Form 10-Q Crawford & Company Quarter Ended June 30, 1997 Page 2 PART I - FINANCIAL INFORMATION Item 1. Financial Statements Condensed Financial Statements: Year-to-Date Unaudited Consolidated Statements of Income for the Six-Month Periods ended June 30, 1997 and June 30, 1996: (In Thousands of Dollars Except Share and Per Share Data) 1997 1996 Revenues $348,520 $319,192 Costs and Expenses: Cost of services provided, less reimbursed expenses of $18,789 in 1997 and $15,868 in 1996 249,615 229,996 Selling, general and administrative expenses 56,960 54,574 Restructuring charge 13,000 0 Total costs and expenses 319,575 284,570 Income Before Income Taxes and Minority Interest 28,945 34,622 Provision for Income Taxes 11,703 13,963 Income Before Minority Interest 17,242 20,659 Minority Interest in Loss of Joint Venture 2,505 0 Net Income $19,747 $20,659 Earnings Per Share $0.40 $0.40 Weighted Average Shares Outstanding 49,882,717 51,311,262 Declared Dividends Per Share - Class A Common Stock $0.22 $0.20 Declared Dividends Per Share - Class B Common Stock $0.22 $0.19 (See accompanying notes to condensed financial statements) Form 10-Q Crawford & Company Quarter Ended June 30, 1997 Page 3 Quarterly Unaudited Consolidated Statements of Income for the Three-Month Periods ended June 30, 1997 and June 30, 1996: (In Thousands of Dollars Except Share and Per Share Data) 1997 1996 Revenues $182,569 $157,629 Costs and Expenses: Cost of services provided, less reimbursed expenses of $10,214 in 1997 and $8,089 in 1996 130,021 113,192 Selling, general and administrative expenses 29,885 27,293 Total costs and expenses 159,906 140,485 Income Before Income Taxes and Minority Interest 22,663 17,144 Provision for Income Taxes 8,537 6,916 Income Before Minority Interest 14,126 10,228 Minority Interest in Income of Joint Venture (694) 0 Net Income $13,432 $10,228 Earnings Per Share $0.27 $0.20 Weighted Average Shares Outstanding 49,736,992 51,156,812 Declared Dividends Per Share - Class A Common Stock $0.11 $0.10 Declared Dividends Per Share - Class B Common Stock $0.11 $0.10 (See accompanying notes to condensed financial statements) Form 10-Q Crawford & Company Quarter Ended June 30, 1997 Page 4 Consolidated Balance Sheets as of June 30, 1997 and December 31, 1996: (In Thousands of Dollars) (Unaudited) June 30 December 31 1997 1996 ASSETS Current Assets: Cash and cash equivalents $71,343 $55,485 Accounts receivable, less allowance for doubtful accounts of $15,777 in 1997 and $11,692 in 1996 122,983 112,975 Unbilled revenues, at estimated billable amounts 95,886 68,593 Prepaid income taxes 5,260 2,677 Prepaid expenses and other current assets 14,656 7,166 Total current assets 310,128 246,896 Property and Equipment: Property and equipment, at cost 152,342 123,901 Less accumulated depreciation and amortization (111,428) (92,264) Net property and equipment 40,914 31,637 Other Assets: Intangible assets arising from acquisitions, less accumulated amortization of $9,625 in 1997 and $8,768 in 1996 51,479 52,266 Prepaid pension obligation 42,958 41,405 Other 7,131 5,881 Total other assets 101,568 99,552 TOTAL ASSETS $452,610 $378,085 (See accompanying notes to condensed financial statements) Form 10-Q Crawford & Company Quarter Ended June 30, 1997 Page 5 Consolidated Balance Sheets - (Continued) (In Thousands of Dollars) (Unaudited) June 30 December 31 1997 1996 LIABILITIES AND SHAREHOLDERS' INVESTMENT Current Liabilities: Short-term borrowings $27,015 $8,437 Accounts payable 17,426 13,329 Accrued compensation and related costs 29,245 30,811 Other accrued liabilities 59,247 32,645 Deferred revenues 16,102 16,300 Current installments of long-term debt 9,915 9,130 Total current liabilities 158,950 110,652 Noncurrent Liabilities: Long-term debt, less current installments 3,551 376 Deferred income taxes 10,030 13,810 Deferred revenues 13,478 12,902 Postretirement medical benefit obligation 8,296 8,037 Self-insured risks 9,123 8,172 Minority interest 28,412 0 Other 4,771 2,600 Total noncurrent liabilities 77,661 45,897 Shareholders' Investment: Class A Common Stock, $1.00 par value; 50,000,000 shares authorized; 23,909,275 and 24,392,393 shares issued in 1997 and 1996, respectively 23,909 24,392 Class B Common Stock, $1.00 par value; 50,000,000 shares authorized; 25,647,760 and 25,718,919 shares issued in 1997 and 1996, respectively 25,648 25,719 Retained earnings 173,499 173,708 Cumulative translation adjustment (7,057) (2,283) Total shareholders' investment 215,999 221,536 TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT $452,610 $378,085 (See accompanying notes to condensed financial statements) Form 10-Q Crawford & Company Quarter Ended June 30, 1997 Page 6 Unaudited Consolidated Statements of Cash Flows for the Six-Month Periods Ended June 30, 1997 and June 30, 1996: (In Thousands of Dollars) 1997 1996 Cash Flows From Operating Activities: Net income $19,747 $20,659 Reconciliation of net income to net cash provided by operating activities: Minority interest in loss of joint venture (2,505) 0 Depreciation and amortization 8,028 8,341 Deferred income taxes (6,363) 1,214 Loss on sales of property and equipment 907 90 Changes in operating assets and liabilities: Short-term investments 0 3,336 Accounts receivable, net 6,509 (2,761) Unbilled revenues 2,583 (4,728) Prepaid or accrued income taxes (1,900) 252 Accounts payable and accrued liabilities 12,931 11,672 Deferred revenues 393 1,130 Prepaid expenses and other assets (9,775) (12,011) Net cash provided by operating activities 30,555 27,194 Cash Flows From Investing Activities: Acquisitions of property and equipment (6,293) (4,371) Sales of property and equipment 179 115 Net cash used in investing activities (6,114) (4,256) Cash Flows From Financing Activities: Dividends paid (10,977) (10,117) Repurchase of common stock (11,265) (7,604) Issuance of common stock 1,733 330 Increase/(decrease) in short-term borrowings 9,740 (525) (Decrease)/increase in long-term debt (1,167) 121 Net cash used in financing activities (11,936) (17,795) Effect of exchange rate changes on cash and cash equivalents 3,353 (129) Increase in cash and cash equivalents 15,858 5,014 Cash and cash equivalents at beginning of period 55,485 40,802 Cash and cash equivalents at end of period $71,343 $45,816 Cash payments for income taxes $14,260 $13,026 (See accompanying notes to condensed financial statements)