Form 10-Q Crawford & Company
Quarter Ended September 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 Nine-Month
Periods ended September 30, 1997 and September 30, 1996:
(In Thousands of Dollars
Except Share and Per Share Data)
1997 1996
Revenues $527,416 $474,089
Costs and Expenses:
Cost of services provided, less reimbursed expenses
of $28,927 in 1997 and $24,333 in 1996 376,592 340,871
Selling, general and administrative expenses 83,324 80,407
Restructuring charge 13,000 0
Total costs and expenses 472,916 421,278
Income Before Income Taxes and Minority Interest 54,500 52,811
Provision for Income Taxes 21,670 21,297
Income Before Minority Interest 32,830 31,514
Minority Interest in Loss of Joint Venture 1,803 0
Net Income $34,633 $31,514
Net Income Per Share
Primary $0.70 $0.62
Assuming Full Dilution $0.67 $0.60
Average Number of Class A and Class B Common
Shares used in Net Income per Share Calculations
Primary 49,736,692 51,216,146
Assuming Full Dilution 51,707,649 52,521,003
Declared Dividends Per Share - Class A Common Stock $0.33 $0.30
Declared Dividends Per Share - Class B Common Stock $0.33 $0.29
(See accompanying notes to condensed financial statements)
Form 10-Q Crawford & Company
Quarter Ended September 30, 1997 Page 3
Quarterly Unaudited Consolidated Statements of Income for the Three-Month
Periods ended September 30, 1997 and September 30, 1996:
(In Thousands of Dollars
Except Share and Per Share Data)
1997 1996
Revenues $178,896 $154,897
Costs and Expenses:
Cost of services provided, less reimbursed expenses
of $10,139 in 1997 and $8,466 in 1996 126,977 110,875
Selling, general and administrative expenses 26,364 25,833
Total costs and expenses 153,341 136,708
Income Before Income Taxes and Minority Interest 25,555 18,189
Provision for Income Taxes 9,967 7,334
Income Before Minority Interest 15,588 10,855
Minority Interest in Income of Joint Venture (702) 0
Net Income $14,886 $10,855
Net Income Per Share
Primary $0.30 $0.22
Assuming Full Dilution $0.29 $0.21
Average Number of Class A and Class B Common
Shares used in Net Income per Share Calculations
Primary 49,449,406 51,033,923
Assuming Full Dilution 51,420,363 52,338,780
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 September 30, 1997 Page 4
Consolidated Balance Sheets as of September 30, 1997 and December 31, 1996:
(In Thousands of Dollars)
(Unaudited)
September 30 December 31
1997 1996
ASSETS
Current Assets:
Cash and cash equivalents $68,871 $55,485
Accounts receivable, less allowance for doubtful
accounts of $16,064 in 1997 and $11,692 in 1996 121,166 112,975
Unbilled revenues, at estimated billable amounts 93,317 68,593
Prepaid income taxes 3,134 2,677
Prepaid expenses and other current assets 14,605 7,166
Total current assets 301,093 246,896
Property and Equipment:
Property and equipment, at cost 152,578 123,901
Less accumulated depreciation and amortization (112,264) (92,264)
Net property and equipment 40,314 31,637
Other Assets:
Intangible assets arising from acquisitions,
less accumulated amortization of $10,063 in
1997 and $8,768 in 1996 51,114 52,266
Prepaid pension obligation 47,612 41,405
Other 4,677 5,881
Total other assets 103,403 99,552
TOTAL ASSETS $444,810 $378,085
(See accompanying notes to condensed financial statements)
Form 10-Q Crawford & Company
Quarter Ended September 30, 1997 Page 5
Consolidated Balance Sheets - (Continued)
(In Thousands of Dollars)
(Unaudited)
September 30 December 31
1997 1996
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Short-term borrowings $20,721 $8,437
Accounts payable 18,899 13,329
Accrued compensation and related costs 29,466 30,811
Other accrued liabilities 58,001 32,645
Deferred revenues 16,057 16,300
Current installments of long-term debt 9,750 9,130
Total current liabilities 152,894 110,652
Noncurrent Liabilities:
Long-term debt, less current installments 984 376
Deferred income taxes 11,189 13,810
Deferred revenues 14,136 12,902
Postretirement medical benefit obligation 8,183 8,037
Self-insured risks 8,663 8,172
Minority interest 27,431 0
Other 4,102 2,600
Total noncurrent liabilities 74,688 45,897
Shareholders' Investment:
Class A Common Stock, $1.00 par value; 50,000,000
shares authorized; 23,733,248 and 24,392,393
shares issued in 1997 and 1996, respectively 23,733 24,392
Class B Common Stock, $1.00 par value; 50,000,000
shares authorized; 25,511,224 and 25,718,919
shares issued in 1997 and 1996, respectively 25,511 25,719
Retained earnings 176,221 173,708
Cumulative translation adjustment (8,237) (2,283)
Total shareholders' investment 217,228 221,536
TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT $444,810 $378,085
(See accompanying notes to condensed financial statements)
Form 10-Q Crawford & Company
Quarter Ended September 30, 1997 Page 6
Unaudited Consolidated Statements of Cash Flows for the Nine-Month Periods
Ended September 30, 1997 and September 30, 1996:
(In Thousands of Dollars)
1997 1996
Cash Flows From Operating Activities:
Net income $34,633 $31,514
Reconciliation of net income to net cash
provided by operating activities:
Minority interest in loss of joint venture (1,803) 0
Depreciation and amortization 11,742 11,933
Deferred income taxes (3,078) 1,336
Loss on sales of property and equipment 339 324
Changes in operating assets and liabilities:
Short-term investments 0 5,470
Accounts receivable, net 7,691 1,836
Unbilled revenues 4,841 (6,959)
Prepaid or accrued income taxes 4,640 (1,511)
Accounts payable and accrued liabilities 6,462 13,992
Deferred revenues 992 2,624
Prepaid expenses and other assets (15,692) (10,944)
Net cash provided by operating activities 50,767 49,615
Cash Flows From Investing Activities:
Acquisitions of property and equipment (7,506) (6,137)
Sales of property and equipment 205 301
Net cash used in investing activities (7,301) (5,836)
Cash Flows From Financing Activities:
Dividends paid (16,425) (15,119)
Repurchase of common stock (20,624) (15,940)
Issuance of common stock 3,977 1,063
Increase/(decrease) in short-term borrowings 3,755 (1,357)
(Decrease)/increase in long-term debt (3,897) 126
Net cash used in financing activities (33,214) (31,227)
Effect of exchange rate changes on cash and
cash equivalents 3,134 (42)
Increase in cash and cash equivalents 13,386 12,510
Cash and cash equivalents at beginning of period 55,485 40,802
Cash and cash equivalents at end of period $68,871 $53,312
Cash payments for income taxes $21,027 $21,461
(See accompanying notes to condensed financial statements)