Korn Ferry Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

Income Taxes (Tables)

12 Months Ended

Apr. 30, 2013

Provision (Benefit) For Domestic And Foreign Income Taxes

The provision (benefit) for domestic and foreign income taxes was as follows:


	Year Ended April 30,
	2013			2012			2011
	(in thousands)
Current income taxes:
Federal	$	4,100		$	4,173		$	7,606
State		1,237			1,609			5,714
Foreign		8,759			12,670			11,826

Current provision for income taxes		14,096			18,452			25,146
Deferred income taxes:
Federal		(423	)		7,281			(2,442	)
State		1,895			3,508			830
Foreign		1,069			(890	)		9,158

Deferred provision for income taxes		2,541			9,899			7,546

Total provision for income taxes	$	16,637		$	28,351		$	32,692

Domestic And Foreign Components Of Income (Loss) From Continuing Operations Before Domestic And Foreign Income And Other Taxes And Equity In Earnings

The domestic and foreign components of income from continuing operations before domestic and foreign income and other taxes and equity in earnings of unconsolidated subsidiaries were as follows:


	Year Ended April 30,
	2013		2012		2011
	(in thousands)
Domestic	$	15,915	$	42,375	$	56,741
Foreign		31,905		38,429		32,963

Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries	$	47,820	$	80,804	$	89,704

Reconciliation Of The Statutory Federal Income Tax Rate To The Effective Consolidated Tax Rate

The reconciliation of the statutory federal income tax rate to the effective consolidated tax rate is as follows:


	Year Ended April 30,
	2013			2012			2011
U.S. federal statutory income tax rate		35.0	%		35.0	%		35.0	%
Foreign source income, net of credits generated		0.6			3.0			1.9
Foreign tax rates differential		(3.7	)		(2.9	)		(3.8	)
COLI increase, net		(4.8	)		(2.7	)		(2.8	)
Repatriation of foreign earnings		(3.2	)		(1.7	)		0.1
State income taxes, net of federal benefit		5.7			4.0			4.6
Adjustments for valuation allowance		(0.4	)		(0.7	)		4.8
Non-deductible business acquisition transaction costs		1.3			—			—
Expense disallowances		1.1			0.8			0.5
Change in uncertain tax positions		1.9			—			(2.3	)
Other		1.3			0.3			(1.6	)

Effective income tax rate		34.8	%		35.1	%		36.4	%

Components Of Deferred Tax Assets And Liabilities

Components of deferred tax assets and liabilities are as follows:


	April 30,
	2013			2012
	(in thousands)
Deferred tax assets:
Deferred compensation	$	64,791		$	63,133
Loss and credit carryforwards		42,984			33,355
Allowance for doubtful accounts		1,804			1,388
Deferred rent		6,366			6,901
Deferred revenue		1,646			—
Reserves and accruals		7,613			3,773
Other		4,556			4,284

Gross deferred tax assets		129,760			112,834

Deferred tax liabilities:
Intangibles		(21,560	)		(11,103	)
Property and equipment		(6,747	)		(4,527	)
Prepaid expenses		(4,184	)		—
Other		(2,824	)		(3,995	)

Gross deferred tax liabilities		(35,315	)		(19,625	)

Valuation allowances		(27,731	)		(25,089	)

Net deferred tax asset	$	66,714		$	68,120

Deferred Tax Amounts

The deferred tax amounts have been classified in the consolidated balance sheets as follows:


	April 30,
	2013			2012
	(in thousands)
Current:
Deferred tax assets	$	12,561		$	15,868
Deferred tax liabilities		(9,050	)		(5,038	)

Current deferred tax asset		3,511			10,830

Non-current:
Deferred tax asset		117,199			96,966
Deferred tax liabilities		(26,265	)		(14,587	)

Valuation allowance		(27,731	)		(25,089	)

Non-current deferred tax asset, net		63,203			57,290

Net deferred tax assets	$	66,714		$	68,120

Changes In Unrecognized Tax Benefits

Company had a liability of $2.0 million for unrecognized tax benefits. A reconciliation of the beginning and ending balances of the gross unrecognized tax benefits is as follows:


	Year Ended April 30,
	2013		2012		2011
	(in thousands)
Unrecognized tax benefits, beginning of year	$	—	$	—	$	3,532
Settlement with tax authority		—		—		(1,473	)
Additions based on tax positions related to the current year		1,454		—		—
Additions based on tax positions related to prior years		569		—		72
Reductions due to lapse of statute of limitations		—		—		(2,131	)

Unrecognized tax benefits, end of year	$	2,023	$	—	$	—

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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