<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MAY 31, 1999
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From _____ to _____
Commission File Number 0-22645
LAI WORLDWIDE, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
Florida 59-3547281
- ------------------------------- -------------------------------
(State of Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
200 Park Avenue
New York, New York
10166-0136
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices)
(212) 953-7900
-------------------------------
(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, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
At June 30, 1999, the Registrant had outstanding 8,024,071 shares of
$.01 par value common stock.
<PAGE>
LAI WORLDWIDE, INC.
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Operations
for the three-month periods
ended May 31, 1999 and 1998 3
Condensed Consolidated Balance Sheets at
May 31, 1999 and February 28, 1999 4
Condensed Consolidated Statements of Cash Flows
for the three-month periods ended
May 31, 1999 and 1998 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 13
PART II. OTHER INFORMATION 14
SIGNATURES 17
</TABLE>
<PAGE>
LAI WORLDWIDE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
May 31,
--------------------------------------
1999 1998
----------------- -----------------
<S> <C> <C>
Fee revenue, net $ 18,964 $ 23,494
Operating expenses:
Compensation and benefits 16,520 17,317
General and administrative 12,978 3,718
Goodwill amortization 194 206
Restructuring charges 2,789 --
---------- -----------
Total operating expenses 32,481 21,241
---------- -----------
Operating income (loss) (13,517) 2,253
Other income (expense), net 259 (118)
---------- -----------
Income (loss) before income taxes (13,258) 2,135
Income tax expense (benefit) (5,436) 938
---------- -----------
Net income (loss) $ (7,822) $ 1,197
---------- -----------
---------- -----------
Basic net income (loss) per common share $ (.97) $ .21
---------- -----------
---------- -----------
Weighted average common shares 8,046 5,625
---------- -----------
---------- -----------
Diluted net income (loss) per common and common equivalent share $ (.97) $ .20
---------- -----------
---------- -----------
Weighted average common and common equivalent shares 8,046 6,005
---------- -----------
---------- -----------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE>
LAI WORLDWIDE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
May 31, February 28,
1999 1999
------------- -------------
(unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 20,535 $ 29,899
Accounts receivable, less allowance of $3,795 and $3,250, respectively 19,987 22,419
Prepaid expenses 673 628
Refundable income taxes 870 3,591
Deferred tax assets 3,201 2,438
---------- ----------
Total current assets 45,266 58,975
---------- ----------
Property and equipment, net of accumulated depreciation and amortization
of $5,093 and $4,228, respectively 9,006 9,521
Deferred tax assets 9,341 4,927
Goodwill, net of accumulated amortization of $987 and $793, respectively 22,298 22,492
Other assets 7,764 7,908
---------- ----------
Total assets $ 93,675 $ 103,823
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 4,900 $ 6,027
Accrued compensation 7,435 8,234
Current maturities of long-term debt 1,418 3,004
Accrued restructuring charges 1,281 577
---------- ----------
Total current liabilities 15,034 17,842
---------- ----------
Accrued rent 1,101 1,279
Deferred compensation 8,949 8,239
Long-term debt, less current maturities 2,878 2,903
---------- ----------
Commitments and contingencies
Stockholders' equity:
Preferred stock; $0.01 par value; 3,000,000 shares authorized; no
shares issued and outstanding -- --
Common stock; $0.01 par value; 35,000,000 shares authorized;
8,120,427 and 8,112,927 shares issued, respectively, and 8,024,071
and 8,082,953 shares outstanding, respectively 82 82
Additional paid-in capital 77,497 78,065
Unamortized stock-based compensation (1,747) (2,732)
Common stock in treasury, at cost; 96,356 and 29,974 shares, respectively (619) (196)
Cumulative translation adjustments 18 37
Retained earnings (9,518) (1,696)
---------- ----------
4
<PAGE>
Total stockholders' equity 65,713 73,560
---------- ----------
---------- ----------
Total liabilities and stockholders' equity $ 93,675 $ 103,823
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE>
LAI WORLDWIDE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months
Ended May 31,
-------------------------------
1999 1998
----------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (7,822) $ 1,197
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
Depreciation and amortization 789 295
Write-down of property and equipment 1,088 --
Goodwill amortization 194 206
Amortization of deferred compensation (5) 88
Changes in operating assets and liabilities (635) (12,843)
--------- ---------
Net cash used in operating activities (6,391) (11,057)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,362) (775)
Investment in life insurance -- (467)
Acquisition of Ward Howell International, Inc. -- (8,092)
--------- ---------
Net cash used in investing activities (1,362) (9,334)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of debt (1,611) (31)
--------- ---------
Net cash used in financing activities (1,611) (31)
--------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS (9,364) (20,422)
CASH AND CASH EQUIVALENTS, at beginning of period 29,899 23,780
--------- ---------
--------- ---------
CASH AND CASH EQUIVALENTS, at end of period $ 20,535 $ 3,358
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
6
<PAGE>
LAI WORLDWIDE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. Organization
LAI Worldwide, Inc. and its wholly-owned subsidiaries ("LAI" or the "Company")
provide consulting services aimed specifically at solving its clients'
leadership needs by identifying, evaluating and recommending qualified
candidates for senior level positions. LAI provides executive search and
selection services exclusively on a retained basis primarily in the United
States.
Note 2. Condensed Consolidated Financial Statements
In the opinion of the Company, the accompanying unaudited condensed consolidated
financial statements reflect all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the financial position of the
Company as of May 31, 1999, and February 28, 1999, and the results of operations
for the three-month periods ended May 31, 1999 and 1998, and cash flows for the
three-month periods ended May 31, 1999 and 1998.
The condensed consolidated financial statements include the financial position
and results of operations of the Company and its wholly-owned subsidiaries. All
material intercompany profits, transactions and balances have been eliminated.
These condensed consolidated financial statements, including the condensed
consolidated balance sheet as of February 28, 1999, which has been derived from
audited financial statements, are presented in accordance with the requirements
of Form 10-Q and consequently may not include all disclosures normally required
by generally accepted accounting principles or those normally made in the
Company's Annual Report on Form 10-K. The accompanying condensed consolidated
financial statements and related notes should be read in conjunction with the
Company's fiscal year 1999 Annual Report on Form 10-K as filed with the
Securities and Exchange Commission on May 27, 1999.
Certain prior year balances have been reclassified in order to conform to the
current year financial statement presentation.
Note 3. Merger with TMP Worldwide, Inc.
Effective as of March 11, 1999, the Company entered into an Agreement and Plan
of Merger (the "Merger Agreement") with TMP Worldwide, Inc. ("TMP"), pursuant to
which TMP is to merge with LAI in a pooling of interests transaction. Under the
terms of the Agreement, each share of LAI common stock or option to purchase LAI
common stock will be exchanged for a specified
7
<PAGE>
number of shares of TMP common stock or options to purchase TMP common stock,
respectively. The Merger Agreement is subject to customary closing conditions,
including approval by the shareholders of LAI.
8
<PAGE>
Note 4. Restructuring Charges
During the first and second quarters of fiscal 1999, the Company focused its
growth strategy on international expansion, opening offices in London,
England and Wanchai, Hong Kong. This expansion involved the hiring of 15
executive search consultants and 47 support staff, principally in London. Due
to economic conditions and the inherent difficulties in establishing start-up
operations, revenues from international operations were less than projected,
resulting in substantial losses from this business segment. As a result, in
December 1998, the Company decided to significantly reduce the size and scope
of its London office. A restructuring charge of approximately $3.5 million
was recorded in the fourth quarter of fiscal 1999.
In March 1999, the Company completed a second review of its international
operations and assessed the impact of the actions taken in fiscal 1999. The
Company determined that the projections for revenues from international
operations were not being met. The Company immediately enacted a plan of closure
for its two international offices. In connection with the closure, the Company
recorded a restructuring charge of approximately $2.8 million. This charge
included approximately $900,000 for write-downs of abandoned assets,
approximately $800,000 of severance benefits payable to 24 employees whose
positions were eliminated and approximately $1.0 million of legal and other
costs directly related to the restructuring. A summary of the changes in the
accrued expenses related to the restructuring is as follows:
<TABLE>
<CAPTION>
Balance at Charged to Balance at
February 28, 1999 Costs and Expenses Deductions May 31, 1999
---------------------- ---------------------- ---------------------- -----------------------
(in thousands)
<S> <C> <C> <C> <C>
Fiscal 1999
restructuring $ 577 $ 116 $ 198 $ 495
Fiscal 2000
restructuring -- 2,673 1,887 786
---------------------- ---------------------- ---------------------- -----------------------
$ 577 $2,789 $2,085 $1,281
</TABLE>
Note 5. Advertising Costs
In May 1999, the Company entered into a four-year co-operative advertising
arrangement with TMP, under which the Company agreed to provide $10 million in
television and print advertising in May and June 1999. As a result, the Company
recorded $7.6 million in advertising costs during May 1999.
9
<PAGE>
Note 6. Net Income (Loss) Per Common and Common Equivalent Share
Basic net earnings per common share ("basic EPS") was determined by dividing
the net income (loss) by the weighted average number of shares of common
stock outstanding during the period. Diluted net earnings per common and
common equivalent share ("diluted EPS") was determined by dividing the net
income (loss) by the weighted average number of shares of common stock
outstanding and dilutive common equivalent shares from stock options using
the treasury stock method and from convertible debt assuming conversion upon
issuance. The following reconciles the numerator and denominator of basic EPS
to diluted EPS:
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
May 31, 1999 May 31, 1998
---------------------------------------------- -----------------------------------------------
Income (loss) Shares Per-Share Income (loss) Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
(dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
BASIC EPS
Income (loss) available to
common stockholders $(7,822) 8,046 $ (.97) $ 1,197 5,625 $ .21
EFFECT OF DILUTIVE SECURITIES
Options -- -- -- 322
Convertible promissory note -- -- 12 58
------------ -------------- ------------ --------------
DILUTED EPS
Income (loss) available to
common stockholders +
assumed conversions $(7,822) 8,046 $ (.97) $1,209 6,005 $ .20
------- ----- ------ ------ ----- -------
------- ----- ------ ------ ----- -------
</TABLE>
Note 7. Comprehensive Income
Comprehensive income is as follows:
<TABLE>
<CAPTION>
Three Months Ended
May 31,
---------------------------------
1999 1998
----------------- ------------
(in thousands)
<S> <C> <C>
Net income (loss) $ (7,822) $ 1,197
Other comprehensive income (loss), net of tax:
Cumulative translation adjustment 18 4
--------- ---------
Comprehensive income (loss) $ (7,804) $ 1,201
--------- ---------
--------- ---------
</TABLE>
10
<PAGE>
Note 8. Segment Reporting
During March 1999, the Company closed both its London and Hong Kong offices (see
Note 4). Prior to that time, the Company was divided into two operating
segments, domestic and international. Domestic operations were, and continue to
be, conducted from offices located in most major cities throughout the United
States. International operations were conducted from offices in London and Hong
Kong. Both segments provided consulting services aimed specifically at solving
their clients' leadership needs by identifying, evaluating, and recommending
qualified candidates for senior executive positions primarily at Fortune 500 and
large private companies exclusively on a retained basis.
The Company evaluates each segment's performance based on its operating profit
or loss.
Information concerning the operations of the Company's reportable segments is as
follows:
<TABLE>
<CAPTION>
Three Months Ended
May 31,
------------------------------
1999 1998
-------- --------
(in thousands)
<S> <C> <C>
Fee revenue, net:
Domestic $ 18,844 $ 23,494
International 120 --
-------- --------
Consolidated $ 18,964 $ 23,494
-------- --------
-------- --------
Restructuring charges:
Domestic $ -- $ --
International 2,789 --
-------- --------
Consolidated $ 2,789 $ --
-------- --------
-------- --------
Operating income (loss):
Domestic $(10,355) $ 2,572
International (3,162) (319)
-------- --------
Consolidated $(13,517) $ 2,253
-------- --------
-------- --------
</TABLE>
<TABLE>
<CAPTION>
May 31,
1999
--------
<S> <C>
Total assets:
Domestic $ 89,110
International 4,565
--------
Consolidated $ 93,675
--------
--------
</TABLE>
11
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS:
During the first and second quarters of fiscal 1999, LAI focused its growth
strategy on international expansion, opening offices in London, England and
Wanchai, Hong Kong. This expansion involved the hiring of 15 executive search
consultants and 47 support staff, principally in London. LAI also signed
exclusivity and confidentiality letter agreements in December 1998, with
Futura Beteiligungs GmbH ("Futura"), the majority owner of Neumann Holding
AG, one of Europe's largest executive search and assessment consulting firms.
The parties entered into preliminary talks about the possibility of LAI
acquiring Futura. These talks were terminated in March 1999, when LAI signed
the Merger Agreement with TMP.
Due to economic conditions and the inherent difficulties in establishing
start-up operations, revenues for the London and Hong Kong offices were less
than projected, resulting in substantial losses from LAI's international
business segment. As a result, in December 1998, LAI decided to significantly
reduce the size and scope of its London office. In connection with this
downsizing, a restructuring charge of approximately $3.5 million was
recorded. This charge included write-downs of abandoned assets, severance
benefits payable to international employees whose positions were eliminated,
and legal and other costs directly related to the restructuring.
In March 1999, LAI completed a second review of its international operations
and assessed the impact of the actions taken as a result of the decision made
in December 1998. LAI determined that projections for revenues from
international operations were not being met. Consistent with its previously
stated intentions to prevent further operating losses from international
operations in fiscal 2000, LAI immediately enacted a plan of closure for its
two international offices. In accordance with this plan, both the London and
Hong Kong offices were closed during the first quarter of fiscal 2000. The
office closures resulted in a further restructuring charge of $2.8 million
during the first quarter of fiscal 2000.
FISCAL 2000 COMPARED TO FISCAL 1999
FEE REVENUE. The Company's fee revenue decreased $4.5 million, or 19.3%, to
$19.0 million for the three-month period ended May 31, 1999, from $23.5 million
for the same period in fiscal 1999.
The Company's domestic revenue decreased $4.7 million, or 19.8%, to $18.8
million for the three-month period ended May 31, 1999, from $23.5 million for
the same period in fiscal 1999. This decrease is attributable to a 23.5%
decrease in the average revenue per consultant employed for a full year to
$169,000 for the three-month period ended May 31, 1999, from $221,000 for the
same period in fiscal 1999. The average first-year cash compensation of
positions for which the Company conducted searches increased 13.4% to $228,000
for the three-month period ended May 31, 1999, from $201,000 for the same period
in fiscal 1999. As of May 31, 1999, the
12
<PAGE>
Company employed 116 consultants domestically, compared to 115 domestic
consultants employed as of May 1998.
13
<PAGE>
The Company's selection services, LAIcompass.com ("Compass"), launched during
the first quarter of fiscal 2000, accounted for 1.0% of the Company's domestic
revenue for the three-month period ended May 31, 1999.
Revenues from international operations, which commenced in May 1998, and ended
in March 1999, accounted for less than 1.0% of total Company revenue for the
three-month period ended May 31, 1999.
COMPENSATION AND BENEFITS. Compensation and benefits decreased $797,000, or
4.6%, to $16.5 million for the three-month period ended May 31, 1999, from $17.3
million for the same period in fiscal 1999. As a percentage of fee revenue,
compensation and benefits increased to 87.1% for the three-month period ended
May 31, 1999, compared to 73.7% for the same period in fiscal 1999.
Domestic compensation and benefits decreased $762,000, or 4.4%, to $16.4 million
for the three- month period ended May 31, 1999, from $17.2 million for the same
period in fiscal 1999. As a percentage of domestic fee revenue, domestic
compensation and benefits increased to 87.1% for the three-month period ended
May 31, 1999, compared to 73.1% for the same period in fiscal 1999. This
increase was primarily due to spreading compensation and benefits for the
Company's administrative and support staff, which are primarily fixed, over a
smaller fee revenue base.
Compass accounted for 1.8% of the Company's domestic compensation and benefits
expense for the three-month period ended May 31, 1999.
International compensation and benefits accounted for less than 1.0% of total
Company compensation and benefits expense for the three-month period ended
May 31, 1999.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased $9.3 million to $13.0 million for the three-month period ended May 31,
1999, from $3.7 million for the same period in fiscal 1999. As a percentage of
fee revenue, general and administrative expenses increased to 68.4% for the
three-month period ended May 31, 1999, compared to 15.8% for the same period in
fiscal 1999.
Domestic general and administrative expenses increased $9.1 million to $12.6
million for the three-month period ended May 31, 1999, from $3.5 million for the
same period in fiscal 1999. As a percentage of domestic fee revenue, domestic
general and administrative expenses increased to 66.8% for the three-month
period ended May 31, 1999, compared to 15.1% for the same period in fiscal 1999.
This increase was primarily due to television advertising costs of $7.6 million
incurred in May 1999. The Company entered into a four-year co-operative
advertising arrangement with TMP in May 1999, under which the Company agreed to
provide $10 million in television and print advertising in May and June 1999.
The television advertising campaign was designed to promote the Company's
relationship with TMP's Monster.com Internet site and the
14
<PAGE>
availability of the link to LAIcompass.com from Monster.com. The Company also
recorded a charge of approximately $870,000 related to excess capacity in
three of its offices and approximately $650,000 of expenses related to the
proposed merger with TMP.
15
<PAGE>
International general and administrative expenses accounted for 3.0% of total
Company general and administrative expenses for the three-month period ended
May 31, 1999.
GOODWILL AMORTIZATION. Goodwill amortization was $194,000 for the three-month
period ended May 31, 1999, compared to $206,000 for the same period in fiscal
1999.
OPERATING INCOME (LOSS). For the three-month period ended May 31, 1999, the
Company experienced an operating loss of $13.5 million compared to operating
income of $2.3 million for the same period in fiscal 1999. This decrease was
primarily due to increased general and administrative expenses as a percentage
of revenues as previously discussed.
RESTRUCTURING CHARGES. Restructuring charges were $2.8 million for the
three-month period ended May 31, 1999, and related to the closure of the
Company's two international offices. See Note 4 to the accompanying Condensed
Consolidated Financial Statements.
OTHER INCOME,(EXPENSE) NET. For the three-month period ended May 31, 1999, the
Company generated other income of $259,000 compared to other expense of $118,000
for the same period in fiscal 1999.
INCOME TAX EXPENSE (BENEFIT). The effective income tax rate for the three-month
period ended May 31, 1999, of 41.0% varied from the statutory rate of 34% due to
state and foreign income tax effects net of the non-deductibility of certain
expenses, including goodwill amortization, premiums on key person life insurance
policies, and a portion of meals and entertainment. The Company's United Kingdom
subsidiary was treated as a branch operation for tax purposes.
LIQUIDITY AND CAPITAL RESOURCES
The Company relies primarily upon cash flows from operations and available
borrowings under its credit facilities to finance its operations. During the
three-month period ended May 31, 1999, cash used in operations was
approximately $6.4 million. To provide additional liquidity, the Company
maintains a line of credit which provides for maximum borrowings of $25.0
million bearing interest at various rates based on either a LIBOR index or
the bank's prime lending rate, as determined at the Company's option. No
borrowings on the line of credit were outstanding at May 31, 1999 or 1998.
Capital expenditures totaled approximately $1.4 million for the three-month
period ended May 31, 1999. These expenditures consisted primarily of upgrades
to information systems. Cash used in financing activities for the three-month
period ended May 31, 1999, was approximately $1.6 million and reflects the
repayment of debt.
The Company believes that funds from operations, its credit facilities, and
the net proceeds from its 1999 secondary public offering will be sufficient
to meet its anticipated
16
<PAGE>
working capital, capital expenditure and general corporate requirements for the
foreseeable future.
17
<PAGE>
YEAR 2000 COMPLIANCE
LAI has completed its assessment of its internal systems and believes that the
cost to ensure all internal systems are Year 2000 compliant and to make
necessary enhancements will not be material. LAI has also completed its
assessment of issues related to its third-party vendors' states of Year 2000
readiness and the potential impact, if any, of any lack of readiness on LAI's
operations. Based on its assessment, LAI does not expect to be materially
affected by any non-compliant third-party vendors. Nevertheless, LAI has
identified alternate vendors during its assessment. LAI believes that costs
associated with Year 2000 compliance will not have a material impact on LAI's
financial statements.
FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis of Financial Condition and Results of
Operations and other sections of this Quarterly Report on Form 10-Q contain
forward-looking statements that are based on the current beliefs and
expectations of the Company's management, as well as assumptions made by, and
information currently available to, the Company's management. Such statements
include those regarding general economic and executive search industry trends
and the Company's ability to successfully execute its operational strategies.
Because such statements involve risks and uncertainties, actual actions and
strategies and the timing and expected results thereof may differ materially
from those expressed or implied by such forward-looking statements, and the
Company's future results, performance, or achievements could differ materially
from those expressed in, or implied by, any such forward-looking statements.
Future events and actual results could differ materially from those set forth in
or underlying the forward-looking statements.
Forward-looking statements are inherently subject to risks and uncertainties,
some of which cannot be predicted. These potential risks and uncertainties
include dependence on attracting and retaining qualified executive search
consultants, portability of client relationships, the proposed acquisition by
TMP, difficulties in managing growth, restrictions imposed by blocking
arrangements, competition, reliance on information processing systems, Year 2000
compliance issues, and development of LAIcompass.com. In addition to the factors
noted above, other risks, uncertainties, assumptions, and factors that could
affect the Company's financial results are described in the Company's fiscal
year 1999 Annual Report on Form 10-K filed with the Securities and Exchange
Commission on May 27, 1999.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not have any material exposure associated with activities in
derivative financial instruments, other financial instruments or derivative
commodity instruments.
18
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
2.1 (4) --Agreement and Plan of Merger dated February 27, 1998, by and
among Lamalie Associates, Inc., LAI Mergersub, Inc. and Ward
Howell International, Inc.
2.2 (4) --Asset Purchase Agreement dated December 29, 1997, by and among
Lamalie Associates, Inc., Chartwell Partners International, Inc.
and David M. DeWilde
2.3 (6) --Agreement and Plan of Merger dated December 23, 1998, by and
among Lamalie Associates, Inc., Registrant and LAI MergerSub, Inc.
2.4 (8) --Agreement and Plan of Merger dated March 11, 1999, by and among
LAI Worldwide, Inc., TMP Worldwide, Inc. and TMP Florida
Acquisition Corp.
3.1 (6) --Articles of Incorporation of the Registrant as now in effect
3.2 (6) --Bylaws of the Registrant as now in effect
4.1 (6) --Form of Common Stock Certificate
4.2 (6) --Stockholder Rights Agreement dated December 30, 1998, between
Registrant and ChaseMellon Shareholder Services, L.L.C.
4.3 (8) --Amendment to Stockholder Rights Agreement
10.1 (6) --1997 Omnibus Stock and Incentive Plan as now in effect
10.2 (6) --Non-Employee Directors' Stock Option Plan as now in effect
10.3 (6) --Profit Sharing and Savings Plan as now in effect
10.4 (6) --1997 Employee Stock Purchase Plan as now in effect
10.5 (1) --Form of Agreement for Deferred Compensation Plan
10.6 (1) --Managing Partners' Compensation Plan +
10.7 (1) --Partners' Compensation Plan +
</TABLE>
19
<PAGE>
<TABLE>
<S> <C>
10.8 (1) --Employment Agreement for Mr. Gow +
10.9 (6) --1998 Omnibus Stock and Incentive Plan as now in effect
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
10.10 (1) --Employment Agreement for Mr. Rothschild +
10.11 (2) --Form of Indemnification Agreement entered into with Messrs.
Philip R. Albright, Richard L. Baird, Michael Brenner, Arthur J.
Davidson, Mark P. Elliott, David W. Gallagher, Joe D. Goodwin,
Roderick C. Gow, Ray J. Groves, Harold E. Johnson, John F.
Johnson, Patrick J. McDonnell, Robert L. Pearson, Richard W.
Pogue, John C. Pope, John S. Rothschild, Thomas M. Watkins III,
Jack P. Wissman
10.12 (6) --Directors' Deferral Plan as now in effect
10.13 (3) --Employment Agreement with Robert L. Pearson dated October 8,
1997
10.14 (4) --Form of Employment Agreement for Former Ward Howell
International, Inc. Shareholders
10.15 (5) --Employment Agreement with Patrick J. McDonnell dated September
15, 1998
10.16 (7) --Letter Agreement with Philip R. Albright dated November 9, 1998
10.17 (7) --Credit Agreement with NationsBank, including amendment thereto
10.18 (9) --Employment Agreement with Richard L. Baird dated January 18,
1999
10.19 (9) --Letter Agreement with Joe D. Goodwin dated January 28, 1999
10.20 (9) --Letter Agreement with Philip R. Albright dated February 25, 1999
10.21 (9) --Settlement Agreement with former Ward Howell International, Inc.
Shareholders dated April 14, 1999
10.22 (9) --Co-op Advertising Agreement between TMP Interactive, Inc. and
LAI Worldwide, Inc. dated May 7, 1999
10.23 (9) --Advertising Agreement between TMP Interactive, Inc. and LAI
Worldwide, Inc. dated May 7, 1999
21.1 (9) --Subsidiaries of the Registrant
27 --Financial Data Schedule (for SEC use only)
</TABLE>
(1) Incorporated by reference to the correspondingly numbered exhibit to the
Registrant's Registration Statement on Form S-1 (File No. 333-26027),
originally filed April 29, 1997, as amended and as effective July 1, 1997.
21
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
(2) Incorporated by reference to the correspondingly numbered exhibit to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended May 31,
1997, filed on August 8, 1997.
(3) Incorporated by reference to the correspondingly numbered exhibit to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended November
30, 1997, filed on January 13, 1998.
(4) Incorporated by reference to the correspondingly numbered exhibit to the
Registrant's current Report on Form 8-K filed March 13, 1998.
(5) Incorporated by reference to the correspondingly numbered exhibit to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended August 31,
1998, filed on October 14, 1998.
(6) Incorporated by reference to the correspondingly numbered exhibit to the
Registrant's current Report on Form 8-K filed January 5, 1999.
(7) Incorporated by reference to the correspondingly numbered exhibit to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended November
31, 1998, filed on January 11, 1998.
(8) Incorporated by reference to the correspondingly numbered exhibit to the
Registrant's current Report on Form 8-K filed on March 22, 1999.
(9) Incorporated by reference to the correspondingly numbered exhibit to the
Registrant's Annual Report on Form 10-K for the year ended February 28,
1999, filed on May 27, 1999.
</TABLE>
+ Confidential treatment has been granted with respect to portions of this
Exhibit.
(b) Reports on Form 8-K.
During the quarter ended May 31, 1999, the Company filed a Current Report on
Form 8-K on March 22, 1999, describing under "Item 5. Other Events," the
proposed merger of the Company with TMP Worldwide, Inc. No financial statements
were filed with this report.
22
<PAGE>
LAI WORLDWIDE, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, Registrant's principal financial officer, thereunto duly
authorized.
July 9, 1999 LAI WORLDWIDE, INC.
(Registrant)
By: /s/ Philip R. Albright
-----------------------------------------------
Philip R. Albright
Chief Financial Officer
(Authorized officer of Registrant and principal
financial officer)
23
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-2000
<PERIOD-START> MAR-01-1999
<PERIOD-END> MAY-31-1999
<CASH> 20,535
<SECURITIES> 0
<RECEIVABLES> 23,782
<ALLOWANCES> 3,795
<INVENTORY> 0
<CURRENT-ASSETS> 45,266
<PP&E> 14,099
<DEPRECIATION> 5,093
<TOTAL-ASSETS> 93,675
<CURRENT-LIABILITIES> 15,034
<BONDS> 0
0
0
<COMMON> 82
<OTHER-SE> 65,631
<TOTAL-LIABILITY-AND-EQUITY> 93,675
<SALES> 0
<TOTAL-REVENUES> 18,964
<CGS> 0
<TOTAL-COSTS> 32,481
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (259)
<INCOME-PRETAX> (13,258)
<INCOME-TAX> (5,436)
<INCOME-CONTINUING> (7,822)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,822)
<EPS-BASIC> (.97)
<EPS-DILUTED> (.97)
</TABLE>
