THE FUTURE OF TALENT
Annual Report 2007
KORN/FERRY AT A GLANCE
#1 in market share (global and U.S. leader)
$653.4 million global fee revenue in fiscal 2007
25% increase in global fee revenue from fiscal 2006
27% increase in EPS from fiscal 2006*
82 offices worldwide
2,260 employees
10,420 searches in fiscal 2007
5.1 million candidates in database
All figures above include Futurestep
* Adjusted for SFAS 123(R) stock option expense and one-time charges/gains
in fiscal 2007, as well as one-time gains in fiscal 2006
4
1
3
7
1
6
6
1
5
5
4
2
4
3
2
2
3
Revenue by region
Global fee revenue in fiscal 2007
Revenue by industry
Global fee revenue in fiscal 2007
Engagements by function
Global assignments in fiscal 2007
1. North America
2. EMEA
3. Asia Pacific
4. South America*
54%
27%
14%
5%
* Includes unconsolidated Mexican
subsidiaries
1. Financial Services
2. Industrial
3. Consumer
4. Technology
5. Life Sciences
6. Healthcare Provider
7. Education/
Not-for-Profit
Excludes Futurestep
24%
23%
17%
17%
9%
6%
4%
1. C-Level/Senior
Management/Board
2. Marketing
3. Human Resources
4. Manufacturing/Research
& Development/
Technology
5. Finance
6. Information Systems
Excludes Futurestep
55%
16%
9%
9%
8%
3%
A UNIQUE APPROACH TO TALENT
Korn/Ferry International is a premier global
provider of talent management solutions to
assist organizations in attracting, deploying,
developing, retaining and rewarding their people.
Since our inception in 1969, clients have trusted
us to help them recruit world-class leadership
talent. Building on this heritage, today Korn/Ferry
is a single source for a wide range of HR needs.
From 82 offices in 39 countries, our diversified suite
of solutions builds on our extensive expertise in
recruiting and focuses on career-long leadership
development. Services range from executive search
to CEO and board services, leadership assessment
and development, outsourced recruiting, interim
solutions and mid-level search.
The result is an approach to talent that spans
the entire employee lifecycle and enables our
clients to drive success through the empowered
management of people.
01 Korn/Ferry International
CHAIRMAN’S LETTER
“There is no doubt: Korn/Ferry is making
great strides and the opportunity that lies
before us remains significant.”
Paul C. Reilly
Chairman
To see our K/F One Company strategy
taking form around the world is quite
invigorating and it seems only fitting to be
writing this letter as we have just finished
a year of record revenues and profits, up
25% and 27%* respectively. There is no
doubt: Korn/Ferry is making great strides
and the opportunity that lies before us
remains significant.
When I reflect back on those early days
when I first joined the firm, the outlook was
certainly less rosy. However, through the
collaborative efforts of the board, Gary and
our leadership team, and all the employees
of the firm, we designed a differentiated
strategy, made the tough decisions early and
had the perseverance to stick through the
hard times. As a result, we have emerged as
the clear market leader six years later. This
was no small accomplishment and I am
proud of the work we have done.
In order to achieve the next level of growth,
we felt it was time to scale our management
structure by separating the roles of
Chairman and Chief Executive Officer.
On July 1, 2007, Gary D. Burnison assumed
his new role of Chief Executive Officer of
Korn/Ferry.
We went about the process very
pragmatically and we hold ourselves out
as a model for transition planning. This
move will be largely invisible in many
aspects. I will stay full-time with the firm
in my role as Chairman and will focus on
driving client facing activities and enhancing
our go-to-market approach. I will continue
* Adjusted for SFAS 123(R) stock option expense and
one-time charges/gains in fiscal 2007, as well as one-time
gains in fiscal 2006
to recruit and retain great people and I will
be very active in helping Gary and the
leadership team to execute on our strategic
plan, and driving the agenda for the board.
Looking ahead, we will continue our
journey. We will build off our current
successes and sustain the momentum of
our three-year strategic plan, K/F One
Company. This plan centers on the
following four strategic pillars:
• #1 Market Share – driving revenue
growth in all business segments
• Client Excellence – delivering quality
service through our unique technologies
and intellectual property, thus adding
‘science’ to our processes
• Solutions-Driven Growth – looking for
additional products and services to
provide clients with a rich set of solutions,
further strengthening relationships and
diversifying our firm
• Partnership – developing our team
organically as well as attracting outside
market experts, and focusing on training,
professional development and retention
I remain extremely excited about the
opportunity ahead and look forward to
even greater things to come for our clients,
our shareholders and our employees in
fiscal 2008.
Paul C. Reilly
Chairman
02 Korn/Ferry International
CHIEF EXECUTIVE’S REVIEW
“Today we are transforming our business through
innovative solutions that allow us to engage with
our clients on their broader talent management
issues on an ongoing, long-term basis.”
Gary D. Burnison
Chief Executive Officer
Dear Shareholder,
By any measure, fiscal 2007 was a
remarkable year for Korn/Ferry
International. Not only did the firm set new
financial records for both our organization
and the industry, but clients around the
world further validated our long-term
business strategy to offer a diversified suite
of talent management solutions.
Our impressive performance can be
attributed first and foremost to our team
of world-class professionals working around
the globe. The Korn/Ferry team is now
2,260 strong. Today, there are currently
seven former CEOs of major executive
search firms working at Korn/Ferry – the
caliber of our people has never been better.
The strength of our results was further
fueled by the power of our brand, our
diversified suite of solutions and the
continued investments made in technology
and training. Companies have come to trust
Korn/Ferry with regards to leadership,
and our brand creates permission for us
to provide greater value to our customers
through our talent management solutions.
Executive Search remains the flagship of
Korn/Ferry. During fiscal 2007, executive
recruiting grew 25% to $567.6 million.
All industry sectors were up from the prior
year, with Technology, Financial and
Industrial growing the fastest. With the
war for talent being driven by the aging
populations in many of the world’s mature
economic markets along with workforce
booms in several emerging nations, we
believe that the demand for executive search
will continue to grow in the long term.
Moving beyond our executive search
business, we are strongly encouraged by
the steady progress of our Futurestep
and Leadership Development Solutions
businesses. Demand for our middle
management and outsourced recruitment
offerings reached an all time high as
Futurestep recorded $85.8 million in fee
revenues for fiscal 2007 and expanded
its operating margin to 8.1% (excluding
the benefit of a $0.9 million reversal of a
previously recorded lease reserve).
Our Leadership Development Solutions
group also posted high growth in fiscal 2007.
Our broad development platform now
provides Korn/Ferry the capability to offer
our clients solutions geared at enhancing
employee effectiveness and leadership
abilities. During the year, in an effort to
further diversify our firm into adjacent,
synergistic talent management services,
we made two strategic acquisitions. The
acquisitions of Lominger International, a
leading training and development product
and services company, and LeaderSource
Ltd., a management and team development
boutique, now provide Korn/Ferry with
an even stronger suite of experience-tested,
research-based development tools and
consulting practices. Combined revenues
for the Leadership Development Solutions
business inclusive of Lominger and
LeaderSource were approximately
$38 million.
03 Korn/Ferry International
CHIEF EXECUTIVE’S REVIEW continued
In fiscal 2008, we will continue to focus
on the very things that have created our
recent success:
• Unparalleled reach and quality in
Executive Search
• New technologies and tools that will
further differentiate Korn/Ferry and
provide our search process with a unique
competitive advantage
• Additional enhancements to Futurestep
and further growth as the leading
recruitment process outsourcing (RPO)
provider in the industry
• An aggressive push to scale our
Leadership Development Solutions
• Continued recruitment and development
of our people, providing them with an
enriching and rewarding environment
that allows them to thrive professionally
Today we are transforming our business
through innovative solutions that allow us
to engage with our clients on their broader
talent management issues on an ongoing,
long-term basis. We have the capabilities to
work with our clients in not only identifying
and attracting talent, but also in deploying,
developing, retaining and rewarding their
workforces.
As the demands of our clients change, we
must continue to innovate. In order to stay
ahead of the competition, we will continue
to upgrade our offerings. Through our
proprietary intellectual property and
technologies, we will infuse science into
the art of search. Not only will this further
differentiate Korn/Ferry, it will also build
a bridge between our recruiting businesses
and our other solutions.
This strategy will allow us to better serve
our clients’ diverse talent management
needs, help us to strengthen our number
one position and give us a distinct advantage
in the marketplace. We believe that this
approach will drive deeper relationships
with clients, provide our consultants with
a unique platform and unlock greater
shareholder value for years to come.
Korn/Ferry’s success is built upon a team
effort, and I wish to thank our clients,
colleagues and shareholders for making
fiscal 2007 a watershed year. I would
also like to acknowledge our leadership
team, our board and especially Paul for
their continued hard work, stewardship
and commitment to our strategy.
I am excited about the future and look
forward to continuing to deliver the
operational and financial results that
have made us the clear industry leader.
Gary D. Burnison
Chief Executive Officer
04 Korn/Ferry International
FINANCIAL HIGHLIGHTS
Continued focus on exceptional client service
and innovative talent management solutions
has not only enabled Korn/Ferry to become
trusted business advisors and business partners
to our clients but also to deliver an exceptional
set of financial results for fiscal 2007.
’05
’06
’07
$452.2
$522.9
$653.4
Total fee revenue in millions, fiscal year
’05
’06
’07
$0.90
$1.09
$1.38
Earnings per share in dollars, fiscal year*
’05
’06
’07
$53.9
$70.2
$85.8
Futurestep fee revenue in millions, fiscal year
* Adjusted fiscal 2007 results exclude the effect of SFAS 123(R) stock option
expensing (which was implemented for the first time in fiscal 2007) of approximately
$3.6 million after tax, and a $3.3 million after tax charge for an employment contract
change offset by a $0.4 million after tax reversal of a previously established lease
restructuring reserve. Adjusted fiscal 2006 results exclude the effect of a $4.5 million
after tax loss recovery on an investment previously written off that was sold in fiscal
2006 and $6.5 million of one-time tax benefits. These are non-GAAP measures that
the Company believes provide useful information regarding the ongoing results of
operations because they have been prepared on a basis comparable year-over-year.
These measures are not intended to replace EPS measured in accordance with U.S.
Generally Accepted Accounting Principles.
’05
’06
’07
$206.9
$278.2
$324.3
Ending cash balance in millions, fiscal year
05 Korn/Ferry International
REDEFINING THE INDUSTRY
Executive Search
Since our inception, we have filled more
than 120,000 executive-level positions
including board directors, chief executive
officers, chief financial officers, chief
operating officers, chief information officers
and other senior officers.
Our search consultants operate in a highly
specialized global network of more than
30 market sectors and functional areas of
expertise, including a team dedicated to
CEO & Board Services. Korn/Ferry
consultants combine an in-depth
understanding of their given industry with
unsurpassed knowledge of and access to
the top players, guaranteeing the highest
levels of service – and most effective results
– for clients worldwide.
Korn/Ferry boasts a unique approach to
executive search that integrates practical
experience with scientific research, and
infuses quality and standardization into
the search process. We employ a rigorous
interviewing approach that identifies in
advance the right competencies to evaluate,
and offers clients deeper insights into a
candidate’s accomplishments, expertise
and fit. Organizations that partner with
Korn/Ferry also benefit from Search
Assessment SM, our proprietary online
methodology that matches candidates against
statistically validated best-in-class profiles.
For clients, this approach translates into
less guesswork, a faster fill rate and a clearer
roadmap for success, not to mention a
statistically proven ability to generate
better results in identifying the right talent
for the position.
06 Korn/Ferry International
Leadership
Development Solutions
Our comprehensive blend of leadership
services assists clients with the ongoing
assessment and development of their
leadership teams.
Succession Planning — Assesses the
competencies of existing management
resources as a basis for understanding key
succession gaps and related development
opportunities
Management & Team Development —
Assesses and enhances the effectiveness
of senior managers and leadership teams
Competency Modeling — Assists clients in
defining the critical competencies required
for success
Executive Coaching — Enhances the
effectiveness of key talent via high
performance and developmental coaching
Onboarding — Improves the success of
external hires and new promotions through
individual, team and enterprise coaching
Merger Integration — Assesses and integrates
talent pursuant to a merger or acquisition
Executive Compensation — Through our
affiliate Executive Compensation Advisors,
ensures that management and executive
pay programs and incentives align with
shareholder value, company strategy and
sound governance practices
Cultural Change — Aligns culture with a
company’s strategy and organizational
requirements
Integrated Talent Management —
Coordinates all key aspects of the talent
management process through our
proprietary Web-based technology
platform, Executive Center SM
During the last 12 months, Korn/Ferry
acquired both Lominger International and
LeaderSource Ltd. This provides us an
even stronger suite of experience-tested,
research-based development tools and
consulting processes.
Futurestep
Futurestep, a Korn/Ferry company, is a global
leader in outsourced recruitment for middle
management professionals. Companies
worldwide from every major industry turn to
Futurestep for help attracting the highest quality
mid-level talent and remaining competitive in
this increasingly challenging marketplace.
Futurestep’s process leverages a multi-channel
sourcing strategy and global database of more
than a million pre-screened professionals to
provide a diverse set of candidates.
Futurestep’s recruitment solutions include:
Recruitment Process Outsourcing (RPO) —
Manages part or all of the client’s recruitment
function through a fully integrated, measurable,
single-source solution, often including on-site
consultants from Futurestep
Project Recruitment — Delivers multiple hires
with built-in timeline and metrics
Interim Solutions — Solves the need for
temporary, flexible mid-management
professionals
Mid-Level Search — Addresses an
organization’s need for key mid-level talent
Consulting — Through The Newman Group, a
Futurestep company, provides talent acquisition
and management consulting services addressing
all facets of the talent management lifecycle,
including strategic analysis and planning;
process review and optimization; technology
and services evaluation, selection and
implementation; and workforce planning
We believe that clients would prefer to work
with fewer trusted partners for multiple HR
needs. The result is an approach to talent
that spans the entire employee lifecycle and
enables our clients to drive success through
the empowered management of people.
R A C T D
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P
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Korn/Ferry’s
Diversified
Solutions
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P
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RETAIN
07 Korn/Ferry International
COMPANY LEADERSHIP
Board of Directors
Paul C. Reilly (1)
Chairman,
Korn/Ferry International
James E. Barlett * (3,5)
Vice Chairman,
TeleTech Holdings, Inc.
Gary D. Burnison (2)
Chief Executive Officer,
Korn/Ferry International
Frank V. Cahouet * (3+,4)
Retired Chairman, President
and Chief Executive Officer,
The Bank of New York
Mellon Corporation
Sakie T. Fukushima
Senior Client Partner,
Korn/Ferry International
Patti S. Hart * (5+,6)
Former Chairman and
Chief Executive Officer,
Pinnacle Systems, Inc.
David L. Lowe * (4)
Vice Chairman,
Friedman Fleischer & Lowe
Edward D. Miller * (4)
Former President and
Chief Executive Officer,
AXA Financial, Inc.
08 Korn/Ferry International
Ihno Schneevoigt * (4)
Former Management Board Member
and Human Resources Director,
Allianz Versicherungs AG and
Allianz Lebensversicherung AG
Gerhard Schulmeyer * (4,5)
Managing Director,
Gerhard, LLC
Ken Whipple * (3,4+)
Chairman,
CMS Energy Corporation
Harry L. You *
Chief Executive Officer,
BearingPoint Inc.
Global Operating Committee
Gary D. Burnison (2)
Chief Executive Officer
Cheryl Buxton
Global Managing Director,
Life Sciences Market
Robert A. Damon
President, North America
Robert Grandy
Global Managing Director,
Financial Market
Joe Griesedieck
Vice Chairman
Gary C. Hourihan
Executive Vice President and President,
Leadership Development Solutions
Linda Hyman
Managing Director,
Integrated Services Programs
Scott E. Kingdom
Global Managing Director,
Industrial Market
Robert McNabb
Chief Executive Officer, Futurestep
and Executive Vice President,
Korn/Ferry International
Paul C. Reilly (1)
Chairman
Tierney Remick
Global Managing Director,
Consumer Market
Chris van Someren
President, Europe, Middle East & Africa
Charles Tseng
President, Asia Pacific
Richard Spitz
Global Managing Director,
Technology Market
Charles W.B. Wardell III
Managing Director,
Northeast U.S. Region
(1) Chief Executive Officer until June 30, 2007
(2) Chief Executive Officer effective July 1, 2007
(3) Member, Audit Committee
(4) Member, Compensation & Personnel Committee
(5) Member, Nominating & Governance Committee
(6) Lead Director
* Independent Director
+ Denotes Committee Chair
CORPORATE
INFORMATION
Stock Listing
Korn/Ferry International Class A common
shares are traded on the New York Stock
Exchange under the symbol KFY.
Legal Counsel
Gibson, Dunn & Crutcher LLP
Los Angeles, California
Auditors
Ernst & Young LLP
Los Angeles, California
Investor Contact
Gregg Kvochak
+1 310 556 8550
Media Contact
Michael Distefano
+1 310 843 4199
Annual Meeting
The annual meeting of shareholders
will be held at 10:00 a.m. PDT,
September 11, 2007, at:
InterContinental Los Angeles
2151 Avenue of the Stars
Los Angeles, California 90067
Registrar and Transfer Agent
For address changes, account consolidation,
registration changes, stock holdings and lost
stock certificates, please contact:
Mellon Investor Services
Shareholder Services
P.O. Box 3315
South Hackensack, New Jersey 07606
Domestic: +1 877 889 7584
International: +1 201 329 8660
www.melloninvestor.com
OUR OFFICES WORLDWIDE
1900 Avenue of the Stars, Suite 2600
Los Angeles, California 90067
Tel: +1 310 552 1834
Fax: +1 310 553 6452
www.kornferry.com
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