What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-08-03 compared with 2020-05-04 · 109 added, 73 removed, 392 unchanged (32% of the section changed)

42 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

Service revenues $ 1,108,326 $ 1,516,385 $ 2,615,017 $ 2,984,915

19 unchanged sentences

(in thousands)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

COMPREHENSIVE INCOME (LOSS):

16 unchanged sentences

Dividends declared ($ .34 per share)

— — — — ( 39,441 ) ( 39,441 )

Net issuances of restricted stock 745 1 ( 1 ) — — —

3 unchanged sentences

114,602 $ 115 $ 1,141,011 $ ( 33,686 ) $ 22,485 $ 1,129,925

Net income — — — — 46,196 46,196

Other comprehensive income (loss) — — — 6,534 — 6,534

Dividends declared ($ .34 per share)

— — — — ( 38,975 ) ( 38,975 )

Net issuances of restricted stock 33 — — — — —

Stock-based compensation — — 13,035 — — 13,035

Repurchases of common stock 0 0 — — ( 9 ) ( 9 )

Balance at June 30, 2020

114,635 $ 115 $ 1,154,046 $ ( 27,152 ) $ 29,697 $ 1,156,706

Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total

5 unchanged sentences

Dividends declared ($ .31 per share)

— — — — ( 36,998 ) ( 36,998 )

Net issuances of restricted stock 281 — — — — —

3 unchanged sentences

118,321 $ 118 $ 1,090,432 $ ( 18,006 ) $ 4,485 $ 1,077,029

Net income — — — — 114,612 114,612

Other comprehensive income (loss) — — — 2,146 — 2,146

Dividends declared ($ .31 per share)

— — — — ( 36,597 ) ( 36,597 )

Net issuances of restricted stock 271 1 ( 1 ) — — —

Stock-based compensation — — 11,670 — — 11,670

Repurchases of common stock ( 1,031 ) ( 1 ) — — ( 59,632 ) ( 59,633 )

Balance at June 30, 2019

117,561 $ 118 $ 1,102,101 $ ( 15,860 ) $ 22,868 $ 1,109,227

The accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

3 unchanged sentences

(in thousands)

Three Months Ended

Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

36 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2020

June 30, 2020

Note A— Summary of Significant Accounting Policies

23 unchanged sentences

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 March 31, 2020, such estimates include allowances for credit losses, variable consideration, workers’ compensation losses, income and other taxes, and assumptions used in the Company’s goodwill impairment assessment and in the valuation of stock grants subject to market conditions.

As of June 30, 2020, such estimates include allowances for credit losses, variable consideration, workers’ compensation losses, income and other taxes, and assumptions used in the Company’s goodwill impairment assessment and in the valuation of stock grants subject to market conditions.

In March 2020, the World Health Organization announced that a novel strain of coronavirus (“COVID-19”) had become pandemic.

The COVID-19 pandemic is already having a significant impact on global economies as a result of stay-at-home orders and business closures designed to stop the spread of the virus.

We are continuing to monitor the spread of COVID-19 and related risks, including risks related to efforts to mitigate the disease’s spread, although the rapid development and fluidity of our response to the pandemic, including uncertainty around the duration and extent of COVID-19, precludes any prediction as to its ultimate impact on the Company’s results of operations, financial condition, or liquidity.

In light of the currently unknown ultimate duration and severity of COVID-19, we face a greater degree of uncertainty than normal in making the judgments and estimates needed to apply the Company’s significant accounting policies.

As COVID-19 continues to develop, we may make changes to these estimates and judgments over time, which could result in meaningful impacts to the Company’s financial statements in future periods.

The subsequent global stay-at-home orders resulted in significant travel restrictions and business closures.

These actions have led to global economic disruptions.

We are continuing to monitor the efforts to mitigate the spread of COVID-19, including uncertainty around the duration and extent of the stay-at-home orders and the effect on the Company’s results of operations, financial condition, and liquidity.

In light of the economic disruption, we face a greater degree of uncertainty than normal in making the judgments and estimates needed to apply the Company’s significant accounting policies.

As the situation continues to develop, we may make changes to these estimates and judgments over time, which could result in meaningful impacts to the Company’s financial statements in future periods.

Actual results and outcomes may differ from management’s estimates and assumptions.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

March 31, 2020

June 30, 2020

Service Revenues.

9 unchanged sentences

The Company expenses all advertising costs as incurred.

Advertising costs were $ 14.5 million and $ 12.8 million for the three months ended March 31, 2020 and 2019, respectively.

Advertising costs were $ 6.7 million and $ 21.2 million for the three and six months ended June 30, 2020, respectively, and $ 15.0 million and $ 27.8 million for the three and six months ended June 30, 2019, respectively.

Allowance for Credit Losses.

3 unchanged sentences

The Company applies credit loss estimates to these pooled receivables to determine expected credit losses.

The following table sets forth the activity in credit losses from December 31, 2019, through March 31, 2020 (in

The following table sets forth the activity in credit losses from December 31, 2019, through June 30, 2020 (in

Balance as of December 31, 2019

4 unchanged sentences

Other, including translation adjustments ( 1,018 )

Balance as of March 31, 2020

Balance as of June 30, 2020

Goodwill and Intangible Assets .

4 unchanged sentences

The Company capitalizes direct costs incurred in the development of internal-use software.

Cloud computing implementation costs incurred in hosting arrangements are capitalized and reported as a component of other assets.

Cloud computing implementation costs incurred in hosting arrangements are capitalized and reported as a component of other current assets.

All other internal-use software development costs are capitalized and reported as a component of computer software within property and equipment on the unaudited Condensed Consolidated Statement of Financial Position.

Capitalized internal-use software development costs were $ 13.0 million and $ 5.0 million for the three months ended March 31, 2020 and 2019, respectively.

Capitalized internal-use software development costs were $ 9.9 million and $ 22.9 million for the three and six months ended June 30, 2020, respectively, and $ 7.9 million and $ 12.9 million for the three and six months ended June 30, 2019, respectively.

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

June 30, 2020

Note B— New Accounting Pronouncements

1 unchanged sentence

Current Expected Credit Losses Model.

In June 2016, the FASB issued authoritative guidance amending how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

March 31, 2020

The guidance requires the application of a current expected credit loss model, which is a new impairment model based on expected losses.

13 unchanged sentences

GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met.

The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform.

The amendments apply only to contracts and hedging relationships that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform.

These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022.

12 unchanged sentences

The Company records temporary and consultant staffing 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.

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

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

June 30, 2020

establish their price and duties and (iii) bears the risk for services that are not fully paid for by customers.

Fees paid to Time Management or Vendor Management service providers selected by clients are recorded as a reduction of revenues, as the Company is not the primary obligor with respect to those services.

1 unchanged sentence

Permanent placement staffing revenues from contracts with customers are primarily recognized when employment candidates accept offers of permanent employment.

The Company has a substantial

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

March 31, 2020

history of estimating the financial impact of permanent placement candidates who do not remain with its clients through the 90 -day guarantee period.

The Company has a substantial history of estimating the financial impact of permanent placement candidates who do not remain with its clients through the 90 -day guarantee period.

These amounts are established based primarily on historical data and are recorded as liabilities.

11 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

Accountemps $ 322,596 $ 486,992 $ 803,037 $ 970,465

9 unchanged sentences

Contracts with multiple performance obligations are recognized as performance obligations are delivered, and contract value is allocated based on relative stand-alone selling values of the services and products in the arrangement.

As of March 31, 2020, aggregate transaction price allocated to the performance obligations that are unsatisfied for contracts with an expected duration of greater than one year was $ 112.0 million.

As of June 30, 2020, aggregate transaction price allocated to the performance obligations that are unsatisfied for contracts with an expected duration of greater than one year was $ 132.6 million.

Of this amount, $ 122.3 million is expected to be recognized within the next twelve months .

As of March 31, 2019, aggregate transaction price allocated to the performance obligations that are unsatisfied for contracts with an expected duration of greater than one year was $ 84.8 million.

As of June 30, 2019, aggregate transaction price allocated to the performance obligations that are unsatisfied for contracts with an expected duration of greater than one year was $ 94.5 million.

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

March 31, 2020

June 30, 2020

Contract liabilities are recorded when cash payments are received or due in advance of performance and are reflected in accounts payable and accrued expenses on the unaudited Condensed Consolidated Statement of Financial Position.

The following table sets forth the activity in contract liabilities from December 31, 2018, through March 31, 2020 (in thousands):

The following table sets forth the activity in contract liabilities from December 31, 2018, through June 30, 2020 (in thousands):

Contract Liabilities

7 unchanged sentences

Other, including translation adjustments 548

Balance as of March 31, 2020

Balance as of June 30, 2020

Note D— Other Current Assets

15 unchanged sentences

Property and equipment, net $ 120,958 $ 128,385

Note F— Leases

The Company has operating leases for corporate and field offices, and certain equipment.

The Company’s leases have remaining lease terms of less than 1 year to 10 years, some of which include options to extend the leases for up to 7 years, and

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

March 31, 2020

some of which include options to terminate the leases within 1 year.

Operating lease expenses for the three months ended March 31, 2020 and 2019, were $ 19.9 million and $ 16.6 million, respectively.

June 30, 2020

Note F— Leases

The Company has operating leases for corporate and field offices, and certain equipment.

The Company’s leases have remaining lease terms of less than 1 year to 10 years, some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within 1 year.

Operating lease expenses were $ 20.0 million and $ 39.9 million for the three and six months ended June 30, 2020, respectively, $ 17.9 million and $ 35.9 million for the three and six months ended June 30, 2019, respectively.

Supplemental cash flow information related to leases consisted of the following (in thousands):

Three Months Ended

Six Months Ended

Cash paid for operating lease liabilities $ 41,539 $ 39,291

4 unchanged sentences

Weighted average discount rate for operating leases 2.8 % 3.0 %

Future minimum lease payments under non-cancellable leases as of March 31, 2020, were as follows (in thousands):

2020 (excluding the three months ended March 31, 2020)

Future minimum lease payments under non-cancellable leases as of June 30, 2020, were as follows (in thousands):

2020 (excluding the six months ended June 30, 2020)

Thereafter 39,474

2 unchanged sentences

(a) Includes current portion of $ 75.1 million for operating leases.

As of March 31, 2020, the Company had additional future minimum lease obligations totaling $ 33.2 million under operating leases that had not yet commenced.

These operating leases include agreements for corporate and field office facilities with lease terms of less than 1 year to 8 years.

As of June 30, 2020, the Company had additional future minimum lease obligations totaling $ 16.1 million under operating leases that had not yet commenced.

These operating leases include agreements for corporate and field office facilities with lease terms of 5 years to 8 years.

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

June 30, 2020

Note G— Goodwill

The following table sets forth the activity in goodwill from December 31, 2019, through March 31, 2020 (in thousands):

The following table sets forth the activity in goodwill from December 31, 2019, through June 30, 2020 (in thousands):

Temporary and consultant staffing Permanent placement staffing Risk consulting and internal audit services Total

2 unchanged sentences

Foreign currency translation adjustments ( 245 ) ( 66 ) ( 223 ) ( 534 )

Balance as of March 31, 2020

Balance as of June 30, 2020

$ 133,965 $ 26,031 $ 49,834 $ 209,830

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

March 31, 2020

Due to the recent significant decline in global economic and labor market conditions caused by the global outbreak of the COVID-19 pandemic, the Company considered the recoverability of its goodwill and determined, during the three months ended March 31, 2020, there were no events or circumstances that have changed since the last annual test that could more likely than not reduce the fair value of the Company’s reporting units below its carrying values.

The Company completed its annual assessment of the recoverability of goodwill as of June 30, 2020, and determined there were no events or circumstances that would more likely than not reduce the fair value of the Company’s reporting units below their carrying value.

Note H— Accrued Payroll and Benefit Costs

6 unchanged sentences

Accrued payroll and benefit costs $ 714,912 $ 743,602

The Company, under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, deferred paying $ 37.5 million of applicable payroll taxes as of June 30, 2020, which is included in other liabilities in the unaudited Condensed Consolidated Statements of Financial Position.

The Company provides various qualified defined contribution 401(k) plans covering eligible employees.

3 unchanged sentences

These plans include provisions for salary deferrals and Company matching and discretionary contributions.

The asset value of the nonqualified plans was $ 363.7 million and $ 398.4 million as of March 31, 2020 and December 31, 2019, respectively, and is included in other current assets in the unaudited Condensed Consolidated Statements of Financial Position.

The liability value for the nonqualified plans was $ 373.0 million and $ 421.2 million as of March 31, 2020 and December 31, 2019, respectively, and is included in current accrued payroll and benefit costs in the unaudited Condensed Consolidated Statements of Financial Position.

Deferred compensation plan and other benefits related to the Company’s executive chairman were $ 91.9 million and $ 91.8 million as of March 31, 2020 and December 31, 2019, respectively, and are included in the liability value for the nonqualified plans.

Net unrealized gains and (losses) on these nonqualified plan assets and liabilities were $( 48.7 ) million and $ 23.7 million for the three months ended March 31, 2020 and 2019, respectively.

The Company’s contribution expense for its qualified defined contribution plans and nonqualified benefits plans totaled $ 5.6 million and $ 3.6 million for the three months ended March 31, 2020 and 2019, respectively.

The asset value of the nonqualified plans was $ 418.1 million and $ 398.4 million as of June 30, 2020 and December 31, 2019, respectively, and is included in other current assets in the unaudited Condensed Consolidated Statements of Financial Position.

The liability value for the nonqualified plans was $ 428.7 million and $ 421.2 million as of June 30, 2020 and December 31, 2019, respectively, and is included in current accrued payroll and benefit costs in the unaudited Condensed Consolidated Statements of Financial Position.

Deferred compensation plan and other benefits related to the Company’s executive chairman were $ 88.3 million and $ 91.8 million as of June 30, 2020 and December 31, 2019, respectively, and are included in the liability value for the nonqualified plans.

Net unrealized gains and (losses) on these nonqualified plan assets and liabilities were $ 47.8 million and $( 1.0 ) million for the three and six months ended June 30, 2020, respectively, and $ 6.4 million and $ 30.1 million for the three and six months ended June 30, 2019, respectively.

The Company’s contribution expense for its qualified defined contribution plans and nonqualified benefits plans totaled $ 6.7 million and $ 12.3 million for the three and six months ended June 30, 2020, respectively, and $ 4.8 million and $ 8.4 million for the three and six months ended June 30, 2019, respectively.

The Company has statutory defined contribution plans and defined benefit plans outside the U.S., which are not material.

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

June 30, 2020

Note I— Commitments and Contingencies

5 unchanged sentences

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

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

March 31, 2020

Company’s Financial Statements.

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.

12 unchanged sentences

Legal costs associated with the resolution of claims, lawsuits and other contingencies are expensed as incurred.

In May 2020, the Company entered into a new $ 100 million unsecured revolving credit facility (the “ 364 -Day Credit Agreement”).

Borrowings under the 364 -Day Credit Agreement will bear interest in accordance with the terms of the borrowing, which typically will be calculated according to the LIBOR plus an applicable margin.

The 364 -Day Credit Agreement is subject to certain financial covenants and the Company was in compliance with these covenants as of June 30, 2020.

There were no borrowings under the 364 -Day Credit Agreement as of June 30, 2020.

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

June 30, 2020

Note J— Stockholders’ Equity

Stock Repurchase Program.

As of March 31, 2020, the Company is authorized to repurchase, from time to time, up to 1.5 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 three months ended March 31, 2020 and 2019, are reflected in the following table (in thousands):

Three Months Ended

As of June 30, 2020, the Company is authorized to repurchase, from time to time, up to 1.5 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 six months ended June 30, 2020 and 2019, are reflected in the following table (in thousands):

Six Months Ended

Common stock repurchased (in shares) 983 1,812

1 unchanged sentence

Additional stock repurchases were made in connection with employee stock plans, whereby Company shares were tendered by employees for the payment of applicable statutory withholding taxes.

The number and the cost of repurchases related to employee stock plans made during the three months ended March 31, 2020 and 2019, are reflected in the following table (in thousands):

Three Months Ended

The number and the cost of repurchases related to employee stock plans made during the six months ended June 30, 2020 and 2019, are reflected in the following table (in thousands):

Six Months Ended

Repurchases related to employee stock plans (in shares) 280 257

2 unchanged sentences

Treasury stock is accounted for using the cost method.

Repurchase activity for the three months ended March 31, 2020 and 2019, is presented in the unaudited Condensed Consolidated Statements of Stockholders’ Equity.

Repurchase activity for the three and six months ended June 30, 2020 and 2019, is presented in the unaudited Condensed Consolidated Statements of Stockholders’ Equity.

Repurchases of shares and issuances of dividends are applied first to the extent of retained earnings and any remaining amounts are applied to additional paid-in capital.

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

March 31, 2020

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.

June 30, 2020

Note K— Net Income Per Share

The calculation of net income per share for the three months ended March 31, 2020 and 2019, is reflected in the following table (in thousands, except per share amounts):

Three Months Ended March 31,

The calculation of net income per share for the three and six months ended June 30, 2020 and 2019, is reflected in the following table (in thousands, except per share amounts):

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

Net income $ 46,196 $ 114,612 $ 136,111 $ 224,410

19 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

March 31, 2020

The following table provides a reconciliation of revenue and operating income by reportable segment to consolidated results for the three months ended March 31, 2020 and 2019 (in thousands):

June 30, 2020

The following table provides a reconciliation of revenue and operating income by reportable segment to consolidated results for the three and six months ended June 30, 2020 and 2019 (in thousands):

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

Service revenues

12 unchanged sentences

Note M— Subsequent Events

On April 30, 2020, the Company announced the following:

On July 30, 2020, the Company announced the following:

Quarterly dividend per share $ .34

Declaration date April 30, 2020

Record date May 26, 2020

Payment date June 15, 2020

Declaration date July 30, 2020

Record date August 25, 2020

Payment date September 15, 2020

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements