-----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, OrMYgvUJcPLpug0AsdBaQxAge8lhfhLZFNLWW/ezHHEE5OCmJPivhrIzEjIF/QHC 3zQKqJPkrnDm8j5yPzf7VA== 0000950144-00-003829.txt : 20000329 0000950144-00-003829.hdr.sgml : 20000329 ACCESSION NUMBER: 0000950144-00-003829 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000328 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-K405 SEC ACT: SEC FILE NUMBER: 001-10356 FILM NUMBER: 580599 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-K405 1 CRAWFORD & COMPANY 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 [ ] 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 incorporation or (I.R.S. Employer Identification Number) organization)
5620 Glenridge Dr., N.E., Atlanta, Georgia 30342 - -------------------------------------------------- ------------------------------------------- (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (404) 256-0830 -------------- Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered ------------------- ----------------------------------------- Class A Common Stock - $1.00 Par Value New York Stock Exchange Class B Common Stock - $1.00 Par Value New York Stock Exchange -------------------------------------- -----------------------
Securities registered pursuant to Section 12(g) of the Act: None - ------------------------------------------------------------------------------- (Title of Class) 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of the voting stock held by nonaffiliates* of the Registrant was $141,284,900 as of March 2, 2000, based upon the closing price as reported on NYSE on such date. - ------------------------------------------------------------------------------- *All shareholders, other than Directors, Executive Officers, and 10% beneficial owners. The number of shares outstanding of each of the Registrant's classes of common stock, as of March 2, 2000, was: Class A Common Stock - $1.00 Par Value - 25,687,731 Shares Class B Common Stock - $1.00 Par Value - 24,712,172 Shares - ------------------------------------------------------------------------------- Documents incorporated by reference: (1) Annual Report to Shareholders for the Year Ended December 31, 1999, Part I - - Item 2; Part II - Items 5, 6, 7, 7A and 8; Part IV - Item 14, and (2) Proxy Statement for the Annual Meeting of Shareholders to be held April 25, 2000, Part III -Items 10, 11, 12, and 13. 2 PART I ITEM 1. BUSINESS Crawford & Company (the "Registrant") is the world's largest independent provider of diversified services to insurance companies, self-insured corporations and governmental entities. A few of the many services provided are claims management, loss adjustment, healthcare management, risk management services, class action administration and risk information services. The Registrant is not owned by or affiliated with any insurance company. DESCRIPTION OF SERVICES The percentages of consolidated revenues derived from the Registrant's domestic and international operations are shown in the following schedule:
Years Ended December 31, ------------------------ 1999 1998 1997 ---- ---- ---- Domestic Operations 74.6% 74.8% 78.9% International Operations 25.4% 25.2% 21.1% ----- ----- ----- 100.0% 100.0% 100.0% ===== ===== =====
DOMESTIC OPERATIONS. Domestic claims services are provided by the Registrant to two different markets. Insurance companies, which represent the major source of revenues, customarily manage their own claims administration function, but require limited services which the Registrant provides. The Registrant also services clients which are self-insured or commercially insured through alternative loss funding methods, and provides them with a more complete range of services they typically require, including the supervision of field locations, information services and medical cost-containment. The major elements of domestic claims administration services (which include the limited services required by most property and casualty insurance company clients as well as the expanded services required by self-insured clients) are as follows: - Initial Reporting - the Registrant's XPressLink(SM) service provides 24-hour receipt, acknowledgement, and distribution of claims information through Electronic Data Interchange, customized reporting and referral programs, call center reporting, and facsimile receipt and distribution. 2 3 - Investigation - the development of information necessary to determine the cause and origin of loss. - Evaluation - the determination of the extent and value of damage incurred and the coverage, liability, and compensability relating to the parties involved. - Disposition - the resolution of the claim, whether by negotiation and settlement, by denial, or by other means. Expanded services provided primarily, but not exclusively, to Registrant's self-insured clients include the following: - Information Services - through the Registrant's information system, SISDAT(SM), it provides reports of detailed claims information of both a statistical and financial nature to self-insured corporations, governmental entities and insurance companies. - Management - the coordination and supervision of all parties involved in the claims settlement process, including the adjusting personnel directly involved in handling the claim. Typically, this management function is performed by an independent administrative unit within the Registrant which is not involved in the initial investigation of a claim. - Auditing Services - the Registrant's provider and hospital bill audit programs assist clients in controlling medical costs associated with workers compensation and liability claims by comparing fees charged by health care providers and hospitals with maximum fee schedules prescribed by statutory regulations as well as usual and customary charges in non-fee-schedule states. The Registrant also provides a PPO network through First Health Group. - Managed Care Services - provides a broad range of cost containment and utilization review services to insurance companies, service organizations and self-insured corporations. These services, which are designed to both control the cost and enhance the efficient delivery of medical benefits, include pre-admission review of hospitalizations, second surgical opinions, concurrent hospital utilization review, and discharge planning. Early intervention services seek to actively control workers compensation medical and indemnity costs at the onset of a claim through nurse screening for severity as claims are received from XPressLink(SM) or directly from the client. - Vocational Services - provides vocational evaluation in order to assess an injured employee's potential to return to work. These services involve diagnostic testing and occupational, personal and motivational counseling of the employee. Vocational, medical and employment consultants assist in the re-employment and preparation of injured 3 4 individuals to return to work. - Medical Case Management Services - are typically provided by rehabilitation nurses who work closely with attending physicians and other medical personnel in order to expedite the injured person's physical recovery and rehabilitation and maximize the opportunity for the person to return to work. These services also involve coordinating and monitoring treatment plans and related costs to insure that such treatment is appropriate and necessary in the circumstances. - Long-Term Care - offers a full menu of long-term care services including comprehensive on-site assessments, complete care coordination, and on-going care monitoring. These services are provided through experienced health care professionals with an insight to local quality care needs and are offered primarily to senior citizens and their children, attorneys, and trust officers. The claims administration services described above are provided to clients for a variety of different referral assignments which generally are classified as to the underlying insured risk categories used by insurance companies. The major categories are described below: - Automobile - relates to all types of losses involving use of the automobile. Such losses include bodily injury, physical damage, medical payments, collision, fire, theft, and comprehensive liability. - Property - relates to losses caused by physical damage to commercial or residential real property and certain types of personal property. Such losses include those arising from fire, windstorm, or hail damage to commercial and residential property, burglary, robbery or theft of personal property, and damage to property under inland marine coverage. - Workers Compensation - relates to claims arising under state and federal workers compensation laws. - Public Liability - relates to a wide range of non-automobile liability claims such as product liability; owners', landlords' and tenants' liabilities; and comprehensive general liability. - Catastrophe - covers all types of natural disasters, such as hurricanes, earthquakes and floods, and man-made disasters such as oil spills, chemical releases, and explosions, where the Registrant provides specially trained catastrophe teams to handle claims, as well as to manage the recovery efforts. 4 5 - Class Action Support - relates to the administration and field inspection requirements with respect to product liability class action settlements. ADDITIONAL RISK MANAGEMENT AND OTHER SERVICES. The Registrant provides the following additional risk management and other related services, which support and supplement the claims and risk management services offered: - RISK SCIENCES GROUP, INC. - is a software applications and consulting firm which is a wholly-owned subsidiary of the Registrant. Risk Sciences Group ("RSG") provides customized computer-based information systems and analytical forecasting services to the risk management and insurance industry. It manages the Registrant's basic information systems, SISDAT(SM), and has developed the SIGMA(SM) system, an on-line risk management information system which supports multiple sources of claims, locations, risk control, medical, litigation, exposure, and insurance policy information. RSG serves a variety of clients with specialized computer programs for long-term risk management planning; data and systems integration; development of historical claims/loss databases; claims administration and management; regulatory reporting; insurance and risk management cost control; and actuarial and financial analysis required for loss forecasting, reserve estimation and financial reporting. - THE GARDEN CITY GROUP, INC. - is a class action settlement administration company which was acquired by the Registrant in January of 1999. The Garden City Group ("GCG") handles the administrative functions related to class action settlements, including qualifying class members, dispensing payments, and administering the settlement funds. With the field operations of the Registrant, GCG and the Registrant offer comprehensive programs to integrate the field inspection and administrative functions in a single source for product liability class action settlements. - THE PRISM NETWORK, INC. - is a subsidiary of the Registrant, acquired in August of 1999, which contracts with a network of contractors ("repairNet(SM)") to provide property damage repair services at agreed contract rates for property damage losses. The Registrant and The PRISM Network, Inc. market repairNet to property insurance companies to facilitate faster, more economical resolution of smaller property damage claims under home-owner policies. - EDUCATION SERVICES - are provided by the Registrant's Crawford University. The primary purpose of the University is to provide education and certification for professionals engaged in service delivery for all lines of business to assure consistent quality in our 5 6 work products. In addition, the University provides continuing education in support of career paths, management and supervisory training, and the opportunity to obtain professional certification through IIA/CPCU. Clients have the opportunity to attend Crawford University education programs and access the Crawford University continuing education curriculum in a variety of risk management subjects. INTERNATIONAL OPERATIONS. In December 1996, an English subsidiary of the Registrant (renamed Crawford-THG Limited) acquired all of the non-United States operations of the Thomas Howell Group, a London, England based international loss adjusting enterprise owned by a subsidiary of Swiss Reinsurance Company of Zurich, Switzerland, which received stock in Crawford-THG Limited as consideration for the transfer. Concurrently, all of the Registrant's non- U.S. subsidiaries were transferred to Crawford-THG Limited, in which the Registrant retained a sixty percent (60%) interest and Swiss Reinsurance Company's subsidiary received a forty percent (40%) interest. In June 1998, Swiss Re's subsidiary exchanged its forty percent (40%) interest in Crawford- THG for 1,900,000 shares of the Registrant's Class A Common Stock. All of the Registrant's principal international operations are now wholly-owned by the Registrant. On July 13, 1998, the Registrant, through a wholly-owned subsidiary, acquired all of the outstanding shares in Adjusters Canada Incorporated, a Canadian loss adjusting company. On December 31, 1998, Adjusters Canada Incorporated and Crawford-THG (Canada) Limited were amalgamated into Crawford Adjusters Canada Incorporated. Revenues and expenses outside of North America and the Caribbean are reported on a two-month delayed basis and, accordingly, the Registrant's December 31, 1999, 1998 and 1997 consolidated financial statements reflect the non-North American financial position as of October 31, 1999, 1998 and 1997 and the results of non-North American operations and cash flows for the 12-month periods ended October 31, 1999, 1998 and 1997. The major services offered by the Registrant through its international operations doing business outside of the U.S. are listed below: - Property and Casualty - provides loss adjusting services for property, general liability, professional indemnity for directors and officers, product liability and medical malpractice. - Oil, Energy & Engineering - provides loss adjusting for oil, gas, petrochemicals, other energy risks, utilities and mining industries, as well as marine and off-shore risks. - Environmental Pollution - provides cost-containment and claims management services with respect to environmental related losses. - Construction - provides loss adjusting services under contractors' all risk, engineering all risk, and contractors' liability coverages. Additionally evaluates machinery breakdown claims and provides 6 7 peripheral services including plant valuation and loss prevention surveys. - Catastrophe - organizes major loss teams to provide claims management and cost containment services through proprietary information systems. - Marine - provides loss adjusting services for freight carriers liability, loss investigations, recoveries, salvage disposal, yacht and small craft, cargo, container, discharge, draft, general average, load, trailer and on/off live surveys, ship repairer liability and port stevedore liability. - Specie and Fine Art - provides loss adjusting services under fine art dealers' block and jewelry and furriers' block policies. - Entertainment Industry - provides a broad range of loss adjusting services for television, commercial and educational film production, and theater and live events. - Aviation - manages salvage removal and sale and provides loss adjusting services for hull related risks, as well as cargo and legal liability, hangar and airport owners'/operators' liability policies. - Banking, Financial and Political Risks - performs loss adjusting functions under bankers blanket bond, political risk, and financial contingency policies. - Livestock - performs loss adjusting on bloodstock, and liability/equestrian activity. - Security Consultancy - performs loss prevention and bank surveys and adjusts cash-in-transit losses. - Reinsurance - provides external audits, portfolio analyses, and management and marketing research. Additionally provides underwriting review, cash control and management of discontinued operations. - Medical and Vocational Case Management Services - provides specialized return to work and expert testimony services in the employer liability and auto liability markets. SERVICE DELIVERY - The Registrant's claims management services are offered primarily through its more than 400 branch offices throughout the United States and 300 offices in 64 countries throughout the rest of the world. 7 8 The Registrant has a branch profit-sharing compensation policy covering most of its branch managers in the United States, under which those managers participate in the profits of their respective branches. This policy provides a formula for the determination of branch office profits and pays the manager a percentage, generally forty percent (40%), of those profits. COMPETITION, EMPLOYMENT AND OTHER FACTORS The claims services markets, both domestically and internationally, are highly competitive and are composed of a large number of companies of varying size and scope of services. These include large insurance companies and insurance brokerage firms which, in addition to their primary services of insurance underwriting or insurance brokerage, also provide services such as claims administration, health and disability management, and risk management information systems, which compete with services offered by the Registrant. Many of these companies are larger than the Registrant in terms of annual revenues and total assets; however, based on experience in the market, the Registrant believes that few, if any, such organizations derive revenues from independent claims administration activities which equal those of the Registrant. The majority of property and casualty insurance companies maintain their own staffs of salaried adjusters, with field adjusters located in those areas in which the volume of claims justifies maintaining a salaried staff. These companies utilize independent adjusters to service claims when the volume of claims exceeds the capacity of their staffs and when claims arise in areas not serviced by staff adjusters. The volume of property claim assignments referred to the Registrant fluctuates primarily depending on the occurrence of severe weather. The United States insurance industry generally uses internal adjusting personnel to make automobile claims adjustments by telephone and assigns the limited function of appraising physical damage to outside service organizations, such as the Registrant. The Registrant believes that such limited assignments from automobile insurers may continue, reflecting a perception by insurance companies that they can reduce adjusting expenses in amounts greater than the higher losses associated with telephone adjusting. In certain instances, however, insurers have attempted to reduce the fixed cost of their claims departments by increasing outside assignments to independent firms such as the Registrant. When insurance premiums have increased and corporate risk management personnel have become more aware of alternative methods of financing losses, there has been a trend toward higher retention levels of risk insurance or implementation of self-insurance programs by large corporations and governmental entities. These programs generally utilize an insurance company which writes specialized policies that permit each client to select its own level of risk retention, and may permit certain risk management services to be provided to the client by service companies independent of the insurance company or broker. In addition to providing full claims administration services for such clients, the Registrant generally provides statistical data such as loss experience analysis. The services are usually the subject of a contractual agreement with the specialty insurance company or the self-insured client that specifies the claims to be administered by the Registrant and the fee to be paid for its services (generally a fixed rate per assignment within the various risk classifications). These programs are sensitive to changes in premiums charged for full coverage insurance. In softer 8 9 insurance markets, as have been experienced in recent years, these alternative risk programs tend to be less attractive to potential clients and are replaced by full traditional insurance and, accordingly, reduce the number of alternative risk programs in which the Registrant can participate. In addition to the large insurance companies and insurance brokerage firms, the Registrant competes with a great number of smaller local and regional risk management services firms located throughout the United States and internationally. Many of these smaller firms have rate structures that are lower than the Registrant's, but do not offer the broad spectrum of risk management services which the Registrant provides and, although such firms may secure business which has a local or regional source, the Registrant believes its broader scope of services and its large number of geographically dispersed offices provide it with a competitive advantage in securing business from national and international clients. Much of the Registrant's operations are dependent on information technology in the receipt, processing, disposition, and archiving of claims and claim related information. The Registrant reviewed its systems and computer software programs, and believes it has modified or replaced those of its systems which might be impacted by the "Year 2000 issue" associated with the capability to properly recognize and process date-sensitive data beyond year 1999. Much of the Registrant's data is received from or distributed to its clients and other third parties, and its ability to do so could be impacted by system problems of those third parties over which the Registrant has no control. The inability of the Registrant's major trading partners to modify or replace their non-Year 2000 compliant systems could have a material impact on future financial results, although the Registrant has seen no material impact to date. At December 31, 1999, the total number of full-time employees was 7,684 compared with 7,658 at December 31, 1998. The Registrant, through its Crawford University, provides many of its employees with formal classroom training in basic and advanced skills relating to claims administration and disability management services. Such training is generally provided at the Registrant's education facility in Atlanta, Georgia, although much of the material is also available through correspondence courses. In many cases, employees are required to complete these or other professional courses in order to qualify for promotion from their existing positions. In addition to this technical training, the Registrant also provides ongoing professional education for certain of its management personnel on general management, marketing, and sales topics. These programs involve both in-house and external resources. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND ANALYSTS' REPORTS Certain written and oral statements made or incorporated by reference from time to time by the Registrant in this report, other reports, filings with the Securities and Exchange Commission, press releases, conferences, or otherwise, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements. Forward-looking statements may be identified, without limitation, by the use of such words as "anticipates", "estimates", "expects", "intends", "plans", "predicts", "projects", "believes", or words or phrases of similar meaning. 9 10 Forward-looking statements include risks and uncertainties which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. In addition to other factors and matters discussed elsewhere herein, some of the important factors that could cause actual results to differ materially from those discussed in the forward-looking statements include the following: - Changes in general economic conditions in the Registrant's major markets, which include the United States, the United Kingdom, and Canada, as well as, to a lesser extent, the other areas throughout the world in which the Registrant does business; - Occurrences of weather related, natural and man-made disasters; - Changes in the degree to which property and casualty insurance carriers outsource their claims handling functions; - Decisions by major insurance carriers and underwriters and brokers to expand their activities as third party administrators and adjusters, which would directly compete with the Registrant's business; - Continued growth in product liability class actions and the possibility that legislation may curtail or limit that growth; - The growth of the alternative risk market and the use of independent third party administrators such as the Registrant, as opposed to administrators affiliated with brokers or insurance carriers; - Ability to develop or acquire information technology resources to support and grow the Registrant's businesses; - The ability to recruit, train, and retain qualified personnel; - The cyclical nature of the Registrant's business and the affect of general economic and weather conditions; - The renewal of existing major contracts with clients and the Registrant's ability to obtain such renewals and new contracts on satisfactory financial terms; - Changes in accounting principles or application of such principles to the Registrant's business; - General risks associated with doing business outside the United States, including without limitation, restrictions on foreign-owned or controlled entities conducting loss adjusting activities in those jurisdictions and currency restrictions; and - Any other factors referenced or incorporated by reference in this report and any other report. 10 11 The risks included above are not exhaustive. Other sections of this report may include additional factors which could adversely impact the Registrant's business and financial performance. Moreover, the Registrant operates in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors, nor can it assess the impact of known risk factors on the Registrant's business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statement. The Registrant undertakes no obligation to revise or publicly release the results of any revisions to forward-looking statements or to identify any new risk factors which may arise. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual future results. Investors should also be aware that while the Registrant does, from time to time, communicate with securities analysts, it is against the Registrant's policy to disclose to them any material, non-public information or other confidential commercial information. Accordingly, investors should not assume that the Registrant agrees with any statement or report issued by any analyst irrespective of the content of the statement or report. Furthermore, the Registrant has a policy against issuing or confirming financial forecasts or projections issued by others. Thus, to the extent that the reports issued by securities analysts contain any projections, forecasts, or opinions, such reports are not the responsibility of the Registrant. ITEM 2. PROPERTIES The Registrant's home office and educational facilities are owned by the Registrant and located in Atlanta, Georgia. As of December 31, 1999, the Registrant leased approximately 600 office locations under leases with remaining terms ranging from a few months to ten years. The remainder of its office locations are occupied under various short-term rental arrangements. The Registrant also leases certain computer equipment. See Note 4 of Notes to Consolidated Financial Statements included in the Registrant's 1999 Annual Report to Shareholders filed herewith as Exhibit 13.1, which notes are incorporated herein by reference. As of December 31, 1999, the Registrant owned or leased approximately 1,585 automobiles which are used by the Registrant's field adjusters and certain of its management personnel in the United States. Additional vehicles are owned or leased by the Registrant's foreign subsidiaries for use by field and management personnel. ITEM 3. LEGAL PROCEEDINGS In the normal course of the claims administration services business, the Registrant is named as a defendant in suits by insureds or claimants contesting decisions by the Registrant or its clients with respect to the settlement of claims. Additionally, clients of the Registrant have brought actions for indemnification on the basis of alleged negligence on the part of the Registrant, its agents or employees in rendering service to clients. The majority of these claims are of the type covered by insurance maintained by the Registrant; however, the Registrant is self-insured for the deductibles under its various insurance coverages. In the opinion of the Registrant, adequate reserves have been provided for such self-insured risks. 11 12 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to security holders for a vote during the fourth quarter of 1999. EXECUTIVE OFFICERS OF THE REGISTRANT The following are the names, positions held, and ages of each of the executive officers of the Registrant:
Name Office Age ---- ------ --- A. L. Meyers, Jr. Chairman and Chief Executive Officer 62 G. L. Davis President and Chief Operating Officer 48 S. V. Festa Executive Vice President - Risk Management Services 40 J. F. Giblin Executive Vice President - Finance 43 Victoria Holland Executive Vice President - Healthcare Management Services 55 J. A. McGee Executive Vice President - Claims Management Services 49 J. F. Osten Executive Vice President-General Counsel & Corporate Secretary 58 H. L. Rogers Executive Vice President - Technical Services 43 W. L. Beach Senior Vice President - Human Resources 55 J. T. Bowman Senior Vice President - Crawford & Company International, Inc. 46 Regional Managing Director - Americas M. F. Reeves Senior Vice President - Crawford & Company International, Inc. 47 Regional Managing Director - UK, Europe & Africa R.G.L. Solomon Senior Vice President - Crawford & Company International, Inc. 52 Regional Managing Director - Asia-Pacific
Mr. Meyers was appointed to his present position effective July 27, 1999. From September 28, 1998 to July 27, 1999 he served as President and Chief Operating Officer. He served as President Claims Management Services from August 1995 until March 1998. He had previously retired from the Company in April 1994, after having served as Manager of the Registrant's Washington, D. C. branch office since 1977. During the period between his retirement in 1994 and appointment as President - Claims Management Services in 1995, he served as a consultant and operations supervisor for the Registrant. Mr. Davis was appointed to his present position effective July 27, 1999. From November 1, 1998 to July 27, 1999 he was Senior Vice President of the Claims Services business unit, a position he also held from August 1, 1997 to April 1, 1998. From April, 1998 to October 31, 1998 Mr. Davis was Manager of the Registrant's Dallas Service Center. From May of 1996 to August of 1997 he was Vice President - National Sales Manager for Claims Services and from July 1994 to May of 1996 he was a Regional Manager in Claims Services operations, first as an Assistant Vice President 12 13 and then Vice President. Mr. Festa was appointed to his present position with the Registrant on July 27, 1999. Prior to July 1999 and from November 1998 he was Senior Vice President - Risk Management Services. From April 1998 to November 1998, he was a Vice President and Director of the Registrant's Service Centers. Prior to April 1998 and for more than five years Mr. Festa was involved in the operations of the Registrant's Risk Management Services business unit first as an Operations Supervisor, then in June of 1996 as an Assistant Vice President and in August of 1997 as a Vice President. Mr. Giblin has been with the Registrant for more than five years, serving as Controller until his appointment to his present position in June 1998. Ms. Holland was appointed to her present position with the Registrant on July 27, 1999. From August 1, 1997 to July 27, 1999, she was a Senior Vice President in the Healthcare Management business unit. Prior to August 1997 and for more than five years, Ms. Holland was a Vice President in the Healthcare Management business unit. Mr. McGee was appointed to his present position with the Registrant July 27, 1999. From November, 1994 to April, 1999 Mr. McGee was Executive Vice President with GAB Robins responsible for the Claims Services Business Unit. GAB Robins is a competitor of the Registrant's. Mr. Osten has served in his present position with the Registrant for more then five years. Mr. Rogers was appointed to his present position with the Registrant on July 27, 1999. Prior to July 1999 and from November 1998 he was Senior Vice President - Property & Catastrophe Services. From February 1, 1997 to November 1, 1998, he was a Vice President in Catastrophe Services operations and from April 1, 1996 to February, 1997 he was an Assistant Vice President in Catastrophe Services operations. From March 1995 to April 1996 he served as Manager of the Registrant's Nashville, Tennessee branch office and from March 1994 to February 1995 he was Manager of the Registrant's Florence, Alabama branch office. Mr. Beach was hired by the Registrant as its Chief Learning & Resources Officer in September 1996 and was appointed Senior Vice President - Human Resources in October of 1997. For more than five years prior to that, he was a partner of Southern Consulting Group in Atlanta, Georgia. Mr. Bowman was appointed to his present position August 1997, first as a Vice President and then in August 1999 as a Senior Vice President. From January 1, 1996 to August, 1997 he was Vice President in charge of International Strategic Planning and from January 1, 1995 to December 31, 1995 he was the Registrant's International Director of Finance. Mr. Reeves was appointed to his present position January 1999, first as a Vice President and then in August, 1999 as a Senior Vice President. From January 1, 1997 to December 1998 he held the positions of Managing Director - U.K. Property and Managing Director - Global Business Development in Crawford-THG Limited, the Registrant's subsidiary. Prior to January 1997 he was employed by Thomas Howell Group, which the Registrant acquired in December of 1996, as Managing Director - U.K. from January 1, 1996 to December 31, 1996 and Managing Director - Europe from January 1, 1995 to December 31, 1995. 13 14 Mr. Solomon was appointed to his present position January 1999, first as a Vice President and then in August 1999 as a Senior Vice President. From January 1, 1997 to December, 1998 he was a Regional Director of Africa, Europe, Asia and Australia in Crawford-THG Limited, the Registrant's subsidiary. Prior to January 1997 he was employed by Thomas Howell Group, which the Registrant acquired in December of 1996, as a Group Director from June 1993. Officers of the Registrant are appointed annually by the Board of Directors of Registrant, except for Messrs. Solomon, Reeves and Bowman, who are appointed by the Board of Directors of Crawford & Company International, Inc. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS The information required by this Item is included on page 40 of the Registrant's Annual Report to Shareholders for the year ended December 31, 1999 under the caption "Quarterly Financial Data (Unaudited), Dividend Information and Common Stock Quotations" and is incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA The information required by this Item is included on page 39 of the Registrant's Annual Report to Shareholders for the year ended December 31, 1999, under the caption "Selected Financial Data" and is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information required by this Item is included on pages 18-22 of the Registrant's Annual Report to Shareholders for the year ended December 31, 1999 under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" and is incorporated herein by reference. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK The Registrant is exposed to minimal market risk for changes in foreign currency exchange rates and interest rates. The Registrant does not hold or issue financial instruments for trading purposes, nor has it entered into any transactions using derivative financial instruments or derivative commodity instruments. FOREIGN CURRENCY The operating results of the Registrant's foreign subsidiaries are affected by fluctuations in foreign currency exchange rates. Fluctuations in foreign currency exchange rates affect the stockholders' investment of the Registrant. Accounts invested in the Registrant's foreign subsidiaries are considered to be permanently invested and are translated into U.S. dollars at the exchange rates in 14 15 effect at year-end. The resulting translation adjustments are recorded in stockholders' investment as cumulative translation adjustments. The cumulative translation adjustment component of stockholders' investment decreased $26,000 during the year. INTEREST RATES The Registrant is exposed to interest rate fluctuations on its borrowings. Depending on general economic conditions, the Registrant has typically used variable rate debt for short-term borrowings and fixed rate debt for longer-term borrowings. At December 31, 1999, the Registrant had $38.9 million in short-term loans outstanding with an average variable interest rate of 5.20%. Long-term loans consisted of the following (in thousands):
Description Interest Rate Amount Maturity ----------- ------------- ------- -------- Term Loan 6.8% $15,000 September 2004, interest payable quarterly Mortgages secured by buildings 7.3% - 7.8% $ 832 Various dates through 2003
The above loans carry a fixed rate of interest. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this Item is included on pages 23-40 of the Registrant's Annual Report to Shareholders for the year ended December 31, 1999 under the captions "Consolidated Statements of Income", "Consolidated Balance Sheets", "Consolidated Statements of Shareholders' Investment", "Consolidated Statements of Cash Flows", "Notes to Consolidated Financial Statements", and "Quarterly Financial Data (Unaudited), Dividend Information and Common Stock Quotations", and is incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by this Item is included on page 2 under the caption "Nominee Information" of the Registrant's Proxy Statement for the Annual Meeting of Shareholders to be held April 25, 2000, and is incorporated herein by reference. For other information required by this Item, see "Executive Officers of the Registrant" on pages 12-14 herein. 15 16 ITEM 11. EXECUTIVE COMPENSATION The information required by this Item is included on pages 4-9 under the captions "Executive Compensation and Other Information" and "Report of the Senior Compensation and Stock Option Committee of the Board of Directors on Executive Compensation" and on page 13 under the caption "Five Year Comparative Stock Performance Graph" of the Registrant's Proxy Statement for the Annual Meeting of Shareholders to be held April 25, 2000, and is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this Item is included on pages 10-12 under the caption "Stock Ownership Information" of the Registrant's Proxy Statement for the Annual Meeting of Shareholders to be held April 25, 2000, and is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this item is included on page 12 under the caption "Information with Respect to Certain Business Relationships" of the Registrant's Proxy Statement for the Annual Meeting of Shareholders to be held April 25, 2000, and is incorporated herein by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this report: 1. Financial Statements The Registrant's 1999 Annual Report to Shareholders contains the consolidated balance sheets as of December 31, 1999 and 1998, the related consolidated statements of income, shareholders' investment and cash flows for each of the three years in the period ended December 31, 1999, and the related report of Arthur Andersen LLP on the financial statements. These financial statements and the report of Arthur Andersen LLP are incorporated herein by reference and included as Exhibit 13.1 to this Form 10-K. The financial statements, incorporated by reference, include the following: - Consolidated Balance Sheets -- December 31, 1999 and 1998 - Consolidated Statements of Income for the Years Ended December 31, 1999, 1998, and 1997 - Consolidated Statements of Shareholders' Investment for the Years Ended December 31, 1999, 1998 and 1997 16 17 - Consolidated Statements of Cash Flows for the Years Ended December 31, 1999, 1998, and 1997 - Notes to Consolidated Financial Statements - December 31, 1999, 1998, and 1997 2. Financial Statement Schedule - Report of Independent Public Accountants as to Schedule
Schedule Number -------- II Valuation and Qualifying Accounts for the Years Ended December 31, 1999, 1998, and 1997 Schedules I and III through V not listed above have been omitted because they are not applicable.
3. Exhibits filed with this report.
Exhibit No. Document ----------- -------- 3.1 Restated Articles of Incorporation of the Registrant, as amended (incorporated by reference to Exhibit 19.1 to the Registrant's quarterly report on Form 10-Q for the quarter ended June 30, 1991). 3.2 Restated By-laws of the Registrant, as amended (incorporated by reference to Exhibit 3.1 to the Registrants quarterly report on Form 10-Q for the quarter ended June 30, 1999). 10.1 * Crawford & Company 1987 Stock Option Plan (incorporated by reference to Exhibit 28(a) to the Registration Statement on Form S-8, Registration No. 33-22595). 10.2 * Amendment to Crawford & Company 1987 Stock Option Plan (incorporated by reference to Appendix C on page C-1 of the Registrant's Proxy Statement for the Special Meeting of Shareholders held on July 24, 1990). 10.3 * Crawford & Company 1990 Stock Option Plan, as amended (incorporated by reference to Exhibit 10.5 to the Registrant's annual report on Form 10-K for the year ended December 31, 1992). 10.4 * Crawford & Company 1997 Key Employee Stock Option Plan (incorporated by reference to Appendix A on page A-1 of the Registrant's Proxy Statement for the Annual Meeting of Shareholders held on April 22, 1997).
17 18 10.5 * Crawford & Company 1997 Non-Employee Director Stock Option Plan (incorporated by reference to Appendix B on page B-1 of the Registrant's Proxy Statement for the Annual meeting of Shareholders held on April 22, 1997). 10.6 * Amended and Restated Supplemental Executive Retirement Plan. 10.7 * Crawford & Company 1996 Employee Stock Purchase Plan (incorporated by reference to Appendix A on page A-1 of Registrant's Proxy Statement for the Annual Meeting of Shareholders held on April 18, 1996). 10.8 * Amended and Restated Crawford & Company Medical Reimbursement Plan (incorporated by reference to Exhibit 10.9 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994). 10.9 * Discretionary Allowance Plan (incorporated by reference to Exhibit 10.10 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994). 10.10 * Deferred Compensation Plan (incorporated by reference to Exhibit 10.11 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994). 10.11* Crawford & Company 1996 Incentive Compensation Plan, as amended. 13.1 The Registrant's Annual Report to Shareholders for the year ended December 31, 1999 (only those portions incorporated herein by reference). 21.1 Subsidiaries of Crawford & Company. 23.1 Consent of Arthur Andersen LLP. 24.1-8 Powers of Attorney. 27.1 Financial Data Schedule. (For SEC use only)
* Management contract or compensatory plan required to be filed as an exhibit pursuant to Item 601 of Regulation S-K. (b) No reports on Form 8-K have been filed during the last quarter of the year ended December 31, 1999. (c) The Registrant has filed the Exhibits listed in Item 14(a)(3). (d) Separate financial statements of Crawford & Company have been omitted since it is primarily an operating company. All subsidiaries included in the consolidated financial statements are wholly-owned. 18 19 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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 Date March 27, 2000 By /s/ Archie Meyers, Jr. --------------- ---------------------------------- ARCHIE MEYERS, JR., Chairman and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. NAME AND TITLE --------------- Date March 27, 2000 /s/ Archie Meyers, Jr. ---------------- -------------------------------------- ARCHIE MEYERS, JR., Chairman and Chief Executive Officer (Principal Executive Officer) and Director Date March 27, 2000 /s/ J. F. Giblin ---------------- -------------------------------------- J. F. GIBLIN, Executive Vice President-Finance (Principal Financial Officer) Date March 27, 2000 /s/ W. B. Swain ---------------- -------------------------------------- W. B. SWAIN, Senior Vice President and Controller (Principal Accounting Officer) Date March 27, 2000 /s/ Grover L. Davis ---------------- -------------------------------------- GROVER L. DAVIS, Director
19 20 NAME AND TITLE Date March 28, 2000 * ---------------- ------------------------------------ F. L. MINIX, Director Date March 28, 2000 * ---------------- ------------------------------------ J. HICKS LANIER, Director Date March 28, 2000 * ---------------- ------------------------------------ CHARLES FLATHER, Director Date March 28, 2000 * ---------------- ------------------------------------ LINDA K. CRAWFORD, Director Date March 28, 2000 * ---------------- ------------------------------------ JESSE C. CRAWFORD, Director Date March 28, 2000 * ---------------- ------------------------------------ LARRY L. PRINCE, Director Date March 28, 2000 * ---------------- ------------------------------------ JOHN A. WILLIAMS, Director Date March 28, 2000 * ---------------- ------------------------------------ E. JENNER WOOD, III, Director Date March 28, 2000 By /s/ Judd F. Osten ---------------- ------------------------------------ JUDD F. OSTEN - As attorney-in-fact for the Directors above whose name an asterisk appears.
20 21 EXHIBIT INDEX
Sequential Page Number Exhibit No. Description of Exhibit of Exhibit ----------- ---------------------- ---------- 3.1 Restated Articles of Incorporation of the Registrant, as amended (incorporated by reference to Exhibit 19.1 to the Registrant's quarterly report on Form 10-Q for the quarter ended June 30, 1991). 3.2 Restated By-laws of the Registrant, as amended (incorporated by reference to Exhibit 3.1 to the Registrants quarterly report on Form 10-Q for the quarter ended June 30, 1999). 10.1 Crawford & Company 1987 Stock Option Plan (incorporated by reference to Exhibit 28(a) to the Registration Statement on Form S-8, Registration No. 33-22595). 10.2 Amendment to Crawford & Company 1987 Stock Option Plan (incorporated by reference to Appendix C on page C-1 of the Registrant's Proxy Statement for the Special Meeting of Shareholders held on July 24, 1990). 10.3 Crawford & Company 1990 Stock Option Plan, as amended (incorporated by reference to Exhibit 10.5 to the Registrant's annual report on Form 10-K for the year ended December 31, 1992). 10.4 Crawford & Company 1997 Key Employee Stock Option Plan (incorporated by reference to Appendix A on page A-1 of the Registrant's Proxy Statement for the Annual Meeting of Shareholders held on April 22, 1997). 10.5 Crawford & Company 1997 Non-Employee Director Stock Option Plan (incorporated by reference to Appendix B on page B-1 of the Registrant's Proxy Statement for the Annual meeting of Shareholders held on April 22, 1997). 10.6 Amended and Restated Supplemental Executive Retirement Plan. 25-28 10.7 Crawford & Company 1996 Employee Stock Purchase Plan (incorporated by reference to Appendix A on page A-1 of Registrant's Proxy Statement for the Annual Meeting of Shareholders held on April 18, 1996).
21 22 EXHIBIT INDEX
Sequential Page Number Exhibit No. Description of Exhibit of Exhibit ----------- ---------------------- ---------- 10.8 Amended and Restated Crawford & Company Medical Reimbursement Plan (incorporated by reference to Exhibit 10.9 to the Registrant's annual report on Form 10-K for the year ended December 31, 1994). 10.9 Discretionary Allowance Plan (incorporated by reference to Exhibit 10.10 to the Registrant's annual report on Form 10-K for the year ended December 31, 1994). 10.10 Deferred Compensation Plan (incorporated by reference to Exhibit 10.11 to the Registrant's annual report on Form 10-K for the year ended December 31, 1994). 10.11 Crawford & Company 1996 Incentive Compensation Plan, as amended. 29-31 13.1 The Registrant's Annual Report to Shareholders for the year ended December 31, 1999 (only those portions incorporated hereby by reference). 32-55 21.1 Subsidiaries of Crawford & Company. 56 23.1 Consent of Arthur Andersen LLP. 57 24.1-8 Powers of Attorney. 58-65 27.1 Financial Data Schedule. (For SEC use only)
22 23 ARTHUR ANDERSEN LLP REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Crawford & Company: We have audited, in accordance with generally accepted auditing standards, the consolidated financial statements included in Crawford & Company's annual report to shareholders incorporated by reference in this Form 10-K and have issued our report thereon dated January 28, 2000. Our audit was made for the purpose of forming an opinion of those statements taken as a whole. The schedule listed in Item 14(a)2 is the responsibility of the Company's management, is presented for purposes of complying with the Securities and Exchange Commission's rules, and is not part of the basic consolidated financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. /s/ ARTHUR ANDERSEN LLP Atlanta, Georgia January 28, 2000 24 SCHEDULE II CRAWFORD & COMPANY AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 ---------------------------------------------------- (In Thousands of Dollars)
Col. A Col. B Col. C Col. D Col. E - ------ ------ ------ ------ ------ Balance at Additions Additions Balance Period Beginning (Deductions) at End of Period from of Allowances(2) Period Charged Charged to Costs to Other and Accounts Expenses (1) 1999 Deducted in consolidated balance sheets from accounts $19,346 $2,789 $ 228 $(2,181) $20,182 receivable ======= ====== ====== ======= ======= 1998 Deducted in consolidated balance sheets from accounts $16,802 $2,780 $ 746 $ (982) $19,346 receivable ======= ====== ====== ======= ======= 1997 Deducted in consolidated balance sheets from accounts $11,692 $2,008 $4,596 $(1,494) $16,802 receivable ======= ====== ====== ======= =======
(1) Represents adjustments to allowance for doubtful accounts receivable arising from acquisitions. (2) Represents uncollectible accounts written off, net of recoveries. EX-10.6 2 AMENDED AND RESTATED SUPPLEMENTAL EXECUTIVE 1 EXHIBIT 10.6 RESTATED AND AS AMENDED THROUGH FEBRUARY 1, 2000 CRAWFORD & COMPANY SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AS AMENDED AND RESTATED AS OF FEBRUARY 1, 2000 Section 1 PURPOSE Crawford & Company hereby amends and restates the Crawford & Company Supplemental Executive Retirement Plan as originally effective as of January 1, 1986 and as thereafter amended. The primary purpose of this SERP is to provide a supplemental retirement benefit to the Participants described in Exhibit A to supplement the benefits payable to each of them under the Retirement Plan to the extent such Retirement Plan benefits are limited by the application of Code ss.ss. 401(a)(17) and 415. Section 2 DEFINITIONS The capitalized terms used in this SERP shall have the same meanings assigned to those terms in the Retirement Plan except that the following terms shall have the following meanings: 2.1 SERP - means this Crawford & Company Supplemental Executive Retirement Plan, as amended from time to time. 2.2 Retirement Plan - means the Crawford & Company Retirement Plan and Trust Agreement, as amended from time to time. 2.3 Deferred Compensation Plan - means the Crawford & Company Deferred Compensation Plan, and any successor plan, as amended from time to time. Section 3 PARTICIPATION The Senior Compensation and Stock Option Committee of the Board of Directors shall have the power to designate an executive as a Participant in this SERP and such designations shall be reflected on Exhibit A to this SERP. Section 4 BENEFIT 4.1 SERP Benefit. A benefit shall be payable under this SERP to, or on behalf of, each Participant, which benefit shall equal the excess, if any, of (a) over (b) where (a) equals the aggregate of the benefits which would have been payable to him, or on his behalf, under (A) the Retirement Plan, plus (B) Restoration Benefits under the Deferred Compensation Plan in the form elected by him, or his Beneficiary, under the terms of the Retirement Plan and Deferred Compensation Plan absent the limitations of Code ss.ss.401(a)(17) and 415, without regard to when such executive became a participant; and (b) equals the aggregate benefits actually payable to him, or on his behalf, in such form under (A) the Retirement Plan, and (B) the Restoration Benefits provisions of the Deferred Compensation Plan. 2 4.2 Payment. The benefit payable to, or on behalf of, a Participant under this ss.4 shall be paid as of the same date, in the same benefit payment form and to the same person as his benefit under the Retirement Plan or Deferred Compensation Plan and no payment shall be made to, or on behalf of, a Participant under this ss.4 unless and until a benefit is paid to him, or on his behalf, under the Retirement Plan. 4.3 Previously Retired Participants. Notwithstanding the foregoing, if an executive, at the time of his designation as a Participant, is currently receiving benefits under the Retirement Plan, he shall not receive any benefits under this SERP until such time as such Participant's employment terminates following his or her designation as a Participant ("Subsequent Retirement"). Such Participant's SERP benefits under ss.4.1 shall, at the time of the Subsequent Retirement, be determined by including all periods of employment up to the Subsequent Retirement, without regard to any previous retirement, as if the Participant first started receiving benefits under the Retirement Plan as of the time of his or her Subsequent Retirement. Any Participant who retires and then returns to employment shall receive additional SERP benefits in accordance with ss.4.1 with respect to such period of subsequent employment if designated a continuing Participant by the Committee. Section 5 SOURCE OF BENEFIT PAYMENTS All benefits payable under the terms of this SERP shall be paid by Crawford & Company from its general assets. No person shall have any right or interest or claims whatsoever to the payment of a benefit under this SERP from any person whomsoever other than Crawford & Company, and no Participant or beneficiary shall have any right or interest whatsoever to the payment of a benefit under this SERP which is superior in any manner to the right of any other general and unsecured creditor of Crawford & Company. Section 6 NOT A CONTRACT OF EMPLOYMENT Participation in this SERP shall not grant to any Participant the right to remain an employee for any specific term of employment or in any specific capacity or at any specific rate of compensation. Section 7 NO ALIENATION OR ASSIGNMENT A Participant or a beneficiary under this SERP shall have no right or power to alienate, commute, anticipate or otherwise assign at law or equity all or any portion of any benefit otherwise payable under this SERP, and the Senior Compensation and Stock Option Committee of the Board of Directors shall have the right in light of any such action to suspend temporarily or terminate permanently the payment of benefits to, or on behalf of, any Participant or beneficiary who attempts to do so. Section 8 ERISA Crawford & Company intends that this SERP come within the various exceptions and exemptions of ERISA and for an unfunded deferred compensation plan maintained primarily for a select group of management or highly compensated employees within the meaning of ERISA ss. 201(2), ss. 302(a)(3) and ss. 401(a)(1) and any ambiguities in this SERP shall be construed to effect that intent. 3 Section 9 ADMINISTRATION, AMENDMENT AND TERMINATION Crawford & Company shall have all powers necessary to administer this SERP in its absolute discretion and shall have the right, by action of the Senior Compensation and Stock Option Committee of the Board of Directors, to amend this SERP from time to time in any respect whatsoever and to terminate this SERP at any time; provided, however, that any such amendment or termination shall not be applied retroactively to deprive a Participant of benefits accrued under this Plan to the date of such amendment or termination. This SERP shall be binding on any successor in interest to Crawford & Company. Section 10 CONSTRUCTION This SERP shall be construed in accordance with the laws of the State of Georgia, and the masculine shall include the feminine and the singular the plural whenever appropriate. Section 11 EXECUTION Crawford & Company, as the SERP sponsor, has executed this SERP to evidence the adoption of this amendment and restatement by the Senior Compensation and Stock Option Committee of its Board of Directors this 1st day of February, 2000. CRAWFORD & COMPANY By /s/ Archie Meyers, Jr. Title: Chairman & CEO 4 EXHIBIT A CRAWFORD & COMPANY SUPPLEMENTAL RETIREMENT PLAN AS AMENDED AND RESTATED EFFECTIVE AS OF FEBRUARY 1, 2000 NAME OF PARTICIPANT T. G. Germany F. L. Minix R. P. Albright P. A. Bollinger D. R. Chapman J. F. Osten D. A. Smith J. F. Giblin A. L. Meyers, Jr. G. L. Davis J. A. McGee H. L. Rogers S. V. Festa Victoria Holland EX-10.11 3 CRAWFORD & COMPANY 1996 INCENTIVE COMPENSATION 1 EXHIBIT 10.11 CRAWFORD & COMPANY 1996 INCENTIVE COMPENSATION PLAN (as Amended through February 2, 1999) Crawford & Company hereby establishes the Crawford & Company 1996 Incentive Compensation Plan, effective as of January 1, 1996, to provide to the officers and key employees of Crawford & Company additional cash incentive compensation which is tied to the attainment of targeted increases in adjusted revenues and adjusted pre-tax income of Crawford & Company on a consolidated basis. I. DEFINITIONS The capitalized terms used in the Plan shall have the following meanings: 1.1 Actual Earnings shall mean the reported Earnings of the Company for the period with respect to which the Incentive Compensation Pool is determined. 1.2 Actual Earnings Percentage shall mean the percentage computed by multiplying (i) the Target Earnings Percentage by (ii) a fraction (which may not be larger than one) the numerator of which is Covered Earnings and the denominator of which is the difference between (A) the Target Earnings and (B) the Threshold Earnings. 1.3 Actual Revenues shall mean the reported Revenues of the Company for the period with respect to which the Incentive Compensation Pool is determined. 1.4 Chief Executive Officer shall mean the Chief Executive Officer of the Company. 1.5 Committee shall mean the Senior Compensation and Stock Option Committee of the Board of Directors of the Company. 1.6 Company shall mean Crawford & Company. 1.7 Covered Earnings shall mean the difference between (i) the Actual Earnings and (ii) the Threshold Earnings (but not less than zero). 1.8 Covered Salaries shall mean the base salaries of the Participants. 1.9 Earnings shall mean the reported pre-tax income of the Company, on a consolidated basis, adjusted to eliminate the effect, if any, of the cumulative effects of changes in accounting principles and any significant gains or losses resulting from the disposition of any major assets of the Company, such as the sale of land, the sale and leaseback of buildings, or the sale or other disposition of a subsidiary or portion of the Company's operations. 1.10 Incentive Compensation Pool shall mean the sum of (1) the Incentive Compensation Pool--Sales and Account Management; plus (2) the Incentive Compensation Pool--Other Officers and Key Employees. 1.11 Incentive Compensation Pool--Other Officers and Key Employees shall mean the sum of (1) the amount computed by multiplying the lesser of Actual Earnings or Threshold Earnings by 1.5%; plus (2) the amount computed by multiplying (i) Actual Earnings by (ii) the Actual Earnings Percentage. In no event shall the Incentive Compensation Pool--Other Officers and Key Employees exceed 100% of the Covered Salaries of its Participants. 1.12 Incentive Compensation Pool--Sales and Account Management shall mean the greater of (1) the amount computed by multiplying the lesser of Actual Earnings or Threshold Earnings by .5%; or (2) the amount computed by multiplying the growth in Actual Revenues over Threshold Revenues by 1.5%, reduced by 10% for every 1% decline in the consolidated Pre-Tax Profit Margin of the Company on a pro rata basis. In no event shall the Incentive Compensation Pool--Sales and Account Management exceed 100% of the Covered Salaries of its Participants. 2 1.13 Participant shall mean any officer (other than the Chief Executive Officer) or home office or regional employee of the Company or its domestic or foreign subsidiaries designated by the Chief Executive Officer to participate in the Incentive Compensation Pool--Sales and Account Management or the Incentive Compensation Pool--Other Officers and Key Employees. 1.14 Pre-Tax Profit Margin shall mean the percentage derived by dividing Earnings by Revenues, both adjusted to eliminate the effect, if any, of significant acquisitions made by the Company in the relevant period. 1.15 Revenues shall mean the reported revenues of the Company, on a consolidated basis, adjusted to eliminate the effect, if any, of significant acquisitions made by the Company in the period with respect to which the Incentive Compensation Pool is determined. 1.16 Target Earnings shall mean the Committee's determination of achievable earnings for the Company for the fiscal year. 1.17 Target Earnings Percentage shall mean 5.22%. 1.18 Threshold Earnings shall mean the Committee's determination of Earnings below which no amount will be added to the Incentive Compensation Pool for earnings growth. 1.19 Threshold Revenues shall mean the Committee's determination of achievable Revenues for the Company in the period with respect to which the Incentive Compensation Pool is determined. 1.20 Plan shall mean this Crawford & Company 1996 Incentive Compensation Plan. II. ESTABLISHMENT OF THRESHOLD REVENUES AND EARNINGS As soon as possible following the availability of audited financial statements of the Company for the immediately preceding fiscal year and the preparation of operational budgets for the current fiscal year, the Committee shall meet to establish the (i) Threshold Revenues, (ii) Threshold Earnings and (iii) Target Earnings for the current fiscal year. Any adjustments to the audited revenues and pre-tax income of the Company in the calculations of Revenues and Earnings shall be approved by the Committee. III. ALLOCATION AND PAYMENT TO PARTICIPANTS The Chief Executive Officer shall have total authority and discretion with respect to the determination of amounts to be paid to the Participants in each of the Incentive Compensation Pools under the provisions of this Plan. He may delegate that responsibility and allocate amounts available for distribution to the heads of the business units and support divisions of the Company. In the event that an individual is no longer a Participant at the end of any period with respect to which the Incentive Compensation Pool is determined by virtue of his no longer being an employee of the Company or any of its domestic or foreign subsidiaries on that date, such individual shall not be eligible for any payments under this Plan, unless such individual's employment has been terminated by reason of death, disability, or retirement. Nothing herein contained shall be construed to require the Committee or the Chief Executive Officer to authorize the allocation and payment of all or any amounts available for distribution under the terms of this Plan. Amounts not distributed with respect to any year shall not be carried over to subsequent fiscal years. Payment to individual Participants shall be as soon as practical after the close of the fiscal period, the availability of reported Revenues and Earnings for that period, the calculation of the Incentive Compensation Pool for that period by the Chief Financial Officer of the Company, and the approval of that calculation by the Committee. IV. NO CONTRACT OF EMPLOYMENT The establishment of this Plan shall not grant to any Participant the right to remain an employee for any specific term of employment or in any specific capacity or as a Participant or at any specific rate of compensation. 3 V. NO ALIENATION OR ASSIGNMENT A Participant shall have no right or power to alienate, commute, anticipate or otherwise assign at law or equity all or any portion of amounts which may be payable to him hereunder and the Committee and the Chief Executive Officer shall have the right, in light of any such action, to suspend temporarily or terminate permanently the status of such an individual as a Participant under this Plan. VI. ADMINISTRATION, AMENDMENT AND TERMINATION The Committee shall have all powers necessary to administer this Plan in its absolute discretion and its determination shall be binding on the Company and the Participants. The Board of Directors of the Company and the Committee have the right to amend or terminate this Plan at any time. VII. CONSTRUCTION This Plan shall be construed in accordance with the laws of the State of Georgia and the masculine shall include the feminine and the singular the plural, where appropriate. VII. TERMINATION OF FORMER PLAN The Annual Incentive Compensation Plan adopted effective January 1, 1993, is hereby terminated. IN WITNESS WHEREOF, Crawford & Company has caused its duly authorized officer to execute the Plan this 30th day of January, 1996, to evidence the adoption of this Plan. CRAWFORD & COMPANY /s/ F. L. MINIX F. L. Minix, Chairman of the Board, and Chief Executive Officer EX-13.1 4 THE REGISTRANT'S ANNUAL REPORT TO SHAREHOLDERS 1 EXHIBIT 13.1 1999 FINANCIAL REVIEW CRAWFORD & COMPANY Management's Discussion and Analysis 18 Consolidated Statements of Income 23 Consolidated Balance Sheets 24 Consolidated Statements of Shareholders' Investment 26 Consolidated Statements of Cash Flows 27 Notes to Consolidated Financial Statements 28 Report of Management 38 Report of Independent Public Accountants 38 Selected Financial Data 39 Quarterly Financial Data (Unaudited) 40 Directors, Officers, and Shareholder Information IBC
ONE COMPANY 17 2 CRAWFORD & COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is a discussion and analysis of the consolidated financial condition and results of operations of Crawford & Company by its two reportable segments: domestic operations and international operations. Expense amounts discussed are excluding Year 2000 expenses, restructuring charges, and minority interest. This discussion should be read in conjunction with the Company's consolidated financial statements and the accompanying footnotes. RESULTS OF OPERATIONS Operating results for the Company's domestic and international operations were as follows:
% Change From Prior Year YEARS ENDED DECEMBER 31 1999 1998 1997 1999 1998 - ------------------------ -------- -------- -------- ------ ------- (in thousands) REVENUES: Domestic $523,342 $499,260 $546,246 4.8% (8.6)% International 178,584 168,011 146,076 6.3% 15.0% -------- -------- -------- Total 701,926 667,271 692,322 5.2% (3.6)% COMPENSATION & FRINGE BENEFITS: Domestic 318,450 313,918 341,684 1.4% (8.1)% % of Revenues 60.9% 62.9% 62.6% International 112,892 104,239 92,528 8.3% 12.7% % of Revenues 63.2% 62.0% 63.4% -------- -------- -------- Total 431,342 418,157 434,212 3.2% (3.7)% % of Revenues 61.5% 62.7% 62.7% EXPENSES OTHER THAN COMPENSATION & FRINGE BENEFITS: Domestic 141,931 121,169 122,294 17.1% (0.9)% % of Revenues 27.1% 24.3% 22.4% International 59,728 63,188 49,695 (5.5)% 27.2% % of Revenues 33.5% 37.6% 34.0% -------- -------- -------- Total 201,659 184,357 171,989 9.4% 7.2% % of Revenues 28.7% 27.6% 24.8% OPERATING INCOME(1): Domestic 62,961 64,173 82,268 (1.9)% (22.0)% % of Revenues 12.0% 12.8% 15.0% International 5,964 584 3,853 nm (84.8)% % of Revenues 3.3% 0.4% 2.6% -------- -------- -------- Total 68,925 64,757 86,121 6.4% (24.8)% % of Revenues 9.8% 9.7% 12.5%
(1) Income before taxes, nonrecurring charges, and minority interest. nm = Not meaningful 18 3 DOMESTIC OPERATIONS YEARS ENDED DECEMBER 31, 1999 and 1998 REVENUES Domestic revenues from insurance companies and self-insured entities totaled $523.3 million for the year ended December 31, 1999, an increase of 4.8% from the $499.3 million reported in 1998. The increase in domestic revenues is due to The Garden City Group ("GCG") and PRISM Network Inc. ("PRISM") acquisitions, which contributed $35.4 million of revenue in 1999. Domestic revenues from insurance companies decreased by 6.4% during 1999, to $281.1 million, due to continued sluggish claim referrals. This decline was partially offset by an increase in revenues from self-insured entities of 5.3%, to $198.2 million, as the insurance market began to harden. Excluding the impact of the GCG and PRISM acquisitions, domestic unit volume, measured principally by cases received, decreased 6.9% from 1998 to 1999. This decrease was partially offset by changes in the mix of services provided and in the rates charged for those services which had the combined effect of increasing revenues by approximately 4.6% in 1999 compared to 1998. The Company's acquisitions of GCG and PRISM increased domestic revenues by 7.1% in 1999. COMPENSATION AND FRINGE BENEFITS The Company's most significant expense is the compensation of its employees, including related payroll taxes and fringe benefits. As a percent of rev- enues, domestic compensation expense decreased, from 62.9% of revenues in 1998 to 60.9% of revenues in 1999. This decrease is due to the Company's efforts to grow revenues without increasing the employee base. Domestic salaries and wages increased slightly, from $270.8 million in 1998 to $271.9 million in 1999. Payroll taxes and fringe benefits for domestic operations increased from $43.1 million in 1998 to $46.6 million in 1999, as a result of an increase in pension expense. Pension expense in 1998 was lower due to favorable investment returns in recent years. EXPENSES OTHER THAN COMPENSATION AND FRINGE BENEFITS Domestic expenses other than compensation and related payroll taxes and fringe benefits increased as a percent of revenues to 27.1% in 1999 from 24.3% in 1998. These increases are primarily due to higher professional fees (related to outsourced functions in the Company's class action administration and medical bill auditing units), and higher interest costs as a result of increased borrowings and lower cash balances in 1999. YEARS ENDED DECEMBER 31, 1998 and 1997 REVENUES Domestic revenues declined 8.6% to $499.3 million for the year ended December 31, 1998. Domestic revenues from insurance companies increased by 3% during 1998 to $300.3 million. This gain was more than off- set, however, by a decline in revenues related to the winding down of a major class action project and continued weakness in the self-insured market. Revenues from the class action project declined from $48.9 million in 1997 to $10.9 million in 1998. The soft insurance market has contributed to the weakness in the self-insurance market, as self-insured entities have elected to move to fully insured programs from alternative risk funding arrangements. Revenues from self-insured entities, excluding the class action project, declined 8% to $188.1 million in 1998. Domestic unit volume, measured principally by cases received, decreased 3.0% from 1997 to 1998. Additionally, changes in the mix of services provided and in the rates charged for those services had the combined effect of decreasing revenues by approximately 5.6% in 1998 compared to 1997. COMPENSATION AND FRINGE BENEFITS The Company's most significant expense is the compensation of its employ- ees, including related payroll taxes and fringe benefits. Domestic compen- sation expense increased slightly, from 62.6% of revenues in 1997 to 62.9% of revenues in 1998. 19 4 CRAWFORD & COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Domestic salaries and wages decreased by 6.2% from $288.7 million in 1997 to $270.8 million in 1998. This decline was due to fewer employees during the year as compared to the prior year, as the Company reduced its U.S. workforce in response to the decline in revenues. Payroll taxes and fringe benefits for domestic operations decreased from $53.0 million in 1997 to $43.1 million in 1998, as a result of fewer employees and a reduction in pension expense due to favorable investment returns achieved by the Company's pension plan in recent years. EXPENSES OTHER THAN COMPENSATION AND FRINGE BENEFITS Domestic expenses other than compensation and related payroll taxes and fringe benefits increased as a percent of revenues to 24.3% in 1998 from 22.4% in 1997. This increase was due to higher personnel relocation costs, higher costs related to the Company's self-insurance program, and one-time costs associated with converting to a new medical bill auditing system. INTERNATIONAL OPERATIONS YEARS ENDED DECEMBER 31, 1999 AND 1998 REVENUES Revenues from the Company's international operations totaled $178.6 million in 1999, a 6.3% increase from $168.0 million in 1998. This increase is due to the July 1998 acquisition of Adjusters Canada Incorporated ("ACI"), which more than offset the reduced claims frequency experienced in 1999. Revenues are net of a 1.0% decline due to the negative effect of a strong U.S. dollar. COMPENSATION AND FRINGE BENEFITS As a percent of revenues, compensation expense, including related payroll taxes and fringe benefits, increased from 62.0% in 1998 to 63.2% in 1999, primarily due to an increase in pension expense. Salaries and wages of international personnel increased as a percent of rev- enues, from 53.3% in 1998 to 54.0% in 1999. Payroll taxes and fringe benefits also increased as a percent of revenues, from 8.7% in 1998 to 9.2% in 1999. EXPENSES OTHER THAN COMPENSATION AND FRINGE BENEFITS Expenses other than compensation and related payroll taxes and fringe benefits decreased as a percent of revenues from 37.6% in 1998 to 33.5% in 1999. These expenses comprise a higher percentage of revenues than the Company's domestic operations due primarily to amortization of intangible assets and higher automobile, occupancy, and interest costs. The decline in these expenses is due primarily to lower professional fees in 1999, as significant fees were incurred in 1998 related to the restructuring of the Company's United Kingdom ("U.K.") operations, and expense reduction measures put in place in 1999. YEARS ENDED DECEMBER 31, 1998 AND 1997 REVENUES Revenues from the Company's international operations totaled $168.0 million and $146.1 million in 1998 and 1997, respectively. The 15% increase in 1998 was primarily due to the acquisitions of ACI and the Thomas Howell Group ("THG"). The stronger U.S. dollar negatively impacted revenues in 1998, reducing international revenues by approximately 6% from the level that would have been reported without foreign currency fluctuations. COMPENSATION AND FRINGE BENEFITS As a percent of revenues, compensation expense, including related payroll taxes and fringe benefits, decreased from 63.4% in 1997 to 62.0% in 1998, primarily due to continued efforts to eliminate redundancies in the Company's U.K. operations (see "Restructuring Charges" below). Salaries and wages of international personnel decreased as a percent of revenues, from 54.5% in 1997 to 53.3% in 1998. Payroll taxes and fringe benefits also decreased as a percent of revenues, from 8.9% in 1997 to 8.7% in 1998. These decreases were due to a decline in the number of employees as a result of the U.K. restructuring program. EXPENSES OTHER THAN COMPENSATION AND FRINGE BENEFITS Expenses other than compensation and related payroll taxes and fringe bene- fits increased as a percent of revenues from 34.0% in 1997 to 37.6% in 1998. This increase was due to higher professional fees associated with the restruc- turing of the Company's U.K. operations and increased bad debt expense. 20 5 MINORITY INTEREST Minority interest benefit of $1.2 million was recorded in 1998, compared to a benefit of $2.5 million in 1997. The minority interest benefit reflects Swiss Reinsurance Company's ("Swiss Re") 40% share in the losses of Crawford-THG Limited through May 1998. In June 1998, the Company acquired Swiss Re's 40% interest, and Crawford-THG Limited is now a wholly-owned subsidiary. RESTRUCTURING CHARGES During the third quarter of 1998, the Company recorded charges totaling $14.9 million related to the restructuring of its U.K. and Canadian operations and the realignment of senior management after the resignation of its former chairman and chief executive officer. These restructuring programs resulted in the elimination of approximately 350 staff positions and the closing of 67 offices. After reflecting income tax benefits of $5.2 million, this charge reduced the Company's 1998 net income by $9.7 million, or $0.19 per share. In connection with the THG acquisition, the Company recorded a pretax charge of $13 million in the first quarter of 1997 for personnel, facilities, and other costs associated with the integration of the Company's international businesses. After reflecting income tax benefits of $4.3 million and minority interest share of $3.5 million, this charge reduced 1997 net income by $5.2 million, or $0.10 per share. During 1999, the Company utilized $4.4 million and $4.0 million of lease and employee separation reserves, respectively. As of December 31, 1999, remaining lease and employee separation reserves were $4.4 million and $0.7 million, respectively. FINANCIAL CONDITION At December 31, 1999, current assets exceeded current liabilities by approximately $109.8 million, a decrease of $0.7 million from the working capital balance at December 31, 1998. Cash and cash equivalents at the end of 1999 totaled $17.7 million, increasing from the $8.4 million at the end of 1998. Cash was generated primarily from operating activities and long-term borrowings, while the principal uses of cash were for dividends paid to shareholders, acquisitions of property and equipment, repurchases of common stock, and the acquisition of GCG. The Company maintains credit lines with banks in order to meet seasonal working capital requirements and other financing needs that may arise. Short-term borrowings outstanding as of December 31, 1999 totaled $38.9 million, increasing from $37.2 million at the end of 1998. In September 1999, the Company obtained a five-year, $15 million term loan with a fixed interest rate of 6.8%. This new loan increased the Company's long-term debt to $16.1 million as of December 31, 1999, compared to $1.9 million at December 31, 1998. The Company believes that its current financial resources, together with funds generated from operations and existing and potential borrowing capabilities, will be sufficient to maintain its current operations. The Company does not engage in any hedging activities to compensate for the effect of exchange rate fluctuations on the operating results of its foreign subsidiaries. Foreign currency denominated debt is maintained primarily to hedge the currency exposure of its net investment in foreign operations. Shareholders' investment at the end of 1999 was $250.3 million, compared with $239.7 million at the end of 1998. FACTORS THAT MAY AFFECT FUTURE RESULTS Certain of the statements contained in this and other sections of this Annual Report are forward-looking. While management believes that these statements are accurate, the Company's business is dependent upon general economic conditions and various conditions specific to its industry. Future trends and these factors could cause actual results to differ materially from the forward-looking statements that have been made. In particular, the following issues and uncertainties should be considered in evaluating the Company's prospects: YEAR 2000 The Company has completed its project to remediate its computer systems to address the Year 2000 issue. The Year 2000 issue, which is common to most organizations, concerns the inability of information systems to properly distinguish the year 2000 from the year 1900. 21 6 CRAWFORD & COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINAL CONDITION AND RESULTS OF OPERATIONS The Company has completed the remediation of, and placed into production, substantially all of its information technology ("IT") and non-IT systems (primarily telephones). These IT and non-IT systems are operational with no known processing errors, computer system failures, or business disruptions associated with the transition from 1999 to 2000. The Company has not experienced any business disruptions external in nature, such as disruptions in telecommunications, electric or transportation services or noncompliance of vendors, customers and other business partners ("Trading Partners") associated with the transition from 1999 to 2000. We will continue to monitor system performance and Trading Partners throughout the year 2000 to ensure continued compliance. The total costs associated with the Year 2000 project were not material to the Company's financial position. The Company incurred approximately $13.3 million through December 31, 1999. The Company does not expect to incur any material costs in 2000. EURO On January 1, 1999, the euro was introduced as the official currency in eleven European countries in which the Company operates. Companies and individuals in those countries may now enter into transactions either in euros or in the local currency. Management does not believe the introduction of the euro will materially affect the Company's financial position or results of operations. FOREIGN CURRENCY EXCHANGE The Company's international operations expose the Company 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. The Company's revenues from its international operations were 25% of total revenues at December 31, 1999 and 1998. Except for borrowings in foreign currencies, the Company does not presently engage in any hedging activities to compensate for the effect of exchange rate fluctuations on the net assets or operating results of its foreign subsidiaries. NEW CLAIMS MANAGEMENT SYSTEM During 1998, the Company began the development of a new claims management system. As of December 31, 1999, approximately $14.2 million of internal and external costs have been capitalized in connection with this development project. The server-based system, which is scheduled to be deployed in mid-2000, is designed to streamline and automate the claims intake, assignment, management, and reporting functions. The Company believes the system will increase its competitive advantages. However, if the system fails to function as planned, it could adversely affect the Company's competitive position and revenues. 22 7 CRAWFORD & COMPANY CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31 1999 1998 1997 - ------------------------------- -------- -------- -------- (in thousands, except per share data) REVENUES $701,926 $667,271 $692,322 COSTS AND EXPENSES: Costs of services provided, less reimbursed expenses of $38,109 in 1999, $35,327 in 1998, and $40,218 in 1997 514,827 494,590 496,613 Selling, general, and administrative expenses 118,174 107,924 109,588 Year 2000 expenses 5,181 7,201 937 Restructuring charges -- 14,873 13,000 -------- -------- -------- 638,182 624,588 620,138 -------- -------- -------- INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 63,744 42,683 72,184 PROVISION FOR INCOME TAXES 24,480 16,395 27,697 -------- -------- -------- INCOME BEFORE MINORITY INTEREST 39,264 26,288 44,487 MINORITY INTEREST IN LOSS OF JOINT VENTURE -- 1,177 2,502 -------- -------- -------- NET INCOME $ 39,264 $ 27,465 $ 46,989 -------- -------- -------- NET INCOME PER SHARE: Basic $ 0.78 $ 0.55 $ 0.95 -------- -------- -------- Diluted $ 0.78 $ 0.54 $ 0.93 -------- -------- -------- WEIGHTED-AVERAGE SHARES OUTSTANDING: Basic 50,380 50,341 49,566 -------- -------- -------- Diluted 50,498 50,938 50,687 -------- -------- -------- CASH DIVIDENDS PER SHARE: Class A Common Stock $ 0.52 $ 0.50 $ 0.44 -------- -------- -------- Class B Common Stock $ 0.52 $ 0.50 $ 0.44 ======== ======== ========
The accompanying notes are an integral part of these statements. 23 8 CRAWFORD & COMPANY CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31 1999 1998 - ----------------- --------- --------- (in thousands) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 17,716 $ 8,423 Accounts receivable, less allowance for doubtful accounts of $20,182 in 1999 and $19,346 in 1998 141,841 134,094 Unbilled revenues, at estimated billable amounts 91,039 88,871 Deferred income tax assets -- 2,342 Prepaid expenses and other current assets 17,240 17,416 --------- --------- TOTAL CURRENT ASSETS 267,836 251,146 --------- --------- PROPERTY AND EQUIPMENT, AT COST: Land 2,425 2,409 Buildings and improvements 20,280 20,009 Furniture and fixtures 65,000 59,693 Data processing equipment 73,117 63,733 Automobiles 5,730 8,229 --------- --------- 166,552 154,073 Less accumulated depreciation and amortization (117,661) (111,130) --------- --------- NET PROPERTY AND EQUIPMENT 48,891 42,943 --------- --------- OTHER ASSETS: Intangible assets arising from acquisitions, less accumulated amortization of $15,068 in 1999 and $12,434 in 1998 80,566 64,092 Prepaid pension cost 49,995 55,377 Capitalized software costs, net 18,449 11,885 Other 8,291 7,447 --------- --------- TOTAL OTHER ASSETS 157,301 138,801 --------- --------- $ 474,028 $ 432,890 ========= =========
The accompanying notes are an integral part of these balance sheets. 24 9 CRAWFORD & COMPANY CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31 1999 1998 - ----------------- --------- ---------- (in thousands) LIABILITIES AND SHAREHOLDERS' INVESTMENT CURRENT LIABILITIES: Short-term borrowings $ 38,914 $ 37,196 Accounts payable 29,575 21,971 Accrued compensation and related costs 23,825 20,307 Accrued restructuring charges 973 7,362 Self-insured risks 11,360 12,166 Other accrued liabilities 30,044 23,434 Deferred revenues 22,836 17,575 Current installments of long-term debt 463 563 --------- --------- TOTAL CURRENT LIABILITIES 157,990 140,574 --------- --------- NONCURRENT LIABILITIES: Long-term debt, less current installments 16,053 1,854 Deferred income taxes 6,571 8,720 Deferred revenues 13,644 13,594 Postretirement medical benefit obligation 7,756 7,983 Self-insured risks 10,241 9,002 Other 11,494 11,491 --------- --------- TOTAL NONCURRENT LIABILITIES 65,759 52,644 --------- --------- SHAREHOLDERS' INVESTMENT: Class A Common Stock, $1.00 par value, 50,000 shares authorized; 25,892 and 25,735 shares issued in 1999 and 1998, respectively 25,892 25,735 Class B Common Stock, $1.00 par value, 50,000 shares authorized; 24,826 and 25,168 shares issued in 1999 and 1998, respectively 24,826 25,168 Additional paid-in capital 22,309 24,560 Retained earnings 185,975 172,958 Cumulative translation adjustment (8,723) (8,749) --------- --------- TOTAL SHAREHOLDERS' INVESTMENT 250,279 239,672 --------- --------- $ 474,028 $ 432,890 ========= =========
25 10 CRAWFORD & COMPANY CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT For the years ended December 31
Common Stock ----------------------- Additional Cumulative Total Class A Class B Paid-In Retained Translation Shareholders' Non-Voting Voting Capital Earnings Adjustment Investment ---------- -------- ---------- --------- ---------- ------------ (in thousands) BALANCE AT 12/31/96 $ 24,392 $ 25,719 $ -- $ 173,708 $(2,283) $ 221,536 Net income -- -- -- 46,989 -- 46,989 Translation adjustment -- -- -- -- (7,078) (7,078) --------- Comprehensive income 39,911 Dividends paid -- -- -- (21,820) -- (21,820) Shares repurchased (1,775) (295) (11,300) (23,904) -- (37,274) Conversion of convertible debt 821 -- 6,564 -- -- 7,385 Stock options exercised 478 53 4,736 -- -- 5,267 -------- -------- -------- --------- ------- --------- BALANCE AT 12/31/97 23,916 25,477 -- 174,973 (9,361) 215,005 Net income -- -- -- 27,465 -- 27,465 Translation adjustment -- -- -- -- 612 612 --------- Comprehensive income 28,077 Dividends paid -- -- -- (25,126) -- (25,126) Shares repurchased (780) (333) (14,327) (4,354) -- (19,794) Stock options exercised 699 24 7,656 -- -- 8,379 Shares issued for acquisition (Note 7) 1,900 -- 31,231 -- -- 33,131 -------- -------- -------- --------- ------- --------- BALANCE AT 12/31/98 25,735 25,168 24,560 172,958 (8,749) 239,672 Net income -- -- -- 39,264 -- 39,264 Translation adjustment -- -- -- -- 26 26 --------- Comprehensive income 39,290 Dividends paid -- -- -- (26,247) -- (26,247) Shares repurchased (861) (354) (12,589) -- -- (13,804) Stock options exercised 98 12 1,385 -- -- 1,495 Shares issued for acquisition (Note 7) 920 -- 8,953 -- -- 9,873 -------- -------- -------- --------- ------- --------- BALANCE AT 12/31/99 $ 25,892 $ 24,826 $ 22,309 $ 185,975 $(8,723) $ 250,279 -------- -------- -------- --------- ------- ---------
The accompanying notes are an integral part of these statements. 26 11 CRAWFORD & COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Years Ended December 31 1999 1998 1997 (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 39,264 $ 27,465 $ 46,989 Reconciliation of net income to net cash provided by operating activities: Minority interest in loss of joint venture -- (1,177) (2,502) Depreciation and amortization 17,028 14,798 15,423 Deferred income taxes 779 (9,662) 2,807 Loss on sales of property and equipment 479 300 277 Changes in operating assets and liabilities, net of effects of acquisitions: Accounts receivable, net (6,209) (13,513) 12,643 Unbilled revenues (1,870) 6,138 10,907 Prepaid or accrued income taxes 4,073 3,713 (1,628) Accounts payable and accrued liabilities 13,226 (7,453) (14,633) Accrued restructuring charges (8,374) 4,490 6,220 Deferred revenues 4,475 943 389 Prepaid expenses and other assets 5,777 (5,106) (10,016) -------- -------- -------- Net cash provided by operating activities 68,648 20,936 66,876 -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisitions of property and equipment (20,835) (13,814) (12,331) Acquisitions of businesses, net of cash acquired (9,555) (16,259) -- Capitalization of software costs (7,736) (11,852) (741) Proceeds from sales of property and equipment 1,348 1,516 1,053 -------- -------- -------- Net cash used in investing activities (36,778) (40,409) (12,019) -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Dividends paid (26,247) (25,126) (21,820) Repurchase of common stock (13,804) (19,794) (37,274) Proceeds from exercise of stock options 1,495 8,379 5,267 Increase in short-term borrowings 2,676 10,887 1,878 Proceeds from long-term borrowings 15,000 -- -- Payments on long-term debt (910) (1,079) (1,676) -------- -------- -------- Net cash used in financing activities (21,790) (26,733) (53,625) -------- -------- -------- Effects of exchange rate changes on cash and cash equivalents (787) (751) (1,337) -------- -------- -------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 9,293 (46,957) (105) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 8,423 55,380 55,485 -------- -------- -------- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 17,716 $ 8,423 $ 55,380 -------- -------- --------
The accompanying notes are an integral part of these statements. 27 12 CRAWFORD & COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1 MAJOR ACCOUNTING AND REPORTING POLICIES NATURE OF OPERATIONS AND INDUSTRY CONCENTRATION The Company is the world's largest independent provider of claims and risk management, loss adjustment, healthcare management, class action administration, and risk information services to insurance companies, self-insured corporations, and governmental entities. Substantial portions of the Company's revenues and accounts receivable are derived from domestic claims services provided to the property and casualty insurance industry. PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries after elimination of all significant intercompany transactions. The financial statements of the Company's international subsidiaries outside North America and the Caribbean are included in the Company's consolidated financial statements on a two-month delayed basis in order to provide sufficient time for accumulation of their results. PRIOR YEAR RECLASSIFICATIONS Certain prior year amounts have been reclassified to conform to the current year presentation. MANAGEMENT'S USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles 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. FAIR VALUE OF FINANCIAL INSTRUMENTS The fair value of financial instruments classified as current assets or liabilities, including cash and cash equivalents, receivables, and accounts payable, approximates carrying value due to the short-term maturity of the instruments. The fair value of short-term borrowings and long-term debt approximates carrying value based on their effective interest rates compared to current market rates. PROPERTY AND DEPRECIATION The Company depreciates the cost of property and equipment over the estimated useful lives of the related assets, primarily using the straight-line method. The estimated useful lives for the principal property and equipment classifications are as follows:
Classification Estimated Useful Lives Furniture and fixtures 3-10 years Data processing equipment 3-5 years Automobiles 3-4 years Buildings and improvements 7-40 years
CAPITALIZED SOFTWARE Capitalized software included in other assets reflects costs related to internally developed or purchased software that are capitalized and amortized on a straight-line basis over periods ranging from three to ten years. INTANGIBLE ASSETS Intangible assets arise from acquisitions and are amortized over 15 to 40 years using the straight-line method. Management periodically evaluates the recoverability of intangible assets. Intangible assets in excess of associated expected operating cash flows are considered to be impaired and are written down to fair value. SELF-INSURED RISKS The Company self-insures certain insurable risks consisting primarily of professional liability, employee medical and disability, workers' compensation, and auto liability. Insurance coverage is obtained for catastrophic property and casualty exposures (including professional liability on a claims-made basis), as well as those risks required to be insured by law or contract. Provision for claims under the self-insured program is made based on the Company's estimate of the aggregate liability for claims incurred. At December 31, 1999 and 1998, accrued self-insured risks totaled $21,601,000 and $21,168,000, respectively, including current liabilities of $11,360,000 and $12,166,000, respectively. 28 13 REVENUE RECOGNITION Revenue is recognized in unbilled revenues as services are provided. Deferred revenues represent the unearned portion of fees derived from certain fixed-rate claim service agreements. INCOME TAXES The Company accounts for certain income and expense items differently for financial reporting and income tax purposes. Provisions for deferred taxes are made in recognition of these temporary differences. The most significant differences relate to prepaid pension cost, unbilled and deferred revenues, self-insurance, and employee compensation. NET INCOME PER SHARE 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 using the "treasury stock" method. Below is the calculation of basic and diluted net income per share:
(in thousands, except per share data) 1999 1998 1997 Net income available to common shareholders $39,264 $27,465 $46,989 ------- ------- ------- Weighted-average common shares outstanding -Basic 50,380 50,341 49,566 Dilutive effect of stock options 118 597 1,121 ------- ------- ------- Weighted-average common shares outstanding -Diluted 50,498 50,938 50,687 ------- ------- ------- Basic net income per share $ 0.78 $ 0.55 $ 0.95 ------- ------- ------- Diluted net income per share $ 0.78 $ 0.54 $ 0.93 ------- ------- -------
Additional options to purchase 2,989,550, 1,098,500, and 913,500 shares of Class A Common Stock at $11.83 to $19.50 per share were outstanding at December 31, 1999, 1998, and 1997, respectively, 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. COMPREHENSIVE INCOME AND FOREIGN CURRENCY TRANSLATION Comprehensive income for the Company consists of the total of net income and foreign currency translation adjustments. The Company reports comprehensive income in the Consolidated Statements of Shareholders' Investment. For operations outside the United States that prepare financial statements in currencies other than the U.S. dollar, results from operations and cash flows are translated at average exchange rates during the period, and assets and liabilities are translated at end-of-period exchange rates. Resulting translation adjustments are accumulated as a component of comprehensive income and reported in the Consolidated Statements of Shareholders' Investment. NEW ACCOUNTING PRONOUNCEMENTS In 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS 133 establishes accounting and reporting standards for derivative instruments. SFAS 133, which will be effective for the Company in 2001, requires that entities recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. Except for borrowing in foreign currencies, the Company does not presently engage in any hedging activities to compensate for the effect of exchange rate fluctuations on the net assets or operating results of its foreign subsidiaries. As a result, the new standard is not expected to have a significant effect on the Company's consolidated results of operations, financial position, or cash flows. 29 14 CRAWFORD & COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In March 1998, the American Institute of Certified Public Accountants issued Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use." SOP 98-1 establishes guidelines for capitalizing such software costs. The Company adopted SOP 98-1 effective January 1, 1999, with no material impact on the Company's consolidated results of operations, financial position, or cash flows expected. CONTINGENCIES The Company is subject to legal proceedings and claims arising in the ordinary course of business. Although there can be no assurance as to the ultimate disposition of these matters, it is the opinion of the Company's management that the final disposition of such matters will not have a material adverse effect on the financial position or results of operations of the Company. 2 RETIREMENT PLANS The Company and its subsidiaries sponsor various defined contribution and defined benefit retirement plans covering substantially all employees. Employer contributions under the Company's defined contribution plans are determined annually, based on employee contributions, a percentage of each covered employee's compensation, and the profitability of the Company. The cost of these plans totaled $5,129,000, $6,007,000, and $7,475,000 in 1999, 1998, and 1997, respectively. Benefits payable under the Company's defined benefit plans are generally based on career compensation. The Company's funding policy is to make cash contributions in amounts sufficient to maintain the plans on an actuarially sound basis, but not in excess of deductible amounts permitted under applicable income tax regulations. Plan assets are invested primarily in equity and fixed income securities. The following schedule reconciles the funded status of the plans with amounts reported in the Company's balance sheets at December 31, 1999 and 1998.
(in thousands) 1999 1998 CHANGE IN BENEFIT OBLIGATION Benefit obligation at beginning of year $ 393,439 $ 324,474 Service cost 13,474 13,243 Interest cost 25,281 25,912 Actuarial (gain) loss (43,944) 46,238 Benefits paid (16,686) (16,428) --------- --------- Benefit obligation at end of year 371,564 393,439 --------- --------- CHANGE IN PLAN ASSETS Fair value of plan assets at beginning of year 394,087 382,477 Actual return on plan assets 44,611 19,658 Company contributions 3,060 8,267 Benefits paid (16,571) (16,315) --------- --------- Fair value of plan assets at end of year 425,187 394,087 --------- --------- Funded status of plan 53,623 648 Unrecognized actuarial (gain) loss (1,440) 59,155 Unrecognized prior service cost (credit) 101 (243) Unrecognized net transition asset (4,594) (6,100) --------- --------- Net prepaid benefit cost 47,690 53,460 Less pension obligation included in other accrued liabilities 2,305 1,917 --------- --------- Prepaid pension cost included in other assets $ 49,995 $ 55,377 --------- ---------
30 15 Assumptions used in accounting for the plans were:
1999 1998 Discount rate 7.5% 6% to 6.8% Expected return on plan assets 9.3% 8% to 9.3% Rate of compensation increase 4.5% 4% to 5.5%
Net periodic benefit cost related to the defined benefit plans in 1999, 1998, and 1997 included the following components:
(in thousands) 1999 1998 1997 Service cost $ 13,474 $ 13,243 $ 9,931 Interest cost 25,281 25,912 17,871 Expected return on assets (29,982) (34,990) (21,104) Amortization (391) (563) 628 Recognized net actuarial loss 2,196 156 2,003 -------- -------- -------- Net periodic benefit cost $ 10,578 $ 3,758 $ 9,329 -------- -------- --------
3 INCOME TAXES Income (loss) before provisions for income taxes and minority interest, consists of the following:
(in thousands) 1999 1998 1997 U.S. $57,780 $ 53,660 $ 81,331 Foreign 5,964 (10,977) (9,147) ------- -------- -------- $63,744 $ 42,683 $ 72,184 ------- -------- --------
The provisions (credits) for income taxes consist of the following:
(in thousands) 1999 1998 1997 Current: U.S. federal and state $23,663 $ 24,328 $ 26,314 Foreign 38 1,729 (1,424) Deferred 779 (9,662) 2,807 ------- -------- -------- $24,480 $ 16,395 $ 27,697 ------- -------- --------
Cash payments for income taxes were $20,763,000 in 1999, $21,493,000 in 1998, and $26,145,000 in 1997. The provisions for income taxes are reconciled to the federal statutory rate of 35% as follows:
(in thousands) 1999 1998 1997 Federal income taxes at statutory rate $ 22,310 $14,939 $ 25,264 State income taxes, net of federal benefit 2,279 1,387 2,815 Other (109) 69 (382) -------- ------- -------- $ 24,480 $16,395 $ 27,697 -------- ------- --------
The Company does not provide for additional U.S. and foreign income taxes on undistributed earnings of foreign subsidiaries because they are considered to be permanently reinvested. At December 31, 1999, such undistributed earnings totaled $40,047,000. If the earnings were not considered permanently reinvested, deferred income taxes would have been provided. Such taxes, if ultimately paid, may be recoverable as foreign tax credits in the United States. Deferred income taxes consist of the following at December 31, 1999 and 1998:
(in thousands) 1999 1998 Accrued compensation $ 6,642 $ 2,997 Accrued restructuring costs 1,538 3,683 Self-insured risks 7,443 6,591 Deferred revenues 11,709 10,903 Postretirement benefits 2,978 3,065 Other 2,162 2,544 -------- -------- Gross deferred tax assets 32,472 29,783 -------- -------- Unbilled revenues 13,644 11,892 Depreciation and amortization 4,935 3,746 Prepaid pension cost 19,198 19,170 Other 1,852 1,353 -------- -------- Gross deferred tax liabilities 39,629 36,161 -------- -------- Net deferred tax liabilities (7,157) (6,378) Less noncurrent net deferred tax liabilities (6,571) (8,720) -------- -------- Current net deferred tax (liability) asset $ (586) $ 2,342 -------- --------
31 16 CRAWFORD & COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4 LEASE COMMITMENTS The Company and its subsidiaries lease office space, certain computer equipment, and its automobile fleet under operating leases. License and maintenance costs related to the leased vehicles are paid by the Company. Rental expense for all operating leases consists of the following:
(in thousands) 1999 1998 1997 Office space $28,412 $29,603 $29,644 Automobile 11,218 12,306 13,090 Computer equipment 527 604 3,344 ------- ------- ------- $40,157 $42,513 $46,078 ------- ------- -------
At December 31, 1999, future minimum payments under non-cancelable operating leases with terms of more than 12 months were as follows: 2000 - $32,804,000; 2001 - $23,518,000; 2002 - $16,002,000; 2003 - $11,141,000; 2004 - $8,528,000 and thereafter - $27,657,000. 5 LONG-TERM DEBT AND SHORT-TERM BORROWINGS Long-term debt consists of the following at December 31, 1999 and 1998:
1999 1998 (in thousands) Term loan payable to bank due September 2004, interest payable quarterly at 6.8% $ 15,000 $ -- Mortgages payable, secured by buildings, due on various dates through 2003 at interest rates ranging from 7.3% to 7.8% 832 1,503 Capital lease obligations 684 914 -------- ------- Total debt 16,516 2,417 Less: current installments (463) (563) -------- ------- Total long-term debt $ 16,053 $ 1,854 -------- -------
The Company leases certain computer and office equipment under capital leases with terms ranging from 24 to 60 months. The term loan payable contains various provisions which, among other things, require the Company to maintain defined fixed charge coverage and leverage ratios and limit the incurrence of certain liens, encumbrances, and disposition of assets in excess of defined amounts, none of which are expected to restrict future operations. The Company maintains credit lines with banks in order to meet seasonal working capital requirements and other financing needs that may arise. Short-term borrowings totaled $38.9 million and $37.2 million at December 31, 1999 and 1998, respectively. The weighted-average interest rate on short-term borrowings was 5.2% during 1999 and 6.7% during 1998. 6 SEGMENT AND GEOGRAPHIC INFORMATION The Company has two reportable segments, one which provides claims services through branch offices located in the United States ("Domestic Operations") and the other which provides similar services through branch or representative offices located in 64 other countries ("International Operations"). Intersegment sales are recorded at cost and are not material. The Company measures segment profit based on operating income, defined as income before taxes, nonrecurring charges, and minority interest. 32 17 Financial information as of December 31, 1999, 1998, and 1997 covering the Company's reportable segments is presented below:
Domestic International Consolidated (in thousands) Operations Operations Totals 1999 Revenues $523,342 $178,584 $701,926 Operating income 62,961 5,964 68,925 Depreciation and amortization 11,320 5,708 17,028 Capital expenditures 23,419 5,152 28,571 Assets 263,677 210,351 474,028 Long-lived assets 138,508 67,684 206,192 1998 Revenues $499,260 $168,011 $667,271 Operating income 64,173 584 64,757 Depreciation and amortization 9,719 5,079 14,798 Capital expenditures 21,569 4,097 25,666 Assets 243,426 189,464 432,890 Long-lived assets 122,178 59,566 181,744 1997 Revenues $546,246 $146,076 $692,322 Operating income 82,268 3,853 86,121 Depreciation and amortization 10,699 4,724 15,423 Capital expenditures 9,698 3,374 13,072 Assets 252,079 176,787 428,866 Long-lived assets 87,060 62,992 150,052
The Company's most significant international operations are in the United Kingdom. Revenues in the United Kingdom were $73,925,000, $79,874,000, and $77,218,000 in 1999, 1998, and 1997, respectively. Long-lived assets were $16,817,000, $14,238,000, and $13,957,000 as of December 31, 1999, 1998, and 1997, respectively. 7 ACQUISITIONS On August 9, 1999, the Company acquired all of the outstanding shares of PRISM Network Inc. ("PRISM") by issuing 919,945 shares of Crawford Class A Common Stock for a total purchase price of approximately $9.9 million. The Company acquired assets with a fair value of $12.2 million, including goodwill related to the purchase of $9.7 million, and assumed liabilities of approximately $2.3 million. The transaction was accounted for by the purchase method of accounting. PRISM's operating results are included in the consolidated statements of income from the acquisition date. On January 6, 1999, the Company acquired all of the outstanding shares of The Garden City Group ("GCG") for an initial purchase price of $7.6 million. The Company acquired assets with a fair value of $11.1 million, including goodwill related to the initial purchase of $5.4 million, and assumed liabilities of approximately $3.5 million. This transaction was accounted for by the purchase method of accounting. GCG's operating results are included in the consolidated statements of income from the acquisition date. In April 1999, the Company made additional payments to the former owners of GCG pursuant to the purchase agreement. Such additional purchase price was approximately $3.2 million, which was recorded as additional goodwill. The purchase price may be further increased based on future earnings of GCG through December 31, 2001. On July 31, 1998, the Company acquired all of the outstanding shares of Adjusters Canada Incorporated ("ACI") for $16.3 million in cash. The Company acquired assets with a fair value of $30.1 million, including goodwill related to the purchase of $13.8 million, and assumed liabilities of approximately $13.8 million. This transaction was accounted for by the purchase method of accounting. ACI's operating results are included in the consolidated statements of income from the acquisition date. The initial purchase price may be increased based on future earnings of ACI through October 31, 2001. 33 18 CRAWFORD & COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In December 1996, the Company entered into an agreement with Swiss Reinsurance Company ("Swiss Re") to merge both companies' claims services firms outside the United States into Crawford-THG Limited ("Crawford-THG"), in which the Company had a 60% controlling interest after this initial transaction. The merger was accounted for as a partial sale of the Company's 100%-owned subsidiary, Crawford & Company International, Ltd. to Swiss Re and a partial acquisition of Swiss Re's 100%-owned subsidiary, Thomas Howell Group ("THG"), by the Company. No gain or loss was recognized on the partial sale. Swiss Re's 40% interest in the equity and net loss of the joint venture is reflected as minority interest through May 31, 1998. On June 1, 1998, the Company acquired Swiss Re's 40% interest in Crawford-THG in exchange for 1.9 million shares of the Company's Class A Common Stock. Crawford-THG is now a wholly-owned subsidiary of the Company. This transaction was accounted for by the purchase method of accounting. The shares issued were valued at $33.1 million, which approximated the minority interest book value. Accordingly, no goodwill was recorded related to this transaction. The accompanying consolidated statements of income include 10 months' operating results of the Company's interest in THG for the year ended December 31, 1997, due to an acquisition effective date of January 1, 1997 and a two-month lag in reporting international results. The following table presents unaudited pro forma operating results as if a full 12 months' operating results of the Company's interest in THG had been recorded for the year ending December 31, 1997. The pro forma information is based on historical information and does not necessarily reflect the actual results that would have occurred, nor is it necessarily indicative of future results of operations of the combined enterprises.
(unaudited - in thousands, except per share data) 1997 Revenues $ 710,062 --------- Income before minority interest 54,420 Minority interest in joint venture (2,821) --------- Net income $ 51,599 --------- Net income per share: Basic $ 1.04 --------- Diluted $ 1.02 ---------
8 RESTRUCTURING CHARGES During the third quarter of 1998, the Company recorded a pretax charge of $14,873,000 related to the restructuring of its United Kingdom and Canadian operations and the realignment of senior management following the resignation of its former chairman and chief executive officer. These restructuring programs resulted in the elimination of approximately 350 staff positions and the closing of 67 offices. After reflecting income tax benefits of $5,181,000, this charge reduced the Company's 1998 net income by $9,692,000 ($0.19 per share). In connection with the THG acquisition, the Company recorded a pretax charge of $13,000,000 in the first quarter of 1997 for personnel, facilities, and other costs associated with the integration of the Company's international businesses. After reflecting income tax benefits of $4,290,000 and minority interest share of $3,484,000, this charge reduced the Company's 1997 net income by $5,226,000 ($0.10 per share). 34 19 The following is a rollforward of the Company's accrued restructuring costs:
Employee (in thousands) Leases Separations Other Total ------- ----------- ------- --------- BALANCE AT DECEMBER 31, 1996 $ -- $ -- $ -- $ -- Accrued 4,937 5,096 2,967 13,000 Acquired 1,137 671 -- 1,808 Utilized (1,709) (2,850) (2,221) (6,780) -------- -------- -------- --------- BALANCE AT DECEMBER 31, 1997 4,365 2,917 746 8,028 Accrued 6,356 8,196 321 14,873 Acquired 371 763 -- 1,134 Utilized (2,292) (7,163) (1,067) (10,522) -------- -------- -------- --------- BALANCE AT DECEMBER 31, 1998 8,800 4,713 -- 13,513 Utilized (4,379) (3,995) -- (8,374) -------- -------- -------- --------- BALANCE AT DECEMBER 31, 1999 4,421 718 -- 5,139 Less noncurrent portion 3,762 404 -- 4,166 -------- -------- -------- --------- Current portion of accrued restructuring costs $ 659 $ 314 $ -- $ 973 -------- -------- -------- ---------
The noncurrent portion of accrued restructuring costs consists primarily of long-term lease obligations related to various U.K. offices, which the Company has vacated and is currently attempting to sublease, and extended payments being made under employee separation agreements. Management believes the remaining reserves are adequate to complete its plan. 35 20 CRAWFORD & COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 9 COMMON STOCK The Company has two classes of Common Stock outstanding, Class A Common Stock and Class B Common Stock. These two classes of stock have essentially identical rights, except that shares of Class A Common Stock generally do not have any voting rights. Under the Company's Articles of Incorporation, the Board of Directors may pay higher (but not lower) cash dividends on the non-voting Class A Common Stock than on the voting Class B Common Stock. STOCK SPLIT In February 1997, the Board of Directors declared a three-for-two stock split on both the Class A Common Stock and Class B Common Stock. The split was effected in the form of a 50% stock dividend and resulted in the issuance of 8,104,354 shares of Class A Common Stock and 8,575,344 shares of Class B Common Stock. All share and per share amounts in the accompanying financial statements and related notes have been restated to give retroactive effect to this stock split. SHARE REPURCHASES In 1997, the Company completed the 1996 share repurchase program by reacquiring 1,176,800 shares of its Class A Common Stock and 240,500 shares of its Class B Common Stock at an average cost of $18.06 and $18.39 per share, respectively. In October 1997, the Company's Board of Directors authorized an additional share repurchase program of an aggregate of 3,000,000 shares of Class A and Class B Common Stock through open market purchases. Through December 31, 1999, the Company has reacquired 2,170,800 shares of its Class A Common Stock and 723,700 shares of its Class B Common Stock at an average cost of $15.84 and $14.91 per share, respectively, under the 1997 program. In April 1999, the Company's Board of Directors authorized an additional share repurchase program of an aggregate of 3,000,000 shares of Class A and Class B Common Stock through open market purchases. EMPLOYEE STOCK PURCHASE PLAN Under the 1996 Employee Stock Purchase Plan, the Company is authorized to issue up to 1,500,000 shares of Class A Common Stock to U.S. and Canadian employees, nearly all of whom are eligible to participate. Under the terms of the Plan, employees can choose each year to have up to $21,000 of their annual earnings withheld to purchase the Company's Class A Common Stock. The purchase price of the stock is 85% of the lesser of the closing price for a share of stock on the first day of the purchase period or the last day of the purchase period. During 1999, 1998, and 1997, the Company issued 56,068, 69,000, and 60,000 shares, respectively, to employees under this plan. Under the 1999 U.K. Sharesave Scheme, the Company is authorized to issue up to 500,000 shares of Class A Common Stock to eligible employees in the U.K. The Scheme has terms comparable to the 1996 Employee Stock Purchase Plan. As of December 31, 1999, no shares have been issued under this scheme. STOCK OPTION PLANS The Company has various stock option plans for employees and directors, which provide for nonqualified and incentive stock option (ISO) grants. The option exercise price cannot be less than the fair market value of the Company's stock at the date of grant, and an option's maximum term is 10 years. Options generally vest ratably over five years or, with respect to certain nonqualified options granted to key executives, upon the attainment of specified prices of the Company's stock. At December 31, 1999, there were 952,300 shares available for future option grants under the plans. 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:
1999 1998 1997 Expected dividend yield 3.8% 3.8% 2.6% Expected volatility 20% 20% 20% Risk-free interest rates 6.8% 4.5%-5.7% 5.4% Expected life of options 7 years 5 years 6-8 years
36 21 A summary of the status of the Company's stock option plans is as follows:
1999 1998 1997 Weighted-Average Weighted-Average Weighted-Average (in thousands of shares) Shares Exercise Price Shares Exercise Price Shares Exercise Price - ------------------------------ ------- ---------------- ------ ---------------- ------ ---------------- Outstanding, beginning of year 4,001 $ 15 3,348 $14 2,722 $12 Options granted 1,281 11 1,845 16 1,433 18 Options acquired 141 2 -- -- -- -- Options exercised (58) 6 (735) 12 (533) 11 Options forfeited (1,367) 16 (457) 18 (274) 12 ------- ----- ----- Outstanding, end of year 3,998 13 4,001 15 3,348 14 ------- ----- ----- Exercisable, end of year 981 1,075 1,536 ------- ----- ----- Weighted-average fair value of options granted during the year: Incentive stock options $2.79 $ 2.74 $3.91 Nonqualified stock options 2.88 2.44 4.41
The following table summarizes information about stock options outstanding at December 31, 1999:
(in thousands of shares) Options Outstanding Options Exercisable - ------------------------------------------------------------------------------------------------------ Range Of Number Weighted-Average Weighted-Average Number Weighted-Average Exercise Outstanding Remaining Exercise Exercisable Exercise Prices At 12/31/99 Contractual Life Price At 12/31/99 Price - --------- ----------- ---------------- ---------------- ----------- ---------------- $ 2 to 8 117 7.3 $ 2 112 $ 2 9 to 12 593 5.2 11 420 11 13 to 17 2,870 8.6 14 392 14 18 to 20 418 8.1 19 57 19 ----- --- $ 2 to 20 3,998 8.0 13 981 12 ----- ---
As part of the PRISM acquisition, the Company acquired and converted outstanding PRISM stock options to 141,415 options for Crawford Class A Common Stock at an option price of $2.41 per share. At December 31, 1999, 116,713 and 110,911 of those options were outstanding and exercisable, respectively. Except for 20,453 options for Class B Common Stock, all of the outstanding and exercisable options as of December 31, 1999 are for Class A Common Stock. PRO FORMA INFORMATION The Company applies APB Opinion 25 and related Interpretations in accounting for its stock option and employee stock purchase plans. Accordingly, no compensation cost has been recognized for these plans. Had compensation cost for these plans been determined based on the fair value at the grant dates for awards under those plans consistent with SFAS 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:
(in thousands, except per share data) 1999 1998 1997 Net income As reported $39,264 $27,465 $46,989 Pro forma 36,395 25,621 44,293 Net income per share - basic As reported 0.78 0.55 0.95 Pro forma 0.72 0.51 0.89 Net income per share - diluted As reported 0.78 0.54 0.93 Pro forma 0.72 0.50 0.87
37 22 CRAWFORD & COMPANY REPORT OF MANAGEMENT The management of Crawford & Company is responsible for the integrity and objectivity of the financial information in this annual report. These financial statements are prepared in conformity with generally accepted accounting principles, using informed judgements and estimates where appropriate. The Company maintains a system of internal accounting policies, procedures, and controls designed to provide reasonable assurance that assets are safeguarded and transactions are executed and recorded in accordance with management's authorization. The internal accounting control system is augmented by a program of internal audits and reviews by management, written policies and guidelines, and the careful selection and training of qualified personnel. Management believes it maintains an effective system of internal accounting controls. The Audit Committee of the Board of Directors, composed solely of outside directors, is responsible for monitoring the Company's accounting and reporting practices. The Audit Committee meets regularly with management, the internal auditors, and the independent public accountants to review the work of each and to assure that each performs its responsibilities. The independent public accountants, Arthur Andersen LLP, are recommended by the Audit Committee of the Board of Directors, selected by the Board of Directors, and ratified by the Company's shareholders. Both the internal auditors and Arthur Andersen LLP have unrestricted access to the audit committee allowing open discussion, without management present, on the quality of financial reporting and the adequacy of internal accounting controls.
/s/ Archie Meyers, Jr. /s/ John F. Giblin /s/ W. Bruce Swain Archie Meyers, Jr. John F. Giblin W. Bruce Swain Chairman of the Board Executive Vice President Senior Vice President, Controller, and Chief Executive Officer and Chief Financial Officer and Chief Accounting Officer
Atlanta, Georgia January 28, 2000 CRAWFORD & COMPANY REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Shareholders and the Board of Directors for Crawford & Company: We have audited the accompanying consolidated balance sheets of CRAWFORD & COMPANY (a Georgia corporation) AND SUBSIDIARIES as of December 31, 1999 and 1998, and the related statements of income and cash flows for each of the three years in the period ended December 31, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Crawford & Company and subsidiaries as of December 31, 1999 and 1998 and the results of their operations and their cash flows for each of the three years ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. /s/ Arthur Anderson LLP Arthur Andersen LLP Atlanta, Georgia January 28, 2000 38 23 CRAWFORD & COMPANY SELECTED FINANCIAL DATA
For The Years Ended December 31 1999 1998 1997 1996 1995 (in thousands, except per share data) REVENUES $701,926 $667,271 $692,322 $633,625 $607,577 NET INCOME 39,264 27,465 46,989 42,810 36,020 NET INCOME PER SHARE: Basic 0.78 0.55 0.95 0.84 0.69 Diluted 0.78 0.54 0.93 0.82 0.68 TOTAL ASSETS 474,028 432,890 428,866 378,085 366,983 LONG-TERM DEBT 16,053 1,854 731 376 9,412 CASH DIVIDENDS PER SHARE: Class A Common Stock 0.52 0.50 0.44 0.40 0.39 Class B Common Stock 0.52 0.50 0.44 0.39 0.36 WEIGHTED-AVERAGE SHARES OUTSTANDING: Basic 50,380 50,341 49,566 51,032 52,277 Diluted 50,498 50,938 50,687 52,097 53,236
All share and per share amounts have been restated to reflect the three-for-two stock split in 1997 (see Note 9) and the adoption of SFAS 128 effective December 31, 1997. 39 24 CRAWFORD & COMPANY QUARTERLY FINANCIAL DATA (UNAUDITED), DIVIDEND INFORMATION AND COMMON STOCK QUOTATIONS
1999 First Second Third Fourth Fiscal Year (in thousands, except per share data) REVENUES $ 172,621 $ 169,827 $ 168,251 $ 191,227 $ 701,926 INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 16,296 16,971 13,153 17,324 63,744 NET INCOME 10,038 10,464 8,093 10,669 39,264 NET INCOME PER SHARE-BASIC 0.20 0.21 0.16 0.21 0.78 NET INCOME PER SHARE-DILUTED 0.20 0.21 0.16 0.21 0.78 CASH DIVIDENDS PER SHARE: Class A Common Stock 0.13 0.13 0.13 0.13 0.52 Class B Common Stock 0.13 0.13 0.13 0.13 0.52 COMMON STOCK QUOTATIONS: Class A-High (A) 14.06 13.50 13.88 12.38 14.06 Class A-Low (A) 10.19 10.00 10.56 10.50 10.00 Class B-High (A) 16.00 16.25 16.13 14.81 16.25 Class B-Low (A) 10.44 10.31 11.56 11.94 10.31
1998 First Second Third Fourth Fiscal Year (in thousands, except per share data) REVENUES $ 166,133 $ 170,028 $ 165,116 $ 165,994 $ 667,271 INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 18,520 18,729 (4,548) 9,982 42,683 MINORITY INTEREST IN LOSS OF JOINT VENTURE 13 474 690 -- 1,177 NET INCOME (LOSS) 11,420 12,014 (2,117) 6,148 27,465 NET INCOME (LOSS) PER SHARE-BASIC 0.23 0.24 (0.04) 0.12 0.55 NET INCOME (LOSS) PER SHARE-DILUTED 0.23 0.24 (0.04) 0.12 0.54 (B) CASH DIVIDENDS PER SHARE: Class A Common Stock 0.125 0.125 0.125 0.125 0.50 Class B Common Stock 0.125 0.125 0.125 0.125 0.50 COMMON STOCK QUOTATIONS: Class A-High (A) 19.75 19.50 19.00 16.13 19.75 Class A-Low (A) 17.75 18.38 16.25 12.06 12.06 Class B-High (A) 20.63 19.69 19.44 16.75 20.63 Class B-Low (A) 18.63 17.38 16.81 12.13 12.13
(A) The quotations listed in this table set forth the high and low closing prices per share of Crawford & Company Class A Common Stock and Class B Common Stock, respectively, as reported on the NYSE Composite Tape. (B) Due to the method used in calculating per share data as prescribed by SFAS 128, the quarterly per share data does not total to the full-year per share data. The approximate number of record holders of the Company's stock as of December 31, 1999: Class A-1,763 and Class B-914. 40 EX-21.1 5 SUBSIDIARIES OF CRAWFORD & COMPANY 1 EXHIBIT 21.1 CRAWFORD & COMPANY LISTING OF SUBSIDIARY CORPORATIONS*
Jurisdiction in Subsidiary Which Organized ---------- --------------- Crawford & Company of California Delaware Crawford & Company of Florida Delaware Crawford & Company of Illinois Delaware Crawford & Company of New York, Inc. New York Crawford & Company Employment Services, Inc. Delaware Risk Sciences Group, Inc. Delaware Crawford & Company (Bermuda) Limited Bermuda Crawford & Company HealthCare Management, Inc. Delaware Crawford & Company International, Inc. Georgia Crawford-THG Limited England Crawford Adjusters Canada Incorporated Canadian Federal The Garden City Group, Inc. Delaware The PRISM Network, Inc. Georgia
* Excludes subsidiaries which, if considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary as of the year ended December 31, 1999. EX-23.1 6 CONSENT OF ARTHUR ANDERSEN LLP 1 ARTHUR ANDERSEN LLP EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our reports included or incorporated by reference in this Form 10-K into Crawford & Company's previously filed Registration Statement File Nos. 2-78989, 33-22595, 33-47536, 33-36116, 333-02051, 333-24425, 333-24427, 333-87465 and 333-87467. /s/ ARTHUR ANDERSEN LLP Atlanta, Georgia March 28, 2000 EX-24.1 7 POWER OF ATTORNEY (JESSE C. CRAWFORD) 1 EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that the undersigned director of CRAWFORD & COMPANY, a Georgia corporation (the "Corporation"), hereby constitutes and appoints JUDD F. OSTEN and JOHN F. GIBLIN, and each of them, his or her true and lawful attorney-in-fact and agent to sign (1) the Corporation's Annual Report on Form 10-K for the year ended December 31, 1999; (2) the Registration Statement on Form S-8 covering 2,500,000 shares of the Class A Common Stock of the Corporation related to the 1997 Key Employee Stock Option Plan, and any and all amendments to, and supplements to any prospectus contained in such Registration Statement and any and all instruments and documents filed as a part of or in connection with such amendments or supplements; (3) Forms 4 or 5 under the Securities Exchange Act of 1934; and (4) any other reports or registration statements to be filed by the Corporation with the Securities and Exchange Commission and/or any national securities exchange under the Securities Exchange Act of 1934, as amended, and any and all amendments thereto, and any and all instruments and documents filed as part of or in connection with any such reports or registration statements or reports or amendments thereto; and in connection with the foregoing, to do any and all acts and things and execute any and all instrument which such attorneys-in-fact and agents may deem necessary or advisable to enable this Corporation to comply with the securities laws of the United States and of any State or other political subdivision thereof; hereby ratifying and confirming all that such attorneys-in-fact and agents, or any one of them, shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 1st day of February, 2000. /s/ Jesse C. Crawford EX-24.2 8 POWER OF ATTORNEY (LINDA K. CRAWFORD) 1 EXHIBIT 24.2 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that the undersigned director of CRAWFORD & COMPANY, a Georgia corporation (the "Corporation"), hereby constitutes and appoints JUDD F. OSTEN and JOHN F. GIBLIN, and each of them, his or her true and lawful attorney-in-fact and agent to sign (1) the Corporation's Annual Report on Form 10-K for the year ended December 31, 1999; (2) the Registration Statement on Form S-8 covering 2,500,000 shares of the Class A Common Stock of the Corporation related to the 1997 Key Employee Stock Option Plan, and any and all amendments to, and supplements to any prospectus contained in such Registration Statement and any and all instruments and documents filed as a part of or in connection with such amendments or supplements; (3) Forms 4 or 5 under the Securities Exchange Act of 1934; and (4) any other reports or registration statements to be filed by the Corporation with the Securities and Exchange Commission and/or any national securities exchange under the Securities Exchange Act of 1934, as amended, and any and all amendments thereto, and any and all instruments and documents filed as part of or in connection with any such reports or registration statements or reports or amendments thereto; and in connection with the foregoing, to do any and all acts and things and execute any and all instrument which such attorneys-in-fact and agents may deem necessary or advisable to enable this Corporation to comply with the securities laws of the United States and of any State or other political subdivision thereof; hereby ratifying and confirming all that such attorneys-in-fact and agents, or any one of them, shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 1st day of February, 2000. /s/ Linda K. Crawford EX-24.3 9 POWER OF ATTORNEY (E. JENNER WOOD, III) 1 EXHIBIT 24.3 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that the undersigned director of CRAWFORD & COMPANY, a Georgia corporation (the "Corporation"), hereby constitutes and appoints JUDD F. OSTEN and JOHN F. GIBLIN, and each of them, his or her true and lawful attorney-in-fact and agent to sign (1) the Corporation's Annual Report on Form 10-K for the year ended December 31, 1999; (2) the Registration Statement on Form S-8 covering 2,500,000 shares of the Class A Common Stock of the Corporation related to the 1997 Key Employee Stock Option Plan, and any and all amendments to, and supplements to any prospectus contained in such Registration Statement and any and all instruments and documents filed as a part of or in connection with such amendments or supplements; (3) Forms 4 or 5 under the Securities Exchange Act of 1934; and (4) any other reports or registration statements to be filed by the Corporation with the Securities and Exchange Commission and/or any national securities exchange under the Securities Exchange Act of 1934, as amended, and any and all amendments thereto, and any and all instruments and documents filed as part of or in connection with any such reports or registration statements or reports or amendments thereto; and in connection with the foregoing, to do any and all acts and things and execute any and all instrument which such attorneys-in-fact and agents may deem necessary or advisable to enable this Corporation to comply with the securities laws of the United States and of any State or other political subdivision thereof; hereby ratifying and confirming all that such attorneys-in-fact and agents, or any one of them, shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 1st day of February, 2000. /s/ E. Jenner Wood, III EX-24.4 10 POWER OF ATTORNEY (J. HICKS LANIER) 1 EXHIBIT 24.4 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that the undersigned director of CRAWFORD & COMPANY, a Georgia corporation (the "Corporation"), hereby constitutes and appoints JUDD F. OSTEN and JOHN F. GIBLIN, and each of them, his or her true and lawful attorney-in-fact and agent to sign (1) the Corporation's Annual Report on Form 10-K for the year ended December 31, 1999; (2) the Registration Statement on Form S-8 covering 2,500,000 shares of the Class A Common Stock of the Corporation related to the 1997 Key Employee Stock Option Plan, and any and all amendments to, and supplements to any prospectus contained in such Registration Statement and any and all instruments and documents filed as a part of or in connection with such amendments or supplements; (3) Forms 4 or 5 under the Securities Exchange Act of 1934; and (4) any other reports or registration statements to be filed by the Corporation with the Securities and Exchange Commission and/or any national securities exchange under the Securities Exchange Act of 1934, as amended, and any and all amendments thereto, and any and all instruments and documents filed as part of or in connection with any such reports or registration statements or reports or amendments thereto; and in connection with the foregoing, to do any and all acts and things and execute any and all instrument which such attorneys-in-fact and agents may deem necessary or advisable to enable this Corporation to comply with the securities laws of the United States and of any State or other political subdivision thereof; hereby ratifying and confirming all that such attorneys-in-fact and agents, or any one of them, shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 1st day of February, 2000. /s/ J. Hicks Lanier EX-24.5 11 POWER OF ATTORNEY (LARRY L. PRINCE) 1 EXHIBIT 24.5 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that the undersigned director of CRAWFORD & COMPANY, a Georgia corporation (the "Corporation"), hereby constitutes and appoints JUDD F. OSTEN and JOHN F. GIBLIN, and each of them, his or her true and lawful attorney-in-fact and agent to sign (1) the Corporation's Annual Report on Form 10-K for the year ended December 31, 1999; (2) the Registration Statement on Form S-8 covering 2,500,000 shares of the Class A Common Stock of the Corporation related to the 1997 Key Employee Stock Option Plan, and any and all amendments to, and supplements to any prospectus contained in such Registration Statement and any and all instruments and documents filed as a part of or in connection with such amendments or supplements; (3) Forms 4 or 5 under the Securities Exchange Act of 1934; and (4) any other reports or registration statements to be filed by the Corporation with the Securities and Exchange Commission and/or any national securities exchange under the Securities Exchange Act of 1934, as amended, and any and all amendments thereto, and any and all instruments and documents filed as part of or in connection with any such reports or registration statements or reports or amendments thereto; and in connection with the foregoing, to do any and all acts and things and execute any and all instrument which such attorneys-in-fact and agents may deem necessary or advisable to enable this Corporation to comply with the securities laws of the United States and of any State or other political subdivision thereof; hereby ratifying and confirming all that such attorneys-in-fact and agents, or any one of them, shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 1st day of February, 2000. /s/ Larry L. Prince EX-24.6 12 POWER OF ATTORNEY (CHARLES FLATHER) 1 EXHIBIT 24.6 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that the undersigned director of CRAWFORD & COMPANY, a Georgia corporation (the "Corporation"), hereby constitutes and appoints JUDD F. OSTEN and JOHN F. GIBLIN, and each of them, his or her true and lawful attorney-in-fact and agent to sign (1) the Corporation's Annual Report on Form 10-K for the year ended December 31, 1999; (2) the Registration Statement on Form S-8 covering 2,500,000 shares of the Class A Common Stock of the Corporation related to the 1997 Key Employee Stock Option Plan, and any and all amendments to, and supplements to any prospectus contained in such Registration Statement and any and all instruments and documents filed as a part of or in connection with such amendments or supplements; (3) Forms 4 or 5 under the Securities Exchange Act of 1934; and (4) any other reports or registration statements to be filed by the Corporation with the Securities and Exchange Commission and/or any national securities exchange under the Securities Exchange Act of 1934, as amended, and any and all amendments thereto, and any and all instruments and documents filed as part of or in connection with any such reports or registration statements or reports or amendments thereto; and in connection with the foregoing, to do any and all acts and things and execute any and all instrument which such attorneys-in-fact and agents may deem necessary or advisable to enable this Corporation to comply with the securities laws of the United States and of any State or other political subdivision thereof; hereby ratifying and confirming all that such attorneys-in-fact and agents, or any one of them, shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 1st day of February, 2000. /s/ Charles Flather EX-24.7 13 POWER OF ATTORNEY (JOHN A. WILLIAMS) 1 EXHIBIT 24.7 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that the undersigned director of CRAWFORD & COMPANY, a Georgia corporation (the "Corporation"), hereby constitutes and appoints JUDD F. OSTEN and JOHN F. GIBLIN, and each of them, his or her true and lawful attorney-in-fact and agent to sign (1) the Corporation's Annual Report on Form 10-K for the year ended December 31, 1999; (2) the Registration Statement on Form S-8 covering 2,500,000 shares of the Class A Common Stock of the Corporation related to the 1997 Key Employee Stock Option Plan, and any and all amendments to, and supplements to any prospectus contained in such Registration Statement and any and all instruments and documents filed as a part of or in connection with such amendments or supplements; (3) Forms 4 or 5 under the Securities Exchange Act of 1934; and (4) any other reports or registration statements to be filed by the Corporation with the Securities and Exchange Commission and/or any national securities exchange under the Securities Exchange Act of 1934, as amended, and any and all amendments thereto, and any and all instruments and documents filed as part of or in connection with any such reports or registration statements or reports or amendments thereto; and in connection with the foregoing, to do any and all acts and things and execute any and all instrument which such attorneys-in-fact and agents may deem necessary or advisable to enable this Corporation to comply with the securities laws of the United States and of any State or other political subdivision thereof; hereby ratifying and confirming all that such attorneys-in-fact and agents, or any one of them, shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 1st day of February, 2000. /s/ John A. Williams EX-24.8 14 POWER OF ATTORNEY (F. L. MINIX) 1 EXHIBIT 24.8 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that the undersigned director of CRAWFORD & COMPANY, a Georgia corporation (the "Corporation"), hereby constitutes and appoints JUDD F. OSTEN and JOHN F. GIBLIN, and each of them, his or her true and lawful attorney-in-fact and agent to sign (1) the Corporation's Annual Report on Form 10-K for the year ended December 31, 1999; (2) the Registration Statement on Form S-8 covering 2,500,000 shares of the Class A Common Stock of the Corporation related to the 1997 Key Employee Stock Option Plan, and any and all amendments to, and supplements to any prospectus contained in such Registration Statement and any and all instruments and documents filed as a part of or in connection with such amendments or supplements; (3) Forms 4 or 5 under the Securities Exchange Act of 1934; and (4) any other reports or registration statements to be filed by the Corporation with the Securities and Exchange Commission and/or any national securities exchange under the Securities Exchange Act of 1934, as amended, and any and all amendments thereto, and any and all instruments and documents filed as part of or in connection with any such reports or registration statements or reports or amendments thereto; and in connection with the foregoing, to do any and all acts and things and execute any and all instrument which such attorneys-in-fact and agents may deem necessary or advisable to enable this Corporation to comply with the securities laws of the United States and of any State or other political subdivision thereof; hereby ratifying and confirming all that such attorneys-in-fact and agents, or any one of them, shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has subscribed these presents this 1st day of February, 2000. /s/ F. L. Minix EX-27 15 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF CRAWFORD & COMPANY FOR THE YEAR ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR DEC-31-1999 DEC-31-1999 17,716 0 141,841 20,182 0 267,836 166,552 117,661 474,028 157,990 16,053 0 0 50,718 199,561 474,028 0 701,926 0 514,827 123,355 0 0 63,744 24,480 39,264 0 0 0 39,264 0.78 0.78
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