Form 10-Q Crawford & Company Quarter Ended March 31, 1998 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 Periods ended March 31, 1998 and March 31, 1997: (In Thousands of Dollars Except Share and Per Share Data) 1998 1997 Revenues $166,133 $165,951 Costs and Expenses: Cost of services provided, less reimbursed expenses of $9,351 in 1998 and $8,575 in 1997 123,782 119,594 Selling, general and administrative expenses 22,803 27,075 Year 2000 expenses 1,028 0 Restructuring charge 0 13,000 Total costs and expenses 147,613 159,669 Income Before Income Taxes and Minority Interest 18,520 6,282 Provision for Income Taxes 7,113 3,166 Income Before Minority Interest 11,407 3,116 Minority Interest in Loss of Joint Venture 13 3,199 Net Income $11,420 $6,315 Net Income Per Share Basic $0.23 $0.13 Diluted $0.23 $0.12 Average Number of Class A and Class B Common Shares used in Net Income per Share Calculations Basic 49,319,110 50,030,061 Diluted 50,081,447 51,416,151 Declared Dividends Per Share - Class A Common Stock $0.125 $0.110 Declared Dividends Per Share - Class B Common Stock $0.125 $0.110 (See accompanying notes to condensed financial statements) Form 10-Q Crawford & Company Quarter Ended March 31, 1998 Page 3 Consolidated Balance Sheets as of March 31, 1998 and December 31, 1997: (In Thousands of Dollars) (Unaudited) March 31 December 31 1998 1997 ASSETS Current Assets: Cash and cash equivalents $45,309 $55,380 Accounts receivable, less allowance for doubtful accounts of $16,730 in 1998 and $16,802 in 1997 117,056 117,338 Unbilled revenues, at estimated billable amounts 86,771 87,688 Prepaid income taxes 1,261 981 Prepaid expenses and other current assets 13,467 12,558 Total current assets 263,864 273,945 Property and Equipment: Property and equipment, at cost: 148,829 149,506 Less accumulated depreciation and amortization (108,841) (110,314) Net property and equipment 39,988 39,192 Other Assets: Intangible assets arising from acquisitions, less accumulated amortization of $11,045 in 1998 and $10,533 in 1997 51,297 51,968 Prepaid pension obligation 49,010 45,972 Other 9,219 5,981 Total other assets 109,526 103,921 TOTAL ASSETS $413,378 $417,058 (See accompanying notes to condensed financial statements) Form 10-Q Crawford & Company Quarter Ended March 31, 1998 Page 4 Consolidated Balance Sheets - (Continued) (In Thousands of Dollars) (Unaudited) March 31 December 31 1998 1997 LIABILITIES AND SHAREHOLDERS' INVESTMENT Current Liabilities: Short-term borrowings $19,836 $19,812 Accounts payable 18,059 19,956 Accrued compensation and related costs 20,185 26,616 Other accrued liabilities 44,478 41,419 Deferred revenues 15,911 16,241 Current installments of long-term debt 453 594 Total current liabilities 118,922 124,638 Noncurrent Liabilities: Long-term debt, less current installments 680 731 Deferred income taxes 15,323 14,921 Deferred revenues 13,556 13,404 Postretirement medical benefit obligation 8,263 8,105 Self-insured risks 9,151 9,067 Minority interest 26,719 26,732 Other 5,111 4,455 Total noncurrent liabilities 78,803 77,415 Shareholders' Investment: Class A Common Stock, $1.00 par value; 50,000,000 shares authorized; 23,931,433 and 23,915,727 shares issued in 1998 and 1997, respectively 23,931 23,916 Class B Common Stock, $1.00 par value; 50,000,000 shares authorized; 25,439,054 and 25,477,233 shares issued in 1998 and 1997, respectively 25,439 25,477 Retained earnings 177,113 174,973 Accumulated other comprehensive income (10,830) (9,361) Total shareholders' investment 215,653 215,005 TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT $413,378 $417,058 (See accompanying notes to condensed financial statements) Form 10-Q Crawford & Company Quarter Ended March 31, 1998 Page 5 Unaudited Consolidated Statements of Cash Flows for the Three-Month Periods Ended March 31, 1998 and March 31, 1997: (In Thousands of Dollars) 1998 1997 Cash Flows From Operating Activities: Net income $11,420 $6,315 Reconciliation of net income to net cash provided by operating activities: Minority interest in loss of joint venture (13) (3,199) Depreciation and amortization 3,832 3,800 Deferred income taxes 336 (6,007) (Gain)/loss on sales of property and equipment (75) 75 Changes in operating assets and liabilities, net of effects of acquisitions: Accounts receivable, net (1,951) 1,759 Unbilled revenues (1,091) 4,910 Prepaid or accrued income taxes 5,686 4,416 Accounts payable and accrued liabilities (6,696) 11,108 Deferred revenues (370) (264) Prepaid expenses and other assets (6,676) (4,819) Net cash provided by operating activities 4,402 18,094 Cash Flows From Investing Activities: Acquisitions of property and equipment (4,630) (4,602) Proceeds from sales of property and equipment 31 142 Net cash used in investing activities (4,599) (4,460) Cash Flows From Financing Activities: Dividends paid (6,176) (5,504) Repurchase of common stock (7,427) (4,399) Issuance of common stock 4,301 1,103 Increase in short-term borrowings 905 1,410 Decrease in long-term debt (115) (576) Net cash used in financing activities (8,512) (7,966) Effect of exchange rate changes on cash and cash equivalents (1,362) 3,487 (Decrease)/increase in cash and cash equivalents (10,071) 9,155 Cash and cash equivalents at beginning of period 55,380 55,485 Cash and cash equivalents at end of period $45,309 $64,640 Cash payments for income taxes $2,587 $1,494 (See accompanying notes to condensed financial statements)