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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
--------------------------------------
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____to_____
Commission file no.0-15152
FIND/SVP, INC.
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(Exact name of Registrant as specified in its charter)
New York 13-2670985
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(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)
625 Avenue of the Americas, New York, NY 10011
- ---------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (212) 645-4500
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par
value $.0001 per share
Title of Class
******************************
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
------------------ ----------------
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
YES NO X
------------------ ----------------
-------------------------------------------------------------
As of March 1, 2001 the aggregate market value of the voting stock held by
non-affiliates of the registrant was $3,069,032.00.
As of March 1, 2001 there were 7,605,943 shares of Common Stock, par value
$.0001 per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Not applicable.
1
PART I
ITEM 1
BUSINESS
GENERAL
FIND/SVP, Inc. ("FIND/SVP" or the "Company") provides broad consulting,
advisory and business intelligence services substantially by telephone primarily
to executives and other decision-making employees. The Company's strategy is to
build a base of regular clients who will utilize the Company's people and
resources for their research, business intelligence and information needs.
The Company was formed under the laws of New York in 1969. In 1971, the
Company became affiliated with SVP International S.A. ("SVP International")
through a licensing agreement which gave the Company the right to the SVP name
and provided access to the resources of what is currently 15 additional SVP
affiliated companies located around the world.
Through its Quick Consulting and Research Service ("QCS"), FIND/SVP
provides retainer clients with access to the subject and technical expertise of
its staff as well as the resources of a large information center. Within each
retainer client's organization, specific individuals receive a Membership Card,
which entitles them to make requests via the telephone and the Internet for
consultation and research assistance. In response, the staff of QCS provides
customized answers in rapid turnaround time, generally within two business days
or less of the request. The QCS service is positioned to be an indispensable
daily partner for decision-makers by providing, on a retainer basis, a
cost-effective "quick consulting" service accessible by telephone or the
Internet. The service is designed to be a valuable resource to small and medium
sized corporations that do not maintain in-house information centers and as a
supplement to in-house resource centers of large corporations. At December 31,
2000, there were 1,907 QCS retainer clients and 11,460 Membership Cardholders.
The Company intends to seek to expand its base of QCS retainer clients, and to
offer these clients an expanded array of business intelligence, research and
advisory services. The Company's Live AnswerDesk offers immediate, on-demand,
question answering and personal search assistance from live experts. It is
designed as a way to enhance the loyalty of the members of various consumer
groups. The Company also produces The Information Advisor newsletter.
In addition to QCS, the Company offers the market research services of
its Strategic Consulting and Research Group ("SCRG"), which is designed to
handle more extensive, in-depth custom market research and competitive
intelligence requests, as well as customer satisfaction and loyalty programs.
The QCS and SCRG businesses represent the core competencies of the Company,
which is to provide the expertise of its staff in an on-demand, consulting and
business advisory relationship with small, medium and large sized corporations.
FIND/SVP's research resources include access to approximately 4,000
computer databases and subscription-paid web sites, approximately 8,000 of its
own files organized by subject and by company, current and back issues of
approximately 1,500 periodicals and journals and approximately 5,000 books and
reference works. Through a licensing agreement, the Company is associated with
the international SVP network of companies and correspondents providing similar
services. This enables FIND/SVP to obtain information through approximately
1,000 additional consultants in the SVP worldwide network.
2
SERVICES AND PRODUCTS
The Company's services and products offer business executives fully
integrated research, business intelligence and management advisory services in a
broad range of industries and disciplines. The Company provides services to help
clients acquire, interpret and use knowledge.
FIND/SVP's research resources at December 31, 2000 include a staff of
85 consultants and researchers in its QCS and SCRG divisions, a reference center
which contains approximately 8,000 of its own subject and company files, access
to approximately 4,000 computer databases, current and back issues of
approximately 1,500 titles, and approximately 5,000 books and reference works,
and a field investigation team with entree into public and private libraries in
the New York area. Through a licensing agreement, the Company is associated with
the international SVP network of companies and correspondents, which enables it
to obtain information worldwide. See "SVP Network; Licensing Agreement With SVP
International." The materials used in the generation of the Company's services
and products are updated and checked by staff members. The Company has its own
training program in which its employees participate.
SERVICES
QUICK CONSULTING AND RESEARCH SERVICE ("QCS"). QCS provides clients
with access to the staff and resources of a large information center, which
seeks to handle research inquiries and requests for business assistance in rapid
turnaround time. Through QCS, the Company is in the business of providing, on a
volume basis, customized answers to business questions on a wide variety of
topics. The service is offered only on a retainer basis. Retainer client
organizations pay in advance, either monthly, quarterly, semi-annually or
annually, a retainer fee. In return, the client organizations receive Membership
Cards for their designated executives or employees. The Membership Card entitles
each cardholder to use QCS and also offers preferential use of, and/or discounts
on, the Company's other services and products. The Company has several fixed and
adjustable fee retainer programs in effect. Out-of-pocket expenses incurred to
answer questions are invoiced in addition to retainer fees.
Retainer clients call FIND/SVP with their business issues and research
needs, give their card number and explain their request to consultants who are
divided into the following six practice groups and three support teams:
PRACTICE GROUPS:
(1) THE CONSUMER PRODUCTS AND SERVICES GROUP is responsible for
research on retailing and apparel, home furnishings, cosmetics and
toiletries, food and beverages, media and entertainment, publishing,
sports and leisure, education, philanthropy, restaurants, food
services, household products, appliances and furniture;
(2) THE TECHNOLOGY, INFORMATION AND COMMUNICATIONS GROUP covers
computers, software, electronic media and office equipment, and
provides expert help with Internet research, hands-on training, on-site
seminars, competitive intelligence, Web marketing/trends and Internet
user demographics.
(3) THE HEALTHCARE AND PHARMACEUTICALS GROUP covers products and
services manufactured by and marketed to businesses in healthcare
fields, including pharmaceuticals, medical and diagnostic equipment,
biotechnology, health resources and clinical information;
3
(4) THE FINANCIAL AND BUSINESS SERVICES GROUP handles requests on
banking, insurance, mergers and acquisitions, real estate and
mortgages, the securities and investment industries, customer
satisfaction and corporate management theory, and provides credit
reports on specific companies and Securities and Exchange Commission
documents on public companies;
(5) THE INDUSTRIAL PRODUCTS AND SERVICES GROUP covers manufacturing,
energy, chemicals, plastics, pulp and paper, metals and mining,
transportation, environment, construction and agriculture; and
(6) THE MANAGEMENT ADVISORY GROUP handles requests on legal research,
human resources research and accounting and tax issues;
SUPPORT TEAMS:
(1) THE INTERNATIONAL TEAM addresses executive's needs for
international finance and trade, global corporate competitive
intelligence and worldwide management strategies;
(2) THE DOCUMENTS TEAM locates and obtains copies of articles,
documents, patents, books, pamphlets, catalogs, conference proceedings,
government reports and product samples; and
(3) THE MARKETING TEAM covers direct marketing, advertising, sales
promotions and demographics.
Client cardholders discuss their research needs with the
Company's consultants and may obtain assistance in formulating their requests.
After the request has been clarified, FIND/SVP's specialists find the needed
information using a combination of the Company's available resources. After
reviewing the findings, the consultants select what appears most relevant to the
client's need, and report the findings, with commentary, as needed.
Documentation of the findings can be sent by any one or a combination of the
following methods: facsimile, courier, messenger, mail or electronic mail. QCS
allows customers to benefit from a fast, convenient and confidential way to
gather knowledge and use the multitude of research resources available today.
Cardholders may ask questions on virtually any subject.
Those requests requiring business intelligence from overseas are
answered by one or more of the information centers in 15 SVP companies worldwide
or by using special SVP correspondents in selected countries where no official
SVP company exists.
QCS is designed to handle client questions requiring less than
approximately three hours of actual staff time. These are automatically covered
by the retainer fee. Requests requiring a more extensive search or a lengthy
written report are not covered by the QCS retainer program and are referred to
the Company's Strategic Consulting and Research Group to be handled separately.
QCS activity is tracked and controlled by a proprietary management
information system called QUESTRAC, which uses recently upgraded
state-of-the-art software technology. The program is based on the know-how
provided by SVP France, the founders of the SVP concept of quick business
advisory services by telephone. Input into the QUESTRAC system provides an
exclusive and confidential database of information about each client, and the
information requested and handled for clients.
At December 31, 2000, there were 1,907 retainer clients, a 4.9%
decrease from December 31, 1999, and 11,460 holders of the Membership Card, an
11.6% decrease from December 31, 1999. During 2000,
4
monthly fees billed to retainer clients (the retainer base) increased by 5.0% to
$1,583,308. Approximately 50% of the top Fortune 100 industrial companies are
QCS retainer clients. Revenues generated by QCS represented 82%, 82% and 74% of
the Company's total revenues for the years ended December 31, 2000, 1999 and
1998, respectively.
LIVE ANSWERDESK ("LAD"). LAD provides immediate, on-demand, question
answering and personal search assistance from live experts. It is designed as a
way to enhance the loyalty of the members of various consumer groups. Revenues
generated by LAD represented 1.0% of the Company's total revenues for the year
ended December 31, 2000, and less than 1.0% for the years ended December 31,
1999 and 1998.
STRATEGIC CONSULTING AND RESEARCH GROUP ("SCRG"). SCRG is designed to
handle more in-depth custom market research and competitive intelligence
assignments. The service is most often used by the Company's QCS retainer
clients as a supplement to that service. Common project requests include
customized market and industry studies, telephone surveys, competitive
intelligence data-gathering and analysis assignments, acquisition studies and
large information collection projects. Additionally, through the Customer
Satisfaction and Loyalty Group, SCRG provides customer satisfaction and loyalty
programs. Through SCRG, the Company provides research as well as interpretation
and analysis. All projects are quoted in advance and billed separately. Revenues
generated by SCRG represented 16%, 17% and 17% of the Company's total revenues
for each of the years ended December 31, 2000, 1999 and 1998, respectively.
NON-CONTINUING PRODUCTS AND SERVICES
In July 1998, the Company completed the sale of substantially all of
the assets of FIND/SVP Published Products, Inc. ("Published Research") pursuant
to an Asset Purchase Agreement dated as of June 26, 1998. The Company recorded a
$20,000 gain related to this sale. Revenues generated from divested activities
represented 9% of the Company's total revenues for the year ended December 31,
1998.
POTENTIAL RELATED SERVICES AND PRODUCTS
The Company plans to expand its services through continued internal
development during 2001. This includes various initiatives aimed at both
business-to-business and consumer users of the Internet. Additionally, the
Company will consider exploring possible alliances with and/or acquisitions of
consulting, research or information properties and companies whose primary
markets are the same as FIND/SVP's market and which would be accretive to the
Company's earnings. There are no commitments or understandings in this regard
and no assurance can be given that the Company will in fact conclude any
acquisitions or internally develop any related services. The foregoing plans are
subject to, among other things, the availability of funds for these purposes.
SVP NETWORK; LICENSING AGREEMENT WITH SVP INTERNATIONAL
Through licensing agreements with SVP ("S'il Vous Plait")
International, 16 companies (the "SVP companies"), including FIND/SVP, form an
international network of information centers. Since each SVP company is based in
a different country, the network has provided the means by which the Company can
obtain international information requested by its clients which it may not
maintain in its library or have access to if generated by or located in another
country. When an SVP company accesses the information center of another SVP
company it is charged a fee for the services provided thereby. Each SVP company
is linked to the SVP network primarily by virtue of its licensing agreement. In
1971, the Company entered into its licensing agreement with SVP International
(formerly SVP Conseil), which was amended in 1981,
5
and obtained the U.S. rights, in perpetuity, to the SVP name and know-how and
access to the SVP International network. Pursuant thereto, SVP International
assisted in the creation, implementation, development and operation of the
Company. The Company has agreed, pursuant to such licensing agreement, to use
its best efforts to have a person selected by SVP International elected to the
Board of Directors of the Company; pursuant to such provision, Brigitte de
Gastines, General Manager of SVP International, is also Chairperson of the Board
for the Company. In addition, Jean-Louis Bodmer, Vice President-Finance and New
Technologies for SVP Group and Eric Cachart, SVP Group's Vice President of
Development and Client Services, are directors of the Company. Historically, SVP
International has engaged in periodic telephonic conversations and meetings with
the Company. By virtue thereof, the Company has benefited from exchanges of
knowledge with SVP International with respect to any enhancements made to SVP
International's information retrieval or billing systems or other proprietary
know-how.
During the first quarter of 1998, SVP International (including
affiliates) increased its ownership in the Company to approximately 37% of the
then outstanding common shares, excluding outstanding warrants, from 18.7% of
the outstanding common shares, excluding outstanding warrants. Concurrent with
the increased ownership, SVP International increased their management
involvement in and physical presence at the Company during 1998, and it is
expected that this will continue into the future. (See "Directors and Executive
Officers of the Registrant - Directors and Officers")
The license agreement provides that SVP International will not compete
with the Company in the United States or enter into any agreement or arrangement
with respect to services similar to those offered by the Company with any entity
which operates or proposes to operate such services in the United States. The
Company, in return, agreed to pay SVP International royalties of $18,000 per
year, plus 2% of the amount of FIND/SVP's gross revenues for each such year,
excluding publishing revenues, derived from certain of its services in excess of
$2,000,000 but less than $4,000,000 and 1% of the amount of such non-publishing
gross revenues in excess of $4,000,000 but less than $10,000,000, and 1.2% of
the gross profit from all publications included in FIND/SVP's gross revenue less
than $10,000,000 for such year. Royalty expense to SVP International totaled
$118,000, $119,000 and $126,000 for the years ended December 31, 2000, 1999 and
1998, respectively.
MARKETS AND CUSTOMERS
The market for FIND/SVP's services and products is comprised primarily
of business executives in a variety of functions, including top management and
marketing, planning, marketing research, sales, information/library, legal,
accounting, tax and new products. FIND/SVP's primary market, in terms of client
organizations, consists of medium to small sized companies. Larger corporations
are, however, among the Company's clients. In certain cases, the service is sold
to more than one department or division of a large corporation. The Company's
appeal to medium to small sized corporations is primarily based on the fact that
these companies do not ordinarily maintain their own research staff and resource
libraries and when they do, they are generally not comprehensive. Large
corporations, on the other hand, often maintain in-house resource centers.
Consequently, these corporations may perceive the Company's QCS service as
unnecessary. The Company believes, however, that in-house corporate libraries
are generally not as comprehensive. Therefore, QCS may be perceived as a
valuable supplemental resource. In addition, in-house centers are good prospects
for the Company's other services. Approximately 50% of the top Fortune 100
industrial companies are QCS retainer clients. Overall, the factors that will
affect the growth of the Company's potential market and its ability to penetrate
it include: (1) the market's perception of the need for and value of consulting,
business intelligence and research services; (2) the trends in the use of
6
internal information centers and databases; and (3) the Company's ability to
extend its personal selling efforts throughout the country.
SALES AND MARKETING
The Company's primary marketing focus is to expand its QCS retainer
client base. In addition to generating revenues from the QCS services, the
retainer client base serves as a ready-made marketplace for SCRG and other
potential services of the Company. QCS is marketed through a combination of
advertising, direct mail, exhibits, sales promotion activities and the Company's
web site. Qualified leads are followed up by FIND/SVP's sales force. These leads
are supplemented by referrals and cold-call selling efforts. The cost of the
Company's advertising and public relations efforts is modest.
COMPETITION
The Company faces competition from three distinct sources: (1) other
research and information services, (2) in-house corporate research centers, and
(3) institutions that sell information directly to end-users.
The Company is aware of several other smaller fee-based on-demand
business information services in the United States. The Company believes that of
these companies it is the largest in terms of revenues and staff size. The
Company believes that the competition may be more significant from organizations
such as Arthur D. Little, Stanford Research Institute and The Conference Board,
which have research capabilities with call-in-service for reference type
questions. To date, however, the call-in-service feature has not been emphasized
by these companies. Although the Company is not aware of direct competitive
companies with larger staffs and revenues, there is no assurance that as the
information industry expands, more competitive companies will not enter the
market. In addition, there is no assurance that a competitive company will not
develop a superior product or service. The Company believes, however, that by
reason of its experience in the industry, its association with the SVP network
and its intent to closely monitor the consulting industry, it will be able to
compete effectively with any potential competitors.
In-house corporate information and research centers present perhaps the
most significant source of competition for the Company today. Large
corporations, in an effort to stay on top of the vast amount of information
available, began to develop in increasing numbers, in-house libraries and
information centers for their employees. While the Company believes that its own
information center serves the added functions of analysis and generation of
information and is larger and better staffed than a majority of these corporate
resource centers, there is no assurance that a significant number of these large
companies will choose to utilize the Company's services and products.
The advent of on-line databases, the Internet and CD-ROM products has
increased the ability of companies to perform information searches and other
research for themselves. Consequently, to the extent companies perceive they can
directly access information from the Internet, on-line databases and acquire
CD-ROM products, FIND/SVP competes with information producers that sell to
end-users. The Company believes, however, that its consultants deliver a
value-added service based on their technical expertise and their ability to
search more information products more quickly than most end users, thereby
delivering a more thorough and economical service. There is no assurance,
however, that companies which develop extensive resource centers will not
accordingly staff them with equally productive personnel.
7
EMPLOYEES
As of December 31, 2000, the Company had 184 full-time employees,
including 4 executive officers, 49 marketing and sales employees, 85 consultants
and research employees, and 46 administrative and general personnel.
The Company's ability to develop, market and sell its services and to
establish and maintain its competitive position will depend, in part, on its
ability to attract and retain qualified personnel. While the Company believes
that it has been successful to date in attracting such personnel, there can be
no assurance that it will continue to do so in the future. The Company is not a
party to any collective bargaining agreements with its employees. It considers
its relations with its employees to be good.
ITEM 2
PROPERTIES
At December 31, 2000, the Company has a lease on approximately 32,000
square feet of office space at 625 Avenue of the Americas, New York, New York,
which became the main offices of the Company in 1987. The lease is subject to
standard escalation clauses, and expires in June 2005. Basic annual rent
expense, determined on the straight-line basis over the term of the lease, is
approximately $694,000.
The Company has additional leased office space for approximately 20,000
square feet at 641 Avenue of the Americas, New York, New York. Such lease
arrangements are subject to standard escalation clauses, and expire in June
2005. Basic annual rent expense, determined on the straight-line basis over the
term of the lease, is approximately $497,000.
ITEM 3
LEGAL PROCEEDINGS
None.
ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
8
PAGE>
PART II
ITEM 5
MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
PRICE RANGE OF COMMON STOCK
The Company's common stock, par value $.0001 per share ("Common
Stock"), is traded on the NASDAQ Small Cap Market under the symbol "FSVP". The
following table sets forth the high and low closing sale prices for the Common
Stock for the periods indicated.
Price Range High Low
- ----------- ---- ---
2000
- ----
1st Quarter 4.0310 2.1880
2nd Quarter 2.6250 1.0000
3rd Quarter 1.2500 0.9380
4th Quarter 1.0000 0.5310
1999
- ----
1st Quarter 1.7813 0.7500
2nd Quarter 1.0000 0.5938
3rd Quarter 1.5625 0.7188
4th Quarter 2.0625 0.7500
On March 1, 2001, there were approximately 836 holders of record of the
Common Stock. Such numbers do not include shares held in "street name."
By letter dated November 13, 2000, the Company received notification
from the NASDAQ Stock Market, Inc. ("NASDAQ") that the Company was not in
compliance with NASDAQ's $1.00 minimum bid price requirement; the shares of the
Common Stock having closed below the minimum bid price for 30 consecutive
business days. To regain compliance with this standard the Common Stock was
required to have a closing bid price at or above $1.00 for ten consecutive
trading days within the 90-calendar day period following the advent of
non-compliance. The Company's Common Stock did not meet the minimum bid price
requirement within that period. The Company requested a hearing with NASDAQ,
which hearing was held on March 22, 2001.
The Company's failure to meet NASDAQ's maintenance criteria may result
in the discontinuance of the inclusion of its securities in NASDAQ. In such
event, trading, if any, in the securities may then continue to be conducted in
the non-NASDAQ over-the-counter market in what are commonly referred to as the
electronic bulletin board and the "pink sheets". As a result, an investor may
find it more difficult to dispose of or to obtain accurate quotations as to the
market value of the securities. In addition, the Company would be subject to a
Rule promulgated by the Securities and Exchange Commission that, if the Company
fails to meet criteria set forth in such Rule, imposes various practice
requirements on broker-dealers who sell securities governed by the Rule to
persons other than established customers and accredited investors. For these
types of transactions, the broker-dealer must make a special suitability
determination for the purchaser and have received the purchaser's written
consent to the transactions prior to sale.
9
Consequently, the Rule may have an adverse effect on the ability of
brokers-dealers to sell the securities, which may affect the ability of
shareholders to sell the securities in the secondary market.
DIVIDEND HISTORY AND POLICY
The Company has never paid cash dividends on its Common Stock and
anticipates that, for the foreseeable future, it will continue to follow a
policy of retaining earnings to finance the expansion and development of its
business. The Company's debt agreements restrict the payment of dividends.
10
ITEM 6
SELECTED FINANCIAL DATA
The following financial data set forth below is derived from the
consolidated financial statements of the Company.
STATEMENTS OF OPERATIONS
Years Ended December 31
-----------------------
(in thousands, except per share amounts)
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
Revenues $23,800 $22,738 $28,175 $32,027 $30,525
Operating (Loss) Income (753) 348 1,329 (3,136) (824)
Net (Loss) Income (535) 883 756 (2,852) (719)
Net (Loss) Income Per Share:
Basic (.07) .12 .11 (.43) (.11)
Diluted (.07) .12 .11 (.43) (.11)
Weighted Average Number of Shares:
Basic 7,450 7,121 7,094 6,593 6,434
Diluted 7,450 7,213 7,100 6,593 6,434
Cash Dividends Paid Per
Common Share - - - - -
BALANCE SHEET DATA
December 31
-----------
(in thousands)
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
Working Capital (Current assets
less current liabilities) $1,587 $2,699 $2,569 $1,016 $3,930
Total Assets 10,783 11,278 11,899 12,481 12,946
Long-Term Notes Payable
excluding current amounts 1,685 3,039 3,523 3,801 3,826
Shareholders' Equity 3,992 3,889 2,988 1,218 4,059
11
ITEM 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
GENERAL
FIND/SVP, Inc. provides a broad consulting, advisory and business
intelligence service to executives and other decision-making employees of client
companies, primarily in the United States. The Company currently operates
primarily in two business segments, providing consulting and business advisory
services including: the Quick Consulting and Research Service ("QCS") which
provides retainer clients with access to the expertise of the Company's staff
and information resources as well as Live AnswerDesk services ("Quick
Consulting"); and the Strategic Consulting and Research Group ("SCRG") which
provides more extensive, in-depth custom market research and competitive
intelligence information, as well as customer satisfaction and loyalty programs
("Strategic Consulting"). Prior to the third quarter of 1998, the Company had
one additional significant operating segment, Published Research Products. The
Company considers its QCS and SCRG service businesses, which operate as
"consulting and business advisory" businesses, to be its core competency.
The Company had an operating loss of $753,000 for the year ended
December 31, 2000 versus operating income of $348,000 and $1,329,000 for the
years ended December 31, 1999 and 1998, respectively. The net loss for the year
ended December 31, 2000 was $535,000 versus net income of $883,000 and $756,000
for the years ended December 31, 1999 and 1998, respectively.
Revenues for 2000 were $23,800,000 and revenues for 1999 were
$22,738,000. On a comparable basis, 1999 revenues were $22,647,000 after
deducting revenues of $91,000 related to the sold Published Research business
unit. The increase in comparable revenues was a result of an increase in the
Company's retainer base (recurring monthly income) in 2000, coupled with a
significant increase in LAD revenues. This was partially offset by a decline in
SCRG revenues for the year. Revenues for 1999 were $22,738,000 and revenues for
1998 were $28,175,000. On a comparable basis, 1998 revenues were $25,500,000
after deducting revenues of $2,700,000 related to the sold Published Research
business unit. The decline in comparable revenues was a result of a decline in
the Company's retainer base in late 1998 and early 1999.
Net income in 1999 was positively affected by a pretax gain of
$1,200,000 (approximately $672,000 after tax) resulting from a collaboration
agreement between FIND/SVP and idealab!, a leading creator and operator of
Internet businesses, to develop find.com, a new Internet site.
Selling, general and administrative expenses were $12,426,000 in 2000,
an increase of $1,579,000 over 1999. Direct costs (those costs directly related
to generating revenue, such as direct labor, expenses incurred on behalf of
clients and the costs of electronic resources and databases) in 2000 were 51.0%
of revenue as compared to 50.8% for the year ended December 31, 1999.
Additionally, selling, general and administrative expenses were 52.2% of revenue
for 2000 as compared to 47.7% for the year ended December 31, 1999. Both total
selling, general and administrative expenses and total direct costs, as well as
these costs as a percentage of revenue, increased primarily due to increased
labor costs and increased marketing and selling costs, as well as the Company's
emphasis on increasing retainer revenue.
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SEGMENT REPORTING
The Company operated in two segments during 2000 and 1999. Prior to that,
the Company had one additional segment. Segment data , which is useful in
understanding results, is as follows:
- ----------------------------------------------------------------------------------------------------------------------
(in thousands) YEARS ENDED DECEMBER 31,
------------------------
2000 1999 1998
---- ---- ----
REVENUES
Quick Consulting $ 19,930 $ 18,851 $ 20,714
Strategic Consulting 3,870 3,887 4,743
Published Research Products -- -- 2,718
---------------------------------------------------
Total revenues $ 23,800 $ 22,738 $ 28,175
===================================================
OPERATING (LOSS) INCOME
Quick Consulting (1) $ 4,545 $ 4,680 $ 5,965
Strategic Consulting (58) 156 403
Published Research Products -- -- 16
---------------------------------------------------
Segment operating (loss) income 4,487 4,836 6,384
Corporate and other (2) (5,318) (3,664) (5,423)
---------------------------------------------------
(Loss) income before (benefit) provision for income taxes $ (831) $ 1,172 $ 961
===================================================
DEPRECIATION AND AMORTIZATION
Quick Consulting $ 583 $ 520 $ 440
Strategic Consulting 68 69 61
Published Research Products -- -- 96
---------------------------------------------------
Total segment depreciation and amortization 651 589 597
Corporate and other 531 516 547
---------------------------------------------------
Total depreciation and amortization $ 1,182 $ 1,105 $ 1,144
===================================================
TOTAL ASSETS
Quick Consulting $ 3,406 $ 3,352
Strategic Consulting 843 735
Published Research Products -- --
----------------------------------
Total segment assets 4,249 4,087
Corporate and other 6,534 7,191
----------------------------------
Total assets $ 10,783 $ 11,278
==================================
CAPITAL EXPENDITURES
Quick Consulting $ 160 $ 218 $ 478
Strategic Consulting 30 25 74
---------------------------------------------------
Total segment capital expenditures 190 243 552
Corporate and other 380 429 66
---------------------------------------------------
Total capital expenditures $ 570 $ 672 $ 618
===================================================
(1) Operating income for the year ended December 31, 1998 includes a
restructuring charge for severance and related costs of $321,000.
(2) Includes interest income, other income, gain on sale of net assets, interest
expense and other expense.
- --------------------------------------------------------------------------------
13
PRODUCT AND SERVICE REVENUES
The Company's revenues increased by $1,062,000 or 4.7%, from
$22,738,000 in 1999 to $23,800,000 in 2000 and decreased by $5,437,000, or
19.3%, from $28,175,000 in 1998 to $22,738,000 in 1999. The increase in 2000 was
due to an increase in QCS and LAD revenues, partially offset by a decrease in
SCRG revenues, as described below. The decrease in 1999 was primarily due to the
sale of Published Research Products completed during the third quarter of 1998,
coupled with a decline in revenues in QCS and SCRG during 1999 as described
below.
QCS revenues increased by $976,000, or 5.3%, from $18,576,000 in 1999
to $19,552,000 in 2000 and decreased by $2,137,000, or 10.3%, from $20,713,000
in 1998 to $18,576,000 in 1999. The increase from 1999 to 2000 was due to an
increase in the average monthly fee paid by retainer clients, partially offset
by the decline in the number of retainer clients. The monthly fees billed to
retainer clients (the retainer base) increased from the beginning of 2000 to the
end of 2000 by 5.0% to $1,583,308.
The decrease from 1998 to 1999 was the result of a 0.9% decline in the
number of retainer clients and a 12.8% decline in the number of retainer
cardholders. The reduction in the retainer base was primarily due to an increase
in the number of rate reductions granted to clients based on their recent usage
history, coupled with a slow-down in new retainer sales during 1998, as compared
to recent years. The slow down in sales was due primarily to staff turnover in
the Business Development area that was experienced throughout 1998. The
reduction in the retainer base began during the third quarter of 1998, and this
was the first time in the Company's history that there had been a reduction in
the retainer base during a full calendar year. The decline continued through the
first quarter of 1999 and, on a dollar value basis, was reversed in the second
quarter of 1999. The Company experienced a growth in the dollar value of the
retainer base in both the third and fourth quarters of 1999, and for the full
year ended December 31, 1999. As a result, the monthly fees billed to retainer
clients (the retainer base) increased from the beginning of 1999 to the end of
1999 by 2.5% to $1,507,782. However, until the retainer base is brought back to
previous levels attained in 1998, retainer revenue in QCS will be lower. In
1999, QCS revenue was lower due to client cancellations exceeding new client
acquisitions.
LAD revenues increased by $179,000, or 426.2%, from $42,000 in 1999
(the year the service began) to $221,000 in 2000.
SCRG revenues decreased by $17,000, or 0.4%, from $3,887,000 in 1999 to
$3,870,000 in 2000 and by $856,000, or 18.1%, from $4,743,000 in 1998 to
$3,887,000 in 1999. The decrease from 1999 to 2000 was a result of a decrease in
sales leads due to employee turnover. The number of new projects begun in the
last half of 2000 decreased as compared to those begun in the last half of 1999.
The decrease from 1998 to 1999 was a continuation of the impact felt by staff
turnover in the second half of 1998. During the fourth quarter of 1998, staff
turnover in SCRG slowed and since then has moderated. As a result, the Company
experienced a decline in revenues during the first two quarters of 1999, as
compared to the like quarters of 1998. The Customer Satisfaction and Loyalty
Division accounted for 13.6%, 22.7% and 28.9% of SCRG's revenue for 2000, 1999
and 1998, respectively.
The Company earned $91,000 and $39,000 in royalties in 1999 and 1998,
respectively, from the sold Published Research unit.
14
DIRECT COSTS
Direct costs (those costs directly related to generating revenue, such
as direct labor, expenses incurred on behalf of clients and the costs of
electronic resources and databases) increased by $584,000, or 5.1%, from
$11,543,000 in 1999 to $12,127,000 in 2000 and decreased by $2,720,000, or
19.1%, from $14,263,000 in 1998 to $11,543,000 in 1999. Direct costs represented
51.0%, 50.8% and 50.6% of revenues, respectively, in 2000, 1999 and 1998. The
increase in total direct costs from 1999 to 2000 was due primarily to an
increase in direct labor costs over the previous year, partially offset by a
decrease in all other direct costs as compared to the previous year. The
decrease in total direct costs from 1998 to 1999 was a result of the sale of
Published Research Products, coupled with a general reduction in direct
operating expenses, primarily due to a reduced headcount and a reduction in
expenses incurred on behalf of clients.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased by $1,579,000,
or 14.6%, from $10,847,000, or 47.7% of revenues in 1999 to $12,426,000, or
52.2% of revenues in 2000, and decreased by $1,415,000, or 11.5%, from
$12,262,000, or 43.5% of revenues in 1998 to $10,847,000, or 47.7% of revenues
in 1999. The increase in total selling, general and administrative expenses from
1999 to 2000 was due primarily to an increase in labor costs over the previous
year, coupled with an increase in selling expenses. The decrease from 1998 to
1999 was primarily due to a reduction in labor costs and reduced sales
commissions during 1999, partially offset by an increased emphasis on marketing.
RESTRUCTURING CHARGE
On March 27, 1998, the Company reduced its full-time labor force in its
core business by 20 positions. As a result, the Company recorded a restructuring
charge of $321,000 during the quarter ended March 31, 1998. The charge consisted
mainly of severance payments, which were fully paid by February 15, 1999,
outplacement services and legal costs associated with the elimination of the
positions. As of December 31, 1999, all costs related to this charge had been
paid.
OPERATING (LOSS) INCOME
The Company's operating loss was $753,000 in 2000, compared to
operating income of $348,000 in 1999, a decrease of $1,101,000. The decrease was
primarily related to the Company's emphasis on increasing its retainer base
through the use of increased marketing expense and the hiring of a larger sales
force.
The Company's operating income was $348,000 in 1999, compared to an
operating income of $1,329,000 in 1998, a decrease of $981,000. The decrease was
primarily related to the sale of Published Research Products, coupled with the
decline in revenue from its QCS and SCRG activities.
INTEREST INCOME AND EXPENSE; OTHER ITEMS
In 2000, the Company earned $119,000 in interest income, which
increased from $88,000 in 1999 and $85,000 in 1998. The increase in 2000 was a
result of higher cash balances throughout 2000, coupled with interest earned on
notes receivable.
15
Interest expense in 2000 was $336,000, which was a decrease from
$464,000 in 1999, and from $522,000 in 1998. The decrease was a result of the
reduction in outstanding debt in 2000 as compared to 1999. In the third quarter
of 2000, the Company reduced its interest expense by replacing a portion of its
Senior Subordinated Notes with a Term Note bearing a lower interest rate.
During the third quarter of 2000, the Company received payment of
$100,000 from a landlord in consideration for giving up its rights under a lease
agreement. This payment was classified as other income.
On December 30, 1999, the Company entered into an agreement with
idealab! and Find.com, Inc. whereby the Company assigned the domain name
"find.com" and licensed the use of certain rights to the trademarks "find.com"
and "find" to Find.com, Inc. idealab! and Find.com, Inc. are not otherwise
related to the Company. Under the terms of the agreement, the Company received
consideration in the form of cash and preferred shares amounting to
approximately $1,200,000, net of related expenses. The Company is also entitled
to certain future royalties. No royalty income was earned in the year ended
December 31, 2000. The carrying value of the preferred shares is the lower of
historical cost or estimated net realizable value. The non-marketable preferred
share securities carry various rights including the ability to convert into
common shares of Find.com and a repurchase (put) option that becomes exercisable
in December 2002. Since the preferred share securities are an investment in a
start-up enterprise, it is reasonably possible in the near term that the
Company's estimate of the net realizable value of the preferred shares will be
less than the carrying value of the preferred shares.
On January 20, 1998, the Company entered into a settlement agreement
regarding a shareholder lawsuit which began during 1997, pursuant to which the
suit was dismissed with prejudice. As part of the settlement, the Company
purchased 274,400 shares of the Common Stock from the plaintiff for $1.25 per
share, totaling $343,000. The purchase price contained a premium of $0.50 per
share over the closing trade price of the Common Stock on the date of
settlement, or $137,000. As a result of the above, the Company recorded treasury
stock of $206,000 and expense of $137,000. The Company used proceeds from its
insurance company of $495,000 to purchase the shares and to pay plaintiff and
Company legal fees in the amount of $110,000 and $42,000, respectively.
Accordingly, the Company recorded other income and other expense of $289,000,
respectively, related to this matter, with the remaining balance of $206,000
offset against the aforementioned treasury stock repurchase amount, thus
reducing the net treasury stock transaction to zero.
INCOME TAXES
The $323,000 income tax benefit for the year ended December 31, 2000
represents 38.9% of pre-tax loss.
The $289,000 tax provision recognized for 1999 represents 24.7% of the
1999 pre-tax income. Income tax expense for 1999 was favorably reduced due to
the reversal of a $280,000 valuation reserve placed upon deferred tax assets
prior years.
The $205,000 tax provision recognized for 1998 represents 21.3% of the
1998 pre-tax income. Income tax expense for 1998 was favorably reduced due to
the reversal of $239,000 of the valuation reserve placed upon deferred tax
assets in the prior year.
16
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company's primary sources of liquidity and capital
resources have been cash flow from operations, borrowings, and prepaid retainer
fees provided by clients. Cash balances were $901,000 and $2,096,000 at December
31, 2000 and 1999, respectively. The Company's working capital position (current
assets, less current liabilities) at December 31, 2000 was $1,587,000, as
compared to $3,199,000 at December 31, 1999.
The Company believes that its cash generated from operations, together
with its existing cash balances, will be sufficient to meet its operating cash
needs and expected capital expenditures for the near term. To supplement
possible short-term cash needs, the Company has a $1,000,000 line of credit at
the prime commercial lending rate plus one-half percent. The line is renewable
annually, and was put in place on December 30, 1999. No amounts were borrowed
under the line of credit as of December 31, 2000.
Cash used in operating activities was $690,000 in the year ended
December 31, 2000. Cash provided by operating activities was $1,093,000 and
$2,166,000 in the years ended December 31, 1999 and 1998, respectively.
Cash (used in) provided by investing activities was ($433,000),
($472,000) and $737,000 in the years ended December 31, 2000, 1999 and 1998,
respectively. Capital expenditures for the migration of the Company's
10-year-old management information system to a new computer system platform were
a significant component of the amounts invested in all three years. This new
system improves the consultants' ability to communicate with clients, access the
internet, and to integrate the Company's products, as well as to expand the
Company's enterprise network. Total capital expenditures were $570,000, $672,000
and $618,000 in the years ended December 31, 2000, 1999 and 1998, respectively.
In 1998, another significant factor was the receipt of $1,250,000 in cash
received upon the sale of assets. During the year ending December 31, 2001, the
Company expects to spend approximately $490,000 for capital items, the major
portions of which will be used for computer hardware upgrades and for leasehold
improvements.
Cash used in financing activities was $72,000, $832,000, and $735,000
in the years ended December 31, 2000, 1999 and 1998, respectively. In 2000 and
1999, the most significant items related to the early repayment debt, which were
otherwise due in installments in the years 2001 and 2002. In connection with the
repayment of such bank borrowings, the bank released two $1,000,000 standby
letters of credit that had been provided by a shareholder, SVP, S.A. In 1998,
significant financing activities included the Company's repayment of bank
borrowings of $1,749,000 and the proceeds obtained from the issuance of common
shares of $1,000,000. The share proceeds related to an equity purchase by SVP
S.A., a subsidiary of Amalia S.A. After the transaction, Amalia was the
beneficial owner of approximately 40.7% of the Company's common shares.
In the first quarter of 2000, warrants to acquire 266,945 common shares
were exercised and $601,000 of face value of the Senior Subordinated Note due
October 31, 2001 was surrendered as payment in a non-cash transaction.
On August 1, 2000, the Company entered into a financing agreement with
a commercial bank for a $1,400,000 Term Note, due June 30, 2005. The Note bears
interest at prime plus 1.25 and is payable in quarterly installments beginning
September 30, 2000. In early August 2000, the proceeds of the Note were used to
pay down a portion of the Company's Senior Subordinated Notes. In November 2000,
the
17
Company also exchanged 150,000 shares of its common stock for 633,000
outstanding warrants to purchase common stock.
In accordance with the terms of the Senior Subordinated Notes, the
payment of portions of accrued interest may be deferred. Accrued deferred
interest of $62,000 and $76,000 at December 31, 2000 and 1999, respectively, was
accrued and deferred under such terms. Such amounts compound and accrue interest
at the rate of 12%.
INFLATION
The Company has in the past been able to increase the price of its
products and services sufficiently to offset the effects of inflation on direct
costs, and anticipates that it will be able to do so in the future.
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities" and in June 2000 issued SFAS No. 138, which
amended certain provisions of SFAS No. 133. These statements require companies
to recognize all derivatives as either assets or liabilities and measure those
instruments at fair value. Gains or losses resulting from changes in the values
of those derivatives would be accounted for depending on the use of the
derivatives and whether it qualifies for hedge accounting. The Company will
adopt both pronouncements as of January 1, 2001. As of December 31, 2000, the
Company has concluded that it did not have derivatives or hedging activities as
contemplated by these pronouncements, and has accordingly concluded that there
is no effect of adoption.
REVENUE RECOGNITION
The Company adopted the Securities and Exchange Commission's Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition," ("SAB 101"),"
including related interpretations, in the quarter ended December 31, 2000. The
adoption of SAB 101 had no impact on the Company's revenue recognition practices
or reported financial results.
FORWARD LOOKING INFORMATION: CERTAIN CAUTIONARY STATEMENTS
This Annual Report on Form 10-K (and any other reports issued by the
Company from time to time) contains certain forward-looking statements made in
reliance upon the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements, including statements
regarding the Company's future cash flows, sales, gross margins and operating
costs, the effect of conditions in the industry and the economy in general, and
legal proceedings, are based on current expectations that involve numerous risks
and uncertainties. Actual results could differ materially from those anticipated
in such forward-looking statements as a result of various known and unknown
factors, including, without limitation, future economic, competitive,
regulatory, and market conditions, future business decisions, and those factors
discussed under Management's Discussion and Analysis of Financial Condition and
Results of Operations. Words such as "believes", "anticipates", "expects",
"intends", "may", and similar expressions are intended to identify
forward-looking statements, but are not the exclusive means of identifying such
statements. The Company undertakes no obligation to revise and of these
forward-looking statements. Subsequent written and oral forward looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by cautionary
18
statements in this paragraph and elsewhere in this Form 10-K, and in other
reports filed by the Company with the Securities and Exchange Commission.
ITEM 7A
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The financial position of the Company is subject to market risk
associated with interest rate movements on outstanding debt. The Company has
debt obligations with both fixed and variable terms. The carrying value of the
Company's variable rate debt obligations approximates fair value as the market
rate is based on prime. An increase in the underlying interest rates would
result in a corresponding increase in interest expense, based on the then
outstanding borrowings.
ITEM 8
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements are submitted in a separate section of this
report on pages F-1 through F-31.
Quarterly financial data is as follows.
(in thousands, except per share data)
(Loss) income
(Loss) income per share
Operating (loss) before Net (loss) basic and
Quarter ended Revenues income extraordinary item income diluted
------------- -------- ------ ------------------ ------ -------
March 31, 2000 $ 6,006 $ 23 $ (34) $ (34) $ 0.00
June 30, 2000 5,961 (99) (111) (111) (0.01)
September 30, 2000 5,993 (361) (196) (223) (0.03)
December 31, 2000 5,840 (316) (167) (167) (0.02)
March 31, 1999 5,486 227 65 65 0.01
June 30, 1999 5,565 (118) (151) (151) (0.02)
September 30, 1999 5,764 186 86 86 0.01
December 31, 1999 5,923 53 883 883 0.12
19
ITEM 9
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
On April 22, 1999, the Company dismissed KMPG LLP ("KPMG") as its
independent accountants. The decision to change independent accountants was
approved by the Board of Directors upon the recommendation of the Audit
Committee.
During the year ended December 31, 1998 and through April 22, 1999,
there had been no disagreements with KMPG on any matter of accounting principles
or practices, financial statement disclosure or auditing scope or procedure or
any reportable events.
On May 4, 1999, the Company engaged Deloitte & Touche LLP ("D&T") as
its new certifying accountant. Management had not previously consulted with D&T
on any accounting, auditing or financial reporting matters.
On May 6, 1999, the Company filed a current report on Form 8-K
reporting a change in the Company's certifying accountants.
20
PART III
ITEM 10
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS AND OFFICERS
On October 5, 1998, the Board of Directors of the Company established
an Office of Managing Directors ("OMD") (a) responsible for (I) the conduct of
the ordinary business affairs and operations of the Company and (II) defining
operating policies in alignment with SVP International to take advantage of its
know-how and technological efficiencies, (b) comprised of three members, who
shall be elected by the Board of Directors, upon the advice of the Chairperson
of the Board of Directors, and designated Senior Officers with the title of
Managing Directors, and the Chief Executive Officer, and (c) reporting to the
Board of Directors. Each Managing Director must be a member of the Board of
Directors or hold another executive position with the Company.
The directors and executive officers of the Company are as follows:
Name Age Position
- ---- --- --------
Andrew P. Garvin (1) 55 President, Chief Executive Officer and Director
Brigitte de Gastines 57 Managing Director and Chairperson of the Board of Directors
Howard S. Breslow 61 Director
Frederick H. Fruitman 50 Director
Jean-Louis Bodmer 59 Managing Director and Director
Eric Cachart 44 Managing Director and Director
Stephan B. Sigaud (1) 44 Vice President - Client Services
Kenneth A. Ash (1) 56 Vice President - International Strategic Research
Fred S. Golden (1) 55 Vice President - Chief Financial Officer
- -----------------------
(1) Member of an Operating Management Group ("OMG") responsible for
applying the Company's overall policies and strategies and for
proposing initiatives and supplemental strategies for the growth of
the Company.
Each director is elected for a period of one year at the Company's
annual meeting of shareholders and serves until his successor is duly elected by
shareholders. Officers are elected by and serve at the will of the Board of
Directors.
Mr. Garvin is a founder of the Company and has served as its Chief
Executive Officer since 1972 and as its President since 1978. Mr. Garvin has
been a director of the Company since its inception and
21
treasurer until 1997. From 1979 to 1982, Mr. Garvin was a member of the Board of
Directors of the Information Industry Association and served as Chairman of the
1979 National Information Conference and Exposition. Mr. Garvin is the author of
The Art of Being Well Informed, an information resource handbook for executives.
Mr. Garvin received a B.A. degree in political science from Yale University and
an M.S. degree in journalism from the Columbia Graduate School of Journalism.
Ms. de Gastines was elected a director of the Company in accordance
with the Company's licensing agreement with SVP International. See "Item 1.
Business - SVP Network; Licensing Agreement with SVP International." She has
been a director of the Company since 1982 and Chairperson of the Board since
October 1998. She has served as the General Manager of SVP International since
1985 and SVP S.A. since 1976.
Mr. Breslow has been a director of the Company since 1986. He has been
a practicing attorney in New York for more than 35 years and a member of the law
firm of Breslow & Walker, LLP, New York, New York for more than 25 years.
Breslow & Walker, LLP is the Company's general counsel. Mr. Breslow currently
serves as a director of Cryomedical Sciences, Inc., a publicly held company
engaged in the research, development and sale of products for use in low
temperature medicine, Vikonics Inc., a publicly held company engaged in the
design and sale of computer-based security systems, Lucille Farms, Inc., a
publicly held company engaged in the manufacturing and marketing of cheese
products, and Excel Technologies, Inc., a publicly held company engaged in the
development and sale of laser products.
Mr. Fruitman has been a director of the Company since 1989. Since 1990,
Mr. Fruitman has been a Managing Director of Loeb Partners Corporation, an
investment banking firm. Mr. Fruitman is a director of Micro Warehouse, Inc., a
publicly held company which markets computer products.
Mr. Bodmer has served as General Manager of SVP France since 1974.
Other positions which he currently holds are Chief Executive Director of SVP,
S.A., President and Chief Executive Officer of SVP Participation, President of
SVP Belgium, and President of SVP United Kingdom.
Mr. Cachart is the Associate General Manager of SVP, S.A. and has
served as President of SVP Multi-info since 1995. He was named President of SVP
Network in 1998. Prior to 1995 he was a journalist and news commentator for
French television networks.
Mr. Sigaud has been the Company's Vice President of Client Services
since October 1998, and was Vice President and Managing Director of the
Company's Customer Satisfaction and Loyalty Group from May 1994 to October 1998.
From 1989 to 1994 Mr. Sigaud was the owner and President of IDSI, Inc., a
consulting firm specializing in Customer Satisfaction Measurement for companies
in the industrial sector. From 1986 to 1989 he functioned as Executive Vice
President for BMES, Inc., a business-to-business marketing research firm. He was
employed from 1982 to 1986 in the Recruiting Department of Renault in France.
Prior thereto he was in International Sales and Marketing and worked as Business
Development Manager for an engineering firm in East Africa and as Trade Attache
in the French Trade Office in Madagascar. Mr. Sigaud holds a B.S. in Math and
Physics from Marseilles University and an MBA in Marketing from ESSEC, the
leading business school in France.
Mr. Ash joined FIND/SVP in March 1992 as Vice President & Managing
Director of the Strategic Consulting & Research Group and became Vice President
International Strategic Research on October 5, 1998. From 1985 to 1992, Mr. Ash
directed his own consulting firm specializing in marketing and acquisition
engagements. In 1991 and 1992, Mr. Ash served as President and CEO of CallTrack
Systems, a start-up company offering a network-based, long distance call
accounting system geared to small and
22
medium-sized organizations. Mr. Ash served as Vice President of Marketing of
Satellite Television Corporation, a COMSAT subsidiary and major communications
start-up venture between 1983 and 1985. From 1973 to 1983, Mr. Ash held
progressively senior account management positions at J. Walter Thompson and
Ogilvy & Mather advertising agencies. Mr. Ash served as a U.S. Navy Officer from
1969 to 1972, earned an MBA from the Wharton School of the University of
Pennsylvania in 1969 and a BA from Princeton University in 1967.
Mr. Golden has been the Company's Vice President and Chief Financial
Officer, Corporate Secretary and Treasurer since March 9, 2000. From July 1999
to March 2000, Mr. Golden was Chief Financial Officer of Elipze LLC, an
interactive advertising and web production company. From 1968 through 1999, Mr.
Golden, a certified public accountant, practiced management consulting and
accounting, including four years with Laventhol Horwath. From 1982 to 1988, he
was Chief Financial Officer at Confab Corporation, a $350 million manufacturing
operation, and from 1988 to 1993, he was Executive Vice President and Chief
Financial Officer at Pilot Air Freight Corp. Mr. Golden holds an accounting
degree from Temple University.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's officers, directors and beneficial owners of more than
10% of any class of its equity securities registered pursuant to Section 12 of
the Securities Exchange Act of 1934 ("Reporting Persons") are required under
that Act to file reports of ownership and changes in beneficial ownership of the
Company's equity securities with the Securities and Exchange Commission. Copies
of those reports must also be furnished to the Company. Based solely on a review
of the copies of reports furnished to the Company pursuant to that Act, the
Company believes that during the fiscal year ended December 31, 2000, all filing
requirements applicable to Reporting Persons were complied with, except that
Form 4 Statement of Changes of Beneficial Ownership of Securities for Furman
Selz LLC which was due on February 10, 2000, was filed on March 10, 2000 and for
Fred S. Golden, an officer of the Company, which was due on May 10, 2000, was
filed on May 15, 2000.
23
ITEM 11
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding
compensation paid by the Company during each of the Company's last three years
to (I) the Company's Chief Executive Officer, and (II) each of the Company's
executive officers who received salary and bonus payments in excess of $100,000
during the year ended December 31, 2000 (collectively the "Named Executive
Officers"):
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
-------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------------- ------------------------------ ----------
SECURITIES
NAMES AND OTHER RESTRICTED UNDERLYING LTIP ALL
PRINCIPAL SALARY BONUS ANNUAL STOCK OPTIONS PAYOUT OTHER
POSITIONS YEAR ($) ($) COMP. AWARDS ($) (#) (1) ($) COMP.
--------- ---- --- --- ----- ---------- ------- --- -----
ANDREW P. GARVIN 2000 273,257 67,200 - - 35,000 - -
PRESIDENT, CHIEF 1999 267,679 - - - - - -
EXECUTIVE OFFICER 1998 264,171 50,000 - - - - -
AND DIRECTOR
STEPHAN B. SIGAUD 2000 192,500 59,000 - - 125,000 - -
VICE PRESIDENT - 1999 175,000 18,611 - - - - -
CLIENT SERVICES 1998 133,958 200 - - 50,000 - -
KENNETH A. ASH 2000 175,000 35,000 - - 37,500 - -
VICE PRESIDENT - 1999 150,000 20,000 - - - - -
INTERNATIONAL 1998 143,750 83,647 - - 60,000 - -
STRATEGIC
RESEARCH
FRED S. GOLDEN 2000 147,881 - - - 112,500 - -
VICE PRESIDENT , 1999 - - - - - - -
CHIEF FINANCIAL 1998 - - - - - - -
OFFICER,
SECRETARY, TREASURER
- ------------------------
(1) Options to acquire Common Stock.
24
OPTION GRANTS DURING 2000
The following table provides information related to stock options
granted to the Named Executive Officers during 2000:
INDIVIDUAL GRANTS
NUMBER OF
SECURITIES % OF TOTAL OPTIONS
UNDERLYING OPTIONS GRANTED TO EXERCISE OR BASE GRANT DATE
GRANTED EMPLOYEES IN FISCAL PRICE PRESENT VALUE
NAME (#) (1) YEAR ($/SHARE) EXPIRATION DATE ($)(2)
- ---- ------- -------------------- --------- --------------- ------
ANDREW P. GARVIN 15,000 1.9% 3.6875 3/9/10 46,350
20,000 2.6% 1.062 7/10/10 18,000
STEPHAN B. SIGAUD 25,000 3.2% 3.6875 3/9/10 77,250
100,000 12.9% 1.062 7/10/10 90,000
KENNETH A. ASH 25,000 3.2% 3.6875 3/9/10 77,250
12,500 1.6% 1.062 7/10/10 11,250
FRED S. GOLDEN 75,000 9.7% 3.6875 3/9/10 231,750
37,500 4.9% 1.062 7/10/10 33,750
- ------------------------
(1) Represent number of shares of Common Stock underlying stock options.
The exercise price equals the fair market of the Common Stock on the
date of grant.
(2) The grant date present value portion of the foregoing table represents
the present value of the options on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions over the remaining contractual life of the options:
expected dividend yield of 0%, risk-free interest rate of 6% and
volatility of 82.1%.
25
AGGREGATED OPTION EXERCISES IN 2000 AND YEAR-END OPTION VALUES
The following table provides information related to options exercised
by each of the Named Executive Officers during the year ended December 31, 2000
and the number and value of options held at fiscal year end. The Company does
not have any outstanding stock appreciation rights.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY
AT FISCAL YEAR END (#) OPTIONS
---------------------- AT FISCAL YEAR END ($)(1)
-------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- -------- ----------- ------------- ----------- -------------
(#) ($)
ANDREW P. GARVIN 39,860 89,685 63,000 97,000 - -
STEPHAN B. SIGAUD - - 31,000 144,000 - -
KENNETH A. ASH - - 37,000 60,500 - -
FRED S. GOLDEN - - 15,000 97,500 - -
- -------------------------
(1) The closing sale price of the Common Stock as reported by NASDAQ on December
31, 2000 was 0.688. Value is calculated on the difference between the option
exercise price of in-the-money options and 0.688 multiplied by the number of
shares of Common Stock underlying the option.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Jean-Louis Bodmer, Andrew P.
Garvin, Howard S. Breslow and Frederick H. Fruitman. The purpose of the
Compensation Committee is to review, structure and set the Company's Executive
Compensation and to align management's interest with the success of the Company.
The Company has no nominating or other committees performing similar functions.
There were no interlocking relationships between the Company and other entities
that might affect the determination of the compensation of the executive
officers of the Company.
EMPLOYMENT AND RELATED AGREEMENTS
On January 1, 1996, the Company entered into an Employment Agreement
with Andrew P. Garvin commencing on January 1, 1996 and terminating on December
31, 2001 (the "Employment Agreement"). Such Employment Agreement was amended and
restated on December 12, 1996. The Employment Agreement provides for a base
salary of $250,000 which will be adjusted each January 1 for a cost of living
increase based on the Consumer Price Index for New York City for the twelve
month period immediately preceding such January 1 date. Mr. Garvin will also be
entitled to additional increases in base salary as may be determined from time
to time by the Board of Directors or any compensation committee appointed by the
Board of Directors. Mr. Garvin received a $12,500 signing bonus upon execution
of the Employment Agreement. In addition, Mr. Garvin will be entitled to receive
performance bonuses equal to 10% per annum of the pre-tax profits of the Company
in excess of $1,000,000 for each of the years ended December 31, 1996, 1997,
1998, 1999, 2000, and 2001. The Employment Agreement limits the bonus to
$250,000 in any year, and states that Mr. Garvin is entitled to receive a cash
bonus of $50,000 in each of January 1997 and January 1998.
26
The Employment Agreement provides that (I) if Mr. Garvin voluntarily
leaves the employ of the Company on account of the Company being acquired and
its principal office being moved to a location which is greater than 50 miles
from New York City; and (II) if Mr. Garvin voluntarily leaves the employ of the
Company on account of a Change in Control, then, in each such case, he shall be
entitled to receive the compensation described in the immediately preceding
paragraph for the balance of the term; provided, however, that if such
termination occurs at a time when there is less than one year left in the term,
the compensation shall continue for a period of two years from the date of
termination on the same basis that the employee received compensation during the
last year of the term. Change of control is defined in the Employment Agreement
to include the acquisition by a party of 30% or more of the outstanding shares
of Common Stock of the Company or a change in the majority of the Incumbent
Board of Directors (as defined in the Employment Agreement). In the event that
the Company terminates Mr. Garvin's employment for cause, and a court of law or
other tribunal ultimately determines that such termination was without cause,
then he shall be entitled to receive double the amount of compensation described
above until the end of the term. Mr. Garvin has agreed to a non-competition
covenant for a period of two years after the term of the Employment Agreement.
During October 1998, Mr. Garvin's contract was amended to provide that
any time after 1999 Mr. Garvin may voluntarily elect to leave the employ of the
Company and receive the balance of his contract for the remaining term of his
employment contract. The term of the contract runs through 2001. Mr. Garvin's
salary for 2000 was $273,257. Additionally, Mr. Garvin has relinquished a total
of 225,000 unvested options previously granted him in connection with his
employment contract.
The Company has entered into a deferred compensation agreement with Mr.
Garvin, which provides for a schedule of payments to him or his designated
beneficiary(ies). The agreement entered into in 1984 provides that in the event
during the course of employment Mr. Garvin (I) dies, (II) becomes totally
disabled or (III) elects to retire after June 30, 1994 and prior to age 65, he
or, in the event of death, his designated beneficiaries, shall receive monthly
payments ranging from $1,250 to $1,800 for a period of ten years from the date
of death, disability or retirement. In the event Mr. Garvin retires at age 65 or
over, Mr. Garvin shall receive $4,750 per month for ten years from the date of
his retirement.
The Company entered into an additional Deferred Compensation Agreement
with Mr. Garvin in 1990. On October 3, 2000, Mr. Garvin relinquished his rights
under the agreement entered into in 1990.
Severance arrangements for members of the Operating Management Group
(i.e. Messrs. Sigaud, Ash and Golden) were authorized by the Board of Directors
on January 25, 1999. Severance agreements were entered into with Mssrs. Sigaud
and Ash providing for (a) a normal severance benefit of nine (9) months, which
would be increased to one (1) year after the employee has served as a member of
the OMG for a continuous period of two (2) years, in the event the employee's
services are terminated by the Company without cause, and (b) a severance
benefit of one (1) year in the event the separation from service is due to (I) a
change-in-control, and (II) the employee suffers, within one (1) year
thereafter, either (A) a discontinuation of duties, or (B) an office change of
at least 50 miles, or (C) a reduction in compensation, or (D) a termination of
employment other than for cause.
DIRECTORS' COMPENSATION
The Board of Directors has approved the payment of $1,500 per Board
meeting, and $500 per committee meeting attended by outside members of the
Board. During 2000, Mr. Breslow received
27
compensation in the total amount of $11,000 and Mr. Fruitman received
compensation in the total amount of $9,500.
The Stock Option Plan of the Company was amended in June 1995 to
provide for the automatic grant to outside directors of five-year non-incentive
options to purchase 2,500 shares of Common Stock on the first business day of
each new year beginning in 1996, the exercise price being the fair market value
on the date of the grant.
On April 22, 1999, the Board voted to grant each outside director
additional five-year, non-incentive stock options to purchase 7,500 shares of
Common Stock on the first business day of each year, commencing with the first
business day of 2000, the exercise price being the fair market value on the date
of the grant.
28
ITEM 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following sets forth, as of December 31, 2000, certain information
with respect to the beneficial ownership of the Common Stock by (I) each person
known by the Company to be the beneficial owner of more than 5% of its
outstanding Common Stock, (II) each of the directors of the Company, (III) each
of the Named Executive Officers, (IV) and by all current executive officers and
directors as a group.
NAME AND ADDRESS NUMBER OF SHARES
BENEFICIAL OWNER OWNED(1) PERCENT
---------------- ---------------- -------
Andrew P. Garvin
625 Avenue of the Americas
New York, NY 10011 (2) 934,039 12.0%
Amalia S.A.
70, rue des Rosiers
F-93585 Saint-Ouen, Cedex
FRANCE (3) 3,095,085 38.6%
Brigitte de Gastines (4) 32,500 Less than 1%
Howard S. Breslow (5)(6) 46,320 Less than 1%
Frederick H. Fruitman (6) 75,679 1%
Jean-Louis Bodmer (4) 25,000 Less than 1%
Eric Cachart (7) 17,500 Less than 1%
Kenneth A. Ash (8) 97,500 1.3%
Stephan B. Sigaud (9) 175,000 2.2%
Fred S. Golden (10) 117,500 1.5%
Leviticus Partners LP
30 Park Avenue, Suite 12F
New York, NY 10016 499,700 6.6%
All Current Executive Officers and Directors as a Group 1,521,038 18.4%
(9 persons) (11)
- --------------------------------------------------------------------------------
(1) Unless otherwise indicated below, all shares are shares of Common Stock
owned beneficially and of record.
(2) Includes 160,000 shares issuable under outstanding options.
(3) Includes the 422,222 shares issuable under outstanding warrants held by
SVP, S.A., the 2,178,100 shares of Common Stock owned by SVP, S.A. and the
494,763 shares of Common Stock owned by SVP International, which are
subsidiaries of Amalia S.A. Brigitte de Gastines owns in excess of 99% of
the stock of Amalia S.A. In addition, Ms. de Gastines is President,
General Manager and a director of SVP, S.A., and General Manager of SVP
International. The shares owned by Amalia S.A. are not shown in the table
as being owned by Ms. de Gastines.
(4) Includes 22,500 shares issuable under outstanding options.
(5) Includes all of the 18,820 shares of Common Stock owned by record of
Breslow & Walker, LLP, a law firm in which Mr. Breslow is a partner.
(6) Includes 27,500 shares issuable under outstanding options.
(7) Includes 17,500 shares issuable under outstanding options.
(8) Includes 97,500 shares issuable under outstanding options.
(9) Includes 175,000 shares issuable under outstanding options.
(10) Includes 112,500 shares issuable under outstanding options.
(11) Includes 660,000 shares issuable under outstanding options.
29
ITEM 13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since 1971, the Company has been a licensee of SVP International.
Pursuant to this license agreement, the Company pays royalties to SVP
International for the use of the SVP name and participation in the SVP
International network. For a description of the relationship of Ms. de Gastines,
Mr. Bodmer and Mr. Cachart to SVP International see "Item 10. Directors and
Executive Officers of the Registrant." The accrued royalties payable as of
December 31, 2000 to SVP International were approximately $296,000.
Howard S. Breslow, a director of the Company, is a member of Breslow &
Walker, LLP, general counsel to the Company. During 2000, Breslow & Walker, LLP
received legal fees of $77,414.
30
PART IV
ITEM 14
EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
(a) (1) FINANCIAL STATEMENTS
The following Financial Statements are filed as part of this
10-K:
Independent Auditors' Reports.
Consolidated Balance Sheets as of December 31, 2000 and 1999.
Consolidated Statements of Operations for the years ended
December 31, 2000, 1999 and 1998.
Consolidated Statements of Shareholders' Equity for the years
ended December 31, 2000, 1999 and 1998.
Consolidated Statements of Cash Flows for the years ended
December 31, 2000, 1999 and 1998.
Notes to Consolidated Financial Statements.
(2) SCHEDULE
The following Financial Statement schedule is filed as part of
this 10-K:
Schedule II - Valuation and Qualifying Accounts
Other Financial Statement schedules are omitted because they
are not applicable or because the information required is
provided in the Consolidated Financial Statements or Notes
thereto included herein.
(3) EXHIBITS
Exhibit
Number Document
------ --------
3(a) Copy of restated Certificate of Incorporation as
amended(1), and amendment thereto.
(b) Copy of By-Laws, as amended.(3)
4(a) Copy of specimen of Common Stock Certificate.(1)
31
10(a) Copy of License Agreement, dated October 11,
1971, between the Company and SVP
International (formerly SVP Conseil) and an
amendment thereto, dated March 23, 1981.(1)
(b) Copy of 1986 Stock Option Plan.(1)
(c) Copy of Deferred Compensation and Salary
Continuation Agreement, dated June 30, 1984, between
the Company and Andrew P. Garvin .(1)
(d) Copy of the lease related to premises at 625 Avenue
of the Americas, NY, NY.(2) and amendment related
thereto.(5)
(e) Copy of Target Benefit Plan of the Company.(4)
(f) Copy of lease dated March 15, 1995 related to
premises on 4th floor at 641 Avenue of the Americas,
NY, N.Y. (6)
(g) Copy of Commercial Revolving Loan, Term Loan and
Security Agreement dated April 27, 1995 between
State Street Bank and Trust Company and the Company.
(7)
(h) Copy of 401(k) and Profit Sharing Plan of the
Company.(8)
(i) Copy of Employment Agreement, amended and restated
as of December 12, 1996, between the Company and
Andrew P. Garvin.(10)
32
(j) Copy of the Note and Warrant Purchase Agreement with
SVP, S.A. dated November 30, 1996. (10)
(k) FIND/SVP, Inc. 1996 Stock Option Plan. (11)
(l) Copy of ETRG Sale Agreement. (12)
(m) Copy of the Sale Agreement for FIND/SVP Published
Products, Inc.'s assets (13)
(n) Copy of the Stock Purchase Agreement between SVP,
S.A. and the Company dated January 15, 1998. (14)
(o) Copy of Peter J. Fiorillo's Severance Agreement.
(15)
(p) Copy of the idealab! Agreement dated December 30,
1999. (16)
(q) Copy of the Chase Manhattan Bank Loan Agreement
dated December 30, 1999. (16)
21 List of Subsidiaries. (9)
23 Independent Auditors' Consents.
33
(1) Incorporated by reference to the Company's Registration Statement on
Form S-18 (Reg. No. 33-8634-NY) which became effective with the
Securities and Exchange Commission on October 31, 1986.
(2) Incorporated by reference to the Company's Form 8-K filed with the
Securities and Exchange Commission on February 2, 1987.
(3) Incorporated by reference to the Company's Form 10-K filed for the
year ended December 31, 1987.
(4) Incorporated by reference to the Company's Form 10-K filed for the
year ended December 31, 1989.
(5) Incorporated by reference to the Company's Form 10-K filed for the
year ended December 31, 1992.
(6) Incorporated by reference to the Company's Form 10-K filed for the
year ended December 31, 1994.
(7) Incorporated by reference to the Company's Form 10-Q filed for the
Quarter ended March 31, 1995.
(8) Incorporated by reference to the Company's Form S-8 filed on March
29, 1996.
(9) Incorporated by reference to the Company's Form 10-K filed for the
year ended December 31, 1995.
(10) Incorporated by reference to the Company's Form 10-K filed for the
year ended December 31, 1996.
(11) Incorporated by reference to the Company's Form S-8, filed on
February 27, 1997.
(12) Incorporated by reference to the Company's Form 10-Q, filed for the
quarter ended September 30, 1997.
(13) Incorporated by reference to the Company's Form 8-K, filed on July
17, 1998.
(14) Incorporated by reference to the Company's Form 10-K filed for the
year ended December 31, 1998.
(15) Incorporated by reference to the Company's Form 10-K filed for the
year ended December 31, 1998.
(16) Incorporated by reference to the Company's Form 10-K filed for the
year ended December 31, 1999.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed in the last quarter of the period
covered by this Form 10-K.
34
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
FIND/SVP, INC.
Date: April 2, 2001 BY: /s/ ANDREW P. GARVIN
----------------------------
Andrew P. Garvin, President and
Chief Executive Officer
(Principal Executive Officer)
Date: April 2, 2001 BY: /s/ FRED S. GOLDEN
----------------------------
Fred S. Golden
(Principal Financial Officer
and Principal Accounting Officer)
Pursuant to the requirement(s) of the Securities Exchange Act of
1934, this report has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date: April 2 , 2001 /s/ ANDREW P. GARVIN
--------------------------
Andrew P. Garvin, Director
Date: April , 2001
-------------------------------
Brigitte de Gastines, Director
Date: April 2, 2001 /s/ HOWARD S. BRESLOW
---------------------------
Howard S. Breslow, Director
Date: April 2, 2001 /s/ FREDERICK H. FRUITMAN
-------------------------
Frederick H. Fruitman, Director
Date: April 2, 2001 /s/ ERIC CACHART
--------------------------
Eric Cachart, Director
Date: April 2, 2001 /s/ JEAN-LOUIS BODMER
---------------------------
Jean-Louis Bodmer, Director
35
ITEM 8
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
FIND/SVP, INC. AND SUBSIDIARIES
Index to Consolidated Financial Statements and Schedule
Page
----
Independent Auditors' Reports F-2
Consolidated Balance Sheets as of December 31, 2000 and 1999 F-4
Consolidated Statements of Operations
for the years ended December 31, 2000, 1999 and 1998 F-5
Consolidated Statements of Shareholders' Equity
for the years ended December 31, 2000, 1999 and 1998 F-6
Consolidated Statements of Cash Flows
for the years ended December 31, 2000, 1999 and 1998 F-7
Notes to Consolidated Financial Statements F-8
Schedule:
Independent Auditors' Report on Supplemental Schedule F-30
Schedule II - Valuation and Qualifying Accounts F-31
F-1
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of Find/SVP, Inc.
We have audited the accompanying consolidated balance sheets of Find/SVP, Inc.
and subsidiaries (the Company) as of December 31, 2000 and 1999, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
each of the two years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company at December 31, 2000
and 1999, and the results of its operations and its cash flows for the years
then ended in conformity with accounting principles generally accepted in the
United States of America.
Deloitte & Touche LLP
Stamford, Connecticut
March 28, 2001
F-2
INDEPENDENT AUDITORS' REPORT
The Board of Directors
FIND/SVP, Inc.:
We have audited the accompanying consolidated statements of operations,
shareholders equity, and cash flows of FIND/SVP, Inc. and subsidiaries for the
year ended December 31, 1998. In connection with our audit of the consolidated
financial statements, we also have audited the accompanying financial statement
schedule for the year ended December 31, 1998. These consolidated financial
statements and financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based on our
audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the results of operations and the cash flows
of FIND/SVP, Inc. and subsidiaries for the year ended December 31, 1998, in
conformity with accounting principles generally accepted in the United States of
America. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
KPMG LLP
New York, New York
February 22, 1999
F-3
FIND/SVP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
December 31
(in thousands, except share and per share data)
ASSETS 2000 1999
Current assets:
Cash and cash equivalents $ 901 $ 2,096
Accounts receivable, less allowance for doubtful accounts of
$101 in 2000 and 1999 2,520 1,941
Note receivable 138 138
Deferred tax assets 70 114
Prepaid expenses and other current assets 442 323
--------- --------
Total current assets 4,071 4,612
Equipment and leasehold improvements, at cost, less
accumulated depreciation and amortization 3,558 3,995
Other assets:
Deferred tax assets 789 403
Cash surrender value of life insurance 703 633
Accrued rent receivable 602 416
Non-marketable equity securities 500 500
Note receivable 137 275
Other assets 423 444
--------- --------
$ 10,783 $ 11,278
========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of notes payable $ 674 $ --
Trade accounts payable 791 409
Accrued expenses and other 979 1,430
Accrued interest 40 74
--------- --------
Total current liabilities 2,484 1,913
--------- --------
Unearned retainer income 2,071 1,929
Notes payable, including accrued deferred interest 1,685 3,039
Deferred compensation 323 267
Accrued rent payable 228 241
Commitments and contingencies
Shareholders' equity:
Common stock, $.0001 par value. Authorized 20,000,000 shares;
issued and outstanding 7,605,943 shares in 2000;
issued and outstanding 7,136,919 shares in 1999 1 1
Capital in excess of par value 5,542 4,904
Accumulated deficit (1,551) (1,016)
--------- --------
Total shareholders' equity 3,992 3,889
--------- --------
$ 10,783 $ 11,278
========= ========
See accompanying notes to consolidated financial statements.
F-4
FIND/SVP, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Years ended December 31
(in thousands, except share and per share data)
2000 1999 1998
Revenues $ 23,800 $ 22,738 $ 28,175
---------- ---------- ----------
Operating expenses:
Direct costs 12,127 11,543 14,263
Selling, general and administrative
expenses 12,426 10,847 12,262
Restructuring charge -- -- 321
---------- ---------- ----------
Operating (loss) income (753) 348 1,329
Interest income 119 88 85
Other income 139 1,200 364
Gain on sale of net assets -- -- 20
Interest expense (336) (464) (522)
Other expense -- -- (315)
---------- ---------- ----------
(Loss) income before (benefit) provision
for income taxes and extraordinary item (831) 1,172 961
(Benefit) provision for income taxes (323) 289 205
---------- ---------- ----------
(Loss) income before extraordinary item (508) 883 756
Extraordinary item (net of tax effect of $9 in 2000) (27) -- --
---------- ---------- ----------
Net (loss) income $ (535) $ 883 $ 756
========== ========== ==========
(Loss) earnings per common share - basic and diluted: $ (.07) $ .12 $ .11
======= ======= =======
Weighted average number of common shares outstanding:
Basic 7,449,986 7,121,242 7,094,273
========== ========== ==========
Diluted 7,449,986 7,213,270 7,100,070
========== ========== ==========
See accompanying notes to consolidated financial statements.
F-5
FIND/SVP, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
Years ended December 31
(in thousands, except share amounts)
Common stock Capital in Accumulated Treasury stock Total
----------------- excess of earnings ------------------ shareholders'
Shares Amount par value (deficit) Shares Amount equity
------ ------ --------- --------- ------ ------ ------
Balance at January 1, 1998 6,575,669 $ 1 $ 3,872 $ (2,655) -- $ -- $ 1,218
Net income -- -- -- 756 -- -- 756
Purchase of treasury stock -- -- -- -- (274,400) -- (456)
Exercise of stock options and warrants 12,900 -- 14 -- -- -- 14
Retirement of treasury shares (74,400) -- -- -- 74,400 -- 206
Common stock issued 600,000 -- 1,000 -- 200,000 -- 1,250
---------- -------- ---------- ----------- ------- ------- -------
Balance at December 31, 1998 7,114,169 1 4,886 (1,899) -- -- 2,988
---------- -------- ---------- ----------- -------- ------- -------
Net income -- -- -- 883 -- -- 883
Exercise of stock options and warrants 22,750 -- 18 -- -- -- 18
---------- -------- ---------- ----------- -------- ------- -------
Balance at December 31, 1999 7,136,919 1 4,904 (1,016) -- -- 3,889
---------- -------- ---------- ------------ -------- ------- -------
Net loss -- -- -- (535) -- -- (535)
Exercise of stock options and warrants 319,024 -- 638 -- -- -- 638
Common stock issued in exchange for warrants 150,000 -- -- -- -- -- --
---------- -------- ---------- ----------- -------- ------- -------
Balance at December 31, 2000 7,605,943 $ 1 $ 5,542 $ (1,551) -- $ -- $ 3,992
========== ======== ========== =========== ======== ======= =======
See accompanying notes to consolidated financial statements.
F-6
FIND/SVP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31
(in thousands)
2000 1999 1998
Cash flows from operating activities:
Net (loss) income $ (535) $ 883 $ 756
Adjustments to reconcile net (loss) income to net cash
(used in) provided by operating activities:
Depreciation and amortization 1,182 1,105 1,144
Provision for losses on accounts receivable 217 90 164
Gain on sale of net assets -- -- (20)
Increase in deferred compensation 56 74 20
Increase (decrease) in unearned retainer income 142 12 (106)
Increase in non-marketable equity securities -- (500) --
Increase in cash surrender value of life insurance (70) (64) (132)
(Increase) decrease in deferred income taxes (342) 245 205
Decrease in assets held for sale -- -- 99
Changes in assets and liabilities, net of non-cash
effect of asset sale:
(Increase) decrease in accounts receivable (796) 157 1,042
Decrease in prepaid and refundable income taxes -- -- 299
(Increase) decrease in prepaid expenses and other
current assets (119) 143 (138)
Increase in accrued rent receivable (186) (186) (186)
Increase in other assets (109) (102) (93)
Decrease in accounts payable, accrued expenses
and accrued interest (117) (810) (927)
(Decrease) increase in accrued rent payable (13) 46 39
------- --------- --------
Net cash (used in) provided by operating activities (690) 1,093 2,166
------- --------- --------
Cash flows from investing activities:
Capital expenditures (570) (672) (618)
Surrender of life insurance -- -- 42
Repayment of notes receivable 137 200 63
Proceeds from sale of net assets -- -- 1,250
------- --------- --------
Net cash (used in) provided by investing activities (433) (472) 737
------- --------- --------
Cash flows from financing activities:
Principal borrowings under notes payable 1,400 -- --
Principal payments under notes payable (1,474) (850) (1,749)
Proceeds from issuance of convertible note-related party -- -- 250
Proceeds from exercise of stock options and warrants 37 18 14
Proceeds from issuance of common stock -- -- 750
Payments to acquire treasury stock -- -- (206)
Proceeds from insurance company, net of expenses -- -- 206
Increase in deferred financing fees (35) -- --
------- --------- --------
Net cash used in financing activities (72) (832) (735)
------- --------- ---------
Net (decrease) increase in cash and cash equivalents (1,195) (211) 2,168
Cash and cash equivalents at beginning of year 2,096 2,307 139
------- --------- --------
Cash and cash equivalents at end of year $ 901 $ 2,096 $ 2,307
======= ========= ========
See accompanying notes to consolidated financial statements.
F-7
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2000, 1999 and 1998
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) ORGANIZATION AND BASIS OF PRESENTATION
Find/SVP, Inc. and its wholly owned subsidiaries (the "Company")
provide a broad consulting, advisory and business intelligence
service to executives and other decision-making employees of
client companies, primarily in the United States. The Company
currently operates in two business segments, providing consulting
and business advisory services including: the Quick Consulting and
Research Service ("QCS") which provides retainer clients with
access to the expertise of the Company's staff and information
resources as well as a Live AnswerDesk service ("Quick
Consulting"); and the Strategic Consulting and Research Group
("SCRG") which provides more extensive, in-depth custom market
research and competitive intelligence information, as well as
customer satisfaction and loyalty programs ("Strategic
Consulting"). Prior to the third quarter of 1998, the Company had
one additional operating segment, Published Research Products. The
Company considers its QCS and SCRG service businesses, which
operate as "consulting and business advisory" businesses, to be
its core competencies.
During July 1998, the Company completed the sale of substantially
all of the assets of its FIND/SVP Published Products, Inc.
subsidiary ("Published Research"). The Company recorded a gain of
$20,000 from this transaction. The revenues from Published
Research accounted for approximately 9% of the Company's total
revenues during 1998.
(b) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Company. All significant intercompany balances and transactions
have been eliminated in consolidation.
(c) EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements are stated at cost.
Depreciation is computed by the straight-line method over the
estimated useful lives of the assets. Electronic equipment and
computer software is primarily depreciated over five years, and
the Company's proprietary management information software system
is depreciated over ten years. Leasehold improvements are
amortized by the straight-line method over the shorter of the term
of the lease or the estimated life of the asset.
F-8
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(1), CONTINUED
(d) DEFERRED CHARGES AND GOODWILL
Deferred charges primarily comprise the cost of acquired library
information files and electronic databases, which are amortized to
expense over the estimated period of benefit of three years using
the straight-line method.
Goodwill arising from various acquisitions represents the excess
of purchase price over the fair value of assets and liabilities
acquired and is being amortized on a straight-line basis over 15
years.
(e) DEFERRED FINANCING FEES
Deferred financing fees primarily relate to costs incurred with
respect to the issuance of the Senior Subordinated Notes ("Senior
Notes") and are being amortized on a straight-line basis over the
life of the Senior Notes. The related amortization is included in
interest expense.
(f) INCOME TAXES
Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax basis and operating losses
and tax credit carryforwards. Deferred tax assets and liabilities
are measured using currently enacted tax rates. The effect on
deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment
date. Realization of the net deferred tax assets is dependent on
future reversals of existing taxable temporary differences and
adequate future taxable income, exclusive of reversing temporary
differences and carryforwards. Although realization is not
assured, management believes that it is more likely than not that
the net deferred tax assets will be realized.
(g) EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share are computed by dividing net
income (loss) by the weighted average number of common shares
outstanding during the year. Diluted earnings (loss) per share are
computed by dividing net income (loss) by a diluted weighted
average number of common shares outstanding during the year. Such
dilution is computed using the treasury stock method for the
assumed conversion of stock options and warrants whose exercise
price was less than the average market price of the common shares
during the respective period, and certain additional dilutive
effects of exercised, terminated and cancelled stock options. In
the year ended December 31, 2000 there was no such dilutive
effect.
F-9
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(1), CONTINUED
Options and warrants to purchase 1,557,914, 1,883,789 and
2,530,225 common shares during the years ended December 31, 2000,
1999 and 1998, respectively, were antidilutive and were therefore
excluded from the computation of diluted earnings per share.
(h) REVENUE RECOGNITION
Revenues from annual retainer fees are recognized ratably over the
contractual period. Other revenues are recognized as earned.
Revenues include certain out-of-pocket and other expenses billed
to clients which aggregated approximately $1,770,000, $2,186,000
and $2,875,000 in 2000, 1999 and 1998, respectively.
(i) CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes all highly liquid investments
with original maturities of three months or less.
(j) NON-MARKETABLE EQUITY SECURITIES
Non-marketable equity securities are valued at the lower of
historical cost or estimated net realizable value.
(k) FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used in estimating the
fair value of financial instruments:
The carrying values reported in the balance sheets for cash,
accounts receivable, prepaid expenses and other current assets,
accounts payable and accrued expenses approximate fair values.
The fair value of notes payable, which approximates its carrying
value, is estimated based on the current rates offered to the
Company for debt of the same remaining maturities.
F-10
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(1), CONTINUED
(l) IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE
DISPOSED OF
The Company reviews long-lived assets and certain identifiable
intangibles for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may
not be recoverable. Recoverability of assets to be held and used
is measured by a comparison of the carrying amount of an asset to
undiscounted future net cash flows expected to be generated by the
asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceed the fair value of the assets.
Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell.
(m) NEW ACCOUNTING PRINCIPLES
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities" and
in June 2000 issued SFAS No. 138, which amended certain provisions
of SFAS No. 133. These statements require companies to recognize
all derivatives as either assets or liabilities and measure those
instruments at fair value. Gains or losses resulting from changes
in the values of those derivatives would be accounted for
depending on the use of the derivatives and whether it qualifies
for hedge accounting. The Company will adopt both pronouncements
as of January 1, 2001. As of December 31, 2000, the Company has
concluded that it did not have derivatives or hedging activities
as contemplated by these pronouncements, and has accordingly
concluded that there is no effect of adoption.
The Company adopted the Securities and Exchange Commission's Staff
Accounting Bulletin No. 101, "Revenue Recognition," ("SAB 101"),
including related interpretations, in the quarter ended December
31, 2000. The adoption of SAB 101 had no impact on the Company's
revenue recognition practices or reported financial results.
(n) USE OF ESTIMATES
Management makes estimates and assumptions relating to the
reporting of assets and liabilities and the disclosure of
contingent assets and liabilities and the reported amounts of
revenue and expenses to prepare these consolidated financial
statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
F-11
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(1), CONTINUED
(o) RECLASSIFICATIONS
Certain prior year balances have been reclassified to conform with
current year presentation.
(2) EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET
At December 31, 2000 and 1999, equipment and leasehold improvements
consist of the following:
- -----------------------------------------------------------------------------------------------
2000 1999
Furniture, fixtures and equipment, including
computer software $8,939,000 $8,598,000
Leasehold improvements 1,913,000 1,796,000
------------- -------------
10,852,000 10,394,000
Less: accumulated depreciation and amortization 7,294,000 6,399,000
------------- -------------
$3,558,000 $3,995,000
============= =============
- -----------------------------------------------------------------------------------------------
(3) OTHER ASSETS
At December 31, 2000 and 1999, other assets consist of the following:
- --------------------------------------------------------------------------------
2000 1999
Deferred charges $176,000 $151,000
Security deposits 132,000 142,000
Goodwill, net 86,000 96,000
Deferred financing fees, net 29,000 55,000
----------- -----------
$423,000 $444,000
=========== ===========
- --------------------------------------------------------------------------------
(4) LEASES
The Company has an operating lease agreement for its principal offices,
which expires in 2005. As a result of certain lease renegotiations,
rental expense is scheduled to decline over the term of the lease. Rental
expense under this lease is recorded on a straight-line basis. Scheduled
payments through December 31, 2000 and 1999 exceeded rental expense
recorded on this lease through such dates by $602,000 and $416,000,
respectively.
F-12
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(4), CONTINUED
The Company has two operating leases for additional office space that
expire in 2005. Rental expense is scheduled to increase over the term of
the lease. Rental expenses on these leases are recorded on a
straight-line basis. Accordingly, rent recorded through December 31, 2000
and 1999 exceeded scheduled payments by $228,000 and $241,000,
respectively. In September 2000, the Company gave up its rights to a
portion of this space for which the Company received $100,000 from its
landlord, which is included in other income in 2000. In 1998, the Company
gave up its rights to part of its leased space for which the Company
received a payment of $75,000 from its landlord, which was included in
other income in 1998.
The Company's leases of office space include standard escalation clauses.
Rental expenses under leases for office space and certain equipment
accounted for as operating leases were $1,573,000, $1,676,000 and
$1,749,000 in 2000, 1999 and 1998, respectively.
The future minimum lease payments under noncancellable operating leases
as of December 31, 2000 were as follows:
- --------------------------------------------------------------------------------
Year ending December 31 Operating Leases
- ----------------------- ----------------
2001 $1,333,000
2002 1,093,000
2003 853,000
2004 853,000
2005 426,000
Thereafter --
---------------
Total minimum lease payments $4,558,000
===============
- --------------------------------------------------------------------------------
F-13
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(5) NOTES PAYABLE
Notes payable as of December 31, 2000 and 1999 consist of the following:
- --------------------------------------------------------------------------------------------------------
2000 1999
Bank borrowings $ 1,350,000 $ -
Borrowings under debt agreements with investors:
$475,000 Series A Senior Subordinated
Note - SVP, S.A., net of unamortized
discount of $1,000 and $2,000 as of
December 31, 2000 and 1999, respectively, due
November 30, 2001 474,000 473,000
$475,000 Series A Senior Subordinated
Note - SVP, S.A., net of unamortized
discount of $2,000 and $3,000 as of
December 31, 2000 and 1999, respectively, due
August 25, 2002 473,000 472,000
$2,025,000 Series A Senior Subordinated Note -- 2,018,000
-------------- --------------
Total notes payable 2,297,000 2,963,000
Less current installments 674,000 --
Plus accrued deferred interest 62,000 76,000
-------------- --------------
Notes payable, excluding current
Installments $ 1,685,000 $ 3,039,000
============== ==============
- --------------------------------------------------------------------------------------------------------
(a) DEBT AGREEMENTS WITH BANK
On August 1, 2000, the Company entered into a financing agreement
with a commercial bank for a $1,400,000 Term Note (the "Note"), due
June 30, 2005. The Note bears interest at prime plus 1.25% and is
payable in quarterly installments beginning September 30, 2000. As
of December 31, 2000, there was $1,350,000 outstanding on this
Note.
The Company has a $1,000,000 line of credit at the prime commercial
lending rate plus 0.5%. The line is renewable annually, and was put
in place on December 30, 1999. No amounts were borrowed under the
line of credit as of December 31, 2000.
F-14
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(5), CONTINUED
(b) DEBT AGREEMENTS WITH INVESTORS
Borrowings under the debt agreements with investors accrue interest
at an annual rate of 12% on the unpaid principal balance. Interest
payments are made periodically, and the agreements allow for the
automatic deferral of some of the interest. Any interest that is
deferred, compounds and accrues interest at 12%. As of December 31,
2000, there was approximately $102,000 of accrued but unpaid
interest of which $62,000 was deferred in accordance with said
provisions. As of December 31, 1999, there was approximately
$150,000 of accrued but unpaid interest, of which $76,000 was
deferred.
In early August 2000, the proceeds of the Term Note due June 30,
2005 were used to pay down a portion of the Company's Senior
Subordinated Notes, resulting in an after tax extraordinary loss of
$27,000.
The aggregate principal maturities of long-term debt for the next
five years, including deferred interest and after full amortization
of discounts, are as follows:
- -------------------------------------------------------------------------
Year ending December 31,
- ------------------------
2001 $ 725,000
2002 725,000
2003 300,000
2004 350,000
2005 200,000
---------------
$ 2,300,000
===============
- -------------------------------------------------------------------------
(6) SHAREHOLDERS' EQUITY
(a) SALE OF COMMON STOCK
In 1998, SVP, S.A. ("SVP"), a subsidiary of Amalia S.A., purchased
$1,000,000 of the Company's common stock at $1.25 per share. At
December 31, 2000 and 1999, Amalia S. A., and its subsidiaries,
was the owner of approximately 35.1% and 37.2%, respectively, of
the Company's common shares.
(b) COMMON STOCK WARRANTS
At December 31, 2000, warrants to purchase 422,222 of the
Company's common shares at $2.25 per share, were outstanding.
These warrants may be exercised by payment to the Company in
cash, or by surrender to the Company of the equivalent face value
amount of Senior Subordinated Notes.
F-15
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(6), CONTINUED
At December 31, 2000, additional warrants to purchase 150,000 of
the Company's Common Shares, at $2.25 per share, were outstanding.
These warrants may be exercised by payment to the Company in cash.
During the first quarter of 2000, 266,945 of such warrants were
exercised. Under the terms of the agreement, $600,626 of face
value of the Senior Subordinated Note due October 31, 2001 was
surrendered as payment. In August 2000 as part of the early
retirement of the Senior Subordinated Note due October 31, 2001,
633,055 warrants were converted into 150,000 shares of the
Company's common stock.
(c) STOCK OPTION PLAN
The Company's 1996 Stock Option Plan (the "Plan"), as amended in
1998 and 2000, authorizes grants of options to purchase up to
1,650,000 shares of common stock, issuable to employees, directors
and consultants of the Company, at prices at least equal to fair
market value at the date of grant (110% of the fair market value
for holders of 10% or more of the outstanding shares of common
stock).
The options to be granted under the Plan will be designated as
incentive stock options or non-incentive stock options by the
Stock Option Committee. Options granted under the Plan are
exercisable during a period of no more than ten years from the
date of the grant (five years for options granted to holders of
10% or more of the outstanding shares of common stock). All
options outstanding at December 31, 2000 expire within the next
ten years if not exercised. Options that are cancelled or expire
during the term of the Plan are eligible to be re-issued under the
Plan and, therefore, are considered available for grant.
There were 166,200 options outstanding under the 1986 Stock Option
Plan as of December 31, 2000, and there were no options available
for grant under this plan at December 31, 2000.
F-16
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(6), CONTINUED
Activity under the stock option plans is summarized as follows:
- ------------------------------------------------------------------------------------------------
Weighted
Available average
for Options exercise
grant Granted price
-------- --------- ------
January 1, 1998 128,100 1,176,713 $ 1.78
Additional authorized 500,000
Granted (366,500) 366,500 0.84
Exercised -- (12,900) 1.12
Cancelled and terminated 540,550 (540,550) 1.46
No longer available under 1986 Plan (235,000) -- --
-------- ---------- -------
December 31, 1998 567,150 989,763 1.31
Granted (247,500) 247,500 0.80
Exercised -- (22,750) 0.77
Cancelled and terminated 338,613 (338,613) 1.09
No longer available under 1986 Plan (171,963) -- --
-------- ---------- -------
December 31, 1999 486,300 875,900 1.12
Additional authorized 500,000 -- --
Granted (772,500) 772,500 2.15
Exercised -- (80,910) 1.68
Cancelled 291,840 (291,840) 1.14
No longer available under the 1986 Plan (30,140) -- --
-------- ---------- -------
December 31, 2000 475,500 1,275,650 1.74
======== ========== =======
Exercisable at December 31, 2000 435,550 $ 1.56
========== =======
Exercisable at December 31, 1999 327,075 $ 1.40
========== =======
Exercisable at December 31, 1998 396,713 $ 1.62
========== =======
During 2000 options to purchase 772,500 shares of common stock
were granted under the Company's Stock Option Plan, at prices
ranging from $0.96875 to $3.6875.
As of December 31, 2000, there were 1,275,650 options outstanding,
exercisable at $0.65625 to $3.6875, with an average remaining
contractual life of 5.54 years. As of December 31, 2000, there
were 435,550 exercisable options, exercisable at $0.65625 to
$3.6875, with an average remaining contractual life of 6.01 years.
F-17
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(6), CONTINUED
On June 30, 1998 the Stock Option Committee of the Board of
Directors voted in favor of a plan to re-price certain outstanding
options held by employees on that date. There was a total of
89,550 options with original issue dates between 1994 and 1998
that were re-priced. The original exercise price of said options
ranged from $1.21 to $2.25 and the weighted-average exercise price
of those options was $1.78. The options were re-priced at $1.0625,
the fair market value on June 30, 1998. All other aspects of the
options were not changed. The weighted average exercise prices
noted above reflect this repricing.
Included in the options granted as of December 31, 1997 are
300,000 options the Company granted to the President of the
Company. Contingent upon meeting certain earnings levels over the
life of his employment agreement, these options will vest on the
certification date of the targeted earnings levels. The exercise
price of these options will be equal to the fair market value of
the common stock on the vesting date or 110% of such fair market
value if the President is a holder of 10% or more of the
outstanding shares of common stock on such date. As of December
31, 2000, the President has relinquished a total of 225,000 of
these options.
The Company applies APB Opinion No. 25 in accounting for its Plan
and, accordingly, no compensation cost has been recognized for its
stock options in the financial statements. Had the Company
determined compensation cost based on the fair value at the grant
date for its stock options under SFAS No. 123, "Accounting for
Stock-Based Compensation", the Company's net income (loss) would
have been reduced (increased) to the pro forma amounts indicated
below:
- -----------------------------------------------------------------------------------------------------
2000 1999 1998
Net (loss) income As reported $ (535,000) $ 883,000 $ 759,000
Proforma (646,000) 821,000 697,000
------------------------------------------------
(Loss) earnings per share Basic
As reported (0.07) 0.12 0.11
Proforma (0.09) 0.12 0.10
------------------------------------------------
Diluted
As reported (0.07) 0.12 0.11
Proforma (0.09) 0.11 0.10
------------------------------------------------
- -----------------------------------------------------------------------------------------------------
F-18
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(6), CONTINUED
The per share weighted-average fair value of stock options granted
during 2000, 1999 and 1998 was $1.21, $0.43 and $0.33,
respectively, on the date of grant using the Black-Scholes
option-pricing model with the following weighted-average
assumptions: 2000 - expected dividend yield of 0%, risk-free
interest rate of 6%, volatility of 82.1% and an expected life of 3
years; 1999 - expected dividend yield of 0%, risk-free interest
rate of 6%, volatility of 75.6% and an expected life of 3 years;
1998 - expected dividend yield of 0%, risk-free interest rate of
6%, volatility of 48.8% and an expected life of 3 years.
Volatility is calculated over the five preceding years for 2000,
1999 and 1998, respectively.
(d) PREFERRED STOCK
The Company has authorized and unissued preferred stock consisting
of 2,000,000 shares at $.0001 par value.
(7) SVP INTERNATIONAL - RELATED PARTY
The Company has an agreement with SVP International, a subsidiary of
Amalia S.A. The agreement provides that SVP International will aid and
advise the Company in the operation of an information service and permit
access to other global SVP information centers, and the use of the SVP
trademark and logo. The agreement shall continue in perpetuity, unless
amended by the parties. The Company pays royalties to SVP International
computed using a formula based on percentages of service and product
revenues, subject to certain limitations.
Royalty expense under the agreement was $118,000, $119,000 and $126,000
in the years ended December 31, 2000, 1999 and 1998, respectively.
Amounts due to SVP International, included in accrued expenses, were
approximately $278,000 and $240,000 at December 31, 2000 and 1999,
respectively.
The Company receives and renders information services to other members of
the SVP network. Charges for such services are made at rates similar to
those used for the Company's other clients.
F-19
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(8) INCOME TAXES
The provision (benefit) for income taxes consists of the following:
- ----------------------------------------------------------------------------------------------------
2000 1999 1998
Current:
Federal $ -- $ -- $ --
State and local -- 20,000 --
-----------------------------------------------------
-- 20,000 --
Deferred:
Federal (260,000) 524,000 342,000
State and local (63,000) 25,000 102,000
-----------------------------------------------------
(323,000) 549,000 444,000
Change in valuation allowance -- (280,000) (239,000)
-----------------------------------------------------
(323,000) 269,000 205,000
-----------------------------------------------------
$ (323,000) $ 289,000 $ 205,000
=====================================================
- ----------------------------------------------------------------------------------------------------
Income tax (benefit) expense differs from the amount computed by
multiplying the statutory rate of 34% to income before income taxes due
to the following:
- -------------------------------------------------------------------------------------------------------------------
2000 1999 1998
Income tax (benefit) expense at statutory rate $(283,000) $ 398,000 $ 327,000
Increase (reduction) in income taxes resulting
from:
Change in valuation allowance -- (280,000) (239,000)
State and local (benefit) taxes, net of federal
income tax benefit (63,000) 118,000 97,000
Nontaxable income (24,000) (18,000) (30,000)
Nondeductible expenses 25,000 31,000 31,000
Other 22,000 40,000 19,000
--------------------------------------------------
$(323,000) $ 289,000 $ 205,000
==================================================
- -------------------------------------------------------------------------------------------------------------------
F-20
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(8), CONTINUED
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets, net of deferred tax liabilities at
December 31, 2000 and 1999 are presented below:
- --------------------------------------------------------------------------------
2000 1999
Deferred tax assets:
State and local tax loss carryforwards $ 317,000 182,000
Federal tax loss carryforwards and credit 226,000 129,000
Deferred compensation 142,000 117,000
Royalty expenses 115,000 --
Other, net 42,000 43,000
Depreciation and amortization 17,000 --
Severance charges -- 46,000
Restructuring charges -- 26,000
Deferred tax liability:
Depreciation and amortization -- (26,000)
----------------------------
Net deferred tax asset $ 859,000 $ 517,000
============================
- --------------------------------------------------------------------------------
Based on the Company's history of prior years' operating earnings
relating to its research-for-hire businesses, a valuation allowance of
$280,000 as of December 31, 1998 was necessary due to the uncertainty of
future earnings to realize the net deferred tax asset. Based upon the
1999 operating results, the valuation allowance was reversed as of
December 31, 1999. Of the net deferred tax asset, $70,000 and $114,000 as
of December 31, 2000 and December 31, 1999, respectively, are classified
as current.
Most federal tax loss carryforwards will expire in 2015. State and local
tax loss carryforwards expire between 2011 and 2020. Alternative minimum
tax assets may be used indefinitely.
F-21
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(9) EMPLOYEE BENEFITS AND DEFERRED COMPENSATION
(a) EMPLOYEE BENEFIT PLANS
The Company sponsors a 401(k) and profit sharing plan under which
eligible participants may elect to defer eligible compensation up
to governmental limitations. The Company contributes 20% of the
employees' contributions up to 1% of their annual compensation and
may contribute additional profit sharing amounts at the discretion
of the Company. Expense was $86,000, $61,000 and $57,000 for the
years ended December 31, 2000, 1999 and 1998, respectively.
During 2000 the Company terminated its Target Benefit Pension
Plan. All funds were distributed to participants as of December
31, 2000.
(b) DEFERRED COMPENSATION
The Company has deferred compensation agreements with two
individuals, with benefits commencing upon retirement, death or
disability. Deferred compensation expense under these agreements
was approximately $56,000, $74,000 and $20,000 in 2000, 1999 and
1998, respectively.
(c) EMPLOYMENT AGREEMENTS
The Company has an employment agreement (the "Agreement") with the
President of the Company, which expires in December 2001. The
Agreement contains certain severance provisions entitling the
President to receive compensation upon termination without cause,
or voluntary termination upon certain conditions, which includes
the acquisition by a party of 30% or more of the outstanding
shares of common stock of the Company or a change in the majority
of incumbent Board members, and certain other occurrences. If
termination occurs at a time when there is less than one year left
in the Agreement, compensation will continue for a two-year period
from the date of termination.
F-22
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(9), CONTINUED
During 1998, the Board amended the contract with the Company's
President to provide that at any time after the end of calendar
year 1999, the President may elect to voluntarily leave the employ
of the Company and receive the balance of his contract for the
remaining term on his employment contract. The term of the
contract runs through 2001.
Effective September 30, 1998, the Company accepted the resignation
of an Executive Officer. In connection with his severance
agreement, coupled with the signing of a release and agreement not
to compete dated October 5, 1998, and the cancellation of his
outstanding options, the Executive Officer received compensation
and benefits through September 2000. An accrual of $475,000 was
recorded in the year ended December 31, 1998 for this obligation.
Severance arrangements for members of the Operating Management
Group ("OMG") were authorized by the Board of Directors on January
25, 1999. In the event of certain changes of control, severance
agreements with members of the OMG would be triggered. Such
agreements were signed by two members of the OMG and provide for
(a) a normal severance benefit for nine (9) months, which would be
increased to one (1) year after the employee has served as a
member of the OMG for a continuous period of two (2) years, in the
event the employee's services are terminated without cause, and
(b) a severance benefit of one (1) year in the event the
separation from service is due to (i) a change in control, and
(ii) the employee suffers, within one (1) year thereafter, either
(A) a discontinuation of duties, or (B) an office change of at
least 50 miles, or (C) a reduction in compensation, or (D) a
termination of employment other than for cause.
(10) SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest and income taxes during the years ended December
31, 2000, 1999 and 1998 was as follows:
- --------------------------------------------------------------------------------
2000 1999 1998
Interest $ 235,000 $ 644,000 $ 292,000
=================================================
Income taxes $ 10,000 $ 60,000 $ --
=================================================
- --------------------------------------------------------------------------------
The Company had the following non-cash financing activities:
During the first quarter of 2000, the Company issued 266,945 common
shares upon the exercise of warrants in exchange for the retirement of
$600,626 of the Company's Senior Subordinated Note due October 31, 2001.
F-23
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(10), CONTINUED
In August 2000, the Company issued 150,000 shares of common stock in
exchange for the cancellation of 633,055 warrants to purchase common
stock.
During 2000, the Company recorded the cashless exercise of 47,860 options
at prices ranging from $0.75 to $2.25, in exchange for 28,831 shares of
common stock at prices ranging from $3.3125 to $4.01325. Such shares were
held for a period of at least six months before the respective exchange.
The value of these transactions was $97,000.
In connection with the Company's sale of Published Research assets during
1998, the Company received a $550,000 four-year note.
In March 1998, a $250,000 convertible note with a related party was
converted into common stock.
(11) ACCRUED EXPENSES
Accrued expenses at December 31, 2000 and 1999 consisted of the
following:
- --------------------------------------------------------------------------------------
2000 1999
Accrued bonuses and employee benefits $ 403,000 $ 441,000
Accrued severance and retirement -- 176,000
Accrued expenses incurred on behalf of clients 41,000 75,000
Accrued SVP royalty 278,000 240,000
Other accrued expenses 257,000 498,000
--------------------------------
$ 979,000 $ 1,430,000
================================
- --------------------------------------------------------------------------------------
F-24
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(12) OTHER INCOME
Other income consists of the following:
- -----------------------------------------------------------------------------------------------------
2000 1999 1998
Early termination of lease $ 139,000 $ -- $ --
Domain name assignment and trademark
license agreement -- 1,200,000 --
Settlement with Asset Value and lease
renegotiation -- -- 364,000
Settlement with Asset Value and lease
renegotiation -- -- (315,000)
--------------------------------------------------
$ 139,000 $ 1,200,000 $ 49,000
==================================================
- -----------------------------------------------------------------------------------------------------
On December 30, 1999, the Company entered into an agreement with idealab!
and Find.com, Inc. whereby the Company assigned the domain name
"find.com" and licensed the use of certain rights to the trademarks
"find.com" and "find" to Find.com, Inc. idealab! and Find.com, Inc. are
not otherwise related to the Company. Under the terms of the agreement,
the Company received consideration in the form of cash and preferred
shares amounting to approximately $1,200,000, net of related expenses.
The Company is also entitled to certain future royalties. No royalty
income was earned in the year ended December 31, 2000. The carrying value
of the preferred shares is the lower of historical cost or estimated net
realizable value. The non-marketable preferred share securities carry
various rights including the ability to convert into common shares of
Find.com and a repurchase (put) option that becomes exercisable in
December 2002. Since the preferred share securities are an investment in
a start-up enterprise, it is reasonably possible in the near term that
the Company's estimate of the net realizable value of the preferred
shares will be less than the carrying value of the preferred shares.
F-25
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(13) LITIGATION
On May 30, 1997, Asset Value Fund Limited Partnership ("Asset Value"), a
shareholder in the Company, commenced an action in the United States
District Court for the Southern District of New York entitled Asset Value
Fund Limited Partnership v. FIND/SVP, Inc. and Andrew P. Garvin, Civil
Action No. 97 Civ. 3977 (LAK). The complaint alleged that between October
1995 and August 1996 the Company and its president made certain oral
misstatements to Paul Koether, the principal of Asset Value, concerning
the financial condition of the Company and that those misstatements
induced Asset Value to buy more shares of the Company and to refrain from
selling the shares it already held. The complaint alleged that those
misstatements give rise to causes of action for violation of Section
10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder,
and for fraud, breach of fiduciary duty and negligent misrepresentation.
The complaint demanded compensatory damages in excess of $1.5 million and
punitive damages in excess of $5 million, as well as costs and attorneys'
fees.
On August 13, 1997, the Company was served with an amended complaint
which alleged that between January 1996 and August 1996, the Company and
its president made certain misstatements concerning the financial
condition of the Company and that those misstatements induced Asset Value
to buy more shares of the Company and to refrain from selling the shares
it already held. The amended complaint alleged that those misstatements
give rise to causes of action for violation of Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5 thereunder and for common
law fraud. The complaint demanded compensatory and punitive damages in an
amount to be determined at trial, as well as costs and attorneys' fees.
On September 29, 1997, the Company and Mr. Garvin moved to dismiss the
amended complaint.
On December 3, 1997, Asset Value commenced an action in the Supreme Court
of the State of New York, County of New York entitled Asset Value Fund
Limited Partnership v. Brigitte De Gastines and Jean-Louis Bodmer, Index
No. 606165/97. The defendants are two of the Company's directors. The
complaint sought to remove the defendants as directors under New York
Business Corporation Law 706(d) because of their alleged failure to
attend meetings of the board and because they considered and approved
financing transactions by the Company involving Amalia, S.A. and/or SVP,
S.A which allegedly constituted self-dealing by the defendants. On
December 30, 1997, the defendants removed this action to the United
States District Court for the Southern District of New York.
F-26
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(13), CONTINUED
On January 20, 1998, Asset Value and the Company entered into a
settlement agreement pursuant to which Asset Value dismissed with
prejudice the two pending actions described above. Furthermore, Asset
Value agreed that for five years neither Asset Value nor Paul Koether
will purchase, either directly or indirectly, any shares of stock in the
Company, or own or control, either directly or indirectly, any shares of
stock in the Company. As part of the settlement, the Company purchased
274,400 shares of the Company's common stock from the plaintiff for $1.25
per share, totaling $343,000. The purchase price contained a premium of
$0.50 per share over the closing trade price of the Company's common
stock on the date of settlement, or $137,000. As a result of the above,
the Company recorded treasury stock of $206,000 and expense of $137,000.
The Company used proceeds from its insurance company of $495,000 to
purchase the shares and to pay plaintiff and Company legal fees in the
amount of $110,000 and $42,000, respectively. Accordingly, the Company
recorded other income and other expense of $289,000, respectively, in the
year ended December 31, 1998, related to this matter, with the remaining
balance of $206,000 offset against the aforementioned treasury stock
repurchase amount, thus reducing the net treasury stock to zero.
(14) IMPAIRMENT LOSS AND ASSET DISPOSAL
During the fourth quarter of 1997, the Company decided to sell the
majority of assets held in its Published Research subsidiary and recorded
an impairment loss of $1,047,000 in December 1997.
In July 1998, the Company completed the sale of substantially all of the
assets of its Published Research subsidiary and recorded a $20,000 gain.
The Company received $1,250,000 in cash, a Promissory Note (the "Note")
in the amount of $550,000 and the purchaser assumed certain liabilities
in the amount of $85,000. The Note bears interest at a rate of 8% per
annum and is payable in four equal annual installments of principal and
interest beginning in June 1999. The Company holds a subordinate security
interest in the sold assets, and has the personal guarantee of a
principal of the purchaser.
During the fourth quarter of 1997, the Company ceased the consumer
oriented operation of its FIND/SVP Internet Services, Inc. subsidiary.
Accordingly, the Company recorded a charge of $500,000 in the fourth
quarter of 1997 related to the closing of the subsidiary. The charge
included $35,000 of severance, all of which was paid by March 31, 1998.
During the second quarter of 1998 the Company received payment of $75,000
from the landlord in return for the forfeiture of the lease. The Company
also had rental expenses of $26,400 during the second quarter of 1998,
prior to the agreement with the landlord. The $75,000 was recorded as
Other Income and the $26,400 was recorded as Other Expense in 1998.
F-27
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(15) RESTRUCTURING CHARGE
On March 27, 1998, the Company reduced its full-time labor force in its
core business by 20 positions. As a result the Company recorded a
restructuring charge of $321,000 during the quarter ended March 31, 1998.
The charge consisted mainly of severance payments, outplacement services
and legal costs associated with the elimination of the positions, all of
which was paid as of December 31, 1999.
(16) SEGMENT REPORTING
During the year ended December 31, 2000, the Company began measuring its
consulting and business advisory services in two business segments: Quick
Consulting and Strategic Consulting. Corresponding information for the
years ended December 31, 1999 and 1998 have been disaggregated to provide
comparative information. The Company operates primarily in the United
States. Prior to the divestiture in the third quarter of 1998, the
Company had one additional segment, Published Research Products. The
Company considers its quick consulting and strategic consulting services
to be its core competency. Corporate and other relates to assets and
activities that are not allocated to a segment.
F-28
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(16), CONTINUED
- ---------------------------------------------------------------------------------------------------------------------
(in thousands) YEARS ENDED DECEMBER 31,
------------------------
2000 1999 1998
---- ---- ----
REVENUES
Quick Consulting $ 19,930 $ 18,851 $ 20,714
Strategic Consulting 3,870 3,887 4,743
Published Research Products -- -- 2,718
--------------------------------------------
Total revenues $ 23,800 $ 22,738 $ 28,175
============================================
OPERATING (LOSS) INCOME
Quick Consulting (1) $ 4,545 $ 4,680 $ 5,965
Strategic Consulting (58) 156 403
Published Research Products -- -- 16
--------------------------------------------
Segment operating (loss) income 4,487 4,836 6,384
Corporate and other (2) (5,318) (3,664) (5,423)
--------------------------------------------
(Loss) income before (benefit) provision for income taxes
$ (831) $ 1,172 $ 961
============================================
DEPRECIATION AND AMORTIZATION
Quick Consulting $ 583 $ 520 $ 440
Strategic Consulting 68 69 61
Published Research Products -- -- 96
--------------------------------------------
Total segment depreciation and amortization 651 589 597
Corporate and other 531 516 547
--------------------------------------------
Total depreciation and amortization $ 1,182 $ 1,105 $ 1,144
============================================
TOTAL ASSETS
Quick Consulting $ 3,406 $ 3,352
Strategic Consulting 843 735
Published Research Products -- --
------------------------------
Total segment assets 4,249 4,087
Corporate and other 6,534 7,191
------------------------------
Total assets $ 10,783 $11,278
==============================
CAPITAL EXPENDITURES
Quick Consulting $ 160 $ 218 $ 478
Strategic Consulting 30 25 74
--------------------------------------------
Total segment capital expenditures 190 243 552
Corporate and other 380 429 66
--------------------------------------------
Total capital expenditures $ 570 $ 672 $ 618
============================================
(1) Operating income for the year ended December 31, 1998 includes a
restructuring charge for severance and related costs of $321,000.
(2) Includes interest income, other income, gain on sale of net assets, interest
expense and other expense.
- --------------------------------------------------------------------------------
F-29
INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTAL SCHEDULE
To the Board of Directors and Shareholders of Find/SVP, Inc.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements as of and for the years ended December 31, 2000 and 1999,
taken as a whole. The data shown on the supplemental schedule on page F-31 for
the years ended December 31, 2000 and 1999 is presented for the purpose of
additional analysis and is not a required part of the basic financial
statements. This schedule is the responsibility of the Company's management.
Such data has been subjected to the auditing procedures applied in our audits of
the basic financial statements and, in our opinion, is fairly stated in all
material respects when considered in relation to the basic financial statements
taken as a whole.
Deloitte & Touche LLP
Stamford, Connecticut
March 28, 2001
F-30
Schedule II
FIND/SVP, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years ended December 31, 2000, 1999 and 1998
(in thousands of dollars)
Balance at Additions
beginning charged to Deduc- Balance at
CLASSIFICATION of year earnings tions (1) end of year
------- -------- --------- -----------
Year ended December 31, 2000:
Allowance for doubtful accounts $ 101 $ 217 $ 217 $ 101
=== === === ===
Year ended December 31, 1999:
Allowance for doubtful accounts $ 104 $ 90 $ 93 $ 101
=== === === ===
Year ended December 31, 1998:
Allowance for doubtful accounts $ 118 $ 164 $ 178 $ 104
=== === === ===
Note: (1) Amounts written off, net of recoveries.
F-31