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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.

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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.

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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.

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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.

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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

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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.

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    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.

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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

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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

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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.

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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.

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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