This is a segment financial measure calculated in accordance with ASC Topic 280, "Segment Reporting," and representing segment earnings before certain unallocated corporate and shared costs and credits, net corporate interest expense, stock option expense, amortization of customer-relationship intangible assets, goodwill and intangible asset impairment charges, restructuring and special charges, loss on disposition of business line, arbitration and claim settlements, income taxes, and net income or loss attributable to noncontrolling interests and redeemable noncontrolling interests.
We recognized a non-cash goodwill impairment charge in 2019 totaling $17.5 million related to our Crawford Claims Solutions segment, due to lower forecasts in that reporting unit. This charge was partially offset by a $2.2 million reduction in income tax expense and $2.2 million credit in noncontrolling interest expense. There were no goodwill impairment charges in 2018. See the "Critical Accounting Policies" in Item 7 and Note 4, "Goodwill and Intangible Assets" of our accompanying audited consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for further discussion about goodwill impairment charges.
In 2019, we recognized a $2.0 million non-recurring deferred tax asset valuation allowance related to certain state net operating loss carryforwards, foreign tax credits and capital losses.
On January 4, 2017, we acquired 85% of the outstanding membership interests of WeGoLook®, LLC, an Oklahoma limited liability company, and certain non-compete agreements, for consideration of $36.1 million on a debt free valuation basis. WeGoLook provides a variety of on-demand inspection, verification, and other field services for businesses and consumers through a mobile platform of independent contractors.
Consolidated revenues before reimbursements were $1.006 billion in 2019, a decrease of 6.1% compared with $1.071 billion in 2018. Net income attributable to Crawford & Company was $12.5 million in 2019, compared with $26.0 million in 2018. During 2019, we recognized arbitration and claim settlement charges of $12.6 million related to payments made to executives of our former Garden City Group business associated with their departure in 2015. The Company recognized a non-cash goodwill impairment charge in 2019 totaling $17.5 million. This charge was partially offset by a $2.2 million reduction in income tax expense and $2.2 million credit in noncontrolling interest expense. There were no goodwill impairment charges in 2018, although we recognized a $1.1 million impairment to an indefinite-lived trade name intangible asset. During 2018, the Company recorded a loss on disposition of the GCG business totaling $20.3 million.
Consolidated revenues before reimbursements decreased 6.1% in 2019 with decreases in each of our segments. Changes in foreign exchange rates decreased our segment revenues by $21.6 million, or approximately 2.0%, for 2019 compared with 2018. Excluding the Garden City Group business and the change in foreign exchange rates, consolidated revenues before reimbursements decreased $13.7 million, or 1.3% compared with 2018.
The decrease in revenues in the Crawford Specialty Solutions segment was primarily due to the disposition of the Garden City Group business as of June 15, 2018, which represents a $29.9 million reduction in revenues in 2019 compared to 2018. See Note 3, "Acquisitions and Disposition of Business Line" of our accompanying consolidated financial statements for further discussion about this transaction.
Excluding the Garden City Group business and the change in foreign exchange rates, Crawford Specialty Solutions segment revenues before reimbursements increased by $4.6 million, or 1.7%, compared with 2018, due to an increase in our Global Technical Services service line.
Segment operating earnings (a measure of segment operating performance used by our management that is defined and discussed in more detail below) and segment gross profit decreased in each of our operating segments, due primarily to the lower revenues which were not fully offset by lower direct operating expenses.
The Company incurred a non-cash goodwill impairment charge in 2019 totaling $17.5 million. This charge was partially offset by a $2.2 million reduction in income tax expense and $2.2 million credit in noncontrolling interest expense. There were no goodwill impairment charges in 2018, although we recognized a $1.1 million impairment to an indefinite-lived trade name intangible asset.
Gross profit is defined as segment revenues, less segment direct costs, which exclude centralized indirect administrative support costs allocated to the business.
Additional discussion and analysis of our income taxes, net corporate interest expense, stock option expense, amortization of customer-relationship intangible assets, unallocated corporate and shared costs, goodwill impairment charges and impairment of intangible assets, restructuring and special charges, arbitration and claim settlements, and loss on disposition of business line follows the discussion and analysis of the results of operations of our three operating segments.
Our segment results are impacted by changes in foreign exchange rates. We believe that a non-GAAP discussion and analysis of segment revenues before reimbursements by major region, based on actual exchange rates and using a constant exchange rate, is helpful in understanding the results of our segment operations. Revenues in our Crawford Specialty Solutions segment are also impacted by the disposition of the Garden City Group service line as of June 15, 2018.
Excluding centralized indirect support costs, gross profit decreased from $78.3 million, or 21.7% of revenues before reimbursements in 2018, to $76.7 million, or 22.6% of revenues before reimbursements in 2019, due primarily to lower earnings in Canada and Europe, partially offset by improved performance in the U.S. and lower compensation costs in 2019 compared to 2018.
There was a decrease in revenues in the U.S. for 2019 due to the decrease in weather related activity referenced above. Based on constant foreign exchange rates, there was an increase in revenues in the U.K. for 2019 compared with 2018 due to an increase in new clients and expanding new services. Revenues in Canada decreased in 2019 compared with the 2018 period due to a reduction in weather related activity resulting from the Ontario windstorms in 2018. There was a revenue increase in Australia due to an increase in weather related case activity in 2019. There was a slight revenue increase in Europe. The decrease in revenues in Rest of World for 2019 compared with 2018 was due to a reduction in weather related case activity in Asia and Latin America.
The most significant expense in our Crawford TPA Solutions segment is the compensation of employees, including related payroll taxes and fringe benefits, and payments to outsourced service providers that augment the functions performed by our employees. Direct compensation expenses, fringe benefits, and non-employee labor, as a percent of Crawford TPA Solutions segment revenues before reimbursements, increased from 58.2% in 2018 to 60.1% in 2019. The U.S. dollar amount of these expenses increased from $235.8 million in 2018 to $236.9 million in 2019. The increase in both the amounts and the percent of revenues in 2019 was due to an increase in employees and the decline in revenues compared to the 2018 period.
There was an average of 3,184 FTEs in this segment in 2019, an increase from an average of 3,144 FTEs in the 2018 period. The increase in employees was due to increased business in Europe and Rest of World, and an increase in business development staff.
Crawford Specialty Solutions recorded operating earnings of $49.3 million in 2019, or 18.1% of revenues before reimbursements, compared with operating earnings of $49.6 million in 2018, or 16.3% of revenues before reimbursements. The decrease in operating earnings in the 2019 period was the result of increased compensation expense compared to 2018. Excluding indirect support costs, gross profit decreased from $105.5 million, or 34.6% of revenues before reimbursements in 2018, to $95.4 million, but increased as a percent of revenues before reimbursements in 2019 to 35.1%, due primarily to the absence of the Garden City Group business which contributed $6.2 million gross profit in the 2018 period.
Crawford Specialty Solutions segment revenues before reimbursements decreased 10.7% to $272.1 million in 2019 compared with $304.6 million in 2018. Changes in foreign exchange rates resulted in a decrease of our Crawford Specialty Solutions segment revenues by approximately 2.4%, or $7.2 million for 2019.
The Garden City Group service line, which was disposed in June 2018, represents a $29.9 million reduction, or 9.8% negative variance in Crawford Specialty Solutions revenues in the 2019 period compared to 2018. Excluding the Garden City Group business and the change in foreign exchange rates, Crawford Specialty Solutions segment revenues before reimbursements increased by $4.6 million, or 1.7%, compared with 2018, primarily due to an increase in our Global Technical Services service line.
Reimbursements for out-of-pocket expenses incurred in our Crawford Specialty Solutions segment can vary materially from period to period depending on the amount and types of projects, primarily in our former Garden City Group service line, and were $9.7 million in 2019, decreasing from $22.5 million in 2018. The decrease in the 2019 period was primarily due to the absence of the Garden City Group service line, which had reimbursements of $10.5 million in the 2018 period.
Crawford Specialty Solutions unit volumes by geographic region, as measured by cases received, for 2019 and 2018 were as follows:
Overall, there was a 8.5% decrease in cases received in 2019 compared with 2018. The decrease in U.S. case volumes in 2019 was due to a decrease in weather related cases in Contractor Connection. The U.K. case volumes were lower in the 2019 period due to a decrease in property cases. The decrease in Canada was due to a decrease in weather related cases as Contractor Connection received additional cases from the Ontario windstorms in 2018. The decrease in Australia cases was due to a reduction in property cases in the current year. The decrease in cases in Europe was due to a decrease in high-frequency, low-complexity cases in Italy. The decrease in cases in Rest of World was due to a decrease in high-frequency, low-complexity cases in Asia.
The most significant expense in our Crawford Specialty Solutions segment is the compensation of employees, including related payroll taxes and fringe benefits, and payments to outsourced service providers that augment the functions performed by our employees. Crawford Specialty Solutions direct compensation, fringe benefits, and non-employee labor expense, as a percent of the related revenues before reimbursements, increased from 51.5% in 2018 to 52.1% in 2019. This increase was due to an increase in staffing to support client growth. The amount of these expenses decreased from $156.8 million in 2018 to $141.8 million in 2019. The decrease in the dollar amount in 2019 was primarily due to the Garden City Group disposal which had $17.3 million of these expenses in 2018. The increase in expenses as a percent of revenues was due to increased compensation expense and an increase in employees in 2019 due to increased demand for Global Technical Services staff. Average FTEs in this segment totaled 1,481 in 2019, compared to an average of 1,434 FTEs in 2018, which excludes the 157 full-time equivalent employees within the Garden City Group for the comparable 2018 period.
Operating earnings for our Crawford Claims Solutions segment decreased from $18.5 million in 2017 to $11.3 million in 2018, representing an operating margin of 3.1% in 2018 compared with 5.1% in 2017. Operating earnings decreased from 2017 to 2018 primarily due to lower revenues in the U.S. and from an increase in centralized administrative support costs as compared to 2017. Excluding centralized indirect support costs, gross profit improved from $76.7 million, or 21.0% of revenues before reimbursements in 2017, to $78.3 million, or 21.7% of revenues before reimbursements in 2018, due primarily to cost reductions in Canada and lower compensation costs in 2018 compared to 2017 related to the hurricane activity in the U.S. in the prior year.
There was a decrease in revenues in the U.S. for 2018 due to a reduction in hurricane-related activity that was present in 2017. Based on constant foreign exchange rates, there was an increase in revenues in the U.K. for 2018 compared with 2017 due to an increase in weather related case volumes and expanding new services. Revenues in Canada increased in 2018 compared with the 2017 period due to cases resulting from the 2018 windstorms in Ontario. There was a revenue decrease in Australia due to a change in the mix of services provided and a reduction in weather related case activity. The revenue increase in Europe was due to increases in Germany and the Netherlands. The slight increase in revenues in Rest of World for 2018 compared with 2017 was primarily due to weather related case activity in the Philippines, partially offset by a decrease of weather related activity in Latin America.
Reimbursements for out-of-pocket expenses incurred in our Crawford Claims Solutions segment which are included in total Company revenues were $19.0 million in 2018 compared to $21.7 million in 2017. The 2018 decrease was due to the decreased revenues, primarily related to the hurricane activity that existed in 2017.
The dollar amount of these expenses decreased from $244.0 million in 2017 to $239.1 million in 2018. There was an average of 3,002 FTEs in 2018 compared with an average of 3,028 FTEs in 2017. The decrease in expenses and FTEs in 2018 was primarily due to the reduction in employees related to the lower revenues in the current period.
Crawford Claims Solutions segment expenses other than reimbursements, direct compensation, fringe benefits, and non-employee labor increased from $102.5 million in 2017 to $110.6 million in 2018, and increased as a percent of segment revenues from 28.1% in 2017 to 30.6% in 2018. The increase in both the amount and the expense as a percent of revenues was due to an $8.9 million increase in indirect centralized administrative support costs in the 2018 period, primarily related to investments in technology and expanding sales efforts.
Crawford TPA Solutions operating earnings were $36.9 million in 2018, a decrease of 3.4% from 2017 operating earnings of $38.2 million. The operating margin decreased from 9.8% in 2017 to 9.1% in 2018. The decrease in operating earnings for the 2018 period resulted from increased compensation expense and an increase in indirect centralized administrative support costs compared to the 2017 period. Excluding centralized indirect support costs, gross profit improved from $106.1 million, or 27.2% of revenues before reimbursements in 2017, to $109.2 million, but declined as a percent of revenues before reimbursements in 2018 to 26.9%, as direct costs grew at a higher rate than revenues.
Revenues before reimbursements from our Crawford TPA Solutions totaled $405.3 million in 2018, compared to $390.6 million in 2017. Changes in foreign exchange rates increased our Crawford TPA Solutions segment revenues by $2.2 million, or approximately 0.6%, for 2018 compared with 2017. Absent foreign exchange rate fluctuations, Crawford TPA Solutions segment revenues would have been $403.1 million in 2018. Revenues were positively impacted by an increase in unit volumes, measured principally by cases received, which increased revenues 0.9% in 2018 compared with 2017. Changes in product mix and in the rates charged for those services accounted for a 2.3% revenue increase for 2018 compared with the 2017 period.
Reimbursements for out-of-pocket expenses incurred in our Crawford TPA Solutions segment which are included in total Company revenues increased to $10.5 million in 2018 from $9.6 million in 2017. This increase was due to higher segment revenues and increased use of third parties in Europe in the 2018 period.
The most significant expense in our Crawford TPA Solutions segment is the compensation of employees, including related payroll taxes and fringe benefits, and payments to outsourced service providers that augment the functions performed by our employees. Direct compensation expenses, fringe benefits, and non-employee labor, as percent of Crawford TPA Solutions segment revenues before reimbursements, increased from 56.6% in 2017 to 58.2% in 2018. The U.S. dollar amount of these expenses increased from $220.7 million in 2017 to $235.8 million in 2018. The increase in both the amounts and the percent of revenues for each of the periods was due to an increase in employees and an increase in compensation and related benefit rates in 2018.
Crawford Specialty Solutions recorded operating earnings of $49.6 million in 2018, or 16.3% of revenues before reimbursements, compared with operating earnings of $52.4 million in 2017, or 15.0% of revenues before reimbursements, including $1.0 million variance related to the Garden City Group business. The decrease in operating earnings in the 2018 period was the result of increased compensation and centralized indirect administrative support costs, as a percent of revenues, compared to 2017. Excluding indirect support costs, gross profit decreased from $114.9 million, or 32.8% of revenues before reimbursements in 2017, to $105.5 million in 2018, including $14.1 million variance related to the Garden City Group business, but increased as a percent of revenues before reimbursements to 34.6% due to higher direct costs in the Garden City Group service line prior to its disposal.
Crawford Specialty Solutions segment revenues before reimbursements decreased 13.0% to $304.6 million in 2018 compared with $350.2 million in 2017. Changes in foreign exchange rates resulted in an increase of our Crawford Specialty Solutions segment revenues by approximately 0.7%, or $2.3 million for 2018, as compared with the 2017 period. Absent foreign exchange rate fluctuations, Crawford Specialty Solutions segment revenues would have been $302.3 million for 2018.
Reimbursements for out-of-pocket expenses incurred in our Crawford Specialty Solutions segment which are included in total Company revenues were $22.5 million in 2018, decreasing from $26.4 million in 2017 due to the disposal of the Garden City Group service line previously referenced and a reduction in Global Technical Services.
Crawford Specialty Solutions unit volumes by major underlying case category, as measured by cases received, for 2018 and 2017 were as follows:
Garden City Group services were generally project based and not denominated by individual claims and therefore not included in the table above.
Crawford Specialty Solutions segment expenses other than reimbursements, direct compensation, fringe benefits, and non-employee labor decreased as a percent of segment revenues before reimbursements to 32.3% in 2018 from 36.4% in 2017, and the dollar amount of these expenses also decreased by $29.1 million. Expenses decreased by 2.4% in 2018 due to the change in the operating model in the U.K. contractor repair business discussed above. The remaining decrease in both the amount and the percent of segment revenues was due to the Garden City Group disposal, which had $22.3 million lower expenses in 2018, and a reduction in advertising costs in our Contractor Connection service line during 2018.
Net corporate interest expense consists of interest expense that we incur on our short- and long-term borrowings, partially offset by interest income we earn on available cash balances and short-term investments. These amounts vary based on interest rates, borrowings outstanding, and the amounts of invested cash. Corporate interest expense totaled $11.5 million, $11.4 million, and $9.9 million for 2019, 2018, and 2017, respectively. Corporate interest income totaled $0.7 million, $1.3 million, and $0.8 million in 2019, 2018, and 2017, respectively. We pay interest on borrowings under our Credit Facility based on variable rates. Our level of interest expense is dependent on the future direction of interest rates as well as the level of outstanding borrowings relative to prior periods. The weighted average interest rates under our Credit Facility were 4.0%, 3.7%, and 2.8% for the years ending December 31, 2019, 2018, and 2017, respectively.
Stock option expense, a component of stock-based compensation, is comprised of non-cash expenses related to stock options granted under our various stock option and employee stock purchase plans. Stock option expense is not allocated to our operating segments. Stock option expense of $1.9 million, $1.7 million and $1.7 million was recognized during 2019, 2018, and 2017, respectively. Other stock-based compensation expense related to our Executive Stock Bonus Plan and our Omnibus Stock and Incentive Plan (pursuant to which we have authority to grant performance shares and restricted shares) is charged to our operating segments and included in the determination of segment operating earnings or loss.
Amortization of customer-relationship intangible assets represents the non-cash amortization expense for finite-lived customer-relationship and trade name intangible assets. Amortization expense associated with these intangible assets totaled $11.3 million, $11.2 million, and $11.0 million in 2019, 2018, and 2017, respectively. This amortization is included in "Selling, general and administrative expenses" in our Consolidated Statements of Operations.
Unallocated corporate and shared costs and credits were $6.5 million, $9.3 million, and $13.5 million in 2019, 2018, and 2017, respectively. The decrease in 2019 compared with 2018 was due to lower professional fees of $4.9 million and other administrative costs of $2.3 million, partially offset by an increase of $4.4 million in U.S. defined benefit plan expense. The decrease in costs in 2018 compared with 2017 was due to lower incentive compensation, payroll taxes and benefits, lower self-insured costs and defined benefit pension expenses, partially offset by an increase in unallocated professional fees.
The Company recognized an impairment of $1.1 million in 2018 related to an indefinite-lived trade name due to a combination of achieving less than forecasted revenue compared to previous modeled results and further reduced forecasted revenue associated with the trade name. There were no such charges in 2019 or 2017.
The Company recognized arbitration and claim settlement charges in 2019 of $12.6 million related to an arbitration panel awarding three of four former executives of our former Garden City Group business unit additional payments associated with their departure from the Garden City Group on December 31, 2015, and a claim settlement with the fourth former executive. There are no other potential claimants related to this matter. The arbitration and claim settlement is presented in the Consolidated Statements of Operations as a separate charge "Arbitration and claim settlements".
Pursuant to an amendment to the Credit Facility dated October 30, 2019, the expenses paid or incurred in connection with the arbitration with the three former executives of our former Garden City Group as discussed above are excluded from the calculation of Consolidated EBITDA for purposes of the financial covenants in the Credit Facility.
The operations of each of our reporting segments expose us to a number of risks, including foreign currency exchange rate changes that can impact translations of foreign-denominated assets and liabilities into U.S. dollars and future earnings and cash flows from transactions denominated in different currencies, as well as the risk of changes in tax rates or tariffs on earnings or services provided outside the U.S. Changes in the relative values of non-U.S. currencies to the U.S. dollar affect our financial results. Increases in the value of the U.S. dollar compared with the other functional currencies in certain of the locations in which we do business negatively impacted our revenues and operating earnings in 2019 and 2017, but a weaker U.S. dollar positively impacted revenues and operating earnings in 2018. We cannot predict the impact that foreign currency exchange rates may have on our future revenues or operating earnings.
At December 31, 2019, our working capital balance (current assets less current liabilities) was approximately $78.9 million, compared with $95.5 million at December 31, 2018. The decrease in working capital was primarily due to the incremental operating lease liability recorded as part of the implementation of ASC 842. For further discussion of this guidance, refer to Note 1, "Significant Accounting and Reporting Policies" of the audited consolidated financial statements included in Item 8 of this Annual Report on Form 10-K. Cash and cash equivalents at the end of 2019 totaled $51.8 million, compared with $53.1 million at the end of 2018.
However, if at a future date or time these funds are necessary for our operations in the U.S. or we otherwise believe it is in our best interests to repatriate all or a portion of such funds, we may be required to accrue and pay taxes to repatriate these funds. No assurances can be provided as to the amount or timing thereof, the tax consequences related thereto, or the ultimate impact any such action may have on our results of operations or financial condition. No additional income or withholding taxes have been provided for any undistributed foreign earnings, other than those related to 2017 U.S. Tax Reform, nor have any taxes been provided for outside basis difference inherent in these entities as these amounts continue to be indefinitely reinvested in foreign operations. We have estimated that we have book over tax basis differences of approximately $61.0 million. Due to withholding tax, basis computations, and other related tax considerations, it is not practicable to estimate any taxes to be provided on outside basis differences at this time.
Cash provided by operating activities increased by $11.6 million in 2018, from $40.8 million in 2017 to $52.4 million in 2018. This increase was primarily due to a decrease in accounts receivables and lower working capital requirements, partially offset by an increase in unbilled receivables and $10.0 million in one-time incremental pension contributions in the U.S. Interest payments on our debt were $10.4 million in 2018, and tax payments, net of refunds, were $8.2 million in 2018.
Cash used in financing activities was $53.4 million in 2019, compared with $58.7 million used in financing activities in 2018. In 2019, we borrowed $66.2 million in short-term borrowings for working capital needs and we repaid a total of $80.9 million. The decrease in borrowings in the 2019 period was primarily due to proceeds from the Garden City Group disposition which were used to reduce borrowings in 2018. We used cash to pay cash dividends totaling $13.2 million. Also in 2019, we repurchased 1,103,398 shares of CRD-A and 1,736,011 shares of CRD-B stock totaling $26.2 million, and we received shares of CRD-A stock that were surrendered by employees to settle $0.8 million of withholding taxes owed on the issuance of restricted and performance shares.
Cash used in financing activities was $58.7 million in 2018. In 2018, we borrowed $101.4 million in short-term borrowings for working capital needs and we repaid a total of $135.4 million in short-term borrowings and $0.5 million in debt and capital lease obligations. The decrease in borrowings in the 2018 period was primarily due to proceeds from the Garden City Group disposition which were used to reduce debt. The increase in borrowings in the 2017 period was primarily due to borrowings to fund the WeGoLook, LLC acquisition and increased working capital requirements. We used cash to pay cash dividends totaling $13.5 million. Also in 2018, we repurchased 1,144,410 shares of CRD-A and 94,378 shares of CRD-B stock totaling $10.4 million, and we received shares of CRD-A stock that were surrendered by employees to settle $1.1 million of withholding taxes owed on the issuance of restricted and performance shares.
Our short-term debt obligations typically peak during the first quarter of each year due to the payment of incentive compensation awards, contributions to retirement plans, and certain other recurring payments, and generally decline during the balance of the year. Our maximum month-end short-term debt obligations were $36.6 million and $36.1 million in 2019 and 2018, respectively. Our average month-end short-term debt obligations were $30.8 million and $25.9 million in 2019 and 2018, respectively. The outstanding balance of our short-term borrowings, excluding outstanding but undrawn letters of credit under our Credit Facility, was $28.5 million and $23.2 million at December 31, 2019 and 2018, respectively. The balance in short-term borrowings at December 31, 2019 represents amounts under our revolving Credit Facility that we expect, but are not required, to repay in the next twelve months. We have historically used the proceeds from our long-term borrowings to finance, among other things, business acquisitions.
Our compliance with the senior secured leverage ratio covenant is also sensitive to changes in our level of consolidated total funded debt, as defined in our Credit Facility. In addition to short- and long-term borrowings, capital leases, and bank overdrafts, among other things, consolidated total funded debt includes letters of credit, the need for which can fluctuate based on our business requirements. An increase in borrowings under our Credit Facility could negatively impact our leverage ratio, unless those increased borrowings are offset by a corresponding increase in our EBITDA. In addition, a reduction in EBITDA in the future could limit our ability to utilize available credit under the Credit Facility, which could negatively impact our ability to fund our current operations or make needed capital investments.
As of December 31, 2019, the impact that our contractual obligations, including estimated interest payments, are expected to have on our liquidity and cash flow in future periods is as follows:
At December 31, 2019, we had approximately $5.3 million of unrecognized income tax benefits related to uncertain tax positions. We cannot reasonably estimate when all of these unrecognized income tax benefits may be settled. We expect $1.2 million of reductions to unrecognized income tax benefits within the next 12 months as a result of projected resolutions of income tax uncertainties.
We sponsor a qualified defined benefit pension plan in the U.S., (the "U.S. Qualified Plan") three defined benefit plans in the U.K. (the "U.K. Plans"), and defined benefit pension plans in the Netherlands, Norway, Germany, and the Philippines (the "other international plans"). Future cash funding of our defined benefit pension plans will depend largely on future investment performance, interest rates, changes to mortality tables, and regulatory requirements. Effective December 31, 2002, we froze our U.S. Qualified Plan. The aggregate deficit in the funded status of the U.S. Plan and other international plans totaled $65.9 million and $74.3 million at the end of 2019 and 2018, respectively. The 2019 decrease in the unfunded deficit of our defined benefit pension plans primarily resulted from actuarial gains in the year. We made no contributions in 2019 to our U.S. Qualified Plan and $0.7 million to our U.K. Plans. In 2018, we made contributions of $19.0 million and $5.0 million to our U.S. Qualified Plan and U.K. Plans, respectively. The U.K. Plans were in a funded status totaling $35.0 million and $32.7 million at the end of 2019 and 2018, respectively, with the fair value of plan assets exceeding the projected benefit obligation. There was a $2.3 million decrease during 2019 in the net prepaid pension balances of the U.K. defined benefit plans.
As a component of our Credit Facility, we maintain a letter of credit facility to satisfy certain contractual obligations. At December 31, 2019, the issued, but undrawn, letters of credit totaled approximately $11.6 million. These letters of credit are typically renewed annually, but unless renewed, will expire as follows:
We maintain funds in trusts to administer claims for certain clients. These funds are not available for our general operating activities and, as such, have not been recorded in the accompanying consolidated balance sheets. We have concluded that we do not have material off-balance sheet financial risk related to these funds at December 31, 2019.
Unbilled revenues decreased $5.3 million, excluding foreign currency exchange impacts. The decrease was primarily due to improved management of receivables in Crawford Claims Solutions and Crawford TPA Solutions.
Accounts Payable and Accrued Liabilities decreased $6.9 million, excluding foreign currency exchange impacts. The decrease was due to higher payments for accrued compensation, incentive compensation and accounts payable in 2019.
The Company often sells multiple lines of claims processing and different levels of processing depending on the complexity of the claims within a contract. The Company typically provides a menu of offerings from which the customer chooses to purchase or not at their discretion. The price of each service is separate and distinct and provides a separate and distinct value to the customer. Pricing is consistent for each service irrespective of the other service(s) or quantities requested by the customer. For example, if we provide claims processing for auto and general liability, those services are priced and delivered independently.
The indefinite-lived intangible assets consisting of the Crawford TPA Solutions and SLS trade names, with carrying values of $29.1 million and $1.7 million, respectively, are also evaluated for potential impairment on an annual basis or when indicators of potential impairment are identified. SLS operates in the Crawford Claim Solutions segment within the U.K. Based on our 2019 analysis, we do not believe these trade names are impaired. The indefinite-lived intangible asset impairment test involves estimating the fair value using an internally prepared discounted cash flow analysis. The fair values of the Company's trade names are established using the relief-from-royalty method, a form of the income approach. This method recognizes that, by virtue of owning the trade name as opposed to licensing it, a company or reporting unit is relieved from paying a royalty, usually expressed as a percentage of net sales, for the asset's use. The present value of the after-tax costs savings (i.e., royalty relief) at an appropriate discount rate including a tax amortization benefit indicates the value of the trade name. We determined the discount rate based on our performance compared to similar market participants, factored by risk in forecasting using a modified capital asset pricing model.
We review the expected long-term rate of return on an annual basis and revise it as appropriate. To support our conclusions, we periodically commission asset/liability studies performed by third-party professional investment advisors and actuaries to assist us in our reviews. These studies project our estimated future pension payments and evaluate the efficiency of the allocation of our pension plan assets into various investment categories. These studies also generate probability-adjusted expected future returns on those assets. As a result of the transition to a liability-driven investment strategy described previously, the expected long-term rates of return on plan assets assumption used to determine 2020 net periodic pension cost are estimated to be 5.50% and 2.54% for the U.S. and U.K. plans, respectively.
Cumulative unrecognized actuarial losses for all plans were $268.4 million through December 31, 2019, compared with $280.9 million through December 31, 2018. These unrecognized losses reflect changes in the discount rates, differences between expected and actual asset returns, and changes to mortality expectations for plan participants, which are being amortized over future periods. These unrecognized losses may be recovered in future periods through actuarial gains. However, unless the minimum amount required to be amortized is below a corridor amount equal to 10.0% of the greater of the projected benefit obligation or the market-related value of plan assets, these unrecognized actuarial losses are required to be amortized and recognized in future periods. For example, projected pension plan expense for 2020 includes $10.4 million of amortization of these actuarial losses versus $10.8 million in 2019, $10.7 million in 2018 and $11.2 million in 2017.
We estimate the service and interest components of net periodic benefit cost for U.S. and international pension and other postretirement benefits. This approach discounts the individual expected cash flows underlying the service cost and interest cost using the applicable spot rates derived from the yield curve used to discount the cash flows used to measure the benefit obligation. For the pension plans, the weighted average spot rates used to determine interest costs were 2.72% for the Company’s U.S. plans and 1.71% for the U.K. plans.
Our effective tax rate, defined as our provision for income taxes divided by income before income taxes, for financial reporting purposes in 2019, 2018, and 2017 was 59.7%, 42.0%, and 35.6%, respectively. If our effective tax rate used for financial reporting purposes changed by 1.0%, we would have recognized an increase or decrease to income taxes of approximately $236,000, $441,000, and $635,000 for the years ended December 31, 2019, 2018, and 2017, respectively. Our effective tax rate for financial reporting purposes is expected to range between 31% and 33% in 2020 before considering any discrete items and assuming no changes in tax law or policy in the material jurisdictions in which we operate.
Our tax credit carryforwards primarily consist of $11.3 million of foreign tax credit ("FTC") carryforwards, which materially expire in 2020. Companies that cannot credit all the foreign taxes paid or deemed paid in a particular tax year because their foreign taxes exceed their FTC limitation are allowed to carry their excess taxes back to the preceding tax year and then forward to the ten succeeding years. Utilization of our FTCs is dependent upon sufficient U.S. regular taxable income and foreign source income in the relevant foreign tax credit basket which is impacted by the interaction of overall domestic and overall foreign loss rules. Based on our projections of income through 2020, including the estimated impact of the Tax Cuts and Jobs Act in the U.S., we expect to fully utilize all but $7.3 million of the FTC carryforwards before expiration after consideration of the Tax Act and the four sources of taxable income. Accordingly, in the period ended December 31, 2019 we established an additional valuation allowance against $0.3 million of the FTCs.
The NOL carryforwards for which a valuation allowance is not recorded primarily consists of $10.8 million of U.K. NOL carryforwards and $3.9 million of state NOL carryforwards generated by our domestic companies. In the U.K., NOL carryforwards have an unlimited life. Based on our evaluation of sources of taxable income, we expect to fully utilize the U.K. NOL carryforwards. Accordingly, we concluded that it was more likely than not that we should be able to utilize our U.K. NOL carryforwards.
We self-insure certain insurable risks consisting primarily of professional liability, auto liability, employee medical, disability, and workers' compensation. Insurance coverage is obtained for catastrophic property and casualty exposures, including professional liability on a claims-made basis, and those risks required to be insured by law or contract. Most of these self-insured risks are in the U.S. Provisions for claims incurred under self-insured programs are made based on our estimates of the aggregate liabilities for claims incurred, including estimated legal fees, losses that have occurred but have not been reported to us, and the adverse developments on reported losses. These estimated liabilities are calculated based on historical claim payment experience, the expected life of the claims, and other factors considered relevant to the claims. The liabilities for claims incurred under our self-insured workers' compensation and employee disability programs are discounted at the prevailing risk-free rate for government issues of an appropriate duration. All other self-insured liabilities are undiscounted. Each quarter we evaluate the adequacy of the assumptions used in developing these estimated liabilities and make adjustments as necessary. Changes in estimates are recognized in the period in which they are determined. Historically, our estimates have been materially accurate.
(1) The total net income presented in the consolidated statement of shareholders' investment for the years ended December 31, 2017, December 31, 2018 and December 31, 2019 excludes $968, $1,275 and $3,191 respectively, in net loss attributable to the redeemable noncontrolling interests.
The accompanying consolidated financial statements were prepared in accordance with generally accepted accounting principles in the U.S. ("GAAP") and include the accounts of the Company, its majority-owned subsidiaries, and variable interest entities in which the Company is deemed to be the primary beneficiary. Significant intercompany transactions are eliminated in consolidation. Financial results from the Company's operations outside of the U.S., Canada, the Caribbean, and certain subsidiaries in the Philippines, are reported and consolidated on a two-month delayed basis in accordance with the provisions of Accounting Standards Codification ("ASC") 810, "Consolidation," in order to provide sufficient time for accumulation of their results. Accordingly, the Company's December 31, 2019, 2018, and 2017 consolidated financial statements include the financial position of such operations as of October 31, 2019 and 2018, respectively, and the results of their operations and cash flows for the fiscal periods ended October 31, 2019, 2018, and 2017, respectively.
The Company has controlling ownership interests in several entities that are not wholly-owned by the Company. The financial results and financial positions of these controlled entities are included in the Company's consolidated financial statements, including the controlling interests, noncontrolling interests, and redeemable noncontrolling interests. The noncontrolling interests and redeemable noncontrolling interests represent the equity interests in these entities that are not attributable, either directly or indirectly, to the Company. On the Company's Consolidated Statements of Operations, net income or loss is separately attributed to the controlling interests and noncontrolling interests and redeemable noncontrolling interests.
The Company consolidates the liabilities of its deferred compensation plan and the related assets, which are held in a rabbi trust and also considered a VIE of the Company. The rabbi trust was created to fund the liabilities of the Company's deferred compensation plan. The Company is considered the primary beneficiary of the rabbi trust because the Company directs the activities of the trust and can use the assets of the trust to satisfy the liabilities of the Company's deferred compensation plan. At December 31, 2019 and 2018, the liabilities of this deferred compensation plan were $8,428,000 and $8,914,000, respectively, which represented obligations of the Company rather than of the rabbi trust, and the values of the assets held in the related rabbi trust were $16,527,000 and $16,402,000, respectively. These liabilities and assets are included in "Other noncurrent liabilities" and "Other noncurrent assets" on the Company's Consolidated Balance Sheets, respectively.
The Company's Crawford Claims Solutions segment generates revenue for claims management services provided to insurance companies and self-insured entities related to property, casualty and catastrophe losses caused by physical damage to commercial and residential real property and personal property. The Company's Crawford TPA Solutions segment is a third party administrator that generates revenue through its Claims Management and Medical Management service lines. The Company's Crawford Specialty Solutions segment principally generates revenues through its Global Technical Services and Contractor Connection service lines as well as its former Garden City Group service line prior to its June 15, 2018 disposition. The Global Technical Services service line generates revenues for claims management services provided to insurance companies and self-insured entities related to large, complex losses with technical adjusting and industry experts. The Contractor Connection service line generates revenue through its independently managed contractor network, with approximately 6,000 credentialed residential and commercial contractors. Prior to its disposition, the Garden City Group service line generated revenues by performing legal settlement administration services on behalf of law firms, corporations, government agencies, and courts. See Note 2, “Revenue Recognition” for further discussion on the Company’s revenue recognition policies.
The Company maintains an allowance for doubtful accounts for estimated losses resulting primarily from the inability of clients to make required payments. Such losses are accounted for as bad debt expense, while adjustments to invoices are accounted for as reductions to revenue. These allowances are established using historical write-off or adjustment information to project future experience and by considering the current creditworthiness of clients, any known specific collection problems, and an assessment of current industry and economic conditions. Actual experience may differ significantly from historical or expected loss results. The Company writes off accounts receivable when they become uncollectible, and any payments subsequently received are accounted for as recoveries. A summary of the activities in the allowance for doubtful accounts for the years ended December 31, 2019, 2018, and 2017 is as follows:
Goodwill is an asset that represents the excess of the purchase price over the fair value of the separately identifiable net assets (tangible and intangible) acquired in certain business combinations. Indefinite-lived intangible assets consist of trade names associated with acquired businesses. Goodwill and indefinite-lived intangible assets are not amortized, but are subject to impairment testing at least annually. Other long-lived assets consist primarily of property and equipment, deferred income tax assets, capitalized software, and amortizable intangible assets related to customer relationships, technology, and trade names with finite lives. Other long-lived assets are evaluated for impairment when impairment indicators are identified.
Goodwill impairment testing is performed on a reporting unit basis. If the fair value of the reporting unit exceeds its carrying value, including goodwill, goodwill is considered not impaired. If the carrying value of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The loss recognized cannot subsequently be reversed.
Additions to property and equipment under finance leases, which are excluded from acquisitions of property and equipment in the Company's Statements of Cash Flows, totaled $760,000 for 2017. There were no such additions during 2019 or 2018.
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 accrued compensation, pension plans, self-insurance, and depreciation and amortization.
Foreign currency transactions for the years ended December 31, 2019 and 2017 resulted in net losses of $243,000 and $685,000, respectively. Foreign currency transactions for the year ended December 31, 2018 resulted in a net gain of $73,000.
In February 2018, the FASB issued ASU 2018-02, "Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." This update allows companies to reclassify stranded tax effects resulting from the 2017 Tax Cuts and Jobs Act ("Tax Act"), from accumulated other comprehensive income (loss) to retained earnings. This update is effective for annual periods beginning after December 15, 2018, and interim periods thereafter. The Company adopted this ASU for the period ended March 31, 2019 and elected not to reclassify the income tax effects of the Tax Act from accumulated other comprehensive loss to retained earnings.
In June 2016, the FASB issued ASU 2016-13, "Measurement of Credit Losses on Financial Instruments" together with its subsequent related amendments in 2018 and 2019, collectively referred to as Topic 326. Topic 326 replaces the incurred loss methodology to record credit losses with a methodology that reflects the expected credit losses for financial assets not accounted for at fair value, including trade receivables, with gains and losses recognized through income. The expected credit loss methodology incorporates past experience, current conditions and reasonable and supportable forecasts affecting collectability of these assets. Topic 326 is effective for annual periods beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted for fiscal years beginning after December 15, 2018. The Company plans to adopt Topic 326 on January 1, 2020 using a modified retrospective approach. The Company's analysis and evaluation of the new standard and its potential impact on our consolidated financial statements will continue through its effective date in the first quarter of 2020.
Compensation-Retirement Benefits: Changes to the Disclosure Requirements for Defined Benefit Plans
Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract
As of January 1, 2018, the Company adopted ASC 606 using the modified retrospective method for those contracts which were not substantially completed as of the transition date. The reported results for the year ended December 31, 2019 and December 31, 2018 reflect the application of ASC 606.
The Company's Crawford Claims Solutions segment generates revenue for claims management services provided to insurance companies and self-insured entities related to property, casualty and catastrophe losses caused by physical damage to commercial and residential real property and certain types of personal property. The Company charges on a fee-per-claim basis for each optional purchase of the claims management services exercised by its customer. Revenue is recognized over time as the performance obligations are satisfied through the effort expended to research, investigate, evaluate, document and report the claim and control of these services are transferred to the customer. Revenue is recognized based on historical claim closure rates and claim type for fixed fee claims applied utilizing a portfolio approach based on time elapsed for these claims. For claims billed on a time and expense incurred basis, which are considered variable consideration, the Company recognizes revenue at the amount in which it has the right to invoice for services performed. These methods of revenue recognition are the most accurate depiction of the transfer of the claims management services to the customer. The Company also generates revenue by providing on-demand inspection, verification and other task specific field services for businesses and consumers. Task assignment services are single optional purchase performance obligations which are generally satisfied at a point in time when the control of the service is transferred to the customer. Therefore, revenue is recognized when the customer receives the service requested.
The following table presents Crawford Claims Solutions revenues before reimbursements disaggregated by geography for the years ended December 31, 2019 and 2018. The Company considers all Crawford Claims Solutions revenues to be derived from one service line.
The following table presents Crawford Specialty Solutions revenues before reimbursements disaggregated by service line and geography for the years ended December 31, 2019 and 2018.
For claims management services, the Company typically has one performance obligation; however, it also provides the customer with an option to acquire additional services. The Company sells multiple lines of claims processing and different levels of processing depending on the complexity of the claims. The Company typically provides a menu of offerings from which the customer chooses to purchase at their option. The price of each service is separate and distinct and provides a separate and distinct value to the customer. Pricing is consistent for each service irrespective of the other services or quantities requested by the customer. For example, if the Company provides claims processing for both auto and general liability, those services are priced and delivered independently.
When the Company receives consideration from a customer prior to transferring services to the customer under the terms of certain claims management agreements, it records deferred revenues on the Company’s Consolidated Balance Sheets, which represents a contract liability. These fixed-fee service agreements typically result from the Crawford TPA Solutions segment and require the Company to handle claims on either a one- or two-year basis, or for the lifetime of the claim. In cases where it handles a claim on a non-lifetime basis, the Company typically receives an additional fee on each anniversary date that the claim remains open. For service agreements where it provides services for the life of the claim, the Company is paid one upfront fee regardless of the duration of the claim. The Company recognizes deferred revenues as revenues as it performs services and transfers control of the services to the customer and satisfies the performance obligation which it determines utilizing a portfolio approach.
As of December 31, 2019, the Company had $88.6 million of remaining performance obligations related to claims and non-claims services in which the price is fixed. Remaining performance obligations consist of deferred revenues as well as certain unbilled receivables that are considered contract assets. The Company expects to recognize approximately 70% of our remaining performance obligations as revenues within one year and the remaining balance thereafter. See the discussion below regarding the practical expedients elected for the disclosure of remaining performance obligations.
The Company has a sales incentive compensation program where remuneration is based on the revenues recognized in the period and does not represent an incremental cost to the Company which provides a future benefit expected to be longer than one year and would meet the criteria to be capitalized and presented as a contract asset on the Company's Consolidated Balance Sheets.
During the year ended December 31, 2018, the Company acquired two separate Global Technical Services businesses for total consideration of approximately $3,400,000 which is comprised of $2,500,000 paid at closing, net of cash acquired of $134,000, $348,000 to be paid in one year and contingent earnout consideration of $377,000. The acquisitions were accounted for under the guidance of ASC 805-10, as business combinations under the acquisition method. As a result of the acquisitions, the Company recognized net tangible assets of $462,000, net of both the deferred payment and contingent earnout, definite lived intangible assets of $1,094,000, goodwill of $1,296,000 and deferred taxes of $202,000. The results of the acquisitions are reported within the Company's Crawford Specialty Solutions operating segment.
During the year ended December 31, 2018, the Company completed the sale of its Garden City Group business (the “GCG Business”) to EPIQ Class Action & Claims Solutions, Inc. ("EPIQ") for cash proceeds of $42,636,000. At the time of the disposal, the GCG Business included total assets of $70,630,000 and total liabilities of $10,147,000. The total asset balance was primarily comprised of accounts receivable, unbilled revenues and capitalized software costs. After including transaction and other costs related to the sale, the Company recognized a pretax loss on the disposal of $20,270,000. The loss on disposal is presented in the Consolidated Statements of Operations as a separate charge "Loss on disposition of business line".
The Company recognized a non-cash goodwill impairment charge in 2019 totaling $17,484,000, related to the valuation of our Crawford Claims Solutions segment, due to lower forecasts in that reporting unit. There were no goodwill impairment charges in 2018. The Company recognized a goodwill impairment in the Garden City Group reporting unit of $19,598,000 during the year ended December 31, 2017. These impairment charges did not affect the Company's liquidity and had no effect on the Company's compliance with the financial covenants under its Credit Facility.
The following is a summary of finite-lived intangible assets acquired through business acquisitions as of December 31, 2019 and 2018:
The following is a summary of indefinite-lived intangible assets at December 31, 2019 and 2018:
Long-term debt consisted of the following at December 31, 2019 and 2018:
On June 15, 2018, the Company, the Company’s guarantor subsidiaries party thereto, Wells Fargo and the other lenders party thereto entered into a Limited Consent and First Amendment to the Amended and Restated Credit Agreement (“the Amendment”) that consented to the Company’s disposition of the GCG Business. No other terms discussed below were changed due to the Amendment.
The obligations of the Borrowers under the Amended and Restated Credit Agreement are guaranteed by each existing material domestic subsidiary of the Company, certain other domestic subsidiaries of the Company and certain existing material foreign subsidiaries of the Company that are disregarded entities for U.S. income tax purposes (each such foreign subsidiary, a "Disregarded Foreign Subsidiary"), and such obligations are required to be guaranteed by each subsequently acquired or formed material domestic subsidiary and Disregarded Foreign Subsidiary (each, a "Guarantor"), and the
At December 31, 2019, the Company was in compliance with the financial covenants under the Credit Facility. If the Company does not meet the covenant requirements in the future, it would be in default under the Credit Facility. Upon the occurrence of an event of default, the lenders may terminate the loan commitments, accelerate all loans and exercise any of their rights under the Credit Facility and ancillary loan documents.
Short-term borrowings under the Credit Facility totaled $28,531,000 and $23,195,000 at December 31, 2019 and 2018, respectively. The Company expects, but is not required, to repay all of such short-term borrowings at December 31, 2019 in 2020.
Principal repayments of long-term debt, including current portions and finance leases, as of December 31, 2019 are expected to be as follows, assuming no prepayments or extensions beyond the stated maturity:
The Company determines if an arrangement is a lease at inception. The Company's and its subsidiaries' leases include office space, computer equipment, and automobiles under operating and finance leases. These lease agreements have remaining lease terms of 1 to 12 years. Some of these lease agreements include options to extend the leases for up to 5 years, options to terminate the leases within 1 year, rental escalation clauses and periodic adjustments for inflation, all of which are considered in the determination of lease payments. These lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The Company's finance leases are not material for the year ended December 31, 2019 and are excluded from the disclosures below. The following table presents the lease-related assets and liabilities recorded on the Company's Consolidated Balance Sheets related to its operating leases:
The components of operating lease costs within the Company's Consolidated Statements of Operations consisted of the following for the year ended December 31, 2019:
Supplemental cash flow information related to operating leases for the three months and year ended December 31, 2019 were as follows:
Future undiscounted operating lease payments reconciled to total operating lease liabilities are as follows:
Net cash payments for income taxes were $16,996,000, $8,168,000, and $15,574,000 in 2019, 2018, and 2017, respectively.
No additional income or withholding taxes have been provided for any undistributed foreign earnings, other than those subject to the Transition Tax nor have any taxes been provided for outside basis difference inherent in these entities as these amounts continue to be indefinitely reinvested in foreign operations. We have estimated that we have book over tax basis differences of approximately $61.0 million. Due to withholding tax, basis computations, and other related tax considerations, it is not practicable to estimate any taxes to be provided on outside basis differences at this time.
At December 31, 2019, the Company had deferred tax assets related to loss carryforwards of $26,034,000, before netting of unrecognized tax benefits of $511,000. An estimated $16,342,000 of the deferred tax assets will not expire, and $9,692,000 will expire over the next 20 years if not utilized by the Company.
Changes in the Company's deferred tax valuation allowance are recorded as adjustments to the provision for income taxes. An analysis of the Company's deferred tax asset valuation allowances is as follows for the years ended December 31, 2019, 2018, and 2017.
Changes to the valuation allowance for the year ended December 31, 2019 were primarily due to anticipated expiration of certain state NOLs after consideration of the four sources of taxable income and losses in certain of the Company’s international operations. Changes to the valuation allowance for the year ended December 31, 2018 were primarily due to anticipated expiration of foreign tax credits after consideration of the Tax Act and the four sources of taxable income and losses in certain of the Company’s international and domestic operations. For the year ended December 31, 2017 the change was primarily due to losses in certain of the Company’s international operations and domestic operations impacting state NOLs.
Certain of the Company's U.K. Plans have fair values of plan assets that exceed the projected benefit obligations. For these plans, the projected benefit obligations and the fair value of plan assets were as follows as of December 31, 2019 and 2018:
Shares of the Company's two classes of common stock are traded on the NYSE under the symbols CRD-A and CRD-B, respectively. The Company's two classes of stock are substantially identical, except with respect to voting rights and the Company's ability to pay greater cash dividends on the non-voting Class A Common Stock than on the voting Class B Common Stock, subject to certain limitations. In addition, with respect to mergers or similar transactions, holders of Class A Common Stock must receive the same type and amount of consideration as holders of Class B Common Stock, unless different consideration is approved by the holders of 75% of the Class A Common Stock, voting as a class. As described in Note 11, "Stock-Based Compensation," certain shares of CRD-A are issued with restrictions under incentive compensation plans.
Effective May 9, 2019, the Company's Board of Directors authorized the repurchase of up to 2,000,000 shares of CRD-A or CRD-B (or a combination of the two) through December 31, 2020 (the "2019 Repurchase Authorization"). Under the 2019 Repurchase Authorization, repurchases may be made for cash, in the open market or privately negotiated transactions at such times and for such prices as management deems appropriate, subject to applicable contractual and regulatory restrictions.
The Company computes earnings per share of CRD-A and CRD-B using the two-class method, which allocates the undistributed earnings for each period to each class on a proportionate basis. The Company's Board of Directors has the right, but not the obligation, to declare higher dividends on CRD-A than on CRD-B, subject to certain limitations. In periods when the dividend is the same for CRD-A and CRD-B or when no dividends are declared or paid to either class, the two-class method generally will yield the same earnings per share for CRD-A and CRD-B. During 2019, 2018 and 2017, the Board of Directors declared a higher dividend on CRD-A than on CRD-B.
The computations of diluted net income attributable to shareholders of Crawford & Company per common share were as follows:
Comprehensive income (loss) for the Company consists of the total of net income, foreign currency translation adjustments, and accrued pension and retiree medical liability adjustments. Foreign currency translation adjustments include net unrealized losses from intra-entity loans that are long-term in nature of $(928,000), $(1,838,000), and $(836,000) for the years ended December 31, 2019, 2018, and 2017, respectively. The changes in components of "Accumulated other comprehensive loss" ("AOCL"), net of taxes and noncontrolling interests, included in the Company's audited Consolidated Balance Sheets were as follows:
The Company has various stock-based incentive compensation plans for its employees and members of its Board of Directors. Only shares of CRD-A can be issued under these plans. The fair value of an equity award is estimated on the grant date without regard to service or performance conditions. The fair value is recognized as compensation expense over the requisite service period for all awards that vest. When recognizing compensation expense, estimates are made for the number of awards that are expected to vest, and subsequent adjustments are made to reflect both changes in the number of shares expected to vest and actual vesting. Compensation expense recognized at the end of any year equals at least the portion of the grant-date value of an award that has vested at that date.
The pretax compensation expense recognized for all stock-based compensation plans was $4,109,000, $6,196,000, and $6,661,000 for the years ended December 31, 2019, 2018, and 2017, respectively. The decreases in 2019 as compared to 2018, as well as 2018 as compared to 2017, were primarily driven by increased performance share forfeiture activity.
The total income tax benefit recognized in the Consolidated Statements of Operations for stock-based compensation arrangements was approximately $888,000, $1,475,000, and $2,219,000 for the years ended December 31, 2019, 2018, and 2017, respectively. Some of the Company's stock-based compensation awards are granted under plans which are designed not to be taxable as compensation to the recipient based on tax laws of the U.S. or other applicable country. Accordingly, the Company does not recognize tax benefits on all of its stock-based compensation expense. Adjustments to additional paid-in capital for differences between deductions taken on its income tax returns related to stock-based compensation plans and the related income tax benefits previously recognized for financial reporting purposes were not significant in any year.
The weighted average grant date fair value of stock options granted during the year ended December 31, 2019, 2018, and 2017 was $2.57, $2.78 and $2.73, respectively. Options exercised in 2019, 2018, and 2017 had an intrinsic value of $446,000, $80,000, and $234,000, respectively. The fair value of options that vested in 2019, 2018, and 2017 was $1,000,000, $36,000, and $33,000, respectively.
At December 31, 2019, the unrecognized compensation cost related to unvested employee stock options was $889,000. Directors' stock options had no unrecognized compensation cost since directors' options vest upon grant, and the grant-date fair values were fully expensed on the grant date.
The total fair value of the performance shares that vested in 2019, 2018, and 2017 was $1,823,000, $2,662,000, and $3,597,000, respectively.
Compensation expense recognized for all restricted shares for the years ended December 31, 2019, 2018, and 2017 was $1,205,000, $1,176,000, and $1,205,000, respectively. As of December 31, 2019, there was $358,000 of total unearned compensation cost related to nonvested restricted shares which is expected to be recognized by June 30, 2021.
Under the U.S. Plan, the Company is authorized to issue up to 1,200,000 shares of CRD-A to eligible employees. Participating employees can elect to have up to $25,000 of their eligible annual earnings withheld to purchase shares at the end of the one-year withholding period which starts each July 1 and ends the following June 30. The purchase price of the stock is 85% of the lesser of the closing price of a share of such stock on the first day or the last day of the withholding period. Participating employees may cease payroll withholdings during the withholding period and/or request a refund of all amounts withheld before any shares are purchased.
During the years ended December 31, 2019, 2018 and 2017, a total of 131,100, 143,769, and 101,708 shares, respectively, of CRD-A were issued under the prior U.S. employee stock purchase plan to the Company's employees at average purchase prices of $7.38, $7.32, and $6.61 in 2019, 2018, and 2017, respectively. At December 31, 2019, an estimated 102,000 shares will be issued and purchased under the U.S. Plan in 2020. During the years ended December 31, 2019, 2018, and 2017, compensation expense of $277,000, $321,000, and $278,000, respectively, was recognized for the prior U.S. employee stock purchase plan.
Under the International Plan, up to 1,000,000 shares of CRD-A may be issued. Participating employees can elect to have up to $21,250 of their eligible annual earnings withheld to purchase up to 5,000 shares of CRD-A at the end of the one-year withholding period which starts each July 1 and ends the following June 30. The purchase price of the stock is 85% of the lesser of the closing price for a share of such stock on the first day or the last day of the withholding period. Participating employees may cease payroll withholdings during the withholding period and/or request a refund of all amounts withheld before any shares are purchased. During 2019, 2018, and 2017, 4,264, 8,740, and 8,342 shares, respectively, were issued under the International Plan. Compensation expense was immaterial for this plan in all three years.
During 2019, the Company impaired and expensed goodwill of $17,484,000. During 2018, the Company impaired and expensed an indefinite-lived trade name of $1,056,000. During 2017, the Company impaired and expensed goodwill of $19,598,000. See Note 1, "Significant Accounting and Reporting Policies" and Note 4, "Goodwill and Intangible Assets," where discussed in more detail.
The following table summarizes the level within the fair value hierarchy used to determine the fair value of the Company's pension plan assets for its U.S Qualified Plan at December 31, 2019 and 2018:
The following table summarizes the level within the fair value hierarchy used to determine the fair value of the Company's pension plan assets for its U.K. plans at December 31, 2019 and 2018:
The Company's three reportable segments represent components of the business for which separate financial information is available, and which is evaluated regularly by the CODM. The segments, organized based upon the nature of services, are: Crawford Claims Solutions, which primarily serves the global property and casualty insurance company markets; Crawford TPA Solutions, which serves the global casualty, disability and self-insurance marketplace; and Crawford Specialty Solutions which serves the global property and casualty insurance company markets, and prior to the Garden City Group disposal on June 15, 2018, the class action, regulatory, mass tort, bankruptcy, and other legal settlement markets, primarily in the U.S. and Canada. Intersegment sales are recorded at cost and are not material.
In the normal course of its business, the Company sometimes pays for certain out-of-pocket expenses that are thereafter reimbursed by its clients. Under GAAP, these out-of-pocket expenses and associated reimbursements are required to be included when reporting expenses and revenues, respectively, in the Company's consolidated results of operations. However, in evaluating segment results, Company management excludes these reimbursements and related expenses from segment results, as they offset each other.
Capital expenditures for the years ended December 31, 2019, 2018, and 2017 are shown in the following table:
The total of the Company's reportable segments' revenues before reimbursements reconciled to total consolidated revenues for the years ended December 31, 2019, 2018, and 2017 was as follows:
The Company's reportable segments' total operating earnings reconciled to consolidated income before income taxes for the years ended December 31, 2019, 2018, and 2017 were as follows:
In the normal course of its business, the Company is sometimes named as a defendant or responsible party in suits or other actions by insureds or claimants contesting decisions made by the Company or its clients with respect to the settlement of claims. Additionally, certain clients of the Company have in the past brought, and may, in the future bring, claims for indemnification on the basis of alleged actions by the Company, its agents, or its employees in rendering services to clients. The majority of these claims are of the type covered by insurance maintained by the Company. However, the Company is responsible for the deductibles and self-insured retentions under various insurance coverages. In the opinion of Company management, adequate provisions have been made for such known and foreseeable risks.
Restructuring charges for the year ended December 31, 2017 were related to the establishment and phase in of the Company's Global Business Services Center in the Philippines and Global Technology Services Center in India (the "Centers"), restructuring and integration costs related to reductions of administrative costs and consolidation of management layers in certain operations, and other restructuring charges for asset impairments and lease termination costs.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 5, 2020 expressed an unqualified opinion thereon.
The Company recognized non-cash goodwill impairment in the amount of $17.5 million related to its Crawford Claims Solutions reporting unit in the fourth quarter of 2019. See Note 4, "Goodwill and Intangible Assets" in the audited consolidated financial statements included in this Item 8. The Company recognized a pretax loss for Arbitration and claim settlements of $12.6 million in 2019. The Company recognized a pretax loss on the disposal of the Garden City Group business of $20.3 million in 2018. See Note 3, "Acquisitions and Disposition of Business Line" in the audited consolidated financial statements included in this Item 8. The provision for income taxes in 2019 and 2018 included the impact of these transactions and tax valuation adjustments.