Annual report pursuant to Section 13 and 15(d)

Business Segments

v2.4.0.6
Business Segments
 12 Months Ended
Apr. 30, 2013
Business Segments
11. Business Segments

In the first quarter of fiscal 2013, the Company changed the composition of its global business segments. Given the importance to the Company’s strategy and development of financial and operational metrics for the LTC business services, the Company’s chief operating decision maker (“CODM”) began to regularly make resource allocation decisions and assess performance separately for Executive Recruitment and LTC. Therefore, under the new reporting format Executive Recruitment and LTC are reported separately. Revenues are directly attributed to a segment and expenses not directly associated with a specific segment are allocated based on the most relevant measures applicable, including revenues, headcount and other factors. Operating results for fiscal 2012 and 2011 have been revised to conform to the new segment reporting. During fiscal 2012 and 2011, the Company also revised the presentation of expenses that are not directly associated with Futurestep resulting in an increase in Futurestep’s operating income of $2.2 million and $2.0 million, respectively, offset by a decrease in Executive Recruitment operating income.

The Company currently operates in three global businesses: Executive Recruitment, LTC and Futurestep. The Executive Recruitment segment focuses on recruiting Board of Director and C-level positions, in addition to research-based interviewing and onboarding solutions, for clients predominantly in the consumer, financial services, industrial, life sciences/healthcare provider and technology industries. LTC provides a comprehensive blend of leadership and talent management solutions including both consulting services and product revenue. Service and product offerings in this segment include: Leadership Strategy, Board, CEO and Top Team Effectiveness, Succession Planning, Assessment, Leadership and Employee Development, Diversity and Inclusion as well as a rich library of online and blended learning modules. Futurestep is a global industry leader in high impact enterprise-wide consulting and recruitment solutions. Their portfolio of services includes recruitment process outsourcing, talent acquisition and management consulting services, project-based recruitment, mid-level recruitment and interim professionals. The Executive Recruitment business segment is managed by geographic regional leaders. LTC’s and Futurestep’s worldwide operations are managed by their respective Chief Executive Officers. The Executive Recruitment geographic regional leaders, the Chief Executive Officers of LTC and Futurestep report directly to the Chief Executive Officer of the Company. The Company also operates a Corporate segment to record global expenses of the Company.

The Company evaluates performance and allocates resources based on the CODM’s review of (1) fee revenue and (2) earnings before interest, taxes, depreciation and amortization (“EBITDA”), which is further adjusted to exclude restructuring charges, transaction and integration costs, and certain separation costs (adjusted EBITDA). The accounting policies for the reportable segments are the same as those described in the summary of significant accounting policies, except that unusual or infrequent items are excluded from adjusted EBITDA.

 

Financial highlights by business segment are as follows:

 

    Year Ended April 30, 2013  
    Executive Recruitment                          
    North
America		     EMEA     Asia
Pacific		     South
America		     Subtotal     LTC     Futurestep     Corporate     Consolidated  
    (in thousands)  

Fee revenue

   $ 290,317      $ 128,807      $ 73,221      $ 30,134      $ 522,479      $ 168,115      $ 122,237      $ —      $ 812,831   

Total revenue

   $ 305,993      $ 132,988      $ 75,359      $ 30,491      $ 544,831      $ 176,566      $ 128,304      $ —      $ 849,701   

Net income

                   $ 33,293   

Other income, net

                     (6,309 ) 

Interest expense, net

                     2,365   

Income tax provision

                     16,637   

Equity in earnings of unconsolidated subsidiaries, net

                     (2,110 ) 
                 

 

 

  

Operating income (loss)

   $ 58,832      $ 9,173      $ 6,973      $ 5,987      $ 80,965      $ 6,424      $ 10,975      $ (54,488 )      43,876   

Depreciation and amortization

     4,726        2,347        1,546        372        8,991        6,012        1,180        2,821        19,004   

Other income (loss), net

     466        95        200        32        793        (75 )      51        5,540        6,309   

Equity in earnings of unconsolidated subsidiaries, net

     434        —        —        —        434        —        —        1,676        2,110   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

EBITDA

     64,458        11,615        8,719        6,391        91,183        12,361        12,206        (44,451 )      71,299   

Restructuring charges,
net

     3,583        3,982        629        —        8,194        10,198        3,527        938        22,857   

Transaction and integration costs

     —        —        —        —        —        —        —        3,106        3,106   

Separation costs

     —        516        —        —        516        —        —        —        516   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted EBITDA

   $ 68,041      $ 16,113      $ 9,348      $ 6,391      $ 99,893      $ 22,559      $ 15,733      $ (40,407 )    $ 97,778   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Identifiable assets(2)

   $ 209,079      $ 148,491      $ 72,303      $ 23,616      $ 453,489      $ 248,611      $ 93,331      $ 319,798      $ 1,115,229   

Long-lived assets(2)

   $ 19,167      $ 6,312      $ 2,784      $ 894      $ 29,157      $ 10,383      $ 2,523      $ 11,565      $ 53,628   

Goodwill(2)

   $ 54,513      $ 50,264      $ 972      $ —      $ 105,749      $ 119,090      $ 32,454      $ —      $ 257,293   
    Year Ended April 30, 2012  
    Executive Recruitment                          
    North
America		     EMEA     Asia
Pacific		     South
America		     Subtotal     LTC     Futurestep     Corporate (1)     Consolidated  
    (in thousands)  

Fee revenue

   $ 305,717      $ 141,409      $ 82,230      $ 31,846      $ 561,202      $ 115,407      $ 113,896      $ —      $ 790,505   

Total revenue

   $ 323,116      $ 146,573      $ 84,279      $ 32,517      $ 586,485      $ 120,281      $ 119,993      $ —      $ 826,759   

Net income

                   $ 54,303   

Other loss, net

                     271   

Interest expense, net

                     1,791   

Income tax provision

                     28,351   

Equity in earnings of unconsolidated subsidiaries, net

                     (1,850 ) 
                 

 

 

  

Operating income (loss)

   $ 75,580      $ 13,288      $ 11,859      $ 9,207      $ 109,934      $ 16,360      $ 8,445      $ (51,873 )      82,866   

Depreciation and amortization

     4,624        1,881        1,268        367        8,140        2,613        1,070        2,194        14,017   

Other income (loss), net

     5        (149 )      60        (61 )      (145 )      146        41        (313 )      (271 ) 

Equity in earnings of unconsolidated subsidiaries, net

     159        —        —        —        159        —        —        1,691        1,850   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

EBITDA

     80,368        15,020        13,187        9,513        118,088        19,119        9,556        (48,301 )      98,462   

Restructuring charges, net

     (15 )      897        —        (99 )      783        —        146        —        929   

Separation costs

     —        —        —        —        —        —        920        999        1,919   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted EBITDA

   $ 80,353      $ 15,917      $ 13,187      $ 9,414      $ 118,871      $ 19,119      $ 10,622      $ (47,302 )    $ 101,310   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Identifiable assets(2)

   $ 171,641      $ 140,980      $ 76,027      $ 22,957      $ 411,605      $ 83,576      $ 90,560      $ 428,948      $ 1,014,689   

Long-lived assets(2)

   $ 22,288      $ 7,542      $ 3,938      $ 955      $ 34,723      $ 2,648      $ 3,420      $ 9,017      $ 49,808   

Goodwill(2)

   $ 55,608      $ 50,664      $ 972      $ —      $ 107,244      $ 36,251      $ 32,843      $ —      $ 176,338   

 

    Year Ended April 30, 2011  
    Executive Recruitment    

 

                    
    North
America		     EMEA     Asia
Pacific		     South
America		     Subtotal     LTC     Futurestep     Corporate (1)     Consolidated  
    (in thousands)  

Fee revenue

   $ 306,180      $ 137,398      $ 81,951      $ 29,177      $ 554,706      $ 99,352      $ 90,191      $ —      $ 744,249   

Total revenue

   $ 323,251      $ 141,746      $ 83,711      $ 29,739      $ 578,447      $ 101,852      $ 95,952      $ —      $ 776,251   

Net income

                   $ 58,874   

Other income, net

                     (6,454 ) 

Interest expense, net

                     2,535   

Income tax provision

                     32,692   

Equity in earnings of unconsolidated subsidiaries, net

                     (1,862 ) 
                 

 

 

  

Operating income (loss)

   $ 70,782      $ 12,768      $ 13,172      $ 7,539      $ 104,261      $ 5,138      $ 6,955      $ (30,569 )      85,785   

Depreciation and amortization

     3,956        1,858        919        335        7,068        2,801        926        1,876        12,671   

Other income (loss), net

     319        (156 )      186        56        405        121        11        5,917        6,454   

Equity in earnings of unconsolidated subsidiaries, net

     —        —        —        —        —        —        —        1,862        1,862   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

EBITDA

     75,057        14,470        14,277        7,930        111,734        8,060        7,892        (20,914 )      106,772   

Restructuring charges, net

     (340 )      2,569        —        —        2,229        —        (99 )      —        2,130   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted EBITDA

   $ 74,717      $ 17,039      $ 14,277      $ 7,930      $ 113,963      $ 8,060      $ 7,793      $ (20,914 )    $ 108,902   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Identifiable assets(2)

   $ 177,774      $ 156,485      $ 77,694      $ 21,143      $ 433,096      $ 79,774      $ 81,544      $ 377,266      $ 971,680   

Long-lived assets(2)

   $ 22,249      $ 5,319      $ 2,633      $ 808      $ 31,009      $ 1,559      $ 2,410      $ 8,164      $ 43,142   

Goodwill(2)

   $ 57,319      $ 53,908      $ 972      $ —      $ 112,199      $ 36,251      $ 35,502      $ —      $ 183,952   

 

(1) The Company recorded an adjustment to the fair value of contingent consideration for a prior acquisition of $2.2 million and $4.9 million during the years ended April 30, 2012 and 2011, respectively.

 

(2) As of the end of the fiscal year.

Fee revenue attributed to an individual customer or country, other than the United States, did not account for more than 10% of the total in fiscal year 2013, 2012 or 2011. Fee revenue classified by country in which the Company derives revenues are as follows:

 

     Year Ended April 30,  
     2013      2012      2011  
     (in thousands)  

United States

    $ 416,987       $ 383,955       $ 365,919   

Other countries

      395,844         406,550         378,330   
  

 

 

     

 

 

     

 

 

  

Total fee revenue

    $ 812,831       $ 790,505       $ 744,249   
  

 

 

     

 

 

     

 

 

  

 

Long-lived assets, excluding financial instruments and tax assets, classified by controlling countries over 10% of the total are as follows:

 

     Year Ended April 30,  
     2013      2012      2011  
     (in thousands)  

United States(1)

    $ 40,200       $ 33,559       $ 30,539   

United Kingdom

      2,982         3,741         4,323   

Other countries

      10,446         12,508         8,280   
  

 

 

     

 

 

     

 

 

  

Total long-lived assets

    $ 53,628       $ 49,808       $ 43,142   
  

 

 

     

 

 

     

 

 

  

 

(1) Includes Corporate long-lived assets