Form 10Q Crawford & Company
Quarter Ended June 30, 1998 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, 1998 and June 30, 1997:
(In Thousands of Dollars
Except Share and Per Share Data)
1998 1997
Revenues $336,161 $348,520
Costs and Expenses:
Cost of services provided, less reimbursed expenses
of $18,590 in 1998 and $18,789 in 1997 246,361 249,615
Selling, general and administrative expenses 49,581 56,960
Year 2000 expenses 2,970 0
Restructuring charge 0 13,000
Total costs and expenses 298,912 319,575
Income Before Income Taxes and Minority Interest 37,249 28,945
Provision for Income Taxes 14,302 11,703
Income Before Minority Interest 22,947 17,242
Minority Interest in Loss of Joint Venture 487 2,505
Net Income $23,434 $19,747
Net Income Per Share
Basic $0.47 $0.40
Diluted $0.47 $0.39
Average Number of Class A and Class B Common
Shares used in Net Income per Share Calculations
Basic 49,617,415 49,882,717
Diluted 50,319,289 51,289,222
Declared Dividends Per Share - Class A Common Stock $0.250 $0.220
Declared Dividends Per Share - Class B Common Stock $0.250 $0.220
(See accompanying notes to condensed financial statements)
Form 10-Q Crawford & Company
Quarter Ended June 30, 1998 Page 3
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 June 30, 1998 and June 30, 1997:
(In Thousands of Dollars
Except Share and Per Share Data)
1998 1997
Revenues $170,028 $182,569
Costs and Expenses:
Cost of services provided, less reimbursed expenses
of $9,239 in 1998 and $10,214 in 1997 122,579 130,021
Selling, general and administrative expense 26,778 29,885
Year 2000 expenses 1,942 0
Total costs and expenses 151,299 159,906
Income Before Income Taxes and Minority Interest 18,729 22,663
Provision for Income Taxes 7,189 8,537
Income Before Minority Interest 11,540 14,126
Minority Interest in Loss of Joint Venture 474 (694)
Net Income $12,014 $13,432
Net Income Per Share
Basic $0.24 $0.27
Diluted $0.24 $0.27
Average Number of Class A and Class B Common
Shares used in Net Income per Share Calculations
Basic 49,912,441 49,736,992
Diluted 50,614,315 52,133,460
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 June 30, 1998 Page 4
Consolidated Balance Sheets as of June 30, 1998 and December 31, 1997:
(In Thousands of Dollars)
(Unaudited)
June 30 December 31
1998 1997
ASSETS
Current Assets:
Cash and cash equivalents $41,851 $55,380
Accounts receivable, less allowance for doubtful
accounts of $17,014 in 1998 and $16,802 in 1997 121,186 117,338
Unbilled revenues, at estimated billable amounts 87,467 87,688
Prepaid income taxes 0 981
Prepaid expenses and other current assets 17,827 12,558
Total current assets 268,331 273,945
Property and Equipment:
Property and equipment, at cost: 150,410 149,506
Less accumulated depreciation and amortization (110,163) (110,314)
Net property and equipment 40,247 39,192
Other Assets:
Intangible assets arising from acquisitions, less accumulated
accumulated amortization of $11,572 in 1998
and $10,533 in 1997 50,870 51,968
Prepaid pension obligation 55,273 45,972
Other 13,131 5,981
Total other assets 119,274 103,921
TOTAL ASSETS $427,852 $417,058
(See accompanying notes to condensed financial statements)
Form 10-Q Crawford & Company
Quarter Ended June 30, 1998 Page 5
Consolidated Balance Sheets - (Continued)
(In Thousands of Dollars)
(Unaudited)
June 30 December 31
1998 1997
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Short-term borrowings $22,054 $19,812
Accounts payable 20,846 19,956
Accrued compensation and related costs 23,170 26,616
Other accrued liabilities 44,362 41,419
Deferred revenues 16,977 16,241
Current installments of long-term debt 447 594
Total current liabilities 127,856 124,638
Noncurrent Liabilities:
Long-term debt, less current installments 659 731
Deferred income taxes 8,282 14,921
Deferred revenues 13,690 13,404
Postretirement medical benefit obligation 8,414 8,105
Self-insured risks 7,687 9,067
Minority interest 0 26,732
Other 5,572 4,455
Total noncurrent liabilities 44,304 77,415
Shareholders' Investment:
Class A Common Stock, $1.00 par value; 50,000,000
shares authorized; 25,902,798 and 23,915,727
shares issued in 1998 and 1997, respectively 25,903 23,916
Class B Common Stock, $1.00 par value; 50,000,000
shares authorized; 25,337,627 and 25,477,233
shares issued in 1998 and 1997, respectively 25,338 25,477
Additional Paid-in-Capital 31,231 0
Retained earnings 180,748 174,973
Accumulated other comprehensive income (7,528) (9,361)
Total shareholders' investment 255,692 215,005
TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT $427,852 $417,058
(See accompanying notes to condensed financial statements)
Form 10-Q Crawford & Company
Quarter Ended June 30, 1998 Page 6
Unaudited Consolidated Statements of Cash Flows for the Six-Month Periods Ended
June 30, 1998 and June 30, 1997:
(In Thousands of Dollars)
1998 1997
Cash Flows From Operating Activities:
Net income $23,434 $19,747
Reconciliation of net income to net cash
provided by operating activities:
Minority interest in income of joint venture (487) (2,505)
Depreciation and amortization 7,566 8,028
Deferred income taxes 1,166 (6,363)
(Gain)/loss on sales of property and equipment (614) 907
Changes in operating assets and liabilities,
net of effects of acquisitions:
Accounts receivable, net (5,204) 6,509
Unbilled revenues (950) 2,583
Prepaid or accrued income taxes 3,116 (1,900)
Accounts payable and accrued liabilities (1,513) 12,931
Deferred revenues 791 393
Prepaid expenses and other assets (16,724) (9,775)
Net cash provided by operating activities 10,581 30,555
Cash Flows From Investing Activities:
Acquisitions of property and equipment (8,228) (6,293)
Proceeds from sales of property and equipment 117 179
Net cash used in investing activities (8,111) (6,114)
Cash Flows From Financing Activities:
Dividends paid (12,357) (10,977)
Repurchase of common stock (12,292) (11,265)
Issuance of common stock 6,938 1,733
Increase in short-term borrowings 2,787 9,740
Decrease in long-term debt (188) (1,167)
Net cash used in financing activities (15,112) (11,936)
Effect of exchange rate changes on cash
and cash equivalents (887) 3,353
(Decrease)/increase in cash and cash equivalents (13,529) 15,858
Cash and cash equivalents at beginning of period 55,380 55,485
Cash and cash equivalents at end of period $41,851 $71,343
Cash payments for income taxes $10,025 $14,260
(See accompanying notes to condensed financial statements)