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Korn/Ferry International Announces Fourth Quarter Fiscal 2011

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 FY11 diluted earnings per share was $0.43, compared to diluted earnings per share of $0.19 in Q4 FY10. Excluding certain tax adjustments, Q4 FY11 diluted earnings per share was $0.39.
FY11 fee revenue increased $171.9 million, or 30%, to $744.3 million, compared to
$572.4 million last year.
FY11 diluted earnings per share was $1.27, compared to diluted earnings per share of $0.12 in FY10. Excluding restructuring charges and certain tax adjustments, FY11 and FY10 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. Los Angeles, CA, June 15, 2011 - 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 FY10. Excluding certain tax adjustments, Q4 FY11 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.

Fee revenue was $197.3 million in Q4 FY11 compared to $168.7 million in Q4 FY10, 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 FY11, an increase of $15.4 million, or 13%, compared to $118.1 million in Q4 FY10. 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 FY11 and $28.4 million in Q4 FY10, 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 $0.6million, or 2%.

Operating income was $26.2 million in Q4 FY11 compared to $13.6 million in Q4 FY10 (or $13.7million excluding restructuring charges in Q4 FY10), an increase of $12.6 million (or $12.5 million excluding restructuring charges in Q4 FY10).

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 FY10 which were paid in FY11.

Fee revenue was $172.0 million in Q4 FY11, an increase of $21.4 million, or 14%, when compared to fee revenue of $150.6 million in Q4 FY10. 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 FY10. Fee revenue increased $16.7 million on a constant currency basis.
Operating income was $30.7 million in Q4 FY11 compared to $23.1 million in Q4 FY10, an increase of $7.6 million. This increase is primarily attributed to the $21.4 million increase in
executive recruitment fee revenue in Q4 FY11 as compared to Q4 FY10, 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.

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