HALF ROBERT INTERNATIONAL INC /DE/ - 10-K Annual Report

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

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

ROBERT HALF INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)

Title of each class		Name of each exchange on which registered
Common Stock, Par Value $.001 per Share		New York Stock Exchange

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.

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.

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.

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.

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.

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.

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.

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.

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 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 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.

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.

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.

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.

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.

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.

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.

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.

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.

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

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.

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.

	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.

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.

	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.

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.

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.

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):

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.

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).

ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(in thousands, except share amounts)

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)

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)

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)

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

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.

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.

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.

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

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

	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

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.

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):

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.

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.

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):

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.

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.

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):

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.

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.

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

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

		Quarter
2003		Year Ended December 31,
	1		2		3		4
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		Year Ended December 31,
	1		2	3		4
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

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.

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.

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.

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.

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.

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.

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
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

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.

The following consolidated financial statements of the Company and its subsidiaries are included in Item 8 of this report:

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

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.

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.

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.

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)

	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

		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

			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

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

	$	295,376

	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

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

		$275,627	$292,499

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.

	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)

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)

		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