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Positive Operating Earnings in Each Segment ATLANTA, July 30 /PRNewswire-FirstCall/ -- Crawford & Company (NYSE:CRDA; CRDB), the world's largest independent provider of claims managementsolutions to insurance companies and self-insured entities, today announcedits financial results for the second quarter ended June 30, 2007. Second quarter 2007 consolidated revenues before reimbursements totaled$240.5 million compared to $192.6 million in the 2006 second quarter.Second quarter 2007 net income was $6.1 million compared to net income of$4.2 million for the 2006 second quarter. Second quarter 2007 earnings pershare was $0.12 compared to earnings per share of $0.09 in the prior-yearquarter. Net income in the 2007 second quarter included the recognition ofa gain of $3.1 million, net of related income taxes, or $0.06 per share,related to the second quarter 2006 sale of the Company's former corporateheadquarters. This gain had previously been deferred pending the expirationof a 12-month leaseback agreement on the sold facility. Mr. Thomas W. Crawford, chief executive officer of Crawford & Company,stated, "We are pleased to report positive operating earnings in each ofour segments in this year's second quarter and that we remain ahead of ourplans for the integration of the Broadspire acquisition. Our second quarter2007 operating results were led by our international and Broadspiresegments and their results helped to offset the decreases we experienced inour U.S. property & casualty and legal settlement administration operatingsegments." Revenues before reimbursements for the Company's operating segments forthe second quarters ended June 30, 2007 and 2006 were as follows (in 000s): Quarter ended June 30, June 30, Segment 2007 2006 % Change U.S. Property & Casualty $43,924 $51,685 (15.0)% International Operations 88,655 73,861 20.0 % Broadspire 82,985 36,149 129.6 % Legal Settlement Administration 24,973 30,908 (19.2)% Total Revenues before Reimbursements $240,537 $192,603 24.9 % U.S. property & casualty revenues before reimbursements were $43.9million in the second quarter of 2007 compared to $51.7 million in the 2006second quarter. Revenues generated by the Company's catastrophe adjustergroup were $1.3 million in the 2007 second quarter, declining from $5.6million in the 2006 period when the Company was responding to severe stormsin the midwestern and northeastern United States. Second quarter 2006revenues included $2.1 million produced by the Company's investigationservices business, which was sold in the 2006 third quarter. The prior-yearquarter also included $600,000 of revenues generated by the Company'sformer subrogation services unit which was sold on February 28, 2007.Operating earnings in the U.S. property and casualty segment declined to$510,000, or 1.2% of revenues, compared to earnings of $3.0 million, or5.8% of revenues in the 2006 second quarter. This decline was primarily dueto the decrease in catastrophe-related revenues in the 2007 second quarter. "The U.S. property & casualty segment experienced a downturn inrevenues compared to last year's second quarter, primarily as a result ofthe absence of significant catastrophic activity. According to the ISO'sProperty Claim Service unit, the 2007 second quarter had the second lowestnumber of second quarter U.S. catastrophic events in the past 10 years. Wecontinue to adjust our staffing levels in light of this and, as a result ofour new case management system which we introduced in the 2007 firstquarter, we are capturing operating efficiencies in our field brancheswhich should lead to better operating performance in this segment duringthe remainder of the year," Mr. Crawford said. "Despite the reduction in catastrophe-related claims, we wereencouraged by a slight increase in non-catastrophe related property andcasualty claim referrals during the current quarter," he said. "Thisincrease was primarily due to an increase in both property claims in thequarter and vehicle services claims referred under a major 2006 contract." Second quarter 2007 revenues before reimbursements for internationaloperations grew to a new quarterly record of $88.7 million from $73.9million for the same period in 2006. Compared to the 2006 second quarter,during the current quarter the U.S. dollar weakened against most majorforeign currencies, resulting in a net exchange rate benefit in the currentquarter. Excluding the benefit of exchange rate fluctuations, internationalrevenues would have been $82.6 million in the 2007 second quarter,reflecting growth in revenues on a constant dollar basis of 11.8%. Thisgrowth reflected increased case referrals in each international operatingregion resulting from new business wins during 2006 and 2007 and the impactof severe weather in the 2007 second quarter. The acquisition of SpecialtyLiability Services, Ltd. in the United Kingdom during the 2006 fourthquarter contributed revenues of $2.0 million in the 2007 second quarter.International operating expenses increased by $13.0 million in U.S.dollars, an 18.4% increase, and by 11.0% on a constant dollar basis.Operating earnings improved to $4.6 million in the current quarter,increasing 62% over last year's second quarter operating earnings of $2.8million. This improvement reflected an increase in operating margin from3.8% in the 2006 second quarter to 5.2% in the 2007 quarter, primarily dueto improved operating efficiency in the U.K. and Canada in the 2007quarter. Revenues before reimbursements from the Broadspire segment were $83.0million in the 2007 second quarter compared to the $36.1 million generatedby the Company's former Crawford Integrated Services business in the 2006quarter. Revenues associated with Broadspire Management Services, Inc.,acquired in the 2006 fourth quarter, totaled $50.0 million in the 2007second quarter. In the 2007 second quarter, the Broadspire segment'soperating earnings improved from a loss of ($5.2) million, or (14.5)% ofrevenues in the 2006 quarter, to operating earnings of $3.0 million, or3.6% of revenues. "The performance of the Broadspire segment exceeded our expectationsfor the 2007 second quarter and that segment delivered a significantlyimproved operating result as compared to the prior-year period. We havetaken important steps to realize operating efficiencies in the combinedBroadspire operation, and have more than accomplished our goals byeliminating more than $32.3 million in operating expenses on an annualizedbasis," Mr. Crawford said. Legal settlement administration revenues before reimbursements were$25.0 million for the 2007 second quarter, compared to $30.9 million in the2006 quarter. The operating results in legal settlement administrationreflected a period of relatively slower class action activity versus theprior year when this segment was completing several major securities classaction projects. Operating earnings totaled $3.4 million in the 2007 secondquarter, or an operating margin of 13.4% of revenues, compared to $6.3million, or 20.5% of revenues, in the prior-year period. The Company'slegal settlement administration revenues are project-based and canfluctuate significantly. The Company has a backlog of awarded projects,which totaled approximately $41.1 million at June 30, 2007. Consolidated revenues before reimbursements for the year-to-date periodended June 30, 2007 were $484.1 million compared with $394.2 million in the2006 period. Net income for the first six months of 2007 totaled $9.4million, or $0.19 per share, compared with $10.1 million, or $0.20 pershare, for the prior-year period. Net income in the 2007 first quarterincluded a gain on disposal of assets of $2.5 million, net of relatedincome taxes, or $0.05 per share, as a result of the sale of the Company'ssubrogation services unit. Net income in the 2007 second quarter includedthe recognition of the gain of $3.1 million, net of related income taxes,or $0.06 per share, related to the second quarter 2006 sale of theCompany's former corporate headquarters. U.S. property and casualty revenues before reimbursements were $90.8million for the year-to-date period ended June 30, 2007 compared with$113.5 million for the same period in 2006. Revenues generated by theCompany's catastrophe adjuster group were $3.1 million in the first sixmonths of 2007, declining from $16.9 million in the first six months of2006. Year-to-date 2006 revenues included $4.6 million produced by theCompany's investigation services business, which was sold in the 2006 thirdquarter. The prior-year period also included revenues of $837,000 generatedby the Company's subrogation services unit which was sold on February 28,2007. Operating earnings in the U.S. property and casualty segment declinedto $2.8 million, or 3.1% of revenues, compared to $9.2 million, or 8.1% ofrevenues in the 2006 year-to-date period. International revenues before reimbursements were $172.6 million forthe first six months of 2007 compared with $144.4 million during the firstsix months of 2006. Excluding the benefit of exchange rate fluctuations,international revenues would have been $162.0 million in the current year,reflecting growth in revenues on a constant dollar basis of 12.2%. Theacquisition of Specialty Liability Services, Ltd. in the U.K. during the2006 fourth quarter contributed revenues of $4.0 million in the 2007year-to-date period. International operating expenses increased by $23.8million in U.S. dollars, a 17.0% increase, and by 10.6% on a constantdollar basis. Operating earnings in the international segment improved to$8.5 million in the current year-to-date period, more than doubling lastyear's operating earnings of $4.1 million in the same period. Thisimprovement reflected an increase in the segment operating margin from 2.8%in the first six months of 2006 to 4.9% in the year-to-date period in 2007. Revenues from Broadspire were $167.6 million for the first six monthsof 2007 compared with $72.1 million in the 2006 period. Revenues associatedwith the Broadspire acquisition totaled $99.6 million during the 2007period. Operating earnings in the Broadspire segment increased to $2.5million, or 1.5% of revenues, compared to an operating loss of ($10.9)million, or (15.1%) of revenues in the 2006 year-to-date period. Legal settlement administration revenues were $53.2 million for the2007 year-to-date period compared with $64.2 million in 2006. For the 2007period, legal settlement administration had operating earnings totaling$6.4 million, decreasing from $13.3 million in the 2006 period. The relatedoperating margin declined from 20.7% in 2006 to 12.0% in 2007. Crawford's operating cash flows for the 2007 year-to-date periodreflected a net cash use of $6.4 million compared to net cash provided byoperations in the prior-year period of $19.2 million. This change wasprimarily due to growth in unbilled revenues during the 2007 period and thepayment of retirement plan contributions, payment of accrued liabilitiesassumed in the Broadspire Management Services, Inc. acquisition, and otherrecurring annual payments during the 2007 first quarter. The Company's cashneeds typically peak during the first quarter and decline during thebalance of the year. Overall, the Company's consolidated cash, cashequivalents and short-term investment position as of June 30, 2007 totaled$45.7 million, down $19.3 million from the $65.0 million at June 30, 2006and down $21.0 million from the $66.7 million at December 31, 2006. Duringthe 2007 second quarter, the Company made a discretionary $5.0 millionpayment on its outstanding long-term debt. Mr. Crawford concluded, "Our outlook for 2007 remains positive andreflects the high expectations we have for continued strength in theoperating results from our international operations and improvement inlegal settlement administration and U.S. property & casualty operatingresults. We will continue to manage all of our operations to ensure weobtain acceptable operating margins." Crawford & Company reaffirmed the following guidance for fiscal 2007: -- Consolidated revenues before reimbursements between $962 million and $1.01 billion. -- Consolidated operating earnings between $49.3 million and $54.5 million. -- After reflecting stock-based compensation expense, net corporate interest expense, intangible asset amortization expense, certain other credits, and income taxes, consolidated net income between $20.5 million and $23.7 million, or $0.42 to $0.48 per share. Crawford & Company's management will host a conference call withanalysts on Monday, July 30, 2007 at 3:00 p.m. EDT to discuss quarterlyearnings and other developments. The call will be recorded and availablefor replay through August 6, 2007. You may dial 1-800-642-1687(706-645-9291 international) to listen to the replay. The access code is10271205. Alternatively, please visit our web site athttp://www.crawfordandcompany.com for a live audio web cast. Further information regarding the Company's financial position,operating results, and cash flows for the quarter and year-to-date periodended June 30, 2007 is shown on the attached unaudited statements.Operating earnings or loss (a non-GAAP financial measure) is the keyfinancial performance measure used by the Company's senior management toevaluate the performance of its segments and make resource allocationdecisions. The Company believes this measure is useful to investors in thatit allows them to evaluate operating performance using the same criteriathat management uses. Operating earnings or loss exclude net corporateinterest expense, stock option expense, income tax expense, amortization ofcustomer relationship intangible assets, and certain other credits. Netcorporate interest expense, stock option expense and income taxes arerecurring components of the Company's net income, but they are notconsidered part of operating earnings since they are managed on acorporate-wide basis. Net corporate interest expense results from capitalstructure decisions made by the Company, stock option expense relates tohistorically granted stock options which are not allocated to its operatingsegments, and income taxes are based on statutory rates in effect in eachof the locations where the Company provides services and vary throughoutthe world. Amortization expense relates to non-cash amortization ofcustomer relationship intangible assets resulting from businesscombinations. These costs are not allocated to the segments for assessingperformance. None of the aforementioned costs relate directly to theperformance of the Company's services and are therefore excluded in orderto accurately assess the results of segment operating activities on aconsistent basis. Certain other credits represent events (gain on disposalof assets) that are not considered part of segment operating earnings sincethey historically have not regularly impacted the Company's operatingperformance and are not expected to regularly impact future performance.Following is a reconciliation of segment operating earnings to consolidatednet income on a GAAP basis and the related margins as a percentage ofrevenues before reimbursements for all periods presented: Quarter ended Year-to-date period ended June June June June 30, % 30, % 30, % 30, % 2007 Margin 2006 Margin 2007 Margin 2006 Margin Operating Earnings (Loss): U.S. property & casualty $510 1.2% $3,005 5.8% $2,849 3.1% $9,216 8.1% International operations 4,566 5.2 2,818 3.8 8,530 4.9 4,111 2.8 Broadspire 2,959 3.6 (5,226)(14.5) 2,500 1.5 (10,919)(15.1) Legal settlement administration 3,353 13.4 6,323 20.5 6,408 12.0 13,260 20.7 Unallocated corporate and shared (costs) credits (652)(0.3) 598 0.3 (2,030) (0.4) 2,167 0.5 Add/(Deduct): Other credits 4,844 2.0 - - 8,824 1.8 - - Stock option expense (346)(0.1) (351) (0.2) (641) (0.1) (617) (0.2) Amortization expense (1,507)(0.6) - - (2,943) (0.6) - - Net corporate interest expense (4,232)(1.8) (594) (0.3) (8,600) (1.8) (1,592) (0.4) Income taxes (3,443)(1.4) (2,360) (1.2) (5,538) (1.1) (5,565) (1.4) Net income $6,052 2.5 $4,213 2.2 $9,359 1.9 $10,061 2.6 Based in Atlanta, Georgia, Crawford & Company(http://www.crawfordandcompany.com) is the world's largest independent provider ofclaims management solutions to insurance companies and self-insuredentities, with a global network of more than 700 offices in 63 countries.Major service lines include property and casualty claims management,integrated claims and medical management for workers' compensation, legalsettlement administration, including class action and warranty inspections,and risk management information services. The Company's shares are tradedon the NYSE under the symbols CRDA and CRDB. Except for historicalinformation contained herein, the matters discussed in this news releaseare forward-looking statements that involve risks and uncertainties. Theresults achieved in the quarter and year-to-date periods ended June 30,2007 are not necessarily indicative of future prospects for the Company.Actual results in future quarters may differ materially. For a discussionregarding factors which could affect the Company's financial performance,see the Company's Form 10-K for the year ended December 31, 2006 filed withthe Securities and Exchange Commission, in particular the information underthe headings "Business," "Risk Factors," "Legal Proceedings" and"Management's Discussion and Analysis of Financial Condition and Results ofOperations." The Company undertakes no obligation to publicly release any revisionsto any forward-looking statements contained herein to reflect events orcircumstances occurring after the date hereof or to reflect the occurrenceof unanticipated events. The Company's actual results may differ materiallyfrom those projected in forward-looking statements made by, or on behalfof, the Company. For further information regarding this press release, please call BruceSwain at (404) 300-1051. CRAWFORD & COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME Unaudited (In Thousands, Except Percentages and Per Share Amounts) Six Months Ended June 30 2007 2006 % Change Revenues: Revenues Before Reimbursements $484,145 $394,209 23% Reimbursements 34,678 37,230 -7% Total Revenues 518,823 431,439 20% Costs and Expenses: Cost of Services Before Reimbursements 361,656 304,959 19% Reimbursements 34,678 37,230 -7% Total Cost of Services 396,334 342,189 16% Selling, General, and Administrative 107,816 72,032 50% Corporate Interest Expense, Net 8,600 1,592 440% Total Costs and Expenses 512,750 415,813 23% Gain on Disposal of Subrogation Business 3,980 - nm Gain on Sale of Corporate Headquarters 4,844 - nm Income Before Income Taxes 14,897 15,626 -5% Income Taxes 5,538 5,565 0% Net Income $9,359 $10,061 -7% Earnings Per Share - Basic and Diluted $0.19 $0.20 -5% Average Numbers of Shares Used to Compute: Basic Earnings Per Share 50,397 49,137 Diluted Earnings Per Share 50,526 49,318 Cash Dividends Per Share: Class A Common Stock $0.00 $0.12 Class B Common Stock $0.00 $0.12 nm = not meaningful CRAWFORD & COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME Unaudited (In Thousands, Except Percentages and Per Share Amounts) Quarter Ended June 30 2007 2006 % Change Revenues: Revenues Before Reimbursements $240,537 $192,603 25% Reimbursements 15,694 17,164 -9% Total Revenues 256,231 209,767 22% Costs and Expenses: Cost of Services Before Reimbursements 178,949 148,483 21% Reimbursements 15,694 17,164 -9% Total Cost of Services 194,643 165,647 18% Selling, General, and Administrative 52,705 36,953 43% Corporate Interest Expense, Net 4,232 594 612% Total Costs and Expenses 251,580 203,194 24% Gain on Sale of Corporate Headquarters 4,844 - nm Income Before Income Taxes 9,495 6,573 44% Income Taxes 3,443 2,360 46% Net Income $6,052 $4,213 44% Earnings Per Share - Basic and Diluted $0.12 $0.09 33% Average Numbers of Shares Used to Compute: Basic Earnings Per Share 50,404 49,286 Diluted Earnings Per Share 50,580 49,396 Cash Dividends Per Share: Class A Common Stock $0.00 $0.06 Class B Common Stock $0.00 $0.06 nm = not meaningful CRAWFORD & COMPANY SUMMARY RESULTS BY OPERATING SEGMENT Six Months Ended June 30 Unaudited (In Thousands, Except Percentages) U.S. Property & Casualty % 2007 2006 Change Revenues Before Reimbursements $90,772 $113,546 -20.1% Compensation & Benefits 60,685 71,846 -15.5% % of Revenues 66.9% 63.3% Expenses Other than Reimbursements, Compensation & Benefits 27,238 32,484 -16.1% % of Revenues 30.0% 28.6% Total Operating Expenses 87,923 104,330 -15.7% Operating Earnings (Loss) (1) $2,849 $9,216 -69.1% % of Revenues 3.1% 8.1% Quarter Ended June 30 Unaudited (In Thousands, Except Percentages) U.S. Property & Casualty % 2007 2006 Change Revenues Before Reimbursements $43,924 $51,685 -15.0% Compensation & Benefits 29,537 33,797 -12.6% % of Revenues 67.2% 65.4% Expenses Other than Reimbursements, Compensation & Benefits 13,877 14,883 -6.8% % of Revenues 31.6% 28.8% Total Operating Expenses 43,414 48,680 -10.8% Operating Earnings (Loss) (1) $510 $3,005 -83.0% % of Revenues 1.2% 5.8% Six Months Ended June 30 Unaudited (In Thousands, Except Percentages) International % 2007 2006 Change Revenues Before Reimbursements $172,595 $144,361 19.6% Compensation & Benefits 121,743 102,397 18.9% % of Revenues 70.6% 71.0% Expenses Other than Reimbursements, Compensation & Benefits 42,322 37,853 11.8% % of Revenues 24.5% 26.2% Total Operating Expenses 164,065 140,250 17.0% Operating Earnings (Loss) (1) $8,530 $4,111 107.5% % of Revenues 4.9% 2.8% Quarter Ended June 30 Unaudited (In Thousands, Except Percentages) International % 2007 2006 Change Revenues Before Reimbursements $88,655 $73,861 20.0% Compensation & Benefits 62,857 51,732 21.5% % of Revenues 70.9% 70.1% Expenses Other than Reimbursements, Compensation & Benefits 21,232 19,311 9.9% % of Revenues 23.9% 26.1% Total Operating Expenses 84,089 71,043 18.4% Operating Earnings (Loss) (1) $4,566 $2,818 62.0% % of Revenues 5.2% 3.8% Six Months Ended June 30 Unaudited (In Thousands, Except Percentages) Broadspire % 2007 2006 Change Revenues Before Reimbursements $167,566 $72,113 132.4% Compensation & Benefits 103,360 49,246 109.9% % of Revenues 61.7% 68.2% Expenses Other than Reimbursements, Compensation & Benefits 61,706 33,786 82.6% % of Revenues 36.8% 46.9% Total Operating Expenses 165,066 83,032 98.8% Operating Earnings (Loss) (1) $2,500 ($10,919) 122.9% % of Revenues 1.5% -15.1% Quarter Ended June 30 Unaudited (In Thousands, Except Percentages) Broadspire % 2007 2006 Change Revenues Before Reimbursements $82,985 $36,149 129.6% Compensation & Benefits 49,086 24,423 101.0% % of Revenues 59.1% 67.6% Expenses Other than Reimbursements, Compensation & Benefits 30,940 16,952 82.5% % of Revenues 37.3% 46.9% Total Operating Expenses 80,026 41,375 93.4% Operating Earnings (Loss) (1) $2,959 ($5,226) 156.6% % of Revenues 3.6% -14.5% Six Months Ended June 30 Unaudited (In Thousands, Except Percentages) Legal Settlement Administration % 2007 2006 Change Revenues Before Reimbursements $53,212 $64,189 -17.1% Compensation & Benefits 26,679 24,845 7.4% % of Revenues 50.2% 38.7% Expenses Other than Reimbursements, Compensation & Benefits 20,125 26,084 -22.8% % of Revenues 37.8% 40.6% Total Operating Expenses 46,804 50,929 -8.1% Operating Earnings (Loss) (1) $6,408 $13,260 -51.7% % of Revenues 12.0% 20.7% Quarter Ended June 30 Unaudited (In Thousands, Except Percentages) Legal Settlement Administration % 2007 2006 Change Revenues Before Reimbursements $24,973 $30,908 -19.2% Compensation & Benefits 13,141 12,335 6.5% % of Revenues 52.6% 39.9% Expenses Other than Reimbursements, Compensation & Benefits 8,479 12,250 -30.8% % of Revenues 34.0% 39.6% Total Operating Expenses 21,620 24,585 -12.1% Operating Earnings (Loss) (1) $3,353 $6,323 -47.0% % of Revenues 13.4% 20.5% (1)A non-GAAP financial measurement which represents earnings before gain on disposal of assets, net corporate interest expense, acquisition related intangible assets amortization expense, stock option expense, income tax expense, and certain unallocated corporate and shared costs. CRAWFORD & COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS June 30, 2007 and December 31, 2006 (In Thousands) Unaudited * June 30 December 31 Assets 2007 2006 Current Assets: Cash and Cash Equivalents $45,723 $61,674 Short-term Investment - 5,000 Accounts Receivable, Net 180,416 178,447 Unbilled Revenues, Net 132,232 117,098 Prepaid Expenses and Other Current Assets 16,900 19,924 Total Current Assets 375,271 382,143 Property and Equipment, at Cost 152,624 140,729 Less Accumulated Depreciation (106,270) (99,845) Net Property and Equipment 46,354 40,884 Other Assets: Goodwill 265,674 256,700 Intangible Assets, Net 121,760 127,869 Capitalized Software Costs, Net 37,562 36,903 Deferred Income Tax Asset, Net 8,260 13,498 Other 31,146 34,991 Total Other Assets 464,402 469,961 Total Assets $886,027 $892,988 Liabilities and Shareholders' Investment Current Liabilities: Short-Term Borrowings $29,201 $27,795 Accounts Payable 36,237 42,262 Accrued Liabilities 115,112 119,162 Self-Insured Risks 19,165 21,722 Accrued Income Taxes 1,924 363 Deferred Revenues 66,011 68,359 Notes Payable and Capital Leases 7,524 2,621 Total Current Liabilities 275,174 282,284 Noncurrent Liabilities: Notes Payable and Capital Leases 187,945 199,044 Deferred Revenues 66,785 77,110 Self-Insured Risks 15,513 12,338 Postretirement Medical Benefit Obligation 2,517 2,440 Accrued Pension Liabilities 87,910 90,058 Other 12,183 14,019 Total Noncurrent Liabilities 372,853 395,009 Minority Interest in Equity of Consolidated Affiliates 4,982 4,544 Shareholders' Investment: Class A Common Stock, $1.00 Par Value 25,790 25,741 Class B Common Stock, $1.00 Par Value 24,697 24,697 Additional Paid-in Capital 17,086 15,468 Retained Earnings 217,037 207,891 Accumulated Other Comprehensive Loss (51,592) (62,646) Total Shareholders' Investment 233,018 211,151 Total Liabilities and Shareholders' Investment $886,027 $892,988 * Derived from the audited Consolidated Balance Sheet CRAWFORD & COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended June 30, 2007 and June 30, 2006 Unaudited (In Thousands) 2007 2006 Cash Flows From Operating Activities: Net Income $9,359 $10,061 Reconciliation of Net Income to Net Cash (Used In) Provided by Operating Activities: Depreciation and Amortization Expense 14,540 9,484 Stock-Based Compensation Costs 1,569 1,248 Loss on Sales of Property and Equipment, net 501 32 Gain on Sale of Subrogation Unit (3,980) - Gain on 2006 Sale of Former Corporate Headquarters (4,844) - Changes in Operating Assets and Liabilities, net of effects of acquisitions and disposition: Accounts Receivable, net 5,133 (11,335) Unbilled Revenues, net (10,704) 10,999 Accrued Income Taxes 8,102 6,433 Accounts Payable and Accrued Liabilities (12,228) (12,808) Deferred Revenues (12,901) 6,124 Accrued Retirement Costs (596) 240 Prepaid Expenses and Other Assets (311) (1,325) Net Cash (Used In) Provided by Operating Activities (6,360) 19,153 Cash Flows From Investing Activities: Acquisitions of Property and Equipment, net (6,535) (5,552) Capitalization of Computer Software Costs (5,043) (4,606) Proceeds from Sale of Investment Security 5,000 - Proceeds from Sale of Subrogation Unit 5,000 - Deposit Received on Sale of Real Estate - 8,000 Other Investing Activities (1,284) (388) Net Cash Used in Investing Activities (2,862) (2,546) Cash Flows From Financing Activities: Dividends Paid - (5,900) Short-Term Borrowings, net (1,073) 1,416 Payments on Long-Term Debt and Capital Lease Obligations (6,328) (721) Other Financing Activities 19 1,281 Net Cash Used in Financing Activities (7,382) (3,924) Effect of Exchange Rate Changes on Cash and Cash Equivalents 653 449 (Decrease) Increase in Cash and Cash Equivalents (15,951) 13,132 Cash and Cash Equivalents at Beginning of Period 61,674 46,848 Cash and Cash Equivalents at End of Period $45,723 $59,980
