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, 2001
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.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2153729
------------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1818 Market Street, Philadelphia, Pennsylvania 19103
- ---------------------------------------------- -----
(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
---------------------------------------
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, 2002 was $317,533,000.
The number of shares outstanding of the registrant's Common Shares as of March
1, 2002 was 15,032,796.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I & II Portions of the Company's 2001 Annual Report to Shareholders
for the fiscal year ended December 31, 2001.
Part III Portions of the Company's definitive proxy statement with respect
to its 2002 Annual Meeting of Shareholders to be held on
May 2, 2002.
PART I
------
Item 1: Business
General
We believe we are the leading global provider of career transition and human
resource consulting services. Founded in 1980 and headquartered in Philadelphia,
Pennsylvania, we have been publicly owned since 1986. We offer a full spectrum
of services to meet the global workforce management needs of client
organizations and their employees. Our worldwide operations include more than
150 owned offices and 77 affiliate and corresponding offices, giving us the
ability to service clients from locations in more than 30 countries. Our
worldwide operations are structured into seven geographic groups.
The terms "company" and "we" are used to refer collectively to the parent
company, Right Management Consultants, Inc., and its wholly-owned and
majority-owned subsidiaries through which we conduct our business.
We presently have agreements with five independent franchise businesses, each of
which we refer to as an Affiliate. We license our Affiliates to use our service
marks and licenses and train them to use our proprietary materials and methods.
We receive fees directly from employers for our services rendered and we receive
royalties and fees from our Affiliates. Our fees for our services are paid
exclusively by the employer. We do not provide our services to employees who are
not sponsored by employers, since we are not a "retail" career counseling firm
or employment agency.
Our operations are divided into two lines of business: career transition
services and organizational consulting.
For detailed financial information regarding our business segments and
geographic areas, refer to Note M, "Segments", in the Company's Notes to the
Consolidated Financial Statements contained in the our 2001 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.
Acquisition of Coutts Consulting Group
- --------------------------------------
On March 22, 2002, we concluded our acquisition of all of the shares of Atlas
Group Holdings Limited, the parent company of Coutts Consulting Group Limited
("Coutts"). Coutts is a London based career transition and organizational
consulting firm with operations in Europe, Japan and Canada.
1
This acquisition is valued at approximately $105 million, including the costs of
the transaction. The consideration consisted of a combination of cash, purchase
price notes and funds we supplied to repay existing indebtedness of Coutts.
The Coutts acquisition solidifies the Company's position as the leading provider
of career transition and organizational consulting services with the addition of
significant operations in the United Kingdom, France and Japan. In addition,
Coutts has operations in Germany, Italy and Switzerland, three countries in
which the Company did not have Company-owned operations prior to the
acquisition, and adds additional volume to our existing businesses in Belgium,
the Netherlands and Spain.
Coutts' revenue for the year ended December 31, 2001 was approximately $92
million. Approximately 46% of revenue was derived in the United Kingdom,
approximately 20% in France and approximately 19% in Japan. Except as set forth
in Item 1: Business of this Report, the information in this Report, and in the
Company's Consolidated Financial Statements and Notes to Consolidated Financial
Statements, contained in the our 2001 Annual Report to Shareholders, the
incorporated portions of which are included as Exhibit 13 to this Report, do not
include any amounts attributable to Coutts.
The acquisition was financed through a new $180 million Credit Agreement entered
into simultaneously to the closing of the acquisition with a syndicate of banks
including First Union National Bank as Administrative Agent. For a description
of the Credit Agreement refer to Note N, "Subsequent Events", in the Company's
Notes to the Consolidated Financial Statements contained in the our 2001 Annual
Report to Shareholders, the incorporated portions of which are included as
Exhibit 13 to this Report.
Career Transition Services
- --------------------------
Our career transition services, including individual and group outplacement
services, provided approximately 83% of total Company office revenue for the
year ended December 31, 2001. We provided career transition services to
approximately 5,130 client companies during 2001, including a majority of the
companies that comprise the Fortune 500. For the twelve months ended December
31, 2001, career transition revenue recognized by one telecommunications
industry client represented 12% of total Company office revenue.
Career transition services are divided into two principal categories -
Individual Outplacement Services and Group Outplacement Services.
Individual Outplacement Services
Our individual outplacement services for the employer include advice on
conducting the termination interview, terms of severance pay and other
termination benefits. Services to terminated employees include assistance in
handling the initial difficulties of termination;
2
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 consultation 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 62% of our career transition revenue generated by our company
offices during 2001 was for individual outplacement services.
Group Outplacement Services
The remaining significant portion of our 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. In
addition, we provide our services to employers during smaller reductions in
their workforce, using group programs.
Our group programs have, as their core, seminars for generally up to twelve
employees per group, in sessions extending over one to five days. Often, the
group seminar is preceded or followed by individual counseling. During a
large-scale reduction in force, we design, staff, or manage career centers for
corporate clients needing to provide career transition services to displaced
employees. The centers are run like company offices, staffed with consultants
and administrative personnel that provide individual counseling workshops,
office support technology and services. These 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.
Approximately 38% of the career transition revenue generated by company offices
during 2001 was for group outplacement services.
Organizational Consulting
- -------------------------
Our organizational consulting business provides effective solutions to the
evolving human resource needs of our clients. We have focused on assisting
organizations in managing the human side of change, a natural complement to our
career transition expertise. Organizational change includes merger, acquisition,
restructuring, deregulation and the implementation of new technology - changes
which can affect everyone in an organization. Often, outside expertise is needed
to identify the issues confronting employees and the training, refocusing,
realignment or skill enhancements needed to help them deliver their greatest
potential to an organization. Our organizational
3
consulting services include assisting organizations and their employees with
developing leaders through executive coaching and customized leadership
development programs; building competencies by identifying the skills, knowledge
and personal characteristics that determine success in a given company, and
using those competencies to align human resource systems with strategy; and
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 17% of total Company
office revenue for the year ended December 31, 2001. No single customer or
client accounted for more than 5% of revenue within the organizational
consulting line of business in 2001.
Competition
- -----------
Three global organizations, in addition to our Company, compete in the career
transition services sector. Our global competitors are Drake Beam Morin, a
subsidiary of Thomson Corp, and Lee Hecht Harrison, owned by Adecco Group SA, a
global provider of personnel and career services. Additionally, there are
regional firms and numerous smaller boutiques, operating in either limited
geographic markets or providing only narrow service lines.
Fees for Services Provided by Company Offices
- ---------------------------------------------
For individual career transition services provided by company offices, we
normally receive 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 our 2001
Annual Report to Shareholders, attached as Exhibit 13 hereto, that portion of
which is incorporated herein by reference.
Management of Company Offices and Affiliates
- --------------------------------------------
We believe that a decentralized approach of organizing our business into
geographic groups and then regions, which may be comprised of more than one
company office or Affiliate office, allows us to be responsive to individual
clients, as well as allowing us to better serve our local and regional markets.
Each region is responsible for the marketing and sales of career transition and
consulting activities in its assigned area. Our clients have access to the our
entire network of company and Affiliate offices.
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Affiliate Arrangements
- ----------------------
The Basic Affiliate Relationship
We have 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 our registered service marks. Under the
Affiliate Agreements, we assist 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. We have no
present intention to enter into any additional Affiliate Agreements. As part of
our operating strategy, new Affiliates are not being sought and we will likely
acquire the remaining Affiliate territories when and if they become available.
Under the Affiliate Agreements, we are 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 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 us to train the Affiliate and its employees in
marketing and delivering career transition and consulting services. We are
responsible for overall guidance and have established company standards and
policies relating to our services. We provide 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 our system of monitoring the progress of terminated
employees. We also provide 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 our services provided, training, and licensing the use of
our federally-registered service mark, the Affiliate generally pays us a 10%
royalty on the Affiliate's total gross receipts and 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
5
territory by a company-owned office. Also, we pay our Affiliates for services
delivered to our clients by an Affiliate in its Exclusive Territory.
Term, Supervision and Termination of Affiliate Agreements
The 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, we 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 us
in consultation with the Advisory Committee. We may also terminate an Affiliate
Agreement due to the death, disability or retirement of the principal
shareholders of an Affiliate.
We have offered and implemented with all of our existing Affiliates an addendum
to their respective Affiliate Agreements. Under the terms of the addendum, we
relinquish our 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 us 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.
Affiliates' Right of First Refusal
Pursuant to the Affiliate Agreements, the Affiliates may have a right of first
refusal to purchase Right Management Consultants, Inc.'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 are 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 Right Management Consultants, Inc. is not the surviving
party and transactions in which the common stock of another company is exchanged
for the Common Shares of Right Management Consultants, Inc.), 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
Acquisitions
- ------------
Effective January 1, 2001, we acquired an additional 31% equity interest in
WayStation, Inc. ("Right WayStation"), a leading career transition services firm
in Japan, giving us a 51% controlling equity interest. Also effective January 1,
2001, we purchased a 51% controlling equity interest in both Saad-Fellipelli
Recursos Humanos Ltda., a Brazilian career transition firm, and
Coaching-Psicologia Estrategica Ltda., a related Brazilian organizational
consulting firm.
Effective April 1, 2001, we acquired certain assets of Human Link, DA, an
organizational consulting firm located in Norway, for a combination of cash,
common stock, and future defined contingent payments. Also effective April 1,
2001, we acquired certain assets of Kontenta Consulting AS, a Norwegian
consulting firm, and Kontura Search and Selection Bergen AS, a related Norwegian
search and selection firm, for a combination of cash and future defined
contingent payments.
Effective May 1, 2001, we acquired the outstanding stock of Corporate Leverage,
Inc., an organizational consulting firm located in Palo Alto, California, for a
combination of cash and future defined contingent payments.
Effective October 1, 2001, we acquired Claessens, NL, our correspondent firm in
the Netherlands, for a combination of cash and future contingent consideration
based on operating results. Also effective on October 1, 2001, we acquired a 51%
interest in Glenoit, S.L., our Iberian correspondent firm with offices in Madrid
and Barcelona, Spain, for a combination of cash and future contingent
consideration based on operating results. We also acquired certain assets of
Change Technologies, Inc., an organizational consulting firm located in
Pittsburgh, PA.
The initial purchase price for all of these acquisitions, including costs of
acquisitions, totaled $19,920,000 in cash and 41,211 in Company Common Shares
issued from treasury shares with a market value of approximately $440,000. We
acquired $2,721,000 in cash and cash equivalents from these acquisitions. The
purchase price allocations for these acquisitions are based upon information
available at this time and are subject to change.
Effective January 1, 2002, we acquired for approximately $3,285,000 in cash, an
additional 20% interest in our Japanese joint venture Right WayStation,
increasing our total interest in this subsidiary to 71%.
Over the last five years, and including the Coutts acquisition, we have
completed thirty-four separate acquisitions of career transition and consulting
firms, entered into an exclusive licensing agreement with a consulting firm, and
purchased controlling interests in four separate firms, for combinations of
cash, company Common Shares, future defined incentives, assumption of incomplete
contracts and other consideration. The
7
total purchase price for these transactions in cash and Common Shares, but
excluding earnouts, aggregated $178,996,000, including the costs of
acquisitions.
Employees
- ---------
At February 28, 2002, we and our subsidiaries employed 2,217 full-time personnel
and part-time professional consultants. This included 14 in senior management,
366 in other managerial and professional roles, 1,233 in field operations as
consultants, and 604 in clerical capacities. Part-time professional consultants
are generally required to have prior executive or management experience and are
provided company training. None of our employees are subject to collective
bargaining agreements. In general, we believe that our employee relations are
good.
Risk Factors
- ------------
Investing in our Common Shares can involve various risks. In addition to the
other matters discussed elsewhere in this Report, the following are risk factors
we believe are material to your investment decision and should be taken into
account in evaluating our business and prospects.
WE MAY SUFFER ECONOMIC HARM IF THE ECONOMIC CONDITIONS ON A LOCAL, REGIONAL,
NATIONAL OR INTERNATIONAL BASIS IMPROVE.
The demand for our services, primarily our career transition services, is
impacted by the economic conditions on a local, regional, national,
international basis. Generally, a stronger economy will result in less
downsizing and less demand for our services. The recent economic condition in
North America has prompted corporations to downsize their operations which has,
to a degree, enabled us to expand. A significant or prolonged decrease in
corporate downsizing activity could reduce demand for our career transition
services. Additionally, a stronger economy can lead to easier and more rapid job
change and reentry, which would further reduce the demand for service or
compress the length of time that our services are required, which would
negatively impact the prices we can charge our clients.
Also, our operations could be adversely affected by weaker economic conditions,
as that could lead to reluctance on outside companies' part to incur the
expenditures associated with the utilization of our services.
WE ARE DEPENDENT UPON ACQUISITIONS TO GROW OUR BUSINESS.
Historically, we have grown both internally and through acquisitions and we tend
to grow our business through both these methods. We have historically acquired
companies within the highly fragmented career transition services industry and
will continue to consider opportunistic acquisitions of career transition
providers. However, it is more likely that we will look to acquire other
consulting services providers, allowing us to diversify our range of services
that we provide.
8
As we look to acquire other consulting services providers, increased competition
for acquisition candidates may develop, which may result in fewer acquisition
opportunities available to us as well as higher acquisition prices for those
companies who we do acquire.
There can be no assurance that we will be able to continue to identify, acquire
or profitably manage additional business or successfully integrate acquired
businesses, if any, without substantial cost, delays or other operational or
financial problems. Any acquisition would involve a number of risks, including
possible adverse affects on our operating results, diversion of our management's
attention, the failure to retain key personnel of the companies we acquire as
well as the risks associated with unanticipated events or liabilities and
amortization of acquired tangible and identified intangible assets, any or all
of which could have a material adverse affect on our business, financial
condition and result of operations. There can be no assurance that our recent or
future acquisitions will achieve anticipated revenues and earnings.
WE MAY FAIL TO REALIZE THE ANTICIPATED BENEFITS OF THE COUTTS ACQUISITION
The success of the Coutts Acquisition in 2002 will depend, in part, on our
ability to realize the anticipated growth opportunities and synergies from
combining our business with the business of Coutts. To realize the anticipated
benefits of this combination, members of our management team must develop
strategies and a business plan that will effectively combine our two businesses.
If the members of our management team are unable to develop strategies and
provide a business plan that achieve these objectives, the anticipated benefits
of the acquisition may not be realized. In particular, the anticipated growth in
revenue, earnings before interest, taxes, depreciation and amortization, or
"EBITDA," may not be realized, which could have an adverse impact on us and the
market price of shares of our common stock.
WE ARE SUBJECT TO COMPETITION FROM COMPETITORS THAT HAVE GREATER FINANCIAL AND
OTHER RESOURCES.
We compete against other providers of career transition services and other
organizational consulting services. While we believe we are the world's largest
provider of career transition services, our primary national and international
competitors are divisions of companies, that as a whole, are much larger than us
and may have access to financial and other resources which are substantially
greater than those available to us. We may also face competition from future
expansion by other companies into the career transition and other organizational
consulting businesses. On a regional basis, we also compete against local career
and other organizational consulting firms that are well established in their
particular regions.
WE ARE DEPENDENT ON A NUMBER OF KEY PERSONNEL.
As a service business, we depend upon the continued services of our executives,
sales and consulting personnel, and our success is dependent in large part on
the continued services of such
9
employees. The loss of these personnel, or the inability to attract or retain
new qualified personnel could have a material adverse affect on us. In addition,
if one or more of our key employees resigns to join a competitor or to form a
competing business, the loss of such personnel and any resulting loss of
existing or potential clients to any such competitor could have a material
adverse affect on our business, financial condition and results of operations.
With the loss of any such personnel, there could be no assurance that we would
be able to prevent the unauthorized disclosure or use of our technical
knowledge, practices or procedures by such personnel.
WE MAY BECOME SUBJECT TO GOVERNMENT REGULATIONS WITH RESPECT TO OUR BUSINESS.
In connection with our arrangement with our Affiliates, we devote substantial
resources to comply with state and federal franchise laws and regulations. While
we believe that our practices and procedures are not in material violation of
the provisions of such state and federal laws, our past practices may give rise
to potential liability. Given the scope of our business and the nature of state
and federal franchise regulations, we could encounter compliance problems in the
future.
Although career transition and organizational consulting services are not
currently specifically subject to state and federal regulation, such regulation
has been considered by legislatures of several states and there can be no
assurance that such regulation would not be adopted in the future and if adopted
will not have a material adverse affect on our business, financial condition and
result of operations.
WE ARE DEPENDENT IN PART UPON RECEIPT OF ROYALTIES FROM OUR AFFILIATES.
Our revenue depends in part upon royalties and fees paid to us by our
Affiliates. Royalties paid to us are equal to 10% of an Affiliate's total gross
receipts. For the fiscal years ended December 31, 2001 and 2000, approximately
2.6% and 2.2%, respectively, of our revenues resulted from royalty payments from
our Affiliates. We have no current plans to reduce our royalty rates, but there
can be no assurance that royalties will continue to be maintained at such level.
While we believe that our relationships with our Affiliates are good, there can
be no assurance that these relationships will remain so. The deterioration in
our relationships with our Affiliates or among the Affiliates themselves, or our
inability to collect royalties and fees payable to us by Affiliates, could
mutually adversely affect our business, financial condition and results of
operations.
OUR ARTICLES OF INCORPORATION COULD DELAY OR DISCOURAGE A TAKE-OVER ATTEMPT.
Our Articles of Incorporation contain provisions that may delay or discourage a
take-over attempt that a shareholder may consider in his or her best interest,
including take-over attempts that might result in a premium being paid on shares
of our common stock. Articles of Incorporation authorize
10
the issuance of up to 1,000,000 preferred shares at the discretion of our Board
of Directors. Our Board of Directors may also fix from time to time in the
future, the designation, limitations and preferences for any such series of
issuances of preferred shares, without any further thought or action required by
shareholders. The right of our Board of Directors to issue preferred shares at
their discretion may make us less attractive to an entity or group considering
acquiring control of us or may make an acquisition materially more difficult,
resulting in a lower acquisition price per share or may otherwise materially
adversely affect investment in our stock.
WE HAVE ENTERED INTO EMPLOYMENT AGREEMENTS WITH OUR EXECUTIVE OFFICERS WHICH
CONTAIN PROVISIONS WHICH COULD DELAY OR DISCOURAGE A TAKE-OVER ATTEMPT.
Under certain circumstances, upon certain contemplated sales of the majority of
our assets or outstanding common stock, or upon a merger, consolidation or
reorganization, certain of our executive officers have an option to extend the
term or their respective employment agreements for an additional 2 years in
accordance with the provisions of their employment agreements. The executive
officers' right to extend the terms of their employment agreements may make us
less attractive to an entity or group considering acquiring control of us or may
make the acquisition materially more difficult, resulting in a lower acquisition
price per share or may otherwise materially adversely affect an investment in
our common stock.
RISKS RELATING TO FORWARD-LOOKING STATEMENTS WHICH MAY NOT COME TRUE
The Private Securities Litigation Reform Act of 1995 provides us with a "safe
harbor" for forward-looking statements that we make. This means that we may not
be liable to our shareholders if the projections we make about our future
operations or performance do not come true. Certain materials we have filed or
may file with the United States Securities and Exchange Commission, and we
incorporate by reference in this prospectus, contain forward-looking statements.
These may include projections about companies we acquire and other business
development activities. We may also make forward-looking statements about future
capital expenditures, projected results and competition in our operations. These
forward-looking statements involve important risks and uncertainties that could
significantly affect our future results, which may not meet our expectations.
Among other things, these risks and uncertainties could include the types of
risks discussed in this "Risk Factors" section.
11
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. We lease approximately 812,959
square feet for all company offices, including the corporate headquarters, at an
aggregate yearly rental cost of approximately $20,769,000. Most of these leases
are also subject to annual operating expense escalation clauses. We believe our
facilities are adequate to provide services to our clients.
Item 3: Legal Proceedings
We are not a party to, nor is our 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 has been appointed by the Board of
Directors to their current position set forth opposite his 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 56 Chairman of the Board of Directors and Chief
Executive Officer
John J. Gavin 45 President, Chief Operating Officer and
Director
Charles J. Mallon 45 Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
G. Lee Bohs 42 Executive Vice President, Corporate
Development
Frederick R. Davidson 65 Chairman of Right Management Consultants
Holdings, Pty. Ltd. and Director
Peter J. Doris 55 Executive Vice President, International
Geoffrey S. Boole 58 Executive Vice President, Career Transition
Services
Christopher Pierce-Cooke 49 Executive Vice President, Managing Director -
Consulting Services
12
Howard H. Mark 44 Executive Vice President, e-Business
Mark A. Miller 53 Group Executive Vice President for the
Eastern U.S.
R. William Holland 58 Group Executive Vice President for the
Central U.S. and Canada
James E. Greenway 55 Group Executive Vice President for the
Western U.S.
Edward C. Davies 55 Group Executive Vice President for
Asia-Pacific
Motohiko Uezumi 58 Chief Executive Officer of Right WayStation
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 position 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 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 our 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. Prior to joining the 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 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 Directors of Global Health Ministry. 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 our
financial operations. 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
Certified Public Accountant and a graduate of Drexel University in Philadelphia.
He is a member of the American and Pennsylvania Institutes of Certified Public
Accountants.
13
Mr. Bohs was employed at the regional Certified Public Accounting firm of Asher
& Company, Ltd., from June 1981 to January 1987, initially as a staff
accountant, and then as an accounting and auditing manager. He joined the
company as Manager of Financial Reporting in January 1987, and was elected
Treasurer in December 1987 and Vice President, Finance, effective January 1989.
From March 1991 until December 1995, Mr. Bohs served as Senior Vice President
and Chief Financial Officer. He was appointed Secretary by the Board of
Directors in May 1995. Effective January 1996, he was promoted to Executive Vice
President and continued to serve as Chief Financial Officer until his
resignation in September 1999. At that time, Mr. Bohs joined TDRC Group, which
later became Intecap, Inc., as an Executive Vice President and Chief Financial
Officer, where he served through January 2002. He re-joined our company in
January 2002 as Executive Vice President, Corporate Development.
Mr. Davidson is the Chairman of Right Management Consultants Holdings, Pty.,
Ltd., formerly Right D & A, Pty. Ltd., an Asia-Pacific career transition firm of
which we acquired a fifty-one percent interest during 1997, and which is now
owned 100% by us. 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 our regional offices in marketing to major
international accounts. He is Executive Vice President, International for Right
Management Consultants.
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 with us 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 our Career Transition Services, and is
responsible for the efficient and effective delivery of the company's career
transition business.
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
14
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 our continued growth and global expansion in the
consulting arena. His education includes a BS degree in economics 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 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 our strategic vision
for information technology 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 our e-business strategy, encompassing the
integration and utilization of the many outstanding technologies that support
our 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 had 10,000 employees and over 200 outsourcing units
worldwide. Dr. Holland was responsible for establishing a worldwide human
resource organization focused on delivering greater client value and aligning
human resource processes, career development models and executive coaching
programs. Prior to his position with Accenture, Dr. Holland held the senior
human resource 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
15
Group. Effective January 1, 2000, Dr. Holland has expanded his responsibility to
include the Canadian region. 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 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 was a division of Moore
Corporation located in the U.S., was primarily engaged in printing services and
print management. In July 1998, Mr. Davies joined Right Management Consultants
Holdings, Pty. Ltd., formerly Right D & A, Pty. Ltd., as the State Director for
the Melbourne office. At that time, we had a 51% interest in Right Management
Consultants Holdings, Pty. Ltd. and as of January 1, 2000, it is 100% owned by
the Company. Since September 1999, Mr. Davies served initially as Director of
Operations and subsequently as Managing Director for the entire Asia-Pacific
network of offices within the Company. Effective March 2000, Mr. Davies was
elected by the Board of Directors as the Group Executive Vice President of
Asia-Pacific.
Mr. Uezumi joined Right WayStation, formerly WayStation, Inc., as Representative
Director, with a partial ownership, in May 1997. Effective November 1, 2001, Mr.
Uezumi was appointed President and Chief Executive Officer of Right WayStation.
Prior to joining the company, Mr. Uezumi held senior executive positions in
three US-based corporations. He began his career with Sumitomo 3M, initially in
sales, then marketing, and ultimately as General Manager of the Magnetic Device
Division. He was then appointed President of Mead Packing Japan, a subsidiary of
Mead Corporation, based in Atlanta, Georgia. Before joining Right WayStation he
was responsible for Citibank's credit card operations in Japan.
Except for Mr. Pinola & Mr. Gavin, who have employment agreements with us, 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.
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 our 2001 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 our 2001 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 our 2001 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 our 2001 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
our 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 12-16 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",
"Independent Public Accountants", and "Audit and Non-audit Fees" contained in
our definitive Proxy Statement with respect to our 2002 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 our
2001 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, 2001 and 2000
Consolidated Statements of Operations for each of the three years
in the period ended December 31, 2001
Consolidated Statements of Shareholders' Equity for each of the
three years in the period ended December 31, 2001
Consolidated Statements of Cash Flows for each of the three years
in the period ended December 31, 2001
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
our 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 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). *
10.04 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). *
10.05 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).*
10.06 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).*
10.07 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). *
10.08 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).*
10.09 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).*
10.10 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)
10.11 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). *
* These documents are compensatory plans or agreements required to be filed as
Exhibits.
19
10.12 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). *
10.13 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). *
10.14 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). *
10.15 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). *
10.16 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).
10.17 Purchase Agreement between and among Right Management Consultants, Inc.
and Way Station, Inc., Keiichi Iwao, Akifumi Hayashi, and Motohiko Uezumi
dated November 2, 2000 (incorporated by reference to the Company's report
on Form 10K for the year ended December 31, 2000, filed April 2, 2001).
10.18 Amendment to the Directors' Stock Option Plan (incorporated by reference
to the Company's report on Form 10K for the year ended December 31, 2000,
filed April 2, 2001.) *
10.19 Amendment to the 1996 Employee Stock Purchase Plan (incorporated by
reference to the Company's report on Form 10K for the year ended December
31, 2000, filed April 2, 2001.) *
10.20 Amendment to the Company's 401(k) Savings Plan (incorporated by reference
to the Company's report on Form 10K for the year ended December 31, 2000,
filed April 2, 2001.) *
10.21 Amended and Restated Directors' Stock Option Plan (incorporated by
reference to the Company's current report on Form 8K, dated November 9,
2001.) *
10.22 Second Amendment to Employment Agreement dated as of January 1, 2002 by
and between Right Management Consultants, Inc. and Richard J. Pinola. *
10.23 Amendment to Employment Agreement dated as of January 1, 2002 by and
between Right Management Consultants, Inc. and John J. Gavin. *
10.24 Amended and Restated Directors' Stock Option Plan. *
10.25 Purchase Agreement between and among Right Management Consultants, Inc.
and its subsidiary Right Associates, Limited and Atlas Group Holdings
Limited, dated February 28, 2002.
10.26 Credit Agreement between Right Management Consultants, Inc. and its
United States wholly owned subsidiaries and UBS Warburg LLC, Fleet
National Bank, Suntrust Bank, Bank of America N.A., and First Union
National Bank, dated March 22, 2002.
*These documents are compensatory plans or agreements required to be filed as
Exhibits.
20
13 Portions of the Company's 2001 Annual Report to Shareholders expressly
incorporated by reference.
21 Subsidiaries of the Company.
23 Consent of Arthur Andersen LLP
99 Letter to the United States Securities and Exchange Commission concerning
Arthur Andersen LLP representations.
(b) Reports on Form 8-K
The Company filed a Form 8-K on November 9, 2001 reporting its
3-for-2 common stock split effective on November 1, 2001 for
shareholders of record as of October 26, 2001. This Form 8-K also
filed the Articles of Amendment of the Company's Articles of
Incorporation to increase the number of authorized shares of
common stock to 30,000,000 shares. Also filed with this Form 8-K
was the Amended and Restated Directors' Stock Option Plan, as
amended by the Board of Directors on March 22, 2001 and approved
by the Shareholders on May 3, 2001.
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: 3/28/02
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 3/28/02
- --------------------- -------
Richard J. Pinola and Chief Executive Officer
/S/ CHARLES J. MALLON Chief Financial 3/28/02
- --------------------- -------
Charles J. Mallon Officer and Principal
Accounting Officer
/S/ FRANK P. LOUCHHEIM Director 3/28/02
- ---------------------- -------
Frank P. Louchheim
/S/ JOSEPH T. SMITH Director 3/28/02
- ------------------- -------
Joseph T. Smith
/S/ JOHN J. GAVIN President and Chief 3/28/02
- ------------------ -------
John J. Gavin Operating Officer and
Director
/S/ LARRY A. EVANS Director 3/28/02
- ------------------ -------
Larry A. Evans
/S/ JOHN R. BOURBEAU Director 3/28/02
- -------------------- -------
John R. Bourbeau
/S/ REBECCA J. MADDOX Director 3/28/02
- --------------------- -------
Rebecca J. Maddox
/S/ CATHERINE Y. SELLECK Director 3/28/02
- ------------------------ -------
Catherine Y. Selleck
/S/ FREDERICK R. DAVIDSON Director 3/28/02
- ------------------------- -------
Frederick R. Davidson
/S/ OLIVER S. FRANKLIN Director 3/28/02
- ---------------------- -------
Oliver S. Franklin
/S/ KEIICHI IWAO Director 3/28/02
- ---------------- -------
Keiichi Iwao
22
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Right Management Consultants, Inc.:
We have audited in accordance with auditing standards generally accepted in the
United States, 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, 2002. 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 in Item 14 (a) (2) 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. This schedule has been subjected to the procedures applied
in the audits of the basic financial statements and, in our opinion, fairly
states in all material respects, the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.
/S/ ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
February 2, 2002
Right Management Consultants, Inc.
Schedule II - Valuation and Qualifying Accounts and Reserves
For the Years Ended December 31, 2001, 2000 and 1999
Additions
------------------------
Balance at Charged to Charged to Balance at
Beginning of Costs and Other End of
Description Year Expenses Accounts Deductions Year
- ----------- ------------ ---------- ---------- ---------- ----------
2001:
- -----
Allowance for doubtful accounts $ 1,596,000 $ 1,989,000 - $ 750,000 $ 2,835,000
=========== ===========
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
=========== ===========
Exhibit Index
-------------
Exhibit No. Description
- ----------- -----------
10.22 Second Amendment to Employment Agreement dated
as of January 1, 2002 by and between Right
Management Consultants, Inc. and Richard J.
Pinola.
10.23 Amendment to Employment Agreement dated as of
January 1, 2002 by and between Right
Management Consultants, Inc. and John J.
Gavin.
10.24 Amended and Restated Directors' Stock Option
Plan.
10.25 Purchase Agreement between and among Right
Management Consultants, Inc. and its
subsidiary Right Associates, Limited and Atlas
Group Holdings Limited, dated February 28,
2002.
10.26 Credit Agreement between Right Management
Consultants, Inc. and its United States wholly
owned subsidiaries and UBS Warburg LLC, Fleet
National Bank, Suntrust Bank, Bank of America,
N.A., and First Union National Bank, dated
March 22, 2002.
13 The Company's 2001 Annual Report to
Shareholders, portions of which are
incorporated by reference
21 Subsidiaries of the Company
23 Consent of Arthur Andersen LLP
99 Letter to the United States Securities and
Exchange Commission concerning Arthur Andersen
LLP representations.