What changed in this filing

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Item 1. Financial Statements

2021-08-04 compared with 2021-04-30 · 105 added, 82 removed, 452 unchanged (29% of the section changed)

43 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Service revenues $ 1,580,581 $ 1,108,326 $ 2,978,961 $ 2,615,017

3 unchanged sentences

Selling, general and administrative expenses 488,093 407,213 911,155 850,081

(Income) loss from investments held in employee deferred compensation trusts

(which is completely offset by related costs and expenses - Notes A & I)

(Income) loss from investments held in employee

deferred compensation trusts (which is completely offset by related costs and expenses - Notes A & I)

( 27,810 ) ( 48,927 ) ( 39,797 ) ( 8,551 )

Amortization of intangible assets 576 330 1,152 668

Interest income, net ( 45 ) ( 957 )

Interest expense (income), net 151 ( 105 ) 105 ( 1,062 )

Income before income taxes 203,862 58,024 353,968 189,787

12 unchanged sentences

(in thousands)

Three Months Ended March 31,

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

2021 2020 2021 2020

COMPREHENSIVE INCOME (LOSS):

23 unchanged sentences

112,682 $ 113 $ 1,194,153 $ ( 13,529 ) $ 16,962 $ 1,197,699

Net income — — — — 149,213 149,213

Other comprehensive income (loss) — — — 4,437 — 4,437

Dividends declared ($ .38 per share)

— — — — ( 42,720 ) ( 42,720 )

Net issuances of restricted stock 5 — — — — —

Stock-based compensation — — 13,903 — — 13,903

Repurchases of common stock ( 717 ) ( 1 ) — — ( 63,281 ) ( 63,282 )

Balance at June 30, 2021 111,970 $ 112 $ 1,208,056 $ ( 9,092 ) $ 60,174 $ 1,259,250

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

10 unchanged sentences

Balance at March 31, 2020 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

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:

41 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2021

June 30, 2021

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, 2021, 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.

We continue to monitor the significant global economic uncertainty as a result of coronavirus (“COVID-19”) to assess the impact on the Company’s results of operations, financial condition, and liquidity.

In light of the ongoing economic disruption, we continue to 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.

As of June 30, 2021, 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.

We continue to monitor the global economic uncertainty as a result of coronavirus (“COVID-19”) to assess the impact on the Company’s results of operations, financial condition, and liquidity.

We continue to face uncertainty in making the judgments and estimates needed to apply the Company’s significant accounting policies.

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

4 unchanged sentences

See Note C for further discussion of the revenue recognition accounting policy.

Costs of Services.

Direct costs of temporary and consultant staffing consist of payroll, payroll taxes and benefit costs for the Company’s engagement professionals, as well as reimbursable expenses.

Direct costs of permanent placement staffing

ROBERT HALF INTERNATIONAL INC.

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

March 31, 2021

services consist of reimbursable expenses.

June 30, 2021

Costs of Services.

Direct costs of temporary and consultant staffing consist of payroll, payroll taxes and benefit costs for the Company’s engagement professionals, as well as reimbursable expenses.

Direct costs of permanent placement staffing services consist of reimbursable expenses.

Risk consulting and internal audit direct costs of services include professional staff payroll, contract labor payroll, payroll taxes and benefit costs, as well as reimbursable expenses.

1 unchanged sentence

The Company expenses all advertising costs as incurred .

Advertising costs were $ 8.4 million and $ 14.5 million for the three months ended March 31, 2021 and 2020, respectively.

Advertising costs were $ 11.8 million and $ 20.2 million for the three and six months ended June 30, 2021, respectively, and $ 6.7 million and $ 21.2 million for the three and six months ended June 30, 2020, respectively.

(Income) Loss from Investments Held in Employee Deferred Compensation Trusts .

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Dividend income $ ( 2,556 ) $ ( 1,055 ) $ ( 2,848 ) $ ( 1,460 )

15 unchanged sentences

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

March 31, 2021

June 30, 2021

The following table sets forth the composition of the underlying assets which comprise the Company’s deferred compensation trust assets (in thousands):

Fair Value Measurements Using

Balance at March 31, 2021

Balance at June 30, 2021

Quoted Prices

26 unchanged sentences

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

March 31, 2021

The following table sets forth the activity in the allowance for credit losses from December 31, 2019, through March 31, 2021 (in thousands):

June 30, 2021

The following table sets forth the activity in the allowance for credit losses from January 1, 2020, through June 30, 2021 (in thousands):

Allowance for Credit Losses

Balance as of December 31, 2019

Adoption of accounting pronouncement 558

Balance as of January 1, 2020

6 unchanged sentences

Other, including translation adjustments ( 1,171 )

Balance as of March 31, 2021

Balance as of June 30, 2021

Internal-use Software.

2 unchanged sentences

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 Statements of Financial Position.

Capitalized internal-use software development costs were $ 10.4 million a nd $ 13.0 million for the three months ended March 31, 2021 and 2020, respectively.

internal-use software development costs were $ 9.1 million and $ 19.5 million for the three and six months ended June 30, 2021,

respectively, and $ 9.9 million and $ 22.9 million for the three and six months ended June 30, 2020, respectively.

Goodwill and Intangible Assets .

1 unchanged sentence

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, or on an as needed interim basis.

Goodwill is not amortized, but is assessed at least annually for impairment, or on an as needed interim basis.

Note B— New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Reference Rate Reform.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The amendments provide optional guidance for a limited time to ease the potential burden in accounting for reference rate reform.

The new guidance provides optional expedients and exceptions for applying U.S.

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.

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.

The application of this guidance did not have a material impact on the Company's financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

ROBERT HALF INTERNATIONAL INC.

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

March 31, 2021

Note C— Revenue Recognition

6 unchanged sentences

Temporary and consultant staffing revenues from contracts with customers are recognized in the amount to which the Company has a right to invoice, when the services are rendered by the Company’s engagement professionals.

The substantial majority of engagement professionals placed on assignment by the Company are the Company’s legal employees while they are working on assignments.

The substantial majority of engagement professionals placed on assignment by the Company are the

ROBERT HALF INTERNATIONAL INC.

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

June 30, 2021

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.

6 unchanged sentences

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 contract liabilities.

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

Fees to clients are generally calculated as a percentage of the new employee’s annual compensation.

10 unchanged sentences

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

March 31, 2021

June 30, 2021

The following table presents the Company’s service revenues disaggregated by line of business (in thousands):

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Accountemps $ 453,342 $ 331,542 $ 870,448 $ 821,426

9 unchanged sentences

Intersegment revenues for each line of business are aggregated and then eliminated as a single line.

Payment terms in the Company’s contracts vary by the type and location of the Company’s customer and the services offered.

Payment terms in the Company’s contracts vary by the type of the Company’s customer and the services offered.

The term between invoicing and when payment is due is not significant.

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, 2021, aggregate transaction price allocated to the performance obligations that are unsatisfied for contracts with an expected duration of greater than one year was $ 170.0 million.

As of June 30, 2021, aggregate transaction price allocated to the performance obligations that are unsatisfied for contracts with an expected duration of greater than one year was $ 173.5 million.

Of this amount, $ 162.9 million is expected to be recognized within the next twelve months .

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.

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 Statements of Financial Position.

The following table sets forth the activity in contract liabilities from December 31, 2019, through March 31, 2021 (in thousands):

The following table sets forth the activity in contract liabilities from January 1, 2020, through June 30, 2021 (in thousands):

Contract Liabilities

Balance as of December 31, 2019 $ 12,948

Balance as of January 1, 2020 $ 12,948

Payments in advance of satisfaction of performance obligations 25,614

5 unchanged sentences

Other, including translation adjustments 730

Balance as of March 31, 2021 $ 15,347

Balance as of June 30, 2021 $ 13,182

ROBERT HALF INTERNATIONAL INC.

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

March 31, 2021

June 30, 2021

Note D— Other Current Assets

17 unchanged sentences

The Company’s leases have remaining lease terms of 1 month to 9 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 for the three months ended March 31, 2021 and 2020, were $ 21.5 million and $ 19.9 million, respectively.

Operating lease expenses were $ 21.7 million and $ 43.2 million for the three and six months ended June 30, 2021, respectively, $ 20.0 million and $ 39.9 million for the three and six

months ended June 30, 2020, 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 $ 45,531 $ 41,539

6 unchanged sentences

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

March 31, 2021

Future minimum lease payments under non-cancellable leases as of March 31, 2021, were as follows (in thousands):

2021 (excluding the three months ended March 31, 2021)

June 30, 2021

Future minimum lease payments under non-cancellable leases as of June 30, 2021, were as follows (in thousands):

2021 (excluding the six months ended June 30, 2021)

Thereafter 30,922

2 unchanged sentences

(a) Includes current portion of $ 79.5 million for operating leases.

As of March 31, 2021, the Company had additional future minimum lease obligations totaling $ 4.0 million under operating leases that had not yet commenced.

As of June 30, 2021, the Company had additional future minimum lease obligations totaling $ 3.8 million under operating leases that had not yet commenced.

These operating leases include agreements for corporate and field office facilities with lease terms of 1 to 6 years.

Note G— Goodwill

The following table sets forth the activity in goodwill from December 31, 2020, through March 31, 2021 (in thousands):

The following table sets forth the activity in goodwill from December 31, 2020, through June 30, 2021 (in thousands):

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

2 unchanged sentences

Foreign currency translation adjustments 70 9 105 184

Balance as of March 31, 2021

Balance as of June 30, 2021

$ 134,581 $ 26,189 $ 62,469 $ 223,239

The Company completed its annual assessment of the recoverability of goodwill during the quarter ended June 30, 2021, 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

5 unchanged sentences

Accrued payroll and benefit costs $ 463,772 $ 397,877

The Company, under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, deferred paying $ 102.2 million of applicable payroll taxes as of March 31, 2021, of which $ 51.1 million is expected to be paid during the next 12 months and is included in accrued payroll and benefit costs and the remaining $ 51.1 million is included in other liabilities on the unaudited Condensed Consolidated Statements of Financial Position .

The Company, under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, deferred paying $ 102.2 million of applicable payroll taxes as of June 30, 2021, of which $ 51.1 million is expected to be paid during the next 12 months and is included in accrued payroll and benefit costs and the remaining $ 51.1 million is included in other liabilities on the unaudited Condensed Consolidated Statements of Financial Position.

Deferred payroll taxes payable was $ 102.2 million as of December 31, 2020.

ROBERT HALF INTERNATIONAL INC.

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

March 31, 2021

June 30, 2021

Note I— Employee Deferred Compensation Plan Obligations

4 unchanged sentences

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

The asset value of the nonqualified plans was $ 424.0 million and $ 406.6 million as of March 31, 2021, and December 31, 2020, respectively.

The asset value of the nonqualified plans was $ 458.6 million and $ 406.6 million as of June 30, 2021, and December 31, 2020, respectively.

The Company holds these assets to satisfy the Company’s liabilities under its deferred compensation plans.

The liability value for the nonqualified plans was $ 437.7 million and $ 435.1 million as of March 31, 2021, and December 31, 2020, respectively.

The liability value for the nonqualified plans was $ 481.5 million and $ 435.1 million as of June 30, 2021, and December 31, 2020, respectively.

The following table presents the Company’s compensation expense related to its qualified defined contribution plans and nonqualified plans (in thousands):

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Contribution expense $ 13,918 $ 6,730 $ 23,472 $ 12,301

Increase (decrease) in employee deferred compensation expense related to changes in the fair

value of trust assets 11,988 ( 40,376 )

Increase (decrease) in employee deferred compensation expense related to changes in the fair value of trust assets 27,810 48,927 39,797 8,551

$ 41,728 $ 55,657 $ 63,269 $ 20,852

20 unchanged sentences

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

March 31, 2021

June 30, 2021

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.

3 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 March 31, 2021.

There were no borrowings under the 364 -Day Credit Agreement as of March 31, 2021.

In May 2021, the Company entered into an amendment (“Amendment No.

1”) to extend the maturity of its $ 100 million unsecured revolving credit facility (the “Credit Agreement”) to May 2024.

Borrowings under the Credit Agreement will bear interest in accordance with the terms of the borrowing, which typically will be calculated according to the LIBOR, or an alternative base rate, plus an applicable margin.

The Credit Agreement is subject to certain financial covenants and the Company was in compliance with these covenants as of June 30, 2021.

There were no borrowings under the Credit Agreement as of June 30, 2021.

Note K— Stockholders’ Equity

Stock Repurchase Program.

As of March 31, 2021, the Company is authorized to repurchase, from time to time, up to 9.2 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, 2021 and 2020, are reflected in the following table (in thousands):

Three Months Ended

As of June 30, 2021, the Company is authorized to repurchase, from time to time, up to 8.4 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, 2021 and 2020, are reflected in the following table (in thousands):

Six Months Ended

Common stock repurchased (in shares) 1,514 983

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, 2021 and 2020, 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, 2021 and 2020, are reflected in the following table (in thousands):

Six Months Ended

Repurchases related to employee stock plans (in shares) 251 280

2 unchanged sentences

Treasury stock is accounted for using the cost method.

Repurchase activity for the three months ended March 31, 2021 and 2020, is presented in the unaudited Condensed Consolidated Statements of Stockholders’ Equity.

Repurchase activity for the three and six months ended June 30, 2021 and 2020, 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.

1 unchanged sentence

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

March 31, 2021

June 30, 2021

Note L— Net Income Per Share

The calculation of net income per share for the three months ended March 31, 2021 and 2020, is reflected in the following table (in thousands, except per share amounts):

The calculation of net income per share for the three and six months ended June 30, 2021 and 2020, is reflected in the following table (in thousands, except per share amounts):

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Net income $ 149,213 $ 46,196 $ 259,811 $ 136,111

16 unchanged sentences

The accounting policies of the segments are set forth in Note A—“Summary of Significant Accounting Policies” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

The Company evaluates performance based on income before net interest income, intangible assets amortization expense, and income taxes.

The Company evaluates performance based on income before net interest expense (income), intangible assets amortization expense, and income taxes.

ROBERT HALF INTERNATIONAL INC.

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

March 31, 2021

The following table provides a reconciliation of service revenues and segment income by reportable segment to consolidated results for the three months ended March 31, 2021 and 2020 (in thousands):

June 30, 2021

The following table provides a reconciliation of service revenues and segment income by reportable segment to consolidated results for the three and six months ended June 30, 2021 and 2020 (in thousands):

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Service revenues

9 unchanged sentences

Amortization of intangible assets 576 330 1,152 668

Interest income, net ( 45 ) ( 957 )

Interest expense (income), net 151 ( 105 ) 105 ( 1,062 )

Income before income taxes $ 203,862 $ 58,024 $ 353,968 $ 189,787

2 unchanged sentences

between temporary and consultant staffing segment and risk consulting and internal audit services segment were $ 143.0 million

and $ 46.3 million for the three months ended March 31, 2021 and 2020, respectively.

and $ 246.8 million for the three and six months ended June 30, 2021, respectively, and $ 41.5 million and $ 87.8 million for the three months and six months ended June 30, 2020, respectively.

Revenue and direct costs related to the intersegment activity are reflected in the risk consulting and internal audit segment, including the costs of candidate payroll, fringe benefits and incremental recruiter compensation.

Note N— Subsequent Events

On April 29, 2021, the Company announced the following:

On August 3, 2021, the Company announced the following:

Quarterly dividend per share $ .38

Declaration date April 29, 2021

Record date May 25, 2021

Payment date June 15, 2021

Declaration date August 3, 2021

Record date August 25, 2021

Payment date September 15, 2021

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