-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VU5VgObeweHHsyU0XhytKREcB6Vc3AxUnoPZ24fVXU5Fb2MHmfl9++MCjKuXJecM E0/T6oZnvbhC/QSvXsPYIw== 0001047469-04-006986.txt : 20040308 0001047469-04-006986.hdr.sgml : 20040308 20040308172238 ACCESSION NUMBER: 0001047469-04-006986 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20031231 FILED AS OF DATE: 20040308 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HALF ROBERT INTERNATIONAL INC /DE/ CENTRAL INDEX KEY: 0000315213 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HELP SUPPLY SERVICES [7363] IRS NUMBER: 941648752 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10427 FILM NUMBER: 04655471 BUSINESS ADDRESS: STREET 1: 2884 SAND HILL RD STREET 2: STE 200 CITY: MENLO PARK STATE: CA ZIP: 94025 BUSINESS PHONE: 6502346000 MAIL ADDRESS: STREET 1: 2884 SAND HILL ROAD STREET 2: STE 200 CITY: MENLO PARK STATE: CA ZIP: 94025 FORMER COMPANY: FORMER CONFORMED NAME: BOOTHE FINANCIAL CORP /DE/ DATE OF NAME CHANGE: 19870721 FORMER COMPANY: FORMER CONFORMED NAME: BOOTHE INTERIM CORP DATE OF NAME CHANGE: 19600201 10-K 1 a2124746z10-k.htm 10-K
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2003

/ / 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		94-1648752
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2884 Sand Hill Road, Menlo Park, California		94025
(Address of principal executive offices)		(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		Name of each exchange on which registered
Common Stock, Par Value $.001 per Share		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

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 X 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 an accelerated filer (as defined in Rule 12b-2 of the Act). Yes X No

As of June 30, 2003, the aggregate market value of the Common Stock held by non-affiliates of the registrant was approximately $2,977,800,000 based on the closing sale price on that date. This amount excludes the market value of 13,188,488 shares of Common Stock directly or indirectly held by registrant's directors and officers and their affiliates.

As of February 29, 2004, there were outstanding 171,871,239 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 2004, 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.

PART I

Item 1. Business

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 (formerly The Affiliates®) provides temporary, project, and full-time staffing of attorneys and specialized support personnel within law firms and corporate legal departments. The Creative Group provides project staffing in the advertising, marketing, and web design fields. Protiviti began operations on May 2002 and provides business and technology risk consulting and internal audit services. Protiviti, which primarily employs risk consulting and internal audit professionals formerly associated with major accounting firms, 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 Andersen. These professionals formed the base of the Company's new Protiviti Inc. subsidiary. Protiviti® has enabled the Company to enter the market for independent internal audit and business and technology risk consulting 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 work loads for accounting, tax and finance 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 increasingly 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 permanent employees are eliminated by the use of Accountemps temporaries. The temporary workers are employees of Accountemps and are paid by Accountemps only when working on customer assignments. The customer pays a fixed rate only for hours worked.

Accountemps clients may fill their permanent employment needs by using an Accountemps employee on a trial basis and, if so desired, "converting" the temporary position to a permanent 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 permanent office and administrative personnel, ranging from word processors to office managers. OfficeTeam operates in much the same fashion as the Accountemps and Robert Half divisions.

Robert Half Finance & Accounting

The Company's Robert Half Finance & Accounting division specializes in the permanent placement of accounting, financial, tax and banking personnel. Fees for successful permanent placements are paid only by the employer and are generally a percentage of the new employee's annual compensation. No fee for permanent 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 and placing regular employees in areas ranging from multiple platform systems integration to end-user support, including specialists in programming, networking, systems integration, database design and help desk support.

Robert Half Legal

Since 1992, the Company has been placing temporary and permanent employees in attorney, paralegal, legal administrative and legal secretarial positions through its Robert Half Legal division (formerly called The Affiliates). The legal profession's requirements (the need for confidentiality, accuracy and reliability, a strong drive toward cost-effectiveness, and frequent peak workload periods) are similar to the demands of the clients of the Accountemps division.

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, and senior financial analysts, for such tasks as financial systems conversions, expansion into new markets, business process reengineering and post-merger financial consolidation.

The Creative Group

The Creative Group division commenced operations in 1999 and serves clients in the areas of advertising, marketing and web design and places project consultants in a variety of positions such as creative directors, graphics designers, web content developers, web designers, media buyers, and public relations specialists.

Protiviti

Protiviti provides independent internal audit and business and technology risk consulting services. Protiviti helps clients identify, measure, and manage operational and technology-related risks they face within their industries and throughout their systems and processes. Protiviti offers a full spectrum of professional consulting services, technologies, and skills for business and technology risk management and the continual transformation of internal audit functions.

Marketing and Recruiting

The Company markets its temporary and permanent staffing services to clients as well as employment candidates. Local marketing and recruiting are generally conducted by each office or related group of

offices. Local advertising directed to clients and employment candidates consists primarily of yellow pages advertisements, classified advertisements, websites, trade shows and advertising on the Internet. Direct marketing through e-mail, regular mail and telephone solicitation also constitutes a significant portion of the Company's total advertising. National advertising conducted by the Company consists primarily of radio, print advertisements in national newspapers, magazines and certain trade journals. The Company has initiated programs to take advantage of the Internet as a resource for recruiting candidates and filling client orders. Recent Internet initiatives include forging traffic building alliances with leading Internet career search sites. The Company plans to expand its use of the Internet in all aspects of sales and recruitment. Joint marketing arrangements have been entered into with major software manufacturers and typically provide for development of proprietary skills tests, cooperative advertising, joint mailings and similar promotional activities. The Company also actively seeks endorsements and affiliations with professional organizations in the business management, office administration and professional secretarial fields. The Company also conducts public relations activities designed to enhance public recognition of the Company and its services. Local employees are encouraged to be active in civic organizations and industry trade groups.

Protiviti markets its risk 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 initiated a national direct mail program to share information with clients on current corporate governance issues. It conducts public relations activities, such as press releases 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 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 temporary and permanent staffing operations is coordinated from its headquarters facilities in Menlo Park and Pleasanton, 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. The Company conducts its temporary and permanent staffing services operations through more than 325 offices in 43 states, the District of Columbia and ten 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 committee consisting of key operating personnel, with operational and administrative support provided by individuals located in Pleasanton and Menlo Park, California. Protiviti has more than 30 offices in 20 states and six foreign countries.

Competition

The Company's temporary and permanent staffing services face competition in attracting clients as well as high-quality specialized employment candidates. The temporary and permanent placement businesses are 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 temporary and permanent placement businesses 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 due to many new firms entering the market and the evolution of established firms in the business space. 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 7,300 full-time staff employees, including approximately 850 engaged directly in Protiviti operations. The Company placed approximately 175,000 employees on temporary assignments with clients during 2003. Temporary employees placed by the Company 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 temporary and permanent staffing services operations are generally more active in the first and fourth quarters of a calendar year. Protiviti has been in operation only since May 2002, so there does not exist sufficient information to determine to what extent, if any, its business may be seasonal. Order backlog is not a material aspect of the Company's temporary and permanent staffing services 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.rhi.com. The Company makes available, free of charge, through its website, its Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q, and its Current Reports on Form 8-K, and any amendments to those reports, as soon as is reasonably practicable after such reports are filed with 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 10 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.

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:

Business Highly Dependent Upon the State of the Economy. The demand for the Company's services, in particular its temporary and permanent staffing services, is highly dependent upon the state of the economy and upon the staffing needs of the Company's clients. Any variation in the economic condition or unemployment 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.

Availability of Candidates. The Company's temporary and permanent staffing services business consists of the placement of individuals seeking employment. There can be no assurance that qualified candidates for employment will continue to seek employment through the Company. Qualified candidates generally seek temporary or permanent positions through multiple sources, including the Company and its competitors. Any shortage of qualified candidates could materially adversely affect the Company.

Highly Competitive Business. The temporary and permanent 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.

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 or harassment. 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. 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 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.

Dependence Upon Personnel. 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.

Government Regulation. The Company's business is subject to regulation or licensing in many states 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.

Government Regulation of the Workplace. 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 could materially adversely affect the Company.

Reliance on Short-Term Contracts. Because long-term contracts are not a significant part of the Company's temporary and permanent staffing services business, future results cannot be reliably predicted by considering past trends or extrapolating past results.

Impact of Protiviti on Corporate Management and Costs. Integrating the recently hired professionals into Protiviti and establishing an infrastructure and procedures for Protiviti has caused the Company to incur significant costs and the diversion of significant amounts of management time. Such costs and expenditures of time can be expected to adversely impact the operations of the Company as a whole. There can be no assurance if, or when, such costs and diversion of time will decrease.

Protiviti Operating Losses. Protiviti has only recently begun operations. It has not yet generated an operating profit, and there can be no assurance that the business will become profitable in the future.

Protiviti Dependence on Personnel. Protiviti is a services business, and is dependent upon its ability to attract and retain personnel. While Protiviti has retained its key personnel to date, there can be no assurance that it will be able to do so.

Protiviti Competition. Protiviti operates in a highly competitive business. As with the Company's temporary and permanent 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.

Demand for Services. In 2002 and 2003, the operations of Protiviti included services related to Sarbanes-Oxley and other regulatory compliance. There can be no assurance that there will be ongoing demand for these services.

Potential Liability. The business of Protiviti consists of providing internal audit and business and technology risk consulting 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 2. Properties

The Company's headquarters operations are located in Menlo Park and Pleasanton, California. Placement activities are conducted through more than 325 offices located in the United States, Canada, the United Kingdom, Belgium, France, the Netherlands, Germany, the Czech Republic, Ireland, Australia

and New Zealand. Protiviti has more than 30 offices in the United States, Canada, France, Italy, Japan, Singapore and the United Kingdom. All of the offices are leased.

Item 3. Legal Proceedings

The Company is not a party to any material pending legal proceedings other than routine litigation incidental to its business.

Item 4. Submission of Matters to a Vote of Security Holders

No matter was submitted to a vote of the Company's security holders during the fourth quarter of the fiscal year covered by this report.

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

The Company's Common Stock is listed for trading on the New York Stock Exchange under the symbol "RHI". On December 31, 2003, there were approximately 1,900 holders of record of the Common Stock.

Following is a list by fiscal quarters of the sales prices of the stock:

	Sales Prices
2003	Sales Prices
2003	High	Low
4th Quarter	$25.18	$19.18
3rd Quarter	$22.93	$18.10
2nd Quarter	$20.09	$13.17
1st Quarter	$16.98	$11.44
	Sales Prices
2002	Sales Prices
2002	High	Low
4th Quarter	$21.65	$11.94
3rd Quarter	$25.20	$15.37
2nd Quarter	$29.30	$22.00
1st Quarter	$30.90	$23.50

No cash dividends were paid in 2003 or 2002. The Company, as it deems appropriate, may continue to retain all earnings for use in its business or may consider paying a dividend in the future.

The remainder of the information required by this item is incorporated by reference to Part III, Item 12 of this Form 10-K.

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.

	Years Ended December 31,
	2003			2002			2001			2000			1999
	(in thousands)
Income Statement Data:
Net service revenues	$	1,974,991		$	1,904,951		$	2,452,850		$	2,699,319		$	2,081,321
Direct costs of services, consisting of payroll, payroll taxes and insurance costs for temporary and risk consulting employees		1,248,253			1,190,216			1,436,272			1,538,556			1,219,270

Gross margin		726,738			714,735			1,016,578			1,160,763			862,051
Selling, general and administrative expenses		707,349			709,542			823,478			864,418			628,405
Amortization of intangible assets		10,277			6,281			5,335			5,157			4,990
Interest income, net		(2,603	)		(4,585	)		(8,519	)		(10,439	)		(6,041	)

Income before income taxes		11,715			3,497			196,284			301,627			234,697
Provision for income taxes		5,325			1,329			75,177			115,524			93,256

Net income	$	6,390		$	2,168		$	121,107		$	186,103		$	141,441

		Years Ended December 31,
		2003		2002		2001		2000		1999
		(in thousands, except per share amounts)
Net Income Per Share:
	Basic	$	.04	$	.01	$	.69	$	1.05	$	.78
	Diluted	$	.04	$	.01	$	.67	$	1.00	$	.77
Shares:
	Basic		168,719		172,484		174,489		177,750		180,446
	Diluted		173,175		177,791		181,489		186,068		184,589

	December 31,
	2003		2002		2001		2000		1999
	(in thousands)
Balance Sheet Data:
Goodwill and other intangible assets, net	$	162,508	$	161,912	$	160,632	$	168,050	$	175,747
Total assets	$	979,903	$	937,996	$	994,162	$	971,029	$	777,188
Debt financing	$	2,414	$	2,480	$	2,682	$	3,764	$	3,495
Stockholders' equity	$	788,661	$	744,966	$	805,696	$	718,539	$	576,103

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 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 qualified candidates for temporary employment or the Company's ability to attract qualified candidates; the entry of new competitors into the marketplace or expansion by existing competitors; the ability of the Company to maintain existing client relationships and attract new clients in the context of changing economic or competitive conditions; the impact of competitive pressures, including any change in the demand for the Company's services, on the Company's ability to maintain its profit margins; the possibility of the Company incurring liability for its activities, including the activities of its temporary employees or for events impacting its temporary employees on clients' premises; the success of the Company in attracting, training and retaining qualified management personnel and other staff employees; and whether governments will impose additional regulations or licensing requirements on personnel services businesses in particular or on employer/employee relationships in general. 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; significant costs and diversion of management time could be incurred in integrating key personnel into Protiviti; there can be no assurance that there will be ongoing demand for Sarbanes-Oxley or other regulatory compliance services; failure of Protiviti to produce projected revenues could adversely affect financial results; and the Company could become involved in litigation relating to prior or current transactions or activities. Further information regarding these and other risks and uncertainties is contained in Item 1. Business under the heading "Risk Factors". 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.

Critical Accounting Policies

As described below, the Company's most critical accounting policies are those that involve subjective decisions, assessments or estimates.

Accounts Receivable Allowances. The Company maintains accounts receivable allowances for estimated losses resulting from the inability of its customers to make required payments. If the financial condition of the Company's customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Estimates used in determining the accounts receivable allowances were based on current trends and historical loss statistics. Actual results may differ from these estimates, which may materially affect the Company's future financial results.

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. The Company records deferred tax assets and liabilities and evaluates the need for valuation allowances to reduce the deferred tax assets to realizable amounts. 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. While management believes that its judgments and interpretations regarding deferred income tax assets and liabilities are appropriate, significant differences in actual experience may materially affect the future financial results of the Company.

Employee Retirement Plans. The determination of the Company's obligations for certain employee retirement plans is dependent upon various assumptions, including, among others, discount rates and service periods. Management believes its assumptions are appropriate, however significant differences in actual experience or significant changes in assumptions may materially affect the Company's future financial results.

Goodwill Impairment. In accordance with the provisions of Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets ("SFAS 142"), the Company assesses the impairment of goodwill and identifiable intangible assets annually, or more often if events or changes in circumstances indicate that the carrying value may not be recoverable. This assessment is based upon a discounted cash flow analysis. The estimate of cash flow is based upon, among other things, certain assumptions about expected future operating performance and an appropriate discount rate determined by management. The Company's estimates of discounted cash flow may differ from actual cash flow due to, among other things, economic conditions, changes to its business model or changes in its operating performance. Significant differences between these estimates and actual cash flow could materially affect the future financial results of the Company. The Company completed its annual goodwill impairment test during the year ended December 31, 2003 and determined that no adjustment to the carrying value of goodwill was required.

Workers' Compensation. The Company self-insures or retains a portion of the exposure for losses related to workers' compensation. The Company has established reserves for workers' compensation claims based on historical loss statistics and periodic independent actuarial valuations. 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 financial results.

Stock Option Plans. The Company has a long history of issuing stock options to employees and directors as an integral part of its compensation programs. Accounting principles generally accepted in the United States of America allow alternative methods of accounting for these plans. The Company has chosen to account for its stock option plans under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees ("APB 25"). Under APB 25, the intrinsic value of the options is used to record compensation expense and, as a result, no compensation expense related to stock options is included in determining net income and net income per share in the Consolidated Financial Statements. As required by SFAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosures, calculations of pro forma net income (loss) and net income (loss) per share, computed in accordance with the method prescribed by SFAS No. 123, Accounting for Stock-Based Compensation, are set forth in Note A to the Consolidated Financial Statements.

Results of Operations for the Three Years Ended December 31, 2003

Temporary and consultant staffing services revenues were $1.7 billion, $1.8 billion and $2.3 billion for the years ended December 31, 2003, 2002 and 2001, respectively, decreasing by 1% and 22% during 2003 and 2002, respectively. Permanent placement revenues were $95 million, $100 million and $189 million for the years ended December 31, 2003, 2002 and 2001, respectively, decreasing by 5% and 47% in 2003 and 2002, respectively. Staffing services revenue results for the year ended December 31, 2003 were adversely impacted by weak labor markets and soft general economic conditions, particularly in the United States. Risk consulting and internal audit services revenues were $133 million for the year ended December 31, 2003. This compares to $42 million for the period May 24, 2002 (inception) to December 31, 2002. The 2003 increase in risk consulting and internal audit services revenues is primarily due to increased brand acceptance in the marketplace and expanding demand for alternatives to the "big four" accounting firms in providing risk consulting services. We expect total Company revenues to continue to be impacted by general macroeconomic conditions in 2004.

The Company's temporary and permanent staffing services business has more than 325 offices in 43 states, the District of Columbia and ten foreign countries, while Protiviti has more than 30 offices in 20 states and six foreign countries. Revenues from domestic operations represented 82%, 83% and 85% of revenues for the years ended December 31, 2003, 2002 and 2001, respectively. Revenues from foreign operations represented 18%, 17% and 15% of revenues for the years ended December 31, 2003, 2002 and 2001, respectively.

Gross margin dollars from the Company's temporary and consultant staffing services represent revenues less direct costs of services, which consist of payroll, payroll taxes and insurance costs for temporary employees. Gross margin dollars from permanent placement staffing services are equal to revenues, as there are no direct costs associated with such revenues. Gross margin dollars for risk consulting and internal audit services represent revenues less direct costs of services, which consist primarily of professional staff payroll, payroll taxes, insurance costs and reimbursable expenses. Gross margin dollars for the Company's temporary and consultant staffing services were $610 million, $628 million and $828 million for the years ended December 31, 2003, 2002 and 2001, respectively, decreasing by 3% and 24% in 2003 and 2002, respectively. Gross margin amounts equaled 35%, 36% and 37% of revenues for temporary and consultant staffing services for the years ended December 31, 2003, 2002 and 2001, respectively. The lower 2003 temporary and consulting gross margin percentage is primarily the result of higher workers' compensation and state unemployment costs. Gross margin dollars for the Company's permanent placement staffing division were $95 million, $100 million and $189 million for the years ended December 31, 2003, 2002 and 2001, respectively, decreasing by 5% and 47% in 2003 and 2002, respectively. Gross margin dollars for the Company's risk consulting and internal audit division were $22 million for the year ended December 31, 2003. This compares to negative $13 million for the period May 24, 2002 (inception) to December 31, 2002. The 2003 improvement in risk consulting and internal audit services gross margin dollars is primarily the result of higher revenues and improved staff utilization.

Selling, general and administrative expenses were $707 million in 2003, compared to $710 million in 2002 and $823 million in 2001. Selling, general and administrative expenses as a percentage of revenues were 36%, 37% and 34% for the years ended December 31, 2003, 2002 and 2001, respectively. Selling, general and administrative expenses consist primarily of staff compensation, advertising, depreciation and occupancy costs. The lower 2003 selling, general and administrative expense percentage resulted primarily from leveraging fixed operating costs.

For acquisitions, the Company allocates the excess of cost over the fair market value of the net tangible assets first to identifiable intangible assets, if any, and then to goodwill. The Company adopted SFAS 142 on January 1, 2002, resulting in the discontinuance of the amortization of goodwill that was being amortized over 40 years. The methods used for evaluating and measuring impairment of certain intangible assets have changed in accordance with the provisions of SFAS 142. The Company completed its annual goodwill impairment test during the year ended December 31, 2003 and determined that no adjustment to the carrying value of goodwill was required. Net intangible assets, consisting primarily of goodwill, represented 17% of total assets and 21% of total stockholders' equity at December 31, 2003.

Interest income for the years ended December 31, 2003, 2002 and 2001 was $3.4 million, $5.5 million and $9.3 million, respectively, while interest expense for the years ended December 31, 2003, 2002 and 2001 was $0.8 million, $0.9 million and $0.8 million, respectively. Lower average cash balances in 2003 and lower interest rates during the year yielded lower interest income.

The provision for income taxes was 45% of income before taxes for the year ended December 31, 2003 and 38% of income before taxes for each of the years ended December 31, 2002, and 2001. The increase in 2003 is due primarily to losses in certain states and international locations where corresponding tax benefits are not being recognized.

Liquidity and Capital Resources

The change in the Company's liquidity during the past three years is the net effect of funds generated by operations and the funds used for capital expenditures, the purchase of intangible assets, repurchases of common stock, and principal payments on outstanding notes payable. As of December 31, 2003, the Company has authorized the repurchase, from time to time, of up to 9.6 million additional shares of the Company's common stock on the open market or in privately negotiated transactions, depending on market conditions. During the year ended December 31, 2003, the Company repurchased approximately 1.6 million shares of common stock on the open market for a total cost of $24.6 million. Additional stock repurchases were made in connection with employee stock plans, whereby Company shares were tendered by employees for the payment of applicable withholding taxes. During the year ended December 31, 2003, such repurchases totaled approximately 0.5 million shares at a cost of $7.8 million. Repurchases of securities have been funded with cash generated from operations. For the year ended December 31, 2003, the Company generated $123.9 million from operations, used $56.2 million in investing activities and used $8.1 million in financing activities. This is further enumerated in the Consolidated Statements of Cash Flows.

The Company's working capital at December 31, 2003, included $377 million in cash and cash equivalents. The Company's working capital requirements consist primarily of the financing of accounts receivable. While there can be no assurances in this regard, the Company expects that internally generated cash will be sufficient to support the working capital needs of the Company, the Company's fixed payments, and other obligations on both a short- and long-term basis. In connection with the formation of Protiviti, the Company became the guarantor of certain former Andersen partners' capital notes, which totaled approximately $3.0 million at December 31, 2003.

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, 2003 (in thousands):

	Payments due by period
Contractual Obligations	2004		2005 to 2006		2007 to 2008		Thereafter		Total
Long-term debt obligations	$	71	$	160	$	186	$	1,997	$	2,414
Operating lease obligations		62,539		104,106		65,782		62,949		295,376
Purchase obligations		5,391		4,705		—		—		10,096

Total	$	68,001	$	108,971	$	65,968	$	64,946	$	307,886

Long-term debt obligations consist of promissory notes 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 2004 and thereafter under non-cancelable leases in effect at December 31, 2003. Purchase obligations consist of purchase commitments primarily related to software licenses and subscriptions and computer hardware and software maintenance agreements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

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 earnings, investments in its foreign subsidiaries, and the intercompany transactions with its foreign subsidiaries.

For 2003, approximately 18% of the Company's revenues were generated outside of the United States. These operations transact business in their functional currency. As a result, fluctuations in the value of foreign currencies against the U.S. dollar have an impact on the Company's reported results. 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.

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 year-end. The resulting translation adjustments are recorded in stockholders' equity as a component of accumulated other comprehensive income (loss).

Item 8. Financial Statements and Supplementary Data

ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(in thousands, except share amounts)

		December 31,
		2003			2002
ASSETS
Cash and cash equivalents		$	376,523		$	316,927
Accounts receivable, less allowances of $13,608 and $12,578			242,348			225,721
Deferred income taxes and other current assets			79,748			102,849

	Total current assets		698,619			645,497
Goodwill and other intangible assets, net			162,508			161,912
Property and equipment, net			113,119			130,587
Deferred and other income taxes			5,657			—

	Total assets	$	979,903		$	937,996

LIABILITIES
Accounts payable and accrued expenses		$	45,094		$	50,132
Accrued payroll costs and retirement obligations			143,734			136,342
Current portion of notes payable and other indebtedness			71			66

	Total current liabilities		188,899			186,540
Notes payable and other indebtedness, less current portion			2,343			2,414
Deferred income taxes and other liabilities			—			4,076

	Total liabilities		191,242			193,030

Commitments and Contingencies (Note I)
STOCKHOLDERS' EQUITY
Common stock, $.001 par value authorized 260,000,000 shares; issued and outstanding 171,775,743 and 170,909,002 shares			172			171
Capital surplus			595,051			543,457
Deferred compensation			(47,408	)		(46,311	)
Accumulated other comprehensive income			20,018			846
Retained earnings			220,828			246,803

	Total stockholders' equity		788,661			744,966

	Total liabilities and stockholders' equity	$	979,903		$	937,996

The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.

ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

	Years Ended December 31,
	2003			2002			2001
Net service revenues	$	1,974,991		$	1,904,951		$	2,452,850
Direct costs of services, consisting of payroll, payroll taxes and insurance costs for temporary and risk consulting employees		1,248,253			1,190,216			1,436,272

Gross margin		726,738			714,735			1,016,578
Selling, general and administrative expenses		707,349			709,542			823,478
Amortization of intangible assets		10,277			6,281			5,335
Interest income, net		(2,603	)		(4,585	)		(8,519	)

Income before income taxes		11,715			3,497			196,284
Provision for income taxes		5,325			1,329			75,177

Net income	$	6,390		$	2,168		$	121,107

Basic net income per share	$	..04		$	..01		$	..69
Diluted net income per share	$	.04		$	.01		$	.67

The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.

ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands)

			Years Ended December 31,
			2003			2002			2001
COMMON STOCK—SHARES:
	Balance at beginning of period			170,909			174,929			176,050
	Issuances of restricted stock			901			725			822
	Repurchases of common stock			(2,054	)		(7,431	)		(5,057	)
	Exercises of stock options			2,020			2,686			3,114

		Balance at end of period		171,776			170,909			174,929

COMMON STOCK—PAR VALUE:
	Balance at beginning of period		$	171		$	175		$	176
	Issuances of restricted stock			1			1			1
	Repurchases of common stock			(2	)		(8	)		(5	)
	Exercises of stock options			2			3			3

		Balance at end of period	$	172		$	171		$	175

CAPITAL SURPLUS:
	Balance at beginning of period		$	543,457		$	487,083		$	406,471
	Issuances of restricted stock—excess over par value			25,008			5,957			22,727
	Exercises of stock options—excess over par value			25,257			39,300			36,331
	Tax impact of equity incentive plans			1,329			11,117			21,554

		Balance at end of period	$	595,051		$	543,457		$	487,083

DEFERRED COMPENSATION:
	Balance at beginning of period		$	(46,311	)	$	(64,792	)	$	(72,870	)
	Issuances of restricted stock			(25,009	)		(5,958	)		(22,728	)
	Amortization of deferred compensation			23,912			24,439			30,806

		Balance at end of period	$	(47,408	)	$	(46,311	)	$	(64,792	)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS):
	Balance at beginning of period		$	846		$	(8,025	)	$	(4,192	)
	Translation adjustments			19,172			8,871			(3,833	)

		Balance at end of period	$	20,018		$	846		$	(8,025	)

RETAINED EARNINGS:
	Balance at beginning of period		$	246,803		$	391,255		$	388,954
	Repurchases of common stock—excess over par value			(32,365	)		(146,620	)		(118,806	)
	Net income			6,390			2,168			121,107

		Balance at end of period	$	220,828		$	246,803		$	391,255

COMPREHENSIVE INCOME:
	Net income		$	6,390		$	2,168		$	121,107
	Translation adjustments			19,172			8,871			(3,833	)

		Total comprehensive income	$	25,562		$	11,039		$	117,274

The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.

ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

				Years Ended December 31,
				2003			2002			2001
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income			$	6,390		$	2,168		$	121,107
		Adjustments to reconcile net income to net cash provided by operating activities:
			Amortization of intangible assets		10,277			6,281			5,335
			Depreciation expense		55,627			66,027			67,781
			Provision (benefit) for deferred income taxes		(5,019	)		567			(11,419	)
			Tax impact of equity incentive plans		1,329			11,117			21,554
		Changes in assets and liabilities, net of effects of acquisitions:
			(Increase) decrease in accounts receivable		(16,172	)		48,262			117,483
			Increase (decrease) in accounts payable, accrued expenses and accrued payroll costs		10,197			18,377			(58,018	)
			Decrease in income taxes payable		—			—			(2,619	)
			Change in other assets, net of change in other liabilities, including 2003 and 2002 deferred compensation amortization of $23,912 and $24,439, respectively		61,250			12,788			14,626

	Net cash flows provided by operating activities				123,879			165,587			275,830

CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchase of goodwill and other intangible assets and other assets				(18,123	)		(19,228	)		—
	Capital expenditures				(36,492	)		(48,300	)		(84,695	)
	Deposits to trusts for employee benefits and retirement plans				(1,531	)		(21,336	)		—

	Net cash flows used in investing activities				(56,146	)		(88,864	)		(84,695	)

CASH FLOWS FROM FINANCING ACTIVITIES:
	Repurchases of common stock				(33,330	)		(145,665	)		(118,811	)
	Principal payments on notes payable and other indebtedness				(66	)		(202	)		(1,082	)
	Proceeds from exercises of stock options				25,259			39,303			36,334

	Net cash flows used in financing activities				(8,137	)		(106,564	)		(83,559	)

Net increase (decrease) in cash and cash equivalents					59,596			(29,841	)		107,576
Cash and cash equivalents at beginning of period					316,927			346,768			239,192

Cash and cash equivalents at end of period				$	376,523		$	316,927		$	346,768

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
	Cash paid during the year for:
		Interest		$	435		$	308		$	322
		Income taxes, net of refunds		$	(15,537	)	$	8,803		$	71,274

	Purchase of goodwill and other intangible assets and other assets:
		Assets acquired
			Goodwill and other intangible assets	$	17,594		$	17,926		$	—
			Other		539			1,490			—
		Liabilities incurred
			Other		(10	)		(188	)		—

		Cash paid, net of cash acquired		$	18,123		$	19,228		$	—

	Non-cash items:
		Stock repurchases awaiting settlement		$	—		$	963		$	—

The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.

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 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 (formerly The Affiliates®) provides temporary, project, and full-time staffing of attorneys and specialized support personnel within law firms and corporate legal departments. The Creative Group provides project staffing in the advertising, marketing, and web design fields. Protiviti began operations on May 24, 2002, and provides business and technology risk consulting and internal audit services. Protiviti, which primarily employs risk consulting and internal audit professionals formerly associated with major accounting firms, is a wholly-owned subsidiary of the Company. Revenues are predominantly derived from specialized staffing services. The Company operates in the United States, Canada, Europe, Asia, Australia and New Zealand. The Company is a Delaware corporation.

Basis of Presentation. The Consolidated 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. In the opinion of management, all adjustments necessary for a fair presentation of the financial position and results of operations for the periods presented have been included.

Principles of Consolidation. The Consolidated Financial Statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. All intercompany balances have been eliminated. Certain reclassifications have been made to the 2002 financial statements to conform to the 2003 presentation.

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, 2003, such estimates included allowances for uncollectible accounts receivable, workers' compensation losses, income and other taxes, and certain employee retirement plans.

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. The Company records revenue gross as a principal versus net 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. Temporary employees placed 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 are recognized as services are provided. Revenues on 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. Reimbursements, including those relating to travel and out-of-pocket expenses, are included in risk consulting and internal audit service revenues, and equivalent amounts of reimbursable expenses are included in direct costs of services.

Costs of Services. Direct costs of staffing services consist of payroll, payroll taxes and insurance costs for the Company's temporary employees. There are no direct costs associated with permanent placement staffing services. Risk consulting and internal audit costs of services include professional staff payroll, payroll taxes and insurance costs, as well as reimbursable expenses.

Advertising Costs. The Company expenses all advertising costs as incurred.

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.

Intangible Assets. Intangible assets primarily consist of the cost of acquired companies in excess of the fair market value of their net tangible assets at the date of acquisition. The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets ("SFAS 142"), on January 1, 2002. Under SFAS 142, goodwill is no longer subject to amortization over its estimated useful life. The methods used for evaluating and measuring impairment of certain intangible assets have changed in accordance with the provisions of SFAS 142. The Company completed its annual goodwill impairment test during the year ended December 31, 2003 and determined that no adjustment to the carrying value of goodwill was required.

Foreign Currency Translation. The results of operations of the Company's foreign subsidiaries are translated at the monthly average exchange rates prevailing during the period. The financial position of the Company's foreign subsidiaries is translated at the current exchange rates at the end of the period, and the

related translation adjustments are recorded as a component of accumulated other comprehensive income within Stockholders' Equity. Gains and losses resulting from foreign currency transactions are included in the Consolidated Statements of Operations, and have not been material for all periods presented.

Stock Option Plans. The Company accounts for its stock option plans in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees ("APB 25"). Under APB 25, the intrinsic value of the options is used to record compensation expense and, as a result, no compensation expense related to stock options is included in determining net income and net income per share in the Consolidated Financial Statements. Had compensation expense for the stock options granted been based on the estimated fair value at the award dates, as prescribed by SFAS No. 123, Accounting for Stock-Based Compensation ("SFAS 123"), the Company's pro forma net income (loss) and net income (loss) per share would have been as follows (in thousands, except per share amounts):

			Years Ended December 31,
			2003			2002			2001
Net Income (Loss)
	As reported		$	6,390		$	2,168		$	121,107
	Stock-based employee compensation expense, net of income tax effects			24,776			32,335			29,977

	Pro forma		$	(18,386	)	$	(30,167	)	$	91,130

Net Income (Loss) Per Share
	Basic
		As reported	$	.04		$	.01		$	.69
		Pro forma	$	(.11	)	$	(.17	)	$	.52
	Diluted
		As reported	$	.04		$	.01		$	.67
		Pro forma	$	(.11	)	$	(.17	)	$	.51

The fair value of each option is estimated, as of the grant date, using the Black-Scholes option pricing model with the following assumptions used for grants in 2003, 2002 and 2001: no dividend yield for any year; expected volatility of 48% to 60%; risk-free interest rates of 2.1% to 6.8%; and expected lives of 1.5 to 6.0 years.

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		3 years
Computer software		2 to 5 years
Furniture and equipment		5 years
Leasehold improvements		Term of lease, 5 years maximum

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. The Company capitalized approximately $10.8 million of internal-use software development costs for the year ended December 31, 2003.

Note B—New Accounting Pronouncements

In May 2003, the Emerging Issues Task Force ("EITF") finalized EITF 00-21, Revenue Arrangements with Multiple Deliverables ("EITF 00-21"). EITF 00-21 addresses the accounting for multiple element revenue arrangements, which involve more than one deliverable or unit of accounting in circumstances where the delivery of those units takes place in different accounting periods. EITF 00-21 requires disclosures of the accounting policy for revenue recognition of multiple element revenue arrangements and the nature and description of such arrangements. The accounting and reporting requirements are effective for revenue arrangements entered into in fiscal periods beginning after June 15, 2003. The adoption of EITF 00-21 does not have a significant impact on the Company's financial statements.

In December 2003, the Financial Accounting Standards Board issued SFAS No. 132 (Revised), Employer's Disclosure about Pensions and Other Postretirement Benefits ("Revised SFAS 132"). Revised SFAS 132 retains disclosure requirements in original SFAS 132 and requires additional disclosures relating to assets, obligations, cash flows and net periodic benefit cost. Revised SFAS 132 is effective for fiscal years ending after December 15, 2003, except that certain disclosures are effective for fiscal years ending after June 15, 2004. Interim period disclosures are effective for interim periods beginning after December 15, 2003. The Company currently does not have any broad-based pension or postretirement benefit plans which require disclosure. Accordingly, the adoption of Revised SFAS 132 does not have a significant impact on the Company's financial statements.

Note C—Deferred Income Taxes and Other Current Assets

Deferred income taxes and other current assets consisted of the following (in thousands):

	December 31,
	2003		2002
Deferred income taxes	$	27,102	$	28,893
Deposits in trusts for employee benefits and retirement plans		31,238		29,707
Income taxes receivable		4,048		24,094
Other		17,360		20,155

	$	79,748	$	102,849

Note D—Goodwill and Other Intangible Assets, Net

The following table sets forth the activity in goodwill and other intangible assets from December 31, 2001 through December 31, 2003 (in thousands):

	Goodwill		Other Intangible Assets			Total
Balance as of December 31, 2001	$	141,492	$	19,140		$	160,632
Purchase of intangible assets		1,625		16,301			17,926
Translation adjustments		848		—			848
Decrease in unamortized retirement costs		—		(11,213	)		(11,213	)

		143,965		24,228			168,193
Amortization of intangible assets		—		(6,281	)		(6,281	)

Balance as of December 31, 2002		143,965		17,947			161,912
Purchase of intangible assets		16,616		978			17,594
Translation adjustments		1,382		—			1,382
Decrease in unamortized retirement costs		—		(8,103	)		(8,103	)

		161,963		10,822			172,785
Amortization of intangible assets		—		(10,277	)		(10,277	)

Balance as of December 31, 2003	$	161,963	$	545		$	162,508

In 2002, the Company completed its arrangement to hire professionals formerly associated with the internal audit and business and technology risk consulting practice of Arthur Andersen LLP. These professionals formed the base of Protiviti. The Company paid $16.1 million, including transaction costs, to secure the release of Protiviti employees from their covenants not to compete or solicit. Subsequently, the Company made additional risk consulting business acquisitions of $3.1 million and recorded intangible assets of $2.6 million as a result. Substantially all of these intangible assets were fully amortized at December 31, 2003.

In 2003, the Company completed the acquisition of its last two independent Robert Half franchises with offices in New Orleans, Louisiana, Overland Park, Kansas, and Kansas City, Missouri. The Company paid approximately $17.6 million for the purchase of intangibles and other assets, including goodwill of $16.6 million and amortizable intangible assets of approximately $1.0 million that are being amortized over 2 to 4 years. The estimated remaining amortization expense is $0.3 million for 2004, and $0.4 million thereafter.

The Company completed its annual goodwill impairment test during the year ended December 31, 2003, and determined that no adjustment to the carrying value of goodwill was required. The Company will perform annual assessments for impairment, applying a discounted cash flow-based test to its reportable units, which are its various lines of business.

The Company adopted SFAS 142 on January 1, 2002, resulting in the discontinuance of the amortization of goodwill that was being amortized over 40 years. Under SFAS 142, goodwill is no longer subject to amortization over its estimated useful life. Had goodwill not been amortized in the year ended

December 31, 2001, the Company's pro forma net income and net income per share would have been as follows (in thousands, except per share amounts):

			Years Ended December 31,
			2003		2002		2001
Net Income
	As reported		$	6,390	$	2,168	$	121,107
	Goodwill amortization, net of income tax effects			—		—		3,308

	Pro forma		$	6,390	$	2,168	$	124,415

Net Income Per Share
	Basic
		As reported	$	.04	$	.01	$	.69
		Goodwill amortization		—		—		.02

		Pro forma	$	.04	$	.01	$	.71

	Diluted
		As reported	$	.04	$	.01	$	.67
		Goodwill amortization		—		—		.02

		Pro forma	$	.04	$	.01	$	.69

Note E—Property and Equipment, Net

Property and equipment consisted of the following (in thousands):

	December 31,
	2003			2002
Furniture and equipment	$	96,754		$	87,154
Computer hardware		96,425			88,724
Computer software		155,523			137,182
Leasehold improvements		61,294			56,851
Other		10,648			11,027

Property and equipment, cost		420,644			380,938
Accumulated depreciation		(307,525	)		(250,351	)

Property and equipment, net	$	113,119		$	130,587

Note F—Accrued Payroll Costs and Retirement Obligations

Accrued payroll costs and retirement obligations consisted of the following (in thousands):

	December 31,
	2003		2002
Payroll and bonuses	$	69,586	$	67,821
Employee benefits and retirement obligations		44,105		48,198
Workers' compensation		15,090		12,206
Payroll taxes		14,953		8,117

	$	143,734	$	136,342

Included in employee benefits and retirement obligations is $36 million at December 31, 2003 and $42 million at December 31, 2002 related to a defined benefit retirement agreement for the Company's key executive. The amount of this obligation has been calculated in accordance with the current provisions of the employee's retirement agreement, which was initially entered into in 1985. The key assumptions used in this calculation include: expected retirement age, mortality, expected post retirement Consumer Price Index increases of 3.1% and 3.4%, and discount rates of 4.7% and 5.3% at December 31, 2003 and 2002, respectively.

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 are due in varying installments, carry varying interest rates and, in aggregate, amounted to $2.4 million at December 31, 2003 and $2.5 million at December 31, 2002. At December 31, 2003, $2.2 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, 2003 (in thousands):

2004	$	71
2005		77
2006		83
2007		89
2008		97
Thereafter		1,997

	$	2,414

At December 31, 2003, the notes carried fixed rates and the weighted average interest rate for the above was approximately 8.6%, 8.5% and 8.2% for the years ended December 31, 2003, 2002 and 2001, respectively.

The Company has an uncommitted letter of credit facility ("the facility") of up to $30.0 million, which is available to cover the issuance of debt support standby letters of credit. The Company had used $26.6 million in debt support standby letters of credit as of December 31, 2003 and $20.4 million as of December 31, 2002. There is a service fee of 1.0% on the used portion of the facility. The facility is subject to certain financial covenants and expires on August 31, 2004.

Note H—Income Taxes

The provision (benefit) for income taxes for the years ended December 31, 2003, 2002 and 2001 consisted of the following (in thousands):

		Years Ended December 31,
		2003			2002			2001
Current:
	Federal	$	4,773		$	(5,132	)	$	63,941
	State		3,430			2,101			11,634
	Foreign		2,141			3,793			11,021
Deferred:
	Federal and state		(1,178	)		567			(11,419	)
	Foreign		(3,841	)		—			—

		$	5,325		$	1,329		$	75,177

Income (loss) before the provision for income taxes for the years ended December 31, 2003, 2002 and 2001 consisted of the following (in thousands):

	Years Ended December 31,
	2003			2002			2001
Domestic	$	18,985		$	(5,717	)	$	171,216
Foreign		(7,270	)		9,214			25,068

	$	11,715		$	3,497		$	196,284

The income taxes shown above varied from the statutory federal income tax rates for these periods as follows:

	Years Ended December 31,
	2003		2002		2001
Federal U.S. income tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal tax benefit	12.6		.8		3.4
Amortization of intangible assets	—		—		.5
Tax-free interest income	(2.8	)	(12.4	)	(.5	)
Non-deductible expenses	(2.1	)	22.5		.5
Non-U.S. income taxed at different rates, net of foreign tax credits	8.4		(2.6	)	(.4	)
Other, net	(5.6	)	(5.3	)	(.2	)

Effective tax rate	45.5	%	38.0	%	38.3	%

The deferred portion of the tax provision consisted of the following (in thousands):

	Years Ended December 31,
	2003			2002			2001
Amortization of franchise rights	$	731		$	509		$	(72	)
Amortization of other intangibles		(3,493	)		(2,087	)		—
Accrued expenses, deducted for tax when paid		442			6,675			(9,475	)
Capitalized costs for books, deducted for tax		4,489			6,069			9,388
Depreciation		(4,290	)		(7,627	)		(12,254	)
Other, net		(2,898	)		(2,972	)		994

	$	(5,019	)	$	567		$	(11,419	)

The deferred income tax amounts included on the Consolidated Statements of Financial Position are comprised of the following (in thousands):

	December 31,
	2003		2002
Current deferred income tax assets, net	$	27,102	$	28,893
Long-term deferred income tax assets, net		11,401		4,591

	$	38,503	$	33,484

The components of the deferred income tax amounts at December 31, 2003 and 2002 were as follows (in thousands):

	December 31,
	2003			2002
Amortization of intangible assets	$	(10,186	)	$	(12,949	)
Accrued expenses, deducted for tax when paid		14,436			17,998
Property and equipment basis differences		25,393			21,103
Provision for bad debts		3,215			4,644
Other, net		9,791			4,577
Net operating loss carryforward—valuation allowance		(4,146	)		(1,889	)

	$	38,503		$	33,484

The Company has net operating loss carryforwards in a number of states. The tax benefit of these net operating losses is $6.1 million. These state net operating loss carryforwards expire in 2007 and later. The Company has net operating loss carryforwards in foreign countries, with a related foreign tax credit of $4.0 million which expires in 2007 and later. Accrued expenses, deducted for tax when paid include approximately $4.5 million related to 2003 property and equipment additions.

The Company has not provided deferred income taxes or foreign withholding taxes on $25.9 million and $28.5 million of undistributed earnings of its non-U.S. subsidiaries as of December 31, 2003 and 2002, respectively, since the Company intends to reinvest these earnings indefinitely.

Note I—Commitments and Contingencies

Rental expense, primarily for office premises, amounted to $72.2 million, $69.7 million and $62.8 million for the years ended December 31, 2003, 2002 and 2001, respectively. The approximate minimum rental commitments for 2004 and thereafter under non-cancelable leases in effect at December 31, 2003 were as follows (in thousands):

2004	$	62,539
2005		57,017
2006		47,089
2007		37,303
2008		28,479
Thereafter		62,949

	$	295,376

The Company is involved in a number of lawsuits arising in the ordinary course of business. While management does not expect any of these 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.

In connection with the formation of Protiviti, the Company became the guarantor of certain employee notes totaling $3.0 million at December 31, 2003.

Note J—Stockholders' Equity

Stock Repurchase Program. As of December 31, 2003, the Company's Board of Directors has authorized the repurchase, from time to time, of up to 9.6 million additional shares of the Company's common stock on the open market or in privately negotiated transactions, depending on market conditions. During the year ended December 31, 2003, the Company repurchased approximately 1.6 million shares on the open market for a total cost of $24.6 million. Additional stock repurchases were made in connection with employee stock plans, whereby Company shares were tendered by employees for the payment of applicable withholding taxes. During the year ended December 31, 2003, such repurchases totaled approximately 0.5 million shares at a cost of $7.8 million.

Note K—Stock Plans

Under various stock plans, officers, employees and outside directors may receive grants of restricted stock or options to purchase common stock. Grants are made at the discretion of a Committee of the Board of Directors. Grants generally vest between two and four years.

Options granted under the plans have exercise prices ranging from 85% to 100% of the fair market value of the Company's common stock at the date of grant and may consist of both incentive stock options and nonstatutory stock options under the Internal Revenue Code. The terms range from 27 months to 10 years.

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 receive all dividends with respect to such shares, whether or not the shares have vested. Compensation expense is recognized on a straight-line basis over the vesting period. Vesting is accelerated upon the death or disability of the recipients.

The Company accounts for these plans under APB 25. Therefore, the intrinsic value of the options is used to record compensation expense and, as a result, no compensation expense has been recognized for its stock option plans. As required by SFAS No. 148, Accounting for Stock-based Compensation—Transition and Disclosure, calculations of pro forma net income and net income per share, computed in accordance with the method prescribed by SFAS 123, are set forth in Note A to the Consolidated Financial Statements.

The following table reflects activity under all stock plans from December 31, 2000 through December 31, 2003, and the weighted average exercise prices (in thousands, except per share amounts):

				Stock Option Plans
		Restricted Stock Plans		Number of Shares		Weighted Average Price Per Share
Outstanding, December 31, 2000		4,881		25,836		$	13.60
	Granted	1,083		6,889		$	22.45
	Exercised	—		(3,113	)	$	11.82
	Restrictions lapsed	(1,643	)	—			—
	Forfeited	(270	)	(2,875	)	$	19.16

Outstanding, December 31, 2001		4,051		26,737		$	15.80
	Granted	1,069		6,683		$	20.24
	Exercised	—		(2,686	)	$	16.96
	Restrictions lapsed	(1,286	)	—			—
	Forfeited	(332	)	(1,668	)	$	21.13

Outstanding, December 31, 2002		3,502		29,066		$	16.38
	Granted	1,015		3,680		$	19.40
	Exercised	—		(2,019	)	$	15.64
	Restrictions lapsed	(1,139	)	—			—
	Forfeited	(118	)	(1,540	)	$	20.53

Outstanding, December 31, 2003		3,260		29,187		$	16.57

The following table summarizes information about options outstanding as of December 31, 2003 (in thousands, except number of years and per share amounts):

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding as of December 31, 2003	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number Exercisable as of December 31, 2003	Weighted Average Exercise Price
$2.71 to $10.41	6,046	2.81	$	7.64	6,046	$	7.64
$11.21 to $16.11	6,913	6.02	$	13.62	4,740	$	12.89
$16.28 to $19.95	6,199	6.37	$	18.40	4,054	$	18.79
$19.97 to $22.56	7,107	6.77	$	21.80	3,958	$	21.87
$22.70 to $34.75	2,922	7.98	$	25.43	976	$	26.52

	29,187	5.81	$	16.57	19,774	$	14.96

At December 31, 2003, the total number of available shares to grant under the plans (consisting of either restricted stock or options) was 6.3 million. Of the 29.2 million options outstanding at December 31, 2003, 19.8 million options were exercisable with a weighted average exercise price of $14.96, and 9.4 million options were not exercisable with a weighted average exercise price of $19.94.

Note L—Net Income Per Share

The calculation of net income per share for the three years ended December 31, 2003 is reflected in the following table (in thousands, except per share amounts):

		Years Ended December 31,
		2003		2002		2001
Net Income		$	6,390	$	2,168	$	121,107
Basic:
	Weighted average shares		168,719		172,484		174,489

Diluted:
	Weighted average shares		168,719		172,484		174,489
	Common stock equivalents—stock options		4,456		5,307		7,000

	Diluted shares		173,175		177,791		181,489

Net Income Per Share:
	Basic	$	.04	$	.01	$	.69
	Diluted	$	.04	$	.01	$	.67

The weighted average diluted common shares outstanding for the year ended December 31, 2003 excludes the dilutive effect of approximately 11.8 million options, since such options have an exercise price in excess of the 2003 average market value of the Company's common stock. Had such options been included, the dilutive effect would have been calculated using the treasury method.

Note M—Business Segments

The Company, which defines its 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 segment provides specialized staffing in the accounting and finance, administrative and office, information technology, legal, advertising, marketing and web design fields. The permanent placement 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 or loss from operations before interest income, intangible amortization expense, and income taxes.

The following table provides a reconciliation of revenue and operating income by reportable segment to consolidated results (in thousands):

		Years Ended December 31,
		2003			2002			2001
Net service revenues
	Temporary and consultant staffing	$	1,746,852		$	1,763,218		$	2,264,162
	Permanent placement staffing		94,840			100,029			188,688
	Risk consulting and internal audit services		133,299			41,704			—

		$	1,974,991		$	1,904,951		$	2,452,850

Operating income (loss)
	Temporary and consultant staffing	$	38,259		$	47,404		$	172,763
	Permanent placement staffing		2,559			(6,852	)		20,337
	Risk consulting and internal audit services		(21,429	)		(35,359	)		—

			19,389			5,193			193,100
Amortization of intangible assets			10,277			6,281			5,335
Interest income, net			(2,603	)		(4,585	)		(8,519	)

Income before income taxes		$	11,715		$	3,497		$	196,284

The Company does not report total assets by segment. The following table represents identifiable assets by business segment (in thousands):

		December 31,
		2003		2002
Accounts receivable
	Temporary and consultant staffing	$	209,521	$	210,901
	Permanent placement staffing		17,596		15,675
	Risk consulting and internal audit services		28,839		11,723

		$	255,956	$	238,299

The Company operates internationally, with operations in the United States, Canada, Europe, Asia, Australia, and New Zealand. The following tables represent revenues and long-lived assets by geographic location (in thousands):

		Years Ended December 31,
		2003		2002		2001
Net service revenues
	Domestic	$	1,622,071	$	1,573,152	$	2,089,222
	Foreign		352,920		331,799		363,628

		$	1,974,991	$	1,904,951	$	2,452,850

		December 31,
		2003	2002
Assets, long-lived
	Domestic	$248,787	$267,444
	Foreign	26,840	25,055

		$275,627	$292,499

Note N—Quarterly Financial Data (Unaudited)

The following tabulation shows certain quarterly financial data for 2003 and 2002 (in thousands, except per share amounts):

	Quarter
2003	Quarter									Year Ended December 31,
2003	1			2		3		4		Year Ended December 31,
Net service revenues	$	473,228		$	482,962	$	501,137	$	517,664	$	1,974,991
Gross margin	$	169,652		$	177,375	$	187,111	$	192,600	$	726,738
Income (loss) before income taxes	$	(5,250	)	$	204	$	8,813	$	7,948	$	11,715
Net income (loss)	$	(3,439	)	$	134	$	4,847	$	4,848	$	6,390
Basic net income (loss) per share	$	(.02	)	$	..00	$	..03	$	..03	$	..04
Diluted net income (loss) per share	$	(.02	)	$	.00	$	.03	$	.03	$	.04

	Quarter
2002	Quarter										Year Ended December 31,
2002	1		2		3			4			Year Ended December 31,
Net service revenues	$	468,471	$	473,121	$	484,778		$	478,581		$	1,904,951
Gross margin	$	184,901	$	183,118	$	175,436		$	171,280		$	714,735
Income (loss) before income taxes	$	14,697	$	5,153	$	(4,954	)	$	(11,399	)	$	3,497
Net income (loss)	$	9,112	$	3,195	$	(3,072	)	$	(7,067	)	$	2,168
Basic net income (loss) per share	$	..05	$	..02	$	(.02	)	$	(.04	)	$	..01
Diluted net income (loss) per share	$	.05	$	.02	$	(.02	)	$	(.04	)	$	.01

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders
of Robert Half International Inc.:

In our opinion, the accompanying consolidated statements of financial position and the related consolidated statements of operations, of stockholders' equity and of cash flows present fairly, in all material respects, the financial position of Robert Half International Inc. and its subsidiaries (the "Company") at December 31, 2003 and 2002, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. The financial statements of the Company as of December 31, 2001 and for the year then ended were audited by other independent accountants who have ceased operations. Those independent accountants expressed an unqualified opinion on those financial statements in their report dated January 18, 2002.

As further described in Note D to the financial statements, Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets", became effective for calendar year filing companies on January 1, 2002. As a result, the Company ceased amortizing goodwill as of January 1, 2002 and as required by SFAS 142, amended its footnote disclosure to provide comparative pro forma information for the year ended December 31, 2001. As discussed above, the financial statements of the Company as of December 31, 2001, and for the year then ended, were audited by other independent accountants who have ceased operations. We audited the pro forma disclosures described in Note D. In our opinion, the pro forma disclosures for 2001 in Note D are appropriate. However, we were not engaged to audit, review, or apply any procedures to the 2001 financial statements of the Company other than with respect to such disclosures and, accordingly, we do not express an opinion or any other form of assurance on the 2001 financial statements taken as a whole.

/s/ PricewaterhouseCoopers LLP

San Francisco, California
January 27, 2004

This is a copy of the audit report previously issued by Arthur Andersen LLP in connection with Robert Half International Inc.'s filing on Form 10-K for the year ended December 31, 2001. This audit report has not been reissued by Arthur Andersen LLP in connection with this filing on Form 10-K. See Exhibit 23.2 for further discussion. This audit report was issued before the Company's adoption of SFAS 142 on January 1, 2002.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and the Board of Directors
of Robert Half International Inc.:

We have audited the accompanying consolidated statements of financial position of Robert Half International Inc. (a Delaware corporation) and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Robert Half International Inc. and subsidiaries as of December 31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States.

ARTHUR ANDERSEN LLP

San Francisco, California
January 18, 2002

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Prior to April 24, 2002, Arthur Andersen LLP served as the Company's independent accountants. On April 24, 2002, the Company reached a tentative agreement with Andersen to hire partners and other employees within Andersen's U.S. internal audit and business risk consulting practices. Andersen and the Company's Board of Directors and Audit Committee determined that execution of the agreement would cause Andersen to no longer be independent. The Company's auditing relationship with Andersen was therefore severed by mutual agreement effective April 24, 2002.

During the two fiscal years ended December 31, 2001 and December 31, 2000, and the subsequent interim periods through the termination of the relationship with Andersen, there was no disagreement between Andersen and the Company, as defined in Item 304 of Regulation S-K, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement, if not resolved to Andersen's satisfaction, would have caused Andersen to make reference to the subject matter of such disagreement in connection with its reports, and there occurred no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.

The audit reports of Andersen on the Company's consolidated financial statements for the fiscal years ended December 31, 2001 and December 31, 2000 did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.

The Company provided Andersen with a copy of the foregoing statements. Exhibit 16 is a copy of Andersen's letter to the Securities and Exchange Commission dated April 26, 2002, stating its agreement with such statements.

On July 16, 2002, the Company engaged PricewaterhouseCoopers LLP as its independent accountant. From January 1, 2000, through such date, neither the Company nor anyone acting on its behalf consulted PricewaterhouseCoopers regarding either (a) the application of accounting principles to any specified transaction, either completed or proposed, (b) the type of audit opinion that might be rendered on the Company's financial statements or (c) any disagreement or reportable event described in Section 304(a) of Regulation S-K.

Item 9A. Controls and Procedures

Management, including the Company's Chairman and Chief Executive Officer and 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 Vice Chairman and Chief Financial Officer concluded that the disclosure controls and procedures were effective, in all material respects, 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.

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 fiscal quarter that has materially affected, or its reasonably likely to materially affect, the Company's internal control over financial reporting.

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 of Directors," "Compensation of Executive Officers," "Independent Public Accountants," and "Section 16(a) Beneficial Ownership Reporting Compliance" 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 2004.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Equity Compensation Plan Information

Plan Category	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
Equity compensation plans approved by security holders	13,831,218	$	14.57	3,554,727(b)(c)
Equity compensation plans not approved by security holders(a)	15,355,688	$	18.37	6,323,434(d)
Total	29,186,906	$	16.57	9,878,161

(a): These plans, by their terms, expressly prohibit any grants to directors or executive officers.
(b): The Outside Directors' Option Plan, which has been approved by stockholders, provides for the automatic grant of an option to each outside director on the date of each Annual Meeting of Stockholders. The grant is 30,000 shares for new directors and 24,000 shares for continuing directors. The plan terminates on May 1, 2006. The table reflects the number of shares expected to be granted in 2004.
(c): The Equity Incentive Plan, which has been approved by stockholders, makes available for stock option or restricted stock grants that number of shares that is equal to 2% of the outstanding shares of Common Stock as of January 1 of that year. The aggregate authorization during any year may be granted in any combination of stock option or restricted stock grants. Any unused portion of an annual authorization expires at the end of the year. Grants may not be made under such plan subsequent to December 31, 2005. The table reflects the number of shares authorized for grant in 2004.
(d): Includes 227,385 shares that may be issued in the form of restricted stock grants pursuant to the Restricted Stock Plan for Field Employees, which plan is described below.

Description of Equity Plans Not Approved by Stockholders

StockPlus Plan. The StockPlus Plan authorizes the grant of stock options to employees other than directors and executive officers. No option may have a term of more than ten years.

Stock Option Plan for Field Employees. The Stock Option Plan for Field Employees authorizes the grant of stock options to employees or consultants other than directors and executive officers. No option may have a term of more than ten years.

Restricted Stock Plan for Field Employees. The Restricted Stock Plan for Field Employees authorizes the grant of shares of restricted stock to employees or consultants other than directors and executive officers. Recipients of awards do not pay for the stock, but the grants are subject to time-based vesting conditions.

PART IV

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a): 1. Financial Statements

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, 2003 and 2002.

Consolidated statements of operations for the years ended December 31, 2003, 2002 and 2001.

Consolidated statements of stockholders' equity for the years ended December 31, 2003, 2002 and 2001.

Consolidated statements of cash flows for the years ended December 31, 2003, 2002 and 2001.

Notes to consolidated financial statements.

Report of independent public accountants.

Selected quarterly financial data for the years ended December 31, 2003 and 2002 are set forth in Note N—Quarterly Financial Data (Unaudited) included in Item 8 of this report.

: 2. Financial Statement Schedules

Schedule II—Valuation and Qualifying Accounts

Schedules I, III, IV and V have been omitted as they are not applicable.

: 3. Exhibits

Exhibit No.		Exhibit

3.1		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 June 30, 2001.
3.2		By-Laws.
4.1		Restated Certificate of Incorporation of Registrant (filed as Exhibit 3.1).
*10.1		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.

*10.2		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, (ii) Exhibit 10.2(b) to Registrant's Registration Statement on Form S-1 (No. 33-15171), (iii) Exhibit 10.2(c) to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1987, (iv) Exhibit 10.2(d) to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1988, (v) Exhibit 28.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1990, (vi) Exhibit 10.8 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, (vii) Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1993, (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 and (xiv) Exhibit 10.2 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999.
*10.3		Key Executive Retirement Plan—Level II, as amended, incorporated by reference to Exhibit 10.3 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1996.
*10.4		Restated Retirement Agreement, as amended, between the Registrant and Harold M. Messmer, Jr. Amendment No. 2 is filed with this Annual Report on Form 10-K for the fiscal year ended December 31, 2003. The original Restated Retirement Agreement and Amendment No. 1 are incorporated by reference to (i) Exhibit 10.4 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 and (ii) Exhibit 10.4 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2001.
*10.5		Excise Tax Restoration Agreement dated November 5, 1996, incorporated by reference to Exhibit 10.6 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1996.
*10.6		Outside Directors' Option Plan, as amended, incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2003.
*10.7		Equity Incentive Plan, as amended, incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2000.
*10.8		Deferred Compensation Plan, incorporated by reference to Exhibit 10.24 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989.
*10.9		Annual Performance Bonus Plan, incorporated by reference to Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2000.
*10.10		Severance Agreement dated as of August 2, 2000, between Registrant and Paul F. Gentzkow, incorporated by reference to Exhibit 10.5 to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2000.

*10.11		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.
*10.12		Severance Agreement dated as of October 1, 1991, between Registrant and Paul F. Gentzkow, incorporated by reference to Exhibit 10.7 to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2000.
*10.13		Form of Amended and Restated Severance Agreement, incorporated by reference to Exhibit 10.13 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999.
*10.14		Form of Change in Control Severance Agreement, incorporated by reference to Exhibit 10.14 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999.
*10.15		Form of Indemnification Agreement for Directors of the Registrant, incorporated by reference to (i) Exhibit 10.27 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989 and (ii) Exhibit 10.19 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993.
*10.16		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.
*10.17		Senior Executive Retirement Plan, as amended, incorporated by reference to Exhibit 10.1 to the Registrant's Annual Report on Form 10-K for the fiscal quarter ended June 30, 2003.
*10.18		Collateral Assignment of Split Dollar Insurance Agreement. Amendment No. 1 is filed with this Annual Report on Form 10-K for the fiscal year ended December 31, 2003. The original Collateral Assignment of Split Dollar Issuance Agreement is incorporated by reference to Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2000.
*10.19		Form of Part-Time Employment 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, 2001.
*10.20		StockPlus Plan, incorporated by reference to Exhibit 10.20 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2002.
*10.21		Restricted Stock Plan for Field Employees, incorporated by reference to Exhibit 10.21 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2002.
*10.22		Stock Option Plan for Field Employees, incorporated by reference to Exhibit 10.22 to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2002.
16		Letter re Change in Certifying Accountant, incorporated by reference to Exhibit 16 to Registrant's Current Report on Form 8-K dated April 24, 2002.
21		Subsidiaries of the Registrant.
23.1		Accountant's Consent.

23.2		Notice Regarding Consent of Former Accountants.
31.1		Rule 13a-14(a) Certification of Chief Executive Officer.
31.2		Rule 13a-14(a) Certification of Chief Financial Officer.
32.1		Rule 1350 Certification of Chief Executive Officer.
32.2		Rule 1350 Certification of Chief Financial Officer.

*: Management contract or compensatory plan.
(b): Reports on Form 8-K

The Registrant filed the following report on Form 8-K during the fiscal quarter ending December 31, 2003:

Date		Items
October 16, 2003		Item 7. Financial Statements and Exhibits.
		Item 12. Results of Operations and Financial Condition.

SIGNATURES

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.

	ROBERT HALF INTERNATIONAL INC. (Registrant)
Date: March 5, 2004	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: March 5, 2004	By:	/s/ HAROLD M. MESSMER, JR. Harold M. Messmer, Jr. Chairman of the Board, Chief Executive Officer, and a Director (Principal Executive Officer)
Date: March 5, 2004	By:	/s/ ANDREW S. BERWICK, JR. Andrew S. Berwick, Jr., Director
Date: March 5, 2004	By:	/s/ FREDERICK P. FURTH Frederick P. Furth, Director
Date: March 5, 2004	By:	/s/ EDWARD W. GIBBONS Edward W. Gibbons, Director
Date: March 5, 2004	By:	/s/ THOMAS J. RYAN Thomas J. Ryan, Director
Date: March 5, 2004	By:	/s/ J. STEPHEN SCHAUB J. Stephen Schaub, Director
Date: March 5, 2004	By:	/s/ M. KEITH WADDELL M. Keith Waddell Vice Chairman, President, Chief Financial Officer and a Director (Principal Financial Officer)
Date: March 5, 2004	By:	/s/ MICHAEL C. BUCKLEY Michael C. Buckley Vice President-Finance and Treasurer (Principal Accounting Officer)

REPORT OF INDEPENDENT AUDITORS ON FINANCIAL STATEMENT SCHEDULE

To the Board of Directors of
Robert Half International Inc.:

Our audits of the consolidated financial statements referred to in our report dated January 27, 2004 appearing in this Annual Report on Form 10-K also included an audit of the financial statement schedule listed in Item 15(a)(2) of this Form 10-K. In our opinion, the data for the years ended December 31, 2003 and 2002 included in the financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

/s/ PricewaterhouseCoopers LLP
San Francisco, California
January 27, 2004

S-1

Schedule II—Valuation and Qualifying Accounts
(in thousands)

		Balance at Beginning of Period		Charged to Expenses	Deductions	Balance at End of Period
Year Ended December 31, 2001
	Allowance for doubtful accounts receivable	$	17,207	12,432	15,276	$	14,363
Year Ended December 31, 2002
	Allowance for doubtful accounts receivable	$	14,363	17,392	19,177	$	12,578
Year Ended December 31, 2003
	Allowance for doubtful accounts receivable	$	12,578	11,900	10,870	$	13,608

S-2

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PART I

Item 1. Business

Item 2. Properties

Item 3. Legal Proceedings

Item 4. Submission of Matters to a Vote of Security Holders

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

Item 6. Selected Financial Data

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8. Financial Statements and Supplementary Data

ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (in thousands, except share amounts)
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts)
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (in thousands)
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT AUDITORS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A. Controls and Procedures

PART III

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

PART IV

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

SIGNATURES

REPORT OF INDEPENDENT AUDITORS ON FINANCIAL STATEMENT SCHEDULE

Schedule II—Valuation and Qualifying Accounts (in thousands)
EX-3.2 3 a2124746zex-3_2.htm EX-3.2
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Exhibit 3.2

Effective as of February 24, 2004

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 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, written notice of each meeting of stockholders shall be given 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. 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 including election of directors, 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 thereat, a quorum being present. 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 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.

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, either at a place within the city where the meeting is to be held and which place shall be specified in the notice of the meeting, or, if not specified, at the place where said meeting is to be held, 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.

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 or (c) by any stockholder of the Corporation who was a stockholder of record at the time of giving of notice provided for in this By-Law, who is entitled to vote at the meeting and who complies with the notice procedures set forth in 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 Rule 14a-11 thereunder (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (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, 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 such beneficial owner and (ii) the class and number of shares of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner.

(3) Notwithstanding anything in the second sentence of paragraph (a)(2) of this By-Law to the contrary, 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 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.

(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 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 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.

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 to each director or sent to each director by mail or by other form of written communication at least one day before the date of the meeting. Notice of any 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.

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 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 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 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.

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 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.

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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Exhibit 3.2

BY-LAWS OF ROBERT HALF INTERNATIONAL INC.
ARTICLE I OFFICES
ARTICLE II MEETING OF STOCKHOLDERS
ARTICLE III DIRECTORS
ARTICLE IV EXECUTIVE COMMITTEE
ARTICLE V OTHER COMMITTEES
ARTICLE VI OFFICERS
ARTICLE VII EXECUTION OF INSTRUMENTS
ARTICLE VIII VOTING OF SECURITIES OWNED BY THE CORPORATION
ARTICLE IX SHARES OF STOCK
ARTICLE X DIVIDENDS
ARTICLE XI CORPORATE SEAL
ARTICLE XII AMENDMENTS
EX-10.4 4 a2124746zex-10_4.htm EXHIBIT 10.4
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Exhibit 10.4

Amendment No. 2 to the Robert Half International Inc.
Restated Retirement Agreement

This agreement is effective October 22, 2003, and amends the terms of the Robert Half International Inc. Restated Retirement Agreement (the "Retirement Agreement') previously entered into between Robert Half International Inc. (the "Company") and Harold M. Messmer, Jr.

1. Section 1(g) of the Retirement Agreement is amended to read as follows:

"Covered Compensation" means (1) $2500 plus (2) one-twelfth of the combination of Salary and Bonus paid to Participant with respect to calendar year 2000.

2. Section 6(b)(1) of the Retirement Agreement is amended, to read as follows:

(b)(1)(A) Upon termination of Participant's employment, the Company shall purchase and deliver to Participant an annuity to fund the obligations of the Company to Participant pursuant hereto, as such obligations exist as of the date of termination. The annuity to be purchased shall be determined by obtaining bids from insurance companies that meet the requirements set forth in the definition of "Current Actuarial Value of the Company's Obligations," and taking into account those bids that would be taken into account if the Company were soliciting bids to satisfy its funding obligation under subsection (a). For the purpose of determining the specifications for the annuity to be purchased, there shall be applied the modification to the definition of "Annual Percentage Increase in CPI" described in Section 1(j)(2). The annuity contract to be purchased shall be the middle bid of the bids obtained (if an even number of bids are obtained, the least expensive bid shall be ignored if an annuity contract is to be purchased).

(B) The Participant may direct that a portion of the funds that would otherwise be used to purchase the annuity described in (A) be remitted by the Company to satisfy the tax withholding obligations that would apply to Participant on account of such purchase. In the event of such direction, the funds used to purchase the annuity shall be reduced by the amount remitted.

(C) Alternatively, at the request of Participant, the Company shall pay Participant in a lump sum an amount equal to the average of all the bids that are taken into account under (A). If no annuity bid can be obtained from an insurance company that meets the criteria of Section 1(j)(1)(A) or (B), the Participant shall be paid a lump sum calculated in accordance with Section 1(j)(1)(E).

3. Subsection (c) is added to §6 of the Retirement Agreement, to read as follows:

(c)(1) Subsection (b)(1) provides for payment of Participant's retirement obligation by delivery of an insurance company annuity contract or a cash lump sum. In lieu of the delivery of such insurance company annuity contract or a cash lump sum, Participant shall have the right to choose that all or a portion of his benefit be paid by the Company (the "Company Payment") upon his termination of employment. Such Company Payment election shall only be effective if it is delivered to the Company in the year prior to Participant's termination of employment and at least six months prior to such termination. Any election may be modified, except that such modification will only be effective if Participant terminates in the year after such modification and six months or more after the date of modification. Making the election in this subsection (c) does not modify the application of subsection (b)(3).

(2) The following paragraphs of this subsection illustrate the manner in which the Company Payment election applies. For purposes of this illustration, assume that Participant determines that 60% of his monthly benefit shall be payable by the Company.

(3) In the case of an election to receive 60% of the benefit from the Company, the other 40% of the Participant's benefit shall be payable as set forth in (b) above, i.e., either by

distribution of a cash lump sum or an insurance company annuity contract, except that the calculations under (b) shall be based on 40% of the promised benefit. Subsection (b)(2) shall be modified, however, so that, the trust described in that subsection shall not terminate; instead, there shall only be withdrawn from the trust an amount equal to the purchase price of the insurance company annuity contract, or the cash paid to Participant, as the case may be. Notwithstanding the preceding sentence, no amount shall be withdrawn from the trust if the remaining amount in the trust is less than the Current Actuarial Value of the Company's Obligations (computed with respect to the remaining Company obligation); any difference between what can be withdrawn from the trust and the amount payable to the Participant shall be paid directly by the Company. The adjustment mechanism of (b)(3) shall continue to apply to the 40% of the Participant's benefit that has been paid under (b).

(4) The remaining 60% of the Company's obligations shall be satisfied by monthly payments by the Company to the Participant. After these payments are made by the Company, the Company shall have the right to be reimbursed annually from the trust within 60 days following each June 30 in an amount equal to such payments to the Participant over the prior 12 months. Furthermore, within 60 days of each June 30, if requested by the Participant, the Company shall make additional payments to the trust, if required, so that the trust is funded in an amount equal to the Current Actuarial Value of the Company's Obligations, except that the funding obligation shall be computed only with reference to the benefits due under this Agreement that were not previously satisfied by the distribution of cash or an insurance company annuity contract under (b).

(5) At any time subsequent to termination of employment Participant may determine that, instead of the Company Payments described in this subsection (c), he wishes to receive an insurance company annuity contract or cash lump sum in settlement of the remaining value of the Company Payments due with respect to the 60% benefit. To receive the lump sum, Participant shall deliver a notice to Company requesting such lump sum. Company will thereupon as quickly as practicable (but in no event later than 30 days from the delivery of the notice) compute the amount to be paid using the methodology set forth in subsection (b) above, and Participant will be given a choice between the receipt of cash or an insurance company annuity contract, as set forth in subsection (b). Notwithstanding the preceding sentences of this paragraph (5), the amount to be paid Participant will be reduced by 6%. For example, if the lump sum otherwise payable to Participant were $5,000,000, participant would only receive a lump sum of $4,700,000, and the $300,000 balance would be forfeited to the Company. Subsequent to receipt of an insurance company annuity contract or a cash lump sum under this paragraph (5), the adjustment mechanism of (b)(3) shall apply to the Company Payments that have been so settled, but applied as if the monthly payment obligation were 94% of the originally computed amount. Subsequent to settlement under this paragraph, the trust established pursuant to this section shall terminate as described in subsection (b)(2).

(A) In addition to the right to receive the entire value of the Company Payment as an insurance company annuity contract or cash lump sum, Participant may elect that a smaller portion of the Company Payment be payable as an insurance company annuity contract or cash lump sum, in which case the remaining portion of his Company Payment shall continue to be paid as described in this subsection (c), including the right to settle the remaining portion under this paragraph (5).

(6) The settlement mechanism in this subsection (c) shall apply in the event of Participant's death prior to termination of employment, except that Participant's Designated Beneficiary shall have the right to make the decisions that would otherwise be reserved to Participant. In the event that Participant terminates employment and is receiving Company Payments at his death, the settlement mechanism in this subsection (c) shall apply to his Designated Beneficiary. The option to receive Company Payments rather than a insurance company annuity contract or a cash lump sum shall only be available if an election is filed by the Designated Beneficiary prior to death no later than the time described in paragraph (1) above.

(7) Instead of the Company Payments described above, the Participant may elect that the Company pay his benefit in the form of a fixed number of annual installments, to be paid at the election of the Participant over a number of years selected by the Participant, which number shall be from 2 to 10 years. The installments shall have the same "Actuarial Value" as the Company Payments described in (1). For this purpose, "Actuarial Value" shall be computed by using (A) the interest assumption specified in Section 417(e)(3) of the Internal Revenue Code (using the applicable interest rate for the second month preceding the date on which distribution commences), (B) the mortality assumptions specified in Section 417(e)(3) of the Internal Revenue Code, and (C) the fixed percentage described in Section 1(j)(2) as the CPI assumption. At any time during the period of payout of the installments, the Participant may make the election described in (5). If such an election is made, the value of the lump sum to be received shall be computed using the interest assumption in this subsection and the 6% discount described in (5) shall apply. In addition to the installment payments described in this paragraph, the Participant may propose a different form of alternative payment in his notice of election; the Company at its discretion may determine whether to agree to such different form of alternative payment.

Executed November 13, 2003, and effective October 22, 2003.

		ROBERT HALF INTERNATIONAL INC.
		BY	/s/ M. KEITH WADDELL

		HAROLD M. MESSMER, JR.
			/s/ HAROLD M. MESSMER, JR.

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Exhibit 10.4

EX-10.18 5 a2124746zex-10_18.htm EXHIBIT 10.18
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Exhibit 10.18

The Registrant has entered into the attached form of Amendment No. 1 to Collateral Assignment Split Dollar Insurance Agreement with each of Harold M. Messmer, Jr., M. Keith Waddell, Paul F. Gentzkow, Robert W. Glass and Steven Karel. Pursuant to Instruction 2 to Item 601 of Regulation S-K, the individual agreements are not being filed.

AMENDMENT NO. 1 TO
COLLATERAL ASSIGNMENT SPLIT DOLLAR
INSURANCE AGREEMENT

This Amendment No. 1 to the Collateral Assignment Split Dollar Insurance Agreement dated November 15, 1996 (the "Agreement") is entered into on January , 2004 between Robert Half International Inc. (the "Corporation") and ("Trust").

WHEREAS, the enactment of the Sarbanes-Oxley Act of 2002 and the promulgation of new federal income tax regulations have caused the parties to reconsider the split-dollar arrangements provided under the Agreement.

WHEREAS, the parties now desire that the Corporation shall have no obligation to make any further contributions toward payment of the insurance premiums.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, it is agreed between the parties as follows:

1. Section 3 of the Agreement between the Corporation and Trust is amended to read in its entirety as follows:

"3. PAYMENT OF PREMIUMS ON POLICY.

The Trust will pay Hartford the portion of the annual premium that is equal to the value of the "economic benefit" of the life insurance protection that would otherwise be imputed income for federal income tax purposes to the Employee for the year, i.e., the cost of such protection determined using the lesser of the IRS' "P.S. 58 rates" (or such successor rates) or Hartford's term insurance rates. For years through and including 2001, the Corporation will (i) pay Hartford the balance of the annual premium and (ii) provide a written statement to the Trust showing the Corporation's current contribution to Hartford and its aggregate contributions. For 2002 and subsequent years, no portion of the annual premium for such years will be paid by the Corporation."

2. In all other respects, the Agreement shall remain in full force and effect and unchanged.

In Witness Whereof, the parties hereto have executed this Amendment to the Agreement on the date above first written.

		[TRUST]
		By:	[Trustee]

		ROBERT HALF INTERNATIONAL INC.
		By:

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Exhibit 10.18

EX-21 6 a2124746zex-21.htm EXHIBIT 21
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EXHIBIT 21

LIST OF SUBSIDIARIES

Name of Subsidiary		Jurisdiction of Incorporation
RH Holding Company, Inc.		California
BMK Services, Inc.		California
BMK Resources, Inc.		California
Robert Half of California, Inc.		California
Cooperative Resources, Inc.		California
Golden State Temporaries, Inc.		California
RHI Staffing, Inc.		California
TM Holdings, Inc.		California
Robert Half of Texas G.P. Ltd.		Delaware
XYZ-II, Inc.		Delaware
Atlantic Temporaries, Inc.		Delaware
Jersey Temporaries, Inc.		Delaware
Protiviti Inc.		Delaware
Protiviti Holdings Inc.		Delaware
Robert Half Incorporated		Florida
R-H International Advertising Fund, Inc.		Florida
OfficeTeam Inc.		Louisiana
Robert Half Corporation		Nevada
Robert Half Nevada Staff, Inc.		Nevada
Robert Half of Pennsylvania, Inc.		Pennsylvania
Monarch Staffing, L.P. (a limited partnership)		Texas
Texas Temp Limited Partnership		Texas
RHT, L.P. (a limited partnership)		Texas
Robert Half Australia Pty. Ltd.		Australia
RHI Belgium S.A./N.V.		Belgium
Robert Half Belgium S.A./N.V.		Belgium
Robert Half Canada Inc.		Canada
Protiviti Co.		Canada
Robert Half Czech Republic, s.r.o.		Czech Republic
Protiviti S.A.S.		France
Robert Half France S.A.		France
RHI Interim, SARL		France
Robert Half S.A.		France
Robert Half Ireland Limited		Ireland
Robert Half Deutschland Beteiligungsgesellschaft mbH		Germany
Robert Half Deutschland GmbH & Co. KG		Germany
Protiviti S.r.l.		Italy
Robert Half S.r.l.		Italy
Protiviti Japan Co., Ltd.		Japan
Robert Half New Zealand Limited		New Zealand
Protiviti Pte. Ltd.		Singapore
Robert Half Limited		United Kingdom
Accountemps UK Limited		United Kingdom
Protiviti Limited		United Kingdom

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EXHIBIT 21

LIST OF SUBSIDIARIES
EX-23.1 7 a2124746zex-23_1.htm EXHIBIT 23.1
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EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

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 and 333-98737) of Robert Half International Inc. of our reports dated January 27, 2004 relating to the financial statements and financial statement schedule, which appear in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

San Francisco, California
March 5, 2004

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EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS
EX-23.2 8 a2124746zex-23_2.htm EXHIBIT 23.2
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EXHIBIT 23.2

NOTICE REGARDING CONSENT OF FORMER ACCOUNTANTS

Section 11(a) of the Securities Act of 1933, as amended (the "Securities Act"), provides that if any part of a registration statement (at the time such part becomes effective) contains an untrue statement of a material fact or omits a material fact required to be stated therein or necessary to make the statements therein not misleading, any person acquiring a security pursuant to that registration statement (unless it is proved that at the time of such acquisition such person knew of such untruth or omission) may sue, among others, every accountant who has consented to be named as having prepared or certified any part of the registration statement, or as having prepared or certified any report or valuation that is used in connection with the registration statement, with respect to the statement in such registration statement, report or valuation which purports to have been prepared or certified by the accountant.

This Annual Report on Form 10-K is incorporated by reference into our Registration Statements on Form S-8 with file numbers 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 and 333-98737 (collectively, the "Registration Statements"). For purposes of determining any liability under the Securities Act with respect to the Registration Statements, the filing of our Form 10-K is deemed to be a new registration statement for each Registration Statement into which it is incorporated by reference.

On April 24, 2002, Robert Half International Inc. (the "Company") severed its auditing relationship with Arthur Andersen LLP ("Andersen") by mutual agreement. On July 16, 2002, the Company appointed PricewaterhouseCoopers LLP as its independent accountant. In response to our reasonable efforts to obtain Andersen's consent to the incorporation by reference of Andersen's audit report in our registration statements, Andersen has informed us that its policy is not to provide such consent when Andersen no longer employs the engagement partner or manager for the requesting company. Both the engagement partner and manager for the Company's audit are no longer with Andersen. As a result, we have been unable to obtain Andersen's written consent to the incorporation by reference into the Registration Statements of its audit report with respect to our financial statements as of December 31, 2001 and 2000 and for the years then ended. Under these circumstances, Rule 437a under the Securities Act permits us to file this Form 10-K without a written consent from Andersen. As a result, however, Andersen will not have any liability under Section 11(a) of the Securities Act for any untrue statements of a material fact contained in the financial statements audited by Andersen or any omissions of a material fact required to be stated therein. Accordingly, you would be unable to assert a claim against Andersen under Section 11(a) of the Securities Act for any purchases of securities under the Registration Statements made on or after the date of this Form 10-K pursuant to the Registration Statements. To the extent provided in Section 11(b)(3)(C) of the Securities Act, however, other persons who are potentially subject to liability under Section 11(a) of the Securities Act, including the Company's officers and directors, may still rely on Andersen's original audit reports as being made by an expert for purposes of establishing a due diligence defense under Section 11(b) of the Securities Act. These facts may have the effect of limiting the ability of the Company's investors to recover any losses suffered in connection with the purchase or sale of the Company's securities due to material inaccuracies or omissions contained in the financial statements reproduced herein for the periods ending December 31, 2001 and 2000.

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EXHIBIT 23.2

NOTICE REGARDING CONSENT OF FORMER ACCOUNTANTS
EX-31.1 9 a2124746zex-31_1.htm EXHIBIT 31.1
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EXHIBIT 31.1

Certification Pursuant to Rule 13a-14 under the Securities Exchange Act of 1934

I, Harold M. Messmer, Jr., certify that:

1.

I have reviewed this report on Form 10-K of Robert Half International Inc.;

2.

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;

3.

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;

4.

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)) for the registrant and have:

(a): 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;
(b): [intentionally omitted]
(c): 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
(d): 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 registrant's board of directors (or persons performing the equivalent functions):

a): 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
b): 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: March 5, 2004

/s/ HAROLD M. MESSMER, JR.

Harold M. Messmer, Jr.
Chairman and Chief Executive Officer

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EXHIBIT 31.1

Certification Pursuant to Rule 13a-14 under the Securities Exchange Act of 1934
EX-31.2 10 a2124746zex-31_2.htm EXHIBIT 31.2
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EXHIBIT 31.2

Certification Pursuant to Rule 13a-14 under the Securities Exchange Act of 1934

I, M. Keith Waddell, certify that:

1.

I have reviewed this report on Form 10-K of Robert Half International Inc.;

2.

3.

4.

(a): 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;
(b): [intentionally omitted]
(c): 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
(d): 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.

a): 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
b): 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: March 5, 2004

/s/ M. KEITH WADDELL

M. Keith Waddell
Vice Chairman, President and Chief Financial Officer

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EXHIBIT 31.2

Certification Pursuant to Rule 13a-14 under the Securities Exchange Act of 1934
EX-32.1 11 a2124746zex-32_1.htm EXHIBIT 32.1
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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, 2003 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.

March 5, 2004

/s/ Harold M. Messmer, Jr.

Harold M. Messmer, Jr.
Chief Executive Officer
Robert Half International Inc.

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EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EX-32.2 12 a2124746zex-32_2.htm EXHIBIT 32.2
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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, 2003 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.

March 5, 2004

/s/ M. Keith Waddell

M. Keith Waddell
Chief Financial Officer
Robert Half International Inc.

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EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
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