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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1995
OR
_______ Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File No. 0-15539
RIGHT MANAGEMENT CONSULTANTS, INC.
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-2153729
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1818 Market Street, Philadelphia, Pennsylvania 19103
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 988-1588
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 $0.01 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
---- ----
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 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. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 22, 1996 was $125,957,460. The number of shares
outstanding of the registrant's Common Stock as of March 22, 1996 was 4,198,582.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I & II Portions of the Company's 1995 Annual Report to Shareholders for
the fiscal year ended December 31, 1995.
Part III The Company's definitive proxy statement with respect to its 1996
Annual Meeting of Shareholders to be held on May 9, 1996.
PART I
Item 1: Business
General
Right Management Consultants, Inc. (the "Company"), is a Pennsylvania
corporation organized in November 1980, doing business under the name "Right
Associates(R)," a federally-registered service mark. The Company is one of the
world's largest career management consulting firms specializing in career
transition (outplacement). Services developed by the Company are currently
offered through 126 offices in North America and Western Europe, of which 89 are
owned and operated by the Company ("Company Offices") and 37 are operated by 9
independently owned businesses ("Affiliates").
The Company licenses its Affiliates to use its service mark and
licenses and trains them to use its proprietary materials and methods. The
Company receives fees directly from employers for services rendered by Company
Offices and royalties and fees from the Affiliates. Both Company Offices and
Affiliates render career management consulting services and human resource
consulting services on either an individual or a group basis. See "Business -
Individual Career Transition" and "Business - Group Career Transition."
Career transition consulting services assists employers with
restructuring issues and helps separated employees develop strategies to achieve
their career objectives, including re-employment, self-employment or retirement.
The Company's fees for such career transition services are paid exclusively by
the employer. The Company does not provide its services to employees who are not
sponsored by employers, since it is not a "retail" career counseling firm,
employment agency, or an executive search firm.
Individual Career Transition
The major portion of the Company's business (approximately 72% of
revenue generated by Company Offices in 1995) consists of providing services, on
a one-on-one basis, to the employer-client and the terminated or resigning
employee.
The Company's individual consulting program for the employer includes
advice on conducting the termination interview, terms of severance pay and other
termination benefits and identification of termination-related issues for which
the employer may wish to seek legal counsel. Services by the Company to
terminated employees include assistance in handling the initial difficulties of
termination, identifying continuing career goals and options and in planning an
alternative career; aiding in developing skills for the search for a new job,
such as resume writing, identifying and researching types of potential
employers, preparing and rehearsing for interviews; continuing counseling and
motivation throughout the job search campaign; assessing new employment offers
and methods of accepting such offers (including consideration of relocation
issues) and, where appropriate, consulting with the employee's spouse regarding
the stresses of the employment search and the positive role the spouse may play
in all aspects of the new job search, as well as assisting with financial
planning and health maintenance.
1
Group Career Transition
The remaining significant portion of the Company's career transition
consulting business consists of providing career transition consulting in group
contexts for companies making group reductions in their work force due to
reorganization, restructuring or other reasons. The Company's group programs
have, as their core, seminars for generally up to 12 employees per group, in
sessions extending over one to five days. Often, the group seminar is preceded
or followed by individual consulting. These group programs are designed for each
employer-client and are generally competitively priced and bid, based on the
number of consulting hours, number of employees involved and type of programs to
be provided. The group program may also be used for "voluntary separation" due
to reorganizations or other reasons.
The Company is also providing a combination of individual and group
career transition consulting services through a cost reimbursement plus fixed
fee contract between the Company and Resource Consultants Inc. ("RCI") for the
United States Army. Through this contract, counseling services are provided to
United States Army soldiers, civilians and their families who are leaving active
duty as a result of planned force reductions. These services are provided
through 34 Job Assistance Centers in the United States and abroad, which are
staffed by employees of a government division of the Company created for this
contract, and RCI, a Vienna, Virginia based consulting firm.
The contract contains annual renewal options for RCI and the United
States Army to extend through May 1997. All renewal options have been exercised
and the Company's anticipated share of the cost plus fixed fee contract revenue
will approximate $4,000,000 over the eighteen month period through May 1997.
Human Resource Consulting
The Company intends to continue to expand its career transition
consulting business and believes such business will remain its primary activity
and source of revenue in the foreseeable future. Nevertheless, the Company also
designs services to meet other human resource consulting needs of the market the
Company currently serves. These services assist employers and their employees in
identifying and improving areas of job performance, refining communication
skills and improving employee productivity. The Company also consults with
corporations on restructuring and realignment issues, providing customized
services to help manage all aspects of organizational change, including
planning, selection, retention strategy and communication issues. Other services
are designed to enhance the abilities of executives and managers to evaluate
employees' performance in making employment and promotion decisions. The Company
is devoting resources to the development of these services; however, the revenue
it currently generates through these services comprises only a small portion of
total Company revenue.
2
Fees for Services Provided by Company Offices
For individual consulting services provided by Company Offices, the
Company normally receives a negotiated fee, depending upon the services
provided, which generally ranges between 10% and 20% of the terminated
employee's annual compensation. Fees for group programs are individually billed
depending upon the type of services the employer requests, the amount of
consulting time required and the number of employees involved.
3
Organization and Distribution of Company Offices and Affiliates
The current network of Company Offices and Affiliates is outlined in
the Company's 1995 Annual Report to Shareholders under the caption "The World
of Right Associates".
Location of offices opened in the past five years:
Company Offices Company Offices
(continued)
1991 Brussels, Belgium (5)
Buffalo, New York Charlotte, N. Carolina (6)
Leeds, England Greensboro, N. Carolina (6)
Memphis, Tennessee Greenville, S. Carolina (6)
Mississauga, Ontario Jackson, Mississippi
Oakbrook Terrace, Illinois Lancaster, Pennsylvania
Wilmington, Delaware Madison, Wisconsin
Raleigh, N. Carolina (6)
1992 Vancouver, British Columbia (7)
Boston, Massachusetts (2)
Manchester, England 1995
Milwaukee, Wisconsin Charleston, South Carolina
Pasadena, California Cupertino, California (17)
San Bernardino, California Kingston, Ontario
Springfield, Massachusetts Providence, Rhode Island (17)
Woodland Hills, California Tulsa, Oklahoma
Oklahoma City, Oklahoma (16)
1993 San Antonio, Texas
Aberdeen, Scotland
Atlanta, Georgia (3) Affiliate offices (1)
Burlington, Massachusetts
Coventry, England 1990
Hunt Valley, Maryland Jacksonville, Florida (8)
Madison, Wisconsin Knoxville, Tennessee
New Orleans, Louisiana Overland Park, Kansas (9)
Regina, Saskatchewan
Saskatoon, Saskatchewan 1991
Tarrytown, New York Boca Raton, Florida (8)
Torrance, California Palm Beach, Florida (8)
Winnipeg, Manitoba San Juan, Puerto Rico (8)
Zurich, Switzerland
1992
Virginia Beach, Virginia (10)
1994
Allentown, Pennsylvania 1993
Antwerp, Belgium (4) Omaha, Nebraska (11)
Johnson City, Tennessee (12)
Affiliate Offices
(continued)
1994
Fort Mitchell, Kentucky (13)
Lexington, Kentucky (13)
Des Moines, Iowa (16)
1995
Kalamazoo, Michigan (14)
Kingsport, Tennessee (15)
4
(1) See "Business - Affiliate Arrangements" for a description of Exclusive
Territories and related limitations on activities of Company Offices
and Affiliates.
(2) Initially opened as an Affiliate in 1984. Acquired as a Company Office
in 1992.
(3) Initially opened as an Affiliate in 1986. Acquired as a Company Office
in 1993.
(4) Initially opened by the Brussels Affiliate in 1993. Acquired as a
Company Office in 1994
(5) Acquired as a Company Office in 1994.
(6) Initially opened and controlled by the Charlotte Affiliate in the
following order: Charlotte (1986), Raleigh (1987), Greensboro (1989)
and Greenville (1992). Acquired as a Company Office in 1994.
(7) Initially opened as an Affiliate in 1990. Acquired as a Company Office
in 1994.
(8) Controlled by the Fort Lauderdale Affiliate.
(9) Initially opened and controlled by the St. Louis Affiliate. Acquired by
a new and separate Affiliate (Kansas City) in 1990.
(10) Controlled by the Richmond Affiliate.
(11) Controlled by the Kansas City Affiliate.
(12) Controlled by the Knoxville Affiliate.
(13) Controlled by the Cincinnati Affiliate.
(14) Controlled by the Detroit Affiliate.
(15) Controlled by the Knoxville Affiliate.
(16) Controlled by the Kansas City Affiliate.
(17) Acquired as Company Offices in 1995.
5
Management of Company Offices and Affiliates
The Company believes that a decentralized approach of organizing its
business into regional offices, in some cases with satellite offices reporting
to them, allows the Company to be responsive to individual clients, as well as
allowing it to better serve its local and regional markets. Each Company Office
and Affiliate is responsible for marketing and sales, and consulting activities
in its assigned region. Through the Company's Affiliate network arrangement, the
Company's clients have access to the entire Company network of Company Offices
and Affiliates. See "Business - Affiliate Arrangements."
A "Regional Managing Principal" oversees each Company and Affiliate
regional office and has the authority to develop and implement the regional
marketing plan for the Company Offices or Affiliate offices in the region. The
Company operates under an operating hub system to oversee its network of Company
and Affiliate offices. Under this structure, the Regional Managing Principal
reports to a Group Executive Vice President ("Group EVP") responsible for that
operating unit. Each Regional Managing Principal of a Company Office currently
receives, among other compensation, an annual salary and a bonus based on the
operating income achieved in his or her respective region.
Affiliate Arrangements
The Basic Affiliate Relationship
The Company has previously entered into agreements ("Affiliate
Agreements") with Affiliates, which are independent franchisee businesses, to
provide the Company's career management consulting services within the
geographic area defined in each Affiliate Agreement (the "Exclusive Territory").
Affiliates render such services exclusively under the Company's registered
service mark, "Right Associates(R)". Under the Affiliate Agreements, the Company
assists the Affiliates in various ways in the provision of career management
consulting services. See "Business - Affiliate Arrangements - Company Training
of Affiliates" and "Affiliates' Payment of Fees and Royalties to Company."
Under the Affiliate Agreements, the Company is precluded from
establishing or maintaining Company Offices or otherwise soliciting customers,
conducting its consulting business or licensing other Affiliates to operate in
the Exclusive Territory of a particular Affiliate. In turn, the Affiliate is
prohibited from establishing or maintaining its own offices or "satellites,"
soliciting customers or engaging in career management consulting within
Exclusive Territories which the Company currently or in the future grants to
other Affiliates or assigns to Company Offices. A Company Office or an Affiliate
may, however, on a non-exclusive basis, perform sales and consulting activities
in any territory that has not been made the Exclusive Territory of another
Company Office or of an Affiliate.
There is not a formal Affiliate organization; however, a Management
Advisory Committee (the "Advisory Committee") exists which considers matters of
general concern to the Affiliates. The Advisory Committee is comprised of four
members appointed by the Company's management and three members elected by the
Affiliates for a three year term.
6
Company Training of Affiliates
The Affiliate Agreement requires the Company to train the Affiliate and
its employees in the selling and the delivery of career management consulting
services. The Company is responsible for overall guidance and has established
Company standards and policies relating to its consulting services. The Company
provides proprietary sales and consulting materials, administrative forms
(including, among other things, guidelines for consulting client-employers and
terminated employees), materials used in conjunction with marketing the
consulting services and administration of its office and materials relating to
the Company's system of monitoring the progress of terminated employees. The
Company provides guidance, if requested by the Affiliates, with respect to the
hiring of the Affiliate's employees, the use and development of sales programs
and general issues of office operation and sales. The cost of such optional
assistance by the Company is paid for by the Affiliate, unless the Company
otherwise agrees not to charge for these services. The Company also provides
marketing support, public relations advertising and promotional support,
consisting of national and international media efforts directed by an in-house
marketing staff.
Affiliates' Payment of Fees and Royalties to Company
In consideration of the Company providing services, training and
licensing the use of its federally-registered service mark, the Affiliate
generally pays to the Company the following fees (which are not in the order of
their contribution to Company revenue): (1) a one-time non-refundable initial
Affiliate (franchise) fee; (2) a 10% royalty on the Affiliate's total gross
receipts; (3) a fee for services rendered in assisting the Affiliate in selling
the Company's programs to the employer-client; and (4) a fee for services
rendered in providing consulting services to terminated employees on certain
contracts and accounts sold and managed by Affiliates.
Term, Supervision and Termination of Affiliate Agreements
The Company's Affiliate Agreements provide for an initial term of three
or five years and are automatically renewed from year to year unless either
party gives the other notice of non-renewal (which may be without cause) at
least 120 days prior to the expiration of the then current term (unless a longer
notice period is required by local franchise laws).
During the term of the Affiliate Agreement, the Company may terminate
the arrangement, subject to local franchise laws and cure periods specified in
the Affiliate Agreements, for a variety of reasons, including a material breach
of such Agreement by the Affiliate, the failure by the Affiliate to achieve at
least 75% of the minimum volume of business set forth in its Affiliate Agreement
in any year of the Affiliate's operation or the Affiliate's failure to otherwise
conduct normal business operations diligently and regularly or to use its best
efforts to sell and provide career transition consulting services, or the
Affiliate's failure to adhere to the written service standards established by
the Company in consultation with the Advisory Committee. Company may also
terminate an Affiliate Agreement due to the death, disability or retirement of
key Affiliate personnel or of principal stockholders of an Affiliate.
7
The Company has offered and implemented with substantially all of its
existing North American Affiliates an addendum to their respective Affiliate
Agreements. Under the terms of the addendum, the Company relinquishes its right
to give notice of non-renewal of the Affiliate's Affiliate Agreement upon the
expiration of its initial or one of its renewal terms. However, the Advisory
Committee is empowered to terminate, upon specified grounds, the Affiliate
Agreement of Affiliates who sign the addendum. In addition, the addendum permits
the Company to terminate the Affiliate Agreement of any Affiliate if certain
trends in the volume of business generated by the Affiliate deviate by more than
specified amounts below the comparably defined trends for all North American
offices of the Company and its Affiliates measured as a group.
An Affiliate may terminate the Affiliate Agreement at any time (after a
specified cure period) upon a material breach of the Affiliate Agreement by the
Company.
The Company has agreed with substantially all of its existing North
American Affiliates that in the event the Company offers to any other North
American Affiliate any provision in the Affiliate Agreement with such other
North American Affiliate which is more beneficial to such other North American
Affiliate than the terms of the existing Affiliate Agreements with the rest of
the current North American Affiliates, then the new provision will be offered to
all existing North American Affiliates, except for provisions added or deleted
to (a) comply with a particular state or provincial law or regulation; (b)
maintain in force prior agreements with specific Affiliates; or (c) address the
unique nature or character of other businesses or activities engaged in by a
specific Affiliate.
Affiliates' Right of First Refusal
Pursuant to the Affiliate Agreements, the Affiliates may have a right
of first refusal to purchase shares of the Company's Common Stock in case of
certain proposed sales or exchanges of the Company's Common Stock. Under the
terms of the Affiliate Agreements, in the event that 51% or more of the Common
Stock of the Company is proposed to be sold by one or more stockholders of the
Company in a single transaction (exclusive of a corporate merger or
consolidation in which the Company is not the surviving party and transactions
in which the common stock of another company is exchanged for the Common Stock
of the Company), the Affiliates may have a right of first refusal to acquire the
Common Stock of the Company being sold under the same terms as the proposed
transaction.
8
Acquisitions
During 1995, the Company completed three separate acquisitions of
outplacement consulting firms. Two of the transactions resulted in the Company
acquiring the assets of former Affiliates of the Company, located in Cupertino,
California and Providence, Rhode Island. The third transaction resulted in the
Company acquiring the outstanding stock of LM&P, SA located in Paris, France.
The total purchase price for these acquisitions aggregated approximately
$8,150,000, including costs of acquisition. The acquisitions were consummated
through combinations of cash, assumption of incomplete outplacement contracts
and obligations to pay certain defined incentives based upon the results of the
acquired entities subsequent to the transactions.
During the period 1991 through 1994, the Company completed eight
separate acquisitions of outplacement consulting firms for combinations of cash,
future defined incentives, incomplete outplacement contracts and other
considerations. The total purchase price for these transactions aggregated
approximately $12,542,000 including costs of acquisition.
Competition
The Company competes against other providers of career transition
consulting services and other human resource consulting services. The Company
believes that, based on revenue, it, together with its Affiliates, is the second
largest provider of career management services in the world, behind Drake Beam
Morin, Inc., a subsidiary of Harcourt General, Inc. The Company believes that
the principal methods of competition in its industry are quality of service,
professional staff and price. On a regional basis, the Company competes against
several outplacement and other human resource consulting firms that concentrate
and are well-established in a particular region. The Company believes that the
cost for its services is competitive, based on the quality and value of services
offered. The Company may also face competition from future expansion by other
entities into the career transition consulting services and other human resource
consulting businesses.
Government Regulation
The offering of Affiliate Agreements to prospective Affiliates by the
Company and certain aspects of the on-going relationship between the Company and
the Affiliates are subject to the franchise regulations of the Federal Trade
Commission (the "FTC") and to various franchise laws enacted by certain of the
states in which the Company's Affiliates are located. FTC regulations require
the Company to make certain specified disclosures to a prospective Affiliate
prior to the consummation of any Affiliate arrangements. These disclosures
generally relate to the Company, the business which is subject to the Affiliate
Agreement and the terms of the Affiliate Agreement. The provisions and scope of
the state laws vary. In some states, the Company is required to register the
offering of the Affiliate Agreements with regulatory agencies and to license
Company personnel who are directly involved in offering the Affiliate Agreement
to prospective Affiliates. Some states also regulate certain terms of the
Affiliate Agreement, primarily the terms upon which the Company can terminate an
Affiliate Agreement for cause or can decline to renew an Affiliate Agreement
after it expires. Other states' laws impose on the Company general duties of
fair dealing with the Affiliates and prohibit unfair discrimination among or
against Affiliates. As a result of such laws regulating relationships with the
Affiliates in certain states, the Company has less flexibility than it would
otherwise have in structuring such relationships.
9
Information Relating to Foreign Operations
See the Company's Consolidated Financial Statements, Note J,
"Geographic Segments", contained in the Company's Annual Report to Shareholders,
for information regarding the Company's foreign operations. This information is
responsive to Item 101(d) of Regulation S-K and is incorporated by reference
herein.
Employees
At February 29, 1996, the Company and its subsidiaries employed 759
persons full-time, including 15 in senior management, 85 in other managerial and
professional roles, 369 in field operations as consultants, and 290 in clerical
capacities. In addition, the Company employed 264 persons on a part-time basis
as professional consultants. Consultants are generally required to have prior
executive or management experience and are provided Company training. None of
the Company's employees are subject to collective bargaining agreements. The
Company believes that its employee relations are good.
Item 2: Properties
The Company leases approximately 22,618 square feet for its corporate
headquarters in the 1818 Market Street Building in Philadelphia, Pennsylvania.
The initial term of the lease expires December 15, 2005 and is at an annual base
rent of approximately $509,000, subject to annual operating expense escalation
clauses. The Company has the option to extend the lease for an additional term
of five years on the same terms and conditions, except that the rent will be
changed to the then current market rate for the building.
All office space for Company Offices is leased. The leases typically
have three to five year terms and some have renewal options. The Company leases
approximately 526,000 square feet for all Company Offices, including the
corporate headquarters, at an aggregate base yearly rental of approximately
$11,301,000. Most of these leases are also subject to annual operating expense
escalation clauses. The Company believes its facilities are adequate.
Item 3: Legal Proceedings
The Company is not a party to, nor is its property the subject of, any
material pending legal proceedings.
Item 4: Submission of Matters to a Vote of Security Holders
Not applicable.
10
Item 4a: Executive Officers of the Registrant
Each of the following executive officers of the Company has been
appointed by the Board of Directors and serves at the discretion of the Board.
All of the executive officers are expected to devote their full business time to
the Company's affairs.
Name Age Positions
----- --- ---------
Richard J. Pinola 50 Chairman of the Board of Directors and
Chief Executive Officer
Frank P. Louchheim 72 Founding Chairman and Director
Joseph T. Smith 60 President, Chief Operating Officer and Director
G. Lee Bohs 36 Executive Vice President, Chief Financial Officer,
Secretary and Treasurer
Joseph E. Jannotta, Jr. 68 Executive Vice President, Career Management
Consulting and Director
Manville D. Smith 57 Executive Vice President of Business Development
Larry A. Evans 53 Executive Vice President and Director
Nancy N. Geffner 56 Group EVP - Greater New York Region and Director
Victor V. Coppola 53 Group EVP - Mid-Atlantic U.S. Region
Peter J. Doris 49 Group EVP - Southeast U.S. Region
David S. Orr 61 Group EVP - North Central U.S. Region
Warren R. Radtke 60 Executive Vice President - Northeast U.S. Region
Gary L. Saenger 51 Executive Vice President - Southwest U.S. Region
Terry W. Szwec 45 Executive Vice President - Canadian Region
George L. Whitwell 55 Executive Vice President - Northwest and
South Central U.S. Regions
11
Mr. Pinola was elected as a Director by the Board in October 1989. Mr.
Pinola is a Certified Public Accountant and joined Penn Mutual Life Insurance
Company in 1969 and was appointed Senior Vice President, Insurance Business in
1984. He was promoted to Executive Vice President of Insurance, Pensions and
Marketing in 1987 and was appointed President and Chief Operating Officer in
1988, which positions he held until his resignation in September 1991. Mr.
Pinola was a financial consultant to various organizations from September 1991
until July 1992, at which time he was appointed President and Chief Executive
Officer of the Company. Effective January 1, 1994, Mr. Pinola was appointed
Chairman of the Board of Directors and continues as Chief Executive Officer. Mr.
Pinola also serves as a director on the Board of K-Tron International, a
publicly held company.
Mr. Louchheim was one of the founders of the Company and from November
1980 until September 1987, Mr. Louchheim served as President, Chief Executive
Officer and Chairman of the Board of Directors of the Company. From January 1992
to December 31, 1993, he served as the full-time Chairman of the Board of
Directors. Effective January 1, 1994, Mr. Louchheim was appointed Founding
Chairman and continues as a Director.
From 1963 to 1980, Mr. Joseph Smith was employed at the Penn Mutual
Life Insurance Company, where he worked in increasingly responsible positions.
He was appointed Second Vice President of Administrative Services in 1973, and
in 1976 was promoted to Vice President of Administration and Human Resources.
From 1981 to 1984, Mr. Smith worked as an independent consultant offering a
range of consulting services to businesses. He joined the Company as a Senior
Consultant in Professional Services in August 1984 and, from August 1988 until
September 1992, held the position of Regional Managing Principal of the
Company's Philadelphia Office. Mr. Smith was elected as a Director in May 1991.
From September 1992 through December 1993, Mr. Smith served as the Company's
Chief Operating Officer. Effective January 1, 1994, Mr. Smith was appointed
President and continues as Chief Operating Officer.
From June 1981 to January 1987, Mr. Bohs was employed at the regional
Certified Public Accounting firm of Asher & Company, Ltd., initially as a staff
accountant, and then as an accounting and auditing manager. He joined the
Company as Manager of Financial Reporting in January 1987, and was elected
Treasurer in December 1987 and Vice President, Finance, effective January 1989.
From March 1991 until December 1995, Mr. Bohs served as Senior Vice President
and Chief Financial Officer. He was appointed Secretary by the Board of
Directors in May 1995. Effective January 1996, he was promoted to Executive Vice
President and continues to serve as Chief Financial Officer.
Mr. Joseph E. Jannotta was appointed Director by the Board in October
1994. For 25 years Mr. Jannotta worked for Jewel Companies, Inc., a multibillion
retailing conglomerate. He had roles in sales and management development, and he
spent his last five years as Vice President of Human Resources of Osco Drug, the
second largest U.S. drug store chain. From 1975 to 1978, Mr. Jannotta was an
owner and operator of a Company that introduced Yoplait Yogurt to the U.S.,
until it was sold to General Mills in 1978. In 1978, Mr. Jannotta founded
Jannotta, Bray & Associates, Inc. a $17 million career management consulting
firm where he served as Chairman until the Company acquired it in September
1994.
12
Mr. Manville Smith worked for the 3M Company where he had a twenty year
career in a variety of positions, including Managing Director for several
international subsidiaries and operations. Subsequently, Mr. Smith went to work
for the Parker Pen Company where he served as Vice President of Strategic
Planning from July 1980 to April 1981. In April 1981, Mr. Smith was promoted to
President of the Parker Pen Company with worldwide responsibility for this
manufacturer of quality writing instruments, where he served until July 1984.
From July 1984 until July 1988, Mr. Smith provided strategic planning consulting
to various organizations. In 1988, Mr. Smith joined the operations of the
Company's Florida Affiliate as Executive Director, where he provided consulting
services. In July 1994, Mr. Smith joined the Company as Executive Vice
President, Business Development, responsible for strategic business development
on a worldwide basis.
Prior to May 1978, Mr. Evans was professionally involved in the
international finance and venture capital industries. From May 1978 to November
1980, Mr. Evans was employed as an independent outplacement consultant for
Bernard Haldane Associates, Inc., reporting to Mr. Louchheim. Since November
1980, Mr. Evans has served as Executive Vice President and a Director of the
Company. In January 1988, Mr. Evans was named Regional Sales Manager of the New
York City Office and, in January 1990, Mr. Evans was named Regional Managing
Principal of the Company's Stamford, Connecticut Office. From September 1992
until April 1995, Mr. Evans held the position of Regional Managing Principal of
the Company's Philadelphia Office. In May 1995 Mr. Evans joined the Company's
Corporate office where he works together with the Company's regional offices in
marketing to major national and international accounts.
From August 1979 to February 1981, Ms. Geffner was a Career Consultant
with Bernard Haldane Associates, Inc. Since March 1981, Ms. Geffner has served
as Regional Managing Principal of the Company's New York City Office. In June
1983, Ms. Geffner was elected to the Board of Directors and in December 1983 was
named an Executive Vice President of the Company. In 1993, Ms. Geffner took on
the additional responsibilities of directing the Company's Key Executive Service
program, the consulting program for senior executives, throughout the United
States and Canada. Effective January 1996, Ms. Geffner resigned from this role
and was appointed Group EVP for the Greater New York Region.
From 1967 to 1995, Mr. Coppola was employed by Coopers & Lybrand LLP,
where he served in various capacities including Human Resources Partner at the
New York office, Managing Partner at the firm's Baltimore office, National
Director of Middle Market Business Services and finally, Partner in the Middle
Market Group in the Philadelphia office. Mr. Coppola is a co-author of the book
Coopers & Lybrand Guide to Growing Your Business and the recipient of the Blair
Thompson Award for his support of entrepreneurism in the Philadelphia
metropolitan area. In May 1995, Mr. Coppola joined the Company as the Regional
Managing Principal of the Company's Philadelphia region. In addition to this
role, effective January 1, 1996, Mr. Coppola was appointed Group EVP for the
Mid-Atlantic U.S. Region.
Prior to joining Right Associates, Mr. Doris was Senior Vice President
of Human Resources for a large New York City based bank. From 1986 to 1990, Mr.
Doris was Senior Vice President, Sales and Operations of the Company. Effective
January 1991, he became a Group EVP in which capacity he is currently
responsible for the Southeast U.S. Region.
13
Prior to 1990, Mr. Orr had a thirty one year career in the
telecommunications industry in which he was a senior officer for Indiana Bell,
Vice President - Regional Business Services for AT&T, Vice President - Marketing
Planning with Ameritech Services and, finally, President of Ameritech
Communications. In 1990, Mr. Orr joined Jannotta, Bray & Associates as an
Executive Program Consultant, a position he held until it was acquired by the
Company in September 1994. Subsequent to the acquisition, Mr. Orr served as
Regional Managing Principal for the Chicago Region of Right/Jannotta Bray until
February 1995 when he was promoted to Group EVP in which capacity he is
currently responsible for the North Central U.S. Region.
From 1965 to 1980, Mr. Radtke was the owner of an independent human
resource consulting firm specializing in executive outplacement, performance
appraisal systems, career management, organizational development and management
assessments. He joined the Right Associates(R) network in 1980 as the Regional
Managing Principal of the Boston, Massachusetts Affiliate office. Mr. Radtke
joined the Company in December 1992 and through December 31, 1993 served as the
Regional Managing Principal of the Company's Boston region. Effective January 1,
1994, Mr. Radtke became Group EVP for the Northeast U.S. Region and continues to
serve as Regional Managing Principal of the Company's Boston region.
Mr. Saenger spent over ten years with American Hospital Supply
Corporation, where he served in various human resources functions at the senior
management level. From 1982 to 1985, Mr. Saenger was with Transaction Technology
Incorporated, a subsidiary to CitiCorp, where he managed the human resources
function. From 1985 to 1991, Mr. Saenger was Senior Vice President of Security
Pacific Automation Company, Inc., a subsidiary of Security Pacific Corporation,
where had full responsibility for human resource policy and implementation. In
1991, Mr. Saenger joined the Company as the Regional Managing Principal of the
Company's Los Angeles region. Effective February 1995, Mr. Saenger became Group
EVP for the Southwest U.S. Region. Mr. Saenger has an M.A. in Personnel from
Idaho State University.
Mr. Szwec was employed as Product Manager for Bristol Myers Canada,
Ltd. from 1969 until 1970, when he left to become Manager of Training and
Development for de Havillard Aircraft, Ltd. In 1976, Mr. Szwec became Director
of Human Resources for Control Data Canada, Ltd., where he stayed until 1986
when he began his own consulting practice specializing in executive training and
development, human resources effectiveness and career planning. Mr. Szwec joined
the Right Associates(R) network in 1987 as then Regional Managing Principal of
the Toronto Affiliate office. Mr. Szwec joined the Company in November 1990 as
Regional Managing Principal of the Company's Toronto region. Effective January
1, 1994, Mr. Szwec became Group EVP for the Canadian Region and continues to
serve as the Regional Managing Principal of the Company's Toronto region.
From July 1968 to February 1983, Mr. Whitwell held various management
positions, including Director of Outplacement for Fox-Morris Associates, Inc., a
Philadelphia, Pennsylvania-based personnel consulting firm. From February 1983
to June 1986, Mr. Whitwell served as Senior Vice President, Field Operations, of
the Company. Mr. Whitwell was a Director of the Company from March 1985 to May
1991 and from June 1986 to September 1987 was Executive Vice President, Field
Operations of the Company. For the period October 1987 through December 1990,
Mr. Whitwell served as the Regional Managing Principal of the Company's
Parsippany, New Jersey office. Effective January 1991, he became a Group EVP in
14
which capacity he is currently responsible for the Northwest and South Central
U.S. Regions. Mr. Whitwell also serves as the Regional Managing Principal of the
Company's San Francisco region.
Each executive officer has been elected for a term expiring with the
first Board of Directors' meeting held after the next annual meeting of
shareholders.
PART II
Item 5: Market for Registrant's Common Equity and Related Stockholder Matters
Incorporated by reference is the information appearing under the
caption "Common Stock Data" in the Company's 1995 Annual Report to Shareholders,
the incorporated portions of which are included as Exhibit 13 to this Report.
Item 6: Selected Financial Data
Incorporated by reference is the information appearing under the
caption "Selected Financial Data" in the Company's 1995 Annual Report to
Shareholders, the incorporated portions of which are included as Exhibit 13 to
this report.
Item 7: Management's Discussion and Analysis of Financial Condition and
Results of Operations
Incorporated by reference is the information appearing under the
caption "Management's Discussion and Analysis of Financial Condition and Results
of Operations" in the Company's 1995 Annual Report to Shareholders, the
incorporated portions of which are included as Exhibit 13 to this Report.
Item 8: Financial Statements and Supplementary Data
Incorporated by reference is the information appearing under the
caption "Consolidated Balance Sheets", "Consolidated Statements of Income",
Consolidated Statements of Stockholders' Equity", Consolidated Statements of
Cash Flows" and "Notes to Consolidated Financial Statements" in the Company's
1995 Annual Report to Shareholders, the incorporated portions of which are
included as Exhibit 13 to this Report.
Item 9: Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
15
PART III
The information called for by Items 10 through 13 of Form 10-K
(except for the information set forth on pages 11-14 with respect to Executive
Officers of the Registrant) is hereby incorporated by reference to the
information set forth under the captions "Election of Directors", "Executive
Compensation", "Voting Securities, Voting Rights and Security Ownership" and
"Ratification of Appointment of Independent Certified Public Accountants"
contained in the Company's definitive Proxy Statement with respect to its 1996
Annual Meeting of Shareholders, to be filed with the Securities and Exchange
Commission within 120 days following the end of the Company's fiscal year.
PART IV
Item 14: Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) 1. Financial statements
The following is a list of financial statements which have
been incorporated by reference from the Company's 1995 Annual Report to
Shareholders, as set forth in Item 8:
Report of Independent Public Accountants Consolidated
Balance Sheets as of December 31, 1995 and 1994 Consolidated
Statements of Income for each of the three years in the
period ended December 31, 1995
Consolidated Statements of Changes in Stockholders' Equity
for each of the three years in the period ended
December 31, 1995
Consolidated Statements of Cash Flows for each of the three
years in the period ended December 31, 1995
Notes to Consolidated Financial Statements
2. Financial statement schedule
Report of Independent Public Accountants
Schedule II - Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable, not required,
or because the required information is contained in the Company's consolidated
financial statements or the notes thereto.
3. Exhibits required to be filed by Item 601 of
Regulation S-K:
16
INDEX TO EXHIBITS
Exhibit No.
3.1. Company's Articles of Incorporation, together with all amendments
thereto, (incorporated by reference to the Company's Form S-1 (File
No. 33-9034), filed November 12, 1986).
3.2. Company's By-Laws (incorporated by reference to the Company's report
on Form 10-K for the fiscal year ended December 31, 1988, filed March
30, 1989).
10.01 Agreement among Right Management Consultants, Inc. and Right Human
Resources Consultants, Inc., dated December 26, 1984 (incorporated by
reference to the Company's Form S-1 (File No. 33-9034), filed
September 25, 1986).
10.02 Agreement among Right Management Consultants, Inc. and Midwest
Reemployment Consultants, Inc. dated February 15, 1985 (incorporated
by reference the Company's Form S-1 (File No. 33-9034), filed
September 25, 1986).
10.03 Agreement among Right Management Consultants, Inc. and Human
Resources, Inc., dated December 26, 1984 (incorporated by reference
to the Company's Form S-1 (File No. 33-9034), filed September 25,
1986).
10.04 Form of Incentive Stock Option Plan, adopted by the Company's
shareholders on November 24, 1986, to be effective as of September 8,
1986 (incorporated by reference to the Company's Form S-1 (File No.
33-9034), filed November 12, 1986).
10.05 Non-Qualified Stock Option Plan, adopted, as of April 30, 1984
(incorporated by reference to the Company's Form S-1 (File No.
33-9034), filed September 25, 1986).
10.06 1986 Shareholders' Agreement (incorporated by reference to the
Company's Form S-1 (File No. 33-9034), filed November 12, 1986).
10.07 401(k) Savings Plan (incorporated by reference to the Company's Form
S-1 (File No. 33-9034), filed September 25, 1986). *
10.08 Amendment to Employment Agreement between Right Management
Consultants, Inc. and Frank P. Louchheim, dated January 1, 1992
(incorporated by reference to the Company's report on Form 10-K for
the fiscal year ended December 31, 1991, filed March 30, 1992). *
10.09 Supplemental Deferred Compensation Plan for Richard J. Pinola, dated
July 1, 1992 (incorporated by reference to the Company's report on
Form 10-K for the fiscal year ended December 31, 1991, filed March
30, 1992). *
10.10 Further Amendment to Amended and Restated Employment Agreement
between Right Management Consultants, Inc. and Frank P. Louchheim
dated February 16, 1993. *
10.11 1993 Stock Option Plan (incorporated by reference as Exhibit 4 filed
in the Company's report on Form S-8 (File No. 33-58698), filed
February 23, 1993). *
10.12 Purchase Agreement dated September 1, 1994 by and between Registrant
and Jannotta, Bray and Associates, Inc. (Schedules omitted)
(incorporated by reference to the Company's Form 8-K, dated September
1, 1994).
10.13 Employment Agreement dated September 1, 1994 by and between
Registrant and Joseph E. Jannotta, Jr. (incorporated by reference to
the Company's Form 8-K, dated September 1, 1994). *
* These documents are compensatory plans or agreements required to be filed as
Exhibits.
17
10.14 Employment Agreement dated September 1, 1994 by and between
Registrant and Harold B. Bray, Jr. (incorporated by reference to the
Company's Form 8-K, dated September 1, 1994). *
10.15 Employment Agreement dated September 1, 1994 by and between
Registrant and David Maguire (incorporated by reference to the
Company's Form 8-K, dated September 1, 1994).*
10.16 Restrictive Covenant dated September 1,1994 by and between Registrant
and Joseph E. Jannotta, Jr. (incorporated by reference to the
Company's Form 8-K, dated September 1, 1994). *
10.17 Restrictive Covenant dated September 1,1994 by and between Registrant
and Harold B. Bray, Jr. (incorporated by reference to the Company's
Form 8-K, dated September 1, 1994). *
10.18 Amended and Restated Revolving Credit and Term Loan Agreement between
Right Management Consultants, Inc., et al and PNC Bank, National
Association, dated June 30, 1994, with modifications dated August 26,
1994 and November 16, 1994.
10.19 $5,000,000 Term Note between Right Management Consultants, Inc. and
its wholly-owned subsidiaries and PNC Bank, National Association,
dated August 26, 1994.
10.20 Lease Agreement between Metropolitan Life Insurance Company and Right
Management Consultants, Inc., dated October 18, 1983 and amended on
August 12, 1986; November 6, 1987; and July 15, 1991.
10.21 Purchase Agreement dated February 15, 1995 by and between Registrant
and Worth Associates, Inc. and Robert A. Fish (incorporated by
reference to the Company's report on Form 10-Q for the quarter ended
March 15, 1595, filed May 15, 1995).
10.22 1993 Stock Incentive Plan, as amended (incorporated by reference to
the Company's Proxy Statement for Annual Meeting of Shareholders held
on May 4, 1995).*
10.23 Director's Stock Option Plan of the Company (incorporated by
reference to the Company's Proxy Statement for Annual Meeting of
Shareholders held on May 4, 1995).*
10.24 Fifth Modification Agreement to the June 30, 1994 Amended and
Restated Revolving Credit and Term Loan Agreement between Right
Management Consultants, Inc., et al and PNC Bank, National
Association, dated August 31, 1995 (incorporated by reference to the
Company's report on Form 10-Q for the quarter ended September 30,
1995, filed November 14, 1995).
10.25 Employment Agreement dated December 12, 1995 by and between Right
Management Consultants, Inc. and Richard J. Pinola. *
10.26 Employment Agreement and Supplemental Deferred Compensation Plan
dated December 12, 1995 by and between Right Management Consultants,
Inc. and Joseph T. Smith. *
11. Consolidated Earnings per Share Calculations. *
13. Portions of the Company's 1995 Annual Report to Shareholders
expressly incorporated by reference.
* These documents are compensatory plans or agreements required to be filed as
Exhibits.
18
21. Subsidiaries of the Company.
23. Consent of Arthur Andersen LLP.
27. Financial Data Schedule+
(b) Report on Form 8-K.
The Company did not file any reports on Form 8-K during the last
quarter of the period covered by this report.
+Filed in electronic form only.
19
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.
RIGHT MANAGEMENT CONSULTANTS, INC.
By: /s/ Richard J. Pinola
---------------------------------
Richard J. Pinola,
Chairman of the Board and
Chief Executive Officer
Dated: March 29, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signatures Title Date
---------- ----- ----
/s/ Richard J. Pinola Chairman of the Board
-------------------- and Chief Executive Officer March 29, 1996
Richard J. Pinola
/s/ G. Lee Bohs Chief Financial
- ------------------------ Officer and Principal
G. Lee Bohs Accounting Officer March 29, 1996
/s/ Frank P. Louchheim
- ------------------------ Director March 29, 1996
Frank P. Louchheim
/s/ Joseph T. Smith
- ------------------------ Director March 29, 1996
Joseph T. Smith
/s/ John R. Bourbeau
- ------------------------ Director March 29, 1996
John R. Bourbeau
/s/ Larry A. Evans
- ------------------------ Director March 29, 1996
Larry A. Evans
/s/ Nancy N. Geffner
- ------------------------ Director March 29, 1996
Nancy N. Geffner
/s/ Joseph E. Jannotta, Jr.
- ------------------------ Director March 29, 1996
Joseph E. Jannotta, Jr.
/s/ Raymond B. Langton
- ------------------------ Director March 29, 1996
Raymond B. Langton
/s/ Rebecca J. Maddox
- ------------------------ Director March 29, 1996
Rebecca J. Maddox
/s/ Catherine Y. Selleck
- ------------------------ Director March 29, 1996
Catherine Y. Selleck
20
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To Right Management Consultants, Inc.:
We have audited in accordance with generally accepted auditing standards, the
financial statements of Right Management Consultants, Inc. and subsidiaries
included in this Form 10-K and have issued our report thereon dated January 31,
1996. Our audits were made for the purpose of forming an opinion on those
financial statements taken as a whole. The schedule listed in Item 14(a)(2) is
the responsibility of the Company's management. This schedule is presented for
purposes of complying with the Securities and Exchange Commission's rules and is
not part of the basic financial statements. This schedule has been subjected to
the audit procedures applied in the audits of the basic financial statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
Arthur Andersen LLP
Philadelphia, Pennsylvania
January 31, 1996
Right Management Consultants, Inc.
Schedule II - Valuation and Qualifying Accounts and Reserves
For the Years 1995, 1994 and 1993
Additions
-------------------------------
Balance at Charged to Charged to Balance at
Beginning of Costs and Other End of
Descripition Year Expenses Accounts Deductions Year
- ------------ ---- -------- -------- ---------- ----
1995:
- ----
Allowance for doubtful accounts $651,000 $400,000 -- $297,000 (1) $754,000
Deferred income tax asset valuation
reserve $391,000 -- -- $391,000 (3) --
1994:
- ----
Allowance for doubtful accounts $794,000 $ 75,000 -- $218,000 (1) $651,000
Deferred income tax asset valuation
reserve $583,000 -- -- $192,000 (3) $391,000
1993:
- ----
Allowance for doubtful accounts $318,000 $485,900 -- $9,900 (1) $794,000
Deferred income tax asset valuation
reserve -- $134,000 $449,000 (2) $583,000
(1) Accounts deemed to be uncollectible.
(2) Cost incurred with the adoption of SFAS 109 as of January 1, 1993. See the
Company's Consolidated Financial Statements, Notes A and E for further
explanation.
(3) Reduction due to the the utilization, benefit and expiration of certain
foreign net operating losses.
EXHIBIT INDEX
Exhibit No. Exhibit
- ---------- -------
10.25 Employment Agreement dated December 12, 1995
by and between Right Management Consultants, Inc.
and Richard J. Pinola.
10.26 Employment Agreement and Supplemental Deferred
Compensation Plan dated December 12, 1995 by and between Right
Management Consultants, Inc. and Joseph T. Smith.
11. Consolidated Earnings per Share Calculations.
13. The Company's 1995 Annual Report to
Shareholders, portions of which are incorporated by reference.
21. Subsidiaries of the Company.
23. Consent of Arthur Andersen LLP.
27. Financial Data Schedule+
+Filed in electronic form only.