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, 1993
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 $1.00 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, 1994, the aggregate market value of the Common Stock held
by non-affiliates of the registrant was approximately $271,221,383 based on the
closing sale price on that date. This amount excludes the market value of
4,439,980 shares of Common Stock held by registrant's directors and officers and
their affiliates.
As of February 28, 1994, there were outstanding 13,518,520 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 1994, 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
OVERVIEW
Robert Half International Inc. (the "Company"), a Delaware corporation,
primarily operates the nation's largest staffing services organization
specializing in the accounting, financial, tax and banking fields. The Company
operates through offices in the United States, Canada, the United Kingdom,
Belgium and France, offering permanent and temporary personnel services under
the names ROBERT HALF-R-and ACCOUNTEMPS-R-, respectively. Currently, the Company
operates 153 offices and an additional 7 offices are operated by independent
franchisees. The Company also places high-end office and administrative
professionals (under the name OFFICETEAM-R-).
ACCOUNTING, FINANCIAL, TAX AND BANKING SERVICES
The Company provides skilled personnel to virtually all industries for a
wide range of accounting, financial, tax, banking and data processing positions.
The Company's office network maintains an interoffice referral system which
enables the offices to cooperate in fulfilling a client's permanent and
temporary employment requirements. The ROBERT HALF permanent placement services
complement the ACCOUNTEMPS temporary staffing services by providing customers
the ability to obtain both temporary and permanent employees from one source and
by attracting applicants for permanent positions who are often willing to accept
temporary positions during their search for permanent employment.
The ACCOUNTEMPS temporary services division offers customers a reliable and
economical means of dealing with uneven or peak work loads caused by such
predictable events as vacations, taking inventories, tax work, month-end
activities and special projects and such unpredictable events as illnesses 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 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, banking and data processing 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.
OTHER ACTIVITIES
The Company's OFFICETEAM division places temporary and permanent high-end
office and administrative personnel, ranging from word processors to office
managers. OFFICETEAM operates in much the same fashion as the ACCOUNTEMPS and
ROBERT HALF divisions.
The Company has a small operation involving only a limited number of offices
which places temporary and permanent employees in paralegal, legal
administrative and legal secretarial positions (operating under the name THE
AFFILIATES-R-).
ORGANIZATION
Management of the Company's offices is coordinated from its headquarters in
Menlo Park, California. Office managers are responsible for most activities of
their offices, including sales, local advertising and marketing and recruitment.
1
The Company's headquarters provides support and centralized services to
Company-owned offices in the administrative, marketing, accounting, training and
legal areas, particularly as it relates to the standardization of the operating
procedures of Company-owned offices.
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. 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 and trade groups.
The Company owns many trademarks, service marks and tradenames, including
the "ROBERT HALF", "ACCOUNTEMPS" and "OFFICETEAM" marks, which are registered in
the United States and in a number of foreign countries.
COMPETITION
The Company faces competition in its efforts to attract clients as well as
high-quality specialized employment candidates. The permanent placement business
is highly competitive, with a number of firms offering services similar to those
provided by the Company, mostly on a regional or local basis. The temporary
services industry is also highly competitive. There are several large nationwide
operations, some of which have greater resources than the Company. In many areas
the local companies are the strongest competitors. The most significant
competitive factors in the permanent placement and temporary personnel service
markets are price and the reliability of service, both of which are often a
function of the availability and quality of personnel. Customers and employment
candidates may use more than one permanent or temporary personnel services
company.
EMPLOYEES
The Company and its subsidiaries presently employ approximately 1,150
regular full-time employees. The Company's offices employed approximately 59,000
different temporary employees on assignments during 1993.
The ACCOUNTEMPS and OFFICETEAM temporary employees 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.
FRANCHISING
The Company is not currently seeking to grant additional franchises or to
grant licenses for the operation of ROBERT HALF or ACCOUNTEMPS offices. However,
the Company is exploring the possibility of using joint ventures or licensing
arrangements as a means of expanding its operations.
The Company believes its relationships with its independently-owned
franchisees are good. Franchisees operate their businesses autonomously, subject
to the requirements of the franchise agreements. The franchise agreements
authorize franchisees to establish one or more ROBERT HALF and ACCOUNTEMPS
offices within designated geographic areas. The agreements provide for monthly
payments of royalties to the Company based on the franchisee's cash collections
and are generally for a term of twenty years, renewable at the franchisee's
option.
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.)
2
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 153 offices located in the United States,
Canada, the United Kingdom, Belgium and France. 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.
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, 1994, there were 1,337 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:
SALES PRICES
--------------------
1993 HIGH LOW
- ------------------------------------------------------------- --------- ---------
4th Quarter.................................................. $ 28.25 $ 24.00
3rd Quarter.................................................. $ 30.00 $ 21.375
2nd Quarter.................................................. $ 22.50 $ 16.25
1st Quarter.................................................. $ 18.125 $ 12.625
SALES PRICES
--------------------
1992 HIGH LOW
- ------------------------------------------------------------- --------- ---------
4th Quarter.................................................. $ 14.50 $ 11.625
3rd Quarter.................................................. $ 11.75 $ 10.25
2nd Quarter.................................................. $ 13.875 $ 11.50
1st Quarter.................................................. $ 14.375 $ 11.00
No cash dividends were paid in 1993 or 1992. 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.
3
ITEM 6. SELECTED FINANCIAL DATA
Following is a table of selected financial data of the Company of the last
five years:
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------
1993 1992 1991 1990 1989
----------- ----------- ----------- ----------- -----------
(IN THOUSANDS)
INCOME STATEMENT DATA:
Net service revenues..................... $ 306,166 $ 220,179 $ 209,455 $ 248,557 $ 234,504
Direct costs of services, consisting of
payroll and payroll taxes for temporary
employees............................... 188,292 131,875 117,583 130,792 119,682
----------- ----------- ----------- ----------- -----------
Gross margin............................. 117,874 88,304 91,872 117,765 114,822
Selling, general and administrative
expenses................................ 88,074 72,136 73,326 90,518 81,157
Amortization of intangible assets........ 4,251 3,961 3,896 3,721 3,357
Interest expense......................... 3,992 4,301 6,574 8,593 7,264
----------- ----------- ----------- ----------- -----------
Income before income taxes and
extraordinary item...................... 21,557 7,906 8,076 14,933 23,044
Provision for income taxes............... 9,834 3,524 3,961 6,067 9,922
----------- ----------- ----------- ----------- -----------
Income before extraordinary item......... 11,723 4,382 4,115 8,866 13,122
Extraordinary item from repurchases of
debentures, net of income tax effects... -- -- -- 453 345
----------- ----------- ----------- ----------- -----------
Net income............................... $ 11,723 $ 4,382 $ 4,115 $ 9,319 $ 13,467
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
DECEMBER 31,
---------------------------------------------------------------
1993 1992 1991 1990 1989
----------- ----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
INCOME PER PRIMARY SHARE:
Income before extraordinary item......... $ .93 $ .37 $ .35 $ .78 $ 1.13
Extraordinary item....................... -- -- -- .04 .03
----------- ----------- ----------- ----------- -----------
Net income............................... $ .93 $ .37 $ .35 $ .82 $ 1.16
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
INCOME PER FULLY DILUTED SHARE:
Income before extraordinary item......... $ .93 $ .37 $ .35 $ .77 $ 1.11
Extraordinary item....................... -- -- -- .04 .03
----------- ----------- ----------- ----------- -----------
Net income............................... $ .93 $ .37 $ .35 $ .81 $ 1.14
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
WEIGHTED AVERAGE NUMBER OF SHARES:
Primary.................................. 12,546 11,965 11,603 11,376 11,601
Fully Diluted............................ 12,630 12,003 11,637 11,468 13,832
DECEMBER 31,
---------------------------------------------------------------
1993 1992 1991 1990 1989
----------- ----------- ----------- ----------- -----------
(IN THOUSANDS)
BALANCE SHEET DATA:
Intangible assets, net................... $ 152,156 $ 143,757 $ 140,715 $ 141,728 $ 133,695
Total assets............................. 204,598 181,999 178,207 187,844 181,437
Debt financing........................... 32,740 61,855 67,614 86,475 90,298
Stockholders' equity..................... 133,602 90,972 84,419 77,291 68,675
4
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE YEARS ENDED DECEMBER 31, 1993
Temporary services revenues increased 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 30% during the year ended December 31, 1993. The
positive revenue comparisons reflect strong demand for the Company's specialized
personnel services.
Net service revenues grew at a slower rate in 1992 compared to 1991,
primarily as a result of the general economic recession. Temporary services
revenues increased 9% while Robert Half division revenues decreased 21%.
Gross margin as a percentage of revenues declined 1% between 1993 and 1992
and equaled 39% of revenue in 1993. In 1992, gross margin equaled 40% of revenue
and in 1991, gross margin was 44% of revenue. The percentage declines related
principally to a 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 $88 million during 1993
compared to $72 million in 1992 and $73 million in 1991. Selling, general and
administrative expenses as a percentage of revenues was 29% in 1993, compared to
33% in 1992 and 35% in 1991. The percentage declines were attributable to
revenue growth coupled with the Company's continued cost containment.
Amortization of intangible assets increased from 1991 to 1993 due to the
acquisitions in each of those years of additional personnel services operations.
Interest expense for the years ended December 31, 1993 and 1992 decreased 7%
and 35%, respectively, over the comparable prior periods due to the reduction in
outstanding indebtedness in both years and declining interest rates in the year
ending December 31, 1992.
The provision for income taxes was 46% in 1993, as compared to 45% in 1992
and 49% in 1991. 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 1992 reduction relative to 1991 was due primarily to a one-time benefit in
the fourth quarter of 1992 for the resolution of tax accounting issues related
to previous acquisitions. The Financial Accounting Standards Board issued a new
standard on accounting for income taxes, which the Company was required to adopt
on January 1, 1993. The cumulative effect of the adoption of the accounting
method prescribed by the new standard was immaterial.
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.
The Company's Board of Directors previously authorized the repurchase, on
the open market or in privately-negotiated transactions, of up to 3.25 million
shares of the Company's common stock or the equivalent amount of Convertible
Debentures or other common stock equivalents. The Company has repurchased
approximately 3.1 million shares of the Company's common stock or common stock
equivalents. See Note F to the Consolidated Financial Statements. Repurchases of
the securities have been funded with cash generated from operations and the bank
line of credit.
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.
5
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,
------------------------
1993 1992
----------- -----------
ASSETS:
Cash and cash equivalents............................................................. $ 1,773 $ 560
Accounts receivable, less allowances of $2,194 and $1,494............................. 40,155 27,362
Other current assets.................................................................. 5,538 4,651
----------- -----------
Total current assets................................................................ 47,466 32,573
Intangible assets, less accumulated amortization of $23,665 and $19,414............... 152,156 143,757
Other assets.......................................................................... 4,976 5,669
----------- -----------
Total assets........................................................................ $ 204,598 $ 181,999
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable and accrued expenses................................................. $ 6,658 $ 5,663
Accrued payroll costs................................................................. 13,243 7,251
Income taxes payable.................................................................. 1,792 240
Current portion of notes payable and other indebtedness............................... 408 883
Accrued interest payable.............................................................. 87 856
----------- -----------
Total current liabilities........................................................... 22,188 14,893
Notes payable and other indebtedness, less current portion............................ 2,032 2,627
Bank loan (revolving credit).......................................................... 30,300 35,600
Deferred income taxes................................................................. 16,476 15,162
Convertible subordinated debentures................................................... -- 22,745
----------- -----------
Total liabilities................................................................... 70,996 91,027
COMMITMENTS AND CONTINGENCIES (SEE NOTES)
STOCKHOLDERS' EQUITY:
Common stock, $1 par value:
authorized -- 30,000,000
shares issued and outstanding -- 13,418,402 and 11,820,742 shares.................... 13,418 11,821
Capital surplus....................................................................... 47,496 16,623
Deferred compensation................................................................. (2,113) (2,208)
Accumulated translation adjustments................................................... (589) (257)
Retained earnings..................................................................... 75,390 64,993
----------- -----------
Total stockholders' equity.......................................................... 133,602 90,972
----------- -----------
Total liabilities and stockholders' equity.......................................... $ 204,598 $ 181,999
----------- -----------
----------- -----------
The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
6
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEARS ENDED DECEMBER 31,
-------------------------------------
1993 1992 1991
----------- ----------- -----------
Net service revenues....................................................... $ 306,166 $ 220,179 $ 209,455
Direct costs of services, consisting of payroll and payroll taxes for
temporary employees....................................................... 188,292 131,875 117,583
----------- ----------- -----------
Gross margin............................................................... 117,874 88,304 91,872
Selling, general and administrative expenses............................... 88,074 72,136 73,326
Amortization of intangible assets.......................................... 4,251 3,961 3,896
Interest expense........................................................... 3,992 4,301 6,574
----------- ----------- -----------
Income before income taxes................................................. 21,557 7,906 8,076
Provision for income taxes................................................. 9,834 3,524 3,961
----------- ----------- -----------
Net income................................................................. $ 11,723 $ 4,382 $ 4,115
----------- ----------- -----------
----------- ----------- -----------
Income per share........................................................... $ .93 $ .37 $ .35
----------- ----------- -----------
----------- ----------- -----------
The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
7
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
YEARS ENDED DECEMBER 31,
-------------------------------
1993 1992 1991
--------- --------- ---------
COMMON STOCK:
Balance at beginning of period............................................... $ 11,821 $ 11,540 $ 11,080
Issuances of restricted stock net -- par value............................... 41 96 185
Conversion of debentures -- par value........................................ 1,020 -- --
Repurchases of common stock -- par value..................................... (60) (53) (3)
Exercises of stock options -- par value...................................... 543 230 232
Issuance of common stock for acquisitions -- par value....................... 53 8 46
--------- --------- ---------
Balance at end of period................................................... $ 13,418 $ 11,821 $ 11,540
--------- --------- ---------
--------- --------- ---------
CAPITAL SURPLUS:
Balance at beginning of period............................................... $ 16,623 $ 13,499 $ 9,684
Issuances of restricted stock, net -- excess over par value.................. 866 1,165 1,720
Conversion of debentures -- excess over par value............................ 21,205 -- --
Exercises of stock options -- excess over par value.......................... 4,572 1,331 1,229
Tax benefits from exercises of stock options................................. 2,823 535 402
Issuance of common stock for acquisitions -- excess over par value........... 1,407 93 464
--------- --------- ---------
Balance at end of period................................................... $ 47,496 $ 16,623 $ 13,499
--------- --------- ---------
--------- --------- ---------
DEFERRED COMPENSATION:
Balance at beginning of period............................................... $ (2,208) $ (1,876) $ (646)
Issuances of restricted stock, net........................................... (907) (1,261) (1,905)
Amortization of deferred compensation from the issuances of restricted
stock....................................................................... 1,002 929 675
--------- --------- ---------
Balance at end of period................................................... $ (2,113) $ (2,208) $ (1,876)
--------- --------- ---------
--------- --------- ---------
ACCUMULATED TRANSLATION ADJUSTMENTS:
Balance at beginning of period............................................... $ (257) $ -- $ --
Translation adjustments...................................................... (332) (257) --
--------- --------- ---------
Balance at end of period................................................... $ (589) $ (257) $ --
--------- --------- ---------
--------- --------- ---------
RETAINED EARNINGS:
Balance at beginning of period............................................... $ 64,993 $ 61,256 $ 57,173
Repurchases of common stock -- excess over par value......................... (1,326) (645) (32)
Net income................................................................... 11,723 4,382 4,115
--------- --------- ---------
Balance at end of period................................................... $ 75,390 $ 64,993 $ 61,256
--------- --------- ---------
--------- --------- ---------
The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
8
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
YEARS ENDED DECEMBER 31,
---------------------------------
1993 1992 1991
----------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................................. $ 11,723 $ 4,382 $ 4,115
Adjustments to reconcile net income to net cash provided by operating
activities:
Amortization of intangible assets....................................... 4,251 3,961 3,896
Depreciation expense.................................................... 2,383 2,426 2,523
Deferred income taxes................................................... 1,136 1,947 1,941
Changes in assets and liabilities, net of effects of acquisitions:
Decrease (increase) in accounts receivable.............................. (10,481) (1,049) 6,595
Increase in accounts payable, accrued expenses and accrued payroll
costs.................................................................. 5,853 863 465
Change in other assets, net of change in other liabilities.............. 52 (1,025) (1,831)
----------- --------- ---------
Total adjustments......................................................... 3,194 7,123 13,589
----------- --------- ---------
Net cash and cash equivalents provided by operating activities.............. 14,917 11,505 17,704
CASH FLOWS USED IN INVESTING ACTIVITIES:
Acquisitions, net of cash acquired.......................................... (11,141) (6,438) (689)
Capital expenditures........................................................ (2,340) (1,101) (789)
----------- --------- ---------
Net cash and cash equivalents used in investing activities.................. (13,481) (7,539) (1,478)
CASH FLOWS USED IN FINANCING ACTIVITIES:
Borrowings under credit agreement........................................... 138,900 69,100 54,000
Repayments under credit agreement........................................... (144,200) (62,100) (67,400)
Repurchases of convertible debentures....................................... (305) -- (770)
Principal payments on notes payable and other indebtedness.................. (1,170) (12,603) (4,287)
Proceeds and tax benefits from exercise of stock options.................... 7,938 2,096 1,863
Repurchases of common stock and common stock equivalents.................... (1,386) (698) (35)
----------- --------- ---------
Net cash and cash equivalents used in financing activities.................. (223) (4,205) (16,629)
----------- --------- ---------
Net increase (decrease) in cash and cash equivalents........................ 1,213 (239) (403)
Cash and cash equivalents at beginning of period............................ 560 799 1,202
----------- --------- ---------
Cash and cash equivalents at end of period.................................. $ 1,773 $ 560 $ 799
----------- --------- ---------
----------- --------- ---------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest.................................................................... $ 4,256 $ 4,233 $ 6,928
Income taxes................................................................ $ 4,568 $ 1,675 $ 2,217
Acquisitions:
Fair value of assets acquired --
Intangible assets......................................................... $ 12,650 $ 6,502 $ 1,563
Other..................................................................... 2,506 424 347
Liabilities incurred --
Notes payable and contracts............................................... 101 -- 128
Other..................................................................... 2,454 387 583
Common stock issued....................................................... 1,460 101 510
----------- --------- ---------
Cash paid, net of cash acquired......................................... $ 11,141 $ 6,438 $ 689
----------- --------- ---------
----------- --------- ---------
The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
9
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 1992 and 1991 financial statements to
conform to the 1993 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. Reserves are established to estimate losses due to placed candidates
not remaining in employment for the Company's guarantee period, typically 90
days.
FOREIGN CURRENCY TRANSLATION. Foreign income statement items are translated
at the monthly average exchange rates prevailing during the period. Foreign
balance sheets are translated at the current exchange rates at the end of the
period, and the related translation adjustments are recorded as part of
Stockholders' Equity. Gains and losses resulting from foreign currency
transactions are included in the Consolidated Statements of Income.
CASH AND CASH EQUIVALENTS. For purposes of the Consolidated Statements of
Cash Flows, the Company classifies all highly-liquid investments with a maturity
of three months or less as cash equivalents.
INTANGIBLE ASSETS. Intangible assets represent the cost of acquired
companies in excess of the fair market value of their net tangible assets at
acquisition date, and are being amortized on a straight-line basis over a period
of 40 years.
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 57 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 $185
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 1993 and 1992 had no
material impact on the pro forma results of operations.
10
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 amount to $2,440,000 at December
31, 1993, and $3,510,000 at December 31, 1992. At December 31, 1993, $1.5
million of the notes were secured by standby letters of credit (see Note D). The
following table shows the schedule of maturities for notes payable and other
indebtedness at December 31, 1993 (in thousands):
1994............................................... $ 408
1995............................................... 555
1996............................................... 351
1997............................................... 404
1998............................................... 464
Thereafter......................................... 258
---------
$ 2,440
---------
---------
At December 31, 1993, all of the notes carried fixed rates of interest
ranging from 8.0% to 13.3%. The weighted average interest rate for the above was
approximately 11.1% and 8.5% for the years ended December 31, 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, 1993, the Company
remains contingently liable for $11.3 million of these subordinated debentures,
payment of $9.5 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)
On November 1, 1993, the Company replaced the then existing unsecured credit
facility. The new credit facility 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, 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 balance at December 31, 1993, $29,000,000 carried an
interest rate tied to Eurodollar rates plus 1.25% and $1,300,000 carried an
interest rate at prime. 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.
11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE D -- BANK LOAN (REVOLVING CREDIT) (CONTINUED)
As of December 31, 1992, the Company had borrowed $35,600,000 of the
borrowing facility in place at that time and had used $2,700,000 in debt support
standby letters of credit. Of the $35,600,000 outstanding loan balance at
December 31, 1992, $25,000,000 carried an interest rate tied to Eurodollar rates
plus 1.25% and the remaining balance of $10,600,000 carried an interest rate at
prime.
NOTE E -- CONVERTIBLE SUBORDINATED DEBENTURES
On August 6, 1987, the Company issued $74,750,000 principal amount of the
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 1.02 million shares of common stock at
the conversion price of $22.00 per share. The remaining $305,000 in principal
amount of Convertible Debentures were redeemed at 102.9% of their principal
amount plus accrued interest.
NOTE F -- SECURITIES REPURCHASE PROGRAM
The Company was previously authorized by its Board of Directors to
repurchase up to a total of 3.25 million shares of the Company's common stock,
or the equivalent amount of Convertible Debentures or other common stock
equivalents from time to time on the open market or in privately negotiated
transactions. As of December 31, 1993, 3.1 million equivalent shares have been
repurchased. There were no repurchases under the program during 1993. During
1992, the Company purchased 15,230 shares of common stock. In 1991, the Company
repurchased $1 million face amount of Convertible Debentures and purchased 3,457
shares of common stock for an aggregate of approximately 49,000 shares or share
equivalents. These repurchases were financed with internally generated cash and
the revolving line of credit.
12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE G -- INCOME TAXES
The provisions for income taxes for the three years ended December 31, 1993
consisted of the following (in thousands):
YEARS ENDED DECEMBER 31,
-------------------------------
1993 1992 1991
--------- --------- ---------
Current:
Federal................................................................ $ 6,995 $ 1,014 $ 1,271
State.................................................................. 1,604 252 196
Foreign................................................................ 99 311 553
Deferred -- principally domestic......................................... 1,136 1,947 1,941
--------- --------- ---------
$ 9,834 $ 3,524 $ 3,961
--------- --------- ---------
--------- --------- ---------
The income taxes shown above varied from the statutory federal income tax
rates for these periods as follows:
YEARS ENDED DECEMBER 31,
-------------------------------------
1993 1992 1991
----------- ----------- -----------
Federal U.S. income tax rate............................................... 35.0% 34.0% 34.0%
State income taxes, net of federal tax benefit............................. 5.5 5.0 3.7
Amortization of intangible assets.......................................... 4.1 10.2 9.9
Other, net................................................................. 1.0 (4.6) 1.4
--- --- ---
Effective tax rate......................................................... 45.6% 44.6% 49.0%
--- --- ---
--- --- ---
The deferred portion of the tax provisions consisted of the following (in
thousands):
YEARS ENDED DECEMBER 31,
-------------------------------
1993 1992 1991
--------- --------- ---------
Amortization of franchise rights......................................... $ 1,484 $ 1,406 $ 1,280
Change from cash basis accounting........................................ (32) (68) (114)
Compensation arrangements................................................ 137 89 488
Allowance for doubtful accounts.......................................... (86) 643 200
Other, net............................................................... (367) (123) 87
--------- --------- ---------
$ 1,136 $ 1,947 $ 1,941
--------- --------- ---------
--------- --------- ---------
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,
1993
------------
Deferred income tax assets............................................ $ (498)
Deferred income tax liabilities....................................... 16,974
------------
$ 16,476
------------
------------
No valuation allowances against deferred tax assets were required at
December 31, 1993.
13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE G -- INCOME TAXES (CONTINUED)
The components of the net deferred income tax liability at December 31, 1993
were as follows (in thousands):
DECEMBER 31,
1993
------------
Amortization of intangible assets..................................... $ 16,365
Foreign taxes......................................................... 495
Other................................................................. (384)
------------
$ 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 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 of 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. Pre-tax pension costs for
these plans were $188,000, $131,000, and $72,000 for the years ended December
31, 1993, 1992 and 1991, respectively. These charges were computed using certain
assumptions regarding salary increases, retirement age and life expectancy.
NOTE I -- COMMITMENTS AND CONTINGENCIES
Rental expense, primarily for office premises, amounted to $8,457,000,
$8,042,000 and $7,616,000 for the years ended December 31, 1993, 1992 and 1991,
respectively. The approximate minimum rental commitments for 1994 and thereafter
under non-cancelable leases in effect at December 31, 1993, are as follows (in
thousands):
1994....................................................... $ 6,540
1995....................................................... $ 5,812
1996....................................................... $ 4,492
1997....................................................... $ 3,486
1998....................................................... $ 2,926
Thereafter................................................. $ 5,267
14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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, 1993 the total number of available grants under the plans
(consisting of either restricted stock or options) was 396,054.
The following table reflects activity under all stock plans from January 1,
1991 through December 31, 1993 and the exercise prices:
STOCK OPTION PLANS
--------------------------------
RESTRICTED NUMBER OF EXERCISE PRICE
STOCK PLANS SHARES PER SHARE
----------- ------------- -----------------
Outstanding, January 1, 1991............................. 46,810 1,446,176 $ 6.23 - 18.83
Granted................................................ 191,949 483,452 $ 8.61 - 11.00
Exercised.............................................. -- (232,541) $ 6.23 - 9.25
Forfeited.............................................. (7,044) (136,892) $ 8.61 - 17.75
----------- ------------- -----------------
Outstanding, December 31, 1991........................... 231,715 1,560,195 $ 6.23 - 18.83
Granted................................................ 132,037 275,117 $ 10.50 - 14.00
Exercised.............................................. -- (229,855) $ 6.23 - 10.13
Forfeited.............................................. (36,513) (144,553) $ 8.61 - 14.00
----------- ------------- -----------------
Outstanding, December 31, 1992........................... 327,239 1,460,904 $ 7.09 - 18.83
Granted................................................ 71,469 707,971 $ 12.33 - 25.25
Exercised.............................................. -- (542,516) $ 7.51 - 16.13
Forfeited.............................................. (28,839) (155,109) $ 8.61 - 21.46
----------- ------------- -----------------
Outstanding, December 31, 1993........................... 369,869 1,471,250 $ 7.09 - 25.25
----------- ------------- -----------------
----------- ------------- -----------------
As of December 31, 1993, an aggregate of 615,965 restricted common stock or
options to purchase common stock were vested.
NOTE K -- PREFERRED SHARE PURCHASE RIGHTS
On July 23, 1990, the Board of Directors declared a dividend distribution of
one Preferred Share Purchase Right (the "Rights") on each outstanding share of
the Company's common stock.
The Rights will be exercisable only if a person or group becomes an
Acquiring Person (as such term is defined in the Right's Agreement) or announces
a tender offer the consummation of which would result in a person or group
becoming an Acquiring Person. Each Right will entitle stockholders to buy one
one-hundredth of a share of a new series of junior participating preferred stock
at an exercise price of $65 (subject to adjustment) upon certain events.
Effective October 28, 1993, Acquiring Person means any person or group of
affiliated or associated persons who shall be the beneficial owner of 15% or
more of the common stock of the Company then outstanding, but does not include
the only shareholder (and affiliates and associates thereof) known by the
Company to have beneficial ownership on October 28, 1993, in excess of 15% of
the then outstanding common stock, provided that
15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE K -- PREFERRED SHARE PURCHASE RIGHTS (CONTINUED)
such exclusion terminates immediately in the event that such shareholder (or any
such affiliate or associate) increases its beneficial ownership of common stock
other than pursuant to certain specified transactions.
If, after the Rights become exercisable, the Company is acquired in a merger
or other business combination transaction, or sells 50% or more of its assets or
earnings power, each Right will entitle its holder to purchase, at the Right's
then-current exercise price, a number of the acquiring company's common shares
having a market value at the time of twice the Right's exercise price.
In addition, if a person or group becomes an Acquiring Person otherwise than
pursuant to a cash tender offer for all shares in which such person or group
increases its stake to 85% of the outstanding shares of common stock, each Right
will entitle its holder (other than such person or members of such group) to
purchase, at the Right's then-current exercise price, a number of the Company's
common shares (or cash, other securities or property) having a market value of
twice the Right's exercise price.
At any time after a person or group becomes an Acquiring Person and prior to
an acquisition by such person or group of 50% or more of the common stock, the
Board of Directors may exchange the Rights (other than Rights owned by such
person or group), in whole or in part, at an exchange ratio of one share of
common stock (or one one-hundredth of a share of the new series of junior
participating preferred stock) per Right.
At any time prior to ten days after a person or group becomes an Acquiring
Person, the Rights are redeemable for one cent per Right at the option of the
Board of Directors.
The dividend distribution was made on August 8, 1990, payable to
stockholders of record on that date. The Rights will expire on July 23, 2000.
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 (12,630,000, 12,003,000 and 11,637,000 shares for
the years ending December 31, 1993, 1992 and 1991, respectively). An assumed
conversion of the Convertible Debentures was not dilutive to income per share in
1993 (see Note E), 1992 or 1991.
NOTE M -- QUARTERLY FINANCIAL DATA (UNAUDITED)
The following tabulation shows certain quarterly financial data for 1993 and
1992 (in thousands, except per share amounts):
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............... .20 .23 .24 .26 .93
1992
Net service revenues............... $ 52,688 $ 53,411 $ 55,052 $ 59,028 $ 220,179
Gross margin....................... 21,775 21,832 21,712 22,985 88,304
Income before income taxes......... 1,734 2,168 2,236 1,768 7,906
Net income......................... 831 1,128 1,147 1,276 4,382
Net income per share............... .07 .09 .10 .11 .37
16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE N -- SEGMENT REPORTING
Information about the Company's operations in different geographic locations
for the three fiscal years ended in December 1993, is shown below. The Company's
areas of operations outside of the United States include Canada, the United
Kingdom, Belgium and France. 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 $917,000, $854,000 and $650,000 for the years ended December 31, 1993, 1992
and 1991, respectively. Domestic operating income reflects charges for
amortization of intangibles of $3,841,000, $3,606,000 and $3,564,000 for the
years ended December 31, 1993, 1992 and 1991, respectively. Identifiable assets
are those assets used in the geographic areas and are reflected after
elimination of intercompany balances.
YEARS ENDED DECEMBER 31,
-------------------------------------
1993 1992 1991
----------- ----------- -----------
Revenue
Domestic....................................................... $ 280,266 $ 196,910 $ 187,282
Foreign........................................................ 25,900 23,269 22,173
----------- ----------- -----------
$ 306,166 $ 220,179 $ 209,455
----------- ----------- -----------
----------- ----------- -----------
Operating Income
Domestic....................................................... $ 26,294 $ 12,585 $ 13,608
Foreign........................................................ (745) (378) 1,042
----------- ----------- -----------
$ 25,549 $ 12,207 $ 14,650
----------- ----------- -----------
----------- ----------- -----------
Assets
Domestic....................................................... $ 180,778 $ 163,030 $ 157,589
Foreign........................................................ 23,820 18,969 20,618
----------- ----------- -----------
$ 204,598 $ 181,999 $ 178,207
----------- ----------- -----------
----------- ----------- -----------
17
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, 1993 and 1992, and the related consolidated
statements of income, stockholders' equity and cash flows for each of the three
years in the period ended December 31, 1993. 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, 1993 and 1992, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1993, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN & CO.
San Francisco, California
January 28, 1994
18
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 1994.
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, 1993 and
1992.
Consolidated statements of income for the years ended December 31, 1993,
1992 and 1991.
Consolidated statements of stockholders' equity for the years ended
December 31, 1993, 1992 and 1991.
Consolidated statements of cash flows for the years ended December 31,
1993, 1992 and 1991.
Notes to consolidated financial statements.
Report of independent public accountants.
Selected quarterly financial data for the years ended December 31, 1993 and
1992 are set forth in Note M - Quarterly Financial Data (Unaudited) included
in Item 8 of this report.
2. FINANCIAL STATEMENT SCHEDULES
Report of independent public accountants on supporting schedules.
II - Amounts receivable from related parties
X - Supplementary income statement information
Schedules I, III, IV, V, VI, VII, VIII, IX, XI, XII and XIII have been
omitted as they are inapplicable.
3. EXHIBITS
EXHIBIT
NO. EXHIBIT
- --------- --------------------------------------------------------------------------------------------------
3.1 Restated Certificate of Incorporation, incorporated by reference to Exhibit 3.1 to Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31, 1991.
3.2 By-Laws.
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.
19
EXHIBIT
NO. EXHIBIT
- --------- --------------------------------------------------------------------------------------------------
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.
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. The Eighth Amendment to such agreement is filed with this Annual Report on Form 10-K for the
fiscal year ended December 31, 1993. The original agreement and the first seven amendments thereto
are incorporated by reference to (i) Exhibit 10.(c) to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1985, (ii) Exhibit 10.2(b) to Registrant's Registration
Statement on Form S-1 (No. 33-15171), (iii) Exhibit 10.2(c) to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1987, (iv) Exhibit 10.2(d) to the Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31, 1988, (v) Exhibit 28.1 to the
Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1990, (vi)
Exhibit 10.8 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31,
1991 and (vii) Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 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.
20
EXHIBIT
NO. EXHIBIT
- --------- --------------------------------------------------------------------------------------------------
*10.9 Key Executive Retirement Plan - Level II Agreement between the Registrant and Harold M. Messmer,
Jr. The Sixth Amendment to such agreement is filed with this Annual Report on form 10-K for the
fiscal year ended December 31, 1992. The original agreement and the first five amendments thereto
are 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, and (iv) Exhibit 10.2 to
the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1993.
*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.
*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.
*10.12 Outside Directors' Option Plan, incorporated by reference to Exhibit 10.21 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31, 1989.
*10.13 1989 Restricted Stock Plan, as amended, incorporated by reference to Exhibit 10.14 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1992.
*10.14 StockPlus Plan, as amended, incorporated by reference to Exhibit 10.15 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1992.
*10.15 1993 Incentive Plan, as amended.
*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.
*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. The form of agreement is
incorporated by reference to Exhibit 10.27 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1989. Filed herewith is a schedule listing the names of the
individuals with whom the agreement has been executed and the date of execution.
*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.
<FN>
- ------------------------
* 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 did not file any reports on Form 8-K during the
fiscal quarter ending December 31, 1993.
21
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 22, 1994 By: _______/S/_M. KEITH WADDELL_______
M. Keith Waddell
Senior Vice President, Chief
Financial Officer and Treasurer
(Principal Financial Officer)
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 22, 1994 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 22, 1994 By: /S/ FREDERICK P. FURTH
----------------------------------------
Frederick P. Furth
Vice Chairman of the Board of Directors
Date: March 22, 1994 By: /S/ ANDREW S. BERWICK, JR.
----------------------------------------
Andrew S. Berwick, Jr., Director
Date: March 22, 1994 By: /S/ EDWARD W. GIBBONS
----------------------------------------
Edward W. Gibbons, Director
Date: March 22, 1994 By: /S/ TODD GOODWIN
----------------------------------------
Todd Goodwin, Director
Date: March , 1994 By:
----------------------------------------
Frederick A. Richman, Director
22
Date: March 22, 1994 By: /S/ THOMAS J. RYAN
----------------------------------------
Thomas J. Ryan, Director
Date: March 22, 1994 By: /S/ J. STEPHEN SCHAUB
----------------------------------------
J. Stephen Schaub, Director
Date: March 22, 1994 By: /S/ M. KEITH WADDELL
----------------------------------------
M. Keith Waddell
Senior Vice President, Chief Financial
Officer and Treasurer
(Principal Financial Officer)
Date: March 22, 1994 By: /S/ BARBARA J. FORSBERG
----------------------------------------
Barbara J. Forsberg
Vice President and Controller
(Principal Accounting Officer)
23
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and the Board of
Directors of Robert Half International Inc.:
We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements of Robert Half International Inc. and
subsidiaries included in this Form 10-K, and have issued our report thereon
dated January 28, 1994. Our audit was made for the purpose of forming an opinion
on the basic financial statements taken as a whole. The schedules listed in Item
14 are the responsibility of the Company's management and are presented for
purposes of complying with the Securities and Exchange Commission's rules and
are not part of the basic financial statements. These schedules have been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, fairly state in all material respects the
financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
San Francisco, California
January 28, 1994
S-1
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
CHARGED TO COSTS AND EXPENSES
-------------------------------------------
1993 1992 1991
------------- ------------- -------------
Advertising costs................................ $ 9,993,000 $ 6,830,000 $ 6,780,000
Amortization of intangible assets................ $ 4,251,000 $ 3,961,000 $ 3,896,000
S-2
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
SCHEDULE II -- AMOUNTS RECEIVABLE FROM RELATED PARTIES
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
BALANCE AT
BALANCE AT END OF PERIOD
BEGINNING --------------------------
NAME OF DEBTOR OF PERIOD ADDITIONS DEDUCTIONS CURRENT NON-CURRENT
- ------------------------------------------------------ ----------- ------------- ------------- ----------- -------------
(IN THOUSANDS)
1993
Stephen and Pamela Saulten (1)...................... $ 94 $ 2 $ -- $ -- $ 96
1992
Stephen and Pamela Saulten (1)...................... $ 175 $ 8 $ 89 $ -- $ 94
1991
Stephen and Pamela Saulten (1)...................... $ 111 $ 64 $ -- $ -- $ 175
<FN>
- ------------------------
(1) This note carried an interest rate of 6% in 1993 and 1992, during 1991 the
interest rate was 9.55%.
S-3
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
No. Exhibit Page
------- ------------------------------------ ----
3.1 Restated Certificate of Incorporation,
incorporated by reference to Exhibit 3.1
to Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1991.
3.2 By-Laws.
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.
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. The Eighth Amendment to such
agreement is filed with this Annual Report on
Form 10-K for the fiscal year ended December
31, 1993. The original agreement and the
first seven amendments thereto are
incorporated by reference to (i) Exhibit
10.(c) to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December
31, 1985, (ii) Exhibit 10.2(b) to
Registrant's Registration Statement on Form
S-1 (No. 33-15171), (iii) Exhibit 10.2(c) to
the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1987,
(iv) Exhibit 10.2(d) to the Registrant's
Annual Report on Form 10-K for the fiscal
year ended December 31, 1988, (v) Exhibit
28.1 to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended March
31, 1990, (vi) Exhibit 10.8 to the
Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1991 and
(vii) Exhibit 10.1 to the Registrant's
Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 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.
The Sixth Amendment to such agreement is
filed with this Annual Report on form 10-
K for the fiscal year ended December 31,
1992. The original agreement and the
first five amendments thereto are
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, and (iv) Exhibit 10.2 to the
Registrant's Quarterly Report on Form 10-
Q for the fiscal quarter ended June 30,
1993.
*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.
*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.
*10.12 Outside Directors' Option Plan, incorporated
by reference to Exhibit 10.21 to the
Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1989.
*10.13 1989 Restricted Stock Plan, as amended,
incorporated by reference to Exhibit 10.14 to
the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1992.
*10.14 StockPlus Plan, as amended, incorporated by
reference to Exhibit 10.15 to the
Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1992.
*10.15 1993 Incentive Plan, as amended.
*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.
*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. The form of
agreement is incorporated by reference to
Exhibit 10.27 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1989. Filed herewith is a
schedule listing the names of the individuals
with whom the agreement has been executed and
the date of execution.
*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.
_____
* Management contract or compensatory plan required
to be filed as an exhibit pursuant to Item 14(c)
of Form 10-K.