Form 10-K
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| þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
2023
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
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Delaware | 95-2623879 | |||||
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |||||
1900 Avenue of the Stars, Suite | 90067 | |||||
(Address of Principal Executive Offices) | (Zip Code) | |||||
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||
Common Stock, par value $0.01 per share | KFY | New York Stock Exchange | ||||||
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Non-accelerated filer |
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Emerging growth company |
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The number of shares outstanding of our common stock as of July 8, 2020 was 54,638,627 shares.
Explanatory Note
The Company was unable to file this Annual Report on Form 10-K for the year ended April 30, 2020 (the “Annual Report”) by the original deadline of June 29, 2020 in light of the ongoing impact of the coronavirus (“COVID-19”) pandemic. To respond to both health and safety
concerns and applicable governmental orders, the Company imposed a range of travel restrictions, office closures, social distancing measures, and remote working policies to maintain its operations while prioritizing the safety of its employees and customers. These measures resulted in operational challenges and disruptions, including to the Company’s customary year-end processes and interactions with and between its accounting personnel, external auditors, and others responsible for or contributing to the preparation of the Annual Report. Therefore, as disclosed in a Form 8-K filed with the Securities and Exchange Commission (“SEC”) on May 11, 2020, the Company relied on the SEC’s March 25, 2020 “Order Under Section 26 of the Securities Exchange Act of 1934 Modifying Exemptions from the Reporting and Proxy Delivery Requirements for Public Companies,” Release No. 34-88465, to delay the filing of the Annual Report.
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ABOUT KORN FERRY
We operatebelieve we are the premier organizational consultancy uniquely positioned to leverage our extensive intellectual property to help companies bring talent and strategy together, helping them have the right people in 111 officesthe right places and providing them with the right rewards. We seek to bring their strategies to life by designing their organizational structure and helping them hire, motivate and retain the best people. And we help professionals navigate and advance their career.
very challenging macroeconomic environment.
We were originally formedwork with:
The Company operates through four global segments:
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Consulting and Digital are new reporting segments. Previously, these were tracked and reported together as2023. In fact, by integrating the previously mentioned acquired companies into Korn Ferry, Advisory (“Advisory”). Overwe were able to generate an incremental $50.0 million in fee revenues since November 1, 2021, (the date of acquisition of our first Interim business) through referrals between the pastacquired companies and our business prior the acquisitions.
In addition to Digital, in recent years we have made other significant investments in our business that have strengthened our IP, enhanced our geographical presence, added complementary offerings to deepen client relationships, and broaden our capabilities around talent acquisition, organizational strategy, assessment and succession, development and rewards and benefits. Approximately 71% of our revenue comes from clients that utilize multiple lines of our business.
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On June 12, 2018, the Company’s Board of Directors approved the Onenon-GAAP financial measures provide meaningful supplemental information regarding Korn Ferry’s performance.
In March 2020, COVID-19 was reported to have spread to over 100 countries, territories or areas worldwide. Initially, the negative business impact of the coronavirus outbreak was most pronounced in the Asia Pacific Region, and in particular China and Hong Kong. During the fourth quarter of fiscal 2020 the World Health Organization declared it a pandemic and the impact has been felt worldwide. The outbreak has severely restricted the level of economic activity in affected areas and has had an adverse impact on sales of certain of our products and services. Governments and companies have implemented social distancing - limiting either travel or in person individual or group face-to-face interaction as well as working from home to adhere to stay at home orders from national, state and city governments. All of our business segments across all of our geographies have been impacted as fee revenue decreased significantly in the fourth quarter. In light of the continuing uncertainty in worldwide economic conditions caused by the COVID-19 pandemic and, as part of a broader program aimed at further enhancing our strong balance sheet and liquidity position, on April 20, 2020, we initiated a plan intended to adjust our cost base to the current economic environment and to position us to invest in the recovery. This plan includes (i) a reduction in workforce, which was substantially completed by the end of fiscal 2020 and resulted in restructuring charges of $40.5 million associated with severance, (ii) the temporary furlough of certain employees, (iii) subject to certain exceptions and legal requirements, salary reductions across the organization, and (iv) other cost saving measures relating to general and administrative expenses.
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, as amended (the “Exchange Act”). 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.
We also make available, free of chargeis focused on the Investor Relations portion of our website at http://ir.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 at www.sec.gov.
We also make available on the Investor Relations portion of our website at http://ir.kornferry.com press releases and related 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 the Investor Relations portion of 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.
THE KORN FERRY OPPORTUNITY
Aligned around our vision to be the preeminent organizational consulting firm, we are pursuing an ambitious strategy that will help us to focus relentlessly on clients and collaborate intensively across the organization. This approach builds on the best of our past and gives us a clear path to the future with focused initiativesfollowing strategic priorities to increase our client and commercial impact.
Korn Ferry is transforming how clients address their talent management needs. We have evolved from a mono-line business to a multi-faceted consultancy, giving our consultants more frequent and expanded opportunities to engage with clients. The expansion of our business into larger addressable markets offers higher growth potential and more durable and visible revenue streams.
While most organizations can develop a sound strategy, they often struggle with how to make it stick. That is where we come in: synchronizing an organization’s strategy with its talent to drive superior performance. We help companies design their organization—the structure, roles and responsibilities—to seize these opportunities. In addition, we help organizations select and hire the talent they need to execute their strategy—and show them the best way to compensate, develop and motivate their people.
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We do this through our five core solution sets:
Core Solutions
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Integrated Solutions
Additionally, we deliver differentiated approaches for our clients through our integrated market offerings, which bring together our best thinking from across our core solutions. These offerings, guided by an ever-changing business environment, target specific client needs and demonstrate Korn Ferry’s competitive advantage and durability.
For example, as the COVID-19 global pandemic took hold, our structure and systems enabled us to quickly pivot our go-to-market approach to help clients navigate the myriad of organizational and people challenges they faced at both the onset of the crisis and as they forge a path towards recovery. A key differentiator is Korn Ferry’s ability to bridge business strategy and talent strategy, positioning us to partner with our clients broadly and deeply in the delivery of integrated solutions ranging from cost optimization to virtual learning experiences, change management, and career transition/outplacement.
Other integrated offerings focus on our clients’ transformational challenges. Our digital transformation service helps clients execute on a digital operating model, including the introduction and integration of new agile ways of working. Rich proprietary data enables our clients to better deliver the right value proposition to attract, retain and engage digital talent. In addition, we help specific functional areas, such as HR, develop their future-state model within a digital environment.
Our diversity and inclusion (“D&I”) service helps clients innovate and grow by creating an inclusive culture and diverse workforce. Organizations are in different places on their D&I journeys, ranging from compliance-driven, values-driven, talent performance driven, and beyond. As a result, we combine our insights into a single offering that can be tailored to different markets and unique buyers.
From core through integrated, across our solution portfolio, we have the advantage of best-in-class solutions, products and talent, coupled with deep market expertise, to deliver a seamless approach to organization, talent and rewards strategies. Our change management capabilities further support our clients, through the successful execution of their transformational strategies and the effective implementation of their people and culture programs.
OUR INTELLECTUAL PROPERTY AND TECHNOLOGY
By bringing together our industry knowledge, methodology, measurements, and data insights, we can not only benchmark clients against the best but also help them make the changes necessary to achieve their optimal performance. We offer a complete view of the talent they need and the talent they have. We know if their rewards are fair and effective and we align their structures, role profiles, and people to support the strategy so that clients know where to focus their efforts to create lasting change in the organization.
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The Talent Hub
At the core of our approach is deep IP and research that informs smarter, more data-driven outcomes for our clients. We house all this data inside our Talent Hub. With more than four billion total data points, including 74 million assessment results, seven million employee engagement survey responses, and rewards data for 22 million employees across over 25,000 organizations and more than 150 countries, our Talent Hub provides the fuel for all of our services, solutions and products, bringing clients a research-based foundation to underpin quality and consistency in their talent processes.
The Korn Ferry Institute
The Korn Ferry Institute, our research and analytics arm, develops and infuses robust scientific research, cutting-edge IP, and state-of-the-art talent analytics methodologies into Korn Ferry, enabling every client facing Korn Ferry colleague to partner with organizations and people to activate their potential and find the success they seek.
At the highest level, the Korn Ferry Institute is built on three core pillars:
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In the fiscal year ahead, we will continue to innovate, driving even greater business and societal impact as we focus on crisis management, organizational transformation, and defining the leadership needed for the future.
INDUSTRY TRENDS
The world has seen so much change.
The emergence of COVID-19 is an event of historic magnitude, with repercussions that will undoubtedly be felt for years. There is virtually no company or industry that has not been impacted by the crisis, forcing them to evolve their talent processes, find new ways to deliver customer value, lead employees through uncertainty and change, and reduce costs to survive.
And, while the world battles this pandemic and the resulting adverse economic consequences, we are seeing violence in the United States uncover a long-standing practice of people treating others based on personal bias – conscious or sub-conscious. As part of this movement, we have raised an active and intentional voice to strongly condemn all bias, including racism and engage in candid dialogue to listen, understand and then lead through action to drive transformative change.
From these long overdue calls for social equality to a global pandemic causing economic downturns, layoffs, furloughs, and pay reductions, emotions are running high. Uncertainty has led to fear. People and companies are struggling to perform at their best. Organizations are increasingly turning to partners like Korn Ferry to synchronize their strategy with their talent as an answer to today’s most pressing business challenges, specifically:
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In addition, we believe the following factors will have a long-term positive impact on our industry:
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GROWTH STRATEGY
Our objective is to expand our position as the preeminent organizational consulting firm. In order to meet this objective, we will continue to pursue our multi-pronged strategy:
Drive a One Korn Ferry Go-to-Market Strategy
Our synergistic go-to-market strategy bringing together our core solutions, is driving more integrated, scalable client relationships. This is evidenced by the fact that approximately 71% of our revenues come from clients that utilize
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multiple lines of our business. To better compete in the market, we will continue to evolve from our traditional line of business segmentation to integrated solutions along industries lines.
Our Digital business is a core pillar of our go-to-market strategy. We have built an integrated platform that gives clients direct access to people and organizational data, insights, analytics, and digital assets that when used together, give clients a common language for all talent matters. A software-as-a-service (“SaaS”) model creates financial security, improves Company cash flow, and helps us generate wider and more long-term relationships with our clients through large scale and technology-based human resources programs. Digital, with its discrete capabilities, also enables us to engage businesses we might not have previously worked with because a complete advisory solution was not required, cost was a barrier, or they lacked awareness of Korn Ferry as a provider. We continue to seek ways to further scale these highly profitable products to our global clients.
Another pillar of our growth strategy is our Marquee and Regional Accounts program. This program drives significant global and regional strategic account developmentintegration across solutions and provides a framework for all our client development activities as we successfully deepen client relationships. Our Marquee and Regional Accounts program now comprises approximately one-third of our global fee revenues. In the year ahead, we will continue to grow and expand our account management activities. This includes driving consistent account selection, assignment, planning and execution; implementing account-based marketing efforts; optimizing the pipeline and opportunity process; integrating our best thinking across solutions; and hiring additional dedicated account leaders. The success of this approach has now been extended to include a broader set of Regional Accounts to be serviced with this same attention and care.
Deliver Client Excellence and Innovation
Technology is positioned to reshape the future of work and with it, the workforce as we know it today. Market innovations contribute to more accurate, faster, cost-effective and impactful business and human decisions. Our firm is well positioned here. We have a set of assets that are critical to such decisions: deep science on organization and human motivation, data on talent, work and rewards, and proven products and solutions.
We have combined our people and organizational data, insights, analytics, and digital assets into a unified single platform to inform smarter, more data-driven outcomes for our clients. Our license based tools allow us to create wide and meaningful impact across our clients’ business, from organizational development and job profiling to selection, training, individual and team development, succession planning, M&A, D&I, digital transformation and more. We can provide insights and solutions to clients more quickly by having “best practice” predefined to act as a benchmark to work towards. Continued enhancements to our Talent Hub platform, including the upcoming launches of Korn Ferry Architect, Learn, and Org Scan, will allow us to embed more analytics directly into our clients’ user experience.
More than 100,000 consumers have registered and are using Korn Ferry Advance, our business-to-consumer offering, since it launched in the United States (the “U.S.”) in July 2017. We are expanding and enhancing the offering to provide more focused assistance to people looking to make their next career move, as well as to provide tailored career services to an organization’s people. Korn Ferry Advance will continue to leverage cutting-edge technology as well as the greatest asset we have—our consultants. Korn Ferry Advance is also being used to augment our Korn Ferry Digital offerings, primarily in leadership development, professional development and career transition services.
geographies.
Along with - Lead innovation through relevant market offerings and evolve our peoplethought leadership around talent strategy.
The Korn Ferry brand is brought to market via two distinct channels: primarily through business-to-business (“B2B”)offerings into fully integrated, scalable and in the early stage of business-to-consumer (“B2C”). In both instances, we communicate key core values about what we do, expressing that we are ‘more than’ as well as inspiring action in the way our customers run their businesses and in the way they approach their careers. We are executing against our strategy with these priorities in mind:
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Advance Korn Ferry as a Premier Career Destination
We continue to invest - Attract and retain top talent through continued investment in building a world-class organization that is aligned to our strategy and is staffed bythrough a capable, motivated, and agile workforce. A few key initiatives in this area include:
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Pursue Transformational M&A Opportunities at the Intersection of Talent and Strategy
Strategy.
OUR ORGANIZATION
The Company operates through four global segments: Consulting, Digital,future.
Consulting
Overview—Korn Ferry helps clients design their organization—the structure, roles and responsibilities—and shows them the best way to develop, motivate and compensate their people. Our focus is on making change happen and helping people and organizations exceed their potential. Through our talented colleagues, robust solutions and IP, our consultants can solve the most disruptive and challenging organizational and talent problems facing clients.
Our Consulting team is comprised of topleadership and organizational consultants and thought leaders, working in 85 cities in 50 countries. Our consultants are predominately recruited from local markets, so they are sensitive to local issues, but work together in global teams, resulting in larger opportunities with greater client and commercial impact. Within Consulting, we offer the following core go-to-market solutions:
Organizational Strategy: We provide end-to-end support to organizations that want to transform their business. Strategy becomes operationalized by aligning the tangible elements of the organization—people, structure and process—and the intangible elements—motivations, relationships and culture.
Assessment and Succession: We provide actionable, research-backed insight and products that allow organizations to understand the talent they have, benchmarked against the talent they need to deliver on the business strategy, andinterim contractors, we help them close any gaps.organizations attract and retain the right people across functions, levels and skills.
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with a spectrum of intensive high-touch and scalable high-tech development experiences. Our combination of data, development content and coaching with forward-thinking, creative design builds leadership experiences that help entry-to senior-level leaders develop and deliver superior results.
Rewards and Benefits
Workforce Transformation: We offer practical and pragmatic solutions to support organizations in re-shaping workforces for the future. These solutions are often bundleddesigned to enhance workforce productivity, agility, engagement, and alignment with the organization's strategic goals.
We partner with some of the world’s most admired organizations in the creation, assisting and execution of talent strategy. We accomplish this through consulting solutions that address how people work and show how to nurture them so that their strategies succeed. We capitalizefocus on the breadth of our IP, service offerings and expertise to do what is right for the client—transforming ideas into actionable insights. Clients can depend on our solutions to be data backed, market tested and agile. our clients and
We are widely recognized byindustry experts forpartner with them to solve the excellencechallenges they face in their businesses.
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Korn Ferry is known for creating•The number of consulting and owning one of the most comprehensive and up-to-date people and organization databasesexecution staff at year-end was 1,853 with an increase in the world. We can benchmark clients againstaverage bill rate (fee revenue divided by the best, but more critically, can help them make the changesnumber of hours worked by consultants and execution staff) of $10 per hour or 3% compared to achieve their optimal performance. These insights are embedded into every consulting project and are a powerful differentiator for our clients, who have come to depend on Korn Ferry for our informed and data-driven point of view.
Consulting fee revenue was $543.1 million, $568.3 million and $540.5 million in fiscal 2020, 2019 and 2018, respectively. This represented 28%, 30% and 31% of the Company’s total fee revenue in fiscal 2020, 2019 and 2018, respectively.
2022.
Overview
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The recent acquisitions of the Acquired Companies allow us to further complement our offering with tools, training and content aimed specifically at driving client challenges related to the acceleration of revenue growth, enhanced customer experience, and professional development.
Our Digital solutions cover the talent journey:
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Our Digital team is comprised of topleadership and organizational consultants and thought leaders, located in 71 cities in 48 countries. Our consultants are predominately recruited from local markets, so they are sensitive to local issues, but work together in global teams, resulting in larger opportunities with greater client and commercial impact. DigitalLicense fee revenue was $292.4$119.7 million, $252.7an increase of 10% compared to fiscal 2022.
Overview
Our Executive Search services concentrate on searches for positions with average annual cash compensation of $360,000 or more, or comparable compensation in foreign locations. The industry is comprised of retained and contingency recruitment firms. Retained firms, such as Korn Ferry, typically charge a fee for their services equalgeneral management talent 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.
As part of being retained by a client to conduct a search, we assemble a team of consultants with appropriate geographic, industry and functional expertise. We utilize a standardized and differentiateddeliver lasting impact. Our approach to placing talent that integratesbrings together our research-based IP, proprietary assessments and behavioral interviewing with our practical experience. Our search consultants serve as management advisors who work closely withexperience to determine the client in identifying, assessingideal organizational fit. Salary benchmarking then helps us build appropriate frameworks for compensation and placing qualified candidates. attraction. This business is managed and reported on a geographic basis and represents four of the Company’s reportable segments (Executive Search North America, Executive Search Europe, the Middle East and Africa ("EMEA"), Executive Search Asia Pacific ("APAC") and Executive Search Latin America).
Industry Specialization—engagements with an average of 594 consultants.
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— We also have organized centers of functional expertise. This helps our teams comprehensively grasp the specific requirements and nuances involved in the role itself. These partners bring a deep understanding of the functional dynamics–from strategy through to execution-enabling them to identify and place candidates who possess the necessary skills, knowledge, and experience to excel in the role.
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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 boardroom, and their expertise is in organizational leadership and governance. They conduct hundreds of engagements every year, tapping talent from every corner 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.
Percentage of Fiscal 20202023 Assignments Opened by Functional Expertise
| Board Level/CEO/CFO/Senior Executive and General Management | 78 |
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Finance and Control | 7 |
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Information Systems | 4 | % | |||||
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Manufacturing/Engineering/Research and Development/Technology | 4 |
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Human Resources and Administration | 3 |
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Regions
North America
EMEA—In fiscal 2020, the region generated fee revenue of $170.3 million and opened 1,863 new engagements with an average of 173 consultants.
Asia Pacific—In fiscal 2020, the region generated fee revenue of $98.1 million and opened 1,107 new engagements with an average of 96 consultants.
Latin America—In fiscal 2020, the region generated fee revenue of $29.4 million and opened 537 new engagements with an average of 38 consultants.
Client Base—Our 3,968more than 4,000 Executive Search engagement clients in fiscal 20202023 include many of the world’s largest and most prestigious public and private companies.
RPO
OverviewInterim
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RPO: In fiscal 2020, Korn Ferry was recognized as one of the top RPO providers$115 per hour in the Baker’s Dozen list, markinglast quarter of fiscal 2023 from $91 per hour as of January 31, 2022, which was the quarter we acquired our 13first interim business. Average bill rates represent fee revenue from interim services divided by the number of hours worked by consultants providing those services.
We combine traditional recruitment expertise with a multi-tiered portfolio of talent acquisition solutions. Consultants, based in 33 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.
Project Recruitment: We can deliver the same talent acquisition services as we would in an end-to-end RPO solution, but within a defined project start and end date. Our Project Recruitment solution is seamless and aligned with the client’s broader talent acquisition strategy. Clients enjoy the same benefits around reduced time to hire, reduced cost per hire and improved candidate quality that they would with a full RPO solution, but via an on-demand model to manage short-term or specialized needs.
Professional Search: We are positioned to help organizations identify and attract professionals at the middle to upper levels of management in single-search engagements. We focus on:
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Our innovative search process mirrors our Executive Search solution, offering access to active and passive candidate pools, the industry’s richest data on salaries and employee engagement, and proprietary tools in Korn Ferry Digital. A wealth of assessment data defines the traits needed for success in each role we recruit and matches candidates against best-in-class profiles while also gauging cultural fit. Our newest offering, Korn Ferry Recruit, a nimble solution, provides a fully integrated end-to-end technology solution for high-volume hiring of repeatable roles.
Client Base—During fiscal 2020,2023, the RPOProfessional Search & Professional SearchInterim segment partnered with 2,202more than 4,000 clients across the globe, and 43%32% of RPOProfessional Search & Professional Search’sInterim’s fiscal 20202023 fee revenue was referred from Korn Ferry’s Executive Search Consulting and Digital segments.other lines of business.
Professional Staff
talent insights. The Company's scalable solutions, built on science and powered by best-in-class technology and consulting expertise, enable the Company to act as a strategic partner in clients’ quest for superior recruitment outcomes and better candidate fit.
underrepresented groups. As of April 30, 2020,2023, 70% of our workforce in the U.S. is female or from an underrepresented group. Broken down further, 62% of our workforce in the U.S. is female, and 64% of our global workforce is female. Our global age demographic is 53% Millennials (ages 26-41) and 8% Gen Z/Centennials (ages 25 and below). As of April 30, 2023, we had a total of 8,19810,697 full-time employees. Of this, 1,686 were Executive Search employees consisting of 556 consultantsemployees:
Consultants and execution staff1 | Support staff2 | Total employees | |||||||||||||||
| Consulting | 1,853 | 363 | 2,216 | ||||||||||||||
| Digital | 347 | 1,077 | 1,424 | ||||||||||||||
| Executive Search | 602 | 1,218 | 1,820 | ||||||||||||||
| Professional Search & Interim | 498 | 591 | 1,089 | ||||||||||||||
| RPO | 180 | 3,750 | 3,930 | ||||||||||||||
| Corporate | — | 218 | 218 | ||||||||||||||
| Total | 3,480 | 7,217 | 10,697 | ||||||||||||||
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The global coronavirus (“COVID-19”) pandemic has been negatively impacting our operations and financial performance, as well as the operations and financial performance of many of the clients in the industries we serve. The ultimate magnitude of this impact will depend on a variety of factors, including the duration of the impact, restrictions and operational requirements that apply to our business and the businesses of our clients, and the state of the global economy as a result of the pandemic, none of which can be predicted at this time.
In December 2019, COVID-19 was reported to have surfaced in Wuhan, China. Since then, COVID-19 has spread across the globe, including all or most of the countries in which we and our clients operate. The COVID-19 pandemic has caused, and is expected to continue to cause, a global slowdown in economic activity, a decrease in demand for a broad variety of goods and services, disruptions in global supply chains, and significant volatility and disruption of financial markets. Because the severity, magnitude and duration of the pandemic and its economic consequences are uncertain, vary by region, are rapidly changing and difficult to predict, its full impact on our operations and financial performance, as well as its impact on our near-term ability to successfully execute our strategic objectives, remains similarly uncertain and difficult to predict. Further, the pandemic’s ultimate impact depends in part on many factors not within our control and which may vary by region (heightening the uncertainty as to the ultimate impact COVID-19 may have on our operations and financial performance), including (1) restrictive governmental and business actions that have been and continue to be taken in response (including travel restrictions, work from home requirements, and other workforce limitations), (2) economic stimulus, funding and relief programs and other governmental economic responses, (3) the effectiveness of governmental actions, (4) economic uncertainty in key global markets and financial market volatility, (5) levels of economic contraction or growth, (6) the impact of the pandemic on health and safety, (7) the pace of recovery if and when the pandemic subsides, and (8) how significantly the number of cases increases as economies begin to open up and the restrictive governmental and business actions referred to above are relaxed.
Further, the COVID-19 pandemic has subjected our operations and financial performance to a number of risks, including those discussed below:
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As the COVID-19 pandemic continues to negatively impact our operations, it may also have the effect of heightening many of the other risks described in this Risk Factor section of our 10-K. In particular, see the risk factors titled:
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Further, the COVID-19 pandemic may also affect our operations and financial results in a manner that is not presently known to us or that we currently do not expect to present significant risks to our operations or financial results.
As a result of the decrease in fee revenue worldwide, the Company developed and implemented a plan that included (i) a reduction in workforce which resulted in $40.5 million of restructuring charges in fiscal 2020 (ii) the temporary furlough of certain employees, (iii) subject to certain exceptions and legal requirements, salary reductions across the organization, and (iv) other cost saving measures relating to general and administrative expenses. There is no guarantee that such plan will be successful and achieve the expected cost efficiencies.
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.
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assignments with regional contingency recruitment firms and large national retained recruitment firms such as Robert Half, Michael Page, Harvey Nash, Robert Walters, TekSystems and the Lucas Group.BTG. In addition, some organizations have developed or may develop internal solutions to address talent acquisition that may be competitive with our solutions. This is a highly competitive and developing industry with numerous specialists. 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 could adversely affect our operating results and future growth.
Consolidation in the industries that we serve could harm our business.
Companies in the industries that we serve have and may continue 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.
Our success depends on attracting and retaining professional employees. Torecruit, attract and retain such employeestalent may be adversely impacted and shifts in perspective and expectations about social issues and priorities surrounding DE&I may occur at a competitive marketplace,faster pace than we must provide a competitive compensation package. As such,are capable of managing effectively. If we often pay hiring bonuses and annual retention bonuses are unable to secure the services of new hiresidentify, attract and retain our professional employees. Such payments have taken the form of long-term deferred compensation, restricted stock, and unsecured cash paymentssufficient talent in the form of promissory notes. The aggregate amount of these awards to employees is significant and as competition in our industry intensifies, we expect to continue issuing these types of long-term incentive awards. The deterioration in the national and global economy and labor markets as a result of COVID-19 has and may continue to put negative pressure on demand for our services, thereby negatively affecting our generation of future revenues, but we nonetheless continue to incur the cost of these long-term awards, resulting in lower results of operations.
Failing to retain our executive officers and key personnel or integrate new members of our senior management who are critical to our businesspositions, it may prevent us from successfully managingachieving our strategic vision, disrupt our business, impact revenues, increase costs, damage employee morale and affect the quality and continuity of client service. In addition, risks associated with our recent reduction 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 weheadcount 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,
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orbe exacerbated if we are unable to integrate new membersretain qualified personnel.
sufficiently mitigate such losses.
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, which could seriously harm our business.
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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 continuously evaluate our cost base in relation to projected near to mid-term demand for our services in an effort
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The billing rates of our consultants that we are able to charge are also affected by a number of factors, including:
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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. Natural disasters, pandemics, disruptions to travel and transportation or problems with communications systems negatively impact our ability to perform services for, and interact with, our clients at their physical locations, 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 U.S. generally accepted accounting principles (“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. Actual results could differ from the estimates we make based on historical experience and various assumptions believed to be reasonable based on specific circumstances, and changes in accounting standards could have an adverse impact on our future financial position and results of operations.
Unfavorable tax laws, tax law changes and tax authority rulings may adversely affect results.
We are subject to income taxes in the U.S. 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 our income taxes and other taxes are subject to ongoing audits by U.S. federal, state and local tax authorities and by non-U.S. authorities. If these audits result in assessments different from estimated amounts recorded, future financial results may include unfavorable tax adjustments.
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Future changes in tax laws, treaties or regulations, and their interpretations or enforcement, may be unpredictable, particularly as taxing jurisdictions face an increasing number of political, budgetary and other fiscal challenges. Tax rates in the jurisdictions in which we operate may change as a result of macroeconomic and other factors outside of our control, making it increasingly difficult for multinational corporations like ourselves to operate with certainty about taxation in many jurisdictions. As a result, we have been and may again be materially adversely affected by future changes in tax law or policy (or in their interpretation or enforcement) in the jurisdictions where we operate, including the U.S., which could have a material adverse effect on our business, cash flow, results of operations, financial condition, as well as our effective income tax rate.
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Furthermore, our debt under our Revolver bears interest at variable rates.
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these restrictions could be substantial. If we incur additional debt, the risks associated with our leverage, including those described above, would increase. Further, the restrictions in the indenture governing the Notes and the Amended Credit Agreement will not prevent us from incurring obligations, such as trade payables, that do not constitute indebtedness as defined in such debt instruments. As of April 30, 2020,2023, we had $646.0$645.4 million of availability to incur additional secured indebtedness under our Revolver.
Revolver and $500 million of availability to incur additional secured indebtedness under our Delayed Draw Facility that expired on June 24, 2023.
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We and our subsidiaries are subject to covenants, representations and warranties in respect of the Revolver, including financial covenants as defined in the Amended Credit Agreement. See “Note 10 – 11 –Long-Term DebtLong-Term Debt”” of our notes to our consolidated financial statements included in this Annual Report on Form 10-K.
Social media platforms present risks and challenges that can cause damage to our brand and reputation.
The inappropriate and/or unauthorized use of social media platforms, including weblogs (or blogs), social media websites and other forms of Internet-based communications, which allow individuals access to a broad audience of consumers and other interested persons by our clients or employees could increase our costs, cause damage to our brand, lead to litigation or result in information leakage, including the 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 platforms could damage our reputation, brand image and goodwill.
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We cannot guarantee that trade secrets, trademark and copyright law protections are adequate to deter misappropriation of our IP (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 IP rights. Redressing infringements may consume significant management time and financial resources. Also, we cannot detect all unauthorized use of our IP 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 IP 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.
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We expect cybersecurity incidents to continue to occur in the future.
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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 Amended Credit Agreement limits us from consummating acquisitions unless we are in pro forma compliance with our financial covenants, and our pro forma domestic liquidity after giving effect to the acquisition is at least $50.0 million, and certain other conditions are met. 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.
We may not be able to successfully integrate or realize the expected benefits from our acquisitions.
Our future success depends in part on our ability to complete the integration of acquisition targets successfully into our operations. The process of integrating an acquired business subjects us to a number of risks, including:
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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 you 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 that 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.
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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.
liquidity.
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▪ | 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, including the repercussions of the ongoing conflict between Russia and Ukraine and the cessation of our business in Russia; |
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▪ | differences in cultures and business practices; |
▪ | statutory equity requirements; |
▪ | differences in accounting and reporting requirements; |
▪repatriation controls; |
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▪ | differences in labor and market conditions; |
▪ | potential adverse tax consequences; |
▪ | multiple regulations concerning immigration, pay rates, benefits, vacation, statutory holiday pay, workers’ compensation, union membership, termination pay, the termination of employment, and other employment laws; and |
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The United Kingdom’s withdrawal from the E.U. may adversely impact our operations in the United Kingdom and elsewhere.
In fiscal 2020, 10.6% of our fee revenue was recognized in the U.K. On January 31, 2020, the U.K. left the E.U. and is now in a transition period through December 31, 2020. Although the U.K. will remain in the E.U. single market and customs union during the transition period, the long-term nature of the U.K.’s relationship with the E.U. is unclear and there is considerable uncertainty as to whether any agreement will be reached and implemented. The political and economic instability created by Brexit has caused and may continue to cause significant volatility in global financial markets and uncertainty regarding the regulation of data protection in the U.K. In particular, although the U.K. enacted a Data Protection Act in May 2018 that is consistent with the GDPR, uncertainty remains regarding how data transfers to and from the U.K. will be regulated. Brexit could also have the effect of disrupting the free movement of goods, services, and people between the U.K., the E.U., and elsewhere. Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the U.K. determines which E.U. laws to replace or replicate. Further, uncertainty around these and related issues could lead to adverse effects on the economy of the U.K. and the other economies. At this time, we cannot predict the impact Brexit will have on our business generally and our U.K. and European operations more specifically, and no assurance can be given that our operating results, financial condition and prospects would not be adversely impacted by the result. Brexit and any uncertainty with respect thereto could adversely impact customer demand and create significant currency fluctuations. In addition, we could be adversely impacted by changes in trade policies, labor, tax or other laws and regulations, IP rights and supply chain logistics. We may incur additional costs as it addresses any such changes. All or any one of these factors could adversely affect our business, revenue, financial condition and results of operations.
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The challenges that continue to surround the timing and terms of the U.K.’s exit from the EU and its consequences could adversely impact customer and investor confidence and relationships, result in additional market volatility and adversely affect our businesses and results of operations. These effects could derive from delays or reductions in contract awards, canceled contracts, increased costs, fluctuations in exchange rates, difficulty in recruiting or in gaining permission to employ existing staff, or less favorable payment terms.
The interest rates under our Credit Agreement may be impacted by the phase-out of LIBOR.
LIBOR is the basic rate of interest used in lending between banks on the London interbank market and is widely used as a reference for setting the interest rates on loans globally. We generally use LIBOR as a reference rate to calculate interest rates under our credit facility. In 2017, the U.K.’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021. It is unclear if LIBOR will cease to exist at that time or if new methods of calculating LIBOR will be established such that it continues to exist after 2021. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, is considering replacing U.S. dollar LIBOR with a new index, the Secured Overnight Financing Rate (“SOFR”), calculated using short-term repurchase agreements backed by U.S. Treasury securities. Whether or not SOFR, or another alternative reference rate, attains market traction as a LIBOR replacement tool remains in question. If LIBOR ceases to exist, we may need to amend our Credit Agreement to replace LIBOR with an agreed upon replacement index, and certain of the interest rates under our Credit Agreement may change. The new rates may not be as favorable to us as those in effect prior to any LIBOR phase-out.
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, 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.
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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: limitations 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.
Our Board of Directors and management team are committed to acting in the best interest of allstockholders, which could disrupt our stockholders. business.
we may not be capable of predicting.
If any of our stockholders commence a proxy contest, advocate for change, make public statements critical of our performance or business, or engage in other similar activities, then our business could bethe future, adversely affected because we may have difficulty attractingby health epidemics, pandemics, and retaining clients due to perceived uncertainties as to our future directionsimilar outbreaks. Pandemics can cause a global slowdown in economic activity, a decrease in demand for a broad variety of goods and negative public statements about our business; responding to proxy contestsservices, disruptions in global supply chains, and other similar actionssignificant volatility and disruption of financial markets. Because the severity, magnitude and duration of a pandemic and its economic consequences are uncertain and vary by stockholders is likely to result in us incurring substantial additional costs and significantly divert the attention of management and our employees; and, if individuals are elected to our Board of Directors with a specific agenda, the execution of our strategic plan may be disrupted or a new strategic plan altogether may be implemented, which could have a material adverseregion, its full impact on our operations and financial performance is uncertain and difficult to predict. Further, a pandemic’s ultimate impact depends in part on many factors not within our control, including (1) restrictive governmental and business actions (including travel restrictions, vaccine mandates, testing requirements, and other workforce limitations), (2) economic stimulus, funding and relief programs and other governmental economic responses, (3) the effectiveness of governmental actions, (4) economic uncertainty in key global markets and financial conditionmarket volatility, (5) levels of economic contraction or resultsgrowth, (6) the impact of operations. Further, anythe pandemic on health and safety and (7) the availability and effectiveness of these mattersvaccines and booster shots.
We have provisions that make an acquisition of us more difficultclients (or for clients to pay for such products and expensive.
Anti-takeover provisions inservices) and may reduce demand for our Certificate of Incorporation, our Bylawsproducts 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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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.
Item 1B. Unresolved Staff Comments
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| Name | Age as of April 30, | Position | ||||||||||
Gary D. Burnison | 62 |
| President and Chief Executive Officer | |||||||||
Robert P. Rozek | 62 |
| Executive Vice President, Chief Financial Officer and Chief Corporate Officer | |||||||||
Mark Arian | 62 |
| Chief Executive Officer, Consulting | |||||||||
Byrne Mulrooney | 62 |
| Chief Executive Officer, RPO & Digital | |||||||||
| Michael Distefano | 53 | Chief Executive Officer, Professional Search & | ||||||||||
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(*)$100 invested on April 30, 2018 in stock or index, including reinvestment of dividends. Fiscal year ended April 30, 2023. |
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Agreement and indenture governing the Notes. Every quarter since the adoption of the dividend policy, the Company has declared a quarterly dividend. On June 21, 2021 and 2022, the Board of Directors increased the quarterly dividend to $0.12 per share and $0.15 per share, respectively. On June 26, 2023, the Board of Directors of the Company approved an increase of 20% in our quarterly dividend, which increased the quarterly dividend to $0.18 per share. Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly- Announced Programs (2) Approximate Dollar Value of Shares that May Yet be Purchased under the Programs (2) February 1, 2020 — February 29, 2020 113,000 $ 38.65 113,000 $178.3 million March 1, 2020 — March 31, 2020 709,619 $ 28.37 706,569 $158.3 million April 1, 2020 — April 30, 2020 989 $ 23.33 — $158.3 million Total 823,608 $ 29.77 819,569 (1)Represents withholding of 1,699 shares to cover taxes on vested restricted shares, in addition to shares purchased as part of a publicly announced program. (2)On June 21, 2022, our Board of Directors approved an increase to the share repurchase program of $300 million. The shares can be repurchased in open market transactions or privately negotiated transactions at the Company's discretion. The share repurchase program has no expiration date. We repurchased approximately $13.4 million of the Company's common stock under the program during the fourth quarter of fiscal 2023. Year Ended April 30, 2020(1) 2019 2018 2017 2016 (in thousands, except per share data and other operating data) Selected Consolidated Statements of Income Data: Fee revenue $ 1,932,732 $ 1,926,033 $ 1,767,217 $ 1,565,521 $ 1,292,112 Reimbursed out-of-pocket engagement expenses 44,598 47,829 52,302 56,148 54,602 Total revenue 1,977,330 1,973,862 1,819,519 1,621,669 1,346,714 Compensation and benefits 1,297,994 1,311,240 1,199,057 1,065,659 891,472 General and administrative expenses 258,957 351,991 237,390 226,232 213,018 Reimbursed expenses 44,598 47,829 52,302 56,148 54,602 Cost of services 85,886 75,487 73,658 71,482 59,824 Depreciation and amortization 55,311 46,489 48,588 47,260 36,220 Restructuring charges, net (2) 58,559 — 78 34,600 33,013 Total operating expenses 1,801,305 1,833,036 1,611,073 1,501,381 1,288,149 Operating income 176,025 140,826 208,446 120,288 58,565 Other (loss) income, net (2,879 ) 10,405 11,416 10,661 (4,778 ) Interest expense, net (22,184 ) (16,891 ) (13,832 ) (14,607 ) (3,394 ) Income tax provision 43,945 29,544 70,133 29,104 18,960 Net income 107,017 104,796 135,897 87,238 31,433 Net income attributable to noncontrolling interest (2,071 ) (2,145 ) (2,118 ) (3,057 ) (520 ) Net income attributable to Korn Ferry $ 104,946 $ 102,651 $ 133,779 $ 84,181 $ 30,913 Basic earnings per share $ 1.91 $ 1.84 $ 2.39 $ 1.48 $ 0.58 Diluted earnings per share $ 1.90 $ 1.81 $ 2.35 $ 1.47 $ 0.58 Basic weighted average common shares outstanding 54,342 55,311 55,426 56,205 52,372 Diluted weighted average common shares outstanding 54,767 56,096 56,254 56,900 52,929 Cash dividends declared per common share $ 0.40 $ 0.40 $ 0.40 $ 0.40 $ 0.40 Other Operating Data: Fee revenue by segment: Consulting (3) $ 543,095 $ 568,321 $ 540,529 $ 497,736 $ 351,208 Digital (4) 292,366 252,727 244,484 226,450 119,937 Executive search: North America 434,624 455,826 408,098 356,625 371,345 EMEA 170,314 182,829 173,725 146,506 144,319 Asia Pacific 98,132 104,291 96,595 80,169 80,506 Latin America 29,400 31,896 30,624 34,376 26,744 Total executive search 732,470 774,842 709,042 617,676 622,914 RPO & Professional Search 364,801 330,143 273,162 223,659 198,053 Total fee revenue $ 1,932,732 $ 1,926,033 $ 1,767,217 $ 1,565,521 $ 1,292,112 Number of offices (at period end) (5) 111 104 106 114 150 Number of consultants and execution staff (at period end) 2,979 3,099 2,922 2,900 2,784 Number of new engagements opened 8,808 9,725 9,149 8,126 7,430 Number of full-time employees: Consulting 2,058 2,416 2,316 2,413 2,432 Digital 1,413 1,187 1,138 1,185 1,194 Executive search 1,686 1,960 1,865 1,791 1,682 RPO & Professional Search 2,891 2,942 2,188 1,710 1,530 Corporate 150 173 136 133 109 Total full-time employees 8,198 8,678 7,643 7,232 6,947 Selected Consolidated Balance Sheets Data as of April 30: Cash and cash equivalents $ 689,244 $ 626,360 $ 520,848 $ 410,882 $ 273,252 Marketable securities (6) 174,085 140,751 137,085 119,937 141,430 Working capital 612,876 585,852 455,799 385,095 188,010 Total assets 2,743,828 2,334,852 2,287,914 2,062,898 1,898,600 Long-term obligations (7) 895,930 540,507 509,839 517,271 375,035 Total stockholders’ equity 1,223,691 1,243,387 1,219,615 1,087,048 1,047,301 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations We also make available on the Investor Relations portion of our website earnings slides and other important information, which we encourage you to review. RPO business. ▪Approximately 78% of the executive searches we performed in fiscal 2023 were for board level, chief executive and other senior executive and general management positions. Our more than 4,000 search engagement clients in fiscal 2023 included many of the world’s largest and most prestigious public and private companies. ▪We have built strong client loyalty, with nearly 80% of the assignments performed during fiscal 2023 having been on behalf of clients for whom we had conducted assignments in the previous three fiscal years. ▪Approximately 80% of our revenues were generated from clients that have utilized multiple lines of our business. Plan. $187.0 million and a fair value of In addition to talent acquisition for permanent placement roles, the Professional Search & Interim segment also offers recruitment services for interim roles. Interim roles are short term in duration, generally less than 12 months. Generally, each interim role is a separate performance obligation. We recognize fee revenue over the duration that the interim resources’ services are provided which also aligns to the contracted invoicing plan and enforceable right to payment. test. 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, ▪A prolonged downturn in the business environment in which the reporting units operate including a longer than anticipated public health crisis; ▪An economic climate that significantly differs from our future profitability assumptions in timing or degree; ▪The deterioration of the labor markets; ▪Volatility in equity and debt markets; Year Ended April 30, 2020 2019 2018 Fee revenue 100.0 % 100.0 % 100.0 % Reimbursed out-of-pocket engagement expenses 2.3 2.5 3.0 Total revenue 102.3 102.5 103.0 Compensation and benefits 67.2 68.1 67.9 General and administrative expenses (1) 13.4 18.3 13.4 Reimbursed expenses 2.3 2.5 3.0 Cost of services 4.4 3.9 4.2 Depreciation and amortization 2.9 2.4 2.7 Restructuring charges, net 3.0 — — Operating income 9.1 7.3 11.8 Net income 5.5 % 5.4 % 7.7 % Net income attributable to Korn Ferry 5.4 % 5.3 % 7.6 % operations: Year Ended April 30, 2020 2019 2018 Dollars % Dollars % Dollars % (dollars in thousands) Fee revenue Consulting (1) $ 543,095 28.1 % $ 568,321 29.5 % 540,529 30.6 % Digital (1) 292,366 15.1 252,727 13.1 244,484 13.8 Executive Search: North America 434,624 22.5 455,826 23.7 408,098 23.1 EMEA 170,314 8.8 182,829 9.5 173,725 9.8 Asia Pacific 98,132 5.1 104,291 5.4 96,595 5.5 Latin America 29,400 1.5 31,896 1.7 30,624 1.7 Total Executive Search 732,470 37.9 774,842 40.3 709,042 40.1 RPO & Professional Search 364,801 18.9 330,143 17.1 273,162 15.5 Total fee revenue 1,932,732 100.0 % 1,926,033 100.0 % 1,767,217 100.0 % Reimbursed out-of-pocket engagement expense 44,598 47,829 52,302 Total revenue $ 1,977,330 $ 1,973,862 $ 1,819,519 Year Ended April 30, 2020 2019 2018 Dollars Margin(1) Dollars Margin(1) Dollars Margin(1) (dollars in thousands) Operating income (loss) Consulting{2} $ 17,695 3.3 % $ (34,115 ) (6.0 %) $ 22,408 4.1 % Digital(2) 46,909 16.0 39,732 15.7 78,127 32.0 Executive Search: North America 113,080 26.0 120,754 26.5 100,397 24.6 EMEA 21,085 12.4 29,974 16.4 26,768 15.4 Asia Pacific 17,914 18.3 24,364 23.4 18,425 19.1 Latin America 4,860 16.5 3,998 12.5 4,022 13.1 Total Executive Search 156,939 21.4 179,090 23.1 149,612 21.1 RPO & Professional Search 50,438 13.8 50,884 15.4 39,396 14.4 Corporate (95,956 ) (94,765 ) (81,097 ) Total operating income $ 176,025 9.1 % $ 140,826 7.3 % $ 208,446 11.8 % Year Ended April 30, 2020 Executive Search Consulting Digital North America EMEA Asia Pacific Latin America Subtotal RPO & Professional Search Corporate Consolidated (in thousands) Fee revenue $ 543,095 $ 292,366 $ 434,624 $ 170,314 $ 98,132 $ 29,400 $ 732,470 $ 364,801 $ — $ 1,932,732 Total revenue $ 557,255 $ 294,261 $ 447,528 $ 172,978 $ 99,209 $ 29,493 $ 749,208 $ 376,606 $ — $ 1,977,330 Net income attributable to Korn Ferry $ 104,946 Net income attributable to noncontrolling interest 2,071 Other loss, net 2,879 Interest expense, net 22,184 Income tax provision 43,945 Operating income (loss) $ 17,695 $ 46,909 $ 113,080 $ 21,085 $ 17,914 $ 4,860 $ 156,939 $ 50,438 $ (95,956 ) $ 176,025 Depreciation and amortization 17,567 19,261 3,452 1,713 1,311 1,182 7,658 3,906 6,919 55,311 Other income (loss), net 1,326 485 (3,051 ) 139 11 51 (2,850 ) 82 (1,922 ) (2,879 ) EBITDA 36,588 66,655 113,481 22,937 19,236 6,093 161,747 54,426 (90,959 ) 228,457 Integration/acquisition costs — 5,937 — — — — — — 6,215 12,152 Restructuring charges, net 24,504 10,481 7,244 6,347 3,649 309 17,549 5,742 283 58,559 Separation costs — — — 1,783 — — 1,783 — — 1,783 Adjusted EBITDA $ 61,092 $ 83,073 $ 120,725 $ 31,067 $ 22,885 $ 6,402 $ 181,079 $ 60,168 $ (84,461 ) $ 300,951 Operating margin 3.3 % 16.0 % 26.0 % 12.4 % 18.3 % 16.5 % 21.4 % 13.8 % 9.1 % Adjusted EBITDA margin 11.2 % 28.4 % 27.8 % 18.2 % 23.3 % 21.8 % 24.7 % 16.5 % 15.6 % Year Ended April 30, 2019 Executive Search Consulting(1) Digital(1) North America EMEA Asia Pacific Latin America Subtotal RPO & Professional Search Corporate Consolidated (in thousands) Fee revenue $ 568,321 $ 252,727 $ 455,826 $ 182,829 $ 104,291 $ 31,896 $ 774,842 $ 330,143 $ — $ 1,926,033 Total revenue $ 585,893 $ 252,727 $ 469,743 $ 186,131 $ 105,543 $ 31,960 $ 793,377 $ 341,865 $ — $ 1,973,862 Net income attributable to Korn Ferry $ 102,651 Net income attributable to noncontrolling interest 2,145 Other income, net (10,405 ) Interest expense, net 16,891 Income tax provision 29,544 Operating (loss) income $ (34,115 ) $ 39,732 $ 120,754 $ 29,974 $ 24,364 $ 3,998 $ 179,090 $ 50,884 $ (94,765 ) $ 140,826 Depreciation and amortization 16,172 12,885 3,890 1,254 1,428 410 6,982 3,255 7,195 46,489 Other income (loss), net 2,203 995 6,699 432 281 322 7,734 268 (795 ) 10,405 EBITDA (15,740 ) 53,612 131,343 31,660 26,073 4,730 193,806 54,407 (88,365 ) 197,720 Integration/acquisition costs 5,304 1,255 — — — — — — 187 6,746 Tradename write-offs 76,967 29,588 — — — — — — - 106,555 Adjusted EBITDA $ 66,531 $ 84,455 $ 131,343 $ 31,660 $ 26,073 $ 4,730 $ 193,806 $ 54,407 $ (88,178 ) $ 311,021 Operating margin (6.0 %) 15.7 % 26.5 % 16.4 % 23.4 % 12.5 % 23.1 % 15.4 % 7.3 % Adjusted EBITDA margin 11.7 % 33.4 % 28.8 % 17.3 % 25.0 % 14.8 % 25.0 % 16.5 % 16.1 % Year Ended April 30, 2018 Executive Search Consulting(1) Digital(1) North America EMEA Asia Pacific Latin America Subtotal RPO & Professional Search Corporate Consolidated (in thousands) Fee revenue $ 540,529 $ 244,484 $ 408,098 $ 173,725 $ 96,595 $ 30,624 $ 709,042 $ 273,162 $ — $ 1,767,217 Total revenue $ 556,521 $ 244,484 $ 421,260 $ 177,234 $ 98,062 $ 30,717 $ 727,273 $ 291,241 $ — $ 1,819,519 Net income attributable to Korn Ferry $ 133,779 Net income attributable to noncontrolling interest 2,118 Other income, net (11,416 ) Interest expense, net 13,832 Income tax provision 70,133 Operating income (loss) $ 22,408 $ 78,127 $ 100,397 $ 26,768 $ 18,425 $ 4,022 $ 149,612 $ 39,396 $ (81,097 ) $ 208,446 Depreciation and amortization 18,954 12,573 3,930 1,689 1,408 455 7,482 3,054 6,525 48,588 Other income, net 2,127 374 1,142 168 373 181 1,864 152 6,899 11,416 EBITDA 43,489 91,074 105,469 28,625 20,206 4,658 158,958 42,602 (67,673 ) 268,450 Integration/acquisition costs 7,724 1,427 — — — — — — 279 9,430 Restructuring charges (recoveries), net (122 ) (119 ) — — 313 — 313 6 - 78 Adjusted EBITDA $ 51,091 $ 92,382 $ 105,469 $ 28,625 $ 20,519 $ 4,658 $ 159,271 $ 42,608 $ (67,394 ) $ 277,958 Operating margin 4.1 % 32.0 % 24.6 % 15.4 % 19.1 % 13.1 % 21.1 % 14.4 % 11.8 % Adjusted EBITDA margin 9.5 % 37.8 % 25.8 % 16.5 % 21.2 % 15.2 % 22.5 % 15.6 % 15.7 % 2022 fiscal 2022. Executive Search Asia Pacific reported fee revenue of Malaysia. 2022. 2022. 2022. fiscal 2022. fiscal 2022. fiscal 2022. 2022, respectively. Permanent Placement, which have higher margins, and being replaced with fee revenue in Interim that has lower margins, but is more resilient to economic factors and in line with our strategy fiscal 2022. 2023 compared to 2022. 2022. fiscal 2022. 2022 and the four immediately preceding fiscal years. fiscal 2022, respectively. 2021 2022 from 72% in fiscal 2021. 2021. General and Administrative Expenses 2021. Executive Search reduction of the Company's real estate footprint of $2.3 million, higher bad debt expense of $2.1 million, and integration and acquisition costs of $1.8 million. Professional Search & Interim general and administrative expenses, as a percentage of revenue, was 7% in fiscal 2022 compared to 6% in fiscal 2021. 2021. fiscal 2021. fiscal 2021. Net 2021. death benefits received from our COLI policies in fiscal 2022 and lower interest expense on borrowings under our COLI policies in fiscal 2022 compared to fiscal 2021 due to the lower amount of borrowings outstanding. 2021. The shortfall is the amount by which the Company’s tax deduction for these awards, based on the fair market value of the awards on the date of vesting, is less than the expense recorded in the Company’s financial statements over the awards’ vesting period. Conversely, the Company recorded a tax benefit for a windfall in connection with stock-based awards that vested in fiscal 2022. fiscal 2021, respectively. Professional Search & Interim segment. our Amended Credit Agreement. Our performance is subject to the general level of economic activity in the geographic regions and the industries we service. We believe, based on current economic conditions, that our cash on hand and funds from operations and the Amended Credit Agreement will be sufficient to meet anticipated working capital, capital expenditures, general corporate requirements, purposes 2022. 2022. Payments Due in: Note (1) Total Less Than 1 Year 1-3 Years 3-5 Years More Than 5 Years (in thousands) Operating lease commitments 14 $ 269,768 $ 60,052 $ 93,580 $ 71,692 $ 44,444 Finance lease commitments 14 3,040 1,325 1,385 330 — Accrued restructuring charges 12 34,153 33,556 — — 597 Interest payments on COLI loans (2) 10 46,270 5,184 10,361 10,308 20,417 Long-term debt 10 400,000 — — — 400,000 Estimated interest on long-term debt (3) 10 148,000 18,500 37,000 37,000 55,500 Total $ 901,231 $ 118,617 $ 142,326 $ 119,330 $ 520,958 (1)See the corresponding Note in the accompanying consolidated financial statements in Item 15. (2)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 $444.1 million at April 30, 2023. (3)Interest on the Notes payable semi-annually in arrears on June 15 and December 15 of each year, commenced on June 15, 2020. 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— Year Percentage 2022 102.313% 2023 101.156% 2024 and thereafter 100.000% Other than the factors discussed in this section, 2023.Capital Allocation ApproachThe Company and its Board of Directors endorse a balanced approach to capital allocation. The Company’s firstlong-term priority is to invest in growth initiatives, such as the hiring of consultants, the continued development of IP and derivative products and services, and the investment in synergistic, accretive M&A transactions that are expected to earn a return superior to the Company's cost of capital. Next, the Company’s capital allocation approach contemplates the planned return of a26portion 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.indebtedness, as well as using excess cash to repay the Notes. See Note 10— 11— Long Term Debt for a description of the Amended Credit Agreement.DividendsOn 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.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 of Directors may, however, amend, revoke or suspend the dividend policy at any time and for any reason.Stock Repurchase ProgramOn March 6, 2019,June 21, 2022, the Board of Directors approved an increase in the Company’s stock repurchase program of approximately $200$300 million, which brought our available capacity to repurchase shares in the open market or privately negotiated transactions to approximately $250$318 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. The Company repurchased approximately $92.4$93.9 million, $37.4$98.8 million and $33.1$30.4 million of the Company’s common stock during fiscal 2020, 20192023, 2022 and 2018,2021, respectively. Any decision to execute on our stock repurchase program will depend on our will depend on our earnings, capital requirements, financial condition and other factors considered relevant by our Board of Directors. The Amended Credit Agreement dated December 16, 2019, permits us to pay dividends to our stockholders and make share repurchases so long as there is no default under the Amended Credit Agreement, the consolidatedCompany’s total funded debt to adjusted EBITDA ratio (as set forth in the Amended Credit Agreement, the “consolidated net leverage ratio, which uses adjusted EBITDAratio”) is no greater than 4.255.00 to 1.00, and thewe are in pro forma liquidity is at least $50 million.compliance with our financial covenant. Furthermore, our Notes allow the Company to pay $25.0 million of dividends per fiscal year with no restrictions plus an unlimited amount of dividends so long as the Company’s consolidated total leverage ratio is not greater than 3.50 to 1.00 and the Company is not in default under the indenture governing the Notes.Issuer Purchases of Equity SecuritiesThe following table summarizes common stock repurchased by us during the fourth quarter of fiscal 2020:2023:Total Number ofSharesPurchased (1)AveragePrice PaidPer ShareTotal Number ofSharesPurchasedas Part ofPublicly-AnnouncedProgramsApproximateDollar Value ofShares thatMay Yet bePurchasedunder thePrograms(2)February 1, 2023 - February 28, 2023 95,000 $ 56.35 95,000 $243.3 million March 1, 2023 - March 31, 2023 76,699 $ 53.09 75,000 $239.3 million April 1, 2023 - April 30, 2023 85,000 $ 48.12 85,000 $235.2 million Total 256,699 $ 52.65 255,000 Represents withholding of 4,039 of restricted shares to cover taxes on vested restricted shares in addition to 819,569 shares repurchased as part of our publicly announced programs.On March 6, 2019, our Board of Directors approved an increase to the share repurchase program to an aggregate of $250 million. The shares can be repurchased in open market transactions or privately negotiated transactions at the Company’s discretion. The share repurchase program has no expiration date.31Item 6. Selected Financial DataReservedThe 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 statements of income data set forth below for the fiscal years ended April 30, 2020, 2019 and 2018 and the selected balance sheets data as of April 30, 2020 and 2019 are derived from our audited consolidated financial statements, appearing elsewhere in this Annual Report on Form 10-K. The selected balance sheets data as of April 30, 2018, 2017 and 2016 and the selected statement of income data set forth below for the fiscal years ended April 30, 2017 and 2016 are derived from audited consolidated financial statements and notes thereto which are not included in this Annual Report on Form 10-K. (1)Due to the acquisition of Miller Heiman Group, AchieveForum and Strategy Execution on November 1, 2019, which accounted for $53.2 million32and $155.5 million of fee revenue and total assets, respectively, during fiscal 2020, financial data trends for fiscal 2020 are not comparable to the prior period.(2)During fiscal 2020, the Company implemented two restructuring plans in order to rationalize our cost structure by eliminating redundant positions. The first plan was due to the acquisition of Miller Heiman Group, AchieveForum and Strategy Execution on November 1, 2019, which resulted in restructuring charges of $18.1 million in fiscal 2020 related to severance. The second plan was due to the COVID-19 pandemic that decreased our fee revenue significantly in the fourth quarter of fiscal 2020 and resulted in restructuring charges of $40.5 million in fiscal 2020 related to severance. During fiscal 2018 and 2017, the Company continued to implement the fiscal 2016 restructuring plan in order to integrate the Advisory 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 $0.1 million and $34.6 million in fiscal 2018 and 2017, respectively. Of the amount recorded in restructuring charges in fiscal 2017, $16.0 million related to severance and $18.6 million related to consolidation of office spaces. In fiscal 2016, the Company implemented the above-referenced restructuring plan and as a result, the Company 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.27(3)During fiscal 2020, the Company changed the composition of its global segments. The Consulting segment represents the consulting business that was previously included in the Advisory segment. Segment data for fiscal 2019, 2018, 2017 and 2016 have been recast to reflect the division of the Advisory segment into the Consulting and Digital segments.(4)During fiscal 2020, the Company changed the composition of its global segments. The Digital segment represents the products business that was previously included in the Advisory segment. Segment data for fiscal 2019, 2018, 2017 and 2016 have been recast to reflect the division of the Advisory segment into the Consulting and Digital segments.(5)The number of offices decreased by eight as of April 30, 2018 compared to April 30, 2017 and 36 as of April 30, 2017 compared to April 30, 2016, due to the continued implementation of the 2016 restructuring plan.(6)As of April 30, 2020, 2019, 2018, 2017, and 2016, the Company’s marketable securities included $141.4 million, $140.8 million, $137.1 million, $119.9 million, and $141.4 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.(7)During fiscal 2020 our long- term obligations increased compared to the previous years due to $180.8 million of non-current portion of operating lease liability recognized as a result of the implementation of Accounting Standard Codification 842 -Leases in fiscal 2020 and our new 4.625% Senior Unsecured Notes due 2027 with a $400 million principal amount offset by a decrease in the amount outstanding under our Credit Facility in fiscal 2020 compared to fiscal 2019.33Forward-Looking StatementsThis 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 (the “Exchange Act”). 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, as well as the expected benefits of the acquisition of Miller Heiman Group, AchieveForum and Strategy Execution (collectively, the “Acquired Companies”),including the timing and expected benefitsanticipated impacts of our recently adopted restructuring plans and the magnitude and duration of the impact of the global (“COVID-19”) pandemic on our business employees, customers and our ability to provide services in affected regions.strategy, are also forward-looking statements. 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, those relating to the magnitude and duration of the negative impact of the COVID -19 outbreak on our business, employees, customers and our ability to provide services in affected regions, global and local political and or economic developments in or affecting countries where we have operations, such as inflation, global slowdowns, or recessions, competition, geopolitical tensions, shifts in global trade patterns, changes in demand for our services as a result of automation, dependence on and costs of attracting and retaining qualified and experienced consultants, impact of inflationary pressures on our profitability, maintaining our relationships with customers and suppliers and retaining key employees, maintaining our brand name and professional reputation, potential legal liability and regulatory developments, portability of client relationships, consolidation of or within the industries we serve, changes and developments in governmental laws and regulations, evolving investor and customer expectations with regard to environmental, social and governance matters, currency fluctuations in our international operations, risks related to growth, alignment of our cost structure, including as a result of recent workforce, real estate, and other restructuring initiatives, restrictions imposed by off-limits agreements, reliance on information processing systems, cyber security vulnerabilities or events, changes to data security, data privacy, and data protection laws, dependence on third parties for the execution of critical functions, limited protection of our intellectual property (���(“IP”), our ability to enhance and develop new technology, our ability to successfully recover from a disaster or other business continuity problems, employment liability risk, an impairment in the carrying value of goodwill and other intangible assets, treaties, or regulations on our business and our company,Company, deferred tax assets that we may not be able to use, our ability to develop new products and services, the impact of the withdrawal of the United Kingdom from the European Union, changes in our accounting estimates and assumptions, the utilization and billing rates of our consultants, seasonality, the expansion of social media platforms, the ability to effect acquisitions and integrate acquired businesses, including Infinity Consulting Solutions ("ICS") and Salo LLC ("Salo"), resulting organizational changes, our indebtedness, the Acquired Companies,ultimate magnitude and duration of any future pandemics or similar outbreaks, and related restrictions and operational requirements that apply to our business and the businesses of our clients, and any related negative impacts on our business, employees, customers and our ability to recognize the anticipated benefits of the acquisition of the Acquired Companies, the costs related to the acquisition of the Acquired Companies, our indebtedness,the phase-out of LIBOR,provide services in affected regions, and the matters disclosed under the heading “Risk Factors” in the Company’s Exchange Act reports, including Item 1A included in this Annual Report on Form 10-K. Readers are urged to consider these 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 SummaryKorn Ferry (referred to herein as the “Company” or in the first personfirst-person notations “we,” “our,” and “us”) is a global organizational consulting firm.firm. We help clients synchronize strategy, operations and talent to drive superior business performance. We work with organizations to design their structures, roles and responsibilities. We help them hire the right people to bring their strategy to life. And we advise them on how to reward, develop and motivate their people.We are pursuing a strategy to help Korn Ferry focus on clients and collaborate intensively across the organization. This approach is intended to build on the best of our past and give us a clear path to the future with focused initiatives to increase our client and commercial impact. Korn Ferry is transforming how clients address their talent management needs. We have evolved from a mono-line business to a multi-faceted consultancy business, giving our consultants more frequent and expanded opportunities to engage with clients.Our eight reportable segments operate through the following five lines of business:1.Consulting aligns organizational structure, culture, performance and people to drive sustainable growth by addressing four global segments:1.fundamental needs: Organizational Strategy, Assessment and Succession, Leadership and Professional Development, and Total Rewards. We enable this work with a comprehensive set of Digital Performance Management Tools, based on some of our world’s leading lP and data. The Consulting teams employ an integrated approach across core solutions, each one intended to strengthen our work and thinking in the next, to help clients execute their strategy in a digitally enabled world.Consulting helps clients synchronize their strategy and their talent by addressing four fundamental needs: Organizational Strategy, Assessment and Succession, Leadership and Professional Development, and Rewards and Benefits. This work is supported and underpinned by a comprehensive range of some of the world’s leading IP and data.2.Digital leverages an artificial intelligence (“AI”) powered platform282.Digital develops technology-enabled Performance Management Tools that empower our clients. Our digital products give clients direct access to our proprietary data, client data and analytics to deliver clear insights with the training tools needed to align organizational structure with business strategy.3.Executive Search helps organizations recruit board level, chief executive and other senior executive and general management talent to deliver lasting impact. Our approach to placing talent brings together research-based IP, proprietary assessments, and behavioral interviewing with our practical experience to determine the ideal organizational fit. Salary benchmarking then builds appropriate frameworks for compensation and retention. This business is managed and reported on a geographic basis and represents four of the Company’s reportable segments (Executive Search North America, Executive Search Europe, the Middle East and Africa ("EMEA"), Executive Search Asia Pacific ("APAC"), and Executive Search Latin America).4.Professional Search & Interim delivers enterprise talent acquisition solutions for professional level middle and upper management. We help clients source high-quality candidates at speed and scale globally, covering single-hire to multi-hire permanent placements and interim contractors.5.Recruitment Process Outsourcing ("RPO") offers scalable recruitment outsourcing solutions leveraging customized technology and talent insights. Our scalable solutions, built on science and powered by best-in-class technology and consulting expertise, enable us to act as a strategic partner in clients’ quest for superior recruitment outcomes and better candidate fit.Professional Search & Interim and RPO were formerly referred to, identify structure, roles, capabilities and behaviors needed to drive business forward. The end to end system gives clients one enterprise-wide talent framework and delivers an achievable blueprint for success along with the guidance and tools to deliver it.3.Executive Search helps organizations recruit board level, chief executive and other senior executive and general management talent. Behavioral interviewing and proprietary assessments are used to determine ideal34organizational fit, and salary benchmarking builds appropriate frameworks for compensation and retention.4.RPO and Professional Search combines people, process expertise and IP-enabled technology to deliver enterprise talent acquisition solutions to clients. Transaction sizes range from single professional searches to team, department and line of business projects, and global outsource recruiting solutions.Consulting and Digital are new reporting segments. Previously, these were tracked and reported together, as Korn Ferry AdvisoryRPO & Professional Search (“Advisory”RPO & Professional Search”). OverWe have recently acquired companies that have added critical mass to our Professional Search and Interim operations. These acquisitions provided us the past years we have invested in the Digital business and harmonized the structure of our content and data, building atechnology platform for the efficient delivery of these assets directlyopportunity to an end consumer or indirectly through a consulting engagement. These investments, combined with the acquisitions of Miller Heiman Group, AchieveForum and Strategy Execution (“the “Acquired Companies”) in November 2019 from TwentyEighty, Inc. for $108.6 million, resulted in reassessingreassess how we managed our Advisory business.RPO & Professional Search segment. Therefore, beginning in the third quarter of fiscal 2020,2023, we separated AdvisoryRPO & Professional Search into two segments in order to better align with the Company’s strategy (which included the acquisition of the Acquired Companies) and the decisions of the Company’s chief operating decision maker, who had begunbegan to regularly make separate resource allocation decisions and assess performance separately between Consultingour Professional Search & Interim business and Digital within Advisory. The addition of the Acquired Companies has further expanded our vast IP and content and leveraged the firm’s digital delivery platforms. We have invested in our digital business to digitize and harmonize the structure of our IP content and data and in building a technology platform for the efficient delivery of these assets directly to an end consumer or indirectly through a consulting engagement.Highlights of our performance in fiscal 20202023 include:▪Approximately 70% of the executive searches we performed in fiscal 2020 were for board level, chief executive and other senior executive and general management positions. Our 3,968 search engagement clients in fiscal 2020 included many of the world’s largest and most prestigious public and private companies.We have built strong client loyalty, with 90% of the assignments performed during fiscal 2020 having been on behalf of clients for whom we had conducted assignments in the previous three fiscal years.Approximately 71% of our revenues were generated from clients that utilized multiple lines of our business.A vital pillar of our growth strategy is our Digital business. Our data and IP are embedded into the core business processes of our clients, helping us generate long-term relationships through large scale and technology-based talent programs.▪In fiscal 2020, Korn Ferry was recognized as one of the top RPO providers in the Baker’s Dozen list, marking our 13th consecutive year on the list. We were also named leader on the Everest PEAK Matrix for three years running and achieved star performer status in fiscal 2020. Through decades of experience, we have enhanced our RPO solution to deliver quality candidates that drive our clients’ business strategies. We leverage proprietary IP and data sets to guide clients on the critical skills and competencies to look for, compensation information to align with market demand, and assessment tools to ensure candidate fit.Restructuring▪In fiscal 2023, we acquired ICS, a provider of senior-level IT interim professional solutions with additional expertise in the areas of compliance and Operational Changeslegal, accounting and finance, and human resources. We also recently acquired Salo, a leading provider of finance, accounting and human resources ("HR") interim talent.Performance HighlightsOn June 12, 2018,August 1, 2022, we completed the Company’s Boardacquisition of Directors approvedICS for $99.3 million, net of cash acquired. ICS is a highly regarded provider of senior-level IT interim professional solutions with additional expertise in the One Korn Ferry rebranding planareas of compliance and legal, accounting and finance, and HR.On February 1, 2023, we completed the acquisition of Salo for $155.4 million, net of cash acquired. Salo is a leading provider of finance, accounting and HR interim talent, with a strong focus on serving organizations in healthcare, among other industries.The above acquisitions echo the commitment to scale our solutions, further increase the focus at the intersection of talent and strategy-wherever and however the needs of organizations evolve-and present real, tangible opportunity for us and our clients looking for the Company (the “Plan”). The Plan includes goingright talent, who are highly agile, with specialized skills and expertise, to market under a single, master brand architecture, solely as Korn Ferryhelp them drive superior performance, including on an interim basis. We believe the addition of these acquisitions to our broader talent acquisition portfolio–spanning Executive Search, RPO, Professional Search and sunsetting allInterim services–has accelerated our ability to capture additional shares of this significant market. All of the Company’s sub-brands used at the time, including Futurestep, Hay Group and Lominger, among others. This integrated go-to-market approach was a key driver in our fee revenue growthacquisitions in fiscal year 2018, which led to the decision to further integrate our go-to-market activities under one master brand — Korn Ferry. As a result, the Company discontinued the use of all sub-brands and changed its name, effective January 1, 2019, to “Korn Ferry.” Two of the Company’s former sub-brands, Hay Group and Lominger, came to Korn Ferry through acquisitions. In connection with the accounting for these acquisitions, $106.6 million of the purchase price was allocated to indefinite-lived tradename intangible assets. As a result of the decision to discontinue their use, the Company took a one-time, non-cash write-off of tradenames of $106.6 million in fiscal 2019. During fiscal 2020 the Company completed the implementation of this plan.On November 1, 2019, we adopted a restructuring plan to rationalize our cost structure to realize the efficiencies and operational improvement that the investments2023 are included in the digital business had enabled, or positioned us to realize. The plan impacts both Consulting and Digital and includes the elimination of redundant positions and consolidation of office space. During fiscal 2020, we recognized $18.1 million of restructuring charges associated with severance and recorded $2.8 million of integration/acquisition costs associated with impairment of 16 office leases. The restructuring actions will be completed by July 31, 2020.The Impact of COVID-19In March 2020, COVID-19 was reported to have spread to over 100 countries, territories or areas worldwide. Initially,35the negative business impact of the coronavirus outbreak was most pronounced in the Asia Pacific Region, and in particular China and Hong Kong. During the fourth quarter of fiscal 2020 the World Health Organization declared it a pandemic and the impact has been felt worldwide. The outbreak has severely restricted the level of economic activity in affected areas and has had an adverse impact on sales of certain of our products and services. Governments and companies have implemented social distancing - limiting either travel or in person individual or group face-to-face interaction as well as working from home to adhere to stay at home orders from national, state and city governments. All of our business segments across all of our geographies have been impacted as fee revenue decreased significantly in the fourth quarter. Professional Search & Interim segment.In light of the continuing uncertaintyCompany’s evolution to an organization that is selling larger integrated solutions in worldwide economic conditions caused bya world where there are shifts in global trade lanes and persistent inflationary pressures, on January 11, 2023, the COVID-19 pandemic and, as part of a broader program aimed at further enhancing our strong balance sheet and liquidity position, on April 20, 2020, weCompany initiated a plan (the “Plan”) intended to adjust our cost base to the current economic environmentrealign its workforce with its business needs and to position usobjectives, namely, to invest in areas of potential growth and implement reductions where there was excess capacity. The Plan resulted in the recovery. This plan includes (i) a reduction of the Company's annualized cost base by approximately $45.0 million to $55.0 million (after taking into account new hires in workforce, which was substantially completed byconnection with the endrebalancing of the Company's workforce). The Plan consisted of severance and related employee benefits payments and lease termination costs. In fiscal 2020 and resulted2023, the Company recorded $42.6 million in restructuring charges, net, and $5.5 million and $4.4 million in impairment of $40.5 million associated with severance, (ii)right-of-use asset and fixed assets, respectively, as a result of implementing the temporary furlough of certain employees, (iii) subject to certain exceptions and legal requirements, salary reductions across the organization, and (iv) other cost saving measures relating to general and administrative expenses.29The Company evaluates performance and allocates resources based on the chief operating decision maker’s 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 impairments of investments)charges). For fiscal 2020,2023, Adjusted EBITDA excluded $58.6$42.6 million of restructuring charges, $12.2net, $14.9 million of integration/acquisition costs, $5.5 million impairment of right-of-use assets and $1.8$4.4 million impairment of separation costs.fixed assets. For fiscal 2019,2022, Adjusted EBITDA excluded $106.6$7.9 million of tradename write-offsintegration/acquisition costs, $7.4 million impairment of right-of-use assets and $6.7$1.9 million impairment of fixed assets. For fiscal 2021, Adjusted EBITDA excluded $30.7 million of restructuring charges, net and $0.7 million of integration/acquisition costs. For fiscal 2018, Adjusted EBITDA excluded $9.4 millionConsolidated and the subtotals of integration/acquisition costs and $0.1 million of restructuring charges, net.EBITDA,Executive Search Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures. Theymeasures and have limitations as analytical tools,tools. They should not be viewed as a substitute for financial information determined in accordance with United States (“U.S.”) generally accepted accounting principles (“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, they may not necessarily be comparable to non-GAAP performance measures that may be presented by other companies.Management believes the presentation of these non-GAAP financial measures 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 these non-GAAP financial measures facilitates comparisons to Korn Ferry’s historical performance and the identification of operating trends that may otherwise be distorted by the factors discussed above. Korn Ferry includes these non-GAAP financial measures 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 Adjusted 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.Fee revenue was $1,932.7$2,835.4 million during fiscal 2020,2023, an increase of $6.7$208.7 million, or 8%, compared to $1,926.0$2,626.7 million in fiscal 2019,2022, with increases in fee revenue in Digital and RPO & Professional Search. During fiscal 2020, we recorded operating incomeall lines of $176.0 millionbusiness with the exception of Executive Search, Digital, Consulting and RPO &Search. Professional Search segments contributing $156.9& Interim had the largest increase in fee revenue when compared to fiscal 2022. The acquisition of companies in the Professional Search & Interim segment was a significant factor in the year-over-year increase in fee revenue. Exchange rates unfavorably impacted fee revenue by $96.8 million, $46.9 million, $17.7 million and $50.4 million, respectively, offset by Corporate expenses of $96.0 million.or 4%, during fiscal 2023 compared to fiscal 2022. Net income attributable to Korn Ferry increaseddecreased by $2.2$116.9 million during fiscal 20202023 to $104.9$209.5 million from $102.7$326.4 million in fiscal 2019.2022. Adjusted EBITDA was $301.0$457.3 million, a decrease of $10.0$81.6 million during fiscal 2020,2023, from Adjusted EBITDA of $311.0$538.9 million in the year-ago period.fiscal 2022. During fiscal 2020,2023, the Executive Search, Professional Search & Interim, Consulting, Digital, Consulting and RPO & Professional Search segmentslines of business contributed $181.1Adjusted EBITDA of $205.8 million, $83.1$110.9 million, $61.1$108.5 million, $97.5 million and $60.2$52.6 million, respectively, offset by Corporate expenses net of other income of $84.5$118.0 million.Our cash, cash equivalents and marketable securities increaseddecreased by $96.2$143.2 million to $863.3$1,067.9 million at April 30, 2020,2023, compared to $767.1$1,211.1 million at April 30, 2019.2022. This increasedecrease was mainly due to cash flows from operationsthe acquisitions of ICS and net borrowings of $168.6 million as a result of our December 2019 notes offering offset by the repayment of the amount outstanding under our prior revolving credit facility (discussed further below). The increase was partially offset by annual bonuses earned in fiscal 2019Salo, retention payments, capital expenditures, stock repurchases and dividends paid to stockholders during fiscal 2020, sign-on and retention payments, $108.6 million paid for the acquisition of the Acquired Companies, $92.4 million in stock repurchases in the open market, $41.5 million in payments for the purchase of property and equipment, $9.0 million paid in tax withholding on restricted stock vestings and $22.8 million in dividends paid during fiscal 2020.2023. As of April 30, 2020,2023, we held marketable securities to settle obligations under our Executive Capital Accumulation Plan (“ECAP”) with a cost value of $144.336$141.4$187.8 million. Our vested obligations for which these assets were held in trust totaled $124.6$172.2 million as of April 30, 20202023 and our unvested obligations totaled $21.7$21.9 million.Our working capital increaseddecreased by $27.0$113.3 million to $612.9$662.4 million in fiscal 2020.2023, as compared to $775.7 million at April 30, 2022. 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 our debt obligations and dividend payments under our dividend policy in the next twelve12 months. We had $646.0 million available for borrowing under our Revolver (as defined herein) at April 30, 2020. As of April 30, 2019, we had a total of $420.2$1,145.4 million available under the Credit Facilities (defined in Liquidity and Capital Resources) and a total of $645.3 million available under the previous revolvercredit facilities after letters of credit were issued. As of April 30, 2020 and 2019, there was $4.0$4.6 million and $2.9$4.7 million of standby letters of credit issued respectively,as of April 30, 2023 and 2022, respectively. Of the amount available under our long-term debt arrangements.the Credit Facilities, $500.0 million is under the Delayed Draw Facility that expired on June 24, 2023 and is no longer available as a source of liquidity. We had a total of $11.3$11.5 million and $8.5$10.0 million of standby letters of credits with other financial institutions as of April 30, 20202023 and 2019,2022, respectively.Critical Accounting PoliciesThe 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 our30consolidated 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. Substantially all fee revenue is derived from talent and organizational consulting services and digital sales, stand-alone or as part of a solution, fees for professional services related to executive and professional recruitment performed on a retained basis, interim services and RPO, either stand-alone or as part of a solution.Revenue is recognized when control of the goods and services is transferred to the customer in an amount that reflects the consideration that we expect to be entitled to in exchange for those goods and services. Revenue contracts with customers are evaluated based on the five-step model outlined in Accounting Standard Codification (“ASC”) 606 (“("ASC 606”606"):, Revenue from Contracts with Customers: 1) identify the contract with a customer; 2) identify the performance obligation(s) in the contract; 3) determine the transaction price; 4) allocate the transaction price to the separate performance obligation(s); and 5) recognize revenue when (or as) each performance obligation is satisfied.Consulting fee revenue is primarily recognized as services are rendered, measured by total hours incurred to theas a percentage of total estimated hours at completion. It is possible that updated estimates for consulting engagements may vary from initial estimates with such updates being recognized in the period of determination. Depending on the timing of billings and services rendered, we accrue or defer revenue as appropriate.Digital revenue is generated from IP platforms enabling large-scale, technology-based talent programs for pay, talent development, engagement, and assessment and is consumed directly by an end user or indirectly through a consulting engagement. Revenue is recognized as services are delivered and we have a legally enforceable right to payment. Revenue also comes from the sale of our proprietary IP subscriptions, which are considered symbolic IP due to the dynamic nature of the content. As a result, revenue is recognized over the term of the contract. Functional IP licenses grant customers the right to use IP content via the delivery of a flat file. Because the IP content license has significant stand-alone functionality, revenue is recognized upon delivery and when an enforceable right to payment exists. Revenue for tangible and digital products sold by the Company, such as books and digital files, is recognized when these products are shipped.Fee revenue from executive and non-executive professional search activities is generally one-third of the estimated first yearfirst-year cash compensation of the placed candidate, plus a percentage of the fee to cover indirect engagement relatedengagement-related expenses. In addition to the search retainer, an uptick fee is billed when the actual compensation awarded by the client for a placement is higher than the estimated compensation. In the aggregate, upticks have been a relatively consistent percentage of the original estimated fee; therefore, we estimate upticks using the expected value method based on historical data on a portfolio basis. In a standard search engagement, there is one performance obligation, which is the promise to undertake a search. We generally recognize such revenue over the course of a search and when it iswe are legally entitled to payment as outlined in the billing terms of the contract. Any revenues associated with services that are provided on a contingent basis are recognized once the contingency is resolved, as this is when control is transferred to the customer. These assumptions determine the timing of revenue recognition for the reported period.37RPO fee revenue is generated through two distinct phases: 1) the implementation phase and 2) the post-implementation recruitment phase. The fees associated with the implementation phase are recognized over the period that the related implementation services are provided. The post-implementation recruitment phase represents end-to-end recruiting services to clients for which there are both fixed and variable fees, which are recognized over the period that the related recruiting services are performed.Annual Performance-Related Bonuses. Each quarter, management makes its best estimate of its annual performance relatedperformance-related bonuses, which requires management to, among other things, project annual consultant productivity (as measured by engagement fees billed and collected by executive searchExecutive Search and Professional Search consultants and revenue and other performance/profitability metrics for Consulting, Digital, Interim and RPO & Professional Search consultants), the level of engagements referred by a consultant in one line of business to a different line of business, our performance, including profitability, competitive forces and future economic conditions and their impact on our results. At the end of each fiscal year, annual performance relatedperformance-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 relatedperformance-related bonus liability and adjust the carrying amount of the liability recorded on the consolidated balance sheets and report any changes in the estimate in current operations. Because annual performance-based bonuses are communicated and paid only after we report our 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.31Deferred 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 sheets and statements 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, other intangible assets, share-based payments, leases 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 when performing the quantitative test is determined utilizing (1) a discounted cash flow analysis based on forecasted 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 perform an annual impairment test each year as of January 31, or more frequently if impairment indicators arise. The qualitative test performed as of January 31, 20202023 did not indicate any impairment. During the fourth quarter of fiscal 2020, the rapidimpairment, and severe impacts of COVID-19, and more specifically, thetherefore there was no need to support global social distancing efforts, by mitigating the spread of the virus and complying with restrictions put in place by various governmental and authoritative entities, led to a decline in demand for our products and services. These actions had a material impact on our business. Therefore, we performedperform a quantitative review as of March 31, 2020, to assess whether we believed these actions caused the fair value of any of our reporting units to fall below its carrying value. This quantitative review included sensitivity analyses of each reporting unit’s discounted cash flow models considering updated rates, financial results and forecasts, market multiples and terminal value revenue growth rates. The conclusion for all reporting units was that no impairment existed as of March 31, 2020.38the fair valuethere were no indicators of each reporting unit exceeded its carrying amountimpairments that required us to perform a quantitative test and as a result, no impairment charge was recognized. However, due to the impact of the COVID-19 pandemic the fair value calculated by or substantive valuation of all the reporting units has declined. While these fair values exceed carrying value for all reporting units the excess of fair value over carrying value of the Consulting segment has the smallest buffer. As of April 30, 2020, goodwill in our Consulting segment was $173.0 million. We are unable to predict how long the impacts from COVID-19 will affect our operations or what additional restrictions may be imposed by governments. Variations from current expectations could impact future levels of fair value relative to carrying value resulting in an impairment. There was no indication of potential impairment during the month ofthrough April 30, 20202023 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 including a longer than anticipated public health crisis;An economic climate that significantly differs from our future profitability assumptions in timing or degree;The deterioration of the labor markets;Volatility in equity and debt markets; andCompetition and disruption in our core business.▪Competition and disruption in our core business; and▪Technological advances such as artificial intelligence that impact labor markets and can diminish the value of our IP.32Results of OperationsThe following table summarizes the results of our operations as a percentage of fee revenue:(1)General and administrative expenses for fiscal 2019 includes write-off of tradenames of $106.6 million.Year Ended April 30, 2023 2022 2021 Fee revenue 100.0 % 100.0 % 100.0 % Reimbursed out-of-pocket engagement expenses 1.0 0.6 0.5 Total revenue 101.0 100.6 100.5 Compensation and benefits 67.1 66.3 71.7 General and administrative expenses 9.5 9.0 10.6 Reimbursed expenses 1.0 0.6 0.5 Cost of services 8.4 4.4 4.0 Depreciation and amortization 2.4 2.4 3.4 Restructuring charges, net 1.5 — 1.7 Operating income 11.2 17.9 8.6 Net income 7.5 % 12.6 % 6.4 % Net income attributable to Korn Ferry 7.4 % 12.4 % 6.3 % 39The operating results for fiscal 2022 and 2021 have been revised to conform to the new segment reporting.The following tables summarize the results of our operations by segment:(Numbers may not total exactly due to rounding)(1)The Consulting and Digital segment data for fiscal 2019 and 2018 has been recast to reflect the division of the Advisory segment into the Consulting and Digital segments.(1)Margin calculated as a percentage of fee revenue by segment.(2)The Consulting and Digital segment data for fiscal 2019 and 2018 has been recast to reflect the division of the Advisory segment into the Consulting and Digital segments.Year Ended April 30, 2023 2022 2021 Dollars % Dollars % Dollars % (dollars in thousands) Fee revenue Consulting $ 677,001 23.9 % $ 650,204 24.8 % $ 515,844 28.5 % Digital 354,651 12.5 349,025 13.3 287,306 15.9 Executive Search: North America 562,139 19.8 605,704 23.1 397,275 21.9 EMEA 187,014 6.6 182,192 6.9 138,954 7.7 Asia Pacific 95,598 3.4 118,596 4.5 83,306 4.6 Latin America 31,047 1.1 29,069 1.1 17,500 1.0 Total Executive Search 875,798 30.9 935,561 35.6 637,035 35.2 Professional Search & Interim 503,395 17.7 297,096 11.3 130,831 7.2 RPO 424,563 15.0 394,832 15.0 239,031 13.2 Total fee revenue 2,835,408 100.0 % 2,626,718 100.0 % 1,810,047 100.0 % Reimbursed out-of-pocket engagement expense 28,428 16,737 9,899 Total revenue $ 2,863,836 $ 2,643,455 $ 1,819,946 40In the tables that follow, the Company presents a subtotal for Executive Search Adjusted EBITDA and a single percentage for Executive Search Adjusted EBITDA margin, which reflects the aggregate of all of the individual Executive Search Regions. These figures are non-GAAP financial measures and are presented as they are consistent with the Company’s lines of business and are financial metrics used by the Company’s investor base.33Year Ended April 30, 2023 2022 2021 Consolidated (in thousands) Fee revenue $ 2,835,408 $ 2,626,718 $ 1,810,047 Total revenue $ 2,863,836 $ 2,643,455 $ 1,819,946 Net income attributable to Korn Ferry $ 209,529 $ 326,360 $ 114,454 Net income attributable to noncontrolling interest 3,525 4,485 1,108 Other (income) loss, net Other (income) loss, net (5,261) 11,880 (37,194) Interest expense, net 25,864 25,293 29,278 Income tax provision 82,683 102,056 48,138 Operating income Operating income 316,340 470,074 155,784 Depreciation and amortization 68,335 63,521 61,845 Other income (loss), net 5,261 (11,880) 37,194 Integration/acquisition costs 14,922 7,906 737 Impairment of fixed assets Impairment of fixed assets 4,375 1,915 — Impairment of right of use assets Impairment of right of use assets 5,471 7,392 — Restructuring charges, net Restructuring charges, net 42,573 — 30,732 Adjusted EBITDA $ 457,277 $ 538,928 $ 286,292 Adjusted EBITDA margin 16.1 % 20.5 % 15.8 % (1)The Consulting and Digital segment data for fiscal 2019 has been recast to reflect the division of the Advisory segment into the Consulting and Digital segments.Year Ended April 30, 2023 Fee revenue Total revenue Adjusted EBITDA Adjusted EBITDA margin (dollars in thousands) Consulting $ 677,001 $ 686,979 $ 108,502 16.0 % Digital 354,651 354,967 97,458 27.5 % Executive Search: North America 562,139 568,212 140,850 25.1 % EMEA 187,014 188,114 31,380 16.8 % Asia Pacific 95,598 95,956 24,222 25.3 % Latin America 31,047 31,054 9,370 30.2 % Total Executive Search 875,798 883,336 205,822 23.5 % Professional Search & Interim 503,395 507,058 110,879 22.0 % RPO 424,563 431,496 52,588 12.4 % Corporate — — (117,972) Consolidated $ 2,835,408 $ 2,863,836 $ 457,277 16.1 % 4134(1)The Consulting and Digital segment data for fiscal 2018 has been recast to reflect the division of the Advisory segment into the Consulting and Digital segments.Year Ended April 30, 2022 Fee revenue Total revenue Adjusted EBITDA Adjusted EBITDA margin (dollars in thousands) Consulting $ 650,204 $ 654,199 $ 116,108 17.9 % Digital 349,025 349,437 110,050 31.5 % Executive Search: North America 605,704 609,258 181,615 30.0 % EMEA 182,192 182,866 31,804 17.5 % Asia Pacific 118,596 118,705 35,105 29.6 % Latin America 29,069 29,079 9,089 31.3 % Total Executive Search 935,561 939,908 257,613 27.5 % Professional Search & Interim 297,096 297,974 106,015 35.7 % RPO 394,832 401,937 59,126 15.0 % Corporate — — (109,984) Consolidated $ 2,626,718 $ 2,643,455 $ 538,928 20.5 % Year Ended April 30, 2021 Fee revenue Total revenue Adjusted EBITDA Adjusted EBITDA margin (dollars in thousands) Consulting $ 515,844 $ 517,046 $ 81,522 15.8 % Digital 287,306 287,780 86,095 30.0 % Executive Search: North America 397,275 399,104 98,099 24.7 % EMEA 138,954 139,213 11,742 8.5 % Asia Pacific 83,306 83,463 16,676 20.0 % Latin America 17,500 17,500 1,289 7.4 % Total Executive Search 637,035 639,280 127,806 20.1 % Professional Search & Interim 130,831 131,080 36,934 28.2 % RPO 239,031 244,760 32,477 13.6 % Corporate — — (78,542) Consolidated $ 1,810,047 $ 1,819,946 $ 286,292 15.8 % Fiscal 20202023 Compared to Fiscal 2019During fiscal 2020, the Company changed the composition of its global segments. The Consulting and Digital segment were previously included in the Advisory segment. Segment data for fiscal 2019 has been recast to reflect the division of the Advisory segment into the Consulting and Digital segments.Fee RevenueFee Revenue. Fee revenue increased by $6.7$208.7 million, or 0.3%8.0%, to $1,932.7$2,835.4 million in fiscal 20202023 compared to $1,926.0$2,626.7 million in fiscal 2019.2022. Exchange rates unfavorably impacted fee revenue by $36.2$96.8 million, or 2%4%, in fiscal 20202023 compared to the year-ago period. The higher feefiscal 2022. Fee revenue was attributable to fee revenue generated from the Acquired Companies and growthincreased in RPO & Professional Search, offset by decreasesall lines of business except in Executive Search which saw a decline in fee revenue compared to fiscal 2022 primarily due to a decline in demand for our products and Consulting principally impactedservices caused by COVID-19 I the fourth quarterslowdown in the global economy. The acquisitions of The Lucas Group, Patina Solutions Group ("Patina"), ICS and Salo (the "Acquired Companies") were a significant factor in the increase in fee revenue compared to fiscal 2020.2022.Consulting. Consulting reported fee revenue of $543.1$677.0 million in fiscal 2020, a decrease2023, an increase of $25.2$26.8 million, or 4%, compared to $568.3$650.2 million in fiscal 2019.2022. The increase in fee revenue was mainly driven by an increase in demand for workforce transformation, organization design, and senior leadership development delivered through our Organization Strategy, Leadership Development, Total Rewards and Assessment & Succession solutions, as clients aligned their structures to new market opportunities and addressed compensation and retention issues. Exchange rates unfavorably impacted fee revenue by $10.9$27.8 million, or 4%, compared to fiscal 2022.Digital. Digital reported fee revenue of $354.7 million in fiscal 2023, an increase of $5.7 million, or 2%, compared to the year-ago period. The decrease was primarily due to the impact of COVID-19 in the fourth quarter of fiscal 2020.Digital. Digital reported fee revenue of $292.4$349.0 million in fiscal 2020, an2022. The increase of $39.7 million, or 16%, compared to $252.7 million in fiscal 2019. The higher fee revenue was attributableprimarily driven by increasing demand for Development offerings as companies invest in sales effectiveness tools and training content to fee build their commercial teams' capabilities to maximize35revenue generated from the Acquired Companies.growth, as well as in analytics on Total Rewards trends used to aid in retention and staffing decisions. Exchange rates unfavorably impacted fee revenue by $6.4 million, or 3%, compared to the year-ago period.Executive Search. Executive Search reported fee revenue of $732.5 million in fiscal 2020, a decrease of $42.3$18.8 million, or 5%, compared to $774.8fiscal 2022.Executive Search North America. Executive Search North America reported fee revenue of $562.1 million in the year-ago period.fiscal 2023, a decrease of $43.6 million, or 7%, compared to $605.7 million in fiscal 2022. Exchange rates unfavorably impacted fee revenue by $11.9$2.2 million or 2%, in fiscal 2020 as compared to the year-ago period. As detailed below, Executive Search fee revenue was lower in all regions in fiscal 2020 as2023 compared to fiscal 2019. The overall decrease in fee revenue was driven by decreases in fee revenue in all sectors due to COVID-19 with consumer products, financial services, technology and education/non-profit having the greatest impact.North America reported fee revenue of $434.6 million in fiscal 2020, a decrease of $21.2 million, or 5%, compared to $455.8 million in the year-ago period.2022. North America’s fee revenue was lowerdecreased due to a 7%14% decrease in the number of engagements billed, partially offset by a 3%an 8% increase in the weighted-average fees billed per engagement (calculated using local currency) in fiscal 20202023 compared to the year-ago period.Executive Search EMEA. Executive Search EMEA reported fee revenue of $170.3$187.0 million in fiscal 2020,a decrease2023, an increase of $12.5$4.8 million, or 7%3%, compared to $182.8$182.2 million in fiscal 2019.2022. Exchange rates unfavorably impacted fee revenue by $5.9$15.6 million, or 3%9%, in fiscal 2020,2023 compared to the year-ago period.fiscal 2022. The decreaseincrease in fee revenue was primarily due to a 3% decrease in the number of engagements billed and a 1% decrease10% increase in the weighted-average fees billed per engagement (calculated using local currency) and a 2% increase in the number of engagements billed in fiscal 20202023 compared to the year-ago period. fiscal 2022.The performance in Germany,the United Kingdom, Norway,42SwedenArab Emirates, Switzerland, Denmark, Netherlands and DenmarkGermany were the primary contributors to the increase in fee revenue in fiscal 2023 compared to fiscal 2022, partially offset by a decrease in fee revenue in fiscal 2020 compared to the year-ago period.France, Russia and Italy.Executive Search Asia Pacific.$98.1$95.6 million in fiscal 2020,2023, a decrease of $6.2$23.0 million, or 6%19%, compared to $104.3$118.6 million in fiscal 2019.2022. Exchange rates unfavorably impacted fee revenue by $2.9$7.9 million, or 3%7%, in fiscal 2020,2023 compared to the year-ago period.fiscal 2022. The decrease in fee revenue was due to a 5%16% decrease in the number of engagements billed, partially offset by a 2% increase in the weighted-average fees billed per engagement (calculated using local currency) in fiscal 20202023 compared to the year-ago period.fiscal 2022. The performance in China, Japan, Australia, India and ChinaKorea were the primary contributors to the decrease in fee revenue in fiscal 2023 compared to fiscal 2022, partially offset by increasesan increase in fee revenue in Singapore and Japan in fiscal 2020 compared to the year-ago period.Executive Search Latin America. Executive Search Latin America reported fee revenue of $29.4$31.0 million in fiscal 2020,2023, an increase of $1.9 million, or 7%, compared to $29.1 million in fiscal 2022. Exchange rates were relatively flat in fiscal 2023 compared to fiscal 2022. The increase in fee revenue was due to a 9% increase in the weighted-average fees billed per engagement (calculated using local currency), partially offset by a decrease of $2.52% in the number of engagements billed in fiscal 2023 compared to fiscal 2022. The performance in Mexico and Brazil were the primary contributors to the increase in fee revenue in fiscal 2023 compared to fiscal 2022, partially offset by a decrease in fee revenue in Colombia.Professional Search & Interim. Professional Search & Interim reported fee revenue of $503.4 million in fiscal 2023, an increase of $206.3 million, or 8%69%, compared to $31.9$297.1 million in fiscal 2019.2022. Exchange rates unfavorably impacted fee revenue by $2.6$7.4 million, or 2%, in fiscal 2023 compared to fiscal 2022. The increase in fee revenue was driven by an increase in both interim and professional search fee revenue of $188.1 million and $18.2 million, respectively, which was primarily due to the acquisitions of the Acquired Companies.RPO. RPO reported fee revenue of $424.6 million in fiscal 2023, an increase of $29.8 million, or 8%, in fiscal 2020, compared to the year-ago period. The decrease in fee revenue was due to lower fee revenue in Brazil, Colombia and Argentina, partially offset by increases in fee revenue in Mexico and Chile in fiscal 2020 compared to the year-ago period.RPO & Professional Search. RPO & Professional Search reported fee revenue of $364.8$394.8 million in fiscal 2020, an increase of $34.7 million, or 11%, compared to $330.1 million in fiscal 2019.2022. Exchange rates unfavorably impacted fee revenue by $6.9$17.1 million, or 2%4%, in fiscal 2023 compared to the year-ago period. Higher fee revenues in RPO and professional search of $26.4 million and $8.3 million, respectively, drove thefiscal 2022. The increase in fee revenue.revenue was due to wider adoption of RPO services in the market in combination with our differentiated solutions.Compensation and BenefitsCompensation and benefits expense decreased $13.2increased by $159.7 million, or 1%9%, to $1,298.0$1,901.2 million in fiscal 20202023 from $1,311.2$1,741.5 million in fiscal 2019.2022. Exchange rates favorably impacted compensation and benefits by $22.6$53.6 million, or 2%3%, in fiscal 20202023 compared to the year-ago period.fiscal 2022. The decreaseincrease in compensation and benefits expense was primarily due to lower performance-related bonus expenseincreases in salaries and related payroll taxes of $147.7 million and employer insurance of $15.3 million. These increases were due to lowerthe increase in fee revenue overall which resulted in an increase in average headcount of 15% in fiscal 2023 compared to fiscal 2022, and wage inflation. Also contributing to higher compensation and benefits expense were increases in commission expense of $20.2 million due to higher fee revenue, $18.7 million more in deferred compensation expenses as a result of COVID-19 pandemic, a decrease in expenses associated with our deferred compensation and retirement plans driven by a decreaseincreases in the fair value of participants’ accounts in fiscal 2023 compared to fiscal 2022 and a decrease inhigher integration/acquisition costs. These decreases in compensation and benefits expense werecosts of $6.4 million. This increase was partially offset by a 3% increasedecreases in average headcount, which contributed to an increaseperformance-related bonus expense of $38.2 million and $8.9 million in salaries and related payroll taxes in fiscal 2020 compared to fiscal 2019.amortization of long-term incentive awards. Compensation and benefits expense, as a percentage of fee revenue, decreasedincreased to 67% in fiscal 20202023 from 68%66% in fiscal 2019.Consulting compensation and benefits expense decreasedincreased by $17.8$27.6 million, or 5%6%, to $373.2$478.5 million in fiscal 20202023 from $391.0$450.9 million in fiscal 2019.2022. Exchange rates favorably impacted compensation and benefits by $7.8$16.5 million, or 2%4%, in fiscal 20202023 compared to the year-ago period.fiscal 2022. The changeincrease in compensation and benefits expense was primarily due to lower performance-related bonus expense due to lower fee revenue as a result of COVID-19 pandemic, partially offset by an increaseincreases in salaries and related payroll taxes.taxes of $22.2 million and employer insurance of $2.5 million. These increases were due to the segment's revenue growth coupled which resulted in an increase in average headcount of 7% in fiscal 2023 compared to fiscal 2022, and wage inflation. Also contributing to higher compensation and benefits expense was an increase in deferred compensation expense of $2.6 million in fiscal 2023 compared to fiscal 2022. Consulting compensation and benefits expense, as a percentage of fee revenue, wasincreased to 71% in fiscal 2023 from 69% for both thein fiscal 2020 and 2019.Digital compensation and benefits expense increased by $16.6$11.3 million, or 12%6%, to $149.7$189.1 million in fiscal 20202023 from $133.1$177.8 million in fiscal 2019.2022. Exchange rates favorably impacted compensation and benefits by $2.8$7.5 million, or 2%4%, in fiscal 2020 202336compared to the year-ago period.fiscal 2022. The increase in compensation and benefits expense was primarily due to an increase in salaries and related payroll taxes mainlyof $13.8 million due to a 9% increase in average headcount in fiscal 2023 compared to fiscal 2022 and wage inflation. The increase was partially offset by a decrease in performance-related bonus expense of $3.0 million. Digital compensation and benefits expense, as a percentage of fee revenue, increased to 53% in fiscal 2023 from 51% in fiscal 2022.Executive Search North America compensation and benefits expense increased by $9.0 million, or 2%, to $386.1 million in fiscal 2023 compared to $377.1 million in fiscal 2022. Exchange rates favorably impacted compensation and benefits by $1.0 million in fiscal 2023 compared to fiscal 2022. The increase in compensation and benefits expense was primarily due to higher salaries and related payroll taxes of $12.4 million and an increase in employer insurance of $1.6 million. These increases were due to an increase in average headcount of 10% in fiscal 2023 compared to fiscal 2022 and wage inflation. Also contributing to the increase in compensation and benefits expense was an increase in deferred compensation expense of $12.4 million due to an increase in the fair market value of participants' accounts in fiscal 2023 compared to fiscal 2022. The increase was partially offset by lower performance-related bonus expense of $12.4 million as a result of lower fee revenue and a decrease in the amortization of long-term incentive awards of $4.9 million. Executive Search North America compensation and benefits expense, as a percentage of fee revenue, increased to 69% in fiscal 2023 from 62% in fiscal 2022.Executive Search EMEA compensation and benefits expense increased by $7.4 million, or 6%, to $140.5 million in fiscal 2023 compared to $133.1 million in fiscal 2022. Exchange rates favorably impacted compensation and benefits by $8.2 million, or 6%, in fiscal 2023 compared to fiscal 2022. The increase in compensation and benefits expense was primarily due to higher performance-related bonus expense of $4.5 million, salaries and related payroll taxes of $2.5 million and amortization of long-term incentive awards of $1.1 million in fiscal 2023 compared to fiscal 2022. These increases were due to the Executive search EMEA segment's revenue growth combined with an increase in average headcount of 11% in fiscal 2023 compared to fiscal 2022. Executive Search EMEA compensation and benefits expense, as a percentage of fee revenue, increased to 75% in fiscal 2023 from 73% in fiscal 2022.Executive Search Asia Pacific compensation and benefits expense decreased by $10.4 million, or 14%, to $61.9 million in fiscal 2023 compared to $72.3 million in fiscal 2022. Exchange rates favorably impacted compensation and benefits by $4.3 million, or 6%, in fiscal 2023 compared to fiscal 2022. The decrease in compensation and benefits expense was primarily due to a decrease in performance-related bonus expense of $8.3 million in fiscal 2023 compared to fiscal 2022 due to lower segment fee revenue. Executive Search Asia Pacific compensation and benefits expense, as a percentage of fee revenue, increased to 65% in fiscal 2023 from 61% in fiscal 2022.Executive Search Latin America compensation and benefits expense increased by $2.0 million, or 11%, to $20.4 million in fiscal 2023 compared to $18.4 million in fiscal 2022. Exchange rates unfavorably impacted compensation and benefits by $0.1 million, in fiscal 2023 compared to fiscal 2022. The increase in compensation and benefits expense was primarily due to an increase in salaries and related payroll taxes as a result of the segment’s fee revenue growth with an increase in average headcount of 8% in fiscal 2023 compared to fiscal 2022. Executive Search Latin America compensation and benefits expense, as percentage of fee revenue, increased to 66% in fiscal 2023 from 63% in fiscal 2022.Professional Search & Interim compensation and benefits expense increased by $74.5 million, or 50%, to $223.3 million in fiscal 2023 compared to $148.8 million in fiscal 2022. Exchange rates favorably impacted compensation and benefits by $2.9 million, or 2%, in fiscal 2023 compared to fiscal 2022. The increase in compensation and benefits expense was primarily due to higher salaries and related payroll taxes of $52.0 million, commission expense of $18.0 million, employee insurance of $3.9 million and integration/acquisition costs of $6.4 million due to the acquisitions of the Acquired Companies, resultingwhich resulted in a 12%55% increase in the average headcount in fiscal 20202023 compared to the year-ago period.Digitalfiscal 2022. This increase was partially offset by a decrease of $8.0 million in performance-related bonus expense. Professional Search & Interim compensation and benefits expense, as a percentage of fee revenue, decreased to 51%44% in fiscal 20202023 from 53%50% in fiscal 2019.Executive Search2022.RPO compensation and benefits expense decreasedincreased by $30.0$35.8 million, or 6%12%, to $472.4$339.0 million in fiscal 2020 compared to $502.42023 from $303.2 million in fiscal 2019.2022. Exchange rates favorably impacted compensation and benefits by $7.5$13.1 million, or 1%4%, in fiscal 20202023 compared to the year-ago period.fiscal 2022. The decreaseincrease in compensation and benefits expense was primarily due to lower performance-related bonus expense due to lower fee revenuehigher salaries and related payroll taxes of $42.1 million and employer insurance of $6.1 million as a result of the COVID-19 pandemic. The restsegment's fee revenue growth combined with an increase in average headcount of 18% in fiscal 2023 compared to fiscal 2022. Also contributing to the change was due to a decrease in the expenses associated with our deferred compensation and retirement plans driven by a decrease in the fair value of participants’ accounts.Executive Searchhigher compensation and benefits expense as a percentage of fee revenue, decreased to 64% in fiscal 2020 from 65% in fiscal 2019.RPO & Professional Search compensation and benefits expense increased by $26.4 million, or 11%, to $261.0 million in fiscal 2020 from $234.6 million in fiscal 2019. Exchange rates favorably impacted compensation and benefits by $4.5 million, or 2%, in fiscal 2020 compared towas the year-ago period. The increase was due to a 14% increase in the average headcount in fiscal 2020 compared to fiscal 2019,severance expense of $3.2 million. This increase was partially offset by a decreasedecreases in lower performance-related bonus expense due to lower fee revenue as a result of COVID-19 pandemic.$12.6 million and in the use of outside contractors of $5.4 million. RPO & Professional Search compensation and benefits expense, as a percentage of fee revenue, increased to 72%80% in fiscal 20202023 from 71%77% in fiscal 2019.Corporate compensation and benefits expense decreasedincreased by $8.4$2.7 million, or 17%5%, to $41.7$62.4 million in fiscal 20202023 from $50.1$59.7 million in fiscal 2019.2022. The decreaseincrease in compensation and benefits expense was primarily driven by higher salaries and related payroll taxes of $4.5 million due to lower performance-related bonusan increase in average headcount of 13% in fiscal 2023 compared to fiscal 2022, and to a lesser extent to an increase in stock-based compensation expense of $2.3 million and the use of outside contractors of $1.3 million. Also contributing to the increase in compensation and benefits expense was an increase in deferred compensation expense of $1.1 million due to4337lower fee revenuepartially offset by an increase in the cash surrender value ("CSV") of company-owned life insurance ("COLI") of $4.8 million as a result of COVID-19 pandemicincreased death benefits, and a decrease in expenses associated with our deferred compensation and retirement plansthe amortization of long-term incentive awards of $1.2 million in fiscal 20202023 compared to the year-ago period.General and Administrative ExpensesGeneral and administrative expenses decreased $93.0increased by $31.2 million, or 26%13%, to $259.0$268.5 million in fiscal 20202023 compared to $352.0$237.3 million in fiscal 2019.2022. Exchange rates favorably impacted general and administrative expenses by $6.2$12.5 million, or 2%5%, in fiscal 20202023 compared to the year-ago period.fiscal 2022. The decrease in general and administrative expenses was magnified by a one-time write-off of tradenames of $106.6 million in fiscal 2019 related to the Plan. The decrease in general and administrative expenses was partially offset by increases in marketing and business development expenses and integration/acquisition costs. General and administrative expenses, as a percentage of fee revenue, decreased to 13% in fiscal 2020 from 18% in fiscal 2019, however, excluding the tradename write-offs, general and administrative expenses as a percentage of fee revenue was 13% in both fiscal 2020 and 2019.Consulting general and administrative expenses decreased by $79.1 million, or 54%, to $67.1 million in fiscal 2020 compared to $146.2 million in the year-ago period. The decrease in general and administrative expenses was magnified by a one-time write-off of tradenames related to the Plan of $77.0 million in fiscal 2019. Consulting general and administrative expenses, as a percentage of fee revenue, decreased to 12% in fiscal 2020 from 26% in fiscal 2019. Excluding the tradename write-offs, general and administrative expenses as a percentage of fee revenue was 12% in both fiscal 2020 and 2019.Digital general and administrative expenses decreased by $19.4 million, or 33%, to $38.7 million in fiscal 2020 compared to $58.1 million in the year-ago period. The decrease in general and administrative expenses was magnified by a one-time write-off of tradenames related to the Plan of $29.6 million in fiscal 2019, partially offset by an increase in integration/acquisition costs and premise and office expenses. Digital general and administrative expenses, as a percentage of fee revenue, decreased to 13% in fiscal 2020 from 23% in fiscal 2019. Excluding the tradename write-offs, general and administrative expenses as a percentage of fee revenue was 13% in fiscal 2020 compared to 11% in the year-ago period.Executive Search general and administrative expenses decreased by $7.2 million, or 9%, to $74.9 million in fiscal 2020 from $82.1 million in fiscal 2019. The decrease in general and administrative expenses was primarily due to decreaseshigher marketing and business development expenses of $15.9 million and an increase in computer software licenses expense of $9.0 million, which contributed to the increase in fee revenue in fiscal 2023 compared to fiscal 2022, as well as an increase in legal and other professional fees travel related expenses and premise and office expenses in fiscal 2020 compared to the year-ago period. Executive Search general and administrative expenses, as a percentage of fee revenue was 10% in fiscal 2020 compared to 11% in the year-ago period.RPO & Professional Search general and administrative expenses increased by $3.1 million, or 11%, to $31.2 million in fiscal 2020 from $28.1 million in fiscal 2019. The increase was primarily due to an increase in premise and office expense and to a lesser extent foreign exchange loss in fiscal 2020 compared to foreign exchange gain in fiscal 2019. RPO & Professional Search general$6.7 million. General and administrative expenses, as a percentage of fee revenue, was 9% in both fiscal 20202023 and 2019.Consulting general and administrative expenses increased by $6.4 million, or 12%, to $57.9 million in fiscal 2023 compared to $51.5 million in fiscal 2022. The increase in general and administrative expenses was primarily due to increases in impairment charges of $3.1 million associated with the reduction of the Company’s real estate footprint and marketing and business development expenses of $2.1 million related to fee revenue growth. Also contributing to the increase in general and administrative expenses was an increase in foreign exchange losses of $2.0 million in fiscal 2023 compared to fiscal 2022. Consulting general and administrative expenses, as a percentage of fee revenue, increased to 9% in fiscal 2023 from 8% in fiscal 2022.Digital general and administrative expenses increased by $9.6 million, or 31%, to $40.6 million in fiscal 2023 compared to $31.0 million in fiscal 2022. The increase in general and administrative expenses was primarily due to higher computer software licenses expense of $3.2 million and an increase in marketing and business development expenses of $3.1 million. Also contributing to the increase in general and administrative expense was an increase in impairment charges of $1.7 million associated with the reduction of the Company's real estate footprint and an increase in foreign exchange losses of $1.5 million in fiscal 2023 compared to fiscal 2022. Digital general and administrative expenses, as a percentage of fee revenue, increased to 11% in fiscal 2023 from 9% in fiscal 2022.Executive Search North America general and administrative expenses increased by $1.6 million, or 5%, to $32.4 million in fiscal 2023 from $30.8 million in fiscal 2022. The increase in general and administrative expenses was primarily due to an increase in marketing and business development expenses of $2.1 million, partially offset by foreign exchange gains of $0.2 million in fiscal 2023 compared to foreign exchange losses of $0.4 million in fiscal 2022. Executive Search North America general and administrative expenses, as a percentage of fee revenue, increased to 6% in fiscal 2023 from 5% in fiscal 2022.Executive Search EMEA general and administrative expenses decreased by $3.3 million, or 18%, to $14.7 million in fiscal 2023 from $18.0 million in fiscal 2022. The decrease in general and administrative expenses was primarily due to a decrease in premise and office expense of $3.3 million due to impairment charges recorded in fiscal 2022 and as a result of the reduction of the Company's real estate footprint. Also contributing to the decrease is the impact of foreign currency with foreign currency gains of $0.3 million in fiscal 2023 compared to foreign exchange losses of $0.7 million in fiscal 2022. This decrease was partially offset by an increase in marketing and business development expense of $1.0 million related to fee revenue growth in fiscal 2023 compared to fiscal 2022. Executive Search EMEA general and administrative expenses, as a percentage of fee revenue, decreased to 8% in fiscal 2023 from 10% in fiscal 2022.Executive Search Asia Pacific general and administrative expenses decreased by $1.3 million, or 12%, to $9.7 million in fiscal 2023 from $11.0 million in fiscal 2022. The decrease in general and administrative expenses was primarily due to decreases in bad debt expense of $0.7 million and premise and office expense of $0.6 million in fiscal 2023 compared to fiscal 2022. Executive Search Asia Pacific general and administrative expenses, as a percentage of fee revenue, increased to 10% in fiscal 2023 from 9% in fiscal 2022.Executive Search Latin America general and administrative expenses increased by $0.5 million, or 56%, to $1.4 million in fiscal 2023 from $0.9 million in fiscal 2022. The increase in general and administrative expenses was primarily due to a gain recorded in fiscal 2022 due to the termination of a lease agreement in Mexico, thereby increasing premise and office expense by $1.7 million, partially offset by an increase in foreign exchange gains of $0.8 million in fiscal 2023 compared to fiscal 2022. Executive Search Latin America general and administrative expenses, as a percentage of fee revenue, increased to 4% in fiscal 2023 from 3% in fiscal 2022.Professional Search & Interim general and administrative expenses increased by $10.1 million, or 50%, to $30.3 million in fiscal 2023 from $20.2 million in fiscal 2022. The increase in general and administrative expenses was primarily due to increases in bad debt expense of $5.4 million, marketing and business development expenses of $2.4 million, premise and office expense of $1.3 million and integration/acquisition costs of $0.8 million in fiscal 2023 compared to fiscal 2022. Professional Search & Interim general and administrative expenses, as a percentage of fee revenue, decreased to 6% in fiscal 2023 from 7% in fiscal 2022.RPO general and administrative expenses increased by $0.9 million, or 4%, to $21.3 million in fiscal 2023 from $20.4 million in fiscal 2022. The increase in general and administrative expenses was primarily due to increases in marketing and business development expenses of $1.0 million, legal and other professional fees of $0.4 million, as well as a foreign38exchange losses of $1.2 million in fiscal 2023 as opposed to foreign exchange gains of $0.8 million in fiscal 2022. This increase was partially offset by a lower bad debt expense of $2.5 million in fiscal 2023 compared to fiscal 2022. RPO general and administrative expenses, as a percentage of fee revenue, was 5% in both fiscal 2023 and fiscal 2022.Corporate general and administrative expenses increased by $9.5$6.6 million, or 25%12%, to $47.0$60.1 million in fiscal 20202023 compared to $37.5$53.5 million in fiscal 2019.2022. The increase in general and administrative expenses was primarily due to integration/acquisition costs incurredincreases in fiscal 2020 related to the purchaselegal and other professional fees of the Acquired Companies and increases in$3.9 million, marketing and business development expenses of $3.8 million, as well as premise and office expense of $2.7 million, partially offset by an increase in foreign exchange gains of $2.3 million in fiscal 20202023 compared to the year-ago period.Cost of Services ExpenseCost of services expense consists primarily of contractor and product costs related to the delivery of various services and products primarily in RPO &through Consulting, Digital, Professional Search Consulting& Interim and Digital.RPO. Cost of services expense was $85.9$238.5 million in fiscal 20202023, an increase of $124.1 million, or 108%, compared to $75.5$114.4 million in fiscal 2019.2022. Professional Search & Interim accounts for $122.9 million of the increase primarily due to the acquisitions of the Acquired Companies which, includes a significant amount of interim business as part of the services they perform which has higher cost of services expense compared to other services Korn Ferry provides. As the interim business becomes an increasing portion of our fee revenue, we expect cost of services expense to continue to increase in future periods. The rest of the increase was from the Consulting segment driven by the increase in fee revenue in the segment. Cost of services expense, as a percentage of fee revenue, wasincreased to 8% in fiscal 2023 from 4% in both the fiscal 2020 and 2019.Depreciation and Amortization ExpensesDepreciation and amortization expenses were $55.3 million in fiscal 2020, an increase of $8.8 million, or 19%, compared to $46.5 million in fiscal 2019. The increase was related primarily to the Acquired Companies and technology investments made in the current and prior year in software and computer equipment, in addition to increases in leasehold improvement and furniture and fixtures.Restructuring Charges, NetIn November 2019, we implemented a restructuring plan to eliminate redundant positions that were created2022 due to investments made in our digital business and the acquisition of the Acquired Companies.Depreciation and Amortization ExpensesDepreciation and amortization expenses were $68.3 million in fiscal 2023, an increase of $4.8 million, or 8%, compared to $63.5 million in fiscal 2022. The increase was primarily due to the amortization of intangible assets due to the acquisition of the Acquired Companies.Restructuring Charges, NetIn April 2020,fiscal 2023, we implemented a second plan in responsethe Plan to the uncertainty caused by COVID-19 that resulted in reductions inrealign our workforce.workforce with our business needs and objectives. As a result, of these two plans, we recorded restructuring charges, net of $58.6$42.6 million of severance costs induring fiscal 2020.2023. There were no restructuring charges, net in fiscal 2019.44Operating2022.Net IncomeOperating Attributable to Korn FerryNet income was $176.0attributable to Korn Ferry decreased by $116.9 million, to $209.5 million in fiscal 2020, an increase of $35.2 million,2023 compared to $140.8$326.4 million in fiscal 2019.2022. The increase in operating income was primarily driven by a decrease in general and administrative expenses of $93.0 million magnifiednet income attributable to Korn Ferry was driven by a one-time write-off of tradenames in the year-ago period, partially offset by restructuring charges of $58.6 million incurred in fiscal 2020.Consulting operating income was $17.7 million in fiscal 2020, an increase of $51.8 million, compared to operating loss of $34.1 million in fiscal 2019. The change was primarily due to a decrease in general and administrative expenses of $79.1 million magnified by a one-time write-off of tradenames related to the Plan of $77.0 million in the year-ago period and a decrease of $17.8 million in compensation and benefits expense. The increase in operating income was partially offset by lower fee revenue of $25.2 million and restructuring charges of $24.5 million in fiscal 2020. Consulting operating income, as a percentage of fee revenue was 3% in fiscal 2020 compared to an operating loss, as a percentage of fee revenue of 6% in fiscal 2019. Excluding the tradename write-offs, operating income as a percentage of fee revenue was 3% in fiscal 2020 compared to 8% in fiscal 2019.Digital operating income was $46.9 million in fiscal 2020, an increase of $7.2 million, or 18%, compared to $39.7 million in fiscal 2019. The increase in operating income was due to higher fee revenue of $39.7 million and a decrease in general and administrative expenses of $19.4 million magnified by a one-time write-off of tradenames related to the Plan in the year ago period. The increase in operating income was partially offset by restructuring charges of $10.5 million in fiscal 2020 and increases in compensation and benefits expense, cost of service and depreciation and amortizationservices expense, of $16.6 million, $18.3 million and $6.4 million, respectively. Digital operating income, as a percentage of fee revenue was 16% in both the fiscal 2020 and 2019. Excluding the tradename write-offs, operating income as a percentage of fee revenue was 16% in fiscal 2020 compared to 27% in fiscal 2019.Executive Search operating income decreased by $22.2 million, or 12%, to $156.9 million in fiscal 2020 compared to $179.1 million in fiscal 2019. The decrease in Executive Search operating income was driven by a decrease in fee revenue of $42.3 million and restructuring charges of $17.5 million incurred in fiscal 2020 largely due to the impact of COVID-19 in the fourth quarter of fiscal 2020. The decrease in operating income was partially offset by decreases in compensation and benefits expense and general and administrative expenses, of $30.0 million and $7.2 million, respectively. Executive Search operating income, as a percentage of fee revenue, was 21% and 23% in the fiscal 2020 and 2019, respectively.RPO & Professional Search operating income was $50.4 millionrestructuring charges, net in fiscal 20202023 compared to $50.9 million in fiscal 2019. The2022. This decrease in operating income was driven by higher compensation and benefits expense of $26.4 million, restructuring charges of $5.7 million incurred in fiscal 2020 and an increase in general and administrative expenses of $3.1 million. The decrease in operating income was partially offset by an increase in fee revenue, of $34.7 million.RPO & Professional Search operatinglower income as a percentage of fee revenue, was 14% in fiscal 2020 compared to 15% in fiscal 2019.Net Income Attributable to Korn FerryNet income attributable to Korn Ferry increased by $2.2 million to $104.9 million in fiscal 2020 compared $102.7 million in fiscal 2019. The increase was primarily driven by lower operating expenses of $31.7 million, partially offset bytax provision and an increase in other income tax expense of $14.4 million and losses in the fair value of our marketable securities incurred(loss), net in fiscal 20202023 compared to gains in the year-ago period.fiscal 2022. Net income attributable to Korn Ferry, as a percentage of fee revenue, was 5%7% and 12% in both the fiscal 20202023 and 2019.Adjusted EBITDAAdjusted EBITDA decreased by $10.0a decrease of $81.6 million to $301.0$457.3 million in fiscal 20202023 compared to $311.0$538.9 million in fiscal 2019.2022. The decrease in Adjusted EBITDA was driven by increases in compensation and benefits expense (excluding integration/acquisition costs), cost of services expense, and general and administrative expenses (excluding integration/acquisition costs and impairment charges), partially offset by increases in fee revenue and other income (loss), net in fiscal 2023 compared to fiscal 2022. Adjusted EBITDA, as a percentage of fee revenue, was 16% in both the fiscal 20202023 compared to 21% in fiscal 2022. Adjusted EBITDA margin decreased primarily due to a change in fee revenue mix, with a decrease in fee revenue in Executive Search and 2019.Consulting Adjusted EBITDA was $61.1$108.5 million in fiscal 2020,2023, a decrease of $5.4$7.6 million, or 8%7%, compared to $66.5$116.1 million in fiscal 2019.2022. The decrease in Adjusted EBITDA was driven by lower fee revenue of $25.2 million largely due to the impact of COVID-19 in the fourth quarter of fiscal 2020. The decrease in adjusted EBITDA was partially offset by decreases of $12.5 millionincreases in compensation and benefits expense, (excluding integration/acquisition costs), $6.0 million in cost of services expense and $2.1 million in general and administrative expenses (excluding tradename write-offsimpairment charges), and cost of services expense, partially offset by an increase in fee revenue in fiscal 2019) in fiscal 20202023 compared to the year-ago period.fiscal 2022. Consulting Adjusted EBITDA, as a percentage of fee revenue, was 11%16% in fiscal 20202023 compared to 12%18% in the year-ago period.Digital Adjusted EBITDA was $83.1$97.5 million in fiscal 2020,2023, a decrease of $1.4$12.6 million, or 2%11%, compared to $84.5$110.1 million in fiscal 2019.2022. The decrease in Adjusted EBITDA was mainly driven by higherincreases in compensation and benefits expense (excluding integration/acquisition costs) of $15.5 million, higher cost of service expenses of $18.3 million and an increase of $6.7 million in general and administrative expenses (excluding integration/acquisition costs in fiscal 2020 and write-off of tradenames in fiscal 2019). This wasimpairment charges), partially offset by an increase of $39.7 million in fee revenue in fiscal 202045the year-ago period.fiscal 2022. Digital Adjusted EBITDA, as a percentage of fee revenue, was 28%27% in fiscal 2020 as2023 compared to 33%32% in fiscal 2019.Executive Search North America Adjusted EBITDA decreased by $12.7$40.7 million, or 7%22%, to $181.1$140.9 million in fiscal 20202023 compared to $193.8$181.6 million in fiscal 2019.2022. The decrease in Adjusted EBITDA was primarily driven by lower fee revenue of $42.3 million in fiscal 2020 compared to the year-ago period largely due to the impact of COVID-19 in the fourth quarter of fiscal 2020 and losses in the fair value of our marketable securities incurred in fiscal 2020 compared to gains in the year-ago period. The decrease in adjusted EBITDA was partially offset by a decrease of $31.9 millionsegment, coupled with increases in compensation and benefits expense (excluding separation costs in fiscal 2020) and $7.2 million in general and administrative expenses.expenses,39partially offset by an increase in other income (loss), net in fiscal 2023 compared to fiscal 2022. Executive Search North America Adjusted EBITDA, as a percentage of fee revenue, was 25% in both the fiscal 2020 and 2019.RPO & Professional2023 compared to 30% in fiscal 2022.Executive Search EMEA Adjusted EBITDA decreased by $0.4 million, or 1%, to $31.4 million in fiscal 2023 compared to $31.8 million in fiscal 2022. The decrease in Adjusted EBITDA was $60.2 million in fiscal 2020,driven by an increase of $5.8 million, or 11%, compared to $54.4 million in fiscal 2019. The increase was driven by higher fee revenue of $34.7 million driven by higher fee revenues in RPO and professional search of $26.4 million and $8.3 million, respectively. The increase in adjusted EBITDA was partially offset by increases of $26.4 million in compensation and benefits expense, partially offset by higher fee revenue in the segment and $3.1 milliona decrease in general and administrative expenses in fiscal 2020 compared to the year-ago period. RPO & Professional(excluding impairment charges). Executive Search EMEA Adjusted EBITDA, as a percentage of fee revenue, was 17% in both fiscal 2020 compared2023 and fiscal 2022.Executive Search Asia Pacific Adjusted EBITDA decreased by $10.9 million, or 31%, to 16% in fiscal 2019.Other (Loss) Income, NetOther loss, net was $2.9$24.2 million in fiscal 20202023 compared to $35.1 million in fiscal 2022. The decrease in Adjusted EBITDA was primarily driven by lower fee revenue in the segment, partially offset by decreases in the compensation and benefits expense and general and administrative expenses in fiscal 2023 compared to fiscal 2022. Executive Search Asia Pacific Adjusted EBITDA, as a percentage of fee revenue, was 25% in fiscal 2023 compared to 30% in fiscal 2022.Executive Search Latin America Adjusted EBITDA increased by $0.3 million, or 3%, to $9.4 million in fiscal 2023 compared to $9.1 million in fiscal 2022. The increase in Adjusted EBITDA was driven by higher fee revenue in the segment and an increase in other income (loss), net, partially offset by an increase in compensation and benefits expense in fiscal 2023 compared to fiscal 2022. Executive Search Latin America Adjusted EBITDA, as a percentage of $10.4fee revenue, was 30% in fiscal 2023 compared to 31% in fiscal 2022.Professional Search & Interim Adjusted EBITDA was $110.9 million in fiscal 2023, an increase of $4.9 million, or 5%, compared to $106.0 million in fiscal 2022. The increase in Adjusted EBITDA was mainly driven by higher fee revenue in the year-ago period.segment as a result of the acquisition of the Acquired Companies, partially offset by increases in cost of services expense, compensation and benefits expense (excluding integration/acquisition costs) and general and administrative expenses (excluding impairment charges and integration/acquisition costs) in fiscal 2023 compared to fiscal 2022. Professional Search & Interim Adjusted EBITDA, as a percentage of fee revenue, was 22% in fiscal 2023 compared to 36% in fiscal 2022.RPO Adjusted EBITDA was $52.6 million in fiscal 2023, a decrease of $6.5 million, or 11%, compared to $59.1 million in fiscal 2022. The change from otherdecrease in Adjusted EBITDA was mainly driven by increases in compensation and benefits expense and general and administrative expenses (excluding impairment charges), partially offset by higher fee revenue in the segment in fiscal 2023 compared to fiscal 2022. RPO Adjusted EBITDA, as a percentage of fee revenue, was 12% in fiscal 2023 compared to 15% in fiscal 2022.Other Income (Loss), NetOther income, net was $5.3 million in fiscal 2023 compared to other loss, net of $11.9 million in fiscal 2022. The difference was primarily due to losses ingains from the fair value of our marketable securities incurred in fiscal 20202023 compared to gains in the year-ago period. These losses were offset by the decreases in our deferred compensation liability that are recorded as decreases in compensation and benefits expense in fiscal 2020.Interest Expense, NetInterest expense, net primarily relates to the 4.625% Senior Unsecuredour Notes due 2027 (the “Notes”) issued in December 2019, our prior credit agreement, and borrowings under our COLI policies and interest cost related to our deferred compensation plans, which are partially offset by interest earned on cash and cash equivalent balances. Interest expense, net was $22.2$25.9 million in fiscal 20202023 compared to $16.9$25.3 million in the year-ago period. The increase in interest expense, net was related to the newly issued Notes, which have a higher interest rate and a higher principal balance than the revolver under our prior credit agreement.Income Tax ProvisionThe provision for income tax was $43.9$82.7 million in fiscal 20202023 compared to $29.5$102.1 million in the year-ago period.fiscal 2022. This reflects a 29% and 22%28% effective tax rate for fiscal 20202023 compared to a 24% effective tax rate for fiscal 2022. In addition to the impact of U.S. state income taxes and 2019, respectively. Thejurisdictional mix of earnings, which generally create variability in our effective tax rate over time, the higher effective tax rate in fiscal 2020 is partially attributable2023 was affected by a tax expense recorded for withholding taxes that are not eligible for credit. The fiscal 2022 effective tax rate was lower due to state income tax on a higher domestic income and a lower tax benefit recorded in connection with stock-based compensation than duringtax credits for eligible research and development expenditures incurred in fiscal 2019.Net Income Attributable to Noncontrolling InterestNet income attributable to noncontrolling 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.income. Net income attributable to noncontrolling interest was $2.1$3.5 million and $4.5 million in both fiscal 20202023 and 2019.Fiscal 2019 Compared2022 compared to Fiscal 2018During fiscal 2020,2023, the Company changed the composition of its global segments. The DigitalProfessional Search & Interim segment and ConsultingRPO segment were previously included in the AdvisoryRPO & Professional Search segment. Segment data for fiscal 20192022 and 20182021 have been recast to reflect the division of the AdvisoryRPO & Professional Search segment into the ConsultingProfessional Search & Interim and DigitalRPO segments.Fee RevenueFee Revenue. Fee revenue increased by $158.8$816.7 million, or 9%45.1%, to $1,926.0$2,626.7 million in fiscal 20192022 compared to $1,767.2$1,810.0 million in fiscal 2018.2021. Exchange rates unfavorably impacted fee revenue by $48.3$2.8 million, in fiscal 2022 compared to fiscal 2021. The higher fee revenue was attributable to increases in all lines of business primarily due to an increase in new40business driven by the increased relevance of the Company’s solutions and the acquisition of The Lucas Group that closed on November 1 2021 and Patina that closed on April 1, 2022 ("Acquired Companies in fiscal 2022") in the Professional Search & Interim segment. Further, the coronavirus pandemic ("COVID-19") adversely impacted demand for the Company’s services on a worldwide basis in fiscal 2021.Consulting. Consulting reported fee revenue of $650.2 million in fiscal 2022, an increase of $134.4 million, or 3%26%, compared to $515.8 million in fiscal 2019 compared to the year-ago period.2021. The increase in fee revenue was attributablepartially driven by our Organizational Strategy work in organization and job redesign, people strategy and culture transformation. In addition, our diversity, equity & inclusion (“DE&I”) business remained strong in fiscal 2022 as we helped clients move the needle on their diversity efforts. Also, greater expectations for organizations to organicbe a force for good in society more broadly has been increasing demand for our environmental and social governance (“ESG”) and sustainability offerings. Leadership Development continues to focus on the importance of increasing employee engagement through coaching and structured leadership workshops. Assessment and Succession increased as clients rely on Korn Ferry’s robust data, science and IP to fuel leadership and scaled workforce transformations. Finally, growth in Total Rewards was fueled by global compensation and retention challenges associated with labor market dislocation; merger & acquisition and IPO activity; and increased focus on executive pay and governance issues, all solution areas.Consulting. Consulting reported fee revenue of $568.3 million, an increase of $27.8 million, or 5%, in fiscal 2019 comparedwhich increased pressure to $540.5 million in fiscal 2018.offer higher and more competitive compensation. Exchange rates unfavorably impacted fee revenue by $17.1$2.8 million, or 3%1%, compared to the year-ago period.fiscal 2021.Digital. Digital reported fee revenue of $252.7$349.0 million in fiscal 2022, an increase of $8.2$61.7 million, or 3%21%, in fiscal 2019 compared to $244.5$287.3 million in fiscal 2018.2021. The increase in fee revenue was primarily due to Professional Development where we targeted new offerings and partnerships in fiscal 2022 to meet the growing need of companies focusing on sales effectiveness. We had double digit increases in fee revenue across our other solutions focusing on assessment, total rewards and organizational strategy as companies focused on retaining and rewarding key talent to reduce levels of attrition from dislocation in the labor markets. Exchange rates unfavorably impacted fee revenue by $7.7$1.8 million, or 3%1%, compared to the year-ago period.fiscal 2021.46Executive Search. Executive Search North America. Executive Search North America reported fee revenue of $774.8$605.7 million in fiscal 2022, an increase of $65.8$208.4 million, or 9%52%, compared to $397.3 million in fiscal 20192021. Exchange rates favorably impacted fee revenue by $1.3 million in fiscal 2022 compared to $709.0 million in the year-ago period. As detailed below, Executive Searchfiscal 2021. North America’s fee revenue was higher in all regions in fiscal 2019 compared to fiscal 2018. The higher fee revenue in Executive Search was mainly due to a 6%35% increase in the number of engagements billed and a 5%12% increase in the weighted-average fees billed per engagement (calculated using local currency) in fiscal 20192022 compared to the year-ago period.fiscal 2021.Executive Search EMEA. Executive Search EMEA reported fee revenue of $182.2 million in fiscal 2022, an increase of $43.2 million, or 31%, compared to $139.0 million in fiscal 2021. Exchange rates unfavorably impacted fee revenue by $14.8$0.5 million or 2%, in fiscal 20192022 compared to the year-ago period.North America reported fee revenue of $455.8 million, anfiscal 2021. The increase of $47.7 million, or 12%, in fiscal 2019 compared to $408.1 million in the year-ago period. North America’s fee revenue was higher due to a 9%15% increase in the number of engagements billed and a 3%14% increase in the weighted-average fees billed per engagement (calculated using local currency) in fiscal 20192022 compared to fiscal 2021.The performance in the year-ago period. Technology, industrialUnited Kingdom, France, the United Arab Emirates and financial servicesBelgium were the main sectors contributingprimary contributors to the increase in fee revenue in fiscal 20192022 compared to the year-ago period. The effectfiscal 2021, driving $31.0 million of exchange rates on fee revenue was minimal in fiscal 2019 compared to the year-ago period.EMEAincreased revenue.Executive Search Asia Pacific. Executive Search Asia Pacific reported fee revenue of $182.8$118.6 million in fiscal 2022, an increase of $9.1$35.3 million, or 5%42%, in fiscal 2019 compared to $173.7$83.3 million in fiscal 2018.2021. Exchange rates unfavorablyfavorably impacted fee revenue by $5.7$0.6 million, or 3%1%, in fiscal 2019,2022 compared to the year-ago period.fiscal 2021. The increase in fee revenue was due to a 5%27% increase in the number of engagements billed and a 4%an 11% increase in the weighted-average fees billed per engagement (calculated using local currency) in fiscal 20192022 compared to the year-ago period.fiscal 2021. The performance in the United Kingdom, Germany, United Arab Emirates,Australia, India, China and FranceSingapore were the primary contributors to the increase in fee revenue in fiscal 20192022 compared to the year-ago period. In termsfiscal 2021, contributing $28.8 million of business sectors, financial services, industrial and technology had the largest increase inincreased fee revenue in fiscal 2019 compared to the year-ago period, partially offset by a decrease in fee revenue in the life sciences/healthcare and consumer goods sectors.Asia Pacificrevenue.Executive Search Latin America. Executive Search Latin America reported fee revenue of $104.3$29.1 million in fiscal 2022, an increase of $7.7$11.6 million, or 8%66%, in fiscal 2019 compared to $96.6$17.5 million in fiscal 2018.2021. Exchange rates unfavorablyfavorably impacted fee revenue by $3.6$0.2 million, or 4%1%, in fiscal 2019,2022 compared to the year-ago period.fiscal 2021. The increase in fee revenue was due to a 10%34% increase in the number of engagements billed and a 2%22% increase in the weighted-average fees billed per engagement (calculated using local currency) in fiscal 20192022 compared to the year-ago period.fiscal 2021. The performance in Hong Kong, Australia, Singapore,Mexico, Brazil and New ZealandChile were the primary contributors to the increase in fee revenue in fiscal 20192022 compared to the year-ago period. Technology, education/non-profit, consumer goods, and financial services were the main sectors contributing to the increase in fee revenue in fiscal 2019 compared to the year-ago period.Latin America2021, driving $9.4 million of increased revenue.Professional Search & Interim. Professional Search & Interim reported fee revenue of $31.9$297.1 million in fiscal 2022, an increase of $1.3$166.3 million, or 4%127%, in fiscal 2019 compared to $30.6$130.8 million in fiscal 2018.2021. Exchange rates favorably impacted fee revenue by $0.3 million compared to fiscal 2021. The increase in Professional Search & Interim fee revenue was due to an 86% increase in engagements billed and a 21% increase in the weighted-average fees billed per engagement in fiscal 2022 compared to fiscal 2021. The increase in Professional Search fee revenue was also due to the acquisition of the Acquired Companies in fiscal 2022, which contributed $69.3 million and $4.1 million of fee revenue, respectively.RPO. RPO reported fee revenue of $394.8 million in fiscal 2022, an increase of $155.8 million, or 65%, compared to $239.0 million in fiscal 2021. Exchange rates unfavorably impacted fee revenue by $4.6$0.1 million or 15%, in fiscal 2019, compared to the year-ago period.fiscal 2021. The increase in fee revenue was due to higher fee revenuethe wider adoption of RPO services in Peru, Colombia and Brazil in fiscal 2019, compared to the year-ago period. Consumer goods and financial services were the main sectors contributing to the increase in fee revenue in fiscal 2019, compared to the year-ago period, partially offset by a decrease in life sciences/healthcare and industrial sectors.RPO & Professional Search. RPO & Professional Search reported fee revenue of $330.1 million, an increase of $56.9 million, or 21%, in fiscal 2019 compared to $273.2 million in fiscal 2018. Exchange rates unfavorably impacted fee revenue by $8.7 million, or 3%, compared to the year-ago period. Higher fee revenues in RPO and professional search of $33.0 million and $23.9 million, respectively, drove the increase in fee revenue.market.41Compensation and BenefitsCompensation and benefits expense increased $112.1$443.6 million, or 9%,34% to $1,311.2$1,741.5 million in fiscal 20192022 from $1,199.1$1,297.9 million in fiscal 2018.2021. Exchange rates favorably impacted compensation and benefits by $29.6$0.3 million or 2%, in fiscal 20192022 compared to the year-ago period.fiscal 2021. The increase in compensation and benefits expense was primarily due to a 10% increaseincreases in average headcount, which contributed $41.4 million in higher salaries and related payroll taxes and a $13.5of $230.4 million, increase inperformance-related bonus expense of $160.3 million, amortization of long-term incentive awards. Also contributing to the increase was higher performance-related bonus expenseawards of $36.9$16.4 million, higher commission expenseemployer insurance of $5.5$13.8 million and an increase in the use of outside contractors of $5.5 million all$9.3 million. These increases were due to the needincrease in fee revenue combined with increases in overall profitability and average headcount. Also contributing to service higher fee revenues from increased business.compensation and benefits expense was an increase in commission expense of $28.5 million due to the Acquired Companies in fiscal 2022, partially offset by a decrease in deferred compensation expenses of $30.7 million as a result of decreases in the fair value of participants’ accounts in fiscal 2022 compared to fiscal 2021. Compensation and benefits expense, as a percentage of fee revenue, was 68%decreased to 66% in both fiscal 2019 and 2018.Consulting compensation and benefits expense increased by $9.4$90.5 million, or 3%25%, to $391.0$450.9 million in fiscal 20192022 from $381.6$360.4 million in fiscal 2018.2021. Exchange rates favorably impacted compensation and benefits expense by $10.9$1.2 million or 3%, in fiscal 20192022 compared to the year-ago period. fiscal 2021. The changeincrease in compensation and benefits expense was primarily due to $3.1increases in salaries and related payroll taxes of $48.9 million, in higher performance-related bonus expense an increase inof $24.5 million, amortization of long-term incentive awards of $3.7$5.0 million and employer insurance of $2.7 million due to an increase in severance expense of $2.1 million. fee revenue combined with increases in overall profitability and average headcount in fiscal 2022 compared to fiscal 2021. Consulting compensation and benefits expense, as a percentage of fee revenue, decreased to 69% in fiscal 20192022 from 71%70% in fiscal 2018.Digital compensation and benefits expense increased by $17.4$31.1 million, or 15%21%, to $177.8 million in fiscal 2022 from $146.7 million in fiscal 2021. The impact of exchange rates was essentially flat in fiscal 2022 compared to fiscal 2021. The increase in compensation and benefits expense was primarily due to increases in performance-related bonus expense of $11.4 million, salaries and related payroll taxes of $7.9 million and commission expenses of $5.8 million in fiscal 2022 compared to fiscal 2021 as a result of an increase in fee revenue combined with increases in overall profitability and average headcount. Digital compensation and benefits expense, as a percentage of fee revenue, was 51% in both fiscal 2022 and fiscal 2021.Executive Search North America compensation and benefits expense increased by $77.6 million, or 26%, to $377.1 million in fiscal 2022 compared to $299.5 million in fiscal 2021. Exchange rates unfavorably impacted compensation and benefits by $0.7 million in fiscal 2022 compared to fiscal 2021. The increase was primarily due to increases in performance-related bonus expense of $82.6 million and salaries and related payroll taxes of $24.6 million due to the increase in fee revenue combined with increases in overall profitability and average headcount in fiscal 2022 compared to fiscal 2021. The increases in compensation and benefits expense was partially offset by a decrease in the amounts owed under certain deferred compensation and retirement plans of $35.4 million due to a decrease in the fair market value of the participants accounts in fiscal 2022 compared to fiscal 2021. Executive Search North America compensation and benefits expense, as a percentage of fee revenue, decreased to 62% in fiscal 2022 from 75% in fiscal 2021.Executive Search EMEA compensation and benefits expense increased by $22.0 million, or 20%, to $133.1 million in fiscal 2019 from $115.72022 compared to $111.1 million in fiscal 2018.2021. Exchange rates favorably impacted compensation and benefits expense by $3.3$0.5 million or 3%, in fiscal 20192022 compared to the year-ago period.fiscal 2021. The changeincrease was primarily due to an increase of $5.5 million in47commission expense, $3.3 million in higher performance-related bonus expense, an increase of $3.0 million in outside contractors due to the need to accommodate the growth in fee revenue and $1.9 million more in salaries and related payroll taxes of $12.6 million and performance-related bonus expense of $8.2 million in fiscal 20192022 compared to fiscal 2021 due to the year-ago period.Digitalincrease in fee revenue combined with an increase in overall profitability. Executive Search EMEA compensation and benefits expense, as a percentage of fee revenue, decreased to 73% in fiscal 2022 from 80% in fiscal 2021.Executive Search Asia Pacific compensation and benefits expense increased by $14.0 million, or 24%, to $72.3 million in fiscal 2022 compared to $58.3 million in fiscal 2021. Exchange rates unfavorably impacted compensation and benefits by $0.4 million, or 1%, in fiscal 2022 compared to fiscal 2021. The increase was primarily due to increases in performance-related bonus expense of $10.2 million and salaries and related payroll taxes of $6.2 million in fiscal 2022 compared to fiscal 2021 due to an increase in fee revenue combined with an increase overall profitability. Executive Search Asia Pacific compensation and benefits expense, as a percentage of fee revenue, decreased to 61% in fiscal 2022 from 70% in fiscal 2021.Executive Search Latin America compensation and benefits expense increased by $4.3 million, or 30%, to $18.4 million in fiscal 2022 compared to $14.1 million in fiscal 2021. Exchange rates unfavorably impacted compensation and benefits by $0.3 million, or 2%, in fiscal 2022 compared to fiscal 2021. The increase was primarily due to higher salaries and related payroll taxes of $2.0 million and performance-related bonus expense of $1.4 million in fiscal 2022 compared to fiscal 2021 due to an increase in fee revenue combined with an increase in overall profitability. Executive Search Latin America compensation and benefits expense, as a percentage of fee revenue, decreased to 63% in fiscal 2022 from 80% in fiscal 2021.Professional Search & Interim compensation and benefits expense increased by $63.0 million, or 73%, to $148.8 million in fiscal 2022 from $85.8 million in fiscal 2021. The impact of exchange rates was essentially flat in fiscal 2022 compared to fiscal 2021. The increase was due to higher salaries and related payroll taxes of $23.0 million, performance-related bonus of $14.7 million, employer insurance of $2.7 million and the use of outside contractors of $0.8 million due to the increase in fee revenue combined with increases in overall profitability and average headcount in fiscal 2022 compared to fiscal 2021. Also contributing to the increase in compensation and benefits was an increase in commission expenses of $22.7 million and42integration and acquisition costs of $1.9 million driven by the acquisition of the Acquired Companies in fiscal 2022. Professional Search & Interim compensation and benefits expense, as a percentage of fee revenue, decreased to 50% in fiscal 2022 from 66% in fiscal 2021.RPO compensation and benefits expense increased by $124.3 million, or $69%, to $303.2 million in fiscal 2022 from $178.9 million in fiscal 2021. The impact of exchange rates was essentially flat in fiscal 2022 compared to fiscal 2021. The increase was primarily due to higher salaries and related payroll taxes of $99.1 million, employer insurance of $5.7 million and the use of outside contractors of $4.2 million due to increases in revenue and average headcount in fiscal 2022 compared to fiscal 2021. RPO compensation and benefits expense, as a percentage of fee revenue, increased to 53%77% in fiscal 20192022 from 47%75% in fiscal 2018.Executive Search2021.Corporate compensation and benefits expense increased by $33.8$16.5 million, or 7%38%, to $502.4$59.7 million in fiscal 2019 compared to $468.62022 from $43.2 million in fiscal 2018. Exchange rates favorably impacted compensation and benefits by $9.4 million, or 2%, in fiscal 2019 compared to the year-ago period.2021. The increase of $7.2 million was due to higher performance-related bonus expensethe changes in CSV of $17.7 millionthe COLI contracts due to the increaselower death benefits recognized in fee revenue.fiscal 2022 compared to fiscal 2021. Also contributing to the increase was a 5% increase in average headcount, which contributed $13.0 million in higher salaries and related payroll taxes, and a $8.2 million increase in amortization of long-term incentive awards in fiscal 2019 compared to the year-ago period. Executive Search compensation and benefits expense, as a percentage of fee revenue, decreased to 65% in fiscal 2019 from 66% in fiscal 2018.RPO & Professional Search compensation and benefits expense increased by $41.4 million, or 21%, to $234.6 million in fiscal 2019 from $193.2 million in fiscal 2018. Exchange rates favorably impacted compensation and benefits by $5.9 million, or 3%, in fiscal 2019 compared to the year-ago period. The increase was due to higher salaries and related payroll taxes of $23.9$6.0 million resulting from a 32%and performance-related bonus expense of $4.2 million due to an increase in theconsolidated fee revenue, combined with increases in overall profitability and average headcount in fiscal 20192022 compared to fiscal 2018. The higher average headcount and the $2.3 million increase in the use of outside contractors was primarily driven by the need to service an increase in fee revenue in the RPO business. Also contributing to the increase in compensation and benefits was a higher performance-related bonus expense of $10.7 million. RPO & Professional Search compensation and benefits expense, as a percentage of fee revenue, was 71% in both fiscal 2019 and 2018.Corporate compensation and benefits expense increased by $10.1 million, or 25%, to $50.1 million in fiscal 2019 from $40.0 million in fiscal 2018. The increase was primarily due to higher performance-related bonus expense, higher salaries and related payroll taxes, an increase in the use of outside contractors, higher stock-based compensation expense and an increase in amortization of long-term incentive awards of $2.0 million, $2.2 million, $1.1 million, $0.9 million and $0.6 million, respectively, in fiscal 2019 compared to the year-ago period. The rest of the increase was due to a change in the 2021.cash surrender value(“CSV”) of COLI that increased compensation and benefits expense by $1.6 million in fiscal 2019 compared to the year-ago period.General and administrative expenses increased $114.6$45.5 million, or 48%24%, to $352.0$237.3 million in fiscal 20192022 compared to $237.4$191.8 million in fiscal 2018.2021. Exchange rates favorably impacted general and administrative expenses by $8.3$0.9 million or 3%, in fiscal 20192022 compared to the year-ago period.fiscal 2021. The increase in general and administrative expenses was primarily due to the write-off of tradenames of $106.6 million related to the Plan, an increase of $3.0 million in legal and other professional expenses, higher marketing and business development expenses of $2.4$14.0 million, which contributed to the increase in fee revenue and new business in fiscal 2022, as well as an increase in premise and office expense of $1.2$6.9 million, bad debt expense of $5.8 million and legal and other professional fees of $5.3 million. In addition, the Company recorded impairment charges associated with the reduction of the Company’s real estate footprint of $9.3 million and integration and acquisition costs of $6.0 million incurred with the acquisition of the Acquired Companies in fiscal 2019 compared to the year-ago period.2022. General and administrative expenses, as a percentage of fee revenue, was 18%decreased to 9% in fiscal 20192022 from 11% in fiscal 2021.Consulting general and administrative expenses increased by $2.9 million, or 6%, to $51.5 million in fiscal 2022 compared to 13%$48.6 million in fiscal 2021. The increase in general and administrative expenses was primarily due to impairment charges associated with the year-ago period. Excludingreduction of the tradename write-offs,Company’s real estate footprint of $2.8 million in fiscal 2022. Consulting general and administrative expenses, as a percentage of fee revenue, decreased to 8% in fiscal 2022 from 9% in fiscal 2021.Digital general and administrative expenses increased by $1.9 million, or 7%, to $31.0 million in fiscal 2022 compared to $29.1 million in fiscal 2021. The increase in general and administrative expenses was primarily due to impairment charges associated with the reduction of the Company’s real estate footprint of $1.5 million in fiscal 2022. Digital general and administrative expenses, as a percentage of fee revenue, decreased to 9% in fiscal 2022 from 10% in fiscal 2021.Executive Search North America general and administrative expenses increased by $3.9 million, or 14%, to $30.8 million in fiscal 2022 from $26.9 million in fiscal 2021. The increase in general and administrative expenses was primarily due to increases in business development expenses of $2.4 million and bad debt expense of $0.7 million. Executive Search North America general and administrative expenses, as a percentage of fee revenue, was 13%5% in fiscal 2019.Consulting2022 compared to 7% in fiscal 2021.Executive Search EMEA general and administrative expenses increased by $77.8$2.0 million, or 114%13%, to $146.2$18.0 million in fiscal 2019 compared to $68.42022 from $16.0 million in the year-ago period.fiscal 2021. The increase in general and administrative expenses was mainlyprimarily due to impairment charges associated with the write-offreduction of tradenamesthe Company’s real estate footprint of $77.0$1.1 million and the impact of foreign currency with foreign exchange losses of $0.7 million in fiscal 20192022 compared to the year-ago period. Consultingforeign currency gains of $0.3 million in fiscal 2021. Executive Search EMEA general and administrative expenses, as a percentage of fee revenue was 26%10% in fiscal 20192022 compared to 13% in fiscal 2018. Excluding the tradename write-offs, general and administrative expenses as a percentage of fee revenue was 12% in fiscal 2019 compared to 13% in fiscal 2018.Digital2021.Executive Search Asia Pacific general and administrative expenses increased by $28.1$2.4 million, or 94%28%, to $58.1$11.0 million in fiscal 2019 compared to $30.02022 from $8.6 million in the year-ago period.fiscal 2021. The increase in general and administrative expenses was mainlyprimarily due to the write-offhigher bad debt expense of tradenames of $29.6$1.0 million in fiscal 20192022 compared to the year-ago period. Digital general and administrative expenses, as a percentage of fee revenue, was 23% in fiscal 2019 compared to 12% in fiscal 2018. Excluding the tradename write-offs, general and administrative expenses as a percentage of fee revenue was 11% in fiscal 2019 compared to 12% in fiscal 2018.general and administrative expenses increased by $4.4 million, or 6%, to $82.1 million in fiscal 2019 from $77.7 million in fiscal 2018. The increase in general and administrative expenses was mainly due to $1.8 million more in premise and office expense and an increase of $0.9 million in legal and other professional expenses. Also contributing to the increase were increases to travel-related expenses and marketing and business development expenses of $1.3 million and $0.7 million, respectively, in order to support the higher fee revenues generated in fiscal 2019 compared to the year-ago period. Executive Search general and administrative expenses, as a percentage of fee revenue, was 11% in both fiscal 2019 and 2018.48RPO & Professional Search general and administrative expenses increased by $1.4 million, or 5%, to $28.1 million in fiscal 2019 from $26.7 million in fiscal 2018. The increase was due primarily to increases in premise and office expense of $1.1 million, in fiscal 2019 compared to the year-ago period. RPO & Professional SearchAsia Pacific general and administrative expenses, as a percentage of fee revenue, was 9% in fiscal 20192022 compared to 10% in fiscal 2021.Executive Search Latin America general and administrative expenses decreased by $1.3 million, or 59%, to $0.9 million in fiscal 2022 from $2.2 million in fiscal 2021. The decrease in general and administrative expenses was primarily due to lower premise and office expenses of $1.4 million in fiscal 2022 compared to fiscal 2021. Executive Search Latin America general and administrative expenses, as a percentage of fee revenue, was 3% in fiscal 2022 compared to 12% in fiscal 2021.Professional Search & Interim general and administrative expenses increased by $12.2 million, or 153%, to $20.2 million in fiscal 2022 from $8.0 million in fiscal 2021. The increase in general and administrative expenses was primarily due to an increase in premise and office expense of $4.4 million, impairment charges associated with the year-ago period.43RPO general and administrative expenses increased by $3.6 million, or 21%, to $20.4 million in fiscal 2022 from $16.8 million in fiscal 2021. The increase was primarily due to higher bad debt expense of $1.6 million, and impairment charges associated with the reduction of the Company's real estate footprint of $1.6 million. RPO general administrative expenses, as a percentage of revenue, was 5% in fiscal 2022 compared to 7% in fiscal 2021.Corporate general and administrative expenses increased by $2.9$18.0 million, or 8%51%, to $37.5$53.5 million in fiscal 20192022 compared to $34.6$35.5 million in fiscal 2018.2021. The increase in general and administrative expenses was primarily due primarily to increaseshigher marketing expense of $7.2 million, integration and acquisition costs of $4.2 million due to the acquisition of the Acquired Companies in fiscal 2022, legal and other professional expenses and software licensesfees of $2.2$3.8 million and $1.7an increase of $1.5 million respectively,in charitable contributions in fiscal 20192022 compared to the year-ago period. This was offset by a foreign exchange gain of $1.0 million in fiscal 2019 compared to a foreign exchange loss of $1.2 million in fiscal 2018.Cost of Services ExpenseCost of services expense consists primarily of non-billable contractor and product costs related to the delivery of various services and products, primarily in RPO & Professional Search & Interim, Consulting, Digital and Digital.RPO. Cost of services expense was $75.5$114.4 million in fiscal 20192022 compared to $73.7$72.0 million in fiscal 2018.2021. The increase was due to an increase in fee revenue and the acquisition of the Acquired Companies in fiscal 2022. Cost of services expense, as a percentage of fee revenue, was 4% in both fiscal 20192022 and 2018.Depreciation and Amortization ExpensesDepreciation and amortization expenses were $46.5 million, a decrease of $2.1 million, or 4%, in fiscal 2019 compared to $48.6$63.5 million in fiscal 2018. The decrease was due2022, an increase of $1.7 million, or 3%, compared to lower amortization expense associated with intangible assets as some of our intangible assets became fully amortized.Operating IncomeOperating income was $140.8 million, a decrease of $67.6$61.8 million in fiscal 2019 compared2021. The increase was primarily due to $208.4technology investments made in the current and prior year in software for our Digital business and the Acquired Companies in fiscal 2022 in the Professional Search & Interim segment.Restructuring Charges, NetThere were no restructuring charges, net during fiscal 2022. In April 2020, we implemented a restructuring plan in response to the uncertainty caused by COVID-19 that resulted in reductions in our workforce in the fourth quarter of fiscal 2020. We continued the implementation of this plan in fiscal 2021 and as a result recorded restructuring charges, net of $30.7 million of severance costs in fiscal 2021.Net Income Attributable to Korn FerryNet income attributable to Korn Ferry increased by $211.9 million to $326.4 million in fiscal 2018.2022 compared to $114.5 million in fiscal 2021. The decreaseincrease in operatingnet income attributable to Korn Ferry was primarily driven by the write-offincrease in fee revenue of tradenames$816.7 million, which was driven by the factors discussed above, and restructuring charges, net of $106.6$30.7 million an increase of $112.1 millionincurred in fiscal 2021. This was partially offset by increases in compensation and benefits expense and $8.0of $443.6 million, more incost of services expense of $42.4 million associated with the higher levels of business demand, a higher income tax provision of $54.0 million and general and an increase in administrative expenses (excluding write-off of tradenames), offset by higher fee revenue$45.5 million. The rest of $158.8 million.Consulting operatingthe change is due to other loss, was $34.1 million, a decreasenet of $56.5$11.9 million in fiscal 20192022 compared to operatingother income, net of $22.4$37.2 million in fiscal 2018. The change was primarily due2021. Net income attributable to the write-off of tradenames of $77.0 million and an increase of $9.4 million in compensation and benefits expense in fiscal 2019 compared to the year-ago period, offset by higher fee revenue of $27.8 million and a decrease in depreciation and amortization expense of $2.8 million. Consulting operating loss,Korn Ferry, as a percentage of fee revenue, was 12% in fiscal 2022 as compared to 6% in fiscal 20192021.Adjusted EBITDAAdjusted EBITDA increased by $252.6 million to $538.9 million in fiscal 2022 compared to operating income, as a percentage of$286.3 million in fiscal 2021. The increase in Adjusted EBITDA was driven by the increase in fee revenue, partially offset by increases in compensation and benefits expense (excluding integration/acquisition costs), cost of 4% in fiscal 2018. Excluding the tradename write-offs, operating incomeservices expense, and general and administrative expenses (excluding integration/acquisition costs and impairment charges). Adjusted EBITDA, as a percentage of fee revenue, was 8%21% and 16% in fiscal 2019 compared to 4% in fiscal 2018.Digital operating income2022 and 2021.Consulting Adjusted EBITDA was $39.7 million, which decreased by $38.4 million, or 49% in fiscal 2019 compared to $78.1$116.1 million in fiscal 2018. The change was primarily due to the write-off of tradenames of $29.6 million and2022, an increase of $17.4$34.6 million, or 42%, compared to $81.5 million in fiscal 2021. The increase in Adjusted EBITDA was driven by higher fee revenue in the segment, as well as cost savings realized from work being conducted virtually. These changes were partially offset by increases in compensation and benefits expense in fiscal 2019 compared to the year-ago period, offset by higher fee revenueand cost of $8.2 million. Digital operating income,services expense. Consulting Adjusted EBITDA, as a percentage of fee revenue, was 18% in fiscal 2022 compared to 16% and 32%in fiscal 2021.Digital Adjusted EBITDA was $110.1 million in fiscal 2022, an increase of $24.0 million, or 28%, compared to $86.1 million in fiscal 2021. The increase in Adjusted EBITDA was mainly driven by the increase in fee revenue in the segment, as well as cost savings realized from work being conducted virtually. These changes were partially offset by increases in compensation and benefits expense (excluding integration/acquisition costs) and cost of services expense in fiscal 2019 and 2018, respectively. Excluding the tradename write-offs, operating income2022 compared to fiscal 2021. Digital Adjusted EBITDA, as a percentage of fee revenue, was 27%32% in fiscal 20192022 as compared to 32%30% in the year-ago period.Executive Search operating incomeNorth America Adjusted EBITDA increased by $29.5$83.5 million, or 20%85%, to $179.1$181.6 million in fiscal 20192022 compared to $149.6$98.1 million in fiscal 2018.2021. The increase in Executive Search operating income was driven by higher fee revenue in the segment, partially offset by an increase in compensation and benefits expense and general and administrative expenses. Executive Search North America Adjusted EBITDA, as a percentage of fee revenue, of $65.8was 30% in fiscal 2022 compared to 25% in fiscal 2021.Executive Search EMEA Adjusted EBITDA increased by $20.1 million, or 172%, to $31.8 million in fiscal 2022 compared to $11.7 million in fiscal 2021. The increase in Adjusted EBITDA was driven by higher fee revenue in the segment, partially44offset by increases in compensation and benefits expense and general and administrative expenses of $33.8 million and $4.4 million, respectively.(excluding impairment charges). Executive Search operating income,EMEA Adjusted EBITDA, as a percentage of fee revenue, was 23% and 21%17% in fiscal 2019 and 2018, respectively.RPO & Professional2022 compared to 8% in fiscal 2021.Executive Search operating income was $50.9 million, an increase of $11.5Asia Pacific Adjusted EBITDA increased by $18.4 million, or 29%110%, in fiscal 2019 compared to $39.4$35.1 million in fiscal 2018.2022 compared to $16.7 million in fiscal 2021. The increase in operating incomeAdjusted EBITDA was driven by higher fee revenue in the segment, partially offset by increases in the compensation and benefits expense and general and administrative expenses. Executive Search Asia Pacific Adjusted EBITDA, as a percentage of $56.9fee revenue, was 30% in fiscal 2022 compared to 20% in fiscal 2021.Executive Search Latin America Adjusted EBITDA increased by $7.8 million to $9.1 million in fiscal 2022 compared to $1.3 million in fiscal 2021. The increase in Adjusted EBITDA was driven by higher fee revenue in the segment, partially offset by an increase in compensation and benefits expense. Executive Search Latin America Adjusted EBITDA, as a percentage of fee revenue, was 31% in fiscal 2022 compared to 7% in fiscal 2021.Professional Search & Interim Adjusted EBITDA was $106.0 million in fiscal 2022, an increase of $69.1 million, or 187%, compared to $36.9 million in fiscal 2021. The increase in Adjusted EBITDA was mainly driven by higher fee revenue, partially offset by increases in compensation and benefits expense (excluding integration/acquisition costs), cost of services expense and general and administrative expenses (excluding impairment charges and integration and acquisition costs). Professional Search & Interim Adjusted EBITDA, as a percentage of fee revenue, was 36% in fiscal 2022 compared to 28% in fiscal 2021.RPO Adjusted EBITDA was $59.1 million in fiscal 2022, an increase of $26.6 million, or 82%, compared to $32.5 million in fiscal 2021. The increase in Adjusted EBITDA was mainly driven by higher fee revenue in the segment, partially offset by increases in compensation and benefits expense, cost of services expense and general and administrative expenses of $41.4 million, $2.4 million and $1.4 million, respectively.(excluding impairment charges). RPO & Professional Search operating income,Adjusted EBITDA, as a percentage of fee revenue, was 15% in fiscal 20192022 compared to 14% in the year-ago period.Netfiscal 2021.Other (Loss) Income, Attributable to Korn Ferry income attributable to Korn Ferry decreased by $31.1 million to $102.7Other loss, net was $11.9 million in fiscal 20192022 compared $133.8 million in fiscal 2018. The decrease was primarily driven by higher operating expenses of $221.9 million mainly due to the tradename write-off of $106.6 million and higher compensation and benefits expense of $112.1 million, partially offset by higher total revenue of $154.4 million and a lower income tax provision of $40.6 million compared to the year-ago period. Net income attributable to Korn Ferry, as a percentage of fee revenue, was 5% in fiscal 2019 compared to 8% in the year-ago period.49Adjusted EBITDAAdjusted EBITDA increased by $33.0 million to $311.0 million in fiscal 2019 compared to $278.0 million in fiscal 2018. This increase was driven by higher fee revenue of $158.8 million, offset by an increases of $114.8 million in compensation and benefits expense (excluding integration costs), $8.0 million in general and administrative expenses (excluding write-off on tradenames), $1.8 million in cost of services and a decrease in other income, net of $1.0$37.2 million in fiscal 2021. The difference was primarily due to changes inlosses from the fair value of our marketable securities in fiscal 20192022 compared to the year-ago period. Adjusted EBITDA, as a percentage of fee revenue, was 16% in both fiscal 2019 and 2018.Consulting Adjusted EBITDA was $66.5 million, an increase of $15.4 million, or 30%,gains in fiscal 2019 compared to $51.1 million in fiscal 2018. The increase was driven by higher fee revenue of $27.8 million, offset by increases of $11.9 million in compensation and benefits expense (excluding integration costs) in fiscal 2019 compared to the year-ago period.Consulting Adjusted EBITDA, as a percentage of fee revenue, was 12% fiscal 2019 compared to 9% in the year-ago period.Digital Adjusted EBITDA was $84.5 million, decreased by $7.9 million, or 9%, in fiscal 2019 compared to $92.4 million in fiscal 2018. The decrease was driven by increases of $17.5 million in compensation and benefits expense (excluding integration costs) offset by higher fee revenue of $8.2 million and a decrease in general and administrative expenses (excluding tradename write-offs) of $1.5 million in fiscal 2019 compared to the year-ago period.Digital Adjusted EBITDA, as a percentage of fee revenue, was 33% in fiscal 2019 compared to 38% in the fiscal 2018.Executive Search Adjusted EBITDA increased by $34.5 million, or 22%, to $193.8 million in fiscal 2019 compared to $159.3 million in fiscal 2018. The increase was driven by higher fee revenue of $65.8 million and an increase in other income, net of $5.9 million, primarily due to changes in the fair value of our marketable securities in fiscal 2019 compared to the year-ago period, offset by increases of $33.8 million in compensation and benefits expense, $4.4 million in general and administrative expenses. Executive Search Adjusted EBITDA, as a percentage of fee revenue, was 25% in fiscal 2019 compared to 22% in the year-ago period.RPO & Professional Search Adjusted EBITDA was $54.4 million, an increase of $11.8 million, or 28%, in fiscal 2019 compared to $42.6 million in fiscal 2018. The increase was driven by higher fee revenue of $56.9 million, offset by increases of $41.4 million in compensation and benefits expense, $2.4 million in cost of services and $1.4 million in general and administrative expenses, in fiscal 2019 compared to the year-ago period. RPO & Professional Search Adjusted EBITDA, as a percentage of fee revenue, was 16% in both fiscal 2019 and 2018.Other Income, NetOther income, net was $10.1 million in the fiscal 2019 compared to $11.1 million in the year-ago period. The decrease was primarily due to smaller gains in the fair value of our marketable securities in fiscal 2019 compared to the year-ago period.Interest Expense, NetInterest expense, net primarily relates to our credit agreementNotes issued in December 2019 and borrowings under our COLI policies, which wasare partially offset by interest earned on cash and cash equivalent balances. Interest expense, net was $16.9$25.3 million in the fiscal 20192022 compared to $13.8$29.3 million in fiscal 2021. Interest expense, net decreased due to interest income earned on the year-ago period.Income Tax ProvisionThe provision for income tax was $29.5$102.1 million in the fiscal 20192022 compared to $70.1$48.1 million in the year-ago period.fiscal 2021. This reflects a 22% and 34%24% effective tax rate for fiscal 2019 and 2018, respectively. The difference in the2022 compared to a 29% effective tax rate is primarilyfor fiscal 2021. In addition to the impact of U.S. state income taxes and jurisdictional mix of earnings, which generally create variability in our effective tax rate over time, the lower effective tax rate in fiscal 2022 was partially attributable to a tax benefit recorded in connection with tax credits claimed in the current year for eligible research and development expenditures. The fiscal 2021 effective tax rate was higher due to the enactment of the Tax Act which reduced the U.S. corporate federal statutory incomea tax rate from 35% to 21%, as well as the excess tax benefitexpense recorded for withholding taxes on intercompany dividends that are not eligible for credit and a shortfall recorded in connection with stock-based awards that vested in fiscal 2019.Net Income Attributable to Noncontrolling InterestNet income attributable to noncontrolling 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.income. Net income attributable to noncontrolling interest was $2.1$4.5 million and $1.1 million in both fiscal 20192022 and 2018.Liquidity and Capital ResourcesThe Company and its Board of Directors endorse a balanced approach to capital allocation. The Company’s long-term priority is to invest in growth initiatives, such as the hiring of consultants, the continued development of IP and derivative products and services and the investment in synergistic, accretive merger and acquisition transactions that are expected to 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” 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 Amended Credit Agreement (defined below) and Notes, as well as using excess cash to repay the Notes.5045On NovemberFebruary 1, 2019,2023, we completed the acquisition of the Acquired Companies in the leadership development areaSalo for $108.6$155.4 million, net of cash acquiredacquired. Salo is a leading provider of finance, accounting and actual resultsHR interim talent, with a strong focus on serving organizations in healthcare, among other industries.On August 1, 2022, we completed the acquisition of operationsICS for $99.3 million, net of cash acquired. ICS contributes interim professional placement offerings and expertise that are highly relevant for the Acquired Companiesnew world of work where more workplaces are hybrid or virtual. ICS is a highly regarded provider of senior-level IT interim professional solutions with additional expertise in the areas of compliance and legal, accounting and finance, and HR.We believe the above acquisitions echo the commitment to scale our solutions and further increase our focus at the intersection of talent and strategy-wherever and however the needs of organizations-evolve and present real, tangible opportunity for us and our clients looking for the right talent, who are highly agile, with specialized skills and expertise, to help them drive superior performance, including on an interim basis. The addition of these acquisitions to our broader talent acquisition portfolio–spanning Executive Search, RPO, Professional Search and Interim services–has accelerated our ability to capture additional shares of this significant market. Both acquisitions are included in our consolidated financial statements from November 1, 2019, the effective date of the acquisition.On November 1, 2019, we also adopted a restructuring plan to rationalize our cost structure to realize the efficiencies and operational improvement that these investments have enabled us to, or positioned us to, realize, and during fiscal 2020, we recognized $18.1 million of restructuring charges associated with severance and recorded $2.8 million of integration/acquisition costs associated with abandonment of premises.In light of the continuing uncertainty in worldwide economic conditions caused by the COVID-19 pandemic and, as part of a broader program aimed at further enhancing our strong balance sheet and liquidity position, on April 20, 2020, we initiated a plan intended to adjust the Company’s cost base to the current economic environment and to position us to invest into the recovery. The plan includes (i) a reduction in workforce and resulted in restructuring charges of $40.5 million associated with severance), (ii) the temporary furlough of certain employees, (iii) subject to certain exceptions and legal requirements, salary reductions across the organization, and (iv) other cost saving measures relating to general and administrative expenses.On December 16, 2019, we completed a private placement of the Notes with a $400 million principal amount pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The Notes were issued with a $4.5 million discount and will mature December 15, 2027, with interest payable semi-annually in arrears on June 15 and December 15 of each year, commencingthat commenced on June 15, 2020. The Notes represent senior unsecured obligations that rank equally in right of payment to all existing and future senior unsecured indebtedness. We may redeem the Notes prior to maturity, subject to certain limitations and premiums defined in the indenture governing the Notes. The Notes are guaranteed by each of our existing and future wholly owned domestic subsidiaries to the extent such subsidiaries guarantee our revolving credit facilityobligations under the Credit Agreement (defined below). The indenture governing the Notes requires that, upon the occurrence of both a Change of Control and a Rating Decline (each as defined in the indenture), we shall make an offer to purchase all of the Notes at 101% of their principal amount, and accrued and unpaid interest. We used the proceeds from the offering of the Notes to repay $276.9 million outstanding under our prior revolving credit facility (the “Prior Credit Agreement”) and to pay expenses and fees in connection therewith. As of April 30, 20202023, the fair value of the Notes is $372.5was $381.5 million, which is based on borrowing rates currently required of notes with similar terms, maturity and credit risk.On June 24, 2022, we entered into an amendment (the "Amendment") to our December 16, 2019 we also entered into a senior secured $650.0 million credit agreementCredit Agreement (the “Credit"Credit Agreement"; as amended by the Amendment, the “Amended Credit Agreement”) with a syndicate of banksthe lenders party thereto and Bank of America, National Association as administrative agent, to, among other things (i) extend the existing maturity date of the revolving facility to June 24, 2027, (ii) provide for enhanceda new delayed draw term loan facility as described below, (iii) replace the London interbank offered rate with Term SOFR, and (iv) replace the existing financial flexibility. See Note 10—covenants with financial covenants described below.Long-Term Debt for a description of the The Amended Credit Agreement. We have a total of $646.0 million available under our $650.0 millionAgreement provides for five-year senior secured credit facilities in an aggregate amount of $1,150 million comprised of a $650.0 million revolving credit facility (the “Revolver”"Revolver") asand a $500 million delayed draw term loan facility with the delayed draw having an expiration date of April 30, 2020,June 23, 2023 (the "Delayed Draw Facility", and together with the Revolver, the "Credit Facilities"). The Amended Credit Agreement also provides that, under certain circumstances, the Company may incur term loans or increase the aggregate principal amount of revolving commitments by an aggregate amount of up to $250 million plus an unlimited amount subject to a consolidated secured net leverage ratio of 3.25 to 1.00. See Note 11 —Long-Term Debt for a further description of the Amended Credit Agreement. The Company has a total of $1,145.4 million available under the Credit Facilities and had a total of $645.3 million available under the previous credit facilities after $4.0$4.6 million and $4.7 million of standby letters of credit hadhave been issued as of April 30, 2020. We had $4.02023 and 2022, respectively. Of the amount available under the Credit Facilities, the $500.0 million Delayed Draw Facility expired on June 24, 2023 and $2.9 million in standby lettersis no longer available as a source of credit issued under our long-term debt arrangements as of April 30, 2020 and 2019, respectively. Weliquidity. The Company had a total of $11.3$11.5 million and $8.5$10.0 million of standby letters of credits with other financial institutions as of April 30, 20202023 and 2019,2022, respectively. The standby letters of credits were generally issued as a result of entering into office premise leases.TheOn December 8, 2014, the Board of Directors has 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. On June 21, 2021 and 2022, the Board of Directors increased the quarterly dividend to $0.12 per share and $0.15 per share, respectively. On June 26, 2023, the Board of Directors approved an increase of 20% in the quarterly dividend, which increased the quarterly dividend to $0.18 per share. The Amended Credit Agreement permits us to pay dividends to our stockholders and make share repurchases so long as there is no default under the Amended Credit Agreement, our total funded debt to adjusted EBITDA ratio (as set forth in the Amended Credit Agreement, the “consolidated net leverage ratio”) is no greater than 5.00 to 1.00, and we are in pro forma compliance with our financial covenant. Furthermore, our Notes allow us to pay $25 million of dividends per fiscal year with no restrictions plus an unlimited amount of dividends so long as our consolidated total leverage ratio is not greater than 3.50 to 1.00, and there is no default under the indenture governing the Notes. 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.46On March 6, 2019,June 21, 2022, our Board of Directors approved an increase to the share repurchase program of approximately $200$300 million, which at the time brought our available capacity to repurchase shares in the open market or privately negotiated transactions to approximately $250$318 million. The Company repurchased approximately $92.4$93.9 million and $37.4$98.8 million of the Company’s stock during fiscal 20202023 and 2019,fiscal 2022, respectively. As of April 30, 2020, $158.32023, $235.2 million remained available for common stock repurchases under our share repurchase program. Any decision to continue to execute 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. The Credit Agreement permits us to pay dividends to our stockholders and make share repurchases so long as there is no default under the Credit Agreement, the consolidated net leverage ratio, which used adjusted EBITDA is no greater than 4.25 to 1.00, and the pro formaOur primarily source of liquidity is at least $50 million, including the revolving credit commitment minus amounts outstanding on the Revolver, issued letters of credit and swing loans. Furthermore,fee revenue generated from our Notes allow us to pay $25 million of dividends per fiscal year with no restrictions plus an unlimited amount of dividends so long asoperations, supplemented by our consolidated total leverage ratio is not greater than 3.50 to 1.00, and there is no defaultborrowing capacity under the indenture governing the Notes.51repayment of the debt repayments, share repurchases and dividend payments under our dividend policy during the next twelve12 months. However, if COVID-19 continues to persist or worsen, or the national or global economy, credit market conditions and/or labor markets were to deteriorate in the future, including as a result of ongoing macroeconomic uncertainty due to inflation and a potential recession, such changes have and could put further 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 additional borrowings under the Amended Credit Agreement to meet our capital needs and/or discontinue our share repurchases and dividend policy.Cash and cash equivalents and marketable securities were $863.3$1,067.9 million and $767.1$1,211.1 million as of April 30, 20202023 and 2019,2022, respectively. Net of amounts held in trust for deferred compensation plans and accrued bonuses, cash and cash equivalents and marketable securities were $531.9$488.2 million and $382.1$605.4 million at April 30, 20202023 and 2019,2022, respectively. As of April 30, 20202023 and 2019,2022, we held $308.2$395.2 million and $267.0$416.7 million, respectively of cash and cash equivalents in foreign locations, net of amounts held in trust for deferred compensation plans and to pay fiscal 2020 annualaccrued bonuses.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 and investments in commercial paper, and corporate notes/bonds.bonds and U.S. Treasury and Agency securities. The primary objectives of our investment in mutual funds are to meet the obligations under certain of our deferred compensation plans, while the commercial paper, and corporate notes/bonds and U.S. Treasury and Agency securities are available for general corporate purposes.As of April 30, 20202023 and 2019,2022, marketable securities of $174.1$223.9 million and $140.8$233.0 million, respectively, included equity securities of $141.4$187.8 million (net of gross unrealized gains of $3.6$9.5 million and gross unrealized losses of $6.5$8.7 million) and $140.8$168.7 million (net of gross unrealized gains of $6.3$10.7 million and gross unrealized losses of $1.0$6.1 million), respectively, and were held in trust for settlement of our obligations under certain deferred compensation plans, of which $132.1$176.1 million and $132.5$158.7 million, respectively, are classified as non-current. These marketable securities were held to satisfy vested obligations totaling $124.6$172.2 million and $122.3$160.8 million as of April 30, 20202023 and 2019,2022, respectively. Unvested obligations under the deferred compensation plans totaled $21.7$21.9 million and $24.6$24.0 million as of April 30, 20202023 and 2019,2022, respectively.The net increasedecrease in our working capital of $27.0$113.3 million as of April 30, 20202023 compared to April 30, 20192022 is primarily attributable to increasesdecreases in cash and cash equivalents, marketable securities and a decrease in compensation and benefits payable, partially offset an increase in other accrued liabilities and operating lease liability, current as a result of implementing the new lease accounting standard.equivalents. Cash and cash equivalents increased due to cash flows from operations and net borrowings of $168.6 million as a result of our December 2019 Notes offering, offset by the repayment of the amount outstanding under our prior revolving credit facility. The increase in marketable securities was due to purchases of debt securities during fiscal 2020, while the decrease in compensation and benefits wasdecreased primarily due to a decrease in bonus accrual duethe acquisitions of ICS and Salo, purchases of property and equipment, repurchases of common stock and dividends paid to lower fee revenue and profitability caused by the impact of COVID-19 pandemic on sales and demand The increase in other accrued liabilities was due to restructuring charges incurredshareholders during fiscal 2020 and not yet paid and deferred revenue from the Acquired Companies.2023. Cash provided by operating activities was $236.3$343.9 million in fiscal 2020,2023, a decrease of $22.5$157.8 million, compared to $258.8$501.7 million in fiscal 2019.Cash used in investing activities was $198.8$323.5 million in fiscal 20202023 compared to $69.5$184.3 million in fiscal 2019. An2022. The increase in cash used in investing activities was primarily due to higher cash paid for the acquisitionacquisitions of the Acquired Companies of $108.6$254.8 million andin fiscal 2023 compared to $133.8 million in fiscal 2022, an increase in the purchasepurchases of property and equipment of $21.0 million coupled with a decrease in proceeds received from sales of marketable securities net of sale/maturities of $39.9$26.6 million, partially offset by a decrease in premiums paid on the COLI policiespurchases of $19.2marketable securities of $28.5 million in fiscal 20202023 compared to the year-ago period.Cash provided by financing activities was $43.7 million in fiscal 2020 compared to cash2022.Cash used in financing activities of $64.6was $152.2 million in fiscal 2019.2023 compared to $137.4 million in fiscal 2022. The change fromincrease in cash used to cash provided byin financing activities was primarily due to an increaseincreases in net proceeds from long term debtdividends paid to our shareholders of $180.7$6.2 million, in fiscal 2020 compareddividends paid to the year-ago period and lowernon controlling interest of $3.3 million, payments made on life insurance policies of $2.6 million, as well as higher cash used to repurchase shares of common stock to satisfy tax withholding requirements upon the vesting of restricted stock of $11.7 million. This was partially offset by $55.1 million more in common stock repurchases and a decrease in borrowings under COLI policies of $31.9$22.2 million in fiscal 20202023 compared to $18.5 million in fiscal 2019.We had approximately $871.0 million of estimated remaining revenue under existing contracts as of April 30, 2020. However, this should not be considered the amount of our future revenue as it does not take into consideration contracts that will be originated and recognized within the same future reporting periods. Further, our contract terms and conditions allow for clients to increase or decrease the scope of services and such changes do not increase or decrease the estimated remaining revenue under contract until we have an enforceable right to payment.52Off-Balance Sheet ArrangementsWe have no off-balance sheet arrangements and have not entered into any transactions involving unconsolidated, special purpose entities.47Contractual ObligationsContractual 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, 2020:2023:Payments Due in: Note (1)Total Less Than1 Year1-3 Years 3-5 Years More Than5 Years(in thousands) Operating lease commitments 15 $ 182,666 $ 51,760 $ 83,598 $ 31,013 $ 16,295 Finance lease commitments 15 4,828 1,545 2,248 1,035 — Accrued restructuring charges 13 8,004 8,004 — — — Interest payments on COLI loans (2)11 31,698 4,507 9,011 8,440 9,740 Long-term debt 11 400,000 — — 400,000 — Estimated interest on long-term debt (3)11 92,500 18,500 37,000 37,000 — Total $ 719,696 $ 84,316 $ 131,857 $ 477,488 $ 26,035 See the corresponding Note in the accompanying consolidated financial statements in Item 15.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 $451.7 million at April 30, 2020.(3)Interest on the Notes payable semi-annually in arrears on June 15 and December 15 of each year, commencing on June 15, 2020.Lastly, we have contingent commitments under certain employment agreements that are payable upon involuntary termination without cause, as described in Note 16—17—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 LoansWe 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, 20202023 and 2019,2022, we held contracts with gross CSVcash surrender value (“CSV”) of $238.7$275.1 million and $219.2$263.2 million, respectively. Total outstanding borrowings against the CSV of COLI contracts were $92.3$77.1 million and $93.2$79.8 million as of April 30, 20202023 and 2019,2022, respectively. Such borrowings do not require annual principal repayments, bear interest primarily at variable rates and are secured by the CSV of COLI contracts. At April 30, 20202023 and 2019,2022, the net cash value of these policies was $146.4$198.0 million and $126.0$183.3 million, respectively. Total death benefits payable, net of loans under COLI contracts, were $451.7$444.1 million and $223.6$449.3 million at April 30, 20202023 and 2019,2022, respectively. Total death benefits increased in fiscal 2020 as compared to fiscal 2019 as we entered into additional insurance policies in order to fund future obligations under certain deferred compensation plans.Long-Term DebtOn December 16, 2019, we completed a private placement of the Notes with a $400 million principal amount. We may redeem the Notes prior to maturity, subject to certain limitations and premiums defined in the indenture governing the Notes. At any time prior to December 15, 2022, we may redeem at a redemption price equal to 100% of the principal plus the Applicable Premium (as defined in the indenture), and accrued and unpaid interest. At any time prior to December 15, 2022, we may use the proceeds of certain equity offerings to redeem up to 35% of the aggregate principal amount of the Notes, including any permitted additional Notes, at a redemption price equal to 104.625% of the principal amount and accrued and unpaid interest. At any time and from time to time on or after December 15, 2022, we may redeem the Notes at the applicable redemption prices set forth in the table below, plus accrued and unpaid interest, if redeemed during the twelve-month period beginning on December 15 of each of the years indicated:53The fair value of the Notes is classified as a Level 2 measurement in the fair value hierarchy.The pay-off of the term loan outstanding under our Prior Credit Agreement is considered a debt modification and therefore, the previously incurred unamortized and current debt issuance costs will be amortized over the life of the new issuance.The principal balance of the Revolver is due on the date of its termination. The Revolver matures on December 16, 2024 and any unpaid principal balance is payable on this date. The Revolver may also be prepaid and terminated early by us at any time without premium or penalty (subject to customary LIBOR breakage fees).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 Agreement 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 0.125% 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 net leverage ratio”) at such time. In addition, we will be required to pay to the lenders a quarterly commitment fee ranging from 0.175% to 0.35% per annum on the average daily unused amount of the Revolver, based upon our consolidated net leverage ratio at such time, and fees relating to the issuance of letters of credit. During fiscal 2020, the average interest rate on amounts outstanding under the current Revolver and the prior revolver was 3.34%. The average interest rate on amounts outstanding under the prior revolver was 3.50% for fiscal 2019.As of April 30, 2020, there was no outstanding liability under the Revolver compared to $226.9 million as of April 30, 2019 under the prior revolver. The unamortized debt issuance costs associated with the Credit Agreement were $4.2 million as of April 30, 2020 and $4.0 million under the Prior Credit Agreement as of April 30, 2019. As of April 30, 2020, we were in compliance with our debt covenants.We had a total of $646.0 million available under the Revolver after $4.0 million of standby letters of credit had been issued as of April 30, 2020. We had a total of $420.2 million available under the Prior Credit Agreement after we drew down $226.9 million and after $2.9 million of standby letters of credit had been issued as of April 30, 2019. We had a total of $11.3 million and $8.5 million of standby letters of credits with other financial institutions as of April 30, 2020 and 2019, respectively. The standby letters of credits were generally issued as a result of entering into office premise leases. and the potential impacts of the COVID-19 on our business, we are not aware of any other trends, demands or commitments that would materially affect liquidity or those that relate to our resources as of April 30, 2020.
Recently Adopted Accounting Standards
In February 2016, the Financial Accounting Standards Board (“FASB”) issued guidance (Accounting Standard Codification 842 – Leases) on accounting for leases that generally requires all leases to be recognized on the consolidated balance sheet. The guidance became effective for fiscal years beginning after December 15, 2018. On July 30, 2018, the FASB issued an amendment that allows entities to apply the provisions at the effective date without adjusting comparative periods. We adopted this guidance as of May 1, 2019 using a modified retrospective approach without restatement of comparative periods. As such, periods prior to the date of adoption are presented in accordance with Accounting Standard Codification 840 - Leases. The FASB also issued subsequent related Accounting Standards Updates (“ASUs”), which detail amendments to the ASU, implementation considerations, narrow-scope improvements and practical expedients. We elected to apply the group of practical expedients which allows us to carry forward our identification of contracts that are or contain leases, our historical lease classification and our initial direct costs for existing leases. We also elected to combine lease and non-lease components for all asset classes and recognize leases with an initial term of 12 months or less on a straight-line basis without recognizing a ROU asset or operating lease liability.
The adoption of this standard had a material impact on the consolidated balance sheet as of May 1, 2019 due to the recognition of ROU assets and operating lease liabilities, but an immaterial impact on our consolidated statements of income, consolidated statements of comprehensive income, consolidated statements of stockholders’ equity, and consolidated statements of cash flows. Upon adoption we recognized total ROU assets of $236.1 million with a corresponding liability of $272.3 million. The ROU asset balance was adjusted by the reclassification of pre-existing
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prepaid expenses and other assets and deferred rent balances of $5.1 million and $41.3 million, respectively.
In August 2017, the FASB issued guidance amending and simplifying the accounting for hedging activities. The guidance refined and expanded strategies that qualify for hedge accounting and simplify the application of hedge accounting in certain situations. The guidance is effective for fiscal years beginning after December 15, 2018. We adopted this guidance as of May 1, 2019. The adoption of this guidance did not have an 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. We will adopt this guidance in our fiscal year beginning May 1, 2020. The adoption of this guidance is not anticipated to have a material impact on the consolidated financial statements.
In August 2018, the FASB issued guidance amending the disclosure requirements for fair value measurements. The amendment removes and modifies disclosures that are currently required and adds additional disclosures that are deemed relevant. The amendments of this standard are effective for fiscal years beginning after December 15, 2019. We will adopt this guidance in our fiscal year beginning May 1, 2020.
In August 2018, the FASB issued guidance amending accounting for internal-use software. The new guidance will align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with developing or obtaining internal-use software. The amendments of this standard are effective for fiscal years beginning after December 15, 2019 with early adoption permitted. We will adopt this guidance in our fiscal year beginning May 1, 2020. The adoption of this guidance is not anticipated to have a material impact on the consolidated financial statements.
In December 2019, the FASB issued guidance on Simplifying the Accounting for Income Taxes. This update eliminates certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The update also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The amendments of this standard are effective for fiscal year beginning after December 15, 2020, with early adoption permitted. We will adopt this guidance in our fiscal year beginning May 1, 2021. The adoption of this guidance is not anticipated to have a material impact on the consolidated financial statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
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consolidated statements of income.
Our
To mitigate the interest rate risk under our former Revolver, we entered into an interest rate swap contract in March 2017 with an initial notional amount of $129.8 million 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. We designated the swap as a cash flow hedge. On December 16, 2019, in conjunction with the payoff of the Prior Credit Agreement, the Company terminated the interest rate swap and recorded $0.5 million in interest expense, net.
Supplemental Financial Information regarding quarterly results is contained in Note 17—
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
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Item 16. Form 10-K Summary
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Korn Ferry
By: /s/ Robert P. Rozek
Robert P. Rozek
Executive Vice President, Chief Financial Officer and Chief Corporate Officer
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| Executive Vice President, Chief Financial Officer and Chief Corporate Officer | |||||
June 28, 2023
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Jerry P. Leamon | ||||||||||||||
| /s/ GARY D. BURNISON
| President & Chief Executive Officer (Principal Executive Officer) and Director |
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| /s/ ROBERT P. ROZEK
| Executive Vice President, Chief Financial Officer and Chief Corporate Officer (Principal Financial Officer and Principal Accounting Officer) |
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| /s/ DEBRA J. PERRY | Director | June 28, 2023 | ||||||||||||
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2023.
July 15, 2020
Ferry Matter supporting management estimates mentioned above that are used in recognizing revenues under Search and Consulting contracts. April 30, 2020 2019 (in thousands, except per share data) ASSETS Cash and cash equivalents $ 689,244 $ 626,360 Marketable securities 41,951 8,288 Receivables due from clients, net of allowance for doubtful accounts of $23,795 and $21,582 at April 30, 2020 and 2019, respectively 397,165 404,857 Income taxes and other receivables 38,755 26,767 Unearned compensation 43,117 42,003 Prepaid expenses and other assets 26,851 28,535 Total current assets 1,237,083 1,136,810 Marketable securities, non-current 132,134 132,463 Property and equipment, net 142,728 131,505 Operating lease right-of-use assets, net 195,077 — Cash surrender value of company-owned life insurance policies, net of loans 146,408 126,000 Deferred income taxes 55,479 43,220 Goodwill 613,943 578,298 Intangible assets, net 111,926 82,948 Unearned compensation, non-current 79,510 80,924 Investments and other assets 29,540 22,684 Total assets $ 2,743,828 $ 2,334,852 LIABILITIES AND STOCKHOLDERS’ EQUITY Accounts payable $ 45,684 $ 39,156 Income taxes payable 21,158 21,145 Compensation and benefits payable 280,911 328,610 Operating lease liability, current 54,851 — Other accrued liabilities 221,603 162,047 Total current liabilities 624,207 550,958 Deferred compensation and other retirement plans 289,136 257,635 Operating lease liability, non-current 180,766 — Long-term debt 394,144 222,878 Deferred tax liabilities 1,056 1,103 Other liabilities 30,828 58,891 Total liabilities 1,520,137 1,091,465 Commitments and contingencies Stockholders' equity Common stock: $0.01 par value, 150,000 shares authorized, 73,205 and 72,442 shares issued and 54,450 and 56,431 shares outstanding at April 30, 2020 and 2019, respectively 585,560 656,463 Retained earnings 742,993 660,845 Accumulated other comprehensive loss, net (107,172 ) (76,652 ) Total Korn Ferry stockholders' equity 1,221,381 1,240,656 Noncontrolling interest 2,310 2,731 Total stockholders' equity 1,223,691 1,243,387 Total liabilities and stockholders' equity $ 2,743,828 $ 2,334,852 Year Ended April 30, 2020 2019 2018 (in thousands, except per share data) Fee revenue $ 1,932,732 $ 1,926,033 $ 1,767,217 Reimbursed out-of-pocket engagement expenses 44,598 47,829 52,302 Total revenue 1,977,330 1,973,862 1,819,519 Compensation and benefits 1,297,994 1,311,240 1,199,057 General and administrative expenses 258,957 351,991 237,390 Reimbursed expenses 44,598 47,829 52,302 Cost of services 85,886 75,487 73,658 Depreciation and amortization 55,311 46,489 48,588 Restructuring charges, net 58,559 — 78 Total operating expenses 1,801,305 1,833,036 1,611,073 Operating income 176,025 140,826 208,446 Other (loss) income, net (2,879 ) 10,405 11,416 Interest expense, net (22,184 ) (16,891 ) (13,832 ) Income before provision for income taxes 150,962 134,340 206,030 Income tax provision 43,945 29,544 70,133 Net income 107,017 104,796 135,897 Net income attributable to noncontrolling interest (2,071 ) (2,145 ) (2,118 ) Net income attributable to Korn Ferry $ 104,946 $ 102,651 $ 133,779 Earnings per common share attributable to Korn Ferry: Basic $ 1.91 $ 1.84 $ 2.39 Diluted $ 1.90 $ 1.81 $ 2.35 Weighted-average common shares outstanding: Basic 54,342 55,311 55,426 Diluted 54,767 56,096 56,254 Cash dividends declared per share: $ 0.40 $ 0.40 $ 0.40 Year Ended April 30, 2020 2019 2018 (in thousands) Net income $ 107,017 $ 104,796 $ 135,897 Other comprehensive (loss) income: Foreign currency translation adjustments (23,764 ) (28,038 ) 22,900 Deferred compensation and pension plan adjustments, net of tax (6,716 ) (5,369 ) 6,054 Net unrealized gain on marketable securities, net of tax 34 — — Net unrealized (loss) gain on interest rate swap, net of tax (456 ) (1,080 ) 1,915 Comprehensive income 76,115 70,309 166,766 Less: comprehensive income attributable to noncontrolling interest (1,689 ) (1,978 ) (2,058 ) Comprehensive income attributable to Korn Ferry $ 74,426 $ 68,331 $ 164,708 Accumulated Other Total Comprehensive Korn Ferry Total Common Stock Retained (Loss) Income, Stockholders' Noncontrolling Stockholder's Shares Amount Earnings Net Equity Interest Equity (in thousands) Balance at May 1, 2017 56,938 $ 692,527 $ 461,976 $ (71,064 ) $ 1,083,439 $ 3,609 $ 1,087,048 Net income — — 133,779 — 133,779 2,118 135,897 Other comprehensive income (loss) — — — 30,929 30,929 (60 ) 30,869 Dividends paid to shareholders — — (22,955 ) — (22,955 ) — (22,955 ) Dividends paid to noncontrolling interest — — — — — (2,659 ) (2,659 ) Purchase of stock (1,092 ) (36,865 ) — — (36,865 ) — (36,865 ) Issuance of stock 671 7,998 — — 7,998 — 7,998 Stock-based compensation — 20,282 — — 20,282 — 20,282 Balance at April 30, 2018 56,517 683,942 572,800 (40,135 ) 1,216,607 3,008 1,219,615 Net income — — 102,651 — 102,651 2,145 104,796 Other comprehensive loss — — — (34,320 ) (34,320 ) (167 ) (34,487 ) Effect of adoption of accounting standards — — 8,853 (2,197 ) 6,656 — 6,656 Dividends paid to shareholders — — (23,459 ) — (23,459 ) — (23,459 ) Dividends paid to noncontrolling interest — — — — — (2,255 ) (2,255 ) Purchase of stock (1,166 ) (58,070 ) — — (58,070 ) — (58,070 ) Issuance of stock 1,080 8,528 — — 8,528 — 8,528 Stock-based compensation — 22,063 — — 22,063 — 22,063 Balance at April 30, 2019 56,431 656,463 660,845 (76,652 ) 1,240,656 2,731 1,243,387 Net income — — 104,946 — 104,946 2,071 107,017 Other comprehensive loss — — — (30,520 ) (30,520 ) (382 ) (30,902 ) Dividends paid to shareholders — — (22,798 ) — (22,798 ) — (22,798 ) Dividends paid to noncontrolling interest — — — — — (2,110 ) (2,110 ) Purchase of stock (2,839 ) (101,439 ) — — (101,439 ) — (101,439 ) Issuance of stock 858 9,041 — — 9,041 — 9,041 Stock-based compensation — 21,495 — — 21,495 — 21,495 Balance at April 30, 2020 54,450 $ 585,560 $ 742,993 $ (107,172 ) $ 1,221,381 $ 2,310 $ 1,223,691 Year Ended April 30, 2020 2019 2018 (in thousands) Cash flows from operating activities: Net income $ 107,017 $ 104,796 $ 135,897 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 55,311 46,489 48,588 Stock-based compensation expense 22,818 23,385 21,469 Tradename write-offs — 106,555 — Write-off of long-lived assets 2,654 — — Provision for doubtful accounts 14,644 14,260 13,675 Gain on cash surrender value of life insurance policies (6,551 ) (6,160 ) (7,776 ) Loss (gain) on marketable securities 2,066 (8,134 ) (10,278 ) Deferred income taxes (9,330 ) (27,796 ) (6,564 ) Change in other assets and liabilities: Deferred compensation 23,496 18,478 27,660 Receivables due from clients 34,152 (30,625 ) (53,357 ) Income taxes and other receivables (6,421 ) 1,409 2,093 Prepaid expenses and other assets (956 ) (148 ) (2,118 ) Unearned compensation 300 (7,299 ) (42,742 ) Income taxes payable 1,246 213 32,439 Accounts payable and accrued liabilities (6,011 ) 28,398 66,081 Other 1,914 (5,016 ) (5,942 ) Net cash provided by operating activities 236,349 258,805 219,125 Cash flows from investing activities: Purchase of property and equipment (41,460 ) (46,682 ) (42,000 ) Purchase of marketable securities (83,563 ) (9,476 ) (9,462 ) Proceeds from sales/maturities of marketable securities 47,936 13,781 2,642 Cash paid for acquisition, net of cash acquired (108,602 ) — — Premium on company-owned life insurance policies (15,699 ) (34,862 ) (1,614 ) Proceeds from life insurance policies 2,280 7,632 5,355 Dividends received from unconsolidated subsidiaries 346 140 240 Net cash used in investing activities (198,762 ) (69,467 ) (44,839 ) Cash flows from financing activities: Proceeds from long term debt 1,045,500 226,875 — Principal payments on long term debt (876,875 ) (238,906 ) (20,625 ) Payment of debt issuance costs (3,050 ) (2,181 ) — Repurchases of common stock (92,446 ) (37,372 ) (33,071 ) Payments of tax withholdings on restricted stock (8,993 ) (20,698 ) (3,794 ) Proceeds from issuance of common stock upon exercise of employee stock options and in connection with an employee stock purchase plan 7,684 7,272 6,885 Borrowings under life insurance policies — 31,870 — Payments on life insurance policy loans (943 ) (5,316 ) (554 ) Principal payments on finance leases (1,833 ) — — Dividends paid to shareholders (22,798 ) (23,459 ) (22,955 ) Dividends - noncontrolling interest (2,110 ) (2,255 ) (2,659 ) Payment of contingent consideration from acquisitions (455 ) (455 ) (485 ) Net cash provided by (used in) financing activities 43,681 (64,625 ) (77,258 ) Effect of exchange rate changes on cash and cash equivalents (18,384 ) (19,201 ) 12,938 Net increase in cash and cash equivalents 62,884 105,512 109,966 Cash and cash equivalents at beginning of year 626,360 520,848 410,882 Cash and cash equivalents at end of the period $ 689,244 $ 626,360 $ 520,848 Supplemental cash flow information: Cash used to pay interest $ 12,526 $ 14,188 $ 11,946 Cash used to pay income taxes, net of refunds $ 54,914 $ 58,408 $ 37,486 2023 In fiscal year 2023 and 2022, the Company acquired companies that have added critical mass to our existing professional search and interim operations, as described in Note 12. This provided the Company with the opportunity to reassess how it manages the Recruitment Process Outsourcing ("RPO") & Professional Search segment. Therefore, beginning in fiscal 2023, the Company separated RPO & Professional Search into two segments to align with the Company's strategy and the decisions of the Company's chief operating decision maker ("CODM"), who began to regularly make separate resource allocation decisions and assess performance separately between Professional Search & Interim and RPO. 1.Consulting aligns organizational structure, culture, performance and people to drive sustainable growth by addressing four fundamental needs: Organizational Strategy, Assessment and Succession, Leadership and Professional Development and Total Rewards. This work is enabled by a comprehensive set of Digital Performance Management Tools, based on some of the world’s leading intellectual property (“lP”) and data. The Consulting teams employ an integrated approach across core capabilities and integrated solutions, each one intended to strengthen the work and thinking in the next, to help clients execute their strategy in a digitally enabled world. a strategic partner in clients’ quest for superior recruitment outcomes and better candidate fit. In addition to talent acquisition for permanent placement roles, the Professional Search & Interim segment also offers recruitment services for interim roles. Interim roles are short term in duration, generally less than 12 months. Generally, each interim role is a separate performance obligation. The Company recognizes fee revenue over the duration that the interim resources' services are provided which also aligns to the contracted invoicing plan and enforceable right to payment. recognized as a credit loss for the Company’s available for sales debt securities. ▪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. testing. 2021. Year Ended April 30, 2020 2019 2018 (in thousands, except per share data) Net income attributable to Korn Ferry $ 104,946 $ 102,651 $ 133,779 Less: distributed and undistributed earnings to nonvested restricted stockholders 1,140 1,066 1,426 Basic net earnings attributable to common stockholders 103,806 101,585 132,353 Add: undistributed earnings to nonvested restricted stockholders 901 831 1,187 Less: reallocation of undistributed earnings to nonvested restricted stockholders 894 820 1,169 Diluted net earnings attributable to common stockholders $ 103,813 $ 101,596 $ 132,371 Weighted-average common shares outstanding: Basic weighted-average number of common shares outstanding 54,342 55,311 55,426 Effect of dilutive securities: Restricted stock 367 750 822 ESPP 58 34 5 Stock options — 1 1 Diluted weighted-average number of common shares outstanding 54,767 56,096 56,254 Net earnings per common share: Basic earnings per share $ 1.91 $ 1.84 $ 2.39 Diluted earnings per share $ 1.90 $ 1.81 $ 2.35 April 30, 2020 2019 (in thousands) Foreign currency translation adjustments $ (83,652 ) $ (60,270 ) Deferred compensation and pension plan adjustments, net of taxes �� (23,554 ) (16,838 ) Marketable securities unrealized gain, net of tax 34 — Interest rate swap unrealized gain, net of taxes — 456 Accumulated other comprehensive loss, net $ (107,172 ) $ (76,652 ) Foreign Currency Translation Deferred Compensation and Pension Plan (1) Unrealized Gain on Marketable Securities Unrealized (Losses) Gains on Interest Rate Swap (2) Accumulated Other Comprehensive Income (Loss) (in thousands) Balance as of May 1, 2017 $ (55,359 ) $ (15,127 ) $ — $ (578 ) $ (71,064 ) Unrealized gains arising during the period 22,960 4,813 — 1,465 29,238 Reclassification of realized net losses to net income — 1,241 — 450 1,691 Balance as of April 30, 2018 (32,399 ) (9,073 ) — 1,337 (40,135 ) Unrealized losses arising during the period (27,871 ) (6,461 ) — (800 ) (35,132 ) Reclassification of realized net losses (gains) to net income — 1,092 — (280 ) 812 Effect of adoption of accounting standard — (2,396 ) — 199 (2,197 ) Balance as of April 30, 2019 (60,270 ) (16,838 ) — 456 (76,652 ) Unrealized (losses) gains arising during the period (23,382 ) (8,883 ) 37 (678 ) (32,906 ) Reclassification of realized net losses (gains) to net income — 2,167 (3 ) 222 2,386 Balance as of April 30, 2020 $ (83,652 ) $ (23,554 ) $ 34 $ — $ (107,172 ) (1)The tax effects on unrealized gains were $1.1 million, $6.0 million and $1.1 million as of April 30, 2023, 2022 and 2021, respectively. The tax effects on reclassifications of realized net losses were $0.1 million, $0.5 million and $1.0 million as of April 30, 2023, 2022 and 2021, respectively. (2)The tax effects on unrealized gain (losses) were $0.1 million and $(0.1) million as of April 30, 2023 and 2022, respectively. Year Ended April 30, 2020 2019 2018 (in thousands) Restricted stock $ 21,495 $ 22,063 $ 20,282 ESPP 1,323 1,322 1,187 Total stock-based compensation expense, pre-tax 22,818 23,385 21,469 Tax benefit from stock-based compensation expense (6,642 ) (5,155 ) (7,319 ) Total stock-based compensation expense, net of tax $ 16,176 $ 18,230 $ 14,150 April 30, 2020 2019 2018 Shares Weighted- Average Grant Date Fair Value Shares Weighted- Average Grant Date Fair Value Shares Weighted- Average Grant Date Fair Value (in thousands, except per share data) Non-vested, beginning of year 1,460 $ 38.42 1,730 $ 33.45 1,581 $ 29.74 Granted 608 $ 38.38 671 $ 40.93 650 $ 37.60 Vested (638 ) $ 25.42 (904 ) $ 36.41 (431 ) $ 26.13 Forfeited (65 ) $ 33.48 (37 ) $ 32.26 (70 ) $ 33.26 Non-vested, end of year 1,365 $ 44.59 1,460 $ 38.42 1,730 $ 33.45 April 30, 2020 Fair Value Measurement Balance Sheet Classification Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Marketable Securities, Current Marketable Securities, Non-current Income Taxes & Other Receivables (in thousands) Changes in Fair Value Recorded in Changes in Fair Value Recorded in Other Comprehensive Income Level 2: Commercial paper $ 19,132 $ 39 $ — $ 19,171 $ 4,785 $ 14,386 $ — $ — Corporate notes/bonds 19,181 26 (19 ) 19,188 901 18,287 — — Total debt investments $ 38,313 $ 65 $ (19 ) $ 38,359 $ 5,686 $ 32,673 $ — $ — Changes in Fair Value Recorded in Changes in Fair Value Recorded in Net Income Net Income Level 1: Mutual funds (1) $ 141,412 $ — $ 9,278 $ 132,134 $ — Total equity investments $ 141,412 $ — $ 9,278 $ 132,134 $ — Cash $ 611,795 $ 611,795 $ — $ — $ — Money market funds 71,763 71,763 — — — Level 2: Foreign currency forward contracts 2,634 — — — 2,634 Total $ 865,963 $ 689,244 $ 41,951 $ 132,134 $ 2,634 April 30, 2019 Fair Value Measurement Balance Sheet Classification Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Marketable Securities, Current Marketable Securities, Non- current Income Taxes & Other Receivables (in thousands) Changes in Fair Value Recorded in Other Comprehensive Income Level 2: Interest rate swap $ — $ 619 $ — $ 619 $ — $ — $ — $ 619 Changes in Fair Value Recorded in Net Income Level 1: Mutual funds (1) $ 140,751 $ — $ 8,288 $ 132,463 $ — Total equity investments $ 140,751 $ — $ 8,288 $ 132,463 $ — Cash $ 579,998 $ 579,998 $ — $ — $ — Money market funds 46,362 46,362 — — — Level 2: Foreign currency forward contracts 99 — — — 99 Total $ 767,829 $ 626,360 $ 8,288 $ 132,463 $ 718 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, April 30, 2020 2019 (in thousands) Derivative asset: Interest rate swap contract $ — $ 619 Year Ended April 30, 2020 2019 2018 (in thousands) (Losses) gains recognized in other comprehensive income (net of tax effects of $(238), $(281), and $828, respectively) $ (678 ) $ (800 ) $ 1,465 (Losses) gains reclassified from accumulated other comprehensive income into interest (expense) income, net $ (297 ) $ 376 $ (730 ) Foreign Currency Forward Contracts Not Designated as Hedges April 30, 2020 2019 (in thousands) Derivative assets: Foreign currency forward contracts $ 3,034 $ 821 Derivative liabilities: Foreign currency forward contracts $ 400 $ 722 Year Ended April 30, 2020 2019 (in thousands) Deferred compensation and pension plans $ 156,586 $ 123,238 Medical and Life Insurance plan 7,527 7,310 International retirement plans 14,851 14,744 Executive Capital Accumulation Plan 129,315 130,161 Total benefit obligation 308,279 275,453 Less: current portion of benefit obligation (19,143 ) (17,818 ) Non-current benefit obligation $ 289,136 $ 257,635 Year Ended April 30, 2020 2019 (in thousands) Change in benefit obligation: Benefit obligation, beginning of year $ 148,369 $ 126,494 Service cost 24,939 17,281 Interest cost 5,433 5,044 Actuarial loss 13,427 7,803 Administrative expenses paid (155 ) (272 ) Benefits paid from plan assets (1) (3,932 ) (1,877 ) Benefits paid from cash (6,652 ) (6,104 ) Plan amendment (608 ) — Benefit obligation, end of year 180,821 148,369 Change in fair value of plan assets: Fair value of plan assets, beginning of year 25,131 26,090 Actual return on plan assets 2,726 1,160 Benefits paid from plan assets (1) (3,932 ) (1,877 ) Administrative expenses paid (155 ) (272 ) Employer contributions 465 30 Fair value of plan assets, end of year 24,235 25,131 Funded status and balance, end of year (2) $ (156,586 ) $ (123,238 ) Current liability $ 8,887 $ 8,331 Non-current liability 147,699 114,907 Total liability $ 156,586 $ 123,238 Plan Assets - weighted-average asset allocation: Debt securities 43 % 54 % Equity securities 56 % 45 % Other 1 % 1 % Total 100 % 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 the COLI contracts are held in trust and are not separated from Level 1 Level 2 Level 3 Total (in thousands) April 30, 2020: Mutual funds $ — $ 24,041 $ — $ 24,041 Money market funds 194 — — 194 Total $ 194 $ 24,041 $ — $ 24,235 April 30, 2019: Mutual funds $ — $ 24,931 $ — $ 24,931 Money market funds 200 — — 200 Total $ 200 $ 24,931 $ — $ 25,131 Year Ended April 30, 2020 2019 2018 (in thousands) Service cost $ 24,939 $ 17,281 $ 11,373 Interest cost 5,433 5,044 3,787 Amortization of actuarial loss 3,261 1,798 2,308 Net prior service credit amortization (24 ) — — Expected return on plan assets (1,452 ) (1,568 ) (1,594 ) Net periodic benefit cost (1) $ 32,157 $ 22,555 $ 15,874 Year Ended April 30, 2020 2019 2018 Discount rate, beginning of year 3.57 % 3.93 % 3.57 % Discount rate, end of year 2.29 % 3.57 % 3.93 % Rate of compensation increase 0.00 % 0.00 % 0.00 % Expected long-term rates of return on plan assets 6.00 % 6.00 % 6.25 % Year Ending April 30, Deferred Retirement Plans (in thousands) 2021 $ 11,208 2022 10,788 2023 9,934 2024 14,801 2025 25,058 2026-2030 196,477 Year End April 30, 2020 2019 (in thousands) Change in benefit obligation: Benefit obligation, beginning of year $ 7,310 $ 7,157 Interest cost 227 243 Actuarial loss 458 520 Benefits paid (468 ) (610 ) Benefit obligation, end of year $ 7,527 $ 7,310 Current liability $ 666 $ 643 Non-current liability 6,861 6,667 Total liability $ 7,527 $ 7,310 Year Ended April 30, 2020 2019 2018 (in thousands) Service cost $ — $ — $ 91 Interest cost 227 243 369 Net periodic service credit amortization (308 ) (308 ) (308 ) Amortization of actuarial gain — (14 ) — Net periodic benefit cost (1) $ (81 ) $ (79 ) $ 152 The weighted-average assumptions used in calculating the medical and life insurance plan were as follows: Year Ended April 30, 2020 2019 2018 Discount rate, beginning of year 3.67 % 3.94 % 3.75 % Discount rate, end of year 2.45 % 3.67 % 3.94 % Healthcare care cost trend rate 6.50 % 6.50 % 7.00 % Year Ending April 30, Medical and Life Insurance (in thousands) 2021 $ 669 2022 652 2023 631 2024 608 2025 579 2026-2030 2,390 Year Ended April 30, 2020 2019 (in thousands) Balance, beginning of year $ 130,161 $ 128,430 Employee contributions 8,215 4,852 Amortization of employer contributions 6,074 9,573 (Loss) gain on investment (826 ) 8,697 Employee distributions (13,911 ) (20,891 ) Exchange rate fluctuations (398 ) (500 ) Balance, end of year 129,315 130,161 Less: current portion (9,590 ) (8,844 ) Non-current portion $ 119,725 $ 121,317 2021. April 30, 2020 2019 (in thousands) Contract assets-unbilled receivables $ 65,370 $ 60,595 Contract liabilities-deferred revenue $ 133,128 $ 112,999 12—Segments. Year Ended April 30, 2020 2019 2018 Dollars % Dollars % Dollars % (dollars in thousands) Industrial $ 556,189 28.8 % $ 557,284 28.9 % $ 529,188 30.0 % Life Sciences/Healthcare 343,955 17.8 322,574 16.7 295,300 16.7 Financial Services 334,433 17.3 348,460 18.1 306,216 17.3 Consumer Goods 285,927 14.8 295,900 15.4 277,904 15.7 Technology 285,562 14.8 261,176 13.6 226,004 12.8 Education/Non–Profit/General 126,666 6.5 140,639 7.3 132,605 7.5 Fee Revenue $ 1,932,732 100.0 % $ 1,926,033 100.0 % $ 1,767,217 100.0 % Year Ended April 30, 2020 2019 2018 (in thousands) Domestic $ 40,736 $ (22,039 ) $ 47,164 Foreign 110,226 156,379 158,866 Income before provision for income taxes $ 150,962 $ 134,340 $ 206,030 Year Ended April 30, 2020 2019 2018 (in thousands) Current income taxes: Federal $ 14,336 $ 6,152 $ 29,400 State 4,974 9,097 2,863 Foreign 33,965 42,091 44,434 Current provision for income taxes 53,275 57,340 76,697 Deferred income taxes: Federal (6,862 ) (16,211 ) (3,530 ) State (784 ) (7,682 ) (317 ) Foreign (1,684 ) (3,903 ) (2,717 ) Deferred benefit for income taxes (9,330 ) (27,796 ) (6,564 ) Total provision for income taxes $ 43,945 $ 29,544 $ 70,133 Year Ended April 30, 2020 2019 2018 U.S. federal statutory income tax rate 21.0 % 21.0 % 30.4 % State tax, net of federal effect 2.2 1.1 1.0 Foreign tax rates differential 4.5 5.0 (2.3 ) Transition tax — — 9.0 Deferred tax remeasurement — — (2.4 ) Non-deductible officers compensation 0.5 1.1 — Excess tax benefit on stock-based compensation (1.0 ) (3.1 ) — Change in valuation allowance — (2.0 ) (2.3 ) Other 1.9 (1.1 ) 0.6 Effective income tax rate 29.1 % 22.0 % 34.0 % April 30, 2020 2019 (in thousands) Deferred tax assets: Deferred compensation $ 86,479 $ 75,521 Operating lease liability 37,934 — Loss carryforwards 27,845 22,467 Reserves and accruals 14,211 12,954 Deferred rent — 7,652 Deferred revenue 1,187 1,090 Allowance for doubtful accounts 4,029 3,217 Other 1,516 — Gross deferred tax assets 173,201 122,901 Deferred tax liabilities: Operating lease, right-of-use, assets (29,998 ) — Intangibles and Goodwill (29,006 ) (28,958 ) Property and equipment (22,332 ) (15,883 ) Prepaid expenses (19,567 ) (20,152 ) Other — (1,759 ) Gross deferred tax liabilities (100,903 ) (66,752 ) Valuation allowances (17,875 ) (14,032 ) Net deferred tax asset $ 54,423 $ 42,117 2024. Under current U.S. federal tax law, we do not expect to incur a U.S. federal income tax liability on the undistributed earnings in the event they are repatriated to the United States. Year Ended April 30, 2020 2019 2018 (in thousands) Unrecognized tax benefits, beginning of year $ 7,794 $ 3,674 $ 2,478 Settlement with tax authority (1,767 ) (1,771 ) (708 ) Additions based on tax positions related to the current year 10 1,775 1,116 Additions based on tax positions related to prior years — 4,116 788 Unrecognized tax benefits, end of year $ 6,037 $ 7,794 $ 3,674 April 30, 2020 2019 (in thousands) Computer equipment and software (1) $ 261,970 $ 220,894 Leasehold improvements 85,208 84,368 Furniture and fixtures 42,741 42,318 Automobiles 3,065 1,022 392,984 348,602 Less: accumulated depreciation and amortization (250,256 ) (217,097 ) Property and equipment, net $ 142,728 $ 131,505 Depreciation expense for property and equipment was In thousands April 30, 2020 April 30, 2019 Senior Unsecured Notes $ 400,000 $ — Revolver — 226,875 Less: Unamortized discount and issuance costs (5,856 ) (3,997 ) Long-term borrowings, net of unamortized discount and debt issuance costs $ 394,144 $ 222,878 Facilities remaining principal due at maturity. The principal balance of the Revolver, if any, is due at maturity. The Credit Facilities mature on Year Ended April 30, 2020 Executive Search Consulting Digital North America EMEA Asia Pacific Latin America Subtotal RPO & Professional Search Corporate Consolidated (in thousands) Fee revenue $ 543,095 $ 292,366 $ 434,624 $ 170,314 $ 98,132 $ 29,400 $ 732,470 $ 364,801 $ — $ 1,932,732 Total revenue $ 557,255 $ 294,261 $ 447,528 $ 172,978 $ 99,209 $ 29,493 $ 749,208 $ 376,606 $ — $ 1,977,330 Net income attributable to Korn Ferry $ 104,946 Net income attributable to noncontrolling interest 2,071 Other loss, net 2,879 Interest expense, net 22,184 Income tax provision 43,945 Operating income (loss) $ 17,695 $ 46,909 $ 113,080 $ 21,085 $ 17,914 $ 4,860 $ 156,939 $ 50,438 $ (95,956 ) $ 176,025 Depreciation and amortization 17,567 19,261 3,452 1,713 1,311 1,182 7,658 3,906 6,919 55,311 Other income (loss), net 1,326 485 (3,051 ) 139 11 51 (2,850 ) 82 (1,922 ) (2,879 ) EBITDA 36,588 66,655 113,481 22,937 19,236 6,093 161,747 54,426 (90,959 ) 228,457 Integration/acquisition costs — 5,937 — — — — — — 6,215 12,152 Restructuring charges, net 24,504 10,481 7,244 6,347 3,649 309 17,549 5,742 283 58,559 Separation costs — — — 1,783 — — 1,783 — — 1,783 Adjusted EBITDA $ 61,092 $ 83,073 $ 120,725 $ 31,067 $ 22,885 $ 6,402 $ 181,079 $ 60,168 $ (84,461 ) $ 300,951 Year Ended April 30, 2019 Executive Search Consulting Digital North America EMEA Asia Pacific Latin America Subtotal RPO & Professional Search Corporate Consolidated (in thousands) Fee revenue $ 568,321 $ 252,727 $ 455,826 $ 182,829 $ 104,291 $ 31,896 $ 774,842 $ 330,143 $ — $ 1,926,033 Total revenue $ 585,893 $ 252,727 $ 469,743 $ 186,131 $ 105,543 $ 31,960 $ 793,377 $ 341,865 $ — $ 1,973,862 Net income attributable to Korn Ferry $ 102,651 Net income attributable to noncontrolling interest 2,145 Other income, net (10,405 ) Interest expense, net 16,891 Income tax provision 29,544 Operating (loss) income $ (34,115 ) $ 39,732 $ 120,754 $ 29,974 $ 24,364 $ 3,998 $ 179,090 $ 50,884 $ (94,765 ) $ 140,826 Depreciation and amortization 16,172 12,885 3,890 1,254 1,428 410 6,982 3,255 7,195 46,489 Other income (loss), net 2,203 995 6,699 432 281 322 7,734 268 (795 ) 10,405 EBITDA (15,740 ) 53,612 131,343 31,660 26,073 4,730 193,806 54,407 (88,365 ) 197,720 Integration/acquisition costs 5,304 1,255 — — — — — — 187 6,746 Tradename write-offs 76,967 29,588 — — — — — — — 106,555 Adjusted EBITDA $ 66,531 $ 84,455 $ 131,343 $ 31,660 $ 26,073 $ 4,730 $ 193,806 $ 54,407 $ (88,178 ) $ 311,021 Year Ended April 30, 2018 Executive Search Consulting Digital North America EMEA Asia Pacific Latin America Subtotal RPO & Professional Search Corporate Consolidated (in thousands) Fee revenue $ 540,529 $ 244,484 $ 408,098 $ 173,725 $ 96,595 $ 30,624 $ 709,042 $ 273,162 $ — $ 1,767,217 Total revenue $ 556,521 $ 244,484 $ 421,260 $ 177,234 $ 98,062 $ 30,717 $ 727,273 $ 291,241 $ — $ 1,819,519 Net income attributable to Korn Ferry $ 133,779 Net income attributable to noncontrolling interest 2,118 Other income, net (11,416 ) Interest expense, net 13,832 Income tax provision 70,133 Operating income (loss) $ 22,408 $ 78,127 $ 100,397 $ 26,768 $ 18,425 $ 4,022 $ 149,612 $ 39,396 $ (81,097 ) $ 208,446 Depreciation and amortization 18,954 12,573 3,930 1,689 1,408 455 7,482 3,054 6,525 48,588 Other income, net 2,127 374 1,142 168 373 181 1,864 152 6,899 11,416 EBITDA 43,489 91,074 105,469 28,625 20,206 4,658 158,958 42,602 (67,673 ) 268,450 Restructuring (recoveries) charges, net (122 ) (119 ) — — 313 — 313 6 — 78 Integration/acquisition costs 7,724 1,427 — — — — — — 279 9,430 Adjusted EBITDA $ 51,091 $ 92,382 $ 105,469 $ 28,625 $ 20,519 $ 4,658 $ 159,271 $ 42,608 $ (67,394 ) $ 277,958 Year Ended April 30, 2020 2019 2018 (in thousands) U.S. $ 875,605 $ 859,969 $ 778,470 United Kingdom 204,271 202,055 176,091 Other countries 852,856 864,009 812,656 Total fee revenue $ 1,932,732 $ 1,926,033 $ 1,767,217 Year Ended April 30, 2020 2019 2018 (in thousands) U.S. (1) $ 169,928 $ 98,455 $ 80,424 United Kingdom 35,739 6,466 7,792 Other countries 132,138 26,584 31,685 Total long-lived assets $ 337,805 $ 131,505 $ 119,901 Restructuring Liability (in thousands) As of April 30, 2018 $ 1,051 Restructuring charges, net — Reductions for cash payments (284 ) Non-cash payments (171 ) Exchange rate fluctuations (65 ) As of April 30, 2019 531 Restructuring charges, net 58,559 Reductions for cash payments (16,737 ) Non-cash payments (8,053 ) Exchange rate fluctuations (147 ) As of April 30, 2020 $ 34,153 Executive Search Consulting Digital North America EMEA Asia Pacific Subtotal RPO & Professional Search Consolidated (in thousands) Balance as of May 1, 2018 $ 173,453 $ 284,716 $ 47,757 $ 47,501 $ 972 $ 96,230 $ 29,823 $ 584,222 Exchange rate fluctuations (306 ) (502 ) (1,186 ) (2,021 ) — (3,207 ) (1,909 ) (5,924 ) Balance as of April 30, 2019 173,147 284,214 46,571 45,480 972 93,023 27,914 578,298 Additions — 38,926 — — — — — 38,926 Exchange rate fluctuations (133 ) (413 ) (850 ) (986 ) — (1,836 ) (899 ) (3,281 ) Balance as of April 30, 2020 $ 173,014 $ 322,727 $ 45,721 $ 44,494 $ 972 $ 91,187 $ 27,015 $ 613,943 April 30, 2020 April 30, 2019 (in thousands) Amortized intangible assets: Gross Accumulated Amortization Net Gross Accumulated Amortization Net Customer lists $ 131,299 $ (64,762 ) $ 66,537 $ 125,099 $ (53,352 ) $ 71,747 Intellectual property 69,100 (26,548 ) 42,552 33,100 (22,045 ) 11,055 Proprietary databases 4,256 (4,202 ) 54 4,256 (4,053 ) 203 Non-compete agreements 910 (910 ) — 910 (893 ) 17 Trademarks 7,186 (4,236 ) 2,950 3,986 (3,986 ) — Total $ 212,751 $ (100,658 ) 112,093 $ 167,351 $ (84,329 ) 83,022 Exchange rate fluctuations (167 ) (74 ) Total Intangible assets $ 111,926 $ 82,948 2023 (continued) Year Ending April 30, Estimated Annual Amortization Expense (in thousands) 2021 $ 19,256 2022 19,101 2023 17,271 2024 14,794 2025 14,696 Thereafter 26,975 $ 112,093 Year Ended April 30, 2020 (in thousands) Finance lease cost Amortization of ROU assets $ 1,820 Interest on lease liabilities 149 1,969 Operating lease cost 57,683 Short-term lease cost 1,111 Variable lease cost 13,562 Lease impairment cost 2,282 Sublease income (447 ) Total lease cost $ 76,160 Year Ended April 30, 2020 (in thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 59,631 Financing cash flows from finance leases $ 1,833 ROU assets obtained in exchange for lease obligations: Operating leases $ 15,246 Finance leases $ 1,333 April 30, 2020 (in thousands) Finance Leases: Property and equipment, at cost $ 4,281 Accumulated depreciation (1,485 ) Property and equipment, net $ 2,796 Other accrued liabilities $ 1,241 Other liabilities 1,634 Total finance lease liabilities $ 2,875 Weighted average remaining lease terms: Operating leases 5.5 years Finance leases 2.9 years Weighted average discount rate: Operating leases 4.8 % Finance leases 4.1 % Year Ending April 30, Operating Financing (in thousands) 2021 $ 60,052 $ 1,325 2022 50,246 940 2023 43,334 445 2024 40,091 245 2025 31,601 85 Thereafter 44,444 — Total lease payments 269,768 3,040 Less: imputed interest 34,151 165 Total $ 235,617 $ 2,875 Year Ending April 30, Lease Commitments (in thousands) 2020 $ 55,351 2021 52,567 2022 45,465 2023 38,582 2024 34,008 Thereafter 74,764 $ 300,737 Year Ended April 30, 2020 (in thousands) Current assets (1) $ 44,475 Long-term assets 15,024 Intangibles assets 45,400 Current liabilities 29,503 Long-term liabilities 5,720 Net assets acquired 69,676 Purchase price 108,602 Goodwill $ 38,926 Quarters Ended Fiscal 2020 Fiscal 2019 April 30 January 31 October 31 July 31 April 30 January 31 October 31 July 31 (in thousands, except per share data) Fee revenue $ 440,469 $ 515,325 $ 492,389 $ 484,549 $ 490,756 $ 474,504 $ 495,205 $ 465,568 Operating income (loss) $ 22,227 $ 31,595 $ 61,869 $ 60,334 $ 62,275 $ 62,683 $ 70,987 $ (55,119 ) Net (loss) income $ (621 ) $ 20,956 $ 43,032 $ 43,650 $ 50,627 $ 45,444 $ 47,317 $ (38,592 ) Net (loss) income attributable to Korn Ferry $ (802 ) $ 19,993 $ 42,804 $ 42,951 $ 50,264 $ 44,964 $ 46,034 $ (38,611 ) Net (loss) earnings per common share: Basic $ (0.02 ) $ 0.37 $ 0.78 $ 0.77 $ 0.90 $ 0.81 $ 0.82 $ (0.70 ) Diluted $ (0.02 ) $ 0.36 $ 0.77 $ 0.76 $ 0.89 $ 0.80 $ 0.81 $ (0.70 ) Column A Column B Column C Column D Column E Additions Description Balance at Beginning of Period Charges to Cost and Expenses Recoveries (Charges) to Other Accounts (1) Deductions (2) Balance at End of Period (in thousands) Allowance for doubtful accounts: Year Ended April 30, 2020 $ 21,582 $ 14,644 $ (311 ) $ (12,120 ) $ 23,795 Year Ended April 30, 2019 $ 17,845 $ 14,260 $ (826 ) $ (9,697 ) $ 21,582 Year Ended April 30, 2018 $ 15,455 $ 13,675 $ 551 $ (11,836 ) $ 17,845 Deferred tax asset valuation allowance: Year Ended April 30, 2020 $ 14,032 $ 886 $ 3,939 $ (982 ) $ 17,875 Year Ended April 30, 2019 $ 15,682 $ 5,170 $ — $ (6,820 ) $ 14,032 Year Ended April 30, 2018 $ 21,278 $ 3,421 $ — $ (9,017 ) $ 15,682 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTINGTo the Stockholders and the Board of Directors of Korn Ferry:Opinion on Internal Control over Financial ReportingWe have audited Korn Ferry and subsidiaries’ internal control over financial reporting as of April 30, 2020,2023, 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). In our opinion, Korn Ferry and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of April 30, 2020,2023, based on the COSO criteria.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Companyas of April 30, 20202023 and 2019,2022, 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, 20202023, and the related notes and the financial statement schedule listed in the index at Item 15(a) and our report dated July 15, 2020June 28, 2023 expressed an unqualified opinion thereon.Basis for OpinionThe 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 are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. 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.Definition and Limitations of Internal Control Over Financial ReportingA 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./s/ Ernst & Young LLPLos Angeles, CaliforniaJuly 15, 2020June 28, 2023F-3REPORT OF INDEPENDENT REGISTEREDPUBLIC ACCOUNTING FIRMTo the Stockholders and the Board of Directors of Korn FerryOpinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Korn Ferry and subsidiaries (the “Company”)Company) as of April 30, 20202023 and 2019,2022, 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, 20202023, and the related notes and the financial statement schedule listed in the index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at April 30, 20202023 and 2019,2022, and the results of its operations and its cash flows for each of the three years in the period ended April 30, 2020,2023, in conformity with U.S. generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of April 30, 2020,2023, 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 July 15, 2020June 28, 2023 expressed an unqualified opinion thereon.Adoption of New Accounting StandardsAs discussed in Note 1 to the financial statements, the Company has changed its method of accounting for leases in fiscal year 2020 due to the adoption of the new leasing standard. The Company adopted the new leasing standard using the modified retrospective approach.Basis for OpinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.Critical Audit MattersThe critical audit mattersmatter communicated below are mattersis a matter arising from the current period audit of the financial statements that werewas communicated or required to be communicated to the audit committee and that: (1) relaterelates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit mattersmatter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit mattersmatter below, providing a separate opinionsopinion on the critical audit mattersmatter or on the accounts or disclosures to which they relate.it relates.Revenue recognitionF-4Revenue recognition Description of the Matter As described in Note 1 to the consolidated financial statements, the Company recognizes revenue when control of the goods and services are transferred to the customer. Revenue recognition includes management estimates of uptick fee variable consideration for Search engagements and estimates of the total hours at completion used to recognize revenue as services are rendered under Consulting contracts.Auditing revenue recognition was complex due to the volume of transactions within the various revenue streams with each revenue stream representing a different pattern of revenue recognition. Auditing revenue recognition also incorporates testing the underlying dataF-4How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s processes and controls related to the recognition of each revenue stream, including, among others, controls over management review of contractual terms, management’s determination of when control of goods and services are transferred to customers as well as management’s review of the accuracy and completeness of underlying data used in the estimates mentioned above.Our audit procedures included, among others, testing a sample of contracts to determine whether terms that may affect revenue recognition were identified and properly considered, performance obligations were appropriately identified in the Company’s evaluation of the accounting for the contracts and revenue was recognized when control of the goods or services is transferred to the customer. In addition, we tested management estimates mentioned above. For Search contracts, we compared the estimates of uptick fee revenues to historical actual data for a portfolio of similar contracts. For Consulting contracts, we compared the data used in the estimate of the total hours at completion to time reports for work completed to date, recalculated the percentage of completion and assessed the reasonableness of management’s estimates to complete based on an understanding of the current status of the contracts. We also performed analysis over contracts completed during the year to determine whether there are significant changes in the estimate from initiation to completion of contracts.Goodwill - Consulting Reporting UnitDescription of the MatterAt April 30, 2020, the goodwill recorded in the Consulting reporting unit was $173 million. As discussed in Note 1 to the consolidated financial statements, goodwill is tested by the Company’s management for impairment at least annually at the reporting unit level and more frequently when indicators of potential impairment are identified. During the fourth quarter of fiscal 2020, management performed a quantitative impairment test of goodwill due to the identification of potential COVID-19 related impairment indicators.Auditing the Company’s annual goodwill impairment test was complex due to the significant judgment in estimating the fair value of the reporting units when the fair value is at or near carrying value. In particular, the Consulting reporting unit’s fair value estimate was sensitive to assumptions including the discount rate and revenue growth rates which are affected by expectations about future market or economic conditions.How We Addressed the Matter in Our AuditWe obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment review process. This includes controls over management’s review of the significant assumptions described above.To test the estimated fair value of the Company’s Consulting reporting unit, we performed audit procedures with the assistance of our valuation specialists that included, among others, assessing methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis. We compared the significant assumptions used by management to current industry and economic trends. We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the Consulting reporting unit that would result from changes in the assumptions./s/ Ernst & Young LLPWe have served as the Company’s auditor since 2002.Los Angeles, CaliforniaJuly 15, 2020 June 28, 2023F-5KORN FERRY AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSApril 30, 2023 2022 (in thousands, except per share data) ASSETS Cash and cash equivalents $ 844,024 $ 978,070 Marketable securities 44,837 57,244 Receivables due from clients, net of allowance for doubtful accounts of $44,377 and $36,384 at April 30, 2023 and 2022, respectively Receivables due from clients, net of allowance for doubtful accounts of $44,377 and $36,384 at April 30, 2023 and 2022, respectively 569,601 590,260 Income taxes and other receivables 67,512 31,884 Unearned compensation 63,476 60,749 Prepaid expenses and other assets 49,219 41,763 Total current assets 1,638,669 1,759,970 Marketable securities, non-current 179,040 175,783 Property and equipment, net 161,876 138,172 Operating lease right-of-use assets, net 142,690 167,734 Cash surrender value of company-owned life insurance policies, net of loans 197,998 183,308 Deferred income taxes 102,057 84,712 Goodwill 909,491 725,592 Intangible assets, net 114,426 89,770 Unearned compensation, non-current 103,607 118,238 Investments and other assets 24,590 21,267 Total assets $ 3,574,444 $ 3,464,546 LIABILITIES AND STOCKHOLDERS’ EQUITY Accounts payable $ 53,386 $ 50,932 Income taxes payable 19,969 34,450 Compensation and benefits payable 532,934 547,826 Operating lease liability, current 45,821 48,609 Other accrued liabilities 324,150 302,408 Total current liabilities 976,260 984,225 Deferred compensation and other retirement plans 396,534 357,175 Operating lease liability, non-current 119,220 151,212 Long-term debt 396,194 395,477 Deferred tax liabilities 5,352 2,715 Other liabilities 27,879 24,153 Total liabilities 1,921,439 1,914,957 Commitments and contingencies Stockholders' equity Common stock: $0.01 par value, 150,000 shares authorized, 76,693 and 75,409 shares issued and 52,269 and 53,190 shares outstanding at April 30, 2023 and 2022, respectively Common stock: $0.01 par value, 150,000 shares authorized, 76,693 and 75,409 shares issued and 52,269 and 53,190 shares outstanding at April 30, 2023 and 2022, respectively 429,754 502,008 Retained earnings 1,311,081 1,134,523 Accumulated other comprehensive loss, net (92,764) (92,185) Total Korn Ferry stockholders' equity 1,648,071 1,544,346 Noncontrolling interest 4,934 5,243 Total stockholders' equity 1,653,005 1,549,589 Total liabilities and stockholders' equity $ 3,574,444 $ 3,464,546 The accompanying notes are an integral part of these consolidated financial statements.F-6KORN FERRY AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOMEYear Ended April 30, 2023 2022 2021 (in thousands, except per share data) Fee revenue $ 2,835,408 $ 2,626,718 $ 1,810,047 Reimbursed out-of-pocket engagement expenses 28,428 16,737 9,899 Total revenue 2,863,836 2,643,455 1,819,946 Compensation and benefits 1,901,203 1,741,452 1,297,880 General and administrative expenses 268,458 237,272 191,776 Reimbursed expenses 28,428 16,737 9,899 Cost of services 238,499 114,399 72,030 Depreciation and amortization 68,335 63,521 61,845 Restructuring charges, net 42,573 — 30,732 Total operating expenses 2,547,496 2,173,381 1,664,162 Operating income 316,340 470,074 155,784 Other income (loss), net Other income (loss), net 5,261 (11,880) 37,194 Interest expense, net (25,864) (25,293) (29,278) Income before provision for income taxes 295,737 432,901 163,700 Income tax provision 82,683 102,056 48,138 Net income 213,054 330,845 115,562 Net income attributable to noncontrolling interest (3,525) (4,485) (1,108) Net income attributable to Korn Ferry $ 209,529 $ 326,360 $ 114,454 Earnings per common share attributable to Korn Ferry: Basic $ 3.98 $ 6.04 $ 2.11 Diluted $ 3.95 $ 5.98 $ 2.09 Weighted-average common shares outstanding: Basic 51,482 52,807 52,928 Diluted 51,883 53,401 53,405 Cash dividends declared per share: $ 0.60 $ 0.48 $ 0.40 The accompanying notes are an integral part of these consolidated financial statements.F-7KORN FERRY AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEYear Ended April 30, 2023 2022 2021 (in thousands) Net income $ 213,054 $ 330,845 $ 115,562 Other comprehensive (loss) income: Foreign currency translation adjustments (3,256) (59,227) 50,069 Deferred compensation and pension plan adjustments, net of tax 3,420 19,096 5,419 Net unrealized gain (loss) on marketable securities, net of tax Net unrealized gain (loss) on marketable securities, net of tax 144 (410) (53) Comprehensive income 213,362 290,304 170,997 Less: comprehensive income attributable to noncontrolling interest (4,412) (4,309) (1,191) Comprehensive income attributable to Korn Ferry $ 208,950 $ 285,995 $ 169,806 The accompanying notes are an integral part of these consolidated financial statements.F-8KORN FERRY AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITYCommon Stock Retained
EarningsAccumulated
Other
Comprehensive
Loss, NetTotal
Korn Ferry
Stockholders'
EquityNoncontrolling
InterestTotal
Stockholders'
EquityShares Amount (in thousands) Balance at May 1, 2020 Balance at May 1, 2020 54,450 $ 585,560 $ 742,993 $ (107,172) $ 1,221,381 $ 2,310 $ 1,223,691 Net income — — 114,454 — 114,454 1,108 115,562 Other comprehensive income Other comprehensive income — — — 55,352 55,352 83 55,435 Dividends paid to shareholders — — (22,498) — (22,498) — (22,498) Dividends paid to noncontrolling interest — — — — — (1,115) (1,115) Purchase of stock (1,146) (35,376) — — (35,376) — (35,376) Issuance of stock 704 6,560 — — 6,560 — 6,560 Stock-based compensation — 26,516 — — 26,516 — 26,516 Balance at April 30, 2021 Balance at April 30, 2021 54,008 583,260 834,949 (51,820) 1,366,389 2,386 1,368,775 Net income — — 326,360 — 326,360 4,485 330,845 Other comprehensive loss — — — (40,365) (40,365) (176) (40,541) Dividends paid to shareholders — — (26,786) — (26,786) — (26,786) Dividends paid to noncontrolling interest — — — — — (1,452) (1,452) Purchase of stock (1,743) (117,301) — — (117,301) — (117,301) Issuance of stock 925 7,688 — — 7,688 — 7,688 Stock-based compensation — 28,361 — — 28,361 — 28,361 Balance at April 30, 2022 Balance at April 30, 2022 53,190 502,008 1,134,523 (92,185) 1,544,346 5,243 1,549,589 Net income Net income — — 209,529 — 209,529 3,525 213,054 Other comprehensive (loss) income Other comprehensive (loss) income — — — (579) (579) 887 308 Dividends paid to shareholders Dividends paid to shareholders — — (32,971) — (32,971) — (32,971) Dividends paid to noncontrolling interest Dividends paid to noncontrolling interest — — — — — (4,721) (4,721) Purchase of stock Purchase of stock (2,082) (116,139) — — (116,139) — (116,139) Issuance of stock Issuance of stock 1,161 8,452 — — 8,452 — 8,452 Stock-based compensation Stock-based compensation — 35,433 — — 35,433 — 35,433 Balance at April 30, 2023 Balance at April 30, 2023 52,269 $ 429,754 $ 1,311,081 $ (92,764) $ 1,648,071 $ 4,934 $ 1,653,005 The accompanying notes are an integral part of these consolidated financial statements.F-9KORN FERRY AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSYear Ended April 30, 2023 2022 2021 (in thousands) Cash flows from operating activities: Net income $ 213,054 $ 330,845 $ 115,562 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 68,335 63,521 61,845 Stock-based compensation expense 36,285 29,210 27,157 Impairment of right-of-use assets Impairment of right-of-use assets 5,471 7,392 — Impairment of fixed assets Impairment of fixed assets 4,375 1,915 — Provision for doubtful accounts 22,493 21,552 15,763 Gain on cash surrender value of life insurance policies (10,576) (5,819) (13,017) (Gain) loss on marketable securities (Gain) loss on marketable securities (2,874) 11,978 (38,529) Deferred income taxes (14,403) (16,963) (14,140) Change in other assets and liabilities: Deferred compensation 52,291 27,197 64,005 Receivables due from clients 33,483 (138,627) (67,331) Income taxes and other receivables (25,615) 3,969 5,798 Prepaid expenses and other assets (5,884) (9,534) (3,902) Unearned compensation 11,904 (23,425) (32,935) Income taxes payable (15,304) 12,751 (1,824) Accounts payable and accrued liabilities (27,821) 191,447 122,687 Other (1,320) (5,751) 10,294 Net cash provided by operating activities 343,894 501,658 251,433 Cash flows from investing activities: Cash paid for acquisitions, net of cash acquired Cash paid for acquisitions, net of cash acquired (254,750) (133,802) — Purchase of property and equipment (70,382) (49,406) (31,122) Purchase of marketable securities (53,530) (82,015) (103,499) Proceeds from sales/maturities of marketable securities 65,878 92,472 69,683 Premium on company-owned life insurance policies (15,219) (15,218) (15,353) Proceeds from life insurance policies 4,376 3,382 18,707 Dividends received from unconsolidated subsidiaries 150 255 205 Net cash used in investing activities (323,477) (184,332) (61,379) Cash flows from financing activities: Repurchases of common stock (95,463) (96,258) (30,387) Payments of tax withholdings on restricted stock (22,232) (18,532) (4,989) Proceeds from issuance of common stock upon exercise of employee stock options and in connection with an employee stock purchase plan 7,606 6,919 5,706 Payments on life insurance policy loans (2,760) (178) (12,279) Principal payments on finance leases (1,639) (1,157) (1,324) Dividends paid to shareholders (32,971) (26,786) (22,498) Dividends paid to noncontrolling interest Dividends paid to noncontrolling interest (4,721) (1,452) (1,115) Net cash used in financing activities Net cash used in financing activities (152,180) (137,444) (66,886) Effect of exchange rate changes on cash and cash equivalents (2,283) (52,590) 38,366 Net (decrease) increase in cash and cash equivalents Net (decrease) increase in cash and cash equivalents (134,046) 127,292 161,534 Cash and cash equivalents at beginning of year 978,070 850,778 689,244 Cash and cash equivalents at end of the year Cash and cash equivalents at end of the year $ 844,024 $ 978,070 $ 850,778 Supplemental cash flow information: Cash used to pay interest $ 25,409 $ 24,607 $ 25,207 Cash used to pay income taxes, net of refunds $ 134,741 $ 107,602 $ 55,317 The accompanying notes are an integral part of these consolidated financial statements.F-10KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 20201. Organization and Summary of Significant Accounting PoliciesNature of BusinessKorn Ferry, a Delaware corporation, and its subsidiaries (the “Company”) is a global organizational consulting firm. The Company helps clients synchronize strategy and talent to drive superior performance. The Company works with organizations to design their structures, roles, and responsibilities. The Company helps organizations hire the right people to bring their strategy to life and advise them on how to reward, develop, and motivate their people.The Company is pursuing a strategy that willdesigned to help Korn Ferry to focus on clients and collaborate intensively across the organization. This approach buildsis intended to build on the best of ourthe Company’s past and givesgive the Company a clear path to the future with focused initiatives to increase ourits client and commercial impact. Korn Ferry is transforming how clients address their talent management needs. The Company has evolved from a mono-line to a diversified business, giving ourits consultants more frequent and expanded opportunities to engage with clients.The Company operatesnow has eight reportable segments that operate through 4 global segments:the following five lines of business:1.Consulting helps clients synchronize their strategy and their talent by addressing four fundamental needs: Organizational Strategy, Assessment and Succession, Leadership and Professional Development, and Rewards and Benefits. This work is supported and underpinned by a comprehensive range of some of the world’s leading intellectual property (“lP”) and data.2.Digital leverages an artificial intelligence powered platform to identify structure, roles, capabilities and behaviours needed to drive business forward. This end to end system gives clients one enterprise-wide talent framework and delivers an achievable blueprint for success along with the guidance and tools to deliver it.3.Executive Search helps organizations recruit board level, chief executive and other senior executive and general management talent. Behavioral interviewing and proprietary assessments are used to determine ideal organizational fit, and salary benchmarking builds appropriate frameworks for compensation and retention.4.Recruitment Process Outsourcing (“RPO”) and Professional Search combines people, process expertise and IP-enabled technology to deliver enterprise talent acquisition solutions to clients. Transaction sizes range from single professional searches to team, department and line of business projects, and global outsource recruiting solutions.2.Digital are new reporting segments. Previously, these were tracked develops technology-enabled Performance Management Tools that empower our clients. The digital products give clients direct access to Korn Ferry proprietary data, client data and analytics to deliver clear insights with the training and tools needed to align organizational structure with business strategy.3.Executive Search helps organizations recruit board level, chief executive and other senior executive and general management talent to deliver lasting impact. The Company’s approach to placing talent is bringing together research-based IP, proprietary assessments and behavioral interviewing with practical experience to determine ideal organizational fit. Salary benchmarking then helps the Company build appropriate frameworks for compensation and retention. This business is managed and reported together,on a geographic basis and represents four of the Company’s reportable segments (Executive Search North America, Executive Search Europe, the Middle East and Africa ("EMEA"), Executive Search Asia Pacific and Executive Search Latin America).4.Professional Search & Interim delivers enterprise talent acquisition solutions for professional level middle and upper management. The Company helps clients source high-quality candidates at speed and scale globally, covering single-hire to multi-hire permanent placements and interim contractors.5.RPO offers scalable recruitment outsourcing solutions leveraging customized technology and talent insights. The Company's scalable solutions, built on science and powered by best-in-class technology and consulting expertise, enable the Company to act as Korn Ferry Advisory (“Advisory”).Basis of Consolidation and PresentationThe 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”) and prevailing practice within our different industries. 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 $0.3 million, $0.1 million and $0.2 million during fiscal 2020, 2019 and 2018, respectively.The Company has control of a Mexican subsidiary and consolidates the operations of this subsidiary. Noncontrolling interest, which represents the Mexican partners’ 51% interest in the Mexican subsidiary, is reflected on the Company’s consolidated financial statements.F-11 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 20202023 (continued)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 UncertaintiesThe 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 or determinable. The most significant areas that require management’s judgment are revenue recognition, deferred compensation, annual performance-related bonuses, evaluation of the carrying value of receivables, goodwill and other intangible assets, share-based payments, leases and the recoverability of deferred income taxes.Revenue RecognitionSubstantially all fee revenue is derived from talent and organizational consulting services and digital sales, stand-alone or as part of a solution, fees for professional services related to executive and professional recruitment performed on a retained basis, interim services and RPO, either stand-alone or as part of a solution.Revenue is recognized when control of the goods and services are transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods and services. Revenue contracts with customers are evaluated based on the five-step model outlined in Accounting StandardStandards Codification (“ASC”) 606 (“ASC 606”):, Revenue from Contracts with Customers: 1) identify the contract with a customer; 2) identify the performance obligation(s) in the contract; 3) determine the transaction price; 4) allocate the transaction price to the separate performance obligation(s); and 5) recognize revenue when (or as) each performance obligation is satisfied.Consulting fee revenue is primarily recognized as services isare rendered, measured by total hours incurred as a percentage of the total estimated hours at completion. It is possible that updated estimates for consulting engagements 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.Digital fee revenue is generated from IP platforms enabling large-scale, technology-based talent programs for pay, talent development, engagement, and assessment and is consumed directly by an end user or indirectly through a consulting engagement. Revenue is recognized as services are delivered and the Company has a legally enforceable right to payment. Revenue also comes from the sale of ourthe Company’s proprietary IP subscriptions, which are considered symbolic IP due to the dynamic nature of the content. As a result, revenue is recognized over the term of the contract. Functional IP licenses grant customers the right to use IP content via the delivery of a flat file. Because the IP content license has significant stand-alone functionality, revenue is recognized upon delivery and when an enforceable right to payment exists. Revenue for tangible and digital products sold by the Company, such as books and digital files, is recognized when these products are shipped.Fee revenue from executive and professional search activities is generally one-third of the estimated first-year cash compensation of the placed candidate, plus a percentage of the fee to cover indirect engagement-related expenses. In addition to the search retainer, an uptick fee is billed when the actual compensation awarded by the client for a placement is higher than the estimated compensation. In the aggregate, upticks have been a relatively consistent percentage of the original estimated fee; therefore, the Company estimates upticks using the expected value method based on historical data on a portfolio basis. In a standard search engagement, there is one performance obligation, which is the promise to undertake a search. The Company generally recognizes such revenue over the course of a search and when it is legally entitled to payment as outlined in the billing terms of the contract. Any revenues associated with services that are provided on a contingent basis are recognized once the contingency is resolved, as this is when control is transferred to the customer. These assumptions determine the timing of revenue recognition for the reported period.RPO fee revenue is generated through two distinct phases: 1) the implementation phase and 2) the post-implementation recruitment phase. The fees associated with the implementation phase are recognized over the period that the related implementation services are provided. The post-implementation recruitment phase represents end-to-end recruiting services to clients for which there are both fixed and variable fees, which are recognized over the period that the related recruiting services are performed.F-12 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 20202023 (continued)ReimbursementsThe Company incurs certain out-of-pocket expenses that are reimbursed by its clients, which are accounted for as revenue in the consolidated statements of income.Allowance for Doubtful AccountsAn allowance is established for doubtful accounts by taking a charge to general and administrative expenses. The Company’s expected credit loss allowance methodology for accounts receivable is developed using historical collection experience, current and future economic and market conditions and a review of the current status of customers’ trade accounts receivable. Due to the short-term nature of such receivables, the estimate of the amount of the allowanceaccounts receivable that may not be collected is primarily based on historical loss experienceloss-rate experience. When required, the Company adjusts the loss-rate methodology to account for current conditions and assessment of the collectability of specific accounts, as well asreasonable and supportable expectations of future collections based upon trendseconomic and market conditions. The Company generally assesses future economic condition for a period of sixty to ninety days, which corresponds with the typecontractual life of work for which services are rendered.its accounts receivables. After the Company exhausts all collection efforts, the amount of the allowance is reduced for balances written off as uncollectible.Cash and Cash EquivalentsThe Company considers all highly liquid investments with original maturities of three months or less from the date of purchase to be cash equivalents. As of April 30, 2020,2023 and 2022, the Company’s investments in cash equivalents consisted of money market funds, and as of April 30, 2022 also consisted of commercial paper and corporate notes/bonds with initial maturity of less than 90 days for which market prices are readily available. As of April 30, 2019, cash equivalents consisted of money market funds for which market prices are readily available.Marketable SecuritiesThe Company currently has investments in marketable securities and mutual funds that are classified as either equity securities or available-for-sale debt securities. The classification of the investments in these marketable securities and mutual funds is assessed upon purchase and reassessed at each reporting period. 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 twelve12 months are carried as current assets.The Company invests in mutual funds (for which market prices are readily available) that are held in trust to satisfy obligations under the Company’s deferred compensation plans. Such investments are classified as equity securities and mirror 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. 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 marketable securities are recorded in the accompanying consolidated statements of income in other (loss) income (loss), net.The Company also invests cash in excess of its daily operating requirements and capital needs primarily in marketable fixed income (debt) securities in accordance with the Company’s investment policy, which restricts the type of investments that can be made. The Company’s investment portfolio includes commercial paper and corporate notes/ bonds.bonds as of April 30, 2023 and 2022 and also included US Treasury and Agency securities as of April 30, 2022. These marketable fixed income (debt) securities are classified as available-for-sale securities based on management’s decision, at the date such securities are acquired, not to hold these securities to maturity or actively trade them. The Company carries these marketable debt securities at fair value based on the market prices for these marketable debt securities or similar debt securities whose prices are readily available. The changes in fair values, net of applicable taxes, are recorded as unrealized gains or losses as a component of comprehensive income. When, inincome unless the opinion of management, a decline in the fair value of an investment below its amortized costchange is considereddue to be “other-than-temporary,” acredit loss. A credit loss is recorded in the statementstatements of income in other income (loss) income,, net; any amount in excess of the credit loss is recorded as unrealized gains or losses as a component of comprehensive income. Generally, the amount of the loss is the difference between the cost or amortized cost and its then current fair value; a credit loss is the difference between the discounted expected future cash flows to be collected from the debt security and the cost or amortized cost of the debt security. The determination of the other-than-temporary decline includes, in addition to other relevant factors, a presumption that if the market value is below cost by a significant amount for a period, a write-down may be necessary. During fiscal 2020, 20192023, 2022 and 2018, 0 other-than-temporary impairment2021, no amount was recognized.F-13 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2020 (continued)Fair Value of Financial InstrumentsFair 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.F-13KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2023 (continued)▪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, 20202023 and 2019,2022, 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 an interest rate swap.contracts. The carrying amount of cash, cash equivalents and accounts receivable approximates fair value due to the short-term maturity of these instruments. The fair values of marketable securities classified as equity securities are obtained from quoted market prices, and the fair values of marketable securities classified as available-for-sale and foreign currency forward contracts and 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 InstrumentsOn December 16, 2019, in conjunction with the payoff of the credit facility, the Company terminated its interest rate swap. The Company had entered into the interest rate swap agreement to effectively convert its variable debt to a fixed-rate basis. The principal objective was 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 determined that the interest rate swap qualified as a cash flow hedge in accordance with Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”). Changes in the fair value of an interest rate swap agreement designated as a cash flow hedge were recorded as a component of accumulated other comprehensive loss within stockholders’ equity and were amortized to interest expense over the term of the related debt.Foreign Currency Forward Contracts Not Designated as HedgesThe Company has established a program that primarily utilizes foreign currency forward contracts to offset the risks associated with the effects of certain foreign currency exposures primarily originating from intercompany balances due to cross border work performed in the ordinary course of business. These foreign currency forward contracts are neither used for trading purposes nor are they designated as hedging instruments pursuant to ASC 815.815, 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 statements of income.Business AcquisitionsBusiness 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 noncontrolling 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 twelve12 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.F-14 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2020 (continued)LeasesThe Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right of useright-of-use (“ROU”) assets and current and non-current operating lease liability, in the consolidated balance sheets. Finance leases are included in property and equipment, net, other accrued liabilities and other liabilities in the consolidated balance sheets.ROU assets represent the Company's right to use an underlying asset for the lease term, and the lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term aton the commencement date. As most of the Company’s leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term, with variable lease payments recognized in the periods in which they are incurred.The Company has lease agreements with lease and non-lease components. For all leases with non-lease components the Company accounts for the lease and non-lease components as a single lease component.Property and Equipment, NetProperty 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 seventen 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.F-14KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2023 (continued)Impairment of Long-Lived AssetsLong-lived assets include property, equipment, ROU assets and software developed or obtained for internal use. In accordance with Accounting Standard CodificationASC 360, Property, Plant and Equipment (“ASC 360”), management reviews the Company’s recorded long-lived assets for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period. The Company determines the extent to which an asset may be impaired based upon its expectation of the asset’s future usability, as well as on a reasonable assurance that the future cash flows associated with the asset will be in excess of its carrying amount. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between fair value and the carrying value of the asset. During fiscal 2020,2023, the Company decided that it would exit 16 office leasesreduced its real estate footprint and as part ofa result, the integration of the acquisition of Miller Heiman Group, AchieveForum and Strategy Execution (“Acquired Companies”). This resulted inCompany took an impairment charge of the ROU assetassets of $2.3$5.5 million and an impairment charge of leasehold improvements and furniture and fixtures of $0.4$4.4 million, both recorded in the consolidated statements of income in general and administrative expenses. InDuring fiscal 2022, the Company reduced its real estate footprint and as a result, the Company took an impairment charge of ROU assets of $7.4 million and an impairment of leasehold improvements and furniture and fixtures of $1.9 million, both recorded in the consolidated statements of income in general and administrative expenses. During fiscal 2019 and 2018,2021, there were 0 suchno impairment charges recorded.Goodwill and Intangible AssetsGoodwill represents the excess of the purchase price over the fair value of assets acquired. The goodwillGoodwill is tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. Results of the annual qualitative impairment test compares the fair valueperformed as 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 ofJanuary 31, 2023, indicated 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 usingexceeded its carrying amount and no reporting units were at risk of failing the impairment test. As a combinationresult, no impairment charge was recognized. There was also no indication 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). The Company performs anpotential impairment test annually as of January 31, or more frequently if impairment indicators arise. The qualitative test performed as of January 31, 2020 did not indicate any impairment.F-15 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2020 (continued)Duringduring the fourth quarter of fiscal 2020, the rapid and severe impacts of the global coronavirus pandemic (“COVID-19”), and more specifically the need to support global social distancing efforts, mitigating the spread of the virus, and complying with restrictions put in place by various governmental entities, led to a decline for our products and services. These actions have a material impact on our business. Therefore, we performed a quantitative review as of March 31, 2020, to assess whether these actions caused the fair value of any of our reporting units to fall below its carrying value. This quantitative review included sensitivity analyses of each reporting unit’s discounted cash flow models considering updated discount rates, financial results and forecasts, market multiples and terminal value revenue growth rates. While fair value exceeded carrying value for all reporting units the excess of the fair value over carrying value of the Consulting segment had the smallest buffer. As of April 30, 2020, goodwill in the Consulting segment was $173.0 million. The conclusion for all reporting units was2023 that 0 impairment existed as of March 31, 2020. As of April 30, 2020, there were nowould require further indicators of impairment with respect to the Company’s goodwill. We are unable to predict how long COVID-19 will impact our operations or what additional restrictions may be imposed by governments in the regions the Company operates. Significant variations from current expectations could impact future assessments and result in an impairment charge.Intangible assets primarily consist of customer lists, non-compete agreements, proprietary databases and IP. Intangible assets 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. As noted above COVID-19 impacted the Company’s fourth quarter business and will impact the business going forward. The Company reviewed its intangible assets and noted 0no impairment as of April 30, 2020. As of April 30, 2019, there were no further indicators of impairment with respect to the Company’s intangible assets.On June 12, 2018, the Company’s Board of Directors voted to approve a plan to go to market under a single, master brand architecture2023, 2022 and to simplify the Company’s organizational structure by eliminating and/or consolidating certain legal entities and implementing a rebranding of the Company to offer the Company’s current products and services using the “Korn Ferry” name, branding and trademarks. As a result, the Company discontinued the use of all sub-brands. Two of the Company’s former sub-brands, Hay Group and Lominger, came to Korn Ferry through acquisitions. In connection with the accounting for these acquisitions, $106.6 million of the purchase price was allocated to indefinite-lived tradename intangible assets. As a result of the decision to discontinue their use, the Company took a non-cash intangible asset write-off of $106.6 million in fiscal 2019, recorded in general and administrative expenses in the consolidated statement of income.Compensation and Benefits ExpenseCompensation 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 searchExecutive Search and Professional Search consultants and revenue and other performance/profitability metrics for Consulting, Digital, Interim and RPO & Professional Search consultants), the level of engagements referred by a consultant in one line of business to a different line of business, and 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 relatedperformance-related bonuses take into account final individual consultant productivity (including referred work), Company/line of business results, including profitability, the achievement of strategic objectives, the results of individual performance appraisals and the current economic landscape. Accordingly, each quarter the Company reevaluates the assumptions used to estimate annual performance relatedperformance-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.F-16 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2020 (continued)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 $197.1$409.4 million, $257.3$447.6 million and $220.4$287.3 million for the years ended April 30, 2020, 20192023, 2022 and 2018,2021, respectively, included in compensation and benefits expense in the consolidated statements of income.F-15KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2023 (continued)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 basedstock-based compensation awards, commissions, payroll taxes and employee insurance benefits. Unearned compensation on the consolidated balance sheets includes long-term retention awards that are generally amortized over four-to-fivefour-to-five years.Deferred Compensation and Pension PlansFor 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 the Senior Executive Incentive Plan (“SEIP”), Wealth Accumulation Plan (“WAP”), Enhanced Wealth Accumulation Plan (“EWAP”) and Worldwide Executive Benefit Plan (“WEB”) and the pension plan acquired under Hay Group, while the medical and life insurance plan and Long Term Performance Unit Plan (“LTPU 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).loss. The actuarial gains/losses included in accumulated other comprehensive incomeloss 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 of plan assets and reflects the Company���sCompany’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.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 PlanThe Company, under the ECAP, 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 sheets.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 InsuranceThe 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 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 sheets.F-17 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2020 (continued)The change in the CSV of COLI contracts, net of insurance premiums paid and gains realized, is reported net in compensation and benefits expense. As of April 30, 20202023 and 2019,2022, the Company held contracts with net CSV of $146.4$198.0 million and $126.0$183.3 million, respectively. If the issuing insurance companies were to become insolvent, the Company would be considered a general creditor; 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, NetThe Company accounts for its restructuring charges as a liability when the obligations are incurred and records such charges at fair value. Changes in the estimates of the restructuring charges are recorded in the period the change is determined.F-16KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2023 (continued)Stock-Based CompensationThe Company has employee compensation plans under which various types of stock-based instruments are granted. These instruments principally include restricted stock units, restricted stock and an Employee Stock Purchase Plan (“ESPP”). The Company recognizes compensation expense related to restricted stock units, restricted stock and the estimated fair value of stock purchases under the ESPP on a straight-line basis over the service period for the entire award.ReclassificationCertain reclassifications have been made to the amounts in the prior periods in order to conform to the current period's presentation.Translation of Foreign CurrenciesGenerally, 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-averageusing the daily exchange rates during the fiscal year. Resulting translation adjustments are recorded as a component of accumulated comprehensive income.loss. 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. During fiscal 2020, 20192023, 2022 and 2018,2021, the Company recorded foreign currency losses of $4.1$2.0 million, $1.7$1.2 million and $3.3$2.7 million respectively, in general and administrative expenses in the consolidated statements of income.Income TaxesThere 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 RiskFinancial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, investments, foreign currency forward contracts, receivables due from clients and net CSV due from insurance companies, which are discussed above. Cash equivalents include investments in money market securities and may include commercial papers and corporate notes/bonds while investments include mutual funds, commercial papers, and corporate notes/bonds.bonds and may include US Treasury and Agency securities. Investments are diversified throughout many industries and geographic regions. The Company maintains its cash and cash equivalents in bank accounts that exceed federally insured FDIC limits. The Company has not experiences any losses in such accounts. The Company conducts periodic reviews of its customers’ financial condition and customer payment practices to minimize collection risk on accounts receivable. AtAs of April 30, 20202023 and 2019,2022, the Company had no other significant credit concentrations.F-18 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2020 (continued)ReclassificationsCertain reclassifications have been made to the amounts in prior periods in order to conform to the current period’s presentation.Recently Adopted Accounting StandardsIn February 2016, the Financial Accounting Standards Board (“FASB”) issued guidance (Accounting Standard Codification 842 – Leases) on accounting for leases that generally requires all leases to be recognized on the consolidated balance sheet. The guidance is effective for fiscal years beginning after December 15, 2018. On July 30, 2018, the FASB issued an amendment that allows entities to apply the provisions at the effective date without adjusting comparative periods. The Company adopted this guidance as of May 1, 2019 using a modified retrospective approach without restatement of comparative periods. As such, periods prior to the date of adoption are presented in accordance with Accounting Standard Codification 840 - Leases. The FASB also issued subsequent related Accounting Standards Updates (“ASUs”), which detail amendments to the ASU, implementation considerations, narrow-scope improvements and practical expedients. The Company elected to apply the group of practical expedients which allows the Company to carry forward its identification of contracts that are or contain leases, its historical lease classification and its initial direct costs for existing leases. The Company has also elected to combine lease and non-lease components for all asset classes and recognize leases with an initial term of 12 months or less on a straight-line basis without recognizing a ROU asset or operating lease liability.The adoption of this standard had a material impact on the consolidated balance sheet as of May 1, 2019 due to the recognition of ROU assets and operating lease liabilities, but an immaterial impact on the Company’s consolidated statements of income, consolidated statements of comprehensive income, consolidated statements of stockholders’ equity, and consolidated statements of cash flows. Upon adoption the Company recognized total ROU assets of $236.1 million with a corresponding liability of $272.3 million. The ROU asset balance was adjusted by the reclassification of pre-existing prepaid expenses and other assets and deferred rent balances of $5.1 million and $41.3 million, respectively.In August 2017, the FASB issued guidance amending and simplifying accounting for hedging activities. The guidance refined and expanded strategies that qualify for hedge accounting and simplified the application of hedge accounting in certain situations. The guidance is effective for fiscal years beginning after December 15, 2018. The Company adopted this guidance as of May 1, 2019. The adoption of this guidance did not have an impact on the consolidated financial statements.Recently Proposed Accounting Standards - Not Yet AdoptedIn June 2016,October 2021, the FASB issued guidance onan amendment in accounting for measurementcontract assets and contract liabilities from contracts with customers, which clarifies that an acquirer of credit losses on financial Instruments, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain typesbusiness should recognize and measure contract assets and contract liabilities in a business combination in accordance with ASC 606, Revenue from Contracts with Customers. The amendment of financial instruments, including trade receivables. Thethis standard isbecomes effective forin fiscal years beginning after December 15, 2019.2022. The amendment should be applied prospectively to business combinations that occur after the effective date. The Company will adopt this guidance in its fiscal year beginning May 1, 2020.2023. The adoption ofCompany does not anticipate this accounting guidance is not anticipated towill 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 will adopt this guidance in its fiscal year beginning May 1, 2020. The adoption of this guidance is not anticipated to have a material impact on the consolidated financial statements.F-19F-17 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 20202023 (continued)In August 2018, the FASB issued guidance amending the disclosure requirements for fair value measurements. The amendment removes and modifies disclosures that are currently required and adds additional disclosures that are deemed relevant. The amendments of this standard are effective for fiscal years beginning after December 15, 2019. The Company will adopt this guidance in its fiscal year beginning May 1, 2020.The Company is currently evaluating the impact of adopting this guidance and doesn’t anticipate the guidance to have a material impact on the consolidated financial statements.In August 2018, the FASB issued guidance amending accounting for internal-use software. The new guidance will align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with developing or obtaining internal-use software. The amendments of this standard are effective for fiscal years beginning after December 15, 2019 with early adoption permitted. The Company will adopt this guidance in its fiscal year beginning May 1, 2020. The adoption of this guidance is not anticipated to have a material impact on the consolidated financial statements.In December 2019, the FASB issued guidance on Simplifying the Accounting for Income Taxes. This update eliminates certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The update also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The amendments of this standard are effective for fiscal year beginning after December 15, 2020, with early adoption permitted. The Company will adopt this guidance in its fiscal year beginning May 1, 2021. The adoption of this guidance is not anticipated to have a material impact on the consolidated financial statements.2. Basic and Diluted Earnings Per ShareAccounting Standards CodificationASC 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. The Company has granted and expects to continue to grant to certain employees under its restricted stock agreements, grants that contain non-forfeitable rights to dividends. Such grants are considered participating securities. Therefore, the Company is 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 2020, 20192023, 2022 and 2018,2021, restricted stock awards of 0.71.2 million shares, 0.61.2 million shares and 0.61.3 million shares, respectively, were outstanding but not included in the computation of diluted earnings per share because they were anti-dilutive.F-20 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2020 (continued)The following table summarizes basic and diluted earnings per common share attributable to common stockholders:Year Ended April 30, 2023 2022 2021 (in thousands, except per share data) Net income attributable to Korn Ferry $ 209,529 $ 326,360 $ 114,454 Less: distributed and undistributed earnings to nonvested restricted stockholders 4,618 7,343 2,763 Basic net earnings attributable to common stockholders 204,911 319,017 111,691 Add: undistributed earnings to nonvested restricted stockholders 3,912 6,750 2,185 Less: reallocation of undistributed earnings to nonvested restricted stockholders 3,882 6,676 2,165 Diluted net earnings attributable to common stockholders $ 204,941 $ 319,091 $ 111,711 Weighted-average common shares outstanding: Basic weighted-average number of common shares outstanding 51,482 52,807 52,928 Effect of dilutive securities: Restricted stock 384 580 476 ESPP 17 14 1 Diluted weighted-average number of common shares outstanding 51,883 53,401 53,405 Net earnings per common share: Basic earnings per share $ 3.98 $ 6.04 $ 2.11 Diluted earnings per share $ 3.95 $ 5.98 $ 2.09 F-18KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2023 (continued)3. Comprehensive IncomeComprehensive income 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 other comprehensive income (loss),loss, net of taxes, is recorded as a component of stockholders’ equity.The components of accumulated other comprehensive income (loss)loss, net were as follows:April 30, 2023 2022 (in thousands) Foreign currency translation adjustments $ (96,860) $ (92,717) Deferred compensation and pension plan adjustments, net of taxes 4,381 961 Marketable securities unrealized loss, net of tax Marketable securities unrealized loss, net of tax (285) (429) Accumulated other comprehensive loss, net $ (92,764) $ (92,185) F-21 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2020 (continued)The following table summarizes the changes in each component of accumulated other comprehensive income (loss):loss, net:Foreign
Currency
TranslationDeferred
Compensation
and Pension
Plan (1)Unrealized Gains
(Losses) on Marketable
Securities (2)Accumulated
Other
Comprehensive
Loss(in thousands) Balance as of May 1, 2020 $ (83,652) $ (23,554) $ 34 $ (107,172) Unrealized gains (losses) arising during the period 49,986 2,660 (53) 52,593 Reclassification of realized net losses to net income — 2,759 — 2,759 Balance as of April 30, 2021 (33,666) (18,135) (19) (51,820) Unrealized (losses) gains arising during the period (59,051) 17,747 (411) (41,715) Reclassification of realized net losses to net income — 1,349 1 1,350 Balance as of April 30, 2022 (92,717) 961 (429) (92,185) Unrealized (losses) gains arising during the period (4,143) 3,211 144 (788) Reclassification of realized net losses to net income — 209 — 209 Balance as of April 30, 2023 $ (96,860) $ 4,381 $ (285) $ (92,764) The tax effects on unrealized (losses) gains were $(3.1) million, $(2.3) million and $2.5 million as of April 30, 2020, 2019 and 2018, respectively. The tax effects on reclassifications of realized net losses were $0.8 million, $0.4 million and $0.8 million as of April 30, 2020, 2019 and 2018, respectively.The tax effects on unrealized (losses) gains were $(0.2) million, $(0.3) million and $0.8 million as of April 30, 2020, 2019 and 2018, respectively. The tax effect on the reclassification of realized net (losses) gains to net income was $(0.1) million, $0.1 million and $(0.3) million as of April 30, 2020 2019 and 2018, respectively.F-19KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2023 (continued)4. Employee Stock PlansStock-Based CompensationThe following table summarizes the components of stock-based compensation expense recognized in the Company’s consolidated statements of income for the periods indicated:Year Ended April 30, 2023 2022 2021 (in thousands) Restricted stock $ 35,433 $ 28,361 $ 26,516 ESPP 852 849 641 Total stock-based compensation expense $ 36,285 $ 29,210 $ 27,157 Stock Incentive PlanAt the Company’s 20192022 Annual Meeting of Stockholders, held on October 3, 2019,September 22, 2022, the Company’s stockholders approved an amendment and restatement to the Korn Ferry Amended and Restated 20082022 Stock Incentive Plan (the 2019 amendment and restatement being the “Fourth A&R 2008 Plan”"2022 Plan"), which, among other things, eliminated the fungible share counting provision and decreasedincreased the total number of shares of the Company’s common stock available for stock-based awards by 2,141,8071,700,000 shares, leaving 3,600,0002,248,284 shares available for issuance, subject to certain changes in the Company’s capital structure and other extraordinary events. The Fourth A&R 20082022 Plan was also amended to generally requirerequires a minimum one-year vesting for all future awards, and provides for the grant of awards to eligible participants, designated as either nonqualified or incentive stock options, restricted stock and restricted stock units, any of which are market-based, and incentive bonuses, which may be paid in cash or stock or a combination thereof.F-22 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2020 (continued)Restricted StockThe Company grants time-based restricted stock awards to executive officers and other senior employees that generally vestingvest 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. As of April 30, 2020 and 2019, 0 performance-based shares were outstanding.Restricted stock activity is summarized below:April 30, 2023 2022 2021 Shares Weighted-
Average
Grant Date
Fair ValueShares Weighted-
Average
Grant Date
Fair ValueShares Weighted-
Average
Grant Date
Fair Value(in thousands, except per share data) Non-vested, beginning of year 1,980 $ 40.32 2,370 $ 34.34 1,365 $ 44.59 Granted 1,143 $ 49.12 483 $ 65.05 1,606 $ 27.63 Vested (1,006) $ 37.72 (821) $ 43.76 (516) $ 39.78 Forfeited (54) $ 52.58 (52) $ 34.30 (85) $ 22.35 Non-vested, end of year 2,063 $ 50.12 1,980 $ 40.32 2,370 $ 34.34 As of April 30, 2020,2023, there were 0.50.4 million shares outstanding relating to market-based restricted stock units with total unrecognized compensation totaling $10.5$17.7 million.F-20KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2023 (continued)As of April 30, 2020,2023, there was $34.7$69.8 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 2.32.4 years. During fiscal 20202023 and 2019, 232,6182022, 372,556 shares and 356,879271,794 shares of restricted stock totaling $9.0totalling $22.2 million and $20.7$18.5 million, respectively, were repurchased by the Company, at the option of the employee, to pay for taxes related to the vesting of restricted stock.Employee Stock Purchase PlanThe 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 atstock. On June 3, 2020, the Company amended the plan so that the purchase price of the shares purchased could not be less than 85% or more than 100% of the fair market price of the common stock on the last day of the enrollment period. This amendment became effective July 1, 2020. At the Company's 2022 Annual Meeting of Stockholders, held on September 22, 2022, the Company's stockholders approved the Korn Ferry Amended and Restated Employee Stock Purchase Plan, which, among other things, increased the total number of shares of the Company's common stock that may be purchased thereunder by 1,500,000 shares. 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 3.04.5 million shares. During fiscal 2020, 2019,2023, 2022, and 2018,2021, employees purchased 220,161154,720 shares at $34.90an average price of $49.16 per share, 169,299103,826 shares at $42.05an average price of $66.64 per share and 198,749188,608 shares at $31.77an average price of $30.25 per share, respectively. As of April 30, 2020,2023, the ESPP had approximately 0.71.8 million shares remaining available for future issuance.F-23 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2020 (continued)Common StockDuring fiscal 2020, there were 0 stock options exercised. During fiscal 20192023, 2022 and 2018, the Company issued 6,720 shares and 41,075 shares of common stock, respectively, because of the exercise of stock options, with cash proceeds from the exercise of $0.2 million and $0.6 million, respectively.During fiscal 2020, 2019 and 2018,2021, the Company repurchased (on the open market or privately negotiated transactions) 2,606,8611,709,867 shares 809,074 shares and 984,079 shares, respectively, of the Company’s common stock for $92.4$93.9 million, $37.41,470,983 shares for $98.8 million and $33.1973,451 shares for $30.4 million, respectively.5. Financial InstrumentsThe following tables show the Company’s financial instruments and balance sheet classification as of April 30, 20202023 and 2019:2022:April 30, 2023 Fair Value Measurement Balance Sheet Classification Cost Unrealized
GainsUnrealized
LossesFair
ValueCash and
Cash
EquivalentsMarketable
Securities,
CurrentMarketable
Securities,
Non-currentIncome Taxes & Other
Receivables(in thousands) Changes in Fair Value Recorded in Other Comprehensive Loss Other Comprehensive Loss Level 2: Commercial paper $ 11,751 $ — $ (30) $ 11,721 $ — $ 11,721 $ — $ — Corporate notes/bonds 24,754 — (355) 24,399 — 21,492 2,907 — Total debt investments $ 36,505 $ — $ (385) $ 36,120 $ — $ 33,213 $ 2,907 $ — Changes in Fair Value Recorded in Net Income Level 1: Mutual funds (1)$ 187,757 $ — $ 11,624 $ 176,133 $ — Total equity investments $ 187,757 $ — $ 11,624 $ 176,133 $ — Cash $ 696,180 $ 696,180 $ — $ — $ — Money market funds 147,844 147,844 — — — Level 2: Foreign currency forward contracts 2,133 — — — 2,133 Total $ 1,070,034 $ 844,024 $ 44,837 $ 179,040 $ 2,133 F-24F-21 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 20202023 (continued)April 30, 2022 Fair Value Measurement Balance Sheet Classification Cost Unrealized
GainsUnrealized
LossesFair
ValueCash and
Cash
EquivalentsMarketable
Securities,
CurrentMarketable
Securities,
Non-currentOther Accrued
Liabilities(in thousands) Changes in Fair Value Recorded in Other Comprehensive Loss Level 2: Commercial paper $ 41,627 $ — $ (126) $ 41,501 $ 15,489 $ 26,012 $ — $ — Corporate notes/bonds 37,736 — (450) 37,286 — 20,242 17,044 — U.S. Treasury and Agency Securities 995 — (8) 987 — 987 — — Total debt investments $ 80,358 $ — $ (584) $ 79,774 $ 15,489 $ 47,241 $ 17,044 $ — Changes in Fair Value Recorded in Net Income Level 1: Mutual funds (1)$ 168,742 $ — $ 10,003 $ 158,739 $ — Total equity investments $ 168,742 $ — $ 10,003 $ 158,739 $ — Cash $ 874,490 $ 874,490 $ — $ — $ — Money market funds 88,091 88,091 — — — Level 2: Foreign currency forward contracts (204) — — — (204) Total $ 1,210,893 $ 978,070 $ 57,244 $ 175,783 $ (204) (1)These investments are held in trust for settlement of the Company’s vested obligations of $124.6 million and $122.3 million as of April 30, 2020 and 2019, respectively, under the ECAP (see Note 6 — Deferred Compensation and Retirement Plans). Unvested obligations under the deferred compensation plans totaled $21.7 million and $24.6 million as of April 30, 2020 and 2019, respectively. During fiscal 2020, the fair value of the investments decreased; therefore, the Company recognized loss of $1.8 million, which was recorded in other (loss) income, net. During fiscal 2019 and 2018, the fair value of the investments increased; therefore, the Company recognized income of $8.1 million, and $10.3 million, respectively, which was recorded in other (loss) income, net. 2020,2023 and 2022 marketable securities classified as available-for-sale consisted of commercial paper and corporate notes/bonds, and also included US Treasury and Agency securities as of April 30, 2022, for which market prices for similar assets are readily available. Investments that have an original maturity of 90 days or less and are considered highly liquid investments are classified as cash equivalents. As of April 30, 2020,2023, available-for-sale marketable securities had remaining maturities ranging from one1 month to twelve13 months. During fiscal 2020,2023, 2022 and 2021, there were $4.8$58.6 million, $79.3 million and $60.6 million in sales/maturities of available-for-sale marketable securities.securities, respectively. Investments in marketable securities that are held in trust for settlement of the Company’s vested obligations under the ECAP are equity securities and are based upon the investment selections the employee elects from a pre-determined set of securities in the ECAP and the Company invests in equity securities to mirror these elections. As of April 30, 20202023 and 2019,2022, the Company’s investments in equity securities consisted of mutual funds for which market prices are readily available. Unrealized losslosses that relatesrelate to equity securities still held as of April 30, 20202023 and 20192022, was $8.2$3.8 million and $4.7$27.3 million, respectively. Unrealizedrespectively, while unrealized gains that relatesrelate to equity securities still held as of April 30, 20182021, was $3.9$32.7 million.Designated Derivatives - Interest Rate Swap AgreementIn March 2017, the Company entered into an interest rate swap contract with a notional amount of $129.8 million 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 interest rate swap agreement locked the interest rates on a portion of the debt outstanding at 1.919%, exclusive of the credit spread on the debt. The Company designated the swap as a cash flow hedge. On December 16, 2019, in conjunction with the payoff of the credit facility, the Company terminated the interest rate swap and recorded $0.5 million in interest expense, net.F-25F-22 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 20202023 (continued)The fair value of the derivative designated as a cash flow hedge instrument is as follows:During fiscal 2020, 2019 and 2018, the Company recognized the following gains and losses on the interest rate swap:The cash flows related to interest rate swap contracts are included in net cash provided by operating activities.The fair value of derivatives not designated as hedge instruments are as follows:April 30, 2023 2022 (in thousands) Derivative assets: Foreign currency forward contracts $ 2,813 $ 1,639 Derivative liabilities: Foreign currency forward contracts $ 680 $ 1,843 As of April 30, 2020,2023, the total notional amounts of the forward contracts purchased and sold were $91.2$112.7 million and $41.8$41.1 million, respectively. As of April 30, 2019,2022, the total notional amounts of the forward contracts purchased and sold were $51.4$89.7 million and $40.0$35.8 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 20202023 and 2018,2021, the Company incurred lossesgains of $0.3$2.1 million and $3.7$2.7 million, respectively, related to forward contracts which is recorded in general and administrative expenses in the accompanying consolidated statements of income. These foreign currency losses offset foreign currency gains that result from transactions denominated in a currency other than the Company’s functional currency. During fiscal 2019,2022, the Company incurred gainslosses of $1.2$0.2 million, related to forward contracts which is recorded in general and administrative expenses in the accompanying consolidated statements of income. These foreign currency gainsgains/losses offset foreign currency losseslosses/gains that result from transactions denominated in a currency other than the Company’s functional currency. The cash flows related to foreign currency forward contracts are included in cash flows from operating activities.6. Deferred Compensation and Retirement PlansThe 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.F-26 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2020 (continued)The total benefit obligations for these plans were as follows:Year Ended April 30, 2023 2022 (in thousands) Deferred compensation and pension plans $ 227,255 $ 189,608 Medical and Life Insurance plan 4,838 5,365 International retirement plans 13,617 14,395 Executive Capital Accumulation Plan 178,043 166,723 Total benefit obligation 423,753 376,091 Less: current portion of benefit obligation (1)(27,219) (18,916) Non-current benefit obligation $ 396,534 $ 357,175 The plan is funded consistent with local statutory requirements. In response to the impact of COVID-19, the Company will take advantage of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act’). Under the CARES Act, minimum required contributions for Hay qualified pension plans, including quarterly contributions, that are otherwise due during calendar year 2020 are instead deferred until January 1, 2021.On July 8, 2016, the Company established the 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 employees. A unit award has a base value of either $25,000 or $50,000 for the purpose of determining the payment that would be made upon early termination for a partially vested unit award. 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 either $12,500 or $25,000 for each of five years commencing on the seventh anniversary of the grant date.F-27 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2020 (continued)Deferred Compensation and Pension PlansThe following tables reconcile the benefit obligation for the deferred compensation and pension plans:Year Ended April 30, 2023 2022 (in thousands) Change in benefit obligation: Benefit obligation, beginning of year $ 211,598 $ 205,740 Service cost 40,843 37,952 Interest cost 9,511 4,028 Actuarial gain (6,083) (25,757) Administrative expenses paid (168) (196) Benefits paid from plan assets (1,901) (2,543) Benefits paid from cash (7,460) (7,626) Benefit obligation, end of year 246,340 211,598 Change in fair value of plan assets: Fair value of plan assets, beginning of year 21,990 26,746 Actual return on plan assets (836) (2,113) Benefits paid from plan assets (1,901) (2,543) Administrative expenses paid (168) (196) Employer contributions — 96 Fair value of plan assets, end of year 19,085 21,990 Funded status and balance, end of year (1)$ (227,255) $ (189,608) Current liability $ 15,447 $ 8,833 Non-current liability 211,808 180,775 Total liability $ 227,255 $ 189,608 Plan Assets - weighted-average asset allocation: Debt securities 44 % 42 % Equity securities 52 % 55 % Other 4 % 3 % Total 100 % 100 % The Company amended the Hay Group qualified plan in fiscal 2020 to allow participants that have yet not received benefits to elect a lump-sum payment rather than an annuity payment. As a result of this plan amendment the benefits paid from plan assets include $2.0 million in payments related to participants making this election. The plan amendment also reduced the Company’s benefit obligation by $0.6 million against other comprehensive income.(2)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, 2020 and 2019, the Company held contracts with gross CSV of $238.7 million and $219.2 million, offset by outstanding policy loans of $92.3 million and $93.2 million, respectively.F-24F-28 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 20202023 (continued)Significant changes affectingour general corporate assets, they are not included in the funded status. As of April 30, 2023 and 2022, the Company held contracts with gross CSV of $275.1 million and $263.2 million, offset by outstanding policy loans of $77.1 million and $79.8 million, respectively.The pension obligation in fiscal 2023 increased compared to fiscal 2022 due to the ongoing accruals for the LTPU Plan for additional awards issued in fiscal 2023. Additionally, the actual return on plan assets was lower than the expected return and this caused our funded position to decrease. The increase in pension benefit obligations in fiscal 2020 compared to fiscal 2019 primarily included actuarial loss in 2020 due to a decrease in discount rates,was partially offset by the actuarial gain which was primarily due to an update of census data and changeincrease in the mortality assumption that affect the assumptions used to value liabilities. The mortality assumption reflects a change from the use of the MP-2018 improvement scale to MP-2019 improvement scale, a change from RP-2006 base mortality table to Pri-2012 base mortality, and a change from the use of “top quartile” to white-collar base tables for some of our plans.discount rates. The fair value measurements of the defined benefit plan assets fall within the following levels of the fair value hierarchy as of April 30, 20202023 and 2019:2022:Level 1 Level 2 Level 3 Total (in thousands) April 30, 2023: April 30, 2023: Mutual funds $ — $ 18,350 $ — $ 18,350 Money market funds 735 — — 735 Total $ 735 $ 18,350 $ — $ 19,085 April 30, 2022: April 30, 2022: Mutual funds $ — $ 21,353 $ — $ 21,353 Money market funds 637 — — 637 Total $ 637 $ 21,353 $ — $ 21,990 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%40% to 60%, and debt securities 35%40% to 45% and other assets of 1% to 11%60%. 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.The components of net periodic benefits costs are as follows:Year Ended April 30, 2023 2022 2021 (in thousands) Service cost $ 40,843 $ 37,952 $ 31,947 Interest cost 9,511 4,028 4,035 Amortization of actuarial loss 945 2,170 4,117 Net prior service credit amortization (97) (97) (97) Expected return on plan assets (1,156) (1,554) (1,404) Net periodic benefit cost (1)$ 50,046 $ 42,499 $ 38,598 (1)The service cost, interest cost and other components of net periodic benefit costs are included in compensation and benefits expense, interest expense, net and other (loss) income, net, respectively, on the consolidated statements of income.F-25KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2023 (continued)The weighted-average assumptions used in calculating the benefit obligations were as follows:Year Ended April 30, 2023 2022 2021 Discount rate, beginning of year 4.08 % 2.17 % 2.29 % Discount rate, end of year 4.77 % 4.08 % 2.17 % Rate of compensation increase 0.00 % 0.00 % 0.00 % Expected long-term rates of return on plan assets 6.00 % 5.50 % 6.00 % F-29 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2020 (continued)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) 2024 $ 17,219 2025 26,151 2026 34,713 2027 43,306 2028 52,563 2029-2033 237,542 Medical and Life Insurance PlanIn conjunction with the acquisition of Hay Group, the Company inherited a benefit plan which offers medical and life insurance coverage to 125107 participants. The medical and life insurance benefit plan is closed to new entrants and is unfunded.The following table reconciles the benefit obligation for the medical and life insurance plan:Year End April 30, 2023 2022 (in thousands) Change in benefit obligation: Benefit obligation, beginning of year $ 5,365 $ 6,584 Interest cost 195 110 Actuarial gain Actuarial gain (93) (857) Benefits paid (629) (472) Benefit obligation, end of year $ 4,838 $ 5,365 Current liability $ 563 $ 585 Non-current liability 4,275 4,780 Total liability $ 4,838 $ 5,365 F-26KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2023 (continued)The components of net periodic benefits costs are as follows:Year Ended April 30, 2023 2022 2021 (in thousands) Service cost $ — $ — $ — Interest cost 195 110 140 Net periodic service credit amortization (308) (308) (308) Amortization of actuarial gain (74) — — Net periodic benefit cost (1)$ (187) $ (198) $ (168) (1)The service cost, interest cost and the other components of net periodic benefit costs are included in compensation and benefits expense, interest expense, net and other income (loss), net, respectively, on the consolidated statements of income.Year Ended April 30, 2023 2022 2021 Discount rate, beginning of year 4.25 % 2.54 % 2.45 % Discount rate, end of year 4.85 % 4.25 % 2.54 % Healthcare care cost trend rate 6.50 % 6.00 % 6.25 % F-30 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2020 (continued)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, Medical and Life Insurance (in thousands) 2024 $ 577 2025 551 2026 525 2027 486 2028 450 2029-2033 1,869 International Retirement PlansThe Company also maintains various retirement plans and other miscellaneous deferred compensation arrangements in 2325 foreign jurisdictions. The aggregate of the long-term benefit obligation accrued at April 30, 20202023 and 20192022 is $14.9$13.6 million for 2,9914,058 participants and $14.7$14.4 million for 2,7773,568 participants, respectively. The Company’s contribution to these plans was $14.4$16.4 million and $13.3$14.8 million in fiscal 20202023 and 2019,2022, respectively.Executive Capital Accumulation PlanThe Company’s ECAP is intended to provide certain employees an opportunity to defer their salary and/or bonus on a pre-tax basis. 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-fivefive 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-15one-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 consolidated balance sheets.F-27KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2023 (continued)The Company issued ECAP awards during fiscal 2020, 20192023, 2022 and 20182021 of $9.0$6.5 million, $8.5$7.5 million and $6.2$8.2 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 both fiscal 2020,2023 and 2021, the deferred compensation liability increased; therefore, the Company recognized a compensation expense of $3.5 million and $37.3 million, respectively. Offsetting the increase in compensation and benefits expense in fiscal 2023 and 2021 was an increase in the fair value of marketable securities (held in trust to satisfy obligations of the ECAP liabilities) of $2.9 million and $38.5 million in fiscal 2023 and 2021, respectively, recorded in other income (loss), net on the consolidated statements of income. During fiscal 2022, deferred compensation liability decreased; therefore, the Company recognized a reduction in compensation expense of $0.8$10.6 million. During both fiscal 2019 and 2018, the deferred compensation liability increased; therefore, the Company recognized compensation expense of $8.7 million and $11.1 million, respectively. Offsetting the decrease in compensation and benefits expense in fiscal 20202022 was a decrease in the fair value of marketable securities (held in trust to satisfy obligations of the ECAP liabilities) of $1.8$12.0 million in fiscal 2020,2022, recorded in other income (loss) income,, net on the consolidated statement of income. Offsetting the increases in compensation and benefits expense in both fiscal 2019 and 2018 was increases in the fair value of marketable securities (held in trust to satisfy obligations of the ECAP liabilities) of $8.1 million and $10.3 million in fiscal 2019 and 2018, respectively, recorded in other (loss) income, net on the consolidated statements of income. Changes in ECAP liability were as follows:Year Ended April 30, 2023 2022 (in thousands) Balance, beginning of year $ 166,723 $ 163,582 Employee contributions 17,046 8,541 Amortization of employer contributions 5,886 7,060 Gain (loss) on investment Gain (loss) on investment 3,464 (10,602) Employee distributions (14,306) (10,880) Acquisition of Lucas Group Acquisition of Lucas Group — 9,620 Exchange rate fluctuations (770) (598) Balance, end of year 178,043 166,723 Less: current portion (11,209) (9,498) Non-current portion $ 166,834 $ 157,225 F-31 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2020 (continued)As of April 30, 20202023 and 2019,2022, the unamortized portion of the Company contributions to the ECAP was $17.0$16.1 million and $16.8$18.2 million, respectively.Defined Contribution PlanThe 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. DueBeginning in fiscal 2022, the Company began to match 10% of the employee contributions each pay period up to the impact of COVID-19,IRS limit (excluding catch-up contributions) and then making an additional discretionary match after the fiscal year. The Company made $3.5 million in matching contributions during fiscal 2023. In addition, the Company has temporarily suspendedintends to make an additional matching contribution relating to fiscal 2023 of $3.1 million in fiscal 2024, which are accrued in compensation and benefits payable on the consolidated balance sheet. The Company made $2.1 million matching contributions during fiscal 2022 and an additional $2.7 million matching contribution in fiscal 2023 related to contributions made by employees in fiscal 2020.2022. The Company made a $3.0 million matching contribution in fiscal 20202022 related to contributions made by employees in fiscal 2019 and a $2.7 million matching contribution in fiscal 2019 related to contributions made by employees in fiscal 2018.Company Owned Life InsuranceThe 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 $238.7$275.1 million and $219.2$263.2 million as of April 30, 20202023 and 2019,2022, respectively, is offset by outstanding policy loans of $92.3$77.1 million and $93.2$79.8 million in the accompanying consolidated balance sheets as of April 30, 20202023 and 2019,2022, respectively. Total death benefits payable, net of loans under COLI contracts, were $451.7$444.1 million and $223.6$449.3 million at April 30, 20202023 and 2019,2022, 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 $6.6$10.6 million, $6.2$5.8 million and $7.8$13.0 million during fiscal 2020, 20192023, 2022 and 2018,2021, respectively, recorded as a decrease inF-28KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2023 (continued)compensation and benefits expense. In addition, certainCertain of the policies are held in trusts to provide additional benefit security for the deferred compensation and pension plans. As of April 30, 2020,2023, COLI contracts with a net CSV of $117.2$173.9 million and death benefits, net of loans, of $178.8$393.3 million were held in trust for these purposes. Total death benefits increased in fiscal 2020 as compared to fiscal 2019 as we entered into additional insurance policies in order to fund future obligations under certain deferred compensation plans.7. Fee RevenueContract BalancesA contract asset (unbilled receivables) is recorded when the Company transfers control of products or services before there is an unconditional right to payment. A contract liability (deferred revenue) is recorded when cash is received in advance of performance of the obligation. Deferred revenue represents the future performance obligations to transfer control of products or services for which we have already received consideration. Deferred revenue is presented in other accrued liabilities on the consolidated balance sheet.sheets.The following table outlines our the Company’s contract asset and liability balances as of April 30, 20202023 and 2019:2022:April 30, 2023 2022 (in thousands) Contract assets-unbilled receivables $ 99,442 $ 100,652 Contract liabilities-deferred revenue $ 257,067 $ 244,149 During the year ended April 30, 2020fiscal 2023, 2022, and 2019,2021 we recognized revenue of $94.1$181.7 million, $131.3 million and $97.0$92.4 million, respectively, that were included in the contract liabilities balance at the beginning of the period.F-32 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2020 (continued)Performance ObligationsThe Company has elected to apply the practical expedient to exclude the value of unsatisfied performance obligations for contracts with a duration of one year or less, which applies to all executive search, and professional search and to most of the fee revenue.revenue from the interim business. As of April 30, 2020,2023, the aggregate transaction price allocated to the performance obligations that are unsatisfied for contracts with an expected duration of greater than one year at inception was $608.5$1,118.0 million. Of the $608.5$1,118.0 million of remaining performance obligations, we expectthe Company expects to recognize approximately $307.7$600.7 million in fiscal 2021, $158.62024, $325.4 million in fiscal 2022, $77.32025, $138.5 million in fiscal 20232026 and the remaining $64.9 $53.4 million in fiscal 20242027 and thereafter. However, this amount should not be considered an indication of the Company’s future revenue as contracts with an initial term of one year or less are not included. Further, our contract terms and conditions allow for clients to increase or decrease the scope of services and such changes do not increase or decrease a performance obligation until the Company has an enforceable right to payment.Disaggregation of RevenueThe Company disaggregates its revenue by line of business and further by region for Executive Search. This information is presented in Note 11—Segments.The following table provides further disaggregation of fee revenue by industry:Year Ended April 30, 2023 2022 2021 Dollars % Dollars % Dollars % (dollars in thousands) Industrial $ 805,241 28.4 % $ 688,902 26.2 % $ 490,863 27.1 % Life Sciences/Healthcare 522,372 18.4 501,463 19.1 355,668 19.7 Financial Services 494,299 17.4 475,326 18.1 331,976 18.3 Technology Technology 483,787 17.1 456,498 17.4 275,510 15.2 Consumer Goods 386,409 13.6 372,720 14.2 239,457 13.2 Education/Non–Profit/General Education/Non–Profit/General 143,300 5.1 131,809 5.0 116,573 6.5 Fee Revenue $ 2,835,408 100.0 % $ 2,626,718 100.0 % $ 1,810,047 100.0 % F-29KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2023 (continued)8. Credit LossesThe Company is exposed to credit losses primarily through the services it provides. The Company’s expected credit loss allowance methodology for accounts receivable is developed using historical collection experience, current and future economic and market conditions and a review of the current status of customers' trade accounts receivables. Due to the short-term nature of such receivables, the estimate of the amount of accounts receivable that may not be collected is primarily based on historical loss-rate experience. When required, the Company adjusts the loss-rate methodology to account for current conditions and reasonable and supportable expectations of future economic and market conditions. The Company generally assesses future economic conditions for a period of sixty to ninety days, which corresponds with the contractual life of its accounts receivables. Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. The Company’s monitoring activities include timely account reconciliation, dispute resolution, payment confirmation, consideration of customers' financial condition and macroeconomic conditions. Balances are written off when determined to be uncollectible.The activity in the allowance for credit losses on the Company's trade receivables is as follows:(in thousands) Balance at May 1, 2020 $ 23,795 Provision for credit losses 15,763 Write-offs (12,073) Recoveries of amounts previously written off 311 Foreign currency translation 1,528 Balance at April 30, 2021 29,324 Provision for credit losses 21,552 Write-offs (14,052) Recoveries of amounts previously written off 702 Foreign currency translation (1,142) Balance at April 30, 2022 36,384 Provision for credit losses 22,493 Write-offs (15,806) Recoveries of amounts previously written off 585 Foreign currency translation 721 Balance at April 30, 2023 $ 44,377 F-30KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2023 (continued)The fair value and unrealized losses on available for sale debt securities, aggregated by investment category and the length of time the security has been in an unrealized loss position as of April 30, 2023 and 2022, are as follows:Less Than 12 Months 12 Months or longer Balance Sheet Classification Fair Value Unrealized Losses Fair Value Unrealized Losses Cash and Cash
EquivalentsMarketable Securities,
CurrentMarketable
Securities, Non-
Current(in thousands) Balance at April 30, 2022 Commercial paper $ 37,002 $ 125 $ 4,499 $ 1 $ 15,489 $ 26,012 $ — Corporate notes/bonds $ 32,186 $ 446 $ 3,800 $ 4 $ — $ 18,942 $ 17,044 U.S. Treasury and Agency Securities $ 987 $ 8 $ — $ — $ — $ 987 $ — Balance at April 30, 2023 Commercial paper $ 8,229 $ 26 $ 3,492 $ 4 $ — $ 11,721 $ — Corporate notes/bonds $ 9,581 $ 123 $ 13,815 $ 232 $ — $ 20,489 $ 2,907 The unrealized losses on 7 and 27 investments in commercial paper securities, 16 and 23 investments in corporate notes/bonds, and no investment and 1 investment in U.S treasury and agency securities on April 30, 2023 and 2022, respectively, were caused by fluctuations in market interest rates. The Company only purchases high grade bonds that have a maturity from the date of purchase of no more than two years. The Company monitors the credit worthiness of its investments on a quarterly basis. The Company does not intend to sell the investments and does not believe it will be required to sell the investments before the investments mature and therefore recover the amortized cost basis.9. Income TaxesIncome (loss) from continuing operations before provision for income taxes was as follows:Year Ended April 30, 2023 2022 2021 (in thousands) Domestic $ 136,269 $ 184,877 $ 34,661 Foreign 159,468 248,024 129,039 Income before provision for income taxes $ 295,737 $ 432,901 $ 163,700 F-31KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2023 (continued)The provision (benefit) for domestic and foreign income taxes was as follows:Year Ended April 30, 2023 2022 2021 (in thousands) Current income taxes: Federal $ 39,188 $ 43,993 $ 16,913 State 15,879 15,962 4,719 Foreign 42,019 59,064 40,646 Current provision for income taxes 97,086 119,019 62,278 Deferred income taxes: Federal (13,228) (13,858) (5,809) State (5,723) (3,936) (5,025) Foreign 4,548 831 (3,306) Deferred benefit for income taxes (14,403) (16,963) (14,140) Total provision for income taxes $ 82,683 $ 102,056 $ 48,138 F-33 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2020 (continued)The reconciliation of the statutory federal income tax rate to the effective consolidated tax rate is as follows:Year Ended April 30, 2023 2022 2021 U.S. federal statutory income tax rate 21.0 % 21.0 % 21.0 % State tax, net of federal effect 2.8 2.5 1.0 Foreign tax rates differential 4.0 2.5 4.5 Non-deductible officer's compensation Non-deductible officer's compensation 1.0 0.7 2.3 Excess tax (benefit) expense on stock-based compensation Excess tax (benefit) expense on stock-based compensation (0.9) (0.6) 0.8 Change in valuation allowance 0.3 (0.7) 0.3 COLI increase, net COLI increase, net (0.8) (0.3) (1.7) Change in uncertain tax positions Change in uncertain tax positions 0.1 0.3 1.1 R&D tax credit R&D tax credit (0.6) (1.3) (0.9) Other 1.1 (0.5) 1.0 Effective income tax rate 28.0 % 23.6 % 29.4 % The 21% corporate income tax rate enacted as part of the 2017 Tax Cuts and Jobs Act (the “Tax Act”) went fully into effect in our fiscal 2019. In fiscal 2018, the Company was subject to a federal blended rate of 30.4% (35% in the eight months prior to enactment and 21% in the four months after). Our higher effective tax rate in fiscal 2020 as compared to fiscal 2019 is partially attributable to state income tax on higher domestic income and a lower tax benefit recorded in connection with stock-based compensation. Also, in fiscal 2019 and 2018, 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 had returned to profitability and were more-likely-than-not to realize those deferred tax assets.In fiscal 2018, the Company recorded a provisional tax charge of $18.4 million for the one-time tax on accumulated foreign earnings (the “Transition Tax”) and a provisional tax benefit of $5.9 million from the remeasurement of our U.S. federal deferred tax assets and liabilities at the rate at which we expected these deferred tax balances to be realized. In accordance with Staff Accounting Bulletin No. 118 (“SAB 118”), we finalized our computation of the Transition Tax and remeasurement of deferred tax balances in fiscal 2019 and determined that the provisional estimates recorded in the fiscal 2018 do not require adjustment. Although the SAB 118 measurement period has closed, and the Company did not make any adjustments to its provisional estimates recorded in prior periods, further technical guidance on a broad range of topics related to the Tax Act is expected. When applicable, we will recognize the effects of such guidance in the period in which it is issued.The Tax Act also introduced a tax on Global Intangible Low-Taxed Income (“GILTI”) which first became effective in fiscal 2019. The Company elected to treat taxes due on future U.S. inclusions in taxable income related to GILTI as an expense when incurred (the “period cost method”) as opposed to factoring such amounts in the Company’s measurement of its deferred taxes (the “deferred method”).F-34F-32 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 20202023 (continued)Components of deferred tax assets and liabilities were as follows:April 30, 2023 2022 (in thousands) Deferred tax assets: Deferred compensation $ 120,361 $ 111,133 Operating lease liability 26,952 35,158 Loss carryforwards 28,707 33,360 Reserves and accruals 21,140 20,887 Allowance for doubtful accounts Allowance for doubtful accounts 7,272 5,645 Deferred revenue 6,436 6,207 Gross deferred tax assets 210,868 212,390 Deferred tax liabilities: Operating lease, right-of-use, assets (22,056) (27,513) Intangibles and goodwill Intangibles and goodwill (26,310) (28,388) Property and equipment (15,953) (24,063) Prepaid expenses (20,037) (24,453) Other (4,581) (1,951) Gross deferred tax liabilities (88,937) (106,368) Valuation allowances (25,226) (24,025) Net deferred tax asset $ 96,705 $ 81,997 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 assets will not be realized. Management believes uncertainty exists regarding the realizability of certain deferred tax assets and has, therefore, established a valuation allowance foroffsetting deferred tax assets that are not more-likely-than-not to be realized. The increase in valuation allowance from fiscal 2019 to fiscal 2020 is largely attributable to the valuation allowance recorded against deferred tax assets of the Acquired Companies which management believes are not more-likely-than-not to be realized. As such, this increase in valuation allowance did not impact the fiscal 2020 provision for income taxes. Realization of the deferred tax asset is dependent on the Company generating enough taxable income of the appropriate nature in future years. Although realization is not assured, management believes that it is more likely than-notmore-likely-than-not that the net deferred tax assets will be realized. In fiscal 2023, the Company’s valuation allowance increased by $1.2 million primarily due to increases in deferred tax asset balances, including net operating loss carryforwards, in certain foreign jurisdictions that were not more-likely-than-not to be realized. In fiscal 2022 and 2021, the Company’s valuation allowance decreased by $1.1 million and increased by $7.3 million, respectively, primarily due to changes in deferred tax asset balances, including net operating loss carryforwards in certain foreign jurisdictions that were not more-likely-than-not to be realized. Deferred tax assets and deferred tax liabilities are presented net on the consolidated balance sheets by tax jurisdiction.As of April 30, 2020,2023, the Company had U.S. federal net operating loss carryforwards of $2.5 million, which the Company anticipates will be fully utilized by fiscal 2028. The Company has state net operating loss carryforwards of $46.3$8.2 million, which if unutilized, will begin to expire in fiscal 2021.2036. The Company has state net operating loss carryforwards of $32.1 million, which, if unutilized, will begin to expire in fiscal 2024. The Company also has foreign net operating loss carryforwards of $106.1$103.7 million, which, if unutilized, will begin to expire in fiscal 2021.We continue to consider approximately $522.5$730.9 million of undistributed earnings of our foreign subsidiaries to be indefinitely reinvested, and, accordingly, have provided no state, local or foreign withholding income taxes on such earnings other than the Transition Tax.earnings. While we do not anticipate a need to repatriate funds to the U.S. to satisfy domestic liquidity needs, we review our cash positions regularly and, to the extent we determine that all or a portion of our foreign earnings are not indefinitely reinvested, we provide additional taxes, if applicable, includingstate, local and foreign withholding taxes and U.S. state income taxes.The Company elected to treat taxes due on future U.S. inclusions in taxable income related to Global Intangible Low-Taxed Income as an expense when incurred (the “period cost method”) as opposed to factoring such amounts in the Company’s measurement of its deferred taxes (the “deferred method”).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 taxF-33KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2023 (continued)authorities. In fiscal 2019, the IRS concluded its audit of our fiscal year 2016 federal tax return. In fiscal 2020, the State of New York and the City of New York concluded their audits of the Company’s income tax returns resulting in an immaterial amount of additional tax. Outside the U.S.,Currently, income tax returns of the Company’s subsidiaries are under audit in Brazil, Germany, Switzerland, Japan, 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 20142017 are no longer open to examination by tax authorities (including U.S. federal, state and foreign).F-35 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2020 (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, 2020,2023, the Company had a liability of $6.0$10.6 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, 2023 2022 2021 (in thousands) Unrecognized tax benefits, beginning of year $ 10,682 $ 9,954 $ 6,037 Additions based on tax positions related to the current year 1,257 456 1,716 Additions based on tax positions related to prior years 28 272 2,201 Settlement with tax authority Settlement with tax authority (545) — — Lapse of applicable statute of limitations Lapse of applicable statute of limitations (856) — — Unrecognized tax benefits, end of year $ 10,566 $ 10,682 $ 9,954 The full amount of unrecognized tax benefits would impact the effective tax rate if recognized. In the next 12 months, it is reasonably possible that the Company’s unrecognized tax benefits could change due to the resolution of certain tax matters either because the tax positions are sustained on audit or the Company agrees to their disallowance. These resolutions could reduce the Company’s liability for unrecognized tax benefits by approximately $1.5$1.4 million. The Company does not expect a change in the amount of unrecognized tax benefits to have a material financial statement impact.The Company classifies interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes. The Company had accruals of $0.6$1.8 million, $0.4$1.4 million, and $0.3$0.9 million for interest related to unrecognized tax benefits as of April 30, 2020, 2019,2023, 2022, and 20182021 respectively. The Company had 0an accrual for fiscal 2020, 2019of $0.5 million and 2018$0.5 million as of April 30, 2023 and 2022, respectively, for penalties related to unrecognized tax benefits. The Company recognized interesttax expense of $0.4 million, $0.1$0.4 million, and $0.3$0.8 million for interest and penalties related to unrecognized tax benefits during the years ended April 30, 2020, 2019,fiscal 2023, 2022, and 2018,2021, respectively.9.10. Property and Equipment, NetProperty and equipment include the following:April 30, 2023 2022 (in thousands) Computer equipment and software (1)$ 383,701 $ 331,371 Leasehold improvements 73,980 81,743 Furniture and fixtures 37,844 41,999 Automobiles 3,346 3,460 498,871 458,573 Less: accumulated depreciation and amortization (336,995) (320,401) Property and equipment, net $ 161,876 $ 138,172 (1)Depreciation expense for capitalized software was $18.8 million, $14.6 million and $12.8million during fiscal 2020, 2019 and 2018, respectively. The net book value of the Company’s computer software costs included in property and equipment, net was $86.3 million and $65.8 million as of April 30, 2020 and 2019, respectively.$39.0$44.6 million, $33.0$43.2 million and $33.8$42.6 million during fiscal 2020, 20192023, 2022 and 2018,2021, respectively.F-36F-34 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 20202023 (continued)10.11. Long-Term Debt4.625% Senior Unsecured Notes due 2027On December 16, 2019, the Company completed a private placement of 4.625% Senior Unsecured Notes due 2027 (the “Notes”) with a $400 million principal amount pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The Notes were issued with a $4.5 million discount and will mature December 15, 2027, with interest payable semi-annually in arrears on June 15 and December 15 of each year, commencing on June 15, 2020. The Notes represent senior unsecured obligations that rank equally in right of payment to all existing and future senior unsecured indebtedness. The Company may redeem the Notes prior to maturity, subject to certain limitations and premiums defined in the indenture governing the Notes. At any time priorPrior to December 15, 2022, the Company maywas permitted to redeem the Notes at a redemption price equal to 100% of the principal plus the Applicable Premium (as defined in the indenture governing the Notes), and accrued and unpaid interest. At any timeAlso, prior to December 15, 2022, the Company maywas permitted to use the proceeds of certain equity offerings to redeem up to 35% of the aggregate principal amount of the Notes, including any permitted additional notes, at a redemption price equal to 104.625% of the principal amount and accrued and unpaid interest. At any time and from time to time on or afterSince December 15, 2022, the Company may redeem the Notes at the applicable redemption prices set forth in the table below, plus accrued and unpaid interest, if redeemed during the twelve-month12-month period beginning on December 15 of each of the years indicated:Year Percentage 2022 102.313% 2023 101.156% 2024 and thereafter 100.000% The Notes allow the Company to pay $25 million of dividends per fiscal year with no restrictions, plus an unlimited amount of dividends so long as the Company’s consolidated total leverage ratio is not greater than 3.50 to 1.00, and the Company is not in default under the indenture governing the Notes. The Notes are guaranteed by each of the Company's existing and future wholly owned domestic subsidiaries to the extent such subsidiaries guarantee the Company's revolving credit facility.facilities. The indenture governing the Notes requires that, upon the occurrence of both a Change of Control and a Rating Decline (each as defined in the indenture), the Company shall make an offer to purchase all of the Notes at 101% of their principal amount, and accrued and unpaid interest. The Company used the proceeds from the offering of the Notes to repay $276.9 million outstanding under the Company’s prior revolving credit facility (the “Prior Credit Agreement”) and to pay expenses and fees in connection therewith. The remainder of the proceeds will bewere used for general corporate requirements. The effective interest rate on the Notes iswas 4.86%. as of April 30, 2023. As of April 30, 2020,2023 and 2022, the fair value of the Notes was $372.5$381.5 million and $379.5 million, respectively, based on borrowing rates then required of notes with similar terms, maturity and credit risk. The fair value of the Notes was classified as a Level 2 measurement in the fair value hierarchy.Long-term debt, at amortized cost, consisted of the following:In thousands April 30, 2023 April 30, 2022 Senior Unsecured Notes $ 400,000 $ 400,000 Less: Unamortized discount and issuance costs (3,806) (4,523) Long-term borrowings, net of unamortized discount and debt issuance costs $ 396,194 $ 395,477 Credit FacilityOn December 16, 2019,June 24, 2022, the Company entered into aan amendment (the “Amendment”) to its December 16, 2019 Credit Agreement (the “Credit Agreement”; as amended by the Amendment, the “Amended Credit Agreement”) with a syndicate of banks and Bank of America, National Association as administrative agent, to, among other things, (i) extend the existing maturity date of the revolving facility to June 24, 2027, (ii) provide for enhanceda new delayed draw term loan facility as described below, (iii) replace the London interbank offered rate with forward-looking SOFR term rate (“Term SOFR”) as described below, and (iv) replace the existing financial flexibility.covenants with the financial covenant described below. The Amended Credit Agreement provides for five-year senior secured credit facilities in an aggregate amount of $1,150.0 million comprised of a $650.0 millionfive-year senior secured revolving credit facility (the “Revolver”) and a $500.0 million delayed draw term loan facility (the “Delayed Draw Facility”, and together with the Revolver, the “Credit Facilities”). The Amended Credit Agreement also provides that, under certain circumstances, the Company may incur term loans or increase the aggregate principal amount of revolving commitments by an aggregate amount up to $250.0 million plus an unlimited amount subject to a consolidated secured net leverage ratio of 3.25 to 1.00.F-35KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2023 (continued)Extensions of credit under the Delayed Draw Facility were available to the Company in up to two advances through June 24, 2023. Any amounts undrawn under the Delayed Draw Facility as of June 24, 2023 are no longer available to the Company. The Amended Credit Agreement contains certain customary affirmative and negative covenants includingthat, among other things, restrict the Company’s ability to incur additional indebtedness, grant liens and make certain acquisitions, investments, asset dispositions and restricted payments. In addition, the Amended Credit Agreement contains a maximum consolidated net leverage ratio,covenant that requires the Company to maintain a maximum consolidated secured net leverage ratio and a minimum interest coverage ratio. The Credit Agreement permits the payment of dividends to stockholders and Company share repurchases so long as there is no default under the Credit Agreement, the consolidated net leverage ratio, which uses adjusted EBITDA is no greater than 4.253.50 to 1.00 and the pro forma liquidity is at least $50.0 million. (which may be temporarily increased to 4.00 following certain material acquisitions under certain circumstances) (the “Financial Covenant”).The payoffprincipal balance of the Delayed Draw Facility, if any, is subject to annual term loan underamortization of 2.5% for the Prior Credit Agreement is considered a debt modificationfiscal quarters ending September 30, 2022 through June 30, 2024, and therefore,5.0% for the previously incurred unamortized and current debt issuance costs will be amortized overfiscal quarter ending September 30, 2024 through June 30, 2027, with the life of the new issuance.F-37 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2020 (continued)the date of its termination. The Revolver matures on December 16, 2024June 24, 2027 and any unpaid principal balance is payable on this date. The RevolverCredit Facilities may also be prepaid and terminated early by the Company at any time without premium or penalty (subject to customary LIBOR breakage fees).AtAmounts outstanding under the Company’s option, loans issued under theAmended Credit Agreement will bear interest at a rate equal to, at the Company’s election, either LIBOR orTerm SOFR plus a SOFR adjustment of 0.10%, plus an alternate base rate, in each case plus the applicable interest rate margin. The interest rate applicable to loans outstanding under the Credit Agreement may fluctuatemargin between LIBOR plus 1.125% per annum to LIBOR plusand 2.00% per annum, independing on the case of LIBOR borrowings (or between the alternateCompany’s consolidated net leverage ratio, or base rate plus an interest rate margin between 0.125% per annum and the alternate base rate plus 1.00% per annum in the alternative), based upondepending on the Company’s total funded debt to adjusted EBITDA ratio (as set forth in the Credit Agreement, the “consolidatedconsolidated net leverage ratio”) at such time.ratio. In addition, the Company will be required to pay to the lenders a ticking fee of 0.20% per annum on the actual daily unused portion of the Delayed Draw Facility, and a quarterly commitment fee ranging from 0.175% to 0.35%0.300% per annum on the averageactual daily unused amount of the Revolver, based upon the Company’s consolidated net leverage ratio at such time, and fees relating to the issuance of letters of credit. During fiscal 2020 the average interest rate incurred on the current and previous term loans was 3.34%. The average interest rate on our previous term loan for 2019 and 2018 was 3.50% and 2.60%, respectively.As of April 30, 2020,2023 and 2022, there was 0no outstanding liability under the Revolver compared to $226.9 million as of April 30, 2019Credit Facilities and the credit facilities under the Credit Agreement prior revolver.to the Amendment (the “Prior Credit Facility”), respectively. The unamortized debt issuance costs associated with the Amended Credit Agreement was $4.2 million as of April 30, 20202023 and $4.0$2.4 million under the Prior Credit Agreement as of April 30, 2019. As of April 30, 2020,2022. The debt issuance costs were included in other current assets and other non-current assets on the consolidated balance sheet.sheets. As of April 30, 2020,2023, the Company was in compliance with its debt covenants.The Company hadhas a total of $646.0$1,145.4 million available under the RevolverCredit Facilities and had a total $645.3 million available under the Prior Credit Facility after $4.0$4.6 million and $4.7 million of standby letters of credit were issued as of April 30, 2020.2023 and 2022, respectively. Of the amount available under the Credit Facilities, $500.0 million is under the Delayed Draw Facility that expired on June 24, 2023. The Company had a total of $420.2 million available under the prior revolver after the Company drew down $226.9$11.5 million and after $2.9 million of standby letters of credit had been issued as of April 30, 2019. The Company had a total of $11.3 million and $8.5$10.0 million of standby letters with other financial institutions as of April 30, 20202023 and 2019,2022, respectively. The standby letters of creditscredit were generally issued as a result of entering into office premise leases.The Company has outstanding borrowings against the CSV of COLI contracts of $92.3$77.1 million and $93.2$79.8 million at April 30, 20202023 and 2019,2022, 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%.11.12. SegmentsOverIn the past yeartwo years, the Company invested in its digital business in order to digitize and harmonize the structure of its IP content and data andhas allocated capital to build a technology platform forout its Professional Search and Interim operations through the efficient deliveryacquisition of these assets directly to an end consumer or indirectly through a consulting engagement.Lucas Group, Patina Solutions Group ("Patina"), Infinity Consulting Solutions ("ICS") and Salo LLC ("Salo"). These investments combinedacquisitions provided the Company with the recent acquisition of the Acquired Companies resulted in reassessingopportunity to reassess how the Companyit manages its Advisory business.RPO & Professional Search segment. Given the Company’s strategy and development of separate financial and operational metrics for the ConsultingProfessional Search & Interim and Digital businessesRPO operations, the Company’s chief operating decision maker (“CODM”) had begunbegan to regularly make separate resource allocation decisions between Professional Search & Interim and assess performance separately between Consulting and Digital.RPO. Therefore, on NovemberMay 1, 2019,2022, the Company changed the composition of its global segments and under the new reporting format, the AdvisoryRPO & Professional Search segment washas been separated into two segments, Consultingsegments: Professional Search & Interim and Digital.RPO. Revenues are directly attributed to a segment and expenses not directly associated with a specific segment are allocated based on the most relevant measures applicable, including revenues, headcount and other factors. Due to this change, the Company completed a qualitativequantitative assessment for any potential goodwill impairment both prior and immediately subsequent to the aforementioned change and determined thatthere was no impairment indicators were present. Operatinggoodwill impairment. The presentation of operating results by segment prior to NovemberMay 1, 2019 have2022 has been recastrevised to conform to the new segment reporting.The Company operates through 4 globalnow has eight reportable segments: Consulting, Digital, Executive Search North America, Executive Search EMEA, Executive Search Asia Pacific, Executive Search Latin America, Professional Search & Interim and RPO.1.Consulting helps clients synchronize their strategy and their talent by addressing four fundamental needs: Organizational Strategy, Assessment and Succession, Leadership and Professional Development, and Rewards and Benefits. This work is supported and underpinned by a comprehensive range of some of the world’s leading lP and data.F-36F-38 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 20202023 (continued)
The Company’s eight reportable segments operate through the following five lines of business:2.Digital leverages an artificial intelligence powered platform to identify structure, roles, capabilities and behaviours needed to drive business forward. This end to end system gives clients one enterprise-wide talent framework and delivers an achievable blueprint for success along with the guidance and tools to deliver it.3.1.Consulting aligns organizational structure, culture, performance and people to drive sustainable growth by addressing four fundamental needs: Organizational Strategy, Assessment and Succession, Leadership and Professional Development and Total Rewards. This work is enabled by a set of Digital Performance Management Tools, based on some of the world’s leading lP and data. The Consulting teams employ an integrated approach across our core capabilities and integrated solutions, each one intended to strengthen the work and thinking in the next, to help clients execute their strategy in a digitally enabled world.Executive Search helps organizations recruit board level, chief executive and other senior executive and general management talent. Behavioral interviewing and proprietary assessments are used to determine ideal organizational fit, and salary benchmarking builds appropriate frameworks for compensation and retention.4.2.Digital develops technology-enabled Performance Management Tools that empower our clients. The digital products give clients direct access to Korn Ferry proprietary data, client data and analytics to deliver clear insights with the training and tools needed to align organizational structure with business strategy.RPO and Professional Search combines people, process expertise and IP-enabled technology to deliver enterprise talent acquisition solutions to clients. Transaction sizes range from single professional searches to team, department and line of business projects, and global outsource recruiting solutions.3.Executive Search helps organizations recruit board level, chief executive and other senior executive and general management talent to deliver lasting impact. The Company’s approach to placing talent is bringing together research-based IP, proprietary assessments and behavioral interviewing with practical experience to determine the ideal organizational fit. Salary benchmarking then helps the Company build appropriate frameworks for compensation and retention. This business is managed and reported on a geographic basis and represents four of the Company’s reportable segments (Executive Search North America, Executive Search EMEA, Executive Search Asia Pacific, and Executive Search Latin America).4.Professional Search & Interim delivers enterprise talent acquisition solutions for professional level middle and upper management. The Company helps clients source high-quality candidates at speed and scale globally, covering single-hire to multi-hire permanent placements and interim contractors.5.RPO offers scalable recruitment outsourcing solutions leveraging customized technology and talent insights. The Company's scalable solutions, built on science and powered by best-in-class technology and consulting expertise, enables the Company to act as a strategic partner in clients’ quest for superior recruitment outcomes and better candidate fit.Executive Search is managed by geographic regional leaders. Worldwide operations for Consulting, Digital, Professional Search & Interim and RPO and Professional Search are managed by their Chief Executive Officers. The Executive Search geographic regional leaders and the Chief Executive Officers of Consulting, Digital, Professional Search & Interim and RPO & Professional Search report directly to the Chief Executive Officer of the Company. The Company also operates a Corporate segment to record global expenses.The Company evaluates performance and allocates resources based on the Company’s CODM review of (1) fee revenue and (2) adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). To the extent that such costs or 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)impairment charges). The accounting policies for the reportable segments are the same as those described in the summary of significant accounting policies in Note 1—Organization and Summary of Significant Accounting Policies, except the items described above are excluded from EBITDA to arrive at Adjusted EBITDA. The CODM is not provided asset information by reportable segment.Financial highlights by operating segment are as follows:F-37F-39 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 20202023 (continued)Financial highlights are as follow:Year Ended April 30, 2023 2022 2021 Consolidated (in thousands) Fee revenue $ 2,835,408 $ 2,626,718 $ 1,810,047 Total revenue $ 2,863,836 $ 2,643,455 $ 1,819,946 Net income attributable to Korn Ferry $ 209,529 $ 326,360 $ 114,454 Net income attributable to noncontrolling interest 3,525 4,485 1,108 Other (income) loss, net (5,261) 11,880 (37,194) Interest expense, net 25,864 25,293 29,278 Income tax provision 82,683 102,056 48,138 Operating income 316,340 470,074 155,784 Depreciation and amortization 68,335 63,521 61,845 Other income (loss), net 5,261 (11,880) 37,194 Integration/acquisition costs 14,922 7,906 737 Impairment of fixed assets 4,375 1,915 — Impairment of right of use assets 5,471 7,392 — Restructuring charges, net 42,573 — 30,732 Adjusted EBITDA(1)$ 457,277 $ 538,928 $ 286,292 Year Ended April 30, 2023 Fee revenue Total revenue Adjusted EBITDA(1)(in thousands) Consulting $ 677,001 $ 686,979 $ 108,502 Digital 354,651 354,967 97,458 Executive Search: North America 562,139 568,212 140,850 EMEA 187,014 188,114 31,380 Asia Pacific 95,598 95,956 24,222 Latin America 31,047 31,054 9,370 Professional Search & Interim 503,395 507,058 110,879 RPO 424,563 431,496 52,588 Corporate — — (117,972) Consolidated $ 2,835,408 $ 2,863,836 $ 457,277 F-40(1)Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization and further excludes integration/acquisition costs, impairment of fixed assets, impairment of right-of-use assets, and restructuring charges, net.F-38 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 20202023 (continued)Year Ended April 30, 2022 Fee revenue Total revenue Adjusted EBITDA(1)(in thousands) Consulting $ 650,204 $ 654,199 $ 116,108 Digital 349,025 349,437 110,050 Executive Search: North America 605,704 609,258 181,615 EMEA 182,192 182,866 31,804 Asia Pacific 118,596 118,705 35,105 Latin America 29,069 29,079 9,089 Professional Search & Interim 297,096 297,974 106,015 RPO 394,832 401,937 59,126 Corporate — — (109,984) Consolidated $ 2,626,718 $ 2,643,455 $ 538,928 Year Ended April 30, 2021 Fee revenue Total revenue Adjusted EBITDA(1)(in thousands) Consulting $ 515,844 $ 517,046 $ 81,522 Digital 287,306 287,780 86,095 Executive Search: North America 397,275 399,104 98,099 EMEA 138,954 139,213 11,742 Asia Pacific 83,306 83,463 16,676 Latin America 17,500 17,500 1,289 Professional Search & Interim 130,831 131,080 36,934 RPO 239,031 244,760 32,477 Corporate — — (78,542) Consolidated $ 1,810,047 $ 1,819,946 $ 286,292 (1)Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization and further excludes, integration/acquisition costs and restructuring charges, net.F-39KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2023 (continued)Fee revenue attributed to an individual customer or country, other than the U.S. in fiscal year 2023 and 2022, and the U.S and United Kingdom in fiscal year 2021, did not account for more than 10% of the total fee revenue in those fiscal 2020, 2019 or 2018.years. Fee revenue classified by country in which the Company derives revenues are as follows:Year Ended April 30, 2023 2022 2021 (in thousands) U.S. $ 1,568,119 $ 1,348,377 $ 837,682 United Kingdom 255,797 247,617 189,893 Other countries 1,011,492 1,030,724 782,472 Total fee revenue $ 2,835,408 $ 2,626,718 $ 1,810,047 Other than the U.S. in fiscal 2023 and 2022, and the U.S. and United Kingdom in fiscal 2021, no single country had over 10% of the total long-lived assets, excluding financial instruments and tax assets. Long-lived assets, excluding financial instruments and tax assets, classified by location of the controlling statutory country are as follows:Year Ended April 30, 2023 2022 2021 (in thousands) U.S.(1)$ 186,220 $ 185,228 $ 182,218 United Kingdom 22,893 26,711 34,081 Other countries 95,453 93,967 89,600 Total long-lived assets $ 304,566 $ 305,906 $ 305,899 (1)Includes Corporate long-lived assets12.13. Restructuring Charges, NetOn April 20,In light of the Company’s evolution to an organization that is selling larger integrated solutions in a world where there are shifts in global trade lanes and persistent inflationary pressures, on January 11, 2023, the Company initiated a plan (the “Plan”) intended to realign its workforce with its business needs and objectives, namely, to invest in areas of potential growth and implement reductions where there is excess capacity. Due to the implementation of the Plan, the Company recorded restructuring charges of $42.6 million during fiscal 2023 across all lines of business related to severance for positions that were eliminated. There were no restructuring charges in fiscal 2022.In the fourth quarter of fiscal 2020, in light of the continuing uncertainty in worldwide economic conditions caused by the COVID-19coronavirus pandemic and, as part of a broader program aimed at further enhancing Korn Ferry’s strong balance sheet and liquidity position, the Company adopted a restructuring plan intended to adjust its cost base to the currentthen-current economic environment and to position the Company to invest intoin its recovery. The Company continued the recovery. Thisimplementation of this restructuring plan in the first quarter of fiscal 2021 and this resulted in restructuring charges, net of $40.5$30.7 million during fiscal 2021 across all lines of business relating to severance for positions that have beenwere eliminated.F-41F-40 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 20202023 (continued)Earlier in fiscal 2020, the Company had also adopted a restructuring plan to rationalize its cost structure to realize the efficiencies and operational improvement that the investments in the Digital business, as discussed in Note 11—Segments, have enabled, or position us to realize. The restructuring plan impacts both the Consulting and Digital segments and includes the elimination of redundant positions, which resulted in restructuring charges, net of $18.1 million in fiscal 2020, relating to severance for positions that have been eliminated.Changes in the restructuring liability were as follows:Restructuring Liability (in thousands) As of May 1, 2020 $ 34,153 Restructuring charges, net 30,732 Reductions for cash payments (56,387) Non-cash payments (3,968) Exchange rate fluctuations 2,455 As of April 30, 2021 6,985 Reductions for cash payments (4,829) Exchange rate fluctuations (654) As of April 30, 2022 1,502 Restructuring charges, net 42,573 Reductions for cash payments (24,485) Non-cash payments (10,827) Exchange rate fluctuations (759) As of April 30, 2023 $ 8,004 As of April 30, 20202023 and 2019,2022, the restructuring liability is included in the current portion of other accrued liabilities on the consolidated balance sheets, except for $0.6 million and $0.5 million respectively,as of April 30, 2022, which arewas included in other long-term liabilities.13.Restructuring charges incurred by segment were as follows:Year Ended April 30 2023 2022 2021 (in thousands) Consulting $ 11,613 $ — $ 14,223 Digital 2,856 — 2,947 Executive Search: North America 4,515 — 958 EMEA 12,732 — 8,868 Asia Pacific 2,129 — 181 Latin America 697 — 405 Professional Search & Interim 4,835 — 1,543 RPO 3,097 — 1,607 Corporate 99 — — Consolidated $ 42,573 $ — $ 30,732 F-41KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2023 (continued)14. Goodwill and Intangible AssetsChanges in the carrying value of goodwill by reportable segment were as follows:Consulting Digital Executive Search ProfessionalSearch & Interim (1)RPO (1)Consolidated North
AmericaEMEA Asia
Pacific(in thousands) Balance as of May 1, 2021 $ 173,410 $ 326,628 $ 48,498 $ 47,449 $ 972 $ 15,705 $ 14,007 $ 626,669 Additions (2)— — — — — 55,480 49,482 104,962 Exchange rate fluctuations (440) (1,274) (934) (877) — (1,329) (1,185) (6,039) Balance as of April 30, 2022 172,970 325,354 47,564 46,572 972 69,856 62,304 725,592 Additions (3)— — — — — 184,519 — 184,519 Exchange rate fluctuations 123 204 (1,327) (171) — 291 260 (620) Balance as of April 30, 2023 $ 173,093 $ 325,558 $ 46,237 $ 46,401 $ 972 $ 254,666 $ 62,564 $ 909,491 $34.9 $16.3 million and $22.7 million as of April 30, 2020.2023 and 2022, respectively. Tax deductible goodwill from the PIVOT Leadership acquisition was $7.2$5.2 million and $7.1 $5.9 million as of April 30, 20202023 and 2019,2022, respectively.F-42 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2020 (continued)Intangible assets include the following:April 30, 2023 April 30, 2022 (in thousands) Amortized intangible assets: Gross Accumulated
AmortizationNet Gross Accumulated
AmortizationNet Customer lists $ 192,099 $ (104,429) $ 87,670 $ 146,799 $ (89,024) $ 57,775 Intellectual property 69,100 (47,187) 21,913 69,100 (40,720) 28,380 Proprietary databases 4,256 (4,256) — 4,256 (4,256) — Non-compete agreements 910 (910) — 910 (910) — Trademarks 12,086 (7,123) 4,963 8,986 (5,261) 3,725 Total (1)$ 278,451 $ (163,905) 114,546 $ 230,051 $ (140,171) 89,880 Exchange rate fluctuations (120) (110) Total Intangible assets $ 114,426 $ 89,770 20202023 consists of IP,of customer relationships and tradenames of $36.0$45.3 million $6.2 million, and $3.2$3.1 million, respectively, with weighted-average useful lives from the date of purchase of seven years tenand two years, respectively. Acquisition-related intangible assets acquired in fiscal 2022 consists of customer relationships and tradenames of $15.5 million and $1.8 million, respectively, with weighted-average useful lives from the date of purchase of seven years and ninetwo years, respectively.During fiscal 2019, the Company decided to further integrate our go-to-market activities under one master brand —Korn Ferry, and discontinued the use of all sub-brands. Two of the Company’s sub-brands, Hay Group and Lominger, were acquired by Korn Ferry through acquisitions. As a result of the decision to discontinue their use, the Company took a non-cash intangible asset impairment charge of $106.6 million during the year ended F-42KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2019, recorded in general and administrative expenses on the accompanying statement of income.Amortization expense for amortized intangible assets was $16.3$23.7 million, $13.5$20.3 million and $14.7$19.2 million during fiscal 2020, 20192023, 2022 and 2018,2021, respectively. Estimated annual amortization expense related to amortizing intangible assets is as follows:Year Ending April 30, Estimated
Annual
Amortization
Expense(in thousands) 2024 $ 25,604 2025 24,256 2026 2026 22,859 2027 2027 17,106 2028 2028 10,080 Thereafter 14,521 $ 114,426 All amortizable intangible assets will be fully amortized by the end of fiscal 2032.14.15. LeasesThe Company’s lease portfolio is comprised of operating leases for office space and equipment and finance leases for equipment. Equipment leases are comprised of vehicles and office equipment. The majority of the Company’s leases include both lease and non-lease components. Non-lease components primarily include maintenance, insurance, taxes and other utilities. The Company has decided to combinecombines fixed payments for non-lease components with its lease payments and accountaccounts for them as a single lease component, which increases its ROU assets and lease liabilities. Some of the leases include one or more options to renew or terminate the lease at the Company’s discretion. Generally, the renewal and termination options are not included in the ROU assets and lease liabilities as they are not reasonably certain of exercise. The Company has elected not to recognize a ROU asset or lease liability for leases with an initial term of 12 months or less.F-43 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2020 (continued)As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of the future minimum lease payments. The Company applies the portfolio approach when determining the incremental borrowing rate since it has a centrally managed treasury function. The Company’s incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments in a similar economic environment.Operating leases contain both office and equipment leases and have remaining terms that range from less than one year to 10nine years, some of which also include options to extend or terminate the lease. Finance leases are comprised of equipment leases and have remaining terms that range from less than one year to 5six years. Finance lease assets are included in property and equipment, net while finance lease liabilities are included in other accrued liabilities and other liabilities.As a result of the acquisition of the Acquired Companies,During fiscal 2023 and 2022, the Company recognized ROU assets of $3.2 million with a corresponding liability of $6.7 million. The ROU asset balance was adjusted by reclassification of pre-existing prepaid expenses, restructuring liabilities and deferred rent totaling $3.5 million. As part of the plan for integrating the Acquired Companies, the Company decided to exit 16 office leasesreduced its real estate footprint and as a result recorded an impairment charge of the ROU assets of $2.3$5.5 million recordedand $7.4 million, respectively, in the consolidated statementstatements of income.In fiscal 2023, the Company acquired ICS and Salo and as a result recognized ROU assets of $0.8 million and $2.1 million, respectively, with corresponding liabilities of $1.0 million and $2.9 million, respectively. In fiscal 2022, the Company acquired Lucas Group and Patina and as a result recognized ROU assets of $3.8 million and $0.2 million, respectively, with corresponding liabilities of $9.4 million and $0.7 million, respectively. In these acquisitions, the ROU assets were adjusted to reflect unfavorable lease terms when compared with current market rates.F-43KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2023 (continued)The components of lease expense were as follows:Year Ended April 30, 2023 2022 2021 (in thousands) Finance lease cost Amortization of ROU assets $ 1,479 $ 1,065 $ 1,221 Interest on lease liabilities 190 84 114 1,669 1,149 1,335 Operating lease cost 48,901 53,092 56,166 Short-term lease cost 833 966 474 Variable lease cost 11,157 10,986 11,592 Lease impairment cost 5,471 7,392 — Sublease income (3,420) (1,119) (657) Total lease cost $ 64,611 $ 72,466 $ 68,910 Rent expense, as previously defined under ASC 840, which includes the Company leased office premises and certain office equipment leases for the years ended April 30, 2019, and 2018, was $58.2 million and $57.6 million, respectively. Supplemental cash flow information related to leases was as follows:Year Ended April 30, 2023 2022 2021 (in thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 63,496 $ 62,996 $ 66,991 Financing cash flows from finance leases $ 1,639 $ 1,157 $ 1,324 ROU assets obtained in exchange for lease obligations: Operating leases $ 19,015 $ 49,235 $ 13,638 Finance leases $ 3,123 $ 1,586 $ 516 F-44 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 20202023 (continued)Supplemental balance sheet information related to leases was as follows:Year Ended April 30, 2023 2022 (in thousands) Finance Leases: Property and equipment, at cost $ 7,103 $ 5,770 Accumulated depreciation (2,741) (3,085) Property and equipment, net $ 4,362 $ 2,685 Other accrued liabilities $ 1,372 $ 1,049 Other liabilities 3,053 1,657 Total finance lease liabilities $ 4,425 $ 2,706 Weighted average remaining lease terms: Operating leases 4.5 years 5.1 years Finance leases 3.8 years 3.3 years Weighted average discount rate: Operating leases 4.5 % 4.3 % Finance leases 4.7 % 3.2 % Maturities of lease liabilities are as follows:Year Ending April 30, Operating Financing (in thousands) 2024 $ 51,760 $ 1,545 2025 44,050 1,313 2026 2026 39,548 935 2027 2027 20,888 597 2028 2028 10,125 438 Thereafter 16,295 — Total lease payments 182,666 4,828 Less: imputed interest 17,625 403 Total $ 165,041 $ 4,425 Future minimum commitments under non-cancelable operating leases with lease terms in excess of one year, excluding commitments accrued in the restructuring liability under ASC 840 at April 30, 2019, are as follows:F-45F-45 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 20202023 (continued)15.16. AcquisitionOn November 1, 2019, the Company completed its acquisition of the Acquired Companies for $108.6 million, net of cash acquired.The Acquired Companies contribute a world-class portfolio of learning, development and performance improvement offerings and expertise to Korn Ferry and bolster the Company’s substantial leadership development capabilities. These companies are included in the new Digital segment which, working closely with the new Consulting segment, will provide clients with direct access to data, insights and analytics from one of the world’s most comprehensive people and organizational databases. The addition of the Acquired Companies further expands Korn Ferry’s vast IP and content and leverages the firm’s digital delivery platforms. Actual results of operations of the Acquired Companies are included in the Company’s consolidated financial statements from November 1, 2019, the effective date of the acquisition.The following table provides a summary of the net assets acquired in fiscal 2020 (as nothe periods indicated (no acquisitions were completed in fiscal 20192021).Year Ended April 30 2023 (2)2022 (3)(in thousands) Current assets (1)$ 37,586 $ 36,071 Long-term assets 5,736 9,351 Intangible assets 48,400 17,300 Current liabilities 18,327 17,672 Long-term liabilities 3,164 16,210 Net assets acquired 70,231 28,840 Purchase price 254,750 133,802 Goodwill $ 184,519 $ 104,962 (1)Included in current assets is acquired receivables in the amount of $35.3 million and $24.5 million for acquisitions completed in fiscal 2023 and 2022, respectively.(2)On February 1, 2023, the Company completed its acquisition of Salo for $155.4 million, net of cash acquired. Salo is a leading provider of finance, accounting and HR interim talent, with a strong focus on serving organizations in healthcare, among other industries. Actual results of operations of Salo are included in the Company's consolidated financial statements from February 1, 2023, the effective date of the acquisition.On August 1, 2022, the Company completed its acquisition of ICS for $99.3 million, net of cash acquired. ICS contributes interim professional placement offerings and expertise that are highly relevant for the new world of work where more workplaces are hybrid or 2018):virtual. ICS is a highly regarded provider of senior-level IT interim professional solutions with additional expertise in the areas of compliance and legal, accounting and finance, and human resources. Actual results of operations of ICS are included in the Company's consolidated financial statements from August 1, 2022, the effective date of the acquisition.(1)Included in current assets is acquired receivablesOn November 1, 2021, the Company completed its acquisition of Lucas Group for $90.9 million, net of cash acquired. Lucas Group contributed a substantial professional search and interim expertise that has enhanced the Company’s search portfolio. Actual results of operations of Lucas Group are included in the Company’s consolidated financial statements from November 1, 2021, the effective date of the acquisition.We believe the above acquisitions echo the commitment to scale the Company's solutions and further increase the Company's focus at the intersection of talent and strategy-wherever and however the needs of organizations evolve-and present real, tangible opportunities for Korn Ferry and our clients, looking for the right talent, that is highly agile, with specialized skills and expertise, to drive superior performance, including on an interim basis. The addition of these acquisitions to Korn Ferry’s broader talent acquisition portfolio–spanning Executive Search, RPO, Professional Search and Interim services–has accelerated Korn Ferry’s ability to capture additional shares of this significant market. All of the acquisitions in fiscal 2023 and 2022 are included in the Professional Search & Interim segment.For each acquisition, the amount of $41.1 million.The aggregate purchase price was allocated on a preliminary basis to the assets acquired and liabilities assumed on their estimated fair values at the date of acquisition. As of April 30, 2020, these2023, the aggregate purchase price allocations remainedfor Salo and ICS remain preliminary with regard to income taxes. taxesbecomesbecome available, not to exceed 12 months.16.17. Commitments and ContingenciesEmployment AgreementsThe 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 typicallyF-46KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2023 (continued)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.F-46 KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApril 30, 2020 (continued)LitigationFrom 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.17. Quarterly Results (Unaudited)The following table sets forth certain unaudited consolidated statements of income data for the quarters in fiscal 2020 and 2019. 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.18. Subsequent EventQuarterly Dividend DeclarationOn July 1, 2020,June 26, 2023, the Board of Directors of the Company declared a cashapproved an increase of 20% in the Company's quarterly dividend of $0.10policy to $0.18 per share and declared an $0.18 per share dividend with a payment date of July 31, 20202023 to holders of the Company’s common stock of record at the close of business on July 15, 2020.7, 2023. 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,condition, the terms of the Company’s indebtedness and other factors that the Board of Directors may deem to be relevant. The Board of Directors may amend, revoke or suspend the dividend policy at any time and for any reason.KORN FERRY AND SUBSIDIARIESSCHEDULE II – VALUATION AND QUALIFYING ACCOUNTSApril 30, 2020(1)Exchange rate fluctuations and for Deferred tax asset includes amount acquired from Acquired Companies.(2)Allowance for doubtful accounts represents accounts written-off, net of recoveries and deferred tax asset valuation represents release of prior valuation allowances.F-48F-47