-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GXWsKIdHAlTXFBc4+9nlKlvv79S6zOBrc1RUOBYG/5V28CIsTju4D1Zh8pf5++WA 0NPcnVnIJNrydHT/v8vyAA== 0000950144-03-008714.txt : 20030721 0000950144-03-008714.hdr.sgml : 20030721 20030721115422 ACCESSION NUMBER: 0000950144-03-008714 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030721 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030721 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CRAWFORD & CO CENTRAL INDEX KEY: 0000025475 STANDARD INDUSTRIAL CLASSIFICATION: INSURANCE AGENTS BROKERS & SERVICES [6411] IRS NUMBER: 580506554 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10356 FILM NUMBER: 03794086 BUSINESS ADDRESS: STREET 1: 5620 GLENRIDGE DR NE CITY: ATLANTA STATE: GA ZIP: 30342 BUSINESS PHONE: 4042560830 MAIL ADDRESS: STREET 1: 5620 GLENRIDE DR CITY: ATLANTA STATE: GA ZIP: 30342 8-K 1 g83895e8vk.txt CRAWFORD & COMPANY UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): July 21, 2003 -------------- CRAWFORD & COMPANY ------------------------------------------------------ (Exact name of Registrant as specified in its charter) GEORGIA --------------------------------------------- (State or other jurisdiction of incorporation) 1-10356 58-0506554 ------------------------ -------------------------------- (Commission File Number) (IRS Employer Identification No.) 5620 Glenridge Drive, N.E., Atlanta, Georgia 30342 -------------------------------------------------- (Address of principal executive offices) (Zip Code) (404) 256-0830 ------------------------- (Registrant's telephone number, including area code) ITEM 7. Financial Statements, Pro Forma Financial Statements and Exhibits (c) Exhibits Exhibit No. Description ----------- ----------- 99.1 Press Release dated July 21, 2003 ITEM 9. Regulation FD Disclosure The information contained in this Item 9 is being furnished to the Securities and Exchange Commission (the "Commission") pursuant to Item 12 of Form 8-K, "Disclosure of Results of Operations and Financial Condition," as directed by the Commission in Release No. 23-47583. On July 21, 2003, Crawford & Company (the "Company") issued a press release containing information about the Company's financial condition or results of operations for the quarterly period ended June 30, 2003. A copy of the press release is attached hereto as Exhibit 99.1. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CRAWFORD & COMPANY (Registrant) By: /s/ JOHN F. GIBLIN ---------------------------------- John F. Giblin Executive Vice President and Chief Financial Officer Dated: July 21, 2003 2 EXHIBIT INDEX
Number Descriptions --------- --------------- 99.1 Press Release issued July 21, 2003
3 EX-99.1 3 g83895exv99w1.txt EX-99.1 PRESS RELEASE, DATED JULY 21, 2003 EXHIBIT 99.1 (CRAWFORD LETTERHEAD) PRESS RELEASE FOR IMMEDIATE RELEASE DATE: JULY 21, 2003 FROM: GROVER L. DAVIS CHAIRMAN AND CHIEF EXECUTIVE OFFICER - -------------------------------------------------------------------------------- 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% ======== ======== ======== ======== ======== ======== ======== ========
Page 1 of 9 (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 Page 2 of 9 (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. - ------------------------------------------------------------------------------- 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 Page 5 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)
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 Page 6 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 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. Page 7 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 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 ========= =========
Page 8 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 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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