EXHIBIT 99.1
[CRDA LISTED NYSE LOGO] [CRDB LISTED NYSE LOGO]
[CRAWFORD & COMPANY LOGO]
PRESS RELEASE
CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E.
P.O. BOX 5047 ATLANTA, GEORGIA 30302 (404) 256-0830
FOR IMMEDIATE RELEASE DATE: JULY 26, 2004
FROM: MARSHALL G. LONG
CHIEF EXECUTIVE OFFICER
- -------------------------------------------------------------------------------
Crawford Reports Second Quarter 2004 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 second quarter ended
June 30, 2004.
Second quarter 2004 revenues before reimbursements totaled $172.0 million
compared with $176.3 million in the 2003 second quarter. Second quarter 2004
net income was $5.5 million compared to $6.1 million for the 2003 second
quarter. Second quarter 2004 net income per share was $0.11 per share compared
to $0.12 in the prior-year quarter. During the 2004 second quarter, the Company
settled a tax credit refund claim with the Internal Revenue Service which
increased net income by $2.8 million, or $0.06 per share. Operating earnings
(earnings before net corporate interest and taxes) in the 2004 second quarter
totaled $5.7 million compared with $10.7 million in the prior year quarter.
U.S. revenues before reimbursements were $109.6 million in the second quarter
of 2004 compared with $121.9 million in the 2003 second quarter. Revenues from
the insurance company market were $48.4 million in the 2004 second quarter
compared with $62.2 million in the 2003 period, reflecting a continued
softening in the Company's U.S. insurance company referrals for high-frequency,
low-severity claims in the current quarter. Revenues from self-insured clients
were $40.4 million in the 2004 second quarter compared with $42.1 million in
the 2003 quarter, primarily reflecting declines in U.S. employment levels and
associated injury rates which have contributed to a reduction in workers'
compensation claims. Recently reported gains in U.S. employment levels should
benefit future revenues from self-insured clients. Class action services
revenues were $20.9 million for the 2004 second quarter, compared with $17.6
million in the comparable year-ago quarter. This increase is primarily the
result of work commenced on several new projects awarded during 2004.
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Second quarter 2004 international revenues grew to $62.4 million from $54.5
million for the same period in 2003. This growth is largely due to foreign
currency fluctuations. During the 2004 second quarter, the U.S. dollar weakened
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 $56.2 million in the 2004 second
quarter, reflecting growth in revenues on a constant dollar basis of 3.4%. In
addition, during the 2004 second quarter, international operating expenses
increased by $6.6 million in U.S. dollars, a 12.2% increase, and by 1.4% on a
constant dollar basis.
Mr. Marshall G. Long, chief executive officer of Crawford & Company, stated,
"Our second quarter results reflect the ongoing industry-wide contraction in
U.S. claims frequency, as we experienced volume declines in both the insurance
company and self-insured markets. These declines more than offset the growth we
enjoyed in our class action services unit during the current quarter."
"While we continue to endure challenging industry circumstances, we were pleased
that we successfully reduced our U.S. operating expenses, excluding severence
costs, by 6.4% in the current quarter as compared to the prior year period in
response to the decline in claims volume and improved our U.S. operating margin
to 3.5% as compared to 2.6% for the 2004 first quarter. Excluding severance
costs of $1.2 million recognized in the 2004 second quarter, our U.S. operating
margin would have been 4.6%. The second quarter 2004 operating margin in our
international operations of 3.1% declined as compared to the 2004 first quarter,
but has grown significantly over the operating margin of 1.0% in the 2003 second
quarter. Our expectations for the insurance industry in 2004 remain cautious,
but we believe we are well positioned to grow our margins, both in the U.S. and
internationally, when claim frequencies begin to grow."
Total revenues before reimbursements for the six months ended June 30, 2004
were $341.9 million compared with $343.6 million in 2003. Operating earnings
totaled $10.8 million compared with $17.1 million in 2003. Net income for the
current six-month period totaled $7.9 million, or $0.16 per share, compared
with $9.3 million, or $0.19 per share, reported in the prior year.
U.S. revenues before reimbursements for the 2004 six-month period were $218.9
million compared with $236.9 million in 2003. International revenues before
reimbursements were $123.0 million in the 2004 year-to-date period compared
with $106.6 million during 2003. Excluding the benefit of exchange rate
fluctuations, international revenues would have been $109.3 million in the
current year-to-date period, reflecting growth in revenues on a constant dollar
basis of 2.6%. In addition, during the 2004 six-month period, international
operating expenses increased by $15.1 million in U.S. dollars, a 14.7% increase
and by 2.0% on a constant dollar basis.
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Mr. Long concluded, "We are pleased with the growth in our class action
services business this year. We benefited from the award of several new
contracts during the second quarter and have a strong backlog of cases, which
will contribute to revenues during the balance of the year. In addition, we
have signed a letter of intent to sell an undeveloped parcel of real estate for
a sales price of $10.4 million in cash. This sale is subject to certain
contingencies but we expect to close this transaction in the third quarter,
recognizing a gain of approximately $9.4 million."
Crawford & Company's management will host a conference call with analysts on
Monday, July 26, 2004 at 3:00 P.M. EDT, to discuss its quarterly earnings and
other developments. The call will be recorded and available for replay through
August 2, 2004. You may dial 1-800-428-6051 (973-709-2089 international) to
listen to the replay. The access code is 366662. 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, 2004 is shown on the
attached statements. 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, %
2004 Margin 2003 Margin 2004 Margin 2003 Margin
-------- ------ -------- ------ -------- ------ -------- ------
Net income $ 5,540 3.2% $ 6,051 3.4% $ 7,929 2.3% $ 9,300 2.7%
Add/(deduct):
Net corporate interest (534) (0.3) 1,179 0.7 803 0.3 2,458 0.7
Income taxes 725 0.4 3,463 2.0 2,093 0.6 5,322 1.6
------- ---- ------- --- ------- --- ------- ---
Operating earnings $ 5,731 3.3% $10,693 6.1% $10,825 3.2% $17,080 5.0%
======= ==== ======= === ======= === ======= ===
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.
Page 3 of 9
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, 2004 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, 2003 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.
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CRAWFORD & COMPANY
COMPARATIVE STATEMENTS OF INCOME
(In Thousands Except Per Share Data)
SIX MONTHS ENDED JUNE 30 2004 2003 % Change
-------- -------- --------
Revenues:
Revenues Before Reimbursements $341,871 $343,568 0%
Reimbursements 29,398 28,602 3%
-------- --------
Total Revenues 371,269 372,170 0%
Costs and Expenses:
Cost of Services Before Reimbursements 263,260 261,314 1%
Reimbursements 29,398 28,602 3%
-------- --------
Cost of Services 292,658 289,916 1%
Selling, General, and Administrative 67,786 65,174 4%
Corporate Interest, Net 803 2,458 -67%
-------- --------
Total Costs and Expenses 361,247 357,548 1%
-------- --------
Income Before Income Taxes 10,022 14,622 -31%
Income Taxes 2,093 5,322 -61%
-------- --------
Net Income $ 7,929 $ 9,300 -15%
======== ========
Net Income Per Share:
Basic $ 0.16 $ 0.19 -16%
-------- --------
Diluted $ 0.16 $ 0.19 -16%
-------- --------
Weighted Average Shares Outstanding:
Basic 48,724 48,623
-------- --------
Diluted 48,836 48,670
-------- --------
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CRAWFORD & COMPANY
COMPARATIVE STATEMENTS OF INCOME
(In Thousands Except Per Share Data)
QUARTER ENDED JUNE 30 2004 2003 % Change
--------- --------- --------
Revenues:
Revenues Before Reimbursements $ 172,016 $ 176,310 -2%
Reimbursements 14,517 13,895 4%
--------- ---------
Total Revenues 186,533 190,205 -2%
Costs and Expenses:
Cost of Services Before Reimbursements 132,135 133,522 -1%
Reimbursements 14,517 13,895 4%
--------- ---------
Cost of Services 146,652 147,417 -1%
Selling, General, and Administrative 34,150 32,095 6%
Corporate Interest, Net (534) 1,179 -145%
--------- ---------
Total Costs and Expenses 180,268 180,691 0%
--------- ---------
Income Before Income Taxes 6,265 9,514 -34%
Income Taxes 725 3,463 -79%
--------- ---------
Net Income $ 5,540 $ 6,051 -8%
========= =========
Net Income Per Share:
Basic $ 0.11 $ 0.12 -8%
--------- ---------
Diluted $ 0.11 $ 0.12 -8%
--------- ---------
Weighted Average Shares Outstanding:
Basic 48,724 48,623
--------- ---------
Diluted 48,796 48,671
--------- ---------
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CRAWFORD & COMPANY
SUMMARY RESULTS BY OPERATING SEGMENT
SIX MONTHS ENDED JUNE 30, 2004
(In Thousands Except Percentages)
U.S. International Total
----------------------- ----------------------- -----------------------
2004 2003 2004 2003 2004 2003
-------- -------- -------- -------- -------- --------
Revenues Before Reimbursements $218,906 $236,931 $122,965 $106,637 $341,871 $343,568
Compensation & Benefits 137,201 149,646 85,269 73,817 222,470 223,463
% of Revenues 62.6% 63.1% 69.4% 69.2% 65.0% 65.0%
Expenses Other than Reimbursements,
Compensation & Benefits 74,987 73,105 33,589 29,920 108,576 103,025
% of Revenues 34.3% 30.9% 27.3% 28.1% 31.8% 30.0%
-------- -------- -------- -------- -------- --------
Operating Earnings (1) $ 6,718 $ 14,180 $ 4,107 $ 2,900 $ 10,825 $ 17,080
% of Revenues 3.1% 6.0% 3.3% 2.7% 3.2% 5.0%
-------- -------- -------- -------- -------- --------
QUARTER ENDED JUNE 30, 2004
(In Thousands Except Percentages)
U.S. International Total
----------------------- ----------------------- -----------------------
2004 2003 2004 2003 2004 2003
-------- -------- -------- -------- -------- --------
Revenues Before Reimbursements $109,593 $121,858 $ 62,423 $ 54,452 $172,016 $176,310
Compensation & Benefits 67,834 75,302 42,849 38,324 110,683 113,626
% of Revenues 61.9% 61.8% 68.6% 70.4% 64.4% 64.4%
Expenses Other than Reimbursements,
Compensation & Benefits 37,933 36,425 17,669 15,566 55,602 51,991
% of Revenues 34.6% 29.9% 28.3% 28.6% 32.3% 29.5%
-------- -------- -------- -------- -------- --------
Operating Earnings (1) $ 3,826 $ 10,131 $ 1,905 $ 562 $ 5,731 $ 10,693
% of Revenues 3.5% 8.3% 3.1% 1.0% 3.3% 6.1%
-------- -------- -------- -------- -------- --------
(1) Earnings net corporate interest, and taxes.
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CRAWFORD & COMPANY
CONSOLIDATED COMPARATIVE BALANCE SHEETS
JUNE 30, 2004 AND DECEMBER 31, 2003
(In Thousands)
JUNE 30 December 31
2004 2003
--------- -----------
ASSETS
Current Assets:
Cash and Cash Equivalents $ 23,090 $ 45,805
Accounts Receivable, Net 154,806 142,273
Unbilled Revenues 105,494 101,557
Prepaid Expenses and Other Current Assets 13,761 13,028
--------- ---------
Total Current Assets 297,151 302,663
--------- ---------
Property and Equipment, at Cost 152,705 154,786
Less Accumulated Depreciation (117,099) (117,618)
--------- ---------
Net Property and Equipment 35,606 37,168
--------- ---------
Other Assets:
Intangible Assets Arising from Acquisitions, Net 106,383 104,523
Capitalized Software Costs, Net 31,753 31,540
Deferred Income Tax Asset 28,736 28,505
Other 12,083 12,840
--------- ---------
Total Other Assets 178,955 177,408
--------- ---------
Total Assets $ 511,712 $ 517,239
========= =========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Short-Term Borrowings $ 41,546 $ 43,007
Accounts Payable 32,924 36,685
Accrued Liabilities 79,564 85,734
Deferred Revenues 22,131 19,172
Current Installments of Long-Term Debt 2,620 3,106
--------- ---------
Total Current Liabilities 178,785 187,704
--------- ---------
Noncurrent Liabilities:
Long-Term Debt, Less Current Installments 50,841 50,664
Deferred Revenues 10,403 10,559
Self-Insured Risks 10,780 11,920
Postretirement Medical Benefit Obligation 6,077 6,077
Minimum Pension Liability 70,159 67,846
Other 10,377 9,875
--------- ---------
Total Noncurrent Liabilities 158,637 156,941
--------- ---------
Shareholders' Investment:
Class A Common Stock, $1.00 Par Value 24,027 24,027
Class B Common Stock, $1.00 Par Value 24,697 24,697
Additional Paid-in Capital 840 840
Retained Earnings 189,829 187,747
Accumulated Other Comprehensive Loss (65,103) (64,717)
--------- ---------
Total Shareholders' Investment 174,290 172,594
--------- ---------
Total Liabilities and Shareholders' Investment $ 511,712 $ 517,239
========= =========
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CRAWFORD & COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2004 AND JUNE 30, 2003
(In Thousands)
2004 2003
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 7,929 $ 9,300
Reconciliation of Net Income to Net Cash (Used in) Provided by
Operating Activities:
Depreciation and Amortization 9,044 8,123
Deferred Income Taxes (90) 245
Loss on Sales of Property and Equipment 40 76
Changes in Operating Assets and Liabilities, Net of Effects
of Acquisitions:
Accounts Receivable, Net (11,716) (7,215)
Unbilled Revenues (4,118) (1,658)
Accrued or Prepaid Income Taxes (86) 1,226
Accounts Payable and Accrued Liabilities (9,324) (64)
Deferred Revenues 2,626 4,830
Prepaid and Accrued Pension Costs (1,403) 7,884
Prepaid Expenses and Other Assets 2,167 2,456
-------- --------
Net Cash (Used in) Provided by Operating Activities (4,931) 25,203
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of Property and Equipment, Net (4,600) (5,204)
Capitalization of Computer Software Costs (3,652) (6,458)
Acquisitions of Businesses, Net of Cash Acquired
(479) (166)
-------- --------
Net Cash Used in Investing Activities (8,731) (11,828)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends Paid (5,847) (5,835)
(Decrease) Increase in Short-Term Borrowings
(3,403) 301
Decrease in Long-Term Debt (300) (403)
Capitalized Loan Costs 61 --
-------- --------
Net Cash Used in Financing Activities (9,489) (5,937)
-------- --------
Effect of Exchange Rate Changes on Cash and Cash Equivalents 436 921
-------- --------
(Decrease) Increase in Cash and Cash Equivalents (22,715) 8,359
Cash and Cash Equivalents at Beginning of Period 45,805 34,934
-------- --------
Cash and Cash Equivalents at End of Period $ 23,090 $ 43,293
======== ========
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