-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, a60pNP7Bc8O9frumT++FD5FrIT8wkaH8uNwqZhwSwHpgkV5OoJK3ep+FiyOP0+M/ Z6BOxZBqY5dIpDZA0yHXUw== 0000912057-95-001238.txt : 19950613 0000912057-95-001238.hdr.sgml : 19950613 ACCESSION NUMBER: 0000912057-95-001238 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950308 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HALF ROBERT INTERNATIONAL INC /DE/ CENTRAL INDEX KEY: 0000315213 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EMPLOYMENT AGENCIES [7361] IRS NUMBER: 941648752 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-10427 FILM NUMBER: 95519358 BUSINESS ADDRESS: STREET 1: 2884 SAND HILL ROAD STREET 2: STE 200 CITY: MENLO PARK STATE: CA ZIP: 94025 BUSINESS PHONE: 4158549700 MAIL ADDRESS: STREET 1: 2884 SAND HILL ROAD STREET 2: STE 200 CITY: MENLO PARK STATE: CA ZIP: 94025 FORMER COMPANY: FORMER CONFORMED NAME: BOOTHE FINANCIAL CORP /DE/ DATE OF NAME CHANGE: 19870721 FORMER COMPANY: FORMER CONFORMED NAME: BOOTHE INTERIM CORP DATE OF NAME CHANGE: 19600201 10-K405 1 10-K405 FORM 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------------ COMMISSION FILE NUMBER 1-10427 ROBERT HALF INTERNATIONAL INC. (Exact name of registrant as specified in its charter) DELAWARE 94-1648752 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2884 SAND HILL ROAD, SUITE 200, MENLO PARK, CALIFORNIA 94025 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (415) 854-9700 ------------------------ Securities registered pursuant to Section 12(b) of the Act: NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED Common Stock, Par Value $.001 per Share New York Stock Exchange Preferred Share Purchase Rights New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None ------------------------ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes _X_ No ____ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. /X/ As of February 28, 1995, the aggregate market value of the Common Stock held by non-affiliates of the registrant was approximately $631,070,000 based on the closing sale price on that date. This amount excludes the market value of 2,686,109 shares of Common Stock held by registrant's directors and officers and their affiliates. As of February 28, 1995, there were outstanding 28,313,280 shares of the registrant's Common Stock. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's Proxy Statement to be mailed to stockholders in connection with the registrant's annual meeting of stockholders, scheduled to be held in May 1995, are incorporated by reference in Part III of this report. Except as expressly incorporated by reference, the registrant's Proxy Statement shall not be deemed to be part of this report. PART I ITEM 1. BUSINESS Robert Half International Inc. is the world's largest specialized provider of temporary and permanent personnel in the fields of accounting and finance. Its divisions include ACCOUNTEMPS-Registered Trademark- and ROBERT HALF-Registered Trademark-, providers of temporary and permanent personnel, respectively, in the fields of accounting and finance. The Company, utilizing its experience as a specialized provider of temporary and permanent personnel, has expanded into additional specialty fields. In December 1991, the Company formed OFFICETEAM-Registered Trademark- to provide skilled temporary administrative and office personnel. In 1992, the Company acquired THE AFFILIATES-Registered Trademark-, which focuses on placing temporary and permanent employees in paralegal, legal administrative and other legal support positions. In addition, the Company recently established RHI CONSULTING-SM- to concentrate on providing temporary information technology professionals in positions ranging from PC/LAN technician to system design and application programmer. The Company's business was originally founded in 1948. Prior to 1986, the Company was primarily a franchisor of ACCOUNTEMPS and ROBERT HALF offices. Beginning in 1986, the Company and its current management embarked on a strategy of acquiring franchised locations and other local or regional independent providers of specialized temporary service personnel. The Company has acquired all but five of the ACCOUNTEMPS and ROBERT HALF franchises in 45 separate transactions, and has acquired 14 other local or regional providers of specialized temporary service personnel. Since 1986, the Company has significantly expanded operations at many of the acquired locations and has opened over 50 new locations. The Company believes that direct ownership of offices allows it to better monitor and protect the image of the ACCOUNTEMPS and ROBERT HALF names, promotes a more consistent and higher level of quality and service throughout its network of offices and improves profitability by centralizing many of its administrative functions. The Company currently has more than 180 offices in 36 states and five foreign countries and placed approximately 85,000 employees on temporary assignment with clients in 1994. ACCOUNTEMPS The ACCOUNTEMPS temporary services division offers customers a reliable and economical means of dealing with uneven or peak work loads for accounting, tax and finance personnel caused by such predictable events as vacations, taking inventories, tax work, month-end activities and special projects and such unpredictable events as illness and emergencies. Businesses increasingly view the use of temporary employees as a means of controlling personnel costs and converting such costs from fixed to variable. The cost and inconvenience to clients of hiring and firing permanent employees are eliminated by the use of ACCOUNTEMPS temporaries. The temporary workers are employees of ACCOUNTEMPS and are paid by ACCOUNTEMPS only when working on customer assignments. The customer pays a fixed rate only for hours worked. ACCOUNTEMPS clients may fill their permanent employment needs by using an ACCOUNTEMPS employee on a trial basis and, if so desired, "converting" the temporary position to a permanent position. The client typically pays a one-time fee for such conversions. The ACCOUNTEMPS business accounted for 75% of the Company's revenue in 1993 and 66% of the Company's revenue in 1994. OFFICETEAM The Company's OFFICETEAM division, which commenced operations in 1991, places temporary and permanent office and administrative personnel, ranging from word processors to office managers, from over 125 locations in the United States. OFFICETEAM operates in much the same fashion as the ACCOUNTEMPS and ROBERT HALF divisions. The OFFICETEAM business accounted for 14% of the Company's revenue in 1993 and 19% of the Company's revenue in 1994. 1 ROBERT HALF The Company offers permanent placement services through its office network under the name ROBERT HALF. The Company's ROBERT HALF division specializes in placing accounting, financial, tax and banking personnel. Fees for successful permanent placements are paid only by the employer and are generally a percentage of the new employee's annual compensation. No fee for permanent placement services is charged to employment candidates. The ROBERT HALF business accounted for 9% of the Company's revenue in 1993 and 1994. OTHER ACTIVITIES In 1992, the Company acquired THE AFFILIATES, a small operation involving only a limited number of offices, which places temporary and permanent employees in paralegal, legal administrative and legal secretarial positions. The legal profession's requirements (the need for confidentiality, accuracy and reliability, a strong drive toward cost-effectiveness, and frequent peak workload periods) are similar to the demands of the clients of the ACCOUNTEMPS division. The Company recently established its RHI CONSULTING division, which specializes in providing information technology professionals ranging from PC/LAN technician to system design and application programmer. MARKETING AND RECRUITING The Company markets its services to clients as well as employment candidates. Local marketing and recruiting are generally conducted by each office or related group of offices. Advertising directed to clients and employment candidates consists primarily of yellow pages advertisements, classified advertisements and radio. Direct marketing through mail and telephone solicitation also constitutes a significant portion of the Company's total advertising. National advertising conducted by the Company consists primarily of print advertisements in national newspapers, magazines and certain trade journals. Joint marketing arrangements have been entered into with Lotus Development Corporation, WordPerfect Corporation, Peachtree Software, Inc., and Computer Associates International, Inc. and typically provide for cooperative advertising, joint mailings and similar promotional activities. The Company also actively seeks endorsements and affiliations with professional organizations in the business management, office administration and professional secretarial fields. The Company also conducts public relations activities designed to enhance public recognition of the Company and its services. Local employees are encouraged to be active in civic organizations and industry trade groups. The Company owns many trademarks, service marks and tradenames, including the ROBERT HALF-Registered Trademark-, ACCOUNTEMPS-Registered Trademark-, OFFICETEAM-Registered Trademark-, THE AFFILIATES-Registered Trademark- and RHI CONSULTING-SM- marks, which are registered in the United States and in a number of foreign countries. ORGANIZATION Management of the Company's operations is coordinated from its headquarters in Menlo Park, California. The Company's headquarters provides support and centralized services to its offices in the administrative, marketing, accounting, training and legal areas, particularly as it relates to the standardization of the operating procedures of its offices. The Company has more than 180 offices in 36 states and five foreign countries. Office managers are responsible for most activities of their offices, including sales, local advertising and marketing and recruitment. COMPETITION The Company faces competition in its efforts to attract clients as well as high-quality specialized employment candidates. The temporary and permanent placement businesses are highly competitive, with a number of firms offering services similar to those provided by the Company on a national, regional or local basis. In many areas the local companies are the strongest competitors. The most significant competitive factors in the temporary and permanent placement businesses are price and the reliability of service, both of which are often a function of the availability and quality of personnel. 2 The Company believes it derives a competitive advantage from its long experience with and commitment to the specialized employment market, its national presence, and its various marketing activities. EMPLOYEES The Company has approximately 1,600 full-time staff employees. The Company's offices placed approximately 85,000 employees on temporary assignments with clients during 1994. Temporary employees placed by the Company are the Company's employees for all purposes while they are working on assignments. The Company pays the related costs of employment, such as workers' compensation insurance, state and federal unemployment taxes, social security and certain fringe benefits. The Company provides voluntary health insurance coverage to interested temporary employees. OTHER INFORMATION The Company's current business constitutes a single business segment. (See Item 8. Financial Statements and Supplementary Data for financial information about the Company.) The Company is not dependent upon a single customer or a limited number of customers. The Company's operations are generally more active in the first and fourth quarters of a calendar year. Order backlog is not a material aspect of the Company's business and no material portion of the Company's business is subject to government contracts. The Company does not have any material expenditures for research and development. Compliance with federal, state or local environmental protection laws has no material effect on the capital expenditures, earnings or competitive position of the Company. Information about foreign operations is contained in Note N of Notes to Consolidated Financial Statements in Item 8. The Company does not have export sales. ITEM 2. PROPERTIES The Company's headquarters is located in Menlo Park, California. Placement activities are conducted through more than 180 offices located in the United States, Canada, the United Kingdom, Belgium, France and the Netherlands. All of the offices are leased. ITEM 3. LEGAL PROCEEDINGS The Company is not a party to any material pending legal proceedings other than routine litigation incidental to its business. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matter was submitted to a vote of the Company's security holders during the fourth quarter of the fiscal year covered by this report. 3 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's Common Stock is listed for trading on the New York Stock Exchange under the symbol "RHI". On February 28, 1995, there were approximately 1,400 holders of record of the Common Stock. Following is a list by fiscal quarters of the sales prices of the stock as quoted on the New York Stock Exchange, adjusted, as appropriate, to reflect the two-for-one stock split effected in the form of a stock dividend in August 1994:
SALES PRICES -------------------- 1994 HIGH LOW -------------------------------- -------- --------- 4th Quarter..................... $26 3/4 $18 1/8 3rd Quarter..................... $23 1/16 $17 2nd Quarter..................... $20 3/16 $15 1/16 1st Quarter..................... $16 7/16 $12 3/4 SALES PRICES -------------------- 1993 HIGH LOW -------------------------------- -------- --------- 4th Quarter..................... $14 1/8 $12 3rd Quarter..................... $15 $10 11/16 2nd Quarter..................... $11 1/4 $ 8 1/8 1st Quarter..................... $ 9 1/16 $ 6 5/16
No cash dividends were paid in 1994 or 1993. The Company, as it deems appropriate, may continue to retain all earnings for use in its business or may consider paying a dividend in the future. 4 ITEM 6. SELECTED FINANCIAL DATA Following is a table of selected financial data of the Company of the last five years:
YEAR ENDED DECEMBER 31, ------------------------------------------------ 1994 1993 1992 1991 1990 -------- -------- -------- -------- -------- (IN THOUSANDS) INCOME STATEMENT DATA: Net service revenues....................................................... $446,328 $306,166 $220,179 $209,455 $248,557 Direct costs of services, consisting of payroll and payroll taxes for temporary employees....................................................... 273,327 188,292 131,875 117,583 130,792 -------- -------- -------- -------- -------- Gross margin............................................................... 173,001 117,874 88,304 91,872 117,765 Selling, general and administrative expenses............................... 121,640 88,074 72,136 73,326 90,518 Amortization of intangible assets.......................................... 4,584 4,251 3,961 3,896 3,721 Interest expense........................................................... 1,570 3,992 4,301 6,574 8,593 -------- -------- -------- -------- -------- Income before income taxes and extraordinary item.......................... 45,207 21,557 7,906 8,076 14,933 Provision for income taxes................................................. 19,090 9,834 3,524 3,961 6,067 -------- -------- -------- -------- -------- Income before extraordinary item........................................... 26,117 11,723 4,382 4,115 8,866 Extraordinary item from repurchases of debentures, net of income tax effects................................................................... -- -- -- -- 453 -------- -------- -------- -------- -------- Net income................................................................. $ 26,117 $ 11,723 $ 4,382 $ 4,115 $ 9,319 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- YEAR ENDED DECEMBER 31, ------------------------------------------------ 1994 1993 1992 1991 1990 -------- -------- -------- -------- -------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) INCOME PER PRIMARY SHARE: Income before extraordinary item........................................... $ .92 $ .47 $ .18 $ .18 $ .39 Extraordinary item......................................................... -- -- -- -- .02 -------- -------- -------- -------- -------- Net income................................................................. $ .92 $ .47 $ .18 $ .18 $ .41 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- INCOME PER FULLY DILUTED SHARE: Income before extraordinary item........................................... $ .92 $ .46 $ .18 $ .18 $ .39 Extraordinary item......................................................... -- -- -- -- .02 -------- -------- -------- -------- -------- Net income................................................................. $ .92 $ .46 $ .18 $ .18 $ .41 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- WEIGHTED AVERAGE NUMBER OF SHARES: Primary.................................................................... 28,336 25,092 23,930 23,206 22,752 Fully Diluted.............................................................. 28,484 25,260 24,007 23,273 22,935 DECEMBER 31, ------------------------------------------------ 1994 1993 1992 1991 1990 -------- -------- -------- -------- -------- (IN THOUSANDS) BALANCE SHEET DATA: Intangible assets, net..................................................... $152,824 $152,156 $143,757 $140,715 $141,728 Total assets............................................................... 227,761 204,598 181,999 178,207 187,844 Debt financing............................................................. 4,214 32,740 61,855 67,614 86,475 Stockholders' equity....................................................... 176,995 133,602 90,972 84,419 77,291
All shares and per share amounts have been restated to retroactively reflect the two-for-one stock split effected in the form of a stock dividend in August 1994. 5 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS FOR THE THREE YEARS ENDED DECEMBER 31, 1994 Temporary services revenues increased 46% during 1994 and 40% during 1993, including the revenues generated from the Company's OfficeTeam division, which was started in 1991 to provide highly-skilled office and administrative personnel. Permanent placement revenues increased 47% during the year ended December 31, 1994 and 30% during the year ended December 31, 1993. The revenue comparisons reflect continued improvement in the demand for the Company's services. Gross margin dollars increased 47% during the year ended December 31, 1994 compared to 33% for the year ended December 31, 1993. Gross margin amounts equaled 39% of revenue in 1994 and 1993. In 1992, gross margin equaled 40% of revenue. The percentage decline relative to 1992 related primarily to the lower mix of the higher permanent placement gross margins and higher unemployment insurance costs associated with the temporary services divisions. Selling, general and administrative expenses were approximately $122 million during 1994 compared to $88 million in 1993 and $72 million in 1992. Selling, general and administrative expenses as a percentage of revenues were 27% in 1994, compared to 29% in 1993 and 33% in 1992. The percentage declines were attributable to revenue growth coupled with the Company's continued cost containment. Amortization of intangible assets increased from 1992 to 1994 due to the acquisitions in each of those years of additional personnel services operations. Interest expense for the years ended December 31, 1994 and 1993 decreased 61% and 7%, respectively, over the comparable prior periods due primarily to the conversion of the Convertible Subordinated Debentures in the fourth quarter of 1993 and the reduction in outstanding indebtedness. The provision for income taxes was 42% in 1994, as compared to 46% in 1993 and 45% in 1992. The decrease in 1994 is the result of a smaller percentage of non-deductible intangible expenses relative to income. The 1993 increase reflects the effect of the 1% increase in the federal corporate income tax rate as a result of the 1993 Tax Act. Because of the increase in pre-tax book income, the effect of the non-deductible intangible amortization on the effective tax rate was reduced in 1993 as compared to 1992. The Financial Accounting Standards Board issued a new standard on accounting for income taxes, which the Company adopted, as required, on January 1, 1993. The cumulative effect of the adoption of the accounting method prescribed by the new standard was not material. LIQUIDITY AND CAPITAL RESOURCES The change in the Company's liquidity during the past three years is the net effect of funds generated by operations and the funds used for the personnel services acquisitions, principal payments on outstanding notes payable, and the securities repurchase program. In November 1994, the Company issued 633,555 shares of its common stock. The net proceeds from the sale of shares were approximately $12.6 million. The Company used the proceeds for repayment of the borrowings under the Company's revolving credit agreement. On December 10, 1993, substantially all of its outstanding convertible subordinated debentures were converted into common stock of the Company. See Note E to the Consolidated Financial Statements. The Company's working capital requirements consist primarily of the financing of accounts receivable. While there can be no assurances in this regard, the Company expects that internally generated cash plus the bank revolving line of credit will be sufficient to support the working capital needs of the Company's offices, the Company's fixed payments and other long-term obligations. 6 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
DECEMBER 31, ------------------ 1994 1993 -------- -------- ASSETS: Cash and cash equivalents........................................... $ 2,638 $ 1,773 Accounts receivable, less allowances of $2,600 and $2,194........... 60,025 40,155 Other current assets................................................ 5,040 5,538 -------- -------- Total current assets.............................................. 67,703 47,466 Intangible assets, less accumulated amortization of $28,243 and $23,665............................................................ 152,824 152,156 Other assets........................................................ 7,234 4,976 -------- -------- Total assets...................................................... $227,761 $204,598 -------- -------- -------- -------- LIABILITIES AND STOCKHOLDERS' EQUITY: Accounts payable and accrued expenses............................... $ 7,232 $ 6,745 Accrued payroll costs............................................... 19,133 13,243 Income taxes payable................................................ 2,181 1,792 Current portion of notes payable and other indebtedness............. 1,081 408 -------- -------- Total current liabilities......................................... 29,627 22,188 Notes payable and other indebtedness, less current portion.......... 3,133 2,032 Bank loan (revolving credit)........................................ -- 30,300 Deferred income taxes............................................... 18,006 16,476 -------- -------- Total liabilities................................................. 50,766 70,996 COMMITMENTS AND CONTINGENCIES (SEE NOTES) STOCKHOLDERS' EQUITY: Common stock, $.001 par value in 1994 and $1 par value in 1993; shares authorized 100,000,000 in 1994 and 30,000,000 in 1993; shares issued and outstanding -- 28,152,201 in 1994 and 26,836,804 in 1993............................................. 28 26,837 Capital surplus..................................................... 82,655 33,113 Deferred compensation............................................... (5,533) (2,113) Accumulated translation adjustments................................. (541) (589) Retained earnings................................................... 100,386 76,354 -------- -------- Total stockholders' equity........................................ 176,995 133,602 -------- -------- Total liabilities and stockholders' equity........................ $227,761 $204,598 -------- -------- -------- --------
All share and per share amounts have been restated to retroactively reflect the two-for-one stock split effected in the form of a stock dividend in August 1994. The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 7 ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEARS ENDED DECEMBER 31, ---------------------------- 1994 1993 1992 -------- -------- -------- Net service revenues............................................................ $446,328 $306,166 $220,179 Direct costs of services, consisting of payroll and payroll taxes for temporary employees...................................................................... 273,327 188,292 131,875 -------- -------- -------- Gross margin.................................................................... 173,001 117,874 88,304 Selling, general and administrative expenses.................................... 121,640 88,074 72,136 Amortization of intangible assets............................................... 4,584 4,251 3,961 Interest expense................................................................ 1,570 3,992 4,301 -------- -------- -------- Income before income taxes...................................................... 45,207 21,557 7,906 Provision for income taxes...................................................... 19,090 9,834 3,524 -------- -------- -------- Net income...................................................................... $ 26,117 $ 11,723 $ 4,382 -------- -------- -------- -------- -------- -------- Income per share................................................................ $ .92 $ .46 $ .18 -------- -------- -------- -------- -------- --------
All share and per share amounts have been restated to retroactively reflect the two-for-one stock split effected in the form of a stock dividend in August 1994. The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 8 ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (IN THOUSANDS)
YEARS ENDED DECEMBER 31, -------------------------- 1994 1993 1992 -------- ------- ------- COMMON STOCK: Balance at beginning of period................................................ $ 26,837 $23,642 $23,080 Issuance of common stock -- par value......................................... 1 -- -- Issuances of restricted stock, net -- par value............................... 334 82 192 Conversion of debentures -- par value......................................... -- 2,040 -- Repurchases of common stock -- par value...................................... (59) (119) (106) Exercises of stock options -- par value....................................... 213 1,086 460 Issuance of common stock for acquisitions -- par value........................ -- 106 16 Change in par value........................................................... (27,298) -- -- -------- ------- ------- Balance at end of period.................................................... $ 28 $26,837 $23,642 -------- ------- ------- -------- ------- ------- CAPITAL SURPLUS: Balance at beginning of period................................................ $ 33,113 $ 3,897 $ 1,107 Issuance of common stock -- excess over par value............................. 12,589 -- -- Issuances of restricted stock, net -- excess over par value................... 4,949 825 1,069 Conversion of debentures -- excess over par value............................. -- 20,185 -- Exercises of stock options -- excess over par value........................... 2,162 4,029 1,101 Tax benefits from exercises of stock options.................................. 2,544 2,823 535 Issuance of common stock for acquisitions -- excess over par value............ -- 1,354 85 Change in par value........................................................... 27,298 -- -- -------- ------- ------- Balance at end of period.................................................... $ 82,655 $33,113 $ 3,897 -------- ------- ------- -------- ------- ------- DEFERRED COMPENSATION: Balance at beginning of period................................................ $ (2,113) $(2,208) $(1,876) Issuances of restricted stock, net............................................ (5,283) (907) (1,261) Amortization.................................................................. 1,863 1,002 929 -------- ------- ------- Balance at end of period.................................................... $ (5,533) $(2,113) $(2,208) -------- ------- ------- -------- ------- ------- ACCUMULATED TRANSLATION ADJUSTMENTS: Balance at beginning of period................................................ $ (589) $ (257) $ -- Translation adjustments....................................................... 48 (332) (257) -------- ------- ------- Balance at end of period.................................................... $ (541) $ (589) $ (257) -------- ------- ------- -------- ------- ------- RETAINED EARNINGS: Balance at beginning of period................................................ $ 76,354 $65,898 $62,108 Repurchases of common stock -- excess over par value.......................... (2,085) (1,267) (592) Net income.................................................................... 26,117 11,723 4,382 -------- ------- ------- Balance at end of period.................................................... $100,386 $76,354 $65,898 -------- ------- ------- -------- ------- -------
All share and per share amounts have been restated to retroactively reflect the two-for-one stock split effected in the form of a stock dividend in August 1994. The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 9 ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
YEARS ENDED DECEMBER 31, ------------------------------ 1994 1993 1992 --------- --------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income.................................................................... $ 26,117 $ 11,723 $ 4,382 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of intangible assets......................................... 4,584 4,251 3,961 Depreciation expense...................................................... 2,673 2,383 2,426 Deferred income taxes..................................................... 1,096 1,136 1,947 Changes in assets and liabilities, net of effects of acquisitions: Increase in accounts receivable........................................... (18,292) (10,481) (1,049) Increase in accounts payable, accrued expenses and accrued payroll costs.................................................................... 5,795 4,158 579 Increase in income taxes payable.......................................... 389 2,553 146 Change in other assets, net of change in other liabilities................ 2,997 (806) (887) --------- --------- -------- Total adjustments........................................................... (758) 3,194 7,123 --------- --------- -------- Net cash and cash equivalents provided by operating activities................ 25,359 14,917 11,505 CASH FLOWS USED IN INVESTING ACTIVITIES: Acquisitions, net of cash acquired............................................ (4,406) (11,141) (6,438) Capital expenditures.......................................................... (4,768) (2,340) (1,101) --------- --------- -------- Net cash and cash equivalents used in investing activities.................... (9,174) (13,481) (7,539) CASH FLOWS USED IN FINANCING ACTIVITIES: Proceeds from issuance of common stock, net................................... 12,589 -- -- Borrowings under credit agreement............................................. 104,900 138,900 69,100 Repayments under credit agreement............................................. (135,200) (144,200) (62,100) Repurchases of convertible debentures......................................... -- (305) -- Principal payments on notes payable and other indebtedness.................... (384) (1,170) (12,603) Proceeds and tax benefits from exercise of stock options...................... 4,919 7,938 2,096 Repurchases of common stock and common stock equivalents...................... (2,144) (1,386) (698) --------- --------- -------- Net cash and cash equivalents used in financing activities.................... (15,320) (223) (4,205) --------- --------- -------- Net increase (decrease) in cash and cash equivalents.......................... 865 1,213 (239) Cash and cash equivalents at beginning of period.............................. 1,773 560 799 --------- --------- -------- Cash and cash equivalents at end of period.................................... $ 2,638 $ 1,773 $ 560 --------- --------- -------- --------- --------- -------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the year for: Interest...................................................................... $ 1,420 $ 4,256 $ 4,233 Income taxes.................................................................. $ 14,609 $ 4,568 $ 1,675 Acquisitions: Fair value of assets acquired -- Intangible assets........................................................... $ 5,452 $ 12,650 $ 6,502 Other....................................................................... 1,694 2,506 424 Liabilities incurred -- Notes payable and contracts................................................. (2,158) (101) -- Other....................................................................... (582) (2,454) (387) Common stock issued........................................................... -- (1,460) (101) --------- --------- -------- Cash paid, net of cash acquired........................................... $ 4,406 $ 11,141 $ 6,438 --------- --------- -------- --------- --------- --------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 10 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION. The Consolidated Financial Statements include the accounts of Robert Half International Inc. (the "Company") and its subsidiaries, all of which are wholly-owned. The Company is a Delaware corporation. All significant intercompany balances have been eliminated. Certain reclassifications have been made to the 1993 and 1992 financial statements to conform to the 1994 presentation. REVENUE RECOGNITION. Temporary services revenues are recognized when the services are rendered by the Company's temporary employees. Permanent placement revenues are recognized when employment candidates accept offers of permanent employment. Allowances are established to estimate losses due to placed candidates not remaining in employment for the Company's guarantee period, typically 90 days. FOREIGN CURRENCY TRANSLATION. Foreign income statement items are translated at the monthly average exchange rates prevailing during the period. Foreign balance sheets are translated at the current exchange rates at the end of the period, and the related translation adjustments are recorded as part of Stockholders' Equity. Gains and losses resulting from foreign currency transactions are included in the Consolidated Statements of Income. CASH AND CASH EQUIVALENTS. For purposes of the Consolidated Statements of Cash Flows, the Company classifies all highly liquid investments with an original maturity of three months or less as cash equivalents. INTANGIBLE ASSETS. Intangible assets represent the cost of acquired companies in excess of the fair market value of their net tangible assets at acquisition date, and are being amortized on a straight-line basis over a period of 40 years. The carrying value of intangible assets is periodically reviewed by the Company and impairments are recognized when the expected future operating cash flows derived from such intangible assets is less than their carrying value. Based upon its most recent analysis, the Company believes that no material impairment of intangible assets exists at December 31, 1994. INCOME TAXES. Effective January 1, 1993, the Company adopted Financial Accounting Standards No. 109, Accounting for Income Taxes (FAS 109). Under FAS 109, deferred taxes are computed based on the difference between the financial statement and income tax bases of assets and liabilities using the enacted marginal tax rate. As permitted under the provisions of FAS 109, the Company elected not to restate prior years and has determined that the cumulative effect of implementation was immaterial. NOTE B -- ACQUISITIONS In July 1986, the Company acquired all of the outstanding stock of Robert Half Incorporated, the franchisor of the Accountemps and Robert Half operations. Subsequently, in 59 separate transactions the Company acquired all of the outstanding stock of certain corporations operating Accountemps and Robert Half franchised offices in the United States, the United Kingdom and Canada as well as other personnel services businesses. The Company has paid approximately $192 million in cash, stock, notes and other indebtedness in these acquisitions, excluding transaction costs and cash acquired. These acquisitions were accounted for as purchases, and the excess of cost over the fair market value of the net tangible assets acquired is being amortized over 40 years using the straight-line method. Results of operations of the acquired companies are included in the Consolidated Statements of Income from the dates of acquisition. The acquisitions made during 1994 and 1993 had no material pro forma impact on the results of operations. 11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE C -- NOTES PAYABLE AND OTHER INDEBTEDNESS The Company issued promissory notes as well as other forms of indebtedness in connection with certain acquisitions. These are due in varying installments, carry varying interest rates and in aggregate amounted to $4,214,000 at December 31, 1994, and $2,440,000 at December 31, 1993. At December 31, 1994, $1.8 million of the notes was secured by a standby letter of credit (see Note D). The following table shows the schedule of maturities for notes payable and other indebtedness at December 31, 1994 (in thousands): 1995....................................................................... $1,081 1996....................................................................... 1,406 1997....................................................................... 1,004 1998....................................................................... 464 1999....................................................................... 15 Thereafter................................................................. 244 ------ $4,214 ------ ------
At December 31, 1994, all of the notes carried fixed rates of interest ranging from 4.1% to 13.3%. The weighted average interest rate for the above was approximately 8.2%, 11.1% and 8.5% for the years ended December 31, 1994, 1993 and 1992, respectively. As part of a Restructuring in 1987, a newly formed corporation, BF Enterprises, Inc., assumed the obligation for certain subordinated debentures issued by a predecessor of the Company. At December 31, 1994, the Company remains contingently liable for $3.6 million of these subordinated debentures, payment of $3.4 million of which has been provided for by the issuance of letters of credit to the trustee for the debentures by BF Enterprises, Inc. Additionally, pursuant to a pledge and security agreement entered into at the time of Restructuring, BF Enterprises, Inc., has agreed to pledge to the Company collateral (consisting of real estate, marketable securities and bank letters of credit) if the net worth of BF Enterprises, Inc., falls below certain minimum levels. NOTE D -- BANK LOAN (REVOLVING CREDIT) The bank loan is an unsecured credit facility which provides a line of credit of up to $80,000,000, which is available to fund the Company's general business and working capital needs, including acquisitions and the purchase of the Company's common stock, and to cover the issuance of debt support standby letters of credit up to $15,000,000. As of December 31, 1994, the Company had no borrowings on the line of credit outstanding and had used $3,358,000 in debt support standby letters of credit. There is a commitment fee on the unused portion of the entire credit facility of .25%. The loan is subject to certain financial covenants which also affect the interest rates charged. The credit facility has the following scheduled reduction in availability (in thousands): 1995....................................................................... $ 5,000 1996....................................................................... $15,000 1997....................................................................... $15,000 1998....................................................................... $15,000 1999....................................................................... $15,000 2000....................................................................... $15,000
The final maturity date for the credit facility is August 31, 2000. 12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE D -- BANK LOAN (REVOLVING CREDIT) (CONTINUED) As of December 31, 1993, the Company had borrowed $30,300,000 on the line of credit and had used $2,780,000 in debt support standby letters of credit. Of the $30,300,000 outstanding loan balance at December 31, 1993, $29,000,000 carried an interest rate tied to Eurodollar rates plus 1.25% and the remaining balance of $1,300,000 carried an interest rate at prime. NOTE E -- CONVERTIBLE SUBORDINATED DEBENTURES On August 6, 1987, the Company issued $74,750,000 of 7.25% Convertible Subordinated Debentures (the "Convertible Debentures"). Prior to 1993, all but $22,745,000 of the Convertible Debentures were repurchased by the Company pursuant to its repurchase program (see Note F). The Convertible Debentures were unsecured obligations of the Company with an original maturity date of August 1, 2012. Interest was payable semi-annually as of February 1 and August 1 of each year to the registered holders as of the preceding January 15 and July 15, respectively. The Convertible Debentures were redeemable at the Company's option at any time on or after August 1, 1990, at declining redemption prices. In December 1993, the Company called for redemption all of its then outstanding Convertible Debentures. Holders of $22,440,000 in principal amount elected to convert their debentures into 2.04 million shares of common stock at the conversion price of $11.00 per share. The remaining $305,000 in principal amount of Convertible Debentures was redeemed at 102.9% of the principal amount plus accrued interest. NOTE F -- STOCKHOLDERS' EQUITY On June 27, 1994, the stockholders of the Company voted to amend the certificate of incorporation to increase the number of authorized shares of the Company's common stock from 30,000,000 to 100,000,000 shares and the number of authorized shares of the Company's preferred stock from 500,000 to 5,000,000. The stockholders of the Company also authorized a reduction in par value from $1 per share to $.001 per share on both classes of shares. In August 1994, the Company effected a two-for-one stock split in the form of a stock dividend. All share and per share amounts have been restated to retroactively reflect the two-for-one stock split. In November 1994, the Company issued 633,555 shares of its common stock at a price of $21.25 per share. The net proceeds from the sale of shares (after deducting issuance costs of approximately $355,000 and a 4% underwriter's discount) were approximately $12.6 million. NOTE G -- INCOME TAXES The provisions for income taxes for the three years ended December 31, 1994, consisted of the following (in thousands):
YEARS ENDED DECEMBER 31, ------------------------- 1994 1993 1992 ------- ------ ------ Current: Federal.................................................................. $14,072 $6,995 $1,014 State.................................................................... 3,155 1,604 252 Foreign.................................................................. 767 99 311 Deferred -- principally domestic........................................... 1,096 1,136 1,947 ------- ------ ------ $19,090 $9,834 $3,524 ------- ------ ------ ------- ------ ------
13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE G -- INCOME TAXES (CONTINUED) The income taxes shown above varied from the statutory federal income tax rates for these periods as follows:
YEARS ENDED DECEMBER 31, ----------------------- 1994 1993 1992 ----- ----- ----- Federal U.S. income tax rate...................... 35.0% 35.0% 34.0% State income taxes, net of federal tax benefit.... 4.7 5.5 5.0 Amortization of intangible assets................. 2.0 4.1 10.2 Other, net........................................ .5 1.0 (4.6) ----- ----- ----- Effective tax rate................................ 42.2% 45.6% 44.6% ----- ----- ----- ----- ----- -----
The deferred portion of the tax provisions consisted of the following (in thousands):
YEARS ENDED DECEMBER 31, ------------------------ 1994 1993 1992 ------ ------ ------ Amortization of franchise rights.................. $1,629 $1,484 $1,406 Other, net........................................ (533) (348) 541 ------ ------ ------ $1,096 $1,136 $1,947 ------ ------ ------ ------ ------ ------
During the fourth quarter of 1992, the Company recorded a one-time benefit of $400,000 for the resolution of certain tax accounting issues related to previous acquisitions. The deferred income tax liability shown on the balance sheet is comprised of the following (in thousands):
DECEMBER 31, ------------------- 1994 1993 -------- -------- Deferred income tax assets........................ $ (883) $ (498) Deferred income tax liabilities................... 18,889 16,974 -------- -------- $18,006 $16,476 -------- -------- -------- --------
No valuation allowances against deferred tax assets were required for the years ended December 31, 1994 and 1993. The components of the net deferred income tax liability at December 31, 1994 and 1993, were as follows (in thousands):
DECEMBER 31, ------------------- 1994 1993 -------- -------- Amortization of intangible assets................. $17,427 $16,365 Foreign taxes..................................... 775 495 Other............................................. (196) (384) -------- -------- $18,006 $16,476 -------- -------- -------- --------
NOTE H -- EMPLOYEE BENEFIT PLANS Under a retirement plan covering one current and one former executive officer of the Company, monthly benefits are payable equal to 25% of the participant's base compensation as defined, increased by an inflation formula. The plan was amended effective May 31, 1992, to provide a fixed supplemental benefit for the current employee during the first 15 years after retirement. The current employee forfeited long-term incentive awards of equal value in exchange for this amendment. The plan was also amended effective May 21, 1991, for the current employee to increase the percentage of 14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE H -- EMPLOYEE BENEFIT PLANS (CONTINUED) base compensation to 30% increasing thereafter by 3% for each year of service beyond the age of 50, up to a maximum of 66%. During 1993, the Company changed its discount rate assumption from 8% to 6%. The effect of both plan amendments and the discount rate change are being amortized over the employee's expected future service period (initially 15 years) and will increase after-tax expense by approximately $76,000 per year. The employee can require the Company to discharge its liability at defined intervals by purchasing annuities. At December 31, 1992, a liability of $1,124,000 was established to cover the estimated unfunded cost of these benefits. This amount was increased to $1,721,000 at December 31, 1993, and at December 31, 1994, is $1,827,000. Pre-tax pension costs for these plans were $232,000, $188,000, and $131,000 for the years ended December 31, 1994, 1993 and 1992, respectively. These charges were computed using certain assumptions regarding salary increases, retirement age and life expectancy. NOTE I -- COMMITMENTS Rental expense, primarily for office premises, amounted to $9,183,000, $8,457,000 and $8,042,000 for the years ended December 31, 1994, 1993 and 1992, respectively. The approximate minimum rental commitments for 1995 and thereafter under non-cancelable leases in effect at December 31, 1994, are as follows (in thousands): 1995....................................................................... $9,151 1996....................................................................... $7,572 1997....................................................................... $6,312 1998....................................................................... $4,944 1999....................................................................... $3,275 Thereafter................................................................. $3,810
NOTE J -- STOCK PLANS Under various stock plans, officers, employees and outside directors may receive grants of restricted stock or options to purchase common stock. Grants are made at the discretion of the Compensation Committee of the Board of Directors. Grants usually vest over four years. Options granted under the plans have exercise prices ranging from 85% to 100% of the fair market value of the Company's common stock at the date of grant, consist of both incentive stock options and nonstatutory stock options under the Internal Revenue Code, and generally have a term of ten years. Recipients of restricted stock do not pay any cash consideration to the Company for the shares, have the right to vote all shares subject to such grant, and receive all dividends with respect to such shares, whether or not the shares have vested. As of December 31, 1994 the total number of available grants under the plans (consisting of either restricted stock or options) was 340,227. 15 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE J -- STOCK PLANS (CONTINUED) The following table reflects activity under all stock plans from January 1, 1992 through December 31, 1994 and the exercise prices:
STOCK OPTION PLANS -------------------------- RESTRICTED NUMBER OF EXERCISE PRICE STOCK PLANS SHARES PER SHARE ----------- ---------- -------------- Outstanding, January 1, 1992......................................................... 463,430 3,120,390 $ 3.12 - 9.42 Granted............................................................................ 264,074 550,234 $ 5.25 - 7.00 Exercised.......................................................................... -- (459,710) $ 3.12 - 5.07 Restrictions lapsed................................................................ (188,178) -- -- Forfeited.......................................................................... (73,026) (289,106) $ 4.31 - 7.00 ----------- ---------- -------------- Outstanding, December 31, 1992....................................................... 466,300 2,921,808 $ 3.55 - 9.42 Granted............................................................................ 142,938 1,415,942 $ 6.17 - 12.63 Exercised.......................................................................... -- (1,085,032) $ 3.76 - 8.07 Restrictions lapsed................................................................ (99,959) -- -- Forfeited.......................................................................... (57,678) (310,218) $ 4.31 - 10.73 ----------- ---------- -------------- Outstanding, December 31, 1993....................................................... 451,601 2,942,500 $ 3.55 - 12.63 Granted............................................................................ 344,814 836,884 $15.00 - 24.00 Exercised.......................................................................... -- (463,515) $ 4.31 - 11.50 Restrictions lapsed................................................................ (156,100) -- -- Forfeited.......................................................................... (13,647) (182,808) $ 4.31 - 12.63 ----------- ---------- -------------- Outstanding, December 31, 1994....................................................... 626,668 3,133,061 $ 3.55 - 24.00 ----------- ---------- -------------- ----------- ---------- --------------
As of December 31, 1994, an aggregate of 1,235,574 options to purchase common stock were vested. NOTE K -- PREFERRED SHARE PURCHASE RIGHTS Pursuant to the Company's stockholder rights agreement, each share of common stock carries one right to purchase one two-hundredth of a share of preferred stock. The rights become exercisable in certain limited circumstances involving a potential business combination transaction or an acquisition of shares of the Company and are exercisable at a price of $32.50 per right, subject to adjustment. Following certain other events after the rights become exercisable, each right entitles its holder to purchase for $32.50 an amount of common stock of the Company, or, in certain circumstances, securities of the acquiror, having a then-current market value of twice the exercise price of the right. The rights are redeemable and may be amended at the Company's option before they become exercisable. Until a right is exercised, the holder of a right has no rights as a stockholder of the Company. The rights expire on July 23, 2000. 16 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NOTE L -- INCOME PER SHARE Income per fully diluted share has been computed using the weighted average number of shares of fully diluted common stock and common stock equivalents outstanding during each period (28,484,000, 25,260,000 and 24,007,000 shares for the years ending December 31, 1994, 1993 and 1992, respectively). An assumed conversion of the Convertible Debentures was not dilutive to income per share in 1993 (see Note E) or 1992. NOTE M -- QUARTERLY FINANCIAL DATA (UNAUDITED) The following tabulation shows certain quarterly financial data for 1994 and 1993 (in thousands, except per share amounts):
QUARTER ------------------------------------- 1994 1 2 3 4 YEAR ------- -------- -------- -------- -------- Net service revenues........................................ $99,896 $106,514 $114,903 $125,015 $446,328 Gross margin................................................ 38,624 41,369 44,644 48,364 173,001 Income before income taxes.................................. 9,826 10,848 11,666 12,867 45,207 Net income.................................................. 5,604 6,273 6,742 7,498 26,117 Net income per share........................................ .20 .22 .24 .26 .92 QUARTER ------------------------------------- 1993 1 2 3 4 YEAR ------- -------- -------- -------- -------- Net service revenues........................................ $69,573 $ 72,446 $ 77,061 $ 87,086 $306,166 Gross margin................................................ 27,307 28,457 29,400 32,710 117,874 Income before income taxes.................................. 4,396 5,360 5,873 5,928 21,557 Net income.................................................. 2,387 2,900 3,091 3,345 11,723 Net income per share........................................ .09 .12 .12 .13 .46
NOTE N -- SEGMENT REPORTING Information about the Company's operations in different geographic locations for each of the three years in the period ended December 31, 1994, is shown below. The Company's areas of operations outside of the United States include Canada, the United Kingdom, Belgium, France and the Netherlands. Revenues represent total net revenues from the respective geographic areas. Operating income is net revenues less operating costs and expenses pertaining to specific geographic areas. Foreign operating income reflects charges for U.S. management fees and amortization of intangibles of $956,000, $917,000 and $854,000 for the years ended December 31, 1994, 1993 and 1992, respectively. Domestic operating income reflects charges for amortization of intangibles of $4,137,000, 17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE N -- SEGMENT REPORTING (CONTINUED) $3,841,000 and $3,606,000 for the years ended December 31, 1994, 1993 and 1992, respectively. Identifiable assets are those assets used in the geographic areas and are after elimination of intercompany balances.
YEARS ENDED DECEMBER 31, ---------------------------- 1994 1993 1992 -------- -------- -------- (IN THOUSANDS) Revenues Domestic........................................ $404,852 $280,266 $196,910 Foreign......................................... 41,476 25,900 23,269 -------- -------- -------- $446,328 $306,166 $220,179 -------- -------- -------- -------- -------- -------- Operating Income Domestic........................................ $ 44,700 $ 26,294 $ 12,585 Foreign......................................... 2,077 (745) (378) -------- -------- -------- $ 46,777 $ 25,549 $ 12,207 -------- -------- -------- -------- -------- -------- Assets Domestic........................................ $200,329 $180,778 $163,030 Foreign......................................... 27,432 23,820 18,969 -------- -------- -------- $227,761 $204,598 $181,999 -------- -------- -------- -------- -------- --------
18 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS TO THE STOCKHOLDERS AND THE BOARD OF DIRECTORS OF ROBERT HALF INTERNATIONAL INC.: We have audited the accompanying consolidated statements of financial position of Robert Half International Inc. (a Delaware corporation) and subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Robert Half International Inc. and subsidiaries as of December 31, 1994 and 1993, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP San Francisco, California January 24, 1995 19 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III The information required by Items 10 through 13 of Part III is incorporated by reference from the registrant's Proxy Statement, under the captions "NOMINATION AND ELECTION OF DIRECTORS," "BENEFICIAL STOCK OWNERSHIP," "COMPENSATION OF DIRECTORS," "COMPENSATION OF EXECUTIVE OFFICERS" AND "COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION AND CERTAIN TRANSACTIONS," which Proxy Statement will be mailed to stockholders in connection with the registrant's annual meeting of stockholders which is scheduled to be held in May 1995. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (A) 1. FINANCIAL STATEMENTS The following consolidated financial statements of the Company and its subsidiaries are included in Item 8 of this report: Consolidated statements of financial position at December 31, 1994 and 1993. Consolidated statements of income for the years ended December 31, 1994, 1993 and 1992. Consolidated statements of stockholders' equity for the years ended December 31, 1994, 1993 and 1992. Consolidated statements of cash flows for the years ended December 31, 1994, 1993 and 1992. Notes to consolidated financial statements. Report of independent public accountants. Selected quarterly financial data for the years ended December 31, 1994 and 1993 are set forth in Note M - Quarterly Financial Data (Unaudited) included in Item 8 of this report. 2. FINANCIAL STATEMENT SCHEDULES Schedules I through V have been omitted as they are not applicable. 3. EXHIBITS
EXHIBIT NO. EXHIBIT - ------- --------------------------------------------------------------------------- 3.1 Restated Certificate of Incorporation, incorporated by reference to Exhibit 3.1 to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1994. 3.2 By-Laws, incorporated by reference to Exhibit 3.2 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1994. 4.1 Indenture dated as of October 1, 1972, as amended, between IDS Realty Trust and First National Bank of Minneapolis, incorporated by reference to Exhibits 6(t) and 6(v) to the Form S-14 Registration Statement of the Registrant (formerly known as Boothe Interim Corporation) filed with the Securities and Exchange Commission on December 31, 1979. 4.2 Restated Certificate of Incorporation of Registrant (filed as Exhibit 3.1).
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EXHIBIT NO. EXHIBIT - ------- --------------------------------------------------------------------------- 4.3 Rights Agreement, dated as of July 23, 1990, between the Registrant and Manufacturers Hanover Trust Company of California, incorporated by reference to (i) Exhibit 1 to the Registrant's Registration Statement on Form 8-A for its Preferred Share Purchase Rights, which Registration Statement was filed with the Commission on July 30, 1990, (ii) Exhibit 19.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1990 and (iii) Exhibit 3 to Registrant's Form 8-A/A Amendment No. 2 filed on December 2, 1993. 10.1 Credit Agreement dated as of November 1, 1993, among the Registrant, NationsBank of North Carolina, N.A. and Bank of America National Trust and Savings Association, incorporated by reference to Exhibit 10 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1993. 10.2 Reorganization and Distribution Agreement between the Registrant and BF Enterprises, Inc., incorporated by reference to Exhibit 10.9 to Registrant's Registration Statement on Form S-1 (No. 33-15171). 10.3 Agreement of Assignment and Assumption of Rights and Obligations under the Indenture between the Registrant and BF Enterprises, Inc., incorporated by reference to Exhibit 10.10 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1987. 10.4 Assumption of Obligations and Liabilities between the Registrant and BF Enterprises, Inc., incorporated by reference to Exhibit 10.11 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1987. 10.5 Pledge and Security Agreement between the Registrant and BF Enterprises, Inc., incorporated by reference to Exhibit 10.10 to Registrant's Registration Statement on Form S-1 (No. 33-15171). 10.6 Tax Sharing Agreement between the Registrant and BF Enterprises, Inc., incorporated by reference to Exhibit 10.11 to Registrant's Registration Statement on Form S-1 (No. 33-15171). *10.7 Employment Agreement dated as of October 2, 1985, between the Registrant and Harold M. Messmer, Jr., incorporated by reference to (i) Exhibit 10.(c) to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1985, (ii) Exhibit 10.2(b) to Registrant's Registration Statement on Form S-1 (No. 33-15171), (iii) Exhibit 10.2(c) to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1987, (iv) Exhibit 10.2(d) to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1988, (v) Exhibit 28.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1990, (vi) Exhibit 10.8 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, (vii) Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1993 and (viii) Exhibit 10.7 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993. *10.8 Key Executive Retirement Plan - Level II, incorporated by reference to Exhibit 10.(f) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1985 and Exhibit 19.2 to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1991. *10.9 Key Executive Retirement Plan - Level II Agreement between the Registrant and Harold M. Messmer, Jr., incorporated by reference to (i) Exhibit 10.5 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1988, (ii) Exhibit 19.3 to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1991, (iii) Exhibit 10.10 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1992, (iv) Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1993 and (v) Exhibit 10.9 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993.
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EXHIBIT NO. EXHIBIT - ------- --------------------------------------------------------------------------- *10.10 1985 Stock Option Plan, as amended, incorporated by reference to Exhibit 10.7 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1988 and Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1994. *10.11 Non-Employee Directors' Option Plan, incorporated by reference to Exhibit 10.(j) to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1986 and Exhibit 10.6 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1994. *10.12 Outside Directors' Option Plan, incorporated by reference to Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1994. *10.13 1989 Restricted Stock Plan, as amended, incorporated by reference to Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1994. *10.14 StockPlus Plan, as amended. *10.15 1993 Incentive Plan, as amended, incorporated by reference to Exhibit 10.5 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1994. *10.16 Deferred Compensation Plan, incorporated by reference to Exhibit 10.24 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989. *10.17 Annual Performance Bonus Plan, incorporated by reference to Exhibit 10.17 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993. *10.18 Form of Severance Agreement, incorporated by reference to (i) Exhibit 10.26 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989 and (ii) Exhibit 19.2 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1990. *10.19 Form of Indemnification Agreement for Directors of the Registrant, incorporated by reference to (i) Exhibit 10.27 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989 and (ii) Exhibit 10.19 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993. *10.20 Form of Indemnification Agreement for Executive Officers of Registrant, incorporated by reference to Exhibit 10.28 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989. 11 Statement re computation of per share earnings. 21 Subsidiaries of the Registrant. 23 Accountants' Consent. 27 Financial Data Schedule. - ------------------------ * 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 the following report on Form 8-K during the fiscal quarter ending December 31, 1994:
DATE ITEM REPORTED - -------------------- ---------------------------- October 12, 1994 Item 5 - Other Events
22 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ROBERT HALF INTERNATIONAL INC. (Registrant) Date: March 8, 1995 By: /S/ M. KEITH WADDELL ----------------------------------- M. Keith Waddell Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) 23 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. Date: March 8, 1995 By: /S/ HAROLD M. MESSMER, JR. ------------------------------------------ Harold M. Messmer, Jr. Chairman of the Board, President, Chief Executive Officer, and a Director (Principal Executive Officer) Date: March 8, 1995 By: /S/ ANDREW S. BERWICK, JR. ------------------------------------------ Andrew S. Berwick, Jr., Director Date: March 8, 1995 By: /S/ FREDERICK P. FURTH ------------------------------------------ Frederick P. Furth, Director Date: March 8, 1995 By: /S/ EDWARD W. GIBBONS ------------------------------------------ Edward W. Gibbons, Director Date: March 8, 1995 By: /S/ TODD GOODWIN ------------------------------------------ Todd Goodwin, Director Date: March 8, 1995 By: /S/ FREDERICK A. RICHMAN ------------------------------------------ Frederick A. Richman, Director Date: March 8, 1995 By: /S/ THOMAS J. RYAN ------------------------------------------ Thomas J. Ryan, Director Date: March 8, 1995 By: /S/ J. STEPHEN SCHAUB ------------------------------------------ J. Stephen Schaub, Director Date: March 8, 1995 By: /S/ M. KEITH WADDELL ------------------------------------------ M. Keith Waddell Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) Date: March 8, 1995 By: /S/ BARBARA J. FORSBERG ------------------------------------------ Barbara J. Forsberg Vice President and Controller (Principal Accounting Officer)
24
EXHIBIT INDEX EXHIBIT SEQUENTIAL NO. Exhibit PAGE - ------- --------------------------------------------------------------------------- ---------- 3.1 Restated Certificate of Incorporation, incorporated by reference to Exhibit 3.1 to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1994. 3.2 By-Laws, incorporated by reference to Exhibit 3.2 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1994. 4.1 Indenture dated as of October 1, 1972, as amended, between IDS Realty Trust and First National Bank of Minneapolis, incorporated by reference to Exhibits 6(t) and 6(v) to the Form S-14 Registration Statement of the Registrant (formerly known as Boothe Interim Corporation) filed with the Securities and Exchange Commission on December 31, 1979. 4.2 Restated Certificate of Incorporation of Registrant (filed as Exhibit 3.1). 4.3 Rights Agreement, dated as of July 23, 1990, between the Registrant and Manufacturers Hanover Trust Company of California, incorporated by reference to (i) Exhibit 1 to the Registrant's Registration Statement on Form 8-A for its Preferred Share Purchase Rights, which Registration Statement was filed with the Commission on July 30, 1990, (ii) Exhibit 19.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1990 and (iii) Exhibit 3 to Registrant's Form 8-A/A Amendment No. 2 filed on December 2, 1993. 10.1 Credit Agreement dated as of November 1, 1993, among the Registrant, NationsBank of North Carolina, N.A. and Bank of America National Trust and Savings Association, incorporated by reference to Exhibit 10 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1993. 10.2 Reorganization and Distribution Agreement between the Registrant and BF Enterprises, Inc., incorporated by reference to Exhibit 10.9 to Registrant's Registration Statement on Form S-1 (No. 33-15171). 10.3 Agreement of Assignment and Assumption of Rights and Obligations under the Indenture between the Registrant and BF Enterprises, Inc., incorporated by reference to Exhibit 10.10 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1987. 10.4 Assumption of Obligations and Liabilities between the Registrant and BF Enterprises, Inc., incorporated by reference to Exhibit 10.11 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1987.
EXHIBIT SEQUENTIAL NO. Exhibit PAGE - ------- --------------------------------------------------------------------------- ---------- 10.5 Pledge and Security Agreement between the Registrant and BF Enterprises, Inc., incorporated by reference to Exhibit 10.10 to Registrant's Registration Statement on Form S-1 (No. 33-15171). 10.6 Tax Sharing Agreement between the Registrant and BF Enterprises, Inc., incorporated by reference to Exhibit 10.11 to Registrant's Registration Statement on Form S-1 (No. 33-15171). *10.7 Employment Agreement dated as of October 2, 1985, between the Registrant and Harold M. Messmer, Jr., incorporated by reference to (i) Exhibit 10.(c) to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1985, (ii) Exhibit 10.2(b) to Registrant's Registration Statement on Form S-1 (No. 33-15171), (iii) Exhibit 10.2(c) to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1987, (iv) Exhibit 10.2(d) to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1988, (v) Exhibit 28.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1990, (vi) Exhibit 10.8 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, (vii) Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1993 and (viii) Exhibit 10.7 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993. *10.8 Key Executive Retirement Plan - Level II, incorporated by reference to Exhibit 10.(f) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1985 and Exhibit 19.2 to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1991. *10.9 Key Executive Retirement Plan - Level II Agreement between the Registrant and Harold M. Messmer, Jr., incorporated by reference to (i) Exhibit 10.5 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1988, (ii) Exhibit 19.3 to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1991, (iii) Exhibit 10.10 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1992, (iv) Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1993 and (v) Exhibit 10.9 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993.
EXHIBIT SEQUENTIAL NO. Exhibit PAGE - ------- --------------------------------------------------------------------------- ---------- *10.10 1985 Stock Option Plan, as amended, incorporated by reference to Exhibit 10.7 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1988 and Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1994. *10.11 Non-Employee Directors' Option Plan, incorporated by reference to Exhibit 10.(j) to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1986 and Exhibit 10.6 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1994. *10.12 Outside Directors' Option Plan, incorporated by reference to Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1994. *10.13 1989 Restricted Stock Plan, as amended, incorporated by reference to Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1994. *10.14 StockPlus Plan, as amended. *10.15 1993 Incentive Plan, as amended, incorporated by reference to Exhibit 10.5 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1994. *10.16 Deferred Compensation Plan, incorporated by reference to Exhibit 10.24 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989. *10.17 Annual Performance Bonus Plan, incorporated by reference to Exhibit 10.17 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993. *10.18 Form of Severance Agreement, incorporated by reference to (i) Exhibit 10.26 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989 and (ii) Exhibit 19.2 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1990. *10.19 Form of Indemnification Agreement for Directors of the Registrant, incorporated by reference to (i) Exhibit 10.27 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989 and (ii) Exhibit 10.19 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993. *10.20 Form of Indemnification Agreement for Executive Officers of Registrant, incorporated by reference to Exhibit 10.28 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989. 11 Statement re computation of per share earnings. 21 Subsidiaries of the Registrant. 23 Accountants' Consent. 27 Financial Data Schedule. - ------------------------ * Management contract or compensatory plan required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K.
EX-10.14 2 EXHIBIT 10.14 EXHIBIT 10.14 ROBERT HALF INTERNATIONAL INC. STOCKPLUS PLAN 1. PURPOSES. The principal purposes of the Robert Half International Inc. StockPlus Plan (the "Plan") are: (a) to improve individual employee performance by providing long-term incentives and rewards to employees of the Company, (b) to assist the Company in attracting, retaining and motivating employees with experience and ability, and (c) to associate the interests of such employees with those of RHII's shareholders. 2. DEFINITIONS. Unless the context clearly indicates otherwise, the following terms, when used in this Plan, shall have the meanings set forth below: (a) "Common Stock" or "Stock" means RHII Common Stock, par value $.001 per share. (b) "Administrator" means a committee of the Board of Directors of RHII, the composition and the size of which shall cause such Administrator to be "disinterested" within the meaning of the General Rules and Regulations promulgated pursuant to Section 16 of the Exchange Act. If such Administrator is composed of "disinterested persons" within the meaning of such General Rules and Regulations, then any person who is appointed a member of such Administrator and who accepts appointment shall, by virtue thereof, be ineligible for the time period specified in such General Rules and Regulations to be granted an Option under the Plan. Unless otherwise determined by the Board of Directors, the Administrator shall be the Compensation Committee of the Board of Directors. (c) "Company" means Robert Half International Inc., its divisions and direct and indirect subsidiaries. (d) "Exchange Act" means the Securities Exchange Act of 1934, as amended. (e) "Fair Market Value" means the closing sales price on the New York Stock Exchange or the NASDAQ National Market System, as the case may be, on the date the value is to be determined as reported in THE WALL STREET JOURNAL (Western Edition). If there are no trades on such date, the closing price on the latest preceding business day upon which trades occurred shall be the Fair Market Value. If the Stock is not listed in the New York Stock Exchange or quoted on the NASDAQ National Market System, the Fair Market Value shall be determined in good faith by the Administrator. (f) "Grant Date" means the date an Option is granted under the Plan. (g) "Option" or "Stock Option" means a right granted under the Plan to an Optionee to purchase shares of RHII Common Stock at a fixed price for a specified period of time. (h) "Option Price" means the price at which a share of Common Stock covered by an Option granted hereunder may be purchased. (i) "Optionee" means an eligible employee of the Company who has received a Stock Option granted under the Plan. (j) "RHII" means Robert Half International Inc., a Delaware corporation. 2. ADMINISTRATION. The Plan shall be administered by the Administrator, which shall have full power and authority to administer and interpret the Plan and to adopt such rules, regulations, agreements, guidelines and instruments for the administration of the Plan as the Administrator deems necessary or advisable. The Administrator's powers include, but are not limited to (subject to the specific limitations described herein), authority to determine the employees to be granted Options under the Plan, determine the size and applicable terms and conditions of grants to be made to such employees, determine the time when Options will be granted and authorize grants to eligible employees. Any guidelines that may be adopted from time to time by the Administrator shall be advisory only and shall not be binding upon the Administrator. The Administrator's interpretations of the Plan, and all actions taken and determinations made by the Administrator concerning any matter arising under or with respect to the Plan or any Options granted hereunder, shall be final, binding and conclusive on all interested parties. The Administrator may delegate ministerial functions hereunder, such delegation to be subject to such terms and conditions as the Administrator in its discretion shall determine. The Administrator may as to all questions of accounting rely conclusively upon any determinations made by the independent public accountants of the Company. 3. STOCK AVAILABLE FOR OPTIONS. The shares that may be delivered or purchased under the Plan shall not exceed an aggregate of 1,595,000 shares of Common Stock, subject to any adjustments which may be made pursuant to Section 10 hereof. Shares of Stock used for purposes of the Plan may be either shares of authorized but unissued Common Stock or treasury shares or both. Stock covered by Options which have terminated or expired prior to exercise or have been surrendered or cancelled shall be available for further option hereunder. 4. ELIGIBILITY. All those employees of the Company as shall be determined from time to time by the Administrator shall be eligible to participate in the Plan, provided, however, that no employee may be granted Options in the aggregate which would result in that employee receiving more than 10% of the maximum number of shares available for issuance under the Plan. 5. TERMS AND CONDITIONS OF OPTIONS. Each Option granted hereunder shall be in writing and shall contain such terms and conditions as the Administrator may determine, subject to the following: (a) PRICE. The Option Price shall be not less than 85% of the Fair Market Value of Common Stock on the Grant Date. (b) TERM AND EXERCISE DATES. Options granted hereunder shall have a term of no longer than ten years from the Grant Date. No Option may be granted after the tenth anniversary of the date of adoption of this Plan. A grant of Options may become exercisable in installments; provided, however, that no Option shall become exercisable until six months following the Grant Date of such Option. However, Stock Options must be exercised for full shares of Common Stock. To the extent that Stock Options are not exercised when they become initially exercisable, they shall be carried forward and be exercisable until the expiration of the term of such Stock Options, subject to the provisions of Section 5(e) hereof. (c) EXERCISE OF OPTION. To exercise an Option, the holder thereof shall give notice of his or her exercise to the Company, specifying the number of shares of Common Stock to be purchased and identifying the specific Options that are being exercised. From time to time the Administrator may establish procedures relating to effecting such exercises. No fractional shares shall be issued as a result of exercising an Option. An Option is exercisable during an Optionee's lifetime only by the Optionee or Optionee's guardian or legal representative. (d) PAYMENT OF OPTION PRICE. The purchase price for Options being exercised must be paid in full at time of exercise. Payment shall be, at the option of the holder at the time of exercise, by any combination of cash, check or delivery of shares of Common Stock that have been owned by Optionee for at least six months. If all or a portion of the purchase price is paid by delivery of shares, the shares shall be valued at the Fair Market Value of such shares on the date of exercise. In addition, in order to enable the Company to meet any applicable foreign, federal (including FICA), state and local withholding tax requirements, an Optionee shall also be required to pay the amount of tax to be withheld. No share of stock will be delivered to any Optionee until all such amounts have been paid. In the event that withholding taxes are not paid within the specified time period, to the extent permitted by law the Company shall have the right, but not the obligation, to cause such withholding taxes to be satisfied by reducing the number of shares of stock deliverable or by offsetting such withholding taxes against amounts otherwise due from the Company to the Optionee. If withholding taxes are paid by reduction of the number of shares deliverable to Optionee, such shares shall be valued at the Fair Market Value as of the date of exercise. (e) EFFECT OF TERMINATION OF EMPLOYMENT. All Options then held by the Optionee which are exercisable at the date of termination shall continue to be exercisable by the Optionee, or, if applicable, Optionee's estate, until the earlier of 30 days after such date or the expiration of such Options in accordance with their terms. All Options which are not exercisable at such date shall automatically terminate and lapse, unless the Administrator shall determine otherwise. Notwithstanding the foregoing, if exercise of an Option during the 30-day period described in the previous sentence would subject the Optionee to liability under Section 16 of the Exchange Act, such Option shall be exercisable until the earliest of (a) its normal termination date and (b) seven months after the last transaction in Common Stock by the Optionee prior to termination. (f) MISCONDUCT. In the event that the Administrator determines in good faith that an Optionee has (i) used for profit, or materially harmed the Company by disclosing to unauthorized persons, confidential information or trade secrets of the Company, (ii) materially breached any contract with, or materially violated any fiduciary obligation to, the Company, or (iii) engaged in unlawful trading in the securities of RHII or of another company based on nonpublic information gained as a result of that Optionee's employment with the Company, then, effective as of the date notice of such misconduct is given by the Administrator to the Optionee, that Optionee shall forfeit all rights to any unexercised Options granted under the Plan and all of that Optionee's outstanding Options shall automatically terminate and lapse, unless the Administrator shall determine otherwise. (g) NONTRANSFERABILITY OF OPTIONS. During an Optionee's lifetime, his or her Options shall not be transferrable and shall only be exercisable by the Optionee and any purported transfer shall be null and void. Options are not transferable except by will or by the laws of descent and distribution. 6. AMENDMENT. The Administrator may, at any time, amend, suspend or terminate the Plan, in whole or in part, provided that no such action shall adversely affect any rights or obligations with respect to any grants theretofore made hereunder. The Administrator may amend the terms and conditions of outstanding Options, provided, however, that (i) no such amendment shall be adverse to the holders of the Options, (ii) no such amendment shall extend the term of an Option, and (iii) the amended terms of the Option would be permitted under this Plan. 7. FOREIGN EMPLOYEES. Without amending the Plan, the Administrator may grant Options to eligible employees who are foreign nationals on such terms and conditions different from those specified in this Plan as may in the judgment of the Administrator be necessary or desirable to foster and promote achievement of the purposes of the Plan, and, in furtherance of such purposes the Administrator may make such modifications, amendments, procedures, subplans and the like as may be necessary or advisable to comply with provisions of laws in other countries in which the Company operates or has employees. 8. REGISTRATION, LISTING AND QUALIFICATION OF SHARES. Each Option shall be subject to the requirement that if at any time the Administrator shall determine that the registration, listing or qualification of the shares covered thereby upon any securities exchange or under any foreign, federal, state or local law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such Option or the purchase of shares thereunder, no such Option may be exercised unless and until such registration, listing, qualification, consent or approval shall have been effected or obtained free of any condition not acceptable to the Administrator. Any person exercising an Option shall make such representations and agreements and furnish such information as the Administrator may request to assure compliance with the foregoing or any other applicable legal requirements. RHII shall use its reasonable best efforts to cause shares issued hereunder to be registered under the Securities Act of 1933, as amended. 9. BUY OUT OF OPTION GAINS. The Administrator shall have the right to elect, in its sole discretion and without the consent of the holder thereof (subject to the last sentence of this paragraph), to cancel the exercisable portion of any Option and pay to the Optionee the excess of the Fair Market Value of the shares of Common Stock covered by such cancelled portion of the Option over the Option Price of such cancelled portion of the Option at the date the Administrator provides written notice (the "Buy Out Notice") of its intention to exercise such right. Buy outs pursuant to this provision shall be effected by RHII as promptly as possible after the date of the Buy Out Notice. Payments of buy out amounts may be made in cash, in shares of Common Stock, or partly in cash and partly in Common Stock, as the Administrator deems advisable. To the extent payment is made in shares of Common Stock, the number of shares shall be determined by dividing the amount of the payment to be made by the Fair Market Value of a share of Common Stock at the date of the Buy Out Notice. In no event shall RHII be required to deliver a fractional share of Common Stock in satisfaction of this buy out provision. Payments of such buy out amounts shall be made net of any applicable foreign, federal (including FICA), state and local withholding taxes. Notwithstanding the foregoing, no buy out may be effected (a) until at least six months after the Grant Date of the subject option, and (b) without the consent of the Optionee if the Optionee is generally required to file reports pursuant to Section 16(a) of the Exchange Act with respect to his transactions in the Common Stock. 10. ADJUSTMENT FOR CHANGE IN STOCK SUBJECT TO PLAN. In the event of any change in the outstanding shares of Common Stock by reason of any stock split, stock dividend, recapitalization, merger, consolidation, combination or exchange of shares or other similar corporate change, such equitable adjustments may be made in the Plan and the Options granted hereunder as the Administrator determines are necessary or appropriate, including, if necessary, an adjustment in the number of shares and prices per share applicable to Options then outstanding and in the number of shares which are reserved for issuance under the Plan. Any such adjustment shall be conclusive and binding for all purposes of the Plan. 11. NO RIGHTS TO OPTIONS OR EMPLOYMENT. No employee or other person shall have any claim or right to be granted an Option under the Plan. Receipt of an Option under the Plan shall not give an employee any rights to receive any other grant under the Plan. An Optionee shall have no rights to or interest in any Option except as set forth herein. Neither the Plan nor any action taken hereunder shall be construed as giving any employee any right to be retained in the employ of the Company. 12. RIGHTS AS SHAREHOLDER. An Optionee under the Plan shall have no rights as a holder of Common Stock with respect to Options granted hereunder, unless and until certificates for shares of Common Stock are issued to such Optionee. 13. OTHER ACTIONS. This Plan shall not restrict the authority of the Administrator or of RHII, for proper corporate purposes, to grant or assume stock options, other than under the Plan, to or with respect to any employee or other person. 14. COSTS AND EXPENSES. Except as provided in Section 5(d) hereof with respect to taxes, the costs and expenses of administering the Plan shall be borne by RHII and shall not be charged to any grant nor to any employee receiving a grant. 15. PLAN UNFUNDED. The Plan shall be unfunded. Except for reserving a sufficient number of authorized shares to the extent required by law to meet the requirements of the Plan, RHII shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any grant under the Plan. 16. GOVERNING LAW. This Plan shall be governed by and construed in accordance with the laws of the State of Delaware. 17. INDEMNIFICATION OF ADMINISTRATOR. Members of the group constituting the Administrator shall be indemnified for actions with respect to the Plan to the fullest extent permitted by the Certificate of Incorporation, as amended, and the By-laws of the Company and by the terms of any indemnification agreement that has been or shall be entered into from time to time between the Company and any such persons. 18. EFFECTIVE DATE. This Plan shall become effective upon adoption by the Board of Directors of RHII. If stockholder approval is required (a) under the General Rules and Regulations promulgated under Section 16 of the Exchange Act in order to exempt any transaction contemplated by this Plan from Section 16(b) of the Exchange Act, (b) by the rules of the New York Stock Exchange, if RHII Common Stock is listed thereon, or (c) by the rules of NASDAQ pertaining to the National Market System, if RHII Common Stock is quoted thereon, then this Plan shall be submitted to the stockholders of RHII for consideration at the next annual meeting of stockholders. The Administrator may make Options conditioned on such approval, and any Option so made shall be effective as of the date of grant. EX-11 3 EXHIBIT 11 EXHIBIT 11 EXHIBIT 11 TO FORM 10-K ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES COMPUTATION OF PER SHARE EARNINGS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEARS ENDED DECEMBER 31, ------------------------- 1994 1993 1992 ------- ------- ------- Net income..................................................................... $26,117 $11,723 $ 4,382 ------- ------- ------- ------- ------- ------- Weighted average number of shares outstanding Primary: Common stock............................................................... 27,365 24,309 23,484 Common stock equivalents -- stock options (A).............................. 971 783 446 ------- ------- ------- Primary shares outstanding................................................. 28,336 25,092 23,930 ------- ------- ------- ------- ------- ------- Fully Diluted: Common stock............................................................... 27,365 24,309 23,484 Common stock equivalents -- stock options (A).............................. 1,119 951 523 ------- ------- ------- Fully diluted shares outstanding........................................... 28,484 25,260 24,007 ------- ------- ------- ------- ------- ------- Net income per share: Primary...................................................................... $ .92 $ .47 $ .18 Fully diluted................................................................ $ .92 $ .46 $ .18 (A) The treasury stock method was used to determine the weighted average number of shares of common stock equivalents outstanding during the periods.
EX-21 4 EXHIBIT 21 EXHIBIT 21 LIST OF SUBSIDIARIES Jurisdiction of Name of Subsidiary Incorporation - ------------------ ------------- RH Holding Company, Inc. California LegalTeam, Inc. California Robert Half of Texas G.P. Ltd. Delaware XYZ-II, Inc. Delaware OCSI Acquisition Sub, Inc. Delaware Robert Half Incorporated Florida R-H International Advertising Fund, Inc. Florida OfficeTeam Inc. Louisana Robert Half of Nevada, Inc. Nevada R-H Franchises Western Hemisphere, Inc. New York Robert Half of Philadelphia, Inc. Pennsylvania RHT, L.P. (a limited partnership) Texas Fontaine Archer Van de Voorde S.A./N.V. Belgium S.A. Robert Half N.V. Belgium Accountemps S.A./N.V. Belgium Robert Half Canada Inc. Canada Norman Parsons S.A. (85% owned) France Accountemps S.A.R.L. France Robert Half S.A. France Robert Half Limited United Kingdom Robert Half Personnel (Midlands) Limited United Kingdom Envaward Limited United Kingdom Hatlon Limited United Kingdom Smiths Recruitment Limited United Kingdom EX-23 5 EXHIBIT 23 EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report dated January 24, 1995 included in this Form 10-K into the Company's previously filed Registration Statements Files No. 33-14706, 33-39204, 33-39187, 33-32623, 33-32622, 33-40795, 33-62138, 33-62140, 33-52617, 33-56639, 33-56641 and 33-57763. ARTHUR ANDERSEN LLP San Francisco, California March 8, 1995 EX-27 6 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994 AND DECEMBER 31, 1993 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR YEAR DEC-31-1994 DEC-31-1993 JAN-01-1994 JAN-01-1993 DEC-31-1994 DEC-31-1993 2,638 1,773 0 0 60,025 40,155 2,600 2,194 0 0 67,703 47,466 0 0 0 0 227,761 204,598 29,627 22,188 3,133 32,332 28 26,837 0 0 0 0 176,967 106,765 227,761 204,598 0 0 446,328 306,166 0 0 273,327 188,292 4,584 4,251 0 0 1,570 3,992 45,207 21,557 19,090 9,834 26,117 11,723 0 0 0 0 0 0 26,117 11,723 .92 .47 .92 .46
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