ANNUAL REPORT
2017
ABOUT US
Robert Half is the world’s first and largest specialized staffing firm. Our history of
innovation spans seven decades and is built upon the core belief that finding the right
fit for a client and candidate creates an engaged, energized workforce. Our staffing
divisions serve the finance and accounting, legal, creative and marketing, technology,
and administrative fields, and we offer full-service consulting services through our
Protiviti subsidiary.
Robert Half is traded on the New York Stock Exchange (symbol: RHI) and is a member
of the S&P 500 Index.
We are a recognized leader in professional staffing and consulting services.
THE
CREATIVE
GROUP
A Robert Half Company
Robert Half is the parent company of Protiviti, a global consulting firm that delivers
deep expertise, objective insights, a tailored approach and unparalleled collaboration
to help leaders confidently face the future. Protiviti and its independently owned
Member Firms provide clients with consulting solutions in finance, technology,
operations, data, analytics, governance, risk and internal audit through a network
of more than 70 offices in over 20 countries.
SELECTED FINANCIAL DATA
(in millions, except per share amounts)
YEARS ENDED DEC 31,
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
INCOME
STATEMENT DATA:
Net service revenues
$ 5,266.8 $ 5,250.4 $ 5,094.9 $ 4,695.0 $ 4,245.9 $ 4,111.2 $ 3,777.0 $ 3,175.1 $ 3,036.5 $ 4,600.6 $ 4,645.7
Operating income
$ 517.3 $ 554.5 $ 580.7 $ 497.2 $ 398.3 $ 343.4 $ 249.4 $ 115.0 $
66.8 $ 416.7 $ 479.9
Net income
$ 290.6 $ 343.4 $ 357.8 $ 305.9 $ 252.2 $ 209.9 $ 149.9 $
66.1 $
37.3 $ 250.2 $ 296.2
Diluted net income
per share, as
reported
$
2.33 $
2.67 $
2.69 $
2.26 $
1.83 $
1.50 $
1.04 $
0.44 $
0.24 $
1.59 $
1.78
Diluted net income
per share, non-GAAP*
$
2.60
Diluted shares
124.9
128.8
132.9
135.5
137.6
139.4
141.8
144.0
146.6
152.5
162.6
Cash dividends
declared per share
CASH FLOW DATA:
Net cash flows
provided by
operating activities
$
.96 $
.88 $
.80 $
.72 $
.64 $
.60 $
.56 $
.52 $
.48 $
.44 $
.40
$ 453.0 $ 442.1 $ 438.2 $ 340.7 $ 309.2 $ 289.2 $ 256.3 $ 175.9 $ 240.2 $ 447.1 $ 411.2
Capital expenditures
$
40.8 $
83.0 $
75.1 $
62.8 $
53.7 $
50.1 $ 56.5 $
35.1 $
41.2 $ 73.4 $
83.8
BALANCE SHEET
DATA AT YEAR-END:
Total assets
$ 1,867.5 $ 1,778.0 $ 1,671.0 $ 1,620.8 $ 1,497.7 $ 1,367.0 $ 1,297.4 $ 1,272.6 $ 1,283.5 $ 1,411.9 $ 1,450.3
Debt financing
$
0.8 $
1.0 $
1.2 $
1.3 $
1.4 $
1.5 $
1.7 $
1.8 $
1.9 $
2.0 $
4.1
Stockholders’ equity
$ 1,105.3 $ 1,086.6 $ 1,003.8 $ 979.9 $ 919.6 $ 842.0 $ 800.5 $ 834.4 $ 899.8 $ 983.9 $ 984.0
* See Appendix A to the Company’s Proxy Statement mailed to stockholders in April 2018 for a reconciliation of the non-GA AP
measures to the most comparable GA AP measures: https://www.roberthalf.com/investor-center/sec-filings/definitive-14a
1 2017 ANNUAL REPORT | ROBERT HALF
FINANCIAL HIGHLIGHTS:
5-YEAR HISTORY
REVENUES (IN MILLIONS)
$5,000
$4,000
$3,000
$2,000
$1,000
$0
2013
2014
2015
2016
2017
DILUTED NET INCOME PER SHARE
$3.00
$2.50
$2.00
$1.50
$1.00
$0.50
$0
2013
2014
2015
2016
2017
(As reported)
2017
(Non-GAAP)*
* See Appendix A to the Company’s Proxy Statement mailed to stockholders in April 2018 for a reconciliation of the non-GAAP
measures to the most comparable GA AP measures: https://www.roberthalf.com/investor-center/sec-filings/definitive-14a
2 2017 ANNUAL REPORT | ROBERT HALF
OPERATING CASH FLOW (IN MILLIONS)
$500
$400
$300
$200
$100
$0
2013
2014
2015
2016
2017
CASH DIVIDENDS DECLARED PER SHARE
$1.00
$0.80
$0.60
$0.40
$0.20
$0
3 2017 ANNUAL REPORT | ROBERT HALF
2013
2014
2015
2016
2017
TO OUR STOCKHOLDERS
Chairman and Chief Executive Officer
Harold M. Messmer, Jr. (left);
Vice Chairman, President and Chief
Financial Officer M. Keith Waddell
R obert Half’s story in 2017 was
one of first regaining and then
increasing business momentum
as the year unfolded. Worldwide
full-year revenues reached a record level,
slightly exceeding that of the prior year.
By the fourth quarter of 2017, growth had
accelerated noticeably. Late-in-the-year
revenue gains were broad-based, both
geographically and within all three of our
reportable business segments.
Full-year global revenues were $5.27 billion,
compared with $5.25 billion reported
in the prior year. U.S. revenues declined
2.3 percent, and international revenues
grew 11.2 percent in 2017. Performance
improved in the fourth quarter of 2017,
with worldwide revenues up 6.4 percent
during that period. Domestic revenues
increased 2.1 percent, and international
revenues grew 23.8 percent in the fourth
quarter of 2017.
Net income for the full year was $291
million, and diluted net income per
share was $2.33. There were 3 percent
fewer average shares outstanding during
2017, reflecting the continuation of our
long-standing share repurchase program.
Last year’s net income was reduced by
a non-cash estimated amount of $34
million, or the equivalent of $0.27 per
share, due to our provision for income
taxes resulting from the recently enacted
Tax Cuts and Jobs Act (TCJA) in the United
States. Adjusted for this fourth-quarter,
one-time charge, full-year net income per
share was $2.60.* Among other things,
the TCJA includes a lower prospective
corporate tax rate. As a result, the value
of deferred tax assets that had been
recorded on our balance sheet earlier,
when tax rates were higher, had to be
remeasured to reflect the lower rate. The
reduced valuation appears in the income
statement as an increased tax provision.
4 2017 ANNUAL REPORT | ROBERT HALF
* See Appendix A to the Company’s Proxy Statement mailed to stockholders in April 2018 for a reconciliation of the non-GA AP
measures to the most comparable GA AP measures: https://www.roberthalf.com/investor-center/sec-filings/definitive-14a
Last year’s return on invested capital (ROIC)
was 26 percent. Excluding the negative effect
of the aforementioned non-cash charge,
return on invested capital was 29 percent in
2017.* Last year’s ROIC performance compares
favorably with our 20-year average of 25 percent.
ECONOMIC BACKGROUND
The economic backdrop for our business during
2017 was generally favorable. Momentum
seemed to build around much of the globe
as the year progressed. In the U.S., real gross
domestic product (GDP) grew 2.3 percent in
2017, a significant step up from the 1.5 percent
growth reported the prior year.
U.S. labor markets were relatively robust
throughout last year. The economy added
approximately 2.2 million jobs, slightly
fewer than the 2.3 million added in 2016.
Non-farm payrolls grew each month in 2017,
thus sustaining the positive trend we’ve seen for
nearly a decade now. The unemployment rate
in each of the last three months of 2017 was 4.1
percent, the lowest rate since December 2000.
Our staffing operations performed well,
considering these trends. Temporary and
consultant staffing revenues were $4.01 billion
in 2017, or 76 percent of total revenues, and
were essentially flat compared to the prior
year. Permanent placement staffing revenues
were $439 million, accounting for 8 percent
of companywide revenues and representing a
year-to-year increase of 5 percent. Operating
income was $356 million and $77 million for
our temporary and consultant and permanent
placement staffing operations, respectively,
in 2017. Total staffing revenue growth for the
fourth quarter of 2017 was 6 percent on a
reported basis, a considerable improvement
from the negative growth rates posted in each
of the previous three quarters.
Global economic conditions also benefited
Protiviti in 2017. Protiviti’s $817 million in
revenues last year represented 16 percent
of the companywide total and were 2 percent
higher than the prior year on a reported basis.
Last year’s $84 million in operating income
produced a solid double-digit percentage
operating margin for the third consecutive year.
Protiviti’s fourth-quarter revenues increased
6 percent year-to-year on a reported basis,
and its operating profit margin that quarter was
the highest interim margin in 2017.
We launched Protiviti in 2002 as a business
unit of Robert Half after hiring more than 700
professionals from Arthur Andersen’s internal
audit and business risk consulting practices.
Our immediate aim was to provide clients with
expertise in internal audit along with business
and technology consulting. Opportunities
also were emerging as several high-profile
corporate collapses and accounting scandals
led to more regulatory focus on governance
and internal control over financial reporting.
From its outset, Protiviti has generated a
reliable core of recurring revenue by providing
clients with internal audit services on an
outsourced or cosourced basis and by helping
them assess and strengthen internal controls.
Protiviti has grown by providing these core
services and by widening the suite of solutions
it offers in the risk and compliance, technology,
data and analytics, and business performance
improvement consulting areas.
Protiviti also enjoys a key differentiator: It can
combine its highly regarded expertise and
technologies with the considerable strengths
of Robert Half’s traditional staffing operations
to provide managed services solutions to the
clients of the enterprise. Blending the capabilities
of both businesses enables us to provide Big
Four-quality consulting services at competitive
prices. Global and regional consulting firms that
compete with Protiviti generally lack the flexible
resource capabilities of our staffing operations.
* See Appendix A to the Company’s Proxy Statement mailed to stockholders in April 2018 for a reconciliation of the non-GA AP
measures to the most comparable GA AP measures: https://www.roberthalf.com/investor-center/sec-filings/definitive-14a
5 2017 ANNUAL REPORT | ROBERT HALF
Late-in-the-year
revenue gains were
broad-based,
both geographically
and within all three
of our reportable
business segments.
BUSINESS HIGHLIGHTS
$5.27
BILLION
29%
2017 NET SERVICE
REVENUES
2017 RETURN ON
INVESTED CAPITAL,
NON-GAAP*
$1.87
BILLION
TOTAL ASSETS AS
OF 12/31/17
$2.60
DILUTED NET
INCOME PER SHARE,
NON-GAAP*
* See Appendix A to the Company’s Proxy Statement mailed to stockholders in April 2018
for a reconciliation of the non-GA AP measures to the most comparable GA AP measures:
https://www.roberthalf.com/investor-center/sec-filings/definitive-14a
RECOGNITION
Robert Half and Protiviti frequently appear on “Best Places to
Work” lists around the world. The following are additional
highlights of our recognition:
2018 Robert Half once again was named first in our
industry on Fortune magazine’s list of “World’s Most
Admired Companies.” (February 1, 2018) This is the
20th consecutive year we have appeared on the list.
2018 For four straight years, Protiviti has been named to
Fortune magazine’s “100 Best Companies to Work
For” list. (February 15, 2018)
2017 Robert Half was named No. 1 on Forbes’ list of
“America’s Best Professional Search Firms.”
(May 3, 2017)
2017 Protiviti was named to Forbes’ list of “America’s
Best Management Consulting Firms.” (April 19, 2017)
6 2017 ANNUAL REPORT | ROBERT HALF
FINANCIAL CONDITION
Robert Half’s financial position remains sound.
Total assets at year-end were $1.9 billion. Our
cash balance of $295 million far exceeded
long-term debt of less than $1 million. Accounts
receivable of $732 million were 4 percent
higher than the prior year-end total. Highly
liquid assets represented 55 percent of the total.
Last year’s receivables increase exceeded
the revenue gain as the year-end balance
reflects faster revenue growth produced in
the final months of the year. We benefit from
the collectability of our receivables due to the
granular nature of our small-to-midsize customer
base. We are free of concentrations — in
customers, industries and geographies. Our
receivables’ average days sales outstanding
(DSO), as calculated for the full year at 50.6
days, was consistent with past trends.
The strength of our balance sheet reflects the
outstanding cash-generating characteristics
of our business; we have a long record of
producing generous amounts of cash under
both favorable and unfavorable business
conditions. Last year’s net cash provided by
operating activities was an all-time high of
$453 million.
Capital expenditures in 2017 were $41 million.
Important projects included the completion of
the global rollout of an enhanced customer
relationship management (CRM) system. Now,
for the first time, Robert Half’s global branch
network is united on a single CRM platform. In
addition, we have increased spending to take
advantage of an entire suite of cloud-based
applications offered by our CRM vendor. We
also invested in software that consolidates
into a single human resources platform the
previously separate and diverse systems of
our staffing operations and Protiviti. Besides
spending on these internal tools, we continued
to invest in digital service options for our clients
and job candidates. We discuss more about
our technology investments later in this letter.
The staffing industry
is large, global
and growing. It’s
also evolving, with
digitalization playing
an ever-larger role.
The $41 million of capital outlays in 2017
was below the previous year’s $83 million
and the five-year average of $63 million. The
lower amount for capital expenditures reflects
the completion of the multiyear CRM and
human resources software implementations
just described. In addition, new technology
spending weighs more toward internal-use
cloud computing arrangements (CCAs), where
implementation costs are expensed rather
than capitalized. U.S. accounting standard
authorities are currently re-examining the
accounting for CCA implementation costs,
but the timing and outcome are uncertain.
Cash provided by operating activities less cash
used for investing activities (free cash flow) in
2017 was $374 million, and $197 million of
that amount was used to repurchase Robert
Half shares in open-market transactions. We
began to repurchase our shares in 1997 and
have acquired 106 million shares since then.
In the last decade alone, we spent $1.6 billion
of the $2.6 billion of free cash flow generated
by the business to purchase 47 million of our
shares, contributing to a 10-year net reduction
of 24 percent of our outstanding shares. For
perspective, we ended 2017 with 124 million
shares. Recently, our board authorized the
purchase of 10 million shares in addition to the
2.3 million authorized shares already in place.
We have paid a quarterly cash dividend
consistently since 2004. Last year’s $0.24 per
share quarterly payout was equivalent to a
total annual outlay of $121 million. The board
recently increased the dividend to $0.28 per
share per quarter, a 17 percent increase. Since
its initial payment, the dividend has been raised
yearly and has compounded at a 12 percent
average annual rate.
We made no large acquisitions last year, which
is consistent with our well-known preference
to grow organically. Our predisposition for
internal growth is based on the fundamental
belief that our industry provides ample
growth opportunities. The staffing industry is
large, global and growing. It’s also evolving,
with digitalization playing an ever-larger role.
While some companies have chosen to acquire
technology-based services, we have opted to
develop proprietary solutions with the expectation
that our path carries less risk and provides us
with a more durable competitive advantage.
7 2017 ANNUAL REPORT | ROBERT HALF
ONGOING INNOVATION
Our business is evolving. Innovations that are
aimed at digital transformation are at the heart
of the evolution. We recognized early on that
clients and candidates would expect to engage
with a staffing firm online, just as they do with
most other businesses. We have responded
by developing proprietary solutions that give
our customers multiple ways to interact with us
online — from submitting job orders through our
website to browsing for job candidates. We have
invested in strengthening our digital storefront to
enable us to reach new segments of the market.
We continue to evaluate and adapt new online
services that can bring our resources to more
customers. For example, we are using artificial
intelligence and machine learning to help us
make better job matches. These and other new
initiatives support our goal of improving the
service experience for clients and candidates.
Over the years, we have learned that digital
solutions alone are usually inadequate to
make effective job matches. A pivotal part of
the customer experience involves a personal
component. In our case, that experience
includes helping a candidate find meaningful
work or a client hire the right candidate to fill
a critical position.
We frequently have seen competitors emerge
that enter the business pursuing a digital-only
strategy. It usually does not take long for them
to realize that a singular approach often is
inadequate. Human involvement is almost
always critically important to completing a
successful match. In today’s world of tightening
labor markets, success often means convincing
someone with sought-after skills to take your
job over other available opportunities. Robert
Half’s staffing professionals are given extensive
training and development in managing the
many aspects of job placements, including
ensuring candidates have the right skills
and personality to fit the position and job
environment. We also provide technical training
so our employees can fully leverage the many
technology tools available to them. We believe
the combination of personal consultation and
digital service options we offer our clients is a
differentiator for Robert Half.
8 2017 ANNUAL REPORT | ROBERT HALF
OUR SERVICE SPECTRUM
We offer a suite of solutions for companies
of all sizes — from small businesses to Fortune
500 firms. The core client base of our staffing
operations is the largest and least-served
segment of the economy — small and midsize
businesses (SMBs). Clients of this size often lack
human resources departments. They are less
able to absorb the costs of a poor hiring fit,
particularly compared to larger organizations
that are more likely to have deep bench strength.
the labor market was considerably smaller.
Over the past decade, the civilian labor force
has risen more than 5 percent, while the labor
force participation rate has fallen nearly 5
percent. The trend is even more pronounced
in the population of workers 25 and older with
a college degree. That worker population has
grown 25 percent over the past decade, but
its labor force participation rate has declined
6 percent. Even a slight increase in the labor
force participation rate would have a positive
impact on the pool of available talent.
The SMB market segment appears poised
for expansion. The Small Business Optimism
Index published by the National Federation of
Independent Business (NFIB) in February 2018
reached the second-strongest reading in the
45 years the NFIB has conducted the survey.
A key priority of ours is to enlarge our share
of this vast market.
For some time now, we also have been targeting
select larger corporations, those with revenues in
the range of $500 million to $2 billion or higher.
These companies have staffing needs that are
typically more complex than those of SMB
clients, including a desire to bring their staffing
efforts in multiple locations under a single point
of contact. We have found that clients of this
size often have more flexibility than much larger
corporations, and they value our personal,
consultative approach.
LOOKING AHEAD
There are many reasons to be optimistic about
the outlook for Robert Half’s business in 2018
and beyond. Near term, the U.S. labor market
continues to tighten, which typically provides a
boost to our business. For several months now,
the U.S. unemployment rate has remained at
a 17-year low. In addition, the U.S. Department
of Labor in late February reported that jobless
claims were near a 49-year low. It also reported
that, as of the third week of February, claims
remained below the 300,000 threshold for
the 156th consecutive week. This trend held
steady as the longest stretch since 1970, when
Global economic growth is increasing. The
International Monetary Fund in its World
Economic Outlook recently raised its global
growth outlook to 3.9 percent to reflect
increased momentum and the expected positive
effect of recent U.S. tax policy changes. The
staffing industry continues to increase its
penetration into worldwide labor forces. Annual
global revenues for the staffing industry now
exceed $400 billion. In the United States,
the percentage of temporary workers in the
overall workforce is 2.04 percent. Higher
concentrations of temporary workers in select
European labor markets suggest there is ample
opportunity for further U.S. growth in the
contingent workforce.
Long-term demographic trends indicate the
already heated competition for talent is likely
to intensify. Skills shortages in occupations
that include our professional specialties are
becoming increasingly acute. The U.S. Bureau
of Labor Statistics (BLS) expects job growth
in the United States for financial analysts,
and accountants and auditors, for example,
to outpace the national average between
2016 and 2026. Furthermore, accountants
and auditors are among the top 20 roles with
the highest projected job growth during this
period. The information technology (IT) staffing
market appears to be even more promising:
It is three to four times larger than accounting
staffing. The IT staffing market continues to
produce robust growth as companies seek
to satisfy appetites for help in business and
technology transformation.
9 2017 ANNUAL REPORT | ROBERT HALF
There are many
reasons to be optimistic
about the outlook for
Robert Half’s business
in 2018 and beyond.
We believe we are just beginning to exploit
the opportunities that are arising in the space
where Protiviti meets our staffing resources.
It is fortuitous that many of these opportunities
are surfacing at a time when Protiviti has
expanded its technology consulting practice.
The pervasiveness of mission-critical IT systems
in modern businesses and the pace of
change mean finding the right IT talent is
tremendously important.
Thus far in our extended economic recovery,
wage rate increases have not been proportional
to the low unemployment and candidate
shortages we are seeing day to day. Experience
suggests that tight labor market conditions
eventually will translate into faster growth in
wage rates. In fact, over the past few months
we have seen evidence in the form of more
positive business sentiment, particularly in the
United States, suggesting the situation may be
changing. Clients are taking on more projects,
and there appears to be a greater urgency to
ensure they have the right people to grow their
businesses. As evidence mounts, this should
result in faster wage growth and a premium
for high-demand skills.
Our brands are second to none in our
industry, our finances are strong, and our
field management is seasoned and solid.
We are committed to attracting, motivating
and retaining the best people. In short, we are
very enthusiastic about our prospects. We have
never been better positioned as a company
for future success.
None of these accomplishments would have
been possible without the exemplary efforts
of the people who comprise our teams
across the globe and work hard every day
to provide outstanding service to our clients
and candidates. We thank them for their
continued passion and pursuit of excellence.
We would also like to express our appreciation
to our board of directors for their guidance
and counsel during 2017, and to you, our
stockholders, for your continued support of
Robert Half.
Respectfully submitted,
Harold M. Messmer, Jr.
M. Keith Waddell
Chairman and
Chief Executive Officer
Vice Chairman, President
and Chief Financial Officer
March 9, 2018
March 9, 2018
10 2017 ANNUAL REPORT | ROBERT HALF
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2017
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
__________________________________________
Commission file number 1-10427
ROBERT HALF INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of
incorporation or organization)
2884 Sand Hill Road, Menlo Park, California
(Address of principal executive offices)
94-1648752
(I.R.S. Employer
Identification No.)
94025
(Zip code)
Registrant’s telephone number, including area code: (650) 234-6000
__________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, Par Value $.001 per Share
Name of each exchange
on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
__________________________________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes
No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes
No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for
such shorter period that the registrant was required to submit and post such files). Yes
No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company.
Yes
No
As of June 30, 2017, the aggregate market value of the Common Stock held by non-affiliates of the registrant was approximately
$5,855,668,588 based on the closing sale price on that date. This amount excludes the market value of 4,041,703 shares of Common
Stock directly or indirectly held by registrant’s directors and officers and their affiliates.
As of January 31, 2018, there were 124,261,548 outstanding shares of the registrant’s Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s Proxy Statement to be mailed to stockholders in connection with the registrant’s annual meeting of
stockholders, scheduled to be held in May 2018, are incorporated by reference in Part III of this report. Except as expressly incorporated
by reference, the registrant’s Proxy Statement shall not be deemed to be part of this report.
2017 ANNUAL REPORT | ROBERT HALF
This Page Intentionally Left Blank
RHI 10K 2015 FINAL.CG2.indd 64
3/14/16 9:45 AM
2017 ANNUAL REPORT | ROBERT HALF Item 1. Business
PART I
Robert Half International Inc. (the “Company”) provides specialized staffing and risk consulting services through such
divisions as Accountemps®, Robert Half® Finance & Accounting, OfficeTeam®, Robert Half® Technology, Robert Half®
Management Resources, Robert Half® Legal, The Creative Group®, and Protiviti®. The Company, through its Accountemps,
Robert Half Finance & Accounting, and Robert Half 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. Robert Half Technology provides information technology
professionals. Robert Half Legal 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 digital,
marketing, and creative fields. Protiviti, which began operations in 2002, is a global business consulting and internal audit firm.
Protiviti, which primarily employs professionals specializing in risk, advisory and transactional services, is a wholly owned
subsidiary of the Company.
The Company’s business was originally founded in 1948. Prior to 1986, the Company was primarily a franchisor, under
the names Accountemps and Robert Half (now called Robert Half Finance & Accounting), of offices providing temporary and
full-time professionals in the fields of accounting and finance. Beginning in 1986, the Company and its current management
embarked on a strategy of acquiring franchised locations. All of the franchises have been acquired. The Company believes that
direct ownership of offices allows it to better monitor and protect the image of its tradenames, promotes a more consistent and
higher level of quality and service throughout its network of offices and improves profitability by centralizing many of its
administrative functions. Since 1986, the Company has significantly expanded operations at many of the acquired locations,
opened many new locations and acquired other local or regional providers of specialized temporary service personnel. The
Company has also expanded the scope of its services by launching the new product lines OfficeTeam, Robert Half Technology,
Robert Half Management Resources, Robert Half Legal and The Creative Group.
In 2002, the Company hired more than 700 professionals who had been affiliated with the internal audit and business and
technology risk consulting practice of Arthur Andersen LLP, including more than 50 individuals who had been partners of that
firm. These professionals formed the base of the Company’s Protiviti Inc. subsidiary. Protiviti® has enabled the Company to
enter the market for business consulting and internal audit services, which market the Company believes offers synergies with
its traditional lines of business.
Accountemps
The Accountemps temporary services division offers customers a reliable and economical means of dealing with uneven
or peak workloads for accounting, finance, and bookkeeping personnel caused by such predictable events as vacations, taking
inventories, tax work, month-end activities and special projects, and such unpredictable events as illness and emergencies.
Businesses view the use of temporary employees as a means of controlling personnel costs and converting such costs from
fixed to variable. The cost and inconvenience to clients of hiring and firing regular employees are eliminated by the use of
Accountemps temporaries. The temporary workers are employees of Accountemps and are paid by Accountemps. The customer
pays a fixed rate only for hours worked.
Accountemps clients may fill their regular employment needs by using an Accountemps employee on a trial basis and, if
so desired, “converting” the temporary position to a regular position. The client typically pays a one-time fee for such
conversions.
OfficeTeam
The Company’s OfficeTeam division, which commenced operations in 1991, places temporary and full-time office and
administrative personnel, ranging from executive and administrative assistants to receptionists and customer service
representatives. OfficeTeam operates in much the same fashion as the Accountemps division.
Robert Half Finance & Accounting
Established in 1948, the Company’s first division and specialized recruitment pioneer Robert Half Finance & Accounting
specializes in the placement of full-time accounting, financial, tax and accounting operations personnel. Fees for successful
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2017 ANNUAL REPORT | ROBERT HALF placements are paid only by the employer and are generally a percentage of the new employee’s annual compensation. No fee
for placement services is charged to employment candidates.
Robert Half Technology
The Company’s Robert Half Technology division, which commenced operations in 1994, specializes in providing
information technology contract consultants, placing full-time employees, and offering managed services in areas ranging from
multiple platform systems integration to end-user technical and desktop support, including specialists in application
development (including mobile, cloud and enterprise applications), networking, systems integration and deployment, database
design and administration, and security and business continuity.
Robert Half Legal
Since 1992, the Company has been placing temporary and full-time employees in attorney, paralegal, legal administrative
and legal secretarial positions through its Robert Half Legal division. The legal profession’s requirements (the need for
confidentiality, accuracy and reliability, a strong drive toward cost-effectiveness, and frequent peak caseload periods) are
similar to the demands of the clients of the Accountemps division. Robert Half Legal offers a full suite of legal staffing and
consulting services to help organizations manage constantly changing workloads and access expertise across in-demand legal
practice areas.
Robert Half Management Resources
The Company’s Robert Half Management Resources division, which commenced operations in 1997, specializes in
providing senior level project professionals in the accounting and finance fields, including chief financial officers, controllers,
senior financial analysts, internal auditors, and business systems analysts for such tasks as financial systems conversions,
expansion into new markets, business process reengineering, business systems performance improvement, and post-merger
financial consolidation.
The Creative Group
The Creative Group division commenced operations in 1999 and specializes in identifying for its clients creative
professionals in the areas of interactive media, design, marketing, advertising and public relations. The division places
freelance and project consultants in a variety of positions such as creative directors, graphics designers, web content
developers, web designers, media buyers, brand managers, and public relations specialists.
Protiviti
Protiviti is a global consulting firm that helps companies solve problems in finance, technology, operations, data,
analytics, governance, risk and internal audit. Through its risk management and internal audit heritage, Protiviti has gained
unique perspectives on the challenges faced by its clients. Protiviti uses these perspectives not only to solve regulatory, risk and
compliance problems, but also to help clients become more effective and productive. Protiviti provides solutions to its clients in
areas such as business performance improvement, internal audit and financial advisory, IT consulting, restructuring and
litigation, risk and compliance, and transaction services.
Marketing and Recruiting
The Company markets its staffing services to clients and employment candidates via both national and local advertising
activities. Advertising consists of client- and employment candidate-facing buys in radio, outdoor, digital display, search engine
marketing, social media, print and trade publications, job boards and events. The Company also markets its services, as well as
hiring and career management advice content and thought leadership, via its search engine-optimized website, social media and
blog feeds, and e-mail marketing program. Direct marketing via telephone solicitation is a significant portion of the Company’s
total marketing efforts. Additionally, the Company has expanded its use of job boards and job aggregators in all aspects of sales
and recruitment. Joint marketing arrangements have been entered into with major software manufacturers and typically provide
for the development of proprietary skills tests, cooperative advertising, joint e-mail campaigns, and similar promotional
activities. The Company also actively seeks endorsements and affiliations with professional organizations in the accounting and
finance, technology, legal, and creative and marketing fields. In addition, the Company conducts public relations activities
designed to enhance public recognition of the Company and its services. This includes outreach to journalists, bloggers and
social media influencers, and the distribution of print, digital, and video thought leadership. Robert Half staffing and recruiting
professionals are encouraged to be active in civic organizations and industry trade groups in their local communities.
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2017 ANNUAL REPORT | ROBERT HALF Protiviti markets its business consulting and internal audit services to a variety of clients in a range of industries. Industry
and competency teams conduct targeted marketing efforts, both locally and nationally, including print advertising and branded
speaking events, with support from Protiviti management. National advertising conducted by Protiviti consists primarily of
print advertisements in national newspapers, magazines and selected trade journals. Protiviti has programs to share its insights
with clients on current corporate governance and risk management issues. It conducts public relations activities, such as
distributing press releases, white papers, case studies and newsletters, designed to enhance recognition for the Protiviti brand,
establish its expertise in key issues surrounding its business and promote its services. Protiviti plans to expand both the services
and value added content on the Protiviti.com website and increase traffic through targeted Internet advertising. Local
employees are encouraged to be active in relevant social media communities, civic organizations and industry trade groups.
The Company and its subsidiaries own many trademarks, service marks and tradenames, including the Robert Half®
Finance & Accounting, Accountemps®, OfficeTeam®, Robert Half® Technology, Robert Half® Management Resources, Robert
Half® Legal, The Creative Group® and Protiviti® marks, which are registered in the United States and in a number of foreign
countries.
Organization
Management of the Company’s staffing operations is coordinated from its headquarters facilities in Menlo Park and San
Ramon, California. The Company’s headquarters provides support and centralized services to its offices in the administrative,
marketing, public relations, accounting, training and legal areas, particularly as it relates to the standardization of the operating
procedures of its offices. As of December 31, 2017, the Company conducted its staffing services operations through 323 offices
in 42 states, the District of Columbia and 17 foreign countries. Office managers are responsible for most activities of their
offices, including sales, local advertising and marketing and recruitment.
The day-to-day operations of Protiviti are managed by a chief executive officer and a senior management team with
operational and administrative support provided by individuals located in San Ramon and Menlo Park, California. As of
December 31, 2017, Protiviti had 56 offices in 23 states and 11 foreign countries.
Competition
The Company’s staffing services face competition in attracting clients as well as skilled specialized employment
candidates. The staffing business is highly competitive, with a number of firms offering services similar to those provided by
the Company on a national, regional or local basis. In many areas the local companies are the strongest competitors. The most
significant competitive factors in the staffing business are price and the reliability of service, both of which are often a function
of the availability and quality of personnel. The Company believes it derives a competitive advantage from its long experience
with and commitment to the specialized employment market, its national presence, and its various marketing activities.
Protiviti faces competition in its efforts to attract clients and win proposal presentations. The risk consulting and internal
audit businesses are highly competitive. In addition, the changing regulatory environment is increasing opportunities for non-
attestation audit and risk consulting services. The principal competitors of Protiviti remain the “big four” accounting firms.
Significant competitive factors include reputation, technology, tools, project methodologies, price of services and depth of
skills of personnel. Protiviti believes its competitive strengths lie in its unique ability to couple the deep skills and proven
methodologies of its “big four” heritage with the customer focus and attention of a smaller organization.
Employees
The Company has approximately 17,200 full-time employees, including approximately 3,600 engaged directly in
Protiviti operations. In addition, the Company placed approximately 211,400 temporary employees on assignments with clients
during 2017. Employees placed by the Company on assignment with clients are the Company’s employees for all purposes
while they are working on assignments. The Company pays the related costs of employment, such as workers’ compensation
insurance, state and federal unemployment taxes, social security and certain fringe benefits. The Company provides access to
voluntary health insurance coverage to interested temporary employees.
Other Information
The Company’s current business constitutes three business segments. (See Note M of Notes to Consolidated Financial
Statement in Item 8. Financial Statements and Supplementary Data for financial information about the Company’s segments.)
The Company is not dependent upon a single customer or a limited number of customers. The Company’s staffing
services operations are generally more active in the first and fourth quarters of a calendar year. Protiviti is generally more active
in the third and fourth quarters of a calendar year. Order backlog is not a material aspect of the Company’s staffing services
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2017 ANNUAL REPORT | ROBERT HALF business. While backlog is of greater importance to Protiviti, the Company does not believe, based upon the length of time of
the average Protiviti engagement, that backlog is a material aspect of the Protiviti business. No material portion of the
Company’s business is subject to government contracts.
Information about foreign operations is contained in Note M of Notes to Consolidated Financial Statements in Item 8.
The Company does not have export sales.
Available Information
The Company’s Internet address is www.roberthalf.com. The Company makes available, free of charge, through its
website, its Annual Reports on Form 10-K, proxy statements for its annual meetings of stockholders, its Quarterly Reports on
Form 10-Q, and Current Reports on Form 8-K, and any amendments to those reports, as soon as is reasonably practicable after
such reports are filed with or furnished to the Securities and Exchange Commission. Also available on the Company’s website
are its Corporate Governance Guidelines, its Code of Business Conduct and Ethics, and the charters for its Audit Committee,
Compensation Committee and Nominating and Governance Committee, each of which is available in print to any stockholder
who makes a request to Robert Half International Inc., 2884 Sand Hill Road, Menlo Park, CA 94025, Attn: Corporate Secretary.
The Company’s Code of Business Conduct and Ethics is the Code of Ethics required by Item 406 of Securities and Exchange
Commission Regulation S-K. The Company intends to satisfy any disclosure obligations under Item 5.05 of Form 8-K
regarding any amendment or waiver relating to its Code of Business Conduct and Ethics by posting such information on its
website.
Item 1A. Risk Factors
The Company’s business prospects are subject to various risks and uncertainties that impact its business. The most
important of these risks and uncertainties are as follows:
Any reduction in global economic activity may harm the Company’s business and financial condition. The demand for
the Company’s services, in particular its staffing services, is highly dependent upon the state of the economy and upon the
staffing needs of the Company’s clients. Certain of the Company’s markets have recently experienced prolonged economic
downturns characterized by high unemployment, limited availability of credit and decreased consumer and business spending.
In addition, certain geopolitical events, including the ongoing negotiation of the United Kingdom’s withdrawal from the
European Union (“Brexit”), have caused significant economic, market, political and regulatory uncertainty in some of the
Company’s markets. Any decline in the economic condition or employment levels of the U.S. or of any of the foreign countries
in which the Company does business, or in the economic condition of any region of any of the foregoing, or in any specific
industry may severely reduce the demand for the Company’s services and thereby significantly decrease the Company’s
revenues and profits. Further, continued or intensifying economic, political or regulatory uncertainty in the Company’s markets
could reduce demand for the Company’s services.
The Company’s business depends on a strong reputation and anything that harms its reputation will likely harm its
results. As a provider of temporary and permanent staffing solutions as well as consultant services, the Company’s reputation
is dependent upon the performance of the employees it places with its clients and the services rendered by its consultants. The
Company depends on its reputation and name recognition to secure engagements and to hire qualified employees and
consultants. If the Company’s clients become dissatisfied with the performance of those employees or consultants or if any of
those employees or consultants engage in or are believed to have engaged in conduct that is harmful to the Company’s clients,
the Company’s ability to maintain or expand its client base may be harmed.
The Company and certain subsidiaries are defendants in several lawsuits that could cause the Company to incur
substantial liabilities. The Company and certain subsidiaries are defendants in several actual or asserted class and
representative action lawsuits brought by or on behalf of the Company’s current and former employees alleging violations of
federal and state law with respect to certain wage and hour related matters, as well as claims challenging the Company’s
compliance with the Fair Credit Reporting Act. The various claims made in one or more of such lawsuits include, among other
things, the misclassification of certain employees as exempt employees under applicable law, failure to comply with wage
statement requirements, failure to compensate certain employees for time spent performing activities related to the interviewing
process, and other related wage and hour violations. Such suits seek, as applicable, unspecified amounts for unpaid overtime
compensation, penalties, and other damages, as well as attorneys’ fees. It is not possible to predict the outcome of these
lawsuits. However, these lawsuits may consume substantial amounts of the Company’s financial and managerial resources and
might result in adverse publicity, regardless of the ultimate outcome of the lawsuits. In addition, the Company and its
subsidiaries may become subject to similar lawsuits in the same or other jurisdictions, or to various other claims, disputes, and
legal or regulatory proceedings that arise in the ordinary course of business. An unfavorable outcome with respect to these
lawsuits and any future lawsuits or regulatory proceedings could, individually or in the aggregate, cause the Company to incur
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2017 ANNUAL REPORT | ROBERT HALF substantial liabilities or impact its operations in such a way that may have a material adverse effect upon the Company’s
business, financial condition or results of operations. Furthermore, any future lawsuits, claims, disputes, or legal or regulatory
proceedings may also consume substantial amounts of the Company’s financial and managerial resources and might result in
adverse publicity, regardless of the ultimate outcome. In addition, an unfavorable outcome in one or more of these cases could
cause the Company to change its compensation plans for its employees, which could have a material adverse effect upon the
Company’s business.
The Company faces risks in operating internationally. The Company depends on operations in international markets,
including Europe, for a significant portion of its business. In the past several years, the European market experienced economic
uncertainty, which adversely affected, and the return of which may in the future adversely affect, the Company’s operations in
Europe. In particular, Brexit has contributed to, and may continue to contribute to, European economic, market and regulatory
uncertainty and could adversely affect European or worldwide economic, market, regulatory, or political conditions. To the
extent that adverse economic conditions and uncertainty in Europe (related to Brexit or otherwise) worsen, demand for the
Company’s services may decline, which could significantly harm its business and results of operations. In addition, these
international operations are subject to a number of risks, including general political and economic conditions in those foreign
countries, the burden of complying with various foreign laws and technical standards and unpredictable changes in foreign
regulations, U.S. legal requirements governing U.S. companies operating in foreign countries, legal and cultural differences in
the conduct of business, potential adverse tax consequences and difficulty in staffing and managing international operations. In
addition, the Company’s business may be affected by foreign currency exchange fluctuations. In particular, the Company is
subject to risk in translating its results in foreign currencies into the U.S. dollar. If the value of the U.S. dollar strengthens
relative to other currencies, the Company’s reported income from these operations could decrease. The value of the U.S. dollar
has recently strengthened considerably against a number of major foreign currencies, and a continuation or extension of this
strength relative to these other currencies could adversely impact the Company’s reported income from its international markets
and cause its revenue in such markets, when translated into U.S. dollars, to decline.
The Company could also be exposed to fines and penalties under U.S. or local jurisdiction trade sanctions and controls as
well as laws prohibiting corrupt payments to governmental officials. Although the Company has implemented policies and
procedures designed to ensure compliance with these laws, it cannot be sure that its employees, contractors or agents will not
violate such policies. Any such violations could materially damage the Company’s reputation, brand, business and operating
results. Further, changes in U.S. laws and policies governing foreign trade or investment and use of foreign operations or
workers, and any negative sentiments towards the United States as a result of such changes, could adversely affect the
Company’s operations.
Government regulations may result in prohibition or restriction of certain types of employment services or the imposition
of additional licensing or tax requirements that may reduce the Company’s future earnings. In many jurisdictions in which the
Company operates, the employment services industry is heavily regulated. For example, governmental regulations in some
countries restrict the length of contracts and the industries in which the Company’s employees may be used. In other countries,
special taxes, fees or costs are imposed in connection with the use of its employees. Additionally, trade unions in some
countries have used the political process to target the industry, in an effort to increase the regulatory burden and expense
associated with offering or utilizing temporary staffing solutions.
The countries in which we operate may, among other things:
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create additional regulations that prohibit or restrict the types of employment services that the Company
currently provides;
require new or additional benefits be paid to the Company’s employees;
require the Company to obtain additional licensing to provide employment services; or
increase taxes, such as sales or value-added taxes, payable by the providers of temporary workers.
Any future regulations may have a material adverse effect on the Company’s business and financial results because they
may make it more difficult or expensive for the Company to continue to provide employment services. Additionally, as the
Company expands existing service offerings, adds new service offerings, or enters new markets, it may become subject to
additional restrictions and regulations which may impede its business, increase costs and impact profitability.
The Company may be unable to find sufficient candidates for its staffing business. The Company’s staffing services
business consists of the placement of individuals seeking employment. There can be no assurance that candidates for
employment will continue to seek employment through the Company. Candidates generally seek temporary or regular positions
through multiple sources, including the Company and its competitors. Unemployment in the United States has been low in the
past couple of years and has recently decreased further; some economists have speculated that in certain markets, the U.S.
could be at or near full employment. This phenomenon has made finding sufficient eligible candidates to meet employers’
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2017 ANNUAL REPORT | ROBERT HALF demands more challenging and further increases in the employment rates could compound these difficulties. Any shortage of
candidates could materially adversely affect the Company.
The Company operates in a highly competitive business and may be unable to retain clients or market share. The
staffing services business is highly competitive and, because it is a service business, the barriers to entry are quite low. There
are many competitors, some of which have greater resources than the Company, and new competitors are entering the market
all the time. In addition, long-term contracts form a negligible portion of the Company’s revenue. Therefore, there can be no
assurance that the Company will be able to retain clients or market share in the future. Nor can there be any assurance that the
Company will, in light of competitive pressures, be able to remain profitable or, if profitable, maintain its current profit
margins.
The Company may incur potential liability to employees and clients. The Company’s temporary services business
entails employing individuals on a temporary basis and placing such individuals in clients’ workplaces. The Company’s ability
to control the workplace environment is limited. As the employer of record of its temporary employees, the Company incurs a
risk of liability to its temporary employees for various workplace events, including claims of physical injury, discrimination,
harassment or failure to protect confidential personal information. While such claims have not historically had a material
adverse effect upon the Company, there can be no assurance that such claims in the future will not result in adverse publicity or
have a material adverse effect upon the Company. The Company also incurs a risk of liability to its clients resulting from
allegations of errors, omissions or theft by its temporary employees, or allegations of misuse of client confidential information.
In many cases, the Company has agreed to indemnify its clients in respect of these types of claims. The Company maintains
insurance with respect to many of such claims. While such claims have not historically had a material adverse effect upon the
Company, there can be no assurance that the Company will continue to be able to obtain insurance at a cost that does not have a
material adverse effect upon the Company or that such claims (whether by reason of the Company not having sufficient
insurance or by reason of such claims being outside the scope of the Company’s insurance) will not have a material adverse
effect upon the Company.
The Company is dependent on its management personnel and employees and a failure to attract and retain such
personnel could harm its business. The Company is engaged in the services business. As such, its success or failure is highly
dependent upon the performance of its management personnel and employees, rather than upon technology or upon tangible
assets (of which the Company has few). There can be no assurance that the Company will be able to attract and retain the
personnel that are essential to its success.
The Company’s business is subject to extensive government regulation and a failure to comply with regulations could
harm its business. The Company’s business is subject to regulation or licensing in many states in the U.S. and in certain
foreign countries. While the Company has had no material difficulty complying with regulations in the past, there can be no
assurance that the Company will be able to continue to obtain all necessary licenses or approvals or that the cost of compliance
will not prove to be material. Any inability of the Company to comply with government regulation or licensing requirements
could materially adversely affect the Company. Further, changes to existing regulation or licensing requirements could impose
additional costs and other burdens or limitations on the Company’s operations. In addition, the Company’s temporary services
business entails employing individuals on a temporary basis and placing such individuals in clients’ workplaces. Increased
government regulation of the workplace or of the employer-employee relationship, or judicial or administrative proceedings
related to such regulation, could materially adversely affect the Company. In addition, to the extent that government regulation
imposes increased costs upon the Company, such as unemployment insurance taxes, there can be no assurance that such costs
will not adversely impact the Company’s profit margins. Further, lawsuits or other proceedings related to the Company’s
compliance with government regulations or licensing requirements could materially adversely affect the Company. For
example, the Company is currently named as a defendant in litigation challenging its compliance with the Fair Credit Reporting
Act. It is not possible to predict the outcome of such litigation; however, such litigation or any future lawsuits or proceedings
related to the Company’s compliance with government regulation or licensing requirements could consume substantial amounts
of the Company’s financial and managerial resources and might result in adverse publicity, regardless of the ultimate outcome
of any such lawsuits or other proceedings. An unfavorable outcome with respect to such litigation or any future lawsuits or
proceedings could, individually or in the aggregate, cause the Company to incur substantial liabilities that may have a material
adverse effect upon the Company’s business, financial condition or results of operations.
Health care reform could increase the costs of the Company’s temporary staffing operations. In March 2010, the Patient
Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (the “PPACA”) was signed
into law in the United States. In 2015, the Company redesigned its employee benefits to offer health insurance coverage to its
temporary candidates in order to meet the requirements of the PPACA’s employer mandate.
It is likely that President Trump and the U.S. Congress will continue to seek to modify, repeal, or otherwise invalidate all,
or certain provisions of, the PPACA. President Trump has issued multiple executive orders in support of repealing the PPACA,
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2017 ANNUAL REPORT | ROBERT HALF in whole or in part, and the U.S. Congress has made several attempts to repeal or modify the PPACA. It is unclear at this point
what the scope of any future such legislation will be and when it will become effective. Because of the uncertainty surrounding
this replacement health care reform legislation, we cannot predict with any certainty the likely impact of the PPACA’s repeal or
the adoption of any other health care reform legislation on the Company’s financial condition or operating results. Whether or
not there is alternative health care legislation enacted in the U.S., there is likely to be significant disruption to the health care
market in the coming months and years and the costs of the Company’s health care expenditures may increase.
The Company’s computer and communications hardware and software systems are vulnerable to damage and
interruption. The Company’s ability to manage its operations successfully is critical to its success and largely depends upon
the efficient and uninterrupted operation of its computer and communications hardware and software systems, some of which
are managed by third-party vendors. The Company’s primary computer systems and operations are vulnerable to damage or
interruption from power outages, computer and telecommunications failures, computer viruses, security breaches, catastrophic
events and errors in usage by the Company’s employees and those of the Company’s vendors. In particular, the Company’s
employees or vendors may have access or exposure to personally identifiable or otherwise confidential information and
customer data and systems, the misuse of which could result in legal liability. Cyber-attacks, including attacks motivated by
grievances against the business services industry in general or against the Company in particular, may disable or damage its
systems. It is possible that the Company’s security controls or those of its third-party vendors over personal and other data and
other practices it follows may not prevent the improper access to or disclosure of personally identifiable or otherwise
confidential information. Such disclosure or damage to the Company’s systems could harm its reputation and subject it to
government sanctions and liability under its contracts and laws that protect personal data and confidential information, resulting
in increased costs or loss of revenue. The potential risk of security breaches and cyber-attacks may increase as the Company
introduces new service offerings.
Changes in data privacy and protection laws and regulations in respect of control of personal information could increase
the Company’s costs or otherwise adversely impact its operations. In the ordinary course of business, the Company collects,
uses, and retains personal information from its employees, employment candidates, and contractors, including, without
limitation, full names, government-issued identification numbers, addresses, birth dates, and payroll-related information. The
possession and use of personal information in conducting the Company’s business subjects it to a variety of complex and
evolving domestic and foreign laws and regulations regarding data privacy, protection and security, which, in many cases,
apply not only to third-party transactions, but also to transfers of information among the Company and its subsidiaries. For
example, the European Union’s General Data Protection Regulation (“GDPR”), which becomes effective in May 2018, will
impose more stringent operational requirements for entities processing personal information, such as stronger safeguards for
data transfers to countries outside the European Union and stronger enforcement authorities and mechanisms. Complying with
the enhanced obligations imposed by the GDPR and other current and future laws and regulations relating to data transfer,
residency, privacy and protection may increase the Company’s operating costs and require significant management time and
attention, while any failure by the Company or its subsidiaries to comply with applicable laws could result in governmental
enforcement actions, fines, and other penalties that could potentially have an adverse effect on the Company’s operations and
reputation.
Failure to maintain adequate financial and management processes and controls could lead to errors in the Company’s
financial reporting. Failure to maintain adequate financial and management processes and controls could lead to errors in the
Company’s financial reporting. If the Company’s management is unable to certify the effectiveness of its internal controls or if
its independent registered public accounting firm cannot render an opinion on the effectiveness of its internal control over
financial reporting, or if material weaknesses in the Company’s internal controls are identified, the Company could be subject
to regulatory scrutiny and a loss of public confidence. In addition, if the Company does not maintain adequate financial and
management personnel, processes and controls, it may not be able to accurately report its financial performance on a timely
basis, which could cause its stock price to fall.
The Company’s results of operations and ability to grow could be materially negatively affected if it cannot successfully
keep pace with technological changes in the development and implementation of its services. The Company’s success
depends on its ability to keep pace with rapid technological changes in the development and implementation of its services. The
Company’s business is reliant on a variety of technologies, including those which support hiring and tracking, order
management, billing, and client data analytics. If the Company does not sufficiently invest in new technology and industry
developments, appropriately implement new technologies, or evolve its business at sufficient speed and scale in response to
such developments, or if it does not make the right strategic investments to respond to these developments, the Company’s
services, results of operations, and ability to develop and maintain its business could be negatively affected.
The demand for the Company’s services related to Sarbanes-Oxley or other regulatory compliance may decline. The
operations of both the staffing services business and Protiviti include services related to Sarbanes-Oxley and other regulatory
compliance. There can be no assurance that there will be ongoing demand for these services. For example, the Jumpstart Our
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2017 ANNUAL REPORT | ROBERT HALF Business Startup (“JOBS”) Act signed into law in April of 2012 allows most companies going public in the U.S. to defer
implementation of some of the provisions of Sarbanes-Oxley for up to five years after their initial public offering. Similarly
there are a number of proposals currently being considered by the U.S. Congress to further delay or, in some cases, remove the
requirements of Sarbanes-Oxley for a number of public companies. Further, many analysts are expecting the U.S. Congress and
President Trump to seek to repeal or modify legislation that is viewed as having over-regulated certain sectors of the U.S.
economy and decreased the incentive for U.S. companies to go public and their ability to effectively compete with foreign
competition. These or other similar modifications of the regulatory requirements could decrease demand for Protiviti’s services.
Long-term contracts do not comprise a significant portion of the Company’s revenue. Because long-term contracts are
not a significant part of the Company’s staffing services business, future results cannot be reliably predicted by considering past
trends or extrapolating past results. Additionally, the Company’s clients will frequently enter into non-exclusive arrangements
with several firms, which the client is generally able to terminate on short notice and without penalty. The nature of these
arrangements further exacerbates the difficulty in predicting our future results.
U.S. federal tax regulations and interpretations could adversely affect the Company. On December 22, 2017, the Tax
Cuts and Jobs Act (the “TCJA”) was signed into law. The TCJA resulted in a revaluation of the Company’s estimated deferred
income tax net assets and a resulting one-time non-cash charge to its provision for income taxes in an amount of $34 million, or
$.27 per share, in the fourth quarter of 2017. See Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations and the Company’s Consolidated Financial Statements and the Notes thereto contained in Item 8.
Financial Statements and Supplementary Data. In addition, the TCJA contains significant changes to corporate taxation,
including the reduction of the corporate tax rate from 35% to 21% beginning in 2018, limitation for net operating losses to 80%
of current year taxable income and elimination of net operating loss carrybacks, one time taxation of offshore earnings at
reduced rates regardless of whether they are repatriated, elimination of U.S. tax on foreign earnings (subject to certain
important exceptions), and modifying or repealing many business deductions (including the ability to deduct executive
compensation expenses in excess of $1 million in virtually all instances). Notwithstanding the reduction in the corporate
income tax rate, the overall impact of these changes on the Company’s results of operations is uncertain and will likely evolve
as new regulations and interpretations relating to the TCJA are implemented. In addition, various political figures have pledged
their support to overturning or modifying key aspects of the TCJA which could further increase the uncertainty relating to the
impact of this or any future tax legislation on the Company’s results of operations.
Protiviti may be unable to attract and retain key personnel. Protiviti is a services business, and is dependent upon its
ability to attract and retain qualified, skilled personnel. While Protiviti has retained its key personnel to date, there can be no
assurance that it will continue to be able to do so.
Protiviti operates in a highly competitive business and faces competitors who are significantly larger and have more
established reputations. Protiviti operates in a highly competitive business. As with the Company’s staffing services business,
the barriers to entry are quite low. There are many competitors, some of which have greater resources than Protiviti and many
of which have been in operation far longer than Protiviti. In particular, Protiviti faces competition from the “big four”
accounting firms, which have been in operation for a considerable period of time and have established reputations and client
bases. Because the principal factors upon which competition is based are reputation, technology, tools, project methodologies,
price of services and depth of skills of personnel, there can be no assurance that Protiviti will be successful in attracting and
retaining clients or be able to maintain the technology, personnel and other requirements to successfully compete.
Protiviti’s operations could subject it to liability. The business of Protiviti consists of providing business consulting and
internal audit services. Liability could be incurred or litigation could be instituted against the Company or Protiviti for claims
related to these activities or to prior transactions or activities. There can be no assurance that such liability or litigation will not
have a material adverse impact on Protiviti or the Company.
Item 1B. Unresolved Staff Comments.
Not applicable.
Item 2. Properties
The Company’s headquarters operations are located in Menlo Park and San Ramon, California. As of December 31, 2017,
placement activities were conducted through 323 offices located in the United States, Canada, the United Kingdom, Belgium,
Brazil, France, the Netherlands, Germany, Luxembourg, Switzerland, Japan, China, Singapore, Australia, New Zealand,
Austria, the United Arab Emirates, and Chile. As of December 31, 2017, Protiviti had 56 offices in the United States, Canada,
Australia, China, France, Germany, Italy, the Netherlands, Japan, Singapore, India and the United Kingdom. All of the offices
are leased.
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2017 ANNUAL REPORT | ROBERT HALF Item 3. Legal Proceedings
On March 13, 2014, Plaintiff Leonor Rodriguez, on her own behalf and on behalf of a putative class of allegedly
similarly situated individuals, filed a complaint against the Company in the Superior Court of California, San Diego County.
The complaint alleges that a putative class of current and former employees of the Company working in California since March
13, 2011 were denied compensation for the time they spent interviewing with clients of the Company as well as performing
activities related to the interview process. Rodriguez seeks recovery on her own behalf and on behalf of the putative class in an
unspecified amount for this allegedly unpaid compensation. Rodriguez also seeks recovery of an unspecified amount for the
alleged failure of the Company to provide her and the putative class with accurate wage statements. Rodriguez also seeks an
unspecified amount of other damages, attorneys’ fees, and statutory penalties, including but not limited to statutory penalties on
behalf of herself and other allegedly “aggrieved employees” as defined by California’s Labor Code Private Attorney General
Act (“PAGA”). On October 10, 2014, the Court granted a motion by the Company to compel all of Rodriguez’s claims, except
the PAGA claim, to individual arbitration. At this stage of the litigation, it is not feasible to predict the outcome of or a range of
loss, should a loss occur, from this proceeding and, accordingly, no amounts have been provided in the Company’s Financial
Statements. The Company believes it has meritorious defenses to the allegations and the Company intends to continue to
vigorously defend against the litigation.
On March 23, 2015, Plaintiff Jessica Gentry, on her own behalf and on behalf of a putative class of allegedly similarly
situated individuals, filed a complaint against the Company in the Superior Court of California, San Francisco County, which
was subsequently amended on October 23, 2015. The complaint, which was filed by the same plaintiffs’ law firm that brought
the Rodriguez matter described above, alleges claims similar to those alleged in Rodriguez. Specifically, the complaint alleges
that a putative class of current and former employees of the Company working in California since March 13, 2010 were denied
compensation for the time they spent interviewing “for temporary and permanent employment opportunities” as well as
performing activities related to the interview process. Gentry seeks recovery on her own behalf and on behalf of the putative
class in an unspecified amount for this allegedly unpaid compensation. Gentry also seeks recovery of an unspecified amount for
the alleged failure of the Company to provide her and the putative class with accurate wage statements. Gentry also seeks an
unspecified amount of other damages, attorneys’ fees, and statutory penalties, including penalties for allegedly not paying all
wages due upon separation to former employees and statutory penalties on behalf of herself and other allegedly “aggrieved
employees” as defined by PAGA. On January 4, 2016, the Court denied a motion by the Company to compel all of Gentry’s
claims, except the PAGA claim, to individual arbitration. At this stage of the litigation, it is not feasible to predict the outcome
of or a range of loss, should a loss occur, from this proceeding and, accordingly, no amounts have been provided in the
Company’s Financial Statements. The Company believes it has meritorious defenses to the allegations and the Company
intends to continue to vigorously defend against the litigation.
The Company is involved in a number of other lawsuits arising in the ordinary course of business. While management
does not expect any of these other matters to have a material adverse effect on the Company’s results of operations, financial
position or cash flows, litigation is subject to certain inherent uncertainties.
Item 4. Mine Safety Disclosure
Not applicable.
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2017 ANNUAL REPORT | ROBERT HALF Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
PART II
Securities
Market Price, Dividends and Related Matters
The Company’s Common Stock is listed for trading on the New York Stock Exchange under the symbol “RHI”. On
January 31, 2018, there were 997 holders of record of the Common Stock.
Following is a list by fiscal quarters of the sales prices of the stock:
2017
4th Quarter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3rd Quarter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2nd Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1st Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016
4th Quarter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3rd Quarter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2nd Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1st Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales Prices
High
$ 57.67
$ 50.72
$ 49.03
$ 50.98
Low
$ 48.21
$ 42.92
$ 44.09
$ 45.00
Sales Prices
High
$ 49.63
$ 41.50
$ 47.26
$ 46.75
Low
$ 34.42
$ 35.67
$ 34.34
$ 36.17
Cash dividends of $.24 per share were declared and paid in each quarter of 2017. Cash dividends of $.22 per share were
declared and paid in each quarter of 2016.
Issuer Purchases of Equity Securities
October 1, 2017 to October 31, 2017 . . . . . . . . . . . . . . . . . . .
November 1, 2017 to November 30, 2017 . . . . . . . . . . . . . . .
December 1, 2017 to December 31, 2017 . . . . . . . . . . . . . . .
Total October 1, 2017 to December 31, 2017 . . . . . . . . . . . .
Total
Number of
Shares
Purchased
—
375,591
809,617
1,185,208
Average
Price Paid
per Share
—
53.78
54.57
$
$
(a)
Total
Number of
Shares
Purchased
as Part of
Publicly
Announced
Plans
—
375,591
713,108
1,088,699
Maximum
Number of
Shares that May
Yet Be
Purchased
Under Publicly
Announced
Plans (b)
3,409,578
3,033,987
2,320,879
(a)
Includes 96,509 shares repurchased in connection with employee stock plans, whereby Company shares were tendered
by employees for the payment of applicable withholding taxes and/or exercise price.
(b) Commencing in October 1997, the Company’s Board of Directors has, at various times, authorized the repurchase, from
time to time, of the Company’s common stock on the open market or in privately negotiated transactions depending on
market conditions. Since plan inception, a total of 108,000,000 shares have been authorized for repurchase of which
105,679,121 shares have been repurchased as of December 31, 2017. As disclosed in Note O and Item 9B, on February
13, 2018, an additional 10,000,000 shares have been authorized for repurchase bringing the total repurchase
authorization since plan inception to 118,000,000.
The remainder of the information required by this item is incorporated by reference to Part III, Item 12 of this Form 10-K.
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2017 ANNUAL REPORT | ROBERT HALF
Stock Performance Graph
The following graph compares, through December 31, 2017, the cumulative total return of the Company’s Common
Stock, an index of certain publicly traded employment services companies, and the S&P 500. The graph assumes the investment
of $100 at the beginning of the period depicted in the chart and reinvestment of all dividends. The information presented in the
graph was obtained by the Company from outside sources it considers to be reliable but has not been independently verified by
the Company.
(a)
This index represents the cumulative total return of the Company and the following corporations providing temporary or
permanent employment services: Kelly Services, Inc.; Kforce Inc.; ManpowerGroup; and Resources Connection Inc. CDI
Corp., which was previously included in this graph, was acquired by a private equity investor and ceased to be publicly
traded effective September 13, 2017.
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2017 ANNUAL REPORT | ROBERT HALF Item 6. Selected Financial Data
The selected five-year financial data presented below should be read in conjunction with the information contained in
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and the Company’s
Consolidated Financial Statements and the Notes thereto contained in Item 8. Financial Statements and Supplementary Data.
2017
2016
2015
2014
2013
Years Ended December 31,
(in thousands)
Income Statement Data:
Net service revenues . . . . . . . . . . . . . . . . . $5,266,789
Direct costs of services, consisting of
$5,250,399
$5,094,933
$4,695,014
$4,245,895
payroll, payroll taxes, benefit costs and
reimbursable expenses . . . . . . . . . . . . .
Gross margin. . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative
3,102,977
2,163,812
3,089,723
2,160,676
2,980,462
2,114,471
2,772,098
1,922,916
2,522,803
1,723,092
1,563
1,646,532
expenses . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of intangible assets . . . . . . .
Interest income, net. . . . . . . . . . . . . . . . . .
Income before income taxes . . . . . . . . . . .
Provision for income taxes . . . . . . . . . . . .
226,932
Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 290,584
Net income available to common
stockholders—diluted . . . . . . . . . . . . . . . . $ 290,584
517,516
(1,799)
1,606,217
1,533,799
1,425,734
1,324,815
1,237
(888)
554,110
210,721
192
(550)
581,030
223,234
557
(724)
497,349
191,421
1,700
(1,002)
397,579
145,384
$ 343,389
$ 357,796
$ 305,928
$ 252,195
$ 343,389
$ 357,796
$ 305,928
$ 252,192
Years Ended December 31,
2017
2016
2015
2014
2013
(in thousands, except per share amounts)
Net Income Per Share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted . . . . . . . . . . . . . . . . . . . . . . . . $
2.34
2.33
$
$
2.68
2.67
$
$
2.72
2.69
$
$
2.28
2.26
$
$
1.85
1.83
Shares:
Basic . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . .
Cash Dividends Declared Per Share . . . . . $
124,152
124,892
127,991
128,766
131,749
132,930
134,358
135,541
136,153
137,589
.96
$
.88
$
.80
$
.72
$
.64
2017
2016
2015
2014
2013
(in thousands)
December 31,
Balance Sheet Data:
Total assets . . . . . . . . . . . . . . . . . . . . . . . . $1,867,454
Notes payable and other indebtedness,
less current portion
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
657
Stockholders’ equity . . . . . . . . . . . . . . . . . $1,105,265
$1,777,971
$1,671,044
$1,620,830
$1,479,670
$
840
$
1,007
$
1,159
$
1,300
$1,086,599
$1,003,781
$ 979,858
$ 919,643
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2017 ANNUAL REPORT | ROBERT HALF
Item 7. 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 to or new interpretations
of U.S. or international tax regulations; the global financial and economic situation; changes in levels of unemployment and
other economic conditions in the United States or foreign countries where the Company does business, or in particular regions
or industries; reduction in the supply of candidates for temporary employment or the Company’s ability to attract 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 margins; the possibility of the Company incurring liability for its activities, including the activities of its temporary
employees, or for events impacting its temporary employees on clients’ premises; the possibility that adverse publicity could
impact the Company’s ability to attract and retain clients and candidates; the success of the Company in attracting, training, and
retaining qualified management personnel and other staff employees; the Company’s ability to comply with governmental
regulations affecting personnel services businesses in particular or employer/employee relationships in general; whether there
will be ongoing demand for Sarbanes-Oxley or other regulatory compliance services; the Company’s reliance on short-term
contracts for a significant percentage of its business; litigation relating to prior or current transactions or activities, including
litigation that may be disclosed from time to time in the Company’s Securities and Exchange Commission (“SEC”) filings; the
ability of the Company to manage its international operations and comply with foreign laws and regulations; the impact of
fluctuations in foreign currency exchange rates; the possibility that the additional costs the Company will incur as a result of
health care reform legislation may adversely affect the Company’s profit margins or the demand for the Company’s services;
the possibility that the Company’s computer and communications hardware and software systems could be damaged or their
service interrupted; and the possibility that the Company may fail to maintain adequate financial and management controls and
as a result suffer errors in its financial reporting. Additionally, with respect to Protiviti, other risks and uncertainties include the
fact that future success will depend on its ability to retain employees and attract clients; there can be no assurance that there will
be ongoing demand for Sarbanes-Oxley or other regulatory compliance services; failure to produce projected revenues could
adversely affect financial results; and there is the possibility of involvement in litigation relating to prior or current transactions
or activities. 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. Further information regarding these and other risks and
uncertainties is contained in Item 1A. “Risk Factors.”
Executive Overview
Demand for the Company’s temporary and consultant staffing, permanent placement staffing and risk consulting and
internal audit services is largely dependent upon general economic and labor trends both domestically and abroad.
Correspondingly, financial results for the year ended December 31, 2017, were positively impacted by improving global
economic conditions as the year progressed. Annual net service revenues reached $5.27 billion in 2017, a slight increase from
the prior year. Full-year 2017 net income decreased 15% to $291 million and diluted net income per share decreased 13% to
$2.33. Included in 2017 net income was a one-time, non-cash charge to the Company's provision for income taxes of $34
million, or $.27 per share, resulting from the recently enacted TCJA. For 2017, revenue growth for temporary and consultant
staffing was essentially flat compared to last year while permanent placement staffing and risk consulting and internal audit
services increased 5% and 2%, respectively.
We believe that the Company is well positioned in the current macroeconomic environment. The United States economic
backdrop during 2017 was stable for the Company as real gross domestic product (“GDP”) grew 2.3%, while the
unemployment rate declined from 4.7% in December 2016 to 4.1% in December 2017. In the United States, the number of job
openings has exceeded the number of hires since February 2015, creating competition for skilled talent that increases the
Company’s value to clients. The U.S. labor market continues to tighten, resulting in talent shortages in some occupations and
higher demand for our services. The secular demand for temporary staffing is also ongoing. The number of temporary workers
as a percentage of the overall U.S. workforce remains near an all-time high, a sign employers are building flexible staffing
options into their human resource plans with increasing frequency.
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2017 ANNUAL REPORT | ROBERT HALF Protiviti continues to see solid growth in its risk and compliance and internal audit and financial advisory practice areas.
Protiviti also is expanding its solutions in areas such as data and analytics, and cybersecurity.
We monitor various economic indicators and business trends in all of the countries in which we operate to anticipate
demand for the Company’s services. We evaluate these trends to determine the appropriate level of investment, including
personnel, which will best position the Company for success in the current and future global macroeconomic environment. The
Company’s investments in headcount are typically structured to proactively support and align with expected revenue growth
trends. As such, during 2017, we added headcount in our temporary and consultant and permanent placement staffing services,
while risk consulting and internal audit headcount remained essentially flat.
We have limited visibility into future revenues not only due to the dependence on macroeconomic conditions noted above,
but also because of the relatively short duration of the Company’s client engagements. Accordingly, we typically assess
headcount and other investments on at least a quarterly basis. That said, based on current trends and conditions, we expect
headcount levels for our full-time staff to be modestly higher for each of our reporting segments throughout the first quarter of
2018.
Capital expenditures in 2017 totaled $41 million, approximately 46% of which represented investments in software
initiatives and technology infrastructure, both of which are important to the Company’s future growth opportunities. While
upgrades to enterprise resource planning and project management applications were completed in 2017, we continue to invest
in digital technology initiatives designed to enhance our service offerings to both clients and candidates. Capital expenditures
also included amounts spent on tenant improvements and furniture and equipment in the Company’s leased offices. We
currently expect that 2018 capital expenditures will range from $45 million to $55 million.
Critical Accounting Policies and Estimates
As described below, the Company’s most critical accounting policies and estimates are those that involve subjective
decisions or assessments.
Accounts Receivable Allowances. The Company maintains allowances for estimated losses resulting from (i) the
inability of its customers to make required payments, (ii) temporary placement sales adjustments, and (iii) permanent placement
candidates not remaining with the client through the 90-day guarantee period, commonly referred to as “fall offs”. The
Company establishes these allowances based on its review of customers’ credit profiles, historical loss statistics and current
trends. The adequacy of these allowances is reviewed each reporting period. Historically, the Company’s actual losses and
credits have been consistent with these allowances. As a percentage of gross accounts receivable, the Company’s accounts
receivable allowances totaled 4.3% and 4.5% as of December 31, 2017 and 2016, respectively. As of December 31, 2017, a
five-percentage point deviation in the Company’s accounts receivable allowances balance would have resulted in an increase or
decrease in the allowance of $1.7 million. Although future results cannot always be predicted by extrapolating past results,
management believes that it is reasonably likely that future results will be consistent with historical trends and experience.
However, if the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability
to make payments, or if unexpected events or significant future changes in trends were to occur, additional allowances may be
required.
Income Tax Assets and Liabilities. In establishing its deferred income tax assets and liabilities, the Company makes
judgments and interpretations based on the enacted tax laws and published tax guidance that are applicable to its operations.
Deferred tax assets and liabilities are measured and recorded using current enacted tax rates, which the Company expects will
apply to taxable income in the years in which those temporary differences are recovered or settled. The likelihood of a material
change in the Company’s expected realization of these assets is dependent on future taxable income, its ability to use foreign
tax credit carryforwards and carrybacks, final U.S. and foreign tax settlements, and the effectiveness of its tax planning in the
various relevant jurisdictions.
On December 22, 2017, the President signed TCJA into law. Effective January 1, 2018, among other changes, TCJA
reduces the federal corporate tax rate to 21 percent, provides for a deemed repatriation and taxation at reduced rates of certain
foreign earnings (a “transition tax”), and establishes new mechanisms to tax certain foreign earnings going forward. Similar to
other large multinational companies, TCJA has wide ranging implications for the Company. The Company has recorded
provisional amounts and a reasonable estimate of TCJA’s impact on its financial statements. As guidance regarding
implementation of various provisions of TCJA is released by the U.S. Government over the course of 2018, the Company’s
estimates may need to be adjusted accordingly.
In December 2017, the SEC issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax
Cuts and Jobs Act (“SAB 118”), which allows the Company to record provisional amounts during a measurement period not to
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2017 ANNUAL REPORT | ROBERT HALF extend beyond one year of the enactment date. Since TCJA was passed late in the fourth quarter of 2017, and ongoing guidance
and accounting interpretations are expected over the next 12 months, the Company considers the accounting of the transition
tax, deferred tax remeasurements, and other items to be incomplete due to the forthcoming guidance and ongoing analysis of its
final tax positions for the year ended December 31, 2017. The Company expects to complete its analysis within the
measurement period in accordance with SAB 118.
The Company also evaluates the need for valuation allowances to reduce the deferred tax assets to realizable amounts.
Management evaluates all positive and negative evidence and uses judgment regarding past and future events, including
operating results, to help determine when it is more likely than not that all or some portion of the deferred tax assets may not be
realized. When appropriate, a valuation allowance is recorded against deferred tax assets to offset future tax benefits that may
not be realized. Valuation allowances of $20.2 million and $18.9 million were recorded as of December 31, 2017 and 2016,
respectively. The valuation allowances recorded relate primarily to net operating losses in certain foreign operations. If such
losses are ultimately utilized to offset future operating income, the Company will recognize a tax benefit up to the full amount
of the related valuation reserve.
While management believes that its judgments and interpretations regarding income taxes are appropriate, significant
differences in actual experience may materially affect the future financial results of the Company.
Goodwill Impairment. The Company assesses the impairment of goodwill annually in the second quarter, or more often
if events or changes in circumstances indicate that the carrying value may not be recoverable in accordance with Financial
Accounting Standards Board (“FASB”) authoritative guidance. The Company completed its annual goodwill impairment
analysis as of June 30, 2017, and determined that no adjustment to the carrying value of goodwill was required. There were no
events or changes in circumstances since the annual goodwill impairment assessment that caused the Company to perform an
interim impairment assessment.
The Company follows FASB authoritative guidance utilizing a two-step approach for determining goodwill impairment.
In the first step the Company determines the fair value of each reporting unit utilizing a present value technique derived from a
discounted cash flow methodology. For purposes of this assessment the Company’s reporting units are its lines of business. The
fair value of the reporting unit is then compared to its carrying value. If the fair value of the reporting unit exceeds the carrying
value of the net assets assigned to that unit, goodwill is not impaired and no further testing is performed. The second step under
the FASB guidance is contingent upon the results of the first step. To the extent a reporting unit’s carrying value exceeds its fair
value, an indication exists that the reporting unit’s goodwill may be impaired and the Company must perform a second more
detailed impairment assessment. The second step involves allocating the reporting unit’s fair value to its net assets in order to
determine the implied fair value of the reporting unit’s goodwill as of the assessment date. The implied fair value of the
reporting unit’s goodwill is then compared to the carrying amount of goodwill to quantify an impairment charge as of the
assessment date.
The Company’s reporting units are Accountemps, Robert Half Finance & Accounting, OfficeTeam, Robert Half
Technology, Robert Half Management Resources and Protiviti, which had goodwill balances at December 31, 2017, of
$127.5 million, $26.2 million, $0.0 million, $7.0 million, $0.0 million and $50.2 million, respectively, totaling $210.9 million.
There were no changes to the Company’s reporting units or to the allocations of goodwill by reporting unit for the year ended
December 31, 2017.
The goodwill impairment assessment is based upon a discounted cash flow analysis. The estimate of future cash flows is
based upon, among other things, a discount rate and certain assumptions about expected future operating performance. The
discount rate for all reporting units was determined by management based on estimates of risk free interest rates, beta and
market risk premiums. The discount rate used was compared to the rate published in various third party research reports, which
indicated that the rate was within a range of reasonableness. The primary assumptions related to future operating performance
include revenue growth rates and profitability levels. In addition, the impairment assessment requires that management make
certain judgments in allocating shared assets and liabilities to the balance sheets of the reporting units. Solely for purposes of
establishing inputs for the fair value calculations described above related to its annual goodwill impairment testing, the
Company made the following assumptions. The Company assumed that year-to-date trends through the date of the most recent
assessment would continue for all reporting units through 2017, using unique assumptions for each reporting unit. In addition,
the Company applied profitability assumptions consistent with each reporting unit’s historical trends at various revenue levels
and, for years 2019 and beyond, used a 3.5% growth factor. This rate is comparable to the Company’s most recent ten-year
annual compound revenue growth rate. The model used to calculate fair value extends a total of 10 years with a terminal value
calculation at the end of the 10 year period. In its most recent calculation, the Company used a 10.3% discount rate, which is
slightly higher than the 9.8% discount rate used for the Company’s test during the second quarter of 2016. This increase in
discount rate is attributable to increases in the risk free rate and the equity market risk premium, offset by a slight decrease in
beta.
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2017 ANNUAL REPORT | ROBERT HALF In order to evaluate the sensitivity of the fair value calculations on the goodwill impairment test, the Company applied
hypothetical decreases to the fair values of each reporting unit. The Company determined that hypothetical decreases in fair
value of at least 62% would be required before any reporting unit would have a carrying value in excess of its fair value.
Given the current economic environment and the uncertainties regarding the impact on the Company’s business, there can
be no assurance that the Company’s estimates and assumptions made for purposes of the Company’s goodwill impairment
testing will prove to be accurate predictions of the future. If the Company’s assumptions regarding forecasted revenue or
profitability growth rates of certain reporting units are not achieved, the Company may be required to recognize goodwill
impairment charges in future periods. It is not possible at this time to determine if any such future impairment charge would
result or, if it does, whether such charge would be material.
Workers’ Compensation. Except for states which require participation in state-operated insurance funds, the Company
retains the economic burden for the first $0.5 million per occurrence in workers’ compensation claims. Workers’ compensation
includes ongoing healthcare and indemnity coverage for claims and may be paid over numerous years following the date of
injury. Claims in excess of $0.5 million are insured. Workers’ compensation expense includes the insurance premiums for
claims in excess of $0.5 million, claims administration fees charged by the Company’s workers’ compensation administrator,
premiums paid to state-operated insurance funds, and an estimate for the Company’s liability for Incurred But Not Reported
(“IBNR”) claims and for the ongoing development of existing claims. Total workers’ compensation expense was $6.2 million,
$0.9 million and $4.6 million, representing 0.15%, 0.02% and 0.11% of applicable U.S. revenue for the years ended
December 31, 2017, 2016 and 2015, respectively.
The reserves for IBNR claims and for the ongoing development of existing claims in each reporting period include
estimates. The Company has established reserves for workers’ compensation claims using loss development rates which are
estimated using periodic third party actuarial valuations based upon historical loss statistics which include the Company’s
historical frequency and severity of workers’ compensation claims, and an estimate of future cost trends. While management
believes that its assumptions and estimates are appropriate, significant differences in actual experience or significant changes in
assumptions may materially affect the Company’s future results. Based on the Company’s results for the year ended
December 31, 2017, a five-percentage point deviation in the Company’s estimated loss development rates would have resulted
in an increase or decrease in the reserve of $0.2 million.
Stock-based Compensation. Under various stock plans, officers, employees and outside directors have received or may
receive grants of restricted stock, stock units, stock appreciation rights or options to purchase common stock.
The Company recognizes compensation expense equal to the grant-date fair value for all stock-based payment awards
that are expected to vest. This expense is recorded on a straight-line basis over the requisite service period of the entire award,
unless the awards are subject to performance conditions, in which case the Company recognizes compensation expense over the
requisite service period of each separate vesting tranche. The Company determines the grant-date fair value of its restricted
stock and stock unit awards using the fair market value of its stock on the grant date, unless the awards are subject to market
conditions, in which case the Company utilizes a binomial-lattice model (i.e., Monte Carlo simulation model). The Monte Carlo
simulation model utilizes multiple input variables to determine the stock-based compensation expense.
No stock appreciation rights have been granted under the Company’s existing stock plans. The Company has not granted
any options to purchase common stock since 2006.
For the years ended December 31, 2017, 2016 and 2015, compensation expense related to restricted stock and stock units
was $42.2 million, $42.7 million and $41.3 million, respectively, of which $11.4 million, $11.0 million and $11.1 million was
related to grants made in 2017, 2016 and 2015, respectively. Based on the Company’s results for the year ended December 31,
2017, a one-percentage point deviation in the estimated forfeiture rates would have resulted in a $0.4 million increase or
decrease in compensation expense related to restricted stock and stock units.
Recent Accounting Pronouncements
See Note B—“New Accounting Pronouncements” to the Company’s Consolidated Financial Statements included under
Part II—Item 8 of this report.
Results of Operations
Demand for the Company’s temporary and consultant staffing, permanent placement staffing and risk consulting and
internal audit services is largely dependent upon general economic and labor market conditions both domestically and abroad.
Correspondingly, results of operations for the year ended December 31, 2017, were positively impacted by improving global
economic conditions as the year progressed. Because of the inherent difficulty in predicting economic trends and the absence of
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2017 ANNUAL REPORT | ROBERT HALF material long-term contracts in any of the Company’s business units, future demand for the Company’s services cannot be
forecasted with certainty. We believe the Company is well positioned in the current United States macroeconomic environment.
The Company’s temporary and permanent staffing business has 323 offices in 42 states, the District of Columbia and
17 foreign countries, while Protiviti has 56 offices in 23 states and 11 foreign countries.
Non-GAAP Financial Measures
The financial results of the Company are prepared in conformity with accounting principles generally accepted in the
United States of America (“GAAP”) and the rules of the SEC. To help readers understand the Company’s financial
performance, the Company supplements its GAAP financial results with revenue growth rates derived from non-GAAP revenue
amounts.
Variations in the Company’s financial results include the impact of changes in foreign currency exchange rates and billing
days. The Company provides “same billing days and constant currency” revenue growth calculations to remove the impact of
these items. These calculations show the year-over-year revenue growth rates for the Company’s reportable segments on both a
reported basis and also on a same day, constant-currency basis for global, U.S. and international operations. The Company has
provided this data because management believes it better reflects the Company’s actual revenue growth rates and aids in
evaluating revenue trends over time. The Company expresses year-over-year revenue changes as calculated percentages using
the same number of billing days and constant currency exchange rates.
In order to calculate constant currency revenue growth rates, as reported amounts are retranslated using foreign currency
exchange rates from the prior year’s comparable period. Management then calculates a global, weighted-average number of
billing days for each reporting period based upon input from all countries and all lines of business. In order to remove the
fluctuations caused by comparable periods having different billing days, the Company calculates same billing day revenue
growth rates by dividing each comparative period’s reported revenues by the calculated number of billing days for that period,
to arrive at a per billing day amount. Same billing day growth rates are then calculated based upon the per billing day amounts.
The term “same billing days and constant currency” means that the impact of different billing days has been removed from the
constant currency calculation.
The non-GAAP financial measures provided herein may not provide information that is directly comparable to that
provided by other companies in the Company’s industry, as other companies may calculate such financial results differently.
The Company’s non-GAAP financial measures are not measurements of financial performance under GAAP, and should not be
considered as alternatives to actual revenue growth derived from revenue amounts presented in accordance with GAAP. The
Company does not consider these non-GAAP financial measures to be a substitute for, or superior to, the information provided
by GAAP financial results. A reconciliation of the same-day, constant-currency revenue growth rates to the reported revenue
growth rates is provided herein.
Refer to Item 7a. “Quantitative and Qualitative Disclosures About Market Risk” for further discussion of the impact of
foreign currency exchange rates on the Company’s results of operations and financial condition.
Years ended December 31, 2017 and 2016
Revenues. The Company’s revenues were $5.27 billion for the year ended December 31, 2017, increasing by 0.3%
compared to $5.25 billion for the year ended December 31, 2016. Revenues from foreign operations represented 22% and 20%
of total revenues for the years ended December 31, 2017 and 2016, respectively. The Company analyzes its revenues for three
reportable segments: temporary and consultant staffing, permanent placement staffing and risk consulting and internal audit
services. In 2017, revenues for permanent placement staffing and risk consulting and internal audit services were up and
revenues for temporary and consultant staffing were down slightly compared to 2016. Revenue growth was strongest
internationally, most notably within Europe. Contributing factors for each reportable segment are discussed below in further
detail.
Temporary and consultant staffing revenues were $4.01 billion for the year ended December 31, 2017, remained
essentially flat compared to revenues of $4.03 billion for the year ended December 31, 2016. Key drivers of temporary and
consultant staffing revenues include average hourly bill rates and the number of hours worked by the Company’s temporary
employees on client engagements. On a same-day, constant-currency basis, temporary and consultant staffing revenues
decreased 0.3% for 2017, compared to 2016, due primarily to fewer hours worked by the Company’s temporary employees,
partially offset by a 2.7% increase in average bill rates. In the U.S., 2017 revenues decreased 3.1% on an as reported basis and
2.8% on a same-day basis, compared to 2016. For the Company’s international operations, 2017 revenues increased 11.0% on
an as reported basis and 10.1% on a same-day, constant-currency basis, compared to 2016.
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2017 ANNUAL REPORT | ROBERT HALF Permanent placement staffing revenues were $439 million for the year ended December 31, 2017, increasing by 4.7%
compared to revenues of $419 million for the year ended December 31, 2016. Key drivers of permanent placement staffing
revenues consist of the number of candidate placements and average fees earned per placement. On a same-day, constant-
currency basis, permanent placement staffing revenues increased 4.9% for 2017 compared to 2016 due to increases in both the
number of placements and average fees per placement. In the U.S., 2017 revenues increased 0.9% on an as reported basis and
1.3% on a same-day basis, compared to 2016. For the Company’s international operations, 2017 revenues increased 14.1% on
an as reported basis, and on a same-day, constant-currency basis increased 13.5%, compared to 2016. Historically, demand for
permanent placement services is even more sensitive to economic and labor market conditions than demand for temporary and
consulting staffing and this is expected to continue.
Risk consulting and internal audit services revenues were $817 million for the year ended December 31, 2017, increasing
by 1.5% compared to revenues of $804 million for the year ended December 31, 2016. Key drivers of risk consulting and
internal audit services revenues are the billable hours worked by consultants on client engagements and average hourly bill
rates. On a same-day, constant-currency basis, risk consulting and internal audit services revenues increased 1.9% for 2017
compared to 2016, driven primarily by increases in billable hours and billing rates. In the U.S., 2017 revenues remained
essentially flat on an as reported basis, and increased 0.3% on a same-day basis, compared to 2016. For the Company’s
international operations, 2017 revenues increased 9.5% on an as reported basis, or 10.2% on a same-day, constant-currency
basis, compared to 2016.
A reconciliation of the non-GAAP year-over-year revenue growth rates to the as reported year-over-year revenue growth
rates for the year ended December 31, 2017, is presented in the following table:
Global
United States
International
Temporary and consultant staffing
As Reported. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Billing Days Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Currency Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Same Billing Days and Constant Currency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Permanent placement staffing
As Reported. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Billing Days Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Currency Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Same Billing Days and Constant Currency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk consulting and internal audit services
As Reported. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Billing Days Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Currency Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Same Billing Days and Constant Currency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-0.4 %
0.4 %
-0.3 %
-0.3 %
4.7 %
0.5 %
-0.3 %
4.9 %
1.5 %
0.4 %
0.0 %
1.9 %
-3.1%
0.3%
—
-2.8%
0.9%
0.4%
—
1.3%
0.0%
0.3%
—
0.3%
11.0%
0.5%
-1.4%
10.1%
14.1%
0.4%
-1.0%
13.5%
9.5%
0.4%
0.3%
10.2%
Gross Margin. The Company’s gross margin dollars were $2.16 billion for both the years ended December 31, 2017 and
2016. Contributing factors for each reportable segment are discussed below in further detail.
Gross margin dollars for temporary and consultant staffing represent revenues less direct costs of services, which consist
of payroll, payroll taxes and benefit costs for temporary employees, and reimbursable expenses. The key drivers of gross
margin are: i) pay/bill spreads, which represent the differential between wages paid to temporary employees and amounts billed
to clients; ii) fringe costs, which are primarily composed of payroll taxes and benefit costs for temporary and consultant staffing
employees; and iii) conversion revenues, which are earned when a temporary position converts to a permanent position with the
Company’s client. Gross margin dollars for the Company’s temporary and consultant staffing division were $1.49 billion for the
year ended December 31, 2017, down 1.1% from $1.51 billion for the year ended December 31, 2016. As a percentage of
revenues, gross margin dollars for temporary and consultant staffing were 37.2% in 2017, down from 37.5% in 2016. This year-
over-year decline in gross margin percentage is primarily attributable to higher workers’ compensation costs and other fringe
benefit costs. The Company’s 2017 results include $0.9 million in workers’ compensation credits, pursuant to third-party
actuarial reviews of the Company’s workers’ compensation accruals. This compares to a credit of $5.8 million in the year-ago
period.
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2017 ANNUAL REPORT | ROBERT HALF
Gross margin dollars for permanent placement staffing represent revenues less reimbursable expenses. Gross margin
dollars for the Company’s permanent placement staffing division were $438 million for the year ended December 31, 2017, up
4.7% from $419 million for the year ended December 31, 2016. Because reimbursable expenses for permanent placement
staffing services are de minimis, the increase in gross margin dollars is substantially explained by the increase in revenues
previously discussed.
Gross margin dollars for risk consulting and internal audit services represent revenues less direct costs of services, which
consist primarily of professional staff payroll, payroll taxes, benefit costs and reimbursable expenses. The primary drivers of
risk consulting and internal audit services gross margin are: i) the relative composition of and number of professional staff and
their respective pay and bill rates; and ii) staff utilization, which is the relationship of time spent on client engagements in
proportion to the total time available for the Company’s risk consulting and internal audit services staff. Gross margin dollars
for the Company’s risk consulting and internal audit division were $232 million for the year ended December 31, 2017, up
0.2% from $231 million for the year ended December 31, 2016. As a percentage of revenues, gross margin dollars for risk
consulting and internal audit services were 28.4% in 2017, down from 28.7% in 2016. The decline in 2017 gross margin
percentage compared to 2016 was primarily due to slightly lower staff utilization rates.
Selling, General and Administrative Expenses. The Company’s selling, general and administrative expenses consist
primarily of staff compensation, advertising, depreciation and occupancy costs. The Company’s selling, general and
administrative expenses were $1.65 billion for the year ended December 31, 2017, up 2.5% from $1.61 billion for the year
ended December 31, 2016. As a percentage of revenues, the Company’s selling, general and administrative expenses were
31.3% for 2017, up from 30.6% for 2016. Contributing factors for each reportable segment are discussed below in further
detail.
Selling, general and administrative expenses for the Company’s temporary and consultant staffing division were $1.14
billion for the year ended December 31, 2017, up 1.9% from $1.12 billion for the year ended December 31, 2016. As a
percentage of revenues, selling, general and administrative expenses for temporary and consultant staffing were 28.4% in 2017,
up from 27.7% in 2016. For 2017 compared to 2016, the increase in selling, general and administrative expenses as a
percentage of revenue is primarily due to increases in staff compensation costs and costs expensed related to digital technology
initiatives.
Selling, general and administrative expenses for the Company’s permanent placement staffing division were $361 million
for the year ended December 31, 2017, up 6.5% from $339 million for the year ended December 31, 2016. As a percentage of
revenues, selling, general and administrative expenses for permanent placement staffing services were 82.1% in 2017, up from
80.7% in 2016. For 2017 compared to 2016, the increase in selling, general and administrative expenses as a percentage of
revenue is primarily due to increases in staff compensation costs and costs expensed related to digital technology initiatives.
Selling, general and administrative expenses for the Company’s risk consulting and internal audit services division were
$148 million for the year ended December 31, 2017, down 1.7% from $150 million for the year ended December 31, 2016. As a
percentage of revenues, selling, general and administrative expenses for risk consulting and internal audit services were 18.1%
in 2017, down from 18.7% in 2016. For 2017 compared to 2016, the decrease in selling, general and administrative expenses as
a percentage of revenue is primarily due to decreases in fixed overhead costs.
Operating Income. The Company’s total operating income was $517 million, or 9.8% of revenues, for the year ended
December 31, 2017, down 6.7% from $555 million, or 10.6% of revenues, for the year ended December 31, 2016. For the
Company’s temporary and consultant staffing division, operating income was $356 million, or 8.9% of applicable revenues,
down 9.7% from $394 million, or 9.8% of applicable revenues, in 2016. For the Company’s permanent placement staffing
division, operating income was $77 million, or 17.7% of applicable revenues, down 2.9% from operating income of $80
million, or 19.1% of applicable revenues, in 2016. For the Company’s risk consulting and internal audit services division,
operating income was $84 million, or 10.3% of applicable revenues, up 3.9% from operating income of $81 million, or 10% of
applicable revenues, in 2016.
Provision for income taxes. The provision for income taxes was 43.9% and 38.0% for the years ended December 31,
2017 and 2016, respectively. The increase is primarily due to the $34 million one-time, non-cash charge resulting from the
recently enacted TCJA.
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2017 ANNUAL REPORT | ROBERT HALF Years ended December 31, 2016 and 2015
Revenues. The Company’s revenues were $5.25 billion for the year ended December 31, 2016, increasing by 3.1%
compared to $5.09 billion for the year ended December 31, 2015. Revenues from foreign operations represented 20% and 19%
of total revenues for the years ended December 31, 2016 and 2015, respectively. The Company analyzes its revenues for three
reportable segments: temporary and consultant staffing, permanent placement staffing and risk consulting and internal audit
services. In 2016, revenues for temporary and consultant staffing and risk consulting and internal audit services were up and
revenue for permanent placement staffing was down compared to 2015. Revenue growth was strongest internationally, most
notably within Europe. Risk consulting and internal audit services continued to post strong growth rates. Contributing factors
for each reportable segment are discussed below in further detail.
Temporary and consultant staffing revenues were $4.03 billion for the year ended December 31, 2016, increasing by 2.4%
compared to revenues of $3.93 billion for the year ended December 31, 2015. Key drivers of temporary and consultant staffing
revenues include average hourly bill rates and the number of hours worked by the Company’s temporary employees on client
engagements. On a same-day, constant-currency basis, temporary and consultant staffing revenues increased 2.8% for 2016,
compared to 2015, due primarily to a 4.2% increase in average bill rates, partially offset by fewer hours worked by the
Company's temporary employees. In the U.S., 2016 revenues increased 2.0% on an as reported basis and 1.9% on a same-day
basis, compared to 2015. For the Company’s international operations, 2016 revenues increased 4.2% on an as reported basis
and 6.9% on a same-day, constant-currency basis, compared to 2015.
Permanent placement staffing revenues were $419 million for the year ended December 31, 2016, decreasing by 0.5%
compared to revenues of $421 million for the year ended December 31, 2015. Key drivers of permanent placement staffing
revenues consist of the number of candidate placements and average fees earned per placement. On a same-day, constant-
currency basis, permanent placement revenues increased 0.3% for 2016 compared to 2015. The decrease in as reported revenue
was driven primarily by a decrease in number of placements, partially offset by an increase in average fees earned per
placement. In the U.S., 2016 revenues increased 0.3% on an as reported basis and 0.1% on a same-day basis, compared to 2015.
For the Company’s international operations, 2016 revenues decreased 2.3% on an as reported basis, and on a same-day,
constant-currency basis increased 0.6%, compared to 2015. Historically, demand for permanent placement services is even
more sensitive to economic and labor market conditions than demand for temporary and consulting staffing and this is expected
to continue.
Risk consulting and internal audit services revenues were $804 million for the year ended December 31, 2016, increasing
by 8.3% compared to revenues of $743 million for the year ended December 31, 2015. Key drivers of risk consulting and
internal audit services revenues are the billable hours worked by consultants on client engagements and average hourly bill
rates. On a same-day, constant-currency basis, risk consulting and internal audit services revenues increased 8.5% for 2016
compared to 2015, due primarily to an increase in number of hours worked, partially offset by a decrease in average hourly bill
rates. In the U.S., 2016 revenues increased 8.0% on an as reported basis, or 7.9% on a same-day basis, compared to 2015. For
the Company’s international operations, 2016 revenues increased 9.6% on an as reported basis and 11.7% on a same-day,
constant-currency basis, compared to 2015.
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2017 ANNUAL REPORT | ROBERT HALF A reconciliation of the non-GAAP year-over-year revenue growth rates to the as reported year-over-year revenue growth
rates for the year ended December 31, 2016, is presented in the following table:
Global
United States
International
Temporary and consultant staffing
As Reported. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Billing Days Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Currency Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Same Billing Days and Constant Currency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Permanent placement staffing
As Reported. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Billing Days Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Currency Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Same Billing Days and Constant Currency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk consulting and internal audit services
As Reported. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Billing Days Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Currency Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Same Billing Days and Constant Currency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.4%
-0.1%
0.5%
2.8%
-0.5%
-0.1%
0.9%
0.3%
8.3%
-0.2%
0.4%
8.5%
2.0%
-0.1%
—
1.9%
0.3%
-0.2%
—
0.1%
8.0%
-0.1%
—
7.9%
4.2%
-0.1%
2.8%
6.9%
-2.3%
-0.1%
3.0%
0.6%
9.6%
-0.2%
2.3%
11.7%
Gross Margin. The Company’s gross margin dollars were $2.16 billion for the year ended December 31, 2016, up 2.2%
from $2.11 billion for the year ended December 31, 2015. Contributing factors for each reportable segment are discussed below
in further detail.
Gross margin dollars from the Company’s temporary and consultant staffing division represent revenues less direct costs
of services, which consist of payroll, payroll taxes and benefit costs for temporary employees, and reimbursable expenses. The
key drivers of gross margin are: i) pay/bill spreads, which represent the differential between wages paid to temporary
employees and amounts billed to clients; ii) fringe costs, which are primarily composed of payroll taxes and benefit costs for
temporary and consultant staffing employees; and iii) conversion revenues, which are earned when a temporary position
converts to a permanent position with the Company’s client. Gross margin dollars for the Company’s temporary and consultant
staffing division were $1.51 billion for the year ended December 31, 2016, up 3.2% from $1.46 billion for the year ended
December 31, 2015. As a percentage of revenues, gross margin dollars for temporary and consultant staffing were 37.5% in
2016, up from 37.2% in 2015. This year-over-year improvement in gross margin percentage of 0.3% was primarily attributable
to higher pay/bill spreads and lower payroll taxes and workers’ compensation costs, partially offset by lower conversion
revenues as a percentage of applicable revenue in 2016 compared to 2015.
Gross margin dollars from permanent placement staffing represent revenues less reimbursable expenses. Gross margin
dollars for the Company’s permanent placement staffing division were $419 million for the year ended December 31, 2016,
down 0.5% from $421 million for the year ended December 31, 2015. Because reimbursable expenses for permanent placement
staffing services are de minimis, the decrease in gross margin dollars is substantially explained by the decrease in revenues
previously discussed.
Gross margin dollars for risk consulting and internal audit services represent revenues less direct costs of services, which
consist primarily of professional staff payroll, payroll taxes, benefit costs and reimbursable expenses. The primary drivers of
risk consulting and internal audit services gross margin are: i) the relative composition of and number of professional staff and
their respective pay and bill rates; and ii) staff utilization, which is the relationship of time spent on client engagements in
proportion to the total time available for the Company’s risk consulting and internal audit services staff. Gross margin dollars
for the Company’s risk consulting and internal audit division were $231 million for the year ended December 31, 2016, up
0.4% from $230 million for the year ended December 31, 2015. As a percentage of revenues, gross margin dollars for risk
consulting and internal audit services were 28.7% in 2016, down from 31.0% in 2015. The decline in 2016 gross margin
percentage compared to 2015 was due to lower staff utilization rates and the mix impact of lower financial services and
regulatory compliance revenues, which is typically a higher margin business for the Company.
Selling, General and Administrative Expenses. The Company’s selling, general and administrative expenses consist
primarily of staff compensation, advertising, depreciation and occupancy costs. The Company’s selling, general and
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2017 ANNUAL REPORT | ROBERT HALF
administrative expenses were $1.61 billion for the year ended December 31, 2016, up 4.7% from $1.53 billion for the year
ended December 31, 2015. As a percentage of revenues, the Company’s selling, general and administrative expenses were
30.6% for 2016, up from 30.1% for 2015. Contributing factors for each reportable segment are discussed below in further
detail.
Selling, general and administrative expenses for the Company’s temporary and consultant staffing division were $1.12
billion for the year ended December 31, 2016, up 5.0% from $1.06 billion for the year ended December 31, 2015. As a
percentage of revenues, selling, general and administrative expenses for temporary and consultant staffing were 27.7% in 2016,
up from 27.1% in 2015. For 2016 compared to 2015, the increase in selling, general and administrative expenses as a
percentage of revenue is primarily due to increases in staff compensation costs, inclusive of employee medical costs, and
variable overhead, including costs related to the Company’s new CRM and project management systems.
Selling, general and administrative expenses for the Company’s permanent placement staffing division were $339 million
for the year ended December 31, 2016, up 0.8% from $336 million for the year ended December 31, 2015. As a percentage of
revenues, selling, general and administrative expenses for permanent placement staffing services were 80.7% in 2016, up from
79.7% in 2015. For 2016 compared to 2015, the increase in selling, general and administrative expenses as a percentage of
revenue is primarily due to increases in staff compensation costs, inclusive of employee medical costs.
Selling, general and administrative expenses for the Company’s risk consulting and internal audit services division were
$150 million for the year ended December 31, 2016, up 11.9% from $134 million for the year ended December 31, 2015. As a
percentage of revenues, selling, general and administrative expenses for risk consulting and internal audit services were 18.7%
in 2016, up from 18.1% in 2015. For 2016 compared to 2015, the increase in selling, general and administrative expenses as a
percentage of revenue is primarily due to an increase in administrative compensation and fixed overhead.
Operating Income. The Company’s total operating income was $555 million, or 10.6% of revenues, for the year ended
December 31, 2016, down 4.5% from $581 million, or 11.4% of revenues, for the year ended December 31, 2015. For the
Company’s temporary and consultant staffing division, operating income was $394 million, or 9.8% of applicable revenues,
down 1.5% from $400 million, or 10.2% of applicable revenues, in 2015. For the Company’s permanent placement staffing
division, operating income was $80 million, or 19.1% of applicable revenues, down 5.9% from operating income of $85
million, or 20.2% of applicable revenues, in 2015. For the Company’s risk consulting and internal audit services division,
operating income was $81 million, or 10.0% of applicable revenues, down 15.7% from operating income of $96 million, or
12.9% of applicable revenues, in 2015.
Provision for income taxes. The provision for income taxes was 38.0% and 38.4% for the years ended December 31,
2016 and 2015, respectively. The decrease is primarily due to an increase of federal and state credits in the U.S, and benefit of
foreign losses.
Liquidity and Capital Resources
The change in the Company’s liquidity during the years ended December 31, 2017, 2016 and 2015, is primarily the net
effect of funds generated by operations and the funds used for capital expenditures, repurchases of common stock, payment of
dividends, and payments to trusts for employee deferred compensation plans.
Cash and cash equivalents were $295 million, $260 million, and $225 million at December 31, 2017, 2016 and 2015,
respectively. Operating activities provided $453 million during the year ended December 31, 2017, offset by $78 million and
$353 million of net cash used in investing activities and financing activities, respectively. Operating activities provided $442
million during the year ended December 31, 2016, offset by $112 million and $288 million of net cash used in investing
activities and financing activities, respectively. Operating activities provided $438 million during the year ended December 31,
2015, offset by $118 million and $369 million of net cash used in investing activities and financing activities, respectively.
Operating activities—Net cash provided by operating activities for the year ended December 31, 2017, was $453 million.
This was composed of net income of $291 million adjusted upward for non-cash items of $160 million and net cash provided
by working capital of $2 million. Net cash provided by operating activities for the year ended December 31, 2016, was
composed of net income of $343 million adjusted upward for non-cash items of $113 million, offset by net cash used in
changes in working capital of $14 million. Net cash provided by operating activities for the year ended December 31, 2015, was
composed of net income of $358 million adjusted upward for non-cash items of $89 million, offset by net cash used in changes
in working capital of $9 million.
Investing activities—Cash used in investing activities for the year ended December 31, 2017, was $78 million. This was
composed of capital expenditures of $41 million, deposits to trusts for employee deferred compensation plans of $36 million,
and payments for acquisitions, net of cash acquired, of $1 million. Cash used in investing activities for the year ended
22
22
2017 ANNUAL REPORT | ROBERT HALF December 31, 2016, was $112 million. This was primarily composed of capital expenditures of $83 million and deposits to
trusts for employee deferred compensation plans of $27 million, and payment for an acquisition, net of cash acquired, of $2
million. Cash used in investing activities for the year ended December 31, 2015, was $118 million. This was primarily
composed of capital expenditures of $75 million and deposits to trusts for employee deferred compensation plans of $28
million, and payment for an acquisition, net of cash acquired, of $15 million.
Financing activities—Cash used in financing activities for the year ended December 31, 2017, was $353 million. This
included repurchases of $232 million in common stock and $121 million in cash dividends to stockholders. Cash used in
financing activities for the year ended December 31, 2016, was $288 million. This included repurchases of $176 million in
common stock and $114 million in cash dividends to stockholders, offset by the excess tax benefits from stock-based
compensation of $2 million. Cash used in financing activities for the year ended December 31, 2015, was $369 million. This
included repurchases of $271 million in common stock, $108 million in cash dividends to stockholders, offset by proceeds of
$2 million from exercises of stock options and the excess tax benefits from stock-based compensation of $9 million.
As of December 31, 2017, the Company is authorized to repurchase, from time to time, up to 2.3 million additional shares
of the Company’s common stock on the open market or in privately negotiated transactions, depending on market conditions.
On February 13, 2018, the Company authorized the repurchase, from time to time, of up to an additional 10 million shares of
the Company's common stock on the open market or in privately negotiated transactions, depending on market conditions.
During the years ended December 31, 2017, 2016 and 2015, the Company repurchased approximately 4.0 million shares,
4.0 million shares and 4.3 million shares of common stock on the open market for a total cost of $197 million, $164 million and
$228 million, respectively. Additional stock repurchases were made in connection with employee stock plans, whereby
Company shares were tendered by employees for the payment of exercise price and applicable statutory withholding taxes.
During the years ended December 31, 2017, 2016 and 2015, such repurchases totaled approximately 0.4 million shares,
0.4 million shares and 0.5 million shares at a cost of $20 million, $15 million and $25 million, respectively. Repurchases of
shares have been funded with cash generated from operations.
The Company’s working capital at December 31, 2017, included $295 million in cash and cash equivalents. The
Company expects that internally generated cash will be sufficient to support the working capital needs of the Company, the
Company’s fixed payments, dividends, and other obligations on both a short-term and long-term basis.
On February 13, 2018, the Company announced a quarterly dividend of $.28 per share to be paid to all shareholders of
record on February 23, 2018. The dividend will be paid on March 15, 2018.
The Company’s cash flows generated from operations are also the primary source for funding various contractual
obligations. The table below summarizes the Company’s major commitments as of December 31, 2017 (in thousands):
Payments due by period
Contractual Obligations
Long-term debt obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018
$
252
85,484
59,854
1,177
$146,767
2019 and
2020
$
505
137,984
47,521
1,695
$187,705
2021 and
2022
$
252
82,642
17,737
1,153
$101,784
Thereafter
$
— $
64,042
11,490
6,353
$ 81,885
Total
1,009
370,152
136,602
10,378
$518,141
Long-term debt obligations consist of promissory notes and related interest as well as other forms of indebtedness issued
in connection with certain acquisitions and other payment obligations. Operating lease obligations consist of minimum rental
commitments for 2018 and thereafter under non-cancelable leases in effect at December 31, 2017. Purchase obligations consist
of purchase commitments primarily related to telecom service agreements, software subscriptions, and computer hardware and
software maintenance agreements. Other liabilities consist of asset retirement and deferred compensation obligations.
23
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2017 ANNUAL REPORT | ROBERT HALF
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Because a portion of the Company’s net revenues are derived from its operations outside the U.S. and are denominated in
local currencies, the Company is exposed to the impact of foreign currency fluctuations. The Company’s exposure to foreign
currency exchange rates relates primarily to the Company’s foreign subsidiaries. Exchange rates impact the U.S. dollar value of
the Company’s reported revenues, expenses, earnings, assets and liabilities.
For the year ended December 31, 2017, approximately 22% of the Company’s revenues were generated outside of the
United States. These operations transact business in their functional currency, which is the same as their local currency. As a
result, fluctuations in the value of foreign currencies against the U.S. dollar, particularly the Canadian dollar, British pound,
Euro, and Australian dollar have an impact on the Company’s reported results. Under GAAP, revenues and expenses
denominated in foreign currencies are translated into U.S. dollars at the monthly average exchange rates prevailing during the
period. Consequently, as the value of the U.S. dollar changes relative to the currencies of the Company’s non-U.S. markets, the
Company’s reported results vary.
During 2017, the U.S. dollar fluctuated, but generally weakened, against the primary currencies in which the Company
conducts business. Currency exchange rates had the effect of increasing reported net service revenues by $11 million, or 0.2%,
in 2017 compared to prior year. The general weakening of the U.S. dollar also affected the reported level of expenses incurred
in the Company’s foreign operations. Because substantially all of the Company’s foreign operations generated revenues and
incurred expenses within the same country and currency, the unfavorable effect of higher reported operating expenses largely
offset the increase in reported revenues. Reported net income was $0.8 million, or 0.2%, higher in the year ended December 31,
2017 compared to prior year due to the effect of currency exchange rates.
For the month ended January 31, 2018, the U.S. dollar weakened against the Euro, British Pound, Canadian Dollar, and
Australian dollar. If currency exchange rates were to remain at January 2018 levels throughout 2018, the Company’s 2018 full-
year reported revenues would be impacted favorably, mostly offset by an unfavorable impact to operating expenses. Thus, the
impact to reported net income would likely be immaterial.
Fluctuations in currency exchange rates impact the U.S. dollar amount of the Company’s stockholders’ equity. The assets
and liabilities of the Company’s non-U.S. subsidiaries are translated into U.S. dollars at the exchange rates in effect at period
end. The resulting translation adjustments are recorded in stockholders’ equity as a component of accumulated other
comprehensive income. Although currency fluctuations impact the Company’s reported results and shareholders’ equity, such
fluctuations generally do not affect cash flow or result in actual economic gains or losses. The Company generally has few
cross-border transfers of funds, except for transfers to the U.S. for payment of intercompany loans, working capital loans made
between the U.S. and the Company’s foreign subsidiaries, and dividends from the Company’s foreign subsidiaries.
24
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2017 ANNUAL REPORT | ROBERT HALF
Item 8. Financial Statements and Supplementary Data
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in thousands, except share amounts)
ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, less allowances of $33,181 and $33,133 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LIABILITIES
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued payroll and benefit costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of notes payable and other indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes payable and other indebtedness, less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments and Contingencies (Note I)
STOCKHOLDERS’ EQUITY
December 31,
2017
2016
$ 294,753
732,405
404,711
1,431,869
210,885
4,946
144,887
74,867
$1,867,454
$ 126,937
612,899
7,877
183
747,896
657
13,636
762,189
$ 260,201
703,228
320,805
1,284,234
209,793
3,671
161,509
118,764
$1,777,971
$ 135,540
539,048
5,141
167
679,896
840
10,636
691,372
Preferred stock, $.001 par value authorized 5,000,000 shares; issued and outstanding
zero shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock, $.001 par value authorized 260,000,000 shares; issued and
outstanding 124,261,458 and 127,796,558 shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stockholders’ equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
124
1,064,601
3,507
37,033
1,105,265
128
1,022,411
(20,502)
84,562
1,086,599
Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,867,454
$1,777,971
The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.
25
25
2017 ANNUAL REPORT | ROBERT HALF
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Years Ended December 31,
2017
2016
2015
Net service revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Direct costs of services, consisting of payroll, payroll taxes, benefit
costs and reimbursable expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$5,266,789
$5,250,399
$5,094,933
3,102,977
3,089,723
2,980,462
Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,163,812
1,646,532
1,563
(1,799)
2,160,676
1,606,217
1,237
(888)
2,114,471
1,533,799
192
(550)
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
517,516
226,932
554,110
210,721
581,030
223,234
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 290,584
$ 343,389
$ 357,796
Net income per share :
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
2.34
2.33
$
$
2.68
2.67
$
$
2.72
2.69
Shares:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
124,152
124,892
127,991
128,766
131,749
132,930
Cash dividends declared per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
.96
$
.88
$
.80
The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.
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26
2017 ANNUAL REPORT | ROBERT HALF
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
COMPREHENSIVE INCOME:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 290,584
24,009
$ 314,593
$ 343,389
(10,208)
$ 333,181
$ 357,796
(25,024)
$ 332,772
Years Ended December 31,
2017
2016
2015
The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.
27
27
2017 ANNUAL REPORT | ROBERT HALF
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except per share amounts)
Years Ended December 31,
2017
2016
2015
COMMON STOCK—SHARES:
Balance at beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net issuances of restricted stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchases of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercises of stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
127,797
918
(4,454)
—
131,156
1,039
(4,405)
7
135,134
785
(4,817)
54
Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
124,261
127,797
131,156
COMMON STOCK—PAR VALUE:
Balance at beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net issuances of restricted stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchases of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercises of stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
128
1
(5)
—
$
131
1
(4)
—
Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
124
$
128
$
135
1
(5)
—
131
CAPITAL SURPLUS:
Balance at beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net issuances of restricted stock at par value. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercises of stock options—excess over par value . . . . . . . . . . . . . . . . . . . . . . . .
Tax impact of equity incentive plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,022,411
(1)
42,191
—
—
$ 979,477
(1)
42,699
223
13
$ 928,157
(1)
41,292
1,529
8,500
Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,064,601
$1,022,411
$ 979,477
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS):
Balance at beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments, net of tax . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RETAINED EARNINGS:
Balance at beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchases of common stock—excess over par value. . . . . . . . . . . . . . . . . . . . .
Cash dividends ($.96 per share, $.88 per share and $.80 per share) . . . . . . . . . . .
Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
$ (20,502) $ (10,294) $
24,009
3,507
14,730
(25,024)
$ (20,502) $ (10,294)
(10,208)
84,562
290,584
(217,031)
(121,082)
37,033
$
$
34,467
343,389
(178,780)
(114,514)
84,562
$
$
36,836
357,796
(252,916)
(107,249)
34,467
The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.
28
28
2017 ANNUAL REPORT | ROBERT HALF
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
2017
2016
2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 290,584
$ 343,389
$ 357,796
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense—restricted stock and stock
units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Excess tax benefits from stock-based compensation. . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for doubtful accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,563
63,930
42,191
—
44,091
8,022
1,237
63,078
42,699
(1,822)
(1,868)
9,192
192
53,273
41,292
(8,762)
(8,579)
12,005
Changes in assets and liabilities, net of effects of acquisitions:
Increase in accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase in accounts payable, accrued expenses, accrued payroll and benefit
costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Decrease) increase in income taxes payable, net . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in other assets, net of change in other liabilities . . . . . . . . . . . . . . . . . . . .
(17,039)
(15,888)
(75,745)
47,832
(9,655)
(18,528)
19,726
(8,246)
(9,416)
60,232
19,948
(13,416)
Net cash flows provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
452,991
442,081
438,236
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for acquisitions, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments to trusts for employee deferred compensation plans. . . . . . . . . . . . . . . .
(1,160)
(40,753)
(36,584)
(2,200)
(82,956)
(27,079)
(14,668)
(75,057)
(28,225)
Net cash flows used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(78,497)
(112,235)
(117,950)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchases of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease in notes payable and other indebtedness . . . . . . . . . . . . . . . . . . . . . . . . .
Excess tax benefits from stock-based compensation. . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from exercises of stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash flows used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(231,724)
(121,000)
(167)
—
—
(352,891)
(176,031)
(114,164)
(154)
1,822
223
(288,304)
(271,138)
(107,561)
(140)
8,762
1,529
(368,548)
Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . .
12,949
(5,918)
(14,280)
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34,552
260,201
$ 294,753
35,624
224,577
$ 260,201
(62,542)
287,119
$ 224,577
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes, net of refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
278
$ 190,954
$
266
$ 219,415
$
285
$ 212,668
Non-cash items:
Stock repurchases awaiting settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
— $ 14,688
$ 11,935
The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.
29
29
2017 ANNUAL REPORT | ROBERT HALF
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A—Summary of Significant Accounting Policies
Nature of Operations. Robert Half International Inc. (the “Company”) provides specialized staffing and risk consulting
services through such divisions as Accountemps®, Robert Half® Finance & Accounting, OfficeTeam®, Robert Half® Technology,
Robert Half® Management Resources, Robert Half® Legal, The Creative Group®, and Protiviti®. The Company, through its
Accountemps, Robert Half Finance & Accounting, and Robert Half Management Resources divisions, is a specialized provider
of temporary, full-time, and senior-level project professionals in the fields of accounting and finance. OfficeTeam specializes in
highly skilled temporary administrative support professionals. Robert Half Technology provides project and full-time
technology professionals. Robert Half Legal provides temporary, project, and full-time staffing of lawyers, paralegals and legal
support personnel. The Creative Group provides interactive, design, marketing, advertising and public relations professionals.
Protiviti is a global consulting firm that helps companies solve problems in finance, technology, operations, data, analytics,
governance, risk and internal audit, and is a wholly owned subsidiary of the Company. Revenues are predominantly derived
from specialized staffing services. The Company operates in North America, South America, Europe, Asia and Australia. The
Company is a Delaware corporation.
Basis of Presentation. The Consolidated Financial Statements (“Financial Statements”) of the Company are prepared in
conformity with accounting principles generally accepted in the United States of America (“GAAP”) and the rules of the
Securities and Exchange Commission (“SEC”).
Principles of Consolidation. The Financial Statements include the accounts of the Company and its subsidiaries, all of
which are wholly owned. All intercompany balances have been eliminated.
Use of Estimates. The preparation of financial statements in conformity with GAAP 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.
As of December 31, 2017, such estimates included allowances for uncollectible accounts receivable, workers’ compensation
losses and income and other taxes. Management estimates are also utilized in the Company’s goodwill impairment assessment
and in the valuation of stock grants subject to market conditions. Actual results and outcomes may differ from management's
estimates and assumptions.
Revenue Recognition. The Company derives its revenues from three segments: temporary and consultant staffing,
permanent placement staffing, and risk consulting and internal audit services. Net service revenues as presented on the
Consolidated Statements of Operations represent services rendered to customers less sales adjustments and allowances.
Reimbursements, including those related to travel and out-of-pocket expenses, are also included in net service revenues, and
equivalent amounts of reimbursable expenses are included in direct costs of services. The Company records revenue on a gross
basis as a principal versus on a net basis as an agent in the presentation of revenues and expenses. The Company has concluded
that gross reporting is appropriate because the Company (i) has the risk of identifying and hiring qualified employees, (ii) has
the discretion to select the employees and establish their price and duties and (iii) bears the risk for services that are not fully
paid for by customers.
Temporary and consultant staffing revenues—Temporary and consultant staffing revenues are recognized when the
services are rendered by the Company’s temporary employees. Employees placed on temporary assignment by the Company
are the Company’s legal employees while they are working on assignments. The Company pays all related costs of
employment, including workers’ compensation insurance, state and federal unemployment taxes, social security and certain
fringe benefits. The Company assumes the risk of acceptability of its employees to its customers.
Permanent placement staffing revenues—Permanent placement staffing revenues are recognized when employment
candidates accept offers of permanent employment. The Company has a substantial history of estimating the effect of
permanent placement candidates who do not remain with its clients through the 90-day guarantee period. Allowances are
established to estimate these losses. Fees to clients are generally calculated as a percentage of the new employee’s annual
compensation. No fees for permanent placement services are charged to employment candidates.
Risk consulting and internal audit revenues—Risk consulting and internal audit services are generally provided on a time-
and-material basis or fixed-fee basis. Revenues earned under time-and-material arrangements and fixed-fee arrangements are
recognized using a proportional performance method as hours are incurred relative to total estimated hours for the engagement.
The Company periodically evaluates the need to provide for any losses on these projects, and losses are recognized when it is
probable that a loss will be incurred.
30
30
2017 ANNUAL REPORT | ROBERT HALF NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Costs of Services. Direct costs of temporary and consultant staffing consist of payroll, payroll taxes and benefit costs for
the Company’s temporary employees, as well as reimbursable expenses. Direct costs of permanent placement staffing services
consist of reimbursable expenses. Risk consulting and internal audit costs of services include professional staff payroll, payroll
taxes and benefit costs, as well as reimbursable expenses.
Advertising Costs. The Company expenses all advertising costs as incurred. Advertising costs for the years ended
December 31, 2017, 2016 and 2015, are reflected in the following table (in thousands):
Advertising Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Years Ended December 31,
2017
$ 49,433
2016
$ 47,312
2015
$ 44,015
Comprehensive Income. Comprehensive income includes net income and certain other items that are recorded directly
to Stockholders’ Equity. The Company’s only source of other comprehensive income is foreign currency translation
adjustments.
Fair Value of Financial Instruments. The Company does not have any financial instruments which require re-
measurement to fair value. The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued
expenses represent fair value based upon their short-term nature.
Cash and Cash Equivalents. The Company considers all highly liquid investments with a maturity at the date of
purchase of three months or less as cash equivalents.
Goodwill and Intangible Assets. Goodwill and intangible assets primarily consist of the cost of acquired companies in
excess of the fair market value of their net tangible assets at the date of acquisition. Identifiable intangible assets are amortized
over their lives, typically ranging from two to five years. Goodwill is not amortized, but is tested at least annually for
impairment. The Company completed its annual goodwill impairment analysis as of June 30 in each of the three years ended
December 31, 2017, and determined that no adjustment to the carrying value of goodwill was required. There were no events or
changes in circumstances during the six months ended December 31, 2017 that caused the Company to perform an interim
impairment assessment.
Income Tax Assets and Liabilities. In establishing its deferred income tax assets and liabilities, the Company makes
judgments and interpretations based on the enacted tax laws and published tax guidance that are applicable to its operations.
Deferred tax assets and liabilities are measured and recorded using current enacted tax rates, which the Company expects will
apply to taxable income in the years in which those temporary differences are recovered or settled. The likelihood of a material
change in the Company’s expected realization of these assets is dependent on future taxable income, its ability to use foreign
tax credit carryforwards and carrybacks, final U.S. and foreign tax settlements, and the effectiveness of its tax planning
strategies in the various relevant jurisdictions.
On December 22, 2017, the President signed the Tax Cuts and Jobs Act (“TCJA”) into law. Effective January 1, 2018,
among other changes, TCJA reduces the federal corporate tax rate to 21 percent, provides for a deemed repatriation and
taxation at reduced rates of certain foreign earnings, and establishes new mechanisms to tax certain foreign earnings going
forward. Similar to other large multinational companies, TCJA has wide ranging implications for the Company. The Company
has recorded provisional amounts and a reasonable estimate of TCJA’s impact on its financial statements. As guidance
regarding implementation of various provisions of TCJA is released by the U.S. Government over the course of 2018, the
Company’s estimates may need to be adjusted accordingly.
In December 2017, the SEC issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax
Cuts and Jobs Act (“SAB 118”), which allows the Company to record provisional amounts during a measurement period not to
extend beyond one year of the enactment date. Since TCJA was passed late in the fourth quarter of 2017, and ongoing guidance
and accounting interpretations are expected over the next 12 months, the Company considers the accounting of the transition
tax, deferred tax remeasurements, and other items to be incomplete due to the forthcoming guidance and ongoing analysis of its
final tax positions for the year ended December 31, 2017. The Company expects to complete its analysis within the
measurement period in accordance with SAB 118.
31
31
2017 ANNUAL REPORT | ROBERT HALF
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company also evaluates the need for valuation allowances to reduce the deferred tax assets to realizable amounts.
Management evaluates all positive and negative evidence and uses judgment regarding past and future events, including
operating results, to help determine when it is more likely than not that all or some portion of the deferred tax assets may not be
realized. When appropriate, a valuation allowance is recorded against deferred tax assets to offset future tax benefits that may
not be realized. Valuation allowances of $20.2 million and $18.9 million were recorded as of December 31, 2017 and 2016,
respectively. The valuation allowances recorded related primarily to net operating losses in certain foreign operations. If such
losses are ultimately utilized to offset future operating income, the Company will recognize a tax benefit up to the full amount
of the valuation reserve.
Workers’ Compensation. Except for states which require participation in state-operated insurance funds, the Company
retains the economic burden for the first $0.5 million per occurrence in workers’ compensation claims. Workers’ compensation
includes ongoing healthcare and indemnity coverage for claims and may be paid over numerous years following the date of
injury. Claims in excess of $0.5 million are insured. Workers’ compensation expense includes the insurance premiums for
claims in excess of $0.5 million, claims administration fees charged by the Company’s workers’ compensation administrator,
premiums paid to state-operated insurance funds, and an estimate for the Company’s liability for Incurred But Not Reported
(“IBNR”) claims and for the ongoing development of existing claims.
The reserves for IBNR claims and for the ongoing development of existing claims in each reporting period includes
estimates. The Company has established reserves for workers’ compensation claims using loss development rates which are
estimated using periodic third party actuarial valuations based upon historical loss statistics which include the Company’s
historical frequency and severity of workers’ compensation claims, and an estimate of future cost trends. While management
believes that its assumptions and estimates are appropriate, significant differences in actual experience or significant changes in
assumptions may materially affect the Company’s future results.
Foreign Currency Translation. The reporting currency of the Company and its subsidiaries is the U.S. dollar. The
functional currency of the Company's foreign subsidiaries is their local currency. 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 accumulated other comprehensive income within Stockholders’ Equity. Gains and
losses resulting from foreign currency transactions are included as a component of selling, general and administrative expenses
in the Consolidated Statements of Operations, and have not been material for all periods presented.
Stock-based Compensation. Under various stock plans, officers, employees and outside directors have received or may
receive grants of restricted stock, stock units, stock appreciation rights or options to purchase common stock.
The Company recognizes compensation expense equal to the grant-date fair value for all stock-based payment awards
that are expected to vest. This expense is recorded on a straight-line basis over the requisite service period of the entire award,
unless the awards are subject to performance conditions, in which case the Company recognizes compensation expense over the
requisite service period of each separate vesting tranche. The Company determines the grant-date fair value of its restricted
stock and stock unit awards using the fair market value of its stock on the grant date, unless the awards are subject to market
conditions, in which case the Company utilizes a binomial-lattice model (i.e., Monte Carlo simulation model). The Monte Carlo
simulation model utilizes multiple input variables to determine the stock-based compensation expense.
No stock appreciation rights have been granted under the Company’s existing stock plans. The Company has not granted
any options to purchase common stock since 2006.
Property and Equipment. Property and equipment are recorded at cost. Depreciation expense is computed using the
straight-line method over the following useful lives:
Computer hardware . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 to 3 years
Computer software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 to 5 years
Furniture and equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 years
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Term of lease,
5 years maximum
32
32
2017 ANNUAL REPORT | ROBERT HALF NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Internal-use Software. The Company capitalizes direct costs incurred in the development of internal-use software.
Amounts capitalized are reported as a component of computer software within property and equipment. Internal-use software
development costs capitalized for the years ended December 31, 2017, 2016 and 2015, are reflected in the following table (in
thousands):
Internal-use software development costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Years Ended December 31,
2017
9,030
2016
$ 33,753
2015
$ 31,964
Note B—New Accounting Pronouncements
Recently Adopted Accounting Pronouncements
Stock Compensation. In March 2016, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance
which changes financial reporting as it relates to Employee Share-Based Payment Accounting. Under the new guidance,
several aspects of the accounting for share-based payment award transactions will be simplified, including: i) income tax
consequences; ii) classification of awards as either equity or liabilities; and iii) classification on the statement of cash flows.
The new guidance was effective for annual and interim periods beginning after December 15, 2016 and was adopted by the
Company effective January 1, 2017. The adoption of this guidance did not have a material impact on the Company’s financial
statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
Revenue from Contracts with Customers. In May 2014, the FASB issued authoritative guidance that provides companies
with a single model for use in accounting for revenue arising from contracts with customers and supersedes current revenue
recognition guidance, including industry-specific revenue guidance. The new guidance requires a company to recognize
revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive
in exchange for those goods or services. It also requires additional disclosure about the nature, amount, timing and uncertainty
of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and
assets recognized from costs incurred to obtain or fulfill a contract. The guidance permits companies to either apply the
requirements retrospectively to all prior periods presented, or apply the requirements in the year of adoption, through a
cumulative adjustment. The amended guidance also requires additional quantitative and qualitative disclosures. In March 2016,
amended guidance was issued to clarify implementation guidance on principal versus agent consideration. In April 2016 an
amendment provided clarifications on determining whether a promised license provides a customer with a right to use or a right
to access an entity’s intellectual property. In May 2016 an amendment provided narrow scope improvements and practical
expedients to reduce the potential diversity, cost and complexity of applying new revenue standard. These amendments, as well
as the original guidance, are all effective for annual and interim periods beginning after December 15, 2017. The new standard
was adopted by the Company effective January 1, 2018. The standard is required to be adopted on either a full or modified
retrospective basis. As the initial adoption of the standard did not have a material impact on the Company’s financial
statements, prior periods will not be restated. The Company also had no significant changes to systems, processes, or controls.
Lease Accounting. In February 2016, the FASB issued authoritative guidance which changes financial reporting as it
relates to leasing transactions. Under the new guidance, lessees will be required to recognize a lease liability, measured on a
discounted basis; and a right-of-use asset, for the lease term. The new guidance is effective for annual and interim periods
beginning after December 15, 2018. Early application is permitted for all entities upon issuance. Lessees and lessors must apply
a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest
comparative period presented in the financial statements. While the impact of the adoption of this guidance will include the
recognition of right-of-use assets and lease liabilities on the Company’s statement of financial position, the Company is in the
process of evaluating the impact of adoption of this guidance on its systems, processes, and controls.
33
33
2017 ANNUAL REPORT | ROBERT HALF
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Classification of Certain Cash Receipts and Cash Payments in Statement of Cash Flows. In August 2016, the FASB
issued authoritative guidance designed to address diversity in how certain cash receipts and cash payments are presented and
classified in the statement of cash flows, including: i) contingent consideration payments made after a business combination; ii)
proceeds from the settlement of insurance claims; and iii) proceeds from the settlement of corporate-owned life insurance
policies. The new guidance is effective for the Company for fiscal years beginning after December 15, 2017, and interim
periods within those fiscal years. Early adoption is permitted in any interim or annual period. The Company believes the
adoption of this guidance will not have a material impact on its financial statements.
Simplifying the Test for Goodwill Impairment. In January 2017, the FASB issued authoritative guidance to simplify the
goodwill impairment testing process. The new standard eliminates Step 2 of the goodwill impairment test. If a company
determines in Step 1 of the goodwill impairment test that the carrying value of goodwill is greater than the fair value, an
impairment in that amount should be recorded to the income statement, rather than proceeding to Step 2. The new guidance is
effective for the Company beginning after December 31, 2019, although early adoption is permitted. The Company believes the
adoption of this guidance will not have a material impact on its financial statements.
Stock Compensation. In May 2017, the FASB issued authoritative guidance updating which changes in the terms or
conditions of a share-based payment award require an entity to apply modification accounting. Under the amended guidance,
entities are required to account for the effects of a modification if the fair value, vesting conditions or classification (as an
equity instrument or a liability instrument) of the modified award change from that of the original award immediately before the
modification. The new guidance is effective for the Company in interim or annual periods beginning after December 15, 2017.
The Company believes the adoption of this guidance will not have a material impact on its financial statements.
Note C—Other Current Assets
Other current assets consisted of the following (in thousands):
Deposits in trusts for employee deferred compensation plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2017
$ 292,326
112,385
$ 404,711
2016
$ 236,371
84,434
$ 320,805
Note D—Goodwill
The following table sets forth the activity in goodwill from December 31, 2015, through December 31, 2017 (in
thousands):
Temporary
and
consultant
staffing
Acquisitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance as of December 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 133,173
1,248
(546)
Balance as of December 31, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 133,875
613
$ 134,488
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance as of December 31, 2017
Goodwill
Risk
consulting
and
internal
audit
services
$ 49,155
299
449
$ 49,903
335
$ 50,238
Permanent
placement
staffing
$ 26,251
—
(236)
$ 26,015
144
$ 26,159
Total
$ 208,579
1,547
(333)
$ 209,793
1,092
$ 210,885
34
34
2017 ANNUAL REPORT | ROBERT HALF
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note E—Property and Equipment, Net
Property and equipment consisted of the following (in thousands):
Computer hardware . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Computer software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note F—Accrued Payroll and Benefit Costs
Accrued payroll and benefit costs consisted of the following (in thousands):
Payroll and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee deferred compensation plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Workers’ compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payroll taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued payroll and benefit costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Included in employee deferred compensation plans is the following (in thousands):
Deferred compensation plan and other benefits related to the
Company’s Chief Executive Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2017
$ 171,515
376,761
102,424
148,764
9,907
809,371
(664,484)
$ 144,887
2016
$ 170,746
374,490
100,472
133,541
9,993
789,242
(627,733)
$ 161,509
December 31,
2017
$ 256,804
312,429
17,092
26,574
$ 612,899
2016
$ 243,301
252,349
19,361
24,037
$ 539,048
December 31,
2017
2016
$ 86,145
$ 83,899
Note G—Notes Payable and Other Indebtedness
The Company issued promissory notes as well as other forms of indebtedness in connection with certain acquisitions and
other payment obligations. These notes are due in varying installments and, in aggregate, amounted to $0.8 million at
December 31, 2017, and $1.0 million at December 31, 2016. At December 31, 2017, $0.8 million of the notes were
collateralized by a standby letter of credit. The following table shows the schedule of maturities for notes payable and other
indebtedness at December 31, 2017 (in thousands):
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
183
200
218
239
—
840
At December 31, 2017, the notes carried fixed rates and the weighted average interest rate for the above was 9.0% for
each of the years ended December 31, 2017, 2016 and 2015.
35
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2017 ANNUAL REPORT | ROBERT HALF
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company has an uncommitted letter of credit facility (the “facility”) of up to $35.0 million, which is available to
cover the issuance of debt support standby letters of credit. The Company had used $17.4 million in debt support standby letters
of credit as of December 31, 2017 and $15.8 million as of December 31, 2016. Of the debt support standby letters of credit
outstanding, $16.6 million as of December 31, 2017 and $14.8 million as of December 31, 2016, satisfies workers’
compensation insurer’s collateral requirements. There is a service fee of 1.125% on the used portion of the facility. The facility
is subject to certain financial covenants and expires on August 31, 2018. The Company was in compliance with these covenants
as of December 31, 2017. The Company intends to renew this facility prior to its August 31, 2018 expiration.
Note H—Income Taxes
The Company recorded provisional amounts and a reasonable estimate in its provision for income taxes and estimated
deferred tax assets, for the impact of TCJA.
The provision (benefit) for income taxes for the years ended December 31, 2017, 2016 and 2015, consisted of the
following (in thousands):
Current:
Years Ended December 31,
2017
2016
2015
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 133,097
24,944
27,079
$ 156,937
34,927
20,725
$ 181,640
36,281
13,892
Deferred:
Federal and state . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
41,717
95
$ 226,932
(3,785)
1,917
$ 210,721
(8,398)
(181)
$ 223,234
Income before the provision for income taxes for the years ended December 31, 2017, 2016 and 2015, consisted of the
following (in thousands):
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Years Ended December 31,
2017
$ 445,418
72,098
$ 517,516
2016
$ 494,890
59,220
$ 554,110
2015
$ 528,916
52,114
$ 581,030
The income taxes shown above varied from the statutory federal income tax rates for these periods as follows:
Federal U.S. income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State income taxes, net of federal tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-deductible expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-U.S. income taxed at different rates, net of foreign tax
credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax impact of uncertain tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance release, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax effects of TCJA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Years Ended December 31,
2017
35.0%
3.7
0.4
—
(1.3)
0.2
—
6.5
(0.6)
43.9%
2016
35.0%
4.2
0.5
(0.6)
(0.8)
—
(0.1)
—
(0.2)
38.0%
2015
35.0%
4.2
0.5
0.1
(0.6)
(0.2)
(0.5)
—
(0.1)
38.4%
In accordance with TCJA, the Company remeasured certain deferred tax assets and liabilities, based on the rates at which
they are expected to reverse in the future. The Company is still analyzing certain aspects of TCJA and refining our calculation,
which could potentially affect the measurement of these balances or give rise to different deferred tax amounts. The provisional
36
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2017 ANNUAL REPORT | ROBERT HALF
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
amount and reasonable estimate recorded related to the re-measurement of the Company’s deferred tax balance was $34.6
million.
The Company recorded provisional amounts and a reasonable estimate for the one-time transition tax on its total
post-1986 foreign earnings and profits, as required by TCJA. A provisional amount of $7.7 million in connection with the
transition tax is offset by foreign tax credits in the Company's current income tax expense. The Company anticipates additional
guidance will be released by the government throughout 2018 that may require the Company to adjust this estimate during the
measurement period prescribed by SAB 118. No additional income taxes have been provided for any remaining undistributed
foreign earnings not subject to the transition tax, or any additional outside basis differences inherent in our foreign entities, as
the Company is still in the process of evaluating its foreign cash needs, and how much, if any, of the amount of earnings should
be considered indefinitely reinvested.
The deferred portion of the tax provision (benefit) consisted of the following (in thousands):
Years Ended December 31,
2017
2016
2015
Amortization of franchise rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of other intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses, deducted for tax when paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capitalized costs for books, deducted for tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal impact of unrecognized tax benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign tax credit carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax effects of TCJA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
495
1,193
15,213
(5,790)
(4,079)
39
—
34,633
108
$ 41,812
$
$
500
1,221
(6,889)
5,901
(2,405)
75
—
—
(271)
514
1,590
(17,664)
5,315
(5,932)
1,058
3,636
—
2,904
$ (1,868) $ (8,579)
The components of the deferred income tax amounts at December 31, 2017 and 2016, were as follows (in thousands):
December 31,
2017
2016
Deferred Income Tax Assets
Provision for bad debts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred compensation and other benefit obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Workers’ compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credits and net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred income tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
6,794
68,101
3,127
8,614
30,087
13,343
130,066
$ 10,510
112,811
5,634
16,772
30,534
18,116
194,377
Deferred Income Tax Liabilities
Amortization of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment basis differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred income tax liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred income tax assets, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(20,220)
(4,421)
(10,847)
(35,488)
(20,178)
$ 74,400
(28,681)
(16,640)
(11,658)
(56,979)
(18,907)
$ 118,491
Credits and net operating loss carryforwards primarily include net operating losses in foreign countries of $26.4 million
that expire in 2018 and later; and California enterprise zone tax credits of $3.5 million that expire in 2023. Of the $3.5 million
of California enterprise zone tax credits, the Company expects that it will utilize $2.0 million of these credits prior to expiration.
Valuation allowances of $18.7 million have been established for net operating loss carryforwards and other deferred items in
foreign countries. In addition, a valuation allowance of $1.5 million has been established for California enterprise zone tax
credits.
37
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2017 ANNUAL REPORT | ROBERT HALF
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FASB authoritative guidance prescribes a recognition threshold and measurement attribute criteria for the financial
statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The literature also
provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and
transition.
The following table reconciles the total amounts of gross unrecognized tax benefits from January 1, 2015 to
December 31, 2017 (in thousands):
December 31,
2017
2016
2015
Balance at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross increases—tax positions in prior years. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross decreases—tax positions in prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross increases—tax positions in current year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lapse of statute of limitations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
731
1,503
(257)
956
(40)
(7)
2,886
$
$
814
92
—
114
—
(289)
731
$
$
4,573
—
(1,807)
120
(520)
(1,552)
814
The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate is $2.8 million, $0.5
million and $0.5 million for 2017, 2016 and 2015, respectively.
The Company’s continuing practice is to recognize interest and penalties related to income tax matters in income tax
expense. The total amount of interest and penalties accrued is $0.1 million as of December 31, 2017. The total amount of
interest and penalties accrued as of December 31, 2016 is $0.1 million, including a $0.1 million reduction recorded in income
tax expense during the year. The total amount of interest and penalties accrued as of December 31, 2015, was $0.2 million,
including a $2.3 million reduction recorded in income tax expense during the year.
The Company believes it is reasonably possible that the settlement of certain tax uncertainties could occur within the next
twelve months; accordingly, $0.1 million of the unrecognized gross tax benefit has been classified as a current liability as of
December 31, 2017. This amount primarily represents unrecognized tax benefits composed of items related to assessed state
income tax audits and negotiations.
The Company’s major income tax jurisdictions are the United States, Australia, Belgium, Canada, France, Germany and
the United Kingdom. For U.S. federal income tax, the Company remains subject to examination for 2014 and subsequent years.
For major U.S. states, with few exceptions, the Company remains subject to examination for 2013 and subsequent years.
Generally, for the foreign countries, the Company remains subject to examination for 2010 and subsequent years.
Note I—Commitments and Contingencies
Rental expense, primarily for office premises, amounted to $87.5 million, $87.3 million and $85.9 million for the years
ended December 31, 2017, 2016 and 2015, respectively. The approximate minimum rental commitments for 2018 and thereafter
under non-cancelable leases in effect at December 31, 2017 were as follows (in thousands):
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 85,484
73,763
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
64,221
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
47,107
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35,535
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
64,042
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 370,152
On March 13, 2014, Plaintiff Leonor Rodriguez, on her own behalf and on behalf of a putative class of allegedly similarly
situated individuals, filed a complaint against the Company in the Superior Court of California, San Diego County. The
complaint alleges that a putative class of current and former employees of the Company working in California since March 13,
2011 were denied compensation for the time they spent interviewing with clients of the Company as well as performing
38
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2017 ANNUAL REPORT | ROBERT HALF
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
activities related to the interview process. Rodriguez seeks recovery on her own behalf and on behalf of the putative class in an
unspecified amount for this allegedly unpaid compensation. Rodriguez also seeks recovery of an unspecified amount for the
alleged failure of the Company to provide her and the putative class with accurate wage statements. Rodriguez also seeks an
unspecified amount of other damages, attorneys’ fees, and statutory penalties, including but not limited to statutory penalties on
behalf of herself and other allegedly “aggrieved employees” as defined by California’s Labor Code Private Attorney General
Act (“PAGA”). On October 10, 2014, the Court granted a motion by the Company to compel all of Rodriguez’s claims, except
the PAGA claim, to individual arbitration. At this stage of the litigation, it is not feasible to predict the outcome of or a range of
loss, should a loss occur, from this proceeding and, accordingly, no amounts have been provided in the Company’s Financial
Statements. The Company believes it has meritorious defenses to the allegations and the Company intends to continue to
vigorously defend against the litigation.
On March 23, 2015, Plaintiff Jessica Gentry, on her own behalf and on behalf of a putative class of allegedly similarly
situated individuals, filed a complaint against the Company in the Superior Court of California, San Francisco County, which
was subsequently amended on October 23, 2015. The complaint, which was filed by the same plaintiffs’ law firm that brought
the Rodriguez matter described above, alleges claims similar to those alleged in Rodriguez. Specifically, the complaint alleges
that a putative class of current and former employees of the Company working in California since March 13, 2010 were denied
compensation for the time they spent interviewing “for temporary and permanent employment opportunities” as well as
performing activities related to the interview process. Gentry seeks recovery on her own behalf and on behalf of the putative
class in an unspecified amount for this allegedly unpaid compensation. Gentry also seeks recovery of an unspecified amount for
the alleged failure of the Company to provide her and the putative class with accurate wage statements. Gentry also seeks an
unspecified amount of other damages, attorneys’ fees, and statutory penalties, including penalties for allegedly not paying all
wages due upon separation to former employees and statutory penalties on behalf of herself and other allegedly “aggrieved
employees” as defined by PAGA. On January 4, 2016, the Court denied a motion by the Company to compel all of Gentry’s
claims, except the PAGA claim, to individual arbitration. At this stage of the litigation, it is not feasible to predict the outcome
of or a range of loss, should a loss occur, from this proceeding and, accordingly, no amounts have been provided in the
Company’s Financial Statements. The Company believes it has meritorious defenses to the allegations and the Company
intends to continue to vigorously defend against the litigation.
The Company is involved in a number of other lawsuits arising in the ordinary course of business. While management
does not expect any of these other matters to have a material adverse effect on the Company’s results of operations, financial
position or cash flows, litigation is subject to certain inherent uncertainties.
Legal costs associated with the resolution of claims, lawsuits and other contingencies are expensed as incurred.
Note J—Stockholders’ Equity
Stock Repurchase Program. As of December 31, 2017, the Company is authorized to repurchase, from time to time, up
to 2.3 million additional shares of the Company’s common stock on the open market or in privately negotiated transactions,
depending on market conditions. The number and the cost of common stock shares repurchased during the years ended
December 31, 2017, 2016 and 2015, are reflected in the following table (in thousands):
Common stock repurchased (in shares) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock repurchased. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Years Ended December 31,
2017
4,046
$ 196,645
2016
4,046
$ 163,614
2015
4,343
$ 228,166
Additional stock repurchases were made in connection with employee stock plans, whereby Company shares were
tendered by employees for the payment of exercise price and applicable statutory withholding taxes. The number and the cost of
employee stock plan repurchases made during the years ended December 31, 2017, 2016 and 2015, are reflected in the
following table (in thousands):
Repurchases related to employee stock plans (in shares) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchases related to employee stock plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
408
$ 20,391
359
$ 15,170
474
$ 24,755
Years Ended December 31,
2017
2016
2015
39
39
2017 ANNUAL REPORT | ROBERT HALF
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The repurchased shares are held in treasury and are presented as if constructively retired. Treasury stock is accounted for
using the cost method. Treasury stock activity for each of the three years ended December 31, 2017, 2016 and 2015 (consisting
of stock option exercises and the purchase of shares for the treasury) is presented in the Consolidated Statements of
Stockholders’ Equity.
Cash Dividends. The Company’s Board of Directors may at their discretion declare and pay dividends upon the shares of
the Company’s stock either out of the Company’s retained earnings or capital surplus. The cash dividends declared during the
years ended December 31, 2017, 2016 and 2015, are reflected in the following table:
Years Ended December 31,
2017
2016
2015
Cash dividends declared per share. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
.96
$
.88
$
.80
Repurchases of shares and issuances of cash dividends are applied first to the extent of retained earnings and any
remaining amounts are applied to capital surplus.
Note K—Stock Plans
Under various stock plans, officers, employees, and outside directors have received or may receive grants of restricted
stock, stock units, stock appreciation rights or options to purchase common stock. Grants have been made at the discretion of
the Committees of the Board of Directors. Grants generally vest either on a straight-line basis over four years or on a cliff basis
over three years. Shares offered under the plan are authorized but unissued shares or treasury shares.
Recipients of restricted stock do not pay any cash consideration to the Company for the shares, have the right to vote all
shares subject to such grant, and there were no grants outstanding that received dividends prior to vesting. Restricted stock
grants made on or after July 28, 2009, contain forfeitable rights to dividends. Dividends for these grants are accrued on the
dividend payment dates but are not paid until the shares vest, and dividends accrued for shares that ultimately do not vest are
forfeited. Recipients of stock units do not pay any cash consideration for the units, do not have the right to vote, and do not
receive dividends with respect to such units.
The Company recognizes compensation expense equal to the grant-date fair value for all stock-based payment awards
that are expected to vest. This expense is recorded on a straight-line basis over the requisite service period of the entire award,
unless the awards are subject to performance conditions, in which case the Company recognizes compensation expense over the
requisite service period of each separate vesting tranche. The Company determines the grant-date fair value of its restricted
stock and stock unit awards using the fair market value on the grant date, unless the awards are subject to market conditions, in
which case the Company utilizes a binomial-lattice model (i.e., Monte Carlo simulation model). The Monte Carlo simulation
model utilizes multiple input variables to determine the stock-based compensation expense.
During the year ended December 31, 2017, the Company granted performance shares to its executives in the form of
restricted stock. The shares granted contain (1) a performance condition based earnings per share, and (2) a performance
condition based on Return on Invested Capital (“ROIC”). The ROIC performance condition measures the Company’s
performance against a peer group. Shares will be delivered at the end of the three year vesting and ROIC performance period
based on the Company’s actual performance compared to the peer group. Actual shares earned will range from seventy-five
percent (75%) to one hundred twenty-five percent (125%) of the target award after any adjustment made for the EPS
performance condition.
Stock-based compensation expense consisted of the following (in thousands):
Restricted stock and stock units - expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Years Ended December 31,
2017
$ 42,191
2016
$ 42,699
2015
$ 41,292
40
40
2017 ANNUAL REPORT | ROBERT HALF
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Unrecognized compensation cost is expected to be recognized over the next four years. Total unrecognized compensation
cost, net of estimated forfeitures, consisted of the following (in thousands):
Restricted stock and stock units - unrecognized future costs . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2017
$ 62,730
2016
$ 60,481
2015
$ 60,627
The following table reflects activity under all stock plans from December 31, 2014 through December 31, 2017, and the
weighted average exercise prices (in thousands, except per share amounts):
Restricted Stock Plans
without Market-Condition
Restricted Stock Plans
with Market-Condition
Number of
Shares/
Units
Weighted
Average
Grant Date
Fair Value
Number of
Shares/
Units
Weighted
Average
Grant Date
Fair Value
Stock Option Plans
Number of
Shares/
Units
Weighted
Average Exercise
Price Per Share
Outstanding, December 31, 2014 . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . .
Restrictions lapsed . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . .
Outstanding, December 31, 2015 . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . .
Restrictions lapsed . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . .
Outstanding, December 31, 2016 . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . .
Restrictions lapsed . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . .
Outstanding, December 31, 2017 . . . . .
1,165
502
—
(599)
(16)
1,052
772
—
(545)
(36)
1,243
904
—
(616)
(41)
1,490
$36.47
$58.14
—
$36.30
$37.63
$46.88
$38.47
—
$42.42
$41.28
$43.78
$47.86
—
$44.09
$43.68
$46.13
1,234
257
—
(499)
—
992
358
—
(364)
(36)
950
50
—
(384)
—
616
$40.24
$71.86
—
$31.41
—
$52.89
$45.93
—
$43.04
$43.04
$54.42
$50.09
—
$50.09
—
$56.76
77
—
(54)
—
(11)
12
—
(7)
—
(5)
—
—
—
—
—
—
$29.22
—
$28.18
—
$30.94
$32.36
—
$32.36
—
$32.36
—
—
—
—
—
—
The total pre-tax intrinsic value of stock options exercised and the total fair value of shares vested during the years ended
December 31, 2017, 2016 and 2015, are reflected in the following table (in thousands):
Years Ended December 31,
Total pre-tax intrinsic value of stock options exercised. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total fair value of shares vested. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— $
$
$ 50,385
52
$ 39,302
2017
2016
2015
$
1,709
$ 56,570
At December 31, 2017, the total number of available shares to grant under the plans (consisting of either restricted stock,
stock units, stock appreciation rights or options to purchase common stock) was approximately 3.8 million.
41
41
2017 ANNUAL REPORT | ROBERT HALF
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note L—Net Income Per Share
The calculation of net income per share for the three years ended December 31, 2017 is reflected in the following table
(in thousands, except per share amounts):
Years Ended December 31,
2017
2016
2015
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic:
Weighted average shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 290,584
$ 343,389
$ 357,796
124,152
127,991
131,749
Diluted:
Weighted average shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dilutive effect of potential common shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
124,152
740
127,991
775
131,749
1,181
Diluted weighted average shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
124,892
128,766
132,930
Net income per share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
2.34
2.33
$
$
2.68
2.67
$
$
2.72
2.69
Potential common shares include the dilutive effect of stock options, unvested performance-based restricted stock,
restricted stock which contains forfeitable rights to dividends, and stock units.
Employee stock options will have a dilutive effect under the treasury method only when the respective period’s average
market value of the Company’s common stock exceeds the exercise proceeds. Under the treasury method, exercise proceeds
include the amount the employee must pay for exercising stock options, the amount of compensation cost for future service that
the Company has not yet recognized, and the amount of tax benefits that would be recorded in capital surplus, if the options
were exercised and the stock units and performance-based restricted stock had vested.
Note M—Business Segments
The Company, which aggregates its operating segments based on the nature of services, has three reportable segments:
temporary and consultant staffing, permanent placement staffing, and risk consulting and internal audit services. The temporary
and consultant staffing segment provides specialized staffing 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, administrative and office, and information technology fields. The risk
consulting segment provides business and technology risk consulting and internal audit services.
The accounting policies of the segments are set forth in Note A—Summary of Significant Accounting Policies. The
Company evaluates performance based on income from operations before net interest income, intangible amortization expense,
and income taxes.
42
42
2017 ANNUAL REPORT | ROBERT HALF
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table provides a reconciliation of revenue and operating income by reportable segment to consolidated
results (in thousands):
Net service revenues
Temporary and consultant staffing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Permanent placement staffing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk consulting and internal audit services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income
Temporary and consultant staffing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Permanent placement staffing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk consulting and internal audit services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Years Ended December 31,
2017
2016
2015
$4,011,042
439,214
816,533
$5,266,789
$4,026,777
419,314
804,308
$5,250,399
$3,930,843
421,411
742,679
$5,094,933
$ 355,700
77,673
83,907
517,280
1,563
(1,799)
$ 517,516
$ 393,704
80,001
80,754
554,459
1,237
(888)
$ 554,110
$ 399,808
85,019
95,845
580,672
192
(550)
$ 581,030
Assets by reportable segment are not presented as the Company does not allocate assets to its reportable segments, nor is
such information used by management for purposes of assessing performance or allocating resources.
The Company operates internationally, with operations in North America, South America, Europe, Asia and Australia.
The following tables represent revenues and long-lived assets by geographic location (in thousands):
Net service revenues (a)
Domestic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$4,121,701
1,145,088
$4,220,477
1,029,922
$4,105,013
989,920
Years Ended December 31,
2017
2016
2015
$5,266,789
$5,250,399
$5,094,933
December 31,
2017
2016
2015
Assets, long-lived
Domestic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 113,069
31,818
$ 136,434
25,075
$ 117,176
25,730
$ 144,887
$ 161,509
$ 142,906
(a) There were no customers that accounted for more than 10% of the Company’s total net revenue in any year presented.
(b) No individual country represented more than 10% of revenues in any year presented.
43
43
2017 ANNUAL REPORT | ROBERT HALF
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note N—Quarterly Financial Data (Unaudited)
The following tabulation shows certain quarterly financial data for 2017 and 2016 (in thousands, except per share
amounts):
2017
Net service revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,287,370
Gross margin. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 525,828
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 125,501
78,521
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
.63
Basic net income per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
.62
Diluted net income per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1
2
$1,308,428
$ 538,438
$ 130,707
80,316
$
.64
$
.64
$
3
$1,324,709
$ 546,400
$ 132,270
84,700
$
.69
$
.68
$
4
$1,346,282
$ 553,146
$ 129,038
47,047
$
.38
$
.38
$
Quarter
2016
Net service revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,302,625
Gross margin. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 531,972
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 133,791
83,416
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
.65
Basic net income per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
.64
Diluted net income per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1
2
$1,344,160
$ 556,993
$ 149,414
91,616
$
.71
$
.71
$
3
$1,338,541
$ 552,509
$ 146,324
90,569
$
.71
$
.71
$
4
$1,265,073
$ 519,202
$ 124,581
77,788
$
.61
$
.61
$
Quarter
Note O—Subsequent Events
On February 13, 2018, the Company authorized the repurchase, from time to time, of up to an additional 10 million
shares of the Company's common stock on the open market or in privately negotiated transactions, depending on market
conditions. The authorization is in addition to the approximately 2.3 million shares remaining under the existing repurchase
program. There is no guarantee as to whether, when, or how many shares the Company will repurchase, and the Company may
discontinue the repurchase program at any time.
On February 13, 2018, the Company announced the following:
Quarterly dividend per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$.28
Declaration date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . February 13, 2018
Record date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . February 23, 2018
Payment date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 15, 2018
44
44
2017 ANNUAL REPORT | ROBERT HALF
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Robert Half International Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the consolidated financial statements, including the related notes, as listed in the index appearing under Item
15(a)(1), and the financial statement schedule listed in the index appearing under Item 15(a)(2), of Robert Half International
Inc. and its subsidiaries (collectively referred to as the “consolidated financial statements”). We also have audited the
Company’s internal control over financial reporting as of December 31, 2017 based on criteria established in Internal Control -
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of December 31, 2017 and 2016, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 2017 in conformity with accounting principles generally accepted in the
United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013)
issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included
in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to
express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial
reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material
respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
45
45
2017 ANNUAL REPORT | ROBERT HALF Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ PricewaterhouseCoopers LLP
San Francisco, California
February 20, 2018
We have served as the Company’s auditor since 2002.
46
46
2017 ANNUAL REPORT | ROBERT HALF Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Disclosure Controls and Procedures. Management, including the Company’s Chairman and Chief Executive Officer and
the Vice Chairman and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s
disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Chairman
and Chief Executive Officer and the Vice Chairman and Chief Financial Officer concluded that the disclosure controls and
procedures were effective to ensure that information required to be disclosed in the reports the Company files and submits
under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and
forms of the Securities and Exchange Commission and that information required to be disclosed by the Company in the reports
that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its
principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting. There have been no changes in the Company’s internal controls
over financial reporting identified in connection with the evaluation required by Rule 13a-15 of the Securities Exchange Act of
1934 that occurred during the Company’s fourth quarter that has materially affected, or is reasonably likely to materially affect,
the Company’s internal control over financial reporting.
Management’s Report on Internal Control over Financial Reporting. Management is responsible for establishing and
maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act
of 1934, as amended). Management assessed the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2017, using criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) and concluded that the Company maintained effective internal
control over financial reporting as of December 31, 2017.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2017, has been audited
by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included
herein.
Item 9B. Other Information
On February 13, 2018, the Board of Directors amended and restated the Company’s By-Laws to implement proxy access
and to update the notice, procedural, disclosure and other requirements for stockholder nominations and proposals of business
not intended to be included in the Company’s proxy statement for an annual meeting of stockholders. In particular, the By-
Laws were amended to include a new Article II, Section 9(a)(3), which permits a stockholder or group of up to 20 stockholders
owning 3% or more of the Company’s common stock continuously for at least three years to nominate for election to the
Board, and include in the Company’s proxy materials for its annual meeting of stockholders, nominees representing 25% of the
number of directors then serving on the Board (rounding down to the closest whole number), subject to certain limitations and
provided that such nominating stockholder(s) and nominee(s) satisfy the applicable requirements specified in the By-Laws. In
connection with the Company’s adoption of proxy access and in order to ensure full disclosure for all director nominations and
proposals, the Company’s By-Laws were also amended to require any notice provided pursuant to Article II, Section 9(a)(2)
(the Company’s traditional advance notice provision) to disclose additional information regarding each person proposed for
nomination for election as a director, the stockholder giving the notice, and the beneficial owner, if any, on whose behalf the
nomination or proposal is made, including disclosure of securities ownership, derivative and short positions and certain
interests, as well as to make other non-substantive changes.
The foregoing description is qualified in its entirety by reference to the Amended and Restated By-Laws that are attached
hereto as Exhibit 3.2 and incorporated herein by reference.
47
47
2017 ANNUAL REPORT | ROBERT HALF On February 13, 2018, the Company authorized the repurchase, from time to time, of up to an additional 10 million
shares of the Company's common stock on the open market or in privately negotiated transactions, depending on market
conditions. The authorization is in addition to the approximately 2.3 million shares remaining under the existing repurchase
program. There is no guarantee as to whether, when, or how many shares the Company will repurchase, and the Company may
discontinue the repurchase program at any time.
48
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2017 ANNUAL REPORT | ROBERT HALF PART III
Except as provided below in this Part III, the information required by Items 10 through 14 of Part III is incorporated by
reference from Item 1 of this Report and from the registrant’s Proxy Statement, under the captions “Nomination and Election of
Directors,” “Beneficial Stock Ownership,” “Compensation Discussion and Analysis,” “Compensation Tables,” “Corporate
Governance,” “The Board and Committees” and “Independent Registered Public Accounting Firm” which Proxy Statement
will be mailed to stockholders in connection with the registrant’s annual meeting of stockholders which is scheduled to be held
in May 2018.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Equity Compensation Plan Information
Plan Category
Equity compensation plans approved by security
holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity compensation plans not approved by
security holders. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
A
Weighted average
exercise price of
outstanding options,
warrants and rights
B
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column A)
C
—
—
—
—
—
—
3,794,824
—
3,794,824
Since May 2005, all grants have been made pursuant to the Stock Incentive Plan, which was approved by stockholders in
May 2005 and re-approved in May 2008, May 2011, May 2013, and May 2014. Such plan authorizes the issuance of stock
options, restricted stock, stock units and stock appreciation rights to directors, executive officers and employees.
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2017 ANNUAL REPORT | ROBERT HALF
Item 15. Exhibits and Financial Statement Schedules
(a) 1. Financial Statements
PART IV
The following consolidated financial statements of the Company and its subsidiaries are included in Item 8 of this
report:
Consolidated statements of financial position at December 31, 2017 and 2016 .............................................
Consolidated statements of operations for the years ended December 31, 2017, 2016, and 2015..................
Consolidated statements of comprehensive income for the years ended December 31, 2017, 2016, and
2015..................................................................................................................................................................
Consolidated statements of stockholders’ equity for the years ended December 31, 2017, 2016, and 2015 ..
Consolidated statements of cash flows for the years ended December 31, 2017, 2016, and 2015 .................
Page(s)
25
26
27
28
29
Notes to consolidated financial statements ......................................................................................................
30-44
Report of independent registered public accounting firm................................................................................
45-46
Selected quarterly financial data for the years ended December 31, 2017 and 2016 are set forth in Note N
—Quarterly Financial Data (Unaudited) included in Item 8 of this report......................................................
44
2. Financial Statement Schedules
Schedule II - Valuation and Qualifying Accounts for the years ended December 31, 2017, 2016, and 2015.
55
Schedules I, III, IV and V have been omitted as they are not applicable.
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2017 ANNUAL REPORT | ROBERT HALF
3. Exhibits
Exhibit
No.
3.1
Exhibit
Restated Certificate of Incorporation, incorporated by reference to Exhibit 3.1 to Registrant’s
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2009.
3.2
Amended and Restated By-Laws.
*10.1
*10.2
*10.3
*10.4
*10.5
*10.6
*10.7
*10.8
*10.9
*10.10
*10.11
Form of Power of Attorney and Indemnification Agreement, incorporated by reference to Exhibit 10.1
to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2002.
Employment Agreement between the Registrant and Harold M. Messmer, Jr., incorporated by
reference to (i) Exhibit 10.(c) to the Registrant’s Annual Report on Form 10-K for the fiscal year
ended December 31, 1985(P), (ii) Exhibit 10.2(b) to Registrant’s Registration Statement on Form S-1
(No. 33-15171)(P), (iii) Exhibit 10.2(c) to the Registrant’s Annual Report on Form 10-K for the fiscal
year ended December 31, 1987(P), (iv) Exhibit 10.2(d) to the Registrant’s Annual Report on Form 10-
K for the fiscal year ended December 31, 1988(P), (v) Exhibit 28.1 to the Registrant’s Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31, 1990(P), (vi) Exhibit 10.8 to the
Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1991(P), (vii)
Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
1993(P), (viii) Exhibit 10.7 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended
December 31, 1993, (ix) Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1995, (x) Exhibit 10.7 to the Registrant’s Annual Report on Form 10-K for
the fiscal year ended December 31, 1995, (xi) Exhibit 10.2 to the Registrant’s Annual Report on Form
10-K for the fiscal year ended December 31, 1996, (xii) Exhibit 10.2 to the Registrant’s Annual
Report on Form 10-K for the fiscal year ended December 31, 1997, (xiii) Exhibit 10.2 to the
Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1998, (xiv) Exhibit
10.2 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999,
(xv) Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 2004, (xvi) Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 2008, and (xvii) Exhibit 10.2 to the Registrant’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2010.
Amended and Restated Retirement Agreement between Registrant and Harold M. Messmer Jr.,
incorporated by reference to Exhibit 99.2 to the Registrant’s Current Report on Form 8-K dated
December 7, 2006.
Amended and Restated Deferred Compensation Plan, incorporated by reference to Exhibit 10.4 to the
Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2008.
Amended and Restated Severance Agreement dated as of February 9, 2011, between Registrant and
Paul F. Gentzkow, incorporated by reference to Exhibit 10.8 to Registrant’s Annual Report on Form
10-K for the fiscal year ended December 31, 2010.
Agreement dated as of July 31, 1995, between Registrant and Paul F. Gentzkow, incorporated by
reference to Exhibit 10.6 to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 2000.
Form of Amended and Restated Severance Agreement, incorporated by reference to Exhibit 10.10 to
Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
Form of Indemnification Agreement for Directors of the Registrant, incorporated by reference to
Exhibit 10.27 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31,
1989(P).
Form of Indemnification Agreement for Executive Officers of Registrant, incorporated by reference
to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 2000.
Senior Executive Retirement Plan, incorporated by reference to Exhibit 10.13 to Registrant’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2010.
Collateral Assignment of Split Dollar Insurance Agreement, incorporated by reference to (i) Exhibit
10.3 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30,
2000, and (ii) Exhibit 10.18 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2003.
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2017 ANNUAL REPORT | ROBERT HALF
Exhibit
No.
*10.12
*10.13
*10.14
*10.15
*10.16
*10.17
*10.18
*10.19
*10.20
*10.21
*10.22
*10.23
21.1
23.1
31.1
31.2
32.1
32.2
Exhibit
Form of Part-Time Employment Agreement, as amended and restated, incorporated by reference to
Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 2014.
Annual Performance Bonus Plan, as amended and restated, incorporated by reference to Exhibit 99.1
to Registrant’s Current Report on Form 8-K dated May 23, 2013.
Summary of Outside Director Cash Remuneration, incorporated by reference to Exhibit 10.2 to the
Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2010.
Stock Incentive Plan, as amended and restated, incorporated by reference to Exhibit 10.2 to the
Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2014.
Stock Incentive Plan—Form of Restricted Share Agreement for Executive Officers effective April 15,
2013, incorporated by reference to Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q for
the fiscal quarter ended March 31, 2013.
Stock Incentive Plan—Form of Restricted Share Agreement for Executive Officers effective through
April 14, 2013, incorporated by reference to Exhibit 99.3 to Registrant’s Current Report on Form 8-K
dated May 3, 2005.
Amendment to Restricted Share Agreement dated as of May 9, 2012, between Registrant and Harold
M. Messmer, Jr., incorporated by reference to Exhibit 10.1 to Registrant’s Quarterly Report on Form
10-Q for the fiscal quarter ended June 30, 2012.
Form of Amendment to Restricted Share Agreement dated as of May 9, 2012, incorporated by
reference to Exhibit 10.2 to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 2012.
Form of Amendment to Restricted Share Agreement dated as of November 8, 2012, incorporated by
reference to Exhibit 10.27 to Registrant’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2012.
Stock Incentive Plan—Form of Stock Option Agreement for Executive Officers, incorporated by
reference to Exhibit 99.4 to Registrant’s Current Report on Form 8-K dated May 3, 2005.
Stock Incentive Plan—Form of Restricted Share Agreement for Outside Directors, incorporated by
reference to Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 2006.
Stock Incentive Plan—Form of Stock Option Agreement for Outside Directors, incorporated by
reference to Exhibit 99.6 to Registrant’s Current Report on Form 8-K dated May 3, 2005.
Subsidiaries of the Registrant.
Independent Registered Public Accounting Firm’s Consent.
Rule 13a-14(a) Certification of Chief Executive Officer.
Rule 13a-14(a) Certification of Chief Financial Officer.
Rule 1350 Certification of Chief Executive Officer.
Rule 1350 Certification of Chief Financial Officer.
101.1
Part II, Item 8 of this Form 10-K formatted in XBRL.
* Management contract or compensatory plan.
(P) This Exhibit was originally filed in paper format. Accordingly, a hyperlink has not been provided.
52
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2017 ANNUAL REPORT | ROBERT HALF
Item 16. Form 10-K Summary
None.
53
53
2017 ANNUAL REPORT | ROBERT HALF Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
ROBERT HALF INTERNATIONAL INC.
(Registrant)
Date: February 20, 2018
By:
/s/ M. KEITH WADDELL
M. Keith Waddell
Vice Chairman, President and
Chief Financial Officer
(Principal Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: February 20, 2018
Date: February 20, 2018
Date: February 20, 2018
Date: February 20, 2018
Date: February 20, 2018
Date: February 20, 2018
Date: February 20, 2018
/s/ HAROLD M. MESSMER, JR.
Harold M. Messmer, Jr.
Chairman of the Board,
Chief Executive Officer,
and a Director
(Principal Executive Officer)
/s/ MARC H. MORIAL
Marc H. Morial, Director
/s/ BARBARA J. NOVOGRADAC
Barbara J. Novogradac, Director
/s/ ROBERT J. PACE
Robert J. Pace, Director
/s/ FREDERICK A. RICHMAN
Frederick A. Richman, Director
/s/ M. KEITH WADDELL
M. Keith Waddell
Vice Chairman, President,
Chief Financial Officer and a Director
(Principal Financial Officer)
/s/ MICHAEL C. BUCKLEY
Michael C. Buckley
Executive Vice President and Treasurer
(Principal Accounting Officer)
By:
By:
By:
By:
By:
By:
By:
54
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2017 ANNUAL REPORT | ROBERT HALF
Schedule II—Valuation and Qualifying Accounts
(in thousands)
Year Ended December 31, 2015
Allowance for doubtful accounts
receivable
Deferred tax valuation allowance
Year Ended December 31, 2016
Allowance for doubtful accounts
receivable
Deferred tax valuation allowance
Year Ended December 31, 2017
Allowance for doubtful accounts
receivable
Deferred tax valuation allowance
Balance at
Beginning of
Period
Charged to
Expenses
Deductions
Translation
Adjustments
Balance at
End of Period
$
$
$
$
$
$
30,544
29,561
35,087
26,329
33,133
18,907
12,005
6,283
9,192
2,160
8,022
1,411
(5,353)
(8,068)
(9,907)
(9,517)
(8,751)
(1,275)
(2,109) $
(1,447) $
35,087
26,329
(1,239) $
(65) $
33,133
18,907
777
1,135
$
$
33,181
20,178
55
55
2017 ANNUAL REPORT | ROBERT HALF As Amended and Restated Effective February 13, 2018
EXHIBIT 3.2
BY-LAWS
OF
ROBERT HALF INTERNATIONAL INC.
ARTICLE I
OFFICES
Section 1.
Registered Office. The registered office of the Corporation in the State
of Delaware shall be at 1209 Orange Street, City of Wilmington, County of New Castle.
Section 2.
Principal Office for Transaction of Business. The principal office for the
transaction of the business of the Corporation shall be at 2884 Sand Hill Road, in the City of
Menlo Park, County of San Mateo, State of California. The Board of Directors may change said
principal office from one location to another within or without said City, County or State.
Section 3.
Other Offices. The Corporation may have offices at such other place or
places, within or without the State of Delaware, as from time to time the Board of Directors may
determine or the business of the Corporation may require.
ARTICLE II
MEETING OF STOCKHOLDERS
Section 1.
Place of Meetings. Meetings of the stockholders shall be held at such place
either within or without the State of Delaware as shall be fixed by the Board of Directors and stated
in the notice or waiver of notice of the meeting.
Section 2.
Annual Meeting. The annual meeting of stockholders for the election of
directors and for the transaction of such other business as may come before the meeting shall be
held on such date in each year as the Chairman of the Board shall designate. The Board of
Directors shall present at each annual meeting a full and clear statement of the business and
condition of the Corporation.
Section 3.
Special Meetings. A special meeting of the stockholders for any purpose
or purposes, unless otherwise prescribed by statute, may be called at any time by
1
1
2017 ANNUAL REPORT | ROBERT HALF the Chairman of the Board, the Vice Chairman of the Board or the Chief Executive Officer or by
order of the Board of Directors.
Section 4.
Notice of Meetings. Except as otherwise provided by law or the
Certificate of Incorporation, notice of each meeting of stockholders shall be given, in a manner
permitted by the Delaware General Corporation Law, not less than ten nor more than sixty days
before the date of the meeting to each stockholder entitled to vote at such meeting, directed to his
address as it appears upon the books of the corporation, said notice to specify the place, date and
hour and purpose or purposes of the meeting. Notice of the time, place and purpose of any
meeting of stockholders may be waived in writing, either before or after such meeting, and will
be waived by any stockholder by his attendance thereat in person or by proxy. Any stockholder
so waiving notice of such meeting shall be bound by the proceedings of any such meeting in all
respects as if due notice thereof had been given. Any previously scheduled meeting of the
stockholders may be postponed, and (unless the Certificate of Incorporation otherwise provides)
any special meeting of the stockholders may be cancelled, by resolution of the Board of Directors
upon public notice given prior to the date previously scheduled for such meeting of stockholders.
Section 5.
Quorum and Adjournment. The holders of a majority of the stock issued
and outstanding and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of business except as
otherwise provided by statute or by the Certificate of Incorporation. The chairman of the meeting
may adjourn the meeting from time to time, whether or not there is such a quorum. No notice of
the time and place of adjourned meetings need be given except as required by law. The
stockholders present at a duly called meeting at which a quorum is present may continue to
transact business until adjournment, notwithstanding the withdrawal of enough stockholders to
leave less than a quorum.
Section 6.
Voting.
(a)
Except as otherwise provided in the Certificate of Incorporation, each
stockholder of voting common stock shall, at each meeting of the stockholders, be entitled to one
vote in person or by proxy for each share of stock of the Corporation held by him on the date
fixed pursuant to the provisions of Section 3 of Article IX of the By-Laws as the record date and
registered in his name on the books of the Corporation for the determination of stockholders who
shall be entitled to notice and to vote at such meeting. Any vote of stock of the Corporation may
be given at any meeting of the stockholders by the stockholder entitled thereto in person or by
proxy but no proxy shall be voted three years after its date, unless said proxy shall provide for a
longer period. At all meetings of the stockholders all matters except where other provision is
made by law, by the Certificate of Incorporation or by these By-Laws, shall be decided by the
vote of a majority in voting interest of the stockholders present in person or by proxy and entitled
to vote on that matter. For purposes of determining the vote on any matter, including election of
directors, the shares deemed entitled to vote on that matter shall not include broker non-votes.
Unless demanded by a stockholder of the Corporation present in person or by proxy at any
meeting of the stockholders and entitled to vote thereat or so
2
2
2017 ANNUAL REPORT | ROBERT HALF directed by the chairman of the meeting, the vote thereat on any question or matter, including the
election of directors, need not be by ballot. Upon a demand of any such stockholder for a vote by
ballot on any question or at the direction of such chairman that a vote by ballot be taken on any
question, such vote shall be taken. On a vote by ballot each ballot shall be signed by the
stockholder voting, or by his proxy, and shall state the number of shares voted. No holder of
Preferred Stock shall be entitled to vote at any meeting of the stockholders, except as provided by
law, by the Certificate of Incorporation or by the Certificate of Determination of Preferences
creating such Preferred Stock.
(b)
Except as provided in Section 5 of Article III or as otherwise required by
law or by the Certificate of Incorporation, each director shall be elected by the vote of the
majority of the votes cast with respect to the director at any meeting for the election of directors
at which a quorum is present, provided that if on the record date for such meeting or the advance
notice date for nominations at such meeting determined pursuant to Section 9(a)(2) of Article II
of these By-laws, the number of nominees exceeds the number of directors to be elected, the
directors shall be elected by the vote of a plurality of the shares represented in person or by proxy
at any such meeting and entitled to vote on the election of directors.
Section 7.
List of Stockholders. The officer who has charge of the stock ledger of
the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at said meeting, arranged in alphabetical order,
showing the address of and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, at
the Corporation’s principal place of business, and the list shall be produced and kept at the time
and place of meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
Section 8.
Inspectors of Votes. At each meeting of the stockholders the chairman of
such meeting may appoint one or three Inspectors of Votes to act thereat. Each Inspector of Votes
so appointed shall first subscribe an oath or affirmation faithfully to execute the duties of an
Inspector of Votes at such meeting with strict impartiality and according to the best of his ability.
Such Inspectors of Votes shall take charge of the ballots at such meeting and after the balloting
thereat on any question shall count the ballots cast thereon and shall make a report in writing to
the secretary of such meeting of the results thereof. An Inspector of Votes need not be a
stockholder of the Corporation, and any officer of the Corporation may be an Inspector of Votes
on any question other than a vote for or against his election to any position with the Corporation
or on any other question in which he may be directly interested. If there are three Inspectors of
Votes, the determination, report or certificate of two such Inspectors shall be as effective as if
unanimously made by all Inspectors.
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3
2017 ANNUAL REPORT | ROBERT HALF Section 9.
Notice of Stockholder Business and Nominations.
(a)
Annual Meetings of Stockholders.
(1)
Nominations of persons for election to the Board of Directors of
the Corporation and the proposal of business to be considered by the stockholders may be made at
an annual meeting of stockholders (a) pursuant to the Corporation’s notice of meeting, (b) by or at
the direction of the Board of Directors, (c) with respect to nominations of persons and the
proposal of any business not intended to be included in the Corporation’s proxy statement for
such annual meeting, by any stockholder of the Corporation who was a stockholder of record at
the time of giving of notice provided for in subsection (a)(2) of this By-Law, who is entitled to
vote at the meeting and who complies with the notice and other procedures set forth in subsection
(a)(2) of this By-Law, or (d) with respect to nominations of persons intended to be included in the
Corporation’s proxy statement for such annual meeting, by a Nominator (as defined below) who
complies with the notice and other procedures set forth in subsection (a)(3) of this By-Law.
(2)
For nominations or other business to be properly brought before
an annual meeting by a stockholder pursuant to clause (c) of paragraph (a)(1) of this By-Law, the
stockholder must have given timely notice thereof in writing to the Secretary of the Corporation
and such other business must otherwise be a proper matter for stockholder action. To be timely, a
stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the
Corporation not later than the close of business on the 60th day nor earlier than the close of
business on the 90th day prior to the first anniversary of the preceding year’s annual meeting;
provided, however, that in the event that the date of the annual meeting is more than 30 days
before or more than 60 days after such anniversary date, notice by the stockholder to be timely
must be so delivered not earlier than the close of business on the 90th day prior to such annual
meeting and not later than the close of business on the later of the 60th day prior to such annual
meeting or the 10th day following the day on which public announcement of the date of such
meeting is first made by the Corporation. In no event shall the public announcement of an
adjournment of an annual meeting commence a new time period for the giving of a stockholder’s
notice as described above. Such stockholder’s notice shall set forth:
(a)
as to each person whom the stockholder proposes to nominate
for election or reelection as a director, all information relating to such person that is
required to be disclosed in solicitations of proxies for election of directors in an election
contest, or is otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) and any successor to
such Regulation, including and in addition to:
(i)
such person’s written consent to being named in the proxy
statement as a nominee and to serving as a director if elected;
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4
2017 ANNUAL REPORT | ROBERT HALF (ii)
an affirmation that such person meets the Corporation’s stated
criteria for board membership;
(iii)
any transactions or relationships between such person and the
Corporation or the Corporation’s customers, suppliers, competitors or
management;
(iv)
Corporation’s stock;
the trading history of such person with respect to the
(v)
information regarding whether such person has any plans or
proposals for the Corporation and whether such person seeks to use the
nomination to redress personal claims or grievances against the Corporation or
others or to further personal interests or special interests not shared by
stockholders at large; and
(vi)
a description of (1) any agreement, arrangement or
understanding with, or any commitment or assurance to, any person or entity as
to how such nominee, if elected as a director of the Corporation, will act or vote
on any issue or question to be decided by the Board of Directors or that otherwise
relates to the Corporation or such persons’ service on the Board of Directors (a
“Voting Commitment”) and (2) any compensatory, payment or other financial
agreement, arrangement or understanding with any person other than with the
Corporation, including any agreement to indemnify such person for obligations
arising as a result of his or her service as a director of the Corporation, in
connection with such nominee’s nomination, service or action as a director of the
Corporation (a “Third-Party Compensation Arrangement”);
(b)
as to any other business that the stockholder proposes to bring
before the meeting, a brief description of the business desired to be brought before the
meeting, the reasons for conducting such business at the meeting and any material
interest in such business of such stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; and
(c)
as to the stockholder giving the notice and the beneficial owner
or owners, if any, on whose behalf the nomination or proposal is made:
(i)
the name and address of such stockholder, as they appear on the
Corporation’s books, and of any such beneficial owner;
(ii)
(1) the class and number of shares of the Corporation that are,
directly or indirectly, beneficially owned by such stockholder and each beneficial
owner on whose behalf the nomination is made and their respective affiliates or
associates or others acting in concert therewith, including the proposed nominee
(each, a “Proponent Person” and collectively, the “Proponent Persons”), (2) any
option, warrant, convertible security, stock appreciation right, swap or similar
right or
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2017 ANNUAL REPORT | ROBERT HALF agreement with an exercise or conversion privilege or a settlement payment or
mechanism at a price related to any class or series of shares of the Corporation or
with a value derived in whole or in part from the value of any class or series of
shares of the Corporation, or which is intended to increase or decrease (or has the
effect of increasing or decreasing) the voting power of any person with respect to
the shares of any class or series of shares of the Corporation, whether or not such
instrument or right or agreement shall be subject to settlement in the underlying
class or series of capital stock of the Corporation or otherwise (a “Derivative
Instrument”), owned beneficially, directly or indirectly, by any such Proponent
Person and any other direct or indirect opportunity to profit or share in any profit
derived from any increase or decrease in the value of the shares of the
Corporation, (3) a description of any proxy, contract, arrangement, understanding
or relationship pursuant to which any such Proponent Person has a right to vote
any shares of the Corporation or influence the voting over any such shares, (4)
any short interest of any such Proponent Person in any security of the
Corporation, (5) any rights to dividends on the shares of the Corporation owned
beneficially, directly or indirectly, by any such Proponent Person that are
separated or separable from the underlying shares of the Corporation, (6) any
proportionate interest in shares of the Corporation or Derivative Instruments
held, directly or indirectly, by a general or limited partnership in which any such
Proponent Person is a general partner or, directly or indirectly, beneficially owns
an interest in a general partner, and (7) any performance-related fees (other than
an asset-based fee) that any such Proponent Person is entitled to based on any
increase or decrease in the value of shares of the Corporation or Derivative
Instruments, including without limitation any such interests held by members of
any such Proponent Person’s immediate family sharing the same household;
(iii)
the trading history of such stockholder and such beneficial owner
with respect to the Corporation’s stock;
(iv)
any transactions or relationships between such stockholder or
such beneficial owner, on the one hand, and the Corporation or its customers,
suppliers, competitors or management, on the other hand;
(v)
information regarding whether such stockholder or such
beneficial owner, or any of their affiliates have any plans or proposals for the
Corporation other than those described in the notice, and whether such
stockholder or such beneficial owner seeks to use the nomination or proposal to
redress personal claims or grievances against the Corporation or others or to
further personal interests or special interests not shared by stockholders at large;
(vi)
a representation that the stockholder is a stockholder of record of
stock of the Corporation at the time of the giving of notice
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2017 ANNUAL REPORT | ROBERT HALF provided for in these By-Laws, is entitled to vote at such meeting and that the
stockholder (or a qualified representative thereof) intends to appear in person at
the meeting to present such nominee for election or to bring such business before
the meeting;
(vii)
all other information relating to such stockholder or such
beneficial owner which would be required to be included in a proxy statement or
other filing required to be filed with the Securities and Exchange Commission if,
with respect to any such nomination or item of business, such stockholder were a
participant in a solicitation subject to Regulation 14A under the Exchange Act;
(viii)
a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by the stockholder; and
(ix)
a statement as to whether or not such stockholder or beneficial
owner intends to deliver a proxy statement and form of proxy to a sufficient
number of holders of the Corporation’s voting shares reasonably believed by
such stockholder or beneficial owner to elect such nominee or nominees or to
carry such proposal under applicable law.
In addition, such stockholder shall be required to provide such further
information as may be requested by the Corporation.
(3)
Proxy Access for Director Nominations.
(a)
Whenever the Board of Directors solicits proxies with respect to
the election of directors at an annual meeting, in addition to any persons nominated for
election to the Board of Directors by or at the direction of the Board of Directors, subject
to the provisions of this subsection 9(a)(3), the Corporation shall:
(i)
include in its notice of meeting and proxy materials, as
applicable, for any annual meeting of stockholders (1) the name of any person
nominated for election (the “Stockholder Nominee”) by a stockholder as of the
date that the Notice of Proxy Access Nomination (as defined below) is received
by the Secretary of the Corporation at the principal executive offices of the
Corporation in accordance with this subsection 9(a)(3) who is entitled to vote for
the election of directors at the annual meeting and who satisfies the notice,
ownership and other requirements of this subsection 9(a)(3) (such stockholder,
together with the beneficial owner of such shares, a “Nominator”) or by a group
of no more than 20 such stockholders (such stockholders, together with the
beneficial owners of such shares, a “Nominator Group”) that, collectively as a
Nominator Group, satisfies the notice, ownership and other requirements of this
subsection 9(a)(3) applicable to a Nominator Group;
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2017 ANNUAL REPORT | ROBERT HALF provided that, in the case of a Nominator Group, each member thereof (each a
“Group Member”) shall have satisfied the notice, ownership and other
requirements of this subsection 9(a)(3) applicable to Group Members, and (2)
if the Nominator or the Nominator Group, as applicable, so elects, the
Nomination Statement (as defined below) furnished by such Nominator or
Nominator Group; and
(ii)
include such Stockholder Nominee’s name on any ballot
distributed at such annual meeting and on the Corporation’s proxy card (or any
other format through which the Corporation permits proxies to be submitted)
distributed in connection with such annual meeting. Nothing in this subsection
9(a)(3) shall limit the Corporation’s ability to solicit against, and include in its
proxy materials its own statements relating to, any Stockholder Nominee,
Nominator or Nominator Group, or to include such Stockholder Nominee as a
nominee of the Board of Directors.
(b)
At each annual meeting, a Nominator or Nominator Group may
nominate one or more Stockholder Nominees for election at such meeting pursuant to this
subsection 9(a)(3); provided that the maximum number of Stockholder Nominees
nominated by all Nominators and Nominator Groups (including Stockholder Nominees
that were submitted by a Nominator or Nominator Group for inclusion in the
Corporation’s proxy materials pursuant to this subsection 9(a)(3) but either are
subsequently withdrawn, disregarded, declared invalid or ineligible pursuant to this
subsection 9(a)(3)) to appear in the Corporation’s proxy materials with respect to an
annual meeting shall not exceed 25% of the total number of directors in office as of the
Final Proxy Access Deadline (as defined below), or if such number is not a whole
number, the closest whole number below 25% (the “Maximum Number”).
The Maximum Number shall be reduced, but not below zero, by the sum of:
(x) the number of persons that the Board of Directors decides to nominate
pursuant to an agreement, arrangement or other understanding with one or
more stockholders or beneficial owners, as the case may be, in lieu of such
person being formally nominated as a director pursuant to this subsection
9(a)(3) or Section 9(a)(2);
(y) the number of persons that the Board decides to nominate for re-election who
were previously elected to the Board based on a nomination made pursuant
to this subsection 9(a)(3) or pursuant to an agreement, arrangement or other
understanding with one or more stockholders or beneficial owners, as the
case may be, in lieu of such person being formally nominated as a director
pursuant to this subsection 9(a)(3), in each case, at one of the previous two
annual meetings; and
(z) the number of persons that the Board decides to nominate for re-election who
were previously elected to the Board based on a
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2017 ANNUAL REPORT | ROBERT HALF nomination made pursuant to Section 9(a)(2) or pursuant to an agreement,
arrangement or other understanding with one or more stockholders or
beneficial owners, as the case may be, in lieu of such person being formally
nominated as a director pursuant to Section 9(a)(2), in each case, at the
previous year’s annual meeting;
If one or more vacancies for any reason occurs on the Board of Directors at any
time after the Final Proxy Access Deadline but before the date of the applicable annual
meeting and the Board of Directors determines to reduce the size of the Board of
Directors in connection therewith, the Maximum Number shall be calculated based on the
number of directors in office as so reduced.
Any Nominator or Nominator Group submitting more than one Stockholder
Nominee for inclusion in the Corporation’s proxy materials pursuant to this subsection
9(a)(3) shall rank in its Notice of Proxy Access Nomination such Stockholder Nominees
based on the order that the Nominator or Nominator Group desires such Stockholder
Nominees to be selected for inclusion in the Corporation’s proxy materials in the event
that the total number of Stockholder Nominees submitted by Nominators or Nominator
Groups pursuant to this subsection 9(a)(3) exceeds the Maximum Number. In the event
that the number of Stockholder Nominees submitted by Nominators or Nominator
Groups pursuant to this subsection 9(a)(3) exceeds the Maximum Number, the highest
ranking Stockholder Nominee who meets the requirements of this subsection 9(a)(3)
from each Nominator and Nominator Group will be selected for inclusion in the
Corporation’s proxy materials until the Maximum Number is reached, beginning with the
Nominator or Nominator Group with the largest number of shares disclosed as owned (as
defined below) in its respective Notice of Proxy Access Nomination submitted to the
Corporation and proceeding through each Nominator or Nominator Group in descending
order of ownership. If the Maximum Number is not reached after the highest ranking
Stockholder Nominee who meets the requirements of this subsection 9(a)(3) from each
Nominator and Nominator Group has been selected, this process will continue as many
times as necessary, following the same order each time, until the Maximum Number is
reached.
If, after the Final Proxy Access Deadline, whether before or after the mailing of
the Corporation’s definitive proxy statement, (i) a Stockholder Nominee who satisfies the
requirements of this subsection 9(a)(3) becomes ineligible for inclusion in the
Corporation’s proxy materials pursuant to this subsection 9(a)(3), becomes unwilling to
serve on the Board of Directors, dies, becomes disabled or is otherwise disqualified from
being nominated for election or serving as a director of the Corporation or (ii) a
Nominator or Nominator Group withdraws its nomination or becomes ineligible, in each
case as determined by the Board of Directors or the chairman of the meeting, then the
Board of Directors or the chairman of the meeting shall declare each nomination by such
Nominator or Nominator Group to be invalid, and each such nomination shall be
disregarded, no replacement nominee or nominees shall be included in the Corporation’s
proxy materials or otherwise submitted for election as a director in
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2017 ANNUAL REPORT | ROBERT HALF substitution thereof and the Corporation (1) may omit from its proxy materials
information concerning such Stockholder Nominee and (2) may otherwise communicate
to its stockholders, including without limitation by amending or supplementing its proxy
materials, that the Stockholder Nominee will not be eligible for election at the annual
meeting and will not be included as a Stockholder Nominee in the proxy materials.
(c)
To nominate a Stockholder Nominee, the Nominator or
Nominator Group shall submit to the Secretary of the Corporation the information
required by this subsection 9(a)(3) on a timely basis. To be timely, the Notice of Proxy
Access Nomination must be addressed to and received by the Secretary of the
Corporation not less than 120 days nor more than 150 days prior to the first anniversary
of the date on which the Corporation’s definitive proxy statement was released to
stockholders in connection with the prior year’s annual meeting; provided, however, that
if the annual meeting is convened more than 30 days prior to or delayed by more than 60
days after the first anniversary of the date of the preceding year’s annual meeting, the
information must be so received not earlier than 120 days prior to such annual meeting
and not later than the close of business on the later of (x) the 90th day prior to such
annual meeting or (y) the 10th day following the day on which a public announcement of
the date of the annual meeting is first made (the last day on which a Notice of Proxy
Access Nomination may be delivered pursuant to and in accordance with this subsection
9(a)(3), the “Final Proxy Access Deadline”); provided further that in no event shall any
adjournment or postponement of an annual meeting, or the public announcement thereof,
commence a new time period or extend any time period for the receipt of the information
required by this subsection 9(a)(3). The written notice required by this subsection 9(a)(3)
(the “Notice of Proxy Access Nomination”) shall include:
(i)
a written notice of the nomination by such Nominator or
Nominator Group expressly requesting to have its Stockholder Nominee included
in the Corporation’s proxy materials pursuant to this subsection 9(a)(3) that
includes, with respect to the Stockholder Nominee and the Nominator (including
any beneficial owner on whose behalf the nomination is made) or, in the case of a
Nominator Group, with respect to each Group Member (including any beneficial
owner on whose behalf the nomination is made) all of the representations,
agreements and other information required in a stockholder notice submitted
under Section 9(a)(2) of these By-Laws;
(ii)
if the Nominator or Nominator Group so elects, a written
statement of the Nominator or Nominator Group for inclusion in the
Corporation’s proxy statement in support of the election of the Stockholder
Nominee(s) to the Board of Directors, which statement shall not exceed 500
words with respect to each Stockholder Nominee (the “Nomination Statement”)
and for the avoidance of doubt, the Nomination
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2017 ANNUAL REPORT | ROBERT HALF Statement shall be limited to 500 words and shall not include any images, charts,
pictures, graphic presentations or similar items;
(iii)
in the case of a nomination by a Nominator Group, the
designation by all Group Members of one specified Group Member (or a
qualified representative thereof) that is authorized to act on behalf of all Group
Members with respect to the nomination and matters related thereto, including
withdrawal of the nomination;
(iv)
a representation by the Stockholder Nominee and the Nominator
or Nominator Group (including each Group Member) and any beneficial owner
on whose behalf the nomination is made that each such person has provided and
will provide facts, statements and other information in all communications with
the Corporation and its stockholders and beneficial owners, including without
limitation the Notice of Proxy Access Nomination and the Nomination
Statement, that are and will be true and correct in all material respects and do not
and will not omit to state a material fact necessary in order to make the
statements made in light of the circumstances under which they were made, not
misleading;
(v)
a statement of the Nominator or Nominator Group (including
each Group Member) and any beneficial owner on whose behalf the nomination
is made, setting forth and certifying the number of shares such Nominator or
Nominator Group is deemed to own (as determined in accordance with sub-
paragraph (d) of this subsection 9(a)(3)) continuously for at least three years as of
the date of the Notice of Proxy Access Nomination and one or more written
statements from the stockholder of the Required Shares (as defined below), and
from each intermediary through which such shares are or have been held during
the requisite three-year holding period, verifying that, as of a date within seven
days prior to the date that the Notice of Proxy Access Nomination is received by
the Secretary of the Corporation, the Nominator or the Nominator Group, as the
case may be, owns, and has owned continuously for the preceding three years,
the Required Shares, and the Nominator’s or, in the case of a Nominator Group,
each Group Member’s agreement to provide (1) within seven days after the
record date for the applicable annual meeting, written statements from the
stockholder and intermediaries verifying the Nominator’s or the Nominator
Group’s, as the case may be, continuous ownership of the Required Shares
through the record date; provided that if and to the extent that a stockholder is
acting on behalf of one or more beneficial owners, such written statements shall
also be submitted by any such beneficial owner or owners, and (2) immediate
notice if the Nominator or the Nominator Group, as the case may be, ceases to
own the Required Shares prior to the date of the applicable annual meeting;
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2017 ANNUAL REPORT | ROBERT HALF (vi)
a copy of any Schedule 14N that has been filed with the U.S.
Securities and Exchange Commission as required by Rule 14a-18 under the
Exchange Act;
(vii)
a representation by the Nominator (including any beneficial
owner on whose behalf the nomination is made), or, in the case of a Nominator
Group, each Group Member (including any beneficial owner on whose behalf the
nomination is made) that:
(1)
the Required Shares were acquired in the ordinary
course of business and not with intent to change or influence control of
the Corporation, and each such person does not presently have such
intent;
(2)
each such person will maintain ownership (as defined in
this subsection 9(a)(3)) of the Required Shares through the date of the
applicable annual meeting along with a further statement as to whether or
not such person has the intention to hold the Required Shares for at least
one year thereafter (which statement the Nominator or Nominator Group
shall include in its Nomination Statement, it being understood that the
inclusion of such statement shall not count towards the Nomination
Statement’s 500-word limit);
(3)
each such person has not nominated, and will not
nominate, for election to the Board of Directors at the applicable annual
meeting any person other than its Stockholder Nominee(s) pursuant to
this subsection 9(a)(3);
(4)
each such person has not distributed, and will not
distribute, to any stockholders or beneficial owners any form of proxy for
the applicable annual meeting other than the form distributed by the
Corporation;
(5)
each such person has not engaged in, and will not
directly or indirectly engage in, and has not been and will not be a
participant (as defined in Schedule 14A of the Exchange Act) in, a
“solicitation” within the meaning of Rule 14a-1(l) under the Exchange
Act in support of the election of any individual as a director at the
applicable annual meeting other than with respect to such Nominator or
Nominator Group’s Stockholder Nominee(s) or a nominee of the Board
of Directors; and
(6)
each such person consents to the public disclosure of the
information provided pursuant to this subsection 9(a)(3);
(viii)
an executed agreement, in a form deemed satisfactory by the
Board of Directors or any committee thereof, pursuant to which the
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2017 ANNUAL REPORT | ROBERT HALF Nominator (including any beneficial owner on whose behalf the nomination
is made) or, in the case of a Nominator Group, each Group Member
(including any beneficial owner on whose behalf the nomination is made)
agrees to:
(1)
comply with all applicable laws, rules and regulations
arising out of or relating to the nomination of each Stockholder Nominee
pursuant to this subsection 9(a)(3);
(2)
assume all liability stemming from any legal or
regulatory violation arising out of the communications and information
provided by such person(s) to the Corporation and its stockholders and
beneficial owners, including without limitation the Notice of Proxy
Access Nomination and Nomination Statement;
(3)
indemnify and hold harmless the Corporation and each
of its directors, officers, employees, agents and affiliates individually
against any liability, loss or damages in connection with any threatened
or pending action, suit or proceeding, whether legal, administrative or
investigative, against the Corporation or any of its directors, officers,
employees, agents and affiliates arising out of or relating to any
nomination submitted by such person(s) pursuant to this subsection 9(a)
(3);
(4)
file with the Securities and Exchange Commission any
solicitation by or on behalf of the Nominator or Nominator Group
(including each Group Member) and any beneficial owner on whose
behalf the nomination is made relating to the meeting at which the
Stockholder Nominee will be nominated, regardless of whether any such
filing is required under Regulation 14A of the Exchange Act or whether
any exemption from filing is available for such solicitation under
Regulation 14A of the Exchange Act;
(5)
furnish to the Corporation all notifications and updated
information required by this subsection 9(a)(3), including, without
limitation, the information required by sub-paragraph (e) of this
subsection 9(a)(3); and
(6)
upon request, provide to the Corporation within five
business days after such request, but in any event prior to the day of the
annual meeting, such additional information as reasonably requested by
the Corporation; and
(ix)
a letter of resignation signed by each Stockholder Nominee,
which letter shall specify that such Stockholder Nominee’s resignation is
irrevocable and that it shall become effective upon a determination by the
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2017 ANNUAL REPORT | ROBERT HALF Board of Directors or any committee thereof that (1) any of the information
provided to the Corporation by the Nominator, the Nominator Group, any Group
Member (including, in each case, any beneficial owner on whose behalf the
nomination is made) or the Stockholder Nominee in respect of the nomination of
such Stockholder Nominee pursuant to this subsection 9(a)(3) is or was untrue in
any material respect (or omitted to state a material fact necessary in order to
make the statements made, in light of the circumstances under which they were
made, not misleading) or (2) the Stockholder Nominee, the Nominator, the
Nominator Group or any Group Member (including, in each case, any beneficial
owner on whose behalf the nomination is made) or any affiliate thereof shall have
breached any of its representations, obligations or agreements under this
subsection 9(a)(3).
(d)
Ownership Requirements.
(i)
To nominate a Stockholder Nominee pursuant to this subsection
9(a)(3), the Nominator or Nominator Group shall have owned shares representing
3% or more of the voting power entitled to vote generally in the election of
directors (the “Required Shares”) continuously for at least three years as of both
the date the Notice of Proxy Access Nomination is submitted to the Corporation
and the record date for determining stockholders eligible to vote at the applicable
annual meeting and must continue to own the Required Shares at all times
between and including the date the Notice of Proxy Access Nomination is
submitted to the Corporation and the date of the applicable annual meeting;
provided that if and to the extent a stockholder is acting on behalf of one or more
beneficial owners (i) only the shares owned by such beneficial owner or owners,
and not any other shares owned by any such stockholder, shall be counted for
purposes of satisfying the foregoing ownership requirement and (ii) the aggregate
number of stockholders and all such beneficial owners whose share ownership is
counted for the purposes of satisfying the foregoing ownership requirement shall
not exceed 20. For the purposes of determining whether the Nominator or
Nominator Group owned the Required Shares for the requisite three-year period,
the aggregate number of shares entitled to vote generally in the election of
directors shall be determined by reference to the Corporation’s periodic filings
with the Securities and Exchange Commission during the ownership period. Two
or more funds that are (i) under common management and investment control,
(ii) under common management and funded primarily by the same employer or
(iii) a “group of investment companies,” as such term is defined in the
Investment Company Act of 1940, as amended, shall be treated as one
stockholder or beneficial owner, as the case may be, for the purpose of satisfying
the foregoing ownership requirements; provided that each fund otherwise meets
the requirements set forth in this subsection 9(a)(3); and provided further that any
such funds for which shares are aggregated for the purpose of satisfying the
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2017 ANNUAL REPORT | ROBERT HALF foregoing ownership requirements provide documentation reasonably satisfactory
to the Corporation that demonstrates that the funds satisfy the criteria for being
treated as one stockholder within seven days after the Notice of Proxy Access
Nomination is delivered to the Corporation. No shares may be attributed to more
than one Nominator or Nominator Group, and no stockholder or beneficial owner
may be a member of more than one Nominator Group (other than a stockholder
directed to act by more than one beneficial owner) for the purposes of this
subsection 9(a)(3).
(ii)
For purposes of this subsection 9(a)(3), “ownership” shall be
deemed to consist of and include only the outstanding shares as to which a person
possesses both (i) the full voting and investment rights pertaining to such shares
and (ii) the full economic interest in (including the opportunity for profit and risk
of loss on) such shares; provided that the ownership of shares calculated in
accordance with clauses (i) and (ii) shall not include any shares (1) that a person
or any of its affiliates has sold in any transaction that has not been settled or
closed, including any short sale, (2) that a person or any of its affiliates has
borrowed for any purposes or purchased pursuant to an agreement to resell or (3)
that are subject to any Derivative Instrument or similar agreement entered into by
a person or any of its affiliates, whether any such security, instrument or
agreement is to be settled with shares or with cash based on the notional amount
or value of shares, in any case in which such security, instrument or agreement
has, or is intended to have, or if exercised by either party would have, the
purpose or effect of (x) reducing in any manner, to any extent or at any time in
the future, the person’s or such person’s affiliates’ full right to vote or direct the
voting of any such shares, and/or (y) hedging, offsetting or altering to any degree
any gain or loss arising from the full economic ownership of such person’s or
such person’s affiliates’ shares. “Ownership” shall include shares held in the
name of a nominee or other intermediary so long as the person claiming
ownership of such shares retains the right to instruct how the shares are voted
with respect to the election of directors and possesses the full economic interest
in the shares. A person’s ownership of shares shall be deemed to continue during
any period in which the person has delegated any voting power by means of a
proxy, power of attorney or other instrument or arrangement that is revocable at
any time by the person. A person’s ownership of shares shall be deemed to
continue during any period in which the person has loaned such shares provided
that the person has the power to recall such loaned shares on five business days’
notice, will vote such shares at the annual meeting and will hold such shares
through the date of the annual meeting. The determination of whether the
requirements of “ownership” of shares for purposes of this subsection 9(a)(3) are
met shall be made by the Board of Directors or any committee thereof. Any such
determination adopted in good faith by the Board of Directors or any committee
thereof shall be conclusive and binding on the Corporation, its
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2017 ANNUAL REPORT | ROBERT HALF stockholders and beneficial owners and all other parties. For the purposes of this
subsection 9(a)(3), the terms “owned,” “owning” and other variations of the word
“own” shall have correlative meanings. For the purposes of this subsection 9(a)
(3), the term “affiliate” or “affiliates” shall have the meaning ascribed thereto
under the rules and regulations of the Exchange Act.
(e)
For the avoidance of doubt, with respect to any nomination
submitted by a Nominator Group pursuant to this subsection 9(a)(3), the information
required by sub-paragraph (c) of this subsection 9(a)(3) to be included in the Notice of
Proxy Access Nomination shall be provided by each Group Member (including any
beneficial owner on whose behalf the nomination is made), and each such Group Member
(including any beneficial owner on whose behalf the nomination is made) shall execute
and deliver to the Secretary of the Corporation the representations and agreements
required under sub-paragraph (c) of this subsection 9(a)(3) at the time the Notice of
Proxy Access Nomination is submitted to the Corporation. In the event that the
Nominator, Nominator Group or any Group Member shall have breached any of their
agreements with the Corporation or any information included in the Nomination
Statement or the Notice of Proxy Access Nomination, or any other communications by
the Nominator, Nominator Group or any Group Member (including any beneficial owner
on whose behalf the nomination is made) with the Corporation or its stockholders and
beneficial owners, ceases to be true and correct in all material respects (or omits a
material fact necessary to make the statements made, in light of the circumstances under
which they were made and as of such later date, not misleading), each Nominator,
Nominator Group or Group Member (including any beneficial owner on whose behalf the
nomination is made), as the case may be, shall promptly (and in any event within 48
hours of discovering such breach or that such information has ceased to be true and
correct in all material respects (or omits a material fact necessary to make the statements
made, in light of the circumstances under which they were made and as of such later date,
not misleading)) notify the Secretary of the Corporation of any such breach, inaccuracy
or omission in such previously provided information and shall provide the information
that is required to correct any such defect, if applicable, it being understood that
providing any such notification shall not be deemed to cure any defect or limit the
Corporation’s rights to omit a Stockholder Nominee from its proxy materials as provided
in this subsection 9(a)(3).
(f)
Stockholder Nominee Requirements.
(i)
Within the time period specified in this subsection 9(a)(3) for
delivering the Notice of Proxy Access Nomination, each Stockholder Nominee
must deliver to the Secretary of the Corporation a written representation and
agreement, which shall be deemed a part of the Notice of Proxy Access
Nomination for purposes of this subsection 9(a)(3), that such person: (1) consents
to being named in the Corporation’s proxy statement as a nominee, to serve as a
director if elected and to the public
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2017 ANNUAL REPORT | ROBERT HALF disclosure of the information provided pursuant to this subsection 9(a)(3); (2)
understands his or her duties as a director under the Delaware General
Corporation Law and agrees to act in accordance with those duties while serving
as a director; (3) is not and will not become a party to (x) any Voting
Commitment that has not been disclosed to the Corporation or (y) any Voting
Commitment that could limit or interfere with such person’s ability to comply, if
elected as a director of the Corporation, with such person’s fiduciary duties under
applicable law; (4) is not and will not become a party to any Third-Party
Compensation Arrangement that has not been disclosed to the Corporation, and
has not and will not receive any such Third-Party Compensation Arrangement
that has not been disclosed to the Corporation; (5) if elected as a director of the
Corporation, will comply with all applicable laws and stock exchange listing
standards and the Corporation’s policies, guidelines and principles applicable to
directors, including, without limitation, the Corporation’s Corporate Governance
Guidelines, Code of Business Conduct and Ethics, confidentiality, share
ownership and trading policies and guidelines, and any other codes, policies and
guidelines or any rules, regulations and listing standards, in each case, as
applicable to directors; (6) agrees to meet with the Board of Directors or any
committee or delegate thereof to discuss matters relating to the nomination of the
Stockholder Nominee, including information in the Notice of Proxy Access
Nomination and such Stockholder Nominee’s eligibility to serve as a member of
the Board of Directors; and (7) will provide facts, statements and other
information in all communications with the Corporation and its stockholders and
beneficial owners that are and will be true and correct in all material respects and
do not and will not omit to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading.
(ii)
At the request of the Corporation, each Stockholder Nominee
must promptly submit (but in no event later than seven days after receipt of the
request) to the Secretary of the Corporation all completed and signed
questionnaires required of directors. The Corporation may request such
additional information as necessary to permit the Board of Directors to determine
if each nominee is independent, including for purposes of serving on the
committees of the Board of Directors, under the listing standards of each
principal securities exchange upon which the Corporation’s shares are listed, any
applicable rules of the Securities and Exchange Commission and any publicly
disclosed standards used by the Board of Directors in determining and disclosing
the independence of the Corporation’s directors and to determine whether the
nominee otherwise meets all other publicly disclosed standards applicable to
directors.
(iii)
In the event that a Stockholder Nominee shall have breached any
of their agreements with the Corporation or any information or communications
provided by a Stockholder Nominee to the
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2017 ANNUAL REPORT | ROBERT HALF Corporation or its stockholders and beneficial owners ceases to be true and
correct in any respect or omits a fact necessary to make the statements made,
in light of the circumstances under which they were made, not misleading,
such nominee shall promptly (and in any event within 48 hours of discovering
such breach or that such information has ceased to be true and correct in all
material respects (or omits a material fact necessary to make the statements
made, in light of the circumstances under which they were made and as of
such later date, not misleading)) notify the Secretary of the Corporation of any
such breach, inaccuracy or omission in such previously provided information
and shall provide the information that is required to make such information or
communication true and correct, if applicable, it being understood that
providing any such notification shall not be deemed to cure any defect or limit
the Corporation’s rights to omit a Stockholder Nominee from its proxy
materials as provided in this subsection 9(a)(3).
(g)
In the event any Nominator or Nominator Group (including any
beneficial owner on whose behalf the nomination is made) submits a nomination at an
annual meeting pursuant to this subsection 9(a)(3) and such Stockholder Nominee shall
have been nominated for election at any of the previous two annual meetings and such
Stockholder Nominee shall not have received at least 25% of the votes cast in favor of
such nominee’s election or such nominee withdrew from or became ineligible or
unavailable for election to the Board of Directors, then such nomination shall be
disregarded.
(h)
Notwithstanding anything to the contrary contained in this
subsection 9(a)(3), the Corporation shall not be required to include, pursuant to this
subsection 9(a)(3), a Stockholder Nominee in its proxy materials for any annual meeting,
or, if the proxy statement already has been filed, to submit the nomination of a
Stockholder Nominee to a vote at the annual meeting, notwithstanding that proxies in
respect of such vote may have been received by the Corporation:
(i)
for any meeting for which the Secretary of the Corporation
receives notice that any stockholder or beneficial owner, as the case may be,
intends to nominate one or more persons for election to the Board of Directors
pursuant to Section 9(a)(2);
(ii)
who is not determined by the Board of Directors in its sole
discretion to be independent under the listing standards of each principal
securities exchange upon which the shares of the Corporation are listed, any
applicable rules of the Securities and Exchange Commission and any publicly
disclosed standards used by the Board of Directors in determining and disclosing
the independence of the Corporation’s directors, including those applicable to a
director’s service on any of the committees of the Board of Directors, in each
case as determined by the Board of Directors or any committee thereof, in its sole
discretion;
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2017 ANNUAL REPORT | ROBERT HALF (iii)
whose election as a member of the Board of Directors would
cause the Corporation to be in violation of these By-Laws, the Certificate of
Incorporation, the rules and listing standards of the principal securities exchanges
upon which the shares of the Corporation are listed, or any applicable law, rule or
regulation or of any publicly disclosed standards of the Corporation applicable to
directors, in each case, as determined by the Board of Directors or any committee
thereof, in its sole discretion;
(iv)
who is or has been, within the past three years, an officer or
director of a competitor, as defined in Section 8 of the Clayton Antitrust Act of
1914, as amended;
(v)
who is a named subject of a pending criminal proceeding
(excluding traffic violations and other minor offenses) or has been convicted in
such a criminal proceeding within the past ten years;
(vi)
who is subject to any order of the type specified in Rule 506(d)
of Regulation D under the Securities Act of 1933, as amended;
(vii)
if the Stockholder Nominee or Nominator (including any
beneficial owner on whose behalf the nomination is made), or, in the case of a
Nominator Group, any Group Member (including any beneficial owner on whose
behalf the nomination is made) shall have provided information to the
Corporation in connection with such nomination that was untrue in any material
respect or omitted to state a material fact necessary in order to make any
statement made, in light of the circumstances under which it was made, not
misleading, as determined by the Board of Directors or any committee thereof, in
its sole discretion;
(viii)
the Nominator (or a qualified representative thereof) or, in the
case of a Nominator Group, the representative designated by the Nominator
Group in accordance with sub-paragraph (c)(iii) of this subsection 9(a)(3) (or a
qualified representative thereof), or the Stockholder Nominee does not appear at
the applicable annual meeting to present the Stockholder Nominee for election;
(ix)
if the Nominator (including any beneficial owner on whose
behalf the nomination is made), or, in the case of a Nominator Group, any Group
Member (including any beneficial owner on whose behalf the nomination is
made) has engaged in or is currently engaged in, or has been or is a participant
(as defined in Schedule 14A of the Exchange Act) in, a “solicitation” within the
meaning of Rule 14a-1(l) under the Exchange Act in support of the election of
any individual as a director at the applicable annual meeting other than with
respect to such Nominator or Nominator Group’s Stockholder Nominee(s) or a
nominee of the Board of Directors; or
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2017 ANNUAL REPORT | ROBERT HALF (x)
the Nominator or, in the case of a Nominator Group, any Group
Member, or applicable Stockholder Nominee otherwise breaches or fails to
comply with its representations or obligations pursuant to these By-Laws,
including, without limitation, this subsection 9(a)(3).
For the purpose of this sub-paragraph (h), clauses (ii) through (x) will result in
the exclusion from the proxy materials pursuant to this subsection 9(a)(3) of the specific
Stockholder Nominee(s) to whom the ineligibility applies, or, if the proxy statement has
already been filed, the ineligibility of the Stockholder Nominee(s) and, in either case, the
inability of the Nominator or Nominator Group that nominated any such Stockholder
Nominee to substitute another Stockholder Nominee therefor; however, clause (i) will
result in the exclusion from the proxy materials pursuant to this subsection 9(a)(3) of all
Stockholder Nominees for the applicable annual meeting, or, if the proxy statement
already has been filed, the ineligibility of all Stockholder Nominees.
(i)
subsection 9(a)(3):
Notwithstanding anything to the contrary contained in this
(i)
the Corporation may omit from its proxy materials any
information, including all or any portion of the Nomination Statement, if the
Board of Directors determines that the disclosure of such information would
violate any applicable law or regulation or that such information is not true and
correct in all material respects or omits to state a material fact necessary in order
to make the statements made, in light of the circumstances under which they
were made, not misleading; and
(ii)
if any Nominator, Nominator Group or Group Member
(including any beneficial owner on whose behalf the nomination is made) or
Stockholder Nominee has failed to comply with the requirements of this
subsection 9(a)(3), the Board of Directors or the chairman of the meeting shall
declare the nomination by such Nominator or Nominator Group to be invalid,
and such nomination shall be disregarded.
(j)
The Board of Directors (or any other person or body authorized
by the Board of Directors) shall have the exclusive power and authority to interpret the
provisions of this subsection 9(a)(3) and make all determinations deemed necessary or
advisable in connection with this subsection 9(a)(3) to any person, facts or circumstances.
All such actions, interpretations and determinations that are done or made by the Board
of Directors (or any other person or body authorized by the Board of Directors) in good
faith shall be final, conclusive and binding on the Corporation, its stockholders and
beneficial owners and all other parties.
(k)
This Section 9(a)(3) shall be the exclusive method for
stockholders to include nominees for director in the Corporation’s proxy materials.
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2017 ANNUAL REPORT | ROBERT HALF (4)
Notwithstanding anything in the second sentence of paragraph
(a)(2) of this By-Law to the contrary, with respect to nominations of persons not intended to be
included in the Corporation’s proxy statement, in the event that the number of directors to be
elected to the Board of Directors of the Corporation is increased and there is no public
announcement by the Corporation naming all of the nominees for director or specifying the size
of the increased Board of Directors at least 70 days prior to the first anniversary of the preceding
year’s annual meeting, a stockholder’s notice required by paragraph (a)(2) of this By-Law shall
also be considered timely, but only with respect to nominees for any new positions created by
such increase, if it shall be delivered to the Secretary at the principal executive offices of the
Corporation not later than the close of business on the 10th day following the day on which such
public announcement is first made by the Corporation.
(b)
Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before the meeting
pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board
of Directors may be made at a special meeting of stockholders at which directors are to be elected
pursuant to the Corporation’s notice of meeting (a) by or at the direction of the Board of Directors
or (b) provided that the Board of Directors has determined that directors shall be elected at such
meeting, by any stockholder of the Corporation who is a stockholder of record at the time of
giving of notice provided for in this By-Law, who shall be entitled to vote at the meeting and who
complies with the notice procedures set forth in this By-Law. In the event the Corporation calls a
special meeting of stockholders for the purpose of electing one or more directors to the Board of
Directors, any such stockholder may nominate a person or persons (as the case may be), for the
election to such position(s) as specified in the Corporation’s notice of meeting, if the
stockholder’s notice required by paragraph (a)(2) of this By-Law shall be delivered to the
Secretary at the principal executive offices of the Corporation not earlier than the close of
business on the 90th day prior to such special meeting and not later than the close of business on
the later of the 60th day prior to such special meeting or the 10th day following the day on which
public announcement is first made of the date of the special meeting and of the nominees
proposed by the Board of Directors to be elected at such meeting. In no event shall the public
announcement of an adjournment of a special meeting commence a new time period for the
giving of a stockholder’s notice as described above.
(c)
General.
(1)
Only such persons who are nominated in accordance with the
procedures set forth in this By-Law shall be eligible to serve as directors and only such business
shall be conducted at a meeting of stockholders as shall have been brought before the meeting in
accordance with the procedures set forth in this By-Law. Except as otherwise provided by law,
the Certificate of Incorporation or these By-Laws, the chairman of the meeting shall have the
power and duty to determine whether a nomination or any business proposed to be brought before
the meeting was made or proposed, as the case may be, in accordance with the procedures set
forth in this By-Law
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2017 ANNUAL REPORT | ROBERT HALF and, if any proposed nomination or business is not in compliance with this By-Law, to
declare that such defective proposal or nomination shall be disregarded.
(2)
For purposes of this By-Law, “public announcement” shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated Press or
comparable national news service or in a document publicly filed by the Corporation with the
Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(3)
Notwithstanding the foregoing provisions of this By-Law, a
stockholder shall also comply with all applicable requirements of the Exchange Act and the rules
and regulations thereunder with respect to the matters set forth in this By-Law. Nothing in this
By-Law shall be deemed to affect any rights (i) of stockholders to request inclusion of proposals
in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the
holders of any series of Preferred Stock to elect directors under specified circumstances.
Section 10.
Record Date for Action by Written Consent. In order that the
Corporation may determine the stockholders entitled to consent to corporate action in writing
without a meeting, the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than 10 days after the date upon which the resolution
fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to
have the stockholders authorize or take corporate action by written consent shall, by written
notice to the Secretary, request the Board of Directors to fix a record date. The Board of
Directors shall promptly, but in all events within 10 days after the date on which such a request is
received, adopt a resolution fixing the record date. If no record date has been fixed by the Board
of Directors within 10 days of the date on which such a request is received, the record date for
determining stockholders entitled to consent to corporate action in writing without a meeting,
when no prior action by the Board of Directors is required by applicable law, shall be the first
date on which a signed written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in Delaware, its principal place of
business or to any officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s
registered office shall be by hand or by certified or registered mail, return receipt requested. If no
record date has been fixed by the Board of Directors and prior action by the Board of Directors is
required by applicable law, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business on the date on
which the Board of Directors adopts the resolution taking such prior action.
Section 11.
Inspectors of Written Consent. In the event of the delivery, in the manner
provided by Section 10, to the Corporation of the requisite written consent or consents to take
corporate action and/or any related revocation or revocations, the Corporation shall engage
nationally recognized independent inspectors of elections for the purpose of promptly performing
a ministerial review of the validity of the consents
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2017 ANNUAL REPORT | ROBERT HALF and revocations. For the purpose of permitting the inspectors to perform such review, no action
by written consent without a meeting shall be effective until such date as the independent
inspectors certify to the Corporation that the consents delivered to the Corporation in accordance
with Section 10 represent at least the minimum number of votes that would be necessary to take
the corporate action. Nothing contained in this paragraph shall in any way be construed to
suggest or imply that the Board of Directors or any stockholder shall not be entitled to contest the
validity of any consent or revocation thereof, whether before or after such certification by the
independent inspectors, or to take any other action (including, without limitation, the
commencement, prosecution, or defense of any litigation with respect thereto, and the seeking of
injunctive relief in such litigation).
Section 12.
Effectiveness of Written Consent. Every written consent shall bear the
date of signature of each stockholder who signs the consent and no written consent shall be
effective to take the corporate action referred to therein unless, within 60 days of the earliest
dated written consent received in accordance with Section 10, a written consent or consents
signed by a sufficient number of holders to take such action are delivered to the Corporation in
the manner prescribed in Section 10.
ARTICLE III
DIRECTORS
Section 1.
General Powers. The property, business and affairs of the Corporation
shall be managed by or under the direction of the Board of Directors.
Section 2.
Number, Qualification and Term of Office. The number of directors
which shall constitute the whole Board shall not be less than six nor more than eleven. The
number of directors shall be fixed at such number, within the limits specified in the preceding
sentence, as determined from time to time by resolution of the Board of Directors, upon approval
by two-thirds (2/3) of the directors in office. Except as provided in Sections 4 and 5 of this
Article III, each director shall be elected by the stockholders at their annual meeting in each year,
and shall hold office until the next annual meeting and until his successor shall be elected and
qualified or until his death, resignation or removal. Directors need not be stockholders. This
Section 2 shall not be amended to change the two-thirds (2/3) approval requirement set forth
above except with the approval of two-thirds (2/3) of the directors in office.
Section 3.
Resignations. Any director may resign at any time by giving written
notice of his resignation to the Corporation. Any such resignation shall take effect at the time
specified therein, or, if the time when it shall become effective shall not be specified therein, then
it shall take effect immediately upon its receipt by the Secretary; and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it effective.
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2017 ANNUAL REPORT | ROBERT HALF Section 4.
Removal of Directors. Any director may be removed, with or without
cause, at any time, by the affirmative vote of a majority in interest of the stockholders of record of
the Corporation entitled to vote, given at a special meeting of the stockholders called for the
purpose, and the vacancy in the Board of Directors caused by any such removal may be filled by
the stockholders at such meeting or, if the stockholders shall fail to fill such vacancy, by the
Board of Directors as provided in Section 5 of this Article III. In no case will a decrease in the
number of directors shorten the term of any incumbent director.
Section 5.
Vacancies. In case of any vacancy in the Board of Directors caused by
death, resignation, disqualification, removal, an increase in the number of directors, or any other
cause, the successor to fill the vacancy may be elected by the holders of shares of stock entitled to
vote at an annual or special meeting of said holders or by two-thirds (2/3) of the directors in
office, though less than a quorum, and each director so elected shall hold office until the next
annual election and until his successor shall be duly elected and qualified, or until his death or
until he shall resign or until he shall have been removed. This section shall not be amended to
change the requirement of a vote of two-thirds (2/3) of the directors set forth above except upon
the approval of two-thirds (2/3) of the directors in office.
Section 6.
Place of Meeting. The Board of Directors may hold its meetings at such
place or places within or without the State of Delaware as the Board of Directors may from time
to time determine.
Section 7.
Organization Meeting. The Board of Directors shall meet immediately
following the annual meeting of stockholders and at the place where the stockholders’ meeting
was held, for the purpose of electing officers and transacting such other business as may lawfully
come before it. No notice of such meeting shall be required.
Section 8.
Regular Meetings. Regular meetings of the Board of Directors shall be
held at such times as the Board of Directors shall from time to time by resolution determine. If
any day fixed for a regular meeting shall be a legal holiday, then the meeting which would
otherwise be held on that day shall be held at the same hour on the next succeeding business day.
Except as otherwise provided by law, notices of regular meetings need not be given.
Section 9.
Special Meetings. Special meetings of the Board of Directors shall be
held when called by the Chairman of the Board, the Vice Chairman of the Board, the Chief
Executive Officer, any member of the Office of the President, the Secretary, Assistant Secretary
or a majority of the Directors.
Section 10.
Notice of Meetings. Notice of the time and place of all special meetings
of the Board of Directors or any committee thereof, and of any regular meeting as to which notice
is given, shall be given to each director either by telephone or by written notice delivered
personally or sent to such director by mail or by other form of written communication at least one
day before the date of the meeting. Notice of any
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2017 ANNUAL REPORT | ROBERT HALF meeting may be waived in writing at any time before or after the meeting and will be waived by
any director by attendance at such meeting.
Section 11.
Quorum and Manner of Acting. Except as otherwise provided by statute
or by these By-Laws, a majority of the total number of directors (but not less than two) shall be
required to constitute a quorum for the transaction of business at any meeting, and the act of a
majority of the directors present at any meeting at which a quorum shall be present shall be the
act of the Board of Directors. In the absence of a quorum, a majority of the directors present may
adjourn any meeting from time to time until a quorum be had. Notice of any adjourned meeting
need not be given.
Section 12.
Action Without Meeting. Unless otherwise restricted by the Certificate
of Incorporation or by these By-Laws, any action required or permitted to be taken at any meeting
of the Board of Directors or of any committee thereof, may be taken without a meeting, if all
members of the Board or of such committee, as the case may be, consent thereto in writing, and
such writing or writings are filed with the minutes of proceedings of the Board or Committee.
Section 13.
Meeting by Telephone. Unless otherwise restricted by the Certificate of
Incorporation or these By-Laws, members of the Board of Directors, or any committee designated
by the Board of Directors, may participate in a meeting of the Board of Directors, or any
committee, by means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.
Section 14.
Compensation. The Board of Directors may at any time or from time to
time by resolution provide that a specified sum shall be paid to any director of the Corporation,
either as his annual compensation as such director or member of any committee of the Board of
Directors or as compensation for his attendance at each meeting of the Board of Directors or any
such committee. The Board of Directors may also likewise provide that the Corporation shall
reimburse each director for any expense paid by him on account of his attendance at any meeting.
Nothing in this Section shall be construed to preclude any director from serving the Corporation
in any other capacity and receiving compensation therefor.
ARTICLE IV
EXECUTIVE COMMITTEE
Section 1.
Appointment. The Board of Directors may by resolution passed by a
majority of the whole Board, appoint an Executive Committee of not less than three members, all
of whom shall be directors. The Chairman of the Executive Committee shall be elected by the
Board of Directors.
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2017 ANNUAL REPORT | ROBERT HALF Section 2.
Powers. The Executive Committee shall have and may exercise, when
the Board is not in session, the power of the Board of Directors in the management of the
business and affairs of the Corporation; but neither the Executive Committee nor any other
committee shall have the power or authority in reference to amending the Certificate of
Incorporation, adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the Corporation’s property
and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of
a dissolution, or amending the By-Laws of the Corporation, nor shall it have the power or
authority to declare a dividend, to authorize the issuance of stock or to fill vacancies in the Board
of Directors or the Executive Committee.
Section 3.
Term. The term of the Executive Committee shall be coexistent with that
of the Board of Directors which shall have appointed such Committee. The Board may at any
time for any reason remove any individual member of the Executive Committee and the Board
may fill a Committee vacancy created by death, resignation or removal or increase in the number
of members of the Executive Committee. The Board of Directors may designate one or more
directors as alternate members of the Executive Committee who may replace any absent or
disqualified member at any meeting of the Committee.
Section 4.
Meetings. Regular meetings of the Executive Committee, of which no
notice shall be required, may be held on such days and at such places as shall be fixed by
resolution adopted by a majority of the Committee and communicated to all of its members.
Special meetings of the Executive Committee shall be held whenever called by the Chairman of
the Executive Committee, the Chairman of the Board, the Vice Chairman of the Board, the Chief
Executive Officer, any member of the Office of the President, or a majority of the members of the
Executive Committee then in office and shall be held at such time and place as shall be
designated in the notice of the meeting.
Section 5.
Quorum and Manner of Action. A majority of the Executive Committee
shall constitute a quorum for the transaction of business and the act of a majority of those present
at a meeting thereof at which a quorum is present shall be the act of the Committee.
ARTICLE V
OTHER COMMITTEES
Section 1.
Committees of the Board of Directors. The Board of Directors may, by
resolution passed by a majority of the whole Board, from time to time appoint other committees
of the Board of Directors. Each such committee, to the extent permitted by law and these By-
Laws, shall have and may exercise such of the powers of the Board of Directors in the
management and affairs of the Corporation as may be prescribed by the resolution creating such
committee. A majority of all of the members of any such committee may determine its action and
fix the time and place of its meetings
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2017 ANNUAL REPORT | ROBERT HALF and specify what notice thereof, if any, shall be given, unless the Board of Directors shall
otherwise prescribe. The Board of Directors shall have power to change the members of any such
committee at any time, to fill vacancies and to discontinue any such committee at any time.
Section 2.
Non-Board Committees. The authority conferred upon the Board of
Directors by Section 1 of this Article V to appoint committees of the Board of Directors shall not
be deemed to preclude the appointment by either the Board of Directors or the Executive
Committee of committees whose members need not be directors of the Corporation provided that
such committees may not exercise any of the powers of the Board of Directors.
ARTICLE VI
OFFICERS
Section 1.
Number. The officers of the Corporation shall be the Chairman of the
Board, the Vice Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer,
one or more members of the Office of the President, one or more Vice Presidents, a Secretary and
a Treasurer. The Board of Directors may also appoint one or more Assistant Vice Presidents,
Assistant Secretaries or Assistant Treasurers and such other officers and agents with such powers
and duties as it shall deem necessary. Assistant Vice Presidents may also be appointed by the
Chairman of the Board, the Vice Chairman of the Board or the Chief Executive Officer. Any
officer may be given such specific designation as may be determined from time to time by the
Board of Directors. Any two or more offices except those of Chief Executive Officer, Chief
Financial Officer and Secretary may be held by the same person.
Section 2.
Election and Term of Office. The officers shall be elected annually by
the Board of Directors at its organization meeting following the annual meeting of the
stockholders and each shall hold office until the next annual election of officers and until his
successor is elected and qualified, or until his death, resignation or removal. Any officer may be
removed at any time, with or without cause, by a vote of the majority of the whole Board. Any
vacancy occurring in any office may be filled by the Board of Directors.
Section 3.
Chairman and Vice Chairman of the Board.
(a)
The Chairman of the Board shall exercise such powers and perform such
duties as may be assigned to him by these By-Laws or by the Board of Directors. The Chairman
of the Board shall preside at meetings of the stockholders and Board of Directors and, in the
absence of the Chairman of the Executive Committee, shall preside at meetings of the Executive
Committee.
(b)
The Vice Chairman of the Board, in the absence of the Chairman of the
Board, shall preside at meetings of the stockholders and Board of Directors. He
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2017 ANNUAL REPORT | ROBERT HALF shall exercise such other powers and perform such other duties as may be assigned to him by
these By-Laws or by the Board of Directors.
Section 4.
Chief Executive Officer. The Chief Executive Officer, subject to the
general control of the Board of Directors, shall be responsible for the management and direction
of the affairs of the Corporation, its officers, employees and agents and shall supervise generally
the affairs of the Corporation. He shall exercise such other powers and perform such other duties
as may be assigned to him by these By-Laws or by the Board of Directors. In the absence of the
Chairman of the Board and the Vice Chairman of the Board, he shall preside at meetings of the
stockholders.
Section 5.
Office of the President. The Board of Directors may designate one or
more individuals as being members of the Office of the President. A member of the Office of the
President shall have such other titles, which may include “President”, as may be designated by
the Board of Directors, and shall exercise such powers and duties as may from time to time be
assigned to him by these By-Laws, the Board of Directors, the Chairman of the Board or the
Chief Executive Officer. Except where by law the signature of the Chairman of the Board or the
Chief Executive Officer is required, each member of the Office of the President shall have the
same power as the Chairman of the Board or the Chief Executive Officer to sign certificates,
contracts and other instruments of the Corporation. Whenever any document requires the
signature of the President of the Corporation, any member of the Office of the President may
execute such document as President. The Board of Directors may designate any member of the
Office of the President as having such powers and duties in the absence of the Chief Executive
Officer as it deems appropriate.
Section 6.
Vice Presidents. The Board of Directors may designate any Vice
President as having such powers and duties in the absence of the Chief Executive Officer and the
members of the Office of the President as it deems appropriate. Except where by law the
signature of the Chairman of the Board, the Chief Executive Officer or a President is required,
each of the Vice Presidents shall have the same power as the Chairman of the Board, the Chief
Executive Officer or the President to sign certificates, contracts and other instruments of the
Corporation. Any Vice President shall perform such other duties and may exercise such other
powers as may from time to time be assigned to him by these By-Laws, the Board of Directors,
the Chairman of the Board or the Chief Executive Officer. The Board of Directors may designate
any Vice President as being an Executive Vice President, Senior Vice President or such other title
as it deems appropriate. The Board of Directors shall determine, subject to applicable law, which
Vice Presidents shall be deemed “officers” or “executive officers” for regulatory compliance
purposes, including, but not limited to, compliance with rules and regulations promulgated under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
Section 7.
Secretary and Assistant Secretaries. The Secretary shall record or cause
to be recorded in books provided for the purpose the minutes of the meetings of the stockholders,
the Board of Directors, the Executive Committee and all other committees of the Board of
Directors, if any; shall see that all notices are duly given in accordance
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2017 ANNUAL REPORT | ROBERT HALF with the provisions of these By-Laws and as required by law; shall be custodian of the seal of the
Corporation and see that the seal is affixed to all documents, the execution of which on behalf of
the Corporation under its seal is duly authorized in accordance with the provisions of these By-
Laws; and, in general, shall perform all duties incident to the office of Secretary and such other
duties as may, from time to time, be assigned to him by the Board of Directors, the Chairman of
the Board or the Chief Executive Officer. At the request of the Secretary, or in his absence or
disability, any Assistant Secretary shall perform any of the duties of the Secretary and, when so
acting, shall have all the powers and be subject to all the restrictions upon, the Secretary. Except
where by law the signature of the Secretary is required, each of the Assistant Secretaries shall
possess the same power as the Secretary to sign certificates, contracts, obligations and other
instruments of the Corporation, and to affix the seal of the Corporation to such instruments, and
attest the same.
Section 8.
Chief Financial Officer. The Chief Financial Officer shall keep or cause
to be kept the books of account of the Corporation and shall render statements of the financial
affairs of the Corporation in such form and as often as required by the Board of Directors, the
Chairman of the Board or the Chief Executive Officer. The Chief Financial Officer shall perform
all other duties commonly incident to his office and shall perform such other duties and have such
other powers as the Board of Directors, the Chairman of the Board or the Chief Executive Officer
shall designate from time to time. At the request of the Chief Financial Officer, or in his absence
or disability, the Treasurer may perform any of the duties of the Chief Financial Officer and,
when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Chief
Financial Officer. Except where by law the signature of the Chief Financial Officer is required,
the Treasurer shall possess the same power as the Chief Financial Officer to sign all certificates,
contracts, obligations and other instruments of the Corporation.
Section 9.
Treasurer and Assistant Treasurer. The Treasurer, subject to the order of
the Board of Directors, shall have the custody of all funds and securities of the Corporation. The
Treasurer shall perform all other duties commonly incident to his office and shall perform such
other duties and have such other powers as the Board of Directors, the Chairman of the Board, the
Chief Executive Officer or the Chief Financial Officer shall designate from time to time. At the
request of the Treasurer, or in his absence or disability, the Assistant Treasurer or, in case there
shall be more than one Assistant Treasurer, the Assistant Treasurer designated by the Board of
Directors, the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer or
the Treasurer, may perform any of the duties of the Treasurer and, when so acting, shall have all
the powers of, and be subject to all the restrictions upon, the Treasurer. Except where by law the
signature of the Treasurer is required, each of the Assistant Treasurers shall possess the same
power as the Treasurer to sign all certificates, contracts, obligations and other instruments of the
Corporation.
Section 10.
Assistant Vice Presidents. The Assistant Vice Presidents shall perform
such duties as shall be determined by the Board of Directors, the Chairman of the Board or the
Chief Executive Officer of the Corporation.
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2017 ANNUAL REPORT | ROBERT HALF ARTICLE VII
EXECUTION OF INSTRUMENTS
The Board of Directors may, in its discretion, determine the method and designate the
signatory officer or officers, or other person or persons, to execute any corporate instrument or
document or to sign the corporate name without limitation, except where otherwise provided
by law or in these By-Laws, and such designation may be general or confined to specific
instances.
ARTICLE VIII
VOTING OF SECURITIES OWNED BY THE CORPORATION
All stock and other securities of other corporations held by the Corporation shall be
voted, and all proxies with respect thereto shall be executed, by the person authorized so to
do by resolution of the Board of Directors, or, in the absence of such authorization, by the
Chairman of the Board, the Vice Chairman of the Board, the Chief Executive Officer, any
member of the Office of the President or any Vice President.
ARTICLE IX
SHARES OF STOCK
Section 1.
Form and Execution of Certificates. The certificates of stock of the
Corporation shall be numbered and shall be entered in the books of the Corporation as they are
issued. They shall exhibit the holder’s name and number of shares and shall be signed by the
Chairman of the Board, the Vice Chairman of the Board, the Chief Executive Officer, any
member of the Office of the President or any Vice President and the Secretary or an Assistant
Secretary. Any or all of the signatures on such certificate may be a facsimile. In case any officer
of the Corporation who shall have signed, or whose facsimile signature shall have been placed
upon, such certificate shall cease to be such officer before such certificate shall have been issued,
such certificate may nevertheless be issued by the Corporation with the same effect as though
such person were such officer at the date of issuance.
Section 2.
Transfer. Transfer of stock shall be made on the books of the
Corporation only by the person named in the certificate or by attorney lawfully constituted in
writing, and upon surrender of the certificate.
Section 3.
Fixing Record Date. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholder or any adjournment
thereof, or to express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment
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30
2017 ANNUAL REPORT | ROBERT HALF of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange
of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which shall not be more than sixty nor less than ten days before the date of such
meeting, nor more than sixty days prior to any other action. A determination of stockholders of
record entitled to notice of or to vote a meeting of stockholders shall apply to any adjournment of
the meeting; provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 4.
Record Owner. The Corporation shall be entitled to treat the holder of
record of any share or shares of stock as the holder in fact thereof and accordingly shall not be
bound to recognize any equitable or other claim to or interest in such share on the part of any
other person, whether or not it shall have express or other notice thereof, save as expressly
provided by the laws of Delaware.
Section 5.
Lost Certificates. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in
such manner as it shall require and/or to give the Corporation a bond in such sum as it may direct
as indemnity against any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
ARTICLE X
DIVIDENDS
Subject to the provisions of law and of the Certificate of Incorporation, the Board of
Directors, at any regular or special meeting, may declare and pay dividends upon the shares of its
stock either (a) out of its surplus as defined in and computed in accordance with the provisions of
law or (b) in case it shall not have any such surplus, out of its net profits for the fiscal year in
which the dividend is declared and/or the preceding fiscal year, whenever and in such amount as,
in the opinion of the Board of Directors, the condition of the affairs of the Corporation shall
render advisable.
Before payment of any dividend or making any distribution of profits, there may be set
aside out of the surplus or net profits of the Corporation such sum or sums as the directors may
from time to time, in their absolute discretion, think proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the directors shall think conducive to the interests of the
Corporation.
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2017 ANNUAL REPORT | ROBERT HALF ARTICLE XI
CORPORATE SEAL
The corporate seal shall consist of a die bearing the name of the Corporation and the
inscription “Corporate Seal -- Delaware.” Said seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE XII
AMENDMENTS
All By-Laws of the Corporation shall be subject to alterations or repeal, and new By-
Laws may be made, by the stockholders at any annual or special meeting, or except as otherwise
provided by these By-Laws or by law, by the affirmative vote of a majority of the directors then
in office given at any regular or special meeting of the Board of Directors.
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2017 ANNUAL REPORT | ROBERT HALF SUBSIDIARIES OF ROBERT HALF INTERNATIONAL INC.
Name of Subsidiary
RH Holding Company, Inc.
Robert Half of California, Inc.
Robert Half Staffing, LLC
Robert Half Temporaries, Inc.
Jersey Temporaries, Inc.
Protiviti Inc.
Protiviti Holdings Inc.
RH-TM Resources, Inc.
Protiviti Government Services, Inc.
Robert Half Corporation
Robert Half Nevada Staff, Inc.
Robert Half of Pennsylvania, Inc.
Protiviti Pty. Limited
Robert Half Australia Pty. Limited
Robert Half Austria GmbH
Robert Half BVBA
Robert Half Trabalho Temporário Ltda.
Protiviti EOOD
Robert Half Canada Inc.
Robert Half Chile Sociedad por Acciones
Robert Half Internacional Empresa De Servicios Transitorios Limitada
Protiviti Shanghai Co. Ltd.
Robert Half Human Resources Shanghai Company Limited
Robert Half Hong Kong Limited
Protiviti Hong Kong Co. Limited
EXHIBIT 21.1
Jurisdiction of
Incorporation
California
California
California
California
Delaware
Delaware
Delaware
Delaware
Maryland
Nevada
Nevada
Pennsylvania
Australia
Australia
Austria
Belgium
Brazil
Bulgaria
Canada
Chile
Chile
China
China
China, Hong Kong SAR
China, Hong Kong SAR
2017 ANNUAL REPORT | ROBERT HALF
Name of Subsidiary
Protiviti SAS
Robert Half International France SAS
Robert Half SAS
Protiviti GmbH
Robert Half Deutschland Beteiligungsgesellschaft mbH
Robert Half Deutschland GmbH & Co. KG
Protiviti Consulting Private Limited
Protiviti Government Services S.r.l.
Protiviti S.r.l.
Robert Half S.r.l.
Protiviti LLC
Robert Half Japan Ltd.
Robert Half Sarl
Robert Half Holding Sarl
Protiviti B.V.
Robert Half International B.V.
Robert Half Nederland B.V.
Robert Half New Zealand Limited
Protiviti Pte. Ltd.
Robert Half International Pte. Ltd.
Robert Half GmbH
Robert Half International (Dubai) Ltd.
Protiviti Limited
Robert Half Holdings Limited
Robert Half Limited
Jurisdiction of
Incorporation
France
France
France
Germany
Germany
Germany
India
Italy
Italy
Italy
Japan
Japan
Luxembourg
Luxembourg
Netherlands
Netherlands
Netherlands
New Zealand
Singapore
Singapore
Switzerland
United Arab Emirates
United Kingdom
United Kingdom
United Kingdom
2017 ANNUAL REPORT | ROBERT HALF
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
EXHIBIT 23.1
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 33-14706,
33-32622, 33-32623, 33-39187, 33-39204, 33-40795, 33-52617, 33-56639, 33-56641, 33-57763, 33-62138, 33-62140,
33-65401, 33-65403, 333-05743, 333-05745, 333-18283, 333-18339, 333-38786, 333-38820, 333-42471, 333-42573,
333-42343, 333-42269, 333-50068, 333-50094, 333-66038, 333-66042, 333-68193, 333-68135, 333-68273, 333-75694,
333-79793, 333-79829, 333-88001, 333-91173, 333-91151, 333-91167, 333-98737, 333-125044, 333-151015, and
333-196291) of Robert Half International Inc., of our report dated February 20, 2018, relating to the consolidated financial
statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this
Form 10-K.
/s/ PricewaterhouseCoopers LLP
San Francisco, California
February 20, 2018
2017 ANNUAL REPORT | ROBERT HALF
EXHIBIT 31.1
Certification Pursuant to Rule 13a-14 under the Securities Exchange Act of 1934
I, Harold M. Messmer, Jr., certify that:
1.
2.
3.
4.
I have reviewed this report on Form 10-K of Robert Half International Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
(b)
(c)
(d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period
covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
(a)
(b)
all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Date: February 20, 2018
/s/ HAROLD M. MESSMER, JR.
Harold M. Messmer, Jr.
Chairman and Chief Executive Officer
2017 ANNUAL REPORT | ROBERT HALF
EXHIBIT 31.2
Certification Pursuant to Rule 13a-14 under the Securities Exchange Act of 1934
I, M. Keith Waddell, certify that:
1.
2.
3.
4.
I have reviewed this report on Form 10-K of Robert Half International Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
(b)
(c)
(d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period
covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
(a)
(b)
all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Date: February 20, 2018
/s/ M. KEITH WADDELL
M. Keith Waddell
Vice Chairman, President and
Chief Financial Officer
2017 ANNUAL REPORT | ROBERT HALF
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. 1350, AS ADOPTED PURSUANT
TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K for the fiscal year ended December 31, 2017 of Robert Half
International Inc. (the “Form 10-K”), I, Harold M. Messmer, Jr., Chief Executive Officer of Robert Half International Inc.,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Form 10-K fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of
operations of Robert Half International Inc.
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or
otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by
Section 906, has been provided to Robert Half International Inc. and will be retained by Robert Half International Inc. and
furnished to the Securities and Exchange Commission or its staff upon request.
February 20, 2018
/s/ Harold M. Messmer, Jr.
Harold M. Messmer, Jr.
Chief Executive Officer
Robert Half International Inc.
2017 ANNUAL REPORT | ROBERT HALF
EXHIBIT 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. 1350, AS ADOPTED PURSUANT
TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K for the fiscal year ended December 31, 2017 of Robert Half
International Inc. (the “Form 10-K”), I, M. Keith Waddell, Chief Financial Officer of Robert Half International Inc., certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Form 10-K fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of
operations of Robert Half International Inc.
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or
otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by
Section 906, has been provided to Robert Half International Inc. and will be retained by Robert Half International Inc. and
furnished to the Securities and Exchange Commission or its staff upon request.
February 20, 2018
/s/ M. Keith Waddell
M. Keith Waddell
Chief Financial Officer
Robert Half International Inc.
2017 ANNUAL REPORT | ROBERT HALF
CORPORATE DIRECTORY
BOARD OF DIRECTORS
MANAGEMENT
Harold M. Messmer, Jr.
Chairman of the Board and Chief Executive Officer of Robert Half International
Marc H. Morial
President and Chief Executive Officer of the National Urban League
Barbara J. Novogradac
President of Novogradac Investment Company, a private real estate
investment company
Robert J. Pace
Founder and Chief Executive Officer of HundredX, Inc., a privately held
technology company
Frederick A. Richman
Consultant to Deloitte Tax LLP
M. Keith Waddell
Vice Chairman of the Board,
President and Chief Financial Officer of Robert Half International
Corporate Headquarters
2884 Sand Hill Road
Menlo Park, California 94025
1.650.234.6000
www.roberthalf.com
Registrar and Stock Transfer Agent
Computershare Investor Services
P.O. Box 505000
Louisville, Kentucky 40233-5000
Private Couriers/Registered Mail:
Computershare Investor Services
462 South 4th Street, Suite 1600
Louisville, Kentucky 40202
1.800.676.0894
1.800.952.9245 (TDD for Hearing Impaired)
1.781.575.2879 (Foreign Shareholders)
www.computershare.com/investor
Executive Officers
Harold M. Messmer, Jr.
Chairman of the Board and Chief Executive Officer
M. Keith Waddell
Vice Chairman of the Board, President and Chief Financial Officer
Paul F. Gentzkow
President and Chief Operating Officer — Staffing Services
Robert W. Glass
Executive Vice President, Corporate Development
Michael C. Buckley
Executive Vice President, Chief Administrative Officer, Treasurer
and Assistant Secretary
Officers
Evelyn Crane-Oliver
Senior Vice President, Secretary and General Counsel
Kenneth D. Gitlin
Senior Vice President, Operational Support
Stephen M. Hilton
Senior Vice President, Corporate Controller and Assistant Treasurer
Christopher M. Hoffmann
Senior Vice President, Commercial Transactions and Law
Tami A. Munns
Senior Vice President, Corporate Services — Staffing
M. Sean Perry
Senior Vice President, Chief Information Officer
Lynne C. Smith
Senior Vice President, Human Resources and Compensation
Reesa M. Staten
Senior Vice President, Corporate Communications
Michelle M. Whitman
Senior Vice President, Marketing
Robert Half Board of Directors (from left) Barbara J. Novogradac; M. Keith Waddell; Harold M. Messmer, Jr.; Frederick A. Richman; Marc H. Morial; and Robert J. Pace
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