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United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended March 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from to
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COMMISSION FILE NUMBER 1-10356
CRAWFORD & COMPANY
(Exact name of Registrant as specified in its charter)
GEORGIA 58-0506554
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5620 GLENRIDGE DRIVE, N.E.
ATLANTA, GEORGIA 30342
(Address of principal executive offices) (Zip Code)
(404) 256-0830
(Registrant's telephone number, including area code)
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Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES [X] NO [ ]
The number of shares outstanding of each of the issuer's classes of common
stock, as of April 30, 2001 was as follows:
CLASS A COMMON STOCK, $1.00 PAR VALUE: 23,754,704
CLASS B COMMON STOCK, $1.00 PAR VALUE: 24,697,172
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE DATA)
QUARTER ENDED
----------------------------
MARCH 31, MARCH 31,
2001 2000
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REVENUES $ 179,455 $ 177,432
COSTS AND EXPENSES:
Cost of services provided, less reimbursed expenses
of $8,721 in 2001 and $8,089 in 2000 133,489 127,993
Selling, general, and administrative expenses 30,665 30,716
Corporate interest, net 1,181 867
Amortization of goodwill 829 761
- ------------------------------------------------------------------------------------------
TOTAL COSTS AND EXPENSES 166,164 160,337
- ------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 13,291 17,095
PROVISION FOR INCOME TAXES 5,104 6,564
- ------------------------------------------------------------------------------------------
NET INCOME $ 8,187 $ 10,531
==========================================================================================
NET INCOME PER SHARE:
Basic $ 0.17 $ 0.21
Diluted $ 0.17 $ 0.21
==========================================================================================
WEIGHTED-AVERAGE SHARES OUTSTANDING:
Basic 48,452 50,034
Diluted 48,525 50,164
==========================================================================================
CASH DIVIDENDS PER SHARE:
Class A Common Stock $ 0.14 $ 0.1375
Class B Common Stock $ 0.14 $ 0.1375
==========================================================================================
(See accompanying notes to condensed consolidated financial statements)
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CRAWFORD & COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
MARCH 31, DECEMBER 31,
2001 2000
- -------------------------------------------------------------------------------------------
ASSETS
- -------------------------------------------------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents $ 23,259 $ 22,136
Accounts receivable, less allowance for doubtful
accounts of $18,113 in 2001 and $17,335 in 2000 135,482 137,378
Unbilled revenues, at estimated billable amounts 92,342 87,067
Prepaid expenses and other current assets 16,846 17,144
- -------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 267,929 263,725
- -------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT:
Property and equipment, at cost 148,505 149,842
Less accumulated depreciation (107,299) (107,045)
- -------------------------------------------------------------------------------------------
NET PROPERTY AND EQUIPMENT 41,206 42,797
- -------------------------------------------------------------------------------------------
OTHER ASSETS:
Intangible assets arising from acquisitions, net 82,023 82,599
Prepaid pension cost 45,964 47,633
Capitalized software costs, net 13,280 12,498
Other 12,300 9,099
- -------------------------------------------------------------------------------------------
TOTAL OTHER ASSETS 153,567 151,829
- -------------------------------------------------------------------------------------------
TOTAL ASSETS $ 462,702 $ 458,351
===========================================================================================
(See accompanying notes to condensed consolidated financial statements)
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CRAWFORD & COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS - CONTINUED
(IN THOUSANDS)
(UNAUDITED)
MARCH 31, DECEMBER 31,
2001 2000
- -------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' INVESTMENT
- -------------------------------------------------------------------------------------------
CURRENT LIABILITIES:
Short-term borrowings $ 47,879 $ 44,420
Accounts payable 27,370 25,628
Accrued compensation and related costs 21,159 25,366
Deferred revenues 21,556 23,353
Self-insured risks 11,020 10,379
Accrued income taxes 16,708 12,922
Other accrued liabilities 15,551 15,355
Current installments of long-term debt 230 216
- -------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 161,473 157,639
- -------------------------------------------------------------------------------------------
NONCURRENT LIABILITIES:
Long-term debt, less current installments 36,544 36,662
Deferred revenues 13,369 13,598
Self-insured risks 11,596 11,346
Deferred income taxes 3,940 3,941
Postretirement medical benefit obligation 7,087 7,785
Other 9,701 9,613
- -------------------------------------------------------------------------------------------
TOTAL NONCURRENT LIABILITIES 82,237 82,945
- -------------------------------------------------------------------------------------------
SHAREHOLDERS' INVESTMENT:
Class A Common Stock, $1.00 par value; 50,000
shares authorized; 23,755 and 23,754 shares issued
and outstanding in 2001 and 2000, respectively 23,755 23,754
Class B Common Stock, $1.00 par value; 50,000
shares authorized; 24,697 shares issued and
outstanding in 2001 and 2000 24,697 24,697
Retained earnings 185,068 183,664
Accumulated other comprehensive income (14,528) (14,348)
- -------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' INVESTMENT 218,992 217,767
- -------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT $ 462,702 $ 458,351
===========================================================================================
(See accompanying notes to condensed consolidated financial statements)
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CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(IN THOUSANDS)
THREE MONTHS ENDED
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MARCH 31, MARCH 31,
2001 2000
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 8,187 $ 10,531
Reconciliation of net income to net cash provided by
operating activities:
Depreciation and amortization 5,161 4,980
Deferred income taxes 6 (23)
(Gain) loss on sales of property and equipment (14) 361
Changes in operating assets and liabilities,
net of effects of acquisitions:
Accounts receivable, net 2,712 (1,874)
Unbilled revenues (5,207) (2,696)
Accrued or prepaid income taxes 4,214 3,009
Accounts payable and accrued liabilities (3,027) (6,319)
Deferred revenues (1,790) (1,509)
Prepaid expenses and other assets (272) (2,357)
- ------------------------------------------------------------------------------------------
Net cash provided by operating activities 9,970 4,103
- ------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment (3,148) (3,129)
Acquisition of businesses, net of cash acquired (723) (3,595)
Capitalization of computer software costs (1,216) (2,150)
Proceeds from sales of property and equipment 83 218
- ------------------------------------------------------------------------------------------
Net cash used in investing activities (5,004) (8,656)
- ------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (6,783) (6,936)
Repurchase of common stock 0 (25,271)
Proceeds from exercise of stock options 0 436
Increase in short-term borrowings, net of repayments 2,787 11,085
Increase in long-term borrowings 0 21,000
Payments on long-term debt (89) (87)
- ------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities (4,085) 227
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash equivalents 242 (275)
- ------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,123 (4,601)
Cash and cash equivalents at beginning of period 22,136 17,716
- ------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 23,259 $ 13,115
==========================================================================================
(See accompanying notes to condensed consolidated financial statements)
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CRAWFORD & COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. The unaudited condensed consolidated financial statements included
herein have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Certain previously reported amounts have been reclassified to conform to the
current presentation. These condensed financial statements should be read in
conjunction with the financial statements and related notes contained in the
Company's annual report on Form 10-K for the fiscal year ended December 31,
2000.
2. The results of operations for the quarter ended March 31, 2001 are not
necessarily indicative of the results to be expected during the balance of the
year ending December 31, 2001.
3. During the quarter ended March 31, 2001, the Company utilized $223,000
of its restructuring reserves for payments related to employee separations and
lease terminations. As of March 31, 2001, remaining restructuring reserves were
$2.5 million, $2.0 million of which is included in other noncurrent liabilities.
The noncurrent portion of accrued restructuring costs consists primarily of
long-term lease obligations related to various United Kingdom offices, which the
Company has vacated and is currently attempting to sublease, and extended
payments being made under employee separation agreements. Management
periodically reviews the restructuring reserves and believes the remaining
reserves are adequate to complete its plan.
4. Basic net income per share is computed based on the weighted-average
number of total common shares outstanding during the respective periods. Diluted
net income per share is computed based on the weighted-average number of total
common shares outstanding plus the dilutive effect of outstanding stock options
using the "treasury stock" method.
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CRAWFORD & COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Below is the calculation of basic and diluted net income per share for the
quarter ended March 31, 2001 and 2000:
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Quarter ended
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March 31, March 31,
(In thousands, except per share data) 2001 2000
=================================================================
Net income available to common
shareholders $ 8,187 $ 10,531
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Weighted-average common shares
outstanding - Basic 48,452 50,034
Dilutive effect of stock options 73 130
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Weighted-average common shares
outstanding - Diluted 48,525 50,164
======== ========
Basic net income per share $ 0.17 $ 0.21
======== =======
Diluted net income per share $ 0.17 $ 0.21
======== ========
=================================================================
Additional options to purchase 5,110,173 shares of Class A Common Stock at
$10.00 to $19.50 per share were outstanding at March 31, 2001, but were not
included in the computation of diluted net income per share because the options'
exercise prices were greater than the average market price of the common shares;
to include them would have been antidilutive.
5. Comprehensive income for the Company consists of the total of net
income and foreign currency translation adjustments. Below is the calculation of
comprehensive income for the quarter ended March 31, 2001 and 2000:
=================================================================
Quarter ended
----------------------
March 31, March 31,
(In thousands) 2001 2000
=================================================================
Net income $ 8,187 $ 10,531
Foreign currency translation adjustment (180) 221
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Comprehensive income $ 8,007 $ 10,752
======== ========
=================================================================
6. The Company has two reportable segments, one which provides claims
services through branch offices located in the United States ("Domestic
Operations") and the other which provides similar services through branch or
representative offices located in 64 other countries ("International
Operations"). Intersegment sales are recorded at cost and are not material. The
Company measures segment profit based on operating income, defined as income
before amortization of goodwill, net corporate interest, and income taxes.
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CRAWFORD & COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Financial information for the quarter ended March 31, 2001 and 2000 covering the
Company's reportable segments is presented below:
=================================================================
Quarter ended
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March 31, March 31
(In thousands) 2001 2000
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Revenues:
Domestic $ 131,470 $ 128,392
International 47,985 49,040
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Total Revenues $ 179,455 $ 177,432
========= =========
Operating Income:
Domestic $ 11,096 $ 13,429
International 4,205 5,294
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Total Operating Income $ 15,301 $ 18,723
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=================================================================
7. The Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards ("SFAS") 133, "Accounting for Derivative
Instruments and Hedging Activities," in 1998 and SFAS 138 as an amendment to
SFAS 133 in 2000. SFAS 133 and 138 establish accounting and reporting standards
for derivative instruments. SFAS 133 and 138, which were effective for the
Company beginning January 1, 2001, requires that entities recognize all
derivatives as either assets or liabilities in the balance sheet and measure
those instruments at fair value. Except for borrowing in foreign currencies, the
Company does not presently engage in any hedging activities to compensate for
the effect of exchange rate fluctuations on the net assets or operating results
of its foreign subsidiaries. As a result, the adoption of the new standard did
not have a significant effect on the Company's consolidated results of
operations, financial position, or cash flows.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Consolidated net income was $8.2 million and $10.5 million for the quarters
ended March 31, 2001 and 2000, respectively.
The following is a discussion and analysis of the consolidated financial
condition and results of operations of the Company's results reported by its two
reportable segments: domestic operations and international operations. Expense
amounts discussed are excluding amortization of goodwill, net corporate
interest, and income taxes.
RESULTS OF OPERATIONS
Operating results for the Company's domestic and international operations for
the quarter ended March 31, 2001 and 2000 are as follows:
==============================================================================
Quarter ended
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March 31, March 31,
(In thousands) 2001 2000
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REVENUES:
Domestic $ 131,470 $ 128,392
International 47,985 49,040
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TOTAL $ 179,455 $ 177,432
COMPENSATION & FRINGE BENEFITS:
Domestic $ 81,559 $ 78,230
% of Revenues 62.1% 60.9%
International 31,126 30,678
% of Revenues 64.9% 62.6%
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TOTAL $ 112,685 $ 108,908
% of Revenues 62.8% 61.3%
EXPENSES OTHER THAN COMPENSATION &
FRINGE BENEFITS:
Domestic $ 38,815 $ 36,733
% of Revenues 29.5% 28.6%
International 12,654 13,068
% of Revenues 26.3% 26.6%
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TOTAL $ 51,469 $ 49,801
% of Revenues 28.7% 28.1%
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OPERATING INCOME (1):
Domestic $ 11,096 $ 13,429
% of Revenues 8.4% 10.5%
International 4,205 5,294
% of Revenues 8.8% 10.8%
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TOTAL $ 15,301 $ 18,723
% of Revenues 8.5% 10.6%
==============================================================================
(1) Income before amortization of goodwill, net corporate interest, and income
taxes.
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DOMESTIC OPERATIONS
REVENUES
Domestic revenues by market type for the quarter ended March 31, 2001 and 2000
are as follows:
================================================================================
Quarter ended
---------------------------------------------
March 31, March 31,
(In thousands) 2001 2000 Variance
================================================================================
Insurance companies $ 69,060 $ 64,174 7.6%
Self-insured entities 50,138 50,637 (1.0%)
Class action services 12,272 13,581 (9.6%)
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TOTAL DOMESTIC REVENUES $ 131,470 $ 128,392 2.4%
========= =========
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Revenues from insurance companies increased to $69.1 million, due to growth in
managed care revenues resulting from the Company's strategic partnership with a
large domestic insurance company and increased revenues from the expansion of
surveillance services throughout the Company's branch network. Revenues from
self-insured clients decreased slightly to $50.1 million in the quarter. Class
action revenues, which can fluctuate based on the timing of project awards,
decreased to $12.3 million in the quarter. The Company has been awarded several
major class action projects which will contribute to its revenues over the next
two quarters and a number of other potential awards are awaiting final court
settlement.
Case Volume Analysis
Excluding the impact of class action services and acquired revenues, domestic
unit volume, measured principally by cases received, decreased 6.6% in the first
quarter of 2001 compared to the same period in 2000. This decrease was offset by
a 9.0% revenue increase from changes in the mix of services provided and in the
rates charged for those services, resulting in a net 2.4% increase in domestic
revenues in the first quarter of 2001, excluding revenues from class action
services and acquired revenues. The Company's domestic insurance company
referrals for high frequency, low severity claims have declined during the
quarter resulting in an increase in the Company's average revenue per claim. The
decline in class action services decreased domestic revenues by 1.0% in the
first quarter of 2001. The Company's acquisition of Greentree Investigations,
Inc. in March 2000 (included in non-class action revenues) increased domestic
revenues over the prior year period by 1.0% for the quarter ended March 31,
2001.
COMPENSATION AND FRINGE BENEFITS
The Company's most significant expense is the compensation of its employees,
including related payroll taxes and fringe benefits. Domestic compensation
expense as a percent of revenues increased to 62.1% in the first quarter of 2001
as compared to 60.9% in 2000.
Domestic salaries and wages increased to $68.1 million for the quarter ended
March 31, 2001, from $66.0 million in the comparable 2000 period. This increase
resulted primarily from merit salary increases and an increase in capacity in
the Company's domestic operating units due to a lack of weather-related claims
activity during the current quarter. Payroll taxes and fringe benefits for
domestic operations totaled $13.5 million in the first quarter of 2001,
increasing
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10.0% from 2000 costs of $12.2 million for the comparable period.
These increases are primarily due to higher costs related to the Company's
self-insured medical program.
EXPENSES OTHER THAN COMPENSATION AND FRINGE BENEFITS
Domestic expenses other than compensation and related payroll taxes and fringe
benefits approximated 29.5% of revenues for the quarter ended March 31, 2001, up
from 28.6% of revenues for the same period in 2000. This increase is due
primarily to higher professional fees related to outsourced functions in certain
information technology units and higher outside processing fees in the Company's
medical bill auditing unit due to a system outage.
INTERNATIONAL OPERATIONS
REVENUES
Revenues from the Company's international operations decreased 2.2%, from $49.0
million in the first quarter of 2000 to $48.0 million in the first quarter of
2001. International unit volume, measured principally by cases received,
increased 6.1% in the first quarter of 2001 compared to the same period in 2000.
Small strategic acquisitions in France and Brazil increased international
revenues by 2.2% for the quarter ended March 31, 2001. Revenues are net of a
9.4% decline during the quarter ended March 31, 2001, due to the negative effect
of a strong U.S. dollar.
COMPENSATION AND FRINGE BENEFITS
As a percent of revenues, compensation expense, including related payroll taxes
and fringe benefits, increased to 64.9% for the quarter ended March 31, 2001
from 62.6% for the same period in 2000.
Salaries and wages of international personnel increased in the quarter ended
March 31, 2001 to 55.7% of revenues from 53.9% for the comparable period in
2000. This increase is primarily due to higher revenues in the prior year period
from hurricane claims incurred in the 1999 fourth quarter. The 2000 fourth
quarter had no such claims activity. Payroll taxes and fringe benefits increased
as a percent of revenue to 9.2% for the quarter ended March 31, 2001, compared
to 8.7% for the same period in 2000.
EXPENSES OTHER THAN COMPENSATION AND FRINGE BENEFITS
Expenses other than compensation and related payroll taxes and fringe benefits
were 26.3% of international revenues for the quarter ended March 31, 2001, down
from 26.6% for the same period in 2000. These decreases are due to reduced rent
and occupancy costs and lower automobile expenses.
FINANCIAL CONDITION
At March 31, 2001 current assets exceeded current liabilities by approximately
$106.5 million, an increase of $0.4 million from the working capital balance at
December 31, 2000. Cash and cash equivalents at March 31, 2001 totaled $23.3
million, an increase of $1.1 million from the balance at the end of 2000. Cash
was generated primarily from operating activities and short-term borrowings,
while the principal uses of cash were for dividends paid to shareholders,
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acquisitions of property and equipment, and investments in computer software.
During the first quarter of 2001, the Company did not repurchase any of its
Class A or Class B Common Stock. As of March 31, 2001, 705,863 shares remain to
be repurchased under the share repurchase program authorized by the Company's
Board of Directors.
The Company maintains credit lines with banks in order to meet seasonal working
capital requirements and other financing needs that may arise. Short-term
borrowings outstanding as of March 31, 2001 totaled $47.9 million, increasing
from $44.4 million at the end of 2000. Long-term borrowings outstanding,
excluding current installments, as of March 31, 2001 total $36.5 million, as
compared to $36.7 million at the end of 2000. The Company believes that its
current financial resources, together with funds generated from operations and
existing and potential borrowing capabilities, will be sufficient to maintain
its current operations.
The Company does not engage in any hedging activities to compensate for the
effect of exchange rate fluctuations on the operating results of its foreign
subsidiaries. Foreign currency denominated debt is maintained primarily to hedge
the currency exposure of the Company's net investment in foreign operations.
Shareholders' investment at March 31, 2001 was $219.0 million, compared with
$217.8 million at December 31, 2000.
FACTORS THAT MAY AFFECT FUTURE RESULTS
FORWARD LOOKING STATEMENTS
Certain information presented in Management's Discussion and Analysis of
Financial Condition and Results of Operations may include forward-looking
statements, the accuracy of which is subject to a number of risks and
assumptions. The Company's Form 10-K for the year ended December 31, 2000,
discusses such risks and assumptions and other key factors that could cause
actual results to differ materially from those expressed in such forward-looking
statements.
CONTINGENCIES
In the normal course of the claims administration services business, the Company
is named as a defendant in suits by insureds or claimants contesting decisions
by the Company or its clients with respect to the settlement of claims.
Additionally, clients of the Company have brought actions for indemnification on
the basis of alleged negligence on the part of the Company, its agents or
employees in rendering service to clients. The majority of these claims are of
the type covered by insurance maintained by the Company; however, the Company is
self-insured for the deductibles under its various insurance coverages. In the
opinion of the Company, adequate reserves have been provided for such
self-insured risks.
The Company has received federal grand jury subpoenas requesting certain
business and financial records of the Company dating back to 1992. The Company
has been advised that the subpoenas were issued in connection with an
investigation into the Company's billings for services in its Domestic Claims
Management and Healthcare Management Services branch offices. The Company is
cooperating fully with the investigation. It is not possible to determine what
effects, if any, this investigation might ultimately have on the Company's
financial position or results of operations.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK
DERIVATIVES
The Company has not entered into any transactions using derivative financial
instruments or derivative commodity instruments.
FOREIGN CURRENCY EXCHANGE
The Company's international operations expose the Company to foreign currency
exchange rate changes that could impact translations of foreign-denominated
assets and liabilities into U.S. dollars and future earnings and cash flows from
transactions denominated in different currencies. The Company's revenues from
its international operations were 26.7% and 27.6% of total revenues at March 31,
2001 and 2000, respectively. Except for borrowing in foreign currencies, the
Company does not presently engage in any hedging activities to compensate for
the effect of exchange rate fluctuations on the net assets or operating results
of its foreign subsidiaries.
The Company measures currency earnings risk related to its international
operations based on changes in foreign currency rates using a sensitivity
analysis. The sensitivity analysis measures the potential loss in earnings based
on a hypothetical 10% change in currency exchange rates. Exchange rates and
currency positions as of March 31, 2001 were used to perform the sensitivity
analysis. Such analysis indicates that a hypothetical 10% change in foreign
currency exchange rates would have decreased pretax income by approximately $0.3
million during the first three months of 2001, had the U.S. dollar exchange rate
increased relative to the currencies with which the Company had exposure.
INTEREST RATES
The Company is exposed to interest rate fluctuations on certain of its variable
rate borrowings. Depending on general economic conditions, the Company uses
variable rate debt for short-term borrowings and fixed rate debt for long-term
borrowings. At March 31, 2001, the Company had $47.9 million in short-term loans
outstanding with an average variable interest rate of 6.2%.
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors of
Crawford & Company:
We have reviewed the accompanying condensed consolidated balance sheet of
CRAWFORD & COMPANY (a Georgia corporation) AND SUBSIDIARIES as of March 31,
2001, and the related condensed consolidated statements of income and cash flows
for the quarters ended March 31, 2001 and 2000. These financial statements are
the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with auditing standards generally accepted in the United States, the objective
of which is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the financial statements referred to above for them to be in
conformity with accounting principles generally accepted in the United States.
We have previously audited, in accordance with auditing standards generally
accepted in the United States, the consolidated balance sheet of Crawford &
Company and subsidiaries as of December 31, 2000 (not presented separately
herein), and in our report dated January 26, 2001, we expressed an unqualified
opinion on that statement. In our opinion, the information set forth in the
accompanying condensed consolidated balance sheet as of December 31, 2000, is
fairly stated, in all material respects, in relation to the consolidated balance
sheet from which it has been derived.
/s/ Arthur Andersen LLP
Atlanta, Georgia
May 9, 2001
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
15.1 Letter from Arthur Andersen LLP
(b) Reports on Form 8-K:
The Company did not file any reports on Form 8-K during the
period covered by this report.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CRAWFORD & COMPANY
(Registrant)
Date: May 9, 2001 /s/ Grover L. Davis
---------------------------------------
Grover L. Davis
Chief Executive Officer
(Principal Executive Officer)
Date: May 9, 2001 /s/ John F. Giblin
---------------------------------------
John F. Giblin
Executive Vice President - Finance
(Principal Financial Officer)
Date: May 9, 2001 /s/ W. Bruce Swain
---------------------------------------
W. Bruce Swain
Senior Vice President and Controller
(Principal Accounting Officer)
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INDEX TO EXHIBITS
Exhibit No. Description Sequential Page No.
15.1 Letter from Arthur Andersen LLP 18
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