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: FEBRUARY 2, 2004
FROM: GROVER L. DAVIS
CHAIRMAN AND
CHIEF EXECUTIVE OFFICER
- -------------------------------------------------------------------------------
CRAWFORD REPORTS FOURTH QUARTER 2003 FINANCIAL RESULTS
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 fourth quarter ended
December 31, 2003.
Fourth quarter 2003 revenues before reimbursements totaled $175.1 million
compared with $173.7 million in the 2002 fourth quarter. Fourth quarter 2003
net income was $2.1 million, or $0.04 per fully diluted share, compared with
net income of $5.8 million, or $0.12 per fully diluted share, for the 2002
fourth quarter.
Operating earnings (earnings before special charge/credit, net corporate
interest and taxes) in the 2003 fourth quarter totaled $4.8 million compared
with $10.3 million in the comparable 2002 quarter. Operating earnings for the
2003 full year totaled $30.0 million compared with $37.2 million in 2002.
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 Year ended
------------------------------------------ -------------------------------------------
December % December % December % December %
31, 2003 Margin 31, 2002 Margin 31, 2003 Margin 31, 2002 Margin
-------- ------ -------- ------ -------- ------ -------- ------
Net income $ 2,088 1.2% $ 5,841 3.3% $ 7,662 1.1% $ 24,512 3.5%
Add/(deduct):
Special charge/credit -- -- -- -- 8,000 1.2 (6,000) (0.9)
Net corporate interest 1,559 0.9 1,141 0.7 5,414 0.8 4,706 0.7
Income taxes 1,195 0.7 3,343 1.9 8,964 1.2 14,029 2.0
-------- --- -------- --- -------- --- -------- ---
Operating earnings $ 4,842 2.8% $ 10,325 5.9% $ 30,040 4.3% $ 37,247 5.3%
======== === ======== === ======== === ======== ===
Page 1 of 9
U.S. revenues before reimbursements were $117.3 million in the fourth quarter
of 2003 compared with $121.7 million in the 2002 fourth quarter. Revenues from
the insurance company market were $52.1 million in the 2003 fourth quarter
compared with $60.4 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 revenues from the winding
down of two projects associated with mold-related claims and reopened
Northridge earthquake claims accounted for $1.3 million of the decline.
Revenues from self-insured clients were $42.1 million in the 2003 fourth
quarter compared with $44.4 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 a record $23.0 million for the 2003 fourth quarter,
compared with $16.8 million in the comparable year-ago quarter.
Fourth quarter 2003 international revenues grew to $57.9 million from $52.1
million for the same period in 2002. During the 2003 fourth quarter, the U.S.
dollar weakened significantly against most major international currencies,
resulting in a net exchange rate benefit in the quarter. Excluding the benefit
of exchange rate fluctuations, international revenues would have been $51.4
million in the 2003 fourth quarter.
Mr. Grover L. Davis, chairman and chief executive officer of Crawford &
Company, stated, "Our fourth 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 15% 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."
"We continue to endure very challenging industry circumstances in the U.S. which
have placed extraordinary pressure on our operating margins. Primarily as a
result of the strong growth we achieved in our Class Action unit, which posted
record quarterly revenues, our consolidated fourth quarter revenues grew 1%
over revenues reported in the 2002 period. This is the first quarter-to-quarter
revenue increase we have generated since the 2001 fourth quarter. However, due
to incremental expenses associated with the growth in class action revenues, we
experienced an increase in our cost of services of 2% in the current quarter.
This overall increase occurred despite reductions we have made in other areas
of our business in response to the continued decline in U.S. claims volume. In
addition, our selling, general and administrative expenses increased 11%, or
$3.4 million, during the 2003 fourth quarter, primarily as a result of higher
costs associated with our self-insurance programs and severance expense."
Page 2 of 9
"In response to the decline in U.S. claims volume in the quarter, we have taken
aggressive measures during December 2003 and January 2004 to reduce our annual
level of administrative costs by approximately $5.0 million. Additional
severance expense associated with these reductions will be recognized in our
2004 first quarter, so these cost reductions will not fully benefit our results
until the 2004 second quarter. As with any cost reduction initiative, this was
a difficult and painful decision to make, but it was absolutely essential in
order for us to be a more flexible and cost effective company. The operating
margins in our international operations improved in the fourth quarter to
better than 4% from less than 3% in the 2003 third quarter. We anticipate
further improved international operating margins during 2004."
Total revenues before reimbursements for the year ended December 31, 2003 were
$690.9 million compared with $699.4 million in 2002. Operating earnings for
full year 2003 totaled $30.0 million compared with $37.2 million in 2002. Net
income for the current year totaled $7.7 million, or $0.16 per share, compared
with $24.5 million, or $0.50 per share, reported in the prior year. Net income
in 2003 included an after-tax charge of $8.0 million, or $0.16 per share, under
an agreement reached with the Department of Justice to resolve the
investigation of the Company's billing practices. 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 2003 were $471.8 million compared with
$508.7 million in 2002. International revenues before reimbursements were
$219.1 million in 2003 compared with $190.7 million during 2002. Excluding the
benefit of exchange rate fluctuations, international revenues would have been
$197.0 million in the current year.
Mr. Davis concluded, "We were very pleased with the growth in our class action
services business during all of 2003 and especially the fourth quarter. Both
periods reflect new record levels of revenues, with the 2003 fourth quarter
benefiting from the performance of work on several large contracts. Overall, our
cash and cash equivalents at December 31, 2003 have grown $10.5 million from the
end of 2002 after reflecting a $10.0 million contribution to the Company's
defined benefit pension plan during September 2003 and the $8.0 million payment
to the Department of Justice in November 2003."
"We are also pleased with the recent appointments of Crawford & Company to the
preferred adjuster lists of several major property and casualty insurers in the
U.S., United Kingdom and Canada which should greatly strengthen our market
penetration and enable us to capture a greater share of revenues when claim
volumes increase."
Page 3 of 9
Crawford & Company's management will host a conference call with analysts on
Monday, February 2, 2004 at 3:00 P.M. EST, to discuss its quarterly earnings
and other developments. The call will be recorded and available for replay
through February 9, 2004. You may dial 1-800-428-6051 (973-709-2089
international) to listen to the replay. The access code is 328985.
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 December 31, 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 December 31, 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)
YEAR ENDED DECEMBER 31 2003 2002 % Change
-------- -------- --------
Revenues:
Revenues Before Reimbursements $690,933 $699,390 -1%
Reimbursements 41,948 36,917 14%
-------- --------
Total Revenues 732,881 736,307 0%
Costs and Expenses:
Cost of Services Before Reimbursements 530,362 532,411 0%
Reimbursements 41,948 36,917 14%
-------- --------
Cost of Services 572,310 569,328 1%
Selling, General, and Administrative 130,531 129,732 1%
Special Charge/Credit (1) 8,000 (6,000) nm
Corporate Interest, Net 5,414 4,706 15%
-------- --------
Total Costs and Expenses 716,255 697,766 3%
-------- --------
Income Before Income Taxes 16,626 38,541 -57%
Income Taxes 8,964 14,029 -36%
-------- --------
Net Income $ 7,662 $ 24,512 -69%
======== ========
Net Income Per Share:
Basic $ 0.16 $ 0.50 -68%
Diluted $ 0.16 $ 0.50 -68%
Weighted Average Shares Outstanding:
Basic 48,668 48,580
Diluted 48,776 48,664
(1) Special charge is an after tax payment related to settlement of a
Department of Justice investigation. Special credit related to a
payment from a former vendor in full settlement of a business dispute.
nm = not meaningful
Page 5 of 9
CRAWFORD & COMPANY
COMPARATIVE STATEMENTS OF INCOME
(In Thousands Except Per Share Data)
QUARTER ENDED DECEMBER 31 2003 2002 % Change
-------- -------- --------
Revenues:
Revenues Before Reimbursements $175,131 $173,722 1%
Reimbursements 10,166 10,229 -1%
-------- --------
Total Revenues 185,297 183,951 1%
Costs and Expenses:
Cost of Services Before Reimbursements 135,090 131,592 3%
Reimbursements 10,166 10,229 -1%
-------- --------
Cost of Services 145,256 141,821 2%
Selling, General, and Administrative 35,199 31,805 11%
Corporate Interest, Net 1,559 1,141 37%
-------- --------
Total Costs and Expenses 182,014 174,767 4%
-------- --------
Income Before Income Taxes 3,283 9,184 -64%
Income Taxes 1,195 3,343 -64%
-------- --------
Net Income $ 2,088 $ 5,841 -64%
======== ========
Net Income Per Share:
Basic $ 0.04 $ 0.12 -67%
Diluted $ 0.04 $ 0.12 -67%
Weighted Average Shares Outstanding:
Basic 48,724 48,623
Diluted 48,966 48,670
Page 6 of 9
CRAWFORD & COMPANY
SUMMARY RESULTS BY OPERATING SEGMENT
YEAR ENDED DECEMBER 31, 2003
(In Thousands Except Percentages)
U.S. International Total
2003 2002 2003 2002 2003 2002
-------- -------- -------- -------- -------- --------
Revenues Before Reimbursements $471,847 $508,734 $219,086 $190,656 $690,933 $699,390
Compensation & Benefits 292,357 320,475 152,950 130,886 445,307 451,361
% of Revenues 62.0% 62.9% 69.8% 68.6% 64.5% 64.5%
Expenses Other than Reimbursements,
Compensation & Benefits 156,201 158,998 59,385 51,784 215,586 210,782
% of Revenues 33.1% 31.3% 27.1% 27.2% 31.2% 30.2%
-------- -------- -------- -------- -------- --------
Operating Earnings (1) $ 23,289 $ 29,261 $ 6,751 $ 7,986 $ 30,040 $ 37,247
% of Revenues 4.9% 5.8% 3.1% 4.2% 4.3% 5.3%
======== ======== ======== ======== ======== ========
QUARTER ENDED DECEMBER 31, 2003
(In Thousands Except Percentages)
U.S. International Total
2003 2002 2003 2002 2003 2002
-------- -------- -------- -------- -------- --------
Revenues Before Reimbursements $117,263 $121,660 $ 57,868 $ 52,062 $175,131 $173,722
Compensation & Benefits 70,986 74,132 40,055 34,913 111,041 109,045
% of Revenues 60.5% 61.0% 69.2% 67.0% 63.4% 62.8%
Expenses Other than Reimbursements,
Compensation & Benefits 43,806 39,687 15,442 14,665 59,248 54,352
% of Revenues 37.4% 32.6% 26.7% 28.2% 33.8% 31.3%
-------- -------- -------- -------- -------- --------
Operating Earnings (1) $ 2,471 $ 7,841 $ 2,371 $ 2,484 $ 4,842 $ 10,325
% of Revenues 2.1% 6.4% 4.1% 4.8% 2.8% 5.9%
======== ======== ======== ======== ======== ========
(1) Earnings before special charge/credit, net corporate interest, and
taxes.
Page 7 of 9
CRAWFORD & COMPANY
CONSOLIDATED COMPARATIVE BALANCE SHEETS
DECEMBER 31, 2003 AND DECEMBER 31, 2002
(In Thousands)
DECEMBER 31 December 31
2003 2002
----------- -----------
ASSETS
Current Assets:
Cash and Cash Equivalents $ 41,564 $ 31,091
Accounts Receivable, Net 142,273 135,174
Unbilled Revenues 100,253 93,792
Prepaid Expenses and Other Current Assets 13,028 11,968
--------- ---------
Total Current Assets 297,118 272,025
--------- ---------
Property and Equipment, at Cost 154,786 144,706
Less Accumulated Depreciation (117,618) (108,607)
--------- ---------
Net Property and Equipment 37,168 36,099
--------- ---------
Other Assets:
Intangible Assets Arising from Acquisitions, Net 104,523 97,798
Capitalized Software Costs, Net 31,540 23,977
Deferred Income Tax Asset 28,966 31,899
Other 14,144 12,978
--------- ---------
Total Other Assets 179,173 166,652
--------- ---------
Total Assets $ 513,459 $ 474,776
========= =========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Short-Term Borrowings $ 43,007 $ 30,019
Accounts Payable 41,451 31,956
Accrued Liabilities 77,188 66,265
Deferred Revenues 19,172 18,516
Current Installments of Long-Term Debt 1,577 1,493
--------- ---------
Total Current Liabilities 182,395 148,249
--------- ---------
Noncurrent Liabilities:
Long-Term Debt, Less Current Installments 52,193 49,976
Deferred Revenues 10,559 12,127
Self-Insured Risks 11,920 11,819
Postretirement Medical Benefit Obligation 6,077 6,289
Minimum Pension Liability 67,846 76,747
Other 9,875 10,138
--------- ---------
Total Noncurrent Liabilities 158,470 167,096
--------- ---------
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 187,747 191,767
Accumulated Other Comprehensive Loss (64,717) (81,481)
--------- ---------
Total Shareholders' Investment 172,594 159,431
--------- ---------
Total Liabilities and Shareholders' Investment $ 513,459 $ 474,776
========= =========
Page 8 of 9
CRAWFORD & COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
DECEMBER 31, 2003 AND DECEMBER 31, 2002
(In Thousands)
2003 2002
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 7,662 $ 24,512
Reconciliation of Net Income to Net Cash Provided by
Operating Activities:
Depreciation and Amortization 16,381 17,414
Deferred Income Taxes 129 3,975
Loss (Gain) on Sales of Property and Equipment 54 (18)
Changes in Operating Assets and Liabilities, Net of Effects
of Acquisitions:
Accounts Receivable, Net 18 5,473
Unbilled Revenues (1,374) (1,369)
Accrued or Prepaid Income Taxes (3,166) (3,525)
Accounts Payable and Accrued Liabilities 984 3,692
Deferred Revenues 345 (1,579)
Accrued Pension Costs 5,600 6,020
Prepaid Expenses and Other Assets 10,225 (1,972)
-------- --------
Net Cash Provided by Operating Activities 36,858 52,623
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of Property and Equipment, Net (10,763) (8,709)
Capitalization of Computer Software Costs (12,681) (11,093)
Acquisitions of Businesses, Net of Cash Acquired (332) (13,569)
-------- --------
Net Cash Used in Investing Activities (23,776) (33,371)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends Paid (11,682) (19,428)
Proceeds from Exercise of Stock Options 419 578
Increase (Decrease) in Short-Term Borrowings 6,696 (6,312)
(Decrease) Increase in Long-Term Debt (701) 14,063
Loan Costs 891 --
-------- --------
Net Cash Used in Financing Activities (4,377) (11,099)
-------- --------
Effect of Exchange Rate Changes on Cash and Cash Equivalents 1,768 972
-------- --------
Increase in Cash and Cash Equivalents 10,473 9,125
Cash and Cash Equivalents at Beginning of Period 31,091 21,966
-------- --------
Cash and Cash Equivalents at End of Period $ 41,564 $ 31,091
======== ========
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