Korn/Ferry International is the world's leading and largestexecutive recruitment firm with the broadest global presence in the executive recruitment industry. KFY provides executive recruitment services exclusively on a retained basis and serve the global recruitment needs of our clients from middle to executive management. KFY's clients are many of the world's largest and most prestigious public and private companies, middle-market and emerging growth companies as well as governmental and not-for-profit organizations. Korn/ferry International has a market cap of $789 million; its shares were traded at around $17.28 with a P/E ratio of 78.5 and P/S ratio of 1.2. Korn/ferry International had an annual average earning growth of 21.1% over the past 5 years. Highlight of Business Operations:Although global economic conditions and demand for our services continued to show signs of improvement during the three months ended October 31, 2009, the demand for executive searches has significantly declined as compared to the year-ago period, which caused declines in our results of operations. Fee revenue decreased 26% in the three months ended October 31, 2009 to $140.1 million compared to $189.3 million in the year-ago period, with decreases in fee revenue in all regions. The North America and Asia Pacific regions in executive recruitment experienced the largest dollar decreases in fee revenue. During the three months ended October 31, 2009, we recorded operating income of $2.2 million with operating income from executive recruitment and Futurestep of $9.7 million and $2.6 million, respectively and corporate expenses of $10.1 million. This represents a decrease of 90% from operating income of $21.5 million in the three months ended October 31, 2008.
Our cash, cash equivalents and marketable securities decreased $69.1 million, or 21% to $261.2 million at October 31, 2009 compared to $330.3 million at April 30, 2009, primarily due to the payment of annual bonuses. As of October 31, 2009, we held marketable securities, to settle obligations under our Executive Capital Accumulation Plan (ECAP) with a cost value of $69.7 million and a fair value of $66.4 million. Our working capital decreased $11.0 million in the six months ended October 31, 2009, to $187.3 million. We believe that cash on hand and funds from operations will be sufficient to meet our anticipated working capital, capital expenditures and general corporate requirements. We had no long-term debt nor any outstanding borrowings under our credit facility at October 31, 2009.
Futurestep. Futurestep reported fee revenue of $16.8 million, a decrease of $12.3 million, or 42%, in the three months ended October 31, 2009 compared to $29.1 million in the three months ended October 31, 2008. The decline in Futuresteps fee revenue is due to a 34% decrease in the number of engagements billed in the three months ended October 31, 2009 as compared to the three months ended October 31, 2008 and a 12% decrease in average fees billed per engagement during the same period. Of the total decrease in fee revenue in the three months ended October 31, 2009 compared to the three months ended October 31, 2008, North America experienced the largest dollar decline, with a decrease in fee revenue of $6.7 million, or 53%, to $6.0 million; Europe fee revenue decreased by $3.8 million, or 47%, to $4.3 million and Asia fee revenue decreased $1.8 million, or 22%, to $6.5 million.
Corporate compensation and benefits expense increased $3.3 million, or 118%, to $6.1 million in the three months ended October 31, 2009 compared to $2.8 million in the three months ended October 31, 2008 primarily due to an $8.8 million increase in certain other deferred compensation liabilities during the three months ended October 31, 2009. We hold marketable securities in a trust for settlement of certain of these deferred compensation obligations as discussed in Note 5 Marketable Securities, in the notes to our condensed consolidated financial statements. This increase was offset by a $5.7 million decrease in certain other deferred compensation retirement plan liabilities due to an increase in cash surrender value of company owned life insurance policies (COLI).
Futurestep general and administrative expenses decreased $2.5 million, or 41%, to $3.6 million in the three months ended October 31, 2009 compared to $6.1 million in the three months ended October 31, 2008 primarily due to decreases of $0.7 million in premises and office expense, $0.9 million in miscellaneous expenses including travel and meetings and $0.4 million in business development expenses. Premises and office expense decreased due to the closure of offices in the second half of fiscal 2009 and general expenses decreased primarily due to the decline in our overall business activities. Futurestep general and administrative expenses, as a percentage of fee revenue, was 21% in both the three months ended October 31, 2009 and 2008.
Operating income decreased $19.2 million, to operating income of $2.3 million in the three months ended October 31, 2009 compared to operating income of $21.5 million in the three months ended October 31, 2008. This decrease in operating income resulted from a $49.2 million decrease in fee revenue during the three months ended October 31, 2009 as compared to the three months ended October 31, 2008. The decrease in fee revenue was partially offset by a decrease in operating expenses of $33.9 million during the same period, which includes net restructuring charges of $2.8 million during the three months ended October 31, 2009. The decrease in operating expenses is primarily attributable to a decrease in compensation and benefits, which was due to a decline in global headcount and a decrease in variable compensation, and to a lesser extent a decrease in general and administrative expenses.
Read the The complete ReportKFY is in the portfolios of Robert Olstein of Olstein Financial Alert Fund, Chuck Royce of ROYCE & ASSOCIATES, HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC.