Crawford Reports Substantial Improvement in 2008 First Quarter Results Net Income Rises 174% on Revenue Growth of 5%

ATLANTA, May 5, 2008 /PRNewswire-FirstCall via COMTEX News Network/ ----Crawford & Company (NYSE: CRDA; CRDB), the world's largest independent provider of claims management solutions to insurance companies and self-insured entities, today announced its financial results for the first quarter ended March 31, 2008.

Consolidated Results

First quarter 2008 consolidated revenues before reimbursements totaled $255.5 million compared to $243.6 million in the 2007 first quarter. First quarter 2008 net income was $9.1 million compared to net income of $3.3 million for the 2007 first quarter. First quarter 2008 basic and diluted earnings per share were $0.18 compared to $0.07 in the prior-year quarter. During the 2007 first quarter, the Company recognized a gain on disposal of assets of $2.5 million, net of related income taxes, or $0.05 per share, as a result of the sale of the Company's subrogation services unit.

Crawford's operating cash flows for the 2008 first quarter reflected cash used in operations of $4.1 million compared to cash used in the prior year period of $32.2 million. This improvement was primarily due to higher net income, a reduction in the growth of accounts receivable balances, and lower payments for accounts payable and accrued liabilities. The Company's consolidated cash and cash equivalent position as of March 31, 2008 totaled $42.8 million.

Effective with the 2008 first quarter, the Company realigned its internal reporting structure to include the results of its Strategic Warranty Services business within its U.S. Property & Casualty segment. This business was previously managed as a component of the Legal Settlement Administration segment. All prior period segment results have been restated to reflect this change.

International Operations

First quarter 2008 revenues before reimbursements for the International Operations segment grew to $106.7 million from $83.9 million for the same period in 2007. Compared to the 2007 first quarter, during the current quarter the U.S. dollar was weaker against most major foreign currencies, resulting in a net exchange rate benefit in the current quarter. Excluding the benefit of exchange rate fluctuations, international revenues would have been $97.2 million in the 2008 first quarter, reflecting growth in revenues on a constant dollar basis of 15.8%. International operating expenses increased by $17.7 million in U.S. dollars, a 22.2% increase, and by 11.2% on a constant dollar basis. Operating earnings improved to $9.0 million in the current quarter, more than doubling last year's first quarter operating earnings of $4.0 million. The related operating margin was 8.4% in the 2008 first quarter, improving from the 4.7% operating margin in the 2007 first quarter.

U.S. Property & Casualty

U.S. Property & Casualty revenues before reimbursements were $49.5 million in the first quarter of 2008 compared to $51.0 million in the 2007 first quarter. Revenues generated by the Company's catastrophe adjuster group were $1.9 million in both the 2008 and 2007 first quarters. The prior-year quarter included $375,000 in revenues generated by the Company's subrogation services unit which was sold February 28, 2007. Operating earnings in the U.S. Property and Casualty segment improved to $5.9 million, or 12.0% of revenues, compared to $3.4 million, or 6.6% of revenues in the 2007 first quarter.

Broadspire

Revenues before reimbursements from the Broadspire segment were $80.3 million in the 2008 first quarter compared to $84.5 million generated in the 2007 quarter. In the 2008 first quarter, the Broadspire segment's operating earnings improved to $1.7 million, or 2.2% of revenues from a loss in the prior-year period of ($681,000), or (0.8%) of revenues.

Legal Settlement Administration

Legal Settlement Administration revenues before reimbursements were $19.0 million for the 2008 first quarter, compared to $24.2 million in the 2007 quarter. Operating earnings totaled $2.5 million in the 2008 first quarter, or an operating margin of 13.2% of revenues, compared to $2.6 million, or 10.9% of revenues, in the prior-year period. The segment's awarded project backlog totaled approximately $50.5 million at March 31, 2008 as compared to $31.1 million at March 31, 2007.

Mr. Jeffrey T. Bowman, chief executive officer of Crawford & Company, stated, "Our first quarter 2008 operating results reflect strong performance despite a difficult U.S. economic environment. Our consolidated revenues before reimbursements improved by nearly 5% on the strength of our international business."

"We were also pleased with our net income growth during the 2008 first quarter, which was achieved primarily through strong cost reduction initiatives that were implemented in 2007. This is the highest quarterly earnings excluding special credits we have generated since the 2001 second quarter. Our selling, general and administrative ("SG&A") costs declined by 8% in the quarter reflecting the recovery of a previously written-off accounts receivable balance and lower self-insurance expenses as well as the benefit of synergies we realized in the Broadspire acquisition. As a percentage of revenues before reimbursements, SG&A costs were 19.8% in the 2008 first quarter, down from 22.6% in the prior-year quarter."

Mr. Bowman concluded, "Despite challenging macro trends in the U.S. property & casualty and workers' compensation markets, our outlook for 2008 is for a significant improvement in consolidated operating results over 2007 even on modest overall sales gains, as we focus on improving our efficiency. This company and management team is committed to managing our operations toward improved operating performance throughout the year, while at the same time continuing to enhance our industry-leading quality."

 Crawford & Company updated its guidance for 2008 as
   follows: -- Consolidated revenues before reimbursements between $990 million and $1.02 billion. -- Consolidated operating
   earnings between $56.8 million and $61.6 million. -- After reflecting stock-based compensation expense, net corporate interest
   expense, intangible asset amortization expense, and income taxes, consolidated net income on a GAAP basis between $20.2 million
   and $23.3 million, or $0.40 to $0.46 per share. 

Crawford & Company's management will host a conference call with analysts on Monday, May 5, 2008 at 3:00 p.m. EDT to discuss quarterly earnings and other developments. The call will be recorded and available for replay through May 12, 2008. You may dial 1-800-642-1687 (706-645-9291 international) to listen to the replay. The access code is 44899872. Alternatively, please visit our web site at http://www.crawfordandcompany.com for a live audio web cast and related financial presentation.

Further information regarding the Company's financial position, operating results, and cash flows for the quarter ended March 31, 2008 is shown on the attached unaudited statements. Operating earnings (a non-GAAP financial measure) is the key financial performance measure used by the Company's senior management to evaluate the performance of its segments and make resource allocation decisions. The Company believes this measure is useful to investors in that it allows them to evaluate operating performance using the same criteria that management uses. Operating earnings exclude net corporate interest expense, stock option expense, income tax expense, amortization of customer relationship intangible assets, unallocated corporate and shared costs and certain other charges and credits. Net corporate interest expense, stock option expense and income taxes are recurring components of the Company's net income, but they are not considered part of operating earnings since they are managed on a corporate-wide basis. Net corporate interest expense results from capital structure decisions made by the Company, stock option expense relates to historically granted stock options which are not allocated to operating segments, and income taxes are based on statutory rates in effect in each of the locations where the Company provides services and vary throughout the world. Amortization expense relates to non-cash amortization of customer relationship intangible assets resulting from business combinations. These costs are not allocated to the segments for assessing performance. None of the aforementioned costs relate directly to the performance of the Company's services and are therefore excluded in order to accurately assess the results of segment operating activities on a consistent basis. Certain other credits and charges represent events (gain on disposal of assets, loss on extinguishment of debt, etc.) that are not considered part of segment operating earnings since they historically have not regularly impacted the Company's operating performance and are not expected to regularly impact future performance. Following is a reconciliation of segment operating earnings (loss) to consolidated net income on a GAAP basis and the related margins as a percentage of revenues before reimbursements for all periods presented:

 Quarter ended March 31, March 31, 2008 % Margin 2007 % Margin Operating Earnings (Loss): U.S. Property & Casualty
   $5,949 12.0% $3,376 6.6% International Operations 8,987 8.4 3,964 4.7 Broadspire 1,747 2.2 (681) (0.8) Legal Settlement Administration
   2,497 13.2 2,636 10.9 Unallocated corporate and shared (costs) credits 651 0.3 (1,772) (0.7) Add/(Deduct): Other credit -
   - 3,978 1.6 Stock option expense (195) (0.1) (295) (0.1) Amortization expense (1,508) (0.6) (1,436) (0.6) Net corporate interest
   expense (4,416) (1.7) (4,368) (1.8) Income taxes (4,644) (1.8) (2,095) (0.9) Net income $9,068 3.5 $3,307 1.4 

Based in Atlanta, Georgia, Crawford & Company (http://www.crawfordandcompany.com) is the world's largest independent provider of claims management solutions to insurance companies and self-insured entities, with a global network of more than 700 locations in 63 countries. Major service lines include property and casualty claims management, integrated claims and medical management for workers' compensation, legal settlement administration, including class action and bankruptcy claims administration, warranty inspections and risk management information services. The Company's shares are traded on the NYSE under the symbols CRDA and CRDB.

Except for historical information contained herein, the matters discussed in this news release are forward-looking statements that involve risks and uncertainties. The results achieved in the quarter ended March 31, 2008 are not necessarily indicative of future prospects for the Company. Actual results in future quarters may differ materially. For a discussion regarding factors which could affect the Company's financial performance, see the Company's Form 10-K for the year ended December 31, 2007 filed with the Securities and Exchange Commission, in particular the information under the headings "Business," "Risk Factors," "Legal Proceedings" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."

The Company undertakes no obligation to publicly release any revisions to any forward-looking statements contained herein to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. The Company's actual results may differ materially from those projected in forward-looking statements made by, or on behalf of, the Company.

FOR FURTHER INFORMATION REGARDING THIS PRESS RELEASE, PLEASE CALL BRUCE SWAIN AT (404) 300-1051.

   CRAWFORD & COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME Unaudited (In Thousands, Except Per Share Amounts) Quarter
   Ended March 31 2008 2007 % Change Revenues: Revenues Before Reimbursements $255,512 $243,608 5% Reimbursements 19,161 19,416
   -1% Total Revenues 274,673 263,024 4% Costs and Expenses: Cost of Services Before Reimbursements 186,743 182,707 2% Reimbursements
   19,161 19,416 -1% Total Cost of Services 205,904 202,123 2% Selling, General, and Administrative 50,641 55,109 -8% Corporate
   Interest Expense, Net 4,416 4,368 1% Total Costs and Expenses 260,961 261,600 0% Gain on Disposal of Subrogation Business
   - 3,978 nm Income Before Income Taxes 13,712 5,402 154% Income Taxes 4,644 2,095 122% Net Income $9,068 $3,307 174% Earnings
   Per Share - Basic and Diluted $0.18 $0.07 173% Average Numbers of Shares Used to Compute: Basic Earnings Per Share 50,575
   50,390 Diluted Earnings Per Share 50,666 50,490 Cash Dividends Declared Per Share: Class A Common Stock $0.00 $0.00 Class
   B Common Stock $0.00 $0.00 nm = not meaningful CRAWFORD & COMPANY SUMMARY RESULTS BY OPERATING SEGMENT Quarter Ended March
   31 Unaudited (In Thousands, Except Percentages) U.S. Property & Casualty % International % 2008 2007 Change 2008 2007
   Change Revenues Before Reimbursements $49,510 $50,996 -2.9% $106,710 $83,940 27.1% Compensation & Benefits 30,577 33,166
   -7.8% 73,857 58,886 25.4% % of Revenues 61.8% 65.1% 69.2% 70.2% Expenses Other than Reimbursements, Compensation & Benefits
   12,984 14,454 -10.2% 23,866 21,090 13.2% % of Revenues 26.2% 28.3% 22.4% 25.1% Total Operating Expenses 43,561 47,620 -8.5%
   97,723 79,976 22.2% Operating Earnings (Loss) (1) $5,949 $3,376 76.2% $8,987 $3,964 126.7% % of Revenues 12.0% 6.6% 8.4% 4.7%
   Legal Settlement Broadspire % Administration % 2008 2007 Change 2008 2007 Change Revenues Before Reimbursements $80,313 $84,520
   -5.0% $18,979 $24,152 -21.4% Compensation & Benefits 45,414 49,954 -9.1% 9,269 10,876 -14.8% % of Revenues 56.5% 59.1%
   48.8% 45.0% Expenses Other than Reimbursements, Compensation & Benefits 33,152 35,247 -5.9% 7,213 10,640 -32.2% % of Revenues
   41.3% 41.7% 38.0% 44.1% Total Operating Expenses 78,566 85,201 -7.8% 16,482 21,516 -23.4% Operating Earnings (Loss) (1) $1,747
   ($681) 356.5% $2,497 $2,636 -5.3% % of Revenues 2.2% -0.8% 13.2% 10.9% (1) A non-GAAP financial measurement which represents
   earnings (loss) before net corporate interest expense, amortization of customer-relationship intangible assets, stock option
   expense, income tax expense, unallocated corporate and shared costs, and gains on asset sales. CRAWFORD & COMPANY CONDENSED
   CONSOLIDATED BALANCE SHEETS March 31, 2008 and December 31, 2007 (In Thousands) Unaudited * March 31 December 31 Assets 2008
   2007 Current Assets: Cash and Cash Equivalents $42,841 $50,855 Accounts Receivable, Net 191,078 178,528 Unbilled Revenues,
   Net 130,948 136,652 Prepaid Expenses and Other Current Assets 18,638 16,717 Total Current Assets 383,505 382,752 Property
   and Equipment 152,161 153,733 Less Accumulated Depreciation (104,730) (104,467) Net Property and Equipment 47,431 49,266 Other
   Assets: Goodwill 262,319 263,769 Intangible Assets Arising from Business Acquisitions, Net 116,932 118,678 Capitalized Software
   Costs, Net 41,690 40,032 Deferred Income Tax Assets, Net 18,607 18,923 Other Noncurrent Assets 28,449 29,362 Total Other Assets
   467,997 470,764 Total Assets $898,933 $902,782 Liabilities and Shareholders' Investment Current Liabilities: Short-Term Borrowings
   $35,015 $29,389 Accounts Payable 38,513 39,601 Accrued Compensation and Related Costs 58,660 69,655 Other Accrued Current
   Liabilities 56,826 57,360 Self-Insured Risks 18,030 18,290 Accrued Income Taxes 14,431 10,435 Deferred Revenues 64,575 64,363
   Current Installments of Long-Term Debt and Capital Leases 2,313 2,475 Total Current Liabilities 288,363 291,568 Noncurrent
   Liabilities: Long-Term Debt and Capital Leases, Less Current Installments 182,955 183,449 Deferred Revenues 56,315 58,925
   Self-Insured Risks 19,108 18,439 Postretirement Medical Benefit Obligation 1,970 1,898 Accrued Pension Liabilities 74,362
   76,977 Other Noncurrent Liabilities 12,328 12,265 Total Noncurrent Liabilities 347,038 351,953 Minority Interest in Equity
   of Consolidated Affiliates 4,899 5,046 Shareholders' Investment: Class A Common Stock, $1.00 Par Value 26,191 25,935 Class
   B Common Stock, $1.00 Par Value 24,697 24,697 Additional Paid-in Capital 19,743 19,057 Retained Earnings 232,955 223,793 Accumulated
   Other Comprehensive Loss (44,953) (39,267) Total Shareholders' Investment 258,633 254,215 Total Liabilities and Shareholders'
   Investment $898,933 $902,782 * Derived from the audited Consolidated Balance Sheet CRAWFORD & COMPANY CONDENSED CONSOLIDATED
   STATEMENTS OF CASH FLOWS Quarter Ended March 31, 2008 and March 31, 2007 Unaudited (In Thousands) 2008 2007 Cash Flows From
   Operating Activities: Net Income $9,068 $3,307 Reconciliation of Net Income to Net Cash Used In Operating Activities: Depreciation
   and Amortization Expense 7,336 7,265 Stock-Based Compensation Costs 962 687 Loss on Sales of Property and Equipment, net 21
   78 Gain on Sale of Subrogation Business - (3,978) Changes in Operating Assets and Liabilities, net of effects of acquisitions
   and disposition: Accounts Receivable, net (13,987) (1,529) Unbilled Revenues, net 3,849 (11,366) Accrued Income Taxes 3,696
   1,387 Accounts Payable and Accrued Liabilities (3,424) (16,895) Deferred Revenues (2,225) (5,946) Accrued Retirement Costs
   (8,369) (4,211) Prepaid Expenses and Other Operating Activities (1,064) (1,024) Net Cash Used In Operating Activities (4,137)
   (32,225) Cash Flows From Investing Activities: Acquisitions of Property and Equipment, net (2,149) (3,240) Capitalization
   of Computer Software Costs (4,384) (2,675) Proceeds from Sale of Investment Security - 5,000 Proceeds from Sale of Subrogation
   Business - 5,000 Other Investing Activities - (762) Net Cash (Used In) Provided By Investing Activities (6,533) 3,323 Cash
   Flows From Financing Activities: Increase in Short-Term Borrowings, net 3,567 2,168 Payments on Long-Term Debt and Capital
   Lease Obligations (732) (780) Other Financing Activities (20) (6) Net Cash Provided by Financing Activities 2,815 1,382 Effect
   of Exchange Rate Changes on Cash and Cash Equivalents (159) 921 Decrease in Cash and Cash Equivalents (8,014) (26,599) Cash
   and Cash Equivalents at Beginning of Period 50,855 61,674 Cash and Cash Equivalents at End of Period $42,841 $35,075 

SOURCE Crawford & Company

http://www.crawfordandcompany.com 

Copyright (C) 2008 PR Newswire. All
   rights reserved