<PAGE>
Filed pursuant to
Rule 424(b)(3)
Registration No. 333-63499
TMP WORLDWIDE INC.
1,853,868 Shares of Common Stock
------------------------
This Prospectus relates to (A) the resale of 150,000 shares of Common Stock,
$.001 par value per share (the "Common Stock"), of TMP Worldwide Inc. ("TMP" or
the "Company") from time to time for the account of Gary Knisely ("Knisely") and
(B)(i) the resale of 44,839 shares of Common Stock from time to time for the
account of Pierre Aussure, (ii) the resale of 51,244 shares of Common Stock from
time to time for the account of Gerhard Bartels, (iii) the resale of 6,405
shares of Common Stock from time to time for the account of David Kenneth Bray,
(iv) the resale of 35,230 shares of Common Stock from time to time for the
account of The TASA Ltd. Self Administered Pension Plan F/B/O David Kenneth
Bray, (v) the resale of 9,608 shares of Common Stock from time to time for the
account of Charles Marie Brusselmans, (vi) the resale of 12,811 shares of Common
Stock from time to time for the account of Neil Campbell Callie, (vii) the
resale of 3,202 shares of Common Stock from time to time for the account of
Remtor Nominees Pty. Ltd. F/B/O Trevor Morton Clark, (viii) the resale of 9,608
shares of Common Stock from time to time for the account of Jo Carol Conover,
(ix) the resale of 64,056 shares of Common Stock from time to time for the
account of Manuel Gutierrez Cortines, (x) the resale of 32,028 shares of Common
Stock from time to time for the account of Edgar S.K. Dammroff, (xi) the resale
of 48,042 shares of Common Stock from time to time for the account of Victor
Carlos Dana, (xii) the resale of 38,433 shares of Common Stock from time to time
for the account of The TASA Ltd. Self Administered Pension Plan F/B/O Fiona Mary
Hilton Darby, (xiii) the resale of 51,244 shares of Common Stock from time to
time for the account of The DeKesel Family 1998 Trust, (xiv) the resale of
41,636 shares of Common Stock from time to time for the account of James P.
Demchak, (xv) the resale of 6,405 shares of Common Stock from time to time for
the account of Trevor M. Dunn, (xvi) the resale of 32,028 shares of Common Stock
from time to time for the account of Luis Escudero Ygartua, (xvii) the resale of
54,447 shares of Common Stock from time to time for the account of Joaquim
Espriu Malagelada, (xviii) the resale of 25,622 shares of Common Stock from time
to time for the account of Juan Manuel Farias Gutierrez, (xix) the resale of
41,636 shares of Common Stock from time to time for the account of The TASA Ltd.
Self Administered Pension Plan F/B/O Patrick John Michael Fearon, (xx) the
resale of 3,202 shares of Common Stock from time to time for the account of
Richard L. Fleming, (xxi) the resale of 44,839 shares of Common Stock from time
to time for the account of Michael Franzino, (xxii) the resale of 54,447 shares
of Common Stock from time to time for the account of Vito Gioia, (xxiii) the
resale of 41,636 shares of Common Stock from time to time for the account of
Duane R. Goar, (xxiv) the resale of 6,405 shares of Common Stock from time to
time for the account of Frans Jacob Gosses, (xxv) the resale of 9,608 shares of
Common Stock from time to time for the account of Christian A.F. Groh, (xxvi)
the resale of 9,608 shares of Common Stock from time to time for the account of
Luminoz Staff Superannuation Fund F/B/O R. Neil Hatherly, (xxvii) the resale of
19,216 shares of Common Stock from time to time for the account of RJ & SG
Ingersoll Superannuation Fund F/B/O Russel J. Ingersoll, (xxviii) the resale of
16,014 shares of Common Stock from time to time for the account of Phoenix
Holdings Pty. Ltd. F/B/O Russel J. Ingersoll, (xxix) the resale of 64,056 shares
of Common Stock from time to time for the account of Klaus Jacobs, (xxx) the
resale of 41,636 shares of Common Stock from time to time for the account of
Thomas R. Keller, (xxxi) the resale of 9,608 shares of Common Stock from time to
time for the account of Dag Einhard Kremer-Nehring, (xxxii) the resale of 6,405
shares of Common Stock from time to time for the account of Michel LeGuillou,
(xxxiii) the resale of 16,014 shares of Common Stock from time to time for the
account of Harvey D. Letcher, (xxxiv) the resale of 12,811 shares of Common
Stock from time to time for the account of Claudia K. Liebesny, (xxxv) the
resale of 35,230 shares of Common Stock from time to time for the account of
David W.H. Lowry, (xxxvi) the resale of 64,056 shares of Common Stock from time
to time for the account of Peter Magnet, (xxxvii) the resale of 9,608 shares of
Common Stock from time to time for the account of Bernhard Mahlo, (xxxviii) the
resale of 32,028 shares of Common Stock from time to time for the account of
Warren L. McGregor, (xxxix) the resale of 70,461 shares of Common Stock from
time to time for the account of John McLaughlin, (xl) the resale of 16,014
shares of Common Stock from time to time for the account of Massimo Misticoni,
(xli) the resale of 6,405 shares of Common Stock from time to time for the
account of Maria Elena Quijada Cordero, (xlii) the resale of 6,405 shares of
Common Stock from time to time for the account of Terteducon Pty. Ltd. F/B/O
Gregor A. Ramsey, (xliii) the resale of 76,867 shares of Common Stock from time
to time for the account of Reinhard Fritz Rijke, (xliv) the resale of 32,028
shares of Common Stock from time to time for the account of Herbert Schmaderer,
(xlv) the resale of 41,636 shares of Common Stock from time to time for the
account of The TASA Ltd. Self Administered Pension Plan F/B/O Andrew R.F.
Simpson, (xlvi) the resale of 64,056 shares of Common Stock from time to time
for the account of Michael T.D. Squires, (xlvii) the resale of 51,244 shares of
Common Stock from time to time for the account of Yarramay Pty Ltd., (xlviii)
the resale of 32,028 shares of Common Stock from time to time for the account of
Hans Uher, (xlix) the resale of 12,811 shares of Common Stock from time to time
for the account of Van Es Superannuation Fund, (l) the resale of 19,216 shares
of Common Stock from time to time for the account of Strathwood Unit Trust F/B/O
Alan R. Van Es, (li) the resale of 12,811 shares of Common Stock from time to
time for the account of Victoriano Vila Vilar, (lii) the resale of 9,608 shares
of Common Stock from time to time for the account of Robert Bruce Whaley, (liii)
the resale of 6,405 shares of Common Stock from time to time for the account of
Jeffery C. Wierichs, (liv) the resale of 57,650 shares of Common Stock from time
to time for the account of Gabriele D.E. Willner-Lange, (lv) the resale of
57,650 shares of Common Stock from time to time for the account of Andrea M.
Wine, (lvi) the resale of 16,014 shares of Common Stock from time to time for
the account of J. Herbert Wise, and (lvii) the resale of 9,608 shares of Common
Stock from time to time for the account of Heinz Henning Witt (collectively, the
"TASA Stockholders" and together with Knisely the "Selling Stockholders"). The
Common Stock offered hereby by Knisely was issued to Knisely by the Company on
May 6, 1998 pursuant to a private placement in connection with the acquisition
by the Company of all the outstanding capital stock of Johnson, Smith & Knisely,
Inc. The Common Stock offered hereby by the TASA Stockholders was issued to the
TASA Stockholders by the Company on August 31, 1998 pursuant to a private
placement in connection with the acquisition by the Company of all the
outstanding capital stock of TASA Holding AG. See "Recent Developments." The
Company will not receive any of the proceeds from the sale of the Common Stock
by the Selling Stockholders.
(CONTINUED ON NEXT PAGE)
------------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 10
FOR A DISCUSSION OF CERTAIN INFORMATION THAT SHOULD BE CONSIDERED
BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is January 19, 1999
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)
The distribution of the Common Stock by the Selling Stockholders (and their
respective donees and pledgees) may be effected from time to time in one or more
transactions (which may involve block transactions) in the over-the-counter
market (including the Nasdaq National Market) or any exchange on which the
Common Stock may then be listed, in negotiated transactions, through the writing
of options on shares (whether such options are listed on an options exchange or
otherwise), or a combination of such methods of sale, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Stockholders (and their respective
donees and pledgees) may effect such transactions by selling shares to or
through broker-dealers, and such broker-dealers may receive compensation in the
form of underwriting discounts, concessions or commissions from the Selling
Stockholders and/or purchasers of shares for whom they may act as agent (which
compensation may be in excess of customary commissions). The Selling
Stockholders may also sell the shares of Common Stock pursuant to Rule 144
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
or may pledge shares as collateral for margin accounts and such shares could be
resold pursuant to the terms of such accounts. The Selling Stockholders and any
broker-dealers that act in connection with the sale of Common Stock might be
deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act and any commissions received by them and any profit on the resale
of the shares might be deemed to be underwriting discounts or commissions under
the Securities Act. The Selling Stockholders may agree to indemnify any agent,
dealer or broker-dealer that participates in transactions involving sales of the
Common Stock against certain liabilities, including liabilities arising under
the Securities Act.
The Common Stock trades on the Nasdaq National Market under the symbol
"TWPW." On January 8, 1999, the closing sale price of the Common Stock was
$41.00 per share.
All expenses of the registration of securities covered by this Prospectus
are to be borne by the Company, except that the Selling Stockholders will pay
underwriting discounts, selling commissions, and fees and the expenses, if any,
of counsel or other advisers to the Selling Stockholders.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS OR A SUPPLEMENT TO THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY OTHER PERSON. NEITHER THIS PROSPECTUS NOR ANY
SUPPLEMENT TO THIS PROSPECTUS CONSTITUTES AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES
OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN
ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS OR A SUPPLEMENT TO THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO ITS DATE.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Available Information..................................................................................... 3
Incorporation of Certain Documents by Reference........................................................... 4
The Company............................................................................................... 6
Recent Developments....................................................................................... 9
Risk Factors.............................................................................................. 10
Unaudited Pro Forma Condensed Combined Financial Information.............................................. 18
Use of Proceeds........................................................................................... 25
Dividend Policy........................................................................................... 25
Price Range of Common Stock............................................................................... 25
Selling Stockholders...................................................................................... 26
Plan of Distribution...................................................................................... 27
Legal Matters............................................................................................. 28
Experts................................................................................................... 29
Index to Consolidated Financial Statements................................................................ F-1
</TABLE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Proxy statements, reports
and other information concerning the Company can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and the regional offices
of the Commission located at Seven World Trade Center, 13th Floor, New York, New
York 10048, and 500 West Madison Street, Chicago, Illinois 60661, and copies of
such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and its public
reference facilities in New York, New York and Chicago, Illinois, at prescribed
rates. Copies of such information may also be inspected at the reading room of
the library of the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006. The Commission maintains a World Wide Web
site on the Internet at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding the Company and other
registrants that file electronically with the Commission.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Commission under the
Securities Act. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock, reference is
hereby made to the Registration Statement. Statements contained herein
concerning the
3
<PAGE>
provisions of any contract, agreement or other document are not necessarily
complete, and in each instance reference is made to the copy of such contract,
agreement or other document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission. Each such statement is qualified in its
entirety by such reference. Copies of the Registration Statement together with
exhibits may be inspected at the offices of the Commission as indicated above
without charge and copies thereof may be obtained therefrom upon payment of a
prescribed fee.
PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT. This
Prospectus (including the documents incorporated by reference herein) contains
certain forward-looking statements (as such term is defined in the Private
Securities Litigation Reform Act of 1995) and information relating to TMP that
are based on the beliefs of the management of TMP, as well as assumptions made
by and information currently available to the management of TMP. When used in
this Prospectus, the words "estimate," "project," "believe," "anticipate,"
"intend," "expect" and similar expressions are intended to identify forward-
looking statements. Such statements reflect the current views of TMP with
respect to future events and are subject to risks and uncertainties that could
cause actual results to differ materially from those contemplated in such
forward-looking statements, including those discussed under "Risk Factors."
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. TMP does not undertake any
obligation to publicly release any revisions to these forward looking statements
to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which are on file with the Commission (File No.
000-21571) pursuant to the Exchange Act are incorporated by reference and made a
part hereof:
(i) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997.
(ii) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998.
(iii) The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998.
(iv) The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998.
(v) The Company's Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1997.
(vi) The Company's Quarterly Report on Form 10-Q/A for the quarter ended
March 31, 1998.
(vii) The Company's Quarterly Report on Form 10-Q/A for the quarter ended
June 30, 1998.
(viii) The Company's Quarterly Report on Form 10-Q/A for the quarter ended
September 30, 1998.
(ix) Management's Discussion and Analysis of Results of Operations and
Financial Condition on pages 62 through 74, and the Financial Statements on
pages F-11 through F-113, of the Company's Information Statement on Schedule
14C, dated January 6, 1999, file no. (0-21571).
(x) The description of the Company's common stock contained in Item 1 of
the Company's Registration Statement on Form 8-A, dated October 16, 1996.
(xi) The Company's Current Report on Form 8-K, dated December 17, 1998,
relating to the acquisition of Bonde & Schmah Media GmbH, a/k/a Bonde &
Schmah Human Resources Services GmbH and PMM Management Consultants GmbH.
(xii) The Company's Current Report on Form 8-K, dated December 7, 1998,
relating to the acquisition of The Consulting Group (International) Limited.
(xiii) The Company's Current Report on Form 8-K, dated August 31, 1998,
relating to the acquisition of TASA Holding A.G.
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(xiv) The Company's Current Report on Form 8-K, dated April 28, 1998,
relating to the acquisition of Fossler & Partner, M-Page and ConServe.
All documents and reports subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering of the securities
offered hereby shall be deemed incorporated by reference into this Prospectus
and to be a part hereof from the date of the filing of such documents or
reports. The information relating to the Company in this Prospectus should be
read together with the information in the documents incorporated by reference.
Any statement contained in a document incorporated by reference herein,
unless otherwise indicated therein, speaks as of the date of the document. Any
statement contained in a document incorporated by reference herein shall be
deemed to be modified or superseded for all purposes to the extent that a
statement contained in this Prospectus modifies or replaces such statement.
The Company will furnish without charge to each person to whom this
Prospectus is delivered, upon request, a copy of any or all of the documents
described above, other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference into such documents. Requests should be
addressed to: TMP Worldwide Inc., 1633 Broadway, New York, New York 10019,
Attention: Myron F. Olesnyckyj, Esq., Vice President-General Counsel, (Tel. No.
(212) 977-4200). The Company furnishes its stockholders with an annual report
containing audited financial statements. In addition, the Company may furnish
such other reports as may be authorized, from time to time, by the Board of
Directors.
5
<PAGE>
THE COMPANY
AS USED IN THIS PROSPECTUS, "GROSS BILLINGS" REFERS TO BILLINGS FOR
ADVERTISING PLACED IN TELEPHONE DIRECTORIES, NEWSPAPERS, NEW MEDIA AND OTHER
MEDIA, AND ASSOCIATED FEES FOR RELATED SERVICES. WHILE GROSS BILLINGS ARE NOT
INCLUDED IN THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS, THE TRENDS IN GROSS
BILLINGS DIRECTLY IMPACT THE COMMISSIONS AND FEES EARNED BY THE COMPANY. THE
COMPANY EARNS COMMISSIONS BASED ON A PERCENTAGE OF THE MEDIA ADVERTISING
PURCHASED AT A RATE ESTABLISHED BY THE RELATED PUBLISHER, AND ASSOCIATED FEES
FOR RELATED SERVICES. IN ADDITION, THE COMPANY EARNS FEES FOR THE PLACEMENT OF
ADVERTISEMENTS ON THE INTERNET, INCLUDING ITS CAREER WEB SITES, AND THROUGH
EXECUTIVE SEARCH SERVICES. EARNINGS BEFORE INTEREST, INCOME TAXES, DEPRECIATION
AND AMORTIZATION ("EBITDA") IS PRESENTED TO PROVIDE ADDITIONAL INFORMATION ABOUT
THE COMPANY'S ABILITY TO MEET ITS FUTURE DEBT SERVICE, CAPITAL EXPENDITURES AND
WORKING CAPITAL REQUIREMENTS AND IS ONE OF THE MEASURES WHICH DETERMINES THE
COMPANY'S ABILITY TO BORROW UNDER ITS CREDIT FACILITY. EBITDA SHOULD NOT BE
CONSIDERED IN ISOLATION OR AS A SUBSTITUTE FOR OPERATING ACTIVITIES AND OTHER
INCOME OR CASH FLOW STATEMENT DATA PREPARED IN ACCORDANCE WITH GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES OR AS A MEASURE OF THE COMPANY'S PROFITABILITY OR
LIQUIDITY. GROSS BILLINGS WITH RESPECT TO COMPANIES ACQUIRED BY THE COMPANY
REFER TO THE COMPANY'S ESTIMATE OF THE ACQUIRED COMPANIES' ANNUAL GROSS
BILLINGS.
TMP Worldwide Inc. ("TMP" or the "Company") is a marketing services,
communications, executive search and technology company that provides
comprehensive, individually tailored advertising services, including development
of creative content, media planning, production and placement of corporate
advertising, market research, direct marketing, executive search and other
ancillary services and products. The Company is one of the world's largest
recruitment advertising agencies and the world's largest yellow page advertising
agency as well as a leader in the use of the Internet for recruiting.
The Company offers advertising programs to more than 17,000 clients,
including more than 70 of the Fortune 100 and more than 400 of the Fortune 500
companies. The Company's growth strategy is to continue to pursue consolidation
opportunities in its core advertising business and to leverage its client base
and its approximately 2,420 sales, marketing and customer service personnel to
expand its Internet-based businesses. For the year ended December 31, 1997, the
Company's gross billings were $1.2 billion, commissions and fees were $310.6
million, net income was $10.4 million and EBITDA was $43.9 million.
TMP is the world's largest yellow page advertising agency, generating
approximately $457.5 million in yellow page gross billings for the year ended
December 31, 1997. TMP is one of the world's largest recruitment advertising
agencies, generating approximately $602.7 million in recruitment advertising
gross billings for the same period. With approximately 30% of the national
accounts segment of the U.S. yellow page advertising market, TMP is
approximately three times larger than its nearest competitor, based on yellow
page gross billings. A substantial part of the Company's growth in each of its
targeted markets has been achieved through acquisitions. From January 1, 1993
through December 31, 1998, TMP completed 71 acquisitions including, in May 1998,
the acquisition of all the outstanding capital stock of Johnson, Smith &
Knisely, Inc. ("JSK"), the twelfth largest executive search firm in the United
States, in August 1998, the acquisition of all the outstanding capital stock of
TASA Holding A.G. ("TASA"), an international executive search firm and, in
September 1998, the acquisition of all the outstanding capital stock of Stackig,
Inc. ("Stackig"), a public relations firm. The Company believes additional
acquisition opportunities exist, particularly in the recruitment advertising,
executive search and Internet markets, and intends to continue its strategy of
making acquisitions which relate to its core businesses.
TMP has created innovative solutions to assist its clients in capitalizing
on the growing awareness and acceptance of the Internet. For its recruitment
advertising clients, TMP has developed interactive career sites which can be
accessed by individuals seeking employment via the Internet on a global basis.
The Company has several career sites, including The Monster
Board-Registered Trademark-, Online Career Center-SM- ("OCC"), Be the Boss-SM-
and MedSearch-SM-, which as of December 31, 1998 collectively contain
approximately 145,000 paid job listings and 1,000,000 resumes. In addition, in
May 1998, the Company expanded its suite of online career products and services,
adding new content and community with the acquisition of About Work
(www.aboutwork.com) and the largest online internship database, with the
acquisition of Student Center (www.studentcenter.com).
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YELLOW PAGE ADVERTISING. TMP develops yellow page marketing programs for
national accounts, clients which sell products or services in multiple markets.
The national segment of the yellow page advertising market was an approximately
$1.7 billion market in the U.S. for the year ended December 31, 1997. The
national yellow page market has grown each year since 1981. During the period of
1990 through 1997, the market grew at a compound annual growth rate of
approximately 6.2%. Yellow page advertising is a complex process involving the
creation of effective imagery and message and the development of media plans
which evaluate approximately 7,000 yellow page directories of which TMP's larger
accounts utilize over 2,000. Coordinating the placement of advertisements in
this number of directories requires an extensive effort at the local level, and
TMP's yellow page sales, marketing and customer service staff of approximately
680 people provides an important competitive advantage in marketing and
executing yellow page advertising programs. TMP earns commissions from yellow
page advertising paid by directory publishers which result in an effective
commission rate to the Company of approximately 20% of yellow page gross
billings.
TMP takes a proactive approach to yellow page advertising by undertaking
original research on the efficacy of the medium, in many cases quantifying the
effectiveness of a given advertising campaign. The Company also has a rigorous
quality assurance program designed to ensure client satisfaction. The Company
believes that this program has enabled it to maintain a yellow page client
retention rate, year to year, in excess of 90%.
RECRUITMENT ADVERTISING. For the year ended December 31, 1997, total
spending on advertisements globally in the recruitment classified advertisement
section of newspapers was approximately $12 billion. While the recruitment
advertising market has historically been cyclical, during the period of 1990
through 1997, the U.S. market grew at a compound annual growth rate of
approximately 12%. In the U.S., the Company receives commissions generally equal
to 15% of recruitment advertising gross billings. Outside of the U.S., where,
collectively, the Company derives the majority of its recruitment advertising
commissions and fees, TMP's commission rates for recruitment advertising vary,
ranging from approximately 10% in Australia to 15% in Canada and the United
Kingdom. The Company also earns fees from value-added services such as design,
research and other creative and administrative services which resulted in
aggregate commissions and fees equal to approximately 21% of recruitment
advertising gross billings for the year ended December 31, 1997.
The services provided by recruitment advertising agencies can be complex and
range from the design and placement of classified advertisements to the creation
of comprehensive image campaigns which internationally "brand" a client as a
quality employer. Further, shortages of qualified employees in many industries,
particularly in the technology area, have increased the need for recruitment
advertising agencies to expand the breadth of their service offerings to effect
national and sometimes global recruitment campaigns. For these reasons, the
Company believes that over time, the proportion of overall recruitment
advertising placed through recruitment advertising agencies will grow. Given the
scale of its recruitment advertising operations and the scope of its service
offerings, the Company believes it is well positioned to participate in this
market growth.
EXECUTIVE SEARCH. To expand the range of services it offers its recruitment
advertising clients, the Company determined to enter the executive search field
because recruitment advertising traditionally has not targeted the senior
executive community. Accordingly, in May 1998, the Company acquired JSK, the
twelfth largest executive search firm in the United States. This acquisition,
coupled with the acquisition of TASA, provided the Company with 32 executive
search offices in 17 countries.
The TMP retained executive search process typically includes the following
steps: (a) a TMP executive search consultant interviews the client in order to
analyze the senior executive position that needs to be filled, the general
environment of the client's work place and the character and quality of
candidates that have successfully performed as an executive of the client; (b)
the consultant then prepares a written synopsis of the position to be filled in
order to attract a suitable, qualified and successful candidate; (c) the
synopsis is then forwarded to other recruiters in order to assist with the
search for a candidate that fits the
7
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criteria set forth in the synopsis; (d) a pool of suitable candidates is
gathered and the consultants begin to schedule interviews; (e) the candidates
are then interviewed and analyzed by the consultants on the premises of TMP to
determine if the candidate meets the requisite experience and potential cultural
fit outlined by the consultant and the client; (f) reports of the most suitable
candidates are prepared by the consultant and presented to the clients, from
which the client can choose which candidates it wants to meet; (g) the
consultant then organizes a mutually convenient time and place for the client to
personally meet and interview such candidates for the position; (h) the
consultant will follow up with the successful candidate to obtain any
supplemental information needed or requested by the client, including obtaining
references and other documentary materials; and (i) the Company then assists the
client in structuring and negotiating the final compensation package and other
benefits for the hired executive based on all relevant factors researched by the
Company, including industry comparisons, the experience levels of the executive
and future trends.
The Company believes that its expansion into the executive search market
will enable it to attract and service additional major clients since TMP can now
market itself as a full service firm that can accommodate all of its clients'
employment and recruitment advertising needs.
INTERNET SERVICES. The Company's Internet-based services complement its
traditional advertising businesses. In recruitment, the Company has several
career sites, including The Monster Board-Registered Trademark-, Online Career
Center-SM-, Be the Boss-SM- and MedSearch-SM- which provide continuously
available databases of career opportunities. Users of these sites can search for
employment opportunities by location, type of job and other criteria. Resumes
can be sent to prospective employers electronically and submitted on-line or via
mail. Users can also access other value-added services such as discussion forums
and on-line career advice. Based on its experience with its clients, TMP
believes that only 20% to 30% of open job positions are advertised using
traditional print media and that on-line solutions, which are significantly less
expensive than traditional recruitment methods, will significantly expand the
recruitment advertising market. More than 55 of the Fortune 100 companies are
utilizing the Company's career sites.
Dealer Locator, which is marketed to yellow page accounts, allows clients to
offer World Wide Web ("Web") pages for local offices, dealers or franchise
locations which are linked to the client's corporate Web site. These pages are
designed to generate additional customer flow while reinforcing brand imagery
contained in other advertising programs. Dealer Locator home pages will
typically include address, directions, hours of operation and potentially other
information such as sale items.
TMP believes its pre-existing relationships with yellow page and recruitment
advertising clients and its sales, marketing and customer service staff of over
2,200 people provide an important competitive advantage in pursuing the market
for Internet clients. Further, the Company believes its innovative Internet
products will provide an opportunity to enhance its ability to market both
traditional advertising and Internet services to non-TMP clients.
The Company is the successor to the businesses formerly conducted by TMP
Worldwide Inc. and subsidiaries ("Old TMP"), Worldwide Classified Inc. and
subsidiaries ("WCI") and McKelvey Enterprises, Inc. and subsidiaries, the chief
executive officer of which was Andrew J. McKelvey (the "Principal Stockholder").
McKelvey Enterprises, Inc. was formed in 1967 by Mr. McKelvey. On December 9,
1996, Old TMP merged into McKelvey Enterprises, Inc. Thereafter, WCI merged into
McKelvey Enterprises, Inc. McKelvey Enterprises, Inc. then merged into Telephone
Marketing Programs Incorporated. Such mergers are collectively referred to as
the "Mergers." In addition, Mr. McKelvey sold or contributed his interest in
five other entities to the Company. Following the Mergers, Telephone Marketing
Programs Incorporated changed its name to TMP Worldwide Inc. All historical
financial data contained herein for periods ended prior to December 9, 1996
reflects the historical financial data of Old TMP, WCI, McKelvey Enterprises,
Inc. and the other entities. The Company was incorporated in Delaware in August
1996. Its executive offices are located at 1633 Broadway, 33rd Floor, New York,
New York 10019, and its telephone number at that location is (212) 977-4200.
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RECENT DEVELOPMENTS
Subsequent to September 30, 1998, TMP has continued its efforts to acquire
Morgan & Banks Limited ("M&B"), a search and selection firm based in Australia.
A brief description of M&B follows:
M&B PROBABLE ACQUISITION
On August 17, 1998, the Company announced an agreement in principle to
acquire all of the outstanding capital stock of M&B, an Australian corporation
(the "M&B Transaction"). The M&B Transaction, which is expected to be completed
in the first quarter of 1999, is expected to be accounted for as a
pooling-of-interests.
M&B, one of the largest temporary contracting and search and selection firms
in Australasia, has offices in Australia, New Zealand, the UK, Hong Kong and
Singapore. For the year ended March 31, 1998, M&B generated revenue of
approximately $235.8 million and had net income of approximately $7.9 million.
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RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING
FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING AN INVESTMENT IN THE SHARES
OF COMMON STOCK OFFERED BY THIS PROSPECTUS. THIS PROSPECTUS CONTAINS, IN
ADDITION TO HISTORICAL INFORMATION, FORWARD-LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY.
FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT
LIMITED TO, THOSE DISCUSSED BELOW, AS WELL AS THOSE DISCUSSED ELSEWHERE IN THIS
PROSPECTUS.
RISKS RELATING TO THE M&B TRANSACTION
POTENTIAL INCREASED ISSUANCE OF SHARES. The formula which will be used to
calculate the number of shares of TMP Common Stock which may be issued pursuant
to the acquisition of M&B (the "Exchange Ratio") is expected to fluctuate
between the date hereof and the effective date of the M&B Transaction. The
Exchange Ratio per M&B Ordinary Share, based on the US$-A$ exchange rate as of
December 31, 1998 and the 20-day average ordinary share closing prices of TMP
Common Stock, as reported by Nasdaq, through December 31, 1998, is 0.08431.
Accordingly, based on the approximate number of outstanding M&B shares on such
date, TMP would issue approximately 6,000,000 shares of TMP Common Stock to
acquire the M&B shares. Although, for the purposes of calculating the Exchange
Ratio, the maximum per share price of TMP Common Stock will not exceed $40.00
and the minimum price, without the consent of TMP, will not be less than $25.00,
to the extent TMP issues a higher number of shares of TMP Common Stock pursuant
to the Exchange Ratio, TMP's net income per share would be adversely affected.
NONREALIZATION OF SYNERGIES. TMP believes that an important benefit to be
realized from the M&B Transaction will be the integration of TMP's and M&B's
respective managements, strategies, and operations. Certain of the anticipated
benefits of the M&B Transaction may not be achieved unless such integration is
successful and achieved in a timely manner. The difficulties of such integration
may initially be increased by the necessity of coordinating geographically
separated organizations (TMP is headquartered in the United States and M&B is
headquartered in Australia) and integrating personnel with diverse business
backgrounds and corporate cultures. There can be no assurance that TMP will
successfully integrate the respective operations of TMP and M&B without
encountering difficulties or experiencing the loss of key TMP or M&B personnel
or that the benefits expected from such integration will be realized. In
addition, the Company recently acquired TASA Holding AG, an executive search
firm, and Stackig, Inc., a public relations firm, and such transactions could
make the integration of M&B more time consuming and difficult. The diversion of
the attention of management and any difficulties encountered in the transition
process (including the interruption of, or a loss of momentum in, M&B
activities, problems associated with integration of management information and
reporting systems, and delays in implementation of consolidation plans) could
also have an adverse impact on the combined company's ability to realize
anticipated synergies from the M&B Transaction.
INCURRENCE OF SIGNIFICANT TRANSACTION EXPENSES; POTENTIAL DILUTIVE EFFECT TO
STOCKHOLDERS. TMP expects to incur M&B Transaction-related expenses currently
estimated to be approximately $4.5 million in the quarter ending March 31, 1999,
the quarter in which the M&B Transaction is expected to be consummated, to
reflect direct transaction costs, primarily for legal and accounting fees and
costs and financial printing, stamp duties, listing fees and other related
costs. This estimate does not include any costs associated with restructuring,
integrating or consolidating the operations of the two companies. This amount is
a preliminary estimate and is therefore subject to change. Additional
unanticipated expenses may be incurred relating to the integration of the
businesses of TMP and M&B. Although TMP expects that the eventual elimination of
duplicative expenses as well as other efficiencies related to the integration of
the business of M&B may offset additional expenses over time, there can be no
assurance that such net benefit will be achieved in the near term, or at all.
There can be no assurance that combining the business of TMP with the business
of M&B, even if achieved in an efficient and effective manner, will result in
combined results of operations and financial condition superior to what would
have been achieved by TMP or M&B independently. The issuance of TMP Common Stock
in connection with the M&B Transaction may have
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the effect of reducing TMP's net income per share from levels otherwise expected
and could reduce the market price of the TMP Common Stock unless revenue growth
or cost savings and other business synergies sufficient to offset the effect of
such issuance can be achieved. See "--Potential Increased Issuance of Shares."
EFFECT OF M&B TRANSACTION ON M&B CLIENTS. The executive search and search
and selection industries are relationship-driven. Consequently, due to the M&B
Transaction, it is possible that certain clients of M&B may terminate their
relationship with M&B. In addition, although the Company does not anticipate any
material personnel changes at M&B, to the extent M&B loses material personnel,
which in turn causes M&B to lose large clients, TMP could be materially
adversely affected.
POTENTIAL UNAVAILABILITY OF "POOLING-OF-INTERESTS" ACCOUNTING TREATMENT OF
M&B TRANSACTION. The M&B Transaction is intended to qualify as a
"pooling-of-interests" for accounting and financial reporting purposes. Under
this method of accounting, the assets and liabilities of TMP and M&B will be
carried forward to the combined company at their recorded amounts, income from
the combined company will include income from TMP and M&B for the entire fiscal
period in which the combination occurs and the reported income of the separate
companies for prior periods will be combined and restated as the results of
operations of the combined company. It is a condition to the consummation of the
M&B Transaction that the M&B Transaction will qualify for pooling-of-interests
accounting treatment. However, if the requirements necessary for
pooling-of-interests are not met prior to the consummation of the M&B
Transaction, TMP may nevertheless elect to consummate the M&B Transaction under
the purchase method of accounting.
Under the pooling-of-interests rules, none of the executive officers,
directors or affiliates of either of the combining companies may sell any shares
of either TMP or M&B (except for certain DE MINIMIS sales) until the combined
company releases financial results covering at least 30 days of combined
operations of TMP and M&B. Accordingly, pooling-of-interests accounting
treatment for the M&B Transaction as of such time may not be available because
of sales by such stockholders (except for certain DE MINIMIS sales) prior to the
time the combined company releases such financial results. There can be no
assurance that an executive officer, director or affiliate of either company
will not sell shares of TMP or M&B stock or that all requirements necessary to
qualify for pooling-of-interests will be met. If the requirements necessary to
qualify for pooling-of-interests are not met prior to consummation of the M&B
Transaction, then TMP is not required to consummate the M&B Transaction.
However, if TMP nevertheless elects to consummate the M&B Transaction, the M&B
Transaction would necessarily be accounted for under the purchase method of
accounting, which would have the effect of M&B's assets and liabilities being
recognized at their fair value and any excess of the purchase price over such
fair value (other than amounts charged to in-process research and development
costs) being recognized as goodwill on TMP's balance sheet. The goodwill would
thereafter be amortized as an expense over its anticipated useful life. The
impact of such treatment could have a material adverse effect on the combined
company's results of operations throughout the amortization period. The M&B
Transaction would also be required to be accounted for under the purchase method
of accounting if, among other things, any affiliate of either company sells
shares in TMP subsequent to consummation of the M&B Transaction and prior to the
release of financial results covering at least 30 days of combined operations,
which would have the effect on the combined company's results of operations
described above. Each of the current executive officers and directors of TMP and
each of the current executive officers and directors and other affiliates of M&B
has entered into an affiliate agreement agreeing to comply with the above
described restrictions on selling shares of TMP and M&B.
RISKS RELATING TO M&B
FOREIGN OPERATIONS. M&B conducts operations in various foreign countries
including New Zealand, Hong Kong, Singapore, and the United Kingdom. For the
fiscal year ended March 31, 1998, 28.7% of M&B's revenue was earned outside of
Australia and collected in the local currency. Because M&B generally pays for
the operating expenses of its foreign operations in local currency, M&B is at
risk for
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exchange rate fluctuations between such local currencies and the Australian
dollar. M&B undertakes minimal hedging activities. M&B is also subject to
taxation in foreign jurisdictions. In addition, transactions between M&B and its
foreign subsidiaries may be subject to Australian or foreign withholding taxes.
Applicable tax rates in foreign countries differ from those of Australia and are
subject to periodic change. The extent, if any, to which M&B will receive credit
in Australia for taxes paid in foreign jurisdictions will depend upon
limitations set forth by the Australian Taxation Office, as well as the
provisions of any tax treaties which may exist between Australia and such
foreign jurisdictions. The failure to receive such credit would subject M&B to
increased taxes and adversely affect operating profit. M&B's operating margins
for its Asian business have been impacted significantly during the fiscal year
ended March 31, 1998. M&B closed its Indonesian office in March 1998 and has
scaled back its operations in Hong Kong and Singapore. Currently, M&B does not
anticipate that it will open any new Asian offices.
INDUSTRY RISKS. Temporary/contracting service providers employ and place
people generally in the workplace of other businesses. An attendant risk of such
activity includes possible claims of discrimination and harassment, workplace
injury of its temporary employees, errors and omissions, particularly for the
actions of professionals (for example, lawyers, accountants and engineers),
misuse of client proprietary information, misappropriation of funds, other
criminal activities or torts and other similar claims. In certain instances with
its clients in the government sector and a limited number of companies in the
private sector, aggregating less than 50 clients, M&B, pursuant to a written
contract, has agreed to indemnify clients against some or all of the foregoing
matters. Moreover, under certain circumstances, M&B may be held responsible for
the actions at a workplace of persons not under M&B's direct control. The scope
of such indemnities vary and can cover injuries to workers and errors and
omissions of M&B supplied workers. Although M&B historically has not had any
significant problems in this area, there can be no assurance that M&B will not
experience such problems in the future or that M&B's insurance, if any, will be
sufficient in amount or scope to cover any such liability.
COMPETITIVE MARKET. The temporary staffing/contracting and permanent
recruitment industry is highly competitive with limited barriers to entry. M&B
competes in national, regional and local markets with full service and
specialized temporary staffing companies, a number of which have greater
marketing, financial and other resources than M&B. In addition, price
competition in the temporary/contracting industry is high particularly for the
provision of clerical and light industrial personnel and this could have an
adverse effect on M&B's business, results of operations and financial condition.
EFFECT OF ECONOMIC FLUCTUATIONS. Demand for staffing services is affected
by the general level of economic activity. When economic activity slows the
permanent staff at many companies may become redundant and such companies may
slow their hiring and reduce their use of temporary employees. Any sustained
slowdown in economic activity in Australasia could have an adverse effect on
M&B's business, results of operations and financial condition.
DEPENDENCE ON ATTRACTING, MOTIVATING AND RETAINING STAFF. The success of
M&B's business depends upon its ability to attract, motivate and retain
consultants and staff who possess the skills, knowledge and attributes necessary
to service the needs of its clients and grow the business. M&B believes it has
been able to attract and retain staff as a result of its reputation, performance
based compensation systems and infrastructure support. Consultants have the
potential to earn significant bonuses based on the amount of revenue generated
from placing either temporary staff/contractors or permanent staff. Bonuses
represent a significant proportion of consultants' total compensation. Any
diminution of M&B's reputation could impair its ability to retain existing
consultants and attract new consultants. Any such inability to attract and
retain consultants could have a material adverse effect on M&B's business,
results of operations and financial condition.
RISKS RELATING TO TMP, M&B AND THE COMBINED COMPANY
UNCERTAIN ABILITY TO MANAGE GROWTH. The Company's business has grown
rapidly in recent periods. The growth of the Company's business has placed a
significant strain on the Company's management and
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operations. As an example, the Company has completed the acquisition of two
executive search companies since May 1998 and, with the acquisition of M&B, the
Company believes that it will be one of the largest executive search firms in
the world. The Company's expansion has resulted, and is expected in the future
to result, in substantial growth in the number of its employees and in increased
responsibility for both existing and new management personnel and incremental
strain on the Company's existing operations, financial and management
information systems. The Company's success depends to a significant extent on
the ability of its executive officers and other members of senior management to
operate effectively both independently and as a group. If the Company is not
able to manage existing or anticipated growth, the Company's business, financial
condition and operating results would be materially adversely affected.
RISKS ASSOCIATED WITH ACQUISITIONS. The Company expects that it will
continue to grow, in part, by acquiring businesses. The success of this strategy
depends upon several factors, including the continued availability of financing
and the Company's ability to identify and acquire businesses on a cost-effective
basis, as well as its continued ability to integrate acquired personnel,
operations, products and technologies into its organization effectively, to
retain and motivate key personnel and to retain the clients of acquired firms.
There can be no assurance that financing for acquisitions will be available on
terms acceptable to the Company, or that the Company will be able to identify or
consummate new acquisitions, or manage and integrate its recent or future
expansions successfully, and any inability to do so would have a material
adverse effect on the Company's business, financial condition and operating
results. There also can be no assurance that the Company will be able to sustain
the rates of growth that it has experienced in the past.
UNCERTAIN VIABILITY OF TRADITIONAL MEDIA. The Company derives a substantial
portion of its commissions and fees from designing and placing recruitment
advertisements in traditional media such as newspapers and trade publications.
This business, excluding search and selection which traditionally had been
included therein, constituted approximately 40.4% of total commissions and fees
for the year ended December 31, 1997 (34.0% of total revenue on a pro forma
basis giving effect to the M&B Transaction). The Company also derives a
substantial portion of its commissions and fees from placing advertising in
yellow page directories. This business constituted approximately 30.8% of total
commissions and fees for the year ended December 31, 1997 (16.5% of total
revenue on a pro forma basis giving effect to the M&B Transaction). There can be
no assurance that the commissions received by the Company in the future will be
equal to the commissions which it has historically received. To the extent that
new media, such as the Internet, cause yellow page directories and other forms
of traditional media to be less desirable forms of advertising media without at
least a proportionate fee increase generated from advertising on the Internet,
of which there can be no assurance, the Company's business, financial condition
and operating results will be materially adversely affected.
UNCERTAIN ACCEPTANCE OF THE INTERNET. Use of the Internet by consumers is
at a very early stage of development, and market acceptance of the Internet as a
medium for information, entertainment, commerce and advertising is subject to a
high level of uncertainty. The Company's and M&B's clients have only limited
experience with the Internet as an advertising medium and such clients have not
devoted a significant portion of their advertising budgets to Internet-based
advertising in the past. In addition, a significant portion of the Company's
potential clients have no experience with the Internet as an advertising medium
and have not devoted any portion of their advertising budgets to Internet-based
advertising in the past. There can be no assurance that advertisers will be
persuaded to allocate or continue to allocate portions of their budgets to
Internet-based advertising. If Internet-based advertising is not widely accepted
by advertisers and advertising agencies, the Company's business, financial
condition and operating results, including its expected rate of commissions and
fees growth, would be materially adversely affected. Although the Company
generated Internet revenue of $18.6 million for the year ended December 31,
1997, and $31.7 million for the nine months ended September 30, 1998, there can
be no assurance that the Company will continue to generate substantial
Internet-based revenue in the future.
UNCERTAIN ACCEPTANCE OF THE COMPANY'S INTERNET CONTENT. The Company's
future growth depends, in part, upon its ability to deliver original and
compelling services in order to attract users valuable to the
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Company's advertising clients. There can be no assurance that the Company's
content will be attractive to a sufficient number of Internet users to generate
material advertising revenues. There also can be no assurance that the Company
will be able to anticipate, monitor and successfully respond to rapidly changing
consumer tastes and preferences so as to attract a sufficient number of users to
its Web sites. Internet users can freely navigate and instantly switch among a
large number of Web sites, many of which offer original content, making it
difficult for the Company to distinguish its content and attract users. In
addition, many other Web sites offer very specific, highly targeted content that
could have greater appeal than the Company's sites to particular subsets of the
Company's target audience.
COMPETITION; LOW BARRIERS TO ENTRY. The markets for the Company's services
are highly competitive and are characterized by pressures to reduce prices,
incorporate new capabilities and technologies and accelerate job completion
schedules.
The Company faces competition from a number of sources. These sources
include national and regional advertising agencies, specialized and integrated
marketing communication firms, traditional media companies, executive search,
and search and selection firms. In addition, with respect to new media, many
advertising agencies and publications have started either to internally develop
or acquire new media capabilities. Some established companies that provide
integrated specialized services (such as advertising services or Web site
design) and are technologically proficient, especially in the new media area,
are also competing with the Company. Many of the Company's competitors or
potential competitors have long operating histories, and some may have greater
financial, management, technological development, sales, marketing and other
resources than the Company. In addition, the Company's ability to maintain its
existing clients and attract new clients depends, to a significant degree, on
the quality of its services and its reputation among its clients and potential
clients.
The Company has no significant proprietary technology that would preclude or
inhibit competitors from entering the yellow page advertising, recruitment
advertising, executive search or on-line advertising markets. There can be no
assurance that existing or future competitors will not develop or offer services
and products that provide significant performance, price, creative or other
advantages over those offered by the Company, which could have a material
adverse effect on the Company's business, financial condition and operating
results.
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS; SEASONALITY AND CYCLICALITY OF
BUSINESS. The Company's and M&B's quarterly operating results have fluctuated
in the past and may fluctuate in the future as a result of a variety of factors,
including the timing of acquisitions. In addition, the timing of yellow page
directory closings, the largest number of which currently occur in the third
quarter, and the receipt of additional commissions, if earned, from yellow page
publishers for achieving a specified volume of advertising, which commissions
are typically reported in the fourth quarter, also affect the cyclicality of the
Company's quarterly results. The Company's quarterly commissions and fees earned
from recruitment advertising are typically highest in the first quarter and
lowest in the fourth quarter. For the year ended December 31, 1997, the
Company's commissions and fees from recruitment advertising, excluding search
and selection which traditionally had been included therein, were 40.4% of the
Company's total commissions and fees (27.6% of total revenue on a pro forma
basis, giving effect to the M&B Transaction). Recruitment advertising
commissions and fees tend to be more cyclical than yellow page commissions and
fees, and therefore, to the extent that a significant percentage of the
Company's commissions and fees are derived from recruitment advertising, the
Company's operating results may be subject to increased cyclicality.
TECHNOLOGICAL RISKS. The market for Internet products and services is
characterized by rapid technological developments, frequent new product
introductions and evolving industry standards. The emerging character of these
products and services and their rapid evolution will require that the Company
continually improve the performance, features and reliability of its Internet
content, particularly in response to competitive offerings. There can be no
assurance that the Company will be successful in responding quickly, cost
effectively and sufficiently to these developments. In addition, the widespread
adoption of new Internet technologies or standards could require substantial
expenditures by the Company
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to modify or adapt its Web sites and services and could affect the Company's
financial condition or operating results. In addition, new Internet services or
enhancements which are or may be offered by the Company may contain design flaws
or other defects that could require costly modifications or result in a loss of
client confidence, either of which could have a material adverse effect on the
Company's business, financial condition or operating results. The Monster
Board-Registered Trademark- connects to the Internet through GTE
Internetworking. OCC connects to the Internet directly through its own on-site
servers. Any disruption in Internet access, or in the Internet generally, could
affect the Company's financial condition or operating results.
DEPENDENCE ON ATTRACTING AND RETAINING QUALIFIED CONSULTANTS. The success
of TMP's executive search business, including that of M&B, giving effect to the
Transaction, depends upon its ability to attract and retain consultants who
possess the skills, contacts and experience necessary to fulfill its clients'
executive search needs. Competition for qualified consultants is intense. TMP
and M&B believe they have been able to attract and retain highly qualified,
effective consultants as a result of their respective reputations, and their
performance-based compensation systems. Consultants have the potential to earn
substantial bonuses based on the amount of revenue generated by obtaining
executive search assignments, executing search assignments and by assisting
other consultants to obtain or complete executive search assignments. Bonuses
represent a significant proportion of consultants' total compensation. Any
diminution of TMP's or M&B's reputation could impair their ability to retain
existing or attract additional qualified consultants. Any such inability to
attract and retain qualified consultants could have a material adverse effect on
TMP's executive search business, results of operations and financial condition.
PORTABLE CLIENT RELATIONSHIPS. The success of TMP's and M&B's executive
search and search and selection businesses depends upon the ability of their
consultants to develop and maintain strong, long-term relationships with
clients. Usually, one or two consultants have primary responsibility for a
client relationship. When a consultant leaves one executive search firm and
joins another, clients that have established relationships with the departing
consultant may move their business to the consultant's new employer. The loss of
one or more clients is more likely to occur if the departing consultant enjoys
widespread name recognition or has developed a reputation as a specialist in
executing searches in a specific industry or management function. Although
client portability historically has not caused significant problems for TMP or
M&B, the failure to retain its most effective consultants or maintain the
quality of service to which its clients are accustomed, and the ability of a
departing consultant to move business to his or her new employer, could have a
material adverse effect on TMP's executive search business, results of
operations and financial condition.
MAINTENANCE OF PROFESSIONAL REPUTATION AND BRAND NAME. TMP's and M&B's
ability to secure new executive search engagements and hire qualified
professionals is highly dependent upon their overall reputation and brand name
recognition, as well as the individual reputations of their professionals.
Because TMP and M&B obtain a majority of their new engagements from existing
clients, or from referrals by those clients, the dissatisfaction of any such
client could have a disproportionate, adverse impact on their ability to secure
new engagements. Any factor that diminishes the reputation of TMP or M&B or any
of its personnel, including poor performance, could make it substantially more
difficult for them to compete successfully for both new engagements and
qualified consultants, and could have an adverse effect on TMP's and M&B's
executive search and search and selection businesses, results of operations and
financial condition.
RESTRICTIONS IMPOSED BY BLOCKING ARRANGEMENTS. Either by agreement with
clients or for marketing or client relationship purposes, executive search firms
frequently refrain, for a specified period of time, from recruiting certain
employees of a client, and possibly other entities affiliated with such client,
when conducting executive searches on behalf of other clients (a "blocking"
arrangement). Blocking arrangements generally remain in effect for one or two
years following completion of an assignment. However, the duration and scope of
the blocking arrangement or "off limits" period, including whether it covers all
operations of a client and its affiliates or only certain divisions of a client,
generally depends on such
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factors as the length of the client relationship, the frequency with which the
executive search firm has been engaged to perform executive searches for the
client and the number of assignments the executive search firm has generated or
expects to generate from the client. Some of TMP's and M&B's executive search
clients are recognized as industry leaders and/or employ a significant number of
qualified executives who are potential candidates for other companies in that
client's industry. Blocking arrangements with such a client or awareness by a
client's competitors of such an arrangement may make it difficult for TMP or M&B
to obtain executive search assignments from, or to fulfill executive search
assignments for, competitors while employees of that client may not be
solicited. As TMP's and M&B's client base grows, particularly in its targeted
business sectors, blocking arrangements increasingly may impede their growth or
their ability to attract and serve new clients, which could have an adverse
effect on TMP's executive search business, results of operations and financial
condition.
DEPENDENCE ON KEY PERSONNEL. The Company's continued success will depend to
a significant extent upon its senior management, including Andrew J. McKelvey,
the Company's Chairman of the Board and CEO. The loss of the services of one or
more key employees could have a material adverse effect on the Company's
business, financial condition or operating results. In addition, if one or more
key employees join a competitor or form a competing company, the resulting loss
of existing or potential clients could have a material adverse effect on the
Company's business, financial condition or operating results. In the event of
the loss of any such employee there can be no assurance that the Company would
be able to prevent the unauthorized disclosure or use of its procedures,
practices, new product development or client lists.
CONTROL BY PRINCIPAL STOCKHOLDER. Andrew J. McKelvey beneficially owns all
of the outstanding TMP Class B Common Stock and 11,206,877 shares of TMP Common
Stock which together represent approximately 68.2% of the combined voting power
of all classes of voting stock of the Company and will represent approximately
60.8% of the combined voting power of the Company assuming an Exchange Ratio of
0.08431 and giving effect to the M&B Transaction. Mr. McKelvey is and will be,
therefore, able to direct the election of all of the members of the Company's
Board of Directors and exercise a controlling influence over the business and
affairs of the Company, including any determinations with respect to mergers or
other business combinations involving the Company, the acquisition or
disposition of assets of the Company, the incurrence of indebtedness by the
Company, the issuance of any additional Common Stock or other equity securities
and the payment of dividends with respect to the Common Stock. Similarly, Mr.
McKelvey has the power to determine matters submitted to a vote of the Company's
stockholders without the consent of the Company's other stockholders and has the
power to prevent a change of control of the Company.
ANTI-TAKEOVER EFFECT OF CERTAIN PROVISIONS OF CERTIFICATE OF INCORPORATION,
BYLAWS AND DELAWARE LAW. The Company's Board of Directors has the authority to
issue up to 800,000 shares of undesignated preferred stock and to determine the
price, rights, preferences, privileges and restrictions, including voting and
conversion rights of such shares, without any further vote or action by the
Company's stockholders. The rights of the holders of Common Stock will be
subject to, and may be adversely affected by, the rights of the holders of any
preferred stock that may be issued in the future. The issuance of preferred
stock could have the effect of making it more difficult for a third party to
acquire a majority of the outstanding voting stock of the Company. The Company
has no current plans to issue shares of preferred stock. Further, certain
provisions of the Company's Certificate of Incorporation and Bylaws and of
Delaware law could delay, prevent or make more difficult a merger, tender offer
or proxy content involving the Company. Among other things, these provisions
specify advance notice requirements for stockholder proposals and director
nominations. In addition, Mr. McKelvey controls approximately 68.2% of the
combined voting power of all classes of voting stock of the Company and,
assuming an Exchange Ratio of 0.08431, will control approximately 60.8% of the
combined voting power following consummation of the M&B Transaction.
16
<PAGE>
FOREIGN OPERATIONS AND RELATED RISKS. The Company conducts operations in
various foreign countries, including Australia, Belgium, Canada, France,
Germany, Japan, the Netherlands, New Zealand, Singapore, Spain and the United
Kingdom. For the year ended December 31, 1997, approximately 34.6% of the
Company's commissions and fees were earned outside of the U.S. and collected in
local currency. Giving pro forma effect to the M&B Transaction, approximately
57.6% of revenue, after considering costs directly associated with revenues of
temporary contracting operations, would have been earned outside the U.S. for
the year ended December 31, 1997. In addition, the Company generally pays
operating expenses in the corresponding local currency and will be subject to
increased risk for exchange rate fluctuations between such local currencies and
the dollar upon consummation of the M&B Transaction. The Company does not
conduct any significant hedging activities.
The Company is also subject to taxation in foreign jurisdictions. In
addition, transactions between the Company and its foreign subsidiaries may be
subject to U.S. and foreign withholding taxes. Applicable tax rates in foreign
jurisdictions differ from those of the U.S., and are subject to periodic change.
The extent, if any, to which the Company will receive credit in the U.S. for
taxes paid in foreign jurisdictions will depend upon the application of
limitations set forth in the Code, as well as the provisions of any tax treaties
which may exist between the U.S. and such foreign jurisdictions.
POSSIBLE VOLATILITY OF STOCK PRICE. The stock market has, from time to
time, experienced extreme price and volume fluctuations. Factors such as
announcements by the Company of variations in its quarterly financial results
and fluctuations in advertising commissions and fees, including the percentage
of the Company's commissions and fees derived from Internet-based services and
products could cause the market price of TMP Common Stock to fluctuate
significantly. Further, due to the volatility of the stock market generally, the
price of TMP Common Stock could fluctuate for reasons unrelated to the operating
performance of the Company.
GOVERNMENT REGULATION. As an advertising agency which creates and places
print and Internet advertisements, the Company is subject to Sections 5 and 12
of the U.S. Federal Trade Commission Act (the "FTC Act") which regulate
advertising in all media, including the Internet, and require advertisers and
advertising agencies to have substantiation for advertising claims before
disseminating advertisements. The FTC Act prohibits the dissemination of false,
deceptive, misleading, and unfair advertising, and grants the Federal Trade
Commission ("FTC") enforcement powers to impose and seek civil penalties,
consumer redress, injunctive relief and other remedies upon advertisers and
advertising agencies which disseminate prohibited advertisements. Advertising
agencies such as TMP are subject to liability under the FTC Act if the agency
actively participates in creating the advertisement, and knew or had reason to
know that the advertising was false or deceptive.
In the event that any advertising created by TMP was found to be false,
deceptive or misleading, the FTC Act could potentially subject the Company to
liability. The fact that the FTC has recently brought several actions charging
deceptive advertising via the Internet, and is actively seeking new cases
involving advertising via the Internet, indicates that the FTC Act could pose a
somewhat higher risk of liability to the advertising distributed via the
Internet. The FTC has never brought any actions against the Company.
Further, there can be no assurance that other current or new government laws
and regulations, or the application of existing laws and regulations will not
subject the Company to significant liabilities, significantly dampen growth in
Internet usage, prevent the Company from offering certain Internet content or
services or otherwise cause a material adverse effect on the Company's business,
financial condition or operating results.
DIVIDEND POLICY. The Company currently intends to retain earnings, if any,
to support its growth strategy and does not anticipate paying dividends on the
TMP Common Stock and TMP Class B Common Stock in the foreseeable future. Payment
of dividends on TMP Common Stock and TMP Class B Common Stock is restricted by
the Company's financing agreement.
17
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The Unaudited Pro Forma Condensed Combined Financial Information reflects
financial information which gives effect to the Company's probable acquisition
of all the outstanding stock of M&B and the assumed replacement of all options
to acquire M&B stock with options to purchase TMP stock in exchange for the
issuance of approximately 6,000,000 shares of the Company's Common Stock and
327,000 options to purchase shares of TMP Common Stock. The share amounts and
option amounts were calculated using an exchange formula based upon a per share
price for M&B shares of 4.65 Australian dollars translated at 0.6123 US dollar
per Australian dollar for the periods presented and assuming 70,421,773 M&B
shares and 3,883,125 M&B options are outstanding at January 4, 1999. The Pro
Forma Financial Information included herein reflects the anticipated use of the
pooling-of-interests method of accounting, after giving effect to the pro forma
adjustments discussed in the accompanying notes. Such financial information has
been prepared from, and should be read in conjunction with, the historical
consolidated financial statements and notes thereto of TMP and M&B included
elsewhere in this Prospectus.
The Pro Forma Condensed Combined Financial Information (i) gives effect to
the M&B Transaction, (ii) gives effect, in the Combined Statement of Operations
for the year ended December 31, 1997, to the acquisition, in August 1997, of all
the outstanding stock of Austin Knight Limited, ("Austin Knight"), for a
purchase price of approximately $47.2 million, and (iii) includes the
adjustments described in the notes hereto.
The Pro Forma Condensed Combined Balance Sheet gives effect to the M&B
Transaction as if it had occurred on September 30, 1998, combining the balance
sheets of TMP at September 30, 1998 with that of M&B as of March 31, 1998. The
Pro Forma Condensed Combined Statements of Operations give effect to the M&B
Transaction as if it had occurred at the beginning of the earliest period
presented, combining the results of TMP for the nine months ended September 30,
1998 and each year in the three-year period ended December 31, 1997 with those
of M&B for the nine months ended March 31, 1998 and each year in the three-year
period ended March 31, 1998, respectively. The results for M&B for the nine
months ended March 31, 1998 are included in the Pro Forma Condensed Combined
Statement of Operations for both the year ended December 31, 1997 and the nine
months ended September 30, 1998. When translated at the appropriate exchange
rates for the December 31, 1997 and September 30, 1998 periods, revenue was
approximately $180,141,000 and $175,550,000, net income was approximately
$5,797,000 and $5,648,000, and net income per share was $0.08 and $0.08,
respectively. In addition, the Pro Forma Condensed Combined Statement of
Operations for the year ended December 31, 1997 includes the results of Austin
Knight for the period prior to its acquisition by TMP on August 26, 1997.
The consolidated financial statements of M&B included in the Pro Forma
Condensed Combined Financial Information utilize Australian GAAP (which
substantially conforms to US GAAP) and were translated at the following exchange
rates: Australian dollars were translated to US dollars at the rate of 0.6613,
0.6955, 0.7137, 0.7874 and 0.7455, respectively, with respect to the Balance
Sheet at March 31, 1998 and the Statement of Operations for the nine months
ended March 31, 1998 and the years ended March 31, 1998, 1997 and 1996. The
Statement of Operations of Austin Knight included in the December 31, 1997 Pro
Forma Condensed Combined Statement of Operations was translated from British
Pounds Sterling to US dollars at the rate of 1.634 US dollars per British Pound
Sterling.
The Pro Forma Condensed Combined Statements of Operations presented do not
include any potential cost savings. The Company believes that it may be able to
reduce salaries and related costs and office and general expenses as it
eliminates duplication of overhead. However, there can be no assurance that the
Company will be successful in effecting any such cost savings.
The Pro Forma Condensed Combined Financial Information is unaudited and is
not necessarily indicative of the consolidated results which actually would have
occurred if the above transactions had been consummated at the beginning of the
periods presented, nor does it purport to present the future financial position
and results of operations for future periods.
18
<PAGE>
TMP WORLDWIDE INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
SEPTEMBER 30, 1998
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
TMP MORGAN & BANKS PRO FORMA
WORLDWIDE INC. LIMITED ADJUSTMENTS COMBINED
-------------- ---------------- ------------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................... $ 12,855 $ 9,581 $ -- $ 22,436
Accounts receivable, net....................... 317,048 25,401 -- 342,449
Work-in-process................................ 16,367 -- -- 16,367
Deferred income taxes.......................... -- 1,446 -- 1,446
Prepaid and other.............................. 19,385 2,243 -- 21,628
-------------- ------- ------ -----------
Total current assets....................... 365,655 38,671 -- 404,326
Property and equipment, net...................... 49,928 9,359 -- 59,287
Deferred income taxes............................ 4,084 135 -- 4,219
Intangibles, net................................. 184,463 6,155 -- 190,618
Other assets..................................... 5,473 30 -- 5,503
-------------- ------- ------ -----------
$ 609,603 $ 54,350 $ -- $ 663,953
-------------- ------- ------ -----------
-------------- ------- ------ -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................... $ 254,864 $ 4,419 $ -- $ 259,283
Accrued expenses and other liabilities......... 50,808 30,759 4,500(a) 86,067
Accrued restructuring costs.................... 20,902 -- -- 20,902
Deferred revenue............................... 13,923 -- -- 13,923
Deferred income taxes.......................... 13,519 9 -- 13,528
Current portion of long-term debt.............. 8,908 318 -- 9,226
-------------- ------- ------ -----------
Total current liabilities.................. 362,924 35,505 4,500 402,929
Long-term debt, less current portion............. 128,581 5,370 -- 133,951
Other liabilities................................ -- 659 -- 659
Minority interests............................... -- 431 -- 431
Stockholders' equity:
Common stock................................... 27 -- 6(b) 33
Class B common stock........................... 2 -- -- 2
Common stock of Morgan & Banks Limited......... -- 1,526 (1,526) (c) --
Additional paid-in capital..................... 171,973 2,780 1,520 (b,c 176,273
Foreign currency translation adjustment........ (543) (204) -- (747)
Retained earnings (deficit).................... (53,361) 8,283 (4,500) (a) (49,578)
-------------- ------- ------ -----------
Total stockholders' equity................. 118,098 12,385 (4,500) 125,983
-------------- ------- ------ -----------
$ 609,603 $ 54,350 $ -- $ 663,953
-------------- ------- ------ -----------
-------------- ------- ------ -----------
</TABLE>
- ------------------------
(a) To accrue for costs to be incurred in connection with the Transaction.
(b) Represents par value of the 5,937 shares to be issued in connection with the
Transaction, based on the number of outstanding M&B Shares as of the balance
sheet date.
(c) Par value of the M&B Shares is reclassified as additional paid-in capital
net of the par value of the newly issued TMP Common Stock.
19
<PAGE>
TMP WORLDWIDE INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
TMP MORGAN & BANKS PRO FORMA
WORLDWIDE INC. LIMITED COMBINED
-------------- ---------------- -----------
<S> <C> <C> <C>
Revenue:
Commissions and fees.......................................... $ 297,854 $ 52,220 $ 350,074
Temporary contracting......................................... -- 123,330 123,330
-------------- -------- -----------
Total revenue............................................. 297,854 175,550 473,404
-------------- -------- -----------
Operating expenses:
Salaries and related costs.................................... 164,012 45,000 209,012
Temporary contracting costs................................... -- 102,307 102,307
Office and general............................................ 91,060 18,157 109,217
Amortization of intangibles................................... 6,403 399 6,802
CEO bonus..................................................... 1,125 -- 1,125
Merger costs.................................................. 9,577 -- 9,577
-------------- -------- -----------
Total operating expenses.................................. 272,177 165,863 438,040
-------------- -------- -----------
Operating income................................................ 25,677 9,687 35,364
Interest expense, net........................................... (7,507) (202) (7,709)
Other expense, net.............................................. (842) (15) (857)
-------------- -------- -----------
Income before provision for income taxes, minority interests and
equity in losses of affiliates................................ 17,328 9,470 26,798
Provision for income taxes...................................... 7,735 3,712 11,447
Minority interests.............................................. -- 110 110
Equity in losses of affiliates.................................. (297) -- (297)
-------------- -------- -----------
Net income...................................................... $ 9,296 $ 5,648 $ 14,944
-------------- -------- -----------
-------------- -------- -----------
Net income per common and Class B common share:
Basic......................................................... $ 0.32 $ 0.43(a)
Diluted....................................................... $ 0.31 $ 0.42(a)
Weighted average shares outstanding:
Basic......................................................... 29,142 34,979(a)
Diluted....................................................... 29,949 35,926(a)
</TABLE>
- ------------------------
(a) Gives effect to the additional shares and options expected to be issued in
connection with the Transaction, including M&B's weighted average basic and
diluted shares outstanding for the periods, which were 69,239 and 70,899,
respectively, multiplied by the assumed Exchange Ratio of 0.08431.
If the Transaction is consummated with TMP Common Stock valued at $25.00 per
share, the minimum share price provided for in the Agreement, basic and
diluted weighted shares outstanding would have been 37,027 and 38,024
shares, respectively, and basic and diluted net income per Common and Class
B Common share would have been $0.40 and $0.39, respectively.
If the Transaction is consummated with TMP Common Stock valued at $40.00 per
share, the maximum share price provided for in the Agreement, basic and
diluted weighted shares outstanding would have been 34,070 and 34,996
shares, respectively, and basic and diluted net income per Common and Class
B Common share would have been $0.44 and $0.43, respectively.
20
<PAGE>
TMP WORLDWIDE INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
TMP AUSTIN KNIGHT MORGAN & BANKS PRO FORMA
WORLDWIDE INC. LIMITED(A) ADJUSTMENTS SUBTOTAL LIMITED COMBINED
-------------- ------------- ----------- ---------- ---------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Commissions and fees.......... $ 310,619 $ 34,800 $ -- $ 345,419 $ 71,950 $ 417,369
Temporary contracting......... -- -- -- -- 163,831 163,831
-------------- ------------- ----------- ---------- -------- -----------
Total revenue............. 310,619 34,800 -- 345,419 235,781 581,200
-------------- ------------- ----------- ---------- -------- -----------
Operating expenses:
Salaries and related costs.... 172,528 28,480 -- 201,008 60,342 261,350
Temporary contracting costs... -- -- -- -- 136,185 136,185
Office and general............ 101,176 5,758 -- 106,934 25,258 132,192
Amortization of intangibles... 6,269 -- 1,323(b) 7,592 558 8,150
CEO bonus..................... 1,500 -- -- 1,500 -- 1,500
-------------- ------------- ----------- ---------- -------- -----------
Total operating
expenses................ 281,473 34,238 1,323 317,034 222,343 539,377
-------------- ------------- ----------- ---------- -------- -----------
Operating income................ 29,146 562 (1,323) 28,385 13,438 41,823
Interest expense, net........... (8,813) (244) (2,896)(c) (11,953) (247) (12,200)
Other income (expense), net..... (181) 1,547 -- 1,366 (22) 1,344
-------------- ------------- ----------- ---------- -------- -----------
Income before provision for
income taxes, minority
interests and equity in losses
of affiliates................. 20,152 1,865 (4,219) 17,798 13,169 30,967
Provision for income taxes...... 9,571 1,442 (1,158)(d) 9,855 5,153 15,008
Minority interests.............. 143 -- -- 143 153 296
Equity in losses of affiliates.. (33) -- -- (33) -- (33)
-------------- ------------- ----------- ---------- -------- -----------
Net income...................... 10,405 423 (3,061) 7,767 7,863 15,630
Preferred stock dividends....... (123) -- -- (123) -- (123)
-------------- ------------- ----------- ---------- -------- -----------
Net income applicable to common
and Class B common
stockholders.................. $ 10,282 $ 423 $ (3,061) $ 7,644 $ 7,863 $ 15,507
-------------- ------------- ----------- ---------- -------- -----------
-------------- ------------- ----------- ---------- -------- -----------
Net income per common and Class
B common share:
Basic......................... $ 0.38 $ 0.47(e)
Diluted....................... $ 0.37 $ 0.46(e)
Weighted average shares
outstanding:
Basic......................... 27,224 32,998(e)
Diluted....................... 27,716 33,642(e)
</TABLE>
- ------------------------
(a) For the period January 1, 1997 through the date of the acquisition by TMP of
Austin Knight on August 26, 1997.
(b) To record amortization of intangibles arising from the acquisition of Austin
Knight, as if such acquisition occurred on January 1, 1997. Such
amortization is based on a 30 year life and is computed on an intangible
asset of $59,523, amortized for eight months.
(c) To record interest expense on borrowings of $47,208, at 9.2% for eight
months, made in connection with the acquisition of Austin Knight, as if such
acquisition occurred on January 1, 1997.
21
<PAGE>
TMP WORLDWIDE INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS (CONTINUED)
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
(d) To record the tax benefit on interest expense of $2,896 on borrowings for
the acquisition of Austin Knight, at an estimated tax rate of 40%.
(e) Gives effect to the additional shares and options expected to be issued in
connection with the Transaction, including M&B's weighted average basic and
diluted shares outstanding for the period, which were 68,489 and 70,289,
respectively, multiplied by the assumed Exchange Ratio of 0.08431.
If the Transaction is consummated with TMP Common Stock valued at $25.00 per
share, the minimum share price provided for in the Agreement, basic and
diluted weighted shares outstanding would have been 35,024 and 35,721
shares, respectively, and basic and diluted net income per Common and Class
B Common share would have been $0.44 and $0.43, respectively.
If the Transaction is consummated with TMP Common Stock valued at $40.00 per
share, the maximum share price provided for in the Agreement, basic and
diluted weighted shares outstanding would have been 32,099 and 32,719
shares, respectively, and basic and diluted net income per Common and Class
B Common share would have been $0.48 and $0.47, respectively.
22
<PAGE>
TMP WORLDWIDE INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
TMP MORGAN & BANKS PRO FORMA
WORLDWIDE INC. LIMITED COMBINED
-------------- ---------------- -----------
<S> <C> <C> <C>
Revenue:
Commissions and fees.......................................... $ 223,319 $ 61,084 $ 284,403
Temporary contracting......................................... -- 113,299 113,299
-------------- -------- -----------
Total revenue............................................. 223,319 174,383 397,702
-------------- -------- -----------
Operating expenses:
Salaries and related costs.................................... 122,964 45,507 168,471
Temporary contracting costs................................... -- 93,585 93,585
Office and general............................................ 74,252 21,944 96,196
Amortization of intangibles................................... 4,440 292 4,732
Special compensation.......................................... 52,019 -- 52,019
-------------- -------- -----------
Total operating expenses.................................. 253,675 161,328 415,003
-------------- -------- -----------
Operating income (loss)......................................... (30,356) 13,055 (17,301)
Interest expense, net........................................... (14,216) (27) (14,243)
Other income (expense), net..................................... (755) 141 (614)
-------------- -------- -----------
Income (loss) before provision for income taxes, minority
interests and equity in earnings of affiliates................ (45,327) 13,169 (32,158)
Provision for income taxes...................................... 4,125 4,812 8,937
Minority interests.............................................. 434 583 1,017
Equity in earnings of affiliates................................ 114 -- 114
-------------- -------- -----------
Net income (loss)............................................... (49,772) 7,774 (41,998)
Preferred stock dividends....................................... (210) -- (210)
-------------- -------- -----------
Net income (loss) applicable to common and Class B common
stockholders.................................................. $ (49,982) $ 7,774 $ (42,208)
-------------- -------- -----------
-------------- -------- -----------
Net (loss) per common and Class B common share:
Basic......................................................... $ (2.24) $ (1.51)
Diluted....................................................... $ (2.24) $ (1.51)
Weighted average shares outstanding:
Basic......................................................... 22,280 27,985(a)
Diluted....................................................... 22,280 27,985(a)
</TABLE>
- ------------------------
(a) Gives effect to the additional shares and options expected to be issued in
connection with the Transaction, including M&B's weighted average basic and
diluted shares outstanding for the period, which were 67,664 and 69,895,
respectively, multiplied by the assumed Exchange Ratio of 0.08431.
If the Transaction is consummated with TMP Common Stock valued at $25.00 per
share, the minimum share price provided for in the Agreement, basic and
diluted weighted shares outstanding would have been 29,986 and 29,986
shares, respectively, and basic and diluted net income per Common and Class
B Common share would have been $(1.41) and $(1.41), respectively.
If the Transaction is consummated with TMP Common Stock valued at $40.00 per
share, the maximum share price provided for in the Agreement, basic and
diluted weighted shares outstanding would have been 27,096 and 27,096
shares, respectively and basic and diluted net income per Common and Class B
Common share would have been $(1.56) and $(1.56), respectively.
23
<PAGE>
TMP WORLDWIDE INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
TMP MORGAN & BANKS PRO FORMA
WORLDWIDE INC. LIMITED COMBINED
-------------- ---------------- -----------
<S> <C> <C> <C>
Revenue:
Commissions and fees.......................................... $ 183,674 $ 44,881 $ 228,555
Temporary contracting......................................... -- 61,768 61,768
-------------- -------- -----------
Total revenue............................................. 183,674 106,649 290,323
-------------- -------- -----------
Operating expenses:
Salaries and related costs.................................... 100,162 31,701 131,863
Temporary contracting costs................................... -- 49,503 49,503
Office and general............................................ 57,310 17,032 74,342
Amortization of intangibles................................... 3,237 118 3,355
-------------- -------- -----------
Total operating expenses.................................. 160,709 98,354 259,063
-------------- -------- -----------
Operating income................................................ 22,965 8,295 31,260
Interest income (expense), net.................................. (10,654) 77 (10,577)
Other income (expense), net..................................... (1,057) 123 (934)
-------------- -------- -----------
Income before provision for income taxes, minority interests and
equity in losses of affiliates................................ 11,254 8,495 19,749
Provision for income taxes...................................... 5,100 3,136 8,236
Minority interests.............................................. 435 326 761
Equity in losses of affiliates.................................. (279) -- (279)
-------------- -------- -----------
Net income...................................................... 5,440 5,033 10,473
Preferred stock dividends....................................... (210) -- (210)
-------------- -------- -----------
Net income applicable to common and Class B common
stockholders.................................................. $ 5,230 $ 5,033 $ 10,263
-------------- -------- -----------
-------------- -------- -----------
Net income per common and Class B common share:
Basic......................................................... $ 0.24 $ 0.37(a)
Diluted....................................................... $ 0.23 $ 0.36(a)
Weighted average shares outstanding:
Basic......................................................... 22,045 27,670(a)
Diluted....................................................... 22,497 28,158(a)
</TABLE>
- ------------------------
(a) Gives effect to the additional shares and options expected to be issued in
connection with the Transaction including M&B's weighted average basic and
diluted shares outstanding for the period, which were 66,718 and 67,152,
respectively, multiplied by the assumed Exchange Ratio of 0.08431.
If the Transaction is consummated with TMP Common Stock valued at $25.00 per
share, the minimum share price provided for in the Agreement, basic and
diluted weighted shares outstanding would have been 29,643 and 30,145
shares, respectively, and basic and diluted net income per Common and Class
B Common share would have been $0.35 and $0.34, respectively.
If the Transaction is consummated with TMP Common Stock valued at $40.00 per
share, the maximum share price provided for in the Agreement, basic and
diluted weighted shares outstanding would have been 26,794 and 27,277
shares, respectively, and basic and diluted net income per Common and Class
B Common share would have been $0.38 and $0.38, respectively.
24
<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common Stock by
the Selling Stockholders.
DIVIDEND POLICY
TMP has never declared or paid any cash dividends on its Common Stock. The
Company currently anticipates that all future earnings will be retained by the
Company to support its growth strategy. Accordingly, TMP does not anticipate
paying cash dividends on the Common Stock for the foreseeable future. The
payment of any future dividends will be at the discretion of the Company's Board
of Directors and will depend upon, among other things, future earnings,
operations, capital requirements, the general financial condition of the
Company, contractual restrictions and general business conditions. The Company's
financing agreement prohibits the payment of dividends on Common Stock.
PRICE RANGE OF COMMON STOCK
The Common Stock is quoted on the Nasdaq National Market under the symbol
"TMPW." The Common Stock was initially offered to the public on December 12,
1996 at $14.00 per share. The following table sets forth for the periods
indicated the high and low reported sale prices per share for the Common Stock
as reported by the Nasdaq National Market.
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, 1999 HIGH LOW
- --------------------------------------------------------------------------- --------- ---------
<S> <C> <C>
First Quarter (through January 8, 1999).................................... $ 50.00 $ 38.75
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998 HIGH LOW
- --------------------------------------------------------------------------- --------- ---------
<S> <C> <C>
First Quarter.............................................................. $ 32.62 $ 21.62
Second Quarter............................................................. $ 34.88 $ 24.75
Third Quarter.............................................................. $ 39.19 $ 27.88
Fourth Quarter............................................................. $ 42.00 $ 20.50
--------- ---------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 HIGH LOW
- --------------------------------------------------------------------------- --------- ---------
<S> <C> <C>
First Quarter.............................................................. $ 22.00 $ 12.88
Second Quarter............................................................. $ 24.25 $ 17.00
Third Quarter.............................................................. $ 25.62 $ 19.00
Fourth Quarter............................................................. $ 28.75 $ 15.00
</TABLE>
The number of stockholders of record of Common Stock on January 8, 1999 was
approximately 380. On January 8, 1999, the last reported sale price of the
Common Stock as reported by the Nasdaq National Market was $41.00.
25
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth information as of December 31, 1998, except
as otherwise noted, with respect to the number of shares of Common Stock
beneficially owned by each of the Selling Stockholders. All of the shares
offered hereby were acquired by the Selling Stockholders from the Company
pursuant to the acquisition of Johnson, Smith & Knisely, Inc. and TASA. Except
for Gary Knisely, who currently owns 2.7% of the Common Stock and who will own
2.2% of the Common Stock after his sale of 150,000 shares of Common Stock
hereby, no other Selling Stockholder owns more than one percent of the
outstanding Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES
OF COMMON STOCK NUMBER OF SHARES OF COMMON STOCK
BENEFICIALLY OF COMMON STOCK BENEFICIALLY
OWNED PRIOR TO REGISTERED OWNED AFTER
SELLING STOCKHOLDER OFFERING HEREIN OFFERING(1)
- ---------------------------------------------------------- ---------------- ---------------- ----------------
<S> <C> <C> <C>
Gary Knisely.............................................. 771,353 150,000 621,353
Pierre Aussure............................................ 44,839 44,839 0
Gerhard Bartels........................................... 51,244 51,244 0
David Kenneth Bray........................................ 6,405 6,405 0
The TASA Ltd. Self Administered Pension Plan
F/B/O David Kenneth Bray................................ 35,230 35,230 0
Charles Marie Brusselmans................................. 9,608 9,608 0
Neil Campbell Callie...................................... 12,811 12,811 0
Remtor Nominees Pty. Ltd.
F/B/O Trevor Morton Clark............................... 3,202 3,202 0
Jo Carol Conover.......................................... 9,608 9,608 0
Manuel Gutierrez Cortines................................. 64,056 64,056 0
Edgar S.K. Dammroff....................................... 32,028 32,028 0
Victor Carlos Dana........................................ 48,042 48,042 0
The TASA Ltd. Self Administered Pension Plan
F/B/O Fiona Mary Hilton Darby........................... 38,433 38,433 0
The DeKesel Family 1998 Trust............................. 51,244 51,244 0
James P. Demchak.......................................... 41,636 41,636 0
Trevor M. Dunn............................................ 6,405 6,405 0
Luis Escudero Ygartua..................................... 32,028 32,028 0
Joaquim Espriu Malagelada................................. 54,447 54,447 0
Juan Manuel Farias Gutierrez.............................. 25,622 25,622 0
The TASA Ltd. Self Administered Pension Plan
F/B/O Patrick John Michael Fearon....................... 41,636 41,636 0
Richard L. Fleming........................................ 3,202 3,202 0
Michael Franzino.......................................... 44,839 44,839 0
Vito Gioia................................................ 54,447 54,447 0
Duane R. Goar............................................. 41,636 41,636 0
Frans Jacob Gosses........................................ 6,405 6,405 0
Christian A.F. Groh....................................... 9,608 9,608 0
Luminoz Staff Superannuation Fund
F/B/O R. Neil Hatherly.................................. 9,608 9,608 0
RJ & SG Ingersoll Superannuation Fund
F/B/O Russel J. Ingersoll............................... 19,216 19,216 0
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES
OF COMMON STOCK NUMBER OF SHARES OF COMMON STOCK
BENEFICIALLY OF COMMON STOCK BENEFICIALLY
OWNED PRIOR TO REGISTERED OWNED AFTER
SELLING STOCKHOLDER OFFERING HEREIN OFFERING(1)
- ---------------------------------------------------------- ---------------- ---------------- ----------------
<S> <C> <C> <C>
Phoenix Holdings Pty. Ltd.
F/B/O Russel J. Ingersoll............................... 16,014 16,014 0
Klaus Jacobs.............................................. 64,056 64,056 0
Thomas R. Keller.......................................... 41,636 41,636 0
Dag Einhard Kremer-Nehring................................ 9,608 9,608 0
Michel LeGuillou.......................................... 6,405 6,405 0
Harvey D. Letcher......................................... 16,014 16,014 0
Claudia K. Liebesny....................................... 12,811 12,811 0
David H. W. Lowry......................................... 35,230 35,230 0
Peter Magnet.............................................. 64,056 64,056 0
Bernhard Mahlo............................................ 9,608 9,608 0
Warren L. McGregor........................................ 32,028 32,028 0
John McLaughlin........................................... 70,461 70,461 0
Massimo Misticoni......................................... 16,014 16,014 0
Maria Elena Quijada Cordero............................... 6,405 6,405 0
Terteducon Pty. Ltd.
F/B/O Gregor A. Ramsey.................................. 6,405 6,405 0
Reinhard Fritz Rijke...................................... 76,867 76,867 0
Herbert Schmaderer........................................ 32,028 32,028 0
The TASA Self Administered Pension Plan
F/B/O Andrew R.F. Simpson............................... 41,636 41,636 0
Michael T.D. Squires...................................... 64,056 64,056 0
Yarramay Pty Ltd.......................................... 51,244 51,244 0
Hans Uher................................................. 32,028 32,028 0
Van Es Superannuation Fund................................ 12,811 12,811 0
Strathwood Unit Trust
F/B/O Alan R. Van Es.................................... 19,216 19,216 0
Victoriano Vila Vilar..................................... 12,811 12,811 0
Robert Bruce Whaley....................................... 9,608 9,608 0
Jeffrey C. Wierichs....................................... 6,405 6,405 0
Gabriele D.E. Willner-Lange............................... 57,650 57,650 0
Andrea M. Wine............................................ 57,650 57,650 0
J. Herbert Wise........................................... 16,014 16,014 0
Heinz Henning Witt........................................ 9,608 9,608 0
</TABLE>
- ------------------------
(1) Assumes that all shares offered by each Selling Stockholder are sold in this
offering.
PLAN OF DISTRIBUTION
The Company is registering the shares of Common Stock offered hereby on
behalf of the Selling Stockholders. All expenses of the registration of the
shares offered hereby are to be borne by the Company, except that the Selling
Stockholders will pay underwriting discounts, selling commissions, and fees and
expenses, if any, of counsel or other advisers to the Selling Stockholders.
27
<PAGE>
The distribution of the shares of Common Stock by the Selling Stockholders
(or their respective donees and pledgees) may be effected from time to time in
one or more transactions (which may involve block transactions) in the
over-the-counter market (including the Nasdaq National Market) or any exchange
on which the Common Stock may then be listed, in negotiated transactions,
through the writing of options on shares (whether such options are listed on an
options exchange or otherwise), or a combination of such methods of sale, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Selling Stockholders (or
their respective donees and pledgees) may effect such transactions by selling
shares to or through broker-dealers, and such broker-dealer may receive
compensation in the form of underwriting discounts, concessions or commissions
from the Selling Stockholders and/or purchasers of shares for whom they may act
as agent (which compensation may be in excess of customary commissions). The
Selling Stockholders (or their respective donees and pledgees) may also sell
such shares of Common Stock pursuant to Rule 144 promulgated under the
Securities Act, or may pledge shares as collateral for margin accounts and such
shares could be resold pursuant to the terms of such accounts. The Selling
Stockholders and any broker-dealers that act in connection with the sale of the
Common Stock might be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act and any commission received by them and any profit
on the resale of the shares of Common Stock as principal might be deemed to be
underwriting discounts and commissions under the Securities Act. The Selling
Stockholders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the shares against certain
liabilities, including liabilities arising under the Securities Act.
Because the Selling Stockholders may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, the Selling Stockholders
will be subject to prospectus delivery requirements under the Securities Act.
Furthermore, in the event of a "distribution" of the shares, such Selling
Stockholders, any selling broker or dealer and any "affiliated purchasers" may
be subject to Regulation M under the Exchange Act, which Regulation prohibits,
with certain exceptions, any such person from bidding for or purchasing any
security which is the subject of such distribution until his participation in
that distribution is completed. In addition, Regulation M under the Exchange Act
prohibits, with certain exceptions, any "stabilizing bid" or "stabilizing
purchase" for the purpose of pegging, fixing or stabilizing the price of Common
Stock in connection with this offering.
The Selling Stockholders have agreed with the Company not to effect any sale
or distribution of Common Stock during any period that is designated by TMP as
"restricted" under TMP's normal policies governing sales of Common Stock by its
directors, officers and employees. The TASA Stockholders have agreed with the
Company not to effect any sale or distribution of Common Stock until after
financial results covering at least thirty (30) days of combined operations of
TMP and TASA Holding AG after August 31, 1998 are published, and otherwise
during any period of time or in a manner which would call into question the
accounting treatment of TMP's acquisition of TASA Holding AG as a "pooling-of-
interests."
In order to comply with certain state securities laws, if applicable, the
Common Stock will not be sold in a particular state unless the Common Stock has
been registered or qualified for sale in such state or an exemption from
registration or qualification is available and complied with.
LEGAL MATTERS
Legal matters relating to the Common Stock have been passed upon for the
Company by Fulbright & Jaworski L.L.P., New York, New York 10103.
28
<PAGE>
EXPERTS
The consolidated financial statements and schedule included in the Company's
Annual Report on Form 10-K/A for the year ended December 31, 1997 and the
Company's Information Statement on Schedule 14C, dated January 6. 1999, which
are incorporated by reference in this Prospectus, have been audited by BDO
Seidman, LLP, independent certified public accountants, and the consolidated
financial statements of Neville Jeffress Australia Pty Limited and subsidiaries
incorporated by reference in this Prospectus have been audited by BDO Nelson
Parkhill, independent auditors, to the extent and for the periods set forth in
their reports incorporated herein by reference, and are incorporated herein in
reliance upon the authority of said firm as experts in accounting and auditing.
The audited consolidated financial statements of M&B incorporated by reference
in this Prospectus and Registration Statement have been audited by Pannell Kerr
Forster, independent chartered accountants, as indicated in their report with
respect thereto, and are incorporated herein in reliance upon the authority of
said firm as experts in accounting and auditing.
The consolidated financial statements of Austin Knight Limited and its
Subsidiaries incorporated by reference in this Prospectus have been audited by
KPMG, independent chartered accountants, to the extent and for the periods set
forth in their report incorporated by reference herein and are included in
reliance upon such report given upon the authority of such firm as experts in
auditing and accounting.
29
