EXHIBIT 99.1
(CRAWFORD LETTERHEAD)
PRESS RELEASE
FOR IMMEDIATE RELEASE DATE: JULY 21, 2003
FROM: GROVER L. DAVIS
CHAIRMAN AND
CHIEF EXECUTIVE OFFICER
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CRAWFORD REPORTS 24% INCREASE IN SECOND QUARTER NET INCOME
Crawford & Company (NYSE: CRDA and CRDB), the world's largest independent
provider of claims management solutions to insurance companies and self-insured
entities, today announced its financial results for the second quarter ended
June 30, 2003.
Second quarter 2003 revenues before reimbursements totaled $176.3 million
compared with $178.0 million in the 2002 second quarter. Second quarter 2003 net
income was $6.1 million, growing from $4.9 million for the 2002 second quarter.
Second quarter 2003 net income per share was $0.12 per share, up 20% from $0.10
in the prior-year quarter.
Operating earnings (earnings before special credit, net corporate interest and
taxes) in the 2003 second quarter totaled $10.7 million compared with $8.8
million in the comparable 2002 quarter. Operating earnings in the 2003 six-month
period totaled $17.1 million compared with $16.8 million in the comparable 2002
period. Operating earnings is one of the key performance measures used by the
Company's senior management to evaluate the performance of its business and make
resource allocation decisions. The Company believes this measure is useful to
investors in that it allows them to evaluate its performance using the same
criteria that management uses. Following is a reconciliation of consolidated net
income to operating earnings and the related margins as a percentage of revenues
before reimbursements for all periods presented:
Quarter ended Six months ended
--------------------------------------------- ----------------------------------------------
June 30, % June 30, % June 30, % June 30, %
2003 Margin 2002 Margin 2003 Margin 2002 Margin
-------- -------- -------- -------- -------- -------- -------- --------
Net income $ 6,051 3.4% $ 4,867 2.7% $ 9,300 2.7% $ 13,034 3.7%
Add/(deduct):
Special credit -- -- -- -- -- -- (6,000) (1.7)
Net corporate interest 1,179 0.7 1,141 0.6 2,458 0.7 2,319 0.7
Income taxes 3,463 2.0 2,786 1.6 5,322 1.6 7,460 2.1
-------- -------- -------- -------- -------- -------- -------- --------
Operating earnings $ 10,693 6.1% $ 8,794 4.9% $ 17,080 5.0% $ 16,813 4.8%
======== ======== ======== ======== ======== ======== ======== ========
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(CRAWFORD LETTERHEAD)
PRESS RELEASE
U.S. revenues before reimbursements were $121.9 million in the second quarter of
2003 compared with $131.7 million in the 2002 second quarter. Revenues from the
insurance company market were $62.2 million in the 2003 second quarter compared
with $68.3 million in the 2002 period, reflecting a continued softening in the
Company's U.S. insurance company referrals for high-frequency, low-severity
claims in the current quarter. Lower medical bill auditing revenues associated
with the previously reported non-renewal of a contract with a major domestic
insurer contributed $2.8 million of this decline. Revenues from self-insured
clients were $42.1 million in the 2003 second quarter compared with $49.1
million in the 2002 quarter, primarily reflecting declines in U.S. employment
levels and associated injury rates which have contributed to a reduction in
workers' compensation claims. Class action services revenues were $17.6 million
for the 2003 second quarter, compared with $14.3 million in the comparable
year-ago quarter, up 23% due to the award of a new class action settlement in
the quarter.
Second quarter 2003 international revenues grew to $54.5 million from $46.3
million for the same period in 2002. This growth is partly due to the Company's
third quarter 2002 acquisition of the loss adjusting business of Robertson and
Company in Australia. During the 2003 second quarter, the U.S. dollar weakened
significantly against the British pound and the euro, resulting in a net
exchange rate benefit in the quarter. Excluding the benefit of exchange rate
fluctuations, international revenues would have been $48.8 million in the 2003
second quarter.
Mr. Grover L. Davis, chief executive officer of Crawford & Company, stated, "Our
second quarter results reflect a continued industry-wide decline in property and
casualty claims frequency. Conservative underwriting by our insurance company
clients, including significant increases in policy deductibles, has contributed
to a decline in property and casualty claims frequency, resulting in an overall
17% decline in claims referred to Crawford in the U.S. In addition, our
self-insured market revenues in the U.S. were negatively impacted by a reduction
in workers' compensation claims frequency, as the U.S. unemployment rate is at
its highest point in a decade, private sector workplace injuries have declined
significantly, and employee absentee rates are at their lowest levels since
1991."
"While we continue to endure challenging industry circumstances, we were pleased
that we successfully reduced our U.S. operating expenses over 11% in the current
quarter in response to the decline in claims volume and improved our operating
margin to better than 8% as compared to 4.5% in the 2002 second quarter and 3.5%
for the 2003 first quarter. The operating margins in our international
operations were disappointing in the second quarter, declining to 1% from just
over 6% in the prior year, primarily due to declining volume in our Canadian and
U.K. operations. We are particularly disappointed in the results of our U.K.
operations where we experienced a loss in the 2003 second quarter after posting
profitable results in this year's first quarter. We have entered into several
new client service agreements and the claims associated with those programs have
been slow to develop. We believe that new claims associated with these programs
will be reported to us and our existing
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(CRAWFORD LETTERHEAD)
PRESS RELEASE
cost base is appropriate for the projected level of claims activity. Further,
once our claim volumes from these new arrangements stabilize, we believe our
U.K. operations should be profitable beginning in this year's fourth quarter."
Total revenues before reimbursements for the year-to-date period ended June 30,
2003 were $343.6 million compared with $349.8 million in 2002. Operating
earnings through June 2003 totaled $17.1 million compared with $16.8 million in
2002. Net income for the current year-to-date period totaled $9.3 million, or
$0.19 per share, compared with $13.0 million, or $0.27 per share, reported in
the prior year. Net income in the 2002 first quarter included a payment received
from a former vendor in full settlement of a business dispute of $3.8 million,
net of related income tax expense, or $0.08 per share.
U.S. revenues before reimbursements for the 2003 six-month period were $236.9
million compared with $258.3 million in 2002. International revenues before
reimbursements were $106.6 million in 2003 compared with $91.5 million during
2002. Excluding the benefit of exchange rate fluctuations, international
revenues would have been $96.9 million in the current year-to-date period.
Mr. Davis concluded, "We are pleased with the growth in our class action
services business this year. We benefited from the award of a significant new
contract during the second quarter and are aggressively pursuing other
opportunities which should contribute to future revenue growth in this business.
In addition, our cash flows from operating activities were $24.6 million for the
year-to-date 2003 period, up from $21.6 million in the comparable prior-year
period. Overall, our cash and cash equivalents at June 30, 2003 have grown $10.2
million from the end of 2002 and are $23.1 million greater than the balances at
June 30, 2002."
"We remain committed to preserving our profitability and are closely monitoring
our U.S. and international operating expenses to ensure that we achieve a
consolidated operating margin of 6% to 7% for 2003. By managing our costs, we
believe that we will be able to preserve our current level of dividends, which
is important to us in delivering shareholder value and building investor
confidence."
"As focused as we are on aggressively managing our cost structure, we are also
equally focused on growing our top line in everything we do. Significant
progress was made on all of our technology initiatives during the first six
months of the year. These projects impact every area of our business and share a
common element: to make it easier for our clients to do business with us, which
in turn should help drive revenue growth. Another ongoing initiative that is
producing tangible benefits is our Six Sigma project, which is identifying
process and quality improvements that will result in more consistent, responsive
and cost-effective service delivery by our branch operations. This project is
focused on ensuring that we consistently meet our clients' desired service
levels, which should lead to increased market penetration with both existing and
new clients."
Page 3 of 9
(CRAWFORD LETTERHEAD)
PRESS RELEASE
Crawford & Company's management will host a conference call with analysts on
Monday, July 21, 2003 at 3:00 P.M. EDT, to discuss its quarterly earnings and
other developments. The call will be recorded and available for replay through
July 28, 2003. You may dial 1-800-428-6051 (973-709-2089 international) to
listen to the replay. The access code is 300341. Alternatively, please visit our
web site at www.crawfordandcompany.com for a live audio web cast.
Further information regarding the Company's financial position, operating
results, and cash flows for the quarter ended June 30, 2003 is shown on the
attached statements.
Based in Atlanta, Georgia, Crawford & Company (www.crawfordandcompany.com) is
the world's largest independent provider of claims management solutions to
insurance companies and self-insured entities, with a global network of more
than 700 offices in 67 countries. Major service lines include workers'
compensation claims administration and healthcare management services, property
and casualty claims management, class action services and risk management
information services. The Company's shares are traded on the NYSE under the
symbols CRDA and CRDB.
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Except for historical information contained herein, the matters discussed in
this news release are forward-looking statements that involve risks and
uncertainties. The results achieved in the quarter ended June 30, 2003 are not
necessarily indicative of future prospects for the Company. Actual results in
future quarters may differ materially. For a complete discussion regarding
factors which could affect the Company's financial performance, see the
Company's Form 10-K for the year ended December 31, 2002 filed with the
Securities and Exchange Commission, in particular the information under the
headings "Business", "Legal Proceedings" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
The Company undertakes no obligation to publicly release any revisions to any
forward-looking statements contained herein to reflect events or circumstances
occurring after the date hereof or to reflect the occurrence of unanticipated
events. The Company's actual results may differ materially from those projected
in forward-looking statements made by, or on behalf of, the Company.
- -------------------------------------------------------------------------------
FOR FURTHER INFORMATION REGARDING THIS PRESS RELEASE, PLEASE CALL JOHN GIBLIN AT
(404) 847-4571.
Page 4 of 9
[CRAWFORD & COMPANY LOGO]
Press Release
CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047
ATLANTA, GEORGIA 30302 (404)256-0830
CRAWFORD & COMPANY
COMPARATIVE STATEMENTS OF INCOME
(In Thousands Except Per Share Data)
SIX MONTHS ENDED JUNE 30 2003 2002 % Change
--------- --------- --------
Revenues:
Revenues Before Reimbursements $ 343,568 $ 349,756 -2%
Reimbursements 19,932 17,501 14%
--------- ---------
Total Revenues 363,500 367,257 -1%
Costs and Expenses:
Cost of Services Before Reimbursements 261,314 265,695 -2%
Reimbursements 19,932 17,501 14%
--------- ---------
Cost of Services 281,246 283,196 -1%
Selling, General, and Administrative 65,174 67,248 -3%
Special Credit (1) -- (6,000) nm
Corporate Interest, Net 2,458 2,319 6%
--------- ---------
Total Costs and Expenses 348,878 346,763 1%
--------- ---------
Income Before Income Taxes 14,622 20,494 -29%
Income Taxes 5,322 7,460 -29%
--------- ---------
Net Income $ 9,300 $ 13,034 -29%
========= =========
Net Income Per Share:
Basic $ 0.19 $ 0.27 -30%
========= =========
Diluted $ 0.19 $ 0.27 -30%
========= =========
Weighted Average Shares Outstanding:
Basic 48,623 48,544
========= =========
Diluted 48,670 48,700
========= =========
(1) Special credit related to a payment from a former vendor in full
settlement of a business dispute.
nm = not meaningful
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[CRAWFORD & COMPANY LOGO]
Press Release
CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047
ATLANTA, GEORGIA 30302 (404)256-0830
CRAWFORD & COMPANY
COMPARATIVE STATEMENTS OF INCOME
(In Thousands Except Per Share Data)
QUARTER ENDED JUNE 30 2003 2002 % Change
-------- -------- ---------
Revenues:
Revenues Before Reimbursements $176,310 $177,989 -1%
Reimbursements 10,317 8,867 16%
-------- --------
Total Revenues 186,627 186,856 0%
Costs and Expenses:
Cost of Services Before Reimbursements 133,522 135,104 -1%
Reimbursements 10,317 8,867 16%
-------- --------
Cost of Services 143,839 143,971 0%
Selling, General, and Administrative 32,095 34,091 -6%
Corporate Interest, Net 1,179 1,141 3%
-------- --------
Total Costs and Expenses 177,113 179,203 -1%
-------- --------
Income Before Income Taxes 9,514 7,653 24%
Income Taxes 3,463 2,786 24%
-------- --------
Net Income $ 6,051 $ 4,867 24%
======== ========
Net Income Per Share:
Basic $ 0.12 $ 0.10 20%
-------- --------
Diluted $ 0.12 $ 0.10 20%
-------- --------
Weighted Average Shares Outstanding:
Basic 48,623 48,547
-------- --------
Diluted 48,671 48,725
-------- --------
nm = not meaningful
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Press Release
CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047
ATLANTA, GEORGIA 30302 (404)256-0830
CRAWFORD & COMPANY
SUMMARY RESULTS BY OPERATING SEGMENT
SIX MONTHS ENDED JUNE 30, 2003
(In Thousands Except Percentages)
U.S. International Total
2003 2002 2003 2002 2003 2002
-------- -------- -------- -------- -------- --------
Revenues Before Reimbursements $236,931 $258,279 $106,637 $ 91,477 $343,568 $349,756
Compensation & Benefits 149,646 166,360 73,817 63,007 223,463 229,367
% of Revenues 63.1% 64.4% 69.2% 68.9% 65.0% 65.6%
Expenses Other than Reimbursements,
Compensation & Benefits 73,105 79,736 29,920 23,840 103,025 103,576
% of Revenues 30.9% 30.9% 28.1% 26.0% 30.0% 29.6%
-------- -------- -------- -------- -------- --------
Operating Earnings (1) $ 14,180 $ 12,183 $ 2,900 $ 4,630 $ 17,080 $ 16,813
% of Revenues 6.0% 4.7% 2.7% 5.1% 5.0% 4.8%
-------- -------- -------- -------- -------- --------
QUARTER ENDED JUNE 30, 2003
(In Thousands Except Percentages)
U.S. International Total
2003 2002 2003 2002 2003 2002
-------- -------- -------- -------- -------- --------
Revenues Before Reimbursements $121,858 $131,669 $ 54,452 $ 46,320 $176,310 $177,989
Compensation & Benefits 75,302 84,602 38,324 31,606 113,626 116,208
% of Revenues 61.8% 64.2% 70.4% 68.3% 64.4% 65.3%
Expenses Other than Reimbursements,
Compensation & Benefits 36,425 41,164 15,566 11,823 51,991 52,987
% of Revenues 29.9% 31.3% 28.6% 25.5% 29.5% 29.8%
-------- -------- -------- -------- -------- --------
Operating Earnings (1) $ 10,131 $ 5,903 $ 562 $ 2,891 $ 10,693 $ 8,794
% of Revenues 8.3% 4.5% 1.0% 6.2% 6.1% 4.9%
-------- -------- -------- -------- -------- --------
(1) Earnings before special credit, net corporate interest, and taxes.
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[CRAWFORD & COMPANY LOGO]
Press Release
CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047
ATLANTA, GEORGIA 30302 (404)256-0830
CRAWFORD & COMPANY
CONSOLIDATED COMPARATIVE BALANCE SHEETS
JUNE 30, 2003 AND DECEMBER 31, 2002
(In Thousands)
JUNE 30 December 31
2003 2002
--------- ---------
ASSETS
Current Assets:
Cash and Cash Equivalents $ 41,290 $ 31,091
Accounts Receivable, Net 146,452 135,174
Unbilled Revenues 98,487 93,792
Prepaid Expenses and Other Current Assets 11,540 11,968
--------- ---------
Total Current Assets 297,769 272,025
--------- ---------
Property and Equipment, at Cost 149,589 144,706
Less Accumulated Depreciation (112,959) (108,607)
--------- ---------
Net Property and Equipment 36,630 36,099
--------- ---------
Other Assets:
Intangible Assets Arising from Acquisitions, Net 101,879 97,798
Capitalized Software Costs, Net 27,823 23,977
Deferred Income Tax Asset 32,001 31,899
Other 13,256 12,978
--------- ---------
Total Other Assets 174,959 166,652
--------- ---------
Total Assets $ 509,358 $ 474,776
========= =========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Short-Term Borrowings $ 35,617 $ 30,019
Accounts Payable 33,136 31,956
Accrued Liabilities 72,903 66,265
Deferred Revenues 23,478 18,516
Current Installments of Long-Term Debt 1,842 1,493
--------- ---------
Total Current Liabilities 166,976 148,249
--------- ---------
Noncurrent Liabilities:
Long-Term Debt, Less Current Installments 51,132 49,976
Deferred Revenues 11,777 12,127
Self-Insured Risks 12,658 11,819
Postretirement Medical Benefit Obligation 6,201 6,289
Minimum Pension Liability 81,429 76,747
Other 9,501 10,138
--------- ---------
Total Noncurrent Liabilities 172,698 167,096
--------- ---------
Shareholders' Investment:
Class A Common Stock, $1.00 Par Value 23,925 23,925
Class B Common Stock, $1.00 Par Value 24,697 24,697
Additional Paid-in Capital 523 523
Retained Earnings 195,232 191,767
Accumulated Other Comprehensive Loss (74,693) (81,481)
--------- ---------
Total Shareholders' Investment 169,684 159,431
--------- ---------
Total Liabilities and Shareholders' Investment $ 509,358 $ 474,776
========= =========
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[CRAWFORD & COMPANY LOGO]
Press Release
CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047
ATLANTA, GEORGIA 30302 (404)256-0830
CRAWFORD & COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2003 AND JUNE 30, 2002
(In Thousands)
2003 2002
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 9,300 $ 13,034
Reconciliation of Net Income to Net Cash Provided by
Operating Activities:
Depreciation and Amortization 8,113 8,811
Deferred Income Taxes 245 (287)
Loss on Sales of Property and Equipment 76 0
Changes in Operating Assets and Liabilities, Net of Effects
of Acquisitions:
Accounts Receivable, Net (7,215) 1,743
Unbilled Revenues (2,190) (9,083)
Accrued or Prepaid Income Taxes 1,226 1,721
Accounts Payable and Accrued Liabilities (522) 1,497
Deferred Revenues 4,830 571
Prepaid and Accrued Pension Costs 7,884 6,690
Prepaid Expenses and Other Assets 2,832 (3,088)
-------- --------
Net Cash Provided by Operating Activities 24,579 21,609
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of Property and Equipment, Net (5,204) (5,394)
Capitalization of Computer Software Costs (6,458) (6,771)
Acquisitions of Businesses, Net of Cash Acquired -- (3,100)
-------- --------
Net Cash Used in Investing Activities (11,662) (15,265)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends Paid (5,835) (13,592)
Proceeds from Exercise of Stock Options -- 62
Increase in Short-Term Borrowings 2,599 2,853
Decrease in Long-Term Debt (403) (90)
-------- --------
Net Cash Used in Financing Activities (3,639) (10,767)
-------- --------
Effect of Exchange Rate Changes on Cash and Cash Equivalents 921 609
-------- --------
Increase (Decrease) in Cash and Cash Equivalents 10,199 (3,814)
Cash and Cash Equivalents at Beginning of Period 31,091 21,966
-------- --------
Cash and Cash Equivalents at End of Period $ 41,290 $ 18,152
======== ========
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