-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NscuZ4f6kvjSL5Y+UkH2mn/AperrOL/NroZ1ulAAzAgM+09ZtcyoMS+NSgzHd/SE Y2UAgVqGjZuY69aXcIt0mA== 0000912057-96-022525.txt : 19961011 0000912057-96-022525.hdr.sgml : 19961011 ACCESSION NUMBER: 0000912057-96-022525 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19961010 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HALF ROBERT INTERNATIONAL INC /DE/ CENTRAL INDEX KEY: 0000315213 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HELP SUPPLY SERVICES [7363] IRS NUMBER: 941648752 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-10427 FILM NUMBER: 96642037 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-K/A 1 FORM 10-K/A - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-K/A AMENDMENT NO. 1 /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 1-10427 --------------------- 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 March 7, 1996, the aggregate market value of the Common Stock held by non-affiliates of the registrant was approximately $1,199,755,000 based on the closing sale price on that date. This amount excludes the market value of 2,630,142 shares of Common Stock held by registrant's directors and officers and their affiliates. As of March 7, 1996, there were outstanding 28,998,392 shares of the registrant's Common Stock. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's Proxy Statement to be mailed to stockholders in connection with the registrant's annual meeting of stockholders, scheduled to be held in May 1996, are incorporated by reference in Part III of this report. Except as expressly incorporated by reference, the registrant's Proxy Statement shall not be deemed to be part of this report. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Registrant hereby amends to read in its entirety as set forth herein Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations and Item 8, Financial Statements. The only portion of Item 8 that has been changed is the Consolidated Statements of Stockholders' Equity to state the number of common shares affecting the transactions disclosed. Exhibit 23.1 is added hereby, and is in addition to Exhibit 23 as originally filed. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS FOR THE THREE YEARS ENDED DECEMBER 31, 1995 Temporary services revenues were $577 million, $406 million and $279 million for the years ended December 31, 1995, 1994 and 1993, respectively, increasing by 42% during 1995 and 46% during 1994. The increase in revenues during these periods reflected in part revenues generated from the Company's OfficeTeam and RHI Consulting divisions, which were started in 1991 and 1994, respectively. Permanent placement revenues were $52 million, $40 million and $27 million for the years ended December 31, 1995, 1994 and 1993, respectively, increasing by 30% during 1995 and 48% during 1994. Overall revenue increases reflect continued improvement in demand for the Company's services, which the Company believes is a result of increased acceptance in the use of professional staffing services. Revenues from companies acquired during 1995, 1994 and 1993 were not material. The Company currently has more than 185 offices in 36 states and five foreign countries. Domestic operations represented 90%, 91% and 92% of revenues for the three years ended December 31, 1995, 1994 and 1993, respectively. Foreign operations represented 10%, 9% and 8% of revenues for those years. Gross margin dollars from the Company's temporary services represent revenues less direct costs of services, which consists of payroll, payroll taxes and insurance costs for temporary employees. Gross margin dollars from permanent placement services are equal to revenues, as there are no direct costs associated with such revenues. Gross margin dollars for the Company's temporary services were $192 million, $133 million and $91 million for the years ended December 31, 1995, 1994 and 1993, respectively, increasing by 44% in 1995 and 46% in 1994. Gross margin amounts equaled 33% of revenues for temporary services for the years ended December 31, 1995, 1994 and 1993, which the Company believes reflects its ability to adjust billing rates and wage rates to underlying market conditions. Gross margin dollars for the Company's permanent placement division were $52 million, $40 million and $27 million for each of the years ended December 31, 1995, 1994 and 1993, respectively, increasing by 30% and 48% in 1995 and 1994, respectively. Selling, general and administrative expenses were $171 million during 1995 compared to $122 million in 1994 and $88 million in 1993. Selling, general and administrative expenses as a percentage of revenues were 27% in both the years ended December 31, 1995 and 1994, and 29% for the year ended December 31, 1993. Selling, general and administrative expenses consist primarily of staff compensation, advertising and occupancy costs, most of which generally follow changes in revenues. The percentage decline from 1993 primarily reflected revenue growth and management of staff compensation costs. The Company allocates the excess of cost over the fair market value of the net tangible assets first to identifiable intangible assets, if any, and then to goodwill. Although management believes that goodwill has an unlimited life, the Company amortizes these costs over 40 years. Management believes that its strategy of making acquisitions of established companies in established markets and maintaining its presence in these markets preserves the goodwill for an indeterminate period. The carrying value of intangible assets is periodically reviewed by the Company and impairments are recognized when the expected future operating cash flows derived from such intangible assets is less than their carrying value. Based upon its most recent analysis, the Company believes that no material impairment of intangible assets existed at December 31, 1995. Intangible assets represented 52% of total assets and 68% of total stockholders' equity at December 31, 1995. Interest income for the years ended December 31, 1995, 1994 and 1993 was $1,237,000, $144,000 and $0, respectively. Interest expense for the years ended December 31, 1995, 1994 and 1993 was $774,000, $1,714,000 and $3,992,000, respectively. These changes reflect an increase in cash and cash equivalents and a decrease in outstanding indebtedness. The provision for income taxes was 42% for both the years ended December 31, 1995 and 1994 and 46% for the year ended December 31, 1993. The decrease in 1994 is the result of a smaller percentage of non-deductible intangible expenses. LIQUIDITY AND CAPITAL RESOURCES The change in the Company's liquidity during the past three years is the net effect of funds generated by operations and the funds used for the personnel services acquisitions, capital expenditures, principal payments on outstanding notes payable, and the securities repurchase program. No open market purchases of the Company's stock were made during the year ended December 31, 1995. For the year ended December 31, 1995, the Company generated $42.2 million from operations, used $9.4 million in investing activities and provided $6 million from financing activities. The Company's working capital at December 31, 1995 included $41.3 million in cash and cash equivalents. In addition at December 31, 1995, the Company had available $76.6 million of its $80 million bank revolving line of credit. The Company's working capital requirements consist primarily of the financing of accounts receivable. While there can be no assurances in this regard, the Company expects that internally generated cash plus the bank revolving line of credit will be sufficient to support the working capital needs of the Company, the Company's fixed payments and other obligations on both a short and long term basis. As of December 31, 1995, the Company had no material capital commitments. The Company's revolving bank line has scheduled reductions in availability through 2001 when the agreement terminates. In November 1994, the Company issued 633,555 shares of its common stock. The net proceeds from the sale of shares were approximately $12.6 million. The Company used the proceeds for repayment of the borrowing under the Company's revolving credit agreement. On December 10, 1993, substantially all the Company's outstanding convertible subordinated debentures were converted into common stock of the Company. See Note F in the Notes to Consolidated Financial Statements. In March 1995, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standard ("SFAS") No. 121, "Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of". The Company plans to adopt SFAS No. 121 in 1996 and believes that the adoption will not have a material impact upon its financial statements. 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, ---------------------- 1995 1994 ---------- ---------- ASSETS: Cash and cash equivalents................................................................. $ 41,346 $ 2,638 Accounts receivable, less allowances of $3,067 and $2,600................................. 84,955 60,025 Other current assets...................................................................... 7,349 5,040 ---------- ---------- Total current assets.................................................................... 133,650 67,703 Intangible assets, less accumulated amortization of $33,071 and $28,243................... 155,441 152,824 Other assets.............................................................................. 12,049 7,234 ---------- ---------- Total assets............................................................................ $ 301,140 $ 227,761 ---------- ---------- ---------- ---------- LIABILITIES AND STOCKHOLDERS' EQUITY: Accounts payable and accrued expenses..................................................... $ 12,631 $ 7,232 Accrued payroll costs..................................................................... 33,853 19,133 Income taxes payable...................................................................... 5,157 2,181 Current portion of notes payable and other indebtedness................................... 4,239 1,081 ---------- ---------- Total current liabilities............................................................... 55,880 29,627 Notes payable and other indebtedness, less current portion................................ 1,486 3,133 Deferred income taxes..................................................................... 15,844 18,006 ---------- ---------- Total liabilities....................................................................... 73,210 50,766 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Common Stock, $.001 par value, 100,000,000 shares authorized, 28,892,311 and 28,152,201 shares issued and outstanding in 1995 and 1994, respectively.......................... 29 28 Capital surplus......................................................................... 99,797 82,655 Deferred compensation................................................................... (9,642) (5,533) Accumulated translation adjustments..................................................... 51 (541) Retained earnings....................................................................... 137,695 100,386 ---------- ---------- Total stockholders' equity............................................................ 227,930 176,995 ---------- ---------- Total liabilities and stockholders' equity............................................ $ 301,140 $ 227,761 ---------- ---------- ---------- ----------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 10 ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEARS ENDED DECEMBER 31, ---------------------------------- 1995 1994 1993 ---------- ---------- ---------- Net service revenues......................................................... $ 628,526 $ 446,328 $ 306,166 Direct costs of services, consisting of payroll, payroll taxes and insurance costs for temporary employees.............................................. 384,449 273,327 188,292 ---------- ---------- ---------- Gross margin................................................................. 244,077 173,001 117,874 Selling, general and administrative expenses................................. 170,684 121,640 88,074 Amortization of intangible assets............................................ 4,767 4,584 4,251 Interest (income) expense.................................................... (463) 1,570 3,992 ---------- ---------- ---------- Income before income taxes................................................... 69,089 45,207 21,557 Provision for income taxes................................................... 28,791 19,090 9,834 ---------- ---------- ---------- Net income................................................................... $ 40,298 $ 26,117 $ 11,723 ---------- ---------- ---------- ---------- ---------- ---------- Income per share............................................................. $ 1.36 $ .92 $ .46 ---------- ---------- ---------- ---------- ---------- ----------
1994 and 1993 per share amounts have been restated to retroactively reflect the two-for-one stock split effected in the form of a stock dividend in August 1994. The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 11 ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (IN THOUSANDS)
YEARS ENDED DECEMBER 31, ------------------------------- 1995 1994 1993 --------- --------- --------- COMMON STOCK--SHARES: Balance at beginning of period.................................................... 28,152 26,837 23,642 Issuance of common stock.......................................................... -- 634 -- Issuance of restricted stock...................................................... 234 332 82 Conversion of debentures.......................................................... -- -- 2,040 Repurchases of common stock....................................................... (114) (115) (119) Exercises of stock options........................................................ 620 464 1,086 Issuance of common stock for acquisitions......................................... -- -- 106 --------- --------- --------- Balance at end of period........................................................ 28,892 28,152 26,837 --------- --------- --------- --------- --------- --------- COMMON STOCK--PAR VALUE: Balance at beginning of period.................................................... $ 28 $ 26,837 $ 23,642 Issuance of common stock.......................................................... -- 1 -- Issuances of restricted stock, net................................................ -- 334 82 Conversion of debentures.......................................................... -- -- 2,040 Repurchases of common stock....................................................... -- (59) (119) Exercises of stock options........................................................ 1 213 1,086 Issuance of common stock for acquisitions......................................... -- -- 106 Change in par value............................................................... -- (27,298) -- --------- --------- --------- Balance at end of period........................................................ $ 29 $ 28 $ 26,837 --------- --------- --------- --------- --------- --------- CAPITAL SURPLUS: Balance at beginning of period.................................................... $ 82,655 $ 33,113 $ 3,897 Issuance of common stock--excess over par value................................... -- 12,589 -- Issuances of restricted stock, net--excess over par value......................... 6,887 4,949 825 Conversion of debentures--excess over par value................................... -- -- 20,185 Exercises of stock options--excess over par value................................. 3,818 2,162 4,029 Tax benefits from exercises of stock options and restricted stock releases........ 6,437 2,544 2,823 Issuance of common stock for acquisitions--excess over par value.................. -- -- 1,354 Change in par value............................................................... -- 27,298 -- --------- --------- --------- Balance at end of period........................................................ $ 99,797 $ 82,655 $ 33,113 --------- --------- --------- --------- --------- --------- DEFERRED COMPENSATION: Balance at beginning of period.................................................... $ (5,533) $ (2,113) $ (2,208) Issuances of restricted stock, net................................................ (6,887) (5,283) (907) Amortization...................................................................... 2,778 1,863 1,002 --------- --------- --------- Balance at end of period........................................................ $ (9,642) $ (5,533) $ (2,113) --------- --------- --------- --------- --------- --------- ACCUMULATED TRANSLATION ADJUSTMENTS: Balance at beginning of period.................................................... $ (541) $ (589) $ (257) Translation adjustments........................................................... 592 48 (332) --------- --------- --------- Balance at end of period........................................................ $ 51 $ (541) $ (589) --------- --------- --------- --------- --------- --------- RETAINED EARNINGS: Balance at beginning of period.................................................... $ 100,386 $ 76,354 $ 65,898 Repurchases of common stock--excess over par value................................ (2,989) (2,085) (1,267) Net income........................................................................ 40,298 26,117 11,723 --------- --------- --------- Balance at end of period........................................................ $ 137,695 $ 100,386 $ 76,354 --------- --------- --------- --------- --------- ---------
1994 and 1993 shares and amounts have been restated to retroactively reflect the two-for-one stock split effected in the form of a stock dividend in August 1994. The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 12 ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
YEARS ENDED DECEMBER 31, ------------------------------- 1995 1994 1993 --------- --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income...................................................................... $ 40,298 $ 26,117 $ 11,723 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of intangible assets........................................... 4,767 4,584 4,251 Depreciation expense........................................................ 3,564 2,673 2,383 Provision for deferred income taxes......................................... (683) 1,096 1,136 Changes in assets and liabilities, net of effects of acquisitions: Increase in accounts receivable............................................. (24,289) (18,292) (10,481) Increase in accounts payable, accrued expenses and accrued payroll costs.... 15,106 5,795 4,158 Increase in income taxes payable............................................ 2,976 389 2,553 Change in other assets, net of change in other liabilities.................. 432 2,997 (806) --------- --------- --------- Total adjustments............................................................. 1,873 (758) 3,194 --------- --------- --------- Net cash and cash equivalents provided by operating activities.................. 42,171 25,359 14,917 CASH FLOWS USED IN INVESTING ACTIVITIES: Acquisitions, net of cash acquired.............................................. (1,024) (4,406) (11,141) Capital expenditures............................................................ (8,417) (4,768) (2,340) --------- --------- --------- Net cash and cash equivalents used in investing activities...................... (9,441) (9,174) (13,481) CASH FLOWS USED IN FINANCING ACTIVITIES: Proceeds from issuance of common stock, net..................................... -- 12,589 -- Borrowings under credit agreement............................................... -- 104,900 138,900 Repayments under credit agreement............................................... -- (135,200) (144,200) Repurchases of convertible debentures........................................... -- -- (305) Principal payments on notes payable and other indebtedness...................... (1,289) (384) (1,170) Proceeds and tax benefits from exercise of stock options and restricted stock releases...................................................................... 10,256 4,919 7,938 Repurchases of common stock and common stock equivalents........................ (2,989) (2,144) (1,386) --------- --------- --------- Net cash and cash equivalents provided by (used in) financing activities........ 5,978 (15,320) (223) --------- --------- --------- Net increase in cash and cash equivalents....................................... 38,708 865 1,213 Cash and cash equivalents at beginning of period................................ 2,638 1,773 560 --------- --------- --------- Cash and cash equivalents at end of period...................................... $ 41,346 $ 2,638 $ 1,773 --------- --------- --------- --------- --------- --------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the year for: Interest...................................................................... $ 405 $ 1,420 $ 4,256 Income taxes.................................................................. $ 21,853 $ 14,609 $ 4,568 Acquisitions: Fair value of assets acquired-- Intangible assets........................................................... $ 4,697 $ 5,452 $ 12,650 Other....................................................................... 753 1,694 2,506 Liabilities assumed-- Notes payable and contracts................................................. (2,800) (2,158) (101) Other....................................................................... (1,626) (582) (2,454) Common stock issued........................................................... -- -- (1,460) --------- --------- --------- Cash paid, net of cash acquired............................................... $ 1,024 $ 4,406 $ 11,141 --------- --------- --------- --------- --------- ---------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE OF OPERATIONS. Robert Half International Inc. (the "Company") provides specialized staffing services through such divisions as Accountemps-Registered Trademark-, Robert Half-Registered Trademark-, OfficeTeam-Registered Trademark- and RHI Consulting-Registered Trademark-. The Company, through its Accountemps and Robert Half divisions, is the world's largest specialized provider of temporary and permanent personnel in the fields of accounting and finance. OfficeTeam specializes in skilled temporary administrative personnel and RHI Consulting provides contract information technology professionals. Revenues are predominantly from temporary services. The Company operates in the United States, Canada and Europe. The Company is a Delaware corporation. PRINCIPLES OF CONSOLIDATION. The Consolidated Financial Statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. All significant intercompany balances have been eliminated. Certain reclassifications have been made to the 1994 and 1993 financial statements to conform to the 1995 presentation. REVENUE RECOGNITION. Temporary services revenues are recognized when the services are rendered by the Company's temporary employees. Permanent placement revenues are recognized when employment candidates accept offers of permanent employment. Allowances are established to estimate losses due to placed candidates not remaining in employment for the Company's guarantee period, typically 90 days. CASH AND CASH EQUIVALENTS. The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents. INTANGIBLE ASSETS. Intangible assets represent the cost of acquired companies in excess of the fair market value of their net tangible assets at acquisition date, and are being amortized on a straight-line basis over a period of 40 years. The carrying value of intangible assets is periodically reviewed by the Company and impairments are recognized when the expected future operating cash flows derived from such intangible assets is less than their carrying value. Based upon its most recent analysis, the Company believes that no material impairment of intangible assets exists at December 31, 1995. INCOME TAXES. Deferred taxes are computed based on the difference between the financial statement and income tax bases of assets and liabilities using the enacted marginal tax rate. FOREIGN CURRENCY TRANSLATION. The results of operations of the Company's foreign subsidiaries are translated at the monthly average exchange rates prevailing during the period. The financial position of the Company's foreign subsidiaries are translated at the current exchange rates at the end of the period, and the related translation adjustments are recorded as part of Stockholders' Equity. Gains and losses resulting from foreign currency transactions are included in the Consolidated Statements of Income. USE OF ESTIMATES. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. NOTE B--ACQUISITIONS In July 1986, the Company acquired all of the outstanding stock of Robert Half Incorporated, the franchisor of the Accountemps and Robert Half operations. Subsequently, in 61 separate transactions the Company acquired all of the outstanding stock of certain corporations operating Accountemps and Robert Half franchised offices in the United States, the United Kingdom and Canada as well as other personnel 14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE B--ACQUISITIONS (CONTINUED) services businesses. The Company has paid approximately $196 million in cash, stock, notes and other indebtedness in these acquisitions, excluding transaction costs and cash acquired. These acquisitions were accounted for as purchases, and the excess of cost over the fair market value of the net tangible assets acquired is being amortized over 40 years using the straight-line method. Results of operations of the acquired companies are included in the Consolidated Statements of Income from the dates of acquisition. The acquisitions made during 1995 and 1994 had no material pro forma impact on the results of operations. NOTE C--NOTES PAYABLE AND OTHER INDEBTEDNESS The Company issued promissory notes as well as other forms of indebtedness in connection with certain acquisitions. These are due in varying installments, carry varying interest rates and in aggregate amounted to $5,725,000 at December 31, 1995 and $4,214,000 at December 31, 1994. At December 31, 1995, $1,350,000 of the notes was secured by a standby letter of credit (see Note D). The following table shows the schedule of maturities for notes payable and other indebtedness at December 31, 1995 (in thousands): 1996................................................................ $ 4,239 1997................................................................ 764 1998................................................................ 464 1999................................................................ 15 2000................................................................ 16 Thereafter.......................................................... 227 --------- $ 5,725 --------- ---------
At December 31, 1995, all of the notes carried fixed rates of interest ranging from 4.1% to 13.3%. The weighted average interest rate for the above was approximately 7.3%, 8.2% and 11.1% for the years ended December 31, 1995, 1994 and 1993, respectively. NOTE D--BANK LOAN (REVOLVING CREDIT) The bank loan is an unsecured credit facility which provides a line of credit of up to $80,000,000, which is available to fund the Company's general business and working capital needs, including acquisitions and the purchase of the Company's common stock, and to cover the issuance of debt support standby letters of credit up to $15,000,000. As of December 31, 1995 and 1994, the Company had no borrowings on the line of credit outstanding and had used $3,408,000 and $3,358,000 in debt support standby letters of credit, respectively. There is a commitment fee on the unused portion of the entire credit facility of .25%. The loan is subject to certain financial covenants which also affect the interest rates charged. 15 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE D--BANK LOAN (REVOLVING CREDIT) (CONTINUED) The credit facility has the following scheduled reduction in availability (in thousands): 1996............................................................... $ 5,000 1997............................................................... $ 15,000 1998............................................................... $ 15,000 1999............................................................... $ 15,000 2000............................................................... $ 15,000 2001............................................................... $ 15,000
The final maturity date for the credit facility is August 31, 2001. NOTE E--CURRENT LIABILITIES Other current liabilities included in accrued payroll costs consist of the following at December 31, 1995 and 1994 (in thousands):
1995 1994 --------- --------- Accrued payroll and bonus............................................... $ 15,856 $ 9,960 Accrued workers compensation and other benefits......................... 11,182 3,731 Accrued payroll taxes................................................... 6,815 5,442 --------- --------- $ 33,853 $ 19,133 --------- --------- --------- ---------
NOTE F--CONVERTIBLE SUBORDINATED DEBENTURES On August 6, 1987, the Company issued $74,750,000 of 7.25% Convertible Subordinated Debentures (the "Convertible Debentures"). Prior to 1993, all but $22,745,000 of the Convertible Debentures were repurchased by the Company pursuant to its repurchase program. The Convertible Debentures were unsecured obligations of the Company with an original maturity date of August 1, 2012. Interest was payable semi-annually as of February 1 and August 1 of each year to the registered holders as of the preceding January 15 and July 15, respectively. The Convertible Debentures were redeemable at the Company's option at any time on or after August 1, 1990, at declining redemption prices. In December 1993, the Company called for redemption all of its then outstanding Convertible Debentures. Holders of $22,440,000 in principal amount elected to convert their debentures into 2.04 million shares of common stock at the conversion price of $11.00 per share. The remaining $305,000 in principal amount of Convertible Debentures was redeemed at 102.9% of the principal amount plus accrued interest. NOTE G--STOCKHOLDERS' EQUITY On June 27, 1994, the stockholders of the Company voted to amend the certificate of incorporation to increase the number of authorized shares of the Company's common stock from 30,000,000 to 100,000,000 shares and the number of authorized shares of the Company's preferred stock from 500,000 to 5,000,000. The stockholders of the Company also authorized a reduction in par value from $1 per share to $.001 per share on both classes of shares. 16 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE G--STOCKHOLDERS' EQUITY (CONTINUED) In August 1994, the Company effected a two-for-one stock split in the form of a stock dividend. 1994 and 1993 share and per share amounts have been restated to retroactively reflect the two-for-one stock split. In November 1994, the Company issued 633,555 shares of its common stock at a price of $21.25 per share. The net proceeds from the sale of shares (after deducting issuance costs of approximately $355,000 and a 4% underwriter's discount) were approximately $12.6 million. NOTE H--INCOME TAXES The provisions for income taxes for the years ended December 31, 1995, 1994 and 1993 consisted of the following (in thousands):
YEARS ENDED DECEMBER 31, ------------------------------- 1995 1994 1993 --------- --------- --------- Current: Federal..................................................... $ 22,061 $ 14,072 $ 6,995 State....................................................... 4,728 3,155 1,604 Foreign..................................................... 1,835 767 99 Deferred--principally domestic................................ 167 1,096 1,136 --------- --------- --------- $ 28,791 $ 19,090 $ 9,834 --------- --------- --------- --------- --------- ---------
The income taxes shown above varied from the statutory federal income tax rates for these periods as follows:
YEARS ENDED DECEMBER 31, ---------------------------- 1995 1994 1993 ---- ---- ---- Federal U.S. income tax rate................................ 35.0% 35.0% 35.0% State income taxes, net of federal tax benefit.............. 4.5 4.7 5.5 Amortization of intangible assets........................... 1.5 2.0 4.1 Other, net.................................................. .7 .5 1.0 ---- ---- ---- Effective tax rate.......................................... 41.7% 42.2% 45.6% ---- ---- ---- ---- ---- ----
The deferred portion of the tax provisions consisted of the following (in thousands):
YEARS ENDED DECEMBER 31, ------------------------------- 1995 1994 1993 --------- --------- --------- Amortization of franchise rights................................ $ 1,650 $ 1,629 $ 1,484 Accrued expenses, deducted for tax when paid.................... (2,068) (524) (137) Other, net...................................................... (265) (9) (211) --------- --------- --------- $ (683) $ 1,096 $ 1,136 --------- --------- --------- --------- --------- ---------
17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE H--INCOME TAXES (CONTINUED) The net deferred income tax liability shown on the balance sheet is comprised of the following (in thousands):
DECEMBER 31, -------------------- 1995 1994 --------- --------- Deferred income tax assets.............................................. $ (1,304) $ (883) Deferred income tax liabilities......................................... 17,148 18,889 --------- --------- $ 15,844 $ 18,006 --------- --------- --------- ---------
No valuation allowances against deferred tax assets were required for the years ended December 31, 1995 and 1994. The components of the net deferred income tax liability at December 31, 1995 and 1994, were as follows (in thousands):
DECEMBER 31, -------------------- 1995 1994 --------- --------- Amortization of intangible assets....................................... $ 16,216 $ 17,427 Foreign taxes........................................................... 200 775 Other................................................................... (572) (196) --------- --------- $ 15,844 $ 18,006 --------- --------- --------- ---------
NOTE I--COMMITMENTS Rental expense, primarily for office premises, amounted to $11,027,000, $9,183,000 and $8,457,000 for the years ended December 31, 1995, 1994 and 1993, respectively. The approximate minimum rental commitments for 1996 and thereafter under non-cancelable leases in effect at December 31, 1995, are as follows (in thousands): 1996............................................................... $ 10,547 1997............................................................... 9,536 1998............................................................... 8,145 1999............................................................... 6,295 2000............................................................... 3,274 Thereafter......................................................... 5,209
NOTE J--STOCK PLANS Under various stock plans, officers, employees and outside directors may receive grants of restricted stock or options to purchase common stock. Grants are made at the discretion of the Compensation Committee of the Board of Directors. Grants vest between four to seven years. Options granted under the plans have exercise prices ranging from 85% to 100% of the fair market value of the Company's common stock at the date of grant, consist of both incentive stock options and nonstatutory stock options under the Internal Revenue Code, and generally have a term of ten years. 18 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE J--STOCK PLANS (CONTINUED) Recipients of restricted stock do not pay any cash consideration to the Company for the shares, have the right to vote all shares subject to such grant, and receive all dividends with respect to such shares, whether or not the shares have vested. As of December 31, 1995, the total number of available shares to grant under the plans (consisting of either restricted stock or options) was 559,714. The following table reflects activity under all stock plans from January 1, 1993 through December 31, 1995, and the exercise prices:
STOCK OPTION PLANS ---------------------------- RESTRICTED NUMBER OF EXERCISE PRICE STOCK PLANS SHARES PER SHARE ----------- ---------- ---------------- Outstanding, January 1, 1993..................................... 466,300 2,921,808 $ 3.55 - 9.42 Granted........................................................ 142,938 1,415,942 $ 6.17 - 12.63 Exercised...................................................... -- (1,085,032) $ 3.76 - 8.07 Restrictions lapsed............................................ (99,959) -- -- Forfeited...................................................... (57,678) (310,218) $ 4.31 - 10.73 ----------- ---------- ---------------- Outstanding, December 31, 1993................................... 451,601 2,942,500 $ 3.55 - 12.63 Granted........................................................ 344,814 836,884 $ 15.00 - 24.00 Exercised...................................................... -- (463,515) $ 4.31 - 11.50 Restrictions lapsed............................................ (156,100) -- -- Forfeited...................................................... (13,647) (182,808) $ 4.31 - 12.63 ----------- ---------- ---------------- Outstanding, December 31, 1994................................... 626,668 3,133,061 $ 3.55 - 24.00 Granted........................................................ 248,392 690,631 $ 21.00 - 41.875 $ 19.625 - Exercised...................................................... -- (620,407) 41.875 Restrictions lapsed............................................ (187,771) -- -- Forfeited...................................................... (14,282) (180,669) $ 4.305 - 41.875 ----------- ---------- ---------------- Outstanding, December 31, 1995................................... 673,007 3,022,616 $ 3.55 - 41.875 ----------- ---------- ---------------- ----------- ---------- ----------------
As of December 31, 1995, an aggregate of 1,208,798 options to purchase common stock were vested. NOTE K--PREFERRED SHARE PURCHASE RIGHTS Pursuant to the Company's stockholder rights agreement, each share of common stock carries one right to purchase one two-hundredth of a share of preferred stock. The rights become exercisable in certain limited circumstances involving a potential business combination transaction or an acquisition of shares of the Company and are exercisable at a price of $32.50 per right, subject to adjustment. Following certain other events after the rights become exercisable, each right entitles its holder to purchase for $32.50 an amount of common stock of the Company, or, in certain circumstances, securities of the acquiror, having a then-current market value of twice the exercise price of the right. The rights are redeemable and may be amended at the Company's option before they become exercisable. Until a right is exercised, the holder of a right has no rights as a stockholder of the Company. The rights expire on July 23, 2000. 19 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE L--INCOME PER SHARE Income per fully diluted share has been computed using the weighted average number of shares of fully diluted common stock and common stock equivalents outstanding during each period (29,708,000, 28,484,000 and 25,260,000 shares for the years ending December 31, 1995, 1994 and 1993, respectively). An assumed conversion of the Convertible Debentures was not dilutive to income per share in 1993 (see Note E). NOTE M--QUARTERLY FINANCIAL DATA (UNAUDITED) The following tabulation shows certain quarterly financial data for 1995 and 1994 (in thousands, except per share amounts):
QUARTER ---------------------------------------------- 1995 1 2 3 4 YEAR - ----------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Net service revenues................................. $ 144,739 $ 148,570 $ 159,303 $ 175,914 $ 628,526 Gross margin......................................... 56,039 57,732 62,196 68,110 244,077 Income before income taxes........................... 15,502 16,053 17,865 19,669 69,089 Net income........................................... 9,005 9,350 10,463 11,480 40,298 Net income per share................................. .31 .32 .35 .38 1.36 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
20 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE N--SEGMENT REPORTING Information about the Company's operations in different geographic locations for each of the three years in the period ended December 31, 1995, is shown below. The Company's areas of operations outside of the United States include Canada, the United Kingdom, Belgium, France and the Netherlands. Revenues represent total net revenues from the respective geographic areas. Operating income is net revenues less operating costs and expenses pertaining to specific geographic areas. Foreign operating income reflects charges for U.S. management fees and amortization of intangible assets of $992,000, $956,000 and $917,000 for the years ended December 31, 1995, 1994 and 1993, respectively. Domestic operating income reflects charges for amortization of intangibles of $4,307,000, $4,137,000 and $3,841,000 for the years ended December 31, 1995, 1994 and 1993, respectively. Identifiable assets are those assets used in the geographic areas and are after elimination of intercompany balances.
YEARS ENDED DECEMBER 31, ---------------------------------- 1995 1994 1993 ---------- ---------- ---------- (IN THOUSANDS) Revenues Domestic............................................... $ 564,564 $ 404,852 $ 280,266 Foreign................................................ 63,962 41,476 25,900 ---------- ---------- ---------- $ 628,526 $ 446,328 $ 306,166 ---------- ---------- ---------- ---------- ---------- ---------- Operating Income Domestic............................................... $ 63,861 $ 44,700 $ 26,294 Foreign................................................ 4,765 2,077 (745) ---------- ---------- ---------- $ 68,626 $ 46,777 $ 25,549 ---------- ---------- ---------- ---------- ---------- ---------- Assets Domestic............................................... $ 267,487 $ 200,329 $ 180,778 Foreign................................................ 33,653 27,432 23,820 ---------- ---------- ---------- $ 301,140 $ 227,761 $ 204,598 ---------- ---------- ---------- ---------- ---------- ----------
21 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Stockholders and the Board of Directors of Robert Half International Inc.: We have audited the accompanying consolidated statements of financial position of Robert Half International Inc. (a Delaware corporation) and subsidiaries as of December 31, 1995 and 1994, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Robert Half International Inc. and subsidiaries as of December 31, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP San Francisco, California January 26, 1996 22 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized. ROBERT HALF INTERNATIONAL INC. (Registrant) Date: October 10, 1996 By /s/ M. KEITH WADDELL ------------------------------------------ M. Keith Waddell SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND TREASURER (PRINCIPAL FINANCIAL OFFICER) EX-23.1 2 EXHIBIT 23.1 EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants we hereby consent to the incorporation by reference of our report dated January 26, 1996 into the Company's Registration Statements on Form S-8 (nos. 333-05743 and 333-05745). ARTHUR ANDERSEN LLP San Francisco, California October 9, 1996 -----END PRIVACY-ENHANCED MESSAGE-----