Korn/Ferry International Announces Fourth Quarter Fiscal 2010 Results of Operations

Highlights

- Fourth quarter fiscal 2010 fee revenue increased 58% to $168.7 million, compared to $107.0 million in the same quarter last year.

- Q4 FY'10 diluted earnings per share was $0.19, compared to diluted loss per share of $0.40 in Q4 FY'09. Excluding restructuring charges, Q4 FY'10 diluted earnings per share was $0.19 compared to diluted loss per share of $0.06 in Q4 FY'09.

- Cash and marketable securities were $296.5 million at April 30, 2010.

Jun 14, 2010, 16:30 ET from Korn/Ferry International

LOS ANGELES, June 14 /PRNewswire-FirstCall/ -- Korn/Ferry International (NYSE: KFY), a premier global provider of talent management solutions, announced Q4 FY'10 diluted earnings per share of $0.19 compared to diluted loss per share of $0.40 in Q4 FY'09.  Excluding net restructuring charges of $0.1 million and $25.1 million, respectively, diluted earnings per share was $0.19 in Q4 FY'10, compared to diluted loss per share of $0.06 in Q4 FY'09.

"Over the past year we remained focused on preserving our brand, positioning our company for long-term growth and remaining close to clients," said Gary Burnison, Chief Executive Officer of Korn/Ferry International. "With growth of 58% year over year and 15% sequentially we are leading our industry.  We believe the combination of our multi-services, geographic reach and pristine brand have positioned us to become the leading diversified talent solutions company in the world. It is clear that our differentiation strategy is working and I am enormously proud of the collective effort and accomplishments of our worldwide colleagues during fiscal 2010."

Financial Results

(dollars in millions, except per share amounts)

Fourth Quarter

Year to Date

FY'10

FY'09

FY'10

FY'09

Fee revenue

$  168.7

$  107.0

$  572.4

$  638.2

Total revenue

$  176.9

$  114.4

$  599.6

$  676.1

Operating income (loss)

$  13.6

$  (30.3)

$  (2.7)

$  3.7

Operating margin

8.1

%

(28.3)

%

(0.5)

%

0.6

%

Net income (loss)

$  8.9

$  (17.2)

$  5.3

$  (10.1)

Basic earnings (loss) per share

$  0.20

$  (0.40)

$  0.12

$  (0.23)

Diluted earnings (loss) per share

$  0.19

$  (0.40)

$  0.12

$  (0.23)

Adjusted Results (a):

Fourth Quarter

Year to Date

FY'10

FY'09

FY'10

FY'09

Operating income (loss)

$  13.7

$  (5.2)

$  17.9

$  45.6

Operating margin

8.1

%

(4.9)

%

3.1

%

7.2

%

Net income (loss)

$  9.0

$  (2.5)

$  15.8

$  15.0

Basic earnings (loss) per share

$  0.20

$  (0.06)

$  0.36

$  0.35

Diluted earnings (loss) per share

$  0.19

$  (0.06)

$  0.35

$  0.34

(a) Adjusted results are non-GAAP financial measures that exclude the following:

Fourth Quarter

Year to Date

FY'10

FY'09

FY'10

FY'09

Restructuring charges, net

$  0.1

$  25.1

$  20.6

$  41.9

Certain tax adjustments (b)

$  —

$  —

$  (2.8)

$  —

(b) Includes reversal of a reserve previously taken against an uncertain tax position and an increased valuation allowance related to cash repatriations and foreign tax credits.

Fee revenue was $168.7 million in Q4 FY'10 compared to $107.0 million in Q4 FY'09, an increase of 58% (or an increase of 50%, or $53.7 million, on a constant currency basis), which reflects improving economic conditions in North America and abroad and stronger demand for permanent recruitment.  Q4 FY'10 includes fee revenue from the acquisition of Whitehead Mann, which closed on June 11, 2009.  Fee revenue improved globally due to an increase in revenue from all segments of the business resulting from a 45% increase in the number of executive recruitment engagements billed as well as a 13% increase in the weighted-average fee billed per executive recruitment engagement compared to the prior year (an increase of 8% excluding the impact of exchange rates).    Furthermore, the Company experienced a 15% increase in fee revenue compared to Q3 FY'10 as a result of the improving economic conditions.

Compensation and benefits were $118.1 million in Q4 FY'10, an increase of $41.3 million, or 54%, compared to $76.8 million in Q4 FY'09.  This increase is attributable mainly to an increase in the variable component of compensation when compared to the prior year, which was lower than normal in Q4 FY'09 due to the challenging economic conditions.  Changes in exchange rates impacted compensation and benefits in Q4 FY'10 unfavorably by $4.8 million compared to Q4 FY'09.

General and administrative expenses were $28.4 million in Q4 FY'10, a decrease of $1.2 million, or 4% from $29.6 million in Q4 FY'09.  This decrease is attributable to a $2.1 million decrease in the provision for bad debts, partially offset by an increase in business development and marketing costs and unrealized foreign exchange losses.  The decrease in the provision for bad debts is due to a higher than normal provision in the prior year, as a result of the challenging macroeconomic conditions experienced in Q4 FY'09.  Changes in exchange rates impacted general and administrative expenses in Q4 FY'10 unfavorably by $1.5 million compared to Q4 FY'09.

Operating income was $13.6 million in Q4 FY'10 compared to operating loss of $30.3 million in Q4 FY'09, an increase of $43.9 million.  Excluding restructuring charges of $0.1 million in Q4 FY'10 and $25.1 million in Q4 FY'09, operating income was $13.7 million in Q4 FY'10 and the operating loss was $5.2 million in Q4 FY'09, an increase of $18.9 million as compared to Q4 FY'09.

Balance Sheet and Liquidity

Cash and marketable securities were $296.5 million at April 30, 2010 compared to $330.3 million at April 30, 2009.  Cash and marketable securities include $69.0 million and $60.8 million, held in trust for deferred compensation plans, at April 30, 2010 and 2009, respectively.  Cash and marketable securities decreased by $33.8 million from Q4 FY'09 mainly due to payments on previously disclosed acquisitions in the current fiscal year.  

Results by Segment

Selected Executive Recruitment Data

(dollars in millions)

Fourth Quarter

Year to Date

FY'10

FY'09

FY'10

FY'09

Fee revenue

$  150.6

$  91.9

$  504.4

$  543.3

Total revenue

$  157.4

$  98.3

$  526.6

$  572.3

Operating income (loss)

$  23.1

$  (16.1)

$  38.2

$  47.4

Operating margin

15.4

%

(17.5)

%

7.6

%

8.7

%

Ending number of consultants

473

460

473

460

Average number of consultants

479

479

482

509

Engagements billed

3,673

2,536

9,164

9,227

New engagements (a)

1,925

1,139

6,505

5,945

Adjusted Results (b):

Fourth Quarter

Year to Date

FY'10

FY'09

FY'10

FY'09

Operating income

$  23.1

$  3.3

$  61.6

$  77.9

Operating margin

15.4

%

3.6

%

12.2

%

14.3

%

(a) Represents new engagements opened in the respective period.

(b) Adjusted results are non-GAAP financial measures that exclude restructuring charges (net of reductions) of $23.4 million during the year ended April 30, 2010 (see attached reconciliations).  Comparative results exclude restructuring charges of $19.4 million and $30.5 million during the three months and year ended April 30, 2009, respectively.

Fee revenue was $150.6 million in Q4 FY'10, an increase of $58.7 million, or 64%, when compared to fee revenue of $91.9 million in Q4 FY'09.  On a constant currency basis, fee revenue increased by $52.4 million or 57%, when compared to the same quarter a year ago.  Fee revenue increased in all regions due to a 45% increase in the overall number of engagements billed and an increase in the average fee per engagement billed of 13% when compared to Q4 FY'09 (an increase of 8% excluding the impact of exchange rates).  

Operating income was $23.1 million in Q4 FY'10 compared to operating loss of $16.1 million in Q4 FY'09.  Excluding restructuring charges of $19.4 million incurred in Q4 FY'09, operating income was $3.3 million in Q4 FY'09 compared to $23.1 million in Q4 FY'10.

The total number of consultants at April 30, 2010 was 473, an increase of 13 from April 30, 2009.

Selected Futurestep Data

(dollars in millions)

Fourth Quarter

Year to Date

FY'10

FY'09

FY'10

FY'09

Fee revenue

$  18.1

$  15.1

$  68.0

$  94.9

Total revenue

$  19.5

$  16.1

$  73.0

$  103.8

Operating (loss) income

$  (1.1)

$  (7.8)

$  1.3

$  (12.0)

Operating margin

(5.9)

%

(51.7)

%

1.9

%

(12.7)

%

Adjusted Results (a):

Fourth Quarter

Year to Date

FY'10

FY'09

FY'10

FY'09

Operating loss

$  (1.0)

$  (2.1)

$  (1.5)

$  (0.6)

Operating margin

(5.5)

%

(14.2)

%

(2.2)

%

(0.6)

%

(a) Adjusted results are non-GAAP financial measures that exclude restructuring charges of $0.1 million and restructuring reductions of $2.8 million during the three months and year ended April 30, 2010, respectively (see attached reconciliations).  Comparative results exclude restructuring charges of $5.6 million and $11.4 million during the three months and year ended April 30, 2009, respectively.

Fee revenue was $18.1 million in Q4 FY'10, an increase of $3.0 million, or 20%, from $15.1 million in Q4 FY'09.  On a constant currency basis, fee revenue increased by $1.3 million in Q4 FY'10, compared to the same quarter a year ago.  Increases in fee revenue were driven by a 21% increase in the average fee per engagement billed, partially offset by a decrease in the number of engagements billed.

Q4 FY'10 and Q4 FY'09 operating loss includes restructuring costs of $0.1 million and $5.6 million, respectively, without such charges, operating loss would have been $1.0 million  in Q4 FY'10 compared $2.1 million in Q4 FY'09.  Operating loss was $1.1 million in Q4 FY'10 compared to an operating loss of $7.8 million in Q4 FY'09. Q4 FY'10 operating loss includes $1.2 million in severance costs, excluding severance and restructuring costs, operating income would have been $0.2 million.

Outlook

Assuming constant foreign exchange rates, Q1 FY'11 fee revenue is likely to be in the range of $155 million to $175 million and diluted earnings per share is likely to be in the range of $0.15 to $0.25.  

Earnings Conference Call Webcast

The earnings conference call will be held tomorrow at 9:00 AM (EDT) and hosted by Gary Burnison, Chief Executive Officer, Mike DiGregorio, Chief Financial Officer and Gregg Kvochak, Vice President of Finance.  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 a presence throughout the Americas, Asia Pacific, Europe, the Middle East and Africa, is a premier global provider of talent management solutions celebrating 40 years in business. Based in Los Angeles, the firm delivers an array of solutions that help clients to attract, develop, retain and sustain their talent. Visit www.kornferry.com for more information on the Korn/Ferry International family of companies, and www.kornferryinstitute.com for thought leadership, intellectual property and research.

Forward-Looking Statements

Statements in this press release and our conference call that relate to future results and events ("forward-looking statements") are based on Korn/Ferry's 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 that 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, including fluctuations in exchange rates, risks related to the growth and results of Futurestep, global economic developments, restrictions imposed by off-limits agreements, reliance on information systems, the successful integration of acquired businesses and employment liability risk.  For a detailed description of risks and uncertainties that could cause differences, please refer to Korn/Ferry's 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.

Use of Non-GAAP Financial Measures

This press release contains financial information calculated other than in accordance with U.S. Generally Accepted Accounting Principles ("GAAP").  These non-GAAP financial measures include:

  • adjusted operating income (loss) and operating margin, adjusted to exclude restructuring charges (reductions), net,
  • adjusted net income (loss), basic and diluted earnings (loss) per share, adjusted to exclude restructuring charges (reductions) and certain tax adjustments and;
  • constant currency amounts that represent the outcome that would have resulted had exchange rates in the reported period been the same as those in effect in the comparable prior year period.

This non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for financial information determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Management believes the presentation of non-GAAP financial measures in this press release provides meaningful supplemental information regarding Korn/Ferry's performance by excluding certain charges that may not be indicative of Korn/Ferry's ongoing operating results.  The use of these non-GAAP financial measures facilitate comparisons to Korn/Ferry's historical performance.  Korn/Ferry includes these non-GAAP financial measures because management believes it is useful to investors in allowing for greater transparency with respect to supplemental information used by management in its evaluation of Korn/Ferry's ongoing operations and financial and operational decision-making.

[Tables attached]

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

Three Months Ended

Year Ended

April 30,

April 30,

2010

2009

2010

2009

(unaudited)

Fee revenue

$           168,690

$           106,980

$           572,380

$           638,223

Reimbursed out-of-pocket engagement expenses

8,215

7,446

27,269

37,905

          Total revenue

176,905

114,426

599,649

676,128

Compensation and benefits

118,225

76,783

413,340

442,632

General and administrative expenses

28,427

29,566

115,280

126,882

Out-of-pocket engagement expenses

13,495

10,317

41,585

49,388

Depreciation and amortization

3,049

2,946

11,493

11,583

Restructuring charges, net

80

25,070

20,673

41,915

          Total operating expenses

163,276

144,682

602,371

672,400

Operating income (loss)

13,629

(30,256)

(2,722)

3,728

Interest and other income (loss), net

2,080

1,064

7,444

(15,801)

          Income (loss) before provision (benefit) for income taxes

                 and equity in earnings of unconsolidated subsidiaries

15,709

(29,192)

4,722

(12,073)

Income tax provision (benefit)

6,245

(11,943)

(485)

384

Equity in (loss) earnings of unconsolidated subsidiaries, net

(548)

49

91

2,365

           Net income (loss)

$               8,916

$           (17,200)

$               5,298

$           (10,092)

Earnings (loss) per common share:

     Basic

$                 0.20

$               (0.40)

$                 0.12

$               (0.23)

     Diluted

$                 0.19

$               (0.40)

$                 0.12

$               (0.23)

Weighted-average common shares outstanding:

     Basic

44,783

43,475

44,413

43,522

     Diluted

46,220

43,475

45,457

43,522

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

FINANCIAL SUMMARY BY SEGMENT

(in thousands)

(unaudited)

Three Months Ended

Year Ended

April 30,

April 30,

2010

2009

2010

2009

Fee Revenue:

Executive recruitment:

North America

$                85,037

$               56,865

$             278,746

$             309,514

EMEA (1)

36,257

20,685

137,497

143,184

Asia Pacific

21,695

10,151

64,132

66,332

South America

7,630

4,260

24,026

24,323

Total executive recruitment

150,619

91,961

504,401

543,353

Futurestep

18,071

15,019

67,979

94,870

Total fee revenue

168,690

106,980

572,380

638,223

Reimbursed out-of-pocket engagement expenses

8,215

7,446

27,269

37,905

Total revenue

$              176,905

$             114,426

$             599,649

$             676,128

Adjusted Operating Income (Loss):

 (Excluding Restructuring Charges)

Margin

Margin

Margin

Margin

Executive recruitment:

North America

$                12,183

14.3%

$                 1,362

2.4%

$               40,993

14.7%

$               49,520

16.0%

EMEA

3,514

9.7%

1,712

8.3%

9,423

6.8%

16,423

11.5%

Asia Pacific

5,826

26.9%

(421)

(4.1%)

8,065

12.6%

7,636

11.5%

South America

1,647

21.6%

683

16.0%

3,173

13.2%

4,305

17.7%

Total executive recruitment

23,170

15.4%

3,336

3.6%

61,654

12.2%

77,884

14.3%

Futurestep

(1,002)

(5.5%)

(2,129)

(14.2%)

(1,485)

(2.2%)

(582)

(0.6%)

Corporate

(8,459)

(6,393)

(42,218)

(31,659)

Total adjusted operating income (loss)

$                13,709

8.1%

$               (5,186)

(4.9%)

$               17,951

3.1%

$               45,643

7.2%

Restructuring Charges (Reductions), net:

Executive recruitment:

North America

$                   (332)

(0.4%)

$                 9,447

16.6%

$               (1,611)

(0.6%)

$               12,004

3.9%

EMEA

136

0.4%

7,756

37.5%

24,934

18.1%

14,362

10.1%

Asia Pacific

152

0.7%

1,293

12.8%

239

0.4%

2,240

3.4%

South America

60

0.8%

909

21.3%

(113)

(0.5%)

1,864

7.7%

Total executive recruitment

16

0.0%

19,405

21.1%

23,449

4.6%

30,470

5.6%

Futurestep

64

0.4%

5,641

37.5%

(2,776)

(4.1%)

11,421

12.1%

Corporate

-

24

-

24

Total restructuring charges (reductions), net

$                       80

0.0%

$               25,070

23.4%

$               20,673

3.6%

$               41,915

6.6%

Operating Income (Loss):

Margin

Margin

Margin

Margin

Executive recruitment:

North America

$                12,515

14.7%

$               (8,085)

(14.2%)

$               42,604

15.3%

$               37,516

12.1%

EMEA

3,378

9.3%

(6,044)

(29.2%)

(15,511)

(11.3%)

2,061

1.4%

Asia Pacific

5,674

26.2%

(1,714)

(16.9%)

7,826

12.2%

5,396

8.1%

South America

1,587

20.8%

(226)

(5.3%)

3,286

13.7%

2,441

10.0%

Total executive recruitment

23,154

15.4%

(16,069)

(17.5%)

38,205

7.6%

47,414

8.7%

Futurestep

(1,066)

(5.9%)

(7,770)

(51.7%)

1,291

1.9%

(12,003)

(12.7%)

Corporate

(8,459)

(6,417)

(42,218)

(31,683)

Total operating income (loss)

$                13,629

8.1%

$             (30,256)

(28.3%)

$               (2,722)

(0.5%)

$                 3,728

0.6%

  (1)  Includes revenues from acquisition of Whitehead Mann, closed on June 11, 2009.

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

As of April 30,

2010

2009

ASSETS

Cash and cash equivalents

$             219,233

$             255,000

Marketable securities

4,114

4,263

Receivables due from clients, net of allowance for doubtful accounts

of $5,983 and $11,197, respectively

107,215

67,308

Income taxes and other receivables

6,292

9,001

Deferred income taxes

20,844

14,583

Prepaid expenses and other assets

28,753

21,442

Total current assets

386,451

371,597

Marketable securities, non-current

73,105

70,992

Property and equipment, net

24,963

27,970

Cash surrender value of company owned life insurance policies, net of loans

69,069

63,108

Deferred income taxes

59,742

45,141

Goodwill

172,273

133,331

Intangible assets, net

25,425

16,928

Investments and other assets

16,070

11,812

Total assets

$             827,098

$             740,879

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable

$               11,148

$               10,282

Income taxes payable

6,323

2,059

Compensation and benefits payable

131,550

116,705

Other accrued liabilities

49,062

44,301

Total current liabilities

198,083

173,347

Deferred compensation and other retirement plans

123,794

99,238

Other liabilities

13,879

9,195

Total liabilities

335,756

281,780

Stockholders' equity

Common stock: $0.01 par value, 150,000 shares authorized, 57,614 and

56,185 shares issued and 45,979 and 44,729 shares outstanding, respectively

388,717

368,430

Retained earnings

90,220

84,922

Accumulated other comprehensive income, net

12,934

6,285

Stockholders' equity

491,871

459,637

Less:  notes receivable from stockholders

(529)

(538)

Total stockholders' equity

491,342

459,099

Total liabilities and stockholders' equity

$             827,098

$             740,879

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

RECONCILIATION OF AS REPORTED (GAAP) TO AS ADJUSTED (NON-GAAP)

APRIL 30, 2010

(in thousands, except per share amounts)

(unaudited)

Three Months Ended

Year Ended

April 30, 2010

April 30, 2010

As Reported

Adjustments

As Adjusted

As Reported

Adjustments

As Adjusted

Fee revenue

$             168,690

$             168,690

$             572,380

$             572,380

Reimbursed out-of-pocket engagement expenses

8,215

8,215

27,269

27,269

          Total revenue

176,905

176,905

599,649

599,649

Compensation and benefits

118,225

118,225

413,340

413,340

General and administrative expenses

28,427

28,427

115,280

115,280

Out-of-pocket engagement expenses

13,495

13,495

41,585

41,585

Depreciation and amortization

3,049

3,049

11,493

11,493

Restructuring charges, net

80

(80)

-

20,673

(20,673)

-

          Total operating expenses

163,276

(80)

163,196

602,371

(20,673)

581,698

Operating income (loss)

13,629

80

13,709

(2,722)

20,673

17,951

Interest and other income, net

2,080

2,080

7,444

7,444

          Income before provision (benefit) for income taxes

                 and equity in earnings of unconsolidated subsidiaries

15,709

80

15,789

4,722

20,673

25,395

Income tax provision (benefit) (1) (2)

6,245

32

6,277

(485)

10,172

9,687

Equity in (loss) earnings of unconsolidated subsidiaries, net

(548)

(548)

91

91

           Net income

$                 8,916

$                     48

$                 8,964

$                 5,298

$              10,501

$               15,799

Earnings per common share:

     Basic

$                   0.20

$                   0.20

$                   0.12

$                   0.36

     Diluted

$                   0.19

$                   0.19

$                   0.12

$                   0.35

Weighted-average common shares outstanding:

     Basic

44,783

44,783

44,413

44,413

     Diluted

46,220

46,220

45,457

45,457

Explanation of Non-GAAP Adjustments

For the three months and year ended April 30, 2010:

  (1) Calculated using an annual effective tax rate of 40% and 38%, respectively, on operating expenses adjustments.

  (2) Includes reversal of a reserve previously taken against an uncertain tax position and an increased valuation allowance

        related to cash repatriations and foreign tax credits.

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

RECONCILIATION OF AS REPORTED (GAAP) TO AS ADJUSTED (NON-GAAP)

APRIL 30, 2009

(in thousands, except per share amounts)

(unaudited)

Three Months Ended

Year Ended

April 30, 2009

April 30, 2009

As Reported

Adjustments

As Adjusted

As Reported

Adjustments

As Adjusted

Fee revenue

$             106,980

$             106,980

$             638,223

$             638,223

Reimbursed out-of-pocket engagement expenses

7,446

7,446

37,905

37,905

   Total revenue

114,426

114,426

676,128

676,128

Compensation and benefits

76,783

76,783

442,632

442,632

General and administrative expenses

29,566

29,566

126,882

126,882

Out-of-pocket engagement expenses

10,317

10,317

49,388

49,388

Depreciation and amortization

2,946

2,946

11,583

11,583

Restructuring charges  

25,070

(25,070)

-

41,915

(41,915)

-

   Total operating expenses

144,682

(25,070)

119,612

672,400

(41,915)

630,485

Operating (loss) income

(30,256)

25,070

(5,186)

3,728

41,915

45,643

Interest and other income (loss), net

1,064

-

1,064

(15,801)

-

(15,801)

   (Loss) income before (benefit) provision for income taxes

                 and equity in earnings of unconsolidated subsidiaries

(29,192)

25,070

(4,122)

(12,073)

41,915

29,842

Income tax (benefit) provision (1)

(11,943)

10,377

(1,566)

384

16,778

17,162

Equity in earnings of unconsolidated subsidiaries, net

49

49

2,365

2,365

    Net (loss) income

$             (17,200)

$              14,693

$               (2,507)

$             (10,092)

$           25,137

$               15,045

(Loss) earnings per common share:

     Basic

$                 (0.40)

$                 (0.06)

$                 (0.23)

$                   0.35

     Diluted

$                 (0.40)

$                 (0.06)

$                 (0.23)

$                   0.34

Weighted-average common shares outstanding:

     Basic

43,475

43,475

43,522

43,522

     Diluted

43,475

43,475

43,522

44,272

Explanation of Non-GAAP Adjustments

For the three months and year ended April 30, 2009:

  (1) Calculated using an annual effective tax rate of 38% and 58%, respectively, on operating expense adjustments.

SOURCE Korn/Ferry International



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