PRESS RELEASE
Published on December 18, 2003
Exhibit 99.1
For Immediate Release
Contacts: For investors:
Gary Burnison (310) 226-2613
For media:
Don Spetner (212) 687-1834
Dan Margolis (310) 843-4186
Correcting and Replacing
Korn/Ferry International Announces to Second Quarter Fiscal Year 2004 Results
Highlights:
| | Fee revenue increased $4.1 million, or 6% compared to first quarter fiscal 2004. |
| | Fiscal second quarter diluted earnings per share was $0.06, the first positive earnings per share since fourth quarter of fiscal 2001. |
| | Earnings per share improved $0.11 compared to prior year second quarter adjusted loss per share, excluding restructuring charges of $16.3 million, and improved $0.08 compared to first quarter fiscal 2004 adjusted loss per share, excluding restructuring charges of $8.5 million. Diluted earnings per share improved $0.54 and $0.31, respectively, compared to actual loss per share, including restructuring charges. |
| | Operating income of $5.2 million improved $4.9 million compared to prior year second quarter adjusted operating income, excluding restructuring charges, and improved $3.6 million compared to first quarter fiscal 2004 adjusted operating income. Operating income improved $21.1 million and $12.1 million, respectively, compared to actual operating loss, including restructuring charges. |
| | EBITDA of $7.7 million improved $3.3 million both year over year and sequentially compared to adjusted EBITDA, excluding restructuring charges. EBITDA improved $19.6 million and $11.8 million, respectively, compared to actual EBITDA, including restructuring charges. |
| | Futurestep reported operating income of $0.5 million and positive EBITDA of $0.7 million in the current quarter. |
Los Angeles, CA, December 10, 2003Korn/Ferry International (NYSE:KFY), the executive recruitment firm with the broadest global presence, announced second quarter fiscal 2004 diluted earnings per share of $0.06 compared to an adjusted loss per share of $0.02 in Q104, excluding restructuring charges of $8.5 million, and an adjusted loss per share of $0.05 in Q203, excluding restructuring charges of $16.3 million. Actual earnings per share, including restructuring charges, improved $0.31 and $0.54 over Q104 and Q203, respectively.
The improvement in our operating profits reflects the success of our multi-product strategy, an unyielding focus on client service, recruiting efforts in North America, our global accounts program and 24 months of relentless cost management said Paul C. Reilly, Chairman and CEO of Korn/Ferry International. We have also seen an apparent beginning of a recovery in corporate growth and the job market, particularly in North America over this past quarter.
Financial Results
Actual and Adjusted Results
(dollars in millions, except per share amounts)
|
Second Quarter |
Year to Date |
|||||||||||||||||||||||||||
|
Actual |
Adjusted (a) |
Actual |
Adjusted (a) |
|||||||||||||||||||||||||
|
Q204 |
Q203 |
Q203 |
Q204 |
Q203 |
Q204 |
Q203 |
||||||||||||||||||||||
| Fee Revenue |
$ | 76.7 | $ | 79.6 | $ | 79.6 | $ | 149.2 | $ | 163.5 | $ | 149.2 | $ | 163.5 | ||||||||||||||
| Revenue |
$ | 82.0 | $ | 85.7 | $ | 85.7 | $ | 160.3 | $ | 175.4 | $ | 160.3 | $ | 175.4 | ||||||||||||||
| EBITDA (b) |
$ | 7.7 | $ | (11.9 | ) | $ | 4.4 | $ | 3.5 | $ | (6.3 | ) | $ | 12.1 | $ | 9.9 | ||||||||||||
| EBITDA Margin (b) |
10 | % | (14.9 | )% | 5.5 | % | 2.4 | % | (3.9 | )% | 8.1 | % | 6.1 | % | ||||||||||||||
| Operating Income (Loss) |
$ | 5.2 | $ | (15.9 | ) | $ | 0.3 | $ | (1.7 | ) | $ | (14.6 | ) | $ | 6.8 | $ | 1.7 | |||||||||||
| Operating Margin |
6.7 | % | (20.0 | )% | 0.4 | % | (1.2 | )% | (8.9 | )% | 4.5 | % | 1.0 | % | ||||||||||||||
| Net Income (Loss) |
$ | 2.2 | $ | (18.0 | ) | $ | (1.7 | ) | $ | (7.2 | ) | $ | (18.6 | ) | $ | 1.3 | $ | (2.3 | ) | |||||||||
| Earnings (Loss) Per Share |
$ | 0.06 | $ | (0.48 | ) | $ | (0.05 | ) | $ | (0.19 | ) | $ | (0.50 | ) | $ | 0.03 | $ | (0.07 | ) | |||||||||
| a) | Adjusted amounts are non-GAAP financial measures and exclude restructuring charges of $16.3 million for the three and six months ended October 31, 2002 and $8.5 million for the six months ended October 31, 2003. These charges primarily relate to severance and facility charges and do not affect fee revenue or revenue. The Company presents adjusted amounts as alternative measures to the actual amounts for comparison purposes. The Company uses the adjusted amounts to analyze its operating results since it believes that the restructuring charges do not reflect, and make it difficult to compare, the Companys ongoing operations over various quarters. |
| b) | For a definition and discussion of EBITDA, a non-GAAP financial measure, and a reconciliation between EBITDA and net income (loss), please see attached schedules at the end of this earnings release. |
Fiscal second quarter fee revenue of $76.7 million increased $4.1 million or 6% from Q104 of $72.6 million and declined $2.9 million or 4% from Q203 of $79.6 million. The sequential increase in fee revenue is attributable to an increase in the number of engagements, primarily in North America.
Compensation and benefits expense of $51.3 million is consistent with Q104 and down $4.2 million or 8% from $55.6 million in Q203. The decline from Q203 reflects a reduction in the number of employees from approximately 1,600 at October 31, 2002 to approximately 1,400 at October 31, 2003.
General and administrative expense was $17.5 million compared to $16.8 million in Q104 and $19.9 million in Q203. The decline of $2.4 million or 12% from prior year reflects the Companys cost savings efforts.
Actual operating income of $5.2 million improved $3.6 million and $4.9 million compared to adjusted operating income in Q104 and Q203, respectively, excluding restructuring charges. On the same basis, actual EBITDA of $7.7 million improved $3.3 million compared to adjusted EBITDA in Q104 and Q203. Actual operating income and EBITDA, including restructuring charges, improved $12.0 million and $11.8 million, respectively, compared to Q104 and improved $21.1 million and $19.6 million, respectively, compared to Q203.
The increases in both operating income and EBITDA in Q204 compared to Q104 reflect the increase in revenue in the current quarter. The increases in both operating income and EBITDA in Q204 compared to Q203 reflect approximately $8.5 million of cost savings as a
result of the Companys cost reduction efforts partially offset by a decrease of $3.6 million in revenues year over year.
Balance Sheet and Liquidity
Cash and cash equivalents was $64.4 million at October 31, 2003 compared to $53.9 million at July 31, 2003.
Interest expense, primarily related to the borrowings under Company Owned Life Insurance (COLI) policies and the Companys convertible securities, was $2.7 million in the current quarter, which is comparable to Q104. At October 31, 2003, the Company had no outstanding borrowings under its credit facility.
EXECUTIVE RECRUITMENT
Korn Ferry is one of the worlds most highly regarded executive recruitment businesses. Operating in 36 countries, executive recruitment business specializes in recruiting executive-level positions.
Selected Executive Recruitment Data
Actual and Adjusted Results
(dollars in millions)
|
Second Quarter |
Year to Date |
|||||||||||||||||||||||||||
|
Actual |
Adjusted (a) |
Actual |
Adjusted (a) |
|||||||||||||||||||||||||
|
Q204 |
Q203 |
Q203 |
Q204 |
Q203 |
Q204 |
Q203 |
||||||||||||||||||||||
| Fee revenue |
$ | 69.2 | $ | 71.8 | $ | 71.8 | $ | 133.7 | $ | 146.3 | $ | 133.7 | $ | 146.3 | ||||||||||||||
| Revenue |
$ | 73.5 | $ | 76.9 | $ | 76.9 | $ | 142.9 | $ | 156.4 | $ | 142.9 | $ | 156.4 | ||||||||||||||
| EBITDA (b) |
$ | 11.2 | $ | | $ | 11.4 | $ | 14.9 | $ | 11.4 | $ | 20.3 | $ | 22.8 | ||||||||||||||
| EBITDA Margin (b) |
16.2 | % | 0.0 | % | 15.9 | % | 11.2 | % | 7.8 | % | 15.2 | % | 15.6 | % | ||||||||||||||
| Operating Income (Loss) |
$ | 9.2 | $ | (3.2 | ) | $ | 8.2 | $ | 10.7 | $ | 5.0 | $ | 16.1 | $ | 16.4 | |||||||||||||
| Operating Margin |
13.2 | % | (4.4 | )% | 11.5 | % | 8.0 | % | 3.4 | % | 12.0 | % | 11.2 | % | ||||||||||||||
| Average number of consultants |
384 | 425 | 425 | 388 | 435 | 388 | 435 | |||||||||||||||||||||
| Engagements (c) |
1,375 | 1,201 | 1,201 | 2,528 | 2,421 | 2,528 | 2,421 | |||||||||||||||||||||
| a) | Adjusted amounts are non-GAAP financial measures and exclude restructuring charges of $11.4 million for the three and six months ended October 31, 2002 and $5.4 million for the six months ended October 31, 2003. These charges primarily relate to severance and facility charges and do not affect fee revenue or revenue. The Company presents adjusted amounts as alternative measures to the actual amounts for comparison purposes. The Company uses the adjusted amounts to analyze its operating results since it believes that the restructuring charges do not reflect, and make it difficult to compare, the Companys ongoing operations over various quarters. |
| b) | For a definition and discussion of EBITDA, a non-GAAP financial measure, and a reconciliation between EBITDA and net income (loss), please see attached schedules at the end of this earnings release. |
| c) | Represents engagements opened in the respective period. |
In the executive recruitment business, fiscal second quarter fee revenue was $69.2 million, an increase of $4.7 million or 7% from $64.5 million in Q104 and a decline of $2.6 million or 4% from $71.8 million in Q203. The sequential increase in fee revenue is attributable to an increase in the number of engagements, primarily in North America.
Executive recruitment operating income was $9.2 million in the current quarter, an increase of $2.3 million or 33% compared to adjusted operating income of $6.9 million in Q104, excluding restructuring charges, and an increase of $1.0 million or 12% compared to adjusted operating income of $8.2 million in Q203, excluding restructuring charges. On the same basis, EBITDA was $11.2 million in the current quarter, an increase of $2.1 million or 23% compared to adjusted EBITDA of $9.1 million in Q104, and essentially flat compared to adjusted EBITDA in Q203.
Actual operating income and EBITDA, including restructuring charges, improved $7.6 million compared to Q104 and improved $12.4 million and $11.2 million, respectively, compared to Q203.
The increase in both operating income and EBITDA in Q204 compared to Q104 is a result of the increase in revenue in the current quarter. The increase in operating income and EBITDA in Q204 compared to Q203 reflects $4.3 million of cost savings as a result of the Companys continued cost reduction efforts partially offset by a decrease of $3.3 million in revenue year over year.
The total number of consultants at October 31, 2003 was 385, a reduction of 36 compared to October 31, 2002 and an increase of 7 compared to July 31, 2003.
FUTURESTEP
Futurestep provides customized middle management recruitment solutions to employers, offering clients a portfolio of services ranging from individual search assignments to on-site managed recruitment services.
Selected Futurestep Data
Actual and Adjusted Results
(dollars in millions)
|
Second Quarter |
Year to Date |
|||||||||||||||||||||||||||
|
Actual |
Adjusted (a) |
Actual |
Adjusted (a) |
|||||||||||||||||||||||||
|
Q204 |
Q203 |
Q203 |
Q204 |
Q203 |
Q204 |
Q203 |
||||||||||||||||||||||
| Fee revenue |
$ | 7.5 | $ | 7.8 | $ | 7.8 | $ | 15.6 | $ | 17.2 | $ | 15.6 | $ | 17.2 | ||||||||||||||
| Revenue |
$ | 8.4 | $ | 8.7 | $ | 8.7 | $ | 17.4 | $ | 19.1 | $ | 17.4 | $ | 19.1 | ||||||||||||||
| EBITDA (b) |
$ | 0.7 | $ | (4.9 | ) | $ | (1.1 | ) | $ | (2.3 | ) | $ | (5.2 | ) | $ | 0.7 | $ | (1.4 | ) | |||||||||
| EBITDA Margin(b) |
9.8 | % | (63.4 | )% | (14.6 | )% | (15.0 | )% | (30.3 | )% | 4.2 | % | (8.2 | )% | ||||||||||||||
| Operating income (loss) |
$ | 0.5 | $ | (5.6 | ) | $ | (1.8 | ) | $ | (3.0 | ) | $ | (6.5 | ) | 0 | $ | (2.7 | ) | ||||||||||
| Operating Margin |
6.4 | % | (72.2 | )% | (23.4 | )% | (19.6 | )% | (37.9 | )% | 0 | % | (15.8 | )% | ||||||||||||||
| a) | Adjusted amounts are non-GAAP financial measures and exclude restructuring charges of $3.8 million for the three and six months ended October 31, 2002 and $3.0 million for the six months ended October 31, 2003. These charges relate to severance and write-off of assets and facility charges and do not affect fee revenue or revenue. The Company presents adjusted amounts as alternative measures to the actual amounts for comparison purposes. The Company uses the adjusted amounts to analyze its operating results since it believes that the restructuring charges do not reflect, and make it difficult to compare, the Companys ongoing operations over various quarters. |
| b) | For a definition and discussion of EBITDA, a non-GAAP financial measure, and a reconciliation between EBITDA and net income (loss), please see attached schedules at the end of this earnings release. |
Futurestep fiscal second quarter fee revenue was $7.5 million compared to $8.1 million in Q104 and $7.8 million in Q203. The decreases in fee revenue compared to Q104 and Q203 reflects the restructuring of Futurestep Europe operations coupled with a traditionally slow month of August in Europe, partially offset by an increase in the number of engagements in North America.
Futurestep operating income was $0.5 million compared to an adjusted operating loss of $0.5 million in Q104, excluding restructuring charges, and an adjusted operating loss of $1.8 million in Q203, excluding restructuring charges. On the same basis, EBITDA was a positive $0.7 million in the current quarter, compared to a negative adjusted EBITDA of $0.1 million in Q104 and a negative adjusted EBITDA of $1.1 million in Q203. Actual operating loss was $3.5 million and $5.6 million in Q104 and Q203, respectively, and actual EBITDA was a negative $3.1 million and $4.9 million in Q104 and Q203, respectively. Actual operating loss and EBITDA include restructuring charges described above. The increase in both operating income and EBITDA is a direct result of the Companys focused cost reduction initiatives offset by slight decreases in revenue.
Outlook
The Company estimates that third quarter fiscal 2004 fee revenue is likely to be in the range of $72 million to $78 million and earnings per share is likely to be in the range of $0.01 to $0.08.
Earnings Conference Call Webcast
The earnings conference call will be held today at 10:00 AM (EST) and hosted by Paul Reilly, Chairman and CEO, and Gary Burnison, Chief Operating Officer. The conference call will be webcast and available online at www.kornferry.com, accessible through the Investor Relations section.
Korn/Ferry International, (NYSE:KFY) with approximately 70 offices in 36 countries, is the executive recruitment firm with the broadest global presence. The firm works closely with clients to provide solutions tailored to their recruitment and assessment needs, through the Companys executive search business, identifying CEOs, COOs, CFOs, board members and other senior-level executives; through the firms Management Assessment business, which provides evaluation of senior management teams; and through Futurestep, which provides customized middle management recruitment solutions to employers, offering clients a portfolio of services ranging from individual search assignments to on-site managed recruitment services. For more information, visit the Korn/Ferry International Web site at www.kornferry.com and the Futurestep Web site at www.futurestep.com.
Statements in this press release and our conference call that relate to future results and events (forward-looking statements) are based on Korn/Ferrys current expectations. Readers are cautioned not to place undue reliance on such statements. Actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties which are beyond the control of Korn/Ferry. The potential risks and uncertainties relate to competition, the dependence on attracting and retaining qualified and experienced consultants, the portability of client relationships, local political or economic developments in or affecting countries where we have operations, risks related to the growth and results of Futurestep, restrictions imposed by off-limits agreements, reliance on information systems and employment liability risk. For a detailed description of risks and uncertainties that could cause differences, please refer to Korn/Ferrys periodic filings with the Securities and Exchange Commission. Korn/Ferry disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
[Tables attached]
KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
| Three Months Ended | Six Months Ended | |||||||||||||||
|
October 31, |
October 31, |
|||||||||||||||
|
2003 |
2002 |
2003 |
2002 |
|||||||||||||
| Fee revenue |
$ | 76,650 | $ | 79,572 | $ | 149,237 | $ | 163,522 | ||||||||
| Reimbursed out-of-pocket engagement expense |
5,315 | 6,086 | 11,061 | 11,924 | ||||||||||||
| Total revenue |
81,965 | 85,658 | 160,298 | 175,446 | ||||||||||||
| Compensation and benefits |
51,355 | 55,581 | 102,673 | 115,088 | ||||||||||||
| General and administrative expense |
17,492 | 19,921 | 34,302 | 38,597 | ||||||||||||
| Out-of-pocket engagement expense |
5,460 | 5,753 | 11,256 | 11,817 | ||||||||||||
| Depreciation and amortization |
2,500 | 4,061 | 5,287 | 8,292 | ||||||||||||
| Restructuring charge |
| 16,281 | 8,526 | 16,281 | ||||||||||||
| Total operating expense |
76,807 | 101,597 | 162,044 | 190,075 | ||||||||||||
| Operating income (loss) |
5,158 | (15,939 | ) | (1,746 | ) | (14,629 | ) | |||||||||
| Interest and other (expense) income, net |
(2,705 | ) | (1,986 | ) | (4,953 | ) | (3,670 | ) | ||||||||
| Income (loss) before provision for income taxes and equity in earnings of unconsolidated subsidiaries |
2,453 | (17,925 | ) | (6,699 | ) | (18,299 | ) | |||||||||
| Provision for income taxes |
475 | 488 | 931 | 1,058 | ||||||||||||
| Equity in earnings of unconsolidated subsidiaries |
243 | 396 | 414 | 757 | ||||||||||||
| Net income (loss) |
2,221 | (18,017 | ) | (7,216 | ) | (18,600 | ) | |||||||||
| Accretion on redeemable convertible preferred stock |
| (242 | ) | | (366 | ) | ||||||||||
| Net income (loss) attributed to common shareholders |
$ | 2,221 | $ | (18,259 | ) | $ | (7,216 | ) | $ | (18,966 | ) | |||||
| Basic earnings (loss) per common share |
$ | 0.06 | $ | (0.48 | ) | $ | (0.19 | ) | $ | (0.50 | ) | |||||
| Basic weighted average common shares outstanding |
37,491 | 37,701 | 37,457 | 37,672 | ||||||||||||
| Diluted earnings (loss) per common share |
$ | 0.06 | $ | (0.48 | ) | $ | (0.19 | ) | $ | (0.50 | ) | |||||
| Diluted weighted average common shares outstanding |
39,669 | 37,701 | 37,457 | 37,672 | ||||||||||||
KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
FINANCIAL SUMMARY BY SEGMENT
(in thousands)
| Three Months Ended October 31, |
Six Months Ended October 31, |
|||||||||||||||||||||||||||
|
2003 |
2002 |
2003 |
2002 |
|||||||||||||||||||||||||
| Fee Revenue: |
||||||||||||||||||||||||||||
| Executive recruitment: |
||||||||||||||||||||||||||||
| North America |
$ | 40,615 | $ | 42,312 | $ | 77,022 | $ | 84,475 | ||||||||||||||||||||
| Europe |
17,860 | 19,157 | 36,015 | 41,321 | ||||||||||||||||||||||||
| Asia/Pacific |
8,314 | 8,775 | 16,321 | 16,847 | ||||||||||||||||||||||||
| South America |
2,380 | 1,551 | 4,301 | 3,658 | ||||||||||||||||||||||||
| Total executive recruitment |
69,169 | 71,795 | 133,659 | 146,301 | ||||||||||||||||||||||||
| Futurestep |
7,481 | 7,777 | 15,578 | 17,221 | ||||||||||||||||||||||||
| Total fee revenue |
76,650 | 79,572 | 149,237 | 163,522 | ||||||||||||||||||||||||
| Reimbursed out-of-pocket engagement expenses |
5,315 | 6,086 | 11,061 | 11,924 | ||||||||||||||||||||||||
| Total revenue |
$ | 81,965 | $ | 85,658 | $ | 160,298 | $ | 175,446 | ||||||||||||||||||||
|
Margin |
Margin |
Margin |
Margin |
|||||||||||||||||||||||||
| Operating Income (Loss): |
||||||||||||||||||||||||||||
| Executive recruitment: |
||||||||||||||||||||||||||||
| North America |
$ | 8,260 | 20 | % | $ | 1,058 | 3 | % | $ | 14,074 | 18 | % | $ | 7,514 | 9 | % | ||||||||||||
| Europe |
324 | 2 | % | (4,416 | ) | (23 | )% | (4,563 | ) | (13 | )% | (1,731 | ) | (4 | )% | |||||||||||||
| Asia/Pacific |
217 | 3 | % | 807 | 9 | % | 816 | 5 | % | 123 | 1 | % | ||||||||||||||||
| South America |
350 | 15 | % | (618 | ) | (40 | )% | 342 | 8 | % | (949 | ) | (26 | )% | ||||||||||||||
| Total executive recruitment |
9,151 | 13 | % | (3,169 | ) | (4 | )% | 10,669 | 8 | % | 4,957 | 3 | % | |||||||||||||||
| Futurestep |
479 | 6 | % | (5,613 | ) | (72 | )% | (3,052 | ) | (20 | )% | (6,526 | ) | (38 | )% | |||||||||||||
| Corporate |
(4,472 | ) | (7,157 | ) | (9,363 | ) | (13,060 | ) | ||||||||||||||||||||
| Total operating income (loss) |
$ | 5,158 | 7 | % | $ | (15,939 | ) | (20 | )% | $ | (1,746 | ) | (1 | )% | $ | (14,629 | ) | (9 | )% | |||||||||
|
Margin |
Margin |
Margin |
Margin |
|||||||||||||||||||||||||
| *Adjusted Operating Income (Loss): |
||||||||||||||||||||||||||||
| Executive recruitment: |
||||||||||||||||||||||||||||
| North America |
$ | 8,260 | 20 | % | $ | 7,702 | 18 | % | $ | 14,338 | 19 | % | $ | 14,158 | 17 | % | ||||||||||||
| Europe |
324 | 2 | % | 34 | 0 | % | 347 | 1 | % | 2,719 | 7 | % | ||||||||||||||||
| Asia/Pacific |
217 | 3 | % | 1,119 | 13 | % | 976 | 6 | % | 435 | 3 | % | ||||||||||||||||
| South America |
350 | 15 | % | (618 | ) | (40 | )% | 400 | 9 | % | (949 | ) | (26 | )% | ||||||||||||||
| Total executive recruitment |
9,151 | 13 | % | 8,237 | 11 | % | 16,061 | 12 | % | 16,363 | 11 | % | ||||||||||||||||
| Futurestep |
479 | 6 | % | (1,816 | ) | (23 | )% | (70 | ) | (0 | )% | (2,729 | ) | (16 | )% | |||||||||||||
| Corporate |
(4,472 | ) | (6,079 | ) | (9,211 | ) | (11,982 | ) | ||||||||||||||||||||
| Total adjusted operating income (loss) |
$ | 5,158 | 7 | % | $ | 342 | 0 | % | $ | 6,780 | 5 | % | $ | 1,652 | 1 | % | ||||||||||||
*Adjusted operating income (loss) on this page and adjusted EBITDA on the following page excludes restructuring charges related to severance and facilities of $16.3 million for the three and six months ended October 31, 2002 and $8.5 million for the six months ended October 31, 2003. Executive recruitment restructuring charges were $11.4 million for the three and six months ended October 31, 2002 and $5.4 million for the six months ended October 31, 2003, and Futurestep restructuring charges were $3.8 million for the three and six months ended October 31, 2002 and $3.0 million for the six months ended October 31, 2003. Corporate restructuring charges were $1.1 million for the three and six months ended October 31, 2002 and $0.1 million for the six months ended October 31, 2003.
KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
RECONCILIATION OF EBITDA
(in thousands)
| Three Months Ended | Six Months Ended | |||||||||||||||
|
October 31, |
October 31, |
|||||||||||||||
|
2003 |
2002 |
2003 |
2002 |
|||||||||||||
| Net income (loss) |
$ | 2,221 | $ | (18,017 | ) | $ | (7,216 | ) | $ | (18,600 | ) | |||||
| Equity in earnings of unconsolidated subsidiaries |
(243 | ) | (396 | ) | (414 | ) | (757 | ) | ||||||||
| Provision for income taxes |
475 | 488 | 931 | 1,058 | ||||||||||||
| Interest and other (expense) income, net |
2,705 | 1,986 | 4,953 | 3,670 | ||||||||||||
| Operating Income (Loss) |
$ | 5,158 | $ | (15,939 | ) | $ | (1,746 | ) | $ | (14,629 | ) | |||||
| Operating Income (Loss) |
||||||||||||||||
| Executive recruitment: |
||||||||||||||||
| North America |
$ | 8,260 | $ | 1,058 | $ | 14,074 | $ | 7,514 | ||||||||
| Europe |
324 | (4,416 | ) | (4,563 | ) | (1,731 | ) | |||||||||
| Asia/Pacific |
217 | 807 | 816 | 123 | ||||||||||||
| South America |
350 | (618 | ) | 342 | (949 | ) | ||||||||||
| Total executive recruitment |
9,151 | (3,169 | ) | 10,669 | 4,957 | |||||||||||
| Futurestep |
479 | (5,613 | ) | (3,052 | ) | (6,526 | ) | |||||||||
| Corporate |
(4,472 | ) | (7,157 | ) | (9,363 | ) | (13,060 | ) | ||||||||
| Total |
$ | 5,158 | $ | (15,939 | ) | $ | (1,746 | ) | $ | (14,629 | ) | |||||
| Depreciation and Amortization |
||||||||||||||||
| Executive recruitment: |
||||||||||||||||
| North America |
$ | 922 | $ | 1,720 | $ | 1,874 | $ | 3,463 | ||||||||
| Europe |
871 | 917 | 1,776 | 1,907 | ||||||||||||
| Asia/Pacific |
219 | 441 | 445 | 942 | ||||||||||||
| South America |
76 | 85 | 155 | 173 | ||||||||||||
| Total executive recruitment |
2,088 | 3,163 | 4,250 | 6,485 | ||||||||||||
| Futurestep |
253 | 681 | 719 | 1,315 | ||||||||||||
| Corporate |
159 | 217 | 318 | 492 | ||||||||||||
| Total |
$ | 2,500 | $ | 4,061 | $ | 5,287 | $ | 8,292 | ||||||||
| EBITDA |
||||||||||||||||
| Executive recruitment: |
||||||||||||||||
| North America |
$ | 9,182 | $ | 2,778 | $ | 15,948 | $ | 10,977 | ||||||||
| Europe |
1,195 | (3,499 | ) | (2,787 | ) | 176 | ||||||||||
| Asia/Pacific |
436 | 1,248 | 1,261 | 1,065 | ||||||||||||
| South America |
426 | (533 | ) | 497 | (776 | ) | ||||||||||
| Total executive recruitment |
11,239 | (6 | ) | 14,919 | 11,442 | |||||||||||
| Futurestep |
732 | (4,932 | ) | (2,333 | ) | (5,211 | ) | |||||||||
| Corporate |
(4,313 | ) | (6,940 | ) | (9,045 | ) | (12,568 | ) | ||||||||
| Total |
$ | 7,658 | $ | (11,878 | ) | $ | 3,541 | $ | (6,337 | ) | ||||||
| Adjusted EBITDA |
||||||||||||||||
| Executive recruitment: |
||||||||||||||||
| North America |
$ | 9,182 | $ | 9,422 | $ | 16,212 | $ | 17,621 | ||||||||
| Europe |
1,195 | 951 | 2,123 | 4,626 | ||||||||||||
| Asia/Pacific |
436 | 1,560 | 1,421 | 1,377 | ||||||||||||
| South America |
426 | (533 | ) | 555 | (776 | ) | ||||||||||
| Total executive recruitment |
11,239 | 11,400 | 20,311 | 22,848 | ||||||||||||
| Futurestep |
732 | (1,135 | ) | 649 | (141 | ) | ||||||||||
| Corporate |
(4,313 | ) | (5,862 | ) | (8,893 | ) | (11,490 | ) | ||||||||
| Total |
$ | 7,658 | $ | 4,403 | $ | 12,067 | $ | 9,944 | ||||||||
Note: EBITDA, a non-GAAP financial measure, is net income (loss), excluding equity in earnings of unconsolidated subsidiaries, provision for income taxes, and interest and other (expense) income. The Company presents EBITDA as an alternative measure of operating performance to net income (loss). The Company uses EBITDA to analyze its operating results without taking into account depreciation and amortization, which are non-cash expenses. Even though the Company believes that EBITDA is a common measure used by analysts and investors, other companies, including companies in its industry, may define EBITDA differently and thus the Company's EBITDA and adjusted EBITDA figures may not be comparable with those of other companies.