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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, 1996
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File No. 0-15539
RIGHT MANAGEMENT CONSULTANTS, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2153729
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1818 Market Street, Philadelphia, Pennsylvania 19103
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 988-1588
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value per share
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant using the closing stock price as of March 25, 1997 was $58,689,318.
The number of shares outstanding of the registrant's Common Stock as of March
25, 1997 was 6,566,637.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I & II Portions of the Company's 1996 Annual Report to Shareholders
for the fiscal year ended December 31, 1996.
Part III The Company's definitive proxy statement with respect to its 1997
Annual Meeting of Shareholders to be held on May 8, 1997.
PART I
Item 1: Business
General
Right Management Consultants, Inc. (the "Company") is an international career
management and organizational consulting firm headquartered in Philadelphia,
Pennsylvania. Founded in 1980, the Company has been publicly owned since 1986.
In 1996, the Company became the largest firm in the career management industry
with revenues in excess of $125 million. Worldwide operations are structured
into eight geographic groups that provide management oversight to approximately
120 global locations, including both Company owned and Affiliate offices.
The Company licenses its Affiliates to use its service marks and licenses and
trains them to use its proprietary materials and methods. The Company receives
fees directly from employers for services rendered by Company offices and
royalties and fees from the Affiliates. The Company's fees for its services are
paid exclusively by the employer. The Company does not provide its services to
employees who are not sponsored by employers, since it is not a "retail" career
counseling firm, employment agency, or an executive search firm.
The Company's operations can be segregated into two lines of business: Right
Associates(R), specializing in career transition services, and People Tech
Consulting ("People Tech"), specializing in career development and
organizational consulting.
Right Associates(R)
Right Associates(R) currently provides career transition services to
approximately 4,500 client companies, including over 80% of the Fortune 500. In
the previous two year period, approximately 500,000 individuals have been
assisted by Right Associates'(R) consultants during their career transition.
Right Associates'(R) services can be separated into two principal categories -
Individual Outplacement Services and Group Outplacement Services.
Individual Outplacement Services
The Company's individual outplacement services for the employer includes advice
on conducting the termination interview, terms of severance pay and other
termination benefits and identification of termination-related issues for which
the employer may wish to seek legal counsel. Services by the Company to
terminated employees include assistance in handling the initial difficulties of
termination; identifying continuing career goals and options and in planning an
alternative career; aiding in developing skills for the search for a new job,
such as resume writing, identifying and researching types of potential
employers, preparing and rehearsing for interviews; continuing counseling and
motivation throughout the job search campaign; assessing new employment offers
and methods of accepting such offers (including consideration of relocation
issues) and, where appropriate, consulting with the employee's spouse regarding
the stresses of the employment search and the positive role the spouse may play
in all aspects of the new job search, as well as assisting with financial
planning and health maintenance.
1
Approximately 76% of the career transition revenue generated by Company offices
during 1996 was for individual outplacement services.
Group Outplacement Services
The remaining significant portion of the Company's career transition business
consists of providing consulting in group contexts for companies making group
reductions in their work force due to reorganization, restructuring or other
reasons. The Company's group programs have, as their core, seminars for
generally up to 12 employees per group, in sessions extending over one to five
days. Often, the group seminar is preceded or followed by individual consulting.
These group programs are designed for each employer-client and are generally
competitively priced and bid, based on the number of consulting hours, number of
employees involved and type of programs to be provided. The group program may
also be used for "voluntary separation" due to reorganizations or other reasons.
Approximately 24% of the career transition revenue generated by Company offices
during 1996 was for group outplacement services.
Other
The Company is also providing a combination of individual and group career
transition services through a cost reimbursement plus fixed fee contract between
the Company and Resource Consultants Inc. ("RCI") for the United States Army.
Through this contract, counseling services are provided to United States Army
soldiers, civilians and their families who are leaving active duty as a result
of planned force reductions. These services are provided through 31 Job
Assistance Centers in the United States and abroad, which are staffed by
employees of a government subsidiary of the Company created for this contract,
and RCI, a Vienna, Virginia based consulting firm.
The contract contains annual renewal options for RCI and the United States Army
to extend through May 1997. All renewal options have been exercised and the
Company's anticipated share of the cost plus fixed fee contract revenue will
approximate $4,800,000 over the eighteen month period through May 1997. The
Company is currently in the process of negotiating an extension of the above
contract for periods subsequent to May 1997. The Company remains optimistic that
an extension will be granted. Revenues from the contract are included in both
the individual outplacement and group outplacement services described above.
The career transition business in total, including individual outplacement
services, group outplacement services and the contract with RCI, provided
approximately 93% of total Company office revenue for the year ended December
31, 1996.
2
People Tech Consulting
During 1996, the Company acquired the outstanding stock of People Tech
Consulting, Inc., a Canadian corporation. See the "Acquisitions" section of this
document. With the addition of People Tech's organizational consulting business
to the Company's previously established career management consulting practice,
the Company is strongly committed to developing and broadening this line of
business.
The Company provides career management consulting services which assist
employers and their employees in identifying and improving areas of job
performance, refining communication skills and improving employee productivity.
The Company also provides organizational consulting to corporations on
restructuring and realignment issues, offering customized services to help
manage all aspects of organizational change, including planning, selection,
retention strategy and communication issues. Other services are designed to
enhance the abilities of executives and managers to evaluate employees'
performance in making employment and promotion decisions.
The consulting business in total, including career management consulting and
organizational consulting, provided approximately 7% of total Company office
revenue for the year ended December 31, 1996. The Company intends to focus on
and expand this line of business in future years.
Fees for Services Provided by Company Offices
For individual career transition services provided by Company offices, the
Company normally receives a negotiated fee, depending upon the services
provided, which generally ranges between 10% and 20% of the terminated
employee's annual compensation. Fees for group career transition programs and
consulting projects are individually billed depending upon the type of services
the employer requests, the amount of consulting time required and the number of
employees involved.
Organization and Distribution of Company Offices and Affiliates
The current network of Company offices and Affiliates is outlined in the
Company's 1996 Annual Report to Shareholders.
Management of Company Offices and Affiliates
The Company believes that a decentralized approach of organizing its business
into geographic regions, which may be comprised of more than one Company office
or Affiliate office, allows the Company to be responsive to individual clients,
as well as allowing it to better serve its local and regional markets. Each
region is responsible for the marketing and sales of career transition and
consulting activities in its assigned area. Through the Company's Affiliate
network arrangement, the Company's clients have access to the entire Company
network of Company offices and Affiliates. See "Business - Affiliate
Arrangements."
3
Affiliate Arrangements
The Basic Affiliate Relationship
The Company has previously entered into agreements ("Affiliate Agreements") with
Affiliates, which are independent franchisee businesses, to provide the
Company's career transition and consulting services within the geographic area
defined in each Affiliate Agreement (the "Exclusive Territory"). Affiliates
render such services exclusively under the Company's registered service marks,
including "Right Associates(R)". Under the Affiliate Agreements, the Company
assists the Affiliates in various ways in the provision of career transition and
consulting services. See "Business - Affiliate Arrangements - Company Training
of Affiliates" and "Affiliates' Payment of Fees and Royalties to Company."
Under the Affiliate Agreements, the Company is precluded from establishing or
maintaining Company offices or otherwise soliciting customers, conducting
consulting business or licensing other Affiliates to operate in the Exclusive
Territory of a particular Affiliate. In turn, the Affiliate is prohibited from
establishing or maintaining its own offices or "satellites" soliciting
customers or engaging in career transition or consulting services within
Exclusive Territories which the Company currently or in the future grants or
assigns to Company offices.
There is not a formal Affiliate organization; however, a Management Advisory
Committee (the "Advisory Committee") exists which considers matters of general
concern to the Affiliates. The Advisory Committee is comprised of four members
appointed by the Company's management and three members elected by the
Affiliates for a three year term.
4
Company Training of Affiliates
The Affiliate Agreement requires the Company to train the Affiliate and its
employees in marketing and delivery of career transition and consulting
services. The Company is responsible for overall guidance and has established
Company standards and policies relating to its services. The Company provides
proprietary sales and consulting materials, administrative forms (including,
among other things, guidelines for consulting client-employers and terminated
employees), materials used in conjunction with marketing the services and
administration of its office and materials relating to the Company's system of
monitoring the progress of terminated employees. The Company provides guidance,
if requested by the Affiliates, with respect to the hiring of the Affiliate's
employees, the use and development of sales programs and general issues of
office operation and sales. The cost of such optional assistance by the Company
is paid for by the Affiliate, unless the Company otherwise agrees not to charge
for these services. The Company also provides marketing support, public
relations, advertising and promotional support, consisting of national and
international media efforts directed by an in-house marketing staff.
Affiliates' Payment of Fees and Royalties to Company
In consideration of the Company providing services, training and licensing the
use of its federally-registered service mark, the Affiliate generally pays to
the Company the following fees (which are not in the order of their contribution
to Company revenue): (1) a one-time non-refundable initial Affiliate (franchise)
fee; (2) a 10% royalty on the Affiliate's total gross receipts; (3) a fee for
services rendered in assisting the Affiliate in selling the Company's programs
to the employer-client; and (4) a fee for services rendered in providing career
transition services to terminated employees on certain contracts and accounts
sold and managed by Affiliates.
Term, Supervision and Termination of Affiliate Agreements
The Company's Affiliate Agreements provide for an initial term of three or five
years and are automatically renewed from year to year unless either party gives
the other notice of non-renewal (which may be without cause) at least 120 days
prior to the expiration of the then current term (unless a longer notice period
is required by local franchise laws).
During the term of the Affiliate Agreement, the Company may terminate the
arrangement, subject to local franchise laws and cure periods specified in the
Affiliate Agreements, for a variety of reasons, including a material breach of
such Agreement by the Affiliate, the failure by the Affiliate to achieve at
least 75% of the minimum volume of business set forth in its Affiliate Agreement
in any year of the Affiliate's operation or the Affiliate's failure to otherwise
conduct normal business operations diligently and regularly or to use its best
efforts to sell and provide career transition consulting services, or the
Affiliate's failure to adhere to the written service standards established by
the Company in consultation with the Advisory Committee. The Company may also
terminate an Affiliate Agreement due to the death, disability or retirement of
key Affiliate personnel or of principal stockholders of an Affiliate.
5
The Company has offered and implemented with substantially all of its existing
North American Affiliates an addendum to their respective Affiliate Agreements.
Under the terms of the addendum, the Company relinquishes its right to give
notice of non-renewal of the Affiliate's Affiliate Agreement upon the expiration
of its initial or one of its renewal terms. However, the Advisory Committee is
empowered to terminate, upon specified grounds, the Affiliate Agreement of
Affiliates who sign the addendum. In addition, the addendum permits the Company
to terminate the Affiliate Agreement of any Affiliate if certain trends in the
volume of business generated by the Affiliate deviate by more than specified
amounts below the comparably defined trends for all North American offices of
the Company and its Affiliates measured as a group.
The Company has agreed with substantially all of its existing North American
Affiliates that in the event the Company offers to any other North American
Affiliate any provision in the Affiliate Agreement with such other North
American Affiliate which is more beneficial to such other North American
Affiliate than the terms of the existing Affiliate Agreements with the rest of
the current North American Affiliates, then the new provision will be offered to
all existing North American Affiliates, except for provisions added or deleted
to (a) comply with a particular state or provincial law or regulation; (b)
maintain in force prior agreements with specific Affiliates; or (c) address the
unique nature or character of other businesses or activities engaged in by a
specific Affiliate.
Affiliates' Right of First Refusal
Pursuant to the Affiliate Agreements, the Affiliates may have a right of first
refusal to purchase shares of the Company's Common Stock in case of certain
proposed sales or exchanges of the Company's Common Stock. Under the terms of
the Affiliate Agreements, in the event that 51% or more of the Common Stock of
the Company is proposed to be sold by one or more stockholders of the Company in
a single transaction (exclusive of a corporate merger or consolidation in which
the Company is not the surviving party and transactions in which the common
stock of another company is exchanged for the Common Stock of the Company), the
Affiliates may have a right of first refusal to acquire the Common Stock of the
Company being sold under the same terms as the proposed transaction.
6
Acquisitions
During 1996, the Company completed four separate acquisitions consisting of two
career transition firms and two organizational consulting firms. See Note B to
the Consolidated Financial Statements. The Company acquired the outstanding
stock of People Tech, a consulting company headquartered in Toronto, Canada. The
other three transactions involved the purchase of the business, assets and/or
the outstanding stock of three other smaller firms located in the United States
and Canada. The total purchase price for these acquisitions aggregated
approximately $3,412,000, including costs of acquisition. The acquisitions were
consummated through combinations of cash and non-cash considerations, including
the assumption of incomplete consulting contracts.
During the period 1991 through 1995, the Company completed eleven separate
acquisitions of career transition and consulting firms for combinations of cash,
future defined incentives, incomplete career transition contracts and other
considerations. The total purchase price for these transactions aggregated
approximately $20,692,000, including costs of acquisition.
Competition
The Company competes against other providers of career transition services and
other human resource consulting services. Based on revenues for 1996, the
Company became the largest provider of career management services worldwide,
surpassing Drake Beam Morin, Inc., a subsidiary of Harcourt General, Inc. The
Company believes that the principal methods of competition in its industry are
quality of service, professional staff and price. On a regional basis, the
Company competes against local career transition and other human resource
consulting firms that are well-established in a particular region. The Company
believes that the cost for its services are competitive, based on the quality
and value of services offered. The Company may also face competition from future
expansion by other entities into the career transition and other human resource
consulting businesses.
Government Regulation
Certain aspects of the on-going relationship between the Company and the
Affiliates are subject to the franchise regulations of the Federal Trade
Commission (the "FTC") and to various franchise laws enacted by certain of the
states in which the Company's Affiliates are located. The provisions and scope
of the state laws vary. In some states, the Company is required to register the
offering of the Affiliate Agreements with regulatory agencies and to license
Company personnel who are directly involved in offering the Affiliate Agreement
to prospective Affiliates. Some states also regulate certain terms of the
Affiliate Agreement, primarily the terms upon which the Company can terminate an
Affiliate Agreement for cause or can decline to renew an Affiliate Agreement
upon expiration. Other states' laws impose on the Company general duties of fair
dealing with the Affiliates and prohibit unfair discrimination among or against
Affiliates. As a result of such laws regulating relationships with the
Affiliates in certain states, the Company has less flexibility than it would
otherwise have in structuring such relationships.
7
Financial Information Relating to Foreign Operations
See the Company's Consolidated Financial Statements, Note J, "Geographic
Segments", contained in the Company's 1996 Annual Report to Shareholders, for
information regarding the Company's foreign operations. This information is
responsive to Item 101(d) of Regulation S-K and is incorporated by reference
herein.
Employees
At February 28, 1997, the Company and its subsidiaries employed 806 persons
full-time, including 16 in senior management, 86 in other managerial and
professional roles, 378 in field operations as consultants, and 326 in clerical
capacities. In addition, the Company employed 272 persons on a part-time basis
as professional consultants. Consultants are generally required to have prior
executive or management experience and are provided Company training. None of
the Company's employees are subject to collective bargaining agreements. In
general, the Company believes that its employee relations are good.
Item 2: Properties
The Company leases approximately 22,618 square feet for its corporate
headquarters in the 1818 Market Street Building in Philadelphia, Pennsylvania.
The initial term of the lease expires December 15, 2005 and is at an annual base
rent of approximately $509,000, subject to annual operating expense escalation
clauses. The Company has the option to extend the lease for an additional term
of five years on the same terms and conditions, except that the rent will be
changed to the then current market rate for the building.
All office space for Company offices is leased. The leases typically have three
to five year terms and some have renewal options. The Company leases
approximately 563,000 square feet for all Company offices, including the
corporate headquarters, at an aggregate base yearly rental of approximately
$13,000,000. Most of these leases are also subject to annual operating expense
escalation clauses. The Company believes its facilities are adequate to provide
services to its clients.
Item 3: Legal Proceedings
The Company is not a party to, nor is its property the subject of, any material
pending legal proceedings.
Item 4: Submission of Matters to a Vote of Security Holders
Not applicable.
8
Executive Officers of the Registrant
Each of the following executive officers of the Company has been appointed by
the Board of Directors and served during 1996 in the following roles at the
discretion of the Board. All of the executive officers are expected to devote
their full business time to the Company's affairs.
Name Age Position(s)
Richard J. Pinola 51 Chairman of the Board of Directors and
Chief Executive Officer
Frank P. Louchheim 73 Founding Chairman and Director
Joseph T. Smith 61 President, Chief Operating
Officer and Director
G. Lee Bohs 37 Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
John J. Gavin 39 Executive Vice President of Corporate
Marketing
Manville D. Smith 58 Executive Vice President of Business
Development
Larry A. Evans 54 Executive Vice President and Director
Nancy N. Geffner 57 New York Group EVP and Director
Dr. Marti D. Smye 46 President of People Tech Consulting, Inc.
and Director
Peter J. Doris 50 Southeast United States Group EVP
David S. Orr 62 North Central United States Group EVP
Warren R. Radtke 61 Northeast United States Group EVP
Gary L. Saenger 52 Southwest United States Group EVP
Terry W. Szwec 46 Canadian Group EVP
George L. Whitwell 56 Northwest and South Central United States
Group EVP
Gilbert A. Wetzel 63 Mid-Atlantic United States Group EVP
9
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 in 1988, which
positions he held until his resignation in September 1991. Mr. Pinola was a
financial consultant to various organizations from September 1991 until July
1992, at which time he was appointed President and Chief Executive Officer of
the Company. Effective January 1, 1994, Mr. Pinola was appointed Chairman of the
Board of Directors and continues as Chief Executive Officer. Mr. Pinola also
serves as a director of K-Tron International, a publicly held company.
Mr. Louchheim was one of the founders of the Company and from November 1980
until September 1987, Mr. Louchheim served as President, Chief Executive Officer
and Chairman of the Board of Directors of the Company. From January 1992 to
December 31, 1993, he served as the full-time Chairman of the Board of
Directors. Effective January 1, 1994, Mr. Louchheim was appointed Founding
Chairman and continues as a Director.
Mr. Joseph Smith joined the Penn Mutual Life Insurance Company in 1963. In 1976,
he was promoted to Vice President of Administration and Human Resources, which
position he held until his resignation in 1980. From 1981 to 1984, Mr. Smith
worked as an independent consultant offering a range of consulting services to
businesses. He joined the Company as a Senior Consultant in Professional
Services in August 1984 and, from August 1988 until September 1992 held the
position of Regional Managing Principal of the Company's Philadelphia office.
Mr. Smith was elected as a Director in May 1991. From September 1992 through
December 1993, Mr. Smith served as the Company's Chief Operating Officer.
Effective January 1, 1994, Mr. Smith was appointed President and continues as
Chief Operating Officer.
From June 1981 to January 1987, Mr. Bohs was employed at the regional Certified
Public Accounting firm of Asher & Company, Ltd., initially as a staff
accountant, and then as an accounting and auditing manager. He joined the
Company as Manager of Financial Reporting in January 1987, and was elected
Treasurer in December 1987 and Vice President, Finance, effective January 1989.
From March 1991 until December 1995, Mr. Bohs served as Senior Vice President
and Chief Financial Officer. He was appointed Secretary by the Board of
Directors in May 1995. Effective January 1996, he was promoted to Executive Vice
President and continues to serve as Chief Financial Officer.
Mr. Gavin was employed at Arthur Andersen LLP in Philadelphia for 18 years in
which he served as the partner in charge of the manufacturing/distribution
industries. Mr. Gavin joined the Company in December 1996 as Executive Vice
President of Corporate Marketing. In this capacity, Mr. Gavin is responsible for
the overall marketing strategy and business development activities for the
Company's worldwide locations. Mr. Gavin serves as the Chairman of Temple
University's Accounting Advisory Board and is a member of the Board of Trustees
of the Eagle's Fly for Leukemia Foundation.
10
Mr. Manville Smith worked for the 3M Company where he had a twenty year career
in a variety of positions, including Managing Director for several international
subsidiaries and operations. Subsequently, Mr. Smith went to work for the Parker
Pen Company where he served as Vice President of Strategic Planning from July
1980 to April 1981. In April 1981, Mr. Smith was promoted to President of the
Parker Pen Company with worldwide responsibility for this manufacturer of
quality writing instruments, where he served until July 1984. From July 1984
until July 1988, Mr. Smith provided strategic planning consulting to various
organizations. In 1988, Mr. Smith joined the operations of the Company's Florida
Affiliate as Executive Director, where he provided consulting services. In July
1994, Mr. Smith joined the Company as Executive Vice President, Business
Development, responsible for strategic business development on a worldwide basis
and has served in this capacity through 1996.
Prior to May 1978, Mr. Evans was professionally involved in the international
finance and venture capital industries. From May 1978 to November 1980, Mr.
Evans was employed as an independent outplacement consultant for Bernard Haldane
Associates, Inc., reporting to Mr. Louchheim. Since November 1980, Mr. Evans has
served as Executive Vice President and a Director of the Company. From January
1990 until May 1995, Mr. Evans served as Regional Managing Principal of several
Company offices. In May 1995, Mr. Evans joined the Company's corporate office
where he works together with the Company's regional offices in marketing to
major national and international accounts.
From August 1979 to February 1981, Ms. Geffner was a Career Consultant with
Bernard Haldane Associates, Inc. Since March 1981, Ms. Geffner has served as
Regional Managing Principal of the Company's New York City office. In December
1983, Ms. Geffner was named an Executive Vice President of the Company. In 1993,
Ms. Geffner took on the additional responsibilities of directing the Company's
Key Executive Service program, the consulting program for senior executives,
throughout the United States and Canada. Effective January 1996, Ms. Geffner
resigned from this role and was appointed Group Executive Vice President for the
Greater New York Region.
From 1981 to 1989, Dr. Smye was a partner of the industrial psychology firm,
Jackson Smith. From this company, in 1989 she founded the change leadership
consulting firm, People Tech Consulting, Inc. ("People Tech"). People Tech was
acquired by the Company in April 1996. In addition, she is the author of two
books titled "You Don't Change a Company by Memo: The Simple Truths About
Managing Change" and "Corporate Abuse: How "Lean and Mean" Robs People and
Profits." Dr. Smye also serves on various boards of both private companies and
community associations, including the Public Policy Forum and the Harvard
Business School Club of Toronto.
Prior to joining Right Associates(R), Mr. Doris was Senior Vice President of
Human Resources for a large New York City based bank. From 1986 to 1990, Mr.
Doris was Senior Vice President, Sales and Operations of the Company. Effective
January 1991, he became a Group EVP for the Southeast region of the United
States in which capacity he served during 1996.
11
Prior to 1990, Mr. Orr had a thirty one year career in the telecommunications
industry in which he was a senior officer for Indiana Bell, Vice President -
Regional Business Services for AT&T, Vice President - Marketing Planning with
Ameritech Services and, finally, President of Ameritech Communications. In 1990,
Mr. Orr joined Jannotta, Bray & Associates as an Executive Program Consultant, a
position he held until it was acquired by the Company in September 1994.
Subsequent to the acquisition, Mr. Orr served as Regional Managing Principal for
the Chicago Region of Right/Jannotta Bray until February 1995 when he was
promoted to Group EVP in which capacity he is currently responsible for the
North Central region of the United States.
From 1965 to 1980, Mr. Radtke was the owner of an independent human resource
consulting firm specializing in executive outplacement, performance appraisal
systems, career management, organizational development and management
assessments. He joined the Right Associates(R) network in 1980 as the Regional
Managing Principal of the Boston, Massachusetts Affiliate office. Mr. Radtke
joined the Company in December 1992 and through December 31, 1993 served as the
Regional Managing Principal of the Company's Boston region. Effective January 1,
1994, Mr. Radtke became Group EVP for the Northeast region of the United States
and continued in this capacity through 1996.
Mr. Saenger spent over ten years with American Hospital Supply Corporation,
where he served in various human resources functions at the senior management
level. From 1982 to 1985, Mr. Saenger was with Transaction Technology
Incorporated, a subsidiary to CitiCorp, where he managed the human resources
function. From 1985 to 1991, Mr. Saenger was Senior Vice President of Security
Pacific Automation Company, Inc., a subsidiary of Security Pacific Corporation,
where he had full responsibility for human resource policy and implementation.
In 1991, Mr. Saenger joined the Company as the Regional Managing Principal of
the Company's Los Angeles region. Effective February 1995, Mr. Saenger became
Group EVP for the Southwest region of the United States. Mr. Saenger has an M.A.
in Personnel from Idaho State University.
Mr. Szwec was employed as Product Manager for Bristol Myers Canada, Ltd. from
1969 until 1970, when he left to become Manager of Training and Development for
de Havilland Aircraft, Ltd. In 1976, Mr. Szwec became Director of Human
Resources for Control Data Canada, Ltd., where he stayed until 1986 when he
began his own consulting practice specializing in executive training and
development, human resources effectiveness and career planning. Mr. Szwec joined
the Right Associates(R) network in 1987 as then Regional Managing Principal of
the Toronto Affiliate office. Mr. Szwec joined the Company in November 1990 as
Regional Managing Principal of the Company's Toronto region. Effective January
1, 1994, Mr. Szwec became Group EVP for the Canadian operations of the Company.
From July 1968 to February 1983, Mr. Whitwell held various management positions,
including Director of Outplacement for Fox-Morris Associates, Inc., a
Philadelphia, Pennsylvania-based personnel consulting firm. From February 1983
to June 1986, Mr. Whitwell served as Senior Vice President, Field Operations, of
the Company. Mr. Whitwell was a Director of the Company from March 1985 to May
1991 and from June 1986 to September 1987 was Executive Vice President, Field
Operations of the Company. For the period October 1987 through December 1990,
Mr. Whitwell served as the Regional Managing Principal of the Company's
Parsippany, New Jersey office. Effective January 1991, he became a Group EVP in
which capacity he was responsible for the Northwest and South Central regions of
the United States through 1996. Mr. Whitwell also serves as the Regional
Managing Principal of the Company's San Francisco region.
12
Prior to joining Right Associates in 1994, Mr. Wetzel was associated with the
Bell System serving as Chairman and Chief Executive Officer of Bell of
Pennsylvania and Diamond State Telephone. Effective December 1996, Mr. Wetzel
became the Group EVP for the Eastern region of the United States in which
capacity he still serves.
Each executive officer has been elected for a term expiring with the first Board
of Directors' meeting held after the next annual meeting of shareholders.
PART II
Item 5: Market for Registrant's Common Equity and Related Stockholder Matters
The information required by this Item is incorporated by reference to the
section titled "Common Stock Data" in the Company's 1996 Annual Report to
Shareholders, the incorporated portions of which are included as Exhibit 13 to
this Report.
Item 6: Selected Financial Data
The information required by this Item is incorporated by reference to the
section titled "Selected Financial Data" in the Company's 1996 Annual Report to
Shareholders, the incorporated portions of which are included as Exhibit 13 to
this Report.
Item 7: Management's Discussion and Analysis of Financial Condition and Results
of Operations
The information required by this Item is incorporated by reference to the
section titled "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Company's 1996 Annual Report to Shareholders, the
incorporated portions of which are included as Exhibit 13 to this Report.
Item 8: Financial Statements and Supplementary Data
The information required by this Item is incorporated by reference to the
sections titled "Consolidated Balance Sheets", "Consolidated Statements of
Income", "Consolidated Statements of Stockholders' Equity", "Consolidated
Statements of Cash Flows" and "Notes to Consolidated Financial Statements" in
the Company's 1996 Annual Report to Shareholders, the incorporated portions of
which are included as Exhibit 13 to this Report.
Item 9: Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
13
PART III
The information called for by Items 10 through 13 of Form 10-K (except for the
information set forth on pages 9-13 with respect to Executive Officers of the
Registrant) is hereby incorporated by reference to the information set forth
under the captions "Election of Directors", "Executive Compensation", "Voting
Securities, Voting Rights and Security Ownership" and "Ratification of
Appointment of Independent Public Accountants" contained in the Company's
definitive Proxy Statement with respect to its 1997 Annual Meeting of
Shareholders, to be filed with the Securities and Exchange Commission within 120
days following the end of the Company's fiscal year.
PART IV
Item 14: Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) The following documents are filed as a part of this Report:
1. Financial statements: The following is a list of financial
statements which have been incorporated by reference from the
Company's 1996 Annual Report to Shareholders, as set forth in
Item 8:
Report of Arthur Andersen LLP, Independent Public Accountants
Consolidated Balance Sheets as of December 31, 1996 and 1995
Consolidated Statements of Income for each of the three years in
the period ended December 31, 1996
Consolidated Statements of Stockholders' Equity for each of the
three years in the period ended December 31, 1996
Consolidated Statements of Cash Flows for each of the three years
in the period ended December 31, 1996
Notes to Consolidated Financial Statements
2. Financial statement schedule: The following financial
statement schedule for the Company is filed as part of this
Report and should be read in conjunction with the Consolidated
Financial Statements of the Company.
Report of Arthur Andersen LLP, Independent Public Accountants
Schedule II - Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable,
not required, or because the required information is contained in
the Company's consolidated financial statements or the notes
thereto.
14
3. Exhibits: The Exhibits listed on the accompanying Index to
Exhibits are filed as part of, or incorporated by reference into,
this Report, under Item 601 of Regulation S-K:
INDEX TO EXHIBITS
Exhibit No.
3.1 Company's Articles of Incorporation, together with all amendments
thereto, (incorporated by reference to the Company's Form S-1 (File
No. 33-9034), filed November 12, 1986).
3.2 Company's By-Laws (incorporated by reference to the Company's report
on Form 10-K for the fiscal year ended December 31, 1988, filed March
30, 1989).
10.01 Agreement among Right Management Consultants, Inc. and Right Human
Resources Consultants, Inc., dated December 26, 1984 (incorporated by
reference to the Company's Form S-1 (File No. 33-9034), filed
September 25, 1986).
10.02 Agreement among Right Management Consultants, Inc. and Midwest
Reemployment Consultants, Inc. dated February 15, 1985 (incorporated
by reference to the Company's Form S-1 (File No. 33-9034), filed
September 25, 1986).
10.03 Agreement among Right Management Consultants, Inc. and Human
Resources, Inc., dated December 26, 1984 (incorporated by reference to
the Company's Form S-1 (File No. 33-9034), filed September 25, 1986).
10.04 Non-Qualified Stock Option Plan, adopted, as of April 30, 1984
(incorporated by reference to the Company's Form S-1 (File No.
33-9034), filed September 25, 1986).*
10.05 1986 Shareholders' Agreement (incorporated by reference to the
Company's Form S-1 (File No. 33-9034), filed November 12, 1986).
10.06 401(k) Savings Plan (incorporated by reference to the Company's Form
S-1 (File No. 33-9034), filed September 25, 1986). *
10.07 Amendment to Employment Agreement between Right Management
Consultants, Inc. and Frank P. Louchheim, dated January 1, 1992
(incorporated by reference to the Company's report on Form 10-K for
the fiscal year ended December 31, 1991, filed March 30, 1992). *
10.08 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). *
10.09 Further Amendment to Amended and Restated Employment Agreement between
Right Management Consultants, Inc. and Frank P. Louchheim dated
February 16, 1993. *
10.10 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). *
*These documents are compensatory plans or agreements required to be filed as
Exhibits.
15
10.11 Purchase Agreement dated September 1, 1994 by and between Registrant
and Jannotta, Bray and Associates, Inc. (Schedules omitted)
(incorporated by reference to the Company's Form 8-K, dated September
1, 1994).
10.12 Lease Agreement between Metropolitan Life Insurance Company and Right
Management Consultants, Inc., dated October 18, 1983 and amended on
August 12, 1986; November 6, 1987; and July 15, 1991.
10.13 Purchase Agreement dated February 15, 1995 by and between Registrant
and Worth Associates, Inc. and Robert A. Fish (incorporated by
reference to the Company's report on Form 10-Q for the quarter ended
March 15, 1995, filed May 15, 1995).
10.14 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).*
10.15 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).*
10.16 Employment Agreement dated December 12, 1995 by and between Right
Management Consultants, Inc. and Richard J. Pinola. *
10.17 Employment Agreement and Supplemental Deferred Compensation Plan dated
December 12, 1995 by and between Right Management Consultants, Inc.
and Joseph T. Smith. *
10.18 Purchase Agreement between PTR Right Acquisition Co. Inc. and Marti
Smye, Margaret Smith, Richard Zuliani, Margaret Smith Family Trust,
Richard Zuliani Family Trust and People Tech Consulting, Inc. dated
April 10, 1996 (incorporated by reference to the Company's report on
Form 10-Q for the quarter ended March 31, 1996, filed May 14, 1996)
10.19 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).*
10.20 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).*
10.21 Credit Agreement between Right Management Consultants, Inc. and its
wholly owned subsidiaries and PNC Bank, National Association dated
December 20, 1996 (incorporated by reference to the Company's Form
8-K, dated January 17, 1997)
10.22 Employment Agreement dated April 10, 1996 by and between Right
Management Consultants, Inc. and Marti Smye. *
11. Consolidated Earnings per Share Calculations.
13. Portions of the Company's 1996 Annual Report to Shareholders expressly
incorporated by reference.
21. Subsidiaries of the Company.
23. Consent of Arthur Andersen LLP, Independent Public Accountants
27. Financial Data Schedule. +
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
fiscal quarter ended December 31, 1996.
*These documents are compensatory plans or agreements required to be filed as
Exhibits.
+ Filed in electronic form only.
16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
RIGHT MANAGEMENT CONSULTANTS, INC.
By: /S/ RICHARD J. PINOLA
---------------------
Richard J. Pinola,
Chairman of the Board and
Chief Executive Officer
Dated: MARCH 27, 1997
17
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Signatures Title Date
/S/ RICHARD J. PINOLA Chairman of the Board
- - --------------------- and Chief Executive Officer MARCH 27, 1997
Richard J. Pinola
/S/ G. LEE BOHS Chief Financial
- - --------------------- Officer and Principal
G. Lee Bohs Accounting Officer MARCH 27, 1997
/S/ FRANK P. LOUCHHEIM Director MARCH 27, 1997
- - ---------------------
Frank P. Louchheim
/S/ JOSEPH T. SMITH Director MARCH 27, 1997
- - ---------------------
Joseph T. Smith
/S/ LARRY A. EVANS Director MARCH 27, 1997
- - ---------------------
Larry A. Evans
/S/ JOHN R. BOURBEAU Director MARCH 27, 1997
- - ---------------------
John R. Bourbeau
/S/ RAYMOND B. LANGTON Director MARCH 27, 1997
- - ---------------------
Raymond B. Langton
/S/ REBECCA J. MADDOX Director MARCH 27, 1997
- - ---------------------
Rebecca J. Maddox
/S/ CATHERINE Y. SELLECK Director MARCH 27, 1997
- - ---------------------
Catherine Y. Selleck
/S/ DR. MARTI D. SMYE Director MARCH 27, 1997
- - ---------------------
Dr. Marti D. Smye
18
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Right Management Consultants, Inc.:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements of Right Management Consultants, Inc. and
subsidiaries included in this Form 10-K and have issued our report thereon dated
January 31, 1997. Our audit was made for the purpose of forming an opinion on
those financial statements taken as a whole. The financial statement schedule
listed in the index above 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 auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
_______________________
Philadelphia, Pennsylvania
January 31, 1997
Right Management Consultants, Inc.
Schedule II - Valuation and Qualifying Accounts and Reserves
For the Years 1996, 1995 and 1994
Additions
Balance at Charged to Charged to Balance at
Beginning of Costs and Other End of
Description Year Expenses Accounts Deductions Year
1996:
Allowance for doubtful accounts $754,000 $28,000 -- $230,000 $552,000
======== ======= ======== ========
Deferred income tax asset valuation
reserve -- $192,000 -- -- $192,000
======== ========
1995:
Allowance for doubtful accounts $651,000 $400,000 -- $297,000 $754,000
======== ======== ======== ========
Deferred income tax asset valuation
reserve $391,000 -- -- $391,000 (1) --
======== ========
1994:
Allowance for doubtful accounts $794,000 $75,000 -- $218,000 $651,000
======== ======= ======== ========
Deferred income tax asset valuation
reserve $583,000 -- -- $192,000 (1) $391,000
======== ======== ========
(1) Reduction due to the utilization and expiration of certain foreign net
operating losses.
Exhibit Index
Exhibit No. Description
10.22 Employment Agreement dated April 10, 1996 by and between
Right Management Consultants, Inc. and Marti Smye
11 Consolidated Earnings per Share Calculations
13 The Company's 1996 Annual Report to Shareholders, portions
of which are incorporated by reference
21 Subsidiaries of the Company
23 Consent of Arthur Andersen LLP
27 Financial Data Schedule +
+ Filed in electronic form only.