<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A
AMENDMENT NO. 1
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-10427
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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
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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
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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 March 7, 1996, the aggregate market value of the Common Stock held by
non-affiliates of the registrant was approximately $1,199,755,000 based on the
closing sale price on that date. This amount excludes the market value of
2,630,142 shares of Common Stock held by registrant's directors and officers and
their affiliates.
As of March 7, 1996, there were outstanding 28,998,392 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 1996, 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.
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<PAGE>
Registrant hereby amends to read in its entirety as set forth herein Item 7,
Management's Discussion and Analysis of Financial Condition and Results of
Operations and Item 8, Financial Statements. The only portion of Item 8 that has
been changed is the Consolidated Statements of Stockholders' Equity to state the
number of common shares affecting the transactions disclosed. Exhibit 23.1 is
added hereby, and is in addition to Exhibit 23 as originally filed.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE YEARS ENDED DECEMBER 31, 1995
Temporary services revenues were $577 million, $406 million and $279 million
for the years ended December 31, 1995, 1994 and 1993, respectively, increasing
by 42% during 1995 and 46% during 1994. The increase in revenues during these
periods reflected in part revenues generated from the Company's OfficeTeam and
RHI Consulting divisions, which were started in 1991 and 1994, respectively.
Permanent placement revenues were $52 million, $40 million and $27 million for
the years ended December 31, 1995, 1994 and 1993, respectively, increasing by
30% during 1995 and 48% during 1994. Overall revenue increases reflect continued
improvement in demand for the Company's services, which the Company believes is
a result of increased acceptance in the use of professional staffing services.
Revenues from companies acquired during 1995, 1994 and 1993 were not material.
The Company currently has more than 185 offices in 36 states and five
foreign countries. Domestic operations represented 90%, 91% and 92% of revenues
for the three years ended December 31, 1995, 1994 and 1993, respectively.
Foreign operations represented 10%, 9% and 8% of revenues for those years.
Gross margin dollars from the Company's temporary services represent
revenues less direct costs of services, which consists of payroll, payroll taxes
and insurance costs for temporary employees. Gross margin dollars from permanent
placement services are equal to revenues, as there are no direct costs
associated with such revenues. Gross margin dollars for the Company's temporary
services were $192 million, $133 million and $91 million for the years ended
December 31, 1995, 1994 and 1993, respectively, increasing by 44% in 1995 and
46% in 1994. Gross margin amounts equaled 33% of revenues for temporary services
for the years ended December 31, 1995, 1994 and 1993, which the Company believes
reflects its ability to adjust billing rates and wage rates to underlying market
conditions. Gross margin dollars for the Company's permanent placement division
were $52 million, $40 million and $27 million for each of the years ended
December 31, 1995, 1994 and 1993, respectively, increasing by 30% and 48% in
1995 and 1994, respectively.
Selling, general and administrative expenses were $171 million during 1995
compared to $122 million in 1994 and $88 million in 1993. Selling, general and
administrative expenses as a percentage of revenues were 27% in both the years
ended December 31, 1995 and 1994, and 29% for the year ended December 31, 1993.
Selling, general and administrative expenses consist primarily of staff
compensation, advertising and occupancy costs, most of which generally follow
changes in revenues. The percentage decline from 1993 primarily reflected
revenue growth and management of staff compensation costs.
The Company allocates the excess of cost over the fair market value of the
net tangible assets first to identifiable intangible assets, if any, and then to
goodwill. Although management believes that goodwill has an unlimited life, the
Company amortizes these costs over 40 years. Management believes that its
strategy of making acquisitions of established companies in established markets
and maintaining its presence in these markets preserves the goodwill for an
indeterminate period. 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 existed at December 31, 1995.
Intangible assets represented 52% of total assets and 68% of total stockholders'
equity at December 31, 1995.
Interest income for the years ended December 31, 1995, 1994 and 1993 was
$1,237,000, $144,000 and $0, respectively. Interest expense for the years ended
December 31, 1995, 1994 and 1993 was $774,000,
<PAGE>
$1,714,000 and $3,992,000, respectively. These changes reflect an increase in
cash and cash equivalents and a decrease in outstanding indebtedness.
The provision for income taxes was 42% for both the years ended December 31,
1995 and 1994 and 46% for the year ended December 31, 1993. The decrease in 1994
is the result of a smaller percentage of non-deductible intangible expenses.
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, capital expenditures, principal payments on outstanding
notes payable, and the securities repurchase program. No open market purchases
of the Company's stock were made during the year ended December 31, 1995. For
the year ended December 31, 1995, the Company generated $42.2 million from
operations, used $9.4 million in investing activities and provided $6 million
from financing activities.
The Company's working capital at December 31, 1995 included $41.3 million in
cash and cash equivalents. In addition at December 31, 1995, the Company had
available $76.6 million of its $80 million bank revolving line of credit. 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,
the Company's fixed payments and other obligations on both a short and long term
basis. As of December 31, 1995, the Company had no material capital commitments.
The Company's revolving bank line has scheduled reductions in availability
through 2001 when the agreement terminates.
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 borrowing under the Company's
revolving credit agreement.
On December 10, 1993, substantially all the Company's outstanding
convertible subordinated debentures were converted into common stock of the
Company. See Note F in the Notes to Consolidated Financial Statements.
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 121, "Accounting for
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of".
The Company plans to adopt SFAS No. 121 in 1996 and believes that the adoption
will not have a material impact upon its financial statements.
<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,
----------------------
1995 1994
---------- ----------
<S> <C> <C>
ASSETS:
Cash and cash equivalents................................................................. $ 41,346 $ 2,638
Accounts receivable, less allowances of $3,067 and $2,600................................. 84,955 60,025
Other current assets...................................................................... 7,349 5,040
---------- ----------
Total current assets.................................................................... 133,650 67,703
Intangible assets, less accumulated amortization of $33,071 and $28,243................... 155,441 152,824
Other assets.............................................................................. 12,049 7,234
---------- ----------
Total assets............................................................................ $ 301,140 $ 227,761
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable and accrued expenses..................................................... $ 12,631 $ 7,232
Accrued payroll costs..................................................................... 33,853 19,133
Income taxes payable...................................................................... 5,157 2,181
Current portion of notes payable and other indebtedness................................... 4,239 1,081
---------- ----------
Total current liabilities............................................................... 55,880 29,627
Notes payable and other indebtedness, less current portion................................ 1,486 3,133
Deferred income taxes..................................................................... 15,844 18,006
---------- ----------
Total liabilities....................................................................... 73,210 50,766
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common Stock, $.001 par value, 100,000,000 shares authorized, 28,892,311 and 28,152,201
shares issued and outstanding in 1995 and 1994, respectively.......................... 29 28
Capital surplus......................................................................... 99,797 82,655
Deferred compensation................................................................... (9,642) (5,533)
Accumulated translation adjustments..................................................... 51 (541)
Retained earnings....................................................................... 137,695 100,386
---------- ----------
Total stockholders' equity............................................................ 227,930 176,995
---------- ----------
Total liabilities and stockholders' equity............................................ $ 301,140 $ 227,761
---------- ----------
---------- ----------
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
10
<PAGE>
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Net service revenues......................................................... $ 628,526 $ 446,328 $ 306,166
Direct costs of services, consisting of payroll, payroll taxes and insurance
costs for temporary employees.............................................. 384,449 273,327 188,292
---------- ---------- ----------
Gross margin................................................................. 244,077 173,001 117,874
Selling, general and administrative expenses................................. 170,684 121,640 88,074
Amortization of intangible assets............................................ 4,767 4,584 4,251
Interest (income) expense.................................................... (463) 1,570 3,992
---------- ---------- ----------
Income before income taxes................................................... 69,089 45,207 21,557
Provision for income taxes................................................... 28,791 19,090 9,834
---------- ---------- ----------
Net income................................................................... $ 40,298 $ 26,117 $ 11,723
---------- ---------- ----------
---------- ---------- ----------
Income per share............................................................. $ 1.36 $ .92 $ .46
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
1994 and 1993 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.
11
<PAGE>
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
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1995 1994 1993
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<S> <C> <C> <C>
COMMON STOCK--SHARES:
Balance at beginning of period.................................................... 28,152 26,837 23,642
Issuance of common stock.......................................................... -- 634 --
Issuance of restricted stock...................................................... 234 332 82
Conversion of debentures.......................................................... -- -- 2,040
Repurchases of common stock....................................................... (114) (115) (119)
Exercises of stock options........................................................ 620 464 1,086
Issuance of common stock for acquisitions......................................... -- -- 106
--------- --------- ---------
Balance at end of period........................................................ 28,892 28,152 26,837
--------- --------- ---------
--------- --------- ---------
COMMON STOCK--PAR VALUE:
Balance at beginning of period.................................................... $ 28 $ 26,837 $ 23,642
Issuance of common stock.......................................................... -- 1 --
Issuances of restricted stock, net................................................ -- 334 82
Conversion of debentures.......................................................... -- -- 2,040
Repurchases of common stock....................................................... -- (59) (119)
Exercises of stock options........................................................ 1 213 1,086
Issuance of common stock for acquisitions......................................... -- -- 106
Change in par value............................................................... -- (27,298) --
--------- --------- ---------
Balance at end of period........................................................ $ 29 $ 28 $ 26,837
--------- --------- ---------
--------- --------- ---------
CAPITAL SURPLUS:
Balance at beginning of period.................................................... $ 82,655 $ 33,113 $ 3,897
Issuance of common stock--excess over par value................................... -- 12,589 --
Issuances of restricted stock, net--excess over par value......................... 6,887 4,949 825
Conversion of debentures--excess over par value................................... -- -- 20,185
Exercises of stock options--excess over par value................................. 3,818 2,162 4,029
Tax benefits from exercises of stock options and restricted stock releases........ 6,437 2,544 2,823
Issuance of common stock for acquisitions--excess over par value.................. -- -- 1,354
Change in par value............................................................... -- 27,298 --
--------- --------- ---------
Balance at end of period........................................................ $ 99,797 $ 82,655 $ 33,113
--------- --------- ---------
--------- --------- ---------
DEFERRED COMPENSATION:
Balance at beginning of period.................................................... $ (5,533) $ (2,113) $ (2,208)
Issuances of restricted stock, net................................................ (6,887) (5,283) (907)
Amortization...................................................................... 2,778 1,863 1,002
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Balance at end of period........................................................ $ (9,642) $ (5,533) $ (2,113)
--------- --------- ---------
--------- --------- ---------
ACCUMULATED TRANSLATION ADJUSTMENTS:
Balance at beginning of period.................................................... $ (541) $ (589) $ (257)
Translation adjustments........................................................... 592 48 (332)
--------- --------- ---------
Balance at end of period........................................................ $ 51 $ (541) $ (589)
--------- --------- ---------
--------- --------- ---------
RETAINED EARNINGS:
Balance at beginning of period.................................................... $ 100,386 $ 76,354 $ 65,898
Repurchases of common stock--excess over par value................................ (2,989) (2,085) (1,267)
Net income........................................................................ 40,298 26,117 11,723
--------- --------- ---------
Balance at end of period........................................................ $ 137,695 $ 100,386 $ 76,354
--------- --------- ---------
--------- --------- ---------
</TABLE>
1994 and 1993 shares and 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.
12
<PAGE>
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income...................................................................... $ 40,298 $ 26,117 $ 11,723
Adjustments to reconcile net income to net cash provided by operating
activities:
Amortization of intangible assets........................................... 4,767 4,584 4,251
Depreciation expense........................................................ 3,564 2,673 2,383
Provision for deferred income taxes......................................... (683) 1,096 1,136
Changes in assets and liabilities, net of effects of acquisitions:
Increase in accounts receivable............................................. (24,289) (18,292) (10,481)
Increase in accounts payable, accrued expenses and accrued payroll costs.... 15,106 5,795 4,158
Increase in income taxes payable............................................ 2,976 389 2,553
Change in other assets, net of change in other liabilities.................. 432 2,997 (806)
--------- --------- ---------
Total adjustments............................................................. 1,873 (758) 3,194
--------- --------- ---------
Net cash and cash equivalents provided by operating activities.................. 42,171 25,359 14,917
CASH FLOWS USED IN INVESTING ACTIVITIES:
Acquisitions, net of cash acquired.............................................. (1,024) (4,406) (11,141)
Capital expenditures............................................................ (8,417) (4,768) (2,340)
--------- --------- ---------
Net cash and cash equivalents used in investing activities...................... (9,441) (9,174) (13,481)
CASH FLOWS USED IN FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net..................................... -- 12,589 --
Borrowings under credit agreement............................................... -- 104,900 138,900
Repayments under credit agreement............................................... -- (135,200) (144,200)
Repurchases of convertible debentures........................................... -- -- (305)
Principal payments on notes payable and other indebtedness...................... (1,289) (384) (1,170)
Proceeds and tax benefits from exercise of stock options and restricted stock
releases...................................................................... 10,256 4,919 7,938
Repurchases of common stock and common stock equivalents........................ (2,989) (2,144) (1,386)
--------- --------- ---------
Net cash and cash equivalents provided by (used in) financing activities........ 5,978 (15,320) (223)
--------- --------- ---------
Net increase in cash and cash equivalents....................................... 38,708 865 1,213
Cash and cash equivalents at beginning of period................................ 2,638 1,773 560
--------- --------- ---------
Cash and cash equivalents at end of period...................................... $ 41,346 $ 2,638 $ 1,773
--------- --------- ---------
--------- --------- ---------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest...................................................................... $ 405 $ 1,420 $ 4,256
Income taxes.................................................................. $ 21,853 $ 14,609 $ 4,568
Acquisitions:
Fair value of assets acquired--
Intangible assets........................................................... $ 4,697 $ 5,452 $ 12,650
Other....................................................................... 753 1,694 2,506
Liabilities assumed--
Notes payable and contracts................................................. (2,800) (2,158) (101)
Other....................................................................... (1,626) (582) (2,454)
Common stock issued........................................................... -- -- (1,460)
--------- --------- ---------
Cash paid, net of cash acquired............................................... $ 1,024 $ 4,406 $ 11,141
--------- --------- ---------
--------- --------- ---------
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS. Robert Half International Inc. (the "Company")
provides specialized staffing services through such divisions as
Accountemps-Registered Trademark-, Robert Half-Registered Trademark-,
OfficeTeam-Registered Trademark- and RHI Consulting-Registered Trademark-. The
Company, through its Accountemps and Robert Half divisions, is the world's
largest specialized provider of temporary and permanent personnel in the fields
of accounting and finance. OfficeTeam specializes in skilled temporary
administrative personnel and RHI Consulting provides contract information
technology professionals. Revenues are predominantly from temporary services.
The Company operates in the United States, Canada and Europe. The Company is a
Delaware corporation.
PRINCIPLES OF CONSOLIDATION. The Consolidated Financial Statements include
the accounts of the Company and its subsidiaries, all of which are wholly-owned.
All significant intercompany balances have been eliminated. Certain
reclassifications have been made to the 1994 and 1993 financial statements to
conform to the 1995 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.
CASH AND CASH EQUIVALENTS. The Company considers 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, 1995.
INCOME TAXES. 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.
FOREIGN CURRENCY TRANSLATION. The results of operations of the Company's
foreign subsidiaries are translated at the monthly average exchange rates
prevailing during the period. The financial position of the Company's foreign
subsidiaries 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.
USE OF ESTIMATES. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period.
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 61 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
14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE B--ACQUISITIONS (CONTINUED)
services businesses. The Company has paid approximately $196 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 1995 and 1994 had no
material pro forma impact on the results of operations.
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 $5,725,000 at December
31, 1995 and $4,214,000 at December 31, 1994. At December 31, 1995, $1,350,000
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, 1995 (in thousands):
<TABLE>
<S> <C>
1996................................................................ $ 4,239
1997................................................................ 764
1998................................................................ 464
1999................................................................ 15
2000................................................................ 16
Thereafter.......................................................... 227
---------
$ 5,725
---------
---------
</TABLE>
At December 31, 1995, 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 7.3%, 8.2% and 11.1% for the years ended December 31, 1995, 1994
and 1993, respectively.
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, 1995 and 1994, the Company had no borrowings on the line
of credit outstanding and had used $3,408,000 and $3,358,000 in debt support
standby letters of credit, respectively. 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.
15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE D--BANK LOAN (REVOLVING CREDIT) (CONTINUED)
The credit facility has the following scheduled reduction in availability
(in thousands):
<TABLE>
<S> <C>
1996............................................................... $ 5,000
1997............................................................... $ 15,000
1998............................................................... $ 15,000
1999............................................................... $ 15,000
2000............................................................... $ 15,000
2001............................................................... $ 15,000
</TABLE>
The final maturity date for the credit facility is August 31, 2001.
NOTE E--CURRENT LIABILITIES
Other current liabilities included in accrued payroll costs consist of the
following at December 31, 1995 and 1994 (in thousands):
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Accrued payroll and bonus............................................... $ 15,856 $ 9,960
Accrued workers compensation and other benefits......................... 11,182 3,731
Accrued payroll taxes................................................... 6,815 5,442
--------- ---------
$ 33,853 $ 19,133
--------- ---------
--------- ---------
</TABLE>
NOTE F--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. 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 G--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.
16
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE G--STOCKHOLDERS' EQUITY (CONTINUED)
In August 1994, the Company effected a two-for-one stock split in the form
of a stock dividend. 1994 and 1993 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 H--INCOME TAXES
The provisions for income taxes for the years ended December 31, 1995, 1994
and 1993 consisted of the following (in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Current:
Federal..................................................... $ 22,061 $ 14,072 $ 6,995
State....................................................... 4,728 3,155 1,604
Foreign..................................................... 1,835 767 99
Deferred--principally domestic................................ 167 1,096 1,136
--------- --------- ---------
$ 28,791 $ 19,090 $ 9,834
--------- --------- ---------
--------- --------- ---------
</TABLE>
The income taxes shown above varied from the statutory federal income tax
rates for these periods as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Federal U.S. income tax rate................................ 35.0% 35.0% 35.0%
State income taxes, net of federal tax benefit.............. 4.5 4.7 5.5
Amortization of intangible assets........................... 1.5 2.0 4.1
Other, net.................................................. .7 .5 1.0
---- ---- ----
Effective tax rate.......................................... 41.7% 42.2% 45.6%
---- ---- ----
---- ---- ----
</TABLE>
The deferred portion of the tax provisions consisted of the following (in
thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Amortization of franchise rights................................ $ 1,650 $ 1,629 $ 1,484
Accrued expenses, deducted for tax when paid.................... (2,068) (524) (137)
Other, net...................................................... (265) (9) (211)
--------- --------- ---------
$ (683) $ 1,096 $ 1,136
--------- --------- ---------
--------- --------- ---------
</TABLE>
17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE H--INCOME TAXES (CONTINUED)
The net deferred income tax liability shown on the balance sheet is
comprised of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1994
--------- ---------
<S> <C> <C>
Deferred income tax assets.............................................. $ (1,304) $ (883)
Deferred income tax liabilities......................................... 17,148 18,889
--------- ---------
$ 15,844 $ 18,006
--------- ---------
--------- ---------
</TABLE>
No valuation allowances against deferred tax assets were required for the
years ended December 31, 1995 and 1994.
The components of the net deferred income tax liability at December 31, 1995
and 1994, were as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1994
--------- ---------
<S> <C> <C>
Amortization of intangible assets....................................... $ 16,216 $ 17,427
Foreign taxes........................................................... 200 775
Other................................................................... (572) (196)
--------- ---------
$ 15,844 $ 18,006
--------- ---------
--------- ---------
</TABLE>
NOTE I--COMMITMENTS
Rental expense, primarily for office premises, amounted to $11,027,000,
$9,183,000 and $8,457,000 for the years ended December 31, 1995, 1994 and 1993,
respectively. The approximate minimum rental commitments for 1996 and thereafter
under non-cancelable leases in effect at December 31, 1995, are as follows (in
thousands):
<TABLE>
<S> <C>
1996............................................................... $ 10,547
1997............................................................... 9,536
1998............................................................... 8,145
1999............................................................... 6,295
2000............................................................... 3,274
Thereafter......................................................... 5,209
</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 vest between four to seven 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.
18
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE J--STOCK PLANS (CONTINUED)
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, 1995, the total number of available shares to grant under
the plans (consisting of either restricted stock or options) was 559,714.
The following table reflects activity under all stock plans from January 1,
1993 through December 31, 1995, 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, 1993..................................... 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
Granted........................................................ 248,392 690,631 $ 21.00 - 41.875
$ 19.625 -
Exercised...................................................... -- (620,407) 41.875
Restrictions lapsed............................................ (187,771) -- --
Forfeited...................................................... (14,282) (180,669) $ 4.305 - 41.875
----------- ---------- ----------------
Outstanding, December 31, 1995................................... 673,007 3,022,616 $ 3.55 - 41.875
----------- ---------- ----------------
----------- ---------- ----------------
</TABLE>
As of December 31, 1995, an aggregate of 1,208,798 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.
19
<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 (29,708,000, 28,484,000 and 25,260,000 shares for
the years ending December 31, 1995, 1994 and 1993, respectively). An assumed
conversion of the Convertible Debentures was not dilutive to income per share in
1993 (see Note E).
NOTE M--QUARTERLY FINANCIAL DATA (UNAUDITED)
The following tabulation shows certain quarterly financial data for 1995 and
1994 (in thousands, except per share amounts):
<TABLE>
<CAPTION>
QUARTER
----------------------------------------------
1995 1 2 3 4 YEAR
- ----------------------------------------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net service revenues................................. $ 144,739 $ 148,570 $ 159,303 $ 175,914 $ 628,526
Gross margin......................................... 56,039 57,732 62,196 68,110 244,077
Income before income taxes........................... 15,502 16,053 17,865 19,669 69,089
Net income........................................... 9,005 9,350 10,463 11,480 40,298
Net income per share................................. .31 .32 .35 .38 1.36
<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
</TABLE>
20
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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, 1995, 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 intangible assets of $992,000, $956,000 and $917,000
for the years ended December 31, 1995, 1994 and 1993, respectively. Domestic
operating income reflects charges for amortization of intangibles of $4,307,000,
$4,137,000 and $3,841,000 for the years ended December 31, 1995, 1994 and 1993,
respectively. Identifiable assets are those assets used in the geographic areas
and are after elimination of intercompany balances.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues
Domestic............................................... $ 564,564 $ 404,852 $ 280,266
Foreign................................................ 63,962 41,476 25,900
---------- ---------- ----------
$ 628,526 $ 446,328 $ 306,166
---------- ---------- ----------
---------- ---------- ----------
Operating Income
Domestic............................................... $ 63,861 $ 44,700 $ 26,294
Foreign................................................ 4,765 2,077 (745)
---------- ---------- ----------
$ 68,626 $ 46,777 $ 25,549
---------- ---------- ----------
---------- ---------- ----------
Assets
Domestic............................................... $ 267,487 $ 200,329 $ 180,778
Foreign................................................ 33,653 27,432 23,820
---------- ---------- ----------
$ 301,140 $ 227,761 $ 204,598
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
21
<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, 1995 and 1994, and the related consolidated
statements of income, stockholders' equity and cash flows for each of the three
years in the period ended December 31, 1995. 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, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
San Francisco, California
January 26, 1996
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 Amendment No. 1 to
Report on Form 10-K to be signed on its behalf by the undersigned, thereunto
duly authorized.
ROBERT HALF INTERNATIONAL INC.
(Registrant)
Date: October 10, 1996 By /s/ M. KEITH WADDELL
------------------------------------------
M. Keith Waddell
SENIOR VICE PRESIDENT, CHIEF FINANCIAL
OFFICER AND TREASURER
(PRINCIPAL FINANCIAL OFFICER)
<PAGE>
EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants we hereby consent to the incorporation by
reference of our report dated January 26, 1996 into the Company's Registration
Statements on Form S-8 (nos. 333-05743 and 333-05745).
ARTHUR ANDERSEN LLP
San Francisco, California
October 9, 1996
