Korn/Ferry International Announces Second Quarter Fiscal 2011 Results of Operations
Highlights
- Second quarter fiscal 2011 fee revenue increased 32% to $185.4 million, compared to $140.1 million in the same quarter last year.
- Q2 FY'11 diluted earnings per share, excluding net adjustments to previously recorded restructuring charges was $0.33, compared to diluted earnings per share of $0.09 in Q2 FY'10. Including net restructuring charges, Q2 FY'11 diluted earnings per share was $0.30 compared to $0.06 in Q2 FY'10.
LOS ANGELES, Dec. 8, 2010 /PRNewswire-FirstCall/ -- Korn/Ferry International (NYSE: KFY), a premier global provider of talent management solutions, announced Q2 FY'11 diluted earnings per share of $0.33 compared to $0.09 in Q2 FY'10 (excluding net adjustments to previously recorded restructuring charges of $2.1 million and $2.8 million, respectively). Diluted earnings per share was $0.30 and $0.06 in Q2 FY'11 and Q2 FY'10, respectively.
"As evidenced by our sixth consecutive sequential fee revenue increase, our clients are increasingly turning to Korn/Ferry for a variety of their most important human capital needs," said Gary D. Burnison, CEO of Korn/Ferry International. "After meeting with many of our clients' CEOs over the last several months, it's evident that we are experiencing a two-speed labor recovery – global vs. local. Global enterprises are investing, hiring and expanding, while organizations more reliant on Western economies for growth have remained more cautious. Overall, I'm very pleased with our organization's results this quarter, which validate our strategy of helping clients achieve extraordinary performance through people."
Financial Results (dollars in millions, except per share amounts) | |||||||||||
Second Quarter | Year to Date | ||||||||||
FY'11 | FY'10 | FY'11 | FY'10 | ||||||||
Fee revenue | $ 185.4 | $ 140.1 | $ 360.5 | $ 256.9 | |||||||
Total revenue | $ 193.2 | $ 146.5 | $ 376.4 | $ 269.8 | |||||||
Operating income (loss) | $ 19.8 | $ 2.3 | $ 39.1 | $ (22.7) | |||||||
Operating margin | 10.7 | % | 1.6 | % | 10.8 | % | (8.8) | % | |||
Net income (loss) | $ 13.7 | $ 2.8 | $ 24.6 | $ (11.5) | |||||||
Basic earnings (loss) per share | $ 0.30 | $ 0.06 | $ 0.55 | $ (0.26) | |||||||
Diluted earnings (loss) per share | $ 0.30 | $ 0.06 | $ 0.53 | $ (0.26) | |||||||
Adjusted Results (a): | Second Quarter | Year to Date | |||||||||
FY'11 | FY'10 | FY'11 | FY'10 | ||||||||
Operating income (loss) | $ 21.9 | $ 5.0 | $ 41.2 | $ (1.8) | |||||||
Operating margin | 11.8 | % | 3.6 | % | 11.4 | % | (0.7) | % | |||
Net income | $ 15.0 | $ 4.3 | $ 25.9 | $ 2.0 | |||||||
Basic earnings per share | $ 0.33 | $ 0.10 | $ 0.58 | $ 0.05 | |||||||
Diluted earnings per share | $ 0.33 | $ 0.09 | $ 0.56 | $ 0.04 | |||||||
(a) Adjusted results are non-GAAP financial measures that exclude restructuring charges, net of recoveries, of $2.1 million during the three and six months ended October 31, 2010. Comparative results exclude restructuring charges, net of recoveries, of $2.8 million and $21.0 million during the three and six months ended October 31, 2009, respectively (see attached reconciliations). | |||||||||||
Fee revenue was $185.4 million in Q2 FY'11 compared to $140.1 million in Q2 FY'10, an increase of 32% (or an increase of 33%, or $45.7 million, on a constant currency basis), which reflects increases in revenue from all segments of the business driven primarily by a 28% increase in the number of executive recruitment engagements billed as well as a 4% (5% excluding the impact of exchange rates) increase in the weighted-average fee billed per executive recruitment engagement compared to the year-ago fiscal quarter. Furthermore, the Company experienced a 6% increase in fee revenue compared to Q1 FY'11.
Compensation and benefits were $127.6 million in Q2 FY'11, an increase of $25.5 million, or 25%, compared to $102.1 million in Q2 FY'10. This increase is attributable mainly to an increase in the variable component of compensation when compared to the year-ago fiscal quarter. Compensation and benefits were lower in Q2 FY'10 compared to Q2 FY'11 due to the challenging economic conditions in Q2 FY'10.
General and administrative expenses were $27.4 million in Q2 FY'11, an increase of $0.2 million, or 1% from $27.2 million in Q2 FY'10. This increase is due primarily to an increase in bad debt provisions as a result of higher revenues and accounts receivable, a decrease in unrealized net foreign exchange gains, partially offset by a fair value contingent consideration adjustment from a prior acquisition. Changes in exchange rates impacted general and administrative expenses in Q2 FY'11 favorably by $0.4 million compared to Q2 FY'10.
Operating income was $19.8 million in Q2 FY'11 compared to $2.3 million in Q2 FY'10, an increase of $17.5 million. Excluding restructuring charges of $2.1 million in Q2 FY'11 and $2.8 million in Q2 FY'10, operating income was $21.9 million in Q2 FY'11 and $5.0 million in Q2 FY'10, an increase of $16.9 million.
Balance Sheet and Liquidity
Cash and marketable securities were $264.7 million at October 31, 2010 compared to $296.5 million at April 30, 2010. Cash and marketable securities include $67.0 million and $69.0 million, held in trust for deferred compensation plans, at October 31, 2010 and April 30, 2010, respectively. Cash and marketable securities decreased by $31.8 million from April 30, 2010, mainly due to the payment of FY'10 annual bonuses in Q1 FY'11, partially offset by cash provided by operating activities in Q2 FY'11.
Results by Segment
Selected Executive Recruitment Data (dollars in millions) | ||||||||||
Second Quarter | Year to Date | |||||||||
FY'11 | FY'10 | FY'11 | FY'10 | |||||||
Fee revenue | $ 164.1 | $ 123.3 | $ 319.0 | $ 224.6 | ||||||
Total revenue | $ 170.5 | $ 128.3 | $ 331.9 | $ 234.9 | ||||||
Operating income (loss) | $ 23.9 | $ 9.7 | $ 51.6 | $ (3.4) | ||||||
Operating margin | 14.6 | % | 7.8 | % | 16.2 | % | (1.5) | % | ||
Ending number of consultants | 475 | 497 | 475 | 497 | ||||||
Average number of consultants | 477 | 499 | 475 | 486 | ||||||
Engagements billed | 3,795 | 2,981 | 6,324 | 4,643 | ||||||
New engagements (a) | 1,970 | 1,578 | 3,860 | 2,896 | ||||||
Adjusted Results (b): | Second Quarter | Year to Date | ||||||||
FY'11 | FY'10 | FY'11 | FY'10 | |||||||
Operating income | $ 26.1 | $ 14.9 | $ 53.8 | $ 20.0 | ||||||
Operating margin | 15.9 | % | 12.1 | % | 16.9 | % | 8.9 | % | ||
(a) Represents new engagements opened in the respective period. | ||||||||||
(b) Adjusted results are non-GAAP financial measures that exclude restructuring charges, net of recoveries, of $2.2 million during the three and six months ended October 31, 2010. Comparative results exclude restructuring charges, net of recoveries, of $5.3 million and $23.4 million during the three and six months ended October 31, 2009, respectively (see attached reconciliations). | ||||||||||
Fee revenue was $164.1 million in Q2 FY'11, an increase of $40.8 million ($41.2 million on a constant currency basis), or 33%, when compared to fee revenue of $123.3 million in Q2 FY'10. Fee revenue increased in all regions due to a 28% increase in the overall number of engagements billed and a 4% (5% excluding the impact of exchange rates) increase in the weighted-average fee per engagement billed when compared to Q2 FY'10.
Operating income was $23.9 million in Q2 FY'11 compared to $9.7 million in Q2 FY'10. Excluding restructuring charges of $2.2 million in Q2 FY'11 and $5.3 million in Q2 FY'10, operating income was $26.1 million and $14.9 million, respectively, an increase of $11.2 million compared to Q2 FY'10.
The total number of consultants at October 31, 2010 was 475, a decrease of 22 from October 31, 2009.
Selected Futurestep Data (dollars in millions) | |||||||||||
Second Quarter | Year to Date | ||||||||||
FY'11 | FY'10 | FY'11 | FY'10 | ||||||||
Fee revenue | $ 21.3 | $ 16.8 | $ 41.5 | $ 32.3 | |||||||
Total revenue | $ 22.7 | $ 18.2 | $ 44.5 | $ 34.9 | |||||||
Operating income | $ 1.2 | $ 2.6 | $ 2.2 | $ 1.8 | |||||||
Operating margin | 5.6 | % | 15.5 | % | 5.2 | % | 5.6 | % | |||
Adjusted Results (a): | Second Quarter | Year to Date | |||||||||
FY'11 | FY'10 | FY'11 | FY'10 | ||||||||
Operating income (loss) | $ 1.1 | $ 0.1 | $ 2.1 | $ (0.7) | |||||||
Operating margin | 5.1 | % | 0.8 | % | 5.0 | % | (2.1) | % | |||
(a) Adjusted results are non-GAAP financial measures that exclude recoveries of restructuring charges of $0.1 million during each of the three and six months ended October 31, 2010. Comparative results exclude restructuring charges, net of recoveries, of $2.5 million during each of the three and six months ended October 31, 2009, respectively (see attached reconciliations). | |||||||||||
Fee revenue was $21.3 million in Q2 FY'11, an increase of $4.5 million (also $4.5 million on a constant currency basis), or 27%, from $16.8 million in Q2 FY'10. The improvement in fee revenue was driven by a 30% increase in the overall number of engagements billed, partially offset by a 3% decrease in the weighted-average fee billed per engagement.
Operating income was $1.2 million in Q2 FY'11 compared to $2.6 million in Q2 FY'10. Operating income includes recovery of restructuring costs of $0.1 million and $2.5 million, during Q2 FY'11 and Q2 FY'10, respectively, which in Q2 FY'10 primarily relates to lower facility lease costs than originally recorded; without which operating income would have been $1.1 million and $0.1 million, respectively.
Outlook
Assuming constant foreign exchange rates, stable economic conditions and steady financial markets, Q3 FY'11 fee revenue is likely to be in the range of $175 million to $190 million and diluted earnings per share is likely to be in the range of $0.25 to $0.32.
Earnings Conference Call Webcast
The earnings conference call will be held today at 9:00 AM (EST) and hosted by CEO Gary Burnison, CFO Mike DiGregorio and SVP Finance Gregg Kvochak. 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. 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 include those relating 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 the following (each of which has been adjusted to exclude restructuring charges):
- adjusted operating income (loss) and operating margin;
- adjusted net income (loss);
- adjusted basic and diluted earnings (loss) per share; 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 | Six Months Ended | ||||||||
October 31, | October 31, | ||||||||
2010 | 2009 | 2010 | 2009 | ||||||
(unaudited) | |||||||||
Fee revenue | $ 185,350 | $ 140,145 | $ 360,462 | $ 256,948 | |||||
Reimbursed out-of-pocket engagement expenses | 7,854 | 6,411 | 15,904 | 12,896 | |||||
Total revenue | 193,204 | 146,556 | 376,366 | 269,844 | |||||
Compensation and benefits | 127,555 | 102,076 | 247,763 | 192,461 | |||||
General and administrative expenses | 27,363 | 27,164 | 55,978 | 55,218 | |||||
Out-of-pocket engagement expenses | 13,237 | 9,464 | 25,336 | 18,253 | |||||
Depreciation and amortization | 3,144 | 2,860 | 6,112 | 5,689 | |||||
Restructuring charges, net | 2,130 | 2,774 | 2,130 | 20,957 | |||||
Total operating expenses | 173,429 | 144,338 | 337,319 | 292,578 | |||||
Operating income (loss) | 19,775 | 2,218 | 39,047 | (22,734) | |||||
Interest and other income (loss), net | 1,657 | 1,180 | (652) | 4,471 | |||||
Income (loss) before provision (benefit) for income taxes | |||||||||
and equity in earnings of unconsolidated subsidiaries | 21,432 | 3,398 | 38,395 | (18,263) | |||||
Income tax provision (benefit) | 8,288 | 879 | 14,809 | (6,486) | |||||
Equity in earnings of unconsolidated subsidiaries, net | 512 | 226 | 974 | 249 | |||||
Net income (loss) | $ 13,656 | $ 2,745 | $ 24,560 | $ (11,528) | |||||
Earnings (loss) per common share: | |||||||||
Basic | $ 0.30 | $ 0.06 | $ 0.55 | $ (0.26) | |||||
Diluted | $ 0.30 | $ 0.06 | $ 0.53 | $ (0.26) | |||||
Weighted-average common shares outstanding: | |||||||||
Basic | 45,130 | 44,470 | 44,886 | 44,123 | |||||
Diluted | 45,918 | 45,291 | 46,061 | 44,123 | |||||
KORN/FERRY INTERNATIONAL AND SUBSIDIARIES | |||||||||||||||||
FINANCIAL SUMMARY BY SEGMENT | |||||||||||||||||
(in thousands) | |||||||||||||||||
(unaudited) | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
October 31, | October 31, | ||||||||||||||||
2010 | 2009 | % Change | 2010 | 2009 | % Change | ||||||||||||
Fee Revenue: | |||||||||||||||||
Executive recruitment: | |||||||||||||||||
North America | $ 94,066 | $ 68,230 | 38% | $ 184,041 | $ 123,522 | 49% | |||||||||||
EMEA | 37,424 | 35,376 | 6% | 73,692 | 64,597 | 14% | |||||||||||
Asia Pacific | 24,098 | 13,563 | 78% | 45,240 | 25,934 | 74% | |||||||||||
South America | 8,478 | 6,122 | 38% | 15,964 | 10,567 | 51% | |||||||||||
Total executive recruitment | 164,066 | 123,291 | 33% | 318,937 | 224,620 | 42% | |||||||||||
Futurestep | 21,284 | 16,854 | 26% | 41,525 | 32,328 | 28% | |||||||||||
Total fee revenue | 185,350 | 140,145 | 32% | 360,462 | 256,948 | 40% | |||||||||||
Reimbursed out-of-pocket engagement expenses | 7,854 | 6,411 | 23% | 15,904 | 12,896 | 23% | |||||||||||
Total revenue | $ 193,204 | $ 146,556 | 32% | $ 376,366 | $ 269,844 | 39% | |||||||||||
Adjusted Operating Income (Loss): | |||||||||||||||||
(Excluding Restructuring Charges) | Margin | Margin | Margin | Margin | |||||||||||||
Executive recruitment: | |||||||||||||||||
North America | $ 19,255 | 20.5% | $ 11,250 | 16.5% | $ 38,930 | 21.2% | $ 15,457 | 12.5% | |||||||||
EMEA | 2,653 | 7.1% | 2,411 | 6.8% | 5,706 | 7.7% | 2,974 | 4.6% | |||||||||
Asia Pacific | 1,561 | 6.5% | 61 | 0.4% | 4,630 | 10.2% | 1,036 | 4.0% | |||||||||
South America | 2,698 | 31.8% | 1,202 | 19.6% | 4,577 | 28.7% | 516 | 4.9% | |||||||||
Total executive recruitment | 26,167 | 15.9% | 14,924 | 12.1% | 53,843 | 16.9% | 19,983 | 8.9% | |||||||||
Futurestep | 1,084 | 5.1% | 141 | 0.8% | 2,073 | 5.0% | (674) | (2.1%) | |||||||||
Corporate (1) | (5,346) | (10,073) | (14,739) | (21,086) | |||||||||||||
Total adjusted operating income (loss) | $ 21,905 | 11.8% | $ 4,992 | 3.6% | $ 41,177 | 11.4% | $ (1,777) | (0.7%) | |||||||||
Restructuring Charges (Reductions), net: | |||||||||||||||||
Executive recruitment: | |||||||||||||||||
North America | $ (340) | (0.3%) | $ (1,279) | (1.9%) | $ (340) | (0.1%) | $ (1,279) | (1.0%) | |||||||||
EMEA | 2,569 | 6.9% | 6,615 | 18.7% | 2,569 | 3.4% | 24,798 | 38.4% | |||||||||
Asia Pacific | - | 0.0% | 87 | 0.6% | - | 0.0% | 87 | 0.3% | |||||||||
South America | - | 0.0% | (173) | (2.9%) | - | 0.0% | (173) | (1.6%) | |||||||||
Total executive recruitment | 2,229 | 1.3% | 5,250 | 4.3% | 2,229 | 0.7% | 23,433 | 10.4% | |||||||||
Futurestep | (99) | (0.5%) | (2,476) | (14.7%) | (99) | (0.2%) | (2,476) | (7.7%) | |||||||||
Corporate | - | - | - | - | |||||||||||||
Total restructuring charges (reductions), net | $ 2,130 | 1.1% | $ 2,774 | 2.0% | $ 2,130 | 0.6% | $ 20,957 | 8.1% | |||||||||
Operating Income (Loss): | Margin | Margin | Margin | Margin | |||||||||||||
Executive recruitment: | |||||||||||||||||
North America | $ 19,595 | 20.8% | $ 12,529 | 18.4% | $ 39,270 | 21.3% | $ 16,736 | 13.5% | |||||||||
EMEA | 84 | 0.2% | (4,204) | (11.9%) | 3,137 | 4.3% | (21,824) | (33.8%) | |||||||||
Asia Pacific | 1,561 | 6.5% | (26) | (0.2%) | 4,630 | 10.2% | 949 | 3.7% | |||||||||
South America | 2,698 | 31.8% | 1,375 | 22.5% | 4,577 | 28.7% | 689 | 6.5% | |||||||||
Total executive recruitment | 23,938 | 14.6% | 9,674 | 7.8% | 51,614 | 16.2% | (3,450) | (1.5%) | |||||||||
Futurestep | 1,183 | 5.6% | 2,617 | 15.5% | 2,172 | 5.2% | 1,802 | 5.6% | |||||||||
Corporate (1) | (5,346) | (10,073) | (14,739) | (21,086) | |||||||||||||
Total operating income (loss) | $ 19,775 | 10.7% | $ 2,218 | 1.6% | $ 39,047 | 10.8% | $ (22,734) | (8.8%) | |||||||||
(1) Improvement primarily due to a decrease in net expenses related to the change in amounts due under deferred compensation plans determined by an increase (or decrease ) in market values, and adjustment to the fair value of contingent consideration for a prior acquisition, totaling $4.3 million and $3.8 million during the three and six months ended October 31, 2010 compared to the three and six months ended October 31, 2009, respectively. | |||||||||||||||||
KORN/FERRY INTERNATIONAL AND SUBSIDIARIES | |||||
CONSOLIDATED BALANCE SHEETS | |||||
(in thousands, except per share amounts) | |||||
October 31, | April 30, | ||||
2010 | 2010 | ||||
ASSETS | (unaudited) | ||||
Cash and cash equivalents | $ 151,118 | $ 219,233 | |||
Marketable securities | 16,189 | 4,114 | |||
Receivables due from clients, net of allowance for doubtful accounts | |||||
of $8,106 and $5,983, respectively | 145,043 | 107,215 | |||
Income taxes and other receivables | 8,476 | 6,292 | |||
Deferred income taxes | 21,375 | 20,844 | |||
Prepaid expenses and other assets | 27,940 | 23,166 | |||
Total current assets | 370,141 | 380,864 | |||
Marketable securities, non-current | 97,410 | 73,105 | |||
Property and equipment, net | 37,470 | 24,963 | |||
Cash surrender value of company owned life insurance policies, net of loans | 71,929 | 69,069 | |||
Deferred income taxes | 53,526 | 59,742 | |||
Goodwill | 177,562 | 172,273 | |||
Intangible assets, net | 24,310 | 25,425 | |||
Investments and other assets | 31,931 | 21,657 | |||
Total assets | $ 864,279 | $ 827,098 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
Accounts payable | $ 11,308 | $ 11,148 | |||
Income taxes payable | 8,487 | 6,323 | |||
Compensation and benefits payable | 121,894 | 131,550 | |||
Other accrued liabilities | 50,762 | 49,062 | |||
Total current liabilities | 192,451 | 198,083 | |||
Deferred compensation and other retirement plans | 131,009 | 123,794 | |||
Other liabilities | 21,706 | 13,879 | |||
Total liabilities | 345,166 | 335,756 | |||
Stockholders' equity | |||||
Common stock: $0.01 par value, 150,000 shares authorized, 58,548 and | |||||
57,614 shares issued and 46,388 and 45,979 shares outstanding, respectively | 387,909 | 388,717 | |||
Retained earnings | 114,780 | 90,220 | |||
Accumulated other comprehensive income, net | 16,949 | 12,934 | |||
Stockholders' equity | 519,638 | 491,871 | |||
Less: notes receivable from stockholders | (525) | (529) | |||
Total stockholders' equity | 519,113 | 491,342 | |||
Total liabilities and stockholders' equity | $ 864,279 | $ 827,098 | |||
KORN/FERRY INTERNATIONAL AND SUBSIDIARIES | |||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
RECONCILIATION OF AS REPORTED (GAAP) TO AS ADJUSTED (NON-GAAP) | |||||||||||||
(in thousands, except per share amounts) | |||||||||||||
(unaudited) | |||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||
October 31, 2010 | October 31, 2009 | ||||||||||||
As Reported | Adjustments | As Adjusted | As Reported | Adjustments | As Adjusted | ||||||||
Fee revenue | $ 185,350 | $ 185,350 | $ 140,145 | $ 140,145 | |||||||||
Reimbursed out-of-pocket engagement expenses | 7,854 | 7,854 | 6,411 | 6,411 | |||||||||
Total revenue | 193,204 | 193,204 | 146,556 | 146,556 | |||||||||
Compensation and benefits | 127,555 | 127,555 | 102,076 | 102,076 | |||||||||
General and administrative expenses | 27,363 | 27,363 | 27,164 | 27,164 | |||||||||
Out-of-pocket engagement expenses | 13,237 | 13,237 | 9,464 | 9,464 | |||||||||
Depreciation and amortization | 3,144 | 3,144 | 2,860 | 2,860 | |||||||||
Restructuring charges, net | 2,130 | (2,130) | - | 2,774 | (2,774) | - | |||||||
Total operating expenses | 173,429 | (2,130) | 171,299 | 144,338 | (2,774) | 141,564 | |||||||
Operating income | 19,775 | 2,130 | 21,905 | 2,218 | 2,774 | 4,992 | |||||||
Interest and other income, net | 1,657 | 1,657 | 1,180 | 1,180 | |||||||||
Income before provision for income taxes | |||||||||||||
and equity in earnings of unconsolidated subsidiaries | 21,432 | 2,130 | 23,562 | 3,398 | 2,774 | 6,172 | |||||||
Income tax provision (1) | 8,288 | 821 | 9,109 | 879 | 1,260 | 2,139 | |||||||
Equity in earnings of unconsolidated subsidiaries, net | 512 | 512 | 226 | 226 | |||||||||
Net income | $ 13,656 | $ 1,309 | $ 14,965 | $ 2,745 | $ 1,514 | $ 4,259 | |||||||
Earnings per common share: | |||||||||||||
Basic | $ 0.30 | $ 0.33 | $ 0.06 | $ 0.10 | |||||||||
Diluted | $ 0.30 | $ 0.33 | $ 0.06 | $ 0.09 | |||||||||
Weighted-average common shares outstanding: | |||||||||||||
Basic | 45,130 | 45,130 | 44,470 | 44,470 | |||||||||
Diluted | 45,918 | 45,918 | 45,291 | 45,291 | |||||||||
Explanation of Non-GAAP Adjustments | |||||||||||||
(1) Calculated using an annual effective tax rate of 39% and 35% on operating expenses, adjusted for the three months ended October 31, 2010 and 2009, respectively. | |||||||||||||
KORN/FERRY INTERNATIONAL AND SUBSIDIARIES | |||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
RECONCILIATION OF AS REPORTED (GAAP) TO AS ADJUSTED (NON-GAAP) | |||||||||||||
(in thousands, except per share amounts) | |||||||||||||
(unaudited) | |||||||||||||
Six Months Ended | Six Months Ended | ||||||||||||
October 31, 2010 | October 31, 2009 | ||||||||||||
As Reported | Adjustments | As Adjusted | As Reported | Adjustments | As Adjusted | ||||||||
Fee revenue | $ 360,462 | $ 360,462 | $ 256,948 | $ 256,948 | |||||||||
Reimbursed out-of-pocket engagement expenses | 15,904 | 15,904 | 12,896 | 12,896 | |||||||||
Total revenue | 376,366 | 376,366 | 269,844 | 269,844 | |||||||||
Compensation and benefits | 247,763 | 247,763 | 192,461 | 192,461 | |||||||||
General and administrative expenses | 55,978 | 55,978 | 55,218 | 55,218 | |||||||||
Out-of-pocket engagement expenses | 25,336 | 25,336 | 18,253 | 18,253 | |||||||||
Depreciation and amortization | 6,112 | 6,112 | 5,689 | 5,689 | |||||||||
Restructuring charges, net | 2,130 | (2,130) | - | 20,957 | (20,957) | - | |||||||
Total operating expenses | 337,319 | (2,130) | 335,189 | 292,578 | (20,957) | 271,621 | |||||||
Operating income (loss) | 39,047 | 2,130 | 41,177 | (22,734) | 20,957 | (1,777) | |||||||
Interest and other (loss) income, net | (652) | (652) | 4,471 | - | 4,471 | ||||||||
Income (loss) before provision (benefit) for income taxes | |||||||||||||
and equity in earnings of unconsolidated subsidiaries | 38,395 | 2,130 | 40,525 | (18,263) | 20,957 | 2,694 | |||||||
Income tax provision (benefit) (1) | 14,809 | 821 | 15,630 | (6,486) | 7,442 | 956 | |||||||
Equity in earnings of unconsolidated subsidiaries, net | 974 | 974 | 249 | 249 | |||||||||
Net income (loss) | $ 24,560 | $ 1,309 | $ 25,869 | $ (11,528) | $ 13,515 | $ 1,987 | |||||||
Earnings (loss) per common share: | |||||||||||||
Basic | $ 0.55 | $ 0.58 | $ (0.26) | $ 0.05 | |||||||||
Diluted | $ 0.53 | $ 0.56 | $ (0.26) | $ 0.04 | |||||||||
Weighted-average common shares outstanding: | |||||||||||||
Basic | 44,886 | 44,886 | 44,123 | 44,123 | |||||||||
Diluted | 46,061 | 46,061 | 44,123 | 44,824 | |||||||||
Explanation of Non-GAAP Adjustments | |||||||||||||
(1) Calculated using an annual effective tax rate of 39% and 35% on operating expenses, adjusted for the six months ended October 31, 2010 and 2009, respectively. | |||||||||||||
SOURCE Korn/Ferry International
Share this article