TMP Worldwide Reports First Quarter 2003 Results

NEW YORK--(BUSINESS WIRE)--April 29, 2003--TMP Worldwide Inc. (Nasdaq: TMPW), one of the world's leading suppliers of human capital solutions, including the pre-eminent Internet career portal Monster(R), today announced financial results for its first quarter ended March 31, 2003.

For the first quarter 2003, TMP posted non-GAAP (formerly known as adjusted) income from continuing operations of $9.7 million, or non-GAAP diluted earnings per share of $0.09. On a generally accepted accounting principles (GAAP) basis, including the balance ($48 million) of the previously announced restructuring charge primarily relating to the spin-off of Hudson Highland Group, Inc., TMP reported a first quarter 2003 loss from continuing operations of $28.8 million, or $0.26 per diluted share.

Effective March 31, 2003, TMP completed the spin-off of its eResourcing and Executive Search business units as a new, publicly traded company known as Hudson Highland Group, Inc. (Nasdaq: HHGP). The financial results of Hudson Highland Group, Inc. are reported as discontinued operations for all periods presented in this release. TMP's first quarter 2003 financial results reflect the continuing operations of the company's Monster, Advertising & Communications, and Directional Marketing business units, and prior periods are presented on a comparative basis. Financial information for the discontinued staffing and executive search business will be issued separately by Hudson Highland Group, Inc.

TMP Worldwide's total commissions and fees for the first quarter of 2003 were $168.9 million reflecting the continued solid performance at Monster, which contributed $106.2 million. Monster's deferred revenue was $114 million at March 31, 2003 up from $110 million in the prior year period but down from the seasonally strong $121 million in last year's fourth quarter.

For the first quarter of 2002, total commissions and fees were $181.5 million and non-GAAP diluted earnings per share from continuing operations were $0.20, or $0.15 on a GAAP basis. Detailed quarter versus quarter comparative results for TMP Worldwide by business segment are presented in the supplemental data tables attached to this release.

Andrew J. McKelvey, Chairman and Chief Executive Officer of TMP Worldwide, commented, "During the first three months of the year, Monster and Directional Marketing realized modest top-line sequential growth, while the sustained, difficult economic environment continued to impact our Advertising & Communications business unit. We expect that economic conditions will remain challenging over the course of 2003, but we remain vigilant at controlling costs and expanding our client portfolio. In the first quarter, we made strong gains in our sector and new business efforts. In healthcare, our Advertising & Communications unit won recruitment advertising business from over 10 regional healthcare organizations. Monster was awarded new assignments from leading Fortune 500 companies within the staffing and technology sectors, and we continue to make strong gains in our government business."

Mr. McKelvey concluded: "Looking forward, the successful spin-off of our staffing and search units is enabling us to center our focus on realizing the true potential of Monster and our other businesses."

TMP Worldwide recorded business reorganization, spin-off and other special charges in continuing operations of $48 million as it completed the previously announced reorganization in connection with the spin-off of its eResourcing and Executive Search businesses. The charge consists primarily of workforce reduction, office consolidation costs and related asset write-offs, professional fees, costs related to the spin-off of Hudson Highland Group, Inc. and other special charges.

Non-GAAP operating income, operating margin, income from continuing operations and diluted earnings per share from continuing operations and adjusted EBITDA reflect adjustments made to exclude business reorganization, spin-off and other special charges, merger and integration costs, and the tax benefits thereon. Non-GAAP income from continuing operations and diluted earnings per share from continuing operations for 2002 are also adjusted to exclude the after-tax cumulative effect of an accounting change of $428.4 million, which was for the implementation of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets. All non-GAAP financial information in this release is reconciled in the "Financial Tables" and "Supplemental Data" sections below.

The loss from discontinued operations includes the GAAP results of the eResourcing and Executive Search divisions, which were spun off as Hudson Highland Group, Inc. Furthermore, for these divisions, the loss from discontinued operations for 2003 also reflects the write-off of certain deferred tax assets of $43 million, which are no longer realizable as a direct result of the spin-off.

Q1 2003 Cash Position Is Strong

In the first quarter of 2003, operating cash provided by continuing operations was approximately $10.1 million, which includes $18.1 million in payments related to TMP's reorganization efforts. During the first quarter of 2003, capital expenditures were $4.4 million and payments for acquisitions net of cash acquired, including payments for restructuring of acquired businesses, were $5.5 million.

Cash as of March 31, 2003, was $125.3 million, compared with $165.6 million as of December 31, 2002. Cash balances at March 31, 2003 reflect the impact of $40 million of cash funding provided to Hudson Highland Group, Inc. at the time of the spin-off. Cash balances at December 31, 2002 are net of cash held by the discontinued operations. A summary of first quarter cash activity is included in the Supplementary Data that follows.

TMP continues to focus on working capital management as evidenced by the stable Days Sales Outstanding ("DSO") of 64 days at both March 31, 2003 and March 31, 2002.

About TMP Worldwide

Founded in 1967, TMP Worldwide Inc., with 4,500 employees in 19 countries, is the online recruitment leader and the world's largest Recruitment Advertising agency network. Headquartered in New York, TMP is also the parent company of Monster, the leading global careers website, the world's largest Yellow Pages advertising agency and a provider of direct marketing services. The Company's clients include more than 90 of the Fortune 100 and more than 490 of the Fortune 500 companies. TMP Worldwide is a member of the S&P 500 Index. More information about TMP Worldwide is available at www.tmp.com.

About Monster

Monster, headquartered in Maynard, Mass., is the leading global careers website, recording over 51.4 million unique visits during the month of March 2003 according to independent research conducted by I/PRO. Monster connects the most progressive companies with the most qualified career-minded individuals, offering innovative technology and superior services that give them more control over the recruiting process. The Monster global network consists of local content and language sites in the United States, United Kingdom, Australia, Canada, the Netherlands, Belgium, New Zealand, Singapore, Hong Kong, France, Scotland, Germany, Ireland, Spain, Luxembourg, India, Italy, Sweden, Norway, Denmark, Switzerland, and Finland. Monster is the official online career management services sponsor of the 2002 Olympic Winter Games and 2002 and 2004 U.S. Olympic Teams. More information about Monster is available at www.monster.com or by calling 1-800-MONSTER.

Condensed consolidated statements of operations for the three months ending March 31, 2003 and 2002, and condensed consolidated balance sheets as of March 31, 2003, and December 31, 2002 for TMP Worldwide Inc. and subsidiaries follow. For an investor kit, please contact Robert Jones at (212) 351-7032 or visit www.tmp.com.

First quarter 2003 results will be discussed on TMP Worldwide's quarterly conference call taking place on April 30, 2003. To join the conference call, please dial in on 1-800-734-6467 at 8:20 AM EDT. For those outside the United States, please call in on 1-212-346-6384. The call will begin promptly at 8:30 AM EDT. Individuals can also access TMP Worldwide's quarterly conference call online through the investor information section of the Company's website at www.tmp.com. Interactive Metrics for TMP Worldwide and Monster are available at www.tmp.com or www.monster.com.

Supplemental Data

Quarter versus quarter comparative results for TMP Worldwide, are as follows (dollar amounts in thousands, except per share amounts):

-------------------------------------- ---------- ---------- --------- Operating Highlights Q1'03 Q1'02 % Change -------------------------------------- ---------- ---------- --------- Total commissions and fees $168,912 $181,492 -7% Operating income (loss) $(32,541) $27,475 -218% Non-GAAP operating income $15,337 $34,448 -55% Non-GAAP operating margin 9.1% 19.0% -52% Income (loss) from continuing operations $(28,820) $17,818 -262% Non-GAAP income from continuing operations $9,712 $22,941 -58% Net loss $(115,868) $(422,071) 73% Income (loss) per share from continuing operations $(0.26) $0.15 -273% Non-GAAP earnings per share from continuing operations $0.09 $0.20 -55% Diluted loss per share $(1.04) $(3.80) 73% Adjusted EBITDA $22,486 $43,536 -48% -------------------------------------- ---------- ---------- ---------

The following tables include quarter versus quarter comparative results for TMP Worldwide's commissions and fees, percentage of Interactive commissions and fees, non-GAAP operating income (loss) and non-GAAP operating margin by operating segment. (Dollar amounts in thousands).

Segment Data For The Three Months Ended March 31, 2003 ---------------------- ----------------------------------------------- Advertising & Directional Monster Communications Marketing Total ---------------------- --------- --------------- ----------- --------- Total Commissions & Fees $106,204 $34,211 $28,497 $168,912 ---------------------- --------- --------------- ----------- --------- Operating Income (Loss) (9,213) (19,586) (3,742) (32,541) Add back: Merger, integration and business reorganization, spin-off and other special charges 28,054 12,315 7,509 47,878 ---------------------- --------- --------------- ----------- --------- Non-GAAP Operating Income (Loss) $18,841 $(7,271) $3,767 $15,337 ====================== ========= =============== =========== ========= Non-GAAP Operating Margin 17.7% -21.3% 13.2% 9.1% % Interactive commissions and fees 100.0% 21.9% 17.9% 70.3% ---------------------- --------- --------------- ----------- --------- Segment Data For The Three Months Ended March 31, 2002 ---------------------- ----------------------------------------------- Advertising & Directional Monster Communications Marketing Total ---------------------- --------- --------------- ----------- --------- Total Commissions & Fees $108,753 $41,051 $31,688 $181,492 ---------------------- --------- --------------- ----------- --------- Operating Income (Loss) 27,043 (8,465) 8,897 27,475 Add back: Merger, integration and business reorganization, spin-off and other special charges 228 6,676 69 6,973 ---------------------- --------- --------------- ----------- --------- Non-GAAP Operating Income (Loss) $27,271 $(1,789) $8,966 $34,448 ====================== ========= =============== =========== ========= Non-GAAP Operating Margin 25.1% -4.4% 28.3% 19.0% % Interactive commissions and fees 100% 16.8% 13.7% 66.1% ---------------------- --------- --------------- ----------- --------- Comparative Segment For The Three Months Ended March 31, 2003 Data compared with 2002 ----------------------- ---------------------------------------------- Advertising & Directional Monster Communications Marketing Total ----------------------- -------- --------------- ----------- --------- Total Commissions & Fees $(2,549) $(6,840) $(3,191) $(12,580) Operating Loss (36,256) (11,121) (12,639) (60,016) Non-GAAP Operating Income (Loss) (8,430) (5,482) (5,199) (19,111) % Change: -- Commissions & Fees -2.3% -16.7% -10.1% -6.9% -- Non-GAAP Operating Income (Loss) -30.9% -306.4% -58.0% -55.5% ----------------------- -------- --------------- ----------- --------- Cash Data ---------------------------------------------------------------- Total ---------------------------------------------------------------- Cash at December 31, 2002 $191,556 Cash attributable to Hudson Highland Group, Inc. (25,908) ---------------------------------------------------------------- Cash of Continuing Operations at December 31, 2002 165,648 Cash activity for the quarter ended March 31, 2003: Cash provided by operating activities of continuing operations, net of reorganization payments of $18,128 10,103 Capital expenditures of continuing operations (4,371) Payments for acquisitions, net of cash acquired (5,535) ---------------------------------------------------------------- Financing activities of continuing operations 746 ---------------------------------------------------------------- Net Change in cash from Continuing Operations, before cash of $14,092 transferred to Hudson Highland Group 943 ---------------------------------------------------------------- Cash used by discontinued operations (27,225) Balance of $40 million cash transfer to Hudson Highland Group (14,092) ---------------------------------------------------------------- Effects of exchange rates on cash 61 ---------------------------------------------------------------- Cash of Continuing Operations at March 31, 2003 $125,335 ----------------------------------------------------------------

Special Note: Except for historical information contained herein, the statements made in this release constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve certain risks and uncertainties, including statements regarding the Company's strategic direction, prospects and future results. Certain factors, including factors outside of our control, may cause actual results to differ materially from those contained in the forward-looking statements, including economic and other conditions in the markets in which we operate, risks associated with acquisitions, competition, seasonality and the other risks discussed in our Form 10-K and our other filings made with the Securities and Exchange Commission, which discussions are incorporated in this release by reference.

TMP WORLDWIDE INC. Condensed Consolidated Statements of Operations for the Three Months Ended March 31, (in Thousands, Except Per Share Amounts) (Unaudited) 2003 2002 ---------- ---------- Gross billings: Monster $110,019 $110,089 Advertising & Communications 159,239 162,023 Directional Marketing 151,874 172,188 ------------------------------------------------ ---------- ---------- Total gross billings $421,132 $444,300 ================================================ ========== ========== Commissions and fees: Monster(a) $106,204 $108,753 Advertising & Communications 34,211 41,051 Directional Marketing 28,497 31,688 ------------------------------------------------ ---------- ---------- Total commissions and fees 168,912 181,492 ------------------------------------------------ ---------- ---------- Operating expenses: Salaries and related 75,791 78,089 Office and general 43,152 40,502 Marketing and promotion 34,018 27,742 Merger and integration - 6,973 Business reorganization, spin-off and other special charges 47,878 - Amortization of intangibles 614 711 ------------------------------------------------ ---------- ---------- Total operating expenses 201,453 154,017 ------------------------------------------------ ---------- ---------- Operating income (loss) (32,541) 27,475 Interest and other, net (885) (160) ------------------------------------------------ ---------- ---------- Income (loss) from continuing operations before provision (benefit) for income taxes, minority interests and accounting change (33,426) 27,315 Provision (benefit) for income taxes (4,071) 9,564 ------------------------------------------------ ---------- ---------- Income (loss) from continuing operations before minority interests and accounting change (29,355) 17,751 Minority interests (535) (67) ------------------------------------------------ ---------- ---------- Income (loss) from continuing operations before accounting change (28,820) 17,818 Loss from discontinued operations, net of tax (87,048) (11,515) ------------------------------------------------ ---------- ---------- Income (loss) before accounting change (115,868) 6,303 Cumulative effect of accounting change, net of tax benefit - (428,374) ------------------------------------------------ ---------- ---------- Net loss $(115,868) $(422,071) ================================================ ========== ========== Reconciliation of income (loss) from continuing operations to non-GAAP income from continuing operations: Income (loss) from continuing operations before accounting change $(28,820) $17,818 Merger and integration - 6,973 Business reorganization and other special charges 47,878 - Tax benefit on merger, integration, business reorganization, spin-off and other special charges (9,346) (1,850) ------------------------------------------------ ---------- ---------- Non-GAAP income from continuing operations $9,712 $22,941 ================================================ ========== ========== Basic loss per share: Income (loss) from continuing operations before accounting change $(0.26) $0.15 Loss from discontinued operations, net of tax benefit (0.78) (0.10) Cumulative effect of accounting change, net of tax benefit - (3.85) ------------------------------------------------ ---------- ---------- Basic loss per share $(1.04) $(3.80) ================================================ ========== ========== Diluted loss per share: Income (loss) from continuing operations before accounting change $(0.26) 0.15 Loss from discontinued operations, net of tax benefit (0.78) (0.10) Cumulative effect of accounting change, net of tax benefit - (3.85) ------------------------------------------------ ---------- ---------- Diluted loss per share $(1.04) $(3.80) ================================================ ========== ========== Non-GAAP diluted income from continuing operations per share $0.09 $0.20 ================================================ ========== ========== Weighted average shares outstanding: Basic 111,455 111,186 ================================================ ========== ========== Diluted 111,952 114,407 ================================================ ========== ========== EBITDA(b) adjusted for merger, integration and business reorganization charges: Income (loss) from continuing operations before accounting change $(28,820) $17,818 Merger and integration - 6,973 Business reorganization, spin-off and other special charges 47,878 - Interest income (expense), net 59 (270) Provision (benefit) for income taxes (4,071) 9,564 Depreciation and amortization 7,440 9,451 ------------------------------------------------ ---------- ---------- Adjusted EBITDA $22,486 $43,536 ================================================ ========== ==========

(a) For the three months ended March 31, 2003 and 2002, Monster commissions and fees include $4.5 million and $ 5.5 million, respectively, for Monster services sold by Hudson Highland Group, Inc., which was spun-off by TMP on March 31, 2003.

(b) Earnings before interest, taxes depreciation and amortization. Adjusted EBITDA is presented to provide additional information about the Company's ability to meet its future debt service, capital expenditures and working capital requirements and is one of the measures which determines the Company's ability to borrow under its credit facility. Adjusted EBITDA should not be considered in isolation or as a substitute for operating income, cash flows from operating activities or other statement of operations or cash flow data prepared in accordance with generally accepted accounting principles, not is it a measure of the Company's profitability or liquidity.

TMP WORLDWIDE INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) March 31, Dec. 31, 2003 2002 ----------- ----------- Assets: Cash and cash equivalents $125,335 $165,648 Accounts receivable, net 299,759 307,599 Property and equipment, net 84,490 123,682 Intangibles, net 393,798 386,704 Other assets 100,433 140,383 Total assets of discontinued operations - 506,779 ---------------------------------------------- ----------- ----------- Total Assets $1,003,815 $1,630,795 ============================================== =========== =========== Liabilities and Stockholders' Equity: Accounts payable and accrued expenses $400,315 $426,160 Accrued integration and restructuring 9,957 12,355 Accrued business reorganization and spin-off costs 64,647 60,336 Deferred commissions and fees 150,371 149,725 Other liabilities 11,141 12,619 Debt 6,971 5,631 Total liabilities of discontinued operations - 150,530 ---------------------------------------------- ----------- ----------- Total Liabilities 643,402 817,356 Stockholders' Equity 360,413 813,439 ---------------------------------------------- ----------- ----------- Total Liabilities and Stockholders' Equity $1,003,815 $1,630,795 ============================================== =========== ===========

CONTACT: TMP Investors: Robert Jones, 212/351-7032 robert.jones@tmp.com or Media: David Rosa, 212/351-7067 david.rosa@tmp.com

SOURCE: TMP Worldwide Inc.