-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AWcjj4aM4fTZSFSwWamogX2L5brc+eCaw3osH/6JJqCneT6uZNaykA1nMJR8vIkn a0DH6sVn4MStCe1hPS9xmw== 0001047469-99-026835.txt : 19990712 0001047469-99-026835.hdr.sgml : 19990712 ACCESSION NUMBER: 0001047469-99-026835 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990531 FILED AS OF DATE: 19990709 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LAI WORLDWIDE INC CENTRAL INDEX KEY: 0001038315 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EMPLOYMENT AGENCIES [7361] IRS NUMBER: 593547281 STATE OF INCORPORATION: FL FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-22645 FILM NUMBER: 99661355 BUSINESS ADDRESS: STREET 1: 200 PARK AVE STREET 2: STE 3100 CITY: NEW YORK STATE: NY ZIP: 10166-0136 BUSINESS PHONE: 8139617494 MAIL ADDRESS: STREET 1: 3903 NORTHDALE BLVD CITY: TAMPA STATE: FL ZIP: 33624 FORMER COMPANY: FORMER CONFORMED NAME: LAMALIE ASSOCIATES INC DATE OF NAME CHANGE: 19970425 10-Q 1 10-Q 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. LAI WORLDWIDE, INC. INDEX
Page ---- 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
LAI WORLDWIDE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited)
Three Months Ended May 31, -------------------------------------- 1999 1998 ----------------- ----------------- 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 ---------- ----------- ---------- -----------
The accompanying notes are an integral part of these condensed consolidated financial statements. 3 LAI WORLDWIDE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in thousands)
May 31, February 28, 1999 1999 ------------- ------------- (unaudited) ASSETS 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 Total stockholders' equity 65,713 73,560 ---------- ---------- ---------- ---------- Total liabilities and stockholders' equity $ 93,675 $ 103,823 ---------- ---------- ---------- ----------
The accompanying notes are an integral part of these condensed consolidated financial statements. 5 LAI WORLDWIDE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)
Three Months Ended May 31, ------------------------------- 1999 1998 ----------------- ------------ 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 --------- --------- --------- ---------
The accompanying notes are an integral part of these condensed consolidated financial statements. 6 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 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 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:
Balance at Charged to Balance at February 28, 1999 Costs and Expenses Deductions May 31, 1999 ---------------------- ---------------------- ---------------------- ----------------------- (in thousands) Fiscal 1999 restructuring $ 577 $ 116 $ 198 $ 495 Fiscal 2000 restructuring -- 2,673 1,887 786 ---------------------- ---------------------- ---------------------- ----------------------- $ 577 $2,789 $2,085 $1,281
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 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:
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) 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 ------- ----- ------ ------ ----- ------- ------- ----- ------ ------ ----- -------
Note 7. Comprehensive Income Comprehensive income is as follows:
Three Months Ended May 31, --------------------------------- 1999 1998 ----------------- ------------ (in thousands) 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 --------- --------- --------- ---------
10 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:
Three Months Ended May 31, ------------------------------ 1999 1998 -------- -------- (in thousands) 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 -------- -------- -------- --------
May 31, 1999 -------- Total assets: Domestic $ 89,110 International 4,565 -------- Consolidated $ 93,675 -------- --------
11 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 Company employed 116 consultants domestically, compared to 115 domestic consultants employed as of May 1998. 13 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 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 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 working capital, capital expenditure and general corporate requirements for the foreseeable future. 17 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 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. a. Exhibits
Exhibit Number Description - ------ ----------- 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 +
19 10.8 (1) --Employment Agreement for Mr. Gow + 10.9 (6) --1998 Omnibus Stock and Incentive Plan as now in effect
20
Exhibit Number Description - ------ ----------- 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)
(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
Exhibit Number Description - ------ ----------- (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.
+ 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 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 EX-27 2 EXHIBIT 27
5 1,000 3-MOS FEB-28-2000 MAR-01-1999 MAY-31-1999 20,535 0 23,782 3,795 0 45,266 14,099 5,093 93,675 15,034 0 0 0 82 65,631 93,675 0 18,964 0 32,481 0 0 (259) (13,258) (5,436) (7,822) 0 0 0 (7,822) (.97) (.97)
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