (0.8%) of revenues, compared to operating earnings of $2.5 million, or 3.2% of revenues, in the prior-year period. This decline was primarily due to lower workers’ compensation claim referrals as a result of lower U.S. employment levels. The Company’s preliminary goodwill impairment charge did not affect the segment operating results of Broadspire.
Legal Settlement Administration
Legal Settlement Administration revenues before reimbursements were $25.9 million in the 2009 second quarter, up 32.5% from $19.6 million in the 2008 quarter, reflecting the positive impact of several major bankruptcy and securities class action administration projects awarded to the Company during the 2009 second quarter. Operating earnings totaled $4.3 million in the 2009 second quarter, or an operating margin of 16.5% of revenues, compared to $3.1 million, or 16.1% of revenues, in the prior-year period. The segment’s awarded project backlog totaled a record of approximately $62.8 million at June 30, 2009.
Management’s Comments
Mr. Jeffrey T. Bowman, chief executive officer of Crawford & Company, stated, “Our second quarter 2009 operating results continue to be reflective of current global economic conditions. We, like other businesses, expect to face continued near-term macroeconomic challenges. While our reported consolidated revenues and earnings are down year-over-year, due primarily to the previously mentioned goodwill impairment charge, defined benefit pension expense increase, and negative impact of a stronger U.S. dollar in 2009, there are several encouraging areas within our businesses.
“In our U.S. Property & Casualty segment, we generated solid revenue gains and our operating margins were at double-digit levels. The performance of our core property & casualty business in the U.S. was enhanced by incremental catastrophe-related business due to severe weather in the 2009 six-month period.
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Our International Operations segment continued to exhibit organic growth as revenues were up over 6% on a constant dollar basis, led by our Canadian and Asia-Pacific regions.
“We saw the benefits of our investments in the bankruptcy processing capabilities within Legal Settlement Administration as we were awarded several bankruptcy administration projects in the 2009 second quarter. Our performance in this segment was also aided by a large securities class action case which began in the current quarter. While still a challenging market for us, we are actively pursuing emerging opportunities in both the securities and bankruptcy sectors of the market and are optimistic about our future prospects.
“Our Broadspire segment primarily handles workers’ compensation claims, and as a result, has been most affected by the current economic downturn. The current level of unemployment is resulting in significantly lower workplace-related claim volumes in the U.S. We are targeting our sales and marketing efforts in this segment to drive market share gains to counteract the industry-wide claims decline. Despite the impairment charge taken in the second quarter, we remain very optimistic about the future of this business.
“Operating cash flow for the year-to-date period turned positive in the second quarter. Historically, our cash requirements are highest in the first quarter and cash balances replenish over the course of the year. We are continuing to drive our Company to improve its working capital profile, primarily by focusing on better management of processes related to unbilled revenues and accounts receivable and we expect improvement in this area over the balance of the year.”
Mr. Bowman concluded, “Before the impairment charge, our operating results for the 2009 second quarter showed improvement over our first quarter results, even as the global economy remained weak. We remain committed to managing our operations toward improved operating performance and market share expansion, and are focusing significant attention on our cost base across the entire organization to ensure we are operating as efficiently as possible.”
2009 Guidance
Crawford & Company updated the components of its previously issued guidance for 2009, added guidance for consolidated cash provided by operating activities, and reaffirmed its earnings per share guidance as follows:
• | Consolidated revenues before reimbursements between $960 million and $980 million. |
• | Consolidated operating earnings between $52.5 million and $57.8 million. |
• | Consolidated cash provided by operating activities between $35.0 million and $40.0 million. |
• | After reflecting stock-based compensation expense, net corporate interest expense, customer-relationship intangible asset amortization expense, special charges and credits, and income taxes, |
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net loss attributable to Crawford & Company on a GAAP basis between ($72.0) million and ($69.0) million, or ($1.40) to ($1.34) loss per share.
• | Before reflecting the special charge related to the preliminary goodwill impairment, net income attributable to Crawford & Company on a non-GAAP basis between $22.0 million and $25.0 million, or $0.41 to $0.47 diluted earnings per share. |
Crawford & Company’s management will host a conference call with investors on Monday, August 10, 2009 at 3:00P.M. EDT to discuss earnings and other developments. The call will be recorded and available for replay through August 18, 2009. You may dial 1-800-642-1687 (706-645-9291 international) to listen to the replay. The access code is 21519530. Alternatively, please visit our web site at www.crawfordandcompany.com for a live audio web cast and related financial presentation.
Further information regarding the Company’s financial position, operating results, and cash flows for the quarter and six-month periods ended June 30, 2009 is shown on the attached condensed consolidated unaudited financial statements. Operating earnings (a non-GAAP financial measure) is the key financial performance measure used by the Company’s senior management to evaluate the performance of its segments and make resource allocation decisions. The Company believes this measure is useful to investors in that it allows them to evaluate operating performance using the same criteria that management uses. Operating earnings represent net income (loss) attributable to Crawford & Company excluding net corporate interest expense, stock option expense, income tax expense, amortization of customer relationship intangible assets, unallocated corporate and shared costs, and certain other charges and credits. Net corporate interest expense, stock option expense and income taxes are recurring components of the Company’s net income (loss), but they are not considered part of operating earnings since they are managed on a corporate-wide basis. Net corporate interest expense results from capital structure decisions made by the Company, stock option expense relates to historically granted stock options and employee stock purchase plan expenses which are not allocated to operating segments, and income taxes are based on statutory rates in effect in each of the locations where the Company provides services, and vary throughout the world. Amortization expense relates to non-cash amortization of customer relationship intangible assets resulting from business combinations. These costs are not allocated to the segments for assessing performance. None of the aforementioned costs relate directly to the Company’s products or the performance of the Company’s services and are therefore excluded in order to accurately assess the results of segment operating activities on a consistent basis. Certain other credits and charges represent events (gains on disposal of assets, restructuring activities, goodwill impairment, etc.) that are not considered part of segment operating earnings since they historically have not regularly impacted the Company’s operating performance and are not expected to regularly impact future performance. Following is a reconciliation of segment operating earnings (loss) to net income (loss) attributable to Crawford & Company on a GAAP basis and the related margins as a percentage of revenues before reimbursements for all periods presented:
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Quarter ended | Year-to-date period ended | |||||||||||||||||||||||||||
June 30, 2009 | % Margin | June 30, 2008 | % Margin | June 30, 2009 | % Margin | June 30, 2008 | % Margin | |||||||||||||||||||||
Operating Earnings (Loss): | ||||||||||||||||||||||||||||
U.S. property & casualty | $ | 6,218 | 11.4 | % | $ | 5,092 | 9.9 | % | $ | 12,388 | 11.3 | % | $ | 11,041 | 11.0 | % | ||||||||||||
International operations | 8,220 | 8.6 | 10,446 | 9.2 | 15,685 | 8.4 | 19,433 | 8.8 | ||||||||||||||||||||
Broadspire | (606 | ) | (0.8 | ) | 2,540 | 3.2 | (2,560 | ) | (1.7 | ) | 4,287 | 2.7 | ||||||||||||||||
Legal settlement administration | 4,287 | 16.5 | 3,142 | 16.1 | 5,814 | 14.0 | 5,639 | 14.6 | ||||||||||||||||||||
Unallocated corporate and shared costs | (5,295 | ) | (2.1 | ) | (2,061 | ) | (0.8 | ) | (7,270 | ) | (1.5 | ) | (1,410 | ) | (0.3 | ) | ||||||||||||
Add/(Deduct): | ||||||||||||||||||||||||||||
Other charges | — | — | — | — | (1,815 | ) | (0.4 | ) | — | — | ||||||||||||||||||
Goodwill impairment | (94,000 | ) | (37.7 | ) | — | — | (94,000 | ) | (19.4 | ) | — | — | ||||||||||||||||
Stock option expense | (197 | ) | (0.1 | ) | (279 | ) | (0.1 | ) | (430 | ) | (0.1 | ) | (474 | ) | (0.1 | ) | ||||||||||||
Amortization expense | (1,496 | ) | (0.6 | ) | (1,506 | ) | (0.6 | ) | (2,994 | ) | (0.6 | ) | (3,014 | ) | (0.6 | ) | ||||||||||||
Net corporate interest expense | (3,640 | ) | (1.5 | ) | (4,656 | ) | (1.8 | ) | (7,125 | ) | (1.5 | ) | (9,072 | ) | (1.7 | ) | ||||||||||||
Income taxes | (1,615 | ) | (0.6 | ) | (4,786 | ) | (1.8 | ) | (2,735 | ) | (0.6 | ) | (9,430 | ) | (1.8 | ) | ||||||||||||
Net income (loss) attributable to Crawford & Company | ($ | 88,124 | ) | (35.3 | ) | $ | 7,932 | 3.0 | ($ | 85,042 | ) | (17.5 | ) | $ | 17,000 | 3.3 | ||||||||||||
Based in Atlanta, Georgia, Crawford & Company (www.crawfordandcompany.com) is the world’s largest independent provider of claims management and related 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. Major service lines include property and casualty claims management; warranty inspections; integrated claims and medical management for workers’ compensation; legal settlement administration, including class action and bankruptcy claims administration; and risk management information services. The Company’s shares are traded on the NYSE under the symbols CRDA and CRDB.
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This press release contains forward-looking statements, including statements about the financial condition, results of operations and earnings outlook of Crawford & Company. Statements, both qualitative and quantitative, that are not historical facts may be “forward-looking” statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from historical experience or Crawford & Company’s present expectations. Accordingly, no one should place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Crawford & Company does not undertake to update forward-looking statements to reflect the impact of circumstances or events that may arise or not arise after the date the forward-looking statements are made. For further information regarding Crawford & Company, including factors that could cause our actual financial condition, results or earnings to differ from those described in any forward-looking statements, please read Crawford & Company’s reports filed with the United States Securities and Exchange Commission and available at www.sec.gov or in the Investor Relations section of Crawford & Company’s website at www.crawfordandcompany.com. |
FOR FURTHER INFORMATION REGARDING THIS PRESS RELEASE, PLEASE CALL BRUCE SWAIN AT (404) 300-1051.
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CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In Thousands, Except Earnings Per Share Amounts and Percentages)
Six Months Ended June 30 | 2009 | 2008 | % Change | ||||||||
Revenues: | |||||||||||
Revenues Before Reimbursements | $ | 485,747 | $ | 518,777 | -6 | % | |||||
Reimbursements | 36,179 | 45,162 | -20 | % | |||||||
Total Revenues | 521,926 | 563,939 | -7 | % | |||||||
Costs and Expenses: | |||||||||||
Costs of Services Before Reimbursements | 359,046 | 376,414 | -5 | % | |||||||
Reimbursements | 36,179 | 45,162 | -20 | % | |||||||
Total Cost of Services | 395,225 | 421,576 | -6 | % | |||||||
Selling, General, and Administrative | 105,902 | 106,707 | -1 | % | |||||||
Corporate Interest Expense, Net | 7,125 | 9,072 | -21 | % | |||||||
Restructuring Costs | 1,815 | — | nm | ||||||||
Goodwill Impairment Charge | 94,000 | — | nm | ||||||||
Total Costs and Expenses | 604,067 | 537,355 | 12 | % | |||||||
(Loss) Income Before Income Taxes | (82,141 | ) | 26,584 | nm | �� | ||||||
Provision for Income Taxes | 2,735 | 9,430 | -71 | % | |||||||
Net (Loss) Income | (84,876 | ) | 17,154 | nm | |||||||
Less: Net Income Attributable to Noncontrolling Interests | (166 | ) | (154 | ) | 8 | % | |||||
Net (Loss) Income Attributable to Crawford & Company | ($ | 85,042 | ) | $ | 17,000 | nm | |||||
(Loss) Earnings Per Share - Basic and Diluted | ($ | 1.65 | ) | $ | 0.33 | nm | |||||
Weighted-average Shares Used in Calculating: | |||||||||||
Basic (Loss) Earnings Per Share | 51,625 | 50,808 | |||||||||
Diluted (Loss) Earnings Per Share | 51,625 | 50,891 | |||||||||
nm = not meaningful
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CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In Thousands, Except Earnings Per Share Amounts and Percentages)
Three Months Ended June 30 | 2009 | 2008 | % Change | ||||||||
Revenues: | |||||||||||
Revenues Before Reimbursements | $ | 249,664 | $ | 263,265 | -5 | % | |||||
Reimbursements | 21,979 | 26,001 | -15 | % | |||||||
Total Revenues | 271,643 | 289,266 | -6 | % | |||||||
Costs and Expenses: | |||||||||||
Costs of Services Before Reimbursements | 183,884 | 189,461 | -3 | % | |||||||
Reimbursements | 21,979 | 26,001 | -15 | % | |||||||
Total Cost of Services | 205,863 | 215,462 | -4 | % | |||||||
Selling, General, and Administrative | 54,414 | 56,204 | -3 | % | |||||||
Corporate Interest Expense, Net | 3,640 | 4,656 | -22 | % | |||||||
Goodwill Impairment Charge | 94,000 | — | nm | ||||||||
Total Costs and Expenses | 357,917 | 276,322 | 30 | % | |||||||
(Loss) Income Before Income Taxes | (86,274 | ) | 12,944 | nm | |||||||
Provision for Income Taxes | 1,615 | 4,786 | -66 | % | |||||||
Net (Loss) Income | (87,889 | ) | 8,158 | nm | |||||||
Less: Net Income Attributable to Noncontrolling Interests | (235 | ) | (226 | ) | 4 | % | |||||
Net (Loss) Income Attributable to Crawford & Company | ($ | 88,124 | ) | $ | 7,932 | nm | |||||
(Loss) Earnings Per Share - Basic and Diluted | ($ | 1.70 | ) | $ | 0.16 | nm | |||||
Weighted-average Shares Used in Calculating: | |||||||||||
Basic (Loss) Earnings Per Share | 51,877 | 50,888 | |||||||||
Diluted (Loss) Earnings Per Share | 51,877 | 50,986 | |||||||||
nm = not meaningful
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CRAWFORD & COMPANY
SUMMARY RESULTS BY OPERATING SEGMENT
Six Months Ended June 30
Unaudited
(In Thousands, Except Percentages)
U.S. Property & Casualty | % Change | International | % Change | Broadspire | % Change | Legal Settlement Administration | % Change | |||||||||||||||||||||||||||||||||||||
2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | |||||||||||||||||||||||||||||||||||||
Revenues Before Reimbursements | $ | 109,599 | $ | 100,708 | 8.8 | % | $ | 186,999 | $ | 220,143 | -15.1 | % | $ | 147,657 | $ | 159,378 | -7.4 | % | $ | 41,492 | $ | 38,548 | 7.6 | % | ||||||||||||||||||||
Compensation & Benefits | 64,992 | 62,162 | 4.6 | % | 130,090 | 150,336 | -13.5 | % | 83,771 | 89,120 | -6.0 | % | 17,836 | 18,077 | -1.3 | % | ||||||||||||||||||||||||||||
% of Revenues Before Reimbursements | 59.3 | % | 61.7 | % | 69.6 | % | 68.3 | % | 56.7 | % | 55.9 | % | 43.0 | % | 46.9 | % | ||||||||||||||||||||||||||||
Expenses Other than Reimbursements, | ||||||||||||||||||||||||||||||||||||||||||||
Compensation & Benefits | 32,219 | 27,505 | 17.1 | % | 41,224 | 50,374 | -18.2 | % | 66,446 | 65,971 | 0.7 | % | 17,842 | 14,832 | 20.3 | % | ||||||||||||||||||||||||||||
% of Revenues Before Reimbursements | 29.4 | % | 27.3 | % | 22.0 | % | 22.9 | % | 45.0 | % | 41.4 | % | 43.0 | % | 38.5 | % | ||||||||||||||||||||||||||||
�� | ||||||||||||||||||||||||||||||||||||||||||||
Total Operating Expenses | 97,211 | 89,667 | 8.4 | % | 171,314 | 200,710 | -14.6 | % | 150,217 | 155,091 | -3.1 | % | 35,678 | 32,909 | 8.4 | % | ||||||||||||||||||||||||||||
Operating Earnings (Loss) (1) | $ | 12,388 | $ | 11,041 | 12.2 | % | $ | 15,685 | $ | 19,433 | -19.3 | % | ($ | 2,560 | ) | $ | 4,287 | -159.7 | % | $ | 5,814 | $ | 5,639 | 3.1 | % | |||||||||||||||||||
% of Revenues Before Reimbursements | 11.3 | % | 11.0 | % | 8.4 | % | 8.8 | % | -1.7 | % | 2.7 | % | 14.0 | % | 14.6 | % | ||||||||||||||||||||||||||||
Three Months Ended June 30 | ||||||||||||||||||||||||||||||||||||||||||||
Unaudited | ||||||||||||||||||||||||||||||||||||||||||||
(In Thousands, Except Percentages) | ||||||||||||||||||||||||||||||||||||||||||||
U.S. Property & Casualty | % Change | International | % Change | Broadspire | % Change | Legal Settlement Administration | % Change | |||||||||||||||||||||||||||||||||||||
2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | |||||||||||||||||||||||||||||||||||||
Revenues Before Reimbursements | $ | 54,547 | $ | 51,198 | 6.5 | % | $ | 96,127 | $ | 113,433 | -15.3 | % | $ | 73,056 | $ | 79,065 | -7.6 | % | $ | 25,934 | $ | 19,569 | 32.5 | % | ||||||||||||||||||||
Compensation & Benefits | 32,561 | 31,585 | 3.1 | % | 65,582 | 76,479 | -14.2 | % | 40,950 | 43,706 | -6.3 | % | 9,821 | 8,808 | 11.5 | % | ||||||||||||||||||||||||||||
% of Revenues Before Reimbursements | 59.7 | % | 61.7 | % | 68.2 | % | 67.4 | % | 56.1 | % | 55.3 | % | 37.9 | % | 45.0 | % | ||||||||||||||||||||||||||||
Expenses Other than Reimbursements, | ||||||||||||||||||||||||||||||||||||||||||||
Compensation & Benefits | 15,768 | 14,521 | 8.6 | % | 22,325 | 26,508 | -15.8 | % | 32,712 | 32,819 | -0.3 | % | 11,826 | 7,619 | 55.2 | % | ||||||||||||||||||||||||||||
% of Revenues Before Reimbursements | 28.9 | % | 28.4 | % | 23.2 | % | 23.4 | % | 44.7 | % | 41.5 | % | 45.6 | % | 38.9 | % | ||||||||||||||||||||||||||||
Total Operating Expenses | 48,329 | 46,106 | 4.8 | % | 87,907 | 102,987 | -14.6 | % | 73,662 | 76,525 | -3.7 | % | 21,647 | 16,427 | 31.8 | % | ||||||||||||||||||||||||||||
Operating Earnings (Loss) (1) | $ | 6,218 | $ | 5,092 | 22.1 | % | $ | 8,220 | $ | 10,446 | -21.3 | % | ($ | 606 | ) | $ | 2,540 | -123.9 | % | $ | 4,287 | $ | 3,142 | 36.4 | % | |||||||||||||||||||
% of Revenues Before Reimbursements | 11.4 | % | 9.9 | % | 8.6 | % | 9.2 | % | -0.8 | % | 3.2 | % | 16.5 | % | 16.1 | % | ||||||||||||||||||||||||||||
(1) | A non-GAAP financial measurement which represents net income attributable to Crawford & Company excluding net corporate interest expense, amortization of customer-relationship intangible assets, stock option expense, income tax expense, unallocated corporate and shared costs, restructuring costs, and preliminary goodwill impairment charge. See page 6 for a reconciliation of Operating Earnings to Net (Loss) Income computed in accordance with GAAP. |
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CRAWFORD & COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
As of June 30, 2009 and December 31, 2008
(In Thousands)
Unaudited June 30 2009 | * December 31 2008 | |||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash and Cash Equivalents | $ | 58,100 | $ | 73,124 | ||||
Accounts Receivable, Net | 149,099 | 157,430 | ||||||
Unbilled Revenues, Net | 101,393 | 99,115 | ||||||
Prepaid Expenses and Other Current Assets | 17,912 | 18,688 | ||||||
Total Current Assets | 326,504 | 348,357 | ||||||
Property and Equipment | 142,021 | 140,399 | ||||||
Less Accumulated Depreciation | (99,267 | ) | (95,785 | ) | ||||
Net Property and Equipment | 42,754 | 44,614 | ||||||
Other Assets: | ||||||||
Goodwill | 161,016 | 251,897 | ||||||
Intangible Assets Arising from Business Acquisitions, Net | 107,902 | 111,389 | ||||||
Capitalized Software Costs, Net | 46,921 | 46,296 | ||||||
Deferred Income Tax Assets, Net | 66,627 | 67,695 | ||||||
Other Noncurrent Assets | 25,593 | 25,000 | ||||||
Total Other Assets | 408,059 | 502,277 | ||||||
Total Assets | $ | 777,317 | $ | 895,248 | ||||
Liabilities and Shareholders’ Investment | ||||||||
Current Liabilities: | ||||||||
Short-Term Borrowings | $ | 12,732 | $ | 13,366 | ||||
Accounts Payable | 39,882 | 40,711 | ||||||
Accrued Compensation and Related Costs | 56,996 | 77,802 | ||||||
Other Accrued Current Liabilities | 58,368 | 56,978 | ||||||
Self-Insured Risks | 18,884 | 17,939 | ||||||
Accrued Income Taxes | 8,061 | 9,937 | ||||||
Deferred Revenues | 58,647 | 59,679 | ||||||
Current Installments of Long-Term Debt and Capital Leases | 2,289 | 2,284 | ||||||
Total Current Liabilities | 255,859 | 278,696 | ||||||
Noncurrent Liabilities: | ||||||||
Long-Term Debt and Capital Leases, Less Current Installments | 180,066 | 181,206 | ||||||
Deferred Revenues | 37,405 | 42,795 | ||||||
Self-Insured Risks | 18,814 | 18,531 | ||||||
Accrued Pension Liabilities | 176,150 | 179,542 | ||||||
Other Noncurrent Liabilities | 13,464 | 14,119 | ||||||
Total Noncurrent Liabilities | 425,899 | 436,193 | ||||||
Shareholders’ Investment: | ||||||||
Class A Common Stock, $1.00 Par Value | 27,219 | 26,523 | ||||||
Class B Common Stock, $1.00 Par Value | 24,697 | 24,697 | ||||||
Additional Paid-in Capital | 26,612 | 26,342 | ||||||
Retained Earnings | 171,104 | 256,146 | ||||||
Accumulated Other Comprehensive Loss | (158,622 | ) | (158,157 | ) | ||||
Total Crawford & Company Shareholders’ Investment | 91,010 | 175,551 | ||||||
Noncontrolling Interests | 4,549 | 4,808 | ||||||
Total Shareholders’ Investment | 95,559 | 180,359 | ||||||
Total Liabilities and Shareholders’ Investment | $ | 777,317 | $ | 895,248 | ||||
* | Derived from the audited Consolidated Balance Sheet |
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CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 2009 and June 30, 2008
Unaudited
(In Thousands)
2009 | 2008 | |||||||
Cash Flows From Operating Activities: | ||||||||
Net (Loss) Income | $ | (84,876 | ) | $ | 17,154 | |||
Reconciliation of Net (Loss) Income to Net Cash Provided By Operating Activities: | ||||||||
Depreciation and Amortization | 15,568 | 14,837 | ||||||
Goodwill Impairment Charge | 94,000 | — | ||||||
Stock-Based Compensation | 2,841 | 2,834 | ||||||
Loss on Sales of Property and Equipment, Net | 40 | 20 | ||||||
Changes in Operating Assets and Liabilities, Net of Effects of Acquisitions and Dispositions: | ||||||||
Accounts Receivable, net | 8,645 | (11,438 | ) | |||||
Unbilled Revenues, net | (2,593 | ) | 4,393 | |||||
Accrued Income Taxes | (2,723 | ) | 6,591 | |||||
Accounts Payable and Accrued Liabilities | (13,409 | ) | (471 | ) | ||||
Deferred Revenues | (6,189 | ) | (9,274 | ) | ||||
Retirement Plan Liabilities | (6,124 | ) | (11,841 | ) | ||||
Prepaid Expenses and Other Operating Activities | (1,504 | ) | (1,740 | ) | ||||
Net Cash Provided By Operating Activities | 3,676 | 11,065 | ||||||
Cash Flows From Investing Activities: | ||||||||
Acquisitions of Property and Equipment, net | (4,614 | ) | (4,994 | ) | ||||
Capitalization of Computer Software Costs | (6,780 | ) | (8,028 | ) | ||||
Other Investing Activities | (1,089 | ) | (204 | ) | ||||
Net Cash Used In Investing Activities | (12,483 | ) | (13,226 | ) | ||||
Cash Flows From Financing Activities: | ||||||||
Shares used to settle withholding taxes under stock-based compensation plans | (1,888 | ) | (20 | ) | ||||
(Decrease) Increase in Short-Term Borrowings, net | (358 | ) | 757 | |||||
Payments on Long-Term Debt and Capital Lease Obligations | (1,213 | ) | (1,331 | ) | ||||
Capitalized Loan Costs | (944 | ) | — | |||||
Other Financing Activities | 26 | (84 | ) | |||||
Net Cash Used In Financing Activities | (4,377 | ) | (678 | ) | ||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents | (1,840 | ) | 330 | |||||
Decrease in Cash and Cash Equivalents | (15,024 | ) | (2,509 | ) | ||||
Cash and Cash Equivalents at Beginning of Period | 73,124 | 50,855 | ||||||
Cash and Cash Equivalents at End of Period | $ | 58,100 | $ | 48,346 | ||||
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