<PAGE>
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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, 1997
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: (650) 234-6000
------------------------
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, 1998, the aggregate market value of the Common Stock held
by non-affiliates of the registrant was approximately $3,780,000,000 based on
the closing sale price on that date. This amount excludes the market value of
8,110,689 shares of Common Stock held by registrant's directors and officers and
their affiliates.
As of February 28, 1998, there were outstanding 91,645,927 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 1998, 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>
PART I
ITEM 1. BUSINESS
Robert Half International Inc. is the world's largest specialized provider
of temporary and regular personnel in the fields of accounting and finance. Its
divisions include ACCOUNTEMPS-Registered Trademark- and ROBERT
HALF-Registered Trademark-, providers of temporary and regular 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 1991, the Company formed
OFFICETEAM-Registered Trademark- to provide skilled temporary administrative and
office personnel. In 1994, the Company established RHI
CONSULTING-Registered Trademark- to concentrate on providing temporary and
contract information technology professionals in positions ranging from PC
support technician to chief information officer. In 1992, the Company acquired
THE AFFILIATES-Registered Trademark-, which focuses on placing temporary and
regular employees in paralegal, legal administrative and other legal support
positions. In 1997, the Company established RHI MANAGEMENT
RESOURCES-REGISTERED TRADEMARK- to provide senior level project professionals
specializing in the accounting and finance fields.
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 three of the ACCOUNTEMPS and ROBERT HALF franchises in 47 separate
transactions, and has acquired 18 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 many 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 200
offices in 39 states and five foreign countries and placed approximately 160,000
employees on temporary assignment with clients in 1997.
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.
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 approximately 190 locations in the
United States, Canada and Europe. OFFICETEAM operates in much the same fashion
as the ACCOUNTEMPS and ROBERT HALF divisions.
1
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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.
RHI CONSULTING
The Company's RHI CONSULTING division, which commenced operations in 1994,
specializes in providing information technology contract consultants and placing
regular employees in areas ranging from multiple platform systems integration to
end-user support, including specialists in programming, networking, systems
integration, database design and help desk support. RHI CONSULTING conducts its
activities from approximately 80 locations in the United States, Canada and
Europe.
THE AFFILIATES
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.
RHI MANAGEMENT RESOURCES
The Company's RHI MANAGEMENT RESOURCES division, which commenced operations
in 1997, specializes in providing senior level project professionals in the
accounting and finance fields, including chief financial officers, controllers,
and senior financial analysts, for such tasks as financial systems conversions,
expansion into new markets, business process reengineering and post-merger
financial consolidation.
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 Microsoft,
Lotus Development Corporation, Corel Corporation (publisher of WordPerfect),
Peachtree Software, Inc., Intuit 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-, RHI
CONSULTING-Registered Trademark- and RHI MANAGEMENT
RESOURCES-REGISTERED TRADEMARK- 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
2
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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 200 offices in 39 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. 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 4,300 full-time staff employees. The Company's
offices placed approximately 160,000 employees on temporary assignments with
clients during 1997. 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 M 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 200 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 December 31, 1997, there were approximately
2,300 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 June 1996
and the three-for-two stock split effected in the form of a stock dividend in
September 1997:
<TABLE>
<CAPTION>
SALES PRICES
--------------------
1997 HIGH LOW
-------------------------------- -------- ---------
<S> <C> <C>
4th Quarter..................... $43.06 $33.00
3rd Quarter..................... $42.67 $31.33
2nd Quarter..................... $31.50 $23.00
1st Quarter..................... $29.83 $22.25
<CAPTION>
SALES PRICES
--------------------
1996 HIGH LOW
-------------------------------- -------- ---------
<S> <C> <C>
4th Quarter..................... $27.67 $21.75
3rd Quarter..................... $26.83 $16.08
2nd Quarter..................... $20.29 $16.25
1st Quarter..................... $16.58 $13.00
</TABLE>
No cash dividends were paid in 1997 or 1996. 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 for the last
five years:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------
1997 1996 1995 1994 1993
------------ ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net service revenues............................... $ 1,302,876 $ 898,635 $ 628,526 $ 446,328 $ 306,166
Direct costs of services, consisting of payroll,
payroll taxes and insurance costs for temporary
employees......................................... 785,546 545,343 384,449 273,327 188,292
------------ ---------- ---------- ---------- ----------
Gross margin....................................... 517,330 353,292 244,077 173,001 117,874
Selling, general and administrative expenses....... 357,766 246,485 170,684 121,640 88,074
Amortization of intangible assets.................. 4,926 5,405 4,767 4,584 4,251
Interest (income) expense.......................... (4,190) (2,243) (463) 1,570 3,992
------------ ---------- ---------- ---------- ----------
Income before income taxes......................... 158,828 103,645 69,089 45,207 21,557
Provision for income taxes......................... 65,131 42,543 28,791 19,090 9,834
------------ ---------- ---------- ---------- ----------
Net income......................................... $ 93,697 $ 61,102 $ 40,298 $ 26,117 $ 11,723
------------ ---------- ---------- ---------- ----------
------------ ---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
NET INCOME PER SHARE:
BASIC.............................................. $ 1.03 $ .69 $ .47 $ .32 $ .16
DILUTED............................................ $ 1.00 $ .67 $ .46 $ .31 $ .16
SHARES:
BASIC.............................................. 90,668 88,267 85,479 82,095 72,927
DILUTED............................................ 93,999 91,522 88,488 85,051 75,313
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Intangible assets, net............................... $ 177,425 $ 174,663 $ 155,441 $ 152,824 $ 152,156
Total assets......................................... $ 561,367 $ 416,012 $ 301,140 $ 227,761 $ 204,598
Debt financing....................................... $ 8,157 $ 6,611 $ 5,725 $ 4,214 $ 32,740
Stockholders' equity................................. $ 418,800 $ 308,445 $ 227,930 $ 176,995 $ 133,602
</TABLE>
All shares and per share amounts have been restated to retroactively reflect
the three-for-two stock split effected in the form of a stock dividend in
September 1997 and the two-for-one stock splits effected in the form of a stock
dividend in both June 1996 and 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, 1997
Temporary services revenues were $1.2 billion, $829 million and $577 million
for the years ended December 31, 1997, 1996 and 1995, respectively, increasing
by 45% during 1997 and 44% during 1996. The increase in revenues during these
periods reflected in part revenues generated from the Company's OFFICETEAM, RHI
CONSULTING, and RHI MANAGEMENT RESOURCES divisions, which were started in 1991,
1994 and 1997, respectively. Permanent placement revenues were $100 million, $70
million and $52 million for the years ended December 31, 1997, 1996 and 1995,
respectively, increasing by 43% during 1997 and 35% during 1996. 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 1997,
1996 and 1995 were not material.
The Company currently has more than 200 offices in 39 states and five
foreign countries. Domestic operations represented 90% of revenues for the years
ended December 31, 1997, 1996 and 1995. Foreign operations represented 10% of
revenues for the years ended December 31, 1997, 1996 and 1995.
Gross margin dollars from the Company's temporary services represent
revenues less direct costs of services, which consist 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 $417 million, $283 million and $192 million for the years ended
December 31, 1997, 1996 and 1995, respectively, increasing by 47% in both 1997
and 1996. Gross margin amounts equaled 35% of revenues for temporary services
for the year ended December 31, 1997, and 34% for the year ended December 31,
1996, and 33% for the year ended December 31, 1995, 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 $100 million, $70 million and $52 million for each of the years ended
December 31, 1997, 1996 and 1995, respectively, increasing by 43% and 35% in
1997 and 1996, respectively.
Selling, general and administrative expenses were $358 million during 1997,
compared to $246 million in 1996 and $171 million in 1995. Selling, general and
administrative expenses as a percentage of revenues were 28% for the year ended
December 31, 1997, and 27% in both of the years ended December 31, 1996 and
1995. Selling, general and administrative expenses consist primarily of staff
compensation, advertising, and occupancy costs, most of which generally follow
changes in revenues.
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, 1997.
Intangible assets represented 32% of total assets and 42% of total stockholders'
equity at December 31, 1997.
Interest income for the years ended December 31, 1997, 1996 and 1995 was
$5,139,000, $2,948,000 and $1,237,000, respectively. Interest expense for the
years ended December 31, 1997, 1996 and 1995 was $949,000, $705,000 and
$774,000, respectively. These changes primarily reflect an increase in cash and
cash equivalents.
The provision for income taxes was 41% for both the years ended December 31,
1997 and 1996, and 42% for the year ended December 31, 1995.
6
<PAGE>
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 staffing
services acquisitions, capital expenditures and principal payments on
outstanding notes payable. In October 1997, the Company authorized the
repurchase, from time to time, of up to four million shares of the Company's
common stock on the open market or in privately negotiated transactions,
depending on market conditions. The Company has repurchased approximately
100,000 shares on the open market pursuant to this program. For additional
information regarding the Company's stock repurchase program, see Note F of the
Notes to Consolidated Financial Statements. Repurchases of the securities have
been funded with cash generated from operations. For the year ended December 31,
1997, the Company generated $82 million from operations, used $35.3 million in
investing activities and provided $4.5 million by financing activities.
The Company's working capital at December 31, 1997, included $131 million in
cash and cash equivalents. In addition at December 31, 1997, the Company had
available $71.4 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, 1997, the Company had no material capital
commitments.
In 1997, the Company initiated a number of major system projects to replace
core systems. Management expects these new systems to be in place before Year
2000 and to resolve any major existing Year 2000 issues. The Company expects to
spend in excess of $40 million on these projects.
ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's market risk sensitive instruments do not subject the Company
to material market risk exposures.
7
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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,
----------------------
1997 1996
---------- ----------
<S> <C> <C>
ASSETS:
Cash and cash equivalents................................................................. $ 131,349 $ 80,181
Accounts receivable, less allowances of $7,164 and $4,016................................. 186,899 125,383
Other current assets...................................................................... 15,757 9,066
---------- ----------
Total current assets.................................................................... 334,005 214,630
Intangible assets, less accumulated amortization of $46,001 and $39,461................... 177,425 174,663
Property and equipment, less accumulated depreciation of $29,962 and $18,252.............. 49,937 26,719
---------- ----------
Total assets............................................................................ $ 561,367 $ 416,012
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable and accrued expenses..................................................... $ 20,285 $ 15,049
Accrued payroll costs..................................................................... 95,925 66,087
Income taxes payable...................................................................... 2,258 3,883
Current portion of notes payable and other indebtedness................................... 3,627 1,542
---------- ----------
Total current liabilities............................................................... 122,095 86,561
Notes payable and other indebtedness, less current portion................................ 4,530 5,069
Deferred income taxes..................................................................... 15,942 15,937
---------- ----------
Total liabilities....................................................................... 142,567 107,567
---------- ----------
Commitments and Contingencies
STOCKHOLDERS' EQUITY:
Common Stock, $.001 par value authorized 160,000,000 shares; issued and outstanding
91,208,029 and 89,621,932 shares........................................................ 91 90
Capital surplus........................................................................... 196,888 140,443
Deferred compensation..................................................................... (44,276) (26,802)
Accumulated translation adjustments....................................................... (1,347) 23
Retained earnings......................................................................... 267,444 194,691
---------- ----------
Total stockholders' equity.............................................................. 418,800 308,445
---------- ----------
Total liabilities and stockholders' equity.............................................. $ 561,367 $ 416,012
---------- ----------
---------- ----------
</TABLE>
All shares and amounts have been restated to retroactively reflect the
three-for-two stock
split effected in the form of a stock dividend in September 1997 and the
two-for-one
stock split effected in the form of a stock dividend in June 1996.
The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.
8
<PAGE>
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1997 1996 1995
------------ ---------- ----------
<S> <C> <C> <C>
Net service revenues....................................................... $ 1,302,876 $ 898,635 $ 628,526
Direct costs of services, consisting of payroll, payroll taxes and
insurance costs for temporary employees.................................. 785,546 545,343 384,449
------------ ---------- ----------
Gross margin............................................................... 517,330 353,292 244,077
Selling, general and administrative expenses............................... 357,766 246,485 170,684
Amortization of intangible assets.......................................... 4,926 5,405 4,767
Interest income............................................................ (4,190) (2,243) (463)
------------ ---------- ----------
Income before income taxes................................................. 158,828 103,645 69,089
Provision for income taxes................................................. 65,131 42,543 28,791
------------ ---------- ----------
Net income................................................................. $ 93,697 $ 61,102 $ 40,298
------------ ---------- ----------
------------ ---------- ----------
Basic net income per share................................................. $ 1.03 $ .69 $ .47
Diluted net income per share............................................... $ 1.00 $ .67 $ .46
</TABLE>
All per share amounts have been restated to retroactively reflect the
three-for-two stock
split effected in the form of a stock dividend in September 1997 and the
two-for-one
stock split effected in the form of a stock dividend in June 1996.
The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.
9
<PAGE>
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
COMMON STOCK--SHARES:
Balance at beginning of period................................................ 89,622 86,677 84,456
Issuances of restricted stock................................................. 802 989 702
Repurchases of common stock................................................... (676) (296) (342)
Exercises of stock options.................................................... 1,446 1,709 1,861
Issuance of common stock for acquisitions..................................... 14 543 --
--------- --------- ---------
Balance at end of period.................................................... 91,208 89,622 86,677
--------- --------- ---------
--------- --------- ---------
COMMON STOCK--PAR VALUE:
Balance at beginning of period................................................ $ 90 $ 87 $ 84
Issuances of restricted stock................................................. 1 1 1
Repurchases of common stock................................................... (1) -- --
Exercises of stock options.................................................... 1 2 2
--------- --------- ---------
Balance at end of period.................................................... $ 91 $ 90 $ 87
--------- --------- ---------
--------- --------- ---------
CAPITAL SURPLUS:
Balance at beginning of period................................................ $ 140,443 $ 99,739 $ 82,598
Issuances of restricted stock--excess over par value.......................... 29,189 24,019 6,886
Exercises of stock options--excess over par value............................. 5,755 4,119 3,817
Issuance of common stock for acquisition...................................... 400 -- --
Tax benefits from exercises of stock options and restricted stock vesting..... 21,101 12,566 6,438
--------- --------- ---------
Balance at end of period.................................................... $ 196,888 $ 140,443 $ 99,739
--------- --------- ---------
--------- --------- ---------
DEFERRED COMPENSATION:
Balance at beginning of period................................................ $ (26,802) $ (9,642) $ (5,533)
Issuances of restricted stock................................................. (29,190) (24,020) (6,887)
Amortization of deferred compensation......................................... 11,716 6,860 2,778
--------- --------- ---------
Balance at end of period.................................................... $ (44,276) $ (26,802) $ (9,642)
--------- --------- ---------
--------- --------- ---------
ACCUMULATED TRANSLATION ADJUSTMENTS:
Balance at beginning of period................................................ $ 23 $ 51 $ (541)
Translation adjustments....................................................... (1,370) (28) 592
--------- --------- ---------
Balance at end of period.................................................... $ (1,347) $ 23 $ 51
--------- --------- ---------
--------- --------- ---------
RETAINED EARNINGS:
Balance at beginning of period................................................ $ 194,691 $ 137,695 $ 100,386
Repurchases of common stock--excess over par value............................ (20,944) (5,391) (2,989)
Issuance of common stock for acquisition...................................... -- 1,285 --
Net income.................................................................... 93,697 61,102 40,298
--------- --------- ---------
Balance at end of period.................................................... $ 267,444 $ 194,691 $ 137,695
--------- --------- ---------
--------- --------- ---------
</TABLE>
All shares and amounts have been restated to retroactively reflect the
three-for-two stock
split effected in the form of a stock dividend in September 1997 and the
two-for-one
stock split effected in the form of a stock dividend in June 1996.
The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.
10
<PAGE>
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................................. $ 93,697 $ 61,102 $ 40,298
Adjustments to reconcile net income to net cash provided by operating
activities:
Amortization of intangible assets...................................... 4,926 5,405 4,767
Depreciation expense................................................... 12,726 6,457 3,564
Provision for deferred income taxes.................................... (5,135) (1,702) (683)
Changes in assets and liabilities, net of effects of acquisitions:
Increase in accounts receivable........................................ (61,027) (38,565) (24,289)
Increase in accounts payable, accrued expenses and accrued payroll
costs................................................................ 27,878 17,893 15,106
Increase (decrease) in income taxes payable............................ (1,625) (1,274) 2,976
Change in other assets, net of change in other liabilities............. 10,517 5,109 432
---------- ---------- ----------
Total adjustments........................................................ (11,740) (6,677) 1,873
---------- ---------- ----------
Net cash and cash equivalents provided by operating activities............. 81,957 54,425 42,171
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired......................................... (3,338) (4,620) (1,024)
Capital expenditures....................................................... (31,958) (18,027) (8,417)
---------- ---------- ----------
Net cash and cash equivalents used in investing activities................. (35,296) (22,647) (9,441)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchases of common stock and common stock equivalents................... (20,945) (5,391) (2,989)
Principal payments on notes payable and other indebtedness................. (1,405) (4,239) (1,289)
Proceeds and tax benefits from exercises of stock options and restricted
stock vesting............................................................ 26,857 16,687 10,256
---------- ---------- ----------
Net cash and cash equivalents provided by financing activities............. 4,507 7,057 5,978
---------- ---------- ----------
Net increase in cash and cash equivalents.................................. 51,168 38,835 38,708
Cash and cash equivalents at beginning of period........................... 80,181 41,346 2,638
---------- ---------- ----------
Cash and cash equivalents at end of period................................. $ 131,349 $ 80,181 $ 41,346
---------- ---------- ----------
---------- ---------- ----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest................................................................. $ 476 $ 521 $ 405
Income taxes............................................................. $ 50,340 $ 32,163 $ 21,853
Acquisitions:
Assets acquired--
Intangible assets...................................................... $ 4,079 $ 9,932 $ 4,697
Other.................................................................. 499 2,180 753
Liabilities incurred--
Notes payable and contracts............................................ (536) (5,125) (2,800)
Other.................................................................. (304) (1,082) (1,626)
Common stock issued...................................................... (400) (1,285) --
---------- ---------- ----------
Cash paid, net of cash acquired.......................................... $ 3,338 $ 4,620 $ 1,024
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.
11
<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,
ROBERT HALF, OFFICETEAM, RHI CONSULTING and RHI MANAGEMENT RESOURCES. The
Company, through its ACCOUNTEMPS, ROBERT HALF and RHI MANAGEMENT RESOURCES
divisions, is the world's largest specialized provider of temporary, full-time,
and project professionals in the fields of accounting and finance. OFFICETEAM
specializes in skilled temporary administrative personnel. RHI CONSULTING
provides contract information technology professionals. RHI MANAGEMENT RESOURCES
places senior-level accounting and financial professionals on longer term, more
complex projects lasting for several months to a year or longer. 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 1996 and 1995 financial statements to
conform to the 1997 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 employed for the Company's guarantee period, typically
90 days.
CASH AND CASH EQUIVALENTS. The Company considers all highly liquid
investments with a maturity of three months or less as cash equivalents.
INTANGIBLE ASSETS. Intangible assets primarily consist of the cost of
acquired companies in excess of the fair market value of their net tangible
assets at acquisition date, which 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 existed at December
31, 1997.
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 rates.
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 is 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.
PROPERTY AND EQUIPMENT. Property and equipment are recorded at cost.
Depreciation expense is computed using the straight-line method over the
estimated useful lives of the assets. Leasehold improvements are amortized over
the shorter of the life of the related asset or the life of the lease.
12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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 65 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 staffing services businesses. The Company has paid approximately $210
million in cash, stock, notes and other indebtedness in these acquisitions,
excluding transaction costs and cash acquired.
These acquisitions were primarily accounted for as purchases, and the excess
of cost of the acquired companies in excess of 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 1997, 1996 and 1995 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 and other payment obligations. These are
due in varying installments, carry varying interest rates and in aggregate
amounted to $8,157,000 at December 31, 1997 and $6,611,000 at December 31, 1996.
At December 31, 1997, $4,825,000 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, 1997 (in thousands):
<TABLE>
<S> <C>
1998................................................................ $ 3,627
1999................................................................ 1,032
2000................................................................ 901
2001................................................................ 56
2002................................................................ 61
Thereafter.......................................................... 2,480
---------
$ 8,157
---------
---------
</TABLE>
At December 31, 1997, generally the notes carried fixed rates and the
weighted average interest rate for the above was approximately 7.0%, 6.9% and
7.3% for the years ended December 31, 1997, 1996 and 1995, 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, 1997 and 1996, the Company had no borrowings on the line
of credit outstanding and had used $8,583,000 and $8,683,000 in debt support
standby letters of credit, respectively. There is a commitment fee on the unused
portion of the entire credit facility of .09%. The loan is subject to certain
financial covenants which also affect the interest rates charged. The final
maturity date for the credit facility is August 31, 2002.
13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE E--ACCRUED PAYROLL COSTS
Accrued payroll costs consisted of the following (in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
--------------------
1997 1996
--------- ---------
<S> <C> <C>
Payroll and bonuses..................................................... $ 36,493 $ 28,374
Employee benefits and workers' compensation............................. 42,042 30,126
Payroll taxes........................................................... 17,390 7,587
--------- ---------
$ 95,925 $ 66,087
--------- ---------
--------- ---------
</TABLE>
NOTE F--STOCKHOLDERS' EQUITY
STOCK SPLITS--In August 1997, the Company effected a three-for-two stock
split in the form of a stock dividend. In June 1996, the Company effected a
two-for-one stock split in the form of a stock dividend. All shares and per
share amounts have been retroactively restated in the financial statements to
reflect these stock splits.
STOCK REPURCHASE PROGRAM--In October 1997, the Company's Board of Directors
authorized the repurchase, from time to time, of up to four million shares of
the Company's common stock on the open market or in privately negotiated
transactions, depending on market conditions. During 1997, the Company
repurchased approximately 100,000 shares of common stock for a total cost of
$3.4 million.
NOTE G--INCOME TAXES
The provision for income taxes for the years ended December 31, 1997, 1996
and 1995 consisted of the following (in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Current:
Federal.................................................... $ 53,973 $ 34,392 $ 22,061
State...................................................... 12,261 7,457 4,728
Foreign.................................................... 4,032 2,396 2,685
Deferred--principally domestic............................... (5,135) (1,702) (683)
--------- --------- ---------
$ 65,131 $ 42,543 $ 28,791
--------- --------- ---------
--------- --------- ---------
</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,
----------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Federal U.S. income tax rate................................ 35.0% 35.0% 35.0%
State income taxes, net of federal tax benefit.............. 4.6 4.5 4.5
Amortization of intangible assets........................... .8 1.0 1.5
Other, net.................................................. .6 .5 .7
---- ---- ----
Effective tax rate.......................................... 41.0% 41.0% 41.7%
---- ---- ----
---- ---- ----
</TABLE>
14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE G--INCOME TAXES (CONTINUED)
The deferred portion of the tax provisions consisted of the following (in
thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Amortization of franchise rights............................... $ 66 $ 691 $ 1,650
Accrued expenses, deducted for tax when paid................... (5,511) (2,468) (2,068)
Other, net..................................................... 310 75 (265)
--------- --------- ---------
$ (5,135) $ (1,702) $ (683)
--------- --------- ---------
--------- --------- ---------
</TABLE>
The net deferred income tax liability shown on the balance sheet is
comprised of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1996
--------- ---------
<S> <C> <C>
Deferred income tax assets.............................................. $ (4,836) $ (2,536)
Deferred income tax liabilities......................................... 20,778 18,473
--------- ---------
$ 15,942 $ 15,937
--------- ---------
--------- ---------
</TABLE>
No valuation allowances against deferred tax assets were required for the
years ended December 31, 1997 and 1996.
The components of the net deferred income tax liability at December 31, 1997
and 1996, were as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1996
--------- ---------
<S> <C> <C>
Amortization of intangible assets....................................... $ 17,026 $ 16,954
Foreign taxes........................................................... 0 151
Other, net.............................................................. (1,084) (1,168)
--------- ---------
$ 15,942 $ 15,937
--------- ---------
--------- ---------
</TABLE>
NOTE H--COMMITMENTS
Rental expense, primarily for office premises, amounted to $19,594,000,
$13,315,000 and $11,027,000 for the years ended December 31, 1997, 1996 and
1995, respectively. The approximate minimum rental commitments for 1998 and
thereafter under non-cancelable leases in effect at December 31, 1997, were as
follows (in thousands):
<TABLE>
<S> <C>
1998............................................................... $ 22,184
1999............................................................... 21,986
2000............................................................... 19,460
2001............................................................... 17,375
2002............................................................... 12,303
Thereafter......................................................... 26,229
</TABLE>
15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE I--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 and 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.
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. Compensation expense is recognized on a straight-line basis over
the vesting period. Vesting is accelerated upon the death or disability of the
recipients.
The Company accounts for these plans under APB Opinion 25. Therefore, no
compensation cost has been recognized for its stock option plans. Had
compensation cost for the stock options granted subsequent to January 1, 1995,
been based on the estimated fair value at the award dates, as prescribed by
Statement of Financial Accounting Standards No. 123, the Company's pro forma net
income and net income per share would have been as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------
1997 1996 1995
------------- ------------- -------------
<S> <C> <C> <C>
Net Income
As Reported................................................. $ 93,697 $ 61,102 $ 40,298
Pro forma................................................... $ 90,212 $ 59,666 $ 40,174
Net Income Per Share
Basic
As Reported............................................... $ 1.03 $ .69 $ .47
Pro forma................................................. $ .99 $ .68 $ .47
Diluted
As Reported............................................... $ 1.00 $ .67 $ .46
Pro forma................................................. $ .97 $ .66 $ .46
</TABLE>
The pro forma amounts do not include amounts for stock options granted
before January 1, 1995. Therefore, the pro forma amounts may not be
representative of the disclosed effects on pro forma net income and net income
per share for future years.
The fair value of each option is estimated, as of the grant date, using the
Black-Scholes option pricing model with the following assumptions used for
grants in 1997, 1996 and 1995, respectively: no dividend yield for any year;
expected volatility of 32% to 34%; risk-free interest rates of 5.7% to 6.9%,
5.3% to 6.7% and 5.4% to 7.9%; and expected lives of 5.5 to 7.3 years for all
three years.
16
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE I--STOCK PLANS (CONTINUED)
The following table reflects activity under all stock plans from January 1,
1995 through December 31, 1997, and the weighted average exercise prices:
<TABLE>
<CAPTION>
STOCK OPTION PLANS
----------------------
WEIGHTED
AVERAGE
RESTRICTED NUMBER OF PRICE
STOCK PLANS SHARES PER SHARE
------------- ---------- ----------
<S> <C> <C> <C>
Outstanding, January 1, 1995.................................. 1,757,474 9,399,183 $ 3.70
Granted..................................................... 745,176 2,071,893 $ 12.67
Exercised................................................... -- (1,861,221) $ 2.05
Restrictions lapsed......................................... (563,313) -- --
Forfeited................................................... (42,846) (542,007) $ 4.79
------------- ---------- ----------
Outstanding, December 31, 1995................................ 1,896,491 9,067,848 $ 6.04
Granted..................................................... 998,492 1,689,644 $ 20.94
Exercised................................................... -- (1,708,532) $ 2.41
Restrictions lapsed......................................... (412,329) -- --
Forfeited................................................... (9,099) (387,429) $ 9.33
------------- ---------- ----------
Outstanding, December 31, 1996................................ 2,473,555 8,661,531 $ 9.53
Granted..................................................... 847,469 1,944,656 $ 29.68
Exercised................................................... -- (1,446,404) $ 3.98
Restrictions lapsed......................................... (859,399) -- --
Forfeited................................................... (45,578) (515,537) $ 15.29
------------- ---------- ----------
Outstanding, December 31, 1997................................ 2,416,047 8,644,246 $ 14.52
------------- ---------- ----------
------------- ---------- ----------
</TABLE>
The following table summarizes information about options outstanding as of
December 31, 1997:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
---------------------------------------------------- ------------------------------
NUMBER NUMBER
OUTSTANDING AS WEIGHTED WEIGHTED EXERCISABLE AS WEIGHTED
OF AVERAGE AVERAGE OF AVERAGE
DECEMBER 31, REMAINING EXERCISE DECEMBER 31, EXERCISE
RANGE OF EXERCISE PRICES 1997 CONTRACTUAL LIFE PRICE 1997 PRICE
- ----------------------------------------- ---------------- ------------------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
$1.44 to $4.21........................... 1,848,332 4.81 $ 2.90 1,848,332 $ 2.90
$5.00 to $8.00........................... 1,862,215 6.80 $ 6.95 1,172,598 $ 7.08
$8.58 to $19.46.......................... 2,456,571 8.01 $ 15.24 641,417 $ 14.26
$20.21 to $37.50......................... 1,916,216 9.09 $ 24.74 229,866 $ 22.43
$38.58 to $41.44......................... 560,912 9.81 $ 39.98 -- --
---------------- --- ------ --------------- ------
8,644,246 7.42 $ 14.52 3,892,213 $ 7.18
---------------- --- ------ --------------- ------
---------------- --- ------ --------------- ------
</TABLE>
At December 31, 1997, the total number of available shares to grant under
the plans (consisting of either restricted stock or options) was 1,137,850.
NOTE J--PREFERRED SHARE PURCHASE RIGHTS
Pursuant to the Company's stockholder rights agreement, each share of common
stock carries one right to purchase .0067 shares 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 $66.67 per right, subject to adjustment. Following
certain other events after the rights become exercisable, each right entitles
its holder to purchase for $66.67 an amount
17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE J--PREFERRED SHARE PURCHASE RIGHTS (CONTINUED)
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.
NOTE K--NET INCOME PER SHARE
In 1997, the Company adopted Statement of Financial Accounting Standard No.
128 (SFAS No. 128), "Earnings Per Share". Under SFAS No. 128, basic net income
per share is computed as net income divided by weighted average shares,
excluding the dilutive effects of stock options and other potentially dilutive
securities. The calculation of net income per share in compliance with SFAS No.
128 for the three years ended December 31, 1997 is reflected in the following
table:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Net Income................................................... $ 93,697 $ 61,102 $ 40,298
Basic:
Weighted average shares.................................... 90,668 88,267 85,479
--------- --------- ---------
--------- --------- ---------
Diluted:
Weighted average shares.................................... 90,668 88,267 85,479
Common stock equivalents--stock options.................... 3,331 3,255 3,009
--------- --------- ---------
Diluted shares............................................. 93,999 91,522 88,488
--------- --------- ---------
--------- --------- ---------
Net Income Per Share:
Basic...................................................... $ 1.03 $ .69 $ .47
Diluted.................................................... $ 1.00 $ .67 $ .46
</TABLE>
As a result of adopting SFAS No. 128 in 1997, the Company's reported net
income per share for 1996 and 1995 have been restated. The effect of this
accounting change on previously reported net income per share data is as
follows:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Primary net income per share as reported........................................ $ .67 $ .45
Effect of SFAS No. 128.......................................................... .02 .02
--- ---
Basic net income per share as restated.......................................... $ .69 $ .47
--- ---
--- ---
Fully diluted net income per share as reported.................................. $ .67 $ .45
Effect of SFAS No. 128.......................................................... -- .01
--- ---
Diluted net income per share as restated........................................ $ .67 $ .46
--- ---
--- ---
</TABLE>
In 1997, the Financial Accounting Standards Board adopted SFAS No. 130
"Reporting Comprehensive Income", which requires disclosure of comprehensive
income. This statement becomes effective in 1998. The Company does not expect
the impact of adopting this statement to be significant.
18
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE L--QUARTERLY FINANCIAL DATA (UNAUDITED)
The following tabulation shows certain quarterly financial data for 1997 and
1996 (in thousands, except per share amounts):
<TABLE>
<CAPTION>
QUARTER
---------------------------------------------- YEAR ENDED
1997 1 2 3 4 DECEMBER 31,
- -------------------------------------------------- ---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Net service revenues.............................. $ 283,023 $ 311,622 $ 339,754 $ 368,477 $1,302,876
Gross margin...................................... $ 111,894 $ 124,140 $ 135,200 $ 146,096 $ 517,330
Income before income taxes........................ $ 33,777 $ 37,613 $ 41,710 $ 45,728 $ 158,828
Net income........................................ $ 19,920 $ 22,210 $ 24,631 $ 26,936 $ 93,697
Basic net income per share........................ $ .22 $ .24 $ .27 $ .30 $ 1.03
Diluted net income per share...................... $ .21 $ .24 $ .26 $ .29 $ 1.00
<CAPTION>
QUARTER
---------------------------------------------- YEAR ENDED
1996 1 2 3 4 DECEMBER 31,
- -------------------------------------------------- ---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Net service revenues.............................. $ 196,239 $ 210,649 $ 232,950 $ 258,797 $ 898,635
Gross margin...................................... $ 76,642 $ 83,921 $ 91,788 $ 100,941 $ 353,292
Income before income taxes........................ $ 22,478 $ 24,234 $ 27,058 $ 29,875 $ 103,645
Net income........................................ $ 13,239 $ 14,224 $ 15,946 $ 17,693 $ 61,102
Basic net income per share........................ $ .15 $ .16 $ .18 $ .20 $ .69
Diluted net income per share...................... $ .15 $ .16 $ .17 $ .19 $ .67
</TABLE>
NOTE M--SEGMENT REPORTING
Information about the Company's operations in different geographic locations
for each of the three years in the period ended December 31, 1997, 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 revenues from the respective geographic areas. Operating income
is 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 $1,538,000, $1,533,000 and $992,000 for the
years ended December 31, 1997, 1996 and 1995, respectively. Domestic operating
income reflects charges for amortization of intangibles of $4,466,000,
$4,935,000 and $4,307,000 for the years ended December 31, 1997, 1996 and 1995,
respectively. Identifiable assets are those assets used in the geographic areas
and are after elimination of intercompany balances.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1997 1996 1995
------------ ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues
Domestic............................................. $ 1,176,888 $ 812,751 $ 564,564
Foreign.............................................. 125,988 85,884 63,962
------------ ---------- ----------
$ 1,302,876 $ 898,635 $ 628,526
------------ ---------- ----------
------------ ---------- ----------
Operating Income
Domestic............................................. $ 144,393 $ 94,260 $ 63,861
Foreign.............................................. 10,245 7,142 4,765
------------ ---------- ----------
$ 154,638 $ 101,402 $ 68,626
------------ ---------- ----------
------------ ---------- ----------
Assets
Domestic............................................. $ 505,702 $ 375,576 $ 267,487
Foreign.............................................. 55,665 40,436 33,653
------------ ---------- ----------
$ 561,367 $ 416,012 $ 301,140
------------ ---------- ----------
------------ ---------- ----------
</TABLE>
19
<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, 1997 and 1996, and the related consolidated
statements of income, stockholders' equity and cash flows for each of the three
years in the period ended December 31, 1997. 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, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
San Francisco, California
January 22, 1998
20
<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 1998.
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, 1997 and
1996.
Consolidated statements of income for the years ended December 31, 1997,
1996 and 1995.
Consolidated statements of stockholders' equity for the years ended
December 31, 1997, 1996 and 1995.
Consolidated statements of cash flows for the years ended December 31,
1997, 1996 and 1995.
Notes to consolidated financial statements.
Report of independent public accountants.
Selected quarterly financial data for the years ended December 31, 1997 and
1996 are set forth in Note L--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, 1997.
3.2 By-Laws, incorporated by reference to Exhibit 3.2 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996.
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 The
Chase Manhattan Bank (formerly Manufacturers Hanover Trust Company of
California), as amended and restated effective April 30, 1997, incorporated
by reference to Exhibit 1 to Registrant's Form 8-A/A Amendment No. 4 filed
on May 1, 1997.
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
- ------- ---------------------------------------------------------------------------
<C> <S>
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, as amended, incorporated by reference to (i) Exhibit
10 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1993, (ii) Exhibit 10.1 to the Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended June 30, 1995, (iii)
Exhibit 10.1 to the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996, and (iv) Exhibit 10.1 to the Registrant's
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1997.
*10.2 Employment Agreement dated as of October 2, 1985, between the Registrant
and Harold M. Messmer, Jr. The Twelfth Amendment to the Employment
Agreement is filed with this Annual Report on Form 10-K for the fiscal year
ended December 31, 1997. The original Employment Agreement and the first
eleven amendments thereto are 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, (viii) Exhibit 10.7 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1993, (ix) Exhibit 10.1 to
the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1995, (x) Exhibit 10.7 to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1995 and (xi) Exhibit 10.2 to
the Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996.
*10.3 Key Executive Retirement Plan--Level II, as amended, incorporated by
reference to Exhibit 10.3 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996.
*10.4 Restated Retirement Agreement between the Registrant and Harold M. Messmer,
Jr., incorporated by reference to Exhibit 10.4 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996.
*10.5 1985 Stock Option Plan, as amended, incorporated by reference to Exhibit
10.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 1997.
*10.6 Excise Tax Restoration Agreement dated November 5, 1996, incorporated by
reference to Exhibit 10.6 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996.
*10.7 Outside Directors' Option Plan, as amended.
*10.8 1989 Restricted Stock Plan, as amended, incorporated by reference to
Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1997.
*10.9 StockPlus Plan, as amended.
*10.10 1993 Incentive Plan, as amended.
*10.11 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.
*10.12 Annual Performance Bonus Plan, incorporated by reference to Exhibit 10.5 to
the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 1996.
*10.13 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.
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
- ------- ---------------------------------------------------------------------------
<C> <S>
*10.14 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.
*10.15 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.
*10.16 Senior Executive Retirement Plan, as amended, incorporated by reference to
Exhibit 10.16 to the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996.
*10.17 Collateral Assignment of Split Dollar Insurance Agreement, incorporated by
reference to Exhibit 10.17 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996.
21 Subsidiaries of the Registrant.
23 Accountants' Consent
27 Financial Data Schedule.
</TABLE>
- ------------------------
* Management contract or compensatory plan required to be filed as an exhibit
pursuant to Item 14(c) of Form 10-K.
(b) Reports on Form 8-K
The Registrant filed no reports on Form 8-K during the fiscal quarter
ending December 31, 1997.
23
<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 13, 1998 By: /S/ M. KEITH WADDELL
------------------------------------
M. Keith Waddell
Senior Vice President, Chief
Financial
Officer and Treasurer
(Principal Financial Officer)
24
<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 13, 1998 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 13, 1998 By: /S/ ANDREW S. BERWICK, JR.
------------------------------------------
Andrew S. Berwick, Jr., Director
Date: March 13, 1998 By: /S/ FREDERICK P. FURTH
------------------------------------------
Frederick P. Furth, Director
Date: March 13, 1998 By: /S/ EDWARD W. GIBBONS
------------------------------------------
Edward W. Gibbons, Director
Date: March 13, 1998 By: /S/ FREDERICK A. RICHMAN
------------------------------------------
Frederick A. Richman, Director
Date: March 13, 1998 By: /S/ THOMAS J. RYAN
------------------------------------------
Thomas J. Ryan, Director
Date: March 13, 1998 By: /S/ J. STEPHEN SCHAUB
------------------------------------------
J. Stephen Schaub, Director
Date: March 13, 1998 By: /S/ M. KEITH WADDELL
------------------------------------------
M. Keith Waddell
Senior Vice President, Chief Financial
Officer and Treasurer
(Principal Financial Officer)
Date: March 13, 1998 By: /S/ BARBARA J. FORSBERG
------------------------------------------
Barbara J. Forsberg
Vice President and Controller
(Principal Accounting Officer)
</TABLE>
25
<PAGE>
EXHIBIT INDEX
<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, 1997.
3.2 By-Laws, incorporated by reference to Exhibit 3.2 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996.
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 The
Chase Manhattan Bank (formerly Manufacturers Hanover Trust Company of
California), as amended and restated effective April 30, 1997, incorporated
by reference to Exhibit 1 to Registrant's Form 8-A/A Amendment No. 4 filed
on May 1, 1997.
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, as amended, incorporated by reference to (i) Exhibit
10 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1993, (ii) Exhibit 10.1 to the Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended June 30, 1995, (iii)
Exhibit 10.1 to the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996, and (iv) Exhibit 10.1 to the Registrant's
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1997.
*10.2 Employment Agreement dated as of October 2, 1985, between the Registrant
and Harold M. Messmer, Jr. The Twelfth Amendment to the Employment
Agreement is filed with this Annual Report on Form 10-K for the fiscal year
ended December 31, 1997. The original Employment Agreement and the first
eleven amendments thereto are 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, (viii) Exhibit 10.7 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1993, (ix) Exhibit 10.1 to
the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1995, (x) Exhibit 10.7 to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1995 and (xi) Exhibit 10.2 to
the Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996.
*10.3 Key Executive Retirement Plan--Level II, as amended, incorporated by
reference to Exhibit 10.3 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996.
*10.4 Restated Retirement Agreement between the Registrant and Harold M. Messmer,
Jr., incorporated by reference to Exhibit 10.4 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996.
*10.5 1985 Stock Option Plan, as amended, incorporated by reference to Exhibit
10.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 1997.
*10.6 Excise Tax Restoration Agreement dated November 5, 1996, incorporated by
reference to Exhibit 10.6 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996.
*10.7 Outside Directors' Option Plan, as amended.
*10.8 1989 Restricted Stock Plan, as amended, incorporated by reference to
Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1997.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
- ------- ---------------------------------------------------------------------------
<C> <S>
*10.9 StockPlus Plan, as amended.
*10.10 1993 Incentive Plan, as amended.
*10.11 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.
*10.12 Annual Performance Bonus Plan, incorporated by reference to Exhibit 10.5 to
the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 1996.
*10.13 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.
*10.14 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.
*10.15 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.
*10.16 Senior Executive Retirement Plan, as amended, incorporated by reference to
Exhibit 10.16 to the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996.
*10.17 Collateral Assignment of Split Dollar Insurance Agreement, incorporated by
reference to Exhibit 10.17 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996.
21 Subsidiaries of the Registrant.
23 Accountants' Consent
27 Financial Data Schedule.
</TABLE>
- ------------------------
* Management contract or compensatory plan required to be filed as an exhibit
pursuant to Item 14(c) of Form 10-K.
<PAGE>
Exhibit 10.2
TWELFTH AMENDMENT TO EMPLOYMENT AGREEMENT
This Twelfth Amendment to Employment Agreement is made and entered into
as of January 1, 1998, by and between Robert Half International Inc. (formerly
Boothe Financial Corporation), a Delaware corporation, ("Corporation") and
Harold M. Messmer, Jr. ("Officer").
1. The last sentence of Section 3.1 of the Employment Agreement dated
as of October 2, 1985, as amended, between Corporation and Officer (the
"Employment Agreement") is hereby amended to read in its entirety as follows:
"Effective as of January 1, 1998, the Base Salary shall in no event be
less than $525,000 per annum."
2. In all other respects, the Employment Agreement is hereby ratified
and confirmed.
IN WITNESS WHEREOF, the parties hereto have executed this agreement
effective as of the day and year first written above.
ROBERT HALF INTERNATIONAL INC.
By /s/ M. Keith Waddell
----------------------------------
M. Keith Waddell
Senior Vice President
/s/ Harold M. Messmer, Jr.
----------------------------------
Harold M. Messmer, Jr.
<PAGE>
EXHIBIT 10.7
OUTSIDE DIRECTORS' OPTION PLAN
OF
ROBERT HALF INTERNATIONAL INC.
(AS AMENDED AND RESTATED EFFECTIVE DECEMBER 11, 1997)
1. DEFINITIONS. As used in this Plan, the following terms have the
following meanings:
1.1. ADMINISTRATOR means the Board or a committee appointed by the
Board.
1.2. AFFILIATE means a "parent" or "subsidiary" corporation, as defined
in Sections 425(e)and 425(f), respectively, of the Code.
1.3. ANNUAL ORGANIZATIONAL MEETING means the first meeting of the Board
after the annual meeting of the Company's stockholders.
1.4. BOARD means the Board of Directors of the Company.
1.5. CHANGE IN CONTROL. A Change in Control means any of the
following events:
1.5.1. Any person or group (as such terms are defined in Section
13(d)(3) of the Exchange Act), other than an employee benefit plan sponsored
by the Company or a subsidiary thereof or a corporation owned (directly or
indirectly), by the stockholders of the Company in substantially the same
proportions of the ownership of stock of the Company, shall become the
beneficial owner of securities of the Company representing 20% or more, or
commences a tender or exchange offer following the successful consummation of
which the offerer and its affiliates would beneficially own securities
representing 20% or more, of the combined voting power of then outstanding
securities ordinarily (and apart from rights accruing in special
circumstances) having the right to vote in the election of directors, as a
result of a tender or exchange offer, open market purchases, privately
negotiated purchases or otherwise; PROVIDED, HOWEVER, that a Change in
Control shall not be deemed to include the acquisition by any such person or
group of securities representing 20% or more of the Company if such party has
acquired such securities not with the purpose nor with the effect of changing
or influencing the control of the Company, nor in connection with or as a
participant in any transaction having such purposes or effect, including,
without limitation, not in connection with such party (i) making any public
announcement with respect to the voting of such shares at any meeting to
consider a merger, consolidation, sale of substantial assets or other
business combination or extraordinary transaction involving the Company, (ii)
making, or in any way participating in, any "solicitation" of "proxies" (as
such terms are defined or used in Regulation 14A under the Exchange Act) to
vote any voting securities of the Company (including, without limitation, any
such solicitation subject to Rule 14a-11 under the Exchange Act) or seeking
to advise or influence any party with respect to the voting of any voting
securities of the Company, directly or indirectly, relating to a merger or
other business combination involving the Company or the sale or transfer of
substantial assets of the Company, (iii) forming, joining or in any way
participating in any "group" within the meaning of Section 13(d)(3) of the
Exchange Act with respect to any voting securities of the Company, directly
or indirectly, relating to a merger or other business combination involving
the Company or the sale or transfer of any substantial assets of the Company,
or (iv) otherwise acting, alone or in concert with others, to seek control of
the Company or to seek to control or influence the management or policies of
the Company.
1.5.2. The stockholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the Company.
1.5.3. A change in the composition of the Board of Directors of the
Company occurring within a two-year period, as a result of which fewer than a
majority of the directors are Incumbent Directors. "Incumbent Directors"
shall mean directors who either (i) are directors of the Company as of the
date hereof, or (ii) are elected, or nominated for election, to the Board of
Directors of the Company with the affirmative votes of at least a majority of
the Incumbent Directors at the time of such election or nomination (but shall
not include an individual whose election or nomination is in connection with
an actual or threatened proxy contest relating to the election of directors
to the Company). As a result of or in connection with any cash tender offer,
merger, or other business combination, sale of assets or contested election,
or combination of the foregoing, the persons who were directors of the
Company just prior to such event shall cease within one year to constitute a
majority of the Board.
1.5.4. The Company's stockholders approve a definitive agreement
providing for a transaction in which the Company will cease to be an
independent publicly owned corporation.
1.5.5. The stockholders of the Company approve a definitive agreement
(i) to merge or consolidate the Company with or into another corporation in
which the holders of the Stock immediately before such merger or
reorganization will not, immediately following such merger or reorganization,
hold as a group on a fully-diluted basis both the ability to elect at least a
majority of the directors of the surviving corporation and at least a
majority in value of the surviving corporation's outstanding equity
securities, or (ii) to sell or otherwise dispose of all or substantially all
of the assets of the Company.
1.6. CODE means the Internal Revenue Code of 1986, as amended.
1.7. COMPANY means Robert Half International Inc.
1.8. DIRECTOR means a member of the Board.
1
<PAGE>
1.9. ELIGIBLE DIRECTOR means a Director who is not also an employee of
the Company or an Affiliate.
1.10. EXCHANGE ACT means the Securities Exchange Act of 1934, as
amended.
1.11. GRANT DATE means the date on which an Option is granted.
1.12. OFFER means a tender offer or an exchange offer for shares of the
Company's Stock.
1.13. OPTION means an option to purchase Stock as described in Section
5.1 hereof. An Option granted under this Plan is a nonstatutory option to
purchase Stock which does not meet the requirements set forth in Section
422A of the Code.
1.14. OPTION AGREEMENT means a written agreement evidencing an Option,
in form satisfactory to the Company, duly executed on behalf of the Company
and delivered to and executed by an Optionee.
1.15. OPTIONEE means an Eligible Director who has been granted an
Option.
1.16. PLAN means the Outside Directors' Option Plan.
1.17. SECURITIES ACT means the Securities Act of 1933, as amended.
1.18. STOCK means the Common Stock, $.001 par value, of the Company.
1.19. STOCK PURCHASE AGREEMENT means a written agreement, in form
satisfactory to the Company, duly executed by the Company and an Optionee
who has exercised an Option to purchase Stock.
1.20. TERMINATION DATE means the date on which an Optionee ceases to be
either a Director of or a consultant to the Company.
1.21. VESTING DATE means, with respect to each calendar year, the last
day of the month in which the Annual Organization Meeting is held; provided,
however, that the "Vesting Date" with respect to a particular Option shall
not include the last day of the month in which such Option is granted.
1.22. VOTING SHARES means the outstanding shares of the Company
entitled to vote for the election of directors.
2. PURPOSES OF THE PLAN. The purposes of the Plan are to attract and
retain the best available candidates for the Board, to provide additional equity
incentives to Eligible Directors through their participation in the growth value
of the Stock, and to promote the success of the Company's business. To
accomplish the foregoing objectives, this Plan provides a means whereby Eligible
Directors will receive Options to purchase Stock.
3. STOCK SUBJECT TO THE PLAN. The number of authorized but previously
unissued shares of the Company's Stock available for issuance hereunder shall
equal the number of shares of Stock with respect to which Options are granted
pursuant to Section 5 hereof.
4. ADMINISTRATION. The Administrator shall have the authority to grant
Options upon the terms and conditions of this Plan, and to determine all other
matters relating to this Plan. The Administrator may delegate ministerial duties
to such employees of the Company as it deems proper. All questions of
interpretation, implementation and application of this Plan shall be determined
by the Administrator, and such determinations shall be final and binding on all
persons.
2
<PAGE>
5. TERMS AND CONDITIONS OF OPTIONS.
5.1. GRANT OF OPTION. Options shall be granted pursuant to this Plan
as follows:
5.1.1. GRANT ON EFFECTIVE DATE. Upon the effective date of this
Plan, an Option for 30,000 shares of Stock shall be granted to each
Eligible Director who shall not previously have been granted an option by
the Company for the purchase of shares of Stock.
5.1.2. SUBSEQUENT GRANTS. On the date of each Annual Organizational
Meeting subsequent to the effective date of this Plan, an Option shall be
granted to each Eligible Director. With respect to any Eligible Director
who, prior to such date, shall not have been granted an option by the
Company, whether pursuant to this Plan or any other plan or arrangement
with the Company, the Option shall be for 15,000 shares of Stock.
Otherwise, the Option shall be for 12,000 shares of Stock.
5.2. EXERCISE PRICE. The exercise price of an Option shall be 100% of
the value of the Stock on the Grant Date, determined in accordance with
Section 6 hereof.
5.3. OPTION TERM. Each Option granted under this Plan shall expire ten
(10) years from the Grant Date.
5.4. OPTION EXERCISE.
5.4.1. INITIAL EXERCISE. No Option may be exercised in whole or in
part until the later to occur of (i) the first Vesting Date following the
Grant Date of such Option and (ii) six months after the Grant Date of
such Option.
5.4.2. STOCKHOLDER APPROVAL. If stockholder approval of this Plan
is required (a) under the 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, or (b) by the rules of
the New York Stock Exchange, if the Company's securities are listed
thereon, or (c) by the rules of the National Association of Securities
Dealers automated quotation system ("NASDAQ"), National Market System, if
the Company's securities are quoted thereon, then no Option may be
exercised in whole or in part until the stockholders of the Company have
approved this Plan.
5.4.3. COMPLIANCE WITH SECURITIES LAWS. Stock shall not be issued
pursuant to the exercise of an Option unless the exercise of the Option
and the issuance and delivery of Stock pursuant thereto shall comply with
all relevant provisions of law, including, without limitation, the
Securities Act, the Exchange Act, applicable state securities laws, the
rules and regulations promulgated under each of the foregoing, the
requirements of the New York Stock Exchange (if the Company's securities
are listed thereon) and the requirements of NASDAQ pertaining to the
National Market System (if the Company's securities are quoted thereon),
and shall be further subject to the approval of counsel for the Company
with respect to such compliance.
5.5. REGISTRATION AND RESALE. If the Stock subject to this Plan is not
registered under the Securities Act and under applicable state securities
laws, the Administrator may require that the Participant deliver to the
Company such documents as counsel for the Company may determine are
necessary or advisable in order to substantiate compliance with applicable
securities laws and the rules and regulations promulgated thereunder.
5.6. VESTING SCHEDULE. An Optionee's right to exercise an Option shall
vest, as to twenty-five percent (25%) of the Stock (as adjusted, pursuant to
Section 5.8.1 hereof, if applicable) initially subject to the Option, on
each of the first through fourth Vesting Dates following the Grant Date.
3
<PAGE>
5.7. PAYMENT UPON EXERCISE. At the time written notice of exercise of
an Option is given to the Company, the Optionee shall make payment in full,
in cash or check or by one of the methods specified in Section 5.7.1 or
Section 5.7.2 below, for all Stock purchased pursuant to the exercise of
such Option. Proceeds of any such payment shall constitute general funds of
the Company.
5.7.1. PROMISSORY NOTE. An Option may be exercised by delivery of
the Optionee's full recourse promissory note for any portion or all of
the aggregate exercise price of the Stock as to which the Option is being
exercised. Such note shall (a) bear interest at the lowest rate which
will not result in interest being imputed pursuant to the Internal
Revenue Code, (b) mature four years after the date of exercise and (c) be
on such other terms as determined by the Administrator. Such promissory
note shall be secured by a security interest in the Stock purchased
pursuant to the Option and in such other manner, if any, as the
Administrator shall approve.
5.7.2. DELIVERY OF STOCK. An Option may be exercised by delivery by
the Optionee of Stock already owned by the Optionee for all or part of
the aggregate exercise price of the Stock as to which the Option is being
exercised, so long as (i) the value of such Stock (determined as provided
in Section 6) is equal on the date of exercise to the aggregate exercise
price of the shares of Stock as to which the Option is being exercised,
or such portion thereof as the Optionee is authorized to pay by delivery
of Stock and (ii) such previously owned shares have been held by the
Optionee for at least six months.
5.8. ADJUSTMENTS.
5.8.1. CHANGES IN CAPITAL STRUCTURE. If the Stock is changed by
reason of a stock split, reverse stock split, stock dividend, or
recapitalization, or is converted into or exchanged for other securities
other than as a result of a Change of Control, the Administrator shall
make such appropriate adjustments in (i) the number of shares of Stock to
be covered by options granted under Section 5.1.2 hereof, (ii) each
Option outstanding under this Plan, and (iii) the exercise price of each
outstanding Option; provided, however, that the Company shall not be
required to issue fractional shares as a result of any such adjustment.
Each such adjustment shall be determined by the Administrator in its sole
discretion, which determination shall be final and binding on all
persons. Any new or additional Stock to which an Optionee may be entitled
under this Section 5.8.1 shall be subject to all of the terms and
conditions set forth in Section 5 of this Plan.
5.8.2. CHANGE OF CONTROL. In the event of a Change of Control, all
Options shall vest immediately.
5.9. NO ASSIGNMENT. No right or benefit under, or interest in, the
Plan shall be subject to assignment or transfer (other than by will or the
laws of descent and distribution), and no such right, benefit or interest
shall be subject to attachment or legal process for or against Participant
or his or her beneficiaries, as the case may be. During the life of the
Optionee, an Option shall be exercisable only by the Optionee or, in the
event of disability of the Optionee, by the Optionee's guardian or legal
representative.
5.10. TERMINATION; EXPIRATION OF UNVESTED OPTIONS. Options granted to
an Optionee under this Plan, to the extent such rights have not expired or
been exercised, shall terminate on such Optionee's Termination Date;
provided, however, that an Option may be exercised, to the extent vested and
exercisable on the Termination Date, for a period of thirty (30) days after
such Optionee's Termination Date; and, provided further, that if exercise of
an Option during such thirty (30) day period would subject such Optionee to
liability under Section 16(b) of the Exchange Act, such thirty (30) day
period shall not begin to run until six (6) months from the date of the last
Stock transaction made, indirectly or directly, by such Optionee prior to
such Optionee's Termination Date.
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6. DETERMINATION OF VALUE. For purposes of this Plan, the value of the
Stock shall be 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 sale price on the last preceding
business day upon which trades occurred shall be the fair market value. If the
Stock is not listed on 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.
7. MANNER OF EXERCISE. An Optionee wishing to exercise an Option shall
give written notice to the Company at its principal executive office, to the
attention of the Secretary of the Company, accompanied by an executed Stock
Purchase Agreement and by payment of the Option exercise price in accordance
with Section 5.7. The date the Company receives written notice of an exercise
hereunder accompanied by payment of the Option exercise price will be considered
the date such Option was exercised. Promptly after receipt of such written
notice and payment, the Company shall deliver to the Optionee or such other
person permitted to exercise such Option under Section 5.9, a certificate or
certificates for the requisite number of shares of Stock. The Company shall pay
any stock issue or transfer tax incurred with respect to such exercise and
issuance.
8. RIGHTS.
8.1. RIGHTS AS OPTIONEE. No Eligible Director shall acquire any rights
as an Optionee unless and until an Option Agreement has been duly executed
on behalf of the Company, delivered to the Optionee and executed by the
Optionee.
8.2. RIGHTS AS STOCKHOLDER. No person shall have any rights as a
stockholder of the Company with respect to any Stock subject to an Option
until the date that a stock certificate has been issued and delivered to the
Optionee.
8.3. NO RIGHT TO REELECTION. Nothing contained in the Plan or any
Option Agreement shall be deemed to create any obligation on the part of the
Board to nominate any Director for reelection by the Company's stockholders,
or confer upon any Director the right to remain a member of the Board for
any period of time, or at any particular rate of compensation.
9. REGISTRATION AND RESALE. The Board may, but shall not be required to,
cause the Plan, the Options, and Stock subject to the Plan to be registered
under the Securities Act and under the securities laws of any state. No Option
may be exercised, and the Company shall not be obliged to grant Stock upon
exercise of an Option, unless, in the opinion of counsel for the Company, such
exercise and grant is in compliance with all applicable federal and state
securities laws and the rules and regulations promulgated thereunder. As a
condition to the grant of an Option for the issuance of Stock upon the exercise
of an Option, the Administrator may require that the Optionee agree to comply
with such provisions and federal and state securities laws as may be applicable
to such grant or the issuance of Stock, and that the Optionee delivers to the
Company such documents as counsel for the Company may determine are necessary or
advisable in order to substantiate compliance with applicable securities laws
and the rules and regulations promulgated thereunder.
10. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN. The Board or the
Administrator may at any time amend, alter, suspend, or discontinue this Plan,
except to the extent that stockholder approval is required for any amendment or
alteration (a) by Rule 16b-3 or applicable law in order to exempt from
Section 16(b) of the Exchange Act any transaction contemplated by this Plan,
or (b) by the rules of the New York Stock Exchange, if the Company's
securities are listed thereon, or (c) by the rules of NASDAQ pertaining to
the National Market System, if the Company's securities are quoted thereon;
provided, however, no amendment, alteration, suspension or discontinuation
shall be made that would impair the rights of any Optionee under an Option
without such Optionee's consent; and provided further, any provision in this
Plan relating to the eligibility of Directors to participate in this Plan,
the timing of Option grants made under this Plan or the amount of Options
granted to a Director under this Plan shall not be amended, to the extent so
provided by Rule 16b-3, more than once every six months, other
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than to comport with the changes in the Code or the rules thereunder. Subject to
the foregoing, the Administrator shall have the power to make such changes in
the regulations and administrative provisions hereunder, or in any Option (with
the Optionee's consent), as in the opinion of the Administrator may be
appropriate from time to time.
11. 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 person.
12. HEADINGS. The headings used in this Plan are for convenience only, and
shall not be used to construe the terms and conditions of the Plan.
13. EFFECTIVE DATE. This Plan shall become effective upon adoption by the
Board. 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
or (b) by the rules of the New York Stock Exchange, if the Company's securities
are listed thereon, or (c) by the rules of NASDAQ pertaining to the National
Market System, if the Company's securities are quoted thereon, then this Plan
shall be submitted to the stockholders of the Company 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, subject only to such approval.
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EXHIBIT 10.9
ROBERT HALF INTERNATIONAL INC.
STOCKPLUS PLAN
(AS AMENDED AND RESTATED EFFECTIVE NOVEMBER 12, 1997)
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 the Board of Directors of RHII or a
committee of the Board, the composition and the size of which shall cause
such committee to satisfy the requirements of Rule 16b-3 of the Exchange
Act with respect to officers and 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.
(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.
3. 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
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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.
4. STOCK AVAILABLE FOR OPTIONS. The shares that may be delivered or
purchased under the Plan shall not exceed an aggregate of 5,785,000 shares of
Common Stock, subject to any adjustments which may be made pursuant to Section
11 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 which have terminated or expired prior to exercise or have been
surrendered or cancelled shall be available for further option hereunder.
5. 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. However, no
individual who is subject to Section 16 of the Exchange Act with respect to
transactions in the Company's securities may be granted an option subsequent to
November 1, 1995.
6. 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 6(e) hereof. An option granted after November
1, 1995, to an eligible employee pursuant to this Plan shall automatically
expire if, within six months after its grant, the recipient of such option
becomes subject to Section 16 of the Exchange Act with respect to
transactions in the Company's securities.
(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 the date of exercise.
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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 and any purported transfer shall be null and void. Options are
not transferable except by will or by the laws of descent and distribution.
7. 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.
8. 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.
9. 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
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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.
10. 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 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.
11. 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.
12. 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.
13. 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.
14. 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.
15. COSTS AND EXPENSES. Except as provided in Section 6(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.
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16. 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.
17. GOVERNING LAW. This Plan shall be governed by and construed in
accordance with the laws of the State of Delaware.
18. 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.
19. 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.
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EXHIBIT 10.10
ROBERT HALF INTERNATIONAL INC.
1993 INCENTIVE PLAN
(AS AMENDED AND RESTATED EFFECTIVE DECEMBER 11, 1997)
1. PURPOSES. The principal purposes of the Robert Half International Inc.
1993 Incentive Plan (the "Plan") are: (a) to improve individual employee
performance by providing long-term incentives and rewards to key employees of
the Company, (b) to assist the Company in attracting, retaining and motivating
key employees with experience and ability, and (c) to align the interests of
such employees with those of the Company's stockholders.
2. DEFINITIONS. Unless the context clearly indicates otherwise, the
following terms, when used in this Plan, shall have the meanings set forth
below:
(a) "ADMINISTRATOR" means either the Board of Directors or a committee
of the Board of Directors of the Company, the composition and the size of
which shall cause such committee to satisfy the requirements of Rule 16b-3
of the Exchange Act with respect to officers and directors.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CHANGE IN CONTROL" means the occurrence of any of the following:
(i) Any person or group (as such terms are defined in Section
13(d)(3) of the Exchange Act), other than an employee benefit plan sponsored
by the Company or a subsidiary thereof or a corporation owned (directly or
indirectly), by the stockholders of the Company in substantially the same
proportions of the ownership of stock of the Company, shall become the
beneficial owner of securities of the Company representing 20% or more, or
commences a tender or exchange offer following the successful consummation of
which the offerer and its affiliates would beneficially own securities
representing 20% or more, of the combined voting power of then outstanding
securities ordinarily (and apart from rights accruing in special
circumstances) having the right to vote in the election of directors, as a
result of a tender or exchange offer, open market purchases, privately
negotiated purchases or otherwise; PROVIDED, HOWEVER, that a Change in
Control shall not be deemed to include the acquisition by any such person or
group of securities representing 20% or more of the Company if such party has
acquired such securities not with the purpose nor with the effect of changing
or influencing the control of the Company, nor in connection with or as a
participant in any transaction having such purposes or effect, including,
without limitation, not in connection with such party (A) making any public
announcement with respect to the voting of such shares at any meeting to
consider a merger, consolidation, sale of substantial assets or other
business combination or extraordinary transaction involving the Company, (B)
making, or in any way participating in, any "solicitation" of "proxies" (as
such terms are defined or used in Regulation 14A under the Exchange Act) to
vote any voting securities of the Company (including, without limitation, any
such solicitation subject to Rule 14a-11 under the Exchange Act) or seeking
to advise or influence any party with respect to the voting of any voting
securities of the Company, directly or indirectly, relating to a merger or
other business combination involving the Company or the sale or transfer of
substantial assets of the Company, (C) forming, joining or in any way
participating in any "group" within the meaning of Section 13(d)(3) of the
Exchange Act with respect to any voting securities of the Company, directly
or indirectly, relating to a merger or other business combination involving
the Company or the sale or transfer of any substantial assets of the Company,
or (D) otherwise acting, alone or in concert with others, to seek control of
the Company or to seek to control or influence the management or policies of
the Company.
(ii) The stockholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the Company.
(iii) A change in the composition of the Board of Directors of
the Company occurring within a two-year period, as a result of which fewer
than a majority of the directors are Incumbent Directors. "Incumbent
Directors" shall mean directors who either (A) are directors of the Company
as of the date hereof, or (B) are elected, or nominated for election, to the
Board of Directors of the Company with the affirmative votes of at least a
majority of the Incumbent Directors at the time of such election or
nomination (but shall not include an individual whose election or nomination
is in connection with an actual or threatened proxy contest relating to the
election of directors to the Company). As a result of or in connection with
any cash tender offer, merger, or other business combination, sale of assets
or contested election, or combination of the foregoing, the persons who were
directors of the Company just prior to such event shall cease within one year
to constitute a majority of the Board.
(iv) The Company's stockholders approve a definitive agreement
providing for a transaction in which the Company will cease to be an
independent publicly owned corporation.
(v) The stockholders of the Company approve a definitive
agreement (A) to merge or consolidate the Company with or into another
corporation in which the holders of the Stock immediately before such merger
or reorganization will not, immediately following such merger or
reorganization, hold as a group on a fully-diluted basis both the ability to
elect at least a majority of the directors of the surviving corporation and
at least a majority in value of the surviving corporation's outstanding
equity securities, or (B) to sell or otherwise dispose of all or
substantially all of the assets of the Company.
(d) "COMMON STOCK" or "STOCK" means Robert Half International Inc.
Common Stock, par value $.001 per share.
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(e) "COMPANY" means Robert Half International Inc., its divisions and
direct and indirect subsidiaries.
(f) "CONTINUOUS EMPLOYMENT" means employment with the Company or any
Subsidiary, or serving as a director or consultant to the Company or any
Subsidiary, without any termination or leave of absence, except for a leave
of absence approved by the Company or any Subsidiary which is less than six
consecutive months in duration.
(g) "DISABILITY" or "DISABLED" shall mean (i) a physical or mental
condition which, in the judgment of the Administrator based on competent
medical evidence satisfactory to the Administrator (including, if required
by the Administrator, medical evidence obtained by an examination conducted
by a physician selected by the Administrator), renders Holder unable to
engage in any substantial gainful activity for the Company and which
condition is likely to result in death or to be of long, continued and
indefinite duration, or (ii) a judicial declaration of incompetence.
(h) "ELIGIBLE EMPLOYEE" means an employee of the Company or any
Subsidiary (including an employee who is a director and/or officer) who, as
determined by the Administrator in its sole discretion, has and exercises
management functions and responsibilities.
(i) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(j) "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.
(k) "GRANT" shall mean an Option or a Restricted Stock Award.
(l) "GRANT DATE" means the date a Grant is made under the Plan.
(m) "HOLDER" means the recipient of a Grant pursuant to this Plan.
(n) "ISSUE DATE" means the date on which shares of Stock subject to a
Restricted Stock Award are issued or transferred by the Company to the
account of an Eligible Employee who has received such grant.
(o) "MINIMUM WITHHOLDING TAXES" means any applicable federal, state and
local income and other employment taxes which the Company is required to
withhold in connection with (i) the lapse of restrictions on Stock subject
to a Restricted Stock Award, (ii) the exercise of an Option, or (iii) the
making of an election under Section 83(b) of the Internal Revenue Code with
respect to a Restricted Stock Award.
(p) "OFFER" means a tender offer or an exchange offer for the Company's
Stock.
(q) "OPTION" or "STOCK OPTION" means a right granted under the Plan to a
Holder to purchase shares of Common Stock at a fixed price for a specified
period of time.
(r) "OPTION PRICE" means the price at which a share of Common Stock
covered by an Option granted hereunder may be purchased.
(s) "OPTIONEE" means an Eligible Employee who has received a Stock
Option granted under the Plan.
(t) "RESTRICTED STOCK AWARD" means a grant described in Section 6 of the
Plan.
(u) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(v) "SUBSIDIARY" means a "SUBSIDIARY" corporation as defined in Section
424(f) of the Internal Revenue Code of 1986, as amended.
2
<PAGE>
(w) "VESTED" means that portion of a Grant with respect to which the
Vesting Date has arrived or passed.
(x) "VESTING DATE" means the date specified in Section 5 or 6 hereof, as
the case may be, or such other date as shall be established by the
Administrator or otherwise on the Grant Date or thereafter.
(y) "VOTING SHARES" means the outstanding shares of the Company entitled
to vote for the election of Directors.
3. STOCK AVAILABLE. The number of shares of Stock for which Grants may be
made during any calendar year shall be that number which is equal to 1.5% of the
number of issued and outstanding shares of Common Stock of the Company
(excluding treasury shares) as of January 1 of such year (January 1, 1993, in
the case of the first year). Any shares of Common Stock covered by Options which
have terminated or expired prior to exercise or have been cancelled without
value shall not be counted against the annual limit and shall be available for
further grants hereunder and shares constituting the portion of a Restricted
Stock Award that is forfeited before any dividends are paid upon such forfeited
shares shall not be counted against the annual limit and shall be available for
further grants hereunder. The foregoing number of shares available for Grants
shall be subject to any adjustments which may be made pursuant to Section 12
hereof. Shares of Stock used for Options may be either shares of authorized but
unissued Common Stock or treasury shares or both. Shares of Stock used for
Restricted Stock Awards shall be treasury shares to the extent that treasury
shares are available, and, if no treasury shares are available, Restricted Stock
Awards shall be authorized but unissued Common Stock.
4. PARTICIPANTS. From time to time the Administrator shall, in its sole
discretion, but subject to all of the provisions of the Plan, determine which
Eligible Employees will be given Grants under the Plan, the number of Options or
shares of Restricted Stock to be granted to each such Eligible Employee and the
terms, conditions and restrictions of each such Grant. In making such
determinations, the Administrator shall take into account the nature of services
rendered and to be rendered by the respective recipients, their present and
potential contribution to the Company's success and such other factors as the
Administrator in its discretion deems relevant to the accomplishment of the
purposes of the Plan. In any year, the Administrator may approve Options to
Eligible Employees subject to differing terms and conditions and Restricted
Stock Awards to Eligible Employees subject to differing terms and conditions.
During any calendar year, the number of shares of Stock with respect to which
Options or Restricted Stock are granted to any one individual may not exceed 75%
of the number of shares of Stock available for Grants during 1994, subject to
adjustment pursuant to Section 12 hereof.
5. 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. Options granted hereunder shall have a term of
no longer than ten years from the Grant Date. An Option may be exercised
only as to those portions of the Option that have Vested. Stock Options must
be exercised for full shares of Common Stock.
(c) INCENTIVE STOCK OPTIONS. No Option granted hereunder shall be
deemed an Incentive Stock Option (as such term is defined in the Internal
Revenue Code) unless (a) such Option is designated as an Incentive Stock
Option at the time of grant by the Administrator and (b) such Option
otherwise meets the requirements for Incentive Stock Options specified in
the Internal Revenue Code. However, no Option designated as an Incentive
Stock Option shall contain any restrictions upon the ability of the Holder
to dispose of Stock acquired upon the exercise thereof other than as
provided elsewhere in this Plan. During the life of the Plan, the total
number of
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<PAGE>
shares for which Incentive Stock Options may be granted may not exceed ten
times the number of shares available for Grants under the Plan during the
first calendar year in which the Plan is in effect.
(d) VESTING. Unless otherwise determined by the Administrator on the
Grant Date, each Option shall Vest as to twenty-five percent (25%) of the
Stock covered by such Option on each of the first through fourth
anniversaries of the Grant Date. Notwithstanding the foregoing, the
Administrator may accelerate Vesting, in whole or in part, under such terms
and conditions as the Administrator deems appropriate.
(e) EXERCISE OF OPTION. To exercise an Option, the Holder shall give
written notice of 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 such exercises. An Option is exercisable during a
Holder's lifetime only by the Holder or, with respect to options that are
not designated as Incentive Stock Options, under such other circumstances as
may be permitted by Rule 16b-3, or any successor rule, under the Exchange
Act and all interpretations of the staff of the Securities and Exchange
Commission thereunder.
(f) 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 Holder
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 the date of exercise. In addition, unless the
Administrator determines otherwise at the time of grant, payment of the
Option Price and of Minimum Withholding Taxes may be made by (i) full
recourse promissory note (secured or unsecured), payable on such terms and
bearing such interest as the Administrator may determine or (ii) delivery
(on a form acceptable to the Administrator) of an irrevocable direction to a
securities broker to sell shares of Common Stock and to deliver part of the
sales proceeds to the Company in payment of the full exercise price and
Minimum Withholding Taxes and receipt of written confirmation from the
securities broker of receipt of such irrevocable direction, the number of
shares sold, the price at which sold and the date of sale.
(g) NONTRANSFERABILITY OF OPTIONS. Options are not transferable except
by will, by the laws of descent and distribution, or, with respect to
options that are not designated as Incentive Stock Options, pursuant to a
domestic relations order or under such other circumstances as the
Administrator may determine.
6. RESTRICTED STOCK AWARDS. Each Restricted Stock Award made under the
Plan shall contain the following terms, conditions and restrictions and such
additional terms, conditions and restrictions as may be determined by the
Administrator at the time of grant.
(a) RIGHTS WITH RESPECT TO SHARES OF STOCK. Upon written acceptance by
the Eligible Employee of restrictions and other terms and conditions
described in the Plan and in the instrument evidencing such Restricted Stock
Award, the Eligible Employee shall be a Holder, and the Company shall cause
to be issued or transferred to the name of the Holder a certificate or
certificates for the number of shares of Stock granted. From and after the
Issue Date, the Holder shall have absolute ownership of such shares of
Stock, including the right to vote and to receive dividends thereon, subject
to the terms, conditions and restrictions described in the Plan and in the
instrument evidencing the grant of such Restricted Stock Award.
4
<PAGE>
(b) RESTRICTIONS ON TRANSFER. Shares covered by a Restricted Stock
Award may not be sold, assigned, pledged, transferred or otherwise conveyed
in any manner until the Vesting Date for such shares.
(c) VESTING. Unless otherwise determined by the Administrator on the
Grant Date, each Restricted Stock Award shall Vest as to twenty-five percent
(25%) of the Stock covered by such grant on each of the first through fourth
Vesting Dates which occur following the related Grant Date of such
Restricted Stock Award. Notwithstanding the foregoing, the Administrator may
accelerate the lapsing of restrictions on a Restricted Stock Award, in whole
or in part under such terms and conditions as the Administrator deems
appropriate.
(d) AUTOMATIC VESTING IN SPECIAL CIRCUMSTANCES. Any provisions herein
to the contrary notwithstanding, a Restricted Stock Award shall
automatically become Vested upon (a) the Death or Disability of the Holder
or (b) the occurrence of a Change in Control.
(e) AGREEMENT BY HOLDER REGARDING WITHHOLDING TAXES. Each Holder
granted a Restricted Stock Award shall represent in writing that such Holder
acknowledges that, with respect to each Restricted Stock Award held by such
Holder, (i) Minimum Withholding Taxes shall be due with respect to shares of
Stock covered by such award, (ii) payment of Minimum Withholding Taxes to
the Company is the responsibility of Holder and (iii) payment of such
Minimum Withholding Taxes may require a significant cash outlay by Holder.
(f) ELECTION TO RECOGNIZE GROSS INCOME IN THE YEAR OF GRANT. If any
Holder properly elects within thirty (30) days of the Grant Date to include
in gross income for federal income tax purposes an amount equal to the fair
market value of the shares of Stock on the Grant Date, such Holder shall pay
in cash to the Company in the calendar month of such Grant Date, or make
arrangements satisfactory to the Administrator to pay to the Company, any
Minimum Withholding Taxes required to be withheld with respect to such
shares.
(g) CONSIDERATION. Recipients of Restricted Stock Awards made in
treasury shares shall not be required to pay any consideration to the
Company. Recipients of Restricted Stock Awards made in the form of
previously unissued shares shall be required to pay such minimum
consideration, if any, as may be required by applicable law. The
Administrator shall determine the form of consideration at the time of the
award, which may include services rendered prior to the award.
(h) PERFORMANCE CONDITIONS. If so determined by the Administrator, any
grant of Restricted Shares shall be made subject to a Performance Condition
in addition to any vesting requirements imposed upon such grant. Such
Performance Condition shall operate as specified in this paragraph (h).
(1) As used in this paragraph (h), the following terms shall have the
indicated meanings:
CERTIFICATION DATE means the date that the Administrator makes
its written certification of a Final Restricted Stock Award.
EPS means fully diluted earnings per share, determined in
accordance with generally accepted accounting principles. For
purposes of the foregoing sentence, earnings shall mean income before
extraordinary items, discontinued operations and cumulative effect of
changes in accounting principles and after full accrual for the
bonuses paid under this Plan.
EPS RATIO means the result obtained by dividing Preliminary EPS
by Target EPS.
FINAL RESTRICTED STOCK AWARD means the product of the Multiplier
and the Original Restricted Stock Award.
5
<PAGE>
MEASUREMENT YEAR means (a) in the case of a grant made in the
first fiscal quarter of a fiscal year, that fiscal year or (b) in the
case of a grant made in the second, third or fourth quarters of a
fiscal year, the subsequent fiscal year.
MULTIPLIER means (a) the sum of 0.1 and the EPS Ratio, if the EPS
Ratio is greater than or equal to 0 and less than 0.9, (b) 1, if the
EPS Ratio is greater than or equal to 0.9, or (c) 0, if the EPS Ratio
is less than 0.
NINE-MONTH PERIOD means the first three fiscal quarters of the
Measurement Year.
ORIGINAL RESTRICTED STOCK AWARD means the number of shares
initially granted pursuant to a Restricted Stock Award made subject
to a Performance Condition.
PRELIMINARY EPS means 1.334 multiplied by EPS for a Nine-Month
Period.
TARGET EPS means the EPS goal set with respect to a Restricted
Stock Award made subject to a Performance Condition.
(2) A Restricted Stock Award shall be subject to a Performance
Condition only if the Administrator makes such a determination on the
Grant Date or if the Holder consents thereto.
(3) If a Restricted Stock Award is made subject to a Performance
Condition, the Administrator shall, not later than the end of the second
calendar month of the Measurement Year, determine the Target EPS for such
award.
(4) After the public release by the Company of its unaudited results
for the third fiscal quarter of the Measurement Year, the Chief Financial
Officer shall, with respect to each Restricted Stock Award made subject
to a Performance Condition, (a) calculate the Preliminary EPS, (b)
determine the Multiplier, (c) calculate the Final Restricted Stock Award,
and (d) deliver such calculation to the Administrator.
(5) The Administrator shall, prior to the end of the Measurement
Year, review the information submitted by the Chief Financial Officer and
certify, in writing, each Final Restricted Stock Award.
(6) To the extent that a Final Restricted Stock Award is less than
the Original Restricted Stock Award, the number of shares of the Original
Restricted Stock Award representing the difference shall be forfeited by
the Holder. The Final Restricted Stock Award shall bear the same vesting
schedule as the Original Restricted Stock Award, and on each Vesting Date
the percentage of the Final Restricted Stock Award that vests shall be
the same as the percentage of the Original Restricted Stock Award that
would have vested had no shares been forfeited as a result of the
performance condition.
(7) If all or a portion of a Restricted Stock Award made subject to a
Performance Condition shall vest prior to the Certification Date by
reason of death, Disability or a Change in Control, then the Performance
Condition shall be cancelled and none of such shares shall be subject to
reduction or forfeiture as provided by the Performance Condition. Such
shares shall be released to Holder in accordance with the terms of this
plan relating to vested shares.
(8) If all or a portion of a Restricted Stock Award made subject to a
Performance Condition shall vest prior to the Certification Date for any
reason other than death, Disability or a Change in Control, no shares
shall be released to the Holder until after the Certification Date. No
such vesting prior to the Certification Date shall in any way be deemed a
6
<PAGE>
satisfaction, waiver or cancellation of the Performance Condition, and
such Restricted Stock Award shall remain subject to reduction and
forfeiture as provided by the Performance Condition.
(i) ALTERNATIVE PERFORMANCE CONDITIONS. If so determined by the
Administrator, any grant of Restricted Shares shall be made subject to an
Alternative Performance Condition in addition to any vesting requirements
imposed upon such grant. Such Alternative Performance Condition shall
operate as specified in this paragraph (i).
(1) As used in this paragraph (i), the following terms shall have the
indicated meanings:
CERTIFICATION DATE means the date that the Administrator makes
its written certification of a Final Restricted Stock Award.
ACTUAL EPS means fully diluted earnings per share for the
Performance Period, determined in accordance with generally accepted
accounting principles. For purposes of the foregoing sentence,
earnings shall mean income before extraordinary items, discontinued
operations and cumulative effect of changes in accounting principles
and after full accrual for the bonuses paid under this Plan.
EPS RATIO means the result obtained by dividing Actual EPS by
Target EPS.
FINAL RESTRICTED STOCK AWARD means the product of the Multiplier
and the Original Restricted Stock Award.
MULTIPLIER means (a) the sum of 0.1 and the EPS Ratio, if the EPS
Ratio is greater than or equal to 0 and less than 0.9, (b) 1, if the
EPS Ratio is greater than or equal to 0.9, or (c) 0, if the EPS Ratio
is less than 0.
ORIGINAL RESTRICTED STOCK AWARD means the number of shares
initially granted pursuant to a Restricted Stock Award made subject
to an Alternative Performance Condition.
PERFORMANCE PERIOD means the period of service to which the
Alternative Performance Condition relates.
TARGET EPS means the EPS goal set with respect to a Restricted
Stock Award made subject to an Alternative Performance Condition.
(2) A Restricted Stock Award shall be subject to an Alternative
Performance Condition only if the Administrator makes such a
determination on the Grant Date or if the Holder consents thereto.
(3) If a Restricted Stock Award is made subject to an Alternative
Performance Condition, the Administrator shall establish the Performance
Period and Target EPS for such award no later than the time permitted by
section 162(m) of the Internal Revenue Code.
(4) After the public release by the Company of its unaudited results
for the last fiscal quarter of the Performance Period, the Chief
Financial Officer shall, with respect to each Restricted Stock Award made
subject to an Alternative Performance Condition, (a) calculate the Actual
EPS, (b) determine the Multiplier, (c) calculate the Final Restricted
Stock Award, and (d) deliver such calculation to the Administrator.
(5) The Administrator shall review the information submitted by the
Chief Financial Officer and certify, in writing, each Final Restricted
Stock Award.
(6) To the extent that a Final Restricted Stock Award is less than
the Original Restricted Stock Award, the number of shares of the Original
Restricted Stock Award representing the difference shall be forfeited by
the Holder. The Final Restricted Stock Award shall bear the same vesting
schedule as the Original Restricted Stock Award, and on each
7
<PAGE>
Vesting Date the percentage of the Final Restricted Stock Award that
vests shall be the same as the percentage of the Original Restricted
Stock Award that would have vested had no shares been forfeited as a
result of the Alternative Performance Condition.
(7) If all or a portion of a Restricted Stock Award made subject to
an Alternative Performance Condition shall vest prior to the
Certification Date by reason of death, Disability or a Change in Control,
then the Alternative Performance Condition shall be cancelled and none of
such shares shall be subject to reduction or forfeiture as provided by
the Alternative Performance Condition. Such shares shall be released to
Holder in accordance with the terms of this plan relating to vested
shares.
(8) If all or a portion of a Restricted Stock Award made subject to
an Alternative Performance Condition shall vest prior to the
Certification Date for any reason other than death, Disability or a
Change in Control, no shares shall be released to the Holder until after
the Certification Date. No such vesting prior to the Certification Date
shall in any way be deemed a satisfaction, waiver or cancellation of the
Alternative Performance Condition, and such Restricted Stock Award shall
remain subject to reduction and forfeiture as provided by the Alternative
Performance Condition.
7. WITHHOLDING TAXES. In order to enable the Company to meet
any applicable foreign, federal (including FICA), state and local
withholding tax requirements, a Holder shall be required to pay the
Minimum Withholding Taxes. No share of stock will be delivered to any
Holder until Minimum Withholding Taxes have been paid. At the option of the
Holder, withholding taxes may be paid by any combination of (a) cash, (b)
reduction in the number of shares deliverable to Holder (in the case of an
Option) or by surrendering a portion of the Restricted Stock Award to
the Company (in either case "Share Reduction"), (c) delivery to the Company
of other shares of Common Stock owned by Holder ("Share Delivery") or (d) any
other means approved or ratified by the Administrator. If withholding taxes
are paid by Share Reduction or Share Delivery, such shares shall be
valued at the Fair Market Value as of the date of exercise or vesting. A
Holder may elect to have additional shares withheld or surrendered pursuant
to Share Reduction or Share Delivery above the amount required to
satisfy Minimum Withholding Taxes. However, total combined Share Reduction
and Share Delivery may not exceed the total taxes that Holder will have to
pay (assuming Federal and state taxes are imposed at his marginal rate) by
reason of the exercise or vesting. In addition, any use of Share Delivery
in excess of Minimum Withholding Taxes must be effected with shares that have
been held at least six months. In the event that Minimum Withholding Taxes
are not paid by Holder, 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 Share Reduction or by offsetting such withholding taxes
against amounts otherwise due from the Company to the Holder.
8. RESTRICTIVE LEGENDS; TRANSFER RESTRICTIONS; CUSTODY. So long as any
restrictions or obligations imposed pursuant hereto shall apply to a share of
Stock (including, but not limited to, the restrictions or obligations imposed
pursuant to Sections 5(f), 5(h), 6(b), 6(e), 6(f) and 7 hereof), each
certificate evidencing such share shall bear an appropriate legend referring to
the terms, conditions and restrictions. In addition, the Company may instruct
its transfer agent that shares of Stock evidenced by such certificates may not
be transferred without the written consent of the Company. Any attempt to
dispose of such shares of Stock in contravention of such terms, conditions and
restrictions shall be invalid. Certificates representing shares that have not
Vested or with respect to which Minimum Withholding Taxes have not been paid
will be held in custody by the Company or such bank or other institution
designated by the Administrator.
9. TERMINATION OF CONTINUOUS EMPLOYMENT. If the Holder's Continuous
Employment with the Company or any Subsidiary shall terminate for any reason,
then, with respect to any portion of a Grant that has not Vested prior to or
concurrently with such termination (a) in the case of an Option, all rights to
such portion that has not Vested shall terminate and (b) in the case of a
Restricted Stock Award, all rights to the shares covered by any portion thereof
that has not Vested shall be forfeited; provided, however, that the
Administrator, in its sole discretion within ninety (90) days of such
termination of Continuous Employment, may notify the Holder in writing that the
Holder's rights in such portion that has not Vested will not terminate or be
forfeited and that the Holder shall continue to be the owner thereof, subject to
such continuing restrictions as the Administrator may prescribe in
8
<PAGE>
such notice. Options then held by the Holder which are Vested at the date of
termination shall continue to be exercisable by the Holder, or, if applicable,
Holder's estate, until the earlier of 90 days after such date or the expiration
of such Options in accordance with their terms. Notwithstanding the foregoing,
(i) the Administrator may in its sole discretion extend the period during which
an Option may be exercised following termination of employment at any time,
provided that any such extension does not exceed the Option's normal termination
date, and (ii) if exercise of an Option during the 90-day period described in
the previous sentence would subject the Holder 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 Holder prior to termination.
10. 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 who shall receive Grants under the Plan, determine the size and
applicable terms and conditions of Grants to be made to such employees,
determine the time when Grants will be made and authorize Grants to Eligible
Employees.
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 Grants 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.
11. COMPLIANCE WITH SECURITIES LAWS. No Option may be exercised and no
Stock may be issued pursuant to an Option or transferred pursuant to a
Restricted Stock Award unless the Administrator shall determine that such
exercise, issuance or transfer complies with all relevant provisions of law,
including, without limitation, the Securities Act, the Exchange Act, applicable
state securities laws, and rules and regulations promulgated under each of the
foregoing, and the requirements of any stock exchange upon which the Stock may
then be listed or quotation system upon which the Stock may be quoted, and shall
be further subject to the approval of counsel for the Company with respect to
such compliance. If the Stock subject to this Plan is not registered under the
Securities Act and under applicable state securities laws, the Administrator may
require that the Holder deliver to the Company such documents as counsel for the
Company may determine are necessary or advisable in order to substantiate
compliance with applicable securities laws and the rules and regulations
promulgated thereunder.
12. 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, spin-off
or exchange of shares or other similar corporate change, appropriate adjustments
shall be made by the Administrator in the number of shares of Stock subject to
this Plan, the number of shares of Stock covered by each Grant and, in the case
of Options, the Option Price of such Option. Any such adjustment shall be
determined by the Administrator in its sole discretion, which determination
shall be conclusive and binding for all purposes of the Plan. Any new or
additional Stock to which a Holder of a Restricted Stock Award may be entitled
shall be subject to all the terms and conditions set forth in Section 6 of this
Plan. If fractional shares become due to any Holder as a result of any
adjustment, the Company may, at its option, pay cash in lieu thereof.
13. NO RIGHTS TO GRANTS OR EMPLOYMENT. No employee or other person shall
have any claim or right to a Grant under the Plan. Receipt of a Grant under the
Plan shall not give an employee any
9
<PAGE>
rights to receive any other Grant under the Plan. 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 or any Subsidiary.
14. RIGHTS AS SHAREHOLDER. A Holder 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 Holder.
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, the Company 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. NO ASSIGNMENT. Except as specifically provided by law (including the
laws of descent and distribution) and elsewhere herein, no right or benefit
under, or interest in, the Plan shall be subject to assignment, and no such
right, benefit or interest shall be subject to attachment or legal process for
or against Holder or his or her beneficiaries, as the case may be.
17. GOVERNING LAW. This Plan shall be governed by and construed in
accordance with the laws of the State of Delaware.
18. 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.
19. HEADINGS. The headings used in this Plan are for convenience only, and
shall not be used to construe the terms and conditions of the Plan.
20. 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 or cancel the terms and
conditions of any outstanding Grant, determine whether cash will be paid or
Grants will be made in replacement of, or as alternatives to, outstanding Grants
or grants under any other incentive compensation plan; provided, however, that
no such change shall be adverse to the Holder thereof without such Holder's
consent.
21. EFFECTIVE DATE, TERMINATION. This Plan shall become effective upon
approval by the stockholders of the Company, and shall remain in effect until
terminated by the Board of Directors or Administrator.
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EXHIBIT 21
LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
JURISDICTION OF
NAME OF SUBSIDIARY INCORPORATION
- ------------------------------------------------------------------------ --------------------
<S> <C>
RH Holding Company, Inc. California
LegalTeam, Inc. California
Benchmark Staffing, Inc. California
Benchmark Resources, Inc. California
Robert Half Licensing, Inc. California
Robert Half of California, Inc. California
Cooperative Resources, Inc. California
Robert Half of Texas G.P. Ltd. Delaware
XYZ-II, Inc. Delaware
Atlantic Temporaries, Inc. Delaware
Texas Temp Gen, Inc. Delaware
Texas Temp Lim, Inc. Delaware
Robert Half Incorporated Florida
R-H International Advertising Fund, Inc. Florida
OfficeTeam Inc. Louisiana
Robert Half Corporation Nevada
Robert Half Nevada Staff, Inc. Nevada
Tripoli Associates Corporation New York
Robert Half of Pennsylvania, Inc. Pennsylvania
Texas Temp Limited Partnership Texas
RHT, L.P. (a limited partnership) Texas
Fontaine Archer Van de Voorde S.A./N.V. Belgium
S.A. Robert Half N.V. Belgium
Robert Half International N.V. Belgium
Robert Half Canada Inc. Canada
Robert Half France S.A. (96% 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
</TABLE>
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants we hereby consent to the incorporation by
reference of our report dated January 22, 1998 into the Company's Registration
Statements on Form S-8 (nos. 33-14706, 33-32622, 33-32623, 33-39187, 33-39204,
33-40795, 33-52617, 33-56639, 33-56641, 33-57763, 33-62138, 33-62140, 33-65401,
33-65403, 333-05743, 333-05745, 333-18283, 333-18339, 333-42471, 333-42573,
333-42343, and 333-42269).
/s/ ARTHUR ANDERSEN LLP
San Francisco, California
January 22, 1998
<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, 1997 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-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 JAN-01-1996
<PERIOD-END> DEC-31-1997 DEC-31-1996
<CASH> 131,349 80,181
<SECURITIES> 0 0
<RECEIVABLES> 194,063 129,399
<ALLOWANCES> 7,164 4,016
<INVENTORY> 0 0
<CURRENT-ASSETS> 334,005 214,630
<PP&E> 79,899 44,971
<DEPRECIATION> 29,962 18,252
<TOTAL-ASSETS> 561,367 416,012
<CURRENT-LIABILITIES> 122,095 86,561
<BONDS> 4,530 5,069
0 0
0 0
<COMMON> 91 90
<OTHER-SE> 418,709 308,355
<TOTAL-LIABILITY-AND-EQUITY> 561,367 416,012
<SALES> 0 0
<TOTAL-REVENUES> 1,302,876 898,635
<CGS> 0 0
<TOTAL-COSTS> 785,546 545,343
<OTHER-EXPENSES> 4,926 5,405
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (4,190) (2,243)
<INCOME-PRETAX> 158,828 103,645
<INCOME-TAX> 65,131 42,543
<INCOME-CONTINUING> 93,697 61,102
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 93,697 61,102
<EPS-PRIMARY> 1.03 0.69
<EPS-DILUTED> 1.00 0.67
</TABLE>
