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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, 2002
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
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None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value per share
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes [X] No [ ]
The aggregate market value of the voting and non-voting stock held by
non-affiliates of the registrant using the closing stock price as of June 28,
2002 was $245,074,000. The number of shares outstanding of the registrant's
Common Shares as of March 18, 2003 was 22,687,459.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I, Portions of the Company's 2002 Annual Report to Shareholders for the
II & IV fiscal year ended December 31, 2002.
Part III Portions of the Company's definitive proxy statement with respect
to its 2003 Annual Meeting of Shareholders to be held on May 1, 2003.
PART I
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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.
Item 1: Business
COMPANY OVERVIEW
We are a leading global provider of career transition services and
organizational consulting services. We were founded in 1980 as a local executive
career transition services firm and since then we have grown to offer a full
spectrum of services to meet the global workforce management needs of our
clients and their employees. Based on revenues, we believe that we are the
largest provider of career transition services in each of North America, Europe
and Asia (excluding Japan), and the second-largest provider in Japan. We provide
our services to clients from approximately 300 offices in 35 countries. For the
year ended December 31, 2002, we generated approximately 50% of our revenues
from the United States, 27% from Europe, 12% from Japan, 6% from Canada, 4% from
the Asia-Pacific region (excluding Japan) and 1% from Brazil.
Our operations are divided into two lines of business: career transition and
organizational consulting services. The career transition segment provides
services on both an individual and group basis to employees who have been
displaced from their employment. The organizational consulting segment provides
services to companies that require assistance in organizational performance,
leadership development and talent management.
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 2002 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.
Our customers consist primarily of mid-size and large industrial and service
companies across a broad range of industries. We are retained by corporate
clients to provide our services to individuals and our fees are paid exclusively
by employers on behalf of their employees. We do not offer our services directly
to individuals for purchase.
We believe that our global presence, operating history, strong reputation and
brand recognition, long-standing client relationships and innovative
technology-based career management and organizational consulting solutions
provide us with significant competitive advantages. We focus on delivering
value-added services that help our clients effectively manage the human side of
change, whether offering assistance to individuals or groups of employees
displaced from employment, or providing solutions that assist clients to manage
the evolving performance, leadership and talent management needs of their
workforces.
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THE MARKET FOR CAREER TRANSITION AND ORGANIZATIONAL CONSULTING SERVICES
Career transition services
Career transition services offer assistance to individuals or groups of
employees displaced from employment. Services range from advising employers on
severance packages to assisting displaced employees with resume writing,
networking and interviewing. Services to displaced employees are provided in
individual or group programs. Managerial-level employees generally receive
longer-term, individual services, while less-senior employees receive
shorter-term, group-based services. Programs frequently begin with the displaced
employee receiving counseling immediately after the layoff notification,
followed by a combination of classroom training, support services and web-based
tools to guide them along the remainder of their career transition process.
International Data Corporation estimates that the market for career transition
services in North America was approximately $1.8 billion in 2000 and will reach
$2.5 billion by 2005, which represents a compound annual growth rate of 6.6%.
These services have become increasingly common as part of comprehensive employee
benefits packages in North America, where displaced employees feel entitled to
some career transition support when employers downsize or restructure their
workforces. These services are available to employees at all levels of
organizations and many senior executives now request career transition services
in their employment contracts.
While somewhat less common outside the United States, career transition services
are prevalent in the United Kingdom, Australia and Canada and are becoming more
common in continental Europe and Japan. We estimate that the international
career transition services markets are smaller than the North American market
but will grow at a faster rate than in North America as these markets continue
to mature.
We believe that there are several primary drivers of demand for career
transition services:
o Corporate earnings pressure: Economic uncertainties in the United States
and other industrialized countries and ongoing pressure to increase
corporate earnings frequently lead to layoffs as organizations attempt to
quickly reduce costs.
o Significant level of mergers and acquisitions: Merger and acquisition
activity leads to restructured workforces and the elimination of redundant
job functions. In recent years, consolidation activity has increased
significantly as a result of low costs of capital and globalization trends.
o Technological innovation: Improvements in technology and the migration from
human-intensive employee functions to automated systems has continued to
make some workers obsolete. As technology continues to improve, the need
for workers in particular industries and functions will continue to
decline.
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Companies choose to provide career transition services for several reasons.
First, as the competition for attracting and retaining qualified employees
increases, companies are increasingly attempting to distinguish themselves in
the marketplace as attractive employers. Consequently, more companies are
providing career transition services as part of a comprehensive benefits package
that provide for the well being of employees not only during their period of
employment, but also after their employment ceases. Additionally, when companies
complete layoffs, many believe that providing career transition services
projects a positive corporate image and improves morale among remaining
employees. Finally, companies may provide career transition services to reduce
costs by preparing and assisting separated employees to find new employment,
thereby diminishing employment-related litigation.
Organizational consulting services
Organizational consulting services provide assistance in addressing companies'
evolving human capital needs, focusing on assisting organizations in addressing
the human side of change. Organizational consultants help companies to build
high performance organizations. Organizational consulting services are designed
to improve employees' commitment, skill sets and confidence levels, overall
teamwork and leadership development to align the workforce with an
organization's overall business strategy and positively impact the success of
the business. Organizational consulting services include a wide range of
services centered around organizational performance, leadership development and
talent management. These services also address the need for companies to retain
productive human capital and minimize employee turnover, which can otherwise
result in lost productivity, lost business, decreased customer satisfaction,
decreased morale and lost intellectual capital.
We believe that there are several primary drivers of demand for organizational
consulting services:
o Growing emphasis on human capital: As economies continue to become more
knowledge-based, businesses are increasingly focused on the effective
management of human capital in order to attract, retain and develop the
most talented employees. Consequently, companies seek to maximize the skill
sets of their human capital within the context of their broader business
objectives.
o Changing workforce demographics: Companies in many countries today are
faced with an aging workforce, a shortage of talented employees and an
increasingly mobile workforce. These trends, along with employees'
increasing desire for lifelong learning opportunities, are prompting
companies to design and deploy effective leadership, talent development and
career management programs to maximize their return on capital invested in
human resources.
o Significant level of mergers and acquisitions: In recent years, industry
consolidation has become increasingly complex and cross-border in nature.
As a result, companies must develop consistent and integrated recruitment,
deployment and retention programs to address pre-merger planning and
post-merger human resources integration issues.
o Globalization of business: As businesses become increasingly multinational,
companies are seeking to deploy human resources programs on a global basis
while recognizing unique
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local requirements and social policies, and to establish consistency in
worldwide reporting and quality control.
Companies frequently augment their internal human resources professional staff
with external consultants for many reasons. First, the growing importance and
complexity of employee issues is creating an unprecedented administrative and
technical burden on human resources departments. Additionally, human resources
departments have historically been viewed as cost centers within organizations,
and pressures to contain costs decrease the resources available to managers.
Finally, companies increasingly choose to outsource non-core functions that can
be addressed either more effectively or less costly by outside professionals.
OUR COMPETITIVE STRENGTHS
Global reach and scale
We believe that, based on revenues, we are the largest provider of career
transition services in North America, Europe and Asia (excluding Japan), and the
second-largest provider in Japan. Our operations are structured into geographic
regions that provide management, leadership and resources to ensure seamless,
consistent and responsive delivery of our services. Our offices are managed and
staffed by consultants fluent not only in local languages, but also in the
nuances of local business customs and cultures. Our global network of
approximately 3,000 employees in over 35 countries allows us to act as a
single-source provider of career transition and organizational consulting
services to large multinational clients, enabling us to meet the needs of our
clients effectively at single or multiple locations and successfully compete for
new accounts that draw on our international footprint and experience.
Our geographic diversification also diminishes the risk associated with demand
fluctuations that result from changes in economic activity around the world. For
example, while robust economic activity in one economy may decrease demand for
career transition services in that country, the economy of another country may
be at a different stage of the economic cycle that creates an offsetting demand
for career transition services. For the year ended December 31, 2002, we derived
50% of our total revenue from the United States and 50% of our total revenue
from our international operations.
Strong reputation and brand recognition
We believe that we have established a strong reputation and brand name that
distinguishes us from competitors. We also believe that we are widely recognized
as a thought leader on matters relating to career transition and organizational
change. We regularly conduct proprietary research on issues of career transition
and organizational change in a wide range of industries so that we are able to
keep our clients thoroughly informed on topical and timely issues. Some of our
recent proprietary publications and surveys include: PeopleBrand; Lessons
Learned from Mergers & Acquisitions: Best Practices in Workforce Integration;
Career Transition and Redeployment: Best Practices at Employers of Choice;
Retaining Employees During Critical Organizational Transitions; Valuing the Dual
Career Workforce; and the industries most in-depth Global Severance Study.
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Long-standing relationships with large global clients
We work with many of the world's largest and most successful organizations.
Although the demand for career transition and organizational consulting services
from a particular client can fluctuate significantly from year to year, we have
been successfully providing career transition services for over 20 years and
many of our clients represent stable, long-term relationships. We believe that
our commitment to client satisfaction serves to strengthen and extend our
relationships, leading to high customer retention rates and repeat business. For
example, a majority of our top 10 clients in fiscal year 2002, ranked by
revenues, have been our clients for each of the last three years.
Innovative technology-based solutions
We believe that we are a leader in the development and application of
technology-based solutions that create value for our clients. Our innovative
solutions offer a variety of proprietary online services including standardized
skills assessments, web-based classes, web-based career counseling and
customized portals aggregating online resources. In addition, our
technology-based solutions enhance our ability to deploy our services
cost-effectively by empowering employees and decreasing their reliance on more
costly one-on-one coaching. Our proprietary application, RightTrack(sm),
significantly enhances our delivery capacity and efficiency across our global
network.
Variable cost structure
Our scalable technology, flexible workforce and target-driven incentive plan
enable us to operate with a highly variable cost structure. We have used
technology to standardize many of our services, enabling us to deliver them more
effectively and conveniently for our clients and to better manage our consultant
utilization. Furthermore, the employment of part-time consultants -who receive
limited benefits and no incentive compensation - allows us to staff more quickly
and efficiently in the short-term to address changing business needs. Finally,
our target-driven incentive plan ties a significant portion of employee
compensation to meeting growth-oriented performance goals, including increases
in regional revenue, group profitability and company earnings per share.
Complementary lines of business
Our career transition and organizational consulting services lines of business
are complementary to each other in that they allow us to provide services to a
client's displaced employees as well as its remaining employees. We are
therefore able to guide the entire organization through the process of change by
helping displaced employees find new employment and ensuring that remaining
employees are refocused on their tasks going forward. In addition to
complementing each other, both lines of business can also operate independently
of one another. This allows us to manage certain risks created by different
economic cycles. For example, historically during periods of economic decline
the demand for career transition services has tended to grow as organizations
try to contain costs through workforce reductions. Additionally, we believe that
the demand for organizational consulting services tends to increase during times
of economic growth as organizations become more interested in utilizing
organizational performance and leadership development tools to better manage
their workforce and compete for, retain and develop additional talent. Over the
last three years, we derived approximately 79% to 84% of our total revenues from
career transition services and approximately 16% to 21% of our total revenue
from organizational consulting services.
5
OUR GROWTH STRATEGY
We believe we are well positioned to continue to expand into new markets and
offer new services to provide greater value to our clients. To serve our clients
better and grow our business, we intend to continue pursuing the following
strategic growth initiatives:
Leverage global presence to increase share of services to large multinational
clients
Large, geographically diverse corporations increasingly desire a single source
provider that has both the critical mass to staff large engagements and the
scope to deploy resources throughout the world. We intend to draw upon our
global resources and local execution capabilities to increase our share of
services to multi-national corporations that are seeking a single source
provider of career transition and organizational consulting services. We believe
we are well positioned to serve our clients' growing needs for integrated career
transition and organizational consulting services worldwide.
Capitalize on cross-selling opportunities to existing clients
We intend to capitalize on our long-term client relationships to cross-sell our
full range of services to our client base. Having developed strong client
relationships with critical decision-makers as a result of our career transition
services work, we have a unique opportunity to cross-sell our organizational
consulting services to capture additional business opportunities and market
share. To facilitate cross-selling opportunities, we maintain a dedicated group
of client service consultants. This group functions independently of delivery
personnel and is responsible for coordinating sales opportunities in the career
transition and organizational consulting segments as well as coordinating sales
opportunities across differing geographic regions. We believe that by continuing
to deliver high-quality career transition services and by further developing our
relationships with our clients, we are well positioned to capture a
significantly larger share of our clients' expenditures for organizational
consulting services.
Identify and pursue strategic acquisitions
The markets for career transition and organizational consulting services are
highly fragmented. We have a history of successfully completing and integrating
strategic acquisitions, including career transition firms in new geographic
locations and organizational consulting firms that add desired competencies,
personnel or geographic coverage. We believe that strategic acquisitions can
significantly decrease the cost, time and commitment of management resources
necessary to attain a meaningful competitive position within a targeted market.
Since January 1, 1997, we have successfully completed and integrated
acquisitions involving 39 firms offering career transition and/or organizational
consulting services. Given the fragmented nature of the worldwide career
transition and organizational consulting markets, we believe there is a
significant opportunity for us to increase our market share on a global basis
through further acquisitions.
Build our brand and culture
We will continue to increase the awareness of our brand name in order to build
our market share, develop new client relationships and attract the best people.
Our leadership position in career transition services is our most important
competitive advantage and presents us with significant
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opportunities for growth. We carefully migrate the brands of acquired companies
to the Right Management Consultants brand to ensure both client continuity and
maximum marketplace visibility. We intend to hire and retain outstanding
professionals, provide incentives to achieve corporate goals and maintain a
culture that fosters outstanding customer service. We will also continue to
emphasize the professional development and training of our employees.
Develop technology-based delivery capabilities
We will continue to develop and apply new technology-based delivery capabilities
to improve customer service and develop and leverage cost efficiencies. Our
technology investments help to drive our growth and improve our profitability by
providing flexibility in pricing and delivery choices to corporate clients,
facilitating access to resources for individuals participating in our programs
and shifting our delivery costs from fixed to variable.
OUR SERVICES
Career transition services
Our career transition services help our clients plan and implement business
initiatives that entail reductions in their workforces. We are retained
exclusively by employers to provide services to their displaced employees on an
individual or group basis to assist them in finding new employment. We provided
career transition services to approximately 5,500 client companies during 2002,
including a majority of the companies that comprise the Fortune 500. Our career
transition services provided approximately 84% of our total revenue for the year
ended December 31, 2002.
We develop specific action plans for each client to ensure that career
transition services are delivered to employees in an appropriate tone and style
that promotes constructive reactions from employees and broader business and
social communities.
These programs are designed to prepare our clients for all facets of workforce
reductions, including:
o configuring programs and services;
o drafting messages for required internal and external communications;
o providing or preparing facilities, equipment and technology for delivery of
services;
o planning and coordination for the notification of employees regarding the
separation event, including preparing, coaching and supporting managers in
conducting notification meetings and delivering separation messages in an
effective manner;
o planning and executing separation logistics, including quickly engaging
separating employees with our individual and group career transition
services;
o addressing issues and reengaging continuing employees with their work and
careers within the organization; and
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o tracking the progress and status of former employees in our individual and
group career transition services programs.
Individual career transition services
Our individual career transition services are focused on assisting individuals
in finding interesting and challenging career opportunities that recognize and
utilize their specific talents and enable them to make constructive steps in
their career continuum rather than simply finding them new employment. Over the
last three years, our career transition revenue generated from individual career
transition services averaged approximately 69%.
We work with individuals from all levels and backgrounds of an organization,
from senior executives, managers and professionals to technical specialists and
front-line staff. Our services to separated employees include assistance in
handling the initial difficulties of termination; identifying continuing career
goals and options; planning an alternative career; aiding in developing skills
such as resume writing, effective networking, identifying and researching
potential employers, preparing and rehearsing for interviews; continuing
consulting and motivation throughout the job search; assessing new employment
offers and methods of accepting such offers; and assisting with financial
planning.
Our process is administered by experienced consultants who are knowledgeable
about current employment market conditions and the latest in employment search
trends and techniques. We build teams of consultants whose styles and strengths
effectively address the needs and preferences of our candidates to help them
achieve their specific goals. Our process is delivered in small
group-facilitated learning sessions that provide essential, elective or
special-needs learning, one-on-one counseling, specific coaching relationships
and just-in-time, needs-driven coaching advice. We also provide our candidates
with twenty-four hour a day, seven day a week support and internet access to job
search tools and market resources.
These learning sessions and coaching programs are designed to address a range of
career options, including comprehensive reemployment, career change, contract
work, consulting practice, entrepreneurship, retirement/work combination and
full retirement.
We offer the following individual career transition services:
o Key Executive Service. The separation and career transition of a top
executive presents a complex set of considerations for both the
organization and the individual. Our Key Executive Service is targeted to
provide fully-customized, high-value counseling and assistance to
high-impact and high-level executives as they develop and manage their
career transition. Our Key Executive Service includes helping executives
assess business, career and personal/lifestyle options; assisting the
evaluation and negotiation of competitive opportunities; advising on
governance, executive compensation and venture capital sources; and
providing access to a rich pool of new contacts. Senior consultants, who
have an in-depth understanding of and personal experience in the senior
executive community, deliver our Key Executive Service.
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o Executive Service. We provide a customized consultative program that helps
executives plan and implement a career strategy, assess particular job
options and opportunities, and successfully redeploy expertise and skills,
while positioning the executive to achieve their short-term goals and
long-term career objectives.
o Professional/Management Service. We assist managers and professionals in
assessing job options and opportunities while redeploying strengths and
skills to achieve job goals as quickly as possible. Our services include
career assessment, definition of career direction, resume preparation,
development and implementation of a personal market plan, enhancement of
interview skills, and the negotiation of job offers and compensation
packages.
o Market Readiness Service. We provide a comprehensive overview of the
job-transaction process and practical strategies for conducting a
successful job-search campaign, and help candidates identify strengths,
develop a valid and realistic job objective, and create a targeted and
effective resume.
Group career transition services
We also provide career transition services in group settings for companies
making large reductions in their workforce at one time. The core of our group
programs are seminars that are typically from one to five days in duration and
for up to twelve employees. These seminars are often preceded or followed by
individual counseling. Our group workshops leverage proven and replicable
frameworks, models and samples of effective resumes, market approaches,
marketing plans, networking and contact actions, interview and negotiation
protocols and tips, and guidelines for effective self-management of a job-search
campaign. Over the last three years, our career transition revenue generated
from group career transition services averages approximately 31%.
We can accommodate group programs in our facilities, or we can quickly design,
staff or manage career centers for corporate clients needing to provide career
transition services during a large-scale reduction in workforce of 250 or more
participants. For large scale workforce reductions, we often help our clients to
prepare the physical facilities for career centers, which are exclusively
dedicated to support the individual and group career transition services for
employees from one specific organization. We provide a turnkey solution for
career centers whereby we find and furnish an appropriate facility, provide or
obtain all necessary equipment and supplies, and staff the facilities with our
consultants and administrative support staff. For clients that wish to use their
own existing facilities, equipment and supplies, we provide our consultants and
limited administrative support. For small scale workforce reductions, we
frequently provide individual and group career transition services to displaced
employees in our own facilities. Career centers are run like company offices and
are staffed with our consultants and administrative personnel who provide office
support technology and services.
Organizational consulting services
Organizational consulting services provide effective solutions to the evolving
human resource needs of clients, focusing on assisting organizations in managing
the human side of change. We are hired both to perform organizational consulting
services on a stand-alone basis and in conjunction with our career transition
services. Specifically, we focus on services addressing
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organizational performance, leadership development and talent management.
Organizational performance
- --------------------------
We provide the expertise, experience and proven approaches to help position our
clients for strategic success by helping them to ensure that their employees are
committed and working to achieve corporate objectives. Our organizational
performance experts help clients turn strategy into results by assessing
organizations, executing strategy and managing change. These services are
offered independently and are also provided in connection with large-scale
workforce reductions.
Our assessments often include conducting rigorous interviews and focus groups of
employees around the world, which can provide unique and valuable insights and
enable us to gather data consistently and cost-effectively. We serve as an
objective, outside resource for data gathering that encourages honest
communication about our clients' current practices and identifies areas for
improvement. We then help our clients to execute their strategies by developing
and articulating comprehensive and compelling messages that provide employees
with detailed action plans. We provide tools and training that managers can use
to communicate corporate strategy and build commitment throughout the
organization.
Leadership development
- ----------------------
We help our clients to develop leaders who are capable of transforming their
businesses and helping to create sustainable competitive advantages. Our
consultants help clients to assess leaders by developing a clear picture of each
employee's strengths and weaknesses. We develop these assessments using
well-researched surveys, written responses, interviews and web-based exercises,
and we help our clients to measure and evaluate these characteristics accurately
in an objective, quantitative format. We then help our clients by coaching
employees to become effective leaders. We help them to clarify behaviors that
are contributing to success on the job, as well as those that limit their
effectiveness, identify their strengths and development needs, recognize ways to
become more open to constructive feedback, create an action plan for development
and identify resources such as mentors to ensure continued success.
Talent management
- -----------------
We also help our clients to select the best talent by creating profiles of high
performers capable of significant contribution to the organization. Some of our
specific services include consulting on recruiting strategies, designing and
administering selection systems, training people how to conduct effective
interviews and consulting on new hire assimilation programs.
We then help our clients with issues of career development and management. We
use a combination of consulting, mentoring, coaching, training, communications
strategies, web-based tools and self-development initiatives to help employees
manage their careers and advancement opportunities.
We assist our clients to retain talent and address succession issues by
developing and promoting diversity and inclusiveness programs, mapping
opportunities for people to move and grow within an organization, and aligning
rewards and recognition with business strategy. With respect to succession
issues, we help clients identify future workforce needs, identify high-potential
talent
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and design programs that assure the next generation of leadership is adequately
prepared to assume greater responsibility.
Technology solutions
Our technology solutions are designed to be an integral part of our career
transition and organizational consulting services. We have made significant
investments in technology to augment our core services with online, twenty-four
hours a day, seven days a week access and support.
Our career transition technology solutions include:
Delivery Tool Description
RightTrack(sm)............................. Web-based collaborative program
management tool that enables our
company to instantly interact and
deliver career transition services
seamlessly around the world.
Right-from-Home(R)......................... Web services to help clients find
new careers as fast as possible.
Resources include proprietary
career assessment tools, resume
development aids, research sources,
job opportunities and courses on
critical job-search skills.
Right Connection(R)........................ Enables companies to provide a
customized, co-branded career
transition portal for their
employees in transition.
Job Bank................................... Provides thousands of exclusive
positions for candidates and the
opportunity to post jobs from
hiring companies.
Resume Bank................................ Links hiring companies with
candidates through a resume
database.
Right Advantage(sm)........................ Combines personalized multi-media
tools and individual consulting to
facilitate the job search for
individuals who are not near a
company office.
Right Virtual.............................. Home-based career transition
service mirrors the deliver process
used in Right office locations,
combining the best in
knowledge-based learning and
hands-on skill development through
a customized virtual learning
center.
Right Access (sm).......................... A customized web site for our
client companies that gives our HR
contacts instant access to our
services - from initiating services
for individuals to tracking their
progress in their campaigns.
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Our organizational consulting technology solutions include:
Delivery Tool Description
Organizational Performance Tools
- --------------------------------
PeopleBrand(TM)............................ Tool for defining, declaring and
delivering employment brand in
order to attract and retain
high-value talent.
PeoplePoll(TM)............................. Comprehensive employee survey used
to "take the pulse" of an
organization, often during times of
change (e.g., mergers and
acquisitions, strategic shifts, new
leadership).
eCustom Surveys(TM)....................... Client-specific surveys on a
variety of topics.
Leadership Development Tools
- ----------------------------
Compass.................................... 360 feedback tool and workshop
focusing on effective leadership.
Matrix..................................... 360 survey that provides feedback
on employees' power and influence.
ECustom 360(TM)............................ Survey that focuses on the
competencies people need to succeed
in a specific company, function or
job.
Talent Management Tools
- -----------------------
CompAssess(TM)............................ A competency-based assessment tool
that helps achieve better results
through workforce planning and
employee development initiatives.
Strategic Career
Management 2000(TM)........................ A self-directed learning tool that
leads employees through the career
planning process, resulting in a
written action plan for career
development.
SALES AND MARKETING
We rely primarily on our reputation and our relationships to market our services
to new and existing clients. Most of our work is repeat work for existing
clients or referrals from existing clients. Our sales professionals develop
close, personal relationships with clients and often learn about new business
opportunities from their frequent contact with clients. Consequently, we
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encourage our professionals to generate new business and reward them with
increased compensation and promotions for sales generating significant new
business.
We employ numerous sales professionals consisting of regional managing
principals and client service consultants. We also have dedicated groups of
regional managing principals and client service consultants to pursue specific
business opportunities. Our strategic accounts group focuses on the needs of 50
targeted companies, consisting of current and potential clients. Our global
response team pursues larger career transition opportunities on a worldwide
basis as they develop.
We pursue new clients using cross-disciplinary teams of consultants as well as
dedicated business developers to initiate relationships with carefully selected
companies. Our client expansion and new client acquisition efforts are supported
by market research, comprehensive sales training programs and extensive
marketing databases. Our sales efforts are also supported by selected marketing
programs designed to raise awareness of our brand and our reputation within our
target markets. These programs promote our leading reputation and establish us
as a preferred career transition and organizational consulting firm to many of
the world's largest companies.
In marketing our services, we emphasize our experience, the quality of our
services and our professionals' particular areas of expertise. While we
aggressively seek new business opportunities, we maintain high professional
standards and carefully evaluate potential new client relationships and
engagements. We are also constantly improving the quality and functionality of
our websites, where we describe our services and experience and promote our
reputation.
COMPETITION
The market for career transition and organizational consulting services is
highly competitive. In the market for services required by global clients, we
believe that there are several barriers to entry, such as the global coverage,
specialized local knowledge and technology required to provide outstanding
services to corporations on a global scale.
Our current and anticipated competitors include:
o major career transition services firms, such as Drake Beam Morin, a
subsidiary of Thomson Corporation, a publishing company, and Lee Hecht
Harrison, owned by Adecco Group SA, a provider of personnel and career
services. Additionally, there are regional firms and numerous smaller
boutiques operating in either limited geographic markets or providing
limited services;
o major organizational consulting firms that compete in serving the large
employer market worldwide, such as William M. Mercer, Towers Perrin, Watson
Wyatt and Hewitt Associates;
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o the organizational consulting practices of public accounting and consulting
firms, such as PricewaterhouseCoopers, Braxton (Deloitte & Touche), Cap
Gemini Ernst & Young, Bearing Point (KPMG) and Accenture; and
o boutique consulting firms comprised primarily of professionals formerly
associated with the firms mentioned above.
The market for our services is subject to change as a result of competitive and
technological developments and increased competition from established and new
competitors. We believe that the primary determinants of selecting a career
transition and organizational consulting firm include reputation, global scale,
service quality, price and the ability to tailor services to a client's unique
needs in a timely manner. We believe we compete favorably in all of these areas.
AFFILIATE ARRANGEMENTS
We have previously entered into agreements with independent franchisees, which
we call Affiliates, to provide career transition and organizational consulting
services within a defined geographic area. We assist our Affiliates in providing
career transition and organizational consulting services and permit them to
render such services exclusively under our registered service marks. We
currently have five Affiliates, all in the United States. We have no present
intention to add any Affiliates, and as part of our operating strategy, we have
acquired ten of our former Affiliates since 1993.
We train our Affiliates and their employees in marketing and delivering career
transition and organizational 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, training materials and materials relating to our system of
monitoring the progress of separated employees. We also provide marketing
support, public relations, advertising and promotional support, consisting of
national and international media efforts.
In consideration of our services provided, training and use of our trademarks
and service marks, our Affiliates pay us a 10% royalty on their total gross
receipts and a fee for services rendered in providing career transition services
to separated employees on certain contracts and accounts sold and managed by
Affiliates, but delivered outside an Affiliate's territory by a company-owned
office. Also, we pay our Affiliates for services delivered to our clients by an
Affiliate in its exclusive territory.
PEOPLE AND CULTURE
As of February 28, 2003, we employed approximately 3,000 full-time personnel and
part-time professional consultants. Our full-time personnel included 18 in
senior management, approximately 170 in other managerial and professional roles,
approximately 1,400 in field operations as sales and delivery consultants and
approximately 1,000 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 relations with our employees
are good.
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We have developed a corporate culture that promotes excellence in job
performance, respect for the ideas and judgment of our colleagues and
recognition of the value of the unique skills and capabilities of our
professional staff. We seek to attract highly qualified and ambitious personnel.
We strive to establish an environment in which all employees can make their best
personal contribution and have the satisfaction of being part of a successful
team. We believe that we have attracted and retained highly skilled employees
because of the quality of our work environment, the professional challenge of
our assignments and the financial and career advancement opportunities we make
available to our staff.
To encourage the achievement of these core values, we reward teamwork and
promote individuals who demonstrate these values. Also, we have an intensive
orientation program for new employees to introduce them to our core values, as
well as a number of internal communications and training initiatives defining
and promoting these core values.
ACQUISITIONS
Effective January 1, 2002, we acquired an additional 20% interest in our
Japanese joint venture Right WayStation, for a purchase price of $3,285,000,
increasing our total interest in this subsidiary to 71%. This additional 20%
interest was purchased from Mr. Keiichi Iwao, the founder of Right WayStation
and, at that time, a Director of the Company.
Effective March 22, 2002, we acquired 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.
This acquisition is valued at approximately $118,129,000, 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 Ireland, Germany, Italy and Switzerland, 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.
In connection with the integration of Coutts with the Company's existing
operations, the Company implemented a plan to restructure its operations.
Pursuant to the provisions of EITF No. 95-3, "Recognition of Liabilities in
Connection with a Purchase Business Combination," the Company accrued
liabilities for redundant costs of approximately $12,277,000 during 2002, that
was included in the allocation of the costs to acquire Coutts, resulting in
additional goodwill related to this transaction. These redundant costs relate
primarily to office space and terminated personnel. As of December 31, 2002,
there was a remaining liability of $7,046,000 included in Other accrued
expenses on the consolidated balance sheet.
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In addition, during 2002, costs related to implementing the restructuring of
operations due to the integration of Coutts that were expensed as incurred were
approximately $2,286,000 and are included in Total expenses on the Statement of
Operations. These expenses included write-offs of leasehold improvements,
restoration costs to office space primarily in Japan, severance to terminated
personnel and other costs.
The Coutts 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 Wachovia Securities as Administrative Agent. For a
description of the Credit Agreement refer to Note E, "Debt and Other
Obligations", in the Company's Notes to the Consolidated Financial Statements
contained in our 2002 Annual Report to Shareholders, the incorporated portions
of which are included as Exhibit 13 to this Report.
During June, the Company completed its acquisition of the outstanding stock of
five of Coutts' franchises in Canada, which had conducted business as Murray
Axmith. These acquisitions had an effective date of July 1, 2002 for financial
reporting purposes, and were acquired for a combination of cash and future
defined contingent payments. The total upfront cash paid as part of the purchase
price for these acquisitions and related transaction costs, net of cash
acquired, totaled approximately $2,528,000.
Effective July 1, 2002, the Company also purchased the outstanding shares of
Assessment & Development Consult Holding BV ("ADC Consulting"), an
organizational consulting firm with three offices in the Netherlands, for cash.
The cash paid for the purchase price and related transaction costs totaled
$8,200,000. In addition to the purchase price, the Company committed to paying
$1,000,000 in retention bonuses to key personnel of ADC Consulting over three
years which will be expensed ratably over that period.
In addition, during 2002, the Company paid approximately $3,975,000 in earnouts
related to acquisitions made in prior years.
Effective January 1, 2003, the Company acquired the remaining 49% minority
interest in its Spanish subsidiary, Right Glenoit SL for a cash purchase price
of approximately $1,300,000, and future contingent payments. Also effective
January 1, 2003, the Company acquired certain assets of Aston Promentor, an
organizational consulting firm in Denmark for a total purchase price of
approximately $2,000,000.
Over the last five years, and including the acquisitions effective January 1,
2003, we have completed thirty separate acquisitions of career transition and
organizational consulting firms 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 $197,771,000, including the costs of
acquisitions.
16
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 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 and
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. 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 or write-down 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
17
The Coutts acquisition in 2002 was a significant acquisition for us that has
been fully integrated with our existing operations as of December 31, 2002. To
realize the anticipated benefits of this combination in the future, members of
our management team must develop strategies and a business plan that will
effectively work for a global business. 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 FACE ADDITIONAL RISKS RELATED TO FOREIGN POLITICAL, LEGAL AND ECONOMIC
CONDITIONS
Our international business operations are subject to a number of risks,
including, but not limited to:
o fluctuations in the value of foreign currencies;
o difficulties in building, integrating and managing foreign operations;
o longer sales cycles;
o different regulatory environments; and
o unexpected legal, economic or political changes in foreign markets.
Our operations could be adversely affected by any of these risks.
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 organizational
consulting businesses. On a regional basis, we also compete against local career
and organizational consulting firms that are well established in their
particular regions.
OUR FINANCIAL RESULTS ARE AFFECTED BY THE TIMING OF LARGE PROJECTS
Our financial results are impacted by the results of large projects that
commence or involve a significant amount of activity during a quarter. We cannot
predict the timing or nature of these projects in advance. Our deferred revenues
are affected by the level of current billings for these projects and their
average length, and our revenue and income could be adversely affected by issues
relating to these projects. Accordingly, our quarterly financial results may
fluctuate and may be more or less than investors' expectations.
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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 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 in material compliance with 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, 2002 and 2001, approximately
1.5% and 2.5%, 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
levels. 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 adversely affect our business, financial condition and results
of operations.
IF WE ARE UNABLE TO MEET OUR CLIENTS' EXPECTATIONS, WE COULD DAMAGE OUR
REPUTATION AND HAVE DIFFICULTY ATTRACTING NEW BUSINESS.
Our ability to secure new business and attract and retain qualified employees
depends heavily on our overall reputation and the quality of the services we
provide. As a result, if we are unable to meet a client's expectations, we could
damage our reputation. This could adversely affect our ability to attract new
business from that client or from other clients. In addition, a negative change
19
in our reputation could affect our ability to attract qualified employees,
further impacting our ability to secure new business from current and new
clients.
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 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.
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Item 2: Properties
All office space for company offices is leased. The leases typically have three
to seven year terms and some have renewal options. We lease approximately
1,100,000 square feet for all company offices, including our corporate
headquarters, at an aggregate yearly rental cost of approximately $31,000,000.
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.
21
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 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 57 Chairman of the Board and Chief Executive
Officer
John J. Gavin 47 President and Chief Operating Officer
G. Lee Bohs 43 Executive Vice President, Corporate Development
Charles J. Mallon 46 Executive Vice President, Chief Financial Officer
and Treasurer
Theodore A. Young 55 Executive Vice President, General Counsel and Secretary
William McCusker 50 Executive Vice President, Marketing
Howard H. Mark 45 Executive Vice President, e-Business
Gayle I. Weibley 52 Executive Vice President, Human Resources
Peter J. Doris 56 Executive Vice President, International
Geoffrey S. Boole 59 Executive Vice President, Career Transition Services
Christopher Pierce-Cooke 50 Executive Vice President, Managing Director -
Consulting Services
James E. Greenway 56 Global Response Team and Group Executive
Vice President Western U.S.
Mark A. Miller 54 Group Executive Vice President Eastern U.S.
R. William Holland 59 Group Executive Vice President Central U.S.
and Canada
Andrew McRae 44 Group Executive Vice President Europe
Edward C. Davies 56 Group Executive Vice President Asia-Pacific
22
Motohiko Uezumi 59 Chairman and Chief Executive Officer of Right Management
Consultants Japan
Keiji Miyaki 52 President and Chief Operating Officer of Right Management
Consultants Japan
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 that manufactures equipment for the food and chemical
industries. Mr. Pinola also is a member of the Board of Trustees of King's
College in Wilkes-Barre, Pennsylvania.
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 operation. 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, a publicly held
company that provides marketing research and services.
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., an intellectual property consulting company, as
Executive Vice President and Chief Financial Officer, where he served through
December 2001. He re-joined our company in January 2002 as Executive Vice
President, Corporate Development.
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
23
Accountant and a graduate of Drexel University in Philadelphia. He is a member
of the American and Pennsylvania Institutes of Certified Public Accountants.
Mr. Young joined the company in January 2003 as Executive Vice President,
General Counsel and Secretary. From 1991 until joining the company, Mr. Young
was a partner in the Philadelphia office of the law firm Fox, Rothschild,
Frankel & O'Brien LLP, where he provided services to the company as its outside
legal counsel. Mr. Young holds a B.A. degree from The Pennsylvania State
University, and a J. D. degree from the University of Pennsylvania.
Mr. McCusker joined Right Management Consultants in June 2002, and is
responsible for branding and marketing activities on a global basis. He was
previously with Arthur Andersen LLP where he had overall marketing
responsibility for the firm's four major service lines. During his marketing
career since 1987, Mr. McCusker has held local, national and global positions in
which he planned and directed strategic planning, direct marketing, business
development, advertising, relationship event, PR, and client satisfaction
initiatives. Prior to his marketing career, Mr. McCusker was a management
information consultant with Arthur Andersen LLP where he served a variety of
global companies. His education includes a Bachelors of Arts from the University
of Notre Dame and a Masters of Business Administration from the University of
Michigan where he concentrated in marketing and computer information systems.
Mr. Mark was the former Director of Information Technology and Managed Care
Reengineering at pharmaceutical company Rhone-Poulenc 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.
Ms. Weibley has over fifteen years of experience as a Human Resource executive
in a number of industry sectors for organizations such as Subaru of America,
CIGNA, Reliance Insurance Company, USInteractive, and most recently, Dechert, an
international law firm. She has also led company-wide organizational realignment
and global human resources restructuring for companies like Prudential, JP
Morgan, National Geographic Society, and Anthem Blue Cross/Blue Shield. She
holds a B.Mus.Ed. from Temple University and an M.S. in Human Organization
Science from Villanova University. In November 2002, Ms. Weibley was appointed
the Executive Vice President, Human Resources. Her responsibilities include
creating the human resources vision and driving human resource strategies that
link to and support the firms' business goals worldwide.
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,
24
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 internally
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 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. 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 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. In 2002, Mr. Greenway was
appointed to lead our Global Response Team, in addition to his responsibilities
as Group Executive Vice President.
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
25
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 Group. Effective January 1, 2000, Dr. Holland 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. McRae joined the company in April 2002 as Group Executive Vice President for
Europe, following the acquisition of Coutts where he had previously been Group
Chief Executive. Prior to Coutts, Mr McRae was Group Finance Director from 1989
to April 1995 for Aspen Communications plc, a UK publicly traded marketing
services company with operations across the world. Mr McRae is a qualified
Chartered Accountant and a graduate of the University of Wales, Swansea.
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. 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 Group Executive Vice President
of the Asia-Pacific region.
Mr. Uezumi joined Right WayStation, formerly WayStation, Inc., as a
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, now Right Management Consultants Japan (Right Japan). He
currently holds the position of Chairman and Chief Executive Officer of Right
Japan. 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.
26
Mr. Miyaki is the President and Chief Operating Officer of Right Management
Consultants Japan, Inc., a position he has held since October 1, 2002. Before
joining Right Japan, he was a Vice President at A.T. Kearney, a consulting firm,
for six years, where he focused on business strategy, mergers and acquisitions
and post merger integration. Mr. Miyaki also conducted various other assignments
including overseas projects with this firm. In addition, Mr. Miyaki served as
the Managing Director of A.T. Kearney Korea and the head of the North Asia
Operation Practice. He holds a Bachelor of Commerce degree from Hitotsubashi
University.
Except for Mr. Pinola and 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.
27
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 2002 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 2002 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 2002 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 2002 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
On April 8, 2002, the Board of Directors of the Company, pursuant to a
recommendation of its Audit Committee, approved the engagement of Ernst & Young
LLP as its independent auditors for the fiscal year ending December 31, 2002 to
replace the firm of Arthur Andersen LLP, which was dismissed as auditors of the
Company effective April 8, 2002. The appointment of Ernst & Young LLP was
ratified by the Company's shareholders at the 2002 Annual Meeting.
The reports of Arthur Andersen LLP on the Company's financial statements for the
fiscal years ended 2001 and 2000 did not contain an adverse opinion or a
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope, or accounting principles, except with respect to the adoption of
SAB No. 101 that was effective January 1, 2000.
28
In connection with the audits of the Company's financial statements for the
fiscal years ended December 31, 2000 and December 31, 2001, and in the
subsequent period through April 8, 2002, there were no disagreements between the
Company and Arthur Andersen LLP on any matters of accounting principles or
practices, financial statement disclosure, or auditing scope or procedures
which, if not resolved to the satisfaction of Arthur Andersen LLP would have
caused them to make reference to the matter in their report.
The Company provided Arthur Andersen LLP with a copy of the forgoing
disclosure. Arthur Andersen LLP's letter dated April 22, 2002, stating its
agreement with such statements, was filed as Exhibit 16.1 to the Company's Form
8-K/A filed on April 22, 2002, which is incorporated herein by reference.
During the years ended December 31, 2000 and December 31, 2001, and
during the subsequent period through April 8, 2002, the Company did not consult
Ernst & Young LLP with respect to the application of accounting principles to a
specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on the Company's consolidated financial
statements, or any other matters or reportable events as set forth in Items 304
(a) (2) (i) and (ii) of Regulation S-K.
PART III
--------
Item 10: Directors and Executive Officers of the Registrant
The Company's Executive Officers are identified in Part I, Item 1 of this
Report. Information relating to the Company's Directors is hereby incorporated
by reference to the information set forth under the caption "Proposal 1:
Election of Directors", "Committees of the Board of Directors" and "Compliance
with Section 16(a) of Securities Exchange Act of 1934" contained in our
definitive Proxy Statement with respect to our 2003 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.
Item 11: Executive Compensation
The information under captions "Executive Compensation", "Stock Option Grants",
"Option Exercises and Year-end Option Value", "Retirement Compensation",
"Employment and Change in Control Agreements", "Compensation of Directors",
"Compensation Committee Report on Executive Compensation" and "Common Shares
Performance", included in the Proxy Statement relating to the Company's 2003
Annual Meeting of Shareholders is incorporated herein by reference.
Item 12: Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
The information under the captions "Principal Shareholders and Management's
Holdings" and "Equity Compensation Plans", included in the Proxy Statement
relating to the Company's 2003 Annual Meeting of Shareholders is incorporated
herein by reference.
29
Item 13: Certain Relationships and Related Transactions
The information under the caption "Certain Relationships and Related Party
Transactions", included in the Proxy Statement relating to the Company's 2003
Annual Meeting of Shareholders is incorporated herein by reference.
Item 14: Controls and Procedures
As of December 31, 2002, an evaluation was performed under the supervision and
with the participation of the Company's management, including the Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures. Based
on that evaluation, the Company's management, including the Chief Executive
Officer and Chief Financial Officer, concluded that the Company's disclosure
controls and procedures were effective as of December 31, 2002. There have been
no significant changes in the Company's internal controls or in other factors
that could significantly affect internal controls subsequent to December 31,
2002.
PART IV
-------
Item 15: 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 2002 Annual Report to Shareholders, as set forth in Item
8:
Report of Ernst & Young LLP, Independent Auditors
Report of Arthur Andersen LLP, Independent Public Accountants
Consolidated Balance Sheets as of December 31, 2002 and 2001
Consolidated Statements of Operations for each of the three
years in the period ended December 31, 2002
Consolidated Statements of Shareholders' Equity for each of
the three years in the period ended December 31, 2002
Consolidated Statements of Cash Flows for each of the three
years in the period ended December 31, 2002
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 Ernst & Young LLP, Independent Auditors
Report of Arthur Andersen LLP, Independent Public Accountants
Schedule II - Valuation and Qualifying Accounts
30
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.
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:
31
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 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). *
10.11 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). *
10.12 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). *
* These documents are compensatory plans or agreements required to be filed as
Exhibits.
32
10.13 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).*
10.14 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).*
10.15 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).
10.16 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.) *
10.17 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.) *
10.18 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.) *
10.19 Amended and Restated Directors' Stock Option Plan (incorporated by
reference to the Company's current report on Form 8K, dated November
9, 2001.) *
10.20 Second Amendment to Employment Agreement dated as of January 1, 2002
by and between Right Management Consultants, Inc. and Richard J.
Pinola (incorporated by reference to the Company's report on Form 10-K
for the year ended December 31, 2001, filed March 28, 2002.) *
10.21 Amendment to Employment Agreement dated as of January 1, 2002 by and
between Right Management Consultants, Inc. and John J. Gavin
(incorporated by reference to the Company's report on Form 10-K for
the year ended December 31, 2001, filed March 28, 2002.) *
10.22 Amended and Restated Directors' Stock Option Plan (incorporated by
reference to the Company's report on Form 10-K for the year ended
December 31, 2001, filed March 28, 2002.) *
10.23 Purchase Agreement between and among Right Management Consultants,
Inc. and its subsidiary Right Associates, Limited and Atlas Group
Holdings Limited, dated February 28, 2002 (incorporated by reference
to the Company's report on Form 10-K for the year ended December 31,
2001, filed March 28, 2002.)
*These documents are compensatory plans or agreements required to be filed as
Exhibits.
33
10.24 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 (incorporated by reference to the
Company's report on Form 10-K for the year ended December 31, 2001,
filed March 28, 2002.)
10.25 Change in Control Agreements with the Chief Executive Officer and the
President and Chief Operating Officer. *
10.26 Change in Control Agreements with Executive Vice Presidents. *
13 Portions of the Company's 2002 Annual Report to Shareholders expressly
incorporated by reference.
21 Subsidiaries of the Company.
23 Consent of Ernst & Young LLP.
99.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C.
Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
99.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C.
Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
*These documents are compensatory plans or agreements required to be filed as
Exhibits.
(b) Reports on Form 8-K
The Company filed a Form 8-K on November 1, 2002 reporting
that it had filed an application for listing on the New York
Stock Exchange (NYSE). The Company began trading its common
stock on the NYSE on November 18, 2002 under the stock
symbol "RHT." Also reported in this Form 8-K, the Company's
Board of Directors authorized the appointment of National
City Bank as transfer agent and registrar for the Company.
34
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
RIGHT MANAGEMENT CONSULTANTS, INC.
By: /S/ RICHARD J. PINOLA
---------------------------------
Richard J. Pinola,
Chairman of the Board and
Chief Executive Officer
Dated: 3/31/03
-------
35
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 3/31/03
- --------------------- and Chief Executive Officer -------
Richard J. Pinola
/S/ CHARLES J. MALLON Chief Financial 3/31/03
- --------------------- Officer and Principal -------
Charles J. Mallon Accounting Officer
/S/ JOHN J. GAVIN President and Chief 3/31/03
- ------------------ Operating Officer and -------
John J. Gavin Director
/S/ FRANK P. LOUCHHEIM Director 3/31/03
- ---------------------- -------
Frank P. Louchheim
/S/ JOSEPH T. SMITH Director 3/31/03
- ------------------- -------
Joseph T. Smith
/S/ LARRY A. EVANS Director 3/31/03
- ------------------ -------
Larry A. Evans
/S/ JOHN R. BOURBEAU Director 3/31/03
- -------------------- -------
John R. Bourbeau
/S/ REBECCA J. MADDOX Director 3/31/03
- --------------------- -------
Rebecca J. Maddox
/S/ CATHERINE Y. SELLECK Director 3/31/03
- ------------------------ -------
Catherine Y. Selleck
/S/ FREDERICK R. DAVIDSON Director 3/31/03
- ------------------------- -------
Frederick R. Davidson
/S/ OLIVER S. FRANKLIN Director 3/31/03
- ---------------------- -------
Oliver S. Franklin
/S/ STEPHEN JOHNSON Director 3/31/03
- ------------------- -------
Stephen Johnson
36
CERTIFICATIONS
I, Richard J. Pinola certify that:
1. I have reviewed this annual report on Form 10-K of Right Management
Consultants, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: March 31, 2003 /s/ RICHARD J. PINOLA
---------------------
Richard J. Pinola,
Chairman and Chief Executive Office
37
I, Charles J. Mallon certify that:
1. I have reviewed this annual report on Form 10-K of Right Management
Consultants, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: March 31, 2003 /s/ CHARLES J. MALLON
---------------------
Charles J. Mallon,
Executive Vice President and Chief
Financial Officer
(Principal Financial Officer)
38
Report of Independent Auditors
To the Board of Directors and Shareholders of 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. as of December 31, 2002, and for the year then ended, and have
issued our report thereon dated February 7, 2003 (included elsewhere in this
Form 10-K). Our audit also included the financial statement schedule as of
December 31, 2002 and for the year then ended listed in Item 15(a) (2) of this
Form 10-K. This schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audit. The financial
statement schedule listed in Item 15(a) (2) of this Form 10-K as of December 31,
2001 and 2000 and for each of the years then ended, was audited by other
auditors who have ceased operations and whose report dated February 2, 2002
expressed an unqualified opinion.
In our opinion, the financial statement schedule for the year ended December 31,
2002 referred to above, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
February 7, 2003
The following report is a copy of the latest and dated report issued by Arthur
Andersen LLP ("Andersen") for the years ended December 31, 2001 and 2000, and
the report has not been reissued by Andersen. The report of Andersen is included
in this annual report on Form 10-K pursuant to Rule 2-02(e) of Regulation S-X.
After reasonable efforts the Company has not been able to obtain a reissued
report from Andersen. Andersen has not consented to the inclusion of its report
in this annual report on Form 10-K.
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, 2002, 2001 and 2000
Additions
-----------------------
Balance at Charged to Acquired Balance at
Beginning of Costs and from End of
Description Year Expenses Acquisitions Deductions Year
- ----------- ---- -------- -------- ---------- ----
2002:
Allowance for doubtful accounts $ 2,835,000 $ 1,819,000 $310,000 $ 1,681,000 $ 3,283,000
============ ===========
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
============ ===========