Item # Page Item 5. ASSETS Cash and cash equivalents Marketable securities Receivables due from clients, net of allowance for doubtful accounts of $17,990 and $15,455 at January 31, 2018 and April 30, 2017, respectively Income taxes and other receivables Prepaid expenses and other assets Total current assets Marketable securities,non-current Property and equipment, net Cash surrender value of company owned life insurance policies, net of loans Deferred income taxes, net Goodwill Intangible assets, net Investments and other assets Total assets LIABILITIES AND STOCKHOLDERS’ EQUITY Accounts payable Income taxes payable Compensation and benefits payable Term loan Other accrued liabilities Total current liabilities Deferred compensation and other retirement plans Term loan,non-current Deferred tax liabilities Other liabilities Total liabilities Stockholders’ equity: Common stock: $0.01 par value, 150,000 shares authorized, 71,606 and 70,811 shares issued at January 31, 2018 and April 30, 2017, respectively and 56,518 and 56,938 shares outstanding at January 31, 2018 and April 30, 2017, respectively Retained earnings Accumulated other comprehensive loss, net Total Korn/Ferry International stockholders’ equity Noncontrolling interest Total stockholders’ equity Total liabilities and stockholders’ equity Fee revenue Reimbursedout-of-pocket engagement expenses Total revenue Compensation and benefits General and administrative expenses Reimbursed expenses Cost of services Depreciation and amortization Restructuring charges, net Total operating expenses Operating income Other income, net Interest expense, net Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries Equity in earnings of unconsolidated subsidiaries, net Income tax provision Net income Net income attributable to noncontrolling interest Net income attributable to Korn/Ferry International Earnings per common share: Basic Diluted Weighted-average common shares outstanding: Basic Diluted Cash dividends declared per share: Net income Other comprehensive income: Foreign currency translation adjustments Deferred compensation and pension plan adjustments, net of tax Unrealized gain on interest rate swap, net of tax Comprehensive income Less: comprehensive income attributable to noncontrolling interest Comprehensive income attributable to Korn/Ferry International STOCKHOLDERS’ EQUITY Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Stock-based compensation expense Provision for doubtful accounts Gain on cash surrender value of life insurance policies Gain on marketable securities Deferred income taxes Change in other assets and liabilities: Deferred compensation Receivables due from clients Income tax and other receivables Prepaid expenses and other assets Investment in unconsolidated subsidiaries Income taxes payable Accounts payable and accrued liabilities Other Net cash provided by operating activities Cash flows from investing activities: Purchase of property and equipment Cash paid for acquisition, net of cash acquired Purchase of marketable securities Proceeds from sales/maturities of marketable securities Premium on company-owned life insurance policies Proceeds from life insurance policies Dividends received from unconsolidated subsidiaries Net cash used in investing activities Cash flows from financing activities: Proceeds from term loan facility Principal payment on term loan facility Payment of contingent consideration from acquisition Repurchases of common stock Payments of tax withholdings on restricted stock Proceeds from issuance of common stock upon exercise of employee stock options and in connection with an employee stock purchase plan Dividends – noncontrolling interest Dividends paid to shareholders Payments on life insurance policy loans Net cash (used in) provided by financing activities Effect of exchange rate changes on cash and cash equivalents Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period better candidate fit. any other period. related recruiting services are performed. funds. The Company maintains its cash and cash equivalents in bank accounts that exceed federally insured FDIC limits. The Company has not experienced any losses in such accounts. from quoted market prices, and the fair values of marketable securities classified as available-for-sale and foreign currency forward contracts 2023. Net income attributable to Korn/Ferry International Less: distributed and undistributed earnings to nonvested restricted stockholders Basic net earnings attributable to common stockholders Add: undistributed earnings to nonvested restricted stockholders Less: reallocation of undistributed earnings to nonvested restricted stockholders Diluted net earnings attributable to common stockholders Weighted-average common shares outstanding: Basic weighted-average number of common shares outstanding Effect of dilutive securities: Restricted stock Stock options ESPP Diluted weighted-average number of common shares outstanding Net earnings per common share: Basic earnings per share Diluted earnings per share Balance as of October 31, 2017 Comprehensive income (loss): Net income Foreign currency translation adjustments Deferred compensation and pension plan adjustments, net of tax Unrealized gain on interest rate swap, net of tax Dividends paid to shareholders Purchase of stock Issuance of stock Stock-based compensation Balance as of January 31, 2018 Balance as of April 30, 2017 Comprehensive income (loss): Net income Foreign currency translation adjustments Deferred compensation and pension plan adjustments, net of tax Unrealized gain on interest rate swap, net of tax Dividends paid to shareholders Dividends paid to noncontrolling interest Purchase of stock Issuance of stock Stock-based compensation Balance as of January 31, 2018 Balance as of October 31, 2016 Comprehensive income (loss): Net income Foreign currency translation adjustments Deferred compensation and pension plan adjustments, net of tax Dividends paid to shareholders Dividends paid to noncontrolling interest Purchase of stock Issuance of stock Stock-based compensation Tax benefit from exercise of stock options and vesting of restricted stock Balance as of January 31, 2017 Balance as of April 30, 2016 Comprehensive income (loss): Net income Foreign currency translation adjustments Deferred compensation and pension plan adjustments, net of tax Dividends paid to shareholders Dividends paid to noncontrolling interest Purchase of stock Issuance of stock Stock-based compensation Tax benefit from exercise of stock options and vesting of restricted stock Balance as of January 31, 2017 Foreign currency translation adjustments Deferred compensation and pension plan adjustments, net of tax Interest rate swap unrealized gain (loss), net of taxes Accumulated other comprehensive loss, net Balance as of October 31, 2017 Unrealized gains arising during the period Reclassification of realized net losses to net income Balance as of January 31, 2018 The following table summarizes the changes in each component of accumulated other comprehensive income (loss), net for the nine months ended January 31, 2018: Balance as of April 30, 2017 Unrealized gains arising during the period Reclassification of realized net losses to net income Balance as of January 31, 2018 2023: Balance as of October 31, 2016 Unrealized losses arising during the period Reclassification of realized net losses to net income Balance as of January 31, 2017 Balance as of April 30, 2016 Unrealized losses arising during the period Reclassification of realized net losses to net income Balance as of January 31, 2017 Restricted stock ESPP Total stock-based compensation expense,pre-tax Tax benefit from stock-based compensation expense Total stock-based compensation expense, net of tax Plan Non-vested, April 30, 2017 Granted Vested Forfeited Non-vested, January 31, 2018 $29.3 million. Level 1: Cash Money market funds Mutual funds (1) Total Level 2: Foreign currency forward contracts Interest rate swap Level 1: Cash Money market funds Mutual funds (1) Total Level 2: Foreign currency forward contracts Interest rate swap Derivative asset: Interest rate swap contract Derivative liability: Interest rate swap contract Gains recognized in other comprehensive income (net of tax effects of $553 and $609, respectively) Losses reclassified from accumulated other comprehensive income into interest expense, net Not Designated as Hedges Derivative assets: Total gross amount of foreign currency forward contracts Gross derivatives offset on the balance sheet (1) Net amounts presented on the balance sheet Derivative liabilities: Total gross amount of foreign currency forward contracts Gross derivatives offset on the balance sheet (1) Net amounts presented on the balance sheet $112.7 million and Service cost Interest cost Amortization of actuarial loss Expected return on plan assets (1) Net periodic benefit costs sheets. Liability as of October 31, 2017 Reductions for cash payments Exchange rate fluctuations Liability as of January 31, 2018 Changes in the restructuring liability during the nine months ended January 31, 2018 are as follows: Liability as of April 30, 2017 Restructuring charges, net Reductions for cash payments Exchange rate fluctuations Liability as of January 31, 2018 the contract liabilities balance at the beginning of the period. Executive Search North America Asia Pacific Total Executive Search Hay Group Futurestep Liability as of January 31, 2018 Executive Search North America Europe, Middle East and Africa (“EMEA”) Asia Pacific Latin America Total Executive Search Hay Group Futurestep Liability as of April 30, 2017 presented in Note 10— expenses. Fee revenue Total revenue Net income attributable to Korn/Ferry International Net income attributable to noncontrolling interest Other income, net Interest expense, net Equity in earnings of unconsolidated Income tax provision Operating income (loss) Depreciation and Other income, net Equity in earnings of unconsolidated EBITDA Integration/acquisition Adjusted EBITDA segment. Fee revenue Total revenue Net income attributable to Korn/Ferry International Net income attributable to noncontrolling interest Other income, net Interest expense, net Equity in earnings of unconsolidated Income tax provision Operating income (loss) Depreciation and Other income (loss), net Equity in earnings of unconsolidated EBITDA Restructuring charges, net Integration/acquisition Adjusted EBITDA Fee revenue Total revenue Net income attributable to Korn/Ferry International Net income attributable to noncontrolling interest Other income, net Interest expense, net Equity in earnings of unconsolidated Income tax provision Operating income (loss) Depreciation and Other income, net Equity in earnings of unconsolidated EBITDA Restructuring charges (recoveries), net Integration/acquisition Adjusted EBITDA Fee revenue Adjusted fee revenue Total revenue Net income attributable to Korn/Ferry International Net income attributable to noncontrolling interest Other income, net Interest expense, net Equity in earnings of Income tax provision Operating income (loss) Depreciation and Other income (loss), net Equity in earnings of EBITDA Restructuring charges, net Integration/acquisition Deferred revenue Adjusted EBITDA Event 2023, Adjusted EBITDA excluded $4.1 million of integration, $1.6 million impairment of right-of-use assets, $0.4 million of restructuring charges, net and $0.1 million impairment of fixed assets. For the three months ended July 31, 2022, Adjusted EBITDA excluded $3.6 million of integration/acquisition costs. The standby letters of credit were generally issued as a result of entering into office premise leases. Fee revenue Reimbursedout-of-pocket engagement expenses Total revenue Compensation and benefits General and administrative expenses Reimbursed expenses Cost of services Depreciation and amortization Restructuring charges, net Operating income Net income Net income attributable to Korn/Ferry International operations: Fee revenue Executive Search: North America EMEA Asia Pacific Latin America. Total Executive Search Hay Group Futurestep Total fee revenue Reimbursedout-of-pocket engagement expenses Total revenue Operating Income Executive Search: North America EMEA Asia Pacific Latin America. Total Executive Search Hay Group Futurestep Corporate Total operating income Fee revenue Total revenue Net income attributable to Korn/Ferry International Net income attributable to noncontrolling interest Other income, net Interest expense, net Equity in earnings of unconsolidated subsidiaries, net Income tax provision Operating income (loss) Depreciation and amortization Other income, net Equity in earnings of unconsolidated subsidiaries, net EBITDA Integration/acquisition costs Adjusted EBITDA Adjusted EBITDA margin Fee revenue Total revenue Net income attributable to Korn/Ferry International Net income attributable to noncontrolling interest Other income, net Interest expense, net Equity in earnings of unconsolidated subsidiaries, net Income tax provision Operating income (loss) Depreciation and amortization Other income (loss), net Equity in earnings of unconsolidated subsidiaries, net EBITDA Restructuring charges, net Integration/acquisition costs Adjusted EBITDA Adjusted EBITDA margin Fee revenue Total revenue Net income attributable to Korn/Ferry International Net income attributable to noncontrolling interest Other income, net Interest expense, net Equity in earnings of unconsolidated subsidiaries, net Income tax provision Operating income (loss) Depreciation and amortization Other income, net Equity in earnings of unconsolidated subsidiaries, net EBITDA Restructuring charges (recoveries), net Integration/acquisition costs Adjusted EBITDA Adjusted EBITDA margin Fee revenue Deferred revenue adjustment due to acquisition Adjusted fee revenue Total revenue Net income attributable to Korn/Ferry International Net income attributable to noncontrolling interest Other income, net Interest expense, net Equity in earnings of unconsolidated subsidiaries, net Income tax provision Operating income (loss) Depreciation and amortization Other income (loss), net Equity in earnings of unconsolidated subsidiaries, net �� EBITDA Restructuring charges, net Integration/acquisition costs Deferred revenue adjustment due to acquisition Adjusted EBITDA Adjusted EBITDA margin 2022 Japan. benefits expense increased by $2.7 million, or 8%, to $37.3 million in the three months ended July 31, 2023 compared to $34.6 million in the year-ago quarter. Exchange rates unfavorably impacted compensation and benefits by $0.8 million, or 2%, in the three months ended July 31, 2023 compared to the year-ago quarter. The increase in compensation and benefits expense was primarily due to increases in severance expense of $3.9 million, amortization of long-term incentive awards of $1.8 million, and salaries and related payroll taxes of $1.4 million due to an increase in average headcount of 4% in the three months ended July 31, 2023 compared to the year-ago quarter and wage inflation. The increase in compensation and benefits expense was partially offset by a decrease in performance-related bonus expense of $3.6 million as a result of the lower segment fee revenue and profitability. Executive Search EMEA compensation and benefits expense, as a percentage of fee revenue, increased to 80% in the three months ended July 31, 2023 from 74% in the year-ago quarter. The increase in compensation and benefits expense was primarily due to higher deferred compensation expenses of $1.0 million due to an increase in the fair value of participants' accounts in the three months ended July 31, 2023 compared to the year-ago quarter, combined with an increase in stock-based compensation expense of $1.0 million. RPO general and administrative expenses, as a percentage of fee revenue, increased to 6% in the three months ended July 31, 2023 from 4% in the year-ago quarter. 2023 from 5% in the year-ago quarter. the acquisitions. 2023 and 2022, respectively. Interest expense, net decreased due to an increase in interest income earned on cash and cash equivalent balances as a result of higher interest rates in the three months ended July 31, 2023 compared to the year-ago quarter. awards’ vesting period. 2022. facility and to pay expenses and fees in connection therewith. As of July 31, 2023, the fair value of the Notes was $377.0 million, which is based on borrowing rates currently required of notes with similar terms, maturity and credit risk. borrowing capacity under our Amended Credit Agreement. Our performance is subject to the general level of economic activity in the geographic regions and the industries plans, while the commercial paper and corporate notes/bonds are available for general corporate purposes. quarter. quarter. resources as of July 31, 2023. consolidated statements of income. Act of 1934 (the “Exchange Act”)) were effective as of July 31, 2023. November 1, 2017—November 30, 2017 December 1, 2017— December 31, 2017 January 1, 2018—January 31, 2018 Total not greater than 3.50 to 1.00 and the Company is not in default under the indenture governing the Notes. Description Executive Vice President, Chief Financial Officer and Chief Corporate Officer
UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549Form 10-Q(Mark One)☑☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended JanuaryJuly 31, 2018orOR☐o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to ___________Commission File Number001-14505KORN/KORN FERRY INTERNATIONAL(Exact Name of Registrant as Specified in its Charter)Delaware 95-2623879 (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.) 1900 Avenue of the Stars, Suite 2600,1500, Los Angeles, California 90067(Address of principal executive offices) (Zip Code)(310) 552-1834(Registrant’s telephone number, including area code)Securities Registered Pursuant to Section 12(b) of the Act:Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered Common Stock, par value $0.01 per share KFY New York Stock Exchange 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 ☑ No ☐oIndicate 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 RegulationS-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☑ No☐oIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2 of the Exchange Act.Large accelerated filer Accelerated Filer ☑Accelerated filer ☐oNon-accelerated filer ☐o(Do not check if a smaller reporting company)Smaller reporting company ☐oEmerging growth company ☐oIf an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐oIndicate by check mark whether the registrant is a shell company (as defined inRule 12b-2 of the Exchange Act). Yes ☐ No ☑The number of shares outstanding of our common stock as of MarchSeptember 5, 20182023 was 56,524,92752,704,629 shares.
KORN/
Table of ContentsDescription Description4524Item 1. Consolidated Financial StatementsKORN/CONSOLIDATED BALANCE SHEETS January 31,
2018 April 30,
2017 (unaudited) (in thousands, except per share data) $ 389,990 $ 410,882 14,807 4,363 397,845 345,314 25,985 31,573 63,409 51,542 892,036 843,674 124,196 115,574 116,767 109,567 118,248 113,067 23,222 20,175 586,561 576,865 206,733 217,319 98,769 66,657 $ 2,166,532 $ 2,062,898 $ 28,359 $ 37,481 17,128 4,526 234,411 248,354 23,192 19,754 163,784 148,464 466,874 458,579 233,595 219,905 217,969 236,222 7,619 7,014 59,581 54,130 985,638 975,850 679,277 692,527 537,353 461,976 (38,671 ) (71,064 ) 1,177,959 1,083,439 2,935 3,609 1,180,894 1,087,048 $ 2,166,532 $ 2,062,898 July 31,
2023April 30,
2023(unaudited) (in thousands, except per share data) ASSETS Cash and cash equivalents $ 562,209 $ 844,024 Marketable securities 29,486 44,837 Receivables due from clients, net of allowance for doubtful accounts of $47,418 and $44,377 at July 31, 2023 and April 30, 2023, respectively 592,333 569,601 Income taxes and other receivables 58,443 67,512 Unearned compensation 66,878 63,476 Prepaid expenses and other assets 57,258 49,219 Total current assets 1,366,607 1,638,669 Marketable securities, non-current 189,359 179,040 Property and equipment, net 166,283 161,876 Operating lease right-of-use assets, net 132,638 142,690 Cash surrender value of company-owned life insurance policies, net of loans 200,103 197,998 Deferred income taxes 94,293 102,057 Goodwill 910,211 909,491 Intangible assets, net 107,979 114,426 Unearned compensation, non-current 121,918 103,607 Investments and other assets 24,077 24,590 Total assets $ 3,313,468 $ 3,574,444 LIABILITIES AND STOCKHOLDERS’ EQUITY Accounts payable $ 50,731 $ 53,386 Income taxes payable 22,868 19,969 Compensation and benefits payable 240,956 532,934 Operating lease liability, current 43,800 45,821 Other accrued liabilities 297,436 324,150 Total current liabilities 655,791 976,260 Deferred compensation and other retirement plans 425,215 396,534 Operating lease liability, non-current 110,823 119,220 Long-term debt 396,379 396,194 Deferred tax liabilities 6,170 5,352 Other liabilities 26,560 27,879 Total liabilities 1,620,938 1,921,439 Stockholders' equity Common stock: $0.01 par value, 150,000 shares authorized, 77,474 and 76,693 shares issued and 52,705 and 52,269 shares outstanding at July 31, 2023 and April 30, 2023, respectively 429,093 429,754 Retained earnings 1,348,059 1,311,081 Accumulated other comprehensive loss, net (90,471) (92,764) Total Korn Ferry stockholders' equity 1,686,681 1,648,071 Noncontrolling interest 5,849 4,934 Total stockholders' equity 1,692,530 1,653,005 Total liabilities and stockholders' equity $ 3,313,468 $ 3,574,444 The accompanying notes are an integral part of these consolidated financial statements.KORN/1CONSOLIDATED STATEMENTS OF INCOME(unaudited) Three Months Ended
January 31, Nine Months Ended
January 31, 2018 2017 2018 2017 (in thousands, except per share data) $ 447,581 $ 381,918 $ 1,291,853 $ 1,159,456 13,189 12,277 39,302 42,626 460,770 394,195 1,331,155 1,202,082 310,751 262,438 885,748 796,014 58,516 56,818 175,380 166,294 13,189 12,277 39,302 42,626 17,467 16,545 53,163 52,251 12,225 11,774 36,881 34,970 — 3,801 78 28,321 412,148 363,653 1,190,552 1,120,476 48,622 30,542 140,603 81,606 7,689 4,200 14,847 7,580 (2,665 ) (2,402 ) (7,904 ) (8,199 ) 53,646 32,340 147,546 80,987 97 113 187 221 26,316 8,075 54,145 21,706 27,427 24,378 93,588 59,502 (180 ) (481 ) (969 ) (2,245 ) $ 27,247 $ 23,897 $ 92,619 $ 57,257 $ 0.49 $ 0.42 $ 1.65 $ 1.01 $ 0.48 $ 0.42 $ 1.63 $ 1.00 55,252 56,173 55,479 56,325 55,997 56,702 56,236 56,917 $ 0.10 $ 0.10 $ 0.30 $ 0.30 Three Months Ended
July 31,2023 2022 (in thousands, except per share data) Fee revenue $ 699,189 $ 695,903 Reimbursed out-of-pocket engagement expenses 7,073 7,245 Total revenue 706,262 703,148 Compensation and benefits 479,881 465,626 General and administrative expenses 65,917 64,457 Reimbursed expenses 7,073 7,245 Cost of services 77,190 37,992 Depreciation and amortization 19,012 16,229 Restructuring charges, net 421 — Total operating expenses 649,494 591,549 Operating income 56,768 111,599 Other income, net 13,577 775 Interest expense, net (4,740) (7,612) Income before provision for income taxes 65,605 104,762 Income tax provision 18,420 26,226 Net income 47,185 78,536 Net income attributable to noncontrolling interest (580) (1,289) Net income attributable to Korn Ferry $ 46,605 $ 77,247 Earnings per common share attributable to Korn Ferry: Basic $ 0.89 $ 1.46 Diluted $ 0.89 $ 1.45 Weighted-average common shares outstanding: Basic 50,934 51,771 Diluted 51,082 52,106 Cash dividends declared per share: $ 0.18 $ 0.15 The accompanying notes are an integral part of these consolidated financial statements.KORN/2CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(unaudited) Three Months Ended
January 31, Nine Months Ended
January 31, 2018 2017 2018 2017 (in thousands) $ 27,427 $ 24,378 $ 93,588 $ 59,502 17,839 (1,583 ) 29,773 (20,016 ) 361 465 1,065 1,392 1,077 — 1,470 — 46,704 23,260 125,896 40,878 (226 ) (219 ) (884 ) (1,809 ) $ 46,478 $ 23,041 $ 125,012 $ 39,069 Three Months Ended
July 31,2023 2022 (in thousands) Net income $ 47,185 $ 78,536 Other comprehensive income (loss): Foreign currency translation adjustments 2,466 (16,305) Deferred compensation and pension plan adjustments, net of tax 27 51 Net unrealized gain (loss) on marketable securities, net of tax 135 (53) Comprehensive income 49,813 62,229 Less: comprehensive income attributable to noncontrolling interest (915) (1,241) Comprehensive income attributable to Korn Ferry $ 48,898 $ 60,988 The accompanying notes are an integral part of these consolidated financial statements.KORN/3CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited) Nine Months Ended
January 31, 2018 2017 (in thousands) $ 93,588 $ 59,502 36,881 34,970 15,800 14,101 9,933 8,373 (6,020 ) (3,316 ) (14,022 ) (7,090 ) 5,373 7,812 25,587 (22 ) (62,464 ) (35,503 ) 4,445 (3,249 ) (11,867 ) (8,882 ) (187 ) (221 ) 18,217 (3,450 ) (15,569 ) (45,891 ) (40,103 ) (3,393 ) 59,592 13,741 (31,133 ) (41,616 ) — (2,880 ) (7,462 ) (9,526 ) 2,515 42,533 (1,339 ) (1,337 ) 5,175 — 60 455 (32,184 ) (12,371 ) — 275,000 (15,469 ) (150,313 ) (485 ) (1,070 ) (32,568 ) (16,318 ) (3,657 ) (4,377 ) 6,885 4,981 (1,558 ) (1,229 ) (17,242 ) (17,546 ) (464 ) — (64,558 ) 89,128 16,258 (12,445 ) (20,892 ) 78,053 410,882 273,252 $ 389,990 $ 351,305 Common Stock Retained
EarningsAccumulated
Other
Comprehensive
Loss, NetTotal
Korn Ferry
Stockholders'
EquityNoncontrolling
InterestTotal
Stockholder's
EquityShares Amount (in thousands) Balance as of April 30, 2023 52,269 $ 429,754 $ 1,311,081 $ (92,764) $ 1,648,071 $ 4,934 $ 1,653,005 Net income — — 46,605 — 46,605 580 47,185 Other comprehensive income — — — 2,293 2,293 335 2,628 Dividends paid to shareholders — — (9,627) — (9,627) — (9,627) Purchase of stock (291) (14,358) — — (14,358) — (14,358) Issuance of stock 727 5,217 — — 5,217 — 5,217 Stock-based compensation — 8,480 — — 8,480 — 8,480 Balance as of July 31, 2023 52,705 $ 429,093 $ 1,348,059 $ (90,471) $ 1,686,681 $ 5,849 $ 1,692,530 Common Stock Retained
EarningsAccumulated
Other
Comprehensive
Loss, NetTotal
Korn Ferry
Stockholders'
EquityNoncontrolling
InterestTotal
Stockholder's
EquityShares Amount (in thousands) Balance as of April 30, 2022 53,190 $ 502,008 $ 1,134,523 $ (92,185) $ 1,544,346 $ 5,243 $ 1,549,589 Net income — — 77,247 — 77,247 1,289 78,536 Other comprehensive loss — — — (16,259) (16,259) (48) (16,307) Dividends paid to shareholders — — (8,703) — (8,703) — (8,703) Purchase of stock (735) (44,276) — — (44,276) — (44,276) Issuance of stock 1,047 4,857 — — 4,857 — 4,857 Stock-based compensation — 7,538 — — 7,538 — 7,538 Balance as of July 31, 2022 53,502 $ 470,127 $ 1,203,067 $ (108,444) $ 1,564,750 $ 6,484 $ 1,571,234 The accompanying notes are an integral part of these consolidated financial statements.4KORN FERRY AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited)Three Months Ended
July 31,2023 2022 (in thousands) Cash flows from operating activities: Net income $ 47,185 $ 78,536 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 19,012 16,229 Stock-based compensation expense 8,728 7,757 Deferred income taxes 7,934 3,831 Provision for doubtful accounts 5,965 5,546 Impairment of right-of-use assets 1,629 — Impairment of fixed assets 123 — Gain on marketable securities (12,796) (58) Gain on cash surrender value of life insurance policies (1,966) (2,029) Change in other assets and liabilities: Deferred compensation 27,453 23,469 Receivables due from clients (28,697) (52,347) Income taxes and other receivables (164) (2,431) Prepaid expenses and other assets (8,039) (11,600) Unearned compensation (21,713) 915 Income taxes payable 3,478 3,887 Accounts payable and accrued liabilities (321,491) (302,289) Other (1,128) (1,302) Net cash used in operating activities (274,487) (231,886) Cash flows from investing activities: Proceeds from sales/maturities of marketable securities 18,008 15,612 Proceeds from life insurance policies 9,332 50 Purchase of property and equipment (15,659) (16,646) Premium on company-owned life insurance policies (238) (276) Purchase of marketable securities — (39,308) Dividends received from unconsolidated subsidiaries — 150 Net cash provided by (used in) investing activities 11,443 (40,418) Cash flows from financing activities: Payments of tax withholdings on restricted stock (10,175) (21,870) Proceeds from issuance of common stock upon exercise of employee stock options and in connection with an employee stock purchase plan 4,696 4,371 Dividends paid to stockholders (9,627) (8,703) Repurchases of common stock (5,138) (24,385) Principal payments on finance leases (382) (412) Payments on life insurance policy loans — (50) Net cash used in financing activities (20,626) (51,049) Effect of exchange rate changes on cash and cash equivalents 1,855 (14,933) Net decrease in cash and cash equivalents (281,815) (338,286) Cash and cash equivalents at beginning of period 844,024 978,070 Cash and cash equivalents at end of the period $ 562,209 $ 639,784 The accompanying notes are an integral part of these consolidated financial statements.5KORN/NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJanuaryJuly 31, 20182023 1. Organization and Summary of Significant Accounting PoliciesNature of BusinessKorn/Korn Ferry, International, a Delaware corporation, (the “Company”), and its subsidiaries (the “Company”) is a global organizational consulting firm. The Company helps clients synchronize strategy and talent to drive superior performance. The Company works with organizations to design their structures, roles, and responsibilities. The Company helps organizations hire the right people to bring their strategy to life and advise them on how to reward, develop, and motivate their people.The Company is pursuing a strategy designed to help Korn Ferry focus on clients and collaborate intensively across the organization. This approach is intended to build on the best of the Company’s past and give the Company a clear path to the future with focused initiatives to increase its client and commercial impact. Korn Ferry is transforming how clients address their talent management needs. The Company has evolved from a mono-line to a diversified business, giving its consultants more frequent and expanded opportunities to engage with clients.The Company services its clients with a core set of solutions that are engagedanchored around talent and talent management – essentially touching every aspect of an employer’s engagement with their employees. Our five core solutions are as follows: Organizational Strategy, Assessment and Succession, Leadership and Professional Development, Total Rewards, and Talent Acquisition. Our colleagues engage with our clients through the delivery of one of our core solutions as a point solution sale or through combining component parts of our core solutions into an integrated solution. In either case, we are solving our clients’ most challenging business and human capital issues.Further differentiating our service offerings from our competitors is the unique combination of IP, content, and data sets that we have, which permeate all of our solution areas. For many years, we have been accumulating data around assessments of executives and professionals, pay, success profiles, organizational engagement and design, job architecture, and candidates. Integrating this unique collection of data into our service offerings provides our colleagues with differentiated points of view and solutions, as well as the ability to demonstrate the efficacy of all of our offerings.Over the last three and one-half years, we have seen more change in the workplace than we did in the previous 15 years. Today, we find ourselves doing different work and working differently. Employees want to and they are working remotely. People don’t want to be tethered to a single company for their entire career. Rather, they want to have many new and unique experiences across many different employers – a career nomad of sorts. There is growing demand for companies to have responsibilities that go beyond delivering profits to shareholders, covering areas such as Environmental, Social and Governance. The continual advancement of technologies like Generative AI creates a constant demand for workers to be upskilled or reskilled. All of these changes and disruptions lead to opportunities for Korn Ferry and make us more relevant than at any time in our history. We have core and integrated solutions that line up to these issues and help our clients solve their most pressing business and Human Capital challenges.Leveraging the strong connection between our various service offering and our lines of providingbusiness, we have an integrated go-to-market strategy. As we drive this strategy, a focal point for us is our Marquee and Regional account program which is comprised of about 340 of our top clients that generate in excess of 35% of our consolidated fee revenue. These accounts have Global Account Leaders assigned who help to orchestrate the delivery of core and integrated solutions that cut across multiple lines of business – effectively making all of the Firm’s resources available as our clients tackle their business and Human Capital issues. Korn Ferry is poised for continued growth. We are capitalizing on the current and growing relevance of our core and integrated solutions which, in combination with the strong connections amongst all of our service offerings and our M&A activities, drives top-line synergies that have resulted in double digit fee revenue growth rates (CAGR) over the past twenty years.The Company has eight reportable segments that operate through the following five lines of business:1.Consulting aligns organizational structure, culture, performance and people to drive sustainable growth by addressing four fundamental needs: Organizational Strategy, Assessment and Succession, Leadership and Professional Development and Total Rewards. This work is enabled by a comprehensive set of Digital Performance Management Tools, based on some of the world’s leading intellectual property (“lP”) and data. The Consulting teams employ an integrated approach across core capabilities and integrated solutions, each one intended to strengthen the work and thinking in the next, to help clients execute their strategy in a digitally enabled world.2.Digital develops technology-enabled Performance Management Tools that empower our clients. The digital products give clients direct access to Korn Ferry proprietary data, client data and analytics to deliver clear insights with the training and tools needed to align organizational structure with business strategy.3.Executive Search helps organizations recruit board level, chief executive and other senior executive and general management talent management solutions, including executive searchto deliver lasting impact. The Company’s approach to placing talent is bringing together research-based IP, proprietary assessments and behavioral interviewing with practical experience to determine6KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJuly 31, 2023 (continued)ideal organizational fit. Salary benchmarking then helps the Company build appropriate frameworks for compensation and retention. This business is managed and reported on a retainedgeographic basis and represents four of the Company’s reportable segments (Executive Search North America, Executive Search Europe, the Middle East and Africa (“EMEA”), Executive Search Asia Pacific and Executive Search Latin America).4.Professional Search & Interim delivers enterprise talent acquisition solutions for professional level middle and upper management. The Company helps clients source high-quality candidates at speed and scale globally, covering single-hire to multi-hire permanent placements and interim contractors.5.Recruitment Process Outsourcing ("RPO") offers scalable recruitment outsourcing solutions leveraging customized technology and talent insights. The Company's scalable solutions, built on science and powered by best-in-class technology and consulting expertise, enable the Company to act as a strategic partner in clients’ quest fornon-executive professionals, superior recruitment process outsourcingoutcomes and leadership & talent consulting services.Basis of Consolidation and PresentationThe accompanying financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form10-K for the year ended April 30, 20172023 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.Company's different industries. The accompanying 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%year or less owned and where the Company exercises significant influence over operations, are accounted for using the equity method.The Company has control of a MexicoMexican subsidiary and consolidates the operations of this subsidiary. Noncontrolling interest, which represents the Company’sMexican partners’ 51% noncontrolling interest in the MexicoMexican subsidiary, is reflected on the Company’s consolidated financial statements.The Company considers events or transactions that occur after the balance sheet date but before the consolidated financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosures.Use of Estimates and UncertaintiesThe preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could materially differ from these estimates, and changes in estimates are reported in current operations as new information is learned or upon the amounts becoming fixed andor determinable. The most significant areas that require management judgment are revenue recognition, restructuring, deferred compensation, annual performance related bonuses, evaluation of the carrying value of receivables, goodwill and other intangible assets, fair value of contingent consideration, share-based payments and the recoverability of deferred income taxes.Revenue RecognitionSubstantially all fee revenue is derived from talent and organizational consulting services and digital sales, stand-alone or as part of a solution, fees for professional services related to executive searchand professional recruitment performed on a retained basis, recruitment fornon-executive professionals, recruitment process outsourcing, people and organizational advisoryinterim services and RPO, eitherstand-alone or as part of a solution.Revenue is recognized when control of the goods and services are transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods and services. Revenue contracts with customers are evaluated based on the five-step model outlined in Accounting Standards Codification (“ASC”) 606 (“ASC 606”), Revenue from Contracts with Customers: 1) identify the contract with a customer; 2) identify the performance obligation(s) in the contract; 3) determine the transaction price; 4) allocate the transaction price to the separate performance obligation(s); and 5) recognize revenue when (or as) each performance obligation is satisfied.Consulting fee revenue is primarily recognized as services are rendered, measured by total hours incurred as a percentage of the total estimated hours at completion. It is possible that updated estimates for consulting engagements may vary from initial estimates with such updates being recognized in the period of determination. Depending on the timing of billings and services rendered, the Company accrues or defers revenue as appropriate.Digital fee revenue is generated from IP platforms enabling large-scale, technology-based talent programs for pay, talent development, engagement, and assessment and is consumed directly by an end user or indirectly through a consulting engagement. Revenue is recognized as services are delivered and the Company has a legally enforceable right to payment. Revenue also comes from the sale of product services. the Company’s proprietary IP subscriptions, which are considered symbolic IP due to the dynamic nature of the content. As a result, revenue is recognized over the term of the contract. Functional IP licenses grant customers the right to use IP content via the delivery of a flat file. Because the IP content license has significant stand-alone functionality, revenue is recognized upon delivery and when an enforceable right to payment exists. Revenue for7KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJuly 31, 2023 (continued)tangible and digital products sold by the Company, such as books and digital files, is recognized when these products are shipped.Fee revenue from executive and professional search activities and recruitment fornon-executive professionals is generallyone-third of the estimated first yearfirst-year cash compensation of the placed executive ornon-executive professional, as applicable,candidate, plus a percentage of the fee to cover indirect engagement-related expenses. In addition to the search retainer, an uptick fee is billed when the actual compensation awarded by the client for a placement is higher than the estimated compensation. In the aggregate, upticks have been a relatively consistent percentage of the original estimated fee; therefore, the Company estimates upticks using the expected value method based on historical data on a portfolio basis. In a standard search engagement, related expenses.there is one performance obligation, which is the promise to undertake a search. The Company generally recognizes such revenue onover the course of a straight-line basis over a three-month period, commencing upon client acceptance,search and when it is legally entitled to payment as this isoutlined in the period over which the recruitment services are performed. Fees earned in excessbilling terms 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.contract. Any revenues associated with services that are provided on a contingent basis are recognized once the contingency is resolved.resolved, as this is when control is transferred to the customer. These assumptions determine the timing of revenue recognition for the reported period. In addition to talent acquisition for permanent placement roles, the Professional Search & Interim segment also offers recruitment fornon-executive professionals, Futurestep provides recruitment process outsourcing (“RPO”) services and fee revenuefor interim roles. Interim roles are short term in duration, generally less than 12 months. Generally, each interim role is recognized as services are rendered and/or as milestones are achieved. Fee revenue from Hay Group (formerly known as Leadership & Talent Consulting (“Legacy LTC”) which was combined with HG (Luxembourg) S.à.r.l (“Legacy Hay”) in December 2015) is recognized as services are rendered for consulting engagements and other time-based services, measured by total hours incurred to the total estimated hours at completion. It is possible that updated estimates for the consulting engagement may vary from initial estimates with such updates being recognized in the period of determination.KORN/FERRY INTERNATIONAL AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJanuary 31, 2018 (continued)Depending on the timing of billings and services rendered, the Company accrues or defers revenue as appropriate. Hay Group revenue is also derived from the sale of product services, which includes revenue from licenses and from the sale of products. Revenue from licenses is recognized using a straight-line method over the term of the contract (generally 12 months). Under 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 includingseparate performance management, team effectiveness, and coaching and development.obligation. The Company recognizes fee revenue over the duration that the interim resources’ services are provided which also aligns to the contracted invoicing plan and enforceable right to payment.RPO feerevenue is generated through two distinct phases: 1) the implementation phase and 2) the post-implementation recruitment phase. The fees associated with the implementation phase are recognized over the period that the related implementation services are provided. The post-implementation recruitment phase represents end-to-end recruiting services to clients for its products whenwhich there are both fixed and variable fees, which are recognized over the product has been sold or shipped inperiod that the case of books. As of January 31, 2018 and April 30, 2017, the Company included deferred revenue of $110.9 million and $95.8 million, respectively, in other accrued liabilities.ReimbursementsThe Company incurs certainout-of-pocket expenses that are reimbursed by its clients, which are accounted for as revenue in itsthe consolidated statements of income.Allowance for Doubtful AccountsAn allowance is established for doubtful accounts by taking a charge to general and administrative expenses. The Company’s expected credit loss allowance methodology for accounts receivable is developed using historical collection experience, current and future economic and market conditions and a review of the current status of customers’ trade accounts receivable. Due to the short-term nature of such receivables, the estimate of the amount of the allowanceaccounts receivable that may not be collected is primarily based on historical loss experience, assessment ofloss-rate experience. When required, the collectability of specific accounts, as well asCompany adjusts the loss-rate methodology to account for current conditions and reasonable and supportable expectations of future collections based upon trendseconomic and market conditions. The Company generally assesses future economic condition for a period of sixty to ninety days, which corresponds with the typecontractual life of work for which services are rendered.its accounts receivables. After the Company exhausts all collection efforts, the amount of the allowance is reduced for balances identifiedwritten off as uncollectible.Cash and Cash EquivalentsThe Company considers all highly liquid investments with original maturities of three months or less from the date of purchase to be cash equivalents. As of JanuaryJuly 31, 20182023 and April 30, 2017,2023, the Company’s investments in cash equivalents consistconsisted of money market funds for which market prices are readily available.Marketable SecuritiesThe Company currently has investments in marketable securities and mutual funds that are classified as tradingeither equity securities based upon management’s intent and ability to hold, sell or trade suchavailable-for-sale debt securities. The classification of the investments in these marketable securities and mutual funds is assessed upon purchase and reassessed at each reporting period. These investments are recorded at fair value and are classified as marketable securities in the accompanying consolidated balance sheets.The investments that the Company may sell within the next 12 months are carried as current assets.The Company invests in mutual funds (for which market prices are readily available) that are held in trust to satisfy obligations under the Company’s deferred compensation plans. Such investments are based uponclassified as equity securities and mirror the employees’ investment elections in their deemed accounts in the Executive Capital Accumulation Plan and similar plans in Asia Pacific and Canada (“ECAP”) from apre-determined set of securities and the Company invests in marketable securities to mirror these elections. These investments are recorded at fair value and are classified as marketable securities in the accompanying consolidated balance sheets. The investments that the Company may sell within the next twelve months are carried as current assets.securities. Realized gains (losses) on marketable securities are determined by specific identification. Interest is recognized on an accrual basis; dividends are recorded as earned on theex-dividend date. Interest, dividend income and the changes in fair value in tradingmarketable securities are recorded in the accompanying consolidated statements of income in other income, net.8KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJuly 31, 2023 (continued)The Company also invests cash in excess of its daily operating requirements and capital needs primarily in marketable fixed income (debt) securities in accordance with the Company’s investment policy, which restricts the type of investments that can be made. The Company’s investment portfolio includes commercial paper and corporate notes/bonds. These marketable fixed income (debt)securities are classified as available-for-sale securities based on management’s decision, at the date such securities are acquired, not to hold these securities to maturity or actively trade them. The Company carries these marketable debt securities at fair value based on the market prices for these marketable debt securities or similar debt securities whose prices are readily available. The changes in fair values, net of applicable taxes, are recorded as unrealized gains or losses as a component of comprehensive income unless the change is due to credit loss. A credit loss is recorded in the statements of income in other income, net; any amount in excess of the credit loss is recorded as unrealized losses as a component of comprehensive income. Generally, the amount of the loss is the difference between the cost or amortized cost and its then current fair value; a credit loss is the difference between the discounted expected future cash flows to be collected from the debt security and the cost or amortized cost of the debt security. During the three months ended July 31, 2023 and 2022, no amount was recognized as a credit loss for the Company’s available for sales debt securities.Fair Value of Financial InstrumentsFair value is the price the Company would receive to sell an asset or transfer a liability (exit price) in an orderly transaction between market participants. For those assets and liabilities recorded or disclosed at fair value, the Company determines the fair value based upon the quoted market price, if available. If a quoted market price is not available for identical assets, the fair value is based upon the quoted market price of similar assets. The fair values are assigned a level within the fair value hierarchy as defined below:◾Level 1: Observable inputs such as quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.◾Level 2:Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.◾Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.•Level 1: Observable inputs such as quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.•Level 2:Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.•Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.As of JanuaryJuly 31, 20182023 and April 30, 2017,2023, the Company held certain assets that are required to be measured at fair value on a recurring basis. These included cash cash equivalents, accounts receivable, marketable securities and foreign currency forward contracts and an interest rate swap.contracts. The carrying amount of cash, cash equivalents and accounts receivable approximates fair value due to the shortshort-term maturity of these instruments. The fair values of marketable securities classified as tradingequity securities are obtainedKORN/FERRY INTERNATIONAL AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJanuary 31, 2018 (continued) or the interest rate swap are obtained from a third party, which are based on quoted prices or market prices for similar assets and financial instruments.Derivative Financial InstrumentsThe Company is exposed to interest rate risk due to the outstanding senior secured credit agreement entered on June 15, 2016. The Company has entered into an interest rate swap agreement to effectively convert its variable debt to a fixed-rate basis. The principal objective of these contracts is to eliminate or reduce the variability of the cash flows in interest payments associated with the Company’s long-term debt, thus reducing the impact of interest rate changes on future interest payment cash flows. The Company has determined that the interest rate swap qualifies as a cash flow hedge in accordance with Accounting Standards Codification 815,Derivatives and Hedging. Changes in the fair value of an interest rate swap agreement designated as a cash flow hedge are recorded as a component of accumulated other comprehensive income (loss), net within stockholders’ equity and are amortized to interest expense over the term of the related debt.Foreign Currency Forward Contracts Not Designated as HedgesThe Company has established a program that primarily utilizes foreign currency forward contracts to offset the risks associated with the effects of certain foreign currency exposures.exposures primarily originating from intercompany balances due to cross border work performed in the ordinary course of business. These foreign currency forward contracts are neither used for trading purposes nor are they designated as hedging instruments pursuant to Accounting Standards CodificationASC 815,Derivatives and Hedging. Accordingly, the fair value of these contracts is recorded as of the end of the reporting period in the accompanying consolidated balance sheets, while the change in fair value is recorded to the accompanying consolidated statements of income.Business AcquisitionsBusiness acquisitions are accounted for under the acquisition method. The acquisition method requires the reporting entity to identify the acquirer, determine the acquisition date, recognize and measure the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquired entity, and recognize and measure goodwill or a gain from the purchase. The acquiree’s results are included in the Company’s consolidated financial statements from the date of acquisition. Assets acquired and liabilities assumed are recorded at their fair values and the excess of the purchase price over the amounts assigned is recorded as goodwill, or if the fair value of the assets acquired exceeds the purchase price consideration, a bargain purchase gain is recorded. Adjustments to fair value assessments are generally recorded to goodwill over the measurement period (not longer than twelve12 months). The acquisition method also requires that acquisition-related transaction and post-acquisition restructuring costs be charged to expense as committed and requires the Company to recognize and measure certain assets and liabilities including those arising from contingencies and contingent consideration in a business combination.9KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJuly 31, 2023 (continued)LeasesThe Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and current and non-current operating lease liability, in the consolidated balance sheets. Finance leases are included in property and equipment, net, other accrued liabilities and other liabilities in the consolidated balance sheets.ROU assets represent the Company's right to use an underlying asset for the lease term, and the lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term on the commencement date. As most of the Company’s leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term, with variable lease payments recognized in the periods in which they are incurred.The Company has lease agreements with lease and non-lease components. For all leases with non-lease components the Company accounts for the lease and non-lease components as a single lease component.Impairment of Long-Lived AssetsLong-lived assets include property, equipment, ROU assets and software developed or obtained for internal use. In accordance with ASC 360, Property, Plant and Equipment, management reviews the Company’s recorded long-lived assets for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period. The Company determines the extent to which an asset may be impaired based upon its expectation of the asset’s future usability, as well as on a reasonable assurance that the future cash flows associated with the asset will be in excess of its carrying amount. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between fair value and the carrying value of the asset. During the three months ended July 31, 2023, the Company reduced its real estate footprint and as a result, the Company recorded an impairment charge of ROU assets of $1.6 million and an impairment of leasehold improvements and furniture and fixtures of $0.1 million, both recorded in the consolidated statements of income in general and administrative expenses. During the three months ended July 31, 2022, there were no impairment charges recorded.Goodwill and Intangible AssetsGoodwill represents the excess of the purchase price over the fair value of assets acquired. The goodwillGoodwill is tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. Results of the annual qualitative impairment test compares the fair valueperformed as of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, goodwill of the reporting unit would be considered impaired. To measure the amount of the impairment loss, the implied fair value of a reporting unit’s goodwill is compared to the carrying amount ofJanuary 31, 2023, indicated that goodwill. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. If the carrying amount of a reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. For each of these tests, the fair value of each of the Company’s reporting units is determined using a combination of valuation techniques, including a discounted cash flow methodology. To corroborate the discounted cash flow analysis performed at each reporting unit, a market approach is utilized using observable market data such as comparable companies in similar lines of business that are publicly traded or which are part of a public or private transaction (to the extent available). Results of the annual impairment test performed as of January 31, 2017, indicated that the fair value of each reporting unit exceeded its carrying amount and no reporting units were at risk of failing the impairment test.amount. As a result, no impairment charge was recognized. The Company’s annual impairment test will be performed in the fourth quarterAs of fiscal 2018. There was alsoJuly 31, 2023 and April 30, 2023, there were no indicationindicators of potential impairment as of January 31, 2018 and April 30, 2017with respect to the Company’s goodwill that would have requiredrequire further testing.Intangible assets primarily consist of customer lists,non-compete agreements, proprietary databases intellectual property and trademarks andIP. Intangible assets are recorded at their estimated fair value at the date of acquisition and are amortized in a pattern in which the asset is consumed, if that pattern can be reliably determined, or using the straight-line method over their estimated useful lives, which range from one to 24 years. For intangible assets subject to amortization, an impairment loss is recognized if the carrying amount of the intangible assets is not recoverable and exceeds fair value. The carrying amount of the intangible assets is considered not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from use of the asset. IntangibleThe Company reviewed its intangible assets with indefinite lives areand did not amortized, but are reviewed annually foridentify any impairment or more frequently whenever events or changes in circumstances indicate that the fair valueas of the asset may be less than its carrying amount. As of JanuaryJuly 31, 20182023 and April 30, 2017, there were no indicators of impairment with respect to the Company’s intangible assets.KORN/FERRY INTERNATIONAL AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJanuary 31, 2018 (continued)Compensation and Benefits ExpenseCompensation and benefits expense in the accompanying consolidated statements of income consist of compensation and benefits paid to consultants (employees who originate business), executive officers and administrative and support personnel. The most significant portions of this expense are salaries and the amounts paid under the annual performance relatedperformance-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 relatedperformance-related bonuses refers to the Company’s annual employee performance relatedperformance-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.10KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJuly 31, 2023 (continued)Each quarter, management makes its best estimate of its annual performance relatedperformance-related bonuses, which requires management to, among other things, project annual consultant productivity (as measured by engagement fees billed and collected by executive searchExecutive Search and Professional Search consultants and revenue and other performance/profitability metrics for Hay GroupConsulting, Digital, Interim and FuturestepRPO consultants), the level of engagements referred by a consultant in one line of business to a different line of business, and Company performance, including profitability, competitive forces and future economic conditions and their impact on the Company’s results. At the end of each fiscal year, annual performance relatedperformance-related bonuses take into account final individual consultant productivity (including referred work), Company/line of business results, including profitability, the achievement of strategic objectives, the results of individual performance appraisals and the current economic landscape. Accordingly, each quarter the Company reevaluates the assumptions used to estimate annual performance relatedperformance-related bonus liability and adjusts the carrying amount of the liability recorded on the consolidated balance sheet and reports any changes in the estimate in current operations.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 not been immaterialsignificant and are recorded in current operations in the period in which they are determined. The performance relatedperformance-related bonus expense was $155.2$92.1 million and $136.2$101.8 million during the ninethree months ended JanuaryJuly 31, 20182023 and 2017,2022, respectively, included in compensation and benefits expense in the consolidated statements of income. During the three months ended January 31, 2018 and 2017, the performance related bonus expense was $56.8 million and $41.1 million, respectively.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 ownedcompany-owned life insurance (“COLI”) contracts, amortization of stockstock-based compensation awards, commissions, payroll taxes and employee insurance benefits. Investments and other assets includeUnearned compensation on the consolidated balance sheets includes long-term retention awards that are generally amortized over four to five-to-five years.Restructuring Charges, NetThe Company accounts for its restructuring charges as a liability when the obligations are incurred and records such chargeschanges at fair value. Such charges includedone-time employee termination benefits and the cost to terminate an office lease including remaining lease payments. Changes in the estimatesestimate of the restructuring charges are recorded in the period the change is determined.Stock-Based CompensationThe Company has employee compensation plans under which various types of stock-based instruments are granted. These instruments principally include restricted stock units, restricted stock and an Employee Stock Purchase Plan (“ESPP”). The Company recognizes compensation expense related to restricted stock units, restricted stock and the estimated fair value of stock purchases under the ESPP on a straight-line basis over the service period for the entire award.Recently Adopted Accounting StandardsIn March 2016,October 2021, the Financial Accounting Standards Board (the “FASB”) issued guidance onan amendment in accounting for certain aspectscontract assets and contract liabilities from contracts with customers, which clarifies that an acquirer of share-based payments to employees.a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with ASC 606, Revenue from Contracts with Customers. The new guidance requires excess tax benefits and tax deficiencies to be recorded in the income statement when the awards vest or are settled. Furthermore, cash flows related to excess tax benefits will no longer be separately classified as a financing activity apart from other income tax cash flows. The guidance also allows companies to repurchase moreamendment of an employee’s shares for tax withholding purposes without triggering liability accounting, clarifying that all cash payments made on an employee’s behalf for withheld shares should be presented as a financing activity in the consolidated statements of cash flows and provides an accounting policy election to account for forfeitures as they occur. The provisions of the guidance arethis standard became effective for fiscal years beginning after December 15, 20162022 and were adopted by the Company effective May 1, 2017. The primary impact of the adoption was the recognition of excess tax benefits in our provision for income taxes in the current year compared to recording it previously as a component of equity. Additional amendments to the accounting for income taxes and minimum statutory withholding tax requirements had no impact to retained earnings, where the cumulative effect of these changes are requiredis to be recorded.applied prospectively to business combinations that occur after the effective date. The Company elected to apply the presentation for cash flows related to excess tax benefits retrospectively for all periods presented which resulted in minimal impact to cash used in operations and cash providedKORN/FERRY INTERNATIONAL AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJanuary 31, 2018 (continued)by financing activities for the nine months ended January 31, 2017. The presentation requirements for cash flows related to employee taxes paid for withheld shares had no impact on any of the periods presented on our consolidated cash flows statements since such cash flows have historically been presented as a financing activity. The Company elected to account for forfeitures as they occur, rather than estimating the expected forfeitures over the vesting period. This election did not have an impact on the Company’s financial statements.Recently Issued Accounting Standards - Not Yet AdoptedIn May 2014, the FASB issued ASU2014-09, which superseded revenue recognition requirements regarding contracts with customers to transfer goods or services or for the transfer of nonfinancial assets. Under this new guidance, entities are required to recognize revenue that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a five-step analysis to be performed on transactions to determine when and how revenue is recognized. In addition, the guidance permits companies to choose between the following two transition methods of adopting ASU2014-09: (1) the full retrospective method, in which case the standard would be applied to all reporting periods presented and (2) the modified retrospective method, with a cumulative-effect adjustment as of the date of adoption.The new guidance is effective for fiscal years and interim periods within those annual years beginning after December 15, 2017. The Company will adoptadopted this guidance in its fiscal year beginning May 1, 20182023 and expects to apply the modified retrospective method in adopting ASU2014-09. The Company organized a team and developed a project plan to guide the implementation. The project plan includes working sessions to review, evaluate and document the arrangements with customers under our various reporting units to identify potential differences that would result from applying the requirements of the new standard.The Company has completed its initial evaluation of the impact of ASU2014-09 on executive search activities and recruitment fornon-executive professionals and recruitment process outsourcing. As to executive search and recruitment fornon-executive professionals we expect the implementation of ASU2014-09 to result in timing differences in the recognition of uptick revenue (uptick revenue occurs when a placement’s actual compensation is higher than the original estimated compensation). Currently the Company recognizes uptick revenue as the amount becomes fixed and determinable. Under ASU2014-09, however, upticks are considered variable consideration and the Company will be required to estimate upticks at contract inception and recognize the revenue over the service period. Based on our initial evaluation the impact of ASU2014-09 on the recruitment process outsourcing revenue stream is not expected to be material. The Company expects to finalize its evaluation of the impact of ASUNo. 2014-09 by the end of the fiscal year.In February 2016, the FASB issued guidance on accounting for leases that generally requires all leases to be recognized on the consolidated balance sheet. The provisions of the guidance are effective for fiscal years beginning after December 15, 2018 and early adoption is permitted. The Company plans to adopt this guidance in fiscal year beginning May 1, 2019. The provisions of the guidance are to be applied using a modified retrospective approach. The Company is still evaluating the effect this guidance will have on the consolidated financial statements. Based on our initial assessment, the Company expects that upon adoption it will report an increase in assets and liabilities on our consolidated balance sheet as a result of recognizingright-of-use assets and lease liabilities related to lease agreements.In August 2016, the FASB issued guidance on the classification of certain cash receipts and cash payments in the statement of cash flows. The new guidance provides clarification on specific cash flow issues regarding presentation and classification in the statement of cash flows with the objective of reducing the existing diversity in practice. The amendments in this update are effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The Company plans to adopt this guidance in its fiscal year beginning May 1, 2018. The provisions of the guidance are to be applied using a retrospective transition method. The adoption of this guidance isdid not anticipated to have a material impact on the consolidated financial statements.In January 2017, the FASB issued guidance that clarifies the definition of a business. The new guidance assists a company when evaluating whether transactions should be accounted for as acquisitions (disposals) of assets or businesses. The provisions of the guidance require that if the fair value of the gross assets acquired (or disposed of) is substantially concentrated in a single identifiable asset or a group of similar identifiable assets, then it is not a business. The provisions of the guidance are effective for annual years beginning after December 15, 2017, including interim periods, with early adoption permitted. The Company plans to adopt this guidance in its fiscal year beginning May 1, 2018. The provisions of the guidance are to be applied prospectively. The adoption of this guidance is not anticipated to have a material impact on the consolidated financial statements.In January 2017, the FASB issued guidance simplifying the test for goodwill impairment. The new guidance simplifies the test for goodwill impairment by removing Step 2 from the goodwill impairment test. Companies will now perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value not to exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The amendments of this standard are effective for goodwill impairment tests in fiscalKORN/FERRY INTERNATIONAL AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJanuary 31, 2018 (continued)years beginning after December 15, 2019, with early adoption permitted for goodwill impairment tests performed after January 1, 2017. The Company is evaluating the adoption timeline and the effects that the standard will have on the consolidated financial statements.In March 2017, the FASB issued guidance that changes the presentation of net periodic pension cost and net periodic postretirement benefit cost. The new guidance will change the presentation of net periodic benefit cost related to employer sponsored defined benefit plans and other postretirement benefits. Service cost will be included within the same income statement line item as other compensation costs arising from services rendered during the period, while other components of net periodic benefit pension cost will be presented separately outside of operating income. Additionally, only service costs may be capitalized in assets. The amendments of this standard are effective for fiscal years beginning after December 15, 2017, including interim periods within those years. The Company will adopt this guidance in its fiscal year beginning May 1, 2018. The adoption of this standard is not anticipated to have a material impact on the consolidated financial statements.In May 2017, the FASB issued guidance clarifying the scope of modification accounting for stock compensation. The new standard provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This pronouncement is effective for annual reporting periods beginning after December 15, 2017, but early adoption is permitted. The Company will adopt this guidance in its fiscal year beginning May 1, 2018. The Company is currently evaluating the impact of adopting this guidance.In August 2017, the FASB issued guidance amending and simplifying accounting for hedging activities. The new guidance will refine and expand strategies that qualify for hedge accounting and simplify the application of hedge accounting in certain situations. The amendments of this standard are effective for fiscal years beginning after December 15, 2018. The Company will adopt this guidance in its fiscal year beginning May 1, 2019. The Company is currently evaluating the impact of adopting this guidance.In February 2018, the FASB issued ASU2018-02 which provides companies the option to reclassify stranded tax effects within accumulated other comprehensive income (loss), net to retained earnings resulting from the Tax Cuts and Jobs Act (the “Tax Act”). The new guidance requires companies to disclose whether they decided to reclassify the income tax effects of the Tax Act from accumulated other comprehensive income (loss), net to retained earnings and to disclose a policy for releasing the income tax effects from accumulated other comprehensive income (loss), net. The guidance is effective for annual reporting periods beginning after December 15, 2018, but early adoption is permitted. If companies elect to reclassify the stranded tax effects the guidance allows it to be recorded in the period of adoption or retrospectively to each period in which the effect of the Tax Act is recognized. The Company is currently evaluating the impact of adopting this guidance.2. Basic and Diluted Earnings Per ShareAccounting Standards CodificationASC 260,Earnings Per Share, requires companies to treat unvested share-based payment awards that havenon-forfeitable rights to dividends prior to vesting as a separate class of securities in calculating earnings per share. We haveThe Company has granted and expectexpects to continue to grant to certain employees under ourits restricted stock agreements, grants that containnon-forfeitable rights to dividends. Such grants are considered participating securities. Therefore, we arethe Company is required to apply thetwo-class method in calculating earnings per share. Thetwo-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 thetwo-class method.Basic earnings per common share was computed using thetwo-class method by dividing basic net earnings attributable to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings per common share was computed using thetwo-class method by dividing diluted net earnings attributable to common stockholders by the weighted-average number of common shares outstanding plus dilutive common equivalent shares. Dilutive common equivalent shares include allin-the-money outstanding options or other contracts to issue common stock as if they were11KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJuly 31, 2023 (continued)exercised or converted. Financial instruments that are not in the form of common stock, but when converted into common stock increase earnings per share, are anti-dilutive and are not included in the computation of diluted earnings per share.During the three and nine months ended JanuaryJuly 31, 2018,2023 and 2022, restricted stock awards of 0.61.2 million shares and 1.2 million shares, respectively, were outstanding but not included in the computation of diluted earnings per share because they were anti-dilutive. During the three and nine months ended January 31, 2017, restricted stock awards of 0.5 million and 0.6 million were outstanding, respectively, but not included in the computation of diluted earnings per share because they were anti-dilutive.KORN/FERRY INTERNATIONAL AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJanuary 31, 2018 (continued)The following table summarizes basic and diluted earnings per common share attributable to common stockholders: Three Months Ended
January 31, Nine Months Ended
January 31, 2018 2017 2018 2017 (in the thousands, except per share data) $ 27,247 $ 23,897 $ 92,619 $ 57,257 295 227 982 505 26,952 23,670 91,637 56,752 235 172 804 356 232 171 793 353 $ 26,955 $ 23,671 $ 91,648 $ 56,755 55,252 56,173 55,479 56,325 738 505 744 540 3 20 6 24 4 4 7 28 55,997 56,702 56,236 56,917 $ 0.49 $ 0.42 $ 1.65 $ 1.01 $ 0.48 $ 0.42 $ 1.63 $ 1.00 Three Months Ended
July 31,2023 2022 (in thousands, except per share data) Net income attributable to Korn Ferry $ 46,605 $ 77,247 Less: distributed and undistributed earnings to nonvested restricted stockholders 1,021 1,645 Basic net earnings attributable to common stockholders 45,584 75,602 Add: undistributed earnings to nonvested restricted stockholders 806 1,474 Less: reallocation of undistributed earnings to nonvested restricted stockholders 804 1,465 Diluted net earnings attributable to common stockholders $ 45,586 $ 75,611 Weighted-average common shares outstanding: Basic weighted-average number of common shares outstanding 50,934 51,771 Effect of dilutive securities: Restricted stock 146 335 ESPP 2 — Diluted weighted-average number of common shares outstanding 51,082 52,106 Net earnings per common share: Basic earnings per share $ 0.89 $ 1.46 Diluted earnings per share $ 0.89 $ 1.45 3. Stockholders’ EquityThe following table summarizes the changes in stockholders’ equity for the three months ended January 31, 2018: Total Korn/Ferry
International
Stockholders’
Equity Noncontrolling
Interest Total
Stockholders’
Equity (in thousands) $ 1,132,014 $ 2,709 $ 1,134,723 27,247 180 27,427 17,793 46 17,839 361 — 361 1,077 — 1,077 (5,705 ) — (5,705 ) (3,503 ) — (3,503 ) 3,412 — 3,412 5,263 — 5,263 $ 1,177,959 $ 2,935 $ 1,180,894 KORN/FERRY INTERNATIONAL AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJanuary 31, 2018 (continued)The following table summarizes the changes in stockholders’ equity for the nine months ended January 31, 2018: Total Korn/Ferry
International
Stockholders’
Equity Noncontrolling
Interest Total
Stockholders’
Equity (in thousands) $ 1,083,439 $ 3,609 $ 1,087,048 92,619 969 93,588 29,858 (85 ) 29,773 1,065 — 1,065 1,470 — 1,470 (17,242 ) — (17,242 ) — (1,558 ) (1,558 ) (36,225 ) — (36,225 ) 7,998 — 7,998 14,977 — 14,977 $ 1,177,959 $ 2,935 $ 1,180,894 The following table summarizes the changes in stockholders’ equity for the three months ended January 31, 2017: Total Korn/Ferry
International
Stockholders’
Equity Noncontrolling
Interest Total
Stockholders’
Equity (in thousands) $ 1,050,553 $ 3,591 $ 1,054,144 23,897 481 24,378 (1,321 ) (262 ) (1,583 ) 465 — 465 (5,796 ) — (5,796 ) — (1,229 ) (1,229 ) (9,578 ) — (9,578 ) 2,778 — 2,778 4,406 — 4,406 17 — 17 $ 1,065,421 $ 2,581 $ 1,068,002 The following table summarizes the changes in stockholders’ equity for the nine months ended January 31, 2017: Total Korn/Ferry
International
Stockholders’
Equity Noncontrolling
Interest Total
Stockholders’
Equity (in thousands) $ 1,045,300 $ 2,001 $ 1,047,301 57,257 2,245 59,502 (19,580 ) (436 ) (20,016 ) 1,392 — 1,392 (17,546 ) — (17,546 ) — (1,229 ) (1,229 ) (20,695 ) — (20,695 ) 5,746 — 5,746 13,497 — 13,497 50 — 50 $ 1,065,421 $ 2,581 $ 1,068,002 KORN/FERRY INTERNATIONAL AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJanuary 31, 2018 (continued)4. Comprehensive IncomeComprehensive income is comprised of net income and all changes to stockholders’ equity, except those changes resulting from investments by stockholders (changes in paid in capital) and distributions to stockholders (dividends) and is reported in the accompanying consolidated statements of comprehensive income. Accumulated other comprehensive income (loss),loss, net of taxes, is recorded as a component of stockholders’ equity.The components of accumulated other comprehensive income (loss),loss, net were as follows: January 31,
2018 April 30,
2017 (in thousands) $ (25,501 ) $ (55,359 ) (14,062 ) (15,127 ) 892 (578 ) $ (38,671 ) $ (71,064 ) July 31,
2023April 30,
2023(in thousands) Foreign currency translation adjustments $ (94,729) $ (96,860) Deferred compensation and pension plan adjustments, net of tax 4,408 4,381 Marketable securities unrealized loss, net of tax (150) (285) Accumulated other comprehensive loss, net $ (90,471) $ (92,764) 12KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJuly 31, 2023 (continued)The following table summarizes the changes in each component of accumulated other comprehensive income (loss),loss, net for the three months ended JanuaryJuly 31, 2018: Foreign
Currency
Translation Deferred
Compensation
and Pension
Plan (1) Unrealized
(Losses) Gains
on Interest Rate
Swap (2) Accumulated
Other
Comprehensive
Income (Loss) (in thousands) $ (43,294 ) $ (14,423 ) $ (185 ) $ (57,902 ) 17,793 — 973 18,766 — 361 104 465 $ (25,501 ) $ (14,062 ) $ 892 $ (38,671 ) Foreign
Currency
Translation Deferred
Compensation
and Pension
Plan (1) Unrealized
(Losses) Gains
on Interest Rate
Swap (2) Accumulated
Other
Comprehensive
Income (Loss) (in thousands) $ (55,359 ) $ (15,127 ) $ (578 ) $ (71,064 ) 29,858 — 1,061 30,919 — 1,065 409 1,474 $ (25,501 ) $ (14,062 ) $ 892 $ (38,671 ) (1)The tax effect on the reclassifications of realized net losses was $0.2 million and $0.7 million for the three and nine months ended January 31, 2018, respectively.(2)The tax effect on unrealized gains was $0.6 million and $0.6 million for the three and nine months ended January 31, 2018, respectively. The tax effect on the reclassification of realized net losses to net income was $0.1 million and $0.3 million for the three and nine months ended January 31, 2018, respectively.KORN/FERRY INTERNATIONAL AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJanuary 31, 2018 (continued)Foreign
Currency
TranslationDeferred
Compensation
and Pension
PlanUnrealized Losses on
Marketable SecuritiesAccumulated
Other
Comprehensive
Loss(in thousands) Balance as of April 30, 2023 $ (96,860) $ 4,381 $ (285) $ (92,764) Unrealized gains arising during the period 2,131 — 135 2,266 Reclassification of realized net losses to net income — 27 — 27 Balance as of July 31, 2023 $ (94,729) $ 4,408 $ (150) $ (90,471) The following table summarizes the changes in each component of accumulated other comprehensive income (loss),loss, net for the three months ended JanuaryJuly 31, 2017: Foreign
Currency
Translation Deferred
Compensation
and Pension
Plan (1) Accumulated
Other
Comprehensive
Income (Loss) (in thousands) $ (54,598 ) $ (20,645 ) $ (75,243 ) (1,321 ) — (1,321 ) — 465 465 $ (55,919 ) $ (20,180 ) $ (76,099 ) The following table summarizes the changes in each component of accumulated other comprehensive income (loss), net for the nine months ended January 31, 2017: Foreign
Currency
Translation Deferred
Compensation
and Pension
Plan (1) Accumulated
Other
Comprehensive
Income (Loss) (in thousands) $ (36,339 ) $ (21,572 ) $ (57,911 ) (19,580 ) — (19,580 ) — 1,392 1,392 $ (55,919 ) $ (20,180 ) $ (76,099 ) (1)The tax effect on the reclassifications of realized net losses was $0.3 million and $0.9 million for the three and nine months ended January 31, 2017, respectively.5.2022:Foreign
Currency
TranslationDeferred
Compensation
and Pension
PlanUnrealized Losses on
Marketable SecuritiesAccumulated
Other
Comprehensive
Loss(in thousands) Balance as of April 30, 2022 $ (92,717) $ 961 $ (429) $ (92,185) Unrealized losses arising during the period (16,257) — (53) (16,310) Reclassification of realized net losses to net income — 51 — 51 Balance as of July 31, 2022 $ (108,974) $ 1,012 $ (482) $ (108,444) 4. Employee Stock PlansStock-Based CompensationThe following table summarizes the components of stock-based compensation expense recognized in the Company’s consolidated statements of income for the periods indicated: Three Months Ended
January 31, Nine Months Ended
January 31, 2018 2017 2018 2017 (in thousands) $ 5,263 $ 4,406 $ 14,977 $ 13,497 254 175 823 604 5,517 4,581 15,800 14,101 (2,750 ) (1,111 ) (5,798 ) (3,778 ) $ 2,767 $ 3,470 $ 10,002 $ 10,323 Three Months Ended
July 31,2023 2022 (in thousands) Restricted stock $ 8,480 $ 7,538 ESPP 248 219 Total stock-based compensation expense $ 8,728 $ 7,757 Stock Incentive PlansAt the Company’s 20162022 Annual Meeting of Stockholders, held on October 6, 2016,September 22, 2022, the Company’s stockholders approved an amendment and restatement to the Korn/Korn Ferry International Amended and Restated 20082022 Stock Incentive Plan (the 2016 amendment and restatement being “The Third A&R 2008 Plan”"2022 Plan"), which, among other things, increased the total number of shares underof the planCompany’s common stock available for stock-based awards by 5,500,0001,700,000 shares, increasing the current maximum number ofleaving 2,248,284 shares that may be issued under the plan to 11,200,000 shares,available for issuance, subject to certain changes in the Company’s capital structure and other extraordinary events. The Third A&R 20082022 Plan requires a minimum one-year vesting for all future awards, and provides for the grant of awards to eligible participants, designated as either nonqualified or incentive stock options, restricted stock and restricted stock units, any of which may be performance-based orare market-based, and incentive bonuses, which may be paid in cash or stock or a combination thereof. Under the Third A&R 2008 Plan, the ability to issue full-value awards is limited by requiring full-value stock awards to count 2.3 times as much as stock options.KORN/FERRY INTERNATIONAL AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJanuary 31, 2018 (continued)Restricted StockThe Company grants time-based restricted stock awards to executive officers and other senior employees that generally vestingvest over a four-year period. In addition, certain key management members typically receive time-based restricted stock awards upon commencement of employment and may receive them annually in conjunction with the Company’s13KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJuly 31, 2023 (continued)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 isare determined by using extensive market data that is based on historical Company and peer group information. The Company recognizes compensation expense for market-based restricted stock units on a straight-line basis over the vesting period.Performance-based restricted stock units vest after three years depending upon the Company meeting certain objectives that are set at the time the restricted stock unit is issued. Performance-based restricted stock units are granted at a price equal to the fair value, which is determined based on the closing price of the Company’s common stock on the grant date. At the end of each reporting period, the Company estimates the number of restricted stock units expected to vest, based on the probability that certain performance objectives will be met, exceeded, or fall below target levels, and the Company takes into account these estimates when calculating the expense for the period.Restricted stock activity during the ninethree months ended JanuaryJuly 31, 20182023 is summarized below: Shares Weighted-
Average Grant
Date Fair Value (in thousands, except per share data) 1,581 $ 29.74 623 $ 37.46 (419 ) $ 26.01 (68 ) $ 33.28 1,717 $ 33.31 Shares Weighted-
Average Grant
Date Fair Value(in thousands, except per share data) Non-vested, April 30, 2023 2,063 $ 50.12 Granted 805 $ 50.42 Vested (622) $ 39.57 Forfeited/expired (129) $ 54.40 Non-vested, July 31, 2023 2,117 $ 53.07 As of JanuaryJuly 31, 2018,2023, there were 0.7 million shares and 0.2 million shares outstanding relating to market-based and performance-based restricted stock units respectively, with total unrecognized compensation totaling $9.9 million and $4.3 million, respectively.As of JanuaryJuly 31, 2018,2023, there was $35.1$94.9 million of total unrecognized compensation cost related to allnon-vested awards of restricted stock, which is expected to be recognized over a weighted-average period of 2.42.7 years. During the three and nine months ended JanuaryJuly 31, 2018, 4,6532023 and 2022, 201,441 shares and 105,024365,464 shares of restricted stock totaling $0.2$10.2 million and $3.6$21.9 million, respectively, were repurchasedwithheld by the Company, at the option of employees, to pay for taxes related to the vesting of restricted stock. During the three and nine months ended January 31, 2017, 7,151 shares and 193,668 shares of restricted stock totaling $0.2 million and $4.4 million, respectively, were repurchased by the Company, at the option of employees, to pay for taxes related to vesting of restricted stock.Employee Stock Purchase PlanThe Company has an ESPP that, in accordance with Section 423 of the Internal Revenue Code, allows eligible employees to authorize payroll deductions of up to 15% of their salary to purchase shares of the Company’s common stock atstock. On June 3, 2020, the Company amended the plan so that the purchase price of the shares purchased could not be less than 85% or more than 100% of the fair market price of the common stock on the last day of the enrollment period. This amendment became effective July 1, 2020. At the Company’s 2022 Annual Meeting of Stockholders, held on September 22, 2022, the Company’s stockholders approved the Korn Ferry Amended and Restated Employee Stock Purchase Plan, which, among other things, increased the total number of shares of the Company’s common stock that may be purchased thereunder by 1,500,000 shares. Employees may not purchase more than $25,000 in stock during any calendar year. The maximum number of shares that may be issued under the ESPP is 3.04.5 million shares. During the three and nine months ended JanuaryJuly 31, 2018,2023 and 2022, employees purchased 82,464105,311 shares at $35.17$44.59 per share and 198,74983,704 shares at $31.77 per share, respectively. During the three and nine months ended January 31, 2017, employees purchased 93,130 shares at $25.01 per share and 207,141 shares at $20.93$52.22 per share, respectively. As of JanuaryJuly 31, 2018,2023, the ESPP had approximately 1.11.7 million shares remaining available for future issuance.Common StockDuring the nine months ended January 31, 2018, the Company issued 41,075 shares of common stock, as a result of the exercise of stock options, with cash proceeds from the exercise of $0.6 million. No stock options were exercised during the three months ended JanuaryJuly 31, 2018. During the three2023 and nine months ended January 31, 2017, the Company issued 2,510 shares andKORN/FERRY INTERNATIONAL AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJanuary 31, 2018 (continued)46,600 shares of common stock, respectively, as a result of the exercise of stock options, with cash proceeds from the exercise of $0.03 million and $0.6 million, respectively.During the three and nine months ended January 31, 2018,2022, the Company repurchased (on the open market) 80,800 shares and 974,079market or through privately negotiated transactions) 90,000 shares of the Company’s common stock for $3.3$4.2 million and $32.6369,867 shares for $22.4 million, respectively. During the three and nine months ended January 31, 2017, the Company repurchased (on the open market) 383,598 shares and 719,098 shares of the Company’s common stock for $9.4 million and $16.3 million, respectively.6.14KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJuly 31, 2023 (continued)5. Financial InstrumentsThe following tables show the Company’s financial instruments and balance sheet classification as of JanuaryJuly 31, 20182023 and April 30, 2017: January 31, 2018 Fair Value Measurement Balance Sheet Classification Cost Unrealized
Gains Unrealized
Losses Fair Value Cash and
Cash
Equivalents Marketable
Securities,
Current Marketable
Securities,
Non-current Income
Taxes &
Other
Receivables Other
Accrued
Liabilities (in thousands) $ 388,962 $ — $ — $ 388,962 $ 388,962 $ — $ — $ — $ — 1,028 — — 1,028 1,028 — — — — 124,202 15,489 (688 ) 139,003 — 14,807 124,196 — — $ 514,192 $ 15,489 $ (688 ) $ 528,993 $ 389,990 $ 14,807 $ 124,196 $ — $ — $ — $ 814 $ (1,992 ) $ (1,178 ) $ — $ — $ — $ 78 $ (1,256 ) $ — $ 1,390 $ — $ 1,390 $ — $ — $ — $ 1,390 $ — April 30, 2017 Fair Value Measurement Balance Sheet Classification Cost Unrealized
Gains Unrealized
Losses Fair Value Cash and
Cash
Equivalents Marketable
Securities,
Current Marketable
Securities,
Non-current Income
Taxes &
Other
Receivables Other
Accrued
Liabilities (in thousands) $ 409,824 $ — $ — $ 409,824 $ 409,824 $ — $ — $ — $ — 1,058 — — 1,058 1,058 — — — — 113,818 6,697 (578 ) 119,937 — 4,363 115,574 — — $ 524,700 $ 6,697 $ (578 ) $ 530,819 $ 410,882 $ 4,363 $ 115,574 $ — $ — $ — $ 129 $ (846 ) $ (717 ) $ — $ — $ — $ — $ (717 ) $ — $ — $ (947 ) $ (947 ) $ — $ — $ — $ — $ (947 ) July 31, 2023 Fair Value Measurement Balance Sheet Classification Cost Unrealized
GainsUnrealized
LossesFair
ValueCash and
Cash
EquivalentsMarketable
Securities,
CurrentMarketable
Securities,
Non-
currentIncome Taxes &
Other Receivables(in thousands) Changes in Fair Value Recorded in Other Comprehensive Gain Level 2: Corporate notes/bonds $ 19,327 $ — $ (203) $ 19,124 $ — $ 19,124 $ — $ — Total debt investments $ 19,327 $ — $ (203) $ 19,124 $ — $ 19,124 $ — $ — Changes in Fair Value Recorded in Net Income Level 1: Mutual funds (1)$ 199,721 $ — $ 10,362 $ 189,359 $ — Total equity investments $ 199,721 $ — $ 10,362 $ 189,359 $ — Cash $ 520,898 $ 520,898 $ — $ — $ — Money market funds 41,311 41,311 — — — Level 2: Foreign currency forward contracts 859 — — — 859 Total $ 781,913 $ 562,209 $ 29,486 $ 189,359 $ 859 15KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJuly 31, 2023 (continued)April 30, 2023 Fair Value Measurement Balance Sheet Classification Cost Unrealized
GainsUnrealized
LossesFair
ValueCash and
Cash
EquivalentsMarketable
Securities,
CurrentMarketable
Securities,
Non-currentIncome Taxes &
Other Receivables(in thousands) Changes in Fair Value Recorded in Other Comprehensive Loss Level 2: Commercial paper $ 11,751 $ — $ (30) $ 11,721 $ — $ 11,721 $ — $ — Corporate notes/bonds 24,754 — (355) 24,399 — 21,492 2,907 — Total debt investments $ 36,505 $ — $ (385) $ 36,120 $ — $ 33,213 $ 2,907 $ — Changes in Fair Value Recorded in Net Income Level 1: Mutual funds (1)$ 187,757 $ — $ 11,624 $ 176,133 $ — Total equity investments $ 187,757 $ — $ 11,624 $ 176,133 $ — Cash $ 696,180 $ 696,180 $ — $ — $ — Money market funds 147,844 147,844 — — — Level 2: Foreign currency forward contracts 2,133 — — — 2,133 Total $ 1,070,034 $ 844,024 $ 44,837 $ 179,040 $ 2,133 ___________________(1) These investments are held in trust for settlement of the Company’s vested obligations of $122.3$192.5 million and $99.5$172.2 million as of JanuaryJuly 31, 20182023 and April 30, 2017,2023, respectively, under the ECAP (see Note 76 — Deferred Compensation and Retirement Plans)Plans). Unvested obligations under the deferred compensation plans totaled $16.8 million and $21.9 million as of July 31, 2023 and April 30, 2023, respectively. During the three and nine months ended JanuaryJuly 31, 2018,2023 and 2022, the fair value of the investments increased; therefore, the Company recognized incomea gain of $7.2$12.8 million and $14.0 million, respectively, which was recorded in other income, net. During the three and nine months ended January 31, 2017, the fair value of the investments increased; therefore, the Company recognized income of $3.9 million and $7.1$0.1 million, respectively, which was recorded in other income, net.As of July 31, 2023, available-for-sale marketable securities had remaining maturities ranging from 1 month to 10 months. During the three months ended July 31, 2023 and 2022, there were $17.2 million and $14.4 million in sales/maturities of available-for-sale marketable securities, respectively. Investments in marketable securities classified as tradingthat are held in trust for settlement of the Company’s vested obligations under the ECAP are equity securities and are based upon the investment selections the employee electionselects from apre-determined set of securities in the ECAP and the Company invests in marketableequity securities to mirror these elections. As of JanuaryJuly 31, 20182023 and April 30, 2017,2023, the Company’s investments in marketableequity securities classified as trading consistconsisted of mutual funds for which market prices are readily available.KORN/FERRY INTERNATIONAL AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJanuary 31, 2018 (continued)Designated Derivatives - Interest Rate Swap AgreementIn March 2017, the Company entered into an interest rate swap contract with a notional amount of $129.8 million, Unrealized gains that relate to hedge the variability to changes in cash flows attributable to interest rate risks caused by changes in interest rates related to its variable rate debt. The Company has designated the swap as a cash flow hedge. The notional amount will be amortized so that the amount is always half of the principal balance of the debt outstanding. As of January 31, 2018, the notional amount was $122.0 million. The interest rate swap agreement matures on June 15, 2021 and locks the interest rates on half the debt outstanding at 1.919%, exclusive of the credit spread on the debt.The fair value of the derivative designated as a cash flow hedge instrument is as follows: January 31,
2018 April 30,
2017 (in thousands) $ 1,390 $ — $ — $ 947 During the three and nine months ended January 31, 2018, the Company recognized the following gains and losses on the interest rate swap: Three Months
Ended Nine Months
Ended January 31, 2018 (in thousands) $ 973 $ 1,061 $ 167 $ 667 As the critical terms of the hedging instrument and the hedged forecasted transaction are the same, the Company has concluded that the changes in the fair value or cash flows attributable to the risk being hedged are expected to completely offset at inception and on an ongoing basis.We estimate that the amount included in accumulated other comprehensive incomeequity securities still held as of JanuaryJuly 31, 20182023 were $11.9 million, while unrealized losses that will be reclassified into interest expense, net within the following 12 months is less than $0.1 million in income. The cash flows relatedrelate to the interest rate swap contract are included in net cash provided by operating activities.Non-Designated Derivatives – equity securities held as of July 31, 2022 were $0.5 million.Foreign Currency Forward ContractsThe fair value of derivatives not designated as hedge instruments are as follows: January 31,
2018 April 30,
2017 (in thousands) $ 814 $ — (736 ) — $ 78 $ — $ 1,992 $ 846 (736 ) (129 ) $ 1,256 $ 717 July 31,
2023April 30,
2023(in thousands) Derivative assets: Foreign currency forward contracts $ 1,573 $ 2,813 Derivative liabilities: Foreign currency forward contracts $ 714 $ 680 16(1)These amounts represent the impact of netting derivative assets and derivative liabilities when a legally enforceable master netting agreement exists and fair value of adjustments related to our counterparty credit risk.KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJuly 31, 2023 (continued)As of JanuaryJuly 31, 2018,2023, the total notional amounts of the forward contracts purchased and sold were $19.7$84.6 million and $57.2$21.2 million, respectively. As of April 30, 2017,2023, the total notional amounts of the forward contracts purchased and sold were $19.4KORN/FERRY INTERNATIONAL AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJanuary 31, 2018 (continued)$70.0$41.1 million, respectively. The Company recognizes forward contracts as a net asset or net liability on the consolidated balance sheets as such contracts are covered by master netting agreements. During the three and nine months ended JanuaryJuly 31, 2018,2023 and 2022, the Company incurred gains of $1.7 million and losses of $1.9 million and $4.2$0.6 million, respectively, related to forward contracts which is recorded in general and administrative expenses in the accompanying consolidated statements of income. These foreign currency gains and losses offset foreign currency gains that result from transactions denominated in a currency other than the Company’s functional currency. During the threelosses and nine months ended January 31, 2017, the Company incurred gains of $1.1 million and $1.3 million, respectively, related to forward contracts. These gains offset foreign currency losses that result from transactions denominated in a currency other than the Company’s functional currency. The cash flows related to foreign currency forward contracts are included in net cash used inflows from operating activities.7.6. Deferred Compensation and Retirement PlansThe Company has several deferred compensation and retirement plans for eligible consultants and vice presidents that provide defined benefits to participants based on the deferral of current compensation or contributions made by the Company subject to vesting and retirement or termination provisions. Among these plans is a defined benefit pension plan for certain Hay Group employees in the United States.U.S. The assets of this plan are held separately from the assets of the sponsorssponsor in self-administered funds. The plan is funded consistent with local statutory requirements. All other defined benefit obligations from other plans are unfunded.The components of net periodic benefit costs are as follows: Three Months Ended
January 31, Nine Months Ended
January 31, 2018 2017 2018 2017 (in thousands) $ 3,235 $ 1,793 $ 8,526 $ 3,981 958 1,062 2,876 3,185 577 763 1,731 2,289 (398 ) (389 ) (1,195 ) (1,169 ) $ 4,372 $ 3,229 $ 11,938 $ 8,286 Three Months Ended
July 31,2023 2022 (in thousands) Service cost $ 9,833 $ 9,143 Interest cost 3,357 2,387 Amortization of actuarial loss 184 218 Expected return on plan assets (1)(272) (289) Net periodic service credit amortization (101) (101) Net periodic benefit costs (2)$ 13,001 $ 11,358 ___________________(1) The expected long-term rate of return on plan assets is 6.50%was 6.00% and 5.50% for JanuaryJuly 31, 20182023 and 2017.2022, respectively.(2) The service cost, interest cost and the other components of net periodic benefit costs are included in compensation and benefits expense, interest expense, net and other income, net, respectively, on the consolidated statements of income. 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 undersetting aside funds to cover such plans. The gross CSV of these contracts of $185.0$277.2 million and $180.3$275.1 million as of JanuaryJuly 31, 20182023 and April 30, 2017,2023, respectively, iswas offset by outstanding policy loans of $66.8 million and $67.2$77.1 million in the accompanying consolidated balance sheets as of Januaryboth July 31, 20182023 and April 30, 2017, respectively.2023. The CSV value of the underlying COLI investments increased by $1.8 million and $6.0$2.0 million during both the three and nine months ended JanuaryJuly 31, 2018, respectively,2023 and is2022, and was recorded as a decrease in compensation and benefits expense in the accompanying consolidated statements of income. The CSV value of the underlying COLI investments increased by $0.1 million and $3.3 million during the three and nine months ended January 31, 2017, respectively, and is recorded as a decrease in compensation and benefits expense in the accompanying consolidated statements of income.The Company’s ECAP is intended to provide certain employees an opportunity to defer their salary and/or bonus on apre-tax basis. In addition, the Company, as part of its compensation philosophy, makes discretionary contributions into the ECAP and such contributions may be granted to key employees annually based on the employee’s performance. Certain key members of management may also receive Company ECAP contributions upon commencement of employment. The Company amortizes these contributions on a straight-line basis over the service period, generally a four- to five-yearfive year period. Participants have the ability to allocate their deferrals among a number of investment options and may receive their benefits at termination, retirement or “in service”‘in service’ either in a lump sum or in quarterly installments over one to 15-to-15 years. The ECAP amounts that are expected to be paid to employees over the next 12 months are classified as a current liability included in compensation and benefits payable on the accompanying consolidated balance sheet.The ECAP is accounted for whereby the changes in the fair value of the vested amounts owed to the participants are adjusted with a corresponding charge (or credit) to compensation and benefits costs. During the three and nine months ended JanuaryJuly 31, 2018,2023 and 2022, deferred compensation liability increased; therefore, the Company recognized an increase in compensation expense of $7.2$12.5 million and $14.4$0.9 million, respectively. Offsetting the increaseincreases in compensation and benefits expense was an increase in the fair value of marketable securities classified as trading (held in trust to satisfy obligations underof the ECAP)ECAP liabilities) of $7.217KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJuly 31, 2023 (continued)$12.8 million and $14.0$0.1 million during the three and nine months ended JanuaryJuly 31, 2018,2023 and 2022, respectively, recorded in other income, net on the consolidated statements of income. During the three and nine months ended January 31, 2017, deferred compensation liability increased; therefore,(see Note 5—Financial Instruments).7. Fee RevenueContract BalancesA contract asset (unbilled receivables) is recorded when the Company recognizedtransfers control of products or services before there is an increaseunconditional right to payment. A contract liability (deferred revenue) is recorded when cash is received in compensation expenseadvance of $4.1 million and $6.7 million, respectively. Offsetting the increase in compensation and benefits expense was an increase in the fair value of marketable securities classified as trading (held in trust to satisfy obligations under the ECAP) of $3.9 million and $7.1 million during theKORN/FERRY INTERNATIONAL AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJanuary 31, 2018 (continued)three and nine months ended January 31, 2017, respectively, recorded in other income, net on the consolidated statements of income (see Note 6 —Financial Instruments).8. Restructuring Charges, NetDuring 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. The Company continued the implementationperformance of the fiscal 2016 restructuring planobligation. Deferred revenue represents the future performance obligations to transfer control of products or services for which we have already received consideration. Deferred revenue is presented in fiscal 2018 in order to integrate the Hay Group entities that were acquired in fiscal 2016 by consolidating premises.Changes in the restructuring liability during the three months ended January 31, 2018 are as follows: Severance Facilities Total (in thousands) $ 1,541 $ 4,716 $ 6,257 (231 ) (1,063 ) (1,294 ) 123 55 178 $ 1,433 $ 3,708 $ 5,141 Severance Facilities Total (in thousands) $ 5,341 $ 8,354 $ 13,695 — 78 78 (4,178 ) (5,328 ) (9,506 ) 270 604 874 $ 1,433 $ 3,708 $ 5,141 As of January 31, 2018 and April 30, 2017, the restructuring liability is included in the current portion of other accrued liabilities on the consolidated balance sheets, except for $1.6sheets.The following table outlines the Company’s contract asset and liability balances as of July 31, 2023 and April 30, 2023:July 31, 2023 April 30, 2023 (in thousands) Contract assets-unbilled receivables $ 114,635 $ 99,442 Contract liabilities-deferred revenue $ 241,734 $ 257,067 During the three months ended July 31, 2023, we recognized revenue of $88.2 million and $4.6 million, respectively, of facilities costs which primarily relate to commitments under operating leases, net of sublease income, which arethat was included in other long-term liabilities.Performance ObligationsThe restructuring liabilityCompany has elected to apply the practical expedient to exclude the value of unsatisfied performance obligations for contracts with a duration of one year or less, which applies to all executive search, professional search and to most of the fee revenue from the interim business. As of July 31, 2023, the aggregate transaction price allocated to the performance obligations that are unsatisfied for contracts with an expected duration of greater than one year at inception was $1,049.0 million. Of the $1,049.0 million of remaining performance obligations, the Company expects to recognize approximately $470.5 million in the remainder of fiscal 2024, $344.2 million in fiscal 2025, $144.6 million in fiscal 2026 and the remaining $89.7 million in fiscal 2027 and thereafter. However, this amount should not be considered an indication of the Company’s future revenue as contracts with an initial term of one year or less are not included. Further, our contract terms and conditions allow for clients to increase or decrease the scope of services and such changes do not increase or decrease a performance obligation until the Company has an enforceable right to payment.Disaggregation of RevenueThe Company disaggregates its revenue by segmentline of business and further by region for Executive Search. This information is summarized below: January 31, 2018 Severance Facilities Total (in thousands) $ — $ 262 $ 262 — 5 5 — 267 267 1,433 3,340 4,773 — 101 101 $ 1,433 $ 3,708 $ 5,141 April 30, 2017 Severance Facilities Total (in thousands) $ 134 $ 250 $ 384 393 — 393 — 6 6 — 87 87 527 343 870 4,814 7,879 12,693 — 132 132 $ 5,341 $ 8,354 $ 13,695 The following table provides further disaggregation of fee revenue by industry:Three Months Ended July 31, 2023 2022 Dollars % Dollars % (dollars in thousands) Industrial $ 201,918 28.9 % $ 195,909 28.2 % Financial Services 128,324 18.3 118,799 17.1 Life Sciences/Healthcare 119,354 17.1 133,204 19.1 Technology 115,773 16.6 122,652 17.6 Consumer Goods 96,427 13.8 95,948 13.8 Education/Non–Profit/General 37,393 5.3 29,391 4.2 Fee Revenue $ 699,189 100.0 % $ 695,903 100.0 % 8. Credit LossesThe Company is exposed to credit losses primarily through the services it provides. The Company’s expected credit loss allowance methodology for accounts receivable is developed using historical collection experience, current and future18KORN/KORN FERRY INTERNATIONAL AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJanuaryJuly 31, 20182023 (continued)economic and market conditions and a review of the current status of customers' trade accounts receivables. Due to the short-term nature of such receivables, the estimate of the amount of accounts receivable that may not be collected is primarily based on historical loss-rate experience. When required, the Company adjusts the loss-rate methodology to account for current conditions and reasonable and supportable expectations of future economic and market conditions. The Company generally assesses future economic conditions for a period of sixty to ninety days, which corresponds with the contractual life of its accounts receivables. Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. The Company’s monitoring activities include timely account reconciliation, dispute resolution, payment confirmation, consideration of customers' financial condition and macroeconomic conditions. Balances are written off when determined to be uncollectible.The activity in the allowance for credit losses on the Company's trade receivables is as follows:(in thousands) Balance at April 30, 2023 $ 44,377 Provision for credit losses 5,965 Write-offs (3,153) Recoveries of amounts previously written off 95 Foreign currency translation 134 Balance at July 31, 2023 $ 47,418 9. Business SegmentsThe fair value and unrealized losses on available for sale debt securities, aggregated by investment category and the length of time the security has been in an unrealized loss position, are as follows:Less Than 12 Months 12 Months or longer Balance Sheet Classification Fair Value Unrealized Losses Fair Value Unrealized Losses Marketable Securities,
CurrentMarketable
Securities, Non-
Current(in thousands) Balance at July 31, 2023 Corporate notes/bonds $ — $ — $ 18,121 $ 203 $ 18,121 $ — Balance at April 30, 2023 Commercial paper $ 8,229 $ 26 $ 3,492 $ 4 $ 11,721 $ — Corporate notes/bonds $ 9,581 $ 123 $ 13,815 $ 232 $ 20,489 $ 2,907 The unrealized losses on 7 investments in commercial paper securities on April 30, 2023, and unrealized losses on 13 and 16 investments in corporate notes/bonds on July 31, 2023 and April 30, 2023, respectively, were caused by fluctuations in market interest rates. The Company currently operatesonly purchases high grade bonds that have a maturity from the date of purchase of no more than two years. The Company monitors the credit worthiness of its investments on a quarterly basis. The Company does not intend to sell the investments and does not believe it will be required to sell the investments before the investments mature and therefore recover the amortized cost basis.9. Income TaxesThe provision for income tax was an expense of $18.4 million in the three global businesses:months ended July 31, 2023, with an effective tax rate of 28.1%, compared to an expense of $26.2 million in the three months ended July 31, 2022, with an effective tax rate of 25.0%. In addition to the impact of U.S. state income taxes and the jurisdictional mix of earnings, which generally create variability in our effective tax rate over time, the tax benefit recorded in the three months ended July 31, 2023 in connection with the windfall from stock-based awards that vested during the three months ended July 31, 2023 was less than the benefit recorded for the three months ended July 31, 2022 in connection with the windfall from stock-based awards that vested during the year-ago quarter. The windfall is the amount by which the Company’s tax deduction for these awards, based on the fair market value of the awards on the date of vesting, is greater than the expense recorded in the Company’s financial statements over the awards’ vesting period.10. SegmentsThe Company has eight reportable segments: Consulting, Digital, Executive Search Hay Group and Futurestep. TheNorth America, Executive Search segment focuses on recruiting BoardEMEA, Executive Search Asia Pacific, Executive Search Latin America, Professional Search & Interim and RPO.19KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJuly 31, 2023 (continued)The Company’s eight reportable segments operate through the following five lines of Directorbusiness:1.Consulting aligns organizational structure, culture, performance andC-level positions, in addition people to research-based interviewing and onboarding solutions, for clients predominantly in the consumer, financial services, industrial, life sciences/healthcare and technology industries. Hay Group assists clients with ongoing assessment, compensation and development of their senior executives and management teams, and addressesdrive sustainable growth by addressing four fundamental needs: TalentOrganizational Strategy, Assessment and Succession, Management, Leadership and Professional Development and Rewards, Motivation and Engagement, all underpinnedTotal Rewards. This work is enabled by a comprehensive arrayset of world-leading intellectual property,Digital Performance Management Tools, based on some of the world’s leading lP and data. The Consulting teams employ an integrated approach across our core capabilities and integrated solutions, each one intended to strengthen the work and thinking in the next, to help clients execute their strategy in a digitally enabled world.2.Digital develops technology-enabled Performance Management Tools that empower our clients. The digital products give clients direct access to Korn Ferry proprietary data, client data, and tools. Futurestepanalytics to deliver clear insights with the training and tools needed to align organizational structure with business strategy.3.Executive Search helps organizations recruit board level, chief executive and other senior executive and general management talent to deliver lasting impact. The Company’s approach to placing talent is bringing together research-based IP, proprietary assessments and behavioral interviewing with practical experience to determine the ideal organizational fit. Salary benchmarking then helps the Company build appropriate frameworks for compensation and retention. This business is managed and reported on a global industry leader in high-impactgeographic basis and represents four of the Company’s reportable segments (Executive Search North America, Executive Search EMEA, Executive Search Asia Pacific, and Executive Search Latin America).4.Professional Search & Interim delivers enterprise talent acquisition solutions. Its portfolio of services includes globalsolutions for professional level middle and regional upper management. The Company helps clients source high-quality candidates at speed and scale globally, covering single-hire to multi-hire permanent placements and interim contractors.5.RPO projectoffers scalable recruitment individual professional searchoutsourcing solutions leveraging customized technology and consulting.talent insights. The Company's scalable solutions, built on science and powered by best-in-class technology and consulting expertise, enables the Company to act as a strategic partner in clients’ quest for superior recruitment outcomes and better candidate fit.Executive Search business segment is managed by geographic regional leadersleaders. Worldwide operations for Consulting, Digital, Professional Search & Interim and Hay Group and Futurestep worldwide operationsRPO are managed by their Chief Executive Officers. Beginning in the second quarter of fiscal 2024, Digital will be led by the President of Technology. The Executive Search geographic regional leaders and the Chief Executive Officers of Hay GroupConsulting, Professional Search & Interim and FuturestepRPO and the President of Technology 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’smaker (“CODM”) review of (1)1) fee revenue and (2)2) adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). To the extent that such costs or charges occur, Adjusted EBITDA excludes restructuring charges, net, integration/acquisition costs, certain separation costs and certainnon-cash charges (goodwill, intangible asset and other than temporary impairment)impairment charges). The accounting policies for theCODM is not provided asset information by reportable segments are the same as those described in the summary of significant accounting policies, except the items described above are excluded from EBITDA to arrive at Adjusted EBITDA. For the nine months ended January 31, 2017, Adjusted EBITDA includes deferred revenue adjustment related to the Legacy Hay acquisition, reflecting revenue that the Hay Group would have realized if not for business combination accounting that requires a company to record the acquisition balance sheet at fair value andwrite-off deferred revenue where no future services are required to be performed to earn that revenue.Financial highlights by business segment are as follows: Three Months Ended January 31, 2018 Executive Search North
America EMEA Asia Pacific Latin
America Subtotal Hay
Group Futurestep Corporate Consolidated (in thousands) $ 102,716 $ 46,782 $ 24,493 $ 6,425 $ 180,416 $ 198,056 $ 69,109 $ — $ 447,581 $ 106,332 $ 47,763 $ 24,942 $ 6,456 $ 185,493 $ 201,961 $ 73,316 $ — $ 460,770 $ 27,247 180 (7,689 ) 2,665
subsidiaries, net (97 ) 26,316 $ 21,313 $ 7,329 $ 5,289 $ 408 $ 34,339 $ 27,079 $ 10,056 $ (22,852 ) 48,622
amortization 990 458 361 113 1,922 7,882 733 1,688 12,225 585 37 185 40 847 370 2 6,470 7,689
subsidiaries, net 97 — — — 97 — — — 97 22,985 7,824 5,835 561 37,205 35,331 10,791 (14,694 ) 68,633
costs — — — — — 1,593 — 80 1,673 $ 22,985 $ 7,824 $ 5,835 $ 561 $ 37,205 $ 36,924 $ 10,791 $ (14,614 ) $ 70,306 20KORN/KORN FERRY INTERNATIONAL AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJanuaryJuly 31, 20182023 (continued) Three Months Ended January 31, 2017 Executive Search North
America EMEA Asia Pacific Latin
America Subtotal Hay
Group Futurestep Corporate Consolidated (in thousands) $ 84,827 $ 39,147 $ 21,012 $ 7,835 $ 152,821 $ 175,662 $ 53,435 $ — $ 381,918 $ 87,975 $ 39,965 $ 21,336 $ 7,856 $ 157,132 $ 178,962 $ 58,101 $ — $ 394,195 $ 23,897 481 (4,200 ) 2,402
subsidiaries, net (113 ) 8,075 $ 17,718 $ 8,175 $ 2,086 $ 1,352 $ 29,331 $ 15,988 $ 6,549 $ (21,326 ) 30,542
amortization 996 226 268 (21 ) 1,469 8,061 789 1,455 11,774 316 19 60 61 456 122 (2 ) 3,624 4,200
subsidiaries, net 113 — — — 113 — — — 113 19,143 8,420 2,414 1,392 31,369 24,171 7,336 (16,247 ) 46,629 — — 893 309 1,202 2,519 80 — 3,801
costs — — — — — 3,364 — 1,466 4,830 $ 19,143 $ �� 8,420 $ 3,307 $ 1,701 $ 32,571 $ 30,054 $ 7,416 $ (14,781 ) $ 55,260 Nine Months Ended January 31, 2018 Executive Search North
America EMEA Asia Pacific Latin
America Subtotal Hay
Group Futurestep Corporate Consolidated (in thousands) $ 296,093 $ 128,249 $ 71,983 $ 22,048 $ 518,373 $ 577,462 $ 196,018 $ — $ 1,291,853 $ 305,866 $ 130,894 $ 73,009 $ 22,114 $ 531,883 $ 589,093 $ 210,179 $ — $ 1,331,155 $ 92,619 969 (14,847 ) 7,904
subsidiaries, net (187 ) 54,145 $ 66,253 $ 20,349 $ 12,811 $ 2,961 $ 102,374 $ 72,532 $ 27,702 $ (62,005 ) 140,603
amortization 2,923 1,345 1,052 331 5,651 24,110 2,313 4,807 36,881 1,157 136 384 99 1,776 459 10 12,602 14,847
subsidiaries, net 187 — — — 187 — — — 187 70,520 21,830 14,247 3,391 109,988 97,101 30,025 (44,596 ) 192,518 — — 313 — 313 (241 ) 6 — 78
costs — — — — — 6,455 — 199 6,654 $ 70,520 $ 21,830 $ 14,560 $ 3,391 $ 110,301 $ 103,315 $ 30,031 $ (44,397 ) $ 199,250 Financial highlights are as follows:Three Months Ended July 31, 2023 2022 Consolidated (in thousands) Fee revenue $ 699,189 $ 695,903 Total revenue $ 706,262 $ 703,148 Net income attributable to Korn Ferry $ 46,605 $ 77,247 Net income attributable to noncontrolling interest 580 1,289 Other income, net (13,577) (775) Interest expense, net 4,740 7,612 Income tax provision 18,420 26,226 Operating income 56,768 111,599 Depreciation and amortization 19,012 16,229 Other income, net 13,577 775 Integration/acquisition costs 4,128 3,605 Impairment of fixed assets 123 — Impairment of right-of-use assets 1,629 — Restructuring charges, net 421 — Adjusted EBITDA(1)$ 95,658 $ 132,208 ___________________Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, further excludes integration/acquisition costs, impairment of fixed assets, impairment of right-of-use assets, and restructuring charges, net when applicable. Financial highlights by reportable segments are as follows:Three Months Ended July 31, 2023 2022 Fee revenue Total revenue Adjusted EBITDA Fee revenue Total revenue Adjusted EBITDA (in thousands) Consulting $ 168,088 $ 170,793 $ 25,180 $ 166,484 $ 168,735 $ 29,550 Digital 87,986 88,012 24,325 83,761 83,815 24,178 Executive Search: North America 127,498 129,413 28,756 151,544 152,884 43,749 EMEA 46,776 47,135 5,638 47,056 47,329 8,515 Asia Pacific 24,539 24,610 6,315 26,381 26,452 7,351 Latin America 6,421 6,422 1,741 7,808 7,809 2,617 Professional Search & Interim 142,179 143,069 24,329 98,947 100,052 29,161 RPO 95,702 96,808 10,471 113,922 116,072 17,709 Corporate — — (31,097) — — (30,622) Consolidated $ 699,189 $ 706,262 $ 95,658 $ 695,903 $ 703,148 $ 132,208 21KORN/KORN FERRY INTERNATIONAL AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJanuaryJuly 31, 20182023 (continued) Nine Months Ended January 31, 2017 Executive Search North
America EMEA Asia Pacific Latin
America Subtotal Hay
Group Futurestep Corporate Consolidated (in thousands) $ 259,361 $ 109,296 $ 60,108 $ 26,645 $ 455,410 $ 539,086 $ 164,960 $ — $ 1,159,456 Deferred revenue
adjustment due to
acquisition — — — — — 3,535 — — 3,535 $ 259,361 $ 109,296 $ 60,108 $ 26,645 $ 455,410 $ 542,621 $ 164,960 — $ 1,162,991 $ 269,302 $ 111,721 $ 61,445 $ 26,766 $ 469,234 $ 552,822 $ 180,026 $ — $ 1,202,082 $ 57,257 2,245 (7,580 ) 8,199
unconsolidated
subsidiaries, net (221 ) 21,706 $ 60,458 $ 21,049 $ 6,216 $ 5,966 $ 93,689 $ 31,188 $ 21,849 $ (65,120 ) 81,606
amortization 2,816 666 757 267 4,506 24,102 2,081 4,281 34,970 512 (37 ) 171 158 804 346 (4 ) 6,434 7,580
unconsolidated
subsidiaries, net 221 — — — 221 — — — 221 64,007 21,678 7,144 6,391 99,220 55,636 23,926 (54,405 ) 124,377 1,706 128 1,515 669 4,018 24,007 80 216 28,321
costs — — — — — 11,993 — 6,684 18,677
adjustment due to
acquisition — — — — — 3,535 — — 3,535 $ 65,713 $ 21,806 $ 8,659 $ 7,060 $ 103,238 $ 95,171 $ 24,006 $ (47,505 ) $ 174,910 10.11. Long-Term Debt4.625% Senior Unsecured Notes due 2027On December 16, 2019, the Company completed a private placement of 4.625% Senior Unsecured Notes due 2027 (the “Notes”) with a $400 million principal amount pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The Notes were issued with a $4.5 million discount and will mature December 15, 2027, with interest payable semi-annually in arrears on June 15 and December 15 of each year, commencing on June 15, 2020. The Notes represent senior unsecured obligations that rank equally in right of payment to all existing and future senior unsecured indebtedness. The Company may redeem the Notes prior to maturity, subject to certain limitations and premiums defined in the indenture governing the Notes. The Company may redeem the Notes at the applicable redemption prices set forth in the table below, plus accrued and unpaid interest, if redeemed during the 12-month period beginning on December 15 of each of the years indicated:Year Percentage 2022 102.313% 2023 101.156% 2024 and thereafter 100.000% The Notes allow the Company to pay $25 million of dividends per fiscal year with no restrictions, plus an unlimited amount of dividends so long as the Company’s consolidated total leverage ratio is not greater than 3.50 to 1.00, and the Company is not in default under the indenture governing the Notes. The Notes are guaranteed by each of the Company's existing and future wholly owned domestic subsidiaries to the extent such subsidiaries guarantee the Company's credit facilities. The indenture governing the Notes requires that, upon the occurrence of both a Change of Control and a Rating Decline (each as defined in the indenture), the Company shall make an offer to purchase all of the Notes at 101% of their principal amount, and accrued and unpaid interest. The Company used the proceeds from the offering of the Notes to repay $276.9 million outstanding under the Company’s prior revolving credit facility and to pay expenses and fees in connection therewith. The remainder of the proceeds were used for general corporate requirements. The effective interest rate on the Notes was 4.86% as of July 31, 2023. As of July 31, 2023 and April 30, 2023, the fair value of the Notes was $377.0 million and $381.5 million, respectively, based on borrowing rates then required of notes with similar terms, maturity and credit risk. The fair value of the Notes was classified as a Level 2 measurement in the fair value hierarchy.Long-term debt, at amortized cost, consisted of the following:In thousands July 31,
2023April 30,
2023Senior Unsecured Notes $ 400,000 $ 400,000 Less: Unamortized discount and issuance costs (3,621) (3,806) Long-term borrowings, net of unamortized discount and debt issuance costs $ 396,379 $ 396,194 Credit FacilitiesOn June 15, 2016,24, 2022, the Company entered into a senior secured $400 millionan amendment (the “Amendment”) to its December 16, 2019 Credit Agreement (the “Credit Agreement”; as amended by the Amendment, the “Amended Credit Agreement”) with a syndicate of banks and Wells Fargo Bank of America, National Association as administrative agent.agent, to, among other things, (i) extend the existing maturity date of the revolving facility to June 24, 2027, (ii) provide for a new delayed draw term loan facility as described below, (iii) replace the London interbank offered rate with forward-looking Secured Overnight Financing Rate (“SOFR”) term rate ("Term SOFR") as described below, and (iv) replace the existing financial covenants with the financial covenant described below. The Amended Credit Agreement provides for among other things: (a)five-year senior secured credit facilities in an aggregate amount of $1,150.0 million comprised of a senior secured$650.0 million revolving credit facility (the “Revolver”) and a $500.0 million delayed draw term loan facility in an(the “Delayed Draw Facility”, and together with the Revolver, the “Credit Facilities”). The Delayed Draw Facility expired on June 24, 2023. The Amended Credit Agreement also provides that, under certain circumstances, the Company may incur term loans or increase the aggregate principal amount of $275 million (the “Term Facility”), (b) a senior secured revolving credit facility (the “Revolver” and together with the Term Facility, the “Credit Facilities”) incommitments by an aggregate principal amount up to $250.0 million plus an unlimited amount subject to a consolidated secured net leverage ratio of $125 million, (c) annual term loan amortization of 7.5%, 7.5%, 10.0%, 10.0% and 10.0%, with the remaining principal due at maturity, (d)3.25 to 1.00.The Amended Credit Agreement contains certain customary affirmative and negative covenants including a maximum consolidated total leverage ratio (as defined below) and a minimum interest coverage ratio and (e) an expanded definition of permittedadd-backs to Adjusted EBITDA in recognition of the accelerated integration actions. The Company’s credit agreement permits payment of dividends to stockholders and share repurchases so long as the pro forma leverage ratio is no greater than 2.50 to 1.00, and the pro forma domestic liquidity is at least $50.0 million. The Company drew down $275 million on the term loan and used $140 million of the proceeds topay-off the term loan that, was outstanding as of April 30, 2016.Atamong other things, restrict the Company’s option, loans issued under the Credit Agreement will bear interest at either LIBOR or an alternate base rate, in each case plus the applicable interest rate margin. The interest rate applicableability to loans outstanding under the Credit Facilities may fluctuate between LIBOR plus 1.25% per annum to LIBOR plus 2.00% per annum, in the case of LIBOR borrowings (or between the alternate base rate plus 0.25% per annumincur additional indebtedness, grant liens and the alternate base rate plus 1.00% per annum, in the alternative), based upon the Company’s total funded debt to adjusted EBITDA ratio (as set forth in the Credit Agreement, the “consolidated leverage ratio”) at such time.make certain acquisitions, investments, asset dispositions and restricted payments. In addition, the Company will be required to pay toAmended Credit Agreement contains a covenant that requires the lenders a quarterly fee ranging from 0.20% to 0.35% per annum on the average daily unused amount of the Term Facility, based upon the Company’s consolidated leverage ratio at such time and fees relating to the issuance of letters of credit. During the three and nine months ended January 31, 2018, the average rate on the Term Facility was 2.65% and 2.49%, respectively. During the three and nine months ended January 31, 2017, the average rate on the Term Facility was 2.06% and 2.29%, respectively.22KORN/KORN FERRY INTERNATIONAL AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJanuaryJuly 31, 20182023 (continued)BothCompany to maintain a maximum consolidated secured leverage ratio of 3.50 to 1.00 (which may be temporarily increased to 4.00 following certain material acquisitions under certain circumstances) (the “Financial Covenant”).The principal balance of the Revolver, and the Term Facilityif any, is due at maturity. The Credit Facilities mature on June 15, 202124, 2027 and any unpaid principal balance is payable on this date. The Credit Facilities may also be prepaid and terminated early by the Company at any time without premium or penalty (subject to customary LIBOR breakage fees). The Term Facility is payable in quarterly installments with principal payments totalling $15.5 million made during the nine months ended January 31, 2018. As of January 31, 2018, $244.1 million wasAmounts outstanding under the Amended Credit Agreement will bear interest at a rate equal to, at the Company’s election, either Term Facility comparedSOFR plus a SOFR adjustment of 0.10%, plus an interest rate margin between 1.125% per annum and 2.00% per annum, depending on the Company’s consolidated net leverage ratio, or base rate plus an interest rate margin between 0.125% per annum and 1.00% per annum depending on the Company’s consolidated net leverage ratio. In addition, the Company will be required to $259.5 million aspay to the lenders a quarterly commitment fee ranging from 0.175% to 0.300% per annum on the actual daily unused amount of the Revolver, based upon the Company’s consolidated net leverage ratio at such time, and fees relating to the issuance of letters of credit.As of July 31, 2023 and April 30, 2017.2023, there was no outstanding liability under the Credit Facilities. The current and long-term portion of unamortized debt issuance costs associated with the long-term debt,Amended Credit Agreement was $2.9$3.9 million and $3.5$4.2 million as of JanuaryJuly 31, 20182023 and April 30, 2017,2023, respectively. The fair value ofdebt issuance costs were included in other current assets and other non-current assets on the Company’s Term Facility is based on borrowing rates currently required of loans with similar terms, maturity and credit risk. The carrying amount of the Term Facility approximates fair value because the base interest rate charged varies with market conditions and the credit spread is commensurate with current market spreads for issuers of similar risk. The fair value of the Term Facility is classified as a Level 2 liability in the fair value hierarchy.consolidated balance sheets. As of JanuaryJuly 31, 2018,2023, the Company was in compliance with its debt covenants.As of January 31, 2018 and April 30, 2017, the Company had no borrowings under the Revolver. The Company had $2.9 million and $3.0 million of standby letters of credits issued under its long-term debt arrangements as of January 31, 2018 and April 30, 2017, respectively. The Company had a total of $7.3$645.4 million and $8.1$1,145.4 million available under the Credit Facilities after $4.6 million and $4.6 million of standby letters of creditscredit were issued as of July 31, 2023 and April 30, 2023, respectively. Of the amount available under the Credit Facilities as of April 30, 2023, $500.0 million was under the Delayed Draw Facility that expired on June 24, 2023. The Company had a total of $10.9 million and $11.5 million of standby letters with other financial institutions as of JanuaryJuly 31, 20182023 and April 30, 2017,2023, respectively. The standby letters of creditscredit were generally issued as a result of entering into office premise leases.11. Income Taxes12. LeasesThe current fiscal year effective tax rate was significantly impacted by the December 22, 2017 enactmentCompany’s lease portfolio is comprised of operating leases for office space and equipment and finance leases for equipment. Equipment leases are comprised of vehicles and office equipment. The majority of the Tax Act into lawCompany’s leases include both lease and non-lease components. Non-lease components primarily include maintenance, insurance, taxes and other utilities. The Company combines fixed payments for non-lease components with its lease payments and accounts for them as a single lease component, which increases its ROU assets and lease liabilities. Some of the leases include one or more options to renew or terminate the lease at the Company’s discretion. Generally, the renewal and termination options are not included in the United States.ROU assets and lease liabilities as they are not reasonably certain of exercise. The Company has elected not to recognize a ROU asset or lease liability for leases with an initial term of 12 months or less.As most significant impacts of the Tax ActCompany’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of the future minimum lease payments. The Company applies the portfolio approach when determining the incremental borrowing rate since it has a centrally managed treasury function. The Company’s incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments in a similar economic environment.Operating leases contain both office and equipment leases and have remaining terms that range from less than one year to nine years, some of which also include (1) a reductionoptions to extend or terminate the lease. Finance leases are comprised of equipment leases and have remaining terms that range from less than one year to five years. Finance lease assets are included in the U.S. corporate federal statutory income tax rate from 35.0% to 21.0% effective January 1, 2018,property and (2) aone-time tax on accumulated foreign earnings (the “Transition Tax”), which is applicable at a rate of 15.5% on cashequipment, net while finance lease liabilities are included in other accrued liabilities and other specified assets and 8% on other residual earnings. Because our fiscalyear-end is April 30, 2018,liabilities.During the Company’s fiscal 2018 statutory federal tax rate is 30.4%.As a result of the enactment of the Tax Act,three months ended July 31, 2023, the Company recorded a provisional tax charge of $16.3 million for the Transition Taxreduced its real estate footprint and a provisional tax benefit of $5.8 million from the remeasurement of our U.S. federal deferred tax assets and liabilities at the rate at which we expect these deferred tax balances to be realized (30.4% in fiscal 2018 and 21.0% thereafter). The amounts recorded as a result recorded an impairment charge of the enactmentROU assets of $1.6 million in the consolidated statements of income. No impairment charge of the Tax Act, specificallyROU assets was recorded during the impactthree months ended July 31, 2022.23KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJuly 31, 2023 (continued)The components of lease expense were as follows:Three Months Ended
July 31,2023 2022 (in thousands) Finance lease cost Amortization of ROU assets $ 402 $ 373 Interest on lease liabilities 54 48 456 421 Operating lease cost 11,697 12,415 Short-term lease cost 269 163 Variable lease cost 3,191 2,655 Lease impairment cost 1,629 — Sublease income (1,063) (507) Total lease cost $ 16,179 $ 15,147 Supplemental cash flow information related to leases was as follows:Three Months Ended
July 31,2023 2022 (in thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 13,568 $ 15,513 Financing cash flows from finance leases $ 382 $ 412 ROU assets obtained in exchange for lease obligations: Operating leases $ 1,219 $ 3,555 Finance leases $ 447 $ 2,384 24KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJuly 31, 2023 (continued)Supplemental balance sheet information related to leases was as follows:July 31, 2023 April 30, 2023 (in thousands) Finance Leases: Property and equipment, at cost $ 7,674 $ 7,103 Accumulated depreciation (3,169) (2,741) Property and equipment, net $ 4,505 $ 4,362 Other accrued liabilities $ 1,529 $ 1,372 Other liabilities 3,113 3,053 Total finance lease liabilities $ 4,642 $ 4,425 Weighted average remaining lease terms: Operating leases 4.3 years 4.5 years Finance leases 3.6 years 3.8 years Weighted average discount rate: Operating leases 4.8 % 4.5 % Finance leases 4.9 % 4.7 % Maturities of lease liabilities were as follows:Year Ending April 30, Operating Financing (in thousands) 2024 (excluding the three months ended July 31, 2023) $ 38,363 $ 1,325 2025 44,632 1,484 2026 40,132 1,089 2027 21,304 689 2028 10,370 467 Thereafter 16,211 — Total lease payments 171,012 5,054 Less: imputed interest 16,389 412 Total $ 154,623 $ 4,642 13. Restructuring Charges, NetDuring the Transition Taxthree months ended July 31, 2023, the Company made adjustments to previously recorded restructuring accruals resulting in restructuring charges of $0.4 million, of which $0.2 million and $0.2 million were recorded in Consulting and Executive Search EMEA, respectively. There were no restructuring charges during the remeasurementthree months ended July 31, 2022.25KORN FERRY AND SUBSIDIARIESNOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTSJuly 31, 2023 (continued)Changes in the restructuring liability during the three months ended July 31, 2023 were as follows:Restructuring Liability (in thousands) As of April 30, 2023 $ 8,004 Restructuring charges, net 421 Reductions for cash payments (4,109) Exchange rate fluctuations (16) As of July 31, 2023 $ 4,300 As of deferred tax balances, are provisional estimates. Additional informationJuly 31, 2023 and analysis are required to finalizeApril 30, 2023, the impact thatrestructuring liability is included in the Tax Act will havecurrent portion of other accrued liabilities on our financial results, including the final determination of foreign cash and other specified assets at the end of fiscal 2018, refinement of the computation of foreign subsidiaries earnings and the final determination of deferred tax balances subject to remeasurement. Additionally, anticipated future guidance from the Internal Revenue Service, state tax agencies, the Financial Accounting Standards Board and the Securities and Exchange Commission could result in changes to these provisional amounts. The Company will continue to appropriately refine these amounts within the measurement period allowed by Staff Accounting Bulletin (“SAB”) No.118, which will be completed no later than December 22, 2018.12.consolidated balance sheets.14. Subsequent EventsQuarterly Dividend DeclarationOn March 5, 2018,September 6, 2023, the Board of Directors of the Company declared a cash dividend of $0.10$0.18 per share with a payment date of AprilOctober 13, 20182023 to holders of the Company’s common stock of record at the close of business on March 26, 2018.September 22, 2023. The declaration and payment of future dividends under the quarterly dividend policy will be at the discretion of the Board of Directors and will depend upon many factors, including the Company’s earnings, capital requirements, financial conditions,condition, the terms of the Company’s indebtedness and other factors that the Board of Directors may deem to be relevant. The Board of Directors may amend, revoke, or suspend the dividend policy at any time and for any reason.26Item 2.Management’s Discussion and Analysis of Financial Condition and Results of OperationsForward-lookingForward-Looking StatementsThis Quarterly Report onForm 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, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements generally can be identified by use of statements that include phrases such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “may,” “will,” “likely,” “estimates,” “potential,” “continue” or other similar words or phrases. Similarly, statements that describe our objectives, plans or goals, including the timing and anticipated impacts of our restructuring plans and business strategy, are also are forward-looking statements. All of theseThese forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from those contemplated by the relevant forward-looking statement. The principal risk factors that could cause actual performance and future actions to differ materially from the forward-looking statements include, but are not limited to, those relating to global and local political and or economic developments in or affecting countries where we have operations, such as inflation, interest rates, global slowdowns, or recessions, competition, geopolitical tensions, shifts in global trade patterns, changes in demand for our services as a result of automation, dependence on and costs of attracting and retaining qualified and experienced consultants, impact of inflationary pressures on our profitability, maintaining our relationships with customers and suppliers and retaining key employees, maintaining our brand name and professional reputation, potential legal liability and regulatory developments, portability of client relationships, globalconsolidation of or within the industries we serve, changes and local political or economic developments in or affecting countries where we have operations, governmental laws and regulations, evolving investor and customer expectations with regard to environmental, social and governance matters,currency fluctuations in our international operations, risks related to growth, alignment of our cost structure, including as a result of recent workforce, real estate, and other restructuring initiatives, restrictions imposed byoff-limits agreements, competition, reliance on information processing systems, cyber security vulnerabilities or events, changes to data security, data privacy, and data protection laws, dependence on third parties for the execution of critical functions, limited protection of our intellectual property (“IP”), our ability to enhance, develop and developrespond to new technology, including artificial intelligence, our ability to successfully recover from a disaster or other business continuity problems, employment liability risk, an impairment in the carrying value of goodwill and other intangible assets, treaties, or regulations on our business and our Company, deferred tax assets that we may not be able to use, our ability to develop new products and services, changes in our accounting estimates and assumptions, tax accounting effects of the Tax Act, alignment of our cost structure, risks related to the integration of recently acquired businesses, the utilization and billing rates of our consultants, seasonality, the expansion of social media platforms, the ability to effect acquisitions and integrate acquired businesses, including Salo LLC ("Salo"), resulting organizational changes, our indebtedness, those relating to the ultimate magnitude and duration of any pandemic or outbreaks, and the matters disclosed under the heading “Risk Factors” in the Company’s Exchange Act reports, including Item 1A ofincluded in the Company’s Annual Report on Form10-K for the fiscal year ended April 30, 2017 (“Form2023 (the “Form 10-K”) and Item 1A of this Quarterly Report on Form10-Q.. Readers are urged to consider these factors carefully in evaluating the forward-looking statements. The forward-looking statements included in this Quarterly Report on Form10-Q are made only as of the date of this Quarterly Report on Form10-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 financialcondition and results of operations should be read together with our consolidatedfinancial statements and related notes included in this Quarterly Report onForm 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.Executive SummaryKorn/Korn Ferry International (referred to herein as the “Company,” “Korn Ferry,”“Company” or in the first personfirst-person notations “we,” “our,”“our” and “us”) is a global organizational consulting firm. We help clients synchronize strategy, operations and talent to drive superior business performance. We work with organizations to design their structures, roles and responsibilities. We help them hire the right people to bring their strategy to life. And we advise them on how to reward, develop and motivate their people.We are pursuing a strategy to help Korn Ferry focus on clients and collaborate intensively across the organization. This approach is intended to build on the best of our past and give us a clear path to the future with focused initiatives to increase our client and commercial impact. Korn Ferry is transforming how clients address their talent management needs. We have evolved from a mono-line business to a multi-faceted consultancy business, giving our consultants more frequent and expanded opportunities to engage with clients.The Company services its clients with a core set of solutions that are anchored around talent and talent management – essentially touching every aspect of an employer’s engagement with their employees. Our services includefive core solutions are as follows: Organizational Strategy, Assessment and Succession, Leadership and Professional Development, Total Rewards, and Talent Acquisition. Our colleagues engage with our clients through the delivery of one of our core solutions as a point solution sale or through combining component parts of our core solutions into an integrated solution. In either case, we are solving our clients’ most challenging business and human capital issues.27Further differentiating our service offerings from our competitors is the unique combination of IP, content, and data sets that we have, which permeate all of our solution areas. For many years, we have been accumulating data around assessments of executives and professionals, pay, success profiles, organizational engagement and design, job architecture, and candidates. Integrating this unique collection of data into our service offerings provides our colleagues with differentiated points of view and solutions, as well as the ability to demonstrate the efficacy of all of our offerings.Over the last three and one-half years, we have seen more change in the workplace than we did in the previous 15 years. Today, we find ourselves doing different work and working differently. Employees want to and they are working remotely. People don’t want to be tethered to a single company for their entire career. Rather, they want to have many new and unique experiences across many different employers – a career nomad of sorts. There is growing demand for companies to have responsibilities that go beyond delivering profits to shareholders, covering areas such as Environmental, Social and Governance. The continual advancement of technologies like Generative AI creates a constant demand for workers to be upskilled or reskilled. All of these changes and disruptions lead to opportunities for Korn Ferry and make us more relevant than at any time in our history. We have core and integrated solutions that line up to these issues and help our clients solve their most pressing business and Human Capital challenges.Leveraging the strong connection between our various service offering and our lines of business, we have an integrated go-to-market strategy. As we drive this strategy, a focal point for us is our Marquee and Regional account program which is comprised of about 340 of our top clients that generate in excess of 35% of our consolidated fee revenue. These accounts have Global Account Leaders assigned who help to orchestrate the delivery of core and integrated solutions that cut across multiple lines of business – effectively making all of the Firm’s resources available as our clients tackle their business and Human Capital issues. Korn Ferry is poised for continued growth. We are capitalizing on the current and growing relevance of our core and integrated solutions which, in combination with the strong connections amongst all of our service offerings and our M&A activities, drives top-line synergies that have resulted in double digit fee revenue growth rates (CAGR) over the past twenty years.Our eight reportable segments operate through the following five lines of business:1.Consulting aligns organizational structure, culture, performance and people to drive sustainable growth by addressing four fundamental needs: Organizational Strategy, Assessment and Succession, Leadership and Professional Development, and Total Rewards. We enable this work with a comprehensive set of Digital Performance Management Tools, based on some of the world’s leading lP and data. The Consulting teams employ an integrated approach across core solutions, each one intended to strengthen our work and thinking in the next, to help clients execute their strategy in a digitally enabled world.2.Digital develops technology-enabled Performance Management Tools that empower our clients. Our digital products give clients direct access to our proprietary data, client data and analytics to deliver clear insights with the training and tools needed to align organizational structure with business strategy.3.Executive Search helps organizations recruit board level, chief executive and other senior executive and general management talent to deliver lasting impact. Our approach to placing talent brings together research-based IP, proprietary assessments, and behavioral interviewing with our practical experience to determine the ideal organizational fit. Salary benchmarking then builds appropriate frameworks for compensation and retention. This business is managed and reported on a geographical basis and represents four of the Company’s reportable segments (Executive Search North America, Executive Search advisoryEurope, the Middle East and Africa (“EMEA”), Executive Search Asia Pacific (“APAC”), and Executive Search Latin America).4.Professional Search & Interim delivers enterprise talent acquisition solutions for professional level middle and products through Hay Group (formerly known as Leadership & Talent Consulting (“Legacy LTC”) which was combined with HG (Luxembourg) S.à.r.l (“Legacy Hay”) in December 2015)upper management. We help clients source high-quality candidates at speed and recruitment fornon-executive professionalsscale globally, covering single-hire to multi-hire permanent placements and recruitment process outsourcinginterim contractors.5.Recruitment Process Outsourcing (“RPO”) through Futurestep. The Company also operatesoffers scalable recruitment outsourcing solutions leveraging customized technology and talent insights. Our scalable solutions, built on science and powered by best-in-class technology and consulting expertise, enable us to act as a Corporate segment to record global expensesstrategic partner in clients’ quest for superior recruitment outcomes and better candidate fit.Highlights of the Company. our performance in fiscal 2023 include:•Approximately 71%78% of the executive searches we performed in fiscal 20172023 were for board level, chief executive and other senior executive and general management positions. Our 3,589 executivemore than 4,000 search engagement clients in fiscal 20172023 included many of the world’s largest and most prestigious public and private companies, including approximately 57% of the Fortune 500, middle market and emerging growth companies, as well as government and nonprofit organizations. companies.•We have built strong client loyalty, with 82%nearly 80% of the assignments performed (without giving effect to Legacy Hay assignments) during fiscal 20172023 having been on behalf of clients for whom we had conducted assignments in the previous three fiscal years.28•Approximately 61%80% of our revenues were generated from clients that utilizehave utilized multiple lines of our business.Superior performance comes from having the right conditions for success in two key areas – the organization•In fiscal 2023, we acquired Infinity Consulting Solutions ("ICS") and its people. Organizational conditions encourage people to put forth their best effort and invest their energy towards achieving the organization’s purpose. We can help operationalizeSalo. ICS is a client’s complete strategy or address any combinationprovider of five broad categories:Organizational StrategyWe map talent strategy to business strategy by designing operating models and organizational structures that align to them, helping organizations put their plans into action. We make sure they have the right people, in the right roles, engaged and enabled to do the right things.Assessment and SuccessionWe provide actionable, research-backed insights that allow organizations to understand the true capabilities of their people so they can make decisions that ensure the right leaders are ready — when and where they are needed — in the future.Talent AcquisitionFrom executive search to recruitment process outsourcing, we integrate scientific research with our practical experience and industry-specificsenior-level IT interim professional solutions with additional expertise to recruit professionals of all levels and functions for client organizations.Leadership DevelopmentWe activate purpose, vision and strategy through leaders at all levels and organizations. We combine expertise, science and proven techniques with forward thinking and creativity to build leadership experiences that help entry- to senior-level leaders grow and deliver superior results.Rewards and BenefitsWe help organizations align reward with strategy. We help them pay their people fairly for doing the right things — with rewards they value — at a cost the organization can afford.The Company currently operates in three global business segments: Executive Search, Hay Group and Futurestep. See Note 9 —Business Segments, in the Notes to Consolidated Unaudited Financial Statements for discussionarea of the Company’s global business segments. compliance and legal, accounting and finance, and human resources. Salo is a leading provider of finance, accounting and human resources ("HR") interim talent.Performance HighlightsThe 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, (recoveries), net, integration/acquisition costs, and certain separation costs and certainnon-cash charges (goodwill, intangible asset and other than temporary impairment)impairments charges). For the nine months ended January 31, 2017, Adjusted EBITDA includes a deferred revenue adjustment related to the Legacy Hay acquisition, reflecting revenue that Hay Group would have realized if not for business combination accounting that requires a company to record the acquisition balance sheet at fair value andwrite-off deferred revenue where no future services are required to be performed to earn that revenue. During the three and nine months ended January 31, 2018 and the three months ended JanuaryJuly 31, 2017, management no longer has adjusted fee revenue.Consolidated and the subtotals of Executive Search Adjusted EBITDA and Adjusted EBITDA margin arenon-GAAP financial measures. Theymeasures and have limitations as analytical tools,tools. They should not be viewed as a substitute for financial information determined in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. In addition, they may not necessarily be comparable tonon-GAAP performance measures that may be presented by other companies.Management believes the presentation of thesenon-GAAP financial measures provides meaningful supplemental information regarding Korn Ferry’s performance by excluding certain charges, items of income and other items that may not be indicative of Korn Ferry’s ongoing operating results. The use of thesenon-GAAP financial measures facilitates comparisons to Korn Ferry’s historical performance and the identification of operating trends that may otherwise be distorted by certain charges and other items that may not be indicative of Korn Ferry’s ongoing operating results.the factors discussed above. Korn Ferry includes thesenon-GAAP financial measures because management believes it is useful to investors in allowing for greater transparency with respect to supplemental information used by management in its evaluation of Korn Ferry’s ongoing operations and financial and operational decision-making. The accounting policies for the reportable segments are the same as those described in the summary of significant accounting policies in the accompanying consolidated financial statements, except that the above noted items are excluded from EBITDA to arrive at Adjusted EBITDA. Management further believes that Adjusted EBITDA is useful to investors because it is frequently used by investors and other interested parties to measure operating performance among companies with different capital structures, effective tax rates and tax attributes and capitalized asset values, all of which can vary substantially from company to company.Similarly, adjusted fee revenue, which includes revenue that Hay Group would have realized over the ensuing year after the acquisition if not for business combination accounting that requires a company to record the acquisition balance sheet at fair value andwrite-off deferred revenue where no future services are required to be performed to earn that revenue, is anon-GAAP financial measure. Adjusted fee revenue is not a measure that substitutes an individually tailored revenue recognition or measurement method for those of GAAP; rather, it is an adjustment for a short period of time that will provide better comparability in the current and future periods. Management believes the presentation of adjusted fee revenue assists management in its evaluation of ongoing operations and provides useful information to investors because it allows investors to make more meaningfulperiod-to-period comparisons of the Company’s operating results, to better identify operating trends that may otherwise be distorted by write-offs required under business combination accounting and to perform related trend analysis and provides a higher degree of transparency of information used by management in its evaluation of Korn Ferry’s ongoing operations and financial and operational decision-making.Fee revenue was $447.6$699.2 million during the three months ended JanuaryJuly 31, 2018,2023, an increase of $65.7$3.3 million, or 17%, compared to $381.9$695.9 million in the three months ended JanuaryJuly 31, 2017, with increases2022. Fee revenue increased primarily due to an increase in the interim portion of the Professional Search & Interim segment as a result of the acquisitions of ICS and Salo (collectively, the "acquisitions"). This was partially offset by decreases in fee revenue from Executive Search, RPO, and the permanent placement portion of Professional Search & Interim primarily due to a decline in all business segments. Duringdemand driven by global economic slowdown and other factors. Exchange rates favorably impacted fee revenue by $1.0 million in the three months ended JanuaryJuly 31, 2018, we recorded operating income of $48.6 million with ExecutiveSearch, Hay Group and Futurestep segments contributing $34.3 million, $27.1 million and $10.1 million, respectively, offset by Corporate expenses of $22.9 million.2023 compared to the year-ago quarter. Net income attributable to Korn Ferry increased $3.3 million duringin the three months ended JanuaryJuly 31, 20182023 was $46.6 million, which decreased by $30.6 million as compared to $27.2$77.2 million from $23.9in the year-ago quarter. The decrease in net income attributable to Korn Ferry was primarily due to a higher cost of service expense associated with the acquisitions in the Interim businesses, and an increase in compensation and benefits expense. These increases were partially offset by an increase in other income, and a decrease in income tax provision. Adjusted EBITDA in the three months ended July 31, 2023 was $95.7 million, forwhich decreased by $36.5 million as compared to $132.2 million in theyear-ago quarter. During the three months ended JanuaryJuly 31, 2018,2023, the Executive Search, Consulting, Digital, Professional Search & Interim, and RPO lines of business contributed $42.5 million, $25.2 million, $24.3 million, $24.3 million, and $10.5 million, respectively, to Adjusted EBITDA, which was $70.3 million with Executive Search, Hay Group and Futurestep segments contributing $37.2 million, $36.9 million and $10.8 million, respectively,partially offset by Corporate expenses net of other income of $14.6$31.1 million. Adjusted EBITDA was $70.3 million, an increase of $15.0 million during the three months ended January 31, 2018, from Adjusted EBITDA of $55.3 million in theyear-ago quarter.Our cash, cash equivalents and marketable securities decreased $1.8by $286.8 million to $529.0$781.1 million at JanuaryJuly 31, 2018,2023, compared to $530.8$1,067.9 million at April 30, 2017.2023. This decrease iswas mainly due to annual bonuses earned in fiscal 20172023 and paid during the first quarter of fiscal 2018,sign-on and2024, long-term retention payments,awards, the semi-annual interest payment on the 4.625% Senior Unsecured Notes due 2027 (the “Notes”), capital expenditures, stock repurchases in the open market, payments for the purchase of property and equipment, dividends paid to stockholders during fiscal 2018 and principal payments on our term loan, partially offset by cash provided by operating activities.the three months ended July 31, 2023. As of JanuaryJuly 31, 2018,2023, we held marketable securities to settle obligations under our Executive Capital Accumulation Plan (“ECAP”) with a cost value of $124.2$187.1 million and a fair value of $139.0$199.7 million. Our vested obligations for which these assets were held in trust totaled $122.3$192.5 million as of JanuaryJuly 31, 20182023 and our unvested obligations totaled $29.7$16.8 million.Our working capital increased from April 30, 2017 to January 31, 2018 by $40.1$48.4 million to $425.2$710.8 million as of JanuaryJuly 31, 2018.2023, as compared to $662.4 million at April 30, 2023. We believe that cash on hand and funds from operations and other forms of liquidity will be sufficient to meet our anticipated working capital, capital expenditures, general corporate requirements, repayment of the debt obligations incurred in connection with the Legacy Hay acquisition, the retention pool obligations pursuant to the Legacy Hay acquisition and29dividend payments under our dividend policy in the next twelve12 months. We had no outstanding borrowings under our revolving credit facility at January 31, 2018 and April 30, 2017. Asa total of January 31, 2018 and April 30, 2017, there was $2.9$645.4 million and $3.0$1,145.4 million respectively,available under the Credit Facilities (defined in Liquidity and Capital Resources) after $4.6 million and $4.6 million of standby letters of credit issued as of July 31, 2023 and April 30, 2023, respectively. Of the amount available under our long-term debt arrangements.the Credit Facilities as of April 30, 2023, $500.0 million was under the Delayed Draw Facility that expired on June 24, 2023 and is no longer available as a source of liquidity. We had a total of $7.3$10.9 million and $8.1$11.5 million of standby letters of creditscredit with other financial institutions as of JanuaryJuly 31, 20182023 and April 30, 2017,2023, respectively.Results of OperationsThe following table summarizes the results of our operations as a percentage of fee revenue:(Numbers may not total exactly due to rounding) Three Months Ended
January 31, Nine months Ended
January 31, 2018 2017 2018 2017 100.0 % 100.0 % 100.0 % 100.0 % 2.9 3.2 3.0 3.7 102.9 103.2 103.0 103.7 69.4 68.7 68.6 68.7 13.1 14.9 13.6 14.3 2.9 3.2 3.0 3.7 3.9 4.3 4.1 4.5 2.7 3.1 2.9 3.0 — 1.0 — 2.4 10.9 8.0 10.9 7.0 6.1 % 6.4 % 7.2 % 5.1 % 6.1 % 6.3 % 7.2 % 4.9 % Three Months Ended
July 31,2023 2022 Fee revenue 100.0 % 100.0 % Reimbursed out-of-pocket engagement expenses 1.0 1.0 Total revenue 101.0 101.0 Compensation and benefits 68.6 66.9 General and administrative expenses 9.4 9.3 Reimbursed expenses 1.0 1.0 Cost of services 11.0 5.5 Depreciation and amortization 2.7 2.3 Restructuring charges, net 0.1 — Operating income 8.1 16.0 Net income 6.7 % 11.3 % Net income attributable to Korn Ferry 6.7 % 11.1 % The following tables summarize the results of our operations by business segment:(Numbers may not total exactly due to rounding) Three Months Ended January 31, Nine months Ended January 31, 2018 2017 2018 2017 Dollars % Dollars % Dollars % Dollars % (in thousands) $ 102,716 22.9 % $ 84,827 22.2 % $ 296,093 22.9 % $ 259,361 22.4 % 46,782 10.5 39,147 10.3 128,249 9.9 109,296 9.4 24,493 5.5 21,012 5.5 71,983 5.6 60,108 5.2 6,425 1.4 7,835 2.0 22,048 1.7 26,645 2.3 180,416 40.3 152,821 40.0 518,373 40.1 455,410 39.3 198,056 44.3 175,662 46.0 577,462 44.7 539,086 46.5 69,109 15.4 53,435 14.0 196,018 15.2 164,960 14.2 447,581 100.0 % 381,918 100.0 % 1,291,853 100.0 % 1,159,456 100.0 % 13,189 12,277 39,302 42,626 $ 460,770 $ 394,195 $ 1,331,155 $ 1,202,082 Three Months Ended January 31, Nine months Ended January 31, 2018 2017 2018 2017 Dollars Margin
(1) Dollars Margin
(1) Dollars Margin
(1) Dollars Margin
(1) (in thousands) $ 21,313 20.7 % $ 17,718 20.9 % $ 66,253 22.4 % $ 60,458 23.3 % 7,329 15.7 8,175 20.9 20,349 15.9 21,049 19.3 5,289 21.6 2,086 9.9 12,811 17.8 6,216 10.3 408 6.4 1,352 17.3 2,961 13.4 5,966 22.4 34,339 19.0 29,331 19.2 102,374 19.7 93,689 20.6 27,079 13.7 15,988 9.1 72,532 12.6 31,188 5.8 10,056 14.6 6,549 12.3 27,702 14.1 21,849 13.2 (22,852 ) — (21,326 ) — (62,005 ) — (65,120 ) — $ 48,622 10.9 % $ 30,542 8.0 % $ 140,603 10.9 % $ 81,606 7.0 % (1)Margin calculated as a percentage of fee revenue by business segment. Three Months Ended January 31, 2018 Executive Search North
America EMEA Asia Pacific Latin
America Subtotal Hay
Group Futurestep Corporate Consolidated (in thousands) $ 102,716 $ 46,782 $ 24,493 $ 6,425 $ 180,416 $ 198,056 $ 69,109 $ — $ 447,581 $ 106,332 $ 47,763 $ 24,942 $ 6,456 $ 185,493 $ 201,961 $ 73,316 $ — $ 460,770 $ 27,247 180 (7,689 ) 2,665 (97 ) 26,316 $ 21,313 $ 7,329 $ 5,289 $ 408 $ 34,339 $ 27,079 $ 10,056 $ (22,852 ) 48,622 990 458 361 113 1,922 7,882 733 1,688 12,225 585 37 185 40 847 370 2 6,470 7,689 97 — — — 97 — — — 97 22,985 7,824 5,835 561 37,205 35,331 10,791 (14,694 ) 68,633 — — — — — 1,593 — 80 1,673 $ 22,985 $ 7,824 $ 5,835 $ 561 $ 37,205 $ 36,924 $ 10,791 $ (14,614 ) $ 70,306 22.4 % 16.7 % 23.8 % 8.7 % 20.6 % 18.6 % 15.6 % 15.7 % Three Months Ended January 31, 2017 Executive Search North
America EMEA Asia Pacific Latin
America Subtotal Hay
Group Futurestep Corporate Consolidated (in thousands) $ 84,827 $ 39,147 $ 21,012 $ 7,835 $ 152,821 $ 175,662 $ 53,435 $ — $ 381,918 $ 87,975 $ 39,965 $ 21,336 $ 7,856 $ 157,132 $ 178,962 $ 58,101 $ — $ 394,195 $ 23,897 481 (4,200 ) 2,402 (113 ) 8,075 $ 17,718 $ 8,175 $ 2,086 $ 1,352 $ 29,331 $ 15,988 $ 6,549 $ (21,326 ) 30,542 996 226 268 (21 ) 1,469 8,061 789 1,455 11,774 316 19 60 61 456 122 (2 ) 3,624 4,200 113 — — — 113 — — — 113 19,143 8,420 2,414 1,392 31,369 24,171 7,336 (16,247 ) 46,629 — — 893 309 1,202 2,519 80 — 3,801 — — — — — 3,364 — 1,466 4,830 $ 19,143 $ 8,420 $ 3,307 $ 1,701 $ 32,571 $ 30,054 $ 7,416 $ (14,781 ) $ 55,260 22.6 % 21.5 % 15.7 % 21.7 % 21.3 % 17.1 % 13.9 % 14.5 % Nine months Ended January 31, 2018 Executive Search North
America EMEA Asia Pacific Latin
America Subtotal Hay
Group Futurestep Corporate Consolidated (in thousands) $ 296,093 $ 128,249 $ 71,983 $ 22,048 $ 518,373 $ 577,462 $ 196,018 $ — $ 1,291,853 $ 305,866 $ 130,894 $ 73,009 $ 22,114 $ 531,883 $ 589,093 $ 210,179 $ — $ 1,331,155 $ 92,619 969 (14,847 ) 7,904 (187 ) 54,145 $ 66,253 $ 20,349 $ 12,811 $ 2,961 $ 102,374 $ 72,532 $ 27,702 $ (62,005 ) 140,603 2,923 1,345 1,052 331 5,651 24,110 2,313 4,807 36,881 1,157 136 384 99 1,776 459 10 12,602 14,847 187 — — — 187 — — — 187 70,520 21,830 14,247 3,391 109,988 97,101 30,025 (44,596 ) 192,518 — — 313 — 313 (241 ) 6 — 78 — — — — — 6,455 — 199 6,654 $ 70,520 $ 21,830 $ 14,560 $ 3,391 $ 110,301 $ 103,315 $ 30,031 $ (44,397 ) $ 199,250 23.8 % 17.0 % 20.2 % 15.4 % 21.3 % 17.9 % 15.3 % 15.4 % Nine months Ended January 31, 2017 Executive Search North
America EMEA Asia Pacific Latin
America Subtotal Hay
Group Futurestep Corporate Consolidated (in thousands) $ 259,361 $ 109,296 $ 60,108 $ 26,645 $ 455,410 $ 539,086 $ 164,960 $ — $ 1,159,456 — — — — — 3,535 — — 3,535 $ 259,361 $ 109,296 $ 60,108 $ 26,645 $ 455,410 $ 542,621 $ 164,960 $ — $ 1,162,991 $ 269,302 $ 111,721 $ 61,445 $ 26,766 $ 469,234 $ 552,822 $ 180,026 $ — $ 1,202,082 $ 57,257 2,245 (7,580 ) 8,199 (221 ) 21,706 $ 60,458 $ 21,049 $ 6,216 $ 5,966 $ 93,689 $ 31,188 $ 21,849 $ (65,120 ) 81,606 2,816 666 757 267 4,506 24,102 2,081 4,281 34,970 512 (37 ) 171 158 804 346 (4 ) 6,434 7,580 221 — — — 221 — — — 221 64,007 21,678 7,144 6,391 99,220 55,636 23,926 (54,405 ) 124,377 1,706 128 1,515 669 4,018 24,007 80 216 28,321 — — — — — 11,993 — 6,684 18,677 — — — — — 3,535 — — 3,535 $ 65,713 $ 21,806 $ 8,659 $ 7,060 $ 103,238 $ 95,171 $ 24,006 $ (47,505 ) $ 174,910 25.3 % 20.0 % 14.4 % 26.5 % 22.7 % 17.5 % 14.6 % 15.0 % Three Months Ended
July 31,2023 2022 Dollars % Dollars % (dollars in thousands) Fee revenue Consulting $ 168,088 24.0 % $ 166,484 23.9 % Digital 87,986 12.6 83,761 12.0 Executive Search: North America 127,498 18.2 151,544 21.8 EMEA 46,776 6.7 47,056 6.8 Asia Pacific 24,539 3.5 26,381 3.8 Latin America 6,421 0.9 7,808 1.1 Total Executive Search 205,234 29.4 232,789 33.5 Professional Search & Interim 142,179 20.3 98,947 14.2 RPO 95,702 13.7 113,922 16.4 Total fee revenue 699,189 100.0 % 695,903 100.0 % Reimbursed out-of-pocket engagement expense 7,073 7,245 Total revenue $ 706,262 $ 703,148 30In the tables that follow, the Company presents a subtotal for Executive Search Adjusted EBITDA and a single percentage for Executive Search Adjusted EBITDA margin, which reflects the aggregate of all of the individual Executive Search Regions. These figures are non-GAAP financial measures and are presented as they are consistent with the Company’s lines of business and are financial metrics used by the Company’s investor base.Three Months Ended
July 31,2023 2022 Consolidated (in thousands) Fee revenue $ 699,189 $ 695,903 Total revenue $ 706,262 $ 703,148 Net income attributable to Korn Ferry $ 46,605 $ 77,247 Net income attributable to noncontrolling interest 580 1,289 Other income, net (13,577) (775) Interest expense, net 4,740 7,612 Income tax provision 18,420 26,226 Operating income 56,768 111,599 Depreciation and amortization 19,012 16,229 Other income, net 13,577 775 Integration/acquisition costs 4,128 3,605 Impairment of fixed assets 123 — Impairment of right-of-use assets 1,629 — Restructuring charges, net 421 — Adjusted EBITDA $ 95,658 $ 132,208 Adjusted EBITDA margin 13.7 % 19.0 % Three Months Ended July 31, 2023 2022 Fee revenue Total revenue Adjusted EBITDA Adjusted EBITDA margin Fee revenue Total revenue Adjusted EBITDA Adjusted EBITDA margin (dollars in thousands) Consulting $ 168,088 $ 170,793 $ 25,180 15.0 % $ 166,484 $ 168,735 $ 29,550 17.7 % Digital 87,986 88,012 24,325 27.6 % 83,761 83,815 24,178 28.9 % Executive Search: North America 127,498 129,413 28,756 22.6 % 151,544 152,884 43,749 28.9 % EMEA 46,776 47,135 5,638 12.1 % 47,056 47,329 8,515 18.1 % Asia Pacific 24,539 24,610 6,315 25.7 % 26,381 26,452 7,351 27.9 % Latin America 6,421 6,422 1,741 27.1 % 7,808 7,809 2,617 33.5 % Total Executive Search 205,234 207,580 42,450 20.7 % 232,789 234,474 62,232 26.7 % Professional Search & Interim 142,179 143,069 24,329 17.1 % 98,947 100,052 29,161 29.5 % RPO 95,702 96,808 10,471 10.9 % 113,922 116,072 17,709 15.5 % Corporate — — (31,097) — — (30,622) Consolidated $ 699,189 $ 706,262 $ 95,658 13.7 % $ 695,903 $ 703,148 $ 132,208 19.0 % 31Three Months Ended JanuaryJuly 31, 20182023 Compared to Three Months Ended JanuaryJuly 31, 2017Fee RevenueFee Revenue.Fee revenue increased by $65.7 million, or 17%, to $447.6was $699.2 million in the three months ended JanuaryJuly 31, 20182023, an increase of $3.3 million compared to $381.9$695.9 million in theyear-ago quarter. Exchange rates favorably impacted fee revenue by $15.8$1.0 million, in the three months ended July 31, 2023 compared to the year-ago quarter. Fee revenue remained constant primarily due to an increase in the Interim portion of the Professional Search & Interim segment resulting from the acquisitions, partially offset by decreases in Executive Search, RPO and permanent placements of Professional Search & Interim due to a decline in demand for such services driven by the global economic slowdown.Consulting. Consulting reported fee revenue of $168.1 million, an increase of $1.6 million, or 4%1%, in the three months ended JanuaryJuly 31, 20182023 compared to $166.5 million in theyear-ago quarter. The higherslight increase in fee revenue was attributable to organicprimarily driven by growth in all lines of business.Executive Search.Executive Searchassessment & succession. Exchange rates favorably impacted fee revenue by $0.3 million in the three months ended July 31, 2023 compared to the year-ago quarter.Digital. Digital reported fee revenue of $180.4$88.0 million, an increase of $27.6$4.2 million, or 18%5%, in the three months ended JanuaryJuly 31, 20182023 compared to $152.8$83.8 million in theyear-ago quarter. As detailed below, Executive SearchThe increase in fee revenue was higherprimarily due to growth in North America, EMEA and Asia Pacific regions, partially offset by lowersubscription-based fee revenue. Exchange rates unfavorably impacted fee revenue in the Latin America regionby $0.1 million in the three months ended JanuaryJuly 31, 2018 as2023 compared to theyear-ago quarter. The higherExecutive Search North America. Executive Search North America reported fee revenue of $127.5 million, a decrease of $24.0 million, or 16%, in Executive Search was mainlythe three months ended July 31, 2023 compared to $151.5 million in the year-ago quarter driven by a decline in demand for executive searches as a result of clients being affected by the uncertain economic environment. North America’s fee revenue decreased primarily due to a 10% increase16% decrease in the number of engagements billed andduring the three months ended July 31, 2023 compared to the year-ago quarter driven by a decline in demand for executive searches as a result of clients being affected by the uncertain economic environment.Executive Search EMEA. Executive Search EMEA reported fee revenue of $46.8 million, a decrease of $0.3 million, or 1%, in the three months ended July 31, 2023 compared to $47.1 million in the year-ago quarter. Exchange rates favorably impacted fee revenue by $1.5 million, or 3%, in the three months ended July 31, 2023 compared to the year-ago quarter. The decrease in fee revenue was primarily due to a 4% increasedecrease in the weighted-average feesfee billed per engagement (calculated using local currency) during the three months ended JanuaryJuly 31, 20182023 compared to theyear-ago quarter. Exchange rates favorably impactedPerformance in France and United Arab Emirates were the primary contributors to the decrease in fee revenue in the three months ended July 31, 2023 compared to the year-ago quarter, partially offset by $5.6an increase in fee revenue in United Kingdom and Denmark.Executive Search Asia Pacific. Executive Search Asia Pacific reported fee revenue of $24.5 million, a decrease of $1.9 million, or 4%7%, in the three months ended JanuaryJuly 31, 2018,2023 compared to $26.4 million in theyear-ago quarter.North America reported Exchange rates unfavorably impacted fee revenue of $102.7 million, an increase of $17.9by $0.9 million, or 21%3%, in the three months ended JanuaryJuly 31, 20182023 compared to $84.8 millionthe year-ago quarter. theyear-ago quarter. North America’s fee revenue was higher due to a 16% increase15% decrease in the number of engagements billed, anddue to a 4%decline in demand for executive searches as a result of clients being affected by the uncertain economic environment. This was partially offset by a 13% increase in the weighted-average feesfee billed per engagement (calculated using local currency) during the three months ended JanuaryJuly 31, 20182023 compared to theyear-ago quarter. The overall increase in fee revenue was driven by the increase in fee revenue from consumer, life sciences/healthcare, technology, industrial, andeducation/non-profit sectors. Exchange rates favorably impacted fee revenue by $0.5 million, or 1% in the three months ended January 31, 2018 compared to theyear-ago quarter.EMEA reported fee revenue of $46.8 million, an increase of $7.7 million, or 20%, in the three months ended January 31, 2018 compared to $39.1 million in theyear-ago quarter. Exchange rates favorably impacted fee revenue by $3.9 million, or 10%, in the three months ended January 31, 2018, compared to theyear-ago quarter. The rest of the change in fee revenue was due to a 15% increase in the number of engagements billed, offset by a 5% decrease in the weighted-average fees billed per engagement (calculated using local currency) during the three months ended January 31, 2018 compared to theyear-ago quarter. The performance in France, United Kingdom, Germany,China and DenmarkSingapore were the primary contributors to the increasedecrease in fee revenue in the three months ended JanuaryJuly 31, 20182023 compared to theyear-ago quarter. In terms of business sectors, industrial and consumer had the largest quarter, partially offset by an increase in fee revenue in the three months ended January 31, 2018 compared to theyear-ago quarter.Asia Pacific reported fee revenue of $24.5 million, an increase of $3.5 million, or 17%, in the three months ended January 31, 2018 compared to $21.0 million in theyear-ago quarter. The effect of exchange rates on fee revenue was $1.1 million, or 5%, in the three months ended January 31, 2018 compared to theyear-ago quarter. The increase in fee revenue was due to a 11% increase in the number of engagements billed in the three months ended January 31, 2018 compared to theyear-ago quarter. The performance in China, Australia, and Singapore were the primary contributors to the increase in fee revenue in the three months ended January 31, 2018 compared to theyear-ago quarter. Life sciences/ healthcare, financial services, and technology were the main sectors contributing to the increase in fee revenue in the three months ended January 31, 2018, as compared to theyear-ago quarter.Executive Search Latin America. Executive Search Latin America reported fee revenue of $6.4 million, a decrease of $1.4 million, or 18%, in the three months ended JanuaryJuly 31, 20182023 compared to $7.8 million in theyear-ago quarter. The effect of exchange rates on fee revenue was minimal. The decrease in fee revenue in the region is due to lower fee revenue in Mexico in the three months ended January 31, 2018, compared to theyear-ago quarter, partially offset by higher fee revenue in Argentina. Industrial and financial services were the main sectors contributing to the decline in fee revenue.Hay Group.Hay Group reported fee revenue of $198.1 million, an increase of $22.4 million, or 13%, in the three months ended January 31, 2018 compared to $175.7 million in theyear-ago quarter. Exchange rates favorably impacted fee revenue by $7.8$0.6 million, or 4%, compared to theyear-ago quarter. Fee revenue from consulting services was higher by $15.6 million in the three months ended January 31, 2018 compared to theyear-ago quarter, with the remaining increase of $6.8 million generated by our products business.Futurestep.Futurestep reported fee revenue of $69.1 million, an increase of $15.7 million, or 29%8%, in the three months ended JanuaryJuly 31, 20182023 compared to $53.4the year-ago quarter. The decrease in fee revenue was primarily driven by a 24% decrease in the number of engagements billed, due to a decline in demand for executive searches as a result of clients being affected by the uncertain economic environment during the three months ended July 31, 2023 compared to the year-ago quarter.Professional Search & Interim. Professional Search & Interim reported fee revenue of $142.2 million, an increase of $43.3 million, or 44%, in the three months ended July 31, 2023 compared to $98.9 million in theyear-ago quarter. Exchange rates favorably impacted fee revenue by $2.4$0.2 million in the three months ended July 31, 2023 compared to the year-ago quarter. The increase in fee revenue was due to an increase in interim fee revenue of $59.1 million mainly driven by the acquisitions. This increase was partially offset by a decrease in permanent placement fee revenue of $15.8 million.32RPO. RPO reported fee revenue of $95.7 million, a decrease of $18.2 million, or 4%16%, in the three months ended JanuaryJuly 31, 2018. Higher2023 compared to $113.9 million in the year-ago quarter. Exchange rates unfavorably impacted fee revenues in RPO and professional search of $9.9 million and $6.0 million, respectively, drove the increase in fee revenue.Compensation and BenefitsCompensation and benefits expense increased $48.4 million, or 18%, to $310.8revenue by $0.1 million in the three months ended JanuaryJuly 31, 2018 from $262.42023 compared to the year-ago quarter. The decrease in fee revenue was primarily due to a decline in the number of placements being requested by existing clients.Compensation and BenefitsCompensation and benefits expense increased by $14.3 million, or 3%, to $479.9 million in the three months ended July 31, 2023 from $465.6 million in the year-ago quarter. Exchange rates unfavorably impacted compensation and benefits expenses by $9.9 million, or 4%, in the three months ended January 31, 2018 compared to theyear-ago quarter. The increase incompensation and benefits was primarily due to a 9% increase in average headcount, which contributed $25.6 million in higher salaries and related payroll taxes, $3.4 million increase in amortization of long-term incentive awards, $1.8 million in vacation expense and $1.4 million in employee insurance costs. The rest of the change was due to an increase in performance related bonus expense of $15.7 million due to higher fee revenues and an increase in the amounts owed under certain deferred compensation and retirement plans of $4.8 million that was driven by increases in the fair value of participants’ accounts in the three months ended January 31, 2018 compared to theyear-ago quarter. The increases in compensation and benefits were partially offset by a decline in integration costs of $2.6 million.Executive Search compensation and benefits expense increased by $21.7 million, or 21%, to $123.7$1.1 million in the three months ended JanuaryJuly 31, 20182023 compared to $102.0 million in theyear-ago quarter. The increase in compensation and benefits expense was primarily due to higher salariesdeferred compensation expenses of $12.8 million as a result of an increase in the fair value of participants' accounts compared to the year-ago quarter and related payroll taxesan increase in severance expense of $6.7$5.2 million due to a 6% increase in average headcount reflecting our continued growth-related investment back intolay-offs that took place during the business.quarter. Also contributing to the increase in compensation and benefits expense was a $7.2were increases in salaries and related payroll taxes of $4.4 million increaseand $2.6 million more in performance related bonus expenseintegration/acquisition costs in the three months ended July 31, 2023 compared to theyear-ago quarter, quarter. The increase in compensation and benefits expense was partially offset by lower performance-related bonus expense of $9.7 million and a decrease of $1.2 million in costs associated with the use of outside contractors in the three months ended July 31, 2023 compared to the year-ago quarter. Compensation and benefits expense, as a percentage of fee revenue, increased to 69% in the three months ended July 31, 2023 from 67% in the year-ago quarter.Consulting compensation and benefits expense increased by $7.3 million, or 6%, to $121.1 million in the three months ended July 31, 2023 from $113.8 million in the year-ago quarter. Exchange rates unfavorably impacted compensation and benefits by $0.3 million in the three months ended July 31, 2023 compared to the year-ago quarter. The increase in compensation and benefits expense was primarily due to increases in performance-related bonus expense of $2.1 million due to higher segment fee revenue, and salaries and related payroll taxes of $2.0 million in the three months ended July 31, 2023 compared to the year-ago quarter. Additionally, an increase of $3.5 million in expenses associated with our deferred compensation and retirement plans (including the increasesexpense of $1.4 million due to an increase in the fair value of participants’ accounts), and $2.4 million increase in amortization of long-term incentive awards. The increase in performance related bonus expense was dueparticipants' accounts also contributed to the increase in fee revenue. Executive Searchcompensation and benefits expense. Consulting compensation and benefits expense, as a percentage of fee revenue, was 69% and 67%increased to 72% in the three months ended JanuaryJuly 31, 2018 and 2017, respectively.Hay Group2023 from 68% in the year-ago quarter.Digital compensation and benefits expense increased $13.9by $3.0 million, or 12%7%, to $125.5$46.7 million in the three months ended JanuaryJuly 31, 20182023 from $111.6$43.7 million in theyear-ago quarter. Exchange rates unfavorably impacted compensation and benefits by $0.2 million in the three months ended July 31, 2023 compared to the year-ago quarter. The increase in compensation and benefits expense was primarily due to higher average consultant headcountincreases in performance-related bonus expense of 6% compared$2.7 million and to theyear-ago quarter which contributed $10.5 milliona lesser extent an increase in higher salaries and related payroll taxes andof $1.8 million due to an increase in performance-related bonus expense of $2.6 million dueaverage headcount in the three months ended July 31, 2023 compared to higher fee revenues,the year-ago quarter, partially offset by $1.8 milliona decrease in lower integration costs. Hay Groupstock-based compensation of $0.8 million. Digital compensation and benefits expense, as a percentage of fee revenue, was 63% and 64%increased to 53% in the three months ended JanuaryJuly 31, 2018 and 2017, respectively.Futurestep2023 from 52% in the year-ago quarter.Executive Search North America compensation and benefits expense increased $12.3by $0.7 million, or 34%1%, to $49.0$98.6 million in the three months ended JanuaryJuly 31, 2018 from $36.72023 compared to $97.9 million in theyear-ago quarter. The increase was due to higher salariesExchange rates favorably impacted compensation and related payroll taxes of $7.4benefits by $0.3 million due to a 31% increase in the average headcount in the three months ended JanuaryJuly 31, 20182023 compared to theyear-ago quarter. The higher average headcount wasCompensation and benefits expense increased primarily due to an increase in deferred compensation expense of $8.8 million as a result of an increase in the fair value of the participants' accounts, partially offset by a decrease in performance-related bonus expense of $7.8 million driven by the need to service an increase inlower segment fee revenue in the RPO business. Also contributingthree months ended July 31, 2023 compared to the increase in compensation and benefits was a higher performance related bonus expense of $4.6 million. Futurestepyear-ago quarter. Executive Search North America compensation and benefits expense, as a percentage of fee revenue, was 71% and 69%increased to 77% in the three months ended JanuaryJuly 31, 20182023 from 65% in the year-ago quarter.Executive Search EMEA compensation and 2017, respectively.Executive Search Asia Pacific compensation and benefits expense decreased by $0.6 million, or 4%, to $16.1 million in the three months ended July 31, 2023 compared to $16.7 million in the year-ago quarter. Exchange rates favorably impacted compensation and benefits by $0.4 million, or 2%, in the three months ended July 31, 2023 compared to the year-ago quarter. The decrease in compensation and benefits expense was primarily due to a decrease in performance-related bonus33expense of $0.3 million driven by lower segment fee in the three months ended July 31, 2023 compared to the year-ago quarter. Executive Search Asia Pacific compensation and benefits expense, as a percentage of fee revenue, increased to 66% in the three months ended July 31, 2023 from 63% in the year-ago quarter.Executive Search Latin America compensation and benefits expense increased by $0.2 million, or 4%, to $4.9 million in the three months ended July 31, 2023 compared to $4.7 million in the year-ago quarter. Exchange rates unfavorably impacted compensation and benefits by $0.3 million, or 6%, in the three months ended July 31, 2023 compared to the year-ago quarter. The increase in compensation and benefits expense was primarily due to increases in deferred compensation expenses of $0.3 million as a result of an increase in the fair value of participants' accounts compared to the year-ago quarter, and salaries and payroll taxes of $0.3 million due to an increase in average headcount of 3% in the three months ended July 31, 2023 compared to the year-ago quarter. The increase in compensation and benefits expense was partially offset by lower performance-related bonus expense of $0.4 million. Executive Search Latin America compensation and benefits expense, as a percentage of fee revenue, increased to 76% in the three months ended July 31, 2023 from 60% in the year-ago quarter.Professional Search & Interim compensation and benefits expense increased by $9.4 million, or 19%, to $59.4 million in the three months ended July 31, 2023 from $50.0 million in the year-ago quarter. Exchange rates unfavorably impacted compensation and benefits by $0.1 million in the three months ended July 31, 2023 compared to the year-ago quarter. The increase was primarily due to increases in salaries and related payroll taxes of $5.4 million and integration/acquisition costs of $2.6 million due to the acquisitions, which resulted in an increase in average headcount of 16% in the three months ended July 31, 2023 compared to the year-ago quarter. Also contributing to higher compensation and benefit expense was an increase in performance-related bonus expense of $0.8 million and an increase in deferred compensation expenses of $0.8 million as a result of an increase in the fair value of participants' accounts compared to the year-ago quarter. Professional Search & Interim compensation and benefits expense, as a percentage of fee revenue, decreased to 42% in the three months ended July 31, 2023 from 51% in the year-ago quarter.RPO compensation and benefits expense decreased by $10.8 million, or 12%, to $77.6 million in the three months ended July 31, 2023 from $88.4 million in the year-ago quarter. Exchange rates unfavorably impacted compensation and benefits by $0.2 million in the three months ended July 31, 2023 compared to the year-ago quarter. The decrease in compensation and benefits expense was primarily due to a decrease in salaries and related payroll taxes of $7.1 million as a result of a 16% decrease in average headcount in the three months ended July 31, 2023 compared to the year-ago quarter. Also contributing to the lower compensation and benefits expense were decreases of $3.2 million in performance-related bonus expense due to lower segment fee revenue, and $1.5 million associated with the use of outside contractors, partially offset by an increase in severance expense of $1.0 million. RPO compensation and benefits expense, as a percentage of fee revenue, increased to 81% in the three months ended July 31, 2023 from 78% in the year-ago quarter.Corporate compensation and benefits expense increased by $0.4$2.5 million, or 3%16%, to $12.5$18.2 million in the three months ended JanuaryJuly 31, 20182023 from $12.1$15.7 million in theyear-ago quarter.General and Administrative ExpensesGeneral and administrative expenses increased $1.7by $1.4 million, or 3%2%, to $58.5$65.9 million in the three months ended JanuaryJuly 31, 2018 compared to $56.82023 from $64.5 million in theyear-ago quarter. Exchange rates unfavorablyfavorably impacted general and administrative expenses by $1.8$0.5 million, or 3%1%, duringin the three months ended JanuaryJuly 31, 20182023 compared to theyear-ago quarter. The increase in general and administrative expenses was primarily due to increases of $2.1$1.8 million in marketing and $0.9business development expense and $1.4 million in computer software licenses expense. Further contributing to the increase in general and administrative expenses was the impairment of right-of-use assets of $1.6 million associated with the reduction of the Company's real estate footprint in the three months ended July 31, 2023. These increases were partially offset by decreases in integration/acquisition costs of $2.0 million and in legal and other professional fees and business development expense, respectively, offset by a decline of $0.6 million in integration costs and a decrease in foreign exchange loss of $0.5 million during the three months ended January 31, 2018 compared to theyear-ago quarter.$1.4 million. General and administrative expenses, as a percentage of fee revenue, was 13% inwere 9% for both the three months ended JanuaryJuly 31, 2018 compared to 15% in the three months ended January 31, 2017.Executive Search2023 and 2022.Consulting general and administrative expenses increased $1.3by $1.7 million, or 7%13%, to $19.3$14.6 million in the three months ended JanuaryJuly 31, 2018 from $18.02023 compared to $12.9 million in theyear-ago quarter. The increase in general and administrative expenses was primarily due to increases of $0.4 million and $0.9 millionan increase in legal and other professional fees of $0.9 million and othera higher bad debt expense of $0.8 million. Further contributing to the increase in general and administrative expenses respectively, duringwas an impairment of right-of-use assets of $0.6 million as a result of the reduction of the Company's real estate footprint in the three months ended JanuaryJuly 31, 20182023 compared to theyear-ago quarter. Executive SearchConsulting general and administrative expenses, as a percentage of fee revenue, was 11%increased to 9% in the three months ended JanuaryJuly 31, 2018 compared to 12%2023 from 8% in the three months ended January 31, 2017.Hay Groupyear-ago quarter.34Digital general and administrative expenses decreased $0.8increased by $0.4 million, or 3%4%, to $24.0$9.5 million in the three months ended JanuaryJuly 31, 20182023 from $24.8$9.1 million in theyear-ago quarter. The decreaseincrease in general and administrative expenses was due to generating aprimarily driven by increases in computer software licenses expense of $0.7 million and foreign exchange gainloss of $0.1$0.3 million in the three months ended JanuaryJuly 31, 20182023 compared to a foreign exchange lossthe year-ago quarter. The increase was partially offset by decreases of $1.0$0.2 million in theyear-ago quarter. This was offset by an increasemarketing and business development and $0.2 million in legal and other professional fees of $0.4 million. Hay Groupfees. Digital general and administrative expenses, as a percentage of fee revenue, was 12% inwere 11% for both the three months ended JanuaryJuly 31, 2018 compared to 14% in the three months ended January 31, 2017.Futurestep2023 and 2022.Executive Search North America general and administrative expenses was $6.5increased by $0.6 million, or 7%, to $9.0 million in the three months ended JanuaryJuly 31, 20182023 compared to $6.2$8.4 million in theyear-ago quarter. FuturestepThe increase in general and administrative expenses was primarily due the impairment of right-of-use assets of $0.5 million associated with the reduction of the Company's real estate footprint in the three months ended July 31, 2023 compared to the year-ago quarter. Executive Search North America general and administrative expenses, as a percentage of fee revenue, was 9%increased to 7% in the three months ended JanuaryJuly 31, 2018 compared to 12%2023 from 6% in theyear-ago quarter.CorporateExecutive Search EMEA general and administrative expenses increased $0.9by $0.3 million, or 12%8%, to $8.7$4.1 million in the three months ended JanuaryJuly 31, 2018 compared to $7.82023 from $3.8 million in theyear-ago quarter. The increase in general and administrative expenses was primarily due to an increase in impairment of $1.2right-of-use assets of $0.4 million associated with the reduction of the Company's real estate footprint. Executive Search EMEA general and administrative expenses, as a percentage of fee revenue, increased to 9% in the three months ended July 31, 2023 from 8% in the year-ago quarter.Executive Search Asia Pacific general and administrative expenses were $2.4 million in legal and other professional fees, offset by a decline of $0.6the three months ended July 31, 2023 compared to $2.5 million in integration coststhe year-ago quarter, essentially flat. Executive Search Asia Pacific general and administrative expenses, as a percentage of fee revenue, increased to 10% in the three months ended July 31, 2023 from 9% in the year-ago quarter.Executive Search Latin America recognized a reduction in general and administrative expenses of $0.7 million in the three months ended July 31, 2023 compared to the year-ago quarter. The decrease in general and administrative expenses was primarily due to an increase in foreign exchange gain of $0.8$0.5 million in the three months ended July 31, 2023 compared to the year-ago quarter.Professional Search & Interim general and administrative expenses increased by $0.4 million, or 6%, to $6.7 million in the three months ended July 31, 2023 compared to $6.3 million in the year-ago quarter. The increase in general and administrative expense was primarily due to increases in premise and office expense.expense of $0.8 million and marketing and business development expense of $0.4 million compared to the year-ago quarter. The restincrease was partially offset by a decrease in integration/acquisition costs of $1.1 million. Professional Search & Interim general and administrative expenses, as a percentage of fee revenue, decreased to 5% in the changethree months ended July 31, 2023 from 6% in the year-ago quarter.RPO general and administrative expenses increased by $0.8 million, or 17%, to $5.6 million in the three months ended July 31, 2023 compared to $4.8 million in the year-ago quarter. The increase in general and administrative expenses was primarily due to generatingthe change in foreign exchange loss of $0.8 million duringin the three months ended JanuaryJuly 31, 20182023 compared to a foreign exchange gain of $0.2$0.3 million in theyear-ago quarter.Corporate general and administrative expenses decreased by $2.1 million, or 13%, to $14.1 million in the three months ended July 31, 2023 compared to $16.2 million in the year-ago quarter. The decrease was primarily due to decreases in legal and other professional fees of $2.5 million and integration/acquisition costs of $1.0 million. The decrease was partially offset by an increase in marketing and business development expense of $1.0 million in the three months ended July 31, 2023 compared to the year-ago quarter.Cost of Services ExpenseCost of services expense consists primarily ofnon-billable contractor and product costs related to the delivery of various services and products primarily in Futurestepthrough Consulting, Digital, Professional Search & Interim and Hay Group.RPO. Cost of services expense increased $1.0by $39.2 million, or 6%103%, to $17.5$77.2 million in the three months ended JanuaryJuly 31, 20182023 compared to $16.5$38.0 million in theyear-ago quarter. Professional Search & Interim account for $40.0 million of the increase due to the acquisitions, which perform a significant amount of interim services. Interim services have a higher cost of service expense as compared to the Company's other segments. Cost of services expense, as a percentage of fee revenue, was 4%increased to 11% in both the three months ended JanuaryJuly 31, 2018 and 2017.Depreciation and Amortization ExpensesDepreciation and amortization expenses were $12.2$19.0 million, an increase of $0.4by $2.8 million, or 3%17%, in the three months ended JanuaryJuly 31, 20182023 compared to $11.8$16.2 million in theyear-ago quarter. The increase relateswas primarily due to technology investments made in the current and prior year, and an increase in software and computer equipment, in additionamortization of intangible assets due to increases in leasehold improvements and furniture and fixtures.35Restructuring Charges, NetDuring fiscal 2023, we implemented a restructuring plan to realign our workforce with our business needs and objectives. In the three months ended JanuaryJuly 31, 2018,2023, the Company made adjustments to previously recorded restructuring accruals resulting in restructuring charges of $0.4 million. There were no restructuring charges, were incurred.Duringnet during the three months ended JanuaryJuly 31, 2017, we continued the implementation of the fiscal 2016 restructuring plan2022.Net Income Attributable to integrate Legacy Hay entities that were acquired in fiscal 2016 and recorded $3.8Korn FerryNet income attributable to Korn Ferry decreased by $30.6 million, of restructuring charges, net relatingor 40%, to the consolidation of premises.Operating IncomeOperating income was $48.6$46.6 million in the three months ended JanuaryJuly 31, 20182023, as compared to $30.5$77.2 million in theyear-ago quarter. This increase in operating income resulted from higher fee revenue of $65.7 million and aThe decrease in restructuring charges, net of $3.8 million, offset byincome attributable to Korn Ferry was primarily due to increases of $48.4cost of services expense of $39.2 million indriven by the acquisitions and compensation and benefits expense $1.7 million in general and administrative expenses and $1.0 million in cost of services expense.Executive Search operating income increased $5.0 million, or 17%, to $34.3$14.3 million in the three months ended JanuaryJuly 31, 2018 as2023 compared to $29.3 million in theyear-ago quarter. The decrease was partially offset by an increase in Executive Search operatingother income wasof $12.8 million driven by higher fee revenuethe increase in the fair value of $27.6 millionour marketable securities (that are held in trust to satisfy obligations under our deferred compensation plan) due to market movements and a decrease in restructuring charges, netincome tax provision of $1.2 million, offset by increases in compensation and benefits expense, general and administrative expenses, and depreciation and amortization expenses of $21.7 million, $1.3 million, and $0.5 million, respectively. Executive Search operating$7.8 million. Net income attributable to Korn Ferry, as a percentage of fee revenue, was 19% in both the three months ended January 31, 20187% and 2017.Hay Group operating income was $27.1 million, an increase of $11.1 million, or 69%,11% in the three months ended JanuaryJuly 31, 20182023 and 2022, respectively.Adjusted EBITDAAdjusted EBITDA decreased by $36.5 million, or 28%, to $95.7 million in the three months ended July 31, 2023 as compared to operating income of $16.0$132.2 million in theyear-ago quarter. The increasedecrease in Adjusted EBITDA was primarily driven by an increase in cost of services expense associated with the acquisitions, higher compensation and benefit expense (excluding integration/acquisition costs), and an increase in general and administrative expenses (excluding impairment charges and integration/acquisition costs), partially offset by increases in fee revenue of $22.4 million and a decrease in restructuring charges, net of $2.5 million, offset by an increase of $13.9 million in compensation and benefits expense. Hay Group operatingother income, net. Adjusted EBITDA, as a percentage of fee revenue, was 14% in the three months ended JanuaryJuly 31, 20182023 compared to 9%19% in theyear-ago quarter.Futurestep operating income Adjusted EBITDA margin decreased primarily due to a change in fee revenue mix, with a decrease in Executive Search and Permanent Placement, which have higher margins, being replaced with fee revenue from Interim, which has lower margins.Consulting Adjusted EBITDA was $10.1 million, an increase of $3.6$25.2 million in the three months ended JanuaryJuly 31, 20182023, a decrease of $4.4 million, or 15%, as compared to $6.5$29.6 million in theyear-ago quarter. The increaseThis decrease in operating incomeAdjusted EBITDA was driven by higher fee revenue of $15.7 million, offset by an increaseincreases in compensation and benefits expense of $12.3 million. Futurestep operating income, as a percentage ofand general and administrative expenses (excluding impairment charges), partially offset by higher fee revenue, was 15%an increase in the three months ended January 31, 2018 comparedvalue of our marketable securities (that are held in trust to 12% in theyear-ago quarter.Net Income Attributable to Korn FerryNet income attributable to Korn Ferry increased by $3.3 million to $27.2 million in the three months ended January 31, 2018 compared to $23.9 million in theyear-ago quarter. The increase wassatisfy obligations under our deferred compensation plans) due to higher total revenue of $66.6 million andmarket movements that generated an increase in other income net of $3.5 million offset by higher operating expenses of $48.4 million and an increase in the income tax provision of $18.2 million compared to theyear-ago quarter. Net income attributable to Korn Ferry, as a percentage of fee revenue, was 6% in bothfor the three months ended JanuaryJuly 31, 20182023 compared the year-ago quarter and 2017, respectively.Adjusted EBITDAAdjusted EBITDA increased by $15.0 million to $70.3 million in the three months ended January 31, 2018 as compared to $55.3 million in theyear-ago quarter. This increase was driven by higher fee revenue of $65.7 million and an increase of $3.5 million in other income, net due to the change in fair value of our marketable securities, offset by increases of $51.0 million in compensation and benefits expense (excluding integration costs), $2.3 million in general and administrative expenses(excluding integration cost) and $1.0 milliona decrease in cost of services expense.16%15% and 18% in the three months ended JanuaryJuly 31, 2018 compared to 14% in theyear-ago quarter.Executive Search2023 and 2022, respectively.Digital Adjusted EBITDA increased $4.6 million, or 14%, to $37.2was $24.3 million in the three months ended JanuaryJuly 31, 2018 as2023 compared to $32.6$24.2 million in the three months ended January 31, 2017. The increase was driven by higher fee revenue of $27.6 million during the three months ended January 31, 2018 compared to theyear-ago quarter, offset by increases of $21.7 million in compensation and benefits expense and $1.3 million in general and administrative expenses. Executive Searchessentially flat.Digital Adjusted EBITDA, as a percentage of fee revenue, was 21%28% and 29% in both the three months ended JanuaryJuly 31, 20182023 and 2017.Hay Group2022, respectively.Executive Search North America Adjusted EBITDA was $36.9decreased by $14.9 million, or 34%, to $28.8 million in the three months ended JanuaryJuly 31, 2018, an increase of $6.8 million, or 23%, as2023 compared to $30.1$43.7 million in theyear-ago quarter. The increasedecrease was mainly driven by higherlower fee revenue of $22.4 million, offset by increases of $15.7 millionin the segment combined with a slight increase in compensation and benefits expense, (excluding integration costs) duringpartially offset by an increase in the value of our marketable securities (that are held in trust to satisfy obligations under our deferred compensation plans) due to market movements that generated an increase in other income for the three months ended JanuaryJuly 31, 20182023 compared to theyear-ago quarter. Hay GroupExecutive Search North America Adjusted EBITDA, as a percentage of fee revenue, was 19%23% and 29% in the three months ended JanuaryJuly 31, 2018 as compared to 17% in theyear-ago quarter.Futurestep2023 and 2022, respectively.Executive Search EMEA Adjusted EBITDA was $10.8decreased by $2.9 million, or 34%, to $5.6 million in the three months ended JanuaryJuly 31, 2018, an increase of $3.4 million, as2023 compared to $7.4$8.5 million in theyear-ago quarter. The increasedecrease was primarily driven by higher fee revenue of $15.7 million, offset by increases of $12.3 millionan increase in compensation and benefits expense during the three months ended January 31, 2018 compared to theyear-ago quarter. Futurestepand a decrease in segment fee revenue. Executive Search EMEA Adjusted EBITDA, as a percentage of fee revenue, was 12% and 18% in the three months ended July 31, 2023 and 2022, respectively.Executive Search Asia Pacific Adjusted EBITDA decreased by $1.1 million, or 15%, to $6.3 million in the three months ended July 31, 2023 compared to $7.4 million in the year-ago quarter. The decrease in Adjusted EBITDA was driven by lower fee revenue in the segment, partially offset by a decrease in compensation and benefits expense.Executive Search Asia Pacific Adjusted EBITDA, as a percentage of fee revenue, was 26% and 28% in the three months ended July 31, 2023 and 2022, respectively.36Executive Search Latin America Adjusted EBITDA decreased by $0.9 million, or 35%, to $1.7 million in the three months ended July 31, 2023 compared to $2.6 million in the year-ago quarter. The decrease in Adjusted EBITDA was primarily driven by lower fee revenue in the segment, partially offset by a decrease in general and administrative expenses. Executive Search Latin America Adjusted EBITDA, as a percentage of fee revenue, was 27% and 34% in the three months ended July 31, 2023 and 2022, respectively.Professional Search & Interim Adjusted EBITDA was $24.3 million in the three months ended July 31, 2023, a decrease of $4.9 million, or 17%, as compared to $29.2 million in the year-ago quarter. The decrease in Adjusted EBITDA was mainly driven by increases in cost of services expense, compensation and benefits expense (excluding integration/acquisition costs), and general and administrative expenses (excluding integration/acquisition costs). This decrease was partially offset by higher fee revenue in the segment as a result of the acquisitions. Professional Search & Interim Adjusted EBITDA, as a percentage of fee revenue, was 17% and 29% in the three months ended July 31, 2023 and 2022, respectively.RPO Adjusted EBITDA was $10.5 million in the three months ended July 31, 2023, a decrease of $7.2 million, or 41%, as compared to $17.7 million in the year-ago quarter. The decrease in Adjusted EBITDA was mainly driven by lower fee revenue in the segment coupled with an increase in general and administrative expenses (excluding impairment charges), partially offset by a decrease in compensation and benefits expense. RPO Adjusted EBITDA, as a percentage of fee revenue, was 11% and 16% in the three months ended JanuaryJuly 31, 2018 compared to 14% in theyear-ago quarter.Other Income, NetOther income, net was $7.7$13.6 million in the three months ended JanuaryJuly 31, 2018 as2023 compared to $4.2$0.8 million in theyear-ago quarter. The increasedifference was primarily due to more gains from the changeincrease in the fair value of our marketable securities where there was a larger gainthat are held in trust for the settlement of the Company's obligation under the ECAP during the three months ended JanuaryJuly 31, 20182023 compared to theyear-ago quarter.Interest Expense, NetInterest expense, net primarily relates to our term loan facility andthe Notes issued in December 2019, borrowings under company-owned life insurance ("COLI") policies and interest cost related to our COLI policies,deferred compensation plans, which isare partially offset by interest earned on cash and cash equivalent balances. Interest expense, net was $2.7$4.7 million in the three months ended JanuaryJuly 31, 2018 as2023 compared to $2.4$7.6 million in theyear-ago quarter.Income Tax ProvisionThe provision for income tax was $26.3$18.4 million in the three months ended JanuaryJuly 31, 20182023, with an effective tax rate of 28.1%, compared to $8.1$26.2 million in theyear-ago quarter. This reflects a 49% three months ended July 31, 2022, with an effective rate of 25.0%. In addition to the impact of U.S. state income taxes and 25%the jurisdictional mix of earnings, which generally create variability in our effective tax rate over time, the tax benefit recorded in the three months ended July 31, 2023 in connection with the windfall from stock-based awards that vested during the three months ended July 31, 2023, which was less than the benefit recorded for the three months ended JanuaryJuly 31, 2018 and 2017, respectively.2022 in connection with the windfall from stock-based awards that vested during the year-ago quarter. The current fiscal year effectivewindfall is the amount by which the Company’s tax rate was significantly impacted bydeduction for these awards, based on the December 22, 2017 enactmentfair market value of the Tax Cuts and Jobs Act (the “Tax Act”) as a resultawards on the date of which, Korn Ferryvesting, is greater than the expense recorded a provisional tax charge of $16.3 million for aone-time tax on accumulated foreign earnings (the “Transition Tax”) and a provisional tax benefit of $5.8 million fromin the remeasurement of our U.S. federal deferred tax assets and liabilities. Korn Ferry will continue to appropriately refine these amounts withinCompany’s financial statements over the measurement period allowed by SAB No.118, which will be completed no later than December 22, 2018.Net Income Attributable to Noncontrolling InterestNet income attributable to noncontrolling interest represents the portion of a subsidiary’s net earnings that are attributable to shares of such subsidiary not held by Korn Ferry that are included in the consolidated results of operations. Net income attributable to noncontrolling interest for the three months ended JanuaryJuly 31, 20182023 was $0.2$0.6 million, as compared to $0.5$1.3 million for the three months ended January 31, 2017.Nine Months Ended January 31, 2018 Compared to Nine Months Ended January 31, 2017Fee RevenueFee Revenue.Fee revenue went up by $132.4 million, or 11%, to $1,291.9 million in the nine months ended January 31, 2018 compared to $1,159.5 million in theyear-ago period. Exchange rates favorably impacted fee revenue by $17.7 million, or 2%, in the three months ended JanuaryJuly 31, 2018 compared to theyear-ago period. The higher fee revenue was attributable to organic growth in all lines of business.Executive Search.Executive Search reported fee revenue of $518.4 million, an increase of $63.0 million, or 14%, in the nine months ended January 31, 2018 compared to $455.4 million in theyear-ago period. As detailed below, Executive Search fee revenue was higher in North America, EMEA and Asia Pacific, partially offset by lower fee revenue in the Latin America region in the nine months ended January 31, 2018 as compared to theyear-ago period. The higher fee revenue in Executive Search was mainly due to an 8% increase in the number of engagements billed and a 4% increase in the weighted-average fees billed per engagement (calculated using local currency) during the nine months ended January 31, 2018 compared to theyear-ago period. Exchange rates favorably impacted fee revenue by $6.4 million, or 1%, in the nine months ended January 31, 2018, compared to theyear-ago period.North America reported fee revenue of $296.1 million, an increase of $36.7 million, or 14%, in the nine months ended January 31, 2018 compared to $259.4 million in theyear-ago period. North America’s fee revenue was higher due to a 10% increase in the number of engagements billed and a 4% increase in the weighted-average fees billed per engagement (calculated using local currency) during the nine months ended January 31, 2018 compared to theyear-ago period. All of the business sectors contributed to the growth in fee revenue in the nine months ended January 31, 2018 as compared to theyear-ago period, with industrial and technology contributing the most. The effect of exchange rates on fee revenue was minimal in the nine months ended January 31, 2018, compared to theyear-ago period.EMEA reported fee revenue of $128.2 million, an increase of $18.9 million, or 17%, in the nine months ended January 31, 2018 compared to $109.3 million in theyear-ago period. The favorable effect of exchange rates on fee revenue was $4.2 million, or 4%, in the three months ended January 31, 2018, compared to theyear-ago period. The increase in fee revenue was due to a 16% increase in the number of engagements billed, offset by a 2% decrease in the weighted-average fees billed per engagement (calculated using local currency) during the nine months ended January 31, 2018 compared to theyear-ago period. The performance in the United Kingdom, France, Germany, and Italy were the primary contributors to the increase in fee revenue in the nine months ended January 31, 2018 compared to theyear-ago period. All of the business sectors contributed to the growth in fee revenue in the nine months ended January 31, 2018 as compared to theyear-ago period, with industrial contributing the most.Asia Pacific reported fee revenue of $72.0 million, an increase of $11.9 million, or 20%, in the nine months ended January 31, 2018 compared to $60.1 million in theyear-ago period. The favorable effect of exchange rates on fee revenue was $1.2 million, or 2%, compared to theyear-ago period. The increase in fee revenue was due to a 9% increase in the number of engagements billed and an 8% increase in the weighted-average fees billed per engagement (calculated using local currency) in the nine months ended January 31, 2018 compared to theyear-ago period. The performance in China, Australia, Singapore, Japan and India were the primary contributors to the increase in fee revenue in the nine months ended January 31, 2018 compared to theyear-ago period, partially offset by a decline in fee revenue in Hong Kong. Financial services, technology, industrial and life sciences/healthcare were the main sectors contributing to the increase in fee revenue in the nine months ended January 31, 2018, as compared to theyear-ago period.Latin America reported fee revenue of $22.0 million, a decrease of $4.6 million, or 17%, in the nine months ended January 31, 2018 compared to $26.6 million in theyear-ago period. The effect of exchange rates on fee revenue was minimal. The decrease in fee revenue is due to lower fee revenue in Mexico and Brazil in the nine months ended January 31, 2018, compared to theyear-ago period, partially offset by higher fee revenue in Argentina, Ecuador and Chile. Consumer goods and financial services were the main sectors contributing to the decline in fee revenue in the nine months ended January 31, 2018, compared to theyear-ago period.Hay Group.Hay Group reported fee revenue of $577.5 million, an increase of $38.4 million, or 7%, in the nine months ended January 31, 2018 compared to $539.1 million in theyear-ago period. Exchange rates favorably impacted fee revenue by $8.5 million, or 2%, compared to theyear-ago period. Fee revenue from consulting services was higher by $25.9 million in the nine months ended January 31, 2018 compared to theyear-ago period, with the remaining increase of $12.5 million generated by our products business.Futurestep.Futurestep reported fee revenue of $196.0 million, an increase of $31.0 million, or 19%, in the nine months ended January 31, 2018 compared to $165.0 million in theyear-ago period. Exchange rates favorably impacted fee revenue by $2.8 million, or 2%, compared to theyear-ago period. Higher fee revenues in RPO and professional search of $22.3 million and $10.2 million, respectively, drove the increase in fee revenue.Compensation and BenefitsCompensation and benefits expense increased $89.7 million, or 11%, to $885.7 million in the nine months ended January 31, 2018 from $796.0 million in theyear-ago period. Exchange rates unfavorably impacted compensation and benefits expenses by $11.4 million, or 1%, in the nine months ended January 31, 2018 compared to theyear-ago period. The increase in compensation and benefits was primarily due to an 8% increase in the average headcount, primarily focused on fee earners, which contributed $58.3 million in higher salaries and related payroll taxes and $13.6 million more in expenses associated with our deferred compensation and retirement plans (includes the increases in the fair value of participants’ accounts) in the nine months ended January 31, 2018 compared to theyear-ago period. The rest of the change was due to $19.0 million increase in performance-related bonus expense and $7.9 million increase in amortization of long term incentive awards, offset by an $8.4 million decrease in integration costs compared to theyear-ago period.Executive Search compensation and benefits expense increased by $48.4 million, or 16%, to $348.9 million in the nine months ended January 31, 2018 compared to $300.5 million in theyear-ago period. The increase was primarily due to higher salaries and related payroll taxes of $18.8 million due to a 6% increase in average headcount reflecting our continued growth-related investment back into the business. Also contributing to the increase in compensation and benefits expense was an increase of $10.5 million in expenses associated with our deferred compensation and retirement plans (includes the increases in the fair value of participants’ accounts), $9.1 million increase in performance related bonus expense compared to theyear-ago period and a $6.1 million increase in amortization of long-term incentive awards. The increase in performance related bonus expense was due to a 14% increase in fee revenue in the nine months ended January 31, 2018 compared to the year-ago period. Executive Search compensation and benefits expense, as a percentage of fee revenue, was 67% in the nine months ended January 31, 2018 compared to 66% in theyear-ago period.Hay Group compensation and benefits expense increased $19.5 million, or 6%, to $365.7 million in the nine months ended January 31, 2018 from $346.2 million in theyear-ago period. The change was primarily due to increases in salaries and payroll taxes of $18.6 million and $3.1 million increase in expenses associated with our deferred compensation and retirement plans (includes the increases in the fair value of participants’ accounts). Also contributing to the increase in compensation and benefits expense was an increase of $2.3 million in performance related bonus expense and employer insurance cost of $1.7 million, offset by a decrease in integration costs of $5.5 million compared toyear-ago period. Hay Group compensation and benefits expense, as a percentage of fee revenue, was 63% in the nine months ended January 31, 2018 compared to 64% in theyear-ago period.Futurestep compensation and benefits expense increased $23.6 million, or 21%, to $138.4 million in the nine months ended January 31, 2018 from $114.8 million in theyear-ago period. The increase was due to higher salaries and related payroll taxes of $18.4 million due to a 29% increase in the average headcount in the nine months ended January 31, 2018 compared to theyear-ago period. The higher average headcount was primarily driven by the need to service an increase in fee revenue in the RPO business. Also contributing to the increase in compensation and benefits expense was an increase of $6.5 million performance related bonus expense due to a 19% increase in fee revenue in the nine months ended January 31, 2018 compared to theyear-ago period. Futurestep compensation and benefits expense, as a percentage of fee revenue, was 71% in the nine months ended January 31, 2018 compared to 70% in theyear-ago period.Corporate compensation and benefits expense decreased by $1.8 million, or 5%, to $32.7 million in the nine months ended January 31, 2018 from $34.5 million in theyear-ago period. This change was mainly due to a decrease of $2.9 million in integration costs in the nine months ended January 31, 2018 compared to theyear-ago period, offset by an increase of $1.1 million in performance related bonus expense.General and Administrative ExpensesGeneral and administrative expenses increased $9.1 million, or 5%, to $175.4 million in the nine months ended January 31, 2018 compared to $166.3 million in theyear-ago period. Exchange rates unfavorably impacted general and administrative expenses by $1.7 million during the nine months ended January 31, 2018 compared to theyear-ago period. The increase in general and administrative expenses was due to increases of $3.7 million, $1.9 million, $1.7 million, and $1.6 million in legal and other professional fees, premise and office expense, business development expense, and bad debt expenses, respectively, offset by a decline of $3.6 million in integration costs during the nine months ended January 31, 2018 compared to theyear-ago period. The rest of the change was primarily due to generating foreign exchange loss of $2.8 million during the nine months ended January 31, 2018 compared to a foreign exchange gain of $0.6 million in the nine months ended January 31, 2017. General and administrative expenses, as a percentage of fee revenue, was 14% in both the nine months ended January 31, 2018 and 2017.Executive Search general and administrative expenses increased $7.3 million, or 15%, to $57.6 million in the nine months ended January 31, 2018 from $50.3 million in theyear-ago period. General and administrative expenses increased due to generating foreign exchange losses of $0.3 million during the nine months ended January 31, 2018 compared to a foreign exchange gain of $1.6 million during theyear-ago period and an increase in bad debt expense of $1.2 million. The rest of the change was due to an increase of $1.0 million in legal and other professional fees, $0.8 million more in marketing and business development to support the higher fee revenues generated in the nine months ended January 31, 2018 compared to theyear-ago period and $0.5 million increase in premise and office expense. Executive Search general and administrative expenses, as a percentage of fee revenue, was 11% in both the nine months ended January 31, 2018 and 2017.Hay Group general and administrative expenses increased $0.9 million to $73.3 million in the nine months ended January 31, 2018 compared to $72.4 million in theyear-ago period. General and administrative expenses increased due to an increase of $1.0 million in marketing and business development to support the higher fee revenues generated in the nine months ended January 31, 2018 compared to theyear-ago period. Hay Group general and administrative expenses, as a percentage of fee revenue, was 13% in both the nine months ended January 31, 2018 and 2017.Futurestep general and administrative expenses increased $2.6 million, or 15%, to $20.0 million in the nine months ended January 31, 2018 from $17.4 million in theyear-ago period. The increase was due primarily to increases in premise and office expense and bad debt expense of $1.0 million each in the nine months ended January 31, 2018 compared to theyear-ago period. Futurestep general and administrative expenses, as a percentage of fee revenue, was 10% in the nine months ended January 31, 2018 compared to 11% in theyear-ago period.Corporate general and administrative expenses decreased $1.6 million, or 6%, to $24.5 million in the nine months ended January 31, 2018 compared to $26.1 million in theyear-ago period. The decrease in general and administrative expenses was due to a decrease of $3.6 million in integration costs associated with the Legacy Hay acquisition, offset by an increase in legal and other professional fees of $2.1 million during the nine months ended January 31, 2018 compared to the nine months ended January 31, 2017.Cost of Services ExpenseCost of services expense consists primarily ofnon-billable contractor and product costs related to the delivery of various services and products, primarily in Futurestep and Hay Group. Cost of services expense was $53.2 million in the nine months ended January 31, 2018 compared to $52.3 million in the nine months ended January 31, 2017. Cost of services expense, as a percentage of fee revenue, was 4% in the nine months ended January 31, 2018 as compared to 5% in theyear-ago period.Depreciation and Amortization ExpensesDepreciation and amortization expenses were $36.9 million, an increase of $1.9 million, or 5%, in the nine months ended January 31, 2018 compared to $35.0 million in theyear-ago period. The increase relates primarily to technology investments made in the current and prior year in software and computer equipment, in addition to increases in leasehold improvements and furniture and fixtures.Restructuring Charges, NetDuring the nine months ended January 31, 2018, we continued the implementation of the fiscal 2016 restructuring plan to integrate Legacy Hay entities that were acquired in fiscal 2016 and recorded $0.1 million of restructuring charges relating to the consolidation of premises.During the nine months ended January 31, 2017, we continued the implementation of the fiscal 2016 restructuring plan in order to integrate the Hay Group entities that were acquired in fiscal 2016 by eliminating redundant positions and operational, general and administrative expenses and consolidating of office space. As a result, we recorded $28.3 million of restructuring charges with $11.5 million of severance costs and $16.8 million relating to the consolidation of office space during the nine months ended January 31, 2017.Operating IncomeOperating income was $140.6 million in the nine months ended January 31, 2018 as compared to $81.6 million in theyear-ago period. This increase in operating income resulted from higher fee revenue of $132.4 million and a decrease in restructuring charges, net of $28.2 million, offset by increases of $89.7 million in compensation and benefits expense, $9.1 million in general and administrative expenses, $1.9 million in depreciation and amortization expenses and $0.9 million in cost of services expense.Executive Search operating income increased $8.7 million, or 9%, to $102.4 million in the nine months ended January 31, 2018 as compared to $93.7 million in theyear-ago period. The increase in Executive Search operating income was driven by increases in higher fee revenue of $63.0 million and a decrease in restructuring charges, net of $3.7 million, offset by increases in compensation and benefits expense, general and administrative expenses, cost of services expense and depreciation and amortization expenses of $48.4 million, $7.3 million, $1.2 million and 1.1 million, respectively. Executive Search operating income, as a percentage of fee revenue, was 20% in the nine months ended January 31, 2018 as compared to 21% in theyear-ago period.Hay Group operating income was $72.5 million, an increase of $41.3 million, or 132%, in the nine months ended January 31, 2018 as compared to operating income of $31.2 million in theyear-ago period. The increase was primarily driven by an increase in fee revenue of $38.4 million and restructuring recoveries, net of $0.2 million during the nine months ended January 31, 2018 compared to restructuring charges, net of $24.0 million during theyear-ago period, offset by an increase of $19.5 million in compensation and benefits expense, $0.9 million in general and administrative expenses and an increase in cost of services expense of $0.9 million in the nine months ended January 31, 2018 compared to theyear-ago period. Hay Group operating income, as a percentage of fee revenue, was 13% in the nine months ended January 31, 2018 compared to 6% in theyear-ago period.Futurestep operating income was $27.7 million, an increase of $5.9 million, in the nine months ended January 31, 2018 as compared to $21.8 million in theyear-ago period. The increase in operating income was driven by higher fee revenue of $31.0 million, offset by an increase in compensation and benefits expense of $23.6 million and general and administrative expenses of $2.6 million. Futurestep operating income, as a percentage of fee revenue, was 14% in the nine months ended January 31, 2018 compared to 13% in theyear-ago period.Net Income Attributable to Korn FerryNet income attributable to Korn Ferry increased by $35.3 million to $92.6 million in the nine months ended January 31, 2018 compared to $57.3 million in theyear-ago period. The increase was due to higher total revenue of $129.1 million, an increase in other income, net of $7.2 million and a decrease in net income attributable to noncontrolling interest of $1.2 million, offset by higher operating expenses of $70.1 million and an increase in income tax provision of $32.4 million due to the enactment of the Tax Act compared to theyear-ago period. Net income attributable to Korn Ferry, as a percentage of fee revenue, was 7% for the nine months ended January 31, 2018 as compared to 5% in theyear-ago period.Adjusted EBITDAAdjusted EBITDA increased by $24.4 million to $199.3 million in the nine months ended January 31, 2018 as compared to $174.9 million in theyear-ago period. This increase was driven by higher adjusted fee revenue of $128.9 million and an increase of $7.2 million in other income, net primarily due to the change in the fair value of our marketable securities, offset by increases of $98.1 million in compensation and benefits expense (excluding integration costs), $12.7 million in general and administrative expenses (excluding integration costs) and $0.9 million in cost of services expense compared to theyear-ago period. Adjusted EBITDA, as a percentage of adjusted fee revenue, was 15% in both the nine months ended January 31, 2018 and 2017.Executive Search Adjusted EBITDA increased $7.1 million, or 7%, to $110.3 million in the nine months ended January 31, 2018 as compared to $103.2 million in the nine months ended January 31, 2017. The increase was driven by higher fee revenue of $63.0 million, offset by increases of $48.4 million in compensation and benefits expense and $7.3 million in general and administrative expenses during the nine months ended January 31, 2018 compared to theyear-ago period. Executive Search Adjusted EBITDA, as a percentage of fee revenue, was 21% in the nine months ended January 31, 2018 as compared to 23% in theyear-ago period.Hay Group Adjusted EBITDA was $103.3 million, an increase of $8.1 million, or 9%, in the nine months ended January 31, 2018 as compared to $95.2 million in theyear-ago period. The increase was driven by higher adjusted fee revenue of $34.9 million, offset by increases of $25.0 million in compensation and benefits expense (excluding integration costs), $0.9 million in general and administrative expenses and an increase in cost of services expense of $0.9 million during the nine months ended January 31, 2018 compared to theyear-ago period. Hay Group Adjusted EBITDA, as a percentage of adjusted fee revenue, was 18% in both the nine months ended January 31, 2018 and 2017.Futurestep Adjusted EBITDA was $30.0 million in the nine months ended January 31, 2018, an increase of $6.0 million, as compared to $24.0 million in theyear-ago period. The increase was driven by higher fee revenue of $31.0 million, offset by increases of $23.6 million in compensation and benefits expense and $2.6 million in general and administrative expenses during the nine months ended January 31, 2018 compared to theyear-ago period. Futurestep Adjusted EBITDA, as a percentage of fee revenue, was 15% in both the nine months ended January 31, 2018 and 2017.Other Income, NetOther income, net was $14.8 million in the nine months ended January 31, 2018 as compared to $7.6 million in theyear-ago period. The increase was primarily due to the change in the fair value of our marketable securities, where there was a larger gain during the nine months ended January 31, 2018 compared to theyear-ago period.Interest Expense, NetInterest expense, net primarily relates to our term loan facility and borrowings under our COLI policies, which is partially offset by interest earned on cash and cash equivalent balances. Interest expense, net was $7.9 million in the nine months ended January 31, 2018 as compared to $8.2 million in theyear-ago period.Income Tax ProvisionThe provision for income tax was $54.1 million in the nine months ended January 31, 2018 compared to $21.7 million in theyear-ago period. This reflects a 37% and 27% effective tax rate for the nine months ended January 31, 2018 and 2017, respectively. The current fiscal year effective tax rate was significantly impacted by the December 22, 2017 enactment of the Tax Act as a result of which, Korn Ferry recorded a provisional tax charge of $16.3 million for the Transition Tax and a provisional tax benefit of $5.8 million from the remeasurement of our U.S. federal deferred tax assets and liabilities. Korn Ferry will continue to appropriately refine these amounts within the measurement period allowed by SAB No.118, which will be completed no later than December 22, 2018.Net Income Attributable to Noncontrolling InterestNet income attributable to noncontrolling interest represents the portion of a subsidiary’s net earnings that are attributable to shares of such subsidiary not held by Korn Ferry that are included in the consolidated results of operations. Net income attributable to noncontrolling interest for the nine months ended January 31, 2018 was $1.0 million compared to $2.2 million for the nine months ended January 31, 2017.Liquidity and Capital ResourcesThe Company and its Board of Directors endorse a balanced approach to capital allocation. The Company’s long-term priority is to invest in growth initiatives, such as the hiring of consultants, the continued development of intellectual propertyIP and derivative products and services and the investment in synergistic, accretive merger and acquisition transactions that are expected to earn a return that is superior to the Company’sCompany's cost of capital. Next, the Company’s capital allocation approach contemplates the planned return of a portion of excess capital to stockholders, in the form of a regular quarterly dividend, subject to the factors discussed below and in the “Risk Factors” section of the Annual Report on Form10-K for the fiscal year ending April 30, 2017. 10-K. Additionally, the Company considers share repurchases on an opportunistic basis and subject to the terms of our Amended Credit Agreement (defined below), as well as using excess cash to repay the Notes.37On December 16, 2019, we completed a private placement of the Notes with a $400 million principal amount pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The Notes were issued with a $4.5 million discount and will mature December 15, 2027, with interest payable semi-annually in arrears on June 15 and December 15 of each year, that commenced on June 15, 2020. The Notes represent senior unsecured obligations that rank equally in right of payment to all existing and future senior unsecured indebtedness. We may redeem the Notes prior to maturity, subject to certain limitations and premiums defined in the indenture governing the Notes. The Notes are guaranteed by each of our existing and future wholly owned domestic subsidiaries to the extent such subsidiaries guarantee our obligations under the Amended Credit Agreement (defined below). The indenture governing the Notes requires that, upon the occurrence of both a Change of Control and a Rating Decline (each as defined in the indenture), we shall make an offer to purchase all of the Notes at 101% of their principal amount, and accrued and unpaid interest. We used the proceeds from the offering of the Notes to repay $276.9 million outstanding under our prior revolving credit agreement.On June 15, 2016,24, 2022, we entered into a senior secured $400 millionan amendment (the “Amendment”) to our December 16, 2019 Credit Agreement (the "Credit Agreement"; as amended by the Amendment, the "Amended Credit Agreement") with a syndicatethe lenders party thereto and Bank of banks and Wells Fargo Bank,America, National Association as administrative agent, to, among other things (i) extend the existing maturity date of the revolving facility to June 24, 2027, (ii) provide for enhanceda new delayed draw term loan facility as described below, (iii) replace the London interbank offered rate with Term SOFR, and (iv) replace the existing financial flexibilitycovenants with financial covenants described below. The Amended Credit Agreement provides for five-year senior secured credit facilities in an aggregate amount of $1,150 million comprised of a $650.0 million revolving credit facility (the “Revolver”) and in recognitiona $500 million delayed draw term loan facility with the delayed draw having expired on June 23, 2023 (the “Delayed Draw Facility”, and together with the Revolver, the “Credit Facilities”). The Amended Credit Agreement also provides that, under certain circumstances, the Company may incur term loans or increase the aggregate principal amount of the accelerated pacerevolving commitments by an aggregate amount of the Legacy Hay integration.up to $250 million plus an unlimited amount subject to a consolidated secured net leverage ratio of 3.25 to 1.00. See Note 10 11 —Long-Term Debtfor a further description of the credit facility. We drew down $275 million on the term loan and used $140 million of the proceeds topay-off the term loan that was outstanding as of April 30, 2016. We had $2.9 million and $3.0 million standby letters of credit issued under our long-term debt arrangements as of January 31, 2018 and April 30, 2017, respectively. We hadAmended Credit Agreement. The Company has a total of $7.3$645.4 million and $8.1$1,145.4 million available under the Credit Facilitiesafter $4.6 million and $4.6 million of standby letters of creditscredit have been issued as of July 31, 2023 and April 30, 2023. Of the amount available under the Credit Facilities as of April 30, 2023, $500.0 million was under the Delayed Draw Facility that expired on June 24, 2023. The Company had a total of $10.9 million and $11.5 million of standby letters with other financial institutions as of JanuaryJuly 31, 20182023 and April 30, 2017, respectively.2023, respectively. The standby letters of creditscredit were generally issued as a result of entering into office premise leases.As part of the Legacy Hay acquisition, the Company has committed to a $40 million retention pool (of which $23.5 million has been paid) for certain employees of Legacy Hay subject to certain circumstances. The remaining balance will be payable within 45 days after November 30, 2018.On December 8, 2014, the Board of Directors adopted a dividend policy to distribute to our stockholders a regular quarterly cash dividend of $0.10 per share. Every quarter since the adoption of the dividend policy, the Company has declared a quarterly dividend. On June 21, 2021 and 2022, the Board of Directors increased the quarterly dividend to $0.12 per share and $0.15 per share, respectively. On June 26, 2023, the Board of Directors approved an increase of 20% in the quarterly dividend, which increased the quarterly dividend to $0.18 per share. The Amended Credit Agreement permits us to pay dividends to our stockholders and make share repurchases so long as there is no default under the Amended Credit Agreement, our total funded debt to adjusted EBITDA ratio (as set forth in the Amended Credit Agreement, the “consolidated net leverage ratio”) is no greater than 5.00 to 1.00, and we are in pro forma compliance with our financial covenant. Furthermore, our Notes allow us to pay $25 million of dividends per fiscal year with no restrictions plus an unlimited amount of dividends so long as our consolidated total leverage ratio is not greater than 3.50 to 1.00, and there is no default under the indenture governing the Notes. The declaration and payment of future dividends under the quarterly dividend program will be at the discretion of the Board of Directors and will depend upon many factors, including our earnings, capital requirements, financial conditions, the terms of our indebtedness and other factors our Board of Directors may deem to be relevant. Our Board of Directors may, however, amend, revoke or suspend our dividend policy at any time and for any reason.On December 8, 2014, theJune 21, 2022, our Board of Directors also approved an increase into the Company’s stockshare repurchase program of approximately $300 million, which at the time brought our available capacity to an aggregate of $150.0 million. Common stock may be repurchased from time to timerepurchase shares in the open market or privately negotiated transactions at the Company’s discretion subject to market conditions and other factors. During the third quarter of fiscal 2017, we resumed repurchasing shares through this program. We$318 million. The Company repurchased approximately $32.6$4.2 million and $22.4 million of the Company’s common stock during the ninethree months ended JanuaryJuly 31, 2018.2023 and 2022, respectively. As of JanuaryJuly 31, 2018, $88.6 2023, $231.0 million remained available for common stock repurchases under our stockshare repurchase program. Any decision to continue to execute our currently outstanding issuershare repurchase program will depend on our earnings, capital requirements, financial condition and other factors considered relevant by our Board of Directors.Our senior secured credit agreement requires that our pro forma leverage ratio, defined as the ratioprimary source of consolidated funded indebtedness to consolidated adjusted EBITDA, is no greater than 2.50 to 1.00, and our pro forma domestic liquidity is at least $50.0 million as a condition to consummating permitted acquisitions, paying dividends tothe fee revenue generated from our stockholders and share repurchases ofoperations, supplemented by our common stock. which we service. We believe, based on current economic conditions, that our cash on hand and funds from operations and the Amended Credit Agreement we entered into on June 15, 2016 will be sufficient to meet anticipated working capital, capital expenditures, general corporate requirements, repayment of the debt incurred in connection with the Legacy Hay acquisition, the retention pool obligations in connection with the Legacy Hay acquisition, sharesrepayments, share repurchases and dividend payments under our dividend policy during the next twelve months.12 months and thereafter for the foreseeable future. However, if the national or global38economy, credit market conditions and/or labor markets were to deteriorate in the future, including as a result of ongoing macroeconomic uncertainty due to inflation and a potential recession, such changes have and could put further negative pressure on demand for our services and affect our operating cash flows. If these conditions were to persist over an extended period of time, we may incur negative cash flows and it might require us to access our existing credit facilityadditional borrowings under the Amended Credit Agreement to meet our capital needs and/or discontinue our share repurchases and dividend policy.Cash and cash equivalents and marketable securities were $529.0$781.1 million and $530.8$1,067.9 million as of JanuaryJuly 31, 20182023 and April 30, 2017,2023, respectively. Net of amounts held in trust for deferred compensation plans and accrued bonuses, cash and marketable securities were $242.1$480.7 million and $245.1$488.2 million at JanuaryJuly 31, 20182023 and April 30, 2017,2023, respectively. As of JanuaryJuly 31, 20182023 and April 30, 2017,2023, we held $210.4$387.3 million and $165.8$395.2 million, respectively of cash and cash equivalents in foreign locations, net of amounts held in trust for deferred compensation plans and to pay fiscal 2018 and 2017 annualaccrued bonuses. Cash and cash equivalents consist of cash and highly liquid investments purchased with original maturities of three months or less. Marketable securities consist of mutual funds and investments in the nine months ended January 31, 2018.commercial paper and corporate notes/bonds. The primary objectives of our investment in mutual funds are to meet the obligations under certain of our deferred compensation plans.As of JanuaryJuly 31, 20182023 and April 30, 2017,2023, marketable securities of $139.0$218.8 million and $223.9 million, respectively, included equity securities of $199.7 million (net of gross unrealized gains of $15.5$17.2 million and gross unrealized losses of $0.7$4.6 million) and $119.9$187.8 million (net of gross unrealized gains of $6.7$9.5 million and gross unrealized losses of $0.6$8.7 million), respectively, were held in trust for settlement of our obligations under certain deferred compensation plans, of which $124.2$189.4 million and $115.6$176.1 million, respectively, are classified asnon-current. These marketable securities were held to satisfy vested obligations totaling $122.3$192.5 million and $99.5$172.2 million as of JanuaryJuly 31, 20182023 and April 30, 2017,2023, respectively. Unvested obligations under the deferred compensation plans totaled $29.7$16.8 million and $37.6$21.9 million as of JanuaryJuly 31, 20182023 and April 30, 2017,2023, respectively.The net increase in our working capital of $40.1$48.4 million as of JanuaryJuly 31, 20182023 compared to April 30, 20172023 is primarily attributable to decreases in compensation and benefit payable and deferred revenue and an increase in accounts receivable, andpartially offset by a decrease in compensation and benefits payable, offset by decreases in cash and cash equivalents. The decrease in cash and cash equivalents and compensation and benefits payable was primarily due to payments of annual bonuses earned in fiscal 2023 and paid during the first quarter of fiscal 2024. The increase in accounts receivable wasis due to an increase in days of sales outstanding, which went from 6156 days to 6965 days (which is consistent with historical experience). Cash used in operating activities was $274.5 million in the three months ended July 31, 2023, compared to the cash used in operating activities of $231.9 million in the three months ended July 31, 2022.Cash provided by investing activities was $11.4 million in the three months ended July 31, 2023 compared to cash used in investing activities of $40.4 million in the year-ago quarter. The change from April 30, 2017cash used in investing activities to January 31, 2018. The decrease in compensation and benefits payable and cash and cash equivalentsprovided by investing activities was primarily due to the payment of annualbonuses earned in fiscal 2017 and paid during the first quarter of fiscal 2018, with cash and cash equivalents also decreasing due tosign-on and retention payments made during the quarter. Cash provided by operating activities was $59.6$18.0 million in the nine months ended January 31, 2018, an increase of $45.9 million, compared to $13.7 million in theyear-ago period.Cash used in investing activities was $32.2 million in the nine months ended January 31, 2018, an increase of $19.8 million, compared to $12.4 million in theyear-ago period. Cash used in investing activities was higher due to a decrease in proceeds from sales/maturitiesmarketable securities during the three months ended July 31, 2023, compared to $23.7 million in purchases of marketable securities offset by less cash used fornet of proceeds in the purchases of property and equipment andyear-ago quarter. Also contributing to this increase was higher proceeds received from life insurance policies inof $9.3 million, during the ninethree months ended JanuaryJuly 31, 20182023 compared to theyear-ago period.Cash used in financing activities was $64.6$20.6 million in the ninethree months ended JanuaryJuly 31, 20182023 compared to cash provided by financing activities of $89.1$51.0 million in theyear-ago period. three months ended July 31, 2022. The change from cash provided by financing activities todecrease in cash used in financing activities was primarily due to a decrease of $135.0 million in proceeds from our term loan facility net ofpay-offlower repurchases of the term loan that was outstanding asCompany’s common stock and lower shares of April 30, 2016, $5.2common stock to satisfy tax withholding requirements upon the vesting of restricted stock of $19.2 million more in term loan payments and an increase of shares repurchased under the stock repurchase program of $16.3$11.7 million, respectively, in the ninethree months ended JanuaryJuly 31, 20182023 compared to theyear-ago period.Cash Surrender Value of Company OwnedCompany-Owned Life Insurance Policies, Net of LoansThe CompanyWe 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 JanuaryJuly 31, 20182023 and April 30, 2017,2023, we held contracts with gross CSVcash surrender value of $185.0$277.2 million and $180.3$275.1 million, respectively. Total outstanding borrowings against the CSV of COLI contracts were $66.8 million and $67.2was $77.1 million as of Januaryboth July 31, 20182023 and April 30, 2017, respectively.2023. Such borrowings do not require annual principal repayments, bear interest primarily at variable rates and are secured by the CSV of COLI contracts. At JanuaryJuly 31, 20182023 and April 30, 2017,2023, the net cash surrender value of these policies was $118.2$200.1 million and $113.1$198.0 million, respectively.Long-Term DebtOn June 15, 2016,Other than the factors discussed in this section, we entered into a senior secured $400 million Credit Agreement (the “Credit Agreement”) with a syndicate of banks and Wells Fargo Bank, National Association as administrative agent. The Credit Agreement provides for, among other things: (a) a senior secured term loan facility in an aggregate principal amount of $275 million (the “ Term Facility”), (b) a senior secured revolving credit facility (the “Revolver” and together with the Term Facility, the “Credit Facilities”) in an aggregate principal amount of $125 million, (c) annual term loan amortization of 7.5%, 7.5%, 10.0%, 10.0% and 10.0%, with the remaining principal due at maturity, (d) certain customary affirmative and negative covenants, including a maximum consolidated total leverage ratio (as defined below) and a minimum interest coverage ratio and (e) an expanded definition of permittedadd-backs to Adjusted EBITDA in recognition of the accelerated integration actions. Our credit agreement permits payment of dividends to stockholders and share repurchases so long as the pro forma leverage ratio is no greater than 2.50 to 1.00, and the pro forma domestic liquidity is at least $50.0 million. We drew down $275 million on the term loan and used $140 million of the proceeds topay-off the term loan that was outstanding as of April 30, 2016.At our option, loans issued under the Credit Agreement will bear interest at either LIBOR or an alternate base rate, in each case plus the applicable interest rate margin. The interest rate applicable to loans outstanding under the Credit Facilities may fluctuate between LIBOR plus 1.25% per annum to LIBOR plus 2.00% per annum, in the case of LIBOR borrowings (or between the alternate base rate plus 0.25% per annum and the alternate base rate plus 1.00% per annum, in the alternative), based upon our total funded debt to adjusted EBITDA ratio (as set forth in the Credit Agreement, the “consolidated leverage ratio”) at such time. In addition, we will be required to pay to the lenders a quarterly fee ranging from 0.20% to 0.35% per annum on the average daily unused amount of the Term Facility, based upon our consolidated leverage ratio at such time and fees relating to the issuance of letters of credit. During the three and nine months ended January 31, 2018, the average rate on the Term Facility was 2.65% and 2.49%, respectively. During the three and nine months ended January 31, 2017, the average rate was 2.06% and 2.29%, respectively.Both the Revolver and the Term Facility mature on June 15, 2021 and may be prepaid and terminated early by us at any time without premium or penalty (subject to customary LIBOR breakage fees). The Term Facility is payable in quarterly installments with principal payments totalling $15.5 million made during the nine months ended January 31, 2018. As of January 31, 2018, $244.1 million was outstanding under the Term Facility compared to $259.5 million as of April 30, 2017. The current and long-term portion of unamortized debt issuance costs associated with the long-term debt, was $2.9 million and $3.5 million as of January 31, 2018 and April 30, 2017, respectively. The fair value of our Term Facility is based on borrowing rates currently required of loans with similar terms, maturity and credit risk. The carrying amount of the Term Facility approximates fair value because the base interest rate charged varies with market conditions and the credit spread is commensurate with current market spreads for issuers of similar risk. The fair value of the Term Facility is classified as a Level 2 liability in the fair value hierarchy. As of January 31, 2018, we were in compliance with our debt covenants.As of January 31, 2018 and April 30, 2017, we had no borrowings under the Revolver. We had $2.9 million of standby letters of credits issued under our long-term debt arrangements as of January 31, 2018 compared to $3.0 million as of April 30, 2017. We had a total of $7.3 million and $8.1 million of standby letters of credits with other financial institutions as of January 31,2018 and April 30, 2017, respectively. The standby letters of credits were generally issued as a result of entering into office premise leases.We are not aware of any other trends, demands or commitments that would materially affect liquidity or those that relate to our resources.Off-Balance Sheet ArrangementsWe have nooff-balance sheet arrangements and have not entered into any transactions involving unconsolidated, special purpose entities. We had no material changes in contractual obligations as of JanuaryJuly 31, 2018,2023, as compared to those disclosed in our table of contractual obligations included in our Annual Report.39Critical Accounting PoliciesPreparation of this Quarterly Report onForm 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 andor 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 Form10-K filed with the Securities Exchange Commission. There have been no material changes in our critical accounting policies since the end of fiscal 2017.Item 3.Quantitative and Qualitative Disclosures About Market RiskAs a result of our global operating activities, we are exposed to certain market risks, including foreign currency exchange fluctuations and fluctuations in interest rates. We manage our exposure to these risks in the normal course of our business as described below.Foreign Currency RiskSubstantially 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 averagedaily rates of exchange during the reporting period. Resulting translation adjustments are reported as a component of accumulated other comprehensive loss, net on our consolidated balance sheets.Transactions denominated in a currency other than the reporting entity’s functional currency may give rise to foreign currency gains or losses that impact our results of operations. Historically, we have not realized significant foreign currency gains or losses on such transactions. ForeignDuring the three months ended July 31, 2023 and 2022, we recorded foreign currency losses on an after tax basis, includedof $0.9 million and $0.3 million, respectively, in net income were $1.8 milliongeneral and administrative expenses in the nine months ended January 31, 2018 as compared to foreign currency gains, on an after tax basis, included in net income were $0.4 million in the nine months ended January 31, 2017.Our exposure to foreign currency exchange rates is primarily driven by fluctuations involving the following currencies –— U.S. Dollar, Canadian Dollar, Euro, Pound Sterling, Euro, Swiss Franc, Korean Won, Brazilian Real,Danish Krone, Polish Zloty, Singapore Dollar, and Mexican Peso. Based on balances exposed to fluctuation in exchange rates between these currencies as of JanuaryJuly 31, 2018,2023, a 10% increase or decrease equally in the value of these currencies could result in a foreign exchange gain or loss of $10.0$11.6 million. We have a program that primarily utilizes foreign currency forward contracts to offset the risks associated with the effects of certain foreign currency exposures. These foreign currency forward contracts are neither used for trading purposes nor are they designated as hedging instruments pursuant to Accounting Standards Codification 815,Derivatives and Hedging.Interest Rate RiskOur exposure to interest rate risk is limited to our Term Facility andCredit Facilities, borrowings against the CSV of COLI contracts.contracts and to a lesser extent our fixed income debt securities. As of JanuaryJuly 31, 2018,2023, there was $244.1 millionwere no amounts outstanding under the Term Facility.Credit Facilities. At our option, loans issued under the Amended Credit FacilitiesAgreement bear interest at either LIBORTerm Secured Overnight Financing Rate ("SOFR") or an alternate base rate, in each case plus the applicable interest rate margin. The interest rate applicable to loans outstanding under the Amended Credit FacilitiesAgreement may fluctuate between LIBORTerm SOFR plus 1.25%a SOFR adjustment of 0.10%, plus 1.125% per annum to LIBOR plus 2.00% per annum, in the case of LIBORTerm SOFR borrowings (or between the alternate base rate plus 0.25%0.125% per annum and the alternate base rate plus 1.00% per annum, in the alternative), based upon our total funded debt to adjusted EBITDA ratio (as set forth in the Amended Credit Agreement, the “consolidated net leverage ratio”) at such time. In addition, we are required to pay the lenders a quarterly commitment fee ranging from 0.20%0.175% to 0.35%0.300% per annum on the average daily unused amount of the Term Facility,Revolver, based upon our consolidated net leverage ratio at such time, a ticking fee of 0.20% per annum on the actual daily unused portion of the Delayed Draw Facility during the availability period of the Delayed Draw Facility (the availability of this facility expired on June 24, 2023), and fees relating to the issuance of letters of credit. A 100 basis point increase in LIBOR rates would have increased our interest expense by approximately $0.6 million and $1.9 million for the three and nine months ended January 31, 2018, respectively. During the three and nine months ended January 31, 2018, theaverage interest rate on the term loan was 2.65% and 2.49%, respectively. We had no borrowings under the Revolver as of January 31, 2018.To mitigate the interest rate risk on our Term Facility, we entered into an interest rate swap contract with an initial notional amount of $129.8 million to hedge the variability to changes in cash flows attributable to interest rate risks caused by changes in interest rates related to our variable rate debt. We have designated the swap as a cash flow hedge. The notional amount is amortized so that the amount is always 50% of the principal balance of the debt outstanding. As of January 31, 2018, the notional amount was $122.0 million. The interest rate swap agreement matures on June 15, 2021 and locks the interest rates on 50% of our outstanding debt at 1.919%, exclusive of the credit spread on the debt. We had $66.8 million and $67.2$77.1 million of borrowings against the CSV of COLI contracts as of Januaryboth July 31, 20182023 and April 30, 2017, respectively,2023, bearing interest primarily at variable rates. TheWe have sought to minimize 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.40Item 4.Controls and Proceduresa)Evaluation of Disclosure Controls and Procedures.a)Evaluation of Disclosure Controls and Procedures.As of the end of the period covered by this Quarterly Report on Form 10-Q, management, our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures and internal controls over financial reporting. Based on their evaluation of our disclosure controls and procedures (as defined in Rules13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) conducted as of the end of the period covered by this Quarterly Report on Form10-Q, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined inRules 13a-15(e) and15d-15(e) under the Exchange Act) are effective.b)Changes in Internal Control over Financial Reporting.b)Changes in Internal Control over Financial Reporting.There were no changes in our internal control over financial reporting during the three months ended JanuaryJuly 31, 20182023 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.41Item 1.Legal ProceedingsFrom time to time, the Company has been and iswe are involved in litigation incidentalboth as a plaintiff and a defendant, relating to its business. The Company is currentlyclaims arising out of our operations. As of the date of this report, we are not a party toengaged in any litigation, which, if resolved adversely against the Company, would,legal proceedings that are expected, individually or in the opinion of management, after consultation with legal counsel,aggregate, to have a material adverse effect on the Company’sour business, financial positioncondition or results of operations.Item 1A.Risk FactorsIn our Form10-K, for the year ended April 30, 2017, we described the material factors, events, and uncertainties that make an investment in our securities risky. Those risk factors facingshould be considered carefully, together with all other information in that Form 10-K and our business. Additionalsubsequent filings with the SEC. It does not address all of the risks that we face, and additional risks not presently known to us or that we currently deem immaterial may also arise and impair our business operations. Except as set forth below, asAs of the date of this report, there have been no material changes to the risk factors described in our Form10-K.The effects of the Tax Cuts and Jobs Act on our business and our company have not yet been fully analyzed and the final impacts could be materially different from our current estimates.On December 22, 2017, the Tax Cuts and Jobs Act (“the “Tax Act”) was enacted into law, making significant changes to the taxation of U.S. business entities. The most significant impacts of the Tax Act on the Company include (1) a reduction in the U.S. corporate federal statutory income tax rate from 35.0% to 21.0% effective January 1, 2018, and (2) aone-time tax on accumulated foreign earnings (the “Transition Tax”), which is applicable at a rate of 15.5% on cash and other specified assets and 8% on other residual earnings. We have recorded in our consolidated financial statements provisional amounts based on our current estimates of the effects of the Tax Act in accordance with our current understanding of the Tax Act and currently available guidance. For additional information regarding the Tax Act and the provisional tax amounts recorded in our consolidated financial statements, refer to Note 11 — Income Taxesto the financial statements of this Quarterly Report. The final amounts may be significantly affected by regulations and interpretive guidance expected to be issued by the tax authorities, clarifications of the accounting treatment of various items, our additional analysis, and our refinement of our estimates of the effects of the Tax Act and, therefore, such final amounts could be materially different than our current provisional amounts, which could materially affect our tax obligations and effective tax rate.Item 2. Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Purchases of Equity SecuritiesIssuer Purchases of Equity SecuritiesThe following table summarizes common stock repurchased by us during the quarter ended JanuaryJuly 31, 2018: 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) — $ — — $91.9 million 64,919 $ 41.10 60,800 $89.4 million 20,534 $ 40.66 20,000 $88.6 million 85,453 $ 41.00 80,800 (1)Represents withholding of a portion of restricted shares to cover taxes on vested restricted shares and shares purchased as part of our publicly announced programs.(2)2023: Total Number of SharesPurchased (1)Average
Price Paid
Per ShareTotal Number of Shares Purchased
as Part of Publicly-
Announced
ProgramsApproximate DollarValue of SharesThat May Yet bePurchased Underthe Programs (2)May 1, 2023— May 31, 2023 90,000 $ 46.48 90,000 $231.0 million June 1, 2023— June 30, 2023 514 $ 51.55 — $231.0 million July 1, 2023— July 31, 2023 200,927 $ 50.51 — $231.0 million Total 291,441 $ 49.27 90,000 _________________________(1)Represents withholding of 201,441 shares to cover taxes on vested restricted shares, in addition to shares purchased as part of a publicly announced program.(2)On December 8, 2014, the Board of Directors approved an increase in the Company’s stock repurchase program to an aggregate of $150.0 million. The shares can be repurchased in open market transactions or privately negotiated transactions at the Company’s discretion. We repurchased approximately $3.3 million of the Company’s common stock under the program during the third quarter of fiscal 2018.Our senior secured credit agreement, dated June 15, 2016,21, 2022, The Amended Credit Agreement permits us to pay dividends to our stockholders and make share repurchases so long as our pro formathere is no default under the Amended Credit Agreement, the Company's total funded debt to adjusted EBITDA ratio (as set forth in the Amended Credit Agreement, the "consolidated net leverage ratio, defined as the ratio of consolidated funded indebtedness to consolidated adjusted EBITDA,ratio"), is no greater than 2.505.00 to 1.00, and ourwe are in pro forma domestic liquiditycompliance with our financial covenant. Furthermore, our Notes allow the Company to pay $25.0 million of dividends per fiscal year with no restrictions plus an unlimited amount of dividends so long as the Company’s consolidated total leverage ratio is at least $50.0 million.Item 5. Other Information(a) None(b) Not applicable(c) Trading PlansOur directors and Section 16 officers may from time to time enter into plans or other arrangements for the purchase or sale of our shares that are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or may represent a non-Rule 10b5-1 trading arrangement under the Exchange Act. During the quarter ended July 31, 2023, no director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements (in each case, as defined in Item 408(a) of Regulation S-K).42Item 6.ExhibitsExhibit
Number3.1* 31.13.2*31.1 31.2 32.1 101.INS Inline XBRL Instance Document.Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.101.SCH Inline XBRL Taxonomy Extension Schema Document. 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended July 31, 2023, has been formatted in Inline XBRL and included as Exhibit 101. _________________________* Incorporated herein by reference.43SIGNATURESPursuant 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.Korn/Ferry InternationalBy:Korn Ferry Date: September 8, 2023 By: /s/ Robert P. Rozek Robert P. Rozek
(Duly Authorized Officer, Principal Financial Officer and Principal Accounting Officer)Date: March 9, 201844