March 8, 2005 - PRESS RELEASE - 8-K: Current report filing

EXHIBIT 99.1

For Immediate Release

Contacts: For investors:

Gary Burnison (310) 226-2613

For media:

Anneli Ballard (212) 984-9350

Korn/Ferry International Announces a 44% increase in

Third Quarter Fiscal 2005 Fee Revenue

Highlights:

Fee revenue was $116.9 million, an increase of 44% from $81.4 million in the prior year third quarter.

Net income was $9.8 million, an improvement of 153% from $3.9 million in the prior year third quarter.

Diluted earnings per share of $0.23 improved $0.13 compared to prior year third quarter.

Los Angeles, CA, March 8, 2005- Korn/Ferry International (NYSE:KFY), the premier provider of executive search, outsourced recruiting and leadership development solutions, announced third quarter fiscal 2005 diluted earnings per share of $0.23 compared to $0.10 in Q304.

Job creation continues at the senior level across almost all industry sectors and geographic regions, said Paul C. Reilly, Chairman and CEO of Korn/Ferry International. Our strong results reflect a fundamental shift among employers from a focus on productivity improvement to a quest for growth. As corporations feel more confident in their ability to meet financial targets, the war for talent will continue to heat up.

Financial Results

Actual and Adjusted Results

(dollars in millions, except per share amounts)


	Third Quarter						Year to Date
	Actual						Actual						Adjusted (a)
	Q305			Q304			FY05			FY04			FY04
Fee Revenue	$	116.9		$	81.4		$	328.2		$	230.6		$	230.6
Revenue	$	123.6		$	86.7		$	345.3		$	247.0		$	247.0
Operating Income	$	17.1		$	6.2		$	47.2		$	4.5		$	13.0
Operating Margin		14.6	%		7.7	%		14.4	%		2.0	%		5.6	%
Net Income (Loss)	$	9.8		$	3.9		$	26.9		$	(3.3	)	$	5.2
Basic Earnings (Loss) Per Share	$	0.25		$	0.10		$	0.70		$	(0.09	)	$	0.14
Diluted Earnings (Loss) Per Share	$	0.23		$	0.10		$	0.62		$	(0.09	)	$	0.14

Adjusted amounts are non-GAAP financial measures and exclude restructuring charges of $8.5 million for the nine months ended January 31, 2004. These charges primarily related to severance and facility charges and did 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 quarters.

Fiscal third quarter fee revenue of $116.9 million increased $35.5 million or 44% from Q304 of $81.4 million. Fee revenue improved in all regions due to an increase in both the number of new engagements opened as well as average fees. Exchange rates impacted fee revenue favorably by $4.1 million in Q305 compared to Q304.

Compensation and benefits expense of $74.6 million increased $21.0 million, or 39%, compared to $53.6 million in Q304. The increase reflects additional bonus expense as a result of improved revenues and profitability. Exchange rates impacted compensation and benefit expense unfavorably by $2.3 million in Q305 compared to Q304.

General and administrative expense was $22.7 million compared to $18.7 million in Q304. The increase of $4.0 million, or 21%, is primarily due to additional professional fees, including compliance costs associated with Section 404 of the Sarbanes-Oxley Act, and increased business development costs.

Operating income of $17.1 million improved $10.9 million compared to Q304.

Balance Sheet and Liquidity

Cash, cash equivalents and marketable securities was $156.9 million at January 31, 2005 compared to $108.1 million at April 30, 2004.

Interest expense, primarily related to borrowings under Company Owned Life Insurance (COLI) policies and Korn/Ferrys convertible securities, was $2.7 million in the current quarter, consistent with prior year. At January 31, 2005, Korn/Ferry had no outstanding borrowings under its credit facility.

Results by Segment

Selected Executive Recruitment DataActual and Adjusted

(dollars in millions)


	Third Quarter						Year to Date
	Actual						Actual						Adjusted (a)
	Q305			Q304			FY05			FY04			FY04
Fee Revenue	$	102.6		$	72.8		$	289.2		$	206.5		$	206.5
Revenue	$	107.9		$	77.1		$	303.3		$	220.0		$	220.0
Operating Income	$	21.1		$	11.4		$	59.5		$	22.0		$	27.4
Operating Margin		20.5	%		15.6	%		20.6	%		10.7	%		13.3	%
Average number of Consultants		394			387			388			384			384
Engagements (b)		1,752			1,317			4,650			3,845			3,845

Adjusted amounts are non-GAAP financial measures and exclude restructuring charges of $5.4 million for the nine months ended January 31, 2004. These charges primarily related to severance and facility charges and did 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 quarters.

b)	Represents new engagements opened in the respective period.

Third quarter fee revenue was $102.6 million, an increase of $29.8 million or 41% from $72.8 million in Q304. Fee revenue improved in all regions due to an increase in both the number of new engagements opened as well as average fees. Exchange rates impacted fee revenue favorably by $3.4 million in Q305 compared to Q304.

Executive recruitment operating income improved 85% to $21.1 million in the current quarter compared to $11.4 million in Q304. Included in Q305 operating income is a favorable restructuring adjustment of $1.3 million as a result of revisions to facilities costs associated with certain previously recorded restructured properties.

The total number of consultants at January 31, 2005 was 391, an increase of 5 consultants compared to January 31, 2004.

Selected Futurestep DataActual and Adjusted

(dollars in millions)


	Third Quarter						Year to Date
	Actual						Actual						Adjusted (a)
	Q305			Q304			FY05			FY04			FY04
Fee Revenue	$	14.3		$	8.5		$	39.0		$	24.1		$	24.1
Revenue	$	15.7		$	9.5		$	42.1		$	27.0		$	27.0
Operating Income (loss)	$	0.7		$	0.6		$	5.0		$	(2.4	)	$	0.6
Operating Margin		5.0	%		7.3	%		12.8	%		(10.0	)%		2.3	%

Adjusted amounts are non-GAAP financial measures and exclude restructuring charges of $3.0 million for the nine months ended January 31, 2004. These charges related to severance and write-off of assets and facility charges and did 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 quarters.

Third quarter fee revenue was $14.3 million, an increase of $5.8 million, or 68%, from Q304. Fee revenue improved in all regions driven by an increase in the number of new engagements opened combined with Futuresteps strategic movement toward outsourced recruiting solutions.

Futurestep operating income was $0.7 million compared to $0.6 million in Q304. Included in Q305 operating income is a restructuring charge of $1.3 million as a result of revisions to facilities costs associated with certain previously recorded restructured properties.

Outlook

Assuming constant foreign exchange rates, Korn/Ferry estimates that fourth quarter fiscal 2005 fee revenue is likely to be in the range of $115 million to $122 million and earnings per share is likely to be in the range of $0.22 to $0.25.

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 70 offices in 35 countries, is a leading provider of executive search and leadership development solutions. Based in Los Angeles, the firm partners with clients worldwide to deliver unparalleled senior-level search, management assessment, coaching and development and middle management recruitment services through its Futurestep subsidiary. For more information, visit the Korn/Ferry International Web site at www.kornferry.com or 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.

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)


	Three Months Ended January 31,						Nine Months Ended January 31,
	2005			2004			2005			2004
Fee revenue	$	116,885		$	81,362		$	328,198		$	230,599
Reimbursed out-of-pocket engagement expense		6,737			5,323			17,148			16,384

Total revenue		123,622			86,685			345,346			246,983

Compensation and benefits		74,616			53,625			208,501			156,298
General and administrative expense		22,736			18,724			64,982			53,026
Out-of-pocket engagement expense		6,825			5,544			17,983			16,800
Depreciation and amortization		2,341			2,546			6,723			7,833
Restructuring charges											8,526

Total operating expense		106,518			80,439			298,189			242,483

Operating income		17,104			6,246			47,157			4,500

Interest and other (expense) income, net		(1,888	)		(1,779	)		(6,384	)		(6,732	)

Income (Loss) before provision for income taxes and equity in earnings of unconsolidated subsidiaries		15,216			4,467			40,773			(2,232	)
Provision for income taxes		5,897			744			15,288			1,675
Equity in earnings of unconsolidated subsidiaries		505			162			1,420			576

Net income (loss)	$	9,824		$	3,885		$	26,905		$	(3,331	)

Interest expense on convertible securities, net of taxes		785						2,344

Net income (loss) adjusted for computation of diluted EPS	$	10,609		$	3,885		$	29,249		$	(3,331	)

Basic net income (loss) per common share	$	0.25		$	0.10		$	0.70		$	(0.09	)

Basic weighted average common shares outstanding		38,726			37,506			38,309			37,474

Diluted net income (loss) per common share	$	0.23		$	0.10		$	0.62		$	(0.09	)

Diluted weighted average common shares outstanding		46,974			40,639			46,832			37,474

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

FINANCIAL SUMMARY BY SEGMENT

(in thousands)


	Three Months Ended January 31,										Nine Months Ended January 31,
	2005					2004					2005					2004
Fee Revenue:
Executive recruitment:
North America	$	55,330				$	42,074				$	162,643				$	119,096
Europe		31,210					19,877					79,865					55,892
Asia/Pacific		13,125					8,893					39,181					25,214
South America		2,897					1,973					7,501					6,274

Total executive recruitment		102,562					72,817					289,190					206,476
Futurestep		14,323					8,545					39,008					24,123

Total fee revenue		116,885					81,362					328,198					230,599

Reimbursed out-of-pocket engagement expenses		6,737					5,323					17,148					16,384

Total revenue	$	123,622				$	86,685				$	345,346				$	246,983


				Margin					Margin					Margin					Margin
Operating Income (Loss):
Executive recruitment:
North America	$	11,423		21	%	$	9,548		23	%	$	35,479		22	%	$	23,622		20	%
Europe		6,867		22	%		604		3	%		15,450		19	%		(3,959	)	(7	)%
Asia/Pacific		2,343		18	%		1,234		14	%		7,605		19	%		2,050		8	%
South America		431		15	%		(26	)	(1	)%		983		13	%		316		5	%

Total executive recruitment		21,064		21	%		11,360		16	%		59,517		21	%		22,029		11	%
Futurestep		714		5	%		628		7	%		5,007		13	%		(2,424	)	(10	)%
Corporate		(4,674	)				(5,742	)				(17,367	)				(15,105	)

Total operating income	$	17,104		15	%	$	6,246		8	%	$	47,157		14	%	$	4,500		2	%


				Margin					Margin					Margin					Margin
*Adjusted Operating Income (Loss):
Executive recruitment:
North America	$	10,540		19	%	$	9,548		23	%	$	34,596		21	%	$	23,886		20	%
Europe		6,521		21	%		604		3	%		15,104		19	%		951		2	%
Asia/Pacific		2,316		18	%		1,234		14	%		7,578		19	%		2,210		9	%
South America		431		15	%		(26	)	(1	)%		983		13	%		374		6	%

Total executive recruitment		19,808		19	%		11,360		16	%		58,261		20	%		27,421		13	%
Futurestep		1,970		14	%		628		7	%		6,263		16	%		558		2	%
Corporate		(4,674	)				(5,742	)				(17,367	)				(14,953	)

Total adjusted operating income	$	17,104		15	%	$	6,246		8	%	$	47,157		14	%	$	13,026		6	%

*Adjusted operating income (loss) excludes restructuring charges related to severance and facilities of $8.5 million for the nine months ended January 31, 2004. Executive recruitment restructuring adjustments were $(1.3) million and $5.4 million, Futurestep restructuring charges were $1.3 million and $3.0 million and Corporate restructuring charges were $0 million and $0.1 million, respectively, for the three and nine months ended January 31, 2005 and the nine months ended January 31, 2004.

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)


	As of January 31, 2005			As of April 30, 2004
	As of January 31, 2005			As of April 30, 2004
ASSETS
Cash and cash equivalents	$	149,341		$	108,102
Marketable Securities		7,568
Receivables due from clients, net of allowance for doubtful accounts of $10,112 and $6,159		77,122			52,306
Income taxes and other receivables		5,983			5,812
Deferred income taxes		8,864			9,320
Prepaid expenses		13,322			10,128

Total current assets		262,200			185,668

Property and equipment, net		20,050			19,603
Cash surrender value of company owned life insurance policies, net of loans		64,877			58,868
Deferred income taxes		30,845			27,352
Goodwill		107,477			98,481
Deferred financing costs, investments and other		8,714			7,670

Total assets	$	494,163		$	397,642

LIABILITIES AND SHAREHOLDERS EQUITY
Accounts payable	$	7,773		$	8,676
Income taxes payable		16,645			2,956
Compensation and benefits payable		77,481			60,957
Other accrued liabilities		28,945			24,785

Total current liabilities		130,844			97,374

Deferred compensation and other retirement plans		58,206			53,018
Long-term debt		44,901			44,400
Other liabilities		9,018			11,456
7.5% Convertible mandatorily redeemable preferred stock, net of unamortized discount and issuance costs, redemption value $11,387		10,748			10,512

Total liabilities		253,717			216,760

Shareholders equity
Common stock: $0.01 par value, 150,000 shares authorized, 42,139 and 39,363 shares issued and 40,990 and 38,170 shares outstanding		328,001			307,003
Retained deficit		(94,299	)		(121,204	)
Unearned restricted stock compensation		(4,896	)		(2,341	)
Accumulated other comprehensive income (loss)		12,493			(1,596	)

Shareholders equity		241,299			181,862
Less: Notes receivable from shareholders		(853	)		(980	)

Total shareholders equity		240,446			180,882

Total liabilities and shareholders equity	$	494,163		$	397,642

Form: 8-K

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