Korn Ferry (KFY) 8-K Korn/Ferry International Announces Second Quarter Fiscal 2009 Earnings

Exhibit 99.1

For Immediate Release

Contacts: For investors:
Investor Relations: Stephen Giusto, (310) 843-4144
Gregg Kvochak, (310) 556-8550
For Media: Mike Distefano, (310) 843-4199

Korn/Ferry International Announces Second Quarter Fiscal 2009 Earnings

Highlights

• Second quarter fiscal 2009 diluted earnings per share was $0.30 compared to $0.37 in Q2’08.

• Second quarter fiscal 2009 fee revenue was $189.3 million, compared to $195.9 million in the same quarter last year.

Los Angeles, CA, December 10, 2008- Korn/Ferry International (NYSE:KFY), a premier global provider of talent management solutions, announced second quarter fiscal 2009 diluted earnings per share of $0.30 compared to $0.37 in Q2’08.

“Given the difficult economic environment, we are relatively pleased with our results for the second quarter,” said Gary D. Burnison, CEO, Korn/Ferry. “However, recently the climate has grown increasingly challenging for our clients. Thanks to the breadth of our offerings we are well positioned to help them manage their human capital strategies through this downturn. Fortunately, we are navigating from a position of strength with $280 million of cash and marketable securities on our balance sheet, no debt, a globally recognized brand and a team of leading colleagues around the world. We plan to maneuver through this volatility seizing opportunity and taking market share.”

Financial Results
(dollars in millions, except per share amounts)

	Second Quarter						Year to date
	Q2’09			Q2’08			Q2’09			Q2’08
Fee Revenue	$	189.3		$	195.9		$	395.0		$	381.2
Revenue	$	199.7		$	206.8		$	417.2		$	403.1
Operating Income	$	21.5		$	25.4		$	45.2		$	50.5
Operating Margin		11.4	%		13.0	%		11.5	%		13.2	%
Net Income	$	13.6		$	17.1		$	29.5		$	34.2
Basic Earnings Per Share	$	0.31		$	0.38		$	0.68		$	0.76
Diluted Earnings Per Share	$	0.30		$	0.37		$	0.66		$	0.74

Fee revenue was $189.3 million in Q2’09 compared to $195.9 million in Q2’08, a decrease of 3.4%. Fee revenue declined due to a decrease in executive search revenues in all geographies offset by an increase in Futurestep revenues. The global economic and financial crisis resulted in a decline in the number of executive search engagements opened compared to a year ago and the average fee billed per executive search engagement decreased by 4.5% compared to the prior year. Changes in exchange rates impacted fee revenue in Q2’09 unfavorably by $1.3 million from Q2’08 and excluding this unfavorable impact revenues decreased 2.7% over the prior year’s second quarter.

Compensation and benefits were $129.7 million in Q2’09, a decrease of $0.7 million compared to $130.4 million in Q2’08. The decrease is primarily attributable to a reduction in profitability based compensation.

General and administrative expenses were $32.3 million in Q2’09, a decrease of $1.9 million, or 5.6% from $34.2 million in Q2’08. The decrease is primarily attributable to cost reduction efforts and realized gains on foreign exchange transactions.

Operating income was $21.5 million in Q2’09 compared to $25.4 million in Q2’08, a decrease of $3.9 million over Q2’08.

Balance Sheet and Liquidity

Cash, cash equivalents and marketable securities were $279.8 million at October 31, 2008 compared to $242.0 million at October 31, 2007. The increase was due primarily to an increase in cash provided by operating activities offset by company stock repurchases.

Interest expense was $1.1 million in Q2’09 and $1.2 million in the same period last year. Interest expense in both years related primarily to borrowings under Korn/Ferry’s COLI policies. At October 31, 2008, Korn/Ferry had no outstanding borrowings under its credit facility.

Results by Segment

Selected Executive Recruitment Data
(dollars in millions)

	Second Quarter						Year to date
	Q2’09			Q2’08			Q2’09			Q2’08
Fee Revenue	$	160.2		$	169.1		$	334.8		$	328.8
Revenue	$	167.8		$	176.5		$	350.7		$	343.1
Operating Income	$	26.6		$	33.0		$	58.3		$	65.6
Operating Margin		16.6	%		19.5	%		17.4	%		20.0	%
Average number of consultants		536			519			529			507
Engagements (a)		1,669			1,879			3,589			3,653

(a) Represents new engagements opened in the respective period.

Fee revenue was $160.2 million in Q2’09, a decrease of $8.9 million from $169.1 million in Q2’08. Fee revenue decreased in all regions due to a decrease in the overall number of engagements billed offset by an overall increase in the average fee per engagement. Changes in exchange rates from Q2’08 impacted fee revenue in Q2’09 unfavorably by $0.9 million.

Operating income was $26.6 million in Q2’09 compared to $33.0 million in Q2’08 resulting in a decrease of $6.4 million from the prior year.

The total number of consultants at October 31, 2008 was 535, an increase of 12 from October 31, 2007.

Selected Futurestep Data
(dollars in millions)

	Second Quarter						Year to date
	Q2’09			Q2’08			Q2’09			Q2’08
Fee Revenue	$	29.1		$	26.8		$	60.3		$	52.4
Revenue	$	31.9		$	30.4		$	66.5		$	60.0
Operating Income	$	1.2		$	1.5		$	4.1		$	3.6
Operating Margin		4.2	%		5.7	%		6.8	%		6.9	%

Fee revenue was $29.1 million in Q2’09, an increase of $2.3 million, or 8.9%, from $26.8 million in Q2’08. Improvements in fee revenue were driven by an increase in the number of engagements billed, offset by a slight decrease in the average fee per engagement. Changes in exchange rates from Q2’08 impacted fee revenue in Q2’09 unfavorably by $0.4 million.

Operating income was $1.2 million in Q2’09 compared to $1.5 million in Q2’08.

Outlook

Assuming constant foreign exchange rates, Korn/Ferry estimates that third quarter fiscal 2009 fee revenue is likely to be in the range of $140 million to $160 million and diluted earnings per share is likely to be in the range of $0.08 to $0.18, prior to approximately $11 million to $15 million in expenses related to rationalizing the cost structure to the current economic environment. However, due to the current extraordinary economic conditions, the ability to predict new business is more difficult than normal. If new business deteriorates, the Company’s results may be below the guidance provided above.

Earnings Conference Call Webcast

The earnings conference call will be held today at 9:00 AM (EST) and hosted by Gary Burnison, Chief Executive Officer, and Stephen Giusto, Chief Financial Officer. 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 more than 90 offices in 39 countries, is a premier global provider of talent management solutions. Based in Los Angeles, the firm delivers an array of solutions that help clients to identify, deploy, develop, retain and reward their talent. For more information on the Korn/Ferry International family of companies, visit www.kornferry.com.

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 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.

[Tables attached]

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)

	Three Months Ended					Six Months Ended
	October 31,					October 31,
	2008			2007		2008			2007
	(unaudited)			(unaudited)
Fee revenue	$	189,300		$	195,857	$	395,033		$	381,210
Reimbursed out-of-pocket engagement expenses		10,437			10,967		22,176			21,891
Total revenue		199,737			206,824		417,209			403,101
Compensation and benefits		129,748			130,404		271,871			253,390
General and administrative expense		32,323			34,212		66,353			65,913
Out-of-pocket engagement expenses		13,297			14,287		28,030			28,414
Depreciation and amortization		2,881			2,539		5,713			4,889
Total operating expense		178,249			181,442		371,967			352,606
Operating income		21,488			25,382		45,242			50,495
Interest and other income, net		(1,184	)		799		(804	)		2,297
Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries		20,304			26,181		44,438			52,792
Provision for income taxes		7,583			9,966		16,876			20,400
Equity in earnings of unconsolidated subsidiaries, net		839			894		1,902			1,817
Net income	$	13,560		$	17,109	$	29,464		$	34,209
Basic earnings per common share	$	0.31		$	0.38	$	0.68		$	0.76
Basic weighted average common shares outstanding		43,776			44,529		43,604			44,785
Diluted earnings per common share	$	0.30		$	0.37	$	0.66		$	0.74
Diluted weighted average common shares outstanding		44,676			45,841		44,590			46,573

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)

	As of			As of
	October 31, 2008			April 30, 2008
	(unaudited)
ASSETS
Cash and cash equivalents	$	199,228		$	305,296
Marketable securities		2,377			5,940
Receivables due from clients, net of allowance for doubtful accounts of $11,937 and $11,504, respectively		125,453			119,952
Income taxes and other receivables		5,753			7,071
Deferred income taxes		9,714			10,401
Prepaid expenses		24,316			20,057
Total current assets		366,841			468,717
Marketable securities, non-current		78,237			78,026
Property and equipment, net		31,504			32,462
Cash surrender value of company owned life insurance policies, net of loans		77,753			81,377
Deferred income taxes		42,258			47,128
Goodwill		124,228			142,699
Intangible assets, net		15,243			15,519
Other assets		15,643			14,286
Total assets	$	751,707		$	880,214
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	10,550		$	15,309
Income taxes payable		9,270			20,948
Compensation and benefits payable		112,872			199,081
Other accrued liabilities		32,565			37,120
Total current liabilities		165,257			272,458
Deferred compensation and other retirement plans		101,490			105,719
Other liabilities		4,963			5,903
Total liabilities		271,710			384,080
Shareholders’ equity
Common stock: $0.01 par value, 150,000 shares authorized, 56,077 and 54,786 shares issued and 44,734 and 44,593 shares outstanding, respectively		361,938			358,568
Retained earnings		124,478			95,014
Accumulated other comprehensive income		(5,877	)		43,097
Shareholders’ equity		480,539			496,679
Less: Notes receivable from shareholders		(542	)		(545	)
Total shareholders’ equity		479,997			496,134
Total liabilities and shareholders’ equity	$	751,707		$	880,214

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
FINANCIAL SUMMARY BY SEGMENT
(in thousands)
(unaudited)

	Three Months Ended				Six Months Ended
	October 31,				October 31,
	2008		2007		2008		2007
Fee Revenue:
Executive recruitment:
North America	$	91,697	$	94,862	$	185,671	$	182,176
EMEA		40,486		42,058		92,076		86,780
Asia Pacific		21,187		24,656		42,590		47,317
South America		6,828		7,497		14,413		12,567
Total executive recruitment		160,198		169,073		334,750		328,840
Futurestep		29,102		26,784		60,283		52,370
Total fee revenue		189,300		195,857		395,033		381,210
Reimbursed out-of-pocket engagement expenses		10,437		10,967		22,176		21,891
Total revenue	$	199,737	$	206,824	$	417,209	$	403,101

				Margin						Margin						Margin						Margin
Operating Income (Loss):
Executive recruitment:
North America	$	16,197			17.7	%	$	21,388			22.5	%	$	34,834			18.8	%	$	41,179			22.6	%
EMEA		5,910			14.6	%		6,064			14.4	%		14,396			15.6	%		13,755			15.9	%
Asia Pacific		3,267			15.4	%		4,614			18.7	%		6,743			15.8	%		9,151			19.3	%
South America		1,214			17.8	%		884			11.8	%		2,294			15.9	%		1,545			12.3	%
Total executive recruitment		26,588			16.6	%		32,950			19.5	%		58,267			17.4	%		65,630			20.0	%
Futurestep		1,221			4.2	%		1,532			5.7	%		4,076			6.8	%		3,616			6.9	%
Corporate		(6,321	)					(9,100	)					(17,101	)					(18,751	)
Total operating income	$	21,488			11.4	%	$	25,382			13.0	%	$	45,242			11.5	%	$	50,495			13.2	%