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0000912057-01-537961.txt : 20011128 0000912057-01-537961.hdr.sgml : 20011128 ACCESSION NUMBER: 0000912057-01-537961 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011107 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10427 FILM NUMBER: 1776772 BUSINESS ADDRESS: STREET 1: 2884 SAND HILL RD STREET 2: STE 200 CITY: MENLO PARK STATE: CA ZIP: 94025 BUSINESS PHONE: 6502346000 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-Q 1 a2060274z10-q.htm 10-Q Prepared by MERRILL CORPORATION
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
/x/	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2001
	OR
/ /	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number 1-10427

ROBERT HALF INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)

DELAWARE (State or other jurisdiction of incorporation or organization)		94-1648752 (I.R.S. Employer Identification No.)
2884 Sand Hill Road Suite 200 Menlo Park, California (Address of principal executive offices)		94025 (zip-code)

Registrant's telephone number, including area code: (650) 234-6000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) had been subject to such filing requirements for the past 90 days. Yes X No

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of September 30, 2001:

175,382,503 shares of $.001 par value Common Stock

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in thousands, except share amounts)

		September 30, 2001			December 31, 2000
		(Unaudited)
ASSETS:
Cash and cash equivalents		$	301,128		$	239,192
Accounts receivable, less allowances of $15,993 and $17,207			332,552			390,369
Other current assets			57,953			42,049

	Total current assets		691,633			671,610
Intangible assets, less accumulated amortization of $75,405 and $69,290			161,247			168,050
Property and equipment, less accumulated depreciation of $168,567 and $118,940			154,381			131,369

	Total assets	$	1,007,261		$	971,029

LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable and accrued expenses		$	41,342		$	51,073
Accrued payroll costs			153,550			182,241
Income taxes payable			17,524			2,619
Current portion of notes payable and other indebtedness			262			1,223

	Total current liabilities		212,678			237,156
Notes payable and other indebtedness, less current portion			2,495			2,541
Deferred income taxes and other liabilities			12,922			12,793

	Total liabilities		228,095			252,490
Commitments and Contingencies
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value authorized 260,000,000 shares; issued and outstanding 173,631,911 and 176,050,349 shares			174			176
Capital surplus			456,364			406,471
Deferred compensation			(52,433	)		(72,870	)
Accumulated other comprehensive income			(6,413	)		(4,192	)
Retained earnings			381,474			388,954

	Total stockholders' equity		779,166			718,539

	Total liabilities and stockholders' equity	$	1,007,261		$	971,029

The accompanying Notes to Consolidated Financial Statements are
an integral part of these financial statements.

ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)

	Three months ended September 30,						Nine months ended September 30,
	2001			2000			2001			2000
	(Unaudited)						(Unaudited)
Net service revenues	$	574,690		$	689,585		$	1,942,367		$	1,993,431
Direct costs of services, consisting of payroll, payroll taxes, and insurance costs for temporary employees		344,125			393,649			1,128,053			1,136,980

Gross margin		230,565			295,936			814,314			856,451
Selling, general, and administrative expenses		193,960			219,880			641,496			635,576
Amortization of intangible assets		1,333			1,319			4,002			3,823
Interest income, net		(2,244	)		(3,119	)		(6,905	)		(7,033	)

Income before income taxes		37,516			77,856			175,721			224,085
Provision for income taxes		14,369			29,819			67,301			85,825

Net income	$	23,147		$	48,037		$	108,420		$	138,260

Basic net income per share	$	.13		$	.27		$	.62		$	.78
Diluted net income per share	$	.13		$	.26		$	.60		$	.74

The accompanying Notes to Consolidated Financial Statements are
an integral part of these financial statements.

ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands)

			Nine Months Ended September 30,
			2001			2000
			(Unaudited)
COMMON STOCK—SHARES:
	Balance at beginning of period			176,050			176,148
	Issuances of restricted stock			51			1,133
	Repurchases of common stock			(4,917	)		(2,337	)
	Exercises of stock options			2,448			2,911

		Balance at end of period		173,632			177,855

COMMON STOCK—PAR VALUE:
	Balance at beginning of period		$	176		$	176
	Issuance of restricted stock			—			1
	Repurchases of common stock			(5	)		(2	)
	Exercises of stock options			3			3

		Balance at end of period	$	174		$	178

CAPITAL SURPLUS:
	Balance at beginning of period		$	406,471		$	303,004
	Issuances of restricted stock—excess over par value			2,842			53,575
	Exercises of stock options—excess over par value			28,312			21,659
	Impact of equity incentive plans			18,739			20,113

		Balance at end of period	$	456,364		$	398,351

DEFERRED COMPENSATION:
	Balance at beginning of period		$	(72,870	)	$	(54,127	)
	Issuances of restricted stock			(2,842	)		(53,576	)
	Amortization of deferred compensation			23,279			24,737

		Balance at end of period	$	(52,433	)	$	(82,966	)

ACCUMULATED OTHER COMPREHENSIVE INCOME:
	Balance at beginning of period		$	(4,192	)	$	(2,420	)
	Translation adjustments			(2,221	)		(2,852	)

		Balance at end of period	$	(6,413	)	$	(5,272	)

RETAINED EARNINGS:
	Balance at beginning of period		$	388,954		$	329,469
	Repurchases of common stock—excess over par value			(115,900	)		(63,827	)
	Net income			108,420			138,260

		Balance at end of period	$	381,474		$	403,902

COMPREHENSIVE INCOME:
	Net income		$	108,420		$	138,260
	Translation adjustments			(2,221	)		(2,852	)

		Total comprehensive income	$	106,199		$	135,408

The accompanying Notes to Consolidated Financial Statements are
an integral part of these financial statements.

ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

				Nine Months Ended September 30,
				2001			2000
				(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income			$	108,420		$	138,260
		Adjustments to reconcile net income to net cash provided by operating activities:
			Amortization of intangible assets		4,002			3,823
			Depreciation expense		50,084			37,504
			Provision for deferred income taxes		(10,211	)		(19,349	)
			Tax impact of equity incentive plans		18,739			20,113
		Changes in assets and liabilities, net of effects of acquisitions:
			(Increase) decrease in accounts receivable		57,817			(66,741	)
			Increase (decrease) in accounts payable, accrued expenses and accrued payroll costs		(38,060	)		56,328
			Increase in income taxes payable		14,905			8,772
			Change in other assets, net of change in other liabilities		18,543			23,985

		Total adjustments			115,819			64,435

	Net cash and cash equivalents provided by operating activities				224,239			202,695
CASH FLOWS FROM INVESTING ACTIVITIES:
	Acquisitions, net of cash acquired				—			(3,153	)
	Capital expenditures				(73,706	)		(47,467	)

	Net cash and cash equivalents used in investing activities				(73,706	)		(50,620	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Repurchases of common stock and common stock equivalents				(115,905	)		(63,829	)
	Principal payments on notes payable and other indebtedness				(1,007	)		(548	)
	Proceeds and capital impact of equity incentive plans				28,315			21,662

	Net cash and cash equivalents used in financing activities				(88,597	)		(42,715	)

Net increase in cash and cash equivalents					61,936			109,360
Cash and cash equivalents at beginning of period					239,192			151,074

Cash and cash equivalents at end of period				$	301,128		$	260,434

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
	Interest			$	226		$	238
	Income taxes			$	43,922		$	71,988
Acquisitions:
	Assets acquired—
		Intangible assets		$	—		$	4,051
		Other			—			780
	Liabilities incurred—
		Notes payable and other contracts			—			(1,132	)
		Other			—			(546	)

	Cash paid, net of cash acquired			$	—		$	3,153

The accompanying Notes to Consolidated Financial Statements are
an integral part of these financial statements.

ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2001

(Unaudited)

Note A—Summary of Significant Accounting Policies

Nature of Operations. Robert Half International Inc. (the "Company") provides specialized staffing services through such divisions as Accountemps®, Robert Half®, OfficeTeam®, RHI Consulting®, RHI Management Resources®, The Affiliates®, and The Creative Group®. The Company, through its Accountemps, Robert Half, and RHI Management Resources divisions, is the world's largest specialized provider of temporary, full-time, and project professionals in the fields of accounting and finance. OfficeTeam specializes in highly skilled temporary administrative support personnel. RHI Consulting provides information technology professionals. The Affiliates provides temporary, project, and full-time staffing of attorneys and specialized support personnel within law firms and corporate legal departments. The Creative Group provides project staffing in the advertising, marketing, and web design fields. Revenues are predominantly from temporary services. The Company operates in the United States, Canada, Europe, Australia, and New Zealand. 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 2000 financial statements to conform to the 2001 presentation.

Revenue Recognition. Temporary and consultant staffing services revenues are recognized when the services are rendered by the Company's temporary employees. Permanent placement staffing revenues are recognized when employment candidates accept offers of permanent employment. Allowances are established to estimate losses due to placed candidates not remaining employed for the Company's guarantee period, typically 90 days.

Cash and Cash Equivalents. The Company considers all highly liquid investments with a maturity of three months or less as cash equivalents.

Intangible Assets. Intangible assets primarily consist of the cost of acquired companies in excess of the fair market value of their net tangible assets at acquisition date, which are being amortized on a straight-line basis over a period of 40 years. The carrying value of intangible assets is periodically reviewed by the Company and impairments are recognized when the expected future operating cash flows derived from such intangible assets are less than their carrying value. Based upon its most recent analysis, the Company believes that no material impairment of intangible assets existed at September 30, 2001.

Income Taxes. Deferred taxes are computed based on the difference between the financial statement and income tax bases of assets and liabilities using the enacted marginal tax rates.

Foreign Currency Translation. The results of operations of the Company's foreign subsidiaries are translated at the monthly average exchange rates prevailing during the period. The financial position of the Company's foreign subsidiaries is translated at the current exchange rates at the end of the period, and the related translation adjustments are recorded as a component of comprehensive income within Stockholders' Equity. Gains and losses resulting from foreign currency transactions are included in the Consolidated Statements of Income.

Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported

amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Property and Equipment. Property and equipment are recorded at cost. Depreciation expense is computed using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the life of the related asset or the life of the lease.

Advertising Costs. The Company expenses all advertising costs as incurred.

Note B—Net Income Per Share

The calculation of net income per share for the three and nine months ended September 30, 2001 and 2000 is reflected in the following table (in thousands, except per share amounts):

		Three Months Ended September 30,				Nine Months Ended September 30,
		2001		2000		2001		2000
		(Unaudited)				(Unaudited)

Net Income		$	23,147	$	48,037	$	108,420	$	138,260
Basic:
	Weighted average shares		174,716		178,052		174,776		177,878

Diluted:
	Weighted average shares		174,716		178,052		174,776		177,878
	Common stock equivalents—stock options		6,284		9,350		6,770		8,415

	Diluted shares		181,000		187,402		181,546		186,293

Net Income Per Share:
	Basic	$	.13	$	.27	$	.62	$	.78
	Diluted	$	.13	$	.26	$	.60	$	.74

Note C—Business Segments

The Company has two reportable segments: temporary and consultant staffing, and permanent placement staffing. The temporary and consultant staffing segment provides specialized personnel in the accounting and finance, administrative and office, information technology, legal, advertising, marketing, and web design fields. The permanent placement staffing segment provides full-time personnel in the accounting, finance, and information technology fields.

The accounting policies of the segments are the same as those described in Note A: Summary of Significant Accounting Policies. The Company evaluates performance based on profit or loss from operations before interest expense, intangible amortization expense, and income taxes.

The following table provides a reconciliation of revenue and operating profit by reportable segment to consolidated results (in thousands):

		Three Months Ended September 30,						Nine Months Ended September 30,
		2001			2000			2001			2000
		(Unaudited)						(Unaudited)
Net service revenues
	Temporary and consultant staffing	$	534,957		$	623,365		$	1,783,366		$	1,803,715
	Permanent placement staffing		39,733			66,220			159,001			189,716

		$	574,690		$	689,585		$	1,942,367		$	1,993,431

Operating income
	Temporary and consultant staffing	$	35,673		$	58,864		$	148,338		$	169,903
	Permanent placement staffing		932			17,192			24,480			50,972

			36,605			76,056			172,818			220,875
Amortization of intangible assets			1,333			1,319			4,002			3,823
Interest income, net			(2,244	)		(3,119	)		(6,905	)		(7,033	)

Income before income taxes		$	37,516		$	77,856		$	175,721		$	224,085

Note D—New Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 141, Business Combinations, and No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires all business combinations initiated after June 30, 2001, to be accounted for using the purchase method. Under SFAS No. 142, goodwill is no longer subject to amortization over its estimated useful life. The Company will adopt SFAS No. 142 on January 1, 2002, resulting in the discontinuance of the amortization of certain intangible assets currently amortized over 40 years. Upon adoption of SFAS No. 142, the Company expects to stop recording amortization expense of approximately $1.3 million per quarter. The methods used for evaluating and measuring impairment of certain intangible assets will change. While the Company has not applied the new impairment analysis, it is not expected to have a material effect on the financial statements.

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Certain information contained in Management's Discussion and Analysis and in other parts of this report may be deemed forward-looking statements regarding events and financial trends that may affect the Company's future operating results or financial positions. These statements may be identified by words such as "estimate", "forecast", "project", "plan", "intend", "believe", "expect", "anticipate", or variations or negatives thereof or by similar or comparable words or phrases. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the statements. These risks and uncertainties include, but are not limited to, the following: changes in levels of unemployment and other economic conditions in the U.S. or foreign countries where the Company does business, or in particular regions or industries; reduction in the supply of qualified candidates for temporary employment or the Company's ability to attract qualified candidates; the entry of new competitors into the marketplace or expansion by existing competitors; the ability of the Company to maintain existing client relationships and attract new clients in the context of changing economic or competitive conditions; the impact of competitive pressures, including any change in the demand for the Company's services, on the Company's ability to maintain its profit margins; the possibility of the Company incurring liability for the activities of its temporary employees or for events impacting its temporary employees on clients' premises; the success of the Company in attracting, training and retaining qualified management personnel and other staff employees; and whether governments will impose additional regulations or licensing requirements on personnel services businesses in particular or on employer/employee relationships in general. Because long-term contracts are not a significant part of the Company's business, future results cannot be reliably predicted by considering past trends or extrapolating past results.

Results of Operations for Each of the Three Months and Nine Months Ended September 30, 2001 and 2000

Temporary and consultant staffing services revenues were $535 million and $623 million for the three months ended September 30, 2001 and 2000, respectively, decreasing by 14% during the three months ended September 30, 2001 compared to the same period in 2000. Temporary and consultant staffing services revenues were $1.8 billion for both the nine months ended September 30, 2001 and 2000. Permanent placement staffing revenues were $40 million and $66 million for the three months ended September 30, 2001 and 2000, respectively, decreasing by 39% during the three months ended September 30, 2001 compared to the same period in 2000. Permanent placement staffing revenues were $159 million and $190 million for the nine months ended September 30, 2001 and 2000, respectively, decreasing by 16% during the nine months ended September 30, 2001 compared to the same period in 2000. Results were impacted by the weakening economy.

As of September 30, 2001, the Company had more than 330 offices in 41 states and the District of Columbia and ten foreign countries. Revenues from domestic operations represented 84% and 86% of revenues for the three and nine months ended September 30, 2001, respectively, and 89% of revenues for both the three and nine months ended September 30, 2000. Revenues from foreign operations represented 16% and 14% of revenues for the three and nine months ended September 30, 2001, respectively, and 11% of revenues for both the three and nine months ended September 30, 2000.

Gross margin dollars from the Company's temporary and consultant staffing services represent revenues less direct costs of services, which consist of payroll, payroll taxes and insurance costs for temporary employees. Gross margin dollars from permanent placement staffing services are equal to revenues, as there are no direct costs associated with such revenues. Gross margin dollars for the Company's temporary and consultant staffing services were $191 million and $655 million for the three and nine months ended September 30, 2001, respectively, compared to $230 million and $667 million for the comparable periods in 2000, decreasing by 17% for the three months ended September 30, 2001, and decreasing by 2% for the nine months ended September 30, 2001. Gross margin amounts equaled 36% and 37% of revenues for temporary and consultant staffing services for the three and nine months ended

September 30, 2001, respectively, compared to 37% of temporary and consultant staffing service revenues for both the three and nine months ended September 30, 2000, which the Company believes reflects its ability to adjust billing rates and wage rates to underlying market conditions. Gross margin amounts for the three months ended September 30, 2001 were impacted by lower temporary-to-permanent conversion fees. Gross margin dollars for the Company's permanent placement staffing division were $40 million and $159 million for the three and nine months ended September 30, 2001, respectively, compared to $66 million and $190 million for the comparable periods in 2000, decreasing by 39% and 16% for the three and nine months ended September 30, 2001, respectively.

Selling, general and administrative expenses were $194 million and $641 million for the three and nine months ended September 30, 2001, respectively, compared to $220 million and $636 million during the three and nine months ended September 30, 2000, respectively. The decrease in the three months ended September 30, 2001 primarily reflects lower compensation costs due to lower revenues. Selling, general and administrative expenses as a percentage of revenues were 34% and 33% for the three and nine months ended September 30, 2001, respectively, compared to 32% for both the three and nine months ended September 30, 2000. Selling, general and administrative expenses consist primarily of staff compensation, advertising, depreciation, and occupancy costs.

The Company allocates the excess of cost over the fair market value of the net tangible assets first to identifiable intangible assets, if any, and then to goodwill. Although management believes that goodwill has an unlimited life, the Company amortizes these costs over 40 years. Management believes that its previous acquisitions of established companies in established markets and maintaining its presence in these markets preserves the goodwill for an indeterminate period. The carrying value of intangible assets is periodically reviewed by the Company and impairments are recognized when the expected future operating cash flows derived from such intangible assets is less than their carrying value. Based upon its most recent analysis, the Company believes that no material impairment of intangible assets existed at September 30, 2001. Net intangible assets represented 16% of total assets and 21% of total stockholders' equity at September 30, 2001.

Interest income for the three months ended September 30, 2001 and 2000 was $2.4 million and $3.3 million respectively. Interest expense for both the three months ended September 30, 2001 and 2000 was $.2 million. Interest income for the nine months ended September 30, 2001 and 2000 was $7.5 million and $7.7 million respectively, while interest expense for the nine months ended September 30, 2001 and 2000 was $.6 million and $.7 million, respectively.

The provision for income taxes was 38% for both the three and nine months ended September 30, 2001, and 38% for both the three and nine months ended September 30, 2000.

Liquidity and Capital Resources

The change in the Company's liquidity during the nine months ended September 30, 2001 is the net effect of funds generated by operations and the funds used for capital expenditures, repurchases of common stock, and principal payments on outstanding notes payable. As of September 30, 2001, the Company has authorized the repurchase, from time to time, of up to 28 million shares of the Company's common stock on the open market or in privately negotiated transactions, depending on market conditions. During the nine months ended September 30, 2001, the Company repurchased approximately 4.2 million shares of common stock on the open market bringing the total shares repurchased under the authorization to 19.9 million. Repurchases of the securities have been funded with cash generated from operations. For the nine months ended September 30, 2001, the Company generated $224 million from operations, used $74 million in investing activities and used $88 million in financing activities.

The Company's working capital at September 30, 2001, included $301 million in cash and cash equivalents. In addition at September 30, 2001, the Company had available $75 million of its $80 million bank revolving line of credit. The Company's working capital requirements consist primarily of the

financing of accounts receivable. While there can be no assurances in this regard, the Company expects that internally generated cash plus the bank revolving line of credit will be sufficient to support the working capital needs of the Company, the Company's fixed payments, and other obligations on both a short and long-term basis. As of September 30, 2001, the Company had no material capital commitments.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

The Company's market risk sensitive instruments do not subject the Company to material market risk exposures.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 2. Changes in Securities

None

Item 3. Defaults Upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Security Holders

None

Item 5. Other Information

None

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits.

Exhibit No.		Exhibit
10.1		Form of Part-Time Employment Agreement

(b) The registrant filed no current report on Form 8-K during the quarter covered by this report.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		ROBERT HALF INTERNATIONAL INC. (Registrant)
		By		/s/ M. KEITH WADDELL M. Keith Waddell, Vice Chairman, Chief Financial Officer and Treasurer (Principal Financial Officer and duly authorized signatory)

Date: November 7, 2001

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PART I — FINANCIAL INFORMATION
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (in thousands, except share amounts)
PART II—OTHER INFORMATION
SIGNATURES
EX-10.1 3 a2060274zex-10_1.htm EXHIBIT 10-1 Prepared by MERRILL CORPORATION
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EXHIBIT 10.1

Effective July 24, 2001, the Registrant entered into a Part-Time Employment Agreement substantially in the form attached hereto with each of Harold M. Messmer, Jr., M. Keith Waddell, Paul F. Gentzkow, Robert W. Glass and Steven Karel. Pursuant to Instruction 2 to Item 601 of Regulation S-K, the individual agreements are not being filed.

PART-TIME EMPLOYMENT AGREEMENT

The Consulting Agreement made as of January 1, 1999, by and between Robert Half International Inc. ("Company") and ("Employee"), which was amended and restated effective August 2, 2000, is amended and restated to read in its entirety as set forth herein, effective as of July 24, 2001.

Whereas, Employee currently serves as an Executive Officer of Company.

Whereas, Company wishes to make arrangements now to insure the availability of the advice, counsel and experience of Employee after Employee retires as an executive officer and Company considers such services to be very important in view of the personal service nature of Company's business and Employee's vital role in helping to build such business.

NOW, THEREFORE, Company and Employee agree as follows:

1. Engagement. Commencing on the Part-Time Employment Commencement Date, Employee shall become a part-time employee of the Company during the Part-Time Employment Period upon the terms and conditions hereinafter set forth. Nothing herein shall in any way modify, affect or govern the terms and conditions of Employee's employment by Company prior to the Part-Time Employment Commencement Date. If Employee's full-time employment with Company shall terminate prior to the Part-Time Employment Commencement Date under any circumstances other than Employee's Retirement, this Agreement shall immediately terminate and be of no further force or effect.

2. Services. During the Part-Time Employment Period, Employee shall provide advice and counsel to Company at such time and in such manner as reasonably requested from time to time. Company agrees that Employee shall not be required to render more than 40 hours of services during any calendar quarter during the Part-Time Employment Period, nor shall Employee be required to (a) travel outside the United States, (b) travel more than 50 miles from Employee's then current principal home more than once in any year, or (c) render services during other than ordinary business hours. The terms of Employee's part-time employment during the Part-Time Employment Period are determined hereunder and no employee manual, policy statement or similar item issued from time to time by Company to its employees shall constitute part of this Agreement or modify, affect or govern the terms of the engagement of Employee during the Part-Time Employment Period.

3. Compensation.

(a) During the Part-Time Employment Period, Employee shall be paid a monthly salary equal to 1/12 of the product of (i) 8% and (ii) Employee's total base salary and cash bonus with respect to the last complete calendar year prior to the Part-Time Employment Commencement Date. Such salary shall be payable in accordance with the Company's standard payroll procedures and shall be subject to required withholding for income and other applicable taxes and contributions.

(b) Employee shall be reimbursed, upon presentation of proper receipts, for Employee's reasonable business expenses related to travel requested by Company. Company shall also, if requested by Employee, provide Employee with such computer equipment and support as Employee may need to render services hereunder.

(c) During the Part-Time Employment Period, any shares of restricted stock held by Employee on the Part-Time Employment Commencement Date shall remain outstanding and shall continue to vest in accordance with their existing terms.

(d) Effective on the Part-Time Employment Commencement Date, any unexercised option granted after January 1, 1999, and then held by Employee shall vest and shall no longer be subject to forfeiture. No portion of any such option, however, may be exercised until the original vesting date for such portion.

4. Other Employment. Except as provided in Sections 2 and 7 hereof, nothing herein shall be construed as in any way prohibiting or preventing Employee from accepting employment with any other entity subsequent to the Part-Time Employment Commencement Date.

5. Use of Name. Employee hereby consents to the use and publication, without further consideration, of his name, picture and image in training materials and other materials relating to the business of any of the RHI Companies, regardless of whether such use or publication is in the form of printed matter, photographs, audio tape, video tape, computer disk, electronic transmission, or otherwise. Such consent applies to both the use and publication of such items during Employee's engagement.

6. Disclosure or Misuse of Confidential Information. Employee shall not, at any time during the Part-Time Employment Period or thereafter, directly or indirectly, disclose, furnish or make accessible to any person, firm, corporation, or other entity, or make use of, any confidential information obtained at any time from any of the RHI Companies (whether prior or subsequent to the Part-Time Employment Commencement Date), including, without limitation, information with respect to the name, address, contact persons or requirements of any customer, client, applicant or employee of any of the RHI Companies (whether having to do with temporary or permanent employment) and information with respect to the procedures, advertising, finances, organization, personnel, plans, objectives or strategies of the RHI Companies. Employee acknowledges that such information is safeguarded by the RHI Companies as trade secrets. Upon termination of Employee's employment, Employee shall deliver to the RHI Companies all copies of all records, manuals, training kits, and other property belonging to the RHI Companies or used in connection with their business which may be in Employee's possession. The provisions of this Section shall survive termination of either Employee's employment or this Agreement for any reason.

7. Restrictive Covenant. In consideration and view of (i) the valuable consideration furnished to Employee by Company entering into this Agreement, (ii) Employee's access to confidential information and trade secrets of the RHI Companies and (iii) the value of such confidential information and trade secrets to the RHI Companies, during the period commencing on the Part-Time Employment Commencement Date and ending on the fourth anniversary thereof, Employee shall not render services to any other firm, person, corporation, partnership or other entity or individual engaged in the business of temporary, contract or permanent placement of individuals or in the staffing services business (including, but not limited to, any executive recruiting firm, employment agency or temporary personnel service). The covenants of Employee contained in this section are in addition to, and not in amendment, modification or replacement of, any obligations of Employee contained in any other agreement between Employee and Company.

8. Non-solicitation of Other Employees. In consideration and view of (i) the valuable consideration furnished to Employee by Company entering into this Agreement, (ii) Employee's access to confidential information and trade secrets of the RHI Companies, and (iii) the value of such confidential information and trade secrets to the RHI Companies, during the period commencing on the Part-Time Employment Commencement Date and ending on the fourth anniversary thereof, Employee shall not, directly or indirectly, solicit, induce, encourage (or assist any other person, firm, entity, business or organization in soliciting, inducing or encouraging) any employee of any of the RHI Companies to leave the employ of the RHI Companies. The covenants of Employee contained in this section are in addition to, and not in amendment, modification or replacement of, any obligations of Employee contained in any other agreement between Employee and Company.

9. Injunction. In view of Employee's access to confidential information and trade secrets and in consideration of the value of such property to the RHI Companies, Employee expressly acknowledges that the covenants set forth herein are reasonable and necessary in order to protect and maintain the proprietary and other legitimate business interests of the RHI Companies, and that the enforcement thereof would not prevent Employee from earning a livelihood. Employee further agrees that in the event of an actual or threatened breach by Employee of such covenants, the RHI Companies would be irreparably harmed and the full extent of injury resulting therefrom would be impossible to calculate and the RHI Companies therefore will not have an adequate remedy at law. Accordingly, Employee agrees that temporary and permanent injunctive relief would be appropriate remedies against such breach, without bond or security; provided, that nothing herein shall be construed as limiting any other legal or equitable remedies the RHI Companies might have.

10. Termination.

(a) Employee may terminate Employee's employment during the Part-Time Employment Period at any time on written notice to Company.

(b) Company may terminate Employee's employment during the Part-Time Employment Period at any time on written notice to Employee.

(c) If Employee's employment is terminated on or after the Part-Time Employment Commencement Date and prior to the fourth anniversary of the Part-Time Employment Commencement Date (1) by Employee as a result of a willful and material breach of this agreement by Company or (2) by Company other than a Termination for Cause or Termination for Nonperformance, Company shall continue to pay Employee the salary specified herein until the earlier of (i) the fourth anniversary of the Part-Time Employment Commencement Date, or (ii) any breach by Employee of the provisions of Sections 6, 7, or 8, hereof.

(d) If Employee's engagement hereunder is terminated on or after the Part-Time Employment Commencement Date and prior to the fourth anniversary of the Part-Time Employment Commencement Date (1) by Employee as a result of a willful and material breach of this agreement by Company or (2) by Company other than a Termination for Cause, effective upon the date of such termination, (i) any outstanding unexercised options granted by Company after January 1, 1999, then held by Employee shall remain outstanding for the full length of their original term, and (ii) any unvested shares of restricted stock granted by Company then held by Employee shall vest and shall not be forfeited.

(e) If the Part-Time Employment Period ends on the fourth anniversary of the Part-Time Employment Commencement Date, then any outstanding unexercised options granted by Company subsequent to the date hereof and then held by Employee shall remain outstanding for the full length of their original term.

11. Waiver. Failure of any party to insist upon strict compliance with any of the terms, covenants and conditions hereof shall not be deemed a waiver or relinquishment of the right to subsequently insist upon strict compliance with such term, covenant or condition or a waiver or relinquishment of any similar right or power hereunder at any subsequent time.

12. Amendment. No provision of this Agreement may be changed or waived except by an agreement in writing signed by the party against whom enforcement of any such waiver or change is sought.

13. Severability. The provisions of this Agreement are severable. If any provision is found by any court of competent jurisdiction to be unreasonable and invalid, that determination shall not affect the enforceability of the other provisions. Furthermore, if any of the restrictions against various activities is found to be unreasonable and invalid, the court before which the matter is pending shall enforce the restriction to the maximum extent it deems to be valid. Such restrictions shall be considered divisible both as to time and as to geographical area, with each month being deemed a separate period of time and each one mile radius from any office being deemed a separate geographical area. The restriction shall remain effective so long as the same is not unreasonable, arbitrary or against public policy.

14. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the state of California, except with respect to Sections 6, 7, 8 and 9, which shall be governed by and construed in accordance with the law of the jurisdiction in which an activity in violation thereof occurred or threatens to occur and with respect to which legal and equitable relief is sought. In no event shall the choice of law be predicated upon the fact that Company is incorporated or has its corporate headquarters in a certain state.

15. Entire Agreement. This Agreement contains all of the agreements, conditions, promises and covenants between the parties with respect to the subject matter hereof and supersedes all prior or contemporaneous agreements, representations, arrangements or understandings, whether written or oral, with respect to the subject matter hereof.

16. Counterparts. This Agreement may be executed in one or more counterparts, all of which shall constitute one agreement.

17. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of Company (including its direct and indirect subsidiaries) and its successors and assigns. This Agreement may not be assigned by Employee.

18. Third Party Beneficiary. Each of the RHI Companies is a third party beneficiary of this Agreement and each of them has the full right and power to enforce rights, interests and obligations under this Agreement without limitation or other restriction.

19. Definitions.

"Termination for Cause" shall mean termination by Company of Employee's employment by Company by reason of (a) Employee's willful dishonesty towards, fraud upon, or deliberate injury or attempted injury to Company which has resulted in material injury to Company, or (b) violation by Employee of the provisions of Section 6, 7, or 8 hereof which has resulted in material injury to Company; provided, however, that Employee's employment shall not be deemed to have been a "Termination for Cause" if such termination took place as a result of any act or omission believed by Employee in good faith to have been in the interest of Company.

"Termination for Nonperformance" shall mean termination by Company of Employee's employment by Company by reason of repeated failure by Employee, following written notice, to materially perform the service obligations contained in Section 2 hereof.

"Part-Time Employment Commencement Date" shall be the date of Employee's Retirement.

"Part-Time Employment Period" means the period of time commencing on the Part-Time Employment Commencement Date and ending on the earlier to occur of (a) the fourth anniversary of the Part-Time Employment Commencement Date or (b) the date on which this agreement is terminated in accordance with the terms hereof.

"Retirement" means any voluntary resignation by Employee of any and all officer positions held by Employee with any of the RHI Companies, accompanied by written notification to the Company by Employee that Employee wishes to become a part-time employee, on or after the later to occur of (a) Employee's 55^th birthday, or (b) the 20th anniversary of Employee's first day of service with Company as a director or full-time employee.

"RHI Companies" means Company and its subsidiaries and affiliates.

20. Indemnification. The Company shall indemnify Employee for all actions taken while performing services hereunder to the fullest extent permitted by Delaware law, the Certificate of Incorporation and the By-laws of the Company and by the terms of any indemnification agreement that has been or shall be entered into from time to time between the Company and Employee, which indemnification agreement shall remain in full force and effect during the Part-Time Employment Period and shall cover the actions of Employee during the Part-Time Employment Period as if he were a director or an officer during the Part-Time Employment Period.

21. Attorneys' Fees. In the event of any litigation pertaining to this agreement, the prevailing party shall be reimbursed by the non-prevailing party for the prevailing party's reasonable attorney's fees and expenses incurred in such litigation.

22. Other Agreements. Employee's Retirement shall be deemed a voluntary termination of employment by Employee under the agreements and plans set forth on Schedule A hereto.

IN WITNESS WHEREOF, the parties have set their hands hereto.

		ROBERT HALF INTERNATIONAL INC.
		By
		Employee

Schedule A