Investor Relations

Press Release

Korn/Ferry International Announces Second Quarter Fiscal 2012 Results of Operations

December 8, 2011
Highlights
- Q2 FY'12 fee revenue increased 8% to $200.2 million, compared to $185.4 million in the same quarter last year.
- Q2 FY'12 diluted earnings per share was $0.32 compared to diluted earnings per share of $0.30 in Q2 FY'11. Excluding net adjustments to previously recorded restructuring charges, diluted earnings per share was $0.33 in Q2 FY'11.

LOS ANGELES, Dec. 8, 2011 /PRNewswire/ -- Korn/Ferry International (NYSE: KFY), a premier global provider of talent management solutions, announced Q2 FY'12 diluted earnings per share of $0.32 compared to diluted earnings per share of $0.30 in Q2 FY'11.  Excluding net adjustments to previously recorded restructuring charges of $2.1 million, diluted earnings per share was $0.33 in Q2 FY'11.

"I am proud of Korn/Ferry's accomplishments during the quarter, which includes eight percent year over year growth and an operating margin of 12.7 percent," said Gary D. Burnison, CEO of Korn/Ferry International.  "With regard to talent, the business world continues to operate a two-speed labor cycle.  Businesses today are doing more with less, placing ever-increasing demands on leaner, skilled workforces highlighting the universal need to attract, develop and retain top people.  Through our diversified business, we are well positioned to not only assist our clients in solving these complex human capital needs but by doing so, ensure their competitive success."

Financial Results

(dollars in millions, except per share amounts)

 

Second Quarter

 

Year to Date

 

 

FY'12

 

FY'11

 

FY'12

 

FY'11

 

Fee revenue

$           200.2

 

$          185.4

 

$        406.5

 

$          360.5

 

Total  revenue

$           210.0

 

$          193.2

 

$        424.6

 

$          376.4

 

Operating income

$             25.4

 

$            19.8

 

$          51.3

 

$            39.1

 

Operating margin

12.7%

 

10.7%

 

12.6%

 

10.8%

 

Net income

$             15.2

 

$            13.7

 

$          30.6

 

$            24.6

 

Basic earnings per share

$             0.33

 

$            0.30

 

$          0.66

 

$            0.55

 

Diluted earnings per share

$             0.32

 

$            0.30

 

$          0.65

 

$            0.53

 

 

 

 

 

 

 

 

 

 

Adjusted Results (a):

Second Quarter

 

Year to Date

 

 

FY'12

 

FY'11

 

FY'12

 

FY'11

 

Operating income

$             25.4

 

$            21.9

 

$          51.3

 

$            41.2

 

Operating margin

12.7%

 

11.8%

 

12.6%

 

11.4%

 

Net income

$             15.2

 

$            15.0

 

$          30.6

 

$            25.9

 

Basic earnings per share

$             0.33

 

$            0.33

 

$          0.66

 

$            0.58

 

Diluted earnings per share

$             0.32

 

$            0.33

 

$          0.65

 

$            0.56

 

 ____________

 

(a)

Adjusted results are non-GAAP financial measures that exclude restructuring charges, net of recoveries, of $2.1 million during the three and six months ended October 31, 2010 (see attached reconciliations).  No restructuring costs were incurred during the three and six months ended October 31, 2011.

Fee revenue was $200.2 million in Q2 FY'12 compared to $185.4 million in Q2 FY'11, an increase of $14.8 million or 8%.  This increase reflects increases in fee revenue from all operating segments of the business driven primarily by a 10% increase in the overall number of engagements billed, which was partially offset by a 2% decrease in the weighted-average fee billed per engagement compared to the year-ago fiscal quarter.  Weighted-average fee billed is impacted by the mix of engagements by segment, fluctuating foreign currencies and in the current quarter was driven by growth in Futurestep which has lower average fees than Executive Recruitment.  On a constant currency basis, fee revenue increased $9.2 million, or 5%.

Compensation and benefit expenses were $131.5 million in Q2 FY'12, an increase of $3.9 million, or 3%, compared to $127.6 million in Q2 FY'11.  The increase is attributable mainly to a 17% increase in salaries and benefits due in large part to a 14% increase in worldwide average headcount compared to the year-ago fiscal quarter, partially offset by a reduction in the variable component of compensation.  The increase in worldwide headcount is primarily driven by the growth in Futurestep.  On a constant currency basis, compensation and benefits decreased $0.3 million.

General and administrative expenses were $34.2 million in Q2 FY'12, an increase of $6.8 million from $27.4 million in Q2 FY'11.  This increase is largely attributable to an increase in legal and other professional fees, and to a lesser extent, an increase in premise and office expenses (due primarily to the timing of renewals of existing leases) and business development expenses.  On a constant currency basis, general and administrative expenses increased $5.5 million.

Operating income was $25.4 million in Q2 FY'12 compared to operating income of $19.8 million in Q2 FY'11, an increase of $5.6 million, or 28%.  After excluding restructuring charges of $2.1 million in Q2 FY'11, operating income was $21.9 million, an increase of $3.5 million, or 16%, compared to Q2 FY'12.


Balance Sheet and Liquidity

Cash and marketable securities were $318.1 million at October 31, 2011 compared to $369.1 million at April 30, 2011.  Cash and marketable securities include $78.4 million and $71.4 million held in trust for deferred compensation plans at October 31, 2011 and April 30, 2011, respectively.  Cash and marketable securities decreased by $51.0 million from April 30, 2011, mainly due to payment of FY'11 annual bonuses paid in Q1 FY'12, partially offset by cash provided by operating activities.

Results by Segment

Selected Executive Recruitment Data

(dollars in millions)

 

Second Quarter

 

Year to Date

 

 

FY'12

 

FY'11

 

FY'12

 

FY'11

 

Fee revenue

$          171.6

 

$        164.1

 

$        347.7

 

$          319.0

 

Total revenue

$          179.7

 

$        170.5

 

$        362.6

 

$          331.9

 

Operating income

$            36.8

 

$          23.9

 

$          72.4

 

$            51.6

 

Operating margin

21.5%

 

14.6%

 

20.8%

 

16.2%

 

 

 

 

 

 

 

 

 

 

Ending number of consultants

461

 

475

 

461

 

475

 

Average number of consultants

468

 

477

 

469

 

475

 

Engagements billed

4,312

 

3,795

 

6,995

 

6,324

 

New engagements (a)

2,029

 

1,970

 

3,994

 

3,860

 

 

 

 

 

 

 

 

 

 

Adjusted Results (b):

Second Quarter

 

Year to Date

 

 

FY'12

 

FY'11

 

FY'12

 

FY'11

 

Operating income

$            36.8

 

$          26.1

 

$          72.4

 

$            53.8

 

Operating margin

21.5%

 

15.9%

 

20.8%

 

16.9%

 

____________

(a)

Represents new engagements opened in the respective period.

 

 

(b)

Adjusted results are non-GAAP financial measures that exclude restructuring charges, net of recoveries, of $2.2 million during the three and six months ended October 31, 2010 (see attached reconciliations).  No restructuring costs were incurred during the three and six months ended October 31, 2011.

Fee revenue was $171.6 million in Q2 FY'12, an increase of $7.5 million, or 5%, when compared to fee revenue of $164.1 million in Q2 FY'11.  Fee revenue increased in all regions due to a 14% increase in the number of executive recruitment engagements billed, which was partially offset by an 8% decrease in the weighted-average fee per engagement billed when compared to Q2 FY'11.  Weighted-average fee billed is impacted by the mix of engagements by region and fluctuating foreign currencies.  The decrease in weighted-average fee per engagement was due to strong growth in leadership and talent consulting services which have a lower average fee per engagement.  On a constant currency basis, fee revenue increased $3.0 million, or 2%. 

Operating income was $36.8 million in Q2 FY'12 compared to operating income of $23.9 million in Q2 FY'11, an increase of $12.9 million.  After excluding $2.2 million of restructuring charges in Q2 FY'11, operating income in Q2 FY'12 increased $10.7 million, or 41%, from Q2 FY'11.  This increase is primarily attributed to the $7.5 million increase in fee revenue and a $5.5 million decrease in compensation and benefits expense in Q2 FY'12 as compared to Q2 FY'11, which was partially offset by a $1.6 million increase in general and administrative expenses.  The decrease in compensation and benefits expense primarily resulted from a decrease in the variable component of compensation when compared to prior year which was partially offset by an increase in salaries and benefits.  The increase in general and administrative expense was primarily driven by an increase in premise and office expense, which was due to an increase in overall business activities.

The total number of consultants at October 31, 2011 and 2010 was 461 and 475, respectively.

Selected Futurestep Data

(dollars in millions)

 

Second Quarter

 

Year to Date

 

 

FY'12

 

FY'11

 

FY'12

 

FY'11

 

Fee revenue

$             28.6

 

$          21.3

 

$          58.8

 

$            41.5

 

Total revenue

$             30.3

 

$          22.7

 

$          62.0

 

$            44.5

 

Operating income

$               2.3

 

$            1.2

 

$            4.6

 

$              2.2

 

Operating margin

7.9%

 

5.6%

 

7.8%

 

5.2%

 

 

 

 

 

 

 

 

 

 

Adjusted Results (a):

Second Quarter

 

Year to Date

 

 

FY'12

 

FY'11

 

FY'12

 

FY'11

 

Operating income

$               2.3

 

$             1.1

 

$             4.6

 

$               2.1

 

Operating margin

7.9%

 

5.1%

 

7.8%

 

5.0%

 

____________

(a)

Adjusted results are non-GAAP financial measures that exclude recoveries of restructuring charges of $0.1 million during the three and six months ended October 31, 2010 (see attached reconciliations).  No restructuring costs were incurred during the three and six month ended October 31, 2011. 

Fee revenue was $28.6 million in Q2 FY'12, an increase of $7.3 million, or 34%, from $21.3 million in Q2 FY'11.  The improvement in fee revenue was driven by a 33% increase in the weighted-average fee billed per engagement, as well as a 1% increase in the number of engagements billed.  The increase in fee revenue was also positively impacted by an increase in engagement activity for existing clients in Q2 FY'12 compared to Q2 FY'11.  On a constant currency basis, fee revenue increased $6.2 million, or 29%.

Operating income was $2.3 million in Q2 FY'12 compared to operating income of $1.2 million in Q2 FY'11, an increase of $1.1 million, or 92%.  Excluding $0.1 million in recoveries of restructuring charges in Q2 FY'11, operating income was $1.1 million.  This increase is primarily attributed to the $7.3 million increase in fee revenue in Q2 FY'12 as compared to Q2 FY'11, which was partially offset by a $6.1 million increase in compensation and benefits expenses.  The increase in compensation and benefits expense was attributable to a 45% increase in average headcount when compared to the year-ago fiscal quarter. 

Outlook

Given the uncertainty caused by the global economy and financial markets, it is particularly challenging to accurately forecast business results.  However, assuming economic conditions, financial markets and foreign exchange rates do remain steady; Q3 FY'12 fee revenue is likely to be in the range of $183 million to $203 million and diluted earnings per share is likely to be in the range of $0.25 to $0.33

Earnings Conference Call Webcast

The earnings conference call will be held today at 9:00 AM (EST) and hosted by CEO Gary Burnison, CFO Mike DiGregorio and SVP Finance Gregg Kvochak.  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.  Based in Los Angeles, the firm delivers an array of solutions that help clients to attract, deploy, develop and reward 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.  These statements, which include words such as "believes", "expects" or "likely" include references to our outlook.  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 include those relating to competition, the dependence on attracting and retaining qualified and experienced consultants, maintaining our brand name and professional reputation, potential legal liability, the portability of client relationships, global and local political or economic developments in or affecting countries where we have operations, currency fluctuations in our international operations, risks related to the growth, alignment of our cost structure with our growth, restrictions imposed by off-limits agreements, reliance on information processing systems, our ability to enhance and develop new technology, the successful integration of acquired businesses, our ability to develop new products and services,  impairment of goodwill and other intangible assets, deferred tax assets 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 CommissionKorn/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").  In particular, it includes:

  • adjusted operating income and operating margin;
  • adjusted net income;
  • adjusted basic and diluted earnings per share; 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 they are 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.  In the case of constant currency amounts, management believes the presentation of such amount provides meaningful supplemental information regarding Korn/Ferry's performance as excluding the impact of exchange rate changes on Korn/Ferry's financial performance allows investors to make more meaningful period-to-period comparisons of the Company's operating results, to better identify operating trends that may otherwise be masked or distorted by exchange rate changes and to perform related trend analysis, and provides a higher degree of transparency of 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 INCOME 

 (in thousands, except per share amounts) 

 

 

 

 

 

 

 

 

 

 

 

 

 Three Months Ended 

 

 Six Months Ended 

 

 

 October 31, 

 

 October 31, 

 

 

2011

 

2010

 

2011

 

2010

 

 

 (unaudited) 

 Fee revenue 

 

$    200,136

 

$    185,350

 

$    406,467

 

$    360,462

 Reimbursed out-of-pocket engagement expenses 

 

9,852

 

7,854

 

18,111

 

15,904

           Total revenue 

 

209,988

 

193,204

 

424,578

 

376,366

 

 

 

 

 

 

 

 

 

 Compensation and benefits 

 

131,481

 

127,555

 

268,852

 

247,763

 General and administrative expenses 

 

34,189

 

27,363

 

68,962

 

55,978

 Out-of-pocket engagement expenses 

 

15,436

 

13,237

 

28,571

 

25,336

 Depreciation and amortization 

 

3,475

 

3,144

 

6,844

 

6,112

 Restructuring charges, net 

 

-

 

2,130

 

-

 

2,130

           Total operating expenses 

 

184,581

 

173,429

 

373,229

 

337,319

 

 

 

 

 

 

 

 

 

 Operating income  

 

25,407

 

19,775

 

51,349

 

39,047

 Other (loss) income, net 

 

(2,617)

 

2,915

 

(4,639)

 

1,414

 Interest expense, net 

 

(389)

 

(1,258)

 

(970)

 

(2,066)

           Income before provision for income taxes 

 

 

 

 

 

 

 

 

               and equity in earnings of unconsolidated subsidiaries 

 

22,401

 

21,432

 

45,740

 

38,395

 Income tax provision  

 

7,726

 

8,288

 

16,161

 

14,809

 Equity in earnings of unconsolidated subsidiaries, net 

 

472

 

512

 

979

 

974

            Net income 

 

$      15,147

 

$      13,656

 

$      30,558

 

$      24,560

 

 

 

 

 

 

 

 

 

 Earnings per common share: 

 

 

 

 

 

 

 

 

      Basic 

 

$          0.33

 

$          0.30

 

$          0.66

 

$          0.55

      Diluted 

 

$          0.32

 

$          0.30

 

$          0.65

 

$          0.53

 

 

 

 

 

 

 

 

 

 Weighted-average common shares outstanding: 

 

 

 

 

 

 

 

 

      Basic 

 

46,499

 

45,130

 

46,234

 

44,886

      Diluted 

 

47,114

 

45,918

 

47,151

 

46,061

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

FINANCIAL SUMMARY BY SEGMENT

(in thousands)

 (unaudited) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

October 31,

 

October 31,

 

 

2011

 

 

 

2010

 

% Change

 

2011

 

 

 

2010

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Executive recruitment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

$ 97,511

 

 

 

$94,066

 

4%

 

$195,936

 

 

 

$184,041

 

6%

 

EMEA 

40,269

 

 

 

37,424

 

8%

 

83,511

 

 

 

73,692

 

13%

 

Asia Pacific

25,266

 

 

 

24,098

 

5%

 

50,941

 

 

 

45,240

 

13%

 

South America

8,506

 

 

 

8,478

 

0%

 

17,297

 

 

 

15,964

 

8%

Total executive recruitment

171,552

 

 

 

164,066

 

5%

 

347,685

 

 

 

318,937

 

9%

Futurestep

28,584

 

 

 

21,284

 

34%

 

58,782

 

 

 

41,525

 

42%

 

Total fee revenue

200,136

 

 

 

185,350

 

8%

 

406,467

 

 

 

360,462

 

13%

Reimbursed out-of-pocket engagement expenses

9,852

 

 

 

7,854

 

25%

 

18,111

 

 

 

15,904

 

14%

 

Total revenue

$209,988

 

 

 

$193,204

 

9%

 

$424,578

 

 

 

$376,366

 

13%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Operating Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  (Excluding Restructuring Charges)

 

 

Margin

 

 

 

Margin

 

 

 

Margin

 

 

 

Margin

Executive recruitment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

$25,697

 

26.4%

 

$19,255

 

20.5%

 

$49,723

 

25.4%

 

$38,930

 

21.2%

 

EMEA

5,483

 

13.6%

 

2,653

 

7.1%

 

10,827

 

13.0%

 

5,706

 

7.7%

 

Asia Pacific

3,771

 

14.9%

 

1,561

 

6.5%

 

7,705

 

15.1%

 

4,630

 

10.2%

 

South America

1,950

 

22.9%

 

2,698

 

31.8%

 

4,233

 

24.5%

 

4,577

 

28.7%

Total executive recruitment

36,901

 

21.5%

 

26,167

 

15.9%

 

72,488

 

20.8%

 

53,843

 

16.9%

Futurestep

2,265

 

7.9%

 

1,084

 

5.1%

 

4,571

 

7.8%

 

2,073

 

5.0%

Corporate (1)

(13,759)

 

 

 

(5,346)

 

 

 

(25,710)

 

 

 

(14,739)

 

 

 

 Total adjusted operating income 

$ 25,407

 

12.7%

 

$21,905

 

11.8%

 

$51,349

 

12.6%

 

$41,177

 

11.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring Charges (Reductions), net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Executive recruitment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

$  -

 

0.0%

 

$(340)

 

(0.3%)

 

$  -

 

0.0%

 

$(340)

 

(0.1%)

 

EMEA

-

 

0.0%

 

2,569

 

6.9%

 

-

 

0.0%

 

2,569

 

3.4%

 

Asia Pacific

-

 

0.0%

 

-

 

0.0%

 

-

 

0.0%

 

    -

 

0.0%

 

South America

-

 

0.0%

 

-

 

0.0%

 

-

 

0.0%

 

    -

 

0.0%

Total executive recruitment

-

 

0.0%

 

2,229

 

1.3%

 

-

 

0.0%

 

2,229

 

0.7%

Futurestep

-

 

0.0%

 

(99)

 

(0.5%)

 

-

 

0.0%

 

(99)

 

(0.2%)

Corporate

-

 

 

 

-

 

 

 

-

 

 

 

    -

 

 

 

 Total restructuring charges (reductions), net

$ -

 

0.0%

 

$2,130

 

1.1%

 

$  -

 

0.0%

 

$2,130

 

0.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income:

 

 

Margin

 

 

 

Margin

 

 

 

Margin

 

 

 

Margin

Executive recruitment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

$ 25,697

 

26.4%

 

$19,595

 

20.8%

 

$49,723

 

25.4%

 

$39,270

 

21.3%

 

EMEA

5,483

 

13.6%

 

84

 

0.2%

 

10,827

 

13.0%

 

3,137

 

4.3%

 

Asia Pacific

3,771

 

14.9%

 

1,561

 

6.5%

 

7,705

 

15.1%

 

4,630

 

10.2%

 

South America

1,950

 

22.9%

 

2,698

 

31.8%

 

4,233

 

24.5%

 

4,577

 

28.7%

Total executive recruitment

36,901

 

21.5%

 

23,938

 

14.6%

 

72,488

 

20.8%

 

51,614

 

16.2%

Futurestep

2,265

 

7.9%

 

1,183

 

5.6%

 

4,571

 

7.8%

 

2,172

 

5.2%

Corporate (1)

(13,759)

 

 

 

(5,346)

 

 

 

(25,710)

 

 

 

(14,739)

 

 

 

 Total operating income

$ 25,407

 

12.7%

 

$19,775

 

10.7%

 

$51,349

 

12.6%

 

$39,047

 

10.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 (1) The Company recorded an adjustment to the fair value of contingent consideration for a prior acquisition, of $2.2 million and $1.9 million  

 

 

 

 

 

     during the three and six months ended October 31, 2011 and 2010, respectively. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 (in thousands, except per share amounts) 

 

 

 

 

 

 

 

 

 

 

 

 

 October 31, 

 

 April 30, 

 

 

2011

 

2011

ASSETS

 

 (unaudited) 

 

 

Cash and cash equivalents

 

$     192,169

 

$     246,856

Marketable securities

 

25,904

 

20,868

Receivables due from clients, net of allowance for doubtful accounts 

 

 

 

 

of $11,032 and $9,977 respectively

 

144,502

 

128,859

Income taxes and other receivables

 

5,900

 

5,138

Deferred income taxes

 

10,648

 

10,214

Prepaid expenses and other assets

 

31,579

 

29,662

Total current assets

 

410,702

 

441,597

 

 

 

 

 

Marketable securities, non-current

 

100,037

 

101,363

Property and equipment, net

 

46,392

 

43,142

Cash surrender value of company owned life insurance policies, net of loans

 

72,240

 

70,987

Deferred income taxes

 

62,453

 

64,418

Goodwill

 

179,813

 

183,952

Intangible assets, net

 

21,166

 

22,289

Investments and other assets

 

43,824

 

43,932

Total assets

 

$     936,627

 

$     971,680

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

Accounts payable

 

$       11,792

 

$       12,504

Income taxes payable

 

6,744

 

4,674

Compensation and benefits payable

 

107,917

 

173,097

Other accrued liabilities

 

45,180

 

43,591

Total current liabilities

 

171,633

 

233,866

 

 

 

 

 

Deferred compensation and other retirement plans

 

135,884

 

139,558

Other liabilities

 

19,978

 

19,919

Total liabilities

 

327,495

 

393,343

 

 

 

 

 

Stockholders' equity

 

 

 

 

Common stock: $0.01 par value, 150,000 shares authorized, 59,846 and 

 

 

 

 

59,101 shares issued and 47,756 and 47,003 shares outstanding, respectively

 

412,018

 

404,703

Retained earnings

 

179,052

 

148,494

Accumulated other comprehensive income, net

 

18,577

 

25,660

Stockholders' equity

 

609,647

 

578,857

Less:  notes receivable from stockholders

 

(515)

 

(520)

Total stockholders' equity

 

609,132

 

578,337

Total liabilities and stockholders' equity

 

$     936,627

 

$     971,680

                                  

 

 

 

 

 

 

 

 

 

 

 

 

 

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF INCOME 

 RECONCILIATION OF AS REPORTED (GAAP) TO AS ADJUSTED (NON-GAAP) 

 (in thousands, except per share amounts) 

 (unaudited) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Three Months Ended 

 

 Three Months Ended 

 

 

October 31, 2011

 

October 31, 2010

 

 

As Reported

 

Adjustments

 

As Adjusted

 

As Reported

 

Adjustments

 

As Adjusted

 

 

 

 

 

 

 

 

 

 

 

 

 

 Fee revenue 

 

$200,136

 

 

 

$200,136

 

$185,350

 

 

 

$185,350

 Reimbursed out-of-pocket engagement expenses 

 

9,852

 

 

 

9,852

 

7,854

 

 

 

7,854

           Total revenue 

 

209,988

 

 

 

209,988

 

193,204

 

 

 

193,204

 

 

 

 

 

 

 

 

 

 

 

 

 

 Compensation and benefits 

 

131,481

 

 

 

131,481

 

127,555

 

 

 

127,555

 General and administrative expenses 

 

34,189

 

 

 

34,189

 

27,363

 

 

 

27,363

 Out-of-pocket engagement expenses 

 

15,436

 

 

 

15,436

 

13,237

 

 

 

13,237

 Depreciation and amortization 

 

3,475

 

 

 

3,475

 

3,144

 

 

 

3,144

 Restructuring charges, net 

 

-

 

-

 

-

 

2,130

 

(2,130)

 

-

           Total operating expenses 

 

184,581

 

-

 

184,581

 

173,429

 

(2,130)

 

171,299

 

 

 

 

 

 

 

 

 

 

 

 

 

 Operating income 

 

25,407

 

-

 

25,407

 

19,775

 

2,130

 

21,905

 

 

 

 

 

 

 

 

 

 

 

 

 

 Other (loss) income, net 

 

(2,617)

 

 

 

(2,617)

 

2,915

 

 

 

2,915

 Interest expense, net 

 

(389)

 

 

 

(389)

 

(1,258)

 

 

 

(1,258)

           Income before provision for income taxes 

 

 

 

 

 

 

 

 

 

 

 

 

                  and equity in earnings of unconsolidated
                  subsidiaries 

 

22,401

 

-

 

22,401

 

21,432

 

2,130

 

23,562

 Income tax provision (1) 

 

7,726

 

 

 

7,726

 

8,288

 

821

 

9,109

 Equity in earnings of unconsolidated subsidiaries, net 

 

472

 

 

 

472

 

512

 

 

 

512

            Net income 

 

$15,147

 

$ -

 

$15,147

 

$13,656

 

$1,309

 

$14,965

 

 

 

 

 

 

 

 

 

 

 

 

 

 Earnings per common share: 

 

 

 

 

 

 

 

 

 

 

 

 

      Basic 

 

$0.33

 

 

 

$0.33

 

$0.30

 

 

 

$0.33

      Diluted 

 

$0.32

 

 

 

$0.32

 

$0.30

 

 

 

$0.33

 

 

 

 

 

 

 

 

 

 

 

 

 

 Weighted-average common shares outstanding: 

 

 

 

 

 

 

 

 

 

 

 

 

      Basic 

 

46,499

 

 

 

46,499

 

45,130

 

 

 

45,130

      Diluted 

 

47,114

 

 

 

47,114

 

45,918

 

 

 

45,918

 

 

 

 

 

 

 

 

 

 

 

 

 

 Explanation of Non-GAAP Adjustments 

 

 

 

 

 

 

 

 

 

 

 

 

 (1) Calculated using an annual effective tax rate of 34% and 39% on operating expenses, adjusted for the three months 

 

 

 

 

       ended October 31, 2011 and 2010, respectively. 

 

 

 

 

 

 

 

 

 

 

 

 

                        

 

 

 

 

 

 

 

 

 

 

 

 

 

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF INCOME 

 RECONCILIATION OF AS REPORTED (GAAP) TO AS ADJUSTED (NON-GAAP) 

 (in thousands, except per share amounts) 

 (unaudited) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Six Months Ended 

 

 Six Months Ended 

 

 

October 31, 2011

 

October 31, 2010

 

 

As Reported

 

Adjustments

 

As Adjusted

 

As Reported

 

Adjustments

 

As Adjusted

 

 

 

 

 

 

 

 

 

 

 

 

 

 Fee revenue 

 

$406,467

 

 

 

$406,467

 

$360,462

 

 

 

$360,462

 Reimbursed out-of-pocket engagement expenses 

 

18,111

 

 

 

18,111

 

15,904

 

 

 

15,904

           Total revenue 

 

424,578

 

 

 

424,578

 

376,366

 

 

 

376,366

 

 

 

 

 

 

 

 

 

 

 

 

 

 Compensation and benefits 

 

268,852

 

 

 

268,852

 

247,763

 

 

 

247,763

 General and administrative expenses 

 

68,962

 

 

 

68,962

 

55,978

 

 

 

55,978

 Out-of-pocket engagement expenses 

 

28,571

 

 

 

28,571

 

25,336

 

 

 

25,336

 Depreciation and amortization 

 

6,844

 

 

 

6,844

 

6,112

 

 

 

6,112

 Restructuring charges, net 

 

-

 

-

 

-

 

2,130

 

(2,130)

 

-

           Total operating expenses 

 

373,229

 

-

 

373,229

 

337,319

 

(2,130)

 

335,189

 

 

 

 

 

 

 

 

 

 

 

 

 

 Operating income 

 

51,349

 

-

 

51,349

 

39,047

 

2,130

 

41,177

 

 

 

 

 

 

 

 

 

 

 

 

 

 Other (loss) income, net 

 

(4,639)

 

 

 

(4,639)

 

1,414

 

 

 

1,414

 Interest expense, net 

 

(970)

 

 

 

(970)

 

(2,066)

 

 

 

(2,066)

           Income before provision for income taxes 

 

 

 

 

 

 

 

 

 

 

 

 

                  and equity in earnings of unconsolidated
                  subsidiaries 

 

45,740

 

-

 

45,740

 

38,395

 

2,130

 

40,525

 Income tax provision (1) 

 

16,161

 

-

 

16,161

 

14,809

 

821

 

15,630

 Equity in earnings of unconsolidated subsidiaries, net 

 

979

 

 

 

979

 

974

 

 

 

974

            Net income  

 

$30,558

 

$ -

 

$30,558

 

$24,560

 

$1,309

 

$25,869

 

 

 

 

 

 

 

 

 

 

 

 

 

 Earnings per common share: 

 

 

 

 

 

 

 

 

 

 

 

 

      Basic 

 

$0.66

 

 

 

$0.66

 

$0.55

 

 

 

$0.58

      Diluted 

 

$0.65

 

 

 

$0.65

 

$0.53

 

 

 

$0.56

 

 

 

 

 

 

 

 

 

 

 

 

 

 Weighted-average common shares outstanding: 

 

 

 

 

 

 

 

 

 

 

 

 

      Basic 

 

46,234

 

 

 

46,234

 

44,886

 

 

 

44,886

      Diluted 

 

47,151

 

 

 

47,151

 

46,061

 

 

 

46,061

 

 

 

 

 

 

 

 

 

 

 

 

 

 Explanation of Non-GAAP Adjustments 

 

 

 

 

 

 

 

 

 

 

 

 

 (1) Calculated using an annual effective tax rate of 35% and 39% on operating expenses, adjusted for the six months 

 

 

 

 

       ended October 31, 2011 and 2010, respectively. 

 

 

 

 

 

 

 

 

 

 

 

                                               

SOURCE Korn/Ferry International

Investor Relations, Gregg Kvochak, +1-310-556-8550; or For Media, Mike Distefano, +1-310-843-4199

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