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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, 2000
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:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
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. [X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant using the closing stock price as of March 1, 2001 was $136,157,000.
The number of shares outstanding of the registrant's Common Shares as of March
1, 2001 was 6,273,826.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I & II Portions of the Company's 2000 Annual Report to Shareholders
for the fiscal year ended December 31, 2000.
Part III Portions of the Company's definitive proxy statement with
respect to its 2001 Annual Meeting of Shareholders to be held
on May 3, 2001.
PART I
Item 1: Business
General
Right Management Consultants, Inc. (the "Company") is an international career
management and organizational 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 2000 revenues of $184 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 organizational 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 2000
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 79% of total Company office
revenue for the year ended December 31, 2000. The Company provided career
transition services to approximately 5,000 client companies during 2000,
including a majority of the companies that comprise the Fortune 500. No single
customer or client accounted for more than 3% of the Company's business in 2000.
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 2000 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 four to twelve 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 2000 was for group outplacement services.
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Organizational Consulting
The Company provides organizational consulting services that assist
organizations and their employees in the following areas: (a) leadership
development - developing leaders through executive coaching and feedback-rich
customized leadership development programs; (b) organizational performance -
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; (c) talent
management - growing talent which involves attracting, motivating, and retaining
the best people in a highly competitive talent marketplace.
The consulting business in total, including career management consulting and
other human resources consulting, provided approximately 21% of total Company
office revenue for the year ended December 31, 2000. No single customer or
client accounted for more than 5% of business within the organizational
consulting line of business in 2000.
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 organizational 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 International, LLC, a technology-based assessment
firm, contributed diverse capabilities to the human resources consulting
practice. The Company further expanded the depth of its consulting practice with
an exclusive licensing agreement with The Atlanta Consulting Group.
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.
During 2000, the Company made three acquisitions of consulting firms: Career
Directions, a firm based in Chicago, Illinois, Sinova International Holding A/S,
based in Copenhagen, Denmark, and serving Denmark, Sweden and Norway; and Irwin
& Browning, located in Atlanta, Georgia. In addition, as of January 1, 2000, the
Company acquired the remaining 49% minority interest in TEAMS International,
LLC.
Effective January 1, 2001, the Company purchased a 51% equity interest in
Coaching - Psicologia Estrategica S/C Ltda., located in Brazil, which will
contribute to the Company's consulting practice on a worldwide basis.
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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 5% and 15% 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 2000 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. 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
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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 transition or
consulting services outside of its 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.
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).
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
5
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. Some states 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 2000, the Company completed four separate career transition and
consulting acquisitions and also purchased the remaining interests in two joint
ventures, Davidson & Associates and TEAMS International, LLC. As of January 1,
2001, the Company purchased an additional 31% interest in its equity investment
with a Japanese firm, giving the Company a controlling 51% interest. Also, as of
January 1, 2001, the Company purchased a 51% controlling interest in two
Brazilian firms, one offering career transition and the other offering
consulting services. See Note C to the Consolidated Financial Statements for a
detailed description of the acquisitions. The total initial purchase price for
the equity interest and acquisitions made in 2000 aggregated $20,457,000. The
acquisitions were consummated through combinations of cash, Company Common
Shares and future defined incentives, including the assumption of incomplete
consulting contracts.
In addition, during 2000 the Company paid $4,406,000 in earnout payments and
other adjustments related to acquisitions made in prior years.
Over the last five years, the Company completed twenty-seven separate
acquisitions of career transition and consulting firms, entered into an
exclusive licensing agreement with a consulting firm, and purchased controlling
interests in three separate firms, for combinations of cash, Company Common
Shares, future defined incentives, assumption of incomplete contracts and other
consideration. The total purchase price for these transactions in cash and
Common Shares, but excluding earnouts, aggregated $68,167,000, including the
costs of acquisitions.
Employees
At February 28, 2001, the Company and its subsidiaries employed 1,702 persons,
including 14 in senior management, 63 in other managerial and professional
roles, 1,128 in field operations as consultants, and 497 in clerical capacities.
In addition, the Company employed 670 persons on a part-time basis as
professional consultants. Consultants are generally required to have prior
7
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. Competition: The Company competes against other providers of career
transition services and other organizational consulting services. Based on
consolidated revenues for 2000, 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 organizational 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 organizational consulting businesses.
2. 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.
3. 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.
8
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.
4. 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 recent economic condition in North America has prompted corporations to
downsize their operations which has, to a degree, enabled the Company to
expand. A significant and prolonged decrease in corporate downsizing
activity would reduce demand for the Company's career transition services.
5. 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 organizational 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.
6. 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
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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."
7. Possible Effects of Change in Company Control and Possible Future Issuance
of Preferred Shares: Under certain circumstances upon certain contemplated
sales of 51% or more of the Company's assets or outstanding Common Shares,
or a Company merger, consolidation or reorganization, executive officers
have an option to extend the term of their respective Employment Agreement
for an additional two years in accordance with the terms of their
Employment Agreement.
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 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.
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 694,000 square feet for all Company offices, including the
corporate headquarters, at an aggregate yearly rental cost of approximately
$16,572,000. 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 55 Chairman of the Board of Directors and Chief
Executive Officer
John J. Gavin 44 President, Chief Operating Officer and Director
Charles J. Mallon 44 Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
Frederick R. Davidson 64 Chairman of Right D&A and Director
Peter J. Doris 54 Executive Vice President, International
Geoffrey S. Boole 57 Executive Vice President, Career Transition
Services
Christopher Pierce-Cooke 48 Executive Vice President, Managing Director -
Consulting Services
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Howard H. Mark 43 Executive Vice President, e-Business
Mark A. Miller 52 Group Executive Vice President for the
Eastern U.S.
R. William Holland 57 Group Executive Vice President for the Central
U.S. and Canada
James E. Greenway 54 Group Executive Vice President for the Western
U.S.
Edward C. Davies 54 Group Executive Vice President for Asia-Pacific
Akifumi Hayashi 37 Chief Executive Officer of Way Station, Inc.
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 K-Tron International,
a publicly held company.
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. Gavin is also a director of Opinion Research
Corporation, which provides marketing research and services.
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
capacity 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. 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.
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Mr. Davidson is the Chairman of Right D&A, 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. Mr Davidson is Chairman of St. John
Ambulance Australia (Victoria) and Chairman of Cooperative Research Centre for
Cochlear Implant and Hearing Aid Innovation. An Officer of the Order of St.
John, Mr. Davidson is a member of the International Institute of Strategic
Studies in London.
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. During 2000, Mr. Doris' responsibilities expanded to
include Europe and Latin America.
Mr. Boole previously held various sales/marketing and human resources positions
at leading North American companies such as Sears, Control Data and Gandalf
Technologies. In these companies, he held leadership positions both in house and
as a consultant. Mr. Boole started with the Company in 1989 with the start up of
the Ottawa office. His career at the Company has encompassed leadership
positions in the Canadian region as both Managing Principal of Career Transition
and Managing Vice President of Consulting Services. Effective August 2000, Mr.
Boole was appointed Executive Vice President of the Company's Career Transition
Services, and is responsible for the efficient and effective delivery of the
Company's career transition business. He is responsible not only for the quality
of service delivered today, but also the creation of new initiatives and
programs that meet the needs of a changing workplace.
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
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. Mark was the former Director of Information Technology and Managed Care
Reengineering at pharmaceutical company Rhone-Poulenec Rorer (RPR), from 1989 to
1997 where he managed
13
RPR's information and technology services for North American pharmaceutical
business focusing on sales and marketing information systems and data
warehousing. From 1997 to 1999, Mr. Mark was the Chief Information Officer at
Right Management Consultants. Mr. Mark oversaw technology operations for the
Company, including the development of the Company's strategic IT vision and
identification and implementation of various new technologies. In December 1999,
Mr. Mark departed the Company to serve as CIO for Alliance Consulting in
Philadelphia, a position he held until October 2000. Mr. Mark rejoined the
Company in November 2000 as Executive Vice President, e-Business. He is
responsible for the Company's e-business strategy, encompassing the integration
and utilization of the many outstanding technologies that support the Company's
consulting solutions and career transition services.
Mr. Miller served as a Vice President, Senior Vice President and then President
of Nutri/System, Inc. from February 1988 to October 1994, where he held profit
and loss responsibility for locations throughout the United States. From
November 1997 to May 2000, Mr. Miller was the Chairman and Chief Executive
Officer of Signature Plastic Surgery, Inc., a venture capital backed health care
services company. Mr. Miller was also the founder and President of The Foxboro
Group where he did general business consulting for firms primarily in the
franchising industry from September 1994 to October 1997. Mr. Miller joined the
Company in June 2000 and currently serves as Group Executive Vice President for
the Eastern Group. Mr. Miller obtained a Bachelor's Degree in Business
Administration from the University of Michigan where his studies concentrated on
corporate strategy, marketing and finance.
Dr. Holland was with Accenture, formerly 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 Accenture, 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
role of Group Executive Vice President of the North Central Group. 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. 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
14
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. During 2000, Mr. Greenway's responsibilities expanded
to Group Executive Vice President for the Western U.S. region.
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., now Right D&A Pty. Ltd ("Right D&A"), as the State Director for the
Melbourne office. At that time, the Company had a 51% interest in Right D&A 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 Right D&A. Effective March 2000, Mr. Davies was
elected by the Board of Directors as the Group Executive Vice President of
Asia-Pacific.
Mr. Hayashi is the Chairman and Chief Executive Officer of Way Station, Inc. He
is widely recognized as an excellent consultant in human resources management.
Mr. Hayashi started his career at Tomatsu Consulting Co. Ltd. in 1987,
ultimately assuming the position of Senior Manager of the HR Consulting
practice. In 1994 he joined IWS Training Center Co. Ltd. (the predecessor of Way
Station, Inc.) and in 1997 he became one of the founding members of Way Station,
Inc. He was promoted to the Deputy President for Way Station, Inc., and in 1998
assumed the office of Chairman and Chief Executive Officer of the firm. Mr.
Hayashi holds a Bachelor of Economics degree from Aoyama Gakuin University in
Tokyo.
Except for Mr. Pinola & Mr. Gavin, who have employment agreements with the
Company, each executive officer has been elected by the Board of Directors for a
term expiring with the first Board of Directors' meeting held after the next
annual meeting of shareholders.
15
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 2000 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 2000 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 2000 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 2000 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
Operations", "Consolidated Statements of Shareholders' Equity", "Consolidated
Statements of Cash Flows" and "Notes to Consolidated Financial Statements" in
the Company's 2000 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.
16
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 "Proposal 1: Election of Directors", "Executive
Compensation", "Principal Shareholders and Management's Holdings", "Compliance
with Section 16(a) of Securities Exchange Act of 1934", "Committees of the Board
of Directors", "Certain Relationships and Related Party Transactions", and
"Proposal 3: Ratification of Appointment of Independent Public Accountants"
contained in the Company's definitive Proxy Statement with respect to its 2001
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 2000 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, 2000 and 1999
Consolidated Statements of Operations for each of the three years
in the period ended December 31, 2000
Consolidated Statements of Shareholders' Equity for each of the
three years in the period ended December 31, 2000
Consolidated Statements of Cash Flows for each of the three years
in the period ended December 31, 2000
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.
17
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). *
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).*
* These documents are compensatory plans or agreements required to be filed as
Exhibits.
18
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 (incorporated by reference to the Company's report on Form 10K
for the year ended December 31, 1999, filed March 30, 2000). *
10.22 Third Amendment, dated June 29, 2000, to the 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 report on Form 10Q for the period ended
September 30, 2000, filed November 14, 2000).
10.23 Purchase Agreement between and among Right Management Consultants, Inc.
and Way Station, Inc., Keiichi Iwao, Akifumi Hayashi, and Motohiko Uezumi
dated November 2, 2000.
*These documents are compensatory plans or agreements required to be filed as
Exhibits.
19
10.24 Amendment to the Directors' Stock Option Plan. *
10.25 Amendment to the 1996 Employee Stock Purchase Plan. *
10.26 Amendment to the Company's 401(k) Savings Plan. *
13 Portions of the Company's 2000 Annual Report to Shareholders expressly
incorporated by reference.
21 Subsidiaries of the Company.
23 Consent of Arthur Andersen LLP
* These documents are compensatory plans or agreements required to be
filed as Exhibits.
(b) Reports on Form 8-K
No Reports on Form 8-K were filed by the Company during the fiscal
quarter ended December 31, 2000.
20
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: 4/02/01
21
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 4/02/01
- --------------------- and Chief Executive Officer -------
Richard J. Pinola
/S/ CHARLES J. MALLON Chief Financial 4/02/01
- --------------------- Officer and Principal -------
Charles J. Mallon Accounting Officer
/S/ FRANK P. LOUCHHEIM Director 4/02/01
- ---------------------- -------
Frank P. Louchheim
/S/ JOSEPH T. SMITH Director 4/02/01
- ------------------- -------
Joseph T. Smith
/S/ JOHN J. GAVIN Director 4/02/01
- ------------------ -------
John J. Gavin
/S/ LARRY A. EVANS Director 4/02/01
- ------------------ -------
Larry A. Evans
/S/ DR. MARTI D. SMYE Director 4/02/01
- --------------------- -------
Dr. Marti D. Smye
/S/ JOHN R. BOURBEAU Director 4/02/01
- -------------------- -------
John R. Bourbeau
/S/ RAYMOND B. LANGTON Director 4/02/01
- ---------------------- -------
Raymond B. Langton
/S/ REBECCA J. MADDOX Director 4/02/01
- --------------------- -------
Rebecca J. Maddox
/S/ CATHERINE Y. SELLECK Director 4/02/01
- ------------------------ -------
Catherine Y. Selleck
/S/ FREDERICK R. DAVIDSON Director 4/02/01
- ------------------------- -------
Frederick R. Davidson
/S/ KEIICHI IWAO Director 4/02/01
- ---------------- -------
Keiichi Iwao
22
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
February 2, 2001. 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 24 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
February 2, 2001
23
Right Management Consultants, Inc.
Schedule II - Valuation and Qualifying Accounts and Reserves
For the Years Ended December 31, 2000, 1999 and 1998
Additions
-----------------------------
Balance at Charged to Charged to Balance at
Beginning of Costs and Other End of
Description Year Expenses Accounts Deductions Year
- ----------- ---- -------- -------- ---------- ----
2000:
- ----
Allowance for doubtful accounts $ 1,467,000 $ 831,000 - $ 702,000 $ 1,596,000
============ ===========
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
========== ===========
24
Exhibit Index
Exhibit No. Description
10.23 Purchase Agreement between and among Right Management Consultants,
Inc. and Way Station, Inc., Keiichi Iwao, Akifumi Hayashi, and
Motohiko Uezumi dated November 2, 2000.
10.24 Amendment to the Directors' Stock Option Plan.
10.25 Amendment to the 1996 Employee Stock Purchase Plan.
10.26 Amendment to the Company's 401(k) Savings Plan.
13 The Company's 2000 Annual Report to Shareholders, portions of which
are incorporated by reference
21 Subsidiaries of the Company
23 Consent of Arthur Andersen LLP
25