<PAGE>
PROSPECTUS
5,250,000 SHARES
ROBERT HALF INTERNATIONAL INC.
COMMON STOCK
-------------------
Of the 5,250,000 shares of Common Stock being offered, 108,555 shares are
being sold by Robert Half International Inc. (the "Company") and 5,141,445 are
being sold for the account of certain stockholders of the Company (the "Selling
Stockholders"). The Company will not receive any of the proceeds of the sale of
the shares being sold by the Selling Stockholders.
Of the 5,250,000 shares of Common Stock offered hereby, 4,200,000 shares are
being offered in the United States and Canada by the U.S. Underwriters and
1,050,000 shares are being offered in a concurrent offering outside of the
United States and Canada by the International Underwriters. The price to public
and underwriting discount per share are identical for both offerings. See
"Underwriting."
The Company's Common Stock is traded on the New York Stock Exchange under
the symbol "RHI". On November 3, 1994, the last reported sale price of the
Common Stock on the New York Stock Exchange was $21 3/8 per share.
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN MATTERS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDERS
<S> <C> <C> <C> <C>
Per Share............................... $21.25 $.85 $20.40 $20.40
Total (3)............................... $111,562,500 $4,462,500 $2,214,522 $104,885,478
<FN>
(1) The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $260,000.
(3) The Company has granted the U.S. Underwriters and the International
Underwriters options exercisable within 30 days after the date hereof to
purchase up to 420,000 and 105,000 additional shares of Common Stock,
respectively, in each case to cover over-allotments, if any. See
"Underwriting." If all such shares are purchased, the total Price to Public,
Underwriting Discount and Proceeds to Company will be $122,718,750,
$4,908,750 and $12,924,522, respectively.
</TABLE>
-------------------
The shares of Common Stock are being offered by the Underwriters, subject to
prior sale, when, as and if delivered to and accepted by the Underwriters, and
subject to the approval of certain legal matters by counsel for the Underwriters
and to certain other conditions. The Underwriters reserve the right to withdraw,
cancel or modify any offer and to reject any order in whole or in part. It is
expected that delivery of the shares of Common Stock will be made in New York,
New York on or about November 10, 1994.
-------------------
MERRILL LYNCH & CO. WILLIAM BLAIR & COMPANY
------------
The date of this Prospectus is November 3, 1994.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
--------------------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 and in accordance therewith files reports, proxy and
information statements and other information with the Securities and Exchange
Commission. Such reports, proxy and information statements and other information
filed by the Company with the Commission can be inspected and copied at the
public reference facilities maintained by the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and at the Commission's
regional offices at Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and at 7 World Trade Center, New York, New York
10048. Copies of such material can be obtained at prescribed rates upon request
from the Public Reference Room of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such reports, proxy and information statements
and other information concerning the Company can also be inspected at the
offices of the New York Stock Exchange at 20 Broad Street, New York, New York
10005.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act of 1933 with respect to the securities offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto, certain portions
of which are omitted as permitted by the rules and regulations of the
Commission. For further information with respect to the Company and the
securities offered hereby, reference is made to such Registration Statement and
exhibits and schedules. Statements contained or incorporated by reference in
this Prospectus as to the contents of any contract or any other document
referred to are not necessarily complete, and in each instance reference is made
to the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference. The Registration Statement, together with its exhibits and
schedules, may be obtained upon payment of a fee prescribed by the Commission,
or may be inspected free of charge at the Commission's principal office in
Washington, D.C.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Robert Half International Inc. will deliver without charge to each person,
including any beneficial owner, to whom a Prospectus is delivered, upon written
or oral request of such person, a copy of any and all of the information that
has been incorporated by reference in this Prospectus (other than exhibits to
such information which are not specifically incorporated by reference into the
information that this Prospectus incorporates). Requests for information should
be directed to Secretary, Robert Half International Inc., 2884 Sand Hill Road,
Menlo Park, California 94025, (415) 854-9700.
The following documents are hereby incorporated by reference in this
Prospectus:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993.
2. The Company's Quarterly Reports on Form 10-Q for the fiscal quarters
ended March 31, 1994, June 30, 1994 and September 30, 1994.
3. The description of the Company's Common Stock contained in its Form
8-A relating to its Common Stock, filed with the Commission on January 5,
1990, as amended.
4. The description of the Company's Preferred Share Purchase Rights
contained in its Form 8-A relating to its Preferred Share Purchase Rights,
filed with the Commission on July 30, 1990, as amended.
5. The Company's Current Report on Form 8-K dated October 19, 1994.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 subsequent to the date hereof and
prior to the termination of the offering (except information included in any
such document in response to Items 402(i), 402(k) or 402(l) of Regulation S-K)
shall be deemed to be incorporated by reference into this Prospectus and to be a
part hereof from the date of filing of such documents. Any statement contained
herein or in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
--------------------------
No action has been or will be taken in any jurisdiction by the Company or by
any Underwriter that would permit the public offering of the Common Stock or the
possession or distribution of this Prospectus in any jurisdiction where action
for that purpose is required, other than in the United States. Persons into
whose possession this Prospectus comes are required by the Company and the
Underwriters to inform themselves about and to observe any restrictions as to
the offering of the Common Stock and the distribution of this Prospectus.
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE IN
THIS PROSPECTUS OR IN THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN. THIS
SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH INFORMATION. UNLESS
OTHERWISE EXPRESSLY INDICATED, ALL INFORMATION IN THIS PROSPECTUS ASSUMES THAT
THE OVER-ALLOTMENT OPTIONS GRANTED TO THE U.S. UNDERWRITERS AND THE
INTERNATIONAL UNDERWRITERS ARE NOT EXERCISED. ALL REFERENCES TO "$" OR "DOLLARS"
MEAN UNITED STATES DOLLARS. ALL SHARE AND PER SHARE AMOUNTS HAVE BEEN RESTATED
TO RETROACTIVELY REFLECT THE TWO-FOR-ONE STOCK SPLIT EFFECTED IN THE FORM OF A
STOCK DIVIDEND IN AUGUST 1994.
THE COMPANY
Robert Half International Inc. (the "Company") is the world's largest
specialized provider of temporary and permanent personnel in the fields of
accounting and finance. Its divisions include ACCOUNTEMPS-R- and ROBERT HALF-R-,
providers of temporary and permanent personnel, respectively, in the fields of
accounting and finance. The Company, utilizing its experience as a specialized
provider of temporary and permanent personnel, has expanded into additional
specialty fields. In December 1991, the Company formed OFFICETEAM-R- to provide
skilled temporary administrative and office personnel. In 1992, the Company
acquired THE AFFILIATES-R-, which focuses on placing temporary and permanent
employees in paralegal, legal administrative and other legal support positions.
In addition, the Company recently established RHI CONSULTING-TM- to concentrate
on providing temporary information technology professionals in positions ranging
from PC/LAN technician to system design and application programmer.
The Company's business was originally founded in 1948. Prior to 1986, the
Company was primarily a franchisor of ACCOUNTEMPS and ROBERT HALF offices.
Beginning in 1986, the Company and its current management embarked on a strategy
of acquiring franchised locations and other local or regional independent
providers of specialized temporary service personnel. The Company has acquired
all but five of the ACCOUNTEMPS and ROBERT HALF franchises in 45 separate
transactions, and has acquired 14 other local or regional providers of
specialized temporary service personnel. Since 1986, the Company has
significantly expanded operations at many of the acquired locations and has
opened over 50 new locations. The Company believes that direct ownership of
offices allows it to better monitor and protect the image of the ACCOUNTEMPS and
ROBERT HALF names, promotes a more consistent and higher level of quality and
service throughout its network of offices and improves profitability by
centralizing many of its administrative functions. The Company currently has
more than 160 offices in 36 states and five foreign countries and placed
approximately 59,000 employees on temporary assignment with clients in 1993.
The Company is a Delaware corporation. Its principal executive offices are
located at 2884 Sand Hill Road, Menlo Park, California, 94025 and its telephone
number is (415) 854-9700.
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by:
The Company........................... 108,555 shares
The Selling Stockholders.............. 5,141,445 shares
Common Stock to be outstanding after
this offering.......................... 27,549,269 shares
Use of proceeds......................... Repayment of a portion of outstanding
indebtedness
New York Stock Exchange symbol.......... RHI
</TABLE>
3
<PAGE>
SUMMARY FINANCIAL DATA
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------------------- --------------------
1989 1990 1991 1992 1993 1993 1994
--------- --------- --------- --------- --------- --------- ---------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE INFORMATION AND PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net service revenues........................ $ 234,504 $ 248,557 $ 209,455 $ 220,179 $ 306,166 $ 219,080 $ 321,313
Gross margin................................ 114,822 117,765 91,872 88,304 117,874 85,164 124,637
Amortization of intangible assets........... 3,357 3,721 3,896 3,961 4,251 3,142 3,431
Income before income taxes and extraordinary
gain (a)................................... 23,044 14,933 8,076 7,906 21,557 15,629 32,340
Net income.................................. 13,467 9,319 4,115 4,382 11,723 8,378 18,619
Net income per fully diluted share.......... $ .57 $ .41 $ .18 $ .18 $ .46 $ .33 $ .66
Weighted average number of fully diluted
shares..................................... 27,664 22,935 23,273 24,007 25,260 25,040 28,213
PERCENTAGE OF REVENUES DATA:
Gross margin................................ 49.0% 47.4% 43.9% 40.1% 38.5% 38.9% 38.8%
Selling, general and administrative
expenses................................... 34.6% 36.4% 35.0% 32.8% 28.8% 29.0% 27.2%
Operating margin before amortization of
intangible assets.......................... 14.4% 11.0% 8.9% 7.3% 9.7% 9.9% 11.5%
Net income margin........................... 5.7% 3.7% 2.0% 2.0% 3.8% 3.8% 5.8%
<FN>
- ------------------------------
(a) Extraordinary gains were recorded in 1989 and 1990 in the amounts of
$345,000 and $453,000, respectively, related to the repurchase of
convertible subordinated debentures.
</TABLE>
4
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS AND DOCUMENTS
INCORPORATED BY REFERENCE HEREIN, THE FOLLOWING FACTORS SHOULD BE CONSIDERED IN
EVALUATING AN INVESTMENT IN THE SHARES OF COMMON STOCK.
DEPENDENCE UPON PERSONNEL
The Company is engaged in the personnel services business. As such, its
success or failure is highly dependent upon the performance of its management
personnel and employees, rather than upon technology or upon tangible assets (of
which the Company has few). There can be no assurance that the Company will be
able to attract and retain the personnel that are essential to its success.
HIGHLY COMPETITIVE BUSINESS
The personnel services business is highly competitive and, because it is a
service business, the barriers to entry are quite low. There are many
competitors, some of which have greater resources than the Company, and new
competitors are entering the market all the time. In addition, long-term
contracts form a negligible portion of the Company's revenue. Therefore, there
can be no assurance that the Company will be able to retain clients or market
share in the future. Nor can there be any assurance that the Company will, in
light of competitive pressures, be able to remain profitable or, if profitable,
maintain its current profit margins.
BUSINESS HIGHLY DEPENDENT UPON THE STATE OF THE ECONOMY
The demand for the Company's services is highly dependent upon the state of
the economy and upon the staffing needs of the Company's clients. Any variation
in the economic condition of the U.S. or of any of the foreign countries in
which the Company does business, or in the economic condition of any region of
any of the foregoing, or in any specific industry may severely reduce the demand
for the Company's services and thereby significantly decrease the Company's
revenues. The ROBERT HALF division has traditionally taken longer to recover
from the effects of recessions than the ACCOUNTEMPS division.
AVAILABILITY OF CANDIDATES
The Company's business consists of the placement of individuals seeking
temporary and permanent employment. There can be no assurance that qualified
candidates for employment will continue to seek temporary employment through the
Company. Qualified candidates generally seek temporary or permanent positions
through multiple sources, including the Company and its competitors. Any
shortage of qualified candidates could materially adversely affect the Company.
GOVERNMENT REGULATION
The Company's business is subject to regulation or licensing in many states
and in certain foreign countries. While the Company has had no material
difficulty complying with regulations in the past, there can be no assurance
that the Company will be able to continue to obtain all necessary licenses or
approvals or that the cost of compliance will not prove to be material. Any
inability of the Company to comply with government regulation or licensing
requirements could materially adversely affect the Company.
POTENTIAL LIABILITY TO EMPLOYEES AND CLIENTS
The Company's temporary services business entails employing individuals on a
temporary basis and placing such individuals in clients' workplaces. The
Company's ability to control the workplace environment is limited. As the
employer of record of its temporary employees, the Company incurs a risk of
liability to its temporary employees for various workplace events, including
claims of physical injury, discrimination or harassment. While such claims have
not historically had a material adverse effect upon the Company, there can be no
assurance that such claims in the future will not result in adverse publicity or
have a material adverse effect upon the Company.
The Company also incurs a risk of liability to its clients resulting from
allegations of errors, omissions or theft by its temporary employees. The
Company maintains insurance with respect to many of such claims. While such
claims have not historically had a material adverse effect upon the Company,
there can be no assurance that the Company will continue to be able to obtain
insurance at a cost that does not have a
5
<PAGE>
material adverse effect upon the Company or that such claims (whether by reason
of the Company not having insurance or by reason of such claims being outside
the scope of the Company's insurance) will not have a material adverse effect
upon the Company.
ABILITY TO CONTINUE GROWTH
There can be no assurance that the growth recently experienced by the
Company will continue in the future. Growth is dependent upon a number of
factors, including, but not limited to, the recruitment of qualified employees,
the availability of working capital, the level of competition and the ability of
the Company to control costs and maintain margins. In addition, to the extent
that past growth has occurred through acquisitions, there can be no assurance
that the Company will be able to continue to locate and acquire businesses in
the future or that any such acquisition will not have a material adverse effect
upon the performance of the Company or the ability of its management to focus
its efforts on current operations.
HEALTH CARE REFORM
Various health care reform proposals, including proposals to require that
employers provide greater benefits to employees and that temporary employers
provide benefits to temporary employees, are being considered by the federal
government and certain state governments. It is impossible at present to predict
what proposals, if any, will be adopted. Therefore, there can be no assurance
that any proposals that are adopted will not have a material adverse effect upon
the Company.
USE OF PROCEEDS
The net proceeds from the sale of the shares offered by the Company are
estimated to be approximately $1,954,522 ($12,664,522 if the Underwriters'
over-allotment options are exercised in full). The Company intends to use the
proceeds for repayment of a portion of the borrowings under the Company's
revolving credit agreement, which borrowings bear interest either at the
Eurodollar rate plus 1% or at prime.
The Company will not receive any of the proceeds from the sale of the shares
offered by the Selling Stockholders.
6
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company at
September 30, 1994, and as adjusted to reflect (i) the sale of shares of Common
Stock by the Company in this offering and (ii) the application of the estimated
net proceeds therefrom.
<TABLE>
<CAPTION>
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Notes payable and other indebtedness, less current portion......................... $ 3,122 $ 3,122
Bank loan (revolving credit)....................................................... 13,700 11,745
Stockholders' equity:
Common stock, $.001 par value:
authorized -- 100,000,000; issued and outstanding -- 27,429,344 actual;
27,537,899 as adjusted........................................................ 27 28
Capital surplus.................................................................. 68,359 70,313
Deferred compensation............................................................ (6,124) (6,124)
Accumulated translation adjustments.............................................. (322) (322)
Retained earnings................................................................ 93,961 93,961
---------- -----------
Total stockholders' equity................................................... 155,901 157,856
---------- -----------
Total capitalization............................................................... $ 172,723 $ 172,723
---------- -----------
---------- -----------
</TABLE>
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Company's Common Stock is listed on the New York Stock Exchange and is
traded under the symbol RHI. The following table sets forth, for the periods
shown, the quarterly high and low sale prices per share of Common Stock as
reported on the New York Stock Exchange Composite Tape. All prices reflect the
Company's two-for-one stock split in August 1994.
<TABLE>
<CAPTION>
SALES PRICES
-------------------
HIGH LOW
------ ------
<S> <C> <C>
1992
First Quarter................................................................. $ 73/16 $ 51/2
Second Quarter................................................................ 615/16 53/4
Third Quarter................................................................. 57/8 51/8
Fourth Quarter................................................................ 71/4 513/16
1993
First Quarter................................................................. $ 91/16 $ 65/16
Second Quarter................................................................ 111/4 81/8
Third Quarter................................................................. 15 1011/16
Fourth Quarter................................................................ 141/8 12
1994
First Quarter................................................................. $167/16 $123/4
Second Quarter................................................................ 203/16 151/16
Third Quarter................................................................. 231/16 17
Fourth Quarter (through November 3)........................................... 233/8 181/8
</TABLE>
On November 3, 1994, the last reported sale price of the Common Stock on the
New York Stock Exchange was $21 3/8 per share. On September 30, 1994, there were
approximately 1,370 holders of record of the Common Stock.
No cash dividends have been paid in the last five years. The Company, as it
deems appropriate, may continue to retain all earnings for use in its business
or may consider paying a dividend in the future.
7
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data set forth below as of December 31,
1992 and 1993 and for each of the years in the three year period ended December
31, 1993 have been derived from the consolidated financial statements of Robert
Half International Inc. and its subsidiaries, which have been audited by Arthur
Andersen LLP, independent auditors, which have been incorporated herein by
reference. The selected consolidated financial data set forth below as of
December 31, 1989, 1990 and 1991 and for each of the years in the two year
period ended December 31, 1990 were derived from audited consolidated financial
statements. The selected consolidated financial data set forth below as of and
for the nine months ended, September 30, 1993 and 1994 have been derived from
the unaudited consolidated financial statements of the Company incorporated
herein by reference. Such unaudited financial statements, in the opinion of
management, include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the results for those interim
periods. Results for the nine months ended September 30, 1994 are not
necessarily indicative of results to be expected for the year ending December
31, 1994. The data presented below is qualified by, and should be read in
conjunction with, the consolidated financial statements, related notes and other
financial information incorporated herein by reference and "Management's
Discussion and Anaylsis of Financial Condition and Results of Operations."
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------------------- --------------------
1989 1990 1991 1992 1993 1993 1994
--------- --------- --------- --------- --------- --------- ---------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE INFORMATION AND PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net service revenues.......................... $ 234,504 $ 248,557 $ 209,455 $ 220,179 $ 306,166 $ 219,080 $ 321,313
Direct costs of services, consisting of
payroll and payroll taxes and insurance costs
for temporary employees...................... 119,682 130,792 117,583 131,875 188,292 133,916 196,676
--------- --------- --------- --------- --------- --------- ---------
Gross margin.................................. 114,822 117,765 91,872 88,304 117,874 85,164 124,637
Selling, general and administrative
expenses..................................... 81,157 90,518 73,326 72,136 88,074 63,580 87,540
Amortization of intangible assets............. 3,357 3,721 3,896 3,961 4,251 3,142 3,431
Interest expense.............................. 7,264 8,593 6,574 4,301 3,992 2,813 1,326
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes and extraordinary
gain......................................... 23,044 14,933 8,076 7,906 21,557 15,629 32,340
Provision for income taxes.................... 9,922 6,067 3,961 3,524 9,834 7,251 13,721
--------- --------- --------- --------- --------- --------- ---------
Income before extraordinary gain.............. 13,122 8,866 4,115 4,382 11,723 8,378 18,619
Extraordinary gain from repurchases of
debentures, net of income tax effects........ 345 453 -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income.................................... $ 13,467 $ 9,319 $ 4,115 $ 4,382 $ 11,723 $ 8,378 $ 18,619
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Income per fully diluted share:
Income before extraordinary gain.............. $ .56 $ .39 $ .18 $ .18 $ .46 $ .33 $ .66
Extraordinary gain............................ .01 .02 -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income.................................... $ .57 $ .41 $ .18 $ .18 $ .46 $ .33 $ .66
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Weighted average number of fully diluted
shares....................................... 27,664 22,935 23,273 24,007 25,260 25,040 28,213
PERCENTAGE OF REVENUES DATA:
Gross margin.................................. 49.0% 47.4% 43.9% 40.1% 38.5% 38.9% 38.8%
Selling, general and administrative
expenses..................................... 34.6% 36.4% 35.0% 32.8% 28.8% 29.0% 27.2%
Operating margin before amortization of
intangible assets............................ 14.4% 11.0% 8.9% 7.3% 9.7% 9.9% 11.5%
Pretax margin................................. 9.8% 6.0% 3.9% 3.6% 7.0% 7.1% 10.1%
Net income margin............................. 5.7% 3.7% 2.0% 2.0% 3.8% 3.8% 5.8%
BALANCE SHEET DATA (AT PERIOD END):
Intangible assets............................. $ 133,695 $ 141,728 $ 140,715 $ 143,757 $ 152,156 $ 145,737 $ 154,133
Total assets.................................. 181,437 187,844 178,207 181,999 204,598 194,555 221,602
Total debt.................................... 90,298 86,475 67,614 61,855 32,740 53,892 17,947
Stockholders' equity.......................... 68,675 77,291 84,419 90,972 133,602 106,242 155,901
</TABLE>
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993.
Net service revenues for the nine months ending September 30, 1994 increased
46.7% compared to the nine months ending September 30, 1993. Temporary service
revenues increased approximately 46.7% during the nine months ended September
30, 1994, including the revenues generated from the Company's OFFICETEAM
division, which was started in 1991 to provide skilled office and administrative
personnel. Permanent placement revenues increased 46.7% during the nine months
ended September 30, 1994 as compared with the nine months ended September 30,
1993. The revenue comparisons reflect continued improvement in the demand for
the Company's services.
Gross margin dollars increased 46.3% during the nine month period ending
September 30, 1994, compared with the corresponding nine month period ending
September 30, 1993. Gross margin amounts equaled 38.8% of revenues for the nine
month period ending September 30, 1994 and 38.9% of revenues for the nine month
period ending September 30, 1993. The percentage decline related principally to
the relatively lower percentage of revenues from the ROBERT HALF permanent
placement division (which has higher gross margins).
Selling, general and administrative expenses were approximately $88 million
during the nine months ended September 30, 1994 compared to approximately $64
million during the nine months ended September 30, 1993. Selling, general and
administrative expenses as a percentage of revenues were 27.2% in the nine
months ended September 30, 1994 compared to 29.0% in the nine months ended
September 30, 1993. The percentage decline was attributable to increased
coverage of fixed costs due to revenue growth.
Interest expense for the nine months ended September 30, 1994 decreased
52.9% over the comparable 1993 period due primarily to the conversion of the
Company's convertible subordinated debentures in the fourth quarter of 1993 and
the reduction in outstanding indebtedness.
The provision for income taxes for the nine months ended September 30, 1994,
was 42.4% compared to 46.4% of income before taxes for the same period in 1993.
The decrease in 1994 is the result of a smaller percentage of non-deductible
intangible expenses relative to income.
RESULTS OF OPERATIONS FOR THE THREE YEARS ENDED DECEMBER 31, 1993
Temporary services revenues increased 40% during 1993, including the
revenues generated from the Company's OFFICETEAM division. Permanent placement
revenues increased 30% during the year ended December 31, 1993. The positive
revenue comparisons reflect strong demand for the Company's services.
Net service revenues grew at a slower rate in 1992 compared to 1991,
primarily as a result of the general economic recession. Temporary services
revenues increased 9% while revenues of the ROBERT HALF division decreased 21%.
Gross margin as a percentage of revenues declined 1% between 1993 and 1992
and equaled 39% of revenue in 1993. In 1992, gross margin equaled 40% of revenue
and in 1991, gross margin was 44% of revenue. The percentage declines related
principally to the relatively lower percentage of revenues from the ROBERT HALF
division (which has higher gross margins) and higher unemployment insurance
costs associated with the temporary services divisions.
Selling, general and administrative expenses were $88 million during 1993
compared to $72 million in 1992 and $73 million in 1991. Selling, general and
administrative expenses as a percentage of revenues was 29% in 1993, compared to
33% in 1992 and 35% in 1991. The percentage declines were attributable to
increased coverage of fixed costs due to revenue growth coupled with the
Company's cost containment measures.
Amortization of intangible assets increased from 1991 to 1993 due to
acquisitions in that period of additional personnel services operations.
9
<PAGE>
Interest expense for the years ended December 31, 1993 and 1992 decreased 7%
and 35%, respectively, over the comparable prior periods due to the reduction in
outstanding indebtedness in both years and declining interest rates in the year
ending December 31, 1992.
The provision for income taxes was 46% in 1993, as compared to 45% in 1992
and 49% in 1991. The 1993 increase reflects the effect of the 1% increase in the
federal corporate income tax rate as a result of the 1993 Tax Act. Because of
the increase in pre-tax book income, the effect of the non-deductible intangible
amortization on the effective tax rate was reduced in 1993 as compared to 1992.
The 1992 reduction relative to 1991 was due primarily to a one-time benefit in
the fourth quarter of 1992 for the resolution of tax accounting issues related
to previous acquisitions. The Financial Accounting Standards Board issued a new
standard on accounting for income taxes, which the Company was required to adopt
on January 1, 1993. The cumulative effect of the adoption of the accounting
method prescribed by the new standard was immaterial.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1994, the Company's sources of liquidity included
approximately $1.1 million in cash and cash equivalents and $30.3 million in net
working capital. In addition, as of September 30, 1994, approximately $65
million remained available for borrowing under the Company's $80 million bank
revolving credit facility at interest rates of either the Eurodollar rate plus
1% or at prime.
The Company's liquidity during the first nine months of 1994 was increased
by $22.1 million from funds generated by operating activities. These funds were
used for personnel services acquisitions, capital expenditures and payments on
outstanding indebtedness.
The Company's working capital requirements consist primarily of the
financing of accounts receivable. While there can be no assurances in this
regard, the Company expects that internally generated cash plus the bank
revolving credit facility will be sufficient for the foreseeable future to
support the working capital needs of the Company.
10
<PAGE>
BUSINESS
Robert Half International Inc. is the world's largest specialized provider
of temporary and permanent personnel in the fields of accounting and finance.
Its divisions include ACCOUNTEMPS-R- and ROBERT HALF-R-, providers of temporary
and permanent personnel, respectively, in the fields of accounting and finance.
The Company, utilizing its experience as a specialized provider of temporary and
permanent personnel, has expanded into additional specialty fields. In December
1991, the Company formed OFFICETEAM-R- to provide skilled temporary
administrative and office personnel. In 1992, the Company acquired THE
AFFILIATES-R-, which focuses on placing temporary and permanent employees in
paralegal, legal administrative and other legal support positions. In addition,
the Company recently established RHI CONSULTING-TM- to concentrate on providing
temporary information technology professionals in positions ranging from PC/LAN
technician to system design and application programmer.
The Company's business was originally founded in 1948. Prior to 1986, the
Company was primarily a franchisor of ACCOUNTEMPS and ROBERT HALF offices.
Beginning in 1986, the Company and its current management embarked on a strategy
of acquiring franchised locations and other local or regional independent
providers of specialized temporary service personnel. The Company has acquired
all but five of the ACCOUNTEMPS and ROBERT HALF franchises in 45 separate
transactions, and has acquired 14 other local or regional providers of
specialized temporary service personnel. Since 1986, the Company has
significantly expanded operations at many of the acquired locations and has
opened over 50 new locations. The Company believes that direct ownership of
offices allows it to better monitor and protect the image of the ACCOUNTEMPS and
ROBERT HALF names, promotes a more consistent and higher level of quality and
service throughout its network of offices and improves profitability by
centralizing many of its administrative functions. The Company currently has
more than 160 offices in 36 states and five foreign countries and placed
approximately 59,000 employees on temporary assignment with clients in 1993.
THE INDUSTRY
The temporary personnel industry has grown rapidly over the past ten years.
According to an independent industry study published by The Omnicomp Group,
industry revenues increased from approximately $7.7 billion in 1984 to
approximately $23.6 billion in 1993, an average annual growth rate of 13.3%, and
from 1992 to 1993, industry revenues increased by 18.5%.
The use of temporary personnel has become widely accepted as a valuable tool
for managing personnel costs and for meeting specialized or fluctuating
employment requirements. Temporary services companies offer their clients a
means of dealing with uneven or peak work loads caused by such predictable
events as vacations, taking inventories, tax work, month-end activities and
special projects and such unpredictable events as illnesses and emergencies.
Businesses view the use of temporary employees as a means of controlling
personnel costs and converting such costs from fixed to variable. The cost and
inconvenience to clients of hiring additional regular employees for short
periods are eliminated by the use of temporaries. This acceptance of the use of
temporaries has resulted in an increase in temporary employees as a percentage
of the workforce from 0.6% in 1984 to 1.4% in 1993, according to the U.S. Bureau
of Labor Statistics and the National Association of Temporary Services,
respectively.
The temporary workers are employees of the temporary service company and are
paid only when working on client assignments. The client pays a fixed rate only
for hours worked. The use of temporary employees therefore enables the client to
shift certain employment costs (such as workers' compensation and unemployment
insurance) to the temporary personnel company.
COMPANY STRATEGY
The Company's strategy is to be the premier provider of specialized staffing
services in the fields of accounting, finance, office administration,
information technology and legal support. Key elements of the Company's strategy
include the following:
- FOCUS ON SPECIALIZED NICHES -- The Company focuses on placing highly
qualified and experienced personnel in positions that require specialized
financial, administrative, technical and legal skills. The
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<PAGE>
Company believes clients' temporary needs for individuals with these
skills are generally more difficult to fill than lower-level positions.
The Company further believes that its 45 years of experience and
reputation in the area of specialized accounting and financial personnel
give it a competitive advantage in the temporary services industry.
- HIRE ASSIGNMENT AND PLACEMENT MANAGERS POSSESSING SPECIALIZED SKILLS --
The Company's assignment and placement managers typically have experience
in the fields in which they are placing personnel. The Company believes
that this allows its managers to better understand each client's staffing
requirements and to select candidates that best address those needs.
Placement managers seek to develop a long term relationship with each
client and strive to play a consultative role in the client's ongoing
hiring and staffing process.
- EXPAND INTO ADDITIONAL SPECIALTY FIELDS -- The Company has diversified its
service offerings beyond accounting and finance to other professional
fields. In 1991, the Company established its OFFICETEAM division which
specializes in providing skilled temporary and permanent office and
administrative personnel. In 1992, the Company acquired THE AFFILIATES
which specializes in providing legal support personnel to law firms and
corporations. Most recently, in January 1994 the Company established its
RHI CONSULTING division to provide information systems personnel ranging
from PC/LAN technicians to system design and application programmers.
- PROMOTE BRAND RECOGNITION -- The Company enhances client awareness of its
services through a commitment to advertising and public relations
activities, including national direct mail and broadcast media compaigns
and the frequent publication of articles and books on personnel matters.
Additionally, the Company has established co-marketing programs with
leading financial, accounting and word processing software companies,
including Lotus Development Corporation, WordPerfect Corporation,
Peachtree Software, Inc., and Computer Associates International, Inc. The
Company also actively seeks endorsements and affiliations with
professional organizations in business management, office administration
and professional secretarial fields.
- EXPAND THROUGH ACQUISITIONS -- Since 1986, the Company has acquired all
but five of the ACCOUNTEMPS and ROBERT HALF franchises in 45 separate
transactions and has acquired 14 other local or regional independent
providers of specialized temporary service personnel. The Company
continues to review acquisitions on an opportunistic basis. The Company
believes that direct ownership of offices allows it to better monitor and
protect the image of the ACCOUNTEMPS and ROBERT HALF names, promotes a
more consistent and higher level of quality and service throughout its
network of offices and improves profitability by centralizing many of the
administrative functions.
OPERATIONS
ACCOUNTEMPS
The ACCOUNTEMPS temporary services division offers customers a reliable and
economical means of dealing with uneven or peak work loads for accounting, tax
and finance personnel caused by such predictable events as vacations, taking
inventories, tax work, month-end activities and special projects and such
unpredictable events as illness and emergencies. Businesses increasingly view
the use of temporary employees as a means of controlling personnel costs and
converting such costs from fixed to variable. The cost and inconvenience to
clients of hiring and firing permanent employees are eliminated by the use of
ACCOUNTEMPS temporaries. The temporary workers are employees of ACCOUNTEMPS and
are paid by ACCOUNTEMPS only when working on customer assignments. The customer
pays a fixed rate only for hours worked.
ACCOUNTEMPS clients may fill their permanent employment needs by using an
ACCOUNTEMPS employee on a trial basis and, if so desired, "converting" the
temporary position to a permanent position. The client typically pays a one-time
fee for such conversions.
The ACCOUNTEMPS business accounted for 75% of the Company's revenue in 1993
and 67% of the Company's revenue during the first nine months of 1994.
12
<PAGE>
OFFICETEAM
The Company's OFFICETEAM division, which commenced operations in 1991,
places temporary and permanent office and administrative personnel, ranging from
word processors to office managers, from over 100 locations in the United
States. OFFICETEAM operates in much the same fashion as the ACCOUNTEMPS and
ROBERT HALF divisions. The OFFICETEAM business accounted for 14% of the
Company's revenue in 1993 and 19% of the Company's revenue during the first nine
months of 1994.
ROBERT HALF
The Company offers permanent placement services through its office network
under the name ROBERT HALF. The Company's ROBERT HALF division specializes in
placing accounting, financial, tax and banking personnel. Fees for successful
permanent placements are paid only by the employer and are generally a
percentage of the new employee's annual compensation. No fee for permanent
placement services is charged to employment candidates.
The ROBERT HALF business accounted for 9% of the Company's revenue in 1993
and during the first nine months of 1994.
OTHER ACTIVITIES
In 1992, the Company acquired THE AFFILIATES, a small operation involving
only a limited number of offices, which places temporary and permanent employees
in paralegal, legal administrative and legal secretarial positions. The legal
profession's requirements (the need for confidentiality, accuracy and
reliability, a strong drive toward cost-effectiveness, and frequent peak
workload periods) are similar to the demands of the clients of the ACCOUNTEMPS
division.
The Company recently established its RHI CONSULTING division, which
specializes in providing information technology professionals ranging from
PC/LAN technician to system design and application programmer.
MARKETING AND RECRUITING
The Company markets its services to clients as well as employment
candidates. Local marketing and recruiting are generally conducted by each
office or related group of offices. Advertising directed to clients and
employment candidates consists primarily of yellow pages advertisements,
classified advertisements and radio. Direct marketing through mail and telephone
solicitation also constitutes a significant portion of the Company's total
advertising. National advertising conducted by the Company consists primarily of
print advertisements in national newspapers, magazines and certain trade
journals. Joint marketing arrangements have been entered into with Lotus
Development Corporation, WordPerfect Corporation, Peachtree Software, Inc., and
Computer Associates International, Inc. and typically provide for cooperative
advertising, joint mailings and similar promotional activities. The Company also
actively seeks endorsements and affiliations with professional organizations in
the business management, office administration and professional secretarial
fields. The Company also conducts public relations activities designed to
enhance public recognition of the Company and its services. Local employees are
encouraged to be active in civic organizations and industry trade groups.
The Company owns many trademarks, service marks and tradenames, including
the ROBERT HALF-R-, ACCOUNTEMPS-R-, OFFICETEAM-R-, THE AFFILIATES-R- and RHI
CONSULTING-TM- marks, which are registered in the United States and in a number
of foreign countries.
ORGANIZATION
Management of the Company's operations is coordinated from its headquarters
in Menlo Park, California. The Company's headquarters provides support and
centralized services to its offices in the administrative, marketing,
accounting, training and legal areas, particularly as it relates to the
standardization of the operating procedures of its offices. The Company has more
than 160 offices in 36 states and five foreign countries. Office managers are
responsible for most activities of their offices, including sales, local
advertising and marketing and recruitment.
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<PAGE>
COMPETITION
The Company faces competition in its efforts to attract clients as well as
high-quality specialized employment candidates. The temporary and permanent
placement businesses are highly competitive, with a number of firms offering
services similar to those provided by the Company on a national, regional or
local basis. In many areas the local companies are the strongest competitors.
The most significant competitive factors in the temporary and permanent
placement businesses are price and the reliability of service, both of which are
often a function of the availability and quality of personnel. The Company
believes it derives a competitive advantage from its long experience with and
commitment to the specialized employment market, its national presence, and its
various marketing activities.
EMPLOYEES
The Company has approximately 1,450 full-time staff employees. The Company's
offices placed approximately 59,000 employees on temporary assignments with
clients during 1993. Temporary employees placed by the Company are the Company's
employees for all purposes while they are working on assignments. The Company
pays the related costs of employment, such as workers' compensation insurance,
state and federal unemployment taxes, social security and certain fringe
benefits. The Company provides voluntary health insurance coverage to interested
temporary employees.
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<PAGE>
EXECUTIVE OFFICERS
The following table lists the name of each executive officer of the Company,
his or her age as of September 30, 1994, and his or her current positions and
offices with the Company:
<TABLE>
<CAPTION>
NAME AGE OFFICE
- ----------------------------------- ---- --------------------------------------------------
<S> <C> <C>
Harold M. Messmer, Jr. ............ 48 Chairman of the Board, President and Chief
Executive Officer
M. Keith Waddell................... 37 Senior Vice President, Chief Financial Officer and
Treasurer
Robert W. Glass.................... 36 Senior Vice President, Corporate Development
Steven Karel....................... 44 Vice President, Secretary and General Counsel
Kirk E. Lundburg................... 35 Vice President, Administration
Barbara J. Forsberg................ 33 Vice President and Controller
</TABLE>
Mr. Messmer has been Chairman of the Board since November 1988, Chief
Executive Officer since May 1987, Chief Executive Officer of the ACCOUNTEMPS and
ROBERT HALF businesses since their acquisition by the Company in 1986 and
President since October 1985. Mr. Messmer is a director of Airborne Freight
Corporation, Health Care Property Investors, Inc., Pacific Enterprises and
Spieker Properties, Inc.
Mr. Waddell has been Senior Vice President of the Company since May 1993,
Chief Financial Officer of the Company since February 1988 and Treasurer since
1987. From October 1986 when he joined the Company until May 1993, he served as
Vice President. Prior to joining the Company, Mr. Waddell was an audit manager
with Arthur Andersen & Co.
Mr. Glass has been Senior Vice President, Corporate Development, since May
1993. He served as Vice President, Corporate Development from February 1988
until May 1993. From 1987 until February 1988, he served as Vice President,
Planning of the Company. From January 1986 until May 1987, Mr. Glass was
employed as an investment analyst by the Company.
Mr. Karel has been Vice President and General Counsel of the Company since
September 1989 and Secretary since May 1993. From 1984 to 1989, Mr. Karel was
employed by Cooper Laboratories, Inc. and CooperVision, Inc. From 1980 to 1984,
he was an associate with the law firm of Pillsbury, Madison & Sutro.
Mr. Lundburg has been Vice President, Administration since July 1993. Prior
to joining the Company, Mr. Lundburg was an associate with the law firm of
Latham & Watkins.
Ms. Forsberg has been Vice President of the Company since May 1993 and
Controller since May 1990. For more than five years prior to joining the
Company, Ms. Forsberg worked in the audit division of Arthur Andersen & Co.
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<PAGE>
SELLING STOCKHOLDERS
The following table sets forth information as of September 30, 1994,
concerning beneficial ownership of Common Stock by the Selling Stockholders.
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK BENEFICIALLY NUMBER OF SHARES BENEFICIALLY
OWNED PRIOR TO SHARES TO
OFFERING BE SOLD OWNED AFTER OFFERING
--------------------- --------- ---------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT NUMBER PERCENT
- ---------------------------------------------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
The Fulcrum III Limited Partnership........... 3,690,994 13.5% 2,986,097 704,897 2.6%
600 Madison Avenue
New York, NY 10022
The Second Fulcrum III Limited Partnership.... 2,509,006 9.1% 2,155,348 353,658 1.3%
600 Madison Avenue
New York, NY 10022
</TABLE>
The sole general partner of each of the Selling Stockholders is Gibbons,
Goodwin, van Amerongen ("GGvA"). The general partners of GGvA are Edward W.
Gibbons (a director of the Company), Todd Goodwin (a director of the Company),
Lewis W. van Amerongen and Elizabeth V. Camp. Mr. Gibbons directly owns 200,000
shares of the Company's Common Stock and Messrs. Gibbons and Goodwin each hold
options to purchase 30,000 shares of the Company's Common Stock.
The Company has agreed with the Selling Stockholders to pay for certain
expenses incurred in connection with the registration of the shares offered
hereby, such as filing fees, printing expenses, blue-sky fees and expenses, fees
and disbursements of counsel for the Company and accounting fees. The Selling
Stockholders have agreed to pay all underwriting discounts, selling commissions
and stock transfer taxes applicable to the shares being sold by the Selling
Stockholders, as well as the fees and disbursements of counsel for the Selling
Stockholders.
CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
TO NON-UNITED STATES HOLDERS
The following is a general discussion of certain United States federal tax
consequences of the acquisition, ownership and disposition of Common Stock by a
holder that, for United States federal income tax purposes, is not a "United
States person" (a "Non-United States Holder"). This discussion is based upon the
United States federal tax law now in effect, which is subject to change,
possibly retroactively. For purposes of this discussion, a "United States
person" means a citizen or resident of the United States; a corporation,
partnership, or other entity created or organized in the United States or under
the laws of the United States or of any political subdivision thereof; or an
estate or trust whose income is includible in gross income for United States
federal income tax purposes regardless of its source. This discussion does not
address investors other than original purchasers and does not consider any
specific facts or circumstances that may apply to a particular Non-United States
Holder. Prospective investors are urged to consult their tax advisors regarding
the United States federal tax consequences of acquiring, holding and disposing
of Common Stock, as well as any tax consequences that may arise under the laws
of any state, municipal, foreign or other taxing jurisdiction.
DIVIDENDS
Dividends, if any, paid to a Non-United States Holder will generally be
subject to withholding of United States federal income tax at the rate of 30%
unless the dividend is effectively connected with the conduct of a trade or
business within the United States by the Non-United States Holder, in which case
the dividend will be subject to the United States federal income tax on net
income that applies to United States persons generally (and, with respect to
corporate holders and under certain circumstances, the branch profits tax).
Non-United States Holders should consult any applicable income tax treaties,
which may provide for a lower
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<PAGE>
rate of withholding or other rules different from those described above. A
Non-United States Holder may be required to satisfy certain certification
requirements in order to claim treaty benefits or otherwise claim a reduction of
or exemption from withholding under the foregoing rules.
GAIN ON DISPOSITION
A Non-United States Holder will generally not be subject to United States
federal income tax on any gain recognized on a sale or other disposition of
Common Stock unless (i) the gain is effectively connected with the conduct of a
trade or business within the United States by the Non-United States Holder, (ii)
in the case of a Non-United States Holder who is a nonresident alien individual
and holds the Common Stock as a capital asset, such holder is present in the
United States for 183 or more days in the taxable year and certain other
requirements are met or (iii) the Company is or becomes a "United States real
property holding corporation" for United States federal income tax purposes and
certain other requirements are met. The Company believes that presently it is
not a United States real property holding corporation for federal income tax
purposes.
FEDERAL ESTATE TAXES
Common Stock owned or treated as owned by an individual who is not a citizen
or resident (as specifically defined for United States federal estate tax
purposes) of the United States at the date of death will be included in such
individual's estate for United States federal estate tax purposes, unless an
applicable estate tax treaty provides otherwise. Such individual's estate may be
subject to United States federal estate tax on the property includible in the
estate for United States federal estate tax purposes. Estates of nonresident
aliens are generally allowed a credit that is equivalent to an exclusion of
$60,000 of assets from the estate for United States federal estate tax purposes.
BACKUP WITHHOLDING AND INFORMATION REPORTING
The Company must report annually to the Internal Revenue Service (the "IRS")
and to each Non-United States Holder the amount of dividends paid to, and the
tax withheld with respect to, each Non-United States Holder. Copies of these
information returns may be made available under the provisions of a specific
treaty or agreement with the tax authorities in the country in which the
Non-United States Holder resides. Dividends not subject to withholding tax may
be subject to backup withholding (at the rate of 31%) if the Non-United States
Holder is not an "exempt recipient" and fails to provide its tax identification
number and other information to the Company.
The payment of the proceeds from the disposition of Common Stock to or
through the United States office of a broker will be subject to information
reporting and backup withholding unless the owner, under penalties of perjury,
certifies, among other things, as to its status as a Non-United States Holder or
otherwise establishes an exemption (and the broker has no actual knowledge to
the contrary). The payment of the proceeds from the disposition of Common Stock
to or through a non-United States office of a broker generally will not be
subject to information reporting or backup withholding. However, information
reporting (but not backup withholding) will apply to a payment of the proceeds
from a sale of Common Stock if the payment is made through a Non-United States
office of a United States broker or through a Non-United States office of a
Non-United States broker that is (i) a controlled foreign corporation for United
States federal income tax purposes or (ii) a person 50% or more of whose gross
income for a certain three-year period is effectively connected with a United
States trade or business, unless the broker has documentary evidence in its
records that the holder is a Non-United States Holder and certain conditions are
met, or the holder otherwise establishes an exemption.
Any amount withheld under backup withholding rules may be refunded to the
holder or credited against the holder's United States federal income tax
liability, provided that the required information is furnished to the IRS.
The backup withholding and information reporting rules currently are under
review by the U.S. Treasury Department and their application to the Common Stock
is subject to change.
17
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"U.S. Purchase Agreement"), the Company and the Selling Stockholders have agreed
to sell to the U.S. Underwriters named below (the "U.S. Underwriters"), and the
U.S. Underwriters, for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated
and William Blair & Company are acting as representatives (the "U.S.
Representatives"), have severally agreed to purchase, the number of shares of
Common Stock set forth opposite their respective names below.
<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITERS SHARES
- -------------------------------------------------------------------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.............................................. 1,650,000
William Blair & Company............................................. 1,650,000
Robert W. Baird & Co. Incorporated.................................. 200,000
Kidder, Peabody & Co. Incorporated.................................. 200,000
Montgomery Securities............................................... 200,000
Smith Barney Inc.................................................... 200,000
Baron Capital, Inc.................................................. 50,000
Van Kasper & Company................................................ 50,000
---------
Total..................................................... 4,200,000
---------
---------
</TABLE>
The Company and the Selling Stockholders have also entered into a purchase
agreement (the "International Purchase Agreement" and, together with the U.S.
Purchase Agreement, the "Agreements") with certain underwriters outside the
United States and Canada (the "International Underwriters"), for whom Merrill
Lynch International Limited and William Blair & Company are acting as lead
managers (the "International Representatives"). Subject to the terms and
conditions set forth in the International Purchase Agreement, the Company and
the Selling Stockholders have agreed to sell to the International Underwriters,
and the International Underwriters have severally agreed to purchase, an
aggregate of 1,050,000 shares of Common Stock. The initial public offering price
per share and the underwriting discount per share are identical under the U.S.
Purchase Agreement and the International Purchase Agreement.
In the U.S. Purchase Agreement and the International Purchase Agreement, the
several U.S. Underwriters and the several International Underwriters
(collectively, the "Underwriters"), respectively, have agreed, subject to the
terms and conditions set forth therein, to purchase all of the shares of Common
Stock being sold pursuant to such Agreement if any of the shares of Common Stock
being sold pursuant to such Agreement are purchased. The U.S. Purchase Agreement
provides that, in the event of a default by a U.S. Underwriter, the purchase
commitments of the non-defaulting U.S. Underwriters may in certain circumstances
be increased, and the International Purchase Agreement provides that, in the
event of a default by an International Underwriter, the purchase commitments of
the non-defaulting International Underwriters may in certain circumstances be
increased. The closing with respect to the sale of the shares of Common Stock
pursuant to the U.S. Purchase Agreement is a condition to the closing with
respect to the sale of the shares of Common Stock pursuant to the International
Purchase Agreement, and the closing with respect to the sale of the shares of
Common Stock pursuant to the International Purchase Agreement is a condition to
the closing with respect to the sale of the shares of Common Stock pursuant to
the U.S. Purchase Agreement.
The U.S. Underwriters and the International Underwriters have entered into
an intersyndicate agreement (the "Intersyndicate Agreement") which provides for
the coordination of their activities. Under the terms of the Intersyndicate
Agreement, the U.S. Underwriters and the International Underwriters are
permitted to sell shares of Common Stock to each other.
The U.S. Representatives have advised the Company that the U.S. Underwriters
propose initially to offer the shares of Common Stock offered hereby to the
public at the public offering price set forth on the cover page of this
Prospectus and to certain dealers at such price less a concession not in excess
of $.50 per
18
<PAGE>
share. The U.S. Underwriters may allow, and such dealers may reallow, a discount
not in excess of $.10 per share on sales to other dealers. After the initial
public offering, the public offering price, concession and discount may be
changed.
The Company has granted to the U.S. Underwriters an option, exercisable for
30 days after the date hereof, to purchase up to 420,000 additional shares of
Common Stock and to the International Underwriters an option, exercisable for 30
days after the date hereof, to purchase up to 105,000 additional shares of
Common Stock, in each case solely to cover over-allotments, if any, at the
initial public offering price less the underwriting discount. To the extent that
the U.S. Underwriters exercise this option, each of the U.S. Underwriters will
be obligated, subject to certain conditions, to purchase approximately the same
percentage of such shares which the number of shares of Common Stock to be
purchased by it shown in the foregoing table bears to the total number of shares
of Common Stock initially purchased by the U.S. Underwriters.
Under the terms of the Intersyndicate Agreement, the U.S. Underwriters and
any dealer to whom they sell shares of Common Stock will offer to sell or sell
shares of Common Stock only to persons whom they believe are United States
Persons or Canadian Persons (as defined in the Intersyndicate Agreement) or to
persons whom they believe intend to reoffer or resell the same to United States
Persons or Canadian Persons, and the International Underwriters and any bank,
broker or dealer to whom they sell shares of Common Stock will not offer to sell
or sell shares of Common Stock to persons whom they believe to be United States
Persons or Canadian Persons or to persons whom they believe intend to reoffer or
resell the same to United States Persons or Canadian Persons, except in each
case for transactions pursuant to the Intersyndicate Agreement which, among
other things, permits the Underwriters to purchase from each other and offer for
resale such number of shares of Common Stock as the selling Underwriter or
Underwriters and the purchasing Underwriter or Underwriters may agree.
The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended.
The Company has agreed not to sell, offer to sell, grant any option for sale
of, or otherwise dispose of, any shares of Common Stock, or any securities
convertible or exchangeable into or exercisable for Common Stock, without the
prior written consent of the U.S. Representatives, for a period of 90 days after
the date of this Prospectus, except for the Common Stock offered hereby, up to
1,000,000 shares of Common Stock that may be issued by the Company in connection
with business acquisitions, Common Stock or options that may be issued pursuant
to the Company's employee benefit plans and preferred share purchase rights and
other securities that may be issued under the Company's stockholder rights plan.
Three executive officers and a director of the Company who, at September 30,
1994, beneficially owned an aggregate of 1,062,675 shares of Common Stock
(including shares that can be acquired on the exercise of options that are
currently exercisable or become exercisable prior to November 30, 1994) have
agreed not to sell, offer to sell, grant any option for the sale of, or
otherwise dispose of, any shares of Common Stock, or any securities convertible
or exchangeable into or exercisable for Common Stock, without the prior written
consent of the U.S. Representatives, for a period of 90 days after the date of
this Prospectus, except for (i) shares of Common Stock surrendered to the
Company in connection with employee benefit plans, (ii) up to 20,000 shares of
Common Stock that may be transferred as gifts by each such officer and by such
director and (iii) shares of Common Stock surrendered in a public tender or
exchange offer or in a merger or consolidation. Such officers and director are,
to the Company's knowledge, the only executive officers and directors of the
Company who, at September 30, 1994, beneficially owned more than 100,000 shares
of Common Stock (other than shares beneficially owned by the Selling
Stockholders, which shares are subject to the contractual restrictions on
transfer described below), other than two directors (the "Subject Directors")
who beneficially owned an aggregate of 2,111,480 shares of Common Stock at that
date. However, the Company has informed the Underwriters that it believes that
the Subject Directors are "affiliates" (as defined in Rule 144 under the
Securities Act of 1933, as amended) of the Company and, to the extent that
either Subject Director sells any such shares pursuant to Rule 144, such sale
will be subject to the volume limitations of Rule 144. In general, under Rule
144 as currently in effect, each Subject Director would be entitled to sell,
within any three-month period, a number of shares that does not exceed the
greater of
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(a) one percent of the outstanding shares of the Common Stock or (b) an amount
equal to the average weekly reported volume of trading in shares of Common Stock
during the four calendar weeks preceding such sale.
The Selling Stockholders have agreed not to sell, offer to sell, grant any
option for sale of, or otherwise dispose of, any shares of Common Stock, or any
securities convertible or exchangeable into or exercisable for Common Stock,
without the prior written consent of the U.S. Representatives, for a period of
120 days after the date of this Prospectus, except for the Common Stock offered
hereby and except for the distribution of shares of Common Stock by the Selling
Stockholders to their respective partners; provided that the certificates
evidencing any shares of Common Stock distributed to such partners shall bear a
legend setting forth, and such shares will therefore be subject to, a similar
restriction on transfers.
LEGAL MATTERS
The validity of the shares offered hereby will be passed upon for the
Company by Wilson, Sonsini, Goodrich & Rosati, Professional Corporation, Palo
Alto, California. Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, New York,
New York, are acting as counsel for the Selling Stockholders. Through limited
partnership interests in The Fulcrum III Limited Partnership and The Second
Fulcrum III Limited Partnership, certain partners of Kramer, Levin, Naftalis,
Nessen, Kamin & Frankel have an indirect interest in approximately 45,000 shares
of Common Stock of the Company but such persons currently do not have the power
to vote or dispose of such shares. Brown & Wood, San Francisco, California, will
act as counsel for the Underwriters.
EXPERTS
The financial statements and schedules included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1993, and
incorporated by reference in this Prospectus and elsewhere in the Registration
Statement relating to this Prospectus have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included and incorporated by reference therein and herein in
reliance upon the authority of said firm as experts in giving said reports.
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING
STOCKHOLDERS OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS NOT BEEN ANY CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE
IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Available Information.......................... 2
Additional Information......................... 2
Incorporation of Certain Documents by
Reference..................................... 2
Prospectus Summary............................. 3
Risk Factors................................... 5
Use of Proceeds................................ 6
Capitalization................................. 7
Price Range of Common Stock and Dividend
Policy........................................ 7
Selected Consolidated Financial Data........... 8
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 9
Business....................................... 11
Executive Officers............................. 15
Selling Stockholders........................... 16
Certain United States Federal Tax Consequences
to Non-United States Holders.................. 16
Underwriting................................... 18
Legal Matters.................................. 20
Experts........................................ 20
</TABLE>
5,250,000 SHARES
ROBERT HALF
INTERNATIONAL INC.
COMMON STOCK
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PROSPECTUS
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MERRILL LYNCH & CO.
WILLIAM BLAIR & COMPANY
NOVEMBER 3, 1994
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