<PAGE>
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
------------------------
COMMISSION FILE NUMBER 1-10427
ROBERT HALF INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-1648752
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2884 SAND HILL ROAD, SUITE 200, MENLO PARK, CALIFORNIA 94025
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (415) 854-9700
------------------------
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
Common Stock, Par Value $.001 per Share New York Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/
As of February 28, 1995, the aggregate market value of the Common Stock held
by non-affiliates of the registrant was approximately $631,070,000 based on the
closing sale price on that date. This amount excludes the market value of
2,686,109 shares of Common Stock held by registrant's directors and officers and
their affiliates.
As of February 28, 1995, there were outstanding 28,313,280 shares of the
registrant's Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Proxy Statement to be mailed to stockholders in
connection with the registrant's annual meeting of stockholders, scheduled to be
held in May 1995, are incorporated by reference in Part III of this report.
Except as expressly incorporated by reference, the registrant's Proxy Statement
shall not be deemed to be part of this report.
<PAGE>
PART I
ITEM 1. 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-Registered Trademark- and ROBERT
HALF-Registered Trademark-, 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-Registered Trademark- to provide skilled temporary
administrative and office personnel. In 1992, the Company acquired THE
AFFILIATES-Registered Trademark-, 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-SM- 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 180 offices in 36 states and five foreign countries and placed
approximately 85,000 employees on temporary assignment with clients in 1994.
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 66% of the Company's revenue in 1994.
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 125 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 in 1994.
1
<PAGE>
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 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-Registered Trademark-, ACCOUNTEMPS-Registered Trademark-,
OFFICETEAM-Registered Trademark-, THE AFFILIATES-Registered Trademark- and RHI
CONSULTING-SM- 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 180 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.
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.
2
<PAGE>
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 1,600 full-time staff employees. The Company's
offices placed approximately 85,000 employees on temporary assignments with
clients during 1994. 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.
OTHER INFORMATION
The Company's current business constitutes a single business segment. (See
Item 8. Financial Statements and Supplementary Data for financial information
about the Company.)
The Company is not dependent upon a single customer or a limited number of
customers. The Company's operations are generally more active in the first and
fourth quarters of a calendar year. Order backlog is not a material aspect of
the Company's business and no material portion of the Company's business is
subject to government contracts. The Company does not have any material
expenditures for research and development. Compliance with federal, state or
local environmental protection laws has no material effect on the capital
expenditures, earnings or competitive position of the Company.
Information about foreign operations is contained in Note N of Notes to
Consolidated Financial Statements in Item 8. The Company does not have export
sales.
ITEM 2. PROPERTIES
The Company's headquarters is located in Menlo Park, California. Placement
activities are conducted through more than 180 offices located in the United
States, Canada, the United Kingdom, Belgium, France and the Netherlands. All of
the offices are leased.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceedings other
than routine litigation incidental to its business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of the Company's security holders during
the fourth quarter of the fiscal year covered by this report.
3
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is listed for trading on the New York Stock
Exchange under the symbol "RHI". On February 28, 1995, there were approximately
1,400 holders of record of the Common Stock.
Following is a list by fiscal quarters of the sales prices of the stock as
quoted on the New York Stock Exchange, adjusted, as appropriate, to reflect the
two-for-one stock split effected in the form of a stock dividend in August 1994:
<TABLE>
<CAPTION>
SALES PRICES
--------------------
1994 HIGH LOW
-------------------------------- -------- ---------
<S> <C> <C>
4th Quarter..................... $26 3/4 $18 1/8
3rd Quarter..................... $23 1/16 $17
2nd Quarter..................... $20 3/16 $15 1/16
1st Quarter..................... $16 7/16 $12 3/4
<CAPTION>
SALES PRICES
--------------------
1993 HIGH LOW
-------------------------------- -------- ---------
<S> <C> <C>
4th Quarter..................... $14 1/8 $12
3rd Quarter..................... $15 $10 11/16
2nd Quarter..................... $11 1/4 $ 8 1/8
1st Quarter..................... $ 9 1/16 $ 6 5/16
</TABLE>
No cash dividends were paid in 1994 or 1993. 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.
4
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
Following is a table of selected financial data of the Company of the last
five years:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net service revenues....................................................... $446,328 $306,166 $220,179 $209,455 $248,557
Direct costs of services, consisting of payroll and payroll taxes for
temporary employees....................................................... 273,327 188,292 131,875 117,583 130,792
-------- -------- -------- -------- --------
Gross margin............................................................... 173,001 117,874 88,304 91,872 117,765
Selling, general and administrative expenses............................... 121,640 88,074 72,136 73,326 90,518
Amortization of intangible assets.......................................... 4,584 4,251 3,961 3,896 3,721
Interest expense........................................................... 1,570 3,992 4,301 6,574 8,593
-------- -------- -------- -------- --------
Income before income taxes and extraordinary item.......................... 45,207 21,557 7,906 8,076 14,933
Provision for income taxes................................................. 19,090 9,834 3,524 3,961 6,067
-------- -------- -------- -------- --------
Income before extraordinary item........................................... 26,117 11,723 4,382 4,115 8,866
Extraordinary item from repurchases of debentures, net of income tax
effects................................................................... -- -- -- -- 453
-------- -------- -------- -------- --------
Net income................................................................. $ 26,117 $ 11,723 $ 4,382 $ 4,115 $ 9,319
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME PER PRIMARY SHARE:
Income before extraordinary item........................................... $ .92 $ .47 $ .18 $ .18 $ .39
Extraordinary item......................................................... -- -- -- -- .02
-------- -------- -------- -------- --------
Net income................................................................. $ .92 $ .47 $ .18 $ .18 $ .41
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
INCOME PER FULLY DILUTED SHARE:
Income before extraordinary item........................................... $ .92 $ .46 $ .18 $ .18 $ .39
Extraordinary item......................................................... -- -- -- -- .02
-------- -------- -------- -------- --------
Net income................................................................. $ .92 $ .46 $ .18 $ .18 $ .41
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
WEIGHTED AVERAGE NUMBER OF SHARES:
Primary.................................................................... 28,336 25,092 23,930 23,206 22,752
Fully Diluted.............................................................. 28,484 25,260 24,007 23,273 22,935
<CAPTION>
DECEMBER 31,
------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Intangible assets, net..................................................... $152,824 $152,156 $143,757 $140,715 $141,728
Total assets............................................................... 227,761 204,598 181,999 178,207 187,844
Debt financing............................................................. 4,214 32,740 61,855 67,614 86,475
Stockholders' equity....................................................... 176,995 133,602 90,972 84,419 77,291
</TABLE>
All shares 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.
5
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE YEARS ENDED DECEMBER 31, 1994
Temporary services revenues increased 46% during 1994 and 40% during 1993,
including the revenues generated from the Company's OfficeTeam division, which
was started in 1991 to provide highly-skilled office and administrative
personnel. Permanent placement revenues increased 47% during the year ended
December 31, 1994 and 30% during the year ended December 31, 1993. The revenue
comparisons reflect continued improvement in the demand for the Company's
services.
Gross margin dollars increased 47% during the year ended December 31, 1994
compared to 33% for the year ended December 31, 1993. Gross margin amounts
equaled 39% of revenue in 1994 and 1993. In 1992, gross margin equaled 40% of
revenue. The percentage decline relative to 1992 related primarily to the lower
mix of the higher permanent placement gross margins and higher unemployment
insurance costs associated with the temporary services divisions.
Selling, general and administrative expenses were approximately $122 million
during 1994 compared to $88 million in 1993 and $72 million in 1992. Selling,
general and administrative expenses as a percentage of revenues were 27% in
1994, compared to 29% in 1993 and 33% in 1992. The percentage declines were
attributable to revenue growth coupled with the Company's continued cost
containment.
Amortization of intangible assets increased from 1992 to 1994 due to the
acquisitions in each of those years of additional personnel services operations.
Interest expense for the years ended December 31, 1994 and 1993 decreased
61% and 7%, respectively, over the comparable prior periods due primarily to the
conversion of the Convertible Subordinated Debentures in the fourth quarter of
1993 and the reduction in outstanding indebtedness.
The provision for income taxes was 42% in 1994, as compared to 46% in 1993
and 45% in 1992. The decrease in 1994 is the result of a smaller percentage of
non-deductible intangible expenses relative to income. 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 Financial Accounting Standards
Board issued a new standard on accounting for income taxes, which the Company
adopted, as required, on January 1, 1993. The cumulative effect of the adoption
of the accounting method prescribed by the new standard was not material.
LIQUIDITY AND CAPITAL RESOURCES
The change in the Company's liquidity during the past three years is the net
effect of funds generated by operations and the funds used for the personnel
services acquisitions, principal payments on outstanding notes payable, and the
securities repurchase program.
In November 1994, the Company issued 633,555 shares of its common stock. The
net proceeds from the sale of shares were approximately $12.6 million. The
Company used the proceeds for repayment of the borrowings under the Company's
revolving credit agreement.
On December 10, 1993, substantially all of its outstanding convertible
subordinated debentures were converted into common stock of the Company. See
Note E to the Consolidated Financial Statements.
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 line of credit will be sufficient to support the working capital needs
of the Company's offices, the Company's fixed payments and other long-term
obligations.
6
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1994 1993
-------- --------
<S> <C> <C>
ASSETS:
Cash and cash equivalents........................................... $ 2,638 $ 1,773
Accounts receivable, less allowances of $2,600 and $2,194........... 60,025 40,155
Other current assets................................................ 5,040 5,538
-------- --------
Total current assets.............................................. 67,703 47,466
Intangible assets, less accumulated amortization of $28,243 and
$23,665............................................................ 152,824 152,156
Other assets........................................................ 7,234 4,976
-------- --------
Total assets...................................................... $227,761 $204,598
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable and accrued expenses............................... $ 7,232 $ 6,745
Accrued payroll costs............................................... 19,133 13,243
Income taxes payable................................................ 2,181 1,792
Current portion of notes payable and other indebtedness............. 1,081 408
-------- --------
Total current liabilities......................................... 29,627 22,188
Notes payable and other indebtedness, less current portion.......... 3,133 2,032
Bank loan (revolving credit)........................................ -- 30,300
Deferred income taxes............................................... 18,006 16,476
-------- --------
Total liabilities................................................. 50,766 70,996
COMMITMENTS AND CONTINGENCIES (SEE NOTES)
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value in 1994 and $1 par value in 1993;
shares authorized 100,000,000 in 1994 and 30,000,000 in 1993;
shares issued and outstanding -- 28,152,201 in 1994
and 26,836,804 in 1993............................................. 28 26,837
Capital surplus..................................................... 82,655 33,113
Deferred compensation............................................... (5,533) (2,113)
Accumulated translation adjustments................................. (541) (589)
Retained earnings................................................... 100,386 76,354
-------- --------
Total stockholders' equity........................................ 176,995 133,602
-------- --------
Total liabilities and stockholders' equity........................ $227,761 $204,598
-------- --------
-------- --------
</TABLE>
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 accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
7
<PAGE>
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Net service revenues............................................................ $446,328 $306,166 $220,179
Direct costs of services, consisting of payroll and payroll taxes for temporary
employees...................................................................... 273,327 188,292 131,875
-------- -------- --------
Gross margin.................................................................... 173,001 117,874 88,304
Selling, general and administrative expenses.................................... 121,640 88,074 72,136
Amortization of intangible assets............................................... 4,584 4,251 3,961
Interest expense................................................................ 1,570 3,992 4,301
-------- -------- --------
Income before income taxes...................................................... 45,207 21,557 7,906
Provision for income taxes...................................................... 19,090 9,834 3,524
-------- -------- --------
Net income...................................................................... $ 26,117 $ 11,723 $ 4,382
-------- -------- --------
-------- -------- --------
Income per share................................................................ $ .92 $ .46 $ .18
-------- -------- --------
-------- -------- --------
</TABLE>
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 accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
8
<PAGE>
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1994 1993 1992
-------- ------- -------
<S> <C> <C> <C>
COMMON STOCK:
Balance at beginning of period................................................ $ 26,837 $23,642 $23,080
Issuance of common stock -- par value......................................... 1 -- --
Issuances of restricted stock, net -- par value............................... 334 82 192
Conversion of debentures -- par value......................................... -- 2,040 --
Repurchases of common stock -- par value...................................... (59) (119) (106)
Exercises of stock options -- par value....................................... 213 1,086 460
Issuance of common stock for acquisitions -- par value........................ -- 106 16
Change in par value........................................................... (27,298) -- --
-------- ------- -------
Balance at end of period.................................................... $ 28 $26,837 $23,642
-------- ------- -------
-------- ------- -------
CAPITAL SURPLUS:
Balance at beginning of period................................................ $ 33,113 $ 3,897 $ 1,107
Issuance of common stock -- excess over par value............................. 12,589 -- --
Issuances of restricted stock, net -- excess over par value................... 4,949 825 1,069
Conversion of debentures -- excess over par value............................. -- 20,185 --
Exercises of stock options -- excess over par value........................... 2,162 4,029 1,101
Tax benefits from exercises of stock options.................................. 2,544 2,823 535
Issuance of common stock for acquisitions -- excess over par value............ -- 1,354 85
Change in par value........................................................... 27,298 -- --
-------- ------- -------
Balance at end of period.................................................... $ 82,655 $33,113 $ 3,897
-------- ------- -------
-------- ------- -------
DEFERRED COMPENSATION:
Balance at beginning of period................................................ $ (2,113) $(2,208) $(1,876)
Issuances of restricted stock, net............................................ (5,283) (907) (1,261)
Amortization.................................................................. 1,863 1,002 929
-------- ------- -------
Balance at end of period.................................................... $ (5,533) $(2,113) $(2,208)
-------- ------- -------
-------- ------- -------
ACCUMULATED TRANSLATION ADJUSTMENTS:
Balance at beginning of period................................................ $ (589) $ (257) $ --
Translation adjustments....................................................... 48 (332) (257)
-------- ------- -------
Balance at end of period.................................................... $ (541) $ (589) $ (257)
-------- ------- -------
-------- ------- -------
RETAINED EARNINGS:
Balance at beginning of period................................................ $ 76,354 $65,898 $62,108
Repurchases of common stock -- excess over par value.......................... (2,085) (1,267) (592)
Net income.................................................................... 26,117 11,723 4,382
-------- ------- -------
Balance at end of period.................................................... $100,386 $76,354 $65,898
-------- ------- -------
-------- ------- -------
</TABLE>
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 accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
9
<PAGE>
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1994 1993 1992
--------- --------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................................... $ 26,117 $ 11,723 $ 4,382
Adjustments to reconcile net income to net cash provided by operating
activities:
Amortization of intangible assets......................................... 4,584 4,251 3,961
Depreciation expense...................................................... 2,673 2,383 2,426
Deferred income taxes..................................................... 1,096 1,136 1,947
Changes in assets and liabilities, net of effects of acquisitions:
Increase in accounts receivable........................................... (18,292) (10,481) (1,049)
Increase in accounts payable, accrued expenses and accrued payroll
costs.................................................................... 5,795 4,158 579
Increase in income taxes payable.......................................... 389 2,553 146
Change in other assets, net of change in other liabilities................ 2,997 (806) (887)
--------- --------- --------
Total adjustments........................................................... (758) 3,194 7,123
--------- --------- --------
Net cash and cash equivalents provided by operating activities................ 25,359 14,917 11,505
CASH FLOWS USED IN INVESTING ACTIVITIES:
Acquisitions, net of cash acquired............................................ (4,406) (11,141) (6,438)
Capital expenditures.......................................................... (4,768) (2,340) (1,101)
--------- --------- --------
Net cash and cash equivalents used in investing activities.................... (9,174) (13,481) (7,539)
CASH FLOWS USED IN FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net................................... 12,589 -- --
Borrowings under credit agreement............................................. 104,900 138,900 69,100
Repayments under credit agreement............................................. (135,200) (144,200) (62,100)
Repurchases of convertible debentures......................................... -- (305) --
Principal payments on notes payable and other indebtedness.................... (384) (1,170) (12,603)
Proceeds and tax benefits from exercise of stock options...................... 4,919 7,938 2,096
Repurchases of common stock and common stock equivalents...................... (2,144) (1,386) (698)
--------- --------- --------
Net cash and cash equivalents used in financing activities.................... (15,320) (223) (4,205)
--------- --------- --------
Net increase (decrease) in cash and cash equivalents.......................... 865 1,213 (239)
Cash and cash equivalents at beginning of period.............................. 1,773 560 799
--------- --------- --------
Cash and cash equivalents at end of period.................................... $ 2,638 $ 1,773 $ 560
--------- --------- --------
--------- --------- --------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest...................................................................... $ 1,420 $ 4,256 $ 4,233
Income taxes.................................................................. $ 14,609 $ 4,568 $ 1,675
Acquisitions:
Fair value of assets acquired --
Intangible assets........................................................... $ 5,452 $ 12,650 $ 6,502
Other....................................................................... 1,694 2,506 424
Liabilities incurred --
Notes payable and contracts................................................. (2,158) (101) --
Other....................................................................... (582) (2,454) (387)
Common stock issued........................................................... -- (1,460) (101)
--------- --------- --------
Cash paid, net of cash acquired........................................... $ 4,406 $ 11,141 $ 6,438
--------- --------- --------
--------- --------- --------
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
10
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION. The Consolidated Financial Statements include
the accounts of Robert Half International Inc. (the "Company") and its
subsidiaries, all of which are wholly-owned. The Company is a Delaware
corporation. All significant intercompany balances have been eliminated. Certain
reclassifications have been made to the 1993 and 1992 financial statements to
conform to the 1994 presentation.
REVENUE RECOGNITION. Temporary services revenues are recognized when the
services are rendered by the Company's temporary employees. Permanent placement
revenues are recognized when employment candidates accept offers of permanent
employment. Allowances are established to estimate losses due to placed
candidates not remaining in employment for the Company's guarantee period,
typically 90 days.
FOREIGN CURRENCY TRANSLATION. Foreign income statement items are translated
at the monthly average exchange rates prevailing during the period. Foreign
balance sheets are translated at the current exchange rates at the end of the
period, and the related translation adjustments are recorded as part of
Stockholders' Equity. Gains and losses resulting from foreign currency
transactions are included in the Consolidated Statements of Income.
CASH AND CASH EQUIVALENTS. For purposes of the Consolidated Statements of
Cash Flows, the Company classifies all highly liquid investments with an
original maturity of three months or less as cash equivalents.
INTANGIBLE ASSETS. Intangible assets represent the cost of acquired
companies in excess of the fair market value of their net tangible assets at
acquisition date, and are being amortized on a straight-line basis over a period
of 40 years. The carrying value of intangible assets is periodically reviewed by
the Company and impairments are recognized when the expected future operating
cash flows derived from such intangible assets is less than their carrying
value. Based upon its most recent analysis, the Company believes that no
material impairment of intangible assets exists at December 31, 1994.
INCOME TAXES. Effective January 1, 1993, the Company adopted Financial
Accounting Standards No. 109, Accounting for Income Taxes (FAS 109). Under FAS
109, deferred taxes are computed based on the difference between the financial
statement and income tax bases of assets and liabilities using the enacted
marginal tax rate. As permitted under the provisions of FAS 109, the Company
elected not to restate prior years and has determined that the cumulative effect
of implementation was immaterial.
NOTE B -- ACQUISITIONS
In July 1986, the Company acquired all of the outstanding stock of Robert
Half Incorporated, the franchisor of the Accountemps and Robert Half operations.
Subsequently, in 59 separate transactions the Company acquired all of the
outstanding stock of certain corporations operating Accountemps and Robert Half
franchised offices in the United States, the United Kingdom and Canada as well
as other personnel services businesses. The Company has paid approximately $192
million in cash, stock, notes and other indebtedness in these acquisitions,
excluding transaction costs and cash acquired.
These acquisitions were accounted for as purchases, and the excess of cost
over the fair market value of the net tangible assets acquired is being
amortized over 40 years using the straight-line method. Results of operations of
the acquired companies are included in the Consolidated Statements of Income
from the dates of acquisition. The acquisitions made during 1994 and 1993 had no
material pro forma impact on the results of operations.
11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE C -- NOTES PAYABLE AND OTHER INDEBTEDNESS
The Company issued promissory notes as well as other forms of indebtedness
in connection with certain acquisitions. These are due in varying installments,
carry varying interest rates and in aggregate amounted to $4,214,000 at December
31, 1994, and $2,440,000 at December 31, 1993. At December 31, 1994, $1.8
million of the notes was secured by a standby letter of credit (see Note D). The
following table shows the schedule of maturities for notes payable and other
indebtedness at December 31, 1994 (in thousands):
<TABLE>
<S> <C>
1995....................................................................... $1,081
1996....................................................................... 1,406
1997....................................................................... 1,004
1998....................................................................... 464
1999....................................................................... 15
Thereafter................................................................. 244
------
$4,214
------
------
</TABLE>
At December 31, 1994, all of the notes carried fixed rates of interest
ranging from 4.1% to 13.3%. The weighted average interest rate for the above was
approximately 8.2%, 11.1% and 8.5% for the years ended December 31, 1994, 1993
and 1992, respectively.
As part of a Restructuring in 1987, a newly formed corporation, BF
Enterprises, Inc., assumed the obligation for certain subordinated debentures
issued by a predecessor of the Company. At December 31, 1994, the Company
remains contingently liable for $3.6 million of these subordinated debentures,
payment of $3.4 million of which has been provided for by the issuance of
letters of credit to the trustee for the debentures by BF Enterprises, Inc.
Additionally, pursuant to a pledge and security agreement entered into at the
time of Restructuring, BF Enterprises, Inc., has agreed to pledge to the Company
collateral (consisting of real estate, marketable securities and bank letters of
credit) if the net worth of BF Enterprises, Inc., falls below certain minimum
levels.
NOTE D -- BANK LOAN (REVOLVING CREDIT)
The bank loan is an unsecured credit facility which provides a line of
credit of up to $80,000,000, which is available to fund the Company's general
business and working capital needs, including acquisitions and the purchase of
the Company's common stock, and to cover the issuance of debt support standby
letters of credit up to $15,000,000.
As of December 31, 1994, the Company had no borrowings on the line of credit
outstanding and had used $3,358,000 in debt support standby letters of credit.
There is a commitment fee on the unused portion of the entire credit facility of
.25%. The loan is subject to certain financial covenants which also affect the
interest rates charged.
The credit facility has the following scheduled reduction in availability
(in thousands):
<TABLE>
<S> <C>
1995....................................................................... $ 5,000
1996....................................................................... $15,000
1997....................................................................... $15,000
1998....................................................................... $15,000
1999....................................................................... $15,000
2000....................................................................... $15,000
</TABLE>
The final maturity date for the credit facility is August 31, 2000.
12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE D -- BANK LOAN (REVOLVING CREDIT) (CONTINUED)
As of December 31, 1993, the Company had borrowed $30,300,000 on the line of
credit and had used $2,780,000 in debt support standby letters of credit. Of the
$30,300,000 outstanding loan balance at December 31, 1993, $29,000,000 carried
an interest rate tied to Eurodollar rates plus 1.25% and the remaining balance
of $1,300,000 carried an interest rate at prime.
NOTE E -- CONVERTIBLE SUBORDINATED DEBENTURES
On August 6, 1987, the Company issued $74,750,000 of 7.25% Convertible
Subordinated Debentures (the "Convertible Debentures"). Prior to 1993, all but
$22,745,000 of the Convertible Debentures were repurchased by the Company
pursuant to its repurchase program (see Note F). The Convertible Debentures were
unsecured obligations of the Company with an original maturity date of August 1,
2012. Interest was payable semi-annually as of February 1 and August 1 of each
year to the registered holders as of the preceding January 15 and July 15,
respectively. The Convertible Debentures were redeemable at the Company's option
at any time on or after August 1, 1990, at declining redemption prices.
In December 1993, the Company called for redemption all of its then
outstanding Convertible Debentures. Holders of $22,440,000 in principal amount
elected to convert their debentures into 2.04 million shares of common stock at
the conversion price of $11.00 per share. The remaining $305,000 in principal
amount of Convertible Debentures was redeemed at 102.9% of the principal amount
plus accrued interest.
NOTE F -- STOCKHOLDERS' EQUITY
On June 27, 1994, the stockholders of the Company voted to amend the
certificate of incorporation to increase the number of authorized shares of the
Company's common stock from 30,000,000 to 100,000,000 shares and the number of
authorized shares of the Company's preferred stock from 500,000 to 5,000,000.
The stockholders of the Company also authorized a reduction in par value from $1
per share to $.001 per share on both classes of shares.
In August 1994, the Company effected a two-for-one stock split in the form
of a stock dividend. All share and per share amounts have been restated to
retroactively reflect the two-for-one stock split.
In November 1994, the Company issued 633,555 shares of its common stock at a
price of $21.25 per share. The net proceeds from the sale of shares (after
deducting issuance costs of approximately $355,000 and a 4% underwriter's
discount) were approximately $12.6 million.
NOTE G -- INCOME TAXES
The provisions for income taxes for the three years ended December 31, 1994,
consisted of the following (in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
1994 1993 1992
------- ------ ------
<S> <C> <C> <C>
Current:
Federal.................................................................. $14,072 $6,995 $1,014
State.................................................................... 3,155 1,604 252
Foreign.................................................................. 767 99 311
Deferred -- principally domestic........................................... 1,096 1,136 1,947
------- ------ ------
$19,090 $9,834 $3,524
------- ------ ------
------- ------ ------
</TABLE>
13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE G -- INCOME TAXES (CONTINUED)
The income taxes shown above varied from the statutory federal income tax
rates for these periods as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
-----------------------
1994 1993 1992
----- ----- -----
<S> <C> <C> <C>
Federal U.S. income tax rate...................... 35.0% 35.0% 34.0%
State income taxes, net of federal tax benefit.... 4.7 5.5 5.0
Amortization of intangible assets................. 2.0 4.1 10.2
Other, net........................................ .5 1.0 (4.6)
----- ----- -----
Effective tax rate................................ 42.2% 45.6% 44.6%
----- ----- -----
----- ----- -----
</TABLE>
The deferred portion of the tax provisions consisted of the following (in
thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Amortization of franchise rights.................. $1,629 $1,484 $1,406
Other, net........................................ (533) (348) 541
------ ------ ------
$1,096 $1,136 $1,947
------ ------ ------
------ ------ ------
</TABLE>
During the fourth quarter of 1992, the Company recorded a one-time benefit
of $400,000 for the resolution of certain tax accounting issues related to
previous acquisitions.
The deferred income tax liability shown on the balance sheet is comprised of
the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1994 1993
-------- --------
<S> <C> <C>
Deferred income tax assets........................ $ (883) $ (498)
Deferred income tax liabilities................... 18,889 16,974
-------- --------
$18,006 $16,476
-------- --------
-------- --------
</TABLE>
No valuation allowances against deferred tax assets were required for the
years ended December 31, 1994 and 1993.
The components of the net deferred income tax liability at December 31, 1994
and 1993, were as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1994 1993
-------- --------
<S> <C> <C>
Amortization of intangible assets................. $17,427 $16,365
Foreign taxes..................................... 775 495
Other............................................. (196) (384)
-------- --------
$18,006 $16,476
-------- --------
-------- --------
</TABLE>
NOTE H -- EMPLOYEE BENEFIT PLANS
Under a retirement plan covering one current and one former executive
officer of the Company, monthly benefits are payable equal to 25% of the
participant's base compensation as defined, increased by an inflation formula.
The plan was amended effective May 31, 1992, to provide a fixed supplemental
benefit for the current employee during the first 15 years after retirement. The
current employee forfeited long-term incentive awards of equal value in exchange
for this amendment. The plan was also amended effective May 21, 1991, for the
current employee to increase the percentage of
14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE H -- EMPLOYEE BENEFIT PLANS (CONTINUED)
base compensation to 30% increasing thereafter by 3% for each year of service
beyond the age of 50, up to a maximum of 66%. During 1993, the Company changed
its discount rate assumption from 8% to 6%. The effect of both plan amendments
and the discount rate change are being amortized over the employee's expected
future service period (initially 15 years) and will increase after-tax expense
by approximately $76,000 per year. The employee can require the Company to
discharge its liability at defined intervals by purchasing annuities. At
December 31, 1992, a liability of $1,124,000 was established to cover the
estimated unfunded cost of these benefits. This amount was increased to
$1,721,000 at December 31, 1993, and at December 31, 1994, is $1,827,000.
Pre-tax pension costs for these plans were $232,000, $188,000, and $131,000 for
the years ended December 31, 1994, 1993 and 1992, respectively. These charges
were computed using certain assumptions regarding salary increases, retirement
age and life expectancy.
NOTE I -- COMMITMENTS
Rental expense, primarily for office premises, amounted to $9,183,000,
$8,457,000 and $8,042,000 for the years ended December 31, 1994, 1993 and 1992,
respectively. The approximate minimum rental commitments for 1995 and thereafter
under non-cancelable leases in effect at December 31, 1994, are as follows (in
thousands):
<TABLE>
<S> <C>
1995....................................................................... $9,151
1996....................................................................... $7,572
1997....................................................................... $6,312
1998....................................................................... $4,944
1999....................................................................... $3,275
Thereafter................................................................. $3,810
</TABLE>
NOTE J -- STOCK PLANS
Under various stock plans, officers, employees and outside directors may
receive grants of restricted stock or options to purchase common stock. Grants
are made at the discretion of the Compensation Committee of the Board of
Directors. Grants usually vest over four years.
Options granted under the plans have exercise prices ranging from 85% to
100% of the fair market value of the Company's common stock at the date of
grant, consist of both incentive stock options and nonstatutory stock options
under the Internal Revenue Code, and generally have a term of ten years.
Recipients of restricted stock do not pay any cash consideration to the
Company for the shares, have the right to vote all shares subject to such grant,
and receive all dividends with respect to such shares, whether or not the shares
have vested.
As of December 31, 1994 the total number of available grants under the plans
(consisting of either restricted stock or options) was 340,227.
15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE J -- STOCK PLANS (CONTINUED)
The following table reflects activity under all stock plans from January 1,
1992 through December 31, 1994 and the exercise prices:
<TABLE>
<CAPTION>
STOCK OPTION PLANS
--------------------------
RESTRICTED NUMBER OF EXERCISE PRICE
STOCK PLANS SHARES PER SHARE
----------- ---------- --------------
<S> <C> <C> <C>
Outstanding, January 1, 1992......................................................... 463,430 3,120,390 $ 3.12 - 9.42
Granted............................................................................ 264,074 550,234 $ 5.25 - 7.00
Exercised.......................................................................... -- (459,710) $ 3.12 - 5.07
Restrictions lapsed................................................................ (188,178) -- --
Forfeited.......................................................................... (73,026) (289,106) $ 4.31 - 7.00
----------- ---------- --------------
Outstanding, December 31, 1992....................................................... 466,300 2,921,808 $ 3.55 - 9.42
Granted............................................................................ 142,938 1,415,942 $ 6.17 - 12.63
Exercised.......................................................................... -- (1,085,032) $ 3.76 - 8.07
Restrictions lapsed................................................................ (99,959) -- --
Forfeited.......................................................................... (57,678) (310,218) $ 4.31 - 10.73
----------- ---------- --------------
Outstanding, December 31, 1993....................................................... 451,601 2,942,500 $ 3.55 - 12.63
Granted............................................................................ 344,814 836,884 $15.00 - 24.00
Exercised.......................................................................... -- (463,515) $ 4.31 - 11.50
Restrictions lapsed................................................................ (156,100) -- --
Forfeited.......................................................................... (13,647) (182,808) $ 4.31 - 12.63
----------- ---------- --------------
Outstanding, December 31, 1994....................................................... 626,668 3,133,061 $ 3.55 - 24.00
----------- ---------- --------------
----------- ---------- --------------
</TABLE>
As of December 31, 1994, an aggregate of 1,235,574 options to purchase
common stock were vested.
NOTE K -- PREFERRED SHARE PURCHASE RIGHTS
Pursuant to the Company's stockholder rights agreement, each share of common
stock carries one right to purchase one two-hundredth of a share of preferred
stock. The rights become exercisable in certain limited circumstances involving
a potential business combination transaction or an acquisition of shares of the
Company and are exercisable at a price of $32.50 per right, subject to
adjustment. Following certain other events after the rights become exercisable,
each right entitles its holder to purchase for $32.50 an amount of common stock
of the Company, or, in certain circumstances, securities of the acquiror, having
a then-current market value of twice the exercise price of the right. The rights
are redeemable and may be amended at the Company's option before they become
exercisable. Until a right is exercised, the holder of a right has no rights as
a stockholder of the Company. The rights expire on July 23, 2000.
16
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE L -- INCOME PER SHARE
Income per fully diluted share has been computed using the weighted average
number of shares of fully diluted common stock and common stock equivalents
outstanding during each period (28,484,000, 25,260,000 and 24,007,000 shares for
the years ending December 31, 1994, 1993 and 1992, respectively). An assumed
conversion of the Convertible Debentures was not dilutive to income per share in
1993 (see Note E) or 1992.
NOTE M -- QUARTERLY FINANCIAL DATA (UNAUDITED)
The following tabulation shows certain quarterly financial data for 1994 and
1993 (in thousands, except per share amounts):
<TABLE>
<CAPTION>
QUARTER
-------------------------------------
1994 1 2 3 4 YEAR
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net service revenues........................................ $99,896 $106,514 $114,903 $125,015 $446,328
Gross margin................................................ 38,624 41,369 44,644 48,364 173,001
Income before income taxes.................................. 9,826 10,848 11,666 12,867 45,207
Net income.................................................. 5,604 6,273 6,742 7,498 26,117
Net income per share........................................ .20 .22 .24 .26 .92
<CAPTION>
QUARTER
-------------------------------------
1993 1 2 3 4 YEAR
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net service revenues........................................ $69,573 $ 72,446 $ 77,061 $ 87,086 $306,166
Gross margin................................................ 27,307 28,457 29,400 32,710 117,874
Income before income taxes.................................. 4,396 5,360 5,873 5,928 21,557
Net income.................................................. 2,387 2,900 3,091 3,345 11,723
Net income per share........................................ .09 .12 .12 .13 .46
</TABLE>
NOTE N -- SEGMENT REPORTING
Information about the Company's operations in different geographic locations
for each of the three years in the period ended December 31, 1994, is shown
below. The Company's areas of operations outside of the United States include
Canada, the United Kingdom, Belgium, France and the Netherlands. Revenues
represent total net revenues from the respective geographic areas. Operating
income is net revenues less operating costs and expenses pertaining to specific
geographic areas. Foreign operating income reflects charges for U.S. management
fees and amortization of intangibles of $956,000, $917,000 and $854,000 for the
years ended December 31, 1994, 1993 and 1992, respectively. Domestic operating
income reflects charges for amortization of intangibles of $4,137,000,
17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE N -- SEGMENT REPORTING (CONTINUED)
$3,841,000 and $3,606,000 for the years ended December 31, 1994, 1993 and 1992,
respectively. Identifiable assets are those assets used in the geographic areas
and are after elimination of intercompany balances.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1994 1993 1992
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues
Domestic........................................ $404,852 $280,266 $196,910
Foreign......................................... 41,476 25,900 23,269
-------- -------- --------
$446,328 $306,166 $220,179
-------- -------- --------
-------- -------- --------
Operating Income
Domestic........................................ $ 44,700 $ 26,294 $ 12,585
Foreign......................................... 2,077 (745) (378)
-------- -------- --------
$ 46,777 $ 25,549 $ 12,207
-------- -------- --------
-------- -------- --------
Assets
Domestic........................................ $200,329 $180,778 $163,030
Foreign......................................... 27,432 23,820 18,969
-------- -------- --------
$227,761 $204,598 $181,999
-------- -------- --------
-------- -------- --------
</TABLE>
18
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE STOCKHOLDERS AND THE BOARD OF DIRECTORS
OF ROBERT HALF INTERNATIONAL INC.:
We have audited the accompanying consolidated statements of financial
position of Robert Half International Inc. (a Delaware corporation) and
subsidiaries as of December 31, 1994 and 1993, and the related consolidated
statements of income, stockholders' equity and cash flows for each of the three
years in the period ended December 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Robert Half International
Inc. and subsidiaries as of December 31, 1994 and 1993, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1994, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
San Francisco, California
January 24, 1995
19
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
The information required by Items 10 through 13 of Part III is incorporated
by reference from the registrant's Proxy Statement, under the captions
"NOMINATION AND ELECTION OF DIRECTORS," "BENEFICIAL STOCK OWNERSHIP,"
"COMPENSATION OF DIRECTORS," "COMPENSATION OF EXECUTIVE OFFICERS" AND
"COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION AND CERTAIN
TRANSACTIONS," which Proxy Statement will be mailed to stockholders in
connection with the registrant's annual meeting of stockholders which is
scheduled to be held in May 1995.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) 1. FINANCIAL STATEMENTS
The following consolidated financial statements of the Company and its
subsidiaries are included in Item 8 of this report:
Consolidated statements of financial position at December 31, 1994 and
1993.
Consolidated statements of income for the years ended December 31, 1994,
1993 and 1992.
Consolidated statements of stockholders' equity for the years ended
December 31, 1994, 1993 and 1992.
Consolidated statements of cash flows for the years ended December 31,
1994, 1993 and 1992.
Notes to consolidated financial statements.
Report of independent public accountants.
Selected quarterly financial data for the years ended December 31, 1994 and
1993 are set forth in Note M - Quarterly Financial Data (Unaudited) included
in Item 8 of this report.
2. FINANCIAL STATEMENT SCHEDULES
Schedules I through V have been omitted as they are not applicable.
3. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
- ------- ---------------------------------------------------------------------------
<C> <S>
3.1 Restated Certificate of Incorporation, incorporated by reference to Exhibit
3.1 to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1994.
3.2 By-Laws, incorporated by reference to Exhibit 3.2 to the Registrant's
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1994.
4.1 Indenture dated as of October 1, 1972, as amended, between IDS Realty Trust
and First National Bank of Minneapolis, incorporated by reference to
Exhibits 6(t) and 6(v) to the Form S-14 Registration Statement of the
Registrant (formerly known as Boothe Interim Corporation) filed with the
Securities and Exchange Commission on December 31, 1979.
4.2 Restated Certificate of Incorporation of Registrant (filed as Exhibit 3.1).
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
- ------- ---------------------------------------------------------------------------
<C> <S>
4.3 Rights Agreement, dated as of July 23, 1990, between the Registrant and
Manufacturers Hanover Trust Company of California, incorporated by
reference to (i) Exhibit 1 to the Registrant's Registration Statement on
Form 8-A for its Preferred Share Purchase Rights, which Registration
Statement was filed with the Commission on July 30, 1990, (ii) Exhibit 19.1
to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1990 and (iii) Exhibit 3 to Registrant's Form 8-A/A
Amendment No. 2 filed on December 2, 1993.
10.1 Credit Agreement dated as of November 1, 1993, among the Registrant,
NationsBank of North Carolina, N.A. and Bank of America National Trust and
Savings Association, incorporated by reference to Exhibit 10 to the
Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1993.
10.2 Reorganization and Distribution Agreement between the Registrant and BF
Enterprises, Inc., incorporated by reference to Exhibit 10.9 to
Registrant's Registration Statement on Form S-1 (No. 33-15171).
10.3 Agreement of Assignment and Assumption of Rights and Obligations under the
Indenture between the Registrant and BF Enterprises, Inc., incorporated by
reference to Exhibit 10.10 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1987.
10.4 Assumption of Obligations and Liabilities between the Registrant and BF
Enterprises, Inc., incorporated by reference to Exhibit 10.11 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended December
31, 1987.
10.5 Pledge and Security Agreement between the Registrant and BF Enterprises,
Inc., incorporated by reference to Exhibit 10.10 to Registrant's
Registration Statement on Form S-1 (No. 33-15171).
10.6 Tax Sharing Agreement between the Registrant and BF Enterprises, Inc.,
incorporated by reference to Exhibit 10.11 to Registrant's Registration
Statement on Form S-1 (No. 33-15171).
*10.7 Employment Agreement dated as of October 2, 1985, between the Registrant
and Harold M. Messmer, Jr., incorporated by reference to (i) Exhibit 10.(c)
to the Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1985, (ii) Exhibit 10.2(b) to Registrant's Registration
Statement on Form S-1 (No. 33-15171), (iii) Exhibit 10.2(c) to the
Registrant's Annual Report on Form 10-K for the fiscal year ended December
31, 1987, (iv) Exhibit 10.2(d) to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1988, (v) Exhibit 28.1 to the
Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1990, (vi) Exhibit 10.8 to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1991, (vii) Exhibit 10.1 to the
Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 1993 and (viii) Exhibit 10.7 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1993.
*10.8 Key Executive Retirement Plan - Level II, incorporated by reference to
Exhibit 10.(f) to Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1985 and Exhibit 19.2 to Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended June 30, 1991.
*10.9 Key Executive Retirement Plan - Level II Agreement between the Registrant
and Harold M. Messmer, Jr., incorporated by reference to (i) Exhibit 10.5
to the Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1988, (ii) Exhibit 19.3 to Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30, 1991, (iii) Exhibit 10.10
to the Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1992, (iv) Exhibit 10.2 to the Registrant's Quarterly Report
on Form 10-Q for the fiscal quarter ended June 30, 1993 and (v) Exhibit
10.9 to the Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993.
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
- ------- ---------------------------------------------------------------------------
<C> <S>
*10.10 1985 Stock Option Plan, as amended, incorporated by reference to Exhibit
10.7 to the Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1988 and Exhibit 10.1 to the Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30, 1994.
*10.11 Non-Employee Directors' Option Plan, incorporated by reference to Exhibit
10.(j) to the Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1986 and Exhibit 10.6 to the Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30, 1994.
*10.12 Outside Directors' Option Plan, incorporated by reference to Exhibit 10.2
to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1994.
*10.13 1989 Restricted Stock Plan, as amended, incorporated by reference to
Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1994.
*10.14 StockPlus Plan, as amended.
*10.15 1993 Incentive Plan, as amended, incorporated by reference to Exhibit 10.5
to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1994.
*10.16 Deferred Compensation Plan, incorporated by reference to Exhibit 10.24 to
the Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1989.
*10.17 Annual Performance Bonus Plan, incorporated by reference to Exhibit 10.17
to the Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993.
*10.18 Form of Severance Agreement, incorporated by reference to (i) Exhibit 10.26
to the Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1989 and (ii) Exhibit 19.2 to the Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30, 1990.
*10.19 Form of Indemnification Agreement for Directors of the Registrant,
incorporated by reference to (i) Exhibit 10.27 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1989 and (ii)
Exhibit 10.19 to the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1993.
*10.20 Form of Indemnification Agreement for Executive Officers of Registrant,
incorporated by reference to Exhibit 10.28 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1989.
11 Statement re computation of per share earnings.
21 Subsidiaries of the Registrant.
23 Accountants' Consent.
27 Financial Data Schedule.
<FN>
- ------------------------
* Management contract or compensatory plan required to be filed as an
exhibit pursuant to Item 14(c) of Form 10-K.
</TABLE>
(b) Reports on Form 8-K
The Registrant filed the following report on Form 8-K during the
fiscal quarter ending December 31, 1994:
<TABLE>
<CAPTION>
DATE ITEM REPORTED
- -------------------- ----------------------------
<S> <C>
October 12, 1994 Item 5 - Other Events
</TABLE>
22
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ROBERT HALF INTERNATIONAL INC.
(Registrant)
Date: March 8, 1995 By: /S/ M. KEITH WADDELL
-----------------------------------
M. Keith Waddell
Senior Vice President, Chief
Financial
Officer and Treasurer
(Principal Financial Officer)
23
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C>
Date: March 8, 1995 By: /S/ HAROLD M. MESSMER, JR.
------------------------------------------
Harold M. Messmer, Jr.
Chairman of the Board, President, Chief
Executive Officer,
and a Director
(Principal Executive Officer)
Date: March 8, 1995 By: /S/ ANDREW S. BERWICK, JR.
------------------------------------------
Andrew S. Berwick, Jr., Director
Date: March 8, 1995 By: /S/ FREDERICK P. FURTH
------------------------------------------
Frederick P. Furth, Director
Date: March 8, 1995 By: /S/ EDWARD W. GIBBONS
------------------------------------------
Edward W. Gibbons, Director
Date: March 8, 1995 By: /S/ TODD GOODWIN
------------------------------------------
Todd Goodwin, Director
Date: March 8, 1995 By: /S/ FREDERICK A. RICHMAN
------------------------------------------
Frederick A. Richman, Director
Date: March 8, 1995 By: /S/ THOMAS J. RYAN
------------------------------------------
Thomas J. Ryan, Director
Date: March 8, 1995 By: /S/ J. STEPHEN SCHAUB
------------------------------------------
J. Stephen Schaub, Director
Date: March 8, 1995 By: /S/ M. KEITH WADDELL
------------------------------------------
M. Keith Waddell
Senior Vice President, Chief Financial
Officer and Treasurer
(Principal Financial Officer)
Date: March 8, 1995 By: /S/ BARBARA J. FORSBERG
------------------------------------------
Barbara J. Forsberg
Vice President and Controller
(Principal Accounting Officer)
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
EXHIBIT SEQUENTIAL
NO. Exhibit PAGE
- ------- --------------------------------------------------------------------------- ----------
<C> <S>
3.1 Restated Certificate of Incorporation, incorporated by reference to Exhibit
3.1 to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1994.
3.2 By-Laws, incorporated by reference to Exhibit 3.2 to the Registrant's
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1994.
4.1 Indenture dated as of October 1, 1972, as amended, between IDS Realty Trust
and First National Bank of Minneapolis, incorporated by reference to
Exhibits 6(t) and 6(v) to the Form S-14 Registration Statement of the
Registrant (formerly known as Boothe Interim Corporation) filed with the
Securities and Exchange Commission on December 31, 1979.
4.2 Restated Certificate of Incorporation of Registrant (filed as Exhibit 3.1).
4.3 Rights Agreement, dated as of July 23, 1990, between the Registrant and
Manufacturers Hanover Trust Company of California, incorporated by
reference to (i) Exhibit 1 to the Registrant's Registration Statement on
Form 8-A for its Preferred Share Purchase Rights, which Registration
Statement was filed with the Commission on July 30, 1990, (ii) Exhibit 19.1
to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1990 and (iii) Exhibit 3 to Registrant's Form 8-A/A
Amendment No. 2 filed on December 2, 1993.
10.1 Credit Agreement dated as of November 1, 1993, among the Registrant,
NationsBank of North Carolina, N.A. and Bank of America National Trust and
Savings Association, incorporated by reference to Exhibit 10 to the
Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1993.
10.2 Reorganization and Distribution Agreement between the Registrant and BF
Enterprises, Inc., incorporated by reference to Exhibit 10.9 to
Registrant's Registration Statement on Form S-1 (No. 33-15171).
10.3 Agreement of Assignment and Assumption of Rights and Obligations under the
Indenture between the Registrant and BF Enterprises, Inc., incorporated by
reference to Exhibit 10.10 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1987.
10.4 Assumption of Obligations and Liabilities between the Registrant and BF
Enterprises, Inc., incorporated by reference to Exhibit 10.11 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended December
31, 1987.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. Exhibit PAGE
- ------- --------------------------------------------------------------------------- ----------
<C> <S>
10.5 Pledge and Security Agreement between the Registrant and BF Enterprises,
Inc., incorporated by reference to Exhibit 10.10 to Registrant's
Registration Statement on Form S-1 (No. 33-15171).
10.6 Tax Sharing Agreement between the Registrant and BF Enterprises, Inc.,
incorporated by reference to Exhibit 10.11 to Registrant's Registration
Statement on Form S-1 (No. 33-15171).
*10.7 Employment Agreement dated as of October 2, 1985, between the Registrant
and Harold M. Messmer, Jr., incorporated by reference to (i) Exhibit 10.(c)
to the Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1985, (ii) Exhibit 10.2(b) to Registrant's Registration
Statement on Form S-1 (No. 33-15171), (iii) Exhibit 10.2(c) to the
Registrant's Annual Report on Form 10-K for the fiscal year ended December
31, 1987, (iv) Exhibit 10.2(d) to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1988, (v) Exhibit 28.1 to the
Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1990, (vi) Exhibit 10.8 to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1991, (vii) Exhibit 10.1 to the
Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 1993 and (viii) Exhibit 10.7 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1993.
*10.8 Key Executive Retirement Plan - Level II, incorporated by reference to
Exhibit 10.(f) to Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1985 and Exhibit 19.2 to Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended June 30, 1991.
*10.9 Key Executive Retirement Plan - Level II Agreement between the Registrant
and Harold M. Messmer, Jr., incorporated by reference to (i) Exhibit 10.5
to the Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1988, (ii) Exhibit 19.3 to Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30, 1991, (iii) Exhibit 10.10
to the Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1992, (iv) Exhibit 10.2 to the Registrant's Quarterly Report
on Form 10-Q for the fiscal quarter ended June 30, 1993 and (v) Exhibit
10.9 to the Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. Exhibit PAGE
- ------- --------------------------------------------------------------------------- ----------
<C> <S>
*10.10 1985 Stock Option Plan, as amended, incorporated by reference to Exhibit
10.7 to the Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1988 and Exhibit 10.1 to the Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30, 1994.
*10.11 Non-Employee Directors' Option Plan, incorporated by reference to Exhibit
10.(j) to the Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1986 and Exhibit 10.6 to the Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30, 1994.
*10.12 Outside Directors' Option Plan, incorporated by reference to Exhibit 10.2
to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1994.
*10.13 1989 Restricted Stock Plan, as amended, incorporated by reference to
Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1994.
*10.14 StockPlus Plan, as amended.
*10.15 1993 Incentive Plan, as amended, incorporated by reference to Exhibit 10.5
to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1994.
*10.16 Deferred Compensation Plan, incorporated by reference to Exhibit 10.24 to
the Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1989.
*10.17 Annual Performance Bonus Plan, incorporated by reference to Exhibit 10.17
to the Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993.
*10.18 Form of Severance Agreement, incorporated by reference to (i) Exhibit 10.26
to the Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1989 and (ii) Exhibit 19.2 to the Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30, 1990.
*10.19 Form of Indemnification Agreement for Directors of the Registrant,
incorporated by reference to (i) Exhibit 10.27 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31, 1989
and (ii) Exhibit 10.19 to the Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1993.
*10.20 Form of Indemnification Agreement for Executive Officers of Registrant,
incorporated by reference to Exhibit 10.28 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1989.
11 Statement re computation of per share earnings.
21 Subsidiaries of the Registrant.
23 Accountants' Consent.
27 Financial Data Schedule.
<FN>
- ------------------------
* Management contract or compensatory plan required to be filed as an
exhibit pursuant to Item 14(c) of Form 10-K.
</TABLE>
<PAGE>
EXHIBIT 10.14
ROBERT HALF INTERNATIONAL INC.
STOCKPLUS PLAN
1. PURPOSES. The principal purposes of the
Robert Half International Inc. StockPlus Plan (the "Plan")
are: (a) to improve individual employee performance by
providing long-term incentives and rewards to employees of
the Company, (b) to assist the Company in attracting,
retaining and motivating employees with experience and
ability, and (c) to associate the interests of such
employees with those of RHII's shareholders.
2. DEFINITIONS. Unless the context clearly
indicates otherwise, the following terms, when used in this
Plan, shall have the meanings set forth below:
(a) "Common Stock" or "Stock" means RHII Common
Stock, par value $.001 per share.
(b) "Administrator" means a committee of the Board
of Directors of RHII, the composition and the size of which
shall cause such Administrator to be "disinterested" within
the meaning of the General Rules and Regulations promulgated
pursuant to Section 16 of the Exchange Act. If such
Administrator is composed of "disinterested persons" within
the meaning of such General Rules and Regulations, then any
person who is appointed a member of such Administrator and
who accepts appointment shall, by virtue thereof, be
ineligible for the time period specified in such General
Rules and Regulations to be granted an Option under the
Plan. Unless otherwise determined by the Board of
Directors, the Administrator shall be the Compensation
Committee of the Board of Directors.
(c) "Company" means Robert Half International
Inc., its divisions and direct and indirect subsidiaries.
(d) "Exchange Act" means the Securities Exchange
Act of 1934, as amended.
(e) "Fair Market Value" means the closing sales
price on the New York Stock Exchange or the NASDAQ National
Market System, as the case may be, on the date the value is
to be determined as reported in THE WALL STREET JOURNAL
(Western Edition). If there are no trades on such date, the
closing price on the latest preceding business day upon
which trades occurred shall be the Fair Market Value. If
the Stock is not listed in the New York Stock Exchange or
quoted on the NASDAQ National Market System, the Fair Market
Value shall be determined in good faith by the
Administrator.
<PAGE>
(f) "Grant Date" means the date an Option is
granted under the Plan.
(g) "Option" or "Stock Option" means a right
granted under the Plan to an Optionee to purchase shares of
RHII Common Stock at a fixed price for a specified period of
time.
(h) "Option Price" means the price at which a
share of Common Stock covered by an Option granted hereunder
may be purchased.
(i) "Optionee" means an eligible employee of the
Company who has received a Stock Option granted under the
Plan.
(j) "RHII" means Robert Half International Inc.,
a Delaware corporation.
2. ADMINISTRATION. The Plan shall be
administered by the Administrator, which shall have full
power and authority to administer and interpret the Plan and
to adopt such rules, regulations, agreements, guidelines and
instruments for the administration of the Plan as the
Administrator deems necessary or advisable. The
Administrator's powers include, but are not limited to
(subject to the specific limitations described herein),
authority to determine the employees to be granted Options
under the Plan, determine the size and applicable terms and
conditions of grants to be made to such employees, determine
the time when Options will be granted and authorize grants
to eligible employees. Any guidelines that may be adopted
from time to time by the Administrator shall be advisory
only and shall not be binding upon the Administrator.
The Administrator's interpretations of the Plan,
and all actions taken and determinations made by the
Administrator concerning any matter arising under or with
respect to the Plan or any Options granted hereunder, shall
be final, binding and conclusive on all interested parties.
The Administrator may delegate ministerial functions
hereunder, such delegation to be subject to such terms and
conditions as the Administrator in its discretion shall
determine. The Administrator may as to all questions of
accounting rely conclusively upon any determinations made by
the independent public accountants of the Company.
3. STOCK AVAILABLE FOR OPTIONS. The shares that
may be delivered or purchased under the Plan shall not
exceed an aggregate of 1,595,000 shares of Common Stock,
subject to any adjustments which may be made pursuant to
Section 10 hereof. Shares of Stock used for purposes of the
Plan may be either shares of authorized but unissued Common
Stock or treasury shares or both. Stock covered by Options
<PAGE>
which have terminated or expired prior to exercise or have
been surrendered or cancelled shall be available for further
option hereunder.
4. ELIGIBILITY. All those employees of the
Company as shall be determined from time to time by the
Administrator shall be eligible to participate in the Plan,
provided, however, that no employee may be granted Options
in the aggregate which would result in that employee
receiving more than 10% of the maximum number of shares
available for issuance under the Plan.
5. TERMS AND CONDITIONS OF OPTIONS. Each Option
granted hereunder shall be in writing and shall contain such
terms and conditions as the Administrator may determine,
subject to the following:
(a) PRICE. The Option Price shall be not less
than 85% of the Fair Market Value of Common Stock on the
Grant Date.
(b) TERM AND EXERCISE DATES. Options granted
hereunder shall have a term of no longer than ten years from
the Grant Date. No Option may be granted after the tenth
anniversary of the date of adoption of this Plan. A grant
of Options may become exercisable in installments; provided,
however, that no Option shall become exercisable until six
months following the Grant Date of such Option. However,
Stock Options must be exercised for full shares of Common
Stock. To the extent that Stock Options are not exercised
when they become initially exercisable, they shall be
carried forward and be exercisable until the expiration of
the term of such Stock Options, subject to the provisions of
Section 5(e) hereof.
(c) EXERCISE OF OPTION. To exercise an Option,
the holder thereof shall give notice of his or her exercise
to the Company, specifying the number of shares of Common
Stock to be purchased and identifying the specific Options
that are being exercised. From time to time the
Administrator may establish procedures relating to effecting
such exercises. No fractional shares shall be issued as a
result of exercising an Option. An Option is exercisable
during an Optionee's lifetime only by the Optionee or
Optionee's guardian or legal representative.
(d) PAYMENT OF OPTION PRICE. The purchase price
for Options being exercised must be paid in full at time of
exercise. Payment shall be, at the option of the holder at
the time of exercise, by any combination of cash, check or
delivery of shares of Common Stock that have been owned by
Optionee for at least six months. If all or a portion of
the purchase price is paid by delivery of shares, the shares
shall be valued at the Fair Market Value of such shares on
<PAGE>
the date of exercise. In addition, in order to enable the
Company to meet any applicable foreign, federal (including
FICA), state and local withholding tax requirements, an
Optionee shall also be required to pay the amount of tax to
be withheld. No share of stock will be delivered to any
Optionee until all such amounts have been paid. In the
event that withholding taxes are not paid within the
specified time period, to the extent permitted by law the
Company shall have the right, but not the obligation, to
cause such withholding taxes to be satisfied by reducing the
number of shares of stock deliverable or by offsetting such
withholding taxes against amounts otherwise due from the
Company to the Optionee. If withholding taxes are paid by
reduction of the number of shares deliverable to Optionee,
such shares shall be valued at the Fair Market Value as of
the date of exercise.
(e) EFFECT OF TERMINATION OF EMPLOYMENT. All
Options then held by the Optionee which are exercisable at
the date of termination shall continue to be exercisable by
the Optionee, or, if applicable, Optionee's estate, until
the earlier of 30 days after such date or the expiration of
such Options in accordance with their terms. All Options
which are not exercisable at such date shall automatically
terminate and lapse, unless the Administrator shall
determine otherwise. Notwithstanding the foregoing, if
exercise of an Option during the 30-day period described in
the previous sentence would subject the Optionee to
liability under Section 16 of the Exchange Act, such Option
shall be exercisable until the earliest of (a) its normal
termination date and (b) seven months after the last
transaction in Common Stock by the Optionee prior to
termination.
(f) MISCONDUCT. In the event that the
Administrator determines in good faith that an Optionee has
(i) used for profit, or materially harmed the Company by
disclosing to unauthorized persons, confidential information
or trade secrets of the Company, (ii) materially breached
any contract with, or materially violated any fiduciary
obligation to, the Company, or (iii) engaged in unlawful
trading in the securities of RHII or of another company
based on nonpublic information gained as a result of that
Optionee's employment with the Company, then, effective as
of the date notice of such misconduct is given by the
Administrator to the Optionee, that Optionee shall forfeit
all rights to any unexercised Options granted under the Plan
and all of that Optionee's outstanding Options shall
automatically terminate and lapse, unless the Administrator
shall determine otherwise.
(g) NONTRANSFERABILITY OF OPTIONS. During an
Optionee's lifetime, his or her Options shall not be
transferrable and shall only be exercisable by the Optionee
<PAGE>
and any purported transfer shall be null and void. Options
are not transferable except by will or by the laws of
descent and distribution.
6. AMENDMENT. The Administrator may, at any
time, amend, suspend or terminate the Plan, in whole or in
part, provided that no such action shall adversely affect
any rights or obligations with respect to any grants
theretofore made hereunder. The Administrator may amend the
terms and conditions of outstanding Options, provided,
however, that (i) no such amendment shall be adverse to the
holders of the Options, (ii) no such amendment shall extend
the term of an Option, and (iii) the amended terms of the
Option would be permitted under this Plan.
7. FOREIGN EMPLOYEES. Without amending the
Plan, the Administrator may grant Options to eligible
employees who are foreign nationals on such terms and
conditions different from those specified in this Plan as
may in the judgment of the Administrator be necessary or
desirable to foster and promote achievement of the purposes
of the Plan, and, in furtherance of such purposes the
Administrator may make such modifications, amendments,
procedures, subplans and the like as may be necessary or
advisable to comply with provisions of laws in other
countries in which the Company operates or has employees.
8. REGISTRATION, LISTING AND QUALIFICATION OF
SHARES. Each Option shall be subject to the requirement
that if at any time the Administrator shall determine that
the registration, listing or qualification of the shares
covered thereby upon any securities exchange or under any
foreign, federal, state or local law, or the consent or
approval of any governmental regulatory body, is necessary
or desirable as a condition of, or in connection with, the
granting of such Option or the purchase of shares
thereunder, no such Option may be exercised unless and until
such registration, listing, qualification, consent or
approval shall have been effected or obtained free of any
condition not acceptable to the Administrator. Any person
exercising an Option shall make such representations and
agreements and furnish such information as the Administrator
may request to assure compliance with the foregoing or any
other applicable legal requirements. RHII shall use its
reasonable best efforts to cause shares issued hereunder to
be registered under the Securities Act of 1933, as amended.
9. BUY OUT OF OPTION GAINS. The Administrator
shall have the right to elect, in its sole discretion and
without the consent of the holder thereof (subject to the
last sentence of this paragraph), to cancel the exercisable
portion of any Option and pay to the Optionee the excess of
the Fair Market Value of the shares of Common Stock covered
by such cancelled portion of the Option over the Option
<PAGE>
Price of such cancelled portion of the Option at the date
the Administrator provides written notice (the "Buy Out
Notice") of its intention to exercise such right. Buy outs
pursuant to this provision shall be effected by RHII as
promptly as possible after the date of the Buy Out Notice.
Payments of buy out amounts may be made in cash, in shares
of Common Stock, or partly in cash and partly in Common
Stock, as the Administrator deems advisable. To the extent
payment is made in shares of Common Stock, the number of
shares shall be determined by dividing the amount of the
payment to be made by the Fair Market Value of a share of
Common Stock at the date of the Buy Out Notice. In no event
shall RHII be required to deliver a fractional share of
Common Stock in satisfaction of this buy out provision.
Payments of such buy out amounts shall be made net of any
applicable foreign, federal (including FICA), state and
local withholding taxes. Notwithstanding the foregoing, no
buy out may be effected (a) until at least six months after
the Grant Date of the subject option, and (b) without the
consent of the Optionee if the Optionee is generally
required to file reports pursuant to Section 16(a) of the
Exchange Act with respect to his transactions in the Common
Stock.
10. ADJUSTMENT FOR CHANGE IN STOCK SUBJECT TO
PLAN. In the event of any change in the outstanding shares
of Common Stock by reason of any stock split, stock
dividend, recapitalization, merger, consolidation,
combination or exchange of shares or other similar corporate
change, such equitable adjustments may be made in the Plan
and the Options granted hereunder as the Administrator
determines are necessary or appropriate, including, if
necessary, an adjustment in the number of shares and prices
per share applicable to Options then outstanding and in the
number of shares which are reserved for issuance under the
Plan. Any such adjustment shall be conclusive and binding
for all purposes of the Plan.
11. NO RIGHTS TO OPTIONS OR EMPLOYMENT. No
employee or other person shall have any claim or right to be
granted an Option under the Plan. Receipt of an Option
under the Plan shall not give an employee any rights to
receive any other grant under the Plan. An Optionee shall
have no rights to or interest in any Option except as set
forth herein. Neither the Plan nor any action taken
hereunder shall be construed as giving any employee any
right to be retained in the employ of the Company.
12. RIGHTS AS SHAREHOLDER. An Optionee under the
Plan shall have no rights as a holder of Common Stock with
respect to Options granted hereunder, unless and until
certificates for shares of Common Stock are issued to such
Optionee.
<PAGE>
13. OTHER ACTIONS. This Plan shall not restrict
the authority of the Administrator or of RHII, for proper
corporate purposes, to grant or assume stock options, other
than under the Plan, to or with respect to any employee or
other person.
14. COSTS AND EXPENSES. Except as provided in
Section 5(d) hereof with respect to taxes, the costs and
expenses of administering the Plan shall be borne by RHII
and shall not be charged to any grant nor to any employee
receiving a grant.
15. PLAN UNFUNDED. The Plan shall be unfunded.
Except for reserving a sufficient number of authorized
shares to the extent required by law to meet the
requirements of the Plan, RHII shall not be required to
establish any special or separate fund or to make any other
segregation of assets to assure the payment of any grant
under the Plan.
16. GOVERNING LAW. This Plan shall be governed
by and construed in accordance with the laws of the State of
Delaware.
17. INDEMNIFICATION OF ADMINISTRATOR. Members of the
group constituting the Administrator shall be indemnified for
actions with respect to the Plan to the fullest extent permitted
by the Certificate of Incorporation, as amended, and the By-laws
of the Company and by the terms of any indemnification agreement
that has been or shall be entered into from time to time between
the Company and any such persons.
18. EFFECTIVE DATE. This Plan shall become
effective upon adoption by the Board of Directors of RHII.
If stockholder approval is required (a) under the General
Rules and Regulations promulgated under Section 16 of the
Exchange Act in order to exempt any transaction contemplated
by this Plan from Section 16(b) of the Exchange Act, (b) by
the rules of the New York Stock Exchange, if RHII Common
Stock is listed thereon, or (c) by the rules of NASDAQ
pertaining to the National Market System, if RHII Common
Stock is quoted thereon, then this Plan shall be submitted
to the stockholders of RHII for consideration at the next
annual meeting of stockholders. The Administrator may make
Options conditioned on such approval, and any Option so made
shall be effective as of the date of grant.
<PAGE>
EXHIBIT 11
EXHIBIT 11 TO FORM 10-K
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Net income..................................................................... $26,117 $11,723 $ 4,382
------- ------- -------
------- ------- -------
Weighted average number of shares outstanding
Primary:
Common stock............................................................... 27,365 24,309 23,484
Common stock equivalents -- stock options (A).............................. 971 783 446
------- ------- -------
Primary shares outstanding................................................. 28,336 25,092 23,930
------- ------- -------
------- ------- -------
Fully Diluted:
Common stock............................................................... 27,365 24,309 23,484
Common stock equivalents -- stock options (A).............................. 1,119 951 523
------- ------- -------
Fully diluted shares outstanding........................................... 28,484 25,260 24,007
------- ------- -------
------- ------- -------
Net income per share:
Primary...................................................................... $ .92 $ .47 $ .18
Fully diluted................................................................ $ .92 $ .46 $ .18
<FN>
(A) The treasury stock method was used to determine the weighted average number
of shares of common stock equivalents outstanding during the periods.
</TABLE>
<PAGE>
EXHIBIT 21
LIST OF SUBSIDIARIES
Jurisdiction of
Name of Subsidiary Incorporation
- ------------------ -------------
RH Holding Company, Inc. California
LegalTeam, Inc. California
Robert Half of Texas G.P. Ltd. Delaware
XYZ-II, Inc. Delaware
OCSI Acquisition Sub, Inc. Delaware
Robert Half Incorporated Florida
R-H International Advertising Fund, Inc. Florida
OfficeTeam Inc. Louisana
Robert Half of Nevada, Inc. Nevada
R-H Franchises Western Hemisphere, Inc. New York
Robert Half of Philadelphia, Inc. Pennsylvania
RHT, L.P. (a limited partnership) Texas
Fontaine Archer Van de Voorde S.A./N.V. Belgium
S.A. Robert Half N.V. Belgium
Accountemps S.A./N.V. Belgium
Robert Half Canada Inc. Canada
Norman Parsons S.A. (85% owned) France
Accountemps S.A.R.L. France
Robert Half S.A. France
Robert Half Limited United Kingdom
Robert Half Personnel (Midlands) Limited United Kingdom
Envaward Limited United Kingdom
Hatlon Limited United Kingdom
Smiths Recruitment Limited United Kingdom
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report dated January 24, 1995 included in this Form 10-K into the
Company's previously filed Registration Statements Files No. 33-14706,
33-39204, 33-39187, 33-32623, 33-32622, 33-40795, 33-62138, 33-62140, 33-52617,
33-56639, 33-56641 and 33-57763.
ARTHUR ANDERSEN LLP
San Francisco, California
March 8, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994 AND
DECEMBER 31, 1993 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1993
<PERIOD-START> JAN-01-1994 JAN-01-1993
<PERIOD-END> DEC-31-1994 DEC-31-1993
<CASH> 2,638 1,773
<SECURITIES> 0 0
<RECEIVABLES> 60,025 40,155
<ALLOWANCES> 2,600 2,194
<INVENTORY> 0 0
<CURRENT-ASSETS> 67,703 47,466
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 227,761 204,598
<CURRENT-LIABILITIES> 29,627 22,188
<BONDS> 3,133 32,332
<COMMON> 28 26,837
0 0
0 0
<OTHER-SE> 176,967 106,765
<TOTAL-LIABILITY-AND-EQUITY> 227,761 204,598
<SALES> 0 0
<TOTAL-REVENUES> 446,328 306,166
<CGS> 0 0
<TOTAL-COSTS> 273,327 188,292
<OTHER-EXPENSES> 4,584 4,251
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,570 3,992
<INCOME-PRETAX> 45,207 21,557
<INCOME-TAX> 19,090 9,834
<INCOME-CONTINUING> 26,117 11,723
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 26,117 11,723
<EPS-PRIMARY> .92 .47
<EPS-DILUTED> .92 .46
</TABLE>
