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

Annual report pursuant to Section 13 and 15(d)

Restructuring Charges, Net

Restructuring Charges, Net

12 Months Ended

Apr. 30, 2017

7. Restructuring Charges, Net

During fiscal 2016, the Company implemented a restructuring plan in order to rationalize its cost structure by eliminating redundant positions and consolidating office space due to the acquisition of Legacy Hay on December 1, 2015. This resulted in restructuring charges, net of $33.0 million in fiscal 2016, of which $32.1 million related to severance and $0.9 million, related to consolidation/abandonment of premises.

The Company continued the implementation of the fiscal 2016 restructuring plan in fiscal 2017 in order to integrate the Hay Group entities that were acquired in fiscal 2016 by eliminating redundant positions and operational, general and administrative expenses and consolidating premises. This resulted in restructuring charges of $34.6 million in fiscal 2017 of which $16.0 million related to severance and $18.6 million related to consolidation of premises.

During fiscal 2015, the Company took actions to rationalize its cost structure as a result of efficiencies obtained from prior year technology investments that enabled further integration of the legacy business and the recent acquisitions (PDI and Global Novations, LLC) as well as other cost saving initiatives. This resulted in restructuring charges, net of $9.5 million against operations in fiscal 2015, of which $9.2 million related to severance and $0.3 million, related to consolidation/abandonment of premises.

Changes in the restructuring liability were as follows:


	Severance			Facilities			Total
	(in thousands)
Liability as of April 30, 2015	$	375		$	771		$	1,146
Restructuring charges, net		32,151			862			33,013
Reductions for cash payments		(25,625	)		(834	)		(26,459	)
Non-cash items		(1,752	)		(91	)		(1,843	)
Exchange rate fluctuations		144			(39	)		105

Liability as of April 30, 2016		5,293			669			5,962
Restructuring charges, net		15,963			18,637			34,600
Reductions for cash payments		(14,974	)		(8,703	)		(23,677	)
Non-cash items		—			(2,024	)		(2,024	)
Exchange rate fluctuations		(941	)		(225	)		(1,166	)

Liability as of April 30, 2017	$	5,341		$	8,354		$	13,695

As of April 30, 2017 and 2016, the restructuring liability is included in the current portion of other accrued liabilities on the consolidated balance sheets, except for $4.6 million and $0.6 million, respectively, of facilities costs which primarily relate to commitments under operating leases, net of estimated sublease income, which are included in other long-term liabilities.

The restructuring liability by segment is summarized below:


	April 30, 2017
	Severance		Facilities		Total
	(in thousands)
Executive Search
North America	$	134	$	250	$	384
Europe, Middle East and Africa (“EMEA”)		393		—		393
Asia Pacific		—		6		6
Latin America		—		87		87

Total Executive Search		527		343		870
Hay Group		4,814		7,879		12,693
Futurestep		—		132		132

Liability as of April 30, 2017	$	5,341	$	8,354	$	13,695


	April 30, 2016
	Severance		Facilities		Total
	(in thousands)
Executive Search
North America	$	—	$	5	$	5
EMEA		1,533		23		1,556
Asia Pacific		33		—		33

Total Executive Search		1,566		28		1,594
Hay Group		3,727		396		4,123
Futurestep		—		245		245

Liability as of April 30, 2016	$	5,293	$	669	$	5,962