-----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, HzZ2EoaqxfxYsiTUTo6FRZKLAzdXVH5qpQsHU8ijlUCs5cn/Jbobxs0JuPzl2w10 iutfPbSczis0xX445dAw3Q== 0000950144-05-007648.txt : 20050725 0000950144-05-007648.hdr.sgml : 20050725 20050725123208 ACCESSION NUMBER: 0000950144-05-007648 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050725 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050725 DATE AS OF CHANGE: 20050725 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CRAWFORD & CO CENTRAL INDEX KEY: 0000025475 STANDARD INDUSTRIAL CLASSIFICATION: INSURANCE AGENTS BROKERS & SERVICES [6411] IRS NUMBER: 580506554 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10356 FILM NUMBER: 05970722 BUSINESS ADDRESS: STREET 1: 5620 GLENRIDGE DR NE CITY: ATLANTA STATE: GA ZIP: 30342 BUSINESS PHONE: 4042560830 MAIL ADDRESS: STREET 1: 5620 GLENRIDE DR CITY: ATLANTA STATE: GA ZIP: 30342 8-K 1 g96406e8vk.txt CRAWFORD & COMPANY UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): July 25, 2005 CRAWFORD & COMPANY ---------------------------------------------------- (Exact name of Registrant as specified in its charter) GEORGIA ---------------------------------------------------- (State or other jurisdiction of incorporation) 1-10356 58-0506554 ---------------------- ------------------------------- (Commission File Number) (IRS Employer Identification No.) 5620 Glenridge Drive, N.E., Atlanta, Georgia 30342 ---------------------------------------------------- (Address of principal executive offices) (Zip Code) (404) 256-0830 ---------------------------------------------------- (Registrant's telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 2.02. Results of Operations and Financial Condition On July 25, 2005, Crawford & Company (the "Company") issued a press release containing information about the Company's financial condition, results of operations, and cash flows for the second quarter of 2005. A copy of the press release is attached hereto as Exhibit 99.1. The press release contains non-GAAP financial measures and a reconciliation to the related GAAP measure is included. Operating earnings is one of the key performance measures used by the Company's senior management to evaluate the performance of its business and make resource allocation decisions. The Company believes this measure is useful to investors in that it allows them to evaluate its performance using the same criteria that management uses. ITEM 9.01. Financial Statements, Pro Forma Financial Statements and Exhibits (c) Exhibits
Exhibit No. Description - ----------- ----------- 99.1 Press Release dated July 25, 2005
SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CRAWFORD & COMPANY (Registrant) By: /s/ JOHN F. GIBLIN ----------------------------- John F. Giblin Executive Vice President and Chief Financial Officer Dated: July 25, 2005 3 EXHIBIT INDEX
Number Descriptions - ------ ------------ 99.1 Press Release issued July 25, 2005
4 EX-99.1 2 g96406exv99w1.txt EX-99.1 PRESS RELEASE DATED JULY 25, 2005 EXHIBIT 99.1 [CRDA LOGO] [CRDB LOGO] [CRAWFORD(R) LOGO] PRESS RELEASE CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047 ATLANTA, GEORGIA 30302 (404) 256-0830 FOR IMMEDIATE RELEASE DATE: JULY 25, 2005 FROM: THOMAS W. CRAWFORD CHIEF EXECUTIVE OFFICER CRAWFORD REPORTS SECOND QUARTER 2005 RESULTS Crawford & Company (NYSE: CRDA and CRDB), the world's largest independent provider of claims management solutions to insurance companies and self-insured entities, today announced its financial results for the second quarter ended June 30, 2005. Second quarter 2005 revenues before reimbursements totaled $186.0 million compared with $172.0 million in the 2004 second quarter. Second quarter 2005 net income was $2.7 million compared to $5.5 million for the 2004 second quarter. Second quarter 2005 net income per share was $0.05 per share compared to $0.11 in the prior-year quarter. During the 2004 second quarter, the Company settled a tax credit refund claim with the Internal Revenue Service which increased net income by $2.8 million, or $0.06 per share. Operating earnings (earnings before net corporate interest and income taxes) in the 2005 second quarter totaled $5.5 million compared with $5.7 million in the prior year quarter. U.S. revenues before reimbursements were $114.4 million in the second quarter of 2005, growing over 4% from $109.6 million in the 2004 second quarter. Revenues from the insurance company market were $48.2 million in the 2005 second quarter compared with $48.4 million in the 2004 period. A decline in the Company's U.S. insurance company referrals for high-frequency, low-severity claims in the current quarter was substantially offset by the referral of higher value claims. Revenues from self-insured clients were $38.6 million in the 2005 second quarter compared with $40.3 million in the 2004 quarter, due primarily to a reduction in claim referrals from the Company's existing clients, only partially offset by net new business gains. Class action services revenues were $27.6 million for the 2005 second quarter, compared with $20.9 million in the comparable 2004 quarter. These revenues can fluctuate based on the timing and size of project awards. Second quarter 2005 international revenues grew to $71.6 million from $62.4 million for the same period in 2004, reflecting growth in revenues on a constant dollar basis of 9.0%, on an 11.3% increase in claim referrals. Compared to the 2004 second quarter, during the 2005 second quarter the U.S. dollar weakened against the British pound and the euro, resulting in a net exchange rate benefit in the Page 1 of 9 [CRAWFORD(R) LOGO] PRESS RELEASE CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047 ATLANTA, GEORGIA 30302 (404) 256-0830 quarter. Excluding the benefit of exchange rate fluctuations, international revenues would have been $68.0 million in the 2005 second quarter. International operating expenses increased by $7.4 million in U.S. dollars, a 12.3% increase, and by 6.4% on a constant dollar basis. Mr. Thomas W. Crawford, chief executive officer of Crawford & Company, stated, "Strong revenue growth in our class action services unit during the current quarter, where we reported record quarterly revenues as a result of work commenced on several large projects, was offset by revenue declines in both the insurance company and self-insured markets in the U.S." "While we were pleased by the overall growth in our top line, we continue to face challenges in the U.S. property and casualty market, as reflected by a decline in our U.S. operating margin from 3.5% in last year's second quarter to 1.6% in the current quarter. This decrease is due to declining claim referrals during the current quarter, investment spending we are making in support of our U.S. quality and training programs, and our decision to maintain our existing service capabilities in our U.S. field operations as we focus on growing our market share in the domestic property and casualty market. The growth in revenues in our class action services unit during the second quarter generated very strong operating margin growth within that unit. We currently have a record backlog in our class action services unit totaling $40.0 million, which should provide growth in this unit's revenues and operating earnings in future quarters." "Operating earnings in our international segment grew 94%, to $3.7 million, reflecting an improvement in our operating margin, from 3.1% in the 2004 second quarter to 5.2% in the 2005 period. An increase in claim referrals, primarily as a result of recent client wins in our United Kingdom and European operations, as well as hurricane-related claims in the Caribbean region, contributed to this margin improvement. We remain confident that the substantial new business awarded to us during 2004 and 2005 will continue to provide solid growth in revenues and healthy international operating margins throughout 2005." Total revenues before reimbursements for the six months ended June 30, 2005 were $370.3 million compared with $341.9 million in 2004. Operating earnings totaled $10.7 million in the 2005 period compared with $10.8 million in 2004. Net income for the current six-month period totaled $5.0 million, or $0.10 per share, compared with $7.9 million, or $0.16 per share, reported in the prior year. U.S. revenues before reimbursements for the 2005 six-month period were $226.9 million compared with $218.9 million in 2004. International revenues before reimbursements were $143.5 million in the 2005 year-to-date period compared with $123.0 million during 2004. Excluding the benefit of exchange rate fluctuations, international revenues would have been $135.5 million in the current year-to-date period, reflecting growth in revenues on a constant dollar basis of 10.2%. International operating expenses increased by $17.6 million in U.S. dollars, a 14.8% increase, and by 8.2% on a constant dollar basis. Page 2 of 9 [CRAWFORD(R) LOGO] PRESS RELEASE CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047 ATLANTA, GEORGIA 30302 (404) 256-0830 Mr. Crawford concluded, "Our operating cash flows for the 2005 six-month period reflect an improvement of $13.4 million as compared to the prior-year period. This improvement is due to the collection of accounts receivable generated from hurricane-related claims administered in 2004 and 2005, as well as strong collections in our class action services unit. In addition, our investing cash flows reflect the receipt of the final installment of $7.6 million related to the September 2004 sale of an undeveloped parcel of real estate. Overall, our consolidated cash position as of June 30, 2005 is sound, totaling $43.6 million, up $20.5 million from the $23.1 million reported at June 30, 2004." Crawford & Company's management will host a conference call with analysts on Monday, July 25, 2005 at 3:00 P.M. EDT, to discuss its quarterly earnings and other developments. The call will be recorded and available for replay through August 1, 2005. You may dial 1-800-642-1687 (706-645-9291 international) to listen to the replay. The access code is 7810341. Alternatively, please visit our web site at www.crawfordandcompany.com for a live audio web cast. Further information regarding the Company's financial position, operating results, and cash flows for the quarter ended June 30, 2005 is shown on the attached statements. Operating earnings is one of the key performance measures used by the Company's senior management to evaluate the performance of its business and make resource allocation decisions. The Company believes this measure is useful to investors in that it allows them to evaluate its performance using the same criteria that management uses. Following is a reconciliation of consolidated net income on a GAAP basis to operating earnings and the related margins as a percentage of revenues before reimbursements for all periods presented:
Quarter ended Six months ended ------------------------------------- ------------------------------------- June 30, % June 30, % June 30, % June 30, % 2005 Margin 2004 Margin 2005 Margin 2004 Margin -------- ------ -------- ------ -------- ------ -------- ------ Net income $2,681 1.5% $5,540 3.2% $ 5,042 1.4% $ 7,929 2.3% Add/(deduct): Net corporate interest 1,355 0.7 (534) (0.3) 2,882 0.8 803 0.3 Income taxes 1,470 0.8 725 0.4 2,763 0.7 2,093 0.6 ------ --- ------ --- -------- --- -------- --- Operating earnings $5,506 3.0% $5,731 3.3% $ 10,687 2.9% $ 10,825 3.2% ====== === ====== ==== ======== ==== ======== ===
Based in Atlanta, Georgia, Crawford & Company (www.crawfordandcompany.com) is the world's largest independent provider of claims management solutions to insurance companies and self-insured entities, with a global network of more than 700 offices in 63 countries. Major service lines include workers' compensation claims administration and healthcare management services, property and casualty claims management, class action services and risk management information services. The Company's shares are traded on the NYSE under the symbols CRDA and CRDB. Page 3 of 9 [CRAWFORD(R) LOGO] PRESS RELEASE CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047 ATLANTA, GEORGIA 30302 (404) 256-0830 Except for historical information contained herein, the matters discussed in this news release are forward-looking statements that involve risks and uncertainties. The results achieved in the quarter and six month periods ended June 30, 2005 are not necessarily indicative of future prospects for the Company. Actual results in future quarters may differ materially. For a complete discussion regarding factors which could affect the Company's financial performance, see the Company's Form 10-K for the year ended December 31, 2004 filed with the Securities and Exchange Commission, in particular the information under the headings "Business", "Legal Proceedings" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." The Company undertakes no obligation to publicly release any revisions to any forward-looking statements contained herein to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. The Company's actual results may differ materially from those projected in forward-looking statements made by, or on behalf of, the Company. FOR FURTHER INFORMATION REGARDING THIS PRESS RELEASE, PLEASE CALL JOHN GIBLIN AT (404) 847-4571. Page 4 of 9 [CRAWFORD(R) LOGO] PRESS RELEASE CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047 ATLANTA, GEORGIA 30302 (404)256-0830 CRAWFORD & COMPANY CONSOLIDATED COMPARATIVE STATEMENTS OF INCOME (In Thousands Except Per Share Data)
SIX MONTHS ENDED JUNE 30 2005 2004 % Change - ------------------------ -------- -------- -------- Revenues: Revenues Before Reimbursements $370,336 $341,871 8% Reimbursements 36,088 29,398 23% -------- -------- Total Revenues 406,424 371,269 9% Costs and Expenses: Cost of Services Before Reimbursements 292,254 263,260 11% Reimbursements 36,088 29,398 23% -------- -------- Cost of Services 328,342 292,658 12% Selling, General, and Administrative 67,395 67,786 -1% Corporate Interest Expense, Net 2,882 803 259% -------- -------- Total Costs and Expenses 398,619 361,247 10% -------- -------- Income Before Income Taxes 7,805 10,022 -22% Income Taxes 2,763 2,093 32% -------- -------- Net Income $ 5,042 $ 7,929 -36% ======== ======== Net Income Per Share: Basic $ 0.10 $ 0.16 -38% -------- -------- Diluted $ 0.10 $ 0.16 -38% -------- -------- Weighted Average Shares Outstanding: Basic 48,878 48,724 -------- -------- Diluted 49,388 48,836 -------- --------
Page 5 of 9 [CRAWFORD(R) LOGO] PRESS RELEASE CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047 ATLANTA, GEORGIA 30302 (404)256-0830 CRAWFORD & COMPANY CONSOLIDATED COMPARATIVE STATEMENTS OF INCOME (In Thousands Except Per Share Data)
QUARTER ENDED JUNE 30 2005 2004 % Change - --------------------- -------- -------- -------- Revenues: Revenues Before Reimbursements $186,002 $172,016 8% Reimbursements 20,779 14,517 43% -------- -------- Total Revenues 206,781 186,533 11% Costs and Expenses: Cost of Services Before Reimbursements 147,335 132,135 12% Reimbursements 20,779 14,517 43% -------- -------- Cost of Services 168,114 146,652 15% Selling, General, and Administrative 33,161 34,150 -3% Corporate Interest Expense, Net 1,355 (534) -354% -------- -------- Total Costs and Expenses 202,630 180,268 12% -------- -------- Income Before Income Taxes 4,151 6,265 -34% Income Taxes 1,470 725 103% -------- -------- Net Income $ 2,681 $ 5,540 -52% ======== ======== Net Income Per Share: Basic $ 0.05 $ 0.11 -55% -------- -------- Diluted $ 0.05 $ 0.11 -55% -------- -------- Weighted Average Shares Outstanding: Basic 48,884 48,724 -------- -------- Diluted 49,391 48,796 -------- --------
Page 6 of 9 [CRAWFORD(R) LOGO] PRESS RELEASE CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047 ATLANTA, GEORGIA 30302 (404)256-0830 CRAWFORD & COMPANY SUMMARY RESULTS BY OPERATING SEGMENT Six Months Ended June 30, 2005 (In Thousands Except Percentages)
U.S. International Total 2005 2004 2005 2004 2005 2004 -------- -------- -------- -------- -------- -------- Revenues Before Reimbursements $226,861 $218,906 $143,475 $122,965 $370,336 $341,871 Compensation & Benefits 146,316 136,474 100,467 85,237 246,783 221,711 % of Revenues 64.5% 62.3% 70.0% 69.4% 66.6% 64.8% Expenses Other than Reimbursements, Compensation & Benefits 76,899 75,714 35,967 33,621 112,866 109,335 % of Revenues 33.9% 34.6% 25.1% 27.3% 30.5% 32.0% -------- -------- -------- -------- -------- -------- Operating Earnings (1) $ 3,646 $ 6,718 $ 7,041 $ 4,107 $ 10,687 $ 10,825 % of Revenues 1.6% 3.1% 4.9% 3.3% 2.9% 3.2% ======== ======== ======== ======== ======== ========
QUARTER ENDED JUNE 30, 2005 (In Thousands Except Percentages)
U.S. International Total 2005 2004 2005 2004 2005 2004 -------- -------- ------- ------- -------- -------- Revenues Before Reimbursements $114,354 $109,593 $71,648 $62,423 $186,002 $172,016 Compensation & Benefits 74,200 67,606 49,922 42,832 124,122 110,438 % of Revenues 64.9% 61.7% 69.6% 68.6% 66.7% 64.2% Expenses Other than Reimbursements, Compensation & Benefits 38,344 38,161 18,030 17,686 56,374 55,847 % of Revenues 33.5% 34.8% 25.2% 28.3% 30.3% 32.5% -------- -------- ------- ------- -------- -------- Operating Earnings (1) $ 1,810 $ 3,826 $ 3,696 $ 1,905 $ 5,506 $ 5,731 % of Revenues 1.6% 3.5% 5.2% 3.1% 3.0% 3.3% ======== ======== ======= ======= ======== ========
(1) Earnings before net corporate interest expense and income taxes. Page 7 of 9 [CRAWFORD(R) LOGO] PRESS RELEASE CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047 ATLANTA, GEORGIA 30302 (404)256-0830 CRAWFORD & COMPANY CONSOLIDATED COMPARATIVE BALANCE SHEETS JUNE 30, 2005 AND DECEMBER 31, 2004 (In Thousands)
JUNE 30 December 31 2005 2004 -------- ----------- ASSETS Current Assets: Cash and Cash Equivalents $ 43,555 $ 43,571 Accounts Receivable, Net 175,207 176,187 Unbilled Revenues 102,785 103,586 Prepaid Expenses and Other Current Assets 14,754 21,363 -------- --------- Total Current Assets 336,301 344,707 -------- --------- Property and Equipment, at Cost 152,272 154,922 Less Accumulated Depreciation (116,176) (120,079) -------- --------- Net Property and Equipment 36,096 34,843 -------- --------- Other Assets: Intangible Assets Arising from Acquisitions, Net 110,240 109,410 Capitalized Software Costs, Net 31,982 32,550 Deferred Income Tax Asset 32,157 32,172 Other 18,427 17,578 -------- --------- Total Other Assets 192,806 191,710 -------- --------- Total Assets $565,203 $ 571,260 ======== ========= LIABILITIES AND SHAREHOLDERS' INVESTMENT Current Liabilities: Short-Term Borrowings $ 38,912 $ 37,401 Accounts Payable 43,216 41,730 Accrued Liabilities 102,622 110,610 Deferred Revenues 20,402 22,682 Current Installments of Long-Term Debt 1,543 1,900 -------- --------- Total Current Liabilities 206,695 214,323 -------- --------- Noncurrent Liabilities: Long-Term Debt, Less Current Installments 50,950 50,875 Deferred Revenues 10,073 10,179 Self-Insured Risks 8,625 10,958 Postretirement Medical Benefit Obligation 5,544 5,544 Minimum Pension Liability 76,161 73,893 Other 10,379 10,655 -------- --------- Total Noncurrent Liabilities 161,732 162,104 -------- --------- Shareholders' Investment: Class A Common Stock, $1.00 Par Value 24,189 24,157 Class B Common Stock, $1.00 Par Value 24,697 24,697 Additional Paid-in Capital 1,719 1,441 Retained Earnings 200,389 201,213 Accumulated Other Comprehensive Loss (54,218) (56,675) -------- --------- Total Shareholders' Investment 196,776 194,833 -------- --------- Total Liabilities and Shareholders' Investment $565,203 $ 571,260 ======== =========
Page 8 of 9 [CRAWFORD(R) LOGO] PRESS RELEASE CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047 ATLANTA, GEORGIA 30302 (404)256-0830 CRAWFORD & COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2005 AND JUNE 30, 2004 (In Thousands)
2005 2004 ------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 5,042 $ 7,929 Reconciliation of Net Income to Net Cash Provided by (Used in) Operating Activities: Depreciation and Amortization 9,631 9,044 Deferred Income Taxes 13 (90) Loss on Sales of Property and Equipment, net 15 103 Stock-Based Compensation 99 - Changes in Operating Assets and Liabilities, net of effects of acquisitions: Accounts Receivable, Net 2,891 (11,716) Unbilled Revenues 2,664 (3,680) Accrued or Prepaid Income Taxes (5,373) (86) Accounts Payable and Accrued Liabilities (1,328) (9,063) Deferred Revenues (2,596) 2,626 Accrued Pension Costs (1,745) (1,664) Prepaid Expenses and Other Assets (1,416) 1,134 ------- ------- Net Cash Provided by (Used in) Operating Activities 7,897 (5,463) ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisitions of Property and Equipment, Net (7,100) (4,600) Capitalization of Computer Software Costs (2,626) (3,120) Proceeds from 2004 Sale of Undeveloped Land 7,562 - Additional Payment for Prior Acquisitions (90) (479) ------- ------- Net Cash Used in Investing Activities (2,254) (8,199) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Dividends Paid (5,866) (5,847) Proceeds from Exercise of Stock Options 310 - Increase (Decrease) in Short-Term Borrowings, Net 392 (3,403) Decrease in Long-Term Debt and Capital Lease Obligations, Net (975) (300) Capitalized Loan Costs - 61 ------- ------- Net Cash Used in Financing Activities (6,139) (9,489) ------- ------- Effect of Exchange Rate Changes on Cash and Cash Equivalents 480 436 ------- ------- Decrease in Cash and Cash Equivalents (16) (22,715) Cash and Cash Equivalents at Beginning of Period 43,571 45,805 ------- ------- Cash and Cash Equivalents at End of Period $43,555 $23,090 ======= =======
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