Exhibit 99.1
For Immediate Release
Contacts:
Investor Relations: Gregg Kvochak, (310) 556-8550
For Media: Mike Distefano, (310) 843-4199
Investor Relations: Gregg Kvochak, (310) 556-8550
For Media: Mike Distefano, (310) 843-4199
Korn/Ferry International Announces Fourth Quarter Fiscal 2011 Results of Operations
Highlights
• | Fourth quarter fiscal 2011 fee revenue increased 17% to $197.3 million, compared to $168.7 million in the same quarter last year. |
• | Q4 FY’11 diluted earnings per share was $0.43, compared to diluted earnings per share of $0.19 in Q4 FY’10. Excluding certain tax adjustments, Q4 FY’11 diluted earnings per share was $0.39. |
• | FY’11 fee revenue increased $171.9 million, or 30%, to $744.3 million, compared to $572.4 million last year. |
• | FY’11 diluted earnings per share was $1.27, compared to diluted earnings per share of $0.12 in FY’10. Excluding restructuring charges and certain tax adjustments, FY’11 and FY’10 diluted earnings per share was $1.25 and $0.35, respectively. |
• | Cash and marketable securities were $369 million at April 30, 2011 compared to $296 million at April 30, 2010. |
Los Angeles, CA, June 15, 2011- Korn/Ferry International (NYSE: KFY), a premier global provider of talent management solutions, announced fourth quarter fiscal 2011 diluted earnings per share of $0.43 compared to $0.19 in Q4 FY’10. Excluding certain tax adjustments, Q4 FY’11 diluted earnings per share was $0.39.
“I am enormously proud of the Korn/Ferry organization,” said Gary Burnison, Chief Executive Officer, Korn/Ferry International. “Once again, our growth was driven by the strength of our differentiated strategy. Thanks to the dedication of our colleagues in serving our clients, we achieved an operating margin of almost 12% for the full year. As we enter a new fiscal year, we will continue to build a Korn/Ferry brand that is synonymous with talent management, assisting our clients in linking their business and people strategies.”
Financial Results
(dollars in millions, except per share amounts)
(dollars in millions, except per share amounts)
Fourth Quarter | Year to Date | |||||||||||||||
FY’11 | FY’10 | FY’11 | FY’10 | |||||||||||||
Fee revenue | $ | 197.3 | $ | 168.7 | $ | 744.3 | $ | 572.4 | ||||||||
Total revenue | $ | 205.8 | $ | 176.9 | $ | 776.3 | $ | 599.6 | ||||||||
Operating income (loss) | $ | 26.2 | $ | 13.6 | $ | 85.8 | $ | (2.7 | ) | |||||||
Operating margin | 13.3 | % | 8.1 | % | 11.5 | % | (0.5 | )% | ||||||||
Net income | $ | 20.4 | $ | 8.9 | $ | 58.9 | $ | 5.3 | ||||||||
Basic earnings per share | $ | 0.45 | $ | 0.20 | $ | 1.30 | $ | 0.12 | ||||||||
Diluted earnings per share | $ | 0.43 | $ | 0.19 | $ | 1.27 | $ | 0.12 |
Adjusted Results (a):
Fourth Quarter | Year to Date | |||||||||||||||
FY’11 | FY’10 | FY’11 | FY’10 | |||||||||||||
Operating income | $ | 26.2 | $ | 13.7 | $ | 87.9 | $ | 17.9 | ||||||||
Operating margin | 13.3 | % | 8.1 | % | 11.8 | % | 3.1 | % | ||||||||
Net income | $ | 18.3 | $ | 9.0 | $ | 58.1 | $ | 15.8 | ||||||||
Basic earnings per share | $ | 0.40 | $ | 0.20 | $ | 1.28 | $ | 0.36 | ||||||||
Diluted earnings per share | $ | 0.39 | $ | 0.19 | $ | 1.25 | $ | 0.35 |
(a) | Adjusted results are non-GAAP financial measures that exclude the following: |
Fourth Quarter | Year to Date | |||||||||||||||
FY’11 | FY’10 | FY’11 | FY’10 | |||||||||||||
Restructuring charges | $ | — | $ | 0.1 | $ | 2.1 | $ | 20.6 | ||||||||
Certain tax adjustments (b) | $ | (2.1 | ) | $ | — | $ | (2.1 | ) | $ | (2.8 | ) |
(b) | In fiscal year 2011 and 2010, adjusted results include reversal of reserves previously taken against an uncertain tax position and in fiscal 2010, adjustments include an increased valuation allowance related to cash repatriations and foreign tax credits. |
Fee revenue was $197.3 million in Q4 FY’11 compared to $168.7 million in Q4 FY’10, an increase of $28.6 million, or 17%, which reflects increases in fee revenue from all segments of the business driven primarily by a 15% increase in the overall number of engagements billed as well as a 2% increase in the weighted-average fee billed per engagement compared to the year-ago fiscal quarter. On a constant currency basis fee revenue increased $21.9 million, or 13%.
Compensation and benefits were $133.5 million in Q4 FY’11, an increase of $15.4 million, or 13%, compared to $118.1 million in Q4 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 to a lesser extent to an increase in worldwide headcount. On a constant currency basis compensation and benefits increased $10.8 million, or 9%.
General and administrative expenses were $29.0 million in Q4 FY’11 and $28.4 million in Q4 FY’10, an increase of $0.6 million, or 2%. The increase is due primarily to an increase in bad debt provisions as a result of higher revenues and accounts receivable, an increase in premise and office expense and other general and administrative expenses, partially offset by a decrease in unrealized foreign exchange losses and a fair value contingent consideration adjustment from a prior acquisition. On a constant currency basis general and administrative expenses decreased $0.6 million, or 2%.
Operating income was $26.2 million in Q4 FY’11 compared to $13.6 million in Q4 FY’10 (or $13.7 million excluding restructuring charges in Q4 FY’10), an increase of $12.6 million (or $12.5 million excluding restructuring charges in Q4 FY’10).
Balance Sheet and Liquidity
Cash and marketable securities were $369.1 million at April 30, 2011 compared to $296.5 million at April 30, 2010. Cash and marketable securities included $71.4 million and $69.0 million, held in trust for deferred compensation plans, at April 30, 2011 and 2010, respectively. Cash and marketable securities increased by $72.6 million from April 30, 2010, mainly due to cash provided by operating activities partially offset by bonuses earned in FY’10 which were paid in FY’11.
Results by Segment
Selected Executive Recruitment Data
(dollars in millions)
(dollars in millions)
Fourth Quarter | Year to Date | |||||||||||||||
FY’11 | FY’10 | FY’11 | FY’10 | |||||||||||||
Fee revenue | $ | 172.0 | $ | 150.6 | $ | 654.1 | $ | 504.4 | ||||||||
Total revenue | $ | 178.8 | $ | 157.4 | $ | 680.3 | $ | 526.6 | ||||||||
Operating income | $ | 30.7 | $ | 23.1 | $ | 111.4 | $ | 38.2 | ||||||||
Operating margin | 17.9 | % | 15.4 | % | 17.0 | % | 7.6 | % | ||||||||
Ending number of consultants | 471 | 473 | 471 | 473 | ||||||||||||
Average number of consultants | 472 | 479 | 474 | 482 | ||||||||||||
Engagements billed | 4,096 | 3,673 | 11,501 | 9,164 | ||||||||||||
New engagements (a) | 2,131 | 1,925 | 7,905 | 6,505 |
Adjusted Results (b):
Fourth Quarter | Year to Date | |||||||||||||||
FY’11 | FY’10 | FY’11 | FY’10 | |||||||||||||
Operating income | $ | 30.7 | $ | 23.1 | $ | 113.6 | $ | 61.6 | ||||||||
Operating margin | 17.9 | % | 15.4 | % | 17.4 | % | 12.2 | % |
(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 year ended April 30, 2011 and 2010, respectively (see attached reconciliations). There were no adjustments during the three months ended April 30, 2011 and 2010. |
Fee revenue was $172.0 million in Q4 FY’11, an increase of $21.4 million, or 14%, when compared to fee revenue of $150.6 million in Q4 FY’10. Fee revenue increased in all regions due to a 12% increase in the number of executive recruitment engagements billed and a 2% increase in the weighted-average fee per engagement billed when compared to Q4 FY’10. Fee revenue increased $16.7 million on a constant currency basis.
Operating income was $30.7 million in Q4 FY’11 compared to $23.1 million in Q4 FY’10, an increase of $7.6 million. This increase is primarily attributed to the $21.4 million increase in executive recruitment fee revenue in Q4 FY’11 as compared to Q4 FY’10, which was partially offset by an $11.3 million and $2.5 million increase in compensation and benefits expense and general and administrative expenses, respectively. The increase in compensation and benefits expense primarily resulted from an increase in the variable component of compensation, and the increase in general and administrative expense was primarily driven by an increase in bad debt provisions and premise and office expense.
The total number of consultants at April 30, 2011 and 2010 was 471 and 473, respectively.
Selected Futurestep Data
(dollars in millions)
(dollars in millions)
Fourth Quarter | Year to Date | |||||||||||||||
FY’11 | FY’10 | FY’11 | FY’10 | |||||||||||||
Fee revenue | $ | 25.3 | $ | 18.1 | $ | 90.2 | $ | 68.0 | ||||||||
Total revenue | $ | 27.0 | $ | 19.5 | $ | 96.0 | $ | 73.0 | ||||||||
Operating income (loss) | $ | 1.5 | $ | (1.1 | ) | $ | 5.0 | $ | 1.3 | |||||||
Operating margin | 6.0 | % | (5.9 | )% | 5.5 | % | 1.9 | % |
Adjusted Results (a):
Fourth Quarter | Year to Date | |||||||||||||||
FY’11 | FY’10 | FY’11 | FY’10 | |||||||||||||
Operating income (loss) | $ | 1.5 | $ | (1.0 | ) | $ | 4.9 | $ | (1.5 | ) | ||||||
Operating margin | 6.0 | % | (5.5 | )% | 5.4 | % | (2.2 | )% |
(a) | Adjusted results are non-GAAP financial measures that exclude recoveries of restructuring charges of $0.1 million and $2.8 million during year ended April 30, 2011 and 2010, respectively. Adjusted results for the three months ended April 30, 2010 exclude restructuring charges of $0.1 million (see attached reconciliations). There were no adjustments during the three months ended April 30, 2011. |
Fee revenue was $25.3 million in Q4 FY’11, an increase of $7.2 million, or 40%, from $18.1 million in Q4 FY’10. The improvement in fee revenue was driven by a 26% increase in the number of engagements billed, as well as an 11% increase in the weighted-average fee billed per engagement. On a constant currency basis fee revenue increased $5.2 million, or 29%.
Operating income was $1.5 million in Q4 FY’11 compared to an operating loss of $1.1 million in Q4 FY’10. Q4 FY’10 operating loss includes $1.2 million in severance costs and $0.1 million restructuring costs which primarily relates to facility lease costs; without such charges, operating income would have been $0.2 million.
Outlook
Assuming constant foreign exchange rates, stable economic conditions and steady financial markets, Q1 FY’12 fee revenue is likely to be in the range of $190 million to $205 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 5:00 PM (EDT) 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. 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”). These non-GAAP financial measures include the following:
• | adjusted operating income (loss) and operating margin, adjusted to exclude charges (reductions) of restructuring charges, net; |
• | adjusted net income, adjusted to exclude restructuring charges (reductions), net and certain tax adjustments; |
• | adjusted basic and diluted earnings per share, adjusted to exclude restructuring charges (reductions) 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 INCOME
(in thousands, except per share amounts)
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
Three Months Ended | Year Ended | |||||||||||||||
April 30, | April 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(unaudited) | ||||||||||||||||
Fee revenue | $ | 197,298 | $ | 168,690 | $ | 744,249 | $ | 572,380 | ||||||||
Reimbursed out-of-pocket engagement expenses | 8,478 | 8,215 | 32,002 | 27,269 | ||||||||||||
Total revenue | 205,776 | 176,905 | 776,251 | 599,649 | ||||||||||||
Compensation and benefits | 133,554 | 118,225 | 507,405 | 413,340 | ||||||||||||
General and administrative expenses | 28,982 | 28,427 | 116,494 | 115,280 | ||||||||||||
Out-of-pocket engagement expenses | 13,674 | 13,495 | 51,766 | 41,585 | ||||||||||||
Depreciation and amortization | 3,320 | 3,049 | 12,671 | 11,493 | ||||||||||||
Restructuring charges, net | — | 80 | 2,130 | 20,673 | ||||||||||||
Total operating expenses | 179,530 | 163,276 | 690,466 | 602,371 | ||||||||||||
Operating income (loss) | 26,246 | 13,629 | 85,785 | (2,722 | ) | |||||||||||
Interest and other income, net | 3,024 | 2,080 | 3,919 | 7,444 | ||||||||||||
Income before provision (benefit) for income taxes and equity in earnings (loss) of unconsolidated subsidiaries | 29,270 | 15,709 | 89,704 | 4,722 | ||||||||||||
Income tax provision (benefit) | 9,285 | 6,245 | 32,692 | (485 | ) | |||||||||||
Equity in earnings (loss) of unconsolidated subsidiaries, net | 354 | (548 | ) | 1,862 | 91 | |||||||||||
Net income | $ | 20,339 | $ | 8,916 | $ | 58,874 | $ | 5,298 | ||||||||
Earnings per common share: | ||||||||||||||||
Basic | $ | 0.45 | $ | 0.20 | $ | 1.30 | $ | 0.12 | ||||||||
Diluted | $ | 0.43 | $ | 0.19 | $ | 1.27 | $ | 0.12 | ||||||||
Weighted-average common shares outstanding: | ||||||||||||||||
Basic | 45,700 | 44,783 | 45,205 | 44,413 | ||||||||||||
Diluted | 47,165 | 46,220 | 46,280 | 45,457 | ||||||||||||
KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
FINANCIAL SUMMARY BY SEGMENT
(in thousands)
(unaudited)
FINANCIAL SUMMARY BY SEGMENT
(in thousands)
(unaudited)
Three Months Ended | Year Ended | |||||||||||||||||||||||||||||||
April 30, | April 30, | |||||||||||||||||||||||||||||||
2011 | 2010 | % Change | 2011 | 2010 | % Change | |||||||||||||||||||||||||||
Fee Revenue: | ||||||||||||||||||||||||||||||||
Executive recruitment: | ||||||||||||||||||||||||||||||||
North America | $ | 96,939 | $ | 85,037 | 14 | % | $ | 375,971 | $ | 278,746 | 35 | % | ||||||||||||||||||||
EMEA (1) | 42,022 | 36,257 | 16 | % | 155,782 | 137,497 | 13 | % | ||||||||||||||||||||||||
Asia Pacific | 24,661 | 21,695 | 14 | % | 90,346 | 64,132 | 41 | % | ||||||||||||||||||||||||
South America | 8,357 | 7,630 | 10 | % | 31,959 | 24,026 | 33 | % | ||||||||||||||||||||||||
Total executive recruitment | 171,979 | 150,619 | 14 | % | 654,058 | 504,401 | 30 | % | ||||||||||||||||||||||||
Futurestep | 25,319 | 18,071 | 40 | % | 90,191 | 67,979 | 33 | % | ||||||||||||||||||||||||
Total fee revenue | 197,298 | 168,690 | 17 | % | 744,249 | 572,380 | 30 | % | ||||||||||||||||||||||||
Reimbursed out-of-pocket engagement expenses | 8,478 | 8,215 | 3 | % | 32,002 | 27,269 | 17 | % | ||||||||||||||||||||||||
Total revenue | $ | 205,776 | $ | 176,905 | 16 | % | $ | 776,251 | $ | 599,649 | 29 | % | ||||||||||||||||||||
Margin | Margin | Margin | Margin | |||||||||||||||||||||||||||||
Adjusted Operating Income (Loss): (Excluding Restructuring Charges) | ||||||||||||||||||||||||||||||||
Executive recruitment: | ||||||||||||||||||||||||||||||||
North America | $ | 19,765 | 20.4 | % | $ | 12,183 | 14.3 | % | $ | 80,345 | 21.4 | % | $ | 40,993 | 14.7 | % | ||||||||||||||||
EMEA | 5,131 | 12.2 | % | 3,514 | 9.7 | % | 14,197 | 9.1 | % | 9,423 | 6.8 | % | ||||||||||||||||||||
Asia Pacific | 4,494 | 18.2 | % | 5,826 | 26.9 | % | 11,611 | 12.9 | % | 8,065 | 12.6 | % | ||||||||||||||||||||
South America | 1,339 | 16.0 | % | 1,647 | 21.6 | % | 7,475 | 23.4 | % | 3,173 | 13.2 | % | ||||||||||||||||||||
Total executive recruitment | 30,729 | 17.9 | % | 23,170 | 15.4 | % | 113,628 | 17.4 | % | 61,654 | 12.2 | % | ||||||||||||||||||||
Futurestep | 1,515 | 6.0 | % | (1,002 | ) | (5.5 | %) | 4,856 | 5.4 | % | (1,485 | ) | (2.2 | %) | ||||||||||||||||||
Corporate (2) | (5,998 | ) | (8,459 | ) | (30,569 | ) | (42,218 | ) | ||||||||||||||||||||||||
Total adjusted operating income (loss) | $ | 26,246 | 13.3 | % | $ | 13,709 | 8.1 | % | $ | 87,915 | 11.8 | % | $ | 17,951 | 3.1 | % | ||||||||||||||||
Restructuring Charges (Reductions), net: | ||||||||||||||||||||||||||||||||
Executive recruitment: | ||||||||||||||||||||||||||||||||
North America | $ | — | 0.0 | % | $ | (332 | ) | (0.4 | %) | $ | (340 | ) | (0.1 | %) | $ | (1,611 | ) | (0.6 | %) | |||||||||||||
EMEA | — | 0.0 | % | 136 | 0.4 | % | 2,569 | 1.6 | % | 24,934 | 18.1 | % | ||||||||||||||||||||
Asia Pacific | — | 0.0 | % | 152 | 0.7 | % | — | 0.0 | % | 239 | 0.4 | % | ||||||||||||||||||||
South America | — | 0.0 | % | 60 | 0.8 | % | — | 0.0 | % | (113 | ) | (0.5 | %) | |||||||||||||||||||
Total executive recruitment | — | 0.0 | % | 16 | 0.0 | % | 2,229 | 0.4 | % | 23,449 | 4.6 | % | ||||||||||||||||||||
Futurestep | — | 0.0 | % | 64 | 0.4 | % | (99 | ) | (0.1 | %) | (2,776 | ) | (4.1 | %) | ||||||||||||||||||
Corporate | — | — | — | — | ||||||||||||||||||||||||||||
Total restructuring charges (reductions), net | $ | — | 0.0 | % | $ | 80 | 0.0 | % | $ | 2,130 | 0.3 | % | $ | 20,673 | 3.6 | % | ||||||||||||||||
Margin | Margin | Margin | Margin | |||||||||||||||||||||||||||||
Operating Income (Loss): | ||||||||||||||||||||||||||||||||
Executive recruitment: | ||||||||||||||||||||||||||||||||
North America | $ | 19,765 | 20.4 | % | $ | 12,515 | 14.7 | % | $ | 80,685 | 21.5 | % | $ | 42,604 | 15.3 | % | ||||||||||||||||
EMEA | 5,131 | 12.2 | % | 3,378 | 9.3 | % | 11,628 | 7.5 | % | (15,511 | ) | (11.3 | %) | |||||||||||||||||||
Asia Pacific | 4,494 | 18.2 | % | 5,674 | 26.2 | % | 11,611 | 12.9 | % | 7,826 | 12.2 | % | ||||||||||||||||||||
South America | 1,339 | 16.0 | % | 1,587 | 20.8 | % | 7,475 | 23.4 | % | 3,286 | 13.7 | % | ||||||||||||||||||||
Total executive recruitment | 30,729 | 17.9 | % | 23,154 | 15.4 | % | 111,399 | 17.0 | % | 38,205 | 7.6 | % | ||||||||||||||||||||
Futurestep | 1,515 | 6.0 | % | (1,066 | ) | (5.9 | %) | 4,955 | 5.5 | % | 1,291 | 1.9 | % | |||||||||||||||||||
Corporate (2) | (5,998 | ) | (8,459 | ) | (30,569 | ) | (42,218 | ) | ||||||||||||||||||||||||
Total operating income (loss) | $ | 26,246 | 13.3 | % | $ | 13,629 | 8.1 | % | $ | 85,785 | 11.5 | % | $ | (2,722 | ) | (0.5 | %) | |||||||||||||||
(1) | Includes revenues from acquisition of Whitehead Mann, closed on June 11, 2009. | |
(2) | 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 $2.8 million and $7.7 million during the three and twelve months ended April 30, 2011 compared to the three and twelve months ended April 30, 2010, respectively. |
KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
As of April 30, | ||||||||
2011 | 2010 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 246,856 | $ | 219,233 | ||||
Marketable securities | 20,868 | 4,114 | ||||||
Receivables due from clients, net of allowance for doubtful accounts of $9,977 and $5,983, respectively | 128,859 | 107,215 | ||||||
Income taxes and other receivables | 5,138 | 6,292 | ||||||
Deferred income taxes | 10,214 | 20,844 | ||||||
Prepaid expenses and other assets | 29,662 | 23,166 | ||||||
Total current assets | 441,597 | 380,864 | ||||||
Marketable securities, non-current | 101,363 | 73,105 | ||||||
Property and equipment, net | 43,142 | 24,963 | ||||||
Cash surrender value of company owned life insurance policies, net of loans | 70,987 | 69,069 | ||||||
Deferred income taxes | 64,418 | 59,742 | ||||||
Goodwill | 183,952 | 172,273 | ||||||
Intangible assets, net | 22,289 | 25,425 | ||||||
Investments and other assets | 43,932 | 21,657 | ||||||
Total assets | $ | 971,680 | $ | 827,098 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Accounts payable | $ | 12,504 | $ | 11,148 | ||||
Income taxes payable | 4,674 | 6,323 | ||||||
Compensation and benefits payable | 173,097 | 131,550 | ||||||
Other accrued liabilities | 43,591 | 49,062 | ||||||
Total current liabilities | 233,866 | 198,083 | ||||||
Deferred compensation and other retirement plans | 139,558 | 123,794 | ||||||
Other liabilities | 19,919 | 13,879 | ||||||
Total liabilities | 393,343 | 335,756 | ||||||
Stockholders’ equity | ||||||||
Common stock: $0.01 par value, 150,000 shares authorized, 59,101 and 57,614 shares issued and 47,003 and 45,979 shares outstanding, respectively | 404,703 | 388,717 | ||||||
Retained earnings | 148,494 | 90,220 | ||||||
Accumulated other comprehensive income, net | 25,660 | 12,934 | ||||||
Stockholders’ equity | 578,857 | 491,871 | ||||||
Less: notes receivable from stockholders | (520 | ) | (529 | ) | ||||
Total stockholders’ equity | 578,337 | 491,342 | ||||||
Total liabilities and stockholders’ equity | $ | 971,680 | $ | 827,098 | ||||
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)
CONSOLIDATED STATEMENTS OF INCOME
RECONCILIATION OF AS REPORTED (GAAP) TO AS ADJUSTED (NON-GAAP)
(in thousands, except per share amounts)
(unaudited)
Three Months Ended | ||||||||||||||||||||||||
April 30, 2011 | April 30, 2010 | |||||||||||||||||||||||
As Reported | Adjustments | As Adjusted | As Reported | Adjustments | As Adjusted | |||||||||||||||||||
Fee revenue | $ | 197,298 | $ | 197,298 | $ | 168,690 | $ | 168,690 | ||||||||||||||||
Reimbursed out-of-pocket engagement expenses | 8,478 | 8,478 | 8,215 | 8,215 | ||||||||||||||||||||
Total revenue | 205,776 | 205,776 | 176,905 | 176,905 | ||||||||||||||||||||
Compensation and benefits | 133,554 | 133,554 | 118,225 | 118,225 | ||||||||||||||||||||
General and administrative expenses | 28,982 | 28,982 | 28,427 | 28,427 | ||||||||||||||||||||
Out-of-pocket engagement expenses | 13,674 | 13,674 | 13,495 | 13,495 | ||||||||||||||||||||
Depreciation and amortization | 3,320 | 3,320 | 3,049 | 3,049 | ||||||||||||||||||||
Restructuring charges (reductions), net | — | — | — | 80 | (80 | ) | — | |||||||||||||||||
Total operating expenses | 179,530 | — | 179,530 | 163,276 | (80 | ) | 163,196 | |||||||||||||||||
Operating income | 26,246 | — | 26,246 | 13,629 | 80 | 13,709 | ||||||||||||||||||
Interest and other income, net | 3,024 | 3,024 | 2,080 | 2,080 | ||||||||||||||||||||
Income before provision for income taxes and equity in earnings (loss) of unconsolidated subsidiaries | 29,270 | — | 29,270 | 15,709 | 80 | 15,789 | ||||||||||||||||||
Income tax provision (1) (2) | 9,285 | 2,131 | 11,416 | 6,245 | 32 | 6,277 | ||||||||||||||||||
Equity in earnings (loss) of unconsolidated subsidiaries, net | 354 | 354 | (548 | ) | (548 | ) | ||||||||||||||||||
Net income | $ | 20,339 | $ | (2,131 | ) | $ | 18,208 | $ | 8,916 | $ | 48 | $ | 8,964 | |||||||||||
Earnings per common share: | ||||||||||||||||||||||||
Basic | $ | 0.45 | $ | 0.40 | $ | 0.20 | $ | 0.20 | ||||||||||||||||
Diluted | $ | 0.43 | $ | 0.39 | $ | 0.19 | $ | 0.19 | ||||||||||||||||
Weighted-average common shares outstanding: | ||||||||||||||||||||||||
Basic | 45,700 | 45,700 | 44,783 | 44,783 | ||||||||||||||||||||
Diluted | 47,165 | 47,165 | 46,220 | 46,220 | ||||||||||||||||||||
Explanation of Non-GAAP Adjustments
(1) | Calculated using an annual effective tax rate of 39% and 40%, adjusted for the three months ended April 30, 2011 and 2010, respectively. | |
(2) | The quarter ended April 30, 2011 includes a $2.1 million reversal of a reserve previously taken against an uncertain tax position. |
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)
CONSOLIDATED STATEMENTS OF INCOME
RECONCILIATION OF AS REPORTED (GAAP) TO AS ADJUSTED (NON-GAAP)
(in thousands, except per share amounts)
(unaudited)
Year Ended | ||||||||||||||||||||||||
April 30, 2011 | April 30, 2010 | |||||||||||||||||||||||
As Reported | Adjustments | As Adjusted | As Reported | Adjustments | As Adjusted | |||||||||||||||||||
Fee revenue | $ | 744,249 | $ | 744,249 | $ | 572,380 | $ | 572,380 | ||||||||||||||||
Reimbursed out-of-pocket engagement expenses | 32,002 | 32,002 | 27,269 | 27,269 | ||||||||||||||||||||
Total revenue | 776,251 | 776,251 | 599,649 | 599,649 | ||||||||||||||||||||
Compensation and benefits | 507,405 | 507,405 | 413,340 | 413,340 | ||||||||||||||||||||
General and administrative expenses | 116,494 | 116,494 | 115,280 | 115,280 | ||||||||||||||||||||
Out-of-pocket engagement expenses | 51,766 | 51,766 | 41,585 | 41,585 | ||||||||||||||||||||
Depreciation and amortization | 12,671 | 12,671 | 11,493 | 11,493 | ||||||||||||||||||||
Restructuring charges (reductions), net | 2,130 | (2,130 | ) | — | 20,673 | (20,673 | ) | — | ||||||||||||||||
Total operating expenses | 690,466 | (2,130 | ) | 688,336 | 602,371 | (20,673 | ) | 581,698 | ||||||||||||||||
Operating income (loss) | 85,785 | 2,130 | 87,915 | (2,722 | ) | 20,673 | 17,951 | |||||||||||||||||
Interest and other income, net | 3,919 | 3,919 | 7,444 | 7,444 | ||||||||||||||||||||
Income before provision (benefit) for income taxes and equity in earnings of unconsolidated subsidiaries | 89,704 | 2,130 | 91,834 | 4,722 | 20,673 | 25,395 | ||||||||||||||||||
Income tax provision (benefit) (1) (2) (3) | 32,692 | 2,952 | 35,644 | (485 | ) | 10,172 | 9,687 | |||||||||||||||||
Equity in earnings of unconsolidated subsidiaries, net | 1,862 | 1,862 | 91 | 91 | ||||||||||||||||||||
Net income | $ | 58,874 | $ | (822 | ) | $ | 58,052 | $ | 5,298 | $ | 10,501 | $ | 15,799 | |||||||||||
Earnings per common share: | ||||||||||||||||||||||||
Basic | $ | 1.30 | $ | 1.28 | $ | 0.12 | $ | 0.36 | ||||||||||||||||
Diluted | $ | 1.27 | $ | 1.25 | $ | 0.12 | $ | 0.35 | ||||||||||||||||
Weighted-average common shares outstanding: | ||||||||||||||||||||||||
Basic | 45,205 | 45,205 | 44,413 | 44,413 | ||||||||||||||||||||
Diluted | 46,280 | 46,280 | 45,457 | 45,457 | ||||||||||||||||||||
Explanation of Non-GAAP Adjustments
(1) | Calculated using an annual effective tax rate of 39% and 38%, adjusted for the year ended April 30, 2011 and 2010, respectively. | |
(2) | The year ended April 30, 2011 includes a $2.1 million reversal which is the net of a reserve previously taken against an uncertain tax position and the tax effect of restructuring charges. | |
(3) | The year ended April 30, 2010 includes a $10.3 million reversal of a reserve which is the net of previously taken against an uncertain tax position, tax effect of restructuring charges and an increased valuation allowance related to cash repatriations and foreign tax credits. |