<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
<TABLE>
<C> <S>
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
</TABLE>
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
<TABLE>
<C> <S>
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
</TABLE>
FOR THE TRANSITION PERIOD FROM TO .
COMMISSION FILE NUMBER: 000-21571
------------------------
TMP WORLDWIDE INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 13-3906555
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
</TABLE>
622 THIRD AVENUE, 39TH FLOOR, NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
(212) 351-7000
(Registrant's telephone number, including area code)
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
Indicate the number of shares outstanding of each of the issuer's class of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
CLASS OUTSTANDING ON NOVEMBER 6, 2000
----- -------------------------------
<S> <C>
Common Stock..................................... 93,016,140
Class B Common Stock............................. 4,762,000
</TABLE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets--September 30, 2000
and
December 31, 1999......................................... 3
Consolidated Condensed Statements of Income (Loss)--Three
Months and Nine Months Ended September 30, 2000 and
1999...................................................... 4
Consolidated Condensed Statements of Comprehensive Income
(Loss)--Three Months and Nine Months Ended September 30,
2000 and 1999............................................. 5
Consolidated Condensed Statement of Stockholders'
Equity--Nine Months Ended September 30, 2000.............. 6
Consolidated Condensed Statements of Cash Flows--Nine Months
Ended September 30, 2000 and 1999......................... 7
Notes to Consolidated Condensed Financial Statements........ 8-21
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 22-34
Item 3. Quantitative and Qualitative Disclosures about Market
Risk...................................................... 35
PART II OTHER INFORMATION
Item 2(c). Changes in Securities and Use of Proceeds................... 36
Item 6. Exhibits and Reports on Form 8-K............................ 36
Signature................................................... 37
</TABLE>
2
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
-------------- -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 505,116 $ 64,615
Accounts receivable, net.................................. 556,322 466,573
Work-in-process........................................... 36,889 25,632
Prepaid and other......................................... 62,131 60,053
---------- ----------
Total current assets.................................... 1,160,458 616,873
Property and equipment, net............................... 107,839 81,026
Intangibles, net.......................................... 452,040 311,873
Deferred income taxes..................................... 22,037 25,237
Other assets.............................................. 34,470 22,505
---------- ----------
$1,776,844 $1,057,514
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 347,136 $ 365,945
Accrued expenses and other current liabilities............ 232,618 135,706
Accrued integration and restructuring costs............... 21,815 21,453
Deferred commissions and fees............................. 127,733 72,298
Current portion of long term debt......................... 9,706 11,068
---------- ----------
Total current liabilities............................... 739,008 606,470
Long term debt, less current portion...................... 28,587 100,102
Other long-term liabilities............................... 25,359 30,726
---------- ----------
Total liabilities....................................... 792,954 737,298
---------- ----------
Minority interest........................................... -- 9
---------- ----------
Stockholders' equity:
Preferred stock, $.001 par value, authorized 800,000
shares; issued and outstanding: none.................... -- --
Common stock, $.001 par value, authorized 1,000,000,000
shares; issued and outstanding: 92,521,968 and
81,715,184 shares....................................... 92 81
Class B common stock, $.001 par value, authorized
39,000,000 shares; issued and outstanding: 4,762,000
shares.................................................. 5 5
Additional paid-in capital.................................. 1,062,500 367,868
Other comprehensive loss.................................... (63,870) (4,899)
Deficit..................................................... (14,837) (42,848)
---------- ----------
Total stockholders' equity.............................. 983,890 320,207
---------- ----------
$1,776,844 $1,057,514
========== ==========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
3
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (LOSS)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Commissions and fees................................ $339,239 $236,648 $900,642 $640,923
-------- -------- -------- --------
Operating expenses:
Salaries & related................................ 168,582 129,159 478,275 371,591
Office & general.................................. 70,671 48,907 199,072 147,989
Marketing & promotion............................. 48,842 17,676 116,565 47,263
Merger & integration.............................. 14,823 34,808 37,146 46,262
Restructuring..................................... -- -- -- 2,789
Amortization of intangibles....................... 4,390 3,202 11,930 9,369
-------- -------- -------- --------
Total operating expenses........................ 307,308 233,752 842,988 625,263
-------- -------- -------- --------
Operating income.................................... 31,931 2,896 57,654 15,660
-------- -------- -------- --------
Other income (expense):
Interest income (expense), net.................... 6,345 (3,031) 13,674 (9,230)
Other, net........................................ 209 (910) (377) (2,421)
-------- -------- -------- --------
6,554 (3,941) 13,297 (11,651)
-------- -------- -------- --------
Income (loss) before provision for income taxes,
minority interests and equity in losses of
affiliates........................................ 38,485 (1,045) 70,951 4,009
Provision for income taxes.......................... 15,165 2,089 34,714 3,583
-------- -------- -------- --------
Income (loss) before minority interests and equity
in losses of affiliates........................... 23,320 (3,134) 36,237 426
Minority interests.................................. (62) -- (386) 107
Equity in losses of affiliates...................... -- (100) -- (300)
-------- -------- -------- --------
Net income (loss) applicable to common and Class B
common stockholders............................... $ 23,382 $ (3,234) $ 36,623 $ 19
======== ======== ======== ========
Net income (loss) per common and Class B common
share:
Basic............................................. $ 0.24 $ (0.04) $ 0.38 $ 0.00
======== ======== ======== ========
Diluted........................................... $ 0.23 $ (0.04) $ 0.36 $ 0.00
======== ======== ======== ========
Weighted average shares outstanding:
Basic............................................. 96,705 84,754 95,176 83,992
======== ======== ======== ========
Diluted........................................... 103,515 84,754 102,135 88,661
======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
4
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
-------------------
2000 1999
-------- --------
<S> <C> <C>
Net income (loss)........................................... $ 23,382 $ (3,234)
Foreign currency translation adjustment..................... (21,034) (1,276)
-------- --------
Comprehensive income (loss)................................. $ 2,348 $ (4,510)
======== ========
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------
2000 1999
-------- -------
<S> <C> <C>
Net income.................................................. $ 36,623 $ 19
Foreign currency translation adjustment..................... (58,971) (697)
-------- -----
Comprehensive loss.......................................... $(22,348) $(678)
======== =====
</TABLE>
See accompanying notes to consolidated condensed financial statements.
5
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
CLASS B
COMMON STOCK,
$.001 PAR VALUE ADDITIONAL OTHER TOTAL
-------------------- PAID-IN COMPREHENSIVE STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL LOSS DEFICIT EQUITY
---------- -------- --------- -------- ---------- -------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1,
2000.................... 81,715,184 $81 4,762,000 $5 $ 367,868 $ (4,899) $(42,848) $320,207
Issuance of common stock
in connection with a
pubic offering completed
February 2, 2000........ 8,000,000 8 -- -- 594,230 -- -- 594,238
Issuance of common stock
in connection with the
exercise of options..... 1,811,112 2 -- -- 27,747 -- -- 27,749
Tax benefit from the
exercise of stock
options................. -- -- -- -- 10,096 -- -- 10,096
Issuance of common stock
in connection with
acquisitions............ 904,717 1 -- -- 60,261 -- -- 60,262
Issuance of common stock
for matching
contribution to 401(k)
plan.................... 14,399 -- -- -- 1,023 -- -- 1,023
Issuance of common stock
for employee stay
bonuses................. 26,702 -- -- -- 648 -- -- 648
Other issuances of common
stock of pooled
entities................ 49,854 -- -- -- 627 -- -- 627
Foreign currency
translation
adjustment.............. -- -- -- -- -- (58,971) -- (58,971)
Pooled company earnings
included in both current
and previous periods.... -- -- -- -- -- -- (285) (285)
Dividends declared by
pooled companies........ -- -- -- -- -- -- (8,327) (8,327)
Net income................ -- -- -- -- -- -- 36,623 36,623
---------- --- --------- -- ---------- -------- -------- --------
Balance, September 30,
2000.................... 92,521,968 $92 4,762,000 $5 $1,062,500 $(63,870) $(14,837) $983,890
========== === ========= == ========== ======== ======== ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
6
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
2000 1999
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 36,623 $ 19
--------- ---------
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization........................... 43,878 33,445
Provision for doubtful accounts......................... 18,448 8,908
Common stock issued for matching contribution to 401(k)
plan and employee stay bonuses........................ 1,671 2,031
Tax effect of stock options............................. 10,096 6,214
(Gain) loss on disposal & write-down of fixed assets.... (35) 7,297
Provision (benefit) for deferred income taxes........... 13,919 (6,802)
Minority interests and other............................ (386) 1,176
Effect of pooled companies included in more than one
period................................................ (285) 3,784
Changes in assets and liabilities, net of effects of
purchases of businesses:
Increase in accounts receivable, net.................... (75,370) (77,932)
(Increase) decrease in work-in-process, prepaid and
other assets.......................................... (36,864) 12,693
Increase in deferred commissions and fees............... 53,800 31,570
Increase (decrease) in accounts payable, accrued
expenses and other current liabilities................ (9,359) 49,538
--------- ---------
Total adjustments..................................... 19,513 71,922
--------- ---------
Net cash provided by operating activities............. 56,136 71,941
--------- ---------
Cash flows from investing activities:
Capital expenditures...................................... (48,697) (23,216)
Payments for purchases of businesses, net of cash
acquired................................................ (92,148) (21,829)
Proceeds from sale of assets and other.................... -- 9,420
--------- ---------
Net cash used in investing activities................. (140,845) (35,625)
--------- ---------
Cash flows from financing activities:
Borrowings under line of credit and proceeds from issuance
of debt................................................. 150,367 927,935
Repayments under line of credit and principal payments on
debt.................................................... (233,494) (947,608)
Net proceeds from issuance of common stock................ 594,238 2,419
Cash received from the exercise of employee stock
options................................................. 27,749 8,159
Other..................................................... -- (2,000)
Dividends paid by pooled entities......................... (8,327) (14,030)
Payments on capitalized leases............................ (3,212) (10,752)
--------- ---------
Net cash provided by (used in) financing activities... 527,321 (35,877)
--------- ---------
Effect of exchange rate changes on cash and cash
equivalents............................................. (2,111) (590)
--------- ---------
Net increase (decrease) in cash and cash equivalents...... 440,501 (151)
Cash and cash equivalents, beginning of period............ 64,615 74,459
--------- ---------
Cash and cash equivalents, end of period.................. $ 505,116 $ 74,308
========= =========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
7
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
NOTE 1--BASIS OF PRESENTATION
The consolidated condensed interim financial statements included herein have
been prepared by TMP Worldwide Inc. ("TMP" or the "Company") without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the information
presented not misleading.
These statements reflect all adjustments, consisting of normal recurring
adjustments that, in the opinion of management, are necessary for fair
presentation of the information contained herein. It is suggested that these
consolidated condensed financial statements be read in conjunction with (i) the
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1999 and (ii) the
supplemental consolidated financial statements filed on Form 8-K dated July 21,
2000. The Company follows the same accounting policies in preparation of interim
reports.
During the period of January 1, 2000 through June 30, 2000, the Company
consummated mergers with the following companies in transactions that provided
for the exchange of all of the outstanding stock of each entity for a total of
4,819,272 shares of TMP common stock. Such transactions were accounted for as
poolings of interest (the "First Half 2000 Mergers"):
<TABLE>
<CAPTION>
NUMBER OF
ENTITY BUSINESS SEGMENT ACQUISITION DATE TMP SHARES ISSUED
------ ----------------------- ----------------- -----------------
<S> <C> <C> <C>
HW Group PLC...................... Selection & Temporary February 16, 2000 715,769
Contracting
Microsurf, Inc.................... Interactive February 16, 2000 684,462
Burlington Wells, Inc............. Selection & Temporary February 29, 2000 52,190
Contracting
Illsley Bourbonnais............... Executive Search March 1, 2000 246,702
System One Services, Inc.......... Selection & Temporary April 3, 2000 1,022,257
Contracting
GTR Advertising................... Recruitment Advertising April 4, 2000 54,041
Virtual Relocation.com, Inc....... Interactive May 9, 2000 947,916
Business Technologies Ltd......... Interactive May 17, 2000 205,703
Simpatix, Inc..................... Interactive May 31, 2000 155,480
Rollo Associates, Inc............. Executive Search May 31, 2000 110,860
Web Technology Partners, Inc...... Interactive May 31, 2000 623,892
</TABLE>
During the period of July 1, 2000 through September 30, 2000, the Company
consummated mergers with the following companies in transactions that provided
for the exchange of all of the outstanding stock of each entity for a total of
355,513 shares of TMP common stock. Such transactions were accounted for as
poolings of interests (the "Third Quarter 2000 Mergers"). The Third Quarter
8
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
NOTE 1--BASIS OF PRESENTATION (CONTINUED)
2000 Mergers combined with the First Half 2000 Mergers are referred to herein as
the "Nine Months 2000 Mergers."
<TABLE>
<CAPTION>
NUMBER OF
TMP SHARES
ENTITY BUSINESS SEGMENT ACQUISITION DATE ISSUED
------ ----------------------- ---------------- ----------
<S> <C> <C> <C>
Rich, Gardner & Associates, Ltd......... Recruitment Advertising August 31, 2000 43,535
Stratascape, Inc........................ Selection & Temporary August 31, 2000 311,978
Contracting
</TABLE>
The Company's consolidated financial statements have been retroactively
restated as of September 30, 1999 and for the three and nine months ended
September 30, 1999 to reflect the Nine Months 2000 Mergers. As a result, the
financial position, and statements of income (loss), comprehensive income (loss)
and cash flows are presented as if the combining companies had been consolidated
for all periods presented. In addition, the consolidated statement of
stockholders' equity reflects the accounts of TMP as if the additional common
stock issued in connection with these mergers had been issued for all periods
when each of the related companies had issued their shares and for the amounts
that reflect the exchange ratios of the mergers.
In addition, for the period October 1, 1999 through September 30, 2000 the
Company completed 18 acquisitions using the purchase method of accounting. Given
the significant number of acquisitions affecting the periods presented, the
results of operations from period to period may not necessarily be comparable.
Furthermore, results of operations for the interim periods are not necessarily
indicative of annual results.
Amounts charged to clients for Temporary Contracting services are reported
net of the costs paid to the temporary contractor. The details for such amounts
are:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------
2000 1999
-------- --------
<S> <C> <C>
Temporary Contracting revenue........................... $421,958 $363,723
Temporary Contracting costs............................. 318,770 291,969
-------- --------
Temporary Contracting, billings and commissions and
fees.................................................. $103,188 $ 71,754
======== ========
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
-------------------
2000 1999
-------- --------
<S> <C> <C>
Temporary Contracting revenue........................... $172,386 $133,029
Temporary Contracting costs............................. 124,611 107,101
-------- --------
Temporary Contracting, billings and commissions and
fees.................................................. $ 47,775 $ 25,928
======== ========
</TABLE>
On January 27, 2000, in connection with its third public offering, the
Company issued an aggregate of, on a post-split basis, 8,000,000 shares of
common stock at a purchase price of $77 5/16 per share. The
9
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
NOTE 1--BASIS OF PRESENTATION (CONTINUED)
offering was completed in February 2000. The net proceeds from this offering
were $594.2 million, and approximately $82 million was used to pay down debt on
the Company's credit line. The remainder is being invested in short and medium
term interest bearing instruments until used for acquisitions, strategic equity
investments and general corporate purposes.
Basic earnings per share assumes no dilution, and is computed by dividing
income available to common and Class B common stockholders by the weighted
average number of common and Class B common shares outstanding during each
period. Diluted earnings per share reflect, in periods in which they have a
dilutive effect, the effect of common shares issuable upon exercise of stock
options, based on the treasury stock method of computing such effects and
contingent shares.
A reconciliation of shares used in calculating basic and diluted earnings
per common and Class B common share follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------
2000 1999
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Basic...................................................... 95,176 83,992
Effect of assumed conversion of options.................... 6,959 4,669
------- ------
Diluted.................................................... 102,135 88,661
======= ======
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
SEPTEMBER 30,
-------------------
2000 1999
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Basic...................................................... 96,705 84,754
Effect of assumed conversion of options.................... 6,810 *
------- ------
Diluted.................................................... 103,515 84,754
======= ======
</TABLE>
------------------------
* Effect of the conversion of stock options outstanding is anti-dilutive. The
number of options is approximately 3,669.
NOTE 2--NATURE OF BUSINESS AND CREDIT RISK
The Company operates in five business segments: Interactive (including
Monster-Registered Trademark-.com and Monstermoving(sm).com), Recruitment
Advertising, Selection & Temporary Contracting, Executive Search and Yellow Page
Advertising. The Company's commissions and fees are earned from the following
activities: (i) advertisements placed on its career and other websites,
(ii) resume and other database access, (iii) selling and placing recruitment
advertising and related services, including employee retention programs,
(iv) mid-level employee selection and temporary contracting services,
(v) executive placement services, (vi) resume screening services, and
(vii) selling and placing Yellow Page Advertising and related services. These
services are provided to a large number of customers in many different
10
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
NOTE 2--NATURE OF BUSINESS AND CREDIT RISK (CONTINUED)
industries. The Company operates principally throughout North America, the
United Kingdom, Continental Europe and the Asia-Pacific Region (primarily
Australia and New Zealand).
NOTE 3--BUSINESS COMBINATIONS
ACQUISITIONS ACCOUNTED FOR USING THE POOLING OF INTERESTS METHOD
During the period of July 1, 2000 through September 30, 2000, the Company
completed the following mergers, which provided for the exchange of all of the
outstanding stock of each entity for a total of 355,513 shares of TMP common
stock. Such transactions were accounted for as poolings of interests.
<TABLE>
<CAPTION>
GEOGRAPHIC NUMBER OF TMP
ENTITY BUSINESS SEGMENT REGION ACQUISITION DATE SHARES ISSUED
------ ----------------------- ------------- ---------------- -------------
<S> <C> <C> <C> <C>
Rich, Gardner &
Associates, Ltd..... Recruitment Advertising North America August 31, 2000 43,535
Stratascape, Inc...... Selection & Temporary North America August 31, 2000 311,978
Contracting
</TABLE>
Commissions and fees, net income (loss) applicable to common and Class B
common stockholders and net income (loss) per common and Class B common share of
the combining companies reflecting the effect of the Nine Months 2000 Mergers
are as follows:
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, 1999 SEPTEMBER 30, 1999
------------------ ------------------
<S> <C> <C>
COMMISSIONS AND FEES:
TMP, as previously reported on Form 10-K for
the year ended December 31, 1999.......... $206,331 $561,481
HW Group, PLC............................... 11,478 32,781
Microsurf, Inc.............................. 1,977 4,185
Burlington Wells, Inc....................... 796 1,617
Illsley Bourbonnais......................... 1,666 4,396
System One Services, Inc.................... 9,418 23,976
GTR Advertising............................. 751 2,312
Virtual Relocation.com, Inc................. 450 951
Business Technologies Ltd................... 197 591
Simpatix, Inc............................... 8 1
Rollo Associates, Inc....................... 998 2,603
Web Technology Partners, Inc................ 918 2,184
Rich, Gardner & Associates, Ltd............. 751 1,953
Stratascape, Inc............................ 909 1,892
-------- --------
TMP, as restated............................ $236,648 $640,923
======== ========
</TABLE>
11
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
NOTE 3--BUSINESS COMBINATIONS (CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, 1999 SEPTEMBER 30, 1999
------------------ ------------------
<S> <C> <C>
NET INCOME (LOSS) APPLICABLE TO COMMON AND
CLASS B COMMON STOCKHOLDERS:
TMP, as previously reported on Form 10-K for
the year ended December 31, 1999.......... $ (5,847) $ (4,917)
HW Group, PLC............................... (14) 191
Microsurf, Inc.............................. 661 1,489
Burlington Wells, Inc....................... 124 389
Illsley Bourbonnais......................... 805 2,177
System One Services, Inc.................... 465 (455)
GTR Advertising............................. 88 462
Virtual Relocation.com, Inc................. (686) (1,570)
Business Technologies Ltd................... 29 85
Simpatix, Inc............................... (135) (376)
Rollo Associates, Inc....................... 272 866
Web Technology Partners, Inc................ 56 (18)
Rich, Gardner & Associates, Ltd............. 255 508
Stratascape, Inc............................ 693 1,188
-------- --------
TMP, as restated............................ $ (3,234) $ 19
======== ========
NET INCOME (LOSS) PER COMMON AND CLASS B
COMMON SHARE:
TMP, as previously reported on Form 10-K for
the year ended December 31, 1999
Basic..................................... $ (0.07) $ (0.06)
Diluted................................... $ (0.07) $ (0.06)
TMP, as restated
Basic..................................... $ (0.04) $ 0.00
Diluted................................... $ (0.04) $ 0.00
</TABLE>
MERGER & INTEGRATION COSTS INCURRED WITH POOLING OF INTERESTS TRANSACTIONS
Merger and integration costs are expenses incurred in connection with
business combinations accounted for under the pooling of interests method of
accounting. In general, merger costs are comprised of transaction costs (such as
advisory, legal and accounting fees, printing costs and costs incurred for the
subsequent registration of shares in connection with the transactions) and stay
bonuses. Integration costs are those associated with the elimination of
redundant facilities and personnel, integration of the operations of the pooled
entities and acceleration of benefits and separation pay in accordance with
pre-existing contractual change in control provisions.
In connection with pooling of interests transactions completed prior to
September 30, 2000, the Company expensed merger and integration costs of $37,146
in the nine months ended September 30,
12
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
NOTE 3--BUSINESS COMBINATIONS (CONTINUED)
2000. Of this amount $20,889 is for merger costs and $16,257 is for integration
costs. The merger costs for the nine month period ended September 30, 2000
consist of (a) $4,197 for payments made in connection with the repayment of debt
of a pooled company pursuant to change in control provisions of such debt,
(b) $6,983 of non-cash employee stay bonuses (c) $2,326 for severance and
(d) $7,383 of transaction related costs, including legal, accounting, printing,
advisory fees and the costs incurred for the subsequent registration of shares
issued in the mergers. The $16,257 of integration costs consists of (a) $4,900
for assumed obligations of closed facilities, (b) $11,214 for consolidation of
acquired facilities and (c) $875 for severance, relocation and other employee
costs, partially offset by a $732 recovery of a reserve for receivables. See
schedule of Accrued Integration and Restructuring Costs in the section below.
During the nine months ended September 30, 1999, the Company expensed merger
and integration costs of $46,262 which were comprised of $11,850 of transaction
costs, $3,251 non-cash employee stay bonuses and $1,132 paid in cash to key
personnel of a pooled company as employee stay bonuses, $4,785 in separation
costs for the managers of an acquired company and $25,244 for integration costs.
Restructuring charges for the nine months ended September 30, 1999 were
$2,789. These charges relate to LAI's closing of its London and Hong Kong
offices prior to LAI's merger with TMP. These charges include $516 for the
write-off of leasehold improvements and fixed assets, $1,238 for severance
benefits payable to 24 employees, and $1,035 for consolidation of facilities
related to the restructuring.
ACQUISITIONS ACCOUNTED FOR USING THE PURCHASE METHOD
In addition to the pooling of interests transactions discussed above, in the
nine month period ended September 30, 2000, the Company completed twelve
acquisitions using the purchase method of accounting, eight Selection &
Temporary Contracting firms, two Recruitment Advertising firms and two
Interactive firms for the Monstermoving(sm).com business. The total amount of
cash paid for these acquisitions was approximately $98.7 million. In addition,
the Company issued 828,428 shares of common stock in connection with certain of
the above-mentioned acquisitions. Operations of these businesses have been
included in the consolidated financial statements from their acquisition dates.
The summarized unaudited pro forma results of operations set forth below for
the nine month periods ended September 30, 2000 and 1999 and the year ended
December 31, 1999 assume the acquisitions in 2000 and 1999 occurred as of the
beginning of the year of acquisition and the beginning of the preceding year.
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
------------------- ------------
2000 1999 1999
-------- -------- ------------
<S> <C> <C> <C>
Commissions and fees........................................ $937,413 $720,450 $970,865
Net income (loss) applicable to common and Class B common
stockholders.............................................. $ 38,206 $ 1,338 $ (7,609)
Net income (loss) per common and Class B common share:
Basic..................................................... $ 0.40 $ 0.02 $ (0.09)
Diluted................................................... $ 0.37 $ 0.01 $ (0.09)
</TABLE>
13
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
NOTE 3--BUSINESS COMBINATIONS (CONTINUED)
The unaudited pro forma results of operations are not necessarily indicative
of what actually would have occurred if the acquisitions had been completed at
the beginning of each of the periods presented, nor are the results of
operations necessarily indicative of the results that will be attained in the
future.
ACCRUED INTEGRATION AND RESTRUCTURING COSTS
In connection with its acquisitions, the Company formulated plans to
integrate the operations of the acquired companies. Such plans involve the
closure of certain offices of such companies and the elimination of redundant
management and employees. The objectives of the plans are to take advantage of
the Company's existing operating infrastructure and efficiencies or to develop
efficiencies from the infrastructure of the acquired companies, and to create a
single brand in the related markets in which the Company operates.
In connection with such plans, in the nine months ended September 30, 2000,
the Company (i) expensed, as part of merger and integration expenses, $16,257,
for companies acquired in transactions accounted for as poolings of interests
and (ii) increased goodwill by $2,592 for companies acquired in transactions
accounted for under the purchase method. These costs and liabilities include:
<TABLE>
<CAPTION>
ADDITIONS DEDUCTIONS
--------------------- ------------------------
BALANCE APPLIED BALANCE
DECEMBER 31, CHARGED TO AGAINST SEPTEMBER 30,
1999 GOODWILL EXPENSED RELATED ASSET PAYMENTS 2000
------------ ---------- -------- ------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Assumed obligations on closed
leased facilities................ $ 9,564 $ 323 $ 4,900 $199 $ (6,482) $ 8,504(a)
Consolidation of acquired
facilities....................... 8,715 340 11,214 -- (9,977) 10,292(b)
Contracted lease payments exceeding
current market costs............. 562 -- -- -- 199 761(c)
Severance, relocation and other
employee costs................... 954 1,929 875 -- (3,158) 600(d)
Recovery of provision for
uncollectible receivables........ -- -- (732) 732 -- --
Pension obligations................ 1,658 -- -- -- -- 1,658(e)
------- ------ ------- ---- -------- -------
Total.............................. $21,453 $2,592 $16,257 $931 $(19,418) $21,815
======= ====== ======= ==== ======== =======
</TABLE>
------------------------
(a) Accrued liabilities for surplus property in the amount of $8,504 as of
September 30, 2000 relate to leased office locations of acquired companies
that were either unutilized prior to the acquisition date or will be closed
by December 31, 2000 in connection with the restructuring plans. The amount
is based on the present value of minimum future lease obligations, net of
estimated sublease income.
(b) Other costs associated with the closure or consolidation of existing offices
of acquired companies in the amount of $10,292 as of September 30, 2000
relate to termination costs of contracts relating to billing systems,
external reporting systems and other contractual arrangements with third
parties.
(c) Above-market lease costs in the amount of $761 as of September 30, 2000
relate to the present value of contractual lease payments in excess of
current market lease rates.
14
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
NOTE 3--BUSINESS COMBINATIONS (CONTINUED)
(d) Estimated employee severance and relocation expenses and other employee
costs in the amount of $600 as of September 30, 2000 relate to estimated
severance for terminated employees at closed locations, costs associated
with employees transferred to continuing offices and other related costs.
Employee groups affected include sales, service, administrative and
management personnel at duplicate locations as well as redundant management
and administrative personnel at corporate headquarters. As of September 30,
2000, the accrual related to approximately 50 employees, senior management,
sales, service and administrative personnel. During the nine months ended
September 30, 2000, payments of $3,158 were made for severance and charged
against the reserve.
(e) Pension obligations in the amount of $1,658 were assumed in connection with
the acquisition of Austin Knight.
The Company continues to evaluate and assess the impact of duplicate
responsibilities and office locations. Pursuant to the conclusions reached by
the Emerging Issues Task Force ("EITF") of the FASB in EITF Issues No. 94-3,
"Liability Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity (including Certain Costs Incurred in a Restructuring)," and
No. 95-3, "Recognition of Liabilities in Connection with a Purchase Business
Combination," in connection with the finalization of preliminary plans relating
to purchased entities, additions to restructuring reserves within one year of
the date of acquisition are treated as additional purchase price, but costs
incurred resulting from plan revisions made after the first year will be charged
to operations in the period in which they occur.
NOTE 4--SEGMENT AND GEOGRAPHIC DATA
The Company is engaged in five lines of business: Interactive (including
Monster-Registered Trademark-.com and Monstermoving(sm).com), Recruitment
Advertising, Selection & Temporary Contracting, Executive Search and Yellow Page
Advertising. Operations are conducted in several geographic regions: North
America, Asia-Pacific (primarily Australia and New Zealand), the United Kingdom
and Continental Europe. The following is a summary of the Company's operations
by business segment and by geographic region, for
15
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
NOTE 4--SEGMENT AND GEOGRAPHIC DATA (CONTINUED)
the nine month and three month periods ended September 30, 2000 and 1999.
Overhead is allocated based on retroactively restated commissions and fees.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
INTERACTIVE SELECTION
-------------------------- & YELLOW
INFORMATION BY BUSINESS MONSTER- RECRUITMENT CONTRACTING EXECUTIVE PAGE
SEGMENT MONSTER-REGISTERED TRADEMARK-.COM MOVING(SM).COM ADVERTISING TEMPORARY SEARCH ADVERTISING TOTAL
---------------------------- ------------ ----------- ---------- ---------- -------- --------- --------
NINE MONTHS ENDED
SEPTEMBER 30, 2000
Commissions and fees:
Traditional sources......... $ -- $ -- $146,159 $263,167 $135,240 $75,666 $620,232
Interactive................. 232,052 7,257 21,645 12,520 25 6,911 280,410
-------- -------- -------- -------- -------- ------- --------
Total commissions and
fees...................... 232,052 7,257 167,804 275,687 135,265 82,577 900,642
-------- -------- -------- -------- -------- ------- --------
Operating expenses:
Salaries & related, office &
general, marketing &
promotion, and overhead... -- -- 128,900 243,053 120,244 62,395 554,592
Interactive (a)............. 190,036 15,501 17,584 10,177 21 6,001 239,320
Merger & integration........ 122 1,734 2,536 22,572 9,318 864 37,146
Amortization of
intangibles............... 348 321 4,867 4,241 761 1,392 11,930
-------- -------- -------- -------- -------- ------- --------
Total operating expenses.... 190,506 17,556 153,887 280,043 130,344 70,652 842,988
-------- -------- -------- -------- -------- ------- --------
Operating income (loss):
Traditional sources......... -- -- 9,856 (6,699) 4,917 11,015 19,089
Interactive................. 41,546 (10,299) 4,061 2,343 4 910 38,565
-------- -------- -------- -------- -------- ------- --------
Total operating income
(loss).................... $ 41,546 $(10,299) $ 13,917 $ (4,356) $ 4,921 $11,925 57,654
======== ======== ======== ======== ======== =======
Total other income, net..... * * * * * * 13,297
--------
Income before provision for
income taxes, minority
interests and equity in
losses of affiliates...... * * * * * * $ 70,951
========
</TABLE>
--------------------------
(a) Is comprised of salaries & related, office & general, marketing & promotion
and allocated overhead.
* Not allocated.
16
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
NOTE 4--SEGMENT AND GEOGRAPHIC DATA (CONTINUED)
<TABLE>
<CAPTION>
INTERACTIVE
------------------------------- SELECTION & YELLOW
MONSTER- RECRUITMENT TEMPORARY EXECUTIVE PAGE
INFORMATION BY BUSINESS SEGMENT MONSTER-C-.COM MOVING(SM).COM ADVERTISING CONTRACTING SEARCH ADVERTISING TOTAL
------------------------------- -------------- -------------- ----------- ----------- --------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
NINE MONTHS ENDED
SEPTEMBER 30, 1999
Commissions and fees:
Traditional sources......... $ -- $ -- $139,271 $199,291 $131,975 $79,522 $550,059
Interactive................. 69,019 5,136 8,526 4,960 -- 3,223 90,864
------- ------ -------- -------- -------- ------- --------
Total commissions and fees.. 69,019 5,136 147,797 204,251 131,975 82,745 640,923
------- ------ -------- -------- -------- ------- --------
Operating expenses:
Salaries & related, office &
general, marketing &
promotion, and overhead... -- -- 120,595 166,824 130,007 51,400 468,826
Interactive (a)............. 64,245 5,361 7,577 3,944 13,806 3,084 98,017
Merger & integration........ -- -- 401 6,343 39,142 376 46,262
Restructuring............... -- -- -- -- 2,789 -- 2,789
Amortization of intangibles.. 175 12 4,833 2,089 710 1,550 9,369
------- ------ -------- -------- -------- ------- --------
Total operating expenses.... 64,420 5,373 133,406 179,200 186,454 56,410 625,263
------- ------ -------- -------- -------- ------- --------
Operating income (loss):
Traditional sources......... -- -- 13,442 24,035 (40,673) 26,196 23,000
Interactive................. 4,599 (237) 949 1,016 (13,806) 139 (7,340)
------- ------ -------- -------- -------- ------- --------
Total operating income (loss).. $ 4,599 $ (237) $ 14,391 $ 25,051 $(54,479) $26,335 15,660
======= ====== ======== ======== ======== =======
Total other expense, net.... * * * * * * (11,651)
--------
Income before provision for
income taxes, minority
interests and equity in
losses of affiliates...... * * * * * * $ 4,009
========
</TABLE>
------------------------
(a) Is comprised of salaries & related, office & general, marketing & promotion
and allocated overhead.
* Not allocated.
17
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
NOTE 4--SEGMENT AND GEOGRAPHIC DATA (CONTINUED)
<TABLE>
<CAPTION>
INTERACTIVE
-------------------------------------------------- SELECTION &
MONSTER- RECRUITMENT TEMPORARY EXECUTIVE
INFORMATION BY BUSINESS SEGMENT MONSTER-REGISTERED TRADEMARK-.COM MOVING(SM).COM ADVERTISING CONTRACTING SEARCH
------------------------------- --------------------------------- -------------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
THREE MONTHS ENDED
SEPTEMBER 30, 2000
Commissions and fees:
Traditional sources.......... $ -- $ -- $49,360 $ 95,326 $47,888
Interactive.................. 97,086 3,099 8,928 6,341 25
------- ------- ------- -------- -------
Total commissions and fees... 97,086 3,099 58,288 101,667 47,913
------- ------- ------- -------- -------
Operating expenses:
Salaries & related, office &
general, marketing &
promotion, and overhead.... -- -- 43,952 81,468 40,761
Interactive (a).............. 77,960 5,487 6,486 5,138 21
Merger & integration......... -- 947 1,403 8,809 3,664
Amortization of intangibles... 184 265 1,491 2,852 373
------- ------- ------- -------- -------
Total operating expenses..... 78,144 6,699 53,332 98,267 44,819
------- ------- ------- -------- -------
Operating income (loss):
Traditional sources.......... -- -- 2,514 2,197 3,090
Interactive.................. 18,942 (3,600) 2,442 1,203 4
------- ------- ------- -------- -------
Total operating income (loss).. $18,942 $(3,600) $ 4,956 $ 3,400 $ 3,094
======= ======= ======= ======== =======
Total other income, net...... * * * * *
Income before provision for
income taxes, minority
interests and equity in
losses of affiliates....... * * * * *
<CAPTION>
YELLOW
PAGE
INFORMATION BY BUSINESS SEGMENT ADVERTISING TOTAL
------------------------------- ----------- --------
<S> <C> <C>
THREE MONTHS ENDED
SEPTEMBER 30, 2000
Commissions and fees:
Traditional sources.......... $29,285 $221,859
Interactive.................. 1,901 117,380
------- --------
Total commissions and fees... 31,186 339,239
------- --------
Operating expenses:
Salaries & related, office &
general, marketing &
promotion, and overhead.... 25,003 191,184
Interactive (a).............. 1,819 96,911
Merger & integration......... -- 14,823
Amortization of intangibles... (775) 4,390
------- --------
Total operating expenses..... 26,047 307,308
------- --------
Operating income (loss):
Traditional sources.......... 5,057 12,858
Interactive.................. 82 19,073
------- --------
Total operating income (loss).. $ 5,139 31,931
=======
Total other income, net...... * 6,554
--------
Income before provision for
income taxes, minority
interests and equity in
losses of affiliates....... * $ 38,485
========
</TABLE>
------------------------
(a) Is comprised of salaries & related, office & general, marketing & promotion
and allocated overhead.
* Not allocated.
18
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
NOTE 4--SEGMENT AND GEOGRAPHIC DATA (CONTINUED)
<TABLE>
<CAPTION>
INTERACTIVE
-------------------------------------------------- SELECTION &
MONSTER- RECRUITMENT TEMPORARY EXECUTIVE
INFORMATION BY BUSINESS SEGMENT MONSTER-REGISTERED TRADEMARK-.COM MOVING(SM).COM ADVERTISING CONTRACTING SEARCH
------------------------------- --------------------------------- -------------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
THREE MONTHS ENDED SEPTEMBER
30, 1999
Commissions and fees:
Traditional sources......... $ -- $ -- $44,542 $75,601 $ 47,776
Interactive................. 31,387 2,427 2,879 1,925 --
------- ------- ------- ------- --------
Total commissions and fees... 31,387 2,427 47,421 77,526 47,776
------- ------- ------- ------- --------
Operating expenses:
Salaries & related, office &
general, marketing &
promotion, and overhead... -- -- 38,139 58,775 40,535
Interactive (a)............. 26,377 2,520 2,671 1,458 4,983
Merger & integration........ -- -- 203 1,556 32,703
Amortization of intangibles... 54 6 1,598 1,060 240
------- ------- ------- ------- --------
Total operating expenses.... 26,431 2,526 42,611 62,849 78,461
------- ------- ------- ------- --------
Operating income (loss):
Traditional sources......... -- -- 4,602 14,210 (25,702)
Interactive................. 4,956 (99) 208 467 (4,983)
------- ------- ------- ------- --------
Total operating income (loss).. $ 4,956 $ (99) $ 4,810 $14,677 $(30,685)
======= ======= ======= ======= ========
Total other expense, net.... * * * * *
Loss before provision for
income taxes, minority
interests and equity in
losses of affiliates...... * * * * *
<CAPTION>
YELLOW
PAGE
INFORMATION BY BUSINESS SEGMENT ADVERTISING TOTAL
------------------------------- ----------- --------
<S> <C> <C>
THREE MONTHS ENDED SEPTEMBER
30, 1999
Commissions and fees:
Traditional sources......... $28,540 $196,459
Interactive................. 1,571 40,189
------- --------
Total commissions and fees... 30,111 236,648
------- --------
Operating expenses:
Salaries & related, office &
general, marketing &
promotion, and overhead... 18,677 156,126
Interactive (a)............. 1,607 39,616
Merger & integration........ 346 34,808
Amortization of intangibles... 244 3,202
------- --------
Total operating expenses.... 20,874 233,752
------- --------
Operating income (loss):
Traditional sources......... 9,273 2,383
Interactive................. (36) 513
------- --------
Total operating income (loss).. $ 9,237 2,896
=======
Total other expense, net.... * (3,941)
--------
Loss before provision for
income taxes, minority
interests and equity in
losses of affiliates...... * $ (1,045)
========
</TABLE>
------------------------
(a) Is comprised of salaries & related, office & general, marketing & promotion
and allocated overhead.
* Not allocated.
19
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
NOTE 4--SEGMENT AND GEOGRAPHIC DATA (CONTINUED)
<TABLE>
<CAPTION>
UNITED CONTINENTAL
INFORMATION BY GEOGRAPHIC REGION NORTH AMERICA ASIA-PACIFIC KINGDOM EUROPE TOTAL
-------------------------------- ------------- ------------ ------- ----------- -----
<S> <C> <C> <C> <C> <C>
NINE MONTHS ENDED SEPTEMBER 30, 2000
Commissions and fees.................. $539,261 $136,559 $122,218 $102,604 $900,642
Income (loss) before income taxes,
minority interests and equity in
losses of affiliates................ $ 63,759 $ 14,274 $(16,727) $ 9,645 $ 70,951
NINE MONTHS ENDED SEPTEMBER 30, 1999
Commissions and fees.................. $354,231 $121,244 $101,885 $ 63,563 $640,923
Income (loss) before income taxes,
minority interests and equity in
losses of affiliates................ $(20,165) $ 17,909 $ 1,997 $ 4,268 $ 4,009
</TABLE>
<TABLE>
<CAPTION>
UNITED CONTINENTAL
INFORMATION BY GEOGRAPHIC REGION NORTH AMERICA ASIA-PACIFIC KINGDOM EUROPE TOTAL
-------------------------------- ------------- ------------ ------- ----------- -----
<S> <C> <C> <C> <C> <C>
THREE MONTHS ENDED SEPTEMBER 30, 2000
Commissions and fees.................. $210,821 $45,747 $ 46,909 $35,762 $339,239
Income (loss) before income taxes,
minority interests and equity in
losses of affiliates................ $ 37,447 $ 5,470 $ (7,806) $ 3,374 $ 38,485
THREE MONTHS ENDED SEPTEMBER 30, 1999
Commissions and fees.................. $135,303 $43,415 $ 36,180 $21,750 $236,648
Income (loss) before income taxes,
minority interests and equity in
losses of affiliates................ $ (8,628) $ 8,661 $ 1,992 $(3,070) $ (1,045)
</TABLE>
NOTE 5--SUBSEQUENT EVENT--JOBTRAK CORPORATION ("JOBTRAK")
On November 7, 2000 the Company and JOBTRAK entered into a merger agreement
by which the Company will acquire all of the outstanding shares of JOBTRAK in
exchange for shares of TMP common stock. The transaction is being accounted for
as a pooling of interests. JOBTRAK provides password protected, co-branded job
listing and resume databases and interview software for over 1,000 college
career centers.
JOBTRAK enables employers to target their job listings to students and
alumni from specific campuses to ensure visibility within a highly qualified and
motivated pool of candidates. It also provides the following products and
services:
- InterviewTRAK--An on-campus interview schedule management tool for career
centers and employers. It allows employers to review resumes and select
candidates, and enables students to sign up for interview time slots
online.
- Career & Alumni Contact Network--A database which helps job-seeking
college students connect with career mentors in their desired field and
geographical location.
20
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
NOTE 5--SUBSEQUENT EVENT--JOBTRAK CORPORATION ("JOBTRAK") (CONTINUED)
- Student Employment Database--A system which allows college and university
career centers to post and manage on-campus, work-student, and co-op
positions for students.
- Job Search Resources--Valuable resources for students including a detailed
guide to the job search process, a guide to writing your resume and online
message boards.
- Virtual Career Fairs--JOBTRAK creates and hosts national and
college-specific virtual career fairs. Job seekers can visit employer
booths, research the opportunities and apply for positions.
- ScholarshipTRAK--Provided free to students, the ScholarshipTRAK database
contains information on more than 600,000 individual scholarship awards
from more than 8,000 funding sources.
21
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
STATEMENTS IN THIS QUARTERLY REPORT ON FORM 10-Q CONCERNING OUR BUSINESS
OUTLOOK OR FUTURE ECONOMIC PERFORMANCE, ANTICIPATED PROFITABILITY, GROSS
BILLINGS, COMMISSIONS AND FEES, EXPENSES OR OTHER FINANCIAL ITEMS AND STATEMENTS
CONCERNING ASSUMPTIONS MADE OR EXCEPTIONS AS TO ANY FUTURE EVENTS, CONDITIONS,
PERFORMANCE OR OTHER MATTERS ARE "FORWARD-LOOKING STATEMENTS" AS THAT TERM IS
DEFINED UNDER THE FEDERAL SECURITIES LAWS. FORWARD-LOOKING STATEMENTS ARE
SUBJECT TO RISKS, UNCERTAINTIES, AND OTHER FACTORS WHICH WOULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE STATED IN SUCH STATEMENTS. SUCH RISKS,
UNCERTAINTIES AND FACTORS INCLUDE, BUT ARE NOT LIMITED TO, (I) WE MAY NOT BE
ABLE TO MANAGE OUR GROWTH, (II) OUR SUCCESS DEPENDS ON THE VALUE OF OUR BRANDS,
PARTICULARLY MONSTER-REGISTERED TRADEMARK-.COM, (III) THE ACCEPTANCE AND
EFFECTIVENESS OF INTERNET ADVERTISING IS UNPROVEN, (IV) WE FACE RISKS RELATING
TO DEVELOPING TECHNOLOGY, INCLUDING THE INTERNET, (V) WE DEPEND ON TRADITIONAL
MEDIA, (VI) WE ARE VULNERABLE TO INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS
BROUGHT AGAINST US BY OTHERS, (VII) WE HAVE NEVER PAID CASH DIVIDENDS,
(VIII) COMPUTER VIRUSES MAY CAUSE OUR SYSTEMS TO INCUR DELAYS OR INTERRUPTIONS,
(IX) INTERNET USERS MAY NOT ACCEPT OUR INTERNET CONTENT, (X) WE FACE RISKS
ASSOCIATED WITH OUR ACQUISITION STRATEGY, (XI) OUR MARKETS ARE HIGHLY
COMPETITIVE, (XII) OUR OPERATING RESULTS FLUCTUATE FROM QUARTER TO QUARTER,
(XIII) THE EFFECT OF GLOBAL ECONOMIC FLUCTUATIONS, (XIV) WE DEPEND ON OUR
CONSULTANTS, (XV) OUR CONSULTANTS MAY DEPART WITH EXISTING EXECUTIVE SEARCH
CLIENTS, (XVI) WE FACE RISKS MAINTAINING OUR PROFESSIONAL REPUTATION AND BRAND
NAME, (XVII) WE FACE RESTRICTIONS IMPOSED BY OFF-LIMITS ARRANGEMENTS,
(XVIII) WE FACE RISKS RELATING TO OUR FOREIGN OPERATIONS, (XIX) WE DEPEND ON OUR
KEY PERSONNEL, (XX) WE ARE CONTROLLED BY A PRINCIPAL STOCKHOLDER, (XXI) THE
EFFECTS OF ANTI-TAKEOVER PROVISIONS COULD INHIBIT OUR ACQUISITION, (XXII) THERE
MAY BE VOLATILITY IN OUR STOCK PRICE AND (XXIII) WE FACE RISKS ASSOCIATED WITH
GOVERNMENT REGULATION.
OVERVIEW
TMP Worldwide Inc. ("TMP" or the "Company"), through its flagship
Interactive product, Monster-Registered Trademark-.com (www.monster.com), is the
on-line recruitment leader. TMP is also the world's largest Recruitment
Advertising agency network, one of the world's largest Executive Search,
Selection and Temporary Contracting agencies, the world's largest Yellow Pages
Advertising agency, a provider of full service interactive advertising and
interactive marketing technology services, and a provider of online moving
services, through the Company's Website, Monstermoving(sm).com
(www.monstermoving.com).
Our Interactive growth is attributable to increased sales of our Internet
products, expansion of our Interactive businesses into certain European
countries, migration of our traditional businesses to the Internet and the
addition of new Interactive services. Monster.com is the leading global career
portal on the Web with over 17 million unique visits per month as of
August 2000 per Nielson I/Pro. The Monster.com global network consists of local
language and content sites in the United States, Canada (French and English),
United Kingdom, Ireland, France, Germany, the Netherlands, Belgium, Australia,
New Zealand, Singapore and Hong Kong.
A substantial part of our growth in Recruitment Advertising, Selection &
Temporary Contracting and Yellow Page Advertising has been achieved through
acquisitions accounted for as purchases. For the period January 1, 1997 through
September 30, 2000, for all segments, we completed 67 such acquisitions, with
estimated annual gross billings of approximately $545 million. Given the
significant number of acquisitions affecting the periods presented, the results
of operations from period to period may not necessarily be comparable.
Furthermore, during the nine months ended September 30, 2000, we completed
thirteen mergers that are being accounted for as poolings of interests (the
"Nine Months 2000 Pooled Companies").
22
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
During the period of January 1, 2000 through March 31, 2000, we consummated
mergers with HW Group PLC, Microsurf, Inc., Burlington Wells, Inc., and Illsley
Bourbonnais (the "First Quarter 2000 Mergers"). During the period of April 1,
2000 through June 30, 2000, we consummated mergers with System One
Services, Inc., GTR Advertising, Virtual Relocation.com, Inc., Business
Technologies Ltd., Simpatix, Inc., Rollo Associates, Inc., and Web Technology
Partners, Inc. (the "Second Quarter 2000 Mergers"). During the period of
July 1, 2000 through September 30, 2000, we consummated mergers with
Stratascape, Inc. and Rich, Gardner & Associates, Ltd. (the "Third Quarter 2000
Mergers"). Approximately 5.2 million shares of our common stock were issued in
exchange for all of the outstanding common stock of the Nine Months 2000 Pooled
Companies. The financial statements as of and for the nine months and quarter
ended September 30, 1999 have been retroactively restated as if the Nine Months
2000 Pooled Companies had been consolidated from January 1, 1999.
Gross billings refers to billings for advertising placed on the Internet, in
newspapers and telephone directories by our clients, and associated fees for
related services. In addition, Executive Search fees, Selection fees, and net
fees from Temporary Contracting services are also part of gross billings. Gross
billings for Recruitment Advertising and Yellow Page Advertising are not
included in our consolidated financial statements because they include a
substantial amount of funds that are collected from our clients but passed
through to publishers for advertisements. However, the trends in gross billings
in these two segments directly impact the commissions and fees earned because,
for these segments, we earn commissions based on a percentage of the media
advertising purchased at a rate established by the related publisher. We also
earn associated fees for related services; such amounts are also included in
gross billings. Publishers and third party Websites typically bill us for the
advertising purchased and we in turn bill our clients for this amount and retain
a commission. Generally, the payment terms for Yellow Page Advertising clients
require payment to us prior to the date payment is due to the publishers. The
payment terms with Recruitment Advertising clients typically require payment
when payment is due to publishers. Historically, we have not experienced
substantial problems with unpaid accounts.
Commissions and fees related to our Interactive businesses are derived from:
- job postings and access to the resume database and related services
delivered via the Internet, primarily our own Website, www.monster.com;
- searches for permanent and temporary employees, at the executive and
professional levels, and related services conducted through the Internet;
- Internet advertising services provided to our Yellow Page Advertising
clients;
- the providing of interactive advertising services and technologies, which
allow advertisers to measure and track sales, repeat traffic and other key
statistics to enable such advertisers to greatly reduce costs, while
driving only the most qualified users to their web sites; and
- interactive advertising, sponsorships and referral fees, primarily on our
own Website, www.monstermoving(sm).com.
Monstermoving(sm).com's (www.monstermoving.com) provides important
relocation information and services to Monster.com's job seeker and employer
community, which averages over 4.4 million unique visitors and over
17.0 million unique visits per month. According to the U.S. Census Department
1997 Study, approximately 20% of the general U.S. population is relocating at
any point in time and we
23
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TMP WORLDWIDE INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
believe that these additional relocation services will be highly valued by
Monster.com's audience and customer base.
Monstermoving(sm).com, was launched in October, 2000 and prior to that date
conducted business through the individual properties that the Company acquired
in 2000, primarily Virtual Relocation.com, Inc. and Microsurf, Inc., which were
accounted for as poolings of interest. It is already one of the Internet's most
comprehensive providers of moving-related analytical tools, and features
information that addresses the entire relocation process. This information
includes new residence listings, community maps, education summaries, mortgage
quotes, moving quotes, insurance quotes, address and utility change services,
and home repair and maintenance information.
Monstermoving(sm).com is directly accessible to Monster.com's large base of
consumer traffic through URL links and promotions on Monster.com. In addition,
the cross-selling of Monstermoving(sm).com's services has started with the
Company's other divisions and will provide an important new advertising venue
for moving-related clients, particularly in the Yellow Page Advertising
division, where over 30% of our Yellow Page revenues are derived from the moving
services industry, including van lines, truck rentals and home services.
For Recruitment Advertising in the U.S., publisher commissions historically
average 15% of recruitment advertising gross billings. We also earn fees from
related services such as campaign development and design, retention and referral
programs, resume screening, brochures and other collateral services, research
and other creative and administrative services. Outside of the U.S., where,
collectively, we derive the majority of our Recruitment Advertising commissions
and fees, our commission rates for recruitment advertising vary, historically
ranging from approximately 10% in Australia to 15% in Canada and the United
Kingdom.
Executive Search offers an advanced and comprehensive range of services
aimed at identifying the appropriate senior executive for our clients. Such
senior executives typically earn in excess of $250,000 annually. Our specialized
services include identification of candidates, competence measurement,
assessment of candidate/company cultural fit and transaction negotiation and
closure.
Selection & Temporary Contracting offers placement services for executives
and professionals in mid-level and temporary positions, as well as for specific
short-term projects. Our Selection business provides services similar to our
Executive Search business, and focuses on mid-level professionals or executives,
who typically earn between $75,000 and $150,000, annually. Our Temporary
Contracting business provides contract employees primarily in Australia, New
Zealand, the United Kingdom and the U.S.
We believe that our Executive Search and Selection & Temporary Contracting
services are helping to broaden the universe of both job seekers and employers
who utilize Monster.com. Through the use of Monster.com, Recruitment
Advertising, Selection & Temporary Contracting and Executive Search, we believe
that we can accommodate all of our clients' employee recruitment needs, which is
our "Intern to CEO" strategy.
We design and execute Yellow Page Advertising, receiving an effective
commission rate from directory publishers which historically approximated 20% of
Yellow Page Advertising gross billings. However, due to reductions in commission
rates by the publishers and higher discounts provided to clients, the rate
declined to approximately 19% in 1999 and was approximately 17.5% as of
September 30, 2000. In addition to base commissions, certain yellow pages
publishers pay increased commissions for volume placement by advertising
agencies. We typically recognize this additional
24
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
commission, if any, in the fourth quarter when it is certain that such
commission has been earned. No such amounts were reported in the fourth quarter
of 1999 due to the aggressive objectives set by the publishers, and the Company
does not foresee achieving these aggressive goals in the future.
Interactive commissions and fees were $280.4 million for the nine months
ended September 30, 2000, an increase of $189.5 million or 208.6% over the same
period of 1999, which had Interactive commissions and fees of $90.9 million.
This growth reflects an increase in the acceptance of our Interactive products
and services by existing and new clients and the effect of increased sales and
marketing activities. Recruitment Advertising commissions and fees were up 4.9%
at $146.2 million for the nine months ended September 30, 2000 versus
$139.3 million for the same period of 1999 reflecting modest growth in
traditional billings of 4.2% and increased fees for creative and other
value-added services. Selection & Temporary Contracting commissions and fees
were $263.2 million, up $63.9 million or 32.1% from $199.3 million for the same
period ended September 30, 1999. The increase reflects the greater demand for
professional level and information service technology employees worldwide,
particularly in mid-level management positions (annual salaries ranging from
$75,000 to $150,000), and acquisitions accounted for as purchases. Executive
Search commissions and fees were $135.2 million for the nine months ended
September 30, 2000, an increase of $3.2 million or 2.5% from $132.0 million for
the comparable nine months of 1999, reflecting strong global demand for senior
executive positions. Yellow Page Advertising billings increased 4.3% to
$431.7 million for the nine month period ended September 30, 2000 and
commissions and fees decreased 4.8% to $75.7 million for the nine months of 2000
compared to $79.5 million for the prior year period, reflecting substantially
reduced commissions paid by publishers and the effects of higher discounts for
certain large clients. Total commissions and fees as a percent of related
billings for the nine months ended September 30, 2000 were 49.6% as compared to
43.0% for the prior year period. The higher percentage reflects increased sales
volume for Interactive, Executive Search, and Selection & Temporary Contracting,
where the Company retains greater portions of the amounts billed.
25
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Based on our consolidated results for the periods ended September 30, 2000
and 1999, 42.4% and 46.5% respectively, of our consolidated commissions and fees
are attributable to clients outside the U.S.
RESULTS OF OPERATIONS
The following table sets forth our gross billings, commissions and fees,
commissions and fees as a percentage of gross billings, EBITDA and cash flow
information.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -----------------------
2000 1999 2000 1999
-------- -------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
GROSS BILLINGS:
Interactive(1)................................. $131,123 $ 45,059 $ 314,353 $ 101,863
Recruitment Advertising........................ 216,639 207,039 666,801 639,919
Selection & Temporary Contracting(2)........... 96,881 76,788 267,222 202,216
Executive Search............................... 47,888 47,776 135,240 132,006
Yellow Page Advertising........................ 162,789 156,580 431,658 413,692
-------- -------- ---------- ----------
Total............................................ $655,320 $533,242 $1,815,274 $1,489,696
======== ======== ========== ==========
COMMISSIONS AND FEES:
Interactive(1)................................. $117,380 $ 40,189 $ 280,410 $ 90,864
Recruitment Advertising........................ 49,360 44,542 146,159 139,271
Selection & Temporary Contracting(2)........... 95,326 75,601 263,167 199,291
Executive Search............................... 47,888 47,776 135,240 131,975
Yellow Page Advertising........................ 29,285 28,540 75,666 79,522
-------- -------- ---------- ----------
Total............................................ $339,239 $236,648 $ 900,642 $ 640,923
======== ======== ========== ==========
COMMISSIONS AND FEES AS A PERCENTAGE OF GROSS
BILLINGS:
Interactive(1)................................. 89.5% 89.2% 89.2% 89.2%
Recruitment Advertising........................ 22.8% 21.5% 21.9% 21.8%
Selection & Temporary Contracting(2)........... 98.4% 98.5% 98.5% 98.6%
Executive Search............................... 100.0% 100.0% 100.0% 100.0%
Yellow Page Advertising........................ 18.0% 18.2% 17.5% 19.2%
Total............................................ 51.8% 44.4% 49.6% 43.0%
EBITDA(3)........................................ $ 47,615 $ 14,384 $ 101,541 $ 46,277
Cash provided by operating activities............ $ 61,302 $ 57,208 $ 56,136 $ 71,941
Cash provided by (used in) investing
activities..................................... $(75,038) $ 1,235 $ (140,845) $ (35,625)
Cash provided by (used in) financing
activities..................................... $ 7,932 $(44,166) $ 527,321 $ (35,877)
Effect of exchange rate changes on cash and cash
equivalents.................................... $ (1,608) $ (884) $ (2,111) $ (590)
</TABLE>
------------------------
(1) Represents fees earned in connection with Recruitment, Yellow Page and other
advertisements placed on the Internet, Interactive moving services and
employment searches and temporary contracting services sourced through the
Internet.
26
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
(2) Amounts for temporary contracting are reported net of the costs paid to the
temporary contractor.
(3) Earnings before interest, income taxes, depreciation and amortization.
EBITDA is presented to provide additional information about our ability to
meet our future debt service, capital expenditures and working capital
requirements and is one of the measures which determines our ability to
borrow under our credit facility. EBITDA should not be considered in
isolation or as a substitute for operating income, cash flows from operating
activities and other income or cash flow statement data prepared in
accordance with generally accepted accounting principles or as a measure of
our profitability or liquidity.
EBITDA for the indicated periods is calculated as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
2000 1999 2000 1999
-------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Net income (loss).................................... $23,382 $(3,234) $ 36,623 $ 19
Interest (income) expense, net....................... (6,345) 3,031 (13,674) 9,230
Income tax expense................................... 15,165 2,089 34,714 3,583
Depreciation and amortization........................ 15,413 12,498 43,878 33,445
------- ------- -------- -------
EBITDA............................................... $47,615 $14,384 $101,541 $46,277
======= ======= ======== =======
</TABLE>
NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1999
Gross billings for the nine months ended September 30, 2000 were
$1,815.3 million, an increase of $325.6 million or 21.9% from $1,489.7 million
for the nine months ended September 30, 1999. Total commissions and fees for the
nine months ended September 30, 2000 were $900.6 million, an increase of
$259.7 million or 40.5% from $640.9 million for the comparable period in 1999.
Interactive commissions and fees for the nine months ended September 30, 2000
were $280.4 million, an increase of $189.5 million or 208.6% compared with
$90.9 million for the nine months ended September 30, 1999. The increase in
Interactive commissions and fees from the September 1999 period to the
September 2000 period is due to: (i) an increasing acceptance of our Interactive
services and products from existing clients, new clients and Internet users,
(ii) the benefits of Monster.com's marketing campaign, (iii) increases in the
services and content available on our websites, (iv) expansion into certain
European markets, (v) price increases on certain products, and (vi) the
continuing migration of our traditional businesses to the Internet. Recruitment
Advertising commissions and fees increased 4.9% to $146.2 million for the nine
months ended September 30, 2000 compared to $139.3 million for the first nine
months of 1999. This increase reflects moderate growth in traditional billings
related to publisher price increases for help-wanted advertisements placed in
newspapers partially offset by migration of traditional business to the
Internet. Accordingly, Interactive recruitment commissions and fees, which is
included in the Interactive number above, increased 153.9% to $21.6 million for
the nine months ended September 30, 2000 from $8.5 million for the comparable
1999 period. Selection & Temporary Contracting commissions and fees were
$263.2 million, up $63.9 million or 32.1% from $199.3 million for the period
ended September 30, 1999. The increase reflects a strong global labor market and
the resulting increased demand for professional workers, especially information
technology and finance employees, and acquisitions accounted for as purchases.
Executive Search commissions and fees were $135.2 million for the nine months
ended September 30, 2000, an increase of $3.2 million or 2.5% from
$132.0 million for the comparable nine months of 1999, reflecting the strong
labor market
27
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
and demand for senior executive positions. Yellow Page Advertising commissions
and fees were $75.7 million for the nine months ended September 30, 2000, a
decrease of $3.8 million or 4.8% from $79.5 million for the comparable nine
months of 1999. This decrease was due to substantially reduced commissions paid
by publishers and the effects of higher discounts for certain large clients.
Operating expenses for the nine months ended September 30, 2000 were
$843.0 million, compared with $625.3 million for the same period in 1999, an
increase of $217.7 million or 34.8%. The increase is primarily due to
$106.7 million in higher salaries and related costs due to organic growth and
acquisitions accounted for as purchases, $69.3 million in marketing and
promotion expenses, primarily related to Monster.com and $51.1 million in office
and general expenses, partially offset by reductions in merger and integration
costs of $9.2 million. As a percent of commissions and fees operating expenses
were 93.6% for the nine months ended September 30, 2000 compared with 97.6% for
the comparable 1999 period.
Salaries and related expenses for the nine months ended September 30, 2000
were $478.3 million, compared with $371.6 million for the same period in 1999.
The increase of $106.7 million or 28.7% is primarily due to acquisitions
accounted for as purchases and organic growth in Interactive and Selection &
Temporary Contracting operations. Synergies from acquisitions and benefits from
the scalability of our business, especially Monster.com, are reflected in the
decline of salaries and related expenses as a percent of commissions and fees to
53.1% for the nine months ended September 30, 2000 from 58.0% for the nine
months ended September 30, 1999.
Office and general expenses for the nine months ended September 30, 2000
were $199.1 million, compared with $148.0 million for the same period in 1999.
The increase of $51.1 million or 34.5% reflects organic growth and acquisitions
in Interactive and Selection & Temporary Contracting. Synergies from the
integration of acquisitions and the benefits of the scalability of the Company's
businesses, especially Monster.com, are reflected in the decline in office and
general expenses as a percentage of commissions and fees from 23.1% for the nine
months ended September 30, 1999 to 22.1% for the nine months ended
September 30, 2000.
Marketing and promotion expenses for the nine months ended September 30,
2000 were $116.6 million or 12.9% of commissions and fees, compared with
$47.3 million or 7.4% of commissions and fees for the same period in 1999. The
increase of $69.3 million or 146.6% is primarily due to higher marketing costs
for Monster.com and reflects the Company's plan to increase the promotion of
Monster.com with funds provided from increased revenues. The nine months ended
September 30, 2000 expenses include a pro rata charge pursuant to the content
and marketing agreement with America Online, Inc. ("AOL") whereby Monster.com,
for the payment of $100 million over four years, is the exclusive provider of
career search services in the U.S. and Canada to AOL members across seven AOL
properties, including the AOL Service, AOL Canada, Compuserve, ICQ, AOL.com,
Netscape and Digital City.
Merger and integration costs reflect costs incurred in connection with
acquisitions accounted for as poolings of interests and reflect integration of
their operations. Such costs were anticipated and factored into the prices paid
for these companies. For the nine months ended September 30, 2000 merger and
integration costs were $37.1 million compared with $46.3 million for the same
period in 1999, a decrease of $9.2 million or 19.7%. The $37.1 million is
comprised of $16.3 million for integration, $4.2 million for debt settlement
costs pursuant to change in control provisions of a pooled company's existing
loan, $6.9 million for the amortization of employee stay bonuses, payable in
stock, and $9.7 million in transaction related costs such as legal, accounting,
advisory fees and costs to register
28
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
the shares issued in the transactions. The $46.3 million for the nine months
ended September 30, 1999 is comprised of $4.8 million for separation pay and
accelerated vesting of employee stock and stock option grants, $11.9 million in
transaction related costs, including legal, accounting, printing and advisory
fees and the costs incurred for the subsequent registration of shares issued in
the acquisitions, $4.4 million for employee stay bonuses paid with stock,
options and cash, and $25.2 million of office and staff integration costs.
Restructuring charges for the nine months ended September 30, 1999 were
$2.8 million. These charges relate to LAI's closing of its London and Hong Kong
offices prior to LAI's merger with TMP. These charges include $0.5 million for
the write-off of leasehold improvements and fixed assets, $1.3 million for
severance benefits payable to 24 employees, and $1.0 million for consolidation
of facilities related to the restructuring.
As a result of the above, operating income for the nine months ended
September 30, 2000 was $57.7 million, an increase of $42.0 million or 268.2%
from $15.7 million for the comparable period in 1999.
Net interest income for the nine months ended September 30, 2000 was
$13.7 million, compared with a net interest expense of $9.2 million for the
comparable 1999 period, an improvement of $22.9 million or 248.1%. This
improvement primarily reflects the investing of net proceeds from the Company's
February 2000 follow-on offering after a significant portion of existing
long-term debt was repaid with a portion of such proceeds. The Company completed
the follow-on public offering of 4.0 million (8.0 million, adjusted for the
February 29, 2000 2-for-1 stock split) shares of common stock on February 2,
2000. The net proceeds raised by the Company totaled $594.2 million.
Taxes on income for the nine months ended September 30, 2000 were
$34.7 million on pre-tax profit of $71.0 million, compared with a tax of
$3.6 million on pre-tax profit of $4.0 million for the nine months of 1999. The
increase of $31.1 million reflects the higher pretax profit in the nine months
ended September 30, 2000. In addition, in each period the provision reflects
expenses that are not tax deductible; these are primarily related to merger
costs from pooling of interests transactions and amortization of certain
intangible assets. Also for both periods the provision is affected by profits
and losses from certain pooled entities that were not taxed at the corporate
level prior to their merger with TMP.
Minority interests in consolidated earnings for the nine months ended
September 30, 2000 was a $386,000 loss compared with a profit of $107,000 for
the nine months ended September 30, 1999.
Equity in losses of unconsolidated affiliates, which reflected losses
associated with the real estate advertising company in which the Company holds a
minority interest, was $300,000 for the nine months ended September 30, 1999.
As a result of all of the above, the net income available to common and
Class B common stockholders for the nine months ended September 30, 2000 was
$36.6 million compared to zero for the nine months ended September 30, 1999. On
a diluted per share basis, the net income available to common and Class B common
stockholders for the nine months ended September 30, 2000 was $0.36, compared to
$0.00 for the comparable 1999 period.
THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1999
Gross billings for the three months ended September 30, 2000 were
$655.3 million, an increase of $122.1 million or 22.9% from $533.2 million for
the three months ended September 30, 1999. Total
29
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
commissions and fees for the three months ended September 30, 2000 were
$339.2 million, an increase of $102.6 million or 43.4% from $236.6 million for
the comparable period in 1999. Interactive commissions and fees for the three
months ended September 30, 2000 were $117.4 million, an increase of
$77.2 million or 192.1% compared with $40.2 million for the three months ended
September 30, 1999. The increase in Interactive commissions and fees from the
September 1999 period to the September 2000 period is due to: (i) an increasing
acceptance of our Interactive services and products from existing clients, new
clients and Internet users, (ii) the benefits of Monster.com's marketing
campaign, (iii) increases in the services and content available on our websites,
(iv) expansion into certain European markets, (v) price increases on certain
products, and (vi) the continuing migration of our traditional businesses to the
Internet. Recruitment Advertising commissions and fees increased 10.8% to
$49.4 million for the three months ended September 30, 2000 compared to
$44.5 million for the third quarter of 1999, reflecting growth in traditional
billings of 4.6% related to new client wins, increased advertising spending by
existing clients, and increases in creative and other value-added services (such
as employee communication and retention) where the fees earned are higher than
advertising commissions. Interactive recruitment commissions and fees, included
in the $117.4 million Interactive number above, increased 210.1% to
$8.9 million for the three months ended September 30, 2000 from $2.9 million for
the comparable 1999 period. Selection & Temporary Contracting commissions and
fees were $95.3 million, up $19.7 million or 26.1% from $75.6 million for the
period ended September 30, 1999. The increase reflects the increasing worldwide
demand for professional level employees, specifically information technology and
finance professionals, and expansion through purchases. This division continues
to grow organically by leveraging the power of the Internet and the Monster.com
resume database. The division has also grown through targeted acquisitions, such
as QD Group Limited in the UK, making TMP Worldwide the largest legal placement
firm outside of the U.S. Executive Search commissions and fees were
$47.9 million for the three months ended September 30, 2000, an increase of
$0.1 million or 0.2% from $47.8 million the comparable three months of 1999.
Yellow Page Advertising commissions and fees were $29.3 million for the three
months ended September 30, 2000, an increase of $0.8 million or 2.6% from
$28.5 million for the comparable three months of 1999. This increase was due to
rate increases by publishers and net new clients.
Operating expenses for the three months ended September 30, 2000 were
$307.3 million, compared with $233.8 million for the same period in 1999, an
increase of $73.5 million or 31.5%. The increase is primarily due to
$39.4 million in higher salaries and related costs due to organic growth and
acquisitions accounted for as purchases, $21.8 million in office and general
expenses, and $31.1 million in marketing and promotion expenses, primarily
related to Monster.com, partially offset by a reduction in merger and
integration costs of $20.0 million. As a percent of commissions and fees
operating expenses were 90.6% for the three months ended September 30, 2000
compared with 98.8% for the comparable 1999 period.
Salaries and related expenses for the three months ended September 30, 2000
were $168.6 million, compared with $129.2 million for the same period in 1999.
The increase of $39.4 million or 30.5% is primarily due to acquisitions
accounted for as purchases and organic growth in Interactive and Selection &
Temporary Contracting operations. Salary and related expenses as a percent of
commissions and fees declined from 54.6% for the three months ended
September 30, 1999 to 49.7% for the three months ended September 30, 2000,
primarily due to synergies from acquisitions and the scalability of Monster.com.
Office and general expenses for the three months ended September 30, 2000
were $70.7 million compared with $48.9 million for the same period in 1999, an
increase of $21.8 million or 44.5%. The
30
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
increase reflects acquisitions accounted for as purchases and organic growth in
Interactive and Selection & Temporary Contracting operations. Synergies from
acquisitions and benefits from the scalability of Monster.com are reflected in
the decline in rent and other occupancy costs as a percent of commissions and
fees to 4.8% from 5.4%. However, this benefit was offset by higher travel &
entertainment, bad debts, and communication costs. Consequently, office &
general remained flat as a percent of commissions and fees at 20.8% for the
three months ended September 30, 2000 compared to 20.7% for the same period in
1999.
Marketing and promotion expenses for the three months ended September 30,
2000 were $48.8 million or 14.4% of commissions and fees, compared with
$17.7 million or 7.5% of commissions and fees for the same period in 1999. The
increase of $31.1 million or 176.3% is primarily due to higher marketing costs
for Monster.com and reflects the Company's plan to increase the promotion of
Monster.com with funds provided from increased revenues. The third quarter 2000
expenses include a pro rata charge pursuant to the content and marketing
agreement with America Online, Inc. ("AOL") whereby Monster.com, for the payment
of $100 million over four years, is the exclusive provider of career search
services in the U.S. and Canada to AOL members across seven AOL properties,
including the AOL Service, AOL Canada, Compuserve, ICQ, AOL.com, Netscape and
Digital City.
Merger and integration costs reflect costs incurred with acquisitions
accounted for as poolings of interests and reflect integration of their
operations. For the three months ended September 30, 2000 merger and integration
costs were $14.8 million compared with $34.8 million for the same period in
1999, a decrease of $20.0 million or 57.4%. Included in the 2000 amount was
$7.0 million for integration costs, $4.9 million in transaction costs,
$0.6 million of debt settlement costs pursuant to change in control provisions
of the loan in connection with an acquisition, $2.1 million for the amortization
of employee stay bonuses payable in stock in connection with certain of the
acquisitions, and $0.2 million paid in cash to key personnel of pooled companies
as employee stay bonuses. The merger and integration costs of $34.8 million for
the three months ended September 30, 1999 are comprised of $6.1 million in
transaction costs, $2.7 million in separation pay for the chief operating
officer of an acquired company, $23.6 million in integration costs and
$2.4 million of employee stay bonuses which were payable in stock and cash in
connection with certain of the acquisitions.
As a result of the above, operating income for the three months ended
September 30, 2000 was $31.9 million, an increase of $29.0 million or 1002.6%
from $2.9 million for the comparable period in 1999.
Net interest income for the three months ended September 30, 2000 was
$6.3 million, compared with a net interest expense of $3.0 million for the
comparable 1999 period, an improvement of $9.3 million or 309.3%. This
improvement primarily reflects the investing of net proceeds from the Company's
February 2000 follow-on offering after a significant portion of existing
long-term debt was repaid with a portion of such proceeds. The Company completed
the follow-on public offering of 4.0 million (8.0 million, adjusted for the
February 29, 2000 2-for-1 stock split) shares of common stock on February 2,
2000. The net proceeds raised by the Company totaled $594.2 million.
Taxes on income for the three months ended September 30, 2000 were
$15.2 million on pre-tax profit of $38.5 million, compared with a tax of
$2.1 million on a pre-tax loss of $1.0 million for the third quarter of 1999.
The tax increase of $13.1 million reflects the higher pretax profit in the three
months ended September 30, 2000. In addition, in each quarter the provision
reflects expenses that are not tax deductible; these are primarily related to
merger costs from pooling of interests transactions and amortization of certain
intangible assets. Also for both periods the provision is affected by profits
31
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TMP WORLDWIDE INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
and losses from certain pooled entities that were not taxed at the corporate
level prior to their merger with TMP.
Minority interests in consolidated earnings for the three months ended
September 30, 2000 was a $62,000 loss compared with no amount for the three
months ended September 30, 1999.
Equity in losses of unconsolidated affiliates, which reflected losses
associated with the real estate advertising company in which the Company holds a
minority interest, was $100,000 for the three months ended September 30, 1999.
As a result of all of the above, the net income available to common and
Class B common stockholders for the three months ended September 30, 2000 was
$23.4 million, an increase of $26.6 million from the net loss of $3.2 million
for the three months ended September 30, 1999. On a diluted per share basis, the
net income available to common and Class B common stockholders for the three
months ended September 30, 2000 was $0.23, compared to a net loss of $0.04 for
the comparable 1999 period.
LIQUIDITY AND CAPITAL RESOURCES
Our principal capital requirements have been to fund (i) acquisitions,
(ii) marketing and development of our Interactive business, (iii) working
capital, and (iv) capital expenditures. Our working capital requirements are
generally higher in the quarters ending March 31 and September 30 during which
payments to the major yellow page directory publishers are at their highest
levels. We have met our liquidity needs over the last three years through
(a) funds provided by operating activities, (b) equity offerings, (c) long-term
borrowings, and (d) capital leases. On January 27, 2000, in connection with its
third public offering, the Company issued an aggregate of, on a post split
basis, 8,000,000 shares of common stock at a purchase price of $77 5/16 per
share. The offering was completed in February 2000. The net proceeds from this
offering were $594.2 million, and approximately $82 million was used to pay down
debt on the Company's credit line. The remainder is being invested in short and
medium term interest bearing instruments until used for acquisitions, strategic
equity investments and general corporate purposes.
Net cash provided by operating activities for the nine months ended
September 30, 2000 was $56.1 million and net cash provided by operating
activities for the nine months ended September 30, 1999 was $71.9 million. The
decrease in cash provided by operating activities of $15.8 million for 2000 over
1999 was primarily attributable to (i) $49.5 million related to the decrease in
the use of funds for work-in-process and prepaid and other assets for the 2000
period over the 1999 period, (ii) $58.9 million resulting from decreases in cash
from accounts payable and accrued liabilities and (iii) $4.1 million due to the
effects of higher earnings from pooled companies in both the current and
previous period, partially offset by (i) a $71.9 million increase in earnings
after adjusting for non-cash items, (ii) $22.2 million resulting from increases
in deferred commissions and fees, primarily at Monster.com and (iii)
$2.6 million due to a smaller increase in accounts receivable for the 2000
period over the 1999 period, related mostly to growth at Monster.com,
Selection & Temporary Contracting and Recruitment Advertising.
EBITDA was $101.5 million for the nine months ended September 30, 2000, an
increase of $55.2 million or 119.4% from $46.3 million for the nine months ended
September 30, 1999. The increase primarily reflects, for the 2000 period, a
$42.0 million increase in operating profits, and $10.4 million more in
depreciation and amortization costs. As a percentage of commissions and fees,
EBITDA increased to 11.3% for the nine months ended September 30, 2000 as
compared with 7.2%
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TMP WORLDWIDE INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
for the nine months ended September 30, 1999. The higher percent reflects the
improved operating margins (including the effects of merger and integration
costs), which were 6.4% and 2.4% of commissions and fees for the 2000 and 1999
periods, respectively.
Net cash used in investing activities for the nine months ended
September 30, 2000 and 1999 was $140.8 million and $35.6 million, respectively.
The $105.2 million increase in cash used in 2000 compared to 1999 was due to a
$70.3 million increase in payments for business acquisitions, $25.5 million for
capital expenditures, primarily leasehold improvements and computer equipment
and software for the expansion of the Company's global technology infrastructure
and $9.4 million less in proceeds from the sale of assets.
We estimate that our expenditures for computer equipment and software,
furniture and fixtures, and leasehold improvements will be approximately $70 to
$80 million for the year ended December 31, 2000.
Our financing activities include equity offerings, borrowings and repayments
under our bank financing agreements and borrowings for and payments on
(i) installment notes, principally to finance acquisitions, (ii) capital leases
and (iii) equipment. Our financing activities for the nine months ended
September 30, 2000 provided net cash of $527.3 million and used $35.9 million in
September 30, 1999. The change of $563.2 million resulted primarily from
$594.2 million in net proceeds from our follow-on common stock offering and a
$19.6 million increase in cash received from the exercise of employee stock
options, partially offset by net repayments in the 2000 period of $86.3 million
against credit facilities and capitalized lease obligations compared with a net
increase in credit facilities and capitalized lease obligations of
$30.4 million in the prior year period.
At September 30, 2000, we had a $185 million committed line of credit from
our primary lender pursuant to a revolving credit agreement expiring
November 5, 2003. Of such line, at September 30, 2000, approximately
$150.9 million was unused and accounts receivable are sufficient to allow draw
down of the entire amount. Our current interest rate under the agreement is
LIBOR plus 50 basis points. In addition, we had secured lines of credit
aggregating $11.1 million for our operations in Australia, New Zealand, France,
Belgium, and Italy, of which approximately $7.8 million was unused at
September 30, 2000.
Cash and cash equivalents at September 30, 2000 were $505.1 million, an
increase of $440.5 million from $64.6 million at December 31, 1999, and were
$430.8 million higher than the September 30, 1999 balance of $74.3 million.
We intend to continue our acquisition strategy and the marketing and
promotion of our Interactive businesses through the use of cash-on-hand,
operating profits, issuance of additional shares of our common stock, borrowings
against our long-term debt facility and seller financed notes. We believe that
our anticipated cash flow from operations, cash-on-hand, as well as the
availability of funds under our existing financing agreements will provide us
with sufficient liquidity to meet our current foreseeable cash needs.
33
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
RECENT ACCOUNTING PRONOUNCEMENTS
During 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which had an initial adoption
date by the Company of January 1, 2000. During the second quarter of 1999, the
FASB postponed the adoption date of SFAS No. 133 until January 1, 2001. The FASB
further amended SFAS No. 133 in September 2000. SFAS No. 133 requires that all
derivative financial instruments be recorded on the consolidated balance sheets
at their fair value. Changes in the fair value of derivatives will be recorded
each period in earnings or other comprehensive earnings, depending on whether a
derivative is designated as part of a hedge transaction and, if it is, the type
of hedge transaction. Gains and losses on derivative instruments reported in
other comprehensive earnings will be reclassified as earnings in the periods in
which earnings are affected by the hedged item. The Company does not expect the
adoption of this statement to have a significant impact on the Company's results
of operations, financial position or cash flows.
In 1999, the SEC issued Staff Accounting Bulletin No. 101 dealing with
revenue recognition which is effective in the fourth quarter of 2000. The
Company does not expect its adoption to have a material effect on the Company's
financial statements.
In 2000, the Emerging Issues Task Force ("EITF") of the FASB issued EITF
Issue No. 00-2, "Website Development Costs," which established guidelines for
accounting for website development costs and is effective for quarters beginning
after September 30, 2000. Although the Company is still evaluating its impact,
the Company does not believe its adoption will have a significant effect on its
financial statements.
YEAR 2000 ISSUE
We completed our Year 2000 software program conversions and compliance
programs during the fourth quarter of 1999. The total external costs for such
programs were approximately $3.0 million. Through the nine months ended
September 30, 2000 we have not experienced any Year 2000 problems either
internally or from outside sources. We have no reason to believe that Year 2000
failures will materially affect us in the future. However, since it may take
several additional months before it is known whether we or third party
suppliers, vendors or customers may have undergone Year 2000 problems, no
assurances can be given that we will not experience losses or disruptions due to
Year 2000 computer-related problems. We will continue to monitor the operation
of our computers and microprocessor-based devices for any Year 2000 problems.
34
<PAGE>
TMP WORLDWIDE INC. AND SUBSIDIARIES
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's primary market risks include fluctuations in interest rates,
variability in interest rate spread relationships (i.e., prime to LIBOR spreads)
and exchange rate variability. Approximately 50% of the Company's borrowings
relate to a five-year financing agreement with an outstanding principal balance
of approximately $34.1 million, including $24.1 million reflected as a reduction
to accounts receivable and $7.0 million for letters of credit, as of
September 30, 2000. Interest on the outstanding balance is charged based on a
variable interest rate related to the Company's choice of (1)the higher of the
prime rate or the Federal Funds rate less 1/2 of 1% or (2)LIBOR plus 50 basis
points as specified in the agreement, and is thus subject to market risk in the
form of fluctuations in interest rates. The majority of the remainder of the
Company's borrowings are in fixed note equipment leases and seller financed
notes. The Company does not have any significant trading activity in derivative
financial instruments.
The Company also conducts operations in various foreign countries, including
Australia, Belgium, Canada, China, France, Germany, Italy, Japan, the
Netherlands, New Zealand, Singapore, Spain, and the United Kingdom. For the nine
months ended September 30, 2000 approximately 42.4% of our commissions and fees
were earned outside the United States and collected in local currency and
related operating expenses were also paid in such corresponding local currency.
Accordingly, we will be subject to increased risk for exchange rate fluctuations
between such local currencies and the dollar. We do not conduct any significant
hedging activities.
The financial statements of the Company's non-U.S. subsidiaries are
translated into U.S. dollars using current rates of exchange, with gains or
losses included in the cumulative translation adjustment account, a component of
stockholders' equity. During the nine months of 2000, due to the strengthening
of the U.S. dollar, the Company had an exchange loss of $59.0 million, primarily
attributable to the strengthening of the U.S. dollar against the Australian
dollar and the British pound.
35
<PAGE>
PART II OTHER INFORMATION
ITEM 2(C). CHANGES IN SECURITIES AND USE OF PROCEEDS
1. On August 31, 2000, we issued 311,978 shares of our common stock in a
private placement transaction pursuant to Section 4(2) of the Securities Act of
1933, as amended, in exchange for all of the outstanding stock of
Stratascape, Inc.
2. On August 31, 2000, we issued 43,535 shares of our common stock in a
private placement transaction pursuant to Section 4(2) of the Securities Act of
1933, as amended, in exchange for all of the outstanding stock of Rich,
Gardner & Associates, Ltd.
3. On September 4, 2000, we issued 475,853 shares of our common stock in a
private placement transaction pursuant to Regulation S as promulgated under the
Securities Act of 1933, as amended, and other consideration in exchange for all
of the outstanding shares of QD Group Limited.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed as part of this report:
27.1 Financial Data Schedule--September 30, 2000
27.2 Financial Data Schedule--September 30, 1999
The following reports on Form 8-K were filed from July 1, 2000 through
September 30, 2000.
(b) (i) The Company's Current Report on Form 8-K, filed July 12, 2000
relating to the Company's acquisitions of Virtual Relocation.com, Inc. and
Simpatix Inc.
(ii) The Company's Amended Current Report on Form 8-K/A, filed July 21, 2000
relating to the financials statements of Virtual Relocation.com, Inc. and
Simpatix Inc. and the pro forma financial statements.
(iii) The Company's Current Report filed on Form 8-K, filed July 21, 2000
relating to the restatement of the Company's consolidated financial statement to
reflect to the consummation of mergers accounted for as pooling of interests.
(iv) The Company's Current Report filed on Form 8-K, filed August 2, 2000
relating to the Company's announcement of earnings for the second quarter ended
June 30, 2000.
(v) The Company's Current Report filed on Form 8-K, filed September 14, 2000
relating to the Company's acquisitions of Rich, Gardner & Associates, Ltd.,
Stratascape, Inc. and QD Group Limited.
(All other items of this report are inapplicable.)
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on it behalf by the
undersigned thereunto duly authorized.
<TABLE>
<S> <C> <C>
TMP WORLDWIDE INC.
(REGISTRANT)
By:
-----------------------------------------
Bart Catalane
CHIEF FINANCIAL OFFICER
(Principal Financial and Accounting
Officer)
Dated: November 14, 2000
</TABLE>
