Korn/Ferry International Announces Third Quarter Fiscal 2011 Results of Operations
Highlights
- Third quarter fiscal 2011 fee revenue increased 27% to $186.5 million, compared to $146.8 million in the same quarter last year.
- Q3 FY'11 diluted earnings per share was $0.30, compared to diluted earnings per share of $0.17 in Q3 FY'10. Excluding certain adjustments discussed below, diluted earnings per share was $0.11 in Q3 FY'10.
LOS ANGELES, March 9, 2011 /PRNewswire/ -- Korn/Ferry International (NYSE: KFY), a premier global provider of talent management solutions, announced third quarter fiscal 2011 diluted earnings per share of $0.30 compared to $0.11 in Q3 FY'10 (excluding a $2.8 million tax benefit and adjustments to previously recorded restructuring charges of $0.3 million). Including these adjustments, diluted earnings per share was $0.17 in Q3 FY'10.
"I continue to be pleased with our performance. The past 90 days brought with it our seventh consecutive quarter of fee revenue growth. We have rebounded substantially faster than the industry," said Gary D. Burnison, CEO of Korn/Ferry International. "Korn/Ferry's ongoing success, in an uneven global economic recovery and multi-speed labor cycle, is a testament to the steadfast efforts of our employees across the globe. We will continue to anchor our Company in helping clients better attract, deploy, develop and reward their workforce through the delivery of enterprise-wide talent management solutions."
Financial Results | |||||||||
(dollars in millions, except per share amounts) | |||||||||
Third Quarter | Year to Date | ||||||||
FY'11 | FY'10 | FY'11 | FY'10 | ||||||
Fee revenue | $ 186.5 | $ 146.8 | $ 547.0 | $ 403.7 | |||||
Total revenue | $ 194.1 | $ 152.9 | $ 570.5 | $ 422.7 | |||||
Operating income (loss) | $ 20.5 | $ 6.4 | $ 59.6 | $ (16.3) | |||||
Operating margin | 11.0 | % | 4.3 | % | 10.9 | % | (4.1) | % | |
Net income (loss) | $ 13.9 | $ 7.9 | $ 38.5 | $ (3.6) | |||||
Basic earnings (loss) per share | $ 0.31 | $ 0.18 | $ 0.86 | $ (0.08) | |||||
Diluted earnings (loss) per share | $ 0.30 | $ 0.17 | $ 0.84 | $ (0.08) | |||||
Adjusted Results (a): | Third Quarter | Year to Date | |||||||
FY'11 | FY'10 | FY'11 | FY'10 | ||||||
Operating income | $ 20.5 | $ 6.0 | $ 61.7 | $ 4.2 | |||||
Operating margin | 11.0 | % | 4.1 | % | 11.3 | % | 1.1 | % | |
Net income | $ 13.9 | $ 4.8 | $ 39.8 | $ 6.8 | |||||
Basic earnings per share | $ 0.31 | $ 0.11 | $ 0.88 | $ 0.15 | |||||
Diluted earnings per share | $ 0.30 | $ 0.11 | $ 0.87 | $ 0.15 | |||||
(a) Adjusted results are non-GAAP financial measures that exclude the following: | |||||||||
Third Quarter | Year to Date | ||||||||
FY'11 | FY'10 | FY'11 | FY'10 | ||||||
Restructuring (reductions) charges | $ — | $ (0.3) | $ 2.1 | $ 20.6 | |||||
Certain tax adjustments (b) | $ — | $ (2.8) | $ — | $ (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 $186.5 million in Q3 FY'11 compared to $146.8 million in Q3 FY'10, an increase of 27% (or an increase of 28%, or $40.5 million, on a constant currency basis), which reflects increases in fee revenue from all segments of the business driven primarily by an 18% increase in the overall number of engagements billed as well as a 7% increase in the weighted-average fee billed per engagement compared to the year-ago fiscal quarter.
Compensation and benefits were $126.1 million in Q3 FY'11, an increase of $23.4 million, or 23% (on both an actual and constant currency basis), compared to $102.7 million in Q3 FY'10. This increase is attributable mainly to an increase in the variable component of compensation when compared to the year-ago fiscal quarter and an increase in worldwide headcount. Variable compensation was lower in Q3 FY'10 compared to Q3 FY'11 due to the challenging economic conditions in Q3 FY'10.
General and administrative expenses were $31.5 million in Q3 FY'11 and $31.6 million in Q3 FY'10. Changes in exchange rates impacted general and administrative expenses in Q3 FY'11 favorably by $0.3 million compared to Q3 FY'10.
Operating income was $20.5 million in Q3 FY'11 compared to $6.4 million in Q3 FY'10 (or $6.0 million excluding recoveries of previously recorded restructuring charges in Q3 FY'10), an increase of $14.1 million (or $14.5 million excluding recoveries of previously recorded restructuring charges in Q3 FY'10).
Balance Sheet and Liquidity
Cash and marketable securities were $303.6 million at January 31, 2011 compared to $296.5 million at April 30, 2010. Cash and marketable securities include $68.6 million and $69.0 million, held in trust for deferred compensation plans, at January 31, 2011 and April 30, 2010, respectively. Cash and marketable securities increased by $7.1 million from April 30, 2010, mainly due to cash provided by operating activities partially offset by bonuses earned in FY'10 and paid in FY'11.
Results by Segment | |||||||||
Selected Executive Recruitment Data | |||||||||
(dollars in millions) | |||||||||
Third Quarter | Year to Date | ||||||||
FY'11 | FY'10 | FY'11 | FY'10 | ||||||
Fee revenue | $ 163.1 | $ 129.2 | $ 482.1 | $ 353.8 | |||||
Total revenue | $ 169.6 | $ 134.3 | $ 501.5 | $ 369.2 | |||||
Operating income | $ 29.1 | $ 18.5 | $ 80.7 | $ 15.1 | |||||
Operating margin | 17.8 | % | 14.3 | % | 16.7 | % | 4.3 | % | |
Ending number of consultants | 474 | 483 | 474 | 483 | |||||
Average number of consultants | 475 | 490 | 475 | 486 | |||||
Engagements billed | 3,930 | 3,281 | 8,853 | 6,786 | |||||
New engagements (a) | 1,914 | 1,683 | 5,774 | 4,580 | |||||
Adjusted Results (b): | Third Quarter | Year to Date | |||||||
FY'11 | FY'10 | FY'11 | FY'10 | ||||||
Operating income | $ 29.1 | $ 18.5 | $ 82.9 | $ 38.5 | |||||
Operating margin | 17.8 | % | 14.3 | % | 17.2 | % | 10.9 | % | |
(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 and $23.4 million during the nine months ended January 31, 2011 and 2010, respectively (see attached reconciliations). There were no adjustments during the three months ended January 31, 2011 and 2010. | |||||||||
Fee revenue was $163.1 million in Q3 FY'11, an increase of $33.9 million ($34.7 million on a constant currency basis), or 26%, when compared to fee revenue of $129.2 million in Q3 FY'10. Fee revenue increased in all regions due to a 20% increase in the number of executive recruitment engagements billed and a 5% increase in the weighted-average fee per engagement billed when compared to Q3 FY'10.
Operating income was $29.1 million in Q3 FY'11 compared to $18.5 million in Q3 FY'10.
The total number of consultants at January 31, 2011 was 474, a decrease of 9 from January 31, 2010.
Selected Futurestep Data | |||||||||
(dollars in millions) | |||||||||
Third Quarter | Year to Date | ||||||||
FY'11 | FY'10 | FY'11 | FY'10 | ||||||
Fee revenue | $ 23.4 | $ 17.6 | $ 64.9 | $ 49.9 | |||||
Total revenue | $ 24.5 | $ 18.6 | $ 69.0 | $ 53.5 | |||||
Operating income | $ 1.3 | $ 0.6 | $ 3.5 | $ 2.4 | |||||
Operating margin | 5.4 | % | 3.2 | % | 5.3 | % | 4.7 | % | |
Adjusted Results (a): | Third Quarter | Year to Date | |||||||
FY'11 | FY'10 | FY'11 | FY'10 | ||||||
Operating income (loss) | $ 1.3 | $ 0.2 | $ 3.4 | $ (0.5) | |||||
Operating margin | 5.4 | % | 1.1 | % | 5.2 | % | (1.0) | % | |
(a) Adjusted results are non-GAAP financial measures that exclude recoveries of restructuring charges of $0.1 million and $2.8 million during nine months ended January 31, 2011 and 2010, respectively. Adjusted results for the three months ended January 31, 2010 exclude recoveries of restructuring charges of $0.3 million (see attached reconciliations). There were no adjustments during the three months ended January 31, 2011. | |||||||||
Fee revenue was $23.4 million in Q3 FY'11, an increase of $5.8 million, or 33%, from $17.6 million in Q3 FY'10. The improvement in fee revenue was driven by a 16% increase in the weighted-average fee billed per engagement, as well as a 14% increase in the number of engagements billed.
Operating income was $1.3 million in Q3 FY'11 compared to $0.6 million in Q3 FY'10. Q3 FY'10 operating income includes recoveries of restructuring costs of $0.3 million which primarily relates to lower facility lease costs than originally recorded; without which operating income would have been $0.2 million.
Outlook
Assuming constant foreign exchange rates, stable economic conditions and steady financial markets, Q4 FY'11 fee revenue is likely to be in the range of $183 million to $197 million and diluted earnings per share is likely to be in the range of $0.30 to $0.36.
Earnings Conference Call Webcast
The earnings conference call will be held today at 1:00 PM (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, deploy, develop and reward 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. The statements, which include words such as "believes", "expects" or "likely" include references to our outlook. 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, maintaining our brand name and professional reputation, potential legal liability, the portability of client relationships, global and local political or economic developments in or affecting countries where we have operations, currency fluctuations in our international operations, risks related to the growth, alignment of our cost structure with our growth, restrictions imposed by off-limits agreements, reliance on information processing systems, our ability to enhance and develop new technology, the successful integration of acquired businesses, our ability to develop new products and services, impairment of goodwill and other intangible assets, deferred tax assets 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:
- adjusted operating income (loss) and operating margin, adjusted to exclude charges (recoveries) of restructuring charges, net;
- adjusted net income (loss), adjusted to exclude charges (recoveries) of restructuring charges, net and certain tax adjustments;
- adjusted basic and diluted earnings (loss) per share, adjusted to exclude charges (recoveries) of restructuring charges, net 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 | Nine Months Ended | ||||||||
January 31, | January 31, | ||||||||
2011 | 2010 | 2011 | 2010 | ||||||
(unaudited) | |||||||||
Fee revenue | $ 186,489 | $ 146,742 | $ 546,951 | $ 403,690 | |||||
Reimbursed out-of-pocket engagement expenses | 7,620 | 6,158 | 23,524 | 19,054 | |||||
Total revenue | 194,109 | 152,900 | 570,475 | 422,744 | |||||
Compensation and benefits | 126,088 | 102,654 | 373,851 | 295,115 | |||||
General and administrative expenses | 31,534 | 31,635 | 87,512 | 86,853 | |||||
Out-of-pocket engagement expenses | 12,756 | 9,837 | 38,092 | 28,090 | |||||
Depreciation and amortization | 3,239 | 2,755 | 9,351 | 8,444 | |||||
Restructuring (reductions) charges, net | - | (364) | 2,130 | 20,593 | |||||
Total operating expenses | 173,617 | 146,517 | 510,936 | 439,095 | |||||
Operating income (loss) | 20,492 | 6,383 | 59,539 | (16,351) | |||||
Interest and other income, net | 1,547 | 893 | 895 | 5,364 | |||||
Income (loss) before provision (benefit) for income taxes | |||||||||
and equity in earnings of unconsolidated subsidiaries | 22,039 | 7,276 | 60,434 | (10,987) | |||||
Income tax provision (benefit) | 8,598 | (244) | 23,407 | (6,730) | |||||
Equity in earnings of unconsolidated subsidiaries, net | 534 | 390 | 1,508 | 639 | |||||
Net income (loss) | $ 13,975 | $ 7,910 | $ 38,535 | $ (3,618) | |||||
Earnings (loss) per common share: | |||||||||
Basic | $ 0.31 | $ 0.18 | $ 0.86 | $ (0.08) | |||||
Diluted | $ 0.30 | $ 0.17 | $ 0.84 | $ (0.08) | |||||
Weighted-average common shares outstanding: | |||||||||
Basic | 45,349 | 44,622 | 45,040 | 44,290 | |||||
Diluted | 46,720 | 45,811 | 46,026 | 44,290 | |||||
KORN/FERRY INTERNATIONAL AND SUBSIDIARIES | |||||||||||||||||
FINANCIAL SUMMARY BY SEGMENT | |||||||||||||||||
(in thousands) | |||||||||||||||||
(unaudited) | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
January 31, | January 31, | ||||||||||||||||
2011 | 2010 | % Change | 2011 | 2010 | % Change | ||||||||||||
Fee Revenue: | |||||||||||||||||
Executive recruitment: | |||||||||||||||||
North America | $ 94,991 | $ 70,187 | 35% | $ 279,032 | $ 193,709 | 44% | |||||||||||
EMEA | 40,068 | 36,643 | 9% | 113,760 | 101,240 | 12% | |||||||||||
Asia Pacific | 20,445 | 16,503 | 24% | 65,685 | 42,437 | 55% | |||||||||||
South America | 7,638 | 5,829 | 31% | 23,602 | 16,396 | 44% | |||||||||||
Total executive recruitment | 163,142 | 129,162 | 26% | 482,079 | 353,782 | 36% | |||||||||||
Futurestep | 23,347 | 17,580 | 33% | 64,872 | 49,908 | 30% | |||||||||||
Total fee revenue | 186,489 | 146,742 | 27% | 546,951 | 403,690 | 35% | |||||||||||
Reimbursed out-of-pocket engagement expenses | 7,620 | 6,158 | 24% | 23,524 | 19,054 | 23% | |||||||||||
Total revenue | $ 194,109 | $ 152,900 | 27% | $ 570,475 | $ 422,744 | 35% | |||||||||||
Adjusted Operating Income (Loss): | |||||||||||||||||
(Excluding Restructuring Charges) | Margin | Margin | Margin | Margin | |||||||||||||
Executive recruitment: | |||||||||||||||||
North America | $ 21,650 | 22.8% | $ 13,353 | 19.0% | $ 60,580 | 21.7% | $ 28,810 | 14.9% | |||||||||
EMEA | 3,360 | 8.4% | 2,935 | 8.0% | 9,066 | 8.0% | 5,909 | 5.8% | |||||||||
Asia Pacific | 2,487 | 12.2% | 1,203 | 7.3% | 7,117 | 10.8% | 2,239 | 5.3% | |||||||||
South America | 1,559 | 20.4% | 1,010 | 17.3% | 6,136 | 26.0% | 1,526 | 9.3% | |||||||||
Total executive recruitment | 29,056 | 17.8% | 18,501 | 14.3% | 82,899 | 17.2% | 38,484 | 10.9% | |||||||||
Futurestep | 1,268 | 5.4% | 191 | 1.1% | 3,341 | 5.2% | (483) | (1.0%) | |||||||||
Corporate (1) | (9,832) | (12,673) | (24,571) | (33,759) | |||||||||||||
Total adjusted operating income (loss) | $ 20,492 | 11.0% | $ 6,019 | 4.1% | $ 61,669 | 11.3% | $ 4,242 | 1.1% | |||||||||
Restructuring (Reductions) Charges, net: | |||||||||||||||||
Executive recruitment: | |||||||||||||||||
North America | $ - | 0.0% | $ - | 0.0% | $ (340) | (0.1%) | $ (1,279) | (0.6%) | |||||||||
EMEA | - | 0.0% | - | 0.0% | 2,569 | 2.3% | 24,798 | 24.5% | |||||||||
Asia Pacific | - | 0.0% | - | 0.0% | - | 0.0% | 87 | 0.2% | |||||||||
South America | - | 0.0% | - | 0.0% | - | 0.0% | (173) | (1.1%) | |||||||||
Total executive recruitment | - | 0.0% | - | 0.0% | 2,229 | 0.5% | 23,433 | 6.6% | |||||||||
Futurestep | - | 0.0% | (364) | (2.1%) | (99) | (0.1%) | (2,840) | (5.7%) | |||||||||
Corporate | - | - | - | - | |||||||||||||
Total restructuring (reductions) charges, net | $ - | 0.0% | $ (364) | (0.2%) | $ 2,130 | 0.4% | $ 20,593 | 5.2% | |||||||||
Operating Income (Loss): | Margin | Margin | Margin | Margin | |||||||||||||
Executive recruitment: | |||||||||||||||||
North America | $ 21,650 | 22.8% | $ 13,353 | 19.0% | $ 60,920 | 21.8% | $ 30,089 | 15.5% | |||||||||
EMEA | 3,360 | 8.4% | 2,935 | 8.0% | 6,497 | 5.7% | (18,889) | (18.7%) | |||||||||
Asia Pacific | 2,487 | 12.2% | 1,203 | 7.3% | 7,117 | 10.8% | 2,152 | 5.1% | |||||||||
South America | 1,559 | 20.4% | 1,010 | 17.3% | 6,136 | 26.0% | 1,699 | 10.4% | |||||||||
Total executive recruitment | 29,056 | 17.8% | 18,501 | 14.3% | 80,670 | 16.7% | 15,051 | 4.3% | |||||||||
Futurestep | 1,268 | 5.4% | 555 | 3.2% | 3,440 | 5.3% | 2,357 | 4.7% | |||||||||
Corporate (1) | (9,832) | (12,673) | (24,571) | (33,759) | |||||||||||||
Total operating income (loss) | $ 20,492 | 11.0% | $ 6,383 | 4.3% | $ 59,539 | 10.9% | $ (16,351) | (4.1%) | |||||||||
(1) Lower net expenses primarily 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 $1.1 million and $4.9 million during the three and nine months ended January 31, 2011 compared to the three and nine months ended January 31, 2010, respectively. | |||||||||||||||||
KORN/FERRY INTERNATIONAL AND SUBSIDIARIES | |||||
CONSOLIDATED BALANCE SHEETS | |||||
(in thousands, except per share amounts) | |||||
January 31, | April 30, | ||||
2011 | 2010 | ||||
ASSETS | (unaudited) | ||||
Cash and cash equivalents | $ 181,309 | $ 219,233 | |||
Marketable securities | 19,949 | 4,114 | |||
Receivables due from clients, net of allowance for doubtful accounts | |||||
of $9,081 and $5,983, respectively | 137,408 | 107,215 | |||
Income taxes and other receivables | 11,859 | 6,292 | |||
Deferred income taxes | 16,251 | 20,844 | |||
Prepaid expenses and other assets | 27,898 | 23,166 | |||
Total current assets | 394,674 | 380,864 | |||
Marketable securities, non-current | 102,301 | 73,105 | |||
Property and equipment, net | 39,903 | 24,963 | |||
Cash surrender value of company owned life insurance policies, net of loans | 73,257 | 69,069 | |||
Deferred income taxes | 62,385 | 59,742 | |||
Goodwill | 176,988 | 172,273 | |||
Intangible assets, net | 23,697 | 25,425 | |||
Investments and other assets | 34,312 | 21,657 | |||
Total assets | $ 907,517 | $ 827,098 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
Accounts payable | $ 11,072 | $ 11,148 | |||
Income taxes payable | 11,786 | 6,323 | |||
Compensation and benefits payable | 143,037 | 131,550 | |||
Other accrued liabilities | 45,300 | 49,062 | |||
Total current liabilities | 211,195 | 198,083 | |||
Deferred compensation and other retirement plans | 128,552 | 123,794 | |||
Other liabilities | 24,518 | 13,879 | |||
Total liabilities | 364,265 | 335,756 | |||
Stockholders' equity | |||||
Common stock: $0.01 par value, 150,000 shares authorized, 58,958 and | |||||
57,614 shares issued and 46,817 and 45,979 shares outstanding, respectively | 398,618 | 388,717 | |||
Retained earnings | 128,455 | 90,220 | |||
Accumulated other comprehensive income, net | 16,701 | 12,934 | |||
Stockholders' equity | 543,774 | 491,871 | |||
Less: notes receivable from stockholders | (522) | (529) | |||
Total stockholders' equity | 543,252 | 491,342 | |||
Total liabilities and stockholders' equity | $ 907,517 | $ 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 | ||||||||||||
January 31, 2011 | January 31, 2010 | ||||||||||||
As Reported | Adjustments | As Adjusted | As Reported | Adjustments | As Adjusted | ||||||||
Fee revenue | $ 186,489 | $ 186,489 | $ 146,742 | $ 146,742 | |||||||||
Reimbursed out-of-pocket engagement expenses | 7,620 | 7,620 | 6,158 | 6,158 | |||||||||
Total revenue | 194,109 | 194,109 | 152,900 | 152,900 | |||||||||
Compensation and benefits | 126,088 | 126,088 | 102,654 | 102,654 | |||||||||
General and administrative expenses | 31,534 | 31,534 | 31,635 | 31,635 | |||||||||
Out-of-pocket engagement expenses | 12,756 | 12,756 | 9,837 | 9,837 | |||||||||
Depreciation and amortization | 3,239 | 3,239 | 2,755 | 2,755 | |||||||||
Restructuring reductions, net | - | - | - | (364) | 364 | - | |||||||
Total operating expenses | 173,617 | - | 173,617 | 146,517 | 364 | 146,881 | |||||||
Operating income | 20,492 | - | 20,492 | 6,383 | (364) | 6,019 | |||||||
Interest and other income, net | 1,547 | 1,547 | 893 | 893 | |||||||||
Income before provision (benefit) for income taxes | |||||||||||||
and equity in earnings of unconsolidated subsidiaries | 22,039 | - | 22,039 | 7,276 | (364) | 6,912 | |||||||
Income tax provision (benefit) (1) (2) | 8,598 | - | 8,598 | (244) | 2,698 | 2,454 | |||||||
Equity in earnings of unconsolidated subsidiaries, net | 534 | 534 | 390 | 390 | |||||||||
Net income | $ 13,975 | $ - | $ 13,975 | $ 7,910 | $ (3,062) | $ 4,848 | |||||||
Earnings per common share: | |||||||||||||
Basic | $ 0.31 | $ 0.31 | $ 0.18 | $ 0.11 | |||||||||
Diluted | $ 0.30 | $ 0.30 | $ 0.17 | $ 0.11 | |||||||||
Weighted-average common shares outstanding: | |||||||||||||
Basic | 45,349 | 45,349 | 44,622 | 44,622 | |||||||||
Diluted | 46,720 | 46,720 | 45,811 | 45,811 | |||||||||
Explanation of Non-GAAP Adjustments | |||||||||||||
(1) Calculated using an annual effective tax rate of 39% and 36%, adjusted for the three months ended January 31, 2011 and 2010, respectively. | |||||||||||||
(2) The three months ended January 31, 2010 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) | |||||||||||||
(in thousands, except per share amounts) | |||||||||||||
(unaudited) | |||||||||||||
Nine Months Ended | Nine Months Ended | ||||||||||||
January 31, 2011 | January 31, 2010 | ||||||||||||
As Reported | Adjustments | As Adjusted | As Reported | Adjustments | As Adjusted | ||||||||
Fee revenue | $ 546,951 | $ 546,951 | $ 403,690 | $ 403,690 | |||||||||
Reimbursed out-of-pocket engagement expenses | 23,524 | 23,524 | 19,054 | 19,054 | |||||||||
Total revenue | 570,475 | 570,475 | 422,744 | 422,744 | |||||||||
Compensation and benefits | 373,851 | 373,851 | 295,115 | 295,115 | |||||||||
General and administrative expenses | 87,512 | 87,512 | 86,853 | 86,853 | |||||||||
Out-of-pocket engagement expenses | 38,092 | 38,092 | 28,090 | 28,090 | |||||||||
Depreciation and amortization | 9,351 | 9,351 | 8,444 | 8,444 | |||||||||
Restructuring charges, net | 2,130 | (2,130) | - | 20,593 | (20,593) | - | |||||||
Total operating expenses | 510,936 | (2,130) | 508,806 | 439,095 | (20,593) | 418,502 | |||||||
Operating income (loss) | 59,539 | 2,130 | 61,669 | (16,351) | 20,593 | 4,242 | |||||||
Interest and other income, net | 895 | 895 | 5,364 | 5,364 | |||||||||
Income (loss) before provision (benefit) for income taxes | |||||||||||||
and equity in earnings of unconsolidated subsidiaries | 60,434 | 2,130 | 62,564 | (10,987) | 20,593 | 9,606 | |||||||
Income tax provision (benefit) (1) (2) | 23,407 | 821 | 24,228 | (6,730) | 10,140 | 3,410 | |||||||
Equity in earnings of unconsolidated subsidiaries, net | 1,508 | 1,508 | 639 | 639 | |||||||||
Net income (loss) | $ 38,535 | $ 1,309 | $ 39,844 | $ (3,618) | $ 10,453 | $ 6,835 | |||||||
Earnings (loss) per common share: | |||||||||||||
Basic | $ 0.86 | $ 0.88 | $ (0.08) | $ 0.15 | |||||||||
Diluted | $ 0.84 | $ 0.87 | $ (0.08) | $ 0.15 | |||||||||
Weighted-average common shares outstanding: | |||||||||||||
Basic | 45,040 | 45,040 | 44,290 | 44,290 | |||||||||
Diluted | 46,026 | 46,026 | 44,290 | 45,209 | |||||||||
Explanation of Non-GAAP Adjustments | |||||||||||||
(1) Calculated using an annual effective tax rate of 39% and 36%, adjusted for the nine months ended January 31, 2011 and 2010, respectively. | |||||||||||||
(2) The nine months ended January 31, 2010 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. | |||||||||||||
SOURCE Korn/Ferry International
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