Crawford & Co. Has 52 Percent Drop in Q2 Net Income

Crawford & Company has announced its financial results for the second quarter ended June 30, 2005.

Second quarter 2005 revenues before reimbursements totaled $186.0 million compared with $172.0 million in the 2004 second quarter. Second quarter 2005 net income was $2.7 million compared to $5.5 million for the 2004 second quarter. Second quarter 2005 net income per share was $0.05 per share compared to $0.11 in the prior-year quarter. During the 2004 second quarter, the company settled a tax credit refund claim with the Internal Revenue Service which increased net income by $2.8 million, or $0.06 per share. Operating earnings (earnings before net corporate interest and income taxes) in the 2005 second quarter totaled $5.5 million compared with $5.7 million in the prior year quarter.

U.S. revenues before reimbursements were $114.4 million in the second quarter of 2005, growing over 4 percent from $109.6 million in the 2004 second quarter. Revenues from the insurance company market were $48.2 million in the 2005 second quarter compared with $48.4 million in the 2004 period. A decline in the company’s U.S. insurance company referrals for high-frequency, low- severity claims in the current quarter was substantially offset by the referral of higher value claims. Revenues from self-insured clients were $38.6 million in the 2005 second quarter compared with $40.3 million in the 2004 quarter, due primarily to a reduction in claim referrals from the company’s existing clients, only partially offset by net new business gains. Class action services revenues were $27.6 million for the 2005 second quarter, compared with $20.9 million in the comparable 2004 quarter. These revenues can fluctuate based on the timing and size of project awards.

Second quarter 2005 international revenues grew to $71.6 million from $62.4 million for the same period in 2004, reflecting growth in revenues on a constant dollar basis of 9.0 percent, on an 11.3 percent increase in claim referrals. Compared to the 2004 second quarter, during the 2005 second quarter the U.S. dollar weakened against the British pound and the euro, resulting in a net exchange rate benefit in the quarter. Excluding the benefit of exchange rate fluctuations, international revenues would have been $68.0 million in the 2005 second quarter. International operating expenses increased by $7.4 million in U.S. dollars, a 12.3 percent increase, and by 6.4 percent on a constant dollar basis.

Total revenues before reimbursements for the six months ended June 30, 2005 were $370.3 million compared with $341.9 million in 2004. Operating earnings totaled $10.7 million in the 2005 period compared with $10.8 million in 2004. Net income for the current six-month period totaled $5.0 million, or $0.10 per share, compared with $7.9 million, or $0.16 per share, reported in the prior year.

U.S. revenues before reimbursements for the 2005 six-month period were $226.9 million compared with $218.9 million in 2004. International revenues before reimbursements were $143.5 million in the 2005 year-to-date period compared with $123.0 million during 2004. Excluding the benefit of exchange rate fluctuations, international revenues would have been $135.5 million in the current year-to-date period, reflecting growth in revenues on a constant dollar basis of 10.2 percent. International operating expenses increased by $17.6 million in U.S. dollars, a 14.8 percent increase, and by 8.2 percent on a constant dollar basis.

Based in Atlanta, Georgia, Crawford & Company is a large independent provider of claims management solutions to insurance companies and self-insured entities, with a global network of more than 700 offices in 63 countries.