<PAGE>
 
    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 18, 1998
                                                     REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
 
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
 
                                   FORM S-1
                            REGISTRATION STATEMENT
                                     UNDER
                          THE SECURITIES ACT OF 1933
 
                                ---------------
 
                           KORN/FERRY INTERNATIONAL
              (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
 

<TABLE>
<S>                                <C>                                <C>
           CALIFORNIA                             7361                            95-2623879
 (STATE OR OTHER JURISDICTION OF      (PRIMARY STANDARD INDUSTRIAL             (I.R.S. EMPLOYER
 INCORPORATION OR ORGANIZATION)        CLASSIFICATION CODE NUMBER)            IDENTIFICATION NO.)
</TABLE>

 
                       1800 CENTURY PARK EAST, SUITE 900
                         LOS ANGELES, CALIFORNIA 90067
                                (310) 552-1834
  (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
                   REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
 
                                 PETER L. DUNN
                       1800 CENTURY PARK EAST, SUITE 900
                         LOS ANGELES, CALIFORNIA 90067
                                (310) 843-4100
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
                             OF AGENT FOR SERVICE)
 
                                  COPIES TO:

<TABLE>
<S>                                                <C>
             JAMES R. UKROPINA, ESQ.                            ALISON S. RESSLER, ESQ.
              O'MELVENY & MYERS LLP                               SULLIVAN & CROMWELL
        400 SOUTH HOPE STREET, SUITE 1500                        1888 CENTURY PARK EAST
          LOS ANGELES, CALIFORNIA 90071                      LOS ANGELES, CALIFORNIA 90067
                  (213) 669-6000                                     (310) 712-6600
</TABLE>

 
                                ---------------
 
       APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
  As soon as practicable after this Registration Statement becomes effective.
 
                                ---------------
 
  If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
 
  If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
 
  If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
 
  If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]
 

                        CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
                                                PROPOSED
                                                 MAXIMUM
          TITLE OF EACH CLASS OF                AGGREGATE        AMOUNT OF
        SECURITIES TO BE REGISTERED         OFFERING PRICE(1) REGISTRATION FEE
- ------------------------------------------------------------------------------
<S>                                         <C>               <C>
Common Stock, no par value................    $230,000,000        $67,850
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
</TABLE>

(1) Estimated solely for purposes of determining the registration fee pursuant
    to Rule 457 under the Securities Act of 1933. A portion of the proposed
    maximum aggregate offering price represents shares that are to be offered
    outside of the United States but that may be resold from time to time in
    the United States. Such shares are not being registered for the purpose of
    sales outside the United States.
 
                                ---------------
 
  THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

<PAGE>
 
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A         +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE   +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY  +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT        +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR   +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE      +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE    +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF  +
+ANY SUCH STATE.                                                               +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
                  SUBJECT TO COMPLETION, DATED AUGUST 18, 1998
 
                                          Shares
 
                           [LOGO OF KORN/FERRY INTL.]
 
                                  Common Stock
                                 (no par value)
 
                                    --------
 
Of the shares of  Common Stock ("Common Stock") offered  hereby,     shares are
being  sold by  Korn/Ferry International  (the  "Company") and      shares  are
 being sold  by the  Selling  Shareholders named  herein under  "Principal and
 Selling  Shareholders" (the "Selling  Shareholders"). Of  the       shares of
  Common Stock being offered,      shares are initially  being offered in  the
  United States and Canada (the  "U.S. Shares") by the U.S. Underwriters (the
  "U.S.  Offering") and     shares  are initially being  concurrently offered
   outside the United States and  Canada (the "International Shares") by the
   Managers  (the  "International  Offering"  and, together  with  the  U.S.
    Offering, the "Offering"). The offering price and underwriting discounts
    and commissions of the U.S. Offering and the International Offering are
    identical.
 
 Prior to the Offering, there has been  no public market for the Common Stock.
  It is  anticipated that the initial  public offering price will  be between
   $     and $     per share. For  information relating to the factors to be
     considered in determining  the initial offering  price to the  public,
      see "Underwriting."  Application will  be made  to list  the Common
       Stock on the New York Stock Exchange under the symbol "KFY."
 
  FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION
  WITH AN INVESTMENT IN THE COMMON STOCK, SEE "RISK FACTORS" ON PAGE 9 HEREIN.
 
THESE  SECURITIES HAVE NOT BEEN APPROVED  OR DISAPPROVED BY THE SECURITIES  AND
 EXCHANGE  COMMISSION   OR  ANY  STATE  SECURITIES  COMMISSION  NOR   HAS  THE
  SECURITIES  AND  EXCHANGE COMMISSION  OR  ANY  STATE SECURITIES  COMMISSION
   PASSED   UPON  THE   ACCURACY   OR   ADEQUACY   OF  THIS   PROSPECTUS.ANY
    REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
 

<TABLE>
<CAPTION>

                                                       UNDERWRITING
                                                        DISCOUNTS    PROCEEDS  PROCEEDS TO
                                             PRICE TO      AND          TO       SELLING
                                              PUBLIC   COMMISSIONS  COMPANY(1) SHAREHOLDERS
                                            ---------  ------------ ---------- ------------
<S>                                         <C>        <C>          <C>        <C>
Per Share..................................  $           $           $           $
Total (2)..................................  $           $           $           $
</TABLE>

(1) Before deduction of expenses payable by the Company estimated at $   .
(2) The Company has granted the U.S. Underwriters and the Managers an option,
    exercisable by Credit Suisse First Boston Corporation for 30 days from the
    date of this Prospectus, to purchase a maximum of     additional shares to
    cover over-allotments of shares. If the option is exercised in full, the
    total Price to Public will be $    , Underwriting Discounts and Commissions
    will be $    and Proceeds to Company will be $    .
 
  The U.S. Shares are offered by the several U.S. Underwriters when, as and if
delivered to and accepted by the U.S. Underwriters and subject to their right
to reject orders in whole or in part. It is expected that the U.S. Shares will
be ready for delivery on or about     , 1998, against payment in immediately
available funds.
 
CREDIT SUISSE FIRST BOSTON
                          DONALDSON, LUFKIN & JENRETTE
                                                        PAINEWEBBER INCORPORATED
 
                         Prospectus dated       , 1998.

<PAGE>
 
 
 [Graphics with globe and a list of the offices of Korn/Ferry International in
  each of the cities in which it operates, plus selected Futurestep screens.]
 
 
 
 
  The Company holds a number of U.S. registered and common law trademarks, as
well as non-U.S. registered trademarks, which are used throughout this
Prospectus. The Company has registered the following marks, among others, with
the U.S. Patent and Trademark Office: "KF" and "Korn/Ferry International."
Korn/Ferry International Futurestep, Inc., a subsidiary of Korn/Ferry
International, has a pending trademark application with the U.S. Patent and
Trademark Office for "Futurestep." In addition, a number of federally
registered trademarks are used throughout this Prospectus that are not owned
by the Company.
 
  CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES
OFFERED HEREBY, INCLUDING OVER-ALLOTMENT, STABILIZING TRANSACTIONS, SYNDICATE
SHORT COVERING TRANSACTIONS AND PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
 
                                       2

<PAGE>
 

                               PROSPECTUS SUMMARY
 
  The following summary information is qualified in its entirety by the more
detailed information, including "Risk Factors" and the Company's Consolidated
Financial Statements and Notes thereto, appearing elsewhere in this Prospectus.
Unless otherwise indicated, the information in this Prospectus (i) gives effect
to the filing of an amendment of the Company's existing Articles of
Incorporation that increases the Company's authorized capital stock and
implements the four-to-one split of the Company's outstanding Common Stock that
will occur prior to the consummation of the Offering, (ii) assumes no exercise
of the over-allotment option granted to the U.S. Underwriters and the Managers
as described in "Underwriting" and (iii) assumes an initial public offering
price of $        per share of Common Stock, the midpoint of the range set
forth on the cover of this Prospectus. Unless the context otherwise requires,
all references to the "Company" and "Korn/Ferry" refer to Korn/Ferry
International and its consolidated subsidiaries and affiliates. All references
to "Futurestep" refer to Korn/Ferry International Futurestep, Inc., a
subsidiary of the Company, or the Internet-based search service offered by the
Company through that subsidiary. The Company's fiscal year ends on April 30 of
each calendar year.
 

                                  THE COMPANY
 
OVERVIEW
 
  Korn/Ferry International is the world's largest executive search firm and has
the broadest global presence in the industry with 384 consultants based in 71
offices across 41 countries. The Company's premier global reputation, strong
client relationships, senior-level search expertise, innovation and
technological leadership provide Korn/Ferry with distinct competitive
advantages. The Company has ranked first in revenues among the world's
executive search firms for each of the last 20 years and, since fiscal 1993,
has generated compound annual revenue growth of 23%. In fiscal 1998, the
Company had total revenues of $315.0 million and performed over 5,870
assignments for more than 3,750 clients, including approximately 43% of the
Fortune 500. Korn/Ferry's clients are many of the world's largest and most
prestigious public and private companies, middle-market and emerging growth
companies as well as governmental and not-for-profit organizations. Almost half
of the searches performed by the Company in fiscal 1998 were for board level,
chief executive and other senior executive officer positions. The Company has
established strong client loyalty; more than 80% of the search assignments it
performed in fiscal 1998 were on behalf of clients for whom it had conducted
multiple assignments over the last three fiscal years.
 
  The Company believes it is the leading innovator in the executive search
industry and the most forward-thinking in addressing the fundamental
transformation of the marketplace caused by the combined impact of advanced
technology and the Internet. In anticipation of these changing industry
dynamics, and in response to clients' demand for middle-management recruitment
services, the Company recently established Futurestep, its Internet-based
search service. Futurestep combines Korn/Ferry's search expertise with
exclusive candidate assessment tools and the reach of the Internet to
accelerate recruitment of candidates for middle-management positions. In the
three months following Futurestep's introduction in southern California,
approximately 23,600 candidates have completed a detailed on-line profile with
Futurestep. The Company and Futurestep have an exclusive alliance with The Wall
Street Journal, the first of its kind in the industry. This alliance provides
preferred print and on-line access to The Wall Street Journal's readers,
advertisers and on-line users. The Company believes its investments in
technology-based recruitment will enable it to expand its share of the middle-
management recruitment market and to strengthen its leading industry position
as new methodologies begin to be utilized in senior-level search.
 
  Korn/Ferry is also an established and respected source of management
research. For example, the Company's Annual Board of Directors Survey of the
Fortune 1000, now in its 25th year, reports on the structure, policy and trends
in America's corporate boardrooms and is recognized as one of the most
comprehensive, long-term studies of boards available.
 
                                       3

<PAGE>
 
 
INDUSTRY
 
  According to industry sources, worldwide executive search revenue grew at a
20% compound annual growth rate, from approximately $3.5 billion in 1993 to
$7.3 billion in 1997. The Company believes that a number of favorable trends
will contribute to the continued growth of the executive search industry,
including: (i) the globalization of business; (ii) the demand for managers with
broader skills; (iii) the increasing outsourcing of recruitment functions; and
(iv) the use of advanced technology to accelerate the identification and
assessment of candidates.
 
GROWTH STRATEGY
 
  Korn/Ferry's objective is to expand its leadership position as a preferred
global executive search firm by offering a broad range of solutions to address
its clients' management recruitment needs. The principal elements of the
Company's strategy include:
 
  Leverage leadership in senior-level search--The Company's leadership in
senior-level search enables it to grow its business by increasing the number of
search assignments it handles for existing clients. The Company also believes
that there are significant opportunities to develop new clients by aggressively
marketing its proven global search expertise. The Company has adopted a
structured approach to develop and build relationships with new and existing
clients. Through its ten specialty practice groups and broad global presence,
the Company maintains an in-depth understanding of the market conditions and
strategic and management issues facing clients. Annually, the Company's
regions, offices, individual consultants and specialty practice groups identify
existing and prospective clients with substantial recurring needs for executive
search services. The Company assembles teams of search consultants based on
geographic, industry and functional expertise to focus on these accounts. The
Company has developed a number of major relationships with prestigious
multinational companies and, in fiscal 1998, completed an average of 34 search
assignments each for 20 major long-standing accounts.
 
  Expand into the middle-management market--In response to the growing client
demand for middle-management recruitment, the Company is expanding its services
to address this market. With its strong senior-level client relationships,
advertised recruitment services and Futurestep, Korn/Ferry is well positioned
to meet its clients' middle-management recruitment needs effectively and
efficiently. By moving aggressively into this segment of the market, the
Company believes it can strengthen its relationships with its existing clients,
develop new clients and gain a competitive advantage in marketing complementary
services.
 
  Pursue strategic acquisitions--The Company will continue to make selected
acquisitions that support its growth strategy, enhance its presence in key
markets or otherwise complement its competitive strengths. The executive search
industry is highly fragmented and consists of approximately 4,000 firms, the
ten largest of which accounted for only 11% of the global executive search
industry revenues in 1997. As the largest global executive search firm, the
Company believes it has the resources to lead consolidation within the highly
fragmented search industry. Since fiscal 1993, the Company has completed five
acquisitions, including most recently the acquisition of Didier Vuchot &
Associates, which enhanced Korn/Ferry's market position in France.
 
  Reinforce technological leadership--The Company has invested more than $25
million over the past two fiscal years in the development of an advanced global
technology infrastructure to increase the speed and quality of service to its
clients. The Company's worldwide databases contain profiles of over 1,000,000
executives and over 310,000 companies. The Company's systems represent a strong
competitive advantage, allowing its consultants to access information and
communicate effectively with each other. As the executive search industry
continues to grow and as more clients seek the assistance of search firms to
fill middle-management positions, an advanced technology infrastructure has
become an indispensable element of the search business.
 
                                       4

<PAGE>
 
 
  Add new complementary services--The Company seeks to add new complementary
services in response to specific client needs. For example, the Company
developed Futurestep and has expanded its advertised recruitment services to
address its clients' growing demand for effective middle-management
recruitment. In addition, the Company is exploring complementary business
opportunities, which could include recruitment outsourcing and human resources
consulting. As attractive business opportunities are identified, the Company
may capitalize on these opportunities through internal development, joint
ventures or selected acquisitions.
 
  The Company believes the high caliber and motivation of its professionals are
critical factors to its success. The Company further believes it has been able
to attract and retain some of the most productive search consultants (vice
presidents and principals) as a result of its premier reputation, history of
consultant equity ownership and performance-based compensation program. The
Company's vice presidents have an average of seven years' experience with the
Company, 12 years in the search industry and 13 years in other industries. On
average, each of the Company's consultants completed 17 search assignments in
fiscal 1998. In each of the last five fiscal years, no individual consultant
has accounted for any material portion of the Company's revenues.
 
  Upon the consummation of the Offering, the Company's employee-shareholders
will continue to own approximately  % of the Company. The employee-shareholders
have agreed to limit their ability to sell more than half of their
shareholdings until on or after the fourth anniversary of the Offering. To
align further the interests of Korn/Ferry's consultants and shareholders, the
Company has revised its compensation program for consultants. In contemplation
of the Offering, the revised compensation program reduces the amount of
consultants' annual cash performance bonus payments and provides for the
issuance of stock options pursuant to the Company's newly adopted Performance
Award Plan. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Overview" and "Management--Liquidity Schedule."
 
CORPORATE INFORMATION
 
  The Company was incorporated in November 1969 under the laws of the State of
California. The Company's principal executive offices are located at 1800
Century Park East, Suite 900, Los Angeles, California 90067, and its telephone
number is (310) 552-1834. The Company's website address is www.kornferry.com
and Futurestep's website address is www.futurestep.com. Neither the information
contained in the websites of the Company and Futurestep nor the websites linked
to the websites of the Company and Futurestep shall be deemed to be a part of
this Prospectus.
 
                                       5

<PAGE>
 
                                  THE OFFERING
 
Common Stock offered by:
 
  The Company.....................              shares
 
  The Selling Shareholders........              shares
 
     Total........................              shares
 
Common Stock offered in:
 
  U.S. Offering...................              shares
 
  International Offering..........              shares
 
     Total........................              shares
 
Common Stock outstanding after the              shares(1)
 Offering.........................  
 
Use of proceeds...................   Of the estimated net proceeds to the
                                     Company of $      million, the Company
                                     intends to use approximately
                                     $      million to complete the redemption
                                     by the Company of certain shares of its
                                     capital stock, including the outstanding
                                     shares of Series A Preferred Stock, $
                                     million to redeem the outstanding shares
                                     of Series B Preferred Stock, $    million
                                     to pay existing obligations of the
                                     Company to former holders of phantom
                                     units and stock appreciation rights,
                                     $      million to repay the outstanding
                                     balance under its credit facility and
                                     $      million for working capital and
                                     general corporate purposes, including the
                                     expansion of Futurestep, possible future
                                     acquisitions and continued development of
                                     technology, information systems and
                                     infrastructure. See "Use of Proceeds" and
                                     "Certain Transactions--Additional
                                     Redemption Amounts." While the Company
                                     will not receive any proceeds from the
                                     sale of shares of Common Stock in the
                                     Offering by the Selling Shareholders, it
                                     will receive approximately $   million
                                     from the repayment by certain Selling
                                     Shareholders of loans from the Company to
                                     those Selling Shareholders.
 
Proposed New York Stock Exchange     
 symbol............................. KFY
- --------
(1) Excludes (i) an aggregate of          shares of Common Stock issuable upon
    the exercise of stock options that will be granted upon consummation of the
    Offering and (ii) an aggregate of             additional shares of Common
    Stock reserved for future issuance under the Company's Performance Award
    Plan (the "Performance Award Plan"). See "Management--Benefit Plans--
    Performance Award Plan."
 
                                       6

<PAGE>
 
                        SUMMARY FINANCIAL AND OTHER DATA
            (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND OTHER DATA)
 
  The following table sets forth certain summary financial and other operating
data for the Company. This information should be read in conjunction with the
Company's Consolidated Financial Statements and Notes thereto, "Selected
Financial and Other Data" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" appearing elsewhere in this
Prospectus.
 

<TABLE>
<CAPTION>
                                 FISCAL YEAR ENDED APRIL 30,
                         --------------------------------------------  PRO FORMA
                           1994     1995     1996     1997     1998     1998(1)
                         -------- -------- -------- -------- -------- -----------
                                                                      (UNAUDITED)
<S>                      <C>      <C>      <C>      <C>      <C>      <C>
STATEMENT OF OPERATIONS
 DATA:
Total revenues.......... $143,608 $187,888 $230,217 $272,561 $315,025  $315,025
Reimbursed candidate
 expenses...............    7,383    8,938    8,731   12,137   14,470    14,470
                         -------- -------- -------- -------- --------  --------
Net revenues............  136,225  178,950  221,486  260,424  300,555   300,555
Compensation and
 benefits...............   86,745  116,363  140,721  166,854  197,790   177,590
General and
 administrative
 expenses...............   36,419   46,319   64,419   73,005   84,575    84,575
                         -------- -------- -------- -------- --------  --------
Operating profit........   13,061   16,268   16,346   20,565   18,190    38,390
Interest expense........    1,991    2,323    3,683    3,320    4,234     4,234
                         -------- -------- -------- -------- --------  --------
Income before provision
 for income taxes and
 non-controlling
 shareholders'
 interests..............   11,070   13,945   12,663   17,245   13,956    34,156
Provision for income
 taxes..................    4,224    5,322    3,288    6,658    6,687    16,363
Non-controlling
 shareholders'
 interests(2)...........    1,788    2,139    1,579    1,588    2,025     2,025
                         -------- -------- -------- -------- --------  --------
Net income.............. $  5,058 $  6,484 $  7,796 $  8,999 $  5,244  $ 15,588(3)
                         ======== ======== ======== ======== ========  ========
Net income per share
  Basic................. $   0.24 $   0.30 $   0.38 $   0.42 $   0.24
  Diluted...............     0.21     0.27     0.36     0.40     0.23
Weighted average common
 shares outstanding
  Basic.................   21,139   21,874   20,390   21,382   21,885
  Diluted...............   26,255   25,607   23,019   23,481   23,839
<CAPTION>
                                 FISCAL YEAR ENDED APRIL 30,
                         --------------------------------------------
                           1994     1995     1996     1997     1998
                         -------- -------- -------- -------- --------
<S>                      <C>      <C>      <C>      <C>      <C>      <C>
OTHER DATA:
Number of offices (at
 period end)............       54       59       62       66       71
Average number of
 consultants(4) ........      207      242      271      311      357
Number of assignments...    3,449    3,570    4,113    4,774    5,879
Total revenues by
 region:
  North America......... $ 75,770 $ 97,950 $111,513 $135,192 $162,618
  Europe................   37,913   49,769   68,890   77,505   86,180
  Asia/Pacific..........   13,876   21,227   29,921   34,532   34,811
  Latin America.........   16,049   18,942   19,893   25,332   31,416
</TABLE>

 

<TABLE>
<CAPTION>
                                                            AS OF APRIL 30, 1998
                                                            --------------------
                                                                         AS
                                                             ACTUAL  ADJUSTED(5)
                                                            -------- -----------
                                                                     (UNAUDITED)
<S>                                                         <C>      <C>
BALANCE SHEET DATA:
Cash and cash equivalents.................................. $ 32,358    $
Working capital............................................   26,573
Total assets...............................................  176,371
Total long-term debt.......................................    6,151
Total mandatorily redeemable stock.........................   56,161
Shareholders' equity.......................................    2,593
</TABLE>

 
                                       7

<PAGE>
 
- --------
(1) The unaudited Pro Forma Statement of Operations Data for fiscal 1998 has
    been computed by eliminating from compensation and benefits that portion of
    consultant compensation that exceeds the amount which would have been paid
    had the Company's revised compensation program, effective May 1, 1998, been
    in effect for all of fiscal 1998. A pro forma adjustment also was made to
    reflect the increased income tax liability resulting from the corresponding
    increase in income before provision for income taxes, using the Company's
    fiscal 1998 effective tax rate of 48%. Under the revised compensation
    program, consultants and others will receive options to purchase shares of
    Common Stock at the market value at the time of grant. Such options will
    vest in equal installments over five years. See "Management's Discussion
    and Analysis of Financial Condition and Results of Operations--Overview."
 
(2) Represents the non-controlling majority shareholders' interest in the
    Company's Mexican subsidiaries and the non-controlling shareholders'
    minority interests in Futurestep.
 
(3) Upon consummation of the Offering, the Company expects to incur non-
    recurring compensation and benefits expenses of (i) $39.8 million from the
    difference between the issuance price of the shares issued by the Company
    in the twelve months preceding the effective date of the Offering and the
    fair market value of the shares at the date of issuance, (ii) $   million
    from the payment of additional redemption amounts to certain shareholders
    under the terms of a 1994 stock redemption agreement and (iii) $   million
    from the payment of existing obligations to former holders of phantom units
    and stock appreciation rights. These non-recurring compensation and
    benefits expenses are not reflected in the pro forma 1998 statement of
    operations data and will be reflected in the Company's financial statements
    for the quarter in which the Offering is consummated.
 
(4) Because the Company's records did not distinguish titles between principal
    and associate during fiscal 1994, 1995 and 1996, the average number of
    consultants is estimated by the Company for each of those years by adding
    to the number of vice presidents a number of additional consultants based
    on the average ratio of principals to associates in fiscal 1997 and 1998.
 
(5) Adjusted for the Offering and application of the estimated net proceeds
    therefrom, including completion of the redemption by the Company of certain
    shares of its capital stock, redemption of the outstanding shares of Series
    B Preferred Stock and payment of existing obligations of the Company to
    former holders of phantom units and stock appreciation rights. See "Use of
    Proceeds," "Capitalization" and "Certain Transactions--Additional
    Redemption Amounts."
 
                                       8

<PAGE>
 

                                 RISK FACTORS
 
  In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating the Company and its
business before purchasing shares of Common Stock. This Prospectus contains
forward-looking statements that are based on the beliefs of the Company's
management, as well as assumptions made by, and information currently
available to, the Company's management. Because such statements involve risks
and uncertainties, actual actions and strategies, the Company's future
results, performance or achievements could differ materially from those
expressed in, or implied by, any such forward-looking statements. Factors that
could cause or contribute to such material differences include, but are not
limited to, those discussed below.
 
COMPETITION
 
  The global executive search industry is highly competitive and fragmented.
In certain markets, the Company's competitors may possess greater resources,
greater name recognition and longer operating histories than the Company,
which may afford these firms advantages in obtaining future clients and
attracting qualified professionals in these markets. Historically, there have
been few barriers to entry into the executive search industry and new
executive search firms continue to enter the market. In addition, the Company
believes that with the continuing development and increased availability of
information technology, the executive search industry may attract new
competitors. See "Business--Competition." There can be no assurance that the
Company will be able to continue to compete effectively against existing or
potential competitors.
 
DEPENDENCE ON ATTRACTING AND RETAINING QUALIFIED EXECUTIVE SEARCH CONSULTANTS
 
  The Company's success depends upon its ability to attract and retain
qualified consultants who possess the skills and experience necessary to
satisfy its clients' executive search needs. The Company competes with other
executive search firms for qualified consultants. The failure of the Company
to identify and hire consultants with the requisite experience, skills and
established client relationships could have a material adverse effect on the
Company's business, financial condition and results of operations. Although
executive search firms strive to provide benefits and incentives to retain
their search consultants, many firms have experienced consultant turnover.
Consultants are paid salaries with the potential to earn substantially greater
performance-based bonuses. A majority of the Company's revenues have been and
will continue to be utilized to pay consultant compensation. Any diminution in
the Company's reputation, reduction in the Company's compensation levels or
restructuring of the Company's compensation system, whether as a result of
insufficient revenues, a decline in the market price of the Common Stock after
the Offering or for any other reason, could impair the Company's ability to
retain existing or attract additional qualified consultants. In connection
with the Offering, the Company has adopted a revised compensation program
featuring equity-based incentives, which were not previously a part of its
compensation structure. There can be no assurance that these changes to the
Company's compensation programs will not adversely affect the Company's
ability to attract and retain consultants. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Overview" and
"Management--Executive Participation Programs--Executive Participation
Program."
 
PORTABILITY OF CLIENT RELATIONSHIPS
 
  The Company's success depends upon the ability of its executive search
consultants to develop and maintain relationships with its clients. When a
consultant leaves one search firm and joins another, clients that have
established relationships with the departing consultant may move their
business to the consultant's new employer. The loss of one or more clients is
more likely to occur if the departing consultant enjoys widespread name
recognition or has developed a reputation as a specialist in executing
searches in a particular industry. The Company's failure to retain its most
productive consultants or maintain the quality of service to which its clients
are accustomed, and the ability of a departing consultant to move business to
his or her new employer, could have a material adverse effect on the Company's
business, financial condition and results of operations. See "-- Dependence on
Attracting and Retaining Qualified Executive Search Consultants."
 
                                       9

<PAGE>
 
EFFECT OF GLOBAL ECONOMIC FLUCTUATIONS
 
  Demand for the Company's services is significantly affected by the general
level of economic activity in the regions and industries in which the Company
operates. When economic activity slows, many companies hire fewer permanent
employees. Therefore, a significant economic downturn, especially in regions
or industries where the Company's operations are heavily concentrated, could
have a material adverse effect on the Company's business, results of
operations and financial condition. Further, the Company may face increased
pricing pressures during such periods. There can be no assurance that during
these periods the Company's results of operations will not be adversely
affected. In the recent past, the financial markets in Asia have experienced
significant turmoil, negatively impacting the revenues and operating profits
of the Company's operations in the Asia/Pacific region. There can be no
assurance that such turmoil in the Asian financial markets will not continue
to affect negatively the Company in that region. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
 
RISKS ASSOCIATED WITH GLOBAL OPERATIONS
 
  The Company has 71 offices in 41 countries and generates approximately half
its total revenues from operations outside of North America. There are certain
risks inherent in transacting business worldwide, such as changes in
applicable laws and regulatory requirements, tariffs and other trade barriers,
difficulties in staffing and managing global operations, problems in
collecting accounts receivable, political instability, fluctuations in
currency exchange rates, expatriation controls and potential adverse tax
consequences. The Company generated approximately one-third of its total
revenues in the form of foreign currencies in fiscal 1998. The Company has no
hedging or similar foreign currency contracts and therefore fluctuations in
the value of foreign currencies could adversely impact the profitability of
the Company's global operations. There can be no assurance that one or more of
such factors will not have a material adverse effect on the Company's
business, financial condition or results of operations.
 
RESTRICTIONS IMPOSED BY OFF-LIMITS AGREEMENTS
 
  Either by agreement with clients, or for client relations or marketing
purposes, executive search firms frequently refrain, for a specified period of
time, from recruiting employees of a client, and possibly other entities
affiliated with such client, when conducting searches on behalf of other
clients (an "off-limits agreement"). Off-limits agreements generally remain in
effect for one or two years following completion of an assignment. The
duration and scope of the off-limits agreement, including whether it covers
all operations of the client and its affiliates or only certain divisions of a
client, generally are subject to negotiation or internal policies and may
depend on such factors as the length of the client relationship, the frequency
with which the executive search firm has been engaged to perform executive
searches for the client and the amount of revenue the executive search firm
has generated or expects to generate from the client. Some of the Company's
clients are recognized as industry leaders and employ a significant number of
qualified executives who are potential recruitment candidates for other
companies. The Company's inability to recruit employees of such a client may
make it difficult for the Company to obtain search assignments from, or to
fulfill search assignments for, other companies in that client's industry.
There can be no assurance that off-limits agreements will not impede the
Company's growth or its ability to attract and serve new clients, or otherwise
have a material adverse effect on the Company's business, results of
operations and financial condition.
 
IMPLEMENTATION OF ACQUISITION STRATEGY
 
  The Company's ability to grow and remain competitive may depend on its
ability to consummate strategic acquisitions of other executive search firms.
Although the Company frequently evaluates possible acquisitions, there can be
no assurance that the Company will be successful in identifying, financing and
completing such acquisitions. An acquired business may not achieve desired
levels of revenue, profitability or productivity or otherwise perform as
expected. In addition, growth through acquisition of existing firms involves
risks such as diversion of management's attention, difficulties in the
integration of acquired operations, difficulties in retaining personnel,
increased off-limits conflicts, assumption of liabilities not known at the
time of acquisition and tax
 
                                      10

<PAGE>
 
and accounting issues, some or all of which could have a material adverse
effect on the Company's business, results of operations and financial
condition. The Company may finance future acquisitions in whole or in part
with Common Stock, indebtedness or cash.
 
ABILITY TO MANAGE GROWTH
 
  The future growth of the Company will result in new and increased
responsibilities for the Company's management personnel as well as increased
demands on the Company's internal systems, procedures and controls, and its
managerial, administrative, financial, marketing, information and other
resources. These new responsibilities and demands may adversely affect the
Company's performance. Moreover, the Company intends to continue to open new
offices and to develop new practice areas or lines of business complementary
to its core services, which may entail certain start-up and maintenance costs
that could be substantial. The failure of the Company to continue to improve
its internal systems, procedures and controls, to open new offices, to develop
new practice areas or otherwise to manage growth successfully could have a
material adverse effect on the Company's business, results of operations and
financial condition.
 
RISKS RELATED TO THE DEVELOPMENT AND GROWTH OF FUTURESTEP
 
  The acceptance of Futurestep is dependent on the use of the Internet by
candidates, the ability of the Company to attract candidates to Futurestep's
website and client acceptance of Futurestep's recruitment services. In
addition, the Company believes Futurestep's alliance with The Wall Street
Journal is important for attracting candidates and clients to Futurestep. The
initial term of the alliance extends through June 2001. Any loss of such
alliance could have a material adverse effect on the growth of Futurestep's
business. In addition, the development of Futurestep will involve substantial
expenditures and the Company believes Futurestep will generate operating
losses through at least the end of fiscal 2000. The limited operating history
of Futurestep makes the prediction of future results of operations difficult
and there can be no assurance that Futurestep's operating losses will not
increase in the future or that Futurestep will ever achieve or sustain
profitability.
 
RELIANCE ON INFORMATION SYSTEMS
 
  The Company's success depends in large part upon its ability to store,
retrieve, process and manage substantial amounts of information. To achieve
its strategic objectives, the Company must continue to develop and enhance its
information systems, which may require the acquisition of equipment and
software and the development, either internally or through independent
consultants, of new proprietary software. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations." The Company's
inability to design, develop, implement and utilize, in a cost-effective
manner, information systems that provide the capabilities necessary for the
Company to compete effectively, or any interruption or loss of the Company's
information processing capabilities, for any reason, could have a material
adverse effect on the Company's business, results of operations and financial
condition.
 
YEAR 2000 COMPLIANCE
 
   The "Year 2000" issue affects installed computer systems, network elements,
software applications and other business systems that have time-sensitive
programs that may not properly reflect or recognize the year 2000, resulting
in miscalculations or system failures. In fiscal year 1998, the Company
commenced an inventory and Year 2000 assessment of its principal computer
systems, network elements, software applications and other business systems.
The Company has determined that an information system used in its London
office is not Year 2000 compliant. The Company expects to complete the
replacement or renovation of any noncompliant systems and applications by
September 1999 and believes that the cost of addressing any of its Year 2000
issues will not be material.
 
                                      11

<PAGE>
 
EMPLOYMENT LIABILITY RISK
 
  Executive search firms are exposed to potential claims with respect to the
executive search process. A client could assert a claim for such matters as
breach of an off-limits agreement or recommending a candidate who subsequently
proves to be unsuitable for the position filled. In addition, a candidate
could assert an action against the Company for failure to maintain the
confidentiality of the candidate's employment search or for alleged
discrimination or other violations of employment law by a client of the
Company. The Company maintains professional liability insurance in such
amounts and with such coverages and deductibles as it believes are adequate to
cover such claims. There can be no assurance, however, that the Company's
insurance will cover all such claims or that its insurance coverage will
continue to be available at economically feasible rates. See "Business--
Insurance."
 
VOTING CONTROL BY CURRENT SHAREHOLDERS
 
  Immediately after the Offering, the current shareholders of the Company will
be the beneficial owners of           shares of Common Stock, representing
approximately   % of the then issued and outstanding shares of Common Stock
(  % if the over-allotment option is exercised in full). Immediately after the
Offering, such shareholders will continue to have sufficient voting power to
elect the entire Board of Directors of the Company and, in general, to
determine (without the consent of the Company's other shareholders) the
outcome of any corporate transaction or other matter submitted to the
shareholders for approval, including mergers, consolidations and the sale of
all or substantially all of the Company's assets, and also the power to
prevent or cause a change in control of the Company. See "Management" and
"Principal and Selling Shareholders."
 
MANAGEMENT DISCRETION CONCERNING USE OF PROCEEDS
 
  Most of the net proceeds of the Offering to the Company have not been
designated for specific uses, and management will have substantial discretion
in using the proceeds of the Offering. The failure of management to apply the
proceeds effectively could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Use of
Proceeds."
 
POSSIBLE VOLATILITY OF STOCK PRICE
 
  There can be no assurance that an active trading market for the Common Stock
will develop as a result of the Offering or, if a trading market does develop,
that it will be sustained or that the shares of Common Stock could be resold
at or above the initial public offering price. The initial public offering
price of the Common Stock offered hereby will be determined through
negotiations among the Company, the Selling Shareholders and the
representatives of the Underwriters and may not be indicative of the price at
which the Common Stock will actually trade after the Offering. In determining
such price, consideration will be given to various factors, including market
conditions for the initial public offering, the past history of and prospects
for the Company's business, operations, earnings and financial position, an
assessment of the Company's management, the market for securities of companies
in businesses similar to those of the Company, the general condition of the
securities markets and other relevant factors. After completion of the
Offering, the market price of the Common Stock could be subject to significant
variation due to fluctuations in the Company's operating results, changes in
earnings estimates by securities analysts, the degree of success the Company
achieves in implementing its business strategy, changes in business conditions
affecting the Company, its customers or its competitors, and other factors. In
addition, the stock market may experience volatility that affects the market
prices of companies in ways unrelated to the operating performance of such
companies, and such volatility may adversely affect the market price of the
Common Stock.
 
SHARES ELIGIBLE FOR FUTURE SALE
 
  Upon consummation of the Offering, the Company will have outstanding an
aggregate of          shares of Common Stock (        shares if the over-
allotment option is exercised in full). Of these shares, all of the    shares
sold in the Offering will be freely tradable without restriction or further
registration under the Securities Act of 1933, as amended (the "Securities
Act"), unless such shares are purchased by affiliates of the Company as that
term is defined in Rule 144 under the Securities Act ("Affiliates"). Of the
remaining    shares,    shares of Common Stock held by existing shareholders
are "restricted securities" as that term is
 
                                      12

<PAGE>
 
defined in Rule 144 under the Securities Act ("Restricted Shares"). Restricted
Shares may be sold to the public only if registered or if they qualify for an
exemption from registration under Rule 144 or 701 promulgated under the
Securities Act. Beginning 90 days after the date of this Prospectus,    shares
will be eligible for sale pursuant to Rule 144, provided the conditions of
Rule 144 or 701 are met, subject to the lock-up agreements described below.
Future sales of substantial amounts of Common Stock after the Offering, or the
perception that such sales could occur, could adversely affect the market
price of the Common Stock and could impair the Company's future ability to
raise capital through the sale of its equity securities. No prediction can be
made as to the effect, if any, that future sales of shares, or the
availability of shares for future sale, will have on the market price of the
Common Stock. In addition, the Company has the authority to issue additional
shares of Common Stock and shares of one or more series of preferred stock.
The issuance of such shares could result in the dilution of the voting power
of the shares of Common Stock purchased in the Offering and could have a
dilutive effect on earnings per share.
 
  Each of the Company and the existing shareholders of the Company has agreed
that it will not offer, sell, contract to sell, announce its intention to
sell, pledge or otherwise dispose of, directly or indirectly, or file with the
Securities and Exchange Commission a registration statement under the
Securities Act relating to, any shares of Common Stock or securities
convertible into or exchangeable or exercisable for any shares of the Company
without the prior written consent of Credit Suisse First Boston Corporation
for a period of 180 days after the date of this Prospectus, except, in the
case of the Company, for the grant of options and sale of shares under the
Company's stock benefit plans. Thereafter, certain parties may also sell
shares under Rule 144 of the Securities Act. See "Description of Capital
Stock," "Shares Eligible for Future Sale" and "Underwriting."
 
  Substantially all of the Company's existing shareholders have agreed to be
subject to a liquidity schedule that limits their ability to sell their
current Common Stock holdings. See "Management--Liquidity Schedule."
 
ANTI-TAKEOVER PROVISIONS; POSSIBLE ISSUANCE OF PREFERRED STOCK
 
  The Company's Amended and Restated Articles of Incorporation (the
"Articles") and Amended and Restated Bylaws (the "Bylaws") and applicable law
contain provisions that could have the effect of inhibiting a non-negotiated
merger or other business combination. In particular, the Articles provide for
a staggered Board of Directors and do not permit cumulative voting. In
addition, the Articles authorizes the Board of Directors to issue shares of
preferred stock, and fix the rights and preferences thereof, without a vote of
its shareholders. Although no shares of preferred stock will be outstanding
upon consummation of the Offering, and the Company has no present plans to
issue any shares of preferred stock, the rights of the holders of Common Stock
will be subject to, and may be adversely affected by, the rights of holders of
any preferred stock that may be issued in the future. Certain of these
provisions may have anti-takeover effects and may delay, deter or prevent a
change in control of the Company that shareholders might otherwise consider in
their best interests. Moreover, the existence of these provisions may depress
the market price of the Common Stock. The Company's Bylaws also limit the
ability of shareholders to raise matters at a meeting of shareholders without
giving advance notice. See "Description of Capital Stock--Preferred Stock" and
"--Certain Anti-Takeover Effects."
 
SUBSTANTIAL AND IMMEDIATE DILUTION
 
  The initial public offering price of the Common Stock offered in the
Offering will be substantially higher than the net tangible book value per
share of the currently outstanding Common Stock. Therefore, purchasers of
Common Stock in the Offering will experience immediate and substantial
dilution of $     per share. See "Dilution."
 
ABSENCE OF DIVIDENDS
 
  The Company does not anticipate declaring or paying any cash dividends on
its Common Stock in the foreseeable future. Future dividend policy will depend
on the Company's earnings, capital requirements, financial condition and other
factors considered relevant by the Board of Directors. See "Dividend Policy."
 
                                      13

<PAGE>
 

                                USE OF PROCEEDS
 
  The net proceeds to the Company from the sale of the         shares of
Common Stock offered by it, after deducting the offering expenses and the
estimated underwriting discounts and commissions payable by the Company, are
estimated to be $     million ($     million if the over-allotment option is
exercised in full), assuming an initial public offering price of $      per
share (the mid-point of the offering range set forth on the cover page of this
Prospectus). The Company will not receive any proceeds from the sale of shares
of Common Stock in the Offering by the Selling Shareholders. However,
approximately $   million of the proceeds from the sale of shares of Common
Stock in the Offering by certain Selling Shareholders will be paid to the
Company to reduce the amount of loans outstanding from the Company to them
incurred in connection with their original purchase of shares of Common Stock.
As of April 30, 1998, the Company had $7.4 million of notes receivable from
shareholders.
 
  The Company intends to use approximately $     million of the net proceeds
from the Offering to complete the redemption by the Company of certain shares
of its capital stock, including the outstanding shares of Series A Preferred
Stock, $    million to redeem the outstanding shares of Series B Preferred
Stock, $   million to pay existing obligations of the Company to former
holders of phantom units and stock appreciation rights, $   million to repay
the outstanding balance under its credit facility and $     million for
working capital and general corporate purposes, including the expansion of
Futurestep, possible future acquisitions and continued development of
technology, information systems and infrastructure. See "Certain
Transactions--Additional Redemption Amounts." Pending such uses, the Company
intends to invest such funds in interest-bearing, short-term, investment grade
securities, certificates of deposit, bank deposits, commercial paper or other
short-term debt instruments. See Note 3 to the Consolidated Financial
Statements for interest rates and maturity of the Company's credit facility
being repaid.
 

                                DIVIDEND POLICY
 
  Since April 30, 1996, the Company has not paid any dividends. Future
dividend policy will depend on the Company's earnings, capital requirements,
financial condition and other factors considered relevant by the Board of
Directors. The Company intends to retain future earnings to finance its
operations and growth and does not anticipate declaring or paying any cash
dividends on its Common Stock in the foreseeable future. See "Risk Factors--
Absence of Dividends" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources."
 
                                      14

<PAGE>
 

                                CAPITALIZATION
 
  The following table sets forth the capitalization of the Company as of April
30, 1998, on (i) an actual basis and (ii) an as adjusted basis to give effect
to the Offering and the application of the estimated net proceeds therefrom
(including approximately $   million to be received by the Company from the
Selling Shareholders). The capitalization of the Company should be read in
conjunction with "Use of Proceeds," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Company's Consolidated
Financial Statements and Notes thereto included elsewhere in this Prospectus.
 

<TABLE>
<CAPTION>
                                                             AS OF APRIL 30,
                                                                  1998
                                                           --------------------
                                                                    AS ADJUSTED
                                                           ACTUAL   (UNAUDITED)
                                                           -------  -----------
                                                               (DOLLARS IN
                                                               THOUSANDS)
<S>                                                        <C>      <C>
Cash and cash equivalents................................. $32,358     $
                                                           =======     =====
Current portion of long-term debt......................... $ 2,559     $ --
Long-term debt, less current portion......................   6,151       --
                                                           -------     -----
Mandatorily redeemable common and preferred stock
  Series A preferred stock, no par value; 10,000 shares
   authorized, 8,600 shares issued and outstanding and no
   shares authorized, issued and outstanding on an as
   adjusted basis.........................................      63       --
  Series B preferred stock, no par value; 150,000 shares
   authorized, 121,000 shares issued and outstanding and
   no shares authorized, issued and outstanding on an as
   adjusted basis.........................................   1,353       --
  Common stock, no par value; 22,282,000 shares issued and
   outstanding ...........................................  62,110
  Notes receivable from shareholders......................  (7,365)
                                                           -------     -----
    Total mandatorily redeemable common and preferred
     stock................................................  56,161
                                                           -------     -----
Shareholders' equity
  Preferred stock, no par value; 50,000,000 shares
   authorized, no shares issued and outstanding on an as
   adjusted basis.........................................     --
  Common stock, no par value; 150,000,000 shares
   authorized, 920,000 shares issued and outstanding and
          shares issued and outstanding on an as adjusted
   basis (1)..............................................     --
  Retained earnings.......................................   2,593
                                                           -------     -----
    Total shareholders' equity (2)........................   2,593
                                                           -------     -----
    Total capitalization.................................. $67,464     $
                                                           =======     =====
</TABLE>

- --------
(1) Excludes (i) an aggregate of     shares issuable upon the exercise of
    stock options that will be granted upon consummation of the Offering and
    (ii) an aggregate of      additional shares of Common Stock reserved for
    issuance under the Performance Award Plan. See "Management--Benefit
    Plans--Performance Award Plan."
 
(2) Includes reduction in shareholders' equity of $      million resulting
    from the completion of the redemption by the Company of certain shares of
    its capital stock, redemption of the outstanding shares of Series B
    Preferred Stock and payment of existing obligations of the Company to
    former holders of phantom units and stock appreciation rights.
 
                                      15

<PAGE>
 
                                   DILUTION
 
  As of April 30, 1998, the Company had a net tangible book value of
$             , or $         per share of Common Stock based upon
shares of Common Stock outstanding. Net tangible book value per share is
determined by dividing the net tangible book value of the Company (total
tangible assets less total liabilities, excluding mandatorily redeemable
Common Stock and preferred stock of the Company) as of such date by the number
of shares of Common Stock outstanding as of such date. Without giving effect
to any changes in the net tangible book value other than the receipt and
application by the Company of estimated net proceeds from the sale of the
shares of Common Stock sold by the Company in the Offering at an assumed
initial public offering price of $      per share (the midpoint of the range
set forth on the cover page of this Prospectus), the Company's pro forma net
tangible book value as of April 30, 1998 would have been $        million, or
$      per share of Common Stock. This represents an immediate increase in pro
forma net tangible book value of $      per share to the existing shareholders
and an immediate dilution of $     per share to new investors purchasing
shares in the Offering. The following table illustrates this per share
dilution to new investors:
 

<TABLE>
   <S>                                                          <C>   <C>
   Initial public offering price per share....................        $
     Net tangible book value per share as of April 30, 1998
      before the Offering.....................................  $
     Increase in net tangible book value per share
      attributable to new investors in the Offering...........
     Effect of stock redemption transaction(1)................
                                                                -----
   Pro forma net tangible book value per share as of April 30,
    1998 after giving effect to the Offering and the stock
    redemption transaction....................................
                                                                      ---------
   Dilution per share to new investors........................        $
                                                                      =========
</TABLE>

 
  The following table sets forth, on a pro forma basis as of April 30, 1998
after giving effect to the Offering as described above, the number of shares
purchased from the Company, the total consideration paid and the average price
per share paid by existing shareholders and the new investors purchasing
shares of Common Stock from the Company in the Offering.
 

<TABLE>
<CAPTION>
                                           SHARES OF
                                             COMMON
                                             STOCK          TOTAL
                                           PURCHASED    CONSIDERATION   AVERAGE
                                         -------------- --------------   PRICE
                                         NUMBER PERCENT AMOUNT PERCENT PER SHARE
                                         ------ ------- ------ ------- ---------
   <S>                                   <C>    <C>     <C>    <C>     <C>
   Existing shareholders(2).............              %  $           %   $
   New investors(2).....................
                                          ---    -----   ----   -----
   Total................................         100.0%         100.0%
                                          ===    =====   ====   =====
</TABLE>

 
  The foregoing table excludes (i) an aggregate of     shares of Common Stock
issuable upon the exercise of stock options that will be granted upon
consummation of the Offering and (ii) an aggregate of         additional
shares of Common Stock reserved for future issuance under the Performance
Award Plan. See "Management--Benefit Plans--Performance Award Plan." To the
extent these options are exercised, there will be further dilution to new
investors.
- --------
 
(1) Includes reduction in shareholders' equity of $      million resulting
    from the completion of the redemption by the Company of certain shares of
    its capital stock, redemption of the outstanding shares of Series B
    Preferred Stock and payment of existing obligations of the Company to
    former holders of phantom units and stock appreciation rights.
(2) Sales by Selling Shareholders in the Offering will reduce the number of
    shares of Common Stock held by existing shareholders to              or
    approximately        % (            shares or approximately     % if the
    over-allotment option is exercised in full) and will increase the number
    of shares held by new investors to            or approximately    %
    (            shares or approximately     % if the over-allotment option is
    exercised in full) of the total number of shares of Common Stock
    outstanding after the Offering. See "Principal and Selling Shareholders."
 
                                      16

<PAGE>
 
                       SELECTED FINANCIAL AND OTHER DATA
 
  The following selected financial data are qualified by reference to, and
should be read in conjunction with, the Company's Consolidated Financial
Statements and Notes thereto and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" appearing elsewhere in this
Prospectus. The selected statement of operations data set forth below for the
Company for the years ended April 30, 1996, 1997 and 1998 and the balance
sheet data as of April 30, 1997 and 1998 are derived from the Company's
Consolidated Financial Statements and Notes thereto, audited by Arthur
Andersen LLP, appearing elsewhere in this Prospectus. The selected statement
of operations data set forth below for the Company for the years ended April
30, 1994 and 1995 and the balance sheet data as of April 30, 1994, 1995 and
1996 are derived from consolidated financial statements and notes thereto,
audited by Arthur Andersen LLP, which are not included in this Prospectus.
 

<TABLE>
<CAPTION>
                                  FISCAL YEAR ENDED APRIL 30,
                          --------------------------------------------  PRO FORMA
                            1994     1995     1996     1997     1998     1998(1)
                          -------- -------- -------- -------- -------- -----------
                            (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)   (UNAUDITED)
<S>                       <C>      <C>      <C>      <C>      <C>      <C>
STATEMENT OF OPERATIONS
 DATA:
Total revenues..........  $143,608 $187,888 $230,217 $272,561 $315,025  $315,025
Reimbursed candidate
 expenses...............     7,383    8,938    8,731   12,137   14,470    14,470
                          -------- -------- -------- -------- --------  --------
Net revenues............   136,225  178,950  221,486  260,424  300,555   300,555
Compensation and
 benefits...............    86,745  116,363  140,721  166,854  197,790   177,590
General and
 administrative
 expenses...............    36,419   46,319   64,419   73,005   84,575    84,575
                          -------- -------- -------- -------- --------  --------
Operating profit........    13,061   16,268   16,346   20,565   18,190    38,390
Interest expense........     1,991    2,323    3,683    3,320    4,234     4,234
                          -------- -------- -------- -------- --------  --------
Income before provision
 for income taxes and
 non-controlling
 shareholders'
 interests..............    11,070   13,945   12,663   17,245   13,956    34,156
Provision for income
 taxes..................     4,224    5,322    3,288    6,658    6,687    16,363
Non-controlling
 shareholders'
 interests(2)...........     1,788    2,139    1,579    1,588    2,025     2,205
                          -------- -------- -------- -------- --------  --------
Net income..............  $  5,058 $  6,484 $  7,796 $  8,999 $  5,244  $ 15,588(3)
                          ======== ======== ======== ======== ========  ========
Net income per share
 Basic..................  $   0.24 $   0.30 $   0.38 $   0.42 $   0.24
 Diluted................      0.21     0.27     0.36     0.40     0.23
Weighted average common
 shares
 outstanding
 Basic..................    21,139   21,874   20,390   21,382   21,885
 Diluted................    26,255   25,607   23,019   23,481   23,839
<CAPTION>
                                        AS OF APRIL 30,
                          --------------------------------------------
                            1994     1995     1996     1997     1998
                          -------- -------- -------- -------- --------
                                         (IN THOUSANDS)
<S>                       <C>      <C>      <C>      <C>      <C>      <C>
BALANCE SHEET DATA:
Cash and cash
 equivalents............  $ 16,737 $ 28,244 $ 26,640 $ 25,298 $ 32,358
Working capital.........    18,288   22,735   22,006   20,051   26,573
Total assets............    85,606  110,003  126,341  148,405  176,371
Total long-term debt....     3,687    6,004    3,922    3,206    6,151
Total mandatorily
 redeemable stock and
 shareholders'
 equity.................    29,375   34,149   43,075   50,812   58,754
</TABLE>

    
                                      17

<PAGE>
 
- --------
(1) The unaudited Pro Forma Statement of Operations Data for fiscal 1998 has
    been computed by eliminating from compensation and benefits that portion
    of consultant compensation that exceeds the amount which would have been
    paid had the Company's revised compensation program, effective May
    1, 1998, been in effect for all of fiscal 1998. A pro forma adjustment
    also was made to reflect the increased income tax liability resulting from
    the corresponding increase in income before provision for income taxes,
    using the Company's fiscal 1998 effective tax rate of 48%. Under the
    revised compensation program, consultants and others will receive options
    to purchase shares of Common Stock at the market value at the time of
    grant. Such options will vest in equal installments over five years. See
    "Management's Discussion and Analysis of Financial Condition and Results
    of Operations--Overview."
 
(2) Represents the non-controlling majority shareholders' interest in the
    Company's Mexican subsidiaries and the non-controlling shareholders'
    minority interests in Futurestep.
 
(3) Upon consummation of the Offering, the Company expects to incur non-
    recurring compensation and benefits expenses of (i) $39.8 million from the
    difference between the issuance price of the shares issued by the Company
    in the twelve months preceding the effective date of the Offering and the
    fair market value of the shares at the date of issuance, (ii) $
    million from the payment of additional redemption amounts to certain
    shareholders under the terms of a 1994 stock redemption agreement and
    (iii) $    million from the payment of existing obligations to former
    holders of phantom units and stock appreciation rights. These non-
    recurring compensation and benefits expenses are not reflected in the pro
    forma 1998 statement of operations data and will be reflected in the
    Company's financial statements for the quarter in which the Offering is
    consummated. See "Certain Transactions--Additional Redemption Amounts" and
    Notes 5, 6 and 14 of notes to Consolidated Financial Statements.
 
                                      18

<PAGE>
 

        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                             RESULTS OF OPERATIONS
 
  The Company's objective is to maximize shareholder value by executing a
strategy that focuses on expanding its leadership position as a preferred
global executive search firm by offering a broad range of solutions to address
its clients' management recruitment needs. The following presentation of
management's discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with the Company's
Consolidated Financial Statements and the Notes thereto and other financial
information included herein.
 
OVERVIEW
 
  Korn/Ferry International is the world's largest executive search firm with
71 offices across 41 countries. In fiscal 1998, the Company had $315.0 million
in total revenues and performed approximately 5,870 assignments for more than
3,750 clients. The Company derives substantially all of its revenues from fees
for professional services, which are billed exclusively on a retained basis.
Fees are typically equal to one third of the first year annual cash
compensation for the positions being filled. The Company recognizes fee
revenues as clients are billed and services are substantially rendered. The
Company generally bills its clients in three monthly installments beginning
with the acceptance of a search assignment. In addition, clients typically are
required to reimburse the Company for candidate travel and any other out-of
pocket expenses incurred in the search process. Expenses that are billed to
clients are included in total revenues. That portion of the expense
attributable to candidate expenses is included in reimbursable candidate
expenses and is deducted from total revenues to arrive at net revenues.
 
  The Company's total revenues have grown at a compound annual growth rate of
approximately 22% to $315.0 million in fiscal 1998 from $143.6 million in
fiscal 1994. The principal drivers of this growth in total revenues are an
increase in the number of assignments, consultant productivity, geographic
expansion and selected acquisitions. The number of searches increased 23% to
5,879 in fiscal 1998 from 4,774 in fiscal 1997, and 16% in fiscal 1997 from
4,113 in fiscal 1996. The average number of consultants grew 15% to 357 in
fiscal 1998 from 311 in fiscal 1997, and 15% in fiscal 1997 from 271 in fiscal
1996.
 
  The largest component of the Company's expenses consists of compensation and
benefits paid to its consultants, executive officers and administrative and
support personnel. The Company believes it has been able to attract and retain
some of the most productive executive search consultants in the industry as a
result of its premium reputation, history of consultant equity ownership and
its performance-based compensation program. Currently, most of the Company's
consultants are paid annual compensation consisting of a base salary and a
cash performance bonus, which has historically represented a significant
portion of total cash compensation. Compensation and benefits expense
represented approximately 66% of net revenues in fiscal 1998.
 
  Upon the consummation of the Offering, the Company's employee-shareholders
will continue to own approximately   % of the Company. The employee-
shareholders have agreed to retain at least 50% of their current Common Stock
ownership until the fourth anniversary of the Offering. To align further the
interests of Korn/Ferry's consultants and shareholders, the Company has
revised its compensation programs. In contemplation of the Offering, effective
May 1, 1998, the revised compensation program reduces the amount of
consultants' annual cash performance bonus payments and provides for the
issuance of stock options pursuant to the Company's newly adopted Performance
Award Plan. Under the revised compensation program, consultants and others
will receive options to purchase shares of Common Stock at the market value at
the time of grant. Such options will vest in equal installments over five
years. See "Management--Benefit Plans--Performance Award Plan." Had the
revised compensation program been in effect for all of fiscal 1998,
compensation and benefits expenses reflected in the Company's Consolidated
Financial Statements would have been reduced by approximately $20.2 million.
The Company believes the revised compensation program is among the most
competitive compensation programs in the industry.
 
 
                                      19

<PAGE>
 
  Upon consummation of the Offering, the Company expects to incur non-
recurring compensation charges of (i) $39.8 million representing the
difference between the book value issuance price of shares issued by the
Company in the twelve months preceding the effective date of the Offering and
the fair market value of the shares at the date of the issuance, (ii) $
million from the payment of additional redemption amounts to certain
shareholders under the terms of a 1994 stock redemption agreement and (iii)
$     million from the payment of existing obligations to former holders of
phantom units and stock appreciation rights. These charges will be reflected
in the Company's Consolidated Financial Statements in the quarter in which the
Offering is consummated.
 
  In May 1998, the Company introduced its Internet-based service, Futurestep.
The Company is currently incurring marketing and other start-up costs
associated with Futurestep, which approximated $0.8 million for fiscal 1998.
The Company believes Futurestep will generate operating losses through at
least the end of fiscal 2000. Futurestep plans to expand in the United States
throughout fiscal 1999 and in other selected markets thereafter.
 
RESULTS OF OPERATIONS
 
  The following table summarizes the results of the Company's operations for
each of the past three fiscal years as a percentage of net revenues.

<TABLE>
<CAPTION>
                                                        PERCENTAGE OF NET
                                                             REVENUES
                                                     FISCAL YEAR ENDED APRIL
                                                               30,
                                                     ---------------------------
                                                                       PRO FORMA
                                                     1996  1997  1998   1998(1)
                                                     ----  ----  ----  ---------
   <S>                                               <C>   <C>   <C>   <C>
   Net revenues..................................... 100%  100%  100%     100%
   Compensation and benefits........................  64    64    66       59
   General and administrative expenses..............  29    28    28       28
   Operating profit.................................   7     8     6       13
   Net income.......................................   4     3     2        5
</TABLE>

- --------
(1) Assumes the Company's revised compensation program for consultants had
    been in effect for all of fiscal 1998. See "Selected Financial and Other
    Data."
 
  The Company experienced growth in total revenues in all geographic regions
in both fiscal 1998 and 1997. The following table summarizes the Company's
total revenues by geographic region for each of the past three fiscal years:

<TABLE>
<CAPTION>
                                            FISCAL YEAR ENDED APRIL 30,
                                       ----------------------------------------
                                           1996          1997          1998
                                       ------------  ------------  ------------
                                       DOLLARS   %   DOLLARS   %   DOLLARS   %
                                       -------- ---  -------- ---  -------- ---
                                                   (IN THOUSANDS)
   <S>                                 <C>      <C>  <C>      <C>  <C>      <C>
   North America...................... $111,513  48% $135,192  50% $162,618  52%
   Europe.............................   68,890  30    77,505  28    86,180  27
   Asia/Pacific.......................   29,921  13    34,532  13    34,811  11
   Latin America......................   19,893   9    25,332   9    31,416  10
                                       -------- ---  -------- ---  -------- ---
     Total revenues................... $230,217 100% $272,561 100% $315,025 100%
                                       ======== ===  ======== ===  ======== ===
</TABLE>

 
FISCAL 1998 COMPARED TO FISCAL 1997
 
 Total Revenues
 
  Total revenues increased $42.5 million, or 16%, to $315.0 million for fiscal
1998 from $272.6 million for fiscal 1997. The increase in total revenues was
primarily the result of a 15% increase in the average number of consultants
and a 23% increase in the number of assignments in fiscal 1998.
 
  North American total revenues increased $27.4 million, or 20%, to $162.6
million for fiscal 1998 from $135.2 million for fiscal 1997. In the European
region, total revenues grew 11% to $86.2 million in fiscal 1998 from $77.5
million in fiscal 1997. Asia/Pacific total revenues remained relatively flat
in fiscal 1998 as compared to fiscal 1997 and Latin America total revenues
increased $6.1 million, or 24%, to $31.4 million in fiscal 1998 from $25.3
million in fiscal 1997.
 
                                      20

<PAGE>
 
  Revenue growth in North America and Latin America was attributable to an
increase in the number of assignments and the average fee per engagement. The
growth in revenues also reflects the addition of two offices in North America
and one office in Latin America in fiscal 1998. Total revenues in Europe
reflect increased revenues from advertised recruitment, an increased number of
consultants and the addition of two offices in fiscal 1998. The relatively
constant total revenues for Asia/Pacific from fiscal 1997 to fiscal 1998 was
attributable to the current economic conditions in Asia and include the
addition of one office in fiscal 1998. The Company believes that fiscal 1999
total revenues in Asia/Pacific may continue to decline but the impact on total
revenues is not expected to be material.
 
  Interest income and other income increased $1.1 million to $4.0 million in
fiscal 1998 from $2.9 million in fiscal 1997. The increase was due primarily
to other search related services.
 
 Compensation and Benefits
 
  Compensation and benefits increased $30.9 million, or 19%, to $197.8 million
in fiscal 1998 from $166.9 million in fiscal 1997. This increase was
attributable to a 15% increase in the average number of consultants to 357 in
fiscal 1998 from 311 in fiscal 1997 and an overall increase in compensation
and benefits as a percentage of net revenues. Compensation and benefits as a
percentage of net revenues in fiscal 1998 was 66% as compared to 64% in fiscal
1997. In addition, the Company has incurred an increase in sign-on bonuses
granted to newly hired consultants in fiscal 1998 prior to their generation of
revenues and guaranteed bonuses. This type of compensation is viewed by the
Company as a necessary investment in attracting and hiring the most productive
consultants in the industry.
 
 General and Administrative Expenses
 
  General and administrative expenses consist of occupancy expense associated
with the Company's leased premises, investments in information and technology
infrastructure, marketing and other general office expenses. General and
administrative expenses increased $11.6 million, or 16%, to $84.6 million in
fiscal 1998 from $73.0 million in fiscal 1997. This increase was primarily
related to an increase in occupancy and office expenses, including
depreciation and leasehold amortization expense attributable to the opening of
six new offices in fiscal 1998 as well as the full year of operation of the
five offices opened in fiscal 1997. As a percentage of net revenues, general
and administrative expenses remained constant at 28% for both fiscal 1998 and
fiscal 1997. Technology expenses amounted to $8.4 million in fiscal 1998 as
compared to $7.2 million in fiscal 1997. The Company intends to continue
investing in information systems, other technology infrastructure and in
research activities to support its growth.
 
 Operating Profit
 
  Operating profit includes interest and other income. Operating profit
decreased $2.4 million to $18.2 million in fiscal 1998 from $20.6 million in
fiscal 1997. As a percentage of net revenues, operating profit decreased to 6%
in fiscal 1998 from 8% in fiscal 1997. This decrease was attributable to the
increase in compensation and benefits in fiscal 1998 from fiscal 1997 as
discussed above.
 
 Interest Expense
 
  Interest expense increased $0.9 million to $4.2 million in fiscal 1998 from
$3.3 million in fiscal 1997. Interest expense for this two year period
reflected the Company's increased borrowings under life insurance policies and
the Company's credit facility.
 
 Provision for Income Taxes
 
  The provision for income taxes in both fiscal 1998 and fiscal 1997 was $6.7
million. The effective tax rate was 48% for fiscal 1998 compared to 39% in
fiscal 1997. The increase was due to the increase in cash remittances from
foreign operations that was treated as taxable income in the United States.
The Company has implemented a global cash management strategy to optimize the
timing and extent of future foreign cash remittances. Under existing tax laws,
the Company expects its normalized effective tax rate to be 40% in future
fiscal years.
 
                                      21

<PAGE>
 
 Non-controlling Shareholders' Interests
 
  Non-controlling shareholders' interests are comprised of the non-controlling
shareholders' majority interests in the Company's Mexican subsidiaries and, in
fiscal 1998, the 20% non-controlling shareholders' interests in Futurestep.
Non-controlling shareholders' interests increased $0.4 million to $2.0 million
in fiscal 1998 from $1.6 million in fiscal 1997. This change was primarily due
to an increase in net income generated by the Mexican subsidiaries of
approximately $1.0 million in fiscal 1998.
 
FISCAL 1997 COMPARED TO FISCAL 1996
 
 Total Revenues
 
  Total revenues increased $42.3 million, or 18%, to $272.6 million for fiscal
1997 from $230.2 million for fiscal 1996. The increase in total revenues was
primarily the result of a 15% increase in the average number of consultants
and a 16% increase in the number of assignments in fiscal 1997.
 
  North American total revenues increased $23.7 million, or 21%, to $135.2
million for fiscal 1997 from $111.5 million for fiscal 1996. In the European
region, total revenues grew 13% to $77.5 million in fiscal 1997 from $68.9
million in fiscal 1996. Asia/Pacific total revenues increased $4.6 million, or
15%, to 34.5 million in fiscal 1997 from $29.9 million in fiscal 1996. Latin
America total revenues increased $5.4 million, or 27%, to $25.3 million in
fiscal 1997 from $19.9 million in fiscal 1996. The growth of total revenues in
each region was primarily attributable to an increase in the number of
assignments. The revenues also reflect the addition of two offices in Europe
and three offices in the Asia/Pacific region in fiscal 1997.
 
  Interest income and other income decreased $1.8 million to $2.9 million in
fiscal 1997 from $4.8 million in fiscal 1996. This decrease was primarily
attributable to additional income associated with the earnings and gain on
sale of an interest in an affiliate in fiscal 1996. See "Certain
Transactions--Strategic Compensation Associates."
 
 Compensation and Benefits
 
  Compensation and benefits increased $26.1 million, or 19%, to $166.9 million
in fiscal 1997 from $140.7 million in fiscal 1996. This increase was primarily
attributable to a 15% increase in the average number of consultants of 271 in
fiscal 1996 to 311 in fiscal 1997. As a percentage of net revenues, fiscal
1997 and fiscal 1996 compensation and benefits were constant at 64%.
 
 General and Administrative Expenses
 
  General and administrative expenses increased $8.6 million, or 13%, to $73.0
million in fiscal 1997 from $64.4 million in fiscal 1996. This increase was
primarily related to an increase in occupancy and office expenses, including
depreciation and leasehold amortization expense, attributable to the opening
of five new offices in fiscal 1997. As a percentage of net revenues, general
and administrative expenses decreased from 29% in fiscal 1996 to 28% in fiscal
1997.
 
 Operating Profit
 
  Operating profit increased $4.2 million to $20.6 million in fiscal 1997 from
$16.3 million in fiscal 1996. As a percentage of net revenues, operating
margin increased to 8% in fiscal 1997 from 7% in fiscal 1996. This increase
was primarily attributable to the decrease in general and administrative
expenses as a percent of net revenues in fiscal 1997 as compared to fiscal
1996.
 
 Interest Expense
 
  Interest expense decreased $0.4 million to $3.3 million in fiscal 1997 from
$3.7 million in fiscal 1996. This decrease was primarily attributable to lower
average outstanding principal amounts on notes payable to shareholders that
more than offset the effect of higher borrowings under life insurance
policies.
 
 Provision for Income Taxes
 
  The provision for income taxes increased $3.4 million to $6.7 million in
fiscal 1997 from $3.3 million in fiscal 1996. The effective tax rate was 39%
for fiscal 1997 as compared to 26% in fiscal 1996. The lower effective tax
rate in fiscal 1996 was due primarily to an increase in foreign tax credits
that resulted in a reduction in the income tax provision of $1.5 million.
 
                                      22

<PAGE>
 
 Non-controlling Shareholders' Interests
 
  Non-controlling shareholder interests remained unchanged at $1.6 million in
fiscal 1997 and fiscal 1996.
 
LIQUIDITY AND CAPITAL RESOURCES
 
  The following table presents selected financial information as of the end of
the past three fiscal years:
 

<TABLE>
<CAPTION>
                                                             AS OF APRIL 30,
                                                         -----------------------
                                                          1996    1997    1998
                                                         ------- ------- -------
                                                             (IN THOUSANDS)
   <S>                                                   <C>     <C>     <C>
   Working capital...................................... $22,006 $20,051 $26,573
   Line of credit.......................................      --   3,000      --
   Total long-term debt, net of current maturities......   3,922   3,206   6,151
   Borrowings under life insurance policies.............  30,305  32,278  37,638
</TABLE>

 
  The Company finances operating expenditures primarily through cash flows
from operations. During fiscal 1996, 1997 and 1998, cash provided by operating
activities was $8.3 million, $10.2 million and $18.5 million, respectively. As
of April 30, 1998, the Company maintained a line of credit in the approximate
amount of $11 million. Outstanding borrowings under this facility bear
interest at various rates based on the bank's prime lending rate less 0.5%. In
June 1998, availability under the Company's credit facility was increased to
$16 million to provide additional liquidity.
 
  Capital expenditures totaled approximately $8.1 million, $8.5 million, and
$9.9 million for fiscal 1996, 1997 and 1998, respectively. These expenditures
consisted primarily of upgrades to information systems, purchases of office
equipment and leasehold improvements. The Company expects to maintain capital
expenditures in fiscal 1999 at the fiscal 1998 level to support office
expansion and technology investments. In addition, the Company plans to
install a new financial system in calendar year 1999 at an expected cost of
approximately $10 million.
 
  Included in cash flows from investing activities are premiums paid on
Company-owned life insurance ("COLI") contracts. The Company purchases COLI
contracts to provide a funding vehicle for anticipated payments due under its
deferred executive compensation programs. Premiums on these COLI contracts
were $8.6 million, $7.9 million and $12.4 million in fiscal 1996, 1997 and
1998, respectively. Generally, the Company borrows against the cash surrender
value of the COLI contracts to fund COLI premium payments. In fiscal 1996, the
Company invested $5.3 million of cash proceeds from borrowings against COLI
contracts in excess of premium payments in guaranteed investment contracts. In
fiscal 1997 and 1998, net redemptions of guaranteed investment contracts were
$1.8 million and $1.9 million respectively.
 
  Cash provided by financing activities was approximately $9.2 million during
fiscal 1998, which included borrowings under COLI contracts of $5.4 million,
proceeds from sales of Common Stock to newly hired and promoted consultants
and payments on the related promissory notes of $6.6 million. During fiscal
1997, cash provided by financing activities was approximately $4.4 million,
consisting primarily of proceeds from sales of Common Stock to newly hired and
promoted consultants and payments on the related promissory notes of
$5.6 million, repurchases of Common Stock and payments on the related notes
payable of $3.7 million and borrowings against COLI contracts of $2.0 million.
During fiscal 1996, cash of $13.6 million was provided by financing activities
consisting principally of proceeds from borrowings under COLI contracts of
$12.9 million. In fiscal 1996, issuances and purchases of Common Stock and
payments on the related notes receivable and notes payable were $5.7 million
and $2.5 million, respectively.
 
  Borrowings under life insurance policies were $30.3 million, $32.3 million
and $37.6 million as of April 30, 1996, 1997 and 1998. Such borrowings are
secured by the cash surrender value of the life insurance policies, do not
require principal payments and bear interest at various variable rates.
 
                                      23

<PAGE>
 
QUARTERLY RESULTS
 
  The following table sets forth certain unaudited statement of operations
data for the quarters in the years ended April 30, 1997 and 1998. The
unaudited quarterly information has been prepared on the same basis as the
annual information and, in management's opinion, includes all adjustments
necessary to present fairly the information for the quarters presented.
 

<TABLE>
<CAPTION>
                   1997 FISCAL QUARTERS ENDED      1998 FISCAL QUARTERS ENDED
                 ------------------------------- -------------------------------
                 JULY 31 OCT. 31 JAN. 31 APR. 30 JULY 31 OCT. 31 JAN. 31 APR. 30
                 ------- ------- ------- ------- ------- ------- ------- -------
                                         (IN THOUSANDS)
<S>              <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
Total revenues.  $57,407 $68,331 $71,902 $74,921 $70,228 $76,808 $82,584 $85,405
Net income.....    1,495   2,343   2,354   2,807   1,089   1,275   1,506   1,374
</TABLE>

 
 Recently Issued Accounting Standards
 
  During 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosures
about Segments of an Enterprise and Related Information," which requires
companies to report financial and descriptive information about its reportable
operating segments in the interim and annual financial statements. It is
effective for annual periods beginning after December 15, 1997 and will be
adopted by the Company in fiscal 1999. It is not expected that the adoption of
this standard will have any impact on the consolidated financial statements
but may require additional footnote disclosure.
 
  During 1998, the FASB issued SFAS No. 132, "Employers' Disclosure about
Pensions and Other Postretirement Benefits an amendment to FASB Statements No.
87, 88 and 106," which revises employers' disclosure requirements for pension
and other postretirement plans. It does not change the measurement or
recognition of costs and benefits provided by those plans. The standard is
effective for fiscal years beginning after December 15, 1997, although earlier
application is encouraged. Disclosures for earlier periods have been restated
for comparative purposes. Adoption of this pronouncement is reflected in the
accompanying consolidated financial statements (See Note 8).
 
  During 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and for Hedging Activities," which establishes new standards for
reporting derivative and hedging information. The standard is effective for
periods beginning after June 15, 1999 and will be adopted by the Company as of
May 1, 2000. It is not expected that the adoption of this standard will have
any impact on the consolidated financial statements nor require additional
footnote disclosure since the Company does not currently utilize derivative
instruments or participate in structured hedging activities.
 
                                      24

<PAGE>
 

 
                                  BUSINESS
 
GENERAL
 
  Korn/Ferry International is the world's largest executive search firm and
has the broadest global presence in the industry with 384 consultants based in
71 offices across 41 countries. The Company's premier global reputation,
strong client relationships, senior-level search expertise, innovation and
technological leadership provide Korn/Ferry with distinct competitive
advantages. The Company has ranked first in revenues among the world's
executive search firms for each of the last 20 years and, since fiscal 1993,
has generated compound annual revenue growth of 23%. In fiscal 1998, the
Company had total revenues of $315.0 million and performed over 5,870
assignments for more than 3,750 clients, including approximately 43% of the
Fortune 500. Korn/Ferry's clients are many of the world's largest and most
prestigious public and private companies, middle-market and emerging growth
companies as well as governmental and not-for-profit organizations. The
Company's clients include Atlantic Richfield Company, Chase Manhattan
Corporation, Cemex, S.A., Diageo plc, Ford Motor Company, General Electric
Company, Lucent Technologies Incorporated, Monsanto Company and United
Technologies Corporation. Almost half of the searches performed by the Company
in fiscal 1998 were for board level, chief executive and other senior
executive officer positions. The Company has established strong client
loyalty; more than 80% of the search assignments it performed in fiscal 1998
were on behalf of clients for whom it had conducted multiple assignments over
the last three fiscal years.
 
  The Company believes it is the leading innovator in the executive search
industry and the most forward-thinking in addressing the fundamental
transformation of the marketplace caused by the combined impact of advanced
technology and the Internet. In anticipation of these changing industry
dynamics, and in response to clients' demand for middle-management recruitment
services, the Company recently established Futurestep, its Internet-based
search service. Futurestep combines Korn/Ferry's search expertise with
exclusive candidate assessment tools and the reach of the Internet to
accelerate the recruitment of candidates for middle-management positions. In
the three months following Futurestep's introduction in southern California,
approximately 23,600 candidates have completed a detailed on-line profile with
Futurestep. The Company and Futurestep have an exclusive alliance with The
Wall Street Journal, the first of its kind in the industry. This alliance
provides preferred print and on-line access to The Wall Street Journal's
readers, advertisers and on-line users. The Company believes its investments
in technology-based recruitment will enable it to expand its share of the
middle-management recruitment market and to strengthen its leading industry
position as new methodologies begin to be utilized in senior-level search.
 
  Korn/Ferry is also an established and respected source of management
research. For example, the Company's Annual Board of Directors Survey of the
Fortune 1000, now in its 25th year, reports on the structure, policy and
trends in America's corporate boardrooms and is recognized as one of the most
comprehensive, long-term studies of boards available. The Company publishes
similar surveys in Australasia and Europe.
 
EXECUTIVE SEARCH INDUSTRY
 
 Overview
 
  According to industry sources, worldwide executive search revenue grew at a
20% compound annual growth rate, from approximately $3.5 billion in 1993 to
$7.3 billion in 1997. The executive search industry is separated into two
distinct markets: retained search firms and contingency search firms.
 
  Retained search firms generally concentrate on searches for positions with
annual compensation of $150,000 or more for large public and private
corporations, government agencies, educational organizations and high growth
start-up companies. Retained search firms also have the capability to provide
their clients with local and international knowledge of the managerial market
within their client's industry, as well as a sophisticated network of relevant
industry contacts. Retained search firms typically charge a fee for their
services equal to approximately one-third of the annual cash compensation for
the position being filled and bill for their services in three installments
irrespective of whether a position has been filled.
 
                                      25

<PAGE>
 
  Contingency search firms generally concentrate on searches for positions
with annual compensation of $150,000 or less. These firms are most commonly
hired to fill middle and lower management positions of small to medium-sized
companies. Unlike retained search firms, contingency search firms are
compensated only when a position is filled. Accordingly, revenues generated by
a contingency search firm typically are more volatile than revenues generated
by a retained search firm. For this reason, contingency search firms often
cannot invest as many resources as retained search firms in a search
assignment. Contingency search firms typically charge a fee for their services
equal to approximately one-third of the annual cash compensation for the
position being filled.
 
  The executive search industry is highly fragmented, consisting of
approximately 4,000 retained and contingency search firms in 1997. According
to Kennedy Information LLC, the ten largest retained search firms accounted
for only 11% of the global search industry in 1997. In 1997, more than 80% of
retained search firms and approximately 90% of contingency search firms
generated less than $2 million each in annual revenues.
 
 Industry Trends
 
  The Company believes that a number of favorable trends will contribute to
the continued growth of the executive search industry, including: (i) the
globalization of business; (ii) the demand for managers with broader skills;
(iii) the increasing outsourcing of recruitment functions; and (iv) the use of
advanced technology to accelerate the identification and assessment of
candidates. The Company believes it is well positioned relative to these key
industry trends.
 
  GLOBALIZATION OF BUSINESS. As the world markets continue to integrate into
one global economy, more companies are required to supplement internal talent
with experienced senior executives who can operate effectively in a global
economy. The rapidly changing and competitive environment increasingly
challenges multinational and local companies to identify qualified executives
with the right combination of skills, experience and cultural compatibility.
This globalization of business, including the expansion in new markets, has
led companies to look beyond their particular region for management talent and
to identify local executives in the regions where they are doing business.
 
  Korn/Ferry's Advantage. With 71 offices in 41 countries, the Company is well
positioned to benefit from the growing management demands of companies
worldwide. To address its clients' global needs, the Company has opened 16 new
offices in the last three fiscal years, including those in Athens, Austin,
Beijing, Copenhagen, Istanbul, Lima, Philadelphia, Rio de Janeiro, Seoul,
Shanghai, Tysons Corner and Wellington. By leveraging its extensive knowledge
of the growing pool of local talent in each of the regions in which it
operates, the Company is able to identify and place qualified candidates
capable of effectively adapting to the local culture and successfully
furthering the client's objectives. In addition, with the geographic expansion
of advertised recruitment and Futurestep, the Company is leveraging its global
network and search capabilities to meet the management recruitment needs of
existing and potential clients.
 
  DEMAND FOR MANAGERS WITH BROADER SKILLS. The Company's recent global study,
Developing Leadership for the 21st Century, indicates that companies are
seeking broader qualifications for executive positions. In many instances,
these candidates cannot be found within a client's organization despite
training, rotation programs and succession planning. Thus, the Company expects
that the executive search business will continue to grow as companies
increasingly turn to executive search firms to identify qualified executives.
 
  Korn/Ferry's Advantage. To address client demand for managers with broader
qualifications, the Company employs an integrated team approach to complete
its searches. For each assignment, the Company is able to draw on its
consultants' expertise in specific regions, industries and functions. The
Company's specialty practice groups include advanced technology, consumer,
energy, entertainment, fashion/retail, financial services healthcare,
industrial, not-for-profit/associations/education and professional services.
Certain consultants also have in-depth expertise in searches for functional
positions, such as members of boards of directors, chief executive officers,
chief financial officers and chief information officers.
 
                                      26

<PAGE>
 
  INCREASING OUTSOURCING OF RECRUITMENT FUNCTIONS. Recent economic factors are
requiring companies to focus on core competencies and to outsource recruitment
functions to providers, such as Korn/Ferry, who can efficiently provide high
quality recruitment services. Moreover, the trend towards globalization and
the current shortage of qualified management-level candidates have made
identifying and recruiting exceptional candidates more difficult. Companies
are increasingly relying on experienced global executive search firms to
address their management recruitment needs. By hiring executive search firms,
companies can expect to: (i) access a diverse and highly qualified field of
candidates on an as-needed basis; (ii) reduce the costs required to maintain
and train a recruiting department in a rapidly changing industry; (iii)
benefit from the most updated information on the industry and specific
geographic markets; (iv) access leading search technology and software; and
(v) maintain management focus on strategic business issues.
 
  Korn/Ferry's Advantage. The Company believes that its premier reputation,
leading global presence, strong client relationships, extensive senior-level
search expertise, innovation and technological leadership position the Company
well to benefit from the growth in outsourcing of recruitment functions. In
addition, by providing senior-level to middle-management search services, the
Company seeks to become a preferred provider of recruitment services for its
clients across all levels of management. This goal is consistent with many
clients' desire to reduce the number of vendors they have and to deepen
relations with their preferred vendors. In order to serve its clients' global
management search needs, the Company maintains one of the largest, most
diverse and technologically innovative global databases of highly qualified
candidates and provides geographic, industry and functional expertise.
 
  USE OF ADVANCED TECHNOLOGY. Technology is having an increasing impact on the
search industry. Global systems and the ability to create comprehensive
worldwide databases are fundamentally changing the search process and moving
the emphasis of the search business from candidate identification to candidate
assessment and placement. In addition, the Internet is creating efficient ways
to identify and recruit from the broad middle-management market, with Internet
technology expected to have applicability to senior-level searches in the near
future. At the same time, new barriers to entry into the executive search
industry are being created as these investments in information technology
become critical to serve clients' needs globally.
 
  Korn/Ferry's Advantage. Korn/Ferry has developed a state-of-the-art
technology infrastructure, including a worldwide networked system and its
proprietary software, Searcher, to increase the speed and quality of its
service to its clients around the world. The Company's worldwide databases
contain the profiles of over 1,000,000 executives and over 310,000 companies,
allowing consultants to access a wide range of potential candidates globally.
To capture the potential of the Internet, Korn/Ferry introduced Futurestep,
which combines the reach of the Internet with the Company's search expertise
and exclusive candidate assessment tools to evaluate and recruit executives
for middle-management positions. Through Futurestep, the Company seeks to pre-
build and update a large candidate inventory and thereby reduce the time
required to perform a search. In addition, Futurestep's assessment tools can
quickly and accurately evaluate a candidate's credentials and likelihood of
integrating into a client's culture. The Company believes that many of
Futurestep's assessment tools and Internet applications will have
applicability to its senior-level search services.
 
                                      27

<PAGE>
 
GROWTH STRATEGY
 
  Korn/Ferry's objective is to expand its leadership position as a preferred
global executive search firm by offering a broad range of solutions to address
its clients' management recruitment needs. The principal elements of the
Company's strategy include: (i) leverage leadership in senior-level search;
(ii) expand into the middle-management market; (iii) pursue strategic
acquisitions; (iv) reinforce technological leadership; and (v) add new
complementary services.
 
 Leverage Leadership in Senior-Level Search
 
  The Company's leadership in senior-level search enables it to grow its
business by increasing the number of search assignments it handles for
existing clients. The Company also believes that there are significant
opportunities to develop new clients by aggressively marketing its proven
global search expertise. The Company has adopted a structured approach to
develop and build relationships with new and existing clients. Through its ten
specialty practice groups and broad global presence, the Company maintains an
in-depth understanding of the market conditions and strategic and management
issues facing clients. Annually, the Company's regions, offices, individual
consultants and specialty practice groups identify existing and prospective
clients with substantial recurring needs for executive search services. The
Company assembles teams of search consultants based on geographic, industry
and functional expertise to focus on these accounts. The Company has also
developed a number of major relationships with prestigious multinational
companies and, in fiscal 1998, completed an average of 34 search assignments
each for 20 major long-standing accounts.
 
 Expand into the Middle-Management Market
 
  In response to the growing client demand for middle-management recruitment,
the Company is expanding its services to address this market. With its strong
senior-level client relationships, advertised recruitment services and
Futurestep, Korn/Ferry is well positioned to meet its clients' middle-
management recruitment needs effectively and efficiently. By moving
aggressively into this segment of the market, the Company believes it can
strengthen its relationships with its existing clients, develop new clients
and gain a competitive advantage in marketing complementary services.
 
 Pursue Strategic Acquisitions
 
  The Company will continue to make selected acquisitions that support its
growth strategy, enhance its presence in key markets or otherwise complement
its competitive strengths. The executive search industry is highly fragmented
and consists of approximately 4,000 firms, the ten largest of which accounted
for only 11% of the global executive search industry revenues in 1997. As the
largest global executive search firm, the Company believes it has the
resources to lead consolidation within the highly fragmented search industry.
Since fiscal 1993, the Company has completed five acquisitions, including most
recently the acquisition of Didier Vuchot & Associates, which enhanced
Korn/Ferry's market position in France.
 
 Reinforce Technological Leadership
 
  The Company has invested more than $25 million over the past two fiscal
years in the development of an advanced global technology infrastructure to
increase the speed and quality of service to its clients. The Company's
systems represent a strong competitive advantage, allowing its consultants to
access information and communicate effectively with each other. As the
executive search industry continues to grow and as more clients seek the
assistance of search firms to fill middle-management positions, an advanced
technology infrastructure has become an indispensable element of the search
business.
 
                                      28

<PAGE>
 
 Add New Complementary Services
 
  The Company seeks to add new complementary services in response to specific
client needs. For example, the Company developed Futurestep and has expanded
its advertised recruitment services to address its clients' growing demand for
effective middle-management recruitment. In addition, the Company is exploring
complementary business opportunities, which could include recruitment
outsourcing and human resources consulting. As attractive business
opportunities are identified, the Company may capitalize on these
opportunities through internal development, joint ventures or selected
acquisitions.
 
SERVICES
 
 Overview
 
  Korn/Ferry provides executive search services exclusively on a retained
basis and addresses the global recruitment needs of its clients at all levels
of management. The Company offers the following three primary services: (i)
senior-level search; (ii) advertised recruitment search; and (iii) Internet-
based search.
 
 Senior-Level Search Services
 
  The Company's search services are typically used to fill senior-level
positions, such as boards of directors, chief executive officers and other
senior executive officers. Once the Company is retained by a client to conduct
an executive search, the Company assembles a team comprised of consultants
with geographic, industry and functional expertise. Korn/Ferry's search
consultants serve as management advisors and work closely with the client in
identifying, assessing and placing a qualified candidate. In fiscal 1998, the
Company performed over 5,400 senior-level search assignments.
 
  The Company uses a search methodology that has been developed through many
years of experience in senior-level search. The Company emphasizes a close
working relationship with the client and a comprehensive understanding of the
client's business issues, strategy and culture, as well as an in-depth
knowledge of the skills necessary to succeed within a client's organization.
Initially, the search team consults with the client to better understand its
history, culture, structure, expectations, challenges, future directions and
operations. In these meetings, the team identifies the specific needs of the
client and develops a profile of an ideal candidate for the position. Early in
the process, the team also works with the client to develop the general
parameters of a compensation package that will attract high quality
candidates.
 
  Once the position is defined, the research team identifies, through the use
of the Company's proprietary databases and a number of key technology-based
information sources, companies that are in related industries facing similar
challenges and issues and that possess operating characteristics similar to
those of the client. In addition, the team consults with its established
network of sources to help identify individuals with the right backgrounds and
personal abilities. These sources are a critical element in assessing the
marketplace. The original list of candidates is carefully screened through
phone interviews, video conferences or in-person meetings with the candidates.
The client is then presented with four to five qualified candidates to
interview. The Company, sometimes with the assistance of an independent third
party, conducts reference checks throughout the process.
 
  Usually, the finalists meet with the client for a second and possibly a
third round of discussions. At this point, the compensation package for each
will have been discussed in detail so that there is confidence that offers
will be accepted. Generally, the search consultants will participate in the
negotiations until a final offer is made and accepted. Throughout the process,
ongoing communication with the client is critical to keep client management
apprised of progress.
 
  Every search that the Company performs is backed by a one-year guarantee. If
the executive who has been recruited does not perform satisfactorily and
ceases to be employed by the client within one year, the Company will repeat
the search for no additional fee.
 
                                      29

<PAGE>
 
 Advertised Recruitment Search Services
 
  The Company's advertised recruitment search service uses print advertising
in targeted publications to attract the most qualified candidates for
management positions at all levels. Advertised recruitment search is
appropriate when clients seek numerous qualified candidates from a broad
universe of industries. The Company introduced its advertised recruitment
search service in 1991, and currently offers it in 16 offices in Europe,
Asia/Pacific and Latin America. In fiscal 1998, advertised recruitment was
used for approximately 455 search assignments. The Company believes there are
opportunities to expand the use of advertised recruitment in the U.S. and
launched the service there in August 1998.
 
  At the beginning of each advertised recruitment search engagement, teams
comprised of consultants with specialized expertise in the appropriate
industry and function gather information on the client's business, culture and
the open position. The team creates the advertising campaign and advises the
client on the most appropriate media for the campaign. Once the advertisement
is finalized and published, the team reviews and screens all resumes received
by the client and interviews qualified candidates. Based on these interviews
and feedback from both the client and the candidates, the team produces a
short list of top candidates for the client and prepares and assembles
detailed profiles and evaluation reports on each candidate. Consultants will
advise and consult with clients throughout the negotiation process and provide
input on competitive salary packages. Finally, the consultants will conduct
final reference checks and follow up with both the client and the candidate to
ensure a smooth transition of the hired candidate into the client's
organization.
 
 Internet-Based Search Services
 
  Futurestep, operated through a subsidiary of the Company, combines the
Company's extensive senior-level search expertise with exclusive candidate
assessment tools and the reach of the Internet to recruit candidates for
middle-management positions. Futurestep is fundamentally different from other
Internet-based job placement services, which do not employ Futurestep's
sophisticated filtering process or permit search professionals to interact
with candidates and clients. One of the Company's co-investors in Futurestep
is bill gross' idealab!, which has agreed to purchase an 11% interest in
Futurestep.
 
  Futurestep recognizes that loss in productivity as a result of middle-
management vacancies is significant. By pre-building an inventory of qualified
candidates prior to receiving a client assignment and by keeping that
inventory current, Futurestep can quickly generate a select list of
candidates, which should significantly reduce search cycle time.
 
  To register with Futurestep, candidates complete an on-line assessment
profile that details their work history, management experience, preferred
career path and management style. The assessment tools, which Futurestep has
licensed on an exclusive basis for executive search, have been validated by a
cross-section of senior managers over ten years and give reliable feedback on
decision-making style, communication style, cultural preferences and career
and personal motivation. Futurestep clients complete a similar profile to
determine company culture and the type of manager who will succeed in the open
position. The Company believes that cultural compatibility is critical to the
successful placement of a candidate and that these proprietary tools may have
applicability to other areas of executive search. To encourage candidates to
register with Futurestep, Futurestep provides career management feedback on a
candidate's salary potential, leadership skills, the industries and functions
for which the candidate is most qualified and the most compatible corporate
culture.
 
  When Futurestep receives a client assignment, a preliminary list of
candidates is selected from the Futurestep database and the most qualified are
called by a Futurestep search consultant for further evaluation. The
consultant schedules a 45-minute to one-hour video interview with selected
candidates. The consultant then identifies the top candidates and provides the
client with excerpts of the video-taped interviews and other background
information for comparison. The Futurestep consultant typically organizes the
client/candidate interviews, and advises and consults throughout the
negotiation process to structure the final offer package and position
responsibilities.
 
                                      30

<PAGE>
 
  Confidentiality for both candidates and clients is paramount. When
candidates register with Futurestep, they do not know who the Futurestep
clients are or which positions are available. Companies do not have access to
candidate information until a candidate gives explicit permission to release
the information to the client when contacted by a Futurestep consultant.
 
  The Company and Futurestep have an exclusive alliance with The Wall Street
Journal, the first of its kind in the industry. Companies that advertise
positions through The Wall Street Journal have the option of retaining
Futurestep for services ranging from resume evaluation to complete management
of the recruitment process. Futurestep candidates have access to career-
management advice through direct links with The Wall Street Journal's website,
and candidates applying for positions advertised through The Wall Street
Journal can register with Futurestep via direct links to Futurestep's website.
 
  The alliance, which has an initial term through June 2001 with options for
renewal, provides the Company with preferred advertising rates and requires
the purchase of a minimum amount of print and on-line advertising. For each
company and candidate referred to Futurestep by The Wall Street Journal,
Futurestep is obligated to pay to The Wall Street Journal a small percentage
of its fee. The Wall Street Journal, the Company and Futurestep have agreed
not to promote competing services during the term of the agreement.
 
ORGANIZATION
 
 Global Presence
 
  The Company has 71 offices across 41 countries, organized into the following
regions: North America, Europe, Asia/Pacific and Latin America. The Company's
offices are staffed with consultants who possess an understanding of the local
market, culture and management resources along with knowledge of the global
issues facing clients.
 
  The following table provides information relating to each region:
 

<TABLE>
<CAPTION>
                                                                     FISCAL 1998
                                        FISCAL 1998     NUMBER OF      AVERAGE
                                          REVENUES    OFFICES AS OF   NUMBER OF
   REGION                               (IN MILLIONS) APRIL 30, 1998 CONSULTANTS
   ------                               ------------  -------------- -----------
   <S>                                  <C>           <C>            <C>
   North America.......................    $162.6           20           167
   Europe..............................      86.2           28           108
   Asia/Pacific........................      34.8           14            46
   Latin America.......................      31.4            9            28
</TABLE>

 
  North America. The Company opened its first office in Los Angeles in 1969,
and currently has 20 offices throughout the U.S. and Canada. The North America
region has grown from $75.8 million in revenues in fiscal 1994 to $162.6
million in fiscal 1998. The Company has been ranked first among Hunt-Scanlon's
top North American executive search firms since the statistics were first
published in 1990. In fiscal 1998, the Company handled over 2,100 assignments
in this region, with an average number of 167 consultants, including 112 vice
presidents. In fiscal 1998, the firm opened new offices in Austin and Tysons
Corner to focus on the high-growth companies located in these areas.
 
  Europe. The Company opened its first European office in London in 1972 and
currently has 28 offices throughout the region. The region has grown from
$37.9 million in revenues in fiscal 1994 to $86.2 million in fiscal 1998. The
Company handled over 1,900 assignments in fiscal 1998 in this region, with an
average number of 108 consultants, including 72 vice presidents. In fiscal
1998, the region added new offices in Helsinki and Copenhagen. In fiscal 1999,
the Company acquired Didier Vuchot & Associates, enhancing Korn/Ferry's market
position in France.
 
  Asia/Pacific. The Company opened its first Asia/Pacific office in Tokyo in
1973, and has built a 14-office network throughout the region, including the
opening in fiscal 1997 of an office in Seoul. The region has grown
 
                                      31

<PAGE>
 
from $13.9 million in revenues in fiscal 1994 to $34.8 million in fiscal 1998.
The Company handled over 740 assignments in fiscal 1998 in this region, with
an average number of 46 consultants, including 30 vice presidents. The latest
Economist Intelligence Unit report on Executive Search in Asia and Australia
describes Korn/Ferry as the leading executive search firm in the region.
 
  Latin America. The Company entered Latin America through its 1977
acquisition of a 49% interest in Hazzard & Associates, and the Company
continues to conduct its operations in Mexico through three subsidiaries in
which the Company holds a controlling minority interest. As of April 30, 1998,
the Company operated a network of nine offices covering more than 20 countries
in Latin America. The region has grown from $16.0 million in revenues in
fiscal 1994 to $31.4 million in fiscal 1998. The Company handled over
925 assignments in fiscal 1998 in this region, with an average number of 28
consultants, including 17 vice presidents. In fiscal 1997, the Company opened
a new office in Rio de Janeiro. According to the Economist Intelligence Unit's
latest report on Executive Search in the Americas, Korn/Ferry dominates the
executive search market in Latin America.
 
 Industry Specialization
 
  In 1970, the Company was the first executive search firm to establish
specialty practices to serve specific industries and markets and has continued
to expand the range of its specialty practices. The specialty practices
consist of consultants throughout the regions with the knowledge and contacts
many have built during successful careers in the same industries and markets.
Consultants in the Company's ten specialty practice groups bring an in-depth
understanding of the market conditions and strategic and management issues
faced by clients within the specific industry. The Company plans to continue
to expand its specialized expertise through internal development, strategic
hiring in targeted growth areas and selected acquisitions.
 
         PERCENTAGE OF FISCAL 1998 REVENUES BY INDUSTRY SPECIALIZATION
 

<TABLE>
       <S>                                                                   <C>
       Financial Services................................................... 21%
       Industrial........................................................... 15%
       Advanced Technology.................................................. 15%
       Consumer............................................................. 15%
       Healthcare........................................................... 11%
       Professional Services................................................  7%
       Fashion/Retail.......................................................  6%
       Not-for-Profit/Associations/Education................................  4%
       Energy...............................................................  3%
       Entertainment........................................................  3%
</TABLE>

 
 Functional Expertise
 
  The Company has organized centers of functional expertise, made up of
consultants who have extensive backgrounds in placing executives in certain
functions, such as boards of directors, chief executive officers and other
senior executive and financial officers. The Company's board services
practice, for example, was first established in 1972 to help clients assemble
an effective, knowledgeable and cohesive board of directors to meet the
growing demands for accountability and more effective board performance. The
shortage of experienced directors, the tightening of governance policies and
the desire on the part of companies to broaden their board bases are making it
more difficult to identify and recruit directors with the needed skills. The
Company has established significant expertise in this area and has built a
proprietary database with the names and backgrounds of all the Fortune 1000
directors, plus a significant number of middle-market and high-growth company
board members, to help support board searches. Members of functional groups
are located throughout the Company's regions and across its specialty practice
groups.
 
                                      32

<PAGE>
 
          PERCENTAGE OF FISCAL 1998 REVENUES BY FUNCTIONAL EXPERTISE
 

<TABLE>
       <S>                                                                   <C>
       Board Level/CEO/Senior Executive and Financial Management............ 44%
       Marketing and Sales.................................................. 25%
       Finance and Control.................................................. 11%
       Manufacturing/Engineering/Research and Development/Technology........  9%
       Human Resources and Administration...................................  7%
       Information Systems..................................................  4%
</TABLE>

 
MARKETING
 
  As the world's largest executive search firm, the Korn/Ferry International
brand name is widely recognized at the senior executive level. The Company has
traditionally marketed its services through its offices, regions and specialty
practices. Futurestep markets its services to existing and prospective
Korn/Ferry clients as well as through its alliance with The Wall Street
Journal. To support Futurestep, which requires extensive marketing to attract
qualified candidates to register in its database, the Company has launched a
major campaign in southern California, including print, radio, television and
on-line advertising and direct mail. The Company intends to replicate this
campaign in other locations as Futurestep expands geographically.
 
  The managers of the Company's offices, regions and specialty practices are
responsible for profitability, with their compensation tied to meeting
budgetary goals. Since one of the best marketing tools in a consultative
business like executive search is referral, these managers are also
accountable for maintaining the quality of the service to clients by making
sure that each assignment meets the standards and practices set by the
Company. Repeat business and referrals from satisfied clients and candidates
are one of the primary sources of new business.
 
  Consultants are also visible and active in their local communities and in
key trade and business associations. The Company has implemented an aggressive
global business development strategy. Specialty practice groups, regions,
offices and individual consultants identify existing and prospective clients
with substantial recurring search needs. Teams, representing local market,
industry and functional expertise, are charged with creating and implementing
strategies for developing business with targeted companies and organizations.
 
  The Company develops a large number of proprietary research reports in
conjunction with leading universities and prestigious research institutions.
These reports deal in-depth with a wide array of issues from corporate
governance to global leadership to provide clients with thoughtful,
provocative material that identifies current trends and permits clients to
benchmark their practices against those of other companies. The Company also
promotes its understanding of the industry, business and management challenges
facing companies today by sponsoring major conferences and forums, such as its
partnership with the World Economic Forum at Davos, speeches and presentations
before major industry and management groups, roundtable discussions that bring
senior executives together to focus on issues of interest, mailings of its
studies and reports to selected companies and interviews with the major
business and trade publications.
 
  Executive search firms frequently refrain from recruiting employees of a
client and possibly client divisions and affiliations for a specified period
of time, typically extending for one to two years following the last
assignment performed. The Company carefully manages the off-limits conditions
to which it may agree with any client, limits the number of off-limits global
agreements to a few major account relationships, and carefully defines the
scope of any such agreement. Over the past few years, the executive recruiting
profession as a whole has been narrowing the scope and shortening the
timeframe of these agreements. See "Risk Factors--Off-Limits Agreements."
 
                                      33

<PAGE>
 
PROFESSIONAL STAFF
 
  The Company has 263 vice presidents, 121 principals, 226 senior associates
and associates and 195 researchers. The Company believes the high caliber and
motivation of its professionals are critical factors to its success. The
Company further believes it has been able to attract and retain some of the
most productive search consultants (vice presidents and principals) as a
result of its premier reputation, history of consultant equity ownership and
its performance-based compensation program. The Company's vice presidents have
an average of seven years' experience with the Company, 12 years in the search
industry and 13 years in other industries. For a discussion of ownership of
Common Stock by, and compensation of, such consultants, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Overview" and "Management--Liquidity Schedule."
 
  Senior associates, associates and researchers support the efforts of the
vice presidents and principals with candidate sourcing and identification, but
do not generally lead an assignment. The Company has training and professional
development programs and a high rate of internal promotions. Over the past
three fiscal years, 55 associates have been promoted to principal and 68
principals have become vice presidents. Promotion to vice president is based
on a variety of factors, including demonstrated superior execution and
business development skills, the ability to identify solutions to complex
issues, personal and professional ethics, a thorough understanding of the
market, how to retain clients and how to develop repeat business, and the
ability to help build effective teams. In addition, the Company has a program
of recruiting experienced professionals into the Company. In fiscal 1998, the
Company hired 27 vice presidents and 38 principals, most with either previous
search backgrounds or strong specialty expertise.
 
  The Company has not been a party to a collective bargaining agreement and
considers relations with its employees to be good.
 
COMPETITION
 
  Korn/Ferry International is the largest executive search firm in the world.
Other large executive search firms include Heidrick & Struggles International,
Inc., SpencerStuart & Associates and Russell Reynolds Associates. These firms
are the Company's primary competitors, although the Company and each of these
firms also competes against smaller firms that specialize in specific
regional, industry or functional searches. The Company believes its brand
name, global network, prestigious client list, strong specialty practices and
quality of service are widely recognized worldwide.
 
  The executive search industry is comprised of approximately 4,000 retained
and contingency search firms. According to industry sources, the top ten
search firms represent only 11% of the industry. To date there have been few
barriers to entry in the executive search business, which explains in part the
highly fragmented nature of the industry. However, the globalization of world
economies, combined with the increased availability and application of
sophisticated technologies and comprehensive databases, will likely raise the
barriers to entry. The Company believes that the industry will experience
consolidation. New competitors, such as technology-oriented companies, will be
drawn to the executive search business by the growing worldwide demand for
qualified management employees, the fragmentation of the industry and the
ability to leverage their existing technology and databases to enter the
market. For example, TMP Worldwide Inc., which operates the Monster Board,
recently acquired two executive search firms.
 
FACILITIES
 
  The Company leases all of its 71 office locations. The Company believes that
its facilities are adequate for its current needs and that it will not have
difficulty leasing additional space to accommodate its anticipated future
needs.
 
                                      34

<PAGE>
 
INSURANCE
 
  The Company maintains insurance in amounts and with such coverages and
deductibles as it believes are appropriate and adequate. The principal risks
that the Company insures against are professional liability, worker's
compensation, personal injury, bodily injury, property damage and fidelity
losses. There can be no assurance that the Company's insurance will adequately
protect it from potential losses and liabilities. See "Risk Factors--
Employment Liability Risk."
 
LEGAL PROCEEDINGS
 
  The Company is currently not a party to any litigation the adverse
resolution of which, in management's opinion, would be likely to have a
material adverse effect on the Company's business, financial position or
results of operations. However, from time to time the Company has been and is
involved in litigation incidental to its business.
 
                                      35

<PAGE>
 

                                  MANAGEMENT
 
EXECUTIVE OFFICERS AND DIRECTORS
 
  The following table sets forth the executive officers and directors of the
Company.
 

<TABLE>
<CAPTION>
   NAME                        CLASS(1) AGE(2) POSITION
   ----                        -------- ------ --------
   <C>                         <C>      <C>    <S>
   Richard M. Ferry(3)........           60    Chair of the Board
                                               President, Chief Executive
   Michael D. Boxberger(3)....           51     Officer and Director
   Windle B. Priem(3).........           60    Vice Chair, Chief Operating
                                                Officer and Director
   Peter L. Dunn(3)...........           53    Vice Chair, Corporate Secretary,
                                                General Counsel and Director
   Elizabeth S.C.S. Murray(3).   n/a     42    Chief Financial Officer,
                                                Treasurer and Executive Vice
                                                President
   Man Jit Singh..............   n/a     41    Vice President and Chief
                                                Executive Officer of Korn/Ferry
                                                International Futurestep, Inc.
   Paul Buchanan-Barrow.......           53    Vice President and Director
   Timothy K. Friar...........           39    Vice President and Director
   Sakie Fukushima............           48    Vice President and Director
                                               Managing Director, Vice
   Hans Jorda.................           41     President and Director
                                               Managing Director, Vice
   Scott E. Kingdom...........           38     President and Director
                                               Managing Director, Vice
   Raimondo Nider.............           57     President and Director
   Manuel A. Papayanopulos....           53    Vice President and Director
                                               Managing Director, Vice
   Michael A. Wellman.........           44     President and Director
                                               Managing Director, Vice
   Young Kuan-Sing............           49     President and Director
</TABLE>

- --------
(1) Denotes Board class of which the Director is a member. See "Description of
    Capital Stock--Certain Anti-Takeover Effects."
(2) As of August 15, 1998.
(3) Member of the Office of the Chief Executive.
 
  Richard M. Ferry is founder of the Company and has been Chair of the Board
since 1991 and a member of the Office of the Chief Executive since July 1998.
He also serves on the Board of Directors of Avery Dennison Corp., Dole Food
Company, Mellon 1st Business Bank, Mullin Consulting, Inc., Mrs. Fields'
Original Cookies and Pacific Life Insurance Company.
 
  Michael D. Boxberger has been the President and Chief Executive Officer of
the Company since 1997 and a member of the Office of the Chief Executive since
July 1998. He has been a Director of the Company since 1993. From 1995 to 1997
he was President of the Company and President-North America from 1991 to 1995.
Mr. Boxberger joined Korn/Ferry in 1987 and has 17 years of executive search
experience.
 
  Windle B. Priem has been a Vice Chair, the Chief Operating Officer and a
member of the Office of the Chief Executive since July 1998. He has been a
Director of the Company since 1993. From 1996 to 1998 he was the President of
the North America region. Mr. Priem joined Korn/Ferry in 1976.
 
  Peter L. Dunn has been a Vice Chair since 1997 and a member of the Office of
the Chief Executive since July 1998. He has been a Director of the Company
since 1992 and serves as the Company's General Counsel and Corporate
Secretary. Mr. Dunn joined Korn/Ferry in 1980.
 
  Elizabeth S.C.S. Murray has been the Executive Vice President and Chief
Financial Officer and Treasurer and a member of the Office of the Chief
Executive since July 1998. In January 1998, she joined the Company as Vice
President and Chief Financial Officer and Treasurer. Prior to that, Ms. Murray
served as Executive Vice President and Chief Financial Officer of Tycom Inc.
from June 1997 to December 1997, and from 1994 to June 1997 she was the Chief
Financial Officer of Hughes Communications, Inc., a subsidiary of Hughes
Electronics Corporation. Prior to 1994, Ms. Murray served in the corporate
offices of Hughes Electronics Corporation as Director of Planning.
 
                                      36

<PAGE>
 
  Man Jit Singh has been a Vice President of the Company and President and
Chief Executive Officer of Futurestep since December 1997. Previously, he was
a principal of Sibson & Co. from 1996 to 1997, the Chief Executive Officer of
Talent Tree Staffing Services and sector director of BET plc from 1994 to
1996, and Chief Executive Officer of The Cast Group AG from 1991 to 1994.
 
  Paul Buchanan-Barrow has been a Vice President since 1992 and a member of
the Board of Directors since 1994. He is currently responsible for the firm's
Business Strategy Group throughout Europe. Mr. Buchanan-Barrow joined
Korn/Ferry in 1992 and has twelve years of executive search experience.
 
  Timothy K. Friar has been a Vice President since 1995 and a member of the
Board of Directors since May 1998. Mr. Friar joined Korn/Ferry in 1993 as a
senior associate.
 
  Sakie Fukushima has been a Vice President since 1993 and a member of the
Board of Directors since 1995. Ms. Fukushima joined Korn/Ferry in 1991 as a
principal and has seven years of executive search experience.
 
  Hans Jorda has been a Vice President since 1994 and a member of the Board of
Directors since 1996. He currently is the Managing Director for the Company's
Middle European Region, including Austria, Germany and Switzerland, a role he
assumed in 1996. From 1992 to 1994 he owned and managed the New Europe
Consulting Group, an executive search company that the Company acquired in
1994, and has 14 years of executive search experience.
 
  Scott E. Kingdom has been a Vice President since 1993, and a Member of the
Board of Directors since May 1998. He has been the Managing Director of the
Chicago and Minneapolis offices since 1995. Mr. Kingdom joined Korn/Ferry in
1988 and has 16 years of executive search experience.
 
  Raimondo Nider has been a Vice President of the Company since 1989 and a
member of the Board of Directors since 1996. He has been the Managing Director
of Southern Europe since 1996. Mr. Nider joined Korn/Ferry in 1989 and has 23
years of executive search experience.
 
  Manuel A. Papayanopulos has been a Vice President since 1982 and a member of
the Board of Directors since 1997. Mr. Papayanopulos joined Korn/Ferry in 1982
and has 24 years of executive search experience.
 
  Michael A. Wellman has been a Vice President since 1992 and a member of the
Board of Directors since 1997. From 1995 to 1998 he was the Managing Director
of the New York office. Since July 1998, he has been Managing Director of the
Northeast Region of the Company (Toronto, Boston, Stamford, Princeton,
Philadelphia and New York). Mr. Wellman joined Korn/Ferry in 1992 and has 15
years of executive search experience.
 
  Young Kuan-Sing has been a Vice President since 1988 and a member of the
Board of Directors since 1996. He is currently the Managing Director for the
ASEAN sub-region within Asia/Pacific and a member of the newly-formed Asia-
Pacific Operating Group as well as the region's Business Strategy Group since
July 1998. From 1995 to 1998 he was responsible for East Asia including China,
Hong Kong, Thailand, Malaysia, Singapore and Indonesia. Prior to that he was
Office Manager for the Company's Singapore office. Mr. Young joined Korn/Ferry
in 1982.
 
  The executive officers of the Company serve at the discretion of its Board
of Directors. Each director of the Company serves until such director's
successor is elected and qualified or until the director's death, retirement,
resignation or removal.
 
BOARD OF DIRECTORS
 
  Upon consummation of the Offering, the Company will have thirteen Directors,
all of whom are employees of the Company, and one vacancy on the Board of
Directors. The Company intends to replace three employee-directors with four
independent directors within 30 days of the consummation of the Offering. The
Company's Board of Directors is divided into three classes serving staggered
terms of three years each, with approximately one-third of the Company's Board
of Directors being elected each year.
 
                                      37

<PAGE>
 
COMMITTEES OF THE BOARD OF DIRECTORS
 
  The Board of Directors (the "Board") has standing Audit, Compensation,
Executive and Nominating Committees.
 
  Audit Committee. Upon consummation of the Offering, the Board intends to
reconstitute its audit committee (the "Audit Committee") to be comprised of at
least two independent directors. The Audit Committee makes recommendations
concerning the engagement of independent public accountants, reviews the plans
and results of the audit engagement with the independent public accountants,
approves professional services provided by the independent public accountants,
reviews the independence of the independent public accountants, considers the
range of audit and non-audit fees and reviews the adequacy of the Company's
internal accounting controls. The Audit Committee is also available to receive
reports, suggestions, questions and recommendations from the independent
public accountants, the Chief Financial Officer and the General Counsel. It
also confers with those parties in order to assure the sufficiency and
effectiveness of the programs being followed by corporate officers in the area
of compliance with the law and conflicts of interest.
 
  Compensation Committee. Upon consummation of the Offering, the Board intends
to expand the membership of its compensation committee (the "Compensation
Committee") to be comprised of at least two independent directors. The
Compensation Committee determines the compensation of the Company's executive
officers and administers the Performance Award Plan. The current executive
officer salaries were set by the Board prior to establishment of the
Compensation Committee. The Compensation Committee has the responsibility for
the compensation of the senior executives of the Company including salaries
and benefits. The Compensation Committee also reviews and makes
recommendations to the Board with respect to the Company's overall
compensation program for directors and officers, including salaries, employee
benefit plans, stock options granted, equity incentive plans and payment of
bonuses.
 
  Executive Committee. The Executive Committee of the Board acts with all the
authority of the Board as to those decisions within the Board's purview, and
possesses all authority of the Board except as to those decisions requiring
approval also of the Company's shareholders.
 
  Nominating Committee. The nominating committee (the "Nominating Committee")
recommends criteria to the Board for the selection of candidates to serve on
the Board, evaluates all proposed candidates, recommends to the Board nominees
to fill vacancies on the Board, and prior to the annual meeting of
shareholders recommends to the Board a slate of nominees for election to the
Board by the shareholders of the Company at the annual meeting. The Nominating
Committee also seeks possible candidates for the Board and otherwise serves to
aid in attracting qualified candidates to the Board.
 
DIRECTOR COMPENSATION
 
  Following the Offering, the Company does not intend to pay additional
remuneration to employees who also serve as directors. The Company will
reimburse all directors for their out-of-pocket expenses incurred in
connection with their duties as directors. Non-employee directors will receive
an annual retainer of $          in cash and $          in cash for each
regular or special meeting attended as well as annual stock option grants
under the Performance Award Plan. See "--Benefit Plans--Performance Award
Plan."
 
OFFICE OF THE CHIEF EXECUTIVE
 
  In July 1998, the Company announced the formation of an Office of the Chief
Executive, consisting of Mr. Ferry and four senior executive officers, Messrs.
Boxberger, Priem and Dunn and Ms. Murray. Concurrently, the duties of these
officers were realigned and expanded. Mr. Priem is a Vice Chair and Chief
Operating Officer. Mr. Dunn, Vice Chair, Corporate Secretary and General
Counsel, is responsible for the Company's Corporate Development Group
including new business ventures, such as Futurestep, and strategic planning,
as well as having responsibility for the Company's information technology and
legal departments. Ms. Murray, the Company's Chief Financial Officer and
Treasurer, is also an Executive Vice President and is responsible for the
corporate treasury, corporate performance standards, external reporting and
information systems.
 
                                      38

<PAGE>
 
COMPENSATION DECISIONS AND INSIDER PARTICIPATION
 
  In fiscal 1998, decisions concerning compensation of executive officers were
made by the Company's Senior Executive Compensation Committee, consisting of
employee-directors Messrs. Buchanan-Barrow, as Chair, Kelley, Nider, Priem and
Wellman, with Messrs. Ferry and Peter Mullin, a compensation consultant,
serving in advisory roles. The Senior Executive Compensation Committee, which
will be reorganized as the Compensation Committee upon consummation of the
Offering, will review and approve the comprehensive compensation program for
senior executives of the Company, and will review the specific salaries of
executive vice presidents and senior vice presidents subject to the
ratification of the salary programs established for the positions of Chair and
the Chief Executive Officer by the Board acting as a whole.
 

EXECUTIVE COMPENSATION
 
  The following table shows the compensation paid by the Company to the Chief
Executive Officer and each of the Company's other three most highly
compensated executive officers (collectively, the "Named Executive Officers"),
all of whom are members of the Office of the Chief Executive, with respect to
the fiscal year ended April 30, 1998.
 
                          SUMMARY COMPENSATION TABLE
 

<TABLE>
<CAPTION>
                             ANNUAL
                          COMPENSATION
                         --------------
   NAME AND PRINCIPAL                    ALL OTHER
        POSITION         SALARY BONUSES COMPENSATION
   ------------------    ------ ------- ------------
<S>                      <C>    <C>     <C>
Richard M. Ferry........
 Chair of the Board
Michael D. Boxberger....
 President and Chief
  Executive Officer
Windle B. Priem.........
 Vice Chair and Chief
  Operating Officer
Peter L. Dunn...........
 Vice Chair, Corporate
  Secretary and General
  Counsel
</TABLE>

 
BENEFIT PLANS
 
 Performance Award Plan
 
  In July 1998, the Company adopted the Performance Award Plan to provide a
means to attract, motivate, reward and retain talented and experienced
officers, non-employee directors, other key employees and certain other
eligible persons (collectively, "Eligible Persons") who may be granted awards
from time to time by the Company's Board of Directors or, if authorized, the
Compensation Committee (such administrators, the "Committee"), or, for non-
employee directors, under a formula provided in the Performance Award Plan.
The maximum number of shares of Common Stock reserved for issuance is
7,000,000 subject to adjustment for certain changes in the Company's capital
structure and other extraordinary events. Shares subject to awards that are
not paid for or exercised before they expire or are terminated are available
for other grants under the Performance Award Plan to the extent permitted by
law. Shareholders of the Company approved the Performance Award Plan in August
1998.
 
  The Committee intends to grant ten-year stock options for approximately
         shares of Common Stock to eligible persons. The Named Executive
Officers will receive option grants for such shares in the following amounts:
Mr. Ferry (   shares); Mr. Boxberger (   shares); Mr. Priem (   shares); and
Mr. Dunn (   shares). The exercise price of each option granted will be at the
fair market value per share of Common Stock at the time of grant. Such options
will vest in equal installments over five years.
 
                                      39

<PAGE>
 
  Awards under the Performance Award Plan may be in the form of nonqualified
stock options, incentive stock options, stock appreciation rights ("SARs"),
limited SARs, restricted stock, performance shares, stock bonuses, or cash
bonuses based on performance. Awards may be granted singularly or in
combination with other awards. Any cash bonuses and other performance awards
under the Performance Award Plan will depend upon the extent to which
performance goals set by the Board of Directors or the Committee are met
during the performance period. Awards under the Performance Award Plan
generally will be nontransferable by the holder of the award (a "Holder")
(other than by will or the laws of descent and distribution). During the
Holder's lifetime, rights under the Performance Award Plan generally will be
exercisable only by the Holder, subject to such exceptions as may be
authorized by the Committee in accordance with the Performance Award Plan. No
incentive stock option may be granted at a price that is less than the fair
market value of the Common Stock (110% of fair market value of the Common
Stock for certain participants) on the date of grant. Nonqualified stock
options and other awards may be granted at prices below the fair market value
of the Common Stock on the date of grant. Restricted stock awards can be
issued for nominal or the minimum lawful consideration. Typically, the
participant may vote restricted stock, but any dividend on restricted shares
will be held in escrow subject to forfeiture until the shares have vested. No
more than          shares will be available for restricted stock awards,
subject to exceptions for restricted stock awards based on past service,
deferred compensation and performance awards.
 
  The maximum number of shares subject to awards (either performance or
otherwise) that may be granted to an individual in the aggregate in any one
calendar year is 1,050,000. A non-employee director may not receive awards in
respect of more than 50,000 shares in the aggregate in any one calendar year.
With respect to cash-based performance awards, no more than $2.5 million per
year, per performance cycle may be awarded to any one individual. No more than
one performance cycle may begin in any one year with respect to cash-based
performance awards.
 
  Section 162(m) Performance-Based Awards. In addition to options and SARs
granted under other provisions of the Performance Award Plan, performance-
based awards payable in cash or shares within the meaning of Section 162(m) of
the Internal Revenue Code of 1986, as amended ("Performance-Based Awards"),
which depend on the achievement of pre-established financial performance
goals, may be granted under the Performance Award Plan. The specific
performance goals will be set by a qualified committee of the Board created
for these purposes and the specific targets will be set by the Committee when
their attainment is substantially uncertain. The permitted performance goals
under the Performance Award Plan may include any one or more of the following:
revenue growth, net earnings (before or after taxes or before or after
interest, taxes, depreciation and amortization), cash flow, return on equity,
return on assets or return on net investment, or cost containment or
reduction. The applicable performance cycle may not be less than one nor more
than seven years (five years in respect of such awards payable only in cash).
 
  Administration. The Performance Award Plan will be administered by the Board
or the Committee. The Committee will have broad authority to (i) designate
recipients of discretionary awards, (ii) determine or modify (subject to any
required consent) the terms and provisions of awards, including the price,
vesting provisions, terms of exercise and expiration dates, (iii) approve the
form of award agreements, (iv) determine specific objectives and performance
criteria with respect to performance awards, and (v) construe and interpret
the Performance Award Plan. The Committee will have the discretion to
accelerate and extend the exercisability or term and establish the events of
termination or reversion of outstanding awards.
 
  Change in Control. Upon a Change in Control Event, each option and SAR will
become immediately exercisable; restricted stock will immediately vest free of
restrictions; and the number of shares, cash or other property covered by each
performance share award will be issued to the Holder, unless the Committee
determines to the contrary. A "Change in Control Event" is defined generally
to include (i) certain changes in a majority of the membership of the Board
over a period of two years or less, (ii) the acquisition of more than 30% of
the outstanding voting securities of the Company by any person other than the
Company, any Company benefit plan or one of their affiliates, successors,
heirs, relatives or certain donees or certain other affiliates, or (iii)
shareholder approval of a transfer of substantially all of the Company's
assets, the dissolution or liquidation of the Company, or a merger,
consolidation or reorganization (other than with an affiliate) whereby
shareholders immediately prior
 
                                      40

<PAGE>
 
to such event own less than 70% of the outstanding voting securities of the
surviving entity after such event. In addition, if any participant's
employment is terminated by the Company for any reason other than for cause
either in express anticipation of, or within one year after a Change in
Control Event, then all awards held by that participant will vest in full
immediately before his or her termination date.
 
  The Committee may also provide for alternative settlements (including cash
payments), the assumption or substitution of awards or other adjustments in
the Change in Control context of any other reorganization of the Company.
 
  Plan Amendment, Termination and Term. The Company's Board has the authority
to amend, suspend or discontinue the Performance Award Plan at any time, but
no such action will affect any outstanding award in any manner materially
adverse to a participant without the consent of the participant. The
Performance Award Plan may be amended by the Board without shareholder
approval unless such approval is required by applicable law.
 
  The Performance Award Plan will remain in existence as to all outstanding
awards until such awards are exercised or terminated. The maximum term of
options, SARs and other rights to acquire Common Stock under the Performance
Award Plan is ten years after the initial date of award, subject to provisions
for further deferred payment in certain circumstances. No award can be made
after the tenth anniversary of the date of the consummation of the Offering.
Awards may remain exercisable for a period of time determined by the Committee
after termination of employment for certain reasons, after which, to the
extent not exercised, such awards terminate.
 
  Automatic Grants to Non-Employee Directors. Under the Performance Award
Plan, each director who is not an officer or employee (a "Non-Employee
Director") and who is or thereafter becomes a director of the Company after
the Offering will be automatically granted a nonqualified stock option to
purchase 1,500 shares of Common Stock when the person takes office, at an
exercise price equal to the market price of the Common Stock at the close of
trading on that date (or, with respect to the Company's current directors, on
the tenth trading day after completion of the Offering). In addition, on the
day of the annual shareholders meeting in each calendar year beginning in 1999
and continuing for each subsequent year during the term of the Performance
Award Plan, each then-continuing Non-Employee Director will be granted a
nonqualified stock option to purchase 1,500 shares of Common Stock at an
exercise price equal to the market price of the Common Stock at the close of
trading on that date. Non-Employee Directors may also be granted discretionary
awards. All automatically granted Non-Employee Director stock options will
have a ten-year term and will be immediately exercisable. If a Non-Employee
Director's services are terminated for any reason, any automatically granted
stock options held by such Non-Employee Director that are exercisable will
remain exercisable for twelve months after such termination of service or
until the expiration of the option term, whichever occurs first.
Automatically-granted options are subject to the same adjustment, change in
control, and acceleration provisions that apply to awards generally, except
that any changes or Board or Committee actions (1) will be effected through a
shareholder approved reorganization agreement or will be consistent with the
effect on Options held by other than executive officers and (2) will be
consistent in respect of the underlying shares with the effect on shareholders
generally. Any outstanding automatic option grant that is not exercised prior
to a Change in Control Event in which the Company is not to survive will
terminate, unless such option is assumed or replaced by the surviving
corporation.
 
  Payment for Shares. The exercise price of options and other awards may be
paid in cash, promissory note or (subject to certain restrictions) shares of
Common Stock. The Company may finance the exercise or purchase and (subject to
any applicable legal limits) offset shares to cover the exercise or purchase
price and withholding taxes.
 
  Federal Tax Consequences. The current federal income tax consequences of
awards authorized under the Performance Award Plan follow certain basic
patterns. Generally, awards under the Performance Award Plan that are
includable in income of the recipient at the time of award or exercise (such
as nonqualified stock options, SARs, restricted stock and performance awards)
are deductible by the Company, and awards that are not required to be included
in income of the recipient at such times (such as incentive stock options) are
not deductible by the Company.
 
                                      41

<PAGE>
 
  Non-Exclusive Plan. The Performance Award Plan is not exclusive. The Board,
under California law, may grant stock and performance incentives or other
compensation, in stock or cash, under other plans or authority.
 
 Employee Tax Deferred Savings Plan--401(k) Plan
 
  The Company adopted a defined contribution 401(k) plan in 1984. Under the
Company's 401(k) plan, U.S. employees who have been employed by the Company
for over six months are eligible to make employee contributions in the
following fiscal quarterly enrollment period, and become eligible for
contributions by the Company. Employees must have worked at least 1,000 hours
in a plan year (May 1 to April 30) to be eligible for the Company
contribution.
 
  The 401(k) plan allows employees to contribute a portion of their salary to
their personal plan account ("Participant Savings Contributions") of up to 20%
of their salary or the maximum employee contribution set by the Internal
Revenue Service each year, whichever is less. Participants are always 100%
vested in their own contributions, and any investment gains or losses
therefrom. The 401(k) plan allows participants over the age of 59 1/2 to make
withdrawals from the Company's 401(k) plan without penalty.
 
  The 401(k) plan provides for discretionary employer contributions.
Discretionary contributions (if any) up to 2% of an employee's salary (to a
maximum of $1,000) are first allocated to employees below the category of vice
president. In addition, the Company may contribute any amount or it may decide
not to contribute in a given Plan Year ("Employer Matching Contribution"). The
Company's matching contribution vests over a period of six years in increments
of 20% after the one year anniversary. The Company also has the option of
making additional contributions to employees' accounts based upon a percentage
of total compensation, including bonuses. An employee is eligible for these
employer contributions for a plan year only if employed on the last day of the
plan year.
 
WORLDWIDE EXECUTIVE BENEFIT PLANS: RETIREMENT PLAN; LIFE INSURANCE PLAN; AND
DISABILITY PLAN
 
  The Company's Worldwide Executive Benefit Plans ("WEB Plans") cover vice
presidents of the Company. The benefits provided are intended to reward
eligible employees for long term service and contributions to the firm and
which are provided through a combination of local government benefits, local
benefits provided by the Company, and specific WEB Plan's benefits. To be
eligible to be a participant in a Company WEB Plan, an employee must be a vice
president or more senior officer and a shareholder of the Company working at
least 30 hours per week.
 
  Retirement Plan. The Company's WEB-Retirement Plan provides a monthly
benefit to eligible employees upon retirement from the Company. Each year, a
plan participant accrues and is fully vested in one-twentieth of the targeted
benefit, expressed as a percentage set by the Company for that year. Upon
retirement, a participant receives a monthly benefit payment equal to the sum
of the percentages accrued over such participant's term of employment, up to a
maximum of 20 years, multiplied by such participant's highest average monthly
salary during any 36 consecutive months of the final 72 months of active full-
time employment. The WEB-Retirement Plan provides targeted retirement benefits
through sources funded by the Company, government social security and
retirement benefits and Company retirement programs provided by the eligible
employee's local office.
 
  Life Insurance Plan. The Company's WEB-Life Insurance Plan provides
financial security for the survivors of an eligible employee in the event of
his or her death. The life insurance coverage provided is a targeted life
insurance benefit of three times an eligible employee's base salary in the
most tax efficient manner possible for participants. The WEB- Life Insurance
Plan administers the life insurance benefits through sources funded by the
Company, government provided survivor benefits and local life insurance
programs and coverage provided by local carriers within an eligible employee's
country.
 
  Disability Plan. The Company's WEB-Disability Plan provides income to
eligible employees and their families should an illness or injury cause an
extended period of disability for an eligible employee. The plan's disability
coverage provides a targeted disability benefit of 60% of an eligible
employee's base salary (up to the
 
                                      42

<PAGE>
 
maximum limit allowed by the insurance carrier). The WEB-Disability Plan
provides the disability coverage through Company funded sources, government
sponsored disability benefits, local disability programs available for the
Company and particular disability benefits under the plan.
 
ENHANCED WEALTH ACCUMULATION PLANS
 
  The Company maintains two Enhanced Wealth Accumulation Plans (the "EWAPS"),
one for its U.S. vice presidents and one for its non-U.S. vice presidents,
which are identical in their material provisions. The EWAPS replaced the
Company's earlier Wealth Accumulation Plans (the "WAPS") for vice presidents,
although those participants within the Company's original WAPS who did not
choose to roll their previous participation and deferrals or contributions
into the EWAPS continue to be covered under the earlier version. The EWAPS
offer a means for the Company to provide an additional future compensation
package for certain vice presidents of the Company in order to reward long
term service to the Company and retain key employees.
 
  The EWAPS allow participants to elect to participate by deferring
compensation initially or in some instances, making an after-tax contribution,
for an eight-year period. Each deferral or contribution unit is for an eight-
year period based on the calendar year, usually commencing on January 1.
Participants may commence an additional deferral or contribution unit every
five years during their participation in the EWAPS. Participants may elect to
accelerate their deferrals or contributions but not increase the total amount.
By choosing to participate in the EWAPS, a vice president opts by his or her
participation to defer a portion of their compensation earned, in return for
an annuity of a specified amount paid by the Company over a fifteen year
period, upon retirement at age 65.
 
  EWAP benefits begin to vest after five years; vested benefits increase for
each year of participation in excess of five years and vested benefits
maximize at 15 years or at age 65 with a minimum participation of eight years.
The payments for vested EWAP benefits generally commence when a participant is
age 65 or retires. If a participant chooses to retire from the Company's
service prior to reaching the age of 65, he or she is eligible for an "early
retirement benefit" as to which his or her normal monthly EWAPS benefits are
proportionately reduced in accordance with his or her early retirement, to be
adjusted for each month a participant retires prior to the age of 65. To be
eligible for an early retirement benefit, the participant must have completed
at least 15 years of service with the Company and also have completed eight
years of service with the Company while enrolled in that contribution unit. An
early retiree may also choose to delay payment of EWAPS benefits until age 65
and accordingly incur no reduction of benefits to be paid. EWAPS participants
who terminate their service with the Company after five or more years of
participation in a deferral or contribution unit and prior to a normal
retirement age of 65 or early retirement date are eligible for an "incentive
benefit" from the Company. However, if a participant becomes employed as an
executive search consultant or obtains employment in any capacity for any
other executive search firm within two years after termination of employment
with the Company, any early retirement or incentive benefit is forfeited.
Payment of the incentive benefit by the Company is in monthly installments,
commencing at age 65, of a payment amount equal to the normal benefit payment,
to be paid for the same number of years a participant participated within a
deferral or contribution unit up to a maximum of 15 years. An incentive
benefit recipient may also elect to receive a lump sum payment in lieu of
monthly payments, equal to their previous deferrals or contribution plus
interest.
 
  If a participant dies and is eligible for normal retirement benefits prior
to receiving his or her full benefits, his or her beneficiary is entitled to
receive such payments. Additionally, a deceased participant's spouse, if any,
may receive an additional survivor's benefit to be paid for a specified period
of time, following the termination of the normal EWAPS benefit payments.
Disability benefits payments are payable to a participant within the plan, but
only with respect to his or her first deferral or contribution unit completed.
There are no disability benefits associated with additional deferral or
contribution units completed by a participant. If a participant becomes
disabled, as defined in the EWAPS, the Company will pay monthly disability
benefits to the participant in an amount equal to one-twelfth of the amount
per annum specified as the disability benefit for the participant's initial
deferral or contribution unit, until the age of 65, or until the attainment of
a later age for persons whose disability begins after age 61. A participant
receiving disability benefit payments is still eligible for all normal
retirement benefits, early retirement benefits and survivor benefits under the
EWAPS.
 
                                      43

<PAGE>
 
SENIOR EXECUTIVE INCENTIVE PLANS
 
  The Company provides for its vice presidents two Senior Executive Incentive
Plans (the "SEIPS"), one for its U.S. executives and one for its non-U.S.
executives, which are identical in their material provisions. The Board of
Directors approves eligibility for senior executives' participation in the
SEIPS. Additionally, a senior executive must be participating in the Company's
EWAPS to be eligible to participate in the SEIPS, unless such requirement is
waived by the Board of Directors. The SEIPS provide additional future
compensation to the selected executives to promote the retention of valuable
employees of the Company.
 
  The SEIPS operate by allowing vice presidents of the Company to participate
in a "benefit unit" whereby a participant elects to reduce the amount of
compensation or in some instances make an after-tax contribution otherwise
earned and payable during a four year period. The interest credited on
deferrals ("benefit unit") upon termination of employment vests over a ten-
year period at which time the participant receives monthly benefit payments
made by the Company over a fifteen-year period, at retirement at age 65 or
later.
 
  A participant may choose to receive the SEIPS incentive benefit payments
prior to the normal benefit payment date, with a corresponding reduction in
the amount to be paid, upon: (i) the retirement of a participant after
attaining age 65, (ii) the deferrals required for the benefit unit having been
completed and (iii) completion by a participant of at least four years of
service post enrollment in the benefit unit. If a participant dies prior to
receiving all incentive benefit payments, the beneficiary is entitled to
receive the remaining payments.
 
EXECUTIVE SALARY CONTINUATION PLAN
 
  The Company's Executive Salary Continuation Plan (the "ESCP") is no longer
an active plan, and as such there are a limited number of Company vice
presidents who remain participants within the plan. The ESCP provides vice
presidents of the Company with an additional salary payment of $7,000 per
annum for the five-year period following their retirement from service with
the Company. Additionally, in the event of death of a vice president prior to
retirement, the ESCP provides that the family of the deceased vice president
will receive an estate and family benefit of $10,000 per annum, to be paid for
a total of ten years to the vice president's surviving family. No benefits
under the plan are vested and should a vice president be terminated prior to
retirement, no benefits under the plan are payable. All plan benefits are
taxed as income to the recipients when received.
 
EXECUTIVE PARTICIPATION PROGRAMS
 
 Executive Participation Program
 
  Prior to the Offering and since 1991, the Company maintained two Executive
Participation Programs for executives located in the U.S. and one for
executives located outside of the U.S., also known as the Company's "Equity
Participation Program" (together, the "EPP"). The EPP historically provided
the opportunity for select executives of the Company to purchase shares of
Common Stock. However, in anticipation of the Offering, the Company has ceased
enrollment of executives in the EPP. Most of the Company's vice presidents are
participants within the EPP. The EPP permitted executives to purchase Common
Stock either in a cash payment, or by issuing promissory notes payable to the
Company. Historically, shares of Common Stock were sold at book value, subject
to the execution by EPP participants of an agreement which required the
Company to purchase such shares at book value upon termination of the
participant's employment with the Company.
 
 Supplemental Equity Participation Plan
 
  Persons promoted to vice president and other persons hired as vice
presidents of the Company between May 2, 1998 and the filing of the Company's
Registration Statement with the Securities and Exchange Commission in
connection with the Offering ordinarily would have become eligible to purchase
shares of Common Stock under the EPP, as described above. However, in
anticipation of the Offering, the Company adopted the Supplemental Equity
Participation Plan (the "Supplemental EPP") and issued shares of Common Stock
to these persons at fair market value, appraised as of June 30, 1998. The
Supplemental EPP also includes
 
                                      44

<PAGE>
 
the Liquidity Schedule, as described below. The Company has ceased enrollment
of executives in the Supplemental EPP as of August 17, 1998.
 
AMENDED STOCK REPURCHASE AGREEMENT
 
  Substantially all of the shareholders of the Company have entered into an
agreement (a "Stock Repurchase Agreement") with the Company that generally
requires the Company to repurchase the shares of Common Stock owned by the
shareholder at book value, typically upon termination of the shareholder's
employment with the Company. In connection with the Offering, each shareholder
of the Company who has entered into a Stock Repurchase Agreement will have the
opportunity to enter into an Amended Stock Repurchase Agreement (the "Amended
Repurchase Agreement"), whether their original Stock Purchase Agreement was
entered into outside of the EPP or in connection with the EPP. The Amended
Repurchase Agreements will become effective upon the consummation of the
Offering and permits the shares of Common Stock subject to the Amended
Repurchase Agreement to be sold into the publicly traded market on certain
dates (the "Liquidity Schedule"). See "--Liquidity Schedule." Each shareholder
who executes an Amended Repurchase Agreement will be permitted to sell their
shares of Common Stock pursuant to the Liquidity Schedule; those shareholders
who do not sign an Amended Repurchase Agreement with the Company will continue
to be obligated to sell their shares of Common Stock back to the Company at
book value under the terms of their original Stock Repurchase Agreement.
 
  The Amended Repurchase Agreement will also permit the Company to call, on a
non-prorata basis, some or all of the shares of Common Stock, held both within
and outside the EPP, which remain restricted from sale pursuant to the
Liquidity Schedule at (i) the book value as of April 30, 1998, plus interest
at 8.5% per annum from that date, in the case of shares acquired at book
value, or (ii) the value appraised as of the most recent appraisal date
preceding the date of purchase, plus interest at 8.5% per annum from the
appraisal date, in the case of shares acquired at the appraised value. Shares
may be called by the Company if the individual shareholder engages in conduct
or acts detrimental to the Company, as determined by the Company, including,
without limitation, (i) affiliation with a competitor or development of, or
contribution to, a competing enterprise, (ii) the disclosure of confidential
Company information to an unauthorized third party, or (iii) conviction of a
felony or other crime involving fraud, dishonesty or acts of moral turpitude.
Each shareholder accused of such conduct and with respect to whom the Company
wishes to exercise its call rights may appeal to the Chair of the Board and to
a committee of the Board of Directors composed of three directors, at least
two of which are outside directors (the "Equity Committee"). Any such
shareholder who is found to have engaged in such conduct or act will be given
30 days to cure such conduct or acts, if a cure is possible.
 
  Additionally, the Company is permitted to call, on a non-prorata basis at
the call price described above, up to 10% of all outstanding shares of Common
Stock which would otherwise become transferable at a future date under the
Liquidity Schedule, with the proviso that such option may not be exercised
more than once during any two-year period, if the Equity Committee of the
Board of Directors, in its discretion, deems such repurchase to be appropriate
based on the existing market conditions for shares of Common Stock or on the
Company's recent financial performance. The Company's right to call shares of
Common Stock applies only to shares of Common Stock subject to the Liquidity
Schedule.
 
LIQUIDITY SCHEDULE
 
  Substantially all of the Company's existing shareholders have agreed to be
subject to the Liquidity Schedule. The Liquidity Schedule limits shareholders'
ability to sell more than 20%, or 30% if they have not participated in the
Offering, of their current aggregate Common Stock holdings until the second
anniversary of the Offering. The Liquidity Schedule also limits shareholders'
ability to sell an additional 20% of their current aggregate Common Stock
holdings until on or after the third anniversary of the Offering and limits
their ability to sell more than half of their shareholdings until on or after
the fourth anniversary of the Offering. Upon the death of the shareholder, the
Liquidity Schedule will cease to apply and all of the shareholder's Common
Stock which were still subject to the Liquidity Schedule will become
transferable.
 
                                      45

<PAGE>
 
EMPLOYMENT AGREEMENTS
 
  The Company has a policy of requiring all its vice presidents to enter into
a standard form of employment agreement that provides for an annual base
salary and discretionary and incentive bonus payment. The Company also
requires its vice presidents to agree in their employment contract not to
compete with the Company both during the term of their employment with the
Company, and also for a period of one to two years after their employment with
the Company.
 
INDEMNIFICATION AND LIMITATION OF LIABILITY OF DIRECTOR AND EXECUTIVE OFFICERS
 
  The Company's Articles contain provisions that eliminate the personal
liability of its directors for monetary damages arising from a breach of their
fiduciary duties in certain circumstances to the fullest extent permitted by
California law. Such limitation of liability does not affect the availability
of equitable remedies such as injunctive relief or rescission.
 
  The Company's Bylaws provide that the Company shall indemnify its directors
and officers and may indemnify its other employees and agents to the fullest
extent permitted by law. The Company's Bylaws also permit the Company to
secure insurance on behalf of any officer, director, employee or other agent
for any liability arising out of his or her actions in such capacity,
regardless of whether the Bylaws would permit indemnification.
 
  The Company has entered, or plans to enter, into agreements to indemnify its
directors and officers, in addition to the indemnification provided for in the
Company's Bylaws. These agreements, among other things, indemnify the
Company's directors and executive officers for certain expenses (including
attorneys' fees), judgments, fines and settlement amounts incurred by any such
person in any action or proceeding, including any action by or in the right of
the Company, arising out of such person's services as a director or executive
officer of the Company, any subsidiary of the Company or any other company or
enterprise to which the person provides services at the request of the
Company. The Company believes that these provisions and agreements are
necessary to attract and retain qualified directors and executive officers.
 
  At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent of the Company where indemnification will
be required or permitted. The Company is not aware of any threatened
litigation or proceeding that might result in a claim for such
indemnification.
 
                                      46

<PAGE>
 

                             CERTAIN TRANSACTIONS
 
ADDITIONAL REDEMPTION AMOUNTS
 
  In fiscal 1995, certain shareholders of the Company (the "Sellers"), at the
request of the Company, agreed to have certain of their shares of Common Stock
redeemed by the Company in a fixed redemption plan initiated by the Company
(the "Redemption"). The Redemption required that any shareholder whose
aggregate ownership of Common Stock, phantom units or stock appreciation
rights exceeded a certain share level have a portion of his holdings redeemed.
The Sellers then agreed to the Redemption, which served as a benefit to the
Company in achieving a more widely held equity ownership as well as an
elimination of holdings by non-employee shareholders.
 
  The redemption price consisted of (i) a fixed amount of $1.82 per share (the
"Fixed Redemption Amount"), which represented the book value of a share of
Common Stock as of year end fiscal 1994, plus 10% to reflect appreciation on
the book value from the end of fiscal 1994 to the date of the redemption, (ii)
a contingent amount (the "Additional Redemption Amount") equal to the
difference between (a) the Fixed Redemption Amount plus 8.5% accrued interest
and (b) the public offering price per share of the Common Stock and (iii) one
share of Series A Preferred Stock for each 100 shares of Common Stock
redeemed. The Fixed Redemption Amount consisted of 16 2/3% cash, with the
balance in the form of a five-year promissory note. The aggregate Additional
Redemption Amount is determined by multiplying the difference described under
item (ii) above by the number of shares redeemed by the Company from each
holder of redeemed shares. The Additional Redemption Amount is payable if the
Company consummates an extraordinary transaction, including a public offering
of the Common Stock of the Company, at any time before December 31, 2004 and
the Seller has not voluntarily terminated or been terminated for cause prior
to the date of the extraordinary transaction.
 
  The Series A Preferred Stock of the Company has a liquidation value of $7.29
per share plus cumulative unpaid dividends at 8.5% per annum until redemption.
Shares of Series A Preferred Stock have voting rights equivalent to 100 shares
of Common Stock for each share outstanding, except that holders of Series A
Preferred Stock must vote in favor of certain transactions approved by holders
of two-thirds or more of the shares of Common Stock of the Company. The Series
A Preferred Stock was designed to give the Sellers the voting power necessary
to protect their rights to receive payment on the promissory note issued in
the Redemption and the Additional Redemption Amounts. The Company may redeem
all or any part of the outstanding Preferred Stock at the earlier of either
(i) payment in full of all promissory notes of the Company issued in the
Redemption or (ii) the approval of the holders of a majority of the shares of
the Series A Preferred Stock.
 
  Simultaneously with the Redemption, certain holders of phantom units and
stock appreciation rights (the "Rights Holders") agreed to terminate their
phantom units and stock appreciation rights in return for payments
corresponding to the Fixed Redemption Amounts and the Additional Redemption
Amounts.
 
  Because a substantial amount of the proceeds from the Offering would have to
be used to pay the aggregate Additional Redemption Amount payable upon an
initial public offering, each of the Sellers and the Rights Holders have
agreed to a negotiated discount (the "Negotiated Adjustment") from the
Additional Redemption Amount they were originally entitled to receive upon an
initial public offering. As a result, upon consummation of the Offering, if
the Offering price is $        per share, the midpoint of the range set forth
on the cover of the Prospectus, the Sellers and the Rights Holders as a group
will receive in the aggregate a payment of $      and the Company's
shareholders' equity will be reduced by the same amount. Mr. Windle B. Priem,
a Director and Vice Chair and Chief Operating Officer of the Company will
receive a discounted payment of approximately $   million. Mr. Richard Ferry,
the Chair of the Company's Board of Directors, will receive a discounted
payment of approximately $   million.
 
KORN/FERRY INTERNATIONAL FUTURESTEP, INC.
 
  In December 1997, Futurestep agreed to sell common stock representing a 9%
interest to Man Jit Singh, the President and Chief Executive Officer of
Futurestep and a Vice President of the Company.
 
                                      47

<PAGE>
 
STRATEGIC COMPENSATION ASSOCIATES
 
  The Company owned 47% of Strategic Compensation Associates ("SCA") during
fiscal 1995 and 1996. During fiscal 1996, the Company paid approximately
$131,000 for services to SCA. In fiscal 1996, the Company sold its entire
membership interest in SCA and a portion of its capital account interest in
SCA, pursuant to purchase agreements executed with other members of SCA. The
purchase agreements, as amended, provide for the members of SCA to purchase
the Company's remaining capital account interest in five annual installments,
with the last interest transfer and payment to be on December 31, 2001.
 
LOANS
 
  On January 28, 1998, the Company and Mr. Boxberger entered into an
agreement, whereby the Company agreed to be sole guarantor and co-obligor with
Mr. Boxberger on a promissory note in the amount of $1 million payable to
Mellon 1st Business Bank, entered into by Mr. Boxberger for home loan
purposes. The Company also agreed to pay all of the interest on the note for a
four-year period ending January 15, 2002. The interest rate is payable at a
variable rate at 0.5% below the bank's reference rate, which at the time of
execution of the note was 8.5% per annum, resulting in an effective interest
rate payable by the Company of 8% at the time of execution. The Company also
independently executed a guaranty of payment of such promissory note for the
benefit of Mellon 1st Business Bank. Mr. Boxberger has entered into an
agreement with the Company to indemnify and hold the Company harmless from any
and all liability (except for the interest payment) that may result from the
Company being a co-obligor of the note. To secure any indemnification
repayment, Mr. Boxberger has pledged to the Company all shares of Common Stock
owned by him and provided the Company with a right to offset any unpaid
indemnification owed to the Company from amounts owed by the Company to Mr.
Boxberger.
 
FUTURE TRANSACTIONS
 
  The Company has implemented a policy requiring that any material transaction
with an affiliated party is subject to approval by a majority of the directors
not interested in such transaction, who must determine that the terms of any
such transaction are no less favorable to the Company than those that could be
obtained from an unaffiliated third party and that the transaction is in the
Company's best interest.
 
                                      48

<PAGE>
 

                      PRINCIPAL AND SELLING SHAREHOLDERS
 
  The following table sets forth certain information about the beneficial
ownership of the Common Stock as of August   , 1998, and as adjusted to
reflect the sale of the Common Stock offered in the Offering, by (i) each
director and each executive officer of the Company, (ii) all directors and
executive officers of the Company as a group, and (iii) each person (or group
of affiliated persons) known by the Company to own beneficially more than five
percent of the Company's outstanding voting securities not otherwise listed.
The address of each director and executive officer listed is in care of
Korn/Ferry International, 1800 Century Park East, Suite 900, Los Angeles,
California 90067.
 

<TABLE>
<CAPTION>
                            SHARES BENEFICIALLY            SHARES BENEFICIALLY
                                   OWNED                       OWNED AFTER
                           PRIOR TO THE OFFERING               THE OFFERING
                           -----------------------         --------------------
NAME AND ADDRESS             NUMBER                SHARES   NUMBER
OF BENEFICIAL OWNER        OF SHARES(1) PERCENTAGE OFFERED OF SHARES PERCENTAGE
- -------------------        -----------  ---------- ------- --------- ----------
<S>                        <C>          <C>        <C>     <C>       <C>
Richard M. Ferry(2).......                    %                            %
Michael D. Boxberger(2)...
Windle B. Priem(2)........
Peter L. Dunn(2)..........
Elizabeth S.C.S.
 Murray(2)................
Man Jit Singh.............
Paul Buchanan-Barrow......
Timothy K. Friar..........
Sakie Fukushima...........
Hans Jorda................
Scott E. Kingdom..........
Raimondo Nider............
Manuel A. Papayanopulos...
Michael A. Wellman........
Young Kuan-Sing...........
All directors and
 executive officers
 as a group
 (15 persons)(3)..........
Selling Shareholders(4)...
</TABLE>

- --------
 *Less than one percent
 
(1) Unless otherwise indicated, each person has sole voting and dispositive
    power with respect to the shares shown.
 
(2) Also an officer of the Company.
 
(3) Holdings include shares of Common Stock held by the Trustees of the
    Korn/Ferry Employee Tax Deferred Savings Plan (401(k) Plan) for the
    benefit of the listed individual.
 
(4) Consists of    persons, none of which owns more than 1% of the outstanding
    shares of Common Stock prior to or after the Offering.
 
                                      49

<PAGE>
 

                         DESCRIPTION OF CAPITAL STOCK
 
  The authorized capital stock of the Company consists of 150,000,000 shares
of Common Stock, no par value per share, and 50,000,000 shares of Preferred
Stock, no par value per share, which can be issued in one or more series.
Immediately following the completion of the Offering, an aggregate of
shares of Common Stock will be issued and outstanding (assuming no exercise of
the over-allotment option), and no shares of Preferred Stock will be issued
and outstanding. As of    , 1998, the Common Stock is held of record by
persons.
 
  The following description of the Company's capital stock is a summary of the
material terms of such stock. It does not purport to be complete and is
subject in all respects to applicable California law and to the provisions of
the Company's Articles and Bylaws, copies of which have been filed as exhibits
to the Registration Statement of which this Prospectus is a part.
 
COMMON STOCK
 
  Subject to the rights of the holders of any Preferred Stock which may be
outstanding, each holder of Common Stock on the applicable record date is
entitled to receive such dividends as may be declared by the Board of
Directors out of funds legally available therefor, and, in the event of
liquidation, to share pro rata in any distribution of the Company's assets
after payment or providing for the payment of liabilities and the liquidation
preference of any outstanding Preferred Stock. Each holder of Common Stock is
entitled to one vote for each share held of record on the applicable record
date on all matters presented to a vote of shareholders. Holders of Common
Stock have no preemptive rights to purchase or subscribe for any stock or
other securities and there are no conversion rights or redemption or sinking
fund provisions with respect to such Common Stock. All outstanding shares of
Common Stock are, and the shares of Common Stock offered hereby will be when
issued, fully paid and non-assessable.
 
PREFERRED STOCK
 
  The Company's Articles authorize 50,000,000 shares of Preferred Stock. The
Board of Directors has the authority to issue the Preferred Stock in one or
more series and to fix the rights, preferences, privileges and restrictions
thereof, including dividend rights, conversion rights, voting rights, terms of
redemption, redemption prices, liquidation preferences and the number of
shares constituting any series or the designation of such series, without
further vote or action by the shareholders. The issuance of Preferred Stock
may have the effect of delaying, deferring or preventing a change in control
of the Company without further action by the shareholders and may adversely
affect the voting and other rights of the holders of Common Stock. The
issuance of Preferred Stock with voting and conversion rights may adversely
affect the voting power of the holders of Common Stock, including the loss of
voting control to others. At present, the Company has no plans to issue any of
the Preferred Stock.
 
CERTAIN ANTI-TAKEOVER EFFECTS
 
  Certain provisions of the Company's Articles and Bylaws summarized below may
be deemed to have anti-takeover effects and may delay, defer or prevent a
tender offer or takeover attempt that a shareholder might consider to be in
such shareholder's best interest, including those attempts that might result
in a premium over the market price for the shares held by shareholders.
 
  The Company's Articles authorize issuance of up to 50,000,000 shares of
Preferred Stock, with such characteristics that may tend to discourage a
merger, tender offer or proxy contest, as described in "--Preferred Stock"
above. The Company's Bylaws also limit the ability of shareholders to raise
matters at a meeting of shareholders without giving advance notice. In
addition, upon qualification of the Company as a "listed corporation" as
defined in Section 301.5(d) of the California Corporations Code, cumulative
voting will be eliminated and the Board of Directors will be divided into
three classes having staggered terms of three years each, with Classes I, II
and III having initial terms expiring at the annual general meeting of
shareholders in 1999, 2000 and 2001, respectively. See "Management."
 
                                      50

<PAGE>
 
TRANSFER AGENT AND REGISTRAR
 
  The Transfer Agent and Registrar for the Common Stock is
                      .
 
LISTING
 
  There is no public trading market for the Common Stock. Application will be
made to list the Common Stock on the New York Stock Exchange ("NYSE") under
the symbol "KFY."
 
                                      51

<PAGE>
 
                        SHARES ELIGIBLE FOR FUTURE SALE
 
  Sales of substantial amounts of Common Stock after the Offering could
adversely affect the market price of the Common Stock and could impair the
Company's future ability to raise capital through the sale of its equity
securities. Upon the consummation of the Offering, the Company will have
outstanding          shares of Common Stock (     shares if the U.S.
Underwriters' and Managers' over-allotment option is exercised in full). All
of the shares of Common Stock sold in the Offering will be freely tradable
under the Securities Act, unless purchased by "affiliates" of the Company as
that term is defined under the Securities Act. Upon the expiration of lock-up
agreements between the Company, its directors and officers. The existing
shareholders and the Underwriters, which will occur 180 days after the date of
this Prospectus (the "Effective Date"), all of the shares of Common Stock
owned by existing shareholders (the "Restricted Shares") will become eligible
for sale, subject to compliance with Rule 144 of the Securities Act and the
liquidity schedule as described below.
 
  In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned Restricted Shares for
at least one year, will be entitled to sell in any three-month period a number
of shares that does not exceed the greater of: (i) 1% of the number of shares
of Common Stock then outstanding (approximately           shares immediately
after this Offering) or (ii) the average weekly trading volume of the
Company's Common Stock on the NYSE during the four calendar weeks immediately
preceding the date on which notice of the sale is filed with the Securities
and Exchange Commission. Sales pursuant to Rule 144 are subject to certain
requirements relating to manner of sale, notice and availability of current
public information about the Company. A person (or persons whose shares are
aggregated) who is not deemed to have been an affiliate of the Company at any
time during the 90 days immediately preceding the sale and who has
beneficially owned Restricted Shares for at least two years is entitled to
sell such shares pursuant to Rule 144(k) without regard to the limitations and
requirements described above.
 
  Each of the Company and the existing shareholders of the Company has agreed
that it will not offer, sell, contract to sell, announce its intention to
sell, pledge or otherwise dispose of, directly or indirectly, and the Company
has agreed that it will not file with the Securities and Exchange Commission a
registration statement under the Securities Act relating to, any shares of
Common Stock or securities convertible into or exchangeable or exercisable for
any shares of the Company without the prior written consent of Credit Suisse
First Boston Corporation for a period of 180 days after the date of this
Prospectus, except in the case of the Company for the grant of options and
sales of shares under the Company's stock benefit plans. The lock-up
agreements with Credit Suisse First Boston Corporation and the Company may be
released at any time as to all or a portion of the shares subject to such
agreements at the sole discretion of Credit Suisse First Boston Corporation
and the Company.
 
  Substantially all of the Company's existing shareholders have agreed to be
subject to the Liquidity Schedule that limits their ability to sell their
current Common Stock holdings. See "Management--Liquidity Schedule."
 
                                      52

<PAGE>
 

                                 UNDERWRITING
 
  Under the terms and subject to the conditions contained in an Underwriting
Agreement dated      , 1998 (the "U.S. Underwriting Agreement"), the
underwriters named below (the "U.S. Underwriters"), for whom Credit Suisse
First Boston Corporation, Donaldson, Lufkin & Jenrette Securities Corporation
and PaineWebber Incorporated are acting as representatives (the
"Representatives"), have severally but not jointly agreed to purchase from the
Company and the Selling Shareholders the following respective numbers of U.S.
Shares:
 

<TABLE>
<CAPTION>
                                                                          NUMBER
                                                                            OF
                                                                           U.S.
                                UNDERWRITER                               SHARES
                                -----------                               ------
   <S>                                                                    <C>
   Credit Suisse First Boston Corporation................................
   Donaldson, Lufkin & Jenrette Securities Corporation...................
   PaineWebber Incorporated..............................................
                                                                           ----
     Total...............................................................
                                                                           ====
</TABLE>

 
  The U.S. Underwriting Agreement provides that the obligations of the U.S.
Underwriters are subject to certain conditions precedent and that the U.S.
Underwriters will be obligated to purchase all of the U.S. Shares offered
hereby (other than those shares covered by the over-allotment option described
below) if any are purchased. The U.S. Underwriting Agreement provides that, in
the event of a default by a U.S. Underwriter, in certain circumstances the
purchase commitments of non-defaulting U.S. Underwriters may be increased or
the U.S. Underwriting Agreement may be terminated.
 
  The Company and the Selling Shareholders have entered into a Subscription
Agreement (the "Subscription Agreement") with the Managers of the
International Offering (the "Managers") providing for the concurrent offer and
sale of the International Shares outside the United States and Canada. The
closing of the U.S. Offering is a condition to the closing of the
International Offering and vice versa.
 
  The Company has granted to the U.S. Underwriters and the Managers an option,
exercisable by Credit Suisse First Boston Corporation, expiring at the close
of business on the 30th day after the date of this Prospectus, to purchase up
to      additional shares at the initial public offering price, less the
underwriting discounts and commissions, all as set forth on the cover page of
this Prospectus. Such option may be exercised only to cover over-allotments in
the sale of the shares of Common Stock offered hereby. To the extent such
option is exercised, each U.S. Underwriter and each Manager will become
obligated, subject to certain conditions, to purchase approximately the same
percentage of such additional shares being sold to the U.S. Underwriters and
the Managers as the number of U.S. Shares set forth next to such U.S.
Underwriter's name in the preceding table and as the number set forth next to
such Manager's name in the corresponding table in the prospectus relating to
the International Offering bears to the sum of the total number of shares of
Common Stock in such tables.
 
  The Company and the Selling Shareholders have been advised by the
Representatives that the U.S. Underwriters propose to offer the U.S. Shares in
the United States and Canada to the public initially at the public offering
price set forth on the cover page of this Prospectus and, through the
Representatives, to certain dealers at such price less a concession of $
per share, and the U.S. Underwriters and such dealers may allow a discount of
$     per share on sales to certain other dealers. After the Offering, the
public offering price and concession and discount to dealers may be changed by
the Representatives.
 
  The public offering price, the aggregate underwriting discounts and
commissions per share and per share concession and discount to dealers for the
U.S. Offering and concurrent International Offering will be identical.
Pursuant to an Agreement between the U.S. Underwriters and Managers (the
"Intersyndicate Agreement")
 
                                      53

<PAGE>
 
relating to the Offering, changes in the public offering price, concession and
discount to dealers will be made only upon the mutual agreement of Credit
Suisse First Boston Corporation, as representative of the U.S. Underwriters,
and Credit Suisse First Boston (Europe) Limited ("CSFBL"), on behalf of the
Managers.
 
  Pursuant to the Intersyndicate Agreement, each of the U.S. Underwriters has
agreed that, as part of the distribution of the U.S. Shares and subject to
certain exceptions, it has not offered or sold, and will not offer or sell,
directly or indirectly, any shares of Common Stock or distribute any
prospectus relating to the Common Stock to any person outside the United
States or Canada or to any other dealer who does not so agree. Each of the
Managers has agreed or will agree that, as part of the distribution of the
International Shares and subject to certain exceptions, it has not offered or
sold, and will not offer or sell, directly or indirectly, any shares of Common
Stock or distribute any prospectus relating to the Common Stock in the United
States or Canada or to any other dealer who does not so agree. The foregoing
limitations do not apply to stabilization transactions or to transactions
between the U.S. Underwriters and the Managers pursuant to the Intersyndicate
Agreement. As used herein, "United States" means the United States of America
(including the States and the District of Columbia), its territories,
possessions and other areas subject to its jurisdiction, "Canada" means
Canada, its provinces, territories, possessions and other areas subject to its
jurisdiction, and an offer or sale shall be in the United States or Canada if
it is made to (i) any individual resident in the United States or Canada or
(ii) any corporation, partnership, pension, profit-sharing or other trust or
entity (including any such entity acting as an investment adviser with
discretionary authority) whose office most directly involved with the purchase
is located in the United States or Canada.
 
  Pursuant to the Intersyndicate Agreement, sales may be made between the U.S.
Underwriters and the Managers of such number of shares of Common Stock as may
be mutually agreed upon. The price of any shares so sold will be the public
offering price, less such amount as may be mutually agreed upon by Credit
Suisse First Boston Corporation, as representative of the U.S. Underwriters,
and CSFBL, on behalf of the Managers, but not exceeding the selling concession
applicable to such shares. To the extent there are sales between the U.S.
Underwriters and the Managers pursuant to the Intersyndicate Agreement, the
number of shares of Common Stock initially available for sale by the U.S.
Underwriters or by the Managers may be more or less than the amount appearing
on the cover page of the Prospectus. Neither the U.S. Underwriters nor the
Managers are obligated to purchase from the other any unsold shares of Common
Stock.
 
  This Prospectus may be used by underwriters and dealers in connection with
sales of International Shares to persons located in the United States, to the
extent such sales are permitted by the contractual limitations on sales
described above.
 
  The Representatives have informed the Company and the Selling Shareholders
that they do not expect discretionary sales by the Underwriters to exceed 5%
of the shares being offered hereby.
 
  Each of the Company and the existing shareholders of the Company has agreed
that it will not offer, sell, contract to sell, announce its intention to
sell, pledge or otherwise dispose of, directly or indirectly, or file with the
Securities and Exchange Commission a registration statement under the
Securities Act relating to, any shares of Common Stock or securities
convertible into or exchangeable or exercisable for any shares of the Company
without the prior written consent of Credit Suisse First Boston Corporation
for a period of 180 days after the date of this Prospectus, except in the case
of the Company for the grant of options and sale of shares under the Company's
stock benefit plans.
 
  The U.S. Underwriters have reserved for sale, at the initial public offering
price, up to     shares of Common Stock for employees, directors and certain
other persons associated with the Company who have expressed an interest in
purchasing such shares of Common Stock in the Offering. The number of shares
available for sale to the general public in the Offering will be reduced to
the extent such persons purchase such reserved shares. Any reserved shares not
so purchased will be offered by the U.S. Underwriters to the general public on
the same terms as the other shares offered hereby.
 
                                      54

<PAGE>
 
  The Company and Selling Shareholders have agreed to indemnify the U.S.
Underwriters and the Managers against certain liabilities, including civil
liabilities under the Securities Act, or contribute to payments that the U.S.
Underwriters and the Managers may be required to make in respect thereof.
 
  Application will be made to list the shares of Common Stock on the NYSE
under the symbol "KFY."
 
  In connection with the listing of the Common Stock on the NYSE, the
Underwriters will undertake to sell round lots of 100 shares or more to a
minimum of 2,000 beneficial owners.
 
  The initial public offering price for the shares will be determined by
negotiation among the Company, the Selling Shareholders and the
Representatives. In determining such price, consideration will be given to
various factors, including market conditions for the initial public offering,
the past history of and prospects for the Company's business, operations,
earnings and financial position, an assessment of the Company's management,
the market for securities of companies in businesses similar to those of the
Company, the general condition of the securities markets and other relevant
factors. There can be no assurance, however, that the initial public offering
price will correspond to the price at which the Common Stock will trade in the
public market subsequent to the Offering or that an active trading market will
develop and continue after the Offering.
 
  The Representatives, on behalf of the U.S. Underwriters and the Managers,
may engage in over-allotment, stabilizing transactions, syndicate covering
transactions and penalty bids in accordance with Regulation M under the
Securities Exchange Act of 1934 (the "Exchange Act"). Over-allotment involves
syndicate sales in excess of the offering size, which creates a syndicate
short position. Stabilizing transactions permit bids to purchase the
underlying security so long as the stabilizing bids do not exceed a specified
maximum. Syndicate covering transactions involve purchases of the Common Stock
in the open market after the distribution has been completed in order to cover
syndicate short positions. Penalty bids permit the Representatives to reclaim
a selling concession from a syndicate member when the Common Stock originally
sold by such syndicate member is purchased in a syndicate covering transaction
to cover syndicate short positions. Such stabilizing transactions, syndicate
covering transactions and penalty bids may cause the price of the Common Stock
to be higher than it would otherwise be in the absence of such transactions.
These transactions may be effected on the NYSE or otherwise and, if commenced,
may be discontinued at any time.
 
                                      55

<PAGE>
 
                         NOTICE TO CANADIAN RESIDENTS
 
RESALE RESTRICTIONS
 
  The distribution of the Common Stock in Canada is being made only on a
private placement basis exempt from the requirement that the Company and
Selling Shareholders prepare and file a prospectus with the securities
regulatory authorities in each province where trades of Common Stock are
effected. Accordingly, any resale of the Common Stock in Canada must be made
in accordance with applicable securities laws which will vary depending on the
relevant jurisdiction, and which may require resales to be made in accordance
with available statutory exemptions or pursuant to a discretionary exemption
granted by the applicable Canadian securities regulatory authority. Purchasers
are advised to seek legal advice prior to any resale of the Common Stock.
 
REPRESENTATIONS OF PURCHASERS
 
  Each purchaser of Common Stock in Canada who receives a purchase
confirmation will be deemed to represent to the Company and Selling
Shareholders and the dealer from whom such purchase confirmation is received
that (i) such purchaser is entitled under applicable provincial securities
laws to purchase such Common Stock without the benefit of a prospectus
qualified under such securities laws, (ii) where required by law, that such
purchaser is purchasing as principal and not as agent, and (iii) such
purchaser has reviewed the text above under "--Resale Restrictions."
 
RIGHTS OF ACTION (ONTARIO PURCHASERS)
 
  The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available,
including common law rights of action for damages or rescission or rights of
action under the civil liability provisions of the U.S. federal securities
laws.
 
ENFORCEMENT OF LEGAL RIGHTS
 
  All of the issuer's directors and officers as well as the experts named
herein and the Selling Shareholders may be located outside of Canada and, as a
result, it may not be possible for Canadian purchasers to effect service of
process within Canada upon the issuer or such persons. All or a substantial
portion of the assets of the issuer and such persons may be located outside of
Canada and, as a result, it may not be possible to satisfy a judgment against
the issuer or such persons in Canada or to enforce a judgment obtained in
Canadian courts against such issuer or persons outside of Canada.
 
NOTICE TO BRITISH COLUMBIA RESIDENTS
 
  A purchaser of Common Stock to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
Common Stock acquired by such purchaser pursuant to this offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #95/17, a copy of which may be obtained from the Company. Only one
such report must be filed in respect of Common Stock acquired on the same date
and under the same prospectus exemption.
 
TAXATION AND ELIGIBILITY FOR INVESTMENT
 
  Canadian purchasers of Common Stock should consult their own legal and tax
advisors with respect to the tax consequences of an investment in the Common
Stock in their particular circumstances and with respect to the eligibility of
the Common Stock for investment by the purchaser under relevant Canadian
Legislation.
 
                                      56

<PAGE>
 

                                 LEGAL MATTERS
 
  The validity of the shares of the Common Stock offered hereby will be passed
upon for the Company by O'Melveny & Myers LLP, Los Angeles, California and for
the Underwriters by Sullivan & Cromwell, Los Angeles, California.
 

                                    EXPERTS
 
  The consolidated financial statements and schedule included in this
Prospectus and elsewhere in the Registration Statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
 
                             AVAILABLE INFORMATION
 
  The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (together with all
amendments, exhibits, schedules and supplements thereto, the "Registration
Statement"), of which this Prospectus forms a part, covering the Common Stock
to be sold pursuant to the Offering. As permitted by the rules and regulations
of the Commission, this Prospectus omits certain information, exhibits and
undertakings contained in the Registration Statement. Such additional
information, exhibits and undertakings can be inspected at and obtained from
the Commission at prescribed rates at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549 and at certain regional offices of the Commission located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661
and 13th Floor, 7 World Trade Center, New York, New York, 10048. The
Commission maintains a Web site at http://www.sec.gov that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. In addition, application will be
made to list the Common Stock on the NYSE, and reports and other information
concerning the Company may be inspected at the offices of such exchange. For
additional information with respect to the Company, the Common Stock and
related matters and documents, reference is made to the Registration
Statement. Statements contained herein concerning any such document are not
necessarily complete and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement. Each such
statement is qualified in its entirety by such reference.
 
  The Company will issue annual reports and unaudited quarterly reports to its
shareholders for the first three quarters of each fiscal year. Annual reports
will include audited consolidated financial statements prepared in accordance
with accounting principles generally accepted in the United States and a
report of its independent public accountants with respect to the examination
of such financial statements. In addition, the Company will issue such other
interim reports as it deems appropriate.
 
                                      57

<PAGE>
 
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 

<TABLE>
<S>                                                                         <C>
Report of Independent Public Accountants................................... F-2
Consolidated Balance Sheets as of April 30, 1997 and 1998.................. F-3
Consolidated Statements of Income for the fiscal years ended April 30,
 1996, 1997 and 1998....................................................... F-5
Consolidated Statements of Shareholders' Equity for the fiscal years ended
 April 30, 1996, 1997 and 1998............................................. F-6
Consolidated Statements of Cash Flows for the fiscal years ended April 30,
 1996, 1997 and 1998....................................................... F-7
Notes to Consolidated Financial Statements................................. F-8
</TABLE>

 
                                      F-1

<PAGE>
 
  After the stock split discussed in Note 14 to Korn/Ferry International's
consolidated financial statements is effective, we expect to be in a position
to render the following auditor's report.
 
Arthur Andersen LLP
 
Los Angeles, California
July 31, 1998
 
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To the Shareholders and Board of Directors of
Korn/Ferry International and Subsidiaries:
 
  We have audited the accompanying consolidated balance sheets of KORN/FERRY
INTERNATIONAL AND SUBSIDIARIES (the "Company"), a California corporation, as
of April 30, 1998 and 1997, and the related consolidated statements of income,
shareholders' equity and cash flows for each of the three years in the period
ended April 30, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
 
  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
 
  In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of KORN/FERRY INTERNATIONAL
AND SUBSIDIARIES as of April 30, 1998 and 1997, and the consolidated results
of their operations and their cash flows for each of the three years in the
period ended April 30, 1998, in conformity with generally accepted accounting
principles.
 
                                      F-2

<PAGE>
 
                   KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
 

<TABLE>
<CAPTION>
                                                              AS OF APRIL 30,
                                                             ------------------
                                                               1997      1998
                                                             --------  --------
<S>                                                          <C>       <C>
ASSETS
- ------
Cash and cash equivalents..................................  $ 25,298  $ 32,358
Receivables due from clients, net of allowance for doubtful
 accounts
 of $3,846 and $5,390 in 1997 and 1998, respectively.......    49,749    57,754
Other receivables..........................................     3,937     3,501
Prepaid expenses...........................................     5,758     6,265
                                                             --------  --------
    Total current assets...................................    84,742    99,878
                                                             --------  --------
Property and equipment:
  Computer equipment and software..........................    13,259    13,715
  Furniture and fixtures...................................    10,673    13,573
  Leasehold improvements...................................     7,596     9,713
  Automobiles..............................................     1,580     1,679
                                                             --------  --------
                                                               33,108    38,680
Less: Accumulated depreciation and amortization............   (15,361)  (17,583)
                                                             --------  --------
    Property and equipment, net............................    17,747    21,097
                                                             --------  --------
Cash surrender value of company owned life insurance
 policies, net of loans....................................    21,292    30,109
Guaranteed investment contracts............................     3,546     1,746
Notes receivable...........................................     2,781     2,308
Deferred income taxes......................................    11,953    16,545
Goodwill and other intangibles, net of accumulated
 amortization of $3,332 and
 $4,182 in 1997 and 1998, respectively.....................     4,364     2,972
Other......................................................     1,980     1,716
                                                             --------  --------
    Total assets...........................................  $148,405  $176,371
                                                             ========  ========
</TABLE>

 
 
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-3

<PAGE>
 
                   KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
 
                    CONSOLIDATED BALANCE SHEETS--(CONTINUED)
                                 (IN THOUSANDS)
 

<TABLE>
<CAPTION>
                                                             AS OF APRIL 30,
                                                            ------------------
                                                              1997      1998
                                                            --------  --------
<S>                                                         <C>       <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Notes payable and current maturities of long-term debt..... $  5,072  $  2,559

Accounts payable...........................................    4,938     3,651
Income taxes payable.......................................    5,454     6,903
Accrued liabilities:
  Compensation.............................................   24,164    26,100
  Payroll taxes............................................    7,790    14,821
  Other accruals...........................................   17,273    19,271
                                                            --------  --------
    Total current liabilities..............................   64,691    73,305
Deferred compensation......................................   27,676    34,552
Long-term debt.............................................    3,206     6,151
Other......................................................      933     1,582
                                                            --------  --------
    Total liabilities......................................   96,506   115,590
                                                            --------  --------
Non-controlling shareholders' interests....................    1,087     2,027
                                                            --------  --------
Mandatorily redeemable common and preferred stock:
  Preferred stock, no par value
  Series A--Authorized 10 shares, outstanding 9 shares in
   1997 and 1998, at redemption value......................       63        63
  Series B--Authorized 150 shares, outstanding 126 and 121
   shares in 1997 and 1998, at book value..................    1,306     1,353
  Common stock, no par value--outstanding 20,062 and 22,282
   shares in 1997 and 1998, at book value..................   52,159    62,110
  Less: Notes receivable from shareholders.................   (5,339)   (7,365)
                                                            --------  --------
    Total mandatorily redeemable common and preferred
     stock.................................................   48,189    56,161
                                                            --------  --------
Shareholders' equity:
  Common Stock, no par value--Authorized 150,000 shares,
   outstanding 1,010 and 920 shares in 1997 and 1998, at
   book value..............................................      --        --
  Retained Earnings........................................    2,623     2,593
                                                            --------  --------
    Total shareholders' equity.............................    2,623     2,593
                                                            --------  --------
    Total liabilities and shareholders' equity............. $148,405  $176,371
                                                            ========  ========
</TABLE>

 
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-4

<PAGE>
 
                   KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
 
                       CONSOLIDATED STATEMENTS OF INCOME
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 

<TABLE>
<CAPTION>
                                                    FISCAL YEAR ENDED APRIL 30,
                                                   ----------------------------
                                                     1996      1997      1998
                                                   --------  --------  --------
<S>                                                <C>       <C>       <C>
Professional fees and reimbursable expenses......  $225,459  $269,624  $311,016
Other income including interest income...........     4,758     2,937     4,009
                                                   --------  --------  --------
  Total revenues.................................   230,217   272,561   315,025
Less: Reimbursable candidate expenses............    (8,731)  (12,137)  (14,470)
                                                   --------  --------  --------
  Net revenues...................................   221,486   260,424   300,555
                                                   --------  --------  --------
Compensation and benefits........................   140,721   166,854   197,790
General and administrative expenses..............    64,419    73,005    84,575
Interest expense.................................     3,683     3,320     4,234
                                                   --------  --------  --------
  Income before provision for income taxes and
   non-controlling shareholders' interests.......    12,663    17,245    13,956
Provision for income taxes.......................     3,288     6,658     6,687
Non-controlling shareholders' interests..........     1,579     1,588     2,025
                                                   --------  --------  --------
  Net income.....................................  $  7,796  $  8,999  $  5,244
                                                   ========  ========  ========
Basic earnings per common share..................  $    .38  $    .42  $    .24
                                                   ========  ========  ========
Basic weighted average common shares outstanding.    20,390    21,382    21,885
                                                   ========  ========  ========
Diluted earnings per common share................  $    .36  $    .40  $    .23
                                                   ========  ========  ========
Diluted weighted average common shares
 outstanding.....................................    23,019    23,481    23,839
                                                   ========  ========  ========
</TABLE>

 
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-5

<PAGE>
 
                   KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
 
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                 (IN THOUSANDS)
 

<TABLE>
<CAPTION>
                                                                           ALLOCATION OF
                                                                           SHAREHOLDERS'
                                                              ACCUMULATED    EQUITY TO
                          PREFERRED STOCK                        OTHER      MANDATORILY      TOTAL
                         ----------------- COMMON   RETAINED COMPREHENSIVE  REDEEMABLE   SHAREHOLDERS' COMPREHENSIVE
                         SERIES A SERIES B  STOCK   EARNINGS    INCOME         STOCK        EQUITY        INCOME
                         -------- -------- -------  -------- ------------- ------------- ------------- -------------
<S>                      <C>      <C>      <C>      <C>      <C>           <C>           <C>           <C>
Balance as of April 30,
 1995...................   $ 1      $14    $ 9,211  $31,976     $  (420)     $(38,763)      $2,019
 Purchase of stock......             (1)    (2,957)                             2,958
 Issuance of stock......                     4,402                             (4,402)
Comprehensive income:
 Net income.............                              7,796                    (7,456)         340        $ 7,796
 Foreign currency
  translation
  adjustments before
  tax...................                                         (2,564)        2,452         (112)        (2,564)
 Income tax benefit
  related to other
  comprehensive income..                                            666          (637)          29            666
                                                                                                          -------
Comprehensive income....                                                                                  $ 5,898
                           ---      ---    -------  -------     -------      --------       ------        =======
Balance as of April 30,
 1996...................     1       13     10,656   39,772      (2,318)      (45,848)       2,276
 Purchase of stock......             (1)    (5,051)                             5,052
 Issuance of stock......                     5,843                             (5,843)
Comprehensive income:
 Net income.............                              8,999                    (8,567)         432        $ 8,999
 Foreign currency
  translation
  adjustments before
  tax...................                                         (2,872)        2,734         (138)        (2,872)
 Income tax benefit
  related to other
  comprehensive income..                                          1,109        (1,056)          53          1,109
                                                                                                          -------
Comprehensive income....                                                                                  $ 7,236
                           ---      ---    -------  -------     -------      --------       ------        =======
Balance as of April 30,
 1997...................     1       12     11,448   48,771      (4,081)      (53,528)       2,623
 Purchase of stock......                    (3,150)                             2,916         (234)
 Issuance of stock......                     8,635                             (8,635)
Comprehensive income:
 Net income.............                              5,244                    (5,005)         239        $ 5,244
 Foreign currency
  translation
  adjustments before
  tax...................                                         (1,461)        1,394          (67)        (1,461)
 Income tax benefit
  related to other
  comprehensive income..                                            700          (668)          32            700
                                                                                                          -------
Comprehensive income....                                                                                  $ 4,483
                           ---      ---    -------  -------     -------      --------       ------        =======
Balance as of April 30,
 1998...................   $ 1      $12    $16,933  $54,015     $(4,842)     $(63,526)      $2,593
                           ===      ===    =======  =======     =======      ========       ======
</TABLE>

 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-6

<PAGE>
 
                   KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
 

<TABLE>
<CAPTION>
                                                   FISCAL YEAR ENDED APRIL
                                                             30,
                                                  ----------------------------
                                                    1996      1997      1998
                                                  --------  --------  --------
<S>                                               <C>       <C>       <C>
Cash from operating activities:
  Net income..................................... $  7,796  $  8,999  $  5,244
  Adjustments to reconcile net income to net cash
   provided by operating activities:
    Depreciation.................................    3,599     5,087     6,552
    Amortization.................................    1,541       424     1,165
    Provision for doubtful accounts..............    1,590     2,196     2,427
    Cash surrender value in excess of premiums
     paid........................................   (1,142)   (1,601)   (1,767)
    Earnings from affiliate......................      589
    Gain on sale of interest in affiliate........     (516)
  Change in other assets and liabilities:
    Deferred compensation........................    2,056     3,093     6,876
    Receivables due from clients.................   (8,769)  (12,630)   (9,996)
    Prepaid expenses.............................     (988)   (1,174)     (507)
    Income taxes payable.........................   (5,323)      276    (3,143)
    Accounts payable and accrued liabilities.....    8,344     6,036     9,678
    Non-controlling shareholders' interests and
     other.......................................     (431)     (550)    1,953
                                                  --------  --------  --------
      Net cash provided by operating activities..    8,346    10,156    18,482
                                                  --------  --------  --------
Cash from investing activities:
  Purchase of property and equipment.............   (8,084)   (8,483)   (9,903)
  Premiums on life insurance.....................   (8,590)   (7,865)  (12,408)
  Redemption (purchase) of guaranteed investment
   contracts.....................................   (5,299)    1,753     1,949
  Sale of interest in affiliates.................      357       434       473
                                                  --------  --------  --------
      Net cash used in investing activities......  (21,616)  (14,161)  (19,889)
                                                  --------  --------  --------
Cash from financing activities:
  Increase/(decrease) in bank borrowings.........   (1,000)    2,000     2,000
  Payment of debt................................   (1,477)   (1,470)   (1,957)
  Borrowings under life insurance policies.......   12,878     1,973     5,358
  Purchase of common and preferred stock.........   (2,532)   (3,674)   (2,761)
  Issuance of common and preferred stock.........    5,695     5,597     6,588
                                                  --------  --------  --------
      Net cash provided by financing activities..   13,564     4,426     9,228
                                                  --------  --------  --------
Effect of exchange rate changes on cash flows....   (1,898)   (1,763)     (761)
                                                  --------  --------  --------
Net increase (decrease) in cash and cash
 equivalents.....................................   (1,604)   (1,342)    7,060
Cash and cash equivalents at beginning of the
 year............................................   28,244    26,640    25,298
                                                  --------  --------  --------
Cash and cash equivalents at end of the year..... $ 26,640  $ 25,298  $ 32,358
                                                  ========  ========  ========
</TABLE>

 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
 
                                      F-7

<PAGE>
 
                   KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
                                APRIL 30, 1998
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Nature of Business
 
  Korn/Ferry International and Subsidiaries is engaged in the business of
providing executive search, consulting and related services globally on a
retained basis.
 
 Principles of Consolidation
 
  The consolidated financial statements include the accounts of Korn/Ferry
International, all of its wholly owned domestic and international
subsidiaries, and affiliated companies in which the Company has effective
control (collectively, the "Company"). All material intercompany accounts and
transactions have been eliminated.
 
 Use of Estimates
 
  The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The most
significant estimates with regard to these financial statements relate to the
accounting for deferred compensation plans and deferred tax assets. (See Notes
8 and 9).
 
 Translation of Foreign Currencies
 
  The functional currency applicable to the Company's foreign subsidiaries,
except those in Argentina, Brazil, Colombia and Venezuela, is the local
currency. Due to high inflation, Argentina, Brazil, Colombia and Venezuela use
the U.S. dollar as the functional currency.
 
  Assets and liabilities of the Company's foreign subsidiaries are translated
into U.S. dollars at the rates of exchange in effect at the end of each year
and revenues and expenses are translated at average rates of exchange during
the year. Translation adjustments are reported as a component of comprehensive
income.
 
  For entities denominated in currencies other than their functional
currencies, gains and losses resulting from the effect of exchange rate
changes are included in determining net income and resulted in losses,
included in general and administrative expenses, of $97, $344 and $511 in
fiscal 1996, 1997 and 1998, respectively.
 
 Revenue Recognition
 
  Substantially all professional fee revenues are derived from fees for
professional services related to executive search, consulting and related
services. Fee revenues are recognized as clients are billed and services are
substantially rendered. The Company generally bills clients in three monthly
installments beginning with the acceptance of a search assignment.
Reimbursable expenses include specifically identified and allocated costs
related to professional services that are billed to clients.
 
 Cash Flows
 
  Cash equivalents consist of highly liquid investments purchased with
original maturities of three months or less.
 
  Net cash from operating activities includes cash payments for interest of
$3,233, $3,594 and $4,381 in fiscal 1996, 1997 and 1998, respectively. Cash
payments for income taxes, net of refunds, amounted to $6,620, $6,770 and
$9,830 in fiscal 1996, 1997 and 1998, respectively.
 
                                      F-8

<PAGE>
 
                   KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
 Fair Value of Financial Instruments
 
  The carrying amount of cash, cash equivalents and accounts receivable
approximates fair value due to the short maturity of these instruments.
Guaranteed investment contracts, notes receivable, notes payable and long-term
debt bear interest at rates that approximate the current market interest rates
for similar instruments and, accordingly the carrying value approximates fair
value.
 
 Concentration of Credit Risk
 
  Financial instruments which potentially subject the Company to significant
concentrations of credit risk consist principally of receivables due from
clients. Concentrations of credit risk with respect to receivables are limited
due to the Company's large number of customers and their dispersion across
many different industries and countries worldwide.
 
 Earnings per Common Share
 
  The Company adopted Statement of Financial Accounting Standard ("SFAS") No.
128, "Earnings per Share," ("EPS") at April 30, 1998, which requires the
Company to report basic and diluted EPS. Basic EPS is computed by dividing net
income by the weighted average number of common shares outstanding for the
year. Diluted EPS reflects the potential dilution that could occur if the
Company's phantom stock units, stock rights and Common Stock purchase
commitments were converted or issued as of the earlier of the beginning of
each year or the date of issuance. (See Note 2).
 
 Property and Equipment
 
  Leasehold improvements are amortized over the useful life of the asset, or
the lease term, whichever is less, using the straight-line method. All other
property and equipment is depreciated or amortized over the estimated useful
lives of three to ten years, using the straight-line method.
 
 Cash Surrender Value of Life Insurance
 
  The increase in the cash surrender value ("CSV") of Company owned life
insurance ("COLI") contracts in excess of insurance premiums paid is reported
in compensation and benefits expense. (See Note 8).
 
 Goodwill and Purchased Employment Contracts
 
  Goodwill and purchased employment contracts are amortized on a straight-line
basis over the shorter of ten years or the life of the contract, from the date
of acquisition.
 
 New Accounting Pronouncements
 
  During 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 131, "Disclosures about Segments of an Enterprise and Related
Information," which requires companies to report financial and descriptive
information about its reportable operating segments in the interim and annual
financial statements. It is effective for annual periods beginning after
December 15, 1997 and will be adopted by the Company in fiscal 1999. It is not
expected that the adoption of this standard will have an impact on the
consolidated financial statements, however, it may require additional footnote
disclosure.
 
  During 1998, the FASB issued SFAS No. 132, "Employers' Disclosure about
Pensions and Other Postretirement Benefits an amendment to FASB Statements No.
87, 88 and 106," which revises employers'
 
                                      F-9

<PAGE>
 
                   KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
disclosure requirements for pension and other postretirement plans. It does
not change the measurement or recognition of costs and benefits provided by
those plans. The standard is effective for fiscal years beginning after
December 15, 1997, although earlier application is encouraged. Adoption of
this pronouncement is reflected in the accompanying consolidated financial
statements (See Note 8). Disclosures for earlier periods have been restated
for comparative purposes.
 
  During 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and for Hedging Activities," which establishes new standards for
reporting derivative and hedging information. The standard is effective for
periods beginning after June 15, 1999 and will be adopted by the Company as of
May 1, 2000. It is not expected that the adoption of this standard will have
an impact on the consolidated financial statements nor require additional
footnote disclosure since the Company does not currently utilize derivative
instruments or participate in structured hedging activities.
 
Reclassifications
 
  Certain prior year balances have been reclassified in order to conform to
the current year consolidated financial statement presentation.
 
2. BASIC AND DILUTED EARNINGS PER SHARE
 
  Following is a reconciliation of the numerator and denominator used in the
computation of basic and diluted EPS:
 

<TABLE>
<CAPTION>
                                                         FISCAL YEAR ENDED APRIL 30,
                      --------------------------------------------------------------------------------------------------
                                    1996                             1997                             1998
                      -------------------------------- -------------------------------- --------------------------------
                                                 PER                              PER                              PER
                        INCOME       SHARES     SHARE    INCOME       SHARES     SHARE    INCOME       SHARES     SHARE
                      (NUMERATOR) (DENOMINATOR) AMOUNT (NUMERATOR) (DENOMINATOR) AMOUNT (NUMERATOR) (DENOMINATOR) AMOUNT
                      ----------- ------------- ------ ----------- ------------- ------ ----------- ------------- ------
<S>                   <C>         <C>           <C>    <C>         <C>           <C>    <C>         <C>           <C>
BASIC EPS
Income available to
 common
 shareholders.......    $7,796       20,390     $0.38    $8,999       21,382     $0.42    $5,244       21,885     $0.24
                                                =====                            =====                            =====
EFFECT OF DILUTIVE
 SECURITIES
Shareholder common
 stock purchase
 commitments........                    894                              436                              318
Phantom stock units.       299        1,272                 246        1,242                 161        1,219
Stock appreciation
 rights.............       109          463                  88          421                  14          417
                        ------       ------              ------       ------              ------       ------
DILUTED EPS
Income available to
 common shareholders
 plus assumed
 conversions........    $8,204       23,019     $0.36    $9,333       23,481     $0.40    $5,419       23,839     $0.23
                        ======       ======     =====    ======       ======     =====    ======       ======     =====
</TABLE>

 
  The share amounts in the table above reflect a 4 to 1 stock split approved
by the Board of Directors on July 24, 1998. (See Note 14).
 
3. NOTES PAYABLE AND LONG-TERM DEBT
 
  At April 30, 1998, the Company maintained an $11,000 unsecured bank
revolving line of credit facility. Borrowings on the line of credit bear
interest at the bank's prime rate less one-half percent, which was 8.0% at
April 30, 1998. There is no outstanding balance under the revolving line of
credit as of April 30, 1998. Subsequent to April 30, 1998, the line of credit
facility was increased to $16,000.
 
                                     F-10

<PAGE>
 
                   KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
  The Company's long-term debt consists of the following:
 

<TABLE>
<CAPTION>
                                                                FISCAL YEAR
                                                              ENDED APRIL 30,
                                                              ----------------
                                                               1997     1998
                                                              -------  -------
<S>                                                           <C>      <C>
8% variable rate unsecured term loan due to bank, principal
 and interest payable quarterly.............................. $   --   $ 5,000
Unsecured subordinated notes payable to former shareholders
 due through October 2002, bearing interest at various rates
 up to 8.75%.................................................   5,278    3,710
                                                              -------  -------
  Total debt.................................................   5,278    8,710
Less: current maturities of long-term debt...................  (2,072)  (2,559)
                                                              -------  -------
  Long-term debt............................................. $ 3,206  $ 6,151
                                                              =======  =======
</TABLE>

 
  The Company issued notes payable to shareholders of $395, $1,708 and $389 in
fiscal 1996, 1997 and 1998, respectively, for the purchase of Common Stock.
 
  Annual maturities of long-term debt for the five fiscal years subsequent to
April 30, 1998 are: $2,559 in 1999, $2,488 in 2000, $1,336 in 2001, $1,254 in
2002 and $1,073 in 2003.
 
  The Company also has outstanding borrowings against the CSV of COLI
contracts of $32,278 and $37,638 at April 30, 1997 and 1998, respectively.
These borrowings are secured by the CSV, principal payments are not scheduled
and interest is payable at least annually, at various variable rates. (See
Note 8).
 
 
4. SHAREHOLDERS AGREEMENTS AND SUPPLEMENTAL INFORMATION REGARDING BOOK VALUE
PER SHARE
 
  Under existing stock purchase and repurchase agreements, collectively
referred to as the Equity Participation Program ("EPP"), eligible executives
of the Company have the opportunity to purchase shares of Common Stock at book
value and are required to sell their shares of Common Stock to the Company at
book value upon termination of their employment. For purposes of EPP purchases
and sales, book value per share, adjusted for the 4 to 1 stock split, was
$2.60 ($10.40 pre-stock split) and $2.79 ($11.15 pre-stock split) at April 30,
1997 and 1998, respectively. The EPP book value calculation excludes the
effect of the Series A Preferred Stock and shareholder notes related to Common
Stock purchases. The Company ceased issuing shares of Common Stock under the
EPP as of May 1, 1998. The Board of Directors approved the Supplemental Equity
Participation Program on July 24, 1998, effective May 2, 1998, that provides
for the issuance of common shares at fair value.
 
  Shares subject to book value repurchase agreements are classified as
mandatorily redeemable common stock in the accompanying consolidated balance
sheets. As of April 30, 1997 and 1998 notes receivable from shareholders for
Common Stock purchases were $4,566 and $6,612, respectively. The Company
issued Common Stock in exchange for notes receivable from shareholders of
$3,172, $4,305 and $6,184 in fiscal 1996, 1997 and 1998 respectively.
 
  At April 30, 1998, the Company had commitments of $1,484 from vice
presidents to buy additional Common Stock at book value under the EPP.
Additionally, the Company had commitments to sell to vice presidents Common
Shares with an aggregate price at book value of $5,805, at May 1, 1998. The
difference between the fair market value of these shares and the EPP book
value purchase price, of approximately $16,000, will be recorded as
compensation and benefits expense when the book value repurchase agreements
are amended and replaced with the fair value repurchase agreements upon
consummation of the IPO. In addition the Company will recognize compensation
and benefits expense related to shares issued subsequent to July 1997, of
approximately $10,600, representing the difference between the fair market
value and the book value of the shares at the date of issuance.
 
                                     F-11

<PAGE>
 
                   KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
   The repurchase agreements under the EPP will be amended upon consummation
of an initial public offering ("IPO") to permit employee shareholders to sell
their shares in the public market, subject to a liquidity schedule that
provides for increases over a four year period in the number of shares that
can be sold. Subsequent to the consummation of an IPO, shares will no longer
be issued under the EPP or Supplemental Equity Participation Program.
 
5. PREFERRED STOCK
 
  In December 1994, the Company issued Series A Preferred Stock in conjunction
with the redemption of common stock from certain employee shareholders. These
shares have a redemption value of $7.29 per share plus cumulative unpaid
dividends at 8.5% per annum. The Company may redeem all or any part of the
outstanding Preferred Stock at the earlier of either (i) payment in full of
all promissory notes of the Company issued in the Redemption, or (ii) the
approval of the holders of a majority of the shares of the Series A Preferred
Stock. Shares of Series A Preferred Stock have voting rights equivalent to 100
shares of common stock for each share outstanding, except that holders of
Series A Preferred Stock must vote in favor of certain transactions approved
by holders of two-thirds or more of the shares of Common Stock of the Company.
 
  In a previous year, the Company also issued Series B Preferred Stock which
has voting and redemption rights, including the book value repurchase
requirements equivalent to Common Stock. All Series B Preferred Stock is held
in the Company's Employee Tax Deferred Savings Plan.
 
  Upon consummation of an IPO, all shares of Series A and B Preferred Stock
will be redeemed at their contractual amounts of approximately $1,400.
 
6. PHANTOM STOCK PLAN AND STOCK RIGHT PLAN
 
  Effective May 1, 1988, the Company established a Phantom Stock Plan for key
employees. The plan allows for granting the rights to purchase up to 1,500
unit rights at the book value of the outstanding Common Stock at the date of
grant. On a pre-stock split basis as of April 30, 1997 and 1998, 310 and 297
units were outstanding, respectively. These units are fully vested and entitle
employees, upon termination of employment, to receive their interest in cash
based on the equivalent book value of the Common Stock.
 
  In fiscal 1992, the Company established a Stock Right Plan under which
rights are granted to employees selected by a committee of the Board of
Directors. These rights are fully vested after two years and entitle the
holder to rights substantially identical to the common shares, excluding
voting rights. As of April 30, 1997 and 1998, 104 units were outstanding on a
pre-stock split basis.
 
  Compensation expense is recognized based on the change, if any, in the book
value of the Common Stock since the date of the grant. Compensation expense
related to these plans amounted to $628, $514 and $270 in fiscal 1996, 1997
and 1998, respectively. Subsequent to year end, the Board of Directors and
shareholders approved the termination of these plans and the conversion of the
phantom stock units and stock rights to Common Stock.
 
  The Common Stock issued upon termination of these plans will be subject to
the EPP book value repurchase agreements. These repurchase agreements will be
amended to adopt the liquidity schedule upon consummation of an IPO. At that
date, the Company will recognize compensation and benefits expense of
approximately $13,200 for the excess of the fair market value of the shares
over the book value price of the shares issued in the conversion.
 
                                     F-12

<PAGE>
 
                   KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
7. EMPLOYEE PROFIT-SHARING AND BENEFIT PLANS
 
  The Company has an Employee Tax Deferred Savings Plan that covers eligible
employees in the United States. The Company's discretionary accrued
contribution to this plan was $1,230, $1,768 and $2,400 for fiscal 1996, 1997
and 1998, respectively. The Company's non-U.S. employees are covered by a
variety of pension plans that are applicable to the countries in which they
work. The contributions for these plans are determined in accordance with the
legal requirements in each country and generally are based on the employees'
annual compensation.
 
8. DEFERRED COMPENSATION AND LIFE INSURANCE CONTRACTS
 
  The Company has established several deferred compensation plans for
officer/shareholder employees that provide defined benefit payments to
participants based on the deferral of current compensation and subject to
vesting and retirement or termination provisions.
 
  The Enhanced Wealth Accumulation Plan (EWAP) was established in fiscal 1994.
Certain vice presidents elect to participate in a "deferral unit" that
requires the contribution of current compensation for an eight year period in
return for defined benefit payments from the Company over a fifteen year
period generally at retirement at age 65 or later. Participants may acquire
additional "deferral units" every five years.
 
  The Wealth Accumulation Plan (WAP) was replaced by the EWAP in fiscal 1994.
Executives who did not choose to roll over their WAP units into the EWAP
continue to be covered under the earlier version in which participants
generally vest and commence receipt of benefit payments at retirement at age
65.
 
  Participants in the Senior Executive Incentive Plan (SEIP) are elected for
participation by the Company's Board of Directors. Generally, to be eligible
the vice president must be participating in the EWAP. Participation in the
SEIP requires the vice president to contribute a portion of their compensation
during a four-year period, or in some cases make an after tax contribution, in
return for a defined benefit paid by the Company generally over a fifteen year
period at age 65, or retirement.
 
  The Company's Worldwide Executive Benefit Plans (WEB) are designed to
integrate with government sponsored benefits and provide a monthly benefit to
vice presidents and shareholders upon retirement from the Company. Each year a
plan participant accrues and is fully vested in one-twentieth of the targeted
benefits expressed as a percentage set by the Company for that year. Upon
retirement, a participant receives a monthly benefit payment equal to the sum
of the percentages accrued over such participant's term of employment, up to a
maximum of 20 years, multiplied by the participant's highest average monthly
salary during any 36 consecutive months in the final 72 months of active full-
time employment.
 
  Certain current and former employees also have individual deferred
compensation arrangements with the Company which provide for payment of
defined amounts over certain periods commencing at specified dates or events.
 
  In 1998, certain employees elected to defer a portion of their compensation
amounting to approximately $2.4 million in anticipation of the Company
establishing a new deferred compensation plan in the near future. If the
Company does not implement such a plan by April 30, 1999, the employees will
receive their deferred compensation plus interest at the Company's bank
borrowing rate, currently at 8%.
 
  For financial accounting purposes, the Company estimates the present value
of the future benefits payable as of the estimated payment commencement date.
The Company also estimates the remaining number of years a participant will be
employed by the Company. Then, each year during the period of estimated
employment, the
 
                                     F-13

<PAGE>
 
                   KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
Company accrues a liability and recognizes expense for a portion of the future
benefit using the "benefit/years of service" attribution method for the SEIP
and EWAP plans and the "projected unit credit" method for the WEB plan.
 
  In calculating the accrual for future benefit payments, management has made
assumptions regarding employee turnover, participant vesting and the discount
rate. Management periodically reevaluates all assumptions. If assumptions
change in future reporting periods, the changes may impact the measurement and
recognition of benefit liabilities and related compensation expense.
 
  As of April 30, 1997 and 1998, the Company had unrecognized losses related
to these deferred compensation plans of $4,421 and $7,747 due to changes in
assumptions of the discount rate used for calculating the accruals for future
benefits. The Company amortizes unrecognized losses over the average remaining
service period of active participants. The discount rate used in 1997 and 1998
was 9.0% and 7.5%, respectively.
 
  Following is a reconciliation of the benefit obligation for the Company's
deferred compensation plans:
 

<TABLE>
<CAPTION>
                                                                 YEAR ENDED
                                                                  APRIL 30,
                                                                 ----------
                                                                1997     1998
                                                               -------  -------
   <S>                                                         <C>      <C>
   Benefit obligation at beginning of the year................ $26,705  $30,149
   Service cost...............................................   1,227    1,693
   Interest cost..............................................   1,320    1,622
   Plan participants' contributions...........................   3,030    5,981
   Recognized loss due to change in assumption................     305      624
   Benefits paid..............................................  (2,438)  (4,707)
                                                               -------  -------
   Benefit obligation at end of fiscal year................... $30,149  $35,362
   Less: current portion of benefit obligation................  (2,473)    (810)
                                                               -------  -------
   Long-term benefit obligation at end of year................ $27,676  $34,552
                                                               =======  =======
</TABLE>

 
  The Company has purchased COLI contracts insuring participants and former
participants. The gross CSV of these contracts of $53,570 and $67,747 is
offset by outstanding policy loans of $32,278 and $37,638, on the accompanying
consolidated balance sheets as of April 30, 1997 and 1998, respectively.
 
  Death benefits payable under COLI contracts were $244,418 and $285,495 at
April 30, 1997 and 1998, respectively. Management intends to use the future
death benefits from these insurance contracts to fund the deferred
compensation arrangements; however, there may not be a direct correlation
between the timing of the future cash receipts and disbursements under these
arrangements. In addition, certain future death benefits are restricted for
the purchase of certain shares of Common Stock, if any, upon the death of a
shareholder. As of April 30, 1998, COLI contracts with a net cash surrender
value of $24,500 and death benefits payable of $146,589 were held in trust for
these purposes.
 
9. INCOME TAXES
 
  The provision for income taxes is based on reported income before income
taxes. Deferred income tax assets and liabilities reflect the impact of
temporary differences between the amounts of assets and liabilities recognized
for financial reporting purposes and the amounts recognized for tax purposes,
as measured by applying the currently enacted tax laws.
 
                                     F-14

<PAGE>
 
                   KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
  The provision (benefit) for domestic and foreign income taxes is comprised
of the following components:
 

<TABLE>
<CAPTION>
                                                     FISCAL YEAR ENDED APRIL 30,
                                                     ---------------------------
                                                       1996     1997     1998
                                                     -------  -------   --------
   <S>                                                <C>      <C>      <C>
   Current taxes:
    Federal.......................................... $   921  $ 2,602  $ 2,953
    State............................................     381      991    1,022
                                                      -------  -------  -------
     Total...........................................   1,302    3,593    3,975
                                                      -------  -------  -------
   Deferred taxes:
    Federal..........................................  (3,766)  (2,133)  (3,458)
    State............................................    (996)    (713)  (1,154)
                                                      -------  -------  -------
     Total...........................................  (4,762)  (2,846)  (4,612)
                                                      -------  -------  -------
   Foreign taxes.....................................   6,748    5,911    7,324
                                                      -------  -------  -------
   Provision for income taxes........................ $ 3,288  $ 6,658  $ 6,687
                                                      =======  =======  =======
</TABLE>

 
  The domestic and foreign components of income (loss) from continuing
operations before domestic and foreign income and other taxes were as follows:
 

<TABLE>
<CAPTION>
                                                FISCAL YEAR ENDED APRIL 30,
                                               -------------------------------
                                                 1996       1997       1998
                                               ---------  ---------  ---------
   <S>                                         <C>        <C>        <C>
   Domestic................................... $  (9,163) $  (2,534) $  (4,635)
   Foreign....................................    21,826     19,779     18,591
                                               ---------  ---------  ---------
   Total...................................... $  12,663  $  17,245  $  13,956
                                               =========  =========  =========
</TABLE>
 
 
  The income tax provision stated as a percentage of pretax income was
different than the amount computed using the U.S. statutory federal income tax
rate for the reasons set forth in the following table:


<TABLE> 
<CAPTION>
                                                FISCAL YEAR ENDED APRIL 30,
                                               -------------------------------
                                                 1996       1997       1998
                                               ---------  ---------  ---------
   <S>                                         <C>        <C>        <C>
   U.S. federal statutory tax rate............     35.0%       35.0%      35.0%
   Foreign source dividend income.............     20.1        12.7       30.6
   Foreign income tax credits utilized........    (20.4)      (11.6)     (21.5)
   Income subject to higher (lower) Foreign
    tax rates.................................     (7.0)       (5.9)       5.9
   COLI CSV increase, net of federal tax
    benefit...................................     (3.6)        0.8       (5.4)
   Other......................................      1.9         7.6        3.3
                                               ---------  ---------  ---------
   Effective tax rate.........................     26.0%       38.6%      47.9%
                                               =========  =========  =========
</TABLE>

 
  The significant components of deferred tax assets and liabilities are as
follows:
 

<TABLE>
<CAPTION>
                                                               AS OF APRIL 30,
                                                               ----------------
                                                                1997     1998
                                                               -------  -------
   <S>                                                         <C>      <C>
   Deferred income tax assets (liabilities):
     Deferred compensation.................................... $11,597  $14,652
     Accrued operating expenses...............................   1,964    3,172
     Other accrued liabilities................................  (1,590)  (1,360)
     Property and equipment...................................     299      419
     Other....................................................    (317)    (338)
                                                               -------  -------
   Deferred income taxes...................................... $11,953  $16,545
                                                               =======  =======
</TABLE>

 
                                     F-15

<PAGE>
 
                   KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
  Realization of the tax asset is dependent on the Company generating
sufficient taxable income in future years as the deferred tax items become
currently deductible for tax reporting purposes. Management believes that all
of the deferred tax asset will be realizable. However, the amount of the
deferred tax asset considered realizable could be reduced if the estimates of
amounts and/or timing of future taxable income are revised.
 
10. COMMITMENTS AND CONTINGENCIES
 
  The Company leases office premises and certain office equipment under leases
expiring at various dates through 2010. Total rental expense for fiscal years
1996, 1997 and 1998 amounted to $9,033, $11,686 and $12,948, respectively. At
April 30, 1998, minimum future commitments under noncancelable operating
leases with lease terms in excess of one year were payable as follows: $11,066
in 1999, $10,357 in 2000, $9,813 in 2001, $8,708 in 2002, $5,910 in 2003 and
$17,972 thereafter. As of April 30, 1998, the Company has outstanding standby
letters of credit of $945 in connection with office leases.
 
  The Company has a policy of requiring all its vice presidents to enter into
a standard form of employment agreement which provides for an annual base
salary and discretionary and incentive bonus payments. The Company also
requires its vice presidents to agree in their employment contracts not to
compete with the Company, both during the term of their employment with the
Company, and also for a period of one to two years after their employment with
the Company ends.
 
  In January 1998, the Company agreed to be the sole guarantor and co-obligor
with an officer-shareholder, on a $1,000 promissory note entered into for his
home loan. The officer-shareholder has pledged all of his Common Stock to the
Company as collateral. The Company also agreed to pay all of the interest on
the note for a four year period ending January 15, 2002. These interest
payments are included in compensation and benefits expense.
 
  In fiscal 1995, certain shareholders of the Company, at the request of the
Company, agreed to have certain of their shares of Common Stock redeemed by
the Company in a fixed redemption plan initiated by the Company. The
redemption price included a contingent amount equal to the difference between
a fixed amount plus 8.5% accrued interest and, in the event of an IPO, the
public offering price per share of the Common Stock. Simultaneously with the
redemption, certain holders of phantom units and stock appreciation rights
agreed to terminate their phantom units and stock appreciation rights in
return for payments corresponding to the fixed amount and an additional
contingent amount. The contingent amount is payable if the Company consummates
an extraordinary transaction, including a public offering of the Common Stock,
at any time before December 31, 2004 and the seller has not voluntarily
terminated or been terminated for cause prior to the date of the extraordinary
transaction.
 
  The Company intends to use a portion of the net proceeds from an IPO to
complete the redemption by the Company of certain shares of its capital stock
and to pay existing obligations of the Company to former holders of phantom
units and stock appreciation rights. Upon consummation of an IPO, each of the
sellers has agreed to a negotiated discount from the contingent amount they
were originally entitled to receive. An IPO price or the range of possible IPO
prices has not been determined by the Company and the underwriters, and
therefore the payment amounts cannot be objectively estimated. However, it is
expected that these payments will result in some compensation and benefits
expense and a significant charge to the paid in capital of the Company, which
will be recorded upon consummation of the IPO.
 
                                     F-16

<PAGE>
 
                   KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
11. LITIGATION
 
  From time to time the Company has been and is involved in litigation
incidental to its business. The Company is currently not a party to any
litigation, which if resolved adversely against the Company, would in the
opinion of the Company have a material adverse effect on the Company's
business, financial position or results of operations.
 
12. DIVESTITURES
 
  Effective February 29, 1996, the Company divested its 47% interest in
Strategic Compensation Associates for a cash payment of $357 and notes
receivable of $3,215. The notes are receivable in six equal annual
installments with interest. Included in other income in fiscal 1996, is a gain
of $516 recognized on this transaction. The outstanding balance of notes
receivable at April 30, 1997 and 1998 was $2,781 and $2,308 respectively.
 
13. BUSINESS SEGMENTS
 
  The Company operates in one industry segment, retained executive search, on
a global basis. In January 1998 the company formed Futurestep, an 80 percent
owned subsidiary, to provide Internet-based retained recruitment services for
middle management positions. Operating expenses and identifiable assets of
Futurestep are not material in 1998. A summary of the company's operations by
geographic area is presented below:
 

<TABLE>
<CAPTION>
                                                   FISCAL YEAR ENDED APRIL 30,
                                                  ----------------------------
                                                    1996      1997      1998
                                                  --------  --------  --------
   <S>                                            <C>       <C>       <C>
   TOTAL REVENUES:
     North America............................... $111,513  $135,192  $162,618
     Europe......................................   68,890    77,505    86,180
     Asia/Pacific................................   29,921    34,532    34,811
     Latin America...............................   19,893    25,332    31,416
                                                  --------  --------  --------
       Total..................................... $230,217  $272,561  $315,025
                                                  ========  ========  ========
   OPERATING PROFIT:
     North America...............................    9,403    16,064    13,615
     Europe......................................    2,230       403     1,928
     Asia/Pacific................................    3,542     4,183     1,313
     Latin America...............................    4,342     4,639     7,009
                                                  --------  --------  --------
       Total operating profit....................   19,517    25,289    23,865
     Corporate...................................   (3,171)   (4,724)   (5,675)
     Interest expense............................   (3,683)   (3,320)   (4,234)
                                                  --------  --------  --------
       Income before income taxes and non-
        controlling shareholders' interest....... $ 12,663  $ 17,245  $ 13,956
                                                  ========  ========  ========
</TABLE>

 

<TABLE>
<CAPTION>
                                                           AS OF APRIL 30,
                                                      --------------------------
                                                        1996     1997     1998
                                                      -------- -------- --------
   <S>                                                <C>      <C>      <C>
   IDENTIFIABLE ASSETS:
     North America................................... $ 33,961 $ 30,545 $ 50,135
     Europe..........................................   33,524   42,300   40,600
     Asia/Pacific....................................   22,955   25,444   18,529
     Latin America...................................    8,057   10,606   16,400
     Corporate.......................................   27,844   39,510   50,707
                                                      -------- -------- --------
       Total......................................... $126,341 $148,405 $176,371
                                                      ======== ======== ========
</TABLE>

 
  The Company's clients were not concentrated in any specific geographic
region and no single client accounted for a significant amount of the
Company's revenues during fiscal 1996, 1997 or 1998.
 
                                     F-17

<PAGE>
 
                   KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
14. STOCK SPLIT
 
  Subsequent to April 30, 1998, the Company's Board of Directors authorized,
and the shareholders approved, the filing of an amendment of the Company's
existing Articles of Incorporation to increase the Company's authorized capital
stock and effect a 4 to 1 split of the Common Stock. The Company intends to
file the amendment immediately after the registration statement relating to the
IPO is declared effective. The financial statements have been retroactively
restated for the effects of this transaction.
 
15. SUBSEQUENT EVENTS
 
  In July 1998, the Company's Board of Directors unanimously approved a
proposed IPO of its common stock. The completion of the IPO is subject to
filing an effective registration statement with the Securities and Exchange
Commission, the compliance by the Company with applicable state securities laws
and favorable market conditions for an offering of the Common Stock.
 
  During the first quarter of fiscal 1999, the Company acquired Didier Vuchot &
Associates in France for approximately $6,000 in cash, notes, and mandatorily
redeemable stock of a subsidiary that is exchangeable for Common Stock.
 
  In June 1998, the Company entered into a trademark license and promotion
agreement with Dow Jones & Company that established an alliance between
Futurestep and the Wall Street Journal. The alliance, which has an initial term
through June 2001 with options for renewal, provides the Company with preferred
advertising rates and requires the purchase of a minimum amount of print and
on-line advertising. For each company and candidate referred to Futurestep by
The Wall Street Journal, Futurestep is obligated to pay to The Wall Street
Journal a small percentage of its fee. The Wall Street Journal, the Company and
Futurestep have agreed not to promote competing services during the term of the
agreement.
 
                                      F-18

<PAGE>
 
- --------------------------------------------------------------------------------
 
 NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, ANY SELLING SHAREHOLDER OR ANY
UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
 
                                 ------------
 
 
                              TABLE OF CONTENTS
 

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
Prospectus Summary........................................................    3
Risk Factors..............................................................    9
Use of Proceeds...........................................................   14
Dividend Policy...........................................................   14
Capitalization............................................................   15
Dilution..................................................................   16
Selected Financial and Other Data.........................................   17

Management's Discussion and Analysis of Financial Condition and Results of
 Operations...............................................................   19
Business..................................................................   25
Management................................................................   36
Certain Transactions......................................................   47
Principal and Selling Shareholders........................................   49
Description of Capital Stock..............................................   50
Shares Eligible for Future Sale...........................................   52
Underwriting..............................................................   53
Notice to Canadian Residents..............................................   56
Legal Matters.............................................................   57
Experts...................................................................   57
Available Information.....................................................   57
Index to Consolidated Financial Statements................................  F-1
</TABLE>

 
                                 ------------
 
 UNTIL         , 1998 (25 DAYS AFTER THE COMMENCEMENT OF THE OFFERING) ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
 
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
 
                          [LOGO OF KORN/FERRY INTL.]
 
                                        Shares
                                  Common Stock
                                 (no par value)

 
                                   PROSPECTUS

 
                           CREDIT SUISSE FIRST BOSTON
 
                          DONALDSON, LUFKIN & JENRETTE
 
                            PAINEWEBBER INCORPORATED
 
- --------------------------------------------------------------------------------

<PAGE>
 

 
                                   PART II
 
                    INFORMATION NOT REQUIRED IN PROSPECTUS
 

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
 
  The following table sets forth the expenses, other than underwriting
discounts and commissions, payable by the Company in connection with the
issuance and distribution of the Common Stock being registered. All amounts
are estimates except the SEC registration fee, the NASD filing fee and the
NYSE listing fee.
 

<TABLE>
   <S>                                                                  <C>
   Securities and Exchange Commission registration fee................. $67,850
   NASD filing fee.....................................................  23,500
   NYSE listing fee....................................................      *
   Accounting fees and expenses........................................      *
   Legal fees and expenses.............................................      *
   Blue Sky qualification fees and expenses............................      *
   Printing and engraving expenses.....................................      *
   Transfer agent and registrar fees...................................      *
   Miscellaneous.......................................................      *
                                                                        -------
     Total............................................................. $    *
                                                                        =======
</TABLE>

- --------
* To be completed by amendment.
 

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
 
  The Company has adopted provisions in its Amended and Restated Articles of
Incorporation that limit the liability of directors in certain instances. As
permitted by the California General Corporation Law ("CGCL"), directors will
not be liable to the Company for monetary damages arising from a breach of
their fiduciary duty as directors in certain circumstances. Such limitation
does not affect liability for any breach of a director's duty to the Company
or its shareholders (i) with respect to approval by the director of any
transaction from which he derives an improper personal benefit, (ii) with
respect to acts or omissions involving an absence of good faith, that he
believes to be contrary to the best interests of the Company or its
shareholders, that involve intentional misconduct or a knowing and culpable
violation of law, that constitute an unexcused pattern of inattention that
amounts to an abdication of his duty to the Company or its shareholders, or
that show a reckless disregard for his duty to the Company or its shareholders
in circumstances in which he was, or should have been, aware, in the ordinary
course of performing his duties, of a risk of serious injury to the Company or
its shareholders, or (iii) based on transactions between the Company and its
directors or another corporation with interrelated directors or on improper
distributions, loans or guarantees under applicable sections of the CGCL. Such
limitation of liability also does not affect the availability of equitable
remedies such as injunctive relief or rescission, although in certain
circumstances equitable relief may not be available as a practical matter. The
limitation may relieve the directors of monetary liability to the Company for
grossly negligent conduct. No claim or litigation is currently pending against
the Company's directors that would be affected by the limitations of
liability.
 
  The Company's Amended and Restated Bylaws (the "Bylaws"), as amended,
provide for the indemnification of directors and executive officers from any
threatened, pending or completed action, suit or proceeding, whether formal or
informal, by reason of their current or past service to the Company, and the
reimbursement of any and all costs incurred by any such director or executive
officer in regards thereto. The Bylaws also provide for the indemnification by
the Company of any director of the Company, for any monetary damages arising
from the imposition of joint and several liability upon such director for
actions taken by other directors of the Company, except as not permitted by
the CGCL.
 
                                     II-1

<PAGE>
 
  The Company has entered, or plans to enter, into agreements (the
"Indemnification Agreements") with each of the directors and executive
officers of the Company pursuant to which the Company has agreed to indemnify
such director or executive officer from claims, liabilities, damages,
expenses, losses, costs, penalties or amounts paid in settlement incurred by
such director or executive officer in or arising out of such person's capacity
as a director or executive officer of the Company or any other corporation of
which such person is a director at the request of the Company to the maximum
extent provided by applicable law. In addition, such director or executive
officer is entitled to an advance of expenses to the maximum extent authorized
or permitted by law.
 
  To the extent that the Board of Directors or the shareholders of the Company
may in the future wish to limit or repeal the ability of the Company to
provide indemnification as set forth in the Articles, such repeal or
limitation may not be effective as to directors and executive officers who are
parties to the Indemnification Agreements, because their rights to full
protection would be contractually assured by the Indemnification Agreements.
It is anticipated that similar contracts may be entered into, from time to
time, with future directors of the Company.
 
  The Form of Underwriting Agreement filed as Exhibit 1.1 to this Registration
Statement provides for indemnification by the Underwriters of the Company and
its directors and officers for certain liabilities arising under the
Securities Act of 1933 (the "Securities Act") or otherwise.
 

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
 
  Set forth below is certain information concerning all sales of securities by
the Company during the past three years that were not registered under the
Securities Act.
 
  During the three years preceding the filing of this Registration Statement,
the Registrant sold shares of Common Stock to its officers without
registration under the Securities Act. Exemption from registration under the
Securities Act for these sales is claimed under Rule 701 promulgated under
Section 3(b) of the Securities Act, Regulation D promulgated under Section
4(2) of the Securities Act and Regulation S under the Securities Act. Each
recipient of such securities represented in each transaction such recipient's
intention to acquire the securities for investment only and not with a view to
or for sale in connection with any distribution thereof and appropriate
legends were affixed to the share certificates issued in such transactions.
 
  Under the Registrant's Executive Participation Program (the "EPP"), the
Registrant offered shares of Common Stock from the EPP's inception through
January 31, 1996 at a purchase price equal to the book value of such share as
of the end of the fiscal year immediately preceding such sale. During the
three years preceding the filing of this Registration Statement, the following
sales were made to officers pursuant to such annual offers: 20,072 shares on
September 1, 1995, October 6, 1995, November 15, 1995 and January 15, 1996,
respectively, each for an aggregate of $39,993; 18,372 shares on January 1,
1996 for an aggregate of $36,606; 99,840 shares on April 16, 1996 for an
aggregate of $198,931; 241,644 shares on May 1, 1996 for an aggregate of
$546,115; 97,336 shares on July 1, 1996 for an aggregate of $219,979; 60,224
shares on November 1, 1996 for an aggregate of $119,996; 17,696 shares on
April 1, 1997 for an aggregate of $39,993; 76,920 shares on May 1, 1997 for an
aggregate of $199,992; 30,768 shares on June 1, 1997 for an aggregate of
$79,997; 30,768 shares on July 1, 1997 for an aggregate of $79,997; 15,384
shares on August 1, 1997, April 1, 1998, and April 30, 1998, respectively,
each for an aggregate of $39,998; and 62,524 shares on August 1, 1998 for an
aggregate of $174,286.
 
  Since the beginning of the fiscal quarter ended January 31, 1996, the
Registrant has offered and sold shares of Common Stock quarterly to officers
under the EPP at a purchase price equal to the book value of such share
determined as a ratio of the book value as of the end of the fiscal year
immediately preceding such sale and the book value as of the end of the fiscal
year immediately following such sale, which ratio reflected the date during
the fiscal year on which such sale was made. The Company has made the
following quarterly offers and sales: For the fiscal quarter ended January 31,
1996, the Company sold an aggregate of 58,752 shares for an aggregate purchase
price of $124,995. For the fiscal quarter ended April 30, 1996, the Company
sold an aggregate of 57,012 shares for an aggregate purchase price of
$124,999. For the fiscal quarter ended July 31, 1996, the Company sold an
aggregate of 1,789,728 shares for an aggregate purchase price of $4,044,785.
For the fiscal quarter ended October 31, 1996, the Company sold an aggregate
of 351,800 shares for an aggregate purchase price of $824,971.
 
                                     II-2

<PAGE>
 
  For the fiscal quarter ended January 31, 1997, the Company sold an aggregate
of 111,504 shares for an aggregate purchase price of $270,955. For the fiscal
quarter ended April 30, 1997, the Company sold an aggregate of 387,736 shares
for an aggregate purchase price of $975,156. For the fiscal quarter ended
July 31, 1997, the Company sold an aggregate of 1,519,220 shares for an
aggregate purchase price of $3,949,972. For the fiscal quarter ended October
31, 1997, the Company sold an aggregate of 330,492 shares for an aggregate
purchase price of $874,978.
 
  For the fiscal quarter ended January 31, 1998, the Company sold an aggregate
of 371,040 shares for an aggregate purchase price of $999,953. For the fiscal
quarter ended April 30, 1998, the Company sold an aggregate of 766,416 shares
for an aggregate purchase price of $2,099,980. For the fiscal quarter ended
July 31, 1998, the Company sold an aggregate of 2,215,104 shares for an
aggregate purchase price of $6,174,602. For the fiscal quarter ended October
31, 1998 (through August 14), the Company sold an aggregate of 159,408 shares
for an aggregate purchase price of $1,749,901.
 
  As of August 1, 1998, the Company issued 1,521,240 shares of Common Stock
upon conversion of 380,310 phantom stock units and stock appreciation rights
in connection with the termination of the Company's Phantom Stock Plan and
Amended and Restated Stock Right Plan. Exemption from registration under the
Securities Act for this issuance is claimed under Section 3(a)(9) of the
Securities Act.
 
  On August 11, 1998, the Company sold 105,728 shares of its Common Stock for
an aggregate purchase price of $294,717 upon exercise by Didier Vuchot &
Associates executives of their put option received in connection with the
Company's acquisition of that firm in June 1998. Exemption from registration
under the Securities Act for this issuance is claimed under Section 4(2) of
the Securities Act.
 
                                     II-3

<PAGE>
 

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 
  (a) EXHIBITS.
 

<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                          DESCRIPTION OF EXHIBIT
 -------                         ----------------------
 <C>     <S>
  1.1*   Form of Underwriting Agreement
  3.1*   Amended and Restated Articles of Incorporation of the Company
  3.2*   Amended and Restated Bylaws of the Company
  4.1*   Specimen Common Stock certificate
  5.1*   Opinion of O'Melveny & Myers LLP
 10.1*   Form of Indemnification Agreement between the Company and each of its
          executive officers and directors
 10.2*   Performance Award Plan
 10.3*   Form of U.S. and non-U.S. Worldwide Executive Benefit Retirement Plan
 10.4*   Form of U.S. and non-U.S. Worldwide Executive Benefit Life Insurance
          Plan
 10.5*   Worldwide Executive Benefit Disability Plan
 10.6*   Form of U.S. and non-U.S. Enhanced Wealth Accumulation Plan
 10.7*   Form of U.S. and non-U.S. Senior Executive Incentive Plan
 10.8*   Executive Salary Continuation Plan
 10.9*   Form of Stock Repurchase Agreement
 10.10*  Form of Amended Stock Repurchase Agreement
 10.11*  Form of Standard Employment Agreement
 10.12*  Form of Bonus Deferral Program for fiscal 1998
 10.13*  Stock Purchase Agreement between the Company, bill gross' idealab!,
          Mr. Singh and Korn/Ferry International Futurestep, Inc. dated
          December 1, 1997
 10.14*  Shareholders Agreement between the Company, bill gross' idealab!, Mr.
          Singh and Korn/Ferry International Futurestep, Inc. dated December 1,
          1997
 10.15*  Employment Agreement between Mr. Singh and Korn/Ferry International
          Futurestep, Inc. dated December 1, 1997
 10.16*  KFI/Singh Agreement between the Company and Mr. Singh dated December
          1, 1997
 10.17*  Stock Repurchase Agreement between the Company and Mr. Singh dated
          December 1, 1997
 10.18*  License Agreement between Self Discovery Dynamics LLC and Korn/Ferry
          International Futurestep, Inc. dated May 15, 1998
 10.19*  Trademark License and Promotion Agreement between Dow Jones & Company,
          the Company and Korn/Ferry International Futurestep, Inc. dated June
          8, 1998
 10.20*  Stock Purchase Agreement between the Company, Mr. Ferry, Henry B.
          Turner and Peter W. Mullin (as trustees of the Richard M. Ferry and
          Maude M. Ferry 1972 Children's Trust), the California Community
          Foundation and Richard M. Ferry (co-trustees), and the California
          Community Foundation dated June 2, 1995
 10.21*  Purchase Agreement dated December 31, 1994 between the Company and the
          parties named therein
 10.22*  Revolving Line Agreement dated January 31, 1997 between the Company
          and Mellon 1st Business Bank, as successor to 1st Business Bank, as
          amended June 19, 1998
 10.23*  Revolving Credit and Term Loan Agreement dated January 31, 1997
          between the Company and Mellon 1st Business Bank, as successor to 1st
          Business Bank
</TABLE>

 
                                      II-4

<PAGE>
 

<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                          DESCRIPTION OF EXHIBIT
 -------                         ----------------------
 <C>     <S>
 10.24*  Continuing Guaranty of the Company dated January 13, 1998 in favor of
          Mellon 1st Business Bank, as successor to 1st Business Bank
 10.25*  Promissory Note executed by the Company dated January 28, 1998 as co-
          obligor payable to Mellon 1st Business Bank, as successor to 1st
          Business Bank
 10.26*  Form of Additional Redemption Agreement
 10.27*  Deferred Compensation Agreement between the Company and Mr. Ferry
          dated June 2, 1995
 10.28*  Deferred Compensation Agreement between the Company and Mr. Ferry
          dated September 1, 1987, as amended on January 1, 1995
 21.1*   Subsidiaries of the Company
 23.1    Consent of Arthur Andersen LLP
 23.3*   Consent of O'Melveny & Myers LLP (included in Exhibit 5.1)
 24.1    Power of Attorney (contained on page II-6)
 27.1    Financial Data Schedule
</TABLE>

- --------
*To be filed by amendment
 
  (b) FINANCIAL STATEMENT SCHEDULES
 
  Schedule II--Korn/Ferry International Allowance for Doubtful Accounts
 

ITEM 17. UNDERTAKINGS
 
  (a) The undersigned Registrant hereby undertakes to provide to the
Underwriters at the closing specified in the Underwriting Agreement
certificates in such denominations and registered in such names as required by
the Underwriters to permit prompt delivery to each purchaser.
 
  (b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the SEC such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. If a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act, and will be governed by the
final adjudication of such issue.
 
  (c) The undersigned Registrant hereby undertakes that:
 
    (1) For purposes of determining any liability under the Securities Act,
  the information omitted from the form of prospectus filed as part of a
  registration statement in reliance upon Rule 430A and contained in a form
  of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
  497(h) under the Securities Act shall be deemed to be part of the
  registration statement as of the time it was declared effective.
 
    (2) For purposes of determining any liability under the Securities Act,
  each post-effective amendment that contains a form of prospectus shall be
  deemed to be a new registration statement relating to the securities
  offered therein, and the offering of such securities at that time shall be
  deemed to be the initial bona fide offering thereof.
 
                                     II-5

<PAGE>
 

                                  SIGNATURES
 
  Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Los
Angeles, State of California, on August 17, 1998.
 
                                          KORN/FERRY INTERNATIONAL
 
                                          By:  /s/ Elizabeth S.C.S. Murray
                                             ----------------------------------
                                                  Elizabeth S.C.S. Murray
                                                Chief Financial Officer and
                                                  Executive Vice President
 
                               POWER OF ATTORNEY
 
  KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers and
directors of the Registrant hereby constitute and appoint Peter L. Dunn and
Elizabeth S.C.S. Murray, and each of them, as lawful attorneys-in-fact and
agent for the undersigned and for each of them (with full power of
substitution and resubstitution, for and in the name, place and stead of each
of the undersigned officers and directors), to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, any and all amendments, supplements and exhibits to this Registration
Statement, including post-effective amendments and registration statements
filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended,
and any and all applications or other documents in connection with the
inclusion of the Registrant's Common Stock on the New York Stock Exchange, and
any and all documents required to be filed with any state securities
regulating board or commission pertaining to this Registration Statement or
securities covered thereby, hereby granting unto said attorneys-in-fact, and
each of them, full power and authority to do and perform each and every act
and thing necessary or desirable to be done in order to effectuate the same as
fully and to all intents and purposes as each of the undersigned might or
could do if personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or any of their substitutes, may
do or cause to be done by virtue hereof.
 
  Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
 

<TABLE>
<CAPTION>
             SIGNATURE                           TITLE                  DATE
             ---------                           -----                  ----
 
<S>                                  <C>                           <C>
       /s/ Richard M. Ferry          Chair of the Board            August 17, 1998
- ------------------------------------
          Richard M. Ferry
 
     /s/ Michael D. Boxberger        President, Chief Executive    August 17, 1998
- ------------------------------------  Officer and Director
        Michael D. Boxberger
 
   /s/  Elizabeth S.C.S. Murray      Chief Financial Officer and   August 17, 1998
- ------------------------------------  Executive Vice President
      Elizabeth S.C.S. Murray
 
       /s/ Donald E. Jordan          Vice President of Finance     August 17, 1998
- ------------------------------------  (Principal Accounting
          Donald E. Jordan            Officer)
</TABLE>

 
                                     II-6

<PAGE>
 

<TABLE>
<CAPTION>
             SIGNATURE                           TITLE                  DATE
             ---------                           -----                  ----
 
<S>                                  <C>                           <C>
     /s/ Paul Buchanan-Barrow                  Director            August 17, 1998
- ------------------------------------
        Paul Buchanan-Barrow
 
        /s/ Peter L. Dunn                      Director            August 17, 1998
- ------------------------------------
           Peter L. Dunn
 
       /s/ Timothy K. Friar                    Director            August 17, 1998
- ------------------------------------
          Timothy K. Friar
 
      /s/ Sakie T. Fukushima                   Director            August 17, 1998
- ------------------------------------
         Sakie T. Fukushima
 
          /s/ Hans Jorda                       Director            August 17, 1998
- ------------------------------------
             Hans Jorda

       /s/ Scott E. Kingdom                    Director            August 17, 1998
- ------------------------------------
          Scott E. Kingdom
 
       /s/  Young Kuan-Sing                    Director            August 17, 1998
- ------------------------------------
          Young Kuan-Sing
 
        /s/ Raimondo Nider                     Director            August 17, 1998
- ------------------------------------
           Raimondo Nider
 
   /s/ Manuel A. Papayanopulos                 Director            August 17, 1998
- ------------------------------------
      Manuel A. Papayanopulos
 
       /s/ Windle B. Priem                     Director            August 17, 1998
- ------------------------------------
          Windle B. Priem
 
      /s/ Michael A. Wellman                   Director            August 17, 1998
- ------------------------------------
         Michael A. Wellman
</TABLE>

 
                                      II-7

<PAGE>
 

                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To the Shareholders and Board of Directors of
Korn/Ferry International and Subsidiaries:
 
  We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements of Korn/Ferry International and
subsidiaries included in this registration statement and we expect to be in a
position to issue our report thereon dated July 31, 1998. Our audit was made
for the purpose of forming an opinion on the basic financial statements taken
as a whole. The Schedule II--Korn/Ferry International Allowance for Doubtful
Accounts is the responsibility of the Company's management and is presented
for purposes of complying with the Securities and Exchange Commission's rules
and is not part of the basic financial statements. This schedule has been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, fairly states in all material
respects the financial data required to be set forth therein in relation to
the basic financial statements taken as a whole.
 
                                                       /s/ Arthur Andersen LLP
 
Los Angeles, California
July 31, 1998

 
                                     II-8

<PAGE>
 
                                  SCHEDULE II
 
                   KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
                                 (IN THOUSANDS)
 

<TABLE>
<CAPTION>
                                     BALANCE AT CHARGED TO           BALANCE AT
                                     BEGINNING  COSTS AND              END OF
                                      OF YEAR    EXPENSES  DEDUCTION    YEAR
                                     ---------- ---------- --------- ----------
<S>                                  <C>        <C>        <C>       <C>
YEAR ENDED APRIL 30:
Allowance for Doubtful Accounts
  1998..............................   $3,846     $2,427    $  (883)   $5,390
  1997..............................    3,341      2,196     (1,691)    3,846
  1996..............................    2,292      1,590       (541)    3,341
</TABLE>

 
 
 
 
 
  The accompanying notes to consolidated financial statements are in integral
                           part of these statements.
 
                                      II-9

<PAGE>
 

                               INDEX TO EXHIBITS
 

<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                          DESCRIPTION OF EXHIBIT
 -------                         ----------------------
 <C>     <S>
  1.1*   Form of Underwriting Agreement
  3.1*   Amended and Restated Articles of Incorporation of the Company
  3.2*   Amended and Restated Bylaws of the Company
  4.1*   Specimen Common Stock certificate
  5.1*   Opinion of O'Melveny & Myers LLP
 10.1*   Form of Indemnification Agreement between the Company and each of its
          executive officers and directors
 10.2*   Performance Award Plan
 10.3*   Form of U.S. and non-U.S. Worldwide Executive Benefit Retirement Plan
         Form of U.S. and non-U.S. Worldwide Executive Benefit Life Insurance
 10.4*   Plan
 10.5*   Worldwide Executive Benefit Disability Plan
 10.6*   Form of U.S. and non-U.S. Enhanced Wealth Accumulation Plan
 10.7*   Form of U.S. and non-U.S. Senior Executive Incentive Plan
 10.8*   Executive Salary Continuation Plan
 10.9*   Form of Stock Repurchase Agreement
 10.10*  Form of Amended Stock Repurchase Agreement
 10.11*  Form of Standard Employment Agreement
 10.12*  Form of Bonus Deferral Program for fiscal 1998
 10.13*  Stock Purchase Agreement between the Company, bill gross' idealab!,
          Mr. Singh and Korn/Ferry International Futurestep, Inc. dated
          December 1, 1997
 10.14*  Shareholders Agreement between the Company, bill gross' idealab!, Mr.
          Singh and Korn/Ferry International Futurestep, Inc. dated December 1,
          1997
 10.15*  Employment Agreement between Mr. Singh and Korn/Ferry International
          Futurestep, Inc. dated December 1, 1997
 10.16*  KFI/Singh Agreement between the Company and Mr. Singh dated December
         1, 1997
 10.17*  Stock Repurchase Agreement between the Company and Mr. Singh dated
          December 1, 1997
 10.18*  License Agreement between Self Discovery Dynamics LLC and Korn/Ferry
          International Futurestep, Inc. dated May 15, 1998
 10.19*  Trademark License and Promotion Agreement between Dow Jones & Company,
          the Company and Korn/Ferry International Futurestep, Inc. dated June
          8, 1998
 10.20*  Stock Purchase Agreement between the Company, Mr. Ferry, Henry B.
          Turner and Peter W. Mullin (as trustees of the Richard M. Ferry and
          Maude M. Ferry 1972 Children's Trust), the California Community
          Foundation and Richard M. Ferry (co-trustees), and the California
          Community Foundation dated June 2, 1995
 10.21*  Purchase Agreement dated December 31, 1994 between the Company and the
          parties named therein
</TABLE>


<PAGE>
 

<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                          DESCRIPTION OF EXHIBIT
 -------                         ----------------------
 <C>     <S>
 10.22*  Revolving Line Agreement dated January 31, 1997 between the Company
          and Mellon 1st Business Bank, as successor to 1st Business Bank, as
          amended June 19, 1998
 10.23*  Revolving Credit and Term Loan Agreement dated January 31, 1997
          between the Company and Mellon 1st Business Bank, as successor to 1st
          Business Bank
 10.24*  Continuing Guaranty of the Company dated January 13, 1998 in favor of
          Mellon 1st Business Bank, as successor to 1st Business Bank
 10.25*  Promissory Note executed by the Company dated January 28, 1998 as co-
          obligor payable to Mellon 1st Business Bank, as successor to 1st
          Business Bank
 10.26*  Form of Additional Redemption Agreement
 10.27*  Deferred Compensation Agreement between the Company and Mr. Ferry
          dated June 2, 1995
 10.28*  Deferred Compensation Agreement between the Company and Mr. Ferry
          dated September 1, 1987, as amended on January 1, 1995
 21.1*   Subsidiaries of the Company
 23.1    Consent of Arthur Andersen LLP
 23.3*   Consent of O'Melveny & Myers LLP (included in Exhibit 5.1)
 24.1    Power of Attorney (contained on page II-6)
 27.1    Financial Data Schedule
</TABLE>

- --------
*To be filed by amendment





<PAGE>

                                                                    EXHIBIT 23.1

                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS


As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included in or made a part of this
registration statement.


/s/ Arthur Andersen LLP

Los Angeles, California
August 17, 1998






<TABLE> <S> <C>


<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM KORN/FERRY
INTERNATIONAL AND SUBSIDIARIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
       
<S>                             <C>                     <C>
<PERIOD-TYPE>                   YEAR                   YEAR
<FISCAL-YEAR-END>                          APR-30-1998             APR-30-1997
<PERIOD-START>                             MAY-01-1997             MAY-01-1996
<PERIOD-END>                               APR-30-1998             APR-30-1997
<CASH>                                          32,358                  25,298
<SECURITIES>                                         0                       0
<RECEIVABLES>                                   63,144                  53,595
<ALLOWANCES>                                   (5,390)                 (3,846)
<INVENTORY>                                          0                       0
<CURRENT-ASSETS>                                99,878                  84,742
<PP&E>                                          38,680                  33,108
<DEPRECIATION>                                (17,583)                (15,361)
<TOTAL-ASSETS>                                 176,371                 148,405
<CURRENT-LIABILITIES>                           73,305                  64,691
<BONDS>                                              0                       0
<PREFERRED-MANDATORY>                            1,416                   1,369
<PREFERRED>                                          0                       0
<COMMON>                                         2,593                   2,623
<OTHER-SE>                                      54,745                  46,820
<TOTAL-LIABILITY-AND-EQUITY>                   176,371                 148,405
<SALES>                                              0                       0
<TOTAL-REVENUES>                               315,025                 272,561
<CGS>                                                0                       0
<TOTAL-COSTS>                                  282,365                 239,859
<OTHER-EXPENSES>                                     0                       0
<LOSS-PROVISION>                                     0                       0
<INTEREST-EXPENSE>                               4,234                   3,320
<INCOME-PRETAX>                                 13,956                  17,245
<INCOME-TAX>                                     6,687                   6,658
<INCOME-CONTINUING>                              7,269                  10,587
<DISCONTINUED>                                       0                       0
<EXTRAORDINARY>                                      0                       0
<CHANGES>                                            0                       0
<NET-INCOME>                                     5,244                   8,999
<EPS-PRIMARY>                                      .24                     .42
<EPS-DILUTED>                                      .23                     .40
        

</TABLE>