Korn/Ferry International Announces Fourth Quarter Fiscal 2011 Results of Operations

Highlights

-- Fourth quarter fiscal 2011 fee revenue increased 17% to $197.3 million, compared to $168.7 million in the same quarter last year.

-- Q4 FY'11 diluted earnings per share was $0.43, compared to diluted earnings per share of $0.19 in Q4 FY'10. Excluding certain tax adjustments, Q4 FY'11 diluted earnings per share was $0.39.

-- FY'11 fee revenue increased $171.9 million, or 30%, to $744.3 million, compared to $572.4 million last year.

-- FY'11 diluted earnings per share was $1.27, compared to diluted earnings per share of $0.12 in FY'10. Excluding restructuring charges and certain tax adjustments, FY'11 and FY'10 diluted earnings per share was $1.25 and $0.35, respectively.

-- Cash and marketable securities were $369 million at April 30, 2011 compared to $296 million at April 30, 2010.

News provided by

Korn/Ferry International

Jun 15, 2011, 07:45 ET

LOS ANGELES, June 15, 2011 /PRNewswire/ -- Korn/Ferry International (NYSE: KFY), a premier global provider of talent management solutions, announced fourth quarter fiscal 2011 diluted earnings per share of $0.43 compared to $0.19 in Q4 FY'10.  Excluding certain tax adjustments, Q4 FY'11 diluted earnings per share was $0.39.

"I am enormously proud of the Korn/Ferry organization," said Gary Burnison, Chief Executive Officer, Korn/Ferry International.  "Once again, our growth was driven by the strength of our differentiated strategy.  Thanks to the dedication of our colleagues in serving our clients, we achieved an operating margin of almost 12% for the full year.  As we enter a new fiscal year, we will continue to build a Korn/Ferry brand that is synonymous with talent management, assisting our clients in linking their business and people strategies."

Financial Results

(dollars in millions, except per share amounts)

Fourth Quarter

Year to Date

FY'11

FY'10

FY'11

FY'10

Fee revenue

$           197.3

$  168.7

$        744.3

$  572.4

Total revenue

$           205.8

$  176.9

$        776.3

$  599.6

Operating income (loss)

$         26.2

$  13.6

$          85.8

$  (2.7)

Operating margin

13.3%

8.1%

11.5%

(0.5)%

Net income

$             20.4

$  8.9

$      58.9

$  5.3

Basic earnings per share

$          0.45

$  0.20

$          1.30

$  0.12

Diluted earnings per share

$          0.43

$  0.19

$          1.27

$  0.12









Adjusted Results (a):

Fourth Quarter

Year to Date

FY'11

FY'10

FY'11

FY'10

Operating income

$             26.2

$  13.7

$     87.9

$  17.9

Operating margin

13.3%

8.1%

11.8%

3.1%

Net income

$             18.3

$  9.0

$          58.1

$  15.8

Basic earnings per share

$       0.40

$  0.20

$    1.28

$  0.36

Diluted earnings per share

$       0.39

$  0.19

$    1.25

$  0.35


(a)

Adjusted results are non-GAAP financial measures that exclude the following:

Fourth Quarter

Year to Date

FY'11

FY'10

FY'11

FY'10

Restructuring charges

$  —

$  0.1

$  2.1

$  20.6

Certain tax adjustments  (b)

$  (2.1)

$  —

$  (2.1)

$  (2.8)


(b)

In fiscal year 2011 and 2010, adjusted results include reversal of reserves previously taken against an uncertain tax position and in fiscal 2010, adjustments include an increased valuation allowance related to cash repatriations and foreign tax credits.

Fee revenue was $197.3 million in Q4 FY'11 compared to $168.7 million in Q4 FY'10, an increase of $28.6 million, or 17%, which reflects increases in fee revenue from all segments of the business driven primarily by a 15% increase in the overall number of engagements billed as well as a 2% increase in the weighted-average fee billed per engagement compared to the year-ago fiscal quarter. On a constant currency basis fee revenue increased $21.9 million, or 13%.

Compensation and benefits were $133.5 million in Q4 FY'11, an increase of $15.4 million, or 13%, compared to $118.1 million in Q4 FY'10.  This increase is attributable mainly to an increase in the variable component of compensation when compared to the year-ago fiscal quarter and to a lesser extent to an increase in worldwide headcount.  On a constant currency basis compensation and benefits increased $10.8 million, or 9%.

General and administrative expenses were $29.0 million in Q4 FY'11 and $28.4 million in Q4 FY'10, an increase of $0.6 million, or 2%.  The increase is due primarily to an increase in bad debt provisions as a result of higher revenues and accounts receivable, an increase in premise and office expense and other general and administrative expenses, partially offset by a decrease in unrealized foreign exchange losses and a fair value contingent consideration adjustment from a prior acquisition.  On a constant currency basis general and administrative expenses decreased $0.6 million, or 2%.

Operating income was $26.2 million in Q4 FY'11 compared to $13.6 million in Q4 FY'10 (or $13.7 million excluding restructuring charges in Q4 FY'10), an increase of $12.6 million (or $12.5 million excluding restructuring charges in Q4 FY'10).

Balance Sheet and Liquidity

Cash and marketable securities were $369.1 million at April 30, 2011 compared to $296.5 million at April 30, 2010.  Cash and marketable securities included $71.4 million and $69.0 million, held in trust for deferred compensation plans, at April 30, 2011 and 2010, respectively.  Cash and marketable securities increased by $72.6 million from April 30, 2010, mainly due to cash provided by operating activities partially offset by bonuses earned in FY'10 which were paid in FY'11.

Results by Segment


Selected Executive Recruitment Data

(dollars in millions)

Fourth Quarter

Year to Date

FY'11

FY'10

FY'11

FY'10

Fee revenue

$          172.0

$  150.6

$        654.1

$  504.4

Total revenue

$          178.8

$  157.4

$        680.3

$  526.6

Operating income

$            30.7

$  23.1

$        111.4

$  38.2

Operating margin

17.9%

15.4%

17.0%

7.6%









Ending number of consultants

471

473

471

473

Average number of consultants

472

479

474

482

Engagements billed

4,096

3,673

11,501

9,164

New engagements (a)

2,131

1,925

7,905

6,505









Adjusted Results (b):

Fourth Quarter

Year to Date

FY'11

FY'10

FY'11

FY'10

Operating income

$            30.7

$  23.1

$        113.6

$  61.6

Operating margin

17.9%

15.4%

17.4%

12.2%


(a)

Represents new engagements opened in the respective period.


(b)

Adjusted results are non-GAAP financial measures that exclude restructuring charges, net of recoveries, of $2.2 million and $23.4 million during the year ended April 30, 2011 and 2010, respectively (see attached reconciliations).  There were no adjustments during the three months ended April 30, 2011 and 2010.

Fee revenue was $172.0 million in Q4 FY'11, an increase of $21.4 million, or 14%, when compared to fee revenue of $150.6 million in Q4 FY'10.    Fee revenue increased in all regions due to a 12% increase in the number of executive recruitment engagements billed and a 2% increase in the weighted-average fee per engagement billed when compared to Q4 FY'10.  Fee revenue increased $16.7 million on a constant currency basis.

Operating income was $30.7 million in Q4 FY'11 compared to $23.1 million in Q4 FY'10, an increase of $7.6 million. This increase is primarily attributed to the $21.4 million increase in executive recruitment fee revenue in Q4 FY'11 as compared to Q4 FY'10, which was partially offset by an $11.3 million and $2.5 million increase in compensation and benefits expense and general and administrative expenses, respectively. The increase in compensation and benefits expense primarily resulted from an increase in the variable component of compensation, and the increase in general and administrative expense was primarily driven by an increase in bad debt provisions and premise and office expense.

The total number of consultants at April 30, 2011 and 2010 was 471 and 473, respectively.

Selected Futurestep Data

(dollars in millions)

Fourth Quarter

Year to Date

FY'11

FY'10

FY'11

FY'10

Fee revenue

$            25.3

$  18.1

$          90.2

$  68.0

Total revenue

$            27.0

$  19.5

$          96.0

$  73.0

Operating income (loss)

$            1.5

$  (1.1)

$            5.0

$  1.3

Operating margin

6.0%

(5.9)%

5.5%

1.9%









Adjusted Results (a):

Fourth Quarter

Year to Date

FY'11

FY'10

FY'11

FY'10

Operating income (loss)

$              1.5

$  (1.0)

$          4.9

$  (1.5)

Operating margin

6.0%

(5.5)%

5.4%

(2.2)%


(a)

Adjusted results are non-GAAP financial measures that exclude recoveries of restructuring charges of $0.1 million and $2.8 million during year ended April 30, 2011 and 2010, respectively.  Adjusted results for the three months ended April 30, 2010 exclude restructuring charges of $0.1 million (see attached reconciliations).  There were no adjustments during the three months ended April 30, 2011.

Fee revenue was $25.3 million in Q4 FY'11, an increase of $7.2 million, or 40%, from $18.1 million in Q4 FY'10.  The improvement in fee revenue was driven by a 26% increase in the number of engagements billed, as well as an 11% increase in the weighted-average fee billed per engagement. On a constant currency basis fee revenue increased $5.2 million, or 29%.

Operating income was $1.5 million in Q4 FY'11 compared to an operating loss of $1.1 million in Q4 FY'10.  Q4 FY'10 operating loss includes $1.2 million in severance costs and $0.1 million restructuring costs which primarily relates to facility lease costs; without such charges, operating income would have been $0.2 million.

Outlook

Assuming constant foreign exchange rates, stable economic conditions and steady financial markets, Q1 FY'12 fee revenue is likely to be in the range of $190 million to $205 million and diluted earnings per share is likely to be in the range of $0.30 to $0.36.

Earnings Conference Call Webcast

The earnings conference call will be held today at 5:00 PM (EDT) and hosted by CEO Gary Burnison, CFO Mike DiGregorio and SVP Finance Gregg Kvochak.  The conference call will be webcast and available online at www.kornferry.com, accessible through the Investor Relations section.

Korn/Ferry International (NYSE: KFY), with a presence throughout the Americas, Asia Pacific, Europe, the Middle East and Africa, is a premier global provider of talent management solutions.  Based in Los Angeles, the firm delivers an array of solutions that help clients to attract, deploy, develop and reward their talent.  Visit www.kornferry.com for more information on the Korn/Ferry International family of companies, and www.kornferryinstitute.com for thought leadership, intellectual property and research.

Forward-Looking Statements

Statements in this press release and our conference call that relate to future results and events ("forward-looking statements") are based on Korn/Ferry's current expectations.  These statements, which include words such as "believes", "expects" or "likely" include references to our outlook.  Readers are cautioned not to place undue reliance on such statements.  Actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties that are beyond the control of Korn/Ferry.  The potential risks and uncertainties include those relating to competition, the dependence on attracting and retaining qualified and experienced consultants, maintaining our brand name and professional reputation, potential legal liability, the portability of client relationships, global and local political or economic developments in or affecting countries where we have operations, currency fluctuations in our international operations, risks related to the growth, alignment of our cost structure with our growth, restrictions imposed by off-limits agreements, reliance on information processing systems, our ability to enhance and develop new technology, the successful integration of acquired businesses, our ability to develop new products and services,  impairment of goodwill and other intangible assets, deferred tax assets and employment liability risk.  For a detailed description of risks and uncertainties that could cause differences, please refer to Korn/Ferry's periodic filings with the Securities and Exchange Commission.  Korn/Ferry disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Use of Non-GAAP Financial Measures

This press release contains financial information calculated other than in accordance with U.S. Generally Accepted Accounting Principles ("GAAP").  These non-GAAP financial measures include the following:

  • adjusted operating income (loss) and operating margin, adjusted to exclude charges (reductions) of restructuring charges, net;
  • adjusted net income, adjusted to exclude restructuring charges (reductions), net and certain tax adjustments;
  • adjusted basic and diluted earnings per share, adjusted to exclude restructuring charges (reductions) net, and certain tax adjustments; and
  • constant currency amounts that represent the outcome that would have resulted had exchange rates in the reported period been the same as those in effect in the comparable prior year period.

This non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for financial information determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Management believes the presentation of non-GAAP financial measures in this press release provides meaningful supplemental information regarding Korn/Ferry's performance by excluding certain charges that may not be indicative of Korn/Ferry's ongoing operating results.  The use of these non-GAAP financial measures facilitate comparisons to Korn/Ferry's historical performance.  Korn/Ferry includes these non-GAAP financial measures because management believes it is useful to investors in allowing for greater transparency with respect to supplemental information used by management in its evaluation of Korn/Ferry's ongoing operations and financial and operational decision-making.


[Tables attached]





KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)












Three Months Ended

Year Ended


April 30,

April 30,


2011

2010

2011

2010


(unaudited)



Fee revenue


$ 197,298

$ 168,690

$ 744,249

$ 572,380

Reimbursed out-of-pocket engagement expenses


8,478

8,215

32,002

27,269

          Total revenue


205,776

176,905

776,251

599,649









Compensation and benefits


133,554

118,225

507,405

413,340

General and administrative expenses


28,982

28,427

116,494

115,280

Out-of-pocket engagement expenses


13,674

13,495

51,766

41,585

Depreciation and amortization


3,320

3,049

12,671

11,493

Restructuring charges, net


-

80

2,130

20,673

          Total operating expenses


179,530

163,276

690,466

602,371









Operating income (loss)


26,246

13,629

85,785

(2,722)









Interest and other income, net


3,024

2,080

3,919

7,444

          Income before provision (benefit) for income taxes









              and equity in earnings (loss) of unconsolidated subsidiaries


29,270

15,709

89,704

4,722

Income tax provision (benefit)


9,285

6,245

32,692

(485)

Equity in earnings (loss) of unconsolidated subsidiaries, net


354

(548)

1,862

91

           Net income


$   20,339

$     8,916

$   58,874

$     5,298









Earnings per common share:









     Basic


$       0.45

$       0.20

$       1.30

$       0.12

     Diluted


$       0.43

$       0.19

$       1.27

$       0.12









Weighted-average common shares outstanding:









     Basic


45,700

44,783

45,205

44,413

     Diluted


47,165

46,220

46,280

45,457

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

FINANCIAL SUMMARY BY SEGMENT

(in thousands)

(unaudited)



















Three Months Ended

Year Ended


April 30,

April 30,


2011


2010

% Change

2011


2010

% Change

















Fee Revenue:














Executive recruitment:















North America

$   96,939


$   85,037

14%

$ 375,971


$ 278,746

35%

EMEA (1)

42,022


36,257

16%

155,782


137,497

13%

Asia Pacific

24,661


21,695

14%

90,346


64,132

41%

South America

8,357


7,630

10%

31,959


24,026

33%

Total executive recruitment

171,979


150,619

14%

654,058


504,401

30%

Futurestep

25,319


18,071

40%

90,191


67,979

33%

Total fee revenue

197,298


168,690

17%

744,249


572,380

30%

Reimbursed out-of-pocket engagement expenses

8,478


8,215

3%

32,002


27,269

17%

Total revenue

$ 205,776


$ 176,905

16%

$ 776,251


$ 599,649

29%


































Adjusted Operating Income (Loss):














 (Excluding Restructuring Charges)

Margin


Margin


Margin


Margin

Executive recruitment:















North America

$   19,765

20.4%

$   12,183

14.3%

$   80,345

21.4%

$   40,993

14.7%

EMEA

5,131

12.2%

3,514

9.7%

14,197

9.1%

9,423

6.8%

Asia Pacific

4,494

18.2%

5,826

26.9%

11,611

12.9%

8,065

12.6%

South America

1,339

16.0%

1,647

21.6%

7,475

23.4%

3,173

13.2%

Total executive recruitment

30,729

17.9%

23,170

15.4%

113,628

17.4%

61,654

12.2%

Futurestep

1,515

6.0%

(1,002)

(5.5%)

4,856

5.4%

(1,485)

(2.2%)

Corporate (2)

(5,998)


(8,459)


(30,569)


(42,218)


Total adjusted operating income (loss)

$   26,246

13.3%

$   13,709

8.1%

$   87,915

11.8%

$   17,951

3.1%


































Restructuring Charges (Reductions), net:














Executive recruitment:















North America

$           -

0.0%

$      (332)

(0.4%)

$      (340)

(0.1%)

$   (1,611)

(0.6%)

EMEA

-

0.0%

136

0.4%

2,569

1.6%

24,934

18.1%

Asia Pacific

-

0.0%

152

0.7%

-

0.0%

239

0.4%

South America

-

0.0%

60

0.8%

-

0.0%

(113)

(0.5%)

Total executive recruitment

-

0.0%

16

0.0%

2,229

0.4%

23,449

4.6%

Futurestep

-

0.0%

64

0.4%

(99)

(0.1%)

(2,776)

(4.1%)

Corporate

-


-


-


-


Total restructuring charges (reductions), net

$           -

0.0%

$          80

0.0%

$     2,130

0.3%

$   20,673

3.6%


































Operating Income (Loss):

Margin


Margin


Margin


Margin

Executive recruitment:















North America

$   19,765

20.4%

$   12,515

14.7%

$   80,685

21.5%

$   42,604

15.3%

EMEA

5,131

12.2%

3,378

9.3%

11,628

7.5%

(15,511)

(11.3%)

Asia Pacific

4,494

18.2%

5,674

26.2%

11,611

12.9%

7,826

12.2%

South America

1,339

16.0%

1,587

20.8%

7,475

23.4%

3,286

13.7%

Total executive recruitment

30,729

17.9%

23,154

15.4%

111,399

17.0%

38,205

7.6%

Futurestep

1,515

6.0%

(1,066)

(5.9%)

4,955

5.5%

1,291

1.9%

Corporate (2)

(5,998)


(8,459)


(30,569)


(42,218)


Total operating income (loss)

$   26,246

13.3%

$   13,629

8.1%

$   85,785

11.5%

$   (2,722)

(0.5%)

(1)

Includes revenues from acquisition of Whitehead Mann, closed on June 11, 2009.  

(2)

Lower net expenses primarily related to the change in amounts due under deferred compensation plans determined by an increase (or decrease) in market values, and adjustment to the fair value of contingent consideration for a prior acquisition, totaling $2.8 million and $7.7 million during the three and twelve months ended April 30, 2011 compared to the three and twelve months ended April 30, 2010, respectively.  

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)



As of April 30,


2011

2010

ASSETS



Cash and cash equivalents

$ 246,856

$ 219,233

Marketable securities

20,868

4,114

Receivables due from clients, net of allowance for doubtful accounts





of $9,977 and $5,983, respectively

128,859

107,215

Income taxes and other receivables

5,138

6,292

Deferred income taxes

10,214

20,844

Prepaid expenses and other assets

29,662

23,166

Total current assets

441,597

380,864





Marketable securities, non-current

101,363

73,105

Property and equipment, net

43,142

24,963

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

70,987

69,069

Deferred income taxes

64,418

59,742

Goodwill

183,952

172,273

Intangible assets, net

22,289

25,425

Investments and other assets

43,932

21,657

Total assets

$ 971,680

$ 827,098





LIABILITIES AND STOCKHOLDERS' EQUITY



Accounts payable

$   12,504

$   11,148

Income taxes payable

4,674

6,323

Compensation and benefits payable

173,097

131,550

Other accrued liabilities

43,591

49,062

Total current liabilities

233,866

198,083





Deferred compensation and other retirement plans

139,558

123,794

Other liabilities

19,919

13,879

Total liabilities

393,343

335,756





Stockholders' equity



Common stock: $0.01 par value, 150,000 shares authorized, 59,101 and





57,614 shares issued and 47,003 and 45,979 shares outstanding, respectively

404,703

388,717

Retained earnings

148,494

90,220

Accumulated other comprehensive income, net

25,660

12,934

Stockholders' equity

578,857

491,871

Less:  notes receivable from stockholders

(520)

(529)

Total stockholders' equity

578,337

491,342

Total liabilities and stockholders' equity

$ 971,680

$ 827,098

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

RECONCILIATION OF AS REPORTED (GAAP) TO AS ADJUSTED (NON-GAAP)

(in thousands, except per share amounts)

(unaudited)




























Three Months Ended


April 30, 2011

April 30, 2010


As Reported

Adjustments

As Adjusted

As Reported

Adjustments

As Adjusted




Fee revenue


$             197,298


$             197,298

$             168,690


$             168,690

Reimbursed out-of-pocket engagement expenses


8,478


8,478

8,215


8,215

          Total revenue


205,776


205,776

176,905


176,905













Compensation and benefits


133,554


133,554

118,225


118,225

General and administrative expenses


28,982


28,982

28,427


28,427

Out-of-pocket engagement expenses


13,674


13,674

13,495


13,495

Depreciation and amortization


3,320


3,320

3,049


3,049

Restructuring charges (reductions), net


-

-

-

80

(80)

-

          Total operating expenses


179,530

-

179,530

163,276

(80)

163,196













Operating income


26,246

-

26,246

13,629

80

13,709













Interest and other income, net


3,024


3,024

2,080


2,080

          Income before provision for income taxes













                 and equity in earnings (loss) of unconsolidated subsidiaries


29,270

-

29,270

15,709

80

15,789

Income tax provision (1) (2)


9,285

2,131

11,416

6,245

32

6,277

Equity in earnings (loss) of unconsolidated subsidiaries, net


354


354

(548)


(548)

           Net income


$               20,339

$                    (2,131)

$               18,208

$                 8,916

$                           48

$                 8,964













Earnings per common share:













     Basic


$                   0.45


$                   0.40

$                   0.20


$                   0.20

     Diluted


$                   0.43


$                   0.39

$                   0.19


$                   0.19













Weighted-average common shares outstanding:













     Basic


45,700


45,700

44,783


44,783

     Diluted


47,165


47,165

46,220


46,220













Explanation of Non-GAAP Adjustments

(1)

Calculated using an annual effective tax rate of 39% and 40%, adjusted for the three months ended April 30, 2011 and 2010, respectively.

(2)

The quarter ended April 30, 2011 includes a $2.1 million reversal of a reserve previously taken against an uncertain tax position.

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

RECONCILIATION OF AS REPORTED (GAAP) TO AS ADJUSTED (NON-GAAP)

(in thousands, except per share amounts)

(unaudited)




























Year Ended


April 30, 2011

April 30, 2010


As Reported

Adjustments

As Adjusted

As Reported

Adjustments

As Adjusted




Fee revenue


$             744,249


$             744,249

$             572,380


$             572,380

Reimbursed out-of-pocket engagement expenses


32,002


32,002

27,269


27,269

          Total revenue


776,251


776,251

599,649


599,649













Compensation and benefits


507,405


507,405

413,340


413,340

General and administrative expenses


116,494


116,494

115,280


115,280

Out-of-pocket engagement expenses


51,766


51,766

41,585


41,585

Depreciation and amortization


12,671


12,671

11,493


11,493

Restructuring charges (reductions), net


2,130

(2,130)

-

20,673

(20,673)

-

          Total operating expenses


690,466

(2,130)

688,336

602,371

(20,673)

581,698













Operating income (loss)


85,785

2,130

87,915

(2,722)

20,673

17,951













Interest and other income, net


3,919


3,919

7,444


7,444

          Income before provision (benefit) for income taxes













                 and equity in earnings of unconsolidated subsidiaries


89,704

2,130

91,834

4,722

20,673

25,395

Income tax provision (benefit) (1) (2) (3)

32,692

2,952

35,644

(485)

10,172

9,687

Equity in earnings of unconsolidated subsidiaries, net


1,862


1,862

91


91

           Net income  

$               58,874

$                       (822)

$               58,052

$                 5,298

$                    10,501

$               15,799













Earnings per common share:













     Basic


$                   1.30


$                   1.28

$                   0.12


$                   0.36

     Diluted


$                   1.27


$                   1.25

$                   0.12


$                   0.35













Weighted-average common shares outstanding:













     Basic


45,205


45,205

44,413


44,413

     Diluted


46,280


46,280

45,457


45,457













Explanation of Non-GAAP Adjustments


(1)

Calculated using an annual effective tax rate of 39% and 38%, adjusted for the year ended April 30, 2011 and 2010, respectively.

(2)

The year ended April 30, 2011 includes a $2.1 million reversal which is the net of a reserve previously taken against an uncertain tax position and the tax effect of restructuring charges.

(3)

The year ended April 30, 2010 includes a $10.3 million reversal of a reserve which is the net of previously taken against an uncertain tax position, tax effect of restructuring charges and an increased valuation allowance related to cash repatriations and foreign tax credits.

SOURCE Korn/Ferry International

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