EX-99.1 2 g88691exv99w1.txt EX-99.1 PRESS RELEASE DATED APRIL 26, 2004 EXHIBIT 99.1 [CRDA NYSE LOGO] [CRDB 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: APRIL 26, 2004 FROM: MARSHALL G. LONG CHIEF EXECUTIVE OFFICER ------------------------------------------------------------------------------- CRAWFORD REPORTS FIRST QUARTER 2004 RESULTS Crawford & Company (NYSE: CRDA and CRDB) announced its financial results for the first quarter ended March 31, 2004. First quarter 2004 revenues before reimbursements totaled $169.9 million compared with $167.3 million in the 2003 first quarter. First quarter 2004 net income was $2.4 million versus $3.2 million for the 2003 first quarter. First quarter 2004 net income per share was $0.05 per share, compared with $0.07 in the prior-year quarter. 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. Operating earnings (earnings before net corporate interest and taxes) in the 2004 first quarter totaled $5.1 million compared with $6.4 million in the comparable 2003 quarter. Following is a reconciliation of consolidated net income to operating earnings and the related margin as a percentage of revenues before reimbursements:
Quarter Ended Quarter Ended March 31, Margin March 31, Margin (in thousands) 2004 % 2003 % ------------- ------ ------------- ----- Net income $2,389 1.4% $3,249 1.9% Add: Net corporate interest 1,337 .8 1,279 .8 Income taxes 1,368 .8 1,859 1.1 ------ --- ------ --- Operating earnings $5,094 3.0% $6,387 3.8% ====== === ====== ===
Page 1 of 6 U.S. revenues before reimbursements were $109.3 million in the first quarter of 2004 compared with $115.1 million in the 2003 first quarter. Revenues from the insurance company market were $50.4 million in the 2004 first quarter compared with $58.7 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 first quarter compared with $42.5 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 $18.5 million for the 2004 first quarter, compared with $13.9 million in the comparable year-ago quarter. This increase is primarily the result of work performed on major projects which were awarded in late 2003. First quarter 2004 international revenues grew to $60.5 million from $52.2 million for the same period in 2003. This growth is largely due to foreign currency fluctuations. During the 2004 first quarter the U.S. dollar weakened significantly, primarily 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 $53.1 million in the 2004 first quarter. Mr. Marshall G. Long, interim Chief Executive Officer of Crawford & Company, stated, "The ongoing industry-wide contraction in U.S. claims volumes continued to be evident in Crawford's core domestic operations during the first quarter. There were encouraging areas of performance, for example, in our class action services which grew revenues at 32% over the prior year first quarter. However, this growth was not sufficient to offset double-digit volume declines among our insurance company and self-insured clients." "These trends were most evident in our U.S. operating margin, which improved from the fourth quarter but declined year-over-year. Expenses also reflected a $775,000 severance cost associated with overhead reductions made in January 2004. Absent this cost, our U.S. operating margin for the 2004 quarter would have been 3.4% as compared with 3.5% in the prior year period," Mr. Long said. "Even in a pressured operating environment, "Crawford Quality" requires that our organization stay proportionally balanced. Delivering consistent, high-quality service remains the single most important aspect of our business. So while we have taken and will continue to take steps both in the field and in the home office to manage costs in line with revenue trends, we are equally committed to maintain the bench strength critical to prompt quality service." The Company recently announced the resignation of its former Chairman and Chief Executive Officer. Although still subject to negotiation, severance costs associated with this resignation are estimated to approximate $850,000, or $0.01 per share, during the 2004 second quarter. Page 2 of 6 Crawford & Company's management will host a conference call with analysts on Monday, April 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 May 3, 2004. You may dial 1-800-428-6051 (973-709-2089 international) to listen. The access code is 350702. 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, 2004 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 March 31, 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. Page 3 of 6 CRAWFORD & COMPANY COMPARATIVE STATEMENTS OF INCOME (In Thousands Except Per Share Data)
QUARTER ENDED MARCH 31 2004 2003 % Change -------- -------- -------- Revenues: Revenues Before Reimbursements $169,855 $167,258 2% Reimbursements 14,881 14,707 1% -------- -------- Total Revenues 184,736 181,965 2% Costs and Expenses: Cost of Services Before Reimbursements 131,125 127,792 3% Reimbursements 14,881 14,707 1% -------- -------- Cost of Services 146,006 142,499 2% Selling, General, and Administrative 33,636 33,079 2% Corporate Interest, Net 1,337 1,279 5% -------- -------- Total Costs and Expenses 180,979 176,857 2% -------- -------- Income Before Income Taxes 3,757 5,108 -26% Income Taxes 1,368 1,859 -26% -------- -------- Net Income $ 2,389 $ 3,249 -26% ======== ======== Net Income Per Share: Basic $ 0.05 $ 0.07 -29% -------- -------- Diluted $ 0.05 $ 0.07 -29% -------- -------- Weighted Average Shares Outstanding: Basic 48,724 48,622 -------- -------- Diluted 48,869 48,689 -------- --------
CRAWFORD & COMPANY SUMMARY RESULTS BY OPERATING SEGMENT QUARTER ENDED MARCH 31, 2004 (In Thousands Except Percentages)
U.S. International Total 2004 2003 2004 2003 2004 2003 -------- -------- ------- ------- -------- -------- Revenues Before Reimbursements $109,313 $115,073 $60,542 $ 52,185 $169,855 $167,258 Compensation & Benefits 69,367 74,344 42,420 35,493 111,787 109,837 % of Revenues 63.5% 64.6% 70.1% 68.0% 65.8% 65.7% Expenses Other than Reimbursements, Compensation & Benefits 37,054 36,680 15,920 14,354 52,974 51,034 % of Revenues 33.9% 31.9% 26.3% 27.5% 31.2% 30.5% -------- -------- ------- ------- -------- -------- Operating Earnings (1) $ 2,892 $ 4,049 $ 2,202 $ 2,338 $ 5,094 $ 6,387 % of Revenues 2.6% 3.5% 3.6% 4.5% 3.0% 3.8% ======== ======== ======= ======= ======== ========
(1) Earnings before net corporate interest and taxes. Page 4 of 6 CRAWFORD & COMPANY CONSOLIDATED COMPARATIVE BALANCE SHEETS March 31, 2004 and December 31, 2003 (In Thousands)
MARCH 31 December 31 2004 2003 --------- ----------- ASSETS Current Assets: Cash and Cash Equivalents $ 31,061 $ 41,564 Accounts Receivable, Net 147,782 142,273 Unbilled Revenues 106,835 100,253 Prepaid Expenses and Other Current Assets 13,258 13,028 --------- --------- Total Current Assets 298,936 297,118 --------- --------- Property and Equipment, at Cost 155,810 154,786 Less Accumulated Depreciation (118,937) (117,618) --------- --------- Net Property and Equipment 36,873 37,168 --------- --------- Other Assets: Intangible Assets Arising from Acquisitions, Net 106,125 104,523 Capitalized Software Costs, Net 32,156 31,540 Deferred Income Tax Asset 28,584 28,505 Other 15,401 14,144 --------- --------- Total Other Assets 182,266 178,712 --------- --------- Total Assets $ 518,075 $ 512,998 ========= ========= LIABILITIES AND SHAREHOLDERS' INVESTMENT Current Liabilities: Short-Term Borrowings $ 50,957 $ 43,007 Accounts Payable 38,936 41,451 Accrued Liabilities 74,264 76,727 Deferred Revenues 20,472 19,172 Current Installments of Long-Term Debt 2,826 3,106 --------- --------- Total Current Liabilities 187,455 183,463 --------- --------- Noncurrent Liabilities: Long-Term Debt, Less Current Installments 51,082 50,664 Deferred Revenues 10,473 10,559 Self-Insured Risks 8,969 11,920 Postretirement Medical Benefit Obligation 6,077 6,077 Minimum Pension Liability 69,063 67,846 Other 9,839 9,875 --------- --------- Total Noncurrent Liabilities 155,503 156,941 --------- --------- 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 187,214 187,747 Accumulated Other Comprehensive Loss (61,661) (64,717) --------- --------- Total Shareholders' Investment 175,117 172,594 --------- --------- Total Liabilities and Shareholders' Investment $ 518,075 $ 512,998 ========= =========
Page 5 of 6 CRAWFORD & COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS QUARTER ENDED MARCH 31, 2004 AND MARCH 31, 2003 (In Thousands)
2004 2003 -------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 2,389 $ 3,249 Reconciliation of Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization 4,377 4,040 Deferred Income Taxes (107) 221 Loss on Sales of Property and Equipment 19 71 Changes in Operating Assets and Liabilities, Net of Effects of Acquisitions: Accounts Receivable, Net (2,723) 3,056 Unbilled Revenues (3,445) (5,986) Accrued or Prepaid Income Taxes 1,241 (1,012) Accounts Payable and Accrued Liabilities (6,630) (2,961) Deferred Revenues 776 1,039 Accrued Pension Costs (3,646) 3,946 Prepaid Expenses and Other Assets (296) 803 -------- ------- Net Cash (Used in) Provided by Operating Activities (8,045) 6,466 -------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisitions of Property and Equipment, Net (2,132) (2,228) Capitalization of Computer Software Costs (2,418) (3,167) Acquisitions of businesses, net of cash acquired (106) -- -------- ------- Net Cash Used in Investing Activities (4,656) (5,395) -------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Dividends Paid (2,923) (2,918) Increase in Short-Term Borrowings 4,257 2,140 Decrease in Long-Term Debt (21) (75) Capitalized Loan Costs 33 -- -------- ------- Net Cash Provided by (Used in) Financing Activities 1,346 (853) -------- ------- Effect of Exchange Rate Changes on Cash and Cash Equivalents 852 788 -------- ------- (Decrease) Increase in Cash and Cash Equivalents (10,503) 1,006 Cash and Cash Equivalents at Beginning of Period 41,564 31,091 -------- ------- Cash and Cash Equivalents at End of Period $ 31,061 $32,097 ======== =======
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