EX-99.1 2 c02397exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit 99.1
For Immediate Release
Contacts:
Investor Relations: Gregg Kvochak, (310) 556-8550
For Media: Mike Distefano, (310) 843-4199
Korn/Ferry International Announces Fourth Quarter Fiscal 2010 Results of Operations
Highlights
  •   Fourth quarter fiscal 2010 fee revenue increased 58% to $168.7 million, compared to $107.0 million in the same quarter last year.
 
  •   Q4 FY’10 diluted earnings per share was $0.19, compared to diluted loss per share of $0.40 in Q4 FY’09. Excluding restructuring charges, Q4 FY’10 diluted earnings per share was $0.19 compared to diluted loss per share of $0.06 in Q4 FY’09.
 
  •   Cash and marketable securities were $296.5 million at April 30, 2010.
Los Angeles, CA, June 14, 2010 - Korn/Ferry International (NYSE: KFY), a premier global provider of talent management solutions, announced Q4 FY’10 diluted earnings per share of $0.19 compared to diluted loss per share of $0.40 in Q4 FY’09. Excluding net restructuring charges of $0.1 million and $25.1 million, respectively, diluted earnings per share was $0.19 in Q4 FY’10, compared to diluted loss per share of $0.06 in Q4 FY’09.
“Over the past year we remained focused on preserving our brand, positioning our company for long-term growth and remaining close to clients,” said Gary Burnison, Chief Executive Officer of Korn/Ferry International. “With growth of 58% year over year and 15% sequentially we are leading our industry. We believe the combination of our multi-services, geographic reach and pristine brand have positioned us to become the leading diversified talent solutions company in the world. It is clear that our differentiation strategy is working and I am enormously proud of the collective effort and accomplishments of our worldwide colleagues during fiscal 2010.”

 

 

 

Financial Results
(dollars in millions, except per share amounts)
                                 
    Fourth Quarter     Year to Date  
    FY’10     FY’09     FY’10     FY’09  
Fee revenue
   $ 168.7     $ 107.0     $ 572.4     $ 638.2  
Total revenue
   $ 176.9     $ 114.4     $ 599.6     $ 676.1  
Operating income (loss)
   $ 13.6     $ (30.3 )   $ (2.7 )   $ 3.7  
Operating margin
     8.1 %     (28.3 )%     (0.5 )%     0.6 %
Net income (loss)
   $ 8.9     $ (17.2 )   $ 5.3     $ (10.1 )
Basic earnings (loss) per share
   $ 0.20     $ (0.40 )   $ 0.12     $ (0.23 )
Diluted earnings (loss) per share
   $ 0.19     $ (0.40 )   $ 0.12     $ (0.23 )
Adjusted Results (a):
                                 
    Fourth Quarter     Year to Date  
    FY’10     FY’09     FY’10     FY’09  
Operating income (loss)
   $ 13.7     $ (5.2 )   $ 17.9     $ 45.6  
Operating margin
     8.1 %     (4.9 )%     3.1 %     7.2 %
Net income (loss)
   $ 9.0     $ (2.5 )   $ 15.8     $ 15.0  
Basic earnings (loss) per share
   $ 0.20     $ (0.06 )   $ 0.36     $ 0.35  
Diluted earnings (loss) per share
   $ 0.19     $ (0.06 )   $ 0.35     $ 0.34  
 
     
(a)   Adjusted results are non-GAAP financial measures that exclude the following:
                                 
    Fourth Quarter     Year to Date  
    FY’10     FY’09     FY’10     FY’09  
Restructuring charges, net
   $ 0.1     $ 25.1     $ 20.6     $ 41.9  
Certain tax adjustments (b)
   $ —     $ —     $ (2.8 )   $ —  
 
     
(b)   Includes reversal of a reserve previously taken against an uncertain tax position and an increased valuation allowance related to cash repatriations and foreign tax credits.
Fee revenue was $168.7 million in Q4 FY’10 compared to $107.0 million in Q4 FY’09, an increase of 58% (or an increase of 50%, or $53.7 million, on a constant currency basis), which reflects improving economic conditions in North America and abroad and stronger demand for permanent recruitment. Q4 FY’10 includes fee revenue from the acquisition of Whitehead Mann, which closed on June 11, 2009. Fee revenue improved globally due to an increase in revenue from all segments of the business resulting from a 45% increase in the number of executive recruitment engagements billed as well as a 13% increase in the weighted-average fee billed per executive recruitment engagement compared to the prior year (an increase of 8% excluding the impact of exchange rates). Furthermore, the Company experienced a 15% increase in fee revenue compared to Q3 FY’10 as a result of the improving economic conditions.
Compensation and benefits were $118.1 million in Q4 FY’10, an increase of $41.3 million, or 54%, compared to $76.8 million in Q4 FY’09. This increase is attributable mainly to an increase in the variable component of compensation when compared to the prior year, which was lower than normal in Q4 FY’09 due to the challenging economic conditions. Changes in exchange rates impacted compensation and benefits in Q4 FY’10 unfavorably by $4.8 million compared to Q4 FY’09.
General and administrative expenses were $28.4 million in Q4 FY’10, a decrease of $1.2 million, or 4% from $29.6 million in Q4 FY’09. This decrease is attributable to a $2.1 million decrease in the provision for bad debts, partially offset by an increase in business development and marketing costs and unrealized foreign exchange losses. The decrease in the provision for bad debts is due to a higher than normal provision in the prior year, as a result of the challenging macroeconomic

 

 

 

conditions experienced in Q4 FY’09. Changes in exchange rates impacted general and administrative expenses in Q4 FY’10 unfavorably by $1.5 million compared to Q4 FY’09.
Operating income was $13.6 million in Q4 FY’10 compared to operating loss of $30.3 million in Q4 FY’09, an increase of $43.9 million. Excluding restructuring charges of $0.1 million in Q4 FY’10 and $25.1 million in Q4 FY’09, operating income was $13.7 million in Q4 FY’10 and the operating loss was $5.2 million in Q4 FY’09, an increase of $18.9 million as compared to Q4 FY’09.
Balance Sheet and Liquidity
Cash and marketable securities were $296.5 million at April 30, 2010 compared to $330.3 million at April 30, 2009. Cash and marketable securities include $69.0 million and $60.8 million, held in trust for deferred compensation plans, at April 30, 2010 and 2009, respectively. Cash and marketable securities decreased by $33.8 million from Q4 FY’09 mainly due to payments on previously disclosed acquisitions in the current fiscal year.
Results by Segment
Selected Executive Recruitment Data
(dollars in millions)
                                 
    Fourth Quarter     Year to Date  
    FY’10     FY’09     FY’10     FY’09  
Fee revenue
   $ 150.6     $ 91.9     $ 504.4     $ 543.3  
Total revenue
   $ 157.4     $ 98.3     $ 526.6     $ 572.3  
Operating income (loss)
   $ 23.1     $ (16.1 )   $ 38.2     $ 47.4  
Operating margin
     15.4 %     (17.5 )%     7.6 %     8.7 %
Ending number of consultants
     473       460       473       460  
Average number of consultants
     479       479       482       509  
Engagements billed
     3,673       2,536       9,164       9,227  
 
New engagements (a)
     1,925       1,139       6,505       5,945  
Adjusted Results (b):
                                 
    Fourth Quarter     Year to Date  
    FY’10     FY’09     FY’10     FY’09  
Operating income
   $ 23.1     $ 3.3     $ 61.6     $ 77.9  
Operating margin
     15.4 %     3.6 %     12.2 %     14.3 %
 
     
(a)   Represents new engagements opened in the respective period.
 
(b)   Adjusted results are non-GAAP financial measures that exclude restructuring charges (net of reductions) of $23.4 million during the year ended April 30, 2010 (see attached reconciliations). Comparative results exclude restructuring charges of $19.4 million and $30.5 million during the three months and year ended April 30, 2009, respectively.
Fee revenue was $150.6 million in Q4 FY’10, an increase of $58.7 million, or 64%, when compared to fee revenue of $91.9 million in Q4 FY’09. On a constant currency basis, fee revenue increased by $52.4 million or 57%, when compared to the same quarter a year ago. Fee revenue increased in all regions due to a 45% increase in the overall number of engagements billed and an increase in the average fee per engagement billed of 13% when compared to Q4 FY’09 (an increase of 8% excluding the impact of exchange rates).
Operating income was $23.1 million in Q4 FY’10 compared to operating loss of $16.1 million in Q4 FY’09. Excluding restructuring charges of $19.4 million incurred in Q4 FY’09, operating income was $3.3 million in Q4 FY’09 compared to $23.1 million in Q4 FY’10.

 

 

 

The total number of consultants at April 30, 2010 was 473, an increase of 13 from April 30, 2009.
Selected Futurestep Data
(dollars in millions)
                                 
    Fourth Quarter     Year to Date  
    FY’10     FY’09     FY’10     FY’09  
Fee revenue
   $ 18.1     $ 15.1     $ 68.0     $ 94.9  
Total revenue
   $ 19.5     $ 16.1     $ 73.0     $ 103.8  
Operating (loss) income
   $ (1.1 )   $ (7.8 )   $ 1.3     $ (12.0 )
Operating margin
     (5.9 )%     (51.7 )%     1.9 %     (12.7 )%
Adjusted Results (a):
                                 
    Fourth Quarter     Year to Date  
    FY’10     FY’09     FY’10     FY’09  
Operating loss
   $ (1.0 )   $ (2.1 )   $ (1.5 )   $ (0.6 )
Operating margin
     (5.5 )%     (14.2 )%     (2.2 )%     (0.6 )%
 
     
(a)   Adjusted results are non-GAAP financial measures that exclude restructuring charges of $0.1 million and restructuring reductions of $2.8 million during the three months and year ended April 30, 2010, respectively (see attached reconciliations). Comparative results exclude restructuring charges of $5.6 million and $11.4 million during the three months and year ended April 30, 2009, respectively.
Fee revenue was $18.1 million in Q4 FY’10, an increase of $3.0 million, or 20%, from $15.1 million in Q4 FY’09. On a constant currency basis, fee revenue increased by $1.3 million in Q4 FY’10, compared to the same quarter a year ago. Increases in fee revenue were driven by a 21% increase in the average fee per engagement billed, partially offset by a decrease in the number of engagements billed.
Q4 FY’10 and Q4 FY’09 operating loss includes restructuring costs of $0.1 million and $5.6 million, respectively, without such charges, operating loss would have been $1.0 million in Q4 FY’10 compared $2.1 million in Q4 FY’09. Operating loss was $1.1 million in Q4 FY’10 compared to an operating loss of $7.8 million in Q4 FY’09. Q4 FY’10 operating loss includes $1.2 million in severance costs, excluding severance and restructuring costs, operating income would have been $0.2 million.

 

 

 

Outlook
Assuming constant foreign exchange rates, Q1 FY’11 fee revenue is likely to be in the range of $155 million to $175 million and diluted earnings per share is likely to be in the range of $0.15 to $0.25.
Earnings Conference Call Webcast
The earnings conference call will be held tomorrow at 9:00 AM (EDT) and hosted by Gary Burnison, Chief Executive Officer, Mike DiGregorio, Chief Financial Officer and Gregg Kvochak, Vice President of Finance. The conference call will be webcast and available online at www.kornferry.com, accessible through the Investor Relations section.
Korn/Ferry International (NYSE: KFY), with a presence throughout the Americas, Asia Pacific, Europe, the Middle East and Africa, is a premier global provider of talent management solutions celebrating 40 years in business. Based in Los Angeles, the firm delivers an array of solutions that help clients to attract, develop, retain and sustain their talent. Visit www.kornferry.com for more information on the Korn/Ferry International family of companies, and www.kornferryinstitute.com for thought leadership, intellectual property and research.

 

 

 

Forward-Looking Statements
Statements in this press release and our conference call that relate to future results and events (“forward-looking statements”) are based on Korn/Ferry’s current expectations. Readers are cautioned not to place undue reliance on such statements. Actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties that are beyond the control of Korn/Ferry. The potential risks and uncertainties relate to competition, the dependence on attracting and retaining qualified and experienced consultants, the portability of client relationships, local political or economic developments in or affecting countries where we have operations, including fluctuations in exchange rates, risks related to the growth and results of Futurestep, global economic developments, restrictions imposed by off-limits agreements, reliance on information systems, the successful integration of acquired businesses and employment liability risk. For a detailed description of risks and uncertainties that could cause differences, please refer to Korn/Ferry’s periodic filings with the Securities and Exchange Commission. Korn/Ferry disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Use of Non-GAAP Financial Measures
This press release contains financial information calculated other than in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). These non-GAAP financial measures include:
  •   adjusted operating income (loss) and operating margin, adjusted to exclude restructuring charges (reductions), net,
 
  •   adjusted net income (loss), basic and diluted earnings (loss) per share, adjusted to exclude restructuring charges (reductions) and certain tax adjustments and;
 
  •   constant currency amounts that represent the outcome that would have resulted had exchange rates in the reported period been the same as those in effect in the comparable prior year period.
This non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for financial information determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.
Management believes the presentation of non-GAAP financial measures in this press release provides meaningful supplemental information regarding Korn/Ferry’s performance by excluding certain charges that may not be indicative of Korn/Ferry’s ongoing operating results. The use of these non-GAAP financial measures facilitate comparisons to Korn/Ferry’s historical performance. Korn/Ferry includes these non-GAAP financial measures because management believes it is useful to investors in allowing for greater transparency with respect to supplemental information used by management in its evaluation of Korn/Ferry’s ongoing operations and financial and operational decision-making.
[Tables attached]

 

 

 

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
                                 
    Three Months Ended     Year Ended  
    April 30,     April 30,  
    2010     2009     2010     2009  
    (unaudited)              
Fee revenue
   $ 168,690     $ 106,980     $ 572,380     $ 638,223  
Reimbursed out-of-pocket engagement expenses
     8,215       7,446       27,269       37,905  
 
                        
Total revenue
     176,905       114,426       599,649       676,128  
 
                        
 
                                
Compensation and benefits
     118,225       76,783       413,340       442,632  
General and administrative expenses
     28,427       29,566       115,280       126,882  
Out-of-pocket engagement expenses
     13,495       10,317       41,585       49,388  
Depreciation and amortization
     3,049       2,946       11,493       11,583  
Restructuring charges, net
     80       25,070       20,673       41,915  
 
                        
Total operating expenses
     163,276       144,682       602,371       672,400  
 
                        
 
                                
Operating income (loss)
     13,629       (30,256 )     (2,722 )     3,728  
 
                                
Interest and other income (loss), net
     2,080       1,064       7,444       (15,801 )
 
                        
Income (loss) before provision (benefit) for income taxes and equity in earnings of unconsolidated subsidiaries
     15,709       (29,192 )     4,722       (12,073 )
Income tax provision (benefit)
     6,245       (11,943 )     (485 )     384  
Equity in (loss) earnings of unconsolidated subsidiaries, net
     (548 )     49       91       2,365  
 
                        
Net income (loss)
   $ 8,916     $ (17,200 )   $ 5,298     $ (10,092 )
 
                        
 
                                
Earnings (loss) per common share:
                                
Basic
   $ 0.20     $ (0.40 )   $ 0.12     $ (0.23 )
 
                        
Diluted
   $ 0.19     $ (0.40 )   $ 0.12     $ (0.23 )
 
                        
 
                                
Weighted-average common shares outstanding:
                                
Basic
     44,783       43,475       44,413       43,522  
 
                        
Diluted
     46,220       43,475       45,457       43,522  
 
                        

 

 

 

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
FINANCIAL SUMMARY BY SEGMENT
(in thousands)
(unaudited)
                                                                 
    Three Months Ended             Year Ended          
    April 30,             April 30,          
    2010             2009             2010             2009          
Fee Revenue:
                                                                
Executive recruitment:
                                                                
North America
   $ 85,037             $ 56,865             $ 278,746             $ 309,514          
EMEA (1)
     36,257               20,685               137,497               143,184          
Asia Pacific
     21,695               10,151               64,132               66,332          
South America
     7,630               4,260               24,026               24,323          
 
                                                        
Total executive recruitment
     150,619               91,961               504,401               543,353          
Futurestep
     18,071               15,019               67,979               94,870          
 
                                                        
Total fee revenue
     168,690               106,980               572,380               638,223          
Reimbursed out-of-pocket engagement expenses
     8,215               7,446               27,269               37,905          
 
                                                        
Total revenue
   $ 176,905             $ 114,426             $ 599,649             $ 676,128          
 
                                                        
 
                                                                
Adjusted Operating Income (Loss):
                                                                
(Excluding Restructuring Charges)
           Margin           Margin           Margin           Margin
 
                                                
Executive recruitment:
                                                                
North America
   $ 12,183       14.3 %   $ 1,362       2.4 %   $ 40,993       14.7 %   $ 49,520       16.0 %
EMEA
     3,514       9.7 %     1,712       8.3 %     9,423       6.8 %     16,423       11.5 %
Asia Pacific
     5,826       26.9 %     (421 )     (4.1 %)     8,065       12.6 %     7,636       11.5 %
South America
     1,647       21.6 %     683       16.0 %     3,173       13.2 %     4,305       17.7 %
 
                                                        
Total executive recruitment
     23,170       15.4 %     3,336       3.6 %     61,654       12.2 %     77,884       14.3 %
Futurestep
     (1,002 )     (5.5 %)     (2,129 )     (14.2 %)     (1,485 )     (2.2 %)     (582 )     (0.6 %)
Corporate
     (8,459 )             (6,393 )             (42,218 )             (31,659 )        
 
                                                        
Total adjusted operating income (loss)
   $ 13,709       8.1 %   $ (5,186 )     (4.9 %)   $ 17,951       3.1 %   $ 45,643       7.2 %
 
                                                        
 
                                                                
Restructuring Charges (Reductions), net:
                                                                
Executive recruitment:
                                                                
North America
   $ (332 )     (0.4 %)   $ 9,447       16.6 %   $ (1,611 )     (0.6 %)   $ 12,004       3.9 %
EMEA
     136       0.4 %     7,756       37.5 %     24,934       18.1 %     14,362       10.1 %
Asia Pacific
     152       0.7 %     1,293       12.8 %     239       0.4 %     2,240       3.4 %
South America
     60       0.8 %     909       21.3 %     (113 )     (0.5 %)     1,864       7.7 %
 
                                                        
Total executive recruitment
     16       0.0 %     19,405       21.1 %     23,449       4.6 %     30,470       5.6 %
Futurestep
     64       0.4 %     5,641       37.5 %     (2,776 )     (4.1 %)     11,421       12.1 %
Corporate
     —               24               —               24          
 
                                                        
Total restructuring charges (reductions), net
   $ 80       0.0 %   $ 25,070       23.4 %   $ 20,673       3.6 %   $ 41,915       6.6 %
 
                                                        
 
                                                                
Operating Income (Loss):
           Margin           Margin           Margin           Margin
 
                                                
Executive recruitment:
                                                                
North America
   $ 12,515       14.7 %   $ (8,085 )     (14.2 %)   $ 42,604       15.3 %   $ 37,516       12.1 %
EMEA
     3,378       9.3 %     (6,044 )     (29.2 %)     (15,511 )     (11.3 %)     2,061       1.4 %
Asia Pacific
     5,674       26.2 %     (1,714 )     (16.9 %)     7,826       12.2 %     5,396       8.1 %
South America
     1,587       20.8 %     (226 )     (5.3 %)     3,286       13.7 %     2,441       10.0 %
 
                                                        
Total executive recruitment
     23,154       15.4 %     (16,069 )     (17.5 %)     38,205       7.6 %     47,414       8.7 %
Futurestep
     (1,066 )     (5.9 %)     (7,770 )     (51.7 %)     1,291       1.9 %     (12,003 )     (12.7 %)
Corporate
     (8,459 )             (6,417 )             (42,218 )             (31,683 )        
 
                                                        
Total operating income (loss)
   $ 13,629       8.1 %   $ (30,256 )     (28.3 %)   $ (2,722 )     (0.5 %)   $ 3,728       0.6 %
 
                                                        
 
     
(1)   Includes revenues from acquisition of Whitehead Mann, closed on June 11, 2009.

 

 

 

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
                 
    As of April 30,  
    2010     2009  
ASSETS
                
Cash and cash equivalents
   $ 219,233     $ 255,000  
Marketable securities
     4,114       4,263  
Receivables due from clients, net of allowance for doubtful accounts of $5,983 and $11,197, respectively
     107,215       67,308  
Income taxes and other receivables
     6,292       9,001  
Deferred income taxes
     20,844       14,583  
Prepaid expenses and other assets
     28,753       21,442  
 
            
Total current assets
     386,451       371,597  
 
            
 
                
Marketable securities, non-current
     73,105       70,992  
Property and equipment, net
     24,963       27,970  
Cash surrender value of company owned life insurance policies, net of loans
     69,069       63,108  
Deferred income taxes
     59,742       45,141  
Goodwill
     172,273       133,331  
Intangible assets, net
     25,425       16,928  
Investments and other assets
     16,070       11,812  
 
            
Total assets
   $ 827,098     $ 740,879  
 
            
 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
Accounts payable
   $ 11,148     $ 10,282  
Income taxes payable
     6,323       2,059  
Compensation and benefits payable
     131,550       116,705  
Other accrued liabilities
     49,062       44,301  
 
            
Total current liabilities
     198,083       173,347  
 
            
 
                
Deferred compensation and other retirement plans
     123,794       99,238  
Other liabilities
     13,879       9,195  
 
            
Total liabilities
     335,756       281,780  
 
                
Stockholders’ equity
                
Common stock: $0.01 par value, 150,000 shares authorized, 57,614 and 56,185 shares issued and 45,979 and 44,729 shares outstanding, respectively
     388,717       368,430  
Retained earnings
     90,220       84,922  
Accumulated other comprehensive income, net
     12,934       6,285  
 
            
Stockholders’ equity
     491,871       459,637  
Less: notes receivable from stockholders
     (529 )     (538 )
 
            
Total stockholders’ equity
     491,342       459,099  
 
            
Total liabilities and stockholders’ equity
   $ 827,098     $ 740,879  
 
            

 

 

 

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
RECONCILIATION OF AS REPORTED (GAAP) TO AS ADJUSTED (NON-GAAP)
APRIL 30, 2010
(in thousands, except per share amounts)
(unaudited)
                                                 
    Three Months Ended     Year Ended  
    April 30, 2010     April 30, 2010  
    As Reported     Adjustments     As Adjusted     As Reported     Adjustments     As Adjusted  
 
Fee revenue
   $ 168,690             $ 168,690     $ 572,380             $ 572,380  
Reimbursed out-of-pocket engagement expenses
     8,215               8,215       27,269               27,269  
 
                                        
Total revenue
     176,905               176,905       599,649               599,649  
 
                                        
 
                                                
Compensation and benefits
     118,225               118,225       413,340               413,340  
General and administrative expenses
     28,427               28,427       115,280               115,280  
Out-of-pocket engagement expenses
     13,495               13,495       41,585               41,585  
Depreciation and amortization
     3,049               3,049       11,493               11,493  
Restructuring charges, net
     80       (80 )     —       20,673       (20,673 )     —  
 
                                    
Total operating expenses
     163,276       (80 )     163,196       602,371       (20,673 )     581,698  
 
                                    
 
                                                
Operating income (loss)
     13,629       80       13,709       (2,722 )     20,673       17,951  
 
                                                
Interest and other income, net
     2,080               2,080       7,444               7,444  
 
                                    
Income before provision (benefit) for income taxes and equity in earnings of unconsolidated subsidiaries
     15,709       80       15,789       4,722       20,673       25,395  
Income tax provision (benefit) (1) (2)
     6,245       32       6,277       (485 )     10,172       9,687  
Equity in (loss) earnings of unconsolidated subsidiaries, net
     (548 )             (548 )     91               91  
 
                                    
Net income
   $ 8,916     $ 48     $ 8,964     $ 5,298     $ 10,501     $ 15,799  
 
                                    
 
                                                
Earnings per common share:
                                                
Basic
   $ 0.20             $ 0.20     $ 0.12             $ 0.36  
 
                                        
Diluted
   $ 0.19             $ 0.19     $ 0.12             $ 0.35  
 
                                        
 
                                                
Weighted-average common shares outstanding:
                                                
Basic
     44,783               44,783       44,413               44,413  
 
                                        
Diluted
     46,220               46,220       45,457               45,457  
 
                                        
     
Explanation of Non-GAAP Adjustments
 
For the three months and year ended April 30, 2010:
 
(1)   Calculated using an annual effective tax rate of 40% and 38%, respectively, on operating expenses adjustments.
 
(2)   Includes reversal of a reserve previously taken against an uncertain tax position and an increased valuation allowance related to cash repatriations and foreign tax credits.

 

 

 

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
RECONCILIATION OF AS REPORTED (GAAP) TO AS ADJUSTED (NON-GAAP)
APRIL 30, 2009
(in thousands, except per share amounts)
(unaudited)
                                                 
    Three Months Ended     Year Ended  
    April 30, 2009     April 30, 2009  
    As Reported     Adjustments     As Adjusted     As Reported     Adjustments     As Adjusted  
Fee revenue
   $ 106,980             $ 106,980     $ 638,223             $ 638,223  
Reimbursed out-of-pocket engagement expenses
     7,446               7,446       37,905               37,905  
 
                                        
Total revenue
     114,426               114,426       676,128               676,128  
 
                                        
 
                                                
Compensation and benefits
     76,783               76,783       442,632               442,632  
General and administrative expenses
     29,566               29,566       126,882               126,882  
Out-of-pocket engagement expenses
     10,317               10,317       49,388               49,388  
Depreciation and amortization
     2,946               2,946       11,583               11,583  
Restructuring charges
     25,070       (25,070 )     —       41,915       (41,915 )     —  
 
                                    
Total operating expenses
     144,682       (25,070 )     119,612       672,400       (41,915 )     630,485  
 
                                    
 
                                                
Operating (loss) income
     (30,256 )     25,070       (5,186 )     3,728       41,915       45,643  
 
                                                
Interest and other income (loss), net
     1,064       —       1,064       (15,801 )     —       (15,801 )
 
                                    
(Loss) income before (benefit) provision for income taxes and equity in earnings of unconsolidated subsidiaries
     (29,192 )     25,070       (4,122 )     (12,073 )     41,915       29,842  
Income tax (benefit) provision (1)
     (11,943 )     10,377       (1,566 )     384       16,778       17,162  
Equity in earnings of unconsolidated subsidiaries, net
     49               49       2,365               2,365  
 
                                    
Net (loss) income
   $ (17,200 )   $ 14,693     $ (2,507 )   $ (10,092 )   $ 25,137     $ 15,045  
 
                                    
 
                                                
(Loss) earnings per common share:
                                                
Basic
   $ (0.40 )           $ (0.06 )   $ (0.23 )           $ 0.35  
 
                                        
Diluted
   $ (0.40 )           $ (0.06 )   $ (0.23 )           $ 0.34  
 
                                        
 
                                                
Weighted-average common shares outstanding:
                                                
Basic
     43,475               43,475       43,522               43,522  
 
                                        
Diluted
     43,475               43,475       43,522               44,272  
 
                                        
     
Explanation of Non-GAAP Adjustments
 
For the three months and year ended April 30, 2009:
 
(1)   Calculated using an annual effective tax rate of 38% and 58%, respectively, on operating expense adjustments.