Korn/Ferry International Announces Third Quarter Fiscal 2012 Results of Operations

Highlights

- Q3 FY'12 fee revenue was essentially flat at $185.9 million, compared to $186.5 million in the same quarter last year.

- Q3 FY'12 diluted earnings per share was $0.25 compared to diluted earnings per share of $0.30 in Q3 FY'11. Excluding net adjustments to previously recorded restructuring charges of $0.9 million, diluted earnings per share was $0.26 in Q3 FY'12.

News provided by

Korn/Ferry International

Mar 07, 2012, 04:35 ET

LOS ANGELES, March 7, 2012 /PRNewswire/ -- Korn/Ferry International (NYSE: KFY), a premier global provider of talent management solutions, announced Q3 FY'12 diluted earnings per share of $0.25 compared to diluted earnings per share of $0.30 in Q3 FY'11. Excluding net adjustments to previously recorded restructuring charges of $0.9 million, diluted earnings per share was $0.26 in Q3 FY'12.

"We had a solid seasonal quarter despite an uneven economic recovery," said Gary Burnison, CEO of Korn/Ferry International. "As the recovery carries forward, we will continue to drive our differentiated strategy and solutions to help our clients not only attract, but engage, develop and retain the talent needed to effectively execute their business strategy."

Financial Results

(dollars in millions, except per share amounts)



Third Quarter


Year to Date



FY'12


FY'11


FY'12


FY'11


Fee revenue

$  185.9


$  186.5


$  592.4


$  547.0


Total  revenue                 

$  194.6


$  194.1


$  619.2


$  570.5


Operating income               

$  16.2


$  20.5


$  67.5


$  59.6


Operating margin               

8.7%


11.0%


11.4%


10.9%


Net income                  

$  11.7


$  13.9


$  42.3


$  38.5


Basic earnings per share            

$  0.25


$  0.31


$  0.91


$  0.86


Diluted earnings per share            

$  0.25


$  0.30


$  0.90


$  0.84











Adjusted Results (a):

Third Quarter


Year to Date



FY'12


FY'11


FY'12


FY'11


Operating income               

$  17.1


$  20.5


$  68.4


$  61.7


Operating margin               

9.2%


11.0%


11.6%


11.3%


Net income                  

$  12.3


$  13.9


$  42.9


$  39.8


Basic earnings per share            

$  0.26


$  0.31


$  0.93


$  0.88


Diluted earnings per share            

$  0.26


$  0.30


$  0.91


$  0.87





____________

(a)

Adjusted results are non-GAAP financial measures that exclude restructuring charges, net, of $0.9 million during the three and nine months ended January 31, 2012.  Comparative results exclude restructuring charges, net, of $2.1 million during the nine months ended January 31, 2011 (see attached reconciliations). No restructuring costs were incurred during the three months ended January 31, 2011.



Fee revenue was $185.9 million in Q3 FY'12 compared to $186.5 million in Q3 FY'11, a decrease of $0.6 million.  The decrease in fee revenue was driven by a 3% decrease in the overall number of engagements billed, which was offset by a 2% increase in the weighted-average fee billed per engagement compared to the year-ago fiscal quarter.  Weighted-average fee billed is impacted by the mix of engagements by segment, and fluctuating foreign currencies.  On a constant currency basis, fee revenue decreased $1.1 million, or 1%.

Compensation and benefit expenses were $125.7 million in Q3 FY'12, a decrease of $0.4 million, compared to $126.1 million in Q3 FY'11.  The decrease is attributable mainly to a reduction in the variable component of compensation, partially offset by an increase in other components of compensation expense.  On a constant currency basis, compensation and benefits decreased $1.0 million, or 1%.

General and administrative expenses were $35.2 million in Q3 FY'12, an increase of $3.7 million from $31.5 million in Q3 FY'11.  This increase is largely attributable to an increase in legal and other professional fees, and to a lesser extent, an increase in premise and office expenses offset by a decrease in travel and meeting expenses.  On a constant currency basis, general and administrative expenses increased $3.5 million, or 11%.

Operating income was $16.2 million in Q3 FY'12 compared to operating income of $20.5 million in Q3 FY'11, a decrease of $4.3 million, or 21%.  Excluding restructuring charges of $0.9 million in Q3 FY'12, operating income was $17.1 million, a decrease of $3.4 million, or 17%.

Balance Sheet and Liquidity

Cash and marketable securities were $352.4 million at January 31, 2012 compared to $369.1 million at April 30, 2011.  Cash and marketable securities include $80.5 million and $71.4 million held in trust for deferred compensation plans at January 31, 2012 and April 30, 2011, respectively.  Cash and marketable securities decreased by $16.7 million from April 30, 2011, mainly due to payment of FY'11 annual bonuses paid in Q1 FY'12, partially offset by cash provided by operating activities.

Results by Segment

Selected Executive Recruitment Data

(dollars in millions)



Third Quarter


Year to Date



FY'12


FY'11


FY'12


FY'11


Fee revenue                 

$  160.1


$  163.1


$  507.8


$  482.1


Total revenue                 

$  167.6


$  169.6


$  530.2


$  501.5


Operating income               

$  28.1


$  29.1


$  100.5


$  80.7


Operating margin                

17.5%


17.8%


19.8%


16.7%











Ending number of consultants           

441


474


441


474


Average number of consultants          

451


475


462


475


Engagements billed               

3,811


3,930


9,255


8,853


New engagements (a)             

1,821


1,914


5,815


5,774











Adjusted Results (b):

Third Quarter


Year to Date



FY'12


FY'11


FY'12


FY'11


Operating income               

$  28.9


$  29.1


$  101.3


$  82.9


Operating margin                

18.0%


17.8%


20.0%


17.2%





____________

(a)

Represents new engagements opened in the respective period, which declined in the three months ended January 31, 2012 compared to the three months ended January 31, 2011 driven by the European region.

(b)

Adjusted results are non-GAAP financial measures that exclude restructuring charges, net, of $0.8 million during the three and nine months ended January 31, 2012.  Comparative results exclude restructuring charges, net, of $2.2 million during the nine months ended January 31, 2011 (see attached reconciliations). No restructuring costs were incurred during the three months ended January 31, 2011.



Fee revenue was $160.1 million in Q3 FY'12, a decrease of $3.0 million, or 2%, when compared to fee revenue of $163.1 million in Q3 FY'11.  Fee revenue decreased primarily due to a 3% decrease in the number of executive recruitment engagements billed, which was partially offset by a 1% increase in the weighted-average fee per engagement billed when compared to Q3 FY'11.  Weighted-average fee billed is impacted by the mix of engagements by region and fluctuating foreign currencies.  The decrease in fee revenue was due to a decrease in fee revenue in the North American region partially offset by an increase in fee revenue in all other regions.  On a constant currency basis, fee revenue decreased $3.3 million, or 2%.  

Operating income was $28.1 million in Q3 FY'12 compared to operating income of $29.1 million in Q3 FY'11, a decrease of $1.0 million. This decrease is primarily attributed to the $3.0 million decrease in fee revenue and $0.8 million in restructuring charges, which was partially offset by a $2.2 million decrease in compensation and benefits expense in Q3 FY'12 as compared to Q3 FY'11.  The decrease in compensation and benefits expense primarily resulted from a decrease in the variable component of compensation when compared to prior year, which was partially offset by an increase in other components of compensation expense.

The total number of consultants at January 31, 2012 and 2011 was 441 and 474, respectively.

Selected Futurestep Data

(dollars in millions)



Third Quarter


Year to Date



FY'12


FY'11


FY'12


FY'11


Fee revenue                 

$  25.8


$  23.4


$  84.6


$  64.9


Total revenue                 

$  27.0


$  24.5


$  89.0


$  69.0


Operating income               

$  0.9


$  1.3


$  5.5


$  3.5


Operating margin                

3.4%


5.4%


6.5%


5.3%











Adjusted Results (a):

Third Quarter


Year to Date



FY'12


FY'11


FY'12


FY'11


Operating income               

$  1.0


$  1.3


$  5.6


$  3.4


Operating margin                

4.0%


5.4%


6.6%


5.2%





____________



(a)

Adjusted results are non-GAAP financial measures that exclude restructuring charges, net, of $0.1 million during the three and nine months ended January 31, 2012.  Adjusted results for the nine months ended January 31, 2011 exclude recoveries of restructuring charges of $0.1 million (see attached reconciliations). No restructuring costs were incurred during the three months ended January 31, 2011.



Fee revenue was $25.8 million in Q3 FY'12, an increase of $2.4 million, or 10%, from $23.4 million in Q3 FY'11.  The improvement in fee revenue was driven by a 12% increase in the weighted-average fee billed per engagement, which was driven by growth in recruitment process outsourcing engagements, which have higher average fees per engagement and partially offset by a 2% decrease in the number of engagements billed.  On a constant currency basis, fee revenue increased $2.2 million, or 9%.

Operating income was $0.9 million in Q3 FY'12 compared to operating income of $1.3 million in Q3 FY'11, a decrease of $0.4 million, primarily due to a decrease in operating income in the European region, partially offset by an increase in operating income in the other Futurestep regions.  This decrease is primarily attributed to a $2.0 million increase in compensation and benefits expenses and a $0.8 million increase in general and administrative expenses, which was partially offset by a $2.4 million increase in fee revenue in Q3 FY'12 as compared to Q3 FY'11.  The increase in compensation and benefits expense was attributable to a 38% increase in average headcount when compared to the year-ago fiscal quarter while the increase in general and administrative expense was due to an increase in premise and office expenses and an increase in marketing expense.

Outlook

Given the uncertainty caused by the global economy and financial markets, it is particularly challenging to accurately forecast business results.  However, assuming economic conditions, financial markets and foreign exchange rates do remain steady; Q4 FY'12 fee revenue is likely to be in the range of $182 million to $196 million and adjusted diluted earnings per share is likely to be in the range of $0.24 to $0.30, excluding $0.03 to $0.04 of estimated non-recurring compensation costs or $0.21 to $0.27 as measured by generally accepted accounting principles.  

Earnings Conference Call Webcast

The earnings conference call will be held today at 5:00 PM (EST) and hosted by CEO Gary Burnison, CFO Robert Rozek 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.  These 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").  In particular, it includes:

  • adjusted operating income and operating margin, adjusted to exclude restructuring charges, net;
  • adjusted net income, adjusted to exclude restructuring charges, net of the income tax effect;
  • adjusted basic and diluted earnings per share, adjusted to exclude restructuring charges, net;
  • adjusted diluted earnings per share, adjusted to exclude non-recurring compensation costs; 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 they are 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.  In the case of constant currency amounts, management believes the presentation of such amount provides meaningful supplemental information regarding Korn/Ferry's performance as excluding the impact of exchange rate changes on Korn/Ferry's financial performance allows investors to make more meaningful period-to-period comparisons of the Company's operating results, to better identify operating trends that may otherwise be masked or distorted by exchange rate changes and to perform related trend analysis, and provides a higher degree of transparency of 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 INCOME

(in thousands, except per share amounts)




Three Months Ended


Nine Months Ended



January 31,


January 31,



2012


2011


2012


2011












(unaudited)

Fee revenue


$ 185,951


$ 186,489


$ 592,418


$ 546,951

 Reimbursed out-of-pocket engagement expenses                                          


8,672


7,620


26,783


23,524

          Total revenue


194,623


194,109


619,201


570,475










Compensation and benefits


125,741


126,088


394,593


373,851

General and administrative expenses


35,242


31,534


104,204


87,512

Engagement expenses


13,023


12,756


41,594


38,092

Depreciation and amortization


3,523


3,239


10,367


9,351

Restructuring charges, net


929


-


929


2,130

          Total operating expenses


178,458


173,617


551,687


510,936










Operating income  


16,165


20,492


67,514


59,539

Other income (loss), net


1,607


1,948


(3,032)


3,362

Interest expense, net


(310)


(401)


(1,280)


(2,467)

          Income before provision for income taxes









              and equity in earnings of unconsolidated subsidiaries                        


17,462


22,039


63,202


60,434

Income tax provision  


6,038


8,598


22,199


23,407

Equity in earnings of unconsolidated subsidiaries, net


293


534


1,272


1,508

           Net income


$   11,717


$   13,975


$   42,275


$   38,535










Earnings per common share:









     Basic


$       0.25


$       0.31


$       0.91


$       0.86

     Diluted


$       0.25


$       0.30


$       0.90


$       0.84










Weighted-average common shares outstanding:









     Basic


46,528


45,349


46,332


45,040

     Diluted


47,345


46,720


47,193


46,026



KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

FINANCIAL SUMMARY BY SEGMENT

(in thousands)

(unaudited)




















Three Months Ended


Nine Months Ended



January 31,


January 31,



2012




2011


% Change


2012




2011


% Change


















Fee Revenue:
















Executive recruitment:

















North America

$   90,002




$   94,991


(5%)


$ 285,938




$ 279,032


2%


EMEA

40,508




40,068


1%


124,019




113,760


9%


Asia Pacific

20,938




20,445


2%


71,879




65,685


9%


South America

8,664




7,638


13%


25,961




23,602


10%

Total executive recruitment

160,112




163,142


(2%)


507,797




482,079


5%

Futurestep

25,839




23,347


11%


84,621




64,872


30%


Total fee revenue

185,951




186,489


(0%)


592,418




546,951


8%

Reimbursed out-of-pocket engagement expenses                          

8,672




7,620


14%


26,783




23,524


14%


Total revenue

$ 194,623




$ 194,109


0%


$ 619,201




$ 570,475


9%



































Adjusted Operating Income:
















 (Excluding Restructuring Charges)



Margin




Margin




Margin




Margin

Executive recruitment:

















North America

$   19,067


21.2%


$   21,650


22.8%


$   68,790


24.1%


$   60,580


21.7%


EMEA

6,210


15.3%


3,360


8.4%


17,037


13.7%


9,066


8.0%


Asia Pacific

1,638


7.8%


2,487


12.2%


9,343


13.0%


7,117


10.8%


South America

1,934


22.3%


1,559


20.4%


6,167


23.8%


6,136


26.0%

Total executive recruitment

28,849


18.0%


29,056


17.8%


101,337


20.0%


82,899


17.2%

Futurestep

1,037


4.0%


1,268


5.4%


5,608


6.6%


3,341


5.2%

Corporate (1)

(12,792)




(9,832)




(38,502)




(24,571)




Total adjusted operating income

$   17,094


9.2%


$   20,492


11.0%


$   68,443


11.6%


$   61,669


11.3%



































Restructuring Charges (Reductions), net:
















Executive recruitment:

















North America

$        (15)


(0.0%)


$           -


0.0%


$        (15)


(0.0%)


$      (340)


(0.1%)


EMEA

897


2.2%


-


0.0%


897


0.7%


2,569


2.3%


Asia Pacific

-


0.0%


-


0.0%


-


0.0%


-


0.0%


South America

(99)


(1.2%)


-


0.0%


(99)


(0.3%)


-


0.0%

Total executive recruitment

783


0.5%


-


0.0%


783


0.2%


2,229


0.5%

Futurestep

146


0.6%


-


0.0%


146


0.1%


(99)


(0.1%)

Corporate

-




-




-




-




 Total restructuring charges (reductions), net

$        929


0.5%


$           -


0.0%


$        929


0.2%


$     2,130


0.4%



































Operating Income:



Margin




Margin




Margin




Margin

Executive recruitment:

















North America

$   19,082


21.2%


$   21,650


22.8%


$   68,805


24.1%


$   60,920


21.8%


EMEA

5,313


13.1%


3,360


8.4%


16,140


13.0%


6,497


5.7%


Asia Pacific

1,638


7.8%


2,487


12.2%


9,343


13.0%


7,117


10.8%


South America

2,033


23.5%


1,559


20.4%


6,266


24.1%


6,136


26.0%

Total executive recruitment

28,066


17.5%


29,056


17.8%


100,554


19.8%


80,670


16.7%

Futurestep

891


3.4%


1,268


5.4%


5,462


6.5%


3,440


5.3%

Corporate (1)

(12,792)




(9,832)




(38,502)




(24,571)




Total operating income

$   16,165


8.7%


$   20,492


11.0%


$   67,514


11.4%


$   59,539


10.9%





















(1) The Company recorded an adjustment to reduce the fair value of contingent consideration for a prior acquisition, of $2.2 million


      and $1.9 million during the nine months ended January 31, 2012 and 2011, respectively.



KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)




January 31,


April 30,



2012


2011

ASSETS


(unaudited)



Cash and cash equivalents


$             218,196


$             246,856

Marketable securities


42,079


20,868

Receivables due from clients, net of allowance for doubtful accounts





of $11,023 and $9,977 respectively


136,090


128,859

Income taxes and other receivables


17,569


5,138

Deferred income taxes


10,267


10,214

Prepaid expenses and other assets


27,115


29,662

Total current assets


451,316


441,597






Marketable securities, non-current


92,129


101,363

Property and equipment, net


47,685


43,142

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


75,460


70,987

Deferred income taxes


50,828


64,418

Goodwill


174,562


183,952

Intangible assets, net


20,923


22,289

Investments and other assets


39,181


43,932

Total assets


$             952,084


$             971,680






LIABILITIES AND STOCKHOLDERS' EQUITY





Accounts payable


$               11,383


$               12,504

Income taxes payable


7,303


4,674

Compensation and benefits payable


117,069


173,097

Other accrued liabilities


41,434


43,591

Total current liabilities


177,189


233,866






Deferred compensation and other retirement plans


137,492


139,558

Other liabilities


20,861


19,919

Total liabilities


335,542


393,343






Stockholders' equity





Common stock: $0.01 par value, 150,000 shares authorized, 59,864 and





59,101 shares issued and 47,784 and 47,003 shares outstanding, respectively


415,635


404,703

Retained earnings


190,769


148,494

Accumulated other comprehensive income, net


10,651


25,660

Stockholders' equity


617,055


578,857

Less:  notes receivable from stockholders


(513)


(520)

Total stockholders' equity


616,542


578,337

Total liabilities and stockholders' equity


$             952,084


$             971,680













KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

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, 2012


January 31, 2011



As Reported


Adjustments


As Adjusted


As Reported


Adjustments


As Adjusted














Fee revenue


$      185,951




$      185,951


$      186,489




$      186,489

Reimbursed out-of-pocket engagement expenses


8,672




8,672


7,620




7,620

          Total revenue


194,623




194,623


194,109




194,109














Compensation and benefits


125,741




125,741


126,088




126,088

General and administrative expenses


35,242




35,242


31,534




31,534

Engagement expenses


13,023




13,023


12,756




12,756

Depreciation and amortization


3,523




3,523


3,239




3,239

Restructuring charges, net


929


(929)


-


-


-


-

          Total operating expenses


178,458


(929)


177,529


173,617


-


173,617














Operating income


16,165


929


17,094


20,492


-


20,492














Other income, net


1,607




1,607


1,948




1,948

Interest expense, net


(310)




(310)


(401)




(401)

          Income before provision for income taxes and equity in earnings













                 of unconsolidated subsidiaries


17,462


929


18,391


22,039


-


22,039

Income tax provision (1)


6,038


328


6,366


8,598


-


8,598

Equity in earnings of unconsolidated subsidiaries, net


293




293


534




534

           Net income


$        11,717


$              601


$        12,318


$        13,975


$                 -


$        13,975














Earnings per common share:













     Basic


$            0.25




$            0.26


$            0.31




$            0.31

     Diluted


$            0.25




$            0.26


$            0.30




$            0.30














Weighted-average common shares outstanding:













     Basic


46,528




46,528


45,349




45,349

     Diluted


47,345




47,345


46,720




46,720














Explanation of Non-GAAP Adjustments

(1) Calculated using an annual effective tax rate of 35% and 39% on operating expenses, adjusted for the three months ended January 31, 2012 and 2011, respectively.




KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

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, 2012


January 31, 2011



As Reported


Adjustments


As Adjusted


As Reported


Adjustments


As Adjusted














Fee revenue


$      592,418




$      592,418


$      546,951




$      546,951

Reimbursed out-of-pocket engagement expenses


26,783




26,783


23,524




23,524

          Total revenue


619,201




619,201


570,475




570,475














Compensation and benefits


394,593




394,593


373,851




373,851

General and administrative expenses


104,204




104,204


87,512




87,512

Engagement expenses


41,594




41,594


38,092




38,092

Depreciation and amortization


10,367




10,367


9,351




9,351

Restructuring charges, net


929


(929)


-


2,130


(2,130)


-

          Total operating expenses


551,687


(929)


550,758


510,936


(2,130)


508,806














Operating income


67,514


929


68,443


59,539


2,130


61,669














Other (loss) income, net


(3,032)




(3,032)


3,362




3,362

Interest expense, net


(1,280)




(1,280)


(2,467)




(2,467)

          Income before provision for income taxes and equity in earnings













              of unconsolidated subsidiaries


63,202


929


64,131


60,434


2,130


62,564

Income tax provision (1)


22,199


328


22,527


23,407


821


24,228

Equity in earnings of unconsolidated subsidiaries, net


1,272




1,272


1,508




1,508

           Net income  


$        42,275


$              601


$        42,876


$        38,535


$           1,309


$        39,844














Earnings per common share:













     Basic


$            0.91




$            0.93


$            0.86




$            0.88

     Diluted


$            0.90




$            0.91


$            0.84




$            0.87














Weighted-average common shares outstanding:













     Basic


46,332




46,332


45,040




45,040

     Diluted


47,193




47,193


46,026




46,026














Explanation of Non-GAAP Adjustments

(1) Calculated using an annual effective tax rate of 35% and 39% on operating expenses, adjusted for the nine months ended January 31, 2012 and 2011, respectively.




SOURCE Korn/Ferry International