Korn Ferry (KFY) 8-K Korn Ferry International Announces Fourth Quarter and Fiscal 2018

Exhibit 99.1

FOR IMMEDIATE RELEASE

Contacts:

Investor Relations: Gregg Kvochak, (310)556-8550

Media: Dan Gugler, (310)226-2645

Korn Ferry International Announces Fourth Quarter and Fiscal 2018

Results of Operations

Highlights

◾ Korn Ferry reports record annual fee revenue of $1,767.2 million, an increase of almost 13% year-over-year.

◾ Korn Ferry reports record fee revenue of $475.4 million in Q4 FY’18 an increase of 17% as compared to Q4 FY’17.

◾ Operating income was $63.3 million in Q4 FY’18 with an operating margin of 13.3%.  Adjusted EBITDA was $74.6 million with an Adjusted EBITDA margin of 15.7%.

◾ Q4 FY’18 diluted earnings per share was $0.73 compared to diluted earnings per share of $0.47 in Q4 FY’17.  Adjusted diluted earnings per share was $0.80 in Q4 FY’18, compared to Adjusted diluted earnings per share in Q4 FY’17 of $0.62.

◾ The Company declared a quarterly dividend of $0.10 per share on June 12, 2018 payable on July 13, 2018 to stockholders of record on June 26, 2018.

Los Angeles, CA, June 13, 2018– Korn/Ferry International (NYSE: KFY), a global organizational consulting firm, today announced record fourth quarter and annual fee revenue of $475.4 million and $1,767.2 million, respectively.  In addition, fourth quarter diluted earnings per share and Adjusted diluted earnings per share were $0.73 and $0.80, respectively.  Adjusted diluted earnings per share for the fourth quarter excluded $4.5 million, or $0.07 per share, comprised of the impact of the United States Tax Cut and Jobs Act (“Tax Act”) and retention awards related to the Hay Group acquisition.

“I am pleased to report fee revenue of $475 million and strong profitability, with diluted earnings per share and Adjusted diluted earnings per share of $0.73 and $0.80 and Adjusted EBITDA of approximately $75 million during our recently completed fourth quarter.  We achieved the highest fiscal year fee revenue in our firm’s history – up 13% year over year,” said Gary D. Burnison, CEO of Korn Ferry. “We’ve come a long way on our journey and I’m excited about the future – to be the preeminent organizational consultancy.  Today’s Korn Ferry is all about synchronizing our clients’ strategy and talent to help them drive superior performance.  We are never more powerful than when we come together as one firm – to help companies design their organization, to offer expertise on how they compensate, develop and motivate their people and to find out who candidates are.  Korn Ferry has the proven expertise to transform individuals, teams, even entire organizations.  In the fiscal year ahead, we will continue to bring talent and organizational strategies to life and unlock the potential within global workforces.”

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Selected Financial Results

(dollars in millions, except per share amounts)^(a)

	Fourth Quarter						Year to Date
	FY’18			FY’17			FY’18			FY’17
Fee revenue	$	475.4		$	406.1		$	1,767.2		$	1,565.5
Total revenue	$	488.4		$	419.6		$	1,819.5		$	1,621.7
Operating income	$	63.3		$	32.8		$	203.9		$	114.4
Operating margin		13.3	%		8.1	%		11.5	%		7.3	%
Net income attributable to Korn Ferry	$	41.2		$	26.9		$	133.8		$	84.2
Basic earnings per share	$	0.74		$	0.48		$	2.39		$	1.48
Diluted earnings per share	$	0.73		$	0.47		$	2.35		$	1.47
EBITDA Results (b):	Fourth Quarter						Year to Date
	FY’18			FY’17			FY’18			FY’17
EBITDA	$	71.8		$	49.5		$	264.3		$	173.9
EBITDA margin		15.1	%		12.2	%		15.0	%		11.1	%
Adjusted Results (c):	Fourth Quarter						Year to Date
	FY’18			FY’17			FY’18			FY’17
Adjusted fee revenue	$	475.4		$	406.1		$	1,767.2		$	1,569.1
Adjusted EBITDA (b)	$	74.6		$	60.1		$	273.8		$	235.0
Adjusted EBITDA margin (b)		15.7	%		14.8	%		15.5	%		15.0	%
Adjusted net income attributable to Korn Ferry	$	45.6		$	35.2		$	154.6		$	128.8
Adjusted basic earnings per share	$	0.82		$	0.62		$	2.76		$	2.27
Adjusted diluted earnings per share	$	0.80		$	0.62		$	2.72		$	2.24

(a) Numbers may not total due to rounding.

(b) EBITDA refers to earnings before interest, taxes, depreciation and amortization.  Adjusted EBITDA further adjusts EBITDA to exclude restructuring charges, net, integration/acquisition costs, separation costs and includes the FY’17 deferred revenue adjustment related to the acquisition of HG (Luxembourg) S.à.r.l (“Legacy Hay”)).  EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted EBITDA margin arenon-GAAP financial measures (see attached reconciliations).

(c) Adjusted results arenon-GAAP financial measures that adjust for the following, as applicable (see attached reconciliations):

	Fourth Quarter				Year to Date
	FY’18		FY’17		FY’18		FY’17
Income tax impact due to the enactment of the Tax Act	$	2.2	$	—	$	13.6	$	—
Restructuring charges, net	$	—	$	6.3	$	0.1	$	34.6
Integration/acquisition costs	$	2.8	$	3.7	$	9.4	$	22.4
Deferred revenue adjustment related to the Legacy Hay acquisition	$	—	$	—	$	—	$	3.5
Separation costs	$	—	$	0.6	$	—	$	0.6
Write-off of debt issuance costs	$	—	$	—	$	—	$	1.0

Fiscal 2018 Fourth Quarter Results

The Company reported record fee revenue in Q4 FY’18 of $475.4 million, an increase of $69.3 million or 17.1% (an increase of $51.7 million or 12.7% on a constant currency basis) compared to Q4 FY’17.  The organic growth was driven by all three lines of business:

Futurestep	31.4	%
Executive Search	17.5	%
Hay Group	12.1	%

Fee revenue growth in the fourth quarter was partially offset by increased compensation and benefits as well as general and administrative expenses resulting in operating income and Adjusted EBITDA growing 93.0% and 24.1%, respectively, as compared to Q4 FY’17 and diluted earnings per share and Adjusted diluted earnings per share growing 55.3% and 29.0%, respectively, as compared to Q4 FY’17.

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Fiscal 2018 Results

The Company reported record fee revenue in FY’18 of $1,767.2 million, an increase of $201.7 million or 12.9% (10.6% increase on a constant currency basis) compared to FY’17.  The organic growth was driven by all three lines of business:

Futurestep	22.1	%
Executive Search	14.8	%
Hay Group	8.4	%

Operating income was $203.9 million in FY’18 with an operating margin of 11.5% as compared to $114.4 million and 7.3%, respectively, in FY’17.  This increase in operating income resulted from higher fee revenue and a decrease in restructuring charges, net offset by increases in compensation and benefits expense and in general and administrative expenses.

Adjusted EBITDA was $273.8 million in FY’18 with an Adjusted EBITDA margin of 15.5% compared to $235.0 million and 15.0%, respectively, in theyear-ago period.

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Results by Segment

Selected Executive Search Data

(dollars in millions)^(a)

	Fourth Quarter						Year to Date
	FY’18			FY’17			FY’18			FY’17
Fee revenue	$	190.7		$	162.3		$	709.0		$	617.7
Total revenue	$	195.4		$	167.0		$	727.3		$	636.2
Operating income	$	46.9		$	30.6		$	149.3		$	124.3
Operating margin		24.6	%		18.8	%		21.0	%		20.1	%
Ending number of consultants		541			517			541			517
Average number of consultants		539			512			529			503
Engagements billed		3,876			3,530			9,808			9,008
New engagements (b)		1,590			1,525			6,325			5,933
EBITDA Results (c):	Fourth Quarter						Year to Date
	FY’18			FY’17			FY’18			FY’17
EBITDA	$	48.6		$	33.6		$	158.6		$	132.8
EBITDA margin		25.5	%		20.7	%		22.4	%		21.5	%
Adjusted Results (d):	Fourth Quarter						Year to Date
	FY’18			FY’17			FY’18			FY’17
Adjusted EBITDA (c)	$	48.6		$	34.2		$	158.9		$	137.4
Adjusted EBITDA margin (c)		25.5	%		21.1	%		22.4	%		22.2	%

(a) Numbers may not total due to rounding.

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

(c) EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted EBITDA margin arenon-GAAP financial measures (see attached reconciliations).

(d) Adjusted results arenon-GAAP financial measures that exclude the following (see attached reconciliations):

	Fourth Quarter				Year to Date
	FY’18		FY’17		FY’18		FY’17
Restructuring charges, net	$	—	$	0.6	$	0.3	$	4.6

Fee revenue was $190.7 million in Q4 FY’18, an increase of $28.4 million or 17.5% (an increase of $22.5 million or 13.9% on a constant currency basis) compared to Q4 FY’17.  The overall increase in fee revenue was attributable to higher fee revenue in all regions.

Operating income was $46.9 million in Q4 FY’18 compared to $30.6 million in Q4 FY’17.  Operating margin was 24.6% in Q4 FY’18 compared to 18.8% in theyear-ago quarter.  The increase in operating income was due to higher fee revenue, partially offset by an increase in compensation and benefits expense driven by a 4.8% increase in average headcount and performance related bonus expense.

Adjusted EBITDA was $48.6 million in Q4 FY’18 with an Adjusted EBITDA margin of 25.5% compared to $34.2 million and 21.1%, respectively, in theyear-ago quarter.

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Selected Hay Group Data

(dollars in millions)^(a)

	Fourth Quarter						Year to Date
	FY’18			FY’17			FY’18			FY’17
Fee revenue	$	207.6		$	185.1		$	785.0		$	724.2
Total revenue	$	211.9		$	188.7		$	801.0		$	741.5
Operating income	$	28.4		$	16.1		$	100.9		$	47.3
Operating margin		13.7	%		8.7	%		12.9	%		6.5	%
Ending number of consultants (b)		577			557			577			557
Staff utilization (c)		70	%		69	%		66	%		67	%
EBITDA Results (d):	Fourth Quarter						Year to Date
	FY’18			FY’17			FY’18			FY’17
EBITDA	$	36.0		$	24.3		$	133.1		$	79.9
EBITDA margin		17.3	%		13.1	%		17.0	%		11.0	%
Adjusted Results (e):	Fourth Quarter						Year to Date
	FY’18			FY’17			FY’18			FY’17
Adjusted fee revenue	$	207.6		$	185.1		$	785.0		$	727.7
Adjusted EBITDA (d)	$	38.7		$	33.0		$	142.0		$	128.2
Adjusted EBITDA margin (d)		18.6	%		17.8	%		18.1	%		17.6	%

(a) Numbers may not total due to rounding.

(b) Represents number of employees originating consulting services.

(c) Calculated by dividing the number of hours our full-time Hay Group professional staff record to engagements during the period, by the total available working hours during the same period.

(d) EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted EBITDA margin arenon-GAAP financial measures (see attached reconciliations).

(e) Adjusted results arenon-GAAP financial measures that adjust for the following (see attached reconciliations):

	Fourth Quarter				Year to Date
	FY’18		FY’17		FY’18			FY’17
Restructuring charges (recoveries), net	$	—	$	5.7	$	(0.2	)	$	29.7
Integration/acquisition costs	$	2.7	$	2.4	$	9.2		$	14.4
Deferred revenue adjustment related to the Legacy Hay acquisition	$	—	$	—	$	—		$	3.5
Separation costs	$	—	$	0.6	$	—		$	0.6

Fee revenue was $207.6 million in Q4 FY’18 compared to $185.1 million in Q4 FY’17, an increase of $22.5 million or 12.1% (7.3% on a constant currency basis) compared to theyear-ago quarter.  The higher fee revenue was primarily driven by a $16.9 million increase in consulting services with the remaining increase of $5.6 million generated by the products business.

Operating income was $28.4 million in Q4 FY’18, resulting in an operating margin of 13.7% in the current quarter compared to 8.7% in theyear-ago quarter.  Operating income increased by $12.3 million from operating income of $16.1 million in Q4 FY’17.  The change in operating income was primarily due to higher fee revenue compared to theyear-ago quarter and a $5.7 million decline in restructuring charges in the current quarter compared to theyear-ago quarter, partially offset by an increase in compensation and benefits expense driven by a 4.6% increase in average consultant headcount in Q4 FY’18 compared to Q4 FY’17 and an increase in performance related bonus expense.

Adjusted EBITDA was $38.7 million in Q4 FY’18 with an Adjusted EBITDA margin of 18.6% compared to $33.0 million and 17.8%, respectively, in theyear-ago quarter.

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Selected Futurestep Data

(dollars in millions)^(a)

	Fourth Quarter						Year to Date
	FY’18			FY’17			FY’18			FY’17
Fee revenue	$	77.1		$	58.7		$	273.2		$	223.7
Total revenue	$	81.0		$	63.9		$	291.2		$	243.9
Operating income	$	11.7		$	8.1		$	39.4		$	30.0
Operating margin		15.1	%		13.9	%		14.4	%		13.4	%
Engagements billed (b)		1,313			1,095			3,423			2,800
New engagements (c)		809			576			2,982			2,193
EBITDA Results (d):	Fourth Quarter						Year to Date
	FY’18			FY’17			FY’18			FY’17
EBITDA	$	12.5		$	8.8		$	42.6		$	32.7
EBITDA margin		16.3	%		15.0	%		15.6	%		14.6	%
Adjusted Results (e):	Fourth Quarter						Year to Date
	FY’18			FY’17			FY’18			FY’17
Adjusted EBITDA (d)	$	12.5		$	8.8		$	42.6		$	32.8
Adjusted EBITDA margin (d)		16.3	%		15.0	%		15.6	%		14.7	%

(a) Numbers may not total due to rounding.

(b) Represents search engagements billed.

(c) Represents new search engagements opened in the respective period.

(d) EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted EBITDA margin arenon-GAAP financial measures (see attached reconciliations).

(e) Adjusted results arenon-GAAP financial measures that exclude the following (see attached reconciliations):

	Fourth Quarter				Year to Date
	FY’18		FY’17		FY’18		FY’17
Restructuring charges, net	$	—	$	—	$	—	$	0.1

Fee revenue was $77.1 million in Q4 FY’18, an increase of $18.4 million or 31.4% (26.7% increase on a constant currency basis), compared to theyear-ago quarter.  The higher fee revenue was driven by an increase in recruitment process outsourcing and professional search of $11.0 million and $8.0 million, respectively, in Q4 FY’18 compared to Q4 FY’17.

Operating income was $11.7 million in Q4 FY’18, an increase of $3.6 million compared to Q4 FY’17 operating income of $8.1 million. Operating margin was 15.1% in the current quarter compared to 13.9% in theyear-ago quarter.  The change in operating income was primarily due to higher fee revenue compared to theyear-ago quarter, partially offset by an increase in compensation and benefits expense driven by a 37.0% increase in average headcount in Q4 FY’18 compared to Q4 FY’17 and an increase in performance related bonus expense.

Adjusted EBITDA was $12.5 million during Q4 FY’18, an increase of $3.7 million compared to Q4 FY’17.  Adjusted EBITDA margin was 16.3% in Q4 FY’18 compared to 15.0% in theyear-ago quarter.

Recent Developments

On June 12, 2018, the Company’s Board of Directors voted to approve a rebranding plan for the Company. This plan includes going to market under a single, master brand architecture, solely as Korn Ferry and sunsetting of all the Company’s sub-brands, including Futurestep, Hay Group and Lominger, among others. The Company is harmonizing under one brand to help accelerate the firm’s positioning as the preeminent organizational consultancy and bring more client awareness to its broad range of talent management solutions. The Hay Group back office was fully integrated as of the beginning of FY’18 and the Company then focused on its integrated go-to-market activities. This integrated go-to-market approach was a key driver in the 13% fee revenue growth in FY’18, which led to the decision to further integrate our go-to-market activities under one master brand – Korn Ferry. In the near term the Company will discontinue the use of all sub-brands. Two of the Company’s sub-brands, Hay Group and Lominger came to Korn Ferry through acquisitions. In connection with the accounting for these acquisitions, $106 million of the purchase price was allocated to indefinite lived tradename intangible assets. As a result of the decision to discontinue their use, the Company will take a one-time, non-cash intangible asset impairment charge of $106 million, or $79 million on an after-tax basis in Q1 FY’19.

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Outlook

Assuming worldwide economic conditions, financial markets and foreign exchange rates remain steady, on a consolidated basis:

◾ Q1 FY’19 fee revenue is expected to be in the range of $450 million and $470 million; and

◾ Q1 FY’19 diluted loss per share is likely to range between ($0.74) to ($0.66).

On a consolidated adjusted basis:

◾ Q1 FY’19 Adjusted diluted earnings per share is expected to be in the range from $0.67 to $0.75.

	Q1 FY’19 Earnings (Loss) Per Share Outlook (1)
	Low			High
Consolidated diluted loss per share	$	(0.74	)	$	(0.66	)
Impairment charge		1.87			1.87
Retention bonuses		0.04			0.04
Tax rate impact		(0.50	)		(0.50	)
Consolidated Adjusted diluted earnings per share	$	0.67		$	0.75

(1) Consolidated Adjusted diluted earnings per share is anon-GAAP financial measure that excludes the items listed in the table.

Earnings Conference Call Webcast

The earnings conference call will be held today at 8:30 AM (EDT) and hosted by CEO Gary Burnison, CFO Robert Rozek and SVP Finance Gregg Kvochak.  The conference call will be webcast and available online atir.kornferry.com.  We will also post to this section of our website earnings slides, which will accompany our webcast, and other important information, and encourage you to review the information that we make available on our website.

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About Korn Ferry

Korn Ferry is a global organizational consulting firm.  We help companies design their organization – the structure, the roles and responsibilities, as well as how they compensate, develop and motivate their people.  As importantly, we help organizations select and hire the talent they need to execute their strategy.  Our approximately 7,000 colleagues serve clients in more than 50 countries.  Visitkornferry.com for more information.

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, changes in demand for our services as a result of automation, the dependence on attracting and retaining qualified and experienced consultants, maintain relationships with customers and suppliers and retain key employees, maintaining our brand name and professional reputation, potential legal liability and regulatory developments, 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 growth, alignment of our cost structure, restrictions imposed byoff-limits agreements, reliance on information processing systems, cyber security vulnerabilities, changes to data security, data privacy and data protection laws, limited protection of our intellectual property, our ability to enhance and develop new technology, our ability to develop new products and services, the utilization and billing rates of our consultants, our ability to successfully recover from a disaster or other business continuity problems, changes in our accounting estimates/assumptions, tax accounting effects of the Tax Act, impairment of goodwill and other intangible assets, deferred tax assets that we may not be able to use, seasonality, risks related to the integration of recently acquired businesses and employment liability risk. For a detailed description of risks and uncertainties that could cause differences, please refer to Korn Ferry’s periodic filings with the Securities and Exchange Commission. Korn Ferry disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Use ofNon-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 net income attributable to Korn/Ferry International, adjusted to exclude the tax impact associated with the Tax Act, restructuring (recoveries) charges, net, integration/acquisition costs, separation costs andwrite-off of debt issuance costs and to include the deferred revenue adjustment related to the Legacy Hay acquisition, net of income tax effect;

◾ Adjusted basic and diluted earnings per share, adjusted to exclude the tax impact associated with the Tax Act, restructuring (recoveries) charges, net, integration/acquisition costs, separation costs andwrite-off of debt issuance costs and to include the deferred revenue adjustment related to the Legacy Hay acquisition, net of income tax effect; and in the case of the outlook section, also adjusted for tax rate impact;

◾ Constant currency (calculated using a quarterly average) 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;

◾ EBITDA, or earnings before interest, taxes, depreciation and amortization and EBITDA margin;

◾ Adjusted EBITDA, which is EBITDA further adjusted to exclude restructuring (recoveries) charges, net, integration/acquisition costs, separation costs and to include the deferred revenue adjustment related to the Legacy Hay acquisition and Adjusted EBITDA margin; and

◾ Adjusted fee revenue, which includes revenue that Hay Group would have realized over the ensuing year after acquisition if not for business combination accounting that requires a company to record the acquisition balance sheet at fair value andwrite-off deferred revenue where no future services are required to be performed to earn that revenue.

Thisnon-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 tonon-GAAP performance measures that may be presented by other companies.

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Management believes the presentation ofnon-GAAP financial measures in this press release provides meaningful supplemental information regarding Korn Ferry’s performance by excluding certain charges and other items that may not

be indicative of Korn Ferry’s ongoing operating results. Thesenon-GAAP financial measures are performance measures and are not indicative of the liquidity of Korn Ferry. These charges represent 1) the tax impact associated with the Tax Act, 2) costs we incurred to acquire and integrate the Legacy Hay acquisition, 3) charges we incurred to restructure the combined company due to the acquisition of Legacy Hay, 4) separation costs, 5) debt issuance costswritten-off upon replacement of our credit facility and 6) revenue that Hay Group would have realized if not for business combination accounting that requires a company to record the acquisition balance sheet at fair value andwrite-off deferred revenue where no future services are required to be performed to earn that revenue. As such, reported fee revenue can make fee revenue and operating results appear to fluctuate more than they would if business combination accounting did not require deferred revenue to be written off. Adjusted fee revenue is not a measure that substitutes an individually tailored revenue recognition or measurement method for those of GAAP, rather, it is an adjustment for a short period of time that will provide better comparability in the current and future periods. Management believes the presentation of adjusted fee revenue assists management in its evaluation of ongoing operations and provides useful information to investors because it allows investors to make more meaningfulperiod-to-period comparisons of the Company’s operating results, to better identify operating trends that may otherwise be distorted by write-offs required under business combination accounting 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. Management no longer has adjusted fee revenue after Q1 FY’17. The use ofnon-GAAP financial measures facilitates comparisons to Korn Ferry’s historical performance. Korn Ferry includesnon-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. Management further believes that EBITDA is useful to investors because it is frequently used by investors and other interested parties to measure operating performance among companies with different capital structures, effective tax rates and tax attributes and capitalized asset values, all of which can vary substantially from company to company. In the case of constant currency amounts, management believes the presentation of such information provides useful 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 meaningfulperiod-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]

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KORN FERRY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

	Three Months Ended April 30						Year Ended April 30
	2018			2017			2018			2017
	(unaudited)
Fee revenue	$	475,364		$	406,065		$	1,767,217		$	1,565,521
Reimbursedout-of-pocket engagement expenses		13,000			13,522			52,302			56,148
Total revenue		488,364			419,587			1,819,519			1,621,669
Compensation and benefits		317,871			275,493			1,203,619			1,071,507
General and administrative expenses		62,010			59,938			237,390			226,232
Reimbursed expenses		13,000			13,522			52,302			56,148
Cost of services		20,495			19,231			73,658			71,482
Depreciation and amortization		11,707			12,290			48,588			47,260
Restructuring charges, net		—			6,279			78			34,600
Total operating expenses		425,083			386,753			1,615,635			1,507,229
Operating income		63,281			32,834			203,884			114,440
Other (loss) income, net		(3,322	)		4,240			11,525			11,820
Interest expense, net		(1,772	)		(2,052	)		(9,676	)		(10,251	)
Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries		58,187			35,022			205,733			116,009
Equity in earnings of unconsolidated subsidiaries		110			112			297			333
Income tax provision		15,988			7,398			70,133			29,104
Net income		42,309			27,736			135,897			87,238
Net income attributable to noncontrolling interest		(1,149	)		(812	)		(2,118	)		(3,057	)
Net income attributable to Korn/Ferry International	$	41,160		$	26,924		$	133,779		$	84,181
Earnings per common share attributable to Korn/Ferry International:
Basic	$	0.74		$	0.48		$	2.39		$	1.48
Diluted	$	0.73		$	0.47		$	2.35		$	1.47
Weighted-average common shares outstanding:
Basic		55,266			55,845			55,426			56,205
Diluted		56,147			56,571			56,254			56,900
Cash dividends declared per share:	$	0.10		$	0.10		$	0.40		$	0.40

KORN FERRY AND SUBSIDIARIES

FINANCIAL SUMMARY BY SEGMENT

(in thousands)

(unaudited)

	Three Months Ended April 30,													Year Ended April 30,
	2018						2017				% Change			2018						2017				% Change
Fee Revenue:
Executive search:
North America		$	112,005					$	97,264			15.2	%		$	408,098					$	356,625			14.4	%
EMEA			45,476						37,210			22.2	%			173,725						146,506			18.6	%
Asia Pacific			24,612						20,061			22.7	%			96,595						80,169			20.5	%
Latin America			8,576						7,731			10.9	%			30,624						34,376			(10.9	%)
Total executive search			190,669						162,266			17.5	%			709,042						617,676			14.8	%
Hay Group			207,551						185,100			12.1	%			785,013						724,186			8.4	%
Futurestep			77,144						58,699			31.4	%			273,162						223,659			22.1	%
Total fee revenue			475,364						406,065			17.1	%			1,767,217						1,565,521			12.9	%
Reimbursedout-of-pocket engagement expenses			13,000						13,522			(3.9	%)			52,302						56,148			(6.8	%)
Total revenue		$	488,364					$	419,587			16.4	%		$	1,819,519					$	1,621,669			12.2	%
Operating Income (Loss):					Margin						Margin							Margin						Margin
Executive search:
North America		$	33,784			30.2%		$	21,092			21.7	%		$	100,037			24.5%		$	81,550			22.9	%
EMEA			6,419			14.1%			6,805			18.3	%			26,768			15.4%			27,854			19.0	%
Asia Pacific			5,614			22.8%			2,364			11.8	%			18,425			19.1%			8,580			10.7	%
Latin America			1,061			12.4%			302			3.9	%			4,022			13.1%			6,268			18.2	%
Total executive search			46,878			24.6%			30,563			18.8	%			149,252			21.0%			124,252			20.1	%
Hay Group			28,407			13.7%			16,114			8.7	%			100,939			12.9%			47,302			6.5	%
Futurestep			11,661			15.1%			8,137			13.9	%			39,363			14.4%			29,986			13.4	%
Corporate			(23,665	)					(21,980	)						(85,670	)					(87,100	)
Total operating income		$	63,281			13.3%		$	32,834			8.1	%		$	203,884			11.5%		$	114,440			7.3	%

KORN FERRY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

	April 30 2018				April 30, 2017
ASSETS
Cash and cash equivalents		$	520,848			$	410,882
Marketable securities			14,293				4,363
Receivables due from clients, net of allowance for doubtful accounts of $17,845 and $15,455 at April 30, 2018 and 2017, respectively			384,996				345,314
Income taxes and other receivables			29,089				31,573
Prepaid expenses and other assets			65,033				51,542
Total current assets			1,014,259				843,674
Marketable securities,non-current			122,792				115,574
Property and equipment, net			119,901				109,567
Cash surrender value of company owned life insurance policies, net of loans			120,087				113,067
Deferred income taxes			25,520				20,175
Goodwill			584,222				576,865
Intangible assets, net			203,216				217,319
Investments and other assets			97,917				66,657
Total assets		$	2,287,914			$	2,062,898
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable		$	35,196			$	37,481
Income taxes payable			23,034				4,526
Compensation and benefits payable			304,980				248,354
Term loan			24,911				19,754
Other accrued liabilities			170,339				148,464
Total current liabilities			558,460				458,579
Deferred compensation and other retirement plans			227,729				219,905
Term loan,non-current			211,311				236,222
Deferred tax liabilities			9,105				7,014
Other liabilities			61,694				54,130
Total liabilities			1,068,299				975,850
Stockholders’ equity
Common stock: $0.01 par value, 150,000 shares authorized, 71,631 and 70,811 shares issued and 56,517 and 56,938 shares outstanding at April 30, 2018 and 2017, respectively			683,942				692,527
Retained earnings			572,800				461,976
Accumulated other comprehensive loss, net			(40,135	)			(71,064	)
Total Korn/Ferry International stockholders’ equity			1,216,607				1,083,439
Noncontrolling interest			3,008				3,609
Total stockholders’ equity			1,219,615				1,087,048
Total liabilities and stockholders’ equity		$	2,287,914			$	2,062,898

KORN FERRY AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(in thousands, except per share amounts)

	Three Months Ended April 30						Year Ended April 30
	2018			2017			2018			2017
	(unaudited)
Fee revenue	$	475,364		$	406,065		$	1,767,217		$	1,565,521
Deferred revenue adjustment due to acquisition (1)		—			—			—			3,535
Adjusted fee revenue	$	475,364		$	406,065		$	1,767,217		$	1,569,056
Operating income	$	63,281		$	32,834		$	203,884		$	114,440
Depreciation and amortization		11,707			12,290			48,588			47,260
Other (loss) income, net		(3,322	)		4,240			11,525			11,820
Equity in earnings of unconsolidated subsidiaries, net		110			112			297			333
EBITDA		71,776			49,476			264,294			173,853
Deferred revenue adjustment due to acquisition (1)		—			—			—			3,535
Restructuring charges, net (2)		—			6,279			78			34,600
Integration/acquisition costs (3)		2,776			3,702			9,430			22,379
Separation costs (4)		—			609			—			609
Adjusted EBITDA	$	74,552		$	60,066		$	273,802		$	234,976
Operating margin		13.3%			8.1%			11.5%			7.3%
Depreciation and amortization		2.5%			3.0%			2.8%			3.0%
Other (loss) income, net		(0.7%	)		1.1%			0.7%			0.8%
Equity in earnings of unconsolidated subsidiaries, net		—			—			—			—
EBITDA margin		15.1%			12.2%			15.0%			11.1%
Deferred revenue adjustment due to acquisition (1)		—			—			—			0.2%
Restructuring charges, net (2)		—			1.5%			—			2.2%
Integration/acquisition costs (3)		0.6%			0.9%			0.5%			1.4%
Separation costs (4)		—			0.2%			—			0.1%
Adjusted EBITDA margin		15.7%			14.8%			15.5%			15.0%
Net income attributable to Korn/Ferry International	$	41,160		$	26,924		$	133,779		$	84,181
Deferred revenue adjustment due to acquisition (1)		—			—			—			3,535
Restructuring charges, net (2)		—			6,279			78			34,600
Integration/acquisition costs (3)		2,776			3,702			9,430			22,379
Separation costs (4)		—			609			—			609
Write-off of debt issuance costs (5)		—			—			—			954
Tax effect on the above items (6)		(541	)		(2,364	)		(2,314	)		(17,438	)
Impact of Tax Act (7)		2,237			—			13,582			—
Adjusted net income attributable to Korn/Ferry International	$	45,632		$	35,150		$	154,555		$	128,820
Basic earnings per common share	$	0.74		$	0.48		$	2.39		$	1.48
Deferred revenue adjustment due to acquisition (1)		—			—			—			0.06
Restructuring charges, net (2)		—			0.10			—			0.61
Integration/acquisition costs (3)		0.05			0.07			0.17			0.40
Separation costs (4)		—			0.01			—			0.01
Write-off of debt issuance costs (5)		—			—			—			0.02
Tax effect on the above items (6)		(0.01	)		(0.04	)		(0.04	)		(0.31	)
Impact of Tax Act (7)		0.04			—			0.24			—
Adjusted basic earnings per share	$	0.82		$	0.62		$	2.76		$	2.27
Diluted earnings per common share	$	0.73		$	0.47		$	2.35		$	1.47
Deferred revenue adjustment due to acquisition (1)		—			—			—			0.06
Restructuring charges, net (2)		—			0.10			—			0.60
Integration/acquisition costs (3)		0.05			0.07			0.17			0.39
Separation costs (4)		—			0.01			—			0.01
Write-off of debt issuance costs (5)		—			—			—			0.02
Tax effect on the above items (6)		(0.01	)		(0.03	)		(0.04	)		(0.31	)
Impact of Tax Act (7)		0.03			—			0.24			—
Adjusted diluted earnings per share	$	0.80		$	0.62		$	2.72		$	2.24

Explanation of Non-GAAP Adjustments

(1) This represents the deferred revenue recorded on the opening balance sheet of Hay Group, required by fair value accounting.  The adjustment is included in the Hay Group segment for the year-ended April 30, 2017.  Management no longer has adjusted fee revenue after Q1 FY’17.

(2) Restructuring plan implemented in order to rationalize our cost structure by eliminating redundant positions and consolidating office space due to the acquisition of Legacy Hay on December 1, 2015.

(3) Costs associated with completing the acquisition of Legacy Hay, such as legal and professional fees, and the on-going integration expenses to combine the companies.

(4) Certain senior management separation charges.

(5) Write-off of debt issuance costs as a result of replacing our prior Credit Agreement with a new senior secured Credit Agreement.

(6) Tax effect on deferred revenue adjustment associated with the acquisition of Legacy Hay, restructuring charges, net, integration/acquisition costs, separation costs and write-off of debt issuance cost.

(7) The tax impact due to provisional tax charge recorded as a result of the Tax Act.

KORN FERRY AND SUBSIDIARIES

RECONCILIATION OF NET INCOME AND OPERATING INCOME (GAAP) TO

EBITDA AND ADJUSTED EBITDA(NON-GAAP)

(in thousands)

(unaudited)

	Three Months Ended April 30, 2018
	Executive Search
	North America			EMEA		Asia Pacific			Latin America		Subtotal			Hay Group			Futurestep			Corporate			Consolidated
Fee revenue	$	112,005		$	45,476	$	24,612		$	8,576	$	190,669		$	207,551		$	77,144		$	—		$	475,364
Total revenue	$	115,394		$	46,340	$	25,053		$	8,603	$	195,390		$	211,912		$	81,062		$	—		$	488,364
Net income attributable to Korn/Ferry International																							$	41,160
Net income attributable to noncontrolling interest																								1,149
Other loss, net																								3,322
Interest expense, net																								1,772
Equity in earnings of unconsolidated subsidiaries, net																								(110	)
Income tax provision																								15,988
Operating income (loss)	$	33,784		$	6,419	$	5,614		$	1,061	$	46,878		$	28,407		$	11,661		$	(23,665	)		63,281
Depreciation and amortization		1,007			344		356			124		1,831			7,417			741			1,718			11,707
Other (loss) income, net		(312	)		32		(11	)		82		(209	)		140			142			(3,395	)		(3,322	)
Equity in earnings of unconsolidated subsidiaries, net		110			—		—			—		110			—			—			—			110
EBITDA		34,589			6,795		5,959			1,267		48,610			35,964			12,544			(25,342	)		71,776
EBITDA margin		30.9%			14.9%		24.2%			14.8%		25.5%			17.3%			16.3%						15.1%
Integration/acquisition costs		—			—		—			—		—			2,696			—			80			2,776
Adjusted EBITDA	$	34,589		$	6,795	$	5,959		$	1,267	$	48,610		$	38,660		$	12,544		$	(25,262	)	$	74,552
Adjusted EBITDA margin		30.9%			14.9%		24.2%			14.8%		25.5%			18.6%			16.3%						15.7%
	Three Months Ended April 30, 2017
	Executive Search
	North America			EMEA		Asia Pacific			Latin America		Subtotal			Hay Group			Futurestep			Corporate			Consolidated
Fee revenue	$	97,264		$	37,210	$	20,061		$	7,731	$	162,266		$	185,100		$	58,699		$	—		$	406,065
Total revenue	$	100,501		$	38,392	$	20,299		$	7,767	$	166,959		$	188,711		$	63,917		$	—		$	419,587
Net income attributable to Korn/Ferry International																							$	26,924
Net income attributable to noncontrolling interest																								812
Other income, net																								(4,240	)
Interest expense, net																								2,052
Equity in earnings of unconsolidated subsidiaries, net																								(112	)
Income tax provision																								7,398
Operating income (loss)	$	21,092		$	6,805	$	2,364		$	302	$	30,563		$	16,114		$	8,137		$	(21,980	)		32,834
Depreciation and amortization		996			364		303			216		1,879			8,160			737			1,514			12,290
Other income (loss), net		332			22		129			526		1,009			(5	)		(87	)		3,323			4,240
Equity in earnings of unconsolidated subsidiaries, net		112			—		—			—		112			—			—			—			112
EBITDA		22,532			7,191		2,796			1,044		33,563			24,269			8,787			(17,143	)		49,476
EBITDA margin		23.2%			19.3%		13.9%			13.5%		20.7%			13.1%			15.0%						12.2%
Restructuring charges, net		13			501		(20	)		104		598			5,656			21			4			6,279
Integration/acquisition costs		—			—		—			—		—			2,447			—			1,255			3,702
Separation costs		—			—		—			—		—			609			—			—			609
Adjusted EBITDA	$	22,545		$	7,692	$	2,776		$	1,148	$	34,161		$	32,981		$	8,808		$	(15,884	)	$	60,066
Adjusted EBITDA margin		23.2%			20.7%		13.8%			14.8%		21.1%			17.8%			15.0%						14.8%

KORN FERRY AND SUBSIDIARIES

RECONCILIATION OF NET INCOME AND OPERATING INCOME (GAAP) TO

EBITDA AND ADJUSTED EBITDA(NON-GAAP)

(in thousands)

	Year Ended April 30, 2018
	Executive Search
	North America		EMEA			Asia Pacific		Latin America		Subtotal		Hay Group			Futurestep			Corporate			Consolidated
Fee revenue	$	408,098	$	173,725		$	96,595	$	30,624	$	709,042	$	785,013		$	273,162		$	—		$	1,767,217
Total revenue	$	421,260	$	177,234		$	98,062	$	30,717	$	727,273	$	801,005		$	291,241		$	—		$	1,819,519
Net income attributable to Korn/Ferry International																					$	133,779
Net income attributable to noncontrolling interest																						2,118
Other income, net																						(11,525	)
Interest expense, net																						9,676
Equity in earnings of unconsolidated subsidiaries, net																						(297	)
Income tax provision																						70,133
Operating income (loss)	$	100,037	$	26,768		$	18,425	$	4,022	$	149,252	$	100,939		$	39,363		$	(85,670	)		203,884
Depreciation and amortization		3,930		1,689			1,408		455		7,482		31,527			3,054			6,525			48,588
Other income, net		845		168			373		181		1,567		599			152			9,207			11,525
Equity in earnings of unconsolidated subsidiaries, net		297		—			—		—		297		—			—			—			297
EBITDA		105,109		28,625			20,206		4,658		158,598		133,065			42,569			(69,938	)		264,294
EBITDA margin		25.8%		16.5%			20.9%		15.2%		22.4%		17.0%			15.6%						15.0%
Restructuring charges (recoveries), net		—		—			313		—		313		(241	)		6			—			78
Integration/acquisition costs		—		—			—		—		—		9,151			—			279			9,430
Adjusted EBITDA	$	105,109	$	28,625		$	20,519	$	4,658	$	158,911	$	141,975		$	42,575		$	(69,659	)	$	273,802
Adjusted EBITDA margin		25.8%		16.5%			21.2%		15.2%		22.4%		18.1%			15.6%						15.5%
	Year Ended April 30, 2017
	Executive Search
	North America		EMEA			Asia Pacific		Latin America		Subtotal		Hay Group			Futurestep			Corporate			Consolidated
Fee revenue	$	356,625	$	146,506		$	80,169	$	34,376	$	617,676	$	724,186		$	223,659		$	—		$	1,565,521
Deferred revenue adjustment due to acquisition		—		—			—		—		—		3,535			—			—			3,535
Adjusted fee revenue	$	356,625	$	146,506		$	80,169	$	34,376	$	617,676	$	727,721		$	223,659		$	—		$	1,569,056
Total revenue	$	369,803	$	150,113		$	81,744	$	34,533	$	636,193	$	741,533		$	243,943		$	—		$	1,621,669
Net income attributable to Korn/Ferry International																					$	84,181
Net income attributable to noncontrolling interest																						3,057
Other income, net																						(11,820	)
Interest expense, net																						10,251
Equity in earnings of unconsolidated subsidiaries, net																						(333	)
Income tax provision																						29,104
Operating income (loss)	$	81,550	$	27,854		$	8,580	$	6,268	$	124,252	$	47,302		$	29,986		$	(87,100	)		114,440
Depreciation and amortization		3,812		1,030			1,060		483		6,385		32,262			2,818			5,795			47,260
Other income (loss), net		844		(15	)		300		684		1,813		341			(91	)		9,757			11,820
Equity in earnings of unconsolidated subsidiaries, net		333		—			—		—		333		—			—			—			333
EBITDA		86,539		28,869			9,940		7,435		132,783		79,905			32,713			(71,548	)		173,853
EBITDA margin		24.3%		19.7%			12.4%		21.6%		21.5%		11.0%			14.6%						11.1%
Restructuring charges, net		1,719		629			1,495		773		4,616		29,663			101			220			34,600
Integration/acquisition costs		—		—			—		—		—		14,440			—			7,939			22,379
Deferred revenue adjustment due to acquisition		—		—			—		—		—		3,535			—			—			3,535
Separation Costs		—		—			—		—		—		609			—			—			609
Adjusted EBITDA	$	88,258	$	29,498		$	11,435	$	8,208	$	137,399	$	128,152		$	32,814		$	(63,389	)	$	234,976
Adjusted EBITDA margin		24.7%		20.1%			14.3%		23.9%		22.2%		17.6%			14.7%						15.0%