<PAGE>
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
.
------------------------
COMMISSION FILE NUMBER 1-10427
ROBERT HALF INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-1648752
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2884 SAND HILL ROAD
SUITE 200
MENLO PARK, CALIFORNIA
(Address of principal executive 94025
offices) (zip-code)
Registrant's telephone number, including area code: (650) 234-6000
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) had been subject to such
filing requirements for the past 90 days. Yes _X_ No ____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of September 30, 1999:
89,706,029 shares of $.001 par value Common Stock
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31,
1998
SEPTEMBER 30, ------------
1999
-------------
(UNAUDITED)
<S> <C> <C>
ASSETS:
Cash and cash equivalents........................................................... $ 182,847 $ 166,060
Accounts receivable, less allowances of $14,490 and $10,176......................... 291,367 240,690
Other current assets................................................................ 28,377 23,656
------------- ------------
Total current assets............................................................ 502,591 430,406
Intangible assets, less accumulated amortization of $59,004 and $53,236............. 172,527 178,363
Property and equipment, less accumulated depreciation of $72,625 and $48,900........ 103,080 94,950
------------- ------------
Total assets.................................................................... $ 778,198 $ 703,719
------------- ------------
------------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable and accrued expenses............................................... $ 42,040 $ 23,659
Accrued payroll costs............................................................... 135,276 124,068
Income taxes payable................................................................ 3,996 3,810
Current portion of notes payable and other indebtedness............................. 1,198 1,308
------------- ------------
Total current liabilities....................................................... 182,510 152,845
Notes payable and other indebtedness, less current portion.......................... 2,611 3,404
Deferred income taxes............................................................... 21,882 25,000
------------- ------------
Total liabilities............................................................... 207,003 181,249
Commitments and Contingencies
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value authorized 260,000,000 shares; issued and outstanding
88,714,710 and 91,225,353 shares.................................................. 89 91
Capital surplus..................................................................... 287,608 270,609
Deferred compensation............................................................... (46,372) (56,790)
Accumulated other comprehensive income.............................................. (1,726) (1,244)
Retained earnings................................................................... 331,596 309,804
------------- ------------
Total stockholders' equity...................................................... 571,195 522,470
------------- ------------
Total liabilities and stockholders' equity...................................... $ 778,198 $ 703,719
------------- ------------
------------- ------------
</TABLE>
The accompanying Notes to Consolidated Financial Statements are
an integral part of these financial statements.
1
<PAGE>
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------- --------------------------
1999 1998 1999 1998
----------- ---------- ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net service revenues........................................ $ 529,462 $ 470,650 $ 1,511,510 $ 1,314,099
Direct costs of services, consisting of payroll, payroll
taxes and insurance costs for temporary employees......... 308,058 280,617 887,821 785,402
----------- ---------- ------------ ------------
Gross margin................................................ 221,404 190,033 623,689 528,697
Selling, general and administrative expenses................ 164,668 131,972 452,368 367,497
Amortization of intangible assets........................... 1,254 1,264 3,737 3,727
Interest income, net........................................ (1,761) (1,733) (4,585) (4,425)
----------- ---------- ------------ ------------
Income before income taxes.................................. 57,243 58,530 172,169 161,898
Provision for income taxes.................................. 22,694 23,556 68,371 65,594
----------- ---------- ------------ ------------
Net income.................................................. $ 34,549 $ 34,974 $ 103,798 $ 96,304
----------- ---------- ------------ ------------
----------- ---------- ------------ ------------
Basic net income per share.................................. $ .38 $ .38 $ 1.14 $ 1.05
Diluted net income per share................................ $ .38 $ .37 $ 1.12 $ 1.01
</TABLE>
The accompanying Notes to Consolidated Financial Statements are
an integral part of these financial statements.
2
<PAGE>
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------
1999 1998
----------- ----------
(UNAUDITED)
<S> <C> <C>
COMMON STOCK--SHARES:
Balance at beginning of period........................................................ 91,225 91,208
Issuances of restricted stock......................................................... 337 316
Repurchases of common stock........................................................... (3,099) (1,298)
Exercises of stock options............................................................ 252 1,273
----------- ----------
Balance at end of period............................................................ 88,715 91,499
----------- ----------
----------- ----------
COMMON STOCK--PAR VALUE:
Balance at beginning of period........................................................ $ 91 $ 91
Issuance of restricted stock.......................................................... 1 --
Repurchases of common stock........................................................... (3) (1)
Exercises of stock options............................................................ -- 1
----------- ----------
Balance at end of period............................................................ $ 89 $ 91
----------- ----------
----------- ----------
CAPITAL SURPLUS:
Balance at beginning of period........................................................ $ 270,609 $ 196,888
Issuances of restricted stock--excess over par value.................................. 6,572 15,250
Exercises of stock options--excess over par value..................................... 1,642 7,285
Capital impact of equity incentive plans.............................................. 8,785 26,909
----------- ----------
Balance at end of period............................................................ $ 287,608 $ 246,332
----------- ----------
----------- ----------
DEFERRED COMPENSATION:
Balance at beginning of period........................................................ $ (56,790) $ (44,276)
Issuances of restricted stock......................................................... (6,573) (15,250)
Amortization of deferred compensation................................................. 16,991 14,270
----------- ----------
Balance at end of period............................................................ $ (46,372) $ (45,256)
----------- ----------
----------- ----------
ACCUMULATED OTHER COMPREHENSIVE INCOME:
Balance at beginning of period........................................................ $ (1,244) $ (1,347)
Translation adjustments............................................................... (482) 321
----------- ----------
Balance at end of period............................................................ $ (1,726) $ (1,026)
----------- ----------
----------- ----------
RETAINED EARNINGS:
Balance at beginning of period........................................................ $ 309,804 $ 267,444
Repurchases of common stock--excess over par value.................................... (82,006) (59,509)
Net income............................................................................ 103,798 96,304
----------- ----------
Balance at end of period............................................................ $ 331,596 $ 304,239
----------- ----------
----------- ----------
COMPREHENSIVE INCOME:
Net income............................................................................ $ 103,798 $ 96,304
Translation adjustments............................................................... (482) 321
----------- ----------
Total comprehensive income.......................................................... $ 103,316 $ 96,625
----------- ----------
----------- ----------
</TABLE>
The accompanying Notes to Consolidated Financial Statements are
an integral part of these financial statements.
3
<PAGE>
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------
1999 1998
----------- ----------
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................................................... $ 103,798 $ 96,304
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of intangible assets.......................................................... 3,737 3,727
Depreciation expense....................................................................... 24,218 13,671
Provision for deferred income taxes........................................................ (6,260) 2,220
Changes in assets and liabilities, net of effects of acquisitions:
Increase in accounts receivable.......................................................... (50,677) (45,959)
Increase in accounts payable, accrued expenses and accrued payroll costs................. 30,576 29,951
Increase in income taxes payable......................................................... 186 6,328
Change in other assets, net of change in other liabilities............................... 17,495 8,471
----------- ----------
Total adjustments............................................................................ 19,275 18,409
----------- ----------
Net cash and cash equivalents provided by operating activities............................... 123,073 114,713
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired......................................................... -- (4,187)
Capital expenditures....................................................................... (34,745) (47,520)
----------- ----------
Net cash and cash equivalents used in investing activities................................... (34,745) (51,707)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchases of common stock and common stock equivalents................................... (82,009) (59,510)
Principal payments on notes payable and other indebtedness................................. 41 (2,221)
Proceeds and capital impact of equity incentive plans...................................... 10,427 34,195
----------- ----------
Net cash and cash equivalents used in financing activities................................... (71,541) (27,536)
----------- ----------
Net increase in cash and cash equivalents.................................................... 16,787 35,470
Cash and cash equivalents at beginning of period............................................. 166,060 131,349
----------- ----------
Cash and cash equivalents at end of period................................................... $ 182,847 $ 166,819
----------- ----------
----------- ----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest................................................................................... $ 273 $ 262
Income taxes............................................................................... $ 65,871 $ 27,692
Acquisitions:
Assets acquired--
Intangible assets........................................................................ $ -- $ 3,967
Other.................................................................................... -- 622
Liabilities incurred--
Other.................................................................................... -- (402)
----------- ----------
Cash paid, net of cash acquired............................................................ $ -- $ 4,187
----------- ----------
----------- ----------
</TABLE>
The accompanying Notes to Consolidated Financial Statements are
an integral part of these financial statements.
4
<PAGE>
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS. Robert Half International Inc. (the "Company")
provides specialized staffing services through such divisions as
ACCOUNTEMPS-REGISTERED TRADEMARK-, ROBERT HALF -REGISTERED TRADEMARK-,
OFFICETEAM-REGISTERED TRADEMARK-, RHI CONSULTING-REGISTERED TRADEMARK-, RHI
MANAGEMENT RESOURCES-REGISTERED TRADEMARK-, THE AFFILIATES-REGISTERED TRADEMARK-
AND THE CREATIVE GROUP-SM-. 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 highly skilled temporary
administrative support personnel. RHI CONSULTING provides contract information
technology professionals. THE AFFILIATES provides temporary, project, and
full-time staffing of attorneys and specialized support personnel within law
firms and corporate legal departments. THE CREATIVE GROUP provides project
staffing in the advertising, marketing, and Web design fields. Revenues are
predominantly from temporary services. The Company operates in the United
States, Canada, Europe, and Australia. 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 1998 financial statements to conform to
the 1999 presentation.
INTERIM FINANCIAL INFORMATION. The Consolidated Financial Statements have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission ("SEC") and, in management's opinion, include all
adjustments necessary for a fair statement of results for such interim periods.
Certain information and note disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to SEC rules or regulations; however,
the Company believes that the disclosures made are adequate to make the
information presented not misleading.
The interim results for the three and nine months ended September 30, 1999,
and 1998 are not necessarily indicative of results for the full year. It is
suggested that these financial statements be read in conjunction with the
financial statements and the notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998.
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 September
30, 1999.
5
<PAGE>
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999
(UNAUDITED)
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
NOTE B--BUSINESS SEGMENTS
In 1998, the Company adopted Statement of Financial Accounting Standard No.
131 (SFAS No. 131), DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
INFORMATION. The Company has defined its business segments based on the nature
of services for the purposes of reporting under SFAS No. 131. The Company is
managed in a matrix form of organization with certain managers responsible for
service lines while other managers are responsible for geographic territories.
As such, both service line and geographic information is used in allocating
resources and measuring performance.
The Company has two reportable segments: temporary and consultant staffing;
and permanent placement staffing. The temporary and consultant staffing segment
provides specialized personnel in the accounting and finance, administrative and
office, information technology, legal, advertising, marketing, and Web design
fields. The permanent placement staffing segment provides full-time personnel in
the accounting, finance, and information technology fields.
The accounting policies of the segments are the same as those described in
Note A: Summary of Significant Accounting Policies. The Company evaluates
performance based on profit or loss from operations before interest expense,
intangible amortization expense, and income taxes.
6
<PAGE>
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999
(UNAUDITED)
NOTE B--BUSINESS SEGMENTS (CONTINUED)
The following table provides a reconciliation of revenue and operating
profit by reportable segment to consolidated results (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- --------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net service revenues
Temporary and consultant staffing...................... $ 485,873 $ 434,084 $ 1,395,501 $ 1,212,388
Permanent placement staffing........................... 43,589 36,566 116,009 101,711
------------ ------------ ------------ ------------
$ 529,462 $ 470,650 $ 1,511,510 $ 1,314,099
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Operating income
Temporary and consultant staffing...................... $ 44,118 $ 48,588 $ 141,400 $ 134,501
Permanent placement staffing........................... 12,618 9,473 29,921 26,699
------------ ------------ ------------ ------------
56,736 58,061 171,321 161,200
Amortization of intangible assets........................ 1,254 1,264 3,737 3,727
Interest income, net..................................... (1,761) (1,733) (4,585) (4,425)
------------ ------------ ------------ ------------
Income before income taxes............................... $ 57,243 $ 58,530 $ 172,169 $ 161,898
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Certain information contained in Management's Discussion and Analysis and in
other parts of this report may be deemed forward-looking statements regarding
events and financial trends that may affect the Company's future operating
results or financial positions. Such statements may be identified by words such
as "estimate", "project", "plan", "intend", "believe", "expect", "anticipate",
or variations or negatives thereof or by similar or comparable words or phrases.
Forward-looking statements are subject to risks and uncertainties that could
cause actual results to differ materially from those expressed in the
statements. Such risks and uncertainties include, but are not limited to, the
following: changes in general or local economic conditions or in the economic
condition of any industry, the availability of qualified staff employees and
temporary candidates, government regulation of the personnel services industry,
general regulations relating to employers and employees, liability risks
associated with the operation of a personnel services business, competitive
conditions in the personnel services industry, and Year 2000 issues. In
addition, it should be noted that, because long-term contracts are not a
significant portion of the Company's business, future results cannot be reliably
predicted by considering past trends or extrapolating past results.
RESULTS OF OPERATIONS FOR EACH OF THE THREE MONTHS AND NINE MONTHS ENDED
SEPTEMBER 30, 1999 AND 1998
Temporary services revenues were $486 million and $434 million for the three
months ended September 30, 1999 and 1998, respectively, increasing by 12% during
the three months ended September 30, 1999 compared to the same period in 1998.
Temporary services revenues were $1.4 billion and $1.2 billion for the nine
months ended September 30, 1999 and 1998, respectively, increasing by 15% during
the nine months ended September 30, 1999 compared to the same period in 1998.
Permanent placement revenues were $43 million and $37 million for the three
months ended September 30, 1999 and 1998, respectively, increasing by 16% during
the three months ended September 30, 1999 compared to the same period in 1998.
Permanent placement revenues were $116 million and $102 million for the nine
months ended September 30, 1999 and 1998, respectively, increasing by 14% during
the nine months ended September 30, 1999 compared to the same period in 1998.
Overall revenue increases reflect continued demand for the Company's services,
which the Company believes is a result of increased acceptance in the use of
professional staffing services.
The Company currently has more than 250 offices in 39 states and seven
foreign countries. Domestic operations represented 88% of revenues for both the
three and nine months ended September 30, 1999 and 89% of revenues for both the
three and nine months ended September 30, 1998. Foreign operations represented
12% of revenues for both the three and nine months ended September 30, 1999 and
11% of revenues for both the three and nine months ended September 30, 1998.
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 $178 million and $508 million for the three and nine months ended
September 30, 1999, respectively, compared to $153 million and $427 million for
the comparable periods in 1998, increasing by 16% and 19% for the three and nine
months ended September 30, 1999, respectively. Gross margin amounts equaled 37%
and 36% of revenues for temporary services for the three and nine months ended
September 30, 1999, respectively, compared to 35% of temporary service revenues
for both the three and nine months ended September 30, 1998, 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 $43 million and $116 million for the three and nine
months ended September 30, 1999, respectively,
8
<PAGE>
compared to $37 million and $102 million for the comparable periods in 1998,
increasing by 16% and 14% for the three and nine months ended September 30,
1999, respectively.
Selling, general and administrative expenses were $165 million and $452
million for the three and nine months ended September 30, 1999, respectively,
compared to $132 million and $367 million during the three and nine months ended
September 30, 1998, respectively. Selling, general and administrative expenses
as a percentage of revenues were 31% and 30% for the three and nine months ended
September 30, 1999, respectively, compared to 28% for both the three and nine
months ended September 30, 1998. Selling, general and administrative expenses
consist primarily of staff compensation, advertising, depreciation and occupancy
costs.
The Company allocates the excess of cost over the fair market value of the
net tangible assets first to identifiable intangible assets, if any, and then to
goodwill. Although management believes that goodwill has an unlimited life, the
Company amortizes these costs over 40 years. Management believes that its
strategy of making acquisitions of established companies in established markets
and maintaining its presence in these markets preserves the goodwill for an
indeterminate period. The carrying value of intangible assets is periodically
reviewed by the Company and impairments are recognized when the expected future
operating cash flows derived from such intangible assets is less than their
carrying value. Based upon its most recent analysis, the Company believes that
no material impairment of intangible assets existed at September 30, 1999.
Intangible assets represented 22% of total assets and 30% of total stockholders'
equity at September 30, 1999.
Interest income for the three months ended September 30, 1999 and 1998 was
$1,961,000 and $2,062,000, respectively, while interest expense for the three
months ended September 30, 1999 and 1998 was $200,000 and $329,000,
respectively. Interest income for the nine months ended September 30, 1999 and
1998 was $5,104,000 and $5,340,000, respectively, while interest expense for the
nine months ended September 30, 1999 and 1998 was $519,000 and $915,000,
respectively.
The provision for income taxes was 40% for both the three and nine months
ended September 30, 1999, compared to 40% and 41% for the three and nine months
ended September 30, 1998, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The change in the Company's liquidity during the nine months ended September
30, 1999 is the net effect of funds generated by operations and the funds used
for capital expenditures and repurchases of common stock. As of September 30,
1999 the company has authorized the repurchase, from time to time, of up to nine
million shares of the company's common stock on the open market or in privately
negotiated transactions, depending on market conditions. During the nine months
ended September 30, 1999, the Company repurchased approximately 2,756,000 shares
of common stock on the open market, bringing the total repurchased under the
authorization to 4,480,000 shares. Repurchases of the securities have been
funded with cash generated from operations. For the nine months ended September
30, 1999, the Company generated $123 million from operations, used $35 million
in investing activities and used $71 million in financing activities.
The Company's working capital at September 30, 1999, included $183 million
in cash and cash equivalents. In addition, at September 30, 1999, the Company
had available $75 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 September 30, 1999, the Company had no material capital
commitments.
9
<PAGE>
The Company's primary exposures related to the Year 2000 are in its key
internal information systems. The Company is addressing the Year 2000 exposures
as part of its strategic plan for upgrading core systems.
Since 1997, the Company has initiated a number of major system projects to
replace core computer hardware, networking, and software systems in the U.S.
with new technology. The Company has purchased software from outside vendors and
is working with outside consultants to install the software and train employees.
The Company's key vendors supplying this technology have asserted that these
hardware, networking, and software systems are Year 2000 compliant. The Company
does not plan to test these systems for Year 2000 compliance given the
contractual representations made by its key vendors.
The Company is currently rolling out these new systems throughout the
organization in phases, by location, and is currently on schedule to be
completed before the Year 2000. The Company has completed the update of
substantially all desktop computers to a model that is Year 2000 compliant. The
Company expects to spend in excess of $44 million on these systems and desktop
upgrade projects of which approximately $43 million has been incurred to date.
Contingency plans are being developed in certain key areas to ensure that
any potential business interruptions caused by the Year 2000 issue are
mitigated. The Company believes it is taking the necessary steps to resolve Year
2000 issues, however, given the possible consequences of failure to resolve
significant Year 2000 issues, there can be no assurance that any one or more of
such failures would not have a material adverse effect on the Company.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's market risk sensitive instruments do not subject the Company
to material market risk exposures.
10
<PAGE>
PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
- ------------- -------------------------------------------------------------------------------------------
<C> <S>
11 Computation of Per Share Earnings.
27 Financial Data Schedule.
</TABLE>
(b) The registrant filed no current report on Form 8-K during the
quarter covered by this report.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ROBERT HALF INTERNATIONAL INC.
(Registrant)
By /s/ M. KEITH WADDELL
------------------------------------
M. Keith Waddell,
SENIOR VICE PRESIDENT, CHIEF
FINANCIAL
OFFICER AND TREASURER
(PRINCIPAL FINANCIAL OFFICER
AND DULY AUTHORIZED SIGNATORY)
Date: November 10, 1999
12
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. PAGE
- ------------- ---------
<C> <S> <C>
11 Computation of Per Share Earnings.............................................................
27 Financial Data Schedule.......................................................................
</TABLE>
<PAGE>
Exhibit 11
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- ---------------------
1999 1998 1999 1998
--------- --------- ---------- ---------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net Income........................................................... $ 34,549 $ 34,974 $ 103,798 $ 96,304
--------- --------- ---------- ---------
--------- --------- ---------- ---------
Weighted Average Number Of Shares Outstanding:
Basic:
Weighted average shares.......................................... 90,109 92,017 90,705 91,906
Diluted:
Weighted average shares.......................................... 90,149 92,017 90,705 91,906
Common stock equivalents--Stock options (A)...................... 1,716 3,158 2,061 3,308
--------- --------- ---------- ---------
Diluted shares outstanding....................................... 91,865 95,175 92,766 95,214
--------- --------- ---------- ---------
--------- --------- ---------- ---------
Net Income Per Share:
Basic.............................................................. $ .38 $ .38 $ 1.14 $ 1.05
Diluted............................................................ $ .38 $ .37 $ 1.12 $ 1.01
</TABLE>
- ------------------------
(A) The treasury stock method was used to determine the weighted average number
of shares of common stock equivalents outstanding during the periods.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 182,847
<SECURITIES> 0
<RECEIVABLES> 305,857
<ALLOWANCES> 14,490
<INVENTORY> 0
<CURRENT-ASSETS> 502,591
<PP&E> 175,705
<DEPRECIATION> 72,625
<TOTAL-ASSETS> 778,198
<CURRENT-LIABILITIES> 182,510
<BONDS> 3,809
0
0
<COMMON> 89
<OTHER-SE> 571,106
<TOTAL-LIABILITY-AND-EQUITY> 778,198
<SALES> 0
<TOTAL-REVENUES> 1,511,510
<CGS> 0
<TOTAL-COSTS> 887,821
<OTHER-EXPENSES> 3,737
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (4,585)
<INCOME-PRETAX> 172,169
<INCOME-TAX> 68,371
<INCOME-CONTINUING> 103,798
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 103,798
<EPS-BASIC> 1.14
<EPS-DILUTED> 1.12
</TABLE>
