Korn/Ferry International Announces Fourth Quarter Fiscal 2009 Results of Operations
Posted on: Tuesday, 9 June 2009, 11:50 CDT
Highlights
- Excluding a
- Fourth quarter fiscal 2009 fee revenue was
- Cash and marketable securities were
"Although our industry, the global capital markets and most businesses have been under siege since the Fall of 2008, Korn/Ferry is successfully navigating this historic global recession. For Fiscal 2009, we ended the year with a fortified balance sheet that includes
Financial Results
(dollars in millions, except per share amounts) Fourth Quarter Year to date Q4'09 Q4'08 2009 2008 ----- ----- ---- ---- Fee revenue $107.0 $208.2 $638.2 $790.6 Revenue $114.4 $220.5 $676.1 $835.6 Operating (loss) income $(33.9) $20.2 $0.1 $91.9 Operating margin (31.7%) 9.7% 0.0% 11.6% Net (loss) income $(19.5) $15.7 $(12.4) $66.2 Basic (loss) earnings per share $(0.45) $0.36 $(0.28) $1.50 Diluted (loss) earnings per share $(0.45) $0.36 $(0.28) $1.46 Adjusted Results (a): Fourth Year to Quarter date Q4'09 2009 ----- ---- Operating (loss) income $(8.8) $42.0 Operating margin (8.3%) 6.6% Net (loss) income $(4.7) $12.8 Basic (loss) earnings per share $(0.11) $0.29 Diluted (loss) earnings per share $(0.11) $0.29 (a) Adjusted results are non-GAAP financial measures that exclude restructuring charges of $25.1 million and $41.9 million during the three and twelve months ended April 30, 2009, respectively (see attached reconciliations).Fee revenue was
Compensation and benefits were
General and administrative expenses were
The Company previously announced it would incur expenses to further rationalize its costs structure due to the deteriorating labor markets. Therefore in the fourth quarter, the Company recorded a
Operating loss was
Balance Sheet and Liquidity
Cash and marketable securities were
Interest expense was
Results by Segment
Selected Executive Recruitment Data
(dollars in millions) Fourth Quarter Year to date Q4'09 Q4'08 2009 2008 ----- ----- ---- ---- Fee revenue $91.9 $177.5 $543.3 $679.4 Revenue $98.3 $185.7 $572.3 $708.8 Operating (loss) income $(16.1) $27.3 $47.4 $122.0 Operating margin (17.5%) 15.4% 8.7% 18.0% Average number of consultants 479 516 509 515 Engagements (a) 1,139 1,794 5,945 7,276 (a) Represents new engagements opened in the respective period. Adjusted Results (b): Fourth Year to Quarter date Q4'09 2009 ----- ---- Operating income $3.3 $77.9 Operating margin 3.6% 14.3% (b) Adjusted results are non-GAAP financial measures that exclude restructuring charges of $19.4 million and $30.5 million during the three and twelve months ended April 30, 2009, respectively (see attached reconciliation).Fee revenue was
The Q4'09 operating income was
The total number of consultants at
Selected Futurestep Data
(dollars in millions) Fourth Quarter Year to date Q4'09 Q4'08 2009 2008 ----- ----- ---- ---- Fee revenue $15.1 $30.7 $94.9 $111.2 Revenue $16.1 $34.7 $103.8 $126.9 Operating (loss) income $(7.8) $2.9 $(12.0) $8.5 Operating margin (51.7%) 9.5% (12.7%) 7.7% Adjusted Results (a): Fourth Year to Quarter date Q4'09 2009 ----- ---- Operating (loss) income $(2.1) $(0.6) Operating margin (14.2%) (0.6%) (a) Adjusted results are non-GAAP financial measures that exclude restructuring charges of $5.6 million and $11.4 million during the three and twelve months ended April 30, 2009 (see attached reconciliation).Fee revenue was
The Q4'09 operating loss would have been
Outlook
The global economic crisis has had a significant impact on many of our client's people initiatives; as such, the demand for executive searches and leadership and talent consulting services declined precipitously throughout the world during the second half of Fiscal 2009. Although demand for the Company's services has begun to stabilize, the macroeconomic climate and labor markets remain uncertain. Based on new business confirmed subsequent to the end of Q4'09 and anticipating a decline in new business in the summer due to seasonality, revenues would be approximately
Earnings Conference Call Webcast
The earnings conference call will be held today at
Korn/Ferry International (NYSE: KFY), with a presence throughout the Americas,
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. Readers are cautioned not to place undue reliance on such statements. Actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties that are beyond the control of Korn/Ferry. The potential risks and uncertainties relate to competition, the dependence on attracting and retaining qualified and experienced consultants, the portability of client relationships, local political or economic developments in or affecting countries where we have operations, including fluctuations in exchange rates, risks related to the growth and results of Futurestep, global economic developments, restrictions imposed by off-limits agreements, reliance on information systems and employment liability risk. For a detailed description of risks and uncertainties that could cause differences, please refer to Korn/Ferry's periodic filings with the Securities and Exchange Commission. Korn/Ferry disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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 adjusted operating income, operating margin, net (loss) income, basic (loss) earnings per share and diluted (loss) earnings per share, adjusted to exclude restructuring charges.
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 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 OPERATIONS (in thousands, except per share amounts) Three Months Ended Year Ended April 30, April 30, 2009 2008 2009 2008 ---- ---- ---- ---- (unaudited) (unaudited) Fee revenue $106,980 $208,204 $638,223 $790,570 Reimbursed out-of-pocket engagement expenses 7,446 12,246 37,905 45,072 ----- ------ ------ ------ Total revenue 114,426 220,450 676,128 835,642 ------- ------- ------- ------- Compensation and benefits 80,457 148,072 446,306 540,056 General and administrative expenses 29,566 33,374 126,882 134,542 Out-of-pocket engagement expenses 10,317 16,086 49,388 58,750 Depreciation and amortization 2,946 2,740 11,583 10,441 Restructuring charges 25,070 - 41,915 - ------ - ------ - Total operating expenses 148,356 200,272 676,074 743,789 ------- ------- ------- ------- Operating (loss) income (33,930) 20,178 54 91,853 Interest and other income (loss), net 1,064 1,063 (15,801) 7,137 ----- ----- ------- ----- (Loss) income before (benefit) provision for income taxes and equity in earnings of unconsolidated subsidiaries (32,866) 21,241 (15,747) 98,990 (Benefit) provision for income taxes (13,339) 6,328 (1,012) 36,081 Equity in earnings of unconsolidated subsidiaries, net 49 833 2,365 3,302 -- --- ----- ----- Net (loss) income $(19,478) $15,746 $(12,370) $66,211 ======== ======= ======== ======= Basic (loss) earnings per common share $(0.45) $0.36 $(0.28) $1.50 ====== ===== ====== ===== Basic weighted average common shares outstanding 43,475 43,230 43,522 44,012 ====== ====== ====== ====== Diluted (loss) earnings per common share $(0.45) $0.36 $(0.28) $1.46 ====== ===== ====== ===== Diluted weighted average common shares outstanding 43,475 44,333 43,522 45,528 ====== ====== ====== ====== KORN/FERRY INTERNATIONAL AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS EXCLUDING NON-GAAP ADJUSTMENTS (in thousands, except per share amounts) (unaudited) Three Months Ended April 30, ------------- 2009 - As Adjust- 2009 - As Reported ments Adjusted ---------- ------- --------- Fee revenue $106,980 $106,980 Reimbursed out-of-pocket engagement expenses 7,446 7,446 ----- ----- Total revenue 114,426 114,426 ------- ------- Compensation and benefits 80,457 80,457 General and administrative expenses 29,566 29,566 Out-of-pocket engagement expenses 10,317 10,317 Depreciation and amortization 2,946 2,946 Restructuring charges (1) 25,070 (25,070) - ------ - Total operating expenses 148,356 (25,070) 123,286 ------- ------- Operating (loss) income (33,930) (8,860) Interest and other income (loss), net 1,064 1,064 ----- ----- (Loss) income before (benefit) provision for income taxes and equity in earnings of unconsolidated subsidiaries (32,866) (7,796) (Benefit) provision for income taxes (2) (13,339) 10,377 (2,962) Equity in earnings of unconsolidated subsidiaries, net 49 49 -- -- Net (loss) income $(19,478) $(4,785) ======== ======= Basic (loss) earnings per common share $(0.45) $(0.11) ====== ====== Basic weighted average common shares outstanding 43,475 43,475 ====== ====== Diluted (loss) earnings per common share $(0.45) $(0.11) ====== ====== Diluted weighted average common shares outstanding 43,475 43,475 ====== ====== Year Ended April 30, ------------- 2009 - As Adjust- 2009 - As Reported ments Adjusted ---------- ------- --------- Fee revenue $638,223 $638,223 Reimbursed out-of-pocket engagement expenses 37,905 37,905 ------ ------ Total revenue 676,128 676,128 ------- ------- Compensation and benefits 446,306 446,306 General and administrative expenses 126,882 126,882 Out-of-pocket engagement expenses 49,388 49,388 Depreciation and amortization 11,583 11,583 Restructuring charges (1) 41,915 (41,915) - ------ - Total operating expenses 676,074 (41,915) 634,159 ------- ------- Operating (loss) income 54 41,969 Interest and other income (loss), net (15,801) (15,801) ------- ------- (Loss) income before (benefit) provision for income taxes and equity in earnings of unconsolidated subsidiaries (15,747) 26,168 (Benefit) provision for income taxes (2) (1,012) 16,778 15,766 Equity in earnings of unconsolidated subsidiaries, net 2,365 2,365 ----- ----- Net (loss) income $(12,370) $12,767 ======== ======= Basic (loss) earnings per common share $(0.28) $0.29 ====== ===== Basic weighted average common shares outstanding 43,522 43,522 ====== ====== Diluted (loss) earnings per common share $(0.28) $0.29 ====== ===== Diluted weighted average common shares outstanding 43,522 44,272 ====== ====== Explanation of Non-GAAP Adjustments ----------------------------------- For the three and twelve months ended April 30, 2009: (1) Restructuring charges (2) Tax effect related to net operating expense adjustments KORN/FERRY INTERNATIONAL AND SUBSIDIARIES FINANCIAL SUMMARY BY SEGMENT (in thousands) (unaudited) Three Months Ended April 30, 2009 2008 ---- ---- Fee Revenue: Executive recruitment: North America $56,865 $97,903 EMEA 20,685 49,970 Asia Pacific 10,151 23,276 South America 4,260 6,372 ----- ----- Total executive recruitment 91,961 177,521 Futurestep 15,019 30,683 ------ ------ Total fee revenue 106,980 208,204 Reimbursed out-of-pocket engagement expenses 7,446 12,246 ----- ------ Total revenue $114,426 $220,450 ======== ======== Operating (Loss) Income: Margin Margin ------ ------ Executive recruitment: North America $(8,085) (14.2%) $13,282 13.6% EMEA (6,044) (29.2%) 8,949 17.9% Asia Pacific (1,714) (16.9%) 4,704 20.2% South America (226) (5.3%) 394 6.2% ---- --- Total executive recruitment (16,069) (17.5%) 27,329 15.4% Futurestep (7,770) (51.7%) 2,903 9.5% Corporate (10,091) (10,054) ------- ------- Total operating (loss) income $(33,930) (31.7%) $20,178 9.7% ======== ======= Restructuring Charges: Executive recruitment: North America $9,447 16.6% $- 0.0% EMEA 7,756 37.5% - 0.0% Asia Pacific 1,293 12.8% - 0.0% South America 909 21.3% - 0.0% --- - Total executive recruitment 19,405 21.1% - 0.0% Futurestep 5,641 37.5% - 0.0% Corporate 24 - -- - Total restructuring charges $25,070 23.4% $- 0.0% ======= == Adjusted Operating (Loss) Income: (Excluding Restructuring Charges) Margin Margin ------ ------ Executive recruitment: North America $1,362 2.4% $13,282 13.6% EMEA 1,712 8.3% 8,949 17.9% Asia Pacific (421) (4.1%) 4,704 20.2% South America 683 16.0% 394 6.2% --- --- Total executive recruitment 3,336 3.6% 27,329 15.4% Futurestep (2,129) (14.2%) 2,903 9.5% Corporate (10,067) (10,054) ------- ------- Total adjusted operating (loss) income $(8,860) (8.3%) $20,178 9.7% ======= ======= Year Ended April 30, 2009 2008 ---- ---- Fee Revenue: Executive recruitment: North America $309,514 $374,891 EMEA 143,184 183,042 Asia Pacific 66,332 95,915 South America 24,323 25,556 ------ ------ Total executive recruitment 543,353 679,404 Futurestep 94,870 111,166 ------ ------- Total fee revenue 638,223 790,570 Reimbursed out-of-pocket engagement expenses 37,905 45,072 ------ ------ Total revenue $676,128 $835,642 ======== ======== Operating (Loss) Income: Margin Margin ------ ------ Executive recruitment: North America $37,516 12.1% $70,628 18.8% EMEA 2,061 1.4% 29,820 16.3% Asia Pacific 5,396 8.1% 19,299 20.1% South America 2,441 10.0% 2,230 8.7% ----- ----- Total executive recruitment 47,414 8.7% 121,977 18.0% Futurestep (12,003) (12.7%) 8,545 7.7% Corporate (35,357) (38,669) ------- ------- Total operating (loss) income $54 0.0% $91,853 11.6% === ======= Restructuring Charges: Executive recruitment: North America $12,004 3.9% $- 0.0% EMEA 14,362 10.1% - 0.0% Asia Pacific 2,240 3.4% - 0.0% South America 1,864 7.7% - 0.0% ----- - Total executive recruitment 30,470 5.6% - 0.0% Futurestep 11,421 12.1% - 0.0% Corporate 24 - -- - Total restructuring charges $41,915 6.6% $- 0.0% ======= == Adjusted Operating (Loss) Income: (Excluding Restructuring Charges) Margin Margin ------ ------ Executive recruitment: North America $49,520 16.0% $70,628 18.8% EMEA 16,423 11.5% 29,820 16.3% Asia Pacific 7,636 11.5% 19,299 20.1% South America 4,305 17.7% 2,230 8.7% ----- ----- Total executive recruitment 77,884 14.3% 121,977 18.0% Futurestep (582) (0.6%) 8,545 7.7% Corporate (35,333) (38,669) ------- ------- Total adjusted operating (loss) income $41,969 6.6% $91,853 11.6% ======= ======= KORN/FERRY INTERNATIONAL AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) As of April 30, 2009 2008 ---- ---- ASSETS ------ Cash and cash equivalents $251,007 $305,296 Marketable securities 4,263 5,940 Receivables due from clients, net of allowance for doubtful accounts of $11,197 and $11,504, respectively 67,308 119,952 Income taxes and other receivables 9,001 7,071 Deferred income taxes 14,583 10,401 Prepaid expenses and other assets 21,442 20,057 ------ ------ Total current assets 367,604 468,717 ------- ------- Marketable securities, non-current 70,992 78,026 Property and equipment, net 27,970 32,462 Cash surrender value of company owned life insurance policies, net of loans 63,108 81,377 Deferred income taxes 45,141 47,128 Goodwill 133,331 142,699 Intangible assets, net 16,928 15,519 Other assets 11,812 14,286 ------ ------ Total assets $736,886 $880,214 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Accounts payable $10,282 $15,309 Income taxes payable 663 20,948 Compensation and benefits payable 116,386 199,081 Other accrued liabilities 44,301 37,120 ------ ------ Total current liabilities 171,632 272,458 ------- ------- Deferred compensation and other retirement plans 99,238 105,719 Other liabilities 9,195 5,903 ----- ----- Total liabilities 280,065 384,080 Shareholders' equity Common stock: $0.01 par value, 150,000 shares authorized, 56,185 and 54,786 shares issued and 44,729 and 44,593 shares outstanding, respectively 368,430 358,568 Retained earnings 82,644 95,014 Accumulated other comprehensive income 6,285 43,097 ----- ------ Shareholders' equity 457,359 496,679 Less: notes receivable from shareholders (538) (545) ---- ---- Total shareholders' equity 456,821 496,134 ------- ------- Total liabilities and shareholders' equity $736,886 $880,214 ======== ========SOURCE Korn/Ferry International
Source: PR Newswire
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