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UNITED STATES 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, 1999
OR
__ Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
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 of other jurisdiction of (IRS Employer
incorporation of 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:
Title of each class Name of each exchange on which registered
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None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value per share
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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 using the closing stock price as of March 1, 2000 was $58,709,000.
The number of shares outstanding of the registrant's Common Shares as of March
1,2000 was 6,031,883.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I & II Portions of the Company's 1999 Annual Report to
Shareholders for the fiscal year ended December 31, 1999.
Part III Portions of the Company's definitive proxy statement with
respect to its 2000 Annual Meeting of Shareholders to be held
on May 4, 2000.
PART I
Item 1: Business
General
Right Management Consultants, Inc. (the "Company") is an international career
management and human resource consulting firm headquartered in Philadelphia,
Pennsylvania. Founded in 1980, the Company has been publicly owned since 1986.
The Company believes it is the largest worldwide firm in the career transition
services industry with 1999 revenues of $181 million. Worldwide operations are
structured into five geographic groups that provide management oversight to more
than 200 service locations worldwide.
The Company licenses its Affiliates to use its service marks 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. The Company's fees for its 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 or employment agency.
The Company's operations are divided into two lines of business: career
transition services, and human resources (including career management)
consulting.
For detailed financial information regarding the Company's business segments and
geographic areas, reference is made to Note L, "Segments", in the Company's
Notes to Consolidated Financial Statements contained in the Company's 1999
Annual Report to Shareholders, the incorporated portions of which are included
as Exhibit 13 to this Report on Form 10-K (this "Report"). Such financial
information is responsive to Item 101 (b) and (d), respectively, of Regulation
S-K and is incorporated by reference herein.
Career Transition Services
The career transition business in total, including individual and group
outplacement services, provided approximately 85% of total Company office
revenue for the year ended December 31, 1999. The Company provided career
transition services to approximately 5,000 client companies during 1999,
including a majority of the companies that comprise the Fortune 500. No single
customer or client accounted for a material amount of the Company's business in
1999. Career transition services are divided into two principal categories -
Individual Outplacement Services and Group Outplacement Services.
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Individual Outplacement Services
The Company's individual outplacement services for the employer include advice
on conducting the termination interview, terms of severance pay and other
termination benefits. 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, effective networking, identifying and researching types of potential
employers, preparing and rehearsing for interviews; continuing consulting 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.
Approximately 78% of the career transition revenue generated by Company offices
during 1999 was for individual outplacement services.
Group Outplacement Services
The remaining significant portion of the Company's career transition business
consists of providing consulting in group contexts for companies making large
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 counseling.
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 the type of programs to be provided. The group program
may also be used for "voluntary separation" due to reorganizations or other
reasons.
In addition, the Company can design, staff, or manage career centers for
corporate clients needing to provide career transition services during a
large-scale reduction-in-force. Career centers typically serve groups of 100 or
more individuals, and are operated for a pre-determined time period, usually
ranging anywhere from six to eighteen months. The centers are run like Company
offices, staffed with consultants and administrative personnel and providing
office support technology and services. Career centers are normally set up in
available space on the corporate clients' premises, or in temporary facilities
located, rented, and equipped by the Company.
Approximately 22% of the career transition revenue generated by Company offices
during 1999 was for group outplacement services.
2
Human Resources Consulting
The Company provides human resources (including career management) consulting
services that assist organizations and their employees in the following five
areas: (1) creating organizational change by linking strategy development and
people development to close the gaps between where a business is now and where
it needs to be to succeed strategically; (2) developing leaders through
executive coaching and feedback-rich customized leadership development programs;
(3) building competencies by identifying the skills, knowledge, and personal
characteristics that determine success in a given company, and using these
competencies to align human resource systems with strategy; (4) growing talent
which involves attracting, motivating, and retaining the best people in a highly
competitive talent marketplace; (5) driving communication by helping people at
all levels understand the link between the business' strategies and their daily
work, and ensuring that ideas and information are shared openly and clearly.
The consulting business in total, including career management consulting and
other human resources consulting, provided approximately 15% of total Company
office revenue for the year ended December 31, 1999. No single customer or
client accounted for a material amount of business within the human resources
and career management consulting line of business in 1999.
To broaden and diversify its business base, the Company entered the consulting
line of business in 1996 by acquiring People Tech Consulting, Inc.
("PeopleTech"), a Canadian corporation. Since then, the Company has continued to
acquire firms with human resources consulting expertise.
During 1998, the Company made two acquisitions of consulting firms and entered
into an exclusive licensing agreement with another consulting firm. The
acquisitions of Manus Associates, a human resources consulting firm, and the
acquired 51% interest in TEAMS, Inc., a technology-based assessment firm,
contributed diverse capabilities to the human resources consulting practice.
Areas of specialty include 360-degree feedback systems, the development of
competency models, leadership development, team-building, and performance and
pay management. The Company further expanded the depth of its human resources
and career management consulting practice with an exclusive licensing agreement
with The Atlanta Consulting Group, an organizational consulting firm. The
Company continues to integrate these products and methodologies into its
consulting business.
During 1999, the Company made three acquisitions of consulting firms: Groupe
ARJ, with offices in Paris and Lyon, France; Jouret Management Center located in
Brussels, Belgium; and Key Management Strategies located near Philadelphia,
Pennsylvania. In addition, as of January 1, 2000, the Company acquired the
remaining 49% minority interest in TEAMS, Inc.
3
Fees for Services Provided by Company Offices
For individual career transition 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 career transition programs and
consulting projects are individually determined depending upon the type of
services the employer requests, the amount of consulting time required and the
number of employees involved.
Organization and Distribution of Company Offices and Affiliates
The current network of Company offices and Affiliates is outlined in the
Company's 1999 Annual Report to Shareholders, attached as Exhibit 13 hereto,
that portion of which is incorporated herein by reference.
Management of Company Offices and Affiliates
The Company believes that a decentralized approach of organizing its business
into geographic groups and related regions, which may be comprised of more than
one Company office or Affiliate office, allows the Company to be responsive to
individual clients, as well as allowing it to better serve its local and
regional markets. Each region is responsible for the marketing and sales of
career transition and consulting activities in its assigned area. Through the
Company's network arrangement, the Company's clients have access to the
Company's entire network of Company and Affiliate offices. See "Business -
Affiliate Arrangements."
Affiliate Arrangements
The Basic Affiliate Relationship
The Company has previously entered into agreements with Affiliates ("Affiliate
Agreements"), which are independent franchisee businesses, to provide the
Company's career transition and 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 marks.
Under the Affiliate Agreements, the Company assists the Affiliates in various
ways in the provision of career transition and consulting services. There are
five Affiliate Agreements that remain in effect, all of them in the United
States. The Company has no present intention to enter into any additional
Affiliate Agreements.
Under the Affiliate Agreements, the Company is precluded from establishing or
maintaining Company offices or otherwise soliciting customers, providing
consulting services or licensing other Affiliates to operate in the Exclusive
Territory of a particular Affiliate. In turn, the Affiliate is
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prohibited from establishing or maintaining its own offices or "satellites"
soliciting customers or engaging in career transition or consulting services
outside of their Exclusive Territory.
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.
Company Training of Affiliates
The Affiliate Agreements require the Company to train the Affiliate and its
employees in marketing and delivering career transition and consulting services.
The Company is responsible for overall guidance and has established Company
standards and policies relating to its 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 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 Affiliates'
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 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 career
transition services to terminated employees on certain contracts and accounts
sold and managed by Affiliates, but delivered outside an Affiliate's territory
by a Company-owned office.
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).
5
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. The Company may also
terminate an Affiliate Agreement due to the death, disability or retirement of
the principal shareholders of an Affiliate.
The Company has offered and implemented with all of its existing 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.
The Company has agreed with substantially all of its existing Affiliates that in
the event the Company offers to any other Affiliate any provision in the
Affiliate Agreement which is more beneficial than the terms of the existing
Affiliate Agreements with the rest of the current Affiliates, then the new
provision will be offered to all existing 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 the Company's Common Shares held by certain shareholders who
have granted to the Affiliates this right, in case of certain proposed sales or
exchanges of the Company's Common Shares. Under the terms of the Affiliate
Agreements, in the event that 51% or more of the Common Shares of the Company is
proposed to be sold by one or more shareholders 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 Shares of the Company), the
Affiliates may have a right of first refusal to acquire the Common Shares of the
Company held by the aforementioned shareholders under the same terms as the
proposed transaction.
6
Government Regulation
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. 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
upon expiration. 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. As part of the Company's
operating strategy, new Affiliates are not being sought and the Company will
likely acquire the remaining Affiliate territories when and if they become
available.
Acquisitions
During 1999, the Company completed six separate career transition and consulting
acquisitions and purchased an equity interest in a career transition firm
located in Japan. As of January 1, 2000 the Company also purchased the remaining
interests in its existing two joint ventures. See Note C to the Consolidated
Financial Statements for a detailed description of the acquisitions. The total
purchase price for the equity interest and acquisitions made in 1999 aggregated
approximately $11,338,000, including the costs of acquisitions. The acquisitions
were consummated through combinations of cash and future defined incentives,
including the assumption of incomplete consulting contracts.
Also during 1999, the Company paid approximately $2,388,000 in earnout payments
related to acquisitions made in prior years.
Over the last five years, the Company completed twenty-six separate acquisitions
(including five former Affiliates) of career transition and consulting firms,
entered into an exclusive licensing agreement with a consulting firm, and
purchased an equity interest in a career transition firm, for combinations of
cash, future defined incentives, assumption of incomplete career transition
contracts and other consideration. The total purchase price for these
transactions, excluding earnouts, aggregated approximately $44,741,000,
including the costs of acquisitions.
Employees
At February 29, 2000, the Company and its subsidiaries employed 1,077 persons,
including 15 in senior management, 51 in other managerial and professional
roles, 517 in field operations as consultants, and 494 in clerical capacities.
7
In addition, the Company employed 607 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. In
general, the Company believes that its employee relations are good.
Risk Factors
In addition to the other matters discussed elsewhere in this Report, the
following risk factors should be taken into account in evaluating the Company
and its business:
1. Government Regulation: In connection with its arrangement with its
Affiliates, the Company devotes resources to complying with state and
federal franchise laws and regulations. The Company believes that its
practices and procedures are not in material violation of the provisions of
such state and federal laws. Nevertheless, the Company's past practices may
give rise to possible liability, and given the scope of the Company's
business and the nature of franchise regulation, compliance problems could
be encountered in the future. For a discussion of the Company's past and
current compliance with state and federal franchising laws, other
regulatory aspects of the Company's relations with its Affiliates and
possible liability of the Company for certain of its past activities, see
"Business - Government Regulation."
Although career transition and human resource consulting services are not
currently specifically subject to state or federal regulation, the Company
is aware that such regulation has been considered by the legislatures of
several states. There can be no assurance that such regulation will not be
adopted in the future.
2. Relations with Affiliates: The Company's revenue depends in part on
royalties and fees paid by Affiliates. Under the current Affiliate
Agreements, royalties equal 10% of the Affiliate's total gross receipts.
The fees paid by Affiliates to the Company vary depending on the services
provided by the Company. The Company believes that the 10% royalty is
reasonable and currently has no plans to reduce it, although there can be
no assurance that royalties will continue to be maintained at such level
under all circumstances. The Company believes that its relations with its
Affiliates are good; however, there can be no assurance that such relations
will remain so. A deterioration of these relationships among the Company
and its Affiliates, or among the Affiliates themselves, or an inability to
collect royalties and fees payable to the Company or payable by one
Affiliate to another could materially adversely affect the Company. See
"Business - Affiliate Arrangements."
3. Possible Effects of Change in Company Control and Possible Future Issuance
of Preferred Shares: Under certain circumstances and pursuant to its
Affiliate Agreements, upon certain contemplated sales of 51% or more of the
Company's outstanding Common Shares, or a Company merger, consolidation or
reorganization, the Affiliates may have a right of first refusal to acquire
8
the Common Shares of the Company being sold or exchanged by certain
shareholders who have granted to the Affiliates this right, on the same
terms as the proposed transaction with a third party. In addition, under
the Affiliate Agreements and under certain circumstances, upon sales of 51%
or more of the Company's assets or capital stock in one or more
transactions, or a Company merger, consolidation or reorganization, then,
regardless of the time remaining on the term of such Affiliate's current
Affiliate Agreement, the term of such Affiliate Agreement is automatically
altered to either (i) one year, with the Affiliate also having an option to
renew the Affiliate Agreement for an additional four year period upon the
expiration of such one year term, or (ii) five years, extending from the
date of such transaction, merger, consolidation or reorganization.
Also, in the event of such transaction or reorganization, under the
Company's Employment Agreements with its executive officers, such officers
have an option to extend the term of their respective Employment Agreement
for an additional two years.
The Company's Articles of Incorporation authorize the issuance of up to
1,000,000 Preferred Shares, at the discretion of the Board of Directors.
The Board of Directors may also fix from time to time in the future, the
designations, limitations, and preferences for any such series of issuances
of Preferred Shares, without any further vote or action by shareholders.
The Affiliates' right of first refusal on shares held by certain
shareholders who have granted to the Affiliates this right, and the
alteration of the term of their Affiliate Agreements, or the executive
officers' right to extend the term of their Employment Agreements, or the
issuance of Preferred Shares at the discretion of the Board of Directors
may make the Company less attractive to an entity or group considering
acquiring control of the Company or may make an acquisition materially more
difficult, resulting in a lower acquisition price per share, or may
otherwise materially adversely affect an investment in the Company's Common
Shares.
4. Competition: The Company competes against other providers of career
transition services and other human resource consulting services. Based on
consolidated revenues for 1999, the Company believes it is the world's
largest provider of career transition services. However, the Company's
primary national and international competitors are divisions of companies
much larger than the Company, and these competitors may have access to
financial and other resources substantially greater than those available to
the Company.
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 also competes against local career transition
and other human resources and career management consulting firms that are
well-established in a particular region. The Company believes that the cost
for its services are 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 and other human
resource and career management consulting businesses.
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5. Dependence on Personnel: As with other service businesses, the Company
depends upon the continued services of its executive, sales, and consulting
personnel. The loss of these personnel, or an inability to attract and
retain new qualified personnel or to retain qualified Affiliates, could
have an adverse impact on the Company.
6. Risks Related to the Company's Acquisition Strategy: The Company has grown
both internally and through acquisitions, and intends to continue to grow
by both of these methods. Historically, the Company has primarily acquired
outside firms within the highly fragmented career transition services
industry. See "Business - Acquisitions." In future periods, the Company
will continue to consider opportunistic acquisitions of career transition
providers. However, it is more likely that the Company will look to acquire
other consulting service providers, thereby allowing the Company to
continue to diversify its range of services provided.
Increased competition for acquisition candidates may develop, in which case
there may be fewer acquisition opportunities available to the Company, as
well as higher acquisition prices. There can be no assurance that the
Company will be able to continue to identify, acquire, or profitably manage
additional businesses or successfully integrate acquired businesses, if
any, without substantial costs, delays or other operational or financial
problems. Further, acquisitions involve a number of special risks,
including possible adverse effects on the Company's operating results,
diversion of management's attention, failure to retain key acquired
personnel, risks associated with unanticipated events or liabilities and
amortization of acquired tangible and intangible assets, some or all of
which could have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, there can be no
assurances that the Company's existing business or future acquisitions will
achieve anticipated revenues and earnings.
7. Economic Conditions on a Local, Regional, National, and International
Basis: The demand for the Company's services, primarily career transition
services, is impacted by economic conditions on a local, regional, national
and international basis. In general, a stronger economy can lead to easier
and more rapid job change and reentry, which can reduce the demand for the
Company's services or compress the length of the services provided, thereby
negatively impacting prices. Weaker economic conditions can also lead to
reluctance on outside companies' part to incur the expenditure associated
with the Company's services.
The current economic expansion in North America has generated a steady
level of merger and acquisition activity in the economy that has, to a
degree, enabled the Company to expand during a period of low unemployment.
A significant and prolonged decrease in the level of merger and acquisition
activity would reduce demand for the Company's career transition services.
10
Item 2: Properties
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 706,000 square feet for all Company offices, including the
corporate headquarters, at an aggregate yearly rental cost of approximately
$16,695,000. Most of these leases are also subject to annual operating expense
escalation clauses. The Company believes its facilities are adequate to provide
services to its clients.
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.
Executive Officers of the Registrant
Each of the following executive officers of the Company has been appointed by
the Board of Directors to their current position set forth opposite his or her
name. All of the executive officers are expected to devote their full business
time to the Company's affairs.
Name Age Position(s)
---- --- -----------
Richard J. Pinola 54 Chairman of the Board of Directors
and Chief Executive Officer
Frank P. Louchheim 76 Founding Chairman and Director
Joseph T. Smith 64 Vice Chairman of the Board of Directors
John J. Gavin 43 President, Chief Operating Officer and
Director
Charles J. Mallon 43 Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
Larry A. Evans 57 Executive Vice President and Director
Frederick R. Davidson 63 Chairman of Davidson & Associates, Pty. Ltd.
and Director
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Peter J. Doris 53 Executive Vice President
Terry W. Szwec 49 Executive Vice President
James E. Greenway 53 Executive Vice President and Chief Marketing
Officer
Christopher Pierce-Cooke 47 Executive Vice President, Managing Director -
Consulting Services
Erik A. Dithmer 68 Group Executive Vice President for the
Eastern U.S.
R. William Holland 56 Group Executive Vice President for the
Central U.S. and Canada
Timothy D. Dorman 52 Group Executive Vice President for the
Western U.S.
Suzanne B. Levasseur 51 Group Executive Vice President for Europe
and Latin America
Edward C. Davies 53 Group Executive Vice President for
Asia-Pacific
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. He was appointed President and Chief Operating Officer of Penn Mutual Life
Insurance Company 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 of two outside
companies: NSG America and K-Tron International, a publicly held company.
Mr. Louchheim was one of the founders of the Company. From November 1980 until
September 1987, he served as President, Chief Executive Officer and Chairman of
the Board of Directors of the Company. He continued to serve as Chief Executive
Officer and Chairman of the Board through December 1991. From January 1992 to
December 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.
Mr. Smith joined the Penn Mutual Life Insurance Company in 1963. In 1976, he was
promoted to Vice President of Administration and Human Resources, which position
he held until his resignation in 1980. From 1981 to 1984, Mr. Smith worked as an
independent consultant offering a range of consulting services to businesses.
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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 1998, Mr. Smith
served as the Company's Chief Operating Officer. Effective January 1, 1994, Mr.
Smith was appointed President in which capacity he served until December 1998.
Effective January 1, 1999, Mr. Smith was appointed Vice Chairman of the Board of
Directors.
Mr. Gavin was employed at Arthur Andersen LLP in Philadelphia for 18 years,
during which time he served as the partner in charge of the
manufacturing/distribution industries. Mr. Gavin joined the Company in December
1996 as Executive Vice President. In this capacity, Mr. Gavin was responsible
for the overall marketing strategy and business development activities for the
Company's worldwide locations. Effective January 1, 1999, Mr. Gavin was
appointed President and Chief Operating Officer of the Company. Also effective
January 1, 1999, Mr. Gavin was elected a Director by the Board of Directors. Mr.
Gavin is a member of the Board of Advisors for Temple University's Fox School of
Business and he is a member of the Board of Trustees of the Eagle's Fly for
Leukemia Foundation.
Mr. Mallon joined the Company in 1996 to assist in directing and managing the
financial operations of the Company. Effective September 1, 1999, Mr. Mallon
assumed the role of Chief Financial Officer, and effective January 1, 2000, he
was elected as an Executive Vice President by the Board of Directors, in which
capacities he now serves. Prior to joining the Company, he was for six years,
the Chief Financial Officer of ACS Enterprises, Inc. ("ACS"), a publicly held
wireless cable system operator. While at ACS, Mr. Mallon had oversight
responsibility for their finance and accounting area, including acquisition
financial due diligence, several public stock offerings, and an expanded credit
facility. Before ACS, Mr. Mallon was with the Philadelphia office of Ernst &
Young for 12 years, ultimately as senior audit manager. Mr. Mallon is a CPA and
a graduate of Drexel University in Philadelphia. He is a member of the American
and Pennsylvania Institutes of Certified Public Accountants.
Mr. Evans was professionally involved in the international finance and venture
capital industries, prior to May 1978. 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. From January
1990 until May 1995, Mr. Evans served as Regional Managing Principal of several
Company offices. From May 1995 until December 1999, Mr. Evans worked in the
Company's corporate office together with the Company's regional offices in
marketing to major national and international accounts. Effective January 1,
2000, Mr. Evans was appointed to oversee one of the Company's largest Key
Executive Services practices. Mr. Evans serves on various boards of both
non-profit organizations and community associations. He also holds directorships
with Knite, Inc., an automotive components manufacturing company, 4 Anything.com
13
and 4 Eschoolmall.com, both internet service companies, and he is on the
Advisory Board of Data Com International, a silicon chip manufacturing company.
Mr. Davidson is the Chairman of Davidson & Associates, Pty. Ltd., an
Asia-Pacific career transition firm of which the Company acquired a fifty-one
percent interest during 1997, and which is now owned 100% by the Company. Mr.
Davidson was elected a Director by the Board of Directors on July 24, 1997. Mr.
Davidson has published numerous articles on career planning, termination
practices and managing large scale staff reductions, and he is the author of The
Art of Executive Firing and Handbook of Executive Survival.
Mr. Doris was Senior Vice President of Human Resources for a large New York City
based bank, prior to joining the Company in 1986. From 1986 to 1990, Mr. Doris
was Senior Vice President, Sales and Operations of the Company. Effective
January 1991, he became a Group Executive Vice President for the Southern region
of the United States in which capacity he served until 1996. Since 1997, Mr.
Doris has been working with the Company's regional offices in marketing to major
international accounts.
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 Havilland 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 the Regional Managing Principal of the
Toronto office. From 1994 through 1999, Mr. Szwec served as Group Executive Vice
President for the Canadian operations of the Company. Mr. Szwec is currently an
Executive Vice President of the Company in which he leads the national accounts
sales and marketing efforts in the Canadian region.
Mr. Greenway was President of Consulting Group, Inc., an organizational and
management development consulting firm. He has held management positions with
Drake Beam Morin (a human resource and outplacement firm), McGraw-Hill and Lucky
Stores. From 1989 to 1993, Mr. Greenway was Executive Vice President of Lee
Hecht Harrison, a human resource and outplacement firm. He also was a member of
their Executive Committee and Advisory Council. In addition, Mr. Greenway served
as President of the Workforce Consulting Group, a global organizational and
career management firm. Mr. Greenway joined the Company in September 1997 as a
Senior Vice President. Effective July 1, 1998, he was promoted to Executive Vice
President responsible for coordinating the sales and marketing activities for
the firm, in which capacity he currently serves.
Mr. Pierce-Cooke has extensive experience in human resources, consulting and
global markets. Prior to joining the Company, he was Chief Executive Officer of
Corporate Vision, a human resource and organizational consulting firm with
operations in Melbourne and Sydney, Australia and London, England. At Westpac,
one of Australia's largest banking institutions, Mr. Pierce-Cooke held two
14
significant roles: he headed up the human resources function for the retail,
corporate and international banking groups; he also spent time directing
Westpac's marketing operations. Earlier in his career, he was a director for
various divisions of British Aerospace and for two years ran its headquarter
operations in London which oversaw over 135,000 employees in 50 countries. Mr.
Pierce-Cooke joined the Company as Executive Vice President and Managing
Director of Consulting Services in April 1999. He is responsible for driving the
firm's continued growth and global expansion in the consulting arena. His
education includes a BS in economics degree and qualifications as an attorney in
the United Kingdom.
Mr. Dithmer had a 25-year career at Union Carbide, where he held a number of
senior sales, marketing and general management positions, both domestic and
international. Mr. Dithmer joined the Company in 1982 as a Client Services
Consultant and successfully built a major portfolio of corporate clients. In
1990, he became Senior Vice President responsible for the total sales activities
of the New York office. At the end of 1997, Mr. Dithmer was promoted to Group
Executive Vice President for the Metro New York Group. In 1998 his
responsibilities were expanded to include three more offices. Mr. Dithmer
currently serves as Group Executive Vice President of the East Group, overseeing
all offices across the entire Eastern U.S. Mr. Dithmer has been affiliated with
various associations and he is the Founder and former President of the American
Chamber of Commerce, Costa Rica.
Dr. Holland was with Andersen Consulting from 1996 to June 1999. Dr. Holland was
the Associate Partner responsible for global human resource operations for their
Information Technology and Business Process Outsourcing business, which has
10,000 employees and over 200 outsourcing units worldwide. Dr. Holland was
responsible for establishing a worldwide HR organization focused on delivering
greater client value and aligning HR processes, career development models and
executive coaching programs. Prior to his position with Andersen Consulting, Dr.
Holland held the Senior HR executive position with a large financial
institution, a prominent University and a large investment advisory business.
Dr. Holland joined the Company in June 1999 in the dual role of Group Executive
Vice President of the North Central Group and Managing Principal of the Chicago
Office. Effective January 1, 2000, Dr. Holland has expanded his responsibility
to include the Canadian region, in addition to the Central U.S. territory. He
holds three degrees, a BA, MA and Ph.D all from Michigan State University and he
has published several works on conflict resolution and career development.
Mr. Dorman has held various executive positions in the career management
industry. From 1990 to 1997, Mr. Dorman was a partner with Transitions
Management Group, a regional career transition firm in San Francisco. From 1994
to 1997, he also served as Chairman and Chief Executive Officer of Outplacement
International, a worldwide network of career management companies. Mr. Dorman
joined the Company in early 1997 and in July 1997, he became the Group Executive
Vice President for the West Group in which capacity he currently serves.
Ms. Levasseur served in Japan as a consultant and advisor to various Japanese
and U.S. companies. She has worked for the U.S. Office of Personnel Management,
in charge of European management design, communication and training. She has
15
also worked as a Training Officer for NATO/SHAPE. In 1988, Ms. Levasseur
established the international operations of the Management Research Group (MRG),
a consulting firm, which included 38 partner locations in Europe, Africa and
Asia Pacific when she left in 1998. Effective April 1, 1998, Ms. Levasseur
joined the Company as Group Executive Vice President of Europe and Latin
America.
Mr. Davies was the Managing Director at Moore Business Systems in Australia from
1995 until February 1998. Moore Business Systems, which is a division of Moore
Corporation located in the U.S., is primarily engaged in printing services and
print management. In July 1998, Mr. Davies joined Davidson & Associates, Pty.
Ltd. ("Davidson & Associates"), as the State Director for the Melbourne office.
At that time, the Company had a 51% interest in Davidson & Associates and as of
January 1, 2000 it is 100% owned by the Company. Since September 1999, Mr.
Davies has served as Director of Operations for the entire Asia-Pacific network
of offices within Davidson & Associates. Effective March 2, 2000, Mr. Davies was
elected by the Board of Directors as the Group Executive Vice President of
Asia-Pacific.
Each executive officer serves at the pleasure of the Board of Directors and has
been elected for a term expiring with the first Board of Directors' meeting held
after the next annual meeting of shareholders.
16
PART II
Item 5: Market for Registrant's Common Equity and Related Shareholder Matters
The information required by this Item is incorporated by reference to the
section titled "Common Share Data" in the Company's 1999 Annual Report to
Shareholders, the incorporated portions of which are included as Exhibit 13 to
this Report.
Item 6: Selected Financial Data
The information required by this Item is incorporated by reference to the
section titled "Selected Financial Data" in the Company's 1999 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
The information required by this Item is incorporated by reference to the
section titled "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Company's 1999 Annual Report to Shareholders, the
incorporated portions of which are included as Exhibit 13 to this Report.
Item 7A: Quantitative and Qualitative Disclosures About Market Risks
The information required by this Item is incorporated by reference to the
section titled "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Company's 1999 Annual Report to Shareholders, the
incorporated portions of which are included as Exhibit 13 to this Report.
Item 8: Financial Statements and Supplementary Data
The information required by this Item is incorporated by reference to the
sections titled "Consolidated Balance Sheets", "Consolidated Statements of
Income", "Consolidated Statements of Shareholders' Equity", "Consolidated
Statements of Cash Flows" and "Notes to Consolidated Financial Statements" in
the Company's 1999 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.
17
PART III
The information called for by Items 10 through 13 of Form 10-K (except for the
information set forth on pages 11-16 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 Public Accountants" contained in the Company's
definitive Proxy Statement with respect to its 2000 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) The following documents are filed as a part of this Report:
1. Financial statements: The following is a list of
financial statements which have been incorporated by
reference from the Company's 1999 Annual Report to
Shareholders, as set forth in Item 8:
Report of Arthur Andersen LLP, Independent Public
Accountants
Consolidated Balance Sheets as of December 31, 1999 and 1998
Consolidated Statements of Income for each of the three
years in the period ended December 31, 1999
Consolidated Statements of Shareholders' Equity for each of
the three years in the period ended December 31, 1999
Consolidated Statements of Cash Flows for each of the three
years in the period ended December 31, 1999
Notes to Consolidated Financial Statements
2. Financial statement schedule: The following financial
statement schedule for the Company is filed as part of this
Report and should be read in conjunction with the
Consolidated Financial Statements of the Company:
Report of Arthur Andersen LLP, 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.
18
3. Exhibits: The Exhibits listed on the accompanying Index
to Exhibits are filed as part of, or incorporated by
reference into, this Report, under Item 601 of Regulation
S-K:
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 as adopted June 28, 1995, and as amended December 17,
1998 effective January 1, 1999 (incorporated by reference to the
Company's report on Form 10-K/A for the fiscal year ended December 31,
1998, filed August 4, 1999).
10.01 1986 Shareholders' Agreement (incorporated by reference to the Company's
Form S-1 (File No. 33-9034), filed November 12, 1986).
10.02 401(k) Savings Plan (incorporated by reference to the Company's Form S-1
(File No. 33-9034), filed September 25, 1986). *
10.03 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). *
10.04 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). *
10.05 Further Amendment to Amended and Restated Employment Agreement between
Right Management Consultants, Inc. and Frank P. Louchheim dated February
16, 1993 (incorporated by reference to the Company's report on Form 10-K
for the fiscal year ended December 31, 1992, filed March 31, 1993). *
10.06 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). *
10.07 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).*
10.08 Directors' 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).*
10.09 Employment Agreement dated December 12, 1995 by and between Right
Management Consultants, Inc. and Richard J. Pinola (incorporated by
reference to the Company's Form 10K for the year ended December 31,
1995, filed March 31, 1996). *
10.10 Employment Agreement and Supplemental Deferred Compensation Plan dated
December 12, 1995 by and between Right Management Consultants, Inc. and
Joseph T. Smith (incorporated by reference to the Company's Form 10K for
the year ended December 31, 1995, filed March 31, 1996). *
* These documents are compensatory plans or agreements required to be filed as
Exhibits.
19
10.11 Employee Stock Purchase Plan of the Company (incorporated by reference
as Exhibit 4 filed in the Company's report on Form S-8 (File No.
333-06211), filed June 18, 1996).*
10.12 Amendment to the 1993 Stock Incentive Plan (incorporated by reference to
the Company's report on Form S-8 (File No. 333-07975), filed July 11,
1996).*
10.13 Credit Agreement between Right Management Consultants, Inc. and its
wholly owned subsidiaries and PNC Bank, National Association dated
December 20, 1996 (incorporated by reference to the Company's Form 8-K,
dated January 17, 1997)
10.14 Purchase Agreement between and among Right Management Consultants, Inc.
and Frederick R. Davidson, Stradis Pty. Ltd., William D.T. Cowan,
Phillip A. Lovett and David Stratford, and Right D&A Pty. Ltd. dated
July 1,1997 (incorporated by reference to the Company's report on Form
10K for the year ended December 31, 1997, filed March 30, 1998).
10.15 Option and Escrow Agreement between and among Right Management
Consultants, Inc. and Frederick R. Davidson, Stradis Pty. Ltd., William
D.T. Cowan, Phillip A. Lovett and David Stratford, and B&McK Nominees
dated July 1,1997 (incorporated by reference to the Company's report on
Form 10K for the year ended December 31, 1997, filed March 30, 1998).
10.16 Amendment to Employment Agreement dated as of January 1, 1999 by and
between Right Management Consultants, Inc. and Richard J. Pinola
(incorporated by reference to the Company's report on Form 10K for the
year ended December 31, 1998, filed March 31, 1999). *
10.17 Amendment to Employment Agreement dated as of January 1, 1999 by and
between Right Management Consultants, Inc. and Joseph T. Smith
(incorporated by reference to the Company's report on Form 10K for the
year ended December 31, 1998, filed March 31, 1999). *
10.18 Employment Agreement and Supplemental Deferred Compensation Plan dated
as of January 1, 1999 by and between Right Management Consultants, Inc.
and John J. Gavin (incorporated by reference to the Company's report on
Form 10K for the year ended December 31, 1998, filed March 31, 1999). *
10.19 Amendment to the 1993 Stock Incentive Plan (incorporated by reference to
the Company's report on Form S-8 (File No. 333-84493), filed August 4,
1999) *
10.20 Amendment to the 1996 Employee Stock Purchase Plan (incorporated by
reference to the Company's report on Form S-8 (File No. 333-84495),
filed August 4, 1999) *
10.21 Supplemental Early Retirement Plan for certain employees, dated January
1, 2000. *
13 Portions of the Company's 1999 Annual Report to Shareholders expressly
incorporated by reference.
21 Subsidiaries of the Company.
23 Consent of Arthur Andersen LLP
27 Financial Data Schedule - 1999 +
*These documents are compensatory plans or agreements required to be filed as
Exhibits.
+ Filed in electronic form only.
20
(b) Reports on Form 8-K
No Reports on Form 8-K were filed by the Company during the
fiscal quarter ended December 31, 1999.
21
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: 3/30/00
-------
22
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 3/30/00
- --------------------- and Chief Executive Officer -------
Richard J. Pinola
/S/ CHARLES J. MALLON Chief Financial 3/30/00
- --------------------- Officer and Principal -------
Charles J. Mallon Accounting Officer
/S/ FRANK P. LOUCHHEIM Director 3/30/00
- ---------------------- -------
Frank P. Louchheim
/S/ JOSEPH T. SMITH Director 3/30/00
- ------------------- -------
Joseph T. Smith
/S/ JOHN J. GAVIN Director 3/30/00
- ------------------ -------
John J. Gavin
/S/ LARRY A. EVANS Director 3/30/00
- ------------------ -------
Larry A. Evans
/S/ DR. MARTI D. SMYE Director 3/30/00
- --------------------- -------
Dr. Marti D. Smye
/S/ JOHN R. BOURBEAU Director 3/30/00
- -------------------- -------
John R. Bourbeau
/S/ RAYMOND B. LANGTON Director 3/30/00
- ---------------------- -------
Raymond B. Langton
/S/ REBECCA J. MADDOX Director 3/30/00
- --------------------- -------
Rebecca J. Maddox
/S/ CATHERINE Y. SELLECK Director 3/30/00
- ------------------------ -------
Catherine Y. Selleck
/S/ FREDERICK R. DAVIDSON Director 3/30/00
- ------------------------- -------
Frederick R. Davidson
23
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Right Management Consultants, Inc.:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements of Right Management Consultants, Inc. and
subsidiaries included in this Form 10-K and have issued our report thereon dated
January 29, 2000. Our audit was made for the purpose of forming an opinion on
the basic financial statements taken as a whole. The financial statement
schedule listed on page 25 is the responsibility of the Company's management and
is presented for the purposes of complying with the Securities and Exchange
Commission's rules and is not part 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.
/S/ ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
January 29, 2000
Right Management Consultants, Inc.
Schedule II - Valuation and Qualifying Accounts and Reserves
For the Years Ended December 31, 1999, 1998 and 1997
Additions
------------------------------
Balance at Charged to Charged to Balance at
Beginning of Costs and Other End of
Description Year Expenses Accounts Deductions Year
1999:
Allowance for doubtful accounts $ 1,066,000 $ 614,000 -- $ 213,000 $ 1,467,000
=========== ===========
1998:
Allowance for doubtful accounts $ 663,000 $ 576,000 -- $ 173,000 $ 1,066,000
=========== ===========
1997:
Allowance for doubtful accounts $ 552,000 $ 329,000 -- $ 218,000 $ 663,000
=========== ===========
Deferred income tax asset valuation
reserve $ 192,000 -- -- $ 192,000 (1) $ --
=========== ===========
(1) Reduction due to the utilization and expiration of certain foreign net operating losses.
Exhibit Index
Exhibit No. Description
10.21 Supplemental Executive Retirement Plan for certain
employees, dated January 1, 2000
13 The Company's 1999 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 - 1999 +
+ Filed in electronic form only.