PRESS RELEASE, DATED JUNE 8, 2004.
Published on June 14, 2004
Exhibit 99.1
For Immediate Release
Contacts: For investors:
Gary Burnison (310) 226-2613
For media:
Don Spetner (310) 843-4176
Korn/Ferry International Announces a 28% Increase in
Fiscal Fourth Quarter Fee Revenue
Highlights:
| | Fee revenue was $97.7 million in the current quarter, an increase of 28% from $76.1 million in the prior year fourth quarter, and an increase of 20% from $81.4 million in the third quarter fiscal 2004. |
| | Fiscal fourth quarter diluted earnings per share was $0.21, the highest earnings per share since fourth quarter 2001. |
| | Diluted earnings per share in the current quarter, improved $0.26 compared to the prior year and improved $0.11 compared to the third quarter fiscal 2004. |
| | Operating income of $11.3 million in the current quarter improved $10.2 million compared to prior year fourth quarter and improved $5.1 million compared to third quarter fiscal 2004. |
Los Angeles, CA, June 8, 2004 - Korn/Ferry International (NYSE:KFY), a leading provider of recruitment and leadership development services, announced fourth quarter fiscal 2004 diluted earnings per share of $0.21 compared to $0.10 in Q304 and a loss per share of $0.05 in Q403.
We are pleased by the results of the fourth quarter and for the year, said Paul C. Reilly, CEO and Chairman of Korn/Ferry International. Vigilant focus on client service and expanding our multi-product strategy has begun to bear fruit. We believe that the global job recovery will continue over the next several quarters as the macro economy further expands.
Financial Results
Actual and Adjusted Results
(dollars in millions, except per share amounts)
|
Fourth Quarter |
Fiscal Year |
|||||||||||||||||||||||
|
Actual |
Actual |
Adjusted (a) |
||||||||||||||||||||||
|
FY04 |
FY03 |
FY04 |
FY03 |
FY04 |
FY03 |
|||||||||||||||||||
| Fee Revenue |
$ | 97.7 | $ | 76.1 | $ | 328.3 | $ | 315.1 | $ | 328.3 | $ | 315.1 | ||||||||||||
| Revenue |
$ | 103.7 | $ | 82.4 | $ | 350.7 | $ | 338.5 | $ | 350.7 | $ | 338.5 | ||||||||||||
| Operating EBITDA (b) |
$ | 13.5 | $ | 5.0 | $ | 25.8 | $ | 2.9 | $ | 34.3 | $ | 19.1 | ||||||||||||
| Operating EBITDA Margin (b) |
13.8 | % | 6.6 | % | 7.9 | % | 0.9 | % | 10.5 | % | 6.1 | % | ||||||||||||
| Operating Income (Loss) |
$ | 11.3 | $ | 1.1 | $ | 15.8 | ($13.3 | ) | $ | 24.3 | $ | 3.0 | ||||||||||||
| Operating Margin |
11.6 | % | 1.5 | % | 4.8 | % | (4.2 | %) | 7.4 | % | 0.9 | % | ||||||||||||
| Net Income (Loss) |
$ | 8.7 | ($1.7 | ) | $ | 5.4 | ($22.9 | ) | $ | 13.9 | ($6.6 | ) | ||||||||||||
| Basic Earnings (Loss) Per Share |
0.23 | (0.05 | ) | 0.14 | (0.63 | ) | 0.37 | (0.20 | ) | |||||||||||||||
| Diluted Earnings (Loss) Per Share |
0.21 | (0.05 | ) | 0.13 | (0.63 | ) | 0.35 | (0.20 | ) | |||||||||||||||
| a) | Adjusted amounts are non-GAAP financial measures and exclude restructuring charges of $8.5 million in FY04 and $16.3 million in FY03. These charges primarily relate to severance and facility charges and do not affect fee revenue or revenue. Korn/Ferry presents adjusted amounts as alternative measures to the actual amounts for comparison purposes. Korn/Ferry 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, Korn/Ferrys ongoing operations over various periods. |
| b) | For a definition and discussion of operating EBITDA, a non-GAAP financial measure, and a reconciliation between operating EBITDA and net income (loss), please see attached schedules at the end of this earnings release. |
Fiscal fourth quarter fee revenue of $97.7 million increased $16.3 million or 20% from Q304 of $81.4 million and increased $21.6 million or 28% from Q403 of $76.1 million. The sequential increase in fee revenue is due to the increase in the average number of billable engagements, primarily in North America and Europe where fee revenue increased $9.5 and $2.5 million, respectively, sequentially. The year over year increase in fee revenue, which includes an increase of North America fee revenue of $12.9 million, is attributable to an improvement in the number of new engagements opened across all regions. Exchange rates impacted fee revenues favorably by $4.5 million in the current quarter compared to Q403 with little impact to net income due, in part, to the effect of exchange rates on compensation and benefit expenses as well as general and administrative expenses.
Compensation and benefits expense was $64.9 million compared to $53.6 million in Q304 and Q403. The increases partially relate to increases in bonus expense due to the continued improvement in profitability. Exchange rates impacted compensation and benefits expense by $2.9 million in the current quarter compared to prior year.
General and administrative expense was $18.6 million compared to $18.7 million in Q304 and $17.8 million in Q403. The year over year increase in general and administrative expense was primarily due to exchange rates.
Depreciation and amortization expense of $2.2 million was consistent with Q304 and decreased $1.7 million compared to Q403 as a significant amount of our property and equipment became fully depreciated in the latter half of fiscal 2003.
Operating income of $11.3 million improved $5.1 million compared to Q304 and improved $10.2 million compared to Q403. Operating EBITDA of $13.5 million improved $4.7 million compared to Q304 and improved $8.5 million compared to Q403.
Balance Sheet and Liquidity
Cash and cash equivalents was $108.1 million at April 30, 2004 compared to $76.9 million at January 31, 2004 and $82.7 million at April 30, 2003.
Interest expense, primarily related to the borrowings under Company Owned Life Insurance (COLI) policies and Korn/Ferrys convertible securities, was $2.1 million in the current quarter, which decreased slightly compared to Q304. At April 30, 2004, Korn/Ferry had no outstanding borrowings under its credit facility.
EXECUTIVE RECRUITMENT
Korn/Ferry is one of the worlds leading executive recruitment brands. Operating in 36 countries, the Executive Recruitment business delivers customized executive search services, including the identification of CEOs, COOs, CFOs, board members and other senior-level executives, to clients worldwide.
Selected Executive Recruitment Data
Actual and Adjusted Results
(dollars in millions)
|
Fourth Quarter |
Fiscal Year |
|||||||||||||||||||||||
|
Actual |
Actual |
Adjusted (a) |
||||||||||||||||||||||
|
FY04 |
FY03 |
FY04 |
FY03 |
FY04 |
FY03 |
|||||||||||||||||||
| Fee Revenue |
$ | 87.6 | $ | 68.0 | $ | 294.1 | $ | 282.4 | $ | 294.1 | $ | 282.4 | ||||||||||||
| Revenue |
$ | 92.4 | $ | 73.2 | $ | 312.5 | $ | 302.0 | $ | 312.5 | $ | 302.0 | ||||||||||||
| Operating EBITDA (b) |
$ | 18.1 | $ | 8.8 | $ | 46.5 | $ | 31.9 | $ | 51.9 | $ | 43.3 | ||||||||||||
| Operating EBITDA Margin (b) |
20.7 | % | 12.9 | % | 15.8 | % | 11.3 | % | 17.6 | % | 15.3 | % | ||||||||||||
| Operating Income |
$ | 16.2 | $ | 5.7 | $ | 38.2 | $ | 19.1 | $ | 43.6 | $ | 30.5 | ||||||||||||
| Operating Margin |
18.5 | % | 8.4 | % | 13.0 | % | 6.8 | % | 14.8 | % | 10.8 | % | ||||||||||||
| Average number of consultants |
382 | 396 | 380 | 420 | 380 | 420 | ||||||||||||||||||
| Engagements (c) |
1,676 | 1,196 | 5,521 | 4,733 | 5,521 | 4,733 | ||||||||||||||||||
| a) | Adjusted amounts are non-GAAP financial measures and exclude restructuring charges of $5.4 million in FY04 and $11.4 million in FY03. These charges primarily relate to severance and facility charges and do not affect fee revenue or revenue. Korn/Ferry presents adjusted amounts as alternative measures to the actual amounts for comparison purposes. Korn/Ferry 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, Korn/Ferrys ongoing operations over various periods. |
| b) | For a definition and discussion of operating EBITDA, a non-GAAP financial measure, and a reconciliation between operating EBITDA and net income (loss), please see attached schedules at the end of this earnings release. |
| c) | Represents new engagements opened in the respective period. |
In the Executive Recruitment business, fiscal fourth quarter fee revenue was $87.6 million, an increase of $14.8 million or 20% from $72.8 million in Q304 and an increase of $19.6 million or 29% from $68.0 million in Q403. The sequential and year over year increases in fee revenue are attributable to an increase in the average number of billable engagements and the number of new engagements opened in the current quarter, across all regions.
Additionally, exchange rates impacted fee revenue in the current quarter favorably by $3.7 million versus Q403.
Executive recruitment operating income was $16.2 million in the current quarter, an increase of $4.8 million or 42% compared to $11.4 million in Q304 and an increase of $10.5 million compared to $5.7 million in Q403. Operating EBITDA was $18.1 million in the current quarter, an improvement of $4.6 million or 34% compared to $13.5 million in Q304 and an improvement of $9.3 million compared to $8.8 million in Q403.
The increases in both operating income and operating EBITDA in Q404 compared to Q304 reflect the increase of revenue partially offset by an increase in compensation and benefits expense.
The increases in both operating income and operating EBITDA in Q404 compared to Q403 reflect the increase of revenue as well a decrease in depreciation and amortization expense, which only affected operating income. These amounts were partially offset by an increase of compensation and benefits expense.
The total number of consultants at April 30, 2004 was 380, fairly consistent with the number of consultants at January 31, 2004, and a reduction of approximately 10 compared to April 30, 2003.
FUTURESTEP
Futurestep provides customized middle management recruitment solutions to companies, 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)
|
Fourth Quarter |
Fiscal Year |
|||||||||||||||||||||||
|
Actual |
Actual |
Adjusted (a) |
||||||||||||||||||||||
|
FY04 |
FY03 |
FY04 |
FY03 |
FY04 |
FY03 |
|||||||||||||||||||
| Fee Revenue |
$ | 10.1 | $ | 8.1 | $ | 34.2 | $ | 32.7 | $ | 34.2 | $ | 32.7 | ||||||||||||
| Revenue |
$ | 11.3 | $ | 9.1 | $ | 38.2 | $ | 36.5 | $ | 38.2 | $ | 36.5 | ||||||||||||
| Operating EBITDA (b) |
$ | 1.0 | $ | 0.2 | ($0.4 | ) | ($7.5 | ) | $ | 2.6 | ($2.1 | ) | ||||||||||||
| Operating EBITDA Margin (b) |
10.0 | % | 1.9 | % | (1.2 | %) | (22.8 | %) | 7.5 | % | (6.4 | %) | ||||||||||||
| Operating Income (loss) |
$ | 0.9 | ($0.4 | ) | ($1.6 | ) | ($9.9 | ) | $ | 1.4 | ($4.5 | ) | ||||||||||||
| Operating Margin |
8.4 | % | (5.5 | %) | (4.6 | %) | (30.2 | %) | 4.1 | % | (13.7 | %) | ||||||||||||
| a) | Adjusted amounts are non-GAAP financial measures and exclude restructuring charges of $3.0 million in FY04 and $5.4 million in FY03. These charges relate to severance and write-off of assets and facility charges and do not affect fee revenue or revenue. Korn/Ferry presents adjusted amounts as alternative measures to the actual amounts for comparison purposes. Korn/Ferry 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, Korn/Ferrys ongoing operations over various periods. |
| b) | For a definition and discussion of operating EBITDA, a non-GAAP financial measure, and a reconciliation between operating EBITDA and net income (loss), please see attached schedules at the end of this earnings release. |
Futurestep fiscal fourth quarter fee revenue was $10.1 million, an increase of $1.6 million or 19% from Q304 and an increase of $2.0 million or 25% from Q403. Fee revenue increased in
all regions driven by our strategic movement toward larger fee engagements. Exchange rates impacted fee revenue in the current quarter favorably by $0.8 million compared to Q403.
Futurestep operating income was $0.9 million in the current quarter compared to $0.6 million in Q304 and an operating loss of $0.4 million in Q403. Operating EBITDA was $1.0 million in the current quarter compared to $0.9 million in Q304 and $0.2 million in Q403.
Outlook
Korn/Ferry estimates that first quarter fiscal 2005 fee revenue is likely to be in the range of $90 million to $96 million, assuming constant foreign exchange rates, and earnings per share is likely to be in the range of $0.12 to $0.17. In fiscal 2005, the Company expects its effective tax rate to be approximately 42%.
Earnings Conference Call Webcast
The earnings conference call will be held today at 9:00 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 over 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 its executive search business, which identifies 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 April 30, |
Twelve Months Ended April 30, |
|||||||||||||||
|
2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Fee revenue |
$ | 97,732 | $ | 76,054 | $ | 328,331 | $ | 315,112 | ||||||||
| Reimbursed out-of-pocket engagement expense |
5,988 | 6,303 | 22,372 | 23,354 | ||||||||||||
| Total revenue |
103,720 | 82,357 | 350,703 | 338,466 | ||||||||||||
| Compensation and benefits |
64,879 | 53,555 | 221,177 | 223,192 | ||||||||||||
| General and administrative expense |
18,597 | 17,813 | 71,623 | 73,107 | ||||||||||||
| Out-of-pocket engagement expense |
6,757 | 5,978 | 23,557 | 23,029 | ||||||||||||
| Depreciation and amortization |
2,197 | 3,869 | 10,030 | 16,161 | ||||||||||||
| Restructuring charges |
| | 8,526 | 16,281 | ||||||||||||
| Total operating expense |
92,430 | 81,215 | 334,913 | 351,770 | ||||||||||||
| Operating income (loss) |
11,290 | 1,142 | 15,790 | (13,304 | ) | |||||||||||
| Interest and other (expense) income, net |
(1,392 | ) | (3,046 | ) | (8,124 | ) | (9,333 | ) | ||||||||
| Income (Loss) before provision for income taxes and equity in earnings of unconsolidated subsidiaries |
9,898 | (1,904 | ) | 7,666 | (22,637 | ) | ||||||||||
| Provision for income taxes |
1,543 | 503 | 3,218 | 2,040 | ||||||||||||
| Equity in earnings of unconsolidated subsidiaries |
379 | 664 | 955 | 1,775 | ||||||||||||
| Net income (loss) |
8,734 | (1,743 | ) | 5,403 | (22,902 | ) | ||||||||||
| Accretion on redeemable convertible preferred stock |
(245 | ) | (852 | ) | ||||||||||||
| Net income (loss) attributed to common shareholders |
$ | 8,734 | $ | (1,988 | ) | $ | 5,403 | $ | (23,754 | ) | ||||||
| Interest expense on convertible debt adjustment |
1,019 | |||||||||||||||
| Net income (loss) adjusted for computation of diluted EPS |
$ | 9,753 | $ | (1,988 | ) | $ | 5,403 | $ | (23,754 | ) | ||||||
| Basic net income (loss) per common share |
$ | 0.23 | $ | (0.05 | ) | $ | 0.14 | $ | (0.63 | ) | ||||||
| Basic weighted average common shares outstanding |
37,445 | 37,408 | 37,466 | 37,576 | ||||||||||||
| Diluted net income (loss) per common share |
$ | 0.21 | $ | (0.05 | ) | $ | 0.13 | $ | (0.63 | ) | ||||||
| Diluted weighted average common shares outstanding |
46,019 | 37,408 | 40,311 | 37,576 | ||||||||||||
KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
FINANCIAL SUMMARY BY SEGMENT
(in thousands)
| Three Months Ended April 30, |
Twelve Months Ended April 30, |
|||||||||||||||||||||||||||
|
2004 |
2003 |
2004 |
2003 |
|||||||||||||||||||||||||
| Fee Revenue: |
||||||||||||||||||||||||||||
| Executive recruitment: |
||||||||||||||||||||||||||||
| North America |
$ | 51,582 | $ | 38,708 | $ | 170,678 | $ | 162,309 | ||||||||||||||||||||
| Europe |
22,344 | 19,015 | 78,236 | 78,990 | ||||||||||||||||||||||||
| Asia/Pacific |
11,604 | 8,114 | 36,818 | 33,523 | ||||||||||||||||||||||||
| South America |
2,097 | 2,129 | 8,371 | 7,616 | ||||||||||||||||||||||||
| Total executive recruitment |
87,627 | 67,966 | 294,103 | 282,438 | ||||||||||||||||||||||||
| Futurestep |
10,105 | 8,088 | 34,228 | 32,674 | ||||||||||||||||||||||||
| Total fee revenue |
97,732 | 76,054 | 328,331 | 315,112 | ||||||||||||||||||||||||
| Reimbursed out-of-pocket engagement expenses |
5,988 | 6,303 | 22,372 | 23,354 | ||||||||||||||||||||||||
| Total revenue |
$ | 103,720 | $ | 82,357 | $ | 350,703 | $ | 338,466 | ||||||||||||||||||||
|
Margin |
Margin |
Margin |
Margin |
|||||||||||||||||||||||||
| Operating Income (Loss): |
||||||||||||||||||||||||||||
| Executive recruitment: |
||||||||||||||||||||||||||||
| North America |
$ | 12,361 | 24 | % | $ | 4,070 | 11 | % | $ | 35,983 | 21 | % | $ | 17,422 | 11 | % | ||||||||||||
| Europe |
2,047 | 9 | % | 298 | 2 | % | (1,912 | ) | (2 | %) | 224 | 0 | % | |||||||||||||||
| Asia/Pacific |
1,948 | 17 | % | 975 | 12 | % | 3,998 | 11 | % | 2,039 | 6 | % | ||||||||||||||||
| South America |
(139 | ) | (7 | %) | 393 | 18 | % | 177 | 2 | % | (602 | ) | (8 | %) | ||||||||||||||
| Total executive recruitment |
16,217 | 19 | % | 5,736 | 8 | % | 38,246 | 13 | % | 19,083 | 7 | % | ||||||||||||||||
| Futurestep |
850 | 8 | % | (440 | ) | (5 | %) | (1,574 | ) | (5 | %) | (9,856 | ) | (30 | %) | |||||||||||||
| Corporate |
(5,777 | ) | (4,154 | ) | (20,882 | ) | (22,531 | ) | ||||||||||||||||||||
| Total operating income (loss) |
$ | 11,290 | 12 | % | $ | 1,142 | 2 | % | $ | 15,790 | 5 | % | $ | (13,304 | ) | (4 | %) | |||||||||||
|
Margin |
Margin |
Margin |
Margin |
|||||||||||||||||||||||||
| *Adjusted Operating Income (Loss): |
||||||||||||||||||||||||||||
| Executive recruitment: |
||||||||||||||||||||||||||||
| North America |
$ | 12,361 | 24 | % | $ | 4,070 | 11 | % | $ | 36,247 | 21 | % | $ | 23,173 | 14 | % | ||||||||||||
| Europe |
2,047 | 9 | % | 298 | 2 | % | 2,998 | 4 | % | 5,567 | 7 | % | ||||||||||||||||
| Asia/Pacific |
1,948 | 17 | % | 975 | 12 | % | 4,158 | 11 | % | 2,351 | 7 | % | ||||||||||||||||
| South America |
(139 | ) | (7 | %) | 393 | 18 | % | 235 | 3 | % | (602 | ) | (8 | %) | ||||||||||||||
| Total executive recruitment |
16,217 | 19 | % | 5,736 | 8 | % | 43,638 | 15 | % | 30,489 | 11 | % | ||||||||||||||||
| Futurestep |
850 | 8 | % | (440 | ) | (5 | %) | 1,408 | 4 | % | (4,481 | ) | (14 | %) | ||||||||||||||
| Corporate |
(5,777 | ) | (4,154 | ) | (20,730 | ) | (23,031 | ) | ||||||||||||||||||||
| Total adjusted operating income |
$ | 11,290 | 12 | % | $ | 1,142 | 2 | % | $ | 24,316 | 7 | % | $ | 2,977 | 1 | % | ||||||||||||
| * | Adjusted operating income (loss) on this page and adjusted operating EBITDA on the following page excludes restructuring charges related to severance and facilities of $8.5 million and $16.3 million for the twelve months ended April 30, 2004 and 2003, respectively. Executive recruitment restructuring charges were $5.4 million and $11.4 million for the twelve months ended April 30 ,2004 and 2003, respectively. Futurestep restructuring charges were $3.0 million and $5.4 million for the twelve months ended April 30, 2004 and 2003. Corporate restructuring charges were $0.1 million and $(0.5) million in the twelve months ended April 30, 2004 and 2003. |
KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
RECONCILIATION OF EBITDA
(in thousands)
|
Three Months Ended April 30, |
Twelve Months Ended April 30, |
|||||||||||||||
|
2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Net income (loss): |
$ | 8,734 | $ | (1,743 | ) | $ | 5,403 | $ | (22,902 | ) | ||||||
| Equity in earnings of unconsolidated subsidiaries |
(379 | ) | (664 | ) | (955 | ) | (1,775 | ) | ||||||||
| Provision for income taxes |
1,543 | 503 | 3,218 | 2,040 | ||||||||||||
| Interest and other expense (income), net |
1,392 | 3,046 | 8,124 | 9,333 | ||||||||||||
| Operating Income (Loss) |
$ | 11,290 | $ | 1,142 | $ | 15,790 | $ | (13,304 | ) | |||||||
| Operating Income (Loss): |
||||||||||||||||
| Executive recruitment: |
||||||||||||||||
| North America |
$ | 12,361 | $ | 4,070 | $ | 35,983 | $ | 17,422 | ||||||||
| Europe |
2,047 | 298 | (1,912 | ) | 224 | |||||||||||
| Asia/Pacific |
1,948 | 975 | 3,998 | 2,039 | ||||||||||||
| South America |
(139 | ) | 393 | 177 | (602 | ) | ||||||||||
| Total executive recruitment |
16,217 | 5,736 | 38,246 | 19,083 | ||||||||||||
| Futurestep |
850 | (440 | ) | (1,574 | ) | (9,856 | ) | |||||||||
| Corporate |
(5,777 | ) | (4,154 | ) | (20,882 | ) | (22,531 | ) | ||||||||
| Total |
$ | 11,290 | $ | 1,142 | $ | 15,790 | $ | (13,304 | ) | |||||||
| Depreciation and Amortization: |
||||||||||||||||
| Executive recruitment: |
||||||||||||||||
| North America |
$ | 798 | $ | 1,454 | $ | 3,557 | $ | 6,716 | ||||||||
| Europe |
854 | 1,099 | 3,580 | 3,943 | ||||||||||||
| Asia/Pacific |
165 | 446 | 797 | 1,839 | ||||||||||||
| South America |
73 | 45 | 303 | 292 | ||||||||||||
| Total executive recruitment |
1,890 | 3,044 | 8,237 | 12,790 | ||||||||||||
| Futurestep |
161 | 591 | 1,171 | 2,404 | ||||||||||||
| Corporate |
146 | 234 | 622 | 967 | ||||||||||||
| Total |
$ | 2,197 | $ | 3,869 | $ | 10,030 | $ | 16,161 | ||||||||
| EBITDA: |
||||||||||||||||
| Executive recruitment: |
||||||||||||||||
| North America |
$ | 13,159 | $ | 5,524 | $ | 39,540 | $ | 24,138 | ||||||||
| Europe |
2,901 | 1,397 | 1,668 | 4,167 | ||||||||||||
| Asia/Pacific |
2,113 | 1,421 | 4,795 | 3,878 | ||||||||||||
| South America |
(66 | ) | 438 | 480 | (310 | ) | ||||||||||
| Total executive recruitment |
18,107 | 8,780 | 46,483 | 31,873 | ||||||||||||
| Futurestep |
1,011 | 151 | (403 | ) | (7,452 | ) | ||||||||||
| Corporate |
(5,631 | ) | (3,920 | ) | (20,260 | ) | (21,564 | ) | ||||||||
| Total |
$ | 13,487 | $ | 5,011 | $ | 25,820 | $ | 2,857 | ||||||||
| Adjusted EBITDA: |
||||||||||||||||
| Executive recruitment: |
||||||||||||||||
| North America |
$ | 13,159 | $ | 5,524 | $ | 39,804 | $ | 29,889 | ||||||||
| Europe |
2,901 | 1,397 | 6,578 | 9,510 | ||||||||||||
| Asia/Pacific |
2,113 | 1,421 | 4,955 | 4,190 | ||||||||||||
| South America |
(66 | ) | 438 | 538 | (310 | ) | ||||||||||
| Total executive recruitment |
18,107 | 8,780 | 51,875 | 43,279 | ||||||||||||
| Futurestep |
1,011 | 151 | 2,579 | (2,077 | ) | |||||||||||
| Corporate |
(5,631 | ) | (3,920 | ) | (20,108 | ) | (22,064 | ) | ||||||||
| Total |
$ | 13,487 | $ | 5,011 | $ | 34,346 | $ | 19,138 | ||||||||
Note: Operating EBITDA, a non-GAAP financial measure, is operating income (loss) before depreciation and amortization. In addition to excluding interest and taxes, operating income (loss) also excludes equity in earnings of unconsolidated subsidiaries and accretion on redeemable convertible preferred stock. The Company presents EBITDA as an alternative measure of operating performance to operating 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.
KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
|
As of April 30, 2004 |
As of April 30, 2003 |
|||||||
| ASSETS |
||||||||
| Cash and cash equivalents |
$ | 108,102 | $ | 82,685 | ||||
| Receivables due from clients, net of allowance for doubtful accounts of $6,159 and $7,199 |
52,306 | 46,737 | ||||||
| Income taxes and other receivables |
2,398 | 12,648 | ||||||
| Deferred income taxes |
9,162 | 9,162 | ||||||
| Prepaid expenses |
10,128 | 10,403 | ||||||
| Total current assets |
182,096 | 161,635 | ||||||
| Property and equipment, net |
19,603 | 27,698 | ||||||
| Cash surrender value of company owned life insurance policies, net of loans |
58,868 | 53,143 | ||||||
| Deferred income taxes |
27,510 | 23,897 | ||||||
| Goodwill |
98,481 | 94,729 | ||||||
| Deferred financing costs, investments and other |
7,670 | 7,911 | ||||||
| Total assets |
$ | 394,228 | $ | 369,013 | ||||
| LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||
| Notes payable |
$ | | $ | 5,099 | ||||
| Accounts payable |
8,676 | 8,651 | ||||||
| Compensation and benefits payable |
60,957 | 52,206 | ||||||
| Other accrued liabilities |
24,785 | 23,006 | ||||||
| Total current liabilities |
94,418 | 88,962 | ||||||
| Deferred compensation and other retirement plans |
53,531 | 49,944 | ||||||
| Long-term debt |
44,400 | 41,364 | ||||||
| Other liabilities |
10,943 | 12,682 | ||||||
| 7.5% Convertible mandatorily redeemable preferred stock, net of unamortized discount and issuance costs, redemption value $11,300 |
10,512 | 9,606 | ||||||
| Total liabilities |
213,804 | 202,558 | ||||||
| Shareholders equity |
||||||||
| Common stock: $0.01 par value, 150,000 shares authorized, 39,363 and 38,642 shares issued and 38,170 and 37,590 shares outstanding |
306,545 | 302,021 | ||||||
| Retained deficit |
(121,204 | ) | (126,607 | ) | ||||
| Unearned restricted stock compensation |
(2,341 | ) | (1,560 | ) | ||||
| Accumulated other comprehensive loss |
(1,596 | ) | (6,044 | ) | ||||
| Shareholders equity |
181,404 | 167,810 | ||||||
| Less: Notes receivable from shareholders |
(980 | ) | (1,355 | ) | ||||
| Total shareholders equity |
180,424 | 166,455 | ||||||
| Total liabilities and shareholders equity |
$ | 394,228 | $ | 369,013 | ||||