EX-99.1 2 g02637exv99w1.txt EX-99.1 PRESS RELEASE DATED JULY 31, 2006 Exhibit 99.1 (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 31, 2006 FROM: THOMAS W. CRAWFORD CHIEF EXECUTIVE OFFICER CRAWFORD REPORTS IMPROVED SECOND QUARTER 2006 RESULTS NET INCOME INCREASES 57% 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, 2006. Second quarter 2006 revenues before reimbursements totaled $192.6 million compared with $186.0 million in the 2005 second quarter. Second quarter 2006 net income was $4.2 million compared to $2.7 million for the 2005 second quarter. Second quarter 2006 net income per share was $0.09 per share compared to $0.05 in the prior-year quarter. Revenues before reimbursements, by market type, for the Company's operating segments for the quarter ended June 30, 2006 and 2005 were as follows (in 000s):
Quarter ended ----------------------------- Market Type June 30, 2006 June 30, 2005 % Change ----------- ------------- ------------- -------- Insurance companies $ 51,563 $ 48,215 6.9% Self-insured entities 36,750 38,594 (4.8)% Legal settlement administration 30,430 27,545 10.5% -------- -------- U.S. Segment 118,743 114,354 3.8% International Segment 73,860 71,648 3.1% -------- -------- Total revenues before reimbursements $192,603 $186,002 3.5% ======== ========
U.S. revenues before reimbursements were $118.7 million in the second quarter of 2006 compared with $114.4 million in the 2005 second quarter. Revenues from the insurance company market were $51.6 million in the 2006 second quarter increasing from $48.2 million in the 2005 period; this increase includes a $2.2 million rise in catastrophe-related revenues over the 2005 period. Revenues from self-insured clients were $36.8 million in the 2006 second quarter compared with $38.6 million in the 2005 quarter. Legal settlement administration revenues were $30.4 million for the 2006 second quarter, compared with $27.5 million in the comparable year-ago quarter. The Company's legal settlement Page 1 of 10 (CRAWFORD(R) LOGO) PRESS RELEASE CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047 ATLANTA, GEORGIA 30302 (404) 256-0830 administration unit revenues are project-based and can fluctuate significantly. However, the Company has a record backlog of projects awarded, totaling approximately $51.2 million at quarter end. Second quarter 2006 international revenues grew to $73.9 million from $71.6 million for the same period in 2005. This growth reflects increased case referrals in our United Kingdom and European operations resulting from claims management agreements entered into during 2005. However, compared to the 2005 second quarter, the U.S. dollar strengthened against the British pound and the euro, resulting in a net exchange rate decline in the 2006 quarter. Excluding the negative effect of exchange rate fluctuations, international revenues would have been $75.6 million in the 2006 second quarter, reflecting growth in revenues on a constant dollar basis of 5.5%. International operating expenses increased by $2.7 million in U.S. dollars, a 4.0% increase, and increased by 5.9% on a constant dollar basis. Mr. Thomas W. Crawford, chief executive officer of Crawford & Company, stated, "We are pleased to report our second straight quarter of earnings growth over the prior year period. Our U.S. operations continued to benefit from strong performance of our legal settlement administration unit and the on-going improvement in our U.S. property and casualty unit. Revenues produced by our catastrophe adjusters in the quarter grew by $2.2 million as we responded to the numerous storms which occurred during the quarter in the midwestern and northeastern United States. Together these units helped us improve our U.S. operating margin by 2.0% in the quarter, from 1.6% in the 2005 period to 3.6% in the quarter ended June 30, 2006. The quality-driven processes in our self-insured operations established over the past two years continue to show improvement. While not yet visible in our financial performance, we are encouraged by customer response in this unit, where the number of requests for proposals is running well ahead of last year." "Operating earnings in our international segment declined to $3.2 million in the current quarter, reflecting a decrease in our operating margin from 5.2% in the 2005 second quarter to 4.4% in the 2006 quarter, due to lower claims activity in our Canadian region and costs incurred in our United Kingdom and Canadian units in anticipation of new business. For the remainder of 2006, we continue to expect growth and margin improvement in our international division." Total revenues before reimbursements for the six months ended June 30, 2006 were $394.2 million compared with $370.3 million in 2005. Net income for the current six-month period totaled $10.1 million, or $0.20 per share, compared with $5.0 million, or $0.10 per share, reported in the prior year. U.S. revenues before reimbursements for the 2006 six-month period were $249.8 million compared with $226.9 million in 2005. International revenues before reimbursements were $144.4 million in the 2006 year-to-date period compared with $143.5 million during 2005. Excluding the negative effect of exchange rate fluctuations, international revenues would have been $149.3 million in the current year-to- Page 2 of 10 (CRAWFORD(R) LOGO) PRESS RELEASE CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047 ATLANTA, GEORGIA 30302 (404) 256-0830 date period, reflecting growth in revenues on a constant dollar basis of 4.0%. International operating expenses increased by $3.0 million in U.S. dollars, a 2.2% increase, and by 5.7 % on a constant dollar basis. On June 30, 2006, the Company closed the previously announced sale of its Atlanta corporate headquarters for $8.0 million in cash paid at closing and a deferred payment contingent upon the buyer's ability to subsequently redevelop the property. As part of the sale, the Company also entered into a 12-month leaseback of these facilities, as it relocates and consolidates its corporate headquarters in a nearby leased facility. As required by sale-leaseback accounting rules, the Company deferred the pre-tax gain of approximately $4.9 million related to this sale until the expiration of the leaseback agreement in June 2007. "Our operating cash flows for the 2006 six-month period reflect an improvement of $13.7 million as compared to the prior-year period. Overall, our consolidated cash position as of June 30, 2006 is very strong, totaling $65.0 million, up $21.4 million from the balance at June 30, 2005. This represents the highest cash balance the Company has enjoyed since the 1997 third quarter," Mr. Crawford concluded. Crawford & Company updated its previously disclosed guidance for fiscal 2006 to the following amounts: - Revenues before reimbursements of between $480 million and $490 million in U.S. operations and operating earnings of between $15 million and $19 million. - Revenues before reimbursements of between $295 million and $310 million in international operations and operating earnings of between $14 million and $16 million. - After reflecting stock option expense, net corporate interest expense and income taxes, net income of between $15.9 million and $19.2 million, or $0.32 to $0.39 per share. Crawford & Company's management will host a conference call with analysts on Monday, July 31, 2006 at 3:00 P.M. EDT, to discuss its quarterly earnings and other developments. The call will be recorded and available for replay through August 7, 2006. You may dial 1-800-642-1687 (706-645-9291 international) to listen to the replay. The access code is 3214387. 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, 2006 is shown on the attached statements. Operating earnings (a non-GAAP financial measure) is one of the key performance measures used by the Company's senior management to evaluate the performance of its operating segments and make resource allocation decisions. The Company believes this measure is useful to investors in that it allows them to evaluate its operating performance using the same criteria that management uses. Net corporate interest expense, stock option Page 3 of 10 (CRAWFORD(R) LOGO) PRESS RELEASE CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047 ATLANTA, GEORGIA 30302 (404) 256-0830 expense and income taxes are recurring components of net income, but they are not considered part of segment operating earnings since they are managed on a corporate-wide basis. Net corporate interest expense results from capital structure decisions made by the Company, stock option expense relates to historically granted stock options which are not allocated to our operating units, and income taxes are based on statutory rates in effect in each of the locations where the Company provides services and vary throughout the world. None of these costs relates directly to the performance of the Company's services and are therefore excluded in order to accurately assess the results of segment operating activities on a consistent basis. Following is a reconciliation of segment operating earnings to consolidated net income on a GAAP basis 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, % 2006 Margin 2005 Margin 2006 Margin 2005 Margin -------- ------ -------- ------ -------- ------ -------- ------ U.S. operating earnings $4,305 3.6% $ 1,810 1.6% $12,936 5.2% $ 3,646 1.6% International operating earnings 3,213 4.4 3,696 5.2 4,899 3.4 7,041 4.9 Deduct: Stock option expense (351) (0.2) -- -- (617) (0.2) -- -- Net corporate interest expense (594) (0.3) (1,355) (0.7) (1,592) (0.4) (2,882) (0.8) Income taxes (2,360) (1.2) (1,470) (0.8) (5,565) (1.4) (2,763) (0.7) ------ ---- ------- ---- ------- ---- ------- --- Net income $4,213 2.2% $ 2,681 1.4% $10,061 2.6% $ 5,042 1.4% ====== ==== ======= ==== ======= ==== ======= ===
Based in Atlanta, Georgia, Crawford & Company (www.crawfordandcompany.com) is the world's largest independent provider of claims management solutions to insurance companies and self-insured entities, with a global network of more than 700 offices in 63 countries. Major service lines include property and casualty claims management, integrated claims and medical management for workers' compensation, legal settlement administration, including class action and warranty inspections, and risk management information services. The Company's shares are traded on the NYSE under the symbols CRDA and CRDB. Page 4 of 10 (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 ended June 30, 2006 are not necessarily indicative of future prospects for the Company. Actual results in future quarters may differ materially. For a discussion regarding factors which could affect the Company's financial performance, see the Company's Form 10-K for the year ended December 31, 2005 filed with the Securities and Exchange Commission, in particular the information under the headings "Business," "Legal Proceedings" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." The Company undertakes no obligation to publicly release any revisions to any forward-looking statements contained herein to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. The Company's actual results may differ materially from those projected in forward-looking statements made by, or on behalf of, the Company. FOR FURTHER INFORMATION REGARDING THIS PRESS RELEASE, PLEASE CALL BRUCE SWAIN AT (404) 847-4407. Page 5 of 10 (CRAWFORD(R) LOGO) PRESS RELEASE CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047 ATLANTA, GEORGIA 30302 (404)256-0830 CRAWFORD & COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME Unaudited (In Thousands, Except Per Share Amounts)
SIX MONTHS ENDED JUNE 30 2006 2005 % Change ------------------------ -------- -------- -------- Revenues: Revenues Before Reimbursements $394,209 $370,336 6% Reimbursements 37,230 36,088 3% -------- -------- Total Revenues 431,439 406,424 6% Costs and Expenses: Cost of Services Before Reimbursements 304,959 292,254 4% Reimbursements 37,230 36,088 3% -------- -------- Cost of Services 342,189 328,342 4% Selling, General, and Administrative 72,032 67,395 7% Corporate Interest Expense, Net 1,592 2,882 -45% -------- -------- Total Costs and Expenses 415,813 398,619 4% -------- -------- Income Before Income Taxes 15,626 7,805 100% Income Taxes 5,565 2,763 101% -------- -------- Net Income $ 10,061 $ 5,042 100% ======== ======== Earnings Per Share - Basic and Diluted $ 0.20 $ 0.10 100% -------- -------- Average Numbers of Shares Used to Compute: Basic Earnings Per Share 49,137 48,878 -------- -------- Diluted Earnings Per Share 49,318 49,388 -------- -------- Cash Dividends Per Share: Class A Common Stock $ 0.12 $ 0.12 Class B Common Stock $ 0.12 $ 0.12
Page 6 of 10 (CRAWFORD(R) LOGO) PRESS RELEASE CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047 ATLANTA, GEORGIA 30302 (404)256-0830 CRAWFORD & COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME Unaudited (In Thousands, Except Per Share Amounts)
QUARTER ENDED JUNE 30 2006 2005 % Change --------------------- -------- -------- -------- Revenues: Revenues Before Reimbursements $192,603 $186,002 4% Reimbursements 17,164 20,779 -17% -------- -------- Total Revenues 209,767 206,781 1% Costs and Expenses: Cost of Services Before Reimbursements 148,483 147,335 1% Reimbursements 17,164 20,779 -17% -------- -------- Cost of Services 165,647 168,114 -1% Selling, General, and Administrative 36,953 33,161 11% Corporate Interest Expense, Net 594 1,355 -56% -------- -------- Total Costs and Expenses 203,194 202,630 0% -------- -------- Income Before Income Taxes 6,573 4,151 58% Income Taxes 2,360 1,470 61% -------- -------- Net Income $ 4,213 $ 2,681 57% ======== ======== Earnings Per Share - Basic and Diluted $ 0.09 $ 0.05 80% -------- -------- Average Numbers of Shares Used to Compute: Basic Earnings Per Share 49,286 48,884 -------- -------- Diluted Earnings Per Share 49,396 49,391 -------- -------- Cash Dividends Per Share: Class A Common Stock $ 0.06 $ 0.06 Class B Common Stock $ 0.06 $ 0.06
Page 7 of 10 (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 UNAUDITED (In Thousands, Except Percentages)
U.S. International ------------------- % ------------------ % 2006 2005 Change 2006 2005 Change -------- -------- ------ -------- -------- ------ Revenues Before Reimbursements $249,849 $226,861 10.1% $144,360 $143,475 0.6% Compensation & Benefits 157,215 146,316 7.4% 102,397 100,467 1.9% % of Revenues 62.9% 64.5% 70.9% 70.0% Expenses Other than Reimbursements, Compensation & Benefits 79,698 76,899 3.6% 37,064 35,967 3.1% % of Revenues 31.9% 33.9% 25.7% 25.1% -------- -------- ----- -------- -------- ----- Total Operating Expenses 236,913 223,215 6.1% 139,461 136,434 2.2% -------- -------- ----- -------- -------- ----- Operating Earnings (1) $ 12,936 $ 3,646 254.8% $ 4,899 $ 7,041 -30.4% % of Revenues 5.2% 1.6% 3.4% 4.9% ======== ======== ===== ======== ======== =====
QUARTER ENDED JUNE 30 UNAUDITED (In Thousands, Except Percentages)
U.S. International ------------------- % ------------------ % 2006 2005 Change 2006 2005 Change -------- -------- ------ -------- -------- ------ Revenues Before Reimbursements $118,743 $114,354 3.8% $73,860 $71,648 3.1% Compensation & Benefits 76,447 74,200 3.0% 51,732 49,922 3.6% % of Revenues 64.4% 64.9% 70.0% 69.6% Expenses Other than Reimbursements, Compensation & Benefits 37,991 38,344 -0.9% 18,915 18,030 4.9% % of Revenues 32.0% 33.5% 25.6% 25.2% -------- -------- ----- ------- ------- ----- Total Operating Expenses 114,438 112,544 1.7% 70,647 67,952 4.0% -------- -------- ----- ------- ------- ----- Operating Earnings (1) $ 4,305 $ 1,810 137.8% $ 3,213 $ 3,696 -13.1% % of Revenues 3.6% 1.6% 4.4% 5.2% ======== ======== ===== ======= ======= =====
(1) A non-GAAP financial measurement which represents earnings before net corporate interest expense, stock option expense, and income taxes. Page 8 of 10 (CRAWFORD(R) LOGO) PRESS RELEASE CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047 ATLANTA, GEORGIA 30302 (404)256-0830 CRAWFORD & COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS JUNE 30, 2006 AND DECEMBER 31, 2005 (In Thousands)
Unaudited * JUNE 30 December 31 2006 2005 --------- ----------- ASSETS Current Assets: Cash and Cash Equivalents $ 64,980 $ 49,441 Accounts Receivable, Net 172,751 163,087 Unbilled Revenues 102,388 109,319 Prepaid Expenses and Other Current Assets 18,958 14,964 -------- --------- Total Current Assets 359,077 336,811 -------- --------- Property and Equipment, at Cost 132,957 150,008 Less Accumulated Depreciation (99,842) (113,071) -------- --------- Net Property and Equipment 33,115 36,937 -------- --------- Other Assets: Goodwill, Net 110,833 110,035 Capitalized Software Costs, Net 34,700 33,068 Deferred Income Tax Asset 37,976 38,217 Other 16,665 16,596 -------- --------- Total Other Assets 200,174 197,916 -------- --------- Total Assets $592,366 $ 571,664 ======== ========= LIABILITIES AND SHAREHOLDERS' INVESTMENT Current Liabilities: Short-Term Borrowings $ 30,354 $ 28,888 Accounts Payable 39,317 42,434 Accrued Liabilities 66,196 78,047 Self-Insured Risks 15,898 17,664 Accrued Income Taxes 24,479 17,880 Deferred Revenues 25,739 19,608 Deposit on Sale of Real Estate 8,000 -- Current Installments of Long-Term Debt and Capital Leases 11,427 6,441 -------- --------- Total Current Liabilities 221,410 210,962 -------- --------- Noncurrent Liabilities: Long-Term Debt and Capital Leases, Less Current Installments 40,212 45,810 Deferred Revenues 10,268 10,409 Self-Insured Risks 11,300 9,122 Postretirement Medical Benefit Obligation 4,352 4,569 Minimum Pension Liabilities 103,425 101,406 Other 14,151 10,355 -------- --------- Total Noncurrent Liabilities 183,708 181,671 -------- --------- Shareholders' Investment: Class A Common Stock, $1.00 Par Value 24,675 24,293 Class B Common Stock, $1.00 Par Value 24,697 24,697 Additional Paid-in Capital 8,421 6,311 Unearned Stock-Based Compensation -- (37) Retained Earnings 205,989 202,351 Accumulated Other Comprehensive Loss (76,534) (78,584) -------- --------- Total Shareholders' Investment 187,248 179,031 -------- --------- Total Liabilities and Shareholders' Investment $592,366 $ 571,664 ======== =========
* Derived from the audited Consolidated Balance Sheet Page 9 of 10 (CRAWFORD(R) LOGO) PRESS RELEASE CRAWFORD & COMPANY 5620 GLENRIDGE DRIVE, N.E. P.O. BOX 5047 ATLANTA, GEORGIA 30302 (404)256-0830 CRAWFORD & COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2006 AND JUNE 30, 2005 Unaudited (In Thousands)
2006 2005 -------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 10,061 $ 5,042 Reconciliation of Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization Expenses 9,484 9,631 Stock-Based Compensation Expense 1,248 99 Loss on Sales of Property and Equipment, net 32 15 Changes in Operating Assets and Liabilities: Accounts Receivable, net (11,335) 2,891 Unbilled Revenues, net 10,999 2,664 Accrued or Prepaid Income Taxes 6,433 (5,360) Accounts Payable and Accrued Liabilities (10,401) (1,328) Deferred Revenues 6,124 (2,596) Accrued Retirement Costs 240 (1,745) Prepaid Expenses and Other Assets (1,325) (1,416) -------- ------- Net Cash Provided by Operating Activities 21,560 7,897 -------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisitions of Property and Equipment, net (5,552) (7,100) Capitalization of Computer Software Costs (4,606) (2,626) Proceeds from 2004 Sale of Undeveloped Land -- 7,562 Proceeds from 2006 Sale of Corporate Headquarters 8,000 -- Other Investing Activities (388) (90) -------- ------- Net Cash Used in Investing Activities (2,546) (2,254) -------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Dividends Paid (5,900) (5,866) Proceeds from Stock Issued to Employees Under Incentive Plans 1,281 310 Increase in Short-Term Borrowings, Net 1,416 392 Payments on Long-Term Debt and Capital Lease Obligations (721) (975) -------- ------- Net Cash Used in Financing Activities (3,924) (6,139) -------- ------- Effect of Exchange Rate Changes on Cash and Cash Equivalents 449 480 -------- ------- Increase (Decrease) in Cash and Cash Equivalents 15,539 (16) Cash and Cash Equivalents at Beginning of Period 49,441 43,571 -------- ------- Cash and Cash Equivalents at End of Period $ 64,980 $43,555 ======== =======
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