[CRDA LISTED LOGO] [CRDB LISTED LOGO]
[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: MAY 1, 2006
FROM: THOMAS W. CRAWFORD
CHIEF EXECUTIVE OFFICER
- --------------------------------------------------------------------------------
CRAWFORD REPORTS 140% INCREASE IN FIRST QUARTER 2006 EARNINGS PER SHARE
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 first quarter ended
March 31, 2006.
First quarter 2006 revenues before reimbursements grew to $201.6 million from
$184.3 million in the 2005 first quarter. First quarter 2006 net income more
than doubled to $5.8 million compared to $2.4 million for the 2005 first
quarter. First quarter 2006 earnings per share were $0.12 per share, up 140%
compared to $0.05 in the 2005 quarter.
Revenues before reimbursements, by market type, for the Company's operating
segments for the quarter ended March 31, 2006 and 2005 were as follows (in
000's):
Quarter ended
---------------------------------------------------------
Market Type March 31, 2006 March 31, 2005 % Change
- ------------------------------------ -------------- -------------- --------
Insurance companies $ 61,515 $ 53,979 14.0%
Self-insured entities 36,841 39,340 (6.4)%
Legal settlement administration 32,750 19,188 70.7%
-------------- --------------
U.S. Segment 131,106 112,507 16.5%
International Segment 70,500 71,827 (1.8)%
-------------- --------------
Total revenues before reimbursements $ 201,606 $ 184,334 9.4%
============== ==============
U.S. revenues before reimbursements were $131.1 million in the first quarter of
2006, increasing 16.5% over the $112.5 million reported in the 2005 first
quarter. Revenues from the insurance company market grew 14% in the 2006
quarter, to $61.5 million, due to an increase in storm-related revenues in the
Company's catastrophe, property central and technical services units. Revenues
from self-insured clients were $36.8 million in the 2006 first quarter,
declining 6.4% from $39.3 million in the 2005 quarter. Legal settlement
administration revenues were $32.8 million for the 2006 first quarter,
increasing 70.7% as compared with $19.2 million in the comparable year-ago
quarter. The Company's legal settlement administration revenues are
project-based and can fluctuate significantly. However, the Company
Page 1 of 8
[CRAWFORD LOGO]
PRESS RELEASE
CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047 ATLANTA, GEORGIA
30302 (404) 256-0830
continues to enjoy a strong backlog of projects awarded, totaling approximately
$35.6 million at quarter end.
First quarter 2006 international revenues before reimbursements declined to
$70.5 million from $71.8 million for the same period in 2005. During the 2006
first quarter, the U.S. dollar strengthened against the British pound and the
euro, resulting in a net exchange rate decline in the quarter. Excluding the
negative effect of exchange rate fluctuations, international revenues would have
been $73.6 million in the 2006 first quarter, reflecting growth in revenues on a
constant dollar basis of 2.4%. This growth reflects increased revenues in our
European and United Kingdom operations resulting from claims management
agreements entered into during 2005, partially offset by lower storm-related
revenues in the Caribbean and Asia-Pacific regions during the 2006 period.
International operating expenses increased by $332,000 in U.S. dollars, a 0.5%
increase, and increased by 4.2% on a constant dollar basis.
Mr. Thomas W. Crawford, chief executive officer of Crawford & Company, stated,
"Our U.S. operations benefited from the continued strong performance of our
legal settlement administration unit and considerable improvement in our U.S.
property and casualty operations. Revenues produced by our catastrophe adjusters
in the quarter grew by $4.8 million to $11.4 million, as we continued to handle
claims associated with hurricanes Katrina, Rita and Wilma. Our solid results in
these areas helped us achieve a 500 basis point improvement in our U.S.
operating margin during the 2006 first quarter, from 1.6% in the 2005 first
quarter to 6.6% in 2006."
"Operating earnings in our international segment declined to $1.7 million in the
current quarter, reflecting a decrease in our operating margin from 4.7% in the
2005 first quarter to 2.4% in the 2006 quarter. This decline is primarily due to
a lower level of storm-related claim activity in our Caribbean and Asia-Pacific
regions during the 2006 quarter as compared to the 2005 period. For the balance
of 2006, as we move past the weather-related surge in international claims
activity in 2005, we expect to see continued growth and margin improvement in
our international division."
Mr. Crawford concluded, "Our operating cash flows for the 2006 first quarter
reflect a substantial improvement of $18.0 million as compared to the 2005
period. This improvement is primarily due to improved collections within our
legal settlement administration unit, the collection of accounts receivable
generated from the hurricane-related claims administered in the 2005 fourth
quarter and lower tax payments during the 2006 quarter. Overall, our
consolidated cash position as of March 31, 2006 is very strong, totaling $50.2
million, up over $24 million from the $25.6 million reported at March 31, 2005."
Page 2 of 8
[CRAWFORD LOGO]
PRESS RELEASE
CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047 ATLANTA, GEORGIA
30302 (404) 256-0830
Crawford & Company reaffirmed the following guidance for fiscal 2006:
- Revenues before reimbursements of between $465 million and $475
million in U.S. operations and operating earnings of between $9.5
million and $12.5 million.
- Revenues before reimbursements of between $300 million and $310
million in international operations and operating earnings of
between $16 million and $18 million.
- After reflecting stock option expense, net corporate interest
expense and income taxes, net income of between $12.3 million and
$15.8 million, or $0.25 to $0.32 per share.
Crawford & Company's management will host a conference call with analysts on
Monday, May 1, 2006 at 3:00 P.M. EDT, to discuss its quarterly earnings and
other developments. The call will be recorded and available for replay through
May 8, 2006. You may dial 1-800-642-1687 (706-645-9291 international) to listen
to the replay. The access code is 8225549. 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 March 31, 2006 is shown on the
attached statements. Operating earnings and the related operating margins
(non-GAAP financial measures) are key performance measures used by the Company's
senior management to evaluate the performance of its operating segments and make
resource allocation decisions. Operating expenses used in the determination of
operating earnings exclude stock option expense, net corporate interest expense
and income taxes. The Company believes this measure is useful to investors in
that it allows them to evaluate its operating performance using the same
criteria that management uses. Net corporate interest expense, stock option
expense and income taxes are recurring components of net income, but they are
not considered part of segment operating earnings since they are managed on a
corporate-wide basis. Net corporate interest expense results from capital
structure decisions made by the Company, stock option expense primarily relates
to historically granted stock options and is a non-cash expense, and income
taxes are based on statutory rates in effect in each of the locations where the
Company provides services and vary throughout the world. None of these costs
relates directly to the performance of the Company's services and are therefore
excluded in order to accurately assess the results of segment operating
activities on a consistent basis. Following is a reconciliation of segment
operating earnings and the related operating margin to consolidated net income
on a GAAP basis and the related margins as a percentage of revenues before
reimbursements for all periods presented:
Page 3 of 8
[CRAWFORD LOGO]
PRESS RELEASE
CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047 ATLANTA, GEORGIA
30302 (404) 256-0830
Quarter ended
----------------------------------------------------------------------
March 31, 2006 % Margin March 31, 2005 % Margin
-------------- -------- -------------- --------
U.S. operating earnings $ 8,631 6.6% $ 1,836 1.6%
International operating earnings 1,686 2.4 3,345 4.7
Deduct:
Stock option expense (266) (0.1) - -
Net corporate interest (998) (0.5) (1,527) (0.8)
Income taxes (3,205) (1.6) (1,293) (0.7)
-------------- --------------
Net income $ 5,848 2.9 $ 2,361 1.3
============== ==============
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 63 countries. Major service lines include property and
casualty claims management, integrated claims and medical management for
workers' compensation, legal settlement administration, including class action
and warranty inspections, 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 March 31, 2006 are not
necessarily indicative of future prospects for the Company. Actual results in
future quarters may differ materially. For a discussion regarding factors which
could affect the Company's financial performance, see the Company's Form 10-K
for the year ended December 31, 2005 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 8
[CRAWFORD LOGO]
Press Release
CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047 ATLANTA, GEORGIA
30302 (404)256-0830
CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Unaudited
(In Thousands Except Per Share Data)
QUARTER ENDED MARCH 31 2006 2005 % Change
- ----------------------------------------------- -------- --------- --------
Revenues:
Revenues Before Reimbursements $ 201,606 $ 184,334 9%
Reimbursements 20,066 15,309 31%
--------- ---------
Total Revenues 221,672 199,643 11%
Costs and Expenses:
Cost of Services Before Reimbursements 156,176 144,919 8%
Reimbursements 20,066 15,309 31%
--------- ---------
Cost of Services 176,242 160,228 10%
Selling, General, and Administrative 35,379 34,234 3%
Corporate Interest Expense, net 998 1,527 -35%
--------- ---------
Total Costs and Expenses 212,619 195,989 8%
--------- ---------
Income Before Income Taxes 9,053 3,654 148%
Income Taxes 3,205 1,293 148%
--------- ---------
Net Income $ 5,848 $ 2,361 148%
========= =========
Earnings Per Share - Basic and Diluted $ 0.12 $ 0.05 140%
--------- ---------
Weighted-Average Common Shares Used to Compute:
Basic Earnings Per Share 48,986 48,872
--------- --------
Diluted Earning Per Share 49,306 49,381
--------- --------
Cash Dividends Per Share:
Class A Common Stock $ 0.06 $ 0.06
Class B Common Stock $ 0.06 $ 0.06
Page 5 of 8
[CRAWFORD LOGO]
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
QUARTERS ENDED MARCH 31
Unaudited
(In Thousands Except Percentages)
U.S. % International %
2006 2005 Change 2006 2005 Change
---------- ---------- ---------- ---------- ---------- ----------
Revenues Before Reimbursements $ 131,106 $ 112,507 16.5% $ 70,500 $ 71,827 -1.8%
---------- ---------- ---------- ---------- ---------- ----------
Compensation & Benefits 80,768 72,116 12.0% 50,665 50,545 0.2%
% of Revenues 61.6% 64.1% 71.9% 70.3%
Expenses Other than Reimbursements,
Compensation & Benefits 41,707 38,555 8.2% 18,149 17,937 1.2%
% of Revenues 31.8% 34.3% 25.7% 25.0%
---------- ---------- ---------- ---------- ---------- ----------
Total Operating Expenses 122,475 110,671 10.7% 68,814 68,482 0.5%
---------- ---------- ---------- ---------- ---------- ----------
Operating Earnings (1) $ 8,631 $ 1,836 370.1% $ 1,686 $ 3,345 -49.6%
% of Revenues 6.6% 1.6% 2.4% 4.7%
========== ========== ========== ========== ========== ==========
(1) A non-GAAP financial measurement which represents earnings before net
corporate interest expense, stock option expense, and income taxes.
Page 6 of 8
[CRAWFORD LOGO]
Press Release
CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047 ATLANTA, GEORGIA
30302 (404)256-0830
CRAWFORD & COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 2006 AND DECEMBER 31, 2005
(In Thousands)
Unaudited *
MARCH 31 December 31
2006 2005
------------ ------------
ASSETS
Current Assets:
Cash and Cash Equivalents $ 50,201 $ 49,441
Accounts Receivable, net 165,280 161,044
Unbilled Revenues 108,375 111,362
Prepaid Expenses and Other Current Assets 14,139 14,964
------------ ------------
Total Current Assets 337,995 336,811
------------ ------------
Property and Equipment, at Cost 139,869 150,008
Less Accumulated Depreciation (103,984) (113,071)
------------ ------------
Net Property and Equipment 35,885 36,937
------------ ------------
Other Assets:
Intangible Assets Arising from Acquisitions, net 109,847 110,035
Capitalized Software Costs, net 34,466 33,068
Deferred Income Tax Asset 38,148 38,217
Other 16,863 16,596
------------ ------------
Total Other Assets 199,324 197,916
------------ ------------
Total Assets $ 573,204 $ 571,664
============ ============
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Short-Term Borrowings $ 32,422 $ 28,888
Accounts Payable 40,502 42,434
Accrued Liabilities 104,563 113,591
Deferred Revenues 21,058 19,608
Current Installments of Long-Term Debt and Capital Leases 6,008 6,441
------------ ------------
Total Current Liabilities 204,553 210,962
------------ ------------
Noncurrent Liabilities:
Long-Term Debt and Capital Leases, Less Current Installments 45,792 45,810
Deferred Revenues 10,379 10,409
Self-Insured Risks 12,738 9,122
Postretirement Medical Benefit Obligation 4,460 4,569
Minimum Pension Liabilities 102,917 101,406
Other 10,245 10,355
------------ ------------
Total Noncurrent Liabilities 186,531 181,671
------------ ------------
Shareholders' Investment:
Class A Common Stock, $1.00 Par Value 24,294 24,293
Class B Common Stock, $1.00 Par Value 24,697 24,697
Additional Paid-in Capital 7,031 6,311
Unearned Stock-Based Compensation - (37)
Retained Earnings 205,260 202,351
Accumulated Other Comprehensive Loss (79,162) (78,584)
------------ ------------
Total Shareholders' Investment 182,120 179,031
------------ ------------
Total Liabilities and Shareholders' Investment $ 573,204 $ 571,664
============ ============
* Derived from the audited Consolidated Balance Sheet
Page 7 of 8
[CRAWFORD LOGO]
Press Release
CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047 ATLANTA, GEORGIA
30302 (404)256-0830
CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
QUARTERS ENDED MARCH 31, 2006 AND MARCH 31, 2005
Unaudited
(In Thousands)
2006 2005
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 5,848 $ 2,361
Reconciliation of Net Income to Net Cash Provided by (Used in)
Operating Activities:
Depreciation and Amortization Expenses 4,756 4,801
Stock-Based Compensation Expenses 757 63
Loss on Sales of Property and Equipment, net 56 31
Changes in Operating Assets and Liabilities:
Accounts Receivable, net (4,041) (385)
Unbilled Revenues, net 3,140 2,554
Accrued or Prepaid Income Taxes 2,054 (5,679)
Accounts Payable and Accrued Liabilities (5,999) (12,435)
Deferred Revenues 1,486 499
Accrued Pension Costs (1,937) (3,903)
Prepaid Expenses and Other Assets (127) 134
-------- --------
Net Cash Provided by (Used in) Operating Activities 5,993 (11,959)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of Property and Equipment, net (2,579) (2,862)
Capitalization of Computer Software Costs (2,627) (1,351)
Other Investing Activities (350) (90)
-------- --------
Net Cash Used in Investing Activities (5,556) (4,303)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends Paid (2,939) (2,933)
Proceeds from Exercise of Stock Options 2 261
Increase in Short-Term Borrowings, net 3,553 1,070
Decrease in Long-Term Debt and Capital Lease Obligations, net (459) (513)
-------- --------
Net Cash Provided by (Used in) Financing Activities 157 (2,115)
-------- --------
Effect of Exchange Rate Changes on Cash and Cash Equivalents 166 444
-------- --------
Increase (Decrease) in Cash and Cash Equivalents 760 (17,933)
Cash and Cash Equivalents at Beginning of Period 49,441 43,571
-------- --------
Cash and Cash Equivalents at End of Period $ 50,201 $ 25,638
======== ========
Page 8 of 8