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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.
−Removed: Similarly, statements that describe our objectives, plans or goals as well as the expected benefits of the acquisition of Miller Heiman Group, AchieveForum and Strategy Execution (collectively, the “Acquired Companies”), the timing and expected benefits of our recently adopted restructuring plan and the potential negative impact of the coronavirus (COVID-19) outbreak on our business, employees, customers and our ability to provide services in affected regions, also are forward-looking statements.
−Removed: All of these forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from those contemplated by the relevant forward-looking statement.
−Removed: 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, changes in demand for our services as a result of automation, dependence on and costs of attracting and retaining qualified and experienced consultants, maintaining our relationships with customers and suppliers and retaining key employees, maintaining our brand name and professional reputation, the expected timing of the consummation of the Plan (as defined below), the impact of the Plan’s rebranding on the Company’s products and services, potential legal liability and regulatory developments, portability of client relationships, global and local political or economic developments in or affecting countries where we have operations, currency fluctuations in our international operations, risks related to growth, restrictions imposed by off-limits agreements, competition, consolidation of the industries we serve, reliance on information processing systems, cyber security vulnerabilities, changes to data security, data privacy, and data protection laws, dependence on third parties for the execution of critical functions, limited protection of our intellectual property (“IP”), our ability to enhance and develop new technology, our ability to successfully recover from a disaster or other business continuity problems, employment liability risk, an impairment in the carrying value of goodwill and other intangible assets, the effects of the Tax Cuts and Jobs Act (the “Tax Act”) and other future changes in tax laws, 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, the impact of the withdrawal of the United Kingdom from the European Union, changes in our accounting estimates and assumptions, alignment of our cost structure, the utilization and billing rates of our consultants, seasonality, expansion of social media platforms, ability to effect acquisition and integrate the Acquired Companies ;
−Removed: the ability to recognize the anticipated benefits of the acquisition of the Acquired Companies;
−Removed: the costs related to the acquisition of the Acquired Companies;
−Removed: our indebtedness, the phase-out of LIBOR, the potential negative impact of the coronavirus (COVID-19) outbreak on our business, employees, customers and our ability to provide services in affected regions, and the matters disclosed under the heading “Risk Factors” in the this Quarterly Report on Form 10-Q and in the Company’s other Exchanges Act reports, including Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2019 (“Form 10-K”).
+Added: Similarly, statements that describe our objectives, plans or goals as well as the expected benefits of the acquisition of Miller Heiman Group, AchieveForum and Strategy Execution (collectively, the “Acquired Companies”), the timing and expected benefits of our recently adopted restructuring plans and the magnitude and duration of the impact of the global (“COVID-19”) pandemic on our business, employees, customers and our ability to provide services in affected regions.
+Added: These forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from those contemplated by the relevant forward-looking statement.
+Added: The principal risk factors that could cause actual performance and future actions to differ materially from the forward-looking statements include, but are not limited to, those relating to the magnitude and duration of the negative impact of the COVID -19 outbreak on our business, employees, customers and our ability to provide services in affected regions, global and local political and or economic developments in or affecting countries where we have operations, competition, changes in demand for our services as a result of automation, dependence on and costs of attracting and retaining qualified and experienced consultants, maintaining our relationships with customers and suppliers and retaining key employees, maintaining our brand name and professional reputation, potential legal liability and regulatory developments, portability of client relationships, consolidation of or within the industries we serve, currency fluctuations in our international operations, risks related to growth, alignment of our cost structure, restrictions imposed by off-limits agreements, reliance on information processing systems, cyber security vulnerabilities, changes to data security, data privacy, and data protection laws, dependence on third parties for the execution of critical functions, limited protection of our intellectual property (“IP”), our ability to enhance and develop new technology, our ability to successfully recover from a disaster or other business continuity problems, employment liability risk, an impairment in the carrying value of goodwill and other intangible assets, treaties, or regulations on our business and our company, deferred tax assets that we may not be able to use, our ability to develop new products and services, the impact of the withdrawal of the United Kingdom from the European Union, changes in our accounting estimates and assumptions, the utilization and billing rates of our consultants, seasonality, the expansion of social media platforms, the ability to effect acquisitions and integrate the Acquired Companies , the ability to recognize the anticipated benefits of the acquisition of the Acquired Companies, the costs related to the acquisition of the Acquired Companies, our indebtedness, the phase-out of LIBOR, and the matters disclosed under the heading “Risk Factors” in the Company’s Exchange Act reports, including Item 1A included in the Annual Report on Form 10-K for the fiscal year ended April 30, 2020 (“Form 10-K”).
Readers are urged to consider these factors carefully in evaluating the forward-looking statements.
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And we advise them on how to reward, develop and motivate their people.
+Added: We are pursuing a strategy that will help Korn Ferry to focus on clients and collaborate intensively across the organization.
+Added: This approach builds on the best of our past and gives us a clear path to the future with focused initiatives to increase our client and commercial impact.
+Added: Korn Ferry is transforming how clients address their talent management needs.
+Added: We have evolved from a mono-line to a diversified business, giving our consultants more frequent and expanded opportunities to engage with clients.
We operate through four global segments:
Consulting helps clients synchronize their strategy and their talent by addressing four fundamental needs:
−Removed: Organizational Strategy, Assessment and Succession, Leadership Development, and Rewards and Benefits.
−Removed: This is supported and underpinned by a comprehensive range of some of the world’s leading lP and data.
−Removed: Digital is an integrated platform that gives clients direct access to people and organizational data, insights, analytics and digital assets.
−Removed: It is comprised of individual products that when used together, give clients a common language for all talent matters.
+Added: Organizational Strategy, Assessment and Succession, Leadership and Professional Development, and Rewards and Benefits.
+Added: This work is supported and underpinned by a comprehensive range of some of the world’s leading lP and data.
+Added: Digital leverages an artificial intelligence (“AI”) powered platform to identify structure, roles, capabilities and behaviors needed to drive business forward.
+Added: The end-to-end system gives clients one enterprise-wide talent framework and delivers an achievable blueprint for success, along with the guidance and tools to deliver it.
Executive Search helps organizations recruit board level, chief executive and other senior executive and general management talent.
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Transaction sizes range from single professional searches to team, department and line of business projects, and global outsource recruiting solutions.
−Removed: Consulting and Digital were formerly referred to, and reported together, as Korn Ferry Advisory (“Advisory”).
−Removed: Over the past year we have invested in the digital business in order to digitize and harmonize the structure of our IP content and data and to build a technology platform for the efficient delivery of these assets directly to an end consumer or indirectly through a consultant engagement.
−Removed: These investments combined with the recent acquisitions resulted in reassessing how we manage our Advisory business.
−Removed: Therefore, beginning in the third quarter of fiscal 2020, we separated Advisory into two segments in order to better align with the Company’s strategy (which included the acquisition of the Acquired Companies) and the decisions of the Company’s chief operating decision maker, which has begun to regularly make resource allocation decisions and assess performance separately between Consulting and Digital.
+Added: Consulting and Digital are new reporting segments implemented in the third quarter of fiscal 2020.
+Added: Previously, these were tracked and reported together as Korn Ferry Advisory (“Advisory”).
+Added: Over the past year, we have invested in the digital business and harmonized the structure of our content and data, building a technology platform for the efficient delivery of these assets directly to an end consumer or indirectly through a consulting engagement.
+Added: These investments combined with the acquisitions of the Acquired Companies in November 2019 from TwentyEighty, Inc.
+Added: for $108.6 million, resulted in a reassessment of how we managed our Advisory business.
+Added: Therefore, beginning in the third quarter of fiscal 2020, we separated Advisory into two segments in order to better align with the Company’s strategy (which included the acquisition of the Acquired Companies) and the decisions of the Company’s chief operating decision maker, who had begun to regularly make resource allocation decisions and assess performance separately between consulting and digital within Advisory.
+Added: The addition of the Acquired Companies has further expanded our vast IP and content and leveraged the firm’s digital delivery platforms.
+Added: We have invested in our digital business to digitize and harmonize the structure of our IP content and data and in building a technology platform for the efficient delivery of these assets directly to an end consumer or indirectly through a consulting engagement.
Approximately 70% of the executive searches we performed in fiscal 2020 were for board level, chief executive and other senior executive and general management positions.
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We have built strong client loyalty, with 90% of the assignments performed during fiscal 2020 having been on behalf of clients for whom we had conducted assignments in the previous three fiscal years.
−Removed: Approximately 70% of our revenues were generated from clients that utilize multiple lines of business.
+Added: Approximately 71% of our revenues were generated from clients that utilized multiple lines of our business.
A vital pillar of our growth strategy is our Digital business.
Our data and IP are embedded into the core business processes of our clients, helping us generate long-term relationships through large scale and technology-based talent programs.
−Removed: We continue to seek ways to scale-up these highly profitable products to our global clients.
−Removed: In fiscal 2019, Korn Ferry was recognized as a top five RPO provider in the Baker’s Dozen list, marking our 12th consecutive year on the list.
+Added: In fiscal 2020, Korn Ferry was recognized as one of the top RPO providers in the Baker’s Dozen list, marking our 13th consecutive year on the list.
+Added: We were also named leader on the Everest PEAK Matrix for three years running and achieved star performer status in fiscal 2020.
Through decades of experience, we have enhanced our RPO solution to deliver quality candidates that drive our clients’ business strategies.
We leverage proprietary IP and data sets to guide clients on the critical skills and competencies to look for, compensation information to align with market demand, and assessment tools to ensure candidate fit.
−Removed: While most organizations can develop a sound strategy, they often struggle with how to make it stick.
−Removed: That is where we come in:
−Removed: synchronizing an organization’s strategy with its talent to drive superior performance.
−Removed: We help companies design their organization—the structure, roles and responsibilities—to seize these opportunities.
−Removed: In addition, we help organizations select and hire the talent they need to execute their strategy—and show them the best way to compensate, develop and motivate their people.
−Removed: We do this through our five core solution sets:
−Removed: Organizational Strategy
−Removed: We map talent strategy to business strategy by designing operating models and organizational structures that align to them, helping organizations put their plans into action.
−Removed: We make sure they have the right people, in the right roles, engaged and enabled to do the right things.
−Removed: Assessment and Succession
−Removed: We 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.
−Removed: Talent Acquisition
−Removed: From executive search to RPO, we integrate scientific research with our practical experience and industry-specific expertise to recruit professionals of all levels and functions for client organizations.
−Removed: Leadership Development
−Removed: We help leaders at all levels of an organization achieve their vision, purpose and strategy.
−Removed: 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.
−Removed: Rewards and Benefits
−Removed: We help organizations design rewards to achieve their strategic objectives.
−Removed: We help them pay their people fairly for doing the right things—with rewards they value—at a cost the organization can afford.
−Removed: On June 12, 2018, the Company’s Board of Directors approved the One Korn Ferry rebranding plan for the Company (the “Plan”).
−Removed: The Plan includes going to market under a single, master brand architecture, solely as Korn Ferry and sunsetting all the Company’s sub-brands used at that time, including Futurestep, Hay Group and Lominger, among others.
−Removed: This integrated go-to-market approach was a key driver in our fee revenue growth in fiscal year 2018 , which led to the decision to further integrate our go-to-market activities under one master brand — Korn Ferry.
−Removed: As a result, the Company discontinued the use of all sub-brands and changed its name, effective January 1, 2019, to “Korn Ferry.” Two of the Company’s former sub-brands, Hay Group and Lominger, came to Korn Ferry through acquisitions.
−Removed: In connection with the accounting for these acquisitions, $106.6 million of the purchase price was allocated to indefinite-lived tradename intangible assets.
−Removed: As a result of the decision to discontinue their use, the Company took a one-time, non-cash write-off of tradenames of $106.6 million during the nine months ended January 31, 2019.
−Removed: On November 1, 2019, we completed the acquisitions of the Acquired Companies from TwentyEighty, Inc.
−Removed: for $108.6 million.
−Removed: The addition of the Acquired Companies has further expanded our vast intellectual property and content and leveraged the firm’s digital delivery platforms.
−Removed: We have invested in our digital business to digitize and harmonize the structure of our IP content and data and in building a technology platform for the efficient delivery of these assets directly to an end consumer or indirectly through a consulting engagement.
−Removed: These investments combined with the acquisition of the Acquired Companies resulted in reassessing how we manage our Advisory business.
−Removed: On November 1, 2019, we adopted a restructuring plan to rationalize our cost structure to realize the efficiencies and operational improvement that these investments have enabled us to, or positioned us to, realize.
−Removed: The plan impacts both Consulting and Digital and includes the elimination of redundant positions and consolidation of office space.
−Removed: During the three and nine months ended January 31, 2020, we recognized $18.1 million of restructuring charges associated with severance and recorded $2.8 million of integration/acquisition costs associated with impairment of 16 office leases.
−Removed: We expect the restructuring actions to be completed by July 31, 2020.
−Removed: In December 2019, a new strain of the coronavirus (COVID-19) was reported to have spread to over 100 countries, territories or areas worldwide.
+Added: The Impact of COVID-19
Initially, the negative business impact of the coronavirus outbreak was most pronounced in the Asia Pacific Region, and in particular China and Hong Kong.
−Removed: In recent weeks and days, however, the impact has become more global.
−Removed: Recently, select governments and companies have implemented social distancing - limiting either travel or in person individual or group face-to-face interaction.
−Removed: The extent to which further, incremental measures are put in place or additional government bodies adopt such measures is unknown.
−Removed: The measures taken to date will impact our business for the fiscal fourth quarter and potentially beyond.
−Removed: We expect that all of our business segments across all of our geographies will be impacted to some degree, but the significance of the impact of the coronavirus outbreak on our business and the duration for which it may have an impact cannot be determined at this time.
−Removed: The Company currently operates through four global segments.
−Removed: See Note 10— Segments in the Notes to Consolidated Unaudited Financial Statements for discussion of the Company’s global business segments.
+Added: In March 2020, COVID-19 was reported to have spread to over 100 countries, territories or areas, worldwide, and in the fourth quarter of fiscal 2020 the World Health Organization declared it a pandemic.
+Added: Governments and companies have implemented social distancing - limiting either travel or in person individual or group face-to-face interaction as well as working from home to adhere to stay at home orders from national, state and city governments.
+Added: The outbreak has severely restricted the level of economic activity in affected areas and has had an adverse impact on demand for and sales of our products and services.
+Added: All of our business segments across all of our geographies have been impacted as fee revenue decreased significantly in the fourth quarter of fiscal 2020 and the first quarter of fiscal 2021 due to a decrease in demand as clients respond to the pandemic.
+Added: In light of the continuing uncertainty in worldwide economic conditions caused by
+Added: the COVID-19 pandemic and, as part of a broader program aimed at further enhancing our strong balance sheet and liquidity position, on April 20, 2020, we initiated a plan intended to adjust our cost base to the current economic environment and to position us to invest in the recovery.
+Added: This plan includes (i) a reduction in workforce, which was completed by the end of the first quarter of fiscal 202 1 and resulted in restructuring charges of $40.5 million and $27.5 million associated with severance during the three months ended April 30, 2020 and the three months ended July 31, 2020 , (ii) the temporary furlough of certain employees, (iii) subject to certain exceptions and legal requirements, salary reductions across the organization, and (iv) other cost saving measures relating to general and administrative expenses.
+Added: Performance Highlights
The Company evaluates performance and allocates resources based on the chief operating decision maker’s review of (1) fee revenue and (2) adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”).
−Removed: To the extent that such charges occur, Adjusted EBITDA excludes restructuring charges, integration/acquisition costs, certain separation costs and certain non-cash charges (goodwill, intangible asset and other than temporary impairment ).
−Removed: In the three months ended January 31, 2020 , Adjusted EBITDA excluded $18.1 million of restructuring charges, $6.7 million of integration/acquisition costs and $1.8 million of separation costs.
−Removed: In the nine months ended January 31, 2020 , Adjusted EBITDA excluded $18.1 million of restructuring charges, $ 9 .
−Removed: 3 million of integration/acquisition costs and $1.8 million of separation costs.
−Removed: In the nine months ended January 31, 2019 , Adjusted EBITDA excluded $106.6 million of write-off of tradenames related to the Plan and $6.7 million of integration/acquisition costs.
−Removed: EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin are non-GAAP financial measures.
+Added: To the extent that such costs or charges occur, Adjusted EBITDA excludes restructuring charges, integration/acquisition costs, certain separation costs and certain non-cash charges (goodwill, intangible asset and other than temporary impairments of investments).
+Added: In the three months ended July 31, 2020, Adjusted EBITDA excluded $27.5 million of restructuring charges and $0.7 million of integration/acquisition costs.
+Added: Earnings before interest, taxes, depreciation and amortization (“EBITDA”), Adjusted EBITDA, and Adjusted EBITDA margin are non-GAAP financial measures.
They have limitations as analytical tools, 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.
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Management further believes that 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.
−Removed: Fee revenue was $515.3 million during the three months ended January 31, 2020, an increase of $40.8 million, or 9%, compared to $474.5 million in the three months ended January 31, 2019.
−Removed: Exchange rates unfavorably impacted fee revenue by $3.1 million, or 1%, in the three months ended January 31, 2020 compared to the year-ago quarter.
−Removed: During the three months ended January 31, 2020, we recorded operating income of $31.6 million, a decrease of $31.1 million, compared to $62.7 million in the three months ended January 31, 2019, with the Executive Search, RPO & Professional Search, Digital and Consulting segments contributing $32.7 million, $14.1 million, $8.5 million, and $2.7 million, respectively, offset by Corporate expenses of $26.4 million.
−Removed: Net income attributable to Korn Ferry in the three months ended January 31, 2020 was $20.0 million, a decrease of $25.0 million as compared to $45.0 million in the year-ago quarter.
−Removed: During the three months ended January 31, 2020, Adjusted EBITDA was $78.1 million, an increase of $0.4 million, compared to $77.7 million in the year-ago quarter, with the Executive Search, Digital, Consulting and RPO & Professional Search segments contributing $40.7 million, $25.9 million, $18.7 million and $15.2 million, respectively, offset by Corporate expenses, net of other income of $22.3 million.
−Removed: Our cash, cash equivalents and marketable securities decreased by $18.6 million to $748.5 million at January 31, 2020, compared to $767.1 million at April 30, 2019.
−Removed: This decrease was mainly due to annual bonuses earned in fiscal 2019 and paid during the first quarter of fiscal 2020, sign-on and retention payments, $108.6 million paid for the acquisition of the Acquired Companies, $68.1 million for stock repurchases in the open market, $33.8 million in payments for the purchase of property and equipment, and $17.3 million in dividends paid during the nine months ended January 31, 2020.
−Removed: These decreases were substantially offset by cash flows from operations and an increase in net borrowings of $180.7 million as a result of our note offering and borrowings under our credit agreement (discussed further below).
−Removed: As of January 31, 2020, we held marketable securities to settle obligations under our Executive Capital Accumulation Plan (“ECAP”) with a cost value of $143.9 million and a fair value of $151.6 million.
−Removed: Our vested obligations for which these assets were held in trust totaled $135.7 million as of January 31, 2020 and our unvested obligations totaled $23.2 million.
−Removed: Our working capital increased by $50.8 million to $636.7 million as of January 31, 2020, as compared to $585.9 million at April 30, 2019.
−Removed: 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 and dividend payments under our dividend policy in the next twelve months.
−Removed: We had $646.0 million and $420.2 million available for borrowing under our current and prior revolvers at January 31, 2020 and April 30, 2019, respectively.
−Removed: As of January 31, 2020 and April 30, 2019, there was $4.0 million and $2.9 million of standby letters of credit issued, respectively, under our credit agreements.
−Removed: We had a total of $11.1 million and $8.5 million of standby letters of credits with other financial institutions as of January 31, 2020 and April 30, 2019, respectively .
+Added: Fee revenue was $344.1 million during the three months ended July 31, 2020, a decrease of $140.4 million, or 29%, compared to $484.5 million in the three months ended July 31, 2019 with decreases in fee revenue in all business segments due to the reductions in demand for our products and services as a result of COVID-19.
+Added: Exchange rates unfavorably impacted fee revenue by $8.1 million, or 2%, in the three months ended July 31, 2020 compared to the year-ago quarter.
+Added: During the three months ended July 31, 2020, we recorded an operating loss of $43.8 million with the Corporate, Executive Search, Consulting and Digital segments contributing expenses of $20.1 million, $12.3 million, $10.9 million and $2.6 million, respectively, offset by operating income from the RPO & Professional Search segment of $2.2 million.
+Added: Net loss attributable to Korn Ferry in the three months ended July 31, 2020 was $30.8 million, a decrease of $73.8 million as compared to net income attributable to Korn Ferry of $43.0 million in the year-ago quarter.
+Added: Adjusted EBITDA in the three months ended July 31, 2020 was $10.6 million, a decrease of $64.3 million as compared to $74.9 million in the year-ago quarter.
+Added: During the three months ended July 31, 2020, the Executive Search, Digital, Consulting, and RPO & Professional Search segments contributed $8.1 million, $7.9 million, $6.6 million, and $6.0 million, respectively, offset by Corporate expenses net of other income of $18.0 million.
+Added: Our cash, cash equivalents and marketable securities decreased by $130.3 million to $733.0 million at July 31, 2020, compared to $863.3 million at April 30, 2020.
+Added: This decrease was mainly due to annual bonuses earned in fiscal 2020 and paid during the first quarter of fiscal 2021, retention payments, capital expenditures, our first semi-annual interest payment on the $400 million senior notes and dividends paid to stockholders during the three months ended July 31, 2020.
+Added: As of July 31, 2020, we held marketable securities to settle obligations under our Executive Capital Accumulation Plan (“ECAP”) with a cost value of $143.3 million and a fair value of $151.8 million.
+Added: Our vested obligations for which these assets were held in trust totaled $137.4 million as of July 31, 2020 and our unvested obligations totaled $24.1 million.
+Added: Our working capital decreased by $10.9 million to $602.0 million as of July 31, 2020, as compared to $612.9 million at April 30, 2020.
+Added: 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 and dividend payments under our dividend policy in the next 12 months.
+Added: We had $646.0 million available for borrowing under our
+Added: current r evolver at July 31, 2020 and April 30, 2020 .
+Added: As of July 31, 2020 and April 30, 2020 , there was $4.0 million of standby letters of credit issued, under our credit agreement.
+Added: We had a total of $11.
+Added: 5 million and $ 11 .
+Added: 3 million of standby letters of credits with other financial institutions as of July 31, 2020 and April 30, 2020 , respectively .
Results of Operations
2 unchanged sentences
Three Months Ended
−Removed: Nine Months Ended
Reimbursed out-of-pocket engagement expenses
6 unchanged sentences
Restructuring charges, net
−Removed: Operating income
−Removed: Net income attributable to Korn Ferry
−Removed: The operating results prior to November 1, 2019 have been revised to conform to the new segment reporting.
−Removed: The following tables summarize the results of our operations by business segment:
+Added: Operating (loss) income
+Added: Net (loss) income
+Added: Net (loss) income attributable to Korn Ferry
+Added: The following tables summarize the results of our operations by segment:
(Numbers may not total exactly due to rounding)
Three Months Ended
−Removed: Nine Months Ended
(dollars in thousands)
+Added: Consulting (1)
Executive Search:
6 unchanged sentences
Total revenue
+Added: The Consulting and Digital segment data for fiscal 2020 has been recast to reflect the division of the former Advisory segment into the Consulting and Digital segments.
Three Months Ended
−Removed: Nine Months Ended
(dollars in thousands)
−Removed: Operating income (loss)
+Added: Operating (loss) income
+Added: Consulting (2)
Executive Search:
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RPO & Professional Search
−Removed: Total operating income
−Removed: Margin calculated as a percentage of fee revenue by business segment.
−Removed: Three Months Ended January 31, 2020
−Removed: Executive Search
−Removed: RPO & Professional Search
−Removed: (in thousands)
−Removed: Total revenue
−Removed: Net income attributable to Korn Ferry
−Removed: Net income attributable to noncontrolling interest
−Removed: Other income, net
−Removed: Interest expense, net
−Removed: Income tax provision
−Removed: Operating income (loss)
−Removed: Depreciation and amortization
−Removed: Other income (loss), net
−Removed: Integration/acquisition costs
−Removed: Restructuring, charges, net
−Removed: Separation costs
−Removed: Adjusted EBITDA
−Removed: Operating margin
−Removed: Adjusted EBITDA margin
−Removed: Three Months Ended January 31, 2019
+Added: Total operating (loss) income
+Added: Margin calculated as a percentage of fee revenue by segment.
+Added: The Consulting and Digital segment data for fiscal 2020 has been recast to reflect the division of the former Advisory segment into the Consulting and Digital segments .
+Added: Three Months Ended July 31, 2020
Executive Search
−Removed: RPO & Professional Search
(in thousands)
Total revenue
−Removed: Net income attributable to Korn Ferry
−Removed: Net income attributable to noncontrolling interest
+Added: Net loss attributable to Korn Ferry
+Added: Net loss attributable to noncontrolling interest
Other income net
Interest expense, net
−Removed: Income tax provision
−Removed: Operating income (loss)
+Added: Income tax benefit
+Added: Operating (loss) income
Depreciation and amortization
−Removed: Other income (loss), net
−Removed: Integration/acquisition costs
−Removed: Adjusted EBITDA
−Removed: Operating margin
−Removed: Adjusted EBITDA margin
−Removed: Nine Months Ended January 31, 2020
−Removed: Executive Search
−Removed: RPO & Professional Search
−Removed: (in thousands)
−Removed: Total revenue
−Removed: Net income attributable to Korn Ferry
−Removed: Net income attributable to noncontrolling interest
Other income, net
−Removed: Interest expense, net
−Removed: Income tax provision
−Removed: Operating income (loss)
−Removed: Depreciation and amortization
−Removed: Other income (loss), net
Integration/acquisition costs
Restructuring, charges, net
−Removed: Separation costs
Adjusted EBITDA
1 unchanged sentence
Adjusted EBITDA margin
−Removed: Nine Months Ended January 31, 2019
+Added: Three Months Ended July 31, 2019
Executive Search
−Removed: RPO & Professional Search
+Added: Consulting (1)
(in thousands)
8 unchanged sentences
Other income (loss), net
−Removed: Integration/acquisition costs
−Removed: Tradename write-offs
−Removed: Adjusted EBITDA
+Added: EBITDA and Adjusted EBITDA
Operating margin
−Removed: Adjusted EBITDA margin
−Removed: Three Months Ended January 31, 2020 Compared to Three Months Ended January 31, 2019
−Removed: Fee revenue increased by $40.8 million, or 9%, to $515.3 million in the three months ended January 31, 2020 compared to $474.5 million in the year-ago quarter.
−Removed: Exchange rates unfavorably impacted fee revenue by $3.1 million, or 1%, in the three months ended January 31, 2020 compared to the year-ago quarter.
−Removed: The higher fee revenue was attributable to fee revenue generated by the Acquired Companies and the increase in fee revenue in RPO & Professional Search, partially offset by a decline in Executive Search fee revenue.
−Removed: Consulting reported fee revenue of $140.5 million, an increase of $1.5 million, or 1%, in the three months ended January 31, 2020 compared to $139.0 million in the year-ago quarter.
−Removed: Exchange rates unfavorably impacted fee revenue by $0.8 million, or 1%, in the three months ended January 31, 2020 compared to the year-ago quarter.
−Removed: Digital reported fee revenue of $99.4 million, an increase of $36.9 million, or 59%, in the three months ended January 31, 2020 compared to $62.5 million in the year-ago quarter.
−Removed: The higher fee revenue was primarily attributable to fee revenue generated by the Acquired Companies.
−Removed: Exchange rates unfavorably impacted fee revenue by $0.7 million, or 1%, in the three months ended January 31, 2020 compared to the year-ago quarter.
+Added: EBITDA and Adjusted EBITDA margin
+Added: The Consulting and Digital segment data for fiscal 2020 has been recast to reflect the division of the former Advisory segment into the Consulting and Digital segments.
+Added: Three Months Ended July 31, 2020 Compared to Three Months Ended July 31, 2019
+Added: During fiscal 2020, the Company changed the composition of its global segments.
+Added: The Consulting and Digital segment were previously included in the former Advisory segment.
+Added: Segment data for fiscal 2020 has been recast to reflect the division of the Advisory segment into the Consulting and Digital segments.
+Added: Fee revenue decreased by $140.4 million, or 29%, to $344.1 million in the three months ended July 31, 2020 compared to $484.5 million in the year-ago quarter.
+Added: Exchange rates unfavorably impacted fee revenue by $8.1 million, or 2%, in the three months ended July 31, 2020 compared to the year-ago quarter.
+Added: The decrease in fee revenue across all our segments was primarily due to the impact of COVID-19 on economies in which we operate, reducing demand for our products and services.
+Added: Consulting reported fee revenue of $99.3 million, a decrease of $38.2 million, or 28%, in the three months ended July 31, 2020 compared to $137.5 million in the year-ago quarter.
+Added: The decrease in fee revenue was due to the contraction in economic activity due to the COVID-19 pandemic.
+Added: Exchange rates unfavorably impacted fee revenue by $2.7 million, or 2%, in the three months ended July 31, 2020 compared to the year-ago quarter.
+Added: Digital reported fee revenue of $56.0 million, a decrease of $2.0 million, or 3%, in the three months ended July 31, 2020 compared to $58.0 million in the year-ago quarter.
+Added: The decrease in fee revenue was due to the contraction in economic activity due to the COVID-19 pandemic, partially offset by fee revenue generated by the Acquired Companies.
+Added: Exchange rates unfavorably impacted fee revenue by $1.1 million, or 2%, in the three months ended July 31, 2020 compared to the year-ago quarter.
Executive Search.
−Removed: Executive Search reported fee revenue of $183.6 million, a decrease of $9.8 million, or 5% , in the three months ended January 31, 2020 compared to $193.4 million in the year-ago quarter.
−Removed: Exchange rates unfavorably impacted fee revenue by $1.0 million, or 1% , in the three months ended January 31, 2020 compared to the year-ago quarter.
−Removed: As detailed below, there was lower fee revenue in all regions in the three months ended January 31, 2020 as compared to the year-ago quarter.
−Removed: The overall decrease in fee revenue was driven by decreases in fee revenue from the technology, financial services and industrial sectors.
−Removed: North America reported fee revenue of $106.9 million, a decrease of $7.3 million, or 6%, in the three months ended January 31, 2020 compared to $114.2 million in the year-ago quarter.
−Removed: The decrease in fee revenue was due to a 4% decrease in the number of engagements billed and a 3% decrease in the weighted-average fee billed per engagement (calculated using local currency) during the three months ended January 31, 2020 compared to the year-ago quarter.
−Removed: Europe, the Middle East, and Africa (“EMEA”) reported fee revenue of $44.3 million, a decrease of $1.6 million, or 3%, in the three months ended January 31, 2020 compared to $45.9 million in the year-ago quarter.
−Removed: The decrease in fee revenue was due to a 4% decrease in the weighted-average fee billed per engagement (calculated using local currency), partially offset by a 2% increase in the number of engagements billed during the three months ended January 31, 2020 compared to the year-ago quarter.
−Removed: The performance in Germany and United Arab Emirates were the primary contributors to the decrease in fee revenue, partially offset by increases in the United Kingdom in the three months ended January 31, 2020 compared to the year-ago quarter.
−Removed: Asia Pacific reported fee revenue of $25.1 million, a decrease of $0.6 million, or 2%, in the three months ended January 31, 2020 compared to $25.7 million in the year-ago quarter.
−Removed: The decrease in fee revenue was due to a 10% decrease in the number of engagements billed, offset by a 9% increase in the weighted-average fees billed per engagement (calculated using local currency) during the three months ended January 31, 2020 compared to the year-ago quarter.
−Removed: The performance in Australia and Hong Kong were the primary contributors to the decrease in fee revenue, partially offset by an increase in fee revenue in Japan in the three months ended January 31, 2020 compared to the year-ago quarter.
−Removed: Latin America reported fee revenue of $7.3 million, a decrease of $0.3 million, or 4%, in the three months ended January 31, 2020 compared to $7.6 million in the year-ago quarter.
−Removed: The decrease in fee revenue in the region was due to lower fee revenue in Brazil, partially offset by higher fee revenue in Mexico in the three months ended January 31, 2020 compared to the year-ago quarter.
+Added: Executive Search reported fee revenue of $120.1 million, a decrease of $73.1 million, or 38%, in the three months ended July 31, 2020 compared to $193.2 million in the year-ago quarter.
+Added: Exchange rates unfavorably impacted fee revenue by $2.6 million, or 1%, in the three months ended July 31, 2020 compared to the year-ago quarter.
+Added: As detailed below, Executive Search fee revenue was lower in all regions in the three months ended July 31, 2020 as compared to the year-ago quarter.
+Added: The decline in fee revenue was driven by decreases in fee revenue in all sectors due to a decrease in demand for our products and services as a result of the worldwide economic downturn associated with COVID-19 with industrial, consumer, technology and financial services having the greatest impact.
+Added: North America reported fee revenue of $69.3 million, a decrease of $42.4 million, or 38%, in the three months ended July 31, 2020 compared to $111.7 million in the year-ago quarter.
+Added: The decrease in fee revenue was due to a 30% decrease in the number of engagements billed and an 11% decrease in the weighted-average fee billed per engagement (calculated using local currency) during the three months ended July 31, 2020 compared to the year-ago quarter.
+Added: EMEA reported fee revenue of $30.1 million, a decrease of $16.4 million, or 35%, in the three months ended July 31, 2020 compared to $46.5 million in the year-ago quarter.
+Added: The decrease in fee revenue was due to a 27% decrease in the number of engagements billed and an 11% decrease in the weighted-average fee billed per engagement (calculated using local
+Added: currency) during the three months ended July 31, 2020 compared to the year-ago quarter.
+Added: Pe rformance in the United Kingdom, Germany and France were the primary contributors to the decrease in fee revenue in the three months ended July 31, 2020 compared to the year-ago quarter.
+Added: Asia Pacific reported fee revenue of $17.3 million, a decrease of $10.1 million, or 37%, in the three months ended July 31, 2020 compared to $27.4 million in the year-ago quarter.
+Added: The decrease in fee revenue was due to a 31% decrease in the number of engagements billed and a 6% decrease in the weighted-average fees billed per engagement (calculated using local currency) during the three months ended July 31, 2020 compared to the year-ago quarter.
+Added: The performance in Australia, China, and Singapore were the primary contributors to the decrease in fee revenue in the three months ended July 31, 2020 compared to the year-ago quarter.
+Added: Latin America reported fee revenue of $3.5 million, a decrease of $4.1 million, or 54%, in the three months ended July 31, 2020 compared to $7.6 million in the year-ago quarter.
+Added: Exchange rates unfavorably impacted fee revenue by $1.4 million, or 18%, in the three months ended July 31, 2020 compared to the year-ago quarter.
+Added: The decrease in fee revenue in the region was due to lower fee revenue in Brazil and Mexico in the three months ended July 31, 2020 compared to the year-ago quarter.
RPO & Professional Search.
−Removed: RPO & Professional Search reported fee revenue of $91.9 million, an increase of $12.3 million, or 15%, in the three months ended January 31, 2020 compared to $79.6 million in the year-ago quarter.
−Removed: Exchange rates unfavorably impacted fee revenue by $0.6 million, or 1%, in the three months ended January 31, 2020 compared to the year-ago quarter.
−Removed: Higher fee revenues in RPO of $9.1 million and Professional Search of $3.2 million, respectively, drove the increase in fee revenue.
+Added: RPO & Professional Search reported fee revenue of $68.7 million, a decrease of $27.1 million, or 28%, in the three months ended July 31, 2020 compared to $95.8 million in the year-ago quarter.
+Added: Exchange rates unfavorably impacted fee revenue by $1.7 million, or 2%, in the three months ended July 31, 2020 compared to the year-ago quarter.
+Added: The decrease in fee revenue was due to the worldwide downturn associated with COVID-19 that resulted in lower fee revenues in Professional Search of $13.6 million and RPO of $13.5 million.
Compensation and Benefits
−Removed: Compensation and benefits expense increased by $26.8 million, or 8%, to $348.6 million in the three months ended January 31, 2020 from $321.8 million in the year-ago quarter.
−Removed: Exchange rates favorably impacted compensation and benefits by $2.0 million, or 1%, in the three months ended January 31, 2020 compared to the year-ago quarter.
−Removed: The increase in compensation and benefits expense was primarily due to higher salaries and related payroll taxes due to a 10% increase in average headcount, both of which were mainly due to the Acquired Companies, as well as an increase in amounts owed under certain deferred compensation and retirement plans.
−Removed: Those increases were driven by increases in the fair value of participants’ accounts in the three months ended January 31, 2020 compared to the year-ago quarter.
−Removed: Consulting compensation and benefits expense decreased by $1.6 million, or 2%, to $93.5 million in the three months ended January 31, 2020 from $95.1 million in the year-ago quarter.
−Removed: Exchange rates favorably impacted compensation and benefits by $0.7 million, or 1%, in the three months ended January 31, 2020 compared to the year-ago quarter.
−Removed: The decrease in compensation and benefits expense was due to a lower performance-related bonus expense in the three months ended January 31, 2020 compared to the year-ago quarter.
−Removed: Consulting compensation and benefits expense, as a percentage of fee revenue, decreased to 67% in the three months ended January 31, 2020 from 68% in the year-ago quarter.
−Removed: Digital compensation and benefits expense increased by $15.4 million, or 47% to $48.2 million in the three months ended January 31, 2020 from $32.8 million in the year-ago quarter.
−Removed: Exchange rates favorably impacted compensation and benefits by $0.2 million, or 1% in the three months ended January 31, 2020 compared to the year-ago quarter.
−Removed: The increase in compensation and benefits expense was due to an increase in average headcount of 16% driven by the acquisition of the Acquired Companies.
−Removed: This was partially offset by a reduction in headcount from the elimination of redundant positions as part of the restructuring plan.
−Removed: Digital compensation and benefits expense, as a percentage of fee revenue, decreased to 49% in the three months ended January 31, 2020 from 53% in the year-ago quarter.
−Removed: Executive Search compensation and benefits expense increased by $3.8 million, or 3% , to $128.7 million in the three months ended January 31, 2020 from $124.9 million in the year-ago quarter.
−Removed: Exchange rates favorably impacted compensation and benefits by $0.6 million , in the three months ended January 31, 2020 compared to the year-ago quarter.
−Removed: The increase in compensation and benefits expense was due to an increase in expenses associated with our deferred compensation and retirement plans (including the increases in the fair value of participants’ accounts) driven by increases in the fair value of participants’ account s in the three months ended January 31, 2020 compared to the year-ago quarter .
−Removed: Executive Search compensation and benefits expense, as a percentage of fee revenue, increased to 70% in the three months ended January 31, 2020 from 65% in the year-ago quarter.
−Removed: RPO & Professional Search compensation and benefits expense increased by $9.6 million, or 17%, to $65.9 million in the three months ended January 31, 2020 from $56.3 million in the year-ago quarter.
−Removed: Exchange rates favorably impacted compensation and benefits by $0.4 million, or 1%, in the three months ended January 31, 2020 compared to the year-ago quarter.
−Removed: The increase was due to a 24% increase in the average headcount in the three months ended January 31, 2020 compared to the year-ago quarter.
−Removed: The higher average headcount was driven by the need to service an increase in fee revenue in the RPO business.
−Removed: RPO & Professional Search compensation and benefits expense, as a percentage of fee revenue, increased to 72% in the three months ended January 31, 2020 from 71% in the year-ago quarter.
−Removed: Corporate compensation and benefits expense was essentially flat in the three months ended January 31, 2020 when compared to the year-ago quarter.
+Added: Compensation and benefits expense decreased $44.5 million, or 14%, to $284.0 million in the three months ended July 31, 2020 from $328.5 million in the year-ago quarter.
+Added: Exchange rates favorably impacted compensation and benefits by $5.2 million, or 2%, in the three months ended July 31, 2020 compared to the year-ago quarter.
+Added: The decrease in compensation and benefits expense was primarily due to lower salaries and related payroll taxes and lower employer insurance due to an 11% decrease in average headcount and a decrease in the use of contractors as a result of actions taken to align our cost structure with the lower level of business demand.
+Added: These changes were partially offset by increases in performance-related bonus expense and amounts owed under certain deferred compensation and retirement plans driven by increases in the fair value of participants’ accounts in the three months ended July 31, 2020 compared to the year-ago quarter.
+Added: Consulting compensation and benefits expense decreased by $15.6 million, or 17%, to $76.9 million in the three months ended July 31, 2020 from $92.5 million in the year-ago quarter.
+Added: Exchange rates favorably impacted compensation and benefits by $1.8 million, or 2%, in the three months ended July 31, 2020 compared to the year-ago quarter.
+Added: The decrease in compensation and benefits expense was due to lower salaries and related payroll taxes and employer insurance due to a 19% decrease in average headcount, partially offset by an increase in performance-related bonus expense in the three months ended July 31, 2020 compared to the year-ago quarter.
+Added: Consulting compensation and benefits expense, as a percentage of fee revenue, increased to 77% in the three months ended July 31, 2020 from 67% in the year-ago quarter.
+Added: Digital compensation and benefits expense increased by $4.9 million, or 16% to $35.9 million in the three months ended July 31, 2020 from $31.0 million in the year-ago quarter.
+Added: Exchange rates favorably impacted compensation and benefits by $0.6 million, or 2% in the three months ended July 31, 2020 compared to the year-ago quarter.
+Added: The increase in compensation and benefits expense was due to increases in performance-related bonus expense and salaries and related payroll taxes due to an increase in average headcount of 12% driven by the acquisition of the Acquired Companies.
+Added: Digital compensation and benefits expense, as a percentage of fee revenue, increased to 64% in the three months ended July 31, 2020 from 54% in the year-ago quarter.
+Added: Executive Search compensation and benefits expense decreased by $17.8 million, or 14%, to $107.1 million in the three months ended July 31, 2020 from $124.9 million in the year-ago quarter.
+Added: Exchange rates favorably impacted compensation and benefits by $1.7 million, or 1%, in the three months ended July 31, 2020 compared to the year-ago quarter.
+Added: The decrease in compensation and benefits expense was due to lower salaries and related payroll taxes and employer insurance due to an 18% decrease in average headcount as a result of actions taken to align our cost structure with the lower level of business demand.
+Added: These changes were partially offset by an increase in expenses associated with our deferred compensation and retirement plans driven by increases in the fair value of participants’ accounts in the three months ended July 31, 2020 compared to the year-ago quarter.
+Added: Executive Search compensation and benefits expense, as a percentage of fee revenue, increased to 89% in the three months ended July 31, 2020 from 65% in the year-ago quarter.
+Added: RPO & Professional Search compensation and benefits expense decreased by $14.0 million, or 20%, to $54.7 million in the three months ended July 31, 2020 from $68.7 million in the year-ago quarter.
+Added: Exchange rates favorably impacted compensation and benefits by $1.1 million, or 2%, in the three months ended July 31, 2020 compared to the year-ago quarter.
+Added: The de crease was due to lower salaries and related payroll taxes and employer insurance due to a 7 % de crease in the average headcount in the three months ended July 31, 2020 compared to the year-ago quarter and a decrease in the use contractors as a result of actions taken to align our cost structure with the lower level of business demand.
+Added: RPO & Professional Search compensation and benefits expense, as a percentage of fee revenue, increased to 80% in the three months ended July 31, 2020 from 72% in the year-ago quarter.
+Added: Corporate compensation and benefits expense decreased by $1.8 million, or 16%, to $9.5 million in the three months ended July 31, 2020 from $11.3 million in the year-ago quarter.
+Added: The decrease was due to lower salaries and related payroll taxes due to a 14% decrease in the average headcount in the three months ended July 31, 2020 compared to the year-ago quarter.
General and Administrative Expenses
−Removed: General and administrative expenses were $71.4 million, an increase of $10.2 million, or 17%, in the three months ended January 31, 2020 compared to the year-ago quarter.
−Removed: Exchange rates favorably impacted general and administrative expenses by $0.8 million, or 1%, in the three months ended January 31, 2020 compared to the year-ago quarter.
−Removed: The increase in general and administrative expenses was due to higher marketing and business development expenses, premise and office expenses and integration/acquisition costs.
−Removed: General and administrative expenses, as a percentage of fee revenue, were 14% in the three months ended January 31, 2020 compared to 13% in the year-ago quarter.
−Removed: Consulting general and administrative expenses were $16.7 million in both the three months ended January 31, 2020 and 2019.
−Removed: Consulting general and administrative expenses, as a percentage of fee revenue, were 12% for both the three months ended January 31, 2020 and 2019.
−Removed: Digital general and administrative expenses were $15.0 million in the three months ended January 31, 2020 compared to $6.8 million in the year-ago quarter.
−Removed: The increase of $8.2 million was mainly due to the Acquired Companies, which resulted in increases to premise and office expenses and integration/acquisition costs.
−Removed: A portion of the premise and office expenses was due to the impairment of 16 office leases which were terminated in connection the integration plan of the Acquired Companies.
−Removed: Digital general and administrative expenses, as a percentage of fee revenue, increased to 15% in the three months ended January 31, 2020 from 11% in the year-ago quarter.
−Removed: Executive Search general and administrative expenses were $19.2 million, a decrease of $2.4 million, or 11% in the three months ended January 31, 2020 compared to $21.6 million in the year-ago quarter.
−Removed: The decrease was mainly due to decreases in bad debt expense, other travel related expenses and foreign exchange loss.
−Removed: Executive Search general and administrative expenses, as a percentage of fee revenue, decreased to 10% in the three months ended January 31, 2020 from 11% in the year-ago quarter.
−Removed: RPO & Professional Search general and administrative expenses were $8.0 million in the three months ended January 31, 2020 compared to $7.1 million in the year-ago quarter.
−Removed: The increase was primarily due to higher premise and office expenses and an increase in marketing and business development expenses.
−Removed: RPO & Professional Search general and administrative expenses, as a percentage of fee revenue, were 9% for both the three months ended January 31, 2020 and 2019.
−Removed: Corporate general and administrative expenses increased $3.5 million, or 39%, to $12.4 million in the three months ended January 31, 2020 compared to $8.9 million in the year-ago quarter.
−Removed: The increase was primarily due to an increase in marketing and business development expenses and integration/acquisition costs related to the Acquired Companies during the three months ended January 31, 2020 compared to the year-ago quarter.
+Added: General and administrative expenses decreased $18.7 million, or 28%, to $47.1 million in the three months ended July 31, 2020 from $65.8 million in the year-ago quarter.
+Added: Exchange rates favorably impacted general and administrative expenses by $1.3 million, or 2%, in the three months ended July 31, 2020 compared to the year-ago quarter.
+Added: The decrease in general and administrative expenses was due to lower marketing and business development expenses, premise and office expenses, legal and professional fees and travel related expenses as a result of actions taken to align our cost structure with the lower level of business demand.
+Added: General and administrative expenses, as a percentage of fee revenue, was 14% in both the three months ended July 31, 2020 and 2019.
+Added: Consulting general and administrative expenses decreased by $5.9 million, or 33%, to $11.8 million in the three months ended July 31, 2020 compared to $17.7 million in the year-ago quarter.
+Added: The decrease was mainly due to decreases in marketing and business development expenses, premise and office expenses and travel related expenses as a result of actions taken to align our cost structure with the lower level of business demand.
+Added: Consulting general and administrative expenses, as a percentage of fee revenue, decreased to 12% in the three months ended July 31, 2020 from 13% in the year-ago quarter.
+Added: Digital general and administrative expenses was $7.3 million in the three months ended July 31, 2020 compared to $7.4 million in the year-ago quarter, essentially flat.
+Added: Digital general and administrative expenses, as a percentage of fee revenue, was 13% for both the three months ended July 31, 2020 and 2019.
+Added: Executive Search general and administrative expenses decreased by $6.4 million, or 32%, to $13.5 million, in the three months ended July 31, 2020 compared to $19.9 million in the year-ago quarter.
+Added: The decrease was mainly due to decreases in marketing and business development expenses, premise and office expenses and travel related expenses as a result of actions taken to align our cost structure with the lower level of business demand.
+Added: Executive Search general and administrative expenses, as a percentage of fee revenue, increased to 11% in the three months ended July 31, 2020 from 10% in the year-ago quarter.
+Added: RPO & Professional Search general and administrative expenses decreased by $2.0 million, or 26%, to $5.7 million in the three months ended July 31, 2020 compared to $7.7 million in the year-ago quarter.
+Added: The decrease was primarily due to lower travel related expenses and decreases in marketing and business development expenses and premise and office expenses due to working from home plans in place and restrictions on employee travel.
+Added: RPO & Professional Search general and administrative expenses, as a percentage of fee revenue, was 8% for both the three months ended July 31, 2020 and 2019.
+Added: Corporate general and administrative expenses decreased $4.3 million, or 33%, to $8.8 million in the three months ended July 31, 2020 compared to $13.1 million in the year-ago quarter.
+Added: The decrease was primarily due to a decrease in legal and professional fees and lower marketing and business development expenses during the three months ended July 31, 2020 compared to the year-ago quarter.
Cost of Services Expense
Cost of services expense consists primarily of contractor and product costs related to the delivery of various services and products, primarily in RPO & Professional Search, Consulting and Digital.
−Removed: Cost of services expense increased by $13.7 million, or 80% to $30.8 million in the three months ended January 31, 2020 compared to $17.1 million in the year-ago quarter.
−Removed: The increase was due to the Acquired Companies.
−Removed: Cost of services expense, as a percentage of fee revenue, increased to 6% in the three months ended January 31, 2020 from 4% in the three months ended January 31, 2019.
+Added: Cost of services expense decreased by $2.8 million, or 16% to $14.3 million in the three months ended July 31, 2020 compared to $17.1 million in the year-ago quarter.
+Added: The decrease was due to the decline in fee revenue.
+Added: Cost of services expense, as a percentage of fee revenue, was 4% in both the three months ended July 31, 2020 and 2019.
Depreciation and Amortization Expenses
−Removed: Depreciation and amortization expenses were $14.9 million, an increase of $3.2 million, or 27%, in the three months ended January 31, 2020 compared to $11.7 million in the year-ago quarter.
−Removed: The increase related primarily to the Acquired Companies and technology investments made in the current and prior year in software and computer equipment, as well as increases in leasehold improvements and furniture and fixtures.
+Added: Depreciation and amortization expenses were $15.0 million, an increase of $2.2 million, or 17%, in the three months ended July 31, 2020 compared to $12.8 million in the year-ago quarter.
+Added: The increase was primarily from the Digital segment due to the acquisition of the Acquired Companies and technology investments made in the current and prior year in software and computer equipment.
Restructuring Charges, Net
−Removed: During the three months ended January 31, 2020, we implemented a restructuring plan in order to eliminate redundant positions that were created due to the investments made in our digital business and the acquisition of the Acquired Companies.
−Removed: As a result, we recorded restructuring charges of $18.1 million of severance costs during the three months ended January 31, 2020.
−Removed: There were no restructuring charges, net during the three months ended January 31, 2019.
−Removed: Operating Income
−Removed: Operating income decreased by $31.1 million, or 50%, to $31.6 million in the three months ended January 31, 2020 compared to $62.7 million in the year-ago quarter.
−Removed: The decrease in operating income was primarily driven by increases in restructuring charges, net, cost of services expense, compensation and benefits expense and general and administrative expenses, partially offset by an increase in fee revenue.
−Removed: Consulting operating income was $2.7 million in the three months ended January 31, 2020, a decrease of $9.1 million, or 77%, as compared to $11.8 million in the year-ago quarter.
−Removed: The decrease in Consulting operating income was mainly driven by restructuring charges, net incurred in the three months ended January 31, 2020.
−Removed: Consulting operating income, as a percentage of fee revenue, was 2% and 8% in the three months ended January 31, 2020 and 2019, respectively.
−Removed: Digital operating income was $8.5 million in the three months ended January 31, 2020, a decrease of $9.0 million, or 51%, as compared to $17.5 million in the year-ago quarter.
−Removed: The decrease in Digital operating income was mainly driven by restructuring charges, net, and increases in compensation and benefits expense, cost of services expense and general and administrative expenses, offset by an increase in fee revenue, mainly due to the Acquired Companies.
−Removed: Digital operating income, as a percentage of fee revenue, was 9% and 28% in the three months ended January 31, 2020 and 2019, respectively.
−Removed: Executive Search operating income decreased $12.0 million, or 27%, to $32.7 million in the three months ended January 31, 2020 as compared to $44.7 million in the year-ago quarter.
−Removed: The decrease in Executive Search operating income was mainly driven by lower fee revenue and an increase in compensation and benefits expense, including $1.8 million in separation charges.
−Removed: Executive Search operating income, as a percentage of fee revenue, was 18% and 23% in the three months ended January 31, 2020 and 2019, respectively.
−Removed: RPO & Professional Search operating income was $14.1 million, an increase of $1.9 million, or 16%, in the three months ended January 31, 2020 as compared to $12.2 million in the year-ago quarter.
−Removed: The increase in operating income was mainly driven by higher fee revenue, offset by increases in compensation and benefits expense and general and administrative expenses.
−Removed: RPO & Professional Search operating income, as a percentage of fee revenue, was 15% in both the three months ended January 31, 2020 and 2019.
−Removed: Net Income Attributable to Korn Ferry
−Removed: Net income attributable to Korn Ferry decreased by $25.0 million, or 56%, to $20.0 million in the three months ended January 31, 2020 as compared to $45.0 million in the year-ago quarter.
−Removed: The decrease was primarily due to restructuring charges, net of $18.1 million and increases in compensation and benefits expense, cost of service expense and general and administrative expenses of $26.8 million, $13.7 million and $10.2 million, respectively.
−Removed: This was partially offset by an increase in fee revenue of $40.8 million during the three months ended January 31, 2020 compared to the year-ago quarter.
−Removed: Net income attributable to Korn Ferry, as a percentage of fee revenue, was 4% in the three months ended January 31, 2020 as compared to 9% in the three months ended January 31, 2019.
+Added: In April 2020, we implemented a restructuring plan in response to the uncertainty caused by COVID-19 that resulted in reductions in our workforce in the fourth quarter of fiscal 2020.
+Added: As part of this plan, we continued to reduce our workforce during the first quarter of fiscal 2021 and recorded restructuring charges of $27.5 million of severance costs during the three months ended July 31, 2020.
+Added: There were no restructuring charges, net during the three months ended July 31, 2019.
+Added: Operating (Loss) Income
+Added: Operating loss was $43.8 million in the three months ended July 31, 2020, a decrease of $104.1 million, or 173%, as compared to operating income of $60.3 million in the year-ago quarter.
+Added: The change in operating (loss) income was primarily driven by a decrease in fee revenue due to the decrease in demand for our products and services as a result of the COVID-19 pandemic and an increase in restructuring charges, net, partially offset by decreases in compensation and benefits expense and general and administrative expenses due to actions taken to align our cost structure with the lower level of business demand.
+Added: Consulting operating loss was $10.9 million in the three months ended July 31, 2020, a decrease of $22.7 million, or 192%, as compared to operating income of $11.8 million in the year-ago quarter.
+Added: The change in Consulting operating (loss) income was mainly driven by a decrease in fee revenue and an increase in restructuring charges, net incurred during the three months ended July 31, 2020 compared to the year-ago quarter.
+Added: This was partially offset by decreases in compensation and benefits expense, cost of services expense and general and administrative expenses due to actions taken to align our cost structure with the lower level of business demand.
+Added: Consulting operating loss, as a percentage of fee revenue, was 11% in the three months ended July 31, 2020 compared to operating income, as a percentage of fee revenue, of 9% in the year-ago quarter.
+Added: Digital operating loss was $2.6 million in the three months ended July 31, 2020, a decrease of $16.6 million, or 119%, as compared to operating income of $14.0 million in the year-ago quarter.
+Added: The change in Digital operating (loss) income was mainly driven by a decrease in fee revenue and an increase in restructuring charges, net incurred during the three months ended July 31, 2020 compared to the year-ago quarter.
+Added: Also, contributing to the decline in operating income was an increase in compensation and benefits expense and cost of services expense, which increased due to the Acquired Companies.
+Added: These expenses were partially offset from the cost saving initiatives that were put in place.
+Added: Digital operating loss, as a percentage of fee revenue, was 5% in the three months ended July 31, 2020 compared to operating income, as a percentage of fee revenue, of 24% in the year-ago quarter.
+Added: Executive Search operating loss decreased $57.9 million, or 127% to $12.3 million in the three months ended July 31, 2020, as compared to operating income of $45.6 million in the year-ago quarter.
+Added: The change in Executive Search operating (loss) income was mainly driven by lower fee revenue and an increase in restructuring charges, net incurred during the three months ended July 31, 2020 compared to the year-ago quarter.
+Added: These changes were partially offset by decreases in compensation and benefits expense and general and administrative expenses, all of which resulted from cost savings initiatives that were put in place.
+Added: Executive Search operating loss, as a percentage of fee revenue, was 10% in the three months ended July 31, 2020 compared to operating income, as a percentage of fee revenue, of 24% in the year-ago quarter.
+Added: RPO & Professional Search operating income was $2.2 million in the three months ended July 31, 2020, a decrease of $12.8 million, or 85% compared to $15.0 million in the year-ago quarter.
+Added: The decrease in operating income was mainly driven by lower fee revenue and an increase in restructuring charges, net.
+Added: The decrease in operating income was partially offset by decreases in compensation and benefits expense and general and administrative expenses, all of which resulted from cost savings initiatives that were put in place.
+Added: RPO & Professional Search operating income, as a percentage of fee revenue, was 3% in the three months ended July 31, 2020 compared to 16% in the year-ago quarter.
+Added: Net (Loss) Income Attributable to Korn Ferry
+Added: Net loss attributable to Korn Ferry decreased by $73.8 million, or 172% to $30.8 million in the three months ended July 31, 2020, as compared to a net income attributable to Korn Ferry of $43.0 million in the year-ago quarter.
+Added: Actions taken by various government and other authoritative bodies in response to the COVID-19 pandemic caused a severe contraction in economic activity during the quarter which translated in a decrease to fee revenue.
+Added: This decline in fee revenue was partially offset by decreases in compensation and benefits expense and general and administrative expenses associated with actions taken to align our cost structure with the lower level of business demand that resulted in a net loss attributable to Korn Ferry in three months ended July 31, 2020.
+Added: Net loss attributable to Korn Ferry, as a percentage of fee revenue, was 9% in the three months ended July 31, 2020 compared to net income attributable to Korn Ferry, as a percentage of fee revenue, of 9% in the year-ago quarter.
Adjusted EBITDA
−Removed: Adjusted EBITDA increased by $0.4 million, or 1%, to $78.1 million in the three months ended January 31, 2020 as compared to $77.7 million in the year-ago quarter.
−Removed: Adjusted EBITDA, as a percentage of fee revenue, was 15% in the three months ended January 31, 2020 compared to 16% in the year-ago quarter.
−Removed: Consulting Adjusted EBITDA was $18.7 million in the three months ended January 31, 2020, an increase of $1.7 million, or 10%, as compared to $17.0 million in the year-ago quarter.
−Removed: This increase was driven by higher fee revenue.
−Removed: Consulting Adjusted EBITDA, as a percentage of fee revenue, was 13% and 12% in the three months ended January 31, 2020 and 2019, respectively.
−Removed: Digital Adjusted EBITDA was $25.9 million in the three months ended January 31, 2020 , an increase of $4.8 million, or 23% , as compared to $21.1 million in the year-ago quarter.
−Removed: This increase was driven by higher fee revenue, partially offset by increases in compensation and benefits expense, cost of service expense and general and administrative expenses during the three months ended January 31, 2020 compared to the year-ago quarter.
−Removed: Digital Adjusted EBITDA, as a percentage of fee revenue, was 26% and 34% in the three months ended January 31, 2020 and 2019, respectively.
−Removed: Executive Search Adjusted EBITDA decreased $7.5 million, or 16%, to $40.7 million in the three months ended January 31, 2020 as compared to $48.2 million in the year-ago quarter.
−Removed: The decrease was mainly driven by a decline in fee revenue, partially offset by a decrease in general and administrative expenses during the three months ended January 31, 2020 compared to the year-ago quarter.
−Removed: Executive Search Adjusted EBITDA, as a percentage of fee revenue, was 22% and 25% in the three months ended January 31, 2020 and 2019, respectively.
−Removed: RPO & Professional Search Adjusted EBITDA was $15.2 million in the three months ended January 31, 2020, an increase of $2.1 million, or 16%, as compared to $13.1 million in the year-ago quarter.
−Removed: The increase was driven by higher fee revenue, offset by increases in compensation and benefits expense and general and administrative expenses during the three months ended January 31, 2020 compared to the year-ago quarter.
−Removed: RPO & Professional Search Adjusted EBITDA, as a percentage of fee revenue, was 17% and 16% in the three months ended January 31, 2020 and 2019, respectively.
+Added: Adjusted EBITDA decreased by $64.3 million, or 86%, to $10.6 million in the three months ended July 31, 2020 as compared to $74.9 million in the year-ago quarter.
+Added: The decrease in Adjusted EBITDA was driven by a decrease in fee revenue, partially
+Added: offset by decreases in compensation and benefits expense (excluding integration/acquisition costs) and general and administrative expenses (excluding integration/ acquisition costs) due to actions taken to align our cost structure with the lower level of business demand.
+Added: Adjusted EBITDA, as a percentage of fee revenue, was 3% in the three months ended July 31, 2020 compared to 15% in the year-ago quarter.
+Added: Consulting Adjusted EBITDA was $6.6 million in the three months ended July 31, 2020, a decrease of $10.1 million, or 60%, as compared to $16.7 million in the year-ago quarter.
+Added: This decrease was driven by lower fee revenue partially offset by decreases in compensation and benefits expense, cost of services expense and general and administrative expenses.
+Added: Consulting Adjusted EBITDA, as a percentage of fee revenue, was 7% and 12% in the three months ended July 31, 2020 and 2019, respectively.
+Added: Digital Adjusted EBITDA was $7.9 million in the three months ended July 31, 2020, a decrease of $9.9 million, or 56%, as compared to $17.8 million in the year-ago quarter.
+Added: This decrease in Digital operating income was mainly driven by a decrease in fee revenue and increases in compensation and benefits expense (excluding integration/acquisition costs) and cost of services expense, during the three months ended July 31, 2020 compared to the year-ago quarter.
+Added: Digital Adjusted EBITDA, as a percentage of fee revenue, was 14% and 31% in the three months ended July 31, 2020 and 2019, respectively.
+Added: Executive Search Adjusted EBITDA decreased $40.8 million, or 83%, to $8.1 million in the three months ended July 31, 2020 as compared to $48.9 million in the year-ago quarter.
+Added: The decrease was mainly driven by lower fee revenue, partially offset by decreases in compensation and benefits expense and general and administrative expenses all of which resulted from cost savings initiatives that were put in place.
+Added: Executive Search Adjusted EBITDA, as a percentage of fee revenue, was 7% and 25% in the three months ended July 31, 2020 and 2019, respectively.
+Added: RPO & Professional Search Adjusted EBITDA was $6.0 million in the three months ended July 31, 2020, a decrease of $10.1 million, or 63%, as compared to $16.1 million in the year-ago quarter.
+Added: The decrease in operating income was mainly driven by lower fee revenue, offset by decreases in compensation and benefits expense and general and administrative expenses all of which resulted from cost savings initiatives that were put in place .
+Added: RPO & Professional Search Adjusted EBITDA, as a percentage of fee revenue, was 9% and 17% in the three months ended July 31, 2020 and 2019, respectively.
Other Income, Net
−Removed: Other income, net was $5.1 million in the three months ended January 31, 2020 compared to $2.5 million in the year-ago quarter.
+Added: Other income, net was $11.2 million in the three months ended July 31, 2020 compared to $1.8 million in the year-ago quarter.
The difference was primarily due to larger gains from the fair value of our marketable securities.
−Removed: These gains were offset by the increases in our deferred compensation liability that are recorded in compensation and benefits expense during the three months ended January 31, 2020 compared to the year-ago quarter.
+Added: These gains were offset by the increases in our deferred compensation liability that are recorded in compensation and benefits expense during the three months ended July 31, 2020 compared to the year-ago quarter.
Interest Expense, Net
Interest expense, net primarily relates to our 4.625% Senior Unsecured Notes due 2027 (the “Notes”) issued in December 2019, our prior credit agreement and borrowings under company-owned life insurance (“COLI”) policies, which are partially offset by interest earned on cash and cash equivalent balances.
−Removed: Interest expense, net was $6.9 million in the three months ended January 31, 2020 compared to $4.3 million in the year-ago quarter.
−Removed: The increase in interest expense, net was related to the newly issued Notes, which have a higher interest rate and a higher principal balance than the revolver under our prior credit agreement.
−Removed: Income Tax Provision
−Removed: The provision for income tax was $8.8 million in the three months ended January 31, 2020 compared to $15.4 million in the year-ago quarter.
−Removed: This reflects a 29.5% and 25.3% effective tax rate for the three months ended January 31, 2020 and 2019, respectively.
−Removed: In both periods, the Company’s effective tax rate was higher than the U.S.
−Removed: federal statutory rate of 21.0%, primarily due to the impact of U.S.
−Removed: state income taxes and the recognition of taxable income outside the U.S.
−Removed: at higher statutory rates.
−Removed: Net Income Attributable to Noncontrolling Interest
−Removed: Net income attributable to noncontrolling interest represents the portion of a subsidiary’s net earnings that are attributable to shares of a subsidiary not held by Korn Ferry that are included in the consolidated results of operations.
−Removed: Net income attributable to noncontrolling interest for the three months ended January 31, 2020 was $1.0 million as compared to $0.5 million the three months ended January 31, 2019.
−Removed: Nine Months Ended January 31, 2020 Compared to Nine Months Ended January 31, 2019
−Removed: Fee revenue increased by $57.0 million, or 4%, to $1,492.3 million in the nine months ended January 31, 2020 compared to $1,435.3 million in the year-ago period.
−Removed: Exchange rates unfavorably impacted fee revenue by $24.0 million, or 2%, in the nine months ended January 31, 2020 compared to the year-ago period.
−Removed: The higher fee revenue was attributable to fee revenue generated by the Acquired Companies and growth in RPO & Professional Search, offset by decreases in Executive Search and Consulting.
−Removed: Consulting reported fee revenue of $422.1 million, a decrease of $1.9 million, in the nine months ended January 31, 2020 compared to $424.0 million in the year-ago period.
−Removed: Exchange rates unfavorably impacted fee revenue by $7.2 million, or 2%, in the nine months ended January 31, 2020 compared to the year-ago period.
−Removed: Digital reported fee revenue of $223.1 million, an increase of $33.1 million, or 17%, in the nine months ended January 31, 2020 compared to $190.0 million in the year-ago period.
−Removed: The higher fee revenue was primarily attributable to fee revenue generated by the Acquired Companies.
−Removed: Exchange rates unfavorably impacted fee revenue by $4.3 million, or 2%, in the nine months ended January 31, 2020 compared to the year-ago period.
−Removed: Executive Search.
−Removed: Executive Search reported fee revenue of $564.6 million, a decrease of $19.4 million, or 3% , in the nine months ended January 31, 2020 compared to $584.0 million in the year-ago period.
−Removed: Exchange rates unfavorably impacted fee revenue by $8.0 million, or 1% , in the nine months ended January 31, 2020 compared to the year-ago period.
−Removed: As detailed below, Executive Search fee revenue was lower in all regions in the nine months ended January 31, 2020 as compared to the year-ago period.
−Removed: The overall decrease in fee revenue was driven by decreases in fee revenue from technology, financial services, consumer, education/non-profit and industrial sectors.
−Removed: North America reported fee revenue of $332.4 million, a decrease of $9.8 million, or 3%, in the nine months ended January 31, 2020 compared to $342.2 million in the year-ago period.
−Removed: North America’s fee revenue was lower due to a 4% decrease in the number of engagements billed, offset by a 1% increase in the weighted-average fees billed per engagement (calculated using local currency) during the nine months ended January 31, 2020 compared to the year-ago period.
−Removed: EMEA reported fee revenue of $130.7 million, a decrease of $6.8 million, or 5%, in the nine months ended January 31, 2020 compared to $137.5 million in the year-ago period.
−Removed: The change in fee revenue was due to a 4% decrease in the weighted-average fees billed per engagement (calculated using local currency), offset by a 2% increase in the number of engagements billed during the nine months ended January 31, 2020 compared to the year-ago period.
−Removed: The performance in the United Kingdom, Germany, Sweden, Norway, and Switzerland were the primary contributors to the decrease in fee revenue, partially offset by increases in fee revenue in Italy in the nine months ended January 31, 2020 compared to the year-ago period.
−Removed: Asia Pacific reported fee revenue of $78.4 million, a decrease of $1.5 million, or 2%, in the nine months ended January 31, 2020 compared to $79.9 million in the year-ago period.
−Removed: The rest of the change in fee revenue was due to a 1% increase in the number of engagements billed during the nine months ended January 31, 2020 compared to the year-ago period.
−Removed: The performance in Australia, China, and Taiwan were the primary contributors to the decrease in fee revenue, partially offset by increases in fee revenue in Singapore and Japan in the nine months ended January 31, 2020 compared to the year-ago period.
−Removed: Latin America reported fee revenue of $23.1 million, a decrease of $1.2 million, or 5%, in the nine months ended January 31, 2020 compared to $24.3 million in the year-ago period.
−Removed: The decrease in fee revenue in the region was due to lower fee revenue in Brazil and Colombia in the nine months ended January 31, 2020 compared to the year-ago period, partially offset by higher fee revenue in Chile.
−Removed: RPO & Professional Search.
−Removed: RPO & Professional Search reported fee revenue of $282.4 million, an increase of $45.0 million, or 19%, in the nine months ended January 31, 2020 compared to $237.4 million in the year-ago period.
−Removed: Exchange rates unfavorably impacted fee revenue by $4.4 million, or 2%, in the nine months ended January 31, 2020 compared to the year-ago period.
−Removed: Higher fee revenues in RPO of $32.5 million and Professional Search of $12.5 million, respectively, drove the increase in fee revenue.
−Removed: Compensation and Benefits
−Removed: Compensation and benefits expense increased $34.9 million, or 4%, to $1,014.5 million in the nine months ended January 31, 2020 from $979.6 million in the year-ago period.
−Removed: Exchange rates favorably impacted compensation and benefits by $15.3 million, or 2%, in the nine months ended January 31, 2020 compared to the year-ago period.
−Removed: The increase in compensation and benefits was primarily due to a 11% increase in average headcount, which contributed to higher salaries and related payroll taxes and an increase in expenses associated with our deferred compensation and retirement plans driven by increases in the fair value of participants’ accounts , offset by a lower performance related bonus expense and a decrease in integration/acquisition costs for the nine months ended January 31, 2020 compared to the year-ago period.
−Removed: Consulting compensation and benefits expense decreased by $8.5 million, or 3%, to $286.2 million in the nine months ended January 31, 2020 from $294.7 million in the year-ago period.
−Removed: Exchange rates favorably impacted compensation and benefits by $5.4 million, or 2%, in the nine months ended January 31, 2020 compared to the year-ago period.
−Removed: The change was primarily due to a lower performance-related bonus expense and a decrease in integration/acquisition costs, offset by higher salaries and related payroll taxes driven by a 3% increase in the average number of consultants.
−Removed: Consulting compensation and benefits expense as a percentage of fee revenue decreased to 68% in the nine months ended January 31, 2020 from 70% in the year-ago period.
−Removed: Digital compensation and benefits expense increased by $12.9 million, or 13%, to $113.4 million in the nine months ended January 31, 2020 from $100.5 million in the year-ago period.
−Removed: Exchange rates favorably impacted compensation and benefits by $1.9 million, or 2%, in the nine months ended January 31, 2020 compared to the year-ago period.
−Removed: The increase was primarily due to a higher performance-related bonus expense and a 17% increase in average headcount mainly from the Acquired Companies.
−Removed: Digital compensation and benefits expense as a percentage of fee revenue decreased to 51% in the nine months ended January 31, 2020 from 53% in the year-ago period.
−Removed: Executive Search compensation and benefits expense was $377.9 million in the nine months ended January 31, 2020 compared to $378.0 million in the year-ago period.
−Removed: Exchange rates favorably impacted compensation and benefits by $5.0 million, or 1%, in the nine months ended January 31, 2020 compared to the year-ago period.
−Removed: Executive Search compensation
−Removed: and benefits expense, as a percentage of fee revenue, increased to 67% in the nine months ended January 31, 2020 from 65% .
−Removed: RPO & Professional Search compensation and benefits expense increased by $32.9 million, or 19%, to $201.9 million in the nine months ended January 31, 2020 from $169.0 million in the year-ago period.
−Removed: Exchange rates favorably impacted compensation and benefits by $2.9 million, or 2%, in the nine months ended January 31, 2020 compared to the year-ago period.
−Removed: The increase was due to a 26% increase in the average headcount in the nine months ended January 31, 2020 compared to the year-ago period.
−Removed: RPO & Professional Search compensation and benefits expense, as a percentage of fee revenue, was 71% in both the nine months ended January 31, 2020 and 2019.
−Removed: Corporate compensation and benefits expense decreased by $2.3 million, or 6%, to $35.1 million in the nine months ended January 31, 2020 from $37.4 million in the year-ago period.
−Removed: The decrease was primarily due to lower performance related bonus expense and an increase in the change in the cash surrender value (“ CSV”) of COLI that decreased compensation and benefits expense in the nine months ended January 31, 2020 compared to the year-ago period.
−Removed: General and Administrative Expenses
−Removed: General and administrative expenses decreased $88.4 million, or 31%, to $199.2 million in the nine months ended January 31, 2020 compared to $287.6 million in the year-ago period.
−Removed: Exchange rates favorably impacted general and administrative expenses by $4.1 million, or 1%, in the nine months ended January 31, 2020 compared to the year-ago period.
−Removed: The decrease in general and administrative expenses was due to the write-off of tradenames of $106.6 million in the year-ago period related to the Plan, with no such charge in the current period.
−Removed: The decrease in general and administrative expense was partially offset by an increase in marketing and business development expenses and premise and office expenses.
−Removed: General and administrative expenses, as a percentage of fee revenue, were 13% in the nine months ended January 31, 2020 as compared to 20% in the nine months ended January 31, 2019.
−Removed: Excluding the tradename write-offs, general and administrative expenses as a percentage of fee revenue were 13% in the nine months ended January 31, 2019.
−Removed: Consulting general and administrative expenses decreased by $75.5 million, or 59%, to $52.6 million in the nine months ended January 31, 2020 from $128.1 million in the year-ago period.
−Removed: The decrease in general and administrative expenses was mainly due to the write-off of tradenames related to the Plan of $77.0 million in the nine months ended January 31, 2019 with no such charge in the current period, partially offset by an increase in marketing and business development expense.
−Removed: Consulting general and administrative expenses, as a percentage of fee revenue, were 12% in the nine months ended January 31, 2020 as compared to 30% in the nine months ended January 31, 2019.
−Removed: Excluding the tradename write-offs, general and administrative expenses as a percentage of fee revenue were 12% in the nine months ended January 31, 2019.
−Removed: Digital general and administrative expenses decreased by $20.8 million, or 41%, to $29.7 million in the nine months ended January 31, 2020 from $50.5 million in the year-ago period.
−Removed: The decrease in general and administrative expenses was mainly due to the write-off of tradenames related to the Plan of $29.6 million in the nine months ended January 31, 2019 with no such charge in the current period, partially offset by an increase in premise and office expenses.
−Removed: Digital general and administrative expenses, as a percentage of fee revenue, were 13% in the nine months ended January 31, 2020 as compared to 27% in the nine months ended January 31, 2019.
−Removed: Excluding the tradename write-offs, general and administrative expenses as a percentage of fee revenue were 11% in the nine months ended January 31, 2019.
−Removed: Executive Search general and administrative expenses decreased by $3.2 million, or 5% to $58.0 million in the nine months ended January 31, 2020 from $61.2 million in the year-ago period.
−Removed: The decrease was primarily due to lower bad debt expense and decreases in legal and other professional fees and travel related expenses during the nine months ended January 31, 2020 compared to the year-ago period.
−Removed: Executive Search general and administrative expenses, as a percentage of fee revenue, were 10% in both the nine months ended January 31, 2020 and 2019.
−Removed: RPO & Professional Search general and administrative expenses increased by $3.9 million, or 20%, to $23.9 million in the nine months ended January 31, 2020 and $20.0 million in the nine months ended January 31, 2019.
−Removed: The increase was primarily due to an increase in premise and office expense and to a lesser extent increases in bad debt expense, marketing and business development and a foreign exchange loss in the nine months ended January 31, 2020 compared to a foreign exchange gain in the year-ago period.
−Removed: RPO & Professional Search general and administrative expenses, as a percentage of fee revenue, were 8% in both the nine months ended January 31, 2020 and 2019.
−Removed: Corporate general and administrative expenses increased by $7.3 million, or 26%, to $35.1 million in the nine months ended January 31, 2020 compared to $27.8 million in the year-ago period.
−Removed: The increase in general and administrative expenses was mainly due to integration/acquisition costs and an increase in marketing and business development expenses during the nine months ended January 31, 2020 compared to the year-ago period.
−Removed: Cost of Services Expense
−Removed: Cost of services expense consists primarily of contractor and product costs related to the delivery of various services and products, primarily in RPO & Professional Search, Consulting and Digital.
−Removed: Cost of services expense increased by $11.4 million, or 21%, to $66.4 million in the nine months ended January 31, 2020 compared to $55.0 million in the year-ago period.
−Removed: The increase was due to the Acquired Companies.
−Removed: Cost of services expense, as a percentage of fee revenue was 4% in both the nine months ended January 31, 2020 and 2019.
−Removed: Depreciation and Amortization Expenses
−Removed: Depreciation and amortization expenses were $40.4 million, an increase of $5.9 million, or 17%, in the nine months ended January 31, 2020 compared to $34.5 million in the year-ago period.
−Removed: The increase related primarily to the Acquired Companies and technology investments made in the current and prior year in software and computer equipment, in addition to increases in leasehold improvements and furniture and fixtures.
−Removed: Restructuring Charges, Net
−Removed: During the nine months ended January 31, 2020, we implemented a restructuring plan in order to eliminate redundant positions that were created due to the investments made in our digital business and the acquisition of the Acquired Companies.
−Removed: As a result, we recorded restructuring charges of $18.1 million of severance costs during the nine months ended January 31, 2020.
−Removed: There were no restructuring charges, net during the nine months ended January 31, 2019.
−Removed: Operating Income
−Removed: Operating income increased by $75.2 million to $153.8 million in the nine months ended January 31, 2020 compared to $78.6 million in the year-ago period.
−Removed: The increase in operating income was primarily driven by the write-off of tradenames of $106.6 million in the year-ago period and higher fee revenue of $57.0 million, offset by an increase in compensation and benefits expense, restructuring charges, net, cost of services expense, marketing and business development expenses and premise and office expenses.
−Removed: Consulting operating income was $24.3 million in the nine months ended January 31, 2020, an increase of $71.7 million, 151% as compared to an operating loss of $47.4 million in the year-ago period.
−Removed: The change from operating loss to operating income was primarily due to the write-off of tradenames related to the Plan of $77.0 million in year-ago period and a decrease in compensation and benefits expense, offset by restructuring charges incurred in the nine months ended January 31, 2020.
−Removed: Consulting operating income, as a percentage of fee revenue, was 6% in the nine months ended January 31, 2020 compared to an operating loss, as a percentage fee revenue, of 11% in the year-ago period.
−Removed: Excluding the tradename write-offs, operating income as a percentage of fee revenue was 6% in the nine months ended January 31, 2020 compared to 7% in the year-ago period.
−Removed: Digital operating income was $41.0 million in the nine months ended January 31, 2020, an increase of $17.9 million, or 77%, as compared to $23.1 million in the year-ago period.
−Removed: The increase was primarily due to the write-off of tradenames related to the Plan of $29.6 million in the year-ago period and higher fee revenue, offset by increases in compensation and benefits expense, cost of services and restructuring charges, net.
−Removed: Digital operating income, as a percentage of fee revenue was 18% and 12% in the nine months ended January 31, 2020 and 2019, respectively.
−Removed: Excluding the tradename write-offs, operating income as a percentage of fee revenue was 18% in the nine months ended January 31, 2020 compared 28% in the year-ago period.
−Removed: Executive Search operating income decreased by $17.4 million, or 13%, to $119.6 million in the nine months ended January 31, 2020 as compared to $137.0 million in the year-ago period.
−Removed: The decrease in Executive Search operating income was driven by lower fee revenue, offset by a decrease in general and administrative expenses.
−Removed: Executive Search operating income, as a percentage of fee revenue was 21% and 23% in the nine months ended January 31, 2020 and 2019, respectively.
−Removed: RPO & Professional Search operating income was $44.3 million, an increase of $8.0 million, or 22%, in the nine months ended January 31, 2020 as compared to $36.3 million in the year-ago period.
−Removed: The increase in operating income was driven by higher fee revenue, offset by increases in compensation and benefits expense and general and administrative expenses.
−Removed: RPO & Professional Search operating income, as a percentage of fee revenue, was 16% in the nine months ended January 31, 2020 compared to 15% in the year-ago period.
−Removed: Net Income Attributable to Korn Ferry
−Removed: Net income attributable to Korn Ferry increased by $53.3 million to $105.7 million in the nine months ended January 31, 2020 as compared to $52.4 million in the year-ago period.
−Removed: The increase was due to $57.1 million more in total revenue, an increase in other income, net of $5.5 million and a decrease in operating expenses of $18.1 million, partially offset by an increase in income tax provision of $24.9 million during the nine months ended January 31, 2020 compared to the year-ago period.
−Removed: income attributable to Korn Ferry, as a percentage of fee revenue, was 7% in the nine months ended January 31, 2020 compared to 4% in the nine months ended January 31, 2019 .
−Removed: Adjusted EBITDA
−Removed: Adjusted EBITDA increased by $2.6 million to $231.4 million in the nine months ended January 31, 2020 as compared to $228.8 million in the year-ago period.
−Removed: This increase was driven by higher fee revenue and an increase in other income, net, offset by an increases in compensation and benefits expense (excluding integration/acquisition costs and separation costs), cost of services expense and general and administrative expenses (excluding write-off on tradenames and integration/acquisition costs).
−Removed: Adjusted EBITDA, as a percentage of fee revenue, was 16% in both the nine months ended January 31, 2020 and 2019.
−Removed: Consulting Adjusted EBITDA was $50.0 million in the nine months ended January 31, 2020, an increase of $1.8 million, or 4%, as compared to $48.2 million in the year-ago period.
−Removed: The increase was driven by a decrease in compensation and benefits expense (excluding integration/acquisition costs), partially offset by lower fee revenue during the nine months ended January 31, 2020 compared to the year-ago period.
−Removed: Consulting Adjusted EBITDA, as a percentage of fee revenue, was 12% in the nine months ended January 31, 2020 compared to 11% in the year-ago period.
−Removed: Digital Adjusted EBITDA was $66.1 million in the nine months ended January 31, 2020, an increase of $2.2 million, or 3%, as compared to $63.9 million in the year-ago period.
−Removed: The increase was driven by higher fee revenue, partially offset by increases in compensation and benefits expense (excluding integration/acquisition costs), cost of services expense and general and administrative expenses (excluding write-off on tradenames and integration/acquisition costs) during the nine months ended January 31, 2020 compared to the year-ago period.
−Removed: Digital Adjusted EBITDA, as a percentage of fee revenue, was 30% in the nine months ended January 31, 2020 as compared to 34% in the nine months ended January 31, 2019.
−Removed: Executive Search Adjusted EBITDA decreased by $10.5 million, or 7%, to $133.6 million in the nine months ended January 31, 2020 as compared to $144.1 million in the nine months ended January 31, 2019.
−Removed: The decrease in Executive Search was driven by lower fee revenue, partially offset by decreases in compensation and benefits expense (excluding separation costs) and general administrative expenses during the nine months ended January 31, 2020 compared to the year-ago period.
−Removed: Executive Search Adjusted EBITDA, as a percentage of fee revenue, was 24% in the nine months ended January 31, 2020 as compared to 25% in the nine months ended January 31, 2019.
−Removed: RPO & Professional Search Adjusted EBITDA was $47.5 million in the nine months ended January 31, 2020, an increase of $8.7 million, or 22%, as compared to $38.8 million in the year-ago period.
−Removed: The increase was driven by higher fee revenue, offset by increases in compensation and benefits expense and general and administrative expenses.
−Removed: RPO & Professional Search Adjusted EBITDA, as a percentage of fee revenue, was 17% in the nine months ended January 31, 2020 compared to 16% in the year-ago period.
−Removed: Other Income, Net
−Removed: Other income, net was $8.0 million in the nine months ended January 31, 2020 compared to $2.5 million in the year-ago period.
−Removed: The increase was primarily due to larger gains in the fair value of our marketable securities.
−Removed: These gains were offset by the increases in our deferred compensation liability that are recorded in compensation and benefits expense during the nine months ended January 31, 2020 compared to the year-ago period.
−Removed: Interest Expense, Net
−Removed: Interest expense, net primarily relates to our Notes issued in December 2019, our prior credit agreement and borrowings under our COLI policies, which are partially offset by interest earned on cash and cash equivalent balances.
−Removed: Interest expense, net was $15.2 million in the nine months ended January 31, 2020 compared to $12.7 million in the year-ago period.
−Removed: The increase in interest expense, net was related to the newly issued Notes, which have a higher interest rate and a higher principal balance than the revolver under our prior credit agreement.
−Removed: Income Tax Provision
−Removed: The provision for income tax was $39.0 million in the nine months ended January 31, 2020 compared to $14.1 million in the year-ago period.
−Removed: This reflects a 26.6% and 20.7% effective tax rate for the nine months ended January 31, 2020 and 2019, respectively.
−Removed: In the nine months ended January 31, 2020, the Company’s effective tax rate was higher than the U.S.
−Removed: federal statutory rate of 21.0% primarily due to the impact of U.S.
−Removed: state income taxes and the recognition of taxable income outside the U.S.
−Removed: at higher statutory tax rates.
−Removed: The effective tax rate for the nine months ended January 31, 2019 was affected by the tradename impairment charge and the excess tax benefit on vested stock-based awards, both of which were recorded as discrete during the three months ended July 31, 2018.
−Removed: The excess tax benefit was 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, exceeded the expense recorded in the Company’s financial statements over the awards’ vesting period.
−Removed: Net Income Attributable to Noncontrolling Interest
−Removed: Net income attributable to noncontrolling interest represents the portion of a subsidiary’s net earnings that are attributable to shares of a subsidiary not held by Korn Ferry that are included in the consolidated results of operations.
−Removed: Net income attributable to noncontrolling interest for the nine months ended January 31, 2020 was $1.9 million as compared to $1.8 million for the nine months ended January 31, 2019.
+Added: Interest expense, net was $6.9 million in the three months ended July 31, 2020 compared to $4.1 million in the year-ago quarter.
+Added: The increase in interest expense, net was related to the newly issued Notes, which have a higher interest rate and a higher principal balance than the amount that was outstanding in the year-ago quarter under the revolver under our prior credit agreement.
+Added: Income Tax (Benefit) Provision
+Added: The benefit for income tax was $8.7 million in the three months ended July 31, 2020, compared to an expense of $14.5 million in the three months ended July 31, 2019.
+Added: This reflects a 21.9% and 24.9% effective tax rate for the three months ended July 31, 2020 and 2019, respectively.
+Added: The variability in effective tax rate is primarily due to the impact of U.S.
+Added: state income taxes and the jurisdictional mix of earnings.
+Added: Net (Loss) Income Attributable to Noncontrolling Interest
+Added: Net (loss) income attributable to noncontrolling interest represents the portion of a subsidiary’s net earnings that are attributable to shares of a subsidiary not held by Korn Ferry that are included in the consolidated results of operations.
+Added: Net loss attributable to noncontrolling interest for the three months ended July 31, 2020 was break-even as compared to net income attributable to noncontrolling interest of $0.7 million the three months ended July 31, 2019.
Liquidity and Capital Resources
The Company and its Board of Directors endorse a balanced approach to capital allocation.
−Removed: The Company’s priority is to invest in growth initiatives, such as the hiring of consultants, the continued development of IP and derivative products and services, and the investment in synergistic, accretive merger and acquisition transactions that earn a return that is superior to the Company's cost of capital.
−Removed: Next, the Company’s capital allocation approach contemplates the return of a portion of excess capital to stockholders in the form of a regular quarterly dividend, subject to the factors discussed below and in the “Risk Factors” section of this Quarterly Report on Form 10-Q.
+Added: The Company’s long-term priority is to invest in growth initiatives, such as the hiring of consultants, the continued development of IP and derivative products and services, and the investment in synergistic, accretive merger and acquisition transactions that earn a return that is superior to the Company's cost of capital.
+Added: Next, the Company’s capital allocation approach contemplates the return of a portion of excess capital to stockholders in the form of a regular quarterly dividend, subject to the factors discussed below and in the “Risk Factors” section of the Annual Report on Form 10-K for the fiscal year ended April 30,2020.
Additionally, the Company considers share repurchases on an opportunistic basis and subject to the terms of our Credit Agreement (defined below) as well as using excess cash to repay the Notes.
−Removed: On November 1, 2019, we completed the acquisition of the Acquired Companies in the leadership development area for $108.6 million, net of cash acquired.
−Removed: The acquisition contributed a world-class portfolio of learning, development and performance improvement offerings and expertise to Korn Ferry and bolsters our substantial leadership development capabilities.
−Removed: The Acquired Companies specialize in transforming sales performance and customer experience, offer frontline leadership development and provide organizational and project management training.
−Removed: These companies are included in the new Digital segment which, working closely with the new Consulting segment, will provide clients with direct access to data, insights and analytics from one of the world’s most comprehensive people and organizational databases.
−Removed: The addition of the Acquired Companies further expands our vast IP and content and leverages our digital delivery platforms.
−Removed: Actual results of operations of the Acquired Companies are included in our consolidated financial statements from November 1, 2019, the effective date of the acquisition.
−Removed: We have invested in our digital business to digitize and harmonize the structure of our IP content and data and in building a technology platform for the efficient delivery of these assets directly to an end consumer or indirectly through a consulting engagement.
−Removed: These investments combined with the acquisition of the Acquired Companies resulted in reassessing how we manage and report the Advisory business.
−Removed: On November 1, 2019, we adopted a restructuring plan to rationalize our cost structure to realize the efficiencies and operational improvement that these investments have enabled us to, or positioned us to, realize.
−Removed: The plan impacts both Consulting and Digital and includes the elimination of redundant positions and consolidation of office space.
−Removed: During the three and nine months ended January 31, 2020 we recognized $18.1 million of restructuring charges associated with severance and recorded $2.8 million of integration/acquisition costs associated with abandonment of premises .
−Removed: On December 16, 2019, we completed a private placement of the Notes with $400 million principal amount pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended.
+Added: On November 1, 2019, we completed the acquisition of the Acquired Companies in the leadership development area for $108.6 million, net of cash acquired and actual results of operations of the Acquired Companies are included in our consolidated financial statements from November 1, 2019, the effective date of the acquisition.
+Added: On November 1, 2019, we also adopted a restructuring plan to rationalize our cost structure to realize the efficiencies and operational improvement that these investments have enabled us to, or positioned us to, realize.
+Added: Initially, the negative business impact of the coronavirus outbreak was most pronounced in the Asia Pacific Region, and in particular China and Hong Kong.
+Added: In March 2020, COVID-19 was reported to have spread to over 100 countries, territories, or areas, worldwide, and in the fourth quarter of fiscal 2020 the World Health Organization declared it a pandemic.
+Added: Governments and companies have implemented social distancing - limiting either travel or in person individual or group face-to-face interaction as well as working from home to adhere to stay at home orders from national, state and city governments.
+Added: The outbreak has severely restricted the level of economic activity in affected areas and has had an adverse impact on demand for and sales of our products and services.
+Added: All of our business segments across all of our geographies have been impacted as fee revenue decreased significantly in the fourth quarter of fiscal 2020 and the first quarter of fiscal 2021 due to a decrease in demand as clients respond to the pandemic.
+Added: In light of the continuing uncertainty in worldwide economic conditions caused by the COVID-19 pandemic and, as part of a broader program aimed at further enhancing our strong balance sheet and liquidity position, on April 20, 2020, we initiated a plan intended to adjust our cost base to the current economic environment and to position us to invest in the recovery.
+Added: This plan includes (i) a reduction in workforce, which was completed by the end of the first quarter of fiscal 2021 and resulted in restructuring charges of $40.5 million and $27.5 million associated with severance during the three months ended April 30, 2020 and the three months ended July 31, 2020, (ii) the temporary furlough of certain employees, (iii) subject to certain exceptions and legal requirements, salary reductions across the organization, and (iv) other cost saving measures relating to general and administrative expenses.
+Added: On December 16, 2019, we completed a private placement of the Notes with a $400 million principal amount pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended.
The Notes were issued with a $4.5 million discount and will mature December 15, 2027, with interest payable semi-annually in arrears on June 15 and December 15 of each year, commencing on June 15, 2020.
3 unchanged sentences
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.
−Removed: We used the proceeds from the offering of the Notes to repay $276.9 million outstanding under our prior revolving credit facility (the “Prior Credit Agreement”) and to pay expenses and fees in connection therewith.
−Removed: As of January 31, 2020, the fair value of the Notes is $402 million, which is based on borrowing rates currently required of notes with similar terms, maturity and credit risk.
−Removed: On December 16, 2019, we entered into a senior secured $650.0 million Credit Agreement (the “Credit Agreement”) with a syndicate of banks and Bank of America, National Association as administrative agent to among other things, provide for enhanced financial flexibility.
+Added: As of July 31, 2020, the fair value of the Notes is $410.5 million, which is based on borrowing rates currently required of notes with similar terms, maturity and credit risk.
+Added: On December 16, 2019, we also entered into a senior secured $650.0 million credit agreement (the “Credit Agreement”) with a syndicate of banks and Bank of America, National Association as administrative agent to among other things, provide for enhanced financial flexibility.
See Note 12— Long-Term Debt for a description of the Credit Agreement.
−Removed: We have a total of $ 646.0 million available under our $650.0 million five-year senior secured revolving credit facility (the “Revolver”) as of January 31, 2020 after $4.0 million of standby letters of credit had been issued as of January 31, 2020 .
−Removed: We had $4.0 million and $2.9 million in standby letters of credit issued under our long-term debt arrangements as of January 31, 2020 and April 30, 2019, respectively.
−Removed: We had a total of $11.1 million and $8.5 million of standby letters of credits with other financial institutions as of January 31, 2020 and April 30, 2019, respectively.
+Added: We have a total of $ 646.0 million available under our $ 650.0 million five-year senior secured revolving credit facility (the “Revolver”) as of July 31, 2020 after $4.0 million of standby letters of credit had been issued as of July 31, 2020 .
+Added: We had $ 4.0 million in standby letters of credit issued under our Revolver as of July 31, 2020 and April 30, 2020.
+Added: We had a total of $ 11.5 million and $ 11.3 million of standby letters of credits with other financial institutions as of July 31, 2020 and April 30, 2020, respectively.
The standby letters of credits were generally issued as a result of entering into office premise leases.
4 unchanged sentences
On March 6, 2019, our Board of Directors approved an increase to the share repurchase program of approximately $200 million, which at the time brought our available capacity to repurchase shares in the open market or privately negotiated transactions to approximately $250 million.
−Removed: The Company repurchased approximately $68.
−Removed: 1 million and $37.4 million of the Company’s stock during the nine months ended January 31, 2020 and 2019 , respectively.
−Removed: As of January 31, 2020 , $ 182.7 million remained available for common stock repurchases under our share repurchase program.
+Added: The Company did not repurchase any of the Company’s stock during the three months ended July 31, 2020 compared to repurchasing $12.7 million of the Company’s stock in the year-ago quarter.
+Added: As of July 31, 2020 , $ 158.3 million remained available for common stock repurchases under our share repurchase program.
Any decision to continue to execute our currently outstanding share repurchase program will depend on our earnings, capital requirements, financial condition and other factors considered relevant by our Board of Directors.
−Removed: The Credit Agreement permits us to pay dividends to our stockholders and make share repurchases so long as there is no default under the Credit Agreement, the consolidated net leverage ratio , which used adjusted EBITDA is no greater than 4.00 to 1.00, and the pro forma liquidity is at least $50 million , including the revolving credit commitment minus amounts outstanding on the Revolver, issued letters of credit and swing loans .
+Added: The Credit Agreement permits us to pay dividends to our stockholders and make share repurchases so long as there is no default under the Credit Agreement, the consolidated net leverage ratio , which used adjusted EBITDA is no greater than 4.
+Added: 25 to 1.00, and the pro forma liquidity is at least $50 million , including the revolving credit commitment minus amounts outstanding on the Revolver, issued letters of credit and swing loans .
Furthermore, 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 i ndenture governing the Note s .
Our performance is subject to the general level of economic activity in the geographic regions and the industries we service.
−Removed: We believe, based on current economic conditions, that our cash on hand and funds from operations and the Credit Agreement will be sufficient to meet anticipated working capital, capital expenditures, general corporate requirements, repayment of the debt, share repurchases and dividend payments under our dividend policy during the next twelve months.
−Removed: However, if the national or global economy, credit market conditions and/or labor markets were to deteriorate in the future, such changes could put negative pressure on demand for our services and affect our operating cash flows.
+Added: We believe, based on current economic conditions, that our cash on hand and funds from operations and the Credit Agreement will be sufficient to meet anticipated working capital, capital expenditures, general corporate requirements, repayment of the debt, share repurchases and dividend payments under our dividend policy during the next 12 months.
+Added: However, if COVID-19 continues to persist or worsen, or the national or global economy, credit market conditions and/or labor markets were to deteriorate in the future, such changes could put negative pressure on demand for our services and affect our operating cash flows.
If these conditions were to persist over an extended period of time, we may incur negative cash flows and it might require us to access additional borrowings under the Credit Agreement to meet our capital needs and/or discontinue our share repurchases and dividend policy.
−Removed: Cash and cash equivalents and marketable securities were $748.5 million and $767.1 million as of January 31, 2020 and April 30, 2019, respectively.
−Removed: Net of amounts held in trust for deferred compensation plans and accrued bonuses, cash and marketable securities were $421.6 million and $382.1 million at January 31, 2020 and April 30, 2019, respectively.
−Removed: As of January 31, 2020 and April 30, 2019, we held $262.1 million and $267.0 million, respectively of cash and cash equivalents in foreign locations, net of amounts held in trust for deferred compensation plans and to pay fiscal 2020 and 2019 annual bonuses.
+Added: Cash and cash equivalents and marketable securities were $733.0 million and $863.3 million as of July 31, 2020 and April 30, 2020, respectively.
+Added: Net of amounts held in trust for deferred compensation plans and accrued bonuses, cash and marketable securities were $ 510.8 million and $ 531.9 million at July 31, 2020 and April 30, 2020, respectively.
+Added: As of July 31, 2020 and April 30, 2020, we held $336.6 million and $ 308.2 million, respectively of cash and cash equivalents in foreign locations, net of amounts held in trust for deferred compensation plans and to pay fiscal 2021 and 2020 annual bonuses.
Cash and cash equivalents consist of cash and highly liquid investments purchased with original maturities of three months or less.
1 unchanged sentence
The primary objectives of our investment in mutual funds are to meet the obligations under certain of our deferred compensation plans, while the commercial paper and corporate notes/bonds are available for general corporate purposes.
−Removed: As of January 31, 2020 and April 30, 2019, marketable securities of $184.8 million and $140.8 million, respectively, included trading securities of $151.6 million (net of gross unrealized gains of $8.3 million and gross unrealized losses of $0.7 million) and $140.8 million (net of gross unrealized gains of $6.3 million and gross unrealized losses of $1.0 million), respectively, were held in trust for settlement of our obligations under certain deferred compensation plans, of which $143.8 million and $132.5 million, respectively, are classified as non-current.
−Removed: These marketable securities were held to satisfy vested obligations totaling $135.7 million and $122.3 million as of January 31, 2020 and April 30, 2019, respectively.
−Removed: Unvested obligations under the deferred compensation plans totaled $23.2 million and $24.6 million as of January 31, 2020 and April 30, 2019, respectively.
−Removed: The net increase in our working capital of $50.8 million as of January 31, 2020 compared to April 30, 2019 is primarily attributable to increases in accounts receivable and marketable securities and a decrease in compensation and benefits payable, partially offset by a decrease in cash and cash equivalents and an increase in operating lease liability, current as a result of implementing the new lease accounting standard.
−Removed: The increase in marketable securities was due to purchases of debt securities during the quarter, while the decrease in cash and cash equivalents and compensation and benefits was primarily due to the payment of annual bonuses earned in fiscal 2019 and paid during the first quarter of fiscal 2020.
−Removed: Cash and cash equivalents further declined due to the price paid for the acquisition of the Acquired Companies and sign-on and retention payments.
−Removed: These decreases in cash and cash equivalents, were partially offset by net proceeds from long-term debt.
−Removed: The increase in accounts receivable was due to an increase in days of sales outstanding, which went from 61 days to 72 days (which is consistent with historical experience) from April 30, 2019 to January 31, 2020 .
−Removed: Cash provided by operating activities was $57.1 million in the nine months ended January 31, 2020, a decrease of $43.9 million, compared to $101.0 million in the nine months ended January 31, 2019.
−Removed: Cash used in investing activities was $191.1 million in the nine months ended January 31, 2020 compared to $59.5 million in the year-ago period.
−Removed: An increase in cash used in investing activities was primarily due to cash paid for the acquisition of the Acquired Companies of $108.6 million and an increase in purchase of marketable securities net of sale/maturities of $40.7 million, partially offset by a decrease in premiums paid on the COLI policies of $19.2 million during the nine months ended January 31, 2020 compared to the year-ago period.
−Removed: Cash provided by financing activities was $74.1 million in the nine months ended January 31, 2020 compared to cash used of $57.8 million in the nine months ended January 31, 2019 .
−Removed: The in crease in cash provided by financing activities was primarily due to the proceeds from long term debt of $445.5 million in the nine months ended January 31, 2020 compared to $ 226.9 million in the year-ago period and lower cash used to repurchase shares of common stock to satisfy tax withholding requirements upon the vesting of restricted stock of $11.6 million , partially offset by an increase of $38.0 million in cash used for principal payments on long term debt, $30.7 million more in repurchase of common stock and a decrease in borrowings under COLI policies of $31.9 million.
−Removed: We had approximately $856.0 million of estimated remaining revenue under existing contracts as of January 31, 2020.
−Removed: However, this should not be considered the amount of our future revenue as it does not take into consideration contracts that will be originated and recognized within the same future reporting periods.
−Removed: Further, our contract terms and conditions allow for clients to increase or decrease the scope of services and such changes do not increase or decrease the estimated remaining revenue under contract until we have an enforceable right to payment.
+Added: As of July 31, 2020 and April 30, 2020, marketable securities of $ 190.2 million and $ 174.1 million, respectively, included equity securities of $151.8 million (net of gross unrealized gains of $ 11.2 million and gross unrealized losses of $ 2.7 million) and $ 141.4 million (net of gross unrealized gains of $ 3.6 million and gross unrealized losses of $ 6.5 million), respectively, were held in trust for settlement of our obligations under certain deferred compensation plans, of which $140.3 million and $132.1 million, respectively, are classified as non-current.
+Added: These marketable securities were held to satisfy vested obligations totaling $137.4 million and $ 124.6 million as of July 31, 2020 and April 30, 2020, respectively.
+Added: Unvested obligations under the deferred compensation plans totaled $24.1 million and $ 21.7 million as of July 31, 2020 and April 30, 2020, respectively.
+Added: The net decrease in our working capital of $ 10.9 million as of July 31, 2020 compared to April 30, 2020 is primarily attributable to decreases in accounts receivable and cash and cash equivalents offset by a decrease in compensation and benefits payable.
+Added: The decrease in cash and cash equivalents and compensation and benefits payable was primarily due to payments of annual bonuses earned in fiscal 2020 and paid during the first quarter of fiscal 2021.
+Added: The decrease in accounts receivable was due to a decline in fee revenue due to the contraction in economic activity due to the COVID-19 pandemic.
+Added: Cash used by operating activities was $144.3 million in the three months ended July 31, 2020, a decrease of $17.6 million, compared to $161.9 million in the three months ended July 31, 2019.
+Added: Cash used in investing activities was $13.2 million in the three months ended July 31, 2020 compared to $9.2 million in the year-ago quarter.
+Added: An increase in cash used in investing activities was primarily due to an increase in the purchase of marketable securities net of sale/maturities of $4.7 million and a decrease in proceeds from life insurance policies of $1.0 million, partially offset by a decrease in purchase of property and equipment of $1.9 million during the three months ended July 31, 2020 compared to the year-ago quarter.
+Added: Cash used in financing activities was $7.8 million in the three months ended July 31, 2020 compared to cash used of $24.9 million in the three months ended July 31, 2019.
+Added: The decrease in cash used in financing activities was primarily due to $12.7 million repurchases of the Company’s common stock in three months ended July 31, 2019 compared to none in the current quarter.
+Added: The rest of the change is due to lower cash used to repurchase shares of common stock to satisfy tax withholding requirements upon the vesting of restricted stock of $ 4.4 million in the three months ended July 31, 2020 compared to $ 8.6 million in the year-ago quarter.
Cash Surrender Value of Company-Owned Life Insurance Policies, Net of Loans
We 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.
−Removed: As of January 31, 2020 and April 30, 2019, we held contracts with gross CSV of $237.6 million and $219.2 million, respectively.
−Removed: Total outstanding borrowings against the CSV of COLI contracts were $92.3 million and $93.2 million as of January 31, 2020 and April 30, 2019, respectively.
+Added: As of July 31, 2020 and April 30, 2020, we held contracts with gross CSV of $ 240.1 million and $ 238.7 million, respectively.
+Added: Total outstanding borrowings against the CSV of COLI contracts were $ 91.7 million and $ 92.3 million as of July 31, 2020 and April 30, 2020, respectively.
Such borrowings do not require annual principal repayments, bear interest primarily at variable rates and are secured by the CSV of COLI contracts.
−Removed: At January 31, 2020 and April 30, 2019, the net cash value of these policies was $145.3 million and $126.0 million, respectively.
+Added: At July 31, 2020 and April 30, 2020, the net cash value of these policies was $ 148.4 million and $ 146.4 million, respectively.
Long-Term Debt
−Removed: On December 16, 2019, we completed a private placement of the Notes with $400 million principal amount.
+Added: On December 16, 2019, we completed a private placement of the Notes with a $400 million principal amount.
We may redeem the Notes prior to maturity, subject to certain limitations and premiums defined in the indenture governing the Notes.
1 unchanged sentence
At any time prior to December 15, 2022, we may use the proceeds of certain equity offerings to redeem up to 35 % of the aggregate principal amount of the Notes, including any permitted additional Notes, at a redemption price equal to 104.625 % of the principal amount and accrued and unpaid interest.
−Removed: At any time and from time to time on or after December 15, 2022, we may redeem the Notes at the applicable redemption prices set forth in the table below, plus accrued and unpaid interest, if redeemed during the twelve-month period beginning on December 15 of each of the years indicated:
+Added: At any time and from time to time on or after December 15, 2022, we may redeem the Notes at the applicable redemption prices set forth in the table below, plus accrued and unpaid interest, if redeemed during the 12-month period beginning on December 15 of each of the years indicated:
2024 and thereafter
The fair value of the Notes is classified as a Level 2 measurement in the fair value hierarchy.
−Removed: The pay-off of the term loan outstanding under our Prior Credit Agreement is considered a debt modification and therefore, the previously incurred unamortized and current debt issuance costs will be amortized over the life of the new issuance.
The principal balance of the Revolver is due on the date of its termination.
4 unchanged sentences
In addition, we will be required to pay to the lenders a quarterly commitment fee ranging from 0.175% to 0.35% per annum on the average daily unused amount of the Revolver, based upon our consolidated net leverage ratio at such time, and fees relating to the issuance of letters of credit.
−Removed: During the three and nine months ended January 31, 2020, the average interest rate on amounts outstanding under the prior revolver was 2.94% and 3.44%, respectively.
−Removed: During the three and nine months ended January 31, 2019, t he average interest rate on amounts outstanding under the prior revolver was 3.64% and 3.42%, respectively.
−Removed: As of January 31, 2020, there was no outstanding liability under the Revolver compared to $226.9 million as of April 30, 2019 under the prior revolver.
−Removed: The unamortized debt issuance costs associated with the long-term debt were $4.5 million and $4.0
−Removed: million as of January 31, 2020 and April 30, 2019, respectively.
−Removed: As of January 31, 2020 , we were in compliance with our debt covenants .
−Removed: We had a total of $646.0 million available under the Revolver after $4.0 million of standby letters of credit had been issued as of January 31, 2020 .
−Removed: We had a total of $420.2 million available under the Prior Credit Agreement after we drew down $226.9 million and after $2.9 million of standby letters of credit had been issued as of April 30, 2019.
−Removed: We had a total of $11.1 million and $8.5 million of standby letters of credits with other financial institutions as of January 31, 2020 and April 30, 2019, respectively.
+Added: T he average interest rate on amounts outstanding under the prior revolver was 3.69% for the three months ended July 31, 2019 .
+Added: As of July 31, 2020 and April 30, 2020, there was no outstanding liability under the Revolver.
+Added: The unamortized debt issuance costs associated with the Credit Agreement were $4.0 million as of July 31, 2020 and $4.2 million as of April 30, 2020 .
+Added: As of July 31, 2020, we were in compliance with our debt covenants.
+Added: We had a total of $ 646.0 million available under the Revolver after $ 4.0 million of standby letters of credit had been issued as of July 31, 2020 and April 30, 2020.
+Added: We had a total of $ 11.5 million and $11.3 million of standby letters of credits with other financial institutions as of July 31, 2020 and April 30, 2020, respectively.
The standby letters of credits were generally issued as a result of entering into office premise leases.
−Removed: Other than the factors discussed in this section and the potential impacts of the coronavirus on our business, we are not aware of any other trends, demands or commitments that would materially affect liquidity or those that relate to our resources as of January 31, 2020 .
+Added: Other than the factors discussed in this section and the potential impacts of the COVID-19 on our business, we are not aware of any other trends, demands or commitments that would materially affect liquidity or those that relate to our resources as of July 31, 2020 .
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements and have not entered into any transactions involving unconsolidated, special purpose entities.
−Removed: We had no material changes in contractual obligations as of January 31, 2020, as compared to those disclosed in our table of contractual obligations included in our Annual Report.
+Added: We had no material changes in contractual obligations as of July 31, 2020 , as compared to those disclosed in our table of contractual obligations included in our Annual Report.
Critical Accounting Policies
−Removed: Preparation of this Quarterly Report on Form 10-Q requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements and the reported amounts of revenue and expenses during the reporting period.
+Added: Preparation of this Quarterly Report on Form 10-Q requires us to make estimates and assumptions that affect the reported
+Added: 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 or 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.
−Removed: We consider the policies related to revenue recognition, performance related bonuses, deferred compensation, carrying values of receivables, goodwill, intangible assets 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.
+Added: We consider the policies related to revenue recognition, performance related bonuses, deferred compensation, carrying values of receivables, goodwill, intangible assets , leases and recoverability of deferred income taxes as critical to an understanding of our interim consolidated financial statements because their application places the most significant demands on management’s judgment and estimates.
Specific risks for these critical accounting policies are described in our Form 10-K filed with the Securities Exchange Commission.
−Removed: There have been no material changes in our critical accounting policies since fiscal 2019.
+Added: There have been no material changes in our critical accounting policies since the end of fiscal 2020 .
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.