Korn Ferry

AT THE 
INTERSECTION
OF TALENT AND STRATEGY

2017 ANNUAL

REPORT

WE ARE THE 
PREEMINENT
GLOBAL PEOPLE AND 
ORGANIZATIONAL 
ADVISORY FIRM. 

WE HELP LEADERS, ORGANIZATIONS, AND 
SOCIETIES SUCCEED BY RELEASING THE 
FULL POWER AND POTENTIAL OF PEOPLE.

“OUR WORK WITH KORN FERRY HAS CHANGED THE WAY WE 

MANAGE TALENT. WE HAVE BECOME OBSESSIVELY FOCUSED ON 
FUTURE SKILLS, AND PREPARING OUR LEADERS AND EMPLOYEES 
FOR THE FUTURE. IT HAS ALSO CHANGED THE WAY WE APPROACH 
LEADERSHIP DEVELOPMENT, AS WE PRIORITIZE THE NEED FOR 

LIFELONG LEARNING.”

Marta de las Casas Fuentes
Director, Global Talent & Development

OUR SOLUTIONS: 

STRATEGY EXECUTION AND 
ORGANIZATION DESIGN

ASSESSMENT AND
SUCCESSION

TALENT STRATEGY 
AND WORK DESIGN

EXECUTIVE SEARCH
AND RECRUITMENT

REWARDS AND
BENEFITS

LEADERSHIP
DEVELOPMENT 

Our vision of growth requires collaborative execution to become 
reality. This execution will be anchored in our culture. We are a 
community that values:

INCLUSION

KNOWLEDGE

HONESTY

PERFORMANCE

We do this in an energizing climate where we act with an open 
mind and insatiable curiosity, never settling for the status quo.

3

3 YEAR ADJUSTED
EBITDA*

in millions

$190.2

2016

$161.7

2015

3 YEAR ADJUSTED
FEE REVENUES**

in millions

$1,303.1

$198.1

$482.1

$1,028.2

$163.7

$267.1

$235.0

2017

$1,569.1

$223.7

$727.7

$597.4

$622.9

$617.7

2015

2016

2017

P
E
T
S
E
R
U
T
U
F

P
U
O
R
G

Y
A
H

H
C
R
A
E
S

I

E
V
T
U
C
E
X
E

* EBITDA refers to earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA further adjusts EBITDA to exclude 

restructuring charges (recoveries), net, integration/acquisition costs, management separation costs, Venezuelan F/X loss, and includes 
the deferred revenue adjustment related to the Hay Group acquisition. EBITDA, and Adjusted EBITDA are non-GAAP fi nancial 
measures. See pages F-39 through F-41 of the accompanying Form 10-K for the fi scal year ended April 30, 2017 for a presentation of 
the most directly comparable GAAP measures and reconciliations to those measures.

 
 
 
 
 
3 YEAR ADJUSTED
FEE REVENUE MIX**

47%

37%

26%

58%

48%

39%

5
1
0
2

6
1
0
2

7
1
0
2

16%

15%

14%

EXECUTIVE  SEARCH

HAY GROUP 

FUTURESTEP

** FY17 and FY16 adjusted fee revenue for Hay Group has been adjusted to include the deferred revenue write-o related 
to the Hay Group acquisition. Adjusted fee revenue is a non-GAAP fi nancial measure. See pages F-36 and F-40 of the 
accompanying Form 10-K for the fi scal year ended April 30, 2017 for a presentation of the most directly comparable 
GAAP measure and a reconciliation to that measure.

DEAR STOCKHOLDERS

I AM PLEASED TO SHARE WITH YOU THE 
HIGHLIGHTS OF OUR FISCAL YEAR 2017:  

As anyone who has done construction knows, the first 

stages are the most visible: foundation dug, cement 

 ƒ We reached record adjusted fee revenues of $1.57 
billion and record adjusted EBITDA of $235 million.

 ƒ We continued to return capital to our shareholders 
through dividends and stock buy backs (1.14 million 

poured, walls framed. But much of the progress 

after that — electrical wiring, plumbing, heating and 

ventilation — happens literally behind the scenes. Yet 

these are the vital connections that make buildings 

and homes safe and livable. 

shares repurchased or approximately 2 percent of 

Over the past fiscal year, we too have been engaged 

outstanding shares).

 ƒ

Korn Ferry shares appreciated approximately 19 

percent (based on a comparison of closing prices on 

the last trading day of fiscal years 2017 and 2016).

 ƒ

The company continued to transform itself from 

a mono-line business to a global management 

consulting firm. 47 percent of our revenue was 

generated outside of talent acquisition services.

 ƒ Maintained our No. 1 position among the “Big 5” global 
search firms. (Named by Forbes magazine as the No. 1 
executive recruiting firm in North America).

THESE ACHIEVEMENTS ARE THE 
VISIBLE RESULTS OF ALL THE HARD 
WORK UNDERTAKEN ACROSS OUR 
FIRM BY MANY TALENTED AND 
DEDICATED COLLEAGUES.

I was reminded of this fact as I watched from my office 

window in Los Angeles a building rise from below-ground 

to skyscraper. At first the work was very visible — the 

girders went up right away. Every time I looked out the 

window, it seemed another floor was added. Then work 

appeared to stop. The construction crews were there, but 

incremental progress was far less visible.

in a kind of “construction” as we transform both 

ourselves and how we serve our clients. It began with 

the combination of Korn Ferry and Hay Group — the 

most significant move in our firm’s history and in our 

industry at large. 

The whole point of this marriage has been to give 

our firm even more reasons to engage with clients 

— beyond our iconic talent acquisition offering. With 

more than 1,000 client engagements in the fiscal year 

that involved a combination of our advisory and talent 

acquisition offerings, our strategy is taking hold. 

From organizational advisory services, strategy 

execution and leadership development to 

compensation and rewards offerings and more — all 

enriched by our treasure trove of intellectual property 

— Korn Ferry is changing the lives of so many 

executives and the organizations they lead.

With more than 7,000 colleagues, we’re also proud 

that our new home is more vibrant and diverse than 

ever: 62 percent of our employees are female; 53 

percent of our firm is comprised of Millennials; and 69 

percent of our workforce is located outside the United 

States. 

MORE THAN EVER, WE’RE HELPING 
OUR CLIENTS DRIVE PERFORMANCE 
THROUGH THEIR PEOPLE. AS WE 
EMBARK UPON A NEW FISCAL 
YEAR, WE BEGIN OUR NEXT PHASE, 
FOCUSING ON THE FOLLOWING 
STRATEGIC GROWTH INITIATIVES:

1.  Leadership Development. Arguably, we are the 

biggest provider of leadership development 

training in the world — about 700 colleagues work 

in this area every day. This is a large and growing 

The conclusion of this fiscal year marks my tenth year 

as CEO of Korn Ferry — although in many ways I still 

feel like it’s my first year. A lot of change has taken 

place during this time. We’ve increased our fee revenue 

threefold. Our talent acquisition business, which a 

decade ago comprised about 80 percent of our overall 

revenue, this year generated 53 percent of our overall 

revenue. We’ve made a series of acquisitions that have 

changed the trajectory of our firm, expanding our 

world-class intellectual property and offerings along 

the way. Even with all the moves we’ve made to date, I 

believe the best is still yet to come.     

market and we continue to combine and evolve 

Our own research tells us that the No. 1 predictor of 

our intellectual property from our legacy firms to 

success is learning agility — having insatiable curiosity 

create offerings that we can deliver at scale.

and refusing to accept the status quo. The progression 

2.  Rewards and Benefits. In this other large 

market for us, we have an established brand and 

permission to engage. We are not only developing 

and increasing our own talent in rewards and 

benefits, but also wrapping this offering around 

of our firm is no different. While we’re not the firm we 

were ten years ago, or even a year ago, we’re still not the 

firm we know we can be. Our journey is all about agility, 

as we constantly evolve our business and change the 

paradigm for how companies think about their talent. 

our talent acquisition solutions. Companies are 

As we increasingly extend our brand, broaden our 

increasingly embracing our rewards and benefits 

solutions and attract top talent to our firm, Korn Ferry is 

expertise to motivate their people — ensuring their 

well-positioned for the future, and I’m excited about our 

workforce is appropriately compensated to achieve 

fiscal year ahead. 

the highest levels of performance. 

I want to personally express my appreciation to our 

3.  Products. Today we generate roughly $230 million 

colleagues across the globe. I am grateful not only 

in product revenue from offerings that range from 

for their dedication and outstanding service, but their 

compensation, engagement, assessment and 

embrace of our purpose, vision and values.

I am also thankful to our leadership team and board 

of directors for their valuable guidance in shaping this 

journey and making this fiscal year so memorable.

Regards,

Gary D. Burnison

more. We are focused on bundling and integrating 

these product offerings more substantially with 

our clients and creating a business that we expect 

could vastly scale.

4.  Marquee Accounts. Another major focus is 

dedicated to those clients where we have a strong 

opportunity to scale. We’re continuing to develop 

and add account leaders to ensure we bring the 

full weight of the firm to clients, thus garnering 

a larger share of spend and multi-business line 

relationships.

5.  Healthcare. As this market likely continues to go 

through rapid change, we see substantial growth 

potential for our solutions. Investments we’ve made 

include hiring dedicated healthcare specialists and 

devising broader solutions specific to healthcare, 

built upon our intellectual property. 

BOARD OF DIRECTORS

GARY BURNISON

GEORGE SHAHEEN

DOYLE BENEBY

WILLIAM FLOYD

Chief Executive 
Officer

Non-Executive 
Chairman

Former Chief Executive
Officer, CPS Energy

Former Chairman, 
Buffet Holdings, Inc. 

CHRISTINA GOLD 

JERRY LEAMON

ANGEL MARTINEZ

DEBRA PERRY

Former Chief Executive
Officer, The Western 
Union Company

Former Global 
Managing Director, 
Deloitte & Touche LLP

Non-Executive 
Chairman, Deckers 
Outdoor Corporation

Former Senior 
Managing Director, 
Moody’s Corporation

“KORN FERRY HAS FACILITATED AIRBUS’ EXPLORATION OF UNKNOWNS AND 
HAS ENABLED US TO GAIN INSIGHT INTO TRENDS AND FUTURE BUSINESS 
PRACTICES.”

Mark Reinecke
Senior Vice President, Top Executive Management & Acquisitions
Human Resources

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Í ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended April 30, 2017

OR

‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-14505

Form 10-K

KORN/FERRY INTERNATIONAL
(Exact Name of Registrant as Specified in its Charter)

Delaware
(State or Other Jurisdiction of Incorporation or Organization)

95-2623879
(I.R.S. Employer Identification Number)

1900 Avenue of the Stars, Suite 2600, Los Angeles, California
(Address of principal executive offices)

90067
(Zip code)

(310) 552-1834
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock, par value $0.01 per share

Name of Each Exchange on Which Registered
New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes Í No ‘
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ‘ No Í
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes Í No ‘
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes Í No ‘
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ‘
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Í

Non-accelerated filer ‘

Accelerated filer ‘

Smaller reporting company ‘

(Do not check if a smaller reporting company)

Emerging growth company ‘
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ‘
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ‘ No Í
The number of shares outstanding of our common stock as of June 20, 2017 was 56,954,101 shares. The aggregate market value of
the registrant’s voting and non-voting common stock held by non-affiliates of the registrant on October 31, 2016, the last business day
of the registrant’s most recently completed second fiscal quarter, (assuming that the registrant’s only affiliates are its officers, directors
and 10% or greater stockholders) was approximately $1,069,775,603 based upon the closing market price of $20.39 on that date of a
share of common stock as reported on the New York Stock Exchange.
Documents incorporated by reference
Portions of the registrant’s definitive Proxy Statement for its 2017 Annual Meeting of Stockholders scheduled to be held on
September 27, 2017 are incorporated by reference into Part III of this Form 10-K.

KORN/FERRY INTERNATIONAL

Index to Annual Report on Form 10-K for the Fiscal Year Ended April 30, 2017

Item #

Item 1

Item 1A

Item 1B

Item 2

Item 3

Item 4

Item 5

Item 6

Item 7

Description

Part I.

Business

Risk Factors

Unresolved Staff Comments

Properties

Legal Proceedings

Mine Safety Disclosures

Executive Officers

Part II.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities

Selected Financial Data

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A

Quantitative and Qualitative Disclosures About Market Risk

Item 8

Item 9

Item 9A

Item 9B

Item 10

Item 11

Item 12

Item 13

Item 14

Financial Statements and Supplementary Data

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

Controls and Procedures

Other Information

Directors, Executive Officers and Corporate Governance

Executive Compensation

Part III.

Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters

Certain Relationships and Related Transactions, and Director Independence

Principal Accounting Fees and Services

Part IV.

Item 15

Exhibits, Financial Statement Schedules

Signatures

Financial Statements and Financial Statement Schedules

Page

1

11

23

23

23

23

23

25

27

29

55

56

56

56

56

57

57

57

57

57

58

62

F-1

Item 1. Business

About Korn Ferry

PART I.

Korn/Ferry International (referred to herein as the “Company,” “Korn Ferry,” or in the first person notations “we,”
“our,” and “us”) is the preeminent global people and organizational advisory firm. We opened our first office in Los
Angeles in 1969 and currently operate in 114 offices in 53 countries. We have the ability to deliver our solutions on
a global basis, wherever our clients do business. As of April 30, 2017, we had 7,232 full-time employees, including
1,330 consultants (517 Executive Search, 557 Hay Group (formerly known as Leadership & Talent Consulting
(“Legacy LTC”) which was combined with HG (Luxembourg) S.à.r.l (“Legacy Hay”) in December 2015), and
256 Futurestep) who are primarily responsible for client services. Our clients include many of the world’s largest
and most prestigious public and private companies, middle market and emerging growth companies, as well as
government and nonprofit organizations. We have built strong client loyalty with 82% of our assignments
performed during fiscal 2017 on behalf of clients for whom we had conducted assignments in the previous three
fiscal years. We have made significant investments in our business with the acquisitions of PDI Ninth House and
Global Novations in fiscal 2013, Pivot Leadership in fiscal 2015, and Legacy Hay in fiscal 2016. These acquisitions
have strengthened our intellectual property, enhanced our geographical presence, added complimentary
capabilities to further leverage search relationships and broadened the capabilities for assessment and
development. They also improved our ability to support the global business community not only in attracting top
talent and designing compensation and reward incentives, but also with an integrated approach to the entire
leadership and people continuum.

We were originally formed as a California corporation in November 1969 and reincorporated as a Delaware
corporation in fiscal 2000.

The Korn Ferry Opportunity

Historically, the Human Resources (“HR”) industry has offered piecemeal views of people based on inconsistent
processes, technologies and measurement. Korn Ferry has assembled intellectual property which we bring to
market through a holistic framework that sits at the intersection of an organization’s strategy and its people.

Superior performance happens when an organization establishes the conditions for success and when the right
people are enabled and engaged, sitting in the right seats and are developed and rewarded. We can help a client
operationalize its business strategy through our six solution sets:

Strategy Execution &
Organization Design

We establish the conditions for success by clarifying strategy; designing an
operating model and organization structure that aligns to it; and defining a high
performance culture. We enable strategic change by engaging and motivating
people to perform.

Talent Strategy and Work
Design

We map talent strategy to business strategy and help organizations put their plan
into action. We make sure they have the right people, in the right roles, engaged
and enabled to do the right things.

Rewards and Benefits

Assessment and
Succession

We help organizations align reward with strategy. We help them pay their people
fairly for doing the right things – with rewards they value – at a cost the
organization can afford.

We provide actionable, research-backed insights that allow organizations to
understand the true capabilities of their people so they can make decisions that
ensure the right leaders are ready – when and where they are needed – in the
future.

1

Executive Search and
Recruitment

We integrate scientific research with our practical experience and industry-specific
expertise to recruit professionals of all levels and functions at organizations across
every industry.

Leadership Development We activate purpose, vision, and strategy through leaders at all levels and

organizations. We combine expertise, science, and proven techniques with forward
thinking and creativity to build leadership experiences that help entry to senior-
level leaders grow and deliver superior results.

About Our Intellectual Property and Technology

Korn Ferry is a knowledge-based company with deep intellectual property (“IP”) and research that allow us to
deliver meaningful outcomes for our clients.

The Korn Ferry Institute, our research and analytics arm, unites the following areas: talent and organizational
analytics, research and thought leadership, and assessment and IP development. These teams work together to
leverage data and build IP in ways that give Korn Ferry a competitive advantage and a privileged understanding of
how people and organizations can best achieve superior performance.

We do research that underpins our products and consulting services across Korn Ferry’s three business lines, and
supports our six solution sets in the service of solving our clients’ most complex business issues, from creating
growth to becoming digitally sustainable to navigating mergers and acquisitions. Our vast library of proprietary
tools and techniques has been acquired or developed through research by our social scientists, statisticians and
IP development specialists. We have unique insight into what makes great leaders and how strategic talent
decisions help contribute to competitive advantage and success.

Our talent data includes five million assessments, profiles of eight million candidates, reward data on twenty million
professionals and engagement data on six million professionals. This database provides the insight and
intelligence for Korn Ferry’s team of social scientists and consultants to determine the true drivers of leadership,
performance and value in the market and how any individual or organization measures up. Solutions leveraging
this IP help to deliver on Korn Ferry’s holistic framework that sits at the intersection of an organization’s strategy
and its people.

In fiscal 2017, the Korn Ferry Institute, in partnership with thought leaders across our business, established the
Korn Ferry Superior Performance Model. This is a foundational framework that captures the key success factors
that drive organizational performance. Divided into organizational enablers and people enablers, our research
shows the relationship between the different levers that drive discretionary energy and financial performance.

In the fiscal year ahead, our IP strategy will be to:

E Embed our Superior Performance Model framework into our consulting methodology with clients;
E Develop a compelling, research-based framework that brings together the vast people and organizational IP

from the legacy firms and clearly describes what drives superior performance;

E Simplify and integrate our portfolio of products, solutions and data assets around this framework and;
E Focus our innovation efforts on the areas within this framework to build differentiated offerings, leverage the

vast amounts of data we have, and promote thought leadership that builds the brand.

Leadership Assessment, Succession and Development will be core solution areas, where we have industry-
leading capabilities and IP and significant competitive advantages including recognition as a market leader in
leadership agility. The next frontier of agility will extend beyond individuals to the collective agility of teams and
organizations. Given our newly acquired expertise from Legacy Hay in the area of Strategy Execution and
Organization Design, we are now positioned to bring together the people and organizational aspects of agility,
establish differentiated thought leadership and develop a distinctive solution.

In the area of Strategy Execution and Organization Design, we will fine-tune a new organizational diagnostic
based on drivers of superior business performance that can be applied to the C-suite and cascaded down through
an organization.

Within Rewards, we believe the market for total rewards strategies and approaches will remain strong, especially

given the increased demand for pay parity. We are developing solutions, growing our rewards database and

providing research-based thought leadership to assist organizations optimize the biggest expense item on their

operating ledger.

Within Executive Search, we will continue to add more discipline and scientific research into the recruitment

process, with emphasis shifting from candidate identification to candidate assessment, fit, attraction, engagement

and rewards. Driving this focus is our enhanced technology as the power of the Internet, big data and online talent

communities make it possible to efficiently identify greater numbers of qualified candidates. We will continue

making enhancements to Korn Ferry’s Four Dimensions of Leadership & Talent (KF4D), our talent assessment

and analytics engine, including integrating new pay and work measurement IP from Legacy Hay.

Finally, we will further embed our IP into new and existing tools commercialized through Korn Ferry’s Products

Group, creating unique value for this growing business line that provides data, analytics and insight products that

aid in recruiting, assessing, developing, engaging and rewarding talent. Examples of this include enhanced

blended assessments that can be used in recruitment and talent management scenarios, and development

targeted to success profiles for roles.

About Our Business Segments

Korn Ferry solutions and intellectual property are delivered through the following business segments:

Executive Search: Korn Ferry Executive Search helps clients attract the best executive talent for moving their

companies in the right direction. The business is managed by geographical region leaders with a focus on

recruiting board-level, chief executive and other senior executive positions for clients predominantly in the

consumer, financial services, industrial, life sciences/healthcare provider, technology and educational/not-for-profit

industries. We also have centers of functional expertise; our Board & CEO Services group, for example, focuses

exclusively on placing CEOs and board of directors in organizations around the world. The relationships that we

develop through this business allow us to add incremental value to our clients through the delivery of our other

people and organizational advisory solutions.

Our executive search services concentrate on searches for positions with annual cash compensation of $300,000

or more, or comparable compensation in foreign locations, which may involve board-level, chief executive and

other senior executive positions. The industry is comprised of retained and contingency recruitment firms.

Retained firms, such as Korn Ferry, typically charge a fee for their services equal to approximately one-third of the

first-year annual cash compensation for the position being filled regardless of whether the position is filled.

Contingency firms generally work on a non-exclusive basis and are compensated only upon successfully placing a

recommended candidate.

Hay Group: Korn Ferry Hay Group helps an organization to align its people to their strategy – developing,

engaging, and rewarding them to reach new heights. We deliver this through a combination of solutions consulting

and product services that addresses how people work, and how to nurture them so that strategies succeed. We

capitalize on the breadth of our intellectual property, service offerings and expertise to do what is right for the

client. Services are delivered by an experienced team of consultants and includes one of the richest and most

comprehensive people data sets.

Futurestep: Korn Ferry Futurestep draws from Korn Ferry’s four decades of recruitment experience to offer fully

scalable, flexible services that help organizations attract top people while reducing costs and time to hire. Our

portfolio of services includes Recruitment Process Outsourcing (“RPO”), Project Recruitment, Professional Search,

Talent Consulting and Employer Branding.

We file annual, quarterly and current reports, proxy statements and other documents with the Securities and

Exchange Commission (the “SEC”), pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”). You

may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street

N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by

calling the SEC at 1-800-732-0330. Our reports, proxy statements and other documents filed electronically with the

SEC are available at the website maintained by the SEC at www.sec.gov.

2

3

Within Rewards, we believe the market for total rewards strategies and approaches will remain strong, especially
given the increased demand for pay parity. We are developing solutions, growing our rewards database and
providing research-based thought leadership to assist organizations optimize the biggest expense item on their
operating ledger.

Within Executive Search, we will continue to add more discipline and scientific research into the recruitment
process, with emphasis shifting from candidate identification to candidate assessment, fit, attraction, engagement
and rewards. Driving this focus is our enhanced technology as the power of the Internet, big data and online talent
communities make it possible to efficiently identify greater numbers of qualified candidates. We will continue
making enhancements to Korn Ferry’s Four Dimensions of Leadership & Talent (KF4D), our talent assessment
and analytics engine, including integrating new pay and work measurement IP from Legacy Hay.

Finally, we will further embed our IP into new and existing tools commercialized through Korn Ferry’s Products
Group, creating unique value for this growing business line that provides data, analytics and insight products that
aid in recruiting, assessing, developing, engaging and rewarding talent. Examples of this include enhanced
blended assessments that can be used in recruitment and talent management scenarios, and development
targeted to success profiles for roles.

About Our Business Segments

Korn Ferry solutions and intellectual property are delivered through the following business segments:

Executive Search: Korn Ferry Executive Search helps clients attract the best executive talent for moving their
companies in the right direction. The business is managed by geographical region leaders with a focus on
recruiting board-level, chief executive and other senior executive positions for clients predominantly in the
consumer, financial services, industrial, life sciences/healthcare provider, technology and educational/not-for-profit
industries. We also have centers of functional expertise; our Board & CEO Services group, for example, focuses
exclusively on placing CEOs and board of directors in organizations around the world. The relationships that we
develop through this business allow us to add incremental value to our clients through the delivery of our other
people and organizational advisory solutions.

Our executive search services concentrate on searches for positions with annual cash compensation of $300,000
or more, or comparable compensation in foreign locations, which may involve board-level, chief executive and
other senior executive positions. The industry is comprised of retained and contingency recruitment firms.
Retained firms, such as Korn Ferry, typically charge a fee for their services equal to approximately one-third of the
first-year annual cash compensation for the position being filled regardless of whether the position is filled.
Contingency firms generally work on a non-exclusive basis and are compensated only upon successfully placing a
recommended candidate.

Hay Group: Korn Ferry Hay Group helps an organization to align its people to their strategy – developing,
engaging, and rewarding them to reach new heights. We deliver this through a combination of solutions consulting
and product services that addresses how people work, and how to nurture them so that strategies succeed. We
capitalize on the breadth of our intellectual property, service offerings and expertise to do what is right for the
client. Services are delivered by an experienced team of consultants and includes one of the richest and most
comprehensive people data sets.

Futurestep: Korn Ferry Futurestep draws from Korn Ferry’s four decades of recruitment experience to offer fully
scalable, flexible services that help organizations attract top people while reducing costs and time to hire. Our
portfolio of services includes Recruitment Process Outsourcing (“RPO”), Project Recruitment, Professional Search,
Talent Consulting and Employer Branding.

We file annual, quarterly and current reports, proxy statements and other documents with the Securities and
Exchange Commission (the “SEC”), pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”). You
may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street
N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-732-0330. Our reports, proxy statements and other documents filed electronically with the
SEC are available at the website maintained by the SEC at www.sec.gov.

3

We also make available, free of charge on the Investor Relations portion of our website at www.kornferry.com, our
annual, quarterly, and current reports, and, if applicable, amendments to those reports, filed or furnished pursuant
to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such
reports with, or furnish them to, the SEC.

We also make available on the Investor Relations portion of our website at www.kornferry.com earnings
presentations and other important information, which we encourage you to review.

Our Corporate Governance Guidelines, Code of Business Conduct and Ethics and the charters of the Audit
Committee, Compensation and Personnel Committee, and Nominating and Corporate Governance Committee of
our Board of Directors are also posted on our website at http://ir.kornferry.com. Stockholders may request copies
of these documents by writing to our Corporate Secretary at 1900 Avenue of the Stars, Suite 2600, Los Angeles,
California 90067.

Industry Trends

In this competitive global economic environment, our clients are seeking new pathways to drive sustainable
profitable growth. CEOs are increasingly demanding an agile workforce that can innovate and drive growth across
borders. We believe Korn Ferry is uniquely positioned to help leaders and organizations succeed by releasing the
full power and potential of people.

Consolidation of Talent Management Solution Providers – In choosing recruitment and human resource service
providers, we believe:

E Companies are actively in search of preferred providers in order to create efficiencies and consolidate vendor

relationships;

E Companies that can offer a full suite of talent management solutions are becoming increasingly attractive; and
E Clients seek trusted advisors who understand their business and unique organizational culture in order to

manage the multiple needs of their business on a global scale.

Skills Gaps – There are not enough highly “skilled” people coming into the labor market to fill open jobs.
Particularly at the senior management levels, the available talent pool is inadequate. New leaders must step into
bigger, more complex, and more global roles faster – and with less experience – than their predecessors. Given
this, learning agility – one’s ability to solve complex problems, easily adapt in a constantly changing world and
drive change – is more important than ever. We believe employers will increasingly seek service providers who
can help them find, develop and retain highly qualified, learning agile talent that secures a competitive advantage.

Human Capital is One of the Top CEO Challenges – The people, the minds, the alliances and the culture that can
create and then nurture innovative ideas – are seen as central to CEOs. In fact, according to The Conference
Board, human capital – how best to develop, engage, manage and retain talent – is the single biggest challenge
facing CEOs in 2017.

Talent Analytics – Companies are increasingly leveraging big data and predictive analytics to measure the
influence of activities across all aspects of their business, including HR. They expect their service providers to
deliver superior metrics and better ways of communicating results. Korn Ferry’s go-to-market approach is
increasingly focused on talent analytics. Leveraging a large set of data on talent accumulated over decades of
research, we have cataloged the elements of talent and isolated the most potent facets. The result, Korn Ferry’s
Four Dimensions of Leadership & Talent, is the talent intelligence engine that powers many of our solutions and
products. Within our Hay Group segment, we also possess several of the richest HR databases in the world, so
our clients can benchmark salaries, leadership potential, employee engagement, organizational culture and other
HR data by industry at a global and country level.

Increased Outsourcing of Recruitment Functions – More companies are focusing on core competencies and
outsourcing non-core, back-office functions to providers who can provide efficient, high-quality services. Third-
party providers can apply immediate and long-term approaches for improving all aspects of talent acquisition.
Advantages to outsourcing part or all of the recruitment function include:

E Access to a diverse and highly qualified pool of candidates, which is refreshed on a regular basis;

E Reduction or elimination of the costs required to maintain and train an in-house recruiting department in a

rapidly changing industry;

E Ability to use the workflow methodologies we have developed over tens of thousands of assignments, which

allows clients to fulfill positions on a streamlined basis;

E Ability to quickly review millions of resumes and provide the right fit for the client;

E Access to the most updated industry and geographic market information;

E Access to cutting-edge search technology software and proprietary intellectual property; and

E Ability to maintain management focus on core strategic business issues.

E

E

E

Other Industry Trends – In addition to the industry trends mentioned above, we believe the following factors will

have a long-term positive impact on the talent management industry:

Increasing demand for professionals with not just the right technical skills, but also the right leadership style,

values and motivation to meet the specific requirements of the position and organizational culture;

E Decreasing executive management tenure and more frequent job changes;

E Retiring baby boomers, creating a skills gap in the workforce;

E Shifting balance of power towards the employee as more people take charge of their own careers, and the new

norm of employee-driven development;

Increasing importance of talent mobility in engaging and developing people within an organization;

Increased attention on succession planning due to heightened scrutiny on CEOs, pressure to generate growth,

shorter CEO tenures and the emphasis being placed on making succession planning a systemic governance

process within global organizations;

E Executive pay and governance practices under more scrutiny than ever; and

E The high turnover rate and varying high volume hiring needs commonly associated with the new shared

economy.

Growth Strategy

Our objective is to expand our position as the preeminent global people and organizational advisory firm. In order

to meet this objective, we will continue to pursue five strategic initiatives:

1. Drive an Integrated, Solutions-Based Go-to-Market Strategy

Differentiating Client Value Proposition – Korn Ferry offers its clients a total approach to talent. Historically, the HR

industry has offered piecemeal views of people based on inconsistent processes, technologies and measurement.

Korn Ferry seeks to disrupt the traditional approach and has assembled intellectual property that we bring to

market through a holistic framework that sits at the intersection of an organization’s strategy and its people.

In analyzing talent management across the entire value chain, Korn Ferry has developed a robust suite of

offerings and leverages our market-leading position in executive search to extend the value we bring our clients

through our diversified capabilities along the rest of the talent lifecycle through our Hay Group and Futurestep

Our synergistic go-to-market strategy, utilizing all three of our business segments, is driving more integrated,

scalable client relationships, while accelerating our evolution to a consultative solutions-based organization. This is

evidenced by the fact that approximately 61% of our revenues come from clients that utilize multiple lines of

We are an increasingly diversified enterprise in the world of human capital services and products, an industry that

represents an estimated $600 billion global market opportunity. Korn Ferry seeks to position itself as the

preeminent global provider of solutions that represents a subset of the human capital services and products

In an effort to gain operational efficiencies and drive superior performance, we expect that multinational clients

increasingly will turn to strategic partners who can manage their people and organizational advisory needs on a

centralized basis. This will require vendors with a global network of offices and technological support systems to

manage engagements across geographical regions. We established our Marquee Accounts program to act as a

catalyst for change as we transform our Company from individual operators to an integrated talent solutions

provider, in an effort to drive major global and regional strategic account development as well as to provide a

framework for all of our client development activities. Today, the program consists of global colleagues from every

businesses.

business.

industry.

4

5

We also make available, free of charge on the Investor Relations portion of our website at www.kornferry.com, our

annual, quarterly, and current reports, and, if applicable, amendments to those reports, filed or furnished pursuant

to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such

reports with, or furnish them to, the SEC.

We also make available on the Investor Relations portion of our website at www.kornferry.com earnings

presentations and other important information, which we encourage you to review.

Our Corporate Governance Guidelines, Code of Business Conduct and Ethics and the charters of the Audit

Committee, Compensation and Personnel Committee, and Nominating and Corporate Governance Committee of

our Board of Directors are also posted on our website at http://ir.kornferry.com. Stockholders may request copies

of these documents by writing to our Corporate Secretary at 1900 Avenue of the Stars, Suite 2600, Los Angeles,

California 90067.

Industry Trends

In this competitive global economic environment, our clients are seeking new pathways to drive sustainable

profitable growth. CEOs are increasingly demanding an agile workforce that can innovate and drive growth across

borders. We believe Korn Ferry is uniquely positioned to help leaders and organizations succeed by releasing the

full power and potential of people.

Consolidation of Talent Management Solution Providers – In choosing recruitment and human resource service

providers, we believe:

relationships;

E Companies are actively in search of preferred providers in order to create efficiencies and consolidate vendor

E Companies that can offer a full suite of talent management solutions are becoming increasingly attractive; and

E Clients seek trusted advisors who understand their business and unique organizational culture in order to

manage the multiple needs of their business on a global scale.

Skills Gaps – There are not enough highly “skilled” people coming into the labor market to fill open jobs.

Particularly at the senior management levels, the available talent pool is inadequate. New leaders must step into

bigger, more complex, and more global roles faster – and with less experience – than their predecessors. Given

this, learning agility – one’s ability to solve complex problems, easily adapt in a constantly changing world and

drive change – is more important than ever. We believe employers will increasingly seek service providers who

can help them find, develop and retain highly qualified, learning agile talent that secures a competitive advantage.

Human Capital is One of the Top CEO Challenges – The people, the minds, the alliances and the culture that can

create and then nurture innovative ideas – are seen as central to CEOs. In fact, according to The Conference

Board, human capital – how best to develop, engage, manage and retain talent – is the single biggest challenge

facing CEOs in 2017.

Talent Analytics – Companies are increasingly leveraging big data and predictive analytics to measure the

influence of activities across all aspects of their business, including HR. They expect their service providers to

deliver superior metrics and better ways of communicating results. Korn Ferry’s go-to-market approach is

increasingly focused on talent analytics. Leveraging a large set of data on talent accumulated over decades of

research, we have cataloged the elements of talent and isolated the most potent facets. The result, Korn Ferry’s

Four Dimensions of Leadership & Talent, is the talent intelligence engine that powers many of our solutions and

products. Within our Hay Group segment, we also possess several of the richest HR databases in the world, so

our clients can benchmark salaries, leadership potential, employee engagement, organizational culture and other

HR data by industry at a global and country level.

Increased Outsourcing of Recruitment Functions – More companies are focusing on core competencies and

outsourcing non-core, back-office functions to providers who can provide efficient, high-quality services. Third-

party providers can apply immediate and long-term approaches for improving all aspects of talent acquisition.

Advantages to outsourcing part or all of the recruitment function include:

E Access to a diverse and highly qualified pool of candidates, which is refreshed on a regular basis;

E Reduction or elimination of the costs required to maintain and train an in-house recruiting department in a

rapidly changing industry;

E Ability to use the workflow methodologies we have developed over tens of thousands of assignments, which

allows clients to fulfill positions on a streamlined basis;

E Ability to quickly review millions of resumes and provide the right fit for the client;
E Access to the most updated industry and geographic market information;
E Access to cutting-edge search technology software and proprietary intellectual property; and
E Ability to maintain management focus on core strategic business issues.
Other Industry Trends – In addition to the industry trends mentioned above, we believe the following factors will
have a long-term positive impact on the talent management industry:
E

Increasing demand for professionals with not just the right technical skills, but also the right leadership style,
values and motivation to meet the specific requirements of the position and organizational culture;

E Decreasing executive management tenure and more frequent job changes;
E Retiring baby boomers, creating a skills gap in the workforce;
E Shifting balance of power towards the employee as more people take charge of their own careers, and the new

E
E

norm of employee-driven development;
Increasing importance of talent mobility in engaging and developing people within an organization;
Increased attention on succession planning due to heightened scrutiny on CEOs, pressure to generate growth,
shorter CEO tenures and the emphasis being placed on making succession planning a systemic governance
process within global organizations;

E Executive pay and governance practices under more scrutiny than ever; and
E The high turnover rate and varying high volume hiring needs commonly associated with the new shared

economy.

Growth Strategy
Our objective is to expand our position as the preeminent global people and organizational advisory firm. In order
to meet this objective, we will continue to pursue five strategic initiatives:

1. Drive an Integrated, Solutions-Based Go-to-Market Strategy

Differentiating Client Value Proposition – Korn Ferry offers its clients a total approach to talent. Historically, the HR
industry has offered piecemeal views of people based on inconsistent processes, technologies and measurement.
Korn Ferry seeks to disrupt the traditional approach and has assembled intellectual property that we bring to
market through a holistic framework that sits at the intersection of an organization’s strategy and its people.

In analyzing talent management across the entire value chain, Korn Ferry has developed a robust suite of
offerings and leverages our market-leading position in executive search to extend the value we bring our clients
through our diversified capabilities along the rest of the talent lifecycle through our Hay Group and Futurestep
businesses.

Our synergistic go-to-market strategy, utilizing all three of our business segments, is driving more integrated,
scalable client relationships, while accelerating our evolution to a consultative solutions-based organization. This is
evidenced by the fact that approximately 61% of our revenues come from clients that utilize multiple lines of
business.

We are an increasingly diversified enterprise in the world of human capital services and products, an industry that
represents an estimated $600 billion global market opportunity. Korn Ferry seeks to position itself as the
preeminent global provider of solutions that represents a subset of the human capital services and products
industry.

In an effort to gain operational efficiencies and drive superior performance, we expect that multinational clients
increasingly will turn to strategic partners who can manage their people and organizational advisory needs on a
centralized basis. This will require vendors with a global network of offices and technological support systems to
manage engagements across geographical regions. We established our Marquee Accounts program to act as a
catalyst for change as we transform our Company from individual operators to an integrated talent solutions
provider, in an effort to drive major global and regional strategic account development as well as to provide a
framework for all of our client development activities. Today, the program consists of global colleagues from every

4

5

line of business and geography, and is centrally coordinated by global account leaders who have deep expertise in
serving the evolving needs of large global clients. We are cascading this methodology throughout every market,
country and office.

2. Deliver Unparalleled Client Excellence

World-class Intellectual Property – Korn Ferry continues to scale and more deeply embed our industry-leading
intellectual property within the talent management processes of our global clients.

Our IP-driven tools and services are being utilized by our clients for everything from organizational development
and job profiling to selection, training, individual and team development, succession planning and more. Our
subscription services that are delivered on-line are products that help us generate long-term relationships with our
clients through large scale and technology-based HR programs on an annuity basis. We continue to seek ways to
scale our product offering to our global clients.

Global organizations utilizing our Company’s validated assessment capability are realizing the power and benefits
of Korn Ferry IP in their people processes. Our assessment capability is currently utilized by more than 60% of our
Executive Search clients. We have observed that candidates who utilize our online assessment tools stay longer
with an organization and are promoted more frequently.

Our IP orientation is further expanded by our acquisitions of Legacy Hay, Pivot Leadership, PDI Ninth House and
Global Novations. By acquiring these firms, we now offer a variety of pay, leadership development, organization
and talent strategy design, coaching and assessment solutions for different organizational levels, as well as
technology-driven talent management solutions. We possess several of the richest HR databases in the world,
spanning 114 countries – including reward data on twenty million professionals, engagement data on six million
professionals and assessment data on five million professionals.

Technology – Information technology is a critical element of all of our businesses. In fiscal 2017, we continued to
invest in enhanced tools and knowledge management to gain a competitive advantage. We further improved our
technology platform to support delivery of Korn Ferry’s Four Dimensions of Leadership (“KF4D”), our newest and
most robust assessment for Executive Search, Hay Group and Futurestep. We completed the enhancements to
our global SAP and Salesforce enterprise systems and the integration of Legacy Hay into Korn Ferry, providing
globally consistent finance, HR, business development and operations processes. We continued to invest in our IT
security infrastructure in an effort to protect the Company’s assets against today’s cyber-security threats.

In fiscal 2017, we further enhanced our scalable intellectual property content repository, which we are leveraging
across all products and services. This enables us to continue to integrate services provided across the entire Hay
Group portfolio, as well as Executive Search and Futurestep, and we have continued work on a unified talent
analytics layer to support Korn Ferry’s strategy to address this key industry trend.

Information technology is a key driver of Futurestep’s growth in RPO, project recruitment and search. Database
technology and the Internet have greatly improved capabilities in identifying, targeting and reaching potential
candidates. In fiscal 2017, we continued the integration of advanced, Internet-based sourcing, assessment and
selection technologies into the engagement workflow including the use of advanced machine learning. We
introduced the Recruiter Desktop – a modern, streamlined view of the recruiting workflow across a company’s
disparate systems incorporating machine learning which dramatically improves the matching capabilities of a
candidate to a job requisition.

We will continue to enhance our technology in order to strengthen our relationships with clients, expand our
markets through new delivery channels and maintain a competitive advantage in offering the full range of
executive talent management services.

3. Extend and Elevate the Korn Ferry Brand

Next to our people, the Korn Ferry brand is the strongest asset of the Company. Since inception, Korn Ferry has
always maintained an aggressive stance in building our global presence and supporting our vision and ongoing
growth through a comprehensive marketing approach. At the highest level, we will continue to extend and elevate
the Korn Ferry brand to raise awareness and drive higher market share within each of our lines of business.

6

line of business and geography, and is centrally coordinated by global account leaders who have deep expertise in

serving the evolving needs of large global clients. We are cascading this methodology throughout every market,

country and office.

2. Deliver Unparalleled Client Excellence

World-class Intellectual Property – Korn Ferry continues to scale and more deeply embed our industry-leading

intellectual property within the talent management processes of our global clients.

Our IP-driven tools and services are being utilized by our clients for everything from organizational development

and job profiling to selection, training, individual and team development, succession planning and more. Our

subscription services that are delivered on-line are products that help us generate long-term relationships with our

clients through large scale and technology-based HR programs on an annuity basis. We continue to seek ways to

scale our product offering to our global clients.

Global organizations utilizing our Company’s validated assessment capability are realizing the power and benefits

of Korn Ferry IP in their people processes. Our assessment capability is currently utilized by more than 60% of our

Executive Search clients. We have observed that candidates who utilize our online assessment tools stay longer

with an organization and are promoted more frequently.

Our IP orientation is further expanded by our acquisitions of Legacy Hay, Pivot Leadership, PDI Ninth House and

Global Novations. By acquiring these firms, we now offer a variety of pay, leadership development, organization

and talent strategy design, coaching and assessment solutions for different organizational levels, as well as

technology-driven talent management solutions. We possess several of the richest HR databases in the world,

spanning 114 countries – including reward data on twenty million professionals, engagement data on six million

professionals and assessment data on five million professionals.

Technology – Information technology is a critical element of all of our businesses. In fiscal 2017, we continued to

invest in enhanced tools and knowledge management to gain a competitive advantage. We further improved our

technology platform to support delivery of Korn Ferry’s Four Dimensions of Leadership (“KF4D”), our newest and

most robust assessment for Executive Search, Hay Group and Futurestep. We completed the enhancements to

our global SAP and Salesforce enterprise systems and the integration of Legacy Hay into Korn Ferry, providing

globally consistent finance, HR, business development and operations processes. We continued to invest in our IT

security infrastructure in an effort to protect the Company’s assets against today’s cyber-security threats.

In fiscal 2017, we further enhanced our scalable intellectual property content repository, which we are leveraging

across all products and services. This enables us to continue to integrate services provided across the entire Hay

Group portfolio, as well as Executive Search and Futurestep, and we have continued work on a unified talent

analytics layer to support Korn Ferry’s strategy to address this key industry trend.

Information technology is a key driver of Futurestep’s growth in RPO, project recruitment and search. Database

technology and the Internet have greatly improved capabilities in identifying, targeting and reaching potential

candidates. In fiscal 2017, we continued the integration of advanced, Internet-based sourcing, assessment and

selection technologies into the engagement workflow including the use of advanced machine learning. We

introduced the Recruiter Desktop – a modern, streamlined view of the recruiting workflow across a company’s

disparate systems incorporating machine learning which dramatically improves the matching capabilities of a

candidate to a job requisition.

We will continue to enhance our technology in order to strengthen our relationships with clients, expand our

markets through new delivery channels and maintain a competitive advantage in offering the full range of

executive talent management services.

3. Extend and Elevate the Korn Ferry Brand

Next to our people, the Korn Ferry brand is the strongest asset of the Company. Since inception, Korn Ferry has

always maintained an aggressive stance in building our global presence and supporting our vision and ongoing

growth through a comprehensive marketing approach. At the highest level, we will continue to extend and elevate

the Korn Ferry brand to raise awareness and drive higher market share within each of our lines of business.

Our leadership in executive search enables us to grow our business by increasing the number of recruitment
assignments we handle for existing clients. We also believe that our strong relationships and well-recognized
brand name will enable us to bring a broader base of solutions and services to our existing client base and to
potential new clients, while allowing us to build communities of candidates to whom we can directly market our
services.

For example, we will leverage the work our Board & CEO Services practice – recently enhanced by the addition of
Legacy Hay’s Executive Pay and Governance capabilities – performs at the top of our clients’ organizations to
promote awareness of our various solutions. We believe these engagements will create revenue opportunities
across all of our lines of business and lead to the expansion of other high-level, consultative relationships within
the board and CEO community.

We drive additional awareness and brand equity through a global marketing program that leverages Korn Ferry
Institute-generated thought leadership (whitepapers, bylined articles, and our award-winning Briefings periodical),
aggressive media relations, social media, a sophisticated demand generation platform and other vehicles that
include sponsorships, speaking opportunities, advertising and events.

4. Advance Korn Ferry as a Premier Career Destination

As our business strategy evolves, so should our talent strategy in order to drive the growth we need and the
culture we want, at a pace we can absorb. Our talent strategy is what allows us to build and attract the best talent
for ourselves (and, by extension, for our clients) to achieve our business potential.

Our goal is to become the premier career destination for top talent through offering a client-focused culture,
promotional/developmental opportunities and compensation that aligns employee behavior to corporate strategy.

In fiscal 2018, we will continue our professional development program called Reimagine. Last year all colleagues
were invited to take part in a series of pulse surveys, and we have used the results to further inform our internal
strategic initiatives. These include the launch of an HR transformation program with a number of work streams
addressing areas such as performance management, rewards, career architecture and talent acquisition. We will
also expand the Korn Ferry Academy, our firm’s new center for enterprise-wide internal learning and development.
We are committed to investing in the professional and personal development of our people throughout their career
with us.

5. Pursue Transformational Opportunities Along the Broad Human Resources Spectrum

We have an unrivaled ability to address the entire talent continuum, delivering solutions and products in the
following areas:

E Strategy Execution and Organization Design
E Talent Strategy and Work Design
E Rewards and Benefits
E Assessment and Succession
E Executive Search and Recruitment
E

Leadership Development

We will continue to internally develop and add new products and services that our clients demand while pursuing a
disciplined acquisition strategy. We have developed a core competency in the identification, acquisition and
integration of Merger and Acquisition (“M&A”) targets that play a significant role in the attainment of our strategic
objectives and the creation of shareholder value. As we look forward, we will continue building Korn Ferry as the
leading authority on driving business performance through people. Our disciplined approach to M&A will continue
to play a vital role in this journey and is a critical component of our overall approach to capital deployment.

Our Services and Organization

Organization

The Company operates in three global business segments: Executive Search, Hay Group, and Futurestep. Our
executive search business is managed on a geographic basis throughout our four regions: North America, Europe,

6

7

the Middle East and Africa (“EMEA”), Asia Pacific and Latin America. Hay Group and Futurestep are managed on
a global basis with operations in North America, EMEA, Asia Pacific and Latin America.

We address the people and organizational advisory needs of our clients through our three business segments:

Executive Search

Overview – Korn Ferry Executive Search helps clients attract the best executive talent for executing and delivering
their business strategy. Our services are typically used to fill executive-level positions, such as board directors,
chief executive officers, chief financial officers, chief operating officers, chief information officers, chief human
resource officers and other senior executive officers.

We utilize a standardized and differentiated approach to placing talent that integrates research based IP with our
practical experience. Providing a more complete view of the candidate than is otherwise possible, we believe our
proprietary tools generate better results in attracting the right person for the position, and open doors to engage
with clients about their broader people and organizational needs.

As part of being retained by a client to conduct a search, we assemble a team comprised of consultants with
appropriate geographic, industry and functional expertise. Our search consultants serve as management advisors
who work closely with the client in identifying, assessing and placing qualified candidates. In fiscal 2017, we
executed 5,933 new executive search assignments.

We emphasize a close working relationship with the client and a comprehensive understanding of the client’s
business issues, strategy and culture. The search team consults with its established network of resources and
searches our databases containing profiles of approximately five million executives to assist in identifying
individuals with the right background, cultural fit and abilities. Through this process, an original list of candidates is
carefully screened through phone interviews, video conferences and in-person meetings. Clients and candidates
complete Korn Ferry’s Four Dimensional Executive Assessment. Launched in fiscal 2015 and powered by Korn
Ferry’s Four Dimensions of Leadership & Talent, this tool gives clients insights about each candidate’s
competencies, personality traits, drivers, and past experiences that are aligned to the role. We conduct due
diligence and background verification of the candidates throughout this process, at times with the assistance of an
independent third party. In fiscal 2017, we integrated Hay Group’s industry standard job grading, job description
and salary benchmark methodologies into the executive search process.

Industry Specialization – Consultants in our five global markets and regional specialty practice groups bring an in-
depth understanding of the market conditions and strategic management issues faced by clients within their
specific industry and geography. We are continually looking to expand our specialized expertise through internal
development and strategic hiring in targeted growth areas.

Percentage of Fiscal 2017 Assignments Opened by Industry Specialization

Global Markets:

Industrial
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Life Sciences/Healthcare Provider . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

31%
18%
17%
17%
12%

Regional Specialties (United States):

Education/Not-for-Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5%

Functional Expertise – We have organized executive search centers of functional expertise, composed of
consultants who have extensive backgrounds in placing executives in certain functions, such as board directors,
CEOs and other senior executive officers. Our Board & CEO Services group, for example, focuses exclusively on
placing CEOs and board directors in organizations around the world. This is a dedicated team from the most
senior ranks of the Company. Their work is with CEOs and in the board room, and their expertise is organizational
leadership and governance. They conduct hundreds of engagements every year, tapping talent from every corner

8

the Middle East and Africa (“EMEA”), Asia Pacific and Latin America. Hay Group and Futurestep are managed on

a global basis with operations in North America, EMEA, Asia Pacific and Latin America.

of the globe. This work spans all ranges of organizational scale and purpose. Members of functional groups are
located throughout our regions and across our industry groups.

We address the people and organizational advisory needs of our clients through our three business segments:

Percentage of Fiscal 2017 Assignments Opened by Functional Expertise

Executive Search

Overview – Korn Ferry Executive Search helps clients attract the best executive talent for executing and delivering

their business strategy. Our services are typically used to fill executive-level positions, such as board directors,

chief executive officers, chief financial officers, chief operating officers, chief information officers, chief human

resource officers and other senior executive officers.

We utilize a standardized and differentiated approach to placing talent that integrates research based IP with our

practical experience. Providing a more complete view of the candidate than is otherwise possible, we believe our

proprietary tools generate better results in attracting the right person for the position, and open doors to engage

with clients about their broader people and organizational needs.

As part of being retained by a client to conduct a search, we assemble a team comprised of consultants with

appropriate geographic, industry and functional expertise. Our search consultants serve as management advisors

who work closely with the client in identifying, assessing and placing qualified candidates. In fiscal 2017, we

executed 5,933 new executive search assignments.

We emphasize a close working relationship with the client and a comprehensive understanding of the client’s

business issues, strategy and culture. The search team consults with its established network of resources and

searches our databases containing profiles of approximately five million executives to assist in identifying

individuals with the right background, cultural fit and abilities. Through this process, an original list of candidates is

carefully screened through phone interviews, video conferences and in-person meetings. Clients and candidates

complete Korn Ferry’s Four Dimensional Executive Assessment. Launched in fiscal 2015 and powered by Korn

Ferry’s Four Dimensions of Leadership & Talent, this tool gives clients insights about each candidate’s

competencies, personality traits, drivers, and past experiences that are aligned to the role. We conduct due

diligence and background verification of the candidates throughout this process, at times with the assistance of an

independent third party. In fiscal 2017, we integrated Hay Group’s industry standard job grading, job description

and salary benchmark methodologies into the executive search process.

Industry Specialization – Consultants in our five global markets and regional specialty practice groups bring an in-

depth understanding of the market conditions and strategic management issues faced by clients within their

specific industry and geography. We are continually looking to expand our specialized expertise through internal

development and strategic hiring in targeted growth areas.

Percentage of Fiscal 2017 Assignments Opened by Industry Specialization

Global Markets:

Industrial

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Life Sciences/Healthcare Provider . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

31%

18%

17%

17%

12%

Regional Specialties (United States):

Education/Not-for-Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5%

Functional Expertise – We have organized executive search centers of functional expertise, composed of

consultants who have extensive backgrounds in placing executives in certain functions, such as board directors,

CEOs and other senior executive officers. Our Board & CEO Services group, for example, focuses exclusively on

placing CEOs and board directors in organizations around the world. This is a dedicated team from the most

senior ranks of the Company. Their work is with CEOs and in the board room, and their expertise is organizational

leadership and governance. They conduct hundreds of engagements every year, tapping talent from every corner

Board Level/CEO/CFO/Senior Executive and General Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance and Control
Marketing and Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Manufacturing/Engineering/Research and Development/Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Information Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Human Resources and Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

71%
9%
6%
5%
5%
4%

Regions

North America – We currently have 20 offices throughout the United States and Canada. In fiscal 2017, the region
generated fee revenue of $356.6 million and opened 2,361 new engagements with an average of 236 consultants.

EMEA – We currently have 24 offices in 19 countries throughout the region. In fiscal 2017, the region generated
fee revenue of $146.5 million and opened 1,755 new engagements with an average of 138 consultants.

Asia Pacific – We currently have 20 offices in 10 countries throughout the region. In fiscal 2017, the region
generated fee revenue of $80.2 million and opened 1,044 new engagements with an average of 96 consultants.

Latin America – We currently have 9 offices in 7 countries covering the entire Latin American region. The region
generated fee revenue of $34.4 million in fiscal 2017 and opened 773 new engagements with an average of
34 consultants.

Client Base – Our 3,589 search engagement clients include many of the world’s largest and most prestigious
public and private companies, and 57% of FORTUNE 500 companies were clients in fiscal 2017. In fiscal 2017,
only 1 client represented more than 1% of fee revenue, with that client representing 1.4% of fee revenue.

Competition – Other multinational executive search firms include Egon Zehnder International, Heidrick & Struggles
International, Inc., Russell Reynolds Associates and Spencer Stuart. Although these firms are our largest
competitors in executive search, we also compete with smaller boutique firms that specialize in specific regional,
industry or functional searches. We believe our brand name, differentiated business model, systematic approach
to client service, cutting-edge technology, unique IP, global network, prestigious clientele, strong specialty
practices and high-caliber colleagues are recognized worldwide. We also believe our long-term incentive
compensation arrangements, as well as other executive benefits, distinguish us from most of our competitors and
are important in attracting and retaining our key consultants.

Hay Group

Overview – Korn Ferry Hay Group helps an organization align its people to their strategy – organizing, developing,
engaging, and rewarding them to reach new heights. We deliver this through a combination of solutions consulting
and product services that address how people work, and how to nurture them so that business strategies succeed.
We capitalize on the breadth of our intellectual property, service offerings and expertise to do what is right for the
client. Services are delivered by an experienced team of consultants and includes one of the richest and most
comprehensive people data sets. Solutions consulting fee revenue was $497.7 million, $351.2 million and
$203.3 million in fiscal 2017, 2016 and 2015, respectively. Solution consulting fee revenue represented 32%, 27%
and 20% of fee revenue in fiscal 2017, 2016 and 2015, respectively.

We have made significant investments in these service areas with the acquisitions of Lominger Limited, Inc.,
Lominger Consulting (“Lominger”) and LeaderSource in fiscal 2007, Lore International in fiscal 2009, SENSA
Solutions in fiscal 2010, PDI and Global Novations in fiscal 2013, Pivot Leadership in fiscal 2015, and Legacy Hay
in fiscal 2016.

Regions – Hay Group solutions are delivered by an experienced team of consultants and the richest and most
comprehensive people data and insights in the world. As of April 30, 2017, we had Hay Group operations in
22 cities in North America, 37 in EMEA, 20 in Asia Pacific, and 9 in Latin America.

8

9

Competition – Our main competitors include firms like Aon Hewitt, Willis Towers Watson, Deloitte, McKinsey, RHR
International, Development Dimensions International, Center for Creative Leadership, Right Management, Mercer
and SHL, a subsidiary of Corporate Executive Board. Although these firms are our largest competitors, we also
compete with smaller boutique firms that specialize in specific regional, industry or functional aspects of leadership
and organizational advisory services.

Futurestep

Overview – Korn Ferry Futurestep offers clients a portfolio of talent acquisition solutions, including RPO, Project
Recruitment, Professional Search, Talent Consulting and Employer Branding. Each Futurestep engagement
leverages a global recruitment process, best-in-class technology and proprietary IP to maximize and measure
quality.

Futurestep combines traditional recruitment expertise with a multi-tiered portfolio of talent acquisition solutions.
Futurestep consultants, based in 26 countries, have access to our databases of pre-screened, mid-level
professionals. Our global candidate pool complements our international presence and multi-channel sourcing
strategy to provide speed, efficiency and quality service for clients worldwide.

Futurestep’s customizable end-to-end RPO solution combines our recruiting expertise with state-of-the-art
technologies to help companies streamline recruitment processes, enhance candidate experience, and improve
cost of, time to, and quality of hire. In fact, Futurestep was recognized as the number one RPO provider in HRO
Today Magazine’s 2016 Baker’s Dozen list, marking its tenth consecutive year on the list.

Significant in scope with a defined delivery period, Project Recruitment addresses a specific talent acquisition
need at a certain point in time. The impetus for a project engagement is often, though not always, a change or
transition within the business.

In the area of Professional Search, Futurestep is uniquely positioned to help identify and attract professional and
specialized talent, in both single-search and multiple managed search projects. Futurestep’s brand association
with Korn Ferry has helped us become regarded by today’s industry leaders as a trusted resource.

Talent Consulting services provide a proven process and deep industry expertise to help clients assess their talent
acquisition strategy, identify needs, and prioritize next steps in improving their talent acquisition operations.

Employer Branding services apply insight and creativity to help clients attract and engage the best candidates. We
use the latest research techniques to identify each client’s unique Employer Value Proposition and then bring it to
life across the full range of traditional and digital media.

Regions – We opened our first Futurestep office in Los Angeles in May 1998. In January 2000, we acquired the
Executive Search & Selection business of PA Consulting with operations in Europe and Asia Pacific. As of
April 30, 2017, we had Futurestep operations in 14 cities in North America, 13 in EMEA, 18 in Asia Pacific, and 5
in Latin America.

Client Base – During fiscal 2017, Futurestep partnered with 1,525 clients across the globe and 41% of
Futurestep’s fiscal 2017 fee revenue was referred from Korn Ferry’s Executive Search and Hay Group segments.

Competition – Futurestep primarily competes for business with other RPO providers such as Cielo Talent,
Alexander Mann Solutions, Hays, Kenexa, Spherion, KellyOCG and ADP, and competes for search assignments
with regional contingency recruitment firms and large national retained recruitment firms.

Professional Staff and Employees

We have assembled a wealth of talent. Our Company brings together the best and brightest from a wide range of
disciplines and professions – everything from academic research and technology development to executive
recruiting, consulting, and business leadership. We are also a culturally diverse organization. Our people come
from all over the world and speak a multitude of languages. For us, this diversity is a key source of strength. It
means we have people who are able to challenge convention, offer unique perspectives, and generate innovative
ideas. Equally important, it means we can think and act globally – just like our clients.

10

As of April 30, 2017, we had a total of 7,232 full-time employees. Of this, 1,791 were Executive Search employees
consisting of 517 consultants and 1,274 associates, researchers, administrative and support staff. Hay Group had
3,598 employees as of April 30, 2017, consisting of 557 consultants and 3,041 associates, researchers,
administrative and support staff. Futurestep had 1,710 employees as of April 30, 2017, consisting of 256
consultants and 1,454 administrative and support staff. Corporate had 133 professionals at April 30, 2017. We are
not party to a collective bargaining agreement and consider our relations with our employees to be good. Korn
Ferry is an equal opportunity employer.

The following table provides information relating to each of our business segments for fiscal 2017. Financial
information regarding our business segments for fiscal 2016 and 2015 and additional information for fiscal 2017 is
contained in Note 11 – Business Segments, in the Notes to our Consolidated Financial Statements included in this
Annual Report on Form 10-K, which is incorporated herein by reference.

Fee Revenue

Operating
Income
(Loss)

(dollars in thousands)

Number of
Consultants
as of
April 30,
2017

Executive Search:

North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EMEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Latin America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

Total Executive Search . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hay Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Futurestep . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

356,625
146,506
80,169
34,376

617,676
724,186
223,659
—

81,550
27,854
8,580
6,268

124,252
47,302
29,986
(87,100)

241
145
97
34

517
557
256
—

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

1,565,521

$

114,440

1,330

The following table provides information on fee revenues for each of the last three fiscal years attributable to the
regions in which the Company operates:

Year Ended April 30,

2017

2016 (1)

2015

(in thousands)

Fee Revenue:

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EMEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Latin America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

728,871
57,640
445,681
249,077
84,252

$

669,585
40,401
343,460
187,631
51,035

557,024
39,252
248,865
145,625
37,386

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

1,565,521

$

1,292,112

$

1,028,152

(1) Fee revenue from Legacy Hay was $186.8 million from December 1, 2015, the effective date of the acquisition.

Additional financial information regarding the regions in which the Company operates can be found in Note 11 –
Business Segments, in the Notes to our Consolidated Financial Statements included in this Annual Report on
Form 10-K.

Item 1A. Risk Factors

The risks described below are the material risks facing our Company. Additional risks not presently known to us or
that we currently deem immaterial may also impair our business operations. Our business, financial condition or
results of operations could be materially adversely affected by any of these risks.

11

Competition in our industries could result in our losing market share and/or require us to charge lower
prices for services, which could reduce our revenue.

We compete for executive search business with numerous executive search firms and businesses that provide job
placement services, including other large global executive search firms, smaller specialty firms and web-based
firms. In recent years, we have also begun facing increased competition from sole proprietors and in-house human
resource professionals whose ability to provide job placement services has been enhanced by professional
profiles made available on the internet and enhanced social media-based search tools. The continued growth of
the shared economy and related freelancing platform sites may also negatively impact demand for our services by
allowing employers seeking services to connect with employees in real time and without any significant cost.
Traditional executive search competitors include Egon Zehnder International, Heidrick & Struggles International,
Inc., Russell Reynolds Associates and Spencer Stuart. In each of our markets, one or more of our competitors
may possess greater resources, greater name recognition, lower overhead or other costs and longer operating
histories than we do, which may give them an advantage in obtaining future clients, capitalizing on new technology
and attracting qualified professionals in these markets. Additionally, specialty firms can focus on regional or
functional markets or on particular industries and executive search firms that have a smaller client base may be
subject to fewer off-limits arrangements. There are no extensive barriers to entry into the executive search industry
and new recruiting firms continue to enter the market. We believe the continuing development and increased
availability of information technology will continue to attract new competitors, especially web-enabled professional
and social networking website providers, and these providers may be facilitating a company’s ability to insource
their recruiting capabilities. As these providers continue to evolve, they may develop offerings similar to or more
expansive than ours, thereby increasing competition for our services or more broadly causing disruption in the
executive search industry. Further, as technology continues to develop and the shared economy continues to
grow, we expect that the use of freelancing platform sites will become more prevalent. As a result, companies may
turn to such sites for their talent needs, which could negatively impact demand for the services we offer.

The human resource consulting business has been traditionally fragmented and a number of large consulting
firms, such as Accenture, Aon Hewitt, Willis Towers Watson and Deloitte are building businesses in human
resource management consulting to serve these needs. These companies are significantly larger than Korn Ferry
and have considerable resources at their disposal allowing for potentially significant investment to grow their
human resource consulting business. Increased competition, whether as a result of professional and social
networking website providers, traditional executive search firms, sole proprietors and in-house human resource
professionals (as noted above) or larger consulting firms building human resources consulting businesses, may
lead to pricing pressures that could negatively impact our business. For example, increased competition could
require us to charge lower prices, and/or cause us to lose market share, each of which could reduce our fee
revenue.

The talent acquisition business, including RPO, project recruitment, professional search, talent consulting and
employee communications is a highly competitive and developing industry with numerous specialists. Our
Futurestep division primarily competes for business with other RPO providers such as Cielo, Alexander Mann
Solutions, Kenexa, Spherion, and Kelly Services, Inc., and competes for mid-level professional search
assignments with regional contingency recruitment firms and large national retained recruitment firms. In addition,
some organizations have developed or may develop internal solutions to address talent acquisition that may be
competitive with our solutions. To compete successfully and achieve our growth targets for our talent acquisition
business, we must continue to support and develop assessment and analytics solutions, maintain and grow our
proprietary database, deliver demonstrable return on investment to clients, support our products and services
globally, and continue to provide consulting and training to support our assessment products. Our failure to
compete effectively with our competitors could adversely affect our operating results and future growth.

If we fail to attract and retain qualified and experienced consultants, our revenue could decline and our
business could be harmed.

We compete with other executive and professional search and consulting firms for qualified and experienced
consultants. These other firms may be able to offer greater compensation and benefits or more attractive lifestyle
choices, career paths or geographic locations than we do. Attracting and retaining consultants in our industry is

12

Competition in our industries could result in our losing market share and/or require us to charge lower

prices for services, which could reduce our revenue.

We compete for executive search business with numerous executive search firms and businesses that provide job

placement services, including other large global executive search firms, smaller specialty firms and web-based

firms. In recent years, we have also begun facing increased competition from sole proprietors and in-house human

resource professionals whose ability to provide job placement services has been enhanced by professional

profiles made available on the internet and enhanced social media-based search tools. The continued growth of

the shared economy and related freelancing platform sites may also negatively impact demand for our services by

allowing employers seeking services to connect with employees in real time and without any significant cost.

Traditional executive search competitors include Egon Zehnder International, Heidrick & Struggles International,

Inc., Russell Reynolds Associates and Spencer Stuart. In each of our markets, one or more of our competitors

may possess greater resources, greater name recognition, lower overhead or other costs and longer operating

histories than we do, which may give them an advantage in obtaining future clients, capitalizing on new technology

and attracting qualified professionals in these markets. Additionally, specialty firms can focus on regional or

functional markets or on particular industries and executive search firms that have a smaller client base may be

subject to fewer off-limits arrangements. There are no extensive barriers to entry into the executive search industry

and new recruiting firms continue to enter the market. We believe the continuing development and increased

availability of information technology will continue to attract new competitors, especially web-enabled professional

and social networking website providers, and these providers may be facilitating a company’s ability to insource

their recruiting capabilities. As these providers continue to evolve, they may develop offerings similar to or more

expansive than ours, thereby increasing competition for our services or more broadly causing disruption in the

executive search industry. Further, as technology continues to develop and the shared economy continues to

grow, we expect that the use of freelancing platform sites will become more prevalent. As a result, companies may

turn to such sites for their talent needs, which could negatively impact demand for the services we offer.

The human resource consulting business has been traditionally fragmented and a number of large consulting

firms, such as Accenture, Aon Hewitt, Willis Towers Watson and Deloitte are building businesses in human

resource management consulting to serve these needs. These companies are significantly larger than Korn Ferry

and have considerable resources at their disposal allowing for potentially significant investment to grow their

human resource consulting business. Increased competition, whether as a result of professional and social

networking website providers, traditional executive search firms, sole proprietors and in-house human resource

professionals (as noted above) or larger consulting firms building human resources consulting businesses, may

lead to pricing pressures that could negatively impact our business. For example, increased competition could

require us to charge lower prices, and/or cause us to lose market share, each of which could reduce our fee

revenue.

The talent acquisition business, including RPO, project recruitment, professional search, talent consulting and

employee communications is a highly competitive and developing industry with numerous specialists. Our

Futurestep division primarily competes for business with other RPO providers such as Cielo, Alexander Mann

Solutions, Kenexa, Spherion, and Kelly Services, Inc., and competes for mid-level professional search

assignments with regional contingency recruitment firms and large national retained recruitment firms. In addition,

some organizations have developed or may develop internal solutions to address talent acquisition that may be

competitive with our solutions. To compete successfully and achieve our growth targets for our talent acquisition

business, we must continue to support and develop assessment and analytics solutions, maintain and grow our

proprietary database, deliver demonstrable return on investment to clients, support our products and services

globally, and continue to provide consulting and training to support our assessment products. Our failure to

compete effectively with our competitors could adversely affect our operating results and future growth.

If we fail to attract and retain qualified and experienced consultants, our revenue could decline and our

business could be harmed.

We compete with other executive and professional search and consulting firms for qualified and experienced

consultants. These other firms may be able to offer greater compensation and benefits or more attractive lifestyle

choices, career paths or geographic locations than we do. Attracting and retaining consultants in our industry is

particularly important because, generally, a small number of consultants have primary responsibility for a client
relationship. Because client responsibility is so concentrated, the loss of key consultants may lead to the loss of
client relationships. In fiscal 2017, for example, our top three executive search consultants had primary
responsibility for generating business equal to approximately 1% of our net revenues, and our top ten executive
search consultants had primary responsibility for generating business equal to approximately 3% of our net
revenues. This risk is heightened due to the general portability of a consultant’s business; consultants have in the
past, and will in the future, terminate their employment with our Company. Any decrease in the quality of our
reputation, reduction in our compensation levels relative to our peers or restructuring of our compensation
program, whether as a result of insufficient revenue, a decline in the market price of our common stock or for any
other reason, could impair our ability to retain existing consultants or attract additional qualified consultants with
the requisite experience, skills and established client relationships. Our failure to retain our most productive
consultants, whether in Executive Search, Hay Group or Futurestep, or maintain the quality of service to which our
clients are accustomed and the ability of a departing consultant to move business to his or her new employer could
result in a loss of clients, which could in turn cause our fee revenue to decline and our business to be harmed. We
may also lose clients if the departing Executive Search, Hay Group or Futurestep consultant has widespread name
recognition or a reputation as a specialist in his or her line of business in a specific industry or management
function. We could also lose additional consultants if they choose to join the departing Executive Search, Hay
Group or Futurestep consultant at another executive search or consulting firm. If we fail to limit departing
consultants from moving business or recruiting our consultants to a competitor, our business, financial condition
and results of operations could be adversely affected.

Acquisitions, or our inability to effect acquisitions, may have an adverse effect on our business.

We have completed several strategic acquisitions of businesses in the last several years, including our
acquisitions of Legacy Hay in fiscal 2016, Pivot Leadership in fiscal 2015 and PDI and Global Novations in fiscal
2013. Targeted acquisitions have been part of our growth strategy, and we may in the future selectively acquire
businesses that are complementary to our existing service offerings. However, we cannot be certain that we will be
able to continue to identify appropriate acquisition candidates or acquire them on satisfactory terms. Our ability to
consummate such acquisitions on satisfactory terms will depend on:

E
E
E
E

the extent to which acquisition opportunities become available;
our success in bidding for the opportunities that do become available;
negotiating terms that we believe are reasonable; and
regulatory approval, if required.

Our ability to make strategic acquisitions may also be conditioned on our ability to fund such acquisitions through
the incurrence of debt or the issuance of equity. Our credit agreement dated as of June 15, 2016 limits us from
consummating permitted acquisitions unless we are in pro forma compliance with our financial covenants, our pro
forma leverage ratio is no greater than 2.50 to 1.00, and domestic liquidity after giving effect to the acquisition is at
least $50.0 million. If we are required to incur substantial indebtedness in connection with an acquisition, and the
results of the acquisition are not favorable, the increased indebtedness could decrease the value of our equity. In
addition, if we need to issue additional equity to consummate an acquisition, doing so would cause dilution to
existing stockholders.

If we are unable to make strategic acquisitions, or the acquisitions we do make are not on terms favorable to us or
not effected in a timely manner, it may impede the growth of our business, which could adversely impact our
profitability and our stock price.

We may not be able to successfully integrate or realize the expected benefits from our acquisitions.

Our future success may depend in part on our ability to complete the integration of acquisition targets successfully
into our operations. The process of integrating an acquired business, may subject us to a number of risks,
including:

E
E

diversion of management attention;
amortization of intangible assets, adversely affecting our reported results of operations;

12

13

E

E
E

E
E
E

inability to retain and/or integrate the management, key personnel and other employees of the acquired
business;
inability to properly integrate businesses resulting in operating inefficiencies;
inability to establish uniform standards, disclosure controls and procedures, internal control over financial
reporting and other systems, procedures and policies in a timely manner;
inability to retain the acquired company’s clients;
exposure to legal claims for activities of the acquired business prior to acquisition; and
incurrence of additional expenses in connection with the integration process.

If our acquisitions are not successfully integrated, our business, financial condition and results of operations, as
well as our professional reputation, could be materially adversely affected.

Further, we cannot assure that acquisitions will result in the financial, operational or other benefits that we
anticipate. Some acquisitions may not be immediately accretive to earnings and some expansion may result in
significant expenditures.

Businesses we acquire may have liabilities or adverse operating issues which could harm our operating
results.

Businesses we acquire may have liabilities or adverse operating issues, or both, that we either fail to discover
through due diligence or underestimate prior to the consummation of the acquisition. These liabilities and/or issues
may include the acquired business’ failure to comply with, or other violations of, applicable laws, rules, or
regulations or contractual or other obligations or liabilities. As the successor owner, we may be financially
responsible for, and may suffer harm to our reputation or otherwise be adversely affected by, such liabilities and/or
issues. An acquired business also may have problems with internal controls over financial reporting, which could in
turn cause us to have significant deficiencies or material weaknesses in our own internal controls over financial
reporting. These and any other costs, liabilities, issues, and/or disruptions associated with any past or future
acquisitions, and the related integration, could harm our operating results.

As a result of our acquisitions, we have substantial amounts of goodwill and intangible assets, and
changes in business conditions could cause these assets to become impaired, requiring write-downs that
would adversely affect our operating results.

All of our acquisitions have been accounted for as purchases and involved purchase prices well in excess of
tangible asset values, resulting in the creation of a significant amount of goodwill and other intangible assets. As of
April 30, 2017, goodwill and purchased intangibles accounted for approximately 28% and 11%, respectively, of our
total assets. Under U.S. generally accepted accounting principles (“GAAP”), we do not amortize goodwill and
intangible assets acquired in a purchase business combination that are determined to have indefinite useful lives,
but instead review them annually (or more frequently if impairment indicators arise) for impairment. Although we
have to date determined that such assets have not been impaired, future events or changes in circumstances that
result in an impairment of goodwill or other intangible assets would have a negative impact on our profitability and
operating results.

An impairment in the carrying value of goodwill and other intangible assets could negatively impact our
consolidated results of operations and net worth.

Goodwill is initially recorded as the excess of amounts paid over the fair value of net assets acquired. While
goodwill is not amortized, it is reviewed for impairment at least annually or more frequently if impairment indicators
are present. In assessing the carrying value of goodwill, we make qualitative and quantitative assumptions and
estimates about revenues, operating margins, growth rates and discount rates based on our business plans,
economic projections, anticipated future cash flows and marketplace data. There are inherent uncertainties related
to these factors and management’s judgment in applying these factors. Goodwill valuations have been calculated
using an income approach based on the present value of future cash flows of each reporting unit and a market
approach. We could be required to evaluate the carrying value of goodwill prior to the annual assessment, if we
experience unexpected significant declines in operating results or sustained market capitalization declines. These
types of events and the resulting analyses could result in goodwill impairment charges in the future. Impairment
charges could substantially affect our results of operations and net worth in the periods of such charges.

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business;

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inability to properly integrate businesses resulting in operating inefficiencies;

inability to establish uniform standards, disclosure controls and procedures, internal control over financial

reporting and other systems, procedures and policies in a timely manner;

inability to retain the acquired company’s clients;

exposure to legal claims for activities of the acquired business prior to acquisition; and

incurrence of additional expenses in connection with the integration process.

If our acquisitions are not successfully integrated, our business, financial condition and results of operations, as

well as our professional reputation, could be materially adversely affected.

Further, we cannot assure that acquisitions will result in the financial, operational or other benefits that we

anticipate. Some acquisitions may not be immediately accretive to earnings and some expansion may result in

significant expenditures.

results.

Businesses we acquire may have liabilities or adverse operating issues which could harm our operating

Businesses we acquire may have liabilities or adverse operating issues, or both, that we either fail to discover

through due diligence or underestimate prior to the consummation of the acquisition. These liabilities and/or issues

may include the acquired business’ failure to comply with, or other violations of, applicable laws, rules, or

regulations or contractual or other obligations or liabilities. As the successor owner, we may be financially

responsible for, and may suffer harm to our reputation or otherwise be adversely affected by, such liabilities and/or

issues. An acquired business also may have problems with internal controls over financial reporting, which could in

turn cause us to have significant deficiencies or material weaknesses in our own internal controls over financial

reporting. These and any other costs, liabilities, issues, and/or disruptions associated with any past or future

acquisitions, and the related integration, could harm our operating results.

As a result of our acquisitions, we have substantial amounts of goodwill and intangible assets, and

changes in business conditions could cause these assets to become impaired, requiring write-downs that

would adversely affect our operating results.

All of our acquisitions have been accounted for as purchases and involved purchase prices well in excess of

tangible asset values, resulting in the creation of a significant amount of goodwill and other intangible assets. As of

April 30, 2017, goodwill and purchased intangibles accounted for approximately 28% and 11%, respectively, of our

total assets. Under U.S. generally accepted accounting principles (“GAAP”), we do not amortize goodwill and

intangible assets acquired in a purchase business combination that are determined to have indefinite useful lives,

but instead review them annually (or more frequently if impairment indicators arise) for impairment. Although we

have to date determined that such assets have not been impaired, future events or changes in circumstances that

result in an impairment of goodwill or other intangible assets would have a negative impact on our profitability and

operating results.

An impairment in the carrying value of goodwill and other intangible assets could negatively impact our

consolidated results of operations and net worth.

Goodwill is initially recorded as the excess of amounts paid over the fair value of net assets acquired. While

goodwill is not amortized, it is reviewed for impairment at least annually or more frequently if impairment indicators

are present. In assessing the carrying value of goodwill, we make qualitative and quantitative assumptions and

estimates about revenues, operating margins, growth rates and discount rates based on our business plans,

economic projections, anticipated future cash flows and marketplace data. There are inherent uncertainties related

to these factors and management’s judgment in applying these factors. Goodwill valuations have been calculated

using an income approach based on the present value of future cash flows of each reporting unit and a market

approach. We could be required to evaluate the carrying value of goodwill prior to the annual assessment, if we

experience unexpected significant declines in operating results or sustained market capitalization declines. These

types of events and the resulting analyses could result in goodwill impairment charges in the future. Impairment

charges could substantially affect our results of operations and net worth in the periods of such charges.

inability to retain and/or integrate the management, key personnel and other employees of the acquired

We are a cyclical Company whose performance is tied to local and global economic conditions.

Demand for our services is affected by global economic conditions and the general level of economic activity in the
geographic regions and industries in which we operate. When conditions in the global economy, including the
credit markets, deteriorate, or economic activity slows, many companies hire fewer permanent employees and
some companies, as a cost-saving measure, choose to rely on their own human resources departments rather
than third-party search firms to find talent and under these conditions companies may cut back on human resource
initiatives, all of which negatively affects our financial condition and results of operations. We may also experience
more competitive pricing pressure during periods of economic decline. If the current market uncertainty persists, if
the national or global economy or credit market conditions in general deteriorate, or if the unemployment rate
increases, such uncertainty or changes could put negative pressure on demand for our services and our pricing,
resulting in lower cash flows and a negative effect on our business, financial condition and results of operations. In
addition, some of our clients may experience reduced access to credit and lower revenues resulting in their
inability to meet their payment obligations to us.

If we are unable to retain our executive officers and key personnel, or integrate new members of our
senior management who are critical to our business, we may not be able to successfully manage our
business in the future.

Our future success depends upon the continued service of our executive officers and other key management
personnel. Competition for qualified personnel is intense, and we may compete with other companies that have
greater financial and other resources than we do. If we lose the services of one or more of our executives or key
employees, or if one or more of them decides to join a competitor or otherwise compete directly or indirectly with
us, or if we are unable to integrate new members of our senior management who are critical to our business, we
may not be able to successfully manage our business or achieve our business objectives.

If we are unable to maintain our professional reputation and brand name, our business will be harmed.

We depend on our overall reputation and brand name recognition to secure new engagements and to hire
qualified professionals. Our success also depends on the individual reputations of our professionals. We obtain a
majority of our new engagements from existing clients or from referrals by those clients. Any client who is
dissatisfied with our services can adversely affect our ability to secure new engagements.

If any factor, including poor performance or negative publicity, whether or not true, hurts our reputation, we may
experience difficulties in competing successfully for both new engagements and qualified consultants. Failing to
maintain our professional reputation and the goodwill associated with our brand name could seriously harm our
business.

The expansion of social media platforms presents new risks and challenges that can cause damage to our
brand and reputation.

The inappropriate and/or unauthorized use of certain media vehicles could cause damage to our brand or
information leakage that could lead to legal implications, including improper collection and/or dissemination of
personally identifiable information of candidates and clients. In addition, negative or inaccurate posts or comments
about us on any social networking website could damage our reputation, brand image and goodwill.

Technological advances may significantly disrupt the labor market and weaken demand for human capital
at a rapid rate.

Our success is directly dependent on our customers’ demands for talent. As technology continues to evolve, more
tasks currently performed by people may be replaced by automation, robotics, machine learning, artificial
intelligence and other technological advances outside of our control. This trend poses a risk to the staffing industry
as a whole, particularly in lower-skill job categories that may be more susceptible to such replacement.

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We are subject to potential legal liability from clients, employees and candidates for employment.
Insurance coverage may not be available to cover all of our potential liability and available coverage may
not be sufficient to cover all claims that we may incur.

Our ability to obtain liability insurance, its coverage levels, deductibles and premiums are all dependent on market
factors, our loss history and insurers’ perception of our overall risk profile. We are exposed to potential claims with
respect to the executive search process. For example, a client could assert a claim for matters such as breach of
an off-limit agreement or recommending a candidate who subsequently proves to be unsuitable for the position
filled. Further, the current employer of a candidate whom we placed could file a claim against us alleging
interference with an employment contract, a candidate could assert an action against us for failure to maintain the
confidentiality of the candidate’s employment search, and a candidate or employee could assert an action against
us for alleged discrimination, violations of labor and employment law or other matters. Also, in various countries,
we are subject to data protection laws impacting the processing of candidate information and other regulatory
requirements.

Additionally, as part of our Hay Group services, we often send a team of leadership consultants to our client’s
workplaces. Such consultants generally have access to client information systems and confidential information. An
inherent risk of such activity includes possible claims of misuse or misappropriation of client intellectual property,
confidential information, funds or other property, harassment, criminal activity, torts, or other claims. Such claims
may result in negative publicity, injunctive relief, criminal investigations and/or charges, payment by us of monetary
damages or fines, or other material adverse effects on our business.

We cannot ensure that our insurance will cover all claims or that insurance coverage will be available at
economically acceptable rates. Our insurance may also require us to meet a deductible. Significant uninsured
liabilities could have a material adverse effect on our business, financial condition and results of operations.

We rely heavily on our information systems and if we lose that technology, or fail to further develop our
technology, our business could be harmed.

Our success depends in large part upon our ability to store, retrieve, process, manage and protect substantial
amounts of information. To achieve our strategic objectives and to remain competitive, we must continue to
develop and enhance our information systems. This may require the acquisition of equipment and software and
the development of new proprietary software, either internally or through independent consultants. If we are unable
to design, develop, implement and utilize, in a cost-effective manner, information systems that provide the
capabilities necessary for us to compete effectively, or for any reason any interruption or loss of our information
processing capabilities occurs, this could harm our business, results of operations and financial condition.
Although we have disaster recovery procedures in place and insurance to protect against the effects of a disaster
on our information technology, we cannot be sure that insurance or these disaster recovery procedures currently in
place will continue to be available at reasonable prices, cover all our losses or compensate us for the possible loss
of clients occurring during any period that we are unable to provide business services.

Cyber security vulnerabilities could lead to improper disclosure of information obtained from our clients,
candidates and employees that could result in liability and harm our reputation.

We use information technology and other computer resources to carry out operational and marketing activities and
to maintain our business records. The continued occurrence of high-profile data breaches against various entities
and organizations provides evidence of an external environment that is increasingly hostile to information security.
This environment demands that we continuously improve our design and coordination of security controls across
our business groups and geographies in order to protect information that we develop or that is obtained from our
clients, candidates and employees. Despite these efforts, given the ongoing and increasingly sophisticated attempts
to access the information of entities, our security controls over this information, our training of employees, and other
practices we follow may not prevent the improper disclosure of such information. We have incurred costs to bolster
our security against attacks; such efforts and expenditures, however, cannot provide absolute assurance that future
data breaches will not occur. We depend on our overall reputation and brand name recognition to secure new
engagements. Perceptions that we do not adequately protect the privacy of information could inhibit attaining new
engagements and qualified consultants, and could potentially damage currently existing client relationships.

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We are subject to potential legal liability from clients, employees and candidates for employment.

Insurance coverage may not be available to cover all of our potential liability and available coverage may

not be sufficient to cover all claims that we may incur.

Our ability to obtain liability insurance, its coverage levels, deductibles and premiums are all dependent on market

factors, our loss history and insurers’ perception of our overall risk profile. We are exposed to potential claims with

respect to the executive search process. For example, a client could assert a claim for matters such as breach of

an off-limit agreement or recommending a candidate who subsequently proves to be unsuitable for the position

filled. Further, the current employer of a candidate whom we placed could file a claim against us alleging

interference with an employment contract, a candidate could assert an action against us for failure to maintain the

confidentiality of the candidate’s employment search, and a candidate or employee could assert an action against

us for alleged discrimination, violations of labor and employment law or other matters. Also, in various countries,

we are subject to data protection laws impacting the processing of candidate information and other regulatory

requirements.

Additionally, as part of our Hay Group services, we often send a team of leadership consultants to our client’s

workplaces. Such consultants generally have access to client information systems and confidential information. An

inherent risk of such activity includes possible claims of misuse or misappropriation of client intellectual property,

confidential information, funds or other property, harassment, criminal activity, torts, or other claims. Such claims

may result in negative publicity, injunctive relief, criminal investigations and/or charges, payment by us of monetary

damages or fines, or other material adverse effects on our business.

We cannot ensure that our insurance will cover all claims or that insurance coverage will be available at

economically acceptable rates. Our insurance may also require us to meet a deductible. Significant uninsured

liabilities could have a material adverse effect on our business, financial condition and results of operations.

We rely heavily on our information systems and if we lose that technology, or fail to further develop our

technology, our business could be harmed.

Our success depends in large part upon our ability to store, retrieve, process, manage and protect substantial

amounts of information. To achieve our strategic objectives and to remain competitive, we must continue to

develop and enhance our information systems. This may require the acquisition of equipment and software and

the development of new proprietary software, either internally or through independent consultants. If we are unable

to design, develop, implement and utilize, in a cost-effective manner, information systems that provide the

capabilities necessary for us to compete effectively, or for any reason any interruption or loss of our information

processing capabilities occurs, this could harm our business, results of operations and financial condition.

Although we have disaster recovery procedures in place and insurance to protect against the effects of a disaster

on our information technology, we cannot be sure that insurance or these disaster recovery procedures currently in

place will continue to be available at reasonable prices, cover all our losses or compensate us for the possible loss

of clients occurring during any period that we are unable to provide business services.

Cyber security vulnerabilities could lead to improper disclosure of information obtained from our clients,

candidates and employees that could result in liability and harm our reputation.

We use information technology and other computer resources to carry out operational and marketing activities and

to maintain our business records. The continued occurrence of high-profile data breaches against various entities

and organizations provides evidence of an external environment that is increasingly hostile to information security.

This environment demands that we continuously improve our design and coordination of security controls across

our business groups and geographies in order to protect information that we develop or that is obtained from our

clients, candidates and employees. Despite these efforts, given the ongoing and increasingly sophisticated attempts

to access the information of entities, our security controls over this information, our training of employees, and other

practices we follow may not prevent the improper disclosure of such information. We have incurred costs to bolster

our security against attacks; such efforts and expenditures, however, cannot provide absolute assurance that future

data breaches will not occur. We depend on our overall reputation and brand name recognition to secure new

engagements. Perceptions that we do not adequately protect the privacy of information could inhibit attaining new

engagements and qualified consultants, and could potentially damage currently existing client relationships.

Data security, data privacy and data protection laws such as the E.U. General Data Protection Regulation,
and other evolving regulations and cross-border data transfer restrictions, may limit the use of our
services and adversely affect our business.

We are or may become subject to a variety of laws and regulations in the European Union (including the E.U.
General Data Protection Act), United States and abroad regarding data privacy, protection and security. As these
laws continue to evolve, we may be required to make changes to our services, solutions and/or products so as to
enable the Company and/or our clients to meet the new legal requirements, including by taking on more onerous
obligations in our contracts, limiting our storage, transfer and processing of data and, in some cases, limiting our
service and/or solution offerings in certain locations. Changes in these laws may also increase our potential
exposure through significantly higher potential penalties for non-compliance. The costs of compliance with, and
other burdens imposed by, such laws and regulations and client demands in this area may limit the use of, or
demand for, our services, solutions and/or products, make it more difficult and costly to meet client expectations,
or lead to significant fines, penalties or liabilities for noncompliance, any of which could harm our business.

In addition, due to the uncertainty and potentially conflicting interpretations of these laws, it is possible that such
laws and regulations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to
another and may conflict with other rules or our practices. Any failure or perceived failure by us to comply with
applicable laws or satisfactorily protect personal information could result in governmental enforcement actions,
litigation, or negative publicity, any of which could inhibit sales of our services, solutions and/or products.

Limited protection of our intellectual property could harm our business, and we face the risk that our
services or products may infringe upon the intellectual property rights of others.

We cannot guarantee that trade secrets, trademark and copyright law protections are adequate to deter
misappropriation of our intellectual property (which has become an important part of our business). Existing laws
of some countries in which we provide services or products may offer only limited protection of our intellectual
property rights. Redressing infringements may consume significant management time and financial resources.
Also, we may be unable to detect the unauthorized use of our intellectual property and take the necessary steps to
enforce our rights, which may have a material adverse impact on our business, financial condition or results of
operations. We cannot be sure that our services and products, or the products of others that we offer to our clients,
do not infringe on the intellectual property rights of third parties, and we may have infringement claims asserted
against us or our clients. These claims may harm our reputation, result in financial liability and prevent us from
offering some services or products.

We have invested in specialized technology and other intellectual property for which we may fail to fully
recover our investment or which may become obsolete.

We have invested in developing specialized technology and intellectual property, including proprietary systems,
processes and methodologies, such as Searcher Express and KF Insight, that we believe provide us a competitive
advantage in serving our current clients and winning new engagements. Many of our service and product offerings
rely on specialized technology or intellectual property that is subject to rapid change, and to the extent that this
technology and intellectual property is rendered obsolete and of no further use to us or our clients, our ability to
continue offering these services, and grow our revenues, could be adversely affected. There is no assurance that
we will be able to develop new, innovative or improved technology or intellectual property or that our technology
and intellectual property will effectively compete with the intellectual property developed by our competitors. If we
are unable to develop new technology and intellectual property or if our competitors develop better technology or
intellectual property, our revenues and results of operations could be adversely affected.

We face risks associated with social and political instability, legal requirements and economic conditions
in our international operations.

We operate in 53 countries and, during the year ended April 30, 2017, generated 53% of our fee revenue from
operations outside of the United States. We are exposed to the risk of changes in social, political, legal and

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economic conditions inherent in international operations. Examples of risks inherent in transacting business
worldwide that we are exposed to include:

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uncertainties and instability in economic and market conditions caused by the U.K.’s vote to exit the European
Union;
uncertainty regarding how the U.K.’s access to the EU Single Market and the wider trading, legal, regulatory
and labor environments, especially in the U.K. and European Union, will be impacted by the U.K’s vote to exit
the European Union, including the resulting impact on our business and that of our clients;
changes in and compliance with applicable laws and regulatory requirements, including U.S. laws affecting the
activities of U.S. companies abroad, including the Foreign Corrupt Practices Act of 1977 and sanctions
programs administered by the U.S. Department of the Treasury Office of Foreign Assets Control, and similar
foreign laws such as the U.K. Bribery Act, as well as the fact that many countries have legal systems, local
laws and trade practices that are unsettled and evolving, and/or commercial laws that are vague and/or
inconsistently applied;
difficulties in staffing and managing global operations, which could impact our ability to maintain an effective
system of internal control;
difficulties in building and maintaining a competitive presence in existing and new markets;
social, economic and political instability;
differences in cultures and business practices;
statutory equity requirements;
differences in accounting and reporting requirements;
repatriation controls;
differences in labor and market conditions;
potential adverse tax consequences;

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union membership, termination pay, the termination of employment, and other employment laws; and
the results of the November 2016 U.S. elections, which have introduced greater uncertainty with respect to
trade policies, tariffs and government regulation affecting trade between the U.S. and other countries.

We cannot ensure that one or more of these factors will not harm our business, financial condition or results of
operations.

Foreign currency exchange rate risks may adversely affect our results of operations.

A material portion of our revenue and expenses are generated by our operations in foreign countries, and we
expect that our foreign operations will account for a material portion of our revenue and expenses in the future.
Most of our international expenses and revenue are denominated in foreign currencies. As a result, our financial
results could be affected by factors, such as changes in foreign currency exchange rates or weak economic
conditions in foreign markets in which we have operations. Fluctuations in the value of those currencies in relation
to the United States dollar have caused and will continue to cause dollar-translated amounts to vary from one
period to another. Given the volatility of exchange rates, we may not be able to manage effectively our currency
translation or transaction risks, which may adversely affect our financial condition and results of operations.

We may be limited in our ability to recruit candidates from our clients and we could lose those
opportunities to our competition, which could harm our business.

Either by agreement with clients, or for client relations or marketing purposes, we sometimes refrain from, for a
specified period of time, recruiting candidates from a client when conducting searches on behalf of other clients.
These off-limit agreements can generally remain in effect for up to two years following completion of an
assignment. The duration and scope of the off-limit agreement, including whether it covers all operations of the
client and its affiliates or only certain divisions of a client, generally are subject to negotiation or internal policies
and may depend on factors such as the scope, size and complexity of the client’s business, the length of the client
relationship and the frequency with which we have been engaged to perform executive searches for the client. If a
prospective client believes that we are overly restricted by these off-limit agreements from recruiting employees of
our existing clients, these prospective clients may not engage us to perform their executive searches. Therefore,

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economic conditions inherent in international operations. Examples of risks inherent in transacting business

worldwide that we are exposed to include:

uncertainties and instability in economic and market conditions caused by the U.K.’s vote to exit the European

Union;

uncertainty regarding how the U.K.’s access to the EU Single Market and the wider trading, legal, regulatory

and labor environments, especially in the U.K. and European Union, will be impacted by the U.K’s vote to exit

the European Union, including the resulting impact on our business and that of our clients;

changes in and compliance with applicable laws and regulatory requirements, including U.S. laws affecting the

activities of U.S. companies abroad, including the Foreign Corrupt Practices Act of 1977 and sanctions

programs administered by the U.S. Department of the Treasury Office of Foreign Assets Control, and similar

foreign laws such as the U.K. Bribery Act, as well as the fact that many countries have legal systems, local

laws and trade practices that are unsettled and evolving, and/or commercial laws that are vague and/or

difficulties in building and maintaining a competitive presence in existing and new markets;

inconsistently applied;

system of internal control;

social, economic and political instability;

differences in cultures and business practices;

statutory equity requirements;

differences in accounting and reporting requirements;

repatriation controls;

differences in labor and market conditions;

potential adverse tax consequences;

E multiple regulations concerning pay rates, benefits, vacation, statutory holiday pay, workers’ compensation,

union membership, termination pay, the termination of employment, and other employment laws; and

the results of the November 2016 U.S. elections, which have introduced greater uncertainty with respect to

trade policies, tariffs and government regulation affecting trade between the U.S. and other countries.

We cannot ensure that one or more of these factors will not harm our business, financial condition or results of

operations.

Foreign currency exchange rate risks may adversely affect our results of operations.

A material portion of our revenue and expenses are generated by our operations in foreign countries, and we

expect that our foreign operations will account for a material portion of our revenue and expenses in the future.

Most of our international expenses and revenue are denominated in foreign currencies. As a result, our financial

results could be affected by factors, such as changes in foreign currency exchange rates or weak economic

conditions in foreign markets in which we have operations. Fluctuations in the value of those currencies in relation

to the United States dollar have caused and will continue to cause dollar-translated amounts to vary from one

period to another. Given the volatility of exchange rates, we may not be able to manage effectively our currency

translation or transaction risks, which may adversely affect our financial condition and results of operations.

We may be limited in our ability to recruit candidates from our clients and we could lose those

opportunities to our competition, which could harm our business.

Either by agreement with clients, or for client relations or marketing purposes, we sometimes refrain from, for a

specified period of time, recruiting candidates from a client when conducting searches on behalf of other clients.

These off-limit agreements can generally remain in effect for up to two years following completion of an

assignment. The duration and scope of the off-limit agreement, including whether it covers all operations of the

client and its affiliates or only certain divisions of a client, generally are subject to negotiation or internal policies

and may depend on factors such as the scope, size and complexity of the client’s business, the length of the client

relationship and the frequency with which we have been engaged to perform executive searches for the client. If a

prospective client believes that we are overly restricted by these off-limit agreements from recruiting employees of

our existing clients, these prospective clients may not engage us to perform their executive searches. Therefore,

difficulties in staffing and managing global operations, which could impact our ability to maintain an effective

We have provisions that make an acquisition of us more difficult and expensive.

our inability to recruit candidates from these clients may make it difficult for us to obtain search assignments from,
or to fulfill search assignments for, other companies in that client’s industry. We cannot ensure that off-limit
agreements will not impede our growth or our ability to attract and serve new clients, or otherwise harm our
business.

Consolidation in the industries that we serve could harm our business.

Companies in the industries that we serve may seek to achieve economies of scale and other synergies by
combining with or acquiring other companies. If two or more of our clients merge or consolidate and combine their
operations, we may experience a decrease in the amount of services we perform for these clients. If one of our
clients merges or consolidates with a company that relies on another provider for its services, we may lose work
from that client or lose the opportunity to gain additional work. The increased market power of larger companies
could also increase pricing and competitive pressures on us. Any of these possible results of industry
consolidation could harm our business, results of operations and financial condition.

Anti-takeover provisions in our Certificate of Incorporation, our Bylaws and under Delaware law make it more
difficult and expensive for us to be acquired in a transaction that is not approved by our Board of Directors. Some
of the provisions in our Certificate of Incorporation and Bylaws include:

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limitation on stockholder actions;
advance notification requirements for director nominations and actions to be taken at stockholder
meetings; and
the ability to issue one or more series of preferred stock by action of our Board of Directors.

These provisions could discourage an acquisition attempt or other transaction in which stockholders could receive
a premium over the current market price for the common stock.

Unfavorable tax laws, tax law changes and tax authority rulings may adversely affect results.

We are subject to income taxes in the United States and in various foreign jurisdictions. Domestic and international
tax liabilities are subject to the allocation of income among various tax jurisdictions. Our effective tax rate could be
adversely affected by changes in the mix of earnings among countries with differing statutory tax rates or changes
in tax laws. The amount of income taxes and other taxes are subject to ongoing audits by United States federal,
state and local tax authorities and by non-United States authorities. If these audits result in assessments different
from estimated amounts recorded, future financial results may include unfavorable tax adjustments.

We have deferred tax assets that we may not be able to use under certain circumstances.

If we are unable to generate sufficient future taxable income in certain jurisdictions, or if there is a significant
change in the time period within which the underlying temporary differences become taxable or deductible, we
could be required to increase our valuation allowances against our deferred tax assets. This would result in an
increase in our effective tax rate, and an adverse effect on our future operating results. In addition, changes in
statutory tax rates may also change our deferred tax assets or liability balances, with either a favorable or
unfavorable impact on our effective tax rate. Our deferred tax assets may also be impacted by new legislation or
regulation.

We may not be able to align our cost structure with our revenue level which in turn may require additional
financing in the future that may not be available at all or may be available only on unfavorable terms.

We continuously evaluate our cost base in relation to projected near to mid-term demand for our services in an
effort to align our cost structure with the current realities of our markets. If actual or projected fee revenues are
negatively impacted by weakening customer demand, we may find it necessary to take cost cutting measures so
that we can minimize the impact on our profitability. There is, however, no guarantee that if we do take such
measures that such measures will properly align our cost structure to our revenue level. Any failure to maintain a
balance between our cost structure and our revenue could adversely affect our business, financial condition, and
results of operations and lead to negative cash flows, which in turn might require us to obtain additional financing

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to meet our capital needs. If we are unable to secure such additional financing on favorable terms, or at all, our
ability to fund our operations could be impaired, which could have a material adverse effect on our results of
operations.

We invest in marketable securities classified as trading and if the market value of these securities declines
materially, they could have an adverse effect on our financial position and results of operations.

Marketable securities in which we invest consist of mutual funds. The primary objectives of the mutual funds are to
meet the obligations under certain of our deferred compensation plans. If the financial markets in which these
securities trade were to materially decline in value, the unrealized losses and potential realized losses could
negatively impact the Company’s financial position and results of operations.

Our inability to successfully recover should we experience a disaster or other business continuity
problem could cause material financial loss, loss of human capital, regulatory actions, reputational harm
or legal liability.

Should we experience a disaster or other business continuity problem, such as an earthquake, hurricane, terrorist
attack, pandemic, security breach, power loss, telecommunications failure or other natural or man-made disaster,
our continued success will depend, in part, on the availability of our personnel, our office facilities, and the proper
functioning of our computer, telecommunication and other related systems and operations. In such an event, we
could experience near-term operational challenges with regard to particular areas of our operations. In particular,
our ability to recover from any disaster or other business continuity problem will depend on our ability to protect our
technology infrastructure against damage from business continuity events that could have a significant disruptive
effect on our operations. We could potentially lose client data or experience material adverse interruptions to our
operations or delivery of services to our clients in a disaster. A disaster on a significant scale or affecting certain of
our key operating areas within or across regions, or our inability to successfully recover should we experience a
disaster or other business continuity problem, could materially interrupt our business operations and cause
material financial loss, loss of human capital, regulatory actions, reputational harm, damaged client relationships or
legal liability.

As we develop new services, clients and practices, enter new lines of business, and focus more of our
business on providing a full range of client solutions, the demands on our business and our operating
risks may increase.

As part of our corporate strategy, we are attempting to leverage our research and advisory services to sell a full
range of services across the life cycle of a policy, program, project, or initiative, and we are regularly searching for
ways to provide new services to clients. In addition, we plan to extend our services to new clients, into new lines of
business, and into new geographic locations. As we focus on developing new services, clients, practice areas and
lines of business; open new offices; and engage in business in new geographic locations, our operations may be
exposed to additional as well as enhanced risks.

In particular, our growth efforts place substantial additional demands on our management and staff, as well as on
our information, financial, administrative and operational systems. We may not be able to manage these demands
successfully. Growth may require increased recruiting efforts, opening new offices, increased business
development, selling, marketing and other actions that are expensive and entail increased risk. We may need to
invest more in our people and systems, controls, compliance efforts, policies and procedures than we anticipate.
Therefore, even if we do grow, the demands on our people and systems, controls, compliance efforts, policies and
procedures may exceed the benefits of such growth, and our operating results may suffer, at least in the short-
term, and perhaps in the long-term.

Efforts involving a different focus, new services, new clients, new practice areas, new lines of business, new
offices and new geographic locations entail inherent risks associated with our inexperience and competition from
mature participants in those areas. Our inexperience may result in costly decisions that could harm our profit and
operating results. In particular, new or improved services often relate to the development, implementation and
improvement of critical infrastructure or operating systems that our clients may view as “mission critical,” and if we
fail to satisfy the needs of our clients in providing these services, our clients could incur significant costs and

losses for which they could seek compensation from us. Finally, as our business continues to evolve and we

provide a wider range of services, we will become increasingly dependent upon our employees, particularly those

operating in business environments less familiar to us. Failure to identify, hire, train and retain talented employees

who share our values could have a negative effect on our reputation and our business.

Our financial results could suffer if we are unable to achieve or maintain adequate utilization and suitable

billing rates for our consultants.

Our profitability depends, to a large extent, on the utilization and billing rates of our professionals. Utilization of our

professionals is affected by a number of factors, including:

the number and size of client engagements;

the timing of the commencement, completion and termination of engagements (for example, the

commencement or termination of multiple RPO engagements could have a significant impact on our business,

including significant fluctuations in our fee revenue, since these types of engagements are generally larger, in

terms of both staffing and fee revenue generated, than our other engagements);

our ability to transition our consultants efficiently from completed engagements to new engagements;

the hiring of additional consultants because there is generally a transition period for new consultants that

results in a temporary drop in our utilization rate;

unanticipated changes in the scope of client engagements;

our ability to forecast demand for our services and thereby maintain an appropriate level of consultants; and

conditions affecting the industries in which we practice as well as general economic conditions.

The billing rates of our consultants that we are able to charge are also affected by a number of factors, including:

our clients’ perception of our ability to add value through our services;

the market demand for the services we provide;

an increase in the number of clients in the government sector in the industries we serve;

introduction of new services by us or our competitors;

our competition and the pricing policies of our competitors; and

current economic conditions.

E

E

E

E

E

E

E

E

E

E

E

E

E

If we are unable to achieve and maintain adequate overall utilization as well as maintain or increase the billing

rates for our consultants, our financial results could materially suffer. In addition, our consultants oftentimes

perform services at the physical locations of our clients. If there are natural disasters, disruptions to travel and

transportation or problems with communications systems, our ability to perform services for, and interact with, our

clients at their physical locations may be negatively impacted which could have an adverse effect on our business

Changes in our accounting estimates and assumptions could negatively affect our financial position and

and results of operations.

results of operations.

We prepare our consolidated financial statements in accordance with GAAP. These accounting principles require

us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure

of contingent assets and liabilities at the date of our financial statements. We are also required to make certain

judgments that affect the reported amounts of revenues and expenses during each reporting period. We

periodically evaluate our estimates and assumptions including those relating to revenue recognition, restructuring,

deferred compensation, goodwill and other intangible assets, contingent consideration, annual performance

related bonuses, allowance for doubtful accounts, share-based payments and deferred income taxes. We base

our estimates on historical experience and various assumptions that we believe to be reasonable based on

specific circumstances. Actual results could differ from these estimates, and changes in accounting standards

could have an adverse impact on our future financial position and results of operations.

20

21

to meet our capital needs. If we are unable to secure such additional financing on favorable terms, or at all, our

ability to fund our operations could be impaired, which could have a material adverse effect on our results of

operations.

We invest in marketable securities classified as trading and if the market value of these securities declines

materially, they could have an adverse effect on our financial position and results of operations.

Marketable securities in which we invest consist of mutual funds. The primary objectives of the mutual funds are to

meet the obligations under certain of our deferred compensation plans. If the financial markets in which these

securities trade were to materially decline in value, the unrealized losses and potential realized losses could

negatively impact the Company’s financial position and results of operations.

Our inability to successfully recover should we experience a disaster or other business continuity

problem could cause material financial loss, loss of human capital, regulatory actions, reputational harm

or legal liability.

Should we experience a disaster or other business continuity problem, such as an earthquake, hurricane, terrorist

attack, pandemic, security breach, power loss, telecommunications failure or other natural or man-made disaster,

our continued success will depend, in part, on the availability of our personnel, our office facilities, and the proper

functioning of our computer, telecommunication and other related systems and operations. In such an event, we

could experience near-term operational challenges with regard to particular areas of our operations. In particular,

our ability to recover from any disaster or other business continuity problem will depend on our ability to protect our

technology infrastructure against damage from business continuity events that could have a significant disruptive

effect on our operations. We could potentially lose client data or experience material adverse interruptions to our

operations or delivery of services to our clients in a disaster. A disaster on a significant scale or affecting certain of

our key operating areas within or across regions, or our inability to successfully recover should we experience a

disaster or other business continuity problem, could materially interrupt our business operations and cause

material financial loss, loss of human capital, regulatory actions, reputational harm, damaged client relationships or

legal liability.

risks may increase.

As we develop new services, clients and practices, enter new lines of business, and focus more of our

business on providing a full range of client solutions, the demands on our business and our operating

As part of our corporate strategy, we are attempting to leverage our research and advisory services to sell a full

range of services across the life cycle of a policy, program, project, or initiative, and we are regularly searching for

ways to provide new services to clients. In addition, we plan to extend our services to new clients, into new lines of

business, and into new geographic locations. As we focus on developing new services, clients, practice areas and

lines of business; open new offices; and engage in business in new geographic locations, our operations may be

exposed to additional as well as enhanced risks.

In particular, our growth efforts place substantial additional demands on our management and staff, as well as on

our information, financial, administrative and operational systems. We may not be able to manage these demands

successfully. Growth may require increased recruiting efforts, opening new offices, increased business

development, selling, marketing and other actions that are expensive and entail increased risk. We may need to

invest more in our people and systems, controls, compliance efforts, policies and procedures than we anticipate.

Therefore, even if we do grow, the demands on our people and systems, controls, compliance efforts, policies and

procedures may exceed the benefits of such growth, and our operating results may suffer, at least in the short-

term, and perhaps in the long-term.

Efforts involving a different focus, new services, new clients, new practice areas, new lines of business, new

offices and new geographic locations entail inherent risks associated with our inexperience and competition from

mature participants in those areas. Our inexperience may result in costly decisions that could harm our profit and

operating results. In particular, new or improved services often relate to the development, implementation and

improvement of critical infrastructure or operating systems that our clients may view as “mission critical,” and if we

fail to satisfy the needs of our clients in providing these services, our clients could incur significant costs and

losses for which they could seek compensation from us. Finally, as our business continues to evolve and we
provide a wider range of services, we will become increasingly dependent upon our employees, particularly those
operating in business environments less familiar to us. Failure to identify, hire, train and retain talented employees
who share our values could have a negative effect on our reputation and our business.

Our financial results could suffer if we are unable to achieve or maintain adequate utilization and suitable
billing rates for our consultants.

Our profitability depends, to a large extent, on the utilization and billing rates of our professionals. Utilization of our
professionals is affected by a number of factors, including:

E
E

E
E

E
E
E

the number and size of client engagements;
the timing of the commencement, completion and termination of engagements (for example, the
commencement or termination of multiple RPO engagements could have a significant impact on our business,
including significant fluctuations in our fee revenue, since these types of engagements are generally larger, in
terms of both staffing and fee revenue generated, than our other engagements);
our ability to transition our consultants efficiently from completed engagements to new engagements;
the hiring of additional consultants because there is generally a transition period for new consultants that
results in a temporary drop in our utilization rate;
unanticipated changes in the scope of client engagements;
our ability to forecast demand for our services and thereby maintain an appropriate level of consultants; and
conditions affecting the industries in which we practice as well as general economic conditions.

The billing rates of our consultants that we are able to charge are also affected by a number of factors, including:

E
E
E
E
E
E

our clients’ perception of our ability to add value through our services;
the market demand for the services we provide;
an increase in the number of clients in the government sector in the industries we serve;
introduction of new services by us or our competitors;
our competition and the pricing policies of our competitors; and
current economic conditions.

If we are unable to achieve and maintain adequate overall utilization as well as maintain or increase the billing
rates for our consultants, our financial results could materially suffer. In addition, our consultants oftentimes
perform services at the physical locations of our clients. If there are natural disasters, disruptions to travel and
transportation or problems with communications systems, our ability to perform services for, and interact with, our
clients at their physical locations may be negatively impacted which could have an adverse effect on our business
and results of operations.

Changes in our accounting estimates and assumptions could negatively affect our financial position and
results of operations.

We prepare our consolidated financial statements in accordance with GAAP. These accounting principles require
us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure
of contingent assets and liabilities at the date of our financial statements. We are also required to make certain
judgments that affect the reported amounts of revenues and expenses during each reporting period. We
periodically evaluate our estimates and assumptions including those relating to revenue recognition, restructuring,
deferred compensation, goodwill and other intangible assets, contingent consideration, annual performance
related bonuses, allowance for doubtful accounts, share-based payments and deferred income taxes. We base
our estimates on historical experience and various assumptions that we believe to be reasonable based on
specific circumstances. Actual results could differ from these estimates, and changes in accounting standards
could have an adverse impact on our future financial position and results of operations.

20

21

Our indebtedness could impair our financial condition and reduce funds available to us for other purposes
and our failure to comply with the covenants contained in our debt instruments could result in an event of
default that could adversely affect our operating results.

On June 15, 2016, the Company entered into a senior secured $400 million Credit Agreement with a syndicate of
banks made up of a $275 million term loan and $125 million of secured revolving loans. As of April 30, 2017,
$259.5 million was outstanding under the term loan and there is no outstanding balance under the revolving loans.

If we do not generate sufficient cash flow from operations to satisfy our debt obligations, we may have to
undertake alternative financing plans. We cannot ensure that we would be able to refinance our debt or enter into
alternative financing plans in adequate amounts on commercially reasonable terms, terms acceptable to us or at
all, or that such plans guarantee that we would be able to meet our debt obligations.

Our existing debt agreements contain financial and restrictive covenants that limit the total amount of debt that we
may incur, and may limit our ability to engage in other activities that we may believe are in our long-term best
interests, including the disposition or acquisition of assets or other companies or the payment of dividends to our
shareholders. Our failure to comply with these covenants may result in an event of default, which, if not cured or
waived, could accelerate the maturity of our indebtedness or prevent us from accessing additional funds under our
revolving credit facility. If the maturity of our indebtedness is accelerated, we may not have sufficient cash
resources to satisfy our debt obligations and we may not be able to continue our operations as planned.

You may not receive the level of dividends provided for in the dividend policy our Board of Directors has
adopted or any dividends at all.

We are not obligated to pay dividends on our common stock. Our Board of Directors adopted a dividend policy on
December 8, 2014, that reflects an intention to distribute to our stockholders a regular quarterly cash dividend of
$0.10 per share of common stock. Although the Company paid our first dividend under this program on April 9,
2015 and has declared a quarterly dividend every quarter since the adoption of the dividend policy, the declaration
and payment of all future dividends to holders of our common stock are subject to the discretion of our Board of
Directors, which may amend, revoke or suspend our dividend policy at any time and for any reason, including
earnings, capital requirements, financial conditions, and other factors our Board of Directors may deem relevant.
The terms of our indebtedness may also restrict us from paying cash dividends on our common stock under
certain circumstances. See below “—Our ability to pay dividends will be restricted by agreements governing our
debt, including our credit agreement, and by Delaware law.”

Over time, our capital and other cash needs may change significantly from our current needs, which could affect
whether we pay dividends and the level of any dividends we may pay in the future. If we were to use borrowings
under our credit facility to fund our payment of dividends, we would have less cash and/or borrowing capacity
available for future dividends and other purposes, which could negatively affect our financial condition, our results
of operations, our liquidity and our ability to maintain and expand our business. Accordingly, you may not receive
dividends in the intended amounts, or at all. Any reduction or elimination of dividends may negatively affect the
market price of our common stock.

Our ability to pay dividends will be restricted by agreements governing our debt, including our credit
agreement, and by Delaware law.

Our credit agreement restricts our ability to pay dividends. See “Management’s Discussion and Analysis of
Financial Condition and Results of Operations—Liquidity and Capital Resources” where we describe the terms of
our indebtedness, including provisions limiting our ability to declare and pay dividends. As a result of such
restrictions, we may be limited in our ability to pay dividends unless we amend our credit agreement or otherwise
obtain a waiver from our lenders. In addition, as a result of general economic conditions, conditions in the lending
markets, the results of our business or for any other reason, we may elect or be required to amend or refinance
our senior credit facility, at or prior to maturity, or enter into additional agreements for indebtedness. Any such
amendment, refinancing or additional agreement may contain covenants which could limit in a significant manner
or entirely our ability to pay dividends to you.

22

Our indebtedness could impair our financial condition and reduce funds available to us for other purposes

and our failure to comply with the covenants contained in our debt instruments could result in an event of

default that could adversely affect our operating results.

On June 15, 2016, the Company entered into a senior secured $400 million Credit Agreement with a syndicate of

banks made up of a $275 million term loan and $125 million of secured revolving loans. As of April 30, 2017,

$259.5 million was outstanding under the term loan and there is no outstanding balance under the revolving loans.

If we do not generate sufficient cash flow from operations to satisfy our debt obligations, we may have to

undertake alternative financing plans. We cannot ensure that we would be able to refinance our debt or enter into

alternative financing plans in adequate amounts on commercially reasonable terms, terms acceptable to us or at

all, or that such plans guarantee that we would be able to meet our debt obligations.

Our existing debt agreements contain financial and restrictive covenants that limit the total amount of debt that we

may incur, and may limit our ability to engage in other activities that we may believe are in our long-term best

interests, including the disposition or acquisition of assets or other companies or the payment of dividends to our

shareholders. Our failure to comply with these covenants may result in an event of default, which, if not cured or

waived, could accelerate the maturity of our indebtedness or prevent us from accessing additional funds under our

revolving credit facility. If the maturity of our indebtedness is accelerated, we may not have sufficient cash

resources to satisfy our debt obligations and we may not be able to continue our operations as planned.

You may not receive the level of dividends provided for in the dividend policy our Board of Directors has

adopted or any dividends at all.

We are not obligated to pay dividends on our common stock. Our Board of Directors adopted a dividend policy on

December 8, 2014, that reflects an intention to distribute to our stockholders a regular quarterly cash dividend of

$0.10 per share of common stock. Although the Company paid our first dividend under this program on April 9,

2015 and has declared a quarterly dividend every quarter since the adoption of the dividend policy, the declaration

and payment of all future dividends to holders of our common stock are subject to the discretion of our Board of

Directors, which may amend, revoke or suspend our dividend policy at any time and for any reason, including

earnings, capital requirements, financial conditions, and other factors our Board of Directors may deem relevant.

The terms of our indebtedness may also restrict us from paying cash dividends on our common stock under

certain circumstances. See below “—Our ability to pay dividends will be restricted by agreements governing our

debt, including our credit agreement, and by Delaware law.”

Over time, our capital and other cash needs may change significantly from our current needs, which could affect

whether we pay dividends and the level of any dividends we may pay in the future. If we were to use borrowings

under our credit facility to fund our payment of dividends, we would have less cash and/or borrowing capacity

available for future dividends and other purposes, which could negatively affect our financial condition, our results

of operations, our liquidity and our ability to maintain and expand our business. Accordingly, you may not receive

dividends in the intended amounts, or at all. Any reduction or elimination of dividends may negatively affect the

market price of our common stock.

agreement, and by Delaware law.

Our ability to pay dividends will be restricted by agreements governing our debt, including our credit

Our credit agreement restricts our ability to pay dividends. See “Management’s Discussion and Analysis of

Financial Condition and Results of Operations—Liquidity and Capital Resources” where we describe the terms of

our indebtedness, including provisions limiting our ability to declare and pay dividends. As a result of such

restrictions, we may be limited in our ability to pay dividends unless we amend our credit agreement or otherwise

obtain a waiver from our lenders. In addition, as a result of general economic conditions, conditions in the lending

markets, the results of our business or for any other reason, we may elect or be required to amend or refinance

our senior credit facility, at or prior to maturity, or enter into additional agreements for indebtedness. Any such

amendment, refinancing or additional agreement may contain covenants which could limit in a significant manner

or entirely our ability to pay dividends to you.

22

Additionally, under the Delaware General Corporation Law (“DGCL”), our Board of Directors may not authorize
payment of a dividend unless it is either paid out of surplus, as calculated in accordance with the DGCL, or if we
do not have a surplus, it is paid out of net profits for the fiscal year in which the dividend is declared and/or the
preceding fiscal year.

If, as a result of these restrictions, we are required to reduce or eliminate the payment of dividends, a decline in
the market price or liquidity, or both, of our common stock could result. This may in turn result in losses by you.

Our dividend policy may limit our ability to pursue growth opportunities.

If we pay dividends at the level currently anticipated under our dividend policy, we may not retain a sufficient
amount of cash to finance growth opportunities, meet any large unanticipated liquidity requirements or fund our
operations in the event of a significant business downturn. In addition, because a portion of cash available will be
distributed to holders of our common stock under our dividend policy, our ability to pursue any material expansion
of our business, including through acquisitions, increased capital spending or other increases of our expenditures,
will depend more than it otherwise would on our ability to obtain third party financing. We cannot assure you that
such financing will be available to us at all, or at an acceptable cost. If we are unable to take timely advantage of
growth opportunities, our future financial condition and competitive position may be harmed, which in turn may
adversely affect the market price of our common stock.

We are increasingly dependent on third parties for the execution of critical functions.

We do not maintain all of our technology infrastructure, and we have outsourced certain other critical applications
or business processes to external providers, including cloud-based services. The failure or inability to perform on
the part of one or more of these critical suppliers or partners could cause significant disruptions and increased
costs.

Item 1B. Unresolved Staff Comments

Not applicable.

Item 2. Properties

Our corporate office is located in Los Angeles, California. We lease all 114 of our Executive Search, Hay Group,
and Futurestep offices located in North America, EMEA, Asia Pacific and Latin America. As of April 30, 2017, we
leased an aggregate of approximately 1.4 million square feet of office space. The leases generally have remaining
terms of one to 13 years and contain customary terms and conditions. We believe that our facilities are adequate
for our current needs and we do not anticipate any difficulty replacing such facilities or locating additional facilities
to accommodate any future growth.

Item 3. Legal Proceedings

From time to time, we are involved in litigation both as a plaintiff and a defendant, relating to claims arising out of our
operations. As of the date of this report, we are not engaged in any legal proceedings that are expected, individually or
in the aggregate, to have a material adverse effect on our business, financial condition or results of operations.

Item 4. Mine Safety Disclosures

Not applicable.

Executive Officers of the Registrant

Name

Gary D. Burnison

Robert P. Rozek

Mark Arian

Byrne Mulrooney

Age as of
April 30,
2017

Position

56

56

56

56

President and Chief Executive Officer

Executive Vice President, Chief Financial Officer and Chief Corporate Officer

Chief Executive Officer, Hay Group

Chief Executive Officer, Futurestep

23

Our executive officers serve at the discretion of our Board of Directors. There is no family relationship between any
executive officer or director. The following information sets forth the business experience for at least the past five
years for each of our executive officers.

Gary D. Burnison has been President and Chief Executive Officer since July 2007. He was Executive Vice
President and Chief Financial Officer from March 2002 until June 30, 2007 and Chief Operating Officer from
November 2003 until June 30, 2007. Prior to joining Korn Ferry, Mr. Burnison was Principal and Chief Financial
Officer of Guidance Solutions, a privately held consulting firm, from 1999 to 2001. Prior to that, he served as an
executive officer and a member of the board of directors of Jefferies and Company, Inc., the principal operating
subsidiary of Jefferies Group, Inc. from 1995 to 1999. Earlier, Mr. Burnison was a partner at KPMG Peat Marwick.

Robert P. Rozek joined the Company in February 2012 as our Executive Vice President and Chief Financial
Officer and in December 2015 also became our Chief Corporate Officer. Prior to joining Korn Ferry, he served as
Executive Vice President and Chief Financial Officer of Cushman & Wakefield, Inc., a privately held commercial
real estate services firm, from June 2008 to February 2012. Prior to joining Cushman & Wakefield, Inc., Mr. Rozek
served as Senior Vice President and Chief Financial Officer of Las Vegas Sands Corp., a leading global developer
of destination properties (integrated resorts) that feature premium accommodations, world-class gaming and
entertainment, convention and exhibition facilities and many other amenities, from 2006 to 2008. Prior to that,
Mr. Rozek held senior leadership positions at Eastman Kodak, and spent five years as a partner with
PricewaterhouseCoopers LLP.

Mark Arian joined the Company as Chief Executive Officer of Korn Ferry’s Hay Group segment in April 2017. Prior
to Korn Ferry, Mr. Arian served as a Managing Principal at Ernst and Young LLP, a multinational professional
services firm that provides audit, tax, business risk, technology and security risk services, and human capital
services worldwide, from March 2014 until March of 2017. In that capacity, he led the People Advisory Services –
Financial Services Sector, and his responsibilities included commercial, people and key account leadership.
Between 2008 and 2014, Mr. Arian held various leadership positions at AON and AON Hewitt, a provider of
insurance, reinsurance, human capital and management consulting services, serving as an Executive Vice
President and leading its strategic M&A and business transformation offering globally. Mr. Arian has also held
various leadership positions at Towers Perrin (now Wills Towers Watson) including serving as the Global M&A and
Global Change Management Leader, and Hewitt Associates, where Mr. Arian built and led the Corporate
Restructuring and Change Practice. Mr. Arian is a graduate of Duke University and holds a juris doctorate from
Columbia University.

Byrne Mulrooney joined the Company in April 2010 as Chief Executive Officer of Futurestep. Prior to joining Korn
Ferry, he was President and Chief Operating Officer of Flynn Transportation Services, a third party logistics
company, from 2007 to 2010. Prior to that, he led Spherion’s workforce solutions business in North America, which
provides workforce solutions in professional services and general staffing, including recruitment process
outsourcing and managed services, from 2003 to 2007. Mr. Mulrooney held executive positions for almost
20 years at EDS and IBM in client services, sales, marketing and operations. Mr. Mulrooney is a graduate of
Villanova University in Pennsylvania. He holds a master’s degree in management from Northwestern University’s
J.L. Kellogg Graduate School of Management.

24

Our executive officers serve at the discretion of our Board of Directors. There is no family relationship between any

executive officer or director. The following information sets forth the business experience for at least the past five

years for each of our executive officers.

Gary D. Burnison has been President and Chief Executive Officer since July 2007. He was Executive Vice

President and Chief Financial Officer from March 2002 until June 30, 2007 and Chief Operating Officer from

November 2003 until June 30, 2007. Prior to joining Korn Ferry, Mr. Burnison was Principal and Chief Financial

Officer of Guidance Solutions, a privately held consulting firm, from 1999 to 2001. Prior to that, he served as an

executive officer and a member of the board of directors of Jefferies and Company, Inc., the principal operating

subsidiary of Jefferies Group, Inc. from 1995 to 1999. Earlier, Mr. Burnison was a partner at KPMG Peat Marwick.

Robert P. Rozek joined the Company in February 2012 as our Executive Vice President and Chief Financial

Officer and in December 2015 also became our Chief Corporate Officer. Prior to joining Korn Ferry, he served as

Executive Vice President and Chief Financial Officer of Cushman & Wakefield, Inc., a privately held commercial

real estate services firm, from June 2008 to February 2012. Prior to joining Cushman & Wakefield, Inc., Mr. Rozek

served as Senior Vice President and Chief Financial Officer of Las Vegas Sands Corp., a leading global developer

of destination properties (integrated resorts) that feature premium accommodations, world-class gaming and

entertainment, convention and exhibition facilities and many other amenities, from 2006 to 2008. Prior to that,

Mr. Rozek held senior leadership positions at Eastman Kodak, and spent five years as a partner with

PricewaterhouseCoopers LLP.

Mark Arian joined the Company as Chief Executive Officer of Korn Ferry’s Hay Group segment in April 2017. Prior

to Korn Ferry, Mr. Arian served as a Managing Principal at Ernst and Young LLP, a multinational professional

services firm that provides audit, tax, business risk, technology and security risk services, and human capital

services worldwide, from March 2014 until March of 2017. In that capacity, he led the People Advisory Services –

Financial Services Sector, and his responsibilities included commercial, people and key account leadership.

Between 2008 and 2014, Mr. Arian held various leadership positions at AON and AON Hewitt, a provider of

insurance, reinsurance, human capital and management consulting services, serving as an Executive Vice

President and leading its strategic M&A and business transformation offering globally. Mr. Arian has also held

various leadership positions at Towers Perrin (now Wills Towers Watson) including serving as the Global M&A and

Global Change Management Leader, and Hewitt Associates, where Mr. Arian built and led the Corporate

Restructuring and Change Practice. Mr. Arian is a graduate of Duke University and holds a juris doctorate from

Columbia University.

Byrne Mulrooney joined the Company in April 2010 as Chief Executive Officer of Futurestep. Prior to joining Korn

Ferry, he was President and Chief Operating Officer of Flynn Transportation Services, a third party logistics

company, from 2007 to 2010. Prior to that, he led Spherion’s workforce solutions business in North America, which

provides workforce solutions in professional services and general staffing, including recruitment process

outsourcing and managed services, from 2003 to 2007. Mr. Mulrooney held executive positions for almost

20 years at EDS and IBM in client services, sales, marketing and operations. Mr. Mulrooney is a graduate of

Villanova University in Pennsylvania. He holds a master’s degree in management from Northwestern University’s

J.L. Kellogg Graduate School of Management.

PART II.

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities

Common Stock

Our common stock is listed on the New York Stock Exchange under the symbol ‘KFY’. The following table sets
forth the high and low sales price per share of the common stock for the periods indicated, as reported on the
New York Stock Exchange:

Fiscal Year Ended April 30, 2017

First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fiscal Year Ended April 30, 2016

First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

High

Low

$
$
$
$

$
$
$
$

30.78 $
24.85 $
31.53 $
33.14 $

36.34 $
36.74 $
38.93 $
31.27 $

18.57
19.94
19.95
27.47

30.73
32.02
28.69
25.21

On June 20, 2017, the last reported sales price on the New York Stock Exchange for the Company’s common
stock, was $33.72 per share and there were approximately 9,701 beneficial stockholders of the Company’s
common stock.

Performance Graph

We have presented below a graph comparing the cumulative total stockholder return on the Company’s shares
with the cumulative total stockholder return on (1) the Standard & Poor’s 500 Stock Index and (2) a company-
established peer group. Cumulative total return for each of the periods shown in the performance graph is
measured assuming an initial investment of $100 on April 30, 2012 and the reinvestment of any dividends paid by
the Company and any company in the peer group on the date the dividends were paid.

Our peer group, is comprised of a broad number of publicly traded companies, which are principally or in
significant part involved in either professional staffing or consulting. The peer group is comprised of the following
14 companies: CBIZ, Inc. (CBZ), FTI Consulting, Inc. (FCN), Heidrick & Struggles International, Inc. (HSII), Huron
Consulting Group Inc. (HURN), ICF International, Inc. (ICFI), Insperity, Inc. (NSP), Kelly Services, Inc. (KELYA),
Kforce Inc. (KFRC), Navigant Consulting, Inc. (NCI), Resources Connection, Inc. (RECN), Robert Half
International, Inc. (RHI), The Dun & Bradstreet Corporation (DNB), Willis Towers Watson (WLTW) and TrueBlue,
Inc. (TBI). We believe this group of professional services firms, is reflective of similar sized companies in terms of
our market capitalization, revenue or profitability, and therefore provides a more meaningful comparison of stock
performance. The returns of each company have been weighted according to their respective stock market
capitalization at the beginning of each measurement period for purposes of arriving at a peer group average.

The stock price performance depicted in this graph is not necessarily indicative of future price performance. This
graph will not be deemed to be incorporated by reference by any general statement incorporating this Form 10-K
into any filing by us under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent
we specifically incorporate this information by reference, and shall not otherwise be deemed soliciting material or
deemed filed under the Securities Act of 1933 or the Securities Exchange Act of 1934.

24

25

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN(*)

Among Korn/Ferry International, the S&P 500 Index, and a Peer Group

$250

$200

$150

$100

$50

$0

4/12 7/12 10/12 1/13 4/13 7/13 10/13 1/14 4/14 7/14 10/14 1/15 4/15 7/15 10/15 1/16 4/16 7/16 10/16 1/17 4/17

Korn/Ferry International

S&P 500

Peer Group

Copyright© 2017 Standard & Poor’s, a division of S&P Global. All rights reserved.

(*) $100 invested on April 30, 2012 in stock or index, including reinvestment of dividends. Fiscal year ended April 30, 2017.

Issuer Purchases of Equity Securities

Capital Allocation Approach

The Company and its Board of Directors endorse a balanced approach to capital allocation. The Company’s first
priority is to invest in growth initiatives, such as the hiring of consultants, the continued development of intellectual
property and derivative products and services, and the investment in synergistic accretive M&A transactions that
earn a return superior to the Company’s cost of capital. Next, the Company’s capital allocation approach
contemplates the planned return of a portion of excess capital to stockholders, in the form of a regular quarterly
dividend, subject to the factors discussed below under “Dividends” and in more detail in the “Risk Factors” section
of this Annual Report on Form 10-K. Additionally, the Company considers share repurchases on an opportunistic
basis and subject to the terms of our credit agreement.

Dividends

On December 8, 2014, the Board of Directors adopted a dividend policy, reflecting an intention to distribute to our
stockholders a regular quarterly cash dividend of $0.10 per share. In fiscal 2016, the Board of Directors declared
the following dividends:

Declaration Date

Dividend Per Share

Record Date

June 10, 2015
September 7, 2015
December 8, 2015
March 8, 2016

$0.10
$0.10
$0.10
$0.10

June 25, 2015
September 25, 2015
December 21, 2015
March 25, 2016

In fiscal 2017, the Board of Directors declared the following dividends:

Declaration Date

Dividend Per Share

Record Date

June 15, 2016
September 7, 2016
December 6, 2016
March 6, 2017

$0.10
$0.10
$0.10
$0.10

June 27, 2016
September 26, 2016
December 20, 2016
March 23, 2017

Total Amount
(in thousands)

$5,115
$5,174
$5,770
$5,774

Total Amount
(in thousands)

$5,909
$5,841
$5,796
$5,772

Payment Date

July 15, 2015
October 15, 2015
January 15, 2016
April 15, 2016

Payment Date

July 15, 2016
October 14, 2016
January 17, 2017
April 14, 2017

The declaration and payment of future dividends under the quarterly dividend policy will be at the discretion of the
Board of Directors and will depend upon many factors, including the Company’s earnings, capital requirements,

financial conditions, the terms of the Company’s indebtedness and other factors that the Board of Directors may

deem to be relevant. The Board may amend, revoke or suspend the dividend policy at any time and for any

reason.

Our senior secured revolving credit agreement, dated June 15, 2016, permits us to pay dividends to our

stockholders and make share repurchases so long as our pro forma leverage ratio, defined as, the ratio of

consolidated funded indebtedness to consolidated adjusted EBITDA, is no greater than 2.50 to 1.00, and our pro

forma domestic liquidity is at least $50.0 million.

Stock Repurchase Program

On December 8, 2014, the Board of Directors approved an increase in the Company’s stock repurchase program

to an aggregate of $150.0 million. Common stock may be repurchased from time to time in open market or

privately negotiated transactions at the Company’s discretion subject to market conditions and other factors.

During the second quarter of fiscal 2017, the Company began to repurchase shares through this program. The

Company repurchased approximately $28.8 million of the Company’s common stock during fiscal 2017. Our

dividend policy as well as any decision to execute on our stock repurchase program will depend on our earnings,

capital requirements, financial condition and other factors considered relevant by our Board of Directors. Our credit

agreement permits us to pay dividends to our stockholders and make share repurchases so long as our pro forma

leverage ratio is no greater than 2.50 to 1.00, and our pro forma domestic liquidity is at least $50.0 million.

The following table summarizes common stock repurchased by us during the fourth quarter of fiscal 2017:

February 1, 2017 — February 28, 2017 . . . . . . . . . . . .

March 1, 2017 — March 31, 2017 . . . . . . . . . . . . . . . . .

April 1, 2017 — April 30, 2017 . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Shares

Purchased

(1)

Average

Price Paid

Per Share

174,384

62,177

196,689

433,250

$

$

$

$

28.27

30.96

30.65

29.74

Approximate

Dollar Value of

Shares that

May Yet be

Purchased

under the

Programs (2)

$128.8 million

$126.9 million

$121.2 million

Shares

Purchased

as Part of

Publicly-

Announced

Programs (2)

174,384

61,380

185,714

421,478

(1) Represents withholding of a portion of restricted shares to cover taxes on vested restricted shares and shares purchased as

part of our publicly announced programs.

(2) On December 8, 2014, the Board of Directors also approved an increase in the Company’s stock repurchase program to an

aggregate of $150.0 million. The shares can be repurchased in open market transactions or privately negotiated

transactions at the Company’s discretion. We repurchased approximately $12.5 million of the Company’s common stock

under the program during the fourth quarter of fiscal 2017.

Item 6. Selected Financial Data

The following selected financial data are qualified by reference to, and should be read together with, our “Audited

Consolidated Financial Statements and Notes to Consolidated Financial Statements” and “Management’s

Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this Annual

Report on Form 10-K. The selected statement of income data set forth below for the fiscal years ended April 30,

2017, 2016 and 2015 and the selected balance sheet data as of April 30, 2017 and 2016 are derived from our

consolidated financial statements, audited by Ernst & Young LLP, appearing elsewhere in this Form 10-K. The

selected balance sheet data as of April 30, 2015, 2014 and 2013 and the selected statement of income data set

forth below for the fiscal years ended April 30, 2014 and 2013 are derived from consolidated financial statements

and notes thereto which are not included in this Form 10-K report and were audited by Ernst & Young LLP.

26

27

financial conditions, the terms of the Company’s indebtedness and other factors that the Board of Directors may
deem to be relevant. The Board may amend, revoke or suspend the dividend policy at any time and for any
reason.

Our senior secured revolving credit agreement, dated June 15, 2016, permits us to pay dividends to our
stockholders and make share repurchases so long as our pro forma leverage ratio, defined as, the ratio of
consolidated funded indebtedness to consolidated adjusted EBITDA, is no greater than 2.50 to 1.00, and our pro
forma domestic liquidity is at least $50.0 million.

Stock Repurchase Program

On December 8, 2014, the Board of Directors approved an increase in the Company’s stock repurchase program
to an aggregate of $150.0 million. Common stock may be repurchased from time to time in open market or
privately negotiated transactions at the Company’s discretion subject to market conditions and other factors.
During the second quarter of fiscal 2017, the Company began to repurchase shares through this program. The
Company repurchased approximately $28.8 million of the Company’s common stock during fiscal 2017. Our
dividend policy as well as any decision to execute on our stock repurchase program will depend on our earnings,
capital requirements, financial condition and other factors considered relevant by our Board of Directors. Our credit
agreement permits us to pay dividends to our stockholders and make share repurchases so long as our pro forma
leverage ratio is no greater than 2.50 to 1.00, and our pro forma domestic liquidity is at least $50.0 million.

(*) $100 invested on April 30, 2012 in stock or index, including reinvestment of dividends. Fiscal year ended April 30, 2017.

Issuer Purchases of Equity Securities

The following table summarizes common stock repurchased by us during the fourth quarter of fiscal 2017:

February 1, 2017 — February 28, 2017 . . . . . . . . . . . .
March 1, 2017 — March 31, 2017 . . . . . . . . . . . . . . . . .
April 1, 2017 — April 30, 2017 . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Shares
Purchased
(1)

Average
Price Paid
Per Share

174,384
62,177
196,689

433,250

$
$
$

$

28.27
30.96
30.65

29.74

Approximate
Dollar Value of
Shares that
May Yet be
Purchased
under the
Programs (2)

$128.8 million
$126.9 million
$121.2 million

Shares
Purchased
as Part of
Publicly-
Announced
Programs (2)

174,384
61,380
185,714

421,478

(1) Represents withholding of a portion of restricted shares to cover taxes on vested restricted shares and shares purchased as

part of our publicly announced programs.

(2) On December 8, 2014, the Board of Directors also approved an increase in the Company’s stock repurchase program to an

aggregate of $150.0 million. The shares can be repurchased in open market transactions or privately negotiated
transactions at the Company’s discretion. We repurchased approximately $12.5 million of the Company’s common stock
under the program during the fourth quarter of fiscal 2017.

Item 6. Selected Financial Data

The following selected financial data are qualified by reference to, and should be read together with, our “Audited
Consolidated Financial Statements and Notes to Consolidated Financial Statements” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this Annual
Report on Form 10-K. The selected statement of income data set forth below for the fiscal years ended April 30,
2017, 2016 and 2015 and the selected balance sheet data as of April 30, 2017 and 2016 are derived from our
consolidated financial statements, audited by Ernst & Young LLP, appearing elsewhere in this Form 10-K. The
selected balance sheet data as of April 30, 2015, 2014 and 2013 and the selected statement of income data set
forth below for the fiscal years ended April 30, 2014 and 2013 are derived from consolidated financial statements
and notes thereto which are not included in this Form 10-K report and were audited by Ernst & Young LLP.

27

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN(*)

Among Korn/Ferry International, the S&P 500 Index, and a Peer Group

$250

$200

$150

$100

$50

$0

4/12 7/12 10/12 1/13 4/13 7/13 10/13 1/14 4/14 7/14 10/14 1/15 4/15 7/15 10/15 1/16 4/16 7/16 10/16 1/17 4/17

Korn/Ferry International

S&P 500

Peer Group

Copyright© 2017 Standard & Poor’s, a division of S&P Global. All rights reserved.

Capital Allocation Approach

The Company and its Board of Directors endorse a balanced approach to capital allocation. The Company’s first

priority is to invest in growth initiatives, such as the hiring of consultants, the continued development of intellectual

property and derivative products and services, and the investment in synergistic accretive M&A transactions that

earn a return superior to the Company’s cost of capital. Next, the Company’s capital allocation approach

contemplates the planned return of a portion of excess capital to stockholders, in the form of a regular quarterly

dividend, subject to the factors discussed below under “Dividends” and in more detail in the “Risk Factors” section

of this Annual Report on Form 10-K. Additionally, the Company considers share repurchases on an opportunistic

basis and subject to the terms of our credit agreement.

On December 8, 2014, the Board of Directors adopted a dividend policy, reflecting an intention to distribute to our

stockholders a regular quarterly cash dividend of $0.10 per share. In fiscal 2016, the Board of Directors declared

Declaration Date

Dividend Per Share

Record Date

Total Amount

(in thousands)

In fiscal 2017, the Board of Directors declared the following dividends:

Declaration Date

Dividend Per Share

Record Date

Total Amount

(in thousands)

$5,115

$5,174

$5,770

$5,774

$5,909

$5,841

$5,796

$5,772

Payment Date

July 15, 2015

October 15, 2015

January 15, 2016

April 15, 2016

Payment Date

July 15, 2016

October 14, 2016

January 17, 2017

April 14, 2017

$0.10

$0.10

$0.10

$0.10

$0.10

$0.10

$0.10

$0.10

June 25, 2015

September 25, 2015

December 21, 2015

March 25, 2016

June 27, 2016

September 26, 2016

December 20, 2016

March 23, 2017

26

The declaration and payment of future dividends under the quarterly dividend policy will be at the discretion of the

Board of Directors and will depend upon many factors, including the Company’s earnings, capital requirements,

Dividends

the following dividends:

June 10, 2015

September 7, 2015

December 8, 2015

March 8, 2016

June 15, 2016

September 7, 2016

December 6, 2016

March 6, 2017

Year Ended April 30,
2013
2015 (2)
2017
(in thousands, except per share data and other operating data)

2016 (1)

2014

Selected Statement of Income Data:
Fee revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,565,521 $ 1,292,112 $ 1,028,152 $
Reimbursed out-of-pocket engagement expenses . .
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation and benefits . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . .
Reimbursed expenses . . . . . . . . . . . . . . . . . . . . . . . .
Cost of services . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
Restructuring charges, net (3)
Total operating expenses . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . .
Other income (loss), net
. . . . . . . . . . . . . . . . . . . . . .
Interest (expense) income, net . . . . . . . . . . . . . . . . .
Equity in earnings of unconsolidated subsidiaries,

37,914
1,066,066
691,450
145,917
37,914
39,692
27,597
9,468
952,038
114,028
7,458
(1,784)

56,148
1,621,669
1,071,507
226,232
56,148
71,482
47,260
34,600
1,507,229
114,440
11,820
(10,251)

54,602
1,346,714
897,345
213,018
54,602
59,824
36,220
33,013
1,294,022
52,692
(4,167)
237

net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interest . . . .
Net income attributable to Korn/Ferry

333
29,104
87,238
(3,057)

1,631
18,960
31,433
(520)

2,181
33,526
88,357
—

960,301 $ 812,831
36,870
849,701
555,346
142,771
36,870
28,977
19,004
22,857
805,825
43,876
6,309
(2,365)

35,258
995,559
646,889
152,040
35,258
39,910
26,172
3,682
903,951
91,608
9,769
(2,363)

2,169
28,492
72,691
—

2,110
16,637
33,293
—

International

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

84,181 $

30,913 $

88,357 $

72,691 $

33,293

Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . $
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . $
Basic weighted average common shares

1.48 $
1.47 $

0.58 $
0.58 $

1.78 $
1.76 $

1.51 $
1.48 $

0.71
0.70

outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

56,205

52,372

49,052

48,162

47,224

Total fee revenue . . . . . . . . . . . . . . . . . . . . . . . . $ 1,565,521 $ 1,292,112 $ 1,028,152 $

Diluted weighted average common shares

outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends declared per common share . . . . . $
Other Operating Data:
Fee revenue by business segment:
Executive search:

North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
EMEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Latin America . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total executive search . . . . . . . . . . . . . . . . . . . .
Hay Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Futurestep . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of offices (at period end) (4) . . . . . . . . . . . .
Number of consultants (at period end) . . . . . . . . . . .
Number of new engagements opened . . . . . . . . . . .
Number of full-time employees:

Executive search . . . . . . . . . . . . . . . . . . . . . . . . . .
Hay Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Futurestep . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total full-time employees . . . . . . . . . . . . . . . . . .

Selected Balance Sheet Data as of April 30:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . $
Marketable securities (5) . . . . . . . . . . . . . . . . . . . . . .
Working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term obligations . . . . . . . . . . . . . . . . . . . . . . . .
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . .

56,900

0.40 $

52,929

0.40 $

49,766

0.10 $

49,145

— $

47,883
—

356,625 $
146,506
80,169
34,376
617,676
724,186
223,659

371,345 $
144,319
80,506
26,744
622,914
471,145
198,053

330,634 $
153,465
84,148
29,160
597,407
267,018
163,727

114
1,330
8,126

1,791
3,598
1,710
133
7,232

150
1,164
7,430

1,682
3,626
1,530
109
6,947

78
694
6,755

1,562
894
1,147
84
3,687

306,768 $ 290,317
128,807
147,917
73,221
84,816
30,134
29,374
522,479
568,875
168,115
254,636
136,790
122,237
960,301 $ 812,831

84
646
6,483

1,566
794
958
78
3,396

87
607
6,126

1,471
886
835
80
3,272

410,882 $
119,937
385,095
2,062,898
517,271
1,087,048

273,252 $
141,430
188,010
1,898,600
375,035
1,047,301

380,838 $
144,576
331,148
1,317,801
196,542
815,249

333,717 $ 224,066
141,916
134,559
175,038
270,535
1,115,229
1,233,666
182,210
191,197
664,468
755,536

28

Total operating expenses . . . . . . . . . . . . . . . . . . .

1,507,229

1,294,022

903,951

805,825

Fee revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,565,521 $ 1,292,112 $ 1,028,152 $

960,301 $ 812,831

Year Ended April 30,

2017

2016 (1)

2015 (2)

2014

2013

(in thousands, except per share data and other operating data)

56,148

1,621,669

1,071,507

226,232

56,148

71,482

47,260

34,600

114,440

11,820

(10,251)

333

29,104

87,238

(3,057)

54,602

1,346,714

897,345

213,018

54,602

59,824

36,220

33,013

52,692

(4,167)

237

1,631

18,960

31,433

(520)

37,914

1,066,066

691,450

145,917

37,914

39,692

27,597

9,468

952,038

114,028

7,458

(1,784)

2,181

33,526

88,357

—

35,258

995,559

646,889

152,040

35,258

39,910

26,172

3,682

91,608

9,769

(2,363)

2,169

28,492

72,691

—

36,870

849,701

555,346

142,771

36,870

28,977

19,004

22,857

43,876

6,309

(2,365)

2,110

16,637

33,293

—

Selected Statement of Income Data:

Reimbursed out-of-pocket engagement expenses . .

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Compensation and benefits . . . . . . . . . . . . . . . . . . .

General and administrative expenses . . . . . . . . . . .

Reimbursed expenses . . . . . . . . . . . . . . . . . . . . . . . .

Cost of services . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Depreciation and amortization . . . . . . . . . . . . . . . . .

Restructuring charges, net (3)

. . . . . . . . . . . . . . . . .

Operating income . . . . . . . . . . . . . . . . . . . . . . . .

Other income (loss), net

. . . . . . . . . . . . . . . . . . . . . .

Interest (expense) income, net . . . . . . . . . . . . . . . . .

Equity in earnings of unconsolidated subsidiaries,

net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . .

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income attributable to noncontrolling interest . . . .

Net income attributable to Korn/Ferry

Basic weighted average common shares

Diluted weighted average common shares

Other Operating Data:

Fee revenue by business segment:

Executive search:

EMEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Latin America . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total executive search . . . . . . . . . . . . . . . . . . . .

Hay Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Futurestep . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of offices (at period end) (4) . . . . . . . . . . . .

Number of consultants (at period end) . . . . . . . . . . .

Number of new engagements opened . . . . . . . . . . .

Number of full-time employees:

Executive search . . . . . . . . . . . . . . . . . . . . . . . . . .

Hay Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Futurestep . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total full-time employees . . . . . . . . . . . . . . . . . .

Selected Balance Sheet Data as of April 30:

International

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

84,181 $

30,913 $

88,357 $

72,691 $

33,293

Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . $

Diluted earnings per share . . . . . . . . . . . . . . . . . . . . $

1.48 $

1.47 $

0.58 $

0.58 $

1.78 $

1.76 $

1.51 $

1.48 $

0.71

0.70

outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

56,205

52,372

49,052

48,162

47,224

outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cash dividends declared per common share . . . . . $

56,900

0.40 $

52,929

0.40 $

49,766

0.10 $

49,145

— $

47,883

—

North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

356,625 $

371,345 $

330,634 $

306,768 $ 290,317

Total fee revenue . . . . . . . . . . . . . . . . . . . . . . . . $ 1,565,521 $ 1,292,112 $ 1,028,152 $

960,301 $ 812,831

144,319

80,506

26,744

622,914

471,145

198,053

150

1,164

7,430

1,682

3,626

1,530

109

6,947

153,465

84,148

29,160

597,407

267,018

163,727

78

694

6,755

1,562

894

1,147

84

3,687

147,917

84,816

29,374

568,875

254,636

136,790

128,807

73,221

30,134

522,479

168,115

122,237

84

646

6,483

1,566

794

958

78

3,396

87

607

6,126

1,471

886

835

80

3,272

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . $

410,882 $

273,252 $

380,838 $

333,717 $ 224,066

Marketable securities (5) . . . . . . . . . . . . . . . . . . . . . .

Working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Long-term obligations . . . . . . . . . . . . . . . . . . . . . . . .

Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . .

119,937

385,095

2,062,898

517,271

1,087,048

141,430

188,010

1,898,600

375,035

1,047,301

144,576

331,148

1,317,801

196,542

815,249

1,233,666

1,115,229

134,559

270,535

191,197

755,536

141,916

175,038

182,210

664,468

146,506

80,169

34,376

617,676

724,186

223,659

114

1,330

8,126

1,791

3,598

1,710

133

7,232

28

(1) Due to the acquisition of Legacy Hay on December 1, 2015, which accounted for $186.8 million and $740.2 million of fee

revenue and total assets, respectively, during fiscal 2016, financial data trends for fiscal 2017 and 2016 are not comparable
to prior periods. See Note 12 – Acquisitions, in the Notes to our Consolidated Financial Statements in this Annual Report on
Form 10-K for discussion of fiscal 2016 acquisitions.

(2) Due to the acquisition of Pivot Leadership on March 1, 2015, which accounted for $3.7 million and $20.0 million of fee

revenue and total assets, respectively, during fiscal 2015, financial data trends for fiscal 2015 are not comparable to prior
periods. See Note 12 – Acquisitions, in the Notes to our Consolidated Financial Statements in this Annual Report on
Form 10-K for discussion of fiscal 2015 acquisitions.

(3) During fiscal 2017, the Company continued to implement the 2016 restructuring plan in order to integrate the Hay Group
entities that were acquired in fiscal 2016 by eliminating redundant positions and operational, general and administrative
expenses and consolidating office space. This resulted in restructuring charges of $34.6 million, of which $16.0 million
related to severance and $18.6 million related to consolidation of office spaces. In fiscal 2016, the Company implemented a
restructuring plan in order to rationalize its cost structure by eliminating redundant positions and consolidating office space
due to the acquisition of Legacy Hay on December 1, 2015. As a result, we recorded $33.0 million in restructuring charges,
of which $32.1 million related to severance and $0.9 million related to consolidation and abandonment of premises. In fiscal
2015, the Company took actions to rationalize its cost structure as a result of efficiencies obtained from prior year
technology investments that enabled further integration of the legacy business and the recent acquisitions (PDI and Global
Novations), as well as other cost saving initiatives. As a result, we recorded $9.2 million of severance and $0.3 million
relating to the consolidation/abandonment of premises. In fiscal 2014, the Company continued the implementation of the
fiscal 2013 restructuring plan in order to integrate the prior year acquisitions by consolidating and eliminating certain
redundant office space around the world and by continuing to consolidate certain overhead functions. As a result, we
recorded $0.8 million and $16.3 million of severance during fiscal 2014 and 2013, respectively, and $2.9 million and
$6.5 million related to the consolidation of premises during fiscal 2014 and 2013, respectively.

(4) The number of offices decreased by 36 as of April 30, 2017 compared to April 30, 2016, due to the continued

implementation of the 2016 restructuring plan.

(5) As of April 30, 2017, 2016, 2015, 2014 and 2013, the Company’s marketable securities included $119.9 million,

$141.4 million, $131.4 million, $116.2 million, and $98.0 million, respectively, held in trust for settlement of the Company’s
obligations under certain of its deferred compensation plans. See Note 5 – Financial Instruments in the Notes to the
Consolidated Financial Statements in this Annual Report on Form 10-K.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations

Forward-looking Statements

This Annual Report on Form 10-K may contain certain statements that we believe are, or may be considered to be,
“forward-looking” statements, within the meaning of Section 27A of the Securities Act of 1933, as amended and
Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements generally
can be identified by use of statements that include phrases such as “believe,” “expect,” “anticipate,” “intend,”
“plan,” “foresee,” “may,” “will,” “likely,” “estimates,” “potential,” “continue” or other similar words or phrases.
Similarly, statements that describe our objectives, plans or goals also are forward-looking statements. All of these
forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ
materially from those contemplated by the relevant forward-looking statement. The principal risk factors that could
cause actual performance and future actions to differ materially from the forward-looking statements include, but
are not limited to, dependence on attracting and retaining qualified and experienced consultants, maintaining our
brand name and professional reputation, potential legal liability and regulatory developments, 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, restrictions imposed by off-
limits agreements, competition, 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
successfully recover from a disaster or business continuity problems, employment liability risk, an impairment in
the carrying value of goodwill and other intangible assets, deferred tax assets that we may not be able to use, our
ability to develop new products and services, changes in our accounting estimates and assumptions, alignment of
our cost structure, risks related to the integration of recently acquired businesses, the utilization and billing rates of
our consultants, seasonality and the matters disclosed under the heading “Risk Factors” in the Company’s
Exchange Act reports, including Item 1A included in this Annual Report. Readers are urged to consider these

29

factors carefully in evaluating the forward-looking statements. The forward-looking statements included in this
Annual Report on Form 10-K are made only as of the date of this Annual Report on Form 10-K and we undertake
no obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances.

The following presentation of management’s discussion and analysis of our financial condition and results of
operations should be read together with our consolidated financial statements and related notes included in this
Annual Report on Form 10-K.

Executive Summary

Korn/Ferry International (referred to herein as the “Company,” “Korn Ferry,” or in the first person notations “we,”

“our,” and “us”) is the preeminent global people and organizational advisory firm. Our services include Executive

Search, advisory solutions and products through Hay Group (formerly known as Leadership & Talent Consulting

(“Legacy LTC”) which was combined with HG (Luxembourg) S.à.r.l (“Legacy Hay”) in December 2015) and

recruitment for non-executive professionals and recruitment process outsourcing (“RPO”) through Futurestep.

Approximately 71% of the executive searches we performed in fiscal 2017 were for board level, chief executive

and other senior executive and general management positions. Our 3,589 search engagement clients in fiscal

2017 included many of the world’s largest and most prestigious public and private companies, including

approximately 57% of the FORTUNE 500, middle market and emerging growth companies, as well as government

and nonprofit organizations. We have built strong client loyalty, with 82% of assignments performed during fiscal

2017 having been on behalf of clients for whom we had conducted assignments in the previous three fiscal years.

Approximately 61% of our revenues were generated from clients that utilize multiple lines of business.

Superior performance comes from having the right conditions for success in two key areas – the organization and

its people. Organizational conditions encourage people to put forth their best effort and invest their energy towards

achieving the organization’s purpose. We can help a client operationalize its business strategy through our six

solution sets:

Design

Strategy Execution & Organization

We establish the conditions for success by clarifying strategy; designing an operating

model and organization structure that aligns to it; and defining a high performance

culture. We enable strategic change by engaging and motivating people to perform.

Talent Strategy and Work Design We map talent strategy to business strategy and help organizations put their plan into

action. We make sure they have the right people, in the right roles, engaged and

enabled to do the right things.

Rewards and Benefits

We help organizations align reward with strategy. We help them pay their people fairly

for doing the right things – with rewards they value – at a cost the organization can

Assessment and Succession

We provide actionable, research-backed insights that allow organizations to

understand the true capabilities of their people so they can make decisions that

ensure the right leaders are ready — when and where they are needed — in the

Executive Search and Recruitment We integrate scientific research with our practical experience and industry-specific

expertise to recruit professionals of all levels and functions at organizations across

afford.

future.

every industry.

Leadership Development

We activate purpose, vision, and strategy through leaders at all levels and

organizations. We combine expertise, science, and proven techniques with forward

thinking and creativity to build leadership experiences that help entry to senior-level

leaders grow and deliver superior results.

During fiscal 2017, we continued the implementation of our fiscal 2016 restructuring plan in order to rationalize our

cost structure by eliminating redundant positions, general and administrative expenses and consolidation of office

space that were created due to the acquisition of Legacy Hay in December 2015. In particular, the majority of our

efforts in both fiscal 2017 and 2016, were focused on activities associated with integration of our go-to-market

activities, our intellectual property and content, our solution sets and service offerings, and our back office systems

and business processes. As a result of these efforts, we recorded $34.6 million of restructuring charges with $16.0

million related to severance costs and $18.6 million related to the consolidation of office space during the fiscal

2017 while in fiscal 2016 we recorded $33.0 million of restructuring charges with $32.1 million related to severance

costs and $0.9 million related to the consolidation/abandonment of premises.

The Company currently operates in three global business segments: Executive Search, Hay Group and

Futurestep. See Note 11 – Business Segments, in the Notes to our Consolidated Financial Statements in this

Annual Report on Form 10-K, for discussion of the Company’s global business segments. The Company evaluates

performance and allocates resources based on the chief operating decision maker’s review of (1) fee revenue and

30

31

factors carefully in evaluating the forward-looking statements. The forward-looking statements included in this

Annual Report on Form 10-K are made only as of the date of this Annual Report on Form 10-K and we undertake

no obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances.

The following presentation of management’s discussion and analysis of our financial condition and results of

operations should be read together with our consolidated financial statements and related notes included in this

Annual Report on Form 10-K.

Executive Summary

Korn/Ferry International (referred to herein as the “Company,” “Korn Ferry,” or in the first person notations “we,”
“our,” and “us”) is the preeminent global people and organizational advisory firm. Our services include Executive
Search, advisory solutions and products through Hay Group (formerly known as Leadership & Talent Consulting
(“Legacy LTC”) which was combined with HG (Luxembourg) S.à.r.l (“Legacy Hay”) in December 2015) and
recruitment for non-executive professionals and recruitment process outsourcing (“RPO”) through Futurestep.
Approximately 71% of the executive searches we performed in fiscal 2017 were for board level, chief executive
and other senior executive and general management positions. Our 3,589 search engagement clients in fiscal
2017 included many of the world’s largest and most prestigious public and private companies, including
approximately 57% of the FORTUNE 500, middle market and emerging growth companies, as well as government
and nonprofit organizations. We have built strong client loyalty, with 82% of assignments performed during fiscal
2017 having been on behalf of clients for whom we had conducted assignments in the previous three fiscal years.
Approximately 61% of our revenues were generated from clients that utilize multiple lines of business.

Superior performance comes from having the right conditions for success in two key areas – the organization and
its people. Organizational conditions encourage people to put forth their best effort and invest their energy towards
achieving the organization’s purpose. We can help a client operationalize its business strategy through our six
solution sets:

Strategy Execution & Organization
Design

We establish the conditions for success by clarifying strategy; designing an operating
model and organization structure that aligns to it; and defining a high performance
culture. We enable strategic change by engaging and motivating people to perform.

Talent Strategy and Work Design We map talent strategy to business strategy and help organizations put their plan into

Rewards and Benefits

Assessment and Succession

action. We make sure they have the right people, in the right roles, engaged and
enabled to do the right things.

We help organizations align reward with strategy. We help them pay their people fairly
for doing the right things – with rewards they value – at a cost the organization can
afford.

We provide actionable, research-backed insights that allow organizations to
understand the true capabilities of their people so they can make decisions that
ensure the right leaders are ready — when and where they are needed — in the
future.

Executive Search and Recruitment We integrate scientific research with our practical experience and industry-specific
expertise to recruit professionals of all levels and functions at organizations across
every industry.

Leadership Development

We activate purpose, vision, and strategy through leaders at all levels and
organizations. We combine expertise, science, and proven techniques with forward
thinking and creativity to build leadership experiences that help entry to senior-level
leaders grow and deliver superior results.

During fiscal 2017, we continued the implementation of our fiscal 2016 restructuring plan in order to rationalize our
cost structure by eliminating redundant positions, general and administrative expenses and consolidation of office
space that were created due to the acquisition of Legacy Hay in December 2015. In particular, the majority of our
efforts in both fiscal 2017 and 2016, were focused on activities associated with integration of our go-to-market
activities, our intellectual property and content, our solution sets and service offerings, and our back office systems
and business processes. As a result of these efforts, we recorded $34.6 million of restructuring charges with $16.0
million related to severance costs and $18.6 million related to the consolidation of office space during the fiscal
2017 while in fiscal 2016 we recorded $33.0 million of restructuring charges with $32.1 million related to severance
costs and $0.9 million related to the consolidation/abandonment of premises.

The Company currently operates in three global business segments: Executive Search, Hay Group and
Futurestep. See Note 11 – Business Segments, in the Notes to our Consolidated Financial Statements in this
Annual Report on Form 10-K, for discussion of the Company’s global business segments. The Company evaluates
performance and allocates resources based on the chief operating decision maker’s review of (1) fee revenue and

30

31

(2) adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). To the extent that
such charges occur, Adjusted EBITDA excludes restructuring charges, integration/acquisition costs, certain
separation costs and certain non-cash charges (goodwill, intangible asset and other than temporary impairment).
For fiscal 2017 and fiscal 2016, Adjusted EBITDA includes a deferred revenue adjustment related to the Legacy
Hay acquisition, reflecting revenue that Hay Group would have realized if not for business combination accounting
that requires a company to record the acquisition balance sheet at fair value and write-off deferred revenue where
no future services are required to be performed to earn that revenue. Adjusted EBITDA and EBITDA are non-
GAAP financial measures. They have limitations as analytical tools, 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. In addition, such measures may not
necessarily be comparable to non-GAAP performance measures that may be presented by other companies.
Management believes the presentation of this non-GAAP financial measure provides meaningful supplemental
information regarding Korn Ferry’s performance by excluding certain charges, items of income and other items that
may not be indicative of Korn Ferry’s ongoing operating results. The use of this non-GAAP financial measure
facilitates comparisons to Korn Ferry’s historical performance and identification of operating trends that may
otherwise be distorted by certain charges and other items that may not be indicative of Korn Ferry’s ongoing
operating results. Korn Ferry includes this non-GAAP financial measure 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. The accounting
policies for the reportable segments are the same as those described in the summary of significant accounting
policies in the accompanying consolidated financial statements, except that the above noted items are excluded
from EBITDA to arrive at Adjusted EBITDA. Management further believes that EBITDA is useful to investors
because it is frequently used by investors and other interested parties to measure operating performance among
companies with different capital structures, effective tax rates and tax attributes and capitalized asset values, all of
which can vary substantially from company to company.

Similarly, adjusted fee revenue is a non-GAAP financial measure. Adjusted fee revenue is not a measure that
substitutes an individually tailored revenue recognition or measurement method for those of GAAP. This is an
adjustment for a short period of time that will provide better comparability in the current and prior periods.
Management believes the presentation of adjusted fee revenue assists management in its evaluation of ongoing
operations and provides useful information to investors because it 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 distorted by write-offs required under business combination accounting 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. The deferred revenue adjustment
is no longer included in the result of operation as of Q2 of fiscal 2017 as the impact of purchase accounting no
longer has an impact on actual results.

Fee revenue increased $273.4 million, or 21% in fiscal 2017 to $1,565.5 million compared to $1,292.1 million in
fiscal 2016, with increases in fee revenue in Hay Group and Futurestep segments, offset by a decrease in
Executive Search. During fiscal 2017, we recorded operating income of $114.4 million with Executive Search, Hay
Group, and Futurestep segments contributing $124.3 million, $47.3 million, and $30.0 million, respectively, offset
by Corporate expenses of $87.1 million. Net income attributable to Korn Ferry in fiscal 2017 was $84.2 million, an
increase of $53.3 million from net income attributable to Korn Ferry of $30.9 million in fiscal 2016. Adjusted
EBITDA was $235.0 million for fiscal 2017 with Executive Search, Hay Group and Futurestep segments
contributing $137.4 million, $128.2 million, and $32.8 million, respectively, offset by Corporate expenses net of
other income of $63.4 million. Adjusted EBITDA was $235.0 million in fiscal 2017, an increase of $44.8 million
from Adjusted EBITDA of $190.2 million during fiscal 2016.

Our cash, cash equivalents and marketable securities increased $116.1 million, or 28%, to $530.8 million at
April 30, 2017, compared to $414.7 million at April 30, 2016. This increase is mainly due to the drawdown on
June 15, 2016 of $275.0 million on our then-new term loan of which $140.0 million of the proceeds were used to
pay-off the term loan that was outstanding as of April 30, 2016 and cash provided by operating activities, offset by
bonuses earned in fiscal 2016 and paid in the first quarter of 2017, $50.1 million in payments for the purchase of

32

(2) adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). To the extent that

such charges occur, Adjusted EBITDA excludes restructuring charges, integration/acquisition costs, certain

separation costs and certain non-cash charges (goodwill, intangible asset and other than temporary impairment).

For fiscal 2017 and fiscal 2016, Adjusted EBITDA includes a deferred revenue adjustment related to the Legacy

Hay acquisition, reflecting revenue that Hay Group would have realized if not for business combination accounting

that requires a company to record the acquisition balance sheet at fair value and write-off deferred revenue where

no future services are required to be performed to earn that revenue. Adjusted EBITDA and EBITDA are non-

GAAP financial measures. They have limitations as analytical tools, 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. In addition, such measures may not

necessarily be comparable to non-GAAP performance measures that may be presented by other companies.

Management believes the presentation of this non-GAAP financial measure provides meaningful supplemental

information regarding Korn Ferry’s performance by excluding certain charges, items of income and other items that

may not be indicative of Korn Ferry’s ongoing operating results. The use of this non-GAAP financial measure

facilitates comparisons to Korn Ferry’s historical performance and identification of operating trends that may

otherwise be distorted by certain charges and other items that may not be indicative of Korn Ferry’s ongoing

operating results. Korn Ferry includes this non-GAAP financial measure 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. The accounting

policies for the reportable segments are the same as those described in the summary of significant accounting

policies in the accompanying consolidated financial statements, except that the above noted items are excluded

from EBITDA to arrive at Adjusted EBITDA. Management further believes that EBITDA is useful to investors

because it is frequently used by investors and other interested parties to measure operating performance among

companies with different capital structures, effective tax rates and tax attributes and capitalized asset values, all of

which can vary substantially from company to company.

Similarly, adjusted fee revenue is a non-GAAP financial measure. Adjusted fee revenue is not a measure that

substitutes an individually tailored revenue recognition or measurement method for those of GAAP. This is an

adjustment for a short period of time that will provide better comparability in the current and prior periods.

Management believes the presentation of adjusted fee revenue assists management in its evaluation of ongoing

operations and provides useful information to investors because it 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 distorted by write-offs required under business combination accounting 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. The deferred revenue adjustment

is no longer included in the result of operation as of Q2 of fiscal 2017 as the impact of purchase accounting no

longer has an impact on actual results.

Fee revenue increased $273.4 million, or 21% in fiscal 2017 to $1,565.5 million compared to $1,292.1 million in

fiscal 2016, with increases in fee revenue in Hay Group and Futurestep segments, offset by a decrease in

Executive Search. During fiscal 2017, we recorded operating income of $114.4 million with Executive Search, Hay

Group, and Futurestep segments contributing $124.3 million, $47.3 million, and $30.0 million, respectively, offset

by Corporate expenses of $87.1 million. Net income attributable to Korn Ferry in fiscal 2017 was $84.2 million, an

increase of $53.3 million from net income attributable to Korn Ferry of $30.9 million in fiscal 2016. Adjusted

EBITDA was $235.0 million for fiscal 2017 with Executive Search, Hay Group and Futurestep segments

contributing $137.4 million, $128.2 million, and $32.8 million, respectively, offset by Corporate expenses net of

other income of $63.4 million. Adjusted EBITDA was $235.0 million in fiscal 2017, an increase of $44.8 million

from Adjusted EBITDA of $190.2 million during fiscal 2016.

Our cash, cash equivalents and marketable securities increased $116.1 million, or 28%, to $530.8 million at

April 30, 2017, compared to $414.7 million at April 30, 2016. This increase is mainly due to the drawdown on

June 15, 2016 of $275.0 million on our then-new term loan of which $140.0 million of the proceeds were used to

pay-off the term loan that was outstanding as of April 30, 2016 and cash provided by operating activities, offset by

bonuses earned in fiscal 2016 and paid in the first quarter of 2017, $50.1 million in payments for the purchase of

fixed assets, $28.8 million in stock repurchases in the open market, and $23.3 million in dividends paid during the
fiscal year 2017. As of April 30, 2017, we held marketable securities to settle obligations under our Executive
Capital Accumulation Plan (“ECAP”) with a cost value of $113.8 million and a fair value of $119.9 million. Our
vested obligations for which these assets were held in trust totaled $99.5 million as of April 30, 2017 and our
unvested obligations totaled $37.6 million.

Our working capital increased by $197.1 million to $385.1 million in fiscal 2017. We believe that cash on hand and
funds from operations and other forms of liquidity will be sufficient to meet our anticipated working capital, capital
expenditures, general corporate requirements, repayment of the debt obligations incurred in connection with the
Legacy Hay acquisition, the retention pool obligations pursuant to the Legacy Hay acquisition and dividend
payments under our dividend policy in the next twelve months. We had $259.5 million outstanding under our Term
Facility as of April 30, 2017, of which $20.6 million will be due within a year. We had no outstanding borrowings
under our revolving credit facility at April 30, 2017 or 2016. As of April 30, 2017 and 2016, there was $3.0 million
and $2.8 million of standby letters of credit issued under our long-term debt arrangements, respectively. We have
a total of $8.1 million and $6.4 million of standby letters of credits with other financial institutions as of April 30,
2017 and 2016, respectively. The standby letters of credits were generally issued as a result of entering into office
premise leases.

Critical Accounting Policies

The following discussion and analysis of our financial condition and results of operations are based on our
consolidated financial statements. Preparation of our periodic filings requires us to make estimates and
assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and
liabilities at the date of our financial statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates and assumptions and changes in the estimates
are reported in current operations as new information is learned or upon the amounts becoming fixed and
determinable. In preparing our consolidated financial statements and accounting for the underlying transactions
and balances, we apply our accounting policies as disclosed in the notes to our consolidated financial statements.
We consider the policies discussed below as critical to an understanding of our consolidated financial statements
because their application places the most significant demands on management’s judgment and estimates. Specific
risks for these critical accounting policies are described in the following paragraphs. Senior management has
discussed the development, selection and key assumptions of the critical accounting estimates with the Audit
Committee of the Board of Directors.

Revenue Recognition. Management is required to establish policies and procedures to ensure that revenue is
recorded over the performance period for valid engagements and related costs are matched against such revenue.
Substantially all fee revenue is derived from fees for professional services related to executive search performed
on a retained basis, recruitment for non-executive professionals, recruitment process outsourcing, people and
organizational advisory services and the sale of product services. Fee revenue from executive search activities
and recruitment for non-executive professionals is generally one-third of the estimated first year compensation of
the placed executive or non-executive professional, as applicable, plus a percentage of the fee to cover indirect
engagement related expenses. We generally recognize such revenue on a straight-line basis over a three-month
period, commencing upon client acceptance, as this is the period over which the recruitment services are
performed. Fees earned in excess of the initial contract amount are recognized upon completion of the
engagement, which reflect the difference between the final actual compensation of the placed executive and the
estimate used for purposes of the previous billings. Since the initial contract fees are typically not contingent upon
placement of a candidate, our assumptions primarily relate to establishing the period over which such service is
performed. These assumptions determine the timing of revenue recognition and profitability for the reported
period. If these assumptions do not accurately reflect the period over which revenue is earned, revenue and profit
could differ. Any revenues associated with services that are provided on a contingent basis are recognized once
the contingency is resolved. In addition to recruitment for non-executive professionals, Futurestep provides RPO
services and fee revenue is recognized as services are rendered and/or as milestones are achieved. Fee revenue
from Hay Group is recognized as services are rendered for consulting engagements and other time based
services, measured by total hours incurred to the total estimated hours at completion. It is possible that updated
estimates for the consulting engagement may vary from initial estimates with such updates being recognized in the

32

33

period of determination. Depending on the timing of billings and services rendered, we accrue or defer revenue as
appropriate. Hay Group revenue is also derived from the sale of product services, which includes revenue from
licenses and from the sale of products. Revenue from licenses is recognized using a straight-line method over the
term of the contract (generally 12 months). Under the fixed term licenses, we are obligated to provide the licensee
with access to any updates to the underlying intellectual property that are made by us during the term of the
license. Once the term of the agreement expires, the client’s right to access or use the intellectual property expires
and we have no further obligations to the client under the license agreement. Revenue from perpetual licenses is
recognized when the license is sold since our only obligation is to provide the client access to the intellectual
property but is not obligated to provide maintenance, support, updates or upgrades. Products sold by us mainly
consist of books and automated services covering a variety of topics including performance management, team
effectiveness, and coaching and development. We recognize revenue for its products when the product has been
sold or shipped in the case of books. Furthermore, a provision for doubtful accounts on recognized revenue is
established with a charge to general and administrative expenses based on historical loss experience, assessment
of the collectability of specific accounts, as well as expectations of future collections based upon trends and the
type of work for which services are rendered.

Annual Performance Related Bonuses. Each quarter, management makes its best estimate of its annual
performance related bonuses, which requires management to, among other things, project annual consultant
productivity (as measured by engagement fees billed and collected by executive search consultants and revenue
and other performance/profitability metrics for Hay Group and Futurestep consultants), the level of engagements
referred by a consultant in one line of business to a different line of business, Company performance including
profitability, competitive forces and future economic conditions and their impact on our results. At the end of each
fiscal year, annual performance related bonuses take into account final individual consultant productivity (including
referred work), Company/line of business results including profitability, the achievement of strategic objectives and
the results of individual performance appraisals, and the current economic landscape. Accordingly, each quarter
we reevaluate the assumptions used to estimate annual performance related bonus liability and adjusts the
carrying amount of the liability recorded on the consolidated balance sheet and reports any changes in the
estimate in current operations. Because annual performance-based bonuses are communicated and paid only
after we report its full fiscal year results, actual performance-based bonus payments may differ from the prior
year’s estimate. Such changes in the bonus estimate historically have been immaterial and are recorded in current
operations in the period in which they are determined.

Deferred Compensation. Estimating deferred compensation requires assumptions regarding the timing and
probability of payments of benefits to participants and the discount rate. Changes in these assumptions could
significantly impact the liability and related cost on our consolidated balance sheet and statement of income,
respectively. For certain deferred compensation plans, management engages an independent actuary to
periodically review these assumptions in order to confirm that they reflect the population and economics of our
deferred compensation plans in all material respects and to assist us in estimating our deferred compensation
liability and the related cost. The actuarial assumptions we use may differ from actual results due to changing
market conditions or changes in the participant population. These differences could have a significant impact on
our deferred compensation liability and the related cost.

Carrying Values. Valuations are required under GAAP to determine the carrying value of various assets. Our most
significant assets for which management is required to prepare valuations are carrying value of receivables,
goodwill, intangible assets, fair value of contingent consideration and recoverability of deferred income taxes.
Management must identify whether events have occurred that may impact the carrying value of these assets and
make assumptions regarding future events, such as cash flows and profitability. Differences between the
assumptions used to prepare these valuations and actual results could materially impact the carrying amount of
these assets and our operating results.

Of the assets mentioned above, goodwill is the largest asset requiring a valuation. Fair value of goodwill for
purposes of the goodwill impairment test is determined utilizing 1) a discounted cash flow analysis based on
forecast cash flows (including estimated underlying revenue and operating income growth rates) discounted using
an estimated weighted-average cost of capital for market participants and 2) a market approach, utilizing
observable market data such as comparable companies in similar lines of business that are publicly traded or

which are part of a public or private transaction (to the extent available). We also reconcile the results of these

analyses to its market capitalization. If the carrying amount of a reporting unit exceeds its estimated fair value,

goodwill is considered potentially impaired and further tests are performed to measure the amount of impairment

loss, if any. We recorded no goodwill impairment in conjunction with our annual goodwill impairment assessment

performed as of January 31, 2017. While historical performance and current expectations have resulted in fair

values of goodwill in excess of carrying values, if our assumptions are not realized, it is possible that in the future

an impairment charge may need to be recorded. However, it is not possible at this time to determine if an

impairment charge would result or if such a charge would be material. Fair value determinations require

considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can

be no assurance that the estimates and assumptions made for purposes of the annual goodwill impairment test

will prove to be accurate predictions of the future. As of our testing date, the fair value of each reporting unit

exceeded its carrying amount and no reporting units were at risk of failing the impairment test. As a result, no

impairment charge was recognized. There was also no indication of potential impairment during the fourth quarter

of fiscal 2017 that would have required further testing.

Examples of events or circumstances that could reasonably be expected to negatively affect the underlying key

assumptions and ultimately impact the estimated fair value of the reporting units may include such items as

A prolonged downturn in the business environment in which the reporting units operate;

An economic climate that significantly differs from our future profitability assumptions in timing or degree;

follows:

▪

▪

▪

▪

The deterioration of the labor markets; and

Volatility in equity and debt markets.

Results of Operations

The following table summarizes the results of our operations as a percentage of fee revenue:

Year Ended April 30,

2017

2016

2015

Fee revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

100.0%

100.0%

100.0%

Reimbursed out-of-pocket engagement expenses . . . . . . . . . . . . . . . . . . . . . . . . . .

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Compensation and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Reimbursed expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cost of services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restructuring charges, net

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income attributable to Korn/Ferry International . . . . . . . . . . . . . . . . . . . . . . . .

3.6

103.6

68.4

14.5

3.6

4.6

3.0

2.2

7.3

5.6%

5.4%

4.2

104.2

69.4

16.5

4.2

4.6

2.8

2.6

4.1

2.4%

2.4%

3.7

103.7

67.2

14.2

3.7

3.9

2.7

0.9

11.1

8.6%

8.6%

34

35

period of determination. Depending on the timing of billings and services rendered, we accrue or defer revenue as

appropriate. Hay Group revenue is also derived from the sale of product services, which includes revenue from

licenses and from the sale of products. Revenue from licenses is recognized using a straight-line method over the

term of the contract (generally 12 months). Under the fixed term licenses, we are obligated to provide the licensee

with access to any updates to the underlying intellectual property that are made by us during the term of the

license. Once the term of the agreement expires, the client’s right to access or use the intellectual property expires

and we have no further obligations to the client under the license agreement. Revenue from perpetual licenses is

recognized when the license is sold since our only obligation is to provide the client access to the intellectual

property but is not obligated to provide maintenance, support, updates or upgrades. Products sold by us mainly

consist of books and automated services covering a variety of topics including performance management, team

effectiveness, and coaching and development. We recognize revenue for its products when the product has been

sold or shipped in the case of books. Furthermore, a provision for doubtful accounts on recognized revenue is

established with a charge to general and administrative expenses based on historical loss experience, assessment

of the collectability of specific accounts, as well as expectations of future collections based upon trends and the

type of work for which services are rendered.

Annual Performance Related Bonuses. Each quarter, management makes its best estimate of its annual

performance related bonuses, which requires management to, among other things, project annual consultant

productivity (as measured by engagement fees billed and collected by executive search consultants and revenue

and other performance/profitability metrics for Hay Group and Futurestep consultants), the level of engagements

referred by a consultant in one line of business to a different line of business, Company performance including

profitability, competitive forces and future economic conditions and their impact on our results. At the end of each

fiscal year, annual performance related bonuses take into account final individual consultant productivity (including

referred work), Company/line of business results including profitability, the achievement of strategic objectives and

the results of individual performance appraisals, and the current economic landscape. Accordingly, each quarter

we reevaluate the assumptions used to estimate annual performance related bonus liability and adjusts the

carrying amount of the liability recorded on the consolidated balance sheet and reports any changes in the

estimate in current operations. Because annual performance-based bonuses are communicated and paid only

after we report its full fiscal year results, actual performance-based bonus payments may differ from the prior

year’s estimate. Such changes in the bonus estimate historically have been immaterial and are recorded in current

operations in the period in which they are determined.

Deferred Compensation. Estimating deferred compensation requires assumptions regarding the timing and

probability of payments of benefits to participants and the discount rate. Changes in these assumptions could

significantly impact the liability and related cost on our consolidated balance sheet and statement of income,

respectively. For certain deferred compensation plans, management engages an independent actuary to

periodically review these assumptions in order to confirm that they reflect the population and economics of our

deferred compensation plans in all material respects and to assist us in estimating our deferred compensation

liability and the related cost. The actuarial assumptions we use may differ from actual results due to changing

market conditions or changes in the participant population. These differences could have a significant impact on

our deferred compensation liability and the related cost.

Carrying Values. Valuations are required under GAAP to determine the carrying value of various assets. Our most

significant assets for which management is required to prepare valuations are carrying value of receivables,

goodwill, intangible assets, fair value of contingent consideration and recoverability of deferred income taxes.

Management must identify whether events have occurred that may impact the carrying value of these assets and

make assumptions regarding future events, such as cash flows and profitability. Differences between the

assumptions used to prepare these valuations and actual results could materially impact the carrying amount of

these assets and our operating results.

Of the assets mentioned above, goodwill is the largest asset requiring a valuation. Fair value of goodwill for

purposes of the goodwill impairment test is determined utilizing 1) a discounted cash flow analysis based on

forecast cash flows (including estimated underlying revenue and operating income growth rates) discounted using

an estimated weighted-average cost of capital for market participants and 2) a market approach, utilizing

observable market data such as comparable companies in similar lines of business that are publicly traded or

which are part of a public or private transaction (to the extent available). We also reconcile the results of these
analyses to its market capitalization. If the carrying amount of a reporting unit exceeds its estimated fair value,
goodwill is considered potentially impaired and further tests are performed to measure the amount of impairment
loss, if any. We recorded no goodwill impairment in conjunction with our annual goodwill impairment assessment
performed as of January 31, 2017. While historical performance and current expectations have resulted in fair
values of goodwill in excess of carrying values, if our assumptions are not realized, it is possible that in the future
an impairment charge may need to be recorded. However, it is not possible at this time to determine if an
impairment charge would result or if such a charge would be material. Fair value determinations require
considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can
be no assurance that the estimates and assumptions made for purposes of the annual goodwill impairment test
will prove to be accurate predictions of the future. As of our testing date, the fair value of each reporting unit
exceeded its carrying amount and no reporting units were at risk of failing the impairment test. As a result, no
impairment charge was recognized. There was also no indication of potential impairment during the fourth quarter
of fiscal 2017 that would have required further testing.

Examples of events or circumstances that could reasonably be expected to negatively affect the underlying key
assumptions and ultimately impact the estimated fair value of the reporting units may include such items as
follows:

▪
▪
▪
▪

A prolonged downturn in the business environment in which the reporting units operate;
An economic climate that significantly differs from our future profitability assumptions in timing or degree;
The deterioration of the labor markets; and
Volatility in equity and debt markets.

Results of Operations

The following table summarizes the results of our operations as a percentage of fee revenue:

Year Ended April 30,
2016

2017

2015

Fee revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reimbursed out-of-pocket engagement expenses . . . . . . . . . . . . . . . . . . . . . . . . . .

100.0%
3.6

100.0%
4.2

100.0%
3.7

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reimbursed expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring charges, net

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income attributable to Korn/Ferry International . . . . . . . . . . . . . . . . . . . . . . . .

103.6
68.4
14.5
3.6
4.6
3.0
2.2

7.3

5.6%

5.4%

104.2
69.4
16.5
4.2
4.6
2.8
2.6

4.1

2.4%

2.4%

103.7
67.2
14.2
3.7
3.9
2.7
0.9

11.1

8.6%

8.6%

34

35

The following tables summarize the results of our operations by business segment:

(Numbers may not total exactly due to rounding)

2017

Dollars

%

Year Ended April 30,
2016

Dollars
(dollars in thousands)

%

2015

Dollars

%

Fee revenue
Executive Search:

North America . . . . . . . . . . . . . . . . . . . . . . $
EMEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . .
Latin America . . . . . . . . . . . . . . . . . . . . . . .

Total Executive Search . . . . . . . . . . . .
Hay Group . . . . . . . . . . . . . . . . . . . . . . . . . . .
Futurestep . . . . . . . . . . . . . . . . . . . . . . . . . . .

356,625
146,506
80,169
34,376

617,676
724,186
223,659

22.8% $

9.4
5.1
2.2

39.5
46.3
14.3

371,345
144,319
80,506
26,744

622,914
471,145
198,053

28.7% $
11.2
6.2
2.1

48.2
36.5
15.3

330,634
153,465
84,148
29,160

597,407
267,018
163,727

32.2%
14.9
8.2
2.8

58.1
26.0
15.9

Total fee revenue . . . . . . . . . . . . . . . . .

1,565,521

100.0% 1,292,112

100.0% 1,028,152

100.0%

Reimbursed out-of-pocket engagement

expense . . . . . . . . . . . . . . . . . . . . . . . . . . .

56,148

Total revenue . . . . . . . . . . . . . . . . . . . . $ 1,621,669

54,602

$ 1,346,714

37,914

$ 1,066,066

2017

Dollars

Margin(1)

Year Ended April 30,
2016

Dollars
Margin(1)
(dollars in thousands)

2015

Dollars

Margin(1)

Operating income (loss)
Executive Search:

North America . . . . . . . . . . . . . . . . . . . . . . .
EMEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . .
Latin America . . . . . . . . . . . . . . . . . . . . . . . .

$ 81,550
27,854
8,580
6,268

Total Executive Search . . . . . . . . . . . . .
Hay Group . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Futurestep . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . .

124,252
47,302
29,986
(87,100)

22.9% $
19.0
10.7
18.2

20.1
6.5
13.4

100,381
20,607
12,572
(1,854)

131,706
(3,415)
26,702
(102,301)

27.0% $
14.3
15.6
(6.9)

21.1
(0.7)
13.5

80,818
18,867
14,631
4,704

119,020
28,175
19,940
(53,107)

24.4%
12.3
17.4
16.1

19.9
10.6
12.2

Total operating income . . . . . . . . . . . . .

$ 114,440

7.3% $

52,692

4.1% $ 114,028

11.1%

(1) Margin calculated as a percentage of fee revenue by business segment.

36

The following tables summarize the results of our operations by business segment:

(Numbers may not total exactly due to rounding)

North America . . . . . . . . . . . . . . . . . . . . . . $

22.8% $

28.7% $

2017

2016

2015

Dollars

%

Dollars

%

Dollars

%

Year Ended April 30,

(dollars in thousands)

356,625

146,506

80,169

34,376

617,676

724,186

223,659

9.4

5.1

2.2

39.5

46.3

14.3

371,345

144,319

80,506

26,744

622,914

471,145

198,053

11.2

6.2

2.1

48.2

36.5

15.3

330,634

153,465

84,148

29,160

597,407

267,018

163,727

32.2%

14.9

8.2

2.8

58.1

26.0

15.9

Fee revenue

Executive Search:

EMEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . .

Latin America . . . . . . . . . . . . . . . . . . . . . . .

Total Executive Search . . . . . . . . . . . .

Hay Group . . . . . . . . . . . . . . . . . . . . . . . . . . .

Futurestep . . . . . . . . . . . . . . . . . . . . . . . . . . .

Reimbursed out-of-pocket engagement

Total fee revenue . . . . . . . . . . . . . . . . .

1,565,521

100.0% 1,292,112

100.0% 1,028,152

100.0%

expense . . . . . . . . . . . . . . . . . . . . . . . . . . .

56,148

Total revenue . . . . . . . . . . . . . . . . . . . . $ 1,621,669

54,602

$ 1,346,714

37,914

$ 1,066,066

2017

2016

2015

Dollars

Margin(1)

Dollars

Margin(1)

Dollars

Margin(1)

Year Ended April 30,

(dollars in thousands)

Operating income (loss)

Executive Search:

North America . . . . . . . . . . . . . . . . . . . . . . .

$ 81,550

22.9% $

100,381

27.0% $

24.4%

EMEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . .

Latin America . . . . . . . . . . . . . . . . . . . . . . . .

Total Executive Search . . . . . . . . . . . . .

Hay Group . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Futurestep . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27,854

8,580

6,268

124,252

47,302

29,986

(87,100)

19.0

10.7

18.2

20.1

6.5

13.4

20,607

12,572

(1,854)

131,706

(3,415)

26,702

(102,301)

14.3

15.6

(6.9)

21.1

(0.7)

13.5

80,818

18,867

14,631

4,704

119,020

28,175

19,940

(53,107)

12.3

17.4

16.1

19.9

10.6

12.2

Total operating income . . . . . . . . . . . . .

$ 114,440

7.3% $

52,692

4.1% $ 114,028

11.1%

(1) Margin calculated as a percentage of fee revenue by business segment.

North
America

Executive Search
Asia
Pacific

Latin
America

EMEA

Subtotal
(in thousands)

Hay Group

Futurestep Corporate Consolidated

Year Ended April 30, 2017

Fee revenue . . . . . . . . . $ 356,625 $ 146,506 $ 80,169 $ 34,376 $ 617,676 $ 724,186 $ 223,659 $
Deferred revenue

— $ 1,565,521

adjustment due to
acquisition . . . . . . . . .

Adjusted fee

—

—

—

—

—

3,535

—

—

3,535

revenue . . . . . . . . . . . $ 356,625 $ 146,506 $ 80,169 $ 34,376 $ 617,676 $ 727,721 $ 223,659 $

— $ 1,569,056

Total revenue . . . . . . . . $ 369,803 $ 150,113 $ 81,744 $ 34,533 $ 636,193 $ 741,533 $ 243,943 $
Net income attributable

— $ 1,621,669

to Korn/Ferry
International . . . . . . . .

Net income attributable
to noncontrolling
interest . . . . . . . . . . . .
Other income, net . . . . .
Interest expense, net . .
Equity in earnings of
unconsolidated
subsidiaries, net

. . . .
Income tax provision . .
Operating income

$

84,181

3,057
(11,820)
10,251

(333)
29,104

(loss) . . . . . . . . . . . . . $

81,550 $

27,854 $

8,580 $

6,268 $ 124,252 $

47,302 $

29,986 $ (87,100) $

114,440

Depreciation and

amortization . . . . . . . .

3,812

1,030

1,060

844

(15)

300

483

684

6,385

32,262

2,818

5,795

47,260

1,813

341

(91)

9,757

11,820

Other income (loss),

net

. . . . . . . . . . . . . . .

Equity in earnings of
unconsolidated
subsidiaries, net

. . . .
EBITDA . . . . . . . . . . . . .
Restructuring charges,

net

. . . . . . . . . . . . . . .

Integration/acquisition

costs . . . . . . . . . . . . .

Deferred revenue

333
86,539

—
28,869

—
9,940

—
7,435

333
132,783

—
79,905

—
32,713

—
(71,548)

333
173,853

1,719

629

1,495

4,616

29,663

101

220

34,600

—

—

14,440

7,939

22,379

773

—

adjustment due to
acquisition . . . . . . . . .
Separation costs . . . . . .
Adjusted EBITDA . . . . . $

—
—
88,258 $

—

—
—

—

—
—

29,498 $ 11,435 $

—
—

—
—
8,208 $ 137,399 $ 128,152 $

3,535
609

—
—

32,814 $ (63,389) $

—

—
—

3,535
609
234,976

7.3%

15.0%

Operating margin . . . . .

22.9%

19.0%

10.7%

18.2%

20.1%

6.5%

13.4%

Adjusted EBITDA

margin . . . . . . . . . . . .

24.7%

20.1%

14.3%

23.9%

22.2%

17.6%

14.7%

36

37

North
America

Executive Search
Asia
Pacific

Latin
America

EMEA

Year Ended April 30, 2016

Hay Group

Subtotal
(in thousands)
$ 622,914

$ 144,319

$ 80,506

$ 26,744

$ 471,145

$ 198,053

—
$ 144,319

—
$ 80,506

—
$ 26,744

—
$ 622,914

10,967
$ 482,112

—
$ 198,053

$ 148,285

$ 83,206

$ 26,781

$ 644,528

$ 488,217

$ 213,969

$

$

$

— $ 1,292,112

—
10,967
— $ 1,303,079

— $ 1,346,714

$

30,913

Futurestep

Corporate

Consolidated

Fiscal 2017 Compared to Fiscal 2016

Fee Revenue

Fee revenue . . . . . . . . . . . . . . . $ 371,345
Deferred revenue adjustment

due to acquisition . . . . . . . . .

—
Adjusted fee revenue . . . . . . . . $ 371,345

Total revenue . . . . . . . . . . . . . . $ 386,256
Net income attributable to

Korn/Ferry International . . . .

Net income attributable to
noncontrolling interest

. . . . .
Other loss, net . . . . . . . . . . . . . .
Interest income, net
. . . . . . . . .
Equity in earnings of

unconsolidated subsidiaries,
. . . . . . . . . . . . . . . . . . . . .
net
Income tax provision . . . . . . . .
Operating income (loss) . . . . . . $ 100,381
Depreciation and

amortization . . . . . . . . . . . . . .
Other (loss) income, net . . . . . .
Equity in earnings of

unconsolidated subsidiaries,
. . . . . . . . . . . . . . . . . . . . .
net
EBITDA . . . . . . . . . . . . . . . . . . .
Restructuring charges, net . . . .
Integration/acquisition costs . .
Venezuelan foreign currency

loss . . . . . . . . . . . . . . . . . . . . .

Deferred revenue adjustment

3,267
(147)

437
103,938
499
—

—

—
due to acquisition . . . . . . . . .
Separation costs . . . . . . . . . . . .
—
Adjusted EBITDA . . . . . . . . . . . $ 104,437

$

$

20,607

$ 12,572

$

(1,854)

$ 131,706

$

(3,415)

$

26,702

$ (102,301)

$

1,029
433

—
22,069
5,807
—

—

—
—
27,876

941
21

—
13,534
577
—

—

—
—
$ 14,111

$

312
312

5,549
619

21,854
(868)

—
(1,230)
322
—

6,635

—
—
5,727

437
138,311
7,205
—

6,635

—
—
$ 152,151

$

—
17,571
25,682
17,607

7,085

10,967
—
78,912

$

2,386
364

—
29,452
49
—

—

—
—
29,501

6,431
(4,282)

1,194
(98,958)
77
27,802

—

—
744
(70,335)

$

10,967
744
190,229

$

Operating margin . . . . . . . . . . .

Adjusted EBITDA margin . . . . .

27.0%

28.1%

14.3%

19.3%

15.6%

17.5%

(6.9)%

21.4%

21.1%

24.4%

(0.7)%

16.4%

13.5%

14.9%

4.1%

14.6%

Year Ended April 30, 2015

North
America

Executive Search
Asia
Pacific

Latin
America

EMEA

Fee revenue . . . . . . . . . . . . . . . $ 330,634
Total revenue . . . . . . . . . . . . . . $ 344,913
Net income attributable to
Korn/Ferry International
Net income attributable to
noncontrolling interest

. . . .

. . . . .
Other income, net . . . . . . . . . . .
Interest expense, net
. . . . . . . .
Equity in earnings of

$ 153,465
$ 158,052

$ 84,148
$ 87,142

$ 29,160
$ 29,218

Subtotal
(in thousands)
$ 597,407
$ 619,325

Hay Group

$ 267,018
$ 275,220

Futurestep

Corporate

Consolidated

$ 163,727
$ 171,521

$
$

— $ 1,028,152
— $ 1,066,066

$

88,357

unconsolidated subsidiaries,
net . . . . . . . . . . . . . . . . . . . . . .
Income tax provision . . . . . . . . .
Operating income (loss) . . . . . . $
Depreciation and

amortization . . . . . . . . . . . . . .
Other income (loss), net . . . . . .
Equity in earnings of

unconsolidated subsidiaries,
net . . . . . . . . . . . . . . . . . . . . . .
EBITDA . . . . . . . . . . . . . . . . . . .
Restructuring charges, net . . . .
Acquisition costs . . . . . . . . . . . .
Adjusted EBITDA . . . . . . . . . . . $

80,818

$

18,867

$ 14,631

$

4,704

$ 119,020

$

28,175

$

19,940

$

(53,107)

$

3,515
288

426
85,047
1,151
—
86,198

1,764
83

—
20,714
3,987
—
24,701

$

1,045
369

—
16,045
17
—
$ 16,062

$

350
109

—
5,163
229
—
5,392

6,674
849

13,427
(22)

426
126,969
5,384
—
$ 132,353

—
41,580
2,758
—
44,338

$

$

1,882
54

—
21,876
1,154
—
23,030

5,614
6,577

1,755
(39,161)
172
959
(38,030)

$

$

Operating margin . . . . . . . . . . .

Adjusted EBITDA margin . . . . .

24.4%

26.1%

12.3%

16.1%

17.4%

19.1%

16.1%

18.5%

19.9%

22.2%

10.6%

16.6%

12.2%

14.1%

520
4,167
(237)

(1,631)
18,960
52,692

36,220
(4,167)

1,631
86,376
33,013
45,409

13,720

—
(7,458)
1,784

(2,181)
33,526
114,028

27,597
7,458

2,181
151,264
9,468
959
161,691

11.1%

15.7%

Fee Revenue. Fee revenue increased $273.4 million, or 21%, to $1,565.5 million in fiscal 2017 compared to

$1,292.1 million in fiscal 2016. Exchange rates unfavorably impacted fee revenue by $27.9 million, or 2%, in fiscal

2017. The higher fee revenue was attributable to growth in Hay Group and Futurestep, offset by a decrease in

Executive Search. The increase in Hay Group was primarily due to the Legacy Hay acquisition that was completed

on December 1, 2015.

Executive Search. Executive Search reported fee revenue of $617.7 million, a decrease of $5.2 million, or 1%, in

fiscal 2017 compared to $622.9 million in fiscal 2016. As detailed below, Executive Search fee revenue was lower

in North America and Asia Pacific regions, offset by higher fee revenue in the Latin America and EMEA regions in

fiscal 2017 as compared to fiscal 2016. Exchange rates unfavorably impacted fee revenue by $12.3 million, or 2%,

in fiscal 2017.

North America reported fee revenue of $356.6 million, a decrease of $14.8 million, or 4%, in fiscal 2017 compared

to $371.4 million in fiscal 2016. North America’s decrease in fee revenue is primarily due a 3% decrease in the

weighted-average fees billed per engagement (calculated using local currency) and 1% decrease in the number of

engagements billed during fiscal 2017 as compared to fiscal 2016. The overall decrease in fee revenue was driven

by a decline in the life sciences/healthcare, education/non-profit and financial services sectors as compared to the

year-ago period, partially offset by an increase in the industrial sector. Exchange rates did not impact fee revenue

in fiscal 2017 when compared to the year-ago period.

EMEA reported fee revenue of $146.5 million, an increase of $2.2 million, or 2%, in fiscal 2017 compared to

$144.3 million in fiscal 2016. The increase in fee revenue was due to a 6% increase in the number of

engagements billed and a 2% increase in the weighted-average fees billed per engagement (calculated using local

currency) during fiscal 2017 as compared to fiscal 2016. This was offset by unfavorable exchange rates which

impacted fee revenue by $10.0 million, or 7%, in fiscal 2017 compared to fiscal 2016. The performance in existing

offices in Germany, United Arab Emirates and Denmark were the primary contributors to the increase in fee

revenue in fiscal 2017 compared to fiscal 2016, offset by a decrease in fee revenue in United Kingdom, France

and Switzerland. In terms of business sectors, the technology and industrial sectors had the largest increase in fee

revenue in fiscal 2017 as compared to fiscal 2016, partially offset by a decrease in fee revenue in the financial

services, consumer goods and life sciences/healthcare sectors.

Asia Pacific reported fee revenue of $80.2 million in fiscal 2017, essentially flat with the $80.5 million in fiscal 2016.

Exchange rates unfavorably impacted fee revenue by $0.5 million in fiscal 2017 when compared to the year-ago

period. There were decreases in Hong Kong and Australia which were offset by an increase in fee revenue in

China and Taiwan. Fee revenue in the technology, financial services and education/non-profit sectors decreased

in fiscal 2017 as compared to fiscal 2016, offset by an increase in fee revenue in the consumer goods and

industrial sectors.

Latin America reported fee revenue of $34.4 million, an increase of $7.7 million, or 29%, in fiscal 2017 compared

to $26.7 million in fiscal 2016. Exchange rates unfavorably impacted fee revenue in Latin America by $1.7 million,

or 6%, in fiscal 2017 compared to fiscal 2016. The increase is due to $11.0 million in fee revenue from our Mexico

subsidiary that we began consolidating in the fourth quarter of 2016 as a result of obtaining control of the entity.

The rest of the change primarily relates to a decrease in fee revenue in Venezuela caused by currency

devaluation, offset by higher fee revenues in Brazil in fiscal 2017 compared to fiscal 2016. Industrial, life sciences/

healthcare and financial services were the main sectors contributing to the growth in fee revenue in fiscal 2017

compared to fiscal 2016, offset by a decrease in fee revenue in the consumer goods sector.

Hay Group. Hay Group reported fee revenue of $724.2 million, an increase of $253.1 million, or 54%, in fiscal

2017 compared to $471.1 million in fiscal 2016. Exchange rates unfavorably impacted fee revenue by

$11.0 million, or 2%, in fiscal 2017. The increase in fee revenue was primarily due to the Legacy Hay acquisition

that was completed on December 1, 2015. As a result of the Legacy Hay acquisition, consulting fee revenue was

higher by $146.5 million in fiscal 2017 compared to fiscal 2016, with the remaining increase of $106.6 million

generated by higher fee revenue from our products business.

38

39

Executive Search

North

America

EMEA

Asia

Pacific

Latin

America

Year Ended April 30, 2016

Subtotal

Hay Group

Futurestep

Corporate

Consolidated

(in thousands)

Fee revenue . . . . . . . . . . . . . . . $ 371,345

$ 144,319

$ 80,506

$ 26,744

$ 622,914

$ 471,145

$ 198,053

— $ 1,292,112

Deferred revenue adjustment

due to acquisition . . . . . . . . .

Adjusted fee revenue . . . . . . . . $ 371,345

$ 144,319

$ 80,506

$ 26,744

$ 622,914

$ 482,112

$ 198,053

—

—

—

—

—

10,967

—

Total revenue . . . . . . . . . . . . . . $ 386,256

$ 148,285

$ 83,206

$ 26,781

$ 644,528

$ 488,217

$ 213,969

$

$

$

—

10,967

— $ 1,303,079

— $ 1,346,714

$

30,913

Operating income (loss) . . . . . . $ 100,381

$

20,607

$ 12,572

$

(1,854)

$ 131,706

$

(3,415)

$

26,702

$ (102,301)

$

EBITDA . . . . . . . . . . . . . . . . . . .

103,938

(1,230)

138,311

29,452

3,267

(147)

1,029

433

437

499

—

—

—

—

22,069

5,807

—

—

—

—

—

941

21

—

13,534

577

—

—

—

—

312

312

—

322

—

6,635

—

—

5,549

619

437

7,205

—

6,635

—

—

21,854

(868)

2,386

364

—

17,571

25,682

17,607

7,085

10,967

—

—

49

—

—

—

—

6,431

(4,282)

1,194

(98,958)

77

27,802

—

—

744

Adjusted EBITDA . . . . . . . . . . . $ 104,437

$

27,876

$ 14,111

$

5,727

$ 152,151

$

78,912

$

29,501

$

(70,335)

$

190,229

Operating margin . . . . . . . . . . .

Adjusted EBITDA margin . . . . .

27.0%

28.1%

14.3%

19.3%

15.6%

17.5%

(6.9)%

21.4%

21.1%

24.4%

(0.7)%

16.4%

13.5%

14.9%

Executive Search

North

America

EMEA

Asia

Pacific

Latin

America

Year Ended April 30, 2015

Subtotal

Hay Group

Futurestep

Corporate

Consolidated

(in thousands)

Fee revenue . . . . . . . . . . . . . . . $ 330,634

Total revenue . . . . . . . . . . . . . . $ 344,913

$ 153,465

$ 158,052

$ 84,148

$ 87,142

$ 29,160

$ 29,218

$ 597,407

$ 619,325

$ 267,018

$ 275,220

$ 163,727

$ 171,521

$

$

— $ 1,028,152

— $ 1,066,066

Net income attributable to

Korn/Ferry International . . . .

Net income attributable to

noncontrolling interest

. . . . .

Other loss, net . . . . . . . . . . . . . .

Interest income, net

Equity in earnings of

. . . . . . . . .

unconsolidated subsidiaries,

net

. . . . . . . . . . . . . . . . . . . . .

Income tax provision . . . . . . . .

Depreciation and

amortization . . . . . . . . . . . . . .

Other (loss) income, net . . . . . .

Equity in earnings of

unconsolidated subsidiaries,

net

. . . . . . . . . . . . . . . . . . . . .

Restructuring charges, net . . . .

Integration/acquisition costs . .

Venezuelan foreign currency

loss . . . . . . . . . . . . . . . . . . . . .

Deferred revenue adjustment

due to acquisition . . . . . . . . .

Separation costs . . . . . . . . . . . .

Net income attributable to

Korn/Ferry International

. . . .

Net income attributable to

noncontrolling interest

. . . . .

Other income, net . . . . . . . . . . .

Interest expense, net

Equity in earnings of

. . . . . . . .

unconsolidated subsidiaries,

net . . . . . . . . . . . . . . . . . . . . . .

Income tax provision . . . . . . . . .

Depreciation and

amortization . . . . . . . . . . . . . .

Other income (loss), net . . . . . .

Equity in earnings of

unconsolidated subsidiaries,

net . . . . . . . . . . . . . . . . . . . . . .

EBITDA . . . . . . . . . . . . . . . . . . .

Restructuring charges, net . . . .

Acquisition costs . . . . . . . . . . . .

Operating income (loss) . . . . . . $

80,818

$

18,867

$ 14,631

$

4,704

$ 119,020

$

28,175

$

19,940

$

(53,107)

$

114,028

3,515

288

426

85,047

1,151

—

1,764

83

—

20,714

3,987

—

1,045

369

16,045

—

17

—

350

109

—

5,163

229

—

6,674

849

13,427

(22)

426

126,969

5,384

—

—

41,580

2,758

—

1,882

54

—

21,876

1,154

—

5,614

6,577

1,755

(39,161)

172

959

Adjusted EBITDA . . . . . . . . . . . $

86,198

$

24,701

$ 16,062

$

5,392

$ 132,353

$

44,338

$

23,030

$

(38,030)

$

161,691

Operating margin . . . . . . . . . . .

Adjusted EBITDA margin . . . . .

24.4%

26.1%

12.3%

16.1%

17.4%

19.1%

16.1%

18.5%

19.9%

22.2%

10.6%

16.6%

12.2%

14.1%

520

4,167

(237)

(1,631)

18,960

52,692

36,220

(4,167)

1,631

86,376

33,013

45,409

13,720

10,967

744

4.1%

14.6%

$

88,357

—

(7,458)

1,784

(2,181)

33,526

27,597

7,458

2,181

151,264

9,468

959

11.1%

15.7%

Fiscal 2017 Compared to Fiscal 2016

Fee Revenue

Fee Revenue. Fee revenue increased $273.4 million, or 21%, to $1,565.5 million in fiscal 2017 compared to
$1,292.1 million in fiscal 2016. Exchange rates unfavorably impacted fee revenue by $27.9 million, or 2%, in fiscal
2017. The higher fee revenue was attributable to growth in Hay Group and Futurestep, offset by a decrease in
Executive Search. The increase in Hay Group was primarily due to the Legacy Hay acquisition that was completed
on December 1, 2015.

Executive Search. Executive Search reported fee revenue of $617.7 million, a decrease of $5.2 million, or 1%, in
fiscal 2017 compared to $622.9 million in fiscal 2016. As detailed below, Executive Search fee revenue was lower
in North America and Asia Pacific regions, offset by higher fee revenue in the Latin America and EMEA regions in
fiscal 2017 as compared to fiscal 2016. Exchange rates unfavorably impacted fee revenue by $12.3 million, or 2%,
in fiscal 2017.

North America reported fee revenue of $356.6 million, a decrease of $14.8 million, or 4%, in fiscal 2017 compared
to $371.4 million in fiscal 2016. North America’s decrease in fee revenue is primarily due a 3% decrease in the
weighted-average fees billed per engagement (calculated using local currency) and 1% decrease in the number of
engagements billed during fiscal 2017 as compared to fiscal 2016. The overall decrease in fee revenue was driven
by a decline in the life sciences/healthcare, education/non-profit and financial services sectors as compared to the
year-ago period, partially offset by an increase in the industrial sector. Exchange rates did not impact fee revenue
in fiscal 2017 when compared to the year-ago period.

EMEA reported fee revenue of $146.5 million, an increase of $2.2 million, or 2%, in fiscal 2017 compared to
$144.3 million in fiscal 2016. The increase in fee revenue was due to a 6% increase in the number of
engagements billed and a 2% increase in the weighted-average fees billed per engagement (calculated using local
currency) during fiscal 2017 as compared to fiscal 2016. This was offset by unfavorable exchange rates which
impacted fee revenue by $10.0 million, or 7%, in fiscal 2017 compared to fiscal 2016. The performance in existing
offices in Germany, United Arab Emirates and Denmark were the primary contributors to the increase in fee
revenue in fiscal 2017 compared to fiscal 2016, offset by a decrease in fee revenue in United Kingdom, France
and Switzerland. In terms of business sectors, the technology and industrial sectors had the largest increase in fee
revenue in fiscal 2017 as compared to fiscal 2016, partially offset by a decrease in fee revenue in the financial
services, consumer goods and life sciences/healthcare sectors.

Asia Pacific reported fee revenue of $80.2 million in fiscal 2017, essentially flat with the $80.5 million in fiscal 2016.
Exchange rates unfavorably impacted fee revenue by $0.5 million in fiscal 2017 when compared to the year-ago
period. There were decreases in Hong Kong and Australia which were offset by an increase in fee revenue in
China and Taiwan. Fee revenue in the technology, financial services and education/non-profit sectors decreased
in fiscal 2017 as compared to fiscal 2016, offset by an increase in fee revenue in the consumer goods and
industrial sectors.

Latin America reported fee revenue of $34.4 million, an increase of $7.7 million, or 29%, in fiscal 2017 compared
to $26.7 million in fiscal 2016. Exchange rates unfavorably impacted fee revenue in Latin America by $1.7 million,
or 6%, in fiscal 2017 compared to fiscal 2016. The increase is due to $11.0 million in fee revenue from our Mexico
subsidiary that we began consolidating in the fourth quarter of 2016 as a result of obtaining control of the entity.
The rest of the change primarily relates to a decrease in fee revenue in Venezuela caused by currency
devaluation, offset by higher fee revenues in Brazil in fiscal 2017 compared to fiscal 2016. Industrial, life sciences/
healthcare and financial services were the main sectors contributing to the growth in fee revenue in fiscal 2017
compared to fiscal 2016, offset by a decrease in fee revenue in the consumer goods sector.

Hay Group. Hay Group reported fee revenue of $724.2 million, an increase of $253.1 million, or 54%, in fiscal
2017 compared to $471.1 million in fiscal 2016. Exchange rates unfavorably impacted fee revenue by
$11.0 million, or 2%, in fiscal 2017. The increase in fee revenue was primarily due to the Legacy Hay acquisition
that was completed on December 1, 2015. As a result of the Legacy Hay acquisition, consulting fee revenue was
higher by $146.5 million in fiscal 2017 compared to fiscal 2016, with the remaining increase of $106.6 million
generated by higher fee revenue from our products business.

38

39

Futurestep. Futurestep reported fee revenue of $223.7 million, an increase of $25.6 million, or 13%, in fiscal 2017
compared to $198.1 million in fiscal 2016. Exchange rates unfavorably impacted fee revenue by $4.6 million, or
2%, in fiscal 2017. Higher fee revenues in RPO and professional search of $13.6 million and $12.2 million,
respectively, drove the increase in fee revenue.

Compensation and Benefits

Compensation and benefits expense increased $174.1 million, or 19%, to $1,071.5 million in fiscal 2017 from
$897.4 million in fiscal 2016. Exchange rates favorably impacted compensation and benefits expense by
$17.2 million, or 2%, during fiscal 2017 compared to fiscal 2016. The Legacy Hay acquisition was the main factor
that contributed to the increase in compensation and benefits expense. Given the size of the Legacy Hay
acquisition, all components of compensation and benefits expense increased with salaries and related payroll
taxes, insurance costs and deferred compensation seeing the largest increases.

Executive Search compensation and benefits expense increased $8.1 million, or 2%, to $409.0 million in fiscal
2017 compared to $400.9 million in fiscal 2016. This increase was primarily due to an increase in the fair value of
amounts owed under certain deferred compensation plans of $10.3 million and higher salaries and related payroll
expense of $10.9 million due to a 7% increase in average consultant headcount reflecting our continued growth-
related investments back into the business in fiscal 2017 compared to the year-ago period. The rest of the change
was due to an increase of $6.7 million in the amortization of long-term incentive awards, offset by lower
performance related bonus expense of $15.6 million during fiscal 2017 compared to fiscal 2016. The decrease in
performance related bonus expense was primarily due to lower fee revenue and profitability. Executive Search
compensation and benefits expense as a percentage of fee revenue was 66% in fiscal 2017 compared to 64% in
fiscal 2016.

Hay Group compensation and benefits expense increased $146.9 million, or 47%, to $462.1 million in fiscal 2017
from $315.2 million in fiscal 2016. The increase in compensation and benefits was primarily due to the Legacy Hay
acquisition, which increased our average headcount during fiscal 2017 compared to fiscal 2016, resulting in higher
salaries and related payroll taxes, performance related bonus expense, insurance costs, retirement plans and
recruiting costs of $101.8 million, $15.1 million, $6.7 million, $6.5 million and $4.2 million, respectively. Hay Group
compensation and benefits expense, as a percentage of fee revenue, decreased to 64% in fiscal 2017 from 67%
in the year-ago period.

Futurestep compensation and benefits expense increased $18.7 million, or 14%, to $154.8 million in fiscal 2017
from $136.1 million in fiscal 2016. The increase was due to a 21% increase in the average headcount in fiscal
2017 compared to the year-ago period that resulted in higher salaries and related payroll taxes and insurance
costs of $19.8 million and $1.9 million, respectively, partially offset by lower performance related bonus expense.
The higher average headcount was primarily driven by the need to service an increase in fee revenue in both
professional search and RPO businesses. Futurestep compensation and benefits expense as a percentage of fee
revenue was 69% in both fiscal 2017 and 2016.

Corporate compensation and benefits expense increased $0.4 million, or 1%, to $45.6 million in fiscal 2017 from
$45.2 million in fiscal 2016. This increase was mainly due to $1.6 million in higher outside contractor costs and a
change in the fair value of vested amounts owed under certain deferred compensation plans of $1.5 million in
fiscal 2017 compared to the year-ago period. Offsetting these increases in compensation and benefit expense was
a decline in integration/acquisition costs and certain separation costs of $2.2 million in fiscal 2017 as compared to
the year-ago period.

General and Administrative Expenses

General and administrative expenses increased $13.2 million, or 6%, to $226.2 million in fiscal 2017 compared to
$213.0 million in fiscal 2016. Exchange rates favorably impacted general and administrative expenses by
$5.2 million, or 2%, during fiscal 2017. The increase in general and administrative expenses was primarily due to
the Legacy Hay acquisition that took place in fiscal 2016, partially offset by a decrease of $20.3 million in
integration/acquisition costs and $13.7 million of Venezuelan foreign currency loss compared to the year-ago
period. The Legacy Hay acquisition was the main factor that contributed to increases of $27.0 million, $8.4 million,

40

Futurestep. Futurestep reported fee revenue of $223.7 million, an increase of $25.6 million, or 13%, in fiscal 2017

compared to $198.1 million in fiscal 2016. Exchange rates unfavorably impacted fee revenue by $4.6 million, or

2%, in fiscal 2017. Higher fee revenues in RPO and professional search of $13.6 million and $12.2 million,

respectively, drove the increase in fee revenue.

Compensation and Benefits

Compensation and benefits expense increased $174.1 million, or 19%, to $1,071.5 million in fiscal 2017 from

$897.4 million in fiscal 2016. Exchange rates favorably impacted compensation and benefits expense by

$17.2 million, or 2%, during fiscal 2017 compared to fiscal 2016. The Legacy Hay acquisition was the main factor

that contributed to the increase in compensation and benefits expense. Given the size of the Legacy Hay

acquisition, all components of compensation and benefits expense increased with salaries and related payroll

taxes, insurance costs and deferred compensation seeing the largest increases.

Executive Search compensation and benefits expense increased $8.1 million, or 2%, to $409.0 million in fiscal

2017 compared to $400.9 million in fiscal 2016. This increase was primarily due to an increase in the fair value of

amounts owed under certain deferred compensation plans of $10.3 million and higher salaries and related payroll

expense of $10.9 million due to a 7% increase in average consultant headcount reflecting our continued growth-

related investments back into the business in fiscal 2017 compared to the year-ago period. The rest of the change

was due to an increase of $6.7 million in the amortization of long-term incentive awards, offset by lower

performance related bonus expense of $15.6 million during fiscal 2017 compared to fiscal 2016. The decrease in

performance related bonus expense was primarily due to lower fee revenue and profitability. Executive Search

compensation and benefits expense as a percentage of fee revenue was 66% in fiscal 2017 compared to 64% in

fiscal 2016.

Hay Group compensation and benefits expense increased $146.9 million, or 47%, to $462.1 million in fiscal 2017

from $315.2 million in fiscal 2016. The increase in compensation and benefits was primarily due to the Legacy Hay

acquisition, which increased our average headcount during fiscal 2017 compared to fiscal 2016, resulting in higher

salaries and related payroll taxes, performance related bonus expense, insurance costs, retirement plans and

recruiting costs of $101.8 million, $15.1 million, $6.7 million, $6.5 million and $4.2 million, respectively. Hay Group

compensation and benefits expense, as a percentage of fee revenue, decreased to 64% in fiscal 2017 from 67%

in the year-ago period.

Futurestep compensation and benefits expense increased $18.7 million, or 14%, to $154.8 million in fiscal 2017

from $136.1 million in fiscal 2016. The increase was due to a 21% increase in the average headcount in fiscal

2017 compared to the year-ago period that resulted in higher salaries and related payroll taxes and insurance

costs of $19.8 million and $1.9 million, respectively, partially offset by lower performance related bonus expense.

The higher average headcount was primarily driven by the need to service an increase in fee revenue in both

professional search and RPO businesses. Futurestep compensation and benefits expense as a percentage of fee

revenue was 69% in both fiscal 2017 and 2016.

Corporate compensation and benefits expense increased $0.4 million, or 1%, to $45.6 million in fiscal 2017 from

$45.2 million in fiscal 2016. This increase was mainly due to $1.6 million in higher outside contractor costs and a

change in the fair value of vested amounts owed under certain deferred compensation plans of $1.5 million in

fiscal 2017 compared to the year-ago period. Offsetting these increases in compensation and benefit expense was

a decline in integration/acquisition costs and certain separation costs of $2.2 million in fiscal 2017 as compared to

the year-ago period.

General and Administrative Expenses

General and administrative expenses increased $13.2 million, or 6%, to $226.2 million in fiscal 2017 compared to

$213.0 million in fiscal 2016. Exchange rates favorably impacted general and administrative expenses by

$5.2 million, or 2%, during fiscal 2017. The increase in general and administrative expenses was primarily due to

the Legacy Hay acquisition that took place in fiscal 2016, partially offset by a decrease of $20.3 million in

integration/acquisition costs and $13.7 million of Venezuelan foreign currency loss compared to the year-ago

period. The Legacy Hay acquisition was the main factor that contributed to increases of $27.0 million, $8.4 million,

$5.3 million and $4.4 million, in premise and office expenses, marketing and business development expenses,
travel-related expenses, and bad debt expense, respectively. General and administration expenses as a
percentage of fee revenue was 14% in fiscal 2017 compared to 16% in fiscal 2016.

Executive Search general and administrative expenses decreased $5.6 million, or 7%, to $69.7 million in fiscal
2017 from $75.3 million in fiscal 2016. The decrease was due to the $6.6 million in Venezuelan foreign currency
loss incurred in fiscal 2016, offset by higher bad debt expense of $1.5 million in fiscal 2017 compared to the year-
ago period. Executive Search general and administrative expenses as a percentage of fee revenue was 11% in
fiscal 2017 compared to 12% in fiscal 2016.

Hay Group general and administrative expenses increased $31.5 million, or 48%, to $97.1 million in fiscal 2017
from $65.6 million in fiscal 2016. The increase in general and administrative expenses was primarily due to the
Legacy Hay acquisition that took place in fiscal 2016, partially offset by a decrease of $1.8 million in integration/
acquisition costs and $7.1 million of Venezuelan foreign currency loss compared to the year-ago period. The
acquisition of Legacy Hay was the main factor for increases of $24.0 million, $4.7 million, $4.2 million, $2.5 million
and $1.6 million in premise and office expenses, marketing and business development expenses, travel-related
expenses, bad debt expense and legal and other professional fees, respectively. Hay Group general and
administrative expenses as a percentage of fee revenue was 13% in fiscal 2017 compared to 14% in fiscal 2016.

Futurestep general and administrative expenses increased $2.5 million, or 12%, to $23.9 million in fiscal 2017
compared to $21.4 million in fiscal 2016. General and administrative expenses increased $1.4 million, $0.4 million
and $0.4 million in premise and office expenses, marketing and business development expenses and bad debt
expense, respectively, during fiscal 2017 compared to the year-ago period due in large part to an increase in fee
revenue. Futurestep general and administrative expenses as a percentage of fee revenue was 11% in both fiscal
2017 and 2016.

Corporate general and administrative expenses decreased $15.2 million, or 30%, to $35.5 million in fiscal 2017
compared to $50.7 million in fiscal 2016. General and administrative expenses decreased due to a decline of
$18.4 million in integration/acquisition costs, offset by increases of $3.2 million in marketing and business
development expenses in fiscal 2017 compared to the year-ago period.

Cost of Services Expense

Cost of services expense consist primarily of non-billable contractor and product costs related to the delivery of
various services and products, primarily in Futurestep and Hay Group. Cost of services expense increased
$11.7 million, or 20%, to $71.5 million in fiscal 2017 compared to $59.8 million in fiscal 2016. The increase is
mainly due to higher fee revenue in Hay Group due to the Legacy Hay acquisition. Cost of services expense as a
percentage of fee revenue was 5% in both fiscal 2017 and 2016.

Depreciation and Amortization Expenses

Depreciation and amortization expenses were $47.3 million in fiscal 2017, an increase of $11.1 million compared
to $36.2 million in fiscal 2016. The increase is mainly due to the Legacy Hay acquisition. The increase relates
primarily to technology investments that were made in the current and prior year in software and computer
equipment, in addition to increases in leasehold improvements, furniture and fixtures (associated with our office
co-location) and intangible assets.

Restructuring Charges, Net

We continued the implementation of the fiscal 2016 restructuring plan in order to integrate the Hay Group entities
that were acquired in the prior year by eliminating redundant positions and operational, general and administrative
expenses and consolidation of office space. As a result, we recorded $34.6 million of restructuring charges in fiscal
2017, of which $16.0 million related to severance costs and $18.6 million related to the consolidation of office
space.

During fiscal 2016, we implemented a restructuring plan in order to rationalize our cost structure in order to
eliminate redundant positions and consolidation of office space that were created due to the acquisition of Legacy

40

41

Hay. As a result, we recorded $33.0 million of restructuring charges, with $32.1 million of severance and
$0.9 million relating to the consolidation/abandonment of premises during fiscal 2016.

Operating Income

Operating income increased $61.7 million, or 117%, to $114.4 million in fiscal 2017 compared to $52.7 million in
fiscal 2016. This increase in operating income resulted from $273.4 million in higher fee revenue, offset by an
increase of $174.1 million in compensation and benefits expense. The rest of the change was due to increases of
$13.2 million in general and administrative expenses, $11.7 million in cost of services expense, and $11.1 million
of depreciation and amortization expenses during fiscal 2017 compared to fiscal 2016. Operating income as a
percentage of fee revenue was 7% in fiscal 2017 compared to 4% in fiscal 2016.

Executive Search operating income was $124.3 million, a decrease of $7.4 million, or 6%, in fiscal 2017 compared
to $131.7 million in fiscal 2016. The decrease in Executive Search operating income was driven by lower fee
revenue of $5.2 million and higher compensation and benefits expense of $8.1 million, offset by a decrease in
general and administrative expenses of $5.6 million. Executive Search operating income as a percentage of fee
revenue was 20% in fiscal 2017 compared to 21% in fiscal 2016.

Hay Group operating income increased by $50.7 million to $47.3 million in fiscal 2017 compared to operating loss
of $3.4 million in fiscal 2016. The change was primarily driven by the Legacy Hay acquisition resulting in an
increase in fee revenue of $253.1 million, offset by increases in compensation and benefits expense, general and
administrative expenses, depreciation and amortization expenses, cost of services expense and restructuring
charges, net of $146.9 million, $31.5 million, $10.4 million, $9.5 million and $4.0 million, respectively in fiscal 2017
compared to 2016. Hay Group operating income as a percentage of fee revenue was 7% in fiscal 2017 compared
to operating loss as a percentage of fee revenue of 1% in fiscal 2016.

Futurestep operating income increased by $3.3 million to $30.0 million in fiscal 2017 from $26.7 million in fiscal
2016. The increase in Futurestep operating income was primarily due to higher fee revenues of $25.6 million,
partially offset by increases of $18.7 million in compensation and benefits expense and $2.5 million in general and
administrative expenses. Futurestep operating income, as a percentage of fee revenue, was 13% in both fiscal
2017 and 2016.

Net Income Attributable to Korn Ferry

Net income attributable to Korn Ferry increased $53.3 million, or 172%, to $84.2 million in fiscal 2017 compared to
$30.9 million in fiscal 2016. The increase was due primarily to higher total revenue of $275.0 million, offset by
higher operating expenses of $213.2 million and an increase in income tax provision of $10.1 million. Net income
attributable to Korn Ferry, as a percentage of fee revenue, was 5% during fiscal 2017 as compared to 2% in the
year-ago period.

Adjusted EBITDA

Adjusted EBITDA increased $44.8 million, or 24%, to $235.0 million in fiscal 2017 compared to $190.2 million in
fiscal 2016. This increase was driven by higher adjusted fee revenue of $266.0 million, and an increase in other
income, net due to the change in fair value of our marketable securities of $16.0 million in fiscal 2017 compared to
the year-ago period, offset by increases of $177.0 million, $47.2 million and $11.7 million in compensation and
benefits expense, general and administrative expenses and cost of services expense, respectively. Adjusted
EBITDA as a percentage of fee revenue was 15% in both fiscal 2017 and 2016.

Executive Search Adjusted EBITDA was $137.4 million, a decrease of $14.8 million, or 10%, in fiscal 2017
compared to $152.2 million in fiscal 2016. This decrease was due to lower fee revenue of $5.2 million and higher
compensation and benefits expense and general and administrative expenses of $8.1 million and $1.0 million,
respectively. Executive Search Adjusted EBITDA as a percentage of fee revenue was 22% in fiscal 2017 as
compared to 24% in fiscal 2016.

Hay Group Adjusted EBITDA increased by $49.3 million to $128.2 million in fiscal 2017 compared to $78.9 million
in fiscal 2016. This increase was due to higher adjusted fee revenue of $245.6 million, offset by an increase in

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Hay. As a result, we recorded $33.0 million of restructuring charges, with $32.1 million of severance and

$0.9 million relating to the consolidation/abandonment of premises during fiscal 2016.

Operating Income

Operating income increased $61.7 million, or 117%, to $114.4 million in fiscal 2017 compared to $52.7 million in

fiscal 2016. This increase in operating income resulted from $273.4 million in higher fee revenue, offset by an

increase of $174.1 million in compensation and benefits expense. The rest of the change was due to increases of

$13.2 million in general and administrative expenses, $11.7 million in cost of services expense, and $11.1 million

of depreciation and amortization expenses during fiscal 2017 compared to fiscal 2016. Operating income as a

percentage of fee revenue was 7% in fiscal 2017 compared to 4% in fiscal 2016.

Executive Search operating income was $124.3 million, a decrease of $7.4 million, or 6%, in fiscal 2017 compared

to $131.7 million in fiscal 2016. The decrease in Executive Search operating income was driven by lower fee

revenue of $5.2 million and higher compensation and benefits expense of $8.1 million, offset by a decrease in

general and administrative expenses of $5.6 million. Executive Search operating income as a percentage of fee

revenue was 20% in fiscal 2017 compared to 21% in fiscal 2016.

Hay Group operating income increased by $50.7 million to $47.3 million in fiscal 2017 compared to operating loss

of $3.4 million in fiscal 2016. The change was primarily driven by the Legacy Hay acquisition resulting in an

increase in fee revenue of $253.1 million, offset by increases in compensation and benefits expense, general and

administrative expenses, depreciation and amortization expenses, cost of services expense and restructuring

charges, net of $146.9 million, $31.5 million, $10.4 million, $9.5 million and $4.0 million, respectively in fiscal 2017

compared to 2016. Hay Group operating income as a percentage of fee revenue was 7% in fiscal 2017 compared

to operating loss as a percentage of fee revenue of 1% in fiscal 2016.

Futurestep operating income increased by $3.3 million to $30.0 million in fiscal 2017 from $26.7 million in fiscal

2016. The increase in Futurestep operating income was primarily due to higher fee revenues of $25.6 million,

partially offset by increases of $18.7 million in compensation and benefits expense and $2.5 million in general and

administrative expenses. Futurestep operating income, as a percentage of fee revenue, was 13% in both fiscal

2017 and 2016.

Net Income Attributable to Korn Ferry

Net income attributable to Korn Ferry increased $53.3 million, or 172%, to $84.2 million in fiscal 2017 compared to

$30.9 million in fiscal 2016. The increase was due primarily to higher total revenue of $275.0 million, offset by

higher operating expenses of $213.2 million and an increase in income tax provision of $10.1 million. Net income

attributable to Korn Ferry, as a percentage of fee revenue, was 5% during fiscal 2017 as compared to 2% in the

year-ago period.

Adjusted EBITDA

Adjusted EBITDA increased $44.8 million, or 24%, to $235.0 million in fiscal 2017 compared to $190.2 million in

fiscal 2016. This increase was driven by higher adjusted fee revenue of $266.0 million, and an increase in other

income, net due to the change in fair value of our marketable securities of $16.0 million in fiscal 2017 compared to

the year-ago period, offset by increases of $177.0 million, $47.2 million and $11.7 million in compensation and

benefits expense, general and administrative expenses and cost of services expense, respectively. Adjusted

EBITDA as a percentage of fee revenue was 15% in both fiscal 2017 and 2016.

Executive Search Adjusted EBITDA was $137.4 million, a decrease of $14.8 million, or 10%, in fiscal 2017

compared to $152.2 million in fiscal 2016. This decrease was due to lower fee revenue of $5.2 million and higher

compensation and benefits expense and general and administrative expenses of $8.1 million and $1.0 million,

respectively. Executive Search Adjusted EBITDA as a percentage of fee revenue was 22% in fiscal 2017 as

compared to 24% in fiscal 2016.

Hay Group Adjusted EBITDA increased by $49.3 million to $128.2 million in fiscal 2017 compared to $78.9 million

in fiscal 2016. This increase was due to higher adjusted fee revenue of $245.6 million, offset by an increase in

compensation and benefit expense, general and administrative expenses and cost of services expense of
$147.6 million, $40.5 million and $9.5 million, respectively. The higher compensation and benefit expense was
driven mainly by increases in salaries and related payroll taxes due to an increase in average headcount and an
increase in performance related bonus expense. Hay Group Adjusted EBITDA as a percentage of fee revenue
was 18% in fiscal 2017 compared to 16% in fiscal 2016.

Futurestep Adjusted EBITDA increased by $3.3 million to $32.8 million in fiscal 2017 compared to $29.5 million in
fiscal 2016. The increase in Futurestep Adjusted EBITDA was primarily due to higher fee revenue of $25.6 million,
offset by an increase in compensation and benefits expense and in general and administrative expenses of $18.7
million and $2.5 million, respectively, during fiscal 2017 as compared to fiscal 2016. The increase in compensation
and benefits expense was primarily driven by higher salaries and related payroll taxes due to an increase in
average headcount. Futurestep Adjusted EBITDA as a percentage of fee revenue was 15% in both fiscal 2017 and
2016.

Other Income (Loss), Net

Other income, net was $11.8 million in fiscal 2017 as compared to other loss, net of $4.2 million in fiscal 2016. The
change in other income (loss), net is primarily due to the increase in the fair value of our marketable securities,
held in trust for settlement of our obligations under certain deferred compensation plans, during fiscal 2017
compared to the decrease in the fair value of our marketable securities in the year-ago period.

Interest (Expense) Income, Net

Interest (expense) income, net primarily relates to our term loan facility that we entered into in the current fiscal
year to provide enhanced financial flexibility and in recognition of the accelerated pace of the Legacy Hay
integration. It also includes interest on our borrowings under our COLI policies and interest earned on cash and
cash equivalent balances. Interest expense, net was $10.3 million in fiscal 2017 compared to interest income, net
of $0.3 million in fiscal 2016.

Equity in Earnings of Unconsolidated Subsidiaries

Equity in earnings of unconsolidated subsidiaries is comprised of our less than 50% interest in IGroup, LLC, which
is engaged in organizing, planning and conducting conferences and training programs throughout the world for
directors, chief executive officers, other senior level executives and also includes earnings of our Mexico
subsidiary for the first nine months in fiscal 2016. In the fourth quarter of fiscal 2016, we obtained control of our
Mexico subsidiary and began to consolidate the operations. Equity in earnings was $0.3 million in fiscal 2017 as
compared to $1.6 million in fiscal 2016. The decrease is due to the consolidation of our Mexico subsidiary in fiscal
2017, which is now included in operations.

Income Tax Provision

The provision for income taxes was $29.1 million in fiscal 2017 compared to $19.0 million in fiscal 2016, reflecting
a 25% and 39% effective tax rate, respectively. The lower effective tax rate in fiscal 2017 was due primarily to a
higher percentage of taxable income arising in jurisdictions outside of the U.S. with lower statutory tax rates. The
effective tax rate in fiscal 2016 was higher largely due to the impact of non-deductible expenses incurred in
connection with the acquisition of Legacy Hay and non-deductible charges related to the devaluation of the
Venezuelan currency.

Net Income Attributable to Non-Controlling Interest

Net income attributable to non-controlling interest represents the portion of a subsidiary’s net earnings that are
attributable to shares of such subsidiary not held by Korn Ferry that are included in the consolidated results of
operations. In the fourth quarter of fiscal 2016, we obtained control of our Mexico subsidiary and began to
consolidate the operations. Net income attributable to non-controlling interest in fiscal 2017 was $3.1 million
compared to $0.5 million in fiscal 2016.

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43

Fiscal 2016 Compared to Fiscal 2015

Fee Revenue

Fee Revenue. Fee revenue increased $263.9 million, or 26%, to $1,292.1 million in fiscal 2016 compared to
$1,028.2 million in fiscal 2015. Exchange rates unfavorably impacted fee revenue by $66.8 million, or 6%, in fiscal
2016. Adjusting for the Legacy Hay acquisition, fee revenue increased $77.1 million, or 7%, compared to fiscal
2015. This increase was attributable to higher fee revenue in Futurestep, North America region of Executive
Search and Legacy LTC.

Executive Search. Executive Search reported fee revenue of $622.9 million, an increase of $25.5 million, or 4%, in
fiscal 2016 compared to $597.4 million in fiscal 2015. As detailed below, Executive Search fee revenue was higher
in the North America region, partially offset by decreases in fee revenue in EMEA, Asia Pacific and Latin America
regions in fiscal 2016 as compared to fiscal 2015. The higher fee revenue was mainly due to a 6% increase in the
weighted-average fees billed per engagement, offset by a 1% decrease in engagements billed during fiscal 2016
as compared to fiscal 2015. Exchange rates unfavorably impacted fee revenue by $29.5 million, or 5%, in fiscal
2016.

North America reported fee revenue of $371.4 million, an increase of $40.8 million, or 12%, in fiscal 2016
compared to $330.6 million in fiscal 2015. North America’s increase in fee revenue is primarily due to an 8%
increase in the number of engagements billed and a 4% increase in the weighted-average fees billed per
engagement during fiscal 2016 as compared to fiscal 2015. The overall increase in fee revenue was primarily
driven by growth in the financial services, life sciences/healthcare, technology and education/non-profit sectors as
compared to fiscal 2015, partially offset by a decrease in the industrial and consumer goods sectors. Exchange
rates unfavorably impacted fee revenue by $2.8 million, or 1%, in fiscal 2016.

EMEA reported fee revenue of $144.3 million, a decrease of $9.2 million, or 6%, in fiscal 2016 compared to
$153.5 million in fiscal 2015. Exchange rates unfavorably impacted fee revenue by $13.8 million, or 9%, in fiscal
2016. The decline in fee revenue was due to a 4% decrease in the number of engagements billed and a 2%
decrease in the weighted-average fees billed per engagement during fiscal 2016 as compared to fiscal 2015. The
performance in existing offices in the United Kingdom, France, Switzerland and Germany were the primary
contributors to the decrease in fee revenue in fiscal 2016 compared to the year-ago period, offset by an increase
in fee revenue in United Arab Emirates and Belgium. In terms of business sectors, financial services, industrial and
technology experienced the largest decreases in fee revenue in fiscal 2016 as compared to fiscal 2015, partially
offset by an increase in the consumer goods sector.

Asia Pacific reported fee revenue of $80.5 million, a decrease of $3.6 million, or 4%, in fiscal 2016 compared to
$84.1 million in fiscal 2015. Exchange rates unfavorably impacted fee revenue by $6.2 million, or 7%, in fiscal
2016. The decline in fee revenue was due to a 4% decrease in the number of engagements billed in fiscal 2016
compared to fiscal 2015. The performance in Singapore, Hong Kong and Australia were the primary contributors to
the decrease in fee revenue in fiscal 2016 compared to fiscal 2015, offset by higher fee revenue in India. Life
sciences/healthcare, consumer goods, and industrial were the main sectors contributing to the decrease in fee
revenue in fiscal 2016 as compared to fiscal 2015, partially offset by higher fee revenue in the education/non-profit
sector.

Latin America reported fee revenue of $26.7 million, a decrease of $2.5 million, or 9%, in fiscal 2016 compared to
$29.2 million in fiscal 2015. In the fourth quarter of fiscal 2016, we obtained control of our equity investment in our
Mexico subsidiary which is included in our consolidated results. The Mexico subsidiary contributed $3.6 million in
fee revenue in fiscal 2016. Excluding fee revenue from our Mexico subsidiary, fee revenue in Latin America
decreased $6.1 million, or 21%, compared to fiscal 2015. Exchange rates unfavorably impacted fee revenue for
Latin America excluding the Mexico subsidiary by $6.1 million, or 21%, in fiscal 2016. The decline in fee revenue
was due to a 41% decrease in the number of engagements billed, offset by a 36% increase in weighted-average
fees billed per engagement in fiscal 2016 compared to fiscal 2015. The performance in Brazil, Colombia and Chile
were the primary contributors to the decline in fee revenue in fiscal 2016 compared to fiscal 2015, partially offset
by the growth in Venezuela. Industrial was the main sector contributing to the decrease in fee revenue in fiscal
2016 compared to fiscal 2015, partially offset by an increase in fee revenue in the consumer goods sector during
the same period.

Hay Group. Hay Group reported fee revenue of $471.1 million, an increase of $204.0 million, or 76%, in fiscal

2016 compared to $267.1 million in fiscal 2015. Exchange rates unfavorably impacted fee revenue by $25.3

million, or 9%, in fiscal 2016. Adjusting for the Legacy Hay acquisition, fee revenue increased $17.2 million, or 6%,

compared to fiscal 2015. Fee revenue increased due to higher consulting fee revenue of $16.6 million, or 8%, in

fiscal 2016 compared to fiscal 2015 with the rest of the increase due to higher fee revenue from products. The

acquisition of Pivot Leadership on March 1, 2015 contributed $22.4 million and $3.7 million in consulting fee

revenue during fiscal 2016 and fiscal 2015, respectively.

Futurestep. Futurestep reported fee revenue of $198.1 million, an increase of $34.4 million, or 21%, in fiscal 2016

compared to $163.7 million in fiscal 2015. Exchange rates unfavorably impacted fee revenue by $12.0 million or

7% in fiscal 2016. The increase in fee revenue was primarily driven by higher fee revenues in professional search

and RPO of $18.1 million and $17.4 million, respectively. The increase in fee revenue in professional search was

due to a 16% increase in the weighted-average fees billed per engagement in fiscal 2016 compared to fiscal 2015

and 9% increase in the number of engagements billed during the same period.

Compensation and Benefits

Compensation and benefits expense increased $205.9 million, or 30%, to $897.4 million in fiscal 2016 from

$691.5 million in fiscal 2015. Exchange rates favorably impacted compensation and benefits expense by $42.8

million, or 6%, during fiscal 2016. Excluding $128.6 million in compensation and benefits relating to the Legacy

Hay acquisition and $22.1 million in integration/acquisition costs and separation charges, compensation and

benefits increased $55.2 million, or 8%, compared to fiscal 2015. This increase was due in large part to an

increase of $35.9 million, $4.7 million, $3.6 million and $2.9 million in salaries and related payroll taxes,

performance related bonus expense, stock-based compensation and outside contractors, respectively. The higher

level of salaries and related payroll expense was due to an increase in average headcount of 11% in fiscal 2016

compared to fiscal 2015, and reflects our continued growth-related investments back into the business. The

increase in performance related bonus expense was due to an increase in fee revenue and profitability. Also,

contributing to the increase in compensation and benefits expense was a change in the cash surrender value

(“CSV”) of company owned life insurance (“COLI”). The change in CSV of COLI increased compensation and

benefits expense by $6.5 million in fiscal 2016 compared to fiscal 2015 due to a smaller increase in the market

value of the underlying investments due to market changes. COLI is held to fund other deferred compensation

retirement plans (see Note 6 – Deferred Compensation and Retirement Plans, included in the Notes to our

Consolidated Financial Statements).

The changes in the fair value of vested amounts owed under certain deferred compensation plans decreased

compensation and benefits expense by $1.7 million in fiscal 2016 compared to an increase of $5.9 million in fiscal

2015. Offsetting these changes in compensation and benefits expense was a decrease in the fair value of

marketable securities classified as trading (held in trust to satisfy obligations under certain deferred compensation

plan liabilities) of $3.3 million in fiscal 2016 compared to an increase of $8.8 million in fiscal 2015, recorded in

other (loss) income, net on the consolidated statement of income.

Executive Search compensation and benefits expense increased $7.6 million to $400.9 million in fiscal 2016

compared to $393.3 million in fiscal 2015. The change was driven by higher salaries and related payroll taxes of

$7.7 million. The higher level of salaries and related payroll expense was due to an increase in average consultant

headcount of 6% in fiscal 2016 compared to fiscal 2015, and reflects our continued growth-related investments

back into the business. Executive Search compensation and benefits expense as a percentage of fee revenue was

64% in fiscal 2016 compared to 66% in fiscal 2015.

Hay Group compensation and benefits expense increased $156.3 million, or 98%, to $315.2 million in fiscal 2016

from $158.9 million in fiscal 2015. Excluding $128.6 million in compensation and benefits relating to the Legacy

Hay acquisition and $16.1 million in integration/acquisition costs, compensation and benefits increased $11.6

million, or 7%, compared to fiscal 2015. The increase was driven by an increase in salaries and related payroll

taxes of $8.5 million and an increase of $3.8 million in performance related bonus expense. The higher level of

salaries and related payroll expense was due to an increase in average consultant headcount of 14% in fiscal

2016 compared to fiscal 2015. Hay Group compensation and benefits expense as a percentage of fee revenue

44

45

Fiscal 2016 Compared to Fiscal 2015

Fee Revenue

Fee Revenue. Fee revenue increased $263.9 million, or 26%, to $1,292.1 million in fiscal 2016 compared to

$1,028.2 million in fiscal 2015. Exchange rates unfavorably impacted fee revenue by $66.8 million, or 6%, in fiscal

2016. Adjusting for the Legacy Hay acquisition, fee revenue increased $77.1 million, or 7%, compared to fiscal

2015. This increase was attributable to higher fee revenue in Futurestep, North America region of Executive

Search and Legacy LTC.

Executive Search. Executive Search reported fee revenue of $622.9 million, an increase of $25.5 million, or 4%, in

fiscal 2016 compared to $597.4 million in fiscal 2015. As detailed below, Executive Search fee revenue was higher

in the North America region, partially offset by decreases in fee revenue in EMEA, Asia Pacific and Latin America

regions in fiscal 2016 as compared to fiscal 2015. The higher fee revenue was mainly due to a 6% increase in the

weighted-average fees billed per engagement, offset by a 1% decrease in engagements billed during fiscal 2016

as compared to fiscal 2015. Exchange rates unfavorably impacted fee revenue by $29.5 million, or 5%, in fiscal

2016.

North America reported fee revenue of $371.4 million, an increase of $40.8 million, or 12%, in fiscal 2016

compared to $330.6 million in fiscal 2015. North America’s increase in fee revenue is primarily due to an 8%

increase in the number of engagements billed and a 4% increase in the weighted-average fees billed per

engagement during fiscal 2016 as compared to fiscal 2015. The overall increase in fee revenue was primarily

driven by growth in the financial services, life sciences/healthcare, technology and education/non-profit sectors as

compared to fiscal 2015, partially offset by a decrease in the industrial and consumer goods sectors. Exchange

rates unfavorably impacted fee revenue by $2.8 million, or 1%, in fiscal 2016.

EMEA reported fee revenue of $144.3 million, a decrease of $9.2 million, or 6%, in fiscal 2016 compared to

$153.5 million in fiscal 2015. Exchange rates unfavorably impacted fee revenue by $13.8 million, or 9%, in fiscal

2016. The decline in fee revenue was due to a 4% decrease in the number of engagements billed and a 2%

decrease in the weighted-average fees billed per engagement during fiscal 2016 as compared to fiscal 2015. The

performance in existing offices in the United Kingdom, France, Switzerland and Germany were the primary

contributors to the decrease in fee revenue in fiscal 2016 compared to the year-ago period, offset by an increase

in fee revenue in United Arab Emirates and Belgium. In terms of business sectors, financial services, industrial and

technology experienced the largest decreases in fee revenue in fiscal 2016 as compared to fiscal 2015, partially

offset by an increase in the consumer goods sector.

Asia Pacific reported fee revenue of $80.5 million, a decrease of $3.6 million, or 4%, in fiscal 2016 compared to

$84.1 million in fiscal 2015. Exchange rates unfavorably impacted fee revenue by $6.2 million, or 7%, in fiscal

2016. The decline in fee revenue was due to a 4% decrease in the number of engagements billed in fiscal 2016

compared to fiscal 2015. The performance in Singapore, Hong Kong and Australia were the primary contributors to

the decrease in fee revenue in fiscal 2016 compared to fiscal 2015, offset by higher fee revenue in India. Life

sciences/healthcare, consumer goods, and industrial were the main sectors contributing to the decrease in fee

revenue in fiscal 2016 as compared to fiscal 2015, partially offset by higher fee revenue in the education/non-profit

sector.

Latin America reported fee revenue of $26.7 million, a decrease of $2.5 million, or 9%, in fiscal 2016 compared to

$29.2 million in fiscal 2015. In the fourth quarter of fiscal 2016, we obtained control of our equity investment in our

Mexico subsidiary which is included in our consolidated results. The Mexico subsidiary contributed $3.6 million in

fee revenue in fiscal 2016. Excluding fee revenue from our Mexico subsidiary, fee revenue in Latin America

decreased $6.1 million, or 21%, compared to fiscal 2015. Exchange rates unfavorably impacted fee revenue for

Latin America excluding the Mexico subsidiary by $6.1 million, or 21%, in fiscal 2016. The decline in fee revenue

was due to a 41% decrease in the number of engagements billed, offset by a 36% increase in weighted-average

fees billed per engagement in fiscal 2016 compared to fiscal 2015. The performance in Brazil, Colombia and Chile

were the primary contributors to the decline in fee revenue in fiscal 2016 compared to fiscal 2015, partially offset

by the growth in Venezuela. Industrial was the main sector contributing to the decrease in fee revenue in fiscal

2016 compared to fiscal 2015, partially offset by an increase in fee revenue in the consumer goods sector during

the same period.

Hay Group. Hay Group reported fee revenue of $471.1 million, an increase of $204.0 million, or 76%, in fiscal
2016 compared to $267.1 million in fiscal 2015. Exchange rates unfavorably impacted fee revenue by $25.3
million, or 9%, in fiscal 2016. Adjusting for the Legacy Hay acquisition, fee revenue increased $17.2 million, or 6%,
compared to fiscal 2015. Fee revenue increased due to higher consulting fee revenue of $16.6 million, or 8%, in
fiscal 2016 compared to fiscal 2015 with the rest of the increase due to higher fee revenue from products. The
acquisition of Pivot Leadership on March 1, 2015 contributed $22.4 million and $3.7 million in consulting fee
revenue during fiscal 2016 and fiscal 2015, respectively.

Futurestep. Futurestep reported fee revenue of $198.1 million, an increase of $34.4 million, or 21%, in fiscal 2016
compared to $163.7 million in fiscal 2015. Exchange rates unfavorably impacted fee revenue by $12.0 million or
7% in fiscal 2016. The increase in fee revenue was primarily driven by higher fee revenues in professional search
and RPO of $18.1 million and $17.4 million, respectively. The increase in fee revenue in professional search was
due to a 16% increase in the weighted-average fees billed per engagement in fiscal 2016 compared to fiscal 2015
and 9% increase in the number of engagements billed during the same period.

Compensation and Benefits

Compensation and benefits expense increased $205.9 million, or 30%, to $897.4 million in fiscal 2016 from
$691.5 million in fiscal 2015. Exchange rates favorably impacted compensation and benefits expense by $42.8
million, or 6%, during fiscal 2016. Excluding $128.6 million in compensation and benefits relating to the Legacy
Hay acquisition and $22.1 million in integration/acquisition costs and separation charges, compensation and
benefits increased $55.2 million, or 8%, compared to fiscal 2015. This increase was due in large part to an
increase of $35.9 million, $4.7 million, $3.6 million and $2.9 million in salaries and related payroll taxes,
performance related bonus expense, stock-based compensation and outside contractors, respectively. The higher
level of salaries and related payroll expense was due to an increase in average headcount of 11% in fiscal 2016
compared to fiscal 2015, and reflects our continued growth-related investments back into the business. The
increase in performance related bonus expense was due to an increase in fee revenue and profitability. Also,
contributing to the increase in compensation and benefits expense was a change in the cash surrender value
(“CSV”) of company owned life insurance (“COLI”). The change in CSV of COLI increased compensation and
benefits expense by $6.5 million in fiscal 2016 compared to fiscal 2015 due to a smaller increase in the market
value of the underlying investments due to market changes. COLI is held to fund other deferred compensation
retirement plans (see Note 6 – Deferred Compensation and Retirement Plans, included in the Notes to our
Consolidated Financial Statements).

The changes in the fair value of vested amounts owed under certain deferred compensation plans decreased
compensation and benefits expense by $1.7 million in fiscal 2016 compared to an increase of $5.9 million in fiscal
2015. Offsetting these changes in compensation and benefits expense was a decrease in the fair value of
marketable securities classified as trading (held in trust to satisfy obligations under certain deferred compensation
plan liabilities) of $3.3 million in fiscal 2016 compared to an increase of $8.8 million in fiscal 2015, recorded in
other (loss) income, net on the consolidated statement of income.

Executive Search compensation and benefits expense increased $7.6 million to $400.9 million in fiscal 2016
compared to $393.3 million in fiscal 2015. The change was driven by higher salaries and related payroll taxes of
$7.7 million. The higher level of salaries and related payroll expense was due to an increase in average consultant
headcount of 6% in fiscal 2016 compared to fiscal 2015, and reflects our continued growth-related investments
back into the business. Executive Search compensation and benefits expense as a percentage of fee revenue was
64% in fiscal 2016 compared to 66% in fiscal 2015.

Hay Group compensation and benefits expense increased $156.3 million, or 98%, to $315.2 million in fiscal 2016
from $158.9 million in fiscal 2015. Excluding $128.6 million in compensation and benefits relating to the Legacy
Hay acquisition and $16.1 million in integration/acquisition costs, compensation and benefits increased $11.6
million, or 7%, compared to fiscal 2015. The increase was driven by an increase in salaries and related payroll
taxes of $8.5 million and an increase of $3.8 million in performance related bonus expense. The higher level of
salaries and related payroll expense was due to an increase in average consultant headcount of 14% in fiscal
2016 compared to fiscal 2015. Hay Group compensation and benefits expense as a percentage of fee revenue

44

45

increased to 67% in fiscal 2016 from 60% in fiscal 2015. Excluding integration/acquisition costs, compensation and
benefits expense as a percentage of fee revenue was 63% in fiscal 2016.

Futurestep compensation and benefits expense increased $24.3 million, or 22%, to $136.1 million in fiscal 2016
from $111.8 million in fiscal 2015. The increase was primarily driven by an increase of $19.0 million in salaries and
related payroll taxes, $2.9 million in outside contractors and $1.2 million in insurance costs for employees. The
increase in salaries and related payroll taxes and insurance costs provided for employees was due to a 27%
increase in the average headcount. The higher average headcount and the increase in utilization of outside
contractors were primarily driven by the need to service an increase in fee revenue in both our professional search
and RPO businesses. Futurestep compensation and benefits expense as a percentage of fee revenue was 69% in
fiscal 2016 compared to 68% in fiscal 2015.

Corporate compensation and benefits expense increased $17.7 million, or 64%, to $45.2 million in fiscal 2016 from
$27.5 million in fiscal 2015. Excluding $6.0 million of integration/acquisition costs and separation charges,
compensation and benefits expense increased $11.7 million in fiscal 2016 as compared to fiscal 2015. This
increase was mainly due to the change in the CSV of COLI. The change in CSV of COLI reduced compensation
and benefits expense by $4.0 million and $10.5 million in fiscal 2016 and 2015, respectively. The decrease in CSV
of COLI was due to a decrease in the market value of investments underlying the COLI. COLI is held to fund other
deferred compensation retirement plans (see Note 6 – Deferred Compensation and Retirement Plans, included in
the Notes to our Consolidated Financial Statements). The rest of the change was due to increases in stock-based
compensation of $2.9 million.

General and Administrative Expenses

General and administrative expenses increased $67.1 million, or 46%, to $213.0 million in fiscal 2016 compared to
$145.9 million in fiscal 2015. Exchange rates favorably impacted general and administrative expenses by $10.1
million, or 7%, during fiscal 2016. Excluding $25.5 million in general and administrative expenses relating to the
Legacy Hay acquisition, integration/acquisition costs of $23.2 million and $13.7 million foreign currency loss due to
the devaluation of the Venezuelan currency, general and administrative expenses increased $4.7 million, or 3%,
compared to fiscal 2015. Fiscal 2015 general and administrative expenses benefitted from a one-time insurance
reimbursement that reduced legal fees in that year. General and administrative expenses as a percentage of fee
revenue was 16% in fiscal 2016 compared to 14% in fiscal 2015. Excluding integration/acquisition costs and the
Venezuelan foreign currency loss, general and administrative expenses as a percentage of fee revenue were 14%
in fiscal 2016.

Executive Search general and administrative expenses increased $3.8 million, or 5%, to $75.3 million in fiscal
2016 from $71.5 million in fiscal 2015. Excluding the Venezuelan foreign currency loss of $6.6 million, general and
administrative expenses decreased $2.8 million, or 4%, compared to fiscal 2015. The decrease was due to
favorable exchange rates that reduced general and administrative expenses by $1.1 million and lower legal and
other professional fees of $0.6 million. Executive Search general and administrative expenses as a percentage of
fee revenue were 12% in both fiscal 2016 and 2015.

Hay Group general and administrative expenses increased $30.3 million, or 86%, to $65.6 million in fiscal 2016
from $35.3 million in fiscal 2015. Excluding $25.5 million relating to the Legacy Hay acquisition, $1.5 million in
integration/acquisition costs and $7.1 million in foreign currency loss due to the devaluation of the Venezuelan
currency, general and administrative expenses decreased $3.8 million, or 11%, compared to fiscal 2015. The
decrease was due to favorable exchange rates that reduced general and administrative expenses by $1.5 million.
The rest of the change was due to lower legal and other professional fees of $1.3 million and a reduction of bad
debt expense of $1.1 million due to better collections. Hay Group general and administrative expenses as a
percentage of fee revenue was 14% in fiscal 2016 compared to 13% in fiscal 2015. Excluding integration/
acquisition costs and the Venezuelan foreign currency loss, general and administrative expenses as a percentage
of fee revenue were 12% in fiscal 2016. We do not believe that further weakening of the Venezuelan Bolivar will
materially impact our results of operations.

Futurestep general and administrative expenses increased $2.1 million, or 11%, to $21.4 million in fiscal 2016
compared to $19.3 million in fiscal 2015. Higher premise and office expenses of $1.5 million contributed to the

46

increased to 67% in fiscal 2016 from 60% in fiscal 2015. Excluding integration/acquisition costs, compensation and

benefits expense as a percentage of fee revenue was 63% in fiscal 2016.

increase in general and administrative expenses. Futurestep general and administrative expenses as a
percentage of fee revenue were 11% in fiscal 2016 compared to 12% in fiscal 2015.

Futurestep compensation and benefits expense increased $24.3 million, or 22%, to $136.1 million in fiscal 2016

from $111.8 million in fiscal 2015. The increase was primarily driven by an increase of $19.0 million in salaries and

related payroll taxes, $2.9 million in outside contractors and $1.2 million in insurance costs for employees. The

increase in salaries and related payroll taxes and insurance costs provided for employees was due to a 27%

increase in the average headcount. The higher average headcount and the increase in utilization of outside

contractors were primarily driven by the need to service an increase in fee revenue in both our professional search

and RPO businesses. Futurestep compensation and benefits expense as a percentage of fee revenue was 69% in

fiscal 2016 compared to 68% in fiscal 2015.

Corporate compensation and benefits expense increased $17.7 million, or 64%, to $45.2 million in fiscal 2016 from

$27.5 million in fiscal 2015. Excluding $6.0 million of integration/acquisition costs and separation charges,

compensation and benefits expense increased $11.7 million in fiscal 2016 as compared to fiscal 2015. This

increase was mainly due to the change in the CSV of COLI. The change in CSV of COLI reduced compensation

and benefits expense by $4.0 million and $10.5 million in fiscal 2016 and 2015, respectively. The decrease in CSV

of COLI was due to a decrease in the market value of investments underlying the COLI. COLI is held to fund other

deferred compensation retirement plans (see Note 6 – Deferred Compensation and Retirement Plans, included in

the Notes to our Consolidated Financial Statements). The rest of the change was due to increases in stock-based

compensation of $2.9 million.

General and Administrative Expenses

General and administrative expenses increased $67.1 million, or 46%, to $213.0 million in fiscal 2016 compared to

$145.9 million in fiscal 2015. Exchange rates favorably impacted general and administrative expenses by $10.1

million, or 7%, during fiscal 2016. Excluding $25.5 million in general and administrative expenses relating to the

Legacy Hay acquisition, integration/acquisition costs of $23.2 million and $13.7 million foreign currency loss due to

the devaluation of the Venezuelan currency, general and administrative expenses increased $4.7 million, or 3%,

compared to fiscal 2015. Fiscal 2015 general and administrative expenses benefitted from a one-time insurance

reimbursement that reduced legal fees in that year. General and administrative expenses as a percentage of fee

revenue was 16% in fiscal 2016 compared to 14% in fiscal 2015. Excluding integration/acquisition costs and the

Venezuelan foreign currency loss, general and administrative expenses as a percentage of fee revenue were 14%

in fiscal 2016.

Executive Search general and administrative expenses increased $3.8 million, or 5%, to $75.3 million in fiscal

2016 from $71.5 million in fiscal 2015. Excluding the Venezuelan foreign currency loss of $6.6 million, general and

administrative expenses decreased $2.8 million, or 4%, compared to fiscal 2015. The decrease was due to

favorable exchange rates that reduced general and administrative expenses by $1.1 million and lower legal and

other professional fees of $0.6 million. Executive Search general and administrative expenses as a percentage of

fee revenue were 12% in both fiscal 2016 and 2015.

Hay Group general and administrative expenses increased $30.3 million, or 86%, to $65.6 million in fiscal 2016

from $35.3 million in fiscal 2015. Excluding $25.5 million relating to the Legacy Hay acquisition, $1.5 million in

integration/acquisition costs and $7.1 million in foreign currency loss due to the devaluation of the Venezuelan

currency, general and administrative expenses decreased $3.8 million, or 11%, compared to fiscal 2015. The

decrease was due to favorable exchange rates that reduced general and administrative expenses by $1.5 million.

The rest of the change was due to lower legal and other professional fees of $1.3 million and a reduction of bad

debt expense of $1.1 million due to better collections. Hay Group general and administrative expenses as a

percentage of fee revenue was 14% in fiscal 2016 compared to 13% in fiscal 2015. Excluding integration/

acquisition costs and the Venezuelan foreign currency loss, general and administrative expenses as a percentage

of fee revenue were 12% in fiscal 2016. We do not believe that further weakening of the Venezuelan Bolivar will

materially impact our results of operations.

Futurestep general and administrative expenses increased $2.1 million, or 11%, to $21.4 million in fiscal 2016

compared to $19.3 million in fiscal 2015. Higher premise and office expenses of $1.5 million contributed to the

Corporate general and administrative expenses increased $30.9 million to $50.7 million in fiscal 2016 compared to
$19.8 million in fiscal 2015. Excluding $21.7 million in integration/acquisition costs, general and administrative
expenses increased $9.2 million, or 46%, compared to fiscal 2015, although fiscal 2015 benefitted from a one-time
insurance reimbursement that lowered legal and professional fees by that amount. The rest of the increase was
due to unfavorable exchange rates that resulted in an increase in general and administrative expenses of $2.2
million during fiscal 2016 compared to fiscal 2015.

Cost of Services Expense

Cost of services expense consist primarily of non-billable contractor and product costs related to the delivery of
various services and products, primarily in Futurestep and Hay Group. Cost of services expense increased $20.1
million, or 51%, to $59.8 million in fiscal 2016 compared to $39.7 million in fiscal 2015. Adjusting for the Legacy
Hay acquisition, the cost of services increased $5.1 million, or 13%, compared to fiscal 2015. The increase is
mainly due to higher fee revenue in Legacy LTC and Futurestep. Cost of services expense as a percentage of fee
revenue was 5% in fiscal 2016 compared to 4% in fiscal 2015.

Depreciation and Amortization Expenses

Depreciation and amortization expenses were $36.2 million in fiscal 2016, an increase of $8.6 million compared to
$27.6 million in fiscal 2015. Adjusting for the Legacy Hay acquisition, depreciation and amortization expenses
increased $0.7 million, or 3%, compared to fiscal 2015. The increase relates primarily to technology investments
that were made in the current and prior year and intangible assets.

Restructuring Charges, Net

During fiscal 2016, we implemented a restructuring plan in order to rationalize our cost structure, eliminate
redundant positions and consolidate office space relating to the acquisition of Legacy Hay. As a result, we
recorded $33.0 million of restructuring charges with $32.1 million of severance costs to eliminate redundant
positions and $0.9 million relating to the consolidation/abandonment of premises, both of which were due to the
integration of Legacy Hay during fiscal 2016. During fiscal 2015, we took actions to rationalize our cost structure
as a result of efficiencies obtained from prior year technology investments that enabled further integration of our
legacy businesses and the previous year’s acquisitions of PDI and Global Novations, LLC, as well as other cost
saving initiatives. As a result, we recorded $9.5 million in restructuring charges, net in fiscal 2015, of which $9.2
million related to severance and $0.3 million related to consolidation/abandonment of premises.

Operating Income

Operating income decreased $61.3 million, or 54%, to $52.7 million in fiscal 2016 as compared to $114.0 million in
fiscal 2015. Adjusting for the $32.4 million operating loss of Legacy Hay, operating income decreased $28.9
million, or 25%, compared to the year-ago period. This decrease in operating income resulted from an increase of
$65.5 million in compensation and benefits expense (which included $9.4 million in integration/acquisition costs
and separation charges), $34.0 million in general and administrative expenses (which included $30.2 million in
integration/acquisition costs and Venezuelan foreign currency loss due to the devaluation of their currency) and
$5.1 million in cost of services expense. These changes were offset by higher fee revenue of $77.1 million during
fiscal 2016 as compared to fiscal 2015. The Legacy Hay operating loss of $32.4 million included integration/
acquisition costs of $12.5 million, $6.9 million in foreign currency loss as a result of the devaluation of the
Venezuelan Bolivar and restructuring charges of $22.9 million. Operating margin was 4% in fiscal 2016, as
compared to 11% in fiscal 2015.

Executive Search operating income was $131.7 million and $119.0 million in fiscal 2016 and 2015, respectively.
Executive Search operating income increased $12.7 million during fiscal 2016 as compared to fiscal 2015. The
increase in Executive Search operating income is primarily attributable to higher fee revenue of $25.5 million,
offset by an increase of $7.6 million, $3.8 million and $1.9 million in compensation and benefits expense, general

46

47

and administrative expenses and restructuring charges, net, respectively. The increase in compensation and
benefits expense was driven by higher salaries and related payroll expense due to an increase in average
consultant headcount. General and administrative expenses increased due to Venezuelan foreign currency loss of
$6.6 million offset by favorable exchange rates in other currencies and reductions in premise and office expense
and legal and other professional fees during fiscal 2016 compared to fiscal 2015. Executive Search operating
income as a percentage of fee revenue was 21% in fiscal 2016 compared to 20% in fiscal 2015.

Hay Group operating loss was $3.4 million in fiscal 2016 as compared to operating income of $28.2 million in fiscal
2015. Adjusting for the $32.4 million operating loss of Legacy Hay, operating income increased $0.8 million, or 3%,
compared to fiscal 2015. The increase in Legacy LTC operating income was due to $17.2 million in higher fee
revenue, which was partially offset by an increase in compensation and benefit expense of $15.9 million. The
higher compensation and benefit expense was driven mainly by increases in salaries and related payroll taxes due
to an increase in average consultant headcount and performance related bonus expense. Hay Group operating
loss as a percentage of fee revenue was 1% in fiscal 2016 compared to operating income as a percentage of fee
revenue of 11% in fiscal 2015.

Futurestep operating income increased by $6.8 million to $26.7 million in fiscal 2016 from $19.9 million in fiscal
2015. The increase in Futurestep operating income was primarily due to higher fee revenues of $34.4 million.
These changes were partially offset by an increase in compensation and benefits expense of $24.3 million and a
$2.1 million increase in general and administrative expenses during fiscal 2016 as compared to fiscal 2015.
Futurestep operating income as a percentage of fee revenue was 13% in fiscal 2016 as compared to 12% in fiscal
2015.

Net Income Attributable to Korn Ferry

Net income attributable to Korn Ferry decreased $57.5 million, or 65%, to $30.9 million in fiscal 2016 compared to
$88.4 million in fiscal 2015. The decrease was due to an increase in operating expenses of $341.9 million and an
$11.7 million decline in other income, offset by an increase in fee revenue of $263.9 million.

Adjusted EBITDA

Adjusted EBITDA increased $28.5 million, or 18%, to $190.2 million in fiscal 2016 compared to $161.7 million in
fiscal 2015. Adjusting for the Legacy Hay acquisition, Adjusted EBITDA was flat compared to year-ago period.
Adjusted EBITDA as a percentage of fee revenue was 15% in fiscal 2016 as compared to 16% in fiscal 2015.

Executive Search Adjusted EBITDA was $152.2 million and $132.4 million in fiscal 2016 and 2015, respectively.
Executive Search Adjusted EBITDA increased $19.8 million during fiscal 2016 as compared to fiscal 2015 due to
$25.5 million increase in fee revenue, offset by an increase of $7.6 million in compensation and benefits expense
and $3.8 million in general and administrative expenses. Executive Search Adjusted EBITDA as a percentage of
fee revenue was 24% in fiscal 2016 as compared to 22% in fiscal 2015.

Hay Group Adjusted EBITDA increased by $34.5 million to $78.9 million in fiscal 2016 as compared to $44.4
million in fiscal 2015. Adjusting for the Legacy Hay acquisition, Adjusted EBITDA increased $6.0 million, or 14%,
compared to fiscal 2015. This increase was due to higher fee revenue of $17.2 million offset by an increase in
compensation and benefit expense of $11.6 million. The higher compensation and benefit expense was driven
mainly by increases in salaries and related payroll taxes due to an increase in average headcount and an increase
in performance related bonus expense. Hay Group Adjusted EBITDA as a percentage of fee revenue was 16% in
fiscal 2016 compared to 17% in fiscal 2015. Adjusting for the Legacy Hay acquisition, Adjusted EBITDA as of
percentage of fee revenue was 18% in fiscal 2016.

Futurestep Adjusted EBITDA increased by $6.5 million to $29.5 million in fiscal 2016 as compared to $23.0 million
in fiscal 2015. The increase in Futurestep Adjusted EBITDA was primarily due to higher fee revenue of $34.4
million, offset by an increase of $24.3 million in compensation and benefits expense and $2.1 million in general
and administrative expenses during fiscal 2016 as compared to fiscal 2015. Futurestep Adjusted EBITDA as a
percentage of fee revenue was 15% in fiscal 2016 as compared to 14% in fiscal 2015.

48

and administrative expenses and restructuring charges, net, respectively. The increase in compensation and

benefits expense was driven by higher salaries and related payroll expense due to an increase in average

consultant headcount. General and administrative expenses increased due to Venezuelan foreign currency loss of

$6.6 million offset by favorable exchange rates in other currencies and reductions in premise and office expense

and legal and other professional fees during fiscal 2016 compared to fiscal 2015. Executive Search operating

income as a percentage of fee revenue was 21% in fiscal 2016 compared to 20% in fiscal 2015.

Hay Group operating loss was $3.4 million in fiscal 2016 as compared to operating income of $28.2 million in fiscal

2015. Adjusting for the $32.4 million operating loss of Legacy Hay, operating income increased $0.8 million, or 3%,

compared to fiscal 2015. The increase in Legacy LTC operating income was due to $17.2 million in higher fee

revenue, which was partially offset by an increase in compensation and benefit expense of $15.9 million. The

higher compensation and benefit expense was driven mainly by increases in salaries and related payroll taxes due

to an increase in average consultant headcount and performance related bonus expense. Hay Group operating

loss as a percentage of fee revenue was 1% in fiscal 2016 compared to operating income as a percentage of fee

revenue of 11% in fiscal 2015.

Futurestep operating income increased by $6.8 million to $26.7 million in fiscal 2016 from $19.9 million in fiscal

2015. The increase in Futurestep operating income was primarily due to higher fee revenues of $34.4 million.

These changes were partially offset by an increase in compensation and benefits expense of $24.3 million and a

$2.1 million increase in general and administrative expenses during fiscal 2016 as compared to fiscal 2015.

Futurestep operating income as a percentage of fee revenue was 13% in fiscal 2016 as compared to 12% in fiscal

2015.

Net Income Attributable to Korn Ferry

Net income attributable to Korn Ferry decreased $57.5 million, or 65%, to $30.9 million in fiscal 2016 compared to

$88.4 million in fiscal 2015. The decrease was due to an increase in operating expenses of $341.9 million and an

$11.7 million decline in other income, offset by an increase in fee revenue of $263.9 million.

Adjusted EBITDA

Adjusted EBITDA increased $28.5 million, or 18%, to $190.2 million in fiscal 2016 compared to $161.7 million in

fiscal 2015. Adjusting for the Legacy Hay acquisition, Adjusted EBITDA was flat compared to year-ago period.

Adjusted EBITDA as a percentage of fee revenue was 15% in fiscal 2016 as compared to 16% in fiscal 2015.

Executive Search Adjusted EBITDA was $152.2 million and $132.4 million in fiscal 2016 and 2015, respectively.

Executive Search Adjusted EBITDA increased $19.8 million during fiscal 2016 as compared to fiscal 2015 due to

$25.5 million increase in fee revenue, offset by an increase of $7.6 million in compensation and benefits expense

and $3.8 million in general and administrative expenses. Executive Search Adjusted EBITDA as a percentage of

fee revenue was 24% in fiscal 2016 as compared to 22% in fiscal 2015.

Hay Group Adjusted EBITDA increased by $34.5 million to $78.9 million in fiscal 2016 as compared to $44.4

million in fiscal 2015. Adjusting for the Legacy Hay acquisition, Adjusted EBITDA increased $6.0 million, or 14%,

compared to fiscal 2015. This increase was due to higher fee revenue of $17.2 million offset by an increase in

compensation and benefit expense of $11.6 million. The higher compensation and benefit expense was driven

mainly by increases in salaries and related payroll taxes due to an increase in average headcount and an increase

in performance related bonus expense. Hay Group Adjusted EBITDA as a percentage of fee revenue was 16% in

fiscal 2016 compared to 17% in fiscal 2015. Adjusting for the Legacy Hay acquisition, Adjusted EBITDA as of

percentage of fee revenue was 18% in fiscal 2016.

Futurestep Adjusted EBITDA increased by $6.5 million to $29.5 million in fiscal 2016 as compared to $23.0 million

in fiscal 2015. The increase in Futurestep Adjusted EBITDA was primarily due to higher fee revenue of $34.4

million, offset by an increase of $24.3 million in compensation and benefits expense and $2.1 million in general

and administrative expenses during fiscal 2016 as compared to fiscal 2015. Futurestep Adjusted EBITDA as a

percentage of fee revenue was 15% in fiscal 2016 as compared to 14% in fiscal 2015.

Other (Loss) Income, Net

Other loss, net was $4.2 million in fiscal 2016 as compared to other income, net of $7.5 million in fiscal 2015. The
change in other (loss) income, net is primarily due to the decrease in the fair value of our marketable securities
during fiscal 2016 compared to the increase in the fair value of our marketable securities in fiscal 2015, which
resulted in a change in other (loss) income, net of $12.1 million during fiscal 2016 compared to fiscal 2015.

Interest Income (Expense), Net

Interest income (expense), net primarily relates to interest earned on cash and cash equivalents, offset by interest
expense related to borrowings under our COLI policies and term loan facility. Interest income, net was $0.3 million
in fiscal 2016 as compared to interest expense, net of $1.8 million in fiscal 2015 for a change of $2.1 million. The
change was primarily due to better than expected collections of accounts receivable acquired in the acquisition of
Legacy Hay that are required to be recorded at fair value on the acquisition date with subsequent collections
recorded as interest income (expense), offset by an increase in interest expense associated with the term loan
facility.

Equity in Earnings of Unconsolidated Subsidiaries

Equity in earnings of unconsolidated subsidiaries is comprised of our less than 50% interest in our Mexico
subsidiary and IGroup, LLC, which is engaged in organizing, planning and conducting conferences and training
programs throughout the world for directors, chief executive officers, other senior level executives and business
leaders. We report our interest in earnings of our Mexico subsidiary for the nine months ended January 31, 2016
and IGroup, LLC for fiscal 2016 on the equity basis as a one-line adjustment to net income. In the fourth quarter of
fiscal 2016, we obtained control of our Mexico subsidiary and began to consolidate the operations. Equity in
earnings was $1.6 million in fiscal 2016 as compared to $2.2 million in fiscal 2015.

Income Tax Provision

The provision for income taxes was $19.0 million in fiscal 2016 compared to $33.5 million in fiscal 2015, reflecting
a 39% and 28% effective tax rate, respectively. The effective tax rate for fiscal 2016 is higher due to the impact of
non-deductible expenses incurred in connection with the acquisition of Legacy Hay, the non-deductible charges
related to the devaluation of the Venezuelan Bolivar and the post-acquisition allocation of income and losses in
jurisdictions with different statutory tax rates. This was offset partially by the benefit recorded in connection with
the conclusion of the IRS audit of the Company’s consolidated federal income tax return for the fiscal year ended
April 30, 2013 and a reversal of valuation allowances previously recorded against deferred tax assets of
subsidiaries that have returned to profitability in recent years.

Net Income Attributable to Non-Controlling Interest

Net income attributable to non-controlling interest represents the portion of a subsidiary’s net earnings that are
attributable to shares of such subsidiary not held by Korn Ferry that are included in the consolidated results of
operations. In the fourth quarter of fiscal 2016, we obtained control of our Mexico subsidiary and began to
consolidate the operations. Net income attributable to non-controlling interest for fiscal 2016 was $0.5 million.

Liquidity and Capital Resources

The Company and its Board of Directors endorse a balanced approach to capital allocation. The Company’s priority is
to invest in growth initiatives, such as the hiring of consultants, the continued development of intellectual property and
derivative products and services, and the investment in synergistic, accretive M&A transactions that earn a return that
is superior to the Company’s cost of capital. Next, the Company’s capital allocation approach contemplates the return
of a portion of excess capital to stockholders, in the form of a regular quarterly dividend, subject to the factors
discussed below and in the “Risk Factors” sections of this Annual Report on Form 10-K. Additionally, the Company
considers share repurchases on an opportunistic basis and subject to the terms of our credit agreement.

On June 15, 2016, we entered into a new senior secured $400 million Credit Agreement with a syndicate of banks
and Wells Fargo Bank, National Association as administrative agent, to provide for enhanced financial flexibility
and in recognition of the accelerated pace of the Legacy Hay integration. See Note 10 — Long-Term Debt for a

48

49

description of the credit facility. We drew down $275 million on the new term loan and used $140 million of the
proceeds to pay-off the term loan that was outstanding as of April 30, 2016. The remaining funds are available for
working capital and general corporate purposes. We had $3.0 million and $2.8 million standby letters of credit
issued under our long-term debt arrangements as of April 30, 2017 and 2016, respectively. We had a total of $8.1
million and $6.4 million of standby letters of credits with other financial institutions as of April 30, 2017 and 2016,
respectively. The standby letters of credits were generally issued as a result of entering into office premise leases.

As part of the Legacy Hay acquisition, the Company has committed to a $40 million retention pool (of which $9
million was paid in fiscal 2017) for certain employees of Legacy Hay subject to certain circumstances. Of the
remaining balance, 50% will be payable within 45 days after November 30, 2017 and the remaining 50% will be
payable within 45 days after November 30, 2018.

On December 8, 2014, the Board of Directors adopted a dividend policy to distribute, to our stockholders, a regular
quarterly cash dividend of $0.10 per share. Every quarter since the adoption of the dividend policy, the Company
has declared a quarterly dividend. The declaration and payment of future dividends under the quarterly dividend
program will be at the discretion of the Board of Directors and will depend upon many factors, including our
earnings, capital requirements, financial conditions, the terms of our indebtedness and other factors our Board of
Directors may deem to be relevant. Our Board of Directors may, however, amend, revoke or suspend our dividend
policy at any time and for any reason.

On December 8, 2014, the Board of Directors also approved an increase in the Company’s stock repurchase
program to an aggregate of $150.0 million. Common stock may be repurchased from time to time in open market
or privately negotiated transactions at the Company’s discretion subject to market conditions and other factors.
During the second quarter of fiscal 2017, we resumed repurchasing shares through this program. We repurchased
approximately $28.8 million of the Company’s common stock during fiscal 2017. Any decision to continue to
execute share repurchases under our currently outstanding share repurchase program will depend on our
earnings, capital requirements, financial condition and other factors considered relevant by our Board of Directors.
Our senior secured credit agreement requires that our pro forma leverage ratio, defined as, the ratio of
consolidated funded indebtedness to consolidated adjusted EBITDA, is no greater than 2.50 to 1.00, and our pro
forma domestic liquidity is at least $50.0 million as a condition to consummating permitted acquisitions, paying
dividends to our stockholders and share repurchases of our common stock.

Our performance is subject to the general level of economic activity in the geographic regions and the industries
which we service. We believe, based on current economic conditions, that our cash on hand and funds from
operations and the credit agreement we entered into on June 15, 2016 will be sufficient to meet anticipated
working capital, capital expenditures, general corporate requirements, repayment of the debt incurred in
connection with the Legacy Hay acquisition, the retention pool obligations in connection with the Legacy Hay
acquisition and dividend payments under our dividend policy during the next twelve months. However, if the
national or global economy, credit market conditions, and/or labor markets were to deteriorate in the future, such
changes would put negative pressure on demand for our services and affect our operating cash flows. If these
conditions were to persist over an extended period of time, we may incur negative cash flows, and it might require
us to access our existing credit facility to meet our capital needs and/or discontinue our dividend policy.

Cash and cash equivalents and marketable securities were $530.8 million and $414.7 million as of April 30, 2017
and 2016, respectively. Net of amounts held in trust for deferred compensation plans and to pay fiscal 2017
bonuses, cash and marketable securities were $245.1 million and $88.9 million at April 30, 2017 and 2016,
respectively. As of April 30, 2017 and 2016, we held $165.8 million and $129.0 million, respectively, of cash and
cash equivalents in foreign locations, net of amounts held in trust for deferred compensation plans and to pay
fiscal 2017 and fiscal 2016 bonuses. If these amounts were distributed to the United States, in the form of
dividends, we would be subject to additional U.S. income taxes. The Company has a plan to distribute a small
portion of the cash held in foreign locations to the United States. No deferred tax liability has been recorded
because no additional taxes would arise in connection with such distributions. Cash and cash equivalents consist
of cash and highly liquid investments purchased with original maturities of three months or less. Marketable
securities consist of mutual funds in fiscal 2017 and 2016. The primary objectives of our investment in mutual
funds are to meet the obligations under certain of our deferred compensation plans.

50

description of the credit facility. We drew down $275 million on the new term loan and used $140 million of the

proceeds to pay-off the term loan that was outstanding as of April 30, 2016. The remaining funds are available for

working capital and general corporate purposes. We had $3.0 million and $2.8 million standby letters of credit

issued under our long-term debt arrangements as of April 30, 2017 and 2016, respectively. We had a total of $8.1

million and $6.4 million of standby letters of credits with other financial institutions as of April 30, 2017 and 2016,

respectively. The standby letters of credits were generally issued as a result of entering into office premise leases.

As part of the Legacy Hay acquisition, the Company has committed to a $40 million retention pool (of which $9

million was paid in fiscal 2017) for certain employees of Legacy Hay subject to certain circumstances. Of the

remaining balance, 50% will be payable within 45 days after November 30, 2017 and the remaining 50% will be

payable within 45 days after November 30, 2018.

On December 8, 2014, the Board of Directors adopted a dividend policy to distribute, to our stockholders, a regular

quarterly cash dividend of $0.10 per share. Every quarter since the adoption of the dividend policy, the Company

has declared a quarterly dividend. The declaration and payment of future dividends under the quarterly dividend

program will be at the discretion of the Board of Directors and will depend upon many factors, including our

earnings, capital requirements, financial conditions, the terms of our indebtedness and other factors our Board of

Directors may deem to be relevant. Our Board of Directors may, however, amend, revoke or suspend our dividend

policy at any time and for any reason.

On December 8, 2014, the Board of Directors also approved an increase in the Company’s stock repurchase

program to an aggregate of $150.0 million. Common stock may be repurchased from time to time in open market

or privately negotiated transactions at the Company’s discretion subject to market conditions and other factors.

During the second quarter of fiscal 2017, we resumed repurchasing shares through this program. We repurchased

approximately $28.8 million of the Company’s common stock during fiscal 2017. Any decision to continue to

execute share repurchases under our currently outstanding share repurchase program will depend on our

earnings, capital requirements, financial condition and other factors considered relevant by our Board of Directors.

Our senior secured credit agreement requires that our pro forma leverage ratio, defined as, the ratio of

consolidated funded indebtedness to consolidated adjusted EBITDA, is no greater than 2.50 to 1.00, and our pro

forma domestic liquidity is at least $50.0 million as a condition to consummating permitted acquisitions, paying

dividends to our stockholders and share repurchases of our common stock.

Our performance is subject to the general level of economic activity in the geographic regions and the industries

which we service. We believe, based on current economic conditions, that our cash on hand and funds from

operations and the credit agreement we entered into on June 15, 2016 will be sufficient to meet anticipated

working capital, capital expenditures, general corporate requirements, repayment of the debt incurred in

connection with the Legacy Hay acquisition, the retention pool obligations in connection with the Legacy Hay

acquisition and dividend payments under our dividend policy during the next twelve months. However, if the

national or global economy, credit market conditions, and/or labor markets were to deteriorate in the future, such

changes would put negative pressure on demand for our services and affect our operating cash flows. If these

conditions were to persist over an extended period of time, we may incur negative cash flows, and it might require

us to access our existing credit facility to meet our capital needs and/or discontinue our dividend policy.

Cash and cash equivalents and marketable securities were $530.8 million and $414.7 million as of April 30, 2017

and 2016, respectively. Net of amounts held in trust for deferred compensation plans and to pay fiscal 2017

bonuses, cash and marketable securities were $245.1 million and $88.9 million at April 30, 2017 and 2016,

respectively. As of April 30, 2017 and 2016, we held $165.8 million and $129.0 million, respectively, of cash and

cash equivalents in foreign locations, net of amounts held in trust for deferred compensation plans and to pay

fiscal 2017 and fiscal 2016 bonuses. If these amounts were distributed to the United States, in the form of

dividends, we would be subject to additional U.S. income taxes. The Company has a plan to distribute a small

portion of the cash held in foreign locations to the United States. No deferred tax liability has been recorded

because no additional taxes would arise in connection with such distributions. Cash and cash equivalents consist

of cash and highly liquid investments purchased with original maturities of three months or less. Marketable

securities consist of mutual funds in fiscal 2017 and 2016. The primary objectives of our investment in mutual

funds are to meet the obligations under certain of our deferred compensation plans.

As of April 30, 2017 and 2016, marketable securities of $119.9 million (net of gross unrealized gains of $6.7 million
and gross unrealized losses of $0.6 million) and $141.4 million (net of gross unrealized gains of $1.4 million and
gross unrealized losses of $2.6 million) were held in trust for settlement of our obligations under certain deferred
compensation plans. As of April 30, 2017 and 2016, $115.6 million and $130.1 million, respectively, are classified
as non-current. These marketable securities were held to satisfy vested obligations totaling $99.5 million and
$94.9 million as of April 30, 2017 and 2016, respectively. Unvested obligations under the deferred compensation
plans totaled $37.6 million and $43.9 million as of April 30, 2017 and 2016, respectively.

The net increase in our working capital of $197.1 million as of April 30, 2017 compared to April 30, 2016 is
primarily attributable to the increase in cash and cash equivalents and accounts receivable. The increase in cash
and cash equivalents is due to cash provided by operations and proceeds received from the term loan entered into
this year offset by payments made on the current and previous term loan. Accounts receivable increased due to an
increase in days of sales outstanding which went from 55 days to 61 days from April 30, 2016 to April 30, 2017.
Cash provided by operating activities was $106.1 million in fiscal 2017, an increase of $42.0 million, compared to
$64.1 million in fiscal 2016 due to an increase in profitability.

Cash used in investing activities was $20.6 million in fiscal 2017, a decrease of $254.0 million, compared to $274.6 million
in fiscal 2016. Cash used in investing activities was lower primarily due to cash used in fiscal 2016 to pay for the
acquisition of Legacy Hay of $253.2 million and an increase in sales/maturities of marketable securities of $32.6 million,
offset by $23.9 million more in cash used to purchase property and equipment in connection with our co-location activities.

Cash provided by financing activities was $64.4 million in fiscal 2017 compared to cash used in financing activities
of $118.5 million in fiscal 2016. Cash provided by financing activities decreased primarily due to $145.5 million
more in term loan payments made during fiscal 2017 compared to the year-ago period and $28.8 million of
Company’s common stock purchased under our stock repurchase program, offset by an increase of $125.0 million
in proceeds from term loan facility.

As of April 30, 2017, $121.2 million remained available for common stock repurchases under our stock repurchase
program.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements and have not entered into any transactions involving unconsolidated,
special purpose entities.

Contractual Obligations

Contractual obligations represent future cash commitments and liabilities under agreements with third parties, and
exclude contingent liabilities for which we cannot reasonably predict future payment. The following table
represents our contractual obligations as of April 30, 2017:

Note (1)

Total

Less Than
1 Year

Payments Due in:

1-3 Years
(in thousands)

3-5 Years

More Than
5 Years

Operating lease commitments . . . . . . . . . . . . . . . . . . .
Accrued restructuring charges (2)
. . . . . . . . . . . . . . . .
Interest payments on COLI loans (3) . . . . . . . . . . . . . .
Retention awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . .
Estimated interest on term loan (4)

14
7
10
12
10
—

$

414,815 $
14,195
39,245
31,000
259,531
19,829

62,384 $
7,803
3,817
15,500
20,625
5,687

112,629 $
4,993
7,634
15,500
53,281
9,753

94,518 $
1,399
7,579
—
185,625
4,389

145,284
—
20,215
—
—
—

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 778,615 $

115,816 $

203,790 $

293,510 $

165,499

(1) See Note in the accompanying consolidated financial statements in Item 15.
(2) Represents rent payments, net of sublease income on an undiscounted basis and severance costs.
(3) Assumes COLI loans remain outstanding until receipt of death benefits on COLI policies and applies current interest rates
on COLI loans ranging from 4.76% to 8.00% with total death benefits payable, net of loans under COLI contracts of $220.6
million at April 30, 2017.
Interest rate used is the variable rate per the credit agreement as of April 30, 2017 for outstanding balance on the term loan.

(4)

50

51

In addition to the contractual obligations above, we have liabilities related to certain employee benefit plans. These
liabilities are recorded in our Consolidated Balance Sheets. The obligations related to these employee benefit
plans are described in Note 6 – Deferred Compensation and Retirement Plans, in the Notes to our Consolidated
Financial Statements in this Annual Report on Form 10-K.

Lastly, we have contingent commitments under certain employment agreements that are payable upon
involuntary, termination without cause, as described in Note 14 – Commitments and Contingencies, in the Notes to
our Consolidated Financial Statements in this Annual Report on Form 10-K.

Cash Surrender Value of Company Owned Life Insurance Policies, Net of Loans

The Company purchased COLI policies or contracts insuring the lives of certain employees eligible to participate in
the deferred compensation and pension plans as a means of funding benefits under such plans. As of April 30,
2017 and 2016, we held contracts with gross CSV of $180.3 million and $175.7 million, respectively. Since fiscal
2012, we paid our premiums under our COLI contracts from operating cash, and in prior years, we generally
borrowed under our COLI contracts to pay related premiums. Such borrowings do not require annual principal
repayments, bear interest primarily at variable rates and are secured by the CSV of COLI contracts. Total
outstanding borrowings against the CSV of COLI contracts were $67.2 million and $68.4 million as of April 30,
2017 and 2016, respectively. At April 30, 2017 and 2016, the net cash value of these policies was $113.1 million
and $107.3 million, respectively. Total death benefits payable, net of loans under COLI contracts, were $220.6
million and $216.7 million at April 30, 2017 and 2016, respectively.

Long-Term Debt

On June 15, 2016, we entered into a senior secured $400 million Credit Agreement (the “Credit Agreement”) with
a syndicate of banks and Wells Fargo Bank, National Association as administrative agent (to provide for enhanced
financial flexibility and in recognition of the accelerated pace of the Hay Group integration). The Credit Agreement
provides for, among other things: (a) a senior secured term loan facility in an aggregate principal amount of $275
million (the “Term Facility”), (b) a senior secured revolving credit facility (the “Revolver” and together with the Term
Facility, the “Credit Facilities”) in an aggregate principal amount of $125 million, (c) annual term loan amortization
of 7.5%, 7.5%, 10.0%, 10.0%, and 10.0%, with the remaining principal due at maturity, (d) certain customary
affirmative and negative covenants, including a maximum consolidated total leverage ratio (as defined below) and
a minimum interest coverage ratio, and (e) an expanded definition of permitted add-backs to Adjusted EBITDA in
recognition of the accelerated integration actions. We drew down $275 million on the new term loan and used
$140 million of the proceeds to pay-off the term loan that was outstanding as of April 30, 2016. The remaining
funds will be used for working capital and general corporate purposes. As of April 30, 2017, we were in compliance
with our debt covenants.

At our option, loans issued under the Credit Agreement will bear interest at either LIBOR or an alternate base rate,
in each case plus the applicable interest rate margin. The interest rate applicable to loans outstanding under the
Credit Facilities may fluctuate between LIBOR plus 1.25% per annum to LIBOR plus 2.00% per annum, in the
case of LIBOR borrowings (or between the alternate base rate plus 0.25% per annum and the alternate base rate
plus 1.00% per annum, in the alternative), based upon the Company’s total funded debt to adjusted EBITDA ratio
(as set forth in the Credit Agreement, the “consolidated leverage ratio”) at such time. In addition, we will be
required to pay to the lenders a quarterly fee ranging from 0.20% to 0.35% per annum on the average daily
unused amount of the Term Facility, based upon our consolidated leverage ratio at such time, and fees relating to
the issuance of letters of credit.

Both the Revolver and the Term Facility mature on June 15, 2021, and may be prepaid and terminated early by us
at any time without premium or penalty (subject to customary LIBOR breakage fees). The Term Facility is payable
in quarterly installments with the final installment consisting of all remaining unpaid principal due on the Term
Facility Maturity date of June 15, 2021. The Company made $15.5 million in principal payments during fiscal 2017.
As of April 30, 2017, $259.5 million was outstanding under the Term Facility compared to $140.0 million as of
April 30, 2016, under the previous Facility. During fiscal 2017, the average rate on the Term Facility was 2.23%.

52

In addition to the contractual obligations above, we have liabilities related to certain employee benefit plans. These

liabilities are recorded in our Consolidated Balance Sheets. The obligations related to these employee benefit

plans are described in Note 6 – Deferred Compensation and Retirement Plans, in the Notes to our Consolidated

Financial Statements in this Annual Report on Form 10-K.

Lastly, we have contingent commitments under certain employment agreements that are payable upon

involuntary, termination without cause, as described in Note 14 – Commitments and Contingencies, in the Notes to

our Consolidated Financial Statements in this Annual Report on Form 10-K.

Cash Surrender Value of Company Owned Life Insurance Policies, Net of Loans

The Company purchased COLI policies or contracts insuring the lives of certain employees eligible to participate in

the deferred compensation and pension plans as a means of funding benefits under such plans. As of April 30,

2017 and 2016, we held contracts with gross CSV of $180.3 million and $175.7 million, respectively. Since fiscal

2012, we paid our premiums under our COLI contracts from operating cash, and in prior years, we generally

borrowed under our COLI contracts to pay related premiums. Such borrowings do not require annual principal

repayments, bear interest primarily at variable rates and are secured by the CSV of COLI contracts. Total

outstanding borrowings against the CSV of COLI contracts were $67.2 million and $68.4 million as of April 30,

2017 and 2016, respectively. At April 30, 2017 and 2016, the net cash value of these policies was $113.1 million

and $107.3 million, respectively. Total death benefits payable, net of loans under COLI contracts, were $220.6

million and $216.7 million at April 30, 2017 and 2016, respectively.

Long-Term Debt

On June 15, 2016, we entered into a senior secured $400 million Credit Agreement (the “Credit Agreement”) with

a syndicate of banks and Wells Fargo Bank, National Association as administrative agent (to provide for enhanced

financial flexibility and in recognition of the accelerated pace of the Hay Group integration). The Credit Agreement

provides for, among other things: (a) a senior secured term loan facility in an aggregate principal amount of $275

million (the “Term Facility”), (b) a senior secured revolving credit facility (the “Revolver” and together with the Term

Facility, the “Credit Facilities”) in an aggregate principal amount of $125 million, (c) annual term loan amortization

of 7.5%, 7.5%, 10.0%, 10.0%, and 10.0%, with the remaining principal due at maturity, (d) certain customary

affirmative and negative covenants, including a maximum consolidated total leverage ratio (as defined below) and

a minimum interest coverage ratio, and (e) an expanded definition of permitted add-backs to Adjusted EBITDA in

recognition of the accelerated integration actions. We drew down $275 million on the new term loan and used

$140 million of the proceeds to pay-off the term loan that was outstanding as of April 30, 2016. The remaining

funds will be used for working capital and general corporate purposes. As of April 30, 2017, we were in compliance

with our debt covenants.

At our option, loans issued under the Credit Agreement will bear interest at either LIBOR or an alternate base rate,

in each case plus the applicable interest rate margin. The interest rate applicable to loans outstanding under the

Credit Facilities may fluctuate between LIBOR plus 1.25% per annum to LIBOR plus 2.00% per annum, in the

case of LIBOR borrowings (or between the alternate base rate plus 0.25% per annum and the alternate base rate

plus 1.00% per annum, in the alternative), based upon the Company’s total funded debt to adjusted EBITDA ratio

(as set forth in the Credit Agreement, the “consolidated leverage ratio”) at such time. In addition, we will be

required to pay to the lenders a quarterly fee ranging from 0.20% to 0.35% per annum on the average daily

unused amount of the Term Facility, based upon our consolidated leverage ratio at such time, and fees relating to

the issuance of letters of credit.

Both the Revolver and the Term Facility mature on June 15, 2021, and may be prepaid and terminated early by us

at any time without premium or penalty (subject to customary LIBOR breakage fees). The Term Facility is payable

in quarterly installments with the final installment consisting of all remaining unpaid principal due on the Term

Facility Maturity date of June 15, 2021. The Company made $15.5 million in principal payments during fiscal 2017.

As of April 30, 2017, $259.5 million was outstanding under the Term Facility compared to $140.0 million as of

April 30, 2016, under the previous Facility. During fiscal 2017, the average rate on the Term Facility was 2.23%.

As of April 30, 2017 and 2016, we had no borrowings under the Revolver. We had $3.0 million and $2.8 million,
respectively, of standby letters of credit issued under our long-term debt arrangements as of April 30, 2017 and
2016, respectively. We had a total of $8.1 million and $6.4 million of standby letters of credits with other financial
institutions as of April 30, 2017 and 2016, respectively. The standby letters of credits were generally issued as a
result of entering into office premise leases.

We are not aware of any other trends, demands or commitments that would materially affect liquidity or those that
relate to our resources.

Accounting Developments

Recently Adopted Accounting Standards

In April 2015, the Financial Accounting Standards Board (the “FASB”) issued guidance simplifying the presentation
of debt issuance costs. The guidance requires debt issuance costs related to a debt liability to be presented in the
balance sheet as a direct deduction from the carrying amount of that debt liability, rather than being classified as
an asset. We adopted this guidance during the first quarter of fiscal 2017 and as a result, $4.2 million of
unamortized debt issuance costs associated with our senior secured Credit Agreement were classified as a direct
deduction to the term loan as of July 31, 2016, of which $0.9 million was recorded to term loan, current, and $3.3
million was recorded to term loan, non-current. The adoption did not have a material impact on the consolidated
financial statements as of April 30, 2016.

In September 2015, the FASB issued guidance requiring an acquirer to recognize adjustments to provisional
amounts recorded in an acquisition that are identified during the measurement period in the reporting period in
which the adjustment amounts are determined. The acquirer is required to record, in the same period’s financial
statements, the effect on earnings of changes in depreciation, amortization or other income effects, if any, as a
result of the change to the provisional amounts, calculated as if the accounting had been completed at the
acquisition date. The acquirer is also required to present separately on the face of the income statement, or
disclose in the footnotes, the portion of the amount recorded in current-period earnings by line item that would
have been recorded in previous reporting periods if the adjustments had been recognized as of the acquisition
date. We adopted this guidance during the first quarter of fiscal 2017 and the adoption did not have an impact on
our consolidated financial statements.

Recently Proposed Accounting Standards

In May 2014, the FASB issued guidance that supersedes revenue recognition requirements regarding contracts with
customers to transfer goods or services or for the transfer of nonfinancial assets. Under the new guidance, entities
are required to recognize revenue that depicts the transfer of promised goods or services to customers in an
amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or
services. The guidance provides a five-step analysis to be performed on transactions to determine when and how
revenue is recognized. The guidance permits two transition methods of adoption 1) the full retrospective method, in
which case the standard would be applied to all reporting periods presented, or 2) the modified retrospective
method, with a cumulative-effect adjustment as of the date of adoption. In July 2015, the FASB decided to approve
a one-year deferral of the effective date as well as providing an option to early adopt the standard on the original
effective date. This new guidance is effective for fiscal years and interim periods within those annual years
beginning after December 15, 2017. We will adopt this guidance in our fiscal year beginning May 1, 2018. We have
organized a team and developed a project plan to guide the implementation. The project plan includes working
sessions to review, evaluate and document the arrangements with customers under our various reporting units to
identify potential differences that would result from applying the requirements of the new standard. We are currently
in the process of developing an updated accounting policy utilizing a bottoms-up approach by reviewing our current
contracts with customers by various revenue streams, evaluating new disclosure requirements and identifying and
implementing appropriate changes to business processes, systems and controls to support revenue recognition and
disclosure under the new standard. We are still evaluating the impact of ASU No. 2014-09 on our financial
statements. Based on our evaluation to date, revenue on the majority of our contracts will continue to be recognized
over time as services are rendered under the new standard. In addition, capitalization of costs associated with
obtaining contracts will have an impact upon adoption of the new standard. We expect to finalize the evaluation in
upcoming quarters and will provide updates on our progress in future filings.

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53

In February 2016, the FASB issued guidance on accounting for leases that generally requires all leases to be
recognized in the consolidated balance sheet. The provisions of the guidance are effective for fiscal years
beginning after December 15, 2018; early adoption is permitted. We plan to adopt this guidance in fiscal year
beginning May 1, 2019. The provisions of the guidance are to be applied using a modified retrospective approach.
We are currently evaluating the effect this guidance will have on our consolidated financial statements.

In March 2016, the FASB issued guidance on accounting for certain aspects of share-based payments to
employees. The new guidance requires excess tax benefits and tax deficiencies to be recorded in the income
statement when the awards vest or are settled. Furthermore, cash flows related to excess tax benefits will no
longer be separately classified as a financing activity apart from other income tax cash flows. The guidance also
allows companies to repurchase more of an employee’s shares for tax withholding purposes without triggering
liability accounting, clarifying that all cash payments made on an employee’s behalf for withheld shares should be
presented as a financing activity in the consolidated statements of cash flows and provides an accounting policy
election to account for forfeitures as they occur. The provisions of the guidance are effective for fiscal years
beginning after December 15, 2016; early adoption is permitted. We will adopt this guidance in fiscal 2018,
beginning May 1, 2017. The adoption of this standard is not anticipated to have a material impact on our
consolidated financial statements.

In August 2016, the FASB issued guidance on the classification of certain cash receipts and cash payments in the
statement of cash flows. The new guidance provides clarification on specific cash flow issues regarding
presentation and classification in the statement of cash flows with the objective of reducing the existing diversity in
practice. The amendments in this update are effective for reporting periods beginning after December 15, 2017,
with early adoption permitted. We plan to adopt this guidance in our fiscal year beginning May 1, 2018. The
provisions of the guidance are to be applied using a retrospective transition method. The adoption of this standard
is not anticipated to have a material impact on our consolidated financial statements.

In January 2017, the FASB issued guidance that clarifies the definition of a business. The new guidance assists a
company when evaluating whether transactions should be accounted for as acquisitions (disposals) of assets or
businesses. The provisions of the guidance require that if the fair value of the gross assets acquired (or disposed
of) is substantially concentrated in a single identifiable asset or a group of similar identifiable assets, then it is not a
business. The provisions of the guidance are effective for annual years beginning after December 15, 2017,
including interim periods, with early adoption permitted. We plan to adopt this guidance in our fiscal year beginning
May 1, 2018. The provisions of the guidance are to be applied prospectively. The adoption of this standard is not
anticipated to have a material impact on our consolidated financial statements.

In January 2017, the FASB issued guidance simplifying the test for goodwill impairment. The new guidance
simplifies the test for goodwill impairment by removing Step 2 from the goodwill impairment test. Companies will
now perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount,
recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair
value not to exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to
perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is
necessary. The amendments of this standard are effective for goodwill impairment tests in fiscal years beginning
after December 15, 2019, with early adoption permitted for goodwill impairment tests performed after January 1,
2017. We are evaluating the adoption timeline and the effects that the standard will have on our consolidated
financial statements.

In March 2017, the FASB issued guidance that improves the presentation of net periodic pension cost and net
periodic postretirement benefit cost. The new guidance will change the presentation of net periodic benefit cost
related to employer sponsored defined benefit plans and other postretirement benefits. Service cost will be
included within the same income statement line item as other compensation costs arising from services rendered
during the period, while other components of net periodic benefit pension cost will be presented separately outside
of operating income. Additionally, only service costs may be capitalized in assets. The amendments of this
standard are effective for fiscal years beginning after December 15, 2017, including interim periods within those
years. We will adopt this guidance in our fiscal year beginning May 1, 2018. The adoption of this standard is not
anticipated to have a material impact on our consolidated financial statements.

54

In February 2016, the FASB issued guidance on accounting for leases that generally requires all leases to be

recognized in the consolidated balance sheet. The provisions of the guidance are effective for fiscal years

beginning after December 15, 2018; early adoption is permitted. We plan to adopt this guidance in fiscal year

beginning May 1, 2019. The provisions of the guidance are to be applied using a modified retrospective approach.

We are currently evaluating the effect this guidance will have on our consolidated financial statements.

In March 2016, the FASB issued guidance on accounting for certain aspects of share-based payments to

employees. The new guidance requires excess tax benefits and tax deficiencies to be recorded in the income

statement when the awards vest or are settled. Furthermore, cash flows related to excess tax benefits will no

longer be separately classified as a financing activity apart from other income tax cash flows. The guidance also

allows companies to repurchase more of an employee’s shares for tax withholding purposes without triggering

liability accounting, clarifying that all cash payments made on an employee’s behalf for withheld shares should be

presented as a financing activity in the consolidated statements of cash flows and provides an accounting policy

election to account for forfeitures as they occur. The provisions of the guidance are effective for fiscal years

beginning after December 15, 2016; early adoption is permitted. We will adopt this guidance in fiscal 2018,

beginning May 1, 2017. The adoption of this standard is not anticipated to have a material impact on our

consolidated financial statements.

In August 2016, the FASB issued guidance on the classification of certain cash receipts and cash payments in the

statement of cash flows. The new guidance provides clarification on specific cash flow issues regarding

presentation and classification in the statement of cash flows with the objective of reducing the existing diversity in

practice. The amendments in this update are effective for reporting periods beginning after December 15, 2017,

with early adoption permitted. We plan to adopt this guidance in our fiscal year beginning May 1, 2018. The

provisions of the guidance are to be applied using a retrospective transition method. The adoption of this standard

is not anticipated to have a material impact on our consolidated financial statements.

In January 2017, the FASB issued guidance that clarifies the definition of a business. The new guidance assists a

company when evaluating whether transactions should be accounted for as acquisitions (disposals) of assets or

businesses. The provisions of the guidance require that if the fair value of the gross assets acquired (or disposed

of) is substantially concentrated in a single identifiable asset or a group of similar identifiable assets, then it is not a

business. The provisions of the guidance are effective for annual years beginning after December 15, 2017,

including interim periods, with early adoption permitted. We plan to adopt this guidance in our fiscal year beginning

May 1, 2018. The provisions of the guidance are to be applied prospectively. The adoption of this standard is not

anticipated to have a material impact on our consolidated financial statements.

In January 2017, the FASB issued guidance simplifying the test for goodwill impairment. The new guidance

simplifies the test for goodwill impairment by removing Step 2 from the goodwill impairment test. Companies will

now perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount,

recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair

value not to exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to

perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is

necessary. The amendments of this standard are effective for goodwill impairment tests in fiscal years beginning

after December 15, 2019, with early adoption permitted for goodwill impairment tests performed after January 1,

2017. We are evaluating the adoption timeline and the effects that the standard will have on our consolidated

financial statements.

In March 2017, the FASB issued guidance that improves the presentation of net periodic pension cost and net

periodic postretirement benefit cost. The new guidance will change the presentation of net periodic benefit cost

related to employer sponsored defined benefit plans and other postretirement benefits. Service cost will be

included within the same income statement line item as other compensation costs arising from services rendered

during the period, while other components of net periodic benefit pension cost will be presented separately outside

of operating income. Additionally, only service costs may be capitalized in assets. The amendments of this

standard are effective for fiscal years beginning after December 15, 2017, including interim periods within those

years. We will adopt this guidance in our fiscal year beginning May 1, 2018. The adoption of this standard is not

anticipated to have a material impact on our consolidated financial statements.

In May 2017, the FASB issued guidance clarifying the scope of modification accounting for stock compensation.
The new standard provides guidance about which changes to the terms or conditions of a share-based payment
award require an entity to apply modification accounting in Topic 718. This pronouncement is effective for annual
reporting periods beginning after December 15, 2017 but early adoption is permitted. We will adopt this guidance
in our fiscal year beginning May 1, 2018. We are currently evaluating the impact of adopting this guidance.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

As a result of our global operating activities, we are exposed to certain market risks, including foreign currency
exchange fluctuations and fluctuations in interest rates. We manage our exposure to these risks in the normal
course of our business as described below.

Foreign Currency Risk

Substantially all our foreign subsidiaries’ operations are measured in their local currencies. Assets and liabilities
are translated into U.S. dollars at the rates of exchange in effect at the end of each reporting period and revenue
and expenses are translated at average rates of exchange during the reporting period. Resulting translation
adjustments are reported as a component of accumulated other comprehensive income on our consolidated
balance sheets.

Transactions denominated in a currency other than the reporting entity’s functional currency may give rise to
transaction gains and losses that impact our results of operations. Historically, we have not realized significant
foreign currency gains or losses on such transactions. Foreign currency gains, on an after tax basis, included in
net income were $0.2 million during fiscal 2017. Foreign currency losses, on an after tax basis, included in net
income were $8.7 million during fiscal 2016 and $1.6 million during fiscal 2015.

Our exposure to foreign currency exchange rates is primarily driven by fluctuations involving the following
currencies – U.S. Dollar, Canadian Dollar, Euro, Pound Sterling, Brazilian Real, Russian Ruble, Singapore Dollar
and Korean Won. Based on balances exposed to fluctuation in exchange rates as of April 30, 2017, a 10%
increase or decrease in the value of each of these currencies could result in a total foreign exchange gain or loss
of $10.5 million. Beginning in the third quarter of fiscal 2016, we established a program that primarily utilizes
foreign currency forward contracts to offset the risks associated with the effects of certain foreign currency
exposures which increased as a result of the Legacy Hay acquisition. These foreign currency forward contracts
are neither used for trading purposes nor are they designated as hedging instruments pursuant to Accounting
Standards Codification 815, Derivatives and Hedging.

Interest Rate Risk

Our exposure to interest rate risk is limited to our Term Facility and borrowings against the CSV of COLI contracts.
As of April 30, 2017, there was $259.5 million outstanding under the Term Facility. At our option, loans issued
under the Credit Facilities bear interest at either adjusted LIBOR or an alternate base rate, in each case plus the
applicable interest rate margin. The interest rate applicable to loans outstanding under the Credit Facilities may
fluctuate between adjusted LIBOR plus 1.25% per annum to adjusted LIBOR plus 2.00% per annum, in the case of
LIBOR borrowings (or between the alternate base rate plus 0.25% per annum and the alternate base rate plus
1.00% per annum, in the alternative), based upon our total funded debt to adjusted EBITDA ratio (as set forth in
the Credit Agreement, the “consolidated leverage ratio”) at such time. In addition, we are required to pay the
lenders a quarterly fee ranging from 0.20% to 0.35% per annum on the average daily unused amount of the Term
Facility, based upon our consolidated leverage ratio at such time, and fees relating to the issuance of letters of
credit. A 100 basis point increase in LIBOR rates would have increased our interest expense by approximately
$2.6 million for fiscal 2017. During fiscal 2017, the average interest rate on the term loan was 2.23%.

To mitigate this interest rate risk on our Term Facility, we have entered into an interest rate swap contract with a
notional amount $129.8 million, designated as a cash flow hedge, to hedge the variability to changes in cash flows
attributable to interest rate risks caused by changes in interest rates related to our variable rate debt. The notional
amount will be amortized so that the amount is always 50% of the principal balance of the debt outstanding. The
interest rate swap agreement matures on June 15, 2021 and locks the interest rates on 50% of our outstanding
debt at 1.919%, exclusive of the credit spread on the debt.

54

55

We had $67.2 million and $68.4 million of borrowings against the CSV of COLI contracts as of April 30, 2017 and
2016, respectively, bearing interest primarily at variable rates. The risk of fluctuations in these variable rates is
minimized by the fact that we receive a corresponding adjustment to our borrowed funds crediting rate which has
the effect of increasing the CSV on our COLI contracts.

Item 8. Financial Statements and Supplementary Data

See Consolidated Financial Statements beginning on page F-1 of this Annual Report on Form 10-K.

Supplemental Financial Information regarding quarterly results is contained in Note 15 – Quarterly Results, in the
Notes to our Consolidated Financial Statements in this Annual Report on Form 10-K.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure

Not applicable.

Item 9A. Controls and Procedures

a) Evaluation of Disclosure Controls and Procedures.

As of the end of the period covered by this Annual Report on Form 10-K, management, our Chief Executive
Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure
controls and procedures and internal controls over financial reporting. Based on their evaluation of our
disclosure controls and procedures conducted as of the end of the period covered by this Annual Report on
Form 10-K, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934 (the “Exchange
Act”)) are effective.

b) Changes in Internal Control over Financial Reporting.

There were no changes in our internal control over financial reporting during the fourth fiscal quarter that have
materially affected or are reasonably likely to materially affect our internal control over financial reporting. See
Management’s Report on Internal Control Over Financial Reporting and Report of Independent Registered
Public Accounting Firm on Internal Control Over Financial Reporting on pages F-2 and F-3, respectively.

Item 9B. Other Information

Not applicable.

56

We had $67.2 million and $68.4 million of borrowings against the CSV of COLI contracts as of April 30, 2017 and

2016, respectively, bearing interest primarily at variable rates. The risk of fluctuations in these variable rates is

minimized by the fact that we receive a corresponding adjustment to our borrowed funds crediting rate which has

the effect of increasing the CSV on our COLI contracts.

Item 8. Financial Statements and Supplementary Data

See Consolidated Financial Statements beginning on page F-1 of this Annual Report on Form 10-K.

Supplemental Financial Information regarding quarterly results is contained in Note 15 – Quarterly Results, in the

Notes to our Consolidated Financial Statements in this Annual Report on Form 10-K.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial

Disclosure

Not applicable.

Item 9A. Controls and Procedures

a) Evaluation of Disclosure Controls and Procedures.

As of the end of the period covered by this Annual Report on Form 10-K, management, our Chief Executive

Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure

controls and procedures and internal controls over financial reporting. Based on their evaluation of our

disclosure controls and procedures conducted as of the end of the period covered by this Annual Report on

Form 10-K, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls

and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934 (the “Exchange

Act”)) are effective.

b) Changes in Internal Control over Financial Reporting.

There were no changes in our internal control over financial reporting during the fourth fiscal quarter that have

materially affected or are reasonably likely to materially affect our internal control over financial reporting. See

Management’s Report on Internal Control Over Financial Reporting and Report of Independent Registered

Public Accounting Firm on Internal Control Over Financial Reporting on pages F-2 and F-3, respectively.

Item 9B. Other Information

Not applicable.

PART III.

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this Item will be included under the captions “The Board of Directors” and
“Section 16(a) Beneficial Ownership Reporting Compliance” and elsewhere in our 2017 Proxy Statement, and is
incorporated herein by reference. The information under the heading “Executive Officers of the Registrant” in Part I
of this Annual Report on Form 10-K is also incorporated by reference in this section.

We have adopted a “Code of Business Conduct and Ethics,” that applies to all of our directors, officers and
employees, including our principal executive officer (who is our Chief Executive Officer), principal financial officer,
and principal accounting officer (who is our Chief Financial Officer) and senior financial officers, or persons
performing similar functions. The Code of Business Conduct and Ethics is available on our website at
www.kornferry.com. We intend to disclose future amendments to certain provisions of the Code of Business
Conduct and Ethics and waivers of the Code of Business Conduct and Ethics granted to executive officers and
directors on our website within four business days following the date of the amendment or waiver.

Item 11. Executive Compensation

The information required by this Item will be included in our 2017 Proxy Statement, and is incorporated herein by
reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters

The information required by this Item will be included under the caption “Security Ownership of Certain Beneficial
Owners and Management” and elsewhere in our 2017 Proxy Statement, and is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this Item will be included under the caption “Certain Relationships and Related
Transactions” and elsewhere in our 2017 Proxy Statement, and is incorporated herein by reference.

Item 14. Principal Accounting Fees and Services

The information required by this Item will be included under the captions “Fees Paid to Ernst & Young LLP,” and
“Audit Committee Pre-Approval Policies and Procedures,” and elsewhere in our 2017 Proxy Statement, and is
incorporated herein by reference.

56

57

PART IV.

Item 15. Exhibits, Financial Statement Schedules

Financial Statements.

(a) The following documents are filed as part of this report:

1.

Index to Financial Statements:

See Consolidated Financial Statements included as part of this Form 10-K and Schedule II – Valuation and
Qualifying Accounts. Pursuant to Rule 7-05 of Regulation S-X, the other schedules have been omitted as the
information to be set forth therein is included in the notes of the audited consolidated financial statements . . . . . .

Page

F-1

Exhibits:

Exhibit
Number

2.1**+

Description

Agreement and Plan of Merger, dated as of December 5, 2012, by and among Korn/Ferry International, Personnel
Decisions International Corporation, Unity Sub, Inc., Personnel Decisions International Corporation, all of the
stockholders of Personnel Decisions International Corporation, and PDI Stockholder Representative, LLC, filed as
Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed on December 6, 2012.

2.2**+

Stock Purchase Agreement by and between HG (Bermuda) Limited and Korn/Ferry International, dated
September 23, 2015, filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed September 24,
2015.

2.3+

3.1+

3.2+

4.1+

10.1*+

10.2*+

10.3*+

10.4*+

10.5*+

10.6*+

10.7*+

10.8*+

10.9*+

Letter Agreement, dated November 30, 2015, by and between Korn/Ferry International and HG (Bermuda)
Limited, filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed December 2, 2015.

Restated Certificate of Incorporation of the Company, filed as Exhibit 3.1 to the Company’s Quarterly Report on
Form 10-Q, filed December 9, 2013.

Fourth Amended and Restated Bylaws of the Company, filed as Exhibit 3.1 to the Company’s Current Report on
Form 8-K, filed October 7, 2014.

Form of Common Stock Certificate of the Company, filed as Exhibit 4.1 to the Company’s Registration Statement
on Form S-3 (No. 333-49286), filed November 3, 2000.

Form of Indemnification Agreement between the Company and some of its executive officers and directors, filed
as Exhibit 10.1 to the Company’s Registration Statement on Form S-1/A (No. 333-61697), filed December 24,
1998.

Form of U.S. and International Worldwide Executive Benefit Retirement Plan, filed as Exhibit 10.3 to the
Company’s Registration Statement on Form S-1/A (No. 333-61697), filed September 4, 1998.

Form of U.S. and International Worldwide Executive Benefit Life Insurance Plan, filed as Exhibit 10.4 to the
Company’s Registration Statement on Form S-1 (No. 333-61697), effective February 10, 1999.

Worldwide Executive Benefit Disability Plan (in the form of Long-Term Disability Insurance Policy), filed as Exhibit
10.5 to the Company’s Registration Statement on Form S-1 (No. 333-61697), effective February 10, 1999.

Form of U.S. and International Enhanced Executive Benefit and Wealth Accumulation Plan, filed as Exhibit 10.6 to
the Company’s Registration Statement on Form S-1 (No. 333-61697), effective February 10, 1999.

Form of U.S. and International Senior Executive Incentive Plan, filed as Exhibit 10.7 to the Company’s
Registration Statement on Form S-1 (No. 333-61697), effective February 10, 1999.

Executive Salary Continuation Plan, filed as Exhibit 10.8 to the Company’s Registration Statement on Form S-1
(No. 333-61697), effective February 10, 1999.

Form of Amended and Restated Stock Repurchase Agreement, filed as Exhibit 10.10 to the Company’s
Registration Statement on Form S-1 (No. 333-61697), effective February 10, 1999.

Form of Standard Employment Agreement, filed as Exhibit 10.11 to the Company’s Registration Statement on
Form S-1 (No. 333-61697), effective February 10, 1999.

58

PART IV.

Item 15. Exhibits, Financial Statement Schedules

Financial Statements.

(a) The following documents are filed as part of this report:

1.

Index to Financial Statements:

See Consolidated Financial Statements included as part of this Form 10-K and Schedule II – Valuation and

Qualifying Accounts. Pursuant to Rule 7-05 of Regulation S-X, the other schedules have been omitted as the

information to be set forth therein is included in the notes of the audited consolidated financial statements . . . . . .

F-1

Page

Exhibits:

Exhibit

Number

Description

2.1**+

Agreement and Plan of Merger, dated as of December 5, 2012, by and among Korn/Ferry International, Personnel

Decisions International Corporation, Unity Sub, Inc., Personnel Decisions International Corporation, all of the

stockholders of Personnel Decisions International Corporation, and PDI Stockholder Representative, LLC, filed as

Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed on December 6, 2012.

2.2**+

Stock Purchase Agreement by and between HG (Bermuda) Limited and Korn/Ferry International, dated

September 23, 2015, filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed September 24,

2.3+

Letter Agreement, dated November 30, 2015, by and between Korn/Ferry International and HG (Bermuda)

Limited, filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed December 2, 2015.

3.1+

Restated Certificate of Incorporation of the Company, filed as Exhibit 3.1 to the Company’s Quarterly Report on

3.2+

Fourth Amended and Restated Bylaws of the Company, filed as Exhibit 3.1 to the Company’s Current Report on

Form 10-Q, filed December 9, 2013.

Form 8-K, filed October 7, 2014.

4.1+

Form of Common Stock Certificate of the Company, filed as Exhibit 4.1 to the Company’s Registration Statement

on Form S-3 (No. 333-49286), filed November 3, 2000.

10.1*+

Form of Indemnification Agreement between the Company and some of its executive officers and directors, filed

as Exhibit 10.1 to the Company’s Registration Statement on Form S-1/A (No. 333-61697), filed December 24,

2015.

1998.

10.2*+

Form of U.S. and International Worldwide Executive Benefit Retirement Plan, filed as Exhibit 10.3 to the

Company’s Registration Statement on Form S-1/A (No. 333-61697), filed September 4, 1998.

10.3*+

Form of U.S. and International Worldwide Executive Benefit Life Insurance Plan, filed as Exhibit 10.4 to the

Company’s Registration Statement on Form S-1 (No. 333-61697), effective February 10, 1999.

10.4*+

Worldwide Executive Benefit Disability Plan (in the form of Long-Term Disability Insurance Policy), filed as Exhibit

10.5 to the Company’s Registration Statement on Form S-1 (No. 333-61697), effective February 10, 1999.

10.5*+

Form of U.S. and International Enhanced Executive Benefit and Wealth Accumulation Plan, filed as Exhibit 10.6 to

the Company’s Registration Statement on Form S-1 (No. 333-61697), effective February 10, 1999.

10.6*+

Form of U.S. and International Senior Executive Incentive Plan, filed as Exhibit 10.7 to the Company’s

Registration Statement on Form S-1 (No. 333-61697), effective February 10, 1999.

10.7*+

Executive Salary Continuation Plan, filed as Exhibit 10.8 to the Company’s Registration Statement on Form S-1

(No. 333-61697), effective February 10, 1999.

10.8*+

Form of Amended and Restated Stock Repurchase Agreement, filed as Exhibit 10.10 to the Company’s

Registration Statement on Form S-1 (No. 333-61697), effective February 10, 1999.

10.9*+

Form of Standard Employment Agreement, filed as Exhibit 10.11 to the Company’s Registration Statement on

Form S-1 (No. 333-61697), effective February 10, 1999.

Exhibit
Number

10.10*+

10.11*+

10.12*+

10.13+

10.14*+

10.15*+

10.16*+

10.17*+

10.18*+

10.19*+

10.20*+

10.21*+

10.22*+

10.23*+

10.24*+

10.25*+

10.26*+

10.27*+

10.28*+

10.29*+

10.30*+

Description

Form of U.S. and Foreign Executive Participation Program, filed as Exhibit 10.27 to the Company’s Registration
Statement on Form S-1 (No. 333-61697), effective February 10, 1999.

Korn/Ferry International Second Amended and Restated Performance Award Plan, filed as Appendix A to the
Company’s Definitive Proxy Statement, filed August 12, 2004.

Form of Indemnification Agreement between the Company and some of its executive officers and directors, filed
as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q, filed March 12, 2004.

Summary of Non-Employee Director Compensation, filed as Exhibit 10.1 to the Company’s Quarterly Report on
Form 10-Q, filed September 10, 2012.

Stock and Asset Purchase Agreement dated as of August 8, 2006, by and among Lominger Limited, Inc.,
Lominger Consulting, Inc., Michael M. Lombardo, Robert W. Eichinger, and the Company filed as Exhibit 10.1 to
the Company’s Quarterly Report on Form 10-Q, filed September 8, 2006.

Letter from the Company to Gary Burnison, dated March 30, 2007, filed as Exhibit 10.38 to the Company’s Annual
Report on Form 10-K, filed June 29, 2007.

Employment Agreement between the Company and Gary Burnison, dated April 24, 2007, filed as Exhibit 10.41 to
the Company’s Annual Report on Form 10-K, filed June 29, 2007.

Form of Restricted Stock Unit Award Agreement to Directors Under the Performance Award Plan, filed as Exhibit
10.2 to the Company’s Quarterly Report on Form 10-Q, filed December 10, 2007.

Form of Stock Option Agreement to Employees and Non-Employee Directors Under the Korn/Ferry International
2008 Stock Incentive Plan, filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed June 12,
2009.

Korn/Ferry International Executive Capital Accumulation Plan, filed as Exhibit 4.1 to the Company’s Registration
Statement on Form S-8 (No. 333-111038), filed December 10, 2003.

Letter Agreement between the Company and Gary D. Burnison dated June 25, 2009, filed as Exhibit 10.51 to the
Company’s Annual Report on Form 10-K, filed June 29, 2009.

Employment Agreement between the Company and Byrne Mulrooney dated March 5, 2010, filed as Exhibit 10.40
to the Company’s Annual Report on Form 10-K, filed June 29, 2010.

Korn/Ferry International Amended and Restated Employee Stock Purchase Plan, filed as Exhibit 99.1 to the
Company’s Registration Statement on Form S-8, filed December 10, 2014.

Employment Agreement between the Company and Robert Rozek, filed as Exhibit 10.2 to the Company’s Current
Report on Form 8-K, filed February 21, 2012.

Second Amended and Restated Korn/Ferry International 2008 Stock Incentive Plan, filed as Exhibit 10.1 to the
Company’s Current Report on Form 8-K, filed October 2, 2012.

Form of Restricted Stock Unit Award Agreement to Non-Employee Directors Under the 2008 Stock Incentive Plan,
filed as Exhibit 10.38 to the Company’s Annual Report on Form 10-K, filed June 25, 2013.

Form of Restricted Stock Unit Award Agreement to Employees Under the 2008 Stock Incentive Plan, filed as
Exhibit 10.39 to the Company’s Annual Report on Form 10-K, filed June 25, 2013.

Letter Agreement between the Company and R.J. Heckman, Ph.D., dated December 4, 2012, filed as Exhibit
10.40 to the Company’s Annual Report on Form 10-K, filed June 25, 2013.

Letter Agreement between the Company and Byrne Mulrooney dated June 26, 2014, filed as Exhibit 10.33 to the
Company’s Annual Report on Form 10-K, filed June 27, 2014.

Amended and Restated Employment Agreement dated July 25, 2014 between Korn/Ferry International and Gary
Burnison, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed August 1, 2014.

Amended and Restated Korn/Ferry International Executive Capital Accumulation Plan, as of August 13, 2014,
filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed December 10, 2014.

58

59

Exhibit
Number

10.31*+

Summary of Non-Employee Director Compensation Program, effective October 1, 2014, filed as Exhibit 10.2 to
the Company’s Quarterly Report on Form 10-Q, filed December 10, 2014.

Description

10.32*+

Form of Indemnification Agreement between the Company and some of its directors and executive officers, filed
as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed June 15, 2015.

10.33*+

Letter Agreement between the Company and Matthew P. Reilly, dated May 4, 2015, filed as Exhibit 10.1 to the
Company’s Quarterly Report on Form 10-Q, filed September 9, 2015.

10.34+

10.35+

Credit Agreement with Wells Fargo Bank, National Association, as lender, dated January 18, 2013, filed as Exhibit
10.2 to the Company’s Quarterly Report on Form 10-Q, filed September 9, 2015.

Amendment No. 1 to Credit Agreement with Wells Fargo Bank, National Association, as lender, dated
December 12, 2014, filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q, filed September 9,
2015.

10.36^+

Amendment No. 2 to Credit Agreement with Wells Fargo Bank, National Association, as lender, dated June 3,
2015, filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q, filed September 9, 2015.

10.37+

10.38+

10.39*+

10.40+

Form of Indemnification Agreement between the Company and some of its directors and executive officers, filed
as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed June 15, 2015.

Amendment No. 3 to Credit Agreement with Wells Fargo Bank, National Association, as lender, dated
September 23, 2015, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed September 24,
2015.

Separation and General Release Agreement, between Matthew P. Reilly and Korn/Ferry International, dated
September 27, 2015, filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q, filed December 10,
2015.

Amendment No. 4 to Credit Agreement with Wells Fargo Bank, National Association, as lender, dated
November 20, 2015, filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q, filed December 10,
2015.

10.41+

Letter Agreement between the Company and Stephen Kaye, filed as Exhibit 10.4 to the Company’s Quarterly
Report on Form 10-Q, filed December 10, 2015.

10.42*+

Amendment to Employment Agreement dated December 28, 2015 between the Company and Robert Rozek, filed
as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed March 10, 2016.

10.43+

10.44+

Credit Agreement, dated June 15, 2016, with Wells Fargo Bank, National Association, as administrative agent and
other lender parties, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed June 17, 2016.

Korn/Ferry International Long Term Performance Unit Plan, filed as Exhibit 10.1 to the Company’s Current Report
on Form 8-K, filed July 14, 2016.

10.45*+

Korn/Ferry International Long Term Performance Unit Plan Form of Unit Award Agreement, filed as Exhibit 10.2 to
the Company’s Current Report on Form 8-K, filed July 14, 2016.

10.46*+

Third Amended and Restated Korn/Ferry International 2008 Stock Incentive Plan, filed as Exhibit 10.1 to the
Company’s Form 8-K filed with the SEC on October 12, 2016.

10.47*+

Summary of Non-Employee Director Compensation Program Effective December 7, 2016, filed as Exhibit 10.1 to
the Company’s 10-Q, filed on March 10, 2017.

10.48*

Letter Agreement between the Company and Mark Arian, dated March 17, 2017.

10.49*

Separation and General Release Agreement, between Stephen D. Kaye and Korn/Ferry International, dated
March 17, 2017.

10.50*

Form of Restricted Stock Unit Award Agreement to Non-Employee Directors Under the 2008 Stock Incentive Plan.

10.51*

Form of Performance Restricted Stock Unit Award Agreement Under the 2008 Stock Incentive Plan.

60

Exhibit

Number

Description

Exhibit
Number

Description

10.31*+

Summary of Non-Employee Director Compensation Program, effective October 1, 2014, filed as Exhibit 10.2 to

10.52*

Form of Restricted Stock Unit Award Agreement to Employees Under the 2008 Stock Incentive Plan.

10.53*

Form of Restricted Stock Award Agreement to Employees Under the 2008 Stock Incentive Plan.

21.1

23.1

24.1

31.1

31.2

32.1

Subsidiaries of Korn/Ferry International.

Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.

Power of Attorney (contained on signature page).

Chief Executive Officer Certification pursuant to Rule 13a-14(a) under the Exchange Act.

Chief Financial Officer Certification pursuant to Rule 13a-14(a) under the Exchange Act.

Chief Executive Officer and Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350.

101.INS

XBRL Instance Document.

101.SCH

XBRL Taxonomy Extension Schema Document.

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

XBRL Taxonomy Extension Label Linkbase Document.

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document.

* Management contract, compensatory plan or arrangement.

** Schedules omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally a copy of

any omitted schedule to the Securities and Exchange Commission upon request.

^

Confidential treatment was granted for portions of this exhibit which have been filed separately with the Securities and
Exchange Commission.

+

Incorporated herein by reference.

the Company’s Quarterly Report on Form 10-Q, filed December 10, 2014.

10.32*+

Form of Indemnification Agreement between the Company and some of its directors and executive officers, filed

as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed June 15, 2015.

10.33*+

Letter Agreement between the Company and Matthew P. Reilly, dated May 4, 2015, filed as Exhibit 10.1 to the

Company’s Quarterly Report on Form 10-Q, filed September 9, 2015.

10.34+

Credit Agreement with Wells Fargo Bank, National Association, as lender, dated January 18, 2013, filed as Exhibit

10.2 to the Company’s Quarterly Report on Form 10-Q, filed September 9, 2015.

10.35+

Amendment No. 1 to Credit Agreement with Wells Fargo Bank, National Association, as lender, dated

December 12, 2014, filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q, filed September 9,

10.36^+

Amendment No. 2 to Credit Agreement with Wells Fargo Bank, National Association, as lender, dated June 3,

2015, filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q, filed September 9, 2015.

10.37+

Form of Indemnification Agreement between the Company and some of its directors and executive officers, filed

as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed June 15, 2015.

10.38+

Amendment No. 3 to Credit Agreement with Wells Fargo Bank, National Association, as lender, dated

September 23, 2015, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed September 24,

10.39*+

Separation and General Release Agreement, between Matthew P. Reilly and Korn/Ferry International, dated

September 27, 2015, filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q, filed December 10,

10.40+

Amendment No. 4 to Credit Agreement with Wells Fargo Bank, National Association, as lender, dated

November 20, 2015, filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q, filed December 10,

2015.

2015.

2015.

2015.

10.41+

Letter Agreement between the Company and Stephen Kaye, filed as Exhibit 10.4 to the Company’s Quarterly

Report on Form 10-Q, filed December 10, 2015.

10.42*+

Amendment to Employment Agreement dated December 28, 2015 between the Company and Robert Rozek, filed

as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed March 10, 2016.

10.43+

Credit Agreement, dated June 15, 2016, with Wells Fargo Bank, National Association, as administrative agent and

other lender parties, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed June 17, 2016.

10.44+

Korn/Ferry International Long Term Performance Unit Plan, filed as Exhibit 10.1 to the Company’s Current Report

on Form 8-K, filed July 14, 2016.

10.45*+

Korn/Ferry International Long Term Performance Unit Plan Form of Unit Award Agreement, filed as Exhibit 10.2 to

the Company’s Current Report on Form 8-K, filed July 14, 2016.

10.46*+

Third Amended and Restated Korn/Ferry International 2008 Stock Incentive Plan, filed as Exhibit 10.1 to the

Company’s Form 8-K filed with the SEC on October 12, 2016.

10.47*+

Summary of Non-Employee Director Compensation Program Effective December 7, 2016, filed as Exhibit 10.1 to

the Company’s 10-Q, filed on March 10, 2017.

10.48*

Letter Agreement between the Company and Mark Arian, dated March 17, 2017.

10.49*

Separation and General Release Agreement, between Stephen D. Kaye and Korn/Ferry International, dated

March 17, 2017.

10.50*

Form of Restricted Stock Unit Award Agreement to Non-Employee Directors Under the 2008 Stock Incentive Plan.

10.51*

Form of Performance Restricted Stock Unit Award Agreement Under the 2008 Stock Incentive Plan.

60

61

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

By: /s/ Robert P. Rozek
Robert P. Rozek
Executive Vice President, Chief Financial Officer and Chief Corporate Officer

Korn/Ferry International

Date: June 28, 2017

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers and directors of the registrant
hereby constitutes and appoints Jonathan M. Kuai and Gary D. Burnison, and each of them, as lawful attorney-in-
fact and agent for each of the undersigned (with full power of substitution and resubstitution, for and in the name,
place and stead of each of the undersigned officers and directors), to sign and file with the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended, any and all amendments,
supplements and exhibits to this report and any and all other documents in connection therewith, hereby granting
unto said attorneys-in-fact, and each of them, full power and authority to do and perform each and every act and
thing necessary or desirable to be done in order to effectuate the same as fully and to all intents and purposes as
each of the undersigned might or could do if personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or any of their substitutes, may do or cause to be done by virtue
hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/s/ GEORGE T. SHAHEEN
George T. Shaheen

/s/ GARY D. BURNISON
Gary D. Burnison

/s/ ROBERT P. ROZEK
Robert P. Rozek

/s/ DOYLE N. BENEBY
Doyle N. Beneby

/s/ WILLIAM R. FLOYD
William R. Floyd

/s/ CHRISTINA A. GOLD
Christina A. Gold

/s/ JERRY LEAMON
Jerry Leamon

/s/ DEBRA J. PERRY
Debra J. Perry

Chairman of the Board and Director

June 28, 2017

President & Chief Executive Officer
(Principal Executive Officer) and Director

Executive Vice President, Chief Financial Officer and
Chief Corporate Officer
(Principal Financial Officer and Principal Accounting
Officer)

Director

Director

Director

Director

Director

62

June 28, 2017

June 28, 2017

June 28, 2017

June 28, 2017

June 28, 2017

June 28, 2017

June 28, 2017

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2017

Management’s Report on Internal Control over Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting . . . . . . . . . . . . . . .

Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Balance Sheets as of April 30, 2017 and 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

POWER OF ATTORNEY

Consolidated Statements of Income for the years ended April 30, 2017, 2016 and 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Comprehensive Income for the years ended April 30, 2017, 2016 and 2015 . . . . . . . . . . . . . .

Consolidated Statements of Stockholders’ Equity for the years ended April 30, 2017, 2016, and 2015 . . . . . . . . . . . . . . . .

Consolidated Statements of Cash Flows for the years ended April 30, 2017, 2016 and 2015 . . . . . . . . . . . . . . . . . . . . . . . .

Page

F-2

F-3

F-4

F-5

F-6

F-7

F-8

F-9

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-10

Financial Statements Schedule II – Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-47

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the

registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto

SIGNATURES

duly authorized.

Date: June 28, 2017

Executive Vice President, Chief Financial Officer and Chief Corporate Officer

Korn/Ferry International

By: /s/ Robert P. Rozek

Robert P. Rozek

KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers and directors of the registrant

hereby constitutes and appoints Jonathan M. Kuai and Gary D. Burnison, and each of them, as lawful attorney-in-

fact and agent for each of the undersigned (with full power of substitution and resubstitution, for and in the name,

place and stead of each of the undersigned officers and directors), to sign and file with the Securities and

Exchange Commission under the Securities Exchange Act of 1934, as amended, any and all amendments,

supplements and exhibits to this report and any and all other documents in connection therewith, hereby granting

unto said attorneys-in-fact, and each of them, full power and authority to do and perform each and every act and

thing necessary or desirable to be done in order to effectuate the same as fully and to all intents and purposes as

each of the undersigned might or could do if personally present, hereby ratifying and confirming all that said

attorneys-in-fact and agents, or any of them, or any of their substitutes, may do or cause to be done by virtue

hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed

below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/s/ GEORGE T. SHAHEEN

George T. Shaheen

/s/ GARY D. BURNISON

Gary D. Burnison

/s/ ROBERT P. ROZEK

Robert P. Rozek

/s/ DOYLE N. BENEBY

Doyle N. Beneby

/s/ WILLIAM R. FLOYD

William R. Floyd

/s/ CHRISTINA A. GOLD

Christina A. Gold

/s/ JERRY LEAMON

Jerry Leamon

/s/ DEBRA J. PERRY

Debra J. Perry

Chairman of the Board and Director

June 28, 2017

President & Chief Executive Officer

(Principal Executive Officer) and Director

June 28, 2017

Executive Vice President, Chief Financial Officer and

June 28, 2017

Chief Corporate Officer

(Principal Financial Officer and Principal Accounting

Officer)

Director

Director

Director

Director

Director

June 28, 2017

June 28, 2017

June 28, 2017

June 28, 2017

June 28, 2017

62

F-1

MANAGEMENT’S REPORT ON
INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of Korn/Ferry International (the “Company”) is responsible for establishing and maintaining adequate
internal control over financial reporting and for the assessment of the effectiveness of internal control over financial
reporting. As defined by the Securities and Exchange Commission, internal control over financial reporting is a
process designed by, or supervised by, the issuer’s principal executive and principal financial officers, and effected
by the issuer’s board of directors, management and other personnel, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with U.S. generally accepted accounting principles.

The Company’s internal control over financial reporting is supported by written policies and procedures, that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of the Company’s assets; (2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the Company are being made only in accordance with
authorizations of the Company’s management and directors; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could
have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls
may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

In connection with the preparation of the Company’s annual financial statements, management of the Company
has undertaken an assessment of the effectiveness of the Company’s internal control over financial reporting as of
April 30, 2017 based on criteria established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Management’s assessment included an
evaluation of the design of the Company’s internal control over financial reporting and testing of the operational
effectiveness of the Company’s internal control over financial reporting.

Based on this assessment, management did not identify any material weakness in the Company’s internal control
over financial reporting, and management has concluded that the Company’s internal control over financial
reporting was effective as of April 30, 2017.

Ernst & Young LLP, the independent registered public accounting firm that audited the Company’s financial
statements for the year ended April 30, 2017 included in this Annual Report on Form 10-K, has issued an audit
report on the effectiveness of the Company’s internal control over financial reporting as of April 30, 2017, a copy of
which is included in this Annual Report on Form 10-K.

June 28, 2017

F-2

MANAGEMENT’S REPORT ON

INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of Korn/Ferry International (the “Company”) is responsible for establishing and maintaining adequate

internal control over financial reporting and for the assessment of the effectiveness of internal control over financial

reporting. As defined by the Securities and Exchange Commission, internal control over financial reporting is a

process designed by, or supervised by, the issuer’s principal executive and principal financial officers, and effected

by the issuer’s board of directors, management and other personnel, to provide reasonable assurance regarding

the reliability of financial reporting and the preparation of financial statements for external purposes in accordance

with U.S. generally accepted accounting principles.

The Company’s internal control over financial reporting is supported by written policies and procedures, that

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions

and dispositions of the Company’s assets; (2) provide reasonable assurance that transactions are recorded as

necessary to permit preparation of financial statements in accordance with generally accepted accounting

principles, and that receipts and expenditures of the Company are being made only in accordance with

authorizations of the Company’s management and directors; and (3) provide reasonable assurance regarding

prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could

have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect

misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls

may become inadequate because of changes in conditions, or that the degree of compliance with the policies or

procedures may deteriorate.

In connection with the preparation of the Company’s annual financial statements, management of the Company

has undertaken an assessment of the effectiveness of the Company’s internal control over financial reporting as of

April 30, 2017 based on criteria established in Internal Control – Integrated Framework (2013) issued by the

Committee of Sponsoring Organizations of the Treadway Commission. Management’s assessment included an

evaluation of the design of the Company’s internal control over financial reporting and testing of the operational

effectiveness of the Company’s internal control over financial reporting.

Based on this assessment, management did not identify any material weakness in the Company’s internal control

over financial reporting, and management has concluded that the Company’s internal control over financial

reporting was effective as of April 30, 2017.

Ernst & Young LLP, the independent registered public accounting firm that audited the Company’s financial

statements for the year ended April 30, 2017 included in this Annual Report on Form 10-K, has issued an audit

report on the effectiveness of the Company’s internal control over financial reporting as of April 30, 2017, a copy of

which is included in this Annual Report on Form 10-K.

June 28, 2017

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The Board of Directors and Stockholders of

Korn/Ferry International

We have audited Korn/Ferry International and subsidiaries’ (the “Company”) internal control over financial
reporting as of April 30, 2017, based on criteria established in Internal Control – Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).
The Company’s management is responsible for maintaining effective internal control over financial reporting, and
for its assessment of the effectiveness of internal control over financial reporting included in the accompanying
Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on
the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects. Our audit
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

In our opinion, Korn/Ferry International and subsidiaries maintained, in all material respects, effective internal
control over financial reporting as of April 30, 2017, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the consolidated balance sheets of Korn/Ferry International and subsidiaries as of April 30, 2017
and 2016, and the related consolidated statements of income, comprehensive income, stockholders’ equity, and
cash flows for each of the three years in the period ended April 30, 2017 and our report dated June 28, 2017,
expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Los Angeles, California

June 28, 2017

F-2

F-3

REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

The Board of Directors and Stockholders of

Korn/Ferry International

We have audited the accompanying consolidated balance sheets of Korn/Ferry International and subsidiaries (the
“Company”) as of April 30, 2017 and 2016, and the related consolidated statements of income, comprehensive
income, stockholders’ equity, and cash flows for each of the three years in the period ended April 30, 2017. Our
audits also included the financial statement schedule listed in the index at Item 15(a). These financial statements
and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on
these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated
financial position of Korn/Ferry International and subsidiaries at April 30, 2017 and 2016, and the consolidated
results of their operations and their cash flows for each of the three years in the period ended April 30, 2017, in
conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the Company’s internal control over financial reporting as of April 30, 2017, based on criteria
established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) and our report dated June 28, 2017, expressed an unqualified opinion
thereon.

/s/ Ernst & Young LLP

Los Angeles, California

June 28, 2017

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,062,898 $

1,898,600

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

410,882 $

ASSETS

Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Receivables due from clients, net of allowance for doubtful accounts of $15,455 and

$11,292, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income taxes and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Prepaid expenses and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Marketable securities, non-current

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

Deferred income taxes, net

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Investments and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

LIABILITIES AND STOCKHOLDERS’ EQUITY

Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Compensation and benefits payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deferred compensation and other retirement plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Term loan, non-current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Commitments and contingencies

Stockholders’ equity:

Common stock: $0.01 par value, 150,000 shares authorized, 70,811 and 69,723 shares

issued at April 30, 2017 and 2016, respectively, and 56,938 and 57,272 shares

outstanding at April 30, 2017 and 2016, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Accumulated other comprehensive loss, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total Korn/Ferry International stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2017

2016

(in thousands, except per share

April 30,

data)

4,363

345,314

31,573

51,542

843,674

115,574

109,567

113,067

20,175

576,865

217,319

66,657

4,526

248,354

19,754

148,464

458,579

219,905

236,222

7,014

54,130

975,850

$

$

37,481 $

273,252

11,338

315,975

20,579

43,130

664,274

130,092

95,436

107,296

27,163

590,072

233,027

51,240

26,634

8,396

266,211

30,000

145,023

476,264

216,113

110,000

5,088

43,834

851,299

692,527

461,976

(71,064)

1,083,439

3,609

1,087,048

702,098

401,113

(57,911)

1,045,300

2,001

1,047,301

1,898,600

Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

2,062,898 $

The accompanying notes are an integral part of these consolidated financial statements.

F-4

F-5

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

The Board of Directors and Stockholders of

Korn/Ferry International

We have audited the accompanying consolidated balance sheets of Korn/Ferry International and subsidiaries (the

“Company”) as of April 30, 2017 and 2016, and the related consolidated statements of income, comprehensive

income, stockholders’ equity, and cash flows for each of the three years in the period ended April 30, 2017. Our

audits also included the financial statement schedule listed in the index at Item 15(a). These financial statements

and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on

these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board

(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about

whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,

evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the

accounting principles used and significant estimates made by management, as well as evaluating the overall

financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated

financial position of Korn/Ferry International and subsidiaries at April 30, 2017 and 2016, and the consolidated

results of their operations and their cash flows for each of the three years in the period ended April 30, 2017, in

conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement

schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all

material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board

(United States), the Company’s internal control over financial reporting as of April 30, 2017, based on criteria

established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the

Treadway Commission (2013 framework) and our report dated June 28, 2017, expressed an unqualified opinion

thereon.

/s/ Ernst & Young LLP

Los Angeles, California

June 28, 2017

ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables due from clients, net of allowance for doubtful accounts of $15,455 and

$11,292, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketable securities, non-current
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash surrender value of company owned life insurance policies, net of loans . . . . . . . . . . .
Deferred income taxes, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation and benefits payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred compensation and other retirement plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Term loan, non-current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Commitments and contingencies

Stockholders’ equity:
Common stock: $0.01 par value, 150,000 shares authorized, 70,811 and 69,723 shares

issued at April 30, 2017 and 2016, respectively, and 56,938 and 57,272 shares
outstanding at April 30, 2017 and 2016, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Korn/Ferry International stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

April 30,

2017

2016

(in thousands, except per share
data)

$

410,882 $
4,363

273,252
11,338

345,314
31,573
51,542
843,674
115,574
109,567
113,067
20,175
576,865
217,319
66,657
2,062,898 $

37,481 $
4,526
248,354
19,754
148,464
458,579
219,905
236,222
7,014
54,130
975,850

315,975
20,579
43,130
664,274
130,092
95,436
107,296
27,163
590,072
233,027
51,240
1,898,600

26,634
8,396
266,211
30,000
145,023
476,264
216,113
110,000
5,088
43,834
851,299

692,527
461,976
(71,064)
1,083,439
3,609
1,087,048
2,062,898 $

702,098
401,113
(57,911)
1,045,300
2,001
1,047,301
1,898,600

$

$

$

The accompanying notes are an integral part of these consolidated financial statements.

F-4

F-5

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

Year Ended April 30,

2017

2015
(in thousands, except per share data)

2016

Fee revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reimbursed out-of-pocket engagement expenses . . . . . . . . . . . . . . . . . . .
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

1,565,521 $
56,148
1,621,669

1,292,112 $
54,602
1,346,714

1,028,152
37,914
1,066,066

Compensation and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reimbursed expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring charges, net
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income (loss), net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest (expense) income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income before provision for income taxes and equity in earnings of

unconsolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of unconsolidated subsidiaries, net . . . . . . . . . . . . . . . .
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interest . . . . . . . . . . . . . . . . . .

1,071,507
226,232
56,148
71,482
47,260
34,600
1,507,229

114,440
11,820
(10,251)

116,009
333
29,104

87,238
(3,057)

897,345
213,018
54,602
59,824
36,220
33,013
1,294,022

52,692
(4,167)
237

48,762
1,631
18,960

31,433
(520)

Net income attributable to Korn/Ferry International

. . . . . . . . . . . . . . . . . .

$

84,181 $

30,913 $

Earnings per common share attributable to Korn/Ferry International:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

1.48 $

1.47 $

0.58 $

0.58 $

Weighted-average common shares outstanding:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

56,205

56,900

52,372

52,929

691,450
145,917
37,914
39,692
27,597
9,468
952,038

114,028
7,458
(1,784)

119,702
2,181
33,526

88,357
—

88,357

1.78

1.76

49,052

49,766

Cash dividends declared per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

0.40 $

0.40 $

0.10

The accompanying notes are an integral part of these consolidated financial statements.

F-6

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

2017

Year Ended April 30,
2016
(in thousands)

2015

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

87,238

$

31,433

$

88,357

Other comprehensive income:

Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred compensation and pension plan adjustments, net of tax . . . . . . . . .
Unrealized losses on marketable securities, net of tax . . . . . . . . . . . . . . . . . .
Net unrealized loss on interest rate swap, net of tax . . . . . . . . . . . . . . . . . . . .
Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . .
Comprehensive income attributable to Korn/Ferry International . . . . . . . . . . . . .

Less: comprehensive income attributable to noncontrolling interest

$

(19,266)
6,445
—
(578)
73,839
(2,811)
71,028

$

(15,428)
(1,864)
(4)
—
14,137
(512)
13,625

$

(36,523)
(1,702)
(10)
—
50,122
—
50,122

Year Ended April 30,

2017

2016

2015

(in thousands, except per share data)

Fee revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

1,565,521 $

1,292,112 $

Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,507,229

1,294,022

Reimbursed out-of-pocket engagement expenses . . . . . . . . . . . . . . . . . . .

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Compensation and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Reimbursed expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cost of services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restructuring charges, net

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

56,148

1,621,669

1,071,507

226,232

56,148

71,482

47,260

34,600

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other income (loss), net

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interest (expense) income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

114,440

11,820

(10,251)

Income before provision for income taxes and equity in earnings of

unconsolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

116,009

Equity in earnings of unconsolidated subsidiaries, net . . . . . . . . . . . . . . . .

Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income attributable to noncontrolling interest . . . . . . . . . . . . . . . . . .

333

29,104

87,238

(3,057)

54,602

1,346,714

897,345

213,018

54,602

59,824

36,220

33,013

52,692

(4,167)

237

48,762

1,631

18,960

31,433

(520)

Net income attributable to Korn/Ferry International

. . . . . . . . . . . . . . . . . .

$

84,181 $

30,913 $

Earnings per common share attributable to Korn/Ferry International:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

1.48 $

1.47 $

0.58 $

0.58 $

Weighted-average common shares outstanding:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

56,205

56,900

52,372

52,929

1,028,152

37,914

1,066,066

691,450

145,917

37,914

39,692

27,597

9,468

952,038

114,028

7,458

(1,784)

119,702

2,181

33,526

88,357

—

88,357

1.78

1.76

49,052

49,766

Cash dividends declared per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

0.40 $

0.40 $

0.10

The accompanying notes are an integral part of these consolidated financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

F-6

F-7

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Common Stock

Shares

Amount

Retained
Earnings

Accumulated
Other
Comprehensive
(Loss)
Income, Net

Total
Korn/Ferry
International
Stockholders’
Equity

(in thousands)

Noncontrolling
Interest

Total

Cash flows from operating activities:

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

87,238 $

31,433 $

88,357

Adjustments to reconcile net income to net cash provided by operating

Year Ended April 30,

2017

2016

2015

(in thousands)

Balance at May 1, 2014 . . . . .
Comprehensive income . . . . .
Dividends paid to

shareholders . . . . . . . . . . . .
Purchase of stock . . . . . . . . . .
Issuance of stock . . . . . . . . . .
Stock-based compensation . .
Tax benefit from exercise of

stock options and vesting of
restricted stock . . . . . . . . . .
Balance at April 30, 2015 . . .
Acquisition of noncontrolling

interest in Mexico . . . . . . . .
Comprehensive income . . . . .
Dividends paid to

shareholders . . . . . . . . . . . .
Purchase of stock . . . . . . . . . .
Issuance of stock . . . . . . . . . .
Stock-based compensation . .
Tax benefit from exercise of

stock options and vesting of
restricted stock . . . . . . . . . .
Balance at April 30, 2016 . . .
Comprehensive income . . . . .
Dividends paid to

shareholders . . . . . . . . . . . .

Dividends paid to

noncontrolling interest . . . . .
Purchase of stock . . . . . . . . . .
Issuance of stock . . . . . . . . . .
Stock-based compensation . .
Tax benefit from exercise of

stock options and vesting of
restricted stock . . . . . . . . . .
Balance at April 30, 2017 . . .

49,811 $ 449,631 $ 308,781 $
—

88,357

—

(2,388) $

(38,235)

756,024 $
50,122

— $
—

756,024
50,122

—
(122)
884
—

—
(4,038)
2,993
13,737

(5,105)
—
—
—

—
50,573

1,516
463,839

—
392,033

—
—

—
(215)
6,914
—

—
—

—
30,913

—
(7,410)
222,456
18,305

(21,833)
—
—
—

—
—
—
—

—
(40,623)

—
(17,288)

—
—
—
—

(5,105)
(4,038)
2,993
13,737

1,516
815,249

—
13,625

(21,833)
(7,410)
222,456
18,305

—
57,272
—

4,908
702,098
—

—
401,113
84,181

—
(57,911)
(13,153)

4,908
1,045,300
71,028

—

—

(23,318)

—
(1,346)
1,012
—

—
(33,579)
5,886
18,045

—
—
—
—

—

77
56,938 $ 692,527 $ 461,976 $

—

—

—
—
—
—

—

(23,318)

—
(33,579)
5,886
18,045

77

(71,064) $

1,083,439 $

—
—
—
—

—
—

1,489
512

—
—
—
—

(5,105)
(4,038)
2,993
13,737

1,516
815,249

1,489
14,137

(21,833)
(7,410)
222,456
18,305

—
2,001
2,811

4,908
1,047,301
73,839

—

(23,318)

(1,203)
—
—
—

(1,203)
(33,579)
5,886
18,045

—

77
3,609 $ 1,087,048

The accompanying notes are an integral part of these consolidated financial statements.

F-8

F-9

Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

106,064

activities:

Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provision for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Gain on cash surrender value of life insurance policies . . . . . . . . . . . . . . . .

(Gain) loss on marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Change in other assets and liabilities, net of effect of acquisitions:

Deferred compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Receivables due from clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income taxes and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Prepaid expenses and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Investment in unconsolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . .

Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cash flows from investing activities:

Cash paid for acquisitions, net of cash acquired and earnout . . . . . . . . . . . . .

Acquisition of Mexico subsidiary, cash acquired . . . . . . . . . . . . . . . . . . . . . . .

Purchase of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Purchase of marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Proceeds from sales/maturities of marketable securities . . . . . . . . . . . . . . . . .

Premiums on company-owned life insurance policies . . . . . . . . . . . . . . . . . . .

Proceeds from life insurance policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Dividends received from unconsolidated subsidiaries . . . . . . . . . . . . . . . . . . .

Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cash flows from financing activities:

Proceeds from term loan facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Principal payment on term loan facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payment of contingent consideration from acquisition . . . . . . . . . . . . . . . . . . .

Repurchases of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payment of tax withholdings on restricted stock . . . . . . . . . . . . . . . . . . . . . . . .

Proceeds from issuance of common stock upon exercise of employee stock

options and in connection with an employee stock purchase plan . . . . . . .

Tax benefit related to stock-based compensation . . . . . . . . . . . . . . . . . . . . . .

Dividends – noncontrolling interest

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Dividends paid to shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payments on life insurance policy loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net cash provided by (used in) financing activities . . . . . . . . . . . . . . . . . . . .

Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . .

Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . .

Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . .

47,260

18,958

12,987

(4,918)

(10,842)

6,589

6,868

(42,326)

(10,177)

(8,485)

(333)

128

5,420

(2,303)

(2,880)

—

(50,088)

(10,536)

42,815

(1,597)

1,117

564

(20,605)

275,000

(155,469)

(1,070)

(28,821)

(4,758)

5,121

77

(1,203)

(23,318)

(1,117)

64,442

(12,271)

137,630

273,252

36,220

18,895

8,570

(3,984)

3,333

(13,792)

(4,605)

(16,622)

(191)

(6,310)

(1,631)

(4,222)

18,862

(1,875)

64,081

(256,082)

3,973

(26,144)

(30,397)

30,066

(1,623)

3,256

2,373

(274,578)

150,000

(10,000)

—

—

(7,410)

4,038

4,908

—

(21,833)

(1,251)

118,452

(15,541)

(107,586)

380,838

27,597

13,899

7,741

(10,509)

(8,829)

895

10,130

(17,213)

115

(1,145)

(2,181)

(10,405)

17,790

(8,966)

107,276

(15,296)

—

(21,860)

(22,843)

21,362

(1,676)

8,087

1,656

(30,570)

—

—

—

—

(4,038)

2,993

1,516

—

(5,105)

(3,301)

(7,935)

(21,650)

47,121

333,717

380,838

Cash and cash equivalents at end of year

. . . . . . . . . . . . . . . . . . . . . . . . . .

$

410,882 $

273,252 $

Supplemental cash flow information:

Cash used to pay interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cash used to pay income taxes, net of refunds . . . . . . . . . . . . . . . . . . . . . .

$

$

10,882 $

32,458 $

5,154 $

33,189 $

4,230

40,899

The accompanying notes are an integral part of these consolidated financial statements.

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

Common Stock

Shares

Amount

Retained

Earnings

(Loss)

Income, Net

Stockholders’

Noncontrolling

Equity

Interest

Total

Accumulated

Other

Total

Korn/Ferry

Comprehensive

International

(in thousands)

(2,388) $

(38,235)

756,024 $

50,122

— $

756,024

50,122

Balance at April 30, 2015 . . .

50,573

463,839

392,033

(40,623)

(17,288)

1,489

512

Balance at May 1, 2014 . . . . .

49,811 $ 449,631 $ 308,781 $

Comprehensive income . . . . .

Dividends paid to

shareholders . . . . . . . . . . . .

Purchase of stock . . . . . . . . . .

Issuance of stock . . . . . . . . . .

Stock-based compensation . .

Tax benefit from exercise of

stock options and vesting of

restricted stock . . . . . . . . . .

Acquisition of noncontrolling

interest in Mexico . . . . . . . .

Comprehensive income . . . . .

Dividends paid to

shareholders . . . . . . . . . . . .

Purchase of stock . . . . . . . . . .

Issuance of stock . . . . . . . . . .

Stock-based compensation . .

Tax benefit from exercise of

stock options and vesting of

restricted stock . . . . . . . . . .

Comprehensive income . . . . .

Dividends paid to

shareholders . . . . . . . . . . . .

Dividends paid to

noncontrolling interest . . . . .

Purchase of stock . . . . . . . . . .

Issuance of stock . . . . . . . . . .

Stock-based compensation . .

Tax benefit from exercise of

stock options and vesting of

restricted stock . . . . . . . . . .

—

—

(122)

884

—

—

—

(4,038)

2,993

13,737

1,516

—

—

—

—

—

—

—

—

—

—

(215)

6,914

—

(7,410)

222,456

18,305

4,908

(1,346)

1,012

(33,579)

5,886

18,045

—

—

—

—

—

—

77

Balance at April 30, 2016 . . .

57,272

702,098

88,357

(5,105)

—

30,913

(21,833)

401,113

84,181

(23,318)

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

(5,105)

(4,038)

2,993

13,737

1,516

815,249

—

13,625

(21,833)

(7,410)

222,456

18,305

(23,318)

—

(33,579)

5,886

18,045

77

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

(1,203)

(5,105)

(4,038)

2,993

13,737

1,516

815,249

1,489

14,137

(21,833)

(7,410)

222,456

18,305

(23,318)

(1,203)

(33,579)

5,886

18,045

77

(57,911)

(13,153)

4,908

1,045,300

71,028

4,908

2,001

2,811

1,047,301

73,839

Balance at April 30, 2017 . . .

56,938 $ 692,527 $ 461,976 $

(71,064) $

1,083,439 $

3,609 $ 1,087,048

The accompanying notes are an integral part of these consolidated financial statements.

Cash flows from operating activities:

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash provided by operating

activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on cash surrender value of life insurance policies . . . . . . . . . . . . . . . .
(Gain) loss on marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Change in other assets and liabilities, net of effect of acquisitions:

Deferred compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables due from clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in unconsolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cash flows from investing activities:

Cash paid for acquisitions, net of cash acquired and earnout . . . . . . . . . . . . .
Acquisition of Mexico subsidiary, cash acquired . . . . . . . . . . . . . . . . . . . . . . .
Purchase of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales/maturities of marketable securities . . . . . . . . . . . . . . . . .
Premiums on company-owned life insurance policies . . . . . . . . . . . . . . . . . . .
Proceeds from life insurance policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends received from unconsolidated subsidiaries . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cash flows from financing activities:

Proceeds from term loan facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal payment on term loan facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of contingent consideration from acquisition . . . . . . . . . . . . . . . . . . .
Repurchases of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of tax withholdings on restricted stock . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from issuance of common stock upon exercise of employee stock
options and in connection with an employee stock purchase plan . . . . . . .
Tax benefit related to stock-based compensation . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends – noncontrolling interest
Dividends paid to shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments on life insurance policy loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by (used in) financing activities . . . . . . . . . . . . . . . . . . . .
Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . .
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . .

Cash and cash equivalents at end of year

Supplemental cash flow information:

Cash used to pay interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cash used to pay income taxes, net of refunds . . . . . . . . . . . . . . . . . . . . . .

Year Ended April 30,

2017

2016

2015

$

87,238 $

(in thousands)
31,433 $

88,357

47,260
18,958
12,987
(4,918)
(10,842)
6,589

6,868
(42,326)
(10,177)
(8,485)
(333)
128
5,420
(2,303)
106,064

(2,880)
—
(50,088)
(10,536)
42,815
(1,597)
1,117
564
(20,605)

275,000
(155,469)
(1,070)
(28,821)
(4,758)

5,121
77
(1,203)
(23,318)
(1,117)
64,442
(12,271)
137,630
273,252
410,882 $

36,220
18,895
8,570
(3,984)
3,333
(13,792)

(4,605)
(16,622)
(191)
(6,310)
(1,631)
(4,222)
18,862
(1,875)
64,081

(256,082)
3,973
(26,144)
(30,397)
30,066
(1,623)
3,256
2,373
(274,578)

150,000
(10,000)
—
—
(7,410)

4,038
4,908
—
(21,833)
(1,251)
118,452
(15,541)
(107,586)
380,838
273,252 $

27,597
13,899
7,741
(10,509)
(8,829)
895

10,130
(17,213)
115
(1,145)
(2,181)
(10,405)
17,790
(8,966)
107,276

(15,296)
—
(21,860)
(22,843)
21,362
(1,676)
8,087
1,656
(30,570)

—
—
—
—
(4,038)

2,993
1,516
—
(5,105)
(3,301)
(7,935)
(21,650)
47,121
333,717
380,838

10,882 $

32,458 $

5,154 $

33,189 $

4,230

40,899

$

$

$

The accompanying notes are an integral part of these consolidated financial statements.

F-8

F-9

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017

1. Organization and Summary of Significant Accounting Policies

Nature of Business

Korn/Ferry International, a Delaware corporation (the “Company”), and its subsidiaries are engaged in the
business of providing talent management solutions, including executive search on a retained basis, recruitment for
non-executive professionals, recruitment process outsourcing and leadership & talent consulting services.

Basis of Consolidation and Presentation

The consolidated financial statements include the accounts of the Company and its wholly and majority owned/
controlled domestic and international subsidiaries. All intercompany balances and transactions have been
eliminated in consolidation. The preparation of the consolidated financial statements conform with United States
(“U.S.”) generally accepted accounting principles (“GAAP”). The consolidated financial statements include all
adjustments, consisting of normal recurring accruals and any other adjustments that management considers
necessary for a fair presentation of the results for these periods.

Investments in affiliated companies, which are 50% or less owned and where the Company exercises significant
influence over operations, are accounted for using the equity method. Dividends received from our unconsolidated
subsidiaries were approximately $0.6 million, $2.4 million and $1.7 million during fiscal 2017, 2016 and 2015,
respectively.

In the fourth quarter of fiscal 2016, we obtained control of our Mexico subsidiary and began to consolidate the
operations. Noncontrolling interest in our Mexico subsidiary is reflected on the Company’s consolidated financial
statements for fiscal 2017 and 2016.

The Company considers events or transactions that occur after the balance sheet date but before the consolidated
financial statements are issued to provide additional evidence relative to certain estimates or to identify matters
that require additional disclosures.

Use of Estimates and Uncertainties

The preparation of the consolidated financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these estimates, and changes in estimates
are reported in current operations as new information is learned or upon the amounts becoming fixed and
determinable. The most significant areas that require management judgment are revenue recognition,
restructuring, deferred compensation, annual performance related bonuses, evaluation of the carrying value of
receivables, goodwill and other intangible assets, fair value of contingent consideration, share-based payments
and the recoverability of deferred income taxes.

Revenue Recognition

Substantially all fee revenue is derived from fees for professional services related to executive search performed
on a retained basis, recruitment for non-executive professionals, recruitment process outsourcing, people and
organizational advisory services and the sale of product services. Fee revenue from executive search activities
and recruitment for non-executive professionals is generally one-third of the estimated first year compensation of
the placed executive or non-executive professional, as applicable, plus a percentage of the fee to cover indirect
engagement related expenses. The Company generally recognizes such revenue on a straight-line basis over a
three-month period, commencing upon client acceptance, as this is the period over which the recruitment services
are performed. Fees earned in excess of the initial contract amount are recognized upon completion of the
engagement, which reflect the difference between the final actual compensation of the placed executive and the

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2017 (continued)

estimate used for purposes of the previous billings. Since the initial contract fees are typically not contingent upon

placement of a candidate, our assumptions primarily relate to establishing the period over which such service is

performed. These assumptions determine the timing of revenue recognition and profitability for the reported

period. Any revenues associated with services that are provided on a contingent basis are recognized once the

contingency is resolved. In addition to recruitment for non-executive professionals, Futurestep provides

recruitment process outsourcing (“RPO”) services and fee revenue is recognized as services are rendered and/or

as milestones are achieved. Fee revenue from Hay Group (formerly known as Leadership & Talent Consulting

(“Legacy LTC”) which was combined with HG (Luxembourg) S.à.r.l (“Legacy Hay”) in December 2015) is

recognized as services are rendered for consulting engagements and other time based services, measured by

total hours incurred to the total estimated hours at completion. It is possible that updated estimates for the

consulting engagement may vary from initial estimates with such updates being recognized in the period of

determination. Depending on the timing of billings and services rendered, the Company accrues or defers revenue

as appropriate. Hay Group revenue is also derived from the sale of product services, which includes revenue from

licenses and from the sale of products. Revenue from licenses is recognized using a straight-line method over the

term of the contract (generally 12 months). Under the fixed term licenses, the Company is obligated to provide the

licensee with access to any updates to the underlying intellectual property that are made by the Company during

the term of the license. Once the term of the agreement expires, the client’s right to access or use the intellectual

property expires and the Company has no further obligations to the client under the license agreement. Revenue

from perpetual licenses is recognized when the license is sold since the Company’s only obligation is to provide

the client access to the intellectual property but is not obligated to provide maintenance, support, updates or

upgrades. Products sold by the Company mainly consist of books and automated services covering a variety of

topics including performance management, team effectiveness, and coaching and development. The Company

recognizes revenue for its products when the product has been sold or shipped in the case of books. As of

April 30, 2017 and 2016, the Company included deferred revenue of $95.8 million and $95.9 million, respectively,

in other accrued liabilities.

Reimbursements

revenue in its consolidated statements of income.

Allowance for Doubtful Accounts

The Company incurs certain out-of-pocket expenses that are reimbursed by its clients, which are accounted for as

An allowance is established for doubtful accounts by taking a charge to general and administrative expenses. The

amount of the allowance is based on historical loss experience, assessment of the collectability of specific

accounts, as well as expectations of future collections based upon trends and the type of work for which services

are rendered. After the Company exhausts all collection efforts, the amount of the allowance is reduced for

balances identified as uncollectible.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less to be cash

equivalents. As of April 30, 2017 and 2016, the Company’s investments in cash equivalents, consist of money

market funds for which market prices are readily available.

Marketable Securities

The Company currently has investments in mutual funds that are classified as trading securities based upon

management’s intent and ability to hold, sell or trade such securities. The classification of the investments in

mutual funds is assessed upon purchase and reassessed at each reporting period. The investments in mutual

funds (for which market prices are readily available) are held in trust to satisfy obligations under the Company’s

deferred compensation plans. Such investments are based upon the employees’ investment elections in their

deemed accounts in the Executive Capital Accumulation Plan and similar plans in Asia Pacific and Canada

(“ECAP”) from a pre-determined set of securities and the Company invests in marketable securities to mirror these

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KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2017

1. Organization and Summary of Significant Accounting Policies

Nature of Business

Korn/Ferry International, a Delaware corporation (the “Company”), and its subsidiaries are engaged in the

business of providing talent management solutions, including executive search on a retained basis, recruitment for

non-executive professionals, recruitment process outsourcing and leadership & talent consulting services.

Basis of Consolidation and Presentation

The consolidated financial statements include the accounts of the Company and its wholly and majority owned/

controlled domestic and international subsidiaries. All intercompany balances and transactions have been

eliminated in consolidation. The preparation of the consolidated financial statements conform with United States

(“U.S.”) generally accepted accounting principles (“GAAP”). The consolidated financial statements include all

adjustments, consisting of normal recurring accruals and any other adjustments that management considers

necessary for a fair presentation of the results for these periods.

Investments in affiliated companies, which are 50% or less owned and where the Company exercises significant

influence over operations, are accounted for using the equity method. Dividends received from our unconsolidated

subsidiaries were approximately $0.6 million, $2.4 million and $1.7 million during fiscal 2017, 2016 and 2015,

respectively.

In the fourth quarter of fiscal 2016, we obtained control of our Mexico subsidiary and began to consolidate the

operations. Noncontrolling interest in our Mexico subsidiary is reflected on the Company’s consolidated financial

statements for fiscal 2017 and 2016.

The Company considers events or transactions that occur after the balance sheet date but before the consolidated

financial statements are issued to provide additional evidence relative to certain estimates or to identify matters

that require additional disclosures.

Use of Estimates and Uncertainties

The preparation of the consolidated financial statements in conformity with GAAP requires management to make

estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent

assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and

expenses during the reporting period. Actual results could differ from these estimates, and changes in estimates

are reported in current operations as new information is learned or upon the amounts becoming fixed and

determinable. The most significant areas that require management judgment are revenue recognition,

restructuring, deferred compensation, annual performance related bonuses, evaluation of the carrying value of

receivables, goodwill and other intangible assets, fair value of contingent consideration, share-based payments

and the recoverability of deferred income taxes.

Revenue Recognition

Substantially all fee revenue is derived from fees for professional services related to executive search performed

on a retained basis, recruitment for non-executive professionals, recruitment process outsourcing, people and

organizational advisory services and the sale of product services. Fee revenue from executive search activities

and recruitment for non-executive professionals is generally one-third of the estimated first year compensation of

the placed executive or non-executive professional, as applicable, plus a percentage of the fee to cover indirect

engagement related expenses. The Company generally recognizes such revenue on a straight-line basis over a

three-month period, commencing upon client acceptance, as this is the period over which the recruitment services

are performed. Fees earned in excess of the initial contract amount are recognized upon completion of the

engagement, which reflect the difference between the final actual compensation of the placed executive and the

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

estimate used for purposes of the previous billings. Since the initial contract fees are typically not contingent upon
placement of a candidate, our assumptions primarily relate to establishing the period over which such service is
performed. These assumptions determine the timing of revenue recognition and profitability for the reported
period. Any revenues associated with services that are provided on a contingent basis are recognized once the
contingency is resolved. In addition to recruitment for non-executive professionals, Futurestep provides
recruitment process outsourcing (“RPO”) services and fee revenue is recognized as services are rendered and/or
as milestones are achieved. Fee revenue from Hay Group (formerly known as Leadership & Talent Consulting
(“Legacy LTC”) which was combined with HG (Luxembourg) S.à.r.l (“Legacy Hay”) in December 2015) is
recognized as services are rendered for consulting engagements and other time based services, measured by
total hours incurred to the total estimated hours at completion. It is possible that updated estimates for the
consulting engagement may vary from initial estimates with such updates being recognized in the period of
determination. Depending on the timing of billings and services rendered, the Company accrues or defers revenue
as appropriate. Hay Group revenue is also derived from the sale of product services, which includes revenue from
licenses and from the sale of products. Revenue from licenses is recognized using a straight-line method over the
term of the contract (generally 12 months). Under the fixed term licenses, the Company is obligated to provide the
licensee with access to any updates to the underlying intellectual property that are made by the Company during
the term of the license. Once the term of the agreement expires, the client’s right to access or use the intellectual
property expires and the Company has no further obligations to the client under the license agreement. Revenue
from perpetual licenses is recognized when the license is sold since the Company’s only obligation is to provide
the client access to the intellectual property but is not obligated to provide maintenance, support, updates or
upgrades. Products sold by the Company mainly consist of books and automated services covering a variety of
topics including performance management, team effectiveness, and coaching and development. The Company
recognizes revenue for its products when the product has been sold or shipped in the case of books. As of
April 30, 2017 and 2016, the Company included deferred revenue of $95.8 million and $95.9 million, respectively,
in other accrued liabilities.

Reimbursements

The Company incurs certain out-of-pocket expenses that are reimbursed by its clients, which are accounted for as
revenue in its consolidated statements of income.

Allowance for Doubtful Accounts

An allowance is established for doubtful accounts by taking a charge to general and administrative expenses. The
amount of the allowance is based on historical loss experience, assessment of the collectability of specific
accounts, as well as expectations of future collections based upon trends and the type of work for which services
are rendered. After the Company exhausts all collection efforts, the amount of the allowance is reduced for
balances identified as uncollectible.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less to be cash
equivalents. As of April 30, 2017 and 2016, the Company’s investments in cash equivalents, consist of money
market funds for which market prices are readily available.

Marketable Securities

The Company currently has investments in mutual funds that are classified as trading securities based upon
management’s intent and ability to hold, sell or trade such securities. The classification of the investments in
mutual funds is assessed upon purchase and reassessed at each reporting period. The investments in mutual
funds (for which market prices are readily available) are held in trust to satisfy obligations under the Company’s
deferred compensation plans. Such investments are based upon the employees’ investment elections in their
deemed accounts in the Executive Capital Accumulation Plan and similar plans in Asia Pacific and Canada
(“ECAP”) from a pre-determined set of securities and the Company invests in marketable securities to mirror these

F-10

F-11

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

elections. These investments are recorded at fair value and are classified as marketable securities in the
accompanying consolidated balance sheets. The investments that the Company may sell within the next twelve
months are carried as current assets. Realized gains (losses) on marketable securities are determined by specific
identification. Interest is recognized on an accrual basis, dividends are recorded as earned on the ex-dividend
date. Interest, dividend income and the changes in fair value in trading securities are recorded in the
accompanying consolidated statements of income in other income (loss), net.

Fair Value of Financial Instruments

Fair value is the price the Company would receive to sell an asset or transfer a liability (exit price) in an orderly
transaction between market participants. For those assets and liabilities recorded or disclosed at fair value, the
Company determines the fair value based upon the quoted market price, if available. If a quoted market price is
not available for identical assets, the fair value is based upon the quoted market price of similar assets. The fair
values are assigned a level within the fair value hierarchy as defined below:

▪ Level 1: Observable inputs such as quoted prices (unadjusted) in active markets that are accessible at the

measurement date for identical, unrestricted assets or liabilities.

▪ Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.
These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or
similar assets or liabilities in markets that are not active.

▪ Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

As of April 30, 2017 and 2016, the Company held certain assets that are required to be measured at fair value on
a recurring basis. These included cash, cash equivalents, accounts receivable, marketable securities and foreign
currency forward contracts and at April 30, 2017 also included an interest rate swap. The carrying amount of cash,
cash equivalents and accounts receivable approximates fair value due to the short maturity of these instruments.
The fair values of marketable securities classified as trading are obtained from quoted market prices, and the fair
values of foreign currency forward contracts or the interest rate swap are obtained from a third party, which are
based on quoted prices or market prices for similar assets and financial instruments.

Derivative Financial Instruments

The Company is exposed to interest rate risk due to the outstanding senior secured credit agreement entered on
June 15, 2016. The Company has entered into an interest rate swap agreement to effectively convert its variable
debt to a fixed-rate basis. The principal objective of these contracts is to eliminate or reduce the variability of the
cash flows in interest payments associated with the Company’s long-term debt, thus reducing the impact of
interest rate changes on future interest payment cash flows. The Company has determined that the interest rate
swap qualifies as a cash flow hedge in accordance with Accounting Standards Codification 815, Derivatives and
Hedging. Changes in the fair value of an interest rate swap agreement designated as a cash flow hedge are
recorded as a component of accumulated other comprehensive income (loss) within stockholders’ equity and are
amortized to interest expense over the term of the related debt.

Foreign Currency Forward Contracts Not Designated as Hedges

Beginning in the third quarter of fiscal 2016, the Company established a program that primarily utilizes foreign
currency forward contracts to offset the risks associated with the effects of certain foreign currency exposures due
to an increase in exposure to such risks as a result of the Legacy Hay acquisition. These foreign currency forward
contracts are neither used for trading purposes nor are they designated as hedging instruments pursuant to
Accounting Standards Codification 815, Derivatives and Hedging. Accordingly, the fair value of these contracts is
recorded as of the end of the reporting period in the accompanying consolidated balance sheets, while the change
in fair value is recorded to the accompanying consolidated statement of income.

F-12

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2017 (continued)

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

elections. These investments are recorded at fair value and are classified as marketable securities in the

accompanying consolidated balance sheets. The investments that the Company may sell within the next twelve

months are carried as current assets. Realized gains (losses) on marketable securities are determined by specific

identification. Interest is recognized on an accrual basis, dividends are recorded as earned on the ex-dividend

date. Interest, dividend income and the changes in fair value in trading securities are recorded in the

accompanying consolidated statements of income in other income (loss), net.

Fair Value of Financial Instruments

Fair value is the price the Company would receive to sell an asset or transfer a liability (exit price) in an orderly

transaction between market participants. For those assets and liabilities recorded or disclosed at fair value, the

Company determines the fair value based upon the quoted market price, if available. If a quoted market price is

not available for identical assets, the fair value is based upon the quoted market price of similar assets. The fair

values are assigned a level within the fair value hierarchy as defined below:

▪ Level 1: Observable inputs such as quoted prices (unadjusted) in active markets that are accessible at the

measurement date for identical, unrestricted assets or liabilities.

▪ Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.

These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or

similar assets or liabilities in markets that are not active.

▪ Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

As of April 30, 2017 and 2016, the Company held certain assets that are required to be measured at fair value on

a recurring basis. These included cash, cash equivalents, accounts receivable, marketable securities and foreign

currency forward contracts and at April 30, 2017 also included an interest rate swap. The carrying amount of cash,

cash equivalents and accounts receivable approximates fair value due to the short maturity of these instruments.

The fair values of marketable securities classified as trading are obtained from quoted market prices, and the fair

values of foreign currency forward contracts or the interest rate swap are obtained from a third party, which are

based on quoted prices or market prices for similar assets and financial instruments.

Derivative Financial Instruments

The Company is exposed to interest rate risk due to the outstanding senior secured credit agreement entered on

June 15, 2016. The Company has entered into an interest rate swap agreement to effectively convert its variable

debt to a fixed-rate basis. The principal objective of these contracts is to eliminate or reduce the variability of the

cash flows in interest payments associated with the Company’s long-term debt, thus reducing the impact of

interest rate changes on future interest payment cash flows. The Company has determined that the interest rate

swap qualifies as a cash flow hedge in accordance with Accounting Standards Codification 815, Derivatives and

Hedging. Changes in the fair value of an interest rate swap agreement designated as a cash flow hedge are

recorded as a component of accumulated other comprehensive income (loss) within stockholders’ equity and are

amortized to interest expense over the term of the related debt.

Foreign Currency Forward Contracts Not Designated as Hedges

Beginning in the third quarter of fiscal 2016, the Company established a program that primarily utilizes foreign

currency forward contracts to offset the risks associated with the effects of certain foreign currency exposures due

to an increase in exposure to such risks as a result of the Legacy Hay acquisition. These foreign currency forward

contracts are neither used for trading purposes nor are they designated as hedging instruments pursuant to

Accounting Standards Codification 815, Derivatives and Hedging. Accordingly, the fair value of these contracts is

recorded as of the end of the reporting period in the accompanying consolidated balance sheets, while the change

in fair value is recorded to the accompanying consolidated statement of income.

Business Acquisitions

Business acquisitions are accounted for under the acquisition method. The acquisition method requires the
reporting entity to identify the acquirer, determine the acquisition date, recognize and measure the identifiable
assets acquired, the liabilities assumed and any non-controlling interest in the acquired entity, and recognize and
measure goodwill or a gain from the purchase. The acquiree’s results are included in the Company’s consolidated
financial statements from the date of acquisition. Assets acquired and liabilities assumed are recorded at their fair
values and the excess of the purchase price over the amounts assigned is recorded as goodwill, or if the fair value
of the assets acquired exceeds the purchase price consideration, a bargain purchase gain is recorded.
Adjustments to fair value assessments are generally recorded to goodwill over the measurement period (not
longer than twelve months). The acquisition method also requires that acquisition-related transaction and post-
acquisition restructuring costs be charged to expense as committed, and requires the Company to recognize and
measure certain assets and liabilities including those arising from contingencies and contingent consideration in a
business combination.

Property and Equipment, Net

Property and equipment is carried at cost less accumulated depreciation. Leasehold improvements are amortized
on a straight-line basis over the estimated useful life of the asset, or the lease term, whichever is shorter. Software
development costs incurred for internal use projects are capitalized and, once placed in service, amortized using
the straight-line method over the estimated useful life, generally three to seven years. All other property and
equipment is depreciated or amortized on a straight-line basis over the estimated useful lives of three to ten years.

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate
that the carrying value of an asset may not be recoverable. In fiscal 2017, 2016 and 2015, there were no such
impairment charges recorded.

Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of assets acquired. The goodwill
impairment test compares the fair value of a reporting unit with its carrying amount, including goodwill. If the
carrying amount of a reporting unit exceeds its fair value, goodwill of the reporting unit would be considered
impaired. To measure the amount of the impairment loss, the implied fair value of a reporting unit’s goodwill is
compared to the carrying amount of that goodwill. The implied fair value of goodwill is determined in the same
manner as the amount of goodwill recognized in a business combination. If the carrying amount of a reporting
unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal
to that excess. For each of these tests, the fair value of each of the Company’s reporting units is determined using
a combination of valuation techniques, including a discounted cash flow methodology. To corroborate the
discounted cash flow analysis performed at each reporting unit, a market approach is utilized using observable
market data such as comparable companies in similar lines of business that are publicly traded or which are part
of a public or private transaction (to the extent available). Results of the annual impairment test performed as of
January 31, 2017, indicated that the fair value of each reporting unit exceeded its carrying amount and no
reporting units were at risk of failing the impairment test. As a result, no impairment charge was recognized. There
was also no indication of potential impairment during the fourth quarter of fiscal 2017 that would have required
further testing.

Intangible assets primarily consist of customer lists, non-compete agreements, proprietary databases, intellectual
property and trademarks and are recorded at their estimated fair value at the date of acquisition and are amortized
in a pattern in which the asset is consumed if that pattern can be reliably determined, or using the straight-line
method over their estimated useful lives which range from one to 24 years. For intangible assets subject to
amortization, an impairment loss is recognized if the carrying amount of the intangible assets is not recoverable
and exceeds fair value. The carrying amount of the intangible assets is considered not recoverable if it exceeds
the sum of the undiscounted cash flows expected to result from use of the asset. Intangible assets with indefinite
lives are not amortized, but are reviewed annually for impairment or more frequently whenever events or changes

F-12

F-13

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2017 (continued)

in circumstances indicate that the fair value of the asset may be less than its carrying amount. As of April 30, 2017
and 2016, there were no indicators of impairment with respect to the Company’s intangible assets.

of plan assets and reflects the Company’s estimate for trust asset returns given the current asset allocation and

any expected changes to the asset allocation and current and future market conditions.

Compensation and Benefits Expense

Compensation and benefits expense in the accompanying consolidated statements of income consist of
compensation and benefits paid to consultants (employees who originate business), executive officers and
administrative and support personnel. The most significant portions of this expense are salaries and the amounts
paid under the annual performance related bonus plan to employees. The portion of the expense applicable to
salaries is comprised of amounts earned by employees during a reporting period. The portion of the expenses
applicable to annual performance related bonuses refers to the Company’s annual employee performance related
bonus with respect to a fiscal year, the amount of which is communicated and paid to each eligible employee
following the completion of the fiscal year.

Each quarter, management makes its best estimate of its annual performance related bonuses, which requires
management to, among other things, project annual consultant productivity (as measured by engagement fees
billed and collected by executive search consultants and revenue and other performance/profitability metrics for
Hay Group and Futurestep consultants), the level of engagements referred by a consultant in one line of business
to a different line of business, Company performance including profitability, competitive forces and future economic
conditions and their impact on the Company’s results. At the end of each fiscal year, annual performance related
bonuses take into account final individual consultant productivity (including referred work), Company/line of
business results including profitability, the achievement of strategic objectives and the results of individual
performance appraisals, and the current economic landscape. Accordingly, each quarter the Company reevaluates
the assumptions used to estimate annual performance related bonus liability and adjusts the carrying amount of
the liability recorded on the consolidated balance sheet and reports any changes in the estimate in current
operations.

Because annual performance-based bonuses are communicated and paid only after the Company reports its full
fiscal year results, actual performance-based bonus payments may differ from the prior year’s estimate. Such
changes in the bonus estimate historically have been immaterial and are recorded in current operations in the
period in which they are determined. The performance related bonus expense was $179.6 million, $186.5 million
and $166.4 million for the years ended April 30, 2017, 2016 and 2015, respectively, included in compensation and
benefits expense in the consolidated statements of income.

Other expenses included in compensation and benefits expense are due to changes in deferred compensation
and pension plan liabilities, changes in cash surrender value (‘CSV’) of company owned life insurance (“COLI”)
contracts, amortization of stock compensation awards, payroll taxes and employee insurance benefits.

Deferred Compensation and Pension Plans

For financial accounting purposes, the Company estimates the present value of the future benefits payable under
the deferred compensation and pension plans as of the estimated payment commencement date. The Company
also estimates the remaining number of years a participant will be employed by the Company. Then, each year
during the period of estimated employment, the Company accrues a liability and recognizes expense for a portion
of the future benefit using the unit credit cost method for Senior Executive Incentive Plan (“SEIP”), Wealth
Accumulation Plan (“WAP”), Enhanced Wealth Accumulation Plan (“EWAP”) and the Worldwide Executive Benefit
Plan (“WEB”) and the pension plan acquired under Legacy Hay, while the medical and life insurance plan uses the
projected unit credit cost method. The amounts charged to operations are made up of service and interest costs
and the expected return on plan assets. Actuarial gains and losses are initially recorded in accumulated other
comprehensive income (loss). The actuarial gains/losses included in accumulated other comprehensive income
are amortized to the consolidated statements of income, if at the beginning of the year, the amount exceeds 10%
of the greater of the projected benefit obligation and market-related plan assets. The amortization included in
periodic benefit cost is divided by the average remaining service of inactive plan participants, or the period for
which benefits will be paid, if shorter. The expected return on plan assets takes into account the current fair value

In calculating the accrual for future benefit payments, management has made assumptions regarding employee

turnover, participant vesting, violation of non-competition provisions and the discount rate. Management

periodically reevaluates all assumptions. If assumptions change in future reporting periods, the changes may

impact the measurement and recognition of benefit liabilities and related compensation expense.

Executive Capital Accumulation Plan

The Company, under its deferred compensation plans, makes discretionary contributions and such contributions

may be granted to key employees annually based on the employee’s performance. Certain key management may

also receive Company contributions upon commencement of employment. The Company amortizes these

contributions on a straight-line basis as they vest, generally over a four to five year period. The amounts that are

expected to be paid to employees over the next 12 months are classified as a current liability included in

compensation and benefits payable in the accompanying consolidated balance sheet.

The ECAP is accounted for whereby the changes in the fair value of the vested amounts owed to the participants

are adjusted with a corresponding charge (or credit) to compensation and benefits costs.

Cash Surrender Value of Life Insurance

The Company purchased COLI policies or contracts insuring the lives of certain employees eligible to participate in

certain of the deferred compensation and pension plans as a means of funding benefits under such plans. The

Company purchased both fixed and variable life insurance contracts and does not purchase “split-dollar” life

insurance policy contracts. The Company historically has had both contracts or policies that provide for a fixed or

guaranteed rate of return and a variable rate of return depending on the return of the policies’ investment in their

underlying portfolio in equities and bonds. Beginning in fiscal 2017 the Company currently only holds contracts or

policies that provide for a fixed or guaranteed rate of return. The CSV of these COLI contracts are carried at the

amounts that would be realized if the contract were surrendered at the balance sheet date, net of the outstanding

loans from the insurer. The Company has the intention and ability to continue to hold these COLI policies and

contracts. Additionally, the loans secured by the policies do not have any scheduled payment terms and the

Company also does not intend to repay the loans outstanding on these policies until death benefits under the

policy have been realized. Accordingly, the investment in COLI is classified as long-term in the accompanying

consolidated balance sheet.

The change in the CSV of COLI contracts, net of insurance premiums paid and gains realized, is reported in

compensation and benefits expense. As of April 30, 2017 and 2016, the Company held contracts with gross CSV

of $180.3 million and $175.7 million, offset by outstanding policy loans of $67.2 million and $68.4 million,

respectively. If the issuing insurance companies were to become insolvent, the Company would be considered a

general creditor for $61.3 million and $55.9 million of net CSV as of April 30, 2017 and 2016, respectively;

therefore, these assets are subject to credit risk. Management, together with its outside advisors, routinely

monitors the claims paying abilities of these insurance companies.

The Company accounts for its restructuring charges as a liability when the obligations are incurred and records

such charges at fair value. Such charges include one-time employee termination benefits and cost to terminate

leases, including remaining lease payments. Changes in the estimates of the restructuring charges are recorded in

Restructuring Charges, Net

the period the change is determined.

Stock-Based Compensation

The Company has employee compensation plans under which various types of stock-based instruments are

granted. These instruments, principally include restricted stock units, restricted stock, stock options and an

Employee Stock Purchase Plan (“ESPP”). The Company recognizes compensation expense related to restricted

F-14

F-15

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2017 (continued)

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

in circumstances indicate that the fair value of the asset may be less than its carrying amount. As of April 30, 2017

and 2016, there were no indicators of impairment with respect to the Company’s intangible assets.

of plan assets and reflects the Company’s estimate for trust asset returns given the current asset allocation and
any expected changes to the asset allocation and current and future market conditions.

Compensation and Benefits Expense

Compensation and benefits expense in the accompanying consolidated statements of income consist of

compensation and benefits paid to consultants (employees who originate business), executive officers and

administrative and support personnel. The most significant portions of this expense are salaries and the amounts

paid under the annual performance related bonus plan to employees. The portion of the expense applicable to

salaries is comprised of amounts earned by employees during a reporting period. The portion of the expenses

applicable to annual performance related bonuses refers to the Company’s annual employee performance related

bonus with respect to a fiscal year, the amount of which is communicated and paid to each eligible employee

following the completion of the fiscal year.

Each quarter, management makes its best estimate of its annual performance related bonuses, which requires

management to, among other things, project annual consultant productivity (as measured by engagement fees

billed and collected by executive search consultants and revenue and other performance/profitability metrics for

Hay Group and Futurestep consultants), the level of engagements referred by a consultant in one line of business

to a different line of business, Company performance including profitability, competitive forces and future economic

conditions and their impact on the Company’s results. At the end of each fiscal year, annual performance related

bonuses take into account final individual consultant productivity (including referred work), Company/line of

business results including profitability, the achievement of strategic objectives and the results of individual

performance appraisals, and the current economic landscape. Accordingly, each quarter the Company reevaluates

the assumptions used to estimate annual performance related bonus liability and adjusts the carrying amount of

the liability recorded on the consolidated balance sheet and reports any changes in the estimate in current

operations.

Because annual performance-based bonuses are communicated and paid only after the Company reports its full

fiscal year results, actual performance-based bonus payments may differ from the prior year’s estimate. Such

changes in the bonus estimate historically have been immaterial and are recorded in current operations in the

period in which they are determined. The performance related bonus expense was $179.6 million, $186.5 million

and $166.4 million for the years ended April 30, 2017, 2016 and 2015, respectively, included in compensation and

benefits expense in the consolidated statements of income.

Other expenses included in compensation and benefits expense are due to changes in deferred compensation

and pension plan liabilities, changes in cash surrender value (‘CSV’) of company owned life insurance (“COLI”)

contracts, amortization of stock compensation awards, payroll taxes and employee insurance benefits.

Deferred Compensation and Pension Plans

For financial accounting purposes, the Company estimates the present value of the future benefits payable under

the deferred compensation and pension plans as of the estimated payment commencement date. The Company

also estimates the remaining number of years a participant will be employed by the Company. Then, each year

during the period of estimated employment, the Company accrues a liability and recognizes expense for a portion

of the future benefit using the unit credit cost method for Senior Executive Incentive Plan (“SEIP”), Wealth

Accumulation Plan (“WAP”), Enhanced Wealth Accumulation Plan (“EWAP”) and the Worldwide Executive Benefit

Plan (“WEB”) and the pension plan acquired under Legacy Hay, while the medical and life insurance plan uses the

projected unit credit cost method. The amounts charged to operations are made up of service and interest costs

and the expected return on plan assets. Actuarial gains and losses are initially recorded in accumulated other

comprehensive income (loss). The actuarial gains/losses included in accumulated other comprehensive income

are amortized to the consolidated statements of income, if at the beginning of the year, the amount exceeds 10%

of the greater of the projected benefit obligation and market-related plan assets. The amortization included in

periodic benefit cost is divided by the average remaining service of inactive plan participants, or the period for

which benefits will be paid, if shorter. The expected return on plan assets takes into account the current fair value

In calculating the accrual for future benefit payments, management has made assumptions regarding employee
turnover, participant vesting, violation of non-competition provisions and the discount rate. Management
periodically reevaluates all assumptions. If assumptions change in future reporting periods, the changes may
impact the measurement and recognition of benefit liabilities and related compensation expense.

Executive Capital Accumulation Plan

The Company, under its deferred compensation plans, makes discretionary contributions and such contributions
may be granted to key employees annually based on the employee’s performance. Certain key management may
also receive Company contributions upon commencement of employment. The Company amortizes these
contributions on a straight-line basis as they vest, generally over a four to five year period. The amounts that are
expected to be paid to employees over the next 12 months are classified as a current liability included in
compensation and benefits payable in the accompanying consolidated balance sheet.

The ECAP is accounted for whereby the changes in the fair value of the vested amounts owed to the participants
are adjusted with a corresponding charge (or credit) to compensation and benefits costs.

Cash Surrender Value of Life Insurance

The Company purchased COLI policies or contracts insuring the lives of certain employees eligible to participate in
certain of the deferred compensation and pension plans as a means of funding benefits under such plans. The
Company purchased both fixed and variable life insurance contracts and does not purchase “split-dollar” life
insurance policy contracts. The Company historically has had both contracts or policies that provide for a fixed or
guaranteed rate of return and a variable rate of return depending on the return of the policies’ investment in their
underlying portfolio in equities and bonds. Beginning in fiscal 2017 the Company currently only holds contracts or
policies that provide for a fixed or guaranteed rate of return. The CSV of these COLI contracts are carried at the
amounts that would be realized if the contract were surrendered at the balance sheet date, net of the outstanding
loans from the insurer. The Company has the intention and ability to continue to hold these COLI policies and
contracts. Additionally, the loans secured by the policies do not have any scheduled payment terms and the
Company also does not intend to repay the loans outstanding on these policies until death benefits under the
policy have been realized. Accordingly, the investment in COLI is classified as long-term in the accompanying
consolidated balance sheet.

The change in the CSV of COLI contracts, net of insurance premiums paid and gains realized, is reported in
compensation and benefits expense. As of April 30, 2017 and 2016, the Company held contracts with gross CSV
of $180.3 million and $175.7 million, offset by outstanding policy loans of $67.2 million and $68.4 million,
respectively. If the issuing insurance companies were to become insolvent, the Company would be considered a
general creditor for $61.3 million and $55.9 million of net CSV as of April 30, 2017 and 2016, respectively;
therefore, these assets are subject to credit risk. Management, together with its outside advisors, routinely
monitors the claims paying abilities of these insurance companies.

Restructuring Charges, Net

The Company accounts for its restructuring charges as a liability when the obligations are incurred and records
such charges at fair value. Such charges include one-time employee termination benefits and cost to terminate
leases, including remaining lease payments. Changes in the estimates of the restructuring charges are recorded in
the period the change is determined.

Stock-Based Compensation

The Company has employee compensation plans under which various types of stock-based instruments are
granted. These instruments, principally include restricted stock units, restricted stock, stock options and an
Employee Stock Purchase Plan (“ESPP”). The Company recognizes compensation expense related to restricted

F-14

F-15

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

stock units, restricted stock and the estimated fair value of stock options and stock purchases under the ESPP on
a straight-line basis over the service period for the entire award.

Translation of Foreign Currencies

Generally, financial results of the Company’s foreign subsidiaries are measured in their local currencies. Assets
and liabilities are translated into U.S. dollars at exchange rates in effect at the balance sheet date, while revenue
and expenses are translated at weighted-average exchange rates during the fiscal year. Resulting translation
adjustments are recorded as a component of accumulated comprehensive income. Gains and losses from foreign
currency transactions of the Company’s foreign subsidiaries and the translation of the financial results of
subsidiaries operating in highly inflationary economies are included in general and administrative expense in the
period incurred. Foreign currency gains, on an after tax basis, included in net income were $0.2 million during
fiscal 2017. Foreign currency losses, on an after tax basis, included in net income were $8.7 million and
$1.6 million during fiscal 2016 and 2015, respectively.

On February 17, 2016, the Venezuelan government announced a devaluation of the Bolivar, from the official
exchange rate of 6.3 Bolivars per USD to 10.0 Bolivars per USD, and streamlined the previous three-tiered
currency exchange mechanism into a dual currency exchange mechanism. The weaker of the two rates is a free-
floating exchange rate that at the time of its introduction, sold dollars at approximately 200 Bolivars per USD. The
economic and political environment in Venezuela has continued to deteriorate and the currency exchange
restrictions have become more onerous. The Company had used the previously prevailing official exchange rate of
6.3 Bolivars per USD to re-measure our Venezuelan subsidiary’s financial statements in previous periods, but after
careful consideration, at the time of the devaluation, the Company decided to adopt the free-floating exchange rate
during the fourth quarter of fiscal 2016 as it more appropriately reflects the ability to convert Bolivars to U.S. dollars
given the deteriorating environment in Venezuela. The devaluation of the Bolivar to approximately 260 Bolivars per
USD resulted in a pre-tax charge of $13.7 million, or diluted loss per share of $0.26 during fiscal 2016. In fiscal
2017, the Bolivar continued to weaken but did not materially impact our results of operations.

Income Taxes

There are two components of income tax expense: current and deferred. Current income tax expense (benefit)
approximates taxes to be paid or refunded for the current period. Deferred income tax expense (benefit) results
from changes in deferred tax assets and liabilities between periods. These gross deferred tax assets and liabilities
represent decreases or increases in taxes expected to be paid in the future because of future reversals of
temporary differences in the basis of assets and liabilities as measured by tax laws and their basis as reported in
the consolidated financial statements. Deferred tax assets are also recognized for tax attributes such as net
operating loss carryforwards and tax credit carryforwards. Deferred tax assets and deferred tax liabilities are
presented net on the consolidated balance sheets by tax jurisdiction. Valuation allowances are then recorded to
reduce deferred tax assets to the amounts management concludes are more likely than not to be realized.

Income tax benefits are recognized and measured based upon a two-step model: (1) a tax position must be more-
likely-than-not to be sustained based solely on its technical merits in order to be recognized and (2) the benefit is
measured as the largest dollar amount of that position that is more-likely-than-not to be sustained upon settlement.
The difference between the benefit recognized for a position and the tax benefit claimed on a tax return is referred
to as an unrecognized tax benefit. The Company records income tax related interest and penalties within income
tax expense.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of
cash, cash equivalents, investments, foreign currency forward contracts, interest rate swap, receivables due from
clients and net CSV due from insurance companies, which are discussed above. Cash equivalents include
investments in money market securities while investments include mutual funds and corporate bonds. Investments
are diversified throughout many industries and geographic regions. The Company conducts periodic reviews of its

F-16

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2017 (continued)

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

stock units, restricted stock and the estimated fair value of stock options and stock purchases under the ESPP on

a straight-line basis over the service period for the entire award.

customers’ financial condition and customer payment practices to minimize collection risk on accounts receivable.
At April 30, 2017 and 2016, the Company had no other significant credit concentrations.

Translation of Foreign Currencies

Recently Adopted Accounting Standards

Generally, financial results of the Company’s foreign subsidiaries are measured in their local currencies. Assets

and liabilities are translated into U.S. dollars at exchange rates in effect at the balance sheet date, while revenue

and expenses are translated at weighted-average exchange rates during the fiscal year. Resulting translation

adjustments are recorded as a component of accumulated comprehensive income. Gains and losses from foreign

currency transactions of the Company’s foreign subsidiaries and the translation of the financial results of

subsidiaries operating in highly inflationary economies are included in general and administrative expense in the

period incurred. Foreign currency gains, on an after tax basis, included in net income were $0.2 million during

fiscal 2017. Foreign currency losses, on an after tax basis, included in net income were $8.7 million and

$1.6 million during fiscal 2016 and 2015, respectively.

On February 17, 2016, the Venezuelan government announced a devaluation of the Bolivar, from the official

exchange rate of 6.3 Bolivars per USD to 10.0 Bolivars per USD, and streamlined the previous three-tiered

currency exchange mechanism into a dual currency exchange mechanism. The weaker of the two rates is a free-

floating exchange rate that at the time of its introduction, sold dollars at approximately 200 Bolivars per USD. The

economic and political environment in Venezuela has continued to deteriorate and the currency exchange

restrictions have become more onerous. The Company had used the previously prevailing official exchange rate of

6.3 Bolivars per USD to re-measure our Venezuelan subsidiary’s financial statements in previous periods, but after

careful consideration, at the time of the devaluation, the Company decided to adopt the free-floating exchange rate

during the fourth quarter of fiscal 2016 as it more appropriately reflects the ability to convert Bolivars to U.S. dollars

given the deteriorating environment in Venezuela. The devaluation of the Bolivar to approximately 260 Bolivars per

USD resulted in a pre-tax charge of $13.7 million, or diluted loss per share of $0.26 during fiscal 2016. In fiscal

2017, the Bolivar continued to weaken but did not materially impact our results of operations.

Income Taxes

There are two components of income tax expense: current and deferred. Current income tax expense (benefit)

approximates taxes to be paid or refunded for the current period. Deferred income tax expense (benefit) results

from changes in deferred tax assets and liabilities between periods. These gross deferred tax assets and liabilities

represent decreases or increases in taxes expected to be paid in the future because of future reversals of

temporary differences in the basis of assets and liabilities as measured by tax laws and their basis as reported in

the consolidated financial statements. Deferred tax assets are also recognized for tax attributes such as net

operating loss carryforwards and tax credit carryforwards. Deferred tax assets and deferred tax liabilities are

presented net on the consolidated balance sheets by tax jurisdiction. Valuation allowances are then recorded to

reduce deferred tax assets to the amounts management concludes are more likely than not to be realized.

Income tax benefits are recognized and measured based upon a two-step model: (1) a tax position must be more-

likely-than-not to be sustained based solely on its technical merits in order to be recognized and (2) the benefit is

measured as the largest dollar amount of that position that is more-likely-than-not to be sustained upon settlement.

The difference between the benefit recognized for a position and the tax benefit claimed on a tax return is referred

to as an unrecognized tax benefit. The Company records income tax related interest and penalties within income

tax expense.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of

cash, cash equivalents, investments, foreign currency forward contracts, interest rate swap, receivables due from

clients and net CSV due from insurance companies, which are discussed above. Cash equivalents include

investments in money market securities while investments include mutual funds and corporate bonds. Investments

are diversified throughout many industries and geographic regions. The Company conducts periodic reviews of its

In April 2015, the Financial Accounting Standards Board (the “FASB”) issued guidance simplifying the presentation
of debt issuance costs. The guidance requires debt issuance costs related to a debt liability to be presented in the
balance sheet as a direct deduction from the carrying amount of that debt liability, rather than being classified as
an asset. The Company adopted this guidance during the first quarter of fiscal 2017 and as a result, $4.2 million of
unamortized debt issuance costs associated with its senior secured Credit Agreement were classified as a direct
deduction to the term loan as of July 31, 2016, of which $0.9 million was recorded to term loan, current, and
$3.3 million was recorded to term loan, non-current. The adoption did not have a material impact on the
consolidated financial statements as of April 30, 2016.

In September 2015, the FASB issued guidance requiring an acquirer to recognize adjustments to provisional
amounts recorded in an acquisition that are identified during the measurement period in the reporting period in
which the adjustment amounts are determined. The acquirer is required to record, in the same period’s financial
statements, the effect on earnings of changes in depreciation, amortization or other income effects, if any, as a
result of the change to the provisional amounts, calculated as if the accounting had been completed at the
acquisition date. The acquirer is also required to present separately on the face of the income statement, or
disclose in the footnotes, the portion of the amount recorded in current-period earnings by line item that would
have been recorded in previous reporting periods if the adjustments had been recognized as of the acquisition
date. The Company adopted this guidance during the first quarter of fiscal 2017 and the adoption did not have an
impact on the consolidated financial statements of the Company.

Recently Proposed Accounting Standards

In May 2014, the FASB issued guidance that supersedes revenue recognition requirements regarding contracts
with customers to transfer goods or services or for the transfer of nonfinancial assets. Under the new guidance,
entities are required to recognize revenue in order to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for
those goods or services. The guidance provides a five-step analysis to be performed on transactions to determine
when and how revenue is recognized. The guidance permits two transition methods of adoption 1) the full
retrospective method, in which case the standard would be applied to all reporting periods presented, or 2) the
modified retrospective method, with a cumulative-effect adjustment as of the date of adoption. In July 2015, the
FASB decided to approve a one-year deferral of the effective date as well as providing an option to early adopt the
standard on the original effective date. This new guidance is effective for fiscal years and interim periods within
those annual years beginning after December 15, 2017. The Company will adopt this guidance in its fiscal year
beginning May 1, 2018. The Company has organized a team and developed a project plan to guide the
implementation. The project plan includes working sessions to review, evaluate and document the arrangements
with customers under our various reporting units to identify potential differences that would result from applying the
requirements of the new standard. The Company is currently in the process of developing an updated accounting
policy, utilizing a bottoms-up approach by reviewing our current contracts with customers by various revenue
streams, evaluating new disclosure requirements and identifying and implementing appropriate changes to
business processes, systems and controls to support revenue recognition and disclosure under the new standard.
The Company is still evaluating the impact of ASU No. 2014-09 on our financial statements. Based on our
evaluation to date, revenue on the majority of our contracts will continue to be recognized over time as services
are rendered under the new standard. In addition, capitalization of costs associated with obtaining contracts will
have an impact upon adoption of the new standard. The Company expects to finalize the evaluation in upcoming
quarters and will provide updates on our progress in future filings.

In February 2016, the FASB issued guidance on accounting for leases that generally requires all leases to be
recognized in the consolidated balance sheet. The provisions of the guidance are effective for fiscal years beginning

F-16

F-17

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

after December 15, 2018; early adoption is permitted. The Company plans to adopt this guidance in its fiscal year
beginning May 1, 2019. The provisions of the guidance are to be applied using a modified retrospective approach.
The Company is currently evaluating the effect that this guidance will have on the consolidated financial statements.

In March 2016, the FASB issued guidance on accounting for certain aspects of share-based payments to
employees. The new guidance requires excess tax benefits and tax deficiencies to be recorded in the income
statement when the awards vest or are settled. Furthermore, cash flows related to excess tax benefits will no
longer be separately classified as a financing activity apart from other income tax cash flows. The guidance also
allows companies to repurchase more of an employee’s shares for tax withholding purposes without triggering
liability accounting, clarifying that all cash payments made on an employee’s behalf for withheld shares should be
presented as a financing activity in the consolidated statements of cash flows and provides an accounting policy
election to account for forfeitures as they occur. The provisions of the guidance are effective for fiscal years
beginning after December 15, 2016; early adoption is permitted. The Company will adopt this guidance in its fiscal
year beginning May 1, 2017. The adoption of this standard is not anticipated to have a material impact on the
consolidated financial statements.

In August 2016, the FASB issued guidance on the classification of certain cash receipts and cash payments in the
statement of cash flows. The new guidance provides clarification on specific cash flow issues regarding
presentation and classification in the statement of cash flows with the objective of reducing the existing diversity in
practice. The amendments in this update are effective for reporting periods beginning after December 15, 2017,
with early adoption permitted. The Company plans to adopt this guidance in its fiscal year beginning May 1, 2018.
The provisions of the guidance are to be applied using a retrospective transition method. The adoption of this
standard is not anticipated to have a material impact on the consolidated financial statements.

In January 2017, the FASB issued guidance that clarifies the definition of a business. The new guidance assists a
company when evaluating whether transactions should be accounted for as acquisitions (disposals) of assets or
businesses. The provisions of the guidance require that if the fair value of the gross assets acquired (or disposed
of) is substantially concentrated in a single identifiable asset or a group of similar identifiable assets, then it is not a
business. The provisions of the guidance are effective for annual years beginning after December 15, 2017,
including interim periods, with early adoption permitted. The Company plans to adopt this guidance in its fiscal
year beginning May 1, 2018. These provisions of the guidance are to be applied prospectively. The adoption of
this standard is not anticipated to have a material impact on the consolidated financial statements.

In January 2017, the FASB issued guidance simplifying the test for goodwill impairment. The new guidance
simplifies the test for goodwill impairment by removing Step 2 from the goodwill impairment test. Companies will
now perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount,
recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair
value not to exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to
perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is
necessary. The amendments of this standard are effective for goodwill impairment tests in fiscal years beginning
after December 15, 2019, with early adoption permitted for goodwill impairment tests performed after January 1,
2017. The Company is evaluating the adoption timeline and effects that the standard will have on the consolidated
financial statements.

In March 2017, the FASB issued guidance that improves the presentation of net periodic pension cost and net
periodic postretirement benefit cost. The new guidance will change the presentation of net periodic benefit cost
related to employer sponsored defined benefit plans and other postretirement benefits. Service cost will be
included within the same income statement line item as other compensation costs arising from services rendered
during the period, while other components of net periodic benefit pension cost will be presented separately outside
of operating income. Additionally, only service costs may be capitalized in assets. The amendments of this
standard are effective for fiscal years beginning after December 15, 2017, including interim period within those
years. The Company plans to adopt this guidance in its fiscal year beginning May 1, 2018. The adoption of this
standard will not have a material impact on the consolidated financial statements.

F-18

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2017 (continued)

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

In May 2017, the FASB issued guidance clarifying the scope of modification accounting for stock compensation.
The new standard provides guidance about which changes to the terms or conditions of a share-based payment
award require an entity to apply modification accounting in Topic 718. This pronouncement is effective for annual
reporting periods beginning after December 15, 2017 but early adoption is permitted. The Company plans to adopt
this guidance in its fiscal year beginning May 1, 2018. The Company is currently evaluating the impact of adopting
this guidance.

2. Basic and Diluted Earnings Per Share

Accounting Standards Codification 260, Earnings Per Share, requires companies to treat unvested share-based
payment awards that have non-forfeitable rights to dividends prior to vesting as a separate class of securities in
calculating earnings per share. We have granted and expect to continue to grant to certain employees under our
restricted stock agreements, grants that contain non-forfeitable rights to dividends. Such grants are considered
participating securities. Therefore, we are required to apply the two-class method in calculating earnings per
share. The two-class method of computing earnings per share is an earnings allocation formula that determines
earnings per share for each class of common stock and participating security according to dividends declared (or
accumulated) and participation rights in undistributed earnings. The dilutive effect of participating securities is
calculated using the more dilutive of the treasury method or the two-class method.

Basic earnings per common share was computed using the two-class method by dividing basic net earnings
attributable to common stockholders by the weighted-average number of common shares outstanding. Diluted
earnings per common share was computed using the two-class method by dividing diluted net earnings
attributable to common stockholders by the weighted-average number of common shares outstanding plus dilutive
common equivalent shares. Dilutive common equivalent shares include all in-the-money outstanding options or
other contracts to issue common stock as if they were exercised or converted. Financial instruments that are not in
the form of common stock, but when converted into common stock increase earnings per share are anti-dilutive,
and are not included in the computation of diluted earnings per share.

During fiscal 2017, 2016 and 2015, restricted stock awards of 0.5 million shares, 0.6 million shares and 0.5 million
shares, respectively, were outstanding but not included in the computation of diluted earnings per share because
they were anti-dilutive.

after December 15, 2018; early adoption is permitted. The Company plans to adopt this guidance in its fiscal year

beginning May 1, 2019. The provisions of the guidance are to be applied using a modified retrospective approach.

The Company is currently evaluating the effect that this guidance will have on the consolidated financial statements.

In March 2016, the FASB issued guidance on accounting for certain aspects of share-based payments to

employees. The new guidance requires excess tax benefits and tax deficiencies to be recorded in the income

statement when the awards vest or are settled. Furthermore, cash flows related to excess tax benefits will no

longer be separately classified as a financing activity apart from other income tax cash flows. The guidance also

allows companies to repurchase more of an employee’s shares for tax withholding purposes without triggering

liability accounting, clarifying that all cash payments made on an employee’s behalf for withheld shares should be

presented as a financing activity in the consolidated statements of cash flows and provides an accounting policy

election to account for forfeitures as they occur. The provisions of the guidance are effective for fiscal years

beginning after December 15, 2016; early adoption is permitted. The Company will adopt this guidance in its fiscal

year beginning May 1, 2017. The adoption of this standard is not anticipated to have a material impact on the

consolidated financial statements.

In August 2016, the FASB issued guidance on the classification of certain cash receipts and cash payments in the

statement of cash flows. The new guidance provides clarification on specific cash flow issues regarding

presentation and classification in the statement of cash flows with the objective of reducing the existing diversity in

practice. The amendments in this update are effective for reporting periods beginning after December 15, 2017,

with early adoption permitted. The Company plans to adopt this guidance in its fiscal year beginning May 1, 2018.

The provisions of the guidance are to be applied using a retrospective transition method. The adoption of this

standard is not anticipated to have a material impact on the consolidated financial statements.

In January 2017, the FASB issued guidance that clarifies the definition of a business. The new guidance assists a

company when evaluating whether transactions should be accounted for as acquisitions (disposals) of assets or

businesses. The provisions of the guidance require that if the fair value of the gross assets acquired (or disposed

of) is substantially concentrated in a single identifiable asset or a group of similar identifiable assets, then it is not a

business. The provisions of the guidance are effective for annual years beginning after December 15, 2017,

including interim periods, with early adoption permitted. The Company plans to adopt this guidance in its fiscal

year beginning May 1, 2018. These provisions of the guidance are to be applied prospectively. The adoption of

this standard is not anticipated to have a material impact on the consolidated financial statements.

In January 2017, the FASB issued guidance simplifying the test for goodwill impairment. The new guidance

simplifies the test for goodwill impairment by removing Step 2 from the goodwill impairment test. Companies will

now perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount,

recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair

value not to exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to

perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is

necessary. The amendments of this standard are effective for goodwill impairment tests in fiscal years beginning

after December 15, 2019, with early adoption permitted for goodwill impairment tests performed after January 1,

2017. The Company is evaluating the adoption timeline and effects that the standard will have on the consolidated

financial statements.

In March 2017, the FASB issued guidance that improves the presentation of net periodic pension cost and net

periodic postretirement benefit cost. The new guidance will change the presentation of net periodic benefit cost

related to employer sponsored defined benefit plans and other postretirement benefits. Service cost will be

included within the same income statement line item as other compensation costs arising from services rendered

during the period, while other components of net periodic benefit pension cost will be presented separately outside

of operating income. Additionally, only service costs may be capitalized in assets. The amendments of this

standard are effective for fiscal years beginning after December 15, 2017, including interim period within those

years. The Company plans to adopt this guidance in its fiscal year beginning May 1, 2018. The adoption of this

standard will not have a material impact on the consolidated financial statements.

F-18

F-19

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

The following table summarizes basic and diluted earnings per common share attributable to common
stockholders:

Year Ended April 30,
2016
(in thousands, except per share data)

2015

2017

Net income attributable to Korn/Ferry International

. . . . . . . . . . . . . . . . . . . . . . .

$

84,181

$

30,913

$

88,357

Less: distributed and undistributed earnings to nonvested restricted

stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Basic net earnings attributable to common stockholders . . . . . . . . . . . . . . . . . .
Add: undistributed earnings to nonvested restricted stockholders . . . . . . . . . . . . .
Less: reallocation of undistributed earnings to nonvested restricted stockholders . . .

765

83,416
560
553

280

30,633
82
81

860

87,497
815
804

Diluted net earnings attributable to common stockholders . . . . . . . . . . . . . . . .

$

83,423

$

30,634

$

87,508

Weighted-average common shares outstanding:

Basic weighted-average number of common shares outstanding . . . . . . . . . . . . .

56,205

52,372

49,052

Effect of dilutive securities:

Restricted stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ESPP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

646
24
25

487
50
20

605
105
4

Diluted weighted-average number of common shares outstanding . . . . . . . . . . . .

56,900

52,929

49,766

Net earnings per common share:

Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

1.48

1.47

$

$

0.58

0.58

$

$

1.78

1.76

3. Comprehensive Income (Loss)

Comprehensive income (loss) is comprised of net income and all changes to stockholders’ equity, except those
changes resulting from investments by stockholders (changes in paid-in capital) and distributions to stockholders
(dividends) and is reported in the accompanying consolidated statements of comprehensive income. Accumulated
comprehensive loss, net of taxes, is recorded as a component of stockholders’ equity.

The components of accumulated other comprehensive loss were as follows:

Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred compensation and pension plan adjustments, net of taxes . . . . . . . . . . . . . . . . . . . . .
Interest rate swap unrealized loss, net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

(55,359) $
(15,127)
(578)

Accumulated other comprehensive loss, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

(71,064) $

(36,339)
(21,572)
—

(57,911)

April 30,

2017

2016

(in thousands)

F-20

Year Ended April 30,

2017

2016

2015

(in thousands, except per share data)

Net income attributable to Korn/Ferry International

. . . . . . . . . . . . . . . . . . . . . . .

$

84,181

$

30,913

$

88,357

Less: distributed and undistributed earnings to nonvested restricted

stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Basic net earnings attributable to common stockholders . . . . . . . . . . . . . . . . . .

Add: undistributed earnings to nonvested restricted stockholders . . . . . . . . . . . . .

Less: reallocation of undistributed earnings to nonvested restricted stockholders . . .

765

83,416

560

553

280

30,633

82

81

860

87,497

815

804

Diluted net earnings attributable to common stockholders . . . . . . . . . . . . . . . .

$

83,423

$

30,634

$

87,508

Weighted-average common shares outstanding:

Effect of dilutive securities:

Basic weighted-average number of common shares outstanding . . . . . . . . . . . . .

56,205

52,372

49,052

Restricted stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ESPP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

646

24

25

487

50

20

605

105

4

Diluted weighted-average number of common shares outstanding . . . . . . . . . . . .

56,900

52,929

49,766

Net earnings per common share:

Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

1.48

1.47

$

$

0.58

0.58

$

$

1.78

1.76

3. Comprehensive Income (Loss)

Comprehensive income (loss) is comprised of net income and all changes to stockholders’ equity, except those

changes resulting from investments by stockholders (changes in paid-in capital) and distributions to stockholders

(dividends) and is reported in the accompanying consolidated statements of comprehensive income. Accumulated

comprehensive loss, net of taxes, is recorded as a component of stockholders’ equity.

The components of accumulated other comprehensive loss were as follows:

Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

(55,359) $

Deferred compensation and pension plan adjustments, net of taxes . . . . . . . . . . . . . . . . . . . . .

Interest rate swap unrealized loss, net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(15,127)

(578)

(36,339)

(21,572)

—

Accumulated other comprehensive loss, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

(71,064) $

(57,911)

April 30,

2017

2016

(in thousands)

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2017 (continued)

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

The following table summarizes basic and diluted earnings per common share attributable to common

stockholders:

The following table summarizes the changes in each component of accumulated other comprehensive (loss)
income:

Foreign
Currency
Translation

Deferred
Compensation
and Pension
Plan (1)

Unrealized
Gains
(Losses) on
Marketable
Securities

(in thousands)

Unrealized
losses on
interest rate
swap (2)

Accumulated
Other
Comprehensive
Income (Loss)

15,604 $
(36,523)

(18,006) $
(3,589)

14 $
(10)

— $
—

Balance as of May 1, 2014 . . . . . . . . . . . . . . $
Unrealized losses arising during the period . .
Reclassification of realized net losses to

net income . . . . . . . . . . . . . . . . . . . . . . . . .

Balance as of April 30, 2015 . . . . . . . . . . . .
Unrealized losses arising during the period . .
Reclassification of realized net losses to

net income . . . . . . . . . . . . . . . . . . . . . . . . .

Balance as of April 30, 2016 . . . . . . . . . . . .
Unrealized (losses) gains arising during the
period . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Reclassification of realized net losses to

—

(20,919)
(15,420)

—

(36,339)

(19,020)

1,887

(19,708)
(3,653)

1,789

(21,572)

4,584

1,861

—

4
(4)

—

—

—

—

net income . . . . . . . . . . . . . . . . . . . . . . . . .

—

Balance as of April 30, 2017 . . . . . . . . . . . . $

(55,359) $

(15,127) $

— $

(2,388)
(40,122)

1,887

(40,623)
(19,077)

1,789

(57,911)

—

—
—

—

—

(635)

(15,071)

57

(578) $

1,918

(71,064)

(1) The tax effects on unrealized gains (losses) were $1.9 million, $(2.3) million and $(2.3) million as of April 30, 2017, 2016 and

2015, respectively. The tax effects on reclassifications of realized net losses were $1.2 million, $1.1 million and $1.2 million
as of April 30, 2017, 2016 and 2015, respectively.

(2) The tax effects on unrealized (losses) were $(0.4) million as of April 30, 2017.

4. Employee Stock Plans

Stock-Based Compensation

The following table summarizes the components of stock-based compensation expense recognized in the
Company’s consolidated statements of income for the periods indicated:

Restricted stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ESPP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

Total stock-based compensation expense, pre-tax . . . . . . . . . . . . . . . . . . . . . . . . .
Tax benefit from stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . .

2017

Year Ended April 30,
2016
(in thousands)

2015

$

18,045
913
—

18,958
(4,756)

$

18,288
590
17

18,895
(7,347)

13,602
162
135

13,899
(3,893)

Total stock-based compensation expense, net of tax . . . . . . . . . . . . . . . . . . . . . . .

$

14,202

$

11,548

$

10,006

Stock Incentive Plan

At the Company’s 2016 Annual Meeting of Stockholders, held on October 6, 2016, the Company’s stockholders
approved an amendment and restatement to the Korn/Ferry International Amended and Restated 2008 Stock
Incentive Plan (the 2016 amendment and restatement being “The Third A&R 2008 Plan”), which among other
things, increased the number of shares under the plan by 5,500,000, increasing the current maximum number of
shares that may be issued under the plan to 11,200,000 shares, subject to certain changes in the Company’s
capital structure and other extraordinary events. The Third A&R 2008 Plan provides for the grant of awards to
eligible participants, designated as either nonqualified or incentive stock options, restricted stock and restricted

F-20

F-21

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

stock units, any of which may be performance-based or market-based, and incentive bonuses, which may be paid
in cash or stock or a combination thereof. Under the Third A&R 2008 Plan, the ability to issue full-value awards is
limited by requiring full-value stock awards to count 2.3 times as much as stock options.

Restricted Stock

The Company grants time-based restricted stock awards to executive officers and other senior employees
generally vesting over a four-year period. In addition, certain key management members typically receive time-
based restricted stock awards upon commencement of employment and may receive them annually in conjunction
with the Company’s performance review. Time-based restricted stock awards are granted at a price equal to fair
value, which is determined based on the closing price of the Company’s common stock on the grant date. The
Company recognizes compensation expense for time-based restricted stock awards on a straight-line basis over
the vesting period.

The Company also grants market-based and performance-based restricted stock units to executive officers and
other senior employees. The market-based units vest after three years depending upon the Company’s total
stockholder return over the three-year performance period relative to other companies in its selected peer group.
The fair value of these market-based restricted stock units are determined by using extensive market data that is
based on historical Company and peer group information. The Company recognizes compensation expense for
market-based restricted stock units on a straight-line basis over the vesting period.

Performance-based restricted stock units vest after three years depending upon the Company meeting certain
objectives that are set at the time the restricted stock unit is issued. Performance-based restricted stock units are
granted at a price equal to fair value, which is determined based on the closing price of the Company’s common
stock on the grant date. At the end of each reporting period, the Company estimates the number of restricted stock
units expected to vest based on the probability that certain performance objectives will be met, exceeded, or fall
below target levels, and the Company takes into account these estimates when calculating the expense for the
period.

Restricted stock activity is summarized below:

2017

Weighted-
Average
Grant Date
Fair Value

Shares

April 30,
2016

Weighted-
Average
Grant Date
Fair Value

Shares

2015

Weighted-
Average
Grant Date
Fair Value

Shares

(in thousands, except per share data)

Non-vested, beginning of year . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited/expired . . . . . . . . . . . . . . . . . . . . .

Non-vested, end of year . . . . . . . . . . . . . . .

1,506
$
$
852
(751) $
(26) $

1,581

$

34.12
17.43
24.15
26.80

29.74

1,560
$
$
784
(809) $
(29) $

1,506

$

22.15
39.19
16.35
23.38

34.12

1,880
$
$
438
(705) $
(53) $

18.95
29.93
18.52
21.13

1,560

$

22.15

As of April 30, 2017, there were 0.6 million shares and 0.1 million shares outstanding relating to market-based and
performance-based restricted stock units, respectively, with total unrecognized compensation totaling $5.3 million
and $5.4 million, respectively.

As of April 30, 2017, there was $27.1 million of total unrecognized compensation cost related to all non-vested
awards of restricted stock, which is expected to be recognized over a weighted-average period of 2.4 years.
During fiscal 2017 and fiscal 2016, 205,440 shares and 215,453 shares of restricted stock totaling $4.8 million and
$7.4 million, respectively, were repurchased by the Company, at the option of the employee, to pay for taxes
related to vesting of restricted stock.

F-22

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2017 (continued)

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

stock units, any of which may be performance-based or market-based, and incentive bonuses, which may be paid

in cash or stock or a combination thereof. Under the Third A&R 2008 Plan, the ability to issue full-value awards is

limited by requiring full-value stock awards to count 2.3 times as much as stock options.

Restricted Stock

The Company grants time-based restricted stock awards to executive officers and other senior employees

generally vesting over a four-year period. In addition, certain key management members typically receive time-

based restricted stock awards upon commencement of employment and may receive them annually in conjunction

with the Company’s performance review. Time-based restricted stock awards are granted at a price equal to fair

value, which is determined based on the closing price of the Company’s common stock on the grant date. The

Company recognizes compensation expense for time-based restricted stock awards on a straight-line basis over

the vesting period.

The Company also grants market-based and performance-based restricted stock units to executive officers and

other senior employees. The market-based units vest after three years depending upon the Company’s total

stockholder return over the three-year performance period relative to other companies in its selected peer group.

The fair value of these market-based restricted stock units are determined by using extensive market data that is

based on historical Company and peer group information. The Company recognizes compensation expense for

market-based restricted stock units on a straight-line basis over the vesting period.

Performance-based restricted stock units vest after three years depending upon the Company meeting certain

objectives that are set at the time the restricted stock unit is issued. Performance-based restricted stock units are

granted at a price equal to fair value, which is determined based on the closing price of the Company’s common

stock on the grant date. At the end of each reporting period, the Company estimates the number of restricted stock

units expected to vest based on the probability that certain performance objectives will be met, exceeded, or fall

below target levels, and the Company takes into account these estimates when calculating the expense for the

period.

Restricted stock activity is summarized below:

2017

Weighted-

Average

Grant Date

Fair Value

Shares

Shares

Shares

(in thousands, except per share data)

April 30,

2016

Weighted-

Average

Grant Date

Fair Value

1,560

784

$

$

(809) $

(29) $

1,506

$

22.15

39.19

16.35

23.38

34.12

2015

Weighted-

Average

Grant Date

Fair Value

1,880

438

$

$

(705) $

(53) $

18.95

29.93

18.52

21.13

1,560

$

22.15

Non-vested, beginning of year . . . . . . . . . .

Granted . . . . . . . . . . . . . . . . . . . . . . . . . . .

Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Forfeited/expired . . . . . . . . . . . . . . . . . . . . .

Non-vested, end of year . . . . . . . . . . . . . . .

1,506

852

$

$

(751) $

(26) $

1,581

$

34.12

17.43

24.15

26.80

29.74

As of April 30, 2017, there were 0.6 million shares and 0.1 million shares outstanding relating to market-based and

performance-based restricted stock units, respectively, with total unrecognized compensation totaling $5.3 million

and $5.4 million, respectively.

As of April 30, 2017, there was $27.1 million of total unrecognized compensation cost related to all non-vested

awards of restricted stock, which is expected to be recognized over a weighted-average period of 2.4 years.

During fiscal 2017 and fiscal 2016, 205,440 shares and 215,453 shares of restricted stock totaling $4.8 million and

$7.4 million, respectively, were repurchased by the Company, at the option of the employee, to pay for taxes

related to vesting of restricted stock.

Employee Stock Purchase Plan

The Company has an ESPP that, in accordance with Section 423 of the Internal Revenue Code, allows eligible
employees to authorize payroll deductions of up to 15% of their salary to purchase shares of the Company’s
common stock at 85% of the fair market price of the common stock on the last day of the enrollment period.
Employees may not purchase more than $25,000 in stock during any calendar year. The maximum number of
shares that may be issued under the ESPP is 3.0 million shares. The ESPP was suspended during the second
half of fiscal 2012 until January 1, 2015. As a result, no shares were purchased during fiscal 2015. On January 1,
2015, the Company resumed the ESPP program with the first purchase of shares made in the first quarter of fiscal
2016. During fiscal 2017 and 2016, employees purchased 207,141 shares at $20.93 per share and 95,135 shares
at $28.83 per share, respectively. As of April 30, 2017, the ESPP had approximately 1.3 million shares remaining
available for future issuance.

Common Stock

During fiscal 2017, 2016 and 2015, the Company issued 53,955 shares, 87,648 shares and 178,950 shares of
common stock, respectively, as a result of the exercise of stock options, with cash proceeds from the exercise of
$0.8 million, $1.3 million and $3.0 million, respectively.

During fiscal 2017, the Company repurchased 1,140,576 shares of the Company’s common stock for $28.8
million. No shares were repurchased during fiscal 2016 and 2015, other than to satisfy minimum tax withholding
requirements upon the vesting of restricted stock as described above.

5. Financial Instruments

The following tables show the Company’s financial instruments and balance sheet classification as of April 30,
2017 and 2016:

April 30, 2017

Fair Value Measurement

Balance Sheet Classification

Cost

Unrealized
Gains

Unrealized
Losses

Fair Value

Cash and
Cash
Equivalents

Marketable
Securities,
Current

Marketable
Securities,
Non-current

Other
Accrued
Liabilities

(in thousands)

Level 1:

Cash . . . . . . . . . . . . . . $ 409,824 $
Money market

funds . . . . . . . . . . . .
Mutual funds (1) . . . . .

1,058
113,818

— $

— $ 409,824 $

409,824 $

— $

— $

—
6,697

—
(578)

1,058
119,937

1,058
—

—
4,363

—
115,574

Total

. . . . . . . . . . . . $ 524,700 $

6,697 $

(578) $ 530,819 $

410,882 $

4,363 $

115,574 $

—

—
—

—

Level 2:

Foreign currency

forward contracts . . . $
Interest rate swap . . . . $

— $
— $

129 $
— $

(846) $
(947) $

(717) $
(947) $

— $
— $

— $
— $

— $
— $

(717)
(947)

F-22

F-23

—
—
—

—

3,694
—

3,694
141,430

— $
—
11,338

— $
—
130,092

Total . . . . . . . . . . . . . . $ 415,840 $

1,395 $

(2,553) $ 414,682 $ 273,252 $

11,338 $

130,092 $

— $ 269,558 $ 269,558 $
—
(2,553)

Level 1:

Cash . . . . . . . . . . . . . . . $ 269,558 $
Money market funds . .
Mutual funds (1) . . . . . .

3,694
142,588

— $
—
1,395

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2017 (continued)

April 30, 2016

Fair Value Measurement

Balance Sheet Classification

Cost

Unrealized
Gains

Unrealized
Losses

Fair Value

Cash and
Cash
Equivalents

Marketable
Securities,
Current

Marketable
Securities,
Non-current

Other
Accrued
Liabilities

(in thousands)

Level 2:

Foreign currency

forward contracts . . . $
Interest rate swap . . . . . $

— $
— $

324 $
— $

(1,041) $
— $

(717) $
— $

— $
— $

— $
— $

— $
— $

(717)
—

(1)

These investments are held in trust for settlement of the Company’s vested and unvested obligations of $137.1 million and
$138.8 million as of April 30, 2017 and 2016, respectively, under the ECAP (see Note 6 — Deferred Compensation and
Retirement Plans). During fiscal 2017 and 2015, the fair value of the investments increased; therefore, the Company
recognized income of $10.8 million and $8.8 million, respectively which was recorded in other income (loss), net. During
fiscal 2016, the fair value of the investments decreased; therefore, the Company recognized a loss of $3.3 million, which
was recorded in other income (loss), net.

Investments in marketable securities classified as trading are based upon investment selections the employee
elects from a pre-determined set of securities in the ECAP and the Company invests in marketable securities to
mirror these elections. As of April 30, 2017 and 2016, the Company’s investments in marketable securities
classified as trading consist of mutual funds for which market prices are readily available. Investments in
marketable securities classified as available-for-sale securities are made based on the Company’s investment
policy, which restricts the types of investments that can be made. As of April 30, 2017 and April 30, 2016, the
Company does not hold marketable securities classified as available-for-sale. During fiscal 2016 and 2015, the
Company received $13.1 million and $5.0 million, respectively, in proceeds from maturities of available-for-sale
marketable securities.

Designated Derivatives - Interest Rate Swap Agreement

In March 2017, the Company entered into an interest rate swap contract with a notional amount $129.8 million,
designated as a cash flow hedge, to hedge the variability to changes in cash flows attributable to interest rate risks
caused by changes in interest rates related to its variable rate debt. The notional amount will be amortized so that
the amount is always half of the principal balance of the debt outstanding. The interest rate swap agreement
matures on June 15, 2021 and locks the interest rates on half the debt outstanding at 1.919%, exclusive of the
credit spread on the debt.

The fair value of the derivative designated as a cash flow hedge instrument is as follows:

Derivative liability:

Interest rate swap contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

947

April 30,
2017
(in thousands)

F-24

F-25

During fiscal 2017, the Company recognized the following losses on the interest rate swap:

Losses recognized in OCI (net of tax effects of $406) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

Losses reclassified from AOCI into interest income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

635

(94)

As the critical terms of the hedging instrument and the hedged forecasted transaction are the same, the Company

has concluded the changes in the fair value or cash flows attributable to the risk being hedged are expected to

completely offset at inception and on an ongoing basis.

We estimate that $0.8 million of derivative losses included in AOCI as of April 30, 2017 will be reclassified into

other expense within the following 12 months. The cash flows related to interest rate swap contracts are included

in net cash provided by operating activities.

Non-Designated Derivatives

The fair value of derivatives not designated as hedge instruments are as follows:

April 30,

2017

(in thousands)

April 30,

2017

2016

(in thousands)

Derivative assets:

Derivative liabilities:

Foreign currency forward contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

129

$

324

Foreign currency forward contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

846

1,041

As of April 30, 2017, the total notional amounts of the forward contracts purchased and sold were $19.4 million

and $70.0 million, respectively. As of April 30, 2016, the total notional amounts of the forward contracts purchased

and sold were $14.5 million and $44.3 million, respectively. The Company recognizes forward contracts as a net

asset or net liability on the consolidated balance sheets as such contracts are covered by master netting

agreements. During fiscal 2017, the Company incurred gains of $0.6 million related to forward contracts while in

fiscal 2016 it incurred losses of $1.8 million which is recorded in general and administrative expenses in the

accompanying consolidated statements of income. The cash flows related to foreign currency forward contracts

are included in cash flows from operating activities in the accompanying statements of cash flow.

6. Deferred Compensation and Retirement Plans

The Company has several deferred compensation and retirement plans for eligible consultants and vice presidents

that provide defined benefits to participants based on the deferral of current compensation or contributions made

by the Company subject to vesting and retirement or termination provisions.

The total benefit obligations for these plans were as follows:

Deferred compensation and pension plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

Medical and Life Insurance plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

International retirement plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Executive Capital Accumulation Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Less: current portion of benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Non-current benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

219,905

$

216,113

Year Ended April 30,

2017

2016

(in thousands)

95,596

12,147

12,021

111,584

231,348

(11,443)

99,699

13,006

15,678

105,676

234,059

(17,946)

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2017 (continued)

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

Fair Value Measurement

Balance Sheet Classification

Unrealized

Unrealized

Cost

Gains

Losses

Fair Value

Equivalents

Current

Cash and

Cash

Marketable

Securities,

Marketable

Securities,

Non-current

Other

Accrued

Liabilities

April 30, 2016

(in thousands)

Level 1:

Cash . . . . . . . . . . . . . . . $ 269,558 $

Money market funds . .

Mutual funds (1) . . . . . .

3,694

142,588

— $

—

— $ 269,558 $ 269,558 $

—

3,694

— $

—

— $

—

1,395

(2,553)

141,430

11,338

130,092

3,694

—

Total . . . . . . . . . . . . . . $ 415,840 $

1,395 $

(2,553) $ 414,682 $ 273,252 $

11,338 $

130,092 $

—

—

—

—

Level 2:

Foreign currency

forward contracts . . . $

Interest rate swap . . . . . $

— $

— $

324 $

(1,041) $

— $

— $

(717) $

— $

— $

— $

— $

— $

— $

— $

(717)

—

(1)

These investments are held in trust for settlement of the Company’s vested and unvested obligations of $137.1 million and

$138.8 million as of April 30, 2017 and 2016, respectively, under the ECAP (see Note 6 — Deferred Compensation and

Retirement Plans). During fiscal 2017 and 2015, the fair value of the investments increased; therefore, the Company

recognized income of $10.8 million and $8.8 million, respectively which was recorded in other income (loss), net. During

fiscal 2016, the fair value of the investments decreased; therefore, the Company recognized a loss of $3.3 million, which

was recorded in other income (loss), net.

Investments in marketable securities classified as trading are based upon investment selections the employee

elects from a pre-determined set of securities in the ECAP and the Company invests in marketable securities to

mirror these elections. As of April 30, 2017 and 2016, the Company’s investments in marketable securities

classified as trading consist of mutual funds for which market prices are readily available. Investments in

marketable securities classified as available-for-sale securities are made based on the Company’s investment

policy, which restricts the types of investments that can be made. As of April 30, 2017 and April 30, 2016, the

Company does not hold marketable securities classified as available-for-sale. During fiscal 2016 and 2015, the

Company received $13.1 million and $5.0 million, respectively, in proceeds from maturities of available-for-sale

marketable securities.

Designated Derivatives - Interest Rate Swap Agreement

In March 2017, the Company entered into an interest rate swap contract with a notional amount $129.8 million,

designated as a cash flow hedge, to hedge the variability to changes in cash flows attributable to interest rate risks

caused by changes in interest rates related to its variable rate debt. The notional amount will be amortized so that

the amount is always half of the principal balance of the debt outstanding. The interest rate swap agreement

matures on June 15, 2021 and locks the interest rates on half the debt outstanding at 1.919%, exclusive of the

credit spread on the debt.

The fair value of the derivative designated as a cash flow hedge instrument is as follows:

Derivative liability:

Interest rate swap contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

947

April 30,

2017

(in thousands)

During fiscal 2017, the Company recognized the following losses on the interest rate swap:

April 30,
2017
(in thousands)

Losses recognized in OCI (net of tax effects of $406) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Losses reclassified from AOCI into interest income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

635
(94)

As the critical terms of the hedging instrument and the hedged forecasted transaction are the same, the Company
has concluded the changes in the fair value or cash flows attributable to the risk being hedged are expected to
completely offset at inception and on an ongoing basis.

We estimate that $0.8 million of derivative losses included in AOCI as of April 30, 2017 will be reclassified into
other expense within the following 12 months. The cash flows related to interest rate swap contracts are included
in net cash provided by operating activities.

Non-Designated Derivatives

The fair value of derivatives not designated as hedge instruments are as follows:

April 30,

2017
(in thousands)

2016

Derivative assets:

Foreign currency forward contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

129

$

324

Derivative liabilities:

Foreign currency forward contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

846

1,041

As of April 30, 2017, the total notional amounts of the forward contracts purchased and sold were $19.4 million
and $70.0 million, respectively. As of April 30, 2016, the total notional amounts of the forward contracts purchased
and sold were $14.5 million and $44.3 million, respectively. The Company recognizes forward contracts as a net
asset or net liability on the consolidated balance sheets as such contracts are covered by master netting
agreements. During fiscal 2017, the Company incurred gains of $0.6 million related to forward contracts while in
fiscal 2016 it incurred losses of $1.8 million which is recorded in general and administrative expenses in the
accompanying consolidated statements of income. The cash flows related to foreign currency forward contracts
are included in cash flows from operating activities in the accompanying statements of cash flow.

6. Deferred Compensation and Retirement Plans

The Company has several deferred compensation and retirement plans for eligible consultants and vice presidents
that provide defined benefits to participants based on the deferral of current compensation or contributions made
by the Company subject to vesting and retirement or termination provisions.

The total benefit obligations for these plans were as follows:

Deferred compensation and pension plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Medical and Life Insurance plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International retirement plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Capital Accumulation Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: current portion of benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended April 30,
2016
2017

(in thousands)

$

$

95,596
12,147
12,021
111,584

231,348
(11,443)
219,905

$

$

99,699
13,006
15,678
105,676

234,059
(17,946)
216,113

F-24

F-25

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

Deferred Compensation and Pension Plans

The Enhanced Wealth Accumulation Plan (“EWAP”) was established in fiscal 1994, which replaced the Wealth
Accumulation Plan (“WAP”). Certain vice presidents elected to participate in a “deferral unit” that required the
participant to contribute a portion of their compensation for an eight year period, or in some cases, make an after
tax contribution, in return for defined benefit payments from the Company over a fifteen year period at retirement
age of 65 or later. Participants were able to acquire additional “deferral units” every five years. Vice presidents who
did not choose to roll over their WAP units into the EWAP continue to be covered under the earlier version in
which participants generally vest and commence receipt of benefit payments at retirement age of 65. In June
2003, the Company amended the EWAP and WAP, so as not to allow new participants or the purchase of
additional deferral units by existing participants.

The Company also maintains a Senior Executive Incentive Plan (“SEIP”) for participants approved by the Board.
Generally, to be eligible, the vice president must be participating in the EWAP. Participation in the SEIP required
the participant to contribute a portion of their compensation during a four-year period, or in some cases make an
after tax contribution, in return for a defined benefit paid by the Company generally over a fifteen year period after
ten years of participation in the plan or such later date as elected by the participant. In June 2003, the Company
amended the SEIP, so as not to allow new participants or the purchase of additional deferral units by existing
participants.

The Company has a defined benefit pension plan, referred to as the Worldwide Executive Benefit (“WEB”),
covering certain executives in the U.S. and foreign countries. The WEB is designed to integrate with government
sponsored and local benefits and provide a monthly benefit to vice presidents upon retirement from the Company.
Each year a plan participant accrued and was fully vested in one-twentieth of the targeted benefits expressed as a
percentage set by the Company for that year. Upon retirement, a participant receives a monthly benefit payment
equal to the sum of the percentages accrued over such participant’s term of employment, up to a maximum of
20 years, multiplied by the participant’s highest average monthly salary during the 36 consecutive months in the
final 72 months of active full-time employment through June 2003. In June 2003, the Company froze the WEB, so
as to not allow new participants, future accruals and future salary increases.

In conjunction with the acquisition of Legacy Hay on December 1, 2015, the Company acquired multiple pension
and savings plans covering certain of its employees worldwide. Among these plans is a defined benefit pension
plan for certain employees in the United States. The assets of this plan are held separately from the assets of the
sponsors in self-administered funds. The plan is funded consistent with local statutory requirements.

On July 8, 2016, the Company established the Long Term Performance Unit Plan (“LTPU Plan”) in order to
promote the success of the Company by providing a select group of management and highly compensated
employees with nonqualified supplemental retirement benefits as an additional means to attract, motivate and
retain such employee. A unit award has a base value of $50,000 for the purpose of determining the payment that
would be made upon early termination for a partially vested unit awards. The units vest 25% on each anniversary
date with the unit becoming fully vested on the fourth anniversary of the grant date, subject to the participant’s
continued service as of each anniversary date. Each vested unit award will pay out an annual benefit of $25,000
for each of five years commencing on the seventh anniversary of the grant date.

F-26

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2017 (continued)

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

Deferred Compensation and Pension Plans

Deferred Compensation and Pension Plans

The Enhanced Wealth Accumulation Plan (“EWAP”) was established in fiscal 1994, which replaced the Wealth

Accumulation Plan (“WAP”). Certain vice presidents elected to participate in a “deferral unit” that required the

participant to contribute a portion of their compensation for an eight year period, or in some cases, make an after

tax contribution, in return for defined benefit payments from the Company over a fifteen year period at retirement

age of 65 or later. Participants were able to acquire additional “deferral units” every five years. Vice presidents who

did not choose to roll over their WAP units into the EWAP continue to be covered under the earlier version in

which participants generally vest and commence receipt of benefit payments at retirement age of 65. In June

2003, the Company amended the EWAP and WAP, so as not to allow new participants or the purchase of

additional deferral units by existing participants.

The Company also maintains a Senior Executive Incentive Plan (“SEIP”) for participants approved by the Board.

Generally, to be eligible, the vice president must be participating in the EWAP. Participation in the SEIP required

the participant to contribute a portion of their compensation during a four-year period, or in some cases make an

after tax contribution, in return for a defined benefit paid by the Company generally over a fifteen year period after

ten years of participation in the plan or such later date as elected by the participant. In June 2003, the Company

amended the SEIP, so as not to allow new participants or the purchase of additional deferral units by existing

participants.

The Company has a defined benefit pension plan, referred to as the Worldwide Executive Benefit (“WEB”),

covering certain executives in the U.S. and foreign countries. The WEB is designed to integrate with government

sponsored and local benefits and provide a monthly benefit to vice presidents upon retirement from the Company.

Each year a plan participant accrued and was fully vested in one-twentieth of the targeted benefits expressed as a

percentage set by the Company for that year. Upon retirement, a participant receives a monthly benefit payment

equal to the sum of the percentages accrued over such participant’s term of employment, up to a maximum of

20 years, multiplied by the participant’s highest average monthly salary during the 36 consecutive months in the

final 72 months of active full-time employment through June 2003. In June 2003, the Company froze the WEB, so

as to not allow new participants, future accruals and future salary increases.

In conjunction with the acquisition of Legacy Hay on December 1, 2015, the Company acquired multiple pension

and savings plans covering certain of its employees worldwide. Among these plans is a defined benefit pension

plan for certain employees in the United States. The assets of this plan are held separately from the assets of the

sponsors in self-administered funds. The plan is funded consistent with local statutory requirements.

On July 8, 2016, the Company established the Long Term Performance Unit Plan (“LTPU Plan”) in order to

promote the success of the Company by providing a select group of management and highly compensated

employees with nonqualified supplemental retirement benefits as an additional means to attract, motivate and

retain such employee. A unit award has a base value of $50,000 for the purpose of determining the payment that

would be made upon early termination for a partially vested unit awards. The units vest 25% on each anniversary

date with the unit becoming fully vested on the fourth anniversary of the grant date, subject to the participant’s

continued service as of each anniversary date. Each vested unit award will pay out an annual benefit of $25,000

for each of five years commencing on the seventh anniversary of the grant date.

The following tables reconcile the benefit obligation for the deferred compensation plans:

Change in benefit obligation:
Benefit obligation, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service cost
Interest cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial (gain) loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid from plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid from cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Benefit obligation, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Change in fair value of plan assets:
Fair value of plan assets, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actual return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid from plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fair value of plan assets, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Funded status and balance, end of year (1)

. . . . . . . . . . . . . . . . . . . . . . . . . . .

Current liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Plan Assets - weighted-average asset allocation:
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2017

Year Ended April 30,
2016
(in thousands)

2015

$

$

$

$

$

124,566
5,507
3,820
(4,791)
—
—
(1,884)
(6,176)

121,042

24,867
2,463
(1,884)
—

25,446

$

89,138
—
3,423
4,393
39,079
(4,799)
(595)
(6,073)

124,566

—
(78)
(595)
25,540

24,867

86,577
—
2,989
5,864
—
—
—
(6,292)

89,138

—
—
—
—

—

(95,596) $

(99,699)

6,182
89,414

95,596

$

$

5,845
93,854

99,699

$

$

$

(89,138)

5,832
83,306

89,138

54%
46%
—%

100%

64%
31%
5%

100%

—%
—%
—%

—%

(1) The Company purchased COLI contracts insuring the lives of certain employees eligible to participate in the deferred

compensation and pension plans as a means of funding benefits under such plans. As of April 30, 2017, 2016 and 2015, the
Company held contracts with gross CSV of $180.3 million, $175.7 million and $172.3 million, offset by outstanding policy
loans of $67.2 million, $68.4 million and $69.6 million, respectively.

F-26

F-27

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

The fair value measurements of the defined benefit plan assets fall within the following levels of the fair value
hierarchy as of April 30, 2017 and 2016:

Level 1

Level 2

Level 3

Total

(in thousands)

April 30, 2017:
Mutual funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and municipal bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. Treasury and agency securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

— $ 25,446
—
—
—
—
—
—
—
—

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

— $ 25,446

$

April 30, 2016:
Mutual funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and municipal bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. Treasury and agency securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

7,990
7,910
—
—
1,315

— $
—
5,597
2,055
—

— $ 25,446
—
—
—
—
—
—
—
—

— $ 25,446

— $
—
—
—
—

7,990
7,910
5,597
2,055
1,315

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

17,215

$

7,652

$

— $ 24,867

Plan assets are invested in various asset classes that are expected to produce a sufficient level of diversification
and investment return over the long term. The investment goal is a return on assets that is at least equal to the
assumed actuarial rate of return over the long term within reasonable and prudent levels of risk. Investment
policies reflect the unique circumstances of the respective plans and include requirements designed to mitigate
risk including quality and diversification standards. Asset allocation targets are reviewed periodically with
investment advisors to determine the appropriate investment strategies for acceptable risk levels. Our target
allocation ranges are as follows: equity securities 50% to 70%, debt securities 30% to 50% and other assets of 0%
to 10%. We establish our estimated long-term return on plan assets considering various factors including the
targeted asset allocation percentages, historic returns and expected future returns. In fiscal 2017, the Company
changed the method of achieving the target allocation by investing in mutual funds that are only available to
institutional investors rather than owning specific equity and debt instruments as was done in previous years. The
mutual funds are valued at fair value as determined by the net asset value of shares held at year-end.

The components of net periodic benefits costs are as follows:

2017

Year Ended April 30,
2016
(in thousands)

2015

Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

5,507
3,820
3,051
(1,559)

$

— $

3,423
2,924
(682)

Net periodic benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

10,819

$

5,665

$

The weighted-average assumptions used in calculating the benefit obligations were as follows:

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discount rate, beginning of year
Discount rate, end of year
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected long-term rates of return on plan assets . . . . . . . . . . . . . . . . . . . .

3.18%
3.57%
0.00%
6.50%

3.28%
3.18%
0.00%
6.50%

2017

Year Ended April 30,
2016

2015

—
2,989
3,050
—

6,039

3.60%
3.28%
0.00%
—%

F-28

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2017 (continued)

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

The fair value measurements of the defined benefit plan assets fall within the following levels of the fair value

hierarchy as of April 30, 2017 and 2016:

Level 1

Level 2

Level 3

Total

(in thousands)

April 30, 2017:

Mutual funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

— $ 25,446

$

— $ 25,446

Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Corporate and municipal bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

U.S. Treasury and agency securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

— $ 25,446

$

— $ 25,446

April 30, 2016:

Mutual funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

— $

— $

Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Corporate and municipal bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

U.S. Treasury and agency securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,315

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

17,215

$

7,652

$

— $ 24,867

—

—

—

—

7,990

7,910

—

—

—

—

—

—

—

5,597

2,055

—

—

—

—

—

—

—

—

—

—

—

—

—

7,990

7,910

5,597

2,055

1,315

Plan assets are invested in various asset classes that are expected to produce a sufficient level of diversification

and investment return over the long term. The investment goal is a return on assets that is at least equal to the

assumed actuarial rate of return over the long term within reasonable and prudent levels of risk. Investment

policies reflect the unique circumstances of the respective plans and include requirements designed to mitigate

risk including quality and diversification standards. Asset allocation targets are reviewed periodically with

investment advisors to determine the appropriate investment strategies for acceptable risk levels. Our target

allocation ranges are as follows: equity securities 50% to 70%, debt securities 30% to 50% and other assets of 0%

to 10%. We establish our estimated long-term return on plan assets considering various factors including the

targeted asset allocation percentages, historic returns and expected future returns. In fiscal 2017, the Company

changed the method of achieving the target allocation by investing in mutual funds that are only available to

institutional investors rather than owning specific equity and debt instruments as was done in previous years. The

mutual funds are valued at fair value as determined by the net asset value of shares held at year-end.

The components of net periodic benefits costs are as follows:

Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Amortization of actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,507

3,820

3,051

(1,559)

Net periodic benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

10,819

$

5,665

$

Year Ended April 30,

2017

2016

2015

(in thousands)

$

— $

3,423

2,924

(682)

The weighted-average assumptions used in calculating the benefit obligations were as follows:

Year Ended April 30,

2017

2016

2015

Discount rate, beginning of year

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Discount rate, end of year

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Expected long-term rates of return on plan assets . . . . . . . . . . . . . . . . . . . .

3.18%

3.57%

0.00%

6.50%

3.28%

3.18%

0.00%

6.50%

—

2,989

3,050

—

6,039

3.60%

3.28%

0.00%

—%

At April 30, 2017, the Company elected to change the method it uses to estimate the interest and service
components of net periodic cost for its defined benefit pension and supplemental benefit plans, which will impact
the estimate of net periodic cost beginning in fiscal 2018. The Company will utilize a full yield curve approach in
the estimation of these components by applying the specific spot rates along the yield curve used in the
determination of the benefit obligation to the relevant projected cash flows. Previously, the Company estimated the
interest and service cost components utilizing a single weighted-average discount rate derived from the yield curve
used to measure the benefit obligation at the beginning of the period. This change compared to the previous
method will impact the interest and service components of net periodic cost in future periods. The Company made
this change to provide a more precise measurement of interest and service costs by improving the correlation
between projected benefit cash flows to the corresponding spot yield curve rates. This change does not affect the
measurement of the total benefit obligation as the change in the interest and service costs is offset in net actuarial
gains and losses. The impact to interest and service costs is not expected to be significant. The Company will
account for this change prospectively as a change in accounting estimate.

Benefit payments, which reflect expected future service, as appropriate, are expected to be paid over the next ten
years as follows:

Year Ending April 30,

Deferred Retirement
Plans
(in thousands)

2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023-2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

8,906
9,148
9,653
9,163
9,122
83,403

During fiscal 2018, the Company expects to recognize $2.3 million in net periodic benefit expense from deferred
compensation and pension plans that will be transferred from accumulated other comprehensive income through
the amortization of actuarial losses in the consolidated statements of income.

Medical and Life Insurance

In conjunction with the acquisition of Legacy Hay on December 1, 2015, the Company inherited a benefit plan
which offers medical and life insurance coverage to approximately 190 participants. Medical and life insurance
benefit plans are unfunded.

The following table reconciles the benefit obligation for the medical and life insurance plan:

Change in benefit obligation:
Benefit obligation, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial (gain) loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Benefit obligation, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Current liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

$

$

Year End April 30,

2017

2016

(in thousands)

13,006
—
155
426
(833)
(607)

12,147

765
11,382
12,147

$

$

$

$

—
12,322
62
208
816
(402)

13,006

673
12,333
13,006

F-28

F-29

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

The components of net periodic benefits costs are as follows:

Year Ended April 30,
2016
2017

(in thousands)

Service cost
Interest cost

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net periodic benefit cost

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

155
426

581

$

$

62
208

270

The weighted-average assumptions used in calculating the Medical and Life Insurance plan were as follows:

Discount rate, beginning of year or acquisition date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discount rate, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Healthcare care cost trend rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.36%
3.75%
7.00%

4.10%
3.36%
7.00%

Benefit payments, which reflect expected future service, as appropriate, are expected to be paid over the next ten
years as follows:

Year Ended April 30,
2016
2017

Year Ending April 30,

Medical and Life
Insurance
(in thousands)

2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023-2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

770
781
804
820
828
4,102

The current health care cost trend rate assumption is 7.0%. We anticipate that the health care cost trend rate
assumption will be 5.0% by fiscal 2022. Increasing the assumed health care cost trend rate by one-percentage
point would increase the accumulated postretirement benefit obligation for the medical and life insurance plan by
less than $0.1 million. Decreasing the assumed health care cost trend rate by one-percentage point would
decrease the accumulated postretirement benefit obligation for the medical and life insurance plan by less than
$0.1 million.

International Retirement Plans

The Company also maintains various retirement plans and other miscellaneous deferred compensation
arrangements in 21 foreign jurisdictions. The aggregate of the long-term benefit obligation accrued at April 30,
2017 and 2016 is $12.0 million for 1,710 participants and is $15.4 million for 1,450 participants, respectively. The
Company’s contribution to these plans was $9.3 million and $5.1 million in fiscal 2017 and 2016, respectively.

Executive Capital Accumulation Plan

The Company’s ECAP is intended to provide certain employees an opportunity to defer salary and/or bonus on a
pre-tax basis or make an after-tax contribution. In addition, the Company, as part of its compensation philosophy,
makes discretionary contributions into the ECAP and such contributions may be granted to key employees
annually based on the employee’s performance. Certain key management may also receive Company ECAP
contributions upon commencement of employment. The Company amortizes these contributions on a straight-line
basis over the service period, generally a four to five year period. Participants have the ability to allocate their
deferrals among a number of investment options and may receive their benefits at termination, retirement or ‘in
service’ either in a lump sum or in quarterly installments over one to 15 years. The ECAP amounts that are
expected to be paid to employees over the next 12 months are classified as a current liability included in
compensation and benefits payable on the accompanying balance sheet.

F-30

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2017 (continued)

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

The components of net periodic benefits costs are as follows:

Year Ended April 30,

2017

2016

(in thousands)

Year Ended April 30,

2017

2016

Medical and Life

Insurance

(in thousands)

Service cost

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interest cost

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net periodic benefit cost

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

155

426

581

$

$

62

208

270

The weighted-average assumptions used in calculating the Medical and Life Insurance plan were as follows:

Discount rate, beginning of year or acquisition date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Discount rate, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Healthcare care cost trend rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.36%

3.75%

7.00%

4.10%

3.36%

7.00%

Benefit payments, which reflect expected future service, as appropriate, are expected to be paid over the next ten

years as follows:

Year Ending April 30,

2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2023-2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

770

781

804

820

828

4,102

The current health care cost trend rate assumption is 7.0%. We anticipate that the health care cost trend rate

assumption will be 5.0% by fiscal 2022. Increasing the assumed health care cost trend rate by one-percentage

point would increase the accumulated postretirement benefit obligation for the medical and life insurance plan by

less than $0.1 million. Decreasing the assumed health care cost trend rate by one-percentage point would

decrease the accumulated postretirement benefit obligation for the medical and life insurance plan by less than

$0.1 million.

International Retirement Plans

The Company also maintains various retirement plans and other miscellaneous deferred compensation

arrangements in 21 foreign jurisdictions. The aggregate of the long-term benefit obligation accrued at April 30,

2017 and 2016 is $12.0 million for 1,710 participants and is $15.4 million for 1,450 participants, respectively. The

Company’s contribution to these plans was $9.3 million and $5.1 million in fiscal 2017 and 2016, respectively.

Executive Capital Accumulation Plan

The Company’s ECAP is intended to provide certain employees an opportunity to defer salary and/or bonus on a

pre-tax basis or make an after-tax contribution. In addition, the Company, as part of its compensation philosophy,

makes discretionary contributions into the ECAP and such contributions may be granted to key employees

annually based on the employee’s performance. Certain key management may also receive Company ECAP

contributions upon commencement of employment. The Company amortizes these contributions on a straight-line

basis over the service period, generally a four to five year period. Participants have the ability to allocate their

deferrals among a number of investment options and may receive their benefits at termination, retirement or ‘in

service’ either in a lump sum or in quarterly installments over one to 15 years. The ECAP amounts that are

expected to be paid to employees over the next 12 months are classified as a current liability included in

compensation and benefits payable on the accompanying balance sheet.

The Company issued ECAP awards during fiscal 2017, 2016 and 2015, of $6.2 million, $23.2 million and
$19.1 million, respectively.

The ECAP is accounted for whereby the changes in the fair value of the vested amounts owed to the participants
are adjusted with a corresponding charge (or credit) to compensation and benefits costs. During fiscal 2017 and
2015, the deferred compensation liability increased; therefore, the Company recognized compensation expense of
$10.6 million and $5.9 million, respectively. Offsetting the increases in compensation and benefits liability was an
increase in the fair value of marketable securities classified as trading (held in trust to satisfy obligations of the
ECAP liabilities) of $10.8 million and $8.8 million in fiscal 2017 and 2015, respectively, recorded in other income
(loss), net on the consolidated statements of income. During fiscal 2016, the deferred compensation liability
decreased; therefore, the Company recognized a credit to compensation expense of $1.7 million, offset by a
decrease in the fair value of marketable securities classified as trading (held in trust to satisfy obligations of the
ECAP liabilities) of $3.3 million, recorded in other income (loss), net on the consolidated statements of income.

Changes in the ECAP liability were as follows:

Balance, beginning of year

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of employer contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (loss) on investment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange rate fluctuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

Balance, end of year
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended April 30,
2016
2017

(in thousands)

$

105,676
5,349
13,667
10,565
(23,044)
(629)

111,584
(4,496)

99,461
7,015
16,439
(1,654)
(15,201)
(384)

105,676
(11,092)

Non-current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

107,088

$

94,584

As of April 30, 2017 and 2016, the unamortized portion of the Company contributions to the ECAP was $25.5
million and $33.2 million, respectively.

Defined Contribution Plan

The Company has a defined contribution plan (“401(k) plan”) for eligible employees. Participants may contribute
up to 50% of their base compensation as defined in the plan agreement. In addition, the Company has the option
to make matching contributions. The Company intends to make matching contributions related to fiscal 2017 in
fiscal 2018. The Company made a $1.8 million matching contribution in fiscal 2017 related to contributions made
by employees in fiscal 2016 and a $1.7 million matching contribution in fiscal 2016 related to contributions made
by employees in fiscal 2015.

Company Owned Life Insurance

The Company purchased COLI contracts insuring the lives of certain employees eligible to participate in the
deferred compensation and pension plans as a means of funding benefits under such plans. The gross CSV of
these contracts of $180.3 million and $175.7 million as of April 30, 2017 and 2016, respectively, is offset by
outstanding policy loans of $67.2 million and $68.4 million in the accompanying consolidated balance sheets as of
April 30, 2017 and 2016, respectively. Total death benefits payable, net of loans under COLI contracts, were
$220.6 million and $216.7 million at April 30, 2017 and 2016, respectively. Management intends to use the future
death benefits from these insurance contracts to fund the deferred compensation and pension arrangements;
however, there may not be a direct correlation between the timing of the future cash receipts and disbursements
under these arrangements. The CSV value of the underlying COLI investments increased by $4.9 million,
$4.0 million and $10.5 million during fiscal 2017, 2016 and 2015, respectively, recorded as a decrease in
compensation and benefits expense. In addition, certain policies are held in trusts to provide additional benefit

F-30

F-31

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

security for the deferred compensation and pension plans. As of April 30, 2017, COLI contracts with a net CSV of
$59.5 million and death benefits, net of loans, of $99.9 million were held in trust for these purposes.

7. Restructuring Charges, Net

During fiscal 2016, the Company implemented a restructuring plan in order to rationalize its cost structure by
eliminating redundant positions and consolidating office space due to the acquisition of Legacy Hay on
December 1, 2015. This resulted in restructuring charges, net of $33.0 million in fiscal 2016, of which $32.1 million
related to severance and $0.9 million, related to consolidation/abandonment of premises.

The Company continued the implementation of the fiscal 2016 restructuring plan in fiscal 2017 in order to integrate
the Hay Group entities that were acquired in fiscal 2016 by eliminating redundant positions and operational,
general and administrative expenses and consolidating premises. This resulted in restructuring charges of
$34.6 million in fiscal 2017 of which $16.0 million related to severance and $18.6 million related to consolidation of
premises.

During fiscal 2015, the Company took actions to rationalize its cost structure as a result of efficiencies obtained
from prior year technology investments that enabled further integration of the legacy business and the recent
acquisitions (PDI and Global Novations, LLC) as well as other cost saving initiatives. This resulted in restructuring
charges, net of $9.5 million against operations in fiscal 2015, of which $9.2 million related to severance and $0.3
million, related to consolidation/abandonment of premises.

Changes in the restructuring liability were as follows:

Severance

Facilities
(in thousands)

Total

Liability as of April 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring charges, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reductions for cash payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange rate fluctuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

Liability as of April 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring charges, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reductions for cash payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange rate fluctuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

375
32,151
(25,625)
(1,752)
144

5,293
15,963
(14,974)
—
(941)

$

771
862
(834)
(91)
(39)

669
18,637
(8,703)
(2,024)
(225)

1,146
33,013
(26,459)
(1,843)
105

5,962
34,600
(23,677)
(2,024)
(1,166)

Liability as of April 30, 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

5,341

$

8,354

$

13,695

As of April 30, 2017 and 2016, the restructuring liability is included in the current portion of other accrued liabilities
on the consolidated balance sheets, except for $4.6 million and $0.6 million, respectively, of facilities costs which
primarily relate to commitments under operating leases, net of estimated sublease income, which are included in
other long-term liabilities.

F-32

7. Restructuring Charges, Net

During fiscal 2016, the Company implemented a restructuring plan in order to rationalize its cost structure by

eliminating redundant positions and consolidating office space due to the acquisition of Legacy Hay on

December 1, 2015. This resulted in restructuring charges, net of $33.0 million in fiscal 2016, of which $32.1 million

related to severance and $0.9 million, related to consolidation/abandonment of premises.

The Company continued the implementation of the fiscal 2016 restructuring plan in fiscal 2017 in order to integrate

the Hay Group entities that were acquired in fiscal 2016 by eliminating redundant positions and operational,

general and administrative expenses and consolidating premises. This resulted in restructuring charges of

$34.6 million in fiscal 2017 of which $16.0 million related to severance and $18.6 million related to consolidation of

premises.

During fiscal 2015, the Company took actions to rationalize its cost structure as a result of efficiencies obtained

from prior year technology investments that enabled further integration of the legacy business and the recent

acquisitions (PDI and Global Novations, LLC) as well as other cost saving initiatives. This resulted in restructuring

charges, net of $9.5 million against operations in fiscal 2015, of which $9.2 million related to severance and $0.3

million, related to consolidation/abandonment of premises.

Changes in the restructuring liability were as follows:

Severance

Facilities

Total

(in thousands)

Liability as of April 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

375

$

$

Restructuring charges, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Reductions for cash payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Non-cash items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exchange rate fluctuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Liability as of April 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restructuring charges, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Reductions for cash payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Non-cash items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exchange rate fluctuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

32,151

(25,625)

(1,752)

144

5,293

15,963

(14,974)

—

(941)

771

862

(834)

(91)

(39)

669

18,637

(8,703)

(2,024)

(225)

1,146

33,013

(26,459)

(1,843)

105

5,962

34,600

(23,677)

(2,024)

(1,166)

Liability as of April 30, 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

5,341

$

8,354

$

13,695

As of April 30, 2017 and 2016, the restructuring liability is included in the current portion of other accrued liabilities

on the consolidated balance sheets, except for $4.6 million and $0.6 million, respectively, of facilities costs which

primarily relate to commitments under operating leases, net of estimated sublease income, which are included in

other long-term liabilities.

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2017 (continued)

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

security for the deferred compensation and pension plans. As of April 30, 2017, COLI contracts with a net CSV of

$59.5 million and death benefits, net of loans, of $99.9 million were held in trust for these purposes.

The restructuring liability by segment is summarized below:

Severance

April 30, 2017
Facilities
(in thousands)

Total

Executive Search

North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe, Middle East and Africa (“EMEA”) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Latin America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

Total Executive Search . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hay Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Futurestep . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

134
393
—
—

527
4,814
—

$

250
—
6
87

343
7,879
132

Liability as of April 30, 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

5,341

$

8,354

$

384
393
6
87

870
12,693
132

13,695

Severance

April 30, 2016
Facilities
(in thousands)

Total

Executive Search

North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EMEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total Executive Search . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hay Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Futurestep . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

— $

1,533
33

1,566
3,727
—

Liability as of April 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

5,293

$

5
23
—

28
396
245

669

$

$

5
1,556
33

1,594
4,123
245

5,962

8. Income Taxes

The provision for income taxes is based on reported income before income taxes. Deferred income tax assets and
liabilities reflect the impact of temporary differences between the amounts of assets and liabilities recognized for
financial reporting purposes and the amounts recognized for tax purposes, as measured by applying the currently
enacted tax laws.

The provision (benefit) for domestic and foreign income taxes was as follows:

2017

Year Ended April 30,
2016
(in thousands)

2015

Current income taxes:

Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

(2,026) $
1,207
23,334

Current provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

22,515

Deferred income taxes:

Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deferred provision (benefit) for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . .

3,341
341
2,907

6,589

$

13,087
3,271
16,394

32,752

(5,334)
(1,838)
(6,620)

(13,792)

16,569
2,412
13,650

32,631

3,140
(239)
(2,006)

895

Total provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

29,104

$

18,960

$

33,526

F-32

F-33

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

The domestic and foreign components of income from continuing operations before domestic and foreign income
and other taxes and equity in earnings of unconsolidated subsidiaries were as follows:

2017

Year Ended April 30,
2016
(in thousands)

2015

Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

5,539
110,470

$

22,228
26,534

$

65,885
53,817

Income before provision for income taxes and equity in earnings of

unconsolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

116,009

$

48,762

$

119,702

The reconciliation of the statutory federal income tax rate to the effective consolidated tax rate is as follows:

U.S. federal statutory income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-deductible transaction costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign tax rates differential
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COLI increase, net
Conclusion of U.S. federal tax audit
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-deductible operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Devaluation of Venezuelan currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in uncertain tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign source income, net of credits generated . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other

Effective income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended April 30,
2016

2015

2017

35.0%
—
(9.1)
(1.5)
—
0.6
—
(3.1)
—
(0.1)
3.3

25.1%

35.0%
5.8
(2.8)
(2.9)
(4.4)
1.5
7.4
(6.2)
1.3
0.5
3.7

38.9%

35.0%
—
(4.2)
(3.1)
—
0.5
—
—
(0.1)
0.4
(0.5)

28.0%

The lower effective tax rate in fiscal 2017 was due primarily to a higher percentage of taxable income arising in
jurisdictions with lower statutory tax rates. The effective tax rate in fiscal 2016 was higher largely due to the impact
of non-deductible expenses incurred in connection with the acquisition of Legacy Hay and non-deductible charges
related to the devaluation of the Venezuelan currency. In both fiscal 2017 and 2016, the Company recorded an
income tax benefit from the reversal of valuation allowances previously recorded against deferred tax assets,
including net operating losses, of certain foreign subsidiaries that have returned to profitability and are now more-
likely-than-not to realize those deferred tax assets.

F-34

Year Ended April 30,

2017

2016

2015

(in thousands)

Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

5,539

$

Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

110,470

22,228

26,534

$

65,885

53,817

Income before provision for income taxes and equity in earnings of

unconsolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

116,009

$

48,762

$

119,702

The reconciliation of the statutory federal income tax rate to the effective consolidated tax rate is as follows:

Year Ended April 30,

2017

2016

2015

U.S. federal statutory income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

35.0%

35.0%

Non-deductible transaction costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Foreign tax rates differential

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

COLI increase, net

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Conclusion of U.S. federal tax audit

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Non-deductible operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Devaluation of Venezuelan currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Change in valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Change in uncertain tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Foreign source income, net of credits generated . . . . . . . . . . . . . . . . . . . . . . . . .

Other

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

(9.1)

(1.5)

—

0.6

—

(3.1)

—

(0.1)

3.3

5.8

(2.8)

(2.9)

(4.4)

1.5

7.4

(6.2)

1.3

0.5

3.7

35.0%

—

(4.2)

(3.1)

—

0.5

—

—

(0.1)

0.4

(0.5)

Effective income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25.1%

38.9%

28.0%

The lower effective tax rate in fiscal 2017 was due primarily to a higher percentage of taxable income arising in

jurisdictions with lower statutory tax rates. The effective tax rate in fiscal 2016 was higher largely due to the impact

of non-deductible expenses incurred in connection with the acquisition of Legacy Hay and non-deductible charges

related to the devaluation of the Venezuelan currency. In both fiscal 2017 and 2016, the Company recorded an

income tax benefit from the reversal of valuation allowances previously recorded against deferred tax assets,

including net operating losses, of certain foreign subsidiaries that have returned to profitability and are now more-

likely-than-not to realize those deferred tax assets.

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2017 (continued)

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

The domestic and foreign components of income from continuing operations before domestic and foreign income

Components of deferred tax assets and liabilities are as follows:

and other taxes and equity in earnings of unconsolidated subsidiaries were as follows:

April 30,

2017

2016

(in thousands)

Deferred tax assets:

Deferred compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss and credit carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserves and accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred rent
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

92,043
32,854
14,095
9,797
2,434
1,705
3,041

91,712
31,023
14,189
7,684
11,464
1,431
5,002

Gross deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

155,969

162,505

Deferred tax liabilities:

Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Gross deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Valuation allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(90,214)
(11,507)
(17,324)
(2,485)

(121,530)

(21,278)

Net deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

13,161

$

(94,284)
(10,603)
(12,698)
(815)

(118,400)

(22,030)

22,075

Deferred tax assets are reduced by a valuation allowance if it is more-likely-than-not that some portion or all of the
deferred tax asset will not be realized. Management believes uncertainty exists regarding the realizability of certain
operating losses and has, therefore, established a valuation allowance for this portion of the deferred tax asset.
Realization of the deferred income tax asset is dependent on the Company generating sufficient taxable income of
the appropriate nature in future years. Although realization is not assured, management believes that it is more
likely than not that the net deferred income tax assets will be realized. Deferred tax assets and deferred tax
liabilities are presented net on the consolidated balance sheets by tax jurisdiction.

As of April 30, 2017, the Company had U.S. federal net operating loss carryforwards of $3.6 million, which the
Company anticipates will be fully utilized by fiscal 2028. The Company has state net operating loss carryforwards
of $23.3 million, which, if unutilized, will begin to expire in fiscal 2018. The Company also has foreign net operating
loss carryforwards of $108.4 million, which, if unutilized, will begin to expire in fiscal 2018. The Company also has
foreign tax credit carryforwards of $3.0 million, which, if unutilized, will expire in 2027.

The Company has not provided for U.S. taxes or foreign withholding taxes on approximately $359.3 million of
undistributed earnings of its foreign subsidiaries as such earnings are intended to be reinvested indefinitely. If a
distribution of these earnings were to be made, the Company might be subject to both foreign withholding taxes
and U.S. income taxes, net of any allowable foreign tax credits or deductions. An estimate of these taxes,
however, is not practicable.

The Company and its subsidiaries file federal and state income tax returns in the U.S. as well as in foreign
jurisdictions. These income tax returns are subject to audit by the Internal Revenue Service (the ‘IRS’) and various
state and foreign tax authorities. In December 2015, the IRS concluded an examination of the Company’s fiscal
year 2013 U.S. federal income tax return. The State of California is currently auditing the Company’s state income
tax returns for fiscal years 2013 and 2014. Outside the United States, income tax returns of the Company’s
subsidiaries are under audit in Canada, Germany and India. The Company’s income tax returns are not otherwise
under examination in any material jurisdictions. The statute of limitations varies by jurisdiction in which the
Company operates. With few exceptions, however, the Company’s tax returns for years prior to fiscal 2011 are no
longer open to examination by tax authorities (including U.S. federal, state and foreign).

F-34

F-35

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

Unrecognized tax benefits are the differences between the amount of benefits of tax positions taken, or expected
to be taken, on a tax return and the amount of benefits recognized for financial reporting purposes. As of April 30,
2017, the Company had a liability of $2.5 million for unrecognized tax benefits. A reconciliation of the beginning
and ending balances of the unrecognized tax benefits is as follows:

2017

Year Ended April 30,
2016
(in thousands)

2015

Unrecognized tax benefits, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlement with tax authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions based on tax positions related to the current year . . . . . . . . . . . . . . . . . . . . .
Additions based on tax positions related to prior years . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

2,095
—
383
—

$

2,423
(1,963)
1,305
330

Unrecognized tax benefits, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

2,478

$

2,095

$

2,701
(497)
219
—

2,423

The liability for unrecognized tax benefits is included in income taxes payable in the consolidated balance sheets.
The full amount of unrecognized tax benefits would impact the effective tax rate if recognized. In the next twelve
months, it is reasonably possible that the Company’s unrecognized tax benefits could change due to resolution of
certain tax matters, which could include payments on those tax matters. These resolutions and payments could
reduce the Company’s liability for unrecognized tax benefits balance by approximately $0.3 million.

The Company classifies interest and penalties related to unrecognized tax benefits as a component of the
provision for income taxes. The Company had no accrual for interest or penalties related to unrecognized tax
benefits as of April 30, 2017 and April 30, 2016. The Company accrued approximately $0.1 million of interest
related to unrecognized tax benefits over the last three fiscal years.

9. Property and Equipment, Net

Property and equipment include the following:

Computer equipment and software (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Automobiles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

Less: accumulated depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

April 30,

2017

2016

(in thousands)

$

160,399
75,921
39,848
1,956

278,124
(168,557)

148,769
59,858
43,069
2,103

253,799
(158,363)

Property and equipment, net

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

109,567

$

95,436

(1) Depreciation expense for capitalized software was $12.6 million, $11.3 million and $9.0 million during fiscal 2017, 2016 and
2015, respectively. The net book value of the Company’s computer software costs included in property and equipment, net
was $33.2 million and $32.3 million as of April 30, 2017 and 2016, respectively.

Depreciation expense for property and equipment was $31.9 million, $24.5 million and $19.4 million during fiscal
2017, 2016 and 2015, respectively.

10. Long-Term Debt

On June 15, 2016, the Company entered into a senior secured $400 million Credit Agreement (the “Credit
Agreement”) with a syndicate of banks and Wells Fargo Bank, National Association as administrative agent to
provide for enhanced financial flexibility and in recognition of the accelerated pace of the Hay Group integration.
The Credit Agreement provides for, among other things: (a) a senior secured term loan facility in an aggregate
principal amount of $275 million (the “ Term Facility”), (b) a senior secured revolving credit facility (the “Revolver”
and together with the Term Facility, the “Credit Facilities”) in an aggregate principal amount of $125 million,
(c) annual term loan amortization of 7.5%, 7.5%, 10.0%, 10.0%, and 10.0%, with the remaining principal due at

F-36

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2017 (continued)

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

Unrecognized tax benefits are the differences between the amount of benefits of tax positions taken, or expected

to be taken, on a tax return and the amount of benefits recognized for financial reporting purposes. As of April 30,

2017, the Company had a liability of $2.5 million for unrecognized tax benefits. A reconciliation of the beginning

and ending balances of the unrecognized tax benefits is as follows:

Year Ended April 30,

2017

2016

2015

(in thousands)

Unrecognized tax benefits, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

2,095

$

2,423

$

Settlement with tax authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Additions based on tax positions related to the current year . . . . . . . . . . . . . . . . . . . . .

Additions based on tax positions related to prior years . . . . . . . . . . . . . . . . . . . . . . . . .

—

383

—

(1,963)

1,305

330

2,701

(497)

219

—

Unrecognized tax benefits, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

2,478

$

2,095

$

2,423

The liability for unrecognized tax benefits is included in income taxes payable in the consolidated balance sheets.

The full amount of unrecognized tax benefits would impact the effective tax rate if recognized. In the next twelve

months, it is reasonably possible that the Company’s unrecognized tax benefits could change due to resolution of

certain tax matters, which could include payments on those tax matters. These resolutions and payments could

reduce the Company’s liability for unrecognized tax benefits balance by approximately $0.3 million.

The Company classifies interest and penalties related to unrecognized tax benefits as a component of the

provision for income taxes. The Company had no accrual for interest or penalties related to unrecognized tax

benefits as of April 30, 2017 and April 30, 2016. The Company accrued approximately $0.1 million of interest

related to unrecognized tax benefits over the last three fiscal years.

9. Property and Equipment, Net

Property and equipment include the following:

Computer equipment and software (1)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

160,399

$

148,769

Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Automobiles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Less: accumulated depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Property and equipment, net

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

109,567

$

95,436

April 30,

2017

2016

(in thousands)

75,921

39,848

1,956

278,124

(168,557)

59,858

43,069

2,103

253,799

(158,363)

(1) Depreciation expense for capitalized software was $12.6 million, $11.3 million and $9.0 million during fiscal 2017, 2016 and

2015, respectively. The net book value of the Company’s computer software costs included in property and equipment, net

was $33.2 million and $32.3 million as of April 30, 2017 and 2016, respectively.

Depreciation expense for property and equipment was $31.9 million, $24.5 million and $19.4 million during fiscal

2017, 2016 and 2015, respectively.

10. Long-Term Debt

On June 15, 2016, the Company entered into a senior secured $400 million Credit Agreement (the “Credit

Agreement”) with a syndicate of banks and Wells Fargo Bank, National Association as administrative agent to

provide for enhanced financial flexibility and in recognition of the accelerated pace of the Hay Group integration.

The Credit Agreement provides for, among other things: (a) a senior secured term loan facility in an aggregate

principal amount of $275 million (the “ Term Facility”), (b) a senior secured revolving credit facility (the “Revolver”

and together with the Term Facility, the “Credit Facilities”) in an aggregate principal amount of $125 million,

(c) annual term loan amortization of 7.5%, 7.5%, 10.0%, 10.0%, and 10.0%, with the remaining principal due at

maturity, (d) certain customary affirmative and negative covenants, including a maximum consolidated total
leverage ratio (as defined below) and a minimum interest coverage ratio, and (e) an expanded definition of
permitted add-backs to Adjusted EBITDA in recognition of the accelerated integration actions. The Company’s
credit agreement permits payment of dividends to stockholders and make share repurchases so long as the pro
forma leverage ratio is no greater than 2.50 to 1.00, and the pro forma domestic liquidity is at least $50.0 million.
The Company drew down $275 million on the new term loan and used $140 million of the proceeds to pay-off the
term loan that was outstanding as of April 30, 2016. The remaining funds will be used for working capital and
general corporate purposes. Principal payments under the term facility are as follows:

Year Ending April 30,

2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Principal
Payments on
Term Loan
(in thousands)

$

$

20,625
25,781
27,500
27,500
158,125
259,531

At the Company’s option, loans issued under the Credit Agreement will bear interest at either LIBOR or an
alternate base rate, in each case plus the applicable interest rate margin. The interest rate applicable to loans
outstanding under the Credit Facilities may fluctuate between LIBOR plus 1.25% per annum to LIBOR plus
2.00% per annum, in the case of LIBOR borrowings (or between the alternate base rate plus 0.25% per annum
and the alternate base rate plus 1.00% per annum, in the alternative), based upon the Company’s total funded
debt to adjusted EBITDA ratio (as set forth in the Credit Agreement, the “consolidated leverage ratio”) at such
time. In addition, the Company will be required to pay to the lenders a quarterly fee ranging from 0.20% to
0.35% per annum on the average daily unused amount of the Term Facility, based upon the Company’s
consolidated leverage ratio at such time, and fees relating to the issuance of letters of credit. During fiscal 2017,
the average rate on the Term Facility was 2.23%.

Both the Revolver and the Term Facility mature on June 15, 2021, and may be prepaid and terminated early by
the Company at any time without premium or penalty (subject to customary LIBOR breakage fees). The Term
Facility is payable in quarterly installments with the final installment consisting of all remaining unpaid principal due
on the Term Facility Maturity date of June 15, 2021. The Company made $15.5 million in principal payments
during fiscal 2017. As of April 30, 2017, $259.5 million was outstanding under the Term Facility compared to
$140.0 million as of April 30, 2016, under the previous facility. The fair value of the Company’s Term Facility is
based on borrowing rates currently required of loans with similar terms, maturity and credit risk. The carrying
amount of the Term Facility approximates fair value because the base interest rate charged varies with market
conditions and the credit spread is commensurate with current market spreads for issuers of similar risk. The fair
value of the Term Facility is classified as a Level 2 liability in the fair value hierarchy. As of April 30, 2017, the
Company was in compliance with its debt covenants.

As of April 30, 2017 and 2016, the Company had no borrowings under the Revolver. The Company had $3.0
million and $2.8 million of standby letters of credits issued under its long-term debt arrangements as of April 30,
2017 and 2016, respectively. The Company had a total of $8.1 million and $6.4 million of standby letters of credits
with other financial institutions as of April 30, 2017 and 2016, respectively. The standby letters of credits were
generally issued as a result of entering into office premise leases.

The Company has outstanding borrowings against the CSV of COLI contracts of $67.2 million and $68.4 million at
April 30, 2017 and 2016, respectively. CSV reflected in the accompanying consolidated balance sheets is net of the
outstanding borrowings, which are secured by the CSV of the life insurance policies. Principal payments are not
scheduled and interest is payable at least annually at various fixed and variable rates ranging from 4.76% to 8.00%.

F-36

F-37

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

11. Business Segments

The Company currently operates in three global businesses: Executive Search, Hay Group and Futurestep. The
Executive Search segment focuses on recruiting Board of Director and C-level positions, in addition to research-
based interviewing and onboarding solutions, for clients predominantly in the consumer, financial services,
industrial, life sciences/healthcare and technology industries. Hay Group assists clients with ongoing assessment,
compensation and development of their senior executives and management teams, and addresses four
fundamental needs: Talent Strategy, Succession Management, Leadership Development, and Rewards,
Motivation and Engagement, all underpinned by a comprehensive array of world-leading IP, products and tools.
Futurestep is a global industry leader in high-impact talent acquisition solutions. Its portfolio of services includes
global and regional RPO, project recruitment, individual professional search and consulting. The Executive Search
business segment is managed by geographic regional leaders and Hay Group and Futurestep worldwide
operations are managed by their Chief Executive Officers. The Executive Search geographic regional leaders and
the Chief Executive Officers of Hay Group and Futurestep report directly to the Chief Executive Officer of the
Company. The Company also operates a Corporate segment to record global expenses of the Company.

The Company evaluates performance and allocates resources based on the Company’s chief operating decision
maker’s (“CODM”) review of (1) fee revenue and (2) adjusted earnings before interest, taxes, depreciation and
amortization (“Adjusted EBITDA”). To the extent that such charges occur, Adjusted EBITDA excludes restructuring
charges, integration/acquisition costs, certain separation costs and certain non-cash charges (goodwill, intangible
asset and other than temporary impairment). The accounting policies for the reportable segments are the same as
those described in the summary of significant accounting policies, except the items described above are excluded
from EBITDA to arrive at Adjusted EBITDA. For fiscal 2017 and 2016, Adjusted EBITDA includes deferred revenue
adjustment related to the Legacy Hay acquisition, reflecting revenue that the Hay Group would have realized if not
for business combination accounting that requires a company to record the acquisition balance sheet at fair value
and write-off deferred revenue where no future services are required to be performed to earn that revenue. The
accounting policies for the reportable segments are the same as those described in the summary of significant
accounting policies, except the items described above are excluded from EBITDA to arrive at Adjusted EBITDA.

F-38

The Company currently operates in three global businesses: Executive Search, Hay Group and Futurestep. The

Executive Search segment focuses on recruiting Board of Director and C-level positions, in addition to research-

based interviewing and onboarding solutions, for clients predominantly in the consumer, financial services,

industrial, life sciences/healthcare and technology industries. Hay Group assists clients with ongoing assessment,

compensation and development of their senior executives and management teams, and addresses four

fundamental needs: Talent Strategy, Succession Management, Leadership Development, and Rewards,

Motivation and Engagement, all underpinned by a comprehensive array of world-leading IP, products and tools.

Futurestep is a global industry leader in high-impact talent acquisition solutions. Its portfolio of services includes

global and regional RPO, project recruitment, individual professional search and consulting. The Executive Search

business segment is managed by geographic regional leaders and Hay Group and Futurestep worldwide

operations are managed by their Chief Executive Officers. The Executive Search geographic regional leaders and

the Chief Executive Officers of Hay Group and Futurestep report directly to the Chief Executive Officer of the

Company. The Company also operates a Corporate segment to record global expenses of the Company.

The Company evaluates performance and allocates resources based on the Company’s chief operating decision

maker’s (“CODM”) review of (1) fee revenue and (2) adjusted earnings before interest, taxes, depreciation and

amortization (“Adjusted EBITDA”). To the extent that such charges occur, Adjusted EBITDA excludes restructuring

charges, integration/acquisition costs, certain separation costs and certain non-cash charges (goodwill, intangible

asset and other than temporary impairment). The accounting policies for the reportable segments are the same as

those described in the summary of significant accounting policies, except the items described above are excluded

from EBITDA to arrive at Adjusted EBITDA. For fiscal 2017 and 2016, Adjusted EBITDA includes deferred revenue

adjustment related to the Legacy Hay acquisition, reflecting revenue that the Hay Group would have realized if not

for business combination accounting that requires a company to record the acquisition balance sheet at fair value

and write-off deferred revenue where no future services are required to be performed to earn that revenue. The

accounting policies for the reportable segments are the same as those described in the summary of significant

accounting policies, except the items described above are excluded from EBITDA to arrive at Adjusted EBITDA.

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2017 (continued)

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

11. Business Segments

Financial highlights by business segment are as follows:

Year Ended April 30, 2017

North
America

Executive Search
Asia
Pacific

EMEA

Latin

America Subtotal

Hay
Group

Futurestep Corporate Consolidated

Fee revenue . . . . . . . . . . . . . $ 356,625 $ 146,506 $ 80,169 $ 34,376 $ 617,676 $
Deferred revenue

724,186

$ 223,659 $

— $ 1,565,521

adjustment due to
acquisition . . . . . . . . . . . . .

—

—

—

—

—

3,535

—

—

3,535

Adjusted fee revenue . . . . . . $ 356,625 $ 146,506 $ 80,169 $ 34,376 $ 617,676 $

727,721

$ 223,659 $

— $ 1,569,056

Total revenue . . . . . . . . . . . . $ 369,803 $ 150,113 $ 81,744 $ 34,533 $ 636,193 $
Net income attributable to

741,533

$ 243,943 $

— $ 1,621,669

(in thousands)

Korn/Ferry
International

. . . . . . . . . . .

Net income attributable to
noncontrolling interest
. . .
Other income, net . . . . . . . . .
Interest expense, net . . . . . .
Equity in earnings of
unconsolidated
subsidiaries, net . . . . . . . .
Income tax provision . . . . . .

$

84,181

3,057
(11,820)
10,251

(333)
29,104

Operating income (loss)
Depreciation and

. . . $ 81,550 $ 27,854 $ 8,580 $ 6,268 $ 124,252 $

47,302

$ 29,986 $ (87,100)

$

114,440

amortization . . . . . . . . . . .
. . .

Other income (loss), net
Equity in earnings of
unconsolidated
subsidiaries, net . . . . . . . .

3,812
844

1,030
(15)

1,060
300

483
684

6,385
1,813

32,262
341

2,818
(91)

5,795
9,757

47,260
11,820

333

—

—

—

333

—

—

—

333

EBITDA . . . . . . . . . . . . . . . . .

86,539

28,869

9,940

7,435

132,783

79,905

32,713

(71,548)

173,853

Restructuring charges,

net . . . . . . . . . . . . . . . . . . .

1,719

629

1,495

773

4,616

29,663

101

220

34,600

Integration/acquisition

cost

. . . . . . . . . . . . . . . . . .

Deferred revenue

adjustment due to
acquisition . . . . . . . . . . . . .
Separation costs . . . . . . . . .

—

—
—

—

—
—

—

—
—

—

—
—

—

—
—

14,440

3,535
609

—

—
—

7,939

22,379

—
—

3,535
609

Adjusted EBITDA . . . . . . . . . $ 88,258 $ 29,498 $ 11,435 $ 8,208 $ 137,399 $

128,152

$ 32,814 $ (63,389)

$

234,976

Identifiable assets (1) . . . . . . $ 340,069 $ 158,927 $ 87,845 $ 26,897 $ 613,738 $ 1,057,611
37,846
Long-lived assets (1) . . . . . . $ 23,746 $ 11,089 $ 8,371 $ 3,262 $ 46,468 $
457,241
— $ 92,149 $
Goodwill (1)

. . . . . . . . . . . . . $ 46,201 $ 44,976 $

972 $

$ 116,717 $ 274,832
$
18,560
6,693 $
$ 27,475 $

$ 2,062,898
109,567
$
576,865
— $

F-38

F-39

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

Year Ended April 30, 2016

North
America

Executive Search
Asia
Pacific

EMEA

Latin

America Subtotal

Hay
Group

Futurestep Corporate Consolidated

Fee revenue . . . . . . . . . . . . . . . . . $ 371,345 $ 144,319 $ 80,506 $ 26,744 $ 622,914 $
Deferred revenue adjustment due
to acquisition . . . . . . . . . . . . . . .

—

—

—

—

—

471,145 $ 198,053 $

— $ 1,292,112

10,967

—

—

10,967

Fee revenue . . . . . . . . . . . . . . . . $ 330,634 $ 153,465 $ 84,148 $ 29,160 $ 597,407 $ 267,018 $ 163,727 $

Total revenue . . . . . . . . . . . . . . . $ 344,913 $ 158,052 $ 87,142 $ 29,218 $ 619,325 $ 275,220 $ 171,521 $

(in thousands)

Adjusted fee revenue . . . . . . . . . . $ 371,345 $ 144,319 $ 80,506 $ 26,744 $ 622,914 $

482,112 $ 198,053 $

— $ 1,303,079

Total revenue . . . . . . . . . . . . . . . . $ 386,256 $ 148,285 $ 83,206 $ 26,781 $ 644,528 $
Net income attributable to Korn/

488,217 $ 213,969 $

— $ 1,346,714

Ferry International

. . . . . . . . . . .

Net income attributable to

noncontrolling interest . . . . . . . .
Other loss, net . . . . . . . . . . . . . . . .
Interest income, net
. . . . . . . . . . .
Equity in earnings of
unconsolidated
subsidiaries, net

. . . . . . . . . . . .
Income tax provision . . . . . . . . . . .

Operating income (loss) . . . . . . . . $ 100,381 $ 20,607 $ 12,572 $ (1,854) $ 131,706 $
Depreciation and amortization . . .
Other (loss) income, net . . . . . . . .
Equity in earnings of
unconsolidated
subsidiaries, net

3,267
(147)

. . . . . . . . . . . .

5,549
619

1,029
433

941
21

312
312

437

437

—

—

—

EBITDA . . . . . . . . . . . . . . . . . . . . .

103,938

22,069

13,534

(1,230)

138,311

Restructuring charges, net . . . . . .
Integration/acquisition costs . . . . .
Venezuelan foreign currency

loss . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue adjustment due
to acquisition . . . . . . . . . . . . . . .
Separation costs . . . . . . . . . . . . . .

499
—

—

—
—

5,807
—

—

—
—

577
—

—

—
—

322
—

7,205
—

6,635

6,635

7,085

—
—

—
—

10,967
—

(3,415) $ 26,702 $ (102,301) $
21,854
(868)

6,431
(4,282)

2,386
364

—

17,571

25,682
17,607

—

1,194

29,452

(98,958)

49
—

—

—
—

77
27,802

—

—
744

$

30,913

520
4,167
(237)

(1,631)
18,960

52,692
36,220
(4,167)

1,631

86,376

33,013
45,409

13,720

10,967
744

Adjusted EBITDA . . . . . . . . . . . . . $ 104,437 $ 27,876 $ 14,111 $ 5,727 $ 152,151 $

78,912 $ 29,501 $

(70,335) $

190,229

Identifiable assets (1) . . . . . . . . . . $ 227,228 $ 150,516 $ 86,394 $ 24,273 $ 488,411 $ 1,005,457 $ 104,396 $ 300,336 $ 1,898,600
95,436
4,817 $ 3,708 $ 1,479 $ 29,048 $
Long-lived assets (1)
590,072
— $ 95,485 $
Goodwill (1) . . . . . . . . . . . . . . . . . . $ 48,320 $ 46,193 $

4,635 $
465,937 $ 28,650 $

. . . . . . . . . . $ 19,044 $

18,779 $
— $

42,974 $

972 $

F-40

F-41

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2017 (continued)

North

America

Executive Search

Asia

Pacific

Latin

Year Ended April 30, 2015

Hay

Group

(in thousands)

EMEA

America

Subtotal

Futurestep Corporate Consolidated

— $ 1,028,152

— $ 1,066,066

$

88,357

—

(7,458)

1,784

(2,181)

33,526

Net income attributable to Korn/

Ferry International . . . . . . . . .

Net income attributable to

noncontrolling interest . . . . . .

Other income, net

. . . . . . . . . . .

Interest expense, net . . . . . . . . .

Equity in earnings

of unconsolidated

subsidiaries, net . . . . . . . . . . . .

Income tax provision . . . . . . . . .

Depreciation and

Equity in earnings

of unconsolidated

350

109

—

229

—

Operating income (loss) . . . . . . $

80,818 $

18,867 $ 14,631 $

4,704 $ 119,020 $

28,175 $

19,940 $

(53,107) $

114,028

amortization . . . . . . . . . . . . . .

Other income (loss), net

. . . . . .

3,515

288

1,764

83

1,045

369

6,674

849

13,427

(22)

1,882

54

5,614

6,577

27,597

7,458

subsidiaries, net . . . . . . . . . . . .

EBITDA . . . . . . . . . . . . . . . . . . . .

Restructuring charges, net

. . . .

Acquisition costs . . . . . . . . . . . .

426

85,047

1,151

—

—

20,714

3,987

—

—

17

—

16,045

5,163

126,969

426

5,384

—

—

41,580

2,758

—

—

1,755

2,181

21,876

1,154

—

(39,161)

151,264

172

959

9,468

959

Adjusted EBITDA . . . . . . . . . . . . $

86,198 $

24,701 $ 16,062 $

5,392 $ 132,353 $

44,338 $

23,030 $

(38,030) $

161,691

Identifiable assets (1)

. . . . . . . . $ 327,446 $ 156,072 $ 94,099 $ 25,328 $ 602,945 $ 265,546 $ 103,782 $ 345,528 $ 1,317,801

Long-lived assets (1) . . . . . . . . . $

Goodwill (1) . . . . . . . . . . . . . . . . $

17,271 $

49,603 $

3,885 $

4,235 $

45,922 $

972 $

966 $

— $

26,357 $

12,377 $

4,204 $

19,150 $

96,497 $ 129,549 $

28,394 $

— $

62,088

254,440

(1) As of the end of the fiscal year.

Fee revenue attributed to an individual customer or country, other than the U.S., did not account for more than

10% of the total in fiscal year 2017, 2016 or 2015. Fee revenue classified by country in which the Company

derives revenues are as follows:

U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total fee revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

728,871

836,650

1,565,521

$

$

669,585

622,527

1,292,112

$

$

557,024

471,128

1,028,152

2017

2015

Year Ended April 30,

2016

(in thousands)

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2017 (continued)

Executive Search

Year Ended April 30, 2016

North

America

EMEA

Asia

Pacific

Latin

America Subtotal

Hay

Group

Futurestep Corporate Consolidated

(in thousands)

Fee revenue . . . . . . . . . . . . . . . . . $ 371,345 $ 144,319 $ 80,506 $ 26,744 $ 622,914 $

471,145 $ 198,053 $

— $ 1,292,112

Deferred revenue adjustment due

to acquisition . . . . . . . . . . . . . . .

—

—

—

—

—

10,967

—

—

10,967

Adjusted fee revenue . . . . . . . . . . $ 371,345 $ 144,319 $ 80,506 $ 26,744 $ 622,914 $

482,112 $ 198,053 $

— $ 1,303,079

Total revenue . . . . . . . . . . . . . . . . $ 386,256 $ 148,285 $ 83,206 $ 26,781 $ 644,528 $

488,217 $ 213,969 $

— $ 1,346,714

Net income attributable to Korn/

Ferry International

. . . . . . . . . . .

Net income attributable to

noncontrolling interest . . . . . . . .

Other loss, net . . . . . . . . . . . . . . . .

Interest income, net

. . . . . . . . . . .

Equity in earnings of

unconsolidated

subsidiaries, net

. . . . . . . . . . . .

Income tax provision . . . . . . . . . . .

Equity in earnings of

unconsolidated

Operating income (loss) . . . . . . . . $ 100,381 $ 20,607 $ 12,572 $ (1,854) $ 131,706 $

(3,415) $ 26,702 $ (102,301) $

Depreciation and amortization . . .

Other (loss) income, net . . . . . . . .

3,267

(147)

1,029

433

941

21

312

312

5,549

619

21,854

(868)

2,386

364

6,431

(4,282)

subsidiaries, net

. . . . . . . . . . . .

437

—

—

437

EBITDA . . . . . . . . . . . . . . . . . . . . .

103,938

22,069

13,534

(1,230)

138,311

29,452

(98,958)

Restructuring charges, net . . . . . .

Integration/acquisition costs . . . . .

Venezuelan foreign currency

loss . . . . . . . . . . . . . . . . . . . . . . .

Deferred revenue adjustment due

to acquisition . . . . . . . . . . . . . . .

Separation costs . . . . . . . . . . . . . .

499

—

—

—

—

5,807

—

—

—

—

—

—

17,571

25,682

17,607

577

—

—

—

—

322

—

7,205

—

6,635

6,635

7,085

—

—

—

—

10,967

—

—

49

—

—

—

—

1,194

77

27,802

—

—

744

Adjusted EBITDA . . . . . . . . . . . . . $ 104,437 $ 27,876 $ 14,111 $ 5,727 $ 152,151 $

78,912 $ 29,501 $

(70,335) $

190,229

Identifiable assets (1) . . . . . . . . . . $ 227,228 $ 150,516 $ 86,394 $ 24,273 $ 488,411 $ 1,005,457 $ 104,396 $ 300,336 $ 1,898,600

Long-lived assets (1)

. . . . . . . . . . $ 19,044 $

4,817 $ 3,708 $ 1,479 $ 29,048 $

42,974 $

4,635 $

18,779 $

95,436

Goodwill (1) . . . . . . . . . . . . . . . . . . $ 48,320 $ 46,193 $

972 $

— $ 95,485 $

465,937 $ 28,650 $

— $

590,072

$

30,913

520

4,167

(237)

(1,631)

18,960

52,692

36,220

(4,167)

1,631

86,376

33,013

45,409

13,720

10,967

744

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

Year Ended April 30, 2015

North
America

Executive Search
Asia
Pacific

Latin
America

EMEA

Hay
Group

Subtotal
(in thousands)

Futurestep Corporate Consolidated

Fee revenue . . . . . . . . . . . . . . . . $ 330,634 $ 153,465 $ 84,148 $ 29,160 $ 597,407 $ 267,018 $ 163,727 $
Total revenue . . . . . . . . . . . . . . . $ 344,913 $ 158,052 $ 87,142 $ 29,218 $ 619,325 $ 275,220 $ 171,521 $
Net income attributable to Korn/
Ferry International . . . . . . . . .

— $ 1,028,152
— $ 1,066,066

$

88,357

Net income attributable to

noncontrolling interest . . . . . .
Other income, net
. . . . . . . . . . .
Interest expense, net . . . . . . . . .
Equity in earnings

of unconsolidated
subsidiaries, net . . . . . . . . . . . .
Income tax provision . . . . . . . . .

Operating income (loss) . . . . . . $
Depreciation and

amortization . . . . . . . . . . . . . .
. . . . . .

Other income (loss), net
Equity in earnings

of unconsolidated
subsidiaries, net . . . . . . . . . . . .

EBITDA . . . . . . . . . . . . . . . . . . . .
. . . .
Restructuring charges, net
Acquisition costs . . . . . . . . . . . .

—
(7,458)
1,784

(2,181)
33,526

80,818 $

18,867 $ 14,631 $

4,704 $ 119,020 $

28,175 $

19,940 $

(53,107) $

114,028

3,515
288

1,764
83

1,045
369

350
109

6,674
849

13,427
(22)

1,882
54

5,614
6,577

27,597
7,458

426

85,047
1,151
—

—

20,714
3,987
—

—

16,045
17
—

—

5,163
229
—

426

126,969
5,384
—

—

41,580
2,758
—

—

1,755

21,876
1,154
—

(39,161)
172
959

2,181

151,264
9,468
959

Adjusted EBITDA . . . . . . . . . . . . $

86,198 $

24,701 $ 16,062 $

5,392 $ 132,353 $

44,338 $

23,030 $

(38,030) $

161,691

Identifiable assets (1)
Long-lived assets (1) . . . . . . . . . $
Goodwill (1) . . . . . . . . . . . . . . . . $

. . . . . . . . $ 327,446 $ 156,072 $ 94,099 $ 25,328 $ 602,945 $ 265,546 $ 103,782 $ 345,528 $ 1,317,801
62,088
254,440

26,357 $
12,377 $
96,497 $ 129,549 $

19,150 $
— $

4,204 $
28,394 $

17,271 $
49,603 $

3,885 $
45,922 $

4,235 $
972 $

966 $
— $

(1) As of the end of the fiscal year.

Fee revenue attributed to an individual customer or country, other than the U.S., did not account for more than
10% of the total in fiscal year 2017, 2016 or 2015. Fee revenue classified by country in which the Company
derives revenues are as follows:

U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total fee revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

728,871
836,650

1,565,521

$

$

669,585
622,527

1,292,112

$

$

557,024
471,128

1,028,152

2017

Year Ended April 30,
2016
(in thousands)

2015

F-40

F-41

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

Long-lived assets, excluding financial instruments and tax assets, classified by controlling countries over 10% of
the total are as follows:

U.S. (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total long-lived assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

70,949
38,618

109,567

$

$

64,525
30,911

95,436

$

$

50,103
11,985

62,088

2017

Year Ended April 30,
2016
(in thousands)

2015

(1)

Includes Corporate long-lived assets

12. Acquisitions

The following is a summary of acquisitions the Company completed during the periods indicated (no acquisitions
were completed in fiscal 2017):

Receivables due from clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred compensation and other retirement plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Goodwill

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Integration/acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Goodwill by segment – Hay Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended April 30,
2016 (1)

2015 (2)

$

(in thousands)
116,509
15,587
29,428
196,400
7,345
125,640
31,400
58,729
8,536

140,964
476,885

335,921

45,409

335,921

$

$

$

3,085
56
202
6,600
18
2,635
—
—
56

7,270
17,496

10,226

959

10,226

$

$

$

$

(1) On December 1, 2015, the Company completed its acquisition of Legacy Hay, a global leader in people strategy and

organizational performance, for $476.9 million, net of cash acquired. The purchase price consisted of $259.0 million in cash
($54 million from foreign locations), net of estimated cash acquired and 5,922,136 shares of the Company’s common stock,
par value $0.01 per share (the “Consideration Shares”), representing an aggregate value of $217.9 million based on the
closing price of the Company’s common stock on The New York Stock Exchange on November 30, 2015. On November 23,
2015, the Company borrowed $150 million from the Term Facility, to finance a portion of the Legacy Hay acquisition
purchase price. As part of the acquisition, the Company has committed to a $40 million retention pool (of which $9.0 million
was paid in fiscal 2017) for certain employees of Legacy Hay subject to certain circumstances. Of the remaining balance,
50% will be payable within 45 days after November 30, 2017 and the remaining 50% will be payable within 45 days after
November 30, 2018.

The acquisition strengthens the Company’s intellectual property, enhances our geographical presence, adds complimentary
capabilities to further leverage search relationships and broadens capabilities for assessment and development. It improves
our ability to support the global business community not only in attracting top talent and designing compensation and reward
incentives, but also with an integrated approach to the entire leadership and people continuum. Actual results of operations
of Legacy Hay are included in the Company’s consolidated financial statements from December 1, 2015, the effective date
of the acquisition, and includes $186.8 million, $740.2 million and $28.5 million in fee revenue, total assets and Adjusted
EBITDA, respectively, with an Adjusted EBITDA margin of 14.4%, during fiscal 2016. Legacy Hay is included in the Hay
Group segment.

F-42

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2017 (continued)

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

Long-lived assets, excluding financial instruments and tax assets, classified by controlling countries over 10% of

the total are as follows:

Year Ended April 30,

2017

2016

2015

(in thousands)

U.S. (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total long-lived assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

70,949

38,618

109,567

$

$

64,525

30,911

95,436

$

$

50,103

11,985

62,088

(1)

Includes Corporate long-lived assets

12. Acquisitions

were completed in fiscal 2017):

The following is a summary of acquisitions the Company completed during the periods indicated (no acquisitions

Receivables due from clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

116,509

$

Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Property and equipment

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deferred compensation and other retirement plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Purchase price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Goodwill

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Integration/acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended April 30,

2016 (1)

2015 (2)

(in thousands)

3,085

56

202

6,600

2,635

18

—

—

56

7,270

17,496

10,226

959

15,587

29,428

196,400

7,345

125,640

31,400

58,729

8,536

140,964

476,885

335,921

45,409

$

$

$

$

$

$

Goodwill by segment – Hay Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

335,921

10,226

(1) On December 1, 2015, the Company completed its acquisition of Legacy Hay, a global leader in people strategy and

organizational performance, for $476.9 million, net of cash acquired. The purchase price consisted of $259.0 million in cash

($54 million from foreign locations), net of estimated cash acquired and 5,922,136 shares of the Company’s common stock,

par value $0.01 per share (the “Consideration Shares”), representing an aggregate value of $217.9 million based on the

closing price of the Company’s common stock on The New York Stock Exchange on November 30, 2015. On November 23,

2015, the Company borrowed $150 million from the Term Facility, to finance a portion of the Legacy Hay acquisition

purchase price. As part of the acquisition, the Company has committed to a $40 million retention pool (of which $9.0 million

was paid in fiscal 2017) for certain employees of Legacy Hay subject to certain circumstances. Of the remaining balance,

50% will be payable within 45 days after November 30, 2017 and the remaining 50% will be payable within 45 days after

November 30, 2018.

The acquisition strengthens the Company’s intellectual property, enhances our geographical presence, adds complimentary

capabilities to further leverage search relationships and broadens capabilities for assessment and development. It improves

our ability to support the global business community not only in attracting top talent and designing compensation and reward

incentives, but also with an integrated approach to the entire leadership and people continuum. Actual results of operations

of Legacy Hay are included in the Company’s consolidated financial statements from December 1, 2015, the effective date

of the acquisition, and includes $186.8 million, $740.2 million and $28.5 million in fee revenue, total assets and Adjusted

EBITDA, respectively, with an Adjusted EBITDA margin of 14.4%, during fiscal 2016. Legacy Hay is included in the Hay

Group segment.

(2) On March 1, 2015, the Company acquired all outstanding membership interests of Pivot Leadership, a global provider of
innovative, customized and scalable executive development programs, for $17.5 million, net of cash acquired, which
includes $2.2 million in contingent consideration. As of April 30, 2017 and 2016, the fair value of the contingent
consideration is $1.3 million and $3.0 million and is included in other liabilities in the accompanying consolidated balance
sheets. The contingent consideration is based on the achievement of certain revenue targets and can be up to $6.5 million,
payable in four installments in fiscal 2017 to 2020. In fiscal 2017, the Company paid $1.1 million due to meeting certain
revenue targets. The acquisition allows us to integrate the Company’s talent management solution with Pivot’s executive
learning capabilities. Actual results of operations of Pivot Leadership are included in the Company’s consolidated financial
statements from March 1, 2015, the effective date of the acquisition, and includes $3.7 million and $20.0 million in fee
revenue and total assets, respectively, during fiscal 2015. Tax deductible goodwill from the Pivot Leadership acquisition was
$7.4 million as of April 30, 2017 and 2016.

The aggregate purchase price for Legacy Hay was allocated on a preliminary basis to the assets acquired and liabilities
assumed on their estimated fair values at the date of acquisition. During fiscal 2017, the Company finalized the purchase price
allocation by recording a decrease to goodwill of $8.2 million primarily as a result of tax returns filed for periods prior to the
acquisition and an increase in other assets.

Pro forma financial information (unaudited)

Unaudited pro forma consolidated fee revenue was $1.6 billion for both fiscal 2016 and 2015, and unaudited pro
forma consolidated net income was $23 million and $75 million for fiscal 2016 and 2015, respectively, as though
the acquisition of Legacy Hay had occurred as of the beginning of fiscal 2015. The unaudited pro forma financial
information is for illustrative purposes and is not indicative of the results of operations that would have been
realized if the acquisition had been completed on the date indicated, nor is it indicative of future operating results.

The unaudited pro forma results primarily include adjustments for amortization charges for acquired intangible
assets and property and equipment, compensation expense for retention awards and imputed interest expense on
Term Facility and the related tax effect on the aforementioned items.

13. Goodwill and Intangible Assets

Changes in the carrying value of goodwill by reportable segment were as follows:

North
America

Executive Search
Asia
Pacific

EMEA

Subtotal Hay Group Futurestep Consolidated

(in thousands)

Balance as of May 1, 2015. . . . . $
Additions . . . . . . . . . . . . . . . . .
Exchange rate fluctuations. . . .

49,603 $
—
(1,283)

45,922 $
—
271

Balance as of April 30, 2016. . . .
Adjustments . . . . . . . . . . . . . .
Exchange rate fluctuations. . .

48,320
—
(2,119)

46,193
—
(1,217)

972 $
—
—

972
—
—

96,497 $ 129,549 $

—
(1,012)

95,485
—
(3,336)

335,921
467

465,937
(8,179)
(517)

28,394
—
256

28,650
—
(1,175)

$ 254,440
335,921
(289)

590,072
(8,179)
(5,028)

Balance as of April 30, 2017. . . . $

46,201 $

44,976 $

972 $

92,149 $ 457,241 $

27,475

$ 576,865

F-42

F-43

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

Intangible assets include the following:

Amortized intangible assets:

Gross

April 30, 2017

Accumulated
Amortization

Customer lists . . . . . . . . . . . . . . . . . . $
Intellectual property . . . . . . . . . . . . . .
Proprietary databases . . . . . . . . . . . .
Trademarks . . . . . . . . . . . . . . . . . . . .
Non-compete agreements . . . . . . . .

125,099
33,100
4,256
3,986
910

$

(31,094) $
(16,994)
(3,202)
(3,986)
(833)

(in thousands)

Net

Gross

94,005 $
16,106
1,054
—
77

125,099
33,100
4,256
3,986
910

April 30, 2016

Accumulated
Amortization

$

(19,910) $
(13,281)
(2,777)
(3,986)
(753)

Total

. . . . . . . . . . . . . . . . . . . . . . . . $

167,351

$

(56,109)

111,242 $

167,351

$

(40,707)

Net

105,189
19,819
1,479
—
157

126,644

Unamortized intangible assets:

Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange rate fluctuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

106,000
77

Total Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

217,319

106,000
383

$

233,027

Acquisition-related intangible assets acquired in fiscal 2016 in connection with the acquisition of Legacy Hay
consists of customer lists and intellectual property of $84.0 million and $10.2 million, respectively, with weighted-
average useful lives from the date of purchase of 11 years and seven years, respectively. Acquisition-related
intangible assets not subject to amortization acquired in connection with the acquisition of Legacy Hay consists of
trademarks of $102.2 million.

Amortization expense for amortized intangible assets was $15.4 million, $11.7 million and $8.2 million during fiscal
2017, 2016 and 2015, respectively. Estimated annual amortization expense related to amortizing intangible assets
is as follows:

Year Ending April 30,

Estimated
Annual
Amortization
Expense
(in thousands)

2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter

$

14,742
13,487
13,204
13,280
13,269
43,260

$

111,242

All amortizable intangible assets will be fully amortized by the end of fiscal 2031.

14. Commitments and Contingencies

Lease Commitments

The Company leases office premises and certain office equipment under leases expiring at various dates through
2030. Total rental expense during fiscal 2017, 2016 and 2015 amounted to $56.8 million, $45.5 million and $38.0
million, respectively.

F-44

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2017 (continued)

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

Intangible assets include the following:

April 30, 2017

Accumulated

Amortization

(in thousands)

April 30, 2016

Accumulated

Amortization

Net

Amortized intangible assets:

Gross

Net

Gross

Customer lists . . . . . . . . . . . . . . . . . . $

125,099

$

(31,094) $

94,005 $

125,099

$

(19,910) $

105,189

Intellectual property . . . . . . . . . . . . . .

Proprietary databases . . . . . . . . . . . .

Trademarks . . . . . . . . . . . . . . . . . . . .

Non-compete agreements . . . . . . . .

33,100

4,256

3,986

910

(16,994)

(3,202)

(3,986)

(833)

16,106

1,054

—

77

33,100

4,256

3,986

910

(13,281)

(2,777)

(3,986)

(753)

19,819

1,479

—

157

Total

. . . . . . . . . . . . . . . . . . . . . . . . $

167,351

$

(56,109)

111,242 $

167,351

$

(40,707)

126,644

Unamortized intangible assets:

Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

106,000

Exchange rate fluctuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

77

Total Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

217,319

106,000

383

$

233,027

Acquisition-related intangible assets acquired in fiscal 2016 in connection with the acquisition of Legacy Hay

consists of customer lists and intellectual property of $84.0 million and $10.2 million, respectively, with weighted-

average useful lives from the date of purchase of 11 years and seven years, respectively. Acquisition-related

intangible assets not subject to amortization acquired in connection with the acquisition of Legacy Hay consists of

trademarks of $102.2 million.

is as follows:

Year Ending April 30,

Estimated

Annual

Amortization

Expense

(in thousands)

$

111,242

2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Thereafter

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14,742

13,487

13,204

13,280

13,269

43,260

All amortizable intangible assets will be fully amortized by the end of fiscal 2031.

14. Commitments and Contingencies

Lease Commitments

The Company leases office premises and certain office equipment under leases expiring at various dates through

2030. Total rental expense during fiscal 2017, 2016 and 2015 amounted to $56.8 million, $45.5 million and $38.0

million, respectively.

Future minimum commitments under non-cancelable operating leases with lease terms in excess of one year
excluding commitments accrued in the restructuring liability are as follows:

Year Ending April 30,

2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter

Lease
Commitments
(in thousands)

$

$

62,384
57,812
54,817
50,418
44,100
145,284

414,815

Employment Agreements

The Company has a policy of entering into offer letters of employment or letters of promotion with vice presidents
which provide for an annual base salary and discretionary and incentive bonus payments. Certain key vice
presidents who typically have been employed by the Company for several years may also have a standard form
employment agreement. Upon termination without cause, the Company is required to pay the amount of
severance due under the employment agreement, if any. The Company also requires its vice presidents to agree
in their employment letters and their employment agreement, if applicable, not to compete with the Company
during the term of their employment, and for a certain period after their employment ends.

Amortization expense for amortized intangible assets was $15.4 million, $11.7 million and $8.2 million during fiscal

2017, 2016 and 2015, respectively. Estimated annual amortization expense related to amortizing intangible assets

Litigation

From time to time, the Company has been and is involved in litigation incidental to its business. The Company is
currently not a party to any litigation which, if resolved adversely against the Company, would, in the opinion of
management, after consultation with legal counsel, have a material adverse effect on the Company’s business,
financial position or results of operations.

15. Quarterly Results (Unaudited)

The following table sets forth certain unaudited consolidated statement of income data for the quarters in fiscal
2017 and 2016. The unaudited quarterly information has been prepared on the same basis as the annual financial
statements and, in management’s opinion, includes all adjustments necessary to present fairly the information for
the quarters presented.

April 30

Fiscal 2017
January 31 October 31

July 31

April 30

January 31 October 31 July 31

Fiscal 2016

(in thousands, except per share data)

Quarters Ended

Fee revenue . . . . . . . . . . . . $ 406,065 $ 381,918 $ 401,917 $ 375,621 $ 399,960 $ 344,158 $ 280,600 $ 267,394
4,842 $ (14,067) $ 29,013 $ 32,904
Operating income (loss) . . $ 32,834 $ 30,542 $ 46,548 $
6,375 $ (15,995) $ 17,971 $ 23,082
Net income (loss) . . . . . . . . $ 27,736 $ 24,378 $ 31,056 $
Net income (loss)

4,516 $
4,068 $

attributable to Korn/Ferry
International . . . . . . . . . . $ 26,924 $ 23,897 $ 30,152 $

3,208 $

5,855 $ (15,995) $ 17,971 $ 23,082

Net earnings (loss) per

common share:
Basic.
. . . . . . . . . . . . . . . $
Diluted. . . . . . . . . . . . . . . $

0.48 $
0.47 $

0.42 $
0.42 $

0.53 $
0.52 $

0.06 $
0.06 $

0.10 $
0.10 $

(0.30) $
(0.30) $

0.36 $
0.35 $

0.46
0.46

F-44

F-45

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 (continued)

16. Subsequent Events

Quarterly Dividend Declaration

On June 20, 2017, the Board of Directors of the Company declared a cash dividend of $0.10 per share that will be
paid on July 14, 2017 to holders of the Company’s common stock of record at the close of business on June 30,
2017. The declaration and payment of future dividends under the quarterly dividend policy will be at the discretion
of the Board of Directors and will depend upon many factors, including the Company’s earnings, capital
requirements, financial conditions, the terms of the Company’s indebtedness and other factors that the Board of
Directors may deem to be relevant. The Board may amend, revoke or suspend the dividend policy at any time and
for any reason.

F-46

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2017 (continued)

16. Subsequent Events

Quarterly Dividend Declaration

On June 20, 2017, the Board of Directors of the Company declared a cash dividend of $0.10 per share that will be

paid on July 14, 2017 to holders of the Company’s common stock of record at the close of business on June 30,

2017. The declaration and payment of future dividends under the quarterly dividend policy will be at the discretion

of the Board of Directors and will depend upon many factors, including the Company’s earnings, capital

requirements, financial conditions, the terms of the Company’s indebtedness and other factors that the Board of

Directors may deem to be relevant. The Board may amend, revoke or suspend the dividend policy at any time and

for any reason.

KORN/FERRY INTERNATIONAL AND SUBSIDIARIES
SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS
April 30, 2017

Column A

Column B

Column C
Additions

Column D

Column E

Balance at
Beginning
of Period

Charges to
Cost and
Expenses

(Charges)
Recoveries
to Other

Accounts (1) Deductions (2)
(in thousands)

Balance at
End of
Period

Description

Allowance for doubtful accounts:

Year Ended April 30, 2017 . . . . . . . . . . . . . .
Year Ended April 30, 2016 . . . . . . . . . . . . . .
Year Ended April 30, 2015 . . . . . . . . . . . . . .

Deferred tax asset valuation allowance:

Year Ended April 30, 2017 . . . . . . . . . . . . . .
Year Ended April 30, 2016 . . . . . . . . . . . . . .
Year Ended April 30, 2015 . . . . . . . . . . . . . .

$
$
$

$
$
$

11,292
9,958
9,513

22,030
21,608
26,969

$
$
$

$
$
$

12,987
8,570
7,741

7,931
18,993
2,537

$
$
$

$
$
$

(415)
(270)
(693)

$
$
$

— $
— $
— $

(8,409) $
(6,966) $
(6,603) $

(8,683) $
(18,571) $
(7,898) $

15,455
11,292
9,958

21,278
22,030
21,608

(1) Exchange rate fluctuations.
(2) Allowance for doubtful accounts represents accounts written-off, net of recoveries and deferred tax asset valuation

represents release of prior valuation allowances.

F-46

F-47

EXHIBIT 32.1 

ACT OF 2002 

their knowledge: 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 SECTION 906 OF THE SARBANES-OXLEY 

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States 

Code), the undersigned officers of Korn/Ferry International, a Delaware corporation (the ‘Company’), hereby certify that, to the best of 

(a) the Annual Report on Form 10-K for the year ended April 30, 2017 (the ‘Report’) of the Company fully complies with the requirements 

of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 

(b) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the 

Company. 

Dated: June 28, 2017 

By:

/s/ GARY D. BURNISON

Name:         Gary D. Burnison

Title:

Chief Executive Officer and President

By:

Name:

Title:

/s/ ROBERT P. ROZEK

Robert P. Rozek

Executive Vice President, Chief Financial Officer, and Chief Corporate Officer

STOCK LISTING

Korn/Ferry International common stock 
is traded on the New York Stock Exchange 
under the symbol KFY.

ANNUAL MEETING

The annual meeting of stockholders 
will be held at 8:00 a.m. PDT,
September 27th, 2017, at:
InterContinental Century City
2151 Avenue of the Stars
Los Angeles, California 90067 USA

REGISTRAR & TRANSFER AGENT

For address changes, account consolidation, 
registration changes, stock holdings, and lost 
stock certificates, please contact:

Computershare
250 Royall Street
Canton, Massachusetts 02021 USA
+1 877 889 7584
www.computershare.com/investor

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Gregg Kvochak
+1 310 556 8550

MEDIA CONTACT

Dan Gugler
+1 310 226 2645

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