EXHIBIT 99.1
[CRAWFORD LOGO]
PRESS RELEASE
CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047
ATLANTA, GEORGIA 30302 (404) 256-0830
FOR IMMEDIATE RELEASE DATE: OCTOBER 27, 2003
FROM: GROVER L. DAVIS
CHAIRMAN AND
CHIEF EXECUTIVE OFFICER
- --------------------------------------------------------------------------------
CRAWFORD REPORTS THIRD QUARTER AND NINE MONTH FINANCIAL RESULTS ROLL OUT OF
CUSTOM CLAIMS HANDLING PROGRAM LANDS LARGE U.S. PERSONAL LINES CUSTOMER
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 third quarter ended
September 30, 2003.
Third quarter 2003 revenues before reimbursements totaled $172.2 million
compared with $175.9 million in the 2002 third quarter. Third quarter 2003 net
loss was ($3.7) million, or ($0.08) per fully diluted share, compared with net
income of $5.6 million, or $0.11 per fully diluted share, for the 2002 third
quarter. Net loss in the 2003 third quarter included an after-tax charge of $8.0
million, or $0.17 per share, under an agreement reached with the Department of
Justice to resolve the investigation of the Company's billing practices. This
charge is recorded in other accrued liabilities in the accompanying consolidated
balance sheets.
Operating earnings (earnings before special charge/credit, net corporate
interest and taxes) in the 2003 third quarter totaled $8.1 million compared with
$10.1 million in the comparable 2002 quarter. Operating earnings in the 2003
nine-month period totaled $25.2 million compared with $26.9 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
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consolidated net (loss) income to operating earnings and the related margins as
a percentage of revenues before reimbursements for all periods presented:
Quarter ended Nine months ended
------------------------------------------ ---------------------------------------------
September % September % September % September %
30, 2003 Margin 30, 2002 Margin 30, 2003 Margin 30, 2002 Margin
-------- ------ --------- ------ --------- ------ --------- ------
Net (loss) income $ (3,726) (2.2%) $ 5,637 3.2% $ 5,574 1.1% $ 18,671 3.5%
Add/(deduct):
Special charge/credit 8,000 4.7 -- -- 8,000 1.6 (6,000) (1.1)
Net corporate interest 1,397 0.8 1,246 0.7 3,855 0.7 3,565 0.7
Income taxes 2,447 1.4 3,226 1.8 7,769 1.5 10,686 2.0
-------- --- -------- --- -------- --- -------- ---
Operating earnings $ 8,118 4.7% $ 10,109 5.7% $ 25,198 4.9% $ 26,922 5.1%
======== === ======== === ======== === ======== ===
U.S. revenues before reimbursements were $117.7 million in the third quarter of
2003 compared with $128.8 million in the 2002 third quarter. Revenues from the
insurance company market were $56.8 million in the 2003 third quarter compared
with $65.7 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 $2.1 million of this decline. Revenues from self-insured
clients were $40.9 million in the 2003 third quarter compared with $47.4 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 $19.9 million for the
2003 third quarter, compared with $15.7 million in the comparable year-ago
quarter.
Third quarter 2003 international revenues grew to $54.6 million from $47.1
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 third 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 $48.6 million in the 2003
third quarter.
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Mr. Grover L. Davis, chief executive officer of Crawford & Company, stated, "Our
third 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
10% decline in claims referred to Crawford in the U.S. In addition, our
self-insured market revenues in the U.S. were negatively affected by a reduction
in workers' compensation claims frequency due to the high U.S. unemployment
rate, which is driving down private sector workplace injuries."
"While we continue to endure challenging industry circumstances, we successfully
reduced our U.S. operating expenses over 7% in the current quarter in response
to the decline in claims volume. However, our operating margin declined to less
than 6% as compared to over 8% for the 2003 second quarter, as our U.S claim
referrals fell more than anticipated. The operating margins in our international
operations improved in the third quarter to nearly 3% from 1% in the 2003 second
quarter. We expect continued pressure on our international operating margins in
the 2003 fourth quarter, but anticipate improved international operating margins
beginning in the 2004 first quarter."
Total revenues before reimbursements for the year-to-date period ended September
30, 2003 were $515.8 million compared with $525.7 million in 2002. Operating
earnings through September 2003 totaled $25.2 million compared with $26.9
million in 2002. Net income for the current year-to-date period totaled $5.6
million, or $0.11 per share, compared with $18.7 million, or $0.38 per share,
reported in the prior year. Net income in 2002 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 nine-month period were $354.6
million compared with $387.1 million in 2002. International revenues before
reimbursements were $161.2 million in 2003 compared with $138.6 million during
2002. Excluding the benefit of exchange rate fluctuations, international
revenues would have been $145.6 million in the current year-to-date period.
Mr. Davis concluded, "We are very pleased with the growth in our class action
services business this year and recorded record revenues during the 2003 third
quarter. We benefited from the commencement of work on a significant new
contract during the quarter and are aggressively pursuing other opportunities
that should contribute to future revenue growth in this business. Overall, our
cash and cash equivalents at September 30, 2003 have grown $5.2 million from the
end of 2002 after reflecting a $10.0 million contribution to the Company's
defined benefit pension plan during September 2003. We recently announced the
closing of a new $70 million three-year revolving credit facility and the
issuance of $50 million in seven-year 6.08% senior notes. This new financing
gives the Company added financial strength and greater working capital
flexibility."
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"We are also pleased to have recently formed an agreement to provide a
customized claims handling program for a large U.S. personal lines insurer. This
agreement will generate annual revenues of approximately $5 million beginning in
the 2003 fourth quarter. This important new program coupled with the recent
appointments of Crawford & Company to the preferred adjuster lists of several
major property and casualty insurers should greatly strengthen our market
penetration and enable us to capture a greater share of revenues when claim
volumes increase."
Crawford & Company's management will host a conference call with analysts on
Monday, October 27, 2003 at 3:00 P.M. EST, to discuss its quarterly earnings and
other developments. The call will be recorded and available for replay through
November 3, 2003. You may dial 1-800-428-6051 (973-709-2089 international) to
listen to the replay. The access code is 308294. Alternatively, please visit our
website 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 September 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.
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 September 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
COMPARATIVE STATEMENTS OF INCOME
(In Thousands Except Per Share Data)
NINE MONTHS ENDED SEPTEMBER 30 2003 2002 % Change
- ------------------------------ --------- --------- --------
Revenues:
Revenues Before Reimbursements $ 515,802 $ 525,668 -2%
Reimbursements 31,782 27,948 14%
--------- ---------
Total Revenues 547,584 553,616 -1%
Costs and Expenses:
Cost of Services Before Reimbursements 393,001 398,420 -1%
Reimbursements 31,782 27,948 14%
--------- ---------
Cost of Services 424,783 426,368 0%
Selling, General, and Administrative 97,603 100,326 -3%
Special Charge/Credit (1) 8,000 (6,000) nm
Corporate Interest, Net 3,855 3,565 8%
--------- ---------
Total Costs and Expenses 534,241 524,259 2%
--------- ---------
Income Before Income Taxes 13,343 29,357 -55%
Income Taxes 7,769 10,686 -27%
--------- ---------
Net Income $ 5,574 $ 18,671 -70%
========= =========
Net Income Per Share:
Basic $ 0.11 $ 0.38 -71%
--------- ---------
Diluted $ 0.11 $ 0.38 -71%
--------- ---------
Weighted Average Shares Outstanding:
Basic 48,649 48,565
--------- ---------
Diluted 48,701 48,625
--------- ---------
- ------------------
(1) Special credit in 2002 related to a payment from a former vendor in
full settlement of a business dispute. Special charge in 2003 is an
after tax fine related to the settlement of the Department of Justice
investigation.
nm = not meaningful
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CRAWFORD & COMPANY
COMPARATIVE STATEMENTS OF INCOME
(In Thousands Except Per Share Data)
QUARTER ENDED SEPTEMBER 30 2003 2002 % Change
- -------------------------- --------- --------- --------
Revenues:
Revenues Before Reimbursements $ 172,234 $ 175,912 -2%
Reimbursements 11,850 10,447 13%
--------- ---------
Total Revenues 184,084 186,359 -1%
Costs and Expenses:
Cost of Services Before Reimbursements 131,687 132,725 -1%
Reimbursements 11,850 10,447 13%
--------- ---------
Cost of Services 143,537 143,172 0%
Selling, General, and Administrative 32,429 33,078 -2%
Special Charge (1) 8,000 -- nm
Corporate Interest, Net 1,397 1,246 12%
--------- ---------
Total Costs and Expenses 185,363 177,496 4%
--------- ---------
(Loss) Income Before Income Taxes (1,279) 8,863 -114%
Income Taxes 2,447 3,226 -24%
--------- ---------
Net (Loss) Income ($ 3,726) $ 5,637 -166%
========= =========
(Loss) Net Income Per Share:
Basic $ (0.08) $ 0.11 -173%
--------- ---------
Diluted $ (0.08) $ 0.11 -173%
--------- ---------
Weighted Average Shares Outstanding:
Basic 48,700 48,607
--------- ---------
Diluted 48,844 48,649
--------- ---------
- -------------
(1) Special charge in 2003 is an after tax fine related to the settlement
of the Department of Justice investigation.
nm = not meaningful
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CRAWFORD & COMPANY
SUMMARY RESULTS BY OPERATING SEGMENT
NINE MONTHS ENDED SEPTEMBER 30, 2003
(In Thousands Except Percentages)
U.S. International Total
2003 2002 2003 2002 2003 2002
-------- -------- -------- -------- -------- --------
Revenues Before Reimbursements $354,584 $387,074 $161,218 $138,594 $515,802 $525,668
Compensation & Benefits 221,371 246,343 112,895 95,973 334,266 342,316
% of Revenues 62.4% 63.7% 70.0% 69.2% 64.8% 65.1%
Expenses Other than Reimbursements,
Compensation & Benefits 112,395 119,311 43,943 37,119 156,338 156,430
% of Revenues 31.7% 30.8% 27.3% 26.8% 30.3% 29.8%
-------- -------- -------- -------- -------- --------
Operating Earnings (1) $ 20,818 $ 21,420 $ 4,380 $ 5,502 $ 25,198 $ 26,922
% of Revenues 5.9% 5.5% 2.7% 4.0% 4.9% 5.1%
-------- -------- -------- -------- -------- --------
QUARTER ENDED SEPTEMBER 30, 2003
(In Thousands Except Percentages)
U.S. International Total
2003 2002 2003 2002 2003 2002
-------- -------- -------- -------- -------- --------
Revenues Before Reimbursements $117,653 $128,795 $ 54,581 $ 47,117 $172,234 $175,912
Compensation & Benefits 71,725 79,983 39,078 32,966 110,803 112,949
% of Revenues 61.0% 62.1% 71.6% 69.9% 64.3% 64.3%
Expenses Other than Reimbursements,
Compensation & Benefits 39,290 39,575 14,023 13,279 53,313 52,854
% of Revenues 33.4% 30.7% 25.7% 28.2% 31.0% 30.0%
-------- -------- -------- -------- -------- --------
Operating Earnings (1) $ 6,638 $ 9,237 $ 1,480 $ 872 $ 8,118 $ 10,109
% of Revenues 5.6% 7.2% 2.7% 1.9% 4.7% 5.7%
-------- -------- -------- -------- -------- --------
(1) Earnings before special charge/credit, net corporate interest, and taxes.
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CRAWFORD & COMPANY
CONSOLIDATED COMPARATIVE BALANCE SHEETS
SEPTEMBER 30, 2003 AND DECEMBER 31, 2002
(In Thousands)
SEPTEMBER 30 December 31
ASSETS 2003 2002
----- ------------ -----------
Current Assets:
Cash and Cash Equivalents $ 36,338 $ 31,091
Accounts Receivable, Net 141,629 135,174
Unbilled Revenues 98,738 93,792
Prepaid Expenses and Other Current Assets 15,585 11,968
--------- ---------
Total Current Assets 292,290 272,025
--------- ---------
Property and Equipment, at Cost 152,431 144,706
Less Accumulated Depreciation (115,450) (108,607)
--------- ---------
Net Property and Equipment 36,981 36,099
--------- ---------
Other Assets:
Intangible Assets Arising from Acquisitions, Net 103,344 97,798
Capitalized Software Costs, Net 29,578 23,977
Deferred Income Tax Asset 31,955 31,899
Other 13,292 12,978
--------- ---------
Total Other Assets 178,169 166,652
--------- ---------
Total Assets $ 507,440 $ 474,776
========= =========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
----------------------------------------
Current Liabilities:
Short-Term Borrowings $ 35,169 $ 30,019
Accounts Payable 33,301 31,956
Accrued Liabilities 86,080 66,265
Deferred Revenues 20,010 18,516
Current Installments of Long-Term Debt 1,509 1,493
--------- ---------
Total Current Liabilities 176,069 148,249
--------- ---------
Noncurrent Liabilities:
Long-Term Debt, Less Current Installments 51,799 49,976
Deferred Revenues 11,765 12,127
Self-Insured Risks 11,901 11,819
Postretirement Medical Benefit Obligation 6,201 6,289
Minimum Pension Liability 75,627 76,747
Other 9,711 10,138
--------- ---------
Total Noncurrent Liabilities 167,004 167,096
--------- ---------
Shareholders' Investment:
Class A Common Stock, $1.00 Par Value 24,027 23,925
Class B Common Stock, $1.00 Par Value 24,697 24,697
Additional Paid-in Capital 840 523
Retained Earnings 188,582 191,767
Accumulated Other Comprehensive Loss (73,779) (81,481)
--------- ---------
Total Shareholders' Investment 164,367 159,431
--------- ---------
Total Liabilities and Shareholders' Investment $ 507,440 $ 474,776
========= =========
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CRAWFORD & COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2003 AND SEPTEMBER 30, 2002
(In Thousands)
2003 2002
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
- -------------------------------------
Net Income $ 5,574 $ 18,671
Reconciliation of Net Income to Net Cash Provided by
Operating Activities:
Depreciation and Amortization 12,095 13,145
Deferred Income Taxes 271 (287)
Loss (Gain) on Sales of Property and Equipment 100 (39)
Changes in Operating Assets and Liabilities, Net of Effects
of Acquisitions:
Accounts Receivable, Net (1,246) 1,596
Unbilled Revenues (1,272) (7,662)
Accrued or Prepaid Income Taxes 3,017 4,300
Accounts Payable and Accrued Liabilities 9,807 179
Deferred Revenues 1,302 1,534
Prepaid and Accrued Pension Costs 1,788 2,161
Prepaid Expenses and Other Assets (1,242) (6,423)
-------- --------
Net Cash Provided by Operating Activities 27,269 27,175
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
- -------------------------------------
Acquisitions of Property and Equipment, Net (7,954) (6,612)
Capitalization of Computer Software Costs (9,390) (8,704)
Acquisitions of Businesses, Net of Cash Acquired (412) (12,798)
-------- --------
Net Cash Used in Investing Activities (17,756) (28,114)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------
Dividends Paid (8,760) (16,510)
Proceeds from Exercise of Stock Options 419 578
Increase in Short-Term Borrowings 957 4,807
(Decrease) Increase in Long-Term Debt (1,076) 11,108
-------- --------
Net Cash Used in Financing Activities (8,460) (17)
-------- --------
Effect of Exchange Rate Changes on Cash and Cash Equivalents 1,269 1,042
-------- --------
Increase in Cash and Cash Equivalents 5,247 86
Cash and Cash Equivalents at Beginning of Period 31,091 21,966
-------- --------
Cash and Cash Equivalents at End of Period $ 36,338 $ 22,052
======== ========
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