Crawford Reports 2009 Fourth Quarter and Annual Results
Net Income Improves in 2009 Fourth Quarter
Provides Guidance for 2010
ATLANTA, Feb. 8 /PRNewswire-FirstCall/ -- Crawford & Company (www.crawfordandcompany.com) (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 year and fourth quarter ended December 31, 2009.
Consolidated Results
Fourth quarter 2009 consolidated revenues before reimbursements were $238.4 million compared to $262.9 million in the 2008 fourth quarter due primarily to lower revenues in the U.S. Property & Casualty, Broadspire, and International Operations segments and the negative effect of foreign currency changes. Fourth quarter 2009 net income attributable to Crawford & Company was $8.9 million, increasing 6% over $8.3 million in the 2008 fourth quarter. Fourth quarter 2009 diluted earnings per share were $0.17 compared to diluted earnings per share of $0.16 in the prior-year quarter.
Full year 2009 consolidated revenues before reimbursements totaled $969.9 million, compared to $1.05 billion in 2008. Net loss attributable to Crawford & Company in 2009 was ($115.7) million, compared to 2008 net income of $32.3 million. Full year 2009 loss per share was ($2.23) compared to diluted earnings per share of $0.62 in the prior year. The 2009 net loss attributable to Crawford & Company includes non-cash impairment charges of $140.9 million, primarily related to goodwill in the Company's Broadspire segment. Excluding the non-cash impairment charges, 2009 net income attributable to Crawford & Company would have been $25.2 million and diluted earnings per share would have been $0.48.
Revenues, net income attributable to Crawford & Company, and earnings per share in the 2009 fourth quarter and for the full year were impacted by increased defined benefit pension expense, the impact of foreign currency changes, restructuring charges, and (solely with respect to the full-year period) the non-cash charge associated with the write-off of a portion of the Company's goodwill, offset by certain tax benefits during 2009 as outlined below:
Fourth Quarter 2009
-------------------
Net
Income
Attributable
In millions, except per share Revenues before to Crawford Diluted
amounts Reimbursements & Company EPS
----------------------------- -------------- ------------ -------
Fourth quarter 2008 results $262.9 $8.3 $0.16
(Less)/Add:
Foreign currency impact in 2009 (1.2) (0.1) -
Increase in pension expense in
2009 - (2.9) (0.05)
2008 sale of Dutch subsidiary - (2.5) (0.05)
2008 previously unrecognized
tax credit - (0.9) (0.02)
Certain tax benefits recognized
in 2009 - 4.3 0.08
Year-over-year change in
restructuring cost - .7 0.01
All other operating changes (23.3) 2.0 0.04
------ ---- -----
Fourth quarter 2009 results $238.4 $8.9 $0.17
====== ==== =====
Full Year 2009
--------------
Net
Income
(Loss)
Attributable
In millions, except per share Revenues before to Crawford Diluted
amounts Reimbursements & Company EPS
----------------------------- --------------- ------------ -------
Full year 2008 results $1,048.6 $32.3 $0.62
(Less)/Add:
Foreign currency impact in 2009 (62.5) (3.9) (0.08)
Increase in pension expense in
2009 - (10.6) (0.20)
2008 sale of Dutch subsidiary - (2.5) (0.05)
2008 previously unrecognized
tax credit - (0.9) (0.02)
Year-over-year change in
restructuring cost - (0.4) (0.01)
Lower 2009 corporate interest
expense - 2.2 0.04
Certain tax benefits recognized
in 2009 - 5.7 0.11
All other operating changes (16.2) 3.3 0.07
------ ------- -------
Subtotal excluding impairment
charges 969.9 25.2 0.48
Impairment charges in 2009, net
of dilution - (140.9) (2.71)
------ ------- ------
Full year 2009 results $969.9 ($115.7) ($2.23)
====== ======== =======
During the 2009 fourth quarter, the Company recognized a one-time $3.3 million income tax benefit for foreign tax credits as a result of a recently completed internal restructuring of certain of the Company's international businesses. In addition, during the second quarter of 2009, the Company completed an internal restructuring of certain of its international businesses that has resulted in an ongoing reduction in its effective tax rate. For the year ended December 31, 2009, the Company benefited from $2.4 million in reduced foreign taxes, as compared to 2008, as a result of this second-quarter restructuring. These tax benefits increased earnings per share by $0.08 and $0.11 for the fourth quarter and year ended December 31, 2009, respectively.
In addition, during the 2009 fourth quarter, the Company incurred restructuring and lease termination costs of $1.5 million, after related income taxes. For the year ended December 31, 2009, these costs totaled $2.6 million, after related income taxes. These costs reduced earnings per share by $0.03 and $0.05 for the 2009 fourth quarter and year ended December 31, 2009, respectively.
Net income in the 2008 fourth quarter included a $2.5 million non-taxable gain on the sale of a business in the Company's Dutch subsidiary. This gain increased diluted earnings per share by $0.05 for the year and fourth quarter ended December 31, 2008. In the 2008 fourth quarter, restructuring costs in certain operations totaled $2.2 million, after related income taxes. These restructuring costs reduced diluted earnings per share by $0.04 for both the fourth quarter and year ended December 31, 2008. In addition, during the 2008 fourth quarter the Company recognized $900,000 in net income for certain previously unrecognized foreign tax credits. These tax credits increased diluted earnings per share by $0.02 for the 2008 fourth quarter and year ended December 31, 2008.
Crawford generated $51.7 million of cash from operations during 2009, compared to the $71.6 million in cash provided by operations during 2008. The $19.9 million decrease was due primarily to lower earnings during 2009 before the impairment charges and growth in working capital requirements. The Company's consolidated cash and cash equivalent position as of December 31, 2009 totaled $70.4 million compared to $73.1 million at December 31, 2008.
International Operations
Fourth quarter 2009 revenues before reimbursements for the International Operations segment declined 5.2% to $103.9 million from $109.6 million for the same period in 2008 due to the relative strength of the U.S. dollar and lower constant dollar revenues in the Company's international business. Compared to the 2008 fourth quarter, during the 2009 fourth quarter the U.S. dollar was stronger against most major foreign currencies, resulting in a negative exchange rate impact. Excluding the negative impact of exchange rate fluctuations, International Operations revenues would have been $105.1 million in the 2009 fourth quarter, reflecting a decline in revenues from the comparable 2008 period on a constant dollar basis of 4.1%, mainly due to the UK and European operations. Segment operating expenses for the 2009 fourth quarter decreased by $5.2 million in U.S. dollars, a 5.2% decrease, and decreased by 3.9% on a constant dollar basis, compared to the 2008 period. Operating earnings were $10.4 million in U.S. dollars during the 2009 fourth quarter ($10.2 million on a constant dollar basis), down from last year's fourth quarter operating earnings of $10.9 million in U.S. dollars. The related operating margin improved to 10.0% in the 2009 fourth quarter, compared to 9.9% in the 2008 fourth quarter.
U.S. Property & Casualty
U.S. Property & Casualty revenues before reimbursements were $44.7 million in the fourth quarter of 2009, decreasing 25.2% from $59.8 million in the 2008 fourth quarter when the Company was completing claims generated by hurricanes Gustav, Dolly and Ike, and reflects overall industry-wide softness in claims during the 2009 period. Revenues generated by the Company's catastrophe adjuster group were $3.7 million in the 2009 fourth quarter, declining from the $11.3 million in the 2008 period. Operating earnings in the 2009 fourth quarter in the U.S. Property & Casualty segment were $1.6 million, or an operating margin of 3.7% of revenues, compared to operating earnings of $4.8 million, or 8.0% of revenues in the 2008 fourth quarter.
Broadspire
Revenues before reimbursements from the Broadspire segment were $70.6 million in the 2009 fourth quarter, down 6.6% from $75.6 million in the 2008 quarter. Broadspire had operating earnings of $2.1 million in the 2009 fourth quarter, or an operating margin of 3.0% of revenues, compared to an operating loss of ($1.8) million, or (2.4%) of revenues, in the prior-year period. The revenue decline was primarily due to a reduced number of workers' compensation claim referrals as a result of lower U.S. employment levels, while the improvement in operating earnings was driven by cost reduction measures implemented during 2009.
Legal Settlement Administration
Legal Settlement Administration revenues before reimbursements were $19.2 million in the 2009 fourth quarter, up 6.8% from $18.0 million in the 2008 quarter, reflecting the positive impact of several major bankruptcy and securities class action administration projects awarded to the Company during 2009. Operating earnings totaled $3.2 million in the 2009 fourth quarter, or an operating margin of 16.8% of revenues, compared to $2.3 million, or 12.9% of revenues, in the prior-year period. The segment's awarded project backlog totaled approximately $55.0 million at December 31, 2009, compared to $42.0 million at December 31, 2008.
Management's Comments
Mr. Jeffrey T. Bowman, president and chief executive officer of Crawford & Company, stated, "Despite overall weakness in the global economy, our reported operating results for the 2009 fourth quarter were at the highest level in all of 2009 and exceeded our expectations. We performed well in our International Operations segment with no significant catastrophic activity, which reflects the leadership position we have earned in this market. Legal Settlement Administration had a good fourth quarter and we were particularly pleased with our performance in the bankruptcy administration market.
"Operating cash flow during the 2009 fourth quarter improved substantially over the 2009 third quarter, reflecting some of the seasonality we experience in our cash receipts. We continue to drive our company to improve its working capital profile, by focusing on better management of processes related to unbilled revenues and accounts receivable and by linking our incentive compensation programs to increased performance in this area. This focus will continue in the upcoming year."
Mr. Bowman concluded, "While we are pleased with our improved fourth quarter results, we expect global economic conditions to continue to be challenging, particularly in employment levels in the U.S. We are focusing significant attention on our administrative cost base across the entire organization to ensure we are operating more efficiently during 2010. We were successful during 2009 in reducing our selling, general and administrative costs, particularly in the fourth quarter, and our efforts in this regard will continue. While we remain confident in our long-term business model and especially the Crawford System of Claims Solutions, we have a cautionary economic outlook for 2010 which is reflected in our guidance for the coming year."
2010 Guidance
Crawford & Company is providing initial guidance for 2010 as follows:
- Consolidated revenues before reimbursements between $970 million and $990 million.
- Consolidated operating earnings between $54.3 million and $60.3 million.
- Consolidated cash provided by operating activities between $30.0 million and $35.0 million.
- After reflecting stock-based compensation expense, net corporate interest expense, customer-relationship intangible asset amortization expense, special charges, and income taxes, net income attributable to Crawford & Company on a GAAP basis between $23.5 million and $26.5 million, or $0.44 to $0.50 diluted earnings per share.
Crawford & Company's management will host a conference call with investors on Monday, February 8, 2010 at 3:00 p.m. EST to discuss earnings and other developments. The call will be recorded and available for replay through February 15, 2010. You may dial 1-800-642-1687 (706-645-9291 international) to listen to the replay. The access code is 53036043. Alternatively, please visit our web site at www.crawfordandcompany.com for a live audio web cast and related financial presentation.
Further information regarding the Company's financial position, operating results, and cash flows for the quarter and year ended December 31, 2009 is shown on the attached condensed consolidated unaudited financial statements. Operating earnings (a non-GAAP financial measure) is the key financial performance measure 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 operating performance using the same criteria that management uses. Operating earnings represents net income (loss) attributable to Crawford & Company excluding net corporate interest expense, stock option expense, income tax expense, amortization of customer relationship intangible assets, unallocated corporate and shared costs, and certain other charges and credits. Net corporate interest expense, stock option expense and income taxes are recurring components of the Company's net income (loss), but they are not considered part of operating earnings since they are managed on a corporate-wide basis. Net corporate interest expense results from capital structure decisions made by and effecting the Company as a whole, stock option expense relates to stock options and employee stock purchase plan expenses which are not allocated to operating segments, 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. Amortization expense relates to non-cash amortization of customer relationship intangible assets resulting from business combinations. These costs are not allocated to the operating segments for assessing performance. None of the aforementioned costs relate directly to the Company's products or the performance of the Company's services and are therefore excluded in order to more accurately assess the results of segment operating activities on a consistent basis. Certain other credits and charges represent events (gains on disposal of assets, restructuring activities, goodwill impairment, etc.) that are not considered part of segment operating earnings since they historically have not regularly impacted the Company's operating performance and are not expected to regularly impact future performance. Following is a reconciliation of segment operating earnings (loss) to net income (loss) attributable to Crawford & Company on a GAAP basis and the related margins as a percentage of revenues before reimbursements for all periods presented:
Quarter ended
-------------
December % December %
31, 2009 Margin 31, 2008 Margin
--------- ------- --------- -------
Operating Earnings (Loss):
U.S. property & casualty $1,642 3.7% $4,792 8.0%
International operations 10,364 10.0 10,866 9.9
Broadspire 2,129 3.0 (1,840) (2.4)
Legal settlement
administration 3,219 16.8 2,322 12.9
Unallocated corporate
and shared costs (2,566) (1.1) (1,581) (0.6)
Add/(Deduct):
Restructuring/other
charges (2,244) (0.9) (3,300) (1.3)
Gain on sale of business - - 2,512 1.0
Impairment charge - - - -
Stock option expense (218) (0.1) (144) (0.1)
Amortization expense (1,500) (0.6) (1,504) (0.6)
Net corporate interest
expense (3,915) (1.6) (4,216) (1.6)
------- -------
Pretax income (loss) 6,911 2.9 7,907 3.0
Income taxes 1,958 0.8 430 0.2
------ ------
Net income (loss)
attributable to
Crawford & Company $8,869 3.7 $8,337 3.2
====== ======
Year ended
----------
December % December %
31, 2009 Margin 31, 2008 Margin
--------- ------- --------- ------
Operating Earnings (Loss):
U.S. property & casualty $18,892 9.1% $22,614 10.4%
International operations 33,307 8.5 38,893 8.7
Broadspire (1,602) (0.6) 3,526 1.1
Legal settlement
administration 13,130 16.0 10,814 14.4
Unallocated corporate
and shared costs (10,714) (1.1) (6,728) (0.6)
Add/(Deduct):
Restructuring/other
charges (4,059) (0.4) (3,300) (0.3)
Gain on sale of
business - - 2,512 0.2
Impairment charge (140,945) (14.5) - -
Stock option expense (914) (0.1) (861) (0.1)
Amortization expense (5,994) (0.6) (6,025) (0.6)
Net corporate interest
expense (14,166) (1.5) (17,622) (1.7)
-------- --------
Pretax income (loss) (113,065) (11.6) 43,823 4.2
Income taxes (2,618) (0.3) (11,564) (1.1)
------- --------
Net income (loss)
attributable to
Crawford & Company ($115,683) (11.9) $32,259 3.1
========== =======
Based in Atlanta, Georgia, Crawford & Company (www.crawfordandcompany.com) is the world's largest independent provider of claims management solutions to the risk management and insurance industry as well as self-insured entities, with a global network of more than 700 locations in 63 countries. The Crawford System of Claims Solutions(SM) offers comprehensive, integrated claims services, business process outsourcing and consulting services for major product lines including property and casualty claims management; workers' compensation claims and medical management, and legal settlement administration. The Company's shares are traded on the NYSE under the symbols CRDA and CRDB.
This press release contains forward-looking statements, including statements about the financial condition, results of operations and earnings outlook of Crawford & Company. Statements, both qualitative and quantitative, that are not historical facts may be "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from historical experience or Crawford & Company's present expectations. Accordingly, no one should place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Crawford & Company does not undertake to update forward-looking statements to reflect the impact of circumstances or events that may arise or not arise after the date the forward-looking statements are made. For further information regarding Crawford & Company, including factors that could cause our actual financial condition, results or earnings to differ from those described in any forward-looking statements, please read Crawford & Company's reports filed with the United States Securities and Exchange Commission from time to time and available at www.sec.gov or in the Investor Relations section of Crawford & Company's website at www.crawfordandcompany.com.
CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In Thousands, Except Earnings Per Share Amounts and Percentages)
Year Ended December 31 2009 2008 % Change
---------------------- ---- ---- --------
Revenues:
Revenues Before Reimbursements $969,868 $1,048,582 -8%
Reimbursements 78,334 87,334 -10%
--------- ---------
Total Revenues 1,048,202 1,135,916 -8%
Costs and Expenses:
Costs of Services Before 713,991 767,093 -7%
Reimbursements
Reimbursements 78,334 87,334 -10%
------- -------
Total Cost of Services 792,325 854,427 -7%
Selling, General, and
Administrative 209,458 218,632 -4%
Corporate Interest Expense, Net 14,166 17,622 -20%
Restructuring and Other Costs 4,059 3,300 23%
Goodwill and Intangible
Asset Impairment Charges 140,945 - nm
--------- ---------
Total Costs and Expenses 1,160,953 1,093,981 6%
--------- ---------
Gain on Sale of Business - 2,512 nm
(Loss) Income Before Income Taxes (112,751) 44,447 nm
Provision for Income Taxes 2,618 11,564 -77%
----- ------
Net (Loss) Income (115,369) 32,883 nm
Less: Net Income Attributable to (314) (624) -50%
Noncontrolling Interests ----- -----
Net (Loss) Income Attributable
to Crawford & Company ($115,683) $32,259 nm
========== =======
(Loss) Earnings Per Share - Basic ($2.23) $0.63 nm
------- -----
(Loss) Earnings Per Share - Diluted ($2.23) $0.62 nm
------- -----
Weighted-Average Shares Used For:
Basic (Loss) Earnings Per Share 51,830 50,958
------ ------
Diluted (Loss) Earnings
Per Share 51,830 52,342
------ ------
nm = not meaningful
CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In Thousands, Except Earnings Per Share Amounts and Percentages)
Three Months Ended December 31 2009 2008 % Change
------------------------------ ---- ---- --------
Revenues:
Revenues Before Reimbursements $238,369 $262,889 -9%
Reimbursements 19,050 17,756 7%
-------- --------
Total Revenues 257,419 280,645 -8%
Costs and Expenses:
Costs of Services Before 175,540 194,350 -10%
Reimbursements
Reimbursements 19,050 17,756 7%
------- -------
Total Cost of Services 194,590 212,106 -8%
Selling, General, and
Administrative 49,721 55,319 -10%
Corporate Interest Expense, Net 3,915 4,216 -7%
Restructuring and Other Costs 2,244 3,300 -32%
------- -------
Total Costs and Expenses 250,470 274,941 -9%
------- -------
Gain on Sale of Business - 2,512 nm
Income Before Income Taxes 6,949 8,216 -15%
Benefit for Income Taxes (1,958) (430) 355%
------- -----
Net Income 8,907 8,646 3%
Less: Net Income Attributable
to Noncontrolling Interests (38) (309) -88%
---- -----
Net Income Attributable $8,869 $8,337 6%
to Crawford & Company ====== ======
Earnings Per Share:
Basic $0.17 $0.16 6%
----- -----
Diluted $0.17 $0.16 6%
----- -----
Weighted-Average Shares Used For:
Basic Earnings Per Share 52,053 51,219
------ ------
Diluted Earnings Per Share 52,902 53,028
------ ------
nm = not meaningful
CRAWFORD & COMPANY
SUMMARY RESULTS BY OPERATING SEGMENT
Year Ended December 31
Unaudited
(In Thousands, Except Percentages)
U.S. Property & Casualty %
2009 2008 Change
====================================
Revenues Before Reimbursements $206,598 $216,753 -4.7%
Compensation & Benefits 125,939 133,933 -6.0%
% of Revenues Before
Reimbursements 61.0% 61.8%
Expenses Other than
Reimbursements, Compensation
& Benefits 61,767 60,206 2.6%
% of Revenues Before
Reimbursements 29.9% 27.8%
------------------------------------
Total Operating Expenses 187,706 194,139 -3.3%
------------------------------------
Operating Earnings (Loss) (1) $18,892 $22,614 -16.5%
% of Revenues Before
Reimbursements 9.1% 10.4%
------------------------------------
International Operations %
2009 2008 Change
====================================
Revenues Before Reimbursements $392,601 $445,056 -11.8%
Compensation & Benefits 270,637 303,197 -10.7%
% of Revenues Before
Reimbursements 68.9% 68.1%
Expenses Other than
Reimbursements, Compensation
& Benefits 88,657 102,966 -13.9%
% of Revenues Before
Reimbursements 22.6% 23.2%
------------------------------------
Total Operating Expenses 359,294 406,163 -11.5%
------------------------------------
Operating Earnings (Loss) (1) $33,307 $38,893 -14.4%
% of Revenues Before
Reimbursements 8.5% 8.7%
------------------------------------
Broadspire %
2009 2008 Change
====================================
Revenues Before Reimbursements $288,650 $311,841 -7.4%
Compensation & Benefits 161,786 175,412 -7.8%
% of Revenues Before
Reimbursements 56.0% 56.3%
Expenses Other than
Reimbursements, Compensation
& Benefits 128,466 132,903 -3.3%
% of Revenues Before
Reimbursements 44.6% 42.6%
------------------------------------
Total Operating Expenses 290,252 308,315 -5.9%
------------------------------------
Operating Earnings (Loss) (1) ($1,602) $3,526 -145.4%
% of Revenues Before
Reimbursements -0.6% 1.1%
------------------------------------
Legal Settlement
Administration %
2009 2008 Change
===================================
Revenues Before Reimbursements $82,019 $74,932 9.5%
Compensation & Benefits 35,859 35,359 1.4%
% of Revenues Before
Reimbursements 43.7% 47.2%
Expenses Other than
Reimbursements, Compensation
& Benefits 33,030 28,759 14.9%
% of Revenues Before
Reimbursements 40.3% 38.4%
-----------------------------------
Total Operating Expenses 68,889 64,118 7.4%
-----------------------------------
Operating Earnings (Loss) (1) $13,130 $10,814 21.4%
% of Revenues Before
Reimbursements 16.0% 14.4%
-----------------------------------
Three Months Ended December 31
Unaudited
(In Thousands, Except Percentages)
U.S. Property & Casualty %
2009 2008 Change
=====================================
Revenues Before Reimbursements $44,746 $59,818 -25.2%
Compensation & Benefits 28,971 37,656 -23.1%
% of Revenues Before
Reimbursements 64.7% 63.0%
Expenses Other than
Reimbursements, Compensation
& Benefits 14,133 17,370 -18.6%
% of Revenues Before
Reimbursements 31.6% 29.0%
----- -----
Total Operating Expenses 43,104 55,026 -21.7%
------ ------ ------
Operating Earnings (Loss) (1) $1,642 $4,792 -65.7%
% of Revenues Before
Reimbursements 3.7% 8.0%
---- ----
International Operations %
2009 2008 Change
=====================================
Revenues Before Reimbursements $103,877 $109,551 -5.2%
Compensation & Benefits 70,127 73,205 -4.2%
% of Revenues Before
Reimbursements 67.5% 66.8%
Expenses Other than
Reimbursements, Compensation
& Benefits 23,386 25,480 -8.2%
% of Revenues Before
Reimbursements 22.5% 23.3%
----- -----
Total Operating Expenses 93,513 98,685 -5.2%
------ ------ -----
Operating Earnings (Loss) (1) $10,364 $10,866 -4.6%
% of Revenues Before
Reimbursements 10.0% 9.9%
--------------------------------------
Broadspire %
2009 2008 Change
====================================
Revenues Before Reimbursements $70,563 $75,552 -6.6%
Compensation & Benefits 38,722 42,740 -9.4%
% of Revenues Before
Reimbursements 54.9% 56.6%
Expenses Other than
Reimbursements, Compensation
& Benefits 29,712 34,652 -14.3%
% of Revenues Before
Reimbursements 42.1% 45.8%
------------------------------------
Total Operating Expenses 68,434 77,392 -11.6%
------------------------------------
Operating Earnings (Loss) (1) $2,129 ($1,840) -215.7%
% of Revenues Before
Reimbursements 3.0% -2.4%
------------------------------------
Legal Settlement
Administration %
2009 2008 Change
===================================
Revenues Before Reimbursements $19,183 $17,968 6.8%
Compensation & Benefits 8,597 8,788 -2.2%
% of Revenues Before
Reimbursements 44.8% 48.9%
Expenses Other than
Reimbursements, Compensation
& Benefits 7,367 6,858 7.4%
% of Revenues Before
Reimbursements 38.4% 38.2%
-----------------------------------
Total Operating Expenses 15,964 15,646 2.0%
-----------------------------------
Operating Earnings (Loss) (1) $3,219 $2,322 38.6%
% of Revenues Before
Reimbursements 16.8% 12.9%
-----------------------------------
(1) A non-GAAP financial measurement which represents net income
attributable to Crawford & Company excluding net corporate interest
expense, amortization of customer-relationship intangible assets, stock
option expense, income tax expense, unallocated corporate and shared
costs, restructuring costs, and goodwill and intangible asset impairment
charges. See page 7 for a reconciliation of Operating Earnings to Net
(Loss) Income computed in accordance with GAAP.
CRAWFORD & COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
As of December 31, 2009 and December 31, 2008
(In Thousands, Except Par Values)
Unaudited *
December 31 December 31
Assets 2009 2008
------------------------------------ ---- ----
Current Assets:
Cash and Cash Equivalents $70,354 $73,124
Accounts Receivable, Net 139,215 157,430
Unbilled Revenues, Net 93,796 99,115
Prepaid Expenses and Other 22,350 18,688
Current Assets --------- ---------
Total Current Assets 325,715 348,357
--------- ---------
Property and Equipment 144,254 140,399
Less Accumulated Depreciation (102,108) (95,785)
--------- ---------
Net Property and Equipment 42,146 44,614
--------- ---------
Other Assets:
Goodwill 123,169 251,897
Intangible Assets Arising from
Business Acquisitions, Net 104,409 111,389
Capitalized Software Costs, Net 50,463 46,296
Deferred Income Tax Asset 69,504 67,695
Other Noncurrent Assets 27,499 25,000
-------- --------
Total Other Assets 375,044 502,277
-------- --------
Total Assets $742,905 $895,248
======== ========
Liabilities and Shareholders' Investment
----------------------------------------
Current Liabilities:
Short-Term Borrowings $32 $13,366
Accounts Payable 35,449 40,711
Accrued Compensation and Related Costs 70,871 77,802
Other Accrued Current Liabilities 47,318 56,978
Self-Insured Risks 18,475 17,939
Accrued Income Taxes - 9,937
Deferred Revenues 53,664 59,679
Current Installments of Long-Term
Debt and Capital Leases 2,314 2,284
-------- --------
Total Current Liabilities 228,123 278,696
-------- --------
Noncurrent Liabilities:
Long-Term Debt and Capital Leases,
Less Current Installments 178,936 181,206
Deferred Revenues 33,524 42,795
Self-Insured Risks 14,824 18,531
Accrued Pension Liabilities 212,507 179,542
Other Noncurrent Liabilities 13,705 14,119
-------- --------
Total Noncurrent Liabilities 453,496 436,193
-------- --------
Shareholders' Investment:
Class A Common Stock, $1.00 Par Value 27,355 26,523
Class B Common Stock, $1.00 Par Value 24,697 24,697
Additional Paid-in Capital 29,570 26,342
Retained Earnings 140,464 256,146
Accumulated Other Comprehensive Loss (165,404) (158,157)
--------- ---------
Total Crawford & Company Shareholders'
Investment 56,682 175,551
Noncontrolling Interests 4,604 4,808
-------- --------
Total Shareholders' Investment 61,286 180,359
-------- --------
Total Liabilities and Shareholders'
Investment $742,905 $895,248
======== ========
* Derived from the audited Consolidated Balance Sheet
CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2009 and 2008
Unaudited
(In Thousands)
2009 2008
---- ----
Cash Flows From Operating Activities:
-------------------------------------
Net (Loss) Income ($115,369) $32,883
Reconciliation of Net (Loss) Income to
Net Cash Provided By
Operating Activities:
Depreciation and Amortization 31,010 30,331
Goodwill and Intangible Asset Impairment
Charges 140,945
Stock-Based Compensation 5,510 5,858
Deferred income tax provision 463 247
Loss on Sales of Property and Equipment,
Net 117 195
Gain on Sale of Business - (2,512)
Changes in Operating Assets and
Liabilities, Net of Effects of Acquisition
and Disposition:
Accounts Receivable 27,193 6,785
Unbilled Revenues 12,481 22,093
Accrued Income Taxes (7,782) 3,077
Accounts Payable and Accrued Liabilities (16,749) 20,493
Deferred Revenues (15,827) (19,024)
Retirement Plan Liabilities (7,844) (25,416)
Prepaid Expenses and Other Operating
Activities, net (2,484) (3,425)
------- -------
Net Cash Provided By Operating Activities 51,664 71,585
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Cash Flows From Investing Activities:
-------------------------------------
Acquisitions of Property and Equipment,
net (9,751) (14,552)
Capitalization of Computer Software Costs (14,823) (16,797)
Other Investing Activities (6,595) 3,313
-------- --------
Net Cash Used In Investing Activities (31,169) (28,036)
-------- --------
Cash Flows From Financing Activities:
-------------------------------------
Shares used to settle withholding taxes
under stock-based compensation plans (1,903) (20)
Proceeds from exercises of stock options/
ESPP plans 453 2,036
Decrease in Short-Term Borrowings, net (18,286) (11,752)
Payments on Long-Term Debt and Capital
Lease Obligations (2,400) (2,484)
Capitalized Loan Costs (4,145) -
Other Financing Activities (274) (610)
-------- --------
Net Cash Used In Financing Activities (26,555) (12,830)
-------- --------
Effect of Exchange Rate Changes on Cash
and Cash Equivalents 3,290 (8,450)
------- ------
Change in Cash and Cash Equivalents (2,770) 22,269
Cash and Cash Equivalents at Beginning of Year 73,124 50,855
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Cash and Cash Equivalents at End of Year $70,354 $73,124
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SOURCE Crawford & Company
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