Form 10Q Crawford & Company
Quarter Ended September 30, 1998 Page 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Financial Statements:
Unaudited Consolidated Statements of Income for the Nine-Month Periods
ended September 30, 1998 and September 30, 1997:
(In Thousands
Except Per Share Data)
1998 1997
Revenues $501,277 $527,416
Costs and Expenses:
Cost of services provided, less reimbursed expenses
of $26,638 in 1998 and $28,927 in 1997 370,362 376,592
Selling, general and administrative expenses 78,110 83,324
Year 2000 expenses 5,231 0
Restructuring charges 14,873 13,000
Total costs and expenses 468,576 472,916
Income Before Income Taxes and Minority Interest 32,701 54,500
Provision for Income Taxes 12,561 21,670
Income Before Minority Interest 20,140 32,830
Minority Interest in Loss of Joint Venture 1,177 1,803
Net Income $21,317 $34,633
Net Income Per Share
Basic $0.43 $0.70
Diluted $0.42 $0.67
Average Number of Class A and Class B Common
Shares used in per Share Calculations
Basic 50,142 49,737
Diluted 50,777 51,708
Declared Dividends Per Share - Class A Common Stock $0.375 $0.330
Declared Dividends Per Share - Class B Common Stock $0.375 $0.330
(See accompanying notes to condensed financial statements)
Form 10-Q Crawford & Company
Quarter Ended September 30, 1998 Page 3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Financial Statements:
Unaudited Consolidated Statements of Income for the Three-Month Periods
ended September 30, 1998 and September 30, 1997:
(In Thousands
Except Per Share Data)
1998 1997
Revenues $165,116 $178,896
Costs and Expenses:
Cost of services provided, less reimbursed expenses
of $8,048 in 1998 and $10,139 in 1997 124,001 126,977
Selling, general and administrative expenses 28,529 26,364
Year 2000 expenses 2,261 0
Restructuring charges 14,873 0
Total costs and expenses 169,664 153,341
(Loss) Income Before Income Taxes and Minority Interest (4,548) 25,555
(Benefit) Provision for Income Taxes (1,741) 9,967
(Loss) Income Before Minority Interest (2,807) 15,588
Minority Interest in Loss (Income) of Joint Venture 690 (702)
Net (Loss) Income ($2,117) $14,886
Net (Loss) Income Per Share
Basic ($0.04) $0.30
Diluted ($0.04) $0.29
Average Number of Class A and Class B Common
Shares used in per Share Calculations
Basic 51,162 49,449
Diluted 51,797 51,420
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 September 30, 1998 Page 4
Consolidated Balance Sheets as of September 30, 1998 and December 31, 1997:
(In Thousands of Dollars)
(Unaudited)
September 30 December 31
1998 1997
ASSETS
Current Assets:
Cash and cash equivalents $10,990 $55,380
Accounts receivable, less allowance for doubtful
accounts of $17,845 in 1998 and $16,802 in 1997 123,863 117,338
Unbilled revenues, at estimated billable amounts 93,034 87,688
Prepaid expenses and other current assets 12,042 13,539
Total current assets 239,929 273,945
Property and Equipment:
Property and equipment, at cost: 157,446 149,506
Less accumulated depreciation and amortization (114,686) (110,314)
Net property and equipment 42,760 39,192
Other Assets:
Intangible assets arising from acquisitions, less
accumulated amortization of $12,123 in 1998
and $10,533 in 1997 62,803 51,968
Prepaid pension obligation 55,010 45,972
Capitalized software development costs 9,149 1,013
Other 12,033 4,968
Total other assets 138,995 103,921
TOTAL ASSETS $421,684 $417,058
(See accompanying notes to condensed financial statements)
Form 10-Q Crawford & Company
Quarter Ended September 30, 1998 Page 5
Consolidated Balance Sheets - (Continued)
(In Thousands of Dollars)
(Unaudited)
September 30 December 31
1998 1997
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Short-term borrowings $29,982 $19,812
Accounts payable 23,493 19,956
Accrued compensation and related costs 21,486 26,616
Accrued restructuring costs 14,686 6,220
Other accrued liabilities 28,225 35,199
Deferred revenues 17,237 16,241
Current installments of long-term debt 570 594
Total current liabilities 135,679 124,638
Noncurrent Liabilities:
Long-term debt, less current installments 2,020 731
Deferred income taxes 7,245 14,921
Deferred revenues 13,585 13,404
Postretirement medical benefit obligation 8,606 8,105
Self-insured risks 7,587 9,067
Minority interest 0 26,732
Other 5,936 4,455
Total noncurrent liabilities 44,979 77,415
Shareholders' Investment:
Class A Common Stock, $1.00 par value; 50,000,000
shares authorized; 25,826,009 and 23,915,727
shares issued in 1998 and 1997, respectively 25,826 23,916
Class B Common Stock, $1.00 par value; 50,000,000
shares authorized; 25,185,817 and 25,477,233
shares issued in 1998 and 1997, respectively 25,186 25,477
Additional Paid-in-Capital 25,912 0
Retained earnings 173,178 174,973
Cumulative foreign currency translation adjustment (9,076) (9,361)
Total shareholders' investment 241,026 215,005
TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT $421,684 $417,058
(See accompanying notes to condensed financial statements)
Form 10-Q Crawford & Company
Quarter Ended September 30, 1998 Page 6
Unaudited Consolidated Statements of Cash Flows for the Nine-Month Periods Ended
September 30, 1998 and September 30, 1997:
(In Thousands of Dollars)
1998 1997
Cash Flows From Operating Activities:
Net income $21,317 $34,633
Reconciliation of net income to net cash
provided by operating activities:
Minority interest in income of joint venture (1,177) (1,803)
Depreciation and amortization 11,395 11,742
Deferred income taxes (2,363) (3,078)
Loss on sales of property and equipment 1,114 339
Changes in operating assets and liabilities,
net of effects of acquisitions:
Accounts receivable, net (4,943) 7,691
Unbilled revenues 57 4,841
Prepaid or accrued income taxes (4,222) 4,640
Accounts payable and accrued liabilities 6,878 6,462
Deferred revenues 982 992
Prepaid expenses and other assets (12,236) (15,303)
Net cash provided by operating activities 16,802 51,156
Cash Flows From Investing Activities:
Acquisitions of property and equipment (10,356) (7,506)
Purchase of ACI, net of cash acquired (15,827) 0
Capitalization of software development costs (8,864) (389)
Proceeds from sales of property and equipment 173 205
Net cash used in investing activities (34,874) (7,690)
Cash Flows From Financing Activities:
Dividends paid (18,757) (16,425)
Repurchase of common stock (18,035) (20,624)
Issuance of common stock 8,037 3,977
Increase in short-term borrowings 6,180 3,755
Decrease in long-term debt (2,323) (3,897)
Net cash used in financing activities (24,898) (33,214)
Effect of exchange rate changes on cash and
cash equivalents (1,420) 3,134
(Decrease) Increase in cash and cash equivalents (44,390) 13,386
Cash and cash equivalents at beginning of period 55,380 55,485
Cash and cash equivalents at end of period $10,990 $68,871
Cash payments for income taxes $21,895 $21,027
(See accompanying notes to condensed financial statements)