Investor Relations

Press Release

Korn/Ferry International Announces Fourth Quarter Fiscal 2010 Results of Operations

June 14, 2010

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, June 14, 2010 /PRNewswire via COMTEX/ --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
                                                        April 30,
                                                        ---------
                                                    2010              2009
                                                    ----              ----
                                                       (unaudited)
     Fee revenue                                $168,690          $106,980
     Reimbursed out-of-pocket
      engagement expenses                          8,215             7,446
               Total revenue                     176,905           114,426
                                                 -------           -------

     Compensation and benefits                   118,225            76,783
     General and administrative
      expenses                                    28,427            29,566
     Out-of-pocket engagement
      expenses                                    13,495            10,317
     Depreciation and
      amortization                                 3,049             2,946
     Restructuring charges, net                       80            25,070
               Total operating expenses          163,276           144,682
                                                 -------           -------

     Operating income (loss)                      13,629           (30,256)

     Interest and other income
      (loss), net                                  2,080             1,064
                                                   -----             -----
               Income (loss) before
                provision (benefit) for
                income taxes
                      and equity in earnings of
                       unconsolidated
                       subsidiaries               15,709           (29,192)
     Income tax provision
      (benefit)                                    6,245           (11,943)
     Equity in (loss) earnings
      of unconsolidated
      subsidiaries, net                             (548)               49
                Net income (loss)                 $8,916          $(17,200)
                                                  ======          ========

     Earnings (loss) per common
      share:
          Basic                                    $0.20            $(0.40)
                                                   =====            ======
          Diluted                                  $0.19            $(0.40)
                                                   =====            ======

     Weighted-average common
      shares outstanding:
          Basic                                   44,783            43,475
                                                  ======            ======
          Diluted                                 46,220            43,475
                                                  ======            ======





                                                       Year Ended
                                                        April 30,
                                                        ---------
                                                    2010              2009
                                                    ----              ----

     Fee revenue                                $572,380          $638,223
     Reimbursed out-of-pocket
      engagement expenses                         27,269            37,905
               Total revenue                     599,649           676,128
                                                 -------           -------

     Compensation and benefits                   413,340           442,632
     General and administrative
      expenses                                   115,280           126,882
     Out-of-pocket engagement
      expenses                                    41,585            49,388
     Depreciation and
      amortization                                11,493            11,583
     Restructuring charges, net                   20,673            41,915
               Total operating expenses          602,371           672,400
                                                 -------           -------

     Operating income (loss)                      (2,722)            3,728

     Interest and other income
      (loss), net                                  7,444           (15,801)
                                                   -----           -------
               Income (loss) before
                provision (benefit) for
                income taxes
                      and equity in earnings of
                       unconsolidated
                       subsidiaries                4,722           (12,073)
     Income tax provision
      (benefit)                                     (485)              384
     Equity in (loss) earnings
      of unconsolidated
      subsidiaries, net                               91             2,365
                Net income (loss)                 $5,298          $(10,092)
                                                  ======          ========

     Earnings (loss) per common
      share:
          Basic                                    $0.12            $(0.23)
                                                   =====            ======
          Diluted                                  $0.12            $(0.23)
                                                   =====            ======

     Weighted-average common
      shares outstanding:
          Basic                                   44,413            43,522
                                                  ======            ======
          Diluted                                 45,457            43,522
                                                  ======            ======


     KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
            FINANCIAL SUMMARY BY SEGMENT
                   (in thousands)
                     (unaudited)


                                     Three Months Ended
                                         April 30,
                               2010                         2009
                               ----                         ----

    Fee Revenue:
    Executive
     recruitment:
      North America         $85,037                      $56,865
      EMEA (1)               36,257                       20,685
      Asia Pacific           21,695                       10,151
      South America           7,630                        4,260
                              -----                        -----
    Total executive
     recruitment            150,619                       91,961
    Futurestep               18,071                       15,019
                             ------                       ------
      Total fee revenue     168,690                      106,980
    Reimbursed out-of-
     pocket engagement
     expenses                 8,215                        7,446
                              -----                        -----
      Total revenue        $176,905                     $114,426
                           ========                     ========


    Adjusted Operating
     Income (Loss):
      (Excluding
       Restructuring
       Charges)                         Margin                    Margin
                                        ------                    ------
    Executive
     recruitment:
      North America         $12,183       14.3%           $1,362      2.4%
      EMEA                    3,514        9.7%            1,712      8.3%
      Asia Pacific            5,826       26.9%             (421)   (4.1%)
      South America           1,647       21.6%              683     16.0%
                              -----                          ---
    Total executive
     recruitment             23,170       15.4%            3,336      3.6%
    Futurestep               (1,002)     (5.5%)           (2,129)  (14.2%)
    Corporate                (8,459)                      (6,393)
                             ------                       ------
       Total adjusted
        operating income
        (loss)              $13,709        8.1%          $(5,186)   (4.9%)
                            =======                      =======


    Restructuring
     Charges
     (Reductions), net:
    Executive
     recruitment:
      North America           $(332)     (0.4%)           $9,447     16.6%
      EMEA                      136        0.4%            7,756     37.5%
      Asia Pacific              152        0.7%            1,293     12.8%
      South America              60        0.8%              909     21.3%
                                ---                          ---
    Total executive
     recruitment                 16        0.0%           19,405     21.1%
    Futurestep                   64        0.4%            5,641     37.5%
    Corporate                     -                           24
                                ---                          ---
       Total restructuring
        charges
        (reductions), net       $80        0.0%          $25,070     23.4%
                                ===                      =======


    Operating Income
     (Loss):                            Margin                    Margin
                                        ------                    ------
    Executive
     recruitment:
      North America         $12,515       14.7%          $(8,085)  (14.2%)
      EMEA                    3,378        9.3%           (6,044)  (29.2%)
      Asia Pacific            5,674       26.2%           (1,714)  (16.9%)
      South America           1,587       20.8%             (226)   (5.3%)
                              -----                         ----
    Total executive
     recruitment             23,154       15.4%          (16,069)  (17.5%)
    Futurestep               (1,066)     (5.9%)           (7,770)  (51.7%)
    Corporate                (8,459)                      (6,417)
                             ------                       ------
       Total operating
        income (loss)       $13,629        8.1%         $(30,256)  (28.3%)
                            =======                     ========






                                              Year Ended
                                               April 30,
                                       2010                  2009
                                       ----                  ----

    Fee Revenue:
    Executive recruitment:
      North America                $278,746              $309,514
      EMEA (1)                      137,497               143,184
      Asia Pacific                   64,132                66,332
      South America                  24,026                24,323
                                     ------                ------
    Total executive recruitment     504,401               543,353
    Futurestep                       67,979                94,870
                                     ------                ------
      Total fee revenue             572,380               638,223
    Reimbursed out-of-pocket
     engagement expenses             27,269                37,905
                                     ------                ------
      Total revenue                $599,649              $676,128
                                   ========              ========


    Adjusted Operating Income
     (Loss):
      (Excluding Restructuring
       Charges)                              Margin                Margin
                                             ------                ------
    Executive recruitment:
      North America                 $40,993     14.7%     $49,520     16.0%
      EMEA                            9,423      6.8%      16,423     11.5%
      Asia Pacific                    8,065     12.6%       7,636     11.5%
      South America                   3,173     13.2%       4,305     17.7%
                                      -----                 -----
    Total executive recruitment      61,654     12.2%      77,884     14.3%
    Futurestep                       (1,485)   (2.2%)        (582)   (0.6%)
    Corporate                       (42,218)              (31,659)
                                    -------               -------
       Total adjusted operating
        income (loss)               $17,951      3.1%     $45,643      7.2%
                                    =======               =======


    Restructuring Charges
     (Reductions), net:
    Executive recruitment:
      North America                 $(1,611)   (0.6%)     $12,004      3.9%
      EMEA                           24,934     18.1%      14,362     10.1%
      Asia Pacific                      239      0.4%       2,240      3.4%
      South America                    (113)   (0.5%)       1,864      7.7%
                                       ----                 -----
    Total executive recruitment      23,449      4.6%      30,470      5.6%
    Futurestep                       (2,776)   (4.1%)      11,421     12.1%
    Corporate                             -                    24
                                        ---                   ---
       Total restructuring charges
        (reductions), net           $20,673      3.6%     $41,915      6.6%
                                    =======               =======


    Operating Income (Loss):                 Margin                Margin
                                             ------                ------
    Executive recruitment:
      North America                 $42,604     15.3%     $37,516     12.1%
      EMEA                          (15,511)  (11.3%)       2,061      1.4%
      Asia Pacific                    7,826     12.2%       5,396      8.1%
      South America                   3,286     13.7%       2,441     10.0%
                                      -----                 -----
    Total executive recruitment      38,205      7.6%      47,414      8.7%
    Futurestep                        1,291      1.9%     (12,003)  (12.7%)
    Corporate                       (42,218)              (31,683)
                                    -------               -------
       Total operating income
        (loss)                      $(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
                                                 April 30, 2010
                                                 --------------
                                      As Reported  Adjustments   As Adjusted
                                      -----------  -----------   -----------

     Fee revenue                          $168,690                   $168,690
     Reimbursed out-
      of-pocket
      engagement
      expenses                               8,215                      8,215
                                             -----                      -----
               Total revenue               176,905                    176,905
                                           -------                    -------

     Compensation
      and benefits                         118,225                    118,225
     General and
      administrative
      expenses                              28,427                     28,427
     Out-of-pocket
      engagement
      expenses                              13,495                     13,495
     Depreciation
      and
      amortization                           3,049                      3,049
     Restructuring
      charges, net                              80          (80)            -
                                                            ---
               Total operating
                expenses                   163,276          (80)      163,196
                                           -------          ---       -------

     Operating
      income (loss)                         13,629           80        13,709

     Interest and
      other income,
      net                                    2,080                      2,080
                                             -----                      -----
               Income before
                provision
                (benefit) for
                income taxes
                      and equity in
                       earnings of
                       unconsolidated
                       subsidiaries         15,709           80        15,789
     Income tax
      provision
      (benefit) (1)
      (2)                                    6,245           32         6,277
     Equity in
      (loss)
      earnings of
      unconsolidated
      subsidiaries,
      net                                  (548)                         (548)
                Net income                  $8,916          $48        $8,964
                                            ======          ===        ======

     Earnings per
      common share:
          Basic                              $0.20                      $0.20
                                             =====                      =====
          Diluted                            $0.19                      $0.19
                                             =====                      =====

     Weighted-
      average common
      shares
      outstanding:
          Basic                             44,783                     44,783
                                            ======                     ======
          Diluted                           46,220                     46,220
                                            ======                     ======


                                                     Year Ended
                                                   April 30, 2010
                                                   --------------
                                      As Reported   Adjustments   As Adjusted
                                      -----------   -----------   -----------

     Fee revenue                          $572,380                    $572,380
     Reimbursed out-
      of-pocket
      engagement
      expenses                              27,269                      27,269
                                            ------                      ------
               Total revenue               599,649                     599,649
                                           -------                     -------

     Compensation and
      benefits                             413,340                     413,340
     General and
      administrative
      expenses                             115,280                     115,280
     Out-of-pocket
      engagement
      expenses                              41,585                      41,585
     Depreciation and
      amortization                          11,493                      11,493
     Restructuring
      charges, net                          20,673       (20,673)            -
                                                         -------
               Total operating
                expenses                   602,371       (20,673)      581,698
                                           -------       -------       -------

     Operating income
      (loss)                                (2,722)       20,673        17,951

     Interest and
      other income,
      net                                    7,444                       7,444
                                             -----                       -----
               Income before
                provision
                (benefit) for
                income taxes
                      and equity in
                       earnings of
                       unconsolidated
                       subsidiaries          4,722        20,673        25,395
     Income tax
      provision
      (benefit) (1)
      (2)                                     (485)       10,172         9,687
     Equity in (loss)
      earnings of
      unconsolidated
      subsidiaries,
      net                                    91                             91
                                               ---                         ---
                Net income                  $5,298       $10,501       $15,799
                                            ======       =======       =======

     Earnings per
      common share:
          Basic                              $0.12                       $0.36
                                             =====                       =====
          Diluted                            $0.12                       $0.35
                                             =====                       =====

     Weighted-
      average common
      shares
      outstanding:
          Basic                             44,413                      44,413
                                            ======                      ======
          Diluted                           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
                                         April 30, 2009
                                         --------------
                         As Reported    Adjustments        As Adjusted
                         -----------    -----------        -----------

     Fee
      revenue                $106,980                          $106,980
      Reimbursed
      out-of-
      pocket
      engagement
      expenses                 7,446                              7,446
                                -----                             -----
        Total
         revenue              114,426                           114,426
                              -------                           -------

      Compensation
      and
      benefits                 76,783                            76,783
     General
      and
      administrative
      expenses                 29,566                            29,566
     Out-of-
      pocket
      engagement
      expenses                 10,317                            10,317
      Depreciation
      and
      amortization              2,946                             2,946
      Restructuring
      charges                  25,070        (25,070)                 -
                               ------        -------                ---
        Total
         operating
         expenses             144,682        (25,070)           119,612
                              -------        -------            -------

     Operating
      (loss)
      income                  (30,256)        25,070             (5,186)

     Interest
      and
      other
      income
      (loss),
      net                    1,064                 -             1,064
                                -----            ---              -----
        (Loss)
         income
         before
         (benefit)
         provision
         for
         income
         taxes
         and
          equity
          in
          earnings
          of
          unconsolidated
          subsidiaries        (29,192)         25,070            (4,122)
     Income
      tax
      (benefit)
      provision
      (1)                     (11,943)         10,377            (1,566)
     Equity in
      earnings
      of
      unconsolidated
      subsidiaries,
      net                        49                                   49
                                  ---                             ---
         Net
          (loss)
          income             $(17,200)       $14,693            $(2,507)
                             ========        =======            =======

     (Loss)
      earnings
      per
      common
      share:
      Basic                    $(0.40)                           $(0.06)
                               ======                            ======
      Diluted                  $(0.40)                           $(0.06)
                               ======                            ======

     Weighted-
      average
      common
      shares
      outstanding:
      Basic                    43,475                            43,475
                               ======                            ======
      Diluted                  43,475                            43,475
                               ======                            ======



                                                  Year Ended
                                                April 30, 2009
                                                --------------
                                 As Reported   Adjustments     As Adjusted
                                 -----------   -----------     -----------


     Fee revenue                     $638,223                      $638,223
     Reimbursed out-of-
      pocket engagement
      expenses                         37,905                        37,905
                                       ------                        ------
        Total revenue                 676,128                       676,128
                                      -------                       -------

     Compensation and
      benefits                        442,632                       442,632
     General and
      administrative expenses         126,882                       126,882
     Out-of-pocket
      engagement expenses              49,388                        49,388
     Depreciation and
      amortization                     11,583                        11,583
     Restructuring charges             41,915       (41,915)              -
                                                    -------
        Total operating expenses      672,400       (41,915)        630,485
                                      -------       -------         -------

     Operating (loss) income            3,728        41,915          45,643

     Interest and other
      income (loss), net              (15,801)            -         (15,801)
                                      -------           ---         -------
        (Loss) income before
         (benefit) provision for
         income taxes
         and equity in earnings
          of unconsolidated
          subsidiaries                (12,073)       41,915          29,842
     Income tax (benefit)
      provision (1)                       384        16,778          17,162
     Equity in earnings of
      unconsolidated
      subsidiaries, net                 2,365                         2,365
         Net (loss) income           $(10,092)      $25,137         $15,045
                                     ========       =======         =======

     (Loss) earnings per
      common share:
      Basic                            $(0.23)                        $0.35
                                       ======                         =====
      Diluted                          $(0.23)                        $0.34
                                       ======                         =====

     Weighted-average common
      shares outstanding:
      Basic                            43,522                        43,522
                                       ======                        ======
      Diluted                          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.



SOURCE Korn/Ferry International

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