-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VtNeDudJQlb64iVBVuRpgIiRGmQ4ATsEH2xb76il3owVfMx9BPSFOed8fnvrW2Wr mXEQVO7uepAlRyzEOqxRyg== 0000912057-99-004465.txt : 19991111 0000912057-99-004465.hdr.sgml : 19991111 ACCESSION NUMBER: 0000912057-99-004465 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991110 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: SEC FILE NUMBER: 001-10427 FILM NUMBER: 99745831 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 FORM 10-Q - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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, 1999 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 94-1648752 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 2884 SAND HILL ROAD SUITE 200 MENLO PARK, CALIFORNIA (Address of principal executive 94025 offices) (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, 1999: 89,706,029 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)
DECEMBER 31, 1998 SEPTEMBER 30, ------------ 1999 ------------- (UNAUDITED) ASSETS: Cash and cash equivalents........................................................... $ 182,847 $ 166,060 Accounts receivable, less allowances of $14,490 and $10,176......................... 291,367 240,690 Other current assets................................................................ 28,377 23,656 ------------- ------------ Total current assets............................................................ 502,591 430,406 Intangible assets, less accumulated amortization of $59,004 and $53,236............. 172,527 178,363 Property and equipment, less accumulated depreciation of $72,625 and $48,900........ 103,080 94,950 ------------- ------------ Total assets.................................................................... $ 778,198 $ 703,719 ------------- ------------ ------------- ------------ LIABILITIES AND STOCKHOLDERS' EQUITY: Accounts payable and accrued expenses............................................... $ 42,040 $ 23,659 Accrued payroll costs............................................................... 135,276 124,068 Income taxes payable................................................................ 3,996 3,810 Current portion of notes payable and other indebtedness............................. 1,198 1,308 ------------- ------------ Total current liabilities....................................................... 182,510 152,845 Notes payable and other indebtedness, less current portion.......................... 2,611 3,404 Deferred income taxes............................................................... 21,882 25,000 ------------- ------------ Total liabilities............................................................... 207,003 181,249 Commitments and Contingencies STOCKHOLDERS' EQUITY: Common stock, $.001 par value authorized 260,000,000 shares; issued and outstanding 88,714,710 and 91,225,353 shares.................................................. 89 91 Capital surplus..................................................................... 287,608 270,609 Deferred compensation............................................................... (46,372) (56,790) Accumulated other comprehensive income.............................................. (1,726) (1,244) Retained earnings................................................................... 331,596 309,804 ------------- ------------ Total stockholders' equity...................................................... 571,195 522,470 ------------- ------------ Total liabilities and stockholders' equity...................................... $ 778,198 $ 703,719 ------------- ------------ ------------- ------------
The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements. 1 ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ----------------------- -------------------------- 1999 1998 1999 1998 ----------- ---------- ------------ ------------ (UNAUDITED) (UNAUDITED) Net service revenues........................................ $ 529,462 $ 470,650 $ 1,511,510 $ 1,314,099 Direct costs of services, consisting of payroll, payroll taxes and insurance costs for temporary employees......... 308,058 280,617 887,821 785,402 ----------- ---------- ------------ ------------ Gross margin................................................ 221,404 190,033 623,689 528,697 Selling, general and administrative expenses................ 164,668 131,972 452,368 367,497 Amortization of intangible assets........................... 1,254 1,264 3,737 3,727 Interest income, net........................................ (1,761) (1,733) (4,585) (4,425) ----------- ---------- ------------ ------------ Income before income taxes.................................. 57,243 58,530 172,169 161,898 Provision for income taxes.................................. 22,694 23,556 68,371 65,594 ----------- ---------- ------------ ------------ Net income.................................................. $ 34,549 $ 34,974 $ 103,798 $ 96,304 ----------- ---------- ------------ ------------ ----------- ---------- ------------ ------------ Basic net income per share.................................. $ .38 $ .38 $ 1.14 $ 1.05 Diluted net income per share................................ $ .38 $ .37 $ 1.12 $ 1.01
The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements. 2 ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (IN THOUSANDS)
NINE MONTHS ENDED SEPTEMBER 30, ----------------------- 1999 1998 ----------- ---------- (UNAUDITED) COMMON STOCK--SHARES: Balance at beginning of period........................................................ 91,225 91,208 Issuances of restricted stock......................................................... 337 316 Repurchases of common stock........................................................... (3,099) (1,298) Exercises of stock options............................................................ 252 1,273 ----------- ---------- Balance at end of period............................................................ 88,715 91,499 ----------- ---------- ----------- ---------- COMMON STOCK--PAR VALUE: Balance at beginning of period........................................................ $ 91 $ 91 Issuance of restricted stock.......................................................... 1 -- Repurchases of common stock........................................................... (3) (1) Exercises of stock options............................................................ -- 1 ----------- ---------- Balance at end of period............................................................ $ 89 $ 91 ----------- ---------- ----------- ---------- CAPITAL SURPLUS: Balance at beginning of period........................................................ $ 270,609 $ 196,888 Issuances of restricted stock--excess over par value.................................. 6,572 15,250 Exercises of stock options--excess over par value..................................... 1,642 7,285 Capital impact of equity incentive plans.............................................. 8,785 26,909 ----------- ---------- Balance at end of period............................................................ $ 287,608 $ 246,332 ----------- ---------- ----------- ---------- DEFERRED COMPENSATION: Balance at beginning of period........................................................ $ (56,790) $ (44,276) Issuances of restricted stock......................................................... (6,573) (15,250) Amortization of deferred compensation................................................. 16,991 14,270 ----------- ---------- Balance at end of period............................................................ $ (46,372) $ (45,256) ----------- ---------- ----------- ---------- ACCUMULATED OTHER COMPREHENSIVE INCOME: Balance at beginning of period........................................................ $ (1,244) $ (1,347) Translation adjustments............................................................... (482) 321 ----------- ---------- Balance at end of period............................................................ $ (1,726) $ (1,026) ----------- ---------- ----------- ---------- RETAINED EARNINGS: Balance at beginning of period........................................................ $ 309,804 $ 267,444 Repurchases of common stock--excess over par value.................................... (82,006) (59,509) Net income............................................................................ 103,798 96,304 ----------- ---------- Balance at end of period............................................................ $ 331,596 $ 304,239 ----------- ---------- ----------- ---------- COMPREHENSIVE INCOME: Net income............................................................................ $ 103,798 $ 96,304 Translation adjustments............................................................... (482) 321 ----------- ---------- Total comprehensive income.......................................................... $ 103,316 $ 96,625 ----------- ---------- ----------- ----------
The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements. 3 ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
NINE MONTHS ENDED SEPTEMBER 30, ----------------------- 1999 1998 ----------- ---------- (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net income................................................................................... $ 103,798 $ 96,304 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of intangible assets.......................................................... 3,737 3,727 Depreciation expense....................................................................... 24,218 13,671 Provision for deferred income taxes........................................................ (6,260) 2,220 Changes in assets and liabilities, net of effects of acquisitions: Increase in accounts receivable.......................................................... (50,677) (45,959) Increase in accounts payable, accrued expenses and accrued payroll costs................. 30,576 29,951 Increase in income taxes payable......................................................... 186 6,328 Change in other assets, net of change in other liabilities............................... 17,495 8,471 ----------- ---------- Total adjustments............................................................................ 19,275 18,409 ----------- ---------- Net cash and cash equivalents provided by operating activities............................... 123,073 114,713 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisitions, net of cash acquired......................................................... -- (4,187) Capital expenditures....................................................................... (34,745) (47,520) ----------- ---------- Net cash and cash equivalents used in investing activities................................... (34,745) (51,707) CASH FLOWS FROM FINANCING ACTIVITIES: Repurchases of common stock and common stock equivalents................................... (82,009) (59,510) Principal payments on notes payable and other indebtedness................................. 41 (2,221) Proceeds and capital impact of equity incentive plans...................................... 10,427 34,195 ----------- ---------- Net cash and cash equivalents used in financing activities................................... (71,541) (27,536) ----------- ---------- Net increase in cash and cash equivalents.................................................... 16,787 35,470 Cash and cash equivalents at beginning of period............................................. 166,060 131,349 ----------- ---------- Cash and cash equivalents at end of period................................................... $ 182,847 $ 166,819 ----------- ---------- ----------- ---------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest................................................................................... $ 273 $ 262 Income taxes............................................................................... $ 65,871 $ 27,692 Acquisitions: Assets acquired-- Intangible assets........................................................................ $ -- $ 3,967 Other.................................................................................... -- 622 Liabilities incurred-- Other.................................................................................... -- (402) ----------- ---------- Cash paid, net of cash acquired............................................................ $ -- $ 4,187 ----------- ---------- ----------- ----------
The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements. 4 ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1999 (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-REGISTERED TRADEMARK-, ROBERT HALF -REGISTERED TRADEMARK-, OFFICETEAM-REGISTERED TRADEMARK-, RHI CONSULTING-REGISTERED TRADEMARK-, RHI MANAGEMENT RESOURCES-REGISTERED TRADEMARK-, THE AFFILIATES-REGISTERED TRADEMARK- AND THE CREATIVE GROUP-SM-. 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 contract 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, and Australia. 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 1998 financial statements to conform to the 1999 presentation. INTERIM FINANCIAL INFORMATION. The Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and, in management's opinion, include all adjustments necessary for a fair statement of results for such interim periods. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to SEC rules or regulations; however, the Company believes that the disclosures made are adequate to make the information presented not misleading. The interim results for the three and nine months ended September 30, 1999, and 1998 are not necessarily indicative of results for the full year. It is suggested that these financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. REVENUE RECOGNITION. Temporary services revenues are recognized when the services are rendered by the Company's temporary employees. Permanent placement revenues are recognized when employment candidates accept offers of permanent employment. Allowances are established to estimate losses due to placed candidates not remaining 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, 1999. 5 ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1999 (UNAUDITED) NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 part of Stockholders' Equity. Gains and losses resulting from foreign currency transactions are included in the Consolidated Statements of Income. USE OF ESTIMATES. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. 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. NOTE B--BUSINESS SEGMENTS In 1998, the Company adopted Statement of Financial Accounting Standard No. 131 (SFAS No. 131), DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION. The Company has defined its business segments based on the nature of services for the purposes of reporting under SFAS No. 131. The Company is managed in a matrix form of organization with certain managers responsible for service lines while other managers are responsible for geographic territories. As such, both service line and geographic information is used in allocating resources and measuring performance. 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. 6 ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1999 (UNAUDITED) NOTE B--BUSINESS SEGMENTS (CONTINUED) The following table provides a reconciliation of revenue and operating profit by reportable segment to consolidated results (in thousands):
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, -------------------------- -------------------------- 1999 1998 1999 1998 ------------ ------------ ------------ ------------ (UNAUDITED) (UNAUDITED) Net service revenues Temporary and consultant staffing...................... $ 485,873 $ 434,084 $ 1,395,501 $ 1,212,388 Permanent placement staffing........................... 43,589 36,566 116,009 101,711 ------------ ------------ ------------ ------------ $ 529,462 $ 470,650 $ 1,511,510 $ 1,314,099 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Operating income Temporary and consultant staffing...................... $ 44,118 $ 48,588 $ 141,400 $ 134,501 Permanent placement staffing........................... 12,618 9,473 29,921 26,699 ------------ ------------ ------------ ------------ 56,736 58,061 171,321 161,200 Amortization of intangible assets........................ 1,254 1,264 3,737 3,727 Interest income, net..................................... (1,761) (1,733) (4,585) (4,425) ------------ ------------ ------------ ------------ Income before income taxes............................... $ 57,243 $ 58,530 $ 172,169 $ 161,898 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
7 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. Such statements may be identified by words such as "estimate", "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. Such risks and uncertainties include, but are not limited to, the following: changes in general or local economic conditions or in the economic condition of any industry, the availability of qualified staff employees and temporary candidates, government regulation of the personnel services industry, general regulations relating to employers and employees, liability risks associated with the operation of a personnel services business, competitive conditions in the personnel services industry, and Year 2000 issues. In addition, it should be noted that, because long-term contracts are not a significant portion 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, 1999 AND 1998 Temporary services revenues were $486 million and $434 million for the three months ended September 30, 1999 and 1998, respectively, increasing by 12% during the three months ended September 30, 1999 compared to the same period in 1998. Temporary services revenues were $1.4 billion and $1.2 billion for the nine months ended September 30, 1999 and 1998, respectively, increasing by 15% during the nine months ended September 30, 1999 compared to the same period in 1998. Permanent placement revenues were $43 million and $37 million for the three months ended September 30, 1999 and 1998, respectively, increasing by 16% during the three months ended September 30, 1999 compared to the same period in 1998. Permanent placement revenues were $116 million and $102 million for the nine months ended September 30, 1999 and 1998, respectively, increasing by 14% during the nine months ended September 30, 1999 compared to the same period in 1998. Overall revenue increases reflect continued demand for the Company's services, which the Company believes is a result of increased acceptance in the use of professional staffing services. The Company currently has more than 250 offices in 39 states and seven foreign countries. Domestic operations represented 88% of revenues for both the three and nine months ended September 30, 1999 and 89% of revenues for both the three and nine months ended September 30, 1998. Foreign operations represented 12% of revenues for both the three and nine months ended September 30, 1999 and 11% of revenues for both the three and nine months ended September 30, 1998. Gross margin dollars from the Company's temporary 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 services are equal to revenues, as there are no direct costs associated with such revenues. Gross margin dollars for the Company's temporary services were $178 million and $508 million for the three and nine months ended September 30, 1999, respectively, compared to $153 million and $427 million for the comparable periods in 1998, increasing by 16% and 19% for the three and nine months ended September 30, 1999, respectively. Gross margin amounts equaled 37% and 36% of revenues for temporary services for the three and nine months ended September 30, 1999, respectively, compared to 35% of temporary service revenues for both the three and nine months ended September 30, 1998, which the Company believes reflects its ability to adjust billing rates and wage rates to underlying market conditions. Gross margin dollars for the Company's permanent placement division were $43 million and $116 million for the three and nine months ended September 30, 1999, respectively, 8 compared to $37 million and $102 million for the comparable periods in 1998, increasing by 16% and 14% for the three and nine months ended September 30, 1999, respectively. Selling, general and administrative expenses were $165 million and $452 million for the three and nine months ended September 30, 1999, respectively, compared to $132 million and $367 million during the three and nine months ended September 30, 1998, respectively. Selling, general and administrative expenses as a percentage of revenues were 31% and 30% for the three and nine months ended September 30, 1999, respectively, compared to 28% for both the three and nine months ended September 30, 1998. 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 strategy of making acquisitions of established companies in established markets and maintaining its presence in these markets preserves the goodwill for an indeterminate period. The carrying value of intangible assets is periodically reviewed by the Company and impairments are recognized when the expected future operating cash flows derived from such intangible assets is less than their carrying value. Based upon its most recent analysis, the Company believes that no material impairment of intangible assets existed at September 30, 1999. Intangible assets represented 22% of total assets and 30% of total stockholders' equity at September 30, 1999. Interest income for the three months ended September 30, 1999 and 1998 was $1,961,000 and $2,062,000, respectively, while interest expense for the three months ended September 30, 1999 and 1998 was $200,000 and $329,000, respectively. Interest income for the nine months ended September 30, 1999 and 1998 was $5,104,000 and $5,340,000, respectively, while interest expense for the nine months ended September 30, 1999 and 1998 was $519,000 and $915,000, respectively. The provision for income taxes was 40% for both the three and nine months ended September 30, 1999, compared to 40% and 41% for the three and nine months ended September 30, 1998, respectively. LIQUIDITY AND CAPITAL RESOURCES The change in the Company's liquidity during the nine months ended September 30, 1999 is the net effect of funds generated by operations and the funds used for capital expenditures and repurchases of common stock. As of September 30, 1999 the company has authorized the repurchase, from time to time, of up to nine 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, 1999, the Company repurchased approximately 2,756,000 shares of common stock on the open market, bringing the total repurchased under the authorization to 4,480,000 shares. Repurchases of the securities have been funded with cash generated from operations. For the nine months ended September 30, 1999, the Company generated $123 million from operations, used $35 million in investing activities and used $71 million in financing activities. The Company's working capital at September 30, 1999, included $183 million in cash and cash equivalents. In addition, at September 30, 1999, 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, 1999, the Company had no material capital commitments. 9 The Company's primary exposures related to the Year 2000 are in its key internal information systems. The Company is addressing the Year 2000 exposures as part of its strategic plan for upgrading core systems. Since 1997, the Company has initiated a number of major system projects to replace core computer hardware, networking, and software systems in the U.S. with new technology. The Company has purchased software from outside vendors and is working with outside consultants to install the software and train employees. The Company's key vendors supplying this technology have asserted that these hardware, networking, and software systems are Year 2000 compliant. The Company does not plan to test these systems for Year 2000 compliance given the contractual representations made by its key vendors. The Company is currently rolling out these new systems throughout the organization in phases, by location, and is currently on schedule to be completed before the Year 2000. The Company has completed the update of substantially all desktop computers to a model that is Year 2000 compliant. The Company expects to spend in excess of $44 million on these systems and desktop upgrade projects of which approximately $43 million has been incurred to date. Contingency plans are being developed in certain key areas to ensure that any potential business interruptions caused by the Year 2000 issue are mitigated. The Company believes it is taking the necessary steps to resolve Year 2000 issues, however, given the possible consequences of failure to resolve significant Year 2000 issues, there can be no assurance that any one or more of such failures would not have a material adverse effect on the Company. 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. 10 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 - ------------- ------------------------------------------------------------------------------------------- 11 Computation of Per Share Earnings. 27 Financial Data Schedule.
(b) The registrant filed no current report on Form 8-K during the quarter covered by this report. 11 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, SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND TREASURER (PRINCIPAL FINANCIAL OFFICER AND DULY AUTHORIZED SIGNATORY) Date: November 10, 1999 12 INDEX TO EXHIBITS
EXHIBIT NO. PAGE - ------------- --------- 11 Computation of Per Share Earnings............................................................. 27 Financial Data Schedule.......................................................................
EX-11 2 EX-11 Exhibit 11 ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES COMPUTATION OF PER SHARE EARNINGS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, -------------------- --------------------- 1999 1998 1999 1998 --------- --------- ---------- --------- (UNAUDITED) (UNAUDITED) Net Income........................................................... $ 34,549 $ 34,974 $ 103,798 $ 96,304 --------- --------- ---------- --------- --------- --------- ---------- --------- Weighted Average Number Of Shares Outstanding: Basic: Weighted average shares.......................................... 90,109 92,017 90,705 91,906 Diluted: Weighted average shares.......................................... 90,149 92,017 90,705 91,906 Common stock equivalents--Stock options (A)...................... 1,716 3,158 2,061 3,308 --------- --------- ---------- --------- Diluted shares outstanding....................................... 91,865 95,175 92,766 95,214 --------- --------- ---------- --------- --------- --------- ---------- --------- Net Income Per Share: Basic.............................................................. $ .38 $ .38 $ 1.14 $ 1.05 Diluted............................................................ $ .38 $ .37 $ 1.12 $ 1.01
- ------------------------ (A) The treasury stock method was used to determine the weighted average number of shares of common stock equivalents outstanding during the periods. EX-27.1 3 EXHIBIT 27.1
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 182,847 0 305,857 14,490 0 502,591 175,705 72,625 778,198 182,510 3,809 0 0 89 571,106 778,198 0 1,511,510 0 887,821 3,737 0 (4,585) 172,169 68,371 103,798 0 0 0 103,798 1.14 1.12
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