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Exhibit 99.1

For Immediate Release

Contacts:

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

For Media: Dan Gugler, (310) 226-2645

Korn Ferry International Announces First Quarter Fiscal 2016

Results of Operations

Highlights

 

    Korn Ferry reports fee revenue of $267.4 million in the first quarter of fiscal 2016, an increase of $16.2 million, or 6.4% ($32.5 million, or 12.9% on a constant currency basis), from Q1 FY’15, with increases realized across all segments on a constant currency basis:

 

Futurestep

     27.3

Leadership and Talent Consulting

     13.7 % (5.5% organically) 

Executive Recruitment

     8.8

 

    Adjusted EBITDA margin increased 50 basis points to 15.6% in Q1 FY’16 compared to 15.1% in Q1 FY’15.

 

    Adjusted diluted earnings per share was $0.47 in Q1 FY’16, excluding $0.7 million of integration/acquisition costs, and $0.43 in Q1 FY’15 excluding $9.9 million of restructuring charges. Q1 FY’16 diluted earnings per share was $0.46 compared to $0.29 in Q1 FY’15.

 

    The Company declared a quarterly dividend of $0.10 per share on September 7, 2015, payable on October 15, 2015 to stockholders of record on September 25, 2015.

Los Angeles, CA, September 8, 2015 – Korn/Ferry International (NYSE: KFY), the preeminent authority on leadership and talent, today announced first quarter fee revenue of $267.4 million and adjusted diluted earnings per share of $0.47, excluding integration/acquisition costs of $0.7 million. On a GAAP basis, diluted earnings per share was $0.46 in the three months ended July 31, 2015.

“For our fiscal first quarter we reported 13% year over year growth at constant currency and growth within all of our service lines,” said Gary D. Burnison, CEO, Korn Ferry. “Our Futurestep offering continued to deliver outsized results growing 27% year over year at constant currency. Our strong performance reaffirms that Korn Ferry is increasingly the people advisory firm that organizations turn to for the people strategies that deliver business strategies.”


Financial Results

(dollars in millions, except per share amounts)

 

     First Quarter  
     FY’16     FY’15  

Fee revenue

   $ 267.4      $ 251.2   

Total revenue

   $ 279.3      $ 260.3   

Operating income

   $ 32.9      $ 18.6   

Operating margin

     12.3     7.4

Net income

   $ 23.1      $ 14.5   

Basic earnings per share

   $ 0.46      $ 0.30   

Diluted earnings per share

   $ 0.46      $ 0.29   

EBITDA Results (a):

    
     First Quarter  
     FY’16     FY’15  

EBITDA

   $ 41.0      $ 28.0   

EBITDA margin

     15.3     11.1

Adjusted Results (b):

    
     First Quarter  
     FY’16     FY’15  

EBITDA (a)

   $ 41.7      $ 37.9   

EBITDA margin (a)

     15.6     15.1

Net income

   $ 23.5      $ 21.5   

Basic earnings per share

   $ 0.47      $ 0.44   

Diluted earnings per share

   $ 0.47      $ 0.43   

 

(a) EBITDA refers to earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA further adjusts EBITDA to exclude restructuring charges and integration/acquisition costs. EBITDA, EBITDA margin, adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures (see attached reconciliation).

 

(b) Adjusted results are non-GAAP financial measures that exclude the following (see attached reconciliations):

 

     First Quarter  
     FY’16      FY’15  

Integration/acquisition costs

   $ 0.7       $ —     

Restructuring charges, net

   $ —         $ 9.9   

Fee revenue was $267.4 million in Q1 FY’16, an increase of $16.2 million, or 6.4% ($32.5 million, or 12.9% on a constant currency basis), compared to Q1 FY’15, primarily due to increases of $6.9 million, $5.6 million, and $3.7 million in fee revenue in Futurestep, Leadership & Talent Consulting, and Executive Recruitment, respectively. The overall fee revenue increase was driven by fee revenue growth in certain of our major markets – financial services, life science/healthcare and technology, partially offset by a decline in industrial and consumer goods.

Compensation and benefit expenses were $179.5 million in Q1 FY’16, an increase of $10.4 million, or 6.2%, compared to the year-ago quarter. The increase was driven, in part, by higher salaries and related payroll taxes and employee insurance due to a 12% increase in the average headcount in Q1 FY’16 compared to Q1 FY’15, reflecting our continued growth-related investments back into our business. Performance related bonus expense was also higher due to an increase in fee revenue and profitability as a result of the continued adoption of our strategy, including referrals between lines of business.

General and administrative expenses were $37.5 million in Q1 FY’16, relatively flat compared to $37.4 million in Q1 FY’15.


Adjusted EBITDA was $41.7 million in Q1 FY’16, an increase of $3.8 million, or 10.0%, compared to Q1 FY’15. Adjusted EBITDA margin was 15.6% and 15.1% in Q1 FY’16 and Q1 FY’15, respectively. The increase in Adjusted EBITDA was primarily driven by higher fee revenues offset by an increase in both compensation and benefit expenses and other loss, net. The increase in other loss, net was due in large part to the decrease in the fair value of our marketable securities in Q1 FY’16 compared to the year-ago quarter.

On a GAAP basis, operating income was $32.9 million in Q1 FY’16 and $18.6 million in Q1 FY’15 resulting in an operating margin of 12.3% in Q1 FY’16 compared to 7.4% in the year-ago quarter. The increase in operating income was primarily driven by higher fee revenues and a decrease in restructuring charges, net offset by an increase in compensation and benefit expenses. Restructuring charges, net of $9.9 million were recorded during Q1 FY’15 with no such charge taken in Q1 FY’16.

Balance Sheet and Liquidity

Cash and marketable securities were $414.5 million at July 31, 2015, compared to $525.4 million at April 30, 2015. Cash and marketable securities decreased by $110.9 million from April 30, 2015, primarily due to Q1 FY’16 payments of FY’15 annual bonuses and $5.1 million in dividend payments made to stockholders during the quarter, partially offset by cash provided by operating activities. Net of amounts held in trust for deferred compensation plans and accrued bonuses, cash and marketable securities were $237.5 million and $235.6 million at July 31, 2015 and April 30, 2015, respectively. As of July 31, 2015 and April 30, 2015, we held $149.5 million and $143.4 million, respectively, of cash and cash equivalents in foreign locations, net of amounts held in trust for deferred compensation plans and bonuses.

The Company declared a quarterly dividend of $0.10 per share on September 7, 2015, payable on October 15, 2015 to stockholders of record on September 25, 2015.


Results by Segment

Selected Executive Recruitment Data

(dollars in millions)

 

     First Quarter  
     FY’16     FY’15  

Fee revenue

   $ 152.1      $ 148.4   

Total revenue

   $ 158.0      $ 154.2   

Operating income

   $ 34.9      $ 24.2   

Operating margin

     23.0     16.3

Ending number of consultants

     486        442   

Average number of consultants

     469        437   

Engagements billed

     3,001        3,033   

New engagements (a)

     1,372        1,252   

EBITDA Results (b):

    
     First Quarter  
     FY’16     FY’15  

EBITDA

   $ 36.9      $ 26.4   

EBITDA margin

     24.3     17.8

Adjusted Results (c):

    
     First Quarter  
     FY’16     FY’15  

EBITDA (b)

   $ 36.9      $ 31.9   

EBITDA margin (b)

     24.3     21.5

 

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

 

(b) EBITDA, EBITDA margin, adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures (see attached reconciliations).

 

(c) Adjusted results are non-GAAP financial measures that exclude the following (see attached reconciliations):

 

     First Quarter  
     FY’16      FY’15  

Restructuring charges, net

   $  —         $ 5.5   

Executive Recruitment

Fee revenue was $152.1 million in Q1 FY’16, an increase of $3.7 million, or 2.5% (an increase of $13.1 million, or 8.8% on a constant currency basis), compared to Q1 FY’15. The overall increase in fee revenue was primarily attributable to a 3.7% increase in the weighted-average fees billed per engagement, partially offset by a 1.1% decrease in the number of engagements billed in Q1 FY’16 compared to Q1 FY’15. On a regional basis, fee revenue increased in North America by $8.1 million, or 9.8% ($8.9 million, or 10.8% on a constant currency basis), South America by $0.1 million, or 1.6% ($1.6 million, or 25.4% on a constant currency basis), partially offset by a decline in EMEA by $4.2 million, or 10.4% (an increase of $1.2 million, or 3.0% on a constant currency basis) and Asia Pacific by $0.3 million, or 1.5% (an increase of $1.4 million, or 7.2% on a constant currency basis).

Adjusted EBITDA was $36.9 million and $31.9 million during Q1 FY’16 and Q1 FY’15, respectively. The increase in Adjusted EBITDA was driven by higher fee revenue of $3.7 million and a decrease in general and administrative expenses of $2.2 million partially offset by increases in compensation and benefit expenses of $1.5 million. The increase in compensation and benefit expenses was


primarily due to an increase in performance related bonus expense resulting from an increase in average headcount and fee revenue, partially offset by a decline in the fair value of the vested amounts owed under certain deferred compensation plans in Q1 FY’16 compared to Q1 FY’15. General and administrative expenses were lower due to a change from a foreign exchange loss in Q1 FY’15 to a foreign exchange gain in Q1 FY’16 and a decline in both premise and office expense and other general and administrative expenses.

Operating income was $34.9 million in Q1 FY’16, an increase of $10.7 million, or 44.2%, compared to Q1 FY’15, resulting in operating margin of 23.0% in Q1 FY’16 compared to 16.3% in Q1 FY’15. Operating income was impacted by all of the above items and a decrease in restructuring charges, net of $5.5 million that was recorded in Q1 FY’15 with no such charge in Q1 FY’16.

Selected Leadership & Talent Consulting Data

(dollars in millions)

 

     First Quarter  
     FY’16     FY’15  

Fee revenue

   $ 69.2      $ 63.6   

Total revenue

   $ 71.4      $ 65.4   

Operating income

   $ 7.5      $ 3.4   

Operating margin

     10.8     5.4

Ending number of consultants (a)

     181        127   

Staff utilization (b)

     68     70

EBITDA Results (c):

    
     First Quarter  
     FY’16     FY’15  

EBITDA

   $ 10.4      $ 6.9   

EBITDA margin

     15.0     10.9

Adjusted Results (d):

    
     First Quarter  
     FY’16     FY’15  

EBITDA (c)

   $ 10.7      $ 9.7   

EBITDA margin (c)

     15.5     15.2

 

(a) Represents number of employees originating consulting services.

 

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

 

(c) EBITDA, EBITDA margin, adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures (see attached reconciliations).

 

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

 

     First Quarter  
     FY’16      FY’15  

Integration/acquisition costs

   $ 0.3       $ —     

Restructuring charges, net

   $ —         $ 2.8   

Leadership & Talent Consulting

Fee revenue was $69.2 million in Q1 FY’16, an increase of $5.6 million, or 8.8% ($8.7 million, or 13.7% on a constant currency basis), from the year-ago quarter. This increase is primarily attributed to higher consulting fee revenue of $4.3 million in Q1 FY’16 compared to Q1 FY’15 with the remaining increase being generated by product revenue. The increase in consulting fee revenue includes $5.2 million of fee revenue from Pivot Leadership which was acquired on March 1, 2015.


Adjusted EBITDA was $10.7 million during Q1 FY’16, an increase of $1.0 million, or 10.3%, compared to Q1 FY’15 due to higher fee revenue of $5.6 million, partially offset by an increase in compensation and benefit expenses of $2.5 million and increases in both costs of services and other loss, net of $1.1 million. The increase in compensation and benefit expenses was primarily due to an increase in salaries and related payroll taxes as a result of higher average headcount in Q1 FY’16 compared to the year-ago quarter. The higher headcount and cost of services reflects our continued growth-related investments back into our business.

Operating income was $7.5 million in Q1 FY’16, an increase of $4.1 million compared to Q1 FY’15, resulting in an operating margin of 10.8% in the current quarter compared to 5.4% in the year-ago quarter. The increase in operating income was due to the factors impacting Adjusted EBITDA as discussed above and a decrease in restructuring charges, net of $2.8 million that were recorded in Q1 FY’15 with no such charge in Q1 FY’16.

Selected Futurestep Data

(dollars in millions)

 

     First Quarter  
     FY’16     FY’15  

Fee revenue

   $ 46.1      $ 39.2   

Total revenue

   $ 49.9      $ 40.7   

Operating income

   $ 6.2      $ 3.5   

Operating margin

     13.4     8.8

Engagements billed

     1,311        1,233   

New engagements (a)

     557        573   

EBITDA Results (b):

    
     First Quarter  
     FY’16     FY’15  

EBITDA

   $ 6.8      $ 3.9   

EBITDA margin

     14.7     9.9

Adjusted Results (c):

    
     First Quarter  
     FY’16     FY’15  

EBITDA (b)

   $ 6.8      $ 5.3   

EBITDA margin (b)

     14.7     13.6

 

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

 

(b) EBITDA, EBITDA margin, adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures (see attached reconciliations).

 

(c) Adjusted results are non-GAAP financial measures that exclude the following (see attached reconciliations):

 

     First Quarter  
     FY’16      FY’15  

Restructuring charges, net

   $ —         $ 1.4   

Futurestep

Fee revenue was $46.1 million in Q1 FY’16, an increase of $6.9 million, or 17.6% ($10.7 million, or 27.3% on a constant currency basis), compared to the year-ago quarter. The higher fee revenue was driven by a 10.4% increase in the weighted average fees billed per engagement and a 6.3% increase in engagements billed in Q1 FY’16 compared to Q1 FY’15.


Adjusted EBITDA was $6.8 million during Q1 FY’16, an increase of $1.5 million, or 28.3%, compared to Q1 FY’15, due primarily to the increase in fee revenue of $6.9 million, partially offset by higher compensation and benefit expenses of $4.6 million and an increase in general and administrative expenses of $0.7 million. The increase in compensation and benefit expenses was driven by higher salaries and related payroll taxes and vacation expense as a result of a 26% increase in average headcount and an increase in the use of outside contractors. The higher average headcount and increase in use of outside contractors are both related to the higher levels of fee revenue driven by the continued adoption of our strategy, including referrals between lines of business. The increase in general and administrative expenses was due primarily to higher premise and office expense in Q1 FY’16 compared to the year-ago quarter.

Operating income was $6.2 million in Q1 FY’16, an increase of $2.7 million, compared to Q1 FY’15, resulting in an operating margin of 13.4% in the current quarter compared to 8.8% in the year-ago quarter. The increase in operating income was due to the same factors impacting Adjusted EBITDA and a decrease in restructuring charges, net of $1.4 million that were recorded in Q1 FY’15 with no such charge in Q1 FY’16.

Outlook

We expect the strong U.S. dollar will continue to negatively impact our FY’16 second quarter year-over-year revenue growth. Assuming worldwide economic conditions and financial markets remain where they are currently and considering the effect of foreign exchange rates, fee revenue is expected to be in the range of $267 million to $277 million in Q2 FY’16, and diluted earnings per share are likely to be in the range of $0.47 to $0.53.

Earnings Conference Call Webcast

The earnings conference call will be held today at 4:30 PM (EDT) 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. 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.

 

 

About Korn Ferry

Korn Ferry is the preeminent authority on leadership and talent. For nearly half a century, clients have trusted us to recruit world-class leaders. Today, we are their partner in designing organizational strategy and developing their people to achieve unimaginable success. For more information, visit www.kornferry.com.


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, our ability to successfully integrate acquired businesses, 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 growth, alignment of our cost structure with our growth, restrictions imposed by off-limits agreements, reliance on information processing systems, cyber security vulnerabilities, limited protection of our intellectual property, our ability to enhance and develop new technology, our ability to develop new products and services, consolidation of industries we serve, our ability to successfully recover from a disaster or other business continuity problems, changes in our accounting estimates/assumptions, impairment of goodwill and other intangible assets, deferred tax assets, seasonality, our ability to successfully rationalize our cost structure 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 net income, adjusted to exclude restructuring charges and integration and acquisition costs, net of income tax effect;

 

    adjusted basic and diluted earnings per share, adjusted to exclude restructuring charges and integration and acquisition costs, net of income tax effect;

 

    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;

 

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

 

    adjusted EBITDA, which is EBITDA further adjusted to exclude restructuring charges, and integration and acquisition costs, and adjusted EBITDA margin.

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 and other items 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 information 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 AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

 

     Three Months Ended
July 31,
 
     2015     2014  
     (unaudited)  

Fee revenue

   $ 267,394      $ 251,188   

Reimbursed out-of-pocket engagement expenses

     11,941        9,137   
  

 

 

   

 

 

 

Total revenue

     279,335        260,325   
  

 

 

   

 

 

 

Compensation and benefits

     179,456        169,106   

General and administrative expenses

     37,491        37,368   

Reimbursed expenses

     11,941        9,137   

Cost of services

     10,120        9,465   

Depreciation and amortization

     7,423        6,770   

Restructuring charges, net

     —          9,886   
  

 

 

   

 

 

 

Total operating expenses

     246,431        241,732   
  

 

 

   

 

 

 

Operating income

     32,904        18,593   

Other (loss) income, net

     (74     2,177   

Interest expense, net

     (299     (794
  

 

 

   

 

 

 

Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries

     32,531        19,976   

Equity in earnings of unconsolidated subsidiaries

     725        466   

Income tax provision

     10,174        5,909   
  

 

 

   

 

 

 

Net income

   $ 23,082      $ 14,533   
  

 

 

   

 

 

 

Earnings per common share:

    

Basic

   $ 0.46      $ 0.30   
  

 

 

   

 

 

 

Diluted

   $ 0.46      $ 0.29   
  

 

 

   

 

 

 

Weighted-average common shares outstanding:

    

Basic

     49,493        48,703   
  

 

 

   

 

 

 

Diluted

     50,014        49,591   
  

 

 

   

 

 

 


KORN FERRY AND SUBSIDIARIES

FINANCIAL SUMMARY BY SEGMENT

(in thousands)

(unaudited)

 

     Three Months Ended July 31,  
     2015           2014     % Change  

Fee Revenue:

        

Executive recruitment:

        

North America

   $ 90,359        $ 82,300        10

EMEA

     36,090          40,297        (10 %) 

Asia Pacific

     19,215          19,534        (2 %) 

South America

     6,426          6,284        2
  

 

 

     

 

 

   

Total executive recruitment

     152,090          148,415        2

Leadership & Talent Consulting

     69,240          63,548        9

Futurestep

     46,064          39,225        17
  

 

 

     

 

 

   

Total fee revenue

     267,394          251,188        6

Reimbursed out-of-pocket engagement expenses

     11,941          9,137        31
  

 

 

     

 

 

   

Total revenue

   $ 279,335        $ 260,325        7
  

 

 

     

 

 

   
Operating Income:          Margin           Margin  

Executive recruitment:

        

North America

   $ 24,145        26.7   $ 18,998        23.1

EMEA

     6,276        17.4     2,643        6.6

Asia Pacific

     2,986        15.5     2,522        12.9

South America

     1,508        23.5     73        1.2
  

 

 

     

 

 

   

Total executive recruitment

     34,915        23.0     24,236        16.3

Leadership & Talent Consulting

     7,495        10.8     3,460        5.4

Futurestep

     6,189        13.4     3,457        8.8

Corporate

     (15,695       (12,560  
  

 

 

     

 

 

   

Total operating income

   $ 32,904        12.3   $ 18,593        7.4
  

 

 

     

 

 

   


KORN FERRY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

 

     July 31,
2015
    April 30,
2015
 
     (unaudited)        
ASSETS     

Cash and cash equivalents

   $ 276,514      $ 380,838   

Marketable securities

     19,859        25,757   

Receivables due from clients, net of allowance for doubtful accounts of $10,344 and $9,958 respectively

     199,533        188,543   

Income taxes and other receivables

     9,835        10,966   

Deferred income taxes

     1,211        3,827   

Prepaid expenses and other assets

     35,923        31,054   
  

 

 

   

 

 

 

Total current assets

     542,875        640,985   
  

 

 

   

 

 

 

Marketable securities, non-current

     118,079        118,819   

Property and equipment, net

     61,800        62,088   

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

     105,111        102,691   

Deferred income taxes

     53,506        56,014   

Goodwill

     250,835        254,440   

Intangible assets, net

     45,655        47,901   

Investments and other assets

     44,683        34,863   
  

 

 

   

 

 

 

Total assets

   $ 1,222,544      $ 1,317,801   
  

 

 

   

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY     

Accounts payable

   $ 18,005      $ 19,238   

Income taxes payable

     1,819        3,813   

Compensation and benefits payable

     120,961        219,364   

Other accrued liabilities

     62,098        63,595   
  

 

 

   

 

 

 

Total current liabilities

     202,883        306,010   
  

 

 

   

 

 

 

Deferred compensation and other retirement plans

     174,988        173,432   

Other liabilities

     22,974        23,110   
  

 

 

   

 

 

 

Total liabilities

     400,845        502,552   
  

 

 

   

 

 

 

Stockholders’ equity

    

Common stock: $0.01 par value, 150,000 shares authorized, 63,549 and 62,863 shares issued and 51,195 and 50,573 shares outstanding, respectively

     467,511        463,839   

Retained earnings

     410,000        392,033   

Accumulated other comprehensive loss, net

     (55,812     (40,623
  

 

 

   

 

 

 

Total stockholders’ equity

     821,699        815,249   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 1,222,544      $ 1,317,801   
  

 

 

   

 

 

 


KORN FERRY 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  
     July 31, 2015     July 31, 2014  
     As Reported     Adjustments     As Adjusted     As Reported     Adjustments     As Adjusted  

Fee revenue

   $ 267,394        $ 267,394      $ 251,188        $ 251,188   

Reimbursed out-of-pocket engagement expenses

     11,941          11,941        9,137          9,137   
  

 

 

     

 

 

   

 

 

     

 

 

 

Total revenue

     279,335          279,335        260,325          260,325   
  

 

 

     

 

 

   

 

 

     

 

 

 

Compensation and benefits

     179,456        (329     179,127        169,106          169,106   

General and administrative expenses

     37,491        (345     37,146        37,368          37,368   

Reimbursed expenses

     11,941          11,941        9,137          9,137   

Cost of services

     10,120          10,120        9,465          9,465   

Depreciation and amortization

     7,423          7,423        6,770          6,770   

Restructuring charges, net

     —              9,886        (9,886     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     246,431        (674     245,757        241,732        (9,886     231,846   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     32,904        674        33,578        18,593        9,886        28,479   

Other (loss) income, net

     (74       (74     2,177          2,177   

Interest expense, net

     (299       (299     (794       (794
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries

     32,531        674        33,205        19,976        9,886        29,862   

Equity in earnings of unconsolidated subsidiaries

     725          725        466          466   

Income tax provision (1) (2)

     10,174        215        10,389        5,909        2,942        8,851   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 23,082      $ 459      $ 23,541      $ 14,533      $ 6,944      $ 21,477   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per common share:

            

Basic

   $ 0.46        $ 0.47      $ 0.30        $ 0.44   
  

 

 

     

 

 

   

 

 

     

 

 

 

Diluted

   $ 0.46        $ 0.47      $ 0.29        $ 0.43   
  

 

 

     

 

 

   

 

 

     

 

 

 

Weighted-average common shares outstanding:

            

Basic

     49,493          49,493        48,703          48,703   
  

 

 

     

 

 

   

 

 

     

 

 

 

Diluted

     50,014          50,014        49,591          49,591   
  

 

 

     

 

 

   

 

 

     

 

 

 

Explanation of Non-GAAP Adjustments

 

(1) The adjustments result in an effective tax rate of 31% and 30% for the as adjusted amounts for the three months ended July 31, 2015 and 2014, respectively.
(2) The three months ended July 31, 2015 includes the tax effect on integration/acquisition costs, while the three months ended July 31, 2014, includes the tax effect of restructuring charges.


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 July 31, 2015  
     Executive Recruitment                          
     North
America
    EMEA     Asia Pacific     South
America
    Subtotal     Leadership
& Talent
Consulting
    Futurestep     Corporate     Consolidated  

Fee revenue

   $ 90,359      $ 36,090      $ 19,215      $ 6,426      $ 152,090      $ 69,240      $ 46,064      $ —        $ 267,394   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

                   $ 23,082   

Other loss, net

                     74   

Interest expense, net

                     299   

Equity in earnings of unconsolidated subsidiaries, net

                     (725

Income tax provision

                     10,174   
                  

 

 

 

Operating income (loss)

   $ 24,145      $ 6,276      $ 2,986      $ 1,508      $ 34,915      $ 7,495      $ 6,189      $ (15,695     32,904   

Depreciation and amortization

     827        365        246        78        1,516        3,748        585        1,574        7,423   

Other income (loss), net

     32        143        18        239        432        (863     —          357        (74

Equity in earnings of unconsolidated subsidiaries, net

     86        —          —          —          86        —          —          639        725   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     25,090        6,784        3,250        1,825        36,949        10,380        6,774        (13,125     40,978   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA margin

     27.8     18.8     16.9     28.4     24.3     15.0     14.7       15.3

Integration/acquisition costs

     —          —          —          —          —          329        —          345        674   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 25,090      $ 6,784      $ 3,250      $ 1,825      $ 36,949      $ 10,709      $ 6,774      $ (12,780   $ 41,652   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

     27.8     18.8     16.9     28.4     24.3     15.5     14.7       15.6
     Three Months Ended July 31, 2014  
     Executive Recruitment                          
     North
America
    EMEA     Asia Pacific     South
America
    Subtotal     Leadership
& Talent
Consulting
    Futurestep     Corporate     Consolidated  

Fee revenue

   $ 82,300      $ 40,297      $ 19,534      $ 6,284      $ 148,415      $ 63,548      $ 39,225      $ —        $ 251,188   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

                   $ 14,533   

Other income, net

                     (2,177

Interest expense, net

                     794   

Equity in earnings of unconsolidated subsidiaries, net

                     (466

Income tax provision

                     5,909   
                  

 

 

 

Operating income (loss)

   $ 18,998      $ 2,643      $ 2,522      $ 73      $ 24,236      $ 3,460      $ 3,457      $ (12,560     18,593   

Depreciation and amortization

     904        489        294        85        1,772        3,252        446        1,300        6,770   

Other income (loss), net

     129        46        109        33        317        217        (2     1,645        2,177   

Equity in earnings of unconsolidated subsidiaries, net

     68        —          —          —          68        —          —          398        466   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     20,099        3,178        2,925        191        26,393        6,929        3,901        (9,217     28,006   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA margin

     24.4     7.9     15.0     3.0     17.8     10.9     9.9       11.1

Restructuring charges, net

     1,151        3,987        17        377        5,532        2,758        1,424        172        9,886   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 21,250      $ 7,165      $ 2,942      $ 568      $ 31,925      $ 9,687      $ 5,325      $ (9,045   $ 37,892   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

     25.8     17.8     15.1     9.0     21.5     15.2     13.6       15.1