Form 10-Q Crawford & Company Quarter Ended March 31, 1996 Page 2 PART I - FINANCIAL INFORMATION Item 1. Financial Statements Condensed Financial Statements: Year-to-Date Unaudited Consolidated Statements of Income for the Three-Month Period ended March 31, 1996 and March 31, 1995: (In Thousand of Dollars Except Share and Per Share Data) 1996 1995 Revenues $161,563 $148,649 Costs and Expenses: Cost of services provided, less reimbursed expenses of $7,784 in 1996 and $8,378 in 1995 116,804 106,683 Selling, general and administrative expense 27,281 26,082 Total costs and expenses 144,085 132,765 Income Before Income Taxes 17,478 15,884 Provision for Income Taxes 7,047 6,406 Net Income $10,431 $9,478 Earnings Per Share $0.30 $0.27 Weighted Average Shares Outstanding 34,310,476 34,930,601 Declared Dividends Per Share - Class A Common $0.150 $0.145 Declared Dividends Per Share - Class B Common $0.145 $0.135 (See accompanying notes to condensed financial statements) Form 10-Q Crawford & Company Quarter Ended March 31, 1996 Page 3 Consolidated Balance Sheets as of March 31, 1996 and December 31, 1995: (In Thousands of Dollars) (Unaudited) March 31 December 31 1996 1995 ASSETS Current Assets: Cash and cash equivalents $50,841 $40,802 Short-term investments, at fair value 3,384 5,596 Accounts receivable, less allowance for doubtful accounts of $10,344 in 1996 and $10,303 in 1995 111,755 111,636 Unbilled revenues, at estimated billable amounts 64,898 60,486 Prepaid income taxes 9,331 6,115 Prepaid expenses and other current assets 11,338 9,745 Total current assets 251,547 234,380 Property and Equipment: Property and equipment, at cost: 122,794 121,307 Less accumulated depreciation and amortization (87,582) (84,859) Net property and equipment 35,212 36,448 Other Assets: Intangible assets arising from acquisitions, less accumulated amortization of $8,050 in 1996 and $7,596 in 1995 54,776 55,731 Prepaid pension obligation 35,408 34,243 Other 9,221 6,181 Total other assets 99,405 96,155 TOTAL ASSETS $386,164 $366,983 (See accompanying notes to condensed financial statements) Form 10-Q Crawford & Company Quarter Ended March 31, 1996 Page 4 Consolidated Balance Sheets - (Continued) (In Thousands of Dollars) (Unaudited) March 31 December 31 1996 1995 LIABILITIES AND SHAREHOLDERS' INVESTMENT Current Liabilities: Short-term borrowings $10,300 $10,154 Accounts payable 13,211 12,366 Accrued compensation and related costs 34,825 26,764 Other accrued liabilities 40,278 29,394 Deferred revenues 15,319 15,504 Current installments of long-term debt 805 872 Total current liabilities 114,738 95,054 Noncurrent Liabilities: Long-term debt, less current installments 8,900 9,412 Deferred income taxes 15,107 14,854 Deferred revenues 11,010 10,498 Postretirement medical benefit obligation 8,103 7,938 Self-insured risks 7,775 7,347 Other 1,401 1,020 Total noncurrent liabilities 52,296 51,069 Shareholders' Investment: Class A Common Stock, $1.00 par value; 50,000,000 shares authorized; 16,864,180 and 17,229,986 shares issued in 1996 and 1995, respectively 16,864 17,230 Class B Common Stock, $1.00 par value; 50,000,000 shares authorized; 17,282,930 and 17,297,730 shares issued in 1996 and 1995, respectively 17,283 17,298 Retained earnings 188,683 189,294 Cumulative translation adjustment (3,700) (2,962) Total shareholders' investment 219,130 220,860 TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT $386,164 $366,983 (See accompanying notes to condensed financial statements) Form 10-Q Crawford & Company Quarter Ended March 31, 1996 Page 5 Unaudited Consolidated Statements of Cash Flows for the Three-Month Periods Ended March 31, 1996 and March 31, 1995: (In Thousands of Dollars) 1996 1995 Cash Flows From Operating Activities: Net income $10,431 $9,478 Reconciliation of net income to net cash provided by (used in) operating activities: Depreciation and amortization 4,163 4,090 Deferred income taxes 2,547 4,037 Loss on sales of property and equipment 42 147 Changes in operating assets and liabilities: Short-term investments 2,212 2,887 Accounts receivable, net (727) 1,722 Unbilled revenues (4,522) (651) Prepaid or accrued income taxes 3,477 1,342 Accounts payable and accrued liabilities 12,232 (9,190) Deferred revenues 328 837 Prepaid expenses and other assets (7,099) (16,245) Net cash provided by (used in) operating activities 23,084 (1,546) Cash Flows From Investing Activities: Acquisitions of property and equipment (2,148) (3,451) Proceeds from sales of property and equipment 23 21 Net cash used in investing activities (2,125) (3,430) Cash Flows From Financing Activities: Dividends paid (5,085) (4,895) Repurchase of common stock (6,644) (3,512) Issuance of common stock 306 311 Increase (decrease) in short-term borrowings 483 (1,728) Increase in long-term debt 102 539 Net cash used in financing activities (10,838) (9,285) Effect of exchange rate changes on cash and cash equivalents (82) (27) Increase (decrease) in cash and cash equivalents 10,039 (14,288) Cash and cash equivalents at beginning of period 40,802 38,968 Cash and cash equivalents at end of period $50,841 $24,680 Cash payments for income taxes $1,569 $810 (See accompanying notes to condensed financial statements)