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Korn/Ferry International Reports Operating Results (10-Q)

December 12, 2011 | About:

10qk

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Korn/Ferry International (KFY) filed Quarterly Report for the period ended 2011-10-31.

Korn/ferry International has a market cap of $816.49 million; its shares were traded at around $15.77 with a P/E ratio of 12.67 and P/S ratio of 1.05.
This is the annual revenues and earnings per share of KFY over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of KFY.


Highlight of Business Operations:

Futurestep. Futurestep reported fee revenue of $28.6 million, an increase of $7.3 million, or 34%, in the three months ended October 31, 2011 compared to $21.3 million in the three months ended October 31, 2010. The increase in Futurestep’s fee revenue was due to a 33% increase in the weighted-average fees billed per engagement and 1% increase in the number of engagements billed in the three months ended October 31, 2011 compared to the three months ended October 31, 2010. The increase in fee revenue was positively impacted by an increase in the level of engagement activity for existing clients in the three months ended October 31, 2011 as compared to the three months ended October 31, 2010. The increase in Futurestep’s fee revenue consisted of North America fee revenue increase of $3.9 million, or 47%, to $12.2 million; Europe fee revenue increase of $1.3 million, or 20%, to $7.7 million; an increase in Asia Pacific fee revenue of $2.0 million, or 30%, to $8.6 million and fee revenue of $0.1 million in South America for the first time. Improvement in Futurestep fee revenue is primarily driven by increases in project based and middle-management recruitment. Exchange rates favorably impacted fee revenue for Futurestep by $1.1 million in the three months ended October 31, 2011.

Executive recruitment compensation and benefits expense decreased $5.5 million, or 5%, to $104.4 million in the three months ended October 31, 2011 compared to $109.9 million in the three months ended October 31, 2010, primarily due to a $6.0 million decrease in performance related bonus expense driven by the Company’s overall level of profitability as defined by pre-tax income before bonus expense. In addition, changes in the fair value of vested amounts owed under certain deferred compensation plans resulted in a decrease of compensation expense of $2.2 million in the three months ended October 31, 2011 and an increase of $2.3 million in the three months ended October 31, 2010. Partially offsetting these changes was a 10% increase in salaries and benefits primarily due to a 5% increase in average executive recruitment headcount, to support our increase in fee revenue and growth in business activities. Executive recruitment compensation and benefits expense decreased as a percentage of fee revenue to 61% from 67% in the three months ended October 31, 2011 and 2010, respectively. Exchange rates unfavorably impacted compensation and benefits expenses by $3.4 million during the three months ended October 31, 2011.

Futurestep. Futurestep reported fee revenue of $58.8 million, an increase of $17.3 million, or 42%, in the six months ended October 31, 2011 compared to $41.5 million in the six months ended October 31, 2010. The increase in Futurestep’s fee revenue was due to a 28% increase in the weighted-average fees billed per engagement and an 11% increase in the number of engagements billed in the six months ended October 31, 2011 compared to the six months ended October 31, 2010. The increase in fee revenue was also positively impacted by an increase in level of activity for existing clients in the six months ended October 31, 2011 as compared to the six months ended October 31, 2010. The increase in Futurestep’s fee revenue consisted of North America fee revenue increase of $9.3 million, or 60%, to $24.9 million; Europe fee revenue increase of $4.1 million, or 32%, to $16.8 million; an increase in Asia Pacific fee revenue of $3.8 million, or 29%, to $17.0 million and fee revenue of $0.1 million in South America for the first time. Improvement in Futurestep fee revenue is primarily driven by increases in project based and middle-management recruitment. Exchange rates favorably impacted fee revenue for Futurestep by $4.9 million in the six months ended October 31, 2011.

Compensation and benefits expense increased $21.1 million, or 9%, to $268.9 million in the six months ended October 31, 2011 from $247.8 million in the six months ended October 31, 2010. The increase in compensation and benefits expense is mainly due to a 19% increase in salaries and benefits in the six months ended October 31, 2011 as compared to the six months ended October 31, 2010 due in large part to a 14% growth in average worldwide headcount. The growth in average worldwide headcount was primarily due to an increase in execution and support staff to support our growth in Futurestep and other business activities. The increase in compensation and benefits expense was partially offset by a $7.2 million decrease in performance related bonus expense to $60.9 million in the six months ended October 31, 2011 from $68.1 million in the six months ended October 31, 2010. This decrease was primarily driven by the Company’s overall level of profitability as defined by pre-tax income before bonus expense. The decrease in bonus expense was also impacted by a change in the mix of revenues by operating segment, notably from the strong performance of Futurestep, where bonus expense relative to revenues is lower than in the Executive Recruitment operating segment. In addition, the performance related bonus expense for the six months ended October 31, 2011 and 2010 was reduced by a change in the bonus expense estimate of $1.2 million and $2.0 million for fiscal 2011 and 2010, respectively, resulting in bonus expense of $59.7 million and $66.1 million, respectively. These changes in estimates represent the difference between the bonus expense recorded for fiscal 2011 and 2010 and the actual cash payments made or to be made with respect to amounts earned during such fiscal years. Exchange rates unfavorably impacted compensation and benefits expenses by $13.8 million during the six months ended October 31, 2011.

Executive recruitment compensation and benefits expense increased $4.6 million, or 2%, to $214.7 million in the six months ended October 31, 2011 compared to $210.1 million in the six months ended October 31, 2010. The increase in compensation and benefits expense is primarily due to a 12% increase in salaries and benefits in the six months ended October 31, 2011 as compared to the six months ended October 31, 2010 due in large part to an 8% growth in average executive recruitment headcount. The increase in average executive recruitment headcount increased to support our increase in fee revenue and growth in business activities. Offsetting these increases was a reduction in the performance related bonus expense of $ 7.7 million in the six months ended October 31, 2011 compared to the year-ago period and changes in the fair value of vested amounts owed under certain deferred compensation plans resulting in a decrease of compensation expense of $3.4 million in the six months ended October 31, 2011 and an increase of $1.2 million in the six months ended October 31, 2010. Executive recruitment compensation and benefits expense decreased as a percentage of fee revenue to 62% from 66% in the six months ended October 31, 2011 and 2010, respectively. Exchange rates unfavorably impacted compensation and benefits expenses by $10.5 million during the six months ended October 31, 2011.

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