SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 31, 2003
TMP Worldwide Inc.
(Exact name of issuer as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-21571 13-3906555
(Commission File Number) (IRS Employer Identification No.)
622 Third Avenue
New York, NY 10017
(Address of Principal Executive Offices)
Registrant's telephone number, including area code (212) 351-7000
None.
(Former address, if changed since last report.)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On March 31, 2003, TMP Worldwide Inc. ("TMP" or the "Registrant")
completed the distribution of the common stock of its eResourcing and Executive
Search business units, Hudson Highland Group, Inc. ("HH Group"), effective 11:59
p.m. The spin-off of HH Group was effected by way of a pro-rata dividend (the
"Distribution") of the common stock of HH Group to holders of TMP common stock
on March 31, 2003. In the Distribution, TMP's stockholders received one share of
HH Group common stock for every 13 1/3 shares of TMP common stock owned. TMP's
stockholders paid no consideration for the shares of HH Group that they
received.
The Distribution is intended to enable each of TMP and HH Group to compete
effectively without negatively affecting each other's businesses. HH Group is
now an independent public company trading under the symbol "HHGP" on the Nasdaq
National Market. TMP continues to operate its Monster, Advertising and
Communications and Directional Marketing segments.
TMP's Chairman and CEO, Andrew J. McKelvey, by virtue of his stock
ownership of TMP, owns in excess of 5% of HH Group's common stock. It is
contemplated that for a transition period, generally not to exceed one year, TMP
will provide certain facilities, information technology, insurance,
administrative, legal, human resources, tax, accounting and other mutually
agreed services to HH Group. HH Group will provide to TMP for a transition
period, generally not expected to exceed one year, certain tax and information
technology services in the Asia Pacific region and certain facilities,
administrative, business license and accounting services in Europe, as well as
other mutually agreed services. In addition, there will be certain other
arrangements between TMP and HH Group in connection with the Distribution.
Further information concerning the Distribution and related matters is
contained in HH Group's Registration Statement on Form 10, dated March 14, 2003,
filed by HH Group with the Securities and Exchange Commission.
This report contains certain forward-looking statements and information
relating to TMP that are based on the beliefs of management as well as
assumptions made by and information currently available to management. When used
in this report, the words "anticipate," "believe," "estimate," "expect,"
"intend," "plan," or any similar expressions, as they relate to TMP or its
management or the management of any of its businesses, are intended to identify
forward-looking statements. Such statements reflect the current view of TMP with
respect to future events and are subject to certain risks, uncertainties and
assumptions. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those described herein as anticipated, believed, estimated,
expected, intended or planned. Reference is made in particular to the discussion
set forth below in this report and set forth in TMP's Annual Report of Form 10-K
for the year ended December 31, 2002, for a discussion of some of the risks,
uncertainties and assumptions that could cause actual results to differ
materially from those described in our forward-looking statements.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired
None
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(b) Pro Forma Financial Information
The unaudited pro forma condensed consolidated financial information
of TMP, included in Item 7(b) of this Report, is based on and should be
read in conjunction with the audited consolidated financial statements and
notes thereto appearing in TMP's Annual Report on From 10-K for the year
ended December 31, 2002. The accompanying unaudited pro forma condensed
consolidated statements of operations for each of the three years in the
period ended December 31, 2002 has been presented as if the Distribution
had been completed as of January 1, 2000. The unaudited pro forma
consolidated balance sheet has been presented as if the Distribution had
been completed as of December 31, 2002.
In the opinion of management, the accompanying pro forma condensed
consolidated financial information includes all material adjustments
necessary to reflect, on a pro forma basis, the impact of the Distribution
on the historical financial information of TMP. The adjustments are
described in the notes to the unaudited pro forma condensed consolidated
financial information and are set forth in the "Pro Forma Adjustments"
column.
The unaudited pro forma condensed consolidated financial information
has been presented for informational purposes only and does not reflect
the results of operations or financial position of TMP that would have
occurred had the Distribution been completed in the periods presented.
Actual results might have differed. The unaudited pro forma condensed
consolidated financial information should not be relied upon as being
indicative of TMP results had the Distribution been completed as of the
dates presented or of results subsequent to the Distribution.
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TMP WORLDWIDE INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
HISTORICAL PRO FORMA PRO FORMA
DECEMBER 31, 2002 ADJUSTMENTS DECEMBER 31, 2002
--------------------- ---------------- ---------------------
ASSETS
Current assets:
Cash and cash equivalents $ 191,556 $ (40,000) (A) $ 151,556
Accounts receivable, net 469,430 (161,831) (A) 307,599
Work-in-process 30,181 (9,260) (A) 20,921
Deferred tax assets 27,634 (4,892) (A)
(8,111) (B) 14,631
Prepaid and other 89,745 (14,025) (A) 75,720
--------------------- ---------------- ---------------------
Total current assets 808,546 (238,119) 570,427
Property and equipment, net 157,788 (34,106) (A)
(23,549) (B) 100,133
Intangibles, net 588,641 (201,937) (A) 386,704
Other assets 14,770 (7,904) (A) 6,866
Deferred tax assets 61,050 (7,241) (A)
(31,564) (B) 22,245
--------------------- ---------------- ---------------------
$ 1,630,795 $ (544,420) $ 1,086,375
===================== ================ =====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 359,688 $ (28,305) (A) $ 331,383
Accrued expenses and other current liabilities 175,147 (80,370) (A) 94,777
Accrued integration and restructuring costs 21,290 (8,935) (A) 12,355
Accrued business reorganization and other special charges 86,181 (25,845) (A) 60,336
Due to HH Group - 10,000 (A) 10,000
Deferred commissions and fees 153,046 (3,321) (A) 149,725
Current portion of long-term debt 3,868 (978) (A) 2,890
--------------------- ---------------- ---------------------
Total current liabilities 799,220 (137,754) 661,466
Long-term debt, less current portion 3,925 (1,184) (A) 2,741
Other long-term liabilities 14,211 (1,592) (A) 12,619
--------------------- ---------------- ---------------------
Total liabilities 817,356 (140,530) 676,826
--------------------- ---------------- ---------------------
Stockholders' equity:
Preferred stock,$.001 par value, authorized 800 shares;
issued and outstanding: none - -
Common stock,$.001 par value, authorized 1,500,000 shares;
Issued: 107,475 and 106,181 shares, respectively;
outstanding: 106,548 and 106,181, respectively 107 107
Class B common stock,$.001 par value, authorized 39,000
shares; issued and outstanding: 4,762 shares 5 5
Additional paid-in capital 1,286,747 (316,006) (A) 970,741
Accumulated other comprehensive income (loss) 14,402 (24,660) (A) (10,258)
Retained deficit (477,980) (63,224) (B) (541,204)
Treasury stock, at cost: 927 shares (9,842) (9,842)
--------------------- ---------------- ---------------------
Total stockholders' equity 813,439 (403,890) 409,549
--------------------- ---------------- ---------------------
$ 1,630,795 $ (544,420) $ 1,086,375
===================== ================ =====================
See accompanying notes to unaudited pro forma
consolidated financial information.
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TMP WORLDWIDE INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
HISTORICAL PRO FORMA
YEAR ENDED PRO FORMA YEAR ENDED
DECEMBER 31, 2002 ADJUSTMENTS DECEMBER 31, 2002
------------------ --------------- ------------------
Commissions and fees $ 1,114,622 $ (411,865) (C) $ 702,757
Operating expenses:
Salaries & related 639,385 (323,753) (C) 315,632
Office & general 276,401 (117,310) (C) 159,091
Marketing & promotion 139,123 (10,854) (C) 128,269
Merger & integration 8,551 (5,373) (C) 3,178
Business reorganization and other special charges 178,358 (73,543) (C) 104,815
Amortization of intangibles 3,159 (754) (C) 2,405
------------------ --------------- ------------------
Total operating expenses 1,244,977 (531,587) 713,390
Operating loss (130,355) 119,722 (C) (10,633)
Other income, net 336 546 (C) 882
------------------ --------------- ------------------
Loss from continuing operations before benefit for income
taxes, minority interests and accounting change (130,019) 120,268 (9,751)
Benefit for income taxes (21,281) 19,685 (D) (1,596)
------------------ --------------- ------------------
Loss from continuing operations before minority interests and
accounting change (108,738) 100,583 (8,155)
Minority interests (2,216) (2,216)
------------------ --------------- ------------------
Loss from continuing operations before accounting change $ (106,522) $ 100,583 $ (5,939)
================== =============== ==================
BASIC AND DILUTED EARNINGS PER SHARE:
Loss from continuing operations before accounting change $ (0.96) $ (0.05)
================== ==================
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic and diluted 111,339 111,339
================== ==================
See accompanying notes to unaudited pro forma
condensed consolidated financial information.
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TMP WORLDWIDE INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
HISTORICAL PRO FORMA
YEAR ENDED PRO FORMA YEAR ENDED
DECEMBER 31, 2001 ADJUSTMENTS DECEMBER 31, 2001
------------------ --------------- ------------------
Commissions and fees $ 1,448,057 $ (571,537) (C) $ 876,520
Operating expenses:
Salaries & related 735,525 (397,102) (C) 338,423
Office & general 304,082 (125,767) (C) 178,315
Marketing & promotion 196,104 (19,371) (C) 176,733
Merger & integration 72,480 (43,177) (C) 29,303
Amortization of intangibles 26,434 (14,324) (C) 12,110
------------------ --------------- ------------------
Total operating expenses 1,334,625 (599,741) 734,884
Operating income 113,432 28,204 (C) 141,636
Other income, net 11,562 2,244 (C) 13,806
------------------ --------------- ------------------
Income from continuing operations before provision for income
taxes, minority interests and accounting change 124,994 30,448 155,442
Provision for income taxes 57,566 14,023 (D) 71,859
------------------ --------------- ------------------
Income from continuing operations before minority interests
and accounting change 67,428 16,425 83,853
Minority interests (1,592) (1,592)
------------------ --------------- ------------------
Income from continuing operations before accounting change $ 69,020 $ 16,425 $ 85,445
================== =============== ==================
BASIC EARNINGS PER SHARE:
Income from continuing operations before accounting change $ 0.63 $ 0.78
================== ==================
DILUTED EARNINGS PER SHARE:
Income from continuing operations before accounting change $ 0.61 $ 0.75
================== ==================
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 109,445 109,445
================== ==================
Diluted 113,426 113,426
================== ==================
See accompanying notes to unaudited pro forma
condensed consolidated financial information.
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TMP WORLDWIDE INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
HISTORICAL PRO FORMA
YEAR ENDED PRO FORMA YEAR ENDED
DECEMBER 31, 2000 ADJUSTMENTS DECEMBER 31, 2000
------------------ --------------- ------------------
Commissions and fees $ 1,407,526 $ (655,161) (C) $ 752,365
Operating expenses:
Salaries & related 743,589 (437,782) (C) 305,807
Office & general 322,453 (138,655) (C) 183,798
Marketing & promotion 164,883 (19,357) (C) 145,526
Merger & integration 64,604 (50,995) (C) 13,609
Amortization of intangibles 19,743 (8,947) (C) 10,796
------------------ --------------- ------------------
Total operating expenses 1,315,272 (655,736) 659,536
Operating income 92,254 575 (C) 92,829
Other income, net 16,417 6,740 (C) 23,157
------------------ --------------- ------------------
Income from continuing operations before provision for income
taxes, minority interests and accounting change 108,671 7,315 115,986
Provision for income taxes 58,250 3,921 (D) 62,171
------------------ --------------- ------------------
Income from continuing operations before minority interests
and accounting change 50,421 3,394 53,815
Minority interests (442) (442)
------------------ --------------- ------------------
Income from continuing operations before accounting change $ 50,863 $ 3,394 $ 54,257
================== =============== ==================
BASIC EARNINGS PER SHARE:
Income from continuing operations before accounting change $ 0.48 $ 0.52
================== ==================
DILUTED EARNINGS PER SHARE:
Income from continuing operations before accounting change $ 0.46 $ 0.49
================== ==================
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 104,884 104,884
================== ==================
Diluted 111,375 111,375
================== ==================
See accompanying notes to unaudited pro forma
condensed consolidated financial information.
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NOTES TO UNAUDITED PRO FORM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
See introduction to pro forma financial information on page 3. The pro
forma unaudited consolidated balance sheet was prepared assuming the
distribution occurred as of December 31, 2002 and included "Pro Forma
Adjustments" as follows:
(A) Represents the assets, liabilities and net equity of HH Group
distributed to TMP stockholders. Included in these adjustments
are $10,000 Due to HH Group which represents obligations that
TMP will pay for HH Group's accrued integration, restructuring
and business reorganization liabilities (limited to $2,500 per
quarter, for one year following the Distribution).
(B) To record the impairment of property and equipment, net of tax
benefit of $7,349, and deferred tax assets no longer realizable
as a direct result of the Distribution.
The pro forma unaudited condensed consolidated statements of operations
for each of the three years in the period ended December 31, 2002 has been
presented as if the Distribution was completed as of January 1, 2000. These
statements include "Pro Forma Adjustments" as follows:
(C) To give retroactive effect to the Distribution of the HH Group
businesses to the shareholders of TMP.
(D) To record an estimated benefit for income taxes based on TMP's
effective tax rate in each year. Pro-forma adjustments have
been tax effected using TMP's effective rate, rather than a
statutory rate, because permanent differences are considered to
be consistent between TMP and HH Group.
In addition to the above pro forma adjustments, we will have the following
one time and non-recurring adjustments, which are not reflected in the
unaudited pro form condensed consolidated statements of operations, as a
result of the Distribution:
(1) We will record a loss on the write-off of property and
equipment of $16,200, net of income tax benefit of $7,349,
relating to certain assets that will no longer be utilized
as a result of the Distribution.
(2) Certain deferred tax assets in the amount of $45,024, relating
to the HH Group businesses, which are no longer realizable as a
result of the Distribution, will be written down to fair value.
(3) We will record a valuation allowance of $2,000 on certain
deferred tax assets to be retained by TMP. As a result of the
Distribution, the realization of these deferred tax assets is
uncertain.
(c) Exhibits.
2.1 Distribution Agreement, dated March 31, 2003, by and between TMP
Worldwide Inc. and Hudson Highland Group, Inc.
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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 hereunto duly authorized.
Date: April 11, 2003
TMP Worldwide Inc.
By:
/s/ Michael Sileck
------------------------------------------
Michael Sileck, Chief Financial Officer
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