Korn/Ferry International Announces Third Quarter Fiscal 2010 Results of Operations
Highlights
- Third quarter fiscal 2010 fee revenue was $146.8 million, compared to $136.2 million in the same quarter last year.
- Q3 FY'10 diluted earnings per share was $0.11, compared to $0.08 in Q3 FY'09 excluding certain adjustments discussed below. Third quarter fiscal 2010 diluted earnings per share was $0.17 compared to diluted loss per share of $0.52 in Q3 FY'09.
- Cash and marketable securities were $251 million at January 31, 2010.
LOS ANGELES, March 9 /PRNewswire-FirstCall/ -- Korn/Ferry International (NYSE: KFY), a premier global provider of talent management solutions, announced third quarter fiscal 2010 diluted earnings per share of $0.11 (excluding a $2.8 million tax benefit) compared to diluted earnings per share of $0.08 in Q3 FY'09 (excluding restructuring charges of $16.8 million and an impairment charge on marketable securities of $15.3 million). On a GAAP basis, diluted earnings per share was $0.17 in Q3 FY'10, compared to diluted loss per share of $0.52 in Q3 FY'09.
"We are encouraged by our results during the quarter, which included our third consecutive sequential fee revenue increase and a year-over-year fee revenue increase of eight percent," said Gary D. Burnison, Chief Executive Officer of Korn/Ferry International. "Although our growth rate continues to outpace the industry, the macroeconomic environment remains challenging. Korn/Ferry, however, is well positioned with $251 million in cash and marketable securities and a clear vision for the future. We have a focused and differentiated business model, a systematic approach to client service that has been institutionalized throughout our Firm and high caliber colleagues who are helping Korn/Ferry capture market share across the globe."
Financial Results
(dollars in millions, except per share amounts)
Third Quarter Year to Date
------------- ------------
FY'10 FY'09 FY'10 FY'09
----- ----- ----- -----
Fee revenue $146.8 $136.2 $403.7 $531.2
Total revenue $152.9 $144.5 $422.7 $561.7
Operating income
(loss) $6.4 $(11.3) $(16.3) $34.0
Operating margin 4.3% (8.3)% (4.1)% 6.4%
Net income (loss) $7.9 $(22.4) $(3.6) $7.1
Basic earnings (loss)
per share $0.18 $(0.52) $(0.08) $0.16
Diluted earnings
(loss) per share $0.17 $(0.52) $(0.08) $0.16
Adjusted Results (a): Third Quarter Year to Date
------------- ------------
FY'10 FY'09 FY'10 FY'09
----- ----- ----- -----
Operating income $6.0 $5.5 $4.2 $50.8
Operating margin 4.1% 4.1% 1.1% 9.6%
Net income $4.8 $3.5 $6.8 $33.4
Basic earnings per
share $0.11 $0.08 $0.15 $0.77
Diluted earnings per
share $0.11 $0.08 $0.15 $0.75
(a) Adjusted results are non-GAAP financial measures that exclude the
following:
Third Quarter Year to Date
------------- ------------
FY'10 FY'09 FY'10 FY'09
----- ----- ----- -----
Restructuring
(reductions)
charges $(0.3) $16.8 $20.6 $16.8
Certain tax
adjustments (b) $(2.8) $- $(2.8) $-
Impairment charge
on marketable
securities $- $15.3 $- $15.9
(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 $146.8 million in Q3 FY'10 compared to $136.2 million in Q3 FY'09, an increase of 7.8% (or an increase of 2.0% or $2.7 million, on a constant currency basis), which reflects the improving revenue trends in all executive recruitment geographic locations in which we operate. During the same period, the weighted-average fee billed per engagement decreased by 2.0% (a decrease of 3.3% excluding the impact of exchange rates). Furthermore, the number of engagements opened increased 28.9% during the period. The Company experienced a 4.8% increase in fee revenue compared to Q2 FY'10.
Compensation and benefits were $102.7 million in Q3 FY'10, an increase of $8.7 million, or 9.3%, compared to $94.0 million in Q3 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 due to the challenging economic conditions. Changes in exchange rates impacted compensation and benefits in Q3 FY'10 unfavorably by $5.3 million from Q3 FY'09.
General and administrative expenses were $31.6 million in Q3 FY'10, an increase of $0.6 million, or 1.9% from $31.0 million in Q3 FY'09. This increase is attributable to a $1.5 million increase in unrealized foreign exchange loss, which was partially offset by a reduction in premises and office expenses. Changes in exchange rates impacted general and administrative expenses in Q3 FY'10 unfavorably by $1.7 million from Q3 FY'09.
Operating income was $6.4 million in Q3 FY'10 compared to operating loss of $11.3 million in Q3 FY'09, an increase of $17.7 million. Excluding restructuring charges of $16.8 million incurred in Q3 FY'09, operating income was $6.0 million, an increase of $0.5 million as compared to Q3 FY'09.
Balance Sheet and Liquidity
Cash and marketable securities were $251.2 million at January 31, 2010 compared to $330.3 million at April 30, 2009. Cash and marketable securities include $64.5 million and $60.8 million, held in trust for deferred compensation plans, at January 31, 2010 and April 30, 2009, respectively. Cash and marketable securities decreased by $79.1 million from Q4 FY'09, mainly due to the payment of annual bonuses in Q1 FY'10 and payments on previously disclosed acquisitions in this fiscal year.
Results by Segment
Selected Executive Recruitment Data
(dollars in millions)
Third Quarter Year to Date
------------- ------------
FY'10 FY'09 FY'10 FY'09
----- ----- ----- -----
Fee revenue $129.2 $116.6 $353.8 $451.4
Total revenue $134.3 $123.3 $369.2 $474.0
Operating income $18.5 $5.2 $15.1 $63.5
Operating margin 14.3% 4.5% 4.3% 14.1%
Ending number of
consultants 483 497 483 497
Average number of
consultants 490 516 486 521
New engagements (a) 1,683 1,217 4,580 4,806
Adjusted Results (b): Third Quarter Year to Date
------------- ------------
FY'10 FY'09 FY'10 FY'09
----- ----- ----- -----
Operating income $18.5 $16.3 $38.5 $74.6
Operating margin 14.3% 14.0% 10.9% 16.5%
(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
nine months ended January 31, 2010 and none during the three months
ended January 31, 2010 (see attached reconciliations). Comparative
results exclude restructuring charges of $11.1 million during the
three and nine months ended January 31, 2009.
Fee revenue was $129.2 million in Q3 FY'10, an increase of $12.6 million, or 10.8%, when compared to revenue of $116.6 million in Q3 FY'09. On a constant currency basis, fee revenue increased by $6.5 million or 5.6%, when compared to the same quarter a year ago. Fee revenue increased in all regions due to a 12.5% increase in the overall number of engagements billed and a decrease in the average fee per engagement billed of 1.5% when compared to Q3 FY'09 (a decrease of 6.3% excluding the impact of exchange rates).
Operating income was $18.5 million in Q3 FY'10 compared to operating income of $5.2 million in Q3 FY'09. Excluding restructuring charges of $11.1 million incurred in Q3 FY'09, operating income was $16.3 million compared to $18.5 million in Q3 FY'10.
The total number of consultants at January 31, 2010 was 483, a decrease of 14 from January 31, 2009.
Selected Futurestep Data
(dollars in millions)
Third Quarter Year to Date
------------- ------------
FY'10 FY'09 FY'10 FY'09
----- ----- ----- -----
Fee revenue $17.6 $19.6 $49.9 $79.8
Total
revenue $18.6 $21.2 $53.5 $87.7
Operating
income
(loss) $0.6 $(8.3) $2.4 $(4.2)
Operating
margin 3.2% (42.5)% 4.7% (5.3)%
Adjusted Results (a): Third Quarter Year to Date
------------ ------------
FY'10 FY'09 FY'10 FY'09
----- ----- ----- -----
Operating
income
(loss) $0.2 $(2.5) $(0.5) $1.5
Operating
margin 1.1% (12.9)% (1.0)% 1.9%
(a) Adjusted results are non-GAAP financial measures that exclude
restructuring reductions of $0.3 million and $2.8 million during the
three and nine months ended January 31, 2010, respectively (see
attached reconciliations). Comparative results exclude restructuring
charges of $5.8 million during the three and nine months ended January
31, 2009.
Fee revenue was $17.6 million in Q3 FY'10, a decrease of $2.0 million, or 10.2%, from $19.6 million in Q3 FY'09. On a constant currency basis, fee revenue declined by $3.8 million in Q3 FY'10, compared to the same quarter a year ago. Reductions in fee revenue were driven by an 8.1% decrease in the number of engagements billed and to a lesser extent by a 1.6% decrease in the average fee per engagement billed.
Q3 FY'10 operating income includes reductions in restructuring costs of $0.3 million, which relate to recoveries of premise costs; without such recoveries, operating income would have been $0.2 million. Operating income was $0.6 million in Q3 FY'10 compared to an operating loss of $8.3 million in Q3 FY'09.
Outlook
Assuming constant foreign exchange rates, Q4 FY'10 fee revenue is likely to be in the range of $145 million to $155 million and diluted earnings per share is likely to be in the range of $0.10 to $0.16.
Earnings Conference Call Webcast
The earnings conference call will be held today at 2:00 PM (EST) 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 (reductions) charges,
- adjusted net income (loss), basic and diluted earnings (loss) per share, adjusted to exclude restructuring (reductions) charges, certain tax adjustments and an impairment charge on marketable securities 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 Nine Months Ended
January 31, January 31,
------------- -------------
2010 2009 2010 2009
---- ---- ---- ----
(unaudited)
Fee revenue $146,742 $136,210 $403,690 $531,243
Reimbursed out-of-pocket
engagement expenses 6,158 8,283 19,054 30,459
----- ----- ------ ------
Total revenue 152,900 144,493 422,744 561,702
------- ------- ------- -------
Compensation and benefits 102,654 93,978 295,115 365,849
General and administrative
expenses 31,635 30,963 86,853 97,316
Out-of-pocket engagement
expenses 9,837 11,041 28,090 39,071
Depreciation and amortization 2,755 2,924 8,444 8,637
Restructuring (reductions)
charges (364) 16,845 20,593 16,845
---- ------ ------ ------
Total operating
expenses 146,517 155,751 439,095 527,718
------- ------- ------- -------
Operating income (loss) 6,383 (11,258) (16,351) 33,984
Interest and other income
(loss), net 893 (16,061) 5,364 (16,865)
--- ------- ----- -------
Income (loss) before
(benefit) provision for
income taxes and equity
in earnings of
unconsolidated
subsidiaries 7,276 (27,319) (10,987) 17,119
Income tax (benefit) provision (244) (4,549) (6,730) 12,327
Equity in earnings of
unconsolidated subsidiaries,
net 390 414 639 2,316
--- --- --- -----
Net income (loss) $7,910 $(22,356) $(3,618) $7,108
====== ======== ======= ======
Earnings (loss) per common share:
Basic $0.18 $(0.52) $(0.08) $0.16
===== ====== ====== =====
Diluted $0.17 $(0.52) $(0.08) $0.16
===== ====== ====== =====
Weighted-average common shares
outstanding:
Basic 44,622 43,406 44,290 43,538
====== ====== ====== ======
Diluted 45,811 43,406 44,290 44,352
====== ====== ====== ======
KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
FINANCIAL SUMMARY BY SEGMENT
(in thousands)
(unaudited)
Three Months Ended
January 31,
-----------------------
2010 2009
---- ----
Fee Revenue:
Executive recruitment:
North America $70,187 $66,978
EMEA 36,643 30,423
Asia Pacific 16,503 13,591
South America 5,829 5,650
----- -----
Total executive recruitment 129,162 116,642
Futurestep 17,580 19,568
------ ------
Total fee revenue 146,742 136,210
Reimbursed out-of-pocket
engagement expenses 6,158 8,283
----- -----
Total revenue $152,900 $144,493
======== ========
Adjusted Operating Income
(Loss):
(Excluding Restructuring
Charges) Margin Margin
------ ------
Executive recruitment:
North America $13,353 19.0% $13,324 19.9%
EMEA 2,935 8.0% 315 1.0%
Asia Pacific 1,203 7.3% 1,314 9.7%
South America 1,010 17.3% 1,329 23.5%
----- -----
Total executive recruitment 18,501 14.3% 16,282 14.0%
Futurestep 191 1.1% (2,530) (12.9%)
Corporate (12,673) (8,165)
------- ------
Total adjusted operating
income $6,019 4.1% $5,587 4.1%
====== ======
Restructuring (Reductions)
Charges:
Executive recruitment:
North America $- 0.0% $2,557 3.8%
EMEA - 0.0% 6,606 21.7%
Asia Pacific - 0.0% 947 7.0%
South America - 0.0% 956 16.9%
- ---
Total executive recruitment - 0.0% 11,066 9.5%
Futurestep (364) (2.1%) 5,779 29.6%
Corporate - -
--- ---
Total restructuring
(reductions) charges $(364) (0.2%) $16,845 12.4%
===== =======
Operating Income (Loss): Margin Margin
------ ------
Executive recruitment:
North America $13,353 19.0% $10,767 16.1%
EMEA 2,935 8.0% (6,291) (20.7%)
Asia Pacific 1,203 7.3% 367 2.7%
South America 1,010 17.3% 373 6.6%
----- ---
Total executive recruitment 18,501 14.3% 5,216 4.5%
Futurestep 555 3.2% (8,309) (42.5%)
Corporate (12,673) (8,165)
------- ------
Total operating income
(loss) $6,383 4.3% $(11,258) (8.3%)
====== ========
Nine Months Ended
January 31,
-----------------------
2010 2009
---- ----
Fee Revenue:
Executive recruitment:
North America $193,709 $252,649
EMEA 101,240 122,499
Asia Pacific 42,437 56,181
South America 16,396 20,063
------ ------
Total executive recruitment 353,782 451,392
Futurestep 49,908 79,851
------ ------
Total fee revenue 403,690 531,243
Reimbursed out-of-pocket
engagement expenses 19,054 30,459
------ ------
Total revenue $422,744 $561,702
======== ========
Adjusted Operating Income
(Loss):
(Excluding Restructuring
Charges) Margin Margin
------ ------
Executive recruitment:
North America $28,810 14.9% $48,158 19.1%
EMEA 5,909 5.8% 14,711 12.0%
Asia Pacific 2,239 5.3% 8,057 14.3%
South America 1,526 9.3% 3,623 18.0%
----- -----
Total executive recruitment 38,484 10.9% 74,549 16.5%
Futurestep (483) (1.0%) 1,546 1.9%
Corporate (33,759) (25,266)
------- -------
Total adjusted operating
income $4,242 1.1% $50,829 9.6%
====== =======
Restructuring (Reductions)
Charges:
Executive recruitment:
North America $(1,279) (0.6%) $2,557 1.1%
EMEA 24,798 24.5% 6,606 5.4%
Asia Pacific 87 0.2% 947 1.6%
South America (173) (1.1%) 956 4.7%
---- ---
Total executive recruitment 23,433 6.6% 11,066 2.4%
Futurestep (2,840) (5.7%) 5,779 7.2%
Corporate - -
--- ---
Total restructuring
(reductions) charges $20,593 5.2% $16,845 3.2%
======= =======
Operating Income (Loss): Margin Margin
------ ------
Executive recruitment:
North America $30,089 15.5% $45,601 18.0%
EMEA (18,889) (18.7%) 8,105 6.6%
Asia Pacific 2,152 5.1% 7,110 12.7%
South America 1,699 10.4% 2,667 13.3%
----- -----
Total executive recruitment 15,051 4.3% 63,483 14.1%
Futurestep 2,357 4.7% (4,233) (5.3%)
Corporate (33,759) (25,266)
------- -------
Total operating income
(loss) $(16,351) (4.1%) $33,984 6.4%
======== =======
KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
January 31, April 30,
2010 2009
---- ----
ASSETS (unaudited)
------
Cash and cash equivalents $175,811 $255,000
Marketable securities 3,928 4,263
Receivables due from clients, net of allowance
for doubtful accounts of $8,924 and
$11,197, respectively 108,098 67,308
Income taxes and other receivables 6,466 9,001
Deferred income taxes 20,249 14,583
Prepaid expenses and other assets 26,851 21,442
------ ------
Total current assets 341,403 371,597
------- -------
Marketable securities, non-current 71,475 70,992
Property and equipment, net 25,618 27,970
Cash surrender value of company owned life
insurance policies, net of loans 65,988 63,108
Deferred income taxes 50,355 45,141
Goodwill 171,001 133,331
Intangible assets, net 26,091 16,928
Investments and other assets 16,308 11,812
------ ------
Total assets $768,239 $740,879
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Accounts payable $10,519 $10,282
Income taxes payable 4,698 2,059
Compensation and benefits payable 102,055 116,705
Other accrued liabilities 44,014 44,301
------ ------
Total current liabilities 161,286 173,347
------- -------
Deferred compensation and other retirement
plans 107,238 99,238
Other liabilities 18,554 9,195
------ -----
Total liabilities 287,078 281,780
Stockholders' equity
Common stock: $0.01 par value, 150,000
shares authorized, 57,528 and
56,185 shares issued and 45,982
and 44,729 shares outstanding,
respectively 381,232 368,430
Retained earnings 81,304 84,922
Accumulated other comprehensive
income, net 19,156 6,285
------ -----
Stockholders' equity 481,692 459,637
Less: notes receivable from
stockholders (531) (538)
---- ----
Total stockholders' equity 481,161 459,099
------- -------
Total liabilities and
stockholders' equity $768,239 $740,879
======== ========
KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
RECONCILIATION OF AS REPORTED (GAAP) TO AS ADJUSTED (NON-GAAP)
JANUARY 31, 2010
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
January 31, 2010
----------------
As Reported Adjustments As Adjusted
----------- ----------- -----------
Fee revenue $146,742 $146,742
Reimbursed out-of-pocket
engagement expenses 6,158 6,158
----- -----
Total revenue 152,900 152,900
------- -------
Compensation and benefits 102,654 102,654
General and administrative
expenses 31,635 31,635
Out-of-pocket engagement
expenses 9,837 9,837
Depreciation and amortization 2,755 2,755
Restructuring (reductions)
charges (364) 364 -
---- --- -
Total operating
expenses 146,517 364 146,881
------- --- -------
Operating income (loss) 6,383 (364) 6,019
Interest and other income, net 893 893
--- ---
Income (loss) before
(benefit) provision for
income taxes
and equity in earnings of
unconsolidated
subsidiaries 7,276 (364) 6,912
Income tax (benefit) provision (1) (2) (244) 2,698 2,454
Equity in earnings of unconsolidated
subsidiaries, net 390 390
--- ------- ---
Net income (loss) $7,910 $(3,062) $4,848
====== ======= ======
Earnings (loss) per common share:
Basic $0.18 $0.11
===== =====
Diluted $0.17 $0.11
===== =====
Weighted-average common shares
outstanding:
Basic 44,622 44,622
====== ======
Diluted 45,811 45,811
====== ======
Nine Months Ended
January 31, 2010
----------------
As Reported Adjustments As Adjusted
----------- ----------- -----------
Fee revenue $403,690 $403,690
Reimbursed out-of-pocket
engagement expenses 19,054 19,054
------ ------
Total revenue 422,744 422,744
------- -------
Compensation and benefits 295,115 295,115
General and administrative
expenses 86,853 86,853
Out-of-pocket engagement
expenses 28,090 28,090
Depreciation and amortization 8,444 8,444
Restructuring (reductions)
charges 20,593 (20,593) -
------ ------- -
Total operating
expenses 439,095 (20,593) 418,502
------- ------- -------
Operating income (loss) (16,351) 20,593 4,242
Interest and other income, net 5,364 5,364
----- -----
Income (loss) before
(benefit) provision for
income taxes and equity
in earnings of
unconsolidated
subsidiaries (10,987) 20,593 9,606
Income tax (benefit) provision (1) (2) (6,730) 10,140 3,410
Equity in earnings of unconsolidated
subsidiaries, net 639 639
--- ------- ---
Net income (loss) $(3,618) $10,453 $6,835
======= ======= ======
Earnings (loss) per common share:
Basic $(0.08) $0.15
====== =====
Diluted $(0.08) $0.15
====== =====
Weighted-average common shares
outstanding:
Basic 44,290 44,290
====== ======
Diluted 44,290 45,209
====== ======
Explanation of Non-GAAP Adjustments
-----------------------------------
For the three and nine months ended January 31, 2010:
(1) Calculated using an annual effective tax rate of 35.5% 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)
JANUARY 31, 2009
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
January 31, 2009
----------------
As Reported Adjustments As Adjusted
----------- ----------- -----------
Fee revenue $136,210 $136,210
Reimbursed out-of-pocket
engagement expenses 8,283 8,283
----- -----
Total revenue 144,493 144,493
------- -------
Compensation and benefits 93,978 93,978
General and administrative
expenses 30,963 30,963
Out-of-pocket engagement
expenses 11,041 11,041
Depreciation and amortization 2,924 2,924
Restructuring charges 16,845 (16,845) -
------ ------- -
Total operating
expenses 155,751 (16,845) 138,906
------- ------- -------
Operating (loss) income (11,258) 16,845 5,587
Interest and other (loss) income,
net (1) (16,061) 15,348 (713)
------- ------ ----
(Loss) income before
(benefit) provision for
income taxes and equity
in earnings of
unconsolidated
subsidiaries (27,319) 32,193 4,874
Income tax (benefit) provision (2) (4,549) 6,381 1,832
Equity in earnings of unconsolidated
subsidiaries, net 414 414
--- ------- ---
Net (loss) income $(22,356) $25,812 $3,456
======== ======= ======
(Loss) earnings per common share:
Basic $(0.52) $0.08
====== =====
Diluted $(0.52) $0.08
====== =====
Weighted-average common shares
outstanding:
Basic 43,406 43,406
====== ======
Diluted 43,406 43,917
====== ======
Nine Months Ended
January 31, 2009
----------------
As Reported Adjustments As Adjusted
----------- ----------- -----------
Fee revenue $531,243 $531,243
Reimbursed out-of-pocket
engagement expenses 30,459 30,459
------ ------
Total revenue 561,702 561,702
------- -------
Compensation and benefits 365,849 365,849
General and administrative
expenses 97,316 97,316
Out-of-pocket engagement
expenses 39,071 39,071
Depreciation and amortization 8,637 8,637
Restructuring charges 16,845 (16,845) -
------ ------- -
Total operating
expenses 527,718 (16,845) 510,873
------- ------- -------
Operating (loss) income 33,984 16,845 50,829
Interest and other (loss) income,
net (1) (16,865) 15,893 (972)
------- ------ ----
(Loss) income before
(benefit) provision for
income taxes and equity
in earnings of
unconsolidated
subsidiaries 17,119 32,738 49,857
Income tax (benefit) provision (2) 12,327 6,401 18,728
Equity in earnings of unconsolidated
subsidiaries, net 2,316 2,316
----- ------- -----
Net (loss) income $7,108 $26,337 $33,445
====== ======= =======
(Loss) earnings per common share:
Basic $0.16 $0.77
===== =====
Diluted $0.16 $0.75
===== =====
Weighted-average common shares
outstanding:
Basic 43,538 43,538
====== ======
Diluted 44,352 44,352
====== ======
Explanation of Non-GAAP Adjustments
-----------------------------------
For the three and nine months ended January 31, 2009:
(1) Asset impairment on marketable securities.
(2) Calculated using an annual effective tax rate of 38% relating to
operating expense adjustments.
SOURCE Korn/Ferry International
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