<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _________________ TO _________________.
------------------------
COMMISSION FILE NUMBER 1-10427
ROBERT HALF INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-1648752
(State or other jurisdiction (I.R.S. Employer
of 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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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) had been subject to such
filing requirements for the past 90 days. Yes _X_ No ____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of March 31, 1996:
29,024,851 shares of $.001 par value Common Stock
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<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
MARCH 31, 1996 DECEMBER 31, 1995
------------------ -----------------
(UNAUDITED)
<S> <C> <C>
ASSETS:
Cash and cash equivalents....................................................... $ 50,165 $ 41,346
Accounts receivable, less allowances of $3,392 and $3,067....................... 96,038 84,955
Other current assets............................................................ 8,034 7,349
---------- -----------------
Total current assets.......................................................... 154,237 133,650
Intangible assets, less accumulated amortization of $34,369 and $33,071......... 158,103 155,441
Other assets.................................................................... 13,087 12,049
---------- -----------------
Total assets.................................................................. $ 325,427 $ 301,140
---------- -----------------
---------- -----------------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable and accrued expenses........................................... $ 12,191 $ 12,631
Accrued payroll costs........................................................... 43,240 33,853
Income taxes payable............................................................ 7,521 5,157
Current portion of notes payable and other indebtedness......................... 1,003 4,239
---------- -----------------
Total current liabilities..................................................... 63,955 55,880
Notes payable and other indebtedness, less current portion...................... 1,093 1,486
Deferred income taxes........................................................... 15,877 15,844
---------- -----------------
Total liabilities............................................................. 80,925 73,210
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value, authorized -- 100,000,000 shares; issued and
outstanding -- 58,102,248 and 57,784,622 shares.............................. 58 58
Capital surplus............................................................... 107,041 99,768
Deferred compensation......................................................... (12,166) (9,642)
Accumulated translation adjustments........................................... (122) 51
Retained earnings............................................................. 149,691 137,695
---------- -----------------
Total stockholders' equity.................................................. 244,502 227,930
---------- -----------------
Total liabilities and stockholders' equity.................................... $ 325,427 $ 301,140
---------- -----------------
---------- -----------------
</TABLE>
All share amounts have been restated to retroactively reflect the two-for-one
stock split declared on May 1, 1996.
The accompanying Notes to Consolidated Financial Statements are
an integral part of these financial statements.
1
<PAGE>
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1996 1995
-------- --------
(UNAUDITED)
<S> <C> <C>
Net service revenues.................................................. $196,239 $144,739
Direct costs of services, consisting of payroll, payroll taxes and
insurance costs for temporary employees.............................. 119,597 88,700
-------- --------
Gross margin.......................................................... 76,642 56,039
Selling, general and administrative expenses.......................... 53,244 39,285
Amortization of intangible assets..................................... 1,308 1,152
Interest expense (income)............................................. (388) 100
-------- --------
Income before income taxes............................................ 22,478 15,502
Provision for income taxes............................................ 9,239 6,497
-------- --------
Net income............................................................ $ 13,239 $ 9,005
-------- --------
-------- --------
Net income per share.................................................. $ .22 $ .15
-------- --------
-------- --------
</TABLE>
All per share amounts have been restated to retroactively reflect the
two-for-one stock split declared on May 1, 1996.
The accompanying Notes to Consolidated Financial Statements are
an integral part of these financial statements.
2
<PAGE>
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
1996 1995
-------- --------
(UNAUDITED)
<S> <C> <C>
COMMON STOCK:
Balance at beginning of period.................................................. $ 58 $ 56
Issuance of restricted stock, net -- par value.................................. -- 1
Exercise of stock options -- par value.......................................... -- --
Repurchases of common stock -- par value........................................ -- --
-------- --------
Balance at end of period........................................................ $ 58 $ 57
-------- --------
-------- --------
CAPITAL SURPLUS:
Balance at beginning of period.................................................. $ 99,768 $ 82,627
Issuance of restricted stock, net -- excess over par value...................... 3,622 3,289
Exercises of stock options -- excess over par value............................. 1,140 729
Tax benefits from exercises of stock options.................................... 2,511 700
-------- --------
Balance at end of period........................................................ $107,041 $ 87,345
-------- --------
-------- --------
DEFERRED COMPENSATION:
Balance at beginning of period.................................................. $ (9,642) $ (5,533)
Issuance of restricted stock, net............................................... (3,622) (3,290)
Amortization of deferred compensation........................................... 1,098 639
-------- --------
Balance at end of period........................................................ $(12,166) $ (8,184)
-------- --------
-------- --------
ACCUMULATED TRANSLATION ADJUSTMENTS:
Balance at beginning of period.................................................. $ 51 $ (541)
Translation adjustments......................................................... (173) 345
-------- --------
Balance at end of period........................................................ $ (122) $ (196)
-------- --------
-------- --------
RETAINED EARNINGS:
Balance at beginning of period.................................................. $137,695 $100,386
Repurchases of common stock -- excess over par value............................ (1,243) (612)
Net income...................................................................... 13,239 9,005
-------- --------
Balance at end of period........................................................ $149,691 $108,779
-------- --------
-------- --------
</TABLE>
All share amounts have been restated to retroactively reflect the two-for-one
stock split declared on May 1, 1996.
The accompanying Notes to Consolidated Financial Statements are
an integral part of these financial statements.
3
<PAGE>
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1996 1995
-------- --------
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income...................................................................... $ 13,239 $ 9,005
Adjustments to reconcile net income to net cash provided by operating
activities:
Amortization of intangible assets............................................. 1,308 1,152
Depreciation expense.......................................................... 1,158 725
Deferred income taxes......................................................... 827 656
Changes in assets and liabilities, net of effects of acquisitions:
Increase in accounts receivable............................................. (11,083) (8,328)
Increase in accounts payable, accrued expenses and accrued payroll costs.... 4,898 7,373
Increase in income tax payable.............................................. 2,364 2,654
Change in other assets, net of change in other liabilities.................. (380) 394
-------- --------
Total adjustments............................................................... (908) 4,626
-------- --------
Net cash and cash equivalents provided by operating activities.................. 12,331 13,631
CASH FLOWS USED IN INVESTING ACTIVITIES:
Capital expenditures.......................................................... (2,290) (1,123)
-------- --------
Cash and cash equivalents used in investing activities.......................... (2,290) (1,123)
CASH FLOWS USED IN FINANCING ACTIVITIES:
Repurchases of common stock or common stock equivalents....................... (1,243) (612)
Principal payments on notes payable and other indebtedness.................... (3,630) (1,019)
Proceeds and tax benefits from exercise of stock options...................... 3,651 1,429
-------- --------
Net cash and cash equivalents used in financing activities...................... (1,222) (202)
-------- --------
Net increase in cash and cash equivalents....................................... 8,819 12,306
Cash and cash equivalents at beginning of period................................ 41,346 2,638
-------- --------
Cash and cash equivalents at end of period...................................... $ 50,165 $ 14,944
-------- --------
-------- --------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest...................................................................... $ 273 $ 234
Income taxes.................................................................. $ 4,255 $ 2,401
</TABLE>
The accompanying Notes to Consolidated Financial Statements are
an integral part of these financial statements.
4
<PAGE>
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
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 1995 financial statements to conform to
the 1996 presentation.
INTERIM FINANCIAL INFORMATION. The Consolidated Financial Statements have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission ("SEC") and, in management's opinion, include all
adjustments necessary for a fair statement of results for such interim periods.
Certain information and note disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to SEC rules or regulations; however,
the Company believes that the disclosures made are adequate to make the
information presented not misleading.
The interim results for the three months ended March 31, 1996, and 1995 are
not necessarily indicative of the results for the full year. It is suggested
that these financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1995.
REVENUE RECOGNITION. Temporary service 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 a 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 the
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 are less than their carrying
value. Based upon its most recent analysis, the Company believes that no
material impairment of intangible assets exist at March 31, 1996.
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.
NOTE B -- SUBSEQUENT EVENT
On May 1, 1996, the Company announced the declaration of a two-for-one stock
split in the form of a stock dividend on its common stock. The record date for
determining those stockholders entitled to receive the stock dividend will be
May 17, 1996. The payment date for the stock dividend will be June 7, 1996. All
share and per share amounts have been restated to retroactively reflect the
two-for-one stock split.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS FOR EACH OF THE THREE MONTHS ENDED MARCH 31, 1996 AND
1995.
Net service revenues increased approximately 35.6% during the first quarter
of 1996 compared to the same period in 1995. Temporary service revenues
increased approximately 36.8% during the three months ended March 31, 1996,
relative to the three months ended March 31, 1995. Permanent placement revenues
increased 23.5% during the comparable three months ending March 31, 1996 and
1995. The revenue comparisons reflect continued improvement in the demand for
the Company's specialized staffing services.
Gross margin dollars increased 40.8% during the three month period ending
March 31, 1996, compared with the corresponding three month period ending March
31, 1995. Gross margin amounts equaled 39.1% and 38.7% of revenue for the three
months ended March 31, 1996 and March 31, 1995, respectively.
Selling, general and administrative expenses were approximately $53 million
during the three months ended March 31, 1996 compared to approximately $39
million during the three months ended March 31, 1995. Selling, general and
administrative expenses as a percentage of revenues was 27.1% for both the three
months ended March 31, 1996 and 1995.
Interest income/expense for the three months ended March 31, 1996 decreased
488% over the comparable 1995 period due to an increase in interest income from
an increase in cash and cash equivalents and a decrease in interest expense due
to a reduction of outstanding indebtedness.
The provision for income taxes for the three months ended March 31, 1996,
was 41.1% compared to 41.9% of income before taxes for the same period in 1995.
The decrease in 1996 is the result of a smaller percentage of non-deductible
intangible expenses relative to income.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1996 the Company's sources of liquidity included
approximately $50 million in cash and cash equivalents and $84 million in net
working capital. In addition, as of March 31, 1996 $77.5 million is available
for borrowing under the Company's $77.5 million bank revolving credit facility
at interest rates of either the Eurodollar rate plus .6% or at prime.
The Company's liquidity during the first quarter of 1996 was increased by
$12.3 million from funds generated by operating activities.
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, fixed payments and other long-term obligations.
On May 1, 1996, the Company announced the declaration of a two-for-one stock
split in the form of a stock dividend on its common stock. The record date for
determining those stockholders entitled to receive the stock dividend will be
May 17, 1996. The payment date for the stock dividend will be June 7, 1996. All
share and per share amounts have been restated to retroactively reflect the
two-for-one stock split.
6
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PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
- ----------- ----------------------------------------------------------------------------------------------------
<C> <S>
11 Computation of Per Share Earnings.
27 Financial Data Schedules.
</TABLE>
(b) The registrant filed no current report on Form 8-K during the quarter
covered by this report.
7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ROBERT HALF INTERNATIONAL INC.
(Registrant)
Date: May 10, 1996 /s/ M. KEITH WADDELL
--------------------------------------
M. Keith Waddell
Vice President, Chief Financial
Officer and
Treasurer (Principal Financial Officer
and
duly authorized signatory)
8
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ---------------------------------------------------------------------------------------------------
<C> <S> <C>
11 Computation of Per Share Earnings..............................................................
27 Financial Data Schedules.......................................................................
</TABLE>
<PAGE>
EXHIBIT 11
EXHIBIT 11 TO FORM 10-Q
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1996 1995
--------- ---------
<S> <C> <C>
Net income................................................................................. $ 13,239 $ 9,005
--------- ---------
--------- ---------
Weighted average number of shares outstanding (A)
Primary:
Common stock........................................................................... 57,988 56,607
Common stock equivalents -- stock options (B).......................................... 2,018 1,956
--------- ---------
Primary shares outstanding............................................................. 60,006 58,563
--------- ---------
--------- ---------
Fully Diluted:
Common stock........................................................................... 57,988 56,607
Common stock equivalents -- stock options (B).......................................... 2,195 2,068
--------- ---------
Fully diluted shares outstanding....................................................... 60,183 58,675
--------- ---------
--------- ---------
Net income per share:
Primary.................................................................................. $ .22 $ .15
Fully diluted............................................................................ $ .22 $ .15
</TABLE>
(A) All share and per share amounts have been restated to retroactively reflect
the two-for-one stock split declared on May 1, 1996.
(B) The treasury stock method was used to determine the weighted average number
of shares of common stock equivalents outstanding during the periods.
<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, 1995 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-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1996 JAN-01-1995
<PERIOD-END> MAR-31-1996 DEC-31-1995
<CASH> 50,165 41,346
<SECURITIES> 0 0
<RECEIVABLES> 99,430 88,022
<ALLOWANCES> 3,392 3,067
<INVENTORY> 0 0
<CURRENT-ASSETS> 154,237 133,650
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 325,427 301,140
<CURRENT-LIABILITIES> 63,955 55,880
<BONDS> 1,093 1,486
<COMMON> 58 58
0 0
0 0
<OTHER-SE> 244,444 227,872
<TOTAL-LIABILITY-AND-EQUITY> 325,427 301,140
<SALES> 0 0
<TOTAL-REVENUES> 196,239 628,526
<CGS> 0 0
<TOTAL-COSTS> 119,597 384,449
<OTHER-EXPENSES> 1,308 4,767
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (388) (463)
<INCOME-PRETAX> 22,478 69,089
<INCOME-TAX> 9,239 28,791
<INCOME-CONTINUING> 13,239 40,298
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 13,239 40,298
<EPS-PRIMARY> .22 .68
<EPS-DILUTED> .22 .68
</TABLE>
