Statement Of Income Alternative
Statement Of Income Alternative (USD $) | ||||
In Thousands, except Per Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Revenues: | ||||
Revenues before reimbursements | $249,664 | $263,265 | $485,747 | $518,777 |
Reimbursements | 21,979 | 26,001 | 36,179 | 45,162 |
Total Revenues | 271,643 | 289,266 | 521,926 | 563,939 |
Costs and Expenses: | ||||
Costs of services provided, before reimbursements | 183,884 | 189,461 | 359,046 | 376,414 |
Reimbursements | 21,979 | 26,001 | 36,179 | 45,162 |
Total cost of services | 205,863 | 215,462 | 395,225 | 421,576 |
Selling, general, and administrative expenses | 54,414 | 56,204 | 105,902 | 106,707 |
Corporate interest expense, net of interest income of $1,066 and $885, respectively | 3,640 | 4,656 | 7,125 | 9,072 |
Restructuring costs | 1,815 | 0 | ||
Goodwill impairment charge | 94,000 | 0 | 94,000 | 0 |
Total Costs and Expenses | 357,917 | 276,322 | 604,067 | 537,355 |
(Loss) Income before Income Taxes | (86,274) | 12,944 | (82,141) | 26,584 |
Provision for Income Taxes | 1,615 | 4,786 | 2,735 | 9,430 |
Net (Loss) Income | (87,889) | 8,158 | (84,876) | 17,154 |
Less: Net Income Attributable to Noncontrolling Interests | (235) | (226) | (166) | (154) |
Net (Loss) Income Attributable to Crawford & Company | ($88,124) | $7,932 | ($85,042) | $17,000 |
(Loss) Earnings Per Share, Based on Net (Loss) Income Attributable to Crawford & Company: | ||||
Basic and Diluted | -1.7 | 0.16 | -1.65 | 0.33 |
Average Number of Shares Used to Compute: | ||||
Basic (Loss) Earnings Per Share | 51,877 | 50,888 | 51,625 | 50,808 |
Diluted (Loss) Earnings Per Share | 51,877 | 50,986 | 51,625 | 50,891 |
1_Statement Of Income Alternati
Statement Of Income Alternative (Parenthetical) (USD $) | ||||
In Thousands | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Corporate interest expense, interest income | $486 | $311 | $1,066 | $885 |
Statement Of Financial Position
Statement Of Financial Position Classified (USD $) | |||||||||||||||||||
In Thousands | Jun. 30, 2009
| Dec. 31, 2008
| |||||||||||||||||
Current Assets: | |||||||||||||||||||
Cash and cash equivalents | $58,100 | $73,124 | [1] | ||||||||||||||||
Accounts receivable, less allowance for doubtful accounts of $11,598 and $12,341, respectively | 149,099 | 157,430 | [1] | ||||||||||||||||
Unbilled revenues, at estimated billable amounts | 101,393 | 99,115 | [1] | ||||||||||||||||
Prepaid expenses and other current assets | 17,912 | 18,688 | [1] | ||||||||||||||||
Total current assets | 326,504 | 348,357 | [1] | ||||||||||||||||
Property and Equipment: | |||||||||||||||||||
Property and equipment | 142,021 | 140,399 | [1] | ||||||||||||||||
Less accumulated depreciation | (99,267) | (95,785) | [1] | ||||||||||||||||
Net property and equipment | 42,754 | 44,614 | [1] | ||||||||||||||||
Other Assets: | |||||||||||||||||||
Goodwill | 161,016 | 251,897 | [1] | ||||||||||||||||
Intangible assets arising from business acquisitions, net | 107,902 | 111,389 | [1] | ||||||||||||||||
Capitalized software costs, net | 46,921 | 46,296 | [1] | ||||||||||||||||
Deferred income tax assets | 66,627 | 67,695 | [1] | ||||||||||||||||
Other noncurrent assets | 25,593 | 25,000 | [1] | ||||||||||||||||
Total other assets | 408,059 | 502,277 | [1] | ||||||||||||||||
TOTAL ASSETS | 777,317 | 895,248 | [1] | ||||||||||||||||
Current Liabilities: | |||||||||||||||||||
Short-term borrowings | 12,732 | 13,366 | [1] | ||||||||||||||||
Accounts payable | 39,882 | 40,711 | [1] | ||||||||||||||||
Accrued compensation and related costs | 56,996 | 77,802 | [1] | ||||||||||||||||
Deferred revenues | 58,647 | 59,679 | [1] | ||||||||||||||||
Self-insured risks | 18,884 | 17,939 | [1] | ||||||||||||||||
Accrued income taxes | 8,061 | 9,937 | [1] | ||||||||||||||||
Other accrued liabilities | 58,368 | 56,978 | [1] | ||||||||||||||||
Current installments of long-term debt and capital leases | 2,289 | 2,284 | [1] | ||||||||||||||||
Total current liabilities | 255,859 | 278,696 | [1] | ||||||||||||||||
Noncurrent Liabilities: | |||||||||||||||||||
Long-term debt and capital leases, less current installments | 180,066 | 181,206 | [1] | ||||||||||||||||
Deferred revenues | 37,405 | 42,795 | [1] | ||||||||||||||||
Self-insured risks | 18,814 | 18,531 | [1] | ||||||||||||||||
Accrued pension liabilities | 176,150 | 179,542 | [1] | ||||||||||||||||
Other noncurrent liabilities | 13,464 | 14,119 | [1] | ||||||||||||||||
Total noncurrent liabilities | 425,899 | 436,193 | [1] | ||||||||||||||||
Shareholders' Investment: | |||||||||||||||||||
Additional paid-in capital | 26,612 | 26,342 | [1] | ||||||||||||||||
Retained earnings | 171,104 | 256,146 | [1] | ||||||||||||||||
Accumulated other comprehensive loss | (158,622) | (158,157) | [1] | ||||||||||||||||
Total Crawford & Company Shareholders' Investment | 91,010 | 175,551 | [1] | ||||||||||||||||
Noncontrolling interests | 4,549 | 4,808 | [1] | ||||||||||||||||
Total shareholders' investment | 95,559 | 180,359 | [1] | ||||||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT | 777,317 | 895,248 | [1] | ||||||||||||||||
Class A common stock | |||||||||||||||||||
Shareholders' Investment: | |||||||||||||||||||
Total shareholders' investment | 27,219 | 26,523 | |||||||||||||||||
Common stock | 27,219 | 26,523 | [1] | ||||||||||||||||
Class B common stock | |||||||||||||||||||
Shareholders' Investment: | |||||||||||||||||||
Total shareholders' investment | 24,697 | 24,697 | |||||||||||||||||
Common stock | $24,697 | $24,697 | [1] | ||||||||||||||||
[1]derived from the audited Consolidated Balance Sheet. |
2_Statement Of Financial Positi
Statement Of Financial Position Classified (Parenthetical) (USD $) | |||||||||||||||||||
In Thousands | Jun. 30, 2009
| Dec. 31, 2008
| |||||||||||||||||
Accounts receivable, allowance for doubtful accounts | $11,598 | $12,341 | [1] | ||||||||||||||||
Class A common stock | |||||||||||||||||||
Common stock, par value | $1 | $1 | [1] | ||||||||||||||||
Common stock, shares authorized | 50,000 | 50,000 | [1] | ||||||||||||||||
Common stock, shares issued | 27,219 | 26,523 | [1] | ||||||||||||||||
Common stock, shares outstanding | 27,219 | 26,523 | [1] | ||||||||||||||||
Class B common stock | |||||||||||||||||||
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. |
Statement Of Cash Flows Indirec
Statement Of Cash Flows Indirect (USD $) | |||||||||||||||||||
In Thousands | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 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 | 0 | |||||||||||||||||
Loss on sales of property and equipment, net | 40 | 20 | |||||||||||||||||
Stock-based compensation | 2,841 | 2,834 | |||||||||||||||||
Changes in operating assets and liabilities, net of effects of acquisition: | |||||||||||||||||||
Accounts receivable, net | 8,645 | (11,438) | |||||||||||||||||
Unbilled revenues, net | (2,593) | 4,393 | |||||||||||||||||
Accrued or prepaid income taxes | (2,723) | 6,591 | |||||||||||||||||
Accounts payable and accrued liabilities | (13,409) | (471) | |||||||||||||||||
Deferred revenues | (6,189) | (9,274) | |||||||||||||||||
Accrued retirement costs | (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 | (4,630) | (5,209) | |||||||||||||||||
Proceeds from sales of property and equipment | 16 | 215 | |||||||||||||||||
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) | |||||||||||||||||
Increases in short-term borrowings | 15,086 | 29,726 | |||||||||||||||||
Payments on short-term borrowings | (15,444) | (28,969) | |||||||||||||||||
Payments on long-term debt and capital lease obligations | (1,213) | (1,331) | |||||||||||||||||
Capitalized loan costs | (944) | 0 | |||||||||||||||||
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 year | 73,124 | [1] | 50,855 | ||||||||||||||||
Cash and cash equivalents at end of period | $58,100 | $48,346 | |||||||||||||||||
[1]derived from the audited Consolidated Balance Sheet. |
Statement Of Shareholders Equit
Statement Of Shareholders Equity And Other Comprehensive Income (USD $) | |||||||||||||||||||
In Thousands | Additional Paid-In Capital
| Accumulated Other Comprehensive Income [Member]
| Class A common stock
| Class B common stock
| Retained Earnings
| Noncontrolling Interests
| Total
| ||||||||||||
Beginning Balance at Dec. 31, 2007 | $19,057 | [1] | ($39,267) | [1] | $25,935 | [1] | $24,697 | [1] | $223,793 | [1] | $5,046 | [1] | $259,261 | [1] | |||||
Comprehensive (loss) - Note 5 | (5,686) | 9,068 | (57) | 3,325 | |||||||||||||||
Adoption of SFAS 158 | 94 | 94 | |||||||||||||||||
Dividends paid to noncontrolling interest | (90) | (90) | |||||||||||||||||
Stock-based compensation | 962 | 962 | |||||||||||||||||
Common stock activity, net | (276) | 256 | (20) | ||||||||||||||||
Ending Balance at Mar. 31, 2008 | 19,743 | (44,953) | 26,191 | 24,697 | 232,955 | 4,899 | 263,532 | ||||||||||||
Comprehensive (loss) - Note 5 | 4,134 | 7,932 | 245 | 12,311 | |||||||||||||||
Stock-based compensation | 1,872 | 1,872 | |||||||||||||||||
Common stock activity, net | 4 | 1 | 5 | ||||||||||||||||
Ending Balance at Jun. 30, 2008 | 21,619 | (40,819) | 26,192 | 24,697 | 240,887 | 5,144 | 277,720 | ||||||||||||
Beginning Balance at Dec. 31, 2008 | 26,342 | [1] | (158,157) | [1] | 256,146 | [1] | 4,808 | [1] | 180,359 | [1] | |||||||||
Comprehensive (loss) - Note 5 | (13,833) | 3,082 | (653) | (11,404) | |||||||||||||||
Stock-based compensation | 1,595 | 1,595 | |||||||||||||||||
Common stock activity, net | (2,512) | 626 | (1,886) | ||||||||||||||||
Ending Balance at Mar. 31, 2009 | 25,425 | (171,990) | 27,149 | 24,697 | 259,228 | 4,155 | 168,664 | ||||||||||||
Comprehensive (loss) - Note 5 | 13,368 | (88,124) | 394 | (74,362) | |||||||||||||||
Stock-based compensation | 1,246 | 1,246 | |||||||||||||||||
Common stock activity, net | (59) | 70 | 11 | ||||||||||||||||
Ending Balance at Jun. 30, 2009 | $26,612 | ($158,622) | $171,104 | $4,549 | $95,559 | ||||||||||||||
[1]derived from the audited Consolidated Balance Sheet. |
Notes to Financial Statements
Notes to Financial Statements | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
1. 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 Article 10 of Regulation S-X promulgated by the United States Securities and Exchange Commission. 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 six months ended June30, 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 under the provisions of Accounting Research Bulletin No.51, Consolidated Financial Statements (ARB 51), in order to provide sufficient time for accumulation of their results. The Company uses the provisions of Financial Accounting Standards Board (FASB) Interpretation No.46-Revised, Consolidation of Variable Interest Entities, an Interpretation of ARB No.51 (FIN 46R), and related interpretations for identifying a variable interest entity (VIE) and determining when the Company 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 under FIN 46R. At June30, 2009 and December31, 2008, the liabilities of this deferred compensation plan were $8,308,000 and $7,621,000, respectively, and the values of the assets held in the related rabbi trust were $13,316,000 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 six months ended June30, 2009 or 2 |
2. Interim Impairment Testing and Preliminary Noncash Goodwill Impairment Charge | 2. Interim Impairment Testing and Preliminary Noncash Goodwill Impairment Charge Due to declines in Broadspires current and forecasted operating results, the impact that declining U.S. employment levels have had on Broadspire, and the recent weakness in the Companys stock prices, the Company performed an interim impairment analysis for all four of its reporting units as of June30, 2009. In connection therewith, the Company updated its forecast of the present value of expected future cash flows for each reporting unit and reconciled the sum of the estimated fair values of the reporting units to the Companys current market capitalization plus an estimated control premium and the estimated fair values of the Companys long-term note payable and its liability for the underfunded portion of its frozen U.S. defined benefit pension plan. The discount rate utilized in estimating the fair values of the Companys reporting units was 15% for Broadspire and 13% for the other reporting units, reflecting managements assessment of a market participants view of the risks associated with the projected cash flows for each respective reporting unit. The terminal growth rate used in the analysis of the Broadspire reporting unit and segment was 3%. This preliminary impairment analysis indicated that the carrying value of the Broadspire segment exceeded its estimated fair value. Step 2 of the impairment testing model involves comparing the fair value of all assets, other than goodwill, and liabilities in the reporting unit to the overall fair value of the reporting unit. The difference is the implied fair value of goodwill. If the implied fair value of goodwill is less than the carrying value of goodwill, an impairment charge is recorded for the difference. The Company has not completed all of the necessary detailed fair value estimates involved in determining the implied fair value of the goodwill of Broadspire. However, based on the work performed to date, the Company has concluded that an impairment loss is probable and can be reasonably estimated. Accordingly, the Company estimated and recorded a preliminary noncash goodwill impairment charge of $94,000,000, or $(1.81) per share, which represented the Companys best estimate of the resulting goodwill impairment. Prior to this impairment charge, the amount of goodwill attributable to the Broadspire segment and reported on the Companys consolidated balance sheet was $140,344,000. Any revision to the preliminary goodwill impairment charge will be recorded during the three months ending September30, 2009, and the Company currently does not expect such revision to exceed an additional $10,000,000, or $(0.19) per share. The preliminary goodwill impairment charge and any future revisions are not deductible by the Company for income tax purposes. The goodwill impairment charge does not violate any covenants in the Companys amended Credit Agreement. |
3. Adoption of New Accounting Standards | 3. Adoption of New Accounting Standards SFAS 161 On January1, 2009, the Company adopted FASB Statement No.161, Disclosures about Derivative Instruments and Hedging Activities, an Amendment of FASB Statement No.133 (SFAS 161). SFAS 161 applies to all derivative instruments and related hedged items accounted for under FASB Statement No.133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133). SFAS 161 amended SFAS 133 by requiring expanded disclosures about an entitys derivative instruments and hedging activities, but did not change the scope of SFAS 133 or its accounting requirements. SFAS 161 also amended Accounting Principles Board (APB) Opinion No.28, Interim Financial Reporting (APB 28), by requiring interim financial statements to include certain disclosures for derivative instruments and hedging activities. Since SFAS 161 is only a disclosure-related pronouncement, 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. SFAS 160 On January1, 2009, the Company adopted SFAS 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No.51 (SFAS 160). SFAS 160 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 the new standard, 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 operations statement of the attribution of that (loss) income between the controlling and noncontrolling interests. Increases and decreases in the noncontrolling ownership interest amount 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, SFAS 160 was applied retroactively to all previous financial statements and increased Shareholders Investment on January1, 2009 by $4,808,000. The adoption of SFAS 160 was not material to the Companys results of operations or cash flows. SFAS 141-R and Related Guidance On January1, 2009, the Company adopted SFAS 141(R), Business Combinations (SFAS 141R) and related guidance. SFAS 141R replaced SFAS 141, Business Combinations (SFAS 141), and changed many well-established business combination accounting practices and significantly affected how acquisition transactions are reflected in the financial statements. SFAS 141R 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 (as amended), 2) expensing acquisition-related costs as incurred, and 3) expensing restructuring costs associated with |
4. Pending Adoption of Recently Issued Accounting Standards | 4. Pending Adoption of Recently Issued Accounting Standards FSP FAS 132R-1 In December 2008, the FASB issued FASB Staff Position No. FAS 132R-1, Employers Disclosure about Postretirement Benefit Plan Assets (FSP FAS 132R-1). This FSP will amend SFAS 132-R, Employers Disclosures about Pension and Other Postretirement Benefits (SFAS 132-R), to require additional disclosures about assets held in an employers defined benefit pension or other postretirement plan. This FSP will replace many of the disclosures currently required under SFAS 132-R and require disclosure of the fair value of each major asset category. This FSP will also require disclosure of the level within the fair value hierarchy of each major category of plan assets, using the guidance in SFAS No.157, Fair Value Measurements (SFAS 157). This FSP will also require employers 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. FSP FAS 132R-1 will be effective for the Companys December31, 2009 annual disclosures related to its defined benefit pension plans. The Companys other postretirement plans are not funded, thus the disclosure provisions of this FSP will not apply to those plans. Since FSP FAS 132R-1 relates only to disclosures, its adoption will not have an impact on the Company results of operations, financial position, or cash flows. SFAS 167 On June12, 2009, the FASB issued SFAS 167, Amendments to FASB Interpretation No.46-R (SFAS 167). SFAS 167 will make certain changes to the guidance used to determine when an entity should consolidate a variable interest entity in its consolidate financial statements. SFAS 167 will be effective for the Company on January1, 2010. Based on the current status of the entities that are evaluated under existing guidance for consolidation in the Companys consolidated financial statements, the Company does not expect the adoption of SFAS 167 to have a material impact on its results of operations, financial position, or cash flows. |
5. Comprehensive (Loss) Income | 5. Comprehensive (Loss) Income Comprehensive (loss) income for the six months ended June30, 2009 and 2008 was as follows: Six months ended June30, 2009 (in thousands) Shareholdersof CrawfordCompany Noncontrolling Interests Total Consolidated Net Loss $ (85,042 ) $ 166 $ (84,876 ) Other Comprehensive Income (Loss): Net foreign currency translation loss (3,927 ) (425 ) (4,352 ) Interest rate swap agreement, net of taxes: Loss reclassified into income 1,664 1,664 Loss recognized during period (682 ) (682 ) Amortization of retirement plans costs, net of taxes 2,480 2,480 Total Comprehensive Loss $ (85,507 ) $ (259 ) $ (85,766 ) Six months ended June30, 2008 (in thousands) Shareholders of Crawford Company Noncontrolling Interests Total Consolidated Net Income $ 17,000 $ 154 $ 17,154 Other Comprehensive Income: Net foreign currency translation (loss) gain (2,800 ) 34 (2,766 ) Interest rate swap agreement, net of taxes: Loss reclassified into income 717 717 Loss recognized during period (799 ) (799 ) Amortization of retirement plans costs, net of taxes 1,330 1,330 Total Comprehensive Income $ 15,448 $ 188 $ 15,636 Comprehensive (loss) income for the three months ended June30, 2009 and 2008 was as follows: Three months ended June30, 2009 (in thousands) Shareholdersof CrawfordCompany Noncontrolling Interests Total Consolidated Net Loss $ (88,124 ) $ 235 $ (87,889 ) Other Comprehensive Income (Loss): Net foreign currency translation gain 11,433 159 11,592 Interest rate swap agreement, net of taxes: Loss reclassified into income 896 896 Loss recognized during period (201 ) (201 ) Amortization of retirement plans costs, net of taxes 1,240 1,240 Total Comprehensive Loss $ (74,756 ) $ 394 $ (74,362 ) Three months ended June30, 2008 (in thousands) Shareholders of Crawford Company Noncontrolling Interests Total Consolidated Net Income $ 7,932 $ 226 $ 8,158 Other Comprehensive Income: Net foreign currency translation gain 1,723 19 1,742 Interest rate swap agreement, net of taxes: Loss reclassified into income 616 616 Gain recognized during period 1,130 1,130 Amortization of retirement plans costs, net of taxes 665 665 Total Comprehensive Income $ 12,066 $ 245 $ 12,311 |
6. 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 and Common Stock Class B, 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 FSP EITF 03-6-1, were as follows: Three months ended Six months ended in thousands, except (loss) earnings per share June30, 2009 June30, 2008 June30, 2009 June30, 2008 Net (loss) income attributable to Crawford Company $ (88,124 ) $ 7,932 $ (85,042 ) $ 17,000 Weighted average common shares used to compute basic (loss) earnings per share 51,877 50,888 51,625 50,808 Dilutive effects of stock-based compensation plans 98 83 Weighted-average common share equivalents used to compute diluted (loss) earnings per share 51,877 50,986 51,625 50,891 Basic (loss) earnings per share $ (1.70 ) $ 0.16 $ (1.65 ) $ 0.33 Diluted (loss) earnings per share $ (1.70 ) $ 0.16 $ (1.65 ) $ 0.33 For the quarter and six-month periods ended June30, 2009, weighted-average common share equivalents of 610,000 and 933,000 shares, respectively, were not used to calculate a diluted earnings per share since the Company recorded a net loss for these periods. Outstanding stock options to purchase 2,526,855 and 2,863,547 shares of the Companys ClassA Common Stock (CRDA) were excluded from the computations of diluted EPS for the six months ended June30, 2009 and 2008, respectively, because the options would have been antidilutive based on the average price of CRDA. Outstanding stock options to purchase 2,496,172 and 2,694,588 shares of the Companys ClassA Common Stock were excluded from the computations of diluted EPS for the three months ended June30, 2009 and 2008, respectively, because the options would have been antidilutive based on the average price of CRDA. In addition, performance stock grants for 766,000 shares of the Companys ClassA common stock were excluded from the computation of EPS because the expected performance conditions had not been met as of June30, 2009. Compensation cost under SFAS 123-R, Share-based Payment, 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 under SFAS 128, Earnings Per Share, until the performance measurements have actually been achieved. The performance goals for 413,000 and 353,000 of these performance stock grants are expected to be achieved at the end of 2009 and 2010, respectively. |
7. 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 on an initial notional amount of $175.0million of the Companys floating-rate debt to a fixed rate of 5.25%. In accordance with SFAS 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133), and related guidance, 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 June30, 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 gains / (losses) on the Companys interest-rate swap derivative instrument is categorized in the table below: (in thousands) Three months ended June30, Gain(Loss)Recognized inOtherComprehensive Loss (OCL) on Derivative-Effective Portion LossReclassifiedfrom AccumulatedOCLinto Income-EffectivePortion (1) 2009 2008 2009 2008 Cash Flow Hedging Relationship: Interest rate hedge $ (266 ) $ 1,873 $ (1,273 ) $ (968 ) (in thousands) Six months ended June30, LossRecognizedinOCL onDerivative-Effective Portion) LossReclassifiedfrom AccumulatedOCLinto Income-EffectivePortion (1) 2009 2008 2009 2008 Cash Flow Hedging Relationship: Interest rate hedge $ (789 ) $ (1,019 ) $ (2,458 ) $ (1,127 ) (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 |
8. Fair Value Measurements | 8. Fair Value Measurements Under SFAS 157, 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 June30, 2009 that are carried at fair value on the Companys balance sheet were categorized as follows: FairValueMeasurementsatJune30,2009 (in thousands) Total (Level 1) (Level 2) (Level 3) Assets: Money market funds (1) $ 2,334 $ 2,334 Liabilities: Derivatives designated as hedging instruments under SFAS 133: Interest rate contract-current (2) $ 3,402 $ 3,402 (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 Consolidated Balance Sheet at June30, 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 value due to the short-term maturity of the instruments. The carrying value of the Companys term note payable was $181,725,000 million at June30, 2009. The Companys term note payable is held by a small number of banks and other investors, and thus it trades infrequently. The Company estimates the fair value of its term note payable based on recent trades and a discounted cash flow analysis based on current borrowing rates for new debt issues with similar credit quality. At June30, 2009, the Company estimates the value of its term note payable to be between $156.0 million and $164.0 million. As disclosed in Note 13, Amendment to Credit Agreement, the Company has the ability to repurchase and retire up to $25.0 million of its term note payable through December 31, 2010. |
9. Defined Benefit Pension Plans | 9. Defined Benefit Pension Plans Net periodic benefit cost related to the Companys defined benefit pension plans for the three months and six months ended June30, 2009 and 2008 included the following components: Threemonthsended Six months ended (in thousands) June30, 2009 June30, 2008 June30, 2009 June30, 2008 Service cost $ 390 $ 774 $ 795 $ 1,547 Interest cost 8,670 9,311 17,453 18,622 Expected return on assets (7,132 ) (11,902 ) (14,373 ) (22,712 ) Amortization of transition asset 52 72 107 145 Recognized net actuarial loss 1,843 962 3,702 1,925 Net periodic benefit cost (credit) $ 3,823 $ (783 ) $ 7,684 $ (473 ) For the three and six month periods ended June30, 2009, the Company made contributions to its underfunded U.S. and U.K. defined benefit pension plans of $3,711,000 and $7,395,000, respectively, compared to $4,535,000 and $6,224,000, respectively, for the comparable periods in 2008. |
10. 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 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. At June30, 2009, the Company estimates that its effective annual income tax rate for 2009 will be approximately 26% before considering discrete items and the preliminary goodwill impairment charge. The preliminary noncash goodwill impairment charge of $94,000,000 recognized in the quarter ended June30, 2009 is not deductible by the Company for income tax purposes. For the six months ended June30, 2009 and 2008, the Companys effective income tax rate before discrete items and the preliminary goodwill impairment charge was approximately 25% and 35%, respectively. The lower effective income tax rate for the first six months of 2009 compared to the same period in 2008 was due primarily to the mix of income earned from domestic and international operations and due to enacted tax changes impacting the current year. For the six months ended June30, 2009, discrete items of $184,000 reduced the Companys effective income tax rate by 1.6%. For the six months ended June30, 2008, discrete items of $192,000 increased the Companys effective income tax rate by 0.7%. |
11. 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. Intersegment revenues are not material for any period presented. The Company measures segment profit (loss) based on operating earnings, a non-GAAP financial measure defined as earnings (or loss) excluding net corporate interest expense, amortization of customer-relationship intangible assets, stock option expense, unallocated corporate and shared costs, net income (loss) attributable to noncontrolling interests, and certain other gains and expenses. Financial information for the three months and six months ended June30, 2009 and 2008 covering the Companys reportable segments is presented below: Three months ended Six months ended (in thousands) June30, 2009 June30, 2008 June30, 2009 June30, 2008 Revenues: U.S. Property Casualty $ 54,547 $ 51,198 $ 109,599 $ 100,708 International Operations 96,127 113,433 186,999 220,143 Broadspire 73,056 79,065 147,657 159,378 Legal Settlement Administration 25,934 19,569 41,492 38,548 Total Segment Revenues before Reimbursements 249,664 263,265 485,747 518,777 Reimbursements 21,979 26,001 36,179 45,162 Total Revenues $ 271,643 $ 289,266 $ 521,926 $ 563,939 Operating Earnings (Loss): U.S. Property Casualty $ 6,218 $ 5,092 $ 12,388 $ 11,041 International Operations 8,220 10,446 15,685 19,433 Broadspire (606 ) 2,540 (2,560 ) 4,287 Legal Settlement Administration 4,287 3,142 5,814 5,639 Total Segment Operating Earnings 18,119 21,220 31,327 40,400 Add/(deduct): Net income attributable to noncontrolling interests 235 226 166 154 Unallocated corporate and shared cost, net (5,295 ) (2,061 ) (7,270 ) (1,410 ) Restructuring costs (1,815 ) Goodwill impairment charge (94,000 ) (94,000 ) Amortization of customer-relationship intangible assets (1,496 ) (1,506 ) (2,994 ) (3,014 ) Stock option expense (197 ) (279 ) (430 ) (474 ) Net corporate |
12. 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 June30, 2009, all measurement periods covered by existing earnout agreements have ended and the Company can tentatively calculate amounts due under these agreements. At June30, 2009, the Company estimates that it will make cash payments of approximately $5,064,000 in the third quarter of 2009 and $889,000 in the second quarter of 2010. At June30, 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 letter of credit facility to satisfy certain of its own contractual requirements. At June30, 2009, the aggregate amount committed under the facility was $19,870,000. 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 acquisition of BMSI. In the event of an unfavorable outcome in which Platinum does not indemnify the Company under the terms of the |
13. Amendment to Credit Agreement | 13. Amendment to Credit Agreement In February 2009, the Company entered into a Fourth Amendment to Credit Agreement and First Amendment to Pledge Agreement (the Amendment). The Amendment amended, among other things, the Companys Credit Agreement dated October31, 2006. The Amendment provides 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 Amendment. This corporate realignment did not impact the composition of the Companys four operating segments. Among other things, the Amendment provides the Company with the ability to repurchase and retire, from time to time through December 2010, up to $25.0 million of its outstanding term debt under its Credit Agreement. The Amendment did not change the base interest rate, interest rate spreads, covenants or other key terms of the Credit Agreement. |
14. 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. |
Document Information
Document Information | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Document Information [Text Block] | |
Document Type | 10-Q |
Amendment Flag | false |
Amendment Description | N.A. |
Document Period End Date | 2009-06-30 |
Entity Information
Entity Information (USD $) | ||||||
6 Months Ended
Jun. 30, 2009 | Jun. 30, 2008
| 6 Months Ended
Jun. 30, 2009 Class A common stock | Jul. 31, 2009
Class A common stock | 6 Months Ended
Jun. 30, 2009 Class B common stock | Jul. 31, 2009
Class B common stock | |
Entity [Text Block] | ||||||
Entity Registrant Name | CRAWFORD & CO | |||||
Entity Central Index Key | 0000025475 | |||||
Current Fiscal Year End Date | --12-31 | |||||
Entity Well-known Seasoned Issuer | No | |||||
Entity Current Reporting Status | Yes | |||||
Entity Voluntary Filers | No | |||||
Entity Filer Category | Accelerated Filer | |||||
Entity Public Float | $180,922,217 | |||||
Trading Symbol | CRD'A | CRD'B | ||||
Entity Common Stock, Shares Outstanding | 27,355,390 | 24,697,172 |