Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

The number of shares outstanding of our common stock as of ~~December~~March 4, ~~2015~~2016 was ~~51,289,162~~57,283,719 shares.


	October 31, 2015			April 30, 2015			January 31, 2016			April 30, 2015
	(unaudited)						(unaudited)
	(in thousands, except per share data)						(in thousands, except per share data)
ASSETS
Cash and cash equivalents	$	270,743		$	380,838		$	207,342		$	380,838
Marketable securities		12,109			25,757			9,118			25,757
Receivables due from clients, net of allowance for doubtful accounts of $11,291 and $9,958, respectively		230,442			188,543
Receivables due from clients, net of allowance for doubtful accounts of $11,775 and $9,958, respectively								330,687			188,543
Income taxes and other receivables		20,956			10,966			32,549			10,966
Deferred income taxes		1,497			3,827
Prepaid expenses and other assets		38,504			31,054			43,157			31,054

Total current assets		574,251			640,985			622,853			637,158

Marketable securities, non-current		134,799			118,819			126,820			118,819
Property and equipment, net		61,665			62,088			90,150			62,088
Cash surrender value of company owned life insurance policies, net of loans		105,472			102,691			104,837			102,691
Deferred income taxes, net		51,528			56,014			61,448			59,841
Goodwill		250,981			254,440			575,112			254,440
Intangible assets, net		43,547			47,901			238,889			47,901
Investments and other assets		49,945			34,863			53,191			34,863

Total assets	$	1,272,188		$	1,317,801		$	1,873,300		$	1,317,801


LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	17,235		$	19,238		$	25,656		$	19,238
Income taxes payable		5,082			3,813			2,612			3,813
Compensation and benefits payable		142,531			219,364			213,599			219,364
Term loan								31,034			—
Other accrued liabilities		69,692			63,595			155,100			63,595

Total current liabilities		234,540			306,010			428,001			306,010

Deferred compensation and other retirement plans		174,345			173,432			203,378			173,432
Term loan, non-current								116,466			—
Deferred tax liabilities								57,985			—
Other liabilities		23,851			23,110			36,756			23,110

Total liabilities		432,736			502,552			842,586			502,552


Stockholders’ equity:
Common stock: $0.01 par value, 150,000 shares authorized, 63,586 and 62,863 shares issued and 51,287 and 50,573 shares outstanding, respectively		473,370			463,839
Common stock: $0.01 par value, 150,000 shares authorized, 69,951 and 62,863 shares issued and 57,270 and 50,573 shares outstanding, respectively								697,397			463,839
Retained earnings		422,797			392,033			401,032			392,033
Accumulated other comprehensive loss, net		(56,715	)		(40,623	)		(67,715	)		(40,623	)

Total stockholders’ equity		839,452			815,249			1,030,714			815,249

Total liabilities and stockholders’ equity	$	1,272,188		$	1,317,801		$	1,873,300		$	1,317,801

The accompanying notes are an integral part of these consolidated financial statements.


	Three Months Ended October 31,						Six Months Ended October 31,						Three Months Ended January 31,						Nine Months Ended January 31,
	2015			2014			2015			2014			2016			2015			2016			2015
	(in thousands, except per share data)												(in thousands, except per share data)
Fee revenue	$	280,600		$	255,702		$	547,994		$	506,890		$	344,158		$	249,545		$	892,152		$	756,435
Reimbursed out-of-pocket engagement expenses		10,739			9,015			22,680			18,152			14,721			9,326			37,401			27,478

Total revenue		291,339			264,717			570,674			525,042			358,879			258,871			929,553			783,913


Compensation and benefits		188,608			174,656			368,064			343,762			242,429			164,802			610,493			508,564
General and administrative expenses		44,563			30,145			82,054			67,513			57,395			36,767			139,449			104,280
Reimbursed expenses		10,739			9,015			22,680			18,152			14,721			9,326			37,401			27,478
Cost of services		11,236			9,706			21,356			19,171			17,494			8,653			38,850			27,824
Depreciation and amortization		7,180			6,779			14,603			13,549			10,330			6,814			24,933			20,363
Restructuring charges, net		—			—			—			9,886
Restructuring charges (recoveries), net														30,577			(418	)		30,577			9,468

Total operating expenses		262,326			230,301			508,757			472,033			372,946			225,944			881,703			697,977


Operating income		29,013			34,416			61,917			53,009
Operating (loss) income														(14,067	)		32,927			47,850			85,936
Other (loss) income, net		(2,646	)		2,362			(2,720	)		4,539			(7,092	)		(1,478	)		(9,812	)		3,061
Interest expense, net		(544	)		(920	)		(843	)		(1,714	)
Interest (expense) income, net														(372	)		288			(1,215	)		(1,426	)

Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries		25,823			35,858			58,354			55,834
(Loss) income before (benefit) provision for income taxes and equity in earnings of unconsolidated subsidiaries														(21,531	)		31,737			36,823			87,571
Equity in earnings of unconsolidated subsidiaries, net		540			452			1,265			918			181			778			1,446			1,696
Income tax provision		8,392			10,907			18,566			16,816
Income tax (benefit) provision														(5,355	)		9,576			13,211			26,392

Net income	$	17,971		$	25,403		$	41,053		$	39,936
Net (loss) income													$	(15,995	)	$	22,939		$	25,058		$	62,875


Earnings per common share:
(Loss) Earnings per common share:
Basic	$	0.36		$	0.52		$	0.82		$	0.82		$	(0.30	)	$	0.46		$	0.49		$	1.27

Diluted	$	0.35		$	0.51		$	0.81		$	0.80		$	(0.30	)	$	0.46		$	0.48		$	1.25


Weighted-average common shares outstanding:
Basic		49,981			49,082			49,737			48,893			54,003			49,135			51,159			48,973

Diluted		50,362			49,740			50,233			49,720			54,003			49,724			51,683			49,663


Cash dividends declared per share:	$	0.10		$	—		$	0.20		$	—		$	0.10		$	—		$	0.30		$	—

The accompanying notes are an integral part of these consolidated financial statements.


	Three Months Ended October 31,						Six Months Ended October 31,						Three Months Ended January 31,						Nine Months Ended January 31,
	2015			2014			2015			2014			2016			2015			2016			2015
	(in thousands)												(in thousands)
Net income	$	17,971		$	25,403		$	41,053		$	39,936
Net (loss) income													$	(15,995	)	$	22,939		$	25,058		$	62,875

Other comprehensive income:
Foreign currency translation adjustments		(1,351	)		(12,555	)		(16,983	)		(16,235	)		(11,447	)		(26,537	)		(28,430	)		(42,772	)
Deferred compensation and pension plan adjustments, net of tax		448			467			895			954			447			466			1,342			1,420
Unrealized gains (losses) on marketable securities, net of tax		—			4			(4	)		(2	)
Unrealized losses on marketable securities, net of tax														—			(5	)		(4	)		(7	)

Comprehensive income	$	17,068		$	13,319		$	24,961		$	24,653
Comprehensive (loss) income													$	(26,995	)	$	(3,137	)	$	(2,034	)	$	21,516

The accompanying notes are an integral part of these consolidated financial statements.


							Nine Months Ended January 31,
	Six Months Ended October 31,						2016			2015
	2015			2014			(in thousands)
Cash flows from operating activities:	(in thousands)
Net income	$	41,053		$	39,936		$	25,058		$	62,875
Adjustments to reconcile net income to net cash used in operating activities:
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization		14,603			13,549			24,933			20,363
Stock-based compensation expense		9,013			6,959			13,539			10,378
Provision for doubtful accounts		4,389			3,770			6,656			5,644
Gain on cash surrender value of life insurance policies		(3,295	)		(5,494	)		(1,801	)		(8,498	)
Loss (gain) on marketable securities		1,818			(4,527	)		8,904			(4,328	)
Deferred income taxes		6,816			2,644			3,059			1,049
Change in other assets and liabilities:
Deferred compensation		(1,324	)		5,570			(3,714	)		2,846
Receivables due from clients		(46,288	)		(39,502	)		(32,291	)		(31,144	)
Income tax and other receivables		(9,492	)		(5,938	)		(11,038	)		1,066
Prepaid expenses and other assets		(7,450	)		(2,538	)		(6,560	)		(1,340	)
Investment in unconsolidated subsidiaries		(1,265	)		(918	)		(1,446	)		(1,696	)
Income taxes payable		1,273			(4,773	)		(4,243	)		(4,999	)
Accounts payable and accrued liabilities		(69,087	)		(56,259	)		(29,184	)		(26,899	)
Other		(14,205	)		(4,494	)		(9,243	)		(7,232	)

Net cash used in operating activities		(73,441	)		(52,015	)
Net cash (used in) provided by operating activities								(17,371	)		18,085

Cash flows from investing activities:
Cash paid for acquisition, net of cash acquired								(252,568	)		—
Purchase of property and equipment		(10,645	)		(11,305	)		(17,673	)		(15,605	)
Purchase of marketable securities		(29,010	)		(22,141	)		(30,276	)		(22,752	)
Proceeds from sales/maturities of marketable securities		24,760			9,232			29,837			12,533
Premium on company-owned life insurance policies		(419	)		(447	)
Premiums on company-owned life insurance policies								(1,352	)		(1,385	)
Proceeds from life insurance policies		1,659			1,976			2,553			8,087
Dividends received from unconsolidated subsidiaries		806			318			2,130			1,656

Net cash used in investing activities		(12,849	)		(22,367	)		(267,349	)		(17,466	)

Cash flows from financing activities:
Proceeds from term loan facility								150,000			—
Principal payment on term loan facility								(2,500	)		—
Purchase of common stock		(6,596	)		(3,748	)		(6,709	)		(3,842	)
Proceeds from issuance of common stock upon exercise of employee stock options and in connection with an employee stock purchase plan		2,491			1,884			3,972			2,177
Tax benefit related to stock-based compensation		4,656			1,350			4,730			1,386
Dividends paid to shareholders		(10,289	)		—			(16,059	)		—
Payments on life insurance policy loans		(1,151	)		(705	)		(1,251	)		(3,301	)

Net cash used in financing activities		(10,889	)		(1,219	)
Net cash provided by (used in) financing activities								132,183			(3,580	)

Effect of exchange rate changes on cash and cash equivalents		(12,916	)		(9,926	)		(20,959	)		(26,305	)

Net decrease in cash and cash equivalents		(110,095	)		(85,527	)		(173,496	)		(29,266	)
Cash and cash equivalents at beginning of period		380,838			333,717			380,838			333,717

Cash and cash equivalents at end of period	$	270,743		$	248,190		$	207,342		$	304,451

The accompanying notes are an integral part of these consolidated financial statements.

Korn/Ferry International, a Delaware corporation (the “Company”), and its subsidiaries are engaged in the business of providing talent management solutions, including executive recruitment on a retained basis, recruitment for non-executive professionals, recruitment process outsourcing and leadership & talent consulting services. The Company’s worldwide network of 78150 offices in 3752 countries enables it to meet the needs of its clients in all industries.

The accompanying financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended April 30, 2015 for 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 the industry. 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. The results of operations for the interim period are not necessarily indicative of the results for the entire fiscal year.

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.

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.

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates, and changes in estimates are reported in current operations as new information is learned or upon the amounts becoming fixed and determinable. The most significant areas that require management judgment are revenue recognition, restructuring, deferred compensation, annual performance related bonuses, evaluation of the carrying value of receivables, goodwill and other intangible assets, fair value of contingent consideration, share-based payments and the recoverability of deferred income taxes.

Substantially all fee revenue is derived from fees for professional services related to executive recruitment performed on a retained basis, recruitment for non-executive professionals, recruitment process outsourcing and leadership & talent consulting services. Fee revenue from executive recruitment activities and recruitment for non-executive professionals is generally one-third of the estimated first year cash compensation of the placed executive or non-executive professional, as applicable, plus a percentage of the fee to cover indirect engagement related expenses. The Company generally recognizes such revenue on a straight-line basis over a three-month period, commencing upon client acceptance, as this is the period over which the recruitment services are performed. Fees earned in excess of the initial contract amount are recognized upon completion of the engagement, which reflect the difference between the final actual compensation of the placed executive and the estimate used for purposes of the previous billings. Since the initial contract fees are typically not contingent upon placement of a candidate, our assumptions primarily relate to establishing the period over which such service is performed. These assumptions determine the timing of revenue recognition and profitability for the reported period. Any revenues associated with services that are provided on a contingent basis are recognized once the contingency is resolved. In addition to recruitment for non-executive professionals, Futurestep provides recruitment process outsourcing (“RPO”) services and fee revenue is recognized as services are rendered and/or as milestones are achieved. Fee revenue from Hay Group (formerly known as Leadership & Talent Consulting (“Legacy LTC”) ~~services is recognized as services are rendered for consulting engagements~~ and ~~other time based~~combined with HG (Luxembourg) S.à.r.l (“Legacy Hay”))

services is recognized as services are rendered for consulting engagements and other time based services, measured by total hours incurred to the total estimated hours at completion. It is possible that updated estimates for the consulting engagement may vary from initial estimates with such updates being recognized in the period of determination. Depending on the timing of billings and services rendered, the Company accrues or defers revenue as appropriate. ~~LTC~~Hay Group revenue is also derived from the sale of solution services, which includes revenue from licenses, compensation data and from the sale of products. Revenue from licenses is recognized using a straight-line method over the term of the contract (generally 12 months). Under the fixed term licenses, the Company is obligated to provide the licensee with access to any updates to the underlying intellectual property that are made by the Company during the term of the license. Once the term of the agreement expires, the client’s right to access or use the intellectual property expires and the Company has no further obligations to the client under the license agreement. Revenue from perpetual licenses is recognized when the license is sold since the Company’s only obligation is to provide the client access to the intellectual property but is not obligated to provide maintenance, support, updates or upgrades. Products sold by the Company mainly consist of books and automated services covering a variety of topics including performance management, team effectiveness, and coaching and development. The Company recognizes revenue for its products when the product has been sold or shipped in the case of books. As of ~~October~~January 31, ~~2015~~2016 and April 30, 2015, the Company included deferred revenue of ~~$40.6~~$94.0 million and $40.5 million, respectively, in other accrued liabilities.

An allowance is established for doubtful accounts by taking a charge to general and administrative expenses. The amount of the allowance is based on historical loss experience, assessment of the collectability of specific accounts, as well as expectations of future collections based upon trends and the type of work for which services are rendered. After the Company exhausts all collection efforts, the amount of the allowance is reduced for balances identified as uncollectible.

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. As of ~~October~~January 31, ~~2015~~2016 and April 30, 2015, the Company’s investments in cash equivalents, consist of money market funds for which market prices are readily available. As of ~~October~~January 31, ~~2015~~2016 and April 30, 2015, the Company had cash equivalents of ~~$148.6~~$69.9 million and $260.6 million, respectively.

The Company currently has investments in marketable securities and mutual funds which are classified as either trading securities or available-for-sale, based upon management’s intent and ability to hold, sell or trade such 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 twelve months are carried as current assets. Realized gains (losses) on marketable securities are determined by specific identification. Interest is recognized on an accrual basis, dividends are recorded as earned on the ex-dividend date. Interest and dividend income are recorded in the accompanying consolidated statements of ~~income~~operations in interest expense, net.

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 (see Note 5 — Marketable Securities) and are classified as trading securities. Such investments are based upon the employees’ investment elections in their deemed accounts in the Executive Capital Accumulation Plan and similar plans in Asia Pacific and Canada (“ECAP”) from a pre-determined set of securities and the Company invests in marketable securities to mirror these elections. The changes in fair value in trading securities are recorded in the accompanying consolidated statements of ~~income~~operations in other (loss) income, 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~~At April 30, 2015, the Company’s investment portfolio includes corporate bonds. 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

a component of comprehensive (loss) income. When, in the opinion of management, a decline in the fair value of an investment below its amortized cost is considered to be “other-than-temporary,” a credit loss is recorded in the statement of ~~income~~operations in other (loss) income, net; any amount in excess of the credit loss is recorded as unrealized gains or losses as a component of comprehensive (loss) 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 of time, a write-down may be necessary. During the three and ~~six~~nine months ended ~~October~~January 31, ~~2015~~2016 and ~~2014,~~2015, no other-than-temporary impairment was recognized.

Beginning in the third quarter of fiscal 2016, the Company established a program that primarily utilizes foreign currency forward contracts to offset the risks associated with the effects of certain foreign currency exposures due to an increase in the foreign currency exposures as a result of the Legacy Hay acquisition. These foreign currency forward contracts are neither used for trading purposes nor are they designated as hedging instruments pursuant to Accounting Standards Codification 815, Derivatives and Hedging. Accordingly, the fair value of these contracts are recorded as of the end of the reporting period in the accompanying consolidated balance sheets, while the change in fair value is recorded to the accompanying consolidated statement of operations.

As of January 31, 2016, the total notional amounts of the forward contracts purchased and sold were $8.9 million and $51.3 million, respectively. The outstanding foreign currency forward contracts were included in prepaid expenses and other assets in the accompanying consolidated balance sheets as of January 31, 2016 and were immaterial. The Company incurred $0.4 million of net losses related to forward contracts for the three months ended January 31, 2016, which is recorded in general and administrative expenses in the accompanying consolidated statements of operations. The cash flows related to foreign currency forward contracts are included in cash (used in) provided by operating activities.

Fair value is the price the Company would receive to sell an asset or transfer a liability (exit price) in an orderly transaction between market participants. For those assets and liabilities recorded or disclosed at fair value, the Company determines the fair value based upon the quoted market price, if available. If a quoted market price is not available for identical assets, the fair value is based upon the quoted market price of similar assets. The fair values are assigned a level within the fair value hierarchy as defined below:

As of ~~October~~January 31, ~~2015~~2016 and April 30, 2015, 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 ~~marketable securities.~~on January 31, 2016 also included foreign currency forward contracts. The carrying amount of cash, cash equivalents and accounts receivable approximates fair value due to the short maturity of these instruments. The fair values of marketable securities classified as trading are obtained from quoted market prices, and the fair values of marketable securities classified as available-for-sale and foreign currency forward contracts are obtained from a third party, which are based on quoted prices or market prices for similar ~~assets.~~assets and financial instruments.

Business acquisitions are accounted for under the acquisition method. The acquisition method requires the reporting entity to identify the acquirer, determine the acquisition date, recognize and measure the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquired entity, and recognize and measure goodwill or a gain from the purchase. The acquiree’s results are included in the Company’s consolidated financial statements from the date of acquisition. Assets acquired and liabilities assumed are recorded at their fair values and the excess of the purchase price over the amounts assigned is recorded as goodwill, or if the fair value of the assets acquired exceeds the purchase price consideration, a bargain purchase gain is recorded. Adjustments to fair value assessments are generally recorded to goodwill over the measurement period (not longer than twelve months). The acquisition method also requires that acquisition-related transaction and post-acquisition restructuring costs be charged to expense as committed, and requires the Company to recognize and measure certain assets and liabilities including those arising from contingencies and contingent consideration in a business combination.

Goodwill represents the excess of the purchase price over the fair value of assets acquired. The goodwill impairment test compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, goodwill of the reporting unit would be considered impaired. To measure the amount of the impairment loss, the implied fair value of a reporting unit’s goodwill is compared to the carrying amount of that goodwill. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a

business combination. If the carrying amount of a reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. For each of these tests, the fair value of each of the Company’s reporting units is determined using a combination of valuation techniques, including a discounted cash flow methodology. To corroborate the discounted cash flow analysis performed at each reporting unit, a market approach is utilized using observable market data such as comparable companies in similar lines of business that are publicly traded or which are part of a public or private transaction (to the extent available). Results of the annual impairment test performed as of January 31, 2015, indicated that the fair value of each reporting unit exceeded its carrying amount and no reporting units were at risk of failing the impairment test. As a result, no impairment charge was recognized. The Company’s annual impairment test will be performed in the fourth quarter of fiscal 2016. There were no indicators of impairment as of ~~October~~January 31, ~~2015~~2016 and April 30, 2015 that would have required further testing.

Intangible assets primarily consist of customer lists, non-compete agreements, proprietary databases, intellectual property and trademarks and are recorded at their estimated fair value at the date of acquisition and are amortized in a pattern in which the asset is consumed if that pattern can be reliably determined, or using the straight-line method over their estimated useful lives which range from one to 24 years. For intangible assets subject to amortization, an impairment loss is recognized if the carrying amount of the intangible assets is not recoverable and exceeds fair value. The carrying amount of the intangible assets is considered not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from use of the asset. Intangible assets with indefinite lives are not amortized, but are reviewed annually for impairment or more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than its carrying amount. As of ~~October~~January 31, ~~2015~~2016 and April 30, 2015, there were no indicators of impairment with respect to the Company’s intangible assets.

Compensation and benefits expense in the accompanying consolidated statements of ~~income~~operations, consist of compensation and benefits paid to consultants (employees who originate business), executive officers and administrative and support personnel. The most significant portions of this expense are salaries and the amounts paid under the annual performance related bonus plan to employees. The portion of the expense applicable to salaries is comprised of amounts earned by employees during a reporting period. The portion of the expenses applicable to annual performance related bonuses refers to the Company’s annual employee performance related bonus with respect to a fiscal year, the amount of which is communicated and paid to each eligible employee following the completion of the fiscal year.

Each quarter, management makes its best estimate of its annual performance related bonuses, which requires management to, among other things, project annual consultant productivity (as measured by engagement fees billed and

collected by executive search consultants and revenue and other performance metrics for ~~LTC~~Hay Group and Futurestep consultants), the level of engagements referred by a fee earner in one line of business to a different line of business, Company performance including profitability, competitive forces and future economic conditions and their impact on the Company’s results. At the end of each fiscal year, annual performance related bonuses take into account final individual consultant productivity (including referred work), Company results including profitability, the achievement of strategic objectives and the results of individual performance appraisals, and the current economic landscape. Accordingly, each quarter the Company reevaluates the assumptions used to estimate annual performance related bonus liability and adjusts the carrying amount of the liability recorded on the consolidated balance sheet and reports any changes in the estimate in current operations.

Because annual performance-based bonuses are communicated and paid only after the Company reports its full fiscal year results, actual performance-based bonus payments may differ from the prior year’s estimate. Such changes in the bonus estimate historically have been immaterial and are recorded in current operations in the period in which they are determined. The performance related bonus expense was ~~$87.0~~$128.1 million and ~~$84.3~~$122.1 million for the ~~six~~nine months ended ~~October~~January 31, ~~2015~~2016 and ~~2014,~~2015, respectively, which was reduced by a change in the previous years’ estimate recorded in the ~~six~~nine months ended ~~October~~January 31, ~~2015~~2016 and ~~2014,~~2015, of $0.6 million and $0.3 million, respectively. This resulted in net bonus expense of ~~$86.4~~$127.5 million and ~~$84.0~~$121.8 million in the ~~six~~nine months ended ~~October~~January 31, ~~2015~~2016 and ~~2014,~~2015, respectively, included in compensation and benefits expense in the consolidated statements of ~~income.~~operations. During the three months ended ~~October~~January 31, ~~2015~~2016 and ~~2014,~~2015, the performance related bonus expense was ~~$44.6~~$41.1 million and ~~$45.3~~$37.8 million, respectively, included in compensation and benefits expense. No change in estimate related to previous years’ estimates was recorded in the three months ended ~~October~~January 31, ~~2015~~2016 or ~~2014.~~

Other expenses included in compensation and benefits expense are due to changes in deferred compensation and pension plan liabilities, changes in cash surrender value (“CSV”) of company owned life insurance (“COLI”) contracts, amortization of stock compensation awards, payroll taxes and employee insurance benefits.

The 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.

The Company has employee compensation plans under which various types of stock-based instruments are granted. These instruments principally include restricted stock units, restricted stock, stock options and an Employee Stock Purchase Plan (“ESPP”). The Company recognizes compensation expense related to restricted stock units, restricted stock and the estimated fair value of stock options and stock purchase under the ESPP on a straight-line basis over the service period for the entire award.

In December 2015, the IRS finalized an examination of the Company’s U.S. federal income tax return for the tax year ended April 30, 2013. As a result of this audit, the Company recognized a financial statement benefit of $2.1 million, recorded in income tax (benefit) provision in the accompanying consolidated statement of operations, primarily due to the removal of an uncertain tax position liability and foreign tax credit utilization.

In November 2015, the FASB issued guidance that simplifies the presentation of deferred income taxes, requiring all deferred tax assets and liabilities, and any related valuation allowances, to be classified as non-current on the balance sheet. The new guidance is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early application permitted for all entities as of the beginning of an interim or annual reporting period. The Company has elected to early adopt the guidance as of January 31, 2016 and has retrospectively applied the new requirements to all periods presented. As such, the Company has reclassified $3.8 million of current deferred tax assets from current assets to non-current assets in the accompanying consolidated balance sheet as of April 30, 2015.

In May 2014, the FASB issued guidance that supersedes revenue recognition requirements regarding contracts with customers to transfer goods or services or for the transfer of nonfinancial assets. Under the new guidance, entities are required to recognize revenue in order to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a five-step analysis to be performed on transactions to determine when and how revenue is recognized. In July 2015, the FASB decided to approve a one-year deferral of the effective date as well as providing an option to early adopt the standard on the original effective date. This new guidance is effective for fiscal years and interim periods within those annual years beginning after December 15, 2017 as opposed to the original effective date of December 15, 2016. The Company will adopt this guidance in its fiscal year beginning May 1, 2018. The Company is currently evaluating the effect the guidance will have on our financial condition and results of operations.

In September 2015, the FASB issued guidance requiring an acquirer to recognize adjustments to provisional amounts recorded in an acquisition that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The acquirer is required to record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the ~~account~~accounting had been completed at the acquisition date. The acquirer is also required to present separately on the face of the income statement or disclose in the footnotes, the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustments had been recognized as of the acquisition date. This new guidance is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The Company will comply with the new guidance when adjustments in acquisitions are identified and recorded during the measurement period.

~~2. Basic and Diluted Earnings Per Share~~In February 2016, the FASB issued guidance on accounting for leases that generally requires all leases to be recognized in the consolidated balance sheet. The provisions of the guidance are effective for fiscal years beginning after December 15, 2018; early adoption is permitted. The provisions of the guidance are to be applied using a modified retrospective approach. We are currently evaluating the effect that this guidance will have on our consolidated financial statements.

Accounting Standards Codification 260, Earnings Per Share, requires companies to treat unvested share-based payment awards that have non-forfeitable rights to dividends prior to vesting as a separate class of securities in calculating earnings per share. We have granted and expect to continue to grant to certain employees under our restricted stock agreements, grants that contain non-forfeitable rights to dividends. Such grants are considered participating securities. Therefore, we are required to apply the two-class method in calculating earnings per share. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. The dilutive effect of participating securities is calculated using the more dilutive of the treasury method or the two-class method.

Basic (loss) earnings per common share was computed using the two-class method by dividing basic net (loss) earnings attributable to common stockholders by the weighted-average number of common shares outstanding. Diluted (loss) earnings per common share

was computed using the two-class method by dividing diluted net (loss) 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. ~~The application of the two-class method did not have a material impact on the earnings per share calculation for the three and six months ended October 31, 2014.~~

During the ~~three and six~~nine months ended ~~October~~January 31, 2016 and 2015 and ~~2014,~~the three months ended January 31, 2015, all shares of outstanding options were included in the computation of diluted earnings per share. During the nine months ended January 31, 2016, restricted stock awards of 0.5 million were outstanding but not included in the computation of diluted earnings per share because they were anti-dilutive. During the three and ~~six~~nine months ended ~~October~~January 31, 2015, restricted stock awards of 0.5 million were outstanding but not included in the computation of diluted earnings per share because they were anti-dilutive.

Due to a net loss generated for the three months ended January 31, 2016, no potentially dilutive shares are included in the loss per share calculation, including 1.5 million in restricted stock awards outstanding, as including such shares in the calculation would be anti-dilutive.

The following table summarizes basic and diluted (loss) earnings per common share attributable to common stockholders:


	Three Months Ended October 31,				Six Months Ended October 31,				Three Months Ended January 31,					Nine Months Ended January 31,
	2015		2014		2015		2014		2016			2015		2016		2015
	(in thousands, except per share data)								(in thousands, except per share data)
Net income	$	17,971	$	25,403	$	41,053	$	39,936

Net (loss) income									$	(15,995	)	$	22,939	$	25,058	$	62,875
Less: distributed and undistributed earnings to nonvested restricted stockholders		167		—		390		—		54			223		235		632

Basic net earnings attributable to common stockholders		17,804		25,403		40,663		39,936
Basic net (loss) earnings attributable to common stockholders										(16,049	)		22,716		24,823		62,243
Add: undistributed earnings to nonvested restricted stockholders		118		—		292		—		—			223		83		632
Less: reallocation of undistributed earnings to nonvested restricted stockholders		117		—		289		—		—			220		82		623

Diluted net earnings attributable to common stockholders	$	17,805	$	25,403	$	40,666	$	39,936
Diluted net (loss) earnings attributable to common stockholders									$	(16,049	)	$	22,719	$	24,824	$	62,252


Weighted-average common shares outstanding:
Basic weighted-average number of common shares outstanding		49,981		49,082		49,737		48,893		54,003			49,135		51,159		48,973
Effect of dilutive securities:
Restricted stock		330		554		433		710		—			491		459		578
Stock options		49		104		58		117		—			97		53		111
ESPP		2		—		5		—		—			1		12		1

Diluted weighted-average number of common shares outstanding		50,362		49,740		50,233		49,720		54,003			49,724		51,683		49,663

Net earnings per common share:
Basic earnings per share	$	0.36	$	0.52	$	0.82	$	0.82

Diluted earnings per share	$	0.35	$	0.51	$	0.81	$	0.80
Net (loss) earnings per common share:
Basic (loss) earnings per share									$	(0.30	)	$	0.46	$	0.49	$	1.27

Diluted (loss) earnings per share									$	(0.30	)	$	0.46	$	0.48	$	1.25

~~Comprehensive~~(loss) income is comprised of net (loss) 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 (loss) income. Accumulated other comprehensive loss, net of taxes, is recorded as a component of stockholders’ equity.

The following table summarizes the changes in each component of accumulated other comprehensive (loss) income ~~(loss)~~ for the three months ended ~~October~~January 31, ~~2015:~~2016:


	Foreign Currency Translation			Deferred Compensation and Pension Plan (1)			Unrealized Losses on Marketable Securities		Accumulated Other Comprehensive Income (Loss)			Foreign Currency Translation			Deferred Compensation and Pension Plan (1)			Unrealized Losses on Marketable Securities		Accumulated Other Comprehensive Income (Loss)
	(in thousands)											(in thousands)
Balance as of July 31, 2015	$	(36,551	)	$	(19,261	)	$	—	$	(55,812	)
Balance as of October 31, 2015												$	(37,902	)	$	(18,813	)	$	—	$	(56,715	)
Unrealized losses arising during the period		(1,351	)		—			—		(1,351	)		(11,447	)		—			—		(11,447	)
Reclassification of realized net losses to net income		—			448			—		448			—			447			—		447

Balance as of October 31, 2015	$	(37,902	)	$	(18,813	)	$	—	$	(56,715	)
Balance as of January 31, 2016												$	(49,349	)	$	(18,366	)	$	—	$	(67,715	)

The following table summarizes the changes in each component of accumulated other comprehensive (loss) income ~~(loss)~~ for the ~~six~~nine months ended ~~October~~January 31, ~~2015:~~2016:


	Foreign Currency Translation			Deferred Compensation and Pension Plan (1)			Unrealized Gains (Losses) on Marketable Securities			Accumulated Other Comprehensive Income (Loss)			Foreign Currency Translation			Deferred Compensation and Pension Plan (1)			Unrealized Gains (Losses) on Marketable Securities			Accumulated Other Comprehensive Income (Loss)
	(in thousands)												(in thousands)
Balance as of April 30, 2015	$	(20,919	)	$	(19,708	)	$	4		$	(40,623	)	$	(20,919	)	$	(19,708	)	$	4		$	(40,623	)
Unrealized losses arising during the period		(16,983	)		—			(4	)		(16,987	)		(28,430	)		—			(4	)		(28,434	)
Reclassification of realized net losses to net income		—			895			—			895			—			1,342			—			1,342

Balance as of October 31, 2015	$	(37,902	)	$	(18,813	)	$	—		$	(56,715	)
Balance as of January 31, 2016													$	(49,349	)	$	(18,366	)	$	—		$	(67,715	)

The following table summarizes the changes in each component of accumulated other comprehensive (loss) income ~~(loss)~~ for the three months ended ~~October~~January 31, ~~2014:~~2015:


	Foreign Currency Translation			Deferred Compensation and Pension Plan (1)			Unrealized Gains (Losses) on Marketable Securities		Accumulated Other Comprehensive Income (Loss)			Foreign Currency Translation			Deferred Compensation and Pension Plan (1)			Unrealized Gains (Losses) on Marketable Securities			Accumulated Other Comprehensive Income (Loss)
	(in thousands)											(in thousands)
Balance as of July 31, 2014	$	11,924		$	(17,519	)	$	8	$	(5,587	)
Unrealized gains (losses) arising during the period		(12,555	)		—			4		(12,551	)
Balance as of October 31, 2014												$	(631	)	$	(17,052	)	$	12		$	(17,671	)
Unrealized losses arising during the period													(26,537	)		—			(5	)		(26,542	)
Reclassification of realized net losses to net income		—			467			—		467			—			466			—			466

Balance as of October 31, 2014	$	(631	)	$	(17,052	)	$	12	$	(17,671	)
Balance as of January 31, 2015												$	(27,168	)	$	(16,586	)	$	7		$	(43,747	)

The following table summarizes the changes in each component of accumulated other comprehensive (loss) income ~~(loss)~~ for the ~~six~~nine months ended ~~October~~January 31, ~~2014:~~2015:


	Foreign Currency Translation			Deferred Compensation and Pension Plan (1)			Unrealized Gains (Losses) on Marketable Securities			Accumulated Other Comprehensive Income (Loss)			Foreign Currency Translation			Deferred Compensation and Pension Plan (1)			Unrealized Gains (Losses) on Marketable Securities			Accumulated Other Comprehensive Income (Loss)
	(in thousands)												(in thousands)
Balance as of April 30, 2014	$	15,604		$	(18,006	)	$	14		$	(2,388	)	$	15,604		$	(18,006	)	$	14		$	(2,388	)
Unrealized losses arising during the period		(16,235	)		—			(2	)		(16,237	)		(42,772	)		—			(7	)		(42,779	)
Reclassification of realized net losses to net income		—			954			—			954			—			1,420			—			1,420

Balance as of October 31, 2014	$	(631	)	$	(17,052	)	$	12		$	(17,671	)
Balance as of January 31, 2015													$	(27,168	)	$	(16,586	)	$	7		$	(43,747	)

The following table summarizes the components of stock-based compensation expense recognized in the Company’s consolidated statements of ~~income~~operations for the periods indicated:


	Three Months Ended October 31,						Six Months Ended October 31,						Three Months Ended January 31,						Nine Months Ended January 31,
	2015			2014			2015			2014			2016			2015			2016			2015
	(in thousands)												(in thousands)
Restricted stock	$	5,178		$	3,617		$	8,732		$	6,869		$	4,399		$	3,356		$	13,131		$	10,225
ESPP		144			—			264			—			127			41			391			41
Stock options		—			23			17			90			—			22			17			112

Total stock-based compensation expense, pre-tax		5,322			3,640			9,013			6,959			4,526			3,419			13,539			10,378
Tax benefit from stock-based compensation expense		(1,714	)		(1,114	)		(2,868	)		(2,096	)		(1,989	)		(1,032	)		(4,857	)		(3,128	)

Total stock-based compensation expense, net of tax	$	3,608		$	2,526		$	6,145		$	4,863		$	2,537		$	2,387		$	8,682		$	7,250

The Company uses the Black-Scholes option valuation model to estimate the grant date fair value of employee stock options. The expected volatility reflects consideration of the historical volatility in the Company’s publicly traded stock during the period the option is granted. The Company believes historical volatility in these instruments is more indicative of expected future volatility than the implied volatility in the price of the Company’s common stock. The expected life of each option is estimated using historical data. The risk-free interest rate is based on the U.S. Treasury zero-coupon issue with a remaining term approximating the expected term of the option. The Company uses historical data to estimate forfeiture rates applied to the gross amount of expense determined using the option valuation model. The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options. The assumptions used in option valuation models are highly subjective, particularly the expected stock price volatility of the underlying stock. The Company did not grant stock options in the three or ~~six~~nine months ended ~~October~~January 31, ~~2015~~2016 and ~~2014.~~2015.

At the Company’s 2012 Annual Meeting of Stockholders, held on September 27, 2012, the Company’s stockholders approved an amendment and restatement to the Korn/Ferry International Amended and Restated 2008 Stock Incentive Plan (the 2012 amendment and restatement being the “Second A&R 2008 Plan”), which among other things, increased the current maximum number of shares that may be issued under the plan to 5,700,000 shares, subject to certain changes in the Company’s capital structure and other extraordinary events. The Second A&R 2008 Plan provides for the grant of awards to eligible participants, designated as either nonqualified or incentive stock options, restricted stock and restricted stock units, any of which may be performance-based or market-based, and incentive bonuses, which may be paid in cash or a combination thereof. Under the Second A&R 2008 Plan, the ability to issue full-value awards is limited by requiring full-value stock awards to count 1.91 times as much as stock options.

Stock option transactions under the Company’s Second A&R 2008 Plan were as follows:


	Three Months Ended October 31,				Six Months Ended October 31,				Three Months Ended January 31,				Nine Months Ended January 31,
	2015		2014		2015		2014		2016		2015		2016		2015
	(in thousands)								(in thousands)
Total fair value of stock options vested	$	—	$	10	$	96	$	334	$	—	$	—	$	96	$	334
Total intrinsic value of stock options exercised	$	198	$	332	$	1,558	$	1,371	$	73	$	145	$	1,631	$	1,516

The Company grants time-based restricted stock awards to executive officers and other senior employees generally vesting over a three to 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 a third-party valuation firm using extensive market data that are 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 ~~the~~ 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 performance-based restricted stock units on a straight-line basis over the vesting period. 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 takes into account these estimates when calculating the expense for the period.

Restricted stock activity during the ~~six~~nine months ended ~~October~~January 31, ~~2015~~2016 is summarized below:


	Shares		Weighted- Average Grant Date Fair Value		Shares			Weighted- Average Grant Date Fair Value
	(in thousands, except per share data)				(in thousands, except per share data)
Non-vested, April 30, 2015		1,560	$	22.15		1,560		$	22.15
Granted		611	$	26.97		1,006		$	29.65
Vested		(778)	$	16.28		(787	)	$	16.31
Forfeited/expired		(14)	$	24.42		(20	)	$	23.49

Non-vested, October 31, 2015		1,379	$	27.57
Non-vested, January 31, 2016						1,759		$	29.04

As of ~~October~~January 31, ~~2015,~~2016, there were ~~0.3~~0.5 million shares and ~~0.2~~0.3 million shares outstanding relating to ~~market-based~~performance-based and ~~performance-based~~market-based restricted stock units, respectively, with total unrecognized compensation totaling ~~$7.6~~$11.9 million and ~~$1.5~~$6.7 million, respectively.

As of ~~October~~January 31, ~~2015,~~2016, there was ~~$28.0~~$36.8 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 ~~2.5~~2.6 years. During the three and ~~six~~nine months ended ~~October~~January 31, ~~2015, 660~~2016, 3,352 shares and ~~188,764~~192,116 shares of restricted stock totaling $0.1 million and ~~$6.7~~$6.8 million, respectively, were repurchased by the Company, at the option of the employee, to pay for taxes related to vesting of restricted stock. During the three and ~~six~~nine months ended ~~October~~January 31, ~~2014, 662~~2015, 3,379 shares and ~~126,083~~129,462 shares of restricted stock totaling $0.1 million and ~~$3.8~~$3.9 million, respectively, were repurchased by the Company, at the option of the employee, to pay for taxes related to vesting of restricted stock.

The Company has an ESPP that, in accordance with Section 423 of the Internal Revenue Code, allows eligible employees to authorize payroll deductions of up to 15% of their salary to purchase shares of the Company’s common stock at 85% of the fair market price of the common stock on the last day of the enrollment period. Employees may not purchase more than $25,000 in stock during any calendar year. The maximum number of shares that may be issued under the ESPP is 3.0 million shares. The ESPP was suspended during the second half of fiscal 2012 and as a result, no shares were purchased during the ~~six~~three and nine months ended ~~October~~January 31, ~~2014.~~2015. On January 1, 2015, the Company ~~once again allowed employees to participate~~resumed the ESPP program with the first purchase of shares made in the ~~ESPP. During the six months ended October 31, 2015, employees purchased 44,334 shares at $29.55 per share.~~first quarter of fiscal 2016. During the three months ended ~~October~~January 31, ~~2015, no~~2016, employees purchased 50,801 shares ~~were~~at $28.20 per share. During the nine months ended January 31, 2016, employees purchased ~~under the ESPP.~~95,135 shares at $28.83 per share. As of ~~October~~January 31, ~~2015,~~2016, the ESPP had approximately ~~1.6~~1.5 million shares remaining available for future issuance.

During the three and ~~six~~nine months ended ~~October~~January 31, ~~2015,~~2016, the Company issued ~~9,070~~3,650 shares and ~~80,498~~84,148 shares of common stock, respectively, as a result of the exercise of stock options, with cash proceeds from the exercise of $0.1 million and ~~$1.2~~$1.3 million, respectively. During the three and ~~six~~nine months ended ~~October~~January 31, ~~2014,~~2015, the Company issued ~~24,308~~15,091 shares and ~~109,629~~124,720 shares of common stock, respectively, as a result of the exercise of stock options, with cash proceeds from the exercise of ~~$0.4~~$0.3 million and ~~$1.9~~$2.2 million, respectively.

No shares were repurchased during the three and ~~six~~nine months ended ~~October~~January 31, ~~2015~~2016 and ~~2014,~~2015, other than to satisfy minimum tax withholding requirements upon the vesting of restricted stock as described above.

As of ~~October~~January 31, ~~2015,~~2016, marketable securities consisted of the following:


	Trading (1)(2)			Available-for- Sale (2)			Total			Trading (1)(2)			Available-for- Sale (2)		Total
	(in thousands)									(in thousands)
Mutual funds	$	144,905		$	—		$	144,905		$	135,938		$	—	$	135,938
Corporate bonds		—			2,003			2,003

Total		144,905			2,003			146,908
Less: current portion of marketable securities		(10,106	)		(2,003	)		(12,109	)		(9,118	)		—		(9,118	)

Non-current marketable securities	$	134,799		$	—		$	134,799		$	126,820		$	—	$	126,820

~~The~~As of January 31, 2016, the Company did not hold marketable securities classified as available-for-sale. As of April 30, 2015, the amortized cost and fair values of marketable securities classified as available-for-sale investments were as follows:

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 ~~October~~January 31, ~~2015 and~~2016, the Company does not hold marketable securities classified as available-for-sale. As of April 30, 2015, marketable securities classified as available-for-sale consist of corporate bonds for which market prices for similar assets are readily available. ~~As of October 31, 2015, available-for-sale marketable securities have remaining maturities ranging from one to two months.~~ During the three and ~~six~~nine months ended ~~October~~January 31, ~~2015,~~2016, the Company received ~~$8.1~~$2.0 million and ~~$11.1~~$13.1 million, respectively, in proceeds from maturities of available-for-sale marketable securities. During the ~~six~~three and nine months ended ~~October~~January 31, ~~2014,~~2015, the Company received ~~$2.0~~$1.0 million and $3.0 million, respectively, in proceeds from ~~maturities of available-for-sale marketable securities. During the three months ended October 31, 2014, there were no sales/~~maturities of available-for-sale marketable securities. Investments in marketable securities classified as trading are based upon investment selections the employee elects from a pre-determined set of securities in the ECAP and the Company invests in marketable securities to mirror these elections. As of ~~October~~January 31, ~~2015~~2016 and April 30, 2015, the Company’s investments in marketable securities classified as trading consist of mutual funds for which market prices are readily available.

As of ~~October~~January 31, ~~2015~~2016 and April 30, 2015, the Company’s marketable securities classified as trading were ~~$144.9~~$135.9 million (net of gross unrealized gains of ~~$5.3~~$0.1 million and ~~$0.9~~$6.5 million of gross unrealized losses) and $131.4 million (net of gross unrealized gains of $8.3 million and $0.2 million of gross unrealized losses), respectively.

The Company has several deferred compensation and retirement plans for eligible consultants and vice presidents that provide defined benefits to participants based on the deferral of current compensation or contributions made by the Company subject to vesting and retirement or termination provisions. In June 2003, the Company amended the deferred compensation plans, with the exception of the ECAP and international retirement plans, so as not to allow new participants or the purchase of additional deferral units by existing participants.


	Three Months Ended October 31,				Six Months Ended October 31,				Three Months Ended January 31,				Nine Months Ended January 31,
	2015		2014		2015		2014		2016		2015		2016		2015
	(in thousands)								(in thousands)
Amortization of actuarial loss	$	731	$	762	$	1,462	$	1,525	$	730	$	763	$	2,192	$	2,288
Interest cost		703		748		1,406		1,495		703		747		2,109		2,242

Net periodic benefit costs	$	1,434	$	1,510	$	2,868	$	3,020	$	1,433	$	1,510	$	4,301	$	4,530

The Company purchased COLI contracts insuring the lives of certain employees eligible to participate in the deferred compensation and pension plans as a means of funding benefits under such plans. The gross CSV of these contracts of

~~$173.9~~ $173.2 million and $172.3 million is offset by outstanding policy loans of ~~$68.5~~$68.4 million and $69.6 million in the accompanying consolidated balance sheets as of ~~October~~January 31, ~~2015~~2016 and April 30, 2015, respectively. The CSV value of the underlying COLI investments ~~increased~~decreased by ~~$0.8 million and $3.3~~$1.5 million during the three ~~and six~~ months ended ~~October~~January 31, ~~2015, respectively,~~2016, and was recorded as an increase in compensation and benefits expense in the accompanying consolidated statement of operations. The CSV value of the underlying COLI investments increased by $1.8 million during the nine months ended January 31, 2016, and was recorded as a decrease in compensation and benefits expense in the accompanying consolidated statement of ~~income.~~ operations.

The CSV value of the underlying COLI investments increased by ~~$2.2~~$3.0 million and ~~$5.5~~$8.5 million during the three and ~~six~~nine months ended ~~October~~January 31, ~~2014,~~2015, respectively, and iswas recorded as a decrease in compensation and benefits expense in the accompanying consolidated statement of ~~income.~~operations.

In conjunction with the acquisition of Legacy Hay on December 1, 2015, the Company acquired multiple pension and savings plans covering certain of its employees worldwide. Among these plans is a defined benefit pension plan for employees in the United States. The assets of this plan are held separately from the assets of the sponsors in self-administered funds. The plan is funded consistent with local statutory requirements. The Company also has benefit plans which offer medical and life insurance coverage to eligible employees and continue to provide coverage after retirement. Additionally, the Company operates a benefit plan which provides supplemental pension benefits. Supplemental defined benefit obligations are unfunded. As of January 31, 2016, the Company has accrued $44.7 million in connection with these plans of which $31.8 million is included in the non-current portion of deferred compensation and other retirement plans in the accompanying consolidated balance sheets, and $12.9 million is included in compensation and benefits payable.

The Company has an ECAP, which is intended to provide certain employees an opportunity to defer salary and/or bonus on a pre-tax basis or make an after-tax contribution. In addition, the Company, as part of its compensation philosophy, makes discretionary contributions into the ECAP and such contributions may be granted to key employees annually based upon employee performance. Certain key management may also receive Company ECAP contributions upon commencement of employment. The Company made contributions to the ECAP during the three and ~~six~~nine months ended ~~October~~January 31, ~~2015~~2016 of ~~$20.0~~$1.2 million and ~~$22.0~~$23.2 million, respectively. The Company made contributions to the ECAP during the three and ~~six~~nine months ended ~~October~~January 31, ~~2014~~2015 of ~~$17.4~~$0.5 million and ~~$18.6~~$19.1 million, respectively. As these contributions vest, the amounts are recorded as a liability in deferred compensation and other retirement plans on the accompanying balance sheet and compensation and benefits on the accompanying consolidated statement of ~~income.~~operations. Participants generally vest in Company contributions over a four year period.

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 the three and ~~six~~nine months ended ~~October~~January 31, ~~2015,~~2016, deferred compensation liability decreased; therefore, the Company recognized a decrease in compensation expense of ~~$1.6~~$5.3 million and ~~$0.9~~$6.2 million in the three and ~~six~~nine months ended ~~October~~January 31, ~~2015,~~2016, respectively. Offsetting the decrease in compensation and benefits expense was a decrease in the fair value of marketable securities classified as trading (held in trust to satisfy obligations under certain deferred compensation liabilities) of ~~$2.5~~$7.1 million and ~~$1.8~~$8.9 million during the three and ~~six~~nine months ended ~~October~~January 31, ~~2015,~~2016, respectively. During the three ~~and six~~ months ended ~~October~~January 31, ~~2014,~~2015, the deferred compensation liability decreased; therefore, the Company recognized a decrease in compensation expense of $0.4 million. During the nine months ended January 31, 2015, the deferred compensation liability increased; therefore, the Company recognized an increase in compensation expense of ~~$1.0 million and $2.7 million in the three and six months ended October 31, 2014, respectively.~~$2.3 million. Offsetting ~~the increase~~these changes in compensation and benefits expense was a decrease in the fair value of marketable securities classified as trading (held in trust to satisfy obligations under certain deferred compensation liabilities), therefore, the Company recognized an increase in other (loss) income, net of $0.2 million during the three months ended January 31, 2015 (see Note 5 —Marketable Securities). During the nine months ended January 31, 2015, there was an increase in the fair value of marketable securities classified as trading (held in trust to satisfy obligations under certain deferred compensation liabilities) ~~of $2.5 million and $4.5 million during~~, therefore, the ~~three and six months ended October 31, 2014, respectively, recorded~~Company recognized a decrease in other (loss) income, net ~~on the consolidated statement~~ of ~~income~~$4.3 million (see Note 5 —Marketable Securities).

During the third quarter of fiscal 2016, the Company implemented a restructuring plan in order to rationalize its cost structure by eliminating redundant positions and consolidating office space due to the acquisition of Legacy Hay on December 1, 2015. This resulted in restructuring charges, net of $30.6 million in the three and nine months ended January 31, 2016, of which $29.9 million relates to severance and $0.7 million, relates to consolidation and abandonment of premises.

Changes in the restructuring liability during the three months ended January 31, 2016 are as follows:

Changes in the restructuring liability during the nine months ended January 31, 2016 are as follows:

As of January 31, 2016 and April 30, 2015, the restructuring liability is included in the current portion of other accrued liabilities on the consolidated balance sheets, except for $0.6 million and $0.3 million, respectively, which are included in other long-term liabilities.

The Company currently operates in three global businesses: Executive Recruitment, ~~LTC~~Hay Group and Futurestep. The Executive Recruitment segment focuses on recruiting Board of Director and C-level positions, in addition to research-based interviewing and onboarding solutions, for clients predominantly in the consumer, financial services, industrial, life sciences/healthcare and technology industries. ~~LTC~~Hay Group assists clients with ongoing assessment, compensation and development of their senior executives and management teams, and addresses three fundamental needs: Talent Strategy, Succession Management, and Leadership Development, all underpinned by a comprehensive array of world-leading IP, products and tools. Futurestep is a global industry leader in high-impact talent acquisition solutions. Its portfolio of services includes global and regional RPO, project recruitment, individual professional search and consulting. The Executive Recruitment business segment is managed by geographic regional leaders and ~~LTC~~Hay Group and Futurestep worldwide operations are managed by their respective Chief Executive Officers. The Executive Recruitment geographic regional leaders and the Chief Executive Officers of ~~LTC~~Hay Group and Futurestep report directly to the Chief Executive Officer of the Company. The Company also operates a Corporate segment to record global expenses of the Company.

The Company evaluates performance and allocates resources based on the Company’s chief operating decision maker’s (“CODM”) review of (1) fee revenue and (2) adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). To the extent that such charges occur, Adjusted EBITDA excludes restructuring charges, integration and acquisition ~~costs,~~items, certain separation costs and certain non-cash charges (goodwill, intangible asset and other than temporary impairment). The accounting policies for the reportable segments are the same as those described in the summary of significant accounting policies, except the items described above are excluded from EBITDA to arrive at Adjusted EBITDA.


	Six Months Ended October 31, 2015																									Nine Months Ended January 31, 2016
	Executive Recruitment											LTC				Futurestep			Corporate			Consolidated				Executive Recruitment
	North America			EMEA		Asia Pacific		South America		Subtotal						Futurestep		North America							EMEA				Asia Pacific				South America				Subtotal				Hay Group				Futurestep				Corporate				Consolidated
	(in thousands)																									(in thousands)
Fee revenue	$	183,147		$	72,660	$	40,213	$	12,542	$	308,562	LTC			$	142,842		$	Corporate	96,590		Consolidated	$	—			$	547,994			$	276,667			$	108,158			$	59,307			$	19,083			$	463,215			$	283,350			$	145,587		$	—	$	892,152
Total revenue	$	190,597		$	74,680	$	41,607	$	12,550	$	319,434	$	147,432			$	103,808		$	—		$	570,674			$	287,694			$	111,097			$	61,210			$	19,095			$	479,096			$	293,511			$	156,946			$	—		$	929,553

Net income																						$	41,053																																		$	25,058
Other loss, net																							2,720																																			9,812
Interest expense, net																							843																																			1,215
Equity in earnings of unconsolidated subsidiaries, net																							(1,265	)																																		(1,446	)
Income tax provision																							18,566																																			13,211

Operating income (loss)	$	51,567		$	13,205	$	6,893	$	2,478	$	74,143	$	15,273			$	13,085		$	(40,584	)	$	61,917			$	80,524			$	14,912			$	9,668			$	3,644			$	108,748			$	(6,286	)		$	19,715			$	(74,327	)	$	47,850
Depreciation and amortization		1,659			597		469		151		2,876		7,336				1,163			3,228			14,603				2,471				810				704				224				4,209				14,058				1,772				4,894			24,933
Other (loss) income, net		(95	)		150		12		272		339		(880	)			8			(2,187	)		(2,720	)			(425	)			227				(102	)			281				(19	)			(737	)			87				(9,143	)		(9,812	)
Equity in earnings of unconsolidated subsidiaries, net		226			—		—		—		226		—				—			1,039			1,265				252				—				—				—				252				—				—				1,194			1,446

EBITDA		53,357			13,952		7,374		2,901		77,584		21,729				14,256			(38,504	)		75,065				82,822				15,949				10,270				4,149				113,190				7,035				21,574				(77,382	)		64,417

Restructuring charges, net																											484				5,866				577				328				7,255				23,241				—				81			30,577
Integration/acquisition costs		—			—		—		—		—		3,639				—			9,029			12,668				—				—				—				—				—				12,052				—				21,763			33,815
Deferred revenue adjustment due to acquisition																											—				—				—				—				—				5,871				—				—			5,871
Separation costs																											—				—				—				—				—				—				—				744			744

Adjusted EBITDA	$	53,357		$	13,952	$	7,374	$	2,901	$	77,584	$	25,368			$	14,256		$	(29,475	)	$	87,733			$	83,306			$	21,815			$	10,847			$	4,477			$	120,445			$	48,199			$	21,574			$	(54,794	)	$	135,424


	Six Months Ended October 31, 2014																									Nine Months Ended January 31, 2015
	Executive Recruitment											LTC				Futurestep			Corporate			Consolidated				Executive Recruitment
	North America			EMEA		Asia Pacific		South America		Subtotal						Futurestep		North America							EMEA				Asia Pacific				South America				Subtotal				Hay Group				Futurestep				Corporate				Consolidated
	(in thousands)																									(in thousands)
Fee revenue	$	165,029		$	76,972	$	40,691	$	14,653	$	297,345	LTC			$	129,956		$	Corporate	79,589		Consolidated	$	—			$	506,890			$	243,055			$	113,788			$	61,615			$	22,366			$	440,824			$	194,269			$	121,342		$	—	$	756,435
Total revenue	$	172,334		$	79,483	$	42,085	$	14,692	$	308,594	$	133,897			$	82,551		$	—		$	525,042			$	253,855			$	117,351			$	63,959			$	22,416			$	457,581			$	199,945			$	126,387			$	—		$	783,913

Net income																						$	39,936																																		$	62,875
Other income, net																							(4,539	)																																		(3,061	)
Interest expense, net																							1,714																																			1,426
Equity in earnings of unconsolidated subsidiaries, net																							(918	)																																		(1,696	)
Income tax provision																							16,816																																			26,392

Operating income (loss)	$	38,115		$	8,264	$	5,946	$	1,772	$	54,097	$	11,222			$	8,607		$	(20,917	)	$	53,009			$	60,788			$	13,337			$	10,042			$	3,513			$	87,680			$	19,799			$	14,367			$	(35,910	)	$	85,936
Depreciation and amortization		1,795			935		555		170		3,455		6,531				905			2,658			13,549				2,662				1,366				771				249				5,048				9,848				1,374				4,093			20,363
Other income, net		323			45		258		46		672		45				23			3,799			4,539
Other income (loss), net																											98				69				283				87				537				(111	)			27				2,608			3,061
Equity in earnings of unconsolidated subsidiaries, net		178			—		—		—		178		—				—			740			918				281				—				—				—				281				—				—				1,415			1,696

EBITDA		40,411			9,244		6,759		1,988		58,402		17,798				9,535			(13,720	)		72,015				63,829				14,772				11,096				3,849				93,546				29,536				15,768				(27,794	)		111,056

Restructuring charges, net		1,151			3,987		17		377		5,532		2,758				1,424			172			9,886				1,151				3,987				17				229				5,384				2,758				1,154				172			9,468
Acquisition costs																											—				—				—				—				—				—				—				445			445

Adjusted EBITDA	$	41,562		$	13,231	$	6,776	$	2,365	$	63,934	$	20,556			$	10,959		$	(13,548	)	$	81,901			$	64,980			$	18,759			$	11,113			$	4,078			$	98,930			$	32,294			$	16,922			$	(27,177	)	$	120,969

~~On September 23, 2015, the~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company ~~entered into Amendment No. 3 (the “Amendment No. 3”)~~is party to ~~the existing~~a Credit Agreement ~~dated as of January 18, 2013~~ with Wells Fargo Bank, National Association, as lender (the “Lender”), dated January 18, 2013, as ~~previously~~ amended by Amendment No. 1 dated as of December 12, 2014 ~~(the “Amendment~~(“Amendment No. 1”) ~~and~~, Amendment No. 2 dated as of June 3, 2015 ~~(the “Amendment~~(“Amendment No. 2”) ~~(the~~, Amendment No. 3, dated as of September 23, 2015 (“Amendment No. 3”) and Amendment No. 4, dated as of November 20, 2015 (“Amendment No. 4”; the existing Credit Agreement, as amended by ~~the~~ Amendment No. 1, ~~the~~ Amendment No. 2, ~~and the~~ Amendment No. 3 and Amendment No. 4, the “Credit Agreement”).

The ~~Amendment No. 3~~Credit Agreement provides for, among other things: (i) a ~~new~~ senior unsecured delayed draw term loan facility in an aggregate principal amount of $150 million (the “Term Facility”); and (ii) a ~~reduction in the~~ revolving credit facility (the “Revolver” and, together with the Term Facility, the “Credit Facilities”) ~~from~~in an aggregate principal amount of ~~$150~~$100 million, ~~to $100 million; (iii) an extension to~~which includes a $25.0 million sub-limit for letters of credit. Both the ~~maturity date of~~Revolver and the ~~Revolver; (iv) consent to enter into the acquisition of Hay~~

~~Group; (v) certain changes to affirmative~~Term Facility mature on September 23, 2020, and ~~negative covenants, including an increase to the minimum adjusted EBITDA that~~may be prepaid and terminated early by the Company ~~must maintain from $70 million~~at any time without premium or penalty (subject to ~~$100 million, (vi) an increase in~~customary LIBOR breakage fees).

The Credit Agreement includes customary and affirmative negative covenants. In particular, the ~~amount of~~Credit Agreements limit us to consummating permitted acquisitions, paying dividends to our stockholders and making share repurchases in any fiscal year ~~from $125.0 million~~ to a cumulative total of $135.0 million, ~~(excluding~~excluding the ~~recently announced~~consideration paid in connection with the acquisition of ~~Hay Group); and (vii) an increase~~Legacy Hay. Subject to the foregoing, pursuant to the Credit Agreement, the Company is permitted to pay up to $85.0 million in ~~the amount of~~ dividends ~~paid to stockholders~~ and share repurchases, in the aggregate, in any fiscal year ~~from $75.0~~(subject to the satisfaction of certain conditions). The Credit Agreement also requires the Company to maintain $50.0 million in domestic liquidity, defined as unrestricted cash and/or marketable securities (excluding any marketable securities that are held in trust for the settlement of the Company’s obligation under certain deferred compensation plans) as a condition to ~~$85.0 million (excluding~~consummating permitted acquisitions, paying dividends to our stockholders and repurchasing shares of our common stock. Undrawn amounts on the ~~recently announced acquisition~~Company’s line of ~~Hay Group)~~credit may be used to calculate domestic liquidity.

The Credit Agreement includes minimum Adjusted EBITDA and maximum Total Funded Debt to Adjusted EBITDA ratio financial covenants (the “consolidated leverage ratio”) (in each case as defined in the Credit Agreement). As of January 31, 2016, the Company was in compliance with its debt covenants.

At the Company’s option, loans issued under the Credit Facilities ~~will~~ bear interest at either adjusted LIBOR or an alternate base rate, in each case plus the applicable interest rate margin. The interest rate applicable to loans outstanding under the Credit Facilities may fluctuate between adjusted LIBOR plus 1.125% per annum to adjusted LIBOR plus 1.875% 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 0.875% per annum, in the alternative), based upon the ~~Company’s total funded debt to adjusted EBITDA~~consolidated leverage ratio ~~(as set forth in the Credit Agreement, the “consolidated leverage ratio”)~~ at such time. In addition, the Company will be required to pay to the Lender a quarterly fee ranging from 0.25% to 0.40% per annum on the average daily unused amount of the Credit Facilities, based upon the Company’s consolidated leverage ratio at such time, and fees relating to the issuance of letters of credit.

~~Both~~On November 23, 2015 the ~~Revolver and~~Company borrowed $150 million under the Term Facility. The Term Facility ~~mature~~is payable in quarterly installments, with the final installment consisting of all remaining unpaid principal due on the term loan maturity date of September 23, ~~2020,~~2020. The Company made $2.5 million in principal payments during the three months ended January 31, 2016 and ~~may~~will be ~~prepaid and terminated early by~~making quarterly installments of $7.8 million starting on April 1, 2016. As of January 31, 2016, there was $147.5 million outstanding under the ~~Company at any time without premium or penalty (subject to customary~~Term Facility. The interest rate on the debt is Adjusted LIBOR ~~breakage fees)~~plus a spread which is dependent on the Company’s leverage ratio, as discussed above. During the three months ended January 31, 2016, the average interest rate on the term loan was 1.56%.

As of ~~October~~January 31, ~~2015~~2016 and April 30, 2015, there was no borrowing made under the ~~Company had no borrowings under its long-term debt arrangements.~~revolving credit facility. At ~~October~~January 31, ~~2015~~2016 and April 30, 2015, there was $2.9 million and $2.8 million of standby letters of credit issued under its long-term debt arrangements, respectively. The Company had a total of ~~$1.4~~$5.0 million and $1.6 million of standby letters of credits with other financial institutions as of ~~October~~January 31, ~~2015~~2016 and April 30, 2015, respectively.

On December 1, 2015, the Company completed its acquisition of Legacy Hay, a global leader in people strategy and organizational performance, for $470.5 million, net of cash acquired. The purchase price consisted of $252.6 million in cash ($54 million from foreign locations), net of estimated cash acquired and 5,922,136 shares of the Company’s common stock, par value $0.01 per share (the “Consideration Shares”), representing an aggregate value of $217.9 million based on the closing price of the Company’s common stock on The New York Stock Exchange on November 30, 2015. On November 23, 2015, the Company borrowed $150 million from the Term Facility, to finance a portion of the Legacy Hay acquisition purchase price. As part of the acquisition, the Company has committed to a $40 million retention pool (up to $5 million payable within one year of the closing of the acquisition) for certain employees of Legacy Hay subject to certain circumstances. Of the remaining balance, 50% will be payable within 45 days after November 30, 2017 and the remaining 50% will be payable within 45 days after November 30, 2018.

The acquisition strengthens the Company’s intellectual property, enhances our geographical presence, adds complimentary capabilities to further leverage search relationships and broadens capabilities for assessment and development. It improves our ability to support the global business community not only in attracting top talent and designing compensation and reward incentives, but also with an integrated approach to the entire leadership and people continuum. Actual results of operations of Legacy Hay are included in the Company’s consolidated financial statements from December 1, 2015, the effective date of the acquisition, and includes $71.9 million, $746.1 million and $8.6 million in fee revenue, total assets and Adjusted EBITDA, respectively, with an Adjusted EBITDA margin of 11.0%, during the third quarter of fiscal 2016. Legacy Hay is included in the Hay Group segment.

The aggregate purchase price for Legacy Hay was allocated on a preliminary basis to the assets acquired and liabilities assumed on their estimated fair values at the date of acquisition. As of January 31, 2016, these allocations remain preliminary as it relates to, among other things, items such as working capital adjustments and income taxes. The measurement period for purchase price allocation ends as soon as information on the facts and circumstances becomes available, not to exceed 12 months. Adjustments to purchase price allocation may require a recasting of the amounts allocated to goodwill retroactive to the period in which the acquisitions occurred.

On ~~December~~March 8, ~~2015,~~2016, the Board of Directors of the Company declared a cash dividend of $0.10 per share that will be paid on ~~January~~April 15, 2016 to holders of the Company’s common stock of record at the close of business on ~~December 21, 2015.~~March 25, 2016. The declaration and payment of future dividends under the quarterly dividend policy will be at the discretion of the Board of Directors and will depend upon many factors, including the Company’s earnings, capital requirements, financial conditions, the terms of the Company’s indebtedness and other factors that the Board of Directors may deem to be relevant. The Board may amend, revoke or suspend the dividend policy at any time and for any reason.

On ~~December 1, 2015,~~February 17, 2016, the ~~Company completed its previously~~Venezuelan government announced ~~acquisition of Hay Group,~~ a global leader in people strategy and organizational performance. The acquisition strengthens the Company’s intellectual property, enhances our geographical presence, adds complimentary capabilities to further leverage search relationships and broadens capabilities to assessment and development. Under the termsdevaluation of the ~~Stock Purchase Agreement, dated~~Bolivar, from the official exchange rate of 6.3 Bolivars per USD to 10.0 Bolivars per USD, and streamlined the previous three-tiered currency exchange mechanism into a dual currency exchange mechanism. The weaker of the two rates will be a free-floating exchange rate based on an existing system that currently sells dollars at approximately 200 Bolivars per USD. The economic and political environment in Venezuela has continued to deteriorate and the currency exchange restrictions have become more onerous. The Company has used the previously prevailing official exchange rate of 6.3 Bolivars per USD to re-measure our Venezuelan subsidiary’s financial statements as of September 23, 2015 (the “Purchase Agreement”), by and between HG (Bermuda) Limited (“HG Bermuda”) and the Company, at the closing of the acquisition the Company paid HG Bermuda an aggregate purchase price of approximately $493 million, consisting of (a) approximately $275 million in cash, net of estimated cash acquired ($54 million from our foreign locations), and after giving effect to estimated purchase price adjustments as described in the Purchase Agreement, and (b) 5,922,136 shares of the Company’s common stock, par value $0.01 per share (the “Consideration Shares”), representing an aggregate value of $218 million based on the closing price of the Company’s common stock on The New York Stock Exchange on November 30, 2015 ($200 million based on the volume weighted average price of the Company’s common stock on The New York Stock Exchange on each of the 20 consecutive trading days ending on September 21, 2015). On November 23, 2015, the Company borrowed $150 million from the Term Facility, to finance a portion of the Hay Group acquisition purchase price. The outstanding principal is payable in quarterly installments starting January 1, 2016, with the final installment consisting of all remaining unpaid principal due on the term loan maturity date of September 23, 2020. Interest accrued on the term loan shall also be payable on the first date of each calendar quarter, with an initial interest rate of 1.34% per annum. Pursuant to the Purchase Agreement,31, 2016. After careful consideration the Company has ~~committed~~taken the decision to ~~a $40 million retention pool (up~~adopt the free-floating exchange rate as it more appropriately reflects the ability to ~~$5 million payable within one year) for certain employees of Hay Group subject~~convert Bolivars to ~~certain circumstances. Of~~U.S. dollars given the ~~remaining balance, 50% will be payable within 45 days after November 30, 2017 and the remaining 50% will be payable within 45 days after November 30, 2018.~~

~~Under the terms~~deteriorating environment in Venezuela. The devaluation of the ~~Purchase Agreement, each~~Bolivar to 200 Bolivars per USD will result in an estimated pre-tax charge ranging from $9 million to $12 million (or diluted earnings per share of ~~HG Bermuda and the Company has agreed~~$0.11 to indemnify the other and certain other indemnified persons from any and all losses incurred by such indemnified persons arising from, among other things, any breach of the representations, warranties or covenants set forth$0.14) in the ~~Purchase Agreement on the terms and subject to the limitations set forth in the Purchase Agreement. In accordance with the Purchase Agreement, at the closing, 835,011 shares~~fourth quarter of Company common stock (the “Indemnity Escrow Shares”) that were payable as transaction consideration to HG Bermuda were deposited at the closing into an escrow account to secure HG Bermuda’s indemnification obligations under the Purchase Agreement. The Indemnity Escrow Shares will be held and released from such account pursuant to the terms of the escrow agreement entered into at closing by and among HG Bermuda, the Company and Computershare Trust Company, N.A., in its capacity as escrow agent.

Pursuant to the terms of the Purchase Agreement, the Company has agreed to prepare and file a resale registration statement on Form S-3 (or, if the Company is not then eligible to use Form S-3, a Form S-1) with the SEC to register the offer and resale of the Consideration Shares within a time period reasonably expected to result in the registration statement being declared effective under the Securities Act of 1933, as amended, on or before the one-year anniversary of the closing date.

Prior to the closing of the acquisition of Hay Group, the Company and HG Bermuda entered into a letter agreement, dated November 30, 2015 (the “SPA Letter Agreement”), to provide for, among other things, the acquisition by Korn/Ferry Canada, Inc., a corporation organized under the laws of Canada and an indirect wholly owned subsidiary of the Company, of all the issued and outstanding capital stock of Hay Group Ltd., a corporation organized under the laws of Ontario, Canada, and an indirect wholly owned subsidiary of HG Bermuda, from Hay Group Investment Holding B.V., a private company with limited liability (~~besloten vennootschap met beperkte aansprakelijkheid~~~~) organized under the laws of the Netherlands and an indirect wholly owned subsidiary of HG Bermuda, immediately prior to the consummation of the acquisition of Hay Group.~~

The foregoing descriptions of the Purchase Agreement and the SPA Letter Agreement are qualified in their entirety by the full text of the Purchase Agreement and the SPA Letter Agreement; copies of which have been filed with the SEC and are incorporated herein by reference.

~~The allocation of the purchase price for assets acquired and liabilities assumed is subject to completion of a formal valuation process and review by management, which has not yet been completed.~~fiscal 2016. We will ~~finalize~~continue to actively monitor the ~~purchase price allocation as soon as practicable within the measurement period, but~~political and economic developments in no event later than one year following the acquisition date. The results of operations of Hay Group will be included in Korn/Ferry International’s consolidated results of operations beginning December 1, 2015.

~~Item 2.~~ ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

This Quarterly Report on Form 10-Q 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 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally can be identified by use of statements that include phrases such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “may,” “will,” “likely,” “estimates,” “potential,” “continue” or other similar words or phrases. Similarly, statements that describe our objectives, plans or goals also are forward-looking statements. All of these forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from those contemplated by the relevant forward-looking statement. The principal risk factors that could cause actual performance and future actions to differ materially from the forward-looking statements include, but are not limited to, dependence on attracting and retaining qualified and experienced consultants, maintaining our brand name and professional reputation, potential legal liability and regulatory developments, portability of client relationships, global and local political or economic developments in or affecting countries where we have operations, currency fluctuations in our international operations, risks related to growth, restrictions imposed by off-limits agreements, competition, reliance on information processing systems, cyber security vulnerabilities, limited protection of our intellectual property, our ability to enhance and develop new technology, our ability to successfully recover from a disaster or business continuity problems, employment liability risk, an impairment in the carrying value of goodwill and other intangible assets, deferred tax assets that we may not be able to use, our ability and efforts to develop new services, clients and practices, changes in our accounting estimates and assumptions, our investments in marketable securities, alignment of our cost structure, risks related to the integration of recently acquired businesses, including Legacy Hay, ~~Group,~~ risks related to our indebtedness, seasonality, impacts of our dividend policy on our ability to pursue growth opportunities, and the matters disclosed under the heading “Risk Factors” in the Company’s Exchange Act reports, including Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2015 (“Form 10-K”). Readers are urged to consider these factors carefully in evaluating the forward-looking statements. The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10-Q. We also make available on the Investor Relations portion of our website at www.kornferry.com earnings slides and other important information, which we encourage you to review.

Korn/Ferry International (referred to herein as the “Company,” “Korn Ferry,” or in the first person notations “we,” “our,” and “us”) is a ~~premier~~preeminent global ~~provider~~people and organizational advisory firm. We help leaders, organizations and societies succeed by releasing the full power and potential of talent management solutions that helps clients design talent strategies as well as assist them in the execution of building and attracting their talent. We are a premier provider of executive recruitment, leadership and talent consulting and talent acquisition solutions with the broadest global presence in the recruitment industry.people. Our nearly 7,000 colleagues deliver services ~~include~~through our Executive Recruitment, ~~consulting and solutions services through~~Hay Group (formerly known as Leadership & Talent Consulting (“Legacy LTC”) and ~~recruitment for non-executive professionals~~combined with HG (Luxembourg) S.à.r.l (“Legacy Hay”)) and ~~recruitment process outsourcing (“RPO”) through Futurestep.~~Futurestep divisions. Approximately 72% of the executive recruitment searches we performed in fiscal 2015 were for board level, chief executive and other senior executive and general management positions. Our 5,350 clients in fiscal 2015 included many of the world’s largest and most prestigious public and private companies, including approximately 56% of the FORTUNE 500, middle market and emerging growth companies, as well as government and nonprofit organizations. We have built strong client loyalty, with 79% of assignments performed during fiscal 2015 having been on behalf of clients for whom we had conducted assignments in the previous three fiscal years. Approximately 60% of our revenues were generated from clients that utilize multiple lines of business.

In an effort to maintain our long-term strategy of being the leading provider of talent management solutions, our strategic focus for fiscal 2016 centers upon enhancing the integration of our multi-service strategy. We further plan to explore new products and services, enhance our technology and processes and aggressively leverage our brand through thought leadership and intellectual capital projects as a means of delivering world-class service to our clients. On December 1, 2015, the Company completed its ~~previously announced~~ acquisition of Legacy Hay, ~~Group,~~ a global leader in people strategy and

organizational performance. The acquisition strengthens the Company’s intellectual property, enhances our geographical presence, adds complimentary capabilities to further leverage search relationships and broadens capabilities to assessment and development. Under the

terms of the Stock Purchase Agreement, dated as of September 23, 2015 (the “Purchase Agreement”), by and between HG (Bermuda) Limited (“HG Bermuda”) and the Company, at the closing of the acquisition the Company paid HG Bermuda an aggregate purchase price of approximately ~~$493~~$470.5 million, consisting of (a) approximately ~~$275~~$252.6 million in cash ($54 million from foreign locations), net of estimated cash acquired, ~~($54 million from our foreign locations),~~ and after giving effect to estimated purchase price adjustments as described in the Purchase Agreement, and (b) 5,922,136 shares of the Company’s common stock, par value $0.01 per share (the “Consideration Shares”), representing an aggregate value of ~~$218~~$217.9 million based on the closing price of the Company’s common stock on The New York Stock Exchange on November 30, ~~2015 ($200 million based on the volume weighted average price of the Company’s common stock on The New York Stock Exchange on each of the 20 consecutive trading days ending on September 21, 2015).~~2015. On November 23, 2015, the Company borrowed $150 million from its term loan facility with Wells Fargo Bank, to finance a portion of the Legacy Hay ~~Group~~ acquisition purchase price. The outstanding principal is payable in quarterly installments starting January 1, 2016, with the final installment consisting of all remaining unpaid principal due on the term loan maturity date of September 23, 2020. Interest accrued on the term loan ~~shall also be~~is payable on the first date of each calendar quarter, with ~~an initial~~the average interest rate ~~of 1.34%~~for the three months ended January 31, 2016 at 1.56% per annum. Pursuant to the Purchase Agreement, the Company has committed to a $40 million retention pool (up to $5 million payable within one ~~year)~~year of the closing of the acquisition) for certain employees of Legacy Hay ~~Group~~ subject to certain circumstances. Of the remaining balance, 50% will be payable within 45 days after November 30, 2017 and the remaining 50% will be payable within 45 days after November 30, 2018. The ~~integration~~Company began the process of ~~Hay Group will involve~~integrating the acquired entity by implementing a restructuring plan in the current quarter in order to align our workforce, ~~alignment, consolidation of office space and elimination of~~eliminate redundant general and administrative ~~expenses. In order to achieve these cost synergies, we will incur restructuring~~expenses and ~~integration/acquisition charges beginning in the third quarter of fiscal 2016.~~consolidate office space.

Prior to the closing of the acquisition of the Legacy Hay, ~~Group,~~ the Company and HG Bermuda entered into a letter agreement, dated November 30, 2015, to provide for, among other things, the acquisition by Korn/Ferry Canada, Inc., a corporation organized under the laws of Canada and an indirect wholly owned subsidiary of the Company, of all the issued and outstanding capital stock of Hay Group Ltd., a corporation organized under the laws of Ontario, Canada and an indirect wholly owned subsidiary of HG Bermuda, from Hay Group Investment Holding B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) organized under the laws of the Netherlands and an indirect wholly owned subsidiary of HG Bermuda, immediately prior to the consummation of the acquisition of the ~~Hay Group.~~Legacy Hay.

In fiscal 2015, we undertook an effort to bring together all our internally developed and acquired intellectual property in Korn Ferry’s Four Dimensions of Leadership (“KF4D”), our newest and most robust assessment tools for Executive Recruitment, ~~LTC~~Hay Group and Futurestep. We have identified four crucial areas that matter most for individual and organizational success. The analytics we collect enable us to help organizations accentuate strengths and identify areas to develop, as well as understand how they and their employees stack up against their competition:

Leveraging KF4D, we plan to continue to address areas of increasing client demand including ~~LTC~~Hay Group and RPO.

The Company currently operates in three global business segments: Executive Recruitment, ~~LTC~~Hay Group and Futurestep. See Note 7 8 –— Business Segments, in the Notes to our Consolidated Financial for discussion of the Company’s global business segments. The Company evaluates performance and allocates resources based on the chief operating decision maker’s review of (1) fee revenue and (2) adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). To the extent that such charges occur, Adjusted EBITDA excludes restructuring charges, integration and acquisition ~~costs~~items and certain separation costs and certain non-cash charges (goodwill, intangible asset and other than temporary impairment). Adjusted EBITDA is a non-GAAP financial measure. It has limitations as an analytical tool, should not be viewed as a substitute for financial information determined in accordance with ~~U.S. generally accepted accounting principles (“GAAP”),~~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, it may not necessarily be comparable to non-GAAP performance measures that may be presented by other companies. Management believes the presentation of this non-GAAP financial measure provides meaningful supplemental information regarding Korn Ferry’s performance by excluding certain charges and other items that

may not be indicative of Korn Ferry’s ongoing operating results. The use of this non-GAAP financial measure facilitates comparisons to Korn Ferry’s historical performance. Korn Ferry includes this non-GAAP financial measure because management believes it is useful to investors in allowing for greater transparency with respect to supplemental information used by management in its evaluation of Korn Ferry’s ongoing operations and financial and operational decision-making. The accounting policies for the reportable

segments are the same as those described in the summary of significant accounting policies in the accompanying consolidated financial statements, except that the above noted items are excluded from EBITDA to arrive at Adjusted EBITDA.

Fee revenue increased ~~$24.9~~$94.7 million, or ~~10%~~38% in the three months ended ~~October~~January 31, ~~2015~~2016 to ~~$280.6~~$344.2 million compared to ~~$255.7~~$249.5 million in the three months ended ~~October~~January 31, ~~2014,~~2015, with increases in fee revenue in all business segments. The acquisition of Legacy Hay contributed $71.9 million in fee revenue in the three months ended January 31, 2016. During the three months ended ~~October~~January 31, ~~2015,~~2016, we recorded an operating loss of $14.1 million. The Hay Group segment and Corporate segment contributed $21.6 million and $33.7 million of operating losses, respectively, offset by the operating income ~~of $29.0 million with~~from Executive Recruitment ~~LTC~~ and Futurestep segments ~~contributing $39.2 million, $7.8~~of $34.6 million and ~~$6.9~~$6.6 million, ~~respectively, offset by corporate expenses of $24.9 million.~~respectively. Net ~~income~~loss during the three months ended ~~October~~January 31, ~~2015 and 2014~~2016 was ~~$18.0~~$16.0 million ~~and $25.4~~compared to net income of $23.0 million ~~respectively.~~for the three months ended January 31, 2015. Adjusted EBITDA was ~~$46.0~~$47.7 million for the three months ended January 31, 2016 with Executive Recruitment, ~~LTC~~Hay Group and Futurestep segments contributing ~~$40.6~~$43.0 million, ~~$14.7~~$22.8 million, and ~~$7.5~~$7.3 million, respectively, offset by corporate expenses net of other income and equity in earnings of unconsolidated subsidiaries of ~~$16.8~~$25.4 million during the three months ended ~~October~~January 31, ~~2015.~~2016. Adjusted EBITDA increased ~~$2.0~~$8.6 million during the three months ended ~~October~~January 31, ~~2015~~2016 to ~~$46.0~~$47.7 million, from Adjusted EBITDA of ~~$44.0~~$39.1 million during the three months ended ~~October~~January 31, ~~2014.~~2015.

Our cash, cash equivalents and marketable securities decreased ~~$107.7~~$182.1 million, or ~~21%~~35%, to ~~$417.7~~$343.3 million at ~~October~~January 31, ~~2015,~~2016, compared to $525.4 million at April 30, 2015. This decrease is mainly due to $252.6 million used to acquire Legacy Hay, bonuses earned in fiscal 2015 and paid during the first quarter of fiscal 2016 and ~~$10.3~~$16.1 million in dividends paid during the first ~~half~~nine months of fiscal 2016, partially offset by $150.0 million in cash borrowed from the term facility and cash provided by operating activities. As of ~~October~~January 31, ~~2015,~~2016, we held marketable securities to settle obligations under our Executive Capital Accumulation Plan (“ECAP”) with a cost value of ~~$140.5~~$142.3 million and a fair value of ~~$144.9~~$135.9 million. Our vested and unvested obligations for which these assets were held in trust totaled ~~$140.9~~$133.0 million as of ~~October~~January 31, ~~2015.~~2016.

Our working capital ~~increased~~decreased by ~~$4.7~~$136.3 million to ~~$339.7~~$194.9 million in the ~~six~~nine months ended ~~October~~January 31, ~~2015.~~2016. We believe that cash on hand, funds from operations and other forms of liquidity will be sufficient to meet our anticipated working capital, capital expenditures, general corporate requirements, ~~purchase price for the acquisition of Hay Group,~~ repayment of the debt obligations incurred in connection with the Legacy Hay ~~Group~~ acquisition, the retention pool obligations pursuant to the Legacy Hay ~~Group~~ acquisition and dividend payments under our dividend policy in the next twelve months. ~~Although, we~~We had no ~~long-term debt or any~~ outstanding borrowings under our revolving credit facility at ~~October~~January 31, ~~2015~~2016 or April 30, ~~2015, as discussed above,~~2015. However, on November 23, 2015 the Company borrowed $150 million from its term loan facility with Wells Fargo Bank, to finance a portion of the Legacy Hay ~~Group~~ acquisition purchase price. At ~~October~~January 31, ~~2015~~2016 and April 30, 2015, there was $2.9 million and $2.8 million of standby letters of credit issued under our long-term debt arrangements, respectively. The Company had a total of ~~$1.4~~$5.0 million and $1.6 million of standby letters of credits with other financial institutions as of ~~October~~January 31, ~~2015~~2016 and April 30, 2015, respectively.

The following table summarizes the results of our operations as a percentage of fee revenue:


	Three Months Ended October 31,						Six Months Ended October 31,						Three Months Ended January 31,						Nine Months Ended January 31,
	2015			2014			2015			2014			2016			2015			2016			2015
Fee revenue		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Reimbursed out-of-pocket engagement expenses		3.8			3.5			4.1			3.6			4.3			3.7			4.2			3.6

Total revenue		103.8			103.5			104.1			103.6			104.3			103.7			104.2			103.6
Compensation and benefits		67.2			68.3			67.2			67.8			70.4			66.1			68.4			67.2
General and administrative expenses		15.9			11.8			15.0			13.3			16.7			14.7			15.6			13.8
Reimbursed expenses		3.8			3.5			4.1			3.6			4.3			3.7			4.2			3.6
Cost of services		4.0			3.8			3.9			3.8			5.1			3.5			4.4			3.7
Depreciation and amortization		2.6			2.6			2.6			2.7			3.0			2.7			2.8			2.7
Restructuring charges, net		—			—			—			1.9
Restructuring charges (recoveries), net														8.9			(0.2	)		3.4			1.2

Operating income		10.3			13.5			11.3			10.5
Operating (loss) income														(4.1	)		13.2			5.4			11.4

Net income		6.4	%		9.9	%		7.5	%		7.9	%
Net (loss) income														(4.6	)%		9.2	%		2.8	%		8.3	%

The following tables summarize the results of our operations by business segment:


																									Three Months Ended January 31,										Nine Months Ended January 31,
	Three Months Ended October 31,												Six Months Ended October 31,												2016					2015					2016					2015
	2015						2014						2015						2014						Dollars		%			Dollars		%			Dollars		%			Dollars		%
	Dollars			%			Dollars			%			Dollars			%			Dollars			%			(dollars in thousands)
Fee revenue	(dollars in thousands)
Executive recruitment:
North America	$	92,788			33.1	%	$	82,729			32.3	%	$	183,147			33.4	%	$	165,029			32.6	%	$	93,520		27.2	%	$	78,026		31.3	%	$	276,667		31.0	%	$	243,055		32.1	%
EMEA		36,570			13.0			36,675			14.3			72,660			13.3			76,972			15.2			35,498		10.3			36,816		14.7			108,158		12.1			113,788		15.0
Asia Pacific		20,998			7.5			21,157			8.3			40,213			7.3			40,691			8.0			19,094		5.5			20,924		8.4			59,307		6.7			61,615		8.2
South America.		6,116			2.2			8,369			3.3			12,542			2.3			14,653			2.9			6,541		1.9			7,713		3.1			19,083		2.1			22,366		3.0

Total executive recruitment		156,472			55.8			148,930			58.2			308,562			56.3			297,345			58.7			154,653		44.9			143,479		57.5			463,215		51.9			440,824		58.3
LTC		73,602			26.2			66,408			26.0			142,842			26.1			129,956			25.6
Hay Group																										140,508		40.8			64,313		25.8			283,350		31.8			194,269		25.7
Futurestep		50,526			18.0			40,364			15.8			96,590			17.6			79,589			15.7			48,997		14.3			41,753		16.7			145,587		16.3			121,342		16.0

Total fee revenue		280,600			100.0	%		255,702			100.0	%		547,994			100.0	%		506,890			100.0	%		344,158		100.0	%		249,545		100.0	%		892,152		100.0	%		756,435		100.0	%

Reimbursed out-of-pocket engagement expenses		10,739						9,015						22,680						18,152						14,721					9,326					37,401					27,478

Total revenue	$	291,339					$	264,717					$	570,674					$	525,042					$	358,879				$	258,871				$	929,553				$	783,913


	Three Months Ended October 31,												Six Months Ended October 31,
	2015						2014						2015						2014
	Dollars			Margin (1)			Dollars			Margin (1)			Dollars			Margin (1)			Dollars			Margin (1)
Operating Income	(dollars in thousands)
Executive recruitment:
North America	$	27,422			29.6	%	$	19,117			23.1	%	$	51,567			28.2	%	$	38,115			23.1	%
EMEA		6,929			18.9			5,621			15.3			13,205			18.2			8,264			10.7
Asia Pacific		3,907			18.6			3,424			16.2			6,893			17.1			5,946			14.6
South America.		970			15.9			1,699			20.3			2,478			19.8			1,772			12.1

Total executive recruitment		39,228			25.1			29,861			20.1			74,143			24.0			54,097			18.2
LTC		7,778			10.6			7,762			11.7			15,273			10.7			11,222			8.6
Futurestep		6,896			13.6			5,150			12.8			13,085			13.5			8,607			10.8
Corporate		(24,889	)		—			(8,357	)		—			(40,584	)		—			(20,917	)		—

Total operating income	$	29,013			10.3	%	$	34,416			13.5	%	$	61,917			11.3	%	$	53,009			10.5	%


	Three Months Ended October 31, 2015																														Three Months Ended January 31, 2016
	Executive Recruitment															LTC				Futurestep				Corporate			Consolidated				Executive Recruitment
	North America			EMEA			Asia Pacific			South America			Subtotal							Futurestep			North America							EMEA				Asia Pacific				South America				Subtotal				Hay Group				Futurestep				Corporate				Consolidated
	(in thousands)																														(in thousands)
Fee revenue	$	92,788		$	36,570		$	20,998		$	6,116		$	156,472		LTC			$	73,602			$	Corporate	50,526		Consolidated	$	—			$	280,600			$	93,520			$	35,498			$	19,094			$	6,541			$	154,653			$	140,508			$	48,997		$	—	$	344,158
Total revenue	$	96,198		$	37,509		$	21,617		$	6,118		$	161,442		$	75,991			$	53,906			$	—		$	291,339			$	97,097			$	36,417			$	19,603			$	6,545			$	159,662			$	146,079			$	53,138			$	—		$	358,879

Net income																											$	17,971
Net loss																																																														$	(15,995	)
Other loss, net																												2,646																																			7,092
Interest expense, net																												544																																			372
Equity in earnings of unconsolidated subsidiaries, net																												(540	)																																		(181	)
Income tax provision																												8,392
Income tax benefit																																																															(5,335	)

Operating income (loss)	$	27,422		$	6,929		$	3,907		$	970		$	39,228		$	7,778			$	6,896			$	(24,889	)		29,013			$	28,957			$	1,707			$	2,775			$	1,166			$	34,605			$	(21,559	)		$	6,630			$	(33,743	)		(14,067	)
Depreciation and amortization		832			232			223			73			1,360			3,588				578				1,654			7,180				812				213				235				73				1,333				6,722				609				1,666			10,330
Other (loss) income, net		(127	)		7			(6	)		33			(93	)		(17	)			8				(2,544	)		(2,646	)			(330	)			77				(114	)			9				(358	)			143				79				(6,956	)		(7,092	)
Equity in earnings of unconsolidated subsidiaries, net		140			—			—			—			140			—				—				400			540				26				—				—				—				26				—				—				155			181

EBITDA		28,267			7,168			4,124			1,076			40,635			11,349				7,482				(25,379	)		34,087				29,465				1,997				2,896				1,248				35,606				(14,694	)			7,318				(38,878	)		(10,648	)

Restructuring charges, net																																484				5,866				577				328				7,255				23,241				—				81			30,577
Integration/acquisition costs		—			—			—			—			—			3,310				—				8,684			11,994				—				—				—				—				—				8,413				—				12,734			21,147
Deferred revenue adjustment due to acquisition																																—				—				—				—				—				5,871				—				—			5,871
Separation costs																																—				—				—				—				—				—				—				744			744

Adjusted EBITDA	$	28,267		$	7,168		$	4,124		$	1,076		$	40,635		$	14,659			$	7,482			$	(16,695	)	$	46,081			$	29,949			$	7,863			$	3,473			$	1,576			$	42,861			$	22,831			$	7,318			$	(25,319	)	$	47,691

Adjusted EBITDA margin		30.5	%		19.6	%		19.6	%		17.6	%		26.0	%		19.9	%			14.8	%						16.4	%			32.0	%			22.2	%			18.2	%			24.1	%			27.7	%			15.6	%			14.9	%						13.6	%


	Three Months Ended October 31, 2014																														Three Months Ended January 31, 2015
	Executive Recruitment															LTC				Futurestep				Corporate			Consolidated				Executive Recruitment
	North America			EMEA			Asia Pacific			South America			Subtotal							Futurestep			North America							EMEA				Asia Pacific				South America				Subtotal				Hay Group				Futurestep				Corporate				Consolidated
	(in thousands)																														(in thousands)
Fee revenue	$	82,729		$	36,675		$	21,157		$	8,369		$	148,930		LTC			$	66,408			$	Corporate	40,364		Consolidated	$	—			$	255,702			$	78,026			$	36,816			$	20,924			$	7,713			$	143,479			$	64,313			$	41,753		$	—	$	249,545
Total revenue	$	86,252		$	38,054		$	21,716		$	8,383		$	154,405		$	68,477			$	41,835			$	—		$	264,717			$	81,521			$	37,868			$	21,874			$	7,724			$	148,987			$	66,048			$	43,836			$	—		$	258,871

Net income																											$	25,403																																		$	22,939
Other income, net																												(2,362	)
Interest expense, net																												920
Other loss, net																																																															1,478
Interest income, net																																																															(288	)
Equity in earnings of unconsolidated subsidiaries, net																												(452	)																																		(778	)
Income tax provision																												10,907																																			9,576

Operating income (loss)	$	19,117		$	5,621		$	3,424		$	1,699		$	29,861		$	7,762			$	5,150			$	(8,357	)		34,416			$	22,673			$	5,073			$	4,096			$	1,741			$	33,583			$	8,577			$	5,760			$	(14,993	)		32,927
Depreciation and amortization		891			446			261			85			1,683			3,279				459				1,358			6,779				867				431				216				79				1,593				3,317				469				1,435			6,814
Other income (loss), net		194			(1	)		149			13			355			(172	)			25				2,154			2,362
Other (loss) income, net																																(225	)			24				25				41				(135	)			(156	)			4				(1,191	)		(1,478	)
Equity in earnings of unconsolidated subsidiaries, net		110			—			—			—			110			—				—				342			452				103				—				—				—				103				—				—				675			778

EBITDA		20,312			6,066			3,834			1,797			32,009			10,869				5,634				(4,503	)		44,009				23,418				5,528				4,337				1,861				35,144				11,738				6,233				(14,074	)		39,041

Restructuring recoveries, net																																—				—				—				(148	)			(148	)			—				(270	)			—			(418	)
Acquisition costs																																—				—				—				—				—				—				—				445			445

Adjusted EBITDA	$	20,312		$	6,066		$	3,834		$	1,797		$	32,009		$	10,869			$	5,634			$	(4,503	)	$	44,009			$	23,418			$	5,528			$	4,337			$	1,713			$	34,996			$	11,738			$	5,963			$	(13,629	)	$	39,068

Adjusted EBITDA margin		24.6	%		16.5	%		18.1	%		21.5	%		21.5	%		16.4	%			14.0	%						17.2	%			30.0	%			15.0	%			20.7	%			22.2	%			24.4	%			18.3	%			14.3	%						15.7	%


	Six Months Ended October 31, 2015																														Nine Months Ended January 31, 2016
	Executive Recruitment															LTC				Futurestep				Corporate			Consolidated				Executive Recruitment
	North America			EMEA			Asia Pacific			South America			Subtotal							Futurestep			North America							EMEA				Asia Pacific				South America				Subtotal				Hay Group				Futurestep				Corporate				Consolidated
	(in thousands)																														(in thousands)
Fee revenue	$	183,147		$	72,660		$	40,213		$	12,542		$	308,562		LTC			$	142,842			$	Corporate	96,590		Consolidated	$	—			$	547,994			$	276,667			$	108,158			$	59,307			$	19,083			$	463,215			$	283,350			$	145,587		$	—	$	892,152
Total revenue	$	190,597		$	74,680		$	41,607		$	12,550		$	319,434		$	147,432			$	103,808			$	—		$	570,674			$	287,694			$	111,097			$	61,210			$	19,095			$	479,096			$	293,511			$	156,946			$	—		$	929,553

Net income																											$	41,053																																		$	25,058
Other loss, net																												2,720																																			9,812
Interest expense, net																												843																																			1,215
Equity in earnings of unconsolidated subsidiaries, net																												(1,265	)																																		(1,446	)
Income tax provision																												18,566																																			13,211

Operating income (loss)	$	51,567		$	13,205		$	6,893		$	2,478		$	74,143		$	15,273			$	13,085			$	(40,584	)		61,917			$	80,524			$	14,912			$	9,668			$	3,644			$	108,748			$	(6,286	)		$	19,715			$	(74,327	)		47,850
Depreciation and amortization		1,659			597			469			151			2,876			7,336				1,163				3,228			14,603				2,471				810				704				224				4,209				14,058				1,772				4,894			24,933
Other (loss) income, net		(95	)		150			12			272			339			(880	)			8				(2,187	)		(2,720	)			(425	)			227				(102	)			281				(19	)			(737	)			87				(9,143	)		(9,812	)
Equity in earnings of unconsolidated subsidiaries, net		226			—			—			—			226			—				—				1,039			1,265				252				—				—				—				252				—				—				1,194			1,446

EBITDA		53,357			13,952			7,374			2,901			77,584			21,729				14,256				(38,504	)		75,065				82,822				15,949				10,270				4,149				113,190				7,035				21,574				(77,382	)		64,417

Restructuring charges, net																																484				5,866				577				328				7,255				23,241				—				81			30,577
Integration/acquisition costs		—			—			—			—			—			3,639				—				9,029			12,668				—				—				—				—				—				12,052				—				21,763			33,815
Deferred revenue adjustment due to acquisition																																—				—				—				—				—				5,871				—				—			5,871
Separation costs																																—				—				—				—				—				—				—				744			744

Adjusted EBITDA	$	53,357		$	13,952		$	7,374		$	2,901		$	77,584		$	25,368			$	14,256			$	(29,475	)	$	87,733			$	83,306			$	21,815			$	10,847			$	4,477			$	120,445			$	48,199			$	21,574			$	(54,794	)	$	135,424

Adjusted EBITDA margin		29.1	%		19.2	%		18.3	%		23.1	%		25.1	%		17.8	%			14.8	%						16.0	%			30.1	%			20.2	%			18.3	%			23.5	%			26.0	%			16.7	%			14.8	%						15.1	%


	Six Months Ended October 31, 2014																														Nine Months Ended January 31, 2015
	Executive Recruitment															LTC				Futurestep				Corporate			Consolidated				Executive Recruitment
	North America			EMEA			Asia Pacific			South America			Subtotal							Futurestep			North America							EMEA				Asia Pacific				South America				Subtotal				Hay Group				Futurestep				Corporate				Consolidated
	(in thousands)																														(in thousands)
Fee revenue	$	165,029		$	76,972		$	40,691		$	14,653		$	297,345		LTC			$	129,956			$	Corporate	79,589		Consolidated	$	—			$	506,890			$	243,055			$	113,788			$	61,615			$	22,366			$	440,824			$	194,269			$	121,342		$	—	$	756,435
Total revenue	$	172,334		$	79,483		$	42,085		$	14,692		$	308,594		$	133,897			$	82,551			$	—		$	525,042			$	253,855			$	117,351			$	63,959			$	22,416			$	457,581			$	199,945			$	126,387			$	—		$	783,913

Net income																											$	39,936																																		$	62,875
Other income, net																												(4,539	)																																		(3,061	)
Interest expense, net																												1,714																																			1,426
Equity in earnings of unconsolidated subsidiaries, net																												(918	)																																		(1,696	)
Income tax provision																												16,816																																			26,392

Operating income (loss)	$	38,115		$	8,264		$	5,946		$	1,772		$	54,097		$	11,222			$	8,607			$	(20,917	)		53,009			$	60,788			$	13,337			$	10,042			$	3,513			$	87,680			$	19,799			$	14,367			$	(35,910	)		85,936
Depreciation and amortization		1,795			935			555			170			3,455			6,531				905				2,658			13,549				2,662				1,366				771				249				5,048				9,848				1,374				4,093			20,363
Other income, net		323			45			258			46			672			45				23				3,799			4,539
Other income (loss), net																																98				69				283				87				537				(111	)			27				2,608			3,061
Equity in earnings of unconsolidated subsidiaries, net		178			—			—			—			178			—				—				740			918				281				—				—				—				281				—				—				1,415			1,696

EBITDA		40,411			9,244			6,759			1,988			58,402			17,798				9,535				(13,720	)		72,015				63,829				14,772				11,096				3,849				93,546				29,536				15,768				(27,794	)		111,056

Restructuring charges, net		1,151			3,987			17			377			5,532			2,758				1,424				172			9,886				1,151				3,987				17				229				5,384				2,758				1,154				172			9,468
Acquisition costs																																—				—				—				—				—				—				—				445			445

Adjusted EBITDA	$	41,562		$	13,231		$	6,776		$	2,365		$	63,934		$	20,556			$	10,959			$	(13,548	)	$	81,901			$	64,980			$	18,759			$	11,113			$	4,078			$	98,930			$	32,294			$	16,922			$	(27,177	)	$	120,969

Adjusted EBITDA margin		25.2	%		17.2	%		16.7	%		16.1	%		21.5	%		15.8	%			13.8	%						16.2	%			26.7	%			16.5	%			18.0	%			18.2	%			22.4	%			16.6	%			13.9	%						16.0	%

Three Months Ended ~~October~~January 31, ~~2015~~2016 Compared to Three Months Ended ~~October~~January 31, ~~2014~~2015

Fee Revenue.Fee revenue went up by ~~$24.9~~$94.7 million, or ~~10%~~38%, to ~~$280.6~~$344.2 million in the three months ended ~~October~~January 31, ~~2015~~2016 compared to ~~$255.7~~$249.5 million in the year-ago quarter. Exchange rates unfavorably impacted fee revenue by $19.6 million, or 8%, in the three months ended January 31, 2016, when compared to the year-ago quarter. Adjusting for the Legacy Hay acquisition, fee revenue increased $22.8 million, or 9%, compared to the year-ago quarter. This increase was attributable to higher fee revenue in Executive Recruitment, Futurestep, ~~LTC~~ and ~~Executive Recruitment. Exchange rates unfavorably impacted fee revenue by $16.4 million, or 6%, in the three months ended October 31, 2015, when compared to the year-ago quarter.~~Hay Group.

Executive Recruitment.Executive Recruitment reported fee revenue of ~~$156.5~~$154.6 million, an increase of ~~$7.5~~$11.2 million, or 5%8%, in the three months ended ~~October~~January 31, ~~2015~~2016 compared to ~~$149.0~~$143.4 million in the year-ago quarter. As detailed below, Executive Recruitment fee revenue was higher in the North America region, partially offset by decreases in fee revenue in ~~South America,~~ Asia Pacific, EMEA, and ~~EMEA~~South America regions in the three months ended ~~October~~January 31, ~~2015~~2016 as compared to the year-ago quarter. The higher fee revenue in Executive Recruitment was mainly due to an 11% increase in the weighted-average fees billed per engagement, offset by a ~~3% increase~~decrease of 2% in the number of Executive Recruitment engagements billed ~~and a 2% increase in the weighted-average fees billed per engagement~~ during the three months ended ~~October~~January 31, ~~2015~~2016 as compared to the year-ago quarter. Exchange rates unfavorably impacted fee revenue by ~~$9.1~~$7.1 million, or 6%5%, in the three months ended ~~October~~January 31, ~~2015,~~2016, when compared to the year-ago quarter.

North America reported fee revenue of ~~$92.8~~$93.5 million, an increase of ~~$10.1~~$15.5 million, or ~~12%~~20%, in the three months ended ~~October~~January 31, ~~2015~~2016 compared to ~~$82.7~~$78.0 million in the year-ago quarter. North America’s fee revenue was higher due to a ~~16%~~10% increase in the number of engagements billed ~~offset by~~and a ~~3% decrease~~9% increase in the weighted-average fees billed per engagement during the three months ended ~~October~~January 31, ~~2015~~2016 compared to the year-ago quarter. The overall increase in fee revenue was driven by growth in the financial services, life sciences/healthcare, technology, and education/non-profit sectors as compared to the year-ago quarter, partially offset by a decline in the ~~consumer goods and~~ industrial ~~sectors.~~sector. Exchange rates unfavorably impacted fee revenue by ~~$0.9~~$0.8 million, or 1%, in the three months ended ~~October~~January 31, ~~2015,~~2016, when compared to the year-ago quarter.

EMEA reported fee revenue of ~~$36.6~~$35.4 million, a decrease of $1.4 million, or 4%, in the three months ended ~~October~~January 31, ~~2015~~2016 compared to ~~$36.7~~$36.8 million in the year-ago quarter. Exchange rates unfavorably impacted fee revenue by ~~$4.2~~$3.1 million, or ~~11%~~8%, in the three months ended ~~October~~January 31, ~~2015,~~2016, when compared to the year-ago quarter. EMEA’s fee revenue was lower due to a 4% decrease in the number of engagements billed during the three months ended January 31, 2016 compared to the year-ago quarter. The performance in existing offices in ~~the United Kingdom,~~France, Switzerland, and Italy ~~Austria and Belgium~~ were the primary contributors to the decrease in fee revenue in the three months ended ~~October~~January 31, ~~2015~~2016 compared to the year-ago quarter, offset by an increase in fee revenue in United Arab Emirates and ~~Germany.~~United Kingdom. In terms of business sectors, financial services and ~~technology~~life sciences/healthcare experienced the largest decline in fee revenue in the three months ended ~~October~~January 31, ~~2015~~2016 as compared to the year-ago quarter, partially offset by an increase in the consumer goods ~~life sciences/healthcare~~ and ~~industrial~~technology sectors.

Asia Pacific reported fee revenue of ~~$21.0~~$19.1 million, a decrease of $1.8 million, or 9%, in the three months ended ~~October~~January 31, ~~2015~~2016 compared to ~~$21.2~~$20.9 million in the year-ago quarter. Exchange rates unfavorably impacted fee revenue by ~~$2.3~~$1.4 million, or ~~11%~~7%, in the three months ended ~~October~~January 31, ~~2015,~~2016, when compared to the year-ago quarter. The decline in fee revenue was due to ~~a 5%~~an 11% decrease ~~in weighted-average fees billed per engagement, offset by a 5% increase~~ in the number of engagements billed, offset by a 3% increase in the weighted-average fees billed per engagement in the three months ended ~~October~~January 31, ~~2015~~2016 compared to the year-ago quarter. The performance in ~~Indonesia, Japan,~~Australia, China, Singapore, and Hong Kong ~~and Australia~~ were the primary contributors to the decrease in fee revenue in the three months ended ~~October~~January 31, ~~2015~~2016 compared to the year-ago quarter, offset by an increase in fee revenue in ~~China.~~India. Life sciences/healthcare, consumer goods, and ~~industrial~~technology were the main sectors contributing to the decrease in fee revenue in the three months ended ~~October~~January 31, ~~2015~~2016 as compared to the year-ago quarter, partially offset by an increase in fee revenue in the financial services ~~and consumer goods sectors.~~sector.

South America reported fee revenue of ~~$6.1~~$6.6 million, a decrease of ~~$2.3~~$1.1 million, or ~~27%~~14%, in the three months ended ~~October~~January 31, ~~2015~~2016 compared to ~~$8.4~~$7.7 million in the year-ago quarter. Exchange rates unfavorably impacted fee revenue for South America by ~~$1.7~~$1.8 million, or ~~20%~~23%, in the three months ended ~~October~~January 31, ~~2015,~~2016, when compared to the year-ago quarter. The decline in fee revenue was mainly due to a ~~16%~~31% decrease in the number of engagements billed, ~~and~~offset by a ~~13% decrease~~23% increase in weighted-average fees billed per engagement in the three months ended ~~October~~January 31, ~~2015~~2016 compared to the year-ago quarter. The performance in Brazil and Colombia were the primary contributors to the decrease in fee revenue in the three months ended ~~October~~January 31, ~~2015~~2016 compared to the year-ago quarter, partially offset by an increase in fee revenue in Venezuela. Industrial and ~~technology~~financial services were the main sectors contributing to the decline in fee revenue in the three months ended ~~October~~January 31, ~~2015~~2016 compared to the year-ago ~~quarter.~~quarter, partially offset by an increase in fee revenue in the consumer goods sector.

~~Leadership & Talent Consulting.~~Hay Group.~~LTC~~Hay Group reported fee revenue of ~~$73.6~~$140.6 million, an increase of ~~$7.3~~$76.2 million, or ~~11%~~118%, in the three months ended ~~October~~January 31, ~~2015~~2016 compared to ~~$66.3~~$64.4 million in the year-ago quarter. ~~Exchange rates~~Adjusting for the Legacy Hay acquisition, fee revenue increased $4.3 million, or 7%, compared to the year-ago quarter, unfavorably impacted ~~fee revenue~~ by ~~$3.1~~exchange rates by $2.4 million, or 5%4%, in the three months ended ~~October~~January 31, ~~2015.~~2016. Fee revenue increased due to higher consulting fee revenue of ~~$7.3~~$5.2 million, or ~~14%~~11%, in the three months ended ~~October~~January 31, ~~2015~~2016 compared to the year-ago ~~quarter. Consulting~~quarter, offset by a decrease in product revenue. The increase in consulting fee revenue includes ~~$6.5~~$4.9 million of fee revenue from Pivot Leadership, which was acquired on March 1, 2015.

Futurestep.Futurestep reported fee revenue of ~~$50.5~~$49.0 million, an increase of ~~$10.1~~$7.3 million, or ~~25%~~18%, in the three months ended ~~October~~January 31, ~~2015~~2016 compared to ~~$40.4~~$41.7 million in the year-ago quarter. Exchange rates unfavorably impacted fee revenue by ~~$4.2~~$2.6 million, or ~~10%~~6%, in the three months ended ~~October~~January 31, ~~2015.~~2016. The ~~increase in~~higher fee revenue was driven by ana $5.7 million increase in recruitment process outsourcing in the three months ended January 31, 2016 compared to the year-ago quarter. The rest of the change was due to higher fee revenue from professional ~~search~~searches of ~~$5.6~~$2.0 million due to ~~a 26%~~an 11% increase in engagements billed in the three months ended ~~October~~January 31, 2015 compared to the year-ago quarter and a 5% increase in the weighted average fees billed per engagement during the same period. The rest of the increase was due to $4.5 million in higher fee revenue in recruitment process outsourcing in the three months ended October 31, 20152016 compared to the year-ago quarter.

Compensation and benefits expense increased ~~$13.9~~$77.7 million, or 8%47%, to ~~$188.6~~$242.4 million in the three months ended ~~October~~January 31, ~~2015~~2016 from ~~$174.7~~$164.7 million in the year-ago quarter. Exchange rates favorably impacted compensation and benefits expenses by $13.4 million, or 8%, in the three months ended January 31, 2016. Excluding $50.9 million in compensation and benefits relating to the Legacy Hay acquisition and $12.6 million in integration/acquisition costs and separation charges, compensation and benefits increased $14.2 million, or 9%, compared to the year-ago quarter. This increase was due in large part to an increase of ~~$9.3~~$11.4 million in salaries and related payroll ~~taxes and $3.3 million of severance costs related to the integration of Hay Group.~~taxes. The higher level of salaries and related payroll expense was due to an increase in average ~~consultant~~ headcount of ~~20%~~13% in the three months ended ~~October~~January 31, ~~2015~~2016 compared to the year-ago quarter, and reflects our continued growth-related investments back into the business. Also contributing to the increase in compensation and benefits was a change in the cash surrender value (“CSV”) of company owned life insurance (“COLI”). The change in CSV of COLI increased compensation and benefits expense by ~~$1.4~~$4.5 million in the three months ended ~~October~~January 31, ~~2015~~2016 compared to the year-ago quarter due to a ~~smaller increase~~decrease in the market value of the underlying ~~investments due to market changes.~~investments. COLI is held to fund other deferred compensation retirement plans. (see Note 6 — Deferred Compensation and Retirement Plans, included in the Notes to our Consolidated Financial Statements) ~~Exchange rates favorably impacted~~. These changes are offset by decreases in our deferred compensation ~~and benefits expenses by $11.1 million, or 6%, in the three months ended October 31, 2015.~~plans of $2.5 million.

Executive Recruitment compensation and benefits expense ~~decreased~~increased by ~~$1.2~~$3.7 million, or 1%4%, to ~~$98.6~~$95.2 million in the three months ended ~~October~~January 31, ~~2015~~2016 compared to ~~$99.8~~$91.5 million in the year-ago quarter. This ~~decrease~~increase was primarily due to ~~lower~~higher performance related bonus expense, ~~of $1.6 million~~ and ~~a decline of $2.1 million in the fair value of vested amounts owed under deferred compensation plans, partially offset by increases in~~ salaries and related payroll expense ~~and amortization~~ of ~~prepaid compensation of $1.4~~$2.9 million and ~~$0.7~~$2.7 million, respectively, partially offset by a decline of $1.7 million in our deferred compensation plans during the three months ended ~~October~~January 31, ~~2015~~2016 compared to the year-ago ~~quarter.~~quarter due to market movements. The increase in ~~salaries and~~performance related ~~payroll~~bonus expense was principally due to ~~an 11%~~a 12% increase in average consultant headcount ~~due to the continued adoption of our strategy.~~and higher fee revenue and profitability. Executive Recruitment compensation and benefits expense as a percentage of fee revenue decreased to ~~63%~~62% in the three months ended ~~October~~January 31, ~~2015~~2016 from ~~67%~~64% in the year-ago quarter.

~~LTC~~Hay Group compensation and benefits expense increased ~~$6.8~~$59.9 million, or ~~17%~~157%, to ~~$46.4~~$98.1 million in the three months ended ~~October~~January 31, ~~2015~~2016 from ~~$39.6~~$38.2 million in the year-ago quarter. Excluding $50.9 million in compensation and benefits relating to the Legacy Hay acquisition and $8.3 million in integration and acquisition costs, compensation and benefits increased $0.7 million, or 2%, compared to the year-ago quarter. The change was primarily due to an increase of $3.3 million of severance costs related to the integration of Hay Group during the three months ended October 31, 2015 compared to the year-ago quarter. The rest of the change was due to an increase in salaries and related payroll taxes ~~and~~of $3.2 million due to a 6% increase in average headcount, offset with the decrease of $1.6 million in performance related bonus expense ~~of $2.5 million and $0.9 million, respectively, due to a 9% increase in average headcount~~ during the three months ended ~~October~~January 31, ~~2015~~2016 compared to the year-ago quarter. ~~LTC~~Hay Group compensation and benefits expense as a percentage of fee revenue increased to ~~63%~~70% in the three months ended ~~October~~January 31, ~~2015~~2016 from ~~60%~~59% in the year-ago quarter. Excluding integration and acquisition costs, compensation and benefits expense as a percentage of fee revenue was 64% in the three months ended January 31, 2016.

Futurestep compensation and benefits expense increased ~~$7.0~~$4.8 million, or ~~25%~~17%, to ~~$35.0~~$33.5 million in the three months ended ~~October~~January 31, ~~2015~~2016 from ~~$28.0~~$28.7 million in the year-ago quarter. The increase was primarily driven by an increase of ~~$5.0~~ $5.3

million in salaries and related payroll taxes and $1.1 million in outside contractor ~~expenses.~~expenses, partially offset by a $2.2 million decrease in performance related bonus expense in the three months ended January 31, 2016 compared to the year-ago quarter. The increase in salaries and related payroll taxes were due to a 34% increase in the average headcount. The higher average headcount and the increase in utilization of outside contractors were primarily driven by the need to service an increase in fee revenue in both professional search and RPO businesses. Futurestep compensation and benefits expense as a percentage of fee revenue was ~~69%~~68% in ~~both~~ the three months ended ~~October~~January 31, ~~2015 and 2014.~~2016 compared to 69% in the year-ago quarter.

Corporate compensation and benefits expense increased by ~~$1.3~~$9.3 million, or ~~18%~~148%, to ~~$8.6~~$15.6 million in the three months ended ~~October~~January 31, ~~2015~~2016 from ~~$7.3~~$6.3 million in the year-ago ~~quarter~~quarter. Excluding $3.6 million of integration and acquisition costs related to the acquisition of Legacy Hay, compensation and benefits expense increased $5.7 million in the three months ended January 31, 2016 as compared to the year-ago quarter. This increase was mainly due to a change in CSV of COLI. The change in CSV of COLI increased compensation and benefits expense by ~~$1.4~~$4.5 million in the three months ended ~~October~~January 31, ~~2015~~2016 compared to the year-ago quarter due to a ~~smaller increase~~decrease in the market value of the underlying investments. COLI is held to fund other deferred compensation retirement plans (see Note 6 —Deferred Compensation and Retirement Plans,included in the Notes to our Consolidated Financial Statements).

General and administrative expenses increased ~~$14.5~~$20.6 million, or ~~48%~~56%, to ~~$44.6~~$57.4 million in the three months ended ~~October~~January 31, ~~2015~~2016 compared to ~~$30.1~~$36.8 million in the three months ended ~~October~~January 31, ~~2014. General~~2015. Exchange rates favorably impacted general and administrative expenses ~~increased due to $8.6~~by $3.5 million, primarily in legal and other professional fees associated with the acquisition of Hay Group in the three months ended October 31, 2015 and the fact that we received a $6.2 million insurance reimbursementor 10%, during the three months ended ~~October~~January 31, ~~2014 that reduced legal fees~~2016. Excluding $12.3 million in ~~the year-ago quarter. Neutralizing the effect of these items,~~ general and administrative expenses ~~were essentially flat quarter-over-quarter.~~relating to the Legacy Hay acquisition and integration/acquisition costs of $9.2 million, general and administrative expenses decreased $0.9 million, or 2%, compared to the year-ago quarter. General and administrative expenses as a percentage of fee revenue was ~~16%~~17% in the three months ended ~~October~~January 31, ~~2015~~2016 compared to ~~12%~~15% in the year-ago quarter. ~~Exchange rates favorably impacted~~Excluding integration and acquisition costs general and ~~administrative~~administration expenses ~~by $2.3 million, or 8%, during~~as a percentage of fee revenue was 14% in the three months ended ~~October~~January 31, ~~2015.~~2016.

Executive Recruitment general and administrative expenses decreased ~~$1.0~~$1.1 million, or 6%7%, to ~~$16.6~~$15.6 million in the three months ended ~~October~~January 31, ~~2015~~2016 from ~~$17.6~~$16.7 million in the year-ago quarter. General and administrative expenses decreased due to a ~~favorable foreign exchange rate that resulted~~reduction in legal and other professional fees of $0.6 million and a ~~foreign exchange gain of $0.3 million in the three months ended October 31, 2015 compared to~~lower foreign exchange loss of $0.3 million induring the three months ended January 31, 2016 compared to the year-ago quarter. ~~The remaining change was due to a decrease in premise and office expense of $0.6 million.~~ Executive Recruitment general and administrative expenses as a percentage of fee revenue was ~~11%~~10% in the three months ended ~~October~~January 31, ~~2015~~2016 compared to 12% in the year-ago quarter.

~~LTC~~Hay Group general and administrative expenses ~~were $8.0~~increased $12.0 million, ~~and $8.4~~or 145%, to $20.3 million in the three months ended ~~October~~January 31, ~~2015 and October 31, 2014, respectively. General and administrative expenses decreased due~~2016 compared to ~~a favorable foreign exchange rate that resulted in an increase of $0.5~~$8.3 million ~~in foreign exchange gain~~ in the three months ended ~~October~~January 31, ~~2015~~2015. Excluding $12.3 million in general and administrative expenses relating to the Legacy Hay acquisition and $0.2 million in integration/acquisition costs, general and administrative expenses decreased $0.5 million, or 6%, compared to the year-ago quarter. ~~LTC~~Hay Group general and administrative expenses as a percentage of fee revenue was ~~11%~~14% in the three months ended ~~October~~January 31, ~~2015~~2016 compared to 13% in the year-ago quarter.

Futurestep general and administrative expenses increased ~~$1.0~~$0.6 million, or ~~23%~~13%, to ~~$5.3~~$5.1 million in the three months ended ~~October~~January 31, ~~2015~~2016 compared to ~~$4.3~~$4.5 million in the year-ago quarter. The increase is attributable to unfavorable foreign exchange rates that resulted in higher foreign exchange loss of $0.3 million in the three months ended January 31, 2016 compared to the year-ago quarter and an increase in premise and office expense of $0.5 million in the three months ended October 31, 2015 compared to the year-ago quarter and unfavorable foreign exchange rate that resulted in a $0.4 million foreign exchange loss in the three months ended October 31, 2015 compared to the year-ago quarter.$0.2 million. Futurestep general and administrative expenses as a percentage of fee revenue was 10% in the three months ended ~~October~~January 31, ~~2015~~2016 compared to 11% in the year-ago quarter.

Corporate general and administrative expenses increased ~~$14.9~~$9.1 million, or 125%, to $16.4 million in the three months ended ~~October~~January 31, ~~2015~~2016 compared to $7.3 million in the year-ago quarter. The increase in general and administrative expenses was driven by ~~$8.6~~$9.0 million in integration and acquisition costs primarily due to legal and other professional fees associated with the acquisition of Legacy Hay ~~Group~~ incurred in the three months ended ~~October~~January 31, ~~2015 and the fact that we received a $6.2 million insurance reimbursement during the three months ended October 31, 2014 that reduced legal fees in the year-ago quarter.~~2016.

Cost of services expense consist primarily of non-billable contractor and product costs related to the delivery of various services and products, primarily in Futurestep and ~~LTC.~~Hay Group. Cost of services expense increased ~~$1.5~~$8.9 million, or ~~15%~~102%, to ~~$11.2~~$17.6 million in the three months ended ~~October~~January 31, ~~2015~~2016 compared to ~~$9.7~~$8.7 million in the year-ago quarter. Adjusting for the Legacy Hay acquisition, the cost of services increased $2.9 million, or 33%, compared to the year-ago quarter. The increase is mainly due to higher fee revenue in Legacy LTC and Futurestep. Cost of services expense as a percentage of fee revenue was 4%5% in ~~both~~ the three months ended ~~October~~January 31, ~~2015 and 2014.~~2016 compared to 3% in the year-ago quarter.

Depreciation and amortization expenses were ~~$7.2~~$10.3 million, an increase of ~~$0.4~~$3.5 million in the three months ended ~~October~~January 31, ~~2015~~2016 compared to $6.8 million in the year-ago quarter. Adjusting for the Legacy Hay acquisition, depreciation and amortization expenses increased $0.3 million, or 4%, compared to the year-ago quarter. The increase relates primarily to technology investments that were made in the current and prior year, primarily in software, leasehold improvements, computer equipment, furniture and fixtures and intangible assets.

During the three months ended January 31, 2016, we implemented a restructuring plan in order to rationalize our cost structure in response to anticipated revenue levels and in order to eliminate redundant positions that were created due to the acquisition of Legacy Hay. As a result, we recorded $30.6 million of restructuring charges with $29.9 million of severance costs to align our work force to current levels of business activities and to eliminate redundant positions due to the integration of Legacy Hay and $0.7 million relating to the consolidation of premises during the three months ended January 31, 2016. During the three months ended January 31, 2015, we recorded a reduction in our restructuring accrual as a result of a change in our original estimates. As a result, we recorded $0.4 million of recoveries in three months ended January 31, 2015, of which $0.3 million relates to severance and $0.1 million relates to facilities.

Operating ~~income decreased $5.4 million to $29.0~~loss was $14.1 million in the three months ended ~~October~~January 31, ~~2015~~2016 as compared to ~~$34.4~~operating income of $32.9 million in the year-ago quarter. Adjusting for the $29.2 million operating loss of Legacy Hay, operating income decreased $17.8 million, or 54%, compared to the year-ago quarter. This decrease in operating income resulted from ~~an increase~~increases of ~~$14.5~~$18.8 million ~~$13.9~~in compensation and benefits expense (which included $3.9 million ~~$1.5~~in integration/acquisition costs), $10.5 million ~~and $0.4~~in restructuring charges, net, $8.1 million in general and administrative expenses ~~compensation~~(which included $9.0 million in integration/acquisition costs), and ~~benefits expense,~~$2.9 million cost of services ~~expense and depreciation and amortization expenses, respectively.~~expense. These changes were offset by higher fee revenue of ~~$24.9~~$22.8 million during the three months ended ~~October~~January 31, ~~2015~~2016 as compared to the year-ago quarter. Legacy Hay operating loss of $29.2 million, included integration/acquisition costs of $8.2 million and restructuring charges of $20.5 million.

Executive Recruitment operating income increased ~~$9.3~~$1.0 million to ~~$39.2~~$34.6 million in the three months ended ~~October~~January 31, ~~2015~~2016 as compared to ~~$29.9~~$33.6 million in the year-ago quarter. The increase in Executive Recruitment operating income was driven by higher fee revenue of ~~$7.5~~$11.2 million and ~~decreases~~a decrease in general and administrative expenses of $1.1 million, offset by an increase of $3.7 million and $7.4 million in compensation and benefits expense and ~~general and administrative expenses of $1.2 million and $1.0 million,~~restructuring charges, net, respectively. The ~~decrease~~increase in compensation and benefits expense was driven by ~~lower~~higher performance related bonus expense and salaries and related payroll expense, offset by a decline in ~~the fair value of vested amounts owed under~~expenses associated with our deferred compensation plans. The decrease in general and administrative expenses was mainly due to ~~favorable~~lower legal and other professional fees and a decrease in foreign exchange ~~rate~~loss in the three months ended ~~October~~January 31, ~~2015~~2016 compared to the year-ago ~~quarter and lower premise and office expense.~~quarter. Executive Recruitment operating income as a percentage of fee revenue was ~~25%~~22% in the three months ended ~~October~~January 31, ~~2015~~2016 as compared to ~~20%~~23% in the year-ago quarter.

~~LTC~~Hay Group operating ~~income~~loss was ~~$7.8~~$21.6 million in ~~the both~~ the three months ended ~~October~~January 31, ~~2015 and 2014. The increase~~2016 as compared to operating income of $8.6 million in the year-ago quarter. Adjusting for the $29.2 million operating loss of Legacy Hay, operating income decreased $1.0 million, or 12%, compared to year-ago quarter due primarily due to restructuring charges, net. Hay Group operating loss as a percentage of fee revenue ~~of $7.3 million~~ was ~~offset by higher compensation and benefit expense of $6.8 million and an increase of $0.5 million~~15% in ~~cost of services expense. LTC~~the three months ended January 31, 2016 compared to operating income as a percentage of fee revenue ~~was 11% in the three months ended October 31, 2015 compared to 12%~~of 13% in the year-ago quarter.

Futurestep operating income increased by ~~$1.8~~$0.8 million to ~~$6.9~~$6.6 million in the three months ended ~~October~~January 31, ~~2015~~2016 from ~~$5.1~~$5.8 million in the year-ago quarter. The increase in Futurestep operating income was primarily due to ~~$10.1~~$7.3 million in higher fee revenue, partially offset by an increase of ~~$7.0~~$4.8 million in compensation and benefits expense, higher cost of services expense of $0.8 million, and a ~~$1.0~~$0.6 million increase in general and administrative expenses in the three months ended ~~October~~January 31, ~~2015~~2016 compared to the year-ago quarter. Futurestep operating income as a percentage of fee revenue was 14% in both the three months ended ~~October~~January 31, ~~2015 as compared to 13% in the year-ago quarter.~~2016 and 2015.

Adjusted EBITDA increased ~~$2.0~~$8.6 million to ~~$46.0~~$47.7 million in the three months ended ~~October~~January 31, ~~2015~~2016 as compared to ~~$44.0~~$39.1 million in the year-ago quarter. ~~This increase~~Excluding Adjusted EBITDA of $8.6 million for the Legacy Hay acquisition, Adjusted EBITDA was ~~driven~~flat compared to the year-ago quarter. The market movements in our marketable securities, CSV of COLI and deferred compensation negatively impacted our Adjusted EBITDA by ~~higher fee revenue of $24.9~~$3.3 million primarily offset by higher compensation and benefits expense, general and administrative expenses and cost of services expense of $10.6 million $5.9 million and $1.5 million, respectively, and other loss, net of $2.6 million duringor 100 basis points in the three months ended ~~October~~January 31, ~~2015 compared to other income, net of $2.4 million in the year-ago quarter.~~2016. Adjusted EBITDA as a percentage of fee revenue was ~~16%~~14% in the three months ended ~~October~~January 31, ~~2015~~2016 as compared to ~~17%~~16% in the year-ago quarter. Adjusted EBITDA margin for Q2 FY’16 was negatively impacted by the net impact of the markets on the Company’s deferred compensation programs as disclosed in the notes to our unaudited consolidated financial statements. Adjusted EBITDA margin for Q2 FY’15 was favorably impacted by the insurance reimbursement discussed above, partially offset by higher other professional fees and additional performance-related bonus expense.

Executive Recruitment Adjusted EBITDA was ~~$40.6~~$43.0 million, ~~and $32.0~~an increase of $7.9 million, or 23%, in the three months ended January 31, 2016 as compared to $35.1 million in the three months ended ~~October~~January 31, ~~2015 and 2014, respectively. Adjusted EBITDA increased $8.6 million in the three months ended October 31, 2015 as compared to the year-ago quarter~~2015. This increase was due to higher fee revenue of ~~$7.5~~$11.2 million ~~decreases~~and a decrease in general and administrative expenses of $1.1 million, offset by an increase of $3.7 million in compensation and benefits expense ~~and general and administrative expenses of $1.2 million and $1.0 million, respectively, offset by other loss, net of $0.1 million~~ during the three months ended ~~October~~January 31, ~~2015~~2016 compared to ~~other income, net of $0.4 million in~~ the year-ago quarter. The ~~decrease~~increase in compensation and benefits expense was driven by ~~lower~~higher performance related bonus expense and salaries and related payroll expense, offset by a decline in ~~the fair value of vested amounts owed under~~expenses associated with our deferred compensation plans. The decrease in general and administrative expenses was ~~partially~~mainly due to ~~favorable~~lower legal and other professional fees and a decrease in foreign exchange ~~rates~~loss in the three months ended ~~October~~January 31, ~~2015~~2016 compared to the year-ago ~~quarter and lower premise and office expense.~~quarter. Executive Recruitment Adjusted EBITDA as a percentage of fee revenue was ~~26%~~28% in the three months ended ~~October~~January 31, ~~2015~~2016 as compared to ~~21%~~24% in the year-ago quarter.

~~LTC~~Hay Group Adjusted EBITDA increased by ~~$3.8~~$11.1 million to ~~$14.7~~$22.8 million in the three months ended ~~October~~January 31, ~~2015~~2016 as compared to ~~$10.9~~$11.7 million in the year-ago quarter. Adjusting for the Legacy Hay acquisition, Adjusted EBITDA increased $2.5 million, or 21%, compared to year-ago quarter. This increase was due to higher fee revenue of ~~$7.3~~$4.3 million and a decline of ~~$0.4~~$0.5 million in general and administrative expenses, offset by an increase in compensation and benefit expense of ~~$3.5~~$0.7 million and a ~~$0.5~~$1.7 million increase in cost of services. The increase in compensation and benefit expenses was due to an increase in headcount to grow the business (a 9%6% increase in the average headcount). ~~LTC~~Hay Group Adjusted EBITDA as a percentage of fee revenue was ~~20%~~16% in the three months ended ~~October~~January 31, ~~2015~~2016 as compared to ~~16%~~18% in the year-ago quarter. Adjusting for the Legacy Hay acquisition, Adjusted EBITDA as a percentage of fee revenue was 21%.

Futurestep Adjusted EBITDA increased by ~~$1.9~~$1.3 million to ~~$7.5~~$7.3 million in the three months ended ~~October~~January 31, ~~2015~~2016 as compared to ~~$5.6~~$6.0 million in the year-ago quarter. The increase in Futurestep Adjusted EBITDA was primarily due to an increase in fee revenue of ~~$10.1~~$7.3 million, offset by an increase of ~~$7.0~~$4.8 million in compensation and benefits expense and ~~$1.0~~$0.6 million in general and administrative expenses during the three months ended ~~October~~January 31, ~~2015~~2016 as compared to the year-ago quarter. The increase in compensation and benefits expense was primarily driven by higher salaries and related payroll taxes due to an increase in average headcount. Futurestep Adjusted EBITDA as a percentage of fee revenue was 15% in the three months ended ~~October~~January 31, ~~2015~~2016 as compared to 14% in the year-ago quarter.

Other loss, net ~~was $2.6~~increased by $5.6 million to $7.1 million in the three months ended ~~October~~January 31, ~~2015~~2016 as compared to ~~other income, net of $2.4~~$1.5 million in the year-ago quarter. The ~~change~~increase in other ~~(loss) income,~~loss, net is due primarily to the decrease in the fair value of our marketable securities which created an additional loss of $6.9 million during the three months ended ~~October~~January 31, 2016 compared to the year-ago quarter.

Interest expense, net primarily relates to borrowings under our COLI policies and term loan facility, which is partially offset by interest earned on cash and cash equivalent balances. Interest expense, net was $0.4 million in the three months ended January 31, 2016 as compared to interest income, net of $0.3 million in the year-ago quarter. The change was mainly due to the increase of $0.4 million in interest expense from the term loan facility that we entered into on November 23, 2015 to finance part of the acquisition.

Equity in earnings of unconsolidated subsidiaries is comprised of our less than 50% interest in our Mexican subsidiary and IGroup, LLC, which is engaged in organizing, planning and conducting conferences and training programs throughout the world for directors, chief executive officers, other senior level executives and business leaders. We report our interest in earnings or loss of our Mexican subsidiary and IGroup, LLC on the equity basis as a one-line adjustment to net income. Equity in earnings was $0.2 million in the three months ended January 31, 2016 as compared to $0.8 million in the year-ago quarter.

The Company recorded an income tax benefit of $5.4 million in the three months ended January 31, 2016 compared to a $9.5 million income tax expense in the year-ago quarter. This reflects a 25% and 30% effective tax rate in the three months ended January 31, 2016 and 2015, respectively. The recognition of the tax benefit for the three months ended January 31, 2016 is at a lower effective tax rate as compared to the year-ago quarter due to the impact of non-deductible expenses incurred in connection with the acquisition of Legacy Hay and the post-acquisition allocation of income and losses in jurisdictions with different statutory tax rates, offset partially by the tax impact of restructuring charges and the benefit recorded in connection with the conclusion of the IRS audit of the Company’s consolidated federal income tax return for the fiscal year ended April 30, 2013.

Nine Months Ended January 31, 2016 Compared to Nine Months Ended January 31, 2015

Fee Revenue.Fee revenue increased $135.8 million, or 18%, to $892.2 million in the nine months ended January 31, 2016 compared to $756.4 million in the nine months ended January 31, 2015. Exchange rates unfavorably impacted fee revenue by $52.3 million, or 7%, in the nine months ended January 31, 2016. Adjusting for the Legacy Hay acquisition, fee revenue increased $63.9 million, or 8%, compared to the year-ago period. This increase was attributable to higher fee revenue in Futurestep, Executive Recruitment and legacy Leadership & Talent Consulting.

Executive Recruitment.Executive Recruitment reported fee revenue of $463.2 million, an increase of $22.4 million, or 5%, in the nine months ended January 31, 2016 compared to $440.8 million in the nine months ended January 31, 2015. As detailed below, Executive Recruitment fee revenue was higher in the North America region, partially offset by decreases in fee revenue in EMEA, South America and Asia Pacific regions in the nine months ended January 31, 2016 as compared to the year-ago period. The higher fee revenue was mainly due to a 5% increase in the weighted-average fees billed per engagement during the nine months ended January 31, 2016 as compared to the nine months ended January 31, 2015. Exchange rates unfavorably impacted fee revenue by $25.6 million, or 6%, in the nine months ended January 31, 2016.

North America reported fee revenue of $276.7 million, an increase of $33.7 million, or 14%, in the nine months ended January 31, 2016 compared to $243.0 million in the nine months ended January 31, 2015. North America’s increase in fee revenue is primarily due to an 8% increase in the number of engagements billed and a 5% increase in the weighted-average fees billed per engagement during the nine months ended January 31, 2016 as compared to the year-ago period. The overall increase in fee revenue was primarily driven by growth in the financial services, life sciences/healthcare, technology and education/non-profit sectors as compared to the nine months ended January 31, 2015, partially offset by a decrease in the industrial and consumer goods sectors. Exchange rates unfavorably impacted fee revenue by $2.5 million, or 1%, in the nine months ended January 31, 2016.

EMEA reported fee revenue of $108.1 million, a decrease of $5.7 million, or 5%, in the nine months ended January 31, 2016 compared to $113.8 million in the nine months ended January 31, 2015. Exchange rates unfavorably impacted fee revenue by $12.7 million, or 11%, in the nine months ended January 31, 2016. The decline in fee revenue was due to a 5% decrease in the number of engagements billed in the nine months ended January 31, 2016 as compared to the year-ago period. The performance in existing offices in the United Kingdom, France, and Germany were the primary contributors to the decrease in fee revenue in the nine months ended January 31, 2016 compared to year-ago period, offset by an increase in

fee revenue in United Arab Emirates and Norway. In terms of business sectors, financial services, industrial, and technology experienced the largest decreases in fee revenue in the nine months ended January 31, 2016 as compared to the year-ago period, partially offset by an increase in the consumer goods and life sciences/healthcare sectors.

Asia Pacific reported fee revenue of $59.3 million in the nine months ended January 31, 2016 compared to $61.6 million in the nine months ended January 31, 2015. Exchange rates unfavorably impacted fee revenue by $5.4 million, or 9%, in the nine months ended January 31, 2016. The decline in fee revenue was due to a 4% decrease in the number of engagements billed, partially offset by a 1% increase in weighted-average fees billed per engagement in the nine months ended January 31, 2016 compared to the year-ago period. The performance in Hong Kong, Indonesia, and Australia were the primary contributors to the decrease in fee revenue in the nine months ended January 31, 2016 compared to the year-ago period, offset by an increase in fee revenue in India. Life sciences/healthcare, consumer goods, and technology were the main sectors contributing to the decrease in fee revenue in the nine months ended January 31, 2016 as compared to the year-ago period, partially offset by an increase in fee revenue in the financial services sector.

South America reported fee revenue of $19.1 million, a decrease of $3.3 million, or 15%, in the nine months ended January 31, 2016 compared to $22.4 million in the nine months ended January 31, 2015. Exchange rates unfavorably impacted fee revenue for South America by $5.0 million, or 22%, in the nine months ended January 31, 2016. The decline in fee revenue was due to a 14% decrease in the number of engagements billed, and a 1% decrease in weighted-average fees billed per engagement in the nine months ended January 31, 2016 compared to the year-ago period. The performance in Brazil, Colombia and Chile were the primary contributors to the decline in fee revenue in the nine months ended January 31, 2016 compared to the nine months ended January 31, 2015, partially offset by the growth in Venezuela. Industrial was the main sector contributing to the decrease in fee revenue in the nine months ended January 31, 2016 compared to the year-ago period, partially offset by an increase in fee revenue in the consumer goods sector during the same period.

Hay Group.Hay Group reported fee revenue of $283.4 million, an increase of $89.1 million, or 46%, in the nine months ended January 31, 2016 compared to $194.3 million in the nine months ended January 31, 2015. Exchange rates unfavorably impacted fee revenue by $16.1 million, or 8%, in the nine months ended January 31, 2016. Adjusting for the Legacy Hay acquisition, fee revenue increased $17.2 million, or 9%, compared to the year-ago period. Fee revenue increased due to higher consulting fee revenue of $16.9 million, or 11%, in the nine months ended January 31, 2016 compared to the year-ago period with the rest of the increase due to higher fee revenue from products. The acquisition of Pivot Leadership on March 1, 2015 contributed $16.6 million in consulting fee revenue during the nine months ended January 31, 2016.

Futurestep.Futurestep reported fee revenue of $145.6 million, an increase of $24.3 million, or 20%, in the nine months ended January 31, 2016 compared to $121.3 million in the nine months ended January 31, 2015. Exchange rates unfavorably impacted fee revenue by $10.6 million or 9% in the nine months ended January 31, 2016. The increase in fee revenue was primarily driven by higher fee revenues in professional search and RPO of $13.3 million and $11.8 million, respectively. The increase in fee revenue in professional search was due to a 13% increase in the weighted average fees billed per engagement in the nine months ended January 31, 2016 compared to the year-ago period and 12% increase in the number of engagements billed during the same period.

Compensation and benefits expense increased $102.0 million, or 20%, to $610.5 million in the nine months ended January 31, 2016 from $508.5 million in the year-ago period. Exchange rates favorably impacted compensation and benefits expenses by $34.9 million, or 7%, during the nine months ended January 31, 2016. Excluding $50.9 million in compensation and benefits relating to the Legacy Hay acquisition and $16.3 million in integration/acquisition costs and separation charges, compensation and benefits increased $34.8 million, or 7%, compared to the year-ago period. This increase was due in large part to an increase in salaries and related payroll taxes of $25.5 million and increases of $3.1 million in outside contractor expenses. The higher level of salaries and related payroll expense was due to an increase in average headcount of 10% in the nine months ended January 31, 2016 compared to year-ago period, and reflects our continued growth-related investments back into the business. Also contributing to the increase in compensation and benefits expense was a change in the cash surrender value (“CSV”) of company owned life insurance (“COLI”). The change in CSV of COLI increased compensation and benefits expense by $6.7 million in the nine months ended January 31, 2016 compared to the year-ago period due to a smaller increase in the market value of the underlying investments due to market changes. COLI is held to fund other deferred compensation retirement plans (see Note 6 — Deferred Compensation and Retirement Plans, included in the Notes to our Consolidated Financial Statements).

The changes in the fair value of vested amounts owed under certain deferred compensation plans decreased compensation and benefits expense by $6.2 million in the nine months ended January 31, 2016 compared to an increase of $2.3 million in the nine months ended January 31, 2015. Offsetting these changes in compensation and benefits expense was a decrease in the fair value of marketable securities classified as trading (held in trust to satisfy obligations under certain deferred compensation plan liabilities) of $8.9 million in the nine months ended January 31, 2016 compared to an increase of $4.3 million in the year-ago period, recorded in other (loss) income, net on the consolidated statement of operations.

Executive Recruitment compensation and benefits expense increased $4.0 million to $293.2 million in the nine months ended January 31, 2016 compared to $289.2 million in the nine months ended January 31, 2015. The change was driven by higher performance related bonus expense of $4.6 million primarily associated with an increase in fee revenue and profitability. The rest of the change was due to higher salaries and related payroll taxes of $4.0 million, offset by a decrease in our deferred compensation and benefit plans of $3.9 million. The higher level of salaries and related payroll expense was due to an increase in average consultant headcount of 8% in the nine months ended January 31, 2016 compared to year-ago period, and reflects our continued growth-related investments back into the business. Executive Recruitment compensation and benefits expense as a percentage of fee revenue was 63% in the nine months ended January 31, 2016 compared to 66% in the year-ago period.

Hay Group compensation and benefits expense increased $69.5 million, or 60%, to $186.0 million in the nine months ended January 31, 2016 from $116.5 million in the nine months ended January 31, 2015. Excluding $50.9 million in compensation and benefits relating to the Legacy Hay acquisition and $11.9 million in integration and acquisition costs, compensation and benefits increased $6.7 million, or 6%, compared to the year-ago period. The increase was driven by an increase in salaries and related payroll taxes of $7.6 million, offset by a decrease of $1.2 million in performance related bonus expense. The higher level of salaries and related payroll expense was due to an increase in average headcount of 9% in the nine months ended January 31, 2016 compared to the year-ago period. Hay Group compensation and benefits expense as a percentage of fee revenue increased to 66% in the nine months ended January 31, 2016 from 60% in the nine months ended January 31, 2015. Excluding integration and acquisition costs compensation and benefits expense as a percentage of fee revenue was 61% in the nine months ended January 31, 2016.

Futurestep compensation and benefits expense increased $16.4 million, or 20%, to $99.8 million in the nine months ended January 31, 2016 from $83.4 million in the nine months ended January 31, 2015. The increase was primarily driven by an increase of $13.0 million in salaries and related payroll taxes and $2.7 million in outside contractors. The increase in salaries and related payroll taxes was due to a 27% increase in the average headcount. The higher average headcount and the increase in utilization of outside contractors were primarily driven by the need to service an increase in fee revenue in both our professional search and RPO businesses. Futurestep compensation and benefits expense as a percentage of fee revenue was 69% in both the nine months ended January 31, 2016 and 2015.

Corporate compensation and benefits expense increased $12.1 million, or 62%, to $31.5 million in the nine months ended January 31, 2016 from $19.4 million in the nine months ended January 31, 2015. Excluding $3.7 million of integration and acquisition costs related to the acquisition of Legacy Hay, compensation and benefits expense increased $8.4 million in the nine months ended January 31, 2016 as compared to the year-ago quarter. This increase was mainly due to the change in the CSV of COLI. The change in CSV of COLI reduced compensation and benefits expense by $1.8 million and $8.5 million in the nine months ended January 31, 2016 and 2015, respectively. The decrease in CSV of COLI was due to a decrease in the market value of investments underlying the COLI. COLI is held to fund other deferred compensation retirement plans (see Note 6 — Deferred Compensation and Retirement Plans, included in the Notes to our Consolidated Financial Statement. The rest of the change was due to increases in stock based compensation of $1.5 million.

General and administrative expenses increased $35.2 million, or 34%, to $139.5 million in the nine months ended January 31, 2016 compared to $104.3 million in the nine months ended January 31, 2015. Exchange rates favorably impacted general and administrative expenses by $8.2 million, or 8%, during the nine months ended January 31, 2016. Excluding $12.3 million in general and administrative expenses relating to the Legacy Hay acquisition and integration/acquisition costs of $18.2 million, general and administrative expenses increased $4.7 million, or 5%, compared to the year-ago period. The increase is attributable to primarily a $6.2 million insurance reimbursement received during the nine months ended January 31, 2015 that reduced legal fees in the year-ago period. General and administrative expenses as a percentage of fee revenue was 16% in the nine months ended January 31, 2016 compared to 14% in the nine months ended January 31, 2015. Excluding integration and acquisition costs general and administration expenses as a percentage of fee revenue was 14% in the nine months ended January 31, 2016.

Executive Recruitment general and administrative expenses decreased $4.3 million, or 8%, to $48.8 million in the nine months ended January 31, 2016 from $53.1 million in the nine months ended January 31, 2015. Favorable foreign exchange rates contributed to a decline in general and administrative expenses of $1.9 million during the nine months ended January 31, 2016 compared to the year-ago period. The remaining decrease was due to lower premise and office expense and legal and other professional fees of $0.9 million and $0.8 million, respectively. Executive Recruitment general and administrative expenses as a percentage of fee revenue was 11% in the nine months ended January 31, 2016 compared to 12% in the year-ago period.

Hay Group general and administrative expenses increased $11.6 million, or 46%, to $37.0 million in the nine months ended January 31, 2016 from $25.4 million in the nine months ended January 31, 2015. Excluding $12.3 million relating to the Legacy Hay acquisition and $0.2 million in integration/acquisition costs, general and administrative expenses decreased $0.9 million, or 4%, compared to the year-ago period. Favorable foreign exchange rates contributed to a decline in general and administrative expenses of $1.5 million in the nine months ended January 31, 2016 compared to the year-ago period, partially offset by an increase in premise and office expense of $0.5 million. Hay Group general and administrative expenses as a percentage of fee revenue was 13% in both the nine months ended January 31, 2016 and 2015.

Futurestep general and administrative expenses increased $2.3 million, or 17%, to $15.8 million in the nine months ended January 31, 2016 compared to $13.5 million in the nine months ended January 31, 2015. Higher premise and office expenses of $1.0 million contributed to the increase in general and administrative expenses along with an increase of $0.8 million due to unfavorable exchange rates and an increase in marketing and business development expenses of $0.4 million. Futurestep general and administrative expenses as a percentage of fee revenue was 11% in both the nine months ended January 31, 2016 and 2015.

Corporate general and administrative expenses increased $25.6 million to $37.9 million in the nine months ended January 31, 2016 compared to $12.3 million in the nine months ended January 31, 2015. The increase in general and administrative expenses was driven by $18.0 million in integration and acquisition costs associated with the acquisition of Legacy Hay incurred in the nine months ended January 31, 2016 and a $6.2 million insurance reimbursement that reduced legal fees in the year-ago period. The rest of the increase was due to unfavorable exchange rates that resulted in an increase in general and administrative expenses of $1.7 million during the nine months ended January 31, 2016 compared to the year-ago period.

Cost of services expense consist primarily of non-billable contractor and product costs related to the delivery of various services and products, primarily in Futurestep and Hay Group. Cost of services expense increased $11.1 million, or 40%, to $38.9 million in the nine months ended January 31, 2016 compared to $27.8 million in the nine months ended January 31, 2015. Adjusting for the Legacy Hay acquisition, the cost of services increased $5.1 million, or 18%, compared to the year-ago period. The increase is mainly due to higher fee revenue in Legacy LTC and Futurestep. Cost of services expense as a percentage of fee revenue was 4% in both the nine months ended January 31, 2016 and 2015.

Depreciation and amortization expenses were $24.9 million, an increase of $4.5 million in the nine months ended January 31, 2016 compared to $20.4 million in the nine months ended January 31, 2015. Adjusting for the Legacy Hay acquisition, depreciation and amortization expenses increased $1.3 million, or 6%, compared to the year-ago period. The increase relates primarily to technology investments that were made in the current and prior year, primarily in computer equipment, software, furniture and fixtures, leasehold improvements and intangible assets.

During the nine months ended January 31, 2016, we implemented a restructuring plan in order to rationalize our cost structure in response to anticipated revenue levels and in order to eliminate redundant positions that were created due to the acquisition of Legacy Hay. As a result, we recorded $30.6 million of restructuring charges with $29.9 million of severance costs to align our work force to current levels of business activities and to eliminate redundant positions due to the

integration of Legacy Hay and $0.7 million relating to the consolidation of premises during the nine months ended January 31, 2016. During the nine months ended January 31, 2015, we took actions to rationalize our cost structure as a result of efficiencies obtained from prior year technology investments that enabled further integration of our legacy businesses and the recent acquisitions as well as other cost saving initiatives. As a result, we recorded $9.5 million in restructuring charges, net in the nine months ended January 31, 2015, of which $9.2 million related to severance and $0.3 million related to consolidation/abandonment of premises.

Operating income decreased $38.1 million to $47.8 million in the nine months ended January 31, 2016 as compared to $85.9 million in the nine months ended January 31, 2015. Adjusting for the $29.2 million operating loss of Legacy Hay, operating income decreased $8.9 million, or 10%, compared to year-ago period. This decrease in operating income resulted from an increase of $43.1 million in compensation and benefits expense (which included $7.6 million in integration/acquisition costs), $22.7 million in general and administrative expenses (which included $18.0 million in integration/acquisition costs), $5.1 million in cost of services expense and $1.3 million in depreciation and amortization expense. These changes were offset by higher fee revenue of $63.9 million during the nine months ended January 31, 2016 as compared to the year-ago period. The Legacy Hay operating loss of $29.2 million included integration/acquisition costs of $8.2 million and restructuring charges of $20.5 million.

Executive Recruitment operating income increased $21.0 million to $108.7 million in the nine months ended January 31, 2016 as compared to $87.7 million in the nine months ended January 31, 2015. The increase in Executive Recruitment operating income is primarily attributable to higher fee revenue of $22.4 million and a decrease in general and administrative expenses of $4.3 million, offset by an increase of $4.0 million and $1.9 million in compensation and benefits expense and restructuring charges, net, respectively. The increase in compensation and benefits expense was driven by higher performance related bonus expense and salaries and related payroll expense, offset by a decline in our deferred compensation and benefit plans. General and administrative expenses decreased due to favorable exchange rates and a reduction in premise and office expense during the nine months ended January 31, 2016 compared to the year-ago period. Executive Recruitment operating income as a percentage of fee revenue was 24% in the nine months ended January 31, 2016 compared to 20% in the nine months ended January 31, 2015.

Hay Group operating loss was $6.3 million in the nine months ended January 31, 2016 as compared to operating income of $19.8 million in the nine months ended January 31, 2015. Adjusting for the $29.2 million operating loss of Legacy Hay, operating income increased $3.1 million, or 16%, compared to the year-ago period. The increase in Hay Group operating income was due to a $17.2 million in higher fee revenue and a decrease of general and administrative expenses of $0.9 million. These changes were offset by increases in compensation and benefit expense of $10.6 million, $3.3 million in cost of services expense and higher depreciation and amortization expense of $1.0 million. The higher compensation and benefit expense was driven mainly by increases in salaries and related payroll taxes and severance costs related to the integration of Legacy Hay. Hay Group operating loss as a percentage of fee revenue was 2% in the nine months ended January 31, 2016 compared to operating income as a percentage of fee revenue of 10% in the year-ago period.

Futurestep operating income increased by $5.3 million to $19.7 million in the nine months ended January 31, 2016 from $14.4 million in the nine months ended January 31, 2015. The increase in Futurestep operating income was primarily due to higher fee revenues of $24.3 million and a decrease in restructuring charges, net of $1.1 million. These changes were partially offset by an increase in compensation and benefits expense of $16.4 million, a $2.3 million increase in general and administrative expenses and $1.1 million in higher cost of services expense during the nine months ended January 31, 2016 as compared to the nine months ended January 31, 2015. Futurestep operating income as a percentage of fee revenue was 14% in the nine months ended January 31, 2016 as compared to 12% in the year-ago period.

Adjusted EBITDA increased $14.4 million to $135.4 million in the nine months ended January 31, 2016 compared to $121.0 million in the nine months ended January 31, 2015. Adjusting for the Legacy Hay acquisition, Adjusted EBITDA increased $5.8 million, or 5%, compared to year-ago period. This increase was driven by higher fee revenue of $63.9 million, offset by the increase of $34.8 million, $12.9 million, $5.1 million, and $4.7 million in compensation and benefits expense (excluding acquisition/integration costs), other (loss) income, net, cost of services expense and general and administrative expenses (excluding acquisition/integration costs), respectively during the nine months ended January 31, 2016 compared to the year-ago period. Adjusted EBITDA as a percentage of fee revenue was 15% in the nine months ended January 31, 2016, as compared to 16% on the year-ago period.

Executive Recruitment Adjusted EBITDA was $120.5 million and $99.0 million in the nine months ended January 31, 2016 and 2015, respectively. Adjusted EBITDA increased $21.5 million during the nine months ended January 31, 2016 as compared to the year-ago period due to the $22.4 million increase in fee revenue. Executive Recruitment Adjusted EBITDA as a percentage of fee revenue was 26% in the nine months ended January 31, 2016 as compared to 22% in the nine months ended January 31, 2015.

Hay Group Adjusted EBITDA increased by $15.9 million to $48.2 million in the nine months ended January 31, 2016 as compared to $32.3 million in the nine months ended January 31, 2015. Adjusting for the Legacy Hay acquisition, Adjusted EBITDA increased $7.3 million, or 23%, compared to year-ago period. This increase was due to higher fee revenue of $17.2 million and a decrease of $0.9 million in general and administrative expenses, offset by an increase in compensation and benefit expense of $6.7 million and cost of services of $3.3 million. The higher compensation and benefit expense was driven mainly by increases in salaries and related payroll taxes due to an increase in average headcount. Hay Group Adjusted EBITDA as a percentage of fee revenue was 17% in both the nine months ended January 31, 2016 and 2015. Adjusting for the Legacy Hay acquisition, Adjusted EBITDA as of percentage of fee revenue was 19%.

Futurestep Adjusted EBITDA increased by $4.7 million to $21.6 million in the nine months ended January 31, 2016 as compared to $16.9 million in the nine months ended January 31, 2015. The increase in Futurestep Adjusted EBITDA was primarily due to higher fee revenue of $24.3 million, offset by an increase of $16.4 million in compensation and benefits expense, $2.3 million in general and administrative expenses and $1.1 million in cost of services expense during the nine months ended January 31, 2016 as compared to the year-ago period. Futurestep Adjusted EBITDA as a percentage of fee revenue was 15% in the nine months ended January 31, 2016 as compared to 14% in the nine months ended January 31, 2015.

Other loss, net was $9.8 million in the nine months ended January 31, 2016 as compared to other income, net of $3.1 million in the nine months ended January 31, 2015. The change in other (loss) income, net is primarily due to the decrease in the fair value of our marketable securities during the nine months ended January 31, 2016 compared the increase in the fair value of our marketable securities in the nine months ended January 31, 2015, which created an additional loss of $13.2 million during the nine months ended January 31, 2016 compared to the year-ago period.

Interest expense, net primarily relates to borrowings under our COLI policies and term loan facility, which is partially offset by interest earned on cash and cash equivalent balances. Interest expense, net was ~~$0.5~~$1.2 million in the ~~three~~nine months ended ~~October~~January 31, ~~2015~~2016 as compared to ~~$0.9~~$1.4 million in the ~~year-ago quarter.~~nine months ended January 31, 2015.

Equity in earnings of unconsolidated subsidiaries is comprised of our less than 50% interest in our Mexican subsidiary and IGroup, LLC, which is engaged in organizing, planning and conducting conferences and training programs throughout the world for directors, chief executive officers, other senior level executives and business leaders. We report our interest in earnings or loss of our Mexican subsidiary and IGroup, LLC on the equity basis as a one-line adjustment to net income. Equity in earnings was ~~$0.6~~$1.5 million in the ~~three~~nine months ended ~~October~~January 31, ~~2015~~2016 as compared to ~~$0.4~~$1.7 million in the ~~year-ago quarter.~~nine months ended January 31, 2015.

The provision for income taxes was ~~$8.5~~$13.2 million in the ~~three~~nine months ended ~~October~~January 31, ~~2015~~2016 compared to ~~$10.9~~$26.4 million in the ~~year-ago quarter.~~nine months ended January 31, 2015. The provision for income taxes in the ~~three~~nine months ended ~~October~~January 31, ~~2015~~2016 and ~~2014~~2015 reflects a 32% and 30% effective tax rate, respectively. The increase in the effective tax rate for the three months ended October 31, 2015 is due to a higher percentage of taxable income arising in jurisdictions with higher statutory tax rates.

~~Six Months Ended October 31, 2015 Compared to Six Months Ended October 31, 2014~~

~~Fee Revenue.~~Fee revenue increased $41.1 million, or 8%, to $548.0 million in the six months ended October 31, 2015 compared to $506.9 million in the six months ended October 31, 2014. This increase was attributable to higher fee revenue in Futurestep, LTC and Executive Recruitment. Exchange rates unfavorably impacted fee revenue by $32.7 million, or 6%, in the six months ended October 31, 2015.

~~Executive Recruitment.~~Executive Recruitment reported fee revenue of $308.6 million, an increase of $11.2 million, or 4%, in the six months ended October 31, 2015 compared to $297.4 million in the six months ended October 31, 2014. As detailed below, Executive Recruitment fee revenue was higher in the North America region, partially offset by decreases in fee revenue in EMEA, Asia Pacific and South America regions in the six months ended October 31, 2015 as compared to the year-ago period. The higher fee revenue was mainly due to a 6% increase in the weighted-average fees billed per engagement, offset by a 2% decrease in the number of Executive Recruitment engagements billed during the six months ended October 31, 2015 as compared to the six months ended October 31, 2014. Exchange rates unfavorably impacted fee revenue by $18.5 million, or 6%, in the six months ended October 31, 2015.

North America reported fee revenue of $183.2 million, an increase of $18.2 million, or 11%, in the six months ended October 31, 2015 compared to $165.0 million in the six months ended October 31, 2014. North America’s increase in fee revenue is primarily due to a 9% increase in the number of engagements billed and a 1% increase in the weighted-average fees billed per engagement during the six months ended October 31, 2015 as compared to the year-ago period. The overall

increase in fee revenue was primarily driven by growth in the financial services, life sciences/healthcare, and technology sectors as compared to the six months ended October 31, 2014, partially offset by a decrease in the industrial and consumer goods sectors. Exchange rates unfavorably impacted fee revenue by $1.7 million, or 1%, in the six months ended October 31, 2015.

EMEA reported fee revenue of $72.7 million, a decrease of $4.3 million, or 6%, in the six months ended October 31, 2015 compared to $77.0 million in the six months ended October 31, 2014. Exchange rates unfavorably impacted fee revenue by $9.6 million, or 12%, in the six months ended October 31, 2015. The decline in fee revenue was due to an 8% decrease in the number of engagements billed, offset by a 3% increase in the weighted-average fees billed per engagement in the six months ended October 31, 2015 as compared to the year-ago period. The performance in existing offices in the United Kingdom and Germany were the primary contributors to the decrease in fee revenue in the six months ended October 31, 2015 compared to year-ago period, offset by an increase in fee revenue in United Arab Emirates and Denmark. In terms of business sectors, technology, industrial and financial services experienced the largest decreases in fee revenue in the six months ended October 31, 2015 as compared to the year-ago period, partially offset by an increase in the life sciences/healthcare sector.

Asia Pacific reported fee revenue of $40.2 million in the six months ended October 31, 2015 compared to $40.7 million in the six months ended October 31, 2014. Exchange rates unfavorably impacted fee revenue by $4.0 million, or 10%, in the six months ended October 31, 2015. The decline in fee revenue was due to a 2% decrease in the number of engagements billed, partially offset by a 1% increase in weighted-average fees billed per engagement in the six months ended October 31, 2015 compared to the year-ago period. The performance in Hong Kong, Japan and Indonesia were the primary contributors to the decrease in fee revenue in the six months ended October 31, 2015 compared to the year-ago period, offset by an increase in fee revenue in China. Life sciences/healthcare and consumer goods were the main sectors contributing to the decrease in fee revenue in the six months ended October 31, 2015 as compared to the year-ago period, partially offset by an increase in fee revenue in the financial services sector.

South America reported fee revenue of $12.5 million, a decrease of $2.2 million, or 15%, in the six months ended October 31, 2015 compared to $14.7 million in the six months ended October 31, 2014. Exchange rates unfavorably impacted fee revenue for South America by $3.2 million, or 22%, in the six months ended October 31, 2015. The decline in fee revenue was due to a 27% decrease in the number of engagements billed, offset by an 18% increase in weighted-average fees billed per engagement in the six months ended October 31, 2015 compared to the year-ago period. The performance in Brazil, Colombia and Chile were the primary contributors to the decline in fee revenue in the six months ended October 31, 2015 compared to the six months ended October 31, 2014, partially offset by the growth in Venezuela. Industrial and technology were the main sectors contributing to the decrease in fee revenue in the six months ended October 31, 2015 compared to the year-ago period, partially offset by an increase in fee revenue in the consumer goods sector during the same period.

~~Leadership & Talent Consulting.~~Leadership & Talent Consulting reported fee revenue of $142.8 million, an increase of $12.9 million, or 10%, in the six months ended October 31, 2015 compared to $129.9 million in the six months ended October 31, 2014. Exchange rates unfavorably impacted fee revenue by $6.2 million, or 5%, in the six months ended October 31, 2015. Fee revenue increased due to higher consulting and product fee revenue of $11.7 million, or 12%, and $1.2 million, or 4%, respectively, in the six months ended October 31, 2015 compared to the year-ago period. The acquisition of Pivot Leadership on March 1, 2015 contributed $11.7 million in consulting fee revenue during the six months ended October 31, 2015.

~~Futurestep.~~Futurestep reported fee revenue of $96.6 million, an increase of $17.0 million, or 21%, in the six months ended October 31, 2015 compared to $79.6 million in the six months ended October 31, 2014. Exchange rates unfavorably impacted fee revenue by $8.0 million or 10% in the six months ended October 31, 2015. The increase in fee revenue was primarily driven by higher fee revenues in professional search and RPO of $11.3 million and $6.1 million, respectively. The increase in fee revenue in professional search was due to a 24% increase in engagements billed in the six months ended October 31, 2015 compared to the year-ago period and a 9% increase in the weighted average fees billed per search engagements during the same period.

Compensation and benefits expense increased $24.3 million, or 7%, to $368.1 million in the six months ended October 31, 2015 from $343.8 million in the year-ago period. This increase was due in large part to an increase in salaries and related payroll taxes of $14.2 million and increases of $2.4 million and $2.1 million in performance related bonus expense and outside contractor expenses, respectively. The increase in performance related bonus expense was due to an increase in fee revenue and profitability due to the continued adoption of our strategy, including referrals between lines of business and an increase in average consultant headcount. The higher level of salaries and related payroll expense was due to an increase in average consultant headcount of 15% in the six months ended October 31, 2015 compared to year-ago period, and reflects our continued growth-related investments back into the business. In addition, an increase in compensation and benefits expense was due to $3.6 million of severance costs related to the integration of Hay Group. Also contributing to the increase in compensation and benefit was a change in the cash surrender value (“CSV”) of company owned life insurance (“COLI”). The change in CSV of COLI increased compensation and benefits expense by $2.2 million in the six months ended October 31, 2015 compared to the year-ago period due to a smaller increase in the underlying investments due to market changes. COLI is held to fund other deferred compensation retirement plans. (see Note 6 — ~~Deferred Compensation and Retirement Plans~~, included in the Notes to our Consolidated Financial Statements) Exchange rates favorably impacted compensation and benefits expenses by $21.5 million, or 6%, during the six months ended October 31, 2015.

The changes in the fair value of vested amounts owed under certain deferred compensation plans decreased compensation and benefits expense by $0.9 million in the six months ended October 31, 2015 compared to an increase of $2.7 million in the six months ended October 31, 2014. Offsetting these changes in compensation and benefits expense was a decrease in the fair value of marketable securities classified as trading (held in trust to satisfy obligations under certain deferred compensation plan liabilities) of $1.8 million in the six months ended October 31, 2015 compared to an increase of $4.5 million in the year-ago period, recorded in other (loss) income, net on the consolidated statement of income.

Executive Recruitment compensation and benefits expense was $198.0 million in the six months ended October 31, 2015 compared to $197.7 million in the six months ended October 31, 2014. Executive Recruitment compensation and benefits expense as a percentage of fee revenue was 64% in the six months ended October 31, 2015 compared to 66% in the year-ago period.

Leadership & Talent Consulting compensation and benefits expense increased $9.6 million, or 12%, to $87.9 million in the six months ended October 31, 2015 from $78.3 million in the six months ended October 31, 2014. The increase was driven by an increase in salaries and related payroll taxes of $4.5 million and an increase of $0.5 million and $0.4 million in outside contractors and performance related bonus expense, respectively. The higher level of salaries and related payroll expense was due to an increase in average headcount of 10% in the six months ended October 31, 2015 compared to the year-ago period. In addition, compensation and benefits expense increased due to $3.6 million of severance costs related to the integration of Hay Group. Leadership & Talent Consulting compensation and benefits expense as a percentage of fee revenue increased to 62% in the six months ended October 31, 2015 from 60% in the six months ended October 31, 2014.

Futurestep compensation and benefits expense increased $11.6 million, or 21%, to $66.3 million in the six months ended October 31, 2015 from $54.7 million in the six months ended October 31, 2014. The increase was primarily driven by an increase of $7.7 million in salaries and related payroll taxes, $1.6 million in outside contractors, $0.6 million in employee insurance cost and $0.5 million in performance related bonus expense. The increase in salaries and related payroll taxes, employee insurance costs and performance related bonus expense were due to a 27% increase in the average headcount. The higher average headcount and the increase in utilization of outside contractors were primarily driven by the need to service an increase in fee revenue in both our professional search and RPO businesses. Futurestep compensation and benefits expense as a percentage of fee revenue was 69% in both the six months ended October 31, 2015 and 2014.

Corporate compensation and benefits expense increased $2.8 million, or 21%, to $15.9 million in the six months ended October 31, 2015 from $13.1 million in the six months ended October 31, 2014 mainly due to the change in the CSV of COLI. The change in CSV of COLI reduced compensation and benefits expense by $3.3 million and $5.5 million in the six months ended October 31, 2015 and 2014, respectively. The decrease in CSV of COLI was due to a decrease in investments underlying the COLI. COLI is held to fund other deferred compensation retirement plans (see Note 6 — ~~Deferred Compensation and Retirement Plans~~~~, included in the Notes to our Consolidated Financial Statements).~~

General and administrative expenses increased $14.6 million, or 22%, to $82.1 million in the six months ended October 31, 2015 compared to $67.5 million in the six months ended October 31, 2014. General and administrative expenses as a percentage of fee revenue was 15% in the six months ended October 31, 2015 compared to 13% in the six months ended October 31, 2014. The increase is attributable to $9.0 million, primarily in legal and other professional fees associated with the acquisition of Hay Group in the six months ended October 31, 2015 and a $6.2 million insurance reimbursement received during the six months ended October 31, 2014 that reduced legal fees in the year-ago period. These increases were partially offset by favorable foreign currency rates that resulted in a decrease in general and administrative expenses of $1.1 million in the six months ended October 31, 2015 compared to the year-ago period. Exchange rates favorably impacted general and administrative expenses by $4.7 million, or 7%, during the six months ended October 31, 2015.

Executive Recruitment general and administrative expenses decreased $3.2 million, or 9%, to $33.2 million in the six months ended October 31, 2015 from $36.4 million in the six months ended October 31, 2014. Favorable foreign exchange rates contributed to a decline in general and administrative expenses of $1.7 million during the six months ended October 31, 2015 compared to the year-ago period. The remaining decrease was due to lower premise and office expense of $1.0 million. Executive Recruitment general and administrative expenses as a percentage of fee revenue was 11% in the six months ended October 31, 2015 compared to 12% in the year-ago period.

Leadership & Talent Consulting general and administrative expenses decreased $0.4 million, or 2%, to $16.7 million in the six months ended October 31, 2015 from $17.1 million in the six months ended October 31, 2014. Favorable foreign exchange rates contributed to a decline in general and administrative expenses of $0.8 million in the six months ended October 31, 2015 compared to the year-ago quarter, partially offset by an increase in premise and office expense of $0.3 million. Leadership & Talent Consulting general and administrative expenses as a percentage of fee revenue was 12% in the six months ended October 31, 2015 compared to 13% in the six months ended October 31, 2014.

Futurestep general and administrative expenses increased $1.7 million, or 19%, to $10.7 million in the six months ended October 31, 2015 compared to $9.0 million in the six months ended October 31, 2014. Higher premise and office expenses of $0.8 million contributed to an increase in general and administrative expenses along with an increase of $0.5 million due to unfavorable exchange rates. Futurestep general and administrative expenses as a percentage of fee revenue was 11% in both the six months ended October 31, 2015 and 2014.

Corporate general and administrative expenses increased $16.5 million to $21.5 million in the six months ended October 31, 2015 compared to $5.0 million in the six months ended October 31, 2014. The increase in general and administrative expenses was driven by a $9.0 million in acquisition costs associated with the acquisition of Hay Group incurred in the six months ended October 31, 2015 and a $6.2 million insurance reimbursement that reduced legal fees in the year-ago period. The rest of the increase was due to unfavorable exchange rates that resulted in an increase in general and administrative expenses of $0.8 million during the six months ended October 31, 2015 compared to the year-ago period.

Cost of services expense consist primarily of non-billable contractor and product costs related to the delivery of various services and products, primarily Futurestep and LTC. Cost of services expense increased $2.2 million, or 11%, to $21.3 million in the six months ended October 31, 2015 compared to $19.1 million in the six months ended October 31, 2014. Cost of services expense as a percentage of fee revenue was 4% in both the six months ended October 31, 2015 and 2014.

Depreciation and amortization expenses were $14.6 million, an increase of $1.0 million in the six months ended October 31, 2015 compared to $13.6 million in the six months ended October 31, 2014. The increase relates primarily to technology investments that were made in the current and prior year, primarily in computer equipment, software, furniture and fixtures, leasehold improvements and intangible assets.

No restructuring charges, net were incurred during the six months ended October 31, 2015. During the six months ended October 31, 2014, we took actions to rationalize our cost structure as a result of efficiencies obtained from prior year technology investments that enabled further integration of the legacy business and the recent acquisitions as well as other cost saving initiatives. As a result, we recorded $9.9 million in restructuring charges, net in the six months ended October 31, 2014, of which $9.6 million relates to severance and $0.3 million relates to consolidation/abandonment of premises.

Operating income increased $8.9 million to $61.9 million in the six months ended October 31, 2015 as compared to $53.0 million in the six months ended October 31, 2014. This increase in operating income resulted from $41.1 million in higher fee revenue and a decrease of $9.9 million in restructuring charges, net, offset by increases in compensation and benefits expense of $24.3 million, general and administrative expenses of $14.6 million, cost of services expense of $2.2 million and depreciation and amortization expenses of $1.0 million during the six months ended October 31, 2015 as compared to the six months ended October 31, 2014.

Executive Recruitment operating income increased $20.0 million to $74.1 million in the six months ended October 31, 2015 as compared to $54.1 million in the six months ended October 31, 2014. The increase in Executive Recruitment operating income is primarily attributable to higher fee revenue of $11.2 million and decreases in restructuring charges, net and general and administrative expenses of $5.5 million and $3.2 million, respectively. General and administrative expenses decreased due to favorable exchange rates and a reduction in premise and office expense during the six months ended October 31, 2015 compared to the year-ago period. Executive Recruitment operating income as a percentage of fee revenue was 24% in the six months ended October 31, 2015 compared to 18% in the six months ended October 31, 2014.

LTC operating income increased $4.1 million to $15.3 million in the six months ended October 31, 2015 as compared to $11.2 million in the six months ended October 31, 2014. The increase in LTC operating income was due to a $12.9 million in higher fee revenue and decreases of restructuring charges, net and general and administrative expenses of $2.8 million and $0.4 million, respectively. These changes were offset by increases in compensation and benefit expense of $9.6 million and $1.6 million in cost of services expense. LTC operating income as a percentage of fee revenue was 11% in the six months ended October 31, 2015 compared to 9% in the year-ago period.

Futurestep operating income increased by $4.5 million to $13.1 million in the six months ended October 31, 2015 from $8.6 million in the six months ended October 31, 2014. The increase in Futurestep operating income was primarily due to higher fee revenues of $17.0 million and a decrease in restructuring charges, net of $1.4 million. The change was partially offset by an increase in compensation and benefits expense of $11.6 million, a $1.7 million increase in general and administrative expenses, and $0.4 million increase in cost of services expense during the six months ended October 31, 2015 as compared to the six months ended October 31, 2014. Futurestep operating income as a percentage of fee revenue was 14% in the six months ended October 31, 2015 as compared to 11% in the year-ago period.

Adjusted EBITDA increased $5.8 million to $87.7 million in the six months ended October 31, 2015 compared to $81.9 million in the six months ended October 31, 2014. This increase was driven by higher fee revenue of $41.1 million, offset by the increase of $20.7 million, $7.3 million, $5.6 million, and $2.2 million in compensation and benefits expense (excluding certain integration costs), other (loss) income, net, general and administrative expenses (excluding certain acquisition costs), and cost of services expense, respectively during the six months ended October 31, 2015 compared to the year-ago period. Adjusted EBITDA as a percentage of fee revenue was 16% in both the six months ended October 31, 2015 and 2014.

Executive Recruitment Adjusted EBITDA was $77.5 million and $63.9 million in the six months ended October 31, 2015 and 2014, respectively. Adjusted EBITDA increased $13.6 million during the six months ended October 31, 2015 as compared to the six months ended October 31, 2014 due to the increase of $11.2 million in fee revenue and a decrease of $3.2 million in general and administrative expenses. General and administrative expenses decreased due to favorable exchange rates and a reduction in premise and office expense during the six months ended October 31, 2015 compared to the year-ago period. Executive Recruitment Adjusted EBITDA as a percentage of fee revenue was 25% in the six months ended October 31, 2015 as compared to 22% in the six months ended October 31, 2014.

LTC Adjusted EBITDA increased by $4.8 million to $25.4 million in the six months ended October 31, 2015 as compared to $20.6 million in the six months ended October 31, 2014. This increase was due to higher fee revenue of $12.9 million and a decrease of $0.4 million in general and administrative expenses, offset by an increase in compensation and benefit expense (excluding certain integration costs) of $6.0 million, cost of services of $1.6 million and other (loss) income, net of $0.9 million. The higher compensation and benefit expense was driven by increases in salaries and related payroll taxes, outside contractors and performance related bonus expense. LTC Adjusted EBITDA as a percentage of fee revenue was 18% in the six months ended October 31, 2015 as compared to 16% in the six months ended October 31, 2014.

Futurestep Adjusted EBITDA increased by $3.4 million to $14.3 million in the six months ended October 31, 2015 as compared to $10.9 million in the six months ended October 31, 2014. The increase in Futurestep Adjusted EBITDA was primarily due to higher fee revenue of $17.0 million, offset by an increase of $11.6 million in compensation and benefits expense, $1.7 million in general and administrative expenses, and $0.4 million increase in cost of services expense during the six months ended October 31, 2015 as compared to the six months ended October 31, 2014. Futurestep Adjusted EBITDA as a percentage of fee revenue was 15% in the six months ended October 31, 2015 as compared to 14% in the six months ended October 31, 2014.

Other loss, net was $2.7 million in the six months ended October 31, 2015 as compared to other income, net of $4.6 million in the six months ended October 31, 2014. The change in other (loss) income, net is primarily due to the decrease in the fair value of our marketable securities during the six months ended October 31, 2015 compared to increases in the fair value of our marketable securities in the year-ago period.

Interest expense, net primarily relates to borrowings under our COLI policies, which is partially offset by interest earned on cash and cash equivalent balances. Interest expense, net was $0.8 million in the six months ended October 31, 2015 as compared to $1.7 million in the six months ended October 31, 2014.

Equity in earnings of unconsolidated subsidiaries is comprised of our less than 50% interest in our Mexican subsidiary and IGroup, LLC, which is engaged in organizing, planning and conducting conferences and training programs throughout the world for directors, chief executive officers, other senior level executives and business leaders. We report our interest in earnings or loss of our Mexican subsidiary and IGroup, LLC on the equity basis as a one-line adjustment to net income. Equity in earnings was $1.3 million in the six months ended October 31, 2015 as compared to $0.9 million in the six months ended October 31, 2014.

The provision for income taxes was $18.6 million in the six months ended October 31, 2015 compared to $16.9 million in the six months ended October 31, 2014. The provision for income taxes in the six months ended October 31, 2015 and 2014 reflects a 32%36% and 30% effective tax rate, respectively. The effective tax rate for the ~~six~~nine months ended ~~October~~January 31, ~~2014 was reduced by a state income tax benefit that was discrete~~2016 is higher due to the ~~first quarter~~impact of ~~fiscal 2015. The effective tax rate for~~non-deductible expenses incurred in connection with the ~~six months ended October 31, 2015 is not affected by a similar benefit~~acquisition of Legacy Hay and ~~is generally higher than~~ the ~~prior year rate due to a higher percentage~~post-acquisition allocation of ~~taxable~~ income ~~arising~~and losses in jurisdictions with ~~higher~~different statutory tax ~~rates.~~rates, offset partially by the tax impact of restructuring charges and the benefit recorded in connection with the conclusion of the IRS audit of the Company’s consolidated federal income tax return for the fiscal year ended April 30, 2013.

The Company and its Board of Directors endorse a balanced approach to capital allocation by utilizing capital for investment in the Company’s consultants and intellectual property, as well as the strategic acquisition of businesses.

On December 1, 2015, the Company completed its ~~previously announced~~ acquisition of Legacy Hay, ~~Group,~~ a global leader in people strategy and organizational ~~performance. Under the terms~~performance, for $470.5 million, net of ~~the Stock Purchase Agreement, dated as of September 23, 2015 (the “Purchase Agreement”), by and between HG (Bermuda) Limited (“HG Bermuda”) and the Company, at the~~

~~closing of the acquisition the Company paid HG Bermuda an aggregate~~cash acquired. The purchase price consisted of ~~approximately $493 million, consisting of (a) approximately $275~~$252.6 million in cash, net of estimated cash acquired ~~($54 million from our foreign locations),~~ and ~~after giving effect to estimated purchase price adjustments as described in the Purchase Agreement, and (b)~~ 5,922,136 shares of the Company’s common stock, par value $0.01 per share (the “Consideration Shares”), representing an aggregate value of ~~$218~~$217.9 million based on the closing price of the Company’s common stock on The New York Stock Exchange on November 30, ~~2015 ($200 million based on the volume weighted average price of the Company’s common stock on The New York Stock Exchange on each of the 20 consecutive trading days ending on September 21, 2015).~~2015. On November 23, 2015, the Company borrowed $150 million from ~~its term loan facility with Wells Fargo Bank,~~the Term Facility, to finance a portion of the Legacy Hay ~~Group~~ acquisition purchase price. The ~~outstanding~~Company made $2.5 million in principal ~~is payable in~~payments during the three months ended January 31, 2016 and will be making quarterly installments of $7.8 million starting on April 1, 2016. As of January 1,31, 2016, ~~with~~there was $147.5 million outstanding under the ~~final installment consisting of all remaining unpaid principal due~~Term Facility. The interest rate on the debt is Adjusted LIBOR plus a spread which is dependent on the Company’s leverage ratio. During the three months ended January 31, 2016, the average interest rate on the term loan ~~maturity date~~was 1.56%. As part of ~~September 23, 2020. Interest accrued on~~ the ~~term loan shall also be payable on the first date of each calendar quarter, with an initial annual interest rate of 1.34%. Pursuant to the Purchase Agreement,~~acquisition, the Company has committed to a $40 million retention pool (up to $5 million payable within one ~~year)~~year of the closing of the acquisition) for certain employees of Legacy Hay ~~Group~~ subject to certain circumstances. Of the remaining balance, 50% will be payable within 45 days after November 30, 2017 and the remaining 50% will be payable within 45 days after November 30, 2018.

On December 8, 2014, the Board of Directors adopted a dividend policy to distribute, to our stockholders, a regular quarterly cash dividend of $0.10 per share. On June 10, 2015, the Company declared a dividend of $0.10 per share, paid on July 15, 2015 to stockholders of record on June 25, 2015. On September 7, 2015, the Company declared a dividend of $0.10 per share, paid on October 15, 2015 to stockholders of record on September 25, 2015. On December 8, 2015, the Company declared a dividend of $0.10 per share, payable on January 15, 2016 to stockholders of record on December 21, 2015. On March 8, 2016, the Company declared a dividend of $0.10 per share, payable on April 15, 2016 to stockholders of record on March 25, 2016. The declaration and payment of future dividends under the quarterly dividend program will be at the discretion of the Board of Directors and will depend upon many factors, including our earnings, capital requirements, financial conditions, the terms of our indebtedness and other factors our Board of Directors may deem to be relevant. Our Board of Directors may, however, amend, revoke or suspend our dividend policy at any time and for any reason.

On December 8, 2014, the Board of Directors also approved an increase in the Company’s stock repurchase program to an aggregate of $150.0 million. Common stock may be repurchased from time to time in open market or privately negotiated transactions at the Company’s discretion subject to market conditions and other factors.

Our performance is subject to the general level of economic activity in the geographic regions and the industries which we service. We believe, based on current economic conditions, that our cash on hand, funds from operations and other forms of liquidity will be sufficient to meet anticipated working capital, capital expenditures, general corporate requirements, ~~purchase price for the acquisition of Hay Group,~~ repayment of the debt incurred in connection with the Legacy Hay ~~Group~~ acquisition, the retention pool obligations in connection with the Legacy Hay ~~Group~~ acquisition and dividend payments under our dividend policy during the next twelve months. However, if the national or global economy, credit market conditions, and/or labor markets were to deteriorate in the future, such changes would put negative pressure on demand for our services and affect our operating cash flows. If these conditions were to persist over an extended period of time, we may incur negative cash flows, and it might require us to further access our existing credit facility to meet our capital needs and/or discontinue our dividend policy.

Cash and cash equivalents and marketable securities were ~~$417.7~~$343.3 million and $525.4 million as of ~~October~~January 31, ~~2015~~2016 and April 30, 2015, respectively. Net of amounts held in trust for deferred compensation plans and accrued bonuses, cash and marketable securities were ~~$186.2~~$80.9 million and $235.6 million at ~~October~~January 31, ~~2015~~2016 and April 30, 2015, respectively. As of ~~October~~January 31, ~~2015~~2016 and April 30, 2015, we held ~~$121.6~~$104.9 million and $143.4 million, respectively, of cash and cash equivalents in foreign locations, net of amounts held in trust for deferred compensation plans and to pay fiscal 2016 and fiscal 2015 bonuses. If these amounts were distributed to the United States, in the form of dividends, we would be subject to additional U.S. income taxes. The Company has a plan to distribute a small portion of the cash held in foreign locations to the United States. No deferred tax liability has been recorded because no additional taxes would arise in connection with such

distributions. Cash and cash equivalents consist of cash and highly liquid investments purchased with original maturities of three months or less. Marketable securities consist of mutual funds and investments in corporate bonds. The primary objectives of our investment in mutual funds are to meet the obligations under certain of our deferred compensation plans, while the corporate bonds and other securities are available for general corporate purposes.

As of ~~October~~January 31, ~~2015~~2016 and April 30, 2015, marketable securities of ~~$146.9~~$135.9 million and $144.6 million, respectively, included trading securities of ~~$144.9~~$135.9 million (net of gross unrealized gains of ~~$5.3~~$0.1 million and ~~$0.9~~$6.5 million of gross unrealized losses) and $131.4 million (net of gross unrealized gains of $8.3 million and $0.2 million of gross unrealized

losses), respectively, held in trust for settlement of our obligations under certain deferred compensation plans, of which ~~$134.8~~$126.8 million and $118.8 million, respectively, are classified as non-current. Our vested and unvested obligations for which these assets were held in trust totaled ~~$140.9~~$133.0 million and $129.1 million as of ~~October~~January 31, ~~2015~~2016 and April 30, 2015, respectively. As of ~~October~~January 31, ~~2015 and~~2016, the Company did not hold any marketable securities classified as available-for-sale. As of April 30, 2015, we had marketable securities classified as available-for-sale with a balance of ~~$2.0 million and~~ $13.2 ~~million, respectively.~~million.

The net ~~increase~~decrease in our working capital of ~~$4.7~~$136.3 million as of ~~October~~January 31, ~~2015~~2016 compared to April 30, 2015 is primarily attributable to ~~an increase in accounts receivable and a~~the decrease ~~in compensation and benefits payable, offset by decreases~~ in cash and cash ~~equivalents.~~equivalents, current portion of the term loan entered into in the quarter and higher other current liabilities due to the acquisition, offset by increases in accounts receivable. The decrease in ~~compensation and benefits payable and~~ cash and cash equivalents was ~~primarily~~ due to ~~payment of~~cash used to purchase Legacy Hay, annual bonuses earned in fiscal 2015 and paid during the first half of fiscal 2016, dividend payments made of $16.1 million, offset with borrowings from the term loan while accounts receivable increased due to the acquisition of Legacy Hay. In addition, accounts receivable increased due to an increase in days of sales outstanding which went from 58 days to 7169 days (which is consistent with historical experience) from April 30, 2015 to ~~October~~January 31, ~~2015.~~2016. Cash used in operating activities was ~~$73.4~~$17.4 million in the ~~six~~nine months ended ~~October~~January 31, ~~2015~~2016 compared to ~~$52.0~~cash provided by operating activities of $18.1 million in the year-ago period. The change is due to the decrease in profitability due to acquisition and integration and restructuring charges during the period.

Cash used in investing activities was ~~$12.9~~$267.4 million in the ~~six~~nine months ended ~~October~~January 31, ~~2015, a decrease~~2016, an increase of ~~$9.5~~$249.9 million, compared to ~~$22.4~~$17.5 million in the year-ago period. Cash used in investing activities was ~~lower~~higher primarily due to ~~less~~cash used to purchase Legacy Hay for $252.6 million in cash, net of estimated cash acquired, and a decrease of $5.5 million in proceeds from life insurance policies, offset by an increase of $9.8 million in the net proceeds from sales/maturities and purchases of marketable ~~securities of $8.6 million.~~securities.

Cash provided by financing activities was $132.2 million in the nine months ended January 31, 2016 compared to cash used in financing activities ~~was $10.9 million in the six months ended October 31, 2015, an increase~~ of ~~$9.7 million, compared to $1.2~~$3.6 million in the year-ago period. Cash ~~used in~~provided by financing activities increased primarily due to the borrowing of $150.0 million from term loan facility, offset by the principal payment under the Term Facility of $2.5 million and cash dividends paid to stockholders of $16.1 million in the ~~six~~nine months ended ~~October~~January 31, ~~2015 of $10.3 million.~~2016. As of ~~October~~January 31, ~~2015,~~2016, $150.0 million remained available for common stock repurchases under our stock repurchase program.

Cash Surrender Value of Company Owned Life Insurance Policies, Net of Loans

The Company purchased COLI policies or contracts insuring the lives of certain employees eligible to participate in the deferred compensation and pension plans as a means of funding benefits under such plans. As of ~~October~~January 31, ~~2015~~2016 and April 30, 2015, we held contracts with gross CSV of ~~$173.9~~$173.2 million and $172.3 million, respectively. Since fiscal 2012, we paid our premiums under our COLI contracts from operating cash, and in prior years, we generally borrowed under our COLI contracts to pay related premiums. Such borrowings do not require annual principal repayments, bear interest primarily at variable rates and are secured by the CSV of COLI contracts. Total outstanding borrowings against the CSV of COLI contracts were ~~$68.5~~$68.4 million and $69.6 million as of ~~October~~January 31, ~~2015~~2016 and April 30, 2015, respectively. At ~~October~~January 31, ~~2015~~2016 and April 30, 2015, the net cash value of these policies was ~~$105.4~~$104.8 million and $102.7 million, respectively.

~~On September 23, 2015, we entered into Amendment No. 3 (the “Amendment No. 3”)~~We are party to ~~the existing~~a Credit Agreement ~~dated as of January 18, 2013~~ with Wells Fargo Bank, National Association, as lender (the “Lender”), dated January 18, 2013, as ~~previously~~ amended by Amendment No. 1 dated as of December 12, 2014 ~~(the “Amendment~~(“Amendment No. 1”) ~~and~~, Amendment No. 2 dated as of June 3, 2015 ~~(the “Amendment~~(“Amendment No. 2”) ~~(the~~, Amendment No. 3, dated as of September 23, 2015 (“Amendment No. 3”) and Amendment No. 4, dated as of November 20, 2015 (“Amendment No. 4”; the existing Credit Agreement, as amended by ~~the~~ Amendment No. 1, ~~the~~ Amendment No. 2, ~~and the~~ Amendment No. 3 and Amendment No. 4, the “Credit Agreement”).

The ~~Amendment No. 3~~Credit Agreement provides for, among other things: (i) a ~~new~~ senior unsecured delayed draw term loan facility in an aggregate principal amount of $150 million (the “Term Facility”); and (ii) a ~~reduction in the~~ revolving credit facility (the “Revolver” and, together with the Term Facility, the “Credit Facilities”) ~~from~~in an aggregate principal amount of ~~$150~~$100 million, which includes a $25.0 million sub-limit for letters of credit. Both the Revolver and the Term Facility mature on September 23, 2020, and may be prepaid and terminated early by us at any time without premium or penalty (subject to ~~$100 million; (iii) an extension~~customary LIBOR breakage fees).

The Credit Agreement includes customary and affirmative negative covenants. In particular, the Credit Agreements limit us to the maturity date of the Revolver; (iv) consent to enter into the acquisition of Hay Group; (v) certain changes to affirmative and negative covenants, including an increase to the minimum adjusted EBITDA that the we must maintain from $70 million to $100 million; (vi) an increase in the amount ofconsummating permitted acquisitions, paying dividends to our stockholders and making share repurchases in any fiscal year ~~from $125.0 million~~ to a cumulative total of $135.0 million, ~~(excluding~~excluding the ~~recently announced~~consideration paid in connection with the acquisition of ~~Hay Group); and (vii) an increase~~Legacy Hay. Subject to the foregoing, pursuant to the Credit Agreement, we are permitted to pay up to $85.0 million in ~~the amount of~~ dividends ~~paid to stockholders~~ and share repurchases, in the aggregate, in any fiscal year ~~from $75.0~~(subject to the satisfaction of certain conditions). The Credit Agreement also requires us to maintain $50.0 million in domestic liquidity, defined as unrestricted cash and/or marketable securities (excluding any marketable securities that are held in trust for the settlement of our obligations under certain deferred compensation plans) as a condition to ~~$85.0 million (excluding~~consummating permitted acquisitions, paying dividends to our stockholders and repurchasing shares of our common stock. Undrawn amounts on our line of credit may be used to calculate domestic liquidity.

The Credit Agreement includes minimum Adjusted EBITDA and maximum Total Funded Debt to Adjusted EBITDA ratio financial covenants (the “consolidated leverage ratio”) (in each case as defined in the ~~recently announced acquisition~~Credit Agreement). As of ~~Hay Group).~~January 31, 2016, we are in compliance with our debt covenants.

At our option, loans issued under the Credit Facilities ~~will~~ bear interest at either adjusted LIBOR or an alternate base rate, in each case plus the applicable interest rate margin. The interest rate applicable to loans outstanding under the Credit Facilities may fluctuate between adjusted LIBOR plus 1.125% per annum to adjusted LIBOR plus 1.875% 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 0.875% per annum, in the alternative), based upon the ~~our total funded debt to adjusted EBITDA~~consolidated leverage ratio ~~(as set forth in the Credit Agreement, the “consolidated leverage ratio”)~~ at such time. In addition, we will be required to pay to the Lender a quarterly fee ranging from 0.25% to 0.40% per annum on the average daily unused amount of the Credit Facilities, based upon our consolidated leverage ratio at such time, and fees relating to the issuance of letters of credit.

~~Both the Revolver and the Term Facility mature on September 23, 2020, and may be prepaid and terminated early by us at any time without premium or penalty (subject to customary LIBOR breakage fees).~~

As of October 31, 2015 and April 30, 2015, we had no borrowings under the long-term debt arrangements. At October 31, 2015 and April 30, 2015, there was $2.9 million and $2.8 million of standby letters of credit issued under its long-term debt arrangements, respectively. We had a total of $1.4 million and $1.6 million of standby letters of credits with other financial institutions as of October 31, 2015 and April 30, 2015, respectively. On November 23, 2015, ~~the Company~~we borrowed $150 million ~~from its term loan facility with Wells Fargo Bank, to finance a portion of~~under the ~~Hay Group acquisition purchase price.~~Term Facility. The ~~outstanding principal~~Term Facility is payable in quarterly installments, ~~starting January 1, 2016,~~ with the final installment consisting of all remaining unpaid principal due on the term loan maturity date of September 23, 2020. ~~Interest accrued~~We made $2.5 million in principal payments under the Term Facility during the three months ended January 31, 2016 and will be making quarterly installments of $7.8 million starting on April 1, 2016. As of January 31, 2016, there was $147.5 million outstanding under the Term Facility. The interest rate on the debt is Adjusted LIBOR plus a spread which is dependent our leverage ratio. During the three months ended January 31, 2016, the average interest rate on the term loan ~~shall also be payable on~~was 1.56%.

As of January 31, 2016 and April 30, 2015, we had no borrowings under the ~~first date~~revolving credit facility. At January 31, 2016 and April 30, 2015, there was $2.9 million and $2.8 million of ~~each calendar quarter,~~standby letters of credit issued under our long-term debt arrangements, respectively. We had a total of $5.0 million and $1.6 million of standby letters of credits with ~~an initial interest rate~~other financial institutions as of ~~1.34% per annum.~~January 31, 2016 and April 30, 2015, respectively.

We are not aware of any other trends, demands or commitments that would materially affect liquidity or those that relate to our resources.

We have no off-balance sheet arrangements and have not entered into any transactions involving unconsolidated, special purpose entities. ~~We had no material changes in~~

Contractual obligations represent future cash commitments and liabilities under agreements with third parties, and exclude contingent liabilities for which we cannot reasonably predict future payment. The following table represents the additional contractual obligations as a result of ~~October~~the Legacy Hay acquisition as of January 31, ~~2015, as compared~~2016. For a summary of our other contractual obligations, see the contractual obligations table in the “Management’s Discussion of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended April 30, 2015.

In addition to ~~those disclosed~~the contractual obligations above, we have liabilities related to certain employee benefit plans. These liabilities are recorded in our ~~table of contractual~~Consolidated Balance Sheets. The obligations ~~included~~related to these employee benefit plans are described in Note 6 —Deferred Compensation and Retirement Plans, in the Notes to our ~~Annual Report.~~Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

Preparation of this Quarterly Report on Form 10-Q requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, 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 interim consolidated financial statements and accounting for the underlying transactions and balances, we apply our accounting policies as disclosed in the notes to our consolidated financial statements. We consider the policies related to revenue recognition, performance related bonuses, deferred compensation, carrying values of receivables, goodwill, intangible assets, fair value of contingent consideration and recoverability of deferred income taxes as critical to an understanding of our interim 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 our Form 10-K filed with the Securities Exchange Commission. There have been no material changes in our critical accounting policies since fiscal 2015.

~~Item 3.~~ ~~Quantitative and Qualitative Disclosures About Market Risk~~

As a result of our global operating activities, we are exposed to certain market risks, including foreign currency exchange fluctuations and fluctuations in interest rates. We manage our exposure to these risks in the normal course of our business as described below. ~~We have not utilized financial instruments for trading, hedging or other speculative purposes nor do we trade in derivative financial instruments.~~

Substantially all our foreign subsidiaries’ operations are measured in their local currencies. Assets and liabilities are translated into U.S. dollars at the rates of exchange in effect at the end of each reporting period and revenue and expenses are translated at average rates of exchange during the reporting period. Resulting translation adjustments are reported as a component of accumulated other comprehensive income on our consolidated balance sheets.

Transactions denominated in a currency other than the reporting entity’s functional currency may give rise to transaction gains and losses that impact our results of operations. Historically, we have not realized significant foreign currency gains or losses on such transactions. Foreign currency gains, on an after tax basis, included in net income were $0.5 million in the nine months ended January 31, 2016 compared to foreign currency losses, on an after tax basis, included in net income ~~were $0.2 million and $1.0~~of $0.4 million in the ~~six~~nine months ended ~~October~~January 31, ~~2015~~2015. Beginning in the third quarter of fiscal 2016, we established a program that primarily utilizes foreign currency forward contracts to offset the risks associated with the effects of certain foreign currency exposures due to an increase in the foreign currency exposures as a result of the Legacy Hay acquisition. These foreign currency forward contracts are neither used for trading purposes nor are they designated as hedging instruments pursuant to Accounting Standards Codification 815, Derivatives and ~~2014, respectively.~~Hedging.

Our primary exposure to exchange losses or gains is based on outstanding intercompany loan balances denominated in U.S. dollars. If the U.S. dollar strengthened or weakened by 15%, 25% and 35% against the Pound Sterling, the Euro, the Canadian dollar, the Australian dollar and the Yen, our exchange loss or gain for the three months ended ~~October~~January 31, ~~2015~~2016 would have been ~~$2.8~~$10.4 million, ~~$4.6~~$17.3 million and ~~$6.5~~$24.2 million, respectively, based on outstanding balances at ~~October~~January 31, ~~2015.~~2016.

We primarily manage our exposure to fluctuations in interest rates through our regular financing activities, which are short term and provide for variable market rates. As of ~~October~~January 31, ~~2015 and April 30, 2015, we had no~~2016, there was $147.5 million outstanding ~~borrowings~~ under the Term Facility. The interest rate on the debt is Adjusted LIBOR plus a spread which is dependent on the Company’s leverage ratio. A 100 basis point increase in LIBOR rates would have increased our ~~Credit Agreement.~~interest expense by approximately $0.3 million for the three months ended January 31, 2016. During the three months ended January 31, 2016, the average interest rate on the term loan was 1.56%. We had ~~$68.5~~$68.4 million and $69.6 million of borrowings against the CSV of COLI contracts as of ~~October~~January 31, ~~2015~~2016 and April 30, 2015, respectively, bearing interest primarily at variable rates. The risk of fluctuations in these variable rates is minimized by the fact that we receive a corresponding adjustment to our borrowed funds crediting rate which has the effect of increasing the CSV on our COLI contracts.

Based on their evaluation of our disclosure controls and procedures conducted as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) are effective.

There were no changes in our internal control over financial reporting during the three months ended ~~October~~January 31, ~~2015~~2016 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

From time to time, the Company has been and is involved in litigation incidental to its business. The Company is currently not a party to any litigation, which, if resolved adversely against the Company, would, in the opinion of management, after consultation with legal counsel, have a material adverse effect on the Company’s business, financial position or results of operations.

In our Form 10-K for the year ended April 30, 2015, we described material risk factors facing our business. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. Except as set forth below, as of the date of this report, there have been no material changes to the risk factors described in our Form 10-K.

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

On November 23, 2015, the Company borrowed $150 million from its term loan facility with Wells Fargo Bank, National Association, dated as of January 18, 2013 (as amended, the “Credit Agreement”). We may borrow an additional $100 million of unsecured revolving loans provided pursuant to our Credit Agreement, subject to the satisfaction of customary conditions to draw.

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

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

The following table summarizes common stock repurchased by us during the quarter ended January 31, 2016:

Our senior unsecured revolving credit agreement limits us to consummating permitted acquisitions, paying dividends to our stockholders and making share repurchases in any fiscal year to a cumulative total of $135.0 million excluding the consideration paid in connection with the acquisition of Hay Group. Subject to the foregoing, pursuant to our senior unsecured revolving credit agreement, we are permitted to pay up $85.0 million in dividends and share repurchases, in the Company’s stock repurchase program to an aggregate of $150.0 million. The shares can be repurchased in ~~any fiscal year (subject to~~open market transactions or privately negotiated transactions at the ~~satisfaction of certain conditions). The senior unsecured revolving credit agreement~~Company’s discretion.

Our Credit Agreement limits us to consummating permitted acquisitions, paying dividends to our stockholders and making share repurchases in any fiscal year to a cumulative total of $135.0 million excluding the consideration paid in connection with the acquisition of Legacy Hay. Subject to the foregoing, pursuant to our Credit Agreement, we are permitted to pay up $85.0 million in dividends and share repurchases, in the aggregate, in any fiscal year (subject to the satisfaction of certain conditions). The Credit Agreement also requires us to maintain $50.0 million in domestic liquidity, defined as unrestricted cash and/or marketable securities (excluding any marketable securities that are held in trust for the settlement of the Company’s obligation under certain deferred compensation plans) as a condition to consummating permitted acquisitions, paying dividends to our stockholders and repurchasing shares of our common stock. Undrawn amounts on our line of credits may be used to calculate domestic liquidity.

~~Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf~~

+	Incorporated herein by reference.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

~~Date: December 10, 2015~~Robert P. RozekExecutive Vice President, Chief Financial Officer and Chief Corporate Officer


	Six Months Ended October 31, 2015
	Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (In Years)		Aggregate Intrinsic Value
	(in thousands, except per share data)
Outstanding, April 30, 2015		202		$	15.45
Exercised		(81	)	$	15.26
Forfeited/expired		(5	)	$	17.97

Outstanding, October 31, 2015		116		$	15.53		1.46	$	2,416

Exercisable, October 31, 2015		116		$	15.53		1.46	$	2,416


	Nine Months Ended January 31, 2016
	Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (In Years)		Aggregate Intrinsic Value
	(in thousands, except per share data)
Outstanding, April 30, 2015		202		$	15.45
Exercised		(84	)	$	15.72
Forfeited/expired		(10	)	$	18.05

Outstanding, January 31, 2016		108		$	15.13		1.25	$	1,698

Exercisable, January 31, 2016		108		$	15.13		1.25	$	1,698


	April 30, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses (1)			Estimated Fair Value
	(in thousands)
Corporate bonds	$	13,167	$	11	$	(1	)	$	13,177
							��


	Severance			Facilities			Total
	(in thousands)
Liability as of October 31, 2015	$	156		$	509		$	665
Restructuring charges, net		29,877			700			30,577
Reductions for cash payments		(7,962	)		(91	)		(8,053	)
Non-cash items		(1,690	)		—			(1,690	)
Exchange rate fluctuations		(119	)		(60	)		(179	)

Liability as of January 31, 2016	$	20,262		$	1,058		$	21,320


	Trading (1)(2)			Available-for- Sale (2)			Total
	(in thousands)
Mutual funds	$	131,399		$	—		$	131,399
Corporate bonds		—			13,177			13,177

Total		131,399			13,177			144,576
Less: current portion of marketable securities		(12,580	)		(13,177	)		(25,757	)

Non-current marketable securities	$	118,819		$	—		$	118,819


	October 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses (1)			Estimated Fair Value
	(in thousands)
Corporate bonds	$	2,003	$	—	$	—		$	2,003


	April 30, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses (1)			Estimated Fair Value
	(in thousands)
Corporate bonds	$	13,167	$	11	$	(1	)	$	13,177


	January 31, 2016
	Severance		Facilities		Total
	(in thousands)
Executive Recruitment
North America	$	427	$	19	$	446
Europe, Middle East and Africa (“EMEA”)		3,664		196		3,860
Asia Pacific		421		—		421
South America		186		—		186

Total Executive Recruitment		4,698		215		4,913
Hay Group		15,431		721		16,152
Futurestep		51		122		173
Corporate		82		—		82

Liability as of January 31, 2016	$	20,262	$	1,058	$	21,320


	(in thousands)
Receivables due from clients	$	116,509
Other current assets		16,306
Property and equipment		27,904
Intangibles assets (1)		198,700
Other non-current assets		7,345
Current liabilities		127,099
Deferred compensation and other retirement plans		31,400
Deferred tax liabilities		55,369
Other liabilities		9,118

Net assets acquired		143,778
Purchase price		470,502

Goodwill	$	326,724


Integration/acquisition costs	$	33,815


	Payments Due in:
	Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years
	(in thousands)
Operating lease commitments	$	76,944	$	19,516	$	25,744	$	11,426	$	20,258
Accrued restructuring charges		21,044		20,512		532		—		—
Retention awards		40,000		5,000		35,000		—		—
Term loan		147,500		31,035		62,069		54,396		—
Estimated interest on term loan (1)		6,336		2,334		3,069		933

Total	$	291,824	$	78,397	$	126,414	$	66,755	$	20,258


	Shares Purchased(1)		Average Price Paid Per Share		Shares Purchased as Part of Publicly- Announced Programs (2)		Approximate Dollar Value of Shares That May Yet be Purchased Under the Programs (2)
November 1, 2015— November 30, 2015		—	$	—		—	$	150.0 million
December 1, 2015— December 31, 2015		1,097	$	37.34		—	$	150.0 million
January 1, 2016— January 31, 2016		2,255	$	31.76		—	$	150.0 million

Total		3,352	$	33.59		—	$	150.0 million


Exhibit Number		Description

10.1*		Amendment to Employment Agreement dated December 28, 2015 between the Company and Robert Rozek.

10.2+		Amendment No. 4 to Credit Agreement with Wells Fargo Bank, National Association, as lender, dated November 20, 2015, filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q, filed on December 10, 2015.

~~2.1+~~		Stock Purchase Agreement by and between HG (Bermuda) Limited and Korn/Ferry International, dated September 23,2015, filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed September 24, 2015.*

~~2.2+~~		Letter Agreement, dated November 30, 2015, by and between Korn/Ferry International and HG (Bermuda) Limited, filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed December 2, 2015.

~~10.1+~~		Amendment No. 3 to Credit Agreement with Wells Fargo Bank, National Association, as lender, dated September 23, 2015, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed September 24, 2015.

10.2**		~~Separation and General Release Agreement, between Matthew P. Reilly and Korn/Ferry International, dated September 27, 2015.~~

~~10.3~~		~~Amendment No. 4 to Credit Agreement with Wells Fargo Bank, National Association, as lender, dated November 20, 2015.~~

10.4**		~~Employment Agreement between the Company and Stephen Kaye.~~

31.1		Chief Executive Officer Certification pursuant to Rule 13a-14(a) under the Exchange Act.

31.2		Chief Financial Officer Certification pursuant to Rule 13a-14(a) under the Exchange Act.

32.1		Chief Executive Officer and Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350.

101.INS		XBRL Instance Document.

101.SCH		XBRL Taxonomy Extension Schema Document.

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.


KORN/FERRY INTERNATIONAL

By:		/s/ Robert P. Rozek
		~~Robert P. Rozek~~ ~~Executive Vice President and Chief Financial Officer~~

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