-----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, PNOMxPJkcFmc6/6C/h9k/Rux8Dz38h9ITZ36FzjU8xpPqLf4dXNtEazT1Y4RDENJ 19ZWEUuNjq0zzxh4JqXqhg== 0000950144-04-005176.txt : 20040510 0000950144-04-005176.hdr.sgml : 20040510 20040510164105 ACCESSION NUMBER: 0000950144-04-005176 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20040331 FILED AS OF DATE: 20040510 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10356 FILM NUMBER: 04793637 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 10-Q 1 g89023e10vq.txt CRAWFORD & COMPANY ================================================================================ United States SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------- FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended March 31, 2004 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from ____ to ____ COMMISSION FILE NUMBER 1-10356 CRAWFORD & COMPANY (Exact name of Registrant as specified in its charter) Georgia 58-0506554 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) 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) ------------------- Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- --- Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES X NO --- --- The number of shares outstanding of each of the issuer's classes of common stock, as of April 30, 2004 was as follows: CLASS A COMMON STOCK, $1.00 PAR VALUE: 24,026,903 CLASS B COMMON STOCK, $1.00 PAR VALUE: 24,697,172 =============================================================================== PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CRAWFORD & COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED (IN THOUSANDS, EXCEPT PER SHARE DATA)
QUARTER ENDED --------------------------------------- MARCH 31, MARCH 31, 2004 2003 --------------------------------------- REVENUES: Revenues before reimbursements $169,855 $167,258 Reimbursements 14,881 14,707 - ----------------------------------------------------------------------------------------------------- TOTAL REVENUES 184,736 181,965 - ----------------------------------------------------------------------------------------------------- COSTS AND EXPENSES: Cost of services provided, before reimbursements 131,125 127,792 Reimbursements 14,881 14,707 - ----------------------------------------------------------------------------------------------------- Cost of Services 146,006 142,499 Selling, general, and administrative expenses 33,636 33,079 Corporate interest, net 1,337 1,279 - ----------------------------------------------------------------------------------------------------- TOTAL COSTS AND EXPENSES 180,979 176,857 - ----------------------------------------------------------------------------------------------------- INCOME BEFORE INCOME TAXES 3,757 5,108 PROVISION FOR INCOME TAXES 1,368 1,859 - ----------------------------------------------------------------------------------------------------- NET INCOME $2,389 $3,249 ===================================================================================================== NET INCOME PER SHARE: Basic $0.05 $0.07 Diluted $0.05 $0.07 ===================================================================================================== WEIGHTED-AVERAGE SHARES OUTSTANDING: Basic 48,724 48,622 Diluted 48,869 48,689 ===================================================================================================== CASH DIVIDENDS PER SHARE: Class A Common Stock $0.06 $0.06 Class B Common Stock $0.06 $0.06 =====================================================================================================
(See accompanying notes to condensed consolidated financial statements) 2 CRAWFORD & COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
(UNAUDITED) MARCH 31, DECEMBER 31, 2004 2003 - ---------------------------------------------------------------------------------------------------------- ASSETS - ---------------------------------------------------------------------------------------------------------- CURRENT ASSETS: Cash and cash equivalents $31,061 $41,564 Accounts receivable, less allowance for doubtful accounts of $21,498 in 2004 and $20,832 in 2003 147,782 142,273 Unbilled revenues, at estimated billable amounts 106,835 100,253 Prepaid expenses and other current assets 13,258 13,028 - ---------------------------------------------------------------------------------------------------------- TOTAL CURRENT ASSETS 298,936 297,118 - ---------------------------------------------------------------------------------------------------------- PROPERTY AND EQUIPMENT: 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 ==========================================================================================================
(See accompanying notes to condensed consolidated financial statements) 3 CRAWFORD & COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS - CONTINUED (IN THOUSANDS)
(UNAUDITED) MARCH 31, DECEMBER 31, 2004 2003 - --------------------------------------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' INVESTMENT - --------------------------------------------------------------------------------------------------------------- CURRENT LIABILITIES: Short-term borrowings $50,957 $43,007 Accounts payable 38,936 41,451 Accrued compensation and related costs 26,555 33,104 Deferred revenues 20,472 19,172 Self-insured risks 20,815 18,040 Accrued income taxes 8,619 7,406 Other accrued liabilities 18,275 18,177 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 Minimum pension liability 69,063 67,846 Postretirement medical benefit obligation 6,077 6,077 Other 9,839 9,875 - --------------------------------------------------------------------------------------------------------------- TOTAL NONCURRENT LIABILITIES 155,503 156,941 - --------------------------------------------------------------------------------------------------------------- SHAREHOLDERS' INVESTMENT: Class A Common Stock, $1.00 par value; 50,000 shares authorized; 24,027 shares issued and outstanding in 2004 and 2003 24,027 24,027 Class B Common Stock, $1.00 par value; 50,000 shares authorized; 24,697 shares issued and outstanding in 2004 and 2003 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 ===============================================================================================================
(See accompanying notes to condensed consolidated financial statements) 4 CRAWFORD & COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED (IN THOUSANDS)
QUARTER ENDED -------------------------------------- MARCH 31, MARCH 31, 2004 2003 -------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $2,389 $3,249 Reconciliation of net income to net cash (used in) 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 Prepaid and 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 (2,144) (2,270) Capitalization of computer software costs (2,418) (3,167) Acquisitions of businesses, net of cash acquired (106) - Proceeds from sales of property and equipment 12 42 - ---------------------------------------------------------------------------------------------------- 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 8,441 4,063 Payments on short-term borrowings (4,184) (1,923) Increase in long-term debt 321 172 Payments on long-term debt (342) (247) 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 ====================================================================================================
(See accompanying notes to condensed consolidated financial statements) 5 CRAWFORD & COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. The unaudited condensed consolidated financial statements of Crawford and Company (the "Company") included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Certain previously reported amounts have been reclassified to conform to the current presentation. Costs associated with the Company's claims management systems totaling $757,000 for the three months ended March 31, 2003 were reclassified from selling, general, and administrative expenses to cost of services provided in the accompanying Consolidated Statements of Income in order to consistently reflect the cost of these systems. In addition, the Company receives reimbursements from clients for pass-through expenses related to the cost of media advertising and postage incurred during advertising and noticing campaigns related to class action settlements administered by the Company. The Company previously recorded certain of these reimbursements as a reduction of cost of services rather than as reimbursements revenue. Accordingly, the Company revised the accompanying Consolidated Statements of Income for the three months ended March 31, 2003 in order to correctly reflect total reimbursements. The impact of this revision was to increase reimbursement revenues and expenses by $5.1 million. The following table reconciles the Company's total revenues as previously reported in each quarter of 2003 to total revenues after reflecting the effects of the reclassifications:
- ------------------------------------------------------------------------------------------ Quarter Ended ------------------------------------------------------- March 31, June 30, September 30, December 31, (in, thousands) 2003 2003 2003 2003 Total ========================================================================================== Total revenues as previously reported $176,873 $186,627 $184,084 $185,297 $732,881 Effect of reclassification 5,092 3,578 15,225 11,233 35,128 -------- -------- -------- -------- ------- Total revenues as adjusted $181,965 $190,205 $199,309 $196,530 $768,009 ======== ======== ======== ======== ======== - ------------------------------------------------------------------------------------------
These reclassifications had no effect on revenues before reimbursements or net income as previously reported. The results of operations for the three months ended March 31, 2004 are not necessarily indicative of the results to be expected during the balance of the year ending December 31, 2004. These condensed financial statements should be read in conjunction with the audited financial statements and related notes contained in the Company's annual report on Form 10-K for the fiscal year ended December 31, 2003. 6 CRAWFORD & COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company's critical accounting policies and estimates, as disclosed on Form 10-K for the fiscal year ended December 31, 2003, have not changed. The Company accounts for stock-based compensation utilizing the intrinsic value method in accordance with the provisions of Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees" and related interpretations. Accordingly, no compensation expense has been recognized for the option plans because the exercise prices of the stock options equal the market prices of the underlying stock on the dates of grant. Had compensation cost for these plans been determined based on the fair value at the grant dates for awards under those plans consistent with Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," the Company's net income and net income per share would have been reduced to the pro forma amounts indicated below:
- -------------------------------------------------------------------------------- Quarter ended ------------------------ March 31, March 31, (in thousands, except per share data) 2004 2003 ================================================================================ Net income as reported $ 2,389 $ 3,249 Less: compensation expense using the fair value method, net of tax 150 348 --------- --------- Pro forma net income $ 2,239 $ 2,901 ========= ========= Net income per share - basic: As reported $ 0.05 $ 0.07 ========= ========= Pro forma $ 0.05 $ 0.06 ========= ========= Net income per share - diluted: As reported $ 0.05 $ 0.07 ========= ========= Pro forma $ 0.05 $ 0.06 ========= ========= - --------------------------------------------------------------------------------
The fair value of options is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:
- ------------------------------------------------------------------------------------- Quarter ended --------------------- March 31, March 31, 2004 2003 ===================================================================================== Expected dividend yield 3.4% 3.6% Expected volatility 34% 33% Risk-free interest rate 3.8% 3.6% Expected life of options 8 years 7 years - -------------------------------------------------------------------------------------
7 CRAWFORD & COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 2. During the quarter ended March 31, 2004, the Company utilized $85,000 of its restructuring reserves for payments related to lease terminations. As of March 31, 2004, remaining restructuring reserves were $1.2 million, $942,000 of which is included in other noncurrent liabilities. The noncurrent portion of accrued restructuring costs consists of long-term lease obligations related to various United Kingdom offices, which the Company has vacated and is currently attempting to sublease. Management periodically reviews the restructuring reserves and believes the remaining reserves are adequate to complete its plan. 3. Basic net income per share is computed based on the weighted-average number of total common shares outstanding during the respective periods. Diluted net income per share is computed based on the weighted-average number of total common shares outstanding plus the dilutive effect of outstanding stock options, if any, using the "treasury stock" method. Below is the calculation of basic and diluted net income per share for the quarters ended March 31, 2004 and 2003:
- ---------------------------------------------------------------------------------- Quarter ended --------------------------- March 31, March 31, (in thousands, except per share data) 2004 2003 ================================================================================= Net income available to common shareholders $ 2,389 $ 3,249 ======= ======= Weighted-average common shares outstanding - Basic 48,724 48,622 Dilutive effect of stock options 145 67 ------- ------- Weighted-average common shares outstanding - Diluted 48,869 48,689 ======= ======= Basic net income per share $ 0.05 $ 0.07 ======= ======= Diluted net income per share $ 0.05 $ 0.07 ======= ======= - ----------------------------------------------------------------------------------
Additional options to purchase 5,573,798 shares of Class A Common Stock at exercise prices ranging from $6.66 to $19.50 per share were outstanding at March 31, 2004, but were not included in the computation of diluted net income per share because the options' exercise prices were greater than the average market price of the common shares. To include them would have been antidilutive. 8 CRAWFORD & COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 4. Comprehensive income for the Company consists of the total of net income and foreign currency translation adjustments. Below is the calculation of comprehensive income for the quarters ended March 31, 2004 and 2003:
- ---------------------------------------------------------------------- Quarter ended ----------------------- March 31, March 31, (in thousands) 2004 2003 ====================================================================== Net income $2,389 $ 3,249 Foreign currency translation adjustment 3,056 4,722 ------ ------- Comprehensive income $5,445 $ 7,971 ====== ======= - -----------------------------------------------------------------------
5. The Company has two reportable segments, one which provides claims services through branch offices located in the United States ("U.S. Operations") and the other which provides similar services through branch or representative offices located in 66 other countries ("International Operations"). The Company's reportable segments represent components of the business for which separate financial information is available that is evaluated regularly by the chief decision maker in deciding how to allocate resources and in assessing performance. Intersegment sales are recorded at cost and are not material. The Company measures segment profit based on operating earnings, defined as earnings before net corporate interest and income taxes. Financial information for the quarters ended March 31, 2004 and 2003 covering the Company's reportable segments is presented below:
- ------------------------------------------------------------------------------------ Quarter ended -------------------------------- March 31, March 31, (in thousands) 2004 2003 ========================================================================= REVENUES: U.S. $109,313 $115,073 International 60,542 52,185 -------- -------- TOTAL REVENUES BEFORE REIMBURSEMENTS $169,855 $167,258 ======== ======== OPERATING EARNINGS: U.S. $ 2,892 $ 4,049 International 2,202 2,338 -------- -------- TOTAL OPERATING EARNINGS $ 5,094 $ 6,387 ======== ======== - ------------------------------------------------------------------------------------
6. During the quarter ended March 31, 2004, the Company made additional payments of $106,000 to the former owner of Greentree Investigations, Inc. pursuant to a purchase agreement entered into in 2000. Additional contingent payments due under this agreement may be made through April of 2005. 9 CRAWFORD & COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 7. The Company normally structures its acquisitions to include earnout payments, which are contingent upon the acquired entity reaching certain revenue and operating earnings targets. The amount of the contingent payments and length of the earnout period varies for each acquisition, and the ultimate payments when made will vary, as they are dependent on future events. Based on projected levels of revenues and operating earnings, additional payments under existing earnout agreements would approximate $2.8 million through 2008, as follows:
- -------------------------------------------------------------------------------- 2004 2005 2006 2007 2008 ---------------------------------------------------------------------- $165,000 $231,000 $0 $0 $2,366,000 - --------------------------------------------------------------------------------
8. The Company and its subsidiaries sponsor various defined benefit and defined contribution retirement plans covering substantially all employees. Effective December 31, 2002, the Company elected to freeze its U.S. defined benefit plan and replace it with a discretionary, non-contributory defined contribution plan. Net periodic benefit cost related to the U.S. defined benefit pension plan for the quarters ended March 31, 2004 and 2003 included the following components:
- -------------------------------------------------------------------------- Quarter ended -------------------------- March 31, March 31, (in thousands) 2004 2003 ========================================================================== Interest cost $ 5,337 $ 5,383 Expected return on assets (5,960) (5,357) Net amortization -- 334 Recognized net actuarial loss 1,386 1,980 ------- ------- Net periodic benefit cost $ 763 $ 2,340 ======= ======= - --------------------------------------------------------------------------
The Company is not required to make any contributions to its frozen U.S. defined benefit pension plan during 2004. In December 2003, a law was passed which expands Medicare, primarily by adding a prescription drug benefit for Medicare-eligible retirees starting in 2006. The Company anticipates that the benefits paid after 2006 will be lower as a result of the new Medicare provision; however, the retiree medical obligations and costs reported do not reflect the impact of this legislation. Deferring the recognition of the new Medicare provisions' impact is permitted by Financial Accounting Standards Board Staff Position 106-1 due to open questions about some of the new Medicare provisions and a lack of authoritative guidance about certain matters. The final accounting guidance could require changes to previously reported information. 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS BUSINESS OVERVIEW Crawford & Company provides claims management services to insurance companies, self-insured entities and class action settlement funds. 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. Insurance companies, which represent the major source of our revenues, customarily manage their own claims administration function but require limited services which we provide, primarily field investigation and evaluation of property and casualty insurance claims. Self-insured entities typically require a broader range of services from us. In addition to field investigation and evaluation of their claims, we may also provide initial loss reporting services for their claimants, loss mitigation services such as medical case management and vocational rehabilitation, risk management information services, and administration of the trust funds established to pay their claims. Finally, we also perform the administrative functions related to securities, product liability, bankruptcy and other class action settlements, including identifying and qualifying class members, determining and dispensing settlement payments, and administering the settlement funds. The claims management services market, both in the U.S. and internationally, is highly competitive and comprised of a large number of companies of varying size and scope of services. The demand from insurance companies and self-insured entities for services provided by independent claims service firms like us is largely dependent on industry-wide claims volumes, which are affected by the insurance underwriting cycle, weather-related events, general economic activity, and overall employment levels and associated injury rates. We generally earn our revenues on an individual fee per claim basis. Accordingly, the volume of claim referrals to us is a key driver of our revenues. During a hard insurance underwriting market, as we have experienced since the September 11, 2001 terrorist attacks, insurance companies become very selective in the risks they underwrite, and insurance premiums and policy deductibles increase, sometimes quite dramatically. This results in a reduction in industry-wide claims volumes, which reduces claims referrals to us unless we can offset the decline in claim referrals with growth in our share of the overall claims services market. Our ability to grow our market share in such a highly fragmented, competitive market is primarily dependent on the delivery of superior quality service and effective, properly focused sales efforts. RESULTS OF OPERATIONS Consolidated net income was $2.4 million and $3.2 million for the quarters ended March 31, 2004 and 2003, respectively. Operating earnings is one of the key performance measures used by our senior management and chief decision maker to evaluate the performance of our business and make resource allocation decisions. We believe this measure is useful to investors in that it allows them to evaluate our performance using the same criteria our management uses. Operating earnings (earnings before net corporate interest, and taxes) during the quarter ended March 31, 2004, totaled $5.1 million compared with $6.4 million in the comparable 2003 period. Following is a reconciliation of 11 consolidated net income to operating earnings for the quarters ended March 31, 2004 and 2003 and the related margins as a percentage of revenues before reimbursements:
- ------------------------------------------------------------------------------------------- Quarter ended --------------------------------------------------- March 31, % March 31, % (in thousands) 2004 Margin 2003 Margin =========================================================================================== Net income $2,389 1.4% $3,249 1.9% Add: Net corporate interest 1,337 0.8 1,279 0.8 Income taxes 1,368 0.8 1,859 1.1 ------ ----- ------ --- Operating earnings $5,094 3.0% $6,387 3.8% ====== ===== ====== === - --------------------------------------- -------------------------------------------------
The following is a discussion and analysis of the consolidated financial condition and results of operations of our two reportable segments: U.S. operations and international operations. Our reportable segments represent components of our business for which separate financial information is available that is evaluated regularly by our chief decision maker in deciding how to allocate resources and in assessing performance. Revenue amounts discussed exclude reimbursements for pass-through expenses. Expense amounts discussed exclude net corporate interest and income taxes. Our discussion and analysis of operating expenses is comprised of two components. Compensation and fringe benefits include all compensation, payroll taxes, and benefits provided to our employees which, as a service company, represents our most significant and variable expense. Expenses other than reimbursements, compensation and fringe benefits include office rent and occupancy costs, other office operating expenses, and depreciation. This discussion should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying footnotes. 12 Operating results for our U.S. and international operations for the quarters ended March 31, 2004 and 2003 are as follows:
Quarter ended -------------------------- March 31, March 31, (in thousands) 2004 2003 ============================================================== REVENUES BEFORE REIMBURSEMENTS: U.S. $109,313 $115,073 International 60,542 52,185 -------- -------- TOTAL $169,855 $167,258 COMPENSATION & FRINGE BENEFITS: U.S. $ 69,367 $ 74,344 % of Revenues 63.5% 64.6% International 42,420 35,493 % of Revenues 70.1% 68.0% -------- -------- TOTAL $111,787 $109,837 % of Revenues 65.8% 65.7% EXPENSES OTHER THAN REIMBURSEMENTS, COMPENSATION & FRINGE BENEFITS: U.S. $ 37,054 $ 36,680 % of Revenues 33.9% 31.9% International 15,920 14,354 % of Revenues 26.3% 27.5% -------- -------- TOTAL $ 52,974 $ 51,034 % of Revenues 31.2% 30.5% -------- -------- OPERATING EARNINGS (1): U.S. $ 2,892 $ 4,049 % of Revenues 2.6% 3.5% International 2,202 2,338 % of Revenues 3.6% 4.5% -------- -------- TOTAL $ 5,094 $ 6,387 % of Revenues 3.0% 3.8%
(1) Earnings before net corporate interest and income taxes. U.S. OPERATIONS REVENUES U.S. revenues before reimbursements, by market type, for the quarters ended March 31, 2004 and 2003 are as follows:
- -------------------------------------------------------------------------------- Quarter ended ---------------------------------------- March 31, March 31, (in thousands) 2004 2003 Variance ========================================================================== Insurance companies $ 50,453 $ 58,651 (14.0%) Self-insured entities 40,409 42,484 (4.9%) Class action services 18,451 13,938 32.4% -------- -------- TOTAL U.S. REVENUES BEFORE REIMBURSEMENTS $109,313 $115,073 (5.0%) ======== ======== - --------------------------------------------------------------------------------
13 Revenues from insurance companies decreased 14.0% to $50.5 million for the 2004 first quarter, reflecting a continued softening in the Company's U.S. insurance company referrals for high-frequency, low-severity claims. Revenues from self-insured clients decreased 4.9% to $40.4 million in the quarter, due primarily to a decline in workers' compensation claim referrals. See the following analysis of U.S. cases received. Class action revenues, which can fluctuate based on the timing of project awards, increased 32.4% to $18.5 million in the current quarter. This increase is primarily the result of work performed on major projects which were awarded in late 2003. Case Volume Analysis U.S. unit volume, measured principally by cases received, and excluding the impact of class action services, decreased 18.5% in the first quarter of 2004 compared to the 2003 period. This decrease was partially offset by a 9.6% revenue increase from changes in the mix of services provided and in the rates charged for those services, resulting in a net 8.9% decrease in U.S. revenues for the first quarter of 2004, excluding revenues from class action services. Our U.S. referrals for high-frequency, low-severity claims have declined during the year resulting in an increase in our average revenue per claim. Growth in class action services increased U.S. revenues by 3.9% in the quarter ended March 31, 2004, compared to the prior year period. Excluding the impact of class action services, U.S. unit volume by major product line, as measured by cases received, for the quarters ended March 31, 2004 and 2003 is as follows:
- ----------------------------------------------------------------------- Quarter ended ------------------------------------ March 31, March 31, (whole numbers) 2004 2003 Variance ===================================================================== Casualty 52,026 55,578 (6.4%) Property 40,973 51,168 (19.9%) Vehicle 33,940 49,065 (30.8%) Workers' Compensation 39,590 48,915 (19.1%) Other 4,688 5,383 (12.9%) ------- ------- TOTAL U.S. CASES RECEIVED 171,217 210,109 (18.5%) ======= ======= - -----------------------------------------------------------------------
Our decline in workers' compensation claim referrals has been primarily due to declines in U.S. employment levels and associated injury rates. The decline in property and vehicle claims for the quarter is due to a decline in referrals of high-frequency, low-severity claims from our insurance company clients. Conservative underwriting by insurance companies, including significant increases in policy deductibles, has contributed to an industry-wide decline in property and casualty claims frequency. The decline in casualty claims is primarily due to a reduction in claims referred by our existing client base. COMPENSATION AND FRINGE BENEFITS Our most significant expense is the compensation of employees, including related payroll taxes and fringe benefits. U.S. compensation expense as a percent of revenues decreased to 63.5% in the first quarter of 2004 as compared to 64.6% in the 2003 quarter. In response to the ongoing decline in U.S. claims volume, we have reduced our level of U.S. full-time equivalent employees by nearly 14% as compared to employment levels through the 2003 first quarter. There were an average of 4,190 full-time equivalent employees in the first quarter of 2004, compared to an average of 4,852 in the 2003 period. 14 U.S. salaries and wages totaled $55.2 million for the quarter ended March 31, 2004, decreasing 7.9% from $59.8 million in the comparable 2003 period. Payroll taxes and fringe benefits for U.S. operations totaled $14.2 million in the first quarter of 2004, decreasing 1.9% from 2003 costs of $14.5 million during the period. These decreases reflect the reduction in full-time equivalent employees during the current quarter. EXPENSES OTHER THAN REIMBURSEMENTS, COMPENSATION AND FRINGE BENEFITS U.S. expenses other than reimbursements, compensation and related payroll taxes and fringe benefits were 33.9% of revenues for the quarter ended March 31, 2004, up from 31.9% for the same period in 2003. This increase primarily relates to higher professional fees associated with growth in our class action services unit. REIMBURSEMENTS Reimbursements in our U.S. operations remained constant at $8.8 million for the quarters ended March 31, 2004 and 2003. INTERNATIONAL OPERATIONS REVENUES Substantially all international revenues are derived from the insurance company market. Revenues before reimbursements from our international operations increased 16.0%, from $52.2 million in the first quarter of 2003 to $60.5 million in the first quarter of 2004. Excluding the impact of acquisitions, international unit volume, measured principally by cases received, increased 1.0% in the first quarter of 2004 compared to the same period in 2003. Revenues reflect a 14.0% increase during the three months ended March 31, 2004, due to the positive effect of a weak U.S. dollar, primarily as compared to the British pound and the euro. Excluding the impact of acquisitions, international unit volume by region for the quarters ended March 31, 2004 and 2003 was as follows:
- -------------------------------------------------------------------------------- Quarter ended ------------------------------------ March 31, March 31, (whole numbers) 2004 2003 Variance =============================================================================== United Kingdom 24,372 22,644 7.6% Americas 28,135 30,619 (8.1%) CEMEA 21,042 19,664 7.0% Asia/Pacific 9,838 9,662 1.8% ------ ------ TOTAL INTERNATIONAL CASES RECEIVED 83,387 82,589 1.0% ====== ======
15 The decrease in the Americas is primarily due to the receipt of approximately 1,900 low-value property claims in Brazil during the 2003 first quarter. There was no such intake of claims in the 2004 period. The increase in Continental Europe, Middle East, & Africa ("CEMEA") is largely due to an increase in high- frequency, low-value claims in South Africa. The increase in Asia/Pacific is primarily due to an increase in new business in Australia. The increase in the United Kingdom (U.K.) is largely due to an increase in claims received from new contracts entered into in late 2003. COMPENSATION AND FRINGE BENEFITS As a percent of revenues, compensation expense, including related payroll taxes and fringe benefits, increased to 70.1% for the quarter ended March 31, 2004 from 68.0% for the same period in 2003, primarily due to lower than expected claims volume in the Americas. There were an average of 3,092 full-time equivalent employees in the first quarter of 2004 compared to an average of 3,112 in the 2003 period. Salaries and wages of international personnel increased to $35.4 million for the quarter ended March 31, 2004, from $29.8 million in the comparable 2003 period. Payroll taxes and fringe benefits for international operations totaled $7.0 million for the quarter ended March 31, 2004, compared to $5.7 million for the same period in 2003. The increases in these costs are largely the result of a decline in the value of the U.S. dollar against other major currencies, primarily the British Pound and the euro. EXPENSES OTHER THAN REIMBURSEMENTS, COMPENSATION AND FRINGE BENEFITS Expenses other than compensation and related payroll taxes and fringe benefits were 26.3% of international revenues for the quarter ended March 31, 2004, compared to 27.5% for the same period in 2003. REIMBURSEMENTS Reimbursements in our international operations increased to $6.1 million for the quarter ended March 31, 2004, from $5.9 million in the comparable 2003 period. This increase is due to the effect of a weaker U.S. dollar, partially offset by a decrease in the use of outside experts in the Americas and CEMEA. NET CORPORATE INTEREST AND INCOME TAXES Net corporate interest was substantially unchanged at $1.3 million for the quarters ended March 31, 2004 and 2003. Our effective tax rate was 36.4% of pretax income for the quarters ended March 31, 2004 and 2003. Taxes on income totaled $1.4 million for the quarter ended March 31, 2004, as compared to $1.9 million for the comparable 2003 period. 16 LIQUIDITY, CAPITAL RESOURCES, AND FINANCIAL CONDITION At March 31, 2004, current assets exceeded current liabilities by approximately $111.5 million, a decrease of $2.2 million from the working capital balance at December 31, 2003. Cash and cash equivalents at March 31, 2004 totaled $31.1 million, a decrease of $10.5 million from the balance at December 31, 2003. Cash used in operations during the period totaled $8.0 million, which was used to fund growth in our class action services and U.K. operations and a $6.1 million annual contribution to our U.S. defined contribution pension plan. Other significant uses of cash during the period included dividends paid to shareholders, investments in computer software, and acquisitions of property and equipment. Cash dividends to shareholders approximated 122.4% of net income in the first quarter of 2004, compared to 89.8% for the same period in 2003. The Board of Directors declares cash dividends to shareholders each quarter based on an assessment of current and projected earnings and cash flows. During the first quarter of 2004, we did not repurchase any Class A or Class B Common Stock. As of March 31, 2004, 705,863 shares are eligible to be repurchased under the discretionary 1999 share repurchase program authorized by the Board of Directors. We believe it is unlikely that we will repurchase shares under this program in the foreseeable future due to the decline in the funded status of our defined benefit pension plans. We maintain committed revolving credit lines with banks in order to meet seasonal working capital requirements and other financing needs that may arise. Our short-term debt obligations typically peak during the first quarter and generally decline during the balance of the year. The balance of unused lines of credit totaled $21.6 million at March 31, 2004. Short-term borrowings outstanding, including bank overdraft facilities, as of March 31, 2004 totaled $51.0 million, increasing from $43.0 million at December 31, 2003. Long-term borrowings outstanding, excluding current installments, as of March 31, 2004 totaled $51.1 million compared to $50.7 million at December 31, 2003. Please refer to the debt covenants discussion under the Factors that May Affect Future Results section of this report for a further discussion of our borrowing capabilities. We believe that our current financial resources, together with funds generated from operations and existing and potential borrowing capabilities, will be sufficient to maintain our current operations. We do not engage in any hedging activities to compensate for the effect of exchange rate fluctuations on the operating results of our foreign subsidiaries. Foreign currency denominated debt is maintained primarily to hedge the currency exposure of our net investment in foreign operations. Shareholders' investment at March 31, 2004 was $175.1 million, compared with $172.6 million at December 31, 2003. This increase is primarily due to foreign currency translation adjustments during the first quarter of 2004. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Management's Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported 17 amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates these estimates and judgements based upon historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of these evaluations form the basis for making judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. For a complete discussion regarding the application of our critical accounting policies, see our Form 10-K for the year ended December 31, 2003 filed with the Securities and Exchange Commission, under the heading "Critical Accounting Policies and Estimates" in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section. FACTORS THAT MAY AFFECT FUTURE RESULTS FORWARD LOOKING STATEMENTS Certain information presented in Management's Discussion and Analysis of Financial Condition and Results of Operations may include forward-looking statements, the accuracy of which is subject to a number of risks, uncertainties and assumptions. Our Form 10-K for the year ended December 31, 2003, discusses such risks, uncertainties and assumptions and other key factors that could cause actual results to differ materially from those expressed in such forward-looking statements. LEGAL PROCEEDINGS In the normal course of the claims administration services business, we are named as a defendant in suits by insureds or claimants contesting decisions made by us or our clients with respect to the settlement of claims. Additionally, our clients have brought actions for indemnification on the basis of alleged negligence on our part, our agents, or our employees in rendering service to clients. The majority of these claims are of the type covered by insurance that we maintain; however, we are self-insured for the deductibles under various insurance coverages. In our opinion, adequate reserves have been provided for such self-insured risks. We have received two related federal grand jury subpoenas which we understand have been issued as part of a possible conflicts of interest investigation involving a public entity client of our Melville, New York office for Risk Management Services and Healthcare Management. We have completed our responses to both of these subpoenas. For a complete discussion regarding legal proceedings, see our Form 10-K for the year ended December 31, 2003 filed with the Securities and Exchange Commission, under the heading "Factors that May Affect Future Results" in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section. CONTINGENT PAYMENTS We normally structure acquisitions to include earnout payments, which are contingent upon the acquired entity reaching certain revenue and operating earnings targets. The amount of the contingent payments and length of the earnout period varies for each acquisition, and the ultimate payments when made will vary, as they are dependent on future events. Based on 18 projected levels of revenues and operating earnings, additional payments under existing earnout agreements would approximate $2.8 million through 2008, as follows: 2004 - $165,000; 2005 - $231,000; and 2008 - $2,366,000. We maintain letters of credit to satisfy certain contractual requirements. At March 31, 2004, there was $11.1 million committed under these letters of credit. POSTRETIREMENT MEDICAL BENEFITS In December 2003, a law was passed which expands Medicare, primarily by adding a prescription drug benefit for Medicare-eligible retirees starting in 2006. We anticipate that the benefits we pay after 2006 will be lower as a result of the new Medicare provision; however, the retiree medical obligations and costs reported do not reflect the impact of this legislation. Deferring the recognition of the new Medicare provisions' impact is permitted by Financial Accounting Standards Board Staff Position 106-1 due to open questions about some of the new Medicare provisions and a lack of authoritative guidance about certain matters. The final accounting guidance could require changes to previously reported information. DEBT COVENANTS In October 2003, we entered into a committed $70.0 million revolving credit line and issued $50.0 million in 6.08% senior notes due October 2010. As of March 31, 2004, there was $37.3 million outstanding on the revolving credit line with an average variable interest rate of 5.0%. In addition, letters of credit of $11.1 million were also outstanding under this revolving credit line. The stock of Crawford & Company International, Inc. is pledged as security under these agreements and the Company's domestic subsidiaries have guaranteed the Company's obligations under these agreements. Both of these agreements contain various provisions which require us to maintain defined leverage ratios, fixed charge coverage ratios, and minimum net worth thresholds. We must maintain, on a rolling four quarter basis, a leverage ratio of consolidated debt to earnings before interest, income taxes, depreciation, amortization, certain non-recurring charges, and the capitalization of internally developed software costs ("EBITDA") of no more than 2.75 times EBITDA. This ratio is reduced to a maximum allowable of 2.50 times EBITDA at September 30, 2004 and 2.25 times EBITDA at September 30, 2005 and thereafter. We must also maintain a fixed charge coverage ratio of EBITDA less depreciation and amortization plus lease expense ("EBITR") to total fixed charges, consisting of interest expense and lease expense, of no less than 1.25 times fixed charges. This ratio is increased to a minimum allowable of 1.50 times fixed charges at September 30, 2004 and thereafter. Additionally, we are required to maintain a minimum net worth equal to $135,516,350 plus 50% of our cumulative positive consolidated net income earned after December 31, 2002 plus 100% of the net proceeds from any equity offering subject to certain terms and conditions. For purposes of determining minimum net worth, any non-cash adjustments after December 31, 2002 related to our pension fund liabilities, goodwill, or foreign translations are excluded. We were in compliance with these debt covenants as of March 31, 2004. If we were not to meet the covenant requirements, both agreements are subject to being called or renegotiated. Any such renegotiations could result in less favorable terms, including higher interest rates and accelerated payments. 19 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK DERIVATIVES We have not entered into any transactions using derivative financial instruments or derivative commodity instruments during the quarter ended March 31, 2004. FOREIGN CURRENCY EXCHANGE Our international operations expose us to foreign currency exchange rate changes that could impact translations of foreign-denominated assets and liabilities into U.S. dollars and future earnings and cash flows from transactions denominated in different currencies. Revenues from our international operations were 35.6% and 31.2% of total revenues at March 31, 2004 and 2003, respectively. Except for borrowing in foreign currencies, we do not presently engage in any hedging activities to compensate for the effect of exchange rate fluctuations on the net assets or operating results of our foreign subsidiaries. We measure currency earnings risk related to our international operations based on changes in foreign currency rates using a sensitivity analysis. The sensitivity analysis measures the potential loss in earnings based on a hypothetical 10% change in currency exchange rates. Exchange rates and currency positions as of March 31, 2004 were used to perform the sensitivity analysis. Such analysis indicates that a hypothetical 10% change in foreign currency exchange rates would have decreased pretax income by approximately $166,000, or less than $0.01 per share, during the first three months of 2004, had the U.S. dollar exchange rate increased relative to the currencies with which we had exposure. INTEREST RATES We are exposed to interest rate fluctuations on certain variable rate borrowings. Depending on general economic conditions, we use variable rate debt for short-term borrowings and fixed rate debt for long-term borrowings. At March 31, 2004, we had $51.0 million in short-term loans outstanding, including bank overdraft facilities, with an average variable interest rate of 4.9%. If the average interest rate were to change by 1%, the impact to pretax income for the three months ended March 31, 2004 would be approximately $127,000, or less than $0.01 per share. Changes in the projected benefit obligations of our defined benefit pension plans are largely dependent on changes in prevailing interest rates as of the measurement dates we use to value these obligations under SFAS 87. If our assumption for the discount rate were to change by 0.25%, representing either an increase or decrease in the rate, the projected benefit obligation of our frozen U.S. defined benefit plan would change by approximately $10.8 million. The impact of this change to pretax income for the quarter ended March 31, 2004 would have been approximately $281,000, or less than $0.01 per share. CREDIT RISK We process payments for claims settlements, primarily on behalf of our self-insured clients. The liability for the settlement cost of claims processed, which is generally pre-funded, remains with the client. Accordingly, we do not incur significant credit risk in the performance of these services. 20 ITEM 4. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES As of the end of the period covered by this report, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our management, including our chief executive officer and chief financial officer. Based on this evaluation, the chief executive officer and chief financial officer have concluded that the design and operation of our disclosure controls and procedures are effective. CHANGES IN INTERNAL CONTROLS There have been no significant changes in our internal controls over financial reporting during the period covered by this report that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 21 REPORT OF INDEPENDENT ACCOUNTANTS To the Shareholders and Board of Directors of Crawford & Company: We have reviewed the accompanying condensed consolidated balance sheet of CRAWFORD & COMPANY (a Georgia corporation) as of March 31, 2004 and 2003, and the related condensed consolidated statements of income and cash flows for the three-month periods ended March 31, 2004 and 2003. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying condensed consolidated financial statements, referred to above, for them to be in conformity with accounting principles generally accepted in the United States. We have previously audited, in accordance with auditing standards generally accepted in the United States, the consolidated balance sheet of CRAWFORD & COMPANY as of December 31, 2003, and the related consolidated statements of income and cash flows for the year then ended (not presented herein) and in our report dated February 2, 2004, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated condensed balance sheet as of December 31, 2003, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. /s/ Ernst & Young LLP Atlanta, Georgia April 27, 2004 22 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS We have received two related federal grand jury subpoenas which we understand have been issued as part of a possible conflicts of interest investigation involving a public entity client of our Melville, New York office for Risk Management Services and Healthcare Management. We have completed our responses to both of these subpoenas. For a complete discussion regarding legal proceedings, see our Form 10-K for the year ended December 31, 2003 filed with the Securities and Exchange Commission, under the heading "Factors that May Affect Future Results" in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 3.1 Amendment to the By-Laws 15.1 Letter from Ernst & Young 31.1 Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of principal executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2 Certification of principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (b) Reports on Form 8-K: Current Report on Form 8-K dated February 2, 2004 containing a copy of the Registrant's press release dated February 2, 2004 titled "Crawford Reports Fourth Quarter 2003 Financial Results." 23 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CRAWFORD & COMPANY (Registrant) Date: May 10, 2004 /s/ Marshall G. Long --------------------------------- Marshall G. Long Chief Executive Officer (Principal Executive Officer) Date: May 10, 2004 /s/ John F. Giblin --------------------------------- John F. Giblin Executive Vice President - Finance (Principal Financial Officer) Date: May 10, 2004 /s/ W. Bruce Swain --------------------------------- W. Bruce Swain Senior Vice President and Controller (Principal Accounting Officer) 24 INDEX TO EXHIBITS
Exhibit No. Description Sequential Page No. 3.1 Amendment to the By-Laws 26 15.1 Letter from Ernst & Young LLP 35 31.1 Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 36 31.2 Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 37 32.1 Certification of principal executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 38 32.2 Certification of principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 39
25 EX-3.1 2 g89023exv3w1.txt EX-3.1 AMENDMENT TO THE BY-LAWS Exhibit 3.1 RESTATED BY-LAWS OF CRAWFORD & COMPANY (reflecting amendments made through March 9, 2004) ARTICLE I SHAREHOLDERS Section 1. Annual Meeting. The annual meeting of the shareholders for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held at such place, either within or without the State of Georgia, on such date, and at such time, as the Board of Directors or its Executive Committee may by resolution provide, or if the Board of Directors or Executive Committee fails to provide for such meeting by action by April 1 of any year, then such meeting shall be held at the principal office of the Company in Atlanta, Georgia at 11:00 a.m. on the third Tuesday in April of each year, if not a legal holiday under the laws of the State of Georgia, and if a legal holiday, on the next succeeding business day. The Board of Directors may specify by resolution prior to any special meeting of shareholders held within the year that such meeting shall be in lieu of the annual meeting. Section 2. Special Meetings. Except as otherwise provided by law, special meetings of the shareholders may be called by the Board of Directors, or its Executive Committee, or by the Chairman of the Board, or by the President, or by the holders of record of at least one-fourth (1/4) of the outstanding stock entitled to vote at such meeting. Such meeting may be held in such place, either within or without the State of Georgia, as is stated in the call and notice thereof. Section 3. Notice of Meeting. Written notice of each meeting of shareholders, stating the date, time and place of the meeting, and describing the purpose or purposes of the meeting if it is a special meeting, shall be mailed to each shareholder entitled to vote at such meeting at such shareholder's address shown on the Company's current record of shareholders not less than ten (10) nor more than sixty (60) days prior to such meeting. If an amendment to the Articles of Incorporation, a plan of merger or share exchange, or a sale of assets of the Company is to be considered at any annual or special meeting, the written notice shall state that consideration of such action is one of the purposes of such meeting. A shareholder may waive notice of a meeting before or after the meeting. The waiver must be in writing, must be signed by the shareholder entitled to the notice, and must be delivered to the Company for inclusion in the minutes or filing with the corporate records. A shareholder's attendance at a meeting (1) waives objection to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding a meeting or transacting business at the meeting, and (2) waives objection to consideration of a particular matter at the meeting, that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented. Neither the business transacted at, nor the purpose of, any meeting need be stated in a waiver of notice of a meeting, except that, with respect to a waiver of notice of a meeting at which an amendment to the Articles of Incorporation, a plan of merger or share exchange, sale of assets, or any other action 26 that would entitle the shareholder to dissenter's rights, is submitted to a vote of shareholders, the same material that the Georgia Business Corporation Code would have required to be sent to the shareholder in a notice of the meeting must be delivered to the shareholder prior to such shareholder's execution of the waiver of notice, or the waiver itself must expressly waive the right to such material. Notice of any meeting may be given by or at the direction of the Secretary or by the person or persons calling such meeting, if the Secretary fails to give such notice within twenty (20) days after the call of a meeting. No notice need be given of the new date, time or place of reconvening any adjourned meeting, if the new date, time and place to which the meeting is adjourned are announced at the adjourned meeting before adjournment, except that, if a new record date for the adjourned meeting is or must be fixed under the applicable provisions of the Georgia Business Corporation Code, notice of the adjourned meeting must be given to persons who are shareholders as of the new record date. Notwithstanding the foregoing, notice of any meeting of the shareholders may be given by electronic or any other means to the extent that delivery of such notice by those means is not precluded by the Georgia Business Corporation Code or the rules and regulations of The New York Stock Exchange or the United States Securities and Exchange Commission. Section 4. Quorum. A majority in interest of the issued and outstanding capital stock of the Company entitled to vote at any annual or special meeting of shareholders and represented either in person or by proxy shall constitute a quorum for the transaction of business at such annual or special meeting. Once a share is represented for any purpose at a meeting other than solely to object to holding the meeting or transacting business at the meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be (under the provisions of the Georgia Business Corporation Code) set for that adjourned meeting. If a quorum shall not be present, the holders of a majority of the stock represented may adjourn the meeting to some later time. When a quorum is present, a vote of a majority of the stock represented in person or by proxy shall determine any question, except as otherwise provided by the Articles of Incorporation, these By-laws, or by law. Section 5. Proxies. A shareholder may vote, execute consents, waivers and releases and exercise any of his other rights, either in person or by proxy duly executed in writing by the shareholder. A proxy for any meeting shall be valid for any adjournment of such meeting. Unless otherwise provided in the proxy, it shall confer discretionary authority to vote on any proposal by a shareholder not included with the proxy materials accompanying the notice and proxy if the Company did not have notice of that matter at least 120 days before the date on which the Company first mailed its proxy materials for the prior year's annual meeting of shareholders. Section 6. Record Date. The Board shall have power to close the stock transfer books of the Company for a period not to exceed fifty (50) days preceding the date of any meeting of shareholders, or the date for payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into 27 effect; provided, however, that in lieu of closing the stock transfer books as aforesaid, the Board may fix in advance a date, not exceeding seventy (70) days preceding the date of any meeting of shareholders, or the date of the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, as a record date for the determination of the shareholders entitled to notice of, and to vote at, any such meeting, or entitled to receive payment of any such dividend, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, and in such case only such shareholders as shall be shareholders of record on the date so fixed shall be entitled to such notices of, and to vote at, such meeting, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any stock on the books of the Company after any such record date fixed as aforesaid. ARTICLE II DIRECTORS Section 1. Powers of Directors. The Board of Directors shall have the management of the business of the Company, and, subject to any restrictions imposed by law, by the charter, or by these By-Laws, may exercise all the power of the corporation. Section 2. Number and Term of Directors. The number of Directors which shall constitute the full Board shall be no greater than twelve (12) and no fewer than seven (7), with the exact number to be set by the Board of Directors or by the affirmative vote of a majority of the voting power of the outstanding stock of the Company either to vote generally in the election of Directors, voting as a class. The variable range for the size of the Board of Directors may be increased or decreased by amendment of these By-laws either by the Board of Directors or by the affirmative vote of a majority of the voting power of the outstanding stock of the Company entitled to vote generally in the election of Directors, voting as a class. At each annual meeting the shareholders entitled to vote thereon shall elect the Directors, who shall serve until their successors are elected and qualified; provided that the shareholders entitled to vote thereon at any special meeting may remove any Director, with or without cause, and may fill any vacancy created thereby. Any vacancy in the Board of Directors occurring between meetings of the shareholders may be filled by the vote of a majority of the remaining Directors, though less than a quorum. Section 3. Meetings of the Directors. The Board may by resolution provide for the time and place of regular meetings, and no notice need be given of such regular meetings. Special meetings of the Directors may be called by the full Board of Directors, by the Executive Committee of the Board of Directors, by the Chairman of the Board, by the President, or by at least any two (2) of the Directors. There shall be an annual meeting of the Board of Directors at the place of and immediately following the annual meeting of shareholders. Section 4. Quorum. A majority of the number of Directors fixed as herein provided or fixed as otherwise provided by law shall constitute a quorum for the transaction of business at any meeting thereof. If a quorum shall not be present, a majority of the Directors present at any such meeting may adjourn the meeting to some later time. Section 5. Action. When a quorum is present, the vote of a majority of the Directors present shall be the act of the Board of Directors, unless a greater vote is required by law, by the Articles of Incorporation or by these By-Laws. 28 Section 6. Notice of Meetings. Notice of each meeting of the Board shall be given by the Secretary by mailing the same at least five (5) days before the meeting or by telephone or telegraph or in person at least two (2) days before the meeting, to each Director, except that no notice need be given of regular meetings fixed by the resolution of the Board. Any Director may waive notice, either before or after any meeting, and shall be deemed to have waived notice if he is present at the meeting. If the Secretary fails to give such notice in the manner specified in the call, within five (5) days after receiving notice of the call, the person or persons calling such meetings, or any person designated by him or them may give such notice. Neither the business to be transacted at or the purpose of any regular or special meeting of the Board need be specified in the notice or waiver of notice of such meeting. Section 7. Committees. The Board may by resolution provide for an Executive Committee and one or more other committees, each consisting of such Directors as are designated by the Board. Any vacancy in such Committee may be filled by the Board. Except as otherwise provided by law, by these By-Laws, or by resolution of the full Board, such Executive Committee shall have and may exercise the full powers of the Board of Directors during the interval between the meetings of the Board and wherever by these By-Laws, or by resolution of the shareholders, the Board of Directors is authorized to take action or to make a determination, such action or determination may be taken or made by such Executive Committee, unless these By-Laws or such resolution expressly require that such action or determination be taken or made by the full Board of Directors. The Executive Committee, or other Committee, shall by resolution fix its own rules of procedure, and the time and place of its meetings, and the person or persons who may call, and the method of call, of its meetings. Section 8. Compensation. A fee for serving as a Director and reimbursement for expenses for attendance at meetings of the Board of Directors or any Committee thereof may be fixed by resolution of the full Board. Section 9. Qualifications of Directors (a) Corporate Officers. Except as provided in subsection (c) below, no person who is or has been an officer of the Company shall be eligible for nomination or re-nomination as a member of the Board of Directors of the Company at any time after such person has attained the age of seventy-five (75). (b) Other Directors. Except as provided in subsection (c) below, no person shall be eligible for nomination or re-nomination as a member of the Board of Directors of the Company at any time after such person has attained the age of seventy-five (75). (c) Exceptions. The provisions of subsection (a) and (b) above shall not apply to any person who, at the time of such person's nomination or re-nomination as a member of the Board of Directors of the Company, is the beneficial owner of ten percent (10%) or more of the voting power of the outstanding stock of the Company entitled to vote generally in the election of Directors." Section 10. Honorary Directors. The Board of Directors shall have the authority to appoint honorary members of the Board of Directors and to further designate any such honorary member as an "Emeritus" officer of the Company. It shall not be a requirement that any such honorary member be qualified to be a member of the Board of Directors. An honorary member shall be entitled to notice of and attendance at all meetings of the Board of 29 Directors and to participate in such meetings, except that such honorary member shall have no voting rights nor shall such honorary member be included in determining a quorum under Section 4. ARTICLE III OFFICERS Section 1. Officers. The officers of the Company shall consist of a Chairman of the Board, a Chief Executive Officer, a corporate President, one or more business unit Presidents, one or more Vice President, a Secretary, a Comptroller, a Treasurer, and such other officers or assistant officers as may be elected by the Board of Directors. Any two (2) or more offices may be held by the same person. The Board may designate one or more Vice Presidents as Executive Vice President or Senior Vice President, and may designate the order in which the Vice Presidents may act. Section 2. Chairman of the Board. The Chairman of the Board shall preside at all meetings of the Board of Directors and the shareholders at which he is present and shall exercise the other powers and perform the other duties as the Board of Directors may from time to time assign to him. Section 3. Chief Executive Officer. Subject to the control of the Board of Directors and the Chairman of the Board, the Chief Executive Officer shall give supervision and direction to the affairs of the Company. Section 4. Corporate President. The corporate President shall be the chief operating officer of the Company and shall give general supervision and administrative direction to the affairs of the Company, subject to the direction of the Chief Executive Officer. Section 5. Business Unit President. A business unit President shall be the chief operating officer of the designated major business unit of the Corporation, reporting to the Chief Executive Officer or the corporate President, as the Board of Directors shall designate. Business units need not have a President, and in the absence of such an officer, will be managed by one or more Vice Presidents. Section 6. Vice President. A Vice President shall have such powers and perform such duties as the Board of Directors, corporate President, or, in the case of the business unit Vice President, as that business unit President may prescribe. A Vice President shall act in case of the absence or disability of the corporate President or business unit President. If there is more than one Vice President, such Vice Presidents shall act in the order of precedence as set out by the Board of Directors, or in the absence of such designation, as designated by the corporate President or business unit President. Section 7. Treasurer. The Treasurer shall receive and have the custody of all moneys and securities of the Company, shall pay such dividends as may be declared from time to time by the Board of Directors, and do and perform all such duties as may be required of him by its Board of Directors, and such other duties as usually devolve upon such officers. 30 Section 8. Comptroller. The Comptroller shall be responsible for the maintenance of proper financial books and records of the Company. Section 9. Secretary. The Secretary shall keep the minutes of the meetings of the shareholders, the Directors, the Executive Committee, and the other committees of the Board and shall have custody of the seal of the Company. Section 10. Assistant Secretaries. The Assistant Secretaries, in the order of their seniority, shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary, and shall perform such other duties as the Board of Directors shall prescribe. Section 11. Assistant Treasurers. The Assistant Treasurers, in the order of their seniority, shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer, and shall perform such other duties as the Board of Directors shall prescribe. Section 12. Other Duties and Authorities. Each officer, employee and agent shall have such other duties and authorities as may be conferred on them by the Board of Directors and, subject to any directions of the Board, by the Chairman of the Board, the corporate President, and any business unit President. Section 13. Removal. Any officer may be removed at any time by the Board of Directors and such vacancy may be filled by the Board of Directors. A contract of employment for a definite term shall not prevent the removal of any officer; but this provision shall not prevent the making of a contract of employment with any officer and any officer removed in breach of his contract of employment shall have a cause of action therefore. Section 14. Salary. The salaries of all officers of the Company shall be fixed by the Board of Directors or by a duly authorized Committee of the Board. ARTICLE IV DEPOSITORIES, SIGNATURES AND SEAL Section 1. Depositories. All funds of the Company shall be deposited in the name of the Company in such depository or depositories as the Board may designate and shall be drawn out on checks, drafts or other orders signed by such officer, officers, agent or agents as the Board may from time to time authorize. Section 2. Contracts. All contracts and other instruments shall be signed on behalf of the Company by such officer, officers, agent or agents, as the Board may from time to time by resolution provide. 31 Section 3. Seal. The corporate seal of the Company shall be as follows, or in such other form as the Board may from time to time by resolution provide: (Imprint of Seal) If the seal is affixed to a document, the signature of the Secretary or an Assistant Secretary shall attest the seal. The seal and its attestation may be lithographed or otherwise printed on any document and shall have, to the extent permitted by law, the same force and effect as if it had been affixed and attested manually. ARTICLE V STOCK TRANSFERS Section 1. Form and Execution of Certificates. The certificates of shares of capital stock of the Company shall be in such form as may be approved by the Board of Directors and shall be signed by the Chairman of the Board or the President and by the Secretary or any Assistant Secretary or Treasurer or any Assistant Treasurer, provided that any such certificate may be signed by the facsimile of the signature of either or both of such officers imprinted thereon if the same is countersigned by a transfer agent of the Company, and provided further that certificates bearing the facsimile of the signature of such officers imprinted thereon shall be valid in all respects as if such person or persons were still in office, even though such officer or officers have died or otherwise ceased to be officers. Section 2. Transfer of Shares. Shares of stock in the Company shall be transferable only on the books of the Company by proper transfer signed by the holder of record thereof or by a person duly authorized to sign for such holder of record. The Company or its transfer agent shall be authorized to refuse any transfer unless and until it is furnished such evidence as it may reasonably require showing that the requested transfer is proper. Upon the surrender of a certificate for transfer of shares of stock, such certificate shall at once be conspicuously marked on its face "Cancelled" and filed with the permanent stock records of the Company. Section 3. Lost, Destroyed or Mutilated Certificates. The Board may by resolution provide for the issuance of certificates in lieu of lost, destroyed or mutilated certificates and may authorize such officer or agent as it may designate to determine the sufficiency of the evidence of such loss, destruction or mutilation and the sufficiency of any security furnished to the Company and to determine whether such duplicate certificate should be issued. Section 4. Transfer Agent and Registrar. The Board may appoint a transfer agent or agents and a registrar or registrars of transfers, and may require that all stock certificates bear the signature of such transfer agent or such transfer agent and registrar. 32 ARTICLE VI INDEMNIFICATION Section 1. The Company shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company) by reason of the fact that he is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including court costs and attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Section 2. The Company shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including court costs and attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company and except that no such indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the Company unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper. Section 3. To the extent that a director, officer, employee or agent of the Company shall be successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 1 and 2 of this Article, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including court costs and attorneys' fees) actually and reasonably incurred by him in connection therewith. Section 4. Any indemnification under Sections 1 and 2 of this Article (unless ordered by a court) shall be made by the Company only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in said Sections 1 and 2. Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if 33 such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the shareholders. Section 5. Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the Company in advance of the final disposition or such action, suit or proceeding as authorized by the Board of Directors in the manner provided in Section 4 of this Article upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the Company as authorized in this Article, and, if such person is a director, upon receipt of a written affirmation of such director's good faith belief that he or she has met the standards of conduct required by the Georgia Business Corporation Code. Section 6. The indemnification provided by this Article shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any agreement, vote of shareholders or disinterested directors, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. Section 7. The Board of Directors may authorize, by a vote of a majority of the full Board, the Company to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Company would have the power to indemnify him against such liability under the provisions of this Article. ARTICLE VII AMENDMENT Section 1. The Board of Directors or the shareholders entitled to vote thereon shall have the power to alter, amend or repeal the By-laws or adopt new by-laws. The shareholders may prescribe that any by-law or by-laws adopted by them shall not be altered, amended or repealed by the Board of Directors. Action by the Board of Directors with respect to by-laws shall be taken by an affirmative vote of a majority of all directors then holding office. An action by the shareholders with respect to by-laws shall be taken by the affirmative vote of a majority of the shares then issued and outstanding and entitled to vote. 34 EX-15.1 3 g89023exv15w1.txt EX-15.1 LETTER FROM ERNST & YOUNG LLP Exhibit 15.1 To the Shareholders and Board of Directors of Crawford & Company: We are aware of the incorporation by reference in the previously filed Registration Statement File Nos. 33-47536, 33-36116, 333-02051, 333-24425, 333-24427, 333-43740, 333-87465, and 333-87467 of Crawford & Company's Form 10-Q for the quarter ended March 31, 2004, which includes our report dated April 27, 2004 related to the unaudited interim financial information contained therein. /s/ Ernst & Young LLP Atlanta, Georgia May 6, 2004 35 EX-31.1 4 g89023exv31w1.txt EX-31.1 SECTION 302 CERTIFICATION OF THE CEO SECTION 302 Exhibit 31.1 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER I, Marshall G. Long, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Crawford & Company; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The Registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) [Paragraph omitted pursuant to SEC Release No. 33-8238]: c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's first fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and 5. The Registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of Registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. Date: May 10, 2004 /s/ Marshall G. Long ------------------------------- Marshall G. Long Chief Executive Officer (Principal Executive Officer) 36 EX-31.2 5 g89023exv31w2.txt EX-31.2 SECTION 302 CERTIFICATION OF THE CFO SECTION 302 Exhibit 31.2 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER I, John F. Giblin, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Crawford & Company; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The Registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) [Paragraph omitted pursuant to SEC Release No. 33-8238]: c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's first fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and 5. The Registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of Registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. Date: May 10, 2004 /s/ John F. Giblin -------------------------------- John F. Giblin Executive Vice President - Finance (Principal Financial Officer) 37 EX-32.1 6 g89023exv32w1.txt EX-32.1 SECTION 906 CERTIFICATION OF THE CEO Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Crawford & Company (the "Company") on Form 10-Q for the period ending March 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Marshall G. Long, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: May 10, 2004 /s/ Marshall G. Long ----------------------------- Marshall G. Long Chief Executive Officer 38 EX-32.2 7 g89023exv32w2.txt EX-32.2 SECTION 906 CERTIFICATION OF THE CFO Exhibit 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Crawford & Company (the "Company") on Form 10-Q for the period ending March 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John F. Giblin, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: May 10, 2004 /s/ John F. Giblin ------------------------------------- John F. Giblin Executive Vice President - Finance Chief Financial Officer 39 -----END PRIVACY-ENHANCED MESSAGE-----